Show Notes
In this episode of Startups For The Rest Of Us, Rob interviews Josh Pigford, the founder of baremetrics about competition, transparency, and funding.
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Transcript
Rob [00:00]: In this episode of Startups For The Rest Of Us, I talked with Josh Pigford, founder of Baremetrics about the good and bad of competition, transparency, and funding. This is Startups For The Rest Of Us episode 244.
Rob [00:21]: Welcome to Startups For the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at launching software products. Whether you’ve built your first product, or you’re just thinking about it. I’m Rob and Mike is on vacation and we’re here to share our experiences to help you avoid the same mistakes we’ve made. So Mike is out-of-town in Hershey, Pennsylvania with his family and so this week I decided to bring Josh Pigford, founder of Baremetrics on the show because he has a lot of unique experience. He has bootstrapped a SAS business for the past couple of years and it had a great growth trajectory and amidst that, he’s had a ton of competition crop-up. He’s also raised a small round of funding to help with his growth and he’s been very transparent with all of their numbers actually published a dashboard with all of the growth numbers and the lifetime value in turn and pretty much opened a kimono on it and that’s at demo.baremetrics.com. So I talked to Josh about all three of those topics because of anyone I know he’s really in the midst of the throws of competition, funding, and transparency, so I hope you enjoy his takes on these topics. Let’s dive right into the interview. So today I have the pleasure of speaking with Josh Pigford. You probably know as the founder of Baremetrics. You haven’t heard about Baremetrics that they are one in click analytics for stripe. So for using the subscription API with stripe particularly if you have a SAS app, Baremetrics gives you a really cool dashboard of all your numbers and your turn and lifetime value and all that kind of stuff typically the stuff that you spend a week or two with the developer trying to build out so it’s not something that most SAS providers want to spend their time doing, and Josh has the pretty unique story that he’s had strong growth since he launched. He got out ahead of the market and then raised a little bit of funding and that’s why I wanted to have him on the show today to talk about it. So, thanks Josh for taking the time to join us.
Josh Pigford [02:13]: Thanks for having me, Rob.
Rob [02:14]: Absolutely. All right. So I want to cover a couple of topics today in particular. The first one I want to start with is transparency. Transparency is something that you’ve been a big advocate of in the sense that from really early on in Baremetrics history, you wanted to kind of have a live demo of Baremetrics, of the dashboard, and so you’ve just opened the kimono and essentially, you show all the numbers for Baremetrics that’s at demo.Baremetrics.com for those who want to go check it out, and it’s your live numbers obviously you’ve obfuscated those customer names in there that are changed for the protection of the innocent but you have real lifetime value and your real monthly occurring revenue and all that stuff. Tell me a little bit about the motivation for it and if you think that’s been a plus or a minus for Baremetrics’s growth.
Josh Pigford [02:58]: Sure, sure. So we back in, I guess been a year and a half now, so February 2014, I had this idea like I need a demo for the software and I mean I guess I didn’t have to have one but it just seems like it was the easiest way to convey the value and honestly, it was all kind of the result of my own laziness so I thought I needed a demo and I could spend a ton of time pumping out like fake data and trying to generate enough fake data to look like I have a legit dashboard but I mean there’s a lot to Baremetrics so like there’s a dozen plus metrics in each of those, have their own individual metrics pages with even more in depth data on all of those. It would’ve taken so much time to put all together and I thought or I could just add a line of code and make my own stuff public. So, I went with the lazy route and at that time, we weren’t making a ton of money, we’re kind of doing like I don’t know, a few thousand bucks a month and so just decided, “I will put it out there.” And there’s I guess a little bit of altruism to it in the sense that I’ve been building software for the web for a decade and I always appreciated other people kind of given me a look into what their startup looks like successful or not, and there’s a little bit of that aspect of it but I mean it initially was a bit of laziness that turned into something bigger.
Rob [04:16]: Sure. And now that you are obviously substantially more than a few thousand dollars a month and since your revenue is public, I don’t have it [?] but it looks like I think your MRR right now is 32,000 or 33,000. Now that this takes a little bit bigger and you have competition and that kind of stuff, do you – and maybe regret is too strong of a word but do you still think it wasn’t a right choice and are you happy every day when you wake up and see your numbers in public?
Josh Pigford [04:38]: So it’s a mixture. It was at the right move, absolutely, I mean so many things came out of it so, kind of the biggest plus was that Buffer, another startup decided to make their stuff public through Baremetrics as well. And then they’re substantially larger. I think their MRR is like $400,000 a month or maybe like 500,000. So it’s a lot of money and a lot of people follow them. And so that would not have happen had I not made mine public because like kind of that wasn’t even an option to make all these revenue public, or at least not in this like easy one-click setup. So, I don’t regret it. It was definitely the right move but man, did it bring up a number of copycats that poured in after that was substantial. So, yeah, but there’s been a couple of I would say legitimate competitors but the [?] 90+% of them, a lot of them just literally, directly ripped off like the design and everything. So, it’s one of those things like it’s sort of a bit of a gold rush in a sense that the way I certainly can’t compare of like their metrics to the app store but I mean in the same way that you hear somebody makes a lot of money on the app store, “Oh, I can do iPhone apps too.” And they copy lots of people and it’s sort of the same as you see but they’re not much more scaled but that’s kind of happened here. And so that’s just really annoying more than anything like that’s the part that’s so frustrating and then the other aspects of it like because we have to be kind of private, we don’t want to surface individual customer’s data. I feel like we have to give a somewhat scaled back demo. And so, the fear is that that kind of almost implies. The Baremetrics doesn’t do as much as it can, but it does we just can’t show it all from the privacies side of it, so.
Rob [06:23]: That’s interesting. Yeah, I hadn’t thought of that. So, as you’re clicking and digging into detail, you can’t necessarily show every screen of –
Josh Pigford [06:29]: Exactly. Like I can show a couple of screenshots here and there but I mean I can’t let you, we get into the okay well especially when we start talking about like customer profiles and stuff. We have to, at that point have to generate a lot of fake data because we can’t show any kind of customer identifiable information there. So, we’re looking at different ways to handle that but it’s like there’s pros and cons but the pros is far with the cons.
Rob [06:52]: Yeah. Right. And so it sounds like you do feel like it brought some competition once folks saw your growth curve, but the pros were that it gave you this plastering on.
Josh Pigford [07:00]: Sure. Like if you look at our graph, like MRR for instance, the big inflection point is when Buffer made their stuff public because it just instantly brought a ton of exposure. And so it changes the angle of the graph permanently. And so, yeah, from that perspective, it was unquestionably the right move.
Rob [07:19]: Right. And for folks who want to check that out, it’s at buffer.Baremetrics.com. Another thought in transparency, I want to hear, I get your thought on it. I think there’s been a movement towards it and I think the first time I heard someone devolves at the revenue a few years ago, I can’t even think of who was like [?] has done it for a while, you have become famous for doing it. It blew me away right it’s this totally unique groundbreaking thing. More and more companies are doing it now, do you feel like it might be losing some of its impact and losing the maybe the bump that if someone came out today, let’s just say I came out today and exposed all of drips back in stuff, do you feel like it would still be worth doing or that the pros maybe kind of getting water down and a lot of people are doing it?
Josh Pigford [08:04]: I don’t know that I would suggest, I mean that’s kind of mixed back here because we sort of kind of partnered with Buffer and so it just opened startup thing where so baremetrics.com/open. You can see, I don’t know, it’s going to be seven or eight different startups that have all made their Baremetrics dashboards public. And like there’s this aspect of like wanting to support people being transparent because I think it can be interesting. The problem is, transparency just solely for transparency stake I would say has lost its kind of gimmicky at this point. I think when you can use it to tell some kind of story, right, like for us, the story it tells is like the Baremetrics story, right? Like it is a demo of our software. It makes complete sense from that perspective and the fact that the numbers, or our actual numbers kind of has this like, “Oh, that’s neat” kind of aspect of it that’s I think kind of been going a long way to maybe adding some sort of face to the company, but like [Josh Mo’s?] random billing software or like I don’t know, maybe he sells some subscription T-shirts or something like or his numbers are all that interesting, probably not to all startups but maybe to other T-shirt companies. And so, like if he’s taking the role of trying to help other T-shirt companies like show you how to start them and kind of the ups and downs, okay, like I think that can be interesting. Or like on a regular basis taking a look at your numbers and saying, “Okay. We had a big spike in user turn, let’s talk through that publicly about like why that happened and how we can fix it because I think that’s helpful to other startups.” But I think a lot of people just like start posing their numbers like because that’s just what people do, and I think there’s a little bit of vanity to it as well like I was guilty of it at first in the sense of like I would post on Twitter like our MRRs are X and some of that was just I’m excited because “Wait, hey, the company is growing.” But I mean to some extent sure, I’m like I feel like I was bragging to some extent too and so, I tried to be a little bit more humble about it at this point but –
Rob [10:07]: Sure. Yeah. I’ve definitely caught some people or in my mind like I feel like certain people are transparent to truly help others and then some folks, I do get the bragging vibe from them of like, “Look at me, look how cool I am.” That thing, and it gets an easy trap to fall into for sure.
Josh Pigford [10:25]: Yeah. And especially early on, like and if you feel like you get a little it attraction and especially we’re like it’s easy to look at yourself from the lens of basically the people that are in your little circle of influence and if maybe you’re doing better than the 10 guys that you hang out with then it’s like it can quickly it can kind of become a bragging thing but like if you’re doing it just to kind of be like a shell off, I think it kind of turns people off.
Rob [10:49]: Right, right. Yeah, there’s an interesting thing I was thinking about. It’s like there’s ongoing transparency which is kind of what you’ve done and what Buffer has done and then I think there’s like point in time transparency which you just touched on where you might write a single blog post about how churn went up, this is what it was, this is what we got it to, and here is what we did, and that’s super helpful, right? But you’re not necessarily just saying, “Here’s my churn every day. You can come and look at it. I think that point in time aspect is something that I’ve personally lean towards like I will, you better MicroConfs, I will often devote everything. I do it once a year if that and it’s not necessarily a commitment that I’ve made but I have an open source, or not open source but I have made everything open but I think there’s some value in transparency. I guess it’s just, yeah, I just wanted to hear your take on it.
Josh Pigford [11:32]: Well, I mean earlier on, the first and that is six to eight months after I made our stuff public, I would do a monthly blog post like, “Hey, here’s the July update of our numbers.” And what kind of touched on what worked and what didn’t but I mean to some extent it was like it was a point in time thing and not necessarily all that useful, and so we stopped doing those but like to me there’s a lot more value so content marketing works really well for us and specifically made once a week writing, end up of a blog post as I’m able to push up that week but like trying to just genuinely be helpful to other people and for us our target markets and other startups so rather entrepreneurs and so that’s sort of an easy thing for us, but I think like transparency when like when it matters to other people is what’s more interesting, right? Like I remember a couple of MicroConfs ago, we talked about making your numbers public like the one where you have shown, not this past but like a couple of months ago but the one before that would drip yeah, and how that just like showing the growth of that was so interesting to me and kind of opened my eyes a little bit about like, “Oh, okay.” So like that’s probably what something more successful looks like, well actually that might have been three years go.
Rob [12:55]: It might have been HitTail.
Josh Pigford [12:56]: HitTail, that was what it was.
Rob [12:57]: Yeah. So, this is when you were back before Baremetrics, right? This was when you –
Josh Pigford [12:59]: Yeah, yeah. So this was PopSurvey and contemporary and like stuff was in my head, I kind of go in okay but also at the same time and sight it was awful, and now that I’ve like you to have a different level of success there. And so, but when I saw like how HitTail, how you’re able to grow that and it’s like that’s when I sort of thinking like okay, like, “I could potentially make some software that could make a lot more money than it’s making right now and I just needed to find a different thing to do that with but that’s where it was super helpful, right?” So for you to release those numbers, because it was a motivator for me.
Rob [13:31]: Right. Yeah, that’s a good point. I want to switch it up a little bit and talk about funding because you’ve been a bootstrapper for a decade or more. You launched PopSurvey, you had Temper, I’m sure there’s many others that I haven’t heard of that you bootstrap. When you launched Baremetrics, it was getting great, growth numbers and at a certain point you were offered funding. The numbers were public, I’m pretty sure. It’s a half million dollars and you took the funding. And I know that there are some folks out there that say, “You should always take funding. You should never take funding.” And I’m not in either of those camps and I know that you weren’t either, so I’d like to hear what your motivation was and what your decision process was like when you were considering, do I keep Baremetrics all my own or do I take some money and essentially move faster but now have some investors that I’m working with?
Josh Pigford [14:21]: Yeah. So for me, there had been this point where Baremetrics was doing from like a growth perspective, talking in percentages, I think was doing between like 20% and 50% every month growth with MRR and so at that point, and our numbers are public so those are the kind of growth rates were investors start like, “Oh, that’s kind of interesting. How can I have the piece of the pie?” So I started getting all these phone calls or emails or whatever and I humored a few people but for the most part it was just kind of the typical like I’m just not comfortable with giving that much of the company and we just aren’t really jiving or you sound like a jerk, like all these kinds of things where it just wouldn’t sit right with me and I was fine with where we were at like I think when most of the funding email started, it was me for the most part and then like I had just hired another engineer. And so like, we’re doing fine and I didn’t have any really big aspirations at the time but I was still kind of riding the wave of like, “Oh, this works.” And so, yeah, then this $500,000 thing came up and just the terms ultimately like I mean honestly, if you start thinking of the health of the business and maybe what my goals are for the business, I would’ve been an idiot to not take it and I think that’s where my mind shifted change was like I was proud of the bootstrap aspect of it but when you start looking at things from a different perspective of like well the things that we could do with this money and what are the sacrifices relative to that. If the sacrifices aren’t anything I’m opposed to then well yeah, why not? So the evaluation, there’s 500,000 for at a $10 million evaluation which equates to 5% and –
Rob [16:06]: So they don’t have control?
Josh Pigford [16:07]: No, and so technically, so it’s a safe like they don’t even have the shares. They get the shares in the event that we sell or that we raise an all-around –
Rob [16:14]: Raising it around. Right. So it’s essentially a convertible note, right, it’s a loan –
Josh Pigford [16:19]: But it’s not even that, I don’t have to pay it back unless like if I shut the business down, if there’s no time, there’s no date attached to anything, like nobody’s hand can possibly force me in any perspective. So, like it would’ve been dumb for me to not take it.
Rob [16:35]: Yeah. Those are some very generous terms.
Josh Pigford [16:37]: Right.
Rob [16:38]: And when you’re making that decision, there’s this money in the table and obviously the terms are favorable and that’s the interesting part is I have stopped saying, “I won’t take funding.” And I’ve started asking myself these questions like when I go and refuse or whatever like, “Under what circumstance would I?” And it’s a different way to ask it but obviously, there were very appealing terms. You took the money. Did you know when you took this half million dollars, how you were going to spend it?
Josh Pigford [17:03]: Yeah, absolutely. I was itching to hire some people like after I started thinking through, when that was suggested as, “Hey, we can put in this amount of money.” Like I instantly started sitting down and brainstorming of all the ways that I could spend it and ways that what does Baremetrics need to grow and to see the goals through that I had that can keep Baremetrics growing and people ultimately what was going to make that happen. So, that was an easy one, for sure.
Rob [17:34]: And how long? Has it been about a year now?
Josh Pigford [17:36]: So, it’s been 10, let’s see, we closed on the deal in I think September.
Rob [17:42]: Okay. So like 9 months, 9-10 months, yeah.
Josh Pigford [17:44]: Yeah. Somewhere around there.
Rob [17:45]: So now you have some perspective and some distance from it, was it the right choice? Was it a good choice for you?
Josh Pigford [17:51]: Yes, absolutely the right choice. I think in [?] sight, I think I would’ve done a few things differently. There was a little bit of a, “Holy crap. There’s half a million dollars today in my bank account now. Woohoo. Let’s spend some money, right?” And I mean part of it is the investor wants you to spend their money. They’re giving it to you not so it just sits there in a bank account but at the same time like I probably spent too fast and at the time I was still maintaining the like 20%-30% average growth rate per month and then like shortly thereafter, it started the growth rate, it started like not tanking but it wasn’t 20% or 30% or more.
Rob [18:28]: Leveling out.
Josh Pigford [18:29]: Right. It’s just like that was inevitable but it happened over the course of 30 to 60 days like it happened pretty quick and I think from that perspective, I’ve kind of ended up overshooting early on how much I was spending. So we’re like at a point now like we should be fine without like needing to raise any more money but it’s just like having to be a little more cautious with our spending money at this point.
Rob [18:51]: Right. Yeah. When you’re growing like that, it’s easy to get ahead of yourself and say, “Well, in six months, we’re going to be at 50,000 or 60,000 recurring revenue and therefore we need to staff up to all of these people and it’s easier to spend money quick when you’re growing up fast, I know the feeling. Now, you leveled off after you raised the money, did you catch any flock from your investors? Did they expect that or were they kind of concerned when that happened?
Josh Pigford [19:11]: Yeah. So, they’ve just been helpful. We have a roadmap wise with the stuff that’s on the roadmap is partially influenced by customers. It’s partially influenced by like investor input about ways that we could potentially expand from a market perspective. And so, if anything, they certainly weren’t like, “Oh man, this is best bad news.” Like sort of, “Hey, yeah. There are some things that you work on to probably fix these things and so that’s us kind of getting [?] now.”
Rob [19:40]: Right. Now, typically, if you’re going to raise an angel round, the majority of folks are going to give you this money, expect the series A then a series B and they want $100,000,000 evaluation, right, or they want $100,000,000 market. Was that the expectation that was communicated to you or did you guys talk about kind of the fun strapping around where you said, I’m going to raise this single round, I want to use it to get the profitability and build a nice profitable business, was any of that discussed?
Josh Pigford [20:05]: So some of those discussed, like if we think of the purpose of my funding round, my money technically came from General Catalyst which is a big VC. They’re not typically like angel round investors. But as part of this stripe specific fund the faith created and they’re like one of the main investors in stripe. So, and for them it’s like it’s a mixture of sure, they want their money back with some returns on it but it’s also this sort of load confidence in the stripe ecosystem for them so like marketing play is not necessarily the right phrase but it’s like for them, it was just as much about saying like, “Let’s beef up. Stripe, they’ve got however much hundreds of millions of dollars put into the stripe. So, if they can make stripe more successful, then this is like then that kind of pays off indirectly for them.
Rob [20:56]: It’s almost like a strategic, it’s a strategic investment for them, right? And to build the ecosystem.
Josh Pigford [21:01]: Exactly. And so that’s kind of again, like that was one of the way that I was sort of unique from that perspective. And so that’s sort of when I also have a little bit stress from the, “Oh, man. I’ve got to get their money back” from a I’m a good human being perspective like I don’t want to lose their money but at the same time they’re not like screaming at me about anything [crosstalk] –
Rob [21:22]: Yeah. That’s nice. So, to kind of wrap up the funding portion, we talked about the advantages and kind of the no brainer aspect of raising this round for you, you’re nine or ten months out, have there been any major kind of negatives or regrets or like bad things that have brought about?
Josh Pigford [21:38]: Not really. I think in hindsight I would be a lot more careful, and this is just naiveté on my part without the evaluation side of things because of you think of it in terms of how much of the company are getting up like okay, at the end of the day kind of giving up 5%, fine, whatever. Like I would give up more, right? So I have thought like, hey, what about I could actually technically add onto the same round even nine months later and that would be great, more money, right? But the probably is I kind of got like a Silicon Valley evaluation which in a lot of times are a little inflated. And so, it makes it a lot harder for me to raise additional funds if I wanted to because a small time investor is like, that’s not worth it for them at that evaluation because they’ve got such a tiny piece of the pie. So, I think in hindsight I probably even though like they suggested the evaluation, I can hindsight I probably would’ve should’ve downplate that a little bit so they get easier to raise more.
Rob [22:41]: Yeah, right. Instead of potentially having to have a downround later or –
Josh Pigford [22:45]: Exactly, right. Because nobody will stop so –
Rob [22:47]: Right. Do you watch Silicon Valley on HBO?
Josh Pigford [22:49]: Yeah, it’s great.
Rob [22:50]: I love that show. So remember when he negotiates with the VC because he wants a [?] evaluation?
Josh Pigford [22:55]: Right, like that’s that.
Rob [22:56]: Yeah, yeah. I totally get it.
Josh Pigford [22:58]: And it was sort of one more point here to the whole evaluation thing like I raise money from a big VC fund whereas there is a whole slew of by single person angel investors, a lot of them completely disconnected from the tech scene who would love to give people money for pretty decent evaluations and like not have a lot of demands about things, like I think that’s sort of where the dogmatic bootstrapper mindset comes from is all the really awful junk that they read on tech grunge and that’s not the norm like. That’s not what most of the investment world looks like just because the rest of it is just boring, it makes for bad news. So, I think like if people are interested in like say they just want $100,000 like a really long way for them. You can probably find one angel investor or a few angel investors who would come in together at a decent evaluation to give you that money and that would just be genuinely helpful or maybe they’re completely hands off and they just kind of want to get their hands dirty in the tech space. So, I think if people are interested in that they should like ignore the hype that they read elsewhere and just kind of start poking around places like AngelList to find like individual angel investors who were just kind of want to help people out because they exist for sure.
Rob [24:22]: Right. Yeah. I like the term colon from customer that I usually call it fund strapping and that’s where you raise a small seed round of I like to think of it as between 100,000 and 500,000, I’m kind of being arbitrary about that but I think that’s probably the range you’d want to do it and you raise it from between one and five angels and it’s like you said, they don’t take control, they’re going to board sit. They can’t kick you out and then you use it essentially to get to profitability and it’s more of the way that traditional businesses are funded say a restaurant or a carwash or dry cleaner, you’re just probably going to have a lot of higher profit margin than those, so it’s an interesting part.
Josh Pigford [24:55]: And I don’t want see, that’s the thing like there is I guess a small possibility that it would make sense for us to try to raise a series A or something like that, but what I am stanchly opposed to is having to be the founder, a founder who just raises money all the time because there are so many that do have to do that where the CEO is essentially the guy who like, okay. He raised around well, six months later he’s going to start again because it takes six months to close another realm. He has to keep doing that over and over and I hate that junk. So, I have no intention of doing that. Profitability for me is the goal.
Rob [25:32]: Right. Yeah, I think of it, I use the phrase building slide decks instead of building a business, right? And I prefer to build the business, so [crosstalk]. Cool. Okay. So, our last topic of the day is competition. I like to think that any time you have a good idea and you execute on it and you achieve some success, you are going to by nature bring competition into your space and you have done that well, you had a good idea with one-click analytics for stripe. You obviously have success and more public about it and so many competitors have sprung up around Baremetrics. Do you think that competition is good? By I say good I mean beneficial to you or because you kind of hear both mindsets of well, competition validates the market but you are already in the market, you had already validated that was working so do you feel like, boy, having more competition is helpful and it’s generating more attention around the space or do you feel like the more crowded it gets, the harder it is to be heard above the noise?
Josh Pigford [26:30]: So, to me I think of it from the point of view of the customer, right. So, competition is ultimately good for customer which I think ultimately is good for us because we’ll hear indirectly a customer say like, “Hey, I was checking out their competition and they had X feature which means, translates to they solve X problem that I have.” So, can you solve that problem for me? Well, maybe not right now but if I hear it from enough people, then yeah, we’ll try to solve that problem for you. And I think that it’s good from that perspective or it stops being good is when there are two dozen people or companies who are all kind of the same. And so, we’re trying really hard, I think this sort of space, this sort of like analytics that you don’t have to think about or work to set up kind of set up a space. We’re at a point where we’re kind of start to kind of fork where there’s a lot of people playing the baseline metrics game where click here, connect to stripe account and you get MRR lifetime value cheering all these stuff. But on that level, it’s not like it’s useful but there has to be something else pass that I think for it to be really valuable but that also it’s really difficult to build but that’s where I feel like we’re starting to kind of fork off on our own is trying to move away from my numbers game and move into the genuinely useful for making business decisions game like helping people understand why things are, what they are, and how to fix them and that kind of thing. And so I think the prevalence of so many competitors right now has helped pushed us in that direction which I think is ultimately a positive thing, but I mean like holy crap is that annoying.
Rob [28:09]: You’ve seen people pop out with your whatever and I don’t know anybody who’s done this but I would have to imagine because I’ve seen it with my stuff, people are popping up probably using your same tagline, probably using names that are similar to use, probably using designs that are similar to yours.
Josh Pigford [28:22]: Oh, sure. That’s amazing, I mean almost there’s one that I’ve seen making the rounds a lot more maybe their content stuff like the stuff that they randomly post on their blog I’ve seen a lot and I’ll go to their software or whatever. It is a direct rip off of Baremetrics and it’s just like how do you sleep at night? And people are using our logo but like changing from a different shade of blue or something, I mean just stupid stuff that’s like at the end of the day, copycats, their motivation is purely to try to make a quick buck and in a year they won’t exist. But for the year that they are around like, I mean you’re like the annoying kid at school that keeps tapping me on the shoulder like, go away. That’s kind of how I feel about them.
Rob [29:04]: Yeah, no, that make sense. You were in the space where the onboarding is really easy, right? It’s one click to get in, it seems like that would be a double edged sword. It’s easy to get people onboard but then it’s easy for people to switch. Yeah.
Josh Pigford [29:16]: Switching cost are way too low right now and so yes, that is probably our number one problem from like a charm perspective is that switching cost are so low which is in the short-term good for a customer because it gives them a lot of options. At the same time, it makes for a customer who doesn’t want to get invested in their software which maybe for them, that sounds like a good thing. But, I think when you’re like so wishy-washy about trying to solve at the end of the day solve your own business problems, being wishy-washy and not saying like, “Here’s what we’re going to use. Here’s what we’re going to stick with, and this is what we’re going to base our business around.” When you stop acting like that, you end up with stuff that’s just not useful at all. And so, yeah, so we’ve got a bunch of stuff that’s coming out soon that the switching cost will be much higher and that sounds a little like just rude, but at the same time, I think it ultimately will make for software that people in the long-term get a lot more value out of.
Rob [30:11]: Right. Well, I mean it’s hard if you have 20 people in the space, or 15 people in the space with no maybe one clear leader and everybody else is kind of milling around creating noise. The customer is actually not getting the best software because everybody is competing whereas if they’re only two or three in the space and they’re really [dooking?] it out, then you’re going to get some awesome new features, right? You’re going to be innovating against each other and that kind of stuff. So, I think it’s interesting that it’s essentially, it’s like the one-click stripe analytics as you said has almost become a baseline for a lot of these products and you know how to rise above it which in the short-term is probably painful and it’s annoying to see all the competition but in the long-term it’s going to make for better products and just going to make you move pretty fast which I think is better for customer.
Josh Pigford [30:55]: Yeah, 100% agree with that.
Rob [30:57]: Cool. All right. So you’ve actually have a customer, I don’t know how – or I’m sorry, not a customer but a competitor crop-up who’s offering one-click stripe analytics for free, so they’re just kind of doing a free-mium model, when you first heard that news, I can imagine the look on your face, was that brutal was it were you kind of like, “Yup. I knew this day would come.”
Josh Pigford [31:17]: I was totally wasn’t surprised. I think start kind of poking around to see okay first, how are you even doing that? Because that gets expensive to store massive amounts of data and processes, like it’s expensive. So it’s like how are you guys pulling that off, and then you start realizing, okay. This is actually like a lead generator for their other business that which is a completely legitimate business, the other one is and lots of people love them but it’s like when you’re like releasing tool just as a lead generator, then no way does that software sort of stand the test of time because it’s ultimately like a loss leader for you and that’s just so hard to maintain especially on a small team. So they don’t worry me and our customers feedback on that has been basically the same that like, “Hey, we’re using this other one because it’s free but like no way would we ever stop using you guys. Their stuff is just not good.” So, it doesn’t bother me and in reality, so in the next month or so, hopefully, we’ll actually have a free version. I think this plays into our long-term plan, like in the short-term we actually may take a little bit of a hit but in the short-term, yeah, we’ll start playing a little bit of the free game, the free-mium game and see how it plays out. We haven’t, because we’ve never had a free plan, I mean a year and a half in and we’ve never tested it. So, it seems a little short-sided of me to not at least humor that as a possibility.
Rob [32:43]: Right. As a test, and so that, I mean it was kind of my next question is like so how do you compete with free because obviously this is going to happen to anyone who has a good idea and has some success, we’re eventually going to get a free competitor and it sounds like so far, number one is you know the game. You’ve been doing this now for 18 months, 2 years. And so, you know what it takes to really run this service in terms of cost and team size and then continue to innovate. And number two, is potentially fight fire with fire, maybe release a free version and to continue to build in an innovator, you have to stay ahead of the game. You have to keep building features that they don’t have.
Josh Pigford [33:19]: Exactly. It’s just one of those things where you kind of have to just, I know what our goals are and I can’t make any assumptions about what my competitors’ goals are. I like the types of problems that one competitor is solving for their customer base however small it may be is not necessarily the same as what I’m doing. And so, it would be super short-sided of me to say like, “Oh, well they just launched some feature. I need to do the same thing.” No, not necessarily, like their customers may want that but our customers may not. Or, the way that we solve that problem is totally different. So, I think it’s just being hyper focused on what it is that you do and you do well is kind of the way to not worry about competition.
Rob [34:05]: Well said. All right, sir. So, folks want to keep up with you online aside from checking out baremetrics.com, what you get is one-click SAS analytics for stripe. How would folks keep up with you whether it’s blog url or Twitter handle?
Josh Pigford [34:20]: So Twitter is @Shpigford and I that’s really about it. I don’t blog much anymore.
Rob [34:26]: All right. I would recommend your podcast which is called Founder’s Journey.
Josh Pigford [34:30]: Yup.
Rob [34:30]: Is that right? I’ve been listening to it for the past couple of months and it’s essentially you reading some blog post that you’re posting on the Baremetrics blog and adlibbing, you’re adding more stuff which has been kind of cool.
Josh Pigford [34:42]:
Rob [34:43]: Very good. Well, thanks again for coming on the show today, man.
Josh Pigford [34:46]: Thanks for having me, Rob.
Rob [34:47]: That wraps us up for today. Thanks again to Josh for coming on the show. If you have a question for us, call our voicemail number at 1-888-801-9690 or email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Out of Control by Moot used under creative commons. Subscribe to us on iTunes by searching for startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, and we’ll see you next time.
Episode 243 | The Tools We Use to Run Our Startups
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about the different tools they use to run their startups.
Items mentioned in this episode:
Team Communication
Customer Communication
Marketing
Hosting
Tech Health
Moving Money
Back Office
Transcript
Rob [00:00]: In this episode of “Startups for the Rest of Us” Mike and I talk about the tools we use to run our startups. This is “Startups for the Rest of Us,” Episode 243.
[musical interlude]
Rob [00:18]: Welcome to “Startups for the Rest of Us” – the podcast that helps developers, designers, and entrepreneurs be awesome at launching software products, whether you’ve built your first product, or you’re just thinking about it. I’m Rob.
Mike [00:26]: I’m Mike.
Rob [00:27]: We’re here to share our experiences to help you avoid the same mistakes we’ve made. [Where are we?] this week, sir?
Mike [00:32]: I’m going on vacation next week to Hershey Park in Pennsylvania and taking with us – with me, I guess! [laughs] I bought a couple of Kindles for the kids, and I have to say, the setup process for those is not terribly intuitive, if you’ve never used a Kindle Fire before. The actual setup of the Kindle was fine – it walks you through very easily – but if you’re trying to set it up for a kid to use, it wasn’t obvious what you had to do in order to wire everything up to a household or create a kid’s profile, and things like that.
Rob [01:02]: Did you get the Kindle Fire Kids version? They have the ones with the big bumpers and they have free replacement and all that?
Mike [01:08]: I did not, actually.
Rob [01:09]: I wonder if those are all set up for that already. I bet they are.
Mike [01:11]: Maybe. Maybe. Yeah, that could be. I just was like, “I’ll just get the cheapest thing there, and if they break it, I’ll just buy a new one.” [laughs]
Rob [01:17]: Right. That may be why they don’t make it super obvious to do the kid thing. They kind of push all that over to the kid version of it.
Mike [01:25]: Yeah. I mean, it wasn’t too hard because I’d used – I’d set something up similar on the Google Nexus that I had, a while back. But, of course my kid dropped that on a concrete floor, so that didn’t last for very long. [laughs]
Rob [01:35]: Yeah.
Mike [01:36]: But I did get some decent cases for the two Kindles. We’ll see how long they last.
Rob [01:41]: Nice.
Mike [01:41]: I’ll give you an update as soon as they smash one.
Rob [01:43]: Yeah, for real. I’ve been sick, man. It took me down, about two days ago. I was so sick I couldn’t listen to podcasts.
Mike [01:52]: Are you serious?
Rob [01:52]: Yeah, it was awful! [laughs] That’s me – that’s as sick as I get! I like, put the earbud in, and I was trying to listen, and I just couldn’t. My throat hurt, and my – it was pretty crazy. Yeah, when I can’t work, and I can’t listen to podcasts, those are kind of the two low points of me.
Mike [02:10]: I can’t imagine being too sick to listen to podcasts.
Rob [02:12]: [laughs] I know. It was terrible. I was really bored then, you know. Because it’s like, at least if you’re sick and you’re lying there, you want to be able to listen to something. But I couldn’t focus on it, and it was distracting. One of my ears was all jacked, so it kind of hurt –
Mike [02:24]: Wait a second! Distraction from what? What else did you want to do?
Rob [02:26]: [laughing] I don’t – from the pain? I don’t know! I just couldn’t focus on it. I’m just getting back to it – I’m actually starting to lose my voice now. You know how like, after you get over a head cold, you don’t even feel bad any more, but then you sound really bad? That’s kind of where I am entering now, and so I get the feeling I’m going to lose part of my voice here over the next couple of days.
Mike [02:43]: Now how did you get a cold? Because isn’t it like a hundred degrees there?
Rob [02:45]: It is a hundred degrees. I have no idea! It is the worst to be – it’s bad to be sick and walk out, and have it be a hundred degrees. It just feels terrible. It feels wrong, right? It should be winter when you have a bad cold and your head’s all stuffed up and your ears jacked up. I don’t know how I got it. Probably my kids.
Mike [03:05]: [laughs] You can always blame the kids –
Rob [03:06]: Indeed, indeed.
Mike [03:06]: – [?] for just about anything.
Rob [03:08]: Hey, today we’re talking about the tools we use to run our startups. We’ve broken them down into several different categories, including things like team communication, customer communication, marketing, hosting, etc. We’ve never done an episode like this, and it struck me earlier today that it’s reasonably frequent question that we get, whether I’m at a conference, or I’m doing talks, or whatever.
Folks ask – they don’t ask, “What tools do you use in general?” But they’ll say, “I’m trying to get this done. What do you use for that?” I found that just over the years in talking to a lot of people and just being on the interwebs like we are, I tend to have some type of recommendation. It’s pretty rare that I need to Google for something.
If they say, “How do I track podcast stats?” “I have – well here’s what I use, and it works reasonably well.” Or, “How should I set up payroll?” Or, “How should I track online purchases?” or whatever. I mean, they’re typically – each of these, I at least have – I may not be the expert on it, but at least have used something, and I have a go or no-go recommendation on it. You and sat down, we put our heads together, and we put together kind of the – as complete a list that I think we can of the tools that we use to run our businesses.
Mike [04:13]: I think the interesting thing is that a lot of these tools, there’s overlap between them. For example, you’ll use certain tools, and I will use other tools in some cases, but they solve generally the same problem. The interesting part is that, if you start looking across a broad spectrum of startups, people have different preferences for the tools that accomplish the same types of jobs.
Just because we have a tool that we use and we like, doesn’t mean that it will necessarily work for you, but there are certain categories of tools that are generally applicable to most startups. I think that, just knowing what else is out there and what other people are using can be really helpful in trying to figure out how to address some of the different problems in your own startup.
Rob [04:51]: Right, and that I think that’s good you pointed that out, because just because we use those tools, doesn’t mean there necessarily are the best breed, or necessarily are the one that everybody should use. That’s why there are competitors, because they offer different feature sets at different price points, and that kind of stuff.
This is kind of a starting point, and if you’re in a similar situation to us, where you’re a very small company, let’s say one to ten employees I think would fit, then these tools would probably be reasonably good for you. I think if you’re in an enterprise, a lot of them would not be. It really depends on the situation you’re in, and your budget for that matter.
To kick us off, our first category is team communication. This is trying to stay up to date and keep informed between your internal team, not with your outside world. The first thing that we use is for chat, and it’s Slack. Most people have probably heard of it. The funny thing with this is, Derrick introduced Slack into the Drip team, and I was kind of resistant to it, because I don’t love IM. I don’t love instant message. I feel like it interrupts. We used to do ICQ back in the day when we had a web development shop, and I just felt like it was constantly kind of, people screwing around and it didn’t really push things forward.
But pretty much, within a week or two, I realized how invaluable Slack would be. Even though we do work in an office all together at least two days a week, there’s still two or three days that we’re apart, and it’s really, really helped improve our communication during those times.
Mike [06:08]: Yeah, I use a combination of Slack and a couple other things as well. But one thing that I’ve used kind of for a long time now is HipChat, which was out, probably quite a long ways before Slack was available. I’m actually considering moving everything over to Slack because I’m a member of a couple of different Slack chat forums, or Slack chat groups, so it would be convenient to have them all on that same technology, so that I don’t have to have HipChat and Slack at the same time. Because the only I have HipChat for is for internal stuff. It’s nice that with Slack, it’s all web-based, so you don’t have to have a client on the desktop in order to use it.
Rob [06:45]: Yeah, I do use the desktop client, but you’re right, you don’t. I think one of our team members purely does it on the web, and I think it’s a perfectly acceptable experience.
I have to be honest, I am completely shocked at how quickly Slack grew. When I first heard the idea, I was like, “Yeah, there’s HipChat, and there’s Campfire, and there’s like ten others that already do the exact same thing. But somehow they did it differently, and their growth has been insane. Hats off to them, for basically being a B-To-B company with a growth curve, like a B-To-C company is. Pretty impressive.
The next tool that we used internally here, building Drip, is GitHub. We use GitHub for [our?] Source Control, and then we use GitHub Issues to track our development issues. Then we use a layer that’s built on top of that, called Codetree. It’s at codetree.com. It’s actually build by one of our developers internally. His name is Derrick, and he launched it as a small [Sass app?], and it sprinkles enough cool stuff on top of GitHub Issues, that it is super valuable.
It allows for prioritization, and assigning to different people, and it can span multiple projects, so if you have a lot of GitHub projects and you want to see those all in one place, it’s got a kanban view, so like a trello view or a list view. It’s got just enough stuff that it’s kind of made it invaluable. I wouldn’t have moved over to GitHub Issues, because we were using FogBugz. But once Derrick built Codetree, that was kind of what convinced me to move over there. This is not for support. Remember this is for development, and our internal kind of development and issue and feature communications.
Mike [08:09]: I still use FogBugz, and I still like it, and it works reasonably well for everything that I use it for. But I think the interesting thing here is that we kind of put this set of tools underneath team communication, because you can use it for assigning tasks to different people, assigning features. Actually, you talked to me a little bit before the podcast about how you use the notifications in there to – when something new comes and has been added to Source Control, that you get a notification that something has been completed, and then you turn around and you notify your customers.
In some ways, I see it as, essentially work flow for the internal development team to say, “Hey, this particular thing is complete. Send something over to the marketing team,” because you’re kind of the marketing team. Then that marketing team can then let the customers know, “Hey there’s this new feature that you might be interested in.
It becomes more of a – not just an internal team communication, but it helps you formalize that process of doing that internal development, send it over to the marketing team, and then letting the customers know that something new is available for them.
Rob [09:12]: Exactly. It keeps the stuff out of email, right? Then it’s all tracked in one place, so you can just go back to the issue in GitHub, and kind of the whole flow of our whole conversation about that issue as we hammer it out is all there in GitHub Issues.
Our other app that we team communication, no surprise, it’s Skype. We will video Skype when we have a longer discussion, because sometimes typing stuff out into Slack just takes too long, as needed. Doesn’t happen too often, it’s surprising. Maybe it’s only once every couple weeks. We also work a couple days a week in the same office, and so we do take care of a lot of the face-to-face stuff on those days, and then every couple weeks we’ll have one of the off days that we’ll need to have kind of a face-to-face, and that’s what we use Skype for.
Lastly, with team communication – kind of an honorable mention here, because I didn’t know where else to put it – is Trello. We don’t actually use it for team communication. We really – each individual team member who uses it, uses it for their own to-do list and prioritizing and moving stuff around. But I do know a lot companies that have shared Trello boards. They drive entire CRM processes off of it, or they’ll drive their development off of Trello. I did want to put it here as kind of a collaboration tool that I know a lot of companies are using.
Mike [10:22]: I use Trello as well, but I’ve started looking at a product called Workboard, which you can find at workboard.com. It’s almost like Trello, except that it’s essentially like a project management layer that’s added on top of Trello. There’s no real integration between Trello. It just is a Trello-like experience. It kind of crosses between what, I guess, FogBugz used to offer in terms of assigning cases to people and issues and things to do. I used to use Fogbugz for that, but obviously it gets expensive when you have VA’s.
But with Workboard, you are just essentially paying for that one manager account, or however many managers you have in the company, to be able to see some of the different dashboards and things like that. I think that Workboard adds enough of a management layer on top of it to be able to push tasks through what they “workstreams,” that you can use those workstreams for different projects and you can see how those different projects are progressing.
It’s something I’m still exploring, but it looks like a good alternative to Trello if you’re looking for something that has a little bit more of the project management functionality built into it.
Rob [11:25]: Yeah, I hadn’t heard of it before you mentioned it, and I’m pretty impressed with the – at least the tour they have on their website. Looks like something to keep an eye on. I think that it’s like a strongly typed Trello. There’s more to it, for like software development teams or for more structured timelines, and I think there’s a real benefit to that.
Mike [11:41]: Yeah, and it is free, if you just want to go for their basic team. They do have like a per-manager plan, which is either 49 or 69 dollars a month, but then you can have unlimited team members with that. The advanced features and stuff include like, progress heat maps, and individual goals, and goal dashboards, and things like that. But I think that most people could probably get away with just like the basic team plan, which is free.
Rob [12:03]: Our second category of tools is customer communication. The first tool we use is for customer support, and we used to use FogBugz up until, maybe 60 days ago. We moved to Help Scout, and I highly recommend Help Scout. We’ve had a very good experience with it. It’s an easier UI to work with than FogBugz, and than a lot of the other support tools I’ve seen. They have keyboard shortcuts, kind of like in Gmail. If I wanted to go through 10, 20 issues at a time, it’s super easy. I never have to touch my mouse. Hit “R” for reply; hit “N” for note. I can change statuses – all with my keyboard.
The other biggest perk I found is on my mobile. I check my email, an issue comes in. It’s just a notification from Help Scout that says there’s a new issue. If I respond directly to that email, it goes directly to the customer. If I respond to that issue, but I put the “at” sign, and I put “note,” it’ll add a note to it. Then I can reply again and put “at assign” and I can assign it to another team member. The last one, I can reply and put “at close,” and it’ll close an issue. I can do my complete support work flow from my mobile without installing an app. It’s all from within the email itself – I use the Gmail app on iPhone.
It has rocked my world. I really like, because I find that I do a lot out and about. I do a lot on my iPhone when I’m in line, or when I just have few minutes to check stuff, and it helps me not have to see, “Oh, I got a notification. I’ll handle that when I’m back at my computer.” It has streamlined my work flow for sure.
Mike [13:31]: I’m still using FogBugz for all my customer support stuff, and it works fine for what it is. Then there’s the cases where something’s complicated enough that you have to get on the phone. For me customer support kind of falls into this situation where it’s a very quick reply, and I can just do it through FogBugz, or it’s very involved and I have to get on the phone. It doesn’t seem like I get a lot of stuff where there’s this middle ground.
Rob [13:52]: The other communication tool we use of course is dealing directly with whether it’s partners or maybe at the higher, medium touch stuff that we do, sales, anything like that. That’s just going to be straight up email. Of course, I’m in Gmail. Actually, all our team members are in Gmail, everything forwards into their Gmail, and they can segment it out, and they can reply as their GetDrip account. I found that works well, because I have like, whatever it is – 9 email addresses, and I certainly don’t want to login to 9 different clients. So I have everything come in, things can be labelled and filtered as needed from there.
And then, I’m a big fan of Boomerang and Reportive. Those are two plugins that I use in Gmail, and they help me – Boomerang of course helps me send stuff later, or boomerang it back into my inbox to make sure that someone acts on something. If I don’t hear from them, I get reminded of that. Reportive just gives me a nice little head shot, and a little bit of information about the person who I’m emailing with.
Mike [14:45]: The other one that I’ll throw into this category besides Boomerang and Reportive is Sidekick. Sidekick is from HubSpot. It’s another plugin that you can essentially use alongside your Gmail account. What it does is it allows you to send somebody an email, and then it will trigger a notification for you every time that email gets opened. If you send somebody an email, and they look at it three times or five times, you’ll get a little notification pop-up that shows you that that person looked at the email or saw it.
This is really good for high touch sales, because you can send somebody an email, and if they take a look at that email, you can see that. Then you can either call them or you can send them a follow-up email if you haven’t heard from them in a couple of weeks, and then suddenly they start looking at this particular email that you sent to them. It kind of triggers, on your end, this notification that says, “Hey, this person’s looking at your email that you sent them two weeks ago. You might want to follow up with them now. It’s probably a good time.”
Rob [15:40]: Our next category of tool is for marketing. Mike, I’ll give you three guesses as to what I use for email marketing, but your first two guesses don’t count.
Mike [15:48]: Oh, they don’t count?
Rob [15:49]: They don’t count.
Mike [15:50]: I’ll have to go with AWeber and MailChimp.
Rob [15:52]: [laughs] That is perfect!
Mike [15:54]: [laughs]
Rob [15:54]: Perfect. Surprise, I use Drip for all our email marketing, and I’ve moved – again, I have like 8 Drip accounts. I had like 3 or 4 MailChimp accounts. But now that I have the ability to kind of expand at will, I have a bazillion Drip accounts, because we have the podcast, and we have MicroConf, and there’s ZenFounder now, and my Software by Rob lists, and then we have the Drip and the HitTail – you know, it just goes on and on. Drip is what I use – I think we do still have one MailChimp account for kind of MicroConf, Micropreneur Academy stuff that we haven’t moved over, but I’ve been deleting users out of that to get it pretty inexpensive. At some point I think we’ll migrate all of that over to Drip.
The other tool I use, surprise, is HitTail. I use that for long tail SEO. That’s obviously another tool that I own. Helps find keywords in your traffic that you should be ranking for, but aren’t, and helps you rank for those. The next one is for search engine rankings, I use –
Mike [16:48]: Oh, go back and don’t skimp on the other thing that HitTail does. You can order some new articles for your website based on what some of those keywords are that you should be ranking for.
Rob [16:58]: Yes, and I do that quite frequently. I use our article ordering service often, and my bookkeeper says, “What are all these $19 charges on your account?” I was like, “Well, those are technically going to us.”
[laughter]
Rob [17:10]: I use that feature a lot. Then, next is Serpfox, and I use this to track search engine rankings. I’ve used a number of different tools. A lot of them go out of business because technically tracking search engine rankings is against Google’s terms of service, because they don’t have an API for it. You basically have to scrape their search results. Most of the companies that used to do it are gone.
But two that I like are Serpfox and AuthorityLabs. I’ve gone back and forth between using both of them. I happen to be using Serpfox right now, but I really do recommend both those tools. They do it solid and I feel like they’re in it for the long haul. How about you? What do you use for SEO stuff.
Mike [17:46]: Mostly, I use Moss. It doesn’t necessarily give you great search engine tracking, but it does give you some level of search engine tracking. But I do like to use it to kind of measure against what the competitors look like in my spaces. Obviously it’s significantly more expensive tool than some of the other things out there, but at the same time they have access to huge amounts of data. It’s nice to be able to kind of rely on some of their data sets to take a look at how your marketing results are coming in, and get some idea of what their impressions are of what the landscape looks like.
Rob [18:18]: I agree. That’s Moss’s competitive advantage, is no one else has their open site explorer stuff, and all the data they have. They really are on top of the game. They have by far the best competitive analysis tool for SEO that I’ve seen.
Mike [18:32]: They also have Followerwonk, which, if you have a Moss subscription, then you get additional insights into Followerwonk that you wouldn’t get without it.
Rob [18:40]: Right. There are a few other tools that I use intermittently, kind of when I’m starting a new business. I mean, something like Market Samurai, or Micro Niche Finder, which I heard is not for sale anymore. But those types of things, when I’m looking for a new niche, or looking at [?] or research or that kind of stuff, I do use them. I didn’t really include them in this list, because they’re not what I use on an ongoing basis. Most of the things we’ve listed here are things that I’m subscribed to. I kind of went to my credit card statement, and looked back at “What do I pay for on a recurring basis?”
As well as some free tools of course, that don’t charge anything, such as Hootsuite, which is on the freemium model. I’ve been using them for years, and just never hit the point where I needed to pay for them. I have to be honest, I don’t love Hootsuite as a Twitter client, but all the other Twitter clients I’ve used have eventually been bought or shut down. Twitter bought one of them, and removed a bunch of functionalities, so I couldn’t do stuff.
I’ve stuck with Hootsuite because it’s been consistent. It’s not the best thing I’ve seen. It does allow for like, multi-column views and some pretty sophisticated scheduling and other stuff. I just can’t seem to find another client like that, that will sync up with an iPhone, that kind of does all that I need, so, Hootsuite is it.
Mike [19:47]: Yeah, I’ve used Hootsuite in the past, and right now my primary mechanism for doing some of that stuff is Buffer. You can find that at bufferapp.com. They’ve got a really good series of blog articles on their website that they publish on a very regular basis. Some of them relate specifically to their company, but some of them are kind of more, general purpose in the startup world or in social marketing, that sort of stuff. But it’s a useful tool. It doesn’t have all of the features that Hootsuite does, but Hootsuite doesn’t have all the features that Buffer does either.
Rob [20:16]: Our next category is hosting, and for the most part we use Amazon. We use EC2, we use Amazon S3, and frankly we pay Amazon a house payment for a nice California home every month, in the amount of servers and bandwidth and storage space and all the other stuff that we use.
Mike [20:39]: Yeah, I use a combination of Rackspace and Microsoft Azure. Microsoft Azure, their platform I use a bunch of the different things that you probably use over on the Amazon side. Not just the hosting of VM’s, but also the disc storage as well. Then, with Rackspace, that kind of where I have the static servers that I want to just be able to maintain myself.
Rob [20:59]: Yeah, the other hosting provider that I still have an account with is DreamHost, and I still think that DreamHost is a good shared host to get started with. When I have smaller sites, like lower traffic, I still put them up on DreamHost first. I actually host a lot of podcast files, because they have a little CDN built in, that allows it to be reasonably downloaded around the world, and doesn’t need to be super, super fast for the podcast download files. Try to get Libsyn or something for the volume – the terabytes of download that we get every month would be really expensive. It’s nice to be able to do that. Then they actually do a lot of email hosting as well.
Mike [21:36]: Yeah, I use DreamHost for exactly the same reasons. Because they give you basically unlimited ability to download stuff, and then all the different email. The other one that came to mind is WP Engine, which you can use that for all your WordPress hosting. We use it for the podcast site, for MicroConf sites, bunch of other stuff as well. But, WP Engine is just awesome for hosting anything WordPress related.
Rob [21:58]: Yeah, that was the last kind of hosting, or the third hosting thing that I use. I think we have two WP Engine accounts, because there’s one kind of for my site, the Numa Group stuff, which is my blog and ZenFounder and then all the Drip and HitTail WordPress blogs and that stuff – our KB, our knowledge base is there – and then we have the whole MicroConf, Micropreneur Academy side of it.
I should divulge that I was an early angel investor in WP Engine, but I’ve been using them years, and I’m a big fan of them. It’s still a very fast site with a lot of uptime and I like the fact that I can back up with one click and restore. It’s really been a good service for me.
Mike [22:35]: Moving on with the list of hosting, I use Wistia for hosting all the videos on my sites. They had a bunch of different plan. They used to have, I think, more plans, but the space in between them was much larger. I used to pay like $100 a month for it, and I was able to drop down to like the $25-a-month plan, just because my bandwidth requirements weren’t nearly as much as what they were offering. They moved the ability to have unlimited videos down into their $25-a-month plan. That’s really why I needed the higher level plan, so since they moved that down, I was like, “Yeah, I’ll drop down to this other plan, because I don’t need the bandwidth,” and it’s worked out really well. I think you use Vimeo, right?
Rob [23:13]: I use SproutVideo, which is more of a direct competitor to Wistia – they’re B-To-B services. Vimeo is more for creators. Like, if you’re a director, a filmmaker, they seem to have gone that route. But Wista and SproutVideo are where it’s at. If I were start over today, I would probably go with Wistia, but at the time when I signed up, their minimum plan was really expensive, and I only needed to host one video for like six months.
I went with Sprout, because they had like a $9 plan or something. They both have good analytics, and they both have bunch of good stuff, but I think all things being equal, Wistia’s probably a better a service, and it’s what I would go with. But the switching cost at this point, I’d have to update so much code and lose so much legacy, that I don’t think I’ll be switching any time soon.
Rounding us out for hosting is really just podcast stats. Folks ask us how we know – how many unique downloads or whatever our podcast has. There’s a service called Bluebrry, and it’s B-L-U-B-R-R-Y. They don’t host the podcast, but they do kind of host a go-between your audio file and – it’s like a proxy I guess, between your audio file and the listener. It gives you stats, so I use this on all the podcasts that we have. This one at ZenFounder and then the Startup Stories podcast that I released last year.
Our next category is tech health, and our first entrant in that category is Pingdom, and this just hits your website how every often you specify. It can tell you if the site is up or not. We also use it to hit some kind of private endpoints that we’ve set up, that don’t just say, “Is the site up,” but they’ll actually have an account of say, how many records are in a queue, and if it gets over a certain record, we’ll change a certain message, and it’ll say, “Uh oh,” and Pingdom will pick up – that if it says, “Uh oh,” it texts all of us, and it says, “We have a problem somewhere.” It’s not just SiteUpime, it’s actually for us maintaining queued throughput. If anything were to die or slow down in terms of sending emails or processing search keywords or anything like that, we’d all be notified. We really use Pingdom to kind of help manage all that. It’s both email and text notification when things go awry.
Mike [25:11]: I switched over. I used to use Pingdom for this, but I started using a combination of Clickie and – I had New Relic running at one point as well. Then the other one I had, that I used for a while was Verelo, and – trying to think of the last one. The last one was Rackspace alerts, because Rackspace has it built into their platform where you can just set up alerts based on the ability to see your server from different data centers. Depending on where the traffic is – and that’s the one that I kind of rely on the most right now, is just the Rackspace built in alerts, because they do have those set up in the different data centers and they do send alerts directly to you to let you know whether or not you can see a server from different data centers. Then in addition to that they’ll let you know when things are fixed.
Rob [25:57]: Nice. Yeah, we also use New Relic as well. I had forgotten to mention them, but it helps. [Check it out?]. I had kept hearing about it, and we never installed it, but I learned that it shows you all your consumption of RAM and CPU and disc space, and it’s pretty helpful.
Last couple for tech health: one is Honey Badger, which is from Benjamin Curtis. He’s like a 3, 4-time MicroConf attendee, and it’s a service that basically catches Ruby exceptions and then gives you all the detailed information. There are some more generalized services that do this. They’re really, really helpful. We often learn about exceptions right as our customers encounter them, and sometimes even before. It’s pretty cool to be able to get that, see exactly what the problem is, go in and fix it, and without a customer reporting it to you, email them and say, “Hey, we’re sorry you ran into that page load error 20 minutes ago. It was a bug. Here’s what it was. We fixed it.” It’s a really nice tool to be able to deal with. Even if you’re not using Ruby, you can look for a more general – I don’t remember the name of the one, but it’s kind of like Exception Handling, or Exception Management.
Then, last one in tech health: I want to give a hat tip to my DBA. He’s at rubytreesoftware.com. His name’s Creston, and he’s really taken good care of us on the Postgres and my SQL side – that’s what he specializes in. He also is a Rails developer. If you have a need for someone to help out with DBA and scaling and performance and that stuff, he helps us with all our backups and S3 management, and just all kinds of stuff that as developers, we don’t want to get involved in, right? It’s much more DevOps and DBA stuff. But it would be a lot of our time and a lot of headache if we didn’t have Creston involved.
Mike [27:30]: I think now we’ll move on to everyone’s favorite topic, which is money.
[laughter]
Rob [27:34]: Moving money. Yeah.
Mike [27:35]: It would be money.
Rob [27:36]: Yeah, so the first couple on the list are pretty obvious, right? Stripe and PayPal? You use both of these as well?
Mike [27:42]: Yes.
Rob [27:43]: Yeah, so use Stripe to collect all the incoming money. I only have a PayPal account anymore really to kind of move money through other PayPal accounts. I guess aside from Micropreneur and MicroConf, I don’t really collect PayPal payments anymore. Oh, that’s not true. I guess selling my books. They are still a few places where I collect PayPal payments. But, Stripe and PayPal – kind of no-brainers.
How about paying employees? Or paying yourself, since you’re an employee of your corp? What do you use?
Mike [28:10]: I’ve used ADP and Paychex in the past, and I kind of flip-flopped back and forth between them until I decided that their fees were getting outrageous. Then this past year, I switched over to using ZenPayroll, and I love ZenPayroll. It’s so much easier to use, and it’s a lot more intuitive, and it’s a lot cheaper. It’s about half the price of either ADP or Paychex. That’s a nice bonus as well.
Rob [28:34]: That’s good to hear. I use Paychex. I’ve used them for four or five years, since I set up the LLC, and they were great when I was one person, one employee. As soon as we got to two or three, they started making mistakes. I would change something and they’d mess it up. It was some pretty simple stuff. I’ve become disenchanted with Paychex and I’m actually planning in about a week and a half to move to ZenPayroll. I’ve only heard good things about it, and I’m excited to get everything moved over there.
Mike [29:02]: Yeah, it’s a bit of a pain to set up at first, but once you’ve got it set up, it’s pretty smooth. I think the only thing that I’m not real fond of is the fact that if you own your own business, it’s a little bit difficult to set up things in such a way that you can have it automatically pay yourself kind of like an owner’s dividend, and not count that as a reimbursement. It’s kind of a pain to do that. You have to kind of do it outside of the system. But otherwise, everything else is pretty smooth.
Rob [29:29]: Oh, that’s okay. I’ve always done that outside of payroll systems, so that won’t be a problem.
Mike [29:33]: Got it.
Rob [29:34] Next one is UpWork, which used to be oDesk. UpWork is both a way to manage, right – there’s like a project management aspect of it. But I’ve also found it really handy for moving money around the world. Because I used to pay people in the Philippines, and they don’t have PayPal, or they didn’t have PayPal there, and it was really hard to get money there. ertain parts of India, and certain parts of the world – these things that we take for granted aren’t there. oDesk/ UpWork really doesn’t have a problem doing that.
I’ve actually moved contractors into UpWork, and you pay like a 10% up charge basically, but in order to get the nice project management and the easy move of money and automatic payments, where I don’t have to manually cut someone out a PayPal invoice or whatever, it’s been worth it for me.
Mike [30:16]: Yeah, I use them as well. Funny enough, when they were changing their name from oDesk to UpWork, I was just in the final stages of releasing my book. [laughs] I had to go through and change it, or just add in a little note that says, “Formerly called oDesk,” and call it UpWork instead.
Rob [30:32]: Oh man.
Mike [30:33]: But it was right at the tail end of it. It was kind of a pain. The only other thing I’d add under this is Gumroad. I use Gumroad for selling my book, “The Single Founder Handbook,” and it makes things very easy. You don’t have to mess around with a shopping cart or anything like that. If you have any updates that you want to issue – so if there’s spelling mistakes or anything like that – if it’s a product where you have to provide any sort of updates, you can just do those directly inside of Gumroad. It will automatically issue those updates to everybody and let them know that there’s an updated set of files that they can download, which is really nice, so that you don’t have to worry about, “Okay, who has what version, and did they pay for it,” or what have you. It’ll just do it automatically for you.
Rob [31:10]: Yeah, I’ve used Gumroad as well. My son wrote a book called “A Parent’s Guide to Minecraft,” and we sold it through Gumroad, just because it was no-brainer. You know, it’s the simplest way to get something up there and start collecting some money.
That rounds out our moving money category. Let’s move on to the next one. It’s back office. I kind of threw everything else in here that I noticed I was being charged for that didn’t really fit into the other categories. We have accounting, and I use Xero, which is pronounced X-E-R-O. I’ve also used Outright in the past, and they were fine. Then GoDaddy bought them and they’re so-so, and they’re kind of the same. I’m more of a fan of Xero. Xero’s also three times the price, so it kind of depends on what budget you’re in. Outright works perfectly fine for smaller, less complex businesses. With all that I have going on, I found that Xero is a better fit. But it’s like 30 bucks a month. You have to make up your mind on that.
Mike [32:00]: Yeah, I use Xero as well, and I’ve used a bunch of different things in the past. I used to use QuickBooks for a long time, and then I switched over to – I’ve used Outright in the past, and what was it? There was a couple other things –
Rob [32:11]: Indinero?
Mike [32:12]: Indinero. Yeah, we used that before. You know, I had a couple of accounts there as well. I like Xero just because I know my way around accounting software, and it works well. It does exactly what it is that I need it to do. I’ve basically handed everything off to a bookkeeper, and she doesn’t seem to have a problem with the software, so, works out nice.
Rob [32:30]: Yup, I use the same bookkeeper. She does a bang up job. Next, for affiliate management. I use Ambassador at getambassador.com. I imagine quite a few folks have heard of that. Stamps.com – I finally signed up for an account, maybe 18 months ago, and I have never looked back. Man, I have not made a trip to the post office in 18 months, and it’s the best thing ever. Just to have this scale that you plug in, and you can weigh stuff, and you print the postage out, right there. It’s like we’re living 2015 or something. Honestly.
I sell stuff on Amazon or Ebay. Like I resell old – whatever it is – old computers or old books, or just stuff that I have. I don’t like to keep a lot of stuff around my house. If I’m done using it, I’m not going to use it, I post that thing for sale or I give it away to Goodwill. When I post it for sale, it comes with the burden of having to ship it. That was one of the reason I got it.
The other thing is, with Drip, we give a lot of Drip t-shirts away when people get their first conversion goal hit, or if they tweet something cool or whatever. I like to ship people a shirt, or maybe a nice Moleskine notebook with Drip stamped on it, and so there’s a decent volume of those going through. I’ve just found that there’s quite a few things that I wind up shipping out, and to not have to run to the post office all the time is totally worth the – whatever it is. I think it’s maybe $15 a month? Then you just pay the exact same price you’d pay in the post office for postage.
Mike [33:44]: Got it. I don’t ship things out very often, and I’ve tried to move to completely online for most things or just not bother dealing with anything. For example, bills and stuff – any business bills, I try to push that off to my bookkeeper. Then, the personal bills and stuff, I just pay them all online. I try as little as possible to deal with paper mail if possible, but there are those few exceptions.
Rob [34:06]: Lastly, in our back office, is GoDaddy, the domain registrar. I think if I was starting over today, I would probably use someone like Hover, which I think is spelled is spelled H-O-V-E-R. I think they’re probably a better bet for it. They have less kind of up sells and all that kind of junk. But, I have 60, 70, maybe even 80 domains with GoDaddy, and all the DNS settings and stuff, it’s just too much of a hassle to change. That’s what I use. How about you?
Mike [34:31]: I’ve used Active-Domain for a long time. That’s “Active dash Domain.” I have a bunch of domains registered there, and then I have a bunch that are over on DreamHost. At one point I tried to kind of do some kind of consolidation, and then I got distracted and never completely finished it. I’ve got a bunch of domains that are at Active-Domain and then the other half of them are probably over at GoDaddy. They both work reasonably well. No real complaints either way.
Rob [34:56]: I think that about wraps us up. If you have a question for us, you can dial it into our voice number at 1-888-801-9690, or email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. Subscribe to us on iTunes by searching for “startups,” and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, and we’ll see you next time.
Episode 242 | Startup Accelerators, Working On vs Working In Your Business and Hiring a Developer as a Non-Technical Founder
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike answer questions about accelerators, the difference between working on and in your business, and the benefits of transparency.
Items mentioned in this episode:
Transcript
Mike [00:00.5]: In this episode of Startups For The Rest of Us, Rob and I are going to be answering questions about accelerators, the difference between working on and in your business, and the benefits of transparency. This is Startups For The Rest of Us, episode 242.
Mike [00:19]: Welcome to Startups For The Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it. I’m Mike.
Rob [00.27]: And I’m Rob.
Mike [00:28]: And 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 [00.32]: I’m doing pretty good. We have some really nice five star iTunes reviews that have come about, we have [Fresch Norlin?] from Sweden, and he says that “this is my absolutely favorite podcast for entrepreneurs, great tips and advice on how to build and launch SaaS products.” And another one from Gurdiga from Moldova, I think this is our first rating from Moldova, he says, “get ready to take notes, the episodes are well structured and information heavy.” Thank you guys very much for your five star rating. We’d love it if you would pop into iTunes or Stitcher or Downcast or wherever you are, give us a five star review, you don’t have have to comment but it does help us stay motivated to produce the podcast and helps us rank at the top of the search engine so that we can get more new listeners.
Mike [01:15]: Awesome, so I don’t usually go on any security rants about things that are discovered in the wild or happen but this one I think is important just because I know a lot of people who use this service. Recently, LastPass discovered an attack their network and if you’re using LastPass at all, your email address and your password reset data was likely lost. I would go ahead and enable factor authentications, change your password, change your password reset question, things like that. They didn’t lose any data directly pertaining to the passwords themselves but just judging from how they protect that stuff it’s pretty well protected to begin with so that stuff wasn’t lost but I would definitely go in and make some changes about that just in case.
Rob [01:53]: The only other update from me is things are going well with Drip. I feel like marketing has continued to ramp up. We have a lot of content going live right now, we have case studies, we have all types of stuff. The person I had hired for customer success and growth is really hitting her stride. She’s about a month and a half into the position and it is crazy how much has been taken off my plate. It’s given me a lot more time to look at higher level stuff and work on the business instead of so much in the business. I was doing so much time intensive marketing work and I’ve been able to step back from that. It’s allowed me to dig into a lot of metrics, it’s allowed me to look through funnels, it’s allowed me to start thinking about some higher level things that I realized I wasn’t looking at because I was too busy head down doing tasks. So it feels good to free myself up from that and get some clarity on where we’re headed next.
Mike [02:47]: Cool. The only other update I have is I completely bailed on Monday at work this week. I ended up getting up late and it was probably 10:30-11:00 and I was like, “you know what, I’m going to take a free day. I’m not going to do anything today.” I went out to lunch with my wife and after lunch we decided to go to a movie and that took me through the rest of the day until the kids got home. I literally did nothing and it was everything I thought it could be.
Rob [03:10]: Yeah, that’s nice. It’s so nice to have that flexibility and to feel okay about it and not stress about it. I took the new crew out for ice cream at this brand new homemade ice cream place that kick-started here locally. It was only a forty-five minute or hour outing but it was in the middle of the afternoon and it was super hot here and it felt good to just be there and not be thinking about work. We were talking about Dungeons and Dragons and other random stuff and to have that flexibility in your work schedule whether it’s taking an hour in the afternoon or like you said taking an entire day, I think that’s one of the biggest perks of the entire entrepreneurship. If you start your own company and you don’t have that flexibility, in my opinion you’ve made a wrong turn somewhere.
Mike [03:55]: Yeah, what I found nice that was on Tuesday when I decided to get back into the swing of things, I didn’t feel like I was behind and I was able to just sit down and work and I got all the stuff done that I would have gotten done on Monday anyway. So it wasn’t as though I got behind or anything. It was a good feeling to go through that and realize that the world isn’t going to fall down around me if I take a day off here and there. It made me think about if I want to work four day weeks over the summer of something like that.
Rob [04:25]: Yeah. So we’re answering some listener questions today.
Mike [04:28]: Yeah, and the first one we have is from Sam Mullen and he says, “Hey, I’d love to hear you and Rob talk about accelerators. I know my opinion but I’m not typical.” So what are your thoughts on accelerators?
Rob [04:37]: Well, it’s a pretty broad question because there must be hundreds of accelerators now. If you haven’t heard the term “accelerator” in essence the first one was Y Combinator and it started around 2005 by Paul Graham, and the idea was that before that if you wanted to raise funding you either had to go to Venture Capitalist or Angel Investors and there weren’t a lot of Angel Investors around at that time. There were these things call Incubators, there were just a handful of them but it was similar to a Venture Capitalist that owned an office building and would provide in house services and provide funding and house your company, but it didn’t spread. I think there was too much money and logistics involved in getting those started.
Paul Graham took a middle ground to that and he started something that was later dubbed an accelerator. That is where they would bring in a cohort of small, young startups. I think they started with college aged kids purely and it’s since expanded out of that but the first one was a cohort of seven or eight companies and it later expanded beyond that. Now I think they’re at 60-80 companies at a time through a YC batch. They basically provide the same amount of funding to all of them, somewhere around $120,000, and they take X percent from all of them. It’s about 7% I think. Those numbers depend on how many founders there are and some other stuff but that’s how it works.
Since then a bunch of places like Techstars, 500 Startups and hundreds of others have sprung up around the world. They’re typically in major metro areas, a lot of them are niche down, so there might be one that is an accelerator purely for medical software or purely for content software or content startups. That’s the landscape as I see it and overall it really depends on your goals. The first question is do you want to go the funding route at all? And I think if your answer to that is “no” or you don’t want to grow to be a hundred million dollar company, then you probably don’t want to think about an accelerator unless you can find an accelerator for boot strappers, which I’ve never heard of. Although Mike, you and I have certainly batted that idea around about trying to organize something like that.
If you decide, “yes, I do want a hundred million dollar company. I want to go for an evaluation of raised funding” in my opinion it’s like business schools. If you’re going to do it you’re going to want a big name. There is a huge value of the network and cache of going to Harvard or Princeton or Yale or going through or going through a YC or Techstars or 500 Startups. I think if you wind up at a random accelerator somewhere, I don’t know that I can vouch for the credibility that you’re going to get, the evaluations, I think it gets complicated at that point. You really need to do your research and know who is involved, know why they’re putting up the funding, because accelerators from what I see take quite a bit of share of your company for the amount of money they put in so they can be not as good as going out and trying to raise Angel Funding directly. How about you? What do you think, Mike?
Mike [07:36]: I think I share a lot of the same thoughts as you. At the end of the day it really boils down to whether or not that’s a route you want to go. Do you want to try and create a high growth startup that has a much smaller chance of success and you really have to drive things forward as quickly as possible rather than feeling things out and being a little bit more careful with your money because when they give you the money the expectation is that you’re going to spend it and spend your way through mistakes and you’re going to spend a lot more money on various mistakes in an effort to learn quickly. That’s really the trade off that you’re making is time versus money. They give you the money so you can save the time and learn those mistakes faster but it’s going to cost you a heck of a lot more to make those mistakes.
Let’s say you’re testing out Facebook ads, your not going to be spending one hundred or two hundred dollars, you’re going to be spending thousands of dollars on a daily basis in order to figure out whether or not that’s a viable strategy and you’re going to really take it to the wall. So those are my thoughts on it but at the same time I feel the same way as you about the name behind the accelerator. For example I heard on Justin Jackson’s Build and Launch podcast a couple of weeks ago, he had a quote on there from somebody that basically said YC is the ultimate validation of your idea because just getting accepted into a Y Combinator gives you a lot more attention than it would if you were at a tech hub or accelerator in Milwaukee or something like that people are going to pay a lot more attention to you. What that means is higher evaluations, more attention, more opportunities to network with people, more introductions to people who have more money and basically a higher chance at successfully landing whatever your next round of funding is. But at the end of the day if that’s not the direction you want to go then an accelerator is probably not for you.
Rob [09:24]: Yeah, I think the one other thing that I would add is that in general I like the cohort approach meaning you’re involved with a number of other companies going through the same thing at the same time. I think the camaraderie and momentum it builds is positive especially if it’s your first time going through this because just raising funding and going out and being on your own is hard and it’s hard to know exactly what to do and it’s hard to stay motivated and I think that’s where a cohort or batch approach like the accelerators tend to take would be a good thing.
Mike [09:57]: So Sam, thanks for the question. Our next one comes from Anders Peterson and he says, “Hi, Rob and Mike, I talked to a fellow Microconfer the other day and he said he started every day working for ninety minutes on his business instead of in his business and it got me to thinking how much time I spend working in and on my business. It’s easy enough to see if others are working on or in their businesses but how do I get that clarity for myself? I’m always wondering if I’m working on or in the business. Can you help clarify this for me?”
Rob [10:21]: I have a couple of thoughts on this. I think the way I would define this has changed over time. I think early on in my business, even doing some minimal things like hiring a VA and getting support off my desk, I would have considered that working on the business because I’m not actually answer the support requests myself any longer. As things have gone on and my team is a little larger now, we’re a total of five full-time, I think there are two ways that I can work on my business and I think Anders, you’re probably in a similar situation with this.
The first one is, is there a recurring task that I never have to do again because of what I just did? To me that is working on my business. If I spent that ninety minutes that that fellow MicroConfer was talking about either described a process, documented a process to hand off to someone or wrote some code to automated or I somehow eliminated that from my plate and someone else was accomplishing that, to me that’s working on the business rather than actually doing that step manually again. Hiring a bookkeeper, to me was working on my business because it eliminated a number of hours each month that I was spending doing things.
The other thought that comes to mind is that I like to do quite a bit of high level planning and thinking ahead and trying to map out what’s next. What do the next sixty days look like? What do the next ninety days look like both in terms of features, where we’re headed and in terms of marketing approaches. Are we going to roll out webinars soon? Are we going to run a contest? That type of stuff takes some brain power that isn’t necessarily tactical. It’s not like going to plug in this ad copy and run a headline and put an image in here but it’s making high level decisions in the direction and vision of the business. So when I’m thinking about that I typically have my black notebook and I don’t even have the computer open and I’m mapping things out, sketching and thinking about them. A lot of them I may not implement. I may hand them off to someone to implement but if I can document them well in this notebook, in my opinion that’s working more on the business because it’s higher level thinking. I think that’s debatable.
I think some folks might say, “well, if you’re still having to plan that stuff out or make those decisions you’re still working in your business.” But I really enjoy that part, the high level visioning and then going one step down and mapping out a whole flow of the entire webinar marketing approach or whatever and then handing it off. So those are the two types of tasks that come to mind for me when I think of working on rather than in my business.
Mike [12:56]: Yeah, for me something like that becomes a very meta question especially what you just said about some people who classify building out those plans as working in the business rather than on it. But at some point somebody is going to have to map out what those plans are going to look like and how everything fits together. And it seems to me like when you are doing things like that you are doing the architecture for how your business is going to execute things. To me that’s working on your business, rather than in it. The deciding factor for me is really are you creating a process for doing something or are you executing the process that is doing something for the business? And to me that’s the differentiator between are you working on versus in the business?
Rob [13:39]: I like that. I like that definition.
Mike [13:41]: The other thing I think is that there are certain cases where you’re going to be required to work in the business because there is probably not anybody else who can do it. For example, doing a podcast tour to talk about what your software does or your approach to a particular problem, that is in many cases working in your business because the process of going through and doing those interviews, you could theoretically outsource it but you’re the founder so you’re the one who is expected to be talking about that stuff. It’s not to say that it would be impossible to find someone else to do it but in the boot strap world of the startups that we deal with it’s more expected that you’re going to be doing that. You can see how that’s working in your business but at the same time you almost have to do certain things like that. So there are going to be times where you have to work in the business not just on it. You can lay down all the plans in the world that you want but if nobody is executing them it doesn’t matter. Your business isn’t going to move forward. Our next question is from Ina Coveney and here is the audio for that question.
Ina Coveney [14:37]: Hello guys, I just discovered your podcast and I love it. My name is Ina Coveney that is I-N-A C-O-V-EN-E-Y. My website is Ina, I-N-A, nutshell web dot com and I’m an entrepreneur and I have a couple of ideas and my question is do I roll out those ideas into a holding company or should I be personally signing as a partner on these other ventures that I’m signing up for? So again, I’m partnering up with a couple people for a couple different businesses. Should I be asking as a holding company? Should my company be with a partner or should I personally be? What are the pros and cons? Thank you, guys. I love the show. Keep it up. Bye.
Mike [15:24]: I think the usual disclaimer should apply here. We’re not lawyers. You should definitely check with a lawyer on a lot of this stuff but I think if I were in this situation I would probably not personally sign up in any other business partnerships especially if you already have an LLC that is designed to act as a legal buffer between you and somebody else. There are situations that I’m aware of for LLC’s. For example, I live in Massachusetts and in talking to my attorney about it he basically said that a one person LLC has less protections afforded to it than a two person LLC and it’s actually different if it is completely within your family as well. So for example, if I had a LLC and my wife owned 50% of it, legally speaking it’s treated as one person because it’s the two of us combined into a family unit or something along those lines. That’s the way he explained it to me. This can vary between states as well so again this goes back to why you really need to check with an attorney but I think the underlying question is should you use a business to sign onto different partnerships with different people and I think the answer to that would probably be yes. That’s the purpose of those things is to essentially act as your agent in many respects, to assume some of the legal liability and financial responsibilities and that’s what a business is for. Use the business for what it’s intended for.
Rob [16:46]: Yeah, I think I would echo your sentiments. If you have a LLC, one of the reasons is to shield you from liability so that I would use to start other businesses. The pros of doing that is that you don’t have to expose yourself to personal liability if you sign up for those businesses in your own name or set up five different LLC’s. One for each partnership. That becomes a nightmare during tax time, it’s very expensive to maintain, legal fees are high, unless those things are cranking out money it’s not worth doing. The negatives of doing it this way, having an umbrella holding company that houses four or five partnerships, is that if those partnerships are not corps or LLC’s which I think is what we’re talking about, then one of them if it was sued could potentially leak into the others. They’re not protected, there are no walls between them. There is only a wall between your personal stuff and all of your businesses and partnerships. For most smaller operators where you have a lot of small sub one hundred thousand dollar businesses collected, my guess is that there is not enough liability to worry about it but of course this is something you have to ask yourself. It’s a risk tolerance thing and certainly a conversation you might want to have with your lawyer.
Mike [17:56]: Our next question is from Michael Steep and he says, “Hi Mike and Rob, Mike from Australia here. Let me start off by saying thanks for the podcast. I really enjoy listening to it. I was listening to episode 224 and I liked the nontechnical discussion. While your podcast is targeted at boot strapping developers, I think you might be surprised by how many non-technical people listen to your podcast. I’m one of them and I’ve been listening for years. This is in two parts; the fist question I have is do you know of any resources for non-technical self-funded founders?
Rob [18:21]: Yeah, this is a good question. I think the best resource I’ve heard about is Programming for Marketers at programmingformarketers.com, this is from Justin Mares who co-wrote the “Traction” book with Gabriel Weinberg and I’d love to see a programming for non-technical founders but no one has put it together yet. But I think this is a start to give you an idea of what it’s like to code, how to tap into some API’s and just give you enough of an idea to start thinking about hiring someone who would obviously have to build your product or even partnering up with someone.
I like Mike’s comment about how many non-technical people listen to the podcast. We actually changed the introduction a few years ago. We used to say this is for developers who are trying to launch products and it now says developers, designers and entrepreneurs because we did shift the focus to not only cater to developers and technical folks but non-technical as well so we’re definitely well aware that there are a lot of non-technical audiences listening to the show.
Part two of Mike’s question involves how a non-technical self-funded founder could work with a developer on a lower risk basis. He basically says that he’s a business owner and he’s heard that working with developers on a purely equity basis is not going to work and I think we’ve seen that happen a lot where developers get approached all the time by people who have this great business idea if the developer wants to just spend a few hundred hours of their spare time to build it then the person will go out and try to market it. We know that that’s basically a lose situation for the developer.
So Mike says, “I have an idea for a piece of software for my industry and I’m in a position where I have wire frames but taking the next step in hiring a developer is difficult. I have quotes that range from four thousand to twenty four thousand dollars. So my concern is I have no way of moving forward because I’m just not confident in my ability to hire or manage a developer. I think the solution is to engage a CTO. I think there is some space in your community for people to work as a CTO with people like me. The CTO would work as an adviser instead of a coder to make sure the non-technical person has an idea of what’s needed. This could work on a peer consulting basis or some form of discounted consulting or equity basis. This way the CTO does not end up wasting months of development time before they find out it’s going nowhere. So I’d be interested in hearing your thoughts.” This is a good question. We’ve heard this before, not asked in the term of a CTO but folks have asked, can I find a cheaper developer and then hire a high end developer to manage them or vet them or view their code and that kind of stuff. The CTO idea is an interesting one so I’m interested to hear your thoughts first.
Mike [20:54]: I think that there are similar problems with this in terms of hiring a developer versus hiring an advanced developer. How do you know that the person is going to be a good CTO and how do you know that they’re going to be able to manage people? I think you can do some of that based on experience, based on things they’ve done before or success with previous projects, but past history does not necessarily indicate that you’re going to be successful moving forward, especially when it’s going to be a new hire for both you and the CTO because it may not work out between the two of them and it may not work if just the developer being hired is difficult to work with.
There are a lot of variables in there and it seems to me like all you’re doing is moving the problem from one place to another. So I’m not sure how I really feel about this idea. In theory it sounds like it could work and on paper there’s nothing that’s really a red flag other than the fact that how do you get to the point of trust with the CTO such that you’re conveying to them exactly what it is that you need and they understand it and are able to convey that down to the next person. Because you’re introducing this other level of abstraction that theoretically and hopefully as a CTO they’re going to understand all the subtle nuances and be able to translate that to somebody else and understand that, “oh, you’re not technical. You’re saying this word that you don’t necessarily understand the specifics of exactly what that means but I can translate that to a developer who is probably not going to be able to interface very well with you and then talk through it with them. I have mixed feelings on it is really what the bottom line is.
Rob [22:27]: I like the idea of couching it as a CTO. I know that Jason Roberts from the Techzing podcast has done some of this work specifically where he comes in at a high consulting rate and does an hour a week or two hours a month or something like that and helps someone keep their guidance as they’re working with contract developers. I think it can work, I think you’re correct, it’ll be a challenge to find someone who will do this. When I was coding and consulting I probably would not wanted to take on small even high dollar per hour projects like this but there are folks out there that I think you’ll be able to find. I think if you looked on airpair.com, that is a YC company and they have a lot of experts on there. I think if you looked at consultants in your niche in terms of the programming language, if you’re going to build a web app, try to find someone who has written a book or is a prolific blogger and consultant and they have a name and their rate is going to be pretty high but my guess is they’re going to be a decent bet to get started because A. they know how to communicate if they’re a decent writer and two, they’re probably an expert in that language so they are going to have high standards for it. They’re not going to be cheap, like I’ve said, but if this is the way you want to go I certainly wouldn’t be skimping on that CTO role and I think this could be an interesting middle ground. I think it’s not a silver bullet and instantly work, I think there are still going to be a lot of challenges but I do like the idea of trying to do that rather than going at it alone if you’re non-technical and riding in blind and hiring some outsource firm where you don’t know what the quality of the code is going to look like.
Mike [24:03]: Thanks for your question, Michael. Our next one comes from Karen Flavel, and Karen says, “Hey guys, thanks for the show. I really appreciate the actionable advice. I’m considering the benefits of opening up and making public the data about site traffic, bug tracking and user issues and even revenue and wondering if you’ve seen this done well. Most importantly I’m wondering how this might be done internally to build staff commitment and trust.
Rob [24:22]: I’m torn on this one. I think it’s up to you if you open up all of that stuff internally. I’d imagine site traffic, bug tracking and user issues are probably already exposed internally because that doesn’t seem like anything that should be hidden from your team internally, revenue that’s up to you. I think if you communicate revenue and expenses people can see how they’re impacting the bottom line. I don’t see any major issues with that. Other folks may have different experiences but I’ve always had a dashboard of the revenues coming in for SaaS apps and the entire team can view revenue for the entire month, go up and down and see how far ahead of the previous month we are and all that. They see all the trial counts and conversion rates and I think that’s helpful so it’s not just some black box that you’re working on and not seeing how you’re impacting it.
Now, making all of that available to the public, I’ve never loved that approach. I know that there is this big movement toward transparency and we see companies like Baremetrics and Buffer putting all of their numbers online, I don’t believe that the world is headed in that direction. I think that there are people who like to do it. I think some people like to do it genuinely to help other people to give them a context, I think others like to do it to brag and show off how much they’re making and you can tell by how people mention it or how they humble brag it when they do it. At a certain point I think there’s a little bit of a transparency backlash. We’ve seen some conversations about that in blog posts like, “enough with the transparency” enough of saying look how much I’m making, public. So those are my overall thoughts. I think if you’re considering making your bug tracking and user issues, site traffic and revenue–that’s a lot of stuff to expose so if you have competition that’s a really nice way for them to get a good idea of what you’re up to. If you don’t have a lot of competition or that’s not really an issue because you’re a mobile able or some other non-competitive field like that, maybe it’s less of a concern. How about you, what do you think, Mike?
Mike [26:12]: I think that opening up the numbers internally is probably a good idea because it gives the people inside your business a little bit of context about what’s going on. How is the business doing? Where are the places where they can help? Are there struggles in terms of the number of bugs and issues that people are running into? Knowing what the company is making is helpful for keeping expenses down especially if you know that the business is struggling in any way shape or form. People are very loathe to spend company money or even waste time doing things that are not directly helping the business move things forward and in the right direction. I used to work at Wegman’s food markets and at the time they had 25,000 employees or something like that and they were pretty public about what their revenue numbers looked like and what they were spending money on and there was a very concentrated effort across the company to help keep costs down. They would not spend money on things that were wasteful and people just generally didn’t waste time and it showed in terms of the customer experiences as well. All the way through to the people who were in the stores. Those people made a concerted effort to make sure that their customers got a good experience and that they were not wasting things.
So I think there are definite benefits and advantages there, outside of the company the only people that you’re helping are your competitors and the people who are aspiring to be entrepreneurs and want to learn form the things that you’re doing in such a way that it’s going to help them do something similar or in a similar market. They may be competitors, they may not but at the end of the day I don’t see what that really buys you especially if you’re going the funded route. If you’re going the funded route they are not going to be happy about you sharing those numbers. But if you’re boot strapped, I don’t know of any clear advantages of sharing all of that information publicly.
Rob [28:00]: I think there is a case to be made. The first few people who did show their metrics like when Baremetrics and Buffer did it, it got them some press, it got them a short term bump of “hey, look what we’re doing” and I’m sure it drove some trials. I’m not convinced that that is the right approach for most businesses, especially if you’re in a highly competitive market where there is blood in the water and people are coming after you. That’s going to wrap us up for today. If you have a question for us and you’d like to hear us answer it on the air you can call our voicemail number at 888-801-9690 or you can email us at questions@startupsfortherestofus.com. Our theme music is an exert from “We’re Outta Control” by MoOt, it’s used under creative commons. Subscribe to is 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 241 | Why Entrepreneurship Is the Logical Path With Guest Taylor Pearson
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike discuss why entrepreneurship is the logical path. They interview Taylor Pearson and talk about his book “The End of Jobs”.
Items mentioned in this episode:
- Taylor Pearson’s Book, The End of Jobs
- AuditShark
- Tropical MBA Podcast
- JitBit
- Taylor Pearson.me
- Taylor Pearson.me/winbooks
Transcript
Rob [00:00]: In this episode of Startups For The Rest Of Us, Mike and I discussed why entrepreneurship is the logical path with guest Taylor Pearson. This is Startups For The Rest Of Us episode 241.
Rob [00:19]: Welcome to Startups For the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at launching software products. Whether you’ve built your first product, or you’re just thinking about it. I’m Rob.
Mike [00:28]: And I’m Mike.
Rob [00:29]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Mike?
Mike [00:34]: Well, the podcast site has been having some pretty weird issues lately and people have been saying that like the site is down and then I check it and it looks like it’s up for me and then there’s the different websites you can go to where they like check to see if it’s down for you or for everybody and I go check those and I say that it’s not available and I’m just like, “Well, it is working for me.”
Rob [00:52]: Oh, well. So it’s the DNS?
Mike [00:53]: That’s what I thought at first and then somebody twitted a screenshot that showed a 503 error coming directly from the server. So I went and checked the server and the error logs are completely empty and I checked with support and they’re like, “Yeah. We haven’t seen any 503 errors.” So I’m just like, “Oh.”
Rob [01:08]: Weird.
Mike [01:09]: Yeah. I guess somebody have mentioned this on Twitter. This is one of those situations where cloud computing sucks because you can’t just go over and kick the server.
Rob [01:16]: Yeah. Yeah. For real. Huh, I haven’t experienced any issues with it so that’s [?] but clears up.
Mike [01:22]: I went into DNS and checked it pretty thoroughly and everything seem to be running fine so I don’t think that that was it. It seems like it might be the server or might be some sort of routing issues of some kind. So, I don’t know if they are aware of it. They’re looking into it but I don’t think they’re going to look too hard to be honest because it seems to be up and running.
Rob [01:40]: Right. So, anyway, we’ve added a speaker to the MicroConf Europe speaker doc that we have Alex from JitBit and he’s attended several MicroConfs but he runs a seven-figure software company that has a number of products; JitBit HelpDesk, JitBit CRM. He has a live chat forum software and a bunch of other stuff, so if you’ve heard of JitBit or you know Alex, his story is pretty cool. It’s totally bootstrapped and he’s grown an admirable software company. So, he’ll be talking about his experience in pulling out some tactics and takeaways for our MicroConf Europe audience this August in Barcelona. How about you? What else you’ve been up to?
Mike [02:17]: I think it was last week, I launched the AuditShark lockdown service to my mailing list and it’s been going recently well. I’ve already started on one that somebody purchased right away and I’ve got two more that I’m in the process of scheduling and then there seems to be more on the pipeline. So, the service itself kind of solves a longstanding issue where people like the software but they don’t necessarily know what to do with the result. So, instead of basically handing it off to them and they use the software, I use the software on their behalf and then interpret everything for them and do the work and it essentially is a product type of service really but it kind of overcomes a lot of the challenges that the businesses who don’t do this very often have been having with the software.
Rob [02:57]: Sure. And especially if you’re not targeting enterprises and not targeting folks with entire teams dedicated to this stuff and you’re mostly going after small and medium-sized businesses, they’re not going to necessarily going to know what to do with those results. So, having you as an expert come in I think there’s a lot of benefit to doing that. Now, is this a one-time audit where you fix? Is it subscription? How does it work?
Mike [03:17]: So, there is essentially it’s a onetime audit and then once we go to through the audit and take a look at the results, probably takes several days to go through everything because we have an initial conversation first to kind of get a rundown on what their environment looks like and then if anything needs to be built to go out into their environment, so like let’s say they have something weird that I don’t necessarily support out of the box, then I’ll go build some stuff and then add it into the product and then go pull those results from their machines and then aggregate it into a report. And then once we sit down, go over everything in the report, depending on where they’re at then it might move into like a man of services opportunity where they can leverage me on a retainer basis in the future and then there’s also the opportunity for doing a follow-up audit in the future based on any server mediation in the efforts that they need to undertake. So, let’s say that there’s 25 things that they need to fix based on the audits. They can go out and then fix those things and then we can come back in three months, or six months, or something like that and then take a look to see where they’re at and whether those things were actually fixed and make sure that their environment is getting better over time and not worse.
Rob [04:24]: Right. And this is for Windows servers only? Is that right?
Mike [04:26]: No. It’s for Windows, Linux, Unix, et cetera.
Rob [04:29]: So, someone is listening to this and are thinking, “Boy, I’d really like my server to be locked down more. How can they get in touched with you to hear more about this?
Mike [04:36]: Well, they can email me directly mtaber@auditshark.com or they can just come over and sign up on the email list that’s over on auditshark.com and you’ll get some brief information about what sorts of things you should be doing for your servers and then there’ll be a sales [piece?] that’s kind of included in there at some point along the way where it will talk a little bit more about the service and how if you’re not ready to do this, these things yourself, then we can come in and do them for you.
Rob [04:58]: Cool. And you said you’ve already sold one, huh?
Mike [05:00]: Yeah. Several of them actually and then soon one of them is in the process of being done right now. It should be done by the end of this week and then the other two, I’m in the process of scheduling and then I’ve heard from other people that they’re interested and they’re just kind of working through paperwork and stuff like that.
Rob [05:13]: Nice. Way to go, man. That’s cool. That’s good news.
Mike [05:16]: Yup. So how about you?
Rob [05:17]: Well, I have a couple of books that I wanted to recommend today. These are books that I’ve read over the past month or so. One is called, Becoming Steve Jobs. And if you’ve read the Walter Isaacson biography, it is an exceptional book. I think it’s just called Jobs and I highly recommend it, and I actually recommend that more than this book. I like this book a lot. This book did a good job of telling a different story. It’s about kind of the psychological and mental development of Steve. It’s written by a journalist who knew Steve from the 80s until his death, and he said that he felt like the Isaacson biography was a little harsh on Steve and that it made him out to be a tyrant and a jerk who was hard to work with and the journalist basically says that was true in the 80s and the early 90s and then he kind of figured himself out like he matured, he became easy to work with and from the mid-90s like the Pixar era on, he was a much easier person to work with. And so that was his premise, I’m not sure that I totally buy that based on a lot of the stuff stories you hear out of Isaacson stuff, but it was a unique look at it and I didn’t feel like the same stories were rehashed in this book and I’m a big fan of tech history and of Apple and all that stuff. I got my first computer, it was an Apple IIE back in 1982, so it kind of has a special place for me and it was neat kind of to hear the other side of the story.
Mike [06:37]: I haven’t read that one but I did read the Isaacson one and it seem to me like there was this, I don’t want to call it definitive turning point but it definitely seemed like Steve Jobs kind of mellowed out a little bit. He definitely seemed like he still had some of those, I don’t want to call it a meanstreak, but like a streak about him where he knew what he wanted and if you couldn’t deliver, he was going to be pissed. So, I don’t think that those completely went away but I think they feel like they were toned down a little bit once he came back and went through Pixar and had been laid off from Apple.
Rob [07:07]: Yeah. It softened a bit but it never went away like it was still part of his, and I think he always felt it but he learned to not lose it when he felt that, when he got older like he didn’t go away for him mentally, it just it didn’t come out as behaviors.
Mike [07:22]: So he didn’t pull a bomb or throw a chair.
Rob [07:24]: Exactly. Exactly. And hey, the other book that I want to recommend is, I wish I could remember who recommended this maybe it’s called Daily Rituals, and I thought that it was going to be this writer discussing a bunch of daily rituals and analyzing him and pulling commonalities, it’s not. It’s 150 short chapters and all it is is the daily ritual of some famous creative person dating all the way back into the 1700s, there’s composers, there’s writers, there’s artists. I think there are going to be some maybe some tech people, just anyone that he could pull Daily Rituals from. He’s putting a chapter in their form. And I have to say, it sounds like it’d be really bad or dry. It’s actually really interesting, and maybe I’m just kind of a weirdo in this respect but listening to people’s daily rituals is giving me a couple of ideas, there are just some things that I want to improve. I’ve been struck by all these creatives had a daily ritual. Even when it might change over time based on their life situation, like some of Mad Kids and had to change it, but it’s shocking that none of these people said, “I’m going to be a creative and I’m just going to write when inspiration strikes.” It really is a testament to having a routine if you’re going to be someone who’s trying to create and produce on a regular schedule.
Mike [08:36]: Very cool.
Rob [08:37]: Today, Mike and I have the pleasure of having Taylor Pearson on the podcast. Taylor has written a book called The End of Jobs and if you’re trying to get a frame of reference for where you might have heard Taylor’s voice before, he worked for [?]. He ran a lot of their e-commerce marketing and he’s been on the Tropical MBA podcast several times. So, Taylor, welcome. It’s great to have you on the show.
Taylor Pearson [09:01]: Thanks for having me. I appreciate it.
Rob [09:03]: So, as I mentioned, Taylor wrote this book called The End of Jobs and the main premise of the book is how investing and entrepreneurship is perhaps a more logical choice as times are changing. It’s a more logical choice than having this salary gig with the so-called stability of having a long-term job. And Taylor touches on a bunch of interesting things about how technology has shifted and has made jobs that were previously not possible, very much possible and how it’s made small niches that could never have done 15 years ago, lucrative enough that you could frankly quit your job and then travel the world doing it. So Taylor, one of the things that I like about your book landing page which is a taylorpearson.me/theendofjobs is you have a really nice summary of it and then you have this section that I always like to see and it’s who should read this book, and you have four different groups. You have early stage entrepreneurs which makes sense because you’re going to teach them how to get this doing. You have established entrepreneurs. I like your explanation for this. You basically say, “Do you have friends who don’t understand what you do? This book will help you convince folks that entrepreneurship is a reasonable choice and then students and corporate employees.” So, with that introduction, would you mind giving folks your own summary of The End of Jobs to kind of give them a frame of reference of why this might be interesting to our audience?
Taylor Pearson [10:25]: Yes. So, the book kind of starts with me starting to work with [?] from Tropical MBA. I started working with them and 2012 and that the time was basically just, I just wanted to travel. That was my fundamental motivation. I wasn’t overly interested in business. I just wanted to be able to go to the country. I want to travel and so I learned a bunch of marketing skills and was working in a marketing at the time because I knew if I develop this skillset, I’ve seen a lot of other people with the same skillset travel and I knew I could do that. So, I showed up to their conference in 2012 and I didn’t really know it was going on, but when I came back two years later in 2014, I kind of had seen some changes that were going on that kind of drove me to write this book that a lot of my friends from Memphis or I would just go in Birmingham, Alabama, we’re kind of on the same trajectory and I was looking around at the people in Bangkok and the way innate differences it was like they, clearest thing in the room, my friends at home were smart and the people on Bangkok were smart and did a lot of ways. The difference was just that they had a better choice that the opportunities they were pursuing is entrepreneurs were better opportunities and a lot of that was driven by kind of the changing nature of technology and the impact that had on jobs and on work.
Rob [11:41]: So one of the things you say in the book, you talked about how the internet has made stair stepping possible and you talked a lot about the long tail and how that works. Would you mind explaining to folks what the long tail is and why it helps entrepreneurs get started these days?
Taylor Pearson [11:54]: So the long tail was a concept that writer for Wired magazine and Chris Anderson came up with and basically what he saw happening was there were kind of three forces of technology and more specifically the internet. The first was this democratization of the tools of production. So if you look back 20 years or 50 years ago, if you wanted to make something, even something like a digital product which now we think of as like so easy to make. If you wanted to make a record album which one is a digital product. 20 or 30 years ago you had to go into the studio and you had to rent at the studio space and you had to record this expensive equipment and now people do just like GarageBand on their computer and that’s through a cross industry as the rise of SAS, all these software tools who democratized production. It’s getting easier to manufacture in China. It’s getting easier to make things. The other thing that’s happening is this democratization of distribution. So, and again, you go back 50 years and if you wanted distribution you basically had to go on NBC, ABC, CBS that there were a very limited number of distribution channels and that’s of all went to cable and with so they moved like onto YouTube and this is like cliché now but the middlemen are dying. This is through a cross distribution channels from video to text to audio, you got podcasting and blogging. All of a sudden, for a very cheap compared to what it cost 20 years ago, anyone can establish and build a distribution channel. And then the other thing is that algorithms have basically connected these two; the distribution and the product creation. I know we could talk about this a little more Rob. I know you had a duck boat E-book at some point?
Rob [13:31]: I did, it was plans actually for building a duck boat with stuff you could buy at Home Depot.
Taylor Pearson [13:37]: And what’s interesting is, you couldn’t have built that 20 years ago, or you couldn’t have sold that product 20 years ago because there just weren’t, like you’re not going to go to the neighborhood Farmers Market and sell it at the shop and sell the duck boat E-book but you have to have the internet and more specifically you have to have Google to connect people that are looking with that duck boat E-book to someone that can produce the duck boat E-book and can do it for much cheaper and can distribute it much more effectively than what’s possible. And this enabled when you look all these businesses that we’re going to talk about that are stair step businesses. They’ve been enabled by all this technology on the long tail and it’s not only continuing and that these are getting more accessible but it’s accelerating.
Rob [14:16]: Right. And that you brought up the stair step I mean that one of the two paths that you outline are scripts, I think you’re calling them, right? It’s kind of like, they don’t follow the script of get to 95 and work for 40 years like our culture tells us to, but follow one of these alternative scripts and one of them is stair stepping which we obviously talk a lot about on the podcast here. And the other one is apprenticeships and I think if you want to hear more about apprenticeships, folks can read your book. We’re not going to have time to cover them up today but we are going to talk about some examples of stair stepping and mindset behind that.
Mike [14:47]: So as part of this democratization of the internet gives everybody in terms of being able to create any product of some kind and then distribute it essentially on your own, does that render a lot of the existing distribution channels more or less irrelevant because you said those middle players are getting squeezed and they’re kind of being pushed out of existence and you that you could say, “Okay. Well, they’re getting pushed out of existence or they’re getting put into a position where they simply become larger.” Is that the case or are they just simply being pushed out of existence and they’re not getting any bigger because of the internet making everything accessible to everyone else?
Taylor Pearson [15:20]: Well, they’re certainly losing market share. Like if you look at video content being consumed, you can look at the pod sharks for three years ago, it was 100% between I think NBC, ABC, and CBS were the three original ones and now it’s like 20% YouTube and 2% Vimeo and 30% cable and like the overall market share is definitely getting much smaller for established players and seeing much larger in general for these new distribution channels. And so as those grow and gain market share, people that are investing in them are obviously getting a part of that market share.
Mike [15:56]: Well, sure, but isn’t the overall size of the market increasing? So, the question would be even though if their market share are maybe getting smaller, does that mean that they are getting smaller as well?
Taylor Pearson [16:05]: I guess it depends on the industry like if you look book publishing, I would say it seems like they are getting smaller, the publishing company, some of the smaller publishing houses are going out of business. How that affects like the very, very top of the market? I’m not sure. I guess that the point in my mind is, the opportunity here for individuals or for entrepreneurs is that these very accessible distribution channels like YouTube, Google, like social are very cheap and they’re getting more and more powerful and that that’s what individuals have access to. So kind of I guess regardless of what happens with the bigger players, there are still more opportunity for individuals.
Mike [16:43]: So in terms of more opportunity in making everything more accessible, can you talk a little bit about some of the problems that some people might have in recognizing some of those opportunities?
Taylor Pearson [16:52]: Yes. So I think one of the reasons we don’t see a lot of these opportunities is we have this very local bias, like we have Dunbar’s numbers kind of which is frequently set that were used to these tribes of 150 people and that’s how our minds work. We think if I only have one friend that likes this, then there’s probably only one friend, one person in the whole world. That’s the cognitive bias we have but say there’s going back to the duck boat example, maybe there’s only 10,000 people in the US that like duck boats, but if 10,000 people like duck boats and all of them pay $100 for an E-book, that’s $1 million in revenue.
Rob [17:27]: Cool. So, let’s talk a little bit more about stair stepping, I mentioned this earlier. There are obviously a lot of examples of folks doing this and some of whom we’ve had on the show like Phil Derksen is a good example with his WordPress plugins, he was in an episode a few months ago called Eight Years to Overnight Success. And David Hehenberger who also has WordPress plugins, he runs Fatcat apps. He’s stair stepping his way up and [Free Davies?], he’s also in the D.C. and he does a Magento plugins if I recall. There are a bunch more. We don’t need to list them all here. What are some good examples that you’ve come across and maybe other areas because it’s not all about software just because this podcast is, there are certainly people doing this and publishing maybe an e-commerce productized service, that kind of stuff. What are the stair stepping examples that you’ve come across?
Taylor Pearson [18:14]: So, kind of going back to this idea of these new distribution channels or these new markets share expanding the thing I noticed looking at people in other industries, is they tend to ride that raising tides. So you see a lot of like you were talking about WordPress plugins that as that WordPress ecosystem is expanding, a rising tide raises all boats and so kind of getting in the ground level of that as more and more people come to WordPress, even if nothing else changes about you don’t improve the market and you don’t improve anything else, there’s still going to be more potential customers for that product. And so that’s true in other markets as well like when I see a lot of people right now is Amazon, and as more and more people shop on Amazon and Amazon makes their platform more and more available to sellers, a lot of people have forgotten business moving very quickly by just using this existing and growing Amazon distribution channel and putting their products or white labeling products on that distribution channel. I see the same thing like did you look at Ramit Sethi’s trajectory? Kind of like stair stepping his way up in info product. So, I think his first info was like $9 and he likes to talk about this all the time that he went from $9 info product and then he did his earned his 1K course which I think was a few $100 and now he’s going to be selling $10,000 courses. So he’s gradually moved up this value chain. And then the same thing tends to happen with productized services that people will come in and test the productized service usually very cheap since it’s mostly their time and labor and then over time, as they moved up the market, they can afford to charge more and more for the same service. So, if you’re doing email marketing for a small business, you can’t contribute the amount of values as you can for a large business but it does what you get momentum and trajectory and you get to understand how the processes work. You get referrals up the market and to new customers and you’re like stair stepped up the value chain.
Mike [20:04]: I think in many ways, some of these things in terms of the stair step approach not just in terms of different types of products but even within in individual products like you said Ramit Sethi’s different info products or productized services and pretty much any of these types of products where you could sell it for a little bit or you could sell it for a huge amount of money based on who your customer is even though at its core, the product itself is generally the same thing. It’s just a matter of where it is that you’re selling it in terms of the small business versus the large business. But, it seems to me like there’s a correlation between how long you’ve been doing it and the experience that you had doing it as to how much you can charge for it and the types of businesses you can sell it to just based on the amount of experience that you have doing it and the amount of value that you’re providing and it’s not as if you could step in and like Ramit Sethi couldn’t have created this $1,000 products and sold it as well as he has on day one because not only did he not have the experience but he didn’t have the credibility and he didn’t have the knowledge that goes along with all the different marketing efforts that need to be in place in order to make that $1,000 product worth it. I mean he basically practiced those things at that lower level first.
Taylor Pearson [21:17]: Absolutely, and you tell what those businesses. They just have so much momentum at this point. They’ve been doing it and they have all the systems in place and they have the people in place and it gets easier and easier to launch bigger and bigger products. And I think the other thing that doesn’t get talked about as much is kind of the mindset is generally everyone, I vividly remember the first time I made a dollar on the internet and it was like this magical moment of like, “Oh my god. You can make money on the internet.” That was nothing I never done before. I didn’t know anyone that ever made money on the internet, but that progression continues to move up and as you have one successful product launch in your belt or one successful product or company or plugin, you kind of gain the confidence to move into bigger and bigger project, I mean you could see that in Ramit’s trajectory that he’s much more confident now and he’s writing in his sales and presentation when he was five years ago.
Rob [22:06]: Yeah. And I would venture to say that he’s much more competent at it as well. That’s something I grew in over time. If you look back at any of the copy that I wrote back in 2007-2008 versus what I write today, it’s night and day. I cringe now. The stuff that I were back then worked well enough but I didn’t know what I was doing in a lot of senses. In addition, there are so many aspects that I feel like stair stepping contributes to, right? It’s like there’s true competence. You just get better at something. There’s also confidence that you can do it and that helps make you more competent because you, it just builds over time and you can start tackling bigger and bigger things and you’re willing to risk bigger and bigger things because it’s a little more calculated, right? It’s not like you’re putting all the chips on the table for this huge moon shot. You’ve basically worked your way up there and you kind of deserve to be there. And then, I also think that kind of like a network effect or maybe it’s better said as like relationships because if Ramit came out of the gate and tried to sell a $10,000 product without having sold all these other products, people are just much less likely to buy it. I think that we did the same thing with the Micropreneur Academy which is a little lower priced and then launching MicroConf which is obviously a more expensive event because it’s an in-person thing. It would’ve been a lot harder for us to just suddenly jump out of the gate without having the podcast, without having my book and the academy, and all this stuff like just it takes time and I think the mistake that I see people doing when they’re not stair stepping is that they know it’s going to take time but they spent two years building something and never launching. So you’re not getting the experience, you’re not really gaining in confidence, and if it fails, you really drop, you can’t do much. But if during that two years, instead you launch some smaller efforts whether it’s a podcast or a blog or a drop ship e-commerce site or a WordPress plugin, then you can start gaining these things. By the time you get to the end of the two years coming back to what you said earlier, there’s a ton of momentum. Your stair stepping is a real big momentum play, right, that the longer you do it, the faster that fly will start spinning.
Taylor Pearson [24:11]: I thought about it again to have another analogy it was if you look at competitive weightlifting or I do amateur collar lifting competition sometimes, the people who end up doing the best, the way it works is you have three attempts but usually start in a low number and move to a much higher number and kind of take these jumps that the people are trying to start at a higher number usually end up failing because they don’t kind of get the confidence of the momentum of kind of building up gradually and being able to get eventually a higher outcome.
Rob [24:39]: Yup. And I think the same can be said for playing a sport, let’s say play baseball and you start in a little league and then you play high school, and then you play college, and then maybe you go minor leagues and then eventually you get to the pros but you don’t just try to jump into the pros when you’re 25 having never done anything before.
Taylor Pearson [24:55]: And coming back a little bit full circle to the importance of the long tail is it didn’t use to be possible to gain that momentum like if you had to lease a store front and you’d have all this startup capital, and you had to pay for advertising in a newspaper or whatever it was, like it was very expensive to start getting momentum whereas now because of basically the internet, it’s very, very cheap.
Rob [25:18]: Yeah, that’s interesting to think about not stair stepping and kind of building your way up is perhaps could be thought of as a mindset that people had 20-30 years ago because it really wasn’t an option to do the service. It was very difficult, I don’t know anyone who was doing it back then.
Mike [25:34]: One of the topics that I talked about in my book was competition and how you can’t let competition essentially either stifle you or push you away from choosing to go after a particular niche product or a type of market. What sorts of thoughts do you have on that and how that competition in the market plays into the types of markets that you can get into and the types of products that you can develop?
Taylor Pearson [25:57]: I think one role competition plays is is a lot of competition usually means a growing market and even a growing market with a lot of competition you’ll still do very well and it’s like going back to the WordPress ecosystem, it didn’t exist 15 years ago. I’m sure there was if you ask someone five years ago, is there a lot of competition in WordPress? They would say yes, but businesses that came in and grew with that ecosystem even though there was a lot of competition, it’s just naturally grown and you look at there are bigger example this might be like Airbnb and Craigslist. First there was Craigslist and now people find housing and Airbnb just like sliced off a little part of Craigslist right like we’ll just want to do vacation rentals and they actually like I think had some APR where they’re automatically posted in their listings to Craigslist to bring people over and now you see people that build business on the back of Airbnb and they rent out houses and there’s a gradual even as there’s more and more competition because the market is growing, everyone is growing and everyone is making more money.
Mike [26:57]: So the idea isn’t that you should stay away from competition, it’s that you should kind of embrace it because especially in those places where the market size is growing because it gives you greater opportunities.
Taylor Pearson [27:07]: Yeah. Like a rising tide it raises all boats and Richard Koch has actually written a great book about this called The Star Principle and it kind of goes through the math of it, but if you kind of look at a growing market and compound interest that picking the right market is or picking a growing market is more important than almost any other decision when entering into a new marketer or a new niche. And even if there’s a bunch of competition as long as the market is growing quickly, there’s always going to be new opportunities. You can always niche down as that market gets bigger and bigger and bigger as Craigslist got bigger and bigger and bigger, Airbnb just carved off like a little niche. You can carve off a little niche of again WordPress with WordPress plugins.
Rob [27:46]: Yeah. It’s interesting we say this because as we pivot a drip from being just a more of an auto responder marketing service and we pivoted in the marketing automation, I did a lot of research into the marketing automation space and I found out that it was growing very quickly and then that projection is like Gartner’s projections and all these other projections or that this market is getting substantially larger over the next three years I think and that was one of the, I want to say it wasn’t the reason we did it. I mean we’re being asked by customers to build this, but it definitely encouraged me to enter this market even though it was it was many months of development to get into it because I figured that no matter what, even if we occupied the small niche, it’s still a small niche that a lot of people are flooding into and that there are going to be folks looking for the service. So, it’s an intuitive thing I think but it’s nice to hear there’s a lot of other I guess either research or other opinions supporting that premise.
Taylor Pearson [28:39]: Yeah. If you haven’t read The Star Principle, I’d definitely take a look. He lays out the math and I can’t remember off the top of my head but basically the premise is as long as you can be the number one player in the growing market, almost everything else doesn’t matter as long as you can hold that number one position and as long as the market keeps growing and like obviously the opportunity we kind of talked about is this I need to take a niche section of a growing market whether it isn’t a clearly established one and kind of submit yourself as the established player.
Rob [29:05]: Right. Yeah. I’ve read the book actually and yeah, it’s good, but what’s nice is that you’ve pretty much summarize the entire book in those three sentences because that’s kind of the premise, right? I think it’s the market is you want to be the number one player and the market should be growing at least 20% to 30% per year, those are kind of his two criteria. I don’t necessarily agree that you have to be the number one player. I think if you raise funding and you want to become a $100 million company then yeah, probably, right you do need to be number one. But I think you can carve out a perfectly livable six or seven-figure business bootstrapped and not need to be number one in a market like this, right? Especially something like whatever, email marketing or marketing automation or WordPress. There are so huge that you can carve out a fulltime living with just a tiny slither of that market.
Taylor Pearson [29:50]: My perception is, what he is talking about and like [Mark Anderson?] talks about this as well is like taking a section in the market so it’s like making barriers or target is marketing for authors or like being able to pick a niche and be the number in that niche of Infusionsoft is like massive marketing automation but it’s not clear if they’re kind of or what their niche particularly is.
Rob [30:11]: Right. But I think their niche is SMBs, right, small and medium-sized businesses because the players that were there before them which were like Pardot, Marketo, and Silverpop, those less own enterprise. I mean they’re pricing with 1,000 bucks a month and up and it was all high-tech sales right with these big lifetime values. Infusionsoft, as far as I know was the first player to come in and be $200-$300 a month which at the time for marketing automation was cheap.
Taylor Pearson [30:33]: Was great.
Rob [30:34]: Yup. That was their niche, right, they were going for the SMBs and now you have a Drip coming in under Infusionsoft and they’re other players doing that as well. And you even have MailChimp trying to move a little bit by adding some of their automation. So, I do think there’s room. The market is big enough. There are a lot of niches in it that can make you 10 grand a month and that’s plenty to live in on most places on earth.
Taylor Pearson [30:59]: Absolutely.
Rob [30:59]: So to switch it up a little bit, I’m curious why did you choose to write this book? Was it something that you felt so strongly the world needed to hear that you wanted to get it down and communicate it? Is that something you’ve been thinking about for years or was it just kind of a stroke of insight and you dove in and did it? Why did you decide to put this on paper?
Taylor Pearson [31:18]: A list all of the above is probably the honest answer. I think what frustrated me looking out on the market and a lot of the ways people talk about entrepreneurship is that a lot of the narrative around it is very much based on I want you to this like a state the cubicle narrative of like get away and everything is terrible and your corporate job sucks. And no one is really having an intelligent discussion about the real merits of entrepreneurship as kind of an intelligent decision that is like follow your passion or escape the cubicle one and that was the way I was thinking about it and that was the way I saw a lot of other entrepreneurs around me thinking about it. I wanted to kind of insert that narrative into the dialogue and I think that there’s a better case for entrepreneurship under those premises as not a just a follow your passion thing but as an intelligent recent life decision.
Rob [32:11]: I like it as a compliment to all the tactical stuff right there. There’s a lot of places, there’s a lot of books, podcasts, blog posts, et cetera about how to do it but I think you starting to look here at why you should do it and beyond the freedom reason, right? We know that you should do it for the freedom and the ability to live where you want and hang out with who you want and spend more time with your family, and all that kind of stuff. But, you really look at it from even like a higher level point of view, right? It’s like why this could potentially be a more logical choice than long-term salaried employment.
Taylor Pearson [32:45]: Yes. And how the kind of changing marketing conditions and what the trends are going forward that as we see kind of globalization move faster and faster and outsourcing move faster and faster and technology move faster and faster that a lot of the intelligence that kind of evolved over the 20th century around long-term stable employment isn’t necessarily true anymore, that a lot of the promises or the implicit promises that were made to the younger generation based on what happened to the old generation aren’t necessarily true that the nature of markets and the way things are moving and changing so fast is people have to be able to adapt to those markets and have to develop a skillset around not just implementing kind of known systems and known solutions for being able to innovate and create and connect their own.
Rob [33:30]: Right. Because there’s even a school thought that anything that is not a kind of a creative job is either going to be outsourced to a place where it’s cheaper or frankly the computers and/or robots are going to take over, right? And I don’t mean take over in the terminal type of way but they’re going to slowly do more and more of our jobs including things like driving trucks, and driving cars with self-driving car movement, like taking orders at a drive-thru. Like, I think it’s 10-15 years until we have a computer that has good enough voice recognition and can interact with someone to where you don’t need that person taking a food order anymore. I know that obviously we’re going to have waiters and waitresses for the foreseeable future but they’re already having iPads or tablets at tables where you can order and you need fewer and fewer of those folks. So there are certainly a case to be made for kind of moving up the chain in terms of creativity and developing your skillset which I think is one of the premises here of your book.
Taylor Pearson [34:23]: Yeah, we’ve seen, I guess it’s the two-sided coin that the glass feeling is kind of disappearing but so is the glass floor in that sense that a lot of these kind of predictable, safe middle class jobs like I talked to a friend that does web design and he’s kind of saying the junior web designers are disappearing because you’ve had software comes in that lets you do basically junior web design as like drag and drop templates and that kind of work, that kind of routine work is being phased out.
Rob [34:52]: So Taylor, you’re doing something interesting with your book. Not only are you giving the book away for the first five days it’s available but you’re also giving away a number of business books when you launch. Could you tell us a little bit about that and where folks can go if they want to be notified when your book is available for free here at the end of the month?
Taylor Pearson [35:08]: So there’s a great quote by Charlie Jones it says, “The person you will be in five years is kind of the sum of the five people you spend the most time around and the books you read.” And that’s certainly been true of me and with a lot of people I’ve seen that the books they’ve read had been a big impact. So, I wanted to give away the books that I felt had been the biggest influence on me and have been recommended to me over the past five years. So I put together 67 books, they’re my 67 favorite books on entrepreneurship. It’s $1300 for the books and I will be giving them away for 10 days from June 15th to June 27th. So if people want to get, jump in that. I’m giving away the books and then I’ll let everyone that joins know about when the book is free on Amazon as well.
Rob [35:52]: Cool. And that’s at taylorpearson, P-E-A-R-S-O-N, .me/winbooks and they can sign up to both win the books and like you said to be notified because your book, The End of Jobs is going to be available for free on Amazon for five days and then after that, it’s going to cost whatever, 10 bucks or 20 bucks. So, and if they want to hear about a when it’s free they can enter their email at that page.
Taylor Pearson [36:15]: Yup.
Rob [36:16]: Awesome. And if folks want to keep up with you aside from this, what’s your Twitter handle or anywhere else they can keep up with you?
Taylor Pearson [36:20]: My Twitter handle is CtaylorMPearson or you can email me taylor@taylorpearson.me.
Rob [36:27]: Sounds great, man. Thank you so much for coming on the show today.
Taylor Pearson [36:30]: Thank you so much for having me and thanks everyone for listening.
Mike [36:32]: If you have a question for us, you can call it into our voicemail number at 1-888-801-9690 or email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Out of Control by Moot used under creative commons. Subscribe to us on iTunes by searching for startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening and we’ll see you next time.
Episode 240 | Podcasts for Startup Founders
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about podcasts for startup founders. They list and classify their favorite podcasts and discuss them in detail.
Items mentioned in this episode:
- Microconf Europe
- Drip
- micropreneur.com
- Bootstrapped Web
- Bootstrapped with Kids
- Founder’s Journey Podcast
- Product People.TV
- Entreprogrammers
- RogueStartups
- Tropical MBA
- ZenFounder
- Nights and Weekends Podcast
- Zero to Scale
- The Rocketship Podcast
- Seth Godin’s Startup School
- This Week in Startups
- A16z
- Mixergy
Transcript
Mike: [00:00]: In this episode of “Startups For The Rest Of Us,” Rob and I are going to be talking about podcasts for startup founders. This is “Startups For The Rest Of Us” episode 240.
Mike [00:16]: Welcome to “Startups For The Rest Of Us,” the podcast that helps developers, designers and entrepreneurs be awesome at launching software products. Whether you’ve built your first product, or you’re just thinking of it. I’m Mike…
Rob [00:23]: And I’m Rob.
Mike [00:24]: And we’re here to share our experiences and help people avoid the same mistakes we’ve made. What’s going on this week Rob?
Rob [00:29]: MicroConf Europe tickets are on sale. Feels great. Go to microconfeurope.com if you’re interested in hanging out with us for a few days in Barcelona at the end of August.
Mike [00:38]: I am so looking forward to that.
Rob [00:40]: I am too. It’s going to be fun. It’s going to be sunny and it’s right on the water. I’ve heard it’s a pretty amazing city. So we are planning our annual month in Europe again, so we’ll be leaving around the first of August and going to France for a couple of weeks with Sherry and the kids. And then we will be heading down to Spain for the latter half of August, and I’ll meet up with you guys in Barcelona for the conference.
Mike [01:04]: Very cool.
Rob [01:06]: How about you? Are you going to do any sightseeing when you’re in Barcelona?
Mike [01:07]: I don’t know. I’m still trying to work that out with the wife to figure out whether or not she can make it or not. Like right now, the answer is no. She probably cannot just because it’s right around the time that school starts for the kids, and we really cannot. We could probably pull them out, but it’s just a matter of how long would be able to pull them out. Plus she’s got a fitness studio that she runs, so it’s a little bit harder for her to get away for an extended period of time, just because she has clients who come see her every week. So we are still trying to figure out exactly what we are going to do or if she is going to be able to make it at all.
Rob [01:35]: Sure. Hey, you and I did our first, I guess we’ll call it a Q&A webinar inside Founder café yesterday, right. So in the past, we’ve done conference calls inside Micropreneur Academy and Founder café, and we wanted to try out more of a visual format and so you and I did Google Hangout, and then we had Chatroll there, and so the members of micropreneur.com and Founder café were able to ask questions. We took a bunch of questions in advance and talk through it. I have to admit, I really enjoyed it.
Mike [02:04]: Yeah. I think it works really well. It’s funny because I hadn’t really considered the dynamics of using something like Google Hangouts and Chatroll versus the conference calls. My impression or at least my belief early on had been that, “Oh, the conference calls are going to be more interactive because everybody can talk to each other”, but it never really seemed like that was the case, and I don’t think the attendance ever really got to the levels that we really wanted to when we are doing the conference calls. And I think part of that is just because, if it’s a conference call people have to get on the phone in order to make the call, and they can use Skype, but it’s a little bit difficult to do that versus something like what we just did, where people can be in a chat room at their computer and just listening on their headphones and streaming it, and that works so much better for somebody who is maybe sitting in the office or sitting in the co-working space or whatever, and being able to participate without having to actively be on a phone call.
Rob [02:57]: Exactly. And it was kind of like a live ‘Startups For The Rest Of Us’ Q&A episode. I spent time preparing and thinking about it like I would on an episode and it was cool that you and I could discuss these questions that were coming from Founder café members, and then folks were able to ask questions live right there in the chat for kind of confirmation or for maybe clarification on points that we are making as we were talking about them.
Mike [03:21]: My initial impression going into it was that it was going to be more like a podcast, only it was video, so there is going to be no editing, so try not screw up too bad.
Rob [03:29]: Yeah, indeed, I know. We are used to the editing. How about you? What’s been going on?
Mike [03:33]: Well, this past week I’ve visited a co-working space over in Worcester. Did that on Friday morning and I spent a couple of hours working there, but my laptop really wasn’t set up for me to be working remotely, because I haven’t travelled for work, probably close to a year at this point. So it was a little bit of challenge just because I don’t do a lot of work on my laptop any more, so there was a lot of stuff that just wasn’t there or wasn’t set up, so it was kind of a pain in the neck. I ended up calling it quits after about two or three hours and just came back to my home office and worked from there for the rest of the day. But, I spent earlier today wasting a bunch of time getting all of my data moved out of SugarSync and into Dropbox so that I can work remotely a little bit better. I think my laptop is in a little bit of better position right now, but I’m going to try it out for a couple of months this summer mainly because the kids are home and I moved my office to another place in the house, so I know that they are probably going to be interrupting me a little bit more this coming summer than they have in the past. So it’s going to be a nice little experiment to try out and see if a co-working space will work out. And there are some software developers there, so that’s kind of nice to see as well.
Rob [04:42]: That is nice, yeah. It’s good to be around the energy of other folks working. We’ve talked about in few of just being able to get out of your house whether the kids are there or not, it’s nice to have the change-up. It creates more creative energy and stuff like that. Before we dive into podcast, my last update is that I’m starting to gear up for some Drip webinars. We are getting that part of the funnel going. We have a bunch of flywheels running right now with content marketing on the blog and word of mouth and referral programs and all that stuff, and so we are getting decent flow of incoming trials and I’m looking taking the next step and increasing those stair stepping up my trial count, if you will. And so we are going to be starting a whole series of webinars on different topics around marketing automation, so keep your eyes peeled if you’re interested in stuff about marketing automation or e-mail marketing, come to getdrip.com and you can sign up for the list there and we’ll be letting folks on that list know when we launch.
Mike [05:40]: Cool. So what’s on agenda for today? Podcast, right?
Rob [05:42]: Indeed it is. For startup founders specifically. We last discuss this topic 2-1/2 years ago, it was episode 104, came out in November of 2012. At this point, I subscribe to 47 podcasts, and what I wanted to do is narrow it down to kind of my top 20 recommended podcasts for startup founders. And as we did in the episode a few years ago, we are going to classify them. We have tactical, we have motivational, we have entertainment, and we have exposure to new thoughts and ideas. So those are the kind of the four categories and some podcast fall into multiple categories, if you think about Mixergy it’s both tactical and motivational. I would tend to think of our podcast here as a similar thing. But what’s interesting is, I started with the list that we had 2-1/2 years ago, and shocked by the number of podcasts that are just no longer around or that became so infrequent that I unsubscribe from them, it was maybe 50%-60% of them were just gone.
Mike [06:41]: That’s kind of crazy. I’ve heard from a lot of people that it’s surprising how long ‘Startups For The Rest Of Us’ has stuck around and how we are still going after five years.
Rob [06:51]: Yeah. I think the average lifetime of a podcast must be- I’m sure if you take all podcast, [and you averaged it?] it’s probably like two months because there are so many podcasts that do three or four episodes and then die. But even with things that make a pass the first few months, I don’t think it’s much more than a year or two, that most podcasts that I listen to last, which tends to be a bummer if it’s the stuff that I really enjoy.
Mike [07:10]: If it’s coming out every week, that’s still like 50 episodes.
Rob [07:13]: That’s true.
Mike [07:14]: If you’re talking a half hour episode, that’s still 25 hours worth of content.
Rob [07:18]: Right.
Mike [07:19]: It’s surprising but it’s not. I mean I kind of lose a sense of time after a while, so I don’t know, I think it’s the kids eating away my brain.
Rob [07:26]: Sure, indeed. And so this time, I wanted to narrow it down to a tighter list of 20. There are several podcasts that I do listen to, obviously there’s another 27 that aren’t on this list and there are shows like the ‘Daily Tech News Show’ with Tom Merritt that I really enjoy. Tim Ferriss Show is pretty good. He interviews folks. I really like 99% invisible and Planet Money, even Dan Carlin’s Hardcore History. But, since those aren’t super startup specific and I don’t necessarily think it’s going to help you expand your mind or push you forward in your startup, we left them off for today, but I did want to give them kind of an honorable mention.
Mike [08:02]: So I have a question for you here. Because you said you have 47 podcasts that you are subscribed to, I’m subscribed to 21 and I cannot keep up with them, so I think we should talk about this for a couple of minutes. How is it that you are able to go through those and what’s your process for filtering some of these out? We will talk about this for a second and I’ll let you know what I do, but I want to hear how you do that.
Rob [08:24]: Sure. So there’s a couple of things that I do. One, I listen everything on 1-1/ 2 speed, sometimes 2 speed but most often 1-1/2 so I can burn through a 30-minute show in 20 minutes. So twice a week, I have a 15-minute drive to my office, where I also drop my son off at his school, and I can take care of a couple of podcasts during that time because also I typically skip intros. I typically and before the outro starts, so you might get another minute or two off of the podcast. I also filter fairly heavily where if I see an episode come up that is about something that I’m not doing right now, I will delete it. There’s a lot of interview shows that interview folks maybe about social media or Facebook ads or how to do something on Instagram or how to do something on YouTube. And since we are not doing YouTube ads right now, I just won’t listen to that episode. And the one other thing I do is, let’s say I’m going to go travel, from the time that I step in my car and leave my house, I have an earbud in. So I drive to the airport with an earbud in. I get out, I check in, I go through security, all with an earbud in. I wait and I get on the plane, and on the plane, maybe I’ll watch a movie, but if I’m going to try to sleep, typically I’ll listen to podcast. So there is like hours on both ends of a flight as an example. I can churn through 30 podcast episodes as long as I delete some, I’ll skip a few or I’llskip around, that kind of stuff. I also have an earbud in when I’m making breakfast in the morning. I have one when I’m making dinner in the evening, when I’m doing dishes, when I’m out doing yard work, when I’m taking out the trash. Like most of my off time, when I’m not with my kids and when I’m kind of doing manual tasks. Even if it’s like five minutes of manual tasks, I can crank through stuff. So that’s kind of my process. How about you?
Mike [10:14]: I don’t do it nearly to that extent. Just to be clear on this, do you have one earbud in or two?
Rob [10:19]: One.
Mike [10:21]: Okay. So you’re kind of half listening to the episode and you are also kind of watching what’s going on around you, right?
Rob [10:28]: Yeah. Well, I’m fully listening to the episode. Just because it’s in one ear, I can fully hear it, but I have the other one in case some kids start screaming in the other room that I can hear them. But I’m not listening while I’m talking to my kids or while I’m watching TV. I’m not multitasking in that respect. I’m multitasking the podcast with doing the dishes which, since it so manual, it’s not like it’s taking any mental energy.
Mike [10:50]: Got it. I kind of get that. We have a dishwasher, so I don’t really bother with that kind of stuff.
Rob [10:55]: We do too, I just mean like cleaning up or clearing the table, wiping, you know. I mean it’s 10 minutes to kind of get everything clear and there are certain things we hand wash because we have really nice – [crosstalk]
Mike [11:03]: – So you’re exaggerating the level of dishes that you do it’s what you’re saying.
Rob [11:06]: Yeah, exactly. I always do that. Don’t you do that? Don’t you tell your wife you do an hour of dishes a night?
Mike [11:10]: No. I cannot get away with that. Yeah, I use Cast so I get the ability to listen to podcasts at a higher speed and you can set it at these in between stages, so it’s like 1.5 or 1.7 or 1.8 speed. Some podcasts I can listen to at, close to 2.0 or even some of them a little bit over, and then there’s other ones I have to do it like 1.6 or 1.7. It’s kind of depends on which podcast. But other than that, I just listen in the car when I’m travelling different places but I try to avoid when I’m sitting down at my desk and doing work. But other than that, I really don’t get too many opportunities except when I’m mowing the lawn or something like that or weed whacking out on the back hill. Those are the times when I get to do that.
Rob [11:51]: Sure. Yeah. I never listen when I’m working because I cannot, because then you background it, right? You’re not actually listening to it.
Mike [11:57]: Right.
Rob [11:57]: I wouldn’t do that.
Mike [11:58]: Got it.
Rob [11:59]: The other thing to keep in mind is, although I have 47 of them, many of them are, I think there is only one that’s once a day, there is a handful that are once a week, and then there is a bunch that are like once a month. I mean that just kind of naturally happens, so they are not necessarily things that are spitting out episodes all the time.
Mike [12:17]: Yeah. See what I did is I setup a couple of different what are called episode filters inside of my podcast app and one of them is my top podcast. So anything that I will listen to just about every single episode, goes in there and then everything else goes all into the unplayed area, where if I get a chance to listen to it, I will. And then there are certain podcasts where I will basically just make an arbitrary decision that says, “If this gets to have a queue of more than 10, just start deleting old episodes,” because if I haven’t gotten to it, then I’m probably not going to at any time in the near future, and at that point, it becomes a list of things for me to do, and I just don’t want to do that. I don’t need more things to do, so just get rid of it.
Rob [13:00]: I think that’s a nice filtering scheme, that’s actually really good.
Mike [13:03]: So it seems to work for me, I mean at one point. Before I did that, I had, it was like 200 different podcast episodes and it wasn’t working for me.
Rob [13:11]: Yeah. Once you get to that point, it’s ridiculous. You’re just not keeping up. It’s like your having 50 articles in your read later queue. It’s like you’re never going to get to those. You’re just creating work for yourself.
Mike [13:20]: Yeah.
Rob [13:20]: Cool. So let’s dive into these. So we have our classifications of tactical, motivational, entertainment and exposure and then I also have categories of bootstrapping, mastermind, startup interview, that kind of stuff. The first podcast, and this is in alphabetical order within the categories, so it’s in no particular order. The first one is Bootstrapped Web, it’s with Jordan Gal and Brian Castle and we classify this one as motivational and tactical. The podcast started out with just Brian and he later brought Jordan on and that’s when I think they really hit their stride. It has a similar format to ours, they do some updates on products, they do interviews every now and then, and they often have like tactical things that they are sharing about what they are doing. So I’m a fan. I’ve been listening to this for quite some time.
Mike [14:02]: The next one on the list is Bootstrapped with Kids and this is with Scott Yewell and Brecht Palombo, and Brecht is travelling the country right now in air-stream, I believe it is, I know he’ll like the shout-out for that.
Rob [14:15]: His trailer.
Mike [14:17]: Yeah. Well, however you want to put it, but he is basically travelling the country and Scott has recently acquired, I don’t know how recently is recently, but he acquired Blackfin Media, which is a web development firm. So the two of them talk about how they are bootstrapping their businesses and running it with kids and a lot of the different business challenges that they come across. And some of it, I don’t know, I think I’d throw a little bit more entertainment into this one as well, because they are pretty entertaining to listen to. But you get a lot of motivation and a few tactics here and there in the podcast.
Rob [14:47]: Next one, I actually just started listening to about a week ago, it’s called Founder’s Journey and it’s by Josh Pigford of Baremetrics, and it’s essentially Josh talking through the blog post that he releases on the Baremetrics blog. I typically do not like single person podcasts, but this one has been an exception. He does a pretty good job of keeping the episode short and since he is pretty funny and entertaining to talk to, the podcast just kind of feels like you are hanging out with him. And what I like is that I don’t tend to read blogs very much any more and I feel like I do miss out on some good information especially the Baremetrics blog where Josh blogs some solid stuff there. And so it’s my way of being able to consume his content via audio.
Mike [15:28]: The next one on the list is Product People and that one is run by Justin Jackson and you can find that over at productpeople.tv. And this one, I don’t want to say it’s fallen off the wagon or anything, but it definitely comes out a lot less frequently than it has in the past. So last year, I think it was going pretty strong and Justin has kind of shifted his focus a little bit over into some other things that he has been working on this year. So building launch.net I believe is the website where he is doing a lot of his work now. But Product People came out with another episode last month and it looks like he might be doing some more stuff with it, but I’m not really sure. It is a pretty solid podcast and then he has a lot of different guests on there talking about various things, talks about the different things that he is working. I like Justin’s take on a lot of things because he has much more the mind of an internet marketer than he does a developer, so he has a lot of insights and good case studies and things like that that most developers are probably not going to see and Justin is able to put them out there as things that people can try, and present them in a way developers don’t see them as slimy or skivvy.
Rob [16:29]: I should take this time to point out that there are some podcasts that I didn’t put on this list because they are so infrequent. I mean there are some solid podcasts, but if they come out every two months, I didn’t really feel like it was applicable to this list. And Product People, I think just made the cut on that because you’re right, he has put out one about every month for a little while. I think if he drifts off, I would probably remove it from this list if we revise, but if he keeps going, he can stay on this list. The other thing I wanted to say, and I meant to say this at the beginning is, the reason that I do listen to so many podcasts is because I need new stimulation and new ideas for all of the stuff that I’m doing. It’s both for the marketing that I’m doing on all of my apps and it’s for the content that I create. Now I have ‘Startups For The Rest Of Us’ with you, I’m writing talks, I’m working on revising my book, and I have the ZenFounder podcast. And in order to be able to put out new stuff and new thoughts, I have to constantly have this incoming exposure to new ideas and it really helps me be able to create content that isn’t redundant and isn’t kind of stuck in the mud. I find it when I don’t consume new media for a long time, my thought patterns become the same thing and I’m saying the same thing over and over. So I just wanted to throw that in here because I forgot to put it at the beginning. Next podcast is Rogue Startups, it’s Dave Rodenbaugh and Craig Hewitt, I have classified this under motivational and tactical, and it’s also similar format to ‘Startups For The Rest Of Us’. It’s two guys chatting about their projects and doing an interview here and there and being fairly tactical along the way.
Mike [18:01]: It seems odd to mention our own startup in here but it is in alphabetical order, so ‘Startups For The Rest Of Us’ is next on the list and hopefully you’ve been with us for a while but we’ve gone past five years at this point. So I don’t know whether that makes us old timers or just experts on this particular arena but I lean more towards old timers, I think.
Rob [18:17]: Indeed. Speaking of old timers, Tropical MBA podcast, it’s been around I think maybe a little longer than ours.
Mike [18:24]: I think so.
Rob [18:25]: Yeah.
Mike [18:26]: I think they’ve been around just as long if not longer, because it used to be called something else.
Rob [18:30]: Lifestyle Business podcast.
Mike [18:31]: Lifestyle Business podcast, yep.
Rob [18:33]: And then they merged with Tropical Talk radio, they had two podcasts. What I like about Dan and Ian, the hosts here is that they are all about bootstrapping like us but it’s not necessarily limited to software. And so they have folks in their audience who talk about info products and e-commerce and prioritize consulting and all kinds of stuff. And their hook, what brings everybody together is being a digital nomad, right, so it’s getting location independence and being able to travel the world. So there is a nice mix of new thoughts and experiences on that podcast. I’ve been a fan for a long time.
Mike [19:06]: And the last one in our bootstrapping category is ZenFounder, and this is one that you run with your wife, Sherry, and I listen to this, and it’s funny because I hear a lot of people who are not necessarily in the technology space that are listening to ZenFounder as well. My wife listens to it for example and a couple of her friends that she knows listens to it as well. It’s interesting to see that it kind of goes beyond just the founder’s aspect, it is also kind of people who are related in some way to founders or who relate to them in some ways, so spouses, significant others, things like that. And I like listening to this podcast because it definitely gives you different perspective on the things that are going on and making sure that you’re staying mentally healthy while you are working on all the different things and making sure that you’re giving other people in your life the things that they need to thrive is definitely helpful. Because it gives you that outside perspective that, if you’re so focused on your own activities, you might not necessarily think about and it’s important to keep those people involved and keep them happy as well as yourself.
Rob [20:07]: Yeah. That’s been a pleasant surprise. We find that a lot of founders are listening to it with their spouse. There are several reviews and comments in iTunes that say, “This is the only podcast I listen to. I’m the wife of a founder. I’m a the wife of an aspiring founder and hear my thoughts.” That was kind of cool. We also keep hearing the comment, “It’s good to hear that there are other people out there are going through the same stuff that we are.” It’s like no one has been talking about this specific topic, this startup family in life, kind of putting it all in perspective. For our next category, we have what I’ve called mastermind podcasts, and these are basically podcasts that allow you to peer in on a couple of people bootstrapping something. And again in alphabetical order, the first one is called Entreprogrammers and there are typically four or five folks in this one, so you might need to listen to it a few times to get your bearings. It’s a long podcast. It’s about two hours per episode and it comes out every week or so. So it’s one that you either committed to or you’re not, but definitely I want to mention it because it’s in my podcast list, but I’ve kind of classified it under M, which is motivational. And the other two are Nights and Weekends, which is Craig Hewitt and Ken Wallace and they are both Founder café members and there is Zero to Scale with Greg Hickman and Justin McGill. Zero to Scale, I just started listening to three or four episodes ago and it’s solid. It’s polished, it’s well put together, fairly short episodes. They’ve interviewed some pretty cool people. Definitely recommended. And then Nights and Weekends, I enjoy being able to peer in on what Craig and Ken Wallace are doing. Ken Wallace is doing MastermindJam, which you’ve mentioned here several times and Craig is doing Podcast Motor, which is a productised service, we’ve also mentioned. So these are neat if you want to travel through journey with someone else. There are definitely more motivational. There is a little bit of tactics thrown in but it’s kind of hearing what someone else is trying and what’s working and hearing what’s going on in their mind. I think it’s that whole thing of, there is someone else out there doing what I’m doing and it’s nice to hear that.
Mike [22:05]: So the next category is startup interviews, and I think the one that should probably be at the top of this list is Mixergy just because it’s been so prolific in interviewing founders and people who are in startups or are building their own businesses, and Andrew Warner spoke at the first MicroConf, and his talk was basically about all the different interviews that he had run through to that point. And obviously, this is four or five years later, and he is still going strong and he has got a massive community that he has put together mainly because of the fact that he has been interviewing all of these founders and founders are listening in to hear stories of other founders and what they are going through and how they overcame different challenges. So some of the different interviews that Andrew has done, they are really just fascinating because he doesn’t pull any punches. He really just dives straight into the things that people want to hear about, and he is not going to shy away from questions that other people wouldn’t ask.
Rob [22:54]: Next one is called the Rocketship. And I put this under motivational and tactical. What I like about the Rocketship is that it’s an interview podcast with three hosts and they keep it very short. It’s between 20 and 25 minutes, so they typically tackle a single topic. They have short intro, then they interview something about an area of expertise for them, so this one has definitely been in my podcast feed for the last year or two.
Mike [23:19]: Next we have Seth Godin’s Startup School, and this is another one I think that, we made sure that we put it on the list partially because it’s so good. The fact is that when Seth put this out there, it was intended to be something that ran through a series of episodes and then stop. So it wasn’t as if they decided to run a bunch of episodes and then got bored or weren’t sure what to do with it. It was intended to end at some point. But if you go through and listen to the startup school podcast, it is extremely good, and Seth has some extremely insightful things that he says, talking to different founders who are going through the startup school and brings out, I’d say, some pretty brilliant points along the way. So it’s definitely worth listening to, probably at less than 1-1/2 speed because you are probably going to want to take a lot of notes when you’re going through it.
Rob [24:03]: Our next one is called StartUp, it’s by Alex Blumberg who used to work for This American Life and then also worked on Planet Money. I like this podcast purely for entertainment, I classified it under entertainment. What I don’t like about it is it’s only presenting the use case of raising a bunch of funding, right, it’s the same funding meme that we hear everywhere else but it’s so exquisitely produced and the stories are amazing. The first season of StartUp, followed Alex as he started up is podcasting company called Gimlet. The second season follows a Y Combinator company that raise funding to start essentially a dating mobile app/website, and it’s just entertaining every time. So I recommend it if you want to kind of hear inside a funded startup trying to get off the ground. If that doesn’t particularly appeal to you, then you may want to skip this one.
Mike [24:51]: And rounding up this list is This Week in Startups by Jason Calacanis, and I think this one is interesting partially because it’s been on for so long but also because Jason has a knack for getting in front of founders or getting founders on the show who you might not have heard of or you have heard of and you want to hear more about them. So generally, he is able to get in front of some pretty famous people. I’ve heard, for example, Tim Ferriss has been on there before and just loads of other founders from various companies. And because he funds a bunch of different companies, he works in the VC area, this might not necessarily be appealing to you just because many of the people that he talks to are venture funded or angel funded. So if you’re looking for actionable bootstrap tips you are probably not going to find them nearly as much. But if you’re looking for, not necessarily the next big idea, but things where you can look ahead out to people for inspiration about how do you grow a company and get it extremely large. He is talking to the founders who are doing it today.
Rob [25:49]: I’ve become a fan of This Week in Startups. When I first listen to it, I thought Jason was a little over bearing and a little annoying, but pretty quickly I realize that the guy is super smart and he is committed to being a journalist in the space where few other people are willing to say and do the things he is. So I’ve come to like his interviewing style and really respect him as a startup journalist and as a startup founder now. He has founded several media startups, he has been kicked in the teeth a few times and he is the first one to say that and I appreciate kind of his honest appraisal of situations whether it’s his own situation or of external things like that Facebook or Google are doing. He doesn’t hold back and I appreciate that as kind of a fresh voice in the space. I use this more to stay up-to-date on startup news and also some tech news and to hear other folks bandy this stuff about. But it’s like you said you’re not going to pick up tactics to help you grow your startup from here. Next category is on-line marketing, and what’s interesting is, a couple of years ago this one had six or eight podcasts in it, it only has two now. A lot of those have shut down or I’ve stopped listening to them. Really the only two podcasts that I have in on-line marketing are The Art of Paid Traffic, which is ultra tactical, and ConversionCast, which is LeadPages podcast, it’s also ultra tactical. And if you want some tactical in-depth looks at how to market a startup, not even a startup, just how to do online marketing well, these are the only two podcasts I listen to really in this genre any more.
Mike [27:19]: I started listening to ConversionCast a while back, and then I stopped because it seemed like all they had on there was this fascinating story of somebody who did something that was incredibly great and was an overnight success. Well at least it made it seem that way. It didn’t feel like it gave enough details about how those journeys came about to make it useful.
Rob [27:41]: I can see that. I haven’t listened to an episode in a week or two because they come up and they don’t seem interesting or it doesn’t seem like something I’m going to apply, I tent to skip on them, that’s how I do tactical podcasts. Again, if I’m not going to run Facebook ads next week or I’m not going to run YouTube retargeting then I’ll kind of file it away and say, “When I do, I’m going to come back and listen.” But I agree with you, it’s a tough balance when you’re being so ultra tactical and I think that’s one of the reasons that we try to not be so ultra tactical on this podcast because there is no story behind, often it doesn’t resonate with people on a personal level, and if they are not using it right now, then it’s not that interesting. And it also goes stale a few months down the road because tactics tend to change pretty frequently. And then finally we have business paradigms and there’s only two podcasts in this area, and these are both categorized as exposure podcasts, so it’s kind of exposing you to do business paradigms and new thought processes. The first one is a16z, it’s the Andreessen Horowitz podcast, and I have a kind of mixed relationship with this one. I listen to maybe every second or third episode. I find it captivating to hear really smart people, especially people who are betting hundreds of millions of dollars on technology and they are talking about different spaces about mobile, about bitcoin or about SaaS, and that kind of stuff. So I like to hear their thoughts on it. It is very high level and it’s all about venture funded stuff. The other one is Entrepreneurial Thought Leaders, and these are lecturers, folks who come back to Stanford University, typically Stanford alum who are talking in a business class to Stanford students. And this one, similar, I’ll listen to every maybe third or fourth episode. It’s a little longer. I don’t have to make it through the entire episode, but I do find that this at least keeps it on my radar of, “what are people talking about? What are people thinking about?” It’s interesting smart people who are moving money around and kind of doing things in this technology space. This is how I keep my pulse on that without being too involved or trying to reinvent your voice and end mashable every day.
Mike [29:36]: One podcast that is not on this list is The Kalzumeus Podcast and that’s put together by Patrick McKenzie and Keith Perhac. And I’m not sure exactly where I would put this under. I think that it would probably be under bootstrapping. I like listening to the podcast. Every single time that there is a podcast episode out I’ll listen to it, but it comes out very infrequently. I think that’s probably the only bad thing I could possibly say about the podcast is that I wish there was more of it.
Rob [30:00]: And that’s the only reason I didn’t include it on this list because it comes out every few months I think. I had several like that that I enjoy when they come out but I wanted to give recommendations since I only had 20, I wanted to give recommendations of more recurring podcasts. If you have a podcast that you think should be added to this list, come to startupsfortherestofus.com, look for episode 240 and add it in the comments. If you have a question for us, you can call our voice-mail number at 888-801-9690 or e-mail us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We‘re Out of Control” by Moot, used under Creative Commons. Subscribe to us on iTunes by searching for startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, and we‘ll see you next time.
Episode 239 | Email List Building From Zero to 1,000: Part II
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike continue their discussion on e-mail list building zero to 1,000. They talk about the best approaches that they see working today for people trying to build a product list or launch list.
Items mentioned in this episode:
- Pre-Launch Email List Building With Directories
- Episode 199: Traction: A Startup Guide to Getting Customers (with Gabriel Weinberg)
- Product Hunt
- Launchlist
- Drip
- Baremetrics
- Bidsketch
- KISSmetrics
- AppSumo
- Microconf Europe
Transcript
Rob [00:00]: In this episode of “Startups For The Rest Of Us,” Mike and I discuss Email List Building: From 0 to 1,000. This is part two in the series. This is “Startups For The Rest Of Us” episode 239.
Welcome to “Startups For The Rest Of Us,” the podcast that helps developers, designers and entrepreneurs, be awesome at launching software products. Whether you’ve built your first product, or you’re just thinking about it. I’m Rob.
Mike [00:28]: And I’m Mike.
Rob [00:29]: And we’re here to share our experiences to help people avoid the same mistakes we’ve made. What’s the word this week sir?
Mike [00:34]: Well, today I’m coming to you with a little bit of Star Wars trivia. What is the internal temperature of a tauntaun?
Rob [00:40]: Um…
Mike [00:42]: Lukewarm.
Rob [00:43]: Boom. We need a rim shot right there.
Mike [00:46]: If you want to hear that or any other terrible MicroConf jokes, you are going to have to go to MicroConfEurope.com, sign up for the mailing list. We are going to be sending out e-mails pretty shortly about MicroConf Europe, how you can get tickets for that and hear more of our terrible jokes and hopefully learn some stuff to help further your bootstrap entrepreneurial endeavors. How about you this week?
Rob [01:04]: Well, this week, I have some good news and some bad news. The good news is that Drip was featured in a VentureBeat report on marketing automation and with a few hundred different marketing automation tools, they chose around 20 or 25 and Drip is one, and then actually recommended Drip as the go-to for small and medium size businesses. So, that was, I think about, a week, a week and half ago that went live, so that feels good.
Mike [01:27]: That’s really cool.
Rob [01:28]: That was the good news. The bad news is it HitTail interfaces with Google using a certain type of API log and I’m not going to the details here because it’s kind of all arcane stuff. But, since they deprecated it and I didn’t know it was deprecated, and so this morning we wake up and HitTail’s struggling to connect to Google and import keywords, which is its core function, so we are scrambling now to integrate the newer form and try to get that live as soon as possible.
Mike [01:57]: Do you think that Google would send out an e-mail about something like that to the people who are using it?
Rob [02:01]: Well, that’s the problem because I don’t know if they know who is using it because it’s not like we had to set up and account to do this. It was just kind of this programmatic way of integrating. So, it’s a bummer. It feels like every, let’s say two to four months with one of my apps runs into some type of issue like this, whether it’s an issue with an API that stops working or it’s a scaling issue or it’s someone misusing your service or just some kind of semi random thing that kind of takes you off your game, stops you from developing new features, takes your eye off the ball, and yet, everybody has to scramble to kind of make up for it.
Mike [02:37]: If it’s not one thing, it’s another.
Rob [02:38]: Indeed.
Mike [02:39]: Well, I think today we are going to be diving into part two of our series on Email List Building. And today, we are going to start off by talking about how to get from 101 to 1000 and there’s a lot of different techniques that we are going to be talking about. Some of them will be applicable to what you’re doing, some of them won’t, and I think the key here is to really take a hard look at each of these and try to identify whether or not it’s a strategy that is going to meet your needs to take your mailing lists to that level. And like I said, some of them are not going to work for you just based on the type of mailing list that you’re using. So for example, there is certain social networks that are probably not going to work very well for enterprise software and then there is other types of techniques like video marketing or webinars and things like that, they would work really well for that. So, it’s really a matter of identifying what the type of mailing list you have, it is who the audience is and whether or not some of these different strategies fit into those paradigms for you.
Rob [03:30]: And if you haven’t listened to episode 238, that was the previous episode and it was part one of this discussion where we talked about how to get from 0 to 100 e-mail subscribers, give some techniques, building up in blocks of 10 or 20, and now we are going to take it to the next level and try to TEDx that. And as Mike said, this is essentially a big list of marketing tactics, its marketing approaches and it kind of kills me when I hear on Twitter, “Hey guys, I’ve set up a landing page I’m gonna collect e-mails, how should I build the list?” because that question is so huge. We could seriously sit here for a few hours and discuss every marketing approach that there is, because all of them are intended to drive traffic somewhere, right? and they are intended to drive traffic whether it’s to convert some into a [trial of your app or to get someone on your product list, if you already have a product, or to get someone on your launch list, almost all of them applied to all of those things. So asking, “How should I build my mailing list?” is a lot like asking, “How should I market my product?” which is an enormous, enormous topic that multiple books have been written on. So, what we’ve done is cherry picked what I consider the best approaches, these are, I think, all online approaches, there may be one or two offline. But it’s the best approaches that we see working today with folks who are trying to build either that product list, if you’ve already launched, and you want to get a notification list, to send blog post to, or product updates, actionable contents, good stuff for them but then also a few mentions of every product here and there. Or, if you are trying to build that launch list around a product that has yet to launch.
Mike [05:00]: So, to start off with, I think the first one that we came up with is leveraging existing startup list. And to do something like this, what you would do is you’d post links to your landing pages on relevant websites and that would include things like Reddit, Hacker News, Product Hunt, Launchlist, BetaList, etc. And there are hundreds of these, not just a couple or a couple dozen. There are literally hundreds of websites that you can post your website to or your landing pages to and do product announcements. Now, some of those are going to work better than others, so there is varying levels of activity. So for example, something like Reddit gets a lot of traffic, same with Hacker News or LifeHacker or Product Hunt and then, there’s also the other fact that you have to take into account, which is how targeted is that list going to be, like the traffic that’s coming in from that source, are they going to care about whatever it is that you’re offering. So, if you were to go to SecurityWeek.com, for example, and you are pitching a product that has something to do with e-mail marketing, is probably not going to convert very well. There is not going to be a lot of people who come over even though there is a lot of traffic on that site. But there are others that you can go to and you can start leveraging those to start driving traffic to your site. We’ll link this up in the show notes but, Robert Graham, from Whitetail software had previously put together a list of these prelaunch e-mail list building directories. As I said, we will link it up in the show notes and you can go over there, check it out. There are probably 60 or 70 of them on that list, something like that, but there is a lot of good information there and its serves as a good starting point for you to start doing those submissions.
Rob [06:30]: The nice part about the list that Robert put together is it’s broken up into beta, launched. beta or launched, and there are some [?] several categories here, and so you can choose the categories based on where you are with your app. The nice part about doing is you can either do-it-yourself one evening while you’re watching Game of Thrones or you can have a virtual assistant do it if you provide them with all the information. It’s not hard work and it will yield some sign ups. As you said, they may not ever convert to paying customers, but this is something that I do, this is all of my marketing plans, I’m going to launch a new app. There is really no reason not to do it because it is such low hanging fruit.
Mike [07:09]: The second strategy that you can try to leverage is content marketing, and content marketing by itself is just a huge topic but really, you have to start small. You start with a blog and you start posting content to that blog and into your auto-responders, and this helps with a couple of different things, and it’s a long term strategy. It’s not something that you’re going to do short term and you’re going to expect that you post one or two blog post and suddenly you’re going to go to a thousand people on your list. But, it can help you with long term SEO, it can increase the overall footprint of your website and your content marketing strategies and essentially helps you move the business forward. Now, again, this is a long term strategy. This isn’t just do it once and forget it. This is something that you’re going to want to invest in over time and make sure that you’re going to be able to put a process in place where this will carry forward even after you’re done building that initial list or hitting that initial goal, you’re probably going to want to take this and carry it forward and keep driving people to that e-mail list.
Rob [08:06]: So I haven’t done this one with a pre-launch product. So for example with Drip, we had a landing page before the product was built and ideally, it would’ve been nice to get a blog up around that, so you start building that SEO footprint, but I was never able to do that. I don’t think it’s something that will pay off early, like you said. It’s something that more of a long term process. I think it’s possible, I think Mint.com did this well actually. They had quite a bit of budget and they did get a blog up even before they launch and they got that flywheel going. I don’t know if many bootstrappers who have the funds or the bandwidth to be able to be building a product, planning for marketing, getting a prelaunch landing page up and have someone blogging or be blogging themselves. So I think that’s quite a bit to bite off, given how time intensive and/or cost intensive good content marketing is. Post-launch once you have revenue and customers and you know your customers and you know what they want, you have a lot more certainty in what you’re doing and this is where we’ve had a lot of luck with this. There is good examples like KISSmetrics, and Bidsketch, and Groove are all really good examples and Baremetrics is another good example of SaaS apps that do content marketing and its blog post for their audience and it drives traffic over time through a lot of social shares and then you can easily built up that e-mail list and then use that e-mail list to perpetuate itself the larger it gets. You can notify people when new post come out and then give mention infrequently of an awesome new feature that your product has. But, some people don’t like the term content marketing, they just want to blog about whatever interests them and that’s fine. You don’t have to call it content marketing, but it’s a short phrase for this idea of being able to write good stuff and draw people to your site and hopefully get a few more of them on your mailing list.
Mike [09:51]: The other thing that you can insert in there in addition to the occasional mention is something that people can use specifically in their startup or in their business and it is a problem that would be addressed by your product. I think there is a difference between doing a pitch for your product with this list and embed it into that content versus saying, “Hey, this is this problem that a lot of people have and here is how you can solve it and, by the way, our product also does this.” So, if there are ways to leverage those thoughts or ideas into those types of post, then the social shares alone should help with that especially when your list starts getting large.
Rob [10:25]: And another tip is, within Drip, when we are sending this out, we actually have a liquid template “if” statement at the bottom of the e-mail that only shows up to folks who are not currently customers. And so it say, “If the person is not a customer, then say, “Hey, we noticed you haven’t used Drip. If you’re interested, sign up for a trial.” And so it is, typically, I put that in the P.S. instead of in the body of the e-mail. I like your approach to teaching and tying it in. I think that’s optimal and then having some maybe stuff specific for non-trial users and non-customers that does in fact pitch in link to your trial sign up page can be definitely useful on this type of context.
Mike [11:02]: Next on the list of strategies is leverage in the contest or giveaway. The interesting part about contest and giveaways is that typically, it’s tricky. And the reason it’s tricky is because if you have a contest that you’re running and let’s say that everybody who enters gets a chance to win. The problem is that there is no incentive for people to invite other people to come in and also enter into the contest. So essentially, there is a disincentive for people to share it because of the fact that if, let’s say that there is a hundred people in there and you’re one of them and the company ask you to share it, well, now by inviting your friends. Let’s say you invite two or three people, you’re less likely to win. But, there is a nice little trick that you can use to give them additional chances to win if they get other people signed up. So let’s say that for each person that they get signed up, they get an additional three chances to win or something like that. I believe that idea came from Noah Kagan of AppSumo. I think that they’ve got a plugin over on SumoMe that allows you to do something like that. And so that’s definitely something to look into when you’re trying to do something like this. But in terms of the giveaway itself, there is lots of things that you can giveaway. You can give away a free book bundle, you can give away gift cards, you can give away one on one consulting, you can give away licenses to your products or anything along those lines that you feel is going to be helpful for your customers or the people who are coming to your list. Now, again, it really depends on what type of products you have and what the people are interested in that are joining your mailing list but there are a lot of different things that you could come up with to essentially sweeten the deal for people to sign up.
Rob [12:32]: I personally have not run a contest like this. I am innately skeptical about it because if you’re going to give something away, let’s say a MacBook Air or an iPad or whatever it is, I know that you’re going to get a bunch of people who are signing up for that and don’t really want to hear from you and so it’s going to dramatically lessen the quality of your list. So I would certainly segment this out from my main list and allow the giveaway to happen and then start pruning that list quickly because you don’t want a list with a 10% open rate or 1% click through rate or high bounce rates and high unsubscribe rates. It just doesn’t do well for your deliverability, but with that said, I have talked to a few people who’ve run contest and have had success at it. The thing to think about is that it will spike your e-mail list really high and then if you wind up with even, let’s say half of those or third of those sticking around and being somewhat engaged, then you’re probably doing pretty well. So, I agree. I think this is something that’s worth doing, it’s been in the back of my mind that is something to try for a while. I just think you want to think through it and do it well and do more research on folks who’ve done this successfully and the steps they’ve taken to make it work.
Mike [13:43]: So, my inclination for something like this is that I agree with you on being a little bit skeptical about how well this would work. But, remember back to the beginning of this podcast episode where we talked about the type of list that you’re building and the type of product that you have is going to make a big difference here. And my inclination is that contest and giveaways are probably going to do much better in a B to C offering than a B to B offering. I don’t know for sure, but that’s my inclination, that’s my general impression about that.
Rob [14:09]: Yeah. I think they will do better in the more B to C or B to beginner, maybe it is B to B but it’s folks who are just getting into [?] just getting into becoming designers or entrepreneurs or photographers or whatever, so they are still more in of the consumer mindset. However, the two people I was thinking of who have run contests to a level of success both had, in essence, more B to B topics. And maybe that is why only a third of their folks stuck around afterwards, maybe bunch of folks came in just to enter for the MacBook and didn’t really want to hear about their B to B offering. But this one, like I said, I think it deserves a little more research and some time to think about.
Mike [14:47]: The next strategy in our list is leverage in social networks. When you talk about social networks, it almost come down to the big three, there is Twitter, Facebook, and LinkedIn, but there are tons and tons of other social networks that you can leverage, there is Tumblr, there is Pinterest, there is StumbleUpon. The list goes on and on. I think the key with social networks is that if you’re going to dabble in social networking, you really have to post content to it pretty regularly. You have to make sure that you’re staying on people’s radar and that you’re using special offers like lead magnets that almost require an e-mail sign up. So, you use those social networks to get in front of people and you really want to be driving people to an e-mail list. Because just getting in front of them is not necessarily going to help you a whole lot, but at the same time, you really want to make sure that you’re getting contact information from them. And doing so, in a way that it is not, I’ll say, over the top or not too much in people’s faces because you can burn out that audience. You don’t want to go to the point where you’re burning them out and you’re not going to be front of mind because they start tuning you out. I do know somebody who has used, I think it’s Instagram to gain some pretty massive followings through Instagram and they’ve been able to verifiably boost sales by huge percentage, and I was shocked when I heard the story and heard a lot of the details about it. But, it’s crazy the amount of things that you can do on these social networks and there are definitely ways that you can leverage them to drive people through to your site and start getting them on your mailing list.
Rob [16:12]: I have always thought of social networks as hub and spoke model, where my hub is my website that I own and my e-mail list that I own and then the social networks are all just traffic device, right. They are the spokes surrounding that and so, as you said, driving folks back to get them on your e-mail list is always my number one goal. And if you want to see some folks who are using Twitter well in this fashion and more of a B to B fashion, go to the folks that I showed earlier who are doing content marketing really well. Because content marketing and social networks go hand in hand, and so, look at the KISSmetrics, the Bidsketch, the Groove, and Drip is doing so so on Twitter right now. It’s not growing super fast but we definitely have a decent size of audience and are able to drive folks back and get some engagement with some of our post. The nice part is Google is once again using the Twitter fire hose and putting in search results and that tells me that they are probably else using this as a some type of ranking factor. So if you have a blog that ghost town and no one sharing it socially, then odds are good that it’s going to get a little bit of ding or it’s not going to get the plus of having, let’s say each of your blog post get tweeted even five times or ten times, that’s going to be a signal to Google that real people are using your account. And I think of social networks is being used in multiple different ways, the one idea is to send folks back to build your mailing list. It’s also a good way just to engage with folks who were talking about your products online, right, and you can get into conversation. Sometimes feature request or support request come through and that’s a little harder. It’s pretty hard to do support at 140 characters at a time. So, I tend to try to get into e-mail discussions with folks when they do that, but I think the conversations that can be had are often worthwhile. It’s hard to lead this back to some type of return on investment based on the amount of time that you might have to spend on it. And so, if you don’t have a ton of time to devote to something, this would not be at the top of my list for building your e-mail list. I think there are lot more effective ways that we are going to talk about today, but I do think that especially if you’re a B to B in a text space that being on Twitter at a minimum is probably par for the course.
Mike [18:18]: Yeah. I kind of relate in social networks back to the content marketing. It seems like it’s a much more of a long term strategy and there might be some quick wins that you can get to drive people over. But in some ways, it almost feels like this might be strategy similar to content marketing where it works better if you’re larger. It takes you from 1001 to 10,000 or 50,000 or something along those lines. Next on our list is video marketing. And I think with a video marketing, you essentially choose a platform of your choice and you can throw out all the different video platform providers, things like Wistia, Vimeo, and YouTube, and essentially leverage those to either make videos of yourself or do interviews or screencast or online webinars. There is lots of different ways to use video of something to put in front of your audience and then leverage those things to drive traffic to those videos and then put some sort of an e-mail capture in place or a sign up form that allows people to view the videos. I’m using this on a couple of different apps, I even went so far to create a video course. I think you’ve got a couple of video courses you’ve done as well. I think it’s hit and miss sometimes. There are certain things that will resonate really, really well and there are certain things that just for whatever reason, they just don’t.
Rob [19:28]: Yeah. I think video marketing works really well in the B to C space, that’s where all the YouTube stars come about. I’ve heard of some B to B players doing it, but it’s always the same examples, right, it’s the Will It Blend guys or Red Bull or some big corporation doing something. I know that there is room here for a smaller B to B player to have videos and I guess maybe like SEOmoz, not that they are that small, but they are not Fortune 500 size. Moz does the whiteboard Fridays that have been frankly just excellent and very consistent over the several years. And I kind of think a video marketing in that way, a bit just like a video podcast. It’s kind of a weekly thing that you release like clockwork and I think that if you’re providing value in entertaining way and you provide unique voice on something, then having the recurring nature of video marketing, I think can be powerful. I also agree with you on webinars. I guess you have to have some expertise or some credentials so that folks know to trust you. But once you have that, if you can stack your funnel through other means and get folks to come to a webinar, you do build a tremendous amount of trust if you make a good presentation and you make a good case for something and you offer a lot of value in that webinar, you can definitely build your list quickly by advertising a free webinar like that. Even just building the webinar list itself, you can build a list and then beyond that, it just creates more engagement and I bet you get more opens and clicks in your overall list after doing a webinar.
Mike [20:56]: That brings up an interesting point, do you ask for the e-mail before or after. And I think that it depends on whether or not you’re doing a video versus a webinar. Because when I’m running webinars, what I do is I will drive people to a landing page and then ask them for their contact information, so that I can let them know when and where the webinar will be and it’s usually like a live demo or presentation or something along those lines. In that way, I got their contact information and I can create a follow-up sequence. And I talked to a couple of other people about this as well in terms of what their e-mails to actual attendees and it seems like it’s about, somewhere between 30% and 50% is pretty average. You get over 50% for a webinar where people have signed up for it and then you’re e-mailing them about it the day before and then the day of an then maybe an hour before. The sign up percentage to people who actually is only about 30% to 40%. I’ve seen lower as well. I’ve seen as low as 20 but it does work. You can get people to sign up for those webinars. But once you’ve got their e-mail address, then you can continue to market additional stuff to them. And that’s really the point of this is getting their e-mail address first. I think if you go to the other direction and you put in like a turn style or something like that, either at the beginning of a video or the end of a video, there is varying levels of success with that. Wistia has some pretty good contextual information about whether or not it’s better to do with. But again, it’s all relative based on what it is that you’re doing, what the product is that you’re trying to sell. Some of the data is just a little, I don’t want to say is misleading, but it’s very sensitive. So I don’t know as there is any hard conclusions to draw from, you really have to test it based on what your market is and figure out which approach works whether it’s better to do it at the beginning or at the end.
Rob [22:38]: And this is also the time to ask yourself, “What is your unique gifting?” are you good at writing some blog post, are you good at interacting with people on Twitter, are you good at standing in front of a video camera and dong a whiteboard presentation like Rand Fishkin does, whatever. I’ve heard he just write off the cuff, write some things and then spits it out to the camera. Depending on your gifting, you’re going to lean towards that approach because all of these are things that you’re going to do over time. You either going to do them every week or you’re going to them on a quarterly basis or maybe a twice a year basis in terms of like maybe a contest or something that, but each of these you’re going to have to get good at. It’s going to be an acquired skill and so it’s something you’re going to do often. So don’t pick something that is a fad that is not going to be interesting or exciting for you or that you’re going to be really bad at because then it’s not going to be successful.
Mike [23:28]: The next strategy on our list is leverage in other people’s networks. And by other people, it doesn’t necessarily means just people, but it can also be other companies. So, if you want to do a guest blog post on, for example, KISSmetrics blog, you would talk to them. If you want to do something over on the Groove blog, you would talk to them about it and some people are going to be open to it and some people are not. But, the key is to recognize whether or not your audience is going to overlap with theirs and whether or not there is enough value that you can provide to them that is going to encourage them to essentially lets you come on and talk to their audience. Because the reality is they are giving you a certain amount of trust and regardless to the additional vetting process that they put in place to take a look at your content and make sure that whatever is going out to their audience is appropriate for it. The fact is that they want to make sure that you’re going to be delivering that value and they may say yes at front and then say no later on based on what they actually see. But hopefully you can find and identify those people and work with them to get through those types of issues and put your message in front of them and hopefully drive some traffic back to your website, and you really want to be able to capture those e-mail leads. And some of this is a little tricky because if you go and post something on, for example the KISSmetrics blog, they really want to keep people there, so it’s going to be a little bit difficult for you to drive traffic back to your website and capture leads because they want to be able to do that. But you can put in like a little byline that maybe gets a link back to your site and essentially helps to establish some authorities, then you can use it to say, “I’ve got this authority because I’ve been published over on the KISSmetrics blog for example. And I think that those are definitely things that you can use to help create additional trust on your site to help get people to sign up for the things on your landing pages. Another option is using joint ventures with people, so if you do a joint webinar series with people or a podcast episode or anything along those lines, there are lots of different ways to essentially get in front of other people’s audiences and then use those to essentially pump up your own audience.
Rob [25:22]: In terms of my concentric circle marketing approach, this is the second circle, so the outside of your own audience, but you can start with friends that you have, like colleagues in your network, right, and then branch out to then colleagues or folks who you don’t know, so they are not even warm leads but it’s kind of a cold pitch to Copyblogger or KISSmetrics or Unbounce blog, or whoever you do want to guest post for, and as long as you have some examples of your work, I found that it’s not that hard if you have high quality writing to go in with a cold pitch and get a decent guest post. Now, there is some kind of scare going on where Matt Cutts had made a comment, like guest posting was going to soon be seen as spam and that has not happened high quality guest post as far as I can see are still high quality guest post and they work really well. So, that’s not something that I have been too concerned about. I think spamming guest post like anything are being found out and Google is smarter than the spammers, in essence, and will eventually catch you. But if you’re actually doing high quality stuff, this is kind of a no-brainer, I’ve used this for a number of products and I’m quite a bit of guest posting as well as joint ventures and everything you mentioned, and I think this is a no-brainer. This is a little harder to do if you prelaunch but it’s not impossible to do, certainly the joint venture is something you’re going to want to do postlaunch.
Mike [26:44]: Next on our list, we have paid advertising. And I think paid advertising is one of those things you really want to stay away from until you get some idea of what your leads are worth to you, but it could be valuable to at least start experimenting with it early just to figure out and get a ballpark idea of how much some of those leads are going to cost you, so that you can reverse engineer what your sales going to looks like. But there is lots of different ways that you can go about paid advertising and there is numerous channels that you can go through. I think that I would almost pull in remarketing into paid advertising as well because you can leverage people who visit your site and then market to them later to try and drive them back to landing page or mailing list later on and get their contact information so that you can market to them directly later on. But, going back to just the concept of 101 to 1000, paid advertising can definitely work in that lower range. As you scale it up, obviously, it’s going to cost you heck of a lot more to start gaining those leads. But early on, it’s really not that hard to start using paid advertising to start gather e-mail address. It’s just a matter of your budget at that point and how much budget do you have to allocate to that. I think the last time I did some Twitter ads, it cost me around $4 a lead or something like that, and that was for my book launch. I probably spent around $1500 or so to get around 400 to 450 leads. So it’s definitely possible and it’s not terribly expensive to do it, but again, you have to have the time to do it and you have to have the money sitting around in order to be able to use that strategy.
Rob [28:12]: Yeah. I’m a fan of paid acquisition. This can work with both pre-launch and post-launch products. I drove a ton of prelaunch e-mail sign ups to Drip. I think it was somewhere between 500 and a thousand of the e-mails that were on the list came from Facebook ads and there are several networks out there that are worth exploring, Facebook, Twitter, LinkedIn, and AdWords are probably the top four that I would look at especially if you’re B to B, and yes, even B to B ads can work well on Facebook if you target the right audiences. Nice part about paid acquisition is you can turn it on and off very quickly, so it’s like a faucet, it doesn’t have to be a long term strategy, but it can become that if you can figure out your ROI and drive a lot of traffic. There is a lot to be set on each of those topics. What I do is, since this stuff changes every six months so dramatically, I don’t keep up on it when I’m not doing it. But if I decide I’m going to go back in and run a Twitter campaign or a Facebook campaign, then I try to find who is the expert today, who are the folks with the podcast and the blogs on this and try to buy one of their courses because they are going to have the most up-to-date information on exactly how to tweak the dials and the knobs in order to make a paid advertising campaign work for that specific network.
Mike [29:28]: So we are starting to wind down our list a little bit her, and the next one we have is offline or in-person events. And I think for offline or in-person events, you can use things like Meetup.com or you can use joint ventures with existing businesses. To me, this seems much more like a localize strategy than anything else. So if you have a retail store or physical presence some place? This is probably going to be a lot more effective than if you have just an online presence or your software company or marketing company where you’re selling something solely online, it is probably not nearly as effective for those types of things. But if you’re a consultant who works locally or freelancer and you’re trying to land local business clients, then it can be highly effective to offer a presentation or a free seminar or anything like that. You can also talk to local workshops or work groups. There are lots of small business associations throughout the country almost no matter what country you’re in. There is almost always small business association of some kind and you can talk to them and find out more about what their audience is and how they get in front of people and talk to them and say, “Hey, I’d like to do a free seminar on “X” and you just ask people for their contact information once you get there.
Rob [30:34]: I think this also includes conferences. We are at the MS build conference a few weeks ago, not something I would typically do to buy a booth at a conference, but we happen to get it included in it a partnership we are doing with Microsoft. And so, it was nice to be able to meet some folks and we did in fact add people to our mailing list based on this with their permission and we are not interfacing with them whether to get them to check Drip out or there are several partnerships that could potentially come out of that, folks wanting to offer Drip to their customer list which is obviously the more lucrative thing instead of trying to find one off to actually interface with their audiences. And so, offline events I think are so important for that networking site and getting that face to face contact that we have so little over these days with social media and webinars and all that stuff. I think there’s a real value to meeting someone in person.
Mike [31:23]: Next up, we have tweaking your website. And by this, we essentially mean, make sure that the call to actions the lead capture is on your website and that is available for everybody across the different browsers and make sure that you take a really hard look at the call to action to make sure that each page has a single function. And that function in most cases is to take them from one place to another, but in many cases, the function of that page is going to be to get somebody’s e-mail address, and it’s not necessarily to sell them something, it’s really because you want to be able to follow-up with them. I think, Rob, you did a really good talk at Business of Software a number years ago, where, I forgot the exact title, but I think it was the number one goal of your website is not to sell them something, I totally butchered it at this point, but the whole talk was about the number one goal of your sales website is not actually to sell somebody something, it’s to get their contact information so that you can follow-up on it later. Why don’t you talk a little bit more about that?
Rob [32:18]: Yeah. That talk was just based on the idea that you don’t sell very many things to first time visitors and you sell the majority of your sales are going to come to folks who have been to your website multiple times. And so getting folks back to your website is really the number one goal rather than trying to make the sale too soon and asking for the sale too soon is a real danger. It will drive people away for kind of up in their face asking for money with buy now buttons and you don’t get their e-mail or you don’t get away to connect with them later, then you’re going to leave a lot of money on the table, so building your e-mail list is really the whole point of this episode. In the last episode, I know we’ve talked about doing it as a prelaunch thing but frankly, it’s the same thing, it’s just getting permission to contact folks and get them to come back to your site when it launches or if you already launch, it’s to educate them and build a relation with them over time, provide them a ton of value and then as they come back and once they are really ready to move into your product’s market. S
So let’s say they are already using MailChimp and they are just thinking about switching to a different e-mail provider, but it might take them three months or six months to make that decision, and if you’ve been sending them any mail newsletter every week with some pretty valuable content, then you’re going to be top of mind when they do in fact decide to change. Because most of these decisions to buy a product or to switch from one product to another, don’t happen instantly. They don’t happen in the 10 seconds that someone has between launch and the first meeting after they get back from launch, they don’t decide it that quickly. And so getting their e-mail address and being able to reconnect with them is really where the value comes. And to round out our approaches for the day, I had added the invitation viral loop and the idea here is that if you’re prelaunch, you’ve probably seen some places where you put in your e-mail address and then it says, “Hey, you’re on our list, we love it if you’d tell other folks about it.” You can either just ask nicely which won’t result in a ton of shares, but if you have a really sought after product, you can run it almost like a contest where the more people who- this person signs up, the higher they move in the list, the higher the priority. So they get access to it first, and again, this only works on something that folks really want to get access to but I see a bunch of B to C or B to b company has used this to effect and it can help build your prelaunch list faster than if you were just trying to find folks [?].
Mike [34:35]: I think this is interesting concept. I know Kickofflabs has it, but they do it directly as part of the sign up. So when you first sign up for a mailing list, immediately ask you to share it with your friends and I think that works in certain scenarios and I think that there are other scenarios where you essentially have to provide the value before somebody is willing to essentially spend their social credit in order to invite their friends or talk to their social networks about whatever it is that you’re offering. For this particular thing, think about what it is that you’re offering and whether or not it makes sense to have them share it upfront or ask them down the road. I think that there are opportunities for both of those things, you just have to think about which one applies to your situation. And I think last on our list is we had an interview with Gabriel Weinberg a while back and we were talking to him about his book called Traction, and I think that virtually every approach in the Traction book is also something that you could use to try and help build your e-mail list. So we won’t recap that but we will link it up in the show notes, so that you can go take a look at that episode and find out more about it.
Rob [35:34]: As we said at the beginning of this episode, this episode could go on forever because it’s essentially a long list of different marketing approaches, it’s the, “How do I market my product? How do I build my e-mail list?” question. It’s a very large question and for me, I put together a marketing plan in a Google doc., so that I can capture all these ideas and figure out which ones are working and figure out what ideas I hear on a podcast or in an audiobook or somewhere else that I think, “I totally want to try that.” So typically, I will e-mail it to myself, so it’s in Trello board and then later on I will transfer that into a marketing plan that’s more of my long term vision of what I want to do over the next couple of years as I have time, and then as soon as I have bandwidth, as soon as I want to try that next marketing approach, then I pull it out of that marketing plan and I go after it. The short list, this is what we see as a low hanging fruit for building your e-mail list and basically, marketing your business and expanding it, but there are whole lot of other approaches available for your podcast, books, and the like.
Mike [36:29]: If you have any other ideas for building your e-mail list, make sure to go over to the Startups for the Rest of Us podcast website and add them in to the comments at the end of the post. If you have any others that you want to add to building your e-mail list from 0 to 1000, please feel free to go over to the Startups for the Rest of Us podcast website and add them in to the comments. If you have a question for us, you can call our voicemail number at 1-888-801-9690 or e-mail it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We‘re Out of Control” by Moot, it’s used under Creative Commons. Subscribe to us on iTunes by searching for startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, and we‘ll see you next time.
Episode 238 | Email List Building From Zero to 1,000: Part I
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike do a short series on e-mail list building from zero to a thousand. They talk about how to build an e-mail list and some of the different strategies that you can use to take it through the different steps.
Items mentioned in this episode:
Transcript
Mike [00:00]: In this episode of “Startups For The Rest Of Us,” Rob and I are going to do a short series on Email List Building: From 0 to 1,000. This is “Startups For The Rest Of Us” episode 238.
Mike [00:17]: Welcome to “Startups For The Rest Of Us,” the podcast that helps developers, designers and entrepreneurs, be awesome at launching software products. Whether you’ve built your first product, or you’re just thinking of it. I’m Mike…
Rob [00:24]: And I’m Rob.
Mike [00:26]: And we’re here to share our experiences and help people avoid the same mistakes we’ve made. What’s going on this week Rob?
Rob [00:29]: Well, we got the MicroConf Europe contract signed. Very excited about that. Thanks to Xander for helping us out with that. And the dates are set: August 31st and September 1st in Barcelona, that is MicroConf Europe 2015. We also have six speakers on board already. We have myself, Sherry Walling, my wife who hosts ZenFounder with. We have Patrick MacKenzie and Rachel Andrew form Perch, Dave Collins from Software Promotions, and Peldi from Balsamiq. So it’s shaping up to be another good conference this year. If you’re interested in attending or even think you might be interested in attending, we’re probably going to sell out fairly quickly, so head over to microconfeurope.com, and we have a little Drip widget over there where you can sign up to be notified when we do our early bird launch.
Mike [01:15]: And we have a brand new website up there now.
Rob [01:18]: Yup, you can check out our re-launch because our old website was pretty long in the tooth. Although I think it was long in the tooth when we launched it.
Mike [01:23]: That’s probably true.
Rob [01:26]: How about you, what’s going on?
Mike [01:28]: Well, kind of the same as you. I started the process of getting us the MicroConf Europe sponsors. And if anyone is interested, we do set aside tickets for a sponsor’s pool. So if you’re interested, send an email to sponsors@microconf.com, and I’ll be sure to get back to you with details about that. Again, it is in Barcelona, so just the venue itself should be awesome.
Rob [01:46]: Indeed. Hey, we have a bunch of new reviews. We’re up to 418 worldwide reviews. We had one in April from Rob Vinning, and he says, “Learning packed into a tight 30-minute spot with no fluff. I can only wish every podcast listed, when I search for startups with this high quality. Keep it up guys.” And then we have one from Blogandarg, who says, “Not a wasted word. With so much great content out there to choose from, it’s often hard to decide which podcast to keep up with, and which are not simply worth the time and investment. Startups For The Rest Of Us is succinct content and consistently helpful, top of the heap. Keep up the great work guys.” So thank you so much for your five-star reviews. We’d love it if you haven’t, post a review for us, in the past, it helps us continue the momentum, and frankly motivates us to continue producing this podcast. What are we talking about today?
Mike [02:29]: So on today’s episode, we’ve gotten a couple of different requests for email list building strategies. And one of the ones that came in, actually had a really good idea, which was to essentially talk through how you would go about building an email list and some of the different strategies that you would use to take it through different steps or different tiers. So what would you do if you get an email list from ground zero, nobody on it, to like 10 subscribers? And then to 25, and then 100, and then 1,000? And what is the process that you go through for that? And it seems to me like there are a lot of different strategies that you can use along the way, and there’s a lot of different questions that you need to answer when you’re doing that. So it’s not really a one-size-fits-all approach. And just based on the format that we use for this podcast, it doesn’t really make sense to try and do it like we’ve done in the past where we have just one episode on it. So what I thought we’d do, is I thought we’d deviate a little bit, and we do sort of a short series on how to build an email list. And basically, walk somebody through the different ways to get to those different tiers inside of a list building activity.
Rob [03:31]: And what’s interesting is you often hear this question asked of experienced entrepreneurs on podcasts, someone will say, if you had to start over today, what would you do? And this is what I would do, I would build an email list, right? This is something that I’ve been such a proponent of for years, and it works in so many situations. And I think, we should talk a little bit about, there’s a bunch of different types of email lists, right? All lists are not created equal. You have Verizon building some type of big marketing email list, and that’s not what we’re going to be talking about today. We have people building personal brand lists. You imagine someone like a Brandon Dunn who has his list that sells a lot of his information about freelancing. Or you have maybe a Tim Farris who has 100,000, 200,000 people on a list. We’re not going to talk about that either, because it’s not as relevant to our audience. The two types of lists that we specifically want to talk about how to build is, number one, a product launch list. So whether that product is a piece of software like I did with Drip, whether it’s a book or information like you did with the single-founder handbook, and I did with my book when I launched it, or a conference or live event, like MicroConf, that’s our early bird list we talked about earlier, some type of product that you’re going to sell, it’s a no-brainer to build an email list in order to sell that product out quickly. So we’ll touch on that. And the other type of list that we’ll talk about, because they’re closely related, is an ongoing marketing list for a product. So if you go to Bizsketch.com, you go to KISSmetrics, their blog, you go to the Drip blog, this is an ongoing marketing list. It’s not a launch list because the products are already launched, but it’s a way to build a list that’s not based around a person or a personality, but it’s more based around people who want to learn from the folks who are producing content at that product, as well as perhaps to keep up to date with that product. Maybe there’s some updates and that kind of stuff mixed in.
Mike [05:15]: Right, there are people who would subscribe to that list because they’d look at the product and like, oh, that’s interesting, I want to learn more about it. But there’s also the side effect of just people will sign up for a list, because they’re not quite sure they’re ready to commit yet, and using that email list and communicating with them on an ongoing basis can just essentially help people trust, whether it’s that person or the company that is sending you those emails. And over time, you eventually get to the point where you decide, hey, maybe I’m going to take a shot and invest in this, because people aren’t going to come to your website and just click the “Buy Now” button. It just doesn’t usually happen that way. But if you get them on an email list, they see your emails on a regular basis, and eventually they get to the point where they trust you enough that hey, I’m going to give this a shot, and they provided me enough value. And in return, I’m going to try out their products, because it seems like it might be solving my problem, and I think that they are going to be able to deliver value to me.
Rob [06:05]: And I should also clarify, when I talked about there being an ongoing marketing list for product, this is different than your trial or your customer list, because you would be sending different emails to trials and customers. Those folks have already bought in. They either need to be on-boarded, or they need to be supported and told about new features and shown how your product is continuing to get better. Whereas, the folks on the front-end of your marketing funnel, they really need to hear more about, probably some content, some education, stuff surrounding your product. You don’t want to be all salesy – there might be a sales pitch now and again. But it’s quite different because you’re not trying to sell trials and customers, but this ongoing marketing list, ultimately, you are trying to sell them. I just wanted to clarify that.
Mike [06:44]: So we’re going to walk through these different tiers, and we’re going to start off on the 0 to 10. And there’s a couple things to keep in mind here. The first one is that there’s a few different types of strategies that you would use for these. There’s the one-time things, and then there’s the ongoing or repetitive tasks. And we’ll touch on those briefly as we go through each of these different tiers. But the 0 to 10 tier, essentially there’s a few different requirements that you have to even start this process. And the first one is that you need to have at least some idea of what your basic value proposition is. When somebody comes to your website, what is it that they’re going to be signing up for? What’s in it for them? You need to set expectations and be able to deliver on those expectations. But at a fundamental level, you have to know what it is that you’re using this list for. Is it the product launch list? Is it going to be an ongoing marketing list? Is it something that you’re going to start out with as a product launch list, and then transition into an ongoing marketing list? And the specific type of list that you use is going to influence some of the strategies down the road.
Rob [07:41]: Right. And so to kind of give an example with a product launch, when I was building the list for Drip, it was a very simple statement of the value that Drip was going to provide. There was a headline, and then there were a few bullet points describing why you might want to sign up, and just something about get early access, and there might have been a mention of a lifetime discount. If you’re selling a book, then you’re going to want to have a little more content about what the book is about, why someone should care about it, how it’s different from other products. And this works for software too. If you’re building more of that ongoing marketing list, typically you don’t have something to offer, right? Like be notified when we launch, because you already launched. So in that case, you’re going to want to come back to my fundamental, which is an email crash course, like a five-day email crash course, or a seven-day mini course. And you can also do as an opt-in reward, you can also do something like a top-10 tools to do this, or top-10 tips for something. I find that email mini course gets folks used to receiving and reading emails from you. And so that’s my personal preference, and that’s why we’ve really focused on that with Drip in providing that kind of thing, instead of helping people set up this one time PDF download. It used to be you gave away e-books to get folks to opt-in, I found that I had gathered a lot of free e-books into a Dropbox folder and never read them. And so I did get on the list, but since I didn’t get much value out of it, because I never read the book, I didn’t get used to reading the person’s emails, I typically unsubscribed. Whereas, if it’s done via crash course, you have a little more leeway, five days or seven days, to create some value there, and the folks are a little more used to hearing from you. So those are kind of the ways that I would think about trying to drive someone to want to sign up for your list, depending on which type of list you have.
Mike [09:17]: So once you’ve kind of established what your value proposition is going to be, you need two other things. You need a basic landing page to capture an email address, and possibly a first name. And then you need a back end email service provider to manage that email list, so you can use A-Webber, you can use MailChimp, you can use Drip, you can use Constant Contact. I mean, there’s probably 30 or 40 different options out there. But you need to settle on one and use that consistently through all the different pages on your site. And you don’t need to have more than one page to start off with, I don’t think. I think you can get away with just the one page, especially when you’re trying to go from 0 to 10.
Rob [09:50]: Yeah, and if I was going to set up a standalone page, I would either go to Theme Forest and download a $7.00 HTML template, which is how we launched the first MicroConf, and how I launched my book originally. Or you can set up a WordPress install and use John Turner’s WordPress Coming Soon plug-in. Or frankly, you can go to some place like Kickoff Labs or Lead Pages and sign up for an account there. These are all easy, quick options for getting a landing page out.
Mike [10:17]: So we’ve talked about some of the different requirements that you have to have in order to go from 0 to 10, but we haven’t talked anything about how to actually get people on to your mailing list. And I think with 0 to 10, it’s extremely straightforward. It’s not like you’re shooting for the moon and you got to get hundreds or thousands of people to that webpage, typically going from 0 to 10, is you can go to things like Facebook and Twitter and LinkedIn, and just ask your friends and colleagues on those lists, or go through your personal contact list of people you email on a regular basis. And send them your basic value proposition in an email. And say, is this something you’d be interested in hearing more from me about? And most people have enough contacts that you can get to that 10 mark without a heck of a lot of trouble.
Rob [10:57]: You know, something to keep in mind is if you have any kind of audience already, you’re going to blow by 10 in like a millisecond. Even if you have a blog with 500 or 1,000 RSS readers, or you have any type of small email list, and you’re driving them to a landing page, you’re going to be in the 50 to 100 to 500 range pretty quickly. And the other thing to think about is that you really want people on that list, who have some type of interest in what you’re going to be doing. Because getting folks on who are not going to buy from you or are not interested in your product, is just going to lower your open rates, lower your click-through rates, lower your conversion rates. So this is not a vanity metric, when we say 0 to 10. We mean 0 to 10 quality, qualified people who may actually have interest in it. Because getting your mom and your dad and your brother on your list, may add three to the list, but it’s not going to do anything for you when you actually go to sell your product.
Mike [11:45]: Yeah, that’s a very important distinction to make. Is that it’s about quality, and you want those people who are coming on to the list to be qualified for whatever it is that your value proposition is.
Rob [11:55]: Last thing I’ll add is, I’ve talked a lot about the concentric circle marketing approach that I use, and this, in essence, would be the center circle. And that center circle is people that you know. And then typically, the second circle is the people that my friends know. And then outside is the cold leads, and it’s breaking outside your network. So depending on how big your inter network is, your audience, this could get you to 10, or like I said, it could get you to 5,000 if your audience is big enough.
Mike [12:20]: So let’s move on to the next tier, and that’s 11 to 25. And like the 0 to 10, there’s certain requirements. And the first one is that when you get into this tier, you really need to start iterating on your value proposition, and start using more landing pages. Now, what does that really mean? It means that you need to start playing a little bit with the language, and seeing if certain things that you say on your landing page is going to resonate with people a little bit better. And there is a little bit, I think of, measurement. But I think it’s mostly gut feel when you start taking a look at these things. Because you’re not going to have enough traffic yet, in order to make solid determinations or do some sort of real A-B testing. It’s more just gut feel than anything. And the other thing that you want to do, is you want to start engaging with people who are getting on your list. I mean, once you’ve got 10 people onto that list, you should start asking them questions. And one of the questions I really like to ask is: what are your current challenges with “x” whatever “x” happens to be? And usually, it’s got to be geared towards your product or towards whatever the marketing approach is that you’re using, or the information that you’re trying to share with people. But you want to learn from them what things they’re having problems with. And you can use that later on. You’re probably not going to use it right away, but you want to start gathering information from people, to figure out what things that you want to talk to them about later on. And the other question I like to ask is: why did you join this email list? What is it that you are hoping to learn? Because that helps you find out where the gaps are in their knowledge. And essentially where on the playing field or the experience level that they are. Because you might have thought that you were talking to these people who were, let’s say, advanced email marketers. And then you suddenly find out that you’re getting all these people on your email list that are very entry-level. And from there, you have to figure out, okay well, do I want to go after the advanced email marketers, or am I okay with those entry-level, basic people, and I need to tweak whatever it is that I’m going to be doing down the road.
Rob [14:08]: And just to clarify, you mentioned that you want to think about having multiple landing pages right now, and not split that thing because you probably don’t have enough traffic. But that depends on, if you are doing a product launch, or if you’re doing that product marketing list after you’ve launched. Because early on, if I’m launching a product, I’m going to have a one-landing page. And if I have enough traffic, I’m going to split test it. Otherwise, I’m going to use my gut feeling like you said, and I’m going to go with the best headline that I have, the best value prop. After you’ve launched and you are a – like I said, a Drip, a BizSketch, a KISSmetrics or a SassApp, that’s trying to build a list just to keep you people updated, that’s when I do have landing pages all over the place, right? I have opt-in forms, on the blog, after blog posts, you might have a little Drip or a SumoMe widget that’s asking at different places. And that’s where you can easily set up landing pages even to start ranking for Google, for different SEO terms. That’s when I think you really start doubling down. Now, I don’t know if you do that this early, because we’re talking 11 to 25 subscribers, and that tends to be pretty early. But I do think that’s the next progression for each of those scenarios.
Mike [15:10]: Yeah, that’s absolutely right. As I was thinking about this, 0 to 10, and 11 to 25, it’s almost like there’s different levels. 0 to 10 is a very specific set of strategies. And for up to 25, it’s a very different set of strategies. Just because early on, you say yourself, you might be able to tap into your own personal network, and suddenly you’re at 500 subscribers, which puts you into a completely different realm of things that you’re going to be doing in order to build an email list. So I almost feel like maybe instead of talking about these as this is 0 to 10, and this is 11 to 25, it’s like, this is the first set of things you do, this is the second set of things that you could do. Maybe that’s a more appropriate way to look at these numbers. But as Rob said, it’s absolutely right, that depending on the type of list that you’re doing, kind of the stuff that falls into this tier two, it’s going to depend on whether or not you’re doing a product launch list or an ongoing marketing launch list. And it’s pretty clear already that we’re only on the second tier here, and your strategy is already starting to diverge, which is why we decided to make this into more of a series about building an email list than just a single podcast episode.
Rob [16:13]: And to kind of wrap up this 11 to 25 portion, I think this is where you sit down and you draft a welcome email and maybe a welcome auto-responder series to introduce yourself, try to deliver some value to your new subscriber. Frankly, it encourages folks to start opening their emails. And you want to keep the list warm. That’s a big thing. Like collecting this list, doesn’t do you much good if you don’t email them. So if you’re going to launch your product six months down the line, now is the time to start touching base with folks and giving them updates. And an easy way to do that, at least early on, is to have an evergreen auto-responder that’s able to introduce yourself and then ask some basic questions just so people do in fact, are used to hearing from you. And if you’re doing more of the product marketing list, like I talked about, that’s where I do have that five- or seven-day crash course, and then I skip to probably weekly updates from there where you can update folks on other new stuff that’s coming out with your product. But much more than that, it’s like new blog posts or new content or new stuff that you’re giving away.
Mike [17:09]: Now, question for you. I have my thoughts on this. What are your thoughts on – during that auto-responder, you’re asking questions of people. Do you have a preference for having them reply via email or fill out a form?
Rob [17:21]: I like to have them reply via email, because A) it shows them that the email does in fact come directly to me. And what I’ve heard is that it’s also a really good anti-spam signal. Like in Gmail, as an example, that if someone replies to an email early on, it indicates that you’re essentially kind of becoming a contact. I would think of it as like a shadow contact. You may not actually be in their contact list, but they replied to you. So that’s a plus mark in your favor.
Mike [17:47]: No, that’s exactly how I felt about it. And that’s what I do as well. I thought about sending people to a form, and then I looked at the form itself in relation to what I had been doing previously, because I wanted to be able to have that information automatically associated with somebody’s contact. I was like, oh well, I’ll just send them to a form and have it automatically sent over via Zapier, and I started implementing it. And then I looked at it after the fact, and I was like, this feels, not wrong, but just different, feels odd to –
Rob [18:13]: It’s not super personal.
Mike [18:14]: Yeah.
Rob [18:15]: It’s like we’re almost having a conversation because you’re emailing like you’re a real person, and you’re talking to them like they are a real person. And then suddenly like, oh click this form and give me feedback. That’s not how we interact. We’re used to hitting keyboard shortcut, or the “A”, which does reply-all, and just talking to someone. And I think that’s a much better experience, and it makes them feel like there’s one-on-one communication going on, which is really what’s happening.
Mike [18:35]: Right, and the end result of that is if there is information or questions that they’re responding to, you have to end up copy/pasting them out into a spreadsheet or something like that. But I think the cost of doing that, in relation to making those emails personal, is probably well worth it, especially when you’re early on. And later on, you can maybe turn into some parsing application or something like that to go into your email or maybe forward them off to some place and have a VA do that sort of thing. But I think early on, I agree, I think you definitely want to have those people just hit reply and be able to respond to the questions directly.
Rob [19:06]: Yeah, even with thousands of people on a list, you’re not going to get so many replies in general, that you’re going to be overwhelmed. I’ve done this myself with several lists of that size and it’s manageable.
Mike [19:16]: So let’s move on to the third tier, which we kind of ball-parked it, 26 to 100. And I think this is where things start to get a little bit harder. Because here what you have to do is you have to start adding automated questions to your auto-responder. And you have to use information from previous discussions to start honing your messages so that you already understand what the challenge is people are having, so you have to ask questions around that topic, and provide them information around those topics. So this isn’t something that you can typically do on day one, because you have to wait until you get at least some level of replies back from people, and then you start crafting messages that relate directly to the challenges that people are having. And you can’t know those things in advance, you have to ask them and wait for them to reply, and then create that content that you can send to them.
Rob [20:01]: I think this is also the point where you start adding more emails to your evergreen sequence or you just send out broadcasts. If you’re going to do a launch, maybe you have an update that really is only time appropriate, and you don’t want it to go out in a few months if someone’s subscribed a few months later. So you just broadcast it out. My rule of thumb, if I have a launch list, is to email once every six weeks. I dropped the ball a little bit on that with Drip, but I probably averaged maybe every two-and-a-half months, I think. And most places I see doing product launches, don’t email at all. And they basically email you once when the product launches and that’s a big mistake. So this is the time to start offering some value around what people are having challenges with or you ask them what they hope to get out of your product, if you’re doing a launch list, and then if you’re doing that product marketing list, that actually should be either a weekly broadcast, or a weekly auto-responder campaign that’s kind of just going out in an evergreen fashion.
Mike [20:56]: Something else you can start doing as your email lists starts to build up, is you can ask your subscribers to start sharing the fact that that mailing lists exists with their friends. And if you can make it easy to share though Twitter or Facebook or LinkedIn or Instagram, Tumblr, or any of the 30 or 50 other applications that are out there, that social networks that people are using, then depending on which ones are appropriate for the offering that you have, then that can really help drive the number of subscribers up to the next level. Now it’s not going to double your subscribers overnight, but let’s say that it gives it a 20% or 30% boost, then that 20% or 30%, can take you from 200 to 240 or 250 instead of just the 200 that you were at. And it won’t be all in one shot either, it’s going to be a little bit here and there over time. And as you add more people, that extra 20%-30% lift is going to be important. One that I’ve seen from Noah Kagan specifically of AppSumo, is that adding a link to your email signature can be extremely helpful to help drive people through to that. I’ve seen him use this before. He always has this P.S., like hey, have you seen this, or why don’t – I think the specific thing he uses is like, hey, why you no use Sumo Me? And I remember seeing that on one of his emails before, and I was like, oh, that’s interesting. And then I went over and actually checked it out. But it was not something that was really on my radar to check out at the time, it was just I saw it in his email signature, and I was like, oh, let me check it out. And that’s something that if you’re just interacting with people, it can help drive traffic over. And some of those people are going to convert. So it could be just a nice little thing to add on there that is going to help you get some people over to your email list.
Rob [22:31]: And this is probably a good place to end this Part One of our look at how to build an email list to a thousand. We basically looked at the beginning steps of getting set up, how to do that initial circle zero discussion with your market, with your audience. And just try to get some folks on the list, try to hone that value proposition. What we’re going to step into in the next episode, in Part Two, is how to go from 101 to 1,000. And that’s really where you start leveraging marketing, you’re going to try essentially 10x your list. And we’re going to get into it. The big approach is that I think are used to really grow lists, because at this point, you’re still doing a bunch of stuff that doesn’t scale to get to 100, right? You’re just kind of scratching and clawing, and at 10x, you need to start branching out a little bit and doing more traditional marketing approaches. And with that, we’re going to wrap 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 on iTunes by searching for startups. And visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 237 | The Biggest Roadblocks to Your Success
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about of the biggest roadblocks to your success. After 5 years of additional knowledge and experience they revisit the topic and share some new insights.
Items mentioned in this episode:
Transcript
Rob [00:00]: In this episode of Startups For the Rest of Us, Mike and I revisit a topic we covered back in episode 3 in April of 2010. We’re going to talk about the biggest roadblocks to your success. This is Startups For the Rest of Us episode 237.
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob.
Mike [00:31]: And I’m Mike.
Rob [00:31]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Mike?
Mike [00:36]: Well, Tom Fakes wrote to us about his new service called fhrnews.com, which is for helping American Express Platinum members make better use of their hotel benefits for the respective free night and the special offers that are often available. And, it’s interesting because Tom was at MicroConf Vegas, and it was him and me and Rich Buggy and I think Ken Wallace as well, but there were several of us sitting there talking to him, wee hours of the morning. It was probably 3:00 in the morning when we were sitting there talking about it and trying to help him figure out which direction to go with the products and figure out a monetization strategy. So, it’s good to see that he’s making traction with it. I’ve seen what he’s been talking about on Twitter and just gotten a couple of emails here and there that have said, “Oh, this is how many new subscribers I’ve gotten and it’s actually going somewhere.” So it’s great to see that those late night conversations were actually bearing some fruit.
Rob [01:22]: Yeah. Nice. I like the kind of long form approach although, Tom, I would tone down the yellow highlighter. That has actually become, you know how when people mock old web design, html design, they always say it’s the marquee tag, right, that made everything flash? Well, the same thing said for internet marketing is the yellow highlighter and that’s almost become like a parody of itself. So, I would dial that down and either use italics or bold just so that people give you more credibility, but other than that, looks good.
Mike [01:52]: I’ll have to disagree with you a little bit just because I think his target market might actually like that.
Rob [01:56]: Fair enough. It’s a good point. It’s always a good point to keep in mind who you’re targeting. If you’re targeting more advanced marketers or technical people, then the yellow highlighting is going to be irritating, but most other people who are having American Express Platinum Card, or whatever this is for, could very well may not know that whole meme.
Mike [02:14]: Yeah, I think it’s more for executives, like that’s what the service is aimed at is people who have an American Express Platinum Card using it for the corporate use. And it seems to me like that would actually fly pretty well with them. But I think Rob’s got a good point, something to test.
Rob [02:28]: For sure. So MicroConf Europe is coming together. We almost have dates. We actually signed a contract today, but we have not received the countersign version, so we don’t want to announce dates yet. But it’s looking like it’s going to be in Barcelona, and we’ll have dates hopefully by next week.
Mike [02:44]: You’re a total MicroConf tease.
Rob [02:46]: I know. I do that on purpose. If you might be interested in joining us in Barcelona in the fall, go to microconfeurope.com and enter your email address in the top right, and we’ll be sure to be in touch. Tickets will go on sale in a couple weeks, and there’s a good chance they could sell out, so you definitely want to get on the email list if you think you might want to come.
Mike [03:06]: Anything else going on?
Rob [03:07]: I’m in kind of the good news bad news mode. Drip is ramping up. The marketing is going well and accelerating because I finally hired someone for customer success and to help me with growth, and she’s already cranked out a bunch of KB articles and a blog post and is heading up the launch of our little educational area we’re calling Drip University. So it cleared out a huge backlog from my Trello list, and I feel like that flywheel is starting to spin just a little bit faster with another person helping. That’s the good news. The bad news is I’ve been discouraged about HitTail because I’m not able to spend enough time to grow it because Drip is moving quickly and it really should be my main focus. And so, HitTail’s is kind of sitting there, and I feel like it has potential to grow, but it’s just not working out. So, I’m trying to sort through that and figure out if there’s a way because I had hired someone a couple months ago to help out and within the first trial period, 30-day trial period, he said that he found out he didn’t have enough time to do it, so he backed out. And I haven’t revisited that, but that’s where it stands. So that’s kind of been my week, thinking about those two things.
Mike [04:08]: Cool. So today we’re talking about the biggest roadblocks to your success, right?
Rob [04:11]: That’s right. And way back in episode 3, which went live in April of 2010, we talked about four roadblocks. And so what I did was I put together this outline without looking at the old outline. I wanted to revisit this topic and see what kind of new insights we had, what different thoughts we had on it, and, frankly, most people don’t go back and listen to something five years old. So even if we say some of the same things, it should be a good reminder. What’s interesting is I made this new list and then I looked back and there is a decent amount of overlap, which shows that these are still consistent things like there’s consistent mistakes still being made in the community. The list we had back from 2010, the four roadblocks were choosing a product with no market, having a lack of goals, being inconsistent – meaning having a lack of focus and overcommitting, and believing that you have to do everything yourself. Today we’re going to be covering six roadblocks and to kick us off, we have lack of a clear goal.
And this is the one I always think about when I think about kind of self-sabotage and about people who are not making progress. It’s that not having a clear goal and knowing what you want to do makes it pretty hard for you to decide where you’re headed and what you need to do to get there. And it also decreases motivation if you’re not super motivated to achieve this goal. An example is, I hated consulting and salaried work back in 2005-‘06, as I was moving away from it. And my number one goal, above all else, was to quit that, and I focused on that. And all I needed was 8,000 bucks a month in order to quit that job. And the focus and the motivation of having that single-minded goal really drove me to it. And I think that I got there way faster than if I hadn’t set up that very concrete goal and worked towards it so hard.
Mike [05:58]: Yeah. I can’t agree with this more. I did consulting for a very long time, much longer than you did, and I think part of my problem was that I actually enjoyed consulting for a really long time. It was fun to just kind of drop into an environment that I didn’t know anything about and go in, solve problem, work with different people, and just get things done. Just kind of like you, after a while, I started to get burned out on it, and I got to a point where I started to really despise doing the consulting work. And I don’t know whether it was just about the work itself or the way it was being done or the technologies involved and things like that, but I got to the point where I just didn’t want to do it anymore.
Rob [06:31]: Yeah, and I think it gets old. Once you’ve done something 20, 30, 40 times, it kind of stops being fun.
Mike [06:37]: You’re solving the same problem over and over and over again just because everybody has that problem. It gets boring, and you just don’t want to do it anymore. Honestly, you get to a certain point where you know what the answers are before people even ask the questions, and you want to just give them the answers but you almost have to wait and let them tell you what they’re problem are because if you give them the answer first, they don’t want to hear it because then you don’t understand. It’s like, “No, I’ve seen this problem in 30 other environments. Trust me. You have this problem, and you don’t know it yet. You just can’t verbalize it.” And you have to be very careful about biting your tongue because otherwise if you speak too soon, they don’t want to hear whatever it is that you have to say.
Rob [07:11]: Right. Because you’re a few steps ahead of them, because you’ve seen this scenario over and over and over and you know how it’s going to play out.
Mike [07:16]: Right. But then it gets boring because then you have to listen to the same things over and over.
Rob [07:20]: It’s like Groundhog Day, right, Bill Murray in Groundhog Day where you’re so tired of it. If you’re listening to this episode and you have no product and you have no idea that your number one goal, I think, should be to validate a product idea and start working on it. And then, once you have that, your focus should be on getting that product out the door – that should be your number one goal. Then it should change to getting revenue for that product. And then it should change to a dollar amount like, “I want to get to 2,000 a month in revenue,” to pick an arbitrary example. And then once you have that, you should try to multiply that if you’re going to do the stair-step approach, just to try to get two or three more out, hit your revenue goal, and quit your job should become your goal. And then from there, it goes on and on and on. But that’s kind of the succession of steps that I would attack and the goals that I would have in mind if I were doing this all over again.
Mike [08:06]: And I think that that’s an interesting point that you made there about the fact that your goal changes over time because you’re going to have these different milestones. You may have this grand goal of, “I don’t want to work for somebody else anymore,” but at the same time, there’s these little, tiny milestones along the way that are going to become your mini goals, so that you have to, essentially work towards those first.
Rob [08:25]: That’s right. And every year, I go on a retreat, I talk about it on the podcast, and I find the next maybe three to five goals that I’m going to accomplish in the next year. And then, you and I do an episode, typically in December, where we talk about our goals, what we accomplished in the past year, whether or not we hit goals we set a year prior. And then, we talk about the next year’s goals. And I think if you’re wondering about how to set goals and that kind of stuff, you can go back and listen to any of those episodes to hear the kinds of things that we’re committing to hear. I’ve always been a believer in goals. I’m a goal-oriented person in general, but I think that if you don’t have something that you’re working towards, it really is a roadblock to your success. Second roadblock is something that I see all the time. It’s building a product before finding customers. I think there are some ideas that you’re able to validate in advance. An idea like HitTail or Drip or going around asking people whether they need a service and then building it, I think it is valuable. I think there are products that you can build quickly that you don’t need to pre-validate.
And I think examples of that could be something like Baremetrics where Josh was able to get a version out in a week, and it was just faster to get that out. Dan Norris with WP Curve, that’s more productized consulting if you think about it. You don’t need to validate that. The validation is that you just put up a landing page and start charging people. We have Craig Hewitt over at Podcast Motor, that’s another one where I wouldn’t have gone and asked people. Maybe I would have had a few conversations but getting that landing page up and just trying to start using your network to sell it, is the big step. But the days of going in your basement and coming up with an idea, and then sitting there writing code for six months – those should be gone. I know people continue to make those mistakes, and actually, we’ll see a lot of folks we have to get emails, we see them at MicroConf, they come into FounderCafe, and they say, “Yeah. I made this big mistake, this developer mistake of just coming up with an idea and building it.” And so, if you’re still doing that, you really, really should stop. The odds of it succeeding are like it’s like a crapshoot at that point.
Mike [10:26]: Yeah. I might even take it just a step further and say it’s not just about finding customers but it’s about finding a repeatable way to get those customers. So, if you have a product that you’re thinking of building and maybe it’s a clone of another product that is already successful, just because they’re successful with it doesn’t mean that you can be as well. And, even if you’re going to try to go at a different market segment for example, if you’re going to take a product that targets medium-sized businesses, and you’re going to say, “Well, I’m going to take this to bootstrappers.” Well, do bootstrappers need it? Are they going to pay you for it? Those are types of things that really factor into it that are going to indicate whether or not you’re going to be successful with it. So, don’t necessarily ignore the whole marketing aspect behind the customers as well.
Rob [11:07]: The third roadblock I’ve written down is lack of focus. Once you have this goal that we talked about two roadblocks ago, work backwards and develop a plan to get to that goal. Try to do a timeline. Do whatever it is that you can to make that structured, and then work through the steps. You really want it to be a step-by-step process to getting there, because that’s going to keep you from wandering. I would also take it a step further and really focus the media that you consume. So instead of continuing to listen to a bazillion podcasts, I actually whittle my podcasts down when I’m at a certain point in my sequence, and I will skip over a lot of irrelevant material. So back when Derek and I were first validating building Drip, I stopped listening to stuff that was talking about how to scale and how to grow and all that because it wasn’t relevant to me right at that time. And I was only listening to a lot of info and consuming info about validation. Once we launched, then I started looking more into the growth stuff. And now that we are where we are, I’m looking at topics that are relevant to me. So, I try to focus that media, including both the audio books, the blog posts, and the podcasts that I listen to.
Mike [12:11]: I think you also have to take a look at those in terms of the focus and figure out if you’re being distracted. And if you’re being distracted in any way, shape, or form, figure out why. Is it that you’re not motivated? Is it that you don’t know necessarily what you’re doing? Are you afraid of doing something that you’ve never done before? There’s a lot of reasons why you might not be making progress, and lack of focus is, I’ll say it’s kind of a bucket that people throw a lot of different things in, but there’s not necessarily just one cause for that lack of focus or lack of motivation. So, be cautious about the reasons why you might have a lack of focus in terms of approaching whatever the product is that you’re going after.
Rob [12:48]: I think another cause of lack of focus is that you’re just chasing too many approaches at once, you’re chasing the next shiny approach. You hear about info products, “Oh, I’m going to do those.” You hear about WordPress plugins. You hear about Sass. You hear about productized consulting. Or you hear about marketing on Facebook or on Twitter or on this or on that. You can’t chase all these things at once, and you have to pick one. You have to build a plan. You have to figure out what the goal is, and you have to try to work towards it and not wander all over the place. And so, kind of keeping in mind that the next shiny approach is probably not the best thing for you to do right now, and that sticking to your plan is, that’s going to help you get over this roadblock. Fourth roadblock we’re going to talk about is the unwillingness to move out of your comfort zone. So it’s things like not wanting to learn marketing, not wanting to outsource some development, not being willing to maybe buy an app if one presents itself, not being willing to hire a VA and outsource some basic tasks. It is possible to build and launch and be successful without doing these things. It just becomes way, way harder if you’re going to try to do everything yourself.
Mike [13:50]: Yeah and some of these things just tie into fear of doing the unknown. You have to be willing to try things out, especially when it comes to marketing because there’s always going to be things that you’re wondering about. If you’re not familiar with content marketing, you’re just like, “Is this going to affect my business? Is it going to move the needle for me?” And it could be something that takes your business to the next level, but it could be something that flops. And you won’t necessarily know that until you at least give it a shot. So, those are the risks that you’re going to have to be willing to take even if they’re outside your comfort zone because a lot of people are just afraid of doing things, because they’re afraid they might fail at them. And, you shouldn’t necessarily be afraid of failing at things. You should be afraid of looking back on them in 10 or 15 years and saying, “I wish I’d tried that instead of going down the wrong path.” Because, typically, when you go down the wrong path, you’re going to learn at least something from it. But if you never go down any of those paths at all, you’re probably not going to get anywhere to begin with.
Rob [14:39]: And the next roadblock that I see people hitting is having an unhealthy consumption to production ratio. And this just comes down to consuming too much stuff, the online media, hanging out on Twitter, Facebook, reading blog posts, listening to podcasts instead of working. So whether you use the term entreporn, whether you decide you’re going to go on a media diet, you kind of need to stop reading and start acting at a certain point. And I think this comes back to with lack of focus, this could be part of that. And it also comes back to once you have that goal in place that you’re working towards and you have some kind of timeline, that always helps me stay focused and basically, go on a temporary media diet where I’ll still consume some stuff, but I will back way off when I’m heads down trying to actually hit a short-term goal.
Mike [15:26]: Little historical anecdote here, but do you remember? I think it might have even been before we started this podcast that you and I had had a couple of discussions about this exact topic. And our thoughts at the time were, “We want people to listen to the podcast, but at the same time, we recognize that this is a problem, so we would rather them spend less time listening to our podcasts and more time doing things.” And that was one of the deciding factors that caused us to do heavy editing on the podcasts and offer transcripts and lots of different ways for people to consume the podcast as quickly as possible so they could get in and get out.
Rob [15:59]: I vaguely remember that. I’m glad you brought it up. That totally sounds like something we would say. I mean that’s kind of the digital behind this podcast, right? It’s that we try to maximize your time because we know that you should be building and launching.
Mike [16:10]: Right. And that was the catch-22 we were in is just we want people to learn something, but at the same time, we don’t want them to listen to us too much.
Rob [16:17]: Right. The sixth roadblock I have is ignoring the need for community and accountability. And this was one that was completely not on my radar five years ago when we did this the first time. But since then, having joined two mastermind groups, running the seven MicroConfs that we’ve run, the connections we’ve made through that, going to DCBKK, attending some local meetups, all of these things have had dramatic, dramatic impact on my progress and the people who I see embracing these communities and looking for accountability in them and looking for others who are doing the same so that we can all move in the same direction and help each other get where we’re going.
Mike [16:56]: Yeah. When we did that podcast episode originally, that was back in 2010, and the first MicroConf wasn’t until 2011, and at the time, the Micropreneur Academy was around, but it wasn’t nearly as, I’ll say, well-formed or as well-populated as it is today. And it was all a lot newer, a lot fresher. So, people weren’t interacting as much, and people didn’t really know what to expect. Now, like the bootstrapping community has kind of taken off and has developed legs of its own, and there are lots of different places to go for help and to talk to people and just learn from other people. There’s books and everything. And so you can go to a local meetup, or you can read books or blogs. There’s lots more resources than there were even five years ago. And it’s nice to see that there’s all these different communities around that are available to people regardless of the technology that you’re using, regardless of the marketing strategies you’re using. And, you can learn something from just about every single one of them. And it’s really nice to be able to leverage all the different data points of other people because you can’t possibly learn everything by yourself. It’s great to be able to leverage the experiences of other people and, quite frankly, the failures that other people have encountered and be able to use those to your advantage so that when you go out and try something, you’ve learned from other people’s mistakes, and you can do them better.
Rob [18:10]: And if you’re looking to join a mastermind group, check out Ken Wallace’s service. He’s a FounderCafe member. He started a service called Mastermind Jam, and he’s trying to link people up. It’s at mastermindjam.com. The last roadblock I have has come about because of several talks at MicroConfs, both from you, from my wife Sherry, and this one is working yourself into the ground. It’s basically working so hard that you burnout, that you cause health issues or you encounter them and you continue to try to work through them. It may feel right to work all day and then come home and work until 2:00 in the morning, and I’ll admit I did that back in the day and I do think there’s a time and a place for it, but you can’t do that forever. And you have to do this in sprints, and then back off and give yourself time to recover, both mentally and physically. Entrepreneurship is long ball. You have to play it as a long ball game, and you need to be aware of where you stand emotionally and physically because it can take a toll on you if you push this too hard for too long.
Mike [19:12]: This is something else that was totally not on my radar five years ago. And I’ve had some health issues here and there and talked about them at MicroConf. And it’s interesting how long it can take you to get over certain things. I’ve had some conversations with people at MicroConf who have had either similar issues to mind or have had related issues, and some of them are just hard to get over. You can’t just flip a switch and say, “Oh, this problem is solved.” One thing I realized was that, over the past 10 days or so, I feel like I’ve actually made more progress in the past 10 days than I’ve made in quite a long time primarily because I’ve been able to sit down and focus all day for the entire day. I’ve realized that I’ve got a streak of 10 days going now at this point, and I haven’t had a streak of 10 days where I’ve been able to do that in a very, very long time. And I think a part of it is related to moving my office out of the dungeon of the basement, to be perfectly honest. And having sunlight is actually quite nice.
Rob [20:04]: Well and I think this changing of the seasons is a big one. When I lived down the east coast, I had a really rough time during the winter. It was dark and cold for five and a half months, and when spring came, I remember my productivity shooting up, my mood shooting up, really just becoming more motivated. And that is one perk of being here in Fresno, California where it is sunny, whatever, 10 months of the year or something, and to such a detriment that we actually have a drought. But it makes it easier to stay motivated because you get that vitamin D every day.
Mike [20:33]: Right. I think there’s a seasonal affective disorder that goes along with that, and some people have it and some people don’t. And there’s these special lights that you can buy. They have a little special wavelength of blue light that they shoot out. I’ve got one of those. It never really felt like it helped all that much, but I did use it. But I really felt like moving out of the basement and up into an area where I get natural sunlight every single day now, it was tremendously helpful. And like I said, it could be coincidence. It could be the fact that I was burned out for a long time and now I’m kind of over a lot of that stuff. But, it’s amazing how productive you can be in two weeks when you aren’t distracted constantly and just getting pulled in different directions and able to sit down and just work for four or six, eight hours at a time.
Rob [21:14]: The thing to keep in mind is that, these are very common roadblocks. These are kind of the patterns that we see dealing with thousands and thousands of entrepreneurs as well as I’ve seen these patterns in myself, and I’m constantly figuring out how to stay focused, how to pursue these goals, how to go out of my comfort zone. It’s always going to be an ongoing struggle. You don’t just conquer this and then suddenly you’re successful and you’re not going to hit these roadblocks. But, what happens is, in my experience, the first time you encounter them, you don’t know how to get around them. But once you’ve overcome them, it gets easier and easier each time you face them after that.
Mike [21:48]: And part of that’s just a recognition problem that that is a problem to begin with. You might not necessarily realize that the reason you’re not doing something is because you’re unfamiliar with it and you’re unwilling and uncomfortable going in that direction, or that consuming too much media, so you don’t realize that you’re consuming much more than you’re producing. And just being able to realize that some of those things are a problem is, in itself, part of the solution. But you have to recognize that it’s a problem before you can do anything to solve it.
Rob [22:17]: That’s a huge part of it is I think recognition is got to be more than half of the issue, and then the other half is actually solving it. But, that first time, you don’t tend to recognize that it’s a problem and then once you’ve achieved some modicum of success and you’ve overcome it, you’re able to see it so much faster the next time and identify it, because it’s similar, when we interviewed Ruben from BidSketch, what five, six episodes ago, he talked about being able to now look ahead and see where his next plateau is going to be, and then he can start trying to get around it early. I feel like this is a similar scenario.
Mike [22:50]: I totally agree. And I think on that note, we’re going to wrap up. If you have a question for us, call our voicemail number at 888-801-9690 or you can e-mail us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We‘re Out of Control by MoOt, it’s used under Creative Commons. Subscribe to us on iTunes by searching for startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, and we‘ll see you next time.
Episode 236 | Making a Full-Time Income With Online Training
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike interview Andrew Connell and talk to him about making a full time income with online training.
Items mentioned in this episode:
- Pluralsight
- Product Hunt
- A Startups Guide to Hiring a Virtual Assistant
- Kajabi Next
- Udemy
- Summit Evergreen
- The Single Founder Handbook
- Andrewconnell.com
Transcript
Mike [00:26]: In this episode of Startups For The Rest Of Us, Rob and I are going to be interviewing Andrew Connell and talking to him about making a full-time income with online training. This is Startups For The Rest Of Us episode 236.
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it. I’m Mike.
Rob [00:28]: And I’m Rob.
Mike [00:32]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s going on this week Rob?
Rob [01:08]: You know I’m fresh back on the scene after going to San Francisco last weekend for Microsoft’s Build Conference, and Derek and I took a ride up there because we sketched out a little partnership between Drip and the Office 365 team. And they started a new program where, for the Office 365 developers, they are providing them with some software components and other stuff to help them build better software and sell more software, frankly. It’s just kind of like, if you have ever heard of the BizSpark program that they had for startups, it’s similar to that but it’s just for Office 365 developers and Drip is a part of that.
Mike [01:09]: Very cool.
Rob [02:00]: Yeah. It was nice. They essentially purchased a bunch of licenses from us and we went up and had a booth there and met a bunch of folks. Like any trade show, there is a lot of discussions that probably aren’t going to lead anywhere, you’re not going to get a lot of individual customers from there. But the ones that were really key were, the conversations we got in with a few Microsoft folks and as well as some affiliated folks of these other partners who then partner up with us. One company said, “Look, if you integrate with us, we’ll pitch you out to all of our customers, who might even add you as an add-on to one of our plans.” And these guys have a hundred times the reach that we do at this point, in terms of customers. If any of those pan out, that’s an enterprise sale cycle. This could take four months, six months to pan out. But if any of those work, that would be worth all the time plus more that we spent up at the conference.
Mike [02:02]: Cool. Congratulations and good luck with all those.
Rob [02:15]: Yeah. Thanks a lot. The other highlight for me was I got to say hi to Paul Thurrott and Mary Jo Foley from Windows Weekly. I have been listening to that show for a couple of years. And I was able to hang out with Andrew Connell, who we’re actually interviewing in this episode.
Mike [02:18]: Well, on my end, the Single Founder Handbook launched this week.
Rob [02:19]: Yeah. Congratulations, man.
Mike [02:20]: Thanks.
Rob [02:22]: It’s a big deal. Got it out in, what? Four months flat.
Mike [02:37]: Yeah. It’s about four months. It was done in probably two and a half to three and then it took a while for the editing process, and I did a private launch just before MicroConf, and then this week was the public launch. I did something new, I don’t know if I mentioned it last week, but I ran what’s called Thunderclap campaign.
Rob [02:38]: Yeah. You mentioned it.
Mike [02:44]: And I got it up to 475,000 for the reach according to their stats.
Rob [02:45]: Do you think it drove sales?
Mike [02:55]: I’m sure that it drove sales but not nearly as many as I would’ve hoped or would’ve liked. Because the reach, it just didn’t seem to drive as much traffic as I would have liked to have seen. It’s really [crosstalk]
Rob [03:12]: It’s the social thing like, “Hey, I have 10,000 Twitter followers, I’d tweet this and 200 of them see it, and of those 200, ten of them click it.” It gets really small really quickly. Facebook’s the same way with the algorithm that your posts only show up to five percent or ten percent of the people you follow.
Mike [03:40]: Yeah. But, I mean, I ran the math on it and I still expected a heck of a lot more from it. I’m actually going to go through these numbers in a lot more detail then probably publish them, most likely, publicly at some point. But just to kind of give you rough numbers of what I’ve looked at so far, if it was about 500,000, I was expecting around five percent of the people to have seen it. So you figure that’s what, 25,000. And of those, how many people would actually click on it. You think maybe one in a 100 or something like that. So that will be –
Rob [03:41]: I would like a little more.
Mike [03:54]: – yeah. I ended up with about 500 people clicking through. At least that’s what I saw. I guess maybe two percent, maybe that’s not nearly as bad as I thought it would’ve been initially when I was looking at those numbers. I seemed to have expected more for some reason.
Rob [03:57]: Because half a million sounds like such a big number.
Mike [04:04]: It does. It was about 500 click throughs, it’s really what it came down to, so divided by thousand.
Rob [04:09]: Mm-hmm. Yeah, with social media for sure. I mean with the e-mail, I would’ve expected to have been ten times that, maybe twenty.
Mike [04:13]: Oh, yeah, definitely. My e-mail was definitely surpassed that, that’s pretty clear.
Rob [04:16]: Right. And you also get some love on Hacker News.
Mike [04:52]: The interesting thing is that although the Thunderclap campaign itself didn’t directly do anything, somebody saw it through that and then they’re like, “Oh my God, what is this?” and then they posted to Hacker News and it ended up at number two on Hacker News. Somebody else posted that to Product Hunt. Got up to like number five or number six in Product Hunt and then it ended the day in the top ten. Because of that, it ended up getting included in the daily e-mail that Product Hunt sends out. So I got the e-mail from them this morning even though it was posted yesterday. As soon as that e-mail went out, I went over and I started taking a look at my server, and sure enough, people started showing up on the server and inside of my analytics.
Rob [05:04]: That’s cool. And that’s the kind of stuff where would that have happened if you hadn’t have had all the tweets go out? Maybe the tweets didn’t result directly in sales, but if they result in you making it to Hacker News and Product Hunt, there’s a lot of value to that, right?
Mike [05:05]: Right.
Rob [05:08]: Because those places, I do think you could find some people who will buy a book.
Mike [05:39]: Right. I was looking at my server at one point and it was pushing between twenty and thirty megabits a second at one point, just because there was so much traffic coming in and people were signing up for the free chapter that I put on the website where you could just put in your name and e-mail address, just click the button and it would basically add you to the e-mail list, and then you could download a free chapter from it. And that was directly through my website, so, of course, had I thought about it a little bit more, I probably would’ve put it on like a CDN or something like that, but didn’t think too much about it. I wasn’t expecting it to have that much traffic that quickly.
Rob [05:41]: Right. Are you talking about sales numbers publicly?
Mike [05:43]: Not yet. I’m sure I will though.
Rob [05:46]: Have you been happy with the sales numbers or did you expect more?
Mike [06:06]: I would say they are probably a little bit low below what I expected, but the week is not over. And I also have a ton of e-mail signups that could theoretically lead into sales. I’m kind of in the neutral phase at the moment. I think if I were looking at just the raw numbers, I’d probably be disappointed. But because there is all this additional follow up that I foresee that can happen, I’m fine with it the way it is.
Rob [06:07]: Very good.
Mike [06:28]: In today’s episode, we are going to be talking to Andrew Connell, and he worked as a corporate developer for several years. He has been a member of Micropreneur Academy for a couple of years. He has been to MicroConf. He started a training company back in 2009 and he has his own podcast called the Microsoft Cloud Show, and he is going to be here today talking to us a little bit about how to make a full-time income with online training. How are you doing today, Andrew?
Andrew [06:30]: Doing great Mike. Thanks for having me.
Mike [06:42]: Excellent. So why don’t you just give us a little bit of your backstory. We know some of the details ourselves, but I think the listeners are going to want to hear a little bit about where you came from, what sorts of things you’ve done in the past, and what has gotten you to where you are today?
Andrew [07:45]: Sure. We always do long bios but I started as a corporate developer, classic, just an employee at a big company building stuff internally and for outside customers. In about 2007, I went to go work full-time for a company as a contract instructor. After a year of that, I kind of split out on my own to do contract instructing, but as kind of like a 1099 or an independent contractor. It was really appealing because, with training, essentially, you get ninety percent of the revenue before you even deliver the services. So it wasn’t that big of a jump to go from a full-time job to a contract instructor. After I did that for about a year or two, the guy that was doing it, guy by a name of Ted Pattison. I was contracting mostly for him. The two of us started a training business that we ran for about four years. They’re still in business but about two years ago, I decided that I wanted to go back on my own and sold my interest to him. And so for the last two years, I have been doing a lot of video-based training and then content generation for various customers. Very little consulting. I do almost zero consulting these days.
Mike [07:55]: So how did you get started with the online training. It sounds like you got rid of your interest in the training company, which I assume, was that doing on site training at different locations?
Andrew [09:04]: Yeah. And I still do a little bit of that. We hold a public course. We’d rent out a training facility or a hotel ballroom over the span of a week. And then people would register at our company and we’d show up with manuals and virtual machines. I just sit there and teach them all week. But while I was doing that, while I was running the training company, we started to stand up a side business or another line of business, where we were going to do on-demand training, where we would record the courses and then people would come to the site and pay us for the courses. But it was one of those classic things that it was more important to focus on the revenue generating activities, and at that time, it wasn’t. So we were never getting it off the ground but the silver lining in it was that we had a ton of video content that we just weren’t using, we just had no way to go through and deliver it. About that time, there was another company, that where all my stuff is today, called Pluralsight. We partnered with them to essentially do our video trainings. So we gave them all of our videos and just kind of got seeded with being one of the authors there that had a lot of content, because we just gave them, I think that’s 76 or 80 hours of content right out of the gate. We did that, I think, late 2012 or something.
Rob [09:11]: To give listeners an idea, these videos, is it like Screencast with you talking over them or is it an actual camera set-up and you teaching a classroom?
Andrew [09:21]: That’s a great question. There is no camera. It’s essentially like a Screencast. So it’s like PowerPoint slides and then Screencast and then people can download a code samples and stuff like that.
Rob [09:47]: Cool. So it seems like this was a natural transition for you from in-person training to moving online. You already had the skill set, you already have the content. Because you are a software developer at heart, was there ever something in you that said, “I’m releasing an info product rather than an app.” Is that like an ultimate goal of yours to release a software, to build a SaaS app or build plugins or whatever or is the info product probably the right path for you?
Andrew [10:46]: Well, it’s funny you say that. In the last few months, I’ve been wrestling with myself about that. I thought that my goal was to build a software product. I’d always loved the idea, I’d always wanted to build something. But I think recently, I’ve looked at it and said, “I’ve got a knack for this info product stuff.” And as much as I really want to build a product, I had started on the SaaS product but let’s do the podcast for, I guess the better part of the last two years, something told me that say, “You’ve never done this” and these other guys were all saying that it is the hardest thing to jump into and you’re finding it’s the hardest thing to jump into, you should pretty much stop and focus on the thing that’s going to be the best revenue generating for you today. So right now, I’m solely focused on doing info products or video-based training. And there is a lot pieces to it. I’ve got two other friends that are doing software products that I hear the challenges that they’d run into and there are certain things with an info product, specifically around video training, video on-demand training, that I don’t have to deal with at all as far as a software product goes. Major headaches that are just not going to be an issue at all.
Mike [10:48]: Could you give us some examples of what those are?
Andrew [11:28]: Yeah. Sure. The big one is support. I don’t have support. So what I can do is people may send in questions from watching course and I can answer those questions, but there is no ongoing support. There is nothing that breaks, [it’s a video?]. Sometimes you have code samples that don’t work after whatever you’re basing them on is the technology has changed, but it’s not that big of a deal to go fix those. So I don’t have like outages or anything like that that I have to deal with. Because right now where I host my courses, you could think of it like a book publisher model where I just give my videos to a company and then they have a master catalog and people subscribe to their catalog and I get paid royalties based on the amount of minutes that they watch of my courses.
Rob [12:09]: Interesting. I think this is such a fundamental question that if you are listening to this, you should ask yourself. Are info product is something that you are interested in doing? Because I know that some software developers absolutely have no desire to teach and they don’t have, whether it’s the skill or the desire and they don’t want to do it. And that’s okay, and if that’s the case, then I would think about doing like stair-step approach that we’ve talked about here. I think that if you are interested in teaching, that the benefits that, Andrew, you’ve laid out, of the no support, of you can create it, it tends to be a little more evergreen, doesn’t need maintenance, that stuff is a real benefit of info products. And I think putting info products into the stair-step approach, is absolutely a viable way to go especially if you have the skill for it.
Andrew [13:30]: I completely agree. I definitely don’t want to put across the perception that this is the way to go. I mean, it is a way to go and for me, I have a knack for doing this and I enjoy doing it. One of the things I always really enjoyed was standing in front of a crowd or at least a small room and teaching some people, is that I get a satisfaction or endorphin rush or whatever you want to call it when I explain something that someone was confused about and you see that light bulb go off in the same way that when someone purchases a product and that solves the business problem for them or makes their lives easier, the same way that a software developer does. I get that same rush as well and I’ve just decided to say, “For me, this one kind of works.” I just finished three brutal weeks speaking between Europe and the U.S. at a couple of different conferences and I really get a lot of satisfaction from explaining something to someone that was really confused and seeing all these light bulbs go off and having people come up afterwards saying, “Thank you. Now I understand this stuff.” To me, I feel like I have helped someone and so the video training kind of helps that as well. Yesterday, I was doing a presentation, had a bunch of people come up afterwards and they’re like, “I’ve been watching your videos, super helpful. Thank you very much.” I definitely don’t want to put across that, like what you said, Rob, that, “This is the way to do it.” It is a way. There’s so many different ways of going through and doing this solopreneur or entrepreneur kind of lifestyle. This is just the one that works for me.
Mike [13:46]: One of the things that you brought up earlier, which kind of contrasts against my experience doing training was that, it sounded to me like you develop the training courses yourself. You started your training company and you were doing the training for people, it sounded to me like you were saying, you created all that content yourself. Is that the case?
Andrew [14:32]: That’s true. Yeah. It’s a bunch of companies where you can actually buy content and training courses from vendors. I have Microsoft background and Microsoft has a thing called the MOC or the Microsoft Official Curriculum, and you can purchase that each book or each kit. One kit would go to a student from Microsoft and then you can teach it, you can re-sell it. But for us, what we did- we founded our company more of a boutique style where we built our entire training course and then we turned around and we would sell it as our stuff that was better than what you will get from vendors. We also repackaged it and sold it to other training companies to go through and teach. We did all of our own stuff and I tell you, it was quite the learning experience going from building a five day course to building an on-demand course that the packaging and the delivery and how you structure courses, is just so radically different.
Mike [14:46]: Yeah. Different experience that I had was that we were basically mandated. We had to teach the official courses and if we didn’t we would have our training certifications yanked. So we had no options at that point. It was use their stuff or don’t be a training company.
Andrew [15:30]: Yeah. And that was a decision that we had to make. Because, I primarily have been teaching SharePoint or .NET or Office 365 over the last six, seven years, eight years. And with Microsoft, when companies would buy a lot of software from Microsoft, they would usually get training certificates that included as part of their purchase and we had to make a decision that we are going to do only our own stuff. But what that meant is that, we couldn’t accept any other training vouchers that these companies had because we weren’t teaching the MOC curriculum and we weren’t certified as Microsoft trainers. We went the different model of saying, “We’re not going to sell a Ford or Chevy style training, we’re going to sell a Lexus or a Ferrari style training and be a little bit more specialized.” And that worked out really well for quite a few years.
Mike [15:36]: But at the same time, you’re almost an off brand as well because you are not necessarily officially sanctioned by Microsoft either, right?
Andrew [15:59]: We weren’t. We were actually brought in by Microsoft quite a few times to help teach a lot of their developers and a lot of their consultants would send people to our courses. But you wouldn’t get a discount by Microsoft sending you to us or anything like that. We didn’t have any way to accept any of the vouchers that Microsoft was giving their customers. It was just a business decision and which way we want to go and how we wanted to structure the company.
Mike [16:13]: Yeah, the vouchers is the thing that I could see where that would be a painful decision to have to make, because you don’t know what the result of that decision is going to be and ultimately, it could torpedo your company. But at the end of the day, it may also turn out completely fine, you just don’t know in advance.
Andrew [16:44]: You really do. I can’t take too much credit for this one because the guy that I was teaching with as a contractor, he had written his own course where when he quote, unquote “hired me,” I did that in quotes because I wasn’t an employee, I was just a contract instructor, he told me he’d keep me busy at least one week a month and that was like that for a year, which was just a fine income and so, at least on the training side that was a fine income. I saw that that business model already worked and so we just ran with it and just said, “Yeah, we’re not going to take vouchers.” I wish I could take a lot more credit for that, but I can’t.
Mike [16:55]: So in transitioning to doing online training, you said that you use Pluralsight. Are there other training platforms that you evaluated that I guess or was it just what was available at that time and seemed like a good option?
Andrew [18:42]: At that time, we didn’t look at anybody else. And the reason why is because, at the time they were known as a Microsoft Development Training Services Company for on-demand training, but where they were lacking was where we were strong and that was in the SharePoint content. They had a bunch of content that was already there, but they had a ton on-demand and they were trying to get it in there and they couldn’t really get it in or it was going to take them a lot more time to grow it organically. And so we just worked out a deal with them where we provided them all the content that we already had to see their catalog and grow it by, I think it was either, two or three [X?] in that one category. And it made a lot of sense for us because the model that Pluralsight follows is that they essentially, like a book publisher, they do all of the marketing, they do all of the sales, they do all of the customer management and stuff, and you just provide the content and you get paid royalties based on the amount of content that people watch over the course of a month or over the course of a quarter. Since then, I have looked at a couple of different options. There’s other companies out there that follow much more of a, I guess you’d call it a self publishing model, like Udemy or Kajabi. These companies, you provide your course to them, they host it for you, either for a monthly fee or they just take a special cut, and then you are incentivized to sell it yourself, to advertise it yourself and to grow your customer list yourself and in exchange, you bring back a much bigger percentage of each sale than what you would with someone that’s doing more of a hosting model. It’s almost the exact same model of the difference between publishing a book with a publisher, like an O’Reilly or somebody like that, versus doing a self publishing. You keep more of the profit for you when you self publish, but in exchange, you also put a lot more of the leg work in the marketing and the sales and the customer generation.
Mike [18:47]: So how was Pluralsight set up for the customers who are purchasing the training packages?
Andrew [19:46]: Pluralsight’s got a huge catalog of courses and they just pay a subscription to the entire catalog. There’s two different levels. There is one for if you just want to watch it online, and then there’s another level that you get additional things like code downloads from the courses that have them, evaluations, and access to the mobile clients where you can cash courses offline if you are like on the subway or something and you want to watch it. So they pay a subscription and then they get access to the entire catalog. The authors get paid based on the amount of minutes watched, and so it breaks it down. The really simplest way to explain it is that, if Pluralsight pulled in a pool of money over the course of a quarter and they looked at how many minutes were watched of the entire catalog, if you are responsible for, let’s just say, ten percent of that, then you are responsible for ten percent of the entire revenue from the quarter and then they look at your royalty number and they say, “Oh, if your royalty number is,” let’s just pull a number out of the hat, let’s just say it’s fifteen, “Then you get paid fifteen percent of the royalty amount that you are responsible for for that quarter.”
Rob [20:01]: Do you think that Pluralsight was something that worked really well because you got in early or have the terms changed? Meaning, if I came in today, let’s say I went and launched ten or twenty Pluralsight courses of my own, do you think I could achieve similar success to what you’ve seen?
Andrew [21:10]: Yeah, you could. The terms are essentially the exact same as far as I know. Each time I put a new course in, I have a separate contract. So the process they work, again, it’s just like a book publisher, I submit an idea to them for the course, I have to make sure that is not already covered in the catalog because that would be cannibalizing one of the other authors. We go back and forth a little bit, they generate a statement of work, and then we agree to an upfront payment when the course is complete and a royalty percentage. And so the higher upfront payment you get, the lower your royalty is. But the higher your royalty is, the lower upfront you get. So you can say, even though it’s a lot of work, you say, “I only want to take like $250 or $500 when I complete the course in exchange for the highest royalty percentage I can possibly get.” That’s a bit of a game that each author has to play. It’s funny there is a constant debate that each author has amongst each other. Because if you pick a topic that you think is going to be somewhat timeless, I would think you would want to maximize your royalty instead of getting a big upfront payment. But if you pick a topic that might be a flash in the pan, then you may want a bigger upfront payment to get more revenue upfront.
Mike [21:15]: So you are kind of gambling as the author either way. It’s hard to tell which way to go sometimes.
Andrew [21:38]: Yeah. Most of the authors are doing it part-time. They have other jobs they are doing. Most of them I think are trying to get more of the upfront payment in exchange for the amount of work that you put in. Because it’s definitely not a trivial task to put a course together. It’s taken me quite awhile to optimize my development and production process to get it down to a number that I feel really works in profitable way for me.
Mike [21:44]: So with that question, how long does it take to create a course and how long are the different courses?
Andrew [23:08]: Generally speaking, they try to keep courses anywhere from one hour to four hours. And if you are outside of those parameters you have to have a pretty good case and have a back and forth with your editor. For me, I think that most courses work best if they are between an hour to two hours long. Partly because, a lot of authors or a lot of customers use on demand courses as the same way to use textbooks. We don’t go grab a textbook out of the bookstore and sit down and read it like a novel. We pull it off the shelf and look at the index and find that answer that we need or hopefully find the topic what we are struggling with at that time. And so you really have to be creative and smart about how you structure the course and that you also chunk little videos together in maybe two to five minutes segments, so that someone who needs an answer can just dive right in real quick. If you go through and you have a problem with something, you’re trying to figure something out, you find a course that looks like has the topic of what you need, the last thing you want to do is find a video that looks like it’s about 25 minutes long that may have the answer you want. You want to go dive and find a two minute video that explains what the problem is and how you can fix it and maybe has other videos that build off of that. But watching 25 minutes in hopes that it going to answer your question, that’s not a good way to package your course. You want to make sure that it’s easy for someone to get in and out and to be able to take advantage of your course a lot more. So I rarely see courses of, at least of mine, that you watched it all the way through.
Mike [23:21]: So are these videos, are they separated into little subsets of videos? So if you have a course that’s, let’s say ninety minutes long, are there like nine, ten minute videos in there or how does that work structurally?
Andrew [23:32]: So you have course and then each course is structured into modules. So a module would be like a major topic or like a chapter on a book, and then inside of that module, you have multiple clips and each clip is a video file.
Mike [23:33]: Got it.
Andrew [23:47]: I try to make mine anywhere from 45 seconds to no more than five minutes at a max and if it’s a demo that’s going to take a lot longer than that, I try to chunk that demo up into multiple clips into different components and different pieces.
Mike [23:50]: So for a one hour training course, how long does it take to put one of these things together?
Andrew [25:28]: Not to change the question, because it makes it easier for me to answer, but let me explain why I’m doing this. It’s hard because some modules you spend more time explaining than you do actually showing. A module that is mostly slide or is explanation and animations, is a lot easier to put together than a module that is much more demo heavy. And I’ll give you a couple examples. The last four or five courses I’ve done have been anywhere from two to four hours. I first started out with my four hour courses, took me anywhere from 120 to 140 hours to finish the course and that’s from planning the whole thing out, building the all the demos, building the slides, recording everything, cleaning up all the audio and stuff and then editing the videos, producing them and then rendering them all out and writing the questions and such. I have been able to get that workflow down anywhere from a 90-minute to 120-minute course, I can get it done in about 36 to 40 hours. But it’s a process that each author struggles with it. We see a lot of people talking, not just in Pluralsight but I see other people as well, how do you get your process down, how do you take advantage of sites like oDesk, now it’s called Upwork, and how you can take advantage of contractors to help you with the audio clean up, how to help you with the video? The hardest part of this entire thing of doing these video training courses is by far the audio. It is incredible how hard it really is to get into and get it done the right way, audio levels, background noise, good equipment. A lot of people think you can and say, “Oh, mine is just fine” but you can’t get a headset with a microphone on it and think that, “Hey you’re just fine.” You really need some professional equipment both hardware and software to get a really high quality sound out of it.
Mike [25:34]: I laugh because that’s exactly what we do for this podcast, we have had headsets with microphones on them.
Andrew [26:09]: For the podcast that I run, I use my recording rig. But for the headset mics and everything, what we find is that a lot of the background noise, a lot of the extra stuff that comes through that’s not on a dynamic mic or directional mic, that you don’t get from the headset ones, when you’re listening to it for a very long time, which is different from a podcast, but when you’re listening to it for a very long time, it can get to be pretty challenging for people. So the research has shown that it’s a little bit better to have a higher quality sound to get a much better output. So I have invested somewhere around $400 or $500 in the hardware that I’ve got sitting on my desk now.
Mike [26:16]: Now for the courses, you don’t have any control over pricing in any way shape or form, right? That all goes through Pluralsight, correct?
Andrew [27:29]: That’s correct. So for the company that I’m with right now with Pluralsight, I have no control over the pricing and it’s one thing that I have been kind of struggling with or I have been thinking about recently. I do a lot of work for one major software company and I would like to have the ability to package up a bunch of my courses on one topic and sell them to that company for them to either use internally or for them to give away to their customers. Today, I don’t really have that ability. I have the ability to give away free trials. This is the part where it’s a little bit different from a book. Any of the marketing that I do for my courses where they currently are, I’m really marketing the catalog and then trying to convince the people to go watch my course once they have bought a subscription. If I don’t do that, if they just go through and the buy a subscription and I’ve tried to get them into the catalog and then they go start watching someone else’s courses, there is nothing in it for me. It’s challenging because I have no visibility on when I send somebody there, I have no visibility into who my customers are. So that’s another thing that I know that, at least as a listener of the Startups podcast, and I’m sure some of the other listeners are too, that’s something I’ve always kind of struggled with and that I have no way to talk directly to my customers unless they ask a question through a little discussion form that we have on each one of our courses on the Pluralsight website.
Rob [27:36]: Right. It’s kind of like the app store model where you can’t really build a list or an audience and you’re a little bit at the whim of Pluralsight, essentially, in terms of communicating with them.
Andrew [27:56]: Yes. It’s exactly like the app store model. It’s just something that, anybody that’s built an app like that and you want to talk to your customers and do research, you’ve just got to hope that they will interact with you on the comments. So that can be challenging. You have a beat on what people want, you have a beat on what the market needs and stuff and you do your research, but no replacement for talking to your customers.
Rob [28:02]: Right. And just to give folks an idea, you have almost thirty courses in Pluralsight, is that correct?
Andrew [28:10]: That’s correct. But thirty courses, and I would say, ballpark, about anywhere from 100 to 115 hours or 110 hours, something like that.
Rob [28:11]: Of course work?
Andrew [28:13]: That’s correct. Yeah, across all of them.
Rob [28:32]: Andrew, I’m curious. You’re using Pluralsight, you’re obviously having success with it, making a full-time income from it. How much though have you given to looking at a platform like Udemy? There’s several others that are less of a publisher model and they are more of direct connection with your audience where you get a bit of high royalty rate on it, but it probably wouldn’t be as lucrative for you upfront. Have you thought about doing that?
Andrew [31:37]: Yes. So I have a Google doc with about ten different options that I have been doing a ton of research on and spending a whole lot of time looking at it and trying to do the whole like pros and cons on each one. I have the opportunity to speak at a bunch of conferences and I have the advantage of followers on Twitter and something of an audience and I would like to be able to take advantage of that a little bit more than just putting courses inside of a catalog and letting somebody else market them. It’s nothing negative about who I’m with right now, the part of building a software product that is appealing to me is the marketing side. Because I find that it is something I don’t know and it’s a challenge that I’d like to try and tackle. And what I’m doing right now, I don’t have the option of really doing that. So there is two of them that I have been looking at a lot recently. One of them is Udemy. They have a very different model from what I’m doing now where you build the courses, you publish them on the Udemy platform and you don’t pay anything for hosting them there. But if you sell the course through one of your promotion codes, then you keep a hundred percent of the sale minus the credit card transaction. If a customer finds your course organically through Udemy’s advertising or they’re an existing Udemy customer and they find your course by just going to their catalog, then you receive only fifty percent of the transaction. Udemy collects the other fifty percent and you split the transaction cost. So Udemy’s advantages to having a huge catalog and then they can turn around and they can sell their catalog to customers and make fifty percent on each transaction. But I have the ability to market straight to my customers, and let’s just say, if I did a course and sold it for $100, if I sold it, I may sell it for fifty bucks. If Udemy sells it, I’m only going to get fifty bucks as well. So either way, it’s splitting the difference. It works good for me. There are some downsides to that though, where with Udemy, you don’t get your customers. You have a way of talking to them either through broadcast messages or, I’d compare it to like a Facebook style Messenger chat where I can see their name and I can see that they subscribed, but I can’t get their e-mail address. There’s another one that I have been looking at called Kajabi Next. It’s a little bit different in the sense that you pay a subscription per month for hosting a certain number of courses. You get five for one level and you get unlimited for another level. But with that one, all of your transactions happen through Stripe and whenever someone registers for your course, you can do a Webhook to where it get sent out. So if I’m using any other mailing list to go through and maintain a list of customers, I can immediately capture all of my customers that purchased my course. They don’t have a whole discounting model or a whole promotion code model like Udemy does, but I could stand up my own little store or even if I wanted to go, I could use something like Groupon and sell my courses and then get their e-mail address and go into Kajabi and then, it’s called inviting an individual to your course. It’s basically like saying, “Give us their e-mail address, we will send them an e-mail. They can get it for free now.” So I’m kind of going between the three different options. I’m looking at them for a couple of different things. I have a few courses I’m still working on with Pluralsight, but I’m looking at just a couple of different options to see what different challenges are. I really want to take advantage of marketing my own stuff and see what I can do with that, just to see if I can do any better with that kind of a business.
Rob [32:12]: Yeah. I really like that the options are laid out. I used Udemy with my Startup VA course, that’s startupvacourse.com, if folks want to check it out. And I had good results, but it’s as you said, you don’t have access to your people. You don’t know who bought and aside from kind of the internal broadcasting stuff, it’s been fine. If I were to do it again or if I were to release another course, I would probably look at something like Kajabi Next, just because it’s such a no brainer to have that Stripe, [Hookfire?] put it into Drip, right, because we integrate with Stripe and just have that list there and you’re constantly adding to your audience. I think there is a lot of value with that.
Andrew [33:57]: The two things that are bugging about that one. I agree with you, that’s the one I lean towards. But the two things that bug me about that, one of them is that when someone registers for your course, let’s say that they do it outside of Kajabi Next. And so you’ve set up your own store to where if you have courses and you want to package them together and you want to sell them for one rate, you would have to make that sale outside of Kajabi Next because they don’t have a way of doing that. So I would have my own store, I’d sell them those five courses, but then it would be a manual process for me to go grab their e-mail address and go invite them into each one of those different courses and I have to keep track of which ones they have access to. It’s not that big of a deal and it’s something that you could definitely outsource that to a VA, but my fear in that is that if I go down that approach, that someone is going to purchase a course, I’m going to be unavailable for a little bit and I’m going to definitely need to have a VA. They’re going to want to jump in and start looking at that course right away. And will it [out?] being automated, it can be a challenge. The other one though that’s a big one and you just cannot discount this one enough. So Kajabi, they have a bunch of courses, but I don’t think that there is a tremendous population that goes to Kajabi looking for a course. They’re going to find the course through your ads and through your different ways of marketing your course. At Udemy, they’ve got six million people that are looking at their courses. And I’ve got friends that have told me that they have courses there and that, anywhere from three quarters to two thirds of their revenue comes direct from Udemy and not through their own marketing efforts. They are not marketing their courses as much as I think that I would do it, but six million is hard to just say, “Yeah, I’m not going to look at that. I’m going to do it on my own.” That’s the one that really keeps pulling me back and just saying, “Maybe you can live with the fact you can’t talk directly to your customers.” But I’m not sure where I stand on. I keep going back and forth everyday.
Mike [34:27]: I think there is a spectrum there. There’s a tipping point in the middle where early on, it doesn’t makes sense, so you lean more towards something like Pluralsight, where they’ve already got the audience versus much later on when you’ve got your own audience, then you would lean more towards building it and hosting it yourself or doing through something like Kajabi Next, where you kind of maintain control of that audience. But there’s that middle phase that it’s like, “How do I go from this side over here to that side over there, so that I can make more money doing the exact same thing.”
Andrew [35:18]: It really falls down to the person that’s doing the course. If you are doing a development style course, like all my stuff is all about development, software development, and if the traditional developer may not have the desire or the skill set to do the marketing and they may just want to say, “I want to build the course and I want to put it somewhere and let you guys go through and sell it.” To me, I’d like to have the opportunity to try the marketing and to really figure out how to talk to my customers and how to get them to come in, how to re-sell to certain customer and how to do special deals for the companies I do a lot of work for. Or if I’m speaking at a conference, I’d like to be able to say at the end of the conference, “If you like this, here is seventy percent off of this course that I have.” And if they get in there, then I can up sell them on another courses. It just depends. I think it’s part, what you said Mike, and then it’s also part of do you want to go through the effort of trying to market it. It’s just to each their own on this one.
Mike [35:24]: Another platform you might want to look at is called Summit Evergreen. Keith Perhac is behind that. He was one of the sponsors at MicroConf this year as well.
Andrew [35:55]: There’s a [slot?] group that stood up around the Founder Café and I think he was the one or someone else was the one that actually pointed me to them as well. And so I haven’t dug into them as much just yet. It’s on my list of like seven, eight, or nine that I was looking at. For me, I know that I’ve got two things ahead of me before I can actually make this jump if I decide to make this jump to somewhat another platform. I’ve got about at least three months or four months before I can actually do this, and so that’s another one of my research that I have to go through and take a look at.
Mike [36:03]: Well, if you want to hear more about Andrew Connell, he has the Microsoft Cloud Show that you can go listen to, that’s a podcast that he runs, and Andrew, where can people follow up with you?
Andrew [36:12]: Two best places, I’ve got a blog that’s just my name, Andrewconnell.com. Two n’s, two l’s. And then also on Twitter, same thing, just @Andrewconnell.
Rob [36:13]: Sounds great, man. Thanks for coming on the show.
Andrew [36:16]: Absolutely. Thanks a lot for the opportunity, guys.
Rob [36:36]: If you have a question for us, call our voicemail number at 888-801-9690 or you can e-mail us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We‘re Out of Control by MoOt, it’s used under Creative Commons. Subscribe to us on iTunes by searching for startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, we‘ll see you next time.
Episode 235 | When Is It Time To Level Up?
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike help you answer the question, when is it time to level up? They address how to think through the process and what concerns there might be to leveling up.
Items mentioned in this episode:
Transcript
Rob: In this episode for Startups for the Rest of Us Mike and I answer the question “When is it time to level up?” This is Startups for the Rest of Us episode two hundred thirty-five.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at launching software products whether you’ve built your first product or are just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, sir?
Mike: Chris Kottom who had suggested our episode on stair-stepping had sent us in another link. He’s got a book called Minitest Cookbook and it’s aimed at helping Ruby and Rails developers write maintainable test cases using mini tests. I went over and checked out the website. It’s pretty cool. It’s got a lot of stuff in there. He’s got a nice little eBook that goes along with it and looks like it’s got a lot of good information in there.
Rob: Congratulations, Chris. We’ll make sure to link that up in the show notes. We also received some praise for episode two hundred thirty, which is our fifth anniversary episode where we had our wives come on and do the show. It’s from Patrick [May?] and he says, “Hello, folks. First off, I love the show and it’s real business life theme, no baloney for sure. I’ve never emailed you but after the spouse episode today I had to comment. Ladies, it was so great to hear from the other or better half of an entrepreneurs life. As a small scale farmer and entrepreneur I felt connected with this episode. My future wife and girl friend of eight years supports me, helps me tackle tough decisions, and keeps me focused when I wander. You guys rock and keep it up. Thanks.”
Mike: Thanks, Patrick. We really appreciate that. I’ve heard a lot of people have been pointing their spouses toward that particular episode and having them listen to it.
Rob: I know. It seemed to have resonated to hear that side of it. I’m glad. We were obviously inspired by Techzing’s two hundredth episode where they had their wives come on and Sherry was actually on that episode as well. But the format seems to speak to a lot of people and I think it tells maybe this other side of the story. It’s like the other business partner’s side of the story that isn’t told enough, I think.
Mike: The unsung heroes.
Rob: I think exactly. People who put up with us in the day to day life.
Mike: Well the only other thing I’ve got is my book is coming out for its public launch next week. So that will be out, I think about the time this episode goes live.
Rob: Very cool. So if folks want to check it out where would they go?
Mike: Singlefounderhandbook.com.
Rob: Nice. All right. Well this week’s episode Mike and I are going to be talking about when is it time to level up. And it’s actually based on a question from Simon at Small Farm Central. Simon writes, “I have a couple of products that I feel are pretty mature. They’re growing ten to thirty percent a year but I can’t grow them super fast because the market’s a bit tapped out. The vertical is very small and we rule the vertical pretty well. I have some new products that I’m working on but I’m wondering when is it time to reduce investment in these more mature products and focus on the new ones that probably have more growth potential. Even if I stop investing and pull back on my existing products, they will keep generating cash since they are SaaS apps.”
So the question is how do you know your product is mature, how do you now when to move on, and really we’re boiling it down to when is it time to level up? I’m using that term level up in the context of our stair-step episode a few episodes back, and also in the context of Patrick McKenzie’s talk at MicroConf where he talked about moving from Bingo Card Creator, which was a small price point, one time purchase and most of his traffic was a single channel. It was SEO with some ad words. And then he leveled up to Appointment Reminder, which was SaaS, and now he’s leveling up to [?] Starfighters.io. And it’s really in line with the stair-step approach that I’ve been talking about for awhile and that we’ve covered a few episodes ago. I think there’s more to dig into this, the specifics of when you should think about leveling up and what some of the concerns should be, and how to think through that whole process.
Here’s some thoughts about when to consider leveling up. And by leveling up I mean moving from that step one, which is typically a single purchase priced product up to multiple purchase priced products, and then up to recurring revenue.
Now in Simon’s case in particular he actually owns two small SaaS apps in this same space and he helps small farmer manage their web presence, is one of his apps. Imagine Squarespace for small farms. And the other one helps them manage their CSA programs. CSA is where a consumer you could pay the farm a monthly subscription and you get a basket of fresh produce every week or every other week. It stands for Community Supported Agriculture. But he knows this market really well. It is a very small niche market so it’s not going to be something that grows like an app for marketers or an app for designers. It’s a good point he brings up, says his growth is not super fast. It’s ten to thirty percent a year. Which is slower than a lot of apps that we might hear about. And I think that’s the first point at which you should consider perhaps moving on, is when revenue has essentially flatlined or is growing very slowly. And if you’ve spent six to twelve months trying to increase it and investing time and energy in trying to find new traffic sources or trying to improve conversion rates and they’re not going up, that is, to me, a leading indicator that you might want to think about adding another product to your portfolio or leveling up.
Mike: Yeah, I think that’s all about a balancing act, too. The ten to thirty percent a year, call it twenty percent, and if you try really, really hard and you get twenty percent but then you don’t try hard at all for the next six months, say, and you still get twenty percent growth, then it’s indicative that there’s not a lot of, I’ll say external influence, that you can provide that’s going to push that business forward. It’s going to move on its own but I think a lot of this also boils down to the fact that just certain types of markets, they take a long time to essentially tap into to get those customers onboarded. And I would imagine that this is not a very tech savvy crowd, so you’re probably going to have to do a lot of hand-holding in order to get those people on board. So, even if you are to try and scale those efforts up, it’s not as though you probably have the man power to be able to get as many people onboarded as you would like.
Rob: I think this relates to the law of diminishing returns. Early on as you’re building and you’re starting to market, you’re going to increase revenue month after month. And then at a certain point you’re going to hit a plateau, and we have talked about this in the past about breaking through plateaus, and there can be any number of causes for that, but if you’ve been working on an app for a number of years and you can see the pattern of it has been slow growth all along, and it’s going to continue to be that, then maybe that’s not a time to bail on it, right? Because it’s just the status quo and that is what this market looks like. But if you’ve had years of eighty percent growth, fifty percent growth, and then it’s slowly tapering off and you feel like you’ve peaked in the market and you might be starting to lose interest, then that’s the time where I think that you’re starting to perhaps lose momentum.
That takes us into our second point of when to potentially consider leveling up, is when your momentum has died down for an extended period of time. Basically, when you’re own personal interest is starting to wane. And I find that this often happens around the time when plateaus start to come up. Because when your business is growing like gangbusters, you’re momentum doesn’t tend to die.
Because the problem with losing momentum is that if you don’t care, if you don’t love this business any longer and you’re starting to maybe lose interest, you’re going to start wandering. You’re going to start thinking about other ideas, you’re not all in anymore, and the business is naturally going to suffer because of this. And so that’s the second thing, is if your revenue has peaked or is flatlined, or if your personal momentum and desire to grow the business has flatlined, both for an extended period of time, those are the points where I really start thinking about should I be making a transition out of this.
Mike: Yeah, I think those things are tied pretty well together in terms of the motivation and how fast you’re growing, because if you’re growing fast you’re motivated to keep doing it, but as your returns start diminishing on the same effort, you’re just not as motivated. And I found that even with the stuff I’ve done. I don’t know if there’s a specific name for that, but it almost seems like there should be.
Rob: Yeah, I know. I think there’s a judgement call to this because every business is going to hit some plateaus and every business is going to lose your interest for different periods of time. So you might have two weeks or three weeks or a month where you hit a plateau and where you’re bored with it and you’re fed up. And to me that’s not long enough. It’s got to be something like six months where you’ve tried everything you can think of and nothing is working, and you’ve asked for advice, and you’ve talked to advisers or mastermind forks or whatever community it is that you have, and you’ve tried everything that you can think about and you’re at the end of your rope and you’re still not growing. That’s the point where, I’d say, are pretty solid indicators that you either need to seek more help, like you need to pay a consultant to come in and help, or you need to start thinking about potentially moving on/leveling up.
Mike: I think something else that factors into this is how much money you’re making from it. There’s a difference between whether it’s something you’re doing on the side or versus whether it’s something that it’s completely your full-time income as well.
Rob: Yeah, I agree. And I think this begs the question of do you always have to keep growing, because there’s a lot of talk in the venture funded startup space about growth, and I think there’s also a lot of talk in the bootstrap startup space about growth, and I’m not sure that growth is necessarily an end goal for everybody, nor should it be. I think depending on where you are in your life, let’s say you’ve just had a child, you may not care about growing for a year or two, or you just want to rent a trailer and drive around the country and hang out with your family. Growth is not necessarily the end all be all of all this stuff. I know I talk about it a lot. It’s been a personal goal of mine to grow businesses over the past few years but if you hit the point where you’re making ample money to live on, I don’t think there’s anything wrong with living the life. Like in quotes, “Living the life,” for awhile and really evaluating whether or not you want to start another app.
You and I were discussing this before, not to use the word coast, because coast has a negative connotation, but I coasted on revenue for a solid eighteen months. It was around 2010, maybe, 2011, we had our second child and there was a solid ten months where I worked a day and a half a week, two days a week. Nothing grew but nothing flailed either. And then there was about another six months where I was just enjoying it and doing things and that’s when I wrote the book and that’s when the Academy really got built. I don’t think that a constant push for growth necessarily should be the goal for everyone at all times. I think it depends on your situation.
Mike: Yeah, growth for the sake of growth shouldn’t necessarily be the goal. It’s what are the things that you’re trying to achieve and why. Why is it that you want those things? If you want growth in order to make more money so that you can do X, Y, and Z then that’s fine, but at that point it’s not growth that’s the goal it’s that X, Y, and Z, whatever that happens to be.
Rob: Right. So I think what I’d do if I were in Simon’s shoes is to go on a retreat and I would get the heck out of Dodge for forty-eight or seventy-two hours, try to be alone and basically ponder this decision and its ramifications and ask a bunch of questions. There’s actually a good podcast episode. It’s Sherry and mine’s podcast called ZenFounder. And you go to zenfounder.com, episode two. We outline the things you should ask in a retreat. But one of the questions that I would be asking is do I still have interest in this niche? Do I still want to grow these apps? Do I really want to start over with a new product in a new market? Because I think that’s what Simon’s asking about because he’s saying his market is too small, currently. Because starting over with that new product in a new market is very, very hard and don’t underestimate how much of a challenge and how long that takes. Looking backwards at the past two plus years, that Derek and I have spent building Drip from scratch, it’s a ton of work. I think that’s something to really think about. It sounds great at the beginning and there are going to be some hard times again. So ask yourself, are you in a place in your life, and mentally where you want to take that leap and go through the hardship of starting something new.
Mike: And I think that if you’re going to do that that’s something that you have to really commit to because it can be very easy to become complacent when you’re in a place where you’ve got money coming in, you don’t have to work terribly hard to get that money coming in the door, and you can essentially drag out other things that you’re working on for an extended period of time because there’s no push or drive for you to complete it in a short amount of time. So just be mindful that if you’re going to go in that direction then you need to commit to doing it or not bother because otherwise you’re going to waste a lot of time and something that you could have easily finished in eight or nine months is going to take you three or four years to finish.
Rob: Right. And the good part is that Simon has a lot of experience. He’s basically grown these two SaaS apps to the point of success. I don’t know what his revenue is but I know that he has a few employees and he owns this market. So he definitely has a lot of experience under his belt and the true stair-step approach of learning these things early on. So I think he does have some advantages under his belt. But I do think that going on a retreat and thinking through do you need to keep growing right now, is it time for you to maybe live the life for a little while, take four or six months and coast and enjoy it, or are you geared up to really start something and hammer it out, start a new app. I think this ties into thinking about it, in terms of fast growth versus slow growth. Because every app and every market is not going to be fast growth. The vertical of small farms or catering to restaurants, or selling into hotels. There’s a bunch of niche markets that we can think of, especially if you’re building a niche piece of software for those markets, where I just don’t really think it’s feasible to have this hundred percent or two hundred percent year over year growth every year. Your growth is going to be slow the entire time, and I don’t necessarily think that’s a bad thing as long as you have the patience to do it and it’s not driving you crazy.
Mike: Yeah, and we had an extended conversation about how to essentially present that fast growth versus slow growth. We talked about auto pilot, we talked about coasting. All these different words that have different connotations depending on how you use them. And I don’t know what the end words for them really should be but it comes down to what your growth curve looks like. Fast paced marketing startups, you’re going to have a lot of heavy growth and it’s going to be easier to onboard people, and you’re going to be able to move them through your sales funnel quickly, versus these other things where the growth is significantly slower, in the neighborhood of, as we said earlier in the episode, the ten to thirty percent year over year growth. That is much slower but the question also comes out as to how far down the road does that growth look like it’s going to go? Is it going to tap itself out in a year or is it going to be ten years or twenty-five years? I think there’s a very big difference between some of those different numbers. And it’s going to influence, in some ways, what you decide to do moving forward. I think that ultimately what you do is also going to be heavily influenced by what you’re interested in.
Rob: Yeah, I think it ties into personality as well. Certain folks are more patient and more willing to just hang out an build a successful, highly profitable app but not feel like their always tantalized into going into that next high growth niche market that everybody’s talking about. I have a lot of respect for the folks that are doing that and can stick with one thing for years on end. So I think that’s an interesting way to think about it.
I think the stuff we’ve talked about so far can be summarized under “Is this something that you want to do?” You need to think about it from your personal perspective. I think another question I would ask myself is is there another opportunity that you can think of where each hour of your time will be worth five X, or ten X more than with your current business? Because if that’s not the case and you don’t have your finger already on something, I’d be less inclined to back away from this. Again, unless you’re really fed up with where you are and you want to make a quick exit, I’d be thinking about what’s next and thinking about how that will be different. Without that “What’s next,” it makes it a little harder. I think just leaving a business behind without having an idea of what you’d be up to next maybe leaves a question mark in my mind. For my personality I think it would leave me concerned but maybe that’s not a general feeling.
Mike: One thing that just jumped in my mind was, for this particular business, have you set out everything that you’ve achieved to do?
Rob: Yeah.
Mike: And I think that if you have then I think it’s probably definitely time to look around and see what else you could do and maybe move on. But if there are things that you set out to achieve originally that are still within the realm of possibility and you just haven’t done them yet, I think you may very well run into a place down the road where you’re like “Gee, I wish I had done that.” Maybe not. It depends on what those things are but it seems to me like that’s something else to keep in mind.
Rob: Yeah, I think that’s a good point. I think the last thing I’ll throw in here because it tied into my decision when I moved from HitTail and moved onto Drip, was is there an external dependency that could potentially render your product moot like you’re integrated with Twitter and they’re going to jack with your API, or you’re integrated with Google and they keep changing everything every six months. In Simon’s case, I don’t think it is, but in the case of HitTail, if Google’s going to be changing things and breaking your app altogether then it might be a good time to think about diversifying.
So I think those are the thoughts and concerns and the questions that I will be asking. And I know Simon asked a little bit about how do you know when your product is mature or how do you know when you own the market. I feel like you have a better sense of it than we do, just because we don’t know your market. And my guess is if you ask yourself or you look at the data, how many small farms there are and how many you’ve reached, you have a pretty good sense of whether or not you can accelerate growth or whether or not this is just a solid business that is hit maybe a plateau. I do think that I would think of it in terms of a plateau and not as the end all be all of the business because my guess is someone somewhere could take this business to the next level. The question that I would ask is what would it take to [?] X this business and do you think that’s possible? And that can play into this decision of if you think it’s possible and these are the steps then do you want to do those?
Mike: I think my sense of that is just very slightly different, which is just that is there a possibility for this business to double or triple in size within a reduced time frame than what you’re currently looking at? As I said, I think it’s slightly different than what you just said, but it boils down to is it even possible, not just for you but for anybody? And if it’s not that might be your indicator to say okay, let’s go do something else or, as we talked about before, maybe you’re just happy where you are and just keep running this business for the next fifteen, twenty years.
Rob: Right. Which I do not think is a bad thing because the pains of starting over are not to be understated. So if you decide to stick with it, that’s great. We wish you the best of luck. If you decide to use this as a time to have an exit and level up, I thought about three different options for how I’ve seen this done and two of them are good choices and the last one is pretty much a bad idea, but we’ll walk through each of them.
The first choice that I’m throwing out, and these are in no particular order, they’re not in priority or anything, the first option is to sell the app. What’s nice is that there is a market that has started to coalesce over the last couple of years for these higher end SaaS apps, especially, but pretty much bootstrap software. And even eCommerce and product test service and all that stuff. There’s now becoming a bit of a liquid market that is more than just the low end flip of market where everything’s twelve months of revenue or twelve months of profit or whatever. So there are definitely solid website brokers out there that are dealing in this type of stuff and the multiples vary depending on growth and all types of stuff, but frankly with a SaaS app that is fairly systemized I think you can get at least two and a half times your annual net profit and potentially up to three, three and a half. Which it becomes an interesting number at that point. If you’re doing a chunk of change each year and you’re able to get 3X that change then realistically your choice is do I take this money off the table now and give me time to start thinking about what my next idea is, potentially acquire something that is more interesting or build it from scratch, or do I stick around for the next three years and try to manage this thing on the side in order to earn that same amount of money?
The second option that I’ve seen people do successfully, but only a few times, is to actually put someone in charge of the app. [Heaton?] Shaw did this with Crazy Egg where they hired basically a CEO to run it, full-time, that person was not focused on other apps. I attempted to do this with HitTail, and I had Derek working half-time on HitTail, half-time on Drip. This is way back in the early days of Drip. The problem was is that Drip quickly grew. It became a bigger app, bigger opportunity than HitTail so I pulled him off and we both started working on Drip, and as a result it didn’t work out for me because I wasn’t willing or wasn’t able to find someone who I thought could totally run it on their own and run it, but perhaps Simon’s in a different situation here where he could really hire more of a CEO or COL level person who can continue to run the app in his absence.
Mike: Yeah, I think that’s the difference between whether or not you have somebody who is going to be involved in your old business that’s also in your new one. Because I think that with Crazy Egg, I don’t think that [Heaton?] and Neil had had anyone who was actively involved with KISSmetrics when they decided, essentially to relegate that to the back burner. So that may be the deciding factor, I’ll say there. But I think that this route is possible but I think that you also have to do it right. You have to make sure that you’re not stepping on an opportunity either forward or backward when you do it.
Rob: And the last of these three options for putting an app on the side is to try to do both. It’s to try to start your new app and just figure you can manage the old apps on the side and not hire someone who is not fully in charge of them. And this, from what I’ve seen and from what I’ve experienced, is not a good idea. Patrick has mentioned this with Bingo Card Creator that trying to do it on the side basically revenue dropped every year since he did that. I saw this with HitTail when both Derek and I stepped away from it, revenue dropped. It’s really, really hard to do two things well at once. The exception is early on when I had a bunch of small apps, I had little apps like [?] and Voice and Beach Towels and little eBooks here and there, those really didn’t need much management. They didn’t have a high touch sales process like I imagine the Small Farm Central does. They didn’t have nearly the moving parts that a real SaaS business did. They just really got leads through a single channel and they converted those leads and all of the stuff was really an automated process either through a virtual assistant or through code. So that’s an exception that if you have something that really, really can be automated, almost ninety-five percent or whatever, then I think you can put that on the back burner but it’s definitely much, much harder to do and I don’t know of any models I’ve seen successfully doing it with a more complex app like a SaaS app that’s doing five figures a month.
Mike: Yeah, it feels to me like that’s a function of the support and the onboarding. So for example, Bingo Card Creator, the onboarding is not very difficult but the support could potentially be much, much larger so you have to have somebody there who can manage the support side of things. And you have to be able to continue staying on top of the SEO because it’s such a low margin business. Because of the low margins you’re not going to be able to take your focus off of it because if you take your focus off of it, immediately your margins are going to plunge, your support costs are going to overtake everything else. And I think you probably experienced something similar with HitTail where you had Derek working on it half-time and then you pulled him off of it but them there wasn’t really anybody there to backfill that. It just seems like that factors into it heavily.
Rob: Yeah, the thing is most of us are running businesses that change frequently even though it may not feel like that. And if you have a business that relies on SEO for a lot of your traffic or relies on ad words, that stuff is changing every six months, so you can lose a lot of your rankings when Google decides to do an update or ad words get more expensive. Or if your using Facebook ads, as an example, they change algorithms and they change the way things are done and suddenly a main source of your traffic goes away and if it was your main business you would spend the time experimenting and figuring it out. But if you’ve now moved on to something else it’s really hard to shift your focus back and spend the week or two weeks or three weeks, whatever it’s going to take, to completely rediscover another traffic source or to reoptimize an existing traffic source that you’ve lost. And so that’s where, in every case that I can think of, trying to do an old somewhat complex app and to start a new one, it breaks down eventually. It may work for six months, it may work for twelve months, but eventually you’re probably going to hit a roadblock with one of these many changing things that we see that you’re then not going to have the time or desire to go back and fix.
Mike: Well, Simon, I really hope that that helps answer some of your questions. If you have a question for us you can call it into our voicemail number at 1.888.801.9690 or email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Out of Control by MoOt used under Creative Commons. Subscribe to us on iTunes by searching for startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening and we’ll see you next time.
