Show Notes
Transcript
[00:00] Mike: This is Startups for the Rest of Us: Episode 108.
[00:02] 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.
[00:18] Rob: And I’m Rob.
[00:19] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. How you doing this week, Rob?
[00:23] Rob: I’m doing good. I’m coming back for a week off for Thanksgiving feeling rested. I went to a cabin near Mt. Shasta in Northern California and I did a lot of thinking, a lot of thinking about what 2013 is going to look like, dove deeper in to those topics I mentioned in the last episode about growing HitTail by a certain amount, looking building some – a couple of info products and launching a new app. So, I kind of sort of diving in to those in creating some specific like outlines, plans, dates, that kind of stuff. There’s a lot of fun. I actually – it was so super relaxing to me because I feel like it lays out what, you know, now I know what to expect over the next 12 or 13 months.
[01:00] Mike: Very cool.
[01:01] Rob: How about you? What did you do for Thanksgiving?
[01:02] Mike: I stayed home. My parents came over to visit and had turkey and mashed potatoes and you know, the whole nine yards and I’ve got some more worked done on AuditShark and got all the tasks together to send off to my new contractor for AuditShark so —
[01:15] Rob: He’s a developer and he’s here in the state, is that right?
[01:18] Mike: Yup, so he’s working on the cloud side of Audit Shark which I haven’t put anybody else on that piece yet and I spent probably two or three hours working with him to not only get us some development environment setup but to make basically walk him through everything and I probably would have done that. It’s like a screencast that you just send it over to him because honestly I would want to reuse that in the future but I needed to help him get his environment set up because I hadn’t documented exactly what needed to be done to do that. So, now, I’ve actually got some of that information because I’ve go everything set up on my laptop and my desktop but I haven’t done it for anybody else. It’s been a long time so I’ve had to do it so I couldn’t quite remember exactly what needed to go in to it.
[01:55] Rob: So, he’s working on the cloud side which is like you said it’s more green field development that just kind of plugs in to AuditShark. What does that mean in terms of are you still looking to launch the second week of January to —
[02:04] Mike: Uh huh.
[02:05] Rob: And any updates since last week early access customers using it, have you made any progress on that?
[02:10] Mike: I talked to one early access customer and I had him go through and run a policy. I basically gave him a set of instructions and said, “Hey, why don’t you go through in to this and let me know what your thoughts are?” I made sure to phrase the e-mail on a specific way and not lead him and his response back to me he said, “Wow that was really easy.” “What exactly do you mean by that?” And he explained it a little bit and he’s a like, “You know, usually the stuff is a lot harder.” He’s like, “I expected it to be a lot harder.” So, it was really nice to see that because that’s exactly what I was going for because I worked with a lot of this type of software before in the past and I know how complicated it can be and it was just extremely easy for him to just go in and run an audit and literally, he clicked the button and within two minutes he had his results. It was – it was awesome.
[02:53] Rob: Well, cool.
[02:54] Mike: The real big thing is that now that I have – I’ve had a developer who’s been working on the client side policy builder and now I’ve got a developer who I’m putting on to the cloud side of things. I’m hoping that this works out. We’re going to do a 3-week trial to see how things go and then from there, we’ll make some decisions and talk a little bit more to see where each of us wants to go with it. And what I’m hoping is that I can basically hand off all of the technical stuff to these two guys and you know, I’ve already got all the client side stuff handed off technically and now, I’m looking to get all the cloud side stuff handed off, all that technical stuff handed off so that I can focus, you know, solely on the marketing and customer development and everything else.
[03:29] Rob: All right, well, good luck. So, are you still looking at getting the AuditShark out the door launched in public on January 14th?
[03:35] Mike: Right around that time, yes, so I know that there are certain things that are just not going to be working and you know, in terms of the policy, I know that I’m going to have to go back and forth with my developers over the next six weeks to make sure that everything kind of works from my end and I expected that there’s going to be things that fall a little bit short from where I would like them to be but that’s the goal right now is to have the product out there and launch publicly by the 14th of January.
[04:00] Rob: Oh, let’s move on to some iTunes reviews then, shall we?
[04:03] Mike: Sure.
[04:03] Rob: So, we got several new iTunes reviews, one is from Gerald Dees [Phonetic]. He says, “Excellent advice for any entrepreneur. I’m not a programmer and I don’t have a software or service business but as an author and entrepreneur, I get an incredible value out of the podcast. I love learning from the trials and successes that Rob and Mike share about their business.” Also, we have one from T Nguyen 444 [Phonetic]. He says, “Very informative this podcast and This Week in Startups are my two favorite. This Week in Startups is a high level and Startups for the Rest of Us helps with lower level attention to detail type information.” We got a few more I won’t read but the other one I like is from Eric Foster and he says, “Awesome, awesome, worth listening to every single minute.” Really appreciate your reviews and even if you don’t write a full review, would love a – just a 5-star rating in iTunes. What else is going on with you?
[04:51] Mike: Couple other things. So, next Thursday, I’ll be meeting up with Corey from the Birdy because I’ll be back in Brooklyn and I’m trying to get together a couple of people to meet up for dinner somewhere in Brooklyn. So, that would be fun. Hopefully, we can get some other people. I’ve had a couple of meetings around the country with other people just through the various travels that I’ve done. I had a meeting last night, actually. Some of my consultant work is going to be changed a little bit. And typically, I’m going on site and doing customer work for people but one of the customers that I work with wants me to start doing some of their e-mail marketing campaigns. So, that would be an interesting change of phase I’ll say because I can do it on my own time. I don’t necessarily have to be at a customer site and we’ll see where that lead. I think that there’s a lot of potential there. They definitely have a severely mismanaged e-mail campaign I’ll say. They’re not measuring anything. They have no idea, you know, who’s clicking on what. They’re not even using an e-mail service provider. Everything is going out through their ISP.
[05:42] Rob: Right.
[05:42] Mike: So, I’d suspect that not a lot of it is getting through it —
[05:45] Rob: Getting there, yeah. Well, it’s unfortunately a common mistake.
[05:48] Mike: What I’m concerned about is taking all those e-mails and putting them in to like MailChimp or ConstantContact and then sending out an e-mail and then having most of them actually get through and then flag to spam because previously they – have just never gotten there because a lot of the e-mail vendors, they will just automatically send it to spam if it comes from certain IP addresses and their IP address may have gotten flagged as a spammer so then they’re just going straight to the trash whereas if I move it over to like MailChimp and then send them out, suddenly, they’ll get through because it’s coming from a different IP address and then what’s going to happen. Am I going to get ban from MailChimp?
[06:23] Rob: So, I’ve done this before with a list I inherited and the first in a big paragraph at the top or a big first sentence that just say, “Hey, you’re receiving this because you signed up to receive them or you either a paying customer of X, you signed up on this URL to receive it. If you prefer not to receive any more of this, simply click this link right here to unsubscribe,” and give them the unsubscribe link right at the top because if they are going to click it, then let them do that rather than mark you as spam. I’d also set up a separate account. I wouldn’t use your MailChimp account. I set one up for this – this guy’s business. So, if it does get banned, that you don’t – you don’t also get banned.
[06:58] Mike: Right, I was definitely going to do that. The thing that I remember reading though was that I think that MailChimp also measures the number of unsubscribed and if it’s really high for a list, then they – I forget how they flag it but basically they take note of it.
[07:13] Rob: You’ll get an e-mail. They do but it’s not nearly as bad as spam marks. You definitely want people to unsubscribe rather than spam – rather than mark it as spam. We had a list that did get more unsubscribed than they liked and it was like – it was like if it goes over 1% unsubscribed, then it get upset and that’s fine but they basically e-mail. And I reply back and I said, “Look, here’s what we’re doing. We’re reviving an old list, blah blah blah.” And they were just like, “That’s fine, you know, just don’t – kind of don’t want to happen again. That was just a warning type thing.” So, that’s all they did because people unsubscribing, I mean that really doesn’t hurt anyone, right? It doesn’t knock their IP, you know, whereas when they mark it as spam, it actually like is a ding against their IP address and that’s why they don’t – I can — and that’s why they’ll ban you.
[07:53] So, the only reason they’re looking at people unsubscribing it’s a danger sign that people may start marking it as spam in the future is the thing. So, I wouldn’t worry too much about that. The other thing you could do depending on how big their list is, is you could break it up in to chunks. If it’s 5000 people, you could send like the first 500, the most recent 500 as one list and send it and see what happens and then work your way backwards because by the time you get back five years or [Laughter] you know, however long it’s been, the really early guys probably are going to – there’s going to be a bunch of bounces. They’re probably are going to be a bunch of mark as spam no matter what you do. So but if you kind of work your way that gradually, then you don’t really, you know, pollute the list right from the start.
[08:32] Mike: Got it. They have two different lists. One of them is about a thousand e-mails which is I’ll say much cleaner and they’ve been e-mailing that or at least they’ve e-mailed it at least once that I know of and the other one is around 5000 and I don’t know where it came from and they can’t really tell me. So, I’m really – I don’t know if I’ll even use it to be perfectly honest. I just don’t think it’s worth then.
[08:51] Rob: Well, the good thing is if you set up the MailChimp account, you put the 1000 safe — “safe” e-mails in there and send them a few e-mails over the course of several weeks or a month or whatever, then you can at least get that MailChimp account, get it some credibility, you know, so it doesn’t look like this is your first mailing out of that account. You at least had some successful non-spammy sense. Then if you go to the other list and just do the recent most 500 and see what happens, you at least have some – some credit in their bank of credibility so to speak. So, hey, I received probably the most sophisticated phishing attack via e-mail that I had ever seen. It was an e-mail comes and I’m checking on my iPhone. So, it’s mostly text. It has the exact subject line and all the text from an e-mail that I get from WordPress when I get a comment on my blog at softwarebyrob.com.
[09:42] And so, I’m seeing this comment and I’m seeing the post name and all the URLs and it says to mark it as spam, click this link. To mark it as, you know, approve it, click this link and the comment was junk, right? So, I click on mark it as spam and it opens up Safari on my phone and you know, you know, I just glanced through and haven’t really look at URLs but it sent me to a fake URL and it was all customized for my blog like someone made a specific, very specific attempt. This was not a mass attempt and the only reason I noticed it because they had an image wrong on the thing it was a broken image and I started thinking, “What is going on here?” But I almost like entered my credentials when I —
[10:19] Mike: Wow.
[10:19] Rob: It’s crazy and I went back to the e-mail, it was like list-9.com/rob/ and that’s what all the e-mails where. So, I think it was list-9 or something like that. So, it’s some funky URL and someone really went to – I’m assuming they scraped blogs from some list and then customized it but there was – I was shocked at how close it was to the e-mails that I get. You know, you get every – kind of everyday as you get comments, you need to mark. I mean it was identical because no way I wouldn’t – wouldn’t be fooled like some – by someone like that.
[10:50] Mike: How close for you to actually click in and putting in your credentials?
[10:53] Rob: Well, there were two reasons I didn’t. One was that broken image just made me a little suspicious and that made me look up at the URL because normally if I’m on my computer, my laptop, I’m going to see the URL. That’s like the first thing I look at but on my iPhone I don’t because they hide the address bar pretty quick.
[11:06] Mike: Right.
[11:07] Rob: I didn’t glance up. The other reason is that I don’t really know my credentials by heart and so, it wasn’t in Safari so I was going to have go in and get it out and I was trying to think do I really want to do this right now. So, that gave me pause and enough pause to sit there and work at it. So —
[11:22] Mike: Wow, that’s an – that’s impressive. I think that’s the way that a lot of these types of security attacks are going to go. I mean the password hacks and stuff have kind of fallen by the wayside just because it’s so much easier to get somebody’s credentials through a phishing attempt.
[11:35] Rob: Yeah, it’s that social engineering, right —
[11:38] Mike: Uh huh.
[11:38] Rob: … rather — run a correct password they get you to do that. It’s pretty crazy. So, any listeners, I would just keep your eyes out for stuff like that. I imagine that that has worked with people. It’s a different URL and that should actually raise a flag, right? If typically you’re able to just click and log in, that’s another thing to think about. So —
[11:54] Mike: I don’t know as a lot of people would catch that though because sometimes your browser cashes it and then sometimes it expires so you have to put them in again but if you’re using something like, you know, a password manager then typically you would not have to type it in. It would just cash it there and would allow you just to go right in and then when it didn’t work or didn’t do that, then you’d have to go look up your password and that probably will put you in the same position where that you were in where you said, “Oh, well, why is this not working,” or – then you start to look at it a little bit.
[12:25] Rob: Yup.
[12:25] Music
[12:29] Mike: Today, we’re going to be talking about eleven software startup myths debunked. So, I thought that we’d take some time and talk about it to people and kind of share what our thoughts were.
[12:37] Rob: Let’s dive in.
[12:38] Mike: So, the first one is if you own a business it mean you can never go on vacation and I think that part of this thought comes from a couple of different areas. One is looking at people who own companies like restaurants or brick and mortar businesses where there’s always customers who were coming in and out and you almost have to be there if you don’t have a manager and this is especially true for any sort of restaurant. You know, restaurants are notorious for like having these mom and pop shops where people don’t go on vacation for years and years at a time because if they do, the entire thing shuts down. And because software businesses are completely different because you can sell software from your website while you’re not actually there, it’s a completely different model. And this whole idea just does not apply.
[13:17] Rob: Yeah, I think with software, it’s so much easier to implement some process to systematize things obviously something we talked a lot of about on the podcast but if you – if you’re able to work on your business instead of in the business and you’re constantly thinking week to week what do I not want to be doing, what’s the most repetitive task here, you know, revisiting that and handing them off to either virtual assistant and just doing all the process stuff that we talked about. It is – I mean I got to be honest, I’ve taken more vacation than [Laughter] ever since owning a business than I did before. It’s a dramatic difference to not have the dollars for hour’s thing. Once you decouple – it actually takes a mindset shift once you decouple the hours you work from the money you make because I still have the mindset of like, “No, no, I need to work 40 hours this week,” but you really don’t and you can start cutting that back either on a week to week basis or you can take a lot of vacation. This is a good myth to bring up.
[14:10] Mike: Well, one of the things that I find is that even when I take a week off or two weeks off to work on my own products while I’m not doing consulting, what I find is that I’m not productive for eight hours even if I’ve got eight or twelve hours on a day to work, I’m not productive for eight or twelve hours. I’m really productive for like four or five but beyond that, I’m not necessarily as productive and it feels like I end up wasting quite a bit of time. So, unless I really buckle down and make a consorted effort to be super productive then I’m not going to be as productive and what that tends to do is it tends to essentially kill my productivity somewhere in the future.
[14:45] Rob: Yeah and the cool part about owning your own business is that you are then able to basically hyper focus on those times when you are productive. So, if you are a morning person, you can make that your work day, you know, you can work three hours a day, five days a week and that can be your whole thing. I mean if you literally get twice as much done in that time, then it’s like working 30 hours a week but you do it in – in half the time. Or if you’re more of a night person, you can do that, you can really structure a time and again, the entrepreneurs I know who – who do this well and who run businesses and are really have a good like work life balance, they understand when they’re – when they’re optimum working hours are, what causes them to be in that optimum working zone and when they find themselves and this something I do, when I find myself on HackerNews or Facebook, I just say, “I’m done,” and I’m going to walk away from my computer because there’s no reason for me to sit here acting and thinking like I’m working when I’m not actually getting anything done, you know, I want to actually rest and rejuvenate during that time.
[15:38] Mike: Cool. So, number two is that mailing list don’t work and are nothing more than spam and this is so false that I just don’t even know where to begin.
[15:46] Rob: Yeah, this is the classic developer mentality, right? It’s like, we, as a developer, we don’t like getting a lot of e-mail or we have this stigma against it but a lot of the biggest online businesses in the world are built purely because e-mail exists and they have massive, massive e-mail list. And so if you look at Groupon or you look at Facebook, even Twitter, the startup Foursquare, on Quora and any of these things, I mean they are constantly when you sign up for them, they are sending you updates via e-mail. It’s what engages people. This is the reason that my conversion rate on many of my apps has gone up substantially like by double digits both during trials as well as retaining customers, even taking visitors and getting them in to trials, all of those things are dramatically increased by getting an e-mail address and engaging customers in a nice way. It’s not about hard selling. It’s not about market, market, market. It’s about educating, providing value and engaging them and setting themselves that they actually want to see and want to open, you know, and even this is one of the reasons I spend more time now creating content for my mailing list, my Software By Rob mailing list than I do for the blog. I actually put more articles out on that in the last six months than I have – I have on the blog because there’s something just more personal and more engaging about e-mail.
[17:00] Mike: This kind of comes back to the conversation I had with the business owner a couple of nights ago where we were talking about this mailing list and I was like your entire marketing strategy behind this is completely mismanaged because people actually do want to get these e-mails and what you’re doing right now is you’re just not measuring anything and that’s got to be turned around in some way, shape or form and I’m like and I can help you do that if it’s something you want help with and he’s like, “Yeah, you know, I’d like you to take a look at it.” So, you know, we’ll see how that goes but that’s definitely I think something that people look at and they say, “Oh, I don’t want to send people e-mails because I don’t want to bother them and you have to bother them because you have to get in front of them but if you are providing them with something that they want, you’re not actually bothering them. They want to see those e-mails and it’s just a mental hurdle that I think a lot of people have to get over.
[17:43] So, moving on the third one is that I’m going to make either billions or nothing and a lot of people think that when they start a business and I think there is a realm of difference between these two and I think you have either one or the other you don’t necessarily have both. You either think you’re going to make absolutely nothing and it’s not worth your time and effort or you think that you’re going to make billions and it’s going to be an over night success and when it’s not, you kind of flip flop over to the other one where you’re like, “Oh, this is just totally not worth it.”
[18:09] Rob: The first time I realized it there was an in between where starting a software company didn’t mean I had to have a hundred million users was just completely shocking to me where I realize, oh, you mean, I can build a business that generates $10,000 a month that’s just software company that I can just be a, you know, solopreneur and kind of do what I want to do and as long as I keep these things in check and build an app that people want, that I can just build a business that – but basically is more of like a small business but as software as the core value of it. My mind was completely blown. This is not the impression that’s in the press, right, of any Fast Company, Inc. Magazine, Entrepreneur Magazine, all these things, they’re not talking about these businesses. These are the small niche B2B stuff that we talk about. I mean there’s a whole movement behind it and actually what’s cool is that there’s so much more to talk about these today, these in between businesses, these niche businesses, niche software businesses than there was even five years ago and there’s just so many more people exploring that and that’s exciting to me and a lot more developers are getting, you know, financial freedom and being able to quit their jobs and because of it, because there’s just so much more education and information available about this.
[19:19] Mike: Yeah, that’s absolutely right and it’s interesting to see those dollars just show up in your account when you’ve got something that you’re selling online because it’s not like you actually put in the time and effort, you know, that leading up to that check being deposited in to your bank. It’s no to say you didn’t put the time in to build the products and put it out there and do everything but it’s not as if there was a direct correlation between the time that you spent doing it and the time that those dollars showed up in your account.
[19:44] Rob: Yeah, it’s that decoupling of hours worked for dollars entering your bank account and it really does blow your mind the first several months of it.
[19:51] Music
[19:54] Mike: Number four is that “I have to do everything because I’m the one who understands how everything is supposed to work.” And I think this issue can be addressed by setting up various processes and procedures for others to follow. And I think part of this mentality comes from thinking that something that’s either too complicated of it’s going to take too long to explain to somebody else how to do it or you just don’t want to give up the control of it and definitely mental hurdles here to getting over this but I think the key is to find the right people for doing this type of work for you and if they’re not working out, then you need to find somebody else. You can’t afford to act like a full-pledged business that has lots of money to burn. If you’re trying something out and you hand some piece of work off to somebody and it doesn’t work out, cut your losses and move on. But that’s not to say that you should never try that again because it may just be that it didn’t work out with that person. You really have to test the waters a lot in order to figure out what is working and what’s not and if somebody else is making it work, then chances are really good that you can too.
[20:55] Rob: I really enjoy the story that Glen Germaine told us last year when he came to MicroConf. If you recall he had e-mailed in about having really struggling with the idea of hiring a developer. He said he didn’t have the money to hire a fulltime developer and he has a system that I recall it’s like medical – sort of medical billing or medical admin office automation type of stuff. And so it’s a pretty complicated software and he was concern that he would spend more time telling a developer had to do something than – than, you know, actually the time it would take and sure enough, he wrote in and we gave – we designed the whole podcast around it which I think was about – it was about hiring and managing remote developers and then he went and he hired one and it turned out really well. He was very detailed and did an excellent job evaluating but he hired someone through oDesk and since then, he’s just raved about it and he gave us the full story at MicroConf and then we – we talked about it later. But that’s the kind of thing. He did it right. He spent the time and found a right person from the start. The thing to remember is if you do pick the wrong person, it’s a learning process.
[21:54] And so, like you said Mike, if it doesn’t ring up the first time, it doesn’t mean it doesn’t work. It doesn’t mean that it won’t work, it just means that you have to give it another shot and you have to learn from your mistakes and get better the next time because this is the only way that you will actually be able to take that vacation we talked about earlier and that you will be able to grow your business is if you let go of these simpler tasks or the lower end tasks I guess I’ll say and I don’t – I’m not to say that development is a lower end task but it is something that’s easier to outsource than the visioning and you know, kind of the entrepreneur mentality of really directing the business. That’s the thing you can’t outsource. For everything else, I think slowly overtime, if you own a business 3, 5, 10 years you are going to want to slowly outsource more and more pieces of it. It’s a learning process like anything else learning how to do that effectively.
[22:43] Mike: And the one piece that you touched on there that I think is really important is that you can’t outsource the vision of what the product is suppose to become. You can outsource all the things leading up to it but you can’t outsource the vision itself because nobody else is going to have that insight and that’s why it’s so difficult to copy somebody’s idea because if there are actually visionary about it and they have in their head exactly what needs to be done, you can’t just look at somebody else’s business and copy it and expect to get the same results because there’s little subtle nuances that you’re going to miss.
[23:13] Rob: I think the one other thing I’ll add is early on in your business, at least this is the way I did it, I didn’t have a lot of money to pay great people. And so, I started off with cheap virtual assistants, cheap developers. They were inexpensive but that’s what it took to get the business off the ground. They were okay. I dealt with some headaches. I dealt people who were, you know, not ideal but it’s what it took to give me — I bought myself enough time that I was able to leverage these businesses and grow them up but what you can do is overtime you then – you can trade up so to speak. So, I had a VA who is – I always knew she was average but she was good enough and then I found someone who’s almost three times the cost that she is but this person is almost three times better. So, now, I have everything going to him and I’m just funneling all types of stuff. Now, it’s more expensive but I have the leeway to be able to do that and I’ve done the same thing with developers and designers and everything. It’s like you trade up overtime as you have the luxury of being able to do that and it then buys you even more time because you get better people who not only provide better results but they are just more reliable, they’re more consistent that answers many questions and that kind of stuff.
[24:21] Mike: So number five is saying, “I don’t know where to start,” or “I don’t have any good ideas about anything that’s never been done before.” And part of that is finding something that’s never been done before. If you’re looking for something that’s never been done before that is just an outright mistake because if something has never been done before, then how do you know that anybody is willing to actually pay for it and that’s one of those things that you really need to find out early on when you first start building something is to make sure that there is going to be people who are willing to pay for it. In addition to not having the ideas, it’s a matter of just asking people and you don’t want to ask them in a way that says, “Well, do you have this problem,” or “If I gave you X, would you be willing to pay for it?” What you really need to do is start focusing on what people feel are their own problems because when you talk to somebody and you say, “Would you be interested in a product that does X, you know, and solve such and such problem for you?” Well, of course, they’re going to be because you have phrase the question in such a way that is very leading.
[25:15] If instead you ask them, “You know, what sorts of problems are you having with your business or with your environment or with this or that just to describe some pinpoints. You start looking at the individual things that they’re saying and the subtle nuances of things that they might talk about. So, they may say, “Oh, well, I’m having a problem with my billing. I’m doing everything and sell and it’s kind of a pain.” And you may think oh well, this person needs a, you know, some sort of software that will do their billing for them but that may not actually be the pain. You have to drill in a little bit deeper and you may very well find out that it’s not that their billing system is a pain. It’s just that the person doing it is difficult to work with. So, unless you’re asking those in depth questions, you might start making assumptions about what the problem is and going down the wrong path.
[26:01] Rob: Yeah, I think there’s a progression of questions you have to ask because early on, you’re right. You want to ask – you want to find a customer group. You want to find out a common problem they all have, right? So if there’s 20 of them that you talk to, 10 of them or whatever, then you try to group that together and say what’s this common pain they have, then though I think you get in to the customer development side where you start saying, “All right, my hypothesis is they need an app that does this and in order for this to work, I need to charge 50 bucks a month for it.” So then you come back to that group and then you find others and you say, “Would you pay 50 bucks a month for an app that does this,” and if they say, yes or no then you say why. You know, you try to figure out what the salient points are, the feature it needs, you know, maybe something it’s lacking with the prices and all that kind of stuff. We definitely agree with you there’s that early space where you really need to just throw it out, throw up in here and say, and don’t lead them yet because you’re just trying to – you’re almost trying to do a brainstorming session where you don’t want to – you don’t want to introduce, you know, impurities in to the conversation.
[26:35] Mike: And that kind of leads us in to number six which is to build something that people want. Why don’t you talk a little bit about that?
[27:01] Rob: Yeah, so you know, I won’t say this is as much of a myth as it is only half of the equation. It’s a myth that this is all you need to do. This is to build a better mouse trap theory and we know that just building a product that’s better, it isn’t enough. You also have to be able to acquire customers for less money than they give you over their lifetime and I think that’s a key part that’s really missed in the discussion of building something people want. I love the quote because Paul Graham wrote an essay and it may – it was out there titled Build Something People Want and that was the salient point from it and now that’s thrown around all the time on Hacker News and in other startup circles. And I think it’s important but it’s half of the equation. There’s the entire marketing side that people ignore when they say this phrase.
[27:42] Mike: Number seven on our list is that passion is a competitive advantage and this is just not true at all either and the reason is because everyone has passion for the products that they’re working on especially when it comes to their first product but the fact is that passion for your product is just not enough. You have to be able to get over your fears. Be able and willing to go talk to people that you’re not necessarily comfortable talking to and that’s something I think a lot of people miss.
[28:06] Rob: Yeah, I mean there are a lot of ways to have a competitive advantage. I like to think that each person has a competitive advantage that – that really is something that they should leverage, just kind of their number one skill and so some people are awesome networkers. And if you have just a fantastic network and that’s what you’re really good at, then that’s your competitive advantage and that’s what you should totally leverage to build your app. If you have a real like an engineering mind and you enjoy marketing, you should combine those two and become, you know, an engineer-driven marketer and that’s more of like Patrick McKenzie is, that’s kind of stuff that I do, a lot of testing, conversion, improvements and I think you died head first in to that. And the other – other people just have a gift for product, right, design UX, that kind of stuff and that’s kind of their whole thing. They don’t really know a lot about the metrics and the analytics and they don’t care because they can build such a gorgeous product and they have at least some way to market it. And so, I think you really need to think about more practical things like that in terms of competitive advantages rather than something that is as ephemeral at passion because like you said everyone who’s building an app is passionate about it. So, it’s just not enough to propel your app in the success.
[29:15] Mike: Number eight is that you have to raise funding to launch a startup. And I think that the word startup has been seriously abused over the years. I read something recent from Paul Graham where basically he said, “The definition of a startup is this…” So, I think that there’s a lot of fighting about exactly what it means to launch a startup but at the same time, I mean the stuff that we’re doing on and working on I mean we consider them to be startups whether you want to agree with the definition or not. I mean you’re working on a software startup because it’s a — it’s an – basically a new software company. So, but raising funding is not necessary to launch a startup. You don’t need any money or whatsoever. Didn’t Patrick McKenzie say that he launched the Bingo Card Creator with $60?
[29:56] Rob: I think it was, yeah.
[29:57] Mike: There are definitely ways to launch a product and a company with very, very little money. You definitely don’t need to go raised funding and the fact is that raising funding is not necessarily going to be answer to all your problems anyway. In fact, it may very well create more problems.
[30:13] Rob: Right and I mean I want to be clear, we are no anti-funding, right. We’re not anti-venture capital. I’m anti everyone thinking that you need to raise angel fund and venture capital in order to do a startup, in order to start a software company, in order to launch B2B website. Now, I do know that there are cases where the only way you’re going to grow that and the only way you’re going to be scale it quick enough is with funding. What I’ve seen is that the more money you have at your disposal, the faster you can grow, period because you’re not waiting for your revenue to come in to then reinvest in a business. Once you have a flywheel in place, a marketing flywheel and you know that you’d just need to dump a bunch of money in to it and more will come out at the other end, then you really do want as much money as possible. And so if you’re waiting for one in $2,000 a month to come in to stuff it in to there, you would grow a lot faster if you had 10 or $20,000 a month to put in to that engine. So, once you are ready to scale, I absolutely think funding is an option for people but it’s not necessarily and if you don’t want to go that route and you want to maintain control, this is such, you know, something we espoused so much on this podcast is you don’t need it to get off the ground and certainly not to build a business that will support you and your family and your lifestyle in the way that you want.
[31:23] Mike: Yeah, and I totally agree with everything you said. I mean the one thing that you brought up was that we’re not anti-funding, it’s just that you don’t necessarily need funding and that leads in to number nine which is you need a co-founder. And I have the Single Founder blog but at the same time, I’m not anti-cofounder. I’m just anti the idea that you need a co-founder in order to succeed. So, I know a lot of people out there who are building these one-person companies that they’re the single founder of that company and they’re doing quite well and some of them will bring employee, some of them don’t. It really depends on what their goals are but you don’t need a co-founder to succeed. And in fact a co-funder, I mean I think that Paul Graham wrote an essay where he basically said that that’s actually one of the risks in having a co-founder that somebody you can fight with. He’s like one of the number causes of a startup failing is fighting between the co-founders. I just think that it’s very important to differentiate between having a co-founder is in some way is nice and some way it is not versus that you absolutely need one in order to succeed.
[32:25] Rob: There are obvious benefits to having co-founder, right? It gives you that ongoing mastermind group, it’s the ongoing support from someone you keep each other’s morale of and as long as you’re on the same page and you share the vision of the startup, then it tends to be a good thing. Now, it does mean you have to grow that thing twice as large to get the same type of pay out. So, if you’re going after a hundred million dollar evaluation raising funding, it’s kind of here nor there, right, because it doesn’t actually matter if you take home 50 million at the end of the day or a hundred million because you’re not going to be able to spend that in your life but if you are building smaller niche apps and you’re bootstrapping, it becomes a lot harder to be because you have to then pick a market that’s twice as big. You have to build your app to twice as much before you’re going to be able to quit your job. Well, it add some complications at the lower end, frankly of in common app size, you know, startup size. So, there are definitely positives and I can understand why people want to take on co-founders but in general when people ask “Should I,” I tend to say, “You know, if you’re asking that question and you don’t have someone already in mind, then I would basically stop this through this point if you can get it done on your own, then do that.”
[33:32] Mike: Number ten is that you just need one big break and your business will be huge. And this is another one of those fallacies that people think, “Oh, just if I get listed in TechCrunch or if I do this or if I do that, if I get on that podcast, then I’m going to get a lot of press and that would be the end of it and that will kind of push me over the edge.” And it’s really not about that. I mean what you’re really looking for is this incremental wins that build upon each other. I mean there’s a reason there’s a hockey stick growth curve and it’s there because there’s all these other previous wins that have to happen in order for you to start making up that growth and as you make those incremental wins, they build upon each other. There’s no one single thing that you can do that is going to just make your business huge.
[34:14] Music
[34:17] Mike: And number eleven is to scratch your own itch. And this really means building an app that you need and by definition, other people are also going to need that. And again, this is another one of those things that is not necessarily true and there’s a lot of people who’ll say, “Well, don’t sell to developers because they don’t pay for stuff,” “Don’t sell to designers because they don’t pay for stuff.” And that’s – those things aren’t true either. I mean if you’re selling something that solves a problem, people are going to buy it. That said, just because you have a problem does not necessarily mean that every one else has that problem as well. And it may be true but it’s not necessarily true. So, you really have to start looking at those types of problems that you’re having and ask other people if they have those problems as well. And if they do, then you may very well have viable products but and this also works in the reverse as well. Just because you don’t have a problem, it doesn’t mean that other people don’t see it as a problem.
[35:06] Rob: Yeah, this one the “scratching your own itch” I’m pretty sure it’s popularized by 37signals because they just built software internally and then started releasing it and other people needed it as well. That worked great for them. Obviously, they have a great niche business, people estimate brings in 20, 30 million a year, that’s awesome. The thing is though as overtime, you know, over the past 7 years since they launched Basecamp, everyone has taken that mentality. And so, you know, every business process that I can imagine for designers and freelancers and developers and small software shops and small, you know, small design shops, whatever has been built internally and released it with Fog Creek, right with FogBugz, with was the SourceGear did with their plug in to Visual SourceSafe back in the day. So again, you’re right. It’s not to say this does or does not work, it’s just it has been espoused as something that that’s what you need to do and that’s the only way you should build software.
[36:00] And if you’re not scratching your own itch and you’re not customer number one, then you’re doing the wrong thing. It’s just – it’s incorrect. I do believe that if you are customer number one, you do have an advantage because you do know your customers and you do know what the product should do. It gives you some insight but it’s absolutely possible and I’ve seen many people do it successfully to build an app that doesn’t serve you, yourself, you know, as you stand today. So, it’s like you said, you need to take this with a grain of salt and look in to it more. Then if you do have a need, that’s great but you need to then do more research to figure out who else has that need, how expensive are they to market to, what can you charge for this, is this then a viable product option just because you have a need in solving your pain, doesn’t mean it’s actually a viable product.
[36:44] Mike: And I think what you said there is – also important because if you are customer number one and you have already validated that other people need this product as well, being customer number one definitely helps you. I mean that’s – that’s a definitive advantage over a product where you’re not necessarily going to use it. That doesn’t necessarily mean it’s not a viable product. I mean you can certainly market and sell a product that you don’t use internally. It’s just that it’s probably not going to be as good as if it was designed by somebody who does use it internally in our regular basis. So to recap to eleven software startup myths, number one is owning a business means you can never go on vacation. Number two is that mailing list don’t work and are nothing more than spam. Number three is “I’m going to make billions or I’m going to make nothing”. Number four is “I have to do everything because I’m the one who understands how everything is supposed to work”. Number five is “I don’t know where to start or I don’t any good ideas about anything that’s never been done before”. Number six is to build something that people want. Number seven is that passion is a competitive advantage. Number eight is you have to raise funding to launch a startup. Number nine is you need a co-founder. Number ten, you need just one big break and your business will explode and number eleven, you should scratch your own itch.
[37:51] Music
[37:54] Rob: If you have a question or comment, please call it in to 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 this podcast in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll find a full transcript of each episode. Thanks for listening. See you next time.
Episode 107 | AuditShark, HitTail and Other Interesting Stuff
Show Notes
- AuditShark
- HitTail
- MicroConf 2013
- Altiris Training
- Rob Walling at BOS 2009
- Micropreneur Academy
- DotNetInvoice
- AdRoll
- StandOut
- Double Double
Transcript
[00:00] Rob: In this episode of Startups of the Rest of Us, Mike and I are going to be talking about Audit Shark, HitTail and what we’re looking at doing in 2013. This is Startups of the Rest of Us: Episode 107.
[00:10] Music
[00:18] 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.
[00:27] Mike: And I’m Mike.
[00:28] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What is the word this week, Mike?
[00:33] Mike: Well, I’m working on getting the AuditShark out the door to my early access customers next week.
[00:38] Rob: So to recap, it was – was it September 10th was the original early access date?
[00:43] Mike: Uh huh.
[00:44] Rob: You got an answer from a couple of people and then you ran in to an issue that if I recall took about six weeks to fix. There was – well, it was a bug or missing feature or something.
[00:52] Mike: Right, it was a missing feature that I thought would take a week and then I ended up taking six weeks.
[00:56] Rob: So that was September 10th. So, then somewhere around late October did you get it back in your hands or is there something that cropped up since then?
[01:02] Mike: I think it was just the matter of having the time to actually dig in to it and figure out what needed to be done and you know, there’s all these other ancillary things that needed to be done because I’ve got a couple of different components that have to pass data back and forth. So, between me implemented things on one side and somebody else implementing things on the other side, it’s just – it took a little bit longer.
[01:21] Rob: So, you and – you said you’re looking now on getting early access back in to the hands of customers, is that right?
[01:26] Mike: Yup. So, I think I’ve got all the bugs worked out in the database synchronization and that everything seems to be working properly now. There’s a lot of other bugs that I need to fix but the product is basically functional and I can – I feel like I can release it now. I mean it’s – I’m obviously not happy with how everything is all situated but at the same time I feel like I could give it to somebody and they would actually get some value out of it.
[01:48] Rob: Right, if you’re not embarrassed by your 1.0, you waited too long?
[01:52] Mike: Right, right.
[01:53] Rob: We’re good. So, next week when we record, you will probably – there’ll be some customers using it again you expect?
[01:59] Mike: I don’t know because this week is Thanksgiving. I don’t know whether or not I’ll be touching base with them this week. It may not be until Tuesday or Wednesday of next week. I anticipate within the next day or two having things able for them to actually use it. I don’t know if I’ll touch base with them just because it’s a holiday week.
[02:17] Rob: Yeah, that’s the tough part about this time of the year. I was just talking to someone about this at lunch and we have a couple of HitTail features that are just wrapping up in terms of ready to go live and launching market and I think I’m going to put a hold on them until mid January. You know, maybe there’s a week or two in early December or some people are kind of looking around, but historically December is just a terrible month for non-consumer apps, all my B2B apps just go in to hibernation and that’s why it’s nice to have a SaaS app. It does have recurring revenue because the growth goes in to hibernation but the income still comes in. The other apps like DotNetInvoice that just kind of take a dive since they’re one-time purchases. So, do you think you’ll be able to get the early access in to other folk’s hands in early December though?
[03:00] Mike: I don’t know. I have a few people who have already make created accounts in the system and I’ll probably talk to them and say, “Hey, you know, just letting you know the stuff is all out here and you can use it now,” and start sending in to their systems and it’ll be able to give them the results and stuff that I would expect. And right now, the big thing on my plate is to just build a policy that will allow them to pull those results back and start looking at them and say, “Oh, I should fix this,” or “I should do that.” There’s just tons and tons of other things that are in place. I hesitate to start going in and approaching new people who aren’t really familiar with it to be able to do any of that stuff because it is December.
[03:37] Rob: Yeah, for sure. So, what is your timeline then? What – what happens from there? Like are you ready to – to launch and start marketing by mid January? Do you think you’ll be there?
[03:50] Mike: I’m thinking mid January and to me everything looks like it’s a go. It’s just like the time of the year is just not good. That’s really what it comes down to. At this point, I’m embarrassed enough by it that I feel comfortable moving forward. It’s just – like I said, it’s just not a good time of the year. So, I feel like if I were to try and move forward right now, it’s probably just not going to work out very well and I would much rather take the time and effort to make things a little bit less embarrassing I’ll say and put things in people’s hands, you know, early January and move forward from there.
[04:20] Rob: Very good. So, I have some – a couple of cool announcements, podcast and MicroConf related. First is our RSS feed now goes back 100 episodes. Other one, hopefully, more exciting, we have super tentative MicroConf 2013 dates and a location. Don’t book any – any plane tickets yet but maybe pencil it in on your calendar. We’re looking at tentatively April 28th, 29th and 30th and in Vegas. And we did actually look at six or seven different cities this year. All signs are pointing towards late April having it in Vegas again. So, pencil it in and we’ll obviously, you know, be in touch more in the – in the coming weeks we’ll be talking about it and as always, go to MicroConf.com, being the first to hear about when tickets go on sale. We did sell out in about two and a half weeks last year. So, assuming the same thing happen you’ll definitely want to be on that e-mail list.
[05:12] Music
[05:16] Mike: So, I’m putting together an e-mail life cycle campaign for my Altiris Training site and I’ve been getting traffic but it’s just not converting at the rate that I’d like. It’s – it’s converting a lot lower. I mean it’s in the typical 1 to 2% range that I think most people would kind of expected to be but I really like to raise that quite a bit more. So, I’m looking to putting together a – I’ll say a pre-life cycle e-mail list so that when people come to the site, they can sign up for the e-mail list and get some more information about not necessarily the product that I offer but educational tips and things that they would be able to do with the software when they start learning the materials that I teach them. So, trying to get them to come back to the site as oppose to people who just come to the site once, they never come back.
[05:59] Rob: You saw my Business of Software talk in 2009, didn’t you?
[06:02] Mike: I probably did, yes.
[06:04] Rob: So, if you haven’t seen the video, search for I guess Rob Walling Business of Software and I honestly don’t remember if it’s 2009 or 2010. The entire talk focuses on using e-mail to get people to come back to your site. I’ve been like such a fist hounding proponent of that approach since then and it was something that I work – it had worked with the Micropreneur Academy. It had worked with DotNetInvoice and frankly with every one of my products eventually gets e-mail integrated in to that, that front end marketing cycle. And about six weeks ago, we launched something very similar. You know, you’re talking about what you’re doing in Altiris Training, we launched something on HitTail and if you go to hittail.com and actually it’s not – I have it off the homepage right now.
[06:41] But if you got to hittail.com/faq as an example, you’ll see the little thing in the lower right. It’s kind of like some – some sites have the chat window on every page. We have the e-mail signup widget. It has definitely worked well. It’s good that you’re – good that you’re working that in because, you know, almost guarantee to bring people back to your site and it’s returning visitors who, you know, are the ones that purchase. The other thing that you may want to think about is to do retargeting and just sign up for a service like AdRoll and you install a tracking pixel and then people when they visit your site if they are floating around the internet, then you can, you know, just play ads to them.
[07:21] Mike: Yeah, I thought about doing that just because I know Google has something very similar to that where it just follows somewhere around. I’ve seen how it works and I’ve seen the statistics on how well it works. It can be disconcerting. I’ve experienced it myself and I’ll say there’s a fine line that you have to make sure you don’t go over because if – if you see those ads on every single site that you go to, then there’s a serious problem.
[07:43] Rob: Yeah, it’s a stalker.
[07:44] Mike: Yes.
[07:45] Rob: A stalker.
[07:45] Mike: It crosses the line in to stalker though. I’m hesitant to start spending the time there because I don’t know if I would have this – the time to spend on making sure that it doesn’t cross that line.
[07:54] Rob: It’s really easy. You just flip a bit. [Laughter] It says how many maximum times to show to someone and you can just choose. And I actually wouldn’t – so I wouldn’t recommend using Google for it for a number of reasons I won’t go in to but there are other services. One call the AdRoll, AdRoll.com that actually uses like seven or eight different ad networks. Google is one of the ad networks they use and so, it has an umbrella overall these networks since you lot more exposure and you have more kind of more control over – over what gets displayed and stuff. So, anyway, just a thought. For doing any type of the advertising, retargeting is – is a necessity. I would not recommend by the way ReTargeter.com I tried and I didn’t want – I did not like them. They did not work out at all. So…
[08:31] Mike: Cool. So, what else have you got going on?
[08:33] Rob: Well, I was doing some review of what HitTail has been doing. You know, the year is coming to a close here and I was just kind of looking at goals for 2013 and trying to figure out where do I want to bring HitTail in 2013, what other things that I want do. You know, I’ve been kind of hinting around that I want to launch a new app and so I looked back at the HitTail growth curve. And over the past five months, it’s been growing 30% a month. It is averaged that. So, you know, someone has been hiring at some level but I hadn’t put it in those numbers because I look at everything in dollar amounts but it’s pretty freaking crazy to think about that. And actually it’s been over the past 13 months, it was 19% per month which frankly that it sounds – I mean it is a lot but it started pretty small, right? It wasn’t – it’s not like it was doing 10 or 20 grand when I acquired it. So, growing it 19% a month is good. I guess you do it for 13 months straight, that’s kind of a [Laughter] – that was surprising to me. It did sound like a lot.
[09:26] Mike: That is a lot. I think I’ve read something recently Paul Graham had advocated that for a lot of their Y combinator startups. They shoot for something like between 5 and 10% of growth rate per week.
[09:39] Rob: Yeah.
[09:39] Mike: So, that’s —
[09:41] Rob: So, 20 to 40% per month, that is crazy.
[09:43] Mike: Uh huh.
[09:44] Rob: That’s crazy in terms of a bootstrapper, you know. If you’re going after venture capital, then yeah, that’s like you said that’s where you need to go. And they measure it per week because they’re only air for twelve weeks.
[09:54] Mike: But if you think about that, that’s about 21% per month. If you start multiplying those numbers out I mean that comes out to a 21 1/2 % per month. So, you’re just not too far behind that —
[10:06] Rob: Yes.
[10:06] Mike: … in terms of HitTail growth.
[10:07] Rob: Right, over, over —
[10:08] Mike: Over 13 months, I mean that’s a crazy amount of growth.
[10:11] Rob: Yeah, so I mean obviously it has to slow down at some point because you just hit like eventually your churn when you have so many paying customers, even at a low single digit churn rate, you’re still losing a huge amount of – of customers and you just have to add them back in faster than you can’t find them fast enough. So, every business plateaus and then you have the lower churn and find another flywheel marketing approach. But I haven’t hit that next. When I hit the first plateau – revenue was around I think it was about 5 grand and I went a couple months there and then shut up and I haven’t seen – haven’t seen the next one. So, we’ll see when that happens. But I did want to say that I think the biggest reason all I know that there has been a couple of the biggest reasons for the growth. One is measuring the right things and actually looking at the data and focusing on these metrics like lifetime value and churn rate and paid conversions and then the other thing has been finding multiple marketing approaches, not a lot of them. It’s been trying probably twenty different marketing approaches but finding three that have really driven the bulk of the growth. And it’s – even if I name the marketing approaches, it’s not going to work the same for every business. You really do need to try a bunch of them and figure out which ones you can scale up.
[11:20] Mike: Yeah and I think that’s a hard part for most people’s figuring out what those three approaches are because you do have to try so many things and it’s not hard to try them. It’s mentally difficult to go through the exercise of failing so many times until you figure out what actually does work.
[11:33] Rob: Right and I think the first step before – the first step that I was able to leapfrog by buying HitTail is that I already knew that it’s solved the problem, right, it had problem solution fits so that I could kick — as soon as I get the redesign done and stabilized it, I knew that it solved someone’s problem. It was just me finding that market and figuring out the best way to market to them. And so finding that market took some trial and error and then once I figure it out, “Oh, these people really understand it, this group,” then trying those 20 marketing approaches in to that niche and figuring out all these three have are the ones that have worked in and some of them are not repeatable like one of them worked really well and gave me a big 30, 40% rise in a month but I can’t do it again. It was a one-time thing but that’s okay, right because it worked and got, you know, got me to the next – kind of the next plateau. It’s always an interesting ride and that’s why I mean one of the reasons, you know, you talked about doing AuditShark and I talked about doing HitTail, they’re bigger ideas but they – they are new challenge, right? It’s learning something new and that’s – that’s been the fun part of it for me.
[12:34] Mike: Cool. So, are you on Twitter very much anymore?
[12:37] Rob: So, I do check in probably once a day when I’m on my phone. I have to admit I haven’t seen you on very much at all and I’m kind of – I’m not seeing a huge point to it right now. Are you on it and I’m just not seeing or are you just not been checking in?
[12:50] Mike: I just haven’t really – little of both, I mean I check in once in a while but I don’t really make a concerted effort to post on Twitter or to actually pay attention to what’s going on and I don’t know whether that’s because I’m just not really interested or because I feel like I don’t necessarily have anything to say. I mean I feel like I do have things to say. It’s just I don’t have time to sit there and do it in a hundred and forty character increments. I mean I feel like if I’m going to provide somebody with value about, you know, insights or thoughts that I have on something, I’d rather do it on a forum that gives me more than a hundred and forty characters than, you know, something like Twitter.
[13:25] Rob: It’s more of a rare breed. I think the old school kind of blogger types you look at Joel Spolsky and you know, maybe Paul Graham and I don’t even know the – a lot of the guys that kind of you and I grew up reading, you know, during our formative startup years, they don’t really use Twitter that much. Joel is on there a little bit, you know, every – a couple of times a week maybe and even Jeff Atwood is not on there nearly as much as I would, you know, think he might be. When you blog for so long and you think your ideas through to that level, its – you’re right, it’s just hard to sound intelligent or to like be groundbreaking in a hundred and forty characters. Now, there are people who did it very well. Actually, I do more retweets and responding than I do sitting down to actually draft original Twitter content. I don’t know. It doesn’t appeal to me. I don’t feel like I can provide that much value. I feel like you and I can provide more value being here on the podcast just discussing stuff and it’s a lot less effort, a lot less strenuous than to sit there and think, “All right, what can I say that’s intelligent and groundbreaking in these hundred and forty characters?”
[14:20] Mike: I think that’s why I’ve shut away a lot more recently than I have in the past from writing bog articles as well just because I share so much on the podcast that it’s like okay, well, I can rehash this particular idea on my blog but kind of what’s the point.
[14:32] Rob: Yup, we’re both on that route. I haven’t blog nearly as much in the last year than, you know, that I had in previous years and one of the reasons because the – podcast is just more fun. It’s like a less time consuming thing and I actually feel like it could – it provides more value to the people who are really in to it like it’s just a closer medium. It’s more intimate.
[14:50] Mike: It’s a different medium because when – when you’re writing a blog post, you can write whatever it is that you’re going to write but within any given sentence, you can say it in like ten different ways. I mean you can put intonations on different words and the exact same words can have different meanings based on what you emphasize. So, I think that doing a podcast, the words that you say are completely different than the words that you would write down even if it was going directly from podcast to transcript. I mean you listen to a podcast versus reading the transcript of that podcast. They’re two entirely different things and you can read the transcript first and then you go back and listen to the podcast say, “Oh, that’s what he really meant.” And I think it’s just a different mental image that people are getting from that podcast versus the transcript.
[15:33] Rob: Have you thought about your goals for 2013 yet?
[15:36] Mike: Not really, I really haven’t.
[15:38] Rob: Do you set – do you tend to set goals?
[15:40] Mike: I usually do but the problem that I find is that I don’t actually get around to set in them until some time in January or February. So, at that point, I’m already short changing myself by like a month or two. So —
[15:51] Rob: Yeah.
[15:52] Mike: … I don’t know. I wonder if this year I should probably take a couple of hours or days or something like that at the very end of this year to say, “Okay, let me sit down and actually figure out what it is that I want to accomplish this coming year.” I mean I have a few things in minds but nothing that I’ve really written down and I committed to myself.
[16:09] Rob: Right, I have not tended to do annual goals. I am a goal-oriented person but I haven’t tended to say – tended to say, “Oh, I’m going to do it, you know, next year.” Just start to thinking what I want to do in 2013 and the interesting part is I didn’t have to think very hard. It kind of just – it all just fell out because its things that I am right on the verge of working on now and I know that they’re going to take longer than I think, you know, all of them. So, I have some things – you know, one thing is like, “Oh, I’m going to get that out here in about 90 days,” but it’s like well, it will be 90 to 120 days. And then I’ll be working it on after that for several months.
[16:41] So, it really is more of a 2013 goal. I did want to throw out these three goals that I have. One is to I want a 2.5X HitTail in 2013 and I have a plan to make that happen. And then I have three info products that I’ve been – that have been sitting on my list, on my back burner percolating for about 18 months and I just have not done another – really haven’t done an info product since probably maybe my book a couple of years ago. So, I mean by the time we do the podcast and do MicroConf and you know, run my apps, I just haven’t – haven’t meant – made a time for it. But I am now taking the step forward and have a date set in the next couple of weeks to sit down and do one of them and I’ll probably launch it after the first of the year. And so the goal would be to launch the other two later in the year and they’ll be on, obviously, start up at later topics.
[17:29] Mike: Info products are interesting because as a developer you look at it and you’re like, “Oh, this isn’t a real product, you know.” It’ll cross [Phonetic] around the real product part of it. And it’s just like it really is because if it’s bringing in revenue, then what difference does it make how you got there and I think that when you’re just starting out, you look at those info products. It’s like, “That’s not a real product. That’s not a software product,” but at the end of the day it doesn’t matter as long as it’s actually bringing in that revenue.
[17:52] Rob: Well and providing value. You can often provide as much or more value giving someone information and you can trying to build an app to help them do something. A lot of the times it’s not that they don’t have the software to do it, it’s that they don’t have the knowledge to do it and sometimes you need both but I actually think there’s a – there’s a lot of value to be having and there’s a lot that’s not being said on certain topics that I feel like I have – I’m assuming unique inside in tiers so. I agree this ties in to the stair step approach that I mentioned last time when we’re interviewing or discussing with Brennan Dunn and how he has a couple – he’s like – what is it? An in-person seminar that he gives and then he has the E-book he has written that have helped him bootstrapped his way to being supported by products. And I guess to wrap that out, the last goal that I have for 2013 is something I’ve mentioned already, it’s to launch a new app and I have a specific revenue goal as well on the first six months after launched. Were you and I really going to build the same app?
[18:44] Mike: I think so. It’s interesting that we have that conversation because I saw in the outline that you’re building something and I’m like, “I wonder if it’s this,” because you were pretty vague and I’m like, “This is what I’m building in the next couple of weeks.” You know, is this is the same thing that you’re building just based on the notes that you said and it’s basically the same thing.
[19:01] Rob: Yeah, it’s similar. It’s probably got 70% overlapped I’d say.
[19:04] Mike: Right.
[19:05] Rob: I’m at the point I’ve well in the customer development. I have eleven commitments to – I’d say they’re purchase commitments. So, basically commitments to sign up for the app and to pay at this price point assuming it does this, assuming it has a positive ROI and its say – it’s a marketing tool and the e-mail marketing space which is something I have – I have a lot of experience and I feel like I, you know, could lend some expertise to and there’s – there are several things that are lacking in today’s e-mail marketing tools. So, yeah, it’s good. I know the numbers have ROI works out. So, I have high hopes for this. I should know – I’m sure there’s people out there thinking we struggle at the entrepreneurial ADD thing, right? Because it’s a lot of people bounce around from one idea to another. I mean I never get one off the ground or they get off one of the ground and get it to a point, I mean get bored off it and jump to the next one and leave the other one to die. And that is not what’s happening here.
[19:56] My whole approach of having a portfolio of product is that I build an app, buy an app. I spent 12 to 18 months on it and then I either automate it, I hire someone to manage or I sell it. I do want of those three things. I have almost never let an app die unless there’s been some specific instances where Google has, you know, done some things and the app will kind of die on its own but it’s nothing that I could have – I couldn’t have saved it by focusing more time on it. It’s just been kind of a consequence of relying on Google for traffic for that particular app. But I do have – I’ve talked about having a product manager for HitTail and we have a plan in place to continue growing HitTail. Like I said my goal is to 2.5X from where it is now over the next year. So, I’m excited.
[20:25] Mike: The thing that I’m looking at building is more specifically for my needs versus I had in it mind to productize it I mean because I’m so focused on AuditShark right now that I know that productizing what I was going to be building was not necessarily in the near term but obviously, you’re much further along in that than I am. So, and I think it’s probably best if I build what I have to do for myself versus trying to productize it because I need it for Audit Shark. I need it for some of the other things that I’m doing. At the end of the day, I don’t necessarily know of what you’re going to be building is what I need.
[21:13] Rob: Exactly. We do have different goals as we describe the thing we’re going to build. Yours is focus on kind of a different end goal. I think they’ll be overlap of functionality but the fact that you need it now and not in three or four months and that you have a developer, you know, you said you’re training or kind of working with the new developer to find out if he can stick around with you long term, it just seems like – like be a natural fit for that.
[21:34] Mike: Uh huh.
[21:35] Rob: Cool though I’ll be mentioning probably putting up a landing page and breaking ground the first lines of code here in the next few weeks.
[21:42] Mike: So, you had mentioned that you have a product manager for HitTail, right?
[21:46] Rob: Yeah.
[21:46] Mike: How did you go about finding a product manager for that? I mean what was your – your thought process behind that? I mean you said that you – you kind of have a plan in place for at least a mental concept of what you’re going to do with a product after 12 to 18 months but isn’t it difficult to kind of hand that off to somebody and just say, “Okay, well, this is going to be something that you’re going to be working on,” and do you have them working at full time or…?
[22:08] Rob: Yeah, so what I did was I had known – I’ve known this guy for over a year, about a year and a half and we’ve – we’ve hang out a lot. I would not — I mean I would have a hard time. I shouldn’t say I would not but I would have a harder time if I was just posting a job description somewhere, you know, and saying, “Looking for a product manager,” because it’s such a unique skills that you need to run these kinds of products because we don’ have a team of developers and designers and people, marketing people. It’s like you need to have all of those skills in one person or be able to work with my contractors, you know, who I’m already – who I’m already using for the skills that I lack. And so, it just so happened that I wasn’t specifically seeking a product manager. I was just going to keep working on HitTail and then once I realize that, you know, this guy that I knew had the ability and was going to – he’s going to go start doing consulting and I just said, “You know, long term, do you want to launch products, you’ll – you can learn more from me by working for me than doing anything else. And if you do this and you’re able to handle the product, then it only makes sense that either we can grow it twice as fast or that I can then branch off and build another product which obviously ultimately means that I can grow revenue for the whole company twice as fast or more for that matter.”
[23:18] And so, it really was a – I’ll say it was a trial run, you know. I basically brought them on half time about 20 hours a week. He’s a contractor. He evaluated me as a client and I evaluated him as a guy who’s running — running the app. Overtime, he’s just proven out that he can – that he can handle a job and so I’ve given him more and more responsibility. Until at this point, I’m doing – I’m actually doing the last several weeks doing very little on HitTail and it’s, you know, it’s continuing its growth and he’s managing making – he’s making now high-level decisions on the thing. I think ultimately long term, we will likely it’s possible we move towards like an employee arrangement.
[23:55] Mike: That’s interesting. I mean one of the things I’ve had some issues with lately is just letting go of certain things. I think part of being a programmer is just being a little bit OCD about certain things and you know, sometimes it’s just hard to let go of things that are you look at and say, “Oh, that’s not actually important in any way, shape or form,” but for some reason you still it is. And I feel like product management in some sense is one of those things where if you get somebody who’s good and they know what they’re doing and they can actually do the job, you can just kind hand it off to them and they’re going to do as good job as you and don’t get me wrong, it’s not that it’s not an important job but it needs to be done right and you have concerns about just handing that off to somebody.
[24:37] Rob: Yeah, definitely requires the right person, right? Because if you hire the wrong person for the job, there’s no chance they’re going to do it as well as you do. You mentioned having those deal over certain things and not being able to letting them go. Do you have any examples of that?
[24:50] Mike: I think one example that comes to mind is probably like the backend database design for AuditShark and how everything fits together. I mean because there are so many different moving parts within AuditShark, it’s very difficult to just for me to just hand that off to somebody and say, “Okay, well, I expect you to start making architectural decisions about how the stuff is going to interact with each other,” because I have a visual studio project or solution file that has I think 10 or 12 different projects in it. And most of them compile down in to a DLL that is then use in other projects and it’s just very difficult for me to conceptually just hand that off to somebody and say “I would like you to start making some of the decisions about how these pieces are going to interact with each other.”
[25:31] And then that also comes in to play with like, for example, the database design where I did all the database design for not only AuditShark but for the AuditShark pro version of the software that I haven’t really talk a lot about. I mean it’s mostly just the policy build or piece of it that I’ve talked about to people but that I can envision being its own product in the future for a different market segment. So, those are the types of things where I look at and say I have visions long term of where this is going to go or where it can go and I want to make sure that I’m not shooting myself in the foot with certain decisions down the road.
[26:06] Rob: Oh, absolutely. It’s been about two months since – since he started, the product manager, and he originally was just doing tier two support because I have a virtual assistant who does tier one. And I say it’s a virtual assistant. It’s guy who’s work – work for me now for a year and he actually does our Academy Support as well and he’s really good. I mean he’s not just – he’s not just that. He’s actually stepped up in to – in to a true support role. And so, the product manager starts just doing very basic tier two support and learning the code and it wasn’t until three or four weeks in where he made a small code change. And then six, seven weeks in, we needed some new database tables and so, I said go design them and run them by me. And that was it. He went in all the leg work. That’s for – it was the Basecamp integration.
[26:49] So, he went and looked at Basecamp, looked at their API and then he put – showed me to create scripts and I looked at them and I actually ran them on production myself. And so that’s the level of control that I – that I maintain. Now, probably with the next one – you know, I better – I’ll continue to review them because it doesn’t take me much time but I don’t feel like I need such hard core control that, you know, I need to keep maintaining the naming of everything or something like that and but maybe you do with AuditShark and if you do, you could still do it in a review process. You know, you don’t actually need to do the design as much as just confirm that it meets your design standards and the standards of your future vision for the product which is what I’m able to do with just a few minutes.
[27:28] Mike: Yeah, I totally understand what you’re saying. I mean there’s one contract where I have had working for me for almost a year now on a piece of AuditShark when I send him something. I said, “Hey, can you make sure this gets done for this piece of it?”And he wrote me back and he’s like, “Well, here’s the code. This is what you asked for but I have a concern about X.” And that literally sat in my inbox for almost a month before I actually had time to go back and look at it and I said, “Well, let me try and figure out what it is that he’s actually saying here that should be done and if there’s a different way to do it,” then he’s like, “Oh, well I’ll come back to you and let you know.”
[28:00] And I look at it and it took me probably 45 minutes to an hour to kind of review what it was that he was saying and what he have done but at the end of the day, he’d made the right decisions like there – there’s nothing different that I would have done but it was a very, very important piece of the product. So and at this point, I mean there were some other things that he came back to me with like there were probably half a dozen things I went through today and looked at them and said like – and after looking at that one thing, I just looked at the other ones and like, “Yup, I’m just going to approve this one.” I’m not even really going to look at it. I’m just going to approve because I’m sure that he did a right thing there.
[28:34] Rob: And that’s a thing, if you hire someone or you bring them on, you can’t trust them to make decisions from day one, right. You have to – no matter how smart they are, no matter how quickly they learn, they’re going to make some mistakes and you have to help them learn why that, you know, that was a mistake and just course correct them and you’ll know within a month after you course correct them a few times, certain contractors no matter what – which job they’re doing whether it’s development, design, support, they will continue to make similar mistakes and those are the ones that you know probably never going to be you’re A players. But it’s once – you correct them once, twice and suddenly after that, you’re not correcting them at all, they slowly build your trust that they’re going to make good decisions over and over and over again.
[29:15] And then it comes down – we talked about this before but they’ll make a 19 decisions exactly like you would and then maybe they’ll make the 20th decision “wrong” in your opinion. You know, that you would made a different one that probably would have been better. But the fact that they didn’t have to check with you on all 20 of those is totally, totally worth the fact that one decision is made slightly differently. And I would venture to say if you hire really smart people and that’s how I feel like I’ve done here, they actually will make quite a few decisions better than you would. They’ll make some better and some worse and honestly, you know, it’ll – it’ll even out overtime or but you hopefully, above or you would be if you’re trying to run everything.
[29:52] Mike: Well, I think the other part of that is that by them making reasonably good decisions, it freeze you up to not have to make those decisions because I spent probably 45 minutes to an hour trying to figure out, it’s like, “Okay, well one, what are our options here and two, what sort of decisions should be made?” And after reviewing everything, I was like he made the exact same decisions I would have made and it was not – it was not a trivial decision either. I mean it was actually pretty complicated and it’s just he made the right decision. I mean what else can you say at that point?
[30:22] Music
[30:25] Rob: So, I have two kind of book reviews or two books that I’ve read recently I just wanted to mention what it’s called StandOut and it’s from the guy who did StrengthsFinder but it’s a new test. We did an episode about StrengthsFinder where you and I both took this test and it kind of defined your strengths or determines your strengths and then it allows you to kind of focus on those moving forward and that’s the theory. This – what StandOut does is instead of having 36 different strengths, StandOut has basically 9 clusters of strengths and so it’s the same thing. It’s like 9 or 10 bucks to get the Kindle version and then you can take this 20-minute online test and then it spits out to – it spits out all 9 of yours in order but your top 2 is really what’s highlighted.
[31:04] So, it’s fine. It’s definitely something I recommend. With the test I’ve taken, they definitely hit the nail on the head in terms of who I feel like I am and what I feel my strengths are. And so it reinforces things. It’s a reminder to me. I redo the reports and I think, yeah, I should be doing more of this. And that’s actually one of the reasons why I have the goals that I do for 2013 of launching a new app and doing info product and growing HitTail but not just trying to sit there and focus on one thing. It’s that I’m – one of my aspects, the StandOut aspects is I’m a creator and I’m like I need to be creating new things or else I’m not living optimally and I’m not doing my best professionally. And so, it definitely fits in line with what I’m doing.
[31:41] The other one, the other book I had recommended to me a couple of times is called Double Double and it’s from the guy who started 1-800-GOT-JUNK? and College Pro Painters and he’s an entrepreneur that’s grown to businesses very large. And the premise is about doubling your revenue and your profit in three years and that’s why it’s called Double Double. And it actually sounded pretty intriguing but I definitely would not recommend it for our crowd. It’s water down because he was basically trying to write – I hate it when people do this. They try to write these very general entrepreneurial books and say super high level, you know, you should be persistent and you should set a goal and then do some stuff to achieve it, you know, but it’s like there was no really action that I could take on it.
[32:22] You know, aside from, all right, set some goals for next year, it was just – it was pretty water down because he was trying to make it so general. I think the advice I would say skip it and I think the advice to take note of is to be more laser focus if you really want to build kind of a hard core constituency of fans and whether that was his goal here or not, I just – I feel it kind of leaves – leaves a lot of people out on the cold if they actually want to do take action on your advice.
[32:43] Mike: Is that kind of the – the four steps of success and the third one is a bunch of question marks and fourth one is profit?
[32:49] Rob: [Laughter] Exactly. Yeah, it’s that kind of thing. It’s actually a decent book. I listen to it and I listened to the whole thing which means it was – it had my interest but I just found it lacking in terms of truly, you know, getting value out of it. As in I’m not going to recommend it to other people because I don’t think they’ll – it’ll actually improve your business if you listen to it.
[33:05] Mike: Got it.
[33:05] Music
[33:08] Mike: If you have question for us, you can call us 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 this podcast in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll find a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 106 | Moving from Consulting to Products (with Brennan Dunn)
Show Notes
Transcript
[00:00] Mike: This is Startups for the Rest of Us: Episode 106.
[00:03] 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. So, what’s the word this week, Rob?
[00:24] Rob: Well, we just launched the HitTail Basecamp integration that I talked about last week. So it’s all live. If you go to hittail.com/basecamp, you get a brief walk through, some screenshots of how that works. And I’m pretty excited. Like I said, it’s really – I’ve mentioned it was the first integration we’ve done but it’s actually the second I realized because the first one was with kind of the – the one-click article service but that one was written by me. On this one my product manager really banged this one out and it’s all architected well and I think I told you he wrote OAuth and OAuth Library in Classic ASP from scratch. I can’t imagine. I wouldn’t definitely not have been that just — I wouldn’t have that coding forwarded to to sit down and do that. But anyways, we’re excited, you know, we’re both doing – going to start a little of bit promotion. We’re kind of doing a soft launch right now. We’d just want to get more people using it just to make sure it’s all good and also have a little bit of paid acquisition with some HitTail and Basecamp stuff going on. So, it’s pretty good. How about you?
[01:17] Mike: Well, I have this new developer starting in a couple of weeks. I just kind of worked out some arrangements with him. We’re going to try – we’re going to try doing some stuff for about three weeks or so and see how it works out and then kind of reevaluate things from there. So, hopefully, that works out.
[01:31] Rob: AuditShark?
[01:31] Mike: He will be working on other stuff first and then if that – if everything works out, then probably transition him over to working on AuditShark.
[01:38] Rob: Got it.
[01:39] Mike: As I said, it’s a trial period and we’ll just see how it goes but I really need somebody who I can put on AuditShark to work on some of the core guts of it. I’ve been working on a lot of this database synchronization code for AuditShark and I’m about at the point where I can actually start testing it but I have all these to-do comments and they’re like different events and things that should be logged. So, you know, some of them have security implications. Some of them just have synchronization implications and I haven’t actually implemented any of the login code behind it and if I had to go look, there’s probably close to a hundred places where I’ve literally documented to do log this or, you know, to do make sure that you double check this data or et cetera. So, to be honest about it, it’s not necessarily worth your time to be doing that. I mean there’s other places that your time is better spent.
[02:27] Rob: Right and that’s the thing is, you know, my 12-year career writing software, I’ve always gold plated everything especially as a consultant and working for – I was a salary employee for credit card company for years like you wrote things to the nines and so when I say I’m a hack what I mean is a hack compared to that where I would spend weeks writing this, the single routine and testing every possible option and doing all kinds of stuff and I just don’t do that anymore. Get kind of the minimum viable function out and then revisit it later. And the thing is that I can – I can just move so quickly, right? If there is actually a bug or any types of problem, I can go in and edit the stuff and it’s not a – a 2-day process to get a change in to production like it used to be. So, it’s more of taking advantage of your agility as a very small startup or a very small software company. You can really be much more, more fast moving than – than larger competitors. So, you have different pros and cons than a larger company maybe doing or building the same software.
[03:21] Mike: Right, I mean there’s just different priorities when you’re working on stuff. That’s really all it comes down to.
[03:25] Rob: Well, hey, if you haven’t checked out episode 36 of the Stock Exchange Podcast, it’s definitely worth a listen. It retells in great detail their Hurricane Sandy story of logging those buckets of gasoline up the stairs after they lost power. We’ve briefly mentioned it last week but I heard the episode. It’s just to hear that kind of that, they had like eight or nine people on this podcast since it’s a round table and they’re just telling their story of, “You know, it’s midnight on this day and then the power goes out and then you just…” One guy had a knife and another guy had a plastic vodka bottle that they cut the bottom out of and used as a funnel for the gas. I mean it was just so cool to hear the innovation and just the get it doneness of the entrepreneurs, right? They didn’t sit around complaining. They just figured out how to make it work and how to log this gas up the thing to keep – it was Fog Creek Software and Square Space were the kind of the two people on this podcast. So, pretty – pretty cool story.
[04:18] Mike: Yeah, that is cool. I haven’t – I haven’t had a chance to listen to it yet. I’ve got some time up in New York and I’m going to be spending down there again. So, I’ve got a 3-hour drive back and forth and I definitely be listening to that though.
[04:28] Rob: Nice, what else is going on?
[04:29] Mike: Oh, you know what? I think that you had said that you tried the Facebook ads.
[04:34] Rob: I did, indeed.
[04:34] Mike: I’m going to be doing that soon. My wife is kind of venturing out to actually start her own business at this point. She’s going to be – she’s a certified Zumba instructor. She’s had enough people approached her to teach at different places that she has decided to kind of take the next step and start building up her own fitness company. She was asking me about how to not necessarily how to drive people to her, you know, to her classes and stuff but she’s kind of talking about some of the issues that she’s got with that, “Oh, well, I’ve got to make sure that I have this number of people there and if I don’t, then I either break even or lose money.” And I just kind of offered to help her drive some people there and my first thought was, well this seems perfect for using Facebook ads.
[05:15] Rob: Absolutely, I really agree. I think that’s a good choice because it’s definitely a consumer-type thing. Now, for people who don’t know what Zumba is right —
[05:22] Mike: Yeah, it’s kind of a dance fitness. There’s kind of a Zumba fitness organization that oversees it and there’s all these rules and regulations about how you can use their logo and brand and everything else. So, she can’t have a brand name that says Zumba and or anything like that. But it’s – it’s very well tied to overall health and fitness and incorporates a lot of dance moves. So, she’ll teach at Curves which – Curves is a fitness facility that is exclusively for women and she has to teach it like the YWCA and there’s a couple of independent fitness studios around that she goes in to. So, she’s been subbing for different classes and somebody had said, “Oh well, I can’t do this class anymore. Can you do it or do you want to take it over?” And she said, “Well, I’ll take it over if you’re not going to do it anymore but I kind of want control over everything at that point, you know, I’m no longer going to be just doing it as a substitute.” So, she’s going to essentially expand from there.
[06:14] Rob: That’s cool. And Facebook is neat for geographically targeting like that. A mutual friend of ours was actually trying to relocate and his wife worked for a government agency that would only transfer her job if she could find someone at the new location to swap with her and so he went on to Facebook and targeted that location and that government agency because you can say people who work for —
[06:34] Mike: Oh —
[06:34] Rob: … and type it in. And so, he did that and was showing ads to like say, “Do you want to move to X,” you know, where they currently live and he got some people to come through. I don’t know that he ever actually – if that’s where they actually found the person or not but he definitely got inquiries and he just had a like a Google doc form or some, you know, e-mail link or something and people can drop a line. So, it’s pretty cool with local stuff. It’s super easy to target across a lot more demographics than any other system I’ve ever seen.
[07:02] Mike: Right. She was – she already has like a Facebook fan page set up that, you know, she’s going on there and letting people know because one of the issues she has is if there aren’t enough people attending that sometimes they have to cancel depending on the location, so, there are, you know, there’s usually post that go out on Facebook that says, “Hey, if you – please RSVP or let us know if you’re going to be able to make it tonight,” and then they’ll cancel class within like an hour so that people aren’t driving there and then find out that it’s canceled. And that was what she was thinking that she would be using Facebook for and I said, “Well, you have access to or you can get access through the Facebook ad system to all the people in this geographic area and you can advertise explicitly to those people.” And I don’t think that was something she’d ever really considered before and I don’t think that any of other instructors she’s worked with have done anything like that either. It would be interesting to see how that turns out.
[07:49] Rob: I agree. Keep us posted. I want to give a shout out thanks to Andrea Conti [Phonetic]. He put together a detailed list of the podcasts that we mentioned in Episode 104 because I just had it as kind of a bulleted list and he put up all the links and he put it in to nice HTML table and so, that’s now live in Episode 104 in the show notes. So, I’d just wanted to thank him for that.
[08:11] Music
[08:14] Rob: So, Mike and I are very pleased to have with us today, Brennan Dunn. He’s a long time Micropreneur Academy member. He also runs his own consulting firm, founder of Planscope and that’s at planscope.io which is project management software for freelancers. It’s a software service application. You know, he’s also written an E-book for freelancers. He has a podcast. He does workshops, all kinds of stuff but before we get in to that, I wanted Brennan to say hi to everybody.
[08:38] Brennan: Hey, everyone.
[08:39] Rob: So, talk to us a little bit about just maybe a 1 or 2-minute intro kind of where you come from, what you’ve been up to the last few years and how you found yourself launching Planscope, you know, having the E-book and workshop and everything.
[08:49] Brennan: Sure, six years ago, I went out of my own became a freelancer. And a little over two years ago, I decided to grow a company. Well, really, I got it so much work than I really had to scale. I kind of went out on a whim and just decided to open up a brick and mortar consultancy. And we grew to ten people and it was a rush but really, I was bit by the product bug and I really wanted to escape consulting once and for all and just kind of build products that I owned and produced recurring revenue for me because consulting can be extremely draining. Yeah, so I decided to – really what happened first was I took Amy Hoy’s 30×500 class and I also at the same time signed up for the Micropreneur Academy. So, I did my research. I discovered that there is a need for something like Planscope and I built it and launched it at LessConf last year, I believe last February.
[09:43] And it’s been growing pretty steadily but the problem with SaaS revenue is even at a 10% growth rate, when you started from zero, it’s still going to take a while to kind of become really that profitable. So, basically I promoted somebody at the consultancy to run it in my absence and I’ve been heads down on products ever since. And last summer, I released a book which in turn led me to managing a newsletter for freelancers and just recently I launched my first online workshop. So, all of it really appeals to the same audience, freelancers and they all kind of feed off to each other. So, that’s kind of my last six years in the nutshell.
[10:22] Rob: Very nice. So, your consultancy is still running kind of in the background, is that right?
[10:27] Brennan: It is. Most of the people that used to work for me fulltime had now been converted back to independent contractors and the guy, Zack who used to lead business development, I really promoted him the COO and really, I get a once a week phone call with updates and how we’re doing and everything else.
[10:44] Rob: Very cool. So, you are very much working on your business not in your business, I would say.
[10:49] Brennan: Correct.
[10:49] Rob: We’re going to be talking about moving from consulting to products and this is something that all three of us on this podcast here, you know, might have done or in the process of doing. And I think it’s a very common path and even if folks are simply moving from salaried employment to products, it can often be, you know, a similar type of set up or you’re just trying to buy out enough time, enough of your time to actually get an app off of the ground. And as you said, if you have a SaaS app, you do tend to need a pretty long runway in order to make it there. So, I guess the first question and you partially addressed this already but you mentioned that, you know, consulting obviously brings in good revenue. So, what is your motivation? Why do you – why do you thirst to own products?
[11:32] Brennan: I think because I know a lot of product owners and I know that they are significantly happier than I ever was working 12 hours a day managing a consultancy, going through the churn of client after client and really having no ownership at the end of the day of anything I produced. So, products were always kind of, you know, the light at the end of the tunnel and people were paying me to build products for them. So, I had everything I needed to build my own. The problem of being that, you know, consulting like an illicit drug gives you an immediate benefit whereas products tend to take a little longer.
[12:03] Rob: Right, so consulting is like an illicit drug and products are like exercise perhaps?
[12:08] Brennan: [Laughter] Yeah, I’ve always actually compared consulting to crack cocaine.
[12:13] Rob: How about you, Mike? What are your thoughts?
[12:15] Mike: It’s really hard to breakaway from consulting once you’re there though. I mean, I really admire what you’ve done in terms of being able to be in a position to I’ll say essentially walked away from that consulting business without having to pay attention to it because you had somebody there who you could rely on and essentially help maintain the business.
[12:34] Rob: Yeah, for sure. I think I’ve, you know, my thoughts on this as well as are similar to Brennan’s and that I was always doing it for the lifestyle element but more for the freedom of it initially and I thought that once I have the freedom that, man, I would just totally be happy and it turns out that the freedom was part of that but I also needed to continue to have challenges as well and you know, I’m certainly in the same boat as you, as you guys. So, the next question I have for you guys to throw on the table is after you realized, you know, let’s say you’re a consultant or even a salaried employee, what’s the first step you recommend once someone has made that decision that they want to go all in and they want to move to building products and they want – essentially, I think, obviously, the first step is replacing their income but, you know, even before that like what do you think now that you guys are both, you know, in the midst of it, what would you recommend someone do?
[13:19] Brennan: So, I’ve seen a lot of consultants who try to enter to the product space and the ones that fail, end up treating their product really like a side project. What I realized earlier on was that if I wanted any of my products to actually succeed, I would really need to treat it like first-class client project, not I”ll deal when I have time or I really had to make sure that I dedicated two days a week to doing nothing but working on my product while spending the other three days really fulltime heads down on, you know, paying my own personal bills. Now, I’ve kind of had it a little easier because in running the consultancy, my employees were paying my bills. So, made it a little easier to write Planscope but had I been a freelancer, it would have taken longer but the same outcome, hopefully, would have occurred.
[14:04] Rob: Very nice, yeah, you definitely have the luxury of having that consulting and it isn’t like something that was hand to. You had built the company but it certainly was a benefit to you when making that transition. For my perspective when I was transitioning from consulting and trying to replace that income with products, I was supporting the family. I had one child and a mortgage and the wife and she was an intern at the time. And so, I was consulting during the day and I was actually doing a lot of side work in the evenings and weekends to try to be able to work on my products. And so I hear what you’re saying about having it work on the side is actually a big challenge and that tends to be a recipe for failure. Somehow I has able to make it work but it do take me several years obviously and a lot of failures to get there.
[14:49] Mike: Well, I think that the way Brennan put it was a little bit differently than I would have thought of it where he said that he really has seen a lot of people failed because they don’t treat their side projects as essentially a first-class citizen and you know, basically treated them as if it was consulting work that absolutely had to be done. And what I was going to say before he had said that was essentially talking about a mindset change because when you’re doing consultant work, you get this immediate benefit from whatever it is that you’re working on and you get paid by the hour on a weekly or monthly basis and there’s a tangible reward that you know is going to be coming with the consulting work. When you’re working on a product, you don’t necessarily have that and it could be months or even years down the road before you start to make enough money that all of the time that you put in previously starts to pay off.
[15:38] So, it’s – if you’ve been consulting for a long time, it’s a serious challenge to get over that mental block that he just says, “You know, I’m going to put some time in to this. I’m going to put in 10, 20, 50 hours and I’m not going to see any return or whatsoever for a very, very long period of time and I think that’s just a mental block.” But I think the way Brennan put it was extremely good and that you have to treat it as if it was a first-class citizen as if you are doing work for someone else and that it needs to get done.
[16:05] Rob: Yeah, for sure. I think that was something within the first six months of starting to get some product revenue, I actually toned down my consulting hours right away and I knew that being able to do that with lend a lot of freedom. It will basically lend some acceleration to getting that, that product revenue going. Even when I was salary, like a couple of years earlier when I started having a little bit of revenue, I actually went down to part-time at one point, my salary job. So, we’ve talked about that on the show before but I definitely think that that’s something that people should – should consider. It’s not an all or nothing game of working 40, 50 hours a week for an employer or clients and then only being able to work on the side on your app. There is an in between and it sounds like, you know, we all have different ways of achieving that.
[16:47] So, I want to switch the discussion over to this thing that I’m calling the stair step approach to replacing – essentially replacing your income and I’ve mentioned that a couple of times because that’s kind of the first goal. I feel like if you’re a bootstrapper, you need to replace this income of, you know, your salary job or consulting. And a lot of people hunker down and try to build this big SaaS app and they want to make the big splash and you know, start generating that recurring revenue right away. But what I’ve seen and the approach that I took and what I have actually seen a lot of people having success with is not relying on a single product and having some easy wins early on. So, either writing an E-book, having a WordPress plug-in, running a workshop like you’re doing, Brennan, to fund some of your time so you’re able to work harder and focus more on your longer term win like a SaaS app.
[17:34] And so I had – I have crazy websites people have heard about like justbeachtowels.com where I, you know, I had beach towels that were being drop ship to people and I had a CMS theming service early on and I had some other information products that I don’t even own anymore by there were my stair step products just to get that income replacements so that I had enough time to then really focus on this long-term goal of building the products with more longevity. You, Brennan, are already attacking that. Can you tell us a little bit about how that’s worked and whether it was intentional or whether you’ve just kind of, you know, stumbled in to having these multiple smaller products?
[18:08] Brennan: Yes, so it’s actually a pretty funny story. One of the misconceptions I think is that consultancies have a very high profit margin. It really tends to not to. So, now that I’ve kind of given the reign to somebody else, the income from the consultancy isn’t nearly what it used to be and what it used to be wasn’t that significant either. The thing is Planscope right now we’re kind of slowly growing it about 10% a month but that translates to maybe $400 a month in growth which isn’t going to pay my mortgage and my kids’ schools and everything else anytime soon.
[18:35] So, I had two paths. I could go full steam consulting and really throw away a lot of hours because consulting, you spend an hour on a client project and that hour doesn’t benefit your product or your audience at all. So, that was path one and path two which really came really accidentally I think. I had a bet with Amy Hoy where I really wanted to go to a conference in Ireland and we had some medical issues, you know, in the family and I didn’t have anything budgeted to go and I know Planscope wasn’t going to be able to give me the money I needed to do that. So, she convinced me to write a book. The book actually came pretty easily because I had developed really good relationships with my Planscope customers and determined that a lot of them were kind of unsure about to price their services.
[19:19] So, I wrote a book. I collected pre-sales and I actually sold $6,000 in product before the book was done and since then, it sold another 25,000. Now, it’s brought in 30 grand which I’m pretty happy about considering that’s nine months or eights months of Planscope at its current state’s income. And then that actually led me to realize that there was a smaller need in the subset of people who wanted to learn me from me about building a consultancy. So, I up the ante and actually charge a thousand a seat. I sold 25 seats. That added another 25,000 to my runway of capital. So, the benefit overall I think of the second path is that all of this feeds in to each other.
[20:02] So, I’ve gotten Planscope customers who found my book because the book is much – it’s hard to convince somebody to drop their current project management software and use yours but it’s a lot easier to an impulse buy to get somebody to find your book and if your book is about – like mine is doubling your freelancing rate that’s a quick and easy buy. They read the book. They either like or they don’t like my philosophy on things, then or are much more willing to check out my other products because they like me. They like the mentality I have towards consulting. So, they all kind of worked out really well and it still is. I mean the book is still selling. The workshop is still selling and Planscope is still selling. So, the diversification for me at least has yielded a lot of returns.
[20:42] Rob: Yeah, that’s really cool to hear. I think we’ve seen similar things with, you know, the podcast tying in to the Academy and tying in to MicroConf and then, you know, I wrote the book, my book on a similar subject, then I certainly see the same thing of there are just being a lot of crossover with people finding one and basically liking it enough that it kind of gets them in to your world. And if they respect the work that you do, it’s pretty easy for them to then say, “Oh, well, I paid 19 bucks for a book. Next, I’m able to actually invest a little more and maybe I even, you know, spend a thousand bucks and go – go to the conference and that happens in the next spring.”
[21:12] Music
[21:15] Rob: So, our next topic is going to be talking about the pros and cons of moving to software products from consulting versus moving from a salary gig. And this is actually one thing that Mike and I get this question a lot from a lot of different people. It’s a challenge. If you’re working at a salary gig and you’re really unhappy, the choice of moving directly in to products or moving first to consulting and trying to build that business enough to support you and then moving the products, it’s a big question and it doesn’t necessarily have a right or wrong answer but I want to throw that out there and kind of have — maybe Brennan, you can tackle it first and then Mike and I will give our thoughts as well.
[21:49] Brennan: Sounds good. So, I haven’t been a salaried employed for six years now. So, I really wouldn’t know what it’s like to go from salary to products but what I do think is it’s probably easier to go from consulting to products specifically because as a consultant, you really are a small business owner. And secondly, one of the really interesting things that came out of the workshop that I discovered was a lot of the students wanted to end up building products one day and a lot of them currently productize their consulted services. So, they might have different packages or these retainer agreements and they are already getting experience in pricing and how to market their services which I think is giving them a huge advantage when it comes to building what we might call traditional products, info products or software.
[22:34] So, that’s my thought on it. I think also one of the benefits that I think of being independent is you can kind of – it’s almost like a scale. As your product revenue increases, you can then taper down your consulting time but likewise when you’re just starting out, you’re probably going to doing more consulting because you don’t really have any product income to begin with and usually as an employee, you can’t really — you’re stuck nights and weekends usually to work on your side projects.
[22:58] Rob: Right, it’s a lot harder to taper, taper down your hours. What are your thoughts, Mike?
[23:02] Mike: I think if somebody will come to me and ask my advice on whether they should jump from a salary gig in to consulting and then use that to leverage it in to products or just go straight in to the products, I probably advice them to go directly in the products. And I think the reason for that is more along the lines of when you’re doing consulting especially if you don’t have a subcontractor arrangement where work is essentially being handed to you at all times, then your focus tends to be divided. And by divided, I mean you’re essentially trying to make sure that you have enough consulting work in order to make ends meet and if you don’t, you have to work twice as hard at it. And that is very detrimental to being able to put – set aside time for working on your side project versus if you have a salaried engagement, you don’t – there’s all these other stuff that you don’t really have to think about. You can just say, “Oh, well, you know what? I’ve got a couple of hours free. I can just work on my own product,” versus if you are running your own consulting company and you’re doing independent consulting, a lot of times you have to spend that extra time thinking about, “Well, where is my next paycheck going to come from? Where is my next project going to come from?”
[24:10] And those things tend to get in the way. Now, there’s definitely a benefit to running your own consulting company and getting the experience of running your own business. I could certainly see the benefits of trying to work through pricing and things like that and getting an external view of that because most of the time developers who are working in the company don’t see like the sales and marketing sides and things like that. But I think that having that paycheck, that weekly paycheck that you don’t really have to worry about where it comes from and being able to fall back on that, I think that’s really, really beneficial.
[24:41] Rob: I certainly see both – both sides of the coin. I think when – when I get this question, I say that if you’re already consulting, it’s a no brainer to keep doing that purely because of the freedom that you have and the timing flexibility and the ability to kind of to filter down your hours or funnel down your hours as Brennan said. But if – I think if you’ve been a salaried employee for years and you’ve never been a consultant, there’s a lot to learn and that first three to six months that I tend to recommend people don’t try to jump in to it because it’s going to take them several months just to figure all their stuff out. New experiences of taxes, new experience of finding projects, managing projects, billing clients, making sure they get paid, you know, there’s all that stuff. And once you’ve been doing it for six months to a year, all that becomes a natural but it is a learning curve upfront.
[25:24] And I also think that if your added job that doesn’t have you working a ton of hours, that it’s actually more beneficial like if you’re working 30, 40 hours a week at a salaried gig and they’re not pushing you to 70 or 80 and you’ve been there for several years and you already have the clout and you kind of the trust of people, it actually gives you a lot of time to kind of go and decompress and work on stuff on the side. You know, there is kind of dependence on how your day gig actually is and how they actually treat you and if you do have the autonomy outside of it and you do have the mental space outside of it to devote to your product because certainly if you are working 70-hour a weeks and have you doing on the weekends, then my answer would be to put – potentially I have to find a different salary job or to move in the consulting from there.
[26:06] Brennan: The last time I had a salary job, I was working 80 hours a week and there’s just no way I had any mental energy left to do anything else. So, I think if I had a very cushy safe and secure job, then you’re right. I think not needing to jilt with business development or anything is useful in a lot of ways. So, I think Mike actually has a really good point.
[26:24] Rob: So, obviously, you’ve had several successes both with your – your SaaS app that you’re building up. You’ve had a successful consultancy you’ve built, your E-book, your workshop, are there any major missteps that you feel like you’ve made along the way that other people would be likely to make?
[26:39] Brennan: I know one thing that I made a huge mistake of and that was letting my initial Planscope mailing list got cold. When I initially tried to cross sell the new book to that list because I haven’t literally spoken to them in months, the reception was not nearly what it should have been. You know, conversely I did keep my list warm for the book. If you buy the book, you get on my newsletter and I send three advices once a week which people seem to really like. Within hours when I announced the workshop and kind of ramped up anticipation about the workshop, I literally almost sold out the workshop within a few hours because the list was warm. That’s one huge mistake that I made with Planscope because I didn’t really understand the value of relationships outside of a user entry and a database.
[27:23] Rob: Yeah, the power of that list is not to be trifled with. Mike, do you have any missteps?
[27:30] Mike: Yeah, I mean the one that I kind of harp on that I ran in to was getting in to a consultant arrangement where you getting paid as contingent upon somebody else getting paid. That was more of a contract issue than anything else. Sign something and not really thinking about it and you know, they’re like, “We’ll pay you within seven days when we get paid by our customer.” And that was just sounded great. Their customer doesn’t pay them, then I’ve got no recourse to go to them because they didn’t get paid. And you know, I sat around for it was probably close to six months before I got 30 some thousand dollars in– invoice is straightened out.
[28:02] Rob: Okay, well cool. Let’s talk about myths and all that – there’s a lot of startup advice out there and as soon as you start actually working on a product, working on a startup and launching something, having people use it. Instantly, some of that startup advice becomes essentially a myth in your mind because it’s just not true, right? It maybe had been true with that person who said it, it may have been true for that person, but there are some common things like eating your on dog food, you must be part of your target audience, you know, build something people want and all these things that may or may not turn out to be true if you launch and have a different experience. Anything come to mind that once weren’t true but now is nothing more than – or maybe a startup myth?
[28:40] Brennan: So, I pointed out three different things that I used to believe and no longer believe. The first is that I used to believe that you realistically couldn’t consult or do something else and bootstrap a product. There’s a huge emphasis on you need to take outside money so you can stay focus 100% on your product and that I just think that’s simply not true. I think you can — you can multitask. You can work on both. So, I mean again it’s a slow growth, tortoise and hare type of raise but in the long run, I think it’s better, at least for me than the alternative. The second thing that I think I’ve come to realize is you really don’t need a business co-founder. I’m a developer. I’m also a designer but when it comes to things like Planscope, I run support. I do all the marketing. I did blogging. I pretty much handle everything. No one else works on it with me and it might seem overwhelming but I’m very partial to low risk easy win B2B products that I’m not inventing new markets. I don’t need to have some crazy viral win to grow their product. What I found is that when you take that route, when you focus on solving things that businesses have, I think it is manageable by one person.
[29:48] So, my third myth finally and this is something that took me a while to realize is the myth that marketing is boring. I’ve actually come to prefer doing split testing over writing code. I just think it’s a lot more interesting. I mean it’s almost like people hacking. I mean you’re getting to see like how different variations are affecting things or – I recently redid my on boarding completely and I was able to see tangible financial results pretty immediately afterwards. That’s the stuff that really is interesting to me and I used to think that the marketing side of thing that’s left for a marketing department, you know. All I care about is code quality and craftsmanship and everything else which are important but I’m really enjoying the traction affecting things of the job.
[30:30] Rob: For sure. What I’m seeing with entrepreneurs who are — developers who are transitioning to entrepreneurs and I did the same thing is you start by disliking the marketing just because we consider the four-letter word in the development world because if you’ve ever worked with marketers, they’re always a pain in the ass because they’re always making you do stuff as a developer that you don’t want to do, you don’t understand what they want you to do. And so, first you start kind of your standoffish to it and then as you start learning it and you start to enjoy and see the – like you said, its people hacking, it’s engineering of business. There’s like all these different ways to look at it but once you get in to it, it becomes super addictive and I found that that entrepreneurs who – the bootstrappers who are actually making it happen, they eventually making the switch that you’ve said where you actually enjoy the marketing perhaps more than writing code. Writing code is still fun. Writing code is your first love but this new thing, shiny and new and it gives you the financial immediate feedback that you don’t get to see when you’re sitting or hacking away and creating a new business object or new database table. So, I could – I can totally see that. How about you, Mike?
[31:30] Mike: Well, I think Brennan talked about two of the three. I would have ordered them slightly differently. The first one was that you need the co-founder and I don’t think that’s true at all.
[31:37] Rob: Right, you’ve long been in time – you’ve long been —
[31:38] Mike: [Laughter] Yeah, I’ve long been an anti co-founder and it’s not —
[31:40] Rob: Yeah.
[31:41] Mike: And it’s not really so much anti co-founder is that not having the right co-founder is probably worse than having no co-founder and that’s really what it is. I just think that people really need to understand that you if you get involved with the wrong co-founder is infinitely worse than doing everything yourself. The second one is that you need funding in order to do anything interesting. I think that there’s a lot of people out there who are doing some very, very interesting things that they just don’t have funding for what they’re doing. They’re all bootstrapped or they got things to a certain point on their own and then they decided that they wanted to go after funding and I don’t think there’s anything inherently wrong with funding but I think that there is this frequency of notion out there that you need funding in order to be successful and I just don’t think that that’s true.
[32:20] The third one is that if you read a lot of the – the successful people out there, it seems easy and you ready everything they say that they, you know, they’ll talk about some marketing technique or something like that and you kind of intuitively understand it. It’s like, “Oh, well, yeah, that makes sense. I would have done that.” But you wouldn’t necessarily have done that and what you come to realize is that those things aren’t necessarily hard but they’re time-consuming to learn and the reason that they’re time-consuming to learn is because you make a series of missteps before you kind of stumble on the right idea and then in retrospect everything should have been obvious to you but it wasn’t.
[32:57] So it’s just that things that should take a lot less time especially when you’re getting in to the marketing side of things, they’re going to take substantially more time than you think they will because you’re going to have to go through those series of missteps before you really understand what’s going on and it’s only in looking back out of it that you understand.
[33:15] Rob: Right, I think, I, too was a victim of reading the blogs back from about 2000 to maybe 2005 and it was – it was folks like Paul Graham, Eric Sink, Joel Spolsky and they talked about their startup days and they just sounded so awesome. It sounded just like this romantic vision of this peaceful villa where you’re just typing way some code and launching some products and I was totally a victim. So and I don’t think – certainly don’t think that was intentional on their part but it’s just you’re not going to write a blog post about the stuff that’s really boring and as it turns out, a lot of the stuff that we do [Laughter] is pretty darn boring. Don’t know if I would call a myth but definitely a misunderstanding of mine early on.
[33:51] Some folks say that you have to be a user of your app like you have to be the number one user that you have to build something that you will use. And well, I do think that is super helpful, I don’t think that’s a necessity and I absolutely think you can build something in other niches for other people, you know, still the low hanging B2B bootstrap ideas I’m a big fan of. But I still think you can have a lot of success with that even if you’re not necessarily in the niche that you’re building for.
[34:15] Brennan: I think it can be harmful to you to build something that you’re a little too passionate about. One of the things that I’ve tried to get pretty good at is putting my ear to the ground and listening to what people are saying and what problems they have day to day. And I think that is significantly better than the alternative which is you’re in the shower in the morning and a great idea comes to you and you go and build it. I think doing that kind of I won’t say market research but just listening to what people are venting it out, that’s where Planscope came from. I was basically crawling through internet forums for freelancers and I started from there.
[34:50] Rob: Very cool. So, the next question I have is do you have one or two traits that you think are the most important for a successful founder now that you’re kind of knee deep in it?
[34:59] Mike: I think one of the single most important traits of a successful founder is perseverance and understanding that you are going to make mistakes and that’s perfectly okay, you know. Nobody escapes from the business world completely unscathed. That just doesn’t happen. There are people who get really lucky but they still make mistakes along the way and it’s learning from those mistakes and adjusting and listening to what your customers are telling you that really makes a difference at the end of the day. You’re not going to hit homerun on the first day. That’s generally doesn’t happen. You can do a lot of things right but you’re still going to make a few minor mistakes along the way and overtime, the number of mistakes that you make is going to go down in certain areas and then as you start to thread new ground, you’re going to learn new things. You’re going to make mistakes in those areas and then you’ll essentially adjust in those other areas as well. So, I think that perseverance and in the phase of uncertainty is really the single key trait that somebody has to have.
[35:56] Rob: I think the willingness to fail and to actually go out with the intention of failing at a few things is important trait that I learned early on. I was just thinking about six months ago when – I don’t know, it’s about ten months ago, now when I relaunched HitTail I had this marketing plan and I put that in to a task list for myself and I was going to try about there are like 18 different marketing approaches, all different kinds of tactics. And I look at it and said, “You know, if 18 of this fail, and only 2 succeed, I am going to have a growing startup.” I’m actually going to have an app that works and even if 19 of them fail but 1 of them is like a huge success, you can get 10, 20, 30% growth a month in an early stage bootstrap startup with just a single – single successful marketing tactic. And it was actually in my head early on that most of them would fail but I need to try all of them.
[36:48] One, to get the updated experience with them and two, because I love learning, I love trying new things. And three, because I just didn’t know which one was going to work best and which one is going to drive the most traffic. And so running through all these things, I now have learned a ton about all of them and I know how this, you know, much brighter vision for what I can do both with HitTail and with future products that I have. So, I think that the willingness to go out there and to take some risks and to bet both some money and some time. And it’s not betting the farm on any of these single approaches but it’s vesting some money and some time and learning from that and being able to take that knowledge and then invest, you know, as you move forward.
[37:24] Brennan: Yes, I would point out cadence as being an important trait which goes along with what both of you were just talking about and what I mean by cadence is knowing that in order to be successful, it’s going to be a lot of very small victories or a lot of very small steps. And I see a lot of founders who they go away in to a basement and write a product almost in secret. They have this idea of this grand launch day. They launch it and crickets and then they get discourage and fades away. I’ve always been a big, big advocate of really a thousand launches, right? I never really saw my launch day as being anything really that significant except that now I had an avenue for getting paying customers in the door.
[38:08] But there is nothing spectacular on my launch day and I think you read TechCrunch or these different publications and you hear about these grand launches and people adding millions of users overnight. Like I think I mentioned earlier, it’s a long tail game. It’s steady march. It’s a cadence. It’s – I do my, you know, continual amount of blogging and producing content that helps me with my organic visibility where I slowly build out new features base on what my customers are actually asking for instead of thinking it as all or nothing way of looking at things.
[38:40] Rob: Right, as Dan Anders would say, “It’s playing long ball.”
[38:43] Brennan:Right.
[38:44] Rob: All right, so I’m going to wrap this up with one final question and I’m actually interested in hearing everyone’s thoughts on this. We’ll start with Brennan, where do you see your business or businesses one year from now? What do you envision?
[38:57] Brennan: I will probably have another book out because there has been, again, I kind of mind my customer correspondents to figure out what problems people have and they try to see between the lines and what I could offer to them, you know, initially. In a year I would like to fully live off a combination of my products and I would also like to really optimize. I would like to have a very grand funnel that works across all of my products and makes the transition between each product very seamless because the way it’s working now is all of my products really target a single audience. If I can pull that off, that will obviously help my growth of my sales which will, hopefully, get me even closer to cutting the cord on consulting.
[39:41] Rob: Very nice. How about you, Mike, where do you see yourself with AuditShark, Altiris Training, forum software, what else you have going on?
[39:50] Mike: [Laughter] Well —
[39:50] Rob: Where do you see that in a year?
[39:51] Mike: Oh, on top of that, I will probably have published a book in about a year. So —
[39:55] Rob: There —
[39:55] Mike: There’s a spoiler alert.
[39:56] Brennan: [Laughter]
[39:56] Rob: First announcement. Very cool!
[39:57] Mike: Yup, yup.
[39:58] Mike: I anticipate being completely wind off from a consulting probably within twelve months. I don’t know how quickly that’s going to go but I, you know, obviously have a lot of different things going on right now and it’s a matter of kind of figuring out which ones are working, which ones aren’t. I have probably three or four different things that are I’m obviously juggling at the moment. Between all of them, I’m just going to be figuring out what one works and which one doesn’t and then, you know, putting some extra effort in to the things that are working, hopefully, leveraging some partnerships that I’ve been working with people on and you know, like I said just getting on a consulting. That’s kind of my main focus for, you know, the next six to eight months.
[40:34] Rob: On my end, I anticipate or hope, however you like to say it, that HitTail will be a two at least 2X where it is today and with a potentially to be it about 3X it means growing at a pretty nice cliff right now. And I have a product manager in place that I’ve mentioned a few times and he’s taking on more and more responsibilities. So, over the next three to six months, I expected transition in to another product. More updates on that in the future.
[41:03] Brennan: Nice.
[41:04] Rob: Well, Brennan, thank you very much for coming on the program. We really appreciate your time in lending your insight. You know, someone who’s knee deep in this process of transitioning from consulting to products, I’m sure that there’s a lot of folks in the audience who identify with where you’re at inside this. I certainly appreciate it. If people want to get in touch with you, learn more about you, what’s kind of the number one place they can go to get – maybe get in touch with you or just read more about your trials and tribulations?
[41:28] Brennan: So, my – the Planscope blog has most of – I blog extensively and I do this because I’ve realized that for me at least Hacker News can be a pretty good source of new business and I’ve put up quite a few different blog post about – well, I’m very open and transparent with my numbers. Well – I’ll detail on boarding experiments and the results of that or one of the more recent ones was about how I built up this runaway of cash through these different products. planscope.io/blog is where you’ll find a lot of my writing. You can e-mail me at me@brennandunn.com or I’m on Twitter @BrennanDunn, B-R-E-N-N-A-N D-U-N-N.
[42:08] Rob: Well, very good. Thanks again for joining us.
[42:10] Brennan: Yeah, thank you.
[42:11] Rob: If you have a question for us, call our voicemail 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 this podcast 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.
Episode 105 | How to Pick a Platform Partner
Show Notes
- DropBox
- SugarSync
- Backblaze
- Acronis
- Pre-Launch Traffic Strategies for Startups: Part 1
- Pre-Launch Traffic Strategies for Startups: Part 2
- Pre-Launch Traffic Strategies for Startups: Part 3
- Amazon Web Services
- Microsoft Azure
- Google App Engine
- Twilio
- CityDesk
- MailChimp
Transcript
[00:00] Rob: In today’s episode of Startups for the Rest of Us, Mike and I are going to be discussing some rules for looking at technology platforms, stacks, frameworks and API’s. This is Startups for the Rest of Us: Episode 105.
[00:12] Music
[00:20] 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.
[00:30] Mike: And I’m Mike.
[00:30] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. Well, I am glad that I have CrashPlan installed in my laptop. As of what about an hour ago, I’ve jumped online to look at the podcast outline you’d created and my laptop won’t boot up. It just locks up at the Window start screen. So, I’m messing around that I’m sure I’ll be able to fix it this evening but if I’m not stress about it like I’m more worried that I’m going to waste 3 to 4 hours screwing around either reformatting the hard drive or whatever but it really is so different than 5 or 10 years ago where like all your data was on a local disk and you didn’t have it anywhere else or you had like a 2-month backup somewhere but between Dropbox and CrashPlan which runs every night and upload my personal stuff and business stuff up to your cloud somewhere it feels — it feels much better.
[01:18] Mike: Yeah, I feel like I’m — I’m kind of in the same boat. I have probably like several different ways of like backing up all my stuff. So, I have — I have Dropbox running for a bunch of data and I have a SugarSync subscription which backs up another set of data and then I have Backblaze which takes an entire machine backup. And then I also have Acronis running which takes a full system snapshot like every night as well [Laughter].
[01:39] Rob: That’s the way to go. You know, as long as it doesn’t impact your performance, the computer performance day to day, it really is nice to have — have some options. What I wish though, you know, so I now how — have a spare router at all times on deck because I’ve now had two brownouts or thunderstorms in the past 6 years that have blown routers but I’m considering like getting an on deck laptop because I’m losing a bunch of time this afternoon. I guess I have this desktop sitting here but as soon as my wife gets home, she’s going to need it. But what do you — what do you think about that? Do you have a spare router and do you have a spare laptop?
[02:12] Mike: But I have extra switches laying around for exactly that purpose like what I do is I have everything going in to my cable modem and then from there, it goes in to my network and I have first thing that it hits is actually one of my servers. So, I can plug it in to either directly in to a switch or in to my server. Like my server I have behind — basically access another wall between, you know, my network and the outside world but I also zip for like VPN and everything else. So —
[02:39] Rob: Right, I got it. Yeah, this router — all the NEC routers that I use have firewalls built. They have a hardware firewall built in and maybe its software. I don’t know but it’s — it’s built in so I have that as well. I don’t have the VPN capability although there’s certainly routers you can buy with that.
[02:53] Mike: Right but I — I mean I do have extra switches and I don’t know if I have an extra wireless router around but I know what you’re saying and then in terms of extra spare laptops and stuff, I have a couple of spare laptops laying around. I think I have 1, 2 — I have 2 spare laptops on top of my regular one and then plus I have a desktop and —
[03:10] Rob: Yeah.
[03:10] Mike: Yeah, you know, I mean I have a whole army of machines here. I can hire like 30 people and every single person will have their own machine.
[03:18] Rob: Not need to scale up. Yeah, and I mean it seems wasteful to have just a laptop sitting around on deck at all times but I really want to get to the point where when this happens because what, this happens like once a year, you know, and I basically lose a day of productivity when I never — when I don’t have that day to give up. And so I’m trying to figure out a way where I can be completely virtual. I would just love to be able to step to the left and log in to this other laptop or this desktop and just not even notice the difference and that — that day is not here even with Dropbox and CrashPlan. I’ll get my data back but it’s going to take a bunch of time for me to, you know, sort this out.
[03:51] Mike: Yeah, I think you’re best bet would be to do something similar to what I do where I’ve got my entire machine being backed up to — I have it actually backed up to a local drive but I also have an external NAS device that I could backup the entire system to. And it would just store differentials everyday or every couple of days or whatever and if I need to go back to another instance of the machine from several days ago or a couple of weeks ago, I can probably do that. And with something like Acronis you can — depending on how you want to do it, you can back up to the exact same hardware which means you either pop out the hard drive and put a new one in and you restore back to that machine or if you have another physical piece of hardware that you would prefer to restore to, you can do that as well even if it’s slightly different. Basically all you need to do is you just need to switch out the hardware’s obstruction layer and mostly software packages that do that kind of backup have the capability to do that for you.
[04:44] Rob: Nice when someone starts that as a service, call me.
[04:46] Mike: [Laughter]
[04:48] Rob: So I was in Pasadena this weekend with the family. We went down and saw the Space Shuttle Endeavour. They retired Space Shuttle and they flew it all across the country and so and then they took 72 hours. They drove it like four or five miles an hour of down through LA from LAX to this — basically, it’s a science center and just awesome. If you’re ever in LA, you should take your kids there because I moved in Pasadena for five years and never went and this thing, it’s a free science center and it’s one of the best I’ve ever been to and I’ve been at at least half a dozen across the country and in Canada as well. So, it was a lot of fun. I also got to hang out with — with Jason Roberts and his wife and kids.
[05:23] Mike: Oh, cool.
[05:24] Rob: It’s a lot of fun hanging out and talking tech, man. You know, there’s just so few people that I ran in to day to day that I’m able to sit down and just engage in like pretty quickly get deep in to like conversation about serious things, you know, like what we do for a living and have someone understand when — when you talk about a really detailed concept about marketing or about a new idea and actually get realistic feedback and it was lot of fun. He’s a kind of — where I always I leave the conversation about — how long we’ve been talking, I leave feeling like we’re in the middle of a conversation. You know I’m saying? Like we — I have so much more to say but it’s like, “Well it’s been we just had a two and a half hour lunch. We have to leave, you know, I got to go pick my kids up.” It was really cool.
[06:06] Mike: That’s awesome. So, hey I came across a couple of different technology blogs say offering advice for choosing technology and both of them misspelled one of the technologies that they were recommending. It was just really bizarre to me that they were able to make recommendations about things that they — and I’m not sure whether it’s just a misspelling or what but it seems had to believe that somebody could make a recommendation about something like a specific distribution of Linux and then misspelled that distribution of Linux.
[06:35] Rob: Yeah, it’s hard not to discredit when people do that. Just like when I’m hiring people like I would send people e-mails or send them a message on oDesk when I’m thinking about hiring them. And if they reply back with like all lower case text with no punctuation and they’re using a letter ‘U’ instead of ‘Y-O-U’, that is a huge, huge red flag for me and I know the person can be, you know, super intelligent and might just be a style thing but I instantly basically discredit them like it’s a major red flag for me. And I feel like the same thing with this technology. If you misspell it, you’re right. You could just be bad at spelling. It could just be a typo but that — that is not both well for my confidence in your recommendation.
[07:14] Mike: Right and to be clear, this was — this was an actual blog post. It wasn’t like it was a transcript. Like I would understand if things come up in our transcript and I’ve seen it come up before where it’s just clearly misspelled and because it’s a transcript, you know and we are using a transcription agency, I don’t expect them to know the spelling of all these different things and that’s, you know, that’s one thing. But this was an actual blog post that was somebody was trying to convince you, “Oh, these are the things you should look at and this why you should use this particular thing.”
[07:42] Music
[07:45] Rob: So I have an answer to one of our most frequently ask questions and that question that we both get on the podcast and I also get when I do public speaking and just, you know, I feel like it kind of floats around a lot is, “How do I get traffic to my landing page if I put up a landing page?” And Dan Norris from Informly which is inform.ly, he wrote a 3-part case study of 13 pre-launch traffic strategies that he’s used to market his startup Informly that hasn’t launched yet. And so it’s a 3-part post and it’s really in-depth. He gives like the actual conversion rates, how many visitors he got and it’s really cool. It’s on my blog, softwarebyrob.com. The third part just went live today and so that is actually the new place. Whenever — because — seriously, I get this question whether it’s in the podcast or I get it multiple times per month and that’s my new answer is to go look at this case study because Dan did a bang of job of running through the — all the topics.
[08:43] Mike: Cool. So what else is —
[08:44] Rob: In fact —
[08:45] Mike: … going on?
[08:45] Rob: Last thing quick HitTail update, just wrapping up the first integration that’s going live since — since I acquired it and we’re integrating with Basecamp. It’s a pretty simple integration. We have a To-Do list in HitTail. We’re just integrating with the Basecamp To-Do’s and it was going to go live late last week but you do some weird thing and you have 500 To-Do’s and certain page locks up, Ajax, you know, issue. So, we have a little bit more troubleshooting to do but that should go live this week and I’m interested to see what impact that has because I’ve said last week, it’s not that a bunch of HitTail people use Basecamp that we know about, it’s that we want to basically be able to kind of market to the Basecamp audience and to be promoted through Basecamp’s Twitter feed and they don’t have a product blog anymore but to be on their Basecamp integration’s page and to see what kind of impact that has. So, luckily it hasn’t been a ton of effort on our part so we don’t need a huge amount of signups in order to justify but I’ll definitely be updating that in the coming weeks. And we have 2 or 3 other integrations already sketched out if this one goes well.
[09:48] Mike: So are you going to make the decision to move forward on those other integrations base on how this goes or you just going to kind of do one or two with those extra integrations kind of regardless?
[09:57] Rob: Yeah, we’re going to do at least two of those others because the — those other two are much more in our — kind of in the wheelhouse of customers who would use HitTail so their marketing platforms like HubSpot, you know, they have an app area and it’s people who are already trying to create content and market their apps and such and so, HitTail is a natural fit for that. Basecamp, the reason we did it first is, number one, because it’s the quickest. It was just not a lot of work on our end and it’s the first integration we’re doing so I really wanted to kind of cut our teeth and learn how to launch it and learn how to kind of get everything going because we have to get OAuth going and there is no ASP, Classic ASP libraries for that.
[10:36] Mike: Really?
[10:36] Rob: So —
[10:37] Mike: Imagine that [Laughter] —
[10:38] Rob: So, we had — we had some work around there but — so we put in — put in some work to get that done and we’re hoping that we can, you know, rip the investment with the — the next couple integrations and that even if this one doesn’t work out and more like maybe an issue of target market and you know, we figured the next — next couple will be — will be solid.
[10:54] Mike: Yeah, I mean that’s a good idea to at least as you said cut your teeth on a couple of them just to figure out where the — the problem areas of your application for doing those integrations are going to be as well.
[11:03] Music
[11:06] Mike: So, today we’re going to be talking about how to pick a platform partner and essentially this is going to be a guide for how to evaluate whether or not a technology or a solution provider is going to be a good partner for you long term. And the problem is that sometimes it could be really difficult to evaluate the solutions of a specific vendor or specific platforms. So, a lot of these are guidelines. They’re not really hard and fast rules and generally what you’re looking for is for red flags and the absence of red flag is something of a green light but obviously you can’t just take a blanket statement and say, “Well, I didn’t see any red flags based on, you know, what we talked about in this podcast episode so everything is going to be fine,” you know, there’s always going to be the potential for downstream something to happen where things are just not going to work out. And sometimes your hand is just going to be force to go in a particular direction due to price constraint or a specific technology that you’re using or timeline but basically, you’d just want to make sure that you are aware of what you’re getting in to.
[12:02] So, some of the things that we’re going to be talking about today are there’s three different types of platforms that we’re really talking about and the first one is a true platform. So, Amazon Web Services, Microsoft’s Azure, Windows, Linux, Google’s app engine, iOS, OS X, those types of things. The second one is technology stacks and frameworks. And this really falls under things like databases, program and languages, the model framework. For example, jQuery, MVC, Ruby on Rails, et cetera. And then the third category is a company or a product API. So, things like Twilio, Twitter, Facebook, Google, PayPal, Stripe or any other payment processor, Basecamp, et cetera. Companies that have an API that they have made available for their products that you could leverage to either do an integration point or to truly build upon the product that they already have.
[12:55] Rob: We’re just going to group all of those things you’ve mentioned in to one big bucket, right, and we’re calling anyone who provides any of those things platform partners.
[13:02] Mike: Yes. So, the first thing to keep in mind when we’re going through this is that there’s a difference between something that where you’re building an integration point between your product and their product versus someone who’s truly a platform provider where you are completely dependent upon them providing the service and this is the difference between like you said earlier in this episode, you doing an integration with Basecamp where you’re not completely reliant upon Basecamp with the exception of where that particular integration versus something like Justin Vincent’s Pluggio application where he’s completely reliant upon the Twitter API being available for him to leverage in order to make his product function.
[13:44] Rob: Right or even if you think about HitTail, it’s reliant on Google and other search engines passing certain information in their search query string. So, it’s not an — it’s an API of sort. It’s not necessarily a sanctioned one but if they all change that or they suddenly stop providing them information, HitTail really is based on their platforms functioning that way.
[14:03] Mike: That’s right. So, we have five guidelines that we’re going to go through. And the first one is that the vendor or the technology place well with others. The first part of it is especially true when you’re talking about service providers. Basically, you’re looking for somebody who isn’t going to steal the ideas of the people who are building on their platform or steal their revenue streams and I’ve seen companies out there where you’ll build a product on their platform or you’ll build a complementary product for their platform and then they’ll look at them and say, “Hey, that’s a great idea,” and then they go ahead and they either try to work with you to work out some sort of a partnership or arrangement where there is a revenue sharing but if that doesn’t work out for whatever reason, they’ll just say, “Well, you know what? We’re just going to implement that ourselves and we’ll take all the revenue.” And because they’re the ones selling that platform to begin with, they basically have first crack at the customers for that revenue. So, they can essentially push you completely out of the market and I’ve seen companies do this.
[14:56] So, what you’re looking for is people who are not going to do that and Microsoft in the 90’s, I think was a company that was really feared for this type of thing. People did not want to go head to head against Microsoft or anything. And Yahoo is kind of the prime example as a company that said, “No, we are not a technology company,” because being a technology company meant that they were going against Microsoft. They wanted to be known as a media company and that works great for a long time. It really kept them out of the sights of Microsoft. But there’s a lot of other companies that you have to be careful around when you’re making these types of decisions and Microsoft today is a lot more partner-focused than they were back in the 90’s.
[15:33] But today, I think in my opinion if you look at company like Apple, you have to be a little bit careful about them primarily because of the extreme secrecy around what Apple does and I think just recently even with iOS 6, the Apple came in and said “Well, Google has been providing the maps for us the longest time and we’re going to ax that. We’re going to create our own maps app.” You want to be careful about vendors who are going to come and swoop in and essentially try and replace you.
[15:58] Rob: Is this also like Twitter when they bought bunch of — couple Twitter clients and then they basically capping API usage so several of the other Twitter clients that are still out there can’t really grow that much?
[16:09] Mike: Yeah, that be — that be one of those in my mind. I mean because obviously they want to make money in some way shape or form off of this other — the Twitter client that they bought but in another way, they’re basically reducing the level of competition by limiting what those other Twitter clients can do on their platform.
[16:26] Rob: Right and it seems like in the 90’s, Microsoft was known as a predator and so, you’ve kind of — you threaded lightly and you expect that they might come after you if you entered the space that they would feasibly entered. With Twitter, it wasn’t really — I don’t think it was really telegraphed before maybe six or eight months ago that they were going to do the changes they recently made to their API’s. But I think until a company has a business model, until they have revenue, until you know how they’re going to make money, they could pivot at any time and basically, knock any of their partners out of the water and that’s essentially what’s happening with Twitter is now going after this advertising revenue model and they’re realizing that they want paid tweets and some other things where they need to control the client experience. So, that decision to go after that forced their hand and kind of made them pushed out their partners who were using the API.
[17:18] Mike: Right but there’s definitely ways to go about that without killing your existing partner. So, for example, they could have said, “Well, we’re not just going to accept any new partners. Nobody else can build on it.” If you are an existing partner you already have an API, you have an API key that you can reach in to our dataset, that’s fine. You could continue doing it.
[17:35] Rob: That’s basically what they’ve done.
[17:37] Mike: No, they haven’t. Actually, they put limits though on how many API calls those companies can do.
[17:44] Rob: Any they already had limits before. They’ve just changed the way they were calculated and then they said you can have no more than like what is it, a hundred thousand unique Twitter handles if you have like a client now or you could have twice as many as you have now. So, you’re right. There is a hard limit now and there wasn’t before.
[17:59] Mike: Right and that’s kind of what I’m getting at there as they basically taken a very adversarial approach to what previously with their partners and the people who helped them grow to the point that they are at now and now, those people are probably struggling at this point to just try and figure out, “Okay. Well, what can I do? How do I make money off of this that, you know, I’ve already invested whatever amounts of money and time in to this particular platform,” and the provider is kind of shocked, you know, maybe there’s not a whole lot that they can do about it.
[18:27] Rob: Probably, now that they’ve done it, people are really weary of Twitter and there are maybe like a — they are not as predatory as Microsoft was in the 90’s but I think they should be viewed with caution, right? A lot of people are now not building stuff on Twitter’s API because they know they can change it at anytime. But before they started making the changes, I don’t know if that they telegraph that much.
[18:45] Mike: So, I think you’re right. I mean that beforehand it would have been very difficult to make the call and say, “Oh well, Twitter would have, you know, is going to eventually screw you down the road.” I don’t think that that’s really a conclusion you could have justifiably come to. I think that by looking at the number of API changes that they made, you could say, “Well, they’re not necessarily — they don’t care as much about the partners that they have because they were breaking things quite a bit from what I understand but I could definitely see how somebody could look at that and say, you know, this isn’t really a good business proposition for us because they keep breaking things for us and they don’t necessarily care about that. And it’s not so much that they would have — you could look at said and well, Twitter is going to become predatory as just — they just weren’t playing well with others which is a little bit different and that’s kind of the real focus with this particular — the first one as they play well with others.
[19:35] Music
[19:37] Mike: The second guideline for choosing a platform provider is that you find a company that really stays true to their core focus. And some companies are chasing multiple revenue streams or you know, in Twitter’s case, they weren’t chasing any revenue stream, it wasn’t obvious but in the case of companies where they’re chasing multiple revenue streams and they’re really not committed to anyone of them, you have to be at least a little bit cautious. There’s nothing inherently wrong with chasing multiple revenue streams but as buyer or a prospective partner, you should definitely be aware that without some level of commitment from them, they’re going to be less likely to be bothered by issues that you could consider critical to your business. One way to help to filter out the types of companies that stay true to their core focus is that the companies that you’re working with, they don’t try to be everything to everyone and you know, some types of customers are just not going to be right for them and sometimes the partners are not going to be right for them. And if you ask them, they’re going to be honest about it and tell you that upfront.
[20:33] And instead of trying to adapt themselves to meet your needs and do absolutely everything that you need or that you are looking for, they’re going to be able to just be honest with you and say, “Look, that’s not something that we can do right now.” And they may couch it a little bit and say, “You know, we may look at that in the future,” but those are the types of answers that you’re going to get from most people who are going to be honest about it. And if somebody comes back and says, “Oh yeah, we have that slated for next quarter,” and then next quarter comes along and then it doesn’t come out and then it gets push a quarter and gets push another quarter. Those are the types of things that tend to bring up flags when you’re evaluating these thunders.
[21:08] Rob: So, the danger here is that if a company isn’t staying true to their core focus, that they could easily move in to your area. Is that the issue?
[21:18] Mike: Well, that’s — that’s part of it. The other risk I think is that they go in a completely different direction and they just stop supporting whatever it is that you were doing. So, as an example, you can take a look at Fog Creek where they started building CityDesk and you know, they were selling CityDesk back in 2000, 2001 timeframe and then they started selling FogBugz. And they came out with version 2.0 of CityDesk and then they essentially dropped it. They never did anything else with it ever again and if you go to their website or you search around for it a little bit, you can still find it today and it looks like they still have in oral form for it but that product hasn’t been updated in probably close to 10 years at this point.
[21:54] So, because Fog Creek is a company was going after a couple of different revenue streams and then one of them took off the risk that I was talking about was essentially they have two or three different products or a company has a couple of different services and one of them takes off, chances are they’re going to double down on that one and if it happens to be the one other than one you’ve chosen, then you’re essentially out of luck. There’s not much you can do about it because they’ve just abandoned the one that you were relying on and it won’t make anymore forward progress.
[22:23] Rob: And this is a similar danger to building something in — if you build something in Visual FoxPro years ago or VB6 and then Microsoft up in — updates it, you know, .NET and kind of leaves your old coding paradigm in the past and all your — your framework they don’t — they don’t really update the language anymore.
[22:41] Mike: I think Microsoft is notorious on this front just because they come up with new types of technologies and you know, especially when it comes to new ways to access data or new frameworks, it could be really challenging to try and pick the winner I’ll say because they may decide, “Oh well, we’ve got millions of users and you know, only 200,000 of them are using this so we’re going to drop that.”
[23:03] Rob: Yeah, I think there’s an advantage to adapting technologies. It’s funny it’s that balancing act. If you adapt them too early, then you have the potential of dropping on something that never takes off. But if you adapt them too late, then you have these technologies only have a certain lifetime, right? I mean if you look back to where — where web pages were original built dynamic web pages in late 90’s, it was C++, CGI Scripts. Then it was — there was Perl and there was this couple of years of — it was like ColdFusion, Classic ASP 1.0 and PHP came up around then and then really PHP is now on 5.0 which is totally different. If you still had old PHP 1.0, it probably wouldn’t even run anymore. So, you had — would have had to move that up. There were desktop apps in VB6. Those got cut off at the knees when .NET came out in 2002. And so if you’re too early in the curve, something you can honestly really pick one bad, right and then take a nosedive and you really get a lot of support for it. But if you wait too late, the thing could basically not be — be use by many people anymore.
[24:04] And it’s not bad of a technology, I mean here I own HitTail. It’s in Classic ASP which hasn’t been updated since, as far as I know, 2001 or 2002. So, it’s at 10 or 11-year old of web technology which is just a crazy statement to say. But it’s not the end of the world that we’re dealing with that. I mean everything still works. The app still works. It’s just that there’s no community around it and if we run in to a hard problem and the solution is not online, we’re really at the mercy of spending hours and hours troubleshooting it. As well as the fact that there’s no ego system there anymore to develop things as — things like OAuth or integrations with, you know, REST API’s weren’t around when Classis ASP was built. And so that’s a trail off you have is that an old app will still continue to work but when you want to update it, you want to do cool and new stuff with it, you probably will have to use a newer language to then tie back in to it.
[24:54] Mike: Well, the other interesting this is that because ASP is obviously on the down swing at this point is that looking forward, I mean how many more versions of — of Windows servers are still even going to support ASP.
[25:08] Rob: Yeah, and I think Windows 2008 server didn’t have it in by default.
[25:12] Mike: It’s not.
[25:13] Rob: Yeah, I think it was the first year where they — you actually had to go in and install it yourself.
[25:17] Mike: I’m going to look at Window server 2012 to see what’s in there but, you know, that’s something you may have to deal with at some point in the near future.
[25:25] Rob: Uh huh, true.
[25:26] Music
[25:29] Mike: The third thing to look at when you’re trying to choose a technology provider is that if it’s — especially if it’s a service provider that they take steps to be safe with and secure with your data. And this — as I said, it applies to a lot more to the platform service providers rather than to integration partners or to just technology providers. But you have to make sure that if, for example, there’s a data breach, they’re going to notify you and they’re going to let you know that there’s something wrong. And if they don’t notify you, then there’s something fundamentally wrong with that company and you really need to be careful about using them in the future. And I think that you can look kind of all over the internet for different companies who’ve ran in to these situations where they have a data breach and either it shows up on some web page somewhere and they just don’t tell anybody about it or they just kind of, you know, do that several weeks after the fact.
[26:20] And I think we ran in to that at one point with our mailing list provider. People started complaining that their e-mails were getting spammed and you know, come to find out it was — it took probably three or four weeks that we found out that our e-mail provider had a data breach and that was exactly what they did. They didn’t bother to tell anybody. They just put up a web page several weeks afterwards because people have been complaining so loudly and there was never an apology. There was never a notification of what was going on. It was just, “Oh, yeah, this happened,” and that was it. And I think you and I just kind of said, “No, that’s it. We’re done at this point.” And we moved everything off of them and then went over to MailChimp.
[26:57] Rob: Which was a painful transition that was AWeber which is surprisingly enough because AWeber has been around for a long time. I would expect that they would have behave better than that but it was — it was pretty shocking and that was, what, two or three years ago that happened. And it’s obviously, it’s painful to move your mailing list because you just, you know, you’re so in trench in to that API. You have the interface down. You have the form embedded. I mean there’s — it’s not a trivial move but that was enough for you and I to decide to — to move everything over to MailChimp.
[27:24] Mike: Right and that’s just a level of trust. I mean if you don’t — if you can’t trust them to do the right thing, then you definitely need to start looking elsewhere.
[27:32] Rob: Right and it’s not that they got breached, it’s just that they didn’t tell us they got breached and we had to wait for complaints to come in from our prospects and customers saying they were getting spammed essentially by, you know, using specific e-mails they had set up for our stuff and I’m so glad that was over.
[27:48] Mike: Also a part of being safe and secure with your data is that if they lose your data and by lose, I mean, you know, the data gets corrupted and they’re not willing to do whatever they can to try and help and they’re not staying in communication with you to let you know what’s going on, that’s a really bad sign. And again, this just goes back to the red flags and looking for things that — signs of things that could go wrong in the relationship down the road and some of these things obviously, you can’t know them in advance but you can search around and find history on companies that had been in business for a while and see what the — the reaction from their users has been over — over time.
[28:24] A lot of these companies have — there’s websites out there where you can go and find reviews and what other people’s experiences are with them. Don’t necessarily trust all the marketing stuff that’s on their website. Go out and find a legitimate third party reviews. Not to say that the reviews on their website aren’t accurate but they are obviously not going to publish things that cast them in any sort of a negative light as well. I mean you — that’s just not something you do on your own marketing material. But if there are user submitted areas, if they have forums, definitely look through those forums and see if you can find out how they would respond to those types of things.
[28:58] Rob: Twitter is probably not a good place to go to see who they have been responding to and look at those conversations.
[29:02] Mike: I think the only down side with Twitter is that you only get so much history there. I mean you’re only going to be able to look back so far. Really what this comes down to is just are these companies willing to own up through their mistakes and everyone makes mistakes and it’s not a big deal that people make mistakes. It’s really how they respond to those mistakes and you know, just keep in mind not everyone customer is a good fit for every single vendor.
[29:22] Music
[29:26] Mike: The fourth guideline we have is that they’re not stuck in the previous decade. Many people make judgments about a company base on their website and to some extent this is good because if you look at a website and it looks like it hasn’t been updated since the 90’s, chances are it probably hasn’t. And if the technology is visually stuck in the last decade, you have to wonder what’s going on under the hood and how long some of that code has been there. And not that code goes bad but problems change over time. And if the company has been changing everything under the covers overtime, then chances are that that front end UI should have as well. And if the front end UI isn’t changing, it may be an indication that things underneath the covers are not changing to meet the needs of new customers.
[30:06] Rob: Right and I think it depends on the business they’re in, right? If you’re looking at someone that’s providing you with, well I mean like an app like Twitter or like some cutting edge social type of thing, you expect to have a fairly modern UI and you expect to have modern REST API’s, not things that are, whatever like web services from 2001. Whereas if you’re dealing with someone or maybe you’re getting government data for something for housing prices or for some old metric that, you know, some — maybe the company is been up for 20 years, you’re going to give them leniency and they — they can have a website that looks older, an API that maybe was built in the late 90’s and you’re going to give them a little more leeway because, hey, they haven’t updated it and they may not have had a reason to do so.
[30:46] So, I mean I think an interesting look is if you look at MailChimp versus AWeber who we’re just talking about, AWeber API is old. They haven’t really updated their UI in years and I think they retain a lot of the customers that they’ve always had but I think if someone comes at the MailChimp website and looks around, they — there’s a very different feeling. There’s a lot more of a hi-tech startup like these guys are constantly updating their app versus AWeber which is more like I’d say very consistent. It’s a more classic aged app. I mean that’s only a bad thing if — if you want new features to be rolled out constantly. I think there’s these pluses and minuses on both sides. But I have heard complaints from people who are still using AWeber that they wish there — there were some new like split testing and you know, features that MailChimp has rolled out that they wish AWeber would get on as well.
[31:34] Mike: And the fifth guideline for choosing a platform provider is that they are able and willing to help you. If they’re honest and willing to tell you when they’re not going to be a good fit for you or if they have documentation and resources that are available that they can point you to and they will help you in the right direction, then they’re probably going to be of good fit for you. But if they are willing to yes you to death and do anything it takes to land you as a customer and then you find out after the fact that they just really weren’t a good fit or that you weren’t a good fit for their services, that’s obviously a bad sign. And you’re going to have to dig a little bit. Chances are good you’re going to have to get on their support.
[32:11] You’re going to have to ask them some questions. Ask them straight forward and say, “You know, will this work in your environment and if so, how is it intended to work?” If you have any questions about how it’s suppose to work or how your product is going to integrate in to their platform and they’re not able to give you satisfactory answers, I mean they don’t necessarily seem knowledgeable about it, either ask for somebody who’s a little bit higher up or you know, take what they’re saying with a grain of salt. Do some additional testing and this might even be a good opportunity to outsource some of that work to oDesk and see if somebody can build a very, very quick prototype using the technology and the ways that they’ve outlined to see if it actually works or not.
[32:47] Rob: In terms of them being able and willing to help you, how does that play in to something like Open Source Software in to like the Google app engine where there isn’t really support?
[32:58] Mike: Well, I think that those types of things when you’re looking at Open Source Software or anything, I mean is there a community behind it because if that community is there, then chances are good that they’re willing to help you but there are — and I can’t think of one off the top of my head but I can imagine that there is probably an open source community out there where there are very close and very not helpful [Laughter] I’ll say and you try building something would whatever the software is and they’re just like, “Oh, you’re doing it wrong. You have no idea what you’re doing just go — so go away.” I can’t imagine that there is very many of them because I wouldn’t — that they would last very long or get very big but I can imagine that there are might be a couple out there that are kind of on a bleeding edge and there’s just like we don’t have time for you, just leave us along figure it out yourself.
[33:42] Rob: Or if it’s a community that’s really small or virtually non-existent I could see that’s like kind of like not having support available.
[33:42] Mike: Yeah, there’s a difference between having dead air and somebody just being not helpful. I could see dead air being much more prevalent than something like, you know, just people just saying, “No, go away.” Really what you’re looking for is are they willing to try and make whatever it is that you’re trying to do work, you know, are they offering solutions or are they offering places you can go for a help. And not to say that they’ll do it for you but they’re trying to make your life easier as oppose to making you jump through hoops.
[34:15] Rob: Is there any way to tell before you integrate with them whether they’re going to be able and willing to help you because like you said they might yes you to death before the sale and then once you get in to it, you know, you build the thing and then they’re not very helpful. How do — how do you avoid that?
[34:28] Mike: Well, I think they’re building prototype is a good way to do it and for prototype you don’t necessarily have to build everything that you’re looking to do. Just try building one piece of it and if it’s something like doing and a lot integration and that’s just one piece of the entire thing and you think that that’s going to be a problem area, work on that one piece or go to oDesk and outsource it to somebody and say, “Hey, I need you to make this work,” and take a look at the output and see if, you know, is it remotely readable? If the person had to jump through hoops in order to get it to work and you know, if you put them in touch with the vendor and they’re not able to help or unwilling to help, then, you know, that says something about what level of support you can expect in the future.
[35:08] I think the big key is making sure that you don’t spend a lot of money before you kind of get in to it and I’ve heard horror stories from people about spending 15, 20, 30, $50,000 before — before they even get something installed and then having to do all these customizations and then coming to find out, “Oh, by the way, this isn’t going to work because of such and such bug that’s unknown issue.” So, I think that wraps up how to pick a platform partner and as I said before the things to keep in mind are when you’re evaluating the vendor, make sure that they play well with others, make sure that the company is staying true to their core focus, make sure that they are taking steps to be safe and secure with the data that you’re putting in to them or onto their services and make sure that they’re not stuck in the last decade and the fifth one is to make sure that they’re able and willing to help you.
[35:56] Music
[35:59] Mike: If you have a question or comment, you can call it into 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 this podcast 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.
Episode 104 | Podcasts For Startup Founders
Show Notes
Our 4 Podcast Classifications:
- Tactical (t)
- Motivational (m)
- Entertainment (e)
- Exposure (x)
(Interview) Startup Podcasts
- Mixergy – tm
- This Week in Startups – me
- Startup Slingshot – tm
- Startup Success Podcast – me
- Founders Talk – me
(Non-interview) Startup Podcasts
- A Smart Bear – me
- TechZing – me
- Seth Godin’s Startup School – me
- Customer Development for Smart People – m
- Startups for the Rest of Us – tm
- Kalzumeus podcast – me
Business Paradigms
- Actionable Books – x
- HBR Ideacast – x
- The Invisible Hand: Management, Economics and Strategy for the Thinking Person – x
Online Marketing and Online Business
- Lifestyle Business Podcast – me
- Tropical Talk Radio – te
- Internet Marketing: Insider tips and advice for online marketing – te
- Foolish Adventure – m
- Internet Business Mastery – mx
- Copyblogger Radio – tx
- SEO 101 – tx
- Talking Websites – tx
Storytelling
- This American Life – e
- The Moth Podcast – e
- This Developer’s Life – e
Tech News and Related
- TWiT – e
- Tech News Today – e
- This Week in Tech – e
- This Week in Google – e
- Frame Rate – e
- Windows Weekly – e
- Hanselminutes – xe
- Apps for Kids – e
- Everyday Einstein’s Quick and Dirty Tips for Making Sense of Science – e
New Ideas, Politics & the Economy
- 99% Invisible – xe
- Decode DC – xe
- NPR: Planet Money – xe
- APM Marketplace – xe
- APM Marketplace Tech (4 minutes) – xe
- Freakonomics Radio – xe
- TED Talks (audio) – xe
- NPR Topics: Pop Culture – xe
Thanks to Andrea Conti for putting together the table below:
| Podcast Type |
Podcast Name | Tactical (T) | Motivational (M) | Entertainment (E) | Exposure (X) | WebSite | Podcast Download |
| (Interview) Startup Podcasts |
Mixergy – tm | 1 | 1 | 0 | 0 | http://mixergy.com | |
| (Interview) Startup Podcasts |
This Week in Startups – me | 0 | 1 | 1 | 0 | http://thisweekinstartups.com/ | http://feeds.feedburner.com/twist-audio |
| (Interview) Startup Podcasts |
Startup Slingshot – tm | 1 | 1 | 0 | 0 | http://www.thestartupslingshot.com | http://www.thestartupslingshot.com/feed/ |
| (Interview) Startup Podcasts |
Startup Success Podcast – me | 0 | 1 | 1 | 0 | http://startupsuccesspodcast.com/ | http://feeds.feedburner.com/TheStartupSuccessPodcast |
| (Interview) Startup Podcasts |
Founders Talk – me | 0 | 1 | 1 | 0 | http://5by5.tv/founderstalk | http://feeds.5by5.tv/founderstalk |
| (Non-interview) Startup Podcasts |
A Smart Bear – me | 0 | 1 | 1 | 0 | http://blog.asmartbear.com/ | http://feeds2.feedburner.com/blogspot/smartbear |
| (Non-interview) Startup Podcasts |
TechZing – me | 0 | 1 | 1 | 0 | http://techzinglive.com/ | http://techzinglive.com/feed |
| (Non-interview) Startup Podcasts |
Seth Godin’s Startup School – me | 0 | 1 | 1 | 0 | http://www.earwolf.com/show/startup-school/ | http://rss.earwolf.com/startup-school |
| (Non-interview) Startup Podcasts |
Customer Development for Smart People – m | 0 | 1 | 0 | 0 | http://clearshore.net/feed/ | |
| (Non-interview) Startup Podcasts |
Startups for the Rest of Us – tm | 1 | 1 | 0 | 0 | http://www.startupsfortherestofus.com/ | http://feeds.feedburner.com/StartupsForTheRestOfUs |
| (Non-interview) Startup Podcasts |
Kalzumeus podcast – me | 0 | 1 | 1 | 0 | http://www.kalzumeus.com/ | http://www.kalzumeus.com/category/podcasts/ |
| Business Paradigms | Actionable Books – x | 0 | 0 | 0 | 1 | http://www.actionablebooks.com/media/videos/author-interviews/ | |
| Business Paradigms | HBR Ideacast – x | 0 | 0 | 0 | 1 | http://blogs.hbr.org/ideacast/ | |
| Business Paradigms | The Invisible Hand: Management, Economics and Strategy for the Thinking Person – x |
0 | 0 | 0 | 1 | http://www.theinvisiblehandpodcast.com/TIH-Annual.html | http://www.theinvisiblehandpodcast.com/InvisibleHandPodcast_fb.xml |
| Online Marketing and Online Business |
Lifestyle Business Podcast – me | 0 | 1 | 1 | 0 | http://www.lifestylebusinesspodcast.com/ | http://feeds.feedburner.com/lifestyle-business-podcast/AdJF |
| Online Marketing and Online Business |
Tropical Talk Radio – te | 1 | 0 | 1 | 0 | http://www.tropicalmba.com/podcasts/ | http://feeds.feedburner.com/GetPaidToTravelTheWorld-TheTropicalMba |
| Online Marketing and Online Business |
Internet Marketing: Insider tips and advice for online marketing – te |
1 | 0 | 1 | 0 | http://www.sitevisibility.co.uk/impodcast/ | http://www.sitevisibility.co.uk/podcast/ |
| Online Marketing and Online Business |
Foolish Adventure – m | 0 | 1 | 0 | 0 | http://foolishadventure.com/ | http://feeds.feedburner.com/foolishadventure |
| Online Marketing and Online Business |
Internet Business Mastery – mx | 0 | 1 | 0 | 1 | http://internetbusinessmastery.com/podcast | http://feeds.feedburner.com/ibm |
| Online Marketing and Online Business |
Copyblogger Radio – tx | 1 | 0 | 0 | 1 | http://www.copyblogger.com/imfsp-radio-1/ | |
| Online Marketing and Online Business |
SEO 101 – tx | 1 | 0 | 0 | 1 | http://www2.webmasterradio.fm/seo-101/ | http://www2.webmasterradio.fm/seo-101/ |
| Online Marketing and Online Business |
Talking Websites – tx | 1 | 0 | 0 | 1 | http://www.talkingwebsites.co/ | |
| Storytelling | This American Life – e | 0 | 0 | 1 | 0 | http://www.thisamericanlife.org/radio-archives | |
| Storytelling | The Moth Podcast – e | 0 | 0 | 1 | 0 | http://themoth.org/radio/episodes | http://feeds.themoth.org/themothpodcast |
| Storytelling | This Developer’s Life – e | 0 | 0 | 1 | 0 | http://thisdeveloperslife.com/ | http://feeds.feedburner.com/thisdeveloperslife |
| Tech News and Related | TWiT – e | 0 | 0 | 1 | 0 | http://twit.tv/shows | http://twit.tv/node/feed |
| Tech News and Related | TWiT – Tech News Today – e | 0 | 0 | 1 | 0 | http://twit.tv/tnt | |
| Tech News and Related | TWiT – This Week in Tech – e | 0 | 0 | 1 | 0 | http://twit.tv/show/this-week-in-tech | |
| Tech News and Related | TWiT – This Week in Google – e | 0 | 0 | 1 | 0 | http://twit.tv/show/this-week-in-google | |
| Tech News and Related | TWiT – Frame Rate – e | 0 | 0 | 1 | 0 | http://twit.tv/show/frame-rate | |
| Tech News and Related | TWiT – Windows Weekly – e | 0 | 0 | 1 | 0 | http://twit.tv/show/windows-weekly | |
| Tech News and Related | Hanselminutes – xe | 0 | 0 | 1 | 1 | http://www.hanselminutes.com/archives | http://feeds.feedburner.com/HanselminutesCompleteMP3 |
| Tech News and Related | Apps for Kids – e | 0 | 0 | 1 | 0 | http://appsforkids.libsyn.com/ | http://appsforkids.libsyn.com/rss |
| Tech News and Related | Everyday Einstein’s Quick and Dirty Tips for Making Sense of Science – e |
0 | 0 | 1 | 0 | http://everydayeinstein.quickanddirtytips.com/ | |
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| New Ideas, Politics & the Economy |
Decode DC – xe | 0 | 0 | 1 | 1 | http://www.decodedc.com/decodedc-podcast/ | http://feeds.feedburner.com/decodedc |
| New Ideas, Politics & the Economy |
NPR: Planet Money – xe | 0 | 0 | 1 | 1 | http://www.npr.org/blogs/money/ | |
| New Ideas, Politics & the Economy |
APM Marketplace – xe | 0 | 0 | 1 | 1 | http://www.marketplace.org/ | http://www.marketplace.org/shows/85/podcast.xml |
| New Ideas, Politics & the Economy |
APM Marketplace Tech (4 minutes) – xe | 0 | 0 | 1 | 1 | http://www.marketplace.org/ | http://www.marketplace.org/shows/55/podcast.xml |
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Freakonomics Radio – xe | 0 | 0 | 1 | 1 | http://www.freakonomics.com/category/freakonomics-radio/podcasts/ | http://feeds.feedburner.com/freakonomicsradio |
| New Ideas, Politics & the Economy |
TED Talks (audio) – xe | 0 | 0 | 1 | 1 | http://www.ted.com/talks/list | http://feeds.feedburner.com/tedtalks_audio |
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NPR Topics: Pop Culture – xe | 0 | 0 | 1 | 1 | http://www.npr.org/sections/pop-culture/ | http://www.npr.org/rss/podcast.php?id=1048 |
Transcript
[00:00] Mike: This is Startups for the Rest of Us: Episode 104.
[00:02] 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: I’m Rob.
[00:20] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. How you doing this week, Rob?
[00:24] Rob: You know, I’m doing really good. I’m actually glad that I changed hosting facilities for HitTail from when I acquired it a year ago because back then it was hosted in Manhattan right downtown and now it’s hosted in Virginia somewhere far away from the Coast. Obviously, Hurricane Sandy has really done some damage to the power grid there on the East Coast. How you’ve been faring?
[00:43] Mike: Pretty good. It’s funny that you mentioned that you’re glad that you moved HitTail to a different server that was kind of further inland because I’ve worked with companies that are in, you know, Western Virginia and in the state of West Virginia and most people all know this but that’s a very, very big hosting area because like the geology is such that there’s very, very few earthquakes and although they have deal with snow, a lot of their income and power lines were all in the ground and so are a lot of the fiber optic cables so they don’t have to worry about stability of the infrastructure and that’s why a lot of the hosting companies that are in D.C. have a lot of their facilities based out in that general vicinity.
[01:19] Rob: Yup, I’ve also heard there’s a bunch of big pipes, big internet trunk pipes that go through there and maybe they put them there because of that natural geological stuff you’re talking about. But AOL, I think that’s like their worldwide headquarter is there and of course, laid a bunch of trunk lines back in the 90’s. I’ve found this cool quote from the Fog Creek blog. I guess FogBugz On Demand went down for part of the day. I think it’s freaking havoc on so many services are going down right now but one of their quotes was “The super human folks at our data center are hauling 55 gallon drums of diesel fuel up 17 flights of stairs.” Assuming they’re able to sustain a rate of transport that exceeds the rate of consumption that data center should run until electricity is restored and the current estimate is four days from now. That’s insane. Big, a major city like Manhattan going to have outages for — I mean they’re calling it a hundred year storm, you know, it’s pretty crazy. I actually have a confession to make. You talked me in to using Trello.
[02:16] Mike: Yes, I did.
[02:16] Rob: So, I’ve always been a pen and paper guy for my to do’s and no to do list has ever replaced it. There’s always something cumbersome about them. There’s just one thing that gets in to the way that doesn’t work as well as the pen and paper so I never make the switch. And last week, I finally decided as I was moving couple of the guys who were working on HitTail, everything is in FogBugz now instead of, you know, other means. We were communicating via e-mail and in Google doc and such. So everything is in FogBugz and I realized that I really need to — to make one more try at this and of course, since you had talked about using Trello, I gave it a shot. And so far, I’m impressed with it. It is very simple. It does exactly what I need, nothing more. There are really hasn’t — I mean I really don’t have a complaint.
[02:58] I’m always looking — when I started using a to do list thing, I’m looking for the one thing that’s going to make me stop using it and I haven’t found that yet. I’ve been using it for about a week straight and it’s great. I go to, you know, go to coffee shop or go somewhere else that I don’t have to remember to bring this paper that if I leave this piece of paper on my desk that, you know, actually still know what’s going on. So, so far, you know, big thumbs up for me and once they get — I’m assuming they got FogBugz integration at some point where I can actually move issues or at least, you know, reference issues between the two, it would be even better for my purposes.
[03:28] Mike: It’s just I got a way from it because I kind of ducked my head to work on certain things then I just never really went back to it. I store a lot of things in Evernote. So I think that once your — the big problem with to do list in general and it’s not specific to Trello or you know, paper or any given technology is just the fact that like as you start throwing things in to it, the more you add then it becomes, I almost say detriment because you look at this giant list of things that you have to do and it’s demotivational and that’s when —
[03:56] Rob: Right.
[03:56] Mike: … it really comes down to.
[03:57] Rob: Yup. If it becomes a dumping ground and there’s just a hundred things on it they’re not prioritized or it’s hard to prioritize them, you’re right. You eventually just ignore it. To declare to do bankruptcy and just shred that whole piece of paper. I’ve done that several times.
[04:10] Mike: Yup.
[04:10] Rob: So, yeah and that very rarely to happen to me over the coming weeks. So, I’m just hoping that this is one system that sticks. But what’s nice is it’s easy enough to switch back to paper.
[04:19] Mike: Right.
[04:19] Rob: What about you? What else has been going?
[04:21] Mike: So, one of our listeners named Matt Crider wrote us to let us know that he runs his website called Flapcast.com and that allows people to listen to their podcast online. And he recently started to listen to ours specifically and he’s come to realized how difficult marketing really is for developer and it’s really interesting to see our podcast up there because our podcast is syndicated in a couple of different channels and we have absolutely no way of figuring out like where it gets syndicated and how and any sort of statistics with that. So based on our RSS feed, we have kind of a round about idea of how many people are listening to the podcast but that’s really about it. I mean because all these other syndication channels, we just, you know, it could be exponentially greater and we just don’t know.
[05:04] Rob: Right because anyone who — anyone like Flapcast who might be cashing our mp3 file and letting a number of people listen to it, that means that each individual is not downloading it since Flapcast is a web — it’s basically a web-based podcast interface. It’s actually looks really nice.
[05:20] Mike: Right.
[05:20] Rob: It’s cool. I might — I actually might import my stuff if it allows me to just import directly just almost as a backup because Apple is doing such screwy things now with their podcast. It kicked them out of iTunes and the podcast episode on your iPhone is buggy as heck and I’m just waiting for it to lose my feed and not have a copy of it somewhere. So, I may use this as a backup. It’s pretty cool.
[05:42] Mike: Interesting. I haven’t run any problems with it, with the iPhone, I mean.
[05:46] Rob: Oh, really?
[05:46] Mike: Yeah.
[05:47] Rob: It’s the worst iOS app I’ve ever used. It — hands down. Actually, I’ve never given an iOS app a negative review. I intentionally went to iTunes and listed out all the bugs that it still has after what’s like 3 months later or 2 months after release and they have done a bunch of updates and it’s still downloads massive. I mean my — I will clean it out knowing no podcast showing as new, you know, as new needing to be listened too and within a couple of days as I sync, it’ll bring 2,000 new episodes from all of my feeds in and they’re all the things that I having marked as played before.
[06:20] Mike: Wow.
[06:20] Rob: And it’s just — it’s just a big bug. It also crashes on me a number of times a day. There’s a few others and that’s now slowly they were probably 10 when I started and listening to it about 2 months ago and they’ve slowly been picking those off. So there’s only about 2 or 3 really big ones left but still only makes me wonder about Apple’s ability to execute [Laughter] on this little podcast app or maybe not their ability to execute but their how high they prioritize it I guess.
[06:45] Mike: Yeah, well I can definitely add my own. I was searching for movies near Mulberry, Massachusetts. I said movies near Mulberry which the phone knows where I live so it really shouldn’t be that difficult for it to find movies near where I live and it came up and said, “Movies near Melbourne, Australia.” I’m just like, “Really? Come on.” [Laughter]
[07:05] Rob: I’m looking for movies on the other side of the world right now.
[07:07] Mike: Yeah, I don’t know. [Laughter]
[07:09] Rob: I have a HitTail update. We are now embarking on a series of integrations. If you recall for my talk at MicroConf last year, I talked about integration marketing as a way to kind of find new users and just connect with other apps and other owners. So our first one probably will go live later this week and maybe I’ll talk about it next week after — after we go public to talk about how we promoted it and kind of the, you know, the benefits we get from that. And I have also, man, I’m taking the step back and I’m doing a bunch of housekeeping issues because I have just been pushing forward, right, like it’s all about providing — basically, providing the most value for the customers who are using it and trying to get more customers. So that’s all I’ve been doing. So anything that’s like not customer-facing, I’ve been completely ignoring. So, there were a couple of minor long standing bugs that I fixed last week. Reporting was a mess. I was using the main database that gets all this incoming traffic. We don’ have any type of reporting database and I was starting my reports with then starting to slow it down and my nightly tasks that look at high volume users were starting to slow the actual production database down.
[08:11] So, we’ve just gone in and spent time to kind of pull that out in to something just for efficiency. To be honest, it’s that point, you know, we always talk about pretty mature optimization, I’m at the place where like growth is just starting to get to the point where I need to start optimizing because it’s — from where I bought HitTail a year ago, a little over a year ago, we’re at 10X, the number of paying customers. And it’s not that the servers have — it hasn’t had any problems. It’s not hasn’t slow down yet but our DBA has these inner workings of the database that he knows what’s going on and he shows me graphs and we’re going to get there if we keep up this growth for another few months. So, now is the time to optimize.
[08:51] Mike: That sounds a little scary. I mean if your DBA is keeping track of certain things and he said, “Well, this is going to be a problem and it’s going to most likely be a problem a lean 2 or 3 months, then you don’t have a whole lot of time to make those optimizations that is going to turn it in to not a problem.
[09:09] Rob: Right. Well, so he didn’t give me an exact timeframe. Yeah, maybe we’d see a little slow down in 3 months and maybe it’ll start to be a real problem in 6 months. The thing is we move quickly since we’re such a small team and we know the code base that — it’s actually not that hard. I basically asked them — I was like, “Send me all the queries that are causing any types of problems and send me the optimize versions. You know, send me the old and what you want it to look like.” And then he goes away and he sends it to me and I just go right in and infixed 10 queries that run all the time. I can fix all those in a couple of hours, you know, and deploy them to production. It actually isn’t that scary.
[09:42] In addition, we are on a cloud server and so I can double the realm tonight, you know. It’s a monthly fee. I can also add more processors. I mean we could go to 4 and 8 processes a box. There’s a number of things we can add hard that space. We can do a lot of things to beef-up the box that literally could be done overnight or you know, having forbid in the middle of the day if we hadn’t seen this coming. So, it’s less scary. To be honest without the DBA, it would be scary because this is — it’s a highly — it’s a high production database, right? It’s just – it’s high performance and I wouldn’t know — as developer, you know, just enough to be dangerous in my opinion. But having a DBA kind of on retainer really opens my eyes that he looks way ahead and helps out.
[10:25] Mike: Yeah, that’s kind of the advantage of having a DBA who kind of knows what he’s doing as oppose to somebody who’s learned about it but isn’t necessarily all up to speed on everything.
[10:34] Rob: Absolutely, that would be my description of you and I if we were [Laughter] trying to maintain the database.
[10:38] Mike: Right.
[10:38] Rob: We’ve kind of learned about it just enough to write code against the database but it’s just not the stuff that the reports and all that in knowledge this guy has of the specific database engine and it helps that he was the one that I originally hired to help me move data centers a year ago. And so he really has some ownership and he knows all the — all the inner workings of everything that’s going on so…
[10:58] Mike: That’s very cool.
[10:58] Rob: Yeah, so what else is going on with you?
[11:00] Mike: So, I had dinner this past week in Brooklyn with James Robert and he’s the one who you had mentioned a couple of weeks ago who is working on the Whicher. Talk shop I guess I’ll say [Laughter] kind of talked to him lot about the Whicher and then talked about the podcast and AuditShark a little bit and it’s interesting that those types of things that he’s been doing and seeing on the Whicher. So it was — it’s just kind of great to get out and talk to a podcast listener. Again, the invitation is open for other people who are in the Brooklyn area. I’m not there now but I will be in the couple of weeks. So by the time this podcast episode, you know, is released then, I’ll probably be back.
[11:31] Rob: The URL is the and then Whicher W-H-I-C-H-E-R .com and it’s a tournament split testing and I really dig this idea. So, it’s cool you get to sit down with him.
[11:43] Mike: So, you know, who Jason and Justin from the TechZing Podcast who were always talking about Jason has these tales that are coming from like from, you know, the dark side of humanity?
[11:52] Rob: Indeed.
[11:53] Mike: Yes. So, here’s one for you, “Disney just acquired the right to Star Wars.” And episode 7 is due out in 2015. So, can we all just cry together now?
[12:04] Rob: Are you serious this happened? Where have I been? Is that like on the front page of Hacker News?
[12:08] Mike: I don’t know. I mean —
[12:09] Rob: They’re going to acquire Lucas — it’s the — how is this possible? I am in a complete shock. I’m sorry I keep cutting you up. I just — I’m absolutely [Laughter] speechless right now.
[12:18] Mike: Yup, but apparently for $4 billion you could have bought it too.
[12:22] Rob: Whoa.
[12:23] Mike: Yup.
[12:23] Rob: Wow.
[12:24] Mike: So, apparently happened today and they are taking over not only Lucasfilm but they’re taking over Industrial Light & Magic as well.
[12:32] Rob: That’s — he must want to retire.
[12:34] Mike: Well, I think it’s more of a leaving a legacy because think about this way —
[12:37] Rob: Yeah.
[12:37] Mike: I mean if George Lucas died today, what would happen to Star Wars and all the other things that he owns?
[12:43] Rob: Someone would sell it to Disney for $4 billion?
[12:45] Mike: Well, maybe but I mean —
[12:46] Rob: Yeah —
[12:46] Mike: … I guess that by selling it himself, he can kind of rest assured that, you know, it’s going to survive beyond him.
[12:54] Rob: Oh, I need a moment of silence to absorb this.–
[12:57] Mike: [Laughter]
[12:57] Rob: I seriously. If you saw my tweet yesterday about my new t-shirt that I got with Greedo and Han in 8 bit format
[13:02] Mike: I did —
[13:03] Rob: you know, what a Star Wars fan I am so —
[13:07] Mike: That was a great tweet, by the way. Is your wife still talking to you?
[13:11] Rob: She —
[13:11] Mike: Or you not wanting her presence?
[13:13] Rob: I put it on Facebook and I said, “Wife is going to love this.” And she said that — her comment was one word, “Couch.”
[13:19] Mike: [Laughter]
[13:22] Rob: It was good. My wife is way funnier than we are. Yeah [Laughter] —
[13:25] Mike: Yes, yes.
[13:25] Rob: It was good stuff.
[13:26] Mike: Nice, nice.
[13:26] Music
[13:29] Rob: Today, we’re going to be covering Podcast you should listen to and why. What we’re going to do is run through — it’s a pretty big list. It’s almost 50 podcasts and the idea here is not that you should listen to every one of them but it’s to pick out the ones that’s based on our descriptions that interest you or that may had expand kind of your mind and your, you know, your vision of the world and technology. Now, we’re going to start by looking at the most relevant to this audience. So, we’re going to talk about startup podcasts, some interview or non-interview ones. We’re going to talk about business paradigms, online marketing podcasts then branch out a little bit to some that I’m familiar with and I listen to quite a bit and we want to both promote podcasts because every podcast needs new listeners. But I think before that, I actually wanted to mention a couple of things. One is the purpose of consuming podcast in my opinion and I really see listening to the podcast — I listen to podcast for four reasons and so I’ve grouped this list in to four different classifications.
[14:24] So first, there are some podcasts that are tactical and by that I mean they are very nuts and bolts, you know, “Here’s how to perform on page SEO and here are the steps.” And there are very few podcasts that actually do this and the reason is because they tend to be kind of boring and they’re less personal and they’re just less entertaining and so there aren’t a lot of them there. But we are going to call out which podcasts are like that. The second type of podcast that I think of is motivational and that’s if you think of like Mixergy or Founders Talk, you listen to them not to learn an exact technique but you listen to them more to get the story of what’s going and to feel, empowered and to just be motivated, right, to go work on your startup. And I know some people say that Startups for the Rest of Us does that for them.
[15:04] So the third kind is entertainment and anything on the TWiT Network, This Week in Tech Leo Laporte’s Network I would classify them it’s like tech news stuff. It’s not going to help you get your startup launch but at the same time, you can’t just work all the time, right? You can’t just stuff your mind full of constant tactical information because you just get overloaded. And so I find it when I have extra time if I am overloaded and I’d just wanted to do the dishes and listen to something fun, I listen to entertainment podcast. And then the last to the four is exposure. And this is something — I’m talking about exposure to new ideas. So something like the HBR, Harvard Business Review Ideacast where it’s not something that is going to directly help me launch a new business, not technical. It doesn’t motivate me. It’s not entertaining but it exposes me to new thoughts, new ideas, new concepts that can — maybe down the line or some way changed my thinking and can help me both in my, you know, day to day work in launching a new startup, in writing an article and creating a podcast outline. I mean anything like that. TEDTalks, the audio feed of the TEDTalks is also a great way to do that.
[16:10] Mike: So, one of the things that we want to point out here is that we’re going to talk about a lot of different podcasts and you have to think about when you can fit the zigs in because there are certain podcasts, there are certain types of podcasts that you have to listen to and you can’t really paid too much attention to any of other things that are going on because you kind of have to concentrate and really absorb the information whereas other podcasts which are more for entertainment, you can listen to them at any time. One of the other things you could keep in my mind is the speed at which you listen to these podcasts and one of the things that I really like with the iPhone is that recently they just added a new ability to listen to the podcast in one and a half speed versus double speed because double speed can be a little bit difficult to listen to but one and a half speed seems to be really kind of the sweet spot, at least for me it is. Some people can listen to certain things faster or slower. Some people don’t even speed them up at all but in order to churn through a podcast very quickly, you can crank it up, you know, one and a half or double speed.
[17:07] And primetimes to listen to podcasts tend to be when you’re on a car, when you’re traveling. A lot of people have long commutes so if you have a half hour or 45-minute commute, you can — at least set aside probably an hour a day, that’s 5 hours a week for podcast. Other times you can listen to podcast are when you’re working out or when you’re doing dishes or yard work or when you’re running or if you’re exercising, if you’re going out for a run, those are great times to listen to these podcasts. Now, one of the other things you have to keep in mind is that you do not have to feel obligated to listen to every single minute of single podcast. If you look at the title for a podcast or you look at the summary and description, feel free to skip it if it doesn’t apply to you or if it sounds like something you’re really not interested in.
[17:49] It’s okay to listen to a few minutes of it and then just skip to the end of it and go to the next one if it’s not kind of grabbing your attention. And that’s one of the things that you really need to be able to do and it can be hard. I mean if there is something on your list of things to do, it’s very difficult to just delete it and move on say, “You know what? This isn’t applicable anymore.” Skip on to the next one. Find something that is.
[18:10] Rob: Yeah, I think this is perhaps the most important tip of the day and it’s why I’m able to subscribe to so many podcasts and absorb what I consider to be kind of the best elements of all of them because as I went to this list, I haven’t realize how many podcasts I’m subscribed to. I think we’re going to talk about 40 or 45 today and I have at least another 20 that I’m subscribed to but some of these only release once a month, some of them are very erratic even less than once a month. A lot of them, I will listen to 1 out of 5 episodes because it’s just the others completely don’t interest me but that 1 out of 5 can and has changed the way I, you know, run a certain business or gives me an entirely new marketing idea that will absolutely have an impact on, you know, on my bottom line or my business or on the way we, you know, we do the podcast or the Academy or MicroConf. And so there’s a way — in my opinion, it’s having a broad home that reaches out to many different things and you can’t — if you’re going to do that, you cannot feel obligated to listen to every minute or it will just, it’s just too much audio and you’re going get overwhelmed and you’ll just give up on it.
[19:11] Music
[19:14] Rob: Our first category is startup podcast, of course, and these are Interview Startup Podcast. So, the first is Mixergy and we’ve classified that as a tactical and as a motivational podcast. The next is This Week In Startups and that is a podcast by Jason Calacanis. He’s actually also a video and has an audio feed. It’s fairly long. It has 3 episodes a week between 30 minutes and an hour. And I’ve gone back and forth with this podcast. I find some of the interviews really good. I definitely don’t listen to all the episodes because some of them just don’t apply but I think perhaps one of my favorite interviews ever with the venture capitalist was about two weeks ago on This Week In Startups and it’s Chris Sacca and the guy is — I’ve never even heard of him. He’s just incredibly smart and it was — Jason Calacanis is a really good interviewer, like him or not, he’s had some successes and he certainly has a lot of confidence in his abilities but he is absolutely a good interviewer and he really brings a lot out of people he’s interviewing. And he also is tends to be pretty honest and blunt and actually that’s pretty respectable. So we’ve classified this one as a motivational and an entertainment podcast. That was This Week In Startups.
[20:24] The next interview startup podcast is a lesser known one. It’s called Startup Slingshot and I’m going to put that in the technical and motivational. And Startup Slingshot is done by William Griggs who used to be in Nashville and now he’s in Austin, Texas. And I’ve been on there a couple of times. What I like about Startup Slingshot is that since it’s a smaller audience, he’s able to do things that maybe some of the larger interview podcast wouldn’t venture in to. And so an example, in my opinion the best interview on a podcast ever about lifetime value and customer acquisition cost, that kind of stuff for SaaS app is on Startup Slingshot and it’s the interview he did with Jason Cohen about 2 or 3 months. And I listened to that interview 3 times because there’s just so much knowledge pouring out of Jason. Good questions, good summaries, I mean he just nailed it.
[21:11] I also went on Startup Slingshot after I relaunched HitTail on January and William asked me stuff that no one else had asked and he asked about metrics, very specifically about metrics I was looking to optimize. I mean kind of get in to some detailed stuff and that’s why I’ve classified this as both tactical and motivational. Now, some of the episodes talked about how to raise money in Indianapolis or how to raise money in Nashville and obviously, those I don’t listen to because I’m not interested in the topic but, you know, fairly — regularly something comes out that really does push the boundary and I think William has a nice interviewing style that’s worth looking at.
[21:43] Mike: So the next podcast is the Startup Success Podcast and this podcast is run by Bob Walsh and Patrick Foley. Patrick Foley is a Microsoft employee. And Bob Walsh and Patrick had been running the Startup Success Podcast for around 150 episodes or so and the podcast itself right now is in kind of an inter media status right now. Patrick Foley is kind of moving away from the podcast to concentrate on other things and they’ll be coming back with a lot more episodes in the future but primarily it focuses on doing interviews with a lot of different startup founders and tech entrepreneurs who have been involved in various endeavors and this is really a motivational and entertainment podcast. You’re not going to find a lot of tactical tips although some of the startup founders that they do interview will provide some tactics and it is a way to get some exposure for some of the ideas assuming that you come on the podcast and give an interview. But those aren’t necessarily the prime motivations for listening to it. It’s really about entertainment and motivation for building upon your startup.
[22:45] Rob: And rounding out our sweet of interview startup podcast is Founders Talk and this is one I’ll call motivational and entertainment. It’s run by Adam Stacoviak and I’ve been listening to him since he was on the Web 2.0 Show and it basically interview startup founders both large and small. It’s mostly venture back stuff but it definitely is interesting if you have, you know, some extra time in your week.
[23:10] Music
[23:13] Rob: Our second category of podcast is Non-interview Startup Podcast. The first is A Smart Bear Podcast and that comes from Jason Cohen. He’s the founder of WP Engine. You hear us talk about him quite a bit. He started the podcast by just reading his blog posts and that was actually kind of cool because since I haven’t read blogs religiously in a while, it was a nice way to keep up with that. But he soon turned it in to — the way summarizes it, it’s like Love Lines for startups and what — it’s basically a calling show where startup founders mostly non-funded. I mean these people who are, you know, kind of bootstrapping. They can — they can call inter Skype with him and he’ll basically tear down their idea in a good way like in to a positive give them feedback and not just say, this doesn’t work, this isn’t good. He’ll actually say, “This doesn’t work but here are something to try…” you know, give 2 or 3 different things to try. So he’s very specific.
[24:00] So I give this one definitely motivational and entertainment value. There are also some tactical things but they’re not general tactical. It’s more tactical for this particular person’s startup and if you can take those and turn them in to something that you like, it’s definitely worth a listen. Now, Smart Bear doesn’t come out that often. It’s got a fairly erratic schedule. I think there’s only been maybe 6 or so episodes in the past 6 months. So, its hit or miss but it’s a nice one to have in the feed and certainly when it appears, it’s one of the first that I listen to.
[24:28] Mike e: The next one is TechZing and this one is hosted by Jason Roberts and Justin Vincent. Justin Vincent talked at the first MicroConf and he talked about his startup Pluggio which he had grown from probably 4 figures in revenue and tripled it in a —
[24:43] Rob: No, he took it from 3 figures in revenue to 4 figures —
[24:46] Mike: Ahh.
[24:47] Rob: … in 6 months, yeah.
[24:47] Mike: Yeah. The two of them talk about a lot of different things that they have been working whether they are consulting things that they have been doing or some of the startup ventures that they’ve had. If you read a lot of Hacker News and you probably seen either one of them posting different blog post.
[25:01] Rob: I think the best description of TechZing is the way they put it like Jason said Startups for the Rest of Us is like going to a conference and hearing someone talk about something and it’s educational. It’s outlined, you know, there’s 10 bullet points and things you’re learning. TechZing is like if you went to go to a conference and the room was packed and so you and your buddy went to a pub and start having a conversation about startups or conversation about Hacker News. Like it’s more of a casual thing, it’s less structured and it’s longer. I mean their episodes are typically 90 minutes long. So, you know, it’s not something you can listen to if you don’t have a lot of time in your week but it’s definitely one, I mean I’ve heard every episode for probably the past hundred episodes.
[25:38] I think the only ones that I skipped — they have both interview episodes and discussion episodes. And so the discussions are when they just talk about each other’s projects and differences from Hacker News and what they’re working on and I listen to every one of those. Some of the interviews if they don’t interest me because some of them will be about, you know, physics or like trading and writing high frequency trading systems, those ones I — I will tend to bow in and out of depending on how much they interest me.
[26:02] Mike: One of the primary things that they’ve talking about these days is their endeavor for AnyFu and it’s interesting to hear a lot of the things that they are running in to with AnyFu about how they’re dealing with the logistics of that application and how they’re planning on bringing that to market. And you know, quite frankly, hearing a lot of the honest discussions about what they should or shouldn’t do and what they want to portray to the users of AnyFu. So, if you’re interested in hearing the beginnings of a startup that may go some place, if you’re interested in hearing the inside story of how that is kind of playing out, definitely go to TechZing. Check out their podcast.
[26:37] Rob: Our next podcast in the startup non-interview section is Seth Godin’s Startups School and this one just came out about a week or two ago. It’s only maybe 4 episodes in and what it is it Seth doing an in person presentation. I guess he got some startup founders, entrepreneurs together for a few days or a week and he just did in person presentation. He said it was unrehearsed and without slides. So, it sounds like he’s just him kind of talking from an outline or something. And I would put this as motivational and entertainment like a lot of the other ones we’re mentioning but Seth Godin is so smart that it’s like everything he says gets you thinking. Now, often I found myself it gets me thinking and then I don’t actually know what to do with that thought because I don’t have any tactics. I don’t actually know what he’s saying. I will make notes and then it will like strikes something — spark something later on in my mind. There been about 25-minute episodes and so far, I’m very impressed. It’s just awesome to listen to this guy talking because he is so smart and he knows marketing so well and entrepreneurship for that matter.
[27:38] Next one on our list is Customer Development for Smart People and what this is it’s someone reading Steve Blank’s blog out loud. Now, this one I’m going to put under motivational only. Steve Blank is the customer development guy and he’s actually the mentor of Eric Ries. He was the professor of Eric Ries who is on Lean Startups. Customer Development essentially, you know, the thought that you should get out of building and you should talk to your customers before building an app, figure out people — that people wanted before building and that all kind of stuff and so this is one where maybe one in four or five episodes that really gripped me and I listened the whole way through but it’s still is nice to be able to keep up with what Steve is doing because he is so smart and he’s had a lot of success. He brought a number of companies public just has a great history behind him, very knowledgeable and he’s now an academic and so he’s pushing the boundaries, the research boundaries of startups.
[28:30] Mike: And the next on the non-interview startup podcast is Startups for the Rest of Us and I think that we kind of self classified ourselves in to the tactical and motivational classification.
[28:35] Rob: And rounding out this table of non-interview startup podcast is the Kalzumeus Podcast. It’s Patrick McKenzie’s podcast. It’s only had maybe 4 episodes over the course of 3 or 4 months. So it is erratically release. When it’s on, it’s good stuff. Patrick McKenzie, obviously, is very smart and then good — everything that, you know, we talked about on the show, definitely motivational, definitely entertaining.
[29:01] Music
[29:04] Rob: Diving in to our next category is number three which is Business Paradigms and so this is where we start getting in to things that are more of the exposure. So, if you recall I talked about four classifications; tactical, motivational, entertainment and exposure and all three of these are exposure to new thoughts and new ideas, things that might take you out of your comfort zone, things that might take you out of, you know, the discipline that you really want to focus on but they can — they can change your way of thinking and kind of open you up to new ideas.
[29:30] So, the first one is called Actionable Books and I’ve listened to several of this. What I like is that each one is 5 to 10 minutes and it’s an essay, someone is writing — someone in this podcast team is writing about a new business book. And so it just exposes you to a whole bunch of new books and you can hear the summary and to figure out, you know, if you might want to go buy the book and listen to it further. My one complaint is that there are all positive reviews. So, I don’t know if they only pick books that they like but there’s really never a critic and I actually kind of wanted a few of them to be critics and to talk about the negative side of things.
[30:05] And the next one is HBR IdeaCast, so it’s the Harvard Business Review IdeaCast, also, an exposure podcast. It looks at high level business paradigms, economics, politics, the economy, you know, stuff that may not necessarily relate directly to your business but absolutely, you know, opens your mind and they look at typically at someone who’s published something in the Harvard Business Review and they just interview them for about 15 minutes about that. So, I found maybe 1 out of 2 of those podcasts to be — to be really interesting. The last one is called is the Invisible Hand. It’s about management, economics and strategy for the thinking person. And this is a 30-minute podcast, also exposure.
[30:42] Music
[30:46] Rob: So, our fourth category is the Online Marketing and Online Business Space.
[30:50] Mike: And the first podcast on this list is the Lifestyle Business Podcast by Dan and Ian. And I really like this podcast. I listen to it for a lot of different reasons. We’ve classified this as both motivational and as entertainment. I definitely get a lot of good nuggets of wisdom out of this and it primarily revolves around making sure that you’re taking a high level view of things and not digging in too much in to details, definitely, shuffling things off to other people that you shouldn’t necessarily be focused on. I really enjoy this podcast. This is one of the few on my list that I listen to almost religiously. These guys definitely know what they’re talking about. And one of the differences between this podcast among the other ones is that is that these guys deal with physical goods and most people don’t tend to pay attention to podcast or to business that deal with physical goods but it’s really interesting hearing these guys talk about, you know, their business and how they push forward when they’re dealing with the types of, you know, supply chain issues that they’re having. So, it’s definitely an interesting podcast to listen to. I definitely recommend it to anyone to take a listen to this one.
[31:54] Rob: And the Lifestyle Business Podcast companion podcast is Tropical Talk Radio which has been coming out mostly weekly but it’s a more — it’s an unedited podcast and it has Dan and Ian doing different interviews. It tends to be more tactical and also is, you know, as entertaining. It’s on as polished and produced as Lifestyle Business. They don’t tend to have an outline. It tends just to be more interviews and discussion but I’ve heard every episode of it so far.
[32:20] Next on our list is Internet Marketing. And this is tough because there’s a bunch of podcasts called Internet Marketing but this was the first one and it’s — actually Internet Marketing: Insider Tips and Advice for Online Marketing. And definitely put this one in hard core tactical. There’s some entertainment that goes along with it but Kelvin Newman and Andy White run this podcast and it is top notched. The production value, just the content, it’s always very tight to the point I don’t think they edit it very much and they just — they’re really able to put together a good show. The topics vary from SEO to social to all kinds of stuff but it is probably hands down my favorite internet marketing podcast that I listen to in terms of getting tactical tips and new ideas and new thoughts in that space.
[33:06] Our next one is the Foolish Adventure and I’ve classified that squarely in a motivational and that is our good friend Tim Conley, started off with him and a co-host and then about 50 episodes in they decided to split ways. Tim now does interviews with people. He’s actually interviewed several Academy members. He’d interviewed Robert Graham and John Turner and Dave Rodenbaugh in the past month. So there are some pretty good episodes that have been coming out of there about some motivational and exciting stories, you know, and basically new entrepreneurs having lot of their early successes in the past couple of years and it’s been, you know, it’s been cool for me to hear in detail like an in-depth interview with some of these guys because Mike, you and I had followed their stories but you can only see so much in the forums, right and in the quick conversation at MicroConf but to sit there and hear a 45-minute interview with any of those guys, it was kind of a treat. So definitely, something to check out and it’s nice that Tim keeps the episode, you know, between 30 and 45 minutes so, definitely easily consumable.
[34:03] Mike: So, the next one on our list is the Internet Business Mastery and the Internet Business Mastery is run by Sterling and Jay. And it’s kind of aimed to beginners. If you’re kind of past the beginner stage, then this podcast probably isn’t quite for you but they definitely have some good insights about where to start with your business especially if you have no tech background. A lot of their listeners do not have a software development background. So if you’re listening to this podcast and you don’t have a tech background, you’re wondering where to start this might be a podcast that you want to listen to and pick up some good information from them.
[34:37] Rob: Yeah and we’ve classified this under a motivation because they have a lot of success stories that they talk about and exposure because if you’re in our world and you’re in software startups, it actually is good to hear other ideas and so Internet Business Mastery focuses more in information product marketing and they — they do run a good shift. They have this podcast going for I think 7 years now and I’ve been listening since 2006 and it’s just — it’s good to catch up, keep up with their stories and always to hearing new ideas about content creation and ideas for new content and that kind of stuff. So, you know, they have a good show going.
[35:07] The last couple in the online marketing space are Copyblogger Radio and that’s in between seasons right now but that’s definitely a tactical and an exposure podcast and a lot of you probably heard the Copyblogger Blog, well, Copyblogger Radio is an extension of that and they — it’s very well produced and they have excellent interviews and also just a lot of good tactics that they share about online marketing. Next is SEO 101 which is probably the most tactical SEO podcast I know. Now, this one is on Webmaster Radio which is a little irritating. The commercials are really loud and there’s a bunch of 3 and 4-minute commercials. It’s basically 2 SEO consultants just talking about recent Google changes. So it’s very, very detailed and if you’re not in to SEO, it’s going to be horrendously boring but it is the most detailed kind of in-depth SEO podcast I know about.
[35:07] And lastly an honorable mention in online marketing space is Talking Websites. I actually stopped listening to this podcast because I’m not looking to buy or sell websites right now but these guys it’s — one of them is Justin Gilchrist. He’s the founder of Flip Filter and I honestly can’t remember who the other one is but it’s very tactical and there’s a lot of exposure. If you’re in the startups space, this is definitely going to be exposure to the concept of buying and selling websites and domains and that kind of stuff.
[36:19] Music
[36:22] Rob: Our fifth category is Storytelling. And this is one of those things — these are all E’s for entertainment, right? It’s This American Life, the most popular podcast in iTunes, millions of listeners. It’s The Moth Podcast just 15-minute shorts of people telling stories on a stage and it’s This Developer’s Life which is Rob Connery and Scott Hanselman doing — it’s like This American Life but for software developers. All of these not only are great for doing the dishes, doing yard work, kind of just vegging but they actually show you how to craft a good story, how to use language very well and all of that can help you in writing, marketing, blogging, these are definitely podcasts, you know, I recommend if you — again, if you have the time, these are the more longer forms. These are getting further and further away from that core competency of actually getting your business off the ground.
[37:09] Our sixth category is Tech News and Related. And all of these are in entertainment as well. There’s the entire TWiT Network, the ones that I listen to personally are Tech News Today which I love. I listen to it everyday. This Week in Tech, This Week in Google and then Frame Rate which is about cutting the cord and like buying a Roku and not having cable anymore. And it’s pretty cool. It covers all the stuff you can watch online. And there’s a podcast called the Windows Weekly if you’re interested in that kind of thing. So the TWiT Network definitely, you know, highly network, most shows you find in there are going to be interesting and you’ll be able to get something out of them.
[37:45] Mike: The next one on the list is Hanselminutes and Hanselminutes is run by Scott Hanselman. And he primarily does the podcast on his own but he always has a guest speaker on and a couple of times in the past I’ve seen him actually have a guest on who has interviewed [0:38:00] him for specific things.
[38:02] Rob: That was a cool episode actually —
[38:04] Mike: Yeah, yeah and primarily it’s him interviewing other people about what they’re doing, what they’re working on. A lot of them tend to be Microsoft focus but he definitely makes an effort on occasions to go out outside of the world of Microsoft. And he will ask them from a point of view of somebody who has absolutely no idea what’s going on and it’s interesting because you can tell by the way he asks the questions that he definitely knows the answer to the question but he asks it such a way for the people who are listening to the podcast who don’t know what’s going on to give them an idea of what’s going on.
[38:36] Rob: I went on Hanselminutes about 6 months. Right before the interview he told me, “I’m going to ask questions that I know the answer too.” He told me exactly what —
[38:44] Mike: Did he?
[38:44] Rob: … you just said. That’s pretty cool. You picked up on that, yeah. I had never picked up on that during the show but he said that exactly.
[38:49] Mike: Really?
[38:49] Rob: “I’m asking them so the listeners can find out.”
[38:51] Mike: Really? I always find —
[38:52] Rob: Yeah.
[38:52] Mike: I always find that the way that he asks those questions seem relatively obvious because he would always stop people. They would start spotting off about different things and you know, he would just stop them and say, “Wait a second, let’s back up a little bit. Explain what this is.” And it was stuff —
[39:05] Rob: Yeah.
[39:06] Mike: … that like if you follow Scott Hanselman at all like he should know that stuff and like, you could tell that like he was just backing up a little bit for the benefit of the listeners which is a great attribute of somebody who’s I’ll say in journalism because, you know, they’re backing up not because they want to know but because they want to make sure the people who are listening understand what’s going on.
[39:24] Rob: Absolutely, and he is very eloquent and a great interviewer. He interviews mostly tech people and about like hard core programming topics like if they build a new frame — JavaScript framework or something which sounds like it could be really boring but somehow he manages to make it quite interesting. And rounding out our tech news and related, these are going to be more interesting to you if you have kids. One is called Apps for Kids, that falls squarely an entertainment and that is basically a father and his 12-year old daughter and they run through a new iOS app probably twice a month. And I have purchased at least 10 of the apps I’ve heard about on the show. It’s a great way to find out. It’s like a lot of them are new learning apps or physics apps. Some of them are just, you know, downright fun like subway panic, might some place at all the time now. But it’s a good way to just kind of have a new funnel of 99-cent entertainment and just that you can — you can pick up on.
[40:16] And the last one in tech news and related is it’s a little higher end in terms of age though. It’s called Everyday Einstein’s Quick and Dirty Tips For Making Sense of Science. And so each week they do 7 to 10 minutes about a specific Science topic and I thought this be great for my 6-year old. And he gets part of it but they often go in to more detail. It’s more like a late junior high or you know, potentially high school level of discussions.
[40:39] Music
[40:43] Rob: Our seventh category for podcasts is New Ideas, Politics and the Economy. So we’re probably at the circle that’s furthest away now from actually needing specifics to launch your startup. All of these fall in to the exposure category in terms of exposing you to new thoughts and ideas and of course, the entertainment category if you like the topic that it’s on. The first is by far one of my favorite non-tech podcast and it’s called 99% Invisible. It’s an independent podcast and it’s about architecture and how spaces and design impact our day to day lives, very, very well produced. It’s a lot like This American Life and it’s only 15 to 20 minutes every week or so. If that sounds at all interesting to you, I highly recommend it. I was hooked after hearing the first episode of that two months ago. Its sister podcast is called DecodeDC and it looks in to — it’s trying to put like Washington politics in to a perspective. It’s only three episodes in but also well produced.
[41:42] The next couple are from NPR. One is called Planet Money and that is also a — I think they do 2 episodes a week and they look at — it kind of is the economy and the business landscape but they do really interesting specific stories about it and it’s very personable. It’s kind of like this podcast, Startups for the Rest of Us, was did stuff about the economy, it’s like two people chatting about something and you get to know the people. It’s not just news reporting. The next two are APM Marketplace which is also on NPR and that is a news reporting show and then APM Marketplace Tech which is a daily 4-minute podcast. That’s some pretty good tech news. I’ve been listening to that for about a month and it’s just a great way to start my day to kind of hear, you know, what happened the previous day or what happened that morning.
[42:25] And rounding this out are a couple of podcasts that some of these run a little long. They’re definitely in to the exposure — in to exposing you to new things. Freakonomics Radio if you read the book Freakonomics, they have a podcast comes out every week. TEDTalks, they released 4 or 5 new audio TEDTalks a week and this is the same stuff you could see if you went to TED.com and subscribe to their RSS feed there but they just put out the audio versions in podcast format and I skipped a lot of these. I probably listen to 1 in 5, 1 in 10 but definitely, you know, expands — expands my thinking. And the last one is To Stay In Touch With Pop Culture. I literally learned about them on this NPR podcast called NPR Topics: Pop Culture and it gathers up all the pop culture topics from the last week.
[43:08] Mike: I think I had mentioned this in the previous podcast that I purged my list of podcast that I listen to several months ago just to kind of focus on AuditShark but it’s interesting to see the sheer number of other podcasts that out there that I haven’t listen to. I did know about a lot of the other ones like Foolish Adventure and I just — that’s one of those things that’s been on my list to listen to. I just haven’t gotten around to it yet but there’s a lot of other ones like that I am somebody would like to This Developer’s Life and Internet Business Mastery and obviously, I listen to TechZing and Lifestyle Business Podcast. But you know, the sheered number of podcasts that are out there are in some ways I think overwhelming for a lot of people because you really have to be able to filter through what other people are listening and what is relevant to you.
[43:54] Rob: I agree and my hope is that this episode serves as a filter for people who are listening rather than the opposite. We don’t want to overwhelm you with 50 things you feel like you have to add it in to your iTunes feed because that’s not what we’re trying to do. What our hope is that you pick the ones that sound at least a bit interesting. You kind of filter through them and if you start — if you don’t like an episode, like Mike said, you skip it and if you skip a bunch of episodes in a row then you unsubscribe from the podcast. I know that without podcast, I would not have met a ton of great people that have become part of my network that are around the world and that have helped me with getting HitTail launched, certainly will help us promote things like MicroConf. I mean just in general, it’s just good to have this — this network of people and to hear about them whether they’re actual host of a podcast, whether they’re the actual – the person being interviewed, these are the people that are doing things in public, right? I mean this is like being in touch with them and if I hear someone on the podcast and it’s interesting, I feel we have something in common, I will totally drop them an e-mail and say, “Hey, I heard that, great interview. Let’s talk. You know, let’s talk about doing something or let’s you know, just whatever. How can I help you?” That kind of things.
[45:00] So, there’s a lot. It’s not just about consuming. It is about like giving back in the space and being able to connect with others and I think another point of value is as if you are looking to — to market your startup. The way I put together that whole HitTail marketing plan, for the most part, it was a lot of stuff off the top of my head that I had, you know, sticking in there but it was a lot of audio books and a lot of podcasts. It was pulling marketing ideas from this and I may not have implemented them exactly the way that they described them in the podcast but they would say one sentence about one idea, I would jot it down and I would later make it on to this marketing plan and those things have absolutely made a difference in how I built and launched and marketed HitTail.
[45:38] Mike: That’s a really great point that you make about being able to give back and just drop people an e-mail and say, “Hey, let’s talk,” or you know, whether you’re offering to do something for them because a lot of these podcasts just really thrive on hearing back from the community and even if it’s not just a question or “Hey, what can I do for you?” Even if it’s just a, “Hey, thanks for this episode. It really resonated with me.” I mean those things are great to hear as somebody who’s developing a podcast. So if there are podcasts out there that you’re listening to, I highly recommend that you just drop an e-mail to the people who are developing those podcasts and just say, “Hey, thanks. I really appreciate what you’re doing.”
[46:11] Music
[46:15] 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. You can subscribe to this podcast 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.
Episode 103 | Nurturing Leads in Your Funnel, Planning for Growth and How to Buy a Website
Show Notes
- Planet Money Episode 412: How to fix the Patent Mess
- Sign up today for MicroConf 2013
- HitTail
- DotNetInvoice
- Liam Cavanagh – Microsoft
- MailChimp
- InfusionSoft
- USERcycle
- Postmark
- Copy Hackers
- Flippa
Transcript
[00:00] Rob: In this episode of Startups for the Rest of Us we’re going to be talking about nurturing leads in your funnel, planning for growth and how to buy a website. This is Startups for the Rest of Us: Episode 103.
[00:11] Music
[00:20] 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.
[00:29] Mike: And I’m Mike.
[00:30] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. I have just had two cups of coffee. So this is going to be an energized show. But I killed the 90 minutes earlier this morning troubleshooting a server configuration issue on HitTail. And when I was younger I was in a few bands play guitar and sing and stuff and I learned that the best art comes out of like intense emotion. And so what I did is I channeled my anger over this server configuration issue and I wrote a poem. It’s called An Ode to Microsoft Security Patches. “Dear, Microsoft. Please stop resetting the permissions on my Windows temp. This is exactly why people talk about your Operating System with such contempt. Your security patches broke my app again. I hope I don’t ever have to go through this crap again. The worst part is that the patch was applied weeks ago and now, up crops this error to spoil my work flow. A miniscule change to a single webpage costs 90 of my precious work minutes to go up in a blaze. In retrospect, my biggest mistake was not assuming that the error message had been written to be intentionally opaque. The end.”
[01:40] Mike: Bravo.
[01:41] Rob: Oh, the poem was like 3 minutes.
[01:43] Mike: Oh, really?
[01:43] Rob: Seriously, off the top of my head, yeah.
[001:45] Mike: Wow.
[01:45] Rob: No, I used to — I used to write songs. So like rhyming stuff is not — was not a big deal. So yeah, I know the 90 minutes was focused on being very angry at a Microsoft Security Patch that resets permissions on a directory every time it runs and [Laughter] and like every six months we run in to this same issue and I finally documented it to the point where I’m not going to lose two hours next time. But that’s frustrating.
[02:07] Mike: Yeah, it’s interesting because that’s one of the things that is little known to people is that when Microsoft is running their patches, they have a tendency to reset permissions. They use some — I’m pretty sure they use some sort of like kernel level stuff that goes in and allows it to change permissions no matter what so that the patch can be successfully applied but it doesn’t necessarily revert those permissions to whatever they were before but that’s something that we — in selling the security and compliance software to people in the past, I’ve pointed it out as like, “Look, permissions can get reset and here’s one of the ways that they can get reset and that’s what this compliance product can help you find out and determine whether those things will change or not and give you notification.” So I highly recommend that you go to AuditShark.com —
[02:49] Rob: [Laughter] Sorry.
[02:49] Mike: … to sign for the free trial.”
[02:51] Rob: Awesome. I will go to that right now [Laughter]. It would have paid for itself this month for sure.
[02:56] Mike: And it will let you know several weeks ago that that it happened.
[02:58] Rob: Yup, very good. So I heard you had dinner with our Podcast Editor last night.
[03:04] Mike: Yeah, I did. It’s a good time. We ended up going up to some place in Manhattan. I forget exactly what the place was called. We were just talking and she had mentioned to me that she’s gotten so good at editing the podcast that when she pulls it up in Audacity, you know how there’s all the graph of exactly what it is that you’re saying. It just shows you like the wave —
[03:21] Rob: Wave —
[03:21] Mike: … of thing?
[03:22] Rob: Uh huh.
[03:23] Mike: She can tell just by eyeballing it where one of us is saying either “Mmm” or “You know.”
[03:28] Rob: That’s awesome, yeah.
[03:29] Mike: And she also said that if she — she would never survive the Podcast Drinking Game if she had to use the non-edited version.
[03:35] Rob: Oh, yeah, that’s — that’s brutal. I don’t think people realize how [Laughter] poorly you and I actually speak before the editor goes through and edits like the same where I worry. She’s edited the, what, 90 something of the episodes, right? I think we only edited the first 5 or 10.
[03:49] Mike: Yeah, she’s done —
[03:49] Rob: That’s so out of —
[03:50] Mike: She’s done a lot of them.
[03:52] Rob: It’s a lot of us to listen to in slow motion.
[03:53] Mike: [Laughter]
[03:55] Rob: Very cool.
[03:56] Mike: Also speaking with the Podcast Drinking Game, Will Samuels wrote in to say that, “You should have to drink whenever Mike says essentially.”
[04:03] Rob: I’ll agree to that.
[04:04] Mike: All right.
[04:04] Rob: I also noticed a few other ticks that you and I have and I’m not going to say them on the show because once I notice them it started irritating me whenever we do it. So there’s an episode of Planet Money which is one of my favorite podcasts. It’s an NPR podcast and it just came out today. It’s episode 412. It’s called How to Fix the Patent Mess and they interviewed a Stanford professor who’s written a book on Software Patents and the mess that it is and he has some proposals for how to fix it. Awesome episode like first — I think it’s the most — he has written an entire book on the subject and this podcast was the most comprehensive view I’ve seen of actually trying to fix this and one of the amazing things that he had said is I think he talks to someone at Google and Motorola and there’s kind of just this number out there and is that the estimated number of patents that if you were to build the smart phone that you’d be infringing upon is 250,000 patents.
[04:58] Mike: That’s insane.
[04:59] Rob: Yeah, and then they run through a bunch of the patents that are even worse. You know, you and I brought up some of them but there are some that are so broad like VO — like Voice Over IP is patented streaming of anything over the internet, anything, like any type of media file is patented by someone. You and I’ve just talked about one-click ordering and that kind of stuff but these are way worse like these are true innovation stifling patents that had been granted. Anyways, if you’re interested in hearing more about that, check out episode 412 of Planet Money.
[05:28] Mike: I wonder sometimes if companies like Google and Microsoft and IBM and Apple aren’t just stock piling some of these patents in order to help keep them away from like the legal trolls.
[05:39] Rob: Oh, they absolutely are. You know, that’s why Google bought Motorola. I mean it’s pretty much widely known to be a patent defense operation like they spent billions. I don’t remember what they paid for, 4 or 5 billion? And it’s widely known, widely expected that that’s why they did it was to get their — that huge cache of patents. Money is not going towards innovation.
[06:00] Mike: No, right.
[06:01] Rob: In fact, it’s not going towards paying people to build things. It’s not going towards R&D. It’s going towards having these documents sitting in a basement somewhere, in a vault so that they have it as defense.
[06:10] Mike: Well, somebody gets that money eventually. It’s got to go somewhere. It’s not like they pay this money and then it just disappears in to a black hole, you know, it’s a financial system.
[06:19] Rob: It goes to lawyers.
[06:20] Mike: So I do have an announcement that I wanted to make. You and I have started talking about MicroConf 2013. So if anyone is interested in actually going to MicroConf, then you’ll have to go to www.microconf.com. Sign up for the e-mail list and you’ll be on the first round of notifications for that. We do expect to sell out. So unless you’re on that list, you may not actually be able to get a ticket and then the other thing is that if anyone is interested in or knows of companies who would like to be a sponsor for MicroConf, just go ahead and drop me an e-mail or use the questions@startupsfortherestofus.com. I’ll follow up with you on the details.
[06:57] Rob: I’ve been making a bunch of tweaks along with my small team of bandits to HitTail and we went from a 30-day trial down to a 21-day trial. I went in and mime some data and figured out that most people get enough hits within the first 21 days to make it where they can decide whether or not to continue with the service. And to be honest, we’re testing stuff now. We’re starting to mock with pricing and some other things and it’s just painful to wait 30 days to find out if your experiment is working because then you — you shut it off and you have another 30 days of either good or bad that’s going with it. You can’t really turn the ship fast enough when it’s 30 days. I’d love to get down to 14-day trial but I don’t think I’ll be able to. Anyways, for those out there who do have longer trials — when I first acquired HitTail, it was a 60-day trial and I went down to 30 without too much issue. But if you have a trial longer than 21 or 14, I would highly recommend trying to get as low as possible just allows you a lot more flexibility.
[07:51] Mike: Was that about the time you were “struggling” to make premium work?
[07:55] Rob: Indeed, it was to quote the Wall Street Journal —
[07:58] Mike: Yes.
[07:58] Rob: Very nice. The other thing we did that I’m pretty stoked about is we launched a 7-day long tail SEO e-mail course. So if you could just go to HitTail.com, you’ll see in the bottom right there’s just this little like JavaScript widget and it’s performing well. I know it can do better if we optimize it. We’re going to do some split testing or a bunch of stuff but already it’s picking up a lot of people who were coming and visiting the site once and leaving. As you know 98%, 97% however many of — we always have a huge chunk of people that come and just bail. So to get people on to an educational 5 or 7-day e-mail course is a big deal. If you don’t have one, you should think about doing it. It was a bit of effort and it’s why I waited until I had my new team member onboard to be able to pull it off. But now that it’s up, it’s absolutely noticeable on our conversion rates and just people returning to the site.
[08:48] Mike: Cool. Where did you get that idea from? Did you pull it from WP Engine was doing or did you talk to Patrick McKenzie about it? Because I know Patrick’s got a course that he recently launched on E-mail Lifecycle Management. And I’ve actually been checking it out recently and it’s — it’s actually very, very good. It’s got —
[09:03] Rob: Yup.
[09:03] Mike: … a lot of great information in that.
[09:05] Rob: Yeah, I know it is good course. No, I mean I’ve done this forever. Remember my talk from BOS? It was all about this. It was all about putting an e-mail follow up sequence on your site and it was at investigation of the impact some of the stuff. So we’ve done this on DotNetInvoice for years. I do it on Apprentice Lineman Jobs. It’s been on my list since I first acquired HitTail. I just didn’t have the bandwidth to do it and —
[09:25] Mike: Great —
[09:25] Rob: … yes, I’ve also checked out Patrick’s course. It’s — he gave me access to it. It’s very detailed, a lot of good info there.
[09:32] Mike: Cool. Yeah, about the other thing I have as I talk to Liam Cavanagh from Microsoft about data synchronization techniques and I spent about an hour, hour and a half on the phone with him just talking about how to go about it, what I’m doing today, what sort of things I should be careful of in the future or whether or not the Microsoft Sync Framework is right for synchronizing data between the databases and based on the discussion I feel like basically on the right track but there are some of the fine points that I need to iron out. So I’m still working on that but, you know, he definitely helped me along. So if anyone wants to follow up with Liam, he said he’s more than happy to talk to people about data synchronization.
[10:09] Music
[10:12] Mike: So today, we’re going to start taking some more listener questions. And the first question comes in from Austin Rehorn [Phonetic] and Austin says, “Hi, Mike and Rob. I’m a long time listener of the show. I look forward to it every week. I took the advice from your show and took my product to market last month. I’ve received a ton of interests but nurturing and converting leads has been a struggle. My question pertains to marketing automation. You guys have spoken to the subject before but Rob has been talking a lot lately about lead conversion ideas he has for HitTail and I’d like to know what tools you’re using. I’m a HitTail customer. I love the product. I’ve signed up for the SEO e-mail campaign and I would like to know what you use to send this out each day. Keep up the amazing work, guys and a belated congrats on your hundredth episode. Thanks, Austin.”
[10:49] Rob: What timing, I just mentioned the long tail SEO course and Austin mentioned that. When I think about lead nurturing like he’s talking about, I actually think of two separate groups of people and then there’s a third that is after they buy and those are kind of your customers in the first several months and retaining them. But the first two segments are people who visit your site and have not yet signed up for trial. And then people who have signed up for your trial and typically obviously that’s between 14 and 30-day trial you want to keep it there. Both of those groups should receive an e-mail follow up sequence. With the first group who just visits your site to try to have a nice looking form somewhere that that pitches them on some valuable thing that they get by giving you their e-mail address and then you send them an e-mail or five over the next several weeks and you educate them. You don’t sell to them very hard. If you look through the HitTail e-mail sequence it is much, much more education. Probably 80, 90% education and then there’s a short pitch for HitTail and like the third e-mail and onward. But the first two almost have no mention or links to the HitTail pricing stuff.
[11:54] And the other thing is when someone signs up for a trial, most apps I know don’t follow up with me very well. They typically say, “All right, here’s the trial stuff.” And then right before I get billed they might say you’re about to be billed. And again, at HitTail we have a very detailed. It’s actually a — it is a lead nurturing system that depending on how many suggestions you’ve received, what you’ve done in the app, different kind of stuff, we look at your account and we send you a different e-mail at various days during your trial sequence. Now, that kind of stinks when I moved from 30-day to a 21-day trial because I really do have to rework that, you know, I did a bunch of that last night. In general for the front end kind of just prospects that are just visiting your website, we use MailChimp at this point but I have to admit, one of my top ideas if I do wind up branching out and building a new app is to build something that helps with this problem because I don’t think there is actually a good one-stop shop that can do this kind of thing. And so I’d say MailChimp is probably the best there is right now but keep your ears peeled on the podcast if you’re interested in seeing something similar to this.
[12:55] In terms of the free trial e-mails, if you can just do a simple follow up sequence also through MailChimp, they have the auto-responder and follow up area but if you need to actually look at your data or see actions people perform and then send them different e-mails, you’ll either have the customer code at or have to use the more expensive system. There is a system called Infusionsoft that’s a few hundred dollars a month and I think Ash Maurya is working on one as well. It’s called USERcycle and it does a similar thing. It’s for this process although — you know what, I think his is for that third segment that I didn’t talk about which is customer. Once they purchase, it’s about retention and it’s about messaging people who haven’t done this or who have done this, you know, sort of specific action kind of like looking at their customer happiness index and e-mailing them based on that. I think the bottom line is especially if you’re still at early phase of your product, you probably don’t have enough customers to really worry about retention yet and I think you’re just going to want to go the easy route and look at MailChimp to begin with.
[13:49] Mike: One of the other things that he mentioned in his question was “What sort of tools you use?” And I know you mentioned MailChimp but MailChimp is typically use for sending out mass e-mails or scheduled e-mails. What about when you had mentioned that you’re analyzing how many keywords they get and then sending e-mails directly to them based on input data I’ll say from your product. So how do you go about sending out those e-mails?
[14:11] Rob: Yup and that’s like a console app that looks at the user’s data and then send it through Postmark which we have mentioned numerous times on the show but it’s basically service that helps with deliverability and it helps you get inside and do, you know, what e-mails are bouncing and it shows every e-mail that you send out of your system basically so you can track what’s going on and both you and I are a hard core proponents of Postmark and I use them. I send thousands of e-mails through them every month.
[14:37] Mike: Now do you track the — I know that in Postmark it will take a look at the bounce backs and stuff and you can look at those. Do you have anything programmatically tied back to your application to identify those or is it just you kind of eyeball it once in while?
[14:51] Rob: I eyeball it once a while. Luckily Postmark will not send to something that’s bounce in the past and so you know, one of the signs of kind of a bad spammy mailing list is if you don’t keep your list clean. If you don’t keep it pruned and so if you keep sending e-mails to the same address and they keep bouncing, your list will actually — you’ll start getting spam marks from web host and AOL and HotMail and big e-mail handlers, they will notice that you’re just sending a bunch of junky e-mail and so a Postmark helps you not do that. So even — even if I do have a big list of prospects and half of them are bouncing – that never happens but if that were the case, Postmark won’t send those e-mails. It keeps track of it for you. It’s pretty cool. There’s a small percentage that bounce back and stuff. It’s not worth — at this point it’s not worth removing them from the database or anything like that because if they’re in a trial and it’s bouncing, the odds are that they’re probably not going to become customers and if they’re a prospect and it’s bouncing, the odds are they’re not going to sign up for a trial. So I don’t go through and prune those out now because, you know, Postmark does a good enough job but yeah, I think if I was at 10X scale to where am now, then I would do like you said and probably monitor something and pull them out of the database.
[16:00] Mike: Okay, so the bottom line to answer your question, Aus, most of this is custom tools that have been set up but uses online services like MailChimp and Postmark to send those e-mails out to people and follow up with them.
[16:12] Rob: That’s right and by far the most time intensive part is writing the e-mails and thinking them through and crafting them and thinking what do they want to hear at a certain date. Four days end of the trial what should they be thinking, what should they receive, that’s the harder part. Finding MailChimp or having some code that has a big case statement that decides when to send what, that didn’t take that long to be honest.
[16:33] Mike: Now, do you take in and I’ve kind of considered this in the past but I’ve never actually been down this road but would you take in to account what days of the week those e-mail get sent?
[16:41] Rob: I don’t.
[16:42] Mike: Yeah. It’s one of those interesting things when you’re writing blog post and stuff like that. You kind of consider that when you’re going to post it base on when you think you’re going to be able to get the most views and in terms of deliverability, you want to make sure the people are going to actually see it and probably read it but it can be hard to schedule some of those things.
[16:59] Rob: I agree. I’ve seen a setting and I don’t remember if it was in MailChimp but it was some mail management program I was using and it said, you set up a follow up sequence or an auto responder sequence and then you could stay only deliver on week days and it will bump people forward it back, you know, one day to get them to a week day. So it’s kind of an interesting feature. I don’t know if that’s in MailChimp but if it’s not, certainly something that I would use because people are going to tend to open B-to-B emails much more often during the week, basically during the work week.
[17:29] Mike: Very cool. So thanks for the question, Austin. Hopefully, that helps you out.
[17:33] Music
[17:36] Mike: And our next question comes from Michael and he says, “Hi, I started my first company when I was 17 and I’m now just past 30 but I have not yet launched any online business. I’d love to hear your thoughts on which strategy to choose when launching several niche sites for the same product. As a couple of examples to set the scenario, books on gardening, you could have a site with gardening about blogging and then you could target people who are looking for gardening or gardening tips. And then the second niche would be startups and entrepreneurs blogging about experiences, hurdles, et cetera. For second example, using products for jigsaw puzzles, the first niche could be nature and wildlife themed jigsaw puzzles. The second could be large puzzles and third would be boudoirs themed jigsaw puzzles. As you’ve recommended many times before, marketing to a niche is much easier. You get better SEO and better conversion if you target specific people.
[18:24] However, one of the advantages and drawbacks with using the single site with sections for each niche versus launching multiple sites, large bookstores like Amazon and Barnes & Noble obviously have one book site with multiple sections and this is probably the best way to go of if you’re big but my separate niche sites be better if you’re small or is a hybrid approach better? The answer is probably it depends but I think a discussion on what it depends on would be interesting to hear. Thanks for great show. Best regards, Michael.”
[18:48] Rob: So I think this would have been easier to answer three weeks ago and the reason is three weeks ago Google launched their new update and it’s called EMD Update. And it basically took exact match domains and dialed them way down in how important they are for your site rankings but more specifically, they said they dialed them down for sites that don’t have a lot of authority. So they kind of implied that if you do — if you do have a site with a lot of links and it’s obviously an authority site, then your exact match domain may still help you a lot but if you have a site with very few valuable links and it just seems like you’re kind of a small niche content site, a thin content site and you happen to be ranking purely on that domain, sites were just disappearing off the first 20 pages of Google because of this. They may not be kicked out and they’re not been penalized. They’re essentially just reworking the algorithm.
[19:40] So three weeks ago, I would have said do many niche sites because you’re going to want to get a nature, you know, naturethemejigsawpuzzles.com and wildlifejigsawpuzzles.com and largejigsawpuzzles.com and go that route. But then you have five or ten sites, depending on how many launch that you have to build links to promote, build up the page rank, build up the link juice and I think these days, I question if exact match domain benefit is still were doing that. So I would probably test it these days because since things are changing so fast, I would consider getting naturejigsawpuzzles.com but I would also get jigsawpuzzles.com or obviously, you can’t get that domain but you know, a different domain, put all the puzzles on it because then you’ll have one place to focus building links. You can create a lot of content there and if someone comes, you can always do up sells and cross sells pretty easily. But then I think if your Nature or Jigsaw Puzzles one then more niche site took off, then I think maybe you’d want to, you know, lean towards that approach.
[20:38] But my guess is these days, it would be better if you did have related products on a single website. No, I don’t think this holds for software products, right? If you have three or four different software products that aren’t highly related, I don’t think you should just create a company website and have them all there because there’s a certain amount of selling that has to go in to selling a software product and having your sales website trying to sell four different products, it’s just a mess because people come and there’s no single call to action, they’re kind of waiting through all your products and trying to figure out what you’re doing, whereas with jigsaw puzzles it less that, right? Actually having a selection of jigsaw puzzles is much more of a benefit than when you have software and you know, trying to sell four or five different things that actually, you know, tends to confuse people more.
[21:20] Mike: I guess my thoughts are probably pretty similar to yours. It definitely for jigsaw puzzles I would probably lean towards having a different website for each of those themes I’ll say. And then you can also cross sell them to in to different products like you can have basically a cookie cutter set up for all of your website. So let’s say you have five or ten different niches for different types of jigsaw puzzles, they can be virtually identical except on each of those sites, a single theme is emphasize and then you can say, “Oh and we also have all of these other ones.” And then in that way regardless of which of those sites they come across, they still see everything but you’re allowed to essentially cross sell the other type of jigsaw puzzles because they’re going to be on that site and they’re going to click around and they’re going to look through from all of the different jigsaw puzzles that are themed wildlife or nature or whatever. But they’ll say, you know, you can have the section of these other jigsaw puzzles or other themes and people are going to browse through those. And you can kind of get that residual traffic without people having to actually go back in to Google and leave your site to find another one that has for example large puzzles.
[22:27] I think that that would definitely help you in that case but I think, you know, what Rob is exactly right for software products. It’s a lot more difficult to cross sell those types of things when those products aren’t as well related. Most of the examples that Michel gave were for, you know, for either books or jigsaw puzzles, most of those are things that are easily repeatable and you basically put it a different skin on it whereas with software, that’s really not the case. I mean HitTail doesn’t come in red, green and blue, for example. I mean it just doesn’t really matter. It’s not material to the function of the product and it’s difficult to replicate that type of software in a new package.
[23:06] Rob: Yeah, I think with certain types are goods. Having a broad selection is actually a benefit and jigsaw puzzles is one of those things and books is another and like we both said with software having a wide selection of software is probably — if you’re a small operator, it’s not actually that beneficial. It tends to be more confusing and overwhelming to a consumer who’s trying to parse through to figure out “Does this software really do what I wanted to?” Whereas if someone like for jigsaw puzzles they’re just like, “Oh, it has a picture of Angry Birds. So I’m going to get that.”
[23:32] Mike: So Michael, I hope that — I hope that answer your question.
[23:34] Music
[23:37] Mike: Our next e-mail comes from Jessie and he says, “Hi, guys. First off, I want to thank you for putting out the show every week and sharing your experiences. I’ve got a lot of insight as a listener and I appreciate the down to earth approach that you guys have. My question is that if you want to go and launch a niche info product for programmers. I had some success and now I’m working on the second info product that we marketed to the same audience and the content would be of interest to the same audience. I’d really like to build a brand, offer more products, start doing training, et cetera. Should I put the different products on their own websites with separate domain names and hope that my name on the covers enough to deliver everything together or shall I offer everything under one store front with the brand name and show my repertoire that way. I really appreciate your thoughts on this one. Thanks, Jessie.”
[24:14] Rob: So a similar question here but given that he specifies that the info products and he wants to just kind of start a line of products that are marketed to the same audience and the content would be of interest to the same audience. I would probably approach this one with a single website and I would have a featured product, biggest daylight right off, you know, on the top in the header when people arrive above the fold, that whole thing is your new product. “We just launched this. Look at that. Here’s our call to action. Please buy,” that’s the whole deal. And then down below mentioning your other products or on a separate page, you know, your other products page, you mentioned all the stuff you put out last year or you know, six months ago or whatever. So, you do have a catalog of your products there and you can do cross sells, up sells, even down sells if you want.
[24:59] It’s not — you’re not trying to sell eight things at once. You really are trying to focus on your newest thing but certainly each product does have its own product page so that if someone decides that they like, they can tweet that individually. That individual product page could be go up on Hacker News if it got popular or whatever. So you’re almost kind of building six or eight little individual sales pages for each product but your home page is really promoting one product at a time with just cursory mentions of your products in case someone wants to kind of sift through and look at your back catalog.
[25:29] Mike: I think I agree with most of what Rob said I would definitely lean towards having a single domain name and then somehow shifting people who have come to buy that one book in to possibly getting them to buy the other one as a bundle or you know, having a couple of different bundles there if you start releasing more then two or three or four different products. And those bundles could obviously all be on the same website under the same brand and the brand can help you sell more of those books or info products and by bundling them together, you can get people to pay for all of them as opposed to paying for just one or two of them.
[26:06] I think I remember hearing that one of the best things that the author at Copy Hackers have ever done was to essentially split the book in to several different books and then charge for each of them individually. That’s another option for you is to take the existing work that you have now and you know, separate it out a little bit to I’ll say generate more content and then maybe bump the price down a little bit, maybe from $30 to $20 but have two or three or four different copies of it that people can buy. “And oh, by the way, you can — if you want to buy the entire bundle, you can buy it for $40.” And what that allows you to do is it allows you to raise the total price that people are paying but on a per module basis. The cost is less.
[26:46] Rob: I think you also get the benefit and that you’re going to do a bunch of promotion for this first product and if it sold well, you’re going to have just residual traffic coming in from all the links that you’ve built and from people talking about it. And so if in a month you launch a brand new product and you put that above the fold, then people — and it is related to that audience, then people are naturally going to be stumbling upon it and you’re not going to start from zero visitors each time if you were to create a different website for each product. And since you’re not going after a long tail SEO it sounds like, I mean you’re not really going for that big wide birth approach where you launch ten or twenty different sites and try to just focus on keywords, I feel like the single site approach is definitely a way to go since your products are so interrelated.
[27:27] Mike: So Jessie, I hope that helps to answer your question. Our next question comes in from Matthew and Matthew says, “Hi, Mike and Rob. I was curious to know what your thoughts are about general liability policies for SaaS companies. My company analystratings.net does reporting on financial news. There’s always a possibility that we could script a report and have a company get mad at us and file suit. How do you go about getting liability policies and what would you look for when dropping?” Matthew, I think that the things to recognize when you’re looking at these liability policies is that what you should probably be doing is talking to an insurance broker because an insurance broker can walk you through exactly the types of questions that you have and what the most likely scenarios are for that.
[28:07] The other thing I would do is I would probably leverage disclaimers pretty much on every single thing that you send and I’ve seen them in all sorts of things like all the investments that I’ve done over the years. There is — on every single one of them there’s a disclaimer that says, “We are not responsible for typographical errors.” And basically when you go to an insurance broker and you start working with them, they’re going to put together especially in the case of like professional liability or general liability policies, they’re going to put together a price quote that is directly related to your business, what you do and how you operate. And they will typically ask you some very detailed questions about exactly what you do and how you do it and whether or not you have disclaimers for that kind of stuff. And if you don’t, you can say yes and then change everything so that you do respond positively to that question. That’s probably what I would do but I’m not a lawyer. I’m not an insurance broker. Definitely go talk to insurance brokers and a good insurance broker will actually bid your insurance plan how to multiple insurance companies so that you can get a comparable rate quote from multiple companies because what one company will provide you for insurance, the pricing maybe almost the same but the actual specifics of what they cover could be radically different. So you really have to pick through them pretty well and understand what your risks are and where you’re vulnerable to being sued and what the insurance companies are going to pick up if you are sued.
[29:33] Rob: A lot of the questions that come to the podcast I answer them with it depends on your risk tolerance and I think this is another one that falls in to that bucket. But it does sound like analystratings.net does have perhaps a little more risk than some typical SaaS ideas. So if it’s in the back of your mind you are worried about getting sued and you are worried about not having some kind of I guess, you know, right it’d be Arizona Missions Insurance or something like that, I would absolutely do what Mike said and talk to a broker. I don’t think you’re going to need to pay that much to get several hundred thousands dollars in coverage. Again, it all depends on your comfort level of how much you think you could potentially lose in a suit but if you have to pay 500 or a thousand dollars a year to get several hundred grand worth of a business coverage, if that’s worth it and that helps you sleep at night, then absolutely. That’s something I would move forward with.
[30:25] Mike: So Matthew, hopefully, that helps to answer your question. Our next question comes to us from Graham and he says, “Hi, Rob and Mike. I’m a huge fan of your podcast and blogs since I discovered them a few months ago and I’ve been plowing through the archives everyday during my hamster wheel commute. I’m a software developer/project manager and totally connected with your comparison of salary employment and consults with the hamster wheel. From your episode 15, you mentioned a number of things to consider as well as places to find apps for sale. As this podcast is two years old now, I’m just wondering if the same techniques and sites were the best places to find apps for sale. I’m just getting my feet wet in the space and learning that as I’m searching for a SaaS app or a website and the $500 a month range of revenue, I’ve been looking around for a while now but my search has been empty so far. Thank a lot, Graham.”
[31:08] Rob: For starters, I do think what we said in episode 15 still holds. Certainly there have been some updates since then but in general, the approaches are still the same. I think it has gotten more competitive. There are a lot of more people talking about this kind of approach now than they were two or three years ago. You know, we were I’d say a bit ahead of the game in talking about this kind of thing. So just because it’s more competitive though doesn’t mean there — there’s still hasn’t money to be made. Now, most people give up on, you know, Flippa or any other type of website buying approach because, number one, there aren’t flexible enough. Meaning that you have to be able to — if you find a good deal, even if you aren’t super excited about X niche, if it’s a good deal and it’s something that fits your moral and ethical compass, then you need to be able to pull the trigger because that maybe the best deal you see for the next three, four, five or six months and I definitely had to look long and hard to find every good deal that I found.
[32:02] So I think that’s the first thing to remember is that it’s not going to be something you go out and the first week you’re going to find some great deal and slam dunk and going to be able to require something. So it will literally take months of education and it’s not like it’s full time but, you know, you kind of have to make it a side gig to do this to spend your time educating yourself on the process. The next thing I’d recommend is checking out an e-book written by a Micropreneur Academy member name Dave Rodenbaugh and you can find that at websitebuyersguide.net and basically, he goes through all the detail, approach that he used. He’s bought a number of websites successfully. He sold a number successfully. He’s really knows what he’s doing when it comes to buying and selling stuff. And he had asked me maybe a year ago if I was going to write a guide like that and I said I just don’t have the time and so he went out and did it. I wrote the forward to it and I highly recommend it. It’s the best guide I know about making decisions, doing due diligence, executing the sale, all that kind of stuff. It’s very in-depth. If you really want to get in to it that — I think it’s — I don’t even know. It’s 30 or 40 bucks but it’s going to save you a lot of time in sifting through listings and that kind of stuff.
[32:02] The third thing to remember is in my opinion the best deals are made off of Flippa and you may hear about an app on Flippa but then you wind up contacting them after the auction ends and it doesn’t sell and negotiating a private sale. Or you may just hear about them through other means. You just make it known to people that you’re out there buying apps and they contact you and there’s kinds of these back channels and when you’re the only buyer, you’re always going to get the best deal what that last approach certainly takes more time and effort. In my experience has landed me, you know, kind of the biggest and best and the highest quality sites that have — that turned out the best for me.
[33:42] Mike: And along those lines, one of the things that you can do is you can start taking a look at different niches that you want to go after and if there’s a product that you have in mind and you start doing your due diligence on that to make sure there is a market for that products and you start finding competitors but they’re not very good in terms of their SEO marketing and maybe their product is okay but they’re just not marketing it very well, you can go ahead and, you know, just directly post them and say, “Hey, I would like to buy your app. Are you open to having a discussion about this?” And in some cases, that’s a good way to go as well because then you’re bypassing Flippa. You don’t have to sit there and sift through a bunch of listings. You’ve kind of already done your due diligence in Google AdWords or various other tools to find out whether or not there is enough traffic to make something like that worth it and you can figure out is this a decent product that I can essentially just buy out right or is it something where it’s going to take some time and effort for the marketing to kick in but the product itself is solid. It’s just they’re — they’re just not doing marketing very well because they’ve got a developing background and that’s on their brain.
[34:47] So if you can identify places like that where it’s something you are already interested in and maybe it isn’t listed on Flippa, maybe the people don’t know that they have an option to sell it, definitely approach them because it’s very possible that they’re looking to get out from that particular product because they don’t see it going anywhere.
[35:06] Rob: Also keep in mind that looking for a SaaS app is a challenge because most sites that are sold are just websites. They’re not SaaS apps. So you’re going to be looking for a needle in a haystack and looking in a range of $500 a month is the lower end and that means you’re going to have more competition if one does come up for sale. It’s kind of like in real estate, if you’re looking for a single family home to buy or to rent out or maybe a duplex, there’s a lot of people in that market. But as soon as you get above four units, you start buying five and six-unit apartment buildings, you have the money or the backing to do that, suddenly you have a lot less competition. So we’ll understand if you don’t have the means to do that right now, that’s fine but keep that in mind down the line. If you can put together any type of financing, partner up with someone who has that kind of money. You can definitely open up to a less competitive and larger market.
[35:52] Music
[35:55] Mike: If you have a question for us, you can call 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 this podcast 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.
Episode 102 | 4 Levels of Income Generating Web Apps
Show Notes
Transcript
[00:00] Mike: This is Startups for the Rest of Us: Episode 102.
[00:04] Music
[00:12] 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.
[00:20] Rob: And I’m Rob.
[00:21] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. How are you doing this week, Rob?
[00:24] Rob: Doing good. We got some really cool new reviews of the show in iTunes. C Snipes [Phonetic] said, “Every episode is a gem.” He said, “This podcast is dense with valuable experience and insight especially for small and early career tech entrepreneurs. Mike and Rob are experienced personable down-to-earth guys. Conversations are focused and relevant.” Then Don Felker said, “Best startup podcast.” He said, “It’s one of the best podcasts I’ve listened to in years. Great simple advice for micropreneurs and single founders. I highly advice listening to it.” You know, Mike when I’m down and sad and all alone, I go in to iTunes and I read all our reviews. It makes me feel good, man. It makes me feel good that we can…we can talk to people. Well, that we can talk to each other but that it resonates with people on that, you know, that they get value out of what we’re saying on the show.
[01:09] Mike: Yeah, that is pretty cool. I love getting e-mails from people whether it’s just praise or people asking questions and just sending things our way. So that’s really great to hear. Definitely, we want to say thanks to everybody for all that support.
[01:22] Rob: Yeah, it says a lot about our listenership. Our listenership is smaller than, you know, some major podcast like Mixergy or This Week in Startups. We rank really well for the term startups and we have per listener, I think we have a lot more ratings and reviews in iTunes. So it’s very cool. How about you? What’s going on this week?
[01:40] Mike: Well, I’ll be on Brooklyn over the next couple of months quite a bit, probably five of the next nine weeks I’ll be spending in Brooklyn, New York. So if anyone is interested in meeting, just drop me a line. You can shoot me an e-mail either questions@startupsfortherestofus.com or mike@micropreneur.com, either one will get to me and we’ll just kind of schedule a time to meet up or just shoot me a message on Twitter or whatever.
[02:01] Rob: Very cool. I am speaking on the Google Campus this weekend. I’m speaking in a Google Developer event that’s designed to get developers together and get them fired up about using like Google API’s and Maps and all that kind of stuff.
[02:15] Mike: Oh. I thought they were going to be replacing Marissa Mayer with you.
[02:20] Rob: Yeah, that’s what [Laughter] — that’s what it is. Wouldn’t I do a great job with that?
[02:24] Mike: Of course.
[02:25] Rob: Let’s say just stand there and look gorgeous and that’s all.
[02:26] Mike: [Laughter]
[02:29] Rob: Yeah, in terms of the speaking gig at Google, I was actually reticent to do it. I was invited a couple of months ago by a guy here in Fresno who had seen me speak and you know, as a rule, I don’t enjoy speaking at Developer events because when I say things like the code doesn’t actually matter that much and the idea doesn’t actually matter that much, it’s a lot about marketing, they don’t tend to want to hear that. So I’m not like a popular guy and it’s not even about being popular. I just — I don’t feel like it resonates with them because they, you know, in general, developers don’t want to hear that message. So it took some convincing but frankly, I’ve never been to the Google Campus there in Mountain View. I really wanted to be convinced till I do it and since it’s, you know, a talk I’ve given before that he said would resonate with the crowd and he knows the crowd and frankly it’s only 40 minutes, so you know, how bad it goes, I can [Laughter] I can flop pretty bad for 40 minutes and still feel okay about it.
[03:18] Mike: Cool. On my end, I’ve lost a couple of Altiris Training subscribers which is a little bit sad and unfortunate. But one of them actually didn’t drop from being a subscriber so much as they tried it out and that it’s the first person who tried it and said, “No, we’re going to actually pass on it. So we’re going to take a refund,” which a little disappointing but some of the content isn’t they’re — they were looking for and they were very adamant about me staying in touch with them so that when the content is there that they’ll check it out again. So that was at least good to see. But they’ve, you know, had high praise for the content that was there, just wasn’t particularly relevant for what they were using.
[03:52] Rob: Oh, interesting. So you need to add more content then if you want to keep customers like them around?
[03:56] Mike: Yeah, it’s just they were looking for more advance content and a lot of the stuff that’s there right now is for beginners and you just can’t find some of the stuff online — I mean you can find it but it’s — it’s a lot like the Academy. You know, it’s not like there’s anything in the Academy that you can’t find elsewhere but it’s highly consolidated in to one location. So you don’t have to go looking for it and you can get your questions answered very concisely and very quickly. And what they’re looking for is just some topics that I haven’t even touched on or talked about yet. So that was fine. It was the first person who said, “Hey, to be honest, this just doesn’t going to work for us.”
[04:31] Rob: Right. So do you think you’re going to invest some time in to adding more content in to keeping them around?
[04:37] Mike: Well, these people are already gone so once I developed — I can develop about half of the content that they want. The other half, I don’t actually have the abilities to do because I’ve never actually done some of that stuff that they’re asking for, so I have to figure out how I’m going to address that issue and I’ve got some ideas. I’ve got some consultants I could probably lean on or some other partners that I could talk to and say, “Hey, can I pay you to put together some videos for this or that,” and it might cost me a couple of hundred dollars to have them put together some videos that are some over views or some detailed description of how to actually solve certain problems but a couple of subscribers would — to completely offset that those costs.
[05:14] Rob: Right. Did you see the thread on Quora? It was about one of the most ridiculous technology patents ever granted.
[05:22] Mike: No, I did not.
[05:22] Rob: And it ties in a little bit with our discussion last week. Some of the mentions are some of the things we mentioned last week like Amazon’s one-click patent, the pull to refresh feature present in many apps. They said it’s actually patented by Twitter. Making links in an e-mail clickable. They say, “All links and phone numbers in e-mails can be made clickable, even when the original e-mail sent by the user didn’t make them clickable links. Sounds trivial but Apple patented and they sued HTC over the patent —
[05:50] Mike: Wow.
[05:50] Rob: … which is kind of frightening. Is that crazy? Buying stuff inside an app. They said, “Yup, even if an app says ‘Click here to buy the full version’, they are ‘infringing a patent’. Rovio got sued over this by Lodsys which owns the patent.” And I’m pretty Lodsys is one of you might call patent trolls. They aren’t actually building anything. They just owned a big portfolio patents and they make their money by suing people for it. So and there are few others. There’s — none I hadn’t heard before about that’s surprising.
[06:19] Mike: I’m surprised about the Lodsys patent where you have to click here to buy the full version. I mean doesn’t that blast out of the water the entire share where the industry from like the ’90s? And wouldn’t that patent have expired by now or couldn’t you point to the entire or like pretty much all the ’90s as being one of the situations where it’s like oh where there’s past examples of where this already existed so it can’t be patentable?
[06:41] Rob: I’m sure the lawyers tried. Rovio definitely has them. So I bet it’s only dealing with the mobile app or something to that effect.
[06:50] Mike: Oh, maybe —
[06:51] Rob: You know what I’m saying? I’m sure there’s a loop hole because they — I mean you can read the Venture Beat article and it looks like Rovio had a heck of a time with them. So it’s certainly was not as easy as saying, “Hey, there was prior art.”
[07:01] Mike: I saw something else. It was Rackspace and Red Hat or in staunch opposition to any software patents and we’ve kind of talked about this before. But, you know, they are completely against software patents of any kind and it was surprising to see that Rackspace had come out so strongly against them. I mean I kind of understand why but it’s interesting that those there were the only two major companies that have kind of thrown their names in along those lines.
[07:24] Rob: Right. Well and there’s been a bunch of things floating around. Silicon Valley of Paul Graham and like a commenter said, “We’re going to agree not to sue like even if we patent something, we’re not going to do offensive litigation.” I think Twitter had said that they weren’t going to use their portfolio for offensive stuff only for defense. I mean it’s pretty crazy. There weren’t software patents until 1998. It was only copyrightable before then and so we definitely have existed without software patents. And anything else going on with you?
[07:50] Mike: I suppose an episode wouldn’t be complete without an AuditShark update. I’ve talked about my database synchronization issues in the past and I had somebody from Microsoft contacts me who said that they thought that I was using some software that they wrote. So that was, you know, really cool to see but I’m finally at the point where after 3700 lines of sequel code and another 2000 lines of C Sharp code, I’m finally able to synchronized the databases or at least I have the databases in a state where I can synchronize them. I still can’t do it natively thru my code but I’ve got other tools that can synchronize between them so I can actually get started with building policies and pushing them to the clouds so that people can use them at this point. So I’ll be starting on building those this week and then hopefully by Monday, people will be able to start using them.
[08:35] Rob: Right. So what does that mean in terms – so that’s a technical side of it, what does it mean in terms of like the users that you have using it?
[08:43] Mike: It means my entire schedule has been pushed back by like six weeks because of this problem.
[08:47] Rob: So you’re going to be back where you kind of were six weeks ago before this thing cropped up and then —
[08:52] Mike: Right.
[08:52] Rob: … you’re going to resume. You’re going to continue with your — your early access users and hopefully, get a few more on board in the next couple of weeks?
[08:59] Mike: Uh huh.
[09:00] Rob: Very good. I was looking at a list of marketing task because, you know, I keep going back to that HitTail marketing plan that I wrote out about, what, nine months ago. It expanded for a while and then boy, for the past couple of months, it’s really been — I mean it’s a huge plan, right? It’s like 12-pages long. I’ve mentioned it before and I keep just plucking ideas off of it and implementing them as I basically as they strike my fancy. You know, it’s like, oh I want to do that. I’m going to try that out and see how it works. And some of them worked and some of them haven’t. I made a list. I started reordering them this weekend and I just put them in to three different categories like the “more traffic bucket”, the “higher conversions bucket” and the “higher lifetime value bucket”. And looking at them in this way was really eye opening because suddenly I realized that when you first launched an app, it’s more about more traffic, right? Because you have zero visitors, you know, and you want to get 500 to thousand, 2,000 just so you can start seeing pattern so you can get some customers. I mean it’s just such a scramble to get that initial flywheel traffic going.
[09:56] And then at the point now, I don’t actually need to do any of the more traffic thing right now for HitTail because I have plenty of traffic coming through that now needs to be optimized. So almost everything that I’m picking up the list now is either to increase conversion rates whether from visits to trials, trials to paid or to increase the lifetime value of customers. So the more traffic stuff is going on the backburner now and everything else is moving forward. But I think depending on where your business is at. You know, if you’re listening to this like give that some thought. It’s not always about traffic. It’s not always about conversions. It will bounce back and forth between these two things and almost for sure, if I get this converting really well and dramatically increased it over the next couple of months, I’m then going to want to go back and I’m going to want to double my traffic again, right? Because then — and then you can just take even more advantage of the higher conversion rates that you’re getting.
[10:47] Mike: Yeah, that’s very cool. I mean I hadn’t necessarily thought about breaking those in to, you know, all the marketing tasks in to the different results that you’re expecting to get from them but it does makes sense.
[10:58] Music
[11:01] Rob: So this week, Mike, we’re talking about Four Levels of Income Generating Web Apps and this outline is actually inspired by a recent episode — I was listening to the Podcast Internet Business Mastery and they looked at four levels of niche websites. And the way, you know, they’re in to the more like knowledge marketing information, marketing stuff and so he looked at having a niche website and then an affiliate website and then building authority website and then building kind of a personal brand website. So nothing to do with software but as I listened to it, I realized there are similar levels or tiers of web apps. So I kind of wanted to run through and give my recommendations, our recommendations on where we think you should start, pluses and minuses and some questions you should ask yourself to determine which level you might want to choose first and go through it from there. So again, there are four levels we’re going to be running through.
[11:46] Before we do that, I actually wanted to make an honorable mention. It’s level zero and this is — I’ve owned several sites like this that are not technically web apps but they’re more on just niche websites like AdSense sites, affiliate sites, smaller content sites that just get traffic via like SEO or affiliate traffic or some kind of flywheel traffic that continues to come every month that get really cheap visitors. The comments so you don’t need a high lifetime value to make a decent amount of recurring income and — this is not web app. So I don’t want to include it in our levels. I did want to mention this is something that I’ve seen people cut their teeth and learn internet marketing doing this kind of site. Examples of the site, there’s one — we’ll include this in the show notes but one of them is scootersmopedscyclesreview.com and the other one is whatsthebest-mattress.com. This gives you an example and these are — these are not great examples. I mean I don’t own these sites. These are just random sites I’ve found.
[12:41] But this gives you an idea of what like a really niche site is and how you can go in to such a tiny niche with such low competition that you can just create some content around that and instantly rank in a search engine and get enough traffic to make a few bucks month. They can then be use to maybe fund, you know, ideas down the line and I don’t know if you’ve done that. I’ve definitely done that and I had some niche sites that were making 4 or 500 bucks a month which is not, you know, it’s like wow, I’m going to quit my job money but I could use that money especially early on that helped me quit consulting with — along with some other, you know, sites I had and it also helped fund some development and some of the advertising on, you know, some CMSthemer and some other early websites I had.
[13:22] I’m going to dive in to number one. It’s the first level of income generating web apps and this first level is a “low competition niche application”. So it’s a low competition web app. It’s in a tight niche. So the thought behind this is you can almost use another word for it. It could be like an entrenched web app or a web app that has a good source of traffic either from something light SEO or from affiliates or from, you know, WordPress.org searches or it could even be — if it’s a mobile app and not a web app, it can even be just from the App Store but it’s some type of recurring quite a bit of traffic, something where you don’t need a high lifetime value to support it. And so frankly, any iPhone app that gets a decent chunk of traffic through the IRS App Store could be called the low competition niche app because there’s not a lot of competition trying to fight of. I own a couple of apps like this. WeddingToolbox is like that.
[14:13] The entire market is not very big. The competition does not tend to be that that brutal, right? It’s not like I need to go out and do all types of info graphics and hardcore in-person marketing and heavy sales in order to keep WeddingToolbox as a profitable app. And then another example I thought of was Dave Rodenbaugh’s WordPress plugin AWPCP which is another WordPress Classified Plugin. And again, it’s low competition. He gets traffic through Google and WordPress.org and it is in a small niche and these are great. Now, these are don’t tend to be “I’m going to quit my job” apps. You don’t tend to make 10 grand a month off of these things. They tend to be very stable and inconsistent and you can build up a nice flywheel of traffic and they can either help fund larger ideas or if you combine a few of them together, they can be really good at helping you essentially quit your job and gain the freedom you probably been looking for.
[15:06] Mike: The nice thing about these types of things is that it’s very similar to the honorable mentioned that you talked about earlier which was just using those to kind of cut you teeth on internet marketing and learn the things that you really need to know in order to essentially take your future products to the next level. So it’s really hard to jump in to something as large as, you know, HitTail or a lot of these other applications and just jump in, feet first and go with it without necessarily knowing anything because you’re going to make a lot of mistakes and you know, you don’t necessarily want to make a lot of those mistakes early on or you want to minimize them as much as possible so it’s not to waste your opportunities.
[15:43] Rob: Exactly, that’s a good point about learning internet marketing from a simpler idea with lower competition because you can learn a lot and then apply that later on to more competitive apps. The low competition niche app is what we talked a lot about in the Academy. I mean this is is where we’re tying to get people in having, you know, some type of success early on. It builds confidence and it teaches those early skills that they can then use to leverage and to potentially if they want, can leverage in to larger niches. So the second level of income generating web apps is a “competitive niche app”. So first level was low competition niche app, this is a competitive niche app. So this is something that needs more active marketing than in a low competition niche.
[16:25] So examples of this do include like you mentioned HitTail. It’s not just going to have a simple flywheel of traffic coming in. It’s going to need more active marketing to grow. Pluggio, Justin Vincent’s app is a good example, Buffer app, anything in a hot niche like Twitter Client or anything like that, it definitely going to be competitive. Frankly, Bidsketch by Ruben Gamez which is proposals — when it was first launched, it was proposal software made for designers. So it was a niche app but it was a competitive niche and it wasn’t a huge market. And for the first year or 15 months or so, he really aimed after that and he actually made the leap in to the next level, you know, that we will talk about in a second.
[17:02] Mike: So the third one is a “competitive large market”. And examples of applications that fall in in to the competitive large market are things like HootSuite or Radian6. Other applications like SalesForce, that’s a very large market for CRM Software but it’s also a very competitive, you know, there’s lot of customizations that can be done. There’s a lot of different players. The market tends to be very fragmented but there’s also a lot of money to be had here because there are so many customers out there who been used a CRM. Other applications or things like HubSpot which has a very large horizontal market and HubSpot is use primarily to gain inbound marketing and then you’ve got things like Stripe which is use for taking credit cards from people.
[17:45] And Stripe is in a very competitive market as well. I mean there are tons of different players out there like Chargify, Recurly and all these other different billing services that will allow you to accept payments on behalf of you. And then there’s also things like we’ve just mentioned, Bidsketch being in a competitive niche. But now, Bidsketch is more in a large market that is competitive and there is so much higher growth curve to that, much higher I’ll say ceiling to where to Bidsketch could go as oppose as to where it could have gone 12 or 18 months ago.
[18:18] Rob: Right and there are certainly some overlap here like, you know, I mentioned Pluggio and Buffer as competitive niche apps, right and they’re in like level two. And one could argue that they should be on level three because it’s a larger market but I’m actually saying that they cater to a kind of a vertical niche within Twitter apps whereas HootSuite and Radian6, they’re like a horizontal Twitter app, right? So, big market and they kind of try to be everything to everybody whereas Pluggio and Buffer are very specific things. It’s like purely for buffering your tweets, purely for scheduling your tweets. It doesn’t do all the fancy stuff that the bigger guys do. And frankly, you know, you could argue the same thing with HitTail like HitTail I consider it to be in a fairly competitive niche. It’s a vertical. It really is towards search engine optimizers. It’s towards internet marketers. People understand digital marketing.
[19:02] You could say that’s a large market but it’s not a horizontal tool like HubSpot, right which is a — it’s also online marketing but it’s just way, way bigger. It’s a much larger market and as a result, if you enter in to a competitive large market, you either had to really, really know what you’re doing or you better have a ton of money backing up. And every — aside from, you know, Bidsketch, every app on this list has millions if not tens of millions of dollars that they’ve raised to compete in these markets. And to be honest, there is a, you know, range of the HootSuite market is obviously larger than Bidsketch’s market. I mean in terms of just the sheer number of people who would potentially use it.
[19:41] So there’s definitely a range even within each of these levels but again, the competitive large market is not something that you can just dive in to as a newbie and I think a lot of people make that mistake. I know I did early on by choosing ideas that were in these horizontal markets and just figuring — you know, if these guys can make it work, so can I. But these guys have way more experience than you and they’ve either launched the app successfully, grown the app successfully or they have just a huge amount of money backing them up and they can make, make a lot of mistakes.
[20:09] Mike: I feel like a lot of developers fall in to the trap of going after the competitive large market because they look at these other products that are out there and say, “Oh, well that piece of software sucks. I could build something very similar. It would ten times better.” And the things that come to mind or things like Service Desk Software or any sort of CRM or bug tracking and —
[20:29] Rob: Project Management —
[20:30] Mike: Yeah, Project —
[20:31] Rob: QuickBooks, that type of stuff. Yup.
[20:33] Mike: Exactly and it seems like it would be easy to build something that would be competitive and it’s really about the marketing at that point. It’s not about the product.
[20:41] Rob: Yeah, exactly. And you know, you mentioned that for a lot of developers make a mistake at going in the level three, I think a lot of devs and just lot of people in general make the mistake of also going in to level four which is we’re calling the “disruptive apps”. And these are basically the moon shot luck shot lottery try apps like Facebook, Twitter, Google, Pinterest, basically anything that doesn’t really have a revenue model and that you definitely need to raise funding to get off the ground. Basically, you know, something that really doesn’t — doesn’t tend to be sold on value. It’s going to tend to disrupt and it’s going to be one in a thousand that might work or 1 in 5,000. I mean just a very, very long shot whereas if you go in to a low competition niche app that level one we just talked about, seriously, like 1 in 10, 1 in 5 if you get good at it. Maybe even better, 1 in 3, you know, a really good odd but the payoff is just not tremendous.
[21:34] But to a single person, if you’re trying to quit your job or you just want to make a car payment or house payment like that actually has a big impact on your life but we don’t see that, right? When we watch the Tech News or we read, you know, Inc. and Fast Company and they’re talking about the disruptive apps. That’s what everybody wants to talk about and so we, who are in the startups space tend to be to gravitate towards this — this disruptive app mythos.
[21:56] Mike: And I think the thing to point about the disruptive apps is that it’s disruptive the first time because — primarily because there isn’t a business model there like before when Google was first getting started, everyone looked at all these different search apps and I think there were 13 of them or there were 12 on the market already and Google was the 13th. And at the time there was no business model there for search engines. There just wasn’t and somebody took a chance on them. They went forward with it and eventually they figured out, “Oh well, we can do advertising in here and if we do good enough at search, we can get paid advertisements betted in to the search results.” And now if you look at something like DuckDuckGo which is kind of headed by Gabriel Weinberg, that you might point to and say, “Well, is that a disruptive app?”
[22:42] And I would almost argued that it’s not because there is a known business model that fits that is going to generate revenue whereas 12 years ago when Google was first getting started, there was no specific business model. They didn’t know how they were going to make it whereas with DuckDuckGo, they have a decent idea and I know that they’re not going in to the direction of specifically selling advertisements in line with all their search results. They’re going in a slightly different direction but they at least have an idea of how they’re going to making money whereas with Google, the plan was not to make money. They wanted to build it as quickly as possible, get as large as possible and then figure it out. So that’s really kind of what separates, you know, the disruptive apps versus a lot of these other ones because with the disruptive apps, they don’t know how they’re going to make money until they get to a point where they say, “Okay, well this is the direction we’re going to go.” They just don’t have those ideas upfront.
[23:31] Rob: And when we talk about these four levels of income generating web and I should say mobile apps because they kind of fit in it to this as well, what we really mean by level is like level of difficulty. So given those four levels, put together a couple of questions that you should ask yourself to figure out which level you should choose because once you’ve decided on the level, it becomes a lot easier to choose ideas that fit within that mark and that are going to be more geared towards your level of expertise at the time. So we have four questions and the first one is, “Are you looking for side income or are you looking to ultimately have fulltime income?” And even if you say, “I’m looking to have ultimately have fulltime income,” you could still choose something in, you know, the level one which is that low competition niche app because you can combine several of them together. I mean that’s originally how I built the fulltime income and I’ve since kind of transitioned not out of box because I still own a lot of apps but I have some apps that would now provide fulltime income on their own.
[24:25] So to get you started, start thinking “Am I happy with my job? And I do want to stay here for a few years and I’m really just looking to get a side income with kind of the minimum amount of work,” and you should definitely think about level one. And if you really are a head strong to get out of your job as soon as possible, then it’s probably better thing to think about heading. Either thinking of heading in to level two or thinking about tackling level one, you know, several of them in series. Not at the same time but one after another.
[24:53] Mike: The second question to ask yourself is “Do you have a concrete idea or do you need to dive in and figure out what’s working and then delving down on it?” And the idea behind this question is really figuring out whether you know exactly what is it that you want to do or do you want to try a couple of different things to see what’s working and then head hard in that direction. And if you’re not really sure, you can try a couple of different things that are in that low competition and maybe they’ll grow from there in to, you know, the level two because I almost feel like a lot of this when you’re going from level one to level two to level three, the difficulty is essentially synonymous with the payoff as well. I mean in a low competition you’re making much less money than you would in something that’s a level two which is a competitive niche app. And these things you have to figure out where you want to start, what level are you comfortable attacking first and progressing from there?
[25:45] Rob: Third question we have is “How much time do you have on a weekly basis to devote the idea and how much money do you have to fund it?” Because obviously, level three and level four are just an entirely different order of magnitude than one and two. So it’s really something that you need to think about. If you’re going to work part time outside of your job and you just have, you know, a hundred or a few hundred box a month to put in to it, then you’re really — I mean I would honestly recommend starting with the level one, maybe a level two but I think that’s even where like starting with level two if you never had a success and you’re just trying to learn the marketing, it can become frustrating pretty quickly because without the resources to experiment boldly, your learning is going to take a long time.
[26:27] You know, you either need to be able and willing to pay for education through — actually learning it yourself through the hard knocks or you need to be willing to pay for it through like online classes and that kind of stuff will short cut you and it will get you, you know, ahead of where you are if you just learn it by yourself. But, it still does and it absolutely requires quite a bit of time of an ongoing basis to do a level two or above, lower as level one as just intends to be more of an upfront investment and then you can — you can tend to put it on to autopilot and move on to your future ideas and use that to then fund those.
[27:00] Mike: I think that’s a key that you — you just touched on which is being able to put something on autopilot because a lot of these other ones once you get above level one and the level two and level three, you really can’t put it on autopilot. You really have to keep on top of it and make sure that you’re continuing to try and move the business forward because if you start slacking it off at all, your business is going to — in some cases it will nose dive and in other cases it will simply taper down overtime as soon you neglect them. And the fourth thing to ask yourself is “Have you successfully executed with an online marketing in the past?” And if you or just starting out, you’ve never built a product before or and never tried to bring in product to market completely on your own and I do want to point out that this is completely different than being on a team of 10 or 15 people and then pushing the product out the door as part of a software company.
[27:47] When you’re doing everything yourself, it is a completely different story to try and tackle a large market versus trying to do it yourself. I mean there are worlds of difference in terms of experience with online marketing than if you’re coming from just a programming background. So although it may look easy, it really isn’t. You, having some of that background and some of that experience is definitely going to help you. So if you’ve never done it before, you’re much better off starting in level one or level two so that you do get that experience and you can build app to go after a level three if that’s ultimately what your goal is.
[28:21] Rob: Yeah, I heard an interview. I think it may have been with Dan Martell. He made the statement that once you’ve started a company like a million dollar company that has a million dollars in annual revenue, if you sell that or you otherwise, exit that you never want to do that again because now you want to go for a ten million or a hundred million dollar company. And that actually resonate quite a bit. I think that’s something to be noted here is that well, you don’t have to move up these levels. Once you’ve gained the experience and depending on your personality, if you really do want to continue learning, you will kind of master these levels. I certainly feel like I got bored in the low competition niche apps and moved in to the more competitive niches and I’ve known several other entrepreneurs who are doing the same who are just — but it’s just that you’ve done it a few times and there’s kind of nothing new to learn and I think as developers who are, you know, fairly intelligent people, you want to continue to learn and expand your horizons and that don’t feel like since you start in level one that that’s where you need to stay or that’s even where you’re going to want to stay past having the first few successes.
[29:24] Mike: I think part of it is just wanting to be challenged and fulfilled in your job or in your career. Nobody wants to do the same thing over and over. So starting out at level one and then progressing from there is it seems to me like it’s a natural progression. I can see people who want to live a specific lifestyle and they just want to stay in that level one or level two area where they don’t necessarily need to stay on top of things all the time or they can shift their focus away from it and live their life and have it as a lifestyle business versus something where they have to continuously stay on top of it, work 40 hours a week, continue to do it day in and day out in order to continue making that business a success.
[30:03] Rob: So those were are thoughts four levels of income generating web apps. If you have other thoughts or questions, obviously, feel free to post them on the blog or send them to us at questions@startupsfortherestofus.com. We actually got a few questions this week. They seem to be piling up. Mike, I think we’re going to have to do more Q&A episodes here soon. We’ve got another drinking game submission from Micah Alcorn [Phonetic]. Thanks for that. He says that the quote is “People should drink whenever we get a question that says ‘I’m a business guy with a brilliant idea. How do I find a technical co-founder?'” I like that one and the cool part is he says, “By the way, I am a business guy with too many ideas. My solution is to learn to write code on nights and weekends, build prototypes, test hypothesis and then outsource. Thanks, Micah Alcorn [Phonetic].
[30:45] Mike: Well, I got a couple of comments from people as well via e-mail. One of them was from a guy from Microsoft who apparently realized that I was using some code that he has written to synchronize the databases. So he said that if I ever needed anything or have any questions just let him know. So I’ll definitely hit him up for that. And then another one was from Scot who had a specific question for me about AuditShark and he said, “Hi, Mike. I was listening to the podcast this morning and you talked about the appeal AuditShark has for those who’ve been hacked. A friend of mine works for Core Security which is a Boston company that does penetration and security testing for enterprises. What do you think about companies like Core as a reseller or recommender for AuditShark? Great show. Thanks for putting all the effort in, Scott.”
[31:24] And I wrote him back and I basically told him that in order for me to sign on multiple resellers for product like AuditShark, I think that would be a pretty big challenge for me right now and not necessarily in terms of to time but I think that early on, it would be really difficult because there are a lot of different things that go in to it. I feel like long-term, it’s a viable strategy but when you’re early on, the problem is that you have to be able to justify what type of market there is for the products and provide the prospective partners with enough guidance about how to reach their audience effectively, how they can sell it, what types of companies are good fits for the particular product. They really need to know what the level of work, risk and reward is that they’re undertaking and that’s really hard to gauge when you’re first starting out with the product. So I would be hard press to provide a lot of those details to somebody. Those are a lot of good questions and I don’t necessarily know the answers to those yet. The really big one is that how much time and training is it going to take to get that partner up to speed on the product and how do you keep multiple partners from stepping on each other when they’re going after the sales and you know, just an example of that is let’s say that I give everybody a 25% discount on the software.
[32:32] Well, each of them is going to start competing and using the MSRP and drop it down up to 25% and they’re going to each try and maintain their own margins. And you would think that when these partners are trying to compete against each other for let’s say the same account, that, you know, they’re going to either run in to these cases where they’ll say, “Well, you know, I’ve got a better relationship with you. So, you know, you’ll buy for me.” And that’s not generally the case. I mean a lot of times what will happen is customers will buy from whoever gives them the cheapest price which is why Dell is as large as they are because they sell pretty much every product you could possibly imagine. And if you got to Dell’s website or you call Dell, I guarantee you that they will sell you just about any given software product out there, you know, just look at the Fortune 1000 or look at all the software companies and I can almost guarantee that Dell will sell every single one of their products. And the reason is because Dell just does so much volume that they are able to get these giant discounts from various software vendors.
[33:28] So when you have that type of relationship, what you’re doing is you’re putting the partners in an uncomfortable position where they’re competing against each other. And that makes things really hard because those large customers, those large value added resellers even if they don’t actually add value to the deal, sometimes they’ll do things like they’ll bundle hardware and software together and they won’t necessarily differentiate between what the costs are and it looks like the customer is getting great deal. And they may or may not be but what ultimately ends up happening is that they end up pushing the other resellers out of the deal So then they’re essentially destroying your reseller channel. So those are a lot of the things that you have to be careful of.
[33:28] There’s one reseller now that I’m working with that somebody that I have really good relationships because we have — we share a lot of core values and beliefs about how to run our business but for me I think it’s more a matter of starting out really slow and picking the right partners as oppose to just trying to get as many partners as possible and then working out the kinks so that it can be ramped up effectively. Going down the road of resellers is something I’m looking at but it’s not necessarily I’m going to go in to this direction and go as fast as possible. It’s really about working out the kinks. Trying to figure out what’s wrong, what’s right, what is and is not going to work and then once I’ve figured out all that stuff, then kind of ramp it up.
[34:44] Rob: Right, we hear a lot from different surveys and studies of startups that premature scaling was one of the biggest causes of startup failure. And in my opinion, trying to find resellers at this point would be far premature. And I think it’s pretty obvious, you still need to develop more features and really to get their product market fit, problem solution fit. I mean find that product that people are dying to have and then once you’re doing well, selling them one on one, then you start developing that that reseller channel. Beyond that, I’ve done some reseller stuff and affiliate stuff and it is quite a bit of effort. It’s a lot more effort than people realize in terms of exactly what you said. It’s like training, getting them onboard, getting them pumped up, reminding them they’re suppose to be selling your stuff, handling issues who, you know, that they do support that you do support. There’s more to it than just finding some people and having them magically sell a bunch of copies of your software every year. So I don’t see it as much of a super bullet as I think I’ve heard people mentioned. So those are two things to keep in mind.
[35:42] Mike: Well, I think that the one thing they’re pointing out about that is that most people look at affiliate sales and they say, oh well, resellers will make 30 or 40 or 50% or something like,” because that’s a typical margin on a lot of those affiliate deals. But when partners have sales reps involved and they’re actively trying to sell those, they’re going to start cutting in to their commissions in order to make the sale. So then they’re competing against each other and I’ve seen situations where even on 6 and 7-figure deals, the commission isn’t only about 2% of the total sale. So you take $1 million deal and 2% of that is about $20,000.
[36:18] It is not that much with regards to the size of the deal and $20,000 it sounds like a lot but the reality is how long is it going to actually take you to land a $1 million sale and it’s not going to be overnight. It’s going to be several months. So if you spent several months trying to land one deal and you get $20,000 out of it, was it worth it at the end of the day? And for the partners, many times the answer is no. It just isn’t. So that’s something you really have to keep in mind when you start ramping up the partners. When you only have one, those issues are just not existent. You don’t have to worry about them. But when you have 10 or a hundred or a thousand, it’s a completely different story.
[36:54] Music
[36:57] Rob: So if you have a question for us and you’d like to hear us discussing on the show, you can call our voicemail number at 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 this podcast in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 101 | Key Takeaways from Business of Software 2012
Show Notes
- Podcast Awards
- The Whicher – Tournament A/B testing
- Business of Software 2012
Transcript
[00:00] Rob: In this episode of Startups for the Rest of Us, Mike and I are going to covering the key takeaways from this year’s Business of Software Conference. This is Startups for the Rest of Us: Episode 101.
[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.
[00:29] Mike: And I’m Mike.
[00:30] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. Well, we are getting some submissions on the drinking game and in fact, Glenn Bennett submitted a comment on the blog and he said “Here’s some help with winning the drinking game; Alternatives to ‘a shoutout include Special thanks To, Many thanks to, Thank you to, We’d like to acknowledge,” and my favorite and I think I’m gonna start using this one, Mike, “We appreciate the acknowledgment of our podcast by…” insert name here. [Laughter] It’s just somehow, it’s a different sentiment.It is the same thing but so what — what’s really going on this week?
[01:01] Mike: Well, I was talking to our Virtual Assistant. She said that she got an iPhone 5.
[01:06] Rob: Awesome. Now, we had given her some Apple credit last year. Is that right?
[01:10] Mike: I think it was actually the year before. She hadn’t use them.
[01:12] Rob: Right.
[01:13] Mike: And because she is — kind of a Mac person and she got an iPhone 5 and started using it and ran in to a couple of issues here and there. It was mostly minor stuff that if you’ve been using an iPhone for a while, you’ll probably set those things up. She was switching from a BlackBerry to an iPhone. So that was kind of, I’ll say a rough transition. [Laughter]
[01:31] Rob: Yeah, I imagine. Yeah, it’s a big, big jump.
[01:35] Mike: But I actually got an iPhone 5 as well and I don’t know. The transition for me was pretty seamless. I basically just restored my iPhone 4 to my iPhone 5 and everything worked fine and the only issue I ran in to was that all of the ‘Save Passwords’ for all the applications, I had reenter in the credentials. But I think that’s more because the certificates no longer match up because it’s a different device and it just says, “No, you have to enter new password.” But that was really the only issue that I ran in to.
[02:04] Rob: Cool, that’s not bad. So I have a 4S and I’ve just upgraded to the new what iOS 6 I guess and there have been a few kinks with that. The podcast app is still pretty clunky. It’s getting better but it has quite a few bugs. I don’t know if you started using it. Apple needs to get their act together with that. And then the Maps App, I’ve heard a lot of complaints about because they remove, you know, Google Maps and inserted their own and it works fine for me for what I’ve used it for but sure, there’s been a lot of issues.
[02:33] Mike: I understand that there’s going to be complaints here and there but I was on my way to the Business of Software Conference and I forgot what the address was. So because I went from the iPhone 4 to the 5, I didn’t have Siri on my 4 so I pulled it up while I was driving, just talked in to it and said, you know, “Find the Intercontinental Hotel.” It found it. I just clicked the route button and it gave me turn by turn directions and talked to me and told me exactly where to go. And I had a GPS but I wasn’t using it because I’m like, oh well, I’m just going to Boston. I know exactly where I’m going and then I just thought to myself, wait a second, I know they’re doing construction. They’re rerouting some traffic. How do I actually get there? And it brought me right there. I mean I don’t —
[03:13] Rob: Yes.
[03:13] Mike: … have any problems at all. But our VA lives in New York City and she said one of the big things that she ran in to is that it doesn’t have a public transportation on it which I —
[03:23] Rob: Got it.
[03:23] Mike: … can see how that could be a huge issue if you live in a big city and that’s what you use. So —
[03:28] Rob: Right.
[03:29] Mike: That I can see being an issue.
[03:30] Rob: Yeah, they definitely have some catch up to do against Google and — So hey, I want to ask a favor. If you’re listening to this podcast and you enjoy the podcast, I’d love for you to go over to podcastawards.com. It’s an annual podcast award competition and people are nominated, different podcasts were nominated. And Mike and I would love it if — even if we were just nominated and made it to the finals, it’d be a great thing. We have never even — I hadn’t heard of it before this year but as I look back in history, it’s actually a pretty, pretty popular thing. So if you have a few minutes, head over to podcastawards.com and right — scroll at the bottom of the page and you know, if you’re able to nominate Mike and I for the both People’s Choice and the Business Podcast Award, we would very much appreciate it. We’d love the recognition and the potential to grow our audience there. What else is going on this week?
[04:18] Mike: One of our listeners named Justin Sikes dropped me an e-mail about an attack on Adobe’s servers where somebody got in to one of their built servers that was doing all of the code signing for, you know, a lot of their different builds. So, you know, it was probably doing stuff for packaging of their flash application and various other things. And it had access to their certificate server and because of that, somebody was able to hack in to machine and start signing their own code and then distributing that as if it was signed by Adobe. People will get these e-mails from these hackers and it would say, “Oh, please run this,” and if they ran it, it would say that it was actually signed by Adobe Software. And if they would look at it and just by kind of glancing at, you say, “Oh well, this is signed by Adobe. It must be trustworthy,” and you click on it, then it will infect your machine with all this malware.
[05:09] Rob: That’s bad news. You know what? I think maybe they should have been using AuditShark.
[05:12] Mike: I believe so too and I feel a blog post coming on about that.
[05:15] Rob: [Laughter] Yeah, indeed way to news jack it I don’t know if you refer that that term newsjacking but it’s jumping on the news quickly in writing a relevant blog post assuming your app or your, you know, your story that you’re trying to tell is relevant to that. So sounds like good opportunity.
[05:31] Mike: So how about you?
[05:32] Rob: Two things I wanted to mention. One, HitTail is continuing to grow through — I’ve kind of found a couple of flywheels that I’m really tapping in to heavily. I’ve also been quite pleased with that new hire that I mentioned the contractor who’s working about 20 hours a week for me. He’s taken on a lot of responsibility and suddenly the other day I found myself on Hacker News for the third or fourth time in the same day and I realized, wait a minute, I don’t have enough to do. I actually to start some new initiatives like it’s to the point where I’ve basically off loaded the bulk of the day to day work on HitTail and I can either, you know, start some new marketing initiatives, this brand new stuff that I haven’t done because it’s too time consuming or I’m evaluating some of the acquisition opportunities and looking at potentially branching out. And it’s nice because it deals to a growing and the goal is that with these flywheels that he would be able to take them over from me. So it’s a forge in to a new territory here but quite please with how that’s going.
[06:25] Mike: That’s very cool.
[06:25] Rob: Yeah, and then the other that I wanted to mention I’ve just thought it was a cool idea I heard it on TechZing. I think it was an episode or two ago and it’s — the URL is thewhicher.com and it’s W-H-I-C-H-E-R. So it’s like ‘which way’ thewhicher.com. And it’s basically tournament split testing. So you can submit like five different versions of a logo and then have someone vote, do you like this one or that one. And if they pick that one, then it, you know, moves it down and then it’s that one or the next one, you know, two or three and then it’s three or four. And so it’s just a pretty cool idea. So I figured, you know, our audience could potentially find some value in that and I just enjoyed checking out some of the examples they had. So thewhicher.com.
[07:10] Mike: Cool. I think I’ve heard about that as well.
[07:12] Music
[07:15] Rob: So you went to Business of Software last week. I did not go this year, you know, it’s just — I’ve talked to Mark Littlewood four or five months and he said he was going to look in to angle it more towards enterprise stuff and they get some people who are like having IPO’s and just like a larger software audience, larger software companies, 50, 100 to 500 employees. And so I was kind of like torn. It was going to be a really big jaunt for me to try to swing everything and you know, in years past I’ve probably would have done it but I just felt like I don’t know that this is actually — that I’m actually going to get that much value at going this year. Now, from what I heard, I watched the Twitter stream and I’ve talked to a couple of other folks who went, it didn’t turn out that way that it was — perhaps a better year this year but I am definitely interested in hearing your take on that and of course, at this point I’m chomping at the bit looking to go in 2013 again. You, I imagine got a lot of sleep as usual.
[08:06] Mike: [Laughter] Absolutely — very, very little actually.
[08:09] Rob: Yeah, that’s how it always go. You still wind up — up till 2 or 3 in the morning, right, chatting with everybody?
[08:13] Mike: Yeah, I think I drew the line I think at 1 o’clock in the morning and I just said, “Look, I got to go.” [Laughter]
[08:19] Rob: Yeah because you stayed at home, right? You have like a 45-minute drive or did you stay in town?
[08:23] Mike: No, I stayed at a hotel that was about —
[08:25] Rob: Okay.
[08:25] Mike: … two miles away.
[08:26] Rob: Got it.
[08:26] Mike: So it wasn’t very — it wasn’t really far. It was short enough to drive. It only took me about I think maybe less than 10 minutes to drive from my hotel to where the conference was but — it was in a slightly different location. It wasn’t at the Seaport Hotel this time. It was at the Intercontinental Hotel —
[08:40] Rob: Right.
[08:40] Mike: … which is literally just up the street. I mean it’s about two or three blocks away but still same general vicinity. But while I was there, I had 15 people asked me if we were going to be doing MicroConf again this year.
[08:51] Rob: Whoa, nice. So I guess we’re not probably not going to have problem selling out again this year. [Laughter]
[08:57] Mike: I would guess not. I mean there were – and it was really funny because several of them had told me it was about two or three days in to the conference, they’re like, “Hey, you know, just want to let you know I was at MicroConf. I loved it.” And I’ve been telling everybody about it [Laughter].
[09:09] Rob: Oh no and you’re like “Shh, quiet. We [Laughter] only have 128 tickets.”
[09:13] Mike: Yeah, yeah.
[09:14] Rob: Yeah, we’re going to have to figure something out because just the e-mail list is growing fast and I don’t know, with only, you know, 128 tickets it’s — I almost bad that — for the people who can’t go who really want to go, it’s going to be a bummer. So we need to talk about alternatives and ways we can potentially expand it without just allowing of growing the conference to a huge size because that we will obviously want to keep that kind of that intimate feel that we’ve had for the past couple of years. If you’re listening to this and you’re interested in MicroConf, go to MicroConf.com and we do have an e-mail list and we’ll be — we’re going to start talking about it probably in the next few episodes and get in to more detail and thinking about the plans but it’s very likely going to be in Las Vegas and it’ll very likely be between I’d say somewhere between March and probably May of 2013. It’s a conference for self-funded startups and single founders. So are you ready to dive in to your Business of Software takeaways? Obviously since —
[10:05] Mike: Yeah.
[10:05] Rob: … I didn’t go and I actually was in Chicago for most of it. Aside from seeing the Twitter feed, I really don’t know much of what happen. So I’m interested to hear your take.
[10:14] Mike: What I do is kind of like what I do at most conferences what I’ll do is I’ll create a new folder and ever know and then for each speaker. I’ll just sit there and start taking notes. And there’s a lot speakers where I have more notes than others and I think part of that is just because there are certain speakers were I had more takeaways that were things that I didn’t necessarily know before or that I wanted to reiterate to myself later on. So for example, there was not so much that I took down notes from Peldi for example because I’ve heard him speak before. I’ve read a lot of his stuff. Same thing with Joel Spolsky and then there’s people like Kathy Sierra where I’ve got, you know, a few notes here and there and there’s others where like for example, Dan Lyons. I had almost no notes at all because most of it what he talked about was just his stories about running his blog as the fake Steve Jobs which was extremely entertaining but there wasn’t necessarily a lot of actionable material there as well.
[11:11] Rob: Right and given that they have, what, 14 speakers it’s not like we can cover all of them and all the takeaways in a single podcast. So we will probably have to skip around to maybe, maybe your highlights or well, some of the more key points that came out of it.
[11:22] Mike: Right, right, yeah and I definitely tried to cut that down for this podcast because this podcast would probably be, you know, 10 to 12 hours long [Laughter] if do.
[11:29] Rob: Right, right. So kick us off. Was Kathy Sierra the opening speaker then?
[11:33] Mike: Yes, she was.
[11:34] Rob: Excellent, so it looks like her talk was called Making Badass Users.
[11:38] Mike: Yeah, I don’t know if that was the actual title of it but it was something along those lines like any titles that you see here in the outline, those are all just kind of a high level summary. But her talk really focused a lot on how our software — I mean how the things that we put out there, people talk about them because it makes them look good. It’s not necessarily about, you know, the software itself or how great the software is. It’s about how well it helps people do their jobs and how well it portrays them in their job. So for example, if you’re making a piece of software that, you know, does really good bug tracking. It makes you a good product manager because you can assign things to different people and get a lot of things done. And it’s not about the software being good at what it is doing, it’s about making the person good with their job is.
[12:20] Rob: Exactly. Now, I love Kathy Sierra. I mean she’s totally dialed in on this — on building apps and at making badass users and actually as a historical note, she as far as I know came out with the phrase of you have your app make people awesome at X. And when you and I were throwing around the original topic for this podcast and try to write the intro, that’s where we took “The podcast that helps developers, designers and entrepreneurs be awesome at launching software products.” It was from a Kathy Sierra quote.
[12:48] Mike: Uh huh. Yeah, that’s exactly right and it’s interesting the way that, you know, that kind of plays in to a lot of the different things that, you know, we’ve done over the years and you know, how this podcast turned out.
[12:57] Rob: Yeah, totally. So this sounds very similar to her talk two or maybe it was three years ago she talked to BOS. Did you ever see that talk?
[13:05] Mike: I did. And it was —
[13:06] Rob: Okay.
[13:06] Mike: … it was similar but it was —
[13:08] Rob: Okay.
[13:08] Mike: I guess she expounded on it a little bit more. I mean I think she got the impression that, you know, it wasn’t just about making your users awesome, it was making them awesome in what they do. So it was kind of diving in a little bit further. It’s like well, why does that work, what is it about your software that makes the users awesome? It’s like well there’s nothing really about that, it’s just making them awesome on what they do. That’s really what it is and she had a bunch of conversations with people and talked about how, you know, you shouldn’t confuse loyalty with bribery. So if you’re putting special deals out there or trying to get people to, you know, like you on Facebook for example, don’t confuse the fact that you’re bribing them with loyalty to your product. I mean you’re bribing them for Facebook like. It’s not that they love your product in some cases. I mean don’t get me wrong. There are cases where, you know, if you’re not compensating for that Facebook like and they do like you anyway on Facebook, then sure, you know, that could be construed as them actually liking you guys.
[14:04] But one of the things that she said that really struck home to me was that, you know, people don’t tell their friends about your product because they like you, they tell their friends because they like their friends.
[14:12] Rob: And what is that mean? Is that they’re trying to help their friends out?
[14:16] Mike: Yes, so she had this whole — it wasn’t really a comic book series but it was a series of slides where there are somebody talking about doing something. I think the example she used was Pinterest and it was basically, you know, people are not telling their friends about a given product or service on the internet because they like that service, they’re telling it because they like their friends. They want their friends to be happy. They want their friends to see new things and you know, they like their friends. So they’re going to tell them about this new service because they want their — to kind of expose their friends to this new thing that will help their friends’ lives be better. It’s not because they like the products or like they like Pinterest. It’s because they like this — they like their friend.
[14:53] Rob: Got it. So it’s not enough just to get the job done and just to help someone with the task at hand but she’s saying you have to just blow them away. You have to make them awesome. You have to make them a badass user because that like psyches them up and energizes them and gives them energy like so much that they want to go help their friends and they want to like evangelize your product to them?
[15:11] Mike: Yeah, that’s right. One of the other quotes she said was “People are loyal to themselves and people they care about.”
[15:16] Rob: Got it. That makes sense. Did she go in to any specifics of how to do that because this sounds like totally cool but how do I do that? Like let’s say I have HitTail, you have AuditShark, what do we do next, you know? [Laughter] Is there – or did she recommend a book or anything of getting more specifically in to how you go about doing that?
[15:33] Mike: Kathy is by far the person I have liked the most notes from.
[15:37] Rob: Really?
[15:37] Mike: There was a lot of discussion about designing for the — the post user experience. So after a product has been used by the customer or the prospective customer, what is it that you want the end user to say to their friends about the product? And it’s really about taking product’s planning to the next step. So I think at MicroConf Patrick McKenzie had talked about designing the user experience like the — like the invasion of Normandy and it was, you know, and Patrick’s talk was about basically scripting out exactly what you want your users to see and when they saw it so that the things that they needed were — that were relevant to what they were doing would show up when they needed them, not before or not after but like right as they were doing something. And it helps them get through the product especially if it’s a complicated product and in a way that really moves them through and makes them successful at whatever their task is. And I think that Kathy Sierra’s take on it was you really wanted to design for the post user experience.
[16:35] So after you’re done walking the user through the product itself and they’ve used your product, what do you want them to say to their friends? What do you want them to say to their coworkers? And I think that relates a lot back to what Patrick’s talk was about because if you script out that user experience, they’re going to talk about the products to their friends about how easy it was or how they should check this out because it will make their lives so much better or so much easier. And I think the two are very, very much intertwined. They definitely, you know, relay to one another like that.
[17:06] Rob: Very cool. So for listeners out there, if you weren’t able to catch the live stream, it looks like if you to businessofsoftware.org, they’re going to have all the talks edited, processed and posted online in the next month. So it should be by the first week in November. So that’s — sounds like Kathy Sierra is a good one for folks at your mark and then probably watch once that’s online.
[17:27] Music
[17:31] Mike: Jason Cohen’s talk was really interesting because that was all about data and metrics and how they can make you do totally the wrong thing. And it was really interesting because one of the first things that he showed was an A/B test that I think he used Google Analytics but it showed an A/B test between two different pages and page 1 was, you know, some variation and page 2 was supposed to be some variation. And if you look at the graph, page A did, you know, significantly better than page 2 and it was over the course of like a month and something like 24,000 data points which you would think would be statistically significant but when you started digging in and looking at actually what was being tested, what he said was there was a company that he was working with in Austin where they were very, very driven by data metrics and split testing and they split tested all these different things and after about year, they started looking at their split tests and their conversion rates and saying, “Well we’ve split tested all of these things.
[18:31] We’ve always chosen the one that is supposed to go on the right direction, yet our conversion rates between last year and this year are really not any different. So what’s going on?” So what they did was they took a page and then they took a copy of it and they split tested between the two and they found that over the course of the month, one of them did like significantly better than the other one. And the problem was that they did not find a statistically significant result like they didn’t wait long enough is really what it came down to.
[18:58] Rob: I see. So he’s not saying that A/B or split testing doesn’t work. He’s just saying that it’s more complicated than most people probably think. They think they can throw up a split test and just look at it as it approaches. Boy, this one is really creaming the other one so it must be better. There’s actually quite complicated formula for doing split testing and I know that when you use Google website optimizer and it’s now actually integrated in to Google Analytics that you’re supposed to wait until the end of the term. They actually declare a winner at some point but it always takes longer than you think it’s going to and so what he’s saying is you have to wait until they declare. You can’t just can’t make a call early on. Is that —
[19:37] Mike: Yeah.
[19:38] Rob: Is that a big takeaway? Okay.
[19:38] Mike: Yeah, they really is and he added a link. We’ll link to it in the show notes but it was basically the A/B hamster where there’s a hamster and they show it. They given an organic carrot and a regular carrot and it’s over this course of like ten different choices for the hamster. And 8 out of 10 or, you know, something like that, it chooses the organic carrot. So you’ll think, oh well hamsters like organic carrots but the fact is that it wasn’t a statistically significant margin. So unless you waited long enough, you really wouldn’t get an answer.
[20:12] Rob: Very cool and you know, I think we should know as we’ve — you and I have just been assuming people know who the speakers are like Kathy Sierra is an author and a consultant and she is a big time in the UI and UX user experience stuff. Jason Cohen is well a serial entrepreneur and he just raised funding for WordPress Engine. He has sold a couple of companies for cash and is just a super intelligent capable dude who’s done a lot of good thing for entrepreneurship and he shares that with people on his blog and at SmartBear.com. So Dharmesh Shah, he’s the founder of HubSpot in addition to he had a company before that but I think they cashed out on as well. It was retro funded but he also blogs it on at Startups.com and has one of the largest startup followerships, you know, online. So he speaks every year. I mean he’s a fixture of Business of Software and I always get tons of value out of his. So what he talk about this year?
[21:03] Mike: Well, he talks a lot about setting the culture for your company and determining, you know, the future of your company based on who you hire. And one of — I took on a couple of different quotes from him and one of them was “Strive not just to build a great startup but strive to build great entrepreneurs” and his comment about that was that when you’re hiring, you’re not just competing against other startups when you’re hiring. So for example, you’re not just competing against Google or Microsoft or Fog Creek or any of these other places, you’re also competed against people doing their own thing. So they may decide, well I don’t want to work for you, I’m going to build my own stuff. So that’s something to keep in mind when you’re hiring because, you know, you have to be able to offer an entrepreneurial culture to people so that they don’t want to go create their own stuff. They essentially want to work within your own company and be paid to do it as oppose to saying, “Oh well I’ll take a really, really low salary for a while and build my own thing.”
[21:56] Rob: Right. So for those of us who don’t plan on hiring employees soon, were there takeaways not regarding like company culture and that kind of stuff?
[22:04] Mike: Well there is one about finding the right types of customers and he said you don’t just want customers, you want crazy loyal fans and it kind of related to setting up barriers of entry and he related it back to HubSpot where they’ve grown the company. And one of their big barriers to entry for other people is that people who sign on with HubSpot love HubSpot. They love HubSpot for not only in what they do but for what they allow them to do and you know, he basically said that this is a strong barrier to entry because it dissuades competition. When you suck and your customers hate you, it’s really easy for competitors to pop up but you’re going to have a lot less competition by virtue of the fact that your customers love you because when people are out there looking for ideas of things to build, they’re essentially drawn to these companies that suck. They’re like, “Oh well, I can build something better than them because they’re terrible and their customer support is awful,” or “Their product sucks.” If you are really good in a lot of different areas, people are just dissuaded from building a competitive products to whatever it is that you have because not only is your company good but your product is good as well.
[23:12] Rob: Right and then people like you and so they don’t want to jump ship. I mean I think PayPal is a great example of this and so is Quicken or QuickBooks. I guess it’s Intuit that makes them but you know, you see — I mean there’s Stripe and Square coming out of the woodwork. There’s several other payment processes that are coming out the woodwork to kind of compete with the dislike of PayPal as well as — well, I won’t say everyone, most people don’t like QuickBooks and so there’s all kinds of, you know, financial apps that come out including Mint and inDinero which we talked about before, LessAccounting, all those guys. I mean they’re just a really wide open market. But if QuickBooks which owned like 90% of the business market at one point, the small business market, if they were obviously delighting their fans and making their users awesome, it would be much, much harder to get in to that market. So that’s cool.
[23:58] Mike: Next was Peldi from Balsamiq and he talked about a lot of different things. Most of it was things that I’ve heard from him before. The two takeaways I got from his talk was that right now he’s in a midst of researching organizations that have a flat hierarchy because one of the issues that he’s running in to is that as he’s trying to grow Balsamiq, he’s running in to problems where he’s the bottleneck. He’s basically making a lot of the high level decisions and he’s trying to move more to a situation where the employees are making the decisions and he is trying to remove himself from those day to day things. He’s looking at other companies where they have much more of a flat organization and one of the things that he pointed out was I think Valve Software has like a PDF or an employee handbook or something like that where it tells developers what their life is going to be like when they’re working at Valve and it pointed out, you know, that there is much more of a flat organization where there is not as much management and that the employees essentially dictate the direction of the company, not some top level management and you know, he’s looking at that just kind of a model and was asking some people in the audience for feedback and said, “Hey, if anyone wants to come talk to me about this particular type of arrangement for business, now it’s working out. You know, I’d love to talk with other people about it.”
[25:14] So I thought that was really cool. I hadn’t really considered the idea of building out a company in a very flat organization like that and I’m really curious to see what sorts of companies are possible with that arrangement. I mean could you imagine being in a, you know, a 500 or 1,000-employee company where there isn’t really a level of middle management it’s just like everybody is kind of doing their own thing and doing what’s best for the company and the management is just kind of air?
[25:39] Rob: I can’t imagine that but only because I’m never seen it done. But I believe it’s possible. I just believe — I don’t know that it’s ever been done before but it’s certainly cool to see Peldi thinking about it because he’s the kind of visionary that could put something like that in place. You know, it would definitely be — I mean that’d be something that would turn to a Harvard Business School case study if he could pull that off. I’ve heard of some companies and I’m trying to think — I think Xerox PARC was one guy, the Palo Alto Research Center and they invented the, you know, what — Ethernet and the laser printers and the mouse and that’s what Bill Gates and Steve Jobs had walked through when they picked up on that stuff. That was I’m pretty sure a flat hierarchy and I think there was one guy leading it and there was a bunch of researchers. And he only got up to — he got up at about 75 people, maybe a hundred and he could manage them and they were all doing their own little individual research projects. You know, you just don’t know because they weren’t turning a profit, right? They were funded by Xerox to do a research whereas Peldi is looking at creating an actual like a for-profit company that does that. So obviously, interested to see how he does it.
[26:42] Mike: Yeah, I mean — from the talk it certainly seem like they were companies out there that were doing it but there just wasn’t a lot of publicly available information about —
[26:51] Rob: Right.
[26:51] Mike: … how it’s actually done. So —
[26:53] Rob: That makes sense.
[26:53] Mike: I think he definitely identified some companies that were doing it and he just wasn’t quite sure how it was being done. So…
[26:58] Rob: Right.
[26:59] Mike: The one really awesome quote that I heard from him though was about VC funding and he said, you know, here’s the quote. He says, “As soon as you take VC funding, you get a boss and a kitchen timer.”
[27:08] Rob: That’s awesome, indeed and I have, man, I’ve talked a lot of entrepreneurs. It’s not that VC funding is bad, it’s just that you need to know what you’re getting in to before you go after it and that’s probably a pretty good analogy of a boss and a kitchen timer because I definitely have a timeframe. Most funds only go out to ten years and so they’re going to put you in the trash can or want you to cash out, you know, if you go — if you go up past that point.
[27:30] Music
[27:33] Mike: So after that was a guy named Mikey Trafton and he was from — I’m not real sure. It’s either Blue Fish or Fire Ant. I think Blue Fish was the company he used to own and then Fire Ant is his new one. And he was talking a lot about building a great culture and gave a lot of tips on how to attract better employees who are good culture fit and they ran in to some issues back when the economy crashed and he was going to have to let some people go. But because he had focused so much on hiring people who were a good culture fit for his company, when he basically called everyone together in a meeting, he said, “Look, we’re going to have to let people go if there’s any way that anybody is willing to start taking pay cuts, then you know, we can hopefully, keep some more of our people on.” And he said that by the end of that day, every single person that worked for him had come in and said, “I’m willing to take a pay cut so that, you know, other people don’t get let go.”
[28:24] Rob: Wow.
[28:24] Mike: It’s just, you know, a very amazing and compelling story about how if you build your company in such a way and hiring the right people who are a culture fit not necessarily a skill set fit that your company will be better for and you can pay them less. I mean that wasn’t, you know, the moral of the story but if you’re hiring those people, then they’re going to be willing to, you know, kind of put their necks on the line with the company to help you out when things get rough.
[28:50] Rob: All right, very cool.
[28:51] Mike: So next was Dan Lyons and if you haven’t heard of Dan Lyons, he was the fake Steve Jobs for the longest time. And I didn’t get hardly anything out of his talk. He did talked a lot at the very end about how to get in front of the press and how they weren’t going to let you get away without their pound of flesh. But one of the things that kind of stuck with me was that the advertising trend that he identified which was, you know, this TV dollars where people used to throw tons and tons of dollars at getting TV time and then on the web it’s, you know, you’re getting dimes and he called them digital dimes. Then now it’s trending towards mobile pennies where you’re getting much, much less for your advertising dollar which changes the landscape of, you know, how advertising is done in that particular medium. And he didn’t have any specific conclusions about who is going to profit from that or who is going to ultimately survive but it was just the matter of this medium is changing, advertising is changing and either you migrate with it or you end up dying.
[29:52] Rob: Right and for those who haven’t of Dan Lyons, you said he was fake Steve Jobs, he had a blog where it was called like Fake Steve Jobs and he was blogging as if he were Steve Jobs. And he’s a reporter and a columnist for some other job, then even wrote a book called Fake Steve Jobs and then eventually he came out, you know, a couple of years and said who he was. And yeah, so that makes sense. I mean he’s not a startup founder so never a lot of, you know, advice for some starting up but definitely would have knowledge about the media and advertising.
[30:21] Mike: Next was Gail Goodman who — she’s the CEO of Constant Contact and Constant Contact is a lot like MailChimp or AWeber and you know, helps companies that want to establish an e-mail relationship with their subscribers and give them updates about different things. And she talked about this the SaaS “long slow ramp of death” which her thinking was that eventually Constant Contact when it was founded back in the late 90’s would end up with this hockey stick growth and it never really turned out that way. It was funny because she had talked about having this flywheel that, you know, as opposed to a hockey stick and you’ve been known in the past to talk about, you know, accelerating the flywheel and things like that so that–
[31:02] Rob: Right.
[31:03] Mike: … you can build upon your earlier successes and you know, that propels you forward. Well she used the kind of the same analogy so that basically that throughout the history of Constant Contact there’s never been a silver bullet where they found one thing that works really well. It was just continuous incremental improvement and they are at the point now where they’re on track to do, I think she said $250 million worth the business and $40 increments from her customers.
[31:29] Rob: Wow, that is incredible. Constant Contact is the e-mail marketing software I know about. They’re the first one I’ve ever heard of. Yeah, they’re MailChimp like you said from the late 90’s and so they certainly have a lot of legacy stuff to deal with but I can totally see that being around for 13, 14 years would just bring it to that point I can’t imagine — I mean a SaaS business that generates that much revenue $40 a month subscriptions. It’s really impressive. I actually heard and watching the Twitter and the folks I’ve talked to that her talk was quite good. So that’s definitely I want to have your mark to watch in its entirety when it’s released here in he next month.
[32:05] Music
[32:08] Mike: Next was Paul Kenny and runs his — it’s a kind of —
[32:12] Rob: Isn’t it a sales consulting operation where he like helps people who come to your company and help train your sales people and help train you how to sell your product that thing?
[32:21] Mike: Yeah, but he talked a lot about how you can learn from what customer say to you so when you’re selling in to a customer and they say no, you can essentially learn a lot more from a qualified no than from an unqualified yes. And he said that the sales conversation with no resistance rarely ends in a deal being done. So if you’re talking to customers and they’re not raising objections, they’re not really questioning you about anything, chances are really good that they’re not going to buy from you either. So it was all about how to help the customers either raise objections or identify what their objections are and then kind of put them back in their core to, you know, help you get the answers that you need to identify whether or not your product is a good fit for them because there’s almost never a time where a product is 100% awesome fit for a particular customer. Sometimes it takes a little bit of hand holding and convincing to say, “Okay. Well this is how this product can fit in to your environment and this is information to kind of get you over the fears and objections that you currently have.”
[33:22] Rob: So here’s what I like about Paul Kenny. I’ve seen him speak every year I’ve been to Business of Software and in general, I don’t like sales people as a rule, right? I don’t think of most us do but Paul Kenny is the nicest guy and he is a great sales person and he’s not the slick slimy sales person you think of and he says that when he gets up there. He says, “That’s a bad representation, a misrepresentation and customers don’t like you when you act like that.” So he talks about how to be smart and be nice and how to do it right without fitting in to that stereotype. And so I just really respect what Paul Kenny has to say every year even though I don’t do enterprise sales which, you know, is most of what he focuses on. I still learn something from here every year and I wind up taking notes because it gives me more insight in to just the overall selling process. Even if it’s not face to face, everything he says, almost everything he says applies to, you know, what stuff that I do online or via e-mail as well. So awesome, I bet that was a good talk.
[34:16] Mike: It really was, you know, I’m skipping ahead a little bit hear but Dan Pink was the last speaker at Business of Software. And he had a lot to say about sales reps as well where he basically broke down the numbers of the population and said that basically 10% of the population is in sales of some kind and he had a bunch of studies and showed some of the statistics and showed some case studies where he was able to show that, you know, from the day that he had that the best sales reps are not the extroverts. Because everyone hires extroverts, you know, especially for sales reps because like, oh they’re outgoing, they’re going to be able to go out and get the sale and everything else but what he showed was that I think the dollar amounts that he showed where introverts get an average for every hour that they work is about $120 and extroverts get about $125. But the people who fall in the middle get around a $155 which is a pretty significant margin above either of those numbers.
[35:10] And you know, he had a couple of different theories for why that was but he was showing that the people who are in the middle tend to relate to other people a lot better and they can kind of fluctuate up and down the scale a little bit versus the people who are at extreme ends. If you’re really introverted, you’re not going to ask for the sale. If you’re really extroverted, you’re going to push too hard for the sale whereas those people in the middle, they’re much more likely to be able to talk to people and reason with them and listen. He’s like, you know, that’s one of the big problems with sales reps is they don’t shut up. [Laughter]
[35:42] Rob: Cool, so who was after Paul Kenny?
[35:44] Mike: That was Noam Wasserman and Noam is a — I think he’s a Harvard professor. And he had a ton of data on startups and most of it was on the reasons for failure within VC back companies. And he had something like data from 4,000 startup companies and about 35% of the ones that failed, failed because of product development or market problems and you know, basically product market fit problems and then 65% of them failed due to people problems. And one of the really tell in statistics that he had was that the people who stepped away from their CEO and Chairman of the Board roles made roughly twice what the other founder of companies did. So if you are a startup founder and you kept both the CEO and the Chairman of the Board role, then chances are you’re going to walk away with about, I think it was $3 million. But if you walk away from both the CEO and the Chairman role, then you would make roughly $6 million from, you know, startup.
[36:44] And again, this is average over the course of 4,000 startups but it was really interesting that the number was doubled like if you step away and the rational behind it was really because the people who have the ideas and the motivation to kind of get the company started are not the same types of people that are going to be able to get the company sold.
[37:04] Rob: That’s fascinating. That actually ties in to something I was reading the other day and the exact details escaped me but it was something to the effect of every fast-growth startup needs three roles over the course of its lifetime and it was the visionary which is right at the very beginning, having the vision and pushing the crew, you know, working long hours and just getting the product to where they can sell it and then there was like the entrepreneur and that’s kind of getting things up, scaling things, getting it to a sustainable business and then there was like the executive or the manager or some role like that and that’s, you know, the person obviously who scale sit up and builds an organization and makes — puts a lot of process in place. And it was saying that most of the time these three roles are not the same person. It’s very rare to see someone who can do all three and so, this actually ties in to that quite nicely.
[37:55] Mike: Yeah, and it was really interesting some of the things that he had talked about was equity split between the founders. I have some of the numbers here but he basically had a bunch of statistics about who split equity with the company within a month of founding and he said 73% of the founders split the equity within a month of founding. And he said 33% of it is an equal split, 21% has a huge gap of equity with there’s a greater than 40% difference between what the founders get and then there’s 90% have a large gap which is 21 to 40% difference and he had examples of all these different things. And one of the things that he talked about was is it wise to split equity basically within that first 30 days.
[38:39] And one of the examples he said against that was ZipCar where Robin Chase and her founder for ZipCar which I think they went IPO and have this like massive organization at this point but they basically talked about it upfront, had a handshake agreement where they were going to split the company 50/50. And over the course of the next 18 months Robin Chase did the vast, vast majority of the work and the other person put in virtually zero and now the company is massive but, you know, that other person who just agreed to it via a handshake, you know, got 50% of Robin share because they just, you know, Robin wanted to get that out of the way and didn’t ask the right questions. And I think her comment was something along the lines of that was the dumbest handshake she ever made.
[39:19] Rob: Right, that’s tough and that’s a lot of that goes in to that is vesting, right, is that you shouldn’t, everyone shouldn’t vest immediately. You should have a 3 or 4-year vesting plan even for founders so that if founder drops out or stops working on it that you essentially you fire him. You let him go from the company and then they stop vesting and they do keep some portion of that while they were working but, you know, after that they basically don’t own anymore of the company.
[39:44] Mike: Yeah, so one — the rest of is talk was about some of the founder dilemmas including that equity and whether static split is okay and if so, when is that okay and you know, what the investor or monetary dilemmas are about starting the startup so whether you’re bootstrapping, self-funding or taking outside money. It was a very fascinating talk but it was also a very — because he’s a professor, it seemed like it was very much a classroom setting. [Laughter]
[40:10] Rob: Yeah, that makes sense. There was a lot of positive buzz on Twitter about it. A lot of people were saying, you know, that it was a good talk. So if you’re saying it’s a classroom setting that mean it might have been boring or a little —
[40:21] Mike: No, definitely not. It was just something —
[40:23] Rob: Okay.
[40:23] Mike: … you would expect to hear on a lecture hall.
[40:25] Rob: I see, a lot of stats and such.
[40:26] Mike: Yeah, a lot of stats, a lot of declarative speaking style.
[40:30] Rob: I see.
[40:31] Mike: He actually walked up and down the aisles a little bit as if he was teaching in the classroom.
[40:36] Rob: Right.
[40:36] Mike: You know.
[40:36] Rob: That makes sense, that’s his style.
[40:38] Mike: Yeah.
[40:38] Rob: Oh cool, I have to take a look at that one. So next up was Noah Kagan. You know, I’ve seen — both you and I have seen him speak in the past and he always has is own unique style for sure and he pushes the boundaries. I saw a couple of tweets that were – I don’t know, they were calling in to question [Laughter] his — the tone of his talk. One of them said like “This was the most insensitive and insulting talk I’ve ever seen in a professional conference.” [Laughter] Obviously, he always has a lot of good stuff, a super smart guy. He’s founded AppSumo and he has grown it to 7 figures plus and knows marketing and knows how to do that. How do you find the talk? Was it cool or did you feel uncomfortable at any point?
[41:14] Mike: I think calling out people in the very beginning about trying to find the thinnest person in the room and the heaviest person in the room was probably a little uncomfortable.
[41:22] Rob: Got it.
[41:23] Mike: But I think a lot of the talk it revolve primarily around the fact that he had gotten away from his root so like he had started the company. He started AppSumo with the concept of bringing great deals to people and bringing people things that they would want for their businesses and that they just didn’t necessarily know existed. Bringing them cool stuff and he had gotten a way from that such that he was basically just spamming people and that’s what he said. I mean those were his words. He’s like “We got to a point where we were spamming people and I didn’t even want to be on my own e-mail list.” And he basically just said that was a huge mistake and I guess he went from within the course of like two months where they had like their best month ever and then with two months later they had their worst month ever and —
[42:10] Rob: What —
[42:10] Mike: … he let go a bunch of people. He let go half of his staff and sent out — actually and e-mailed apology to people saying, “Look, you know, we’ve gotten away from our roots. This is what I’m going to do to change it and let’s get back to delivering stuff in your e-mail box that you actually want to see.”
[42:26] Rob: Wow. Yeah, that’s crazy. I saw either a Twitter or post from him right after that where he basically said go to AppSumo.com and look and there was — I went and there’s a personal letter from him that basically said what you said a kind of apologize and just said, “We’re getting back to our roots.” And now I’m looking at it and looks like there’s a — there’s like a letter. It’s almost like a blog right now. I mean I guess they still have products it seems like he’s trying to go back to the roots and figure out a different approach. What a trip, what a — like a vulnerable thing to do in front of that audience.
[42:56] Mike: Yeah, it really was and I understand how people, you know, there were some people who took some of the things that he said and said, “Whoa, that’s, you know, totally inappropriate.” It obviously wasn’t the intent.
[43:06] Rob: And it wasn’t the point of the talk either, right?
[43:08] Mike: Yeah, it’s like —
[43:09] Rob: Yeah.
[43:09] Mike: I mean you could take just about anything that anyone says either on this podcast or in a conference talk and either blow it out of proportion or take it at the wrong way and really focus on that one little section of it but I think in general he — it was more of a good broad message about making sure that you stay true to the users because they’re the ones who put you there. It’s not — it’s not about you. It’s not about your product. It’s about you servicing the people who buy your stuff basically.
[43:36] Rob: Okay, so looks like we have one left. I guess Bob Dorf was after Noah?
[43:40] Mike: Uh huh. So Bob Dorf is a colleague of Steve Blank. Both of them argued that business plans belong in the Creative Writing Department at colleges which I thought was really funny. He said startup enemy number one is the business plan. It was interesting because the, you know, the way he said it and I don’t know of the whole history here but it was along the lines of when Eric Ries was going through their classes, they basically said, “Hey, we’ll fund your idea but you have to basically use our methods and prove out this theory that we have,” and it was all about the Lean Startup movement which is kind of really where all of that stuff comes from. So it’s very interesting to kind of see the mentor behind Eric Ries about how that process is done and you know, how to always be innovating and in constantly seeking customer feedback and challenging the business model that you’ve put in in place and using the same approach just not everyday of the week. His comment about business plans was no business plans survives first contact with customers just askWebVan.
[44:40] Rob: Nice.
[44:40] Mike: He says —
[44:40] Rob: So we talked about business plans and that you shouldn’t write them.
[44:43] Mike: Yes.
[44:43] Rob: All right, cool.
[44:45] Mike: You know, the one really stark quote that stuck with me was he said that “A startup is a contemporary organization designed to find a repeatable process for identifying customers and building what they want” which I thought was just an incredible way to describe, you know, what a startup is and how you should go about building your business around that concept so that you are always building stuff that people want as oppose to building stuff that you think people want that they don’t really care about.
[45:10] Rob: Right, right. Well, it sounds like it was quite an eventful BOS. I’m sorry I missed it this year and I certainly looking forward 2013. Any other highlights or things that you should mention that, you know, don’t fit to kind of this outline we put together?
[45:24] Mike: I ended up missing the lightning talks but, you know, other than that I mean a lot of the conference was just talking to other people and what they were doing and what they were building and you know, giving ideas and getting ideas from different people.
[45:37] Rob: Very cool. Any discussions about AuditShark?
[45:40] Mike: Yeah, I did have a few discussions about AuditShark here and there and one of the things that stuck with me was I was talking to Noah and Adii and Noah had asked me about what I was working on and I told him AuditShark and he — you know, I’ve started to explain what it was and he’s like “Who would want that?” And I said, “Well, you know, one of the things that there’s a very start contrast between people who have been hacked versus those who haven’t.” And since Adii was standing right there, I said, “Adii, would you have bought AuditShark which is security software for servers before you were hack,” he’s like “Absolutely not.” I was like “Would you buy it now because last year at MicroConf you almost didn’t come because your server was hacked?” He’s like, “I absolutely would buy it.” And —
[46:18] Rob: Right.
[46:18] Mike: … it got me to thinking. I was like, “Well why haven’t I kind of latched on to that earlier?” Because —
[46:23] Rob: Right.
[46:23] Mike: … I’ve thought about that before I just haven’t really — I don’t know why for some reason it didn’t occur to me like that would be an awesome marketing angle to go after and say, “If you’ve been hacked, this software could help you prevent that from happening again.”
[46:35] Rob: Right and that’s the thing, right? Because before you’re hacked, it’s more of a vitamin and then after you’re hacked, you know that it can happen again and it’s much more of kind of an aspirin thing like it’s more of like you feel the impending threat because you’ve seen the realities of what can happen. That’s it, that’s a good insight and you know what’s funny? One hallway conversation, one simple question from someone, can do that and that’s what this conference is. Whether it’s BOS or MicroConf or you know, a Lean Startup get together. I mean it’s just — it’s like this one sentence or this one introduction could make the whole conference worth it. So although there’s tons of stuff in the talks themselves just run through, I always find that the hallway conversations have as much or more value than the talks themselves.
[47:16] Mike: Yeah, I mean just that one comment from Noah just like that paid for the whole conference. That’s just like that one insight is like oh, it’s suddenly just something clicked to my brain and it’s like that is a very, very good marketing angle that I could use to get in front of the right type of customers for AuditShark because even at the beginning of this podcast, I’ve mentioned about Adobe being hacked. I didn’t thought too much about exactly what happened with that but my understanding of how they were hacked was that they’ve like many companies that are large they had built their server and they’re supposed to check and then they put it on their environment but unfortunately, they don’t ever checked their servers again or at least that was the implication from the article. And that’s what AuditShark is designed to do. It’s designed to go in to those servers and check to make sure if they’re still configured the right way. And apparently the server had slipped through and for some reason did not go through the right process so it had never been checked to see if it conformed their security standards. And that’s exactly what AuditShark is designed to do.
[48:13] Rob: So all you have to do now is find the list of companies that had been hacked, bam! That’s your marketing list.
[48:17] Mike: Yup.
[48:17] Music
[48:20] Mike: So I think that about wraps us up for the Business of Software overview. If you have any questions or comments, you can call it into 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 this podcast 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.
Episode 100 | Startup Advice From 9 Successful Founders
Show Notes
- Jason Cohen – A Smart Bear Blog & WPEngine
- Jeff Atwood – Coding Horror & Stack Overflow
- Derek Sivers – CD Baby
- Dharmesh Shah – Hubspot
- Erik Sink – Source Gear
- Andrew Warner – Mixergy
- Ruben Gamez – Bidsketch
- Patrick McKenzie – Kalzumeus Software
- Dan & Ian – Tropical MBA & Lifestyle Business Podcast
- Peldi Guilizzoni – Balsamiq
Transcript
[00:00] Mike: This is Startups for the Rest of Us episode 100
[00:03] [Music]
[00:12] 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 are here to share experiences to help you avoid the same mistakes we’ve made. So what’s this week Rob?
[00:25] Rob: The word is episode 100 sir.
[00:27] Mike: That’s two words.
[00:28] Rob: I know but we finally made it. 99 episodes ago we sat down at these very tables recorded over Skype. What was it, maybe three years ago, two and a half years?
[00:39] Mike: Yeah.
[00:40] Rob: And didn’t we record 10 episodes before releasing a single one to iTunes?
[00:43] Mike: We did.
[00:44] Rob: We were already scared about it if I recall. If people would really want to listen to it but sure has changed over the years.
[00:50] Mike: You know it’s funny because I remember spending so much time doing the editing upfront. It’s not obvious I don’t think when you go back and listen to it but the first episode I think we wrote down every single word we were going to say on the podcast.
[01:03] Rob: Yeah. It’s very very stiff. You’re right we read most not all of it but most of it. There was not much chit chat just kind of and around BSing. Well hey as of today this is obviously a special episode. What we’ve decided to do is invite on nine of the most successful founders that we know and have them give you some startup advice. We will be getting to that a little bit later. But before that, we wanted to chat about some podcast metrics. 100 episodes in and we’re just checking we have feed banner tells us we have just over 2,700 subscribers. So those are people who listen through the RSS feed and we push about 750 gigs, almost a terabyte of audio bandwidth every month. That equates to around 19,000 downloads a month. Since we put out multiple episodes, you don’t really know how much each one is individually downloaded unless you look at logs. But certainly a far cry from when we started off with my mom and your wife listening to the podcast in episode one.
[02:01] Mike: My wife hasn’t listened to a single episode. Has your wife ever listened?
[02:04] Rob: No.
[02:05] Mike: No.
[02:05] Rob: I’ve cut her a few clips of some particularly like things that were related to what she was doing or something funny that you said or something. But no she does not listen. I have friends who listen but not the wife. No one in my family listens actually.
[02:18] Mike: That’s really funny.
[02:19] Rob: So how about iTunes reviews, where do we stand after 100 episodes?
[02:23] Mike: So after 100 episodes, we’re currently sitting at 222 iTunes ratings.
[02:28] Rob: Wow! That’s from all over the world, right?
[02:30] Mike: Yeah.
[02:30] Rob: So, thank you person on the other end of this ear buds listening to us now. Thank you for supporting us, thank you for listening, for subscribing, giving us reviews, giving us feedback, posting comments to the startupsfortherestofus.com blog, giving us questions via email and voicemail, all these things that if we didn’t have that kind of support, we wouldn’t continue to do the podcast, period. The reason we do it is because we love interacting with other entrepreneurs and we love just building that community that allows us to sit down and chat each week and hopefully share some of our knowledge, to learn from you who’s sitting here listening to it now and have events like Microconf and I don’t think we could have pulled off without this podcast.
[03:13] Mike: Oh definitely not. And speaking of comments, I mean we are up to 418 comments on the blog.
[03:19] Rob: Yeah that’s awesome. So yeah, we really want to thank you guys.
[03:22] [Music]
[03:25] Rob: Diving right in. As I mentioned before this episode it could be titled ‘Startup Advise from Nine Successful Founders’ and these are some of the most successful founders that we know and you’re probably are going to recognize almost all of the names. What we did is we contacted them and asked them some questions and allowed them to answer just one over either voicemail or an audio format. So to kick it off we have Jason Cohen. He has been a serial entrepreneur. He sold at least two companies for cash. He has been very successful. He started WP Engine a couple of years ago and it’s growing quickly. They are in the tens of employees if I recall and have raised series A, I mean they are on the up shoot. So anyways Jason Cohen responded and he answered the question, what’s the most common mistake you see startup founders make?
[04:14] Jason Cohen: Founders tend to do whatever is comfortable for them, which is whatever they are good at. Developers want to write code. Designers want to build A/B tests. MBAs want to build spreadsheets. The trouble is that by definition the toughest part of your startup is going to be in the things that you are not good at, because you don’t have good ideas. You won’t execute it that well. You don’t have a passion for it. You want to procrastinate it and so on. So those are exactly the kinds of things that will probably make your startup fail. If you write code, it’s probably not your code that will cause your startup to fail. And yet that is where you want to spend all of your time.
[04:48] But getting people to a website willing to pay a specific amount of money for something, that’s probably the hardest and most important part of a new startup. That’s where you need to spend your time. Not writing code. Not worrying about your M.V.P. Not at the beginning. Now in any other large project you tackle the big scary unknown stuff before you go fill in the details you know you can build. And startups are no different from that. So, I know you can write the code. You know you can write the code. That’s exactly why it’s not valuable or useful to write the code. It’s all the other stuff that’s scary and hard. So you gotta tackle that hard scary part first and then you’ve eliminated the biggest risk to your startup. And that sets you up best for success.
[05:27] Mike: So next we talked to Jeff Atwood and who hasn’t heard of Jeff Atwood? But Jeff Atwood he’s the blogger behind codinghorror.com, he was also the co-founder of Stack Overflow, the Stack Overflow podcast and various other ancillary endeavors related to that. We talked to him and he submitted what he thought was the most common piece of advice that he gave to startup founders. So here’s Jeff.
[05:53] Jeff Atwood: Well, I don’t get asked a lot for advice from startup founders. But when I do one of the first things I ask them is “Why the hell are you asking me about this?” Because I feel like it’s the first role of a startup founder to ask your own community what they think of the product. Like, I don’t use your website or your product, probably. And I’m not really probably even in the audience for it most of the time.
[06:19] So, if you’re asking me that seems already sort of misguided and you should be asking your community what you should be doing. You should be talking to your community. You should be talking to the people that use your…your website, your application every day. And asking them what they think. And they’re going to appreciate it a lot more than I do because they’re the ones giving you money or time or whatever the resource is and investing in what it is that you are doing. And not engaging with your community is sort of the number one flaw I see the startups that I’ve advised make.
[06:51] And for some reason they just don’t prioritize it. And I’ve never been able to figure out why because I always found that the community on StackOverflow and StackExchange was the number one source of inspiration for things to do. They certainly won’t hesitate to tell you when they think you’re doing it wrong. Which is often useful.
[07:09] And a lot of the feedback isn’t actionable which is true. So, I would say, on average about 10% of the feedback you get from the community is useful in some way, which means you have to look at 10 posts, 10 units of work to find the one that’s actually potentially useful. So, it’s a lot of work and maybe that’s why some startups don’t want to do it. But, I feel like if you’re not engaging with your community either nobody cares in which case your problem is not that your product has flaws. The problem is that nobody cares about your product. And that’s what you need to fix first.
[07:43] So, the main piece of advice I end up giving a lot of startups… the mistake I see a lot of them make is not having a clubhouse for their community to go to talk about the thing together with each other and also to help each other. The community scales a lot better than you and your small team will. So, make sure you’re listening your community.
[08:01] Rob: Next up we have Derek Sivers. Derek founded CD Baby somewhere in the middle or late 90s. And he grew it to a very successful company, he sold it for 22 million dollars somewhere around 2007, 2008. He has been a pro startup advocate; he shares a lot of knowledge on his blog sivers.org. I highly recommend that you check him out. He’s also working on his next idea. He blogs about all these at sivers.org, so I do encourage you to check it out. Derek answered the question, what’s the most common piece of advice you give to startup founders.
[08:37] Derek Sivers: Have you heard the phrase, hand out your shingle? It’s an old phrase that refers to declaring yourself to be in business, especially a service business like an architect or lawyer or doctor. You’d start your business by making a little sign saying “ARCHITECT” and then you’d hang it on your door now declaring yourself to be in business. So, I think the first thing you should do when you have an idea is to hang out your shingle.
[09:01] Get your idea out into the sunlight to the opinions of the world. And, don’t just ask for feedback on your idea. That’s too hypothetical. But by actually declaring yourself to be in business, by asking people to pay for your service or product, you’ll get much better feedback then just asking for feedback. It’s an old truism that is you want advice, ask for money, but if you want money ask for advice. So, by hanging out your shingle as soon as you have the idea it means you will also start small. Don’t develop the idea too far before putting it out into the world.
[09:37] Businesses always turn out much different than you planned. So, let your plans be shaped by actual public demand, instead of your initial idea. For me, I started CD Baby before PayPal existed and there was no way to charge credit cards online if you were just a musician. So, I launched CD Baby as a payment processing service for musicians. But, only two weeks into it a customer whose card I had charged never received their CD When I called the musician to find out why they said “Oh, hey man, sorry I totally flaked out. I forgot. I’ll do it tomorrow. Wait no not tomorrow, next week. “
[10:13] So, I had to change my plan to handle the CD warehousing and shipping. But, this was a hit. Everybody wanted this order fulfillment service I was providing, right? But, soon my customers, the people that actually bought CDs, were coming back to CDBaby.com every week to see what was new. So, whereas I thought I was an order fulfillment service. My customers were telling me I was actually a retail store. And I’m glad they did because that retail store went on to make me a net profit of about 15 million dollars over the next few years, all because I hung out my shingle when my idea was only a week old. And I let the customers shape it into what it needed to be.
[10:52] Mike: Next up we have Dharmesh Shah. Dharmesh is a very frequent speaker at the business and software conference. I don’t think there’s been a business and software conference yet that he hasn’t spoken at, at least not the one that I’ve been at. He’s also the co-founder of HubSpot which is based out of Cambridge Massachusetts which does a lot of inbound marketing. Here’s what Dharmesh had to say about the most common piece of advice he gave to start up founders.
[11:16] Dharmesh Shah: Once an entrepreneur has what she believes is a reasonably good idea. My advice is generally to get started. Start executing on that idea. A common mistake entrepreneurs make is they wait for that perfect idea. The exceptional idea, that game changing, life transforming, paradigm shifting idea. And the reality that it‘s actually very, very rare for an entrepreneur to start with an exceptional idea. What more commonly happens is they start with a… what they believe to be a reasonably good idea. They start the business. And as they’re working on that reasonably good idea the exceptional idea, kinda of, come about as a result of kind of iteration and tweaking. So sitting on the sidelines its very very rare to just through raw analysis and talking to people, it’s very rare to actually come up with an exceptional idea. The way to get to a great idea is to start with a mediocre idea. A reasonable idea and then tweak it from there.
[12:07] The other reason not to wait on the side lines waiting for that perfect idea is that even if you happen to get lucky. Of the 5 idea that have occurred to you, let’s say, one of them happens to be the exceptional idea. Chances are you wouldn’t know that the idea that you were thinking about was actually exceptional. Because chances are as you talk to smart people that you trust getting feedback on this what you believe to be what might be an exceptional idea. You’re going to get push back. You are going to get reasons from smart people that say “Here’s why this particular idea is just not that exceptional. Here’s why it’s not going to work. Here’s why it’s already been done or tried two or three times before.” Even with exceptional ideas they rarely rarely stand that kind of scrutiny. The only real way to know that an idea is exceptional, try to actually implement it. It doesn’t have to be the perfect solution but just enough to learn what it is about this particular idea that works and doesn’t work and tweak it from there.
[12:57] So my advice is if you have a reasonably good idea and you’re looking to do a startup, my advice is…start up. Get going. Figure out how to tweak that idea as you go.
[13:07] Rob: Our next guest is Eric Sink. Eric Sink worked on the original Internet Explorer team for Microsoft in the 1990s. He left to found his own company called SourceGear which makes a product called Vault Source Control and a number of other spinoffs of that. Erik was instrumental in my getting educated as a software marketer. He has a blog at Ericsink.com where he blogged especially prolifically from about 2000 to maybe 2003, 2004 on the topic of software marketing. He had an angle like no one else at the time. His articles were later published into a book called Eric Sink on the Business of Software and I have it on my bookshelf. I have been a devoted follower of Eric Sink and actually it was a big pleasure to meet him two years ago at Business Software. We were both speakers and I was able to make his acquaintance and thank him for all the advise he shared with me unknowingly. This is Eric Sink. He called in to our voicemail line so it will be a little different call quality but he was also answering the question, what’s the most common piece of advice you give to startup founders.
[14:15] Eric Sink: The advice I give is to understand how to evaluate risks. As a startup founder, as an entrepreneur you’re going to make all kinds of decisions and they’re going to be risky decisions. And typically what we do is we turn to advisors. We ask people what they would do and we ask them about their experience. And the problem with that approach is that invariably our advisors have more experience than us, which means they’ve gotten burned. And invariably they become more conservative over time. And in some cases they’ve forgotten that their early successes happened because they took risks and beat the odds.
[14:53] So, sometimes it’s the lack of experience that provides the courage we need to take risks. Advisors need to help us understand what would happen if we place a bet and lose. But, as an entrepreneur the bet is yours to place. And you need to go in informed about the risks. And then you need to choose whether you want to take the risk or not, but the decision is yours. It’s kind of like in that movie called Stealth, which was an otherwise awful movie. But there’s this great point in the movie where one of the pilots says, after being told that he has very little chance of success at something, he says “I didn’t get this far by being in the 73rd percentile. I like my odds.” And he goes ahead and does it anyway.
[15:38] And sometimes entrepreneurship is just like that. It’s about being told how you could get burned and taking the risk and winning. And that’s where your success is going to come from. And what I often tell people is that if you don’t like the sound of that, if that doesn’t appeal to you. Then maybe you should stop being an entrepreneur and go get a job. Because the reality is that is what entrepreneurship is like. Taking risks and beating them more often than other people do.
[16:06] Mike: Next up we have Andrew Warner. Andrew Warner founded a company called Bradford and Reed when he was in his early 20s. He grew the revenue pretty high, ended up selling the company around the time he probably got very burned out by the company. Surely, after that, he decided that he was going to build another company called Mixergy and right now you can find him at mixergy.com. Andrew is a really tough guy to get in touch with. He’s running all over the place. So we finally caught up to him and here’s what he had to say.
[16:36] Andrew Warner: Hey! It’s Andrew Warner on a run because that’s my advice to you. Take up running or something like it. Because don’t you ever get into times in your life where you can’t get anything done right because you’re not confident. And you’re not confident because you haven’t been able to get anything done right at work. Well, times like that you need something outside of work that’s completely within your control. That you can just totally rock and then go back into the office or the desk and that confidence will carry you through. So, for me that’s running. Even if I stink at work and everything is falling down and we’re losing money, I can go for a four mile run. Cross that four mile line and feel “Hey! I got it! I can do this. I can do anything.” And that carries back into work. So find your version of running. Keep cultivating it even when you don’t think you need it. And then it will be there for you when you do need it. I’m Andrew, again, and Rob congratulations on 100 shows.
[17:31] Rob: Next up is Ruben Gomez. He is a long time friend, founder of bidsketch.com which is proposal software for agencies. Ruben was one of the charter members of the Micropreneur Academy. This was before he launched his product and I had been giving him advice via email and became somewhat of a mentor and advisor for Ruben and I’ve taken great pleasure in seeing the success of BidSketch. Now he’s at the point where he’s mentoring and advising new startup founders. So it was a natural fit for us to ask him what’s the most common mistake you see startup founders make.
[18:12] Ruben Gomez: So the biggest mistake that I see people make is that they’re not clear enough about who their customer is. So, that generally means that they don’t understand their customer well enough and they’re just being too broad about who they’re targeting. So, if I asked them who is your customer? They may say something like, small businesses or freelancers. Ok. Freelancers is a better example but it is still too broad, right, because there are all sorts of different types of freelancers. You have freelance writers, freelance designers, freelance developers. Each one of those has a different problem. They use different language. And they just read different blogs and websites. So, the more specific you can get and the better you can understand your customer the easier it makes everything. Not just website copy but also generating traffic and actually coming up with a solution to solve their problem as well.
[19:06] Mike: Next we talked to Patrick McKenzie. If you’ve ever looked at a bingo card creation software, you can’t possibly have missed his website, bingocardcreator.com. He also runs a blog and a software company called kalzumeus.com. He is a frequent speaker at MicroConf and he has also spoken a couple of times at the Business and Software Conference. Here’s what Patrick said, here is the common piece of advice that he gave to startup founders.
[19:33] Patrick McKenzie: So, probably the most common pattern I see among startup founders is that they have a brilliant idea. They make software to instantiate the idea. They then try to find a customer for it. They can’t find the customer. They come to me and ask me how do they improve their marketing.
[19:46] And, they have things almost exactly backwards. The first thing they should be doing is finding a customer. And understanding that customer well enough to understand what the customer really needs, particularly in a business situation. What they need to increase the revenue of their business or decrease the costs from their business. Then after you understand what the customer really needs you can create products which answer that need. Which might be a software product, a service offering, what have you, a combination of all these. Create the product that directly addresses that need. And then since you have a deep understanding of who your target customer is and where they’re coming from, you can take that deep understanding and let it inform your marketing strategy.
[20:27] For example, if you know that your target customer is going to be the office manager at a professional service business, this lets you A) Target your marketing copy towards the concerns and the aspirations of the office manager, in particular, rather than the aspirations of say the business owner or the person who will actually be performing the services for the clients. And it also lets you find out where that target customer hangs out. For example, office managers actually go to conventions to see how they can do their jobs more efficiently. They are probably not reading Hacker News all day. But they might have particular industry specific websites.
[21:02] They also probably identify more with specific industries than they do with the general title of office manager. So, if you are trying to reach them you would probably go into the industries where you’ve had previous…demonstrated customer success or demonstrate customer need. More adjacent industries and shop it to them directly. Find out where those…folks in those industries hang out. Address them directly. This will make life much easier than trying to retrofit a new customer population on top of a software or service offering that you have no evidence that anyone in the world other than you would ever actually pay money for.
[21:34] Mike: So up next we have Dan and Ian from Lifestyle Business Podcast. And they answered a question about what are some of the common mistakes you see startup founders making.
[21:41] Dan Andrews: Hey! Mike and Rob its Dan and Ian from the Lifestyle Business Podcast. First off big ups on the 100th episode of Startups For The Rest Of Us. We’ve been fans since way back in the day like back when tight gym shorts were popular. You guys have done some amazing stuff and kept us encouraged along our journey as well. So, thanks so much for what you do. We’re going to answer this question; What are some common mistakes you see startup founders making? And Ian is going to kick us off.
[22:06] Ian: Hey, guys congrats on the first 100 episodes. I’ve got a little quick tip. I think it’s important for first time or early developers to focus on less sexy niches with your skill set. So, realize that your skill set may be more valuable to less sexy niches then it is to the shiny niches. So, take those skill sets and attack a market that’s begging for you. One that’s maybe a little less established because there will be less competition and more opportunities.
[22:33] Dan Andrews: Yeah, and that’s basically how Ian and I made a living the last 5 years. So, it’s worked in our case. One other thing that I see people failing to do is change their social circle. Way back in the day Rob said “Hey, Dan you’ve gotta read Never Eat Alone by Keith Ferrazzi. And I put it off and I put it off. And I think that book actually is a great roadmap for doing this kind of thing, which is, you can’t go it alone. You can’t be the only guy who…you know, all your friends have great jobs. And they want you to play fantasy football all the time. They want you to show up to all these parties. At a certain time I think you need to change that social group to get encouragement and perhaps most importantly great critical feedback on the kind of stuff that you are doing. So don’t do this thing alone. Focus on getting a great group of people around you that are going to support your entrepreneurial journey.
[23:16] Ian: That’s right if you have a house pet that doesn’t support what you’re doing, take it to the pound.
[Laughter]
[23:21] Dan Andrews: Alright guys. Congrats on the 100th episode and we’ll be sticking around for the next 100.
[23:26] Rob: And rounding out our esteemed panel of guests, we talked to Peldi Guilizzoni. He is the founder of Balsamiq Markups. He started it as a one person software company. Maybe what do you think , Mike, like four, five years ago?
[23:40] Mike: Yeah. I think it was around 2007.
[23:42] Rob: Yeah and he has since grown to well into the seven figures in revenue and he has at least a dozen employees, he’s based out of Italy and has just had an amazing story to tell and he has always been more than willing to share his experiences. In fact if you read the early posting at balsamiq.com in the blog, he went into in detail, step by step everything he did when he launched. That was a big inspiration for a lot of folks who came after him, really helped them grow their businesses. So he is now an advisor, I’m pretty sure he does some angel investing as well and just generally a nice guy who has spoken at Microconf, spoken at Business Software. We asked him what’s the most common piece of advice you give to startup founders.
[24:28] Peldi Guilizzoni: The most common piece of advice I give to a startup founder is to resist your natural urge to work in a vacuum. Include your customers as much as you can in everything you do. When you are just starting, for instance, do customer development. Find the people who have the pain you are trying to solve before writing any code. Only start coding when you have a group of people lined up to buy your product as soon as it is ready.
[24:53] When coding release everything as quickly as possible. Stop yourself from thinking through every possible use case. Build only the main use case and release it quickly. 90% of the time you see that it’s enough. If it’s not enough add the little piece that’s missing and go back to listening. Forget secrecy, buzz, or trying to make a splash. Those are all exhausting short term things which don’t matter in the long run. A tight feedback loop with an enthusiastic community is so much more valuable. It’s the best form of marketing and it is something your competition can not easily replicate. Good luck!
[25:31] Music
[25:35] Mike: So again we want to say a big thanks to everyone who submitted answers to those questions and especially to you the listeners. This podcast wouldn’t be here without you. It’s really inspirational to hear the stories from you guys, the question that you have and to be able to know that we are helping you out and that obviously we do get some satisfaction out of helping you guys out. So feel free to send in any more questions you have and we look forward to hearing you over the next however many episodes that there are for Startups for the rest of us podcast and hopefully you’ll listen to the end. Rob take it away.
[26:07] Rob: If you have a question or comment, you can call it into our voicemail number. Its 888-801-9690 or email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from ‘“We’re Outta Control” by MoOt, used under Creative Commons. You can subscribe to this podcast in iTunes by searching for startups or via RSS that’s startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening to us for 100 episodes and we will see you next time.
Episode 99 | Outsourcing a New UI, Two-Sided Markets, Handling Incoming Calls, and More…
Show Notes
Transcript
[00:00] Rob: In today’s episode of Startups for the Rest of Us, we’re going to be talking about outsourcing a new user interface, questions about patents, handling incoming phone calls, and leveraging social media. This is Startups for the Rest of Us: Episode 99.
[00:14] [Music]
[00:23] 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.
[00:32] Mike: And I’m Mike.
[00:33] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. So, what’s the word this week, Mike?
[00:39] Mike: I am encountering massive contractor woes.
[00:42] Rob: Oh no. Do tell.
[00:44] Mike: So I think I had mentioned that I ended up letting one my contractors go, right?
[00:49] Rob: Yup.
[00:50] Mike: That was one that kind of ended up out of the picture. And then another one his grandmother went into the hospital and since his mother relies a lot on him for a lot of things. He basically, he didn’t drop off the face of the planet. We’ve talked about it a little bit. But basically his work effort has dropped to pretty much zero because he’s dealing with family issues which I, you know, go deal with your family issues. Those are kind of more important than other things that are going on. Another one is in the middle of applying for loans for like car and a couple of other things. So he’s got to deal with banks and everything else, so he’s really not available. Another one has just kind of drop off by the face of the planet. So it’s basically just me.
[01:27] Rob: Seriously. Wow. Yeah. I’ve had this happened to me before where everyone but a large number of people kind of flake or even just got caught up with other stuff all the same time and it’s a real bummer. It seems to happen in 3’s.
[01:41] Mike: Yeah. I think you’d mentioned before that happened to you a couple of months ago I think.
[01:45] Rob: Yeah. It was about six months ago and it was like a VA, a developer, and another developer within about three weeks of each other. But you know what, they were people who had not worked for me for very long. Have these guys been around for a while or are they recent hires?
[02:01] Mike: Well a couple of them have. I mean one of them has been around for along time and then the other two had been probably a little bit more recent. But one of them has been really good and the one I let go obviously wasn’t so good.
[02:12] Rob: Are these contractors do they do consulting full time or do they have day jobs and they’re doing their work on the side?
[02:19] Mike: They pretty much do this full time.
[02:20] Rob: Got it. That’s surprising then cause that’s like one of the questions I ask upfront. I tend to want people who are going to do it during the day and who are going to give it their best effort instead of doing it in the evenings and weekends. And I also found that people doing it at the evening and weekends since it’s not the primary source of income they do tend to take it less seriously. And if they have a rough patch, they’re just going to bail on you. But it sounds like two of them are temporary and they’ll be back.
[02:44] Mike: Yeah. Yeah.
[02:45] Rob: I’ve been reading or listening to a book called The Facebook Effect. It’s the flipside of the story that you see in the film, The Social Network. The Social Network was largely guessed at by Ben Mezrich. Ben Mezrich is kind of this author who goes after these really big sensational stories. He wrote The Social Network as almost like a narrative right where it reads like fiction. But he had to make up a bunch of the interactions cause it was a fiction book, so he has to have conversations that no one really knows what happened. And so then the movies obviously took it to the next step and just use that and dramatize them.
[03:21] And so the movie got a lot of criticism early on for people who are saying really it isn’t very accurate. I mean it’s kind of just somewhat made up thing. So anyways, The Facebook Effect is an authorized book about Facebook. So it’s going to naturally slant the other way since it’s authorized because this reporter have the cooperation of Mark Zuckerberg and a bunch of other people. And so he’s naturally more of a fan of theirs and slanted to their benefit. But it was really interesting to hear the kind of the flip side to the story about basically all the lawsuits that came about because of Facebook and how many times Mark Zuckerberg and Facebook were sued and to hear his side of the story.
[03:56] So it’s definitely not anything you’re going to listen to and it’s going to help you launch your micropreneur endeavor, build a product or anything. But if someone is looking for entertainment and then to get maybe a different side of the story I definitely was fascinated by it. And I was also impressed with some elements of Zuckerberg’s ability to dig into the social graph and frankly his persistence in the early years of getting Facebook off the ground.
[04:17] Mike: That’s really cool. I mean I watched The Social Network probably less than a month ago. There were a lot of things that went on I just really questioned how accurate they were. I figured they were some embellishment, but I didn’t necessarily figure out how much or kind of look into how much. So that made what you just said kind of make a lot of sense that it was dramatized forHollywood. But you know it’s interesting that there’s something else out there that you can kind of read the other side that’s a little bit more I’ll say official.
[04:45] Rob: Yeah. And to be honest, The Social Network is one of the few movies I purchased in the past five years and normally I just do streaming and rental and stuff. I really like The Social Network as a film. It like motivates me and I actually like the way the characters are portrayed. I love the dialogue. It’s written by Aaron Sorkin who is probably my favorite writer, television and film. So I actually like the movie at a lot. I mean even Aaron Sorkin said he’s never used Facebook. And it’s kind of hard to write the movie about the product without at least having an idea of the product cause it’s a pretty key part of the story.
[05:17] Mike: Yeah. I can definitely see that.
[05:18 ] Rob: What else is going on with you? What’s the update on AuditShark?
[05:23] Mike: That’s a pretty disappointing story right now. I mean between the contractor woes and trying to rework the database that I talked about last week, there’s two different sides of the database that have to be worked is the client side application and then the service side application. And to date I haven’t really distributed the client side application to anybody yet because there are authentication issues that I’m still dealing with. I just don’t have a mechanism for people to log into it and authenticate to the server. It’s not that there’s any security problem. It’s just there’s no security on it right now.
[05:54] So there’s no way to synchronize things between your local database and the server which is why I’ve been working on this stuff. And unfortunately until there is that mechanism in place I really can’t publish policies out to the server easily because there’s a web interface for building them but you have to go looking the database to find the guid of different things that you’re looking up and different objects. And it’s just not intuitive and it’s really really hard to use. I mean the customers just definitely couldn’t use it. So I would say I’m pretty far behind in terms of where I’d like to be right now. It just kind of take time to plug through it. I mean the early access customers that I’ve talked to and have it install and its up and running on their machines, it’s just not really doing anything.
[06:36] And it’s not going to be able to really do anything until I get to the point where the synchronization stuff is working and I can push those policies out to the server. And I had thought that being to do it on the server itself through the web interface was going to be enough. And later on I kind of realized that’s just not the case because you need to have the guid of some of these different objects to work with and nobody has access to them except for me because they’re not surface through the user interface for the customers.
[07:03] Rob: Right. This is why you do early access right. It’s like so good to be in the hands of the customer because as of two weeks ago you’re like I’m pretty much done with this thing and then they start using it. And this always happens, always, always with every project that I’d launched. So it’s good that they come up. If none of these comes up, it’s like I keep waiting for the other shoe to drop. If you launch it, it’s like wait a minute. There’s no bugs. These people aren’t using it. If we haven’t found kind of like the major design flaw in the first week then I’m skeptical. So you say it’s disappointing but to me it’s almost to be expected. I guess it depends on how much time it actually takes you to fix. That could be the disappointing part. If its 40 hours of coding that’s a real bummer. It is what it is. I mean it’s certainly common stuff.
[07:45] Mike: Yeah. About 40 hours is probably ballpark accurate.
[07:49] Rob: Yeah, that is. That’s going to be tough. Hey we already got suggestions for our Startups for the Rest of Us drinking game. We got them from our editor. She has first look at all of our podcast. She says I’m all for a drinking game for the podcast. Drink when and then she list nine things. When Mike says to be perfectly honest. I think that’s a great one. When Rob says shout out. When either Mike or Rob tells people to be succinct and then goes on for another minute about being succinct. When either Rob or Mike mentioned their kids, mentioned their wives, mention the weather, say the word AuditShark, HitTail or Do Net invoice. When Mike says not a whole heck of a lot. When either say that about wraps us up. So awesome suggestions and as Mike says last week if you have any other suggestion we should incorporate into this Startup for the Rest of Us drinking game please do send them over.
[08:42] Mike: Have you noticed that I did not say to be perfectly honest or not a whole heck of a lot so far.
[08:47] Rob: I know. You didn’t. I guess that about wrap us up for that segment. Oh nailed it. I want to give a shout out to, how else do you say that.
[08:56] Mike: I don’t know, head ups. I have no idea. I don’t know what you’d say.
[09:01] Rob: Well we want to extend some special thanks to Eric Foster fromPortland,Oregon. He left a very complimentary call on our voice mail line. It was just kind of thanking us for the podcast, telling the things he liked. Yeah, we really appreciate hearing from you even if you don’t want us to publish it on the podcast. It just meant for us it still is great to hear people’s voice and maybe it’s more convenient to if you listen in the car just to dial up the number at the end and that was really cool. Thanks Eric.
[09:26] Mike: You know I forgot to mention on last week’s episode that I’m headed to the Business of Software Conference. And that’s a little unfortunate because by the time this episode goes live people will already be at the conference and they won’t hear me say hey if you’re there get in touch with me.
[09:39] Rob: Yeah.
[09:40] Mike: Oops.
[09:42] Rob: Yeah. It would have been nice to have it last week. So BOS next week. Very cool. Well I’m not going this year so I hope to have a full report in the following episode which I think will be 101; episode 100 listeners keep your eye out for it. We have some special guest coming on to assist us with that.
[09:57] Mike: I’ve been catching up on a lot of my podcast while I’d been traveling lately. And I listen to an episode of TechZing earlier this week and I was extremely disappointed. It was the wives episode where your wife…
[10:10] Rob: Yup.
[10:11] Mike: Yeah and it wasn’t the episode itself that was disappointing. I mean I though the episode itself was actually quite outstanding. But what I’m disappointed about is that you don’t bring out your feminine side on this podcast.
[10:21] Rob: Oh my gosh. [Laughter] And if you haven’t heard that, listen to that. Let’s see. She also said I like Project Runaway, right?
[10:28] Mike: I thought it was the Bachelorette.
[10:30] Rob: No that’s Jason Roberts cause I gave him crap about liking the Bachelorette in comments. And he said, “Hey, she said you like Project Runaway so you’re not one to talk.” Well Mike…
[10:41] Mike: I was listening to that episode and I’m just thinking to myself I am so glad my wife didn’t go on that episode.
[10:49] Rob: You know I got no editing say over what was said and actually Jason and Justin didn’t either.
[10:54] Music
[10:56] Rob: Let’s dive in to the listener’s question.
[10:58] Mike: So the first one comes in from Jeff Nobel and he says first off love your show. It’s really the very best podcast in the micropreneur vertical. I think we’re the only micropreneur vertical, isn’t it?
[11:10] Rob: Yeah. I think so.
[11:11] Mike: Naturally we’re the best but we’re also the worst. So it says “I can’t tell you how much I learn driving back and forth to a job I hope to eventually not drive back and forth to. I started working out a project over a year ago and I’d been working alone until about two months ago when I asked a friend to join me. I’m a senior software engineer. My friend is a great asset on the business side. I’m concurrently dealing with two issues so naturally I have two questions. The first is I currently have a site I paid a contractor for very early on the project but it just doesn’t work anymore. I had way too much content and the old design doesn’t give me a place to put it.
[11:42] I’m not a web designer and I know my limitations. If I go with the contractor via oDesk what’s the best way to work with them. Do I send screenshots of what I have and scribble what I’m looking for? Do I give remote access somehow? And if so, how do I protect my code? How can make sure that the html they provide will cut off well with master pages and is developer ready.” And there’s a few other related questions here. But I think there’s some basics of working with contractors via oDesk to get web pages build. And Rob you’ve done this a lot as well as I have so why don’t you kind of give your feedback first.
[12:13] Rob: Sure. So it sounds like he hired someone to build a site for him and the site is breaking like the layout comes apart when he adds dynamic content or something. And so frankly the first contractor didn’t do a very good job. It sounds like to me because this should not happen. So my thoughts if I had a site that did this and I felt like the first contractor was easy to work with and was good, the original person who built this, then I would frankly go back to him and let him know that you know what’s going on and the site actually isn’t working and figure out if you guys can work something out.
[12:46] Again assuming that he was reasonable, easy to work with, and you had a decent relationship. Maybe you don’t pay full rate for that stuff maybe you pay a discounted rate or he does some stuff for free. Because realistically just throwing up a site that doesn’t actually fully work, you know when I was working for people. You didn’t do that. I guaranteed my work. The second thing if that doesn’t work out, I would look on oDesk. I’ve found some several good CSS and html and designers on oDesk. If was in your situation, I would find someone who look reasonable, hire them. And I would probably start, yes I would give them access to the server. You asked do I get remote access or how do I protect your code.
[13:25] If you have a bunch of custom code with a custom database maybe you need to think about that. But really if it’s just html pages the odds of someone stealing your html pages is very small. So obviously, it depends on your risk tolerance. But I mean I’ve worked with 15 or 20 contractors in the past 5 to 7 years and almost unequivocally especially if the site is not live, yes, I give remote access. Because the more of a barrier and bottleneck you are trying to manually shuffle pages back and forth or something, the less it’s going to get done and the more frustrated both he, the contractor and you are going to be. So in terms of sending screenshots or what you’re looking for I tend to record a screen cast if I think that that’s going to be helpful, you know, if I can talk through what I want.
[14:13] If I need something more written then yeah I would actually probably I would consider marking things up like a paint program like paint.net or Photoshop. You know taking screenshot of your current situation and then marking it up or I would even print them out. This is going to sound so Archaean but I would print them out and I would handwrite comments on them. I’ve done that before. I found it a lot faster and I’m a lot better at that than using a paint program and then scan them back in and send them as a spec.
[14:41] I don’t know that you need much more than that. It really does depend on your changes of course. But that’s how I would begin to approach it. And yeah it depends a lot on your success with this project depends a lot on how good the contractor is that you find. And so that’s the key and we’d talked a lot about how to do that in the past.
[14:57] Mike: I’ve gone through some of this recently and what I ended up doing was I actually hired two people. And it sounds like Jeff is a position where he has a full time job, so he’s already spending job in the car and at work everyday. And that’s cutting into his time. So because this type of stuff is not necessarily core to your product, I mean it’s important to make your product look good because that’s what helps to sell the product. But I feel like these are the types of things that you should definitely outsource completely. I mean you shouldn’t be spending your time taking the designer stuff and put it into the program. What you really should be doing is and this is kind of what I did. I actually hired two people.
[15:37] I hired somebody who was just a designer and then I had him hand his stuff off to a developer, who put into a visual studio projects and created all the master pages and the basic layouts of everything. And then as I integrated that stuff into my code, into my source code, for the actual application then if there were problems with anything I would send them back and just kind of go through that process again. I put those two contractors directly in touch with each other. I said if one of you had questions, go to the other, talk to each other, log the time. I’ll pay you guys for it. That’s fine. And then just walk through that process.
[16:12] In terms of access to my server, I did not give them to my access to my server. What I did was I set up an automated built system where when they were working with things it would automatically deploy it into a development area that would go live but they didn’t have direct access to the server. So if anything in that deployment broke, it was up to them to essentially push code back into an [0:16:32][inaudible] source code repository and then the build will automatically kick off shortly and then it would deploy it to the web server and then they could see those changes live on the server.
[16:43] So that’s kind of how I dealt with most of things. But I think that making something look good is something that you definitely want to outsource to contractors that are going to do that. Because it’s not to say that it’s a waste of time but it’s just not the best use of your time.
[16:55] Rob: Right. And I think in terms of accessing the server I think he’s concern because he has existing code. It looks like he might have some custom code that’s been written. And you know he has how do I protect my code. I mean to be honest there is no way to protect your code. I mean try to give people access only to a single directory. But it’s never been worth my time to do that. Cause what are they doing to do? They’re going to take your code and do what sell it on the black market. Like no one wants it and if they try to compete with you, you need to be able to out market them. There’s going to be competition anyway so.
[17:26] Mike: I wasn’t worry about that so much as I was about them having access to like the other products I have on my server and production data from other products.
[17:35] Rob: That’s totally different. Yup, I agree. He has a non-production site and he just has you know I’m assuming he has this custom code for this web app he has. Now for you I agree if I have like a production like the HitTail server I don’t give contractors access to that. But I have a subversion repository that has the code in it. And when I get a new contractor I do just a simple four-hour project and if we communicate well and I trust him, he gets access to the whole thing. And he could feasibly pull the entire HitTail code base down to his box. You know at this point what is he going to do with that. That’s the question I have for you. What is the risk? So I’m not saying there’s no risk but for me if I’m going to have people working on my stuff they need to have access to it.
[18:20] Mike: Yeah and I think to kind of get around the server side access as well. I mean you could, if it’s a Linux box I mean there’s tons of places where you could just standup a Linux server for a really cheap price for a month or two months or however long it takes for this project to go. If it’s Windows it’s probably going to be more expensive. But again if you have somebody working 10, 15, 20 hours a week and you start weighing the cost of them for let’s say the 10 hours a week that’s a $100 a week. You got $400 a month. What’s the Window server going to cost you for a month, $50 or $60? It doesn’t seem to me like setting up a staging server for them to use that they have full administrative access to is a big deal.
[19:00] Rob: And then I think the last question of this part he asked about I purchased templates long ago. They looked great till I put dynamic content in them and then the whole layout came apart. How do I manage that with oDesk? And I think the bottom-line is you need to find a good designer/html CSS person and think about it as an ongoing relationship. So don’t think here’s this two week gig, go do this, and then you leave and you move on and then you’re stuck without someone to maintain it. This stuff always requires maintenance.
[19:31] All the designers I worked with who do designers CSS work for me I’m pinging them once a month for little changes or tweaks or fixes, browser issues. There’s always new stuff. There’s maintenance that comes up. So don’t think about this as a single project. Think about it as an ongoing thing. It will have an upfront stuck of hours. But then beyond that try to build a relationship with this person, you are going to be working with them ongoing a few hours a month. That’s a great part about oDesk is that it’s fairly easy to do that. You just ping them for a task and then you get only billed for what they work on. So that is one of the big benefits and I think keeping that mindset in place helps you get the setup from the start.
[20:10] Mike: And what you just mentioned they’re extremely important in terms of browser compatibility. Cause there’s been all kinds of things that I run into where I’ll see something or somebody will say something say hey this doesn’t work. I go in my browser and say what are you using? I’m using IE9. Okay. Well I just send it over to verify it, then just send it over to the designer and say hey this isn’t working in IE9 what can you do? And he just sends me a new set of CSS files. I just add them back to the site and I’m done.
[20:38] So Jeff’s followup question to that is my project relies on data from users. It’s a site that shares information from one user to another. I supposed forums may have some of the same issue but in your opinion what’ the best way to populate the site when it’s new. My biggest fear is that people will find the site once its launch, see it’s basically empty and then bounce, goes the graft. One idea I had was to populate the sites content locally myself and focus on marketing locally only in the beginning. But I worry that the overall products will suffer in markets that I have not put effort into yet. The web is a big place.
[21:09] Rob: Now you talked a little more with him, right. And then did you get an idea more of what he’s talking about, some specifics.
[21:15] Mike: I did. The best example that he gave me was something he called GasBuddy. Cause he didn’t want to share exactly what his product was or product idea was. So the best example that he gave was GasBuddy where if you’re not familiar with GasBuddy, it’s essentially an application where you go in and you can find cheapest gas prices in your area. And what that really relies on is people who lived around the country seeing these prices entering them and helping to keep the information up to date.
[21:46] So let’s say that you lived in an area of the country where nobody was using it, if you’re the only one using it then you got no data to go off of and you’re left with this chicken and egg problem. Where you’re relying upon the users to provide data but until they start providing that data, you’ve got nothing to share with people. So it’s definitely a chicken and egg problem.
[22:05] Rob: Yeah. If was going after something like this similar to GasBuddy, first you do have to have it populated. You’re exactly right. If people come in and there’s nothing there, they’re going to bounce. So a couple of approaches that come to mind is the first thing that you need to some type of motivation for people to take that. Even if its 5 or 10 seconds you need to have to motivation for them to do that. So gamification is a buzz words these days. You know it hold some value to have like a leader board of like these people are the leaders in these cities or these geographic areas whatever you divide them up to be.
[22:37] And people can compete against each other and they get a badge on the site if they’ve done the most updates. It’s kind of like being a mayor inFour Square. And Stack Overflow is another great example. They really focus on offering some type of benefit even if it wasn’t monetary. You know it was just prestige. It was just being good at something and being publicly recognized. So that’s an idea of how to get people motivated. Now I think initially that doesn’t mean anything if there’s no one on the site. So you’re going to have to do, well a couple of ideas come to mind.
[23:07] One is to go to Craigslist in each of the, maybe go up to top 10 metro areas. It depends on how much time you had to do this. But you can do the top 10 metro areas or top 20 metro areas assuming you’re in theUS. You can find that list and then go those Craigslist and post and ask people to do this. And initially you very well may have to pay them. You have to figure out a price point that works for you but you have to get that data in there. Since it doesn’t rely on your geography, you can’t just go, typically I would say if you just had form I would go and hire some people.
[23:35] If it’s a form for designers I would go to oDesk. I would hire 5 or 10 designers and I would get some discussion started and i would ask them to participate. Or, if I had an audience of designers, actually a good example isMicropreneurAcademy. There are forms in there and before anyone got in there I didn’t want dead forms before I launch it and so I had five charter members who people I’d been emailing with and I let them early and we had a bunch of discussions. So that the forms were reasonably populated when folks got in and they were like people are already posting.
[24:02] So if you have an audience that can do this, all the better. But my guess is you wouldn’t be asking this if you had an audience. So I do think initially you’re going to have to hire to do that. Now if there’s other sources of data that you could either buy or scrape to kind of get the thing populated initially, that would be another idea if you could do that online. This is really hard app to launch cause it has a true two sided market that you’re trying to get people to post data and take time to do that. Most people don’t want to do that.
[24:29]And then you’re also going to have to try to attract people to come and consume the data right because you’re going to presumably have ads or affiliate links or some ways to make money from this. And it’s a lot of work. You know without experience doing this before it’s going to be tough to get it off the ground well and to get both sides of the market coming at the same time. And it’s also going to be hard to do part-time without some help. So you definitely I think you’re going to need some budget to get people on there helping you.
[24:55] Mike: The other thing that comes to mind is if you’re building a mailing list you could ask them to fill out a profile beforehand and essentially as part of that mailing list maybe you have a thousand or two thousand people in there. And you ask everyone to fill out a profile. And of the people who do fill out a profile then what you could do is you can take that information and concentrate on different clusters of people and populate data explicitly related to where they are in the country or their interest or however your application actually works.
[25:27] And then from there just invite those people to kind of start with and then once they get in there, they’re using it. The people who come in after them are not going to see kind of a blank slate unless all the data that is truly localized. If you’re just relying on the specific group of people providing information that another group of people are going to use then you’re going to have to start somewhere.
[25:49] Rob: Yeah and I guess that’s the other approach you could take is really just doing one local area and doing in the one where you live cause you have real feet on the ground and you have probably friends, acquaintances in the area who can also help out. And so just to test the idea and to see if it’s viable at all, you may want to start with that. And truly starts small with it and then once you plan that out and I figure out how much traffic you can get for that area then you can say well is this worth scaling out to the top 20 cities in the US or is the idea not, you know does it not work. Kind of as an afterthought I think that maybe what I’d do unless the idea specifically doesn’t allow for that.
[26:25] Mike: So Jeff thanks for the call. Hopefully that helps you out.
[26:28] Music
[26:31] Mike: So our next question comes from Joshua [Hermann]. And he left us some voice mails. Joshua also emailed us about a week later and gave us some additional information. So here’s the voice mail that he’d left us.
[26:40] Joshua: Hi, Mike and Rob. My name is Josh and I’m looking at starting up my own business, working with some friends in getting it off the ground. In episode 75 a listener had brought up a question about patenting and if it was important. I was looking at doing that myself. And then in the search ended up finding out that said patent was already filed. Of course at this point that’s making me a little bit weary because my entire business idea kind of based around one of the processes that sounds like that it might be on.
[27:10] Is there any suggestions that you have if it looks like an idea that you know once was noble now is potentially patented by someone else and might get you in a little trouble. Now I love to hear what you guys think. Thanks for the show. It has been a great help for someone like me who’s looking to start up his first software based business. So thank you very much and have a good day.
[27:32] Mike: I don’t know this is kind of an interesting problem with patents. I never applied for patent and I think that you had said at one point that HitTail had a patent application in progress or some of its designs.
[27:44] Rob: That’s right. It did. Yup.
[27:45] Mike: Was it even worth pursuing though?
[27:47] Rob: Not really. I let the patent app expire.
[27:50] Mike: But I think having a patent versus what he’s referring to is somebody else has a patent on something. And he’s wondering what he should be concerned about, are there other ways around it. Should he try to buy the patent? I think there’s a lot of issues here that need to be dealt with. So I think you and I are probably both in agreement on our stance and feeling on patents. I mean software patents especially are just ridiculous. I mean there’s no way that 95% of these software patents should even be allowed in any way, shape or form. Unfortunately, because the patent office really just has no clue when it comes to software, they look at it as if it was a physical product. And they just really don’t know what they’re doing so they’re just rubber stamping a lot of these things without really looking at them in depth.
[28:35] Which we end up with is patents that have been approved for things like one click ordering systems. Sure, Amazon has that and allows you to just order something with one click but big deal. I mean that’s not exactly a novel concept. So I think that there’s a lot of these patents out there that are just garbage patents. But unfortunately as a micropreneur you may need to not only be aware of them but be aware of the risk that you may be getting sued over something that you have invented. So I think that for this particular one though I would be hesitant to give specific advice about whether or not you should try to buy this patent or try to fight it or just ignore it.
[29:15] That’s something that I think that you really need to talk to an IP lawyer about and find out from him what are the risk associated with. Is your idea realistically overlapping enough to the point that you stand a good chance being sued or are those risks minimal? And then judging from your own risk tolerances, figure out whether or not you’re willing to accept those risk and do it anyway or are they high enough that you want to make an attempt to buy the patent or just walk away from the idea and go for something else.
[29:45] Rob: Yeah. This really depends on your risk tolerance. Like Mike said we just can’t give specific advice about something like this cause there’s just liability involved. Let me say that I don’t know of an app that you could build these days that does not break some type of pattern or infringed some type of patent because some of the patents, a lot of the patents software patents that had been granted since 1998 when they became legalized I’ll say. Before that you couldn’t patent software. You could copyright it but you couldn’t patten any elements of it. And I have to be honest I’m heavy heavy opponent of software patents because they’ve gotten so out of control, because they’re so highly technical and because the patent and trademark office has allowed these obvious lot of obvious patent to get through.
[30:28] And some of them are so broad there’s no way that you can build an app without violating them. So I bet every app that I owned violates multiple patents if you actually went and dug. Because there are things that are patented that are like sending data back and forth between a mobile device and server. You know things like displaying search result in a table that’s sortable by clicking links at the top. Well if you have any type of applications that displays search results that’s how we display them and that’s how we’ve always done it. You put it in a grid and everyone knows you click the top to sort. So yes could I be sued tomorrow? Absolutely. Almost anyone could. And if in fact once you hit a certain size your chances of being sued are very high because all the patent issues and patent trolls and such that’s flowing around.
[31:14] So that’s my general thought on the situation. It needs to be fixed and it’s going to be so hard to do so because these patent trolls that are lobbying congress and trying to keep this stuff in place and the law today does say if you have this patent that it’s really hard to overturn. So I think a couple of things to think about if you do something and it never takes off then yeah your odd of being sued are probably pretty low. If you do something and it grows to 500 or 10,000 a month your odd of being sued are probably pretty low just because you’re not really on anyone’s radar. You know as you grow bigger then yeah the odds of you being sued period for anything for any of these patents, not just the one that Josh was pointing out, they absolutely go up. So again it comes down to risk tolerance.
[31:58] Music
[32:03] Mike: Our next question comes from Matt White and he says Rob I know you’re a busy man so I’ll try to keep this brief. I’ve read your book, loved it and started a small shuttle business with some friends. We decided early on that we wanted a phone number on our website wenatcheevalleyshuttle.com. So that people would feel like they can trust us and call to make sure we are real. The problem is we get a lot more calls than we expected and a lot of these people want to book our shuttle over the phone. We usually just do the booking for them but it’s very disruptive to our day. It’s not enough calls to justify hiring someone and I’m not aware of any call center that would want a contract that only sends them 15 to 20 calls a day.
[32:34] We would really like to get as many of these people as possible to book on the site instead. We could take down the number but we’re afraid we’ll lose a significant number of sales that way. We could charge an additional fee for booking over the phone but that only solves the problem halfway because it doesn’t reduce call volume, just call duration. Any suggestions or ideas? Thanks for everything Matt White. So, I think that this is one of those things where you could actually turn to a software solution for it. And if memory serves me correctly if you sign up for a Twilio account, you could probably build essentially a call center software solution that would do exactly this for you and could walk people through the essentially booking your shuttles for them.
[33:16] Rob: Nice like an IVR system interactive voice response where it’s like push 1 to book now and then some numbers for a date or whatever.
[33:24] Mike: Exactly. The other thing that I can think of is if you check with grasshopper.com they do small business phone systems and they may very well have something that’s similar to this that would just be out of the box that you wouldn’t have to build yourself. Twilio provides a lot of developer API that would make it possible for you to build this type of thing but Grasshopper may very well have something that’s already pre-built that you just do some customization to it and that maybe enough. It kind of depend on how much time and effort you want to put into this and how much pain you’re willing to go through doing the development yourself or outsourcing it I guess.
[34:02] Rob: Yeah. I have two thoughts on this. The first is to test and to not pick up the phone for one week and leave a voice mail message that tells people that they should book online that you’re currently not accepting reservations over the phone and see what happens. See, you know, watch the volume and you maybe need to do a two week test. But it may be you’ll know after one day. If suddenly your bookings plummet then you know to undo it. But I would test to see what kind of impact that has because of these calls really are impacting your ability to work then it may be worth your while to lose a few reservations. The other thought I had is that I’m sure you know your net profit margin per booking.
[34:41] And so if you make let’s say $5 per booking which I imagine is low and you’re getting 15 phone booking a day then you don’t spend up to $75 and not lose money. So obviously you want to spend less of that but that does justify potentially hiring someone to just handle the calls. And what I would think about doing, the way I would handle it is I would go to oDesk. I would find someone who takes inbound phone calls. I would post the project and I would say this is inbound call answering and reservation taking on an as needed basis. And I can almost guarantee on people that are on oDesk who do this.
[35:16] And I don’t know to be honest how they build, if they build per incoming call that would probably my guess is they would charge you per call and they just have to be around to answer for these eight or ten hours of the day whatever you specify. So that way if you do make $5 or $10 per call and you’re paying them too then you know scales up and down and you’re paying someone just to sit around. So if you find someone I would tend to look in theUSif you’re in theUSbecause you want the same time zone and give them a Skype number that dials over to them or use Grasshopper like Mike said. But I actually don’t think it’s a very hard problem to solve.
[35:52] Mike: So Matt thanks a lot for your question. I hope that the answers that we gave you will help kind of push you in the right direction.
[35:57] Music
[36:00] Mike: So this one comes from Mark and he says hi guys what’s up. First of all, I have to say I love the podcast. Not only does it provide me with actionable advice. It has also broadened my understanding of what a startup can be. The industry leads us to believe we have to aim extremely high, work crazy hours, and take huge risk but personally that doesn’t sound too interesting to me. I really enjoy work but I don’t want to be enslaved by it. My question is with regards to leveraging your Twitter and Facebook accounts to increase brand awareness, draw traffic to your site, etc. How often should you post update? Share too much ad people might unsubscribe, share too little and you’re wasting opportunities.
[36:32] To give you a little bit more background info on my particular case. I run a site called Beta List that covers pre-launched startups. We currently post about three posts a day and apart from the site itself, RSS, and the daily newsletter, we also share this post via Twitter to 9,000 followers and 700 Facebook fans. So that’s about three posts per day. I’ve been thinking sharing relevant links podcast, videos, popular post on the site etc. but I’m hesitant actually doing this as I’m not sure that’s what people subscribed for. I’m afraid this might hurt my company’s reputation. I’ve asked people and the response was mixed. What’s your experience? Am I worrying too much? Looking forward to your response, Mark.
[37:07] Rob: So my thought on this is especially with Twitter and Facebook, it’s kind of a stream of consciousness mediums anyway that when I subscribed someone on Twitter if they start posting more or they start posting something I didn’t exactly sign up for I don’t even think most people are going to notice to be honest. I think the only time you might run into unsubscribe is the email newsletter if someone signs up for a specific thing, even RSS. It’s just people just take it as long as in their genre and you’re giving valuable stuff like you said you’re going to aggregating links, filtering, sharing podcast videos, popular post like that stuff tends to be helpful.
[37:44] And so I would bet that you will not see many people unsubscribed. Via the email newsletter, I would just take the plunge and test it and put it in, I mean you’re going to need to just try it out. Three posts per day I’m assuming to Twitter and Facebook that doesn’t sound like very much to me at all for an active kind of newsletter that covers a lot of startups. I mean you really have a lot of content to share. I don’t’ feel like ramping that up would be a big deal. So if I were in your shoes I would probably just ramp it up and see what happens and yeah you make it a few people that unsubscribed but my guess is you may also take on new subscribers because you’re putting out as long as long it’s quality valuable stuff and my guess is you might kind of grow a tighter more engaged audience especially if you can give them just better information than they’re getting elsewhere.
[38:26] Mike: Yeah. I would agree with Rob. The only comment that I would make is that if you’re looking to do this on your email newsletter I don’t know as I would send out three emails a day. I would probably send one that includes a bunch of information in it with links back to your site. And part of that is so that you can get those people back to your site to drive traffic for other things because people generally read their emails. I think it’s one of the few mediums that really really works well these days. If everyone screams and raves about Facebook and Twitter and how many followers they have for this or that. But the reality is most people don’t buy things through Twitter or Facebook but they read their email pretty intently because in and I think Patrick McKenzie pointed this out in one of his blog post.
[38:07] That one of the things that you’ll notice with email is that people treat their email as generally pretty important. So when your emails appear next to other things that are important, they’re going to treat that as being more important to them. And I think that’s a good distinction to have. But obviously you don’t want to abuse it when it comes to email because people do read it more. They do treat it with I’ll say a little bit more care when they’re looking at their email. So definitely make sure you scale back on the post per day for the email but the other ones I agree with Rob just start blasting them out there and kind of see what happens.
[39:45] And if things really do tank you’ll probably be able to measure that pretty quickly with 9,000 people and scale that back as needed. But again there’s so much stuff going through people’s Twitter streams that they don’t even see 90% of it. So even if you post three times a day, the only people that you’re probably going to turn off are the people who are on Twitter all day and chances are that’s just a drop in the bucket for everyone else. So Mark thanks again for your question. Our next question comes in from another Mark, Mark Snider and Mark says hey guys I have a question. Do you typically work on multiple endeavors at once or do you try to keep things focus and stick with one idea at a time. Love the show and keep up the good work. Mark fromMilwaukee.
[40:25] Rob: So Mike as someone who is doing Altiristraining.com, forum software, AuditShark, anything else?
[40:32] Mike: I don’t think so. I think that’s it. Well I think it’s hard. I don’t know if I would recommend it to be perfectly honest. I think most of mine are kind of different stages. It’s starting to come to a head I guess but I guess there’s a distinction to be made between running multiple startups versus having different small products. And I think you can attest to that as well. And the other distinction I would probably make is there’s a different between running them and starting them. Because if you’re trying to start multiple side businesses at the same time, it’s really hard to do that but just getting one to a point where it’s maintainable and then start in a different one and then getting that to a point where it’s maintainable is kind of completely different story.
[41:16] Rob: Yeah. I’ve always been pretty hard line about this that I never try to build and launch two at the same time. I never try to revamp two at the same time cause it takes so much focus and commitment and all that and it’s like you said if you get it to the point where it is kind of a maintenance mode it can still be growing but it doesn’t require all that upfront work to get the processes in place, to get the marketing going, all that stuff. Once that’s done it really does, the workload really does reduce quite a bit and it’s much more easier to automate or outsource large chunks of it.
[41:48] I would absolutely not recommend trying to build and grow two endeavors at once but building one for a time and then putting in maintenance and doing another and then even coming to that first one at a later date once the second one is in maintenance mode I actually do that quite often. So Mike, do you feel like with your forum software and Altiris Training and AuditShark that that’s been like a detriment having too many things going on.
[42:11] Mike: I think that for the things that like for the forum software and the Altiris Training website I don’t pay nearly as much attention to them as I probably could. So because I’m not paying attention to them and it’s still I would say early on especially for the Altiris Training site I can probably squeeze more money out of it. I could probably optimize a lot more things but I’m not paying attention to it nearly as much so that’s not just happening. And then for the forum software that’s kind of a rebuild mode where I’ve had a developer whose been working on it and you know I’ve been making high level decisions and just kind of handing them off and saying here go do this.
[42:46] But because it really hasn’t gotten to the point until the past week or so where things I need to start paying attention to it, it hasn’t really been an issue. If I were trying to build all of them or trying to grow all of them at once I think it would be really hard just because of the level of effort that the marketing side takes. I don’t like to put it this way but marketing is kind of time sink. It can take you much longer amount of time to get you to where you want and it’s very very difficult to estimate. I would probably say it’s just as difficult to estimate how much time it’s going to take you to complete something from a marketing perspective as it is a very complicated program and problem because you don’t necessarily know when you end this.
[43:28]You can’t just say well I’m going to do search engine optimization and it will take me about six hours. Well chances are good that it’s going to take you a lot more than six hours. It can take you significantly longer and the problem is you don’t necessarily know when you’re done. And then couple with that it takes a lot of time to see what your results are. So it’s not like programming where there’s a defined end point for that sort of thing. But it may just be complicated to estimate. When you’re doing marketing it may take you two or three hours of work and then you wait a week to figure out okay well did that have any effect and then you have to measure it.
[43:59] So I think that those are two slightly different things and that the marketing side is much more estimate because there’s no hard ending to it. You just kind of have to make a judgment call and say I am done working on this because I have chosen to be done. So Mark thanks for sending in that question. Hopefully that helps you out. Rob, do we have anything else?
[44:15] Rob: That wraps us up for today.
[44:16] Mike: I think that’s a drink too. If you have a question or comment, 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 this podcast 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.
