Episodes

Show Notes

• Quora Thread: What are the best ways to think of ideas for a startup?
• Paul Graham: Startup Ideas
• Jason Cohen
• Joel Spolsky: Platform Vendors
• Business Model Generation by  Alexander Osterwalder and Yves Pigneur

Show Notes

Transcript

[00:00] Mike: This is Startups for the Rest of Us: Episode 137.

[00:03] Music

[00:10] Mike: Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs to be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it. I’m Mike.

[00:19] Rob: And I’m Rob.

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

[00:24] Rob: Well, I’m at inbox zero for perhaps the first time in my life. Yeah. Yeah, after getting back from MicroConf there were just this mountain of e-mail, hundreds and hundreds of e-mails. I was so far behind and I decided that like long-term, this isn’t how I want to do e-mail. Decided that I would shoot for this inbox zero thing. To me, I’ve always viewed this maybe a faddish thing or like the – it’s the flavor of the day for was it like personal organization or time management. But frankly, it feels good. It’s been about 10 or 11 days now and once I got through all that e-mail, got it to zero, I used, you know, Boomerang to remind of stuff so that I didn’t have to leave it in there and see it all the time.

[01:02] And then I also moved tasks directly from Gmail in to Trello. So, if I need to respond at some thing later or if it’s a lower priority than right now, then I will say like respond to this e-mail in Gmail, you know, I copy that as a Trello item. It’d be nice to have like a one-click way to do that but for now, just getting to this point is kind of my minimum viable strategy and then I’m sure I’ll go out and look for a better tool to do it at some point if I keep this up.

[01:28] Mike: Well, personally, I have subscribed to inbox dozen or so. So [Laughter] I tried inbox zero for a little while and it worked really well and so, I got the certain things that were either longer term things or things that I couldn’t respond to right away for one reason or another and I really needed to keep them there because otherwise, I would just use Boomerang for them.

[01:47] So, certain things I haven’t quite been able to do that for but there’s definitely stuff that I just keep it in my inbox just to keep it kind of at the forefront of my mind I’ll say because certain other tools like if you use your e-mail as a to-do list, it’s just eventually gets too long and you get overloaded and you just can’t keep up. And then if you shift from taking your inbox stuff and move it at someplace else, eventually that other thing seems to get overloaded because there’s always more work to do. So, I think that there’s this balance you have to strike about stuff that you decide you’re just not going to do it and you just throw it away.

[02:18] Rob: No, there is a huge amount of stuff that I over the past couple of years as my, you know, e-mail and just all the management tasks that I have to do have increased. I’ve made a lot of decisions to blanket not reply to certain things and then I’m not able to address certain things. I’ve also started to bulk reply to a lot of things where I shouldn’t say bulk, I should batch reply. You know, everybody who asked for advice, I put them under advice tag and then I throw them to Trello and say I respond to all the people under advice and I’ll take 30 minutes or 1 hour each week and I’ll just go through them all.

[02:53] And if there’s 10 of them, then I know that I have 6 minutes per and that’s all I can give. In the old days, I used to sit there and respond with 5-paragraph essays to everything. But it’s just making adjustment, you know, as the volume increases. How about you? What’s going on on your end, anything new?

[03:06] Mike: Well, I have my first mastermind meeting got-together and we used the Google Hangout and things went really well. And we’ve all got things that were tasked for doing the next time we meet and we’ll be meeting again next week. So, we’re going to do it every other week as opposed to every week. It seemed like it was a good meeting. Everyone kind of threw out some feedback afterwards and it looks like it’s going to go well. So, we’ll see how it goes and you know, four to six weeks or something like that. And I’ll report back with the status report of how things are going.

[03:32] Rob: Yeah, definitely and then we could, you know, since the two of us  are involved in masterminds and we could in a couple of months probably share our thoughts on how we think they should be run, some potential mistakes we’ve made, pitfalls and that kind of stuff just our structure that we have in mind for like a software or startup mastermind. A lot of people have talked about masterminds but the specifics of them aren’t talked about that much and when they are, they tend to focus on other niches.

[03:58] So, hey, Derek Sivers e-mailed me and he actually e-mailed me because he’s launched a new venture. It’s WoodEgg.com and they’re basically startup guides for 16 Asian countries that he co-wrote with some folks who were on the ground in those countries. And he e-mailed because he said he’s hiring people to help create the 2014 editions because the 2013 ones are just out and he wants to update him every year. And I’d just wanted to throw it out there as a call, you know, if you’re in one of these 16 Asian countries, go to WoodEgg.com/help. Get in touch with Derek. I mean he’s awesome to work with and it’s certainly a good opportunity, good thing to have on your resume number one. You can make a bit of change for sure some good experience to kind of be involved with someone like that who’s really executing on stuff.

[04:39] If you don’t know Derek, he had CD Baby and he built it up over several years and sold it for 20 million bucks in 2007, 2008 and since then, he’s been kind of globetrotting and preparing to launch some new ventures. And this is really the first thing that’s come out since then. So, definitely, wish him luck with that and again, if you’re on the ground in any of those countries and at all interested in working with Derek, go to WoodEgg.com/help.

[05:01] Remember back to episode 115 when we talked about Proposition HN, it was a guy who had made a post on Hacker News. He did it anonymously and he said, “I’m going to fund a couple of ideas. I have enough money to give.” It was like 5 to 8,000 bucks per idea and, “We – I own half and you own half. You’re a developer. I’m a marketer and let’s kind of build some MVPs and see what happens.”

[05:23] Well, he has given an update. I guess he has a blog. It’s HNProposition.blogspot.com. Last update was in February which was what, four months ago now and basically he updates that he’s gotten 250 something e-mails, kind of the break down of people who are interested or not or had more questions and then he talks about there’s basically five ideas that he plans to – or that he plans to green light. And there’s one SaaS app aimed at businesses, one SaaS app aimed at consumers, two games and a productivity app and so as of four months ago anyways that’s where it was.

[05:59] Mike: If I had to make a guess, I would say that the one SaaS aimed at business probably has the most chance of success. The other ones – the one aimed at consumer is probably not going to do as well. The games are going to be either completely hit a mess and then the productivity app, I mean there’s, you know, a million and one productivity apps out there and I would have a hard time believing that that one would do well in terms of monetary value.

[06:21] Now, I guess from my perspective is this a good deal for the person doing it? It depends on what their experience level is. I mean if you’ve never had any experience or doing any of these – any of the marketing side of things, getting the inside view on how that stuff is done if this person actually follows through with all of this stuff then, you know, you’re going to probably learn a lot.

[06:40] Rob: Yeah and I like that he signs up his blog post with, “Never forget premise number one, investors incubators overestimate their ability to pick good ideas and startups.” So, that’s what he, you know, basing all this on, just that he wants to have multiple things, multiple irons in the fire.

[06:53] Music

[06:57] Rob: Today, we’re going to be talking about some listener questions. We have a lot in the queue and I picked five or six that we’re going to run through. The first is about enterprise 2.0 SaaS startup looking for feedback. It’s an e-mail from Dustin DeVries and he says, “Hey, Mike and Rob. I’ve heard you guys talk about software consulting several times on the show and wanted to get your advice on finding certain types of software consulting work. I’m primarily PHP, Python and frontend.”

[07:21] “I’m currently trying to build an internet-based business to bootstrap it and provide for my family so, I do consulting work in the meantime. This has worked pretty well for me. I average rates of 75 to $85 an hour while there are plenty of jobs for remote consultants within the software industry. Most of the ones I stumbled across are part of a bigger team. So, I’m one of many developers building an app for a company. So, I have to be on Skype 9 to 5, engaged in daily scrum meetings, et cetera.

[07:45] While this is definitely better than a salary gig, I prefer to find gigs that are more goal/milestone-based where I’m building an app to a specification with weekly and or monthly deadlines. This allows me to work on my own pace. I managed to find a few of these gigs and they are awesome but they are usually through networking, word of mouth or wherever else. Do you have any suggestions for finding this type of work? FYI, I’m not real intrigued by things like oDesk because they feel like a sweatshop for developers. I also suspect that I wouldn’t be able to command the rate I’m used to charging at least not until I build a reputation. Thanks for the advice, Dustin.”

[08:15] Mike: Yeah, I have to agree I don’t think that oDesk is the way to go with this. I mean you really need to be able to build a name and reputation for yourself and I think that that is going to involve – getting involved in a couple of different communities. And obviously, if you’re in the PHP and Python space and as well as the, you know, CSS, JavaScript, jQuery, all that stuff that goes along with it, you’re going to want to get involved in the communities that, you know, cater to that kind of work. So, that’s probably the first place that I would start. You have to find some way to attract their attention get involved in such a way that you’re going to sort of build a community around the things that you do.

[08:49] Now, whether that’s creating tools that the community uses or becoming a recognized expert in that area, you know, those are all ways to kind of establish a reputation there but I would definitely agree that going to the type of communities like oDesk where you’re essentially bidding and trying to end up, you know, what – amounts becoming the lowest bidder for many of these jobs. And it’s not to say that everyone is going to hire the lowest bidder for the job but the vast majority of the people on there are going to be asking for rates significantly lower than what you’ve specified there.

[09:21] The other thing that you can do is you can hit up your network. Definitely leverage LinkedIn a little bit. You could probably try some advertisements on there that might get you some work. Introduce yourself to some recruiters and the LinkedIn obviously had some tons and tons of recruiters on there. And they have tons and tons of contacts. So, if you could get in with a couple of them, then those realms as an expert in PHP and Python that could lead itself in to more projects for larger and larger companies.

[09:46] The other thing that I would do is I would probably look at raising your rates if you’re going to be going down that road because you don’t want to be seen as the run of the mill PHP, Python consultant. What you want to do is you want to kind of separate yourself from the pack a little bit. And I’m not saying you raise your rate across the board, you could try it with a couple of strategic customers that you would like to acquire and see what happens, see if you can position yourself as that expert. And if you can, great, you’ve just increased your rate. If not, then, you know, maybe you talk to them about lowering your rate a little bit back to, you know, “90 to $95” an hour which is still more than, you know, the 70, 85 – the 85 that you said.

[10:19] Rob: Yeah, I would agree, oDesk is not the place. If you’re already            billing 75 to 85 an hour, I just really don’t see that being a good fit for you. It’s also just a lot of hourly work. So, it’s kind of getting away from what you want. The way I look at this and when I was doing consulting, as I looked at is as we used to call it body shop work versus project work. And body shop is when you are a body and you put on a project to work on a team like you are – and they’re so much more of that work available. There’s tons of it because enterprise development shops all over the country, all over the world need you and that’s a lot of software built is just internal business apps and there are teams working on it. So, there is so much more of it available.

[10:58] Project work on the other hand which is what you’re talking about where you have milestones and goals and stuff where you’re working autonomously and independently, it’s so much harder to come by as you found. And so, the bottom line is you have to stand out. You have to either be as good as you are now and do the project work at a lower rate so that you are better than the other people in that rate or what I would say is you have to start building yourself a personal brand a kin to what Mike said.

[11:22] The way I did this because I went to the same path, I went salary then I did body shop work and then I did project work. And for me, it happened to be the blog, I blogged Software by Rob. My early days were about software development technical stuff and there were enough people finding me through that. I had enough of a name in that that I was able to basically score a project work for a bunch of random startups all over the country. It was all remote. It was all milestone and project-based.

[11:47] I’m not saying that that’s the only way to do it but that is definitely one way to do it. It’s building a name for yourself within a community. You know, very much like what Mike said just a different approach but that’s one way to kind of make yourself stand out and get yourself because this is the premium work. Everybody wants this work, right? There’s no coincident that you want to do. Everybody who’s in your position wants to do it. And so, you have to stand out from the others and you just have to figure out the best way to do that. So, I hope that helps, Dustin.

[12:13] Our next question is an enterprise 2.0 SaaS startup looking for feedback. This e-mail is from Edward Anderson at ProcessSmith.com. He says, “Hey, I’m a longtime listener and my startup Process Smith has been shaped by your guys’ awesome podcast. Process Smith is a platform running reoccurring business processes. Process Smith takes user creative flow charts and runs them. It’s sort of a lightweight BMP engine. I launched it the beginning of this year and I still need to increase my users. You can check it out at process-smith.com. I’m a programmer not a sales person and I struggle to find a good method to sell Process Smith.”

[12:48] “I think part of my problem is that it’s such a generic tool. It doesn’t scream, “I will fix X.” But I also think that is one of its strengths. I’m trying SEO but the keywords for my product are really competitive. I’ve been putting off inside sales but it’s increasing and becoming a last resort option. Given my product to either of you have a suggestion on effective marketing plan to get users. I know it’s a really broad question. Any other feedback would be extremely valuable to me.”

[13:11] Mike: I have a couple of thoughts on this. I think one of the things that you need to do is focus in on a couple of very specific problems that you think that larger businesses are having that are more general purpose. So, one that I can think of for example is an onboarding process. So, when a new employee comes in to the company, what does it take to get that person up and running? What sort of things do they need? Do they need new hardware? Do they need new software? Does the HR Department need to have things filed? You know, does the person need an active directory account? Do they need an e-mail account? There’s all these things that kind of go in to onboarding a new employee.

[13:46] Now, on the flipside of that, you could also go with the employee termination – now, whether the employee is terminated, you know, because they quit or because they did something wrong or because there are layoffs, things along those lines. Those are the two types of problems that jump in to my mind as to things that you could target and if you position your product in such a way that it says, “Hey, this is a general purpose tool but these are things that it does really well. We can do an onboarding process. We can do termination process.” And that kind of leads more in to the realm of creating processes for like the HR Department.

[14:21] So, both of those two things, there’s a lot of crossover between the HR Department and the IT Department because obviously, the IT Department has to handle the account creations and things like that. But I would probably try to go after those people in HR Department to try and make their lives easier because the IT people already have all these different systems that will do things for them and track the stuff that they have to do. The HR Department probably not so much.

[14:43] So, I would look at those types of HR problems that you could create a workflow or a process for that is going to vary from company to company and that’s where your engine comes in and it’s extremely valuable because although it’s geared for these types of processes, you don’t want to present it as, “Oh, this is a very general purpose tool. You can use it for anything.” What you need to do is focus it down and tell people, “This is what you can use it for. Sure you’re using this for all this other things but this is what you should use it for. This is what it’s really good it.” Does it have to be really good at that? No, it doesn’t because that’s marketing issue. It’s not a technical issue at that point but you’re trying to position it in such a way that people are going to find it for a very specific problem that they’re having.

[15:23] Rob: Yeah, you nailed it on the head. The phrase that every – using his e-mail where he said, “I think part of my problem is that it’s such a generic tool. It doesn’t scream “I will fix X.” But I also think that’s one of its strengths,” that is the problem. No one – I mean I looked at the website and there are a bunch of uses listed and that is completely not helpful because if it’s not built for me, then there’s no reason that I’m going to sign up and pay 50 bucks, hundred bucks, 200 bucks a month for this product.

[15:48] I think that is the number one thing that you have to figure out before you do anything else. Do not write another line of code. Figure out who’s using your app, who is paying you for it and what do they using it for and then just go after that market. Since you don’t have funding, I’m assuming you’re number one thing right now is to find a problem, a desperate pain point that you can solve for people. And I would build an entirely new – I go to an entirely new domain name, entirely new website, entirely new value proposition and focus on that and get 100 customers paying you a hundred bucks a month and there is your ten grand. Quit your job and then move on to, you know, either broaden that. Go horizontal. Look at other verticals.

[16:25] That’s where you can really start playing the game because for now you have this very general purpose tool. We see this a lot. I see this app builders, these things that make it easy for HR Department to build an app or to build some type of web app or a website builder or something and there’s a bazillion of these and they have all their unique takes on it but none of solves such a desperate pain point that are more focused tool doesn’t solve better. I think you need to find a desperate pain point and go after that and once you have solved that problem, hopefully, you will have what we call problem solution fit, then you can actually figure out how to market that. And that’s then you’re going to take your product. You’re going to map it to a market. So, I hope that helps, Edward.

[17:05] Our next question is about whether the internet is  lot more competitive than it was three to four years ago. It’s from Mitesh Chauhan. He says, “Hi, guys, great show. One thing I’d like to ask you, Rob started out by having a few niche sites which in the end help him quit his job. However, would you say that back then the internet was a lot less competitive? Can we still apply the notion of several zero niche sites to bring in 400 plus dollars a month given how competitive the internet is these days in 2013?”

[17:33] Mike: I think that as time marches on no matter what the internet is going to become more competitive, this year is more competitive than last year. Last year was more competitive than the year before and you can go on and on. It’s just doesn’t matter. It’s always more competitive today than it was yesterday. I distinctly remember thinking this probably 10 or 12 years ago and I was like, “Oh, if I’d only been born a couple of years before, I would have gotten in on this particular wave of the internet and I would be in such a great position.”

[17:58] And that’s just totally not true. That’s not how  the world works. There’s always new markets that are coming out. There’s always new problems to be solved and as long as you’re building solutions that people find valuable, you can build a niche for yourself and you can build a product that goes out to the market and is successful. But you have to start some place. If you don’t ever start because you’re afraid that it’s too competitive then you’ll never going to finish, you’ll never going to succeed.

[18:20] Rob: I agree. It’s always more competitive than the prior year and that’s been the case since it came out in ’96. Do I wish that we could have, you know, built an e-commerce website? Would had it been less competitive to try to build an online store in ’96? Well, absolutely. Problem was the tools were so ancient at that point. And so, now in 2013, you have so many more tools at you’re disposal. You can get websites built faster. We have tools like WordPress that weren’t around in any type of former fashion and let’s say 2005. They just – they weren’t usable. Now you can bam, get a website up with one click. We have keyword tools that are far, far better than we had five, ten years ago.

[18:58] So, you have – it is more competitive but you also have these tools at your disposal. It feels a little bit like it could be use as an excuse of like, “Wow, it’s just too competitive and this stuff doesn’t work anymore,” right? Launching an online business is all done, you know. You can’t really do it these days because every niche has competition. Every niche might have competition now and it probably didn’t five years ago.

[19:17] So, going back to the original question, “Can we still apply the notion of several zero niche sites bringing 400 plus dollars a month given how competitive the internet is these days?” I do think that – I still think that you can build niche sites. I know that the AdSense Flippers were doing it. I know that there are people who do this and make money at it. Now, is that an interesting problem to solve? You know, is it something that excites you or that something that you think has longevity for you? Or is it just something to get you out of your job?

[19:46] Figuring out the answer to that question will help and I would say that if you do have something that’s really excited and really passionate about, then I would lean towards doing that because I do think that launching these niche sites is harder than it was five years ago. But at any point in time since the internet has launched, there’s always opportunity and that’s our challenge it is to find that opportunity and attack it. So, I hope that answers your question, Mitesh.

[20:09] Our next question is about the quality of a pre-launched landing page. This e-mail is Tom Nguyen and he says, “I know how you guys say we need to create an MVP which is the bare minimum to collect e-mails and gage interest before I really start working on my product. I created a launch page but now I have customers saying my design is bad and needs work. Should I ignore them or listen to their feedback and fix my design? Does the launch page still need to be nicely designed since that is a part of marketing?” What do you think, Mike?

[20:39] Mike: I think that having a launch page that looks reasonably nice is fine. I don’t think that it needs to look spectacular. I mean really the purpose of the launch page is just to get people at least some information about your product or your proposed product enough to the point that they’ll give you an e-mail address. And if you can’t get those e-mail addresses basically for free and just by showing a couple of pages of information about what it is that you’re trying to build or what it is that you’re proposing as a solution for a problem, then you need to go find different problem. I would not worry too much about what people think of your design. You know, you really need to focus on talking to those people figuring out whether it’s a problem that they have that they’re going to pay for.

[21:22] The design I mean if you go back and look at one of the early forms of my Altiris training site, it looked awful and I still got people to pay for it. I mean it was, you know, it was great that I had all this traffic coming through and people were paying for it but I had to go through and refund their money. It looked…it looked okay. I mean it was a theme that I bought but it was not the greatest in the world. The website didn’t have a lot of great information on it. It’s significantly better today than it was then but then I didn’t have a product. I was just kind of testing the water to see if it was actually viable.

[21:51] And that’s what your – the purpose of your launch pages. The purpose of your launch page is to communicate with people not solely to look good. And it’s not to say that, you know, you can put something out there that looks like Craigslist and you know, be widely successful with it. But you…you have to at least pay attention to some things. You have to tweak some of the text. Try and market it as best as you can but in terms of the design itself, I don’t know that I would worry too much about it.

[22:14] Rob: Yeah, in my opinion if people are complaining, that is a problem because if these are actually people that are in the niche that you’re trying to serve and they care enough design and you’re kind of violating that design sense, then it means that you don’t have credibility to them and I do think it’s going to impact your conversion rates.

[22:29] Now with that in mind, good enough is good enough like it doesn’t need to be spectacular. There are a number of options that work just fine for you. Install WordPress and download the Coming Soon plugin from John Turner. Go to LaunchRock.com. That’s where our MicroConfEurope.com landing page is right now. It’s LaunchRock and I think it’s free. Man, I don’t know, maybe 10 bucks a month or something. And I got that up in 5 or 10 minutes and it’s collecting e-mail and has an image in the background and it looks fine. It’s very simple. Easy to get…get a website like that up. Go to themeforest.net. Look for single landing page HTML template. They’re $7. Any of these options are going to be good enough in almost all niches.

[23:10] The thing you have to remember is that certain niches are really going to care about design. So, a lot of freelancers, designers, web people, they care more about design. Photographers are the same way. If you’re a non-technical niche, then they’re not going to care as much about it. So, if people are complaining, I do think that’s a problem. I do think it impacts your credibility. But the good news is that getting a landing page up that doesn’t insult someone’s design sense and hopefully can and create conversion rate is really, really easy these days. This goes back to our previous answer to the previous question of the tools that are available today are things that, you know, it would have taken a custom design and you know, 500 or a thousand dollars or more five years ago to get a landing page up. And today you can buy one a really attractive one for 7 bucks from Theme Forest. So, thanks for the question, Tom.

[23:56] Our next question is asking about a retirement plan for an entrepreneur. He says, “Hi, Rob and Mike. I’m a big fan. I discovered the show around episode 50 and listened all the way back to the beginning. The content you put out is great and I really appreciate it. You’re obviously successfully at generating and maintaining multiple revenue streams and that’s admirable. I would like to successfully do that as well.”

[24:14] “My question is what are your long-term plans regarding a steady income and something to live off when you retire? The idea behind multiple revenue streams is it if one fails, the other act as sort of a safety. So, your entire income doesn’t depend on just one stream. I think in the ever-changing world of technology, many products have a life expectancy of no more than a few years. I’m aware of the fact that I won’t be young forever and that the tech world is constantly changing.”

[24:35] “It’s reasonable to expect that when I’m 40 I’ll have less understanding than I do now of whatever the internet will evolve to and of course even more so at 50 or 60. I don’t want to be an old man trying to execute products in a world I barely understand anymore. What I’m getting at is what are your long- term plans? What do you see yourself living off when you’re 50 or 60 and in retirement? Thanks. Keep up the good work.”

[24:56] Mike: I think that over time, you know, if you’re building a portfolio, the level of success that you achieve with those products tends to go up and it’s not to say that every single one is going to a hundred thousand dollars the first one and 300 with the next one, you know, three and a half million with the next one. You know, you’re going to have some failures here and there. There are some things that you’re just going to tank after a few years. There are some things that you’re going to get bored with that you’re going to sell them off.

[25:17] If you kind of follow up pattern though, if you’re trying to build the portfolio products, eventually as you get more and more successful, the ones that you started out with, you’re going to essentially let them fall by the wayside. And whether that involves just letting them die or selling them off and reapping the rewards from that to plug in to your next venture, you’re going to be building bigger and bigger things. If you were to talk to an entrepreneur who went out and created a company and he sold it for a million dollars and you asked him what he’s going to want to do next, if he’s comes back and says, “Well, I want to build another company.” Your immediate thought is, “Oh, he’s going to go out and build another million dollar company.”

[25:53] And chances are really good that that’s not the case and chances are more likely that he’s going to want to go out and build a 5 million dollar company or 10 million dollar company because he’s already done that once, so why would he do it again and it’s not to say that, you know, it’s not financially blow off successful but people want new challenges. So, as you proceed in your career, you’re going to be looking for bigger and bigger things. And I think that, you know, over time as you progress from 30 to 40 to 50 to 60, you’re going to be building bigger and bigger things assuming that you’re successful with those previous products.

[26:25] Rob: Yeah, I think I’ll start by talking about my concept of retirement. I don’t intend to suddenly stop working one day when I’m 60. I went down to two days a week for about 10 months when my second son was born and I got really bored like I need to create things. I mean I think a lot of us do as entrepreneurs. So, I kind of reject the notion of one day I’m just going to suddenly not do any of that, any of the work that we do and any of the company running or company starting or all that stuff because that is one thing that actually excites me, right? It actually is interesting. Now, I do imagine that I’ll scale work back but even…even these days, I don’t work fulltime. And so, I don’t feel like retirement is going to be this massive change of stepping back and like letting all these companies go.

[27:10] The second thing, I don’t intend to really fall out of touch with the tech world. I mean I know people who are in their 50’s now who really live in technology and they understand it still. They may not be programmers, they may not be writing every line of code and they may not, you know, understand how to design hardware but they have a sense of it and they know where opportunities are. And so, personally, I kind of reject that premise that when I’m 50 or 60, I’m naturally going to be like our parents are now.

[27:36] The thing is we are although we’re not digital natives, I started writing code when I was eight. And so, to me technology is a huge part of my life and I think it will always be. Now, I may not understand, you know, there’s going to be a social network college kids or something when I’m 60, yeah, you’re right, I’m not going to get that. But that’s not where my business opportunities are going to lie anyways.

[27:55] So, the next thing I’ll say is that I do contribute to retirement accounts. I do have savings that is building up. So, aside from my businesses that provide me income now, I do have that traditional, you know, the IRAs or the 401(k)s that we call them here in the US but it’s just a big retirement savings account so that I do have money to live off of. When I get older, I plan to run my businesses as long as it’s fun to do so. And at this point if I really backed off and wasn’t creating anything, if I didn’t do a podcast, didn’t write, didn’t, you know, have the e-mail newsletter, didn’t grow the businesses and just put them in maintenance mode, I wouldn’t have to work very much.

[28:30] And so, that to me is a long-term strategy but I don’t want to do that. That’s actually boring to me now. And so, I’m going to run them as long as it’s fun and in the end maybe sell them to someone for cash at that point and you know, put that in to retirement to live off of. But I think that people like us, most people listening to this podcast, you always going to want to do something. You’re always going to be building and whether it’s you writing code or whether it’s you building businesses with other people, I just – I don’t know that that’s ever going to stop cold turkey for any of us.

[28:59] Mike: Yeah, you brought up something I forgot to mention. I contribute to a SEP IRA account and you know, that works out pretty well as well. I mean it’s part of my retirement strategy. I’ve got some other things that I do. When you get to a certain level with your products, it’s not as if you just are not contributing to some sort of retirement because you can treat that retirement as kind of a secondary or back up strategy for whatever you’re doing. You know, as long as you’re making a fulltime income from your products, you know, you should treat it as if it is your fulltime job, you should be putting some of that money away or for a retirement fund of some kind.

[29:30] Rob: And our last question comes to us from Ben Feldman. He says, “Hi, Mike and Rob. First off, I’d just wanted to say that I love the podcast. I’ve listened to every episode. I listen to similar podcasts and yours by far is the most informative and enjoyable to listen to. I’m looking for feedback on my startup idea. My idea is to “employ” the world with crowd sourced development. With the far reach of the internet and the reason boom in crowd funding startups, I believe that you can get any job done by outsourcing it to the world. That’s why I created a platform where someone can build a project or a startup idea for a software product and my team and I will breakdown the entire idea in to organized intangible development and business tasks then we crowd source the execution of each task where each task will be worth a monetary value for a paid project or a percent of equity for startup.”

[30:19] “Unlike other crowd sourcing tools like 99designs or designers compete for each task, here only one person at a time can work on a task and each person will be reviewed and tested before it’s marked complete and the person gets credit for his or her work.” I’ve summarized Ben’s e-mail here. It’s pretty long. This reminds me of tweaky.com. If you haven’t checked that out, it’s a pretty cool idea. It bills itself as the number one place to customize your website and it’s basically to design tweaks. If you send like a spec or a brief they break it down in to the series of tweaks and they charge $39 flat rate per tweak. They actually organize the tweaks in to $39 groups and then they will execute them one by one.

[30:57] So, it does seem a reminiscent of that which is an idea that, you know, as far as I know is working. Yeah, we can critic the business idea based on what we think but that’s almost less important than would you use the service? Or…or do you have reservations about using it as, you know, as a business owner.

[31:14] Mike: I don’t think I would have reservation using it as a business owner. I think that having it as a crowd sourced platform for building software that you want to get done for free, that seems like it probably may not work out very well, offering people a percent of the equity to get a project done that you’re interested in having done, it seems to me like it wouldn’t work out so well and I think that the primary challenge would be if you get let’s say ten developers who each, you know, say they’ll sign up and they’ll do 10% of the project to each 10% of it, that’s – so those 10 people own it.

[31:49] First of all, would be the question of how do you get paid for this? How are you getting compensated for running this and putting everybody together? And then the second thing would be, well, how does it get sold out in to the market and how are these ten developers going to see any sort of return on the work they put in to it? So, from that stand point I don’t know is this idea has a lot of legs but if there was a service out there that, you know, where you’re breaking ideas down in to manageable chunks and then outsourcing those individual chunks, the problem I think that you may run in to with doing something along those lines is that what happens if somebody comes along and says, “Here, please scope out this project,” and they do it and maybe it takes you 25 hours or maybe it takes you a hundred hours to scope it out and break it down in to those little bit size pieces. And then they say, “Oh, well, this is too much. I don’t want to have to pay for it,” and they just walk away.

[32:40] So, maybe you charge upfront for that sort of thing but I think that more of Rob’s question would I use something like that? I probably would but it really depends on the specifics of how you’re going to go about dividing up that work and how you’re going to go about charging for it to get done. I think the other question I would have in my mind what are the qualifications of the people who are designing and building it. And what sort of technologies and things like that. But I think that all of those are road blocks that have solutions for them and you can figure them out. I don’t know as I feel real good about, you know, handing out equity for people doing from pieces to work though.

[33:14] Rob: Yeah, I think the equity plus the pricing thing makes it a little too complicated from the start and I probably just focus on one or the other. The other thing is that design is tends to be let me say it’s simpler. It’s more visible. So, Tweaky focuses on tweaks to designs and they’re making it work. But you’re talking about building an entire app and that’s really complicated and they’re like an iceberg, right, where there’s tiny bit visible on top and then all the code could be crap behind it. But if it happens to work for a few weeks then there’s a person get credit for it who maintains the code like you don’t tend to maintain the “design.” Once the landing page is done, it’s sliced, you put it on the internet. If you need more changes, you go back to Tweaky.

[33:53] But code is not that way. A lot of code will have bugs in it that you’ll discover or it just constantly needs updating and I guess you could say you have to keep coming back to your service. But there’s a lot more added complexity with all that. I also think that this idea in general, this sounds way too complicated for unfunded startup. I know that this is one of those that you would need funding for and you need to build a team. You need to move really quick. Kickstarter didn’t just sprout out of, you know, some guy’s garage as a single founder idea. Pretty darn sure they raised quite a bit of money to get it off the ground. And this idea sounds like that. The number of moving parts, the two sided marketplace problem, all of that stuff, you’re just going to need raise funding.

[34:33] So, if you’re trying to bootstrap this, I would almost guarantee that this is not going to work. It’s just going to take too long. It’s going to take you years to solve all of these problems that we’ve brought up. It’s not to say that it’s impossible to solve, you have to move so fast that you’re going to need money.

[34:49] The last thing I’d say is prove it out, right now that it can work. Put up a landing page and instead of – you don’t need to write code. You don’t need to build an app to coordinate. You don’t need to do any of that. Prove it out with e-mail and you finding some people manually on oDesk and trying to sell this idea to someone who will actually pay you money, an end customer who wants an app built and just try to do a single app. Don’t even try to do the whole crowd funding part of it because that’s a whole other added layer of complexity. Just try to get an app built using this approach and see if it’s possible, see how hard it is and see how much you’re going to have to charge to make it worth your time and to make the business profitable because once you do that, you’ll have a much better idea of what this is going to take and whether the idea will fly. Thanks for the question, Ben, hope that was helpful.

[35:31] Music

[35:34] Child: So, that wraps us up for the day. If you have a question for us call our voicemail number at 1-888-801-9690 or e-mail us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commotions. May I please have something to eat?

[36:02] Rob: Subscribe to us in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. See you next time.

Show Notes

• Tom Fakes – http://blog.craz8.com

Transcript

[00:00] Rob: In this episode of Startups for the Rest of Us, Mike and I are going to be talking about AuditShark, Drip and HitTail. This is Startups for the Rest of Us episode 136.

[00:09] Music

[00:17]Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob.

[00:25] Mike: And I’m Mike.

[00:26] Rob: And we’re here to share our experiences to help people avoid the same mistakes we’ve made. What’s the good word this week, Mike?

[00:31] Mike: I’m sweating in Texas.

[00:33] Rob: And it’s swampy.

[00:35] Mike: Swampy is a good way to put it.

[00:37] Rob: Well we’re going to be talking today on the show. It’s going to be an update show where we talk a lot about projects we’ve been working on recently, progress we made or lack thereof in some cases. We got a comment on last week’s episode, episode 135 where we answered several listeners’ questions. And Ray piped in. He put a comment on the blog.

[00:55] And he said the question about the 19-year-old who doesn’t have any programming experience. I think I’d be tempted to suggest that he try and complete some of the free online courses that are all the rage at the moment. They are available I think for HTML, CSS, Ruby on Rails for example. It might be a quick way to build some basic skills quickly.

[01:12] It would be difficult to pick a technology stack if you have no experience. I would do that first then look at some freelancing job. With no skills I think even finding the right freelance jobs and getting them would be almost impossible. I thought we said that. Did we skip that step? Because that’s the first thing we should have said is first learn something and then go to oDesk and try to get contracts.

[01:31] Mike: Part of the comment also kind of includes that idea that he doesn’t know the technology stack, so he doesn’t necessarily know where to start. And we kind of give some ideas about where to start, which was go to the Ruby on Rails route or PHP or something along those lines just to get your feet wet in a way that’s not going to overwhelm you.

[0 1:51] Rob: Thanks for the clarification there, Ray. The other thing we got was an email from Matt Vanderpool and he attended MicroConf last month. The subject line of his email is heartfelt thank you for putting on MicroConf. And he says, hey Rob and Mike. I wanted to extend a heartfelt thank you to both of you for organizing MicroConf.

[02:10] I also wanted to tell you a little about what MicroConf has done for QAtab. Matt has an app called QAtab that’s at QAtab.com and it helps company improve their QA process. He says in the four months before MicroConf I did nothing with QAtab. I was too busy and didn’t have the time to work on it. In one month since MicroConf, I have reduced my consulting time so that I could work on QAtab.

[02:32] Added support for integrating with external ticketing systems based on information from Tom Fakes who I met at MicroConf. Set up a weekly meeting for product accountability with Najaf Ali who I met at MicroConf. Identified and reviewed competitors to help me determine what makes QAtab different. And then he list five or six other things all dealing with either dealing with information he got from MicroConf or people he met at MicroConf.

[02:54] He says I don’t know if I would ever make this progress without it. The talks were great and the networking was even better. Almost everyone who I explained the QAtab concept to immediately got it and that was very helpful. I think it was this kind of feedback that I was missing and that I really needed to keep going. Again thank you.

[03:11] So, we want to extend obviously a thank you to Matt for writing such a detailed email. Yeah, really just for letting us know the difference it makes and that’s frankly why we’re starting to do two of them. Certainly if it works out and it continues to make this kind of difference for people it’s kind of a no brainer.

[03:27] Mike: Yeah. We’ll have to take into account those people who are trying to get us to do three or four a year but we’ll see what happens.

[03:34] Rob: I saw an Asia request and an Australia, New Zealand request come through. We’re going to need some staff to help with those.

[03:40] Music

[03:43] Rob: So Mike, we haven’t heard much about details of AuditShark. What’s going on with that probably for a couple of months?

[03:51] Mike: So for people who haven’t heard much of what I’ve been working on AuditShark is a product designed for auditing web servers. Basically your infrastructure servers to make sure that you’re following best practices for security. Cause there are literally thousands and thousands of ways to configure a server. But not all of them are necessarily the right way or good way that isn’t going to end up in your server getting hacked.

[04:13] So, AuditShark is designed to check all this different pieces of information on your servers to make sure that the server is configured correctly out of the box, you know when you first start configuring it. And then to continually make sure that it’s still configured the right way in case those baseline recommendations change or if the server changes itself.

[04:30] For example, somebody actually does get into your server and hacks into it, chances are good that they’re going to start making some changes to it. And those are the type of things that you want to be notified about. These are not things that you’re going to go back into the server and check on a daily. You’d rather have software that will do that.

[04:47] So that’s what AuditShark is designed to do. From a problem standpoint obviously it’s giving you some at least piece of mind that at somebody is going in and taking a look at these servers, making sure that it is set up correctly. Those are the type of things that people I’ve spoken to find fairly valuable about it.

[05:03] So, over the past few weeks, I’ve been making a very focus effort to kind of get the product more or less the feature complete where it is enough to put in front of somebody where they would actually get value out of it. So to help with that I hire a developer to start building some of these control points. I spent some time doing some training for them.

[05:20] Over the past couple of weeks, he’s put together roughly between 100 and 150 different security checks that are built in the product now and they’re all targeted at Windows 2008. That’s just more or less the starting point. Next up on the docket is going after sequel server 2008. And then after that, I’m going to start taking a look to figure out whether we want to do more Windows checks and go down the route of Windows 2012 and the sequel 2012.

[05:46] Or, if we want to start going more towards the Linux side of things with Linux, Linux-based apps such as Apache or MySQL. Or, if we go after more of a platform specific approach where we’re going to maybe say Ruby on Rails, Gems or things like that. But essentially in order to make those decisions, I have to do a little bit more customer development.

[06:06] Rob: And does that mean are you are able to ask them in advance and figure it out or do you have to go through the process of actually installing it on their server, getting them to use it and then making a decision.

[06:16] Mike: No, I can just talk to them. I can ask them the questions. I can look at my spreadsheet to figure out what the numbers are of the people who are interested in different things and just go after the largest pieces. Figure out who is, one, willing to pay the most for it, and then two, what the largest number of people who are willing to pay that amount.

[06:35] You know just do a little bit of multiplication, you can figure out what’s going to be the most profitable area to go after next; at least for my launch list and the people that I talked to so far. Obviously, if I start progressing and marketing a lot more then that could change dramatically very very quickly. But it’s at least a starting point to give me an idea.

[06:53] But the fact that he was able to put together roughly 50 control points a week indicates to me that over the course of the next month or two months, it wouldn’t be a stretch to have like another 250, 300, 400 control points build where these are all each individuals checks and security checks that are being done on somebody’s machine that would be reported on a daily basis.

[07:14] And I think that regardless of the system that you’re running, there’s going to be value in that. And that’s really what I was – I spent a lot of time and effort getting to the point where I know that the system actually provides that value because that is the value proposition. If it doesn’t deliver, it’s very difficult to justify charging for it.

[07:31] Rob: Right, that makes sense. And have you limited this to or do you know yet who’s going to get the most value out of it. Like is it SAS operator, is it downloadable software companies. Is there any group or demographic that it’s particularly resonated with?

[07:46] Mike: Not that I have differentiated it. I mean I can certainly make guesses about it. My suspicion is that any company that basis 95% to 99% of its revenue off of its web servers they would be a good candidate for it. Because they’re going to want to make sure that those servers don’t go down whether it’s because of bad configurations or hackers getting in.

[08:09] We talked a little bit about Rudy a couple of weeks ago where his backups were failing. And he didn’t know that that was going on. I could very well build a control point that checks and validates your backup for example. And if your backups are failing, let’s say I check the log files for backups or there are very specific things that I can look at, I can tell you whether your backups are failing.

[08:29] And then it’s not six months, nine months down the road when your entire server crashes and then suddenly you find that your backups were failing seven months ago and you’re completely toast. Then something like that would provide a lot of value. But it is for those types of people who have the vast majority of revenue of their revenue come in from those servers.

[08:48] Because they basically are mission critical. If you lose those servers, you lose your business. Now again that’s just hypothetical, theories. I can stay here and talk till I’m blue in the face and say, “Yeah, that’s sounds reasonable.” But until I go talk to customers and say is this why you’re buying this product, it’s hard to make those judgment calls.

[09:04] Rob: Right. Cause the answer you gave me was the problem that you solved. You talked about a problem someone has and how AuditShark can solve it. And that totally make sense. Problem solutions [feed] I think you’re going to find that. What I’m asking about is the next step, product market [feed]. It’s what market are you going to focus on first with your limited resources being a single founder. You can’t go after every one who has 90% of the revenue from their web server cause that’s a huge huge market, and you just can’t possibly market to them. So that’s what I was probing after is who is that demographic.

[09:37] Mike: It’s probably going to be SAS operators initially just because I’m kind of plugged into that network to some degree, so I understand kind of the pulse of the market a little bit. And I understand a lot about how web severs work. What the problems around running them are. What the remediation issues are. I can certainly offer a value of there in terms of not just my knowledge but in the products applicability to solving those situations. So, it seems to me like that’s a reasonable place to start. Whether I stay there or not, it depends a lot on how the market responds to what I’m offering.

[0:10:09] Rob: I like it. That’s a good answer. At least you have one that’s not broad cause that is definitely a market that you have reached into.

[10:17] Music

[10:18] Mike: You’d mentioned a while ago that you were working on a couple of information products and I know that one of the first things was the video course on hiring a VA. I think you’d done a bunch of stuff back in January where you had somebody come in and do a lot of videos of you. How is that coming along?

[10:35] Rob: It was ready to launch. I mean I had all the videos by January and I was hoping to launch it in January. And then HitTail had a big spike and a bunch of press. You know it was great stuff. HitTail grew very very fast early in the year, and it took my attention off of the video course basically. I have kind of a goal to launch three courses this year, just smaller things that really focus on particular pain point.

[11:00] And so I put the video, the VA video course on hold. But I’d been getting emails about it probably one or two a month from you know whoever, listeners, people who hear about it and asking if I’ve launched it yet or where I’m going to launch it. Cause I don’t have a landing page for this one. This is probably the first time I’ve ever done this. I just plan to send it to basically my email newsletter list.

[11:23] It’s softwarebyrob.com. I have a newsletter for that. I’m going to test that out in thinking that in the next – it’s going to probably be 7 to 14 days that I’m going to get it out. It’s all uploaded. I have transcripts. I have audio versions. I have course notes. There’re really just one or two final pieces. I have a job description that I use, already uploaded that I use to hire VA’s.

[11:44] And then there’s just a couple like I want to get a sample screencast and a sample Google doc that I share to showing how simple it actually is to train someone to do something. So I’m excited. It’s fun. I like sharing this kind of information and being able to justify going into such depth. You can’t do it on a podcast. You can’t really do it in a talk at a conference going deeper than I’ve gone probably since my book. You know that’s the last time I really dove into something with this much detail and being able to handover so many like accompanying resources.

[12:15] Mike: That was really cool. I’d be interested in seeing that. I know there are a lot of people who I reply to and there were several people I talked to at MicroConf who were asking me. They’re like you’re involved in a lot. You do a lot of different things. How do you get all this stuff done? And I’m like the magic of it is I don’t actually do most of it. So as you said it’s through VA’s and you get other people to basically work through your processes.

[12:38] Rob: Yeah. That’s right. With HitTail, it’s kind of been a trip. One of my main marketing channels just stopped working very abruptly. It’s an algorithmic thing. Its paid acquisition that I’d been doing for about eight or nine months. And I stopped it for MicroConf because I was too busy. And when I came back and re-uped it just like ads aren’t appearing even with the same bids.

[13:00] It’s been kind of a shocker. It’s not the majority of growth but it has been the longest term and most stable, and it is a big chunk of the monthly growth that’s been happening over the past probably eight to nine months. And so the nice part is that it’s a SAS app. And SAS is beautiful because the money keeps coming in. It may not gross substantially this month.

[13:25] It’s been growing between 10% and 30% a month for 15 months. And the growth this month will be single digit at best. But it’s SAS. Like the revenue still comes in. It’s not like with the single download software product that I’ve had were when growth stops it really drops down substantially and you lose 50% or 80% of your revenue in a month.

[13:45] Mike: That’s nice to hear. As long as you’ve got that growth coming in, I think the thing that would concern me and obviously I’m not, you know, seeing all your numbers and everything. But if I were in that position what would concern me is the fact that if you lose like a major growth engine, does that mean that in another month or two because that growth engine is lost, now as you start to shed people who came in through that engine, are you going to start going in the other direction. Are you going to start to shrink because that growth is no longer being powered by that particular channel?

[14:17] Rob: Absolutely. If your churn is too high and you don’t have that large funnel of trials coming in, you will start to shrink. I’ve plotted it all out cause it’s been going on for about six weeks now. And it’s funny. I’m like working with an ad provider and all this stuff and they don’t really know how their system works. It’s like this black box algorithm.

[14:35] And there’s no flags on my account. There’s nothing. They’re like we don’t know why it’s not running. I mean it’s bizarre. So I’m doing all types of crazy testing like running the same ad but pointing it to just a completely different website like pointing it to my blog to see if the ad shows up. You’re right. If you lose a major growth engine and your churn is too high then of course a SAS app will shrink over time.

[14:57] This is obviously a concern. It’s not something – I don’t want to play it off and say since it’s SAS I’m immune to X, Y and Z cause it certainly not the case at all. And this is a major major issue on my play right now which is a bit of a bummer because I had all these processes in place that essentially are ensuring the growth, the continued growth of it daily even though I’m not focusing on it.

[15:17] And when something like this happens this is where I’ve had to pull away from what I was working on which was Drip. And I had to pull away from it and come back and so now I’m getting less done on the new project. That’s just a balancing act. When processes failed and you have to step back I think it’s the part that I don’t enjoy about having a lot of spinning plates is when one that I started spinning a long time ago that’s been going well for a long suddenly starts to wobble and I have to take my attention off of the new ones.

[15:45] Mike: Yeah. That’s always hard. That’s also one of the reason you don’t automate everything upfront because if that automation fails for whatever reasons, it’s going to take a long time to begin with, but then if that automation fails then it’s going to take you exponentially more time to figure out how to go back and fix everything especially, depending on what it is if it’s complicated or somebody changes your API or changes their webpage and your parsing it. It could just be really difficult. But, yeah, when those processes breakdown sometimes there’s just nothing you can do. You have to back and take a look at it.

[16:15] Rob: Right. So let’s bounce back to some of the things on your list. What else is new?

[16:20] Mike: Last week I was trying to get a customer installed. And basically run into a couple of things because I wanted to get some of the control points that I talked about that I was having the new developer worked on out into the system and test it. So we were making a lot of changes all at once. And I don’t know whether it was directly related to something that we did or whether it’s just the sheer number of control points that were added to the system that basically results were not coming back anymore. So I just basically found this out over the past day or two because the policies that I put in place to go out and audit my test machines, they’re just not sending the results back anymore. They used to. They were doing it fine every single day and now it’s a black hole.

[17:01] Rob: That’s not good.

[17:02] Mike: I think that I’ve got enough log in code in place to figure it out. It’s just that I haven’t had the time to sit down on the servers and figure out exactly what’s going on. I mean it may very well be something as simple as a configuration change in a config file some place on the server. But it could be something that’s a lot more complicated than that.

[17:21] And I know that this whole mechanism for passing that data back has got to change at some point. I think it was Gabriel Weinberg had written an article talking about scalability and how it can usually see the next order of magnitude of growth, but two orders of magnitude things are going to be so completely then it’s very difficult to figure out what’s going on or what it’s going to look like.

[17:42] And I think that it’s kind of at stage right now where you know before I was always passing back a handful of control points where it was less than ten. And at this point, I’m sending back pretty close to a 150. So, it really is a full order of magnitude higher than it was before. I don’t know what the problem is. It could be something simple.

[18:02] It may require some radical changes. I’m hoping its not radical changes. But again, it’s a problem where I’ve got to deal with it and I’ve got to deal with now. Because obviously I don’t want to start putting a lot more customers into this and then having them log in and have them not be able to do anything at all because the system just doesn’t work anymore.

[18:20] Rob: Right. That’s a pretty major one to find early on. This is exactly why we roll out to one customer at a time and test things. I mean it is a beta test in this case. But it’s also it’s also I guess one of the other big benefits that we talked about a lot is you’re learning what features your customers needs. And they push the limits of these things, right. Cause you just wouldn’t likely test with that many control points.

[18:41] Mike: Oh no, I would. I could easily foresee somebody running 500 or a 1000 or even 1500 or 2000 control points against a single machine because you’re not going to want to do those manually. Cause even if it took you like 5 seconds to check each one of them. I could easily see somebody doing that in a production environment. And this is only a 100 to 150. So, it’s got to get fixed. It absolutely has to get fixed.

[19:05] Rob: Very good. So basically the month since MicroConf has not treated me well at all. I just know after a month, just about out from under the email load that had piled up. Then the HitTail growth is stalled and now Drip…

[19:18] Mike: Is this tales from the dark side?

[19:20] Rob: It is man. It’s just one of those bad months. I was down like last week and the week before, I was really bummed about these things and they were impacted me. I was really shocked by it and surprise and everything. And I’m just kind of like dealing with it now. I’m realizing I’ll figure out a solution eventually. And the same thing with Drip.

[19:37] So with Drip probably three and a half to four weeks ago, we started with our customer no. 1. Cause HitTail has been using Drip for a while and it works and Drip is sending email and everything works great. We try to get customer no. 1 on the system and right away it was like you don’t have this feature that I absolutely need. So we implemented it.

[19:56] Then there were a couple more that he needed then we implemented them. As we went down the line, it just turned out his use case was way too complicated. He had so many landing pages and list and the interactive and he had custom segments and he had API calls. Not that stuff is that bad, but at this point in Drip’s lifecycle, it’s just not there. We can’t build all that.

[20:16] We could spend another month building it for him. And maybe it’s 1 out of 50 or 1 out of 100 potential customers has all the problem he did. So the cool part is that he is able to switch, since he’s a founder as well, he was able to switch pretty quickly from customer to kind of adviser. And we had a long hang out with myself and Derek who’s coding it and customer no.1.

[20:39] And he’s basically like you know you really got to think I don’t know if I would build all these features yet. And so that’s what we decided to do. We basically pull the plug on just on getting customer no. 1 on the app. And so we’ve had to switch up the plan a little bit and take evasive action and I have 16 other early access customers.

[20:57] And so now I’m choosing one who has a pretty simple use case and we started talking. And I would love to get him on board like today. But as this is going on, Derek and I started talking and he realized this just during the conversation that we have to do some refactoring of the data model that it was… Yup, you know how painful that’s going to be.

[21:17] Mike: Yup.

[21:18] Rob: So it felt like a one two punch man. Basically Derek, he’s like do you have time to chat. And I’m like this is not good. We never chat unless something is wrong you know. We started talking and it was basically a 90-minute Skype chat of me trying to figure out how we could avoid doing this. It’s about eight working days. Once we get data in the system and we have users on it, it would be one of those changes where it would literally take three to six man months to fix down the line if we have to migrate everybody.

[21:47] So it was that kind of thing where its like this gets us 80% of the way there but it’s going to be catastrophic if we ever had to add one additional variation of this or one additional piece of flexibility. We just saw quickly how that architecture had max itself out. So we’re several days into that. I think probably 3-4 days from now that would be done.

[22:08] And then we’ll be circling back and getting our next customer no. 1 on. But the good news I realized is that feature we built for our first customer no. 1 we are going to need. We’re going to need for ourselves or for this next customer no. 1. So we didn’t lose time per se. We didn’t waste time.

[22:29] Mike: Yeah. I think the one thing that you’ve mentioned that’s really important for some people to think about is that you may have your heart set on signing on this customer no.1 But understand and realize that it may not work out with that customer. They may have use cases or needs that are going to be so far above and beyond what the rest of your customers are going to want or need that it’s actually not worth building it for them.

[22:52] Because you’re going to end up doing all this customizations that are never going to be used by anybody else or going to be very difficult or going to be so time consuming that it’s going to set you so far back from launching that at the end of days it’s not going to be profitable. Or, you’re going to lose motivation or you’re just going to have the money to be able to make ends meet to roll it out to everybody.

[23:09] So being able to walk away from that customer no. 1 and say, “Look we just can’t help you right now. We maybe able to do it at some point in the future. But now is just not the right time.” In some cases, that’s the right decision to make. It’s not an easy decision to make. But sometimes it’s the right one.

[23:24] Rob: That’s what I was going to say. It was not an easy decision at all. It was not clear cut. At a certain point, it just starts feeling institutively wrong like you were doing so much work. And I kept asking myself the question how many other users of my first hundred are going to need what we’re building here. And that answer was like none or one.

[23:45] It was just such a small percentage that I know we can get quite a few people using and paying for the app without these features. And again it’s a judgment call. Someone else may have made a different one. But the thing that struck me was no matter how many emails and how many times I discussed it with customer no. 1 and tried to thoroughly understand his use case, there were still these little things that creep up once he tried to implement.

[24:07] It just goes back to that recommendation of get people actually using your app cause expect things to come up that you haven’t accounted for. I don’t know if I honestly believe you can account for things until they really start touching the code.

[24:21] Mike: There’s always the difference between like you know you can explain an idea to somebody else. And until you’ve explained it to them three or four times and actually showed them what you’re talking about, it is so hard to convey some of that stuff. I mean that’s part of why when we’re talking about outsourcing code to developers, that’s why it makes the screen mockup so incredibly important.

[24:41] Because it allows you to show them quickly what you’re talking about. Versus having them read a spec that they’re only going to skim anyway and they’re not going really understand it even if you’re talking to it right in there ear. So hey, I’ve got some of my own tales from the dark side. I’m letting go one of my developers. I had to get on to him a number of times over the past several months.

[24:59] And it’s really just not working out. I mean the relationship just kind of limp along for about six months. And I feel like I’ve tolerated it because I felt like I didn’t necessarily have a choice and I didn’t want to put the time and effort in to finding somebody else. But I’ve decided to just kill the relationship and focus more on people who are actually working out.

[25:16] Rob: That’s a bummer. I’m sorry to hear that. You have a couple of domestic developers, is that right?

[25:21] Mike: Yeah.

[25:22] Rob: Here in the US.

[25:23] Mike: He’s not one of them.

[25:24] Rob: Oh, he’s not. Okay.

[25:26] Mike: No. No.

[25:27] Rob: Well that’s bummer. I mean you have other help. Are they able to step up and make up for him or are you going to have to go on a search for someone?

[25:33] Mike: The lead developer who I have working on the policy builder and then the other developer I have who is using the policy builders, that’s really where a lot of the problems are. And we’ve had these discussions internally where we’re looking and all of the problems with the policy builder with the synchronization, and none of it is really major but collectively it tends to be a pain.

[25:55] So we’re actually looking at that stuff in trying to figure out what is the future of this going to look like. What are we going to do in the future? How is it going to work? We’ve talked about some different architecture consideration. It almost seems like the original thought that I’ve had a long time is to take the policy builder and put it in the web, so you didn’t have to have this additional downloadable component.

[26:12] And it looks like that’s probably the direction that we’re going to go. For now, we’re going to leave things the way that they are just because it would be an incredible waste of time and effort to back off and put things on hold and go back and rebuild it in the web. So, we’re just going to leave things the way they are. We’re going to basically work through the issue as we best as we can.

[26:32] The developer who’s building a lot of the control points had a lot of good feedback for me in terms of what the policy builders needs. But a lot of those suggestions are directly applicable to taking it and making it web base as well. She’s like in jQuery or something along those lines.

[26:47] I think that that that’s ultimately the direction we’ll go. And if that’s the case then this developer was working on that policy builder. So, if I basically halt the development there and put it in maintenance mode, it doesn’t necessarily matter that I’ve kind of lost him.

[27:01] Rob: That’s funny. I haven’t realized that the policy builder wasn’t web base yet. I can see the headaches of trying to build it on the web instead of as a desktop app. But I agree with you. I think it’s  no brainer long term cause then you don’t have to support people downloading it and installing and running into all those issues that are hard to troubleshoot as opposed to you having kind of a SAS thing that you can maintain and fix right on the fly.

[27:24] Mike: Yeah. I mean the other thing with the policy builder is that there’s going to be people out there who have Mac. I mean there’s going to be a lot of people who have Mac and its Windows only right now. So moving it into the web it solves a lot of those problems. The other thing that it does is it allows us to avoid any database synchronization problems.

[27:42] You don’t have to have a sequel server on the client to run it. There’re some things along licensing that I can probably get away with a couple of components that I won’t need anymore. The major issue that it kind of brings in is how to test things. So once you’ve built a policy or control point, how do you test it?

[27:59] And for something like that I think that we’re going to move more towards an always connected model where if you push task down to a machine, because it’s going to maintain a constant connection out to AuditShark and the Cloud then it will always be able to contact it. Will you be able to do it through the UI, which will be pretty neat if we can get it working?

[28:17] And I don’t see any reason why we can’t. It’s just a matter of wiring all that stuff up and that’s a nontrivial amount of work. So that’s kind of the reason for putting things kind of in a maintenance mode for that while in parallel we walk down the road of building this other stuff.

[28:31] Rob: Absolutely. At this point man, I mean we’re both kind of in the same boat, right. We’re approaching launch on something. And I find myself everyday saying that’s a great feature. I’m entering in FogBugs  and putting it in at priority 6 or 7. Like a great feature. We’re going to build it in six months. That’s typically the timeframe. You know I’ll say we’re building for 2.0.

[28:49] There’re some awesome features. I can think of a hundred of features I would want in an email marketing tool. But we can put them in a bug tracker and implement them later. Cause right now we just to go to implement the shortest path to providing actual monetizable value to people and that’s the same boat you’re in. Writing less code and doing more things to get you closer to launch frankly.

[29:13] Mike: Yeah. And the nice thing about that is if you can get to launch and it starts to gain traction then obviously you’re going to be gaining revenue from it. And you can bring more people on to build that version 2.0 kind of in parallel while you got version 1.0 in maintenance mode.

[29:28] Rob: So my last update for the day is also dealing with Drip. I have this really interesting experience last week. About two weeks we bailed on trying to get customer no. 1 on. And then we decided to re-factor. So we were in kind of just stand still mode, and I was looking at the future set and really asking myself what exactly are building and is this still in line with my original vision of Drip that I had way back.

[29:52] Is that still something people are willing to pay for? Does it provide value to a market? The answer was I think so but I don’t really know. And so I was trying to think how do I answer this better. How do I find out what people really want because I’ve had so many one off conversation whether it’s at MicroConf or whether it’s over Skype or whether it’s one on one via email.

[30:12] And when people say, “I’m really looking forward to Drip. I asked them, “What exactly do you think it does?” Because I haven’t spelled out what the features are and everybody has a different answer. Some people want behavioral email. Some people want workflow based email. You know there’re all these things that people want and I was trying to figure out how many of them each of these things.

[30:29] So realizing that the launch list. I have an email list of about 1400 people who’ve expressed interest in Drip. And they’ve come from all different sources from probably listeners of this podcast to people who heard about it at MicroConf to ads that I’ve run sending them through a landing page. And so I created a Google forum. I love Google forum. It’s like Wufoo but its super simple.

[30:53] You create this form. They have quite a few options. Nothing like Wufoo cause it’s free and everything goes into a Google doc spreadsheet when the info comes in. So, I created one of those. I send out a link. I’m trying to keep it as short as possible and I got a lot of responses. I got 22% response rate answer some really key questions.

[31:13] And some of them were directly in line with my hypothesis and other send me in a different direction frankly. But the most important thing is it really improves my mental state of like are we wondering here. Are we really building something people want and it totally confirmed that. Because an overwhelming number of people who responded and the percentage of people responded want exactly what we’ve already built to be honest.

[31:38] If we were refactoring right now based on what Drip is today and based on how I described it in this survey, we have a kind of critical mass in that group. But the key thing that we asked that I almost didn’t ask I added in last was question no. 1 was basically saying are you a and then there were choices. Are you a startup founder/software entrepreneur or are you an email marketer or a general marketer or other.

[32:04] And then there was a text box. So other wound up being like consultants and just kind of some random people. That was key because then all of the other responses I could segment in that Google spreadsheet and I could just order by one thing. And then I could look at how many startup founders said that particular thing and then how many email marketers said that particular thing.

[32:26] And that was a key insight that I’m glad I’ve done. So folks out there if you are going to send out a survey, try to get – you don’t want to ask five questions about who they are. You want to boil it down to one so that it doesn’t really clog up the survey.

[32:39] Mike: Yeah. That’s a good thing to ask. One of the things I’ve been doing is talking a look at the email addresses of the people who’ve been signing up for the AuditShark launch list. And using Rapportive you can basically backtrack their email address to see who they are, where they work at and what their title is at that company.

[32:55] And that’s extremely helpful for figuring out whether it’s more of a qualified lead than somebody who is just kind of idly interested. I mean if they sign up for AuditShark and they got like a Gmail account, chances are pretty good so far that I found that they’re not necessarily interested. It’s more because it’s a podcast listener or they’ve heard about it from a blog or something like.

[33:14] They’re kind of idly curious. Whereas I’ve gotten a lot of other emails that have come in and I’ve been able to backtrack it to companies for legitimate corporate email addresses and some of the titles are like operations, engineers or sys admin at such and such company. And it’s clear that they’re looking to solve a very specific problem. And you can reply to those people.

[33:36] You can go back to them either one on one with a survey like that with some very detailed and specific questions. By cross segmenting those types of people, you can send them different questions. So that you can essentially say okay sys admin are interested in these types of things.

[33:50]Let me drill in for the next sys admin who comes along let me send them a survey that kind of drills in to try and get more information about what a sys admin would look for as opposed to somebody who is just kind of curious or kind of drive by person.

[34:05] Rob: Yeah. That’s a really good point. I’m glad you mention that cause I’ve forgotten to mention that one of the choices after identifying who they were, I asked them what’s the no. 1 you think Drip is going to do. Like what are you most excited about. Give them a few choices and one of those choices was I’m just curious about Drip.

[34:20] And having that alone I think like 20% of the respondents said that and that was great. Because I was able to basically not listen to their opinion as much cause it’s not as important as a founder opinion who can actually use this today and really has a desire to use it.

[34:35] Mike: Yeah. And that’s definitely a differentiating factor between them. If you know what they do or what they are interested in, it helps you determine whether or not to ignore the things that they have to say. And it sounds a little callous, but at the time you have to as a startup founder you have to choose what advice you listen to. And you have to have some way of doing that. And that’s a good way of doing that.

[34:55] Rob: Right. I wouldn’t say ignore. I’d say prioritize. It just has to be prioritized lower than some of the other groups that I look at. There were a couple of other things I learned from the survey. I won’t go into too much detail but the one I already said so far which that is all the features that we have built so far including the ones for customer no. 1 are important to people. And that was a nice confirmation.

[35:16] Another one is that there were a lot of startup and software founders which I would have expected. You know confirmed it basically with data. And then another one was it was kind of the opposite side of the coin. There was an advanced feature which is like split testing, right. Splitting testing auto responder sequences against each other as well as subject lines. I mean really going in depth.

[35:38] It’s a very hard thing to build but it was on our docket and we pulled it off because our intuition was that people didn’t want anything that complicated. But it was the exact opposite. People are like this is a major feature that I want now like it was a big deal. So we’re turning around on that.

[35:54] And then another one was email workflow and trying to almost like infusion stuff. Not quite behavior but where you have really complex rules engines. I’ve heard from so many people that they wanted that. And so, I was entertaining the idea, wondering if we have to go down that path cause that’s not a fun thing to build. Frankly, we found that a smaller percentage wanted that than almost anything else.

[36:15] So, although, it’s a vocal group or  it’s a group of people that I’ve talked to a lot cause I’ve heard that suggestion a lot, it’s not something that we’re not going to build tomorrow. And so again, we’re not going to ignore that feature but it’s prioritized lower than some of these other things that we’re talking about.

[36:30] Mike: The feature for AB testing or split testing any of the email campaigns not just the content of them but like the headlines and stuff to drive people in, yeah that’s definitely a feature that you should be working on for a second. I totally agree with the people who responded in that survey.

[36:47] Rob: Yeah. It was a long thought process. I won’t go into it. That was originally one of the value props I had mentioned when I was pitching Drip to anybody was it could do that. Because I don’t know of any other system that allows you to split task sequences, its auto responder sequences.

[37:01] It’s always you cans split test individual campaigns, individual blast emails but not sequences. But I have fought through; I had a series of discussions and such. We’ve moved it off cause it’s a lot of work to build. But as you said a lot of folks are interested in it so we will be building it.

[37:16] Mike: Cool.

[37:17] Rob: Yeah. This really reminds me why having a launch list is so crucial. I’ve been doing one on one interview with people like I said we email and Skype. But it’s really hard to get like a higher level idea from that. You get specific request and it’s hard to know how many others have that same problem. What the survey data did combined with those interviews is it gives me a much higher confidence in the direction we’re taking.

[37:37] It makes me feel better about what we’re building and it makes me, I don’t know. Just have a better outlook on it. It makes me want to move fast and get things done. So it’s not like we don’t already tell people to have a landing page and a launch list but one more reason to have something like that in place.

[37:52] Mike: Maybe you should have one for the VA videos.

[37:54] Rob: Oh my god. We’ll see how that goes. It’s going to be such an I told you so. Everyone is going to point.

[38:01] Mike: I can see it as the twitter hash tag right now.

[38:04] Rob: Hash tag I told you so.

[38:06] Mike: No we’ll see how that goes.

[38:07] Music

[38:10] Mike: I was reworking some of the marketing stuff on the website right now as well. I reworked the sign up process a little bit to emphasize some of the things that I took away from MicroConf like the 60 day money back guarantee versus a free trial, giving people a little bit more information on the sign up, doing annual plans versus just a  monthly plan.

[38:30] Offering that to them upfront as opposed to basically offering it after they’ve already signed up. So I’m looking at doing those types of things. And the only other thing I have going on is about an hour after this podcast ends I’ll be doing our first mastermind group call this evening.

[38:45] Rob: Very nice. That’s a good move. Are you excited about it?

[38:49] Mike: Yeah. I am. I mean it’s just kind of exploratory at the moment. I mean we’ll do a couple and see how thing go. Maybe do one every other week the next every for the next six or eight weeks or something like that. And then I think everybody will kind of evaluate where things are at. Whether its meeting everyone’s needs or not or if we need to change anything. But I’m kind of excited and interested in seeing how things go but we arrange it at MicroConf, so another notch on the plus column for MicroConf.

[39:16] Rob: Yeah. Very cool. I’m looking forward to hearing how that goes and I’m sure listeners will be interested in updates in the future.

[39:22] Mike: Well if you have a question for us, you can call us into our voicemail number at 1-888-801-9690 or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. You can subscribe to us on iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.

Show Notes

Transcript

[00:00] Mike: This is Startups for the Rest of Us: Episode 135.

[00:04] Music

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

[00:19] Rob: And I’m Rob.

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

[00:24] Rob: Well, we got a pretty cool write-up by Toby Osbourn. He did a really good write-up about episode 133 where we talked about the Founder Test. Not only did he write it up, he actually added his own insights. He summarized our points and then added like extra resources that he would offer for each of the 11 points we raised.

[00:44] So, I basically in the show notes for 133, I was going to put — Toby already did a better job than we will writing this up but I did and I just said for, you know, an exceptional summary and additional points go here and so, I just linked him right over. Obviously, we’ll link it up in the show notes for this episode since I’m mentioning it as well. But I did brought it for this out there. If you hear an episode and you do a write-up like this and you basically do a better job than our show notes, I mean we don’t tend to write detailed show notes. So, you find compelled to write about this, you’re highly likely to get some type of a link or a mention like this.

[01:19] Frankly, having a good write up like this helps everyone. It helps us because then there’s a good documentation of it and we don’t have to create it and obviously, it helps you because it will get you some traffic.  So, if a bunch of people start doing it every week, you know, have a little bit of a problem but I can imagine that that actually will happen.

[01:35] Mike: So, definitely, do let us know if you’ve done a write-up on any of the episodes that we’ve done. In terms of the stuff, I’ve been working on, I’m still working out how to outsource all of my bookkeeping. The paperwork and website log ins are the biggest pain in the neck. I called American Express to find out what my options were in terms of creating an account for somebody and they said, “Oh well…” one of their suggestions was to give the person my username and password to log in as bank —

[01:58] Rob: Oh my gosh. It’s the worst ever. [Laughter] Yeah, I’ve been surprised at how hard this role-based access control is, right. PayPal actually does a decent, a reasonable job. It’s not great but compared to the other financial providers, they do probably one of the best jobs. I agree and anytime I’m getting a bookkeeper set up, it’s a pretty painful process. It takes a lot more time.

[02:19] Mike: The biggest problem I have is just all the paperwork, the actual pieces of paper that  I’m still getting in trying to figure out how to get them over to my bookkeeper. Well, I could have it to come in through e-mail but at the same time, it’s like how do I have my bookkeeper go in and actually pay my American Express bill and things like that. I still haven’t quite figured out exactly how I’m going to deal with all that stuff.

[02:36] I mean I could have it, you know, sent to like mailbox forwarding and have it sent over as a PDF and then they pay it somehow but at the same time, then they’re going to have to deal with going in to QuickBooks or something like that to print out the checks and everything else and then actually mail them out as opposed to do everything electronically and online.

[02:53] Rob: Yeah. So, at my credit card, I pay it obviously which is like a direct deposit or an ACH thing and that’s one click for me so, I’m going to – I’m not having my bookkeeper do that. Everything else is paid through an automated fashion, either online or through the credit card. Hey, so you’re in Long Island.

[03:10] Mike: Oh, yes, I went to a wedding this past Saturday and it was absolutely insane. The wedding itself, you know, it’s very nice short ceremony but once the wedding was over, we went out and you know, they have like a pre-dinner reception. Well, we went to this reception and there were 11 different food stations.

[3:27] Rob: Wow.

[3:27] Mike: So, three of these stations were nothing but alcohol. There was like a tequila sunrise stations. There was a vodka station and a tequila station. Oh, that doesn’t include after we got in to the actual reception area where, you know, there was a sit-down dinner where they have a shot bar and it was literally called shot bar.

[03:43] Rob: Wow, that’s crazy. Who…who are these people? I need friends like this.

[03:47] Mike: I was thinking that too. I need more friends like this.

[03:50] Rob: Yeah.

[03:50] Music

[03:53] Rob: There’s two patterns that I’m seeing emerge that are kind of starting to irritate me. I’m irritated by two things in this kind of startup space, the startup training space. First thing is since everybody is interviewing people and putting it out as like some type of book or e-book or video training course or something, it’s – you know, this was something new 5 or 6 years ago and now, I’m getting contacted once or twice a week to be somehow written up in someway. It used to be flattering but now it’s just like there are too many – it’s not, oh, I’m popular, it’s there are so many more of this been created. And so, that’s a little bit – it’s kind of like, huh, when does this stop? And then there’s kind of a glut I think or going to be a glut of that.

[04:30] The second thing that it’s irritating is people are doing something once and then writing a book or creating a course on it. If you’re really good at like synthesizing, doing something once – synthesizing what made it work and what made it fail, okay but typically, you have to do it a few times. You have to have some failures. You have to kind of experience what someone who didn’t do it right the first time felt and then so that you know kind of how to address the course.

[04:56] Mike: There are certain people who make excellent teachers and there are certain people who don’t and I definitely can see where you’re coming from in terms of, you know, seeing a lot more of these types of courses coming out. You know, some of them are good. Some of them aren’t and I think the issue is that the market will be sort of flooded and it’s going to be difficult for people to figure out which ones are worth going after or which ones are worth purchasing. And what’s going to happen is the people who have the bad ones are going to end up selling some and they’re going to be encouraged to make more and you’re not really going to get the leaders who are really rising at the top.

[05:31] And it’s not to say that the people who aren’t really good at building those things or doing those things – so for example, take Patrick McKenzie. He has an e-mail course. It’s fantastic. I can see somebody else coming out with one that is not as good but because somebody might be outside of Patrick McKenzie’s circles would buy that other one and may but two or three other ones and realize, “Oh, well, these all suck.” And then either give up on that whole, the genre of info products or just, you know, keep buying them and  essentially leading on the people who are not building good stuff so that it encourages them to build more bad stuff.

[06:06] Rob: Yeah, I think some key points about Patrick McKenzie’s course, number one, he didn’t interview people. He did it from his own knowledge. And number two, he had done e-mail marketing so many times. He didn’t try to do it once and then teaches. So, he is the exact opposite of kind of the two things I just said which I think puts him in this camp of – my hope I guess is that the market decides, right, that an expert like him, an expert in this field will have success and will sell really well and that someone who’d creates a lesser course or just more of a copycat course that’s just kind of grouping some expertise, I just feel like the interview stuff, it groups expertise and tries to draw patterns across them and – well, that can be useful. I don’t feel like it’s nearly —

[06:48] Mike: Not universal.

[06:48] Rob: …as good as – yeah.

[06:50] Mike: It’s almost the difference between doing the research yourself versus trying to extrapolate an end result from what other people have encountered because essentially you end up with this natural bias or self-selection bias. In some ways, I almost see there’s like you’re going out and doing a master’s degree to build this book versus somebody who’s just kind of picking and choosing from what other people have encountered or have done and not necessarily really doing the research themselves and going through those, you know, months or years of failures and successes to really figure out what works and what doesn’t based on their own testing.

[07:24] Rob: Right and maybe it’s that the people, you know, some of the people who are doing their own testing are just they’re too busy, right, so they aren’t putting out these products. And so, there’s someone on the outside who’s come — more of being a journalist and just asking questions and then compiling it. I’ve seen the volume of e-mails go up and actually have this—there are conversations with a couple other founders and we’re just trying to decide like why they’re suddenly spiked up when they’re, you know, there were none of these things a year ago and then all of a sudden there’s this big thing to interview people and compile it together as an info product or a book of some kind. And I guess a few people who had early success with it now everybody is jumping on. The market will decide.

[07:58] Mike: Hopefully, hopefully.

[07:58] Rob: Yeah.

[07:59] Music 

[08:02] Mike: Today, we’re going to be answering a bunch of listener questions. So, the first question we have is from Michael Schlacter [Phonetic] and he says, “Hey, Rob and Mike, I have a bit of an odd question to ask you guys. Do you think it’s possible to learn programming and start attempting startups within 5 years for someone with no prior programming experience? This is coming from a 19-year old working at Target as a fulltime cashier. I’m locked in a dead end job at minimum wage. College is not an option as I was expelled from my previous college and as a result pretty much disowned. I can’t afford to transfer out of community college to learn Computer Science. Do you guys think it’s possible to learn enough programming in a few years to start making money off of it and if it is, any recommended methods of learning? Sorry for asking this ridiculous question, I understand if you don’t have an answer.”

[08:39] Rob: So, first of all, that’s a bummer and I’m glad Michael gave us a lot of detail because someone in his position the answer is probably going to be different than if he was a 45-year old person out of a desk job.

[08:48] First of all, don’t think – I mean we talked a little bit in the past about how the value of college in getting like a bachelor’s degree in Computer Science is just not anywhere near worth the time and the effort versus just going out and either teaching yourself from books going to like a focused training course or a technical school, something that really focuses in getting you actionable skills.

[09:10] But I was in Michael’s shoes. I graduated with a bachelor’s degree in Computer Engineering but I didn’t have any marketable skills really. I have some but I didn’t really know the languages that people are using in web development. And I was working construction during the day. I was a Project Manager and then at night I was going to the library and getting books on Perl and HTML. This is 1998. So, technology is a little bit different.

[09:34] These days it would be Ruby, PHP, I mean I would do pick one of those because all the tools are free and as long as you have a computer at home, you can download all the development tools and I would start teaching myself one of those languages. But I would get on Craigslist, oDesk, Elance and I would try to take on some low end jobs meaning jobs that are small and jobs that don’t pay heck of a lot and that maybe, you know, 5 hours or maybe they’re only paying 5 or 10 bucks. But if you are working at Target making minimum wage then this is, you know, a decent amount of money at least it’s worth your time to learn on them.

[10:07] And then slowly build up, slowly build up that reputation, build up your experience, build up your portfolio. And I absolutely think that just trying to go to startups within 5 years is possible but I think taking in smaller first steps first. I think you learn to do what, you know, what I just said and then you slowly ramp that up and you raise your rate. So, you’re making 20, 40, 50, 60 bucks an hour and it’s actually that’s when you can obviously get out of the job, you know, of making minimum wage and you can build up just yourself build up a brand and be a freelancer.

[10:38] And that’s probably the first goal I would set is to try to meet your current income maybe within a year, maybe within 12 months of today working nights and weekends teaching yourself to code and then trying to build a client base. Say 12 months from I want to have met that income and once you get there and you can – you’re able to quit that Target job, then you’re going to start learning much, much faster and I think from there, it will accelerate.

[11:01] Mike: Yeah, I don’t – I don’t really have anything to add. I mean Rob hit the nail on the head. If you’re making minimum wage now, I don’t see any reason why you couldn’t very quickly get to the point in programming Ruby or PHP or something like that where you would be able to supplant that income on oDesk. Now, granted I don’t think that that’s a long-term strategy, you know, outsourcing yourself through oDesk but at the same time if you are based here in the US, you should definitely be able to supplant that minimum wage salary reasonably quickly and reasonably quickly to me would definitely be within a year. It maybe as little as 6 months or 3 months —

[11:35] Rob: I agree.

[11:36] Mike: …it really depends on exactly what it is that you’re trying to do.

[11:38] Rob: No, I agree and that’s a good point you raised is that the oDesk strategy is it’s just to get your foot in the door. That’s not a sustainable thing. You want to find clients outside of that because that’s where you’re actually going to not be just in a low dollar competition.

[11:50] Mike: So, Michael thanks for your question. Hopefully, that helps out.

[11:53] Rob: Our next question is more about – it’s a link from Brian Casel and Brian, you might know him. We mentioned SweetProcess.com a few months ago. It’s a SaaS app. He is looking at starting a startup podcast, a BootstrappedWeb.com. And so, in prep for that, he wrote a blog post and it says, “What do the best podcasts get right?” And he dropped me an e-mail with it because he wanted to hear our thoughts on this and potentially some other thoughts, you know, as he’s starting to get his podcast going, I’m sure he’d love to hear some other things we, that you and I know that maybe make this podcast worked or other podcast that we listen to.

[12:28] And so, we’ll link this up in the show notes for sure but basically he said, “What makes a podcast great?” And he goes down the list. He says its consistency. It comes out – he said, “Startup for the Rest of Us comes out every Tuesday morning, every Thursday it’s Lifestyle Business Podcast and Mixergy is pretty much everyday.” So, having a consistent release schedule is one. Having a consistent structure whether it’s content, lengths, segments, topics, advertisement, guest or no guest is another one that he likes.

[12:52] Pre-recording preparation is the third. So putting some time or thought and tweet in advance so that it’s not purely loosen it’s spontaneous. It actually makes better use of the listener’s time. And then the last point he said is vulnerability. It’s actually getting a little bit personal. So, not just always talking about what other people are doing or just talking about five ways to do this but actually starting to get in to your own experience.

[13:15] I definitely agree with his four points here. The consistency is a big deal. For me, I love having a podcast. I know the Lifestyle Business is every Thursday and I look forward to listening to it. I think structure of episode itself is something that a lot of people don’t realize when they’re starting a podcast and the ones that don’t have that pre-recording prep and that wander, they’ve just make it harder like I have to really like the host and like what they’re doing on a personal level in order for me to engage. Otherwise, I’ll last one or two episodes and I’m gone.

[13:43] I also think that having some type of pretty tight time constraint typically in my head it’s between 20 and 40 minutes, that’s where a podcast should be. When it gets too short, there’s not enough value and once they started getting to an hour, I really need to be delivered a lot of value in order to listen to something for an hour even when it’s on time and a half or double speed.

[14:02] I also think one other thing he mentions vulnerability here. I know that our podcast actually took a bit of a jump up once you and I started talking more about the projects that we were working on because at first we were just educating people on five ways to do this and seven ways to do that and then we really started talking about some project we were working on and I think that drew people in and made us more human. It added the vulnerable element.

[14:24] So, I think that having a mix of both education and vulnerability is good. I think sticking to just one I don’t know. It kind of makes it more of one sided thing and makes it less interesting. And I think the one thing that’s left off of this list in my head is almost no podcast with just one host works unless it’s an interview show. I listen to some podcast where it’s just one person talking and it gets old really fast not having the back and forth banter. I think if you’re trying to start one and you’re just starting as one person, you kind of have to do interviews even though I think interview podcast have kind of been done.

[14:54] Mike: I think structure is a little bit less important. I think that in terms of the content — I think in terms of the length itself that kind of structure to it, I think that that should probably be consistent because I totally agree with you that if it’s too short, you don’t get enough out of it. If it’s too long, it tends to ramble. The structure itself can be different from one episode to the next. So, for example, our podcast sometimes we’ll talk about specific topics, other times we’ll do listener questions. We’ve had a couple of guest on. I think that that doesn’t necessarily matter as much as the length. I feel like the length is probably a lot more important than the actual structure of the podcast.

[15:29] The other thing I think of is, you know, in terms of vulnerability I think one of the things that we do is not only do we talk about some of the things that we’re working on but we also talk a lot about other people. We talk a lot about the community. We talk – and we try to involve the community. We do a lot of listener questions and I think that really helps to engage the listeners because if you don’t engage the listeners, if you’re not talking about them, it doesn’t necessarily help them because you have your own thoughts and views on the things that you’re working on and if all you do is talk about those things, eventually  it gets boring. I mean you can’t talk about yourself 99 days out of a hundred. It’s just people aren’t going to listen.

[16:05] It’s not necessarily that interesting and you can’t possibly be doing enough that, you know, it’s going to be interesting all the time whereas I find our community very interesting. It’s fascinating seeing all the different things that people are working on and how they’ve tried things and what things have worked, what things haven’t. And there’s just not enough hours and day for me to try all those different things which really for me, listening to our podcast is nice just because it’s interesting to hear what other people are working on. We don’t talk about ourselves constantly and I think that that translates to having a good podcast as well because a lot of the podcasts you listen to that are very successful don’t talk about themselves all the time, they talk about other people.

[16:39] Rob: So, our next topic is an e-mail I received from Barry Welch [Phonetic] and he’s a long-time listener and he e-mailed a link to a Hacker News’ post. It’s about a guy having a rough time and the title of the post, it’s an Ask HN and the title is “And Now What?” And basically the poster does an anonymous post and he says, “I’m desperate. I’m almost 38. I start a programming at age 10. I spent 7 years in a video game industry.” And he worked up from a programmer to a CTO.

[17:06] And he says, “I tried during 5 years to create a startup. I still have a halftime job that pays the bills and it gives me enough time to create stuff and during these five years I’ve created all types of stuff, a game, tools, B2B projects. I’ve created some projects alone. Each time I had find that no traction. I got negative feedback. It’s demotivating and I stopped. So, I don’t know what to do. It’s horrible because I have all this time and skill but nothing to do. I have no motivation. All the failures kill me, what I waste.”

[17:32] I mean he kind of goes on for a while. He says, “If you have any advice, that would help.” There are some decent responses in the Hacker News comments but I know both you and I had some thoughts on it. So, let’s talk a little bit about it.

[17:43] Mike: So, I think the first thing that strikes me is that the post itself if you read through it and we’ll link back to it in the show notes. But in reading through it, I wouldn’t necessarily say that this is probably uncommon from, you know, the perspective of somebody who’s tried numerous times and never really succeeded. It almost [0:18:00] strikes me as just like a classic case of depression. I mean, you know, the person is depressed severely about having trying for five years to build a startup and almost nothing has worked.

[18:10] And I see a lot of emphasis here on, “I’ve done this. I’ve done that.” I don’t have any ideas and it’s very focused on I and I don’t see any focus on anyone else. So, to me it almost seems like the person is really focused on himself as opposed to focus on other people. But when you’re trying to build a product focusing on yourself is bad because you’re not solving anyone else’s problem and you can build a product for yourself. But what are you going to do? Are you going to pay yourself for it too? It just doesn’t make sense. It’s not going to work that way.

[18:38] So, you need to build something that other people are going to use and if you’re not talking to other people or about other people, how are you going to get there? So, in this case if I were offered by so be like start focusing on what somebody else needs, you know, don’t focus on yourself. Don’t focus on where you are, where you’ve been and what you’ve been doing and try to find people who are also in a position where they have that same need so that you can build a product that meets those needs.

[19:04] Rob: A lot of people have been in this boat. I was in this boat. I may never felt this bad at the time but a lot of people try for five years to create something and it doesn’t pan out the startup stuff especially if you’re trying to go for more of the big bang. I mean he built like game at one point. Like if you’re trying to go down that road or trying to raise funding, the odds are that you’re not going to succeed. So, this should not be a surprise. So, I think the first thing is to adjust expectations. Don’t be so disappointed with the failure and see it as one more step on the road to actually getting this done.

[19:34] The next thing I would do is probably take a couple of months off from any side work or any thinking about the startup idea. Maybe take I’d say somewhere between two and four months off and you might also want to try to get away for a period of time and go to, you  know, more of a remote place and spend some time just thinking and not stressing about this.

[19:54] And if you find that you can’t do that, that you cannot stress about it, then you have something going on like that’s where it’s – you have like a clinical  something that’s bothering you whether it’s depression or whether it’s an anxiety disorder or something. Consider seeking professional help because if you have thoughts that are just constantly on your mind and you – that you can’t get off of under them no matter, there are folks out there who can help you with the stuff.

[20:16] The last thing I think is after taking that break of several months and just getting away from it, my guess is that you’re going to have a bunch of ideas to start cropping up again. Keep a list of them and figure out if in fact you do actually want to do this. So, that would be the next question. If you have this halftime job that pays your bills, so why do you want to do a startup? Why not just work halftime for the rest of your life and enjoy what you’re doing? Like what is it that you really want out of a startup? I would take a step back and ask yourself that.

[20:43] And in the mean time, take that halftime that you have for a week and spend it doing something fun. But find something else that’s interesting that you can spend your time doing so that you’re not so caught up in this startup space. I think you need a little bit of distance and then probably need to come back to it full force at a time in the future once you got time to kind of reconcile up.

[21:03] Mike: Our next question comes from Jeremy and he says, “Hey, guys, I e-mailed you a question back in January about doing door-to-door marketing for local organic produce delivery campaign that you answered in episode 117. The company is now expanding to the majority of Orlando along with a complete redesign of the website that’ll be launch in a couple of weeks. The question we have for you guys is how to best spend our budget? We have $10,000 that is dedicated to marketing for the next three months and our goal is to hit 100 users. It should be a realistic goal but without conversion numbers from our new website, there’ll be a bit of trial and error at first.”

[21:31] “We’ve approached the local ad agency and they tell us they think they can get us there. Do you think it’s worth money spending to hire a professional agency to do all the heavy lifting or should we just take the $10,000 and put it towards search engine marketing and hire a blogger and social media person? Remember that this is a local business so search engine marketing for anyone outside of Orlando is useless. Should we invest a lot in local advertising, flyers, sponsored events, et cetera? Thanks. My wife and I are both still enjoying your show. It’s Jeremy.”

[21:56] Rob: Since marketing is such a key part of your business long-term and since these are the first days and you don’t really know how you’re going to acquire customers, I would lean against hiring agency to do it unless they show you exactly what they’re going to do and it’s believable.

[22:12] I cringe to think of handling $10,000 to an agency and just expecting them to do the heavy lifting and having it work out because if it doesn’t, you really haven’t learned anything. At least if you spend the 10 grand, you’re going to learn what works and what doesn’t, you’re going to take a lot away from that and my guess is you’ll get close to that 100 if you don’t, you know, make it all the way.

[22:33] So, I would lean towards doing it myself but that’s only because marketing is such a critical piece of your business. If you guys want to focus on all other aspects of your business, I guess you could consider outsourcing the marketing but think about it this way, if you spend this 10 grand, you’ll get these hundred users, what then? How do you acquire your next hundred because you probably don’t have another 10 grand to spend? But if you spend this 10 grand and you learn from it and you get the hundred users, then you can probably parlay that knowledge in to figuring out how to reduce the cost of the marketing or how to do some more guerrilla tactics that may get you the same results. So, that’s what I consider.

[23:09] I would definitely consider search engine marketing, pay per click on Facebook because it’s awesome because you can do, you know, GO stuff. So, you can go to local and Craigslist, of course because it’s free. I would not hire a blogger at this point. I don’t know what the use of that would be. I think long-term you do want to have a Facebook page, getting some likes. You want a Twitter account, of course but I don’t — I wouldn’t focus on that for my first hundred people. I would do some stuff that doesn’t scale before I did that.

[23:36] Mike: I would definitely not go the route of hiring an ad agency because even if they do a bunch of stuff and it turns out that it’s wrong, obviously, you wouldn’t have learned anything like you said but even if they do something that is right, how do you know that it’s repeatable? I mean if you don’t have all the insight in to exactly what’s going on – I mean there’s subtle nuances just in talking to somebody and if you’re not the one who’s doing that, then it’s going to be harder for them to convey that back to you.

[24:01] So, the other thing that weighs in on my mind is the fact that they’re going to be paying somebody on an hourly basis to go out and do bunch of stuff for you and they’re going to be burning money whether it works or not. Whereas if you do it yourself, you don’t necessarily have to pay yourself while you’re out there burning this money. I mean you can print flyers. I mean printing flyers is nothing. It doesn’t cost hardly anything but if they hire somebody to go do that, it’s going to cost you the $50 to print these thousands of flyers and then it’s going to cost you $5000 just to go out and distribute them.

[24:30] So, it’s a difference in how far your marketing dollars are going go to. So, I would definitely lean towards doing everything yourself because as Rob said, I mean marketing is going to be a key piece of your business moving forward and you have to be able to understand all the ins and outs of it.

[24:45] Rob: Yeah, there also is some pretty good local marketing using like Google Local and Google Maps so when people search for stuff although I don’t know if people are going to be searching for this. I think it’s more of an outbound thing. I think your thought of doing flyers because, you know, you had print out some flyers before and gone door-to-door and obviously, that’s not long-term scalable but at this point if you have 10 grand to spend, I would certainly give that a shot for a few days and see how well that works. And if no one signs up, then you wasted your time but like Mike said you really haven’t wasted any money.

[25:13] But if that starts working and you know you convert 1 out of every 50 houses, then now you have numbers to start working with and you can then hire someone to do it and know what you can pay them per hour and still make money or you can just make it, you know, I think for two days a week, you go out and do that. Those are certainly my initial thoughts. I imagine there’s a lot more in the local marketing space that neither Mike nor I have ever tackled.

[25:36] Mike: So, thanks for the question, Jeremy. Our next one comes from Pierre and he says, “Hi, I’ve been reading lately about the B2B versus B2C startups specifically most startup founder seemed to favor B2B businesses. Two items from Jason Cohen emphasized this point recently. First, was a recap of his MicroConf presentation where he says B2C is not worth it. Customers complain about cost all the time. Every speaker at MicroConf is in B2B that should tell you something.

[25:58] And he also wrote a blog post called  “Bootstrapped CPC Rule of Thumb” which paints a very bleak picture for B2C paid ad revenue. Since B2C tends to bring in less money for customer, there’s less money to put in to acquiring customers. However I went back and listen to episode 10 of your podcast which was about B2C versus B2B startups. You both seemed considerably more optimistic about B2C startups than the current mood in the startup community. This episode was recorded almost three years ago. Have your views of B2C startups changed or are people just underestimating B2C startup potential? Thanks. I love the show, Pierre.”

[26:28] Rob: Two things, I think a lot has changed in the startup space or knowledge of how to launch startup has changed in that three years. In addition, I’ve learned a bunch personally in that three years. And yeah, I won’t do another B2C startup personally. I’m not saying no one should do them but the support cost or paying customers complain about price like Jason said, it’s just a hassle. It’s a hassle to keep people around and that’s not to say the B2C doesn’t work because obviously, Facebook and Twitter and Google, you know, these are B2C companies but you have to go a whole different route if you’re going to do that. I think bootstrapping of B2C company to profitability and to that, let’s say your number is 10 grand a month that you need to quit your job, it’s a lot harder to do with a B2C.

[27:11] Now, mobile is an exception here and mobile was not nearly as prominent as it, you know, as it is today three years ago when we talked about this. So, that would be the exception that if you can get in front of a lot of consumers all at once and that’s through something like a mobile app store, iOS app store, it’s also through like WordPress.org.

[27:30] If you can get a big channel of people and have a low one-time price point and not support, then yeah, you can certainly do this but to build a larger business and business that consistently grows and generates several hundred thousand in to the millions of dollars a year, you’re not going to do that as a single founder. I can count on one hand the number of single founders that I have ever heard of that have done B2C startups and been able to do this but there are dozens, literally dozens and dozens, if not, hundreds that I could think of that are, you know, one and two-person  teams who have done this in the B2C market. It’s just — it’s a whole different game.

[28:04] Mike: The one comment that kind of sticks out in my mind from about B2C versus B2B businesses is from a Business of Software Conference I went to where somebody was trying to launch a business and one of the things that they found out afterwards is they were going after the B2C business and what they realized afterwards was something like 92 or 95% of all money that spent on software is spent in the B2B space which means that there’s very few people who are consumers who were spending money on software.

[28:36] So, if you’re trying to monetize those people, there’s much lower dollars that are being dedicated to that. So, why would you want to go after that? You can look at and say, “Well, there’s going to be less competition,” but I don’t necessarily think that’s true because I think that there’s a lot of people who are still going after that B2C market and because there’s less money, there’s actually more competition.

[28:54] I mean you can count on one hand the number of people who have gone after that market and been successful and it’s not to say that you can’t do it. Mobile is an exception. You can definitely do those types of things there but it’s difficult. It’s a lot easier to find a B2B business that is going to work and is going to scale because all you need to do is you need to find a problem that people are willing to pay for.

[28:54] There’s a very limited number of problems that people in the consumer space are willing to pay for. And again, it’s not to say that they won’t pay for things, it’s just that it’s very hard to find some very specific problems. If you want to build a game or something like that, that’s definitely a B2C business but at the same time, you’re competing with all of these other things for sources of entertainment.

[29:34] So, you know, what other types of things can you charge them for then the list of things that you can charge them for is actually very, very small. So, there’s a lot of competition there. It tends to be high dollar items, you know, like real estate software searching for new apartments and things like that and maybe you’re monetizing them directly by charging them or maybe you’re trying to do ad-based things.

[29:54] But even building a business off of advertisements I don’t necessarily think that that’s a great way to go either because it’s very  difficult. I mean you have to be able to know what your numbers are. You have to be able to tap in to the different ad sources of revenue and you have to deal with privacy concerns and customers are very antsy about handling over personal information.

[30:12] So, those are all the things to consider whereas in the B2B space, 95% of those problems just go right away. You don’t have to worry about them and the dollar amounts are much higher. So, your profit margins are going to be higher.

[30:23] Rob: Right, yeah. It’s not that there aren’t problems in the B2B space, it’s just that you’re able to charge five to ten times more and so, it’s worth the dealing with the problems that are in the B2B space. In terms of building a business around the ad revenue, you just have to get so much volume. It’s not that it’s not possible, it’s that it’s really, really hard and by the time you get there, you’re talking millions of page views a month to really build a nice sustainable business and it’s a long shot. That’s a hit-based business. It’s not the repeatable business types that we’re talking about here.

[30:52] Mike: So, we have time for one more question. This one is from Todd and he says, “Hey, Rob and Mike. I love the show. I have a few questions. How can you test for various media formats on different devices such the Galaxy, iPhone, iPad, et cetera? I know Adobe Labs and BrowserStack but that doesn’t show media renders. Second question I have is when you’re making app for products, did you ever plan out the lifetime viability of the product such as 1 year, 2 years, et cetera? Anyway, keep up the good work.”

[31:16] So, Todd, I have a very quick answer for you and I’ll link to it in the show notes, there’s an article on SmashingMagazine.com that lists a ton of cross browser testing tools. So, there’s free tools out there and they do list the Adobe Browser Lab on there. They do not have BrowserStack but they do have I don’t know probably 12 to 15 different tools on here that do what seems like what you’re looking for which is being able to display what the media is going to look like and all these different formats and different browsers. There’s various pricing on there but we’ll link to that in the show notes and hopefully, that will be what you need.

[31:50] Rob: In terms of his second question, it was, “When you’re making app, do you ever plan up a lifetime viability of the products which is a year or two, et cetera?” I don’t know that I build products that I don’t feel are likely going to be evergreen. Obviously, if you build against an API or you build, you know, interfacing with some large powerhouse like Google, then you know the lifetime is not infinite because you know that API may change or you know, that Google could change the way that they pass search engine data, you know, as I’ve seen with HitTail already because HitTail relies on some of the query string data that Google sends.

[32:21] But I never think, oh, it’s going to get shut down in a year or two because frankly I just wouldn’t I mean it’s so much time and effort to get something going that if I know it has a pretty short lifespan, it’s not something I would be interested in doing. I think if you’re doing a funded startup or a super high fast growth hit-based startup, then yeah, what’s the cycle for that? It’s like a 1 to 2-year growth and then you sell.

[32:41] So, maybe it doesn’t need to be as much of a sustainable business. Or if you have something let’s say you’re just writing an e-book or 50-page e-book, yeah, I guess that that’s sold for 12 months and then went out of style. It was a hint guide for a video game or something. Sure, if it only takes you, you know, 12 to 15 hours to put together, that’s one thing. But to truly build a like an actual business, you know, build the SaaS app or you put in hundreds and hundreds of hours or the tens of thousands of dollars and you put in 12 to 24 months of your life to do it, it’s just not something that that I would only do for an opportunity window that’s only a year or two long.

[33:15] Mike: Well, I have my Altiris Training website which sort of falls in that boat. I mean if they come out with Altiris Client Management Suite 8 and they completely redesign the interface, then most of the stuff that I have developed tends to go out of the window. I mean basically I’d have to go in and I have to re-record, you know, pretty much every video in there because, you know, all the screens are going to be different.

[33:36] And then they may make some minor adjustments and changes and stuff between screens even between version 71 and 72, for example, but I don’t necessarily know as I would go back and re-record every single video based on that. And you know, the chances that some of those changing, it’s not really that big a deal but if they do a complete overhaul, I’d have to seriously consider whether or not I’d go back and even bother with all that.

[33:58] Rob: Right. I think that’s different though because it wouldn’t wipe out your business. You would – all the traffic and the marketing copy and all that stuff that you built would still be valid. And if it was bringing in enough money, you could just either hire someone or record it yourself and the business is still totally solvent. It doesn’t wipe you out.

[34:16] Mike: Right. I mean the other issue is that even – the people are still going to own version 7 for a long time. So, they – then I would just have to build, you know, videos for version 8 and then I could host them side by side and say, “Well, if you have version 7, go here. If you have version 8, go here.” Yeah, I don’t know — I don’t own any other businesses that are, you know, have a low lifetime viability. I don’t think that I would go down the road of building something where I thought the whole business was going to die out in a year or two unless, you know, it was some massive return for not a heck of a lot of investment.

[34:47] Rob: Yeah and I think we almost need a specific example to be able to really evaluate this but —

[34:51] Mike: Yeah.

[34:52] Rob: …you know, it’s like a friend of mine has a Pinterest plugin, right? It’s a WordPress plugin. He’s an Academy member. We talked about it and I said, “You know, Pinterest may take a nosedive. It could pull Myspace or Friendster here.” But he knew that the upfront investment was not – it wasn’t hundreds of hours to build this plugin. And he’s made enough money that already that it was well worth. You know, he’s like six or seven months in to the paid plugin and it’s like boom! If it was – if his plugin was wiped off the face of the earth, it was such a learning experience and he made a decent chunk of money that it was worth it.

[35:23] But at the same time he’s not planning. He didn’t look and say, “Wow, this thing is obsolete in a year and I’m going to go build it,” because I probably would have said, “You know what? Find something else that’s not obsolete in a year and spend your time doing that.”

[35:34] Mike: I think even with that, Pinterest plugin though the future is unclear for it. I mean so, you’re essentially trying to predict something that you have no way of knowing. I mean Pinterest could nosedive tomorrow and then their whole business could tank but we’re kind of guessing at that point, you know. We have no idea whether or not that’s going to happen. I think it’s a little different if you know for a fact that there is a – end of life for a product that you’re trying to build an add-on for. That product is going to go away.

[35:59] You’re going to build  this add-on but on – let’s say, it’s an add-on or Windows XP. Well, Windows XP is end of life next, what was it, next spring some time? You know, when I go build something, it was very much Windows XP specific, probably not at this point. I probably wouldn’t have done it five years ago either because, you know, all these new versions of Windows have come out. I’d built some thing for those but not necessarily for Windows XP. In the context of the question, I wouldn’t go after something that has an obvious end of life. I would definitely lean towards stuff that is more evergreen.

[36:29] Rob: That wraps up our questions for today. If you have a question for us and you’d like to hear us discuss it on air, you can call our voicemail number at 888-801-9690 or e-mail us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.

Show Notes

Transcript

[00:00] Rob: In this episode of Startups for the Rest of Us, Mike and I discuss Seven Steps to Rescuing a Failing Software Project. This is Startups for the Rest of Us: Episode 132.

[00:10] Music

[00:19] Rob: Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob.

[00:28] Mike: And I’m Mike.

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

[00:33] Mike: Well, last week I interviewed a bookkeeper and the hope is that I can basically hand off all of my bills and credit cards and you know, my books and everything and just not have to worry about any of it and free up some of my time every month.

[00:46] Rob: That is a very good idea. Are you doing it for your personal accounts or for your business accounts?

[00:50] Mike: Technically for my business but if it works out, then I may very well say, “Hey, can you also do this process as well?” [Laughter]

[00:56] Rob: Yup. So, I’m looking in to this exact thing actually since inDinero hasn’t worked out and I have a pretty complex system and lot of rules need to be put in place and I haven’t been able to find an online source to handle it. I think I’m also going to be hiring someone to handle it. It’s too much work and it’s work that doesn’t move your business forward at all.

[01:12] Mike: Yeah, I just feel like it’s a waste of time.

[01:14] Rob: Yeah, I agree. Is the person you hired or you’re talking to, are they local?

[01:18] Mike: Yeah, she is actually. You know, part of it was a comfortability with that and if I ever move and that’s fine but you know, I explained to her as like, “Look, I really want to get to a position where I can hand things to you and I don’t ever actually have to see you,” because she was concerned, well not concerned but she’s like, “Oh, do you need me to come in to your office? Do you need me to – you know, how many times a week do we need to meet?” I’m like, “No, no, no. I don’t ever actually want to see you.” [Laughter]

[01:40] Rob: Yeah, let’s get this straight, I don’t even have an office, you know. It’s my basement of my house.

[01:44] Mike: Right.

[01:45] Rob: Yeah. No, I feel the same way. I actually have it on my post MicroConf to-do list. I have three things and one of them is hire a bookkeeper. And now, since going to MicroConf, I’ve added a couple of comments to that Trello – that Trello item of hire a bookkeeper. I’ve heard that Xero , X-E-R-O, could potentially work for me and then someone mentioned that I should try LessAccounting as well. I had tried both of them about two and a half, three years ago and they didn’t work given my complexity of all the PayPal and bank accounts and merchant accounts, all that stuff that run through my company, the Numa Group but now that I’m out looking again, I’ll probably sign up for both of those guys and then also look in to getting a bookkeeper and figure out which of the three approaches is going to work best for me.

[02:26] Mike: I talked to several people at MicroConf who were using Outright as well which we use —

[02:30] Rob: Yup.

[02:30] Mike: …internally.

[02:31] Rob: Absolutely, yeah. I use Outright – we have two Outright accounts. One is for Micropreneur stuff and then DotNetInvoice has its own Outright account but the rest of my stuff is more complicated than Outright can easily handle it. It’s a pretty simple system which is great but it just can only support so much. And please, please don’t post a comment and tell me to do QuickBooks Online or QuickBooks of any kind. If I need to use QuickBooks if that really is the solution, then I’m definitely hiring a bookkeeper because I don’t want to touch it, you know. I want them to handle all of the – any interactions with QuickBooks is going to be handled by someone else.

[03:02] Mike: Yeah, this bookkeeper that I’m working with she primarily uses QuickBooks which I’m not terribly pleased about it but at the same time if I’m not dealing with it, then I don’t necessarily care a whole lot. So —

[03:11] Rob: That’s right.

[03:12] Mike: …you know, we’ll see how it works out and she actually has a relationship with QuickBooks consultant. So, anytime she has a question, she just goes talk to them and it’s a friend of hers and just gets it all straightened out. So, there, you know, she might even be doing my payroll. I may be switching over from Paychecks to have her do that as well.

[03:27] Rob: Yeah, that’d be nice for sure. So, hey, last month I had a projection of what HitTail was going to do. I actually mentioned it in my MicroConf talk. And it actually grew by more than expected like quite a bit more and I realized that at the end of every month like as the end of the month approaches, you know, you have projections in your dashboard that you’re looking out. I’ve just found it so difficult to be accurate with those projections even with four days left in a month. I mean I can be off by 20%, 30% of growth, not the 20% of revenue in the total month because I know where my base is but just the percentage of the growth or loss that month, I just have not found a good way that I feel confident that I can say yes within, you know, hundred dollars. That’s going to be the number.

[04:09] And the funny thing is I thought it was just me and that the data the way it sorted in HitTail but I’ve talked to several other people who own SaaS apps and software companies and it feels like this is a recurring problem. Everyone I know has it. I have an analysis apps and I have DigMyData and I have a bunch of apps that I can run reports on the stuff but there really isn’t a great solution for it. I just — I thought it was funny to – I ran the numbers in. I’m always a little bit surprise and you just think at this point I would have just dialed in.

[04:35] Mike: is that because of the way that the months fall? So like, you know, some have 30 days —

[04:40] Rob: Yup.

[04:40] Mike: …some have 31. Is that —

[04:41] Rob: Sometimes it is, you know, other times you’ll just get a chunk of cancelations for some reason just a little blip and it’s just enough that it kind of sense you – the growth is just a little smaller than you think. The reason I got the bigger bump, I don’t know. I had some boost – I don’t know if it’s going to improve conversion rates or if I just had a lot of trials in the funnel that I – just for the last couple of days of the month that I really hadn’t encountered on and suddenly convert it. It was something at that effect. And so, there’s always these small anomalies and again, it’s not like, “Oh, I can’t run my business because of this,” but I guess if you’re out there and you’re running a SaaS app and you’re on the same boat, don’t feel bad because everybody I talked to always has that thing of like how – where really am I going to be at the end of this month?

[05:16] Mike: I had a discussion this past week with my AuditShark developer to finalize the list of things that needs to get done before we can really start pushing on it. It’s really small at this point. I mean the only two things that are left I would say are e-mail reports and billing. And billing obviously doesn’t necessarily need to be completely in place but beyond that those things are both things that he’s taking care of and then just expanding the Policy File library. But other than that, I mean everything looks like it’s good to go. So, next week I’m going to be sitting down. I have the week off or I took the week off and I’m going to be sitting down and figuring out exactly who else I’m going to be putting in to my beta program and try to figure out exactly why I want to go live for the full public launch.

[05:54] Rob: Very good but at this point, do you think you’re within weeks?

[05:57] Mike: Yeah, it is definitely weeks [Laughter] and definitely not months unless  something —

[06:00] Rob: Right.

[06:00] Mike: …major comes up that I didn’t see or wasn’t able to test, I don’t see an issue with getting out there, you know, within next several weeks.

[06:07] Rob: Right, very cool. Yeah, I would encourage you to launch without billing in place. And obviously as you’re collecting a credit card or maybe even you don’t need to collect a credit card if you’re not going to collect it upfront but —

[06:17] Mike: No, I’m going to. I want to because it’s until now I haven’t billed anybody for it yet so next week I want to get to the point where things are in place enough so that I could start billing people and I intend to. There’s a few minor pieces I need in place just to be able to put the credit card numbers in but the final billing code is probably not going to be ready when I, you know, go through that process. I’ll have my developer work on that while I’m going through with them.

[06:40] Rob: Right, definitely. Yeah, that’s a nice part about having a developer that – you know, there’s a couple of ways to do it right. If you’re writing all the code, then nothing gets done unless you’re doing it. But there’s also the hybrid where you’re writing some of it and they’re writing some of it and it’s nice because you can keep your hands in it and writing code is so much fun, right? But I find that that still weighs on me that I would still assign a lot of it, task that have to get done to me and if I wanted to get them done quick and then I just work until 1 or 2 in the morning just try to get a bunch done.

[07:09] Being able to outsource everything essentially to have someone else doing it, I find there’s like a certain level of – it’s actually it relieves – I don’t have the stress that I should be doing something right now because there are critical path is held up by how fast the code can get written but I’m not writing any code on this project. I’m talking about Drip now. And you know, I know you’ve written code on AuditShark. Are you – are there tasks here that you could feasibly get done faster if you pulled some of them back to you or is that it? Are you kind of done right now with writing a code and it’s all outsourced to your dev?

[07:40] Mike: They’re definitely things that I could pull back and work on myself that would get done quicker because he’s only working on it two days a week at this point. There’s things that could definitely get done quicker if I’m working on them because I could obviously work on them seven days a week but at the same time there are so many different things that need my attention. It’s just not worth the time and effort. If I start focusing on the code [0:08:00] at this point, I’m going to start dropping some of the other things and all the other things are sales, marketing or customer development related. So, those are the things that really need to get done.

[08:09] And then the policy library is kind of a big chunk that I have not sunk my teeth in to yet. I’ve really got to figure out how to get that built out as quickly as possible and put a process in place for somebody to kind of walk through and start implementing those things. And that’s a key component right now that I just don’t have a good handle on. So, I’ll be putting some time and effort in to that next week just because it needs to get done and it needs to be something that expands overtime. I can’t just do a bunch of work there and then just walk away. There’s other things that need to be built on an ongoing basis.

[08:38] Rob: Yeah and that makes sense, that’s actually what I’m saying is like not getting dragged back in to the code right now when all the marketing and sales and this other stuff needs to get done. There’s a certain amount of serenity to it. That’s what I was saying is that having someone that I can hand off the code do and say, get it done as fast as possible but not feeling the compulsion to go on and do it myself is better for the product in the long term. I mean that actually leads it right in to what’s going on with Drip.

[09:02] As we record this podcast, we’re in an hour or two of having all the features complete to install it on customer number one. And I expected this to come late last week but MicroConf just kind of trashed everything. And then when Derek and I met, he’s the Product Manager for, well, for HitTail and the developer on Drip, we went through some more features that we wanted to get in before we got customer one on. So, my hope is that by the next time we record, it’s realistically should be by tomorrow, our customer one, who I have already talked to should be installing it. I’m sure we’ll run in to a whole slew of other things small features here and there that we need to add and tweak to get it ready for customer number two.

[09:42] What’s cool is in FogBugz, I have milestones for each of the customers that I’m going to get on. There’s this milestone of – it’s called customer number one and it has all the issues that I need to fix and that I think that he needs. I’ve already e-mailed him and asked him exactly what he’s going to do with it and so, we had to add some things last minute to get it in. But it makes it  really easy. It feels like it’s slow going but it makes it easy to know that when he gets in there, it should have everything he needs to basically do what he’s doing today with his software.

[10:11] Mike: That’s really interesting idea. I hadn’t thought about creating milestones for each individual customer where they look at that and they say, “Oh, well, this isn’t working for me,” or “I need something over here instead.” That’s a really good idea. I think I’ll steal that. [Laughter]

[10:23] Rob: And we are – I mean it’s not that we’re giving them access to it, it’s not that we’re letting them know, “Oh, here’s all the issues we’re fixing,” or “Here’s all the things we’re adding.” It makes it easy to not be like, “I’m launching to 500 people.” We’re really launching this week to one person. It’s one guy who owns a SaaS app. I was able to interview him and say exactly how you’re going to use this and he kind of said – gave me some ideas. I asked more questions and then I realized and you know, talked to Derek and said, “All right, our app doesn’t do these four things right now. We need to build this in order for us to support him.”

[10:52] And knowing that his needs are common is helpful, right? It’s not that he sends us off on a rabbit trail to do some random feature. The features that he needs, everyone is going to need. It’s just about prioritizing them. We have a list of say 50 features right now and I just picked the next four that we need to get him on the system because once we have him on the system, we’ll just start learning so much faster.

[11:12] Mike: Cool. Yeah, I had a similar discussion with Jason Roberts from the TechZing podcast at MicroConf last week and I was talking to him about his secret project. And told him I was like, “You know, these are the things that I would need and these are the thing that I would use in that. And these are the pieces that are important to me.” He’s like, “Oh, well, I haven’t really thought about that, you know, and that wouldn’t be too hard to add in.” But it just kind of highlighted some of the things that are fairly common used scenarios that, you know, just hadn’t really occurred to him.

[11:39] Rob: Yeah and that’s always the way it is. We never quite realize how people are going to use our apps. So, until someone is actually using it and I would – I dare I say paying for it although if they’re very serious about it even if they haven’t paid you a dime, if it’s the right people who really know, you know, who built apps themselves, they can often get you feedback even without giving you money. But I think the ideal case is that until you have someone using it and paying you for it, you just don’t know how folks are going to be utilizing it.

[12:08] Mike: So, one of our listeners his name is Masaj from Fired Up Digital. He started listening around episode 22 and he’s since left his job. He dropped us a few more productivity tips related to episode 125. The two tips that he sent in to us was the first one was to split the day. Do e-mail and stuff like that in the morning and then work in the afternoon in a coffee shop so that you’re not doing the same thing all day long in one location. And then second thing he said was that, you know, he exercises regularly to get some of the endorphins going and just recently had done a marathon. But both of those I think are really good tips to fit in with episode 125.

[12:44] Music

[12:47] Mike: So today, we’re talking about Seven Steps to Rescuing a Failing Software Project. And this idea is really about if you have a project that you’re working on whether it’s in-house development or you’re working on a product itself that you’re going to be launching out to the world and things are starting to go wrong, you know, whether the code isn’t getting done fast enough, there’s people who aren’t responding when you ask them for things. And you know, you’re trying to manage the project but at the same time there’s just lots of stuff going on that, you know, you’re not quite sure how to handle or those things are going off the rails a little bit. You need to be able to get things back on track. So, this episode is really about stepping in kind of assessing the situation and then rescuing that project put it back on track.

[13:32] Rob: And this applies both to being a – for being a pre-launched product as well as maybe you’re going from version 2.0 to version to 2.4 and you have a bunch of tasks that you’re trying to do. Maybe you’re working with developers and like you said, things aren’t working out.

[13:48] Mike: So, step one is to don’t assign blame. If you start assigning blame to people, they’re going to, you know, at least be a little bit resentful. Some things are beyond their control. Maybe they’re – you haven’t given them enough direction. Maybe they’re waiting for other people. The point here is that by assigning blame, you’re essentially pointing fingers and they’re going to resent that. What you really need to do is you need to step back. You need to figure out what’s going on and address the underlying reasons why things are starting to go wrong.

[14:14] Now, that doesn’t mean that, you know, if somebody is willfully ignoring you or they’re just not doing what you’re telling them to do, you know, obviously, you need to address that. But in a general sense, you don’t want to kind of bring everybody together as a group and say, “Hey, look. Joe over there, you’re not doing your stuff. This stuff is got to get done, you know, all these other people are counting on you but you’re just, you know, you’re not coming through a force. We need you to, you know, get on things.”

[14:37] The other thing that goes along with this is not doing it publicly either. I mean if you do need to provide some critical feedback to people because they are in that type of situation, definitely do it privately. You don’t want to make a big deal out of it in front of everybody because that will push them away instead of bring them in to the fold.

[14:53] Rob: The best example I’ve seen of this of a manager who handled this kind of stuff really well where mistakes were made and he wanted the entire team to learn about something. So, if you think about it like mistakes are opportunities for learning, right? A mistake would be made, he would correct that person privately just like you said and then he bring the team together and he would try to anonymize it, right and say like, “Hey, guys. This just happened…” And in any way he could – if he couldn’t anonymize it, he would just say, “This just happened. Here’s what we’re going to do to correct it. Here’s why we don’t do that, you know. Here’s the remedy for it so that we all don’t make it in the future.”

[15:27] And if he couldn’t anonymize it, he would say exactly what you just said. He’ll say, “Look, John here did this. He and I just talked about this. It was a mistake but the reason I’m bringing this up is not to shame him, it’s that all of us need to learn from this like this is a learning experience.” He would actually use it as kind of a teaching moment so everybody was feeling okay about it. And then, you know, as the project went on like it wasn’t a guilty thing where you felt like a mistake was this bad thing, right? It wasn’t – rather than assigning blame, it was used as kind of a learning thing to help improve everyone helped improve the team dynamics and just help  move the project forward.

[16:02] Mike: Step number two is to look at the numbers. Is it time to pull the plug and you need to be able to make an honest assessment as to whether or not the project can be salvaged. If there are definite milestones that you need to reach, if it’s an outsource project to you or your customers are coming in saying, “Hey, we need this by this particular date,” look at those numbers, any timelines that you have or try and figure out honestly where exactly things stand. I mean you have to be realistic about everything because if you can’t, then it makes it very difficult to plan for the future. You need to be able to be honest with yourself, be honest with your team and ask people, “You know, do you think this project can be saved?”

[16:39] And by asking everybody, you get different people’s feedback on that and it’s really important to not just depend on your own optimism or pessimism is the case maybe. Ask everybody on your team and let them know, “This is where things stand. Do you think this project can be saved under these parameters?”

[16:56] Rob: This is such a hard question to answer because it is such a case by case basis thing. A lot of it depends on trusting your own gut and looking at a project and really asking some tough questions. Shutting a project down is – it always feels so painful right because you’ve invested time, money, resources, everything in to a project whether it’s month’s old or even if it’s just a few weeks old but at the same time, there’s that that expression sending good money after bad.

[17:23] I’ve actually a little bit dealing with this right now on a project dealing with HitTail. It’s not a development project but I hired a contractor to help out with something. We’re about three months in to it and it’s not moving as fast as I would want it but the contractors had been really good about communicating with me and really good about pointing out, you know, road blocks and bumps along the way. So, there’s that thing of like if they just don’t communicate, then yes, it’s obvious it’s not going to work out. But he’s always one step away from delivering something.

[17:50] So, I’m in a place of like I’d ask myself this morning I was in a call with him and I said, “You know, is it time to pull the plug on this? Can it be salvaged?” And so, I brought that up to him and I said, “Hey, here’s how I’m feeling. I’m feeling right now like we’re three months in to this and I’m not sure that you’re going to be able to deliver on this and here’s what I need. I need to feel confident that the next thing you do, you’ll hit the deadline and you’re going to deliver it at the level that I need.”

[18:15] And that actually turned out to be a really good conversation and I appreciated he – he was very professional about it and now we have a hard deadline with like an exact milestone that happens in a couple of weeks. And we both agreed, you know, if it doesn’t work out at that point, we are just going to walk away and he’s actually going to refund all the money that I paid him. I don’t know. It’s just a worth while thing.

[18:34] So, that’s I found especially lately it’s like if a contractor is either unprofessional or unreliable or an employee for that matter, then that tends to be, you know a better reason to pull that plug. But if they’re willing to work with you and like commit to things and get them done and actually do start delivering, then a lot of things can be salvaged even when maybe you think they can’t.

[18:56] Mike: The third step is to stop looking at the software you’re building. A lot of times if a software development project starts to go off the rails a little bit, people will look at the software and say, “Well, why are these things not getting done? You know, what is it in a software that’s so complicated?” And they start digging in and they tend to go down the rabbit hole. The problem is the software is probably not to blame. It’s the management over the project. It is the deadlines that you’re putting in place and the time estimates that you’re putting in to those.

[19:23] I mean if those things are being created in such a way that is unrealistic to even be able to come up with those time estimates, then that’s the issue that needs to be addressed. It’s not building the software that’s the problem, it’s the time estimates that you’re associating with it. You really need to assess where things are going wrong and deal with those issues rather than just assuming that the problem is in writing of the code.

[19:45] Rob: Moving from developer to project manager is hard. You know, a lot of developers don’t estimate how long it’s going to take them to do something and they want to move ahead with the fun stuff which is coding, the building and the creating. And I totally get that. That’s how I am built by nature. And so, if a project is going off the rails, the first place I look at obviously is the project manager because here she’s the one responsible but more importantly I start looking at like well, where are your estimates and how close or how far off have you been from those? And figuring out either that you are a bad estimator or that, you know, that you missed pieces of the estimate.

[20:25] Somehow taking away like realize this is probably a mistake on your part and learning from that so that you don’t do it next time is extremely valuable as opposed to just ignoring it or like you said, you know, blaming it on the software, blaming – it was too technically hard or I didn’t do estimates because I’d just wanted to have fun building it. It’s like none of that is helpful. If you actually do want to get better and improve at this whole project management thing or just even at building software products, you have to sit there and examine the process and figure out where you went wrong and improve yourself.

[20:57] Mike: Yeah, that’s something that I have to personally take a little bit stronger look at just because we haven’t really put a lot of time estimates in to AuditShark. I mean there are certain places where there are but there’s a lot of places, a lot of things in FogBugz where there are not time estimates which makes it hard to do scheduling and trying to figure out where different dates are going to fall. So, that’s definitely something I need to get better at on my end. But I think that that’s a common problem too.

[21:20] Rob: I sometimes feel like a broken record because everytime I talk to one of my developers and we talk about doing in a feature, the first thing I say is, “All right, I need an estimate on that. And you have to give it to me right now. You have to think about it for five minutes and send me an e-mail. Put it directly in FogBugz or the Google doc we have set up but I need before you write a line of code, I need an estimate so that we have some idea of how long this is going to take.”

[21:43] And the thing is if you get 20 or 30 small little features, you know, all in your issue tracking system, it’s impossible to know. It’s impossible to estimate how long that’s going to take especially when someone is not working fulltime. That’s where it gets weird, right, if they’re working 16 or 20 hours in a week, then things get  kind of hairy. I think all of us learned if you’ve been developing, you know, writing code for 20 years, you think in terms of a person weeks.

[22:09] And so if they’re only working 15, 20 hours a week, I find it really hard to just look at a swath of  and things oh, this is going to take them X amount of weeks because you’re – you don’t have in mind that they’re only working, you know, part-time. And so, having those actual hour estimates even they’re off by a 10 or 20%, it really makes it a lot clearer as to when potentially you could deliver the thing.

[22:30] Mike: So, step four is to cut twice and then cut again. And this is really in reference to feature creep because feature creep is real. It bugs on a project. There’s always new things to be implemented. There’s always new features that are coming in whether they’re from customers or from project management which is tends to be you but you have to be able to make the project manageable and make the milestones manageable by cutting things out that are just unnecessary.

[22:54] Rob: This is where I’d become a pretty big believer in this whole early access model when we’re – as we’ve been building Drip, I have been looking at just the minimum feature set we needed to get it installed on HitTail. And whenever we had a question or decision to make about should we implement that, I asked Derek and I said, “Do we need that to install on HitTail?” And then we’d say yes or no and that will go in to the HitTail milestone, the customer zero milestone we had. And as soon as we got it on HitTail, yay, big celebration and even that took way longer than we wanted to rather than we thought which it always does.

[23:27] Then we said, “Okay. What are we going to do next?” And that’s when I interviewed customer one, looked at exactly what he needed that we didn’t have and everything since then that we’ve discovered, you know, the other five to ten things we found on our own, we’ve asked the question, does he need this to launch because if he doesn’t, then don’t put it in this milestone yet. Put it in customer two or even way down the line we have a public launch milestone in FogBugz. And so, that’s the one that we need before everybody gets in.

[23:54] So, that’s things like setting a settings page and updating your password and all the billing stuff and I mean there’s a lot of stuff that’s not in place at this point. It is absolutely, you know, about as much of an MVP as we could do and feel reasonable about. No matter how much you do that, it’s still going to take longer than you think. You can only cut so far and being able to focus on a handful of customers upfront and just building for them makes it much easier to prioritize than if you’re just picking things out of the air and trying to decide yes or no or should be build this because the answer is always yes, we should build this but the question is when should we build it? How soon should we build it? Can we push this off one more milestone down the line? Can we push it off the public launch? Or maybe to one point one which is after public launch when you have that revenue coming in and you have the motivation and the excitement of having customers paying you that the pay off of all that because that will be the time where you can really hunker down and potentially hire more developers if you have more revenue, pushing things off pass that is really a benefit to a bootstrapped product.

[24:59] Mike: Step five is to be honest about your project risks. Anytime there’s a dependency on something when things go wrong, it’s going to push everything back. And this is one of the fundamental problems with the waterfall method that Agile  and Scrum  tried to solve. But if you’re not honest about the project risks and the project risk can be any sort of dependencies that you have whether they’re on software or people or availability of resources, new hardware coming out, new software releases.

[25:25] So, if you’re – I mean you’re waiting for the next version of Windows or the next kernel Linux to become available. Those things are probably beyond your control. You don’t have any say in when those things actually occur and although you may get commitments from people, they’re not necessarily setting stone and they can decide, “Oh, well, we’re going to push this back because of XY and Z,” and they may very well be legitimate reasons. But because they’re outside of your control, you have to take that as a risk and taking in to account what you’re going to do if those things don’t come through.

[25:53] Rob: Yeah, an element of a project having risk or not really it isn’t a binary thing, right? It’s not a yes or no. It’s more of a gradient  but in my project plans, I always just have a yes or no because most things you’re doing as you’re writing code have very little risk because if you’re inserting data in to a database, validating it, pulling it out and displaying it like these are virtually zero risk. But the – anytime you’re integrating with an external API or you’re doing any type of algorithm that needs to do kind of some magic that you’re going to have to play around with or any type of external dealing with, you know, third-parties that you have to rely on in some form of fashion. Those things are all in my opinion the risk is just through the roof.

[26:37] There’s a big risk of running over your estimate more than anything. There’s always a risk that you’re never going to get it done, you know, it’s just not going to work or not going to do the thing but that’s lower risk within. You’re just going to be 50 or a hundred percent over your estimate. So, when I have project plans, I – if it’s in a Google doc, I’ll put a big like risk column and then say, “Yes. This part right here, I’m really sketchy about. I just don’t know if we’re going to be able to deliver this. I want to build that first,” like I want to eliminate the risk as soon as possible in a project and that tends to be the opposite of the natural inclination which is to push all the risky stuff off to the end and do the easy stuff first.

[27:12] So, you’re attacking a project and you don’t want it to get to the point where it’s becoming a failing project, try to stack up the hard things first, the tricky things first and build them before everything else because we know that you can write billing code and we know that you build the settings pages where people can reset their password, that’s the trivial part. It’s doing a hard stuff first that’s, you know, going to hopefully ensure the success of your project.

[27:34] Mike: I think the biggest thing I ran in to in those types of things is kind of what you alluded to. It’s like third-party libraries and third-party integrations, any external APIs because you can always run in to a bug in those or you know, if it’s an open source project you may have to resort to reading the source code to figure out exactly how it works and be able to do what it is that you need to do.

[27:54] Step six is to intervene when necessary. There are times when you’re going to have to make hard decisions or accept  some technical debt now to get a project out the door. You may also need to overrule the opinions of some of your developers, some of the – more extreme cases, you may need to cut people out of the project or bring in news ones but the fact of the matter is that this is your business and you’re the one who asked to make those hard decisions nobody else can make them for you. And you do have to take in to account all the previous things that, you know, we’ve talked about so far in this podcast episode. You have to be willing to intervene when it’s absolutely necessary and make those decisions.

[28:29] Rob: And this counts both for when you’ve hired a developer or when you’re writing the code yourself and that’s the hard part that I think most people don’t think about is that just because you’re the project manager and the developer doesn’t mean you shouldn’t have some type of mental separation between those hats because making the call to not implement something that the developers had really wants to implement because it’s either going to be fun or you know it’s easier, you know you can do it and “just a few hours” if it’s not going to get you closer to launch and closer to having people getting value out of your app and paying you money, then that’s the time to step in and say, “We need to push this off.”

[29:04] Mike: And the seventh and final step is to fix your processes and procedures. You need to document things, figure out how things went wrong and figure out how to do them better in the future. You want to be able to avoid repeated problems from one project to the next and use each project as a learning experience to be able to take those experiences and those good lessons that you’ve learned and apply them to the next project so that things will run smoother the next time around. This applies whether or not you’ve got a single product and you’re just trying to get multiple releases out the door or you’re trying to build multiple products and sell each of them independently and build a small company that, you know, manages multiple products.

[29:41] Rob: You know, I hate processes and I despise procedures but sometimes they’re required so that you don’t make the same mistakes over and over. When I really like processes and procedures is when they make my life easier in the future when they allow me to essentially hand something off to someone else so that it can be done right  over and over and over and thereby leveraging someone else’s time instead of mine and when it saves me from losing time or money or just making a big mistake in the future.

[30:10] You know, it’s kind of the entrepreneurial goal with your gut as to how much you need but for sure if you’re a one-person shop, you don’t need very many. But as you grow, even if you only grow with part-time contractors or you know, getting in to some fulltime contractors, you need to start ramping it up just a little bit, just enough so that you can hands stuff off with confidence and not be bogged down by handling all of the processes and then so you can learn from your mistakes and be, you know, more successful in the future and more efficient moving forward.

[30:39] Mike: And don’t forget that that includes documenting things as well because just because you wrote the code for something doesn’t mean that somebody else’s is going to be able to understand it or it’s going to know intuitively exactly how to use it. So, make sure that you put together documentation and not just about your code but around, you know, for example your build process if you have a complicated build setup, make sure you document that so that even if you’re rebuilding your machine and going from one machine to the next, you know how that is supposed to work and you can hand that off to a developer.

[31:08] The same thing that goes with some of your marketing collateral or anything else but I mean we’ve kind of talked about a lot of these things in the past in terms of documenting all the different procedures that you use in your business that you can outsource them and that’s part of what this entails as well.

[31:21] Rob: So, to recap our seven steps Seven Steps to Rescuing a Failing Software Project are don’t assign blame. Number two, look at the numbers. Number three, stop looking at the software you’re building. Number four, cut twice and then cut again. Number five, be honest about your project risks. Number six, intervene when necessary and number seven, fix your processes and procedures.

[31:42] Music

[31:45] Mike: If you have a question for us, you can call it to our voicemail number at 1-888-801-9690. Or e-mail us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. You can subscribe to us on iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.

Show Notes

• MicroConf 2013 Recap on the Bootstrapped with Kids podcast
• MicroConfRecap.com – the best online recap of MicroConf 2013, created by @itengelhardt
• Search for “microconf” in Twitter
• Special thanks to @patio11 for his MicroConf tweet stream

Transcript

[00:00] Mike: This is Startups for the Rest of Us: Episode 131.

[00:02] Music

[00:10] Mike: Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it. I’m Mike.

[00:18] Rob: And I’m Rob.

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

[00:23] Rob: MicroConf 2013 is done. I still feel like I’m about at 70% after sleeping hours and hours on end. How are you feeling?

[00:32] Mike: You actually got sleep?

[00:33] Rob: I did. Well, after I got home, yeah.

[00:36] Mike: Oh, okay because, you know, you were still there like 4 o’clock in the morning when I left. [Laughter]

[00:40] Rob: I know. Well, that was the thing. So, Tuesday night conference ends and it felt to me the whole time like every conversation you have is just too short. You want to hear more about people’s thoughts and ideas. You want to get their feedback. You want to give your feedback. And so we – yeah, we were hanging out after, you know, the evening event and pretty soon it was 1 o’clock and then last time I looked at my watch is 1 in the morning and then pretty soon we saw people coming out of the elevator, attendees of MicroConf with their bags heading to the airport and they were catching morning flights. Totally worth it but, you know, I’ve been paying the price for that and as well as just stay in the plate and doing so much talking for the past couple of days.

[01:15] Mike: Yeah, there were definitely a number of conversations that just didn’t get finished that I was involved in just because there were other things going on. I got pulled in one direction or another. And it would be great to been able to finish some of those conversation because they were definitely worth while. I mean it was just like everytime you turn around, there’s someone else to talk, someone else with, you know, some unique insight or you know, unique problem that needs your perspective and or needs a different perspective and it’s just nice to be able to talk to those people and help them out or get help on the things that you’re working on.

[01:43] Rob: Yeah, absolutely. So, today I mean we’re going to basically dedicate the whole episode but we’re going to be talking about our takeaways from MicroConf 2013 both from what we got from talks from other attendees and then maybe give a little background on how you and I felt about our talks and you know, kind of get that the personal side as well.

[01:59] Music 

[02:02] Rob: I just listened to a pretty cool podcast recap of MicroConf 2013 from an attendee. His name is Brecht Palombo and he actually did one of the attendee talks and actually one of the attendee talks that was – it was one of my favorites to be honest and he has a podcast called Bootstrapped with Kids. So, you can obviously search for it in iTunes or whatever but we’ll also link that up in the show notes because it was nice to hear – it’s kind of like you get back from MicroConf and your head is spinning and it was just nice to hear someone else talking about it because I could nod and say, “Yes, I felt that way too,” like it wasn’t just this reality distortion field. There’s just kind of an incredible feeling when you go to a conference like that and you’re around, you know, 150, 160 people who were just like you because you spend the rest of your year really not being people like, you know.

[02:44] I mean, obviously, we have friends and such but they’re not in the startup mentality, in the building of business mentality, the way that these people, you know, at a conference like MicroConf are. Anyways, I recommend that episode and then hopefully, you and I can also do MicroConf justice over, you know, the next 30, 40 minutes.

[03:01] Mike: Cool. The other thing that I’ve got is one of the things that you and I had discussed just like very shortly after the conference is over is the fact that there’s all these people out there who have quit their jobs based on either listening to podcast or joining the Academy or coming to MicroConf. And if there’s anyone out there listening to this who has quit their job because of the fact that they were inspired by the podcast or the conference or Micropreneur Academy, definitely drop us a line and let us know. We’d love to, you know, highlight you guys and let other people know about you and kind of share some of the success stories that we’ve kind of come across.

[03:33] Rob: I agree. I have been completely shocked by the number of people who contacted us even within the last six months and are saying, “Oh, yeah, I started this business but, you know, I’m a lifetime Academy member and I started this business and I quit my job like eight months ago.” And it’s like why didn’t you tell me? This – because this is why I do it like this is why you and I sit here every week and record the podcast. I mean that is the biggest pay off.

[03:55] And someone came up at MicroConf. It was Richard Chen [Phonetic]. He has PHP Grid  and he said, “Yeah, I quit my job six months ago.” And I was like, “Man, that is fantastic news.” So, I don’t want it to be, you know, six or eight months from now. We really want to hear about it now and I think we’re thinking about putting together a list of some kind just to kind of – I don’t know, they inspired others and just to kind of keep track of each other. So and like Mike said, you know, send us your info, your URL, your name and all that if you have quit your job.

[04:23] Mike: So, what are your thoughts about the Twitter stream for MicroConf?

[04:26] Rob: Wow, I made the mistake of barely getting on Twitter while I was at the conference and I tried – I figured after the conference, I’d go back through it but it’s thousands and thousands of tweets. And if you go search for the – it’s just #MicroConf, there were patio11 Patrick McKenzie as a lot of you know him. He was just spitting out all types of awesome quotes from the conference. It looked to me like every 5 or 10 minutes, he was just picking up the best thing that was going on, you know, from the speakers and putting it on the Twitter stream.

[04:54] And then I want to give – I think both of us want to give a big shoutout to Christoph Engelhardt. He totally came through. He was doing awesome blog write ups almost in real time. He was basically taking notes from every speaker, putting it in bullet format on to his blog and he’s just hitting publish as the talk ended it seemed and then tweeting those out. And so, he is really has really well documented this MicroConf and he, you know, we’ll link up to him. His Twitter handle is @itengelhardt.

[05:21] But I also – I’m going to register — after we record this, I want to register MicroConfRecap.com and I want to point it, redirect it to his recap of it because he has a link to all the – all his notes as many speakers has put their slides on SlideShare. We don’t have videos at this point but pretty much everything that could be recapped has been recapped by him. So, there’s no reason for you and I to do that as well. So, if you are interested in digging in to it a little more and seeing detailed release at the talks because one I got – obviously, we just don’t have time to talk through all the points, MicroConfRecap.com.

[05:52] Mike: You know, I really like the fact that it was at the Tropicana this year instead of the Hard Rock. I mean I really like the Hard Rock but looking back at the comparison between the two, I really felt like the Tropicana suited the types of people there. I think that was partially because the conference area was far away from all of the action and life, you know, all of the things that the Hard Rock is trying to put on, you know, all the casinos, all the, you know, the gambling areas. And because the different evening events that we had were away from that stuff, it just seemed like it created a much better atmosphere than we got over at Hard Rock.

[06:24] Rob: Yeah, I would agree and I heard that from some attendees as well. It just seemed to be more our age.  And I think the Tropicana is great because it’s – you know, obviously, you can go to the Bellagio and we could have it there but you have to add 3 or 400 bucks to every ticket and it’s like for our audience, I think at the price point we want to be, the Trop is perhaps the best conference hotel in, you know, in Vegas for us. Maybe the MGM Grand would be another one but everything else is either too expensive or too cheap and everything is out perfect, right? And the food choices there are not outstanding. Certainly of the three years we’ve had it, by far, this – I think this was the best venue for us.

[06:57] Mike: I think that in my mind that was probably the biggest detriment was the fact that there were only a couple of places to eat. It did result in a 2 a.m. Del Taco run. [Laughter]

[07:06] Rob: I saw that. Did you go on that?

[07:07] Mike: Oh, yeah. So, Hiten and a couple of – I don’t know, it’s probably seven or eight people went over and then I followed over with Jas. You know, we sat down a little while after they – they were just kind of leaving when we got there but you know, it was still, you know, 1:30, 2 o’clock in the morning.

[07:22] Rob: Only in Vegas, right? It’s like a Tuesday night and it’s 2 in the morning and you’re just walking – I mean on the street. But second, that’s the part – that’s what’s so cool about a conference like this is and maybe it’s specific to MicroConf. I don’t go to a lot of other conferences anymore but it’s like you hang out with – you go to on a Del Taco run with Hiten Shah who runs KISSmetrics, amazing content marketer, venture funded, venture back entrepreneur and you just talked to him. You can ask him questions about your business. You can just ask, you know, about anything and same thing, it’s like Jason Cohen, Patrick McKenzie, Josh Kaufman author of The Personal MBA, just everybody is there and just mingling.

[07:58] And so, whether you’re a speaker or an attendee, it’s just  conversations and we’re all just people and just people at different levels of the game. And that’s what I like most about it. I like that our speakers stick around and they don’t come in for just for their talk and then fly out. It’s just not the vibe that we want to set.

[08:14] Mike: Right. Yeah, I really like that as well and I had saw a number of people who had commented on that. They’re like, “Wow, it’s really awesome to be able to come to an evening event and then just walk up to any of the speakers and just be able to start up a conversation and talk to them because they’re here.”

[08:26] Rob: When we recruit speakers, we specifically ask them to do that. We say, “If you’re going to speak here, we want you to stay all, you know, basically all three nights, Sunday, Monday, Tuesday and we want you to come to the evening events and we want you to be approachable because that’s the vibe of the conference.” And so, we’re pretty specific about, you know, by having them do that.

[08:42] Mike: Uh huh.

[08:42] Rob: Did you get the feeling that a lot of the attendees listen to podcast?

[08:46] Mike: You know, there were a ton of people who would mention it to me but it’s hard for me to kind of give a percentage of the people that I talked to who also listen to the podcast because there were a lot of Academy members there as well. So, I didn’t talk a lot about the podcast to people. I definitely recall people saying, “Oh, I listen to you a lot on the podcast,” and you know, “Oh, I feel like I know you already.”

[09:05] Rob: I tend to think that since our audience, you know, on the global scale, our audience is not huge, right? I mean it’s like we don’t really know how big of it is. We need to get better metrics but let’s say it’s 5,000 people or 8,000 people just, you know, in that ballpark but it’s such a self-selecting group that’s going to come to MicroConf that I think a lot more than listen than I think. And so, as we would be in conversation that say, “Oh, yeah, I remember that from the podcast.” And I heard that over and over and over. And so, it was cool that we were able to meet a lot of listeners in one place like that.

[09:31] You know, Justin and Jason just recorded a TechZing episode where they talked about MicroConf and one of the things Jason said was it’s cool to remember that we’re actually having some type of impact. It’s not just you and I here talking every week, you know, with – and we get four or five comments on a podcast episode but when you meet the real people and they’re really building businesses like you are, it brings it home, you know. It makes such a deeper reality. So, how did you feel about your talk?

[09:56] Mike: You know, I spent a lot of time [Laughter] it’s funny because I always spent a lot of time, you know [0:10:00], working on my talk but this year in addition to the time I spent on my talk, I did some research on how to give an effective presentation and what sort of things you should think about when putting it together and I think that really helped with the quality level. I talked to a bunch of people who said that they thought that it was by far one of the better talks that I’ve given at MicroConf and it felt really good afterwards. I mean it was the second day so I was absolutely exhausted. I mean the first day I got there it was Saturday night and I got around 6 or 7 hours of sleep but I was up at 5 o’clock in the morning and then what was it? Sunday night, I only got about 5 hours of sleep and then Monday night I had like 4 hours of sleep. So —

[10:37] Rob: You were really tired.

[10:39] Mike: I was —

[10:39] Rob: Yeah.

[10:40] Mike: …exhausted. So, I was up there on stage. There were certain things that I was forgetting and you know, examples that I intended to use that I just ended up not using. I thought of other things at the time. So, there were certainly some flaws that I recognized but there were a lot of people that said, “Oh, I really like your talk and it was really good. It resonated. You know, I had — got a lot of good information, a lot of good insights.” So, you know, I think it came off really well. I think, you know, obviously, there’s always room for improvement and I think if I hadn’t been as tired as I was, it probably would have been better but I still think it was a pretty good talk.

[11:10] Rob: You and I had talked about this but I don’t think we’re ever going to give our best talks at MicroConf because we’re too busy with other things. You can’t focus on it. I think speaking at another conference that you’re not running, you’re just going to give – even that exact same talk, it’s going to be a better version of it because your mind is so much more present. I also heard from a few people who came up and said, “That was the best talk I’ve seen Mike give.” And I thought I was going to miss the middle 20 minutes I got pulled out to do some stuff.

[11:33] So, your title was How to Sell Anything to Anyone and you did research in to the psychological triggers. You also went in to enterprise sales. That’s the part that I caught up at the end which I thought was cool. So, it was nice that you could speak both from your experience on being, you know, on both sides of the enterprise sale part and then also do some research, you know, and offer some kind of not just storytelling stuff but stuff that was answering a lot of the questions of why do we believe these things. So —

[11:59] Mike: Yeah.  I definitely did research on what sort of emotional triggers people will have and then I got in to what people are actually buying. So, like for example, one of things – the examples that I went in to is the people that aren’t buying software, they’re buying a solution to a problem. You know, they’re buying some sort of end result. They’re not buying KISSmetrics or WooThemes or whatever, they’re actually buying the outcome from that product. So, when you’re talking to people, you have to kind of position it in that way that you’re selling them a solution. You’re not selling them a product. What about you? How was your talk? Did you feel good about it or —

[12:33] Rob: I did. I mean I basically filled in every gap that I could about my HitTail experience. So, you know, we talked about on the podcast and I’ll give some vague notions of where it’s going, if it’s going up or down. I basically laid out every month of revenue from the month that I acquired it including how much I paid for it, how much revenue it had been and I gave an idea of how much money every month through last month and even gave a projection for what I was going to do in April. And then I talked about all the tactics that I used that were both successful and unsuccessful during that time.

[13:05] And so, I went back and forth on whether to be that revealing, you know, because it really – it was pretty much everything I could give about HitTail but I also said, you know, I asked people not to tweet out exact numbers. I don’t really want it to be widely public, you know, make it out at some point but it feels good. It felt like the story doesn’t have as much impact without those exact numbers like you can put up a hockey stick growth curve with no scale. It just doesn’t matter. It’s like, well, did you grow it to $7,000 a month or is that $70,000 a month? You know, it makes a difference and so, that’s when I keep during afterwards was they were really glad that I included numbers because it gave them an idea of what it takes to get to that point, how long it takes to get to that point because I talked a lot about, you know, they’re being the five months of building and the six months of learning where it wasn’t growing.

[13:50] And people keep – were talking about, “Yeah, I remember on the podcast how frustrated you were with it,” and now you can see it on the graph why I was frustrated because the revenue wasn’t growing. And then there’s just this month where I pretty much  started figuring things out and from there, it just – it spikes way up. So, in the end, I felt good for sure. I’d hope it would have value for people and based on the feedback that I got they, you know, people told me that it was going to help them in their journey. So, I was happy with it.

[14:13] Mike: Yeah, I talked to people afterwards and they were a little bit surprised that you were as revealing as you were and I understand that and I’ve done this in the past as well. You start throwing out numbers and you’re always concern about how that’s going to come across and you have to be very careful how you put it out there because you don’t want to come off as braggy but at the same time it’s like these things put those numbers in perspective, you know. Those numbers mean something in a certain context and it’s very revealing to be able to see those things especially if you’re not quite at that point yet.

[14:41] And so, I know that were a lot of people who really look at those and said, “Wow, that’s not just impressive that you did but it’s very helpful for me as an entrepreneur to see that, you know, it takes this long to get to that point or it took somebody else that long. So, I don’t feel nearly as bad about the time that I’ve spent on the stuff that I’ve been doing.”

[14:59] Rob: Yeah, that was a comment I heard was it brought it down to earth because especially in the early days, it was making so little that even, you know, just boosting a few thousand visitors in a month made a difference and someone said, “Well, I can boost my traffic a few thousand visitors in a month.” You know, it totally made it realistic for him.

[15:17] So, let’s talk a little bit about the attendee talk. This year we tried something a little different. I think it was pretty successful because frankly the attendee talks were one of the highlights of the conference for me. What we did is after folks – we sold the conference out and then we e-mailed attendees and we said, “Send us your topics and you can do a 12-minute talk on any topic you want,” and we get 21 or 22 of those submissions and then we put them in a private website and we allowed all the attendees to vote them up. And so the ones that were at the top eight, we did four per day.

[15:48] And we had – we had people like Nathan Barry and Brennan Dunn doing talks which were very cool. We had some kind of I’ll say some sleeper hits of some people that I don’t know that other folks have heard of before [0:16:00]. One, we had my wife, Sherry Walling, did a talk. She’s a psychologist and she did a talk called Don’t Burn up in the Launch: Staying Emotionally and Relationally Healthy While Launching Your Startup. And I figured that it was either going to be really popular because it’s so different or it was going to get kind of a big nothing. You know, like people were just going to I wouldn’t say they would groan but they’ll be like, “Oh, well, this is just basic advice.” From what I gathered, it was – people were saying like, “She needs to do a full talk next year.” I had at least five or ten people come up and tell me that. It seemed to really resonate with a lot of people about how you can’t sacrifice your family on the way to building a business.

[16:37] Mike: Yeah, I had asked one of the guys during one of the evening events, you know, what three things he was going to take away from MicroConf and implement when he got home and one of the things that he said was basically set up a weekly meetings with his wife to discuss not only the business but, you know, how things were with the family to make sure that, you know, just to keep the lines of communication open. And I thought that was really nice and obviously, it came directly from her talk. I mean there’s no other – nobody else who talked about that kind of stuff.

[17:02] Rob: Right. That was the nice thing is she never really showed me her slides but I did tell her have some actions. You know, have something that people can take away and do because that’s a big part of the conference is that we want people to actually act on what they’re hearing and not just kind of sit there for two days. I was glad it resonated and she was certainly excited. There was a long Twitter stream of people, you know, kind of talking about it and I was glad it was – it worked out really well. And I do think that there’s room – I mean we just don’t hear about that, you know, at any of our conferences about like kind of work life balance and how to realistically have a family and launch a startup at the same time.

[17:34] Mike: Yeah, that’s something that’s almost never talk about at conferences. I mean and even in social situations, you don’t generally tend to discuss those types of things and I’m not sure whether it’s because it’s socially taboo or whether it’s just they don’t come up because you’re so focused on other things. But you know, she definitely made a point that you have to concentrate on those things. You have to look at those things and be conscious of what they affecting your business because anything in your home life is going to affect the  work that you’re doing at your business.

[18:02] Rob: Another one of the attendee talks, well, there were couple others. You know, Brennan Dunn has been on the show before. He’s a lifetime Academy member and he and Nathan Barry are kind of big up and comers over the past maybe 12 to 18 months and they both talked about teaching and how, you know, not just trying to say sell software but to actually teach your audience and offer them something of value. And Brennan looked a lot at writing e-books and having an e-mail mini course. And then Nathan talked a lot about teaching. I think those were some noticeable talks. And you know, luckily we videoed everything. It’s going to take a long time for that stuff to get released. I think that those will also be helpful to folks who are interested.

[18:41] Mike: You know, I really like Patrick Thompson’s talk about building when you – essentially bootstrapping I’ll call it a mobile empire but [Laughter] I don’t know if he would —

[18:48] Rob: Yeah.

[18:48] Mike: …describe it that way but, you know, putting together I think from a single codebase building out a series of apps and being able to expand the reach that he’s got. I mean the reach that he has through push notifications and the app sources are absolutely amazing.

[19:02] Rob: I know and you know, Patrick Thompson is basically the resident mobile expert of the Micropreneur Academy. He’s been in the Academy for really since early on and he’s had awesome success with QuickReader was kind of his flagship product which I recommended to teach you how to speed read but then he has a whole slew of other apps that are somehow one way or another related to that. And I agree, his talk was – he has a full version of his talk that he did at Oregon Mobile Users Group. It’s about an hour and he shrunk it down to about 15 or so minutes for this attendee talk but that was the other one actually that people said they wanted to hear a full version of it like they were – when I mentioned there was a video of it, people were like get up their phones and like started writing the URL. So, I think that was also a big success story and could easily be turned in to a full talk in a future MicroConf.

[19:53] The last attendee talk I want to mention is Brecht Palombo and he basically came out of nowhere. He’s – he’s also a lifetime Academy member  who I had no idea, I don’t think either you or I did know that he had left his job but he e-mailed a month or two ago and said, “Hey, I’m a non-technical founder and I built a 6-figure SaaS business using only free public data sources.” And I’m like what a story, you know. And he and I e-mailed back and forth and so, when I saw that he was coming at MicroConf we’re doing attendee talks, I e-mailed him and said, “You should talk about this.” And so, he applied and I’m glad he got voted up because he’s a good speaker like he was a salesperson in a previous job and it shows.

[20:29] His talk was very funny and also, he put things in perspective because he wouldn’t just say, “I got distracted by shiny objects,” but he actually had revenue graphs. And he would show the – how was revenue had grown over a couple of years, he would say, “And here’s where I saw the shiny object and I went off and tried to build like a Twilio app.” And his revenue just flat lines and then he says, “Here’s when I start refocusing and it just shoots up.” It was this visual representation of all the mistakes you can make as an entrepreneur at least the mistakes that he made that he basically set his business back 18 to 24 months. And so, that was also one of the standouts for me. And again, Brecht is the one – he has that podcast called Bootstrapped with Kids that just did a recap of MicroConf as well.

[21:10] Mike: You know, I think one of the single quotes that kind of stock with me was from Jason Cohen. He said, “The predictable acquisition of recurring revenue with annual pre-pay and a good market creates a cash machine.” His talk had a lot of elements in about talking towards creating a business that was a cash machine where you could predictably put money in to one end of it to do marketing or customer development or customer acquisition and then at the other end, you knew exactly how much you were going to get out of it. And I thought that that was really interesting quote and definitely a great way to put things in such a way that, you know, it makes you really think about the types of things that you’re doing, how you can measure them and why you’re measuring them.

[21:46] Rob: Yeah, I agree. For those who don’t know Jason Cohen, he blogs at SmartBear. He started multiple bootstrapped companies. He sold them for cash and then he recently raised funding and is running WP Engine. What I like about that quote and again, I’m going to say it again because it’s so dense, “The predictable acquisition of recurring revenue with annual pre-pay and a good market creates a cash machine.” And each of those points he would talk about. He didn’t start with that sentence. He started and said, “Look, if you’re going to bootstrap a business on the side and you’re a single or maybe two founders and you don’t have employees, you have limitations. And so, let me show you what you can’t do.”

[22:20] And so, he started going through it and he’s basically like, “You can’t do one-time revenue. I’ve done it. It’s too hard with one person. So, we’re going to talk about recurring revenue and then let me show you how annual pre-pay totally gets your cash flow up. And then let’s talk about good markets and bad markets,” and he defined those. And so, by the end he has this epic sentence that describes the ideal bootstrap business. It’s like how to back in to your business model if you have these limitations. And then he was quoted I mean not only all over on Twitter but he was mentioned in other presentations, you know, later that day and the next day. And I think this is going to outlive. I hope he writes a blog post about this because I think this statement here will outlive this talk. It really is it defines what I consider the ideal bootstrap business if you have, you know, limitations on your life and you’re working on the side trying to launch something.

[23:05] So, here’s the thing [Laughter] we got up in front of the crowd on the first day and we say, “You know, we want you to take away three actions from MicroConf that you’re going to implement in the next month and three relationships, three people that you’ve met that you will stay in touch with over the next year and that will – you can either get feedback from, give feedback to, build a relationship, have some kind of mastermind like something to keep you going because just having actions isn’t enough.” And you know, within 3 or 4 hours, you already see tweets of like, “I have 13 action items,” or you know, I have by the second day, it was like someone tweeting and said, “I have 26 action items.”

[23:40] And that’s kind of how MicroConf tends to go. We recruit the speakers that are going to talk about action stuff and then we encourage them to really go over board. I only took notes on a couple of the talks because I was running around and I had about 6 or 7 action items but let’s maybe just talk about 3 or 4 takeaways maybe the biggest ones, the ones we think are going to make the biggest difference to our businesses. What do you have?

[23:59] Mike: So, the first one that I got was from Jason Cohen’s talk which was basically with the annual pre-pay is amazing and there’s a lot of ways to kind of convince people to go for an annual plan and one of which is if you offer a couple of months free if they signed up for a year. If you e-mail existing customers and offer them a month or two months free in order to get on to those plans, something that Patrick McKenzie kind of came up with near the end was that if you have a set of customers who were kind of budding up against the limits — you have the SaaS application and they’re budding up against the limits of whatever their plan offers, you e-mail them like a special offer and say, “Hey, if you upgrade now, I’ll give you 20% off and you’ll get some head room.”

[24:37] And that’s interesting because what he said was that there are people who they don’t look at that as an upsell. They look at it as, “Oh, my god. What do I do? I’m close to the limits of this plan and I don’t want to have to, you know, worry about what’s going to happen if I go over. You know, is it going to cut off? Is it like the phone company where I’m going to get these massive charges?” And they want to be sold to. So, contacting those people who are within 20% of that limit, it can work really well.

[25:03] Rob: So, I took that one away and that’s absolutely something I’m going to implement both I would guess on HitTail and definitely on Drip. The other thing I took away which was kind of brought a big smile to my face because I was already going to do it and already have done it a number of times is to build an e-mail mini course. Basically, some content that educates as highly educational and doesn’t sell to people but that you provide to them via e-mail and this is the entire idea behind Drip which is why it brought a smile to my face because it’s like I’m such a proponent of this approach that the fact that it was mentioned over and over and over was more encouragement to really get Drip out the door and to get it working, get it so people can use it because I believe that it’s actually the best way to deliver an e-mail mini course but since it’s not out today, it’s not actually the best way because it doesn’t exists yet.

[25:48] That’s the one I took away and actually I started making notes already on the components because I have not written – obviously, I’m going to have a little e-mail of mini course for Drip itself when you come to the Drip website and I haven’t written that but I already had some  ideas right away just watching both Patrick and Jason and Hiten all talked about things that they’ve done to e-mail as well as actually Brennan Dunn touched on it as well. And so, I have a bunch of notes for that that I don’t need to go and to hear it, they’re just super detailed based on, you know, what am I going to do with Drip. That is such low hanging fruit. Do it once and you build that course and it impacts your conversion rate forever like it never goes away. That is just – it’s one of those flywheels that you can’t ignore.

[26:27] Mike: Another tactic that I got out of it was switching from using a trial to a 60-day money back guarantee because the rationale behind that makes a lot of sense because if you offer a free trial to somebody, then you also have to answer the questions of oh, well, I’m going to charge them after 14 days or 21 days. You know, how much value are they going to get out of it? And I think that you can, you know, just from the talks, Jason Cohen had said, you know, switching to a 60-day money back guarantee, it gives people a little bit more incentive to give you money earlier, you know. It just kind of moves your cash flow forward. Getting that money now is worth a heck of a lot more than getting it later and if your conversion rate, the people who try out your trial and actually stick around is relatively high, then you don’t necessarily have to do a whole heck of a lot of refunds. So, that really helps in terms of cash flow to be able to get that money now as suppose to later.

[27:17] Rob: Yeah, I’ve struggled with this one because this, you know, Justin Vincent does this with Pluggio and he’s had a lot of success with it. He said it really helped this conversion rates and actually just had more, you know, happy customers. It didn’t impact that at all. The thing I’ve struggled with it specifically with HitTail is that, you know, people don’t get value out of that for a week or two or sometimes three and I feel almost like it’s hard to charge someone on day zero because they’ve used the tool that they don’t get value right after they log in. Whereas with WP Engine, it’s WordPress hosting, you get – as soon as you sign up, you get value because you can move your site over and bam, the hosting works. And so, getting 30 days free in that instance doesn’t actually make that much sense, right? Because why are you getting a free trial of hosting like in either works where it doesn’t, right [0:28:00]?

[28:00] So, I think that there might be instances where this is more applicable. I could see with something like AuditShark that you could potentially get value on day one and I could see you’re charging upfront, you know, and then having the guarantee. But I don’t know. So, Drip is another one of those, right? If someone signs up for Drip and they get the form and they put on their site, you’re not getting value on day zero. You really need a couple of days to get some e-mails on it and to see how the conversion rate impacts you. And so, I certainly think it’s something to test but I’m not sure that I believe that it works in all situations.

[28:31] Mike: I think it depends a lot on how long that cycle is. If it’s a couple of days, I don’t think it’s a big deal but if it’s, you know, if they’re not going to see value for 20 to 30 days, it’s totally a different story.

[28:40] Rob: Well, last takeaway that we’ll talk about again, they were dozens, the next meme that kept coming up was to raise your prices. Developers tend to undercharge. We tend to undercharge for our products think they’re worth less than they are and I guess we think we’re going to get more sales if you’re charging a lower price. And so, the single fastest thing that I’ve seen people do to basically start making more money in their businesses and a lot of them this is the kicker that gets them to the place where they can actually quit their jobs and split their businesses fulltime which is obviously very helpful. That tactic has been to raise prices.

[29:14] Mike: You know, it’s interesting that in talking to a lot of the people there, they felt uncomfortable raising their prices because they’re constantly looking at it through their own eyes, you know, “I wouldn’t pay for that. Why would somebody else?” And they aren’t looking at the value that they’re providing, how much pain they’re saving somebody else with their product because raising your prices and being able to do that and measuring how well it works and whether people respond to it, whether they – are actually found to paying more, that is validation that you have a good idea that you are actually providing something of value to people.

[29:43] Rob: Yeah and I did talked to one person who said that he had basically raised his prices every month and eventually, you obviously do hit a ceiling and he raised it to the point where sales dropped off pretty dramatically. This is certainly another one to be – you can’t just take it to its unnatural extreme. I think as a generality, most people undercharged. I have also increased prices on a number of different products and seen the overall revenue dropped significantly. So, I do feel like, you know, there’s pricing elasticity and then you hit a point where it just – it doesn’t work anymore. So, if you’ve never raised your prices, then this is definitely something to consider doing.

[30:18] Music

[30:21] Mike: So, what about next year, what are we thinking we’re going to do for next year? What are we going to do different? What works great? What are we going to keep around? What are we, you know, that we – because we tried a bunch of things this year but what about the things that we tried. Do they work? Do they not work? What are we going to do different?

[30:34] Rob: I think first thing is unless there’s a reason not to, I think we should do it at the Tropicana again. I thought it was good and I think, you know, working with the same staff would be helpful two years in a row because we bounced around so far. Second thing is I absolutely am going to convince you that we need to hire a coordinator next year. We are not doing this again on our own. There’s just every year we’d say we’re going to and then we don’t find one and I think we need to find a Vegas-based coordinator. We already starting on MicroConf Europe and we have a person on the ground who lives in Prague where the conference is going to be and already, it’s been so much less work that this is the way to go.

[31:10] So, I think that’s a big thing we need to do next year. I think that will also allow us like – let’s take example the attendee talks were one of the highlights for me but they were a lot of work. They were way more work than I thought they’d be and if we can get a coordinator to handle at least some of that work, then I’d be willing to do them again next year. If not, it’s actually not worth doing. It would be, you know, something that I would consider dropping.

[31:34] Mike: Yeah, I definitely agree with you on the coordinator. I don’t think you need to really convince me with that one. [Laughter]

[31:38] Rob: Yeah.

[31:39] Mike: The other thing that I think we definitely keep around is the teardowns. I mean there’s a lot of people who really like the teardowns and kind of what value they bring because even if it’s not your website or your product that’s being torn down, you look at it and you say, “Hah, yeah, I get it. I understand why making some of these changes is going to make sense and I can translate them back to my own websites and to my own businesses that I’m running.”

[32:00] Rob: Yeah and to give folks an idea, if you’ve never heard the term teardown, basically what it is, is you call out a URL and one of the speakers is doing them and they pull it up on their computer and then they give you a feedback like, “Here’s what I would test,” maybe in terms of your headline or in terms of structure, UX stuff to try to convert higher. And so, you know, almost anyone in the room could do that could give feedback on it but what’s nice is that we’ve had Hiten Shah do it, Patrick McKenzie. This year we had a copywriting expert named Joanna Wiebe who is one of our speakers do it and really a lot of unique insights come out of those sessions. And those — I think those maybe the most popular parts with our attendees. A lot of them say it’s the most participatory part even if you’re not participating and you’re thinking to yourself, “What would I do to improve this website?” And so, it’s a lot more thinking it in application than just being told information like when you’re, you know, sitting, listening to speaker. So, I agree.

[32:52] We also did something different this year. We had idea teardowns where Josh Kaufman who wrote The Personal MBA talked about a framework for evaluating and validating ideas like business ideas and he basically called people up and have them do a short pitch of their idea and then would ask them probing questions, you know, like, “Who’s the market,” “What’s the value?” And then they’d answer and he’d say, “Nope, try again,” like, “Get more focus.” But really for who is the value and by the end of it, you had a better – even though it was only, you know, 4 or 5-minute conversation, everyone had a better idea of what that person’s marketing message, what their positioning, perhaps what their headlines should read. They haven’t even built a product, right? It’s just a nascent idea in their mind right now but they had a better idea of how to position it and how to think about the value that it brings to the market.

[33:38] Mike: Yeah and what that does is it allows you to kind of focus on the things that matter and not build things that people just they’re not going to want or not going to actually use.

[33:46] Rob: So, yeah, I agree with you, teardowns have been a staple of the conference now for three years and I think we may want to – we only did two 25-minute sessions. I think we may want to think about doing four over the course of the conference. I think four 30 minutes sessions because it always seems like there’s not enough time to do as many teardowns as we like.

[34:03] Mike: Right, cool.

[34:04] Rob: If you have a question for us, call our voicemail number at 888-801-9690. Or e-mail 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 or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.

Show Notes

Transcript

[00:00] Rob: In this episode of Startups for the Rest of Us, we’re going to be discussing how to capitalize on your unfair advantage. This is Startups for the Rest of Us: Episode 130.

[00:09] Music

[00:16] Rob: Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob.

[00:26] Mike: And I’m Mike.

[00:26] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Mike?

[00:32] Mike: I’ve got nothing done in three weeks. [Laughter]

[00:34] Rob: Is that right? What have you been up to?

[00:35] Mike: It’s all those stuff related to MicroConf. So —

[00:37] Rob: Yeah, I’m in the same boat, man. The last minute stuff getting it done – I mean this is going to air Tuesday which is the day that MicroConf is happening. I’m pretty stoked, man. I’m starting to feel a little anxious because I’m trying to finish up my talk to, you know, talk is going well in general. I ran through it and it’s over an hour. It’s like, oh, I got to cut 20 minutes off of this thing, just taking care some last minute details. I’m very excited to get on a plane on a couple of days and see everybody at the conference.

[01:00] Mike: Yeah, I’m on the same boat with my talk. It’s coming along well. I’m probably about two thirds on the way done right now.

[01:06] Rob: Cool. I have a pretty cool milestone from last week. We finally got Drip installed on customer zero which is HitTail. So, you know, we’re using our own internal app as the first proving ground to make sure everything works, to make sure the pop up works, collects e-mails, sends e-mails. It allows you to edit stuff and split test and all that kind of stuff. So, it was a milestone and we fought through it. Derek pulled a couple of late nights and we’re excited. So, the advantage of being your first customer, you know, of being able to get it on to someone site and we ran in to a couple of issues but since it’s our own internal thing, it was really easy to troubleshoot. We are on track to install it on customer number one like a paying customer and as of Monday morning but of course, we’ll be at MicroConf.

[01:51] So, I won’t be doing that. We’ll probably push it off maybe another week and then I think we’ll be adding new customers. I have 15 early access customers, kind of a short list of people  who I know most of them I know personally who I’m going to start adding as quickly as possible. I think we’ll start off one a week and then I’ll try to do two a week and then three and then once all those people are on and we basically built out all of the things that they need, then I will go to the launch list and that will be a true, you know, public launch so to speak.

[02:20] Mike: Very cool. Yeah, I’ve been looking at what I’m going to doing with AuditShark and just because I’ve been busy the past few weeks. I think that I have a week that I have taken and set aside about two weeks after MicroConf is over and I think I’m going to sit down that week and kind of plan out the actual launch sequence and everything else that goes with it. I was hoping to be able to actually to do the launch that week but I just don’t think it’s going to happen. So, but I’ll at least be able to sit down and plan everything out and make sure that everything is going to go the way that I wanted to.

[02:48] Rob: Very good, so then are you looking at launching in May as well or are you looking at June?

[02:52] Mike: It’ll be the end of May or early June, maybe the first week of June or something like that.

[02:56] Rob: Very nice. Hey, I realized last episode I mentioned MicroConf Europe but basically if you’re in Europe and you’re interested in meeting other self-funded startup founders, software entrepreneurs and you’d like to see high-caliber speakers talking about how they’ve built SaaS, web apps, mobile businesses, that’s what MicroConf is going to be and we’re taking it to Prague and it’s going to be the first week of October. And if you’re interested in that kind of thing, it’s probably going to be fairly small this first year. I would guess it’ll be somewhere between a hundred and a hundred and twenty people and we are currently working on recruiting speakers. But if you’re interested in that, head over to microconfeurope.com and you can enter your e-mail and we’ll be in touch as details firm up. Right now, you and I, you know, are the only confirmed speakers I’ll say but we have a lot of folks Europeans and folks on that side of the world. I think it’s going to shape up nicely over the coming months.

[03:49] Mike: Definitely, that’s going to be a lot of fun. Hey, I got an e-mail from inDinero. Did you get an e-mail from them as well?

[03:54] Rob: I did. I got three e-mails from them. So, at one point, Mike, I had three inDinero accounts  through different – with different businesses and I am very thankful that I have pulled, we pulled all the MicroConf, Micropreneur stuff and one of my other businesses off and I’m now using Outright for those.

[04:13] Mike: Well, they basically e-mailed me to let me know that what’s been happening with their inDinero self-service over the past few months and apparently, they renamed it to self-service which is completely new to me because they didn’t ever tell me that I was on this new self-service plan. But essentially, they said that they’ve been having difficulty building a profitable business model and they’re essentially pulling the plug on all of their lower end plans. So, they’re going to take everything and move it up market and they’re going to offer all inclusive accounting tax and payroll services starting at 399 a month.

[04:45] Rob: And here’s…here’s the issue I have with this. Number one, they gave us 60 to 90, somewhere in there. So, that’s the first thing. Second thing is they’re cutting it off in the middle of the year and I now – I can’t really go back to January and import things from my bank accounts and PayPal. So, I’m going to have to have someone manually take my stuff out of inDinero or out of the source accounts and go put them in another system. And the third thing is they – if they’re going to do this, they should have done it a year ago when they – I mean they’ve been crashing and burning for a year with just mad bugs in their system. They had – they actually had a solid working system. They had the best system that I know of for doing this type of online accounting stuff. It was automated. It had amazing rules that you could create really cool stuff.

[05:31] And then they either rewrote their backend or the frontend or they rewrote everything because the UI totally changed and there were ton of bugs after that and it never really worked right after that. And I was always trying to figure out why they were doing that or what the issue was but they just never seemed to recover and I recommended inDinero at least a half dozen people or maybe more and now they’re – I mean I feel bad for them. I didn’t see this coming and then everyone has been pulling off of inDinero just because it’s been buggy.

[05:58] Mike: I think buggy is an understatement but —

[06:00] Rob: It is.

[06:01] Mike: …in away, I’m kind of thankful as well because I, you know, last year when they pulled this because they basically went and they said, “Well, we have to start charging for this,” which I get. You know, they have to charge at some point, you know, for their free plans in order to make it up but they kind of drew a line in the sand and they said, “Look, we’re not going to allow anybody on this free plan anymore. We’re actually going to pull the free plan and if you want to stay on it, then you’re going to have to start paying for it.” And I’m like that’s fine, I have no problems doing that but the way that they did and I think we might have talked about this a little bit last year but the way that they did it just seemed not well-thought out. It didn’t feel to me like they were taking the needs of their customers in to account or that they even talk to their customers at all to figure out, you know, how they might feel about this sort of change or what the best approach for that might be.

[06:46] So, I actually have two different systems running at the same time right now because I did not trust it and I did not trust them to start making the right decisions and at this point, I could just turn off inDinero and it won’t matter to me because I still have all of my accounting stuff going through another system as well. I’m paying for two which in a way kind of sucks but in retrospect looking at what they’ve done, that was probably a good move on my part in terms of insurance.

[07:09] Rob: Yeah, I remember when you moved that over and that’s about the time I moved, you know, two of those businesses over as well. I think the issue I have here is it’s really hard not to grandfather people in. If you’re going to make the mistake of going with a free plan and thinking that that’s going to work and then going back on that, you got to handle it better than that. And then if you’re going to have an app that’s been running for what, three years? I think I’ve been paying these guys for three years and you’re just going to cut it off and stop access to it and frankly, the e-mail was a little kind of like “Thanks for supporting us since the beginning.” And it’s like what do you mean thanks? Well, there’s no thanks. I mean basically, I, you know, I now opted either spend a couple of days of my time or hire someone which I will probably do.

[07:50] So, it’s going to cost me a few hundred bucks to move off of their system and it’s like, hmm, it should have been handled better than this. What was interesting is I have a $399 a month plan, now we had to handle all the bookkeeping  and paychecks and all that stuff, I need that. I would use that but there’s no chance I’m going to do it now and I feel like if they’d handled this differently given a longer term, they’ve sunset the app of a long time, if they just said, “We need to make more money.” They need to raise their prices in order to make this work like any of that but for the past almost a year, the app has really not worked like it is buggy enough that I would say it’s on the borderline of not functioning. It does pull stuff in but it will often pulling multiple transactions for the same transaction, you know, there’s this all kind of stuff you have to go to manually fixed.

[08:33] In addition, their support turnaround time is between five and ten days when you e-mail them. So and that’s been that way for about a year or more. Now, that you’ve done that, you really shot yourself in the foot because I bet they have thousands of either free or paying customers that they could have pulled from in order to like ramp up in to this, this higher end plan but now who in that group is going to want to actually pay them 400 bucks a month because you just don’t trust that they’re going to – that they’re going to do right by you at this point.

[08:58] Mike: At the end of the day, that’s essentially what it comes down to is trusting whether or not they’re going to do the right thing or going to do what’s in your best interest as a supplier I mean because they’re providing you a service and at this point, they’ve just shown themselves to be completely untrustworthy in terms of making decisions that affects you as a customer and you know, like I said, I’m thankful that I’ve had all my stuff going through a backup system at the same time and that now because of  that I don’t have to go in and do any of that porting that you’re talking about. I’ve essentially prepaid for their problems.

[09:30] Rob: Indeed. I guess this is one of the dangers of using a SaaS app is you’re not, you know, you’re not fully in control. So, if you’re on inDinero, I would recommend Outright. That’s what I’ve been using. They seem to work well. They don’t have a sophisticated, a rule system. There are some things that it doesn’t do that inDinero does. It’s been a pretty easy switch for me in general.

[09:48] Music

[09:51] Rob: So this week, we are talking about Capitalizing on Your Unfair Advantage and specifically, we’re going to define what are unfair advantages and then look at seven different types that relate to software startups. This post is inspired by a number of different sources. I’ve been thinking about this concept of different unfair advantage for a while. Jason Cohen has talked about it. I mean frankly, if you look at unfair advantage in business, there’s books written on it. I have a bunch of notes on my notebook. Everytime I hear about it, I add a new idea.

[10:16] But this particular episode is inspired by a recent post by Pat Flynn and he has a podcast and a blog called Smart Passive Income. He basically says he interviewed someone named Lain Ehmann who is in the scrapbooking niche and he says, “Lain Ehmann described an unfair advantage as a skill or asset that you have that no one else has or very few others might have in a specific niche. It’s your competitive edge, and whatever that edge may be, it’s your job to use it to your advantage as much as possible as you shape and create your business.”

[10:46] And I’m really inspired by this because I’ve realized as I talked to different entrepreneurs who are starting or who are scaling their businesses that people tend to take one of several different tracks to kind of building and scaling a business. So, I’m scaling a business in a certain way. Maybe Noah Kagan is scaling it in a very different way. Maybe someone like Sacha Greif is doing it in a different way because he’s a product person. He’s like a designer and he builds gorgeous products. And so, I was kind of wrestling with that and thinking it through and Pat Flynn really summarized it well in this post. And it’s basically, your unfair advantage is like the core competency that you have that’s going to give you advantage over other people.

[11:22] The first type of unfair advantage is your experience. It’s what you’ve been through. So, if you look at you and I talking on this podcast, the reason we have a podcast and the reason maybe people listen to our podcast instead of the thousands of other business podcasts out there is that we have experience to doing certain things. That’s an unfair advantage essentially, you know. It’s something that we’ve put in a time. We’ve gone through the years of being entrepreneurs. Launching products, failing, having some successes and that gives us more value to offer than another random business podcast if someone just coming on and saying, “Hey, this is my first product and here’s what I’m doing.” Now, they will likely have a different unfair advantage but in this case, this is what we have [0:12:00].

[12:01] Another example of using your experiences and unfair advantages, let’s say you have a really in-depth knowledge of a particular industry. So, like you do with the kind of the auditing industry, taking on AuditShark is utilizing an unfair advantage. For me to build a product like AuditShark I would have a huge learning curve. I would actually be in an unfair disadvantage compared to the knowledge you have.

[12:21] Mike: Yeah and that’s more because, you know, I have worked at a company that did this kind of stuff in the past and I’ve seen a lot of the things that people are explicitly looking for when they’re looking an auditing software. So, that stuff that can be learned but it does take time to do that. It does take time to go through that process and that’s where your background and your experience really comes in to play.

[12:41] Rob: A second of type of unfair advantage is the niche you pick. It’s who you serve and your ability to do so. And we – I mean this is like a time to take a drink, right? We’re talking about how niches are unfair advantage. Think of any of our apps like look at AuditShark. You’re going to focus on a specific niche. At one point it was banks and it another point, I think at this point, it might be software as the service apps. For Drip, it’s the same type of thing. I’m going to be focusing hard core on software as service apps, may move in to E-Commerce site as some point.

[13:11] You look at a lot of products that are bootstrapped especially and starting with a niche and then growing out from that is by far the best way to go because you don’t have the funding or the manpower to go in every direction. Even look at the, you know, how this podcast or MicroConf, the conference had success. If we tried to just be another startup conference, I don’t think we would have been heard above the noise but instead we came out and we said, “We are the conference for self-funded startup founders.” And that’s choosing a niche and you know, that is essentially been an advantage for us over the past couple of years. And now there are other conferences coming up around this – almost the exact same topic as MicroConf and I see that as a good sign actually. It shows that there’s – the competition validates the market and it shows that there are lot of people interested in this niche.

[13:56] Mike: I think the point to make about using a niche as an unfair advantage is that  the ideas that you want to go deep and narrow because you want to essentially identify the people who are going to strongly resonate with whatever the application or service that you’re offering is because there is always going to be this larger players out there who do pretty much everything when the problem is that because they do everything, they don’t necessarily do certain things very well or serve certain types of audiences.

[14:23] And that’s where – but essentially choosing a niche and making sure that you’re going to go deep and narrow in a specific niche to meet the needs of those people and essentially ignore some of the other people because you’re going to have either going to be certain things that you may think are interesting or that, you know, may appeal to a broader audience but you don’t necessarily want all of them. You want to nail that specific niche, get it right and then use that to essentially broaden your footprint as opposed to try to go as horizontal and broadly as possible but not necessarily do as many things that are useful to people.

[14:57] Rob: That’s true, who you exclude in your marketing is almost as important as who you include in it. A third type of unfair advantage is your rolodex. So, it’s the people you know and I’m going to quote Pat Flynn here. He says, “If your rolodex is an unfair advantage if you know and have access to the right people in your industry, people who others do not have access to. You’re a connector, and you can provide value to a specific audience by using the connections you’ve made over time.”

[15:22] And this is absolutely not my unfair advantage. I have never been Mr. Rolodex. I’ve never been good networker or connector but examples of people who are like this and this is exactly what got me on this whole track in the first place is someone like Noah Kagan or Andrew Warner or Jason Cohen. These are people that know so many people and have a broad network that is someone like Noah with no software experience. He isn’t a coder but he starts and grows these online businesses very quickly because of all the connections he can make and you see, he starts AppSumo. AppSumo is not a software company. What it is, is it’s something that only someone who knows a lot of people could put [0:16:00] together really quickly like he did because I remember as Noah was putting it together, it was a lesson in thinking how is he getting this going so fast? How is he cutting all of these deals so quickly?

[16:10] Because you and I, you know, try to get people like special deals for Academy members and deals for MicroConf people and we can do it but it just takes a lot of time because a lot of times you have cold e-mails that you’re dealing with whereas if you already have that big rolodex, you can get an idea like an AppSumo or you could put together a conference or you could, you know, put together those social types things really fast because of the number of people that you know you can get stuff done so much quicker.

[16:36] Mike: And this leads really well in to number four which is people who know you and if you have a large rolodex, then chances are that that relationship is both ways and those people know you. So, when you start putting yourself out there and you start making public the things that you’re doing and the things that you’re working on, people will actually reach out to you as opposed to you having to reach out to them. And you know, in some ways you can look at it as inbound versus outbound marketing but the ideas that if you’re reaching out to people, you’re limited by your own time versus if people are reaching to you, then, you know, you’re essentially filled in a request and those people are essentially already qualified for whatever it is that you’re working on to doing.

[17:13] So, you don’t necessarily have to spend as much time pitching it to people or trying to sell them on the idea because they’re reaching out to you. They already sold on that idea. So, it helps you scale up your efforts very, very quickly. This past week, I got an e-mail from somebody saying, “Hey, you know, I know that you’re working on AuditShark. Just letting you know that there is this request for news article out here that is in this particular space, you know. You might want to respond to it.” So, you know, just by putting yourself out there if there are people out there who are paying attention to it, they’ll reach out to you.

[17:44] Rob: Yeah, having an audience or just a group of people who will listen to you and this is whether you have a podcast or a blog or a large Twitter following, you know, it could be a lot of people who follow you on Facebook. As long as it’s within the niche that you’re dealing in, this is a very powerful tool. This is perhaps the only [0:18:00] reason we were able to pull MicroConf off that very first year and to sell enough tickets to break even on it was because we had built an audience and we had done the podcast probably for a year and a half at that point. And without that, I just I don’t think we could have done it.

[18:15] Jason Cohen says a real unfair advantage is one that cannot be easily copied or bought. And so, if you think about having an audience, it’s not easy to buy an audience and it’s not easy to copy one like to put an 18 months of recording a podcast every week is something that most people will not do. So, capitalizing on an unfair advantage like that on any of this is the way you should go. It’s just going to make launching your business or your app or your product so much easier.

[18:37] The fifth type of unfair advantage is your hustle, how much you put in and where you put it in. This makes me think of this quote that I always have on my head, “It’s those who work the hardest, tend to make it work. They tend to succeed.” And of course you can be a super hard worker and you just put your efforts in the wrong places, yes, that can happen but for the most part, the people I know who are willing to focus for extended periods of time and really hustle and focus on a single goal are able to achieve it much easier than people who are trying to work on three or four things who are scattered, maybe bounce from one app idea to the other or just won’t commit to focusing on a single idea for six months and actually getting it off the ground.

[19:16] Because the problem if you bounce around is you never actually get anything to launch but if you can focus and can push it through, then you can actually, you know, start making enough money to buy out your time and then you just build on that and build on that and that’s where you can really scale up a business.

[19:31] Mike: I think this is where a lot of entrepreneurs just kind of run in to problems because obviously if you put in a lot of work and effort on to a single idea, your chances of doing well with that idea are going to increase dramatically assuming that that idea was a good one and just going to be successful because obviously you could choose to do something and just has no chance of ever making it. You know, a lot of people try to hedge their bets by doing a lot of different things or trying out different things to figure out what’s working and what’s not. And they do that in an effort to [0:20:00] essentially find something that is sort of working that they can double down on and I don’t know if there’s a good answer for how to strike that balance. Obviously, if you put in a lot of effort, you know, your chances of making it over somebody who is in putting in that effort are going to be dramatically higher.

[20:15] Rob: Yeah, and I don’t this is justification for working 60 or 70-hour a week because the people I know who has been successful, yes, they do put in time but it’s more about being effective and it’s more about focusing and if you can just stick with one idea or one thing long enough to get it launched and making enough money that it allows you to then focus on the next thing, then you’re going to be in a much better place and it’s also knowing what to work on, right? It’s eliminating the things that aren’t that important either getting them to a virtual assistant or someone who’s helping you out.

[20:47] It’s outsourcing things like tier 1 support. I mean it’s becoming a super effective person so that as you are working, you’re only working on the things that essentially at your pay grade and that anything else that can be handled that you don’t need to personally handle, that you’re not handling. Once you do that and you continue to work and focus on, you know, on a single thing, it’s just amazing how much you can get done in a matter of even a couple of months.

[21:10] Mike: Yeah, I mean a lot of that is about making sure that you’re doing things that will incrementally make the business better overtime so that you can focus more of your energies on growing that business as opposed to maintaining them.

[21:21] Rob: A sixth type of unfair advantage is your ability to build a great product. And I talked about this a little earlier but these are the people who go out to build whether, you know, whether it’s an info product or whether it’s a software app or whether it’s just an e-book or something. It’s the folks who focus on design and they just build gorgeous UIs and UXs. And so, think of like 37signals, think of Mint.com and how they look in the early days. Think of Sacha Greif, think of the people in the design community who may not focus on things like split testing, Analytics, SEO, metrics, lifetime value, cost per acquisition. They don’t focus on that but they build really good products and they are known for building products so they have…they have the attention of the world in that realm.

[22:06] Because I got to be honest, just being a really good designer and building a really interesting product is not enough. I’ve seen many well-designed products with exceptional UIs fail because they missed all these other stuff. They don’t look at the metrics and they haven’t chosen a target market but putting together a great product with a couple of other things like finding a target market and building it for people, you know, who actually need it in solving their problem, you really can make it work. It may not be as optimized as the people like maybe myself, Patrick McKenzie, like people who look at the analytical side of things, but it almost doesn’t matter because you’re focusing on your unfair advantage and you’re not trying to go outside of your area of core competency.

[22:45] Mike: Another good example is Fog Creek Software with a lot of the things that they do and obviously, they started out with CityDesk and then kind of transitioned over to FobBugz but building that initial product and making it an exceptional product for that particular target market really served them well because then they were able to leverage that to go out and find more customers who were like the existing ones that they have. And by focusing on the product and not exclusively or at the expense of all other things but focusing as much as they could on the product to make it a better product will certainly serve them well because it kind of allows you a little bit of leeway to I won’t necessarily say to completely ignore the metrics, but it allows you to not pay attention to them as much especially if you are at least moderately successful with that product. Once you get to a point where you do start paying attention to those metrics, if you already have a moderately successful product, then you can massively increase revenues and sales by concentrating on those metrics.

[23:41] Rob: Yeah, I think Joel Spolsky is an interesting example to look at actually to see like which of the seven unfair advantages that he have and he definitely had number one which is his experience. He’d already been at Microsoft. He’d been building software for years and so, he had experience to build new apps but also to start blogging about them which was a great marketing approach. Step two is his niche. I mean he basically chose the niche of developers. Unfair advantage number three was probably the people who know you. He built an audience quickly and you know, because he was one of the early bloggers in his space. And then I think the other unfair advantage he have his is, yeah, you’re right, his ability to build a great product.

[24:16] I don’t think it was like amazing UX like 37signals or Mint.com but at the same time especially the early versions of FogBugz, they’ve just had some really well-designed UIs that are easy and intuitive to use. So, you can see that having multiple types of unfair advantages combined can obviously, you know, propel you and not having all three of those means that you instantly have a disadvantage if you’re trying to compete against, you know, something like FogBugz.

[24:42] So, the seventh type of unfair advantage is your ability to listen, build, measure and learn. And I think a shorter way to say this is this is the analytical approach. This is how I see people. It’s the people who look at the numbers. It’s maybe, you know, a Hiten Shah, a Sean Ellis. I like to include myself in this camp of I – I get in to the numbers. I like to see the numbers. I try not to get buried and I’m – which of course, you can but I really like to build, measure and learn. Fight my way through it in that respect. I would say, you know, I build decent products. I build good enough products. I don’t know if I have the unfair advantage of being able to build amazing products and frankly, that’s why I hired someone my product manager Derek happens to have an exceptional eye for UX and UI and that’s one of the good reasons he’s involved because Drip is turning out way better than it would have if I built it myself.

[25:34] So, the idea is to hopefully stack a couple of these unfair advantages if they aren’t uniquely mine but kind of combining them and putting them all in to one bucket so that that when an app like Drip launches that you’re instantly out ahead of other people, you know, as competitors are going to come out of the woodwork for sure combining these and stacking them is definitely an advantage.

[25:55] Mike: I’ll definitely put Patrick McKenzie in this camp as well and it’s not just about analyzing numbers and looking at numbers, it’s about, you know, kind of shifting the way that you think about things and you know, being able to see things from different perspectives especially from your customer’s perspective to figure out what questions you should be asking and what numbers you should be paying attention to because it’s not enough to just pay attention to the numbers, you have to be able to pay attention to the right numbers and understanding which numbers are the right ones and the important things to pay attention to versus ones that are probably going to lead you down a rabbit hole that don’t necessarily mean anything. There’s a big difference between those two different sets of numbers.

[26:32] But yeah, I mean having an analytical approach is definitely, you know, one of those unfair advantages that if you’re able to see things with somebody else’s eye and see them from a different perspective than your own, it’ll definitely help you figure out what’s going to work and put you in a better place than somebody else who’s trying to build the exact same thing.

[26:49] Rob: Yeah and what I like about this list is I don’t believe that any one of this is better than any others and so, if you’ve always felt like oh, I don’t really want to get in to the numbers, the LTV, the cost per acquisition, all that stuff, then have one of these other unfair advantages and you could absolutely build a successful business doing it. I think that’s what I like is it kind of shows that there are all this different facets of each of us and that if you hear someone speaking and they say you absolutely must do it this way, I mean you hear that all the time, right? You must build a great product. If you don’t have a great product, it’s not going to work.

[27:20] I disagree like that is a for unfair advantage and that maybe how you personally, the speaker on the stage did it this time. But there are many other ways to do it. We’ve listed seven here, there have to be more as well. So, you know, feel free to chime in with your own in the comments or you can call us at our voicemail number or drop us an e-mail.

[27:40] Music

[27:43] Rob: The first is your experience, what you’ve been through. The second is your niche, who you serve and your ability to do so. The third is your rolodex, the people you know. The fourth is the people who know you, in other words, your audience. The fifth is your hustle, how much you put in and where. The sixth is your ability to build a great product  and the seventh is your ability to listen, build, measure and learn.

[28:04] Mike: If you have a question for us, you can call it in to our voicemail number at 1-888-801-9690. Or you can e-mail it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. You can subscribe to us on iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.

 

Show Notes

Transcript

[00:00] Mike: On this episode of Startups for the Rest of Us,we’re going to be talking about Seven Tips for Becoming aBetter Manager. This is Startups for the Rest of Us: Episode 129.

[00:06] Music

[00:15] Mike: Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it. I’m Mike.

[00:23] Rob: And I’m Rob.

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

[00:27] Rob: Two good words, MicroConf Europe. I’m…I’m excited. So, we have a little announcement to make. If you go to microconfeurope.com, we are putting on a conference and it looks like it’s going to be in Prague in early October. We don’t have all the details ironed out at this point. But if you are at allinterested, we’d love to hear from you. I’ll have a little e-mail sign up there and they’re trying to get an idea of how many folks want to come but we have nail down pretty serious talks with hotel and getting the logistics up. And we’ve had a lot of request over the past three years to have another MicroConf like either on the East Coast of the US or somewhere in Europe because a lot of folks aren’t able to make it out to Vegas.

[01:07] Mike: Yes, so that’ll be really excited. It’s interesting being in the pre-planning phases of putting together the conference. So we’ll just — we’ll definitely be working pretty hard towards that and especially since, you know, we’re still kind of just finishing up the current MicroConf.

[01:18] Rob:  Speaking of that, how is it going with the planning?

[01:20] Mike: I feel like I have zero free time.

[01:22] Rob:  We do this every year, right? Every year –

[01:24] Mike: Right.

[01:24] Rob: …we talk early on and we’re like, “You know we should hire a coordinator. We should figure out to outsource more of this.” And then we decide not to. And every year about this time, it’s like, “Oh man, now I know. Next year, next year we’re going to figure out how to delegate more of this.”

[01:36] Mike: So, yeah, I mean, I’m just spending a lot of time on that. You know, I don’t even have the time right now to plan out the AuditShark launch which I was hoping to do like two weeks after MicroConf. So, because of that I’m not even able to put stuff in place to kind of follow through with that. So, you, know, it’s unfortunate but I think I’m just going to perhaps turn my attention to it back once MicroConf is over. But other than that, I’ve started realizing that I need to kill certain things. So one of the things that  I’ve decided to outright kill, remember when we discussed some of our goals for the year early on? One of them was for me to write a book. And I’ve decided that at this point I’m just going to kill that.

[02:11] And it’s kind of dead in the water right now. I’m just not going to spend any more time or effort thinking about it or looking at it just because I got so many others  things going on and it doesn’t really makes a lot of sense for me to dedicate that time when because that was such a long-term play, I feel like I can come back to it later. And it’s not going to materially affect the things that I’m working on now.

[02:33] Rob:  Right. Because you were looking at that both as an experience of writing a book but also as a potentially a marketing opportunity for AuditShark and it’s kind of like until, you know, until you hit the app out there and get people using it, it’s not, in my opinion, worth all the effort of getting a book out purely. If you don’t have the app, it’s really not worth the effortof getting the book out there.

[02:52] Mike: Right, right. So, yeah, I’ve decided to kill that. I’m looking at a couple of other things that are potentially on the chopping block to just cut down on the demands on my time.

[03:01] Rob: Yup, twice a year I do this exact process you’re talking about. And you have to. I’m a big believer in eliminating couple of times a year making a point of going down that list and killing the things that either aren’t working or that you’re just never going to do that have kind of — I find that things that sit on my to-do list for a long, long time that I never do, they stressed me out because I feel like I’m slacking or I feel like I’m,you know, giving in to the resistance to not doing them. And just making the decision, you know, this isn’t worth doing and that’s why I haven’t been doing it. I’m taking them off the list, does wonders for my mental stress.

[03:35] Mike: Yes, so I’m thinking the exact same thing. So hopefully, that’ll…that’ll help out to just kind of move on, get other things done.

[03:40] Rob: Yeah, very good.

[03:41] Mike: So, what else you got going on?

[03:44] Rob: Well, I had a couple of things. One, I am starting to work with a couple of bloggers and content creators getting some kind of a pillar articles out on e-mail marketing. This is for the Drip Blog. So, right now the Drip Blog is completely bare and there’s no post. But I want to start that, both the content marketing angle and the SEO angle. I want to start that early. I had on a list to do a month or two ago and just have been caught up with other things. I’m putting that in full swing in the past week here and I have two leads on some looks like some very good bloggers and several ideas for posts based on bunch of research I’ve done. So, that I’ll be tackling over the next –well it’ll be on going, you know, every month we’ll put out a new content. But my hope is that we get the first post out here inabout the next thirty days and then build from there.

[04:33] Mike:  Now for those bloggers that you’ve found, are they familiar with e-mail marketing or they’re just good writers that are going to be doing a research on that?

[04:41] Rob:  I sought out both meaning people who have both of those skills and it’s actually really hard to find someone who has both of those skills. The two people I’ve found are both exceptional writers and they know how to write headlines and they know about marketing and conversions. And then they have some experience in e-mail marketing and they have written posts in the past on e-mail marketing. So although they may not, you know, doing e-mail marketing fulltime all the time, they do know the value of it and the concepts and all the verbiage and we’ll probably do, you know, some research in order to fill out the articles.

[05:13] Last thing for me is I finished the book. It’s called The Launch Pad: Inside Y Combinator. I’ve mentioned that last week. You know, I didn’t take anything super actionable away from it aside from thinking about startup ideas in a different way because of how…how Paul Graham thinks about it. I think if you’re easily swayed and it’s kind of sucked in to that world of the high gross startup and it turns out to be a distraction for you, I would say do not listen to this book or do not read it because it really like gets you fired up to get in to this…this magical world. But they…they follow the 63 startup teams through the Y Combinator series and they get — they go back and look at, you know, several years earlier and all the successes. They talked a little about the failures but to — in my opinion not enough, you know, it’s the natural selection biased.

[05:58] And since it is written by a journalist, there’s a certain amount of romanticism around things. It’s a slog, right? It’s a slog to get a lot of the stuff done and that isn’t — I don’t – didn’t feel like that was necessarily well-enough represented.But overall, it’s a very good book and I would recommend if you’re in to this kind of thing here in startup tales that that you do check it out.

[06:17] Mike: Cool.

[06:18] Music

[06:22] Mike: Today’s episode is – and titled Seven Tips for Becoming a Better Manager. And, I was thinking about it in episode 120, we talked a lot about Growing Your Business Past Employee Zero. But one of the things we didn’t talk about was how to manage the scaling of your business. So, today we’re going to do that. As part of scaling up your business, it tends to mean getting help from other people. And you know, as we talked about on episode 120, there’s a lot different types of people that you can bring into your business. And what we’re going to do today is we’re going to discuss the things that go in to managing those people that you bring into your business.

[06:51] Rob: Yeah. I think that these counts both for contract designers and developers, virtual assistants but it could also mean if you do make that choice to hire an employee to all of the supplies across the board, right?  This isn’t just for employees, it’s contractors, consultants and VAs and all that.

[07:08] Mike:  Yeah, that’s a really good point to make. The tipone is “To go online with everything.” It’s really hard to manage other people when you have any sort of paper-based system. And whether the paper that you’re dealing with is either orprocessing or accounting systems or legal paperwork or anything like that, you really need to be able to get as much of the stuff online as you possibly can. And this can include having your bills e-mailed to you or sent to a service like Mailbox Forwarding or Earth Class Mail and then these items are going to be available remotely and digitally without taking up any of your time or effort.

[07:40] Rob: Should this episode be Seven Tips for Becoming a Better Remote Manager or do you think this applies also to people who are actually working in a same location as their contractors or employees?

[07:50] Mike: I think this applies to both and one of the things that, you know, on the surface it may look it is geared specifically towards managing remote workers because obviously if you got a bill mailed to you and you have to0 then turn around and scan it and send it to somebody, then it makes it a little bit more difficult. But even if somebody is in your office, maybe they’re busy, maybe they’re not available, they are in a meeting, they’re doing other things, it’s a lot easier to e-mail something to somebody or use an online system and say, “Hey, here I need you to deal with this.” And then when they’re available, when it fits their schedules so that you’re not interrupting them in the middle of their work, then they can deal with it. As opposed to just walking in to their office and saying, “Hey, you know, I’m going to interrupt whatever you’re doing because this is “more important” than whatever you’re working on now and I need you to deal with itbecause it’s not worth my time.”

[08:33] Rob:  Yup, cloud, cloud, cloud. I would say anything you’re doing with a new business, you should try to get it into the cloud and that includes accounting like I would always opt for in an online accounting package like a SaaS. Even though I’m, you know, not be paying more for it, QuickBooks, you can pay a one-time fee and then I guess a manual upgrade or something. But I just think having that all like up on a website and accessible is the way to go. And anytime there’s a question about should I have like my bill paying is all done online through my bank, everything I can possibly do. Time tracking is done online through a website. Just anything you can do to get off your computer and off of any single point of failure where it’s… it’s sitting on your laptop is better.

[09:15] Obviously, you know, if you’re listening to this podcast,you’re probably already using Dropbox to share bunch of stuff. I mean, you definitely did think about that when you’re working with remote or even on-site workers and it’s like you said because if you have a file on your laptop it still is a pain to get it to other people within the same office unless you have like a professional file…file share setup and Dropbox is just such an easier way to do that.

[09:37] Mike:  And one of the things that you just said was about, you know, for especially for online accounting systems and having those things available it’s — even if it costs a little bit more money because typically those things you’re paying a monthly fee form and they do cost more money. You can buy a license for QuickBooks for, you know, a 150, $200, it’ll cost you$30 a month to get that as a hosted service. So, there’s obviously that money trade-off that you’re going to be making but it can be well-worth it in terms of, you know, the time that it saves you.

[10:04] Tip number two is “To make sure that your expectations are clear upfront.” Nobody likes to be told that they did something wrong or didn’t follow a process when you never either told them about it or never fully explained what that process was. You need to establish the rules and guidelines for new people upfront and you need to make sure that those things are clear. If they ever aren’t or they start deviating from them,follow up very quickly because if those expectations aren’t being met, then you need to correct whatever that processes that they’re supposed to be following. Everyone should be well-informed of exactly what is expected of them and they should have concrete goals so that they understand what it is that they’re working towards.

[10:40] Rob: Yeah. Last round when I hired a VA to handle support on the couple of apps, it’s funny that giving clear expectations is not as cumbersome or it doesn’t take as long as you think it does. I mean I’ve made some pretty basic statements of, “I want you to check, you know, check the support account twice a day preferably, you know, eight to twelve hours apart based on what works for you. It doesn’t really matter the time of day, you know, all things responded to it at that point or send over to me. And in general, like we are way, you know, customer-focused so, like if someone asks for a refund. When in doubt, treat them like you’d want to be treated and only if it’sreally a big deal, someone asks for three months of refunds or something, then you get me involve.” And it was a very short list by the time I get down to it. I think that setting clear expectations if you hire the right people is quite easy to do because they just tend to do…they just tend to make good decisions. They tend to make decisions like you would probably make them. And you just have to give them some very general guidelines.

[11:44] Now, if you hire people who maybe wouldn’t make the same decisions you do, then you run into a problem because now you have to start specifying every single thing they do. Oh,when you’re a solo-preneur, you’re working with a couple of contractors or maybe you have one or two employees, it’s critical that you do hire people who can — are going to be more likely to make decisions like you or going to –someone’s, you know, make the right call because that just cuts down on  a lot of misunderstandings and you’ve – I find that you have to set a lot fewer expectations explicitly because they’re going to tend to do what you are doing in the first place.

[12:18] Mike:  Tip number three is “To overshare” and this applies to providing more than the minimum amount of information to people when you’re delegating tasks to them. Tell them as much as you can, give them at least some background on why they’re doing this specific task because this helps them to make those good decisions that you’ve just talked about on whatever it is that they’re working on. If they don’t understand the end goal, it’s a lot harder for them to make good decisions and to do what you would have expected them.

[12:44] Rob:  Yeah, I’ve definitely made this mistake in the past of not sharing enough and thinking that I could just put together a bulleted list of a process and a process or multiple processes and expects someone to follow that and then to make the right decisions because they may be able to follow that but making the right decisions requires more background. And you know, as you’ve stated it in here, requires a bit of oversharing that may not seem required at first but that down the line really helps you out.

[13:10] I think the best way I’ve found to overshare is not to put it into a document because people skim through long paragraphs of prose and they wanted to get to the process and see what they have to do. The best way is to record a screencast or at least the best way I’ve found. And that’s because you can sit there and you can talk with, you know, you have a human voice and you can have some intonation and you can show them, “You know, this is just — this is a really hard decision to make but when someone does this, here’s how I typically handle it. But if they do this other thing then you know, I’d probably do this.” And you really would never put that down on a document that would just seem ridiculous. But if you’re actually sitting there and you record a 5 or 10-minute screencast and they watch the whole thing through, they’re so much more likely to kind of retain the main point and the main mission or the vision that you’re trying to communicate rather than just think about, “Oh, what are the exact bullet points that I have to follow?”

[13:58] Mike:  Tip number four is “To learn to stretch [0:14:00]delegate” and this means giving tasks to people who you think it’s going to be a stretch for them to meet those tasks or meet those goals. You need to be careful not to go too far over someone’s head but people really enjoy challenges. They don’t want to be bored with their jobs and this type of delegation is going to help them find their jobs more enjoyable.

[14:19] So there’s three things that doing this really accomplishes. The first is that it forces people to use their brains and really think about and understand what it is that they’re doing and what they’re trying to accomplish. Second is that it provides them with a sense of trust because you’re giving them an important task that is kind of on the edge of their skillset. And they’re going to know that this is probably on the edge of their skillset and they’re going to appreciate that, you know, youare entrusting them to this. And the third thing that it does is that it allows you to asses where they are with the new organization and allows you to figure out whether or not you can entrust them with some more advanced tasks and essentially move them along with your organization as opposed to using them for one-off task and then going to find somebody else for the next task.

[15:01] So, you’re looking to help establish a long-term relationship with whoever this person is. And it applies more to contractors than anything else but even internally if you have an employee who you’ve hire, you want to be able to gage what their skillset is and how quickly they’re learning and how quickly they’re understanding what your company is about and, you know, really be able to follow through on more important things later on.

[15:24] Rob:  I’ve found that stretch delegation works really well with either a contractor or employee who you have a relationship with and who you’ve worked with for a while. But with new folks they’re not going to want to do that, right? Because they’re concern that if it’s an early project and they fail that you don’t have enough of a relationship built up that you’ll overlook that. And so, that’s the first rule I think is to look at someone you’ve been working with for awhile, you have a rapport and you know, you trust them and they trust you so thatif they did crash and burn, you know that they’re still super capable of what they’re doing. I mean that they don’t necessarily feel bad or guilty or something like they didn’t deliver for you.

[16:03] The second thing is I’ve kind of have a formula when I do a stretch delegation typically is via e-mail and I’ll write and say, “Hey, are you up for this?” And the first thing I do is say, “Here’s what we need to do.” You know, I’d say, it’s like it’s a team thing like, “We’re going to release this new feature and it’s going to take you a bit outside of anything you’ve done before. Are you interested?” And so I asked them and leave it in their core. But then, I let them know number one, “I know that you can do this. I know that you are capable and I know that you can step up to this.” So, it’s about their confidence. Number two, I say, “I will train you like I will show you how I would do it, I will show you the decisions  we have to make and I will be there to support you so when things fall apart we’ll work on it together to…to solve it.” And then number three, just to let them know that, you know, this doesn’t rest solely on their shoulders. I’m not just going to bail on this thing and trust them to handle it all that I’m actually going to be there to make sure that it gets on right and they work together and that if they decided that they don’t want to do it down the line, that they don’t have to.

[17:01] So, I really give them a lot of outs to…to feel comfortable saying, “You know what? I’ll give it a try.” And nine times out of ten, it works really well and like what you said it actually keeps people happy because it’s expanding their skills, they’re learning new things and it adds some variants to what otherwise, you know, could become kind of a humdrum job.

[17:19] Mike: Tip number five is “To acknowledge people’s accomplishments.” When somebody does a good job withsomething, you have to make sure that you acknowledge that and you tell them.  And this really applies much more to the new things that you ask of people rather than the daily or weekly task that you have ask them to do. Nobody wants to hear, “Thanks for the 39th consecutive weekly report e-mailed to me by 3 p.m.on Friday. Way to go.” But if you have a task or project that was challenging and the person really stepped up to the plate, make sure that person is aware that you appreciate them for tackling the job and being successful with it.

[17:50] Rob: The nice part about acknowledging accomplishment is it allows you to on the flipside also be very honest when someone makes a mistake or has a failure because people feel like you’re going to tell them both, the good and the bad. If you’re always pointing out mistakes, then people get discouraged. If you’re only pointing out accomplishments, then people start wondering like, “What is this guy? Basically, lying to me, not telling me when I’m making mistakes or just not being upfront and honest.” So I think you need to cover both sides of this coin. But definitely calling out accomplishments is the fun part. I think that’s the fun part of leading and managing people is letting someone know when they just totally kicked ass on a task and pointing out exactly why and how they did a good job like not just the, “Wow, this is great,” but say like, “Here’s how you executed, here’s how you totally stepped up to the plate on this one, and here’s the impact that’s now going to have on our business or our support process or a sales process like you really made the difference.”

[18:45] Because most of the time people aren’t doing a task surely that the clock hours they wanted to see how or what they’re doing makes a difference within the organization. And Ithink acknowledging someone’s accomplishment involves letting them know that just as much as it is patting him on the back and saying, “You know, you did…you did really a good job.”

[19:03] Mike: Tip number six is “To understand that people make mistakes” and by people, I don’t just mean the people who you are delegating task to but yourself as well. The fact is that nobody is perfect and you’re very likely to screw up management somewhere along the way. But making mistakes is critical to the learning process and in fact, sometimes it’s better to allow other people to make some mistakes so that they become a better worker down the road.

[19:26] Now, as a manager you’re taking responsibility for other people’s actions but the last thing you wanted to be responsible for is their mistakes too. You want to try to find ways to avoid mistakes in the future and to correct your processes to account for those mistakes. But you also want to be careful not to necessarily step in too early when somebody is starting to make a mistake. Sometimes it’s better to let them kind of make a little bit of a mistake or something that, you know, is correctable later on so that they’ll learn how not to do something as opposed to stepping in and immediately correcting them, you know, when you see things start going wrong.

[19:58] Now, if they’re going down a completely wrong path and you know that it’s just a rabbit hole that’s going to be filled with all sorts of things that you just don’t want to have to deal with or if you’re on a very strict timeline then obviously, you know, you want to probably step in a little bit earlier. But if they’re making some mistakes here and there along the way that are probably not completely critical or not going to totally blow apart whatever it is that you’re working on, you can generally get away with letting them make some of those minor mistakes so that they get back on track and they’ve learned how to do those things better in the future.

[20:27] Rob: When I first started delegating e-mail support, I made mistakes. I made the mistake of being too specific about what people should do during different scenarios. And so as an example, I’d have like the refund process and how it should be handled and here’s the reply email and all of the stuff. And I thought it had to be all detailed. Nowadays, I have a general rule for each of my products and when I hand that off to a VA or support person, I say, “Just handle it like you’re authorized to refund up to X dollars and you’re authorized to make the customer happy.” It’s so much better. They feel — the VA or the support person feels like they’re in more control, the customers are happier because they get really fast service and I’m happier because I’m not bothered now by — I used to get bothered by every refund request. I would say, “You know, don’t refund money until you show it me because I might have some prior history with this person or with the account and we may not want to refund it or whatever.” And that just has gone away.

[21:25] And for every 19 times it’s done correct, there’s maybe one time where it’s like, “Hah, you know, I wouldn’t have made that call.” But the fact is getting all 20 of those off my plate and never seeing them and never being a bottleneck is better for the customer, it’s better for my support people and it’s better for the entire business. And so, I think…I think that’s a big part is thatunderstanding the people may make mistakes but it’s better to have a small amount of mistakes than to have all these oversight. And I don’t know if you’ve heard the expression about building a$10,000 fence around a $1,000 product, you know. It’s like you’re almost spending more time [0:22:00] and headache to protect from something going wrong when one thing that goes wrong really isn’t going to make that much of a difference to your business.

[22:08] Mike:  Tip number seven is “To treat everybody fairly and with empathy.” And everybody is different but the way you treat them shouldn’t be. You don’t need to establish official policies or procedures for absolutely everything but you do need to make sure that you’re treating people fairly. And one of the issues that I’ve seen before is that policies can get in the way of doing something that guidelines and goals could be used for instead. So, rather than using policies for how to handle a specific situation, you can just use general guidelines and goals for the company that will allow you some flexibility. And you don’t want to be put into a situation where you absolutely have to do or follow the letter of whatever the policy states because you wrote a policy for it.

[22:46] You’re much better off being in the position where you can kind of make a judgment call based on the situation or the circumstances and things like that. And that as — you’ve talked about earlier with the — your support people, you say you givethem some general guidelines and just kind of turn them loose. And one time out of twenty, they’ll make a different call than you would but at the same time by just having those guidelines in place for yourself as opposed to putting together written policies that the company has to operate by, then you give yourself that flexibility to make a different call when the situation warrants it.

[23:18] Rob: You know, these last two tips may feel you might be listening to them and thinking, “Oh this is…this is obvious.Why were they even bringing this up?” But couple of things, one, they may not be obvious to everyone. I bet there are few people out there listening, thinking, “Yeah. You know, I’d never thought of that.” Number two, it’s a lot easier to hear this than it is to actually learn them. It’s a lot more work to actually treat people fairly and with empathy and to understand that people make mistakes. And you grow into that as a manager. So that’swhy we’re bringing them up, so you can actively be thinking about them as you are guiding people —

[23:50] Mike: Oh —

[23:50] Rob: …and actual example though not just talking about it.

[23:52] Mike: Somebody goes missing for a couple of days and they don’t e-mail back, you may very well say, “Well I’m going to can this person. You know, let him go as a contractor or whatever.” And then you find out a week  later that their mother died or something like that.

[24:03] Rob:  That’s one situation but someone might say well, they should’ve texted you or e-mailed you or something. But that’s a hard one. If you fired them and then found that out, yes,of course, you’d rehire…you’d rehire [Laughter] them if you are empathetic, you know. But also depends on the person, like ifthey were a really solid worker, I wouldn’t — and they went missing, I would not fire them like I would instantly think, oh,something happened. But if they —

[24:26] Mike:  Right.

[24:27] Rob: …kind of been flaky and not really communicative the whole time, then it’s like, “Ah, they were kind of on the edge anyways.” There’s that balancing act.

[24:34] Mike: That’s why it’s a perfect example though because if you have like just a written blanket policies as well, if you go missing for two days or four days or whatever and you’re non-responsive through e-mails or and maybe they’re based overseas or something like that so you don’t have a direct line of communication with them, you can’t just call them up or go over to their house. If they don’t respond, if your policy just says,“Well, I’m going to let them go,” and then they come back a week later with that and you have to abide by that policy, yousay, “Well, I’m sorry that, you, you know, you had a death in thefamily but you didn’t call us so, too bad.” Whereas by using goals and guidelines for the company as your compass that gives you the flexibility to make a different judgment call based on situation.

[25:13] Rob:  That makes sense.

[25:14] Mike:  So the recap, tip number one is “To go online with everything.” Tip number two “Make sure your expectations are very clear with everybody upfront.” Tip number three is “To overshare information” and make sure you’ve given everybody enough information about the tasks that they’re doing to make effective decisions. Tip number four is “Learn to stretch delegate.” Tip five is “To acknowledge people’saccomplishments.” Tip six, “Understand that people make mistakes including yourself” and tip seven is “To treat everybody fairly and with empathy.”

[25:41] Music

[25:44] Rob: We actually had a voicemail from Terry at theBuild My Online Store Podcast. He had a couple of more tips surrounding episode 125 and are working from the outside the office hacks.

[25:58] Voicemail:  “Hey, Rob and Mike. It’s Terry here frombuildmyonlinestore.com. I like the  episode…episode 125 about Optimizing Your Productivity Outside the Office. I think two things that I found helpful, one, is the iPhone USB charger. So, what happens is if you’re outside in a coffee shop and you’re tethering your internet, it tends to drain the battery pretty fast. So, one thing that happened to me is that I forgot to bring my charger once and sometimes your phone just had half battery and you could probably end up hearing the whole thingwhile you’re outside and it could be a real jargon. So, the second thing is I actually bring menthol along with me. So, sometimes, you know, you’re outside, you’re hungry at the coffee shop. You don’t want to bring too much food or you don’t want to buy too much food. Menthol is actually a pretty good way to kind of control your hunger throughout the day and you just need a break to kind of refresh yourself. You take a mint, go for a walk and kind of take it easy. So, thanks for the episode. I found it really helpful and talk to you soon.”

[26:46] Rob:  So, thanks for the call Terry. If you have a question or a comment and you like to leave us a voicemail and have us potentially play on an episode, you can call us at 888-801-9690. Our e-mail is 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 or via RSS atstartupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll, see you next time.