Episodes

November 13, 2012 / 2 Comments /

Episode 105 | How to Pick a Platform Partner

Startups For the Rest of Us

Episode 105 | How to Pick a Platform Partner

00:00 /

Show Notes

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.

November 6, 2012 / 16 Comments /

Episode 104 | Podcasts For Startup Founders

Startups For the Rest of Us

Episode 104 | Podcasts For Startup Founders

00:00 /

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/
New Ideas, Politics & the Economy	99% Invisible – xe	0	0	1	1	http://99percentinvisible.org/	http://feeds.99percentinvisible.org/99percentinvisible
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
New Ideas, Politics & the Economy	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
New Ideas, Politics & the Economy	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.

October 30, 2012 / 7 Comments /

Episode 103 | Nurturing Leads in Your Funnel, Planning for Growth and How to Buy a Website

Startups For the Rest of Us

Episode 103 | Nurturing Leads in Your Funnel, Planning for Growth and How to Buy a Website

00:00 /

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

[00:29] 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.

October 23, 2012 / 8 Comments /

Episode 102 | 4 Levels of Income Generating Web Apps

Startups For the Rest of Us

Episode 102 | 4 Levels of Income Generating Web Apps

00:00 /

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.

October 16, 2012 / 5 Comments /

Episode 101 | Key Takeaways from Business of Software 2012

Startups For the Rest of Us

Episode 101 | Key Takeaways from Business of Software 2012

00:00 /

Show Notes

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.

October 9, 2012 / 8 Comments /

Episode 100 | Startup Advice From 9 Successful Founders

Startups For the Rest of Us

Episode 100 | Startup Advice From 9 Successful Founders

00:00 /

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]

[00:19] 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 73^rd 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 100^th 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 100^th 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.

October 2, 2012 / 2 Comments /

Episode 99 | Outsourcing a New UI, Two-Sided Markets, Handling Incoming Calls, and More…

Startups For the Rest of Us

Episode 99 | Outsourcing a New UI, Two-Sided Markets, Handling Incoming Calls, and More...

00:00 /

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.

September 25, 2012 / 8 Comments /

Episode 98 | Eight Sentiments That Do Not Bode Well For Your Startup

Startups For the Rest of Us

Episode 98 | Eight Sentiments That Do Not Bode Well For Your Startup

00:00 /

Show Notes

The eight sentiments:

“This product idea is awesome. Now off to the basement to build it; see you in 6 months!”
“I haven’t even finished the features I want to build yet and potential customers are already asking me to build X.” Translation: “I’m sticking to my product idea no matter what my potential customers tell me.”
“I’m halfway done with this idea…but that shiny new one over there seems so much better.”
“I plan to quite my job 60 days after I launch.”
“It would take me as much time to explain this task to someone else, so I’ll just do it myself.”
“I don’t want to bother with all that click through and conversion rate nonsense…I’ll just build a great product.” Translation: “Build a better mousetrap is not a good strategy”
“My idea is pretty hard to explain, do you have 20 minutes to spare?”
“I don’t want to talk publicly about my idea because someone might steal it.”

Transcript

[00:00] Mike: This is Startups For The Rest Of Us episode 98.

[00:03] [Music]

[00:12] Mike: Welcome to Startups For The Rest Of Us, the podcast to help 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: We are here to share our experiences to avoid the same mistakes we’ve made. How are you doing this week Rob?

[00:24] Rob: I’m doing pretty well; I’m back off of 48 hours of being completely off the line. We went to the central coast to California around Big Sur area and went camping car camping with my two kids and then my brother and kids five kids, brother and his wife.

[00:41] Mike: What is car camping?

[00:43] Rob: You go to a camp site you pull your car in and then you park within a walk of that like there is technically a picnic table, fire pit setup and you setup a tent and you just have kind of this little camp spot there and it’s frankly before we had kids we always back packed right, you do a four mile hike up the hills seven mile hike up to some hill to a lake. But when you have a two and a six year old that’s just not as conducive.

[01:05] Mike: I see, yeah I’m outdoorsy in that I like drinking on patios.

[01:10] Rob: Yeah I know totally. It’s good to get out in nature and all that but it’s tough men, it’s tough with kids and trying to get all the, you know , it’s 40 something degrees at night and so I kept worrying that the kids were going to be too cold and had to lug air mattresses. Normally again I would sleep on, you know, a little mat. It was fun made smores, did some hiking and saw some waterfalls. But I was totally gone with no, you know it’s weird, I’ve gone places with just my phone for several days at a time and you can just email and make sure no kind of no emergencies came through but men I was off the grid for a couple of days. From Sunday until Tuesday and frankly it was pretty refreshing.

[01:45] Mike: Really? I find it disconcerting when my cell phone just doesn’t work at all.

[01:49] Rob: Well here is the thing; it was disconcerting for about the first day. Because it’s like wow I need to check where we are where is the map? Oh you can’t map and then maybe someone mentions something oh yeah that movie I want to find out who it is. I go to look it up at Google and it’s like duh you can’t do that. But then I felt like I slowly started to adjust like adjust out of that. Actually the fast pace of life kind of goes away. I started feeling like just more calm. In that sense I would rather be away for a longer period because I think if I’d hang out for maybe a week offline, I would have gotten more used to it but it’s hard for me to get into work when I come back. Essentially I had five days off right? Do you find you have that issue when you come back?

[02:24] Mike: Yeah to some extent. I mean if I’m just completely disconnected for whatever reason it seems like it takes a couple of days to kind of work my way back into, I will say a mental state where I’m going to be actually productive. I think a lot of it has to do with just trying to figure out okay well now I’m back to work what should I do, what should I do first? Because there is a billion things to do and it’s just that because there is so much to do you’re just not really sure where to start sometimes.

[02:47] Rob: Yeah, I must feel like it’s a learned skill. The more I go away on these short trips these one and two day trips in addition to the weekend, I’m starting to do once a month, twice a month just I’ll go to the coast or whatever. I’m becoming better at being productive once I get back. I feel like certain people and I’m one of them has a real hard time getting back and other people come back refreshed right? You take four days off you come back and they are just chomping at the bit and getting all types of stuff done but I’m not there yet.

[03:16] Mike: Got it.

[03:16] Rob: What’s going on?

[03:17] Mike: I’ve just been reworking some of the backend database in AuditShark to support some fun stuff called bidirectional database synchronization.

[03:25] Rob: And what are you doing that for?

[03:26] Mike: The short answer there is a component in AuditShark that people will install locally and it needs to synchronize with the cloud database.

[03:32] Rob: A component that you install locally has a database built into it?

[03:35] Mike: Yes.

[03:36] Rob: Okay.

[03:37] Mike: It’s basically about making database calls back to my database to be able to be able to store that information, that’s really what it is.

[03:42] Rob: And are there any, I mean you’re going to dot net right?

[03:45] Mike: Mmmh.

[03:46] Rob: Are there any libraries that help with that kind of stuff or you have to write from scratch?

[03:50] Mike: There is a synchronization library that Microsoft publishes but you have to have certain database columns in place in your database. What I’ve done is I’ve basically shoe horned these new columns into the database. There is like 11 different database tables that I need them in and essentially what you should do is you have to put four column into each of the tables and then you also have to create like a tombstone table for each of those tables. So I had to add 11 tables and then put two new fields into each of these new tables and then in addition to that change I had to add four more columns to every one of the existing 11 tables.

[04:26] Rob: I love that phrase “tombstone tables”.

[04:27] Mike: Well, its’ because if you delete something and you’re trying to synchronize between two tables how do you know where it was deleted?

[04:34] Rob: Right, right.

[04:35] Mike: Or where was add it because it could be in either one, it could be deleted from one table or added to another and depending on which ways you do the synchronization first you may be adding it or you might be deleting it. It’s just you have to keep track of that stuff which kind of sucks. But it’s getting close to being done so once I get that done then I can move onto other things. I’m working with some people from Microsoft on helping get some of the other stuff in AuditShark set up for automated and testing and deployment. Because right now I’m not doing a heck of a lot of changes that I think need to be tested, but extremely strenuously but I can see it done in the future and I’m trying to get into a position where down the road I’m not going to have to worry about that as much because I’m going to have like a full blown staging environment that’s going to be mostly a copy of production like a true staging environment which Azure doesn’t really offer you that.

[05:20] Rob: You said you’re working with folks from Microsoft, like their support or their technical help?

[05:23] Mike: They are BizSpark developers.

[05:26] Rob: Developer liaisons or something?

[05:27] Mike: Kind of yeah I mean like they reach out to you and say, “Hey do you have any questions or problems or anything we cans help you with?” And then I have this problem, so I have gone back and forth with them a couple of times. Right now at first I was just working with one person he handed it off because he wasn’t technical enough. That’s person basically involved somebody else’s. Now I’m involved with like three different people kind of talking about it because it’s just such a giant issue.

[05:50] Rob: Got it, did you tell them about your tombstone tables?

[05:53] Mike: No I did not.

[05:54] Rob: Okay, I wanted to talk about a new iTunes review and it’s from RC in New York City. He says a great podcast like the title says for the rest of us. I discovered this podcast of Stitcher when I ran out of tech entrepreneurs to listen to and boy was I pleasantly surprised. I was used to the tech — I like this next phrase a very good tonal phrase — I was used to the tech luminary type podcast where people bask in the glory of their own light and speak in obtuse generalities. Sir you have quite a vocabulary. Being a non tech wanna-entrepreneur it was refreshing and informative to hear the tough examples, experiences and tips and tricks of Rob and Mike as they slog week to week to make the projects/businesses a success. So thanks for that review RC in NYC we are up over 200 ratings now, really appreciate a rating and or a review on iTunes if you get the chance.

[06:45] Mike: You know I got an email from listener who had also send me –he’d heard that I was talking about putting together documentation for AuditShark. Although I’ve hired somebody to do it who has a background in writing documentation for compliance and security products, so I don’t really need this. But the products point from me to was something called Screen Steps Live from Blue Mango Learning and it looks like it’s a SAS application where essentially you sign up for a subscription and they will essential host your videos and just kind of streamline the process for building FAQs and tutorials and things like that’s for your product. So if you don’t have access to developers that’s a great tool to leverage that. But they do aim it specifically at non developers and I know that we do have a number of non-developers who listened to the podcast. So I thought I’d share that little tidbit and then send over.

[07:36] Rob: That’s pretty cool. Man they need to get a better domain name. They are at bluemangolearning.com/screenstepslive. Probably not ideal. I searched for their product name expecting it to be dot com or something so product sure looks interesting for that niche. So I am working on a basically a bit of procrastination because I don’t actually want to do real work. Every month about this time, I’m looking at my HitTail dashboard and I’m trying to figure out, where am I going to be at the end of the month? There is revenue sources coming from a few different things I’ve old billing, I have new billing, I have article billing I have just a lot of stuff to add up and prorate for the rest of the month.

[08:15] I found that there is so many ups and downs during the month, there are just certain days where a lot of people signed up one month and so during a simple prorating of, hey we are X days into the month multiply that by out to 30 or 31 days is just not accurate. So I’m working on a more intelligent prediction query for HitTail but it’s surprisingly challenging. I know the conversion rate of how many go from trial to paid during a particular 30 day period, but if I’m half way through that period for them and they are still there, then they have a higher chance of sticking around.

[08:47] So I can’t just use this blanket percentage across everyone, I actually have to prorate the conversion percentage across people who are still there. So I’ve only spend about 15, 20 minutes on it yet but like I said it’s not super productive per se but I do feel like it’s going to give me some better insight, I know where I’m going to stand at the end of each month. I’m still trying to sort out if knowing that information is actually helpful or actually helpful if it’s just mentally helpful for me.

[09:10] Mike: Well I think it might help prevent you from becoming distracted and thinking about it more often because if you have a dashboard that’s accurate and shows you that information and you’ve already done the code behind it to know that it’s pretty close to being accurate then you won’t think about it as much to try and figure out all the different scenarios for, “Oh well, my conversion rate last month was this and the month before that was this” and you’re trying to figure out and do some mental interpolation between those and figure out what your conversion rate is going to end up bringing in for revenue this month. So if you’re not thinking about all those different things kind of frees up your brain to think about other stuff.

[09:45] Rob: Yeah that’s a good point and that’s actually the way I look at it because every time I look at this dashboard I know that 90% of the numbers I’m like yeah those are on, those are on. But this one I’m just like, you know, because I have just a simple flat paraded prediction now and every time I look at it I’m like I know that doesn’t include this, I know it doesn’t include people who are currently in the trial funnel. I mean it’s just, it’s such a weak estimate that I’m not taking it seriously. Every week probably I do want to have an idea of where I stand this month and where I look to be by the end of the month. So I download an Excel file from PayPal and I go through some manual work and add it all up by hand just to see where it is and it would be so much better to have that for real.

[10:22] Mike: I have a question for you; I mean you obviously have all this historical data right?

[10:26] Rob: I do.

[10:27] Mike: Why don’t you go back to the historical data that you have and try and figure out develop an algorithm that will guess what it should be at the end of each month and then take a look at those and see how close it is at being accurate as opposed to trying to kind of guess because that’s basically what you’re doing right now is you’re guessing. Then you’re doing to have to wait a couple of weeks to try to figure out whether that’s accurate or not as opposed to going back and looking at the historical data and you already have that stuff so you can essentially run through the algorithm see if it’s right at different points along the month, see how close it is and just kind of do a percent gap and says oh it’s within 5% or 10% tolerance of this number and that’s good enough as long as it’s that close.

[11:07] Rob: Right no that would be what to do except for the historical data I have, these are live customer records and so the data is actually not in the form it was when I was in say the middle of May. So in the middle of May I had X number of trials, certain number of people had cancelled by that point but over the next 15 days in May as more people cancelled then they get set to inactive. So their records are actually different now. So I don’t actually have a snapshot of the database on that day. Does that make sense? So I can’t go back and rerun the algorithm based on what it looked like at that point.

[11:39] Mike: Oh I see.

[11:40] Rob: You know what I’m saying? And like it’s not like I have some huge data mining thing that I took snapshot of it everyday and I could run it. It’s live data that has changed since then.

[11:50] Mike: I see, you’re not tracking the historical events as much as you’re changing the records of the individuals that are in the system

[11:56] Rob: That’s right and if I were — a couple of things one if I was architecting the system I would of course have a cancellation date instead of inactive bit because then you have the actual information right then I could go back and do exactly what you’re saying. But I didn’t architect the system and it’s not worth me for this thing it’s not worth me going back in you know adding a bunch of code just to get a little better prediction of algorithm. I think even given what I have I could probably spend less than an hour right now and get within 5 to 10% without changing app code.

[12:25] Mike: I see, I see.

[12:26] Rob: But no I like your approach that’s exactly what, that would be the ideal approach to it.

[12:30] Mike: Yeah what I did recently is I hired a developer who built the web hooks for stripe and then whenever stripe does something it basically sends out information back to this web hook that is on my server. It sends just information about hey this is just what happened and it sends and I think it sends JSON over through that request. I hired a developer who built two different things one was to go into stripe and pull in pretty much every single web hook that has been processed over the past 30 days and the second one was to actually implement something so that there is a web hook out there that I can have live so that whenever stripe does something it will kick off, it will send something to that.

[13:12] All I do is I take the entire JSON query and send it directly into my database so that if I ever need to put new post processing on it later, I don’t have to worry about it because stripe only keeps track of the last 30 days of web hooks that they’ve basically send out the last 30 of events. So to get around that I basically just save every single JSON query that they send to my web hook and throw in the database and it’s not like I really care about the storage space or anything like that. Then if I ever need to run through and do any post processing on anything all the way back to the beginning of time I can do that.

[13:42] Rob: Interesting I haven’t done any of the web hooks stuff; I’ve looked at it as kind of…

[13:47] Mike: Neither have I.

[13:48] Rob: Premature optimization thing I didn’t even know they only held it for 30 days. What kind of information do they have that you could need? Because I haven’t had a need and I’ve been running on stripe for about nine months and I haven’t had a need to go look at that stuff. What kind of information that I don’t have right now would you have in your database?

[14:04] Mike: So they have whenever somebody signs up. They have whenever there is a cancellation they have, whenever payment was attempted but fails, whenever payment was succeeded, whenever they send you money. I mean pretty much any given like all that happens and they keep a record of it.

[14:21] Rob: So you’re looking at the logs right, you’re logging events is what you’re doing. Because I can get that data but I only get the data at the customers and look at the payments and look at this and that but I can’t look at the event of when that happened and that’s what you’re getting.

[14:36] Mike:Yes.

[14:36] Rob: Got it.

[14:36] Mike: I mean I don’t have any specific use for it right now but it was a task that I was able to, you know, send out there and I knew that once that that 30 day period time goes by I’m not going to have that data ever gain. So if I ever need it in the future it would be good to have it and if I don’t ever use it that’s fine it’s not like I actually did the work on it anyway I just scoped it and said here is what I need. It took me it was like literary five minutes of my time to say this is what I need.

[15:01] Rob: You realize that the phrase “If I ever need it in the future” is the very definition of premature scaling that we talked about in the last episode?

[15:09] Mike: You know but I think with the premature scaling you’re also talking about something that takes more than five minutes of your time.

[15:13] Rob: You’re right; right you said something to me shortly before we hit record.

[15:17] Mike: I had just said something like, “Oh I hate java” and you asked me if I was working with java and I said no I would shoot myself if I had to code in java.

[15:26] Rob: And why is that? Did you code java back in the day?

[15:27] Mike: I did for a while it just irritated me for some reason I don’t know why. Part of it was the IDEs that you had to work with and don’t get me wrong I haven’t worked with java in probably nine years.

[15:37] Rob: You’re still going to get hate mail.

[15:39] Mike: Yeah.

[15:41] Rob: And you know what people should send you? Java is not bad you work with .net you idiot.

[15:46] Mike: I don’t care, I just it rubbed me the wrong way when I was working with it and it just seemed like they were always making these weird changes that didn’t make a whole heck of a lot of sense. Then they came out with net beans and this and that.

[15:58] Rob: It was pretty gnarly. It was pretty complicated.

[16:00] Mike: What is all of this stuff? It just didn’t make any sense to me and so I just kind of got away from it.

[16:05] Rob: I coded java for about 18 months and it was I found it complex. It’s my memory of it, I remember the ring no-good IDEs for it and I remember it being extremely complicated even and that is coming I’m a dot net developer like dot net is not simple compared to php and ruby and python and you know those types of frameworks. Java really kind of pushed it over the top and maybe it was the documentation wasn’t good so it just seemed complex but it was definitely a struggle to build things that are easier to do in a lot of other languages. It’s also building web apps and I just don’t think it’s the ideal language to build web apps with.

[16:37] Mike: Yeah I don’t either. I would attribute a lot of it to the IDE.

[16:40] Rob: Right.

[16:41] Mike: And I think that the reason I think that is because at least with dot net if you’re typing something you get a little interface that pops up you’re starting to type a function and it just will auto complete it for you and it will show you all the command-line parameters for that. Whereas if you have a bad IDE for java you are not getting any of that but with dot net you’re typically you’re working with visual studio and everything is right there you don’t generally have to worry about it.

[17:06] Rob: Yeah most languages don’t have the intelisense that dot net does and you get so spoiled by that as a developer because it dramatically improves your productivity. But stepping into when I step into php I have I’ll just say it takes me a lot longer because I have to sit there and look everything up, it doesn’t auto populate it like it does with .net.

[17:23] Mike: Yeah the other issue I think I have with java was all the debugging.

[17:27] Rob: I remember spending like six hours just getting a step through debugging working on a JSP server

[17:32] [music]

[17:35] Rob: So Mike and I are going to be talking about eight sentiments that do not bode well for your startup. Realistically these are a bit tongue in cheek. But before the call Mike and I were talking about how each of us including us here on the podcast as well as most people out there and most entrepreneurs that we talk to make at least one of these mistakes and typically several of them during the time of building launching a product. So the first sentiment is, “This product idea is awesome. Now off to the basement to build it I’ll see you in six months”. Mike how many times have we covered that on this podcast?

[18:06] Mike: At least one.

[18:07] Rob: We’ve talked about this certainly with AuditShark you built it for quite a while before showing the actual app to customers, I think we see this everyday. We get questions from podcast listeners who basically say, “Glad I found your podcast, I’ve already build this app and about to launch it but I have no mailing list, I haven’t done any marketing”. But that might be the most common email I get these days actually is ,“ I have this product and either I’m just about to launch or I launched a month ago and no one is buying and I don’t know what to do now”. Typically my first thing is, “Well, does anyone want this? Like have you talked to customers?” If you didn’t do it before you built then you need to do it now so that you can determine if you should, you know, even continue with this product. There is no reason to throw good money after bad.

[18:51] Mike: Or good time after bad.

[18:52] Rob: Indeed. So our second sentiment that does not bode well for your startup is, “I haven’t even finished the features I want to build yet and potential customers are already asking me to build X”.

[19:04] Mike: I love this one because the translation to this is basically, “I’m sticking to my product idea no matter what my potential customers tell me”. I have this vision in my head of stuff that I want to build but people are asking me to do these other stuff and I’m not done yet I’m not done yet I still want to do this other stuff. What they are telling you is what they want and what they are willing to pay for and what you’re telling them is no I’m going to do this because this is my vision. You’re basically saying my vision is more important than what my customers want.

[19:31] Rob: Yeah and this is a really hard balance because as soon as you launch an app and as soon as you have people using it you’re going to get feature request especially if you launch when you’re still a little embarrassed about your product and I think most V I.0 are they should be launched when you’re still a little embarrassed about it. So you’re going to get a slew feature request and it’s up to you to figure out well which one of these should I actually implement, which one of these maybe lined up with my vision, which ones don’t but are still worth implementing and maybe even have a higher priority that the features I have in mind because frankly your product can go down an entirely different road than you imagined and it could be more useful to your potential audience if they are using it in a way that you never thought possible.

[20:11] Mike: Yeah and it’s interesting the dynamic here because I was actually having a conversation last night with prospective partner of AuditShark and he’s asking me he’s like, “ What do you see is the vision for this, you know, what do you envision this turning into down the road?” But I basically put it blunly and I’m like, “The product direction is going to be driven by what the customers want, and at the end of the day if I do what the customers want then I will make a metric ton of money, it’s not going to matter. But it’s really about what they want not necessarily what I want for the product.

[20:44] Rob: Yeah and again that is a really, it’s a hard thing to do to actually implement what you’ve just said. Because it’s hard to know when you get 20, 30, 40 customers all sending you a request you can’t do everything the customers want, you have to parse it out and figure out which on or which set of features is actually the thing that you can implement that is going to help the most customers and attract the most new customers to the product. So the third sentiment that does not bode well for your startup is, “I’m half way done with this idea but that shiny new one over there seems so much better”.

[21:19] Mike: Aren’t we all guilty of this one?

[21:21] Rob: Yeah absolutely. Every month yeah I’m currently evaluating ;let’s just say a couple other potential acquisitions and I’m in due diligence right now I’m signing an NDA on one and right away I told it to one of my mastermind groups and one of the guys was just like what are you doing? Like I feel like you’re taking your eye off the ball. You know he didn’t say it quite like that but in so many words.

[21:41] Mike: I’ll say it, I feel like you’re taking your eye off the ball.

[21:43] Rob: Yeah, no it’s definitely something in the back of my mind I mean if you listen back 10 episodes I’ve been talking about this you know about to shift focus because there is this thing that I’ve said over and over is that I never work on two products. I never try to grow two products at the same time. Anytime I’ve tried to that I’ve failed because there is just too much to do. I have a couple tricks up my sleeve that I’ve never had in the past — but the bottom line is it’s risky game and it’s always a gamble if you’re going to try to either do two idea at once or even worse just leap from one half completed idea to the next because that’s a good way to kill three, four, five years of your entrepreneurial career and never actually launch anything and launching is when you really start learning.

[22:25] Mike: Yeah I mean you can take a look at the hard drive of just about any developer and just count the number of unfinished products and that right there will give you a good idea of, you know, how I guess pervasive this particular problem is. I mean there are people who just leap from product to product or projects to projects because they never actually finish anything and after two, three, five, eight years of working on this stuff they still have nothing to show for it. I think we are all guilty of that at some point I mean there is always these projects that we get involved in that you kind of bogged down, you loses your motivation to work on it and it’s no longer as exciting and sexy to kind of push through to the finish line because you don’t have customers yet, there is nobody really relying on it yet and you’re just like, “Well you know that looks really interesting” it’s very easy to get distracted and go on a different direction.

[23:13] Rob: Yeah and don’t get me wrong here I’m not saying don’t own multiple products because obviously that’s you know really the approach that I’ve taken on, I’ve had success with it it’s not to bounce from idea to idea without completing one and either getting it to a state of automation or of some type of semi autopilot state where you are not just having to really focus on it to make it grow all the time. Our fourth sentiment that does bode well for your startup is, “I plan to quit my job 60 days after I launch”. So why is that a bad sentiment?

[23:45] Mike: I think that is a bad sentiment because it places, I’ll say, unrealistic expectations on your launch and when you don’t meet those expectations it’s not only mentally draining but it’s also going to put you in a position where you’re starting to look for excuses, why didn’t this work? What didn’t go right? And you’re going to basically put blame everywhere except for where your expectation should have been. I just don’t think that it’s good for your mental health; I think that being able to quit your job 60 days after launch is just an unrealistic expectation to have for virtually anything. I mean I can’t think of anything where that sort of thing would happen. They are going to take some time to kind of get to the point where you have the steady stream of visitors and customers who are coming in and saying, “Yes, I’m willing to pay money for this.”

[24:31] Rob: Right the problem is that, if you set your expectations so high and then you fail to hit them and you fail miserably to hit them, which is really likely will if you think you’re going to have may have a fulltime income after 60 days. It’s just very discouraging, you know, there is kind of these three dips that you hit when you’re launching a product. One is about half way through development, one is just after launch and then the other one is like three, four, five months after launch where the buzz has worn off the launch and this will just contribute that all the more and will encourage you to basically bail on the product.

[25:07] Our fifth sentiment that doesn’t bode well for your startup is, “It will take me as much time to explain this task to someone else. So, I’ll just do it myself”. You know Mike I think we should start startups for the rest of us drinking game because we talk so much about VAs and outsourcing and not even outsourcing to developers and designers that everytime we mention it everyone listening should have to do a shot.

[25:30] Mike: You know I think that is a great idea, I think that our listeners should start sending things in. So anyone who is listening please send us some stuff for to questions@startupsfortherestofus.com send us your thoughts about what should go into the podcast drinking game where anything we say or something somebody asks that should go in every time that comes up you take a drink.

[25:51] Rob: Right because we I mean that has been a recurring theme since episode one of not trying to do everything yourself and especially not using the excuse of, it would take me as much time to explain this task to someone else so I will just do it myself. I think the big, I mean there is many, but one of them I think the one that I found to be the most kind of impactful to me is that it always feels this way the first time you have to hire a developer, the first time you have to hire a designer, tier one email support. Any of those things it’s like gosh! Four hours, six hours, eight hours whatever to hire this person and this task is only a one or two hour task.

Well, a couple of things. 1. You’re probably not very good at estimating so you’re probably underestimating the actual amount of time it’s going to take to do it. 2. Once you have that person and you find them and they are good at this, then the next 100 times you have this come up, it’s a five or ten minute email to send them a task. Right? A one hour a 30 minute tasks can be outsourced really easily if you don’t have to go through the hiring process. So there is this almost like these economies of scale, once you get these first several hours of hiring them out of the way then you can build on that. This stuff does not happen overnight but it’s about building a team of people you can rely on, even if you don’t use the all the time but you at least have them as resources and it makes outsourcing very easy and very cost effective and time effective.

[27:10] Mike: Well the other thing that comes up is that and I was talking to somebody last night about this which was the person I was speaking to has to do billing for a bunch of different customers and it has to be done in a very specific way and it’s a lot of it is recurring thing. He’s constantly just looking at this stuff saying I will just do it myself as opposed to sending it to so and so to do. I told him I was like why don’t you just create a video, you know, do a screen cast, walk through it, sign up for screencast.com and buy Camtasia studio and just walk through the process, record it once. Send it over to the person who needs to do it and if you ever need to replace that person or if both of you are busy and you need somebody else on your team to do it, because he’s got a team of like 10 or 15 people, I was like just send it over to him, send him the link to the video and say this is who it needs to be done I need you to do it.

[27:58] There is new customer they need to be added to the CRM package here is all the information that you need to do it and here is the video that explains exactly who to do it, please go do this and take care of this. Because they are employees of yours, they are working for you just go ahead and get it done. As opposed to spending all of your time doing these things when there are repetitive task that somebody else can be doing.

[28:18] Rob: Our sixth sentiment is, “I don’t want to bother with all that click through and conversion rate nonsense I’ll just build a great product”.

[28:25] Mike: I lovethat “ the click through and conversion rate nonsense”. I mean basically what you’re saying is you know build a better mouse trap and they will come and building a better mouse trap is not actually a good strategy. Mouse traps themselves have really not changed over the years. People have tried to build better mouse traps but if you look for building a better mouse trap there is pictures of all these really weird contraptions that just generally don’t work very well. Building a better product does not draw new customers, solving their problems draws customers.

[28:55] Rob: The challenge with this is that building a successful business requires an ongoing stream of people who are interested in your product. It’s over romanticizing building software, building web apps, building startups to say that the product is going to be so good that word of mouth is going to spread or that the virility is going to spread the word or that social media. These are the things that are fun that we do anyway right? People are on Twitter, on Facebook and so thinking that that’s going to be enough just having that good product is going to make people talk about it enough to build a sustainable business is wishful thinking bottom-line.

[29:32] And while you don’t have to be like ultra left brained about it and do hardcore click through, conversion rate analysis and just be all about the numbers you can move a little more towards the center. Every entrepreneur that I know who has been successful in the long term has a really good handle on what their conversion rates, click throughs, at what their numbers are for their business. I don’t know anyone who does it who doesn’t know that. Anytime someone has a business and I ask them where is your marketing and they say, ‘Oh its’ all a word of mouth”, hugely skeptical right away.

[30:03] I’m hugely skeptical that either a) is their business actually successful; and b) is it really word of mouth or is this person just attributing all these other things that are happening to word of mouth because they don’t know any better? This may be the one that I don’t think is talked about very much, I think it’s wishful thinking to believe that the product is enough to make a successful business.

Our seventh sentiment is, “My idea is pretty hard to explain, do you have 20 minutes to spare?”

[30:33] So this probably comes back to that kind of enterprise software, the high tech software versus being able to sell on the web. The problem with having something that is so complicated and you can’t explain it in a couple of sentences, is that it’s very hard to sell. It means that you have to educate your market which is very expensive and time consuming and you have to educate a lot of people and only a few of those people will buy. It also means it’s extremely hard to do with like paid customer acquisition because you have to send them through a long funnel. You can’t just have a headline that explains what your product does, if you can’t explain it in 30 characters which is I think is 32 characters is you know a Facebook headlin or 50 something characters is an Ad Words headline.

[31:12] If you can’t explain your product then you have to go a different route that is almost like a lead gen route and you have you have a headline that kind of addresses part of the problem and then either have them talk to sales people, go through auto responders, download reports all those are good tactics to do long term for any business and they will expand your sales. But if you can’t make sales without them, then you’re basically a medium to high tech sales all the time and that’s just a different business then. You knew I think as a solopreneur or a micropreneur than you want to be in.

[31:42] Mike: I think the other side of it is that, if you can’t explain it succinctly then it’s very difficult to convey that to new customers very quickly and when people hit your website they are just going to leave very quickly. I run into this problem I think a lot earlier on with AuditShark where it was very difficult for me to explain to people what it is that AuditShark does and why you would wants to do it. I still feel like I’m tweaking the response and what I’m telling people, but basically I feel like AuditShark is a product that brings clarity to the security posture of your web servers and that’s really it. It just tells you where your server stands with regards to security, how vulnerable they are etcetera.

[32:22] Rob: Right and I think there are, you know, with this one my idea is pretty hard to explain do you have 20 minutes to spare? I think there are two ways to look at time. One is either that your idea really is that hard and that’s obviously a danger sign or your idea isn’t actually that hard and you just don’t know how to explain it yet. That’s also a danger sign it means and you can correct that one right? You can learn the language of your customers, we talked about that last episode and you can just learn how to more succinctly describe it and that’s absolutely a requirement if you do plan to sell online like you said through sales or marketing website. So rounding out our eight sentiments is, “I don’t want to talk publically about my idea because someone might steal it”.

[33:01] Mike: This has got to be one take a drink.

[33:04] Rob: This is the other drinking game one I know. We’re getting quite a few emails with a question but the person won’t tell us their idea they just say, “Oh it’s in the kind of commerce space” and here is this question but the answer to it depends entirely on having more specifics.

[33:21] Mike: So the issue with this is that’s, if you’re not talking about your idea then it’s very difficult to find people who are going to basically tell you you’re crazy that it’s not a very good idea. If you’re not telling people what the idea is, then who are you talking to about what problems you’re actually solving? If it’s a known problem then people are presumably already talking about it and searching for it so it’s not like it’s this giant secret.

[33:44] The other side of it is that the second you launch it’s out in public I mean everyone knows about your idea at that point because the world is connected to the Internet so everyone can see it it’s not like you’re able to hide anything at that point. So if somebody really has tons of money and wants to come steal your idea they are going to do it. But the problem is that nobody wants to steal bad ideas. What they want to do is they want to steal successful ideas. So, if you have an idea you could tell everybody in the world and nobody is going to care but if it’s a good idea that you follow through with and you’re successful with it that’s when people are going to start copying you, that’s when people are going to start taking your idea and trying to implement it or come after you with more money. But it’s not until you’ve proven that that idea is successful that anybody is going to care.

[34:30] Rob: Right and there is a difference here between going on a podcast with several thousand people listening and saying here is what I’m going to build and here is exactly what I’m going to build and how I’m going to market it and all the steps I’m going to take, I mean that could be stupid, right? You’re basically giving away a plan of something that is actually valuable. But talking to people in person or over the phone mentioning it to some people, asking people and saying hey I would appreciate if we don’t tell everyone about this. But here is the idea what do you think and getting really in-depth about it there, is not much risk in doing that, right?

[34:59] Even going on the podcast Mike if you and I were to sit here and talk about and I always explaining a whole idea, I questions how many people would even move forward with that and how many people would be able to basically the out market you even if you gave them most of the broad tips of how to do it. Because everyone has their own idea and they all want to implement it, right? They don’t want to implement your idea they tend to want to implement their own because they are passionate about it and that’s probably another sentiment that doesn’t bode well for your startup, is being able to adopt other people’s ideas or acquire startups that are failing rather than just the traditional, I’m going to build a novel product and launch it like every other developer does.

[35:37] Mike: Well I think I have a perfect example for this is mean Jason and Justin from the TechZing podcast talked about the idea of AnyFoo. Their product idea was essentially providing a market place where if you need a expert on whatever the topic is sit can be a programming topic, it could be C Sharp, it should be you know Azure, it could be Ruby, I could be Rail whatever, I mean any of those topics there are experts out there. Their idea was to essentially build the website where you provide a market place for going and hiring these people. Now obviously you’re not going to hire them for an extended period of time because they are going to probably charge you a bare minimum of $100 and they talked publicly about this for a long time.

[36:20] They said somebody should build a website where you go there and I can pay $200 to talk to an expert on security for an hour. Just to pick his brain, to get some thoughts and figure out what I should be doing and you know what sort of things that I’m missing in the existing things that I’m doing. They talked about it for a year, they told their entire listener base, “Hey somebody please implement it” and nobody did. So they finally decided to actually follow through and start building it themselves because nobody else had. They are publicly talking about it and they are actually asking people to go do it and not one person steps up and goes to steal that idea.

[36:53] Rob: Yeah there is so much more that goes into building a business than the idea, basically the idea is a small piece of it and having a great idea is great but there is so much execution and work and expertise and development and marketing that goes into it, that just having someone know your idea is not enough for them even if they get there first it’s not enough for them to beat you if you can out market them. Well, that about wraps us up for today, top review our eight sentiments that do not board well for your startup are:

This product idea is awesome now off to the basement to build it. See you in six months.
I haven’t even finished the features I want to build yet and potential customers are already asking me to build X.
I’m half way done with this idea but that shiny new one over there seems so much better.
I plan to quit my day job 60 days after I launch.

[37:42] Mike:

It would take me as much time to explain this task to someone else so I’ll just do it myself.
I don’t want to bother with all that’s click through and conversion rate nonsense. I will just build a great product.
My idea is pretty hard to explain. Do you have 20 minutes to spare?
I don’t want to talk publicly about my idea because someone might steal. [Music]

[38:02] Rob: If you have a question or comment you can call it in to our voice mail number at 888-801-9690 or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. You can subscribe to this podcast on iTunes by searching for startups or via RSS at startupsfortherestofus.com where you will find a full transcript or each episode. Thanks for listening we’ll see you next time.

September 18, 2012 / 2 Comments /

Episode 97 | Premature Scaling

Startups For the Rest of Us

Episode 97 | Premature Scaling

00:00 /

Show Notes

Transcript

[00:00] Rob: If you stick around to the end of this episode Mike and I are going to be talking about premature scaling. This is startups for the rest of us episode 97.

[00:07] [Music]

[00:15] 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 just thinking about it. I’m Rob.

[00:24] Mike: And I am Mike.

[00:24] Rob: And we are here to share our experiences to help you avoid the same mistakes we have made. This week the word is Audit Shark, early access.

[00:32] Mike: Yep.

[00:32] Rob: So what’s going on? Did you… Are people using it Mike? What you had talked about on the podcast was that yesterday people had started using it in September 10^th.

[00:38] Mike: Yep.

[00:39] Rob: Did that happen?

[00:40] Mike: Well actually I had somebody start using it last week so…

[00:44] Rob: Oh, nice.

[00:44] Mike: I had somebody install AuditShark on a couple of their servers and basically worked through some of the issues that they were having just to basically make sure that everything was usable and functional. And then from there basically to ran some more tests over the weekend and made a huge number of changes of the code over the weekend and then I waited until this morning actually to get my next customer on.

[01:07] So yesterday I touched base with, you know, somebody who was interested in using it as an early access customer and got him installed, he was up and running and you know once we started with the process it was maybe five or ten minutes tops. And most of that was working through some last minute code changes that I had made. So for example I dropped some columns and then forgot to pull out some of the error checking code so they were looking for it, but there was no way for him to enter in that information so I had to make some raw database changes. But other than that I mean things went pretty smooth I think.

[01:38] Rob: Awesome. And so you have two customers or potential customers using it? Well, so that’s an interesting question, are they customers, like are they paying you yet or are they under the understanding that it’s maybe a 30 day trial or how has that worked out?

[01:52] Mike: So one of them is a prospective partner who wants to resell it and the other one is a prospective customer who will be using it for his own servers.

[02:03] Rob: Got it, so he is checking it out, see how it works, see what it does. And is there a trial period you have discussed or you are just kind of going to say how is it working and touch base with them and that kind of stuff?

[02:13] Mike: Yeah that’s probably going to be more it than anything else. Most of—I mean the thing is one of the issues that have right now is because the product is functional but it isn’t necessarily complete. The primary issue is that it works and does what it’s supposed to do but because I don’t have the library populated with a lot of content yet, it’s not as useful as it could be. So essentially what I am doing is I am working with him to essentially do things on, I don’t want to say consulting basis, but in a way I am basically taking a look at his servers, you know, and I am going to be building the policies on his behalf and just I am going to let him know, hey this stuff is ready, you know whenever you what to run it., if you want to double check and watch your servers just to make sure that there is not going to be any major impact or whatever then he can do that and he can run it on his own schedule. It’s very simple to do that for him.

[03:04] And then you know he can take a look at it and maybe later on he just decided, oh well you’ve got some new stuff, I have already seen it in action. It’s not hurting anything; it doesn’t have a very high impact, just go ahead do whatever you want whenever you want.

[03:17] Rob: Right. Sounds a lot like customer development at this point, right? I mean you are actually working with a real customer and basing your features, your new features on his needs.

[03:26] Mike: Yeah, I mean and that’s the nice part about this piece of it, because it’s content driven and I can just develop new content and add it in, it’s not like I am adding new features but I am adding—I guess in a way I kind of am adding new feature because they are new things that the software is going to be looking for but it uses all the same underlying code that I have already written.

[03:45] Rob: Right, you are modifying XML files that the code consumes, is that right?

[03:48] Mike: Yeah basically.

[03:49] Rob: RUL files, yeah, AuditShark audits. Servers and the security audit scan stuff and you are basically adding more rules and more scans, more points of data by not modifying code but modifying some text file, I assume it’s XML or something so–.

[04:04] Mike: Yeah.

[04:05] Rob: Fantastic. So how do you feel? Does it feel good or is it like—are you as excited as you thought you would be you know because you finally, you are on early access, or is it like a letdown?

[04:14] Mike: I don’t think it’s a letdown. I feel good about where things are at, I mean I am a little disappointed that I am not further a long but I think that that’s going to be the case no matter what.

[04:22] Rob: Sure.

[04:22] Mike: You know I ran into some previously undiscovered scalability issues last week that took me quite a while to track down because I had some—some of my logging code wasn’t actually logging anything and I knew that a long time ago but I just said, well you know, it’s logging code, it’s really not that big a deal. Well, then I ran into an issue where connections weren’t being closed to the database and it became an issue because I couldn’t see where those connections were being opened and closed.

[04:50] Rob: Right.

[04:51] Mike: Now I had to fix the logging code and then once that was fixed then I had to go fix the connection issue.

[04:57] Rob: Right. And that’s early product stuff, right? I mean you are always going to see that at this early stage. So what’s your plan now, like today, tomorrow, this week? You are working on AuditShark almost exclusively, are you writing more code right now, are you building more rules for your two kind of customer development folks, are you looking for other people to do early access so you can get more feedback? What’s your game plan?

[05:20] Mike: So right now I am planning on, I am doing a little bit of code, just basically the bare minimum stuff that I need in order to be able to populate the database, beyond that I am not really doing anything that is code development related. There is a few minor features that absolutely need to be there that, you know, for them to be able to use it that I am still kind of working on. But you know those kind of go hand in hand with populating the library. So until the library is populated, those features are kind of completely unimportant and in order to test populating the library I need those features.

[05:51] So I expect those to kind of be hammered out in the next couple of days, probably two days at most. And then from there on it’s just a matter of, you know, running these policies against their machines, taking a look at the output, seeing what things come back as okay, what things come back as not okay, where I can drill in to find out more information and then essentially determining what other recommendations I can make based on what they have installed, because if by looking at their installation, let’s that they don’t have Apache installed, well why would I go out and build, you know, 100 rules that check what Apache is, how Apache is configured and what versions of everything are there and what vulnerabilities are there if they don’t have Apache. I feel like that’s important down the road but because it’s still early customer development stuff and they are not going to be using that, I don’t feel that it’s as important.

[06:40] Right. Do you have plans right now to get another potential customer or two on board, like as of next week do you think you will have more people using the system in order to vary the feedback that you get?

[06:51] Mike: I would expect that by the end of the week I probably will.

[06:54] Rob: Okay.

[06:54] Mike: We’ll start talking to people early in the week and then trying to identify specifically who I am going to add in by the end of the week.

[07:02] Rob: Very good. Well sir, let me join each person listening right and wish you a hardy congratulations on getting it out of the door and getting it on a real server, a few real customer servers.

[07:13] Mike: Thank you.

[07:15] Rob: So this actually ties in with a voice mail we received, J. Speaks called in and he thought I let you off too easy with our discussion about Altiris Training versus AuditShark because AltirisTraining you spent maybe a month, about somewhere between a month and six weeks, you outsourced a lot of it, you recorded the videos and you have had some early success with it. Pretty quickly people signed up and you know you have some demand. And then AuditShark you have been working on it for several years, people can go back and listen to the last 40 episodes to hear all that, but basically it’s just much bigger project, it’s more ambitious and you know you are just now getting into the really—the focusing and doing customer development stuff.

[07:52] J’s concern was that when I asked you, I said hey you know how come you are going after AuditShark instead of just focusing on Altiris Training, just going after it and ten-exing your effort on that and leaving everything else behind. And you said because you are not that interested in AltirisTraining, it’s not that big of a market, you don’t have a passion for it, you know, some other stuff. He just said it seemed to him AltirisTraining is the obvious choice to pursue based on its early access. So I wanted to hear more from you, why aren’t you doubling down on AltirisTraining and why are you continuing to go after AuditShark?

[08:24] Mike: I think the primary reason that I am not really going after the Altiristraining.com website harder is because of the fact that I don’t see where additional traffic would come from. Looking at the searches that are done for it, looking at the current traffic that I am getting for it, I am still only getting, you know, four or 500 websites visits a month and that includes people who have already bought. And since I have launched it, I think in the first week or so I had several sign ups and since then I haven’t had one.

[08:53] So to me it looks like, you know, there is a market for it and it’s probably as small as I kind of thought it would be. I don’t see it as being something that’s going to just grow and grow and you know maybe that’s just going to take a little bit more effort on my part to try and, you know, figure out how to optimize that pipeline a little bit. But you know at this point I just don’t see any sort of substantial growth.

[09:19] Rob: Yeah tell me—so there is a market for this right, some people are interested in it, potential opportunities for expansion, I mean there could be partnerships, could be, not affiliate deals in the traditional sense but affiliate deals that are like high tech sales on your part, right? Of actually talking to consultants and talking to—and I guess you already have one of those in place, but multiplying that. They are all fairly, they are not really automatable and they are not internet marketing based, right? It will be more about building a real business, more about focusing and doing more medium and high tech stuff, whether it’s direct sales or selling to partners who can then resell it.

[09:54] And my take on it is the reason you don’t want to focus on that is because the idea is not that interesting to you and if you are going to spend all that time that you prefer to spend that time working on AuditShark. And it’s an interesting question, right? It’s like what are you optimizing for. And I think every person who is launching apps needs to ask that, what are you optimizing for? Are you optimizing for to make enough money to quit your job, are you optimizing to, you know, enjoy what you are working on, like are you really passionate about it? Is it some mix of the two? And I think that’s the question you are probably dealing with, is even if you could, let’s say you just stopped working on audit shark all together and completely focused in Altiris Training.

[10:33] Number one, it’s going to take you a heck of a long time to grow it, right, because it is medium and high tech stuff. And my guess is that with AuditShark, after you build a product people want, you are going to be able to get some of that automated—it’s more like the fly wheel traffic effect of getting online marketing going. Based on our conversations it seems like your desire is to go more of that route and you are just more interested in Audit Shark? Is that accurate?

[10:58] Mike: Yeah I think so, I mean I looked at it as something where I could probably build something that would have value in the future but not necessarily a substantial value now and that I wouldn’t have to sink a lot of time and effort into it to make a few hundred dollars extra a month. And at this point you know I had somebody who paid for six month subscription upfront, I do have the potential for, you know, an additional anywhere from 250 to $ 1000 a month in sales that, you know, very well could be recurring just through the partnership but at the same time the existing customer base is only paying a couple $ 100 a month for access to the site.

[11:37] So realistically I am looking at, you know, maybe close to $ 1000, maybe a little bit more. I don’t realistically see it going over $ 1500 a month anytime in the near future. The point was really to get it to a point where it was automated enough that I didn’t have to worry about it too much, but at the same time I may be able to just turn around and flip it. I was really looking for in many ways a project to vet a couple of developers that I was trying to identify.

[12:03] There was one developer who I had working on Audit Shark who was not really working out very well and I was very low to find another one and put them also onto AuditShark, at least right away. So in some ways it was a vetting process for finding those developers, you know, finding a developer who I can put on a different project, have him do something that, you know, may very well be meaningful and substantial to me but isn’t going to break the bank, isn’t going to necessarily either positively or negatively impact AuditShark, and that was really what I was more concerned about, was the negative impact to AuditShark.

[12:37] Rob: Yep, and I know where you are coming from because I own a number of websites, they are in the similar vein for me, right? It’s more automated income, automated revenue, and they are not in a niche that I particularly want to go and spend a bunch of time in and they have a traffic source or two that is recurring and that is a fly wheel and that I don’t mess with, but growing it beyond where it’s plateaued would be a lot of effort and I much prefer to spend that effort, you know, on something else.

[13:05] So hey I have two quick updates then we are going to dive into the premature scaling discussion. The first thing is, I don’t know about you but I am looking forward to episode 100. We have a special episode planned, we are stocked about that. Keep your eyes peeled, just three episodes away now. The other thing is I hired a half time contractor to help me with marketing and support and I already have a VA doing Tier one support, but I hired this—he is actually a colleague, a friend of mine who I have known for about a year and he is going to be doing tier two support. So I have been doing tier two for, you know, the last nine months.

[13:42] And so he is going to learn the ins and outs of the app and he is also already creating an email follow up sequence. He is doing a bunch of stuff that’s been on my list since I acquired the app but have not had the time to do. So he is doing a lot of content creation, he has worked on some ideas for info graphics, some viral blog posts, a couple of other things that are just, you know, they are too complicated to kind of outsource easily. And what I like is that I have a lot of task people, I have a lot of task Vas and developers and such where I can give them a task and they can do it. But he is much more of a project person where I can just say here, go do that, research it, proposes titles, and I say alright pick that one, there, now go gather data for an info graphic. Boom! Comes back, you now, it’s like that kind of thing where he is more of a full service person.

[14:21] So basically I had several agencies quote on doing this exact work that I am talking about and they outlines their process of how they would do it. And I am taking that process, and they were definitely going to be contractors, they work for an agency. And I took that exact process and gave it to him and said go do what they sad here. They didn’t give me any ideas, we didn’t steal anything or write anything, but I said here are the steps here are the steps we are going to go through because these are the steps I was going to go through with them. So I am pretty darn sure that going through these steps does not make you an employee.

[14:50] You know and I am excited to have someone on board who can do a higher level of work with, you know, with less supervision who is more like a consultant, you know, it’s more like a consultant than a contractor.

[15:00] Mike: Right, yeah. And that definitely nice to have, my wife and I were having a similar discussion a couple of nights ago that was just about like our previous work histories where, you know, where she used to work at a graphics design company where there would be employees who come in and unless they were explicitly told to do something, they wouldn’t do anything and they would basically sit around waiting for people to assign them work. How does anything get done if you know nobody is there to tell you to do something then what gets done. And the answer of course is nothing, and that’s one of these–, I would call that a hiring problem more than anything else, I mean you really need to identify those people who are going to be employees who can identify what needs to get done and get it done.

[15:38] Rob: And I think that’s the difference, you know when founders say like I want to hire great people, like great people are the ones who improve your business. You hire an employee improve your business even if you step away for two days, you come back the business is better than it used to be, whereas, average people maybe don’t do that. You know Kagan talks about that in his talks and he says there are minus ones, zeros and ones, and the ones are the ones that improve the business. Zeros keep it so, so, and you will need some of them and then the minus ones are kind of more the toxic people, the people who I actually degrade from the business.

[16:06] [Music]

[16:10] Mike: And this episode is based on some thoughts I had regarding a forum thread came up inside the Micropreneur Academy that popped up a few weeks ago. And essentially what had happened was that Facebook decided they were going to eliminate about 80 million fake Facebook accounts. One of the members of the Micropreneur Academy ended up with what was literally exponential growth because all these Facebook accounts got shut down and people were looking for another place to go and his site offered something that very much appealed to this particular audience and it was kind of a social networking site. And you know people just kind of flooded his server to sign up for accounts. And this wasn’t something that he had planned; this wasn’t something that he had actively gone after, it just kind of fell in his lap. You know obviously not everybody is in this kind of a position but it brought about a discussion about, you know, when is it the right time to scale out the systems.

[17:01] And I think that the obvious short term answer for him is, you know, it’s kind of too late to scale your code at this point, you basically just have to buy a better server, buy more hardware, you know, throw hardware at the problem until you figure out how to deal with it. But you know the questions came up, well why didn’t you, you know, build for scale to begin with? I mean what’s preventing the site from being to handle this influx of people. So the basic question is, you know, when is the right time to scale, you know.

[17:27] And there is different aspects to that question, I mean the first is engineering your software to scale. And I think that I was reading Dharmesh’s website on startups.com and he actually a blog post that was specifically about this and the direct quote is, “ don’t fall into the trap of spending limited resources on planning and preparing for success, instead spend them on times that will actually increase your chances of success.”

[17:51] Rob: You know I have seen this over and over especially with businesses that I have acquired where the previous owner has invested literally tens of thousands of dollars into either hardware or into bullet proofing software and making this exotic admin area or just automated incredible amounts of things to where their app could handle 50,000 paid customers, but when I buy the app it has four paid customers. They either didn’t know how to market, they ran out of money before they were able to market or it just wasn’t a good idea for an app at that scale.

[18:26] And then you know I will take it over and downgrade everything and go to a—I mean I went from a $ 500 a month hosting plan with one app and I moved it to a shared hosting account that is eight dollars a month and it has never had a glitch, just incredible stuff, right? So that’s definitely premature scaling and I have seen that a lot when I was—I also saw it a lot when I used to consult especially for the government.

[18:47] Mike: Well the government is totally a different story, but so basically you increase your profit margin by $ 500 a month or $ 492 a month just by moving it to a different server?

[18:57] Rob: Yes. It was crazy I know. That might have been the single most profitable move I did that year. It is very common especially for some reason as developers and I am the same way, I have to fight off this urge but when I—I think coming through the enterprise software ranks you have to think a certain way. And with enterprise software it tends to make sense that you would think that way. You know, you are trying to avoid these massive outages, you are trying to avoid of manual labor, you are trying to avoid one off things, all of those things need to happen because you have hundreds of thousands of users or your system is absolutely mission critical, it cannot fail and so you learn to engineer things a certain way.

[19:36] So it’s really hard to then come away from that and sit down to build invoicing software SAS app or a keyword tool SAS app and to think differently, right? Because you think about every edge case and then you spend months building this software that can handle every edge case. Whereas handling those edge cases manually is going to save you those months of development time.

[19:57] Mike: Yeah and if the application itself changes significantly enough, those edge cases may just completely go away.

[20:04] Rob: I agree. And I mean even this morning I was recording a screen cast for kind of a new edge case we discovered with one of my apps and I sent it to the virtual system and I told them if this happens a lot and you feel like you are doing this too much, let me know and I will write the code to fix this, but it’s about 10 hours of work for me. And I know that doesn’t sound like a lot but that’s a bigger time investment than I want to make when this is literally—it’s about a five to seven minute process for him each time he has to do it. And my guess is this is going to happen once a week and I think that’s what has been happening for a few weeks.

[20:38] And so, hey that’s a nice trade off for now because I am going to take that 10 hours, invest that into actually getting more customers which is basically what Dharmesh said, don’t spend the time actually preparing for success, actually increase your chances of success. And so I am going to invest that 10 hours right now into increasing the success. The other thing that people shouldn’t over look is I am not just saving time, right, I am saying it’s 10 hours and he is going to spend five to seven minutes per, but I am saving my time. So him spending five to seven minutes for several months is still worth me saving a few hours of time so that I can push the business forward.

[21:11] Mike: Yeah and I think that’s, you know, that’s really what a lot of people over look when they are trying to figure out what they should do next and you know people get hang up on these little details where, oh well, this is taking too long to do or oh I can write the code for this. And the answer is not always code, I mean as developers our brains kind of naturally gravitate in that general direction because we like to solve problems and get things done. But sometimes you have to look at the bigger picture and the bigger picture in many cases is Identifying when it is not cost effective to do something, you know, when is it going to save you more time by, you know, skipping over that and just dealing with it when that piece comes up. And there is all these different things that you have to maintain in addition to that once you have written that code. So you write that code and then you own it for the life time.

[21:58] Rob: Yeah I think the big question you should ask yourself anytime you think about sitting down and not building a feature but doing scaling type stuff or handling edge cases with code or admin tasks that could be handled manually is what is the danger of this actually happening and what is the consequence if it happens. And so you can take an example like, you know, some edge case, someone clicks a button in Hit Tail and they are on the old billing instead of the new billing and it can’t do it. And so I can write a bunch of code to go back and you know mess with scripts and mess with data, or I can just pop up a message and say you know what, you are on old billing, click here or you know our Admins already been notified and they will go on and do this manually. And that is like a three minute change, right, to just ping off an email and give a message.

[22:46] Alternatively, I could spend four or five hours and solve this thing for this one person, but the question I have to ask myself is, what is the chance that this will happen again? The consequence is oh, that someone sees a message? That’s a bummer, if 100 people a week saw it then yeah I don’t want my app to function like that, but if it’s once a month then you got to be willing to put up with that in order to save like I said even four or five hours a time because our time as entrepreneurs is so valuable, it’s more valuable than having perfection.

[23:16] Mike: And I used to be extremely guilty of that one, I worked at Pedestil because we would ship the product and we would ship it with this list of known issues and it just buffed at the time, I mean looking back on it I was kind of young and naïve but looking, you know, at the time I am looking at that saying well we know about these issues, why are we not fixing them. And you know of course it’s all about getting the product out there and making sure that people are using it so that you can charge more money for it and so that you can pay the bills and you know pay my own salary which, you know, I should have been able to realize that stuff but I just didn’t and I was too focused on the code itself as opposed to the bigger picture of the business.

[23:55] Rob: As a software craftsman you want the code to be the most important part and you want it to matter, right? You want it to be what matters and what makes the difference and you want your product to be perfect because that’s what you are good at, you want your be proud of what you are building if you are a craftsman. But when you are an entrepreneur, even if you are still that technician, you have to balance these two things out.

[24:16] Mike: So let’s kind of go onto a slightly different topic in terms of scaling. What about scaling marketing and paid advertising and things like that? I mean it seems like especially when it comes to paid advertising, the last thing you want to do is start dumping money into that and scaling it before you even know it works.

[24:34] Rob: There is some pretty obvious steps that you need to follow before you try to scale a marketing spend, and by marketing spend I don’t just mean paid advertising, I mean investing your time or money into having info graphics made, having viral blog posts written or writing them yourself. Any part of partnership where you do an integration, like this all costs either money or time whether you hire or do it yourself. So before you know that you have a product that people want to use and that will actually convert when they hit your marketing website and that they will stick around for a while until you have a reasonable lifetime value, then you should not scale your marketing, period.

[25:14] The first one is do you actually have a product that people are interested in and that you can communicate pretty quickly because that’s the core of going on marketing on the internet, right? If you have a product that’s so complicated, whether it’s an enterprise product or it’s just such a new idea that putting up a Google Ad or a Facebook Ad or building an info graphic isn’t going to really get people to come in and buy, then you know you have more medium and high tech sales stuff.

[25:37] So the first step is getting a product that people want, the second step is having a website that actually sells it well and that gets a decent conversion rate and gets enough people through the funnel that if you do go out and buy, whether you do the info graphic or paid Ads, you know if you send a bunch of traffic to your site are they actually convert. And then the third thing is plugging that funnel, making sure that people who start your trial actually convert to paid and after they convert to paid they don’t just churn out in the first month or two because then all that money you spend early on is just going to go away.

[26:12] So that’s you know one of the–, there was a startup survey and I wish I could remember the name of it, but it basically said that one of the, if not the most common causes of startup failure, was premature scaling. And what they meant was it was trying to go out on just market, market, market, before they had done those three steps.

[26:33] Mike: It’s interesting because, you know, I am kind of in that position right now with Audit Shark where I don’t necessarily specifically know the product market fit is the yet, I mean I am sure that there is, you know, a way to tweak Audit Shark so that it s the right product and you know it just needs to find the right market for it. In some ways I am having a hard time kind of identifying the terminology that people would use to like search for it. How do you translate what people are thinking into words that they would actually use to go search for this type of product and that’s, you know, that’s the stuff that I am struggling with.

[27:05] Rob: Absolutely.

[27:07] Mike: It takes a little bit longer, I mean I feel like I am going about things a little bit slower than I would like in many ways but at the same time I feel like it’s the right path because I don’t necessarily know all of the fine grain details. So you know I would like to make sure that, you know, once I find that, you know, test it out, make sure that it’s right.

[27:25] Rob: Right, I mean I just ran through this over the last nine months, right, because I had HitTail, I know the old marketing wasn’t working very well. And so I had to figure out what do people call this, is it an analytics package, real time analytics, is it a keyword tool, is it a Long Tail keyword tool, is it Nassio keyword tool, what are the ramifications of this thing, you know, and what are people going to search for, what’s going to make sense in their mind. So that was a lot of—there were some research, I did some competitive research, looked at what Analytics—what people think of when they see Analytics versus Keyword Tool. And then also it was honing copy and I wrote the first version of the website and since then I just tweak and tweak as I find that certain Ads convert well and get a lot of clicks. Then when they come to the website I will start borrowing copy from my Ad and putting it in the website because I know its compelling headline and compelling Ad copy.

[28:18] So it is an ongoing process but you certainly optimize, you kind of optimize up as you do it, right? Your first version is your best guess and then the more you talk to customers the more you get people to come visit your site and the more you do, you know, advertising or even info graphics and blogging. You just learn the verbiage that people used to talk about it and it becomes part of your kind of vocabulary as you speak about it. And then it becomes much easier. If you go back and revisit a page you wrote six month ago, whether it’s the home page or any page of your sales site and you haven’t seen it since, you will realize like oh my gosh, I can’t believe I called it that it’s not that at all, you know, no one called it that. And you will revise it, so definitely a process but the key part of that is starting to talk to customers pretty early.

[29:00] Mike: You know I came across this book on Amazon called Nail it then scale it-The entrepreneurs guide to creating and managing breakthrough innovation. Have you come across this book before?

[29:10] Rob: I haven’t.

[29:10] Mike: Okay. It has 31 reviews and the vast majority of them are five stars.

[29:16] Rob: Oh yeah.

[29:16] Mike: It’s like 28 of them are five stars and I think I am actually going to pick it up and take a look at it. I guess the third piece that I wanted to talk a little about was scaling the business itself and you know how do you go about scaling the business. One of the things I read a while back was this thing called the lily Pad Strategy. The basic idea was to treat your market as if it was a pond and you know you are addressing this little tiny piece of the market and that’s represented kind of by a lily pad. And in order to address the entire market space, what you need to do is you need to jump from your lily pad to an adjacent lily pad. And instead of trying to go to a lily pad that’s clear on the other side of the pond, you want to go to an adjacent one because that is much more reflective of what your product currently looks like versus something that’s on the other side of the pond where their expectations are completely different and the product that you currently have is not going to even remotely resemble something they are looking for.

[30:11] Rob: So does the Lilly pad strategy mean that you should just make small tweaks to your product, is that what it’s saying? I guess I am missing out on what the adjacent pad–.

[30:20] Mike: Oh, so let’s say that you have a product that is like a CRM package for a dental practice and you’ve got this CRM package but it’s specifically for dentists. Well an adjacent market might be a CRM package for like a chiropractor practice, you know, some sort of physical therapy because it’s still in the health care but it doesn’t branch out into things like mental health where there might be other, you know, logistical hurdles in terms of regulations that you need to deal with. Maybe there is laws that deal with how that data is going to be stored that are radically different from the mental health perspective versus physical health.

[31:01] Rob: Right, okay. So this is about growing your business, like growing your market and taking over new adjacent niches.

[31:08] Mike: Yeah, so I thought that, you know, the article it was very interesting about discussing it in terms of these Lilly pads which are market verticals which are right next to each other and some market verticals are going to be really close to each other and then there is other market verticals which are much, much further away. And you start branching out and you start addressing all of these different needs which you start ending up doing, is you essentially morph your product into more of a generalized solution that addresses a much, much larger portion of the market as opposed to the niche product that you started out with.

[31:39] Rob: Right and you see that like with Fog Bugs, right? Fog Bugs originally started as a bug tracker and then it moved into like a project management tool, and then it added like estimating and you could do Adgil development with it and it had built in estimating algorithms, and then they added a Wiki so you could so specs and roll that right in. so it kind of expanded into a larger tool, I think that’s pretty natural.

[32:03] My experience to be honest is with smaller shops like you know one to five person software companies, is that most markets they are going to be in are going to be large enough that there is low hanging fruit that people leave behind and they expand too quickly. I guess that’s what we are talking, premature scaling. It’s if let’s say I am a one person software shop and I have a product like Hit Tail, there is still a lot of the market that I could reach that has never heard of my product and so if I were to right now start going after—I have had suggestions like you should get it localized and globalised, do both. And so get it into other languages and handling other currencies and you should just start going after Western European markets and all this stuff. And it’s like, yeah okay that could work, but to me that’s way too premature to branch out into other markets.

[32:56] Well I think people need to use caution and thinking, well since I have tried some marketing and I am pretty much tapped out I am going to branch into this other market, because that’s that—it’s that downward cycle I would say of constantly thinking you need to build new features when you really you don’t know how to market yet. And you don’t know how to market your app yet and you haven’t optimized that part of it and you are expanding too quickly.

[33:18] Mike: Yeah I mean all of those things are great things to think about, but I think that maybe some of the listeners might question, you know, what are the things that you can look at in your business to figure out whether you have reached the market potential for a product versus, okay I have kind of saturated this piece of the market, I really need to start looking at either adjacent markets or complimentary products or just an entirely different product.

[33:39] Rob: Right. Well I think you can look what traffic sources you are currently harnessing, and I don’t just mean online traffic but you know if you take inbound phone calls or whatever other types of stuff you are working on, I think that a product that people are actually interested in using and that totally clicks with them and you have a high retention rate, I think that a product like that has a much larger market and a longer life cycle than most people have attention for.

[34:07] And so I would ere on the side of if you have an app that people are actually paying for and saying wow this is fantastic and offering to give you testimonials, which I have seen happen, then you need to double down and really look at where is all your traffic coming from and what have you not even touched, because I can almost guarantee you that if we sat down I could point out five areas that you haven’t even thought about, five places you haven’t even thought about marketing.

[34:32] So I would almost say, as a rule, don’t expand out until you are way, way down the line. I feel like you are going to have so much experience and so much knowledge as an entrepreneur you are going to know when the time is right that you should scale it out. If you are hesitant or wondering, my app kind of isn’t really taking off, should I just add more features or go onto other verticals? I think that’s the wrong time to do it. But if you do a full pivot, then that’s one thing, right? If you realize wow this other market really needs it more and I am just going ditch and leave the other one behind, but if you are thinking about expanding and just building a bigger and bigger product, trying to capture a few more crumbs from other verticals, I don’t think you built something that people want.

[35:10] How about scaling like internal business stuff, like if you know in terms of building the product and maintaining it and then supporting the product and then marketing, what are your thoughts on scaling those areas in a business?

[35:23] Mike: You have to find either employees or contractors, consultants even that you can essentially hand those tasks off to that have some sort of a measurable goal that they can measure the results against and they have to have a process to do that measurement. And I think that’s probably the most important thing to figure out whether or not they are making progress or not and make sure that the time lines are short enough such that they can measure those results and figure out whether they are making progress. And if they are not, how can they go backwards a little bit, take a couple of steps back and then maybe come at the problem from a slightly different angle in order to actually move things forward again.

[36:00] Things get to a certain point where you just can’t manage everything yourself, at least not all in your head or, you know, there is only so many hours in a day. You are going to have to have other people that you rely on that you hand some of these things off to.

[36:14] Rob: If you want to go to the next phase then you do, otherwise stay where you are if you are happy. You know and that first phase is that solopreneur, it’s the micropreneur we have talked about over and over and doing everything yourself and that can work for a while. Step two which I do actually think or phase two which I do actually think people should move into, that’s where you are outsourcing and you are outsourcing mostly to task based contractors and we talk a lot about that here in the academy, hiring VAs, hiring developers. But you are still the entrepreneur and the manager and you are handing off just some of the technician aspects of it.

[36:46] And then phase three, this is where you know a lot of people don’t want to go and actually historically you and I have not gone here, but I feel like I am slowly being pulled into this as I want to grow larger and larger, that’s where you do hire that consultant level, the project level person. And like you said whether they are an employee or a contractor it’s kind of irrelevant, it’s can you hand off an entire project to them. And they go handle it and they are just at a higher level and they go based on goals rather than here is the process, you know, that you plug this into. And then past that I think is hiring like full time employees, but I think early on you really need exceptional employees to really push the business forward and then I think when you get to five or ten employees then you need to start having a little bit more process in place because you are just not going to find 20 phenomenal employees.

[37:33] You are going to get some people who are just kind of average and you need to have processes that help the whole thing function and you did get more process oriented. And obviously growing up from there requires even more process and that’s typically the time that a lot of founders sell and leave because it’s not necessarily fun anymore if you like early stage startups. To be honest I typically haven’t stuck around with companies as they have grown past teams of about 15 or 20 developers. That’s when I historically I have just found out that it’s like this is way too much headache, you know. But what’s required for that size business is not a bad thing, it’s just it’s not a good fit for everyone.

[38:06] Mike: Right.

[38:07] [Music]

[38:10] Mike: If you have a question or comment you can call it in to our voice mail number at 888-801-9690 or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. You can subscribe to this podcast on iTunes by searching for startups or via RSS at startupsfortherestofus.com where you will find a full transcript or each episode. Thanks for listening we’ll see you next time.

September 11, 2012 / Leave a Comment /

Episode 96 | Cold Calling with Robert Graham

Startups For the Rest of Us

Episode 96 | Cold Calling with Robert Graham

00:00 /

Show Notes

Cold Calling Early Customers eBook

Transcript

[00:00] Mike: This is Startups for the Rest of Us: Episode 96.

[00:04] [Music]

[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?

[00:25] Rob: I’m good. I just took four days off for Labor Day weekend. So of course instead of actually taking four days off, I got this bug in my ear over the weekend and rewrote my churn, not algorithm but my report. So I have this one page dashboard I use in HitTail, and has all these numbers lifetime value and I’ve talked about it before. But what is bothering me is that when I got a big spike and new customers my churn 30 days later would spike way up. And the reason is with typical SaaS businesses any type of recurring you have the highest churn in your first 30, 60, 90 days and then it settles down after that.

[00:59] And so if you have an imbalance, you know, people who are in their first 30 days and you have a ton and then you’re overall churn is not a good measure because you need to break it down. And so I was like no problem. I’m just going split that out. It’s the weekend. I had a corona with a lime in it. I’m sitting there writing a little bit some SQL queries. And 5 hours later, no joke, I finally, I just it kept not working the way I want it. Now granted my data model is not the most elegant and normalized data model. I inherited it from the previous owner. So there were some challenges as well as some dirty data. I have to kind of code around in the SQL statement. Don’t include it if that string field includes this underscore. I mean this crazy stuff like. But once it all got done now I’m very happy that I spent almost an entire day over Labor Day weekend to split out my churn into 30, 60, 90 days and beyond. All right. So, how about you? What have you been up to?

[01:52] Mike: I spent the last week or so working pretty hard on AuditShark and I’ve churned out more than 5,000 lines of code over the past week and a half or so. A lot of it was of I’ll say copy and reformat type of code. So basically I have a component that I had built and then I needed to build another component but I also needed to reuse or I wanted them to share the same kind of web services on the backend. So essentially what I did was I wrote a generic version of the component code and all the classes that go along with it.

[02:23] So essentially I had to refactor a lot of the code in order to make it generic enough that I could use it again for other components that I have that are coming down the line a little bit later. So most of it as I said was copy paste. But I had to tweak a lot of it and make sure that the logic still work. And that took a long time to get done but I’m really happy with how it all came out. And as of yesterday, I’ve had the new agent installed on a couple of servers. So that’s been running. I haven’t seen any problem so far.

[02:49] Rob: Well good. Is it true that as of today we are 6 days away from the AuditShark early access?

[02:56] Mike: Yes, it is true.

[02:57] Rob: And so when this goes live it would actually be the day after. So yeah, early access is on September 10^th. You’re going to hit that?

[03:05] Mike: I think so. I’m looking at my list of things that still needs to be done on my end for the early access and it says that I’ve got 36.5 hours worth of work left. I went through everything that I have in five bucks and assigned a time estimate to it. And I was pretty conservative for most of my time estimates. So I think that it seems reasonable and the 36.5 hours from today would realistically leave me about a day short. But as I said I was conservative with those times and I think some of them will just take a little bit less time that I’ve estimated. I fully plan on spending some additional time probably this weekend to make sure that everything gets done.

[03:42] I won’t call it a concern but the one thing that I’m not terribly happy about is that I know that some of the content is not going to be done. So I’m not going to be able to launch it with the policies the way that I want them to be from the server. So there’s not going to be enough content that people are [auditing] for on day 1 but that’s also something that’s going to take time anyway. I mean it’s not like I can just launch on day 1. Like if I was doing a vulnerability scan I would launch on day 1 and say okay we’ll I’ve got 3 million vulnerabilities that I’m scanning for. It just doesn’t really work that way.

[04:12] Rob: I think that’s why they called it early access.

[04:13] Mike: Yeah. Yeah. [Laughter]

[04:16] Rob: So August was a good month for HitTail. I was actually worried because internally because July was the best month ever. But there was that $1,000 article order, remember. And I was concerned that I was actually going to decrease, you know, have less revenue but I wound up making it passed that and another several hundred bucks. So I made it to another milestone. And some things in terms of marketing are not working at all but the ones that are working are working quite well. And so it’s driving a lot of new trials, you know, it continues to grow. So it’s been good to be hitting on a few cylinders that I’m trying.

[04:51] Mike: That’s really good to hear and that’s part of why I’m working on AuditShark cause it kind of reposition it as more of a SaaS application more anything else and I kind of made that decision a long time ago. But in talking to some of the webhosts this past couple of weeks, I found that they are more than willing to pay for a product like AuditShark on a subscription basis. The price points that I kind of talk to them about they don’t really seem to blink at down there. Just like a couple thousand a month, that’s no big deal, whatever.

[05:20] Rob: Yeah, I would expect that would be a huge sticking point. Speaking of couple thousand dollars a month, do you have a billing mechanism in place if I sign up?

[05:29] Mike: [Laughter] No and actually I have a contractor who’s working on that right now. And that’s one of those things that, wait, why are giving me crap over this. Aren’t you the one who that waited until three days before you have to bill somebody that…

[05:42] Rob: Indeed, I did. But the funny part is he put it on the outline. And I’m like wow he’s working on it already. This is way ahead of schedule in my mind. Early access you’re like at least minimum of 30 days away from billing somebody. Do you have a 30 day trial? Is that what it is?

[05:57] Mike: Yeah. Well the thing is this is just to get the thing started for them to sign up. It isn’t the actual billing code itself. It’s just you know as part of the initial registration for customers, here enter your billing information, in the backend so that I can bill you later. But I’m not actually building the billing code yet.

[06:15] Rob: Right. That made sense. And that code actually it’s not as simple as it sounds because they do the cool java script thing where you don’t need PCI compliance. But as a result it’s a new unique experience that no one else does. So you really do have to dig in and understand what they’re doing in order to implement it.

[06:32] Mike: Yeah. I really don’t because this contractor has already done it and he did it for altiristraining.com which is why he’s doing it for this product as well.

[06:40] Rob: Awesome.

[06:41] Mike: Definitely. Not only code reuse but contractor reuse.

[06:44] Rob: That’s a best way man. I mean that’s something, every time I talk to someone about outsourcing I say if you find a good whatever developer, virtual assistant, designer any of these things, you keep them around. I have people who work for me for five years. They may be part time. They may be hourly. They maybe halfway across the world but it’s like all the knowledge that they have from my various businesses helps me moving forward cause I don’t have to redefine everything. It’s so valuable to train someone like you’re doing on one or even multiple of your apps cause you’re going to tend to use the same billing systems. You’re going to tend to have the same approaches and it’s great if someone is up to speed. It’s similar to having an employee who is just around and kind of understands the legacy of how you do things.

[07:24] Mike: Uh-huh. The one thing I have found that’s a challenge in working with some of these guys though is when I go to reply to some of their question and stuff that the Google, so when reply to somebody, the height of the box that you type in your message into it’s like 240 or 260 pixels tall. So it makes it difficult to see what somebody else has said in line with what you’re typing which is kind of pain in the neck. So I went out to search for some Chrome extensions that would actually allow you to expand the size of that. I tweeted about it and somebody said, well in Firefox you can just drag it and make it whatever size you want. And I’m like yeah stupid Firefox. But I went out and I found these extensions and I went to install them and you can’t install them anymore. You have to go to Google Chrome web store in order to install them.

[08:13] Rob: Google is doing crazy stuff. I mean I don’t know why they’re doing that. Maybe it’s a security thing but it seems like they’re making things hard on a lot of people with a lot of their choices that they’re making with their tools.

[08:24] Mike: Yeah. I read up on it. There is a way to do it. You can basically drag it on to the extension. Like if you have to download the extension on to your hard drive and then you have to drag it from there onto the extensions page in your web browser and then you can install it. But it’s a manual effort and they said that they’ve done that intentionally to help increase the security of the web browser, which is fine but is in no way shape or form obvious that that’s what you have to do in order to get it installed. They just pop up this little thing that says you can’t install this. You have to go download from the web store instead.

[08:54] Rob: And the trippy thing with Chrome is on most of the websites I visit if there’s a text area it has the draggable thing in the bottom right. But it doesn’t have that when I’m looking at Gmail and Chrome. I wonder if it’s in the Google apps. Did you see if there’s just one an enabler? I guess our listener will let us know if that’s the case.

[09:12] Mike: Yeah. I just remember searching for a quick fix to it and the chrome extension was one of the first things that came up and I’m like that’s a very quick fix. It’s simple. And I went to do it and it just didn’t work. So I thought I mentioned they change their security model on Chrome.

[09:25] Rob: Well this is one of; like I said so many things they’re doing lately that I’m just it’s like making it harder on people in general. They did the penguin update which made it harder on SEO whatever. That’s fine. Although, they did kind of hose me with the badges, they went back. Stuff that used to work doesn’t work. They have shut down their API. They had a search API that all the rank trackers used to use. So if you’re trying to track your rank of keywords you can hit the search API, get the result back, and search for URL. My URL rank this high for this keyword. They shut that down. They’re like deprecated it. So now any rank tracker you use is scraping, screen scraping Google. And they have to have this bank of servers with multiple external IP or Google will shut them down. They have to make it look like they’re a bunch of different computers.

[10:12] Mike: Funny that you mention that because my webserver in Rackspace is hosted on a subnet where they’re doing that. And whenever I try to go to Google and search when I’m on that server if I need to get something, Google pop up this saying that says please confirm that you’re a real person cause we received too many searches from this IP subnet.

[10:31] Rob: Bingo. So they’re doing that. You know they have a reason but it stinks. It makes it crappier for end users or people who used to use the Google API. I actually have an app that used it at one point. Luckily it’s not in production anymore. And then they’re taking keywords out of the searches. You know if you’re looking in your Google analytic account. I mean this is about a year old now. But anytime anyone could log into Google and they do a search and they found your website for a particular Google won’t tell you what that term is anymore. It just says not provided which is that stinks. I have a lot of website where that is very important information for me to know and to know how they’re getting there, and what terms of converting and stuff. The trick is if you pay for clicks, if you pay for AdWords clicks they will tell you the keywords even if someone is logged into Google.

[11:14] Mike: Is that what it is?

[11:15] Rob: Yes, isn’t that crazy. So it’s really a trip to watch these companies. You know the reason, [hubbub] with Twitter and what they’ve done with their API and they’re really hurting developers. And then you look at Facebook and they changes, some of the changes there making with privacy and all that stuff. You look at Google. These companies are like clawing. They’ve gone public. Twitter hasn’t yet but you know they’re on the road to it. And they’re like clawing for this revenue. They really start to do stuff that it isn’t, I don’t know if it’s necessarily in line with the don’t be evil thing anymore.

[11:44] Mike: Well they canned that whole statement a while back they rework some of their pages and somebody noticed that the don’t be evil slogan had basically been removed.

[11:54] Rob: Yeah. I mean so I’m not saying certainly not a conspiracy theory. Oh yes, shocker. Companies are going to, you know, if you’re not paying for the service then you are the product right? You’re not paying for it, Facebook. They obviously are marketing you. The same thing with Twitter and Google. None of this is shocking. I’m not saying Google is the worst thing on the planet. We used a lot of their tools. I like it. But it is a boomer when it impacts our usability, our ability to basically support our businesses as we use their tools. I don’t know. How things turn around but I don’t necessarily see that in the future.

[12:25] Mike: Well I think that they’re just going to continue to do whatever, I mean I don’t expect them to work any different than any other company. And they’re going to do whatever is best for them. You know that’s going to fit in line with their don’t be evil. And the face of that is going to well if it’s bad for us, we can’t do it. If it’s evil for us, it must be evil for the world. So if you’re doing something that negatively affects us then we’re going to shut you down because it hurts us which ultimately turns around and hurts everybody else. Which isn’t necessarily true but you know that’s the line of thinking that I feel like they’re following. There are certain things that they’re doing that I just kind of shake my head.

[13:00] Rob: Right. I mean even the not showing the keyword when someone is logged in that is absolutely impacting too. Like I’m able to, my service is able to provide less value to people because I have less information on how people are finding the websites so I can’t offer as many suggestions.

[13:14] Music

[13:17] Mike: So what are we doing today?

[13:19] Rob: We are talking to Robert Graham about cold calling and not cold calling in a tradition sense. He’s done a lot customer development and vetting business ideas using cold calling, and he’s a software developer. I don’t know, not someone who you would think that would really be drawn to this. So today, Mike and I are going to be having a chat with Robert Graham, native of Austin, Texas. How are things today Robert?

[13:41] Robert: Going pretty well. How are you guys doing?

[13:44] Rob: Doing all right. Robert Graham is a software developer. He’s actually a long time member of the Micropreneur Academy. He’s gone to both Microconfs and he’s just a friend of the show. Robert has kind of carved out this niche probably by mistake, I think he told me once. He’s gotten really good at cold calling and he’s a believer in the customer development, a lean startup approach and so he started doing cold calling for some of the ideas he had. And he wound up writing an eBook on it. The eBook’s selling well and you know I’m just fascinated by this concept because it’s never something that I’ve done to great scale. And Robert has done it so many times that he’s become kind of startup expert on it. So welcome to the show Robert and if you could of kind of just give us a little more background about kind of who you are, what you do and how you fell into cold calling.

[14:32] Robert: Okay. Sure. I kind of came to this totally by accident like you said. I’ve been a software developer forever. You know like in 8^th grade I was writing basic on my calculator to solve quadratic equation formulas in class. I guess I got into a niche from my background I grew up in southeast Texas, hunting and fishing. My dad and pretty much all the red blooded males that I grew up with all did. I knew a bunch of guys that had land or big hunters so I jumped in at some point whenever I made some of my first product to wildlife management. It turned out that they were not as online as I had hoped.

[15:12] And so it was kind of my one last ditch ways to connect I tired cold calling. And really just kind of stumble into some success after calling a lot of people with phone calls that maybe I get to talk to someone but it wasn’t taking me anywhere. And other one where I know on the first couple of calls if I got a voicemail prompt I was happy like it was a success. So I didn’t start in a place where I was very good in this or even excited to try but eventually after a little bit of success it went to the other direction for me.

[15:46] Rob: Right. And have you used cold calling both to vet ideas like in the customer development sense as well as to make sales or what you used them for in the past?

[15:56] Robert: So this gets a little under the semantics of what you mean by cold calling. I don’t know if I’ve ever sold something directly over the phone where the person I’m calling I’ve never spoken with before, but I’ve definitely used cold calling to starts relationships that ended in sales.

[16:11] Rob: Got it. Okay. As well as to vet product idea, is that right? To figure out if someone would be willing to pay for a product and you try to figure out if you’re going to build it at all?

[16:22] Robert: Yeah. I mean that’s probably the no. 1 thing I’ve done with cold calling. And I think the two things are tied up together if I were kind of starting over today how I would approach it.

[16:32] Rob: Right. Mike you’ve also done cold calling. What capacity did you do it in?

[16:35] Mike: That’s from Moon River Consulting and it was back in probably end of 2007 and early 2008 and when I tried to scale up the company. Essentially, I was trying to generate leads for some of the products that we were selling and doing consulting on. They were primarily Altiris and Symantec products. And essentially what we’re doing is we would get this list, they called them unqualified or semi-qualified leads from Symantec.

[17:02] So whenever an enterprise customer download something from them, you give them their email address and they will add it in to their database and try and match it up with any phone numbers or names that they might have. And then they’ll take those leads that if they don’t think that they are worth their own sales rep’s time to follow up on they’ll basically divvy them up and send them out to their partners. So what I was doing was going through this list of leads and trying to talk to people to figure out what it is that they were looking for and whether or not there is anything that we can help them with.

[17:35] Rob: Got it. So you really were doing then outbound cold calling for sales.

[17:40] Mike: Yeah.

[17:41] Rob: Okay. So that’s cool. That’s good to know. So it sounds like we have a variety of experience here. Robert, you wrote an eBook on this. What’s the URL?

[17:49] Robert: It’s www.coldcallingbook.net.

[17:52] Rob: Okay. So talked to me about how cold calling and cold emailing maybe complement things like contact creation and list building and traffic generation. Like why would someone do cold calling in addition to those other things?

[18:06] Robert: Right. So I think the biggest answer is because they can be extremely complementary. One of the things that you need to do as part of any contact creation strategy is have good sources for that content and good places to continue getting new ideas. And I think whether part of say an interview series with some of your customers or your potential customers where you could highlight themselves, their facilities, how they do business, best practices. You could invent awards that you give out and do all kind of different things where you have readymade content for the web.

[18:40] I know the award I did I kind of stole from Rand Fishkin who talked a lot about it. He said there’s one like Seattle startups or top 100 or something page that, you know, it’s just someone’s complete invention. And it doesn’t even matter how the ranking get generated or why, but everyone that he knows and had seen visit the page cause they want to see the rank. And I think that’s true you know everybody experience with post and ranking across all kinds of different things.

[19:10] So it’s a good way to have content to put out there. It’s a good way to have goodwill with your customers and also start relationships with new people. And that means a lot of different things. But cold calling if you’re mostly online or you’re mostly in magazines or wherever your main channels are, if you’re going to cold call you can really tap into network that you’re not a part of. And even a small foot hold in a new network can have an exponential effect once you make some people there really happy.

[19:42] Rob: I see. So you’re saying you use the cold calling to build a relationship, to get into a network that you otherwise wouldn’t be able to.

[19:48] Robert: Right.

[19:49] Rob: I’m curious Mike. I’m curious to hear yours sense of like back in the day when you were doing cold calling, why were you doing cold calling instead of other types of whether it was like online marketing or other approaches.

[20:02] Mike: I started doing cold calling more in part because it was forced on me. Their previous relationship that had been in place between Altiris and Symantec and their partners was that you would work very hand in hand with the sales reps. And then Symantec started pulling in a lot of leads they were getting and started bringing in partners a lot less. And basically said, well instead of us giving you leads you’re going to have to find your own. And they ended up torpedoing most of their partner network at one point because of that.

[20:33] And in about a year they shifted their strategy and kind of came back around on it, but by then they’d already killed about half of their partners in that particular space. So for me, it was more of I’d say a force direction than something I said like oh this seems like a great idea. And one of the things that I’ve found was that when you actually get in and you start talking to somebody especially when it comes to enterprise sale they expect you to be there.

[20:56 ] And they expect somebody, they expect to be able to put a face of a name is really what it comes down to. And doing any sort of inbound marketing efforts those tend to yield a lot less because at the enterprise scale these customers are used to having sales reps kind of walk in the door and introduce themselves and say here this is what I’ve got for you and this is how it can solve problem X, Y and Z.

[21:19] Rob: Right. Okay. We’re really talking about two different kinds of cold calling here. Mike has done mostly or entirely outbound sales cold calling. What we would traditionally think of as that kind of stuff. And Robert has done mostly costumer development cold calling which is calling people to figure out if they would buy an app before he builds it and then often like he said that does turn into a relationship later on that he can then go make a sale because the person has probably followed his development for several months while he got the product going.

[21:48] So we’re going to keep those two things. So I think my first question is as someone who is obviously much more of an online marketer and I bet there are a lot of folks listening to the podcast who feel the same way. There is this aversion to cold calling. In your book Robert you say how to get over the fear. So you use the word fear or you know a lack of desire to do it. What are some strategies and some thoughts on how you’ve done it, how you recommend people do it and then Mike we’ll toast it over to you when he’s done.

[22:14] Robert: You’re specifically asking about overcoming fear?

[22:17] Rob: Yeah.

[22:18] Robert: Yeah. So overcoming fear is a big thing for a lot of people with cold calling. I mean I kind of look at it a little bit in the rear view mirror which I think is both really good for giving advice and really bad for giving advice. Sometimes hindsight is 20/20 but it’s not quite right. I think the really bad cliché to answer that everyone will give is just do it and it will get better. You know practice makes perfect. The better answer is we need to figure out exactly what it is about cold calling that bothers you.

[22:46] Are you unconvinced that it will help your business? Are you scared of rejection? Are you scared of talking to people you don’t know? Are you scared do humiliation? Are you scared your product isn’t good enough? You need to really think about and isolate those factors and then kind of come up with things that you can do whether it’s role playing friends, calling old friends out of the blue, maybe some of that pickup artist techniques that see where people try to get rejected in the mall by people they don’t know.

[23:17] There are lots of different things that you can try to experiment with to get over some of those fear and then I mean eventually you just have to take the final step and make some calls. And know that the worst case on a bad cold call is that you get rejected, maybe someone yells at you. Honestly in all the cold calls I’ve done, the worst I can say that I’ve had is someone say that they weren’t interested in a less than friendly way.

[23:43] Rob: Right which is not that bad. So when you were vetting say I know you ran kind of a tracking service for a whitetail deer and did you make calls before that to find out if people were interested or you build it first and then call.

[23:59] Robert: That one actually, there were two products in that space and the first one I build before I called anyone and the second one I build after I had done some customer development. And each of them kind of had varied level of success and it’s a long story. But that’s the answer.

[24:15] Rob: Got it. And so if someone listens to this and they’re thinking I don’t have a whitetail deer startup. I have a startup where people are online. It’s an analytic package or something dealing with social media. I know my audience is online and I know that I can do some SEO or Pay Per Click or get on Hacker News or TechCrunch or any of these things, build a landing page, get an email address and then email some people and starts some conversations. In your opinion, do you think they should consider cold calling and what do you think the benefits would be over the approach I’ve just mentioned.

[24:45] Robert: I think it does depend a little bit on your market. I think you need to gauge what people’s expectations would be and if receiving a cold call for that type of business would be an absolute shock then you probably don’t need to engage in cold calling. But there are a lot of businesses that while they have an online component or they can get significant online traffic, it’s also a traditional B2B scenario where it’s definitely in balance to make calls to people and see what they would be interested in doing.

[25:16] I know a lot of different things come to mind. I would say I was in wildlife management. It’s a big agriculture industry. I know a couple other people writing software in that space that are making full time livings and cold calling is kind of a part of it for them. I would say proposals for designers is another place where it seems like a lot of those companies wouldn’t be totally out of balance to give a call. It may not be the fastest way to scale in every context, but I think it’s a great way to jumpstart and it’s a great way to jumpstart sort of new areas that you’re not well established.

[25:49] Rob: Right. So, Mike back to you. I mentioned earlier there is this fear or aversion to cold calling. You obviously did it. How did you get over that?

[25:56] Mike: It took a while to be perfectly honest. And I came to the realization, thankfully it was kind of early on, but it probably took a week or two of calls before I kind of got over it. But it was exactly the fear of calling. And I couldn’t quite figure out why it was that I was afraid to call. I finally ended up narrowing it down to the fact that I didn’t want to make the mistakes in the calls that I was making because I didn’t want to get rejected. And it wasn’t so much getting rejected it was the fear of losing you know whatever sales I was trying to pursue. It’s like if I say the wrong thing, this person will hang up on me and there’s a $30,000 sales that I just lost because I said the wrong thing.

[26:34] And that’s one of those risk that you’re just going to have to take. And you have to learn what works and what doesn’t. So what I ended up doing was I actually invested in a product called [AX]. And what I would do is I would take detailed notes about who I was calling, when I was calling them, and when I got through exactly what I was saying to them. And that I would essentially cross reference what I was talking to each person about with the other person I was talking to about hat particular topic. I also seem to find that there were certain times of the day that made it easier to get through to people.

[27:06] So first thing in the morning, at the very end of the day was usually a good time to call. Sometimes in the middle of the morning you know 10 a.m., 11 a.m. wasn’t so good. You tend to interrupt people and run into a lot of issues there. It really just took a lot of practice. And getting over the fear of I’m going to lose something by calling this person or I’m not ever going to be able to talk to this person again. And usually I can’t think of anybody who I called and they were just rude upfront but it was definitely a learning experience throughout the course of making all those calls.

[27:37] Rob: Yeah. Sure. So what was your worst? Was your worst response also something like I’m not interested in a rude voice?

[27:43] Mike: Yeah. I’d say that was probably. I mean I never got profanity. I mean I’ve gotten profanity from people in person consulting before, never over the phone. Yeah. I never got anybody who just swore at me and just scream don’t ever call me again. It was just look I’m really not interested.

[28:01] Rob: Yeah cause it’s different then the cold calling I think that we as consumers think are the people who are calling at like 6 p.m. right at dinner time and they’re to sell you long distance.

[28:12] Mike: Yeah.

[28:13] Rob: At least targeted. You know both what Robert has done and what you’ve done is at least like I work for this company, we provide this service. That’s a cost of business like that. I mean I’ve been in that position where I get inbound calls or I was managing teams at the development houses and people want to sell you tools or they want to sell you services or whatever. And yeah I was always respectful and I feel like most people are going to be.

[28:34] So it really does. I do hear that from of you that it almost sounds like this fear of doing cold calling is probably overrated. You’re not likely to get people yelling at you. It might also be the time thing. Like Robert said maybe people just don’t think it’s going to work or don’t think it’s going to be time well spent. Now, Mike you did cold calling to make sales, did you find it was a reasonable use of time or I mean did it generate sales or did you eventually abandon it and just kind of say this isn’t working right now in this niche.

[29:05] Mike: No, I did. I actually landed one of my largest sales by calling people. One of them was $169,000 sale. So it was not small by any means. I mean it was definitely worth in that regard but the problem was that and it sort of came back to the fear of calling people. I was afraid to make mistakes and part of it was that was one of the early experiences that I had with cold calling was I made this really really great sale but it just came out of the left field nobody in Symantec or Altiris expected it. It just kind of landed in my lap.

[29:39] So I was constantly afraid of making mistakes going forward. And looking back on it now I realized that most of entrepreneurs who are doing online marketing are doing the exact type of thing that I was doing then it’s just in a different mental category. When you drive people to your website, you only expect to convert like 2 or 3 or 4 out of a 100. And that’s kind of the status quote. That’s no big deal.

[30:07] But the same thing, you know, not those exact same numbers but there’s going to be similar ratios of some kind where there is X number of people that you call out of a hundred that are not going to respond to what you say. And I think the fear is for me it really derived from okay well how many of these calls do I have to make before I get to one that is actually going to yield any sort of actionable thing that I can go after.

[30:28] Rob: Right. And do you have a rule of thumb at all base on your experience?

[30:31] Mike: Specifically for what?

[30:32] Rob: For what you’re doing like outbound. It was a cold list to you. You didn’t have relationship it was at least a targeted list. It wasn’t very targeted? [Laughter]

[30:40] Mike: No. I learned after the fact that it was much less targeted than I would have thought.

[30:46] Rob: So with that in mind, with that description do you remember any idea like how many calls you had to make in order to get to the next step.

[30:53] Mike: It really depended on how targeted the person was that I talked to. I was pitching a specific type of products. If they happened to submit an email for a webcast that they may or may not have actually been interested in, they maybe just saw the headline then it kind of got categorized in a specific way and Symantec just said this person is in this bucket and go ahead and call them and see if they’re interested.

[31:14] And a lot of times it just wasn’t well qualified traffic. I have very much related to the same type thing like get it on the front page on TechCrunch and getting a 100,000 people to your website but how many of those people are targeted and actually interested in what it is you have on your website.

[31:29] Rob: Right. So there’s a lot of people walking up at a conference to your booth and saying I want to enter the iPad competition or the iPad contest to win it. So they scan your badge and it got on the list. But you don’t really want the product. You want the iPad.

[31:40] Mike: Yup.

[31:42] Robert: Yeah. I was going to piggyback what Michael was saying about conversion rate and talking about seeing that in a different way. I think it’s more personal when you’re actually making the calls as to whether or not you feel like you lost the sale in comparison to you get visitors to your website all the time that don’t convert and you don’t give it a second thought. But one big difference between having people hit a landing page and talking to people is something I brought up you can take notes and get feedback instantly on every person you talk to. And so you can A/B test and change what you’re doing with every call.

[32:18] And that doesn’t mean that you’re going to get your conversion rates to skyrocket because you always are still fighting, you’re still calling someone relatively cold and you may not be hitting them at the right time. But you can do a lot of moving toward how the costumers think and what kind of language they use really fast. Where if you even add a survey to a landing page that really hits your conversion rate a little bit because you have another call to action on a page. You have more things going on. It detracts from what you want people to do. So I think cold calling can give you a big leg up there and you can get a lot of feedback really fast.

[32:54] Rob: Right. You get a lot more of the why a lot faster than if you have a thousand people hit your site. You can tell they’re not converting but you don’t know why.

[33:02] Robert: Right.

[33:03] Rob: That make sense. Do you have any comments or thoughts on that? I mean I realize it was kind of a broad question but it was like what are the approximate conversion rates given your experience of calling to doing some kind of customer development calling for an idea. Like is it 1 in 20 calls someone actually talks to you or is more than that?

[33:23] Robert: No. For me, it was a lot higher than that. I usually try to have really targeted list that I’m going after. I do a lot of different things to target the list. You know picking people that are entrepreneurs. Making sure that I’m talking to someone who can make something of a purchasing decision, someone that has a stake in whatever it is that I’m trying to do the problem that I’m trying to solve, businesses that are close enough that I do something face to face if that’s an option.

[33:48] So all those things like just bringing you closer to the target and they realize kind of instantly as you get them talking. My percentage for doing cold calling for customer development are close to like 25% or 50% depending on the market and how good I could come up with the targeted list, how targeted the list was, and exactly how sure I was of what the product was too. That made a difference.

[34:12] Rob: All right. That make sense. I mean Mike was trying to sell something, right. People know that when you call. Whereas you as I recall had a good opener where it was like I’m a local entrepreneur and I’m thinking about building some software. Could you help, I mean it wasn’t like I’m selling you something. It’s totally different opening.

[34:31] Robert: Yeah. Well actually the opening that was most successful I wrote about close to about 100% conversion rate and that was true that happened for several weeks for me where I was calling people and I basically pitching to say hey I’m going to come out to your facility, do a tour, take some pictures, talk to you about how you handle X, Y and Z. It was people that breed whitetail deer like kind of a farm setup. And every one of them was like totally into me coming out and doing that. I mean it was free publicity for them. None of them know a lot about online marketing but they were all excited about having more of it done for them.

[35:03] Rob: Right. Cause you were going to interview them and do a little bit of case study or talk about their thing and publish it on your blog.

[35:08] Robert: I had a blog that was inside of the whitetail management niche. I mean it was really a win for everybody. And that was what got me super high conversion rate. But I’d also done calls where I don’t really have a value pitch. I’m just kind of threading on people’s willingness to help out someone getting things started. Even then the conversion rates are a lot higher.

[35:32] My brother-in-law is in heavy equipment sales and rental and I have a good friend that did door to door an commercial security system sales and they have times where they have to go to the office and make a 100 or 200 calls a day and I know their conversion rates are closer to maybe 5%. And a lot of times especially in the like residential security system space the 5% is he gets to convert 5% to let him show up and do a presentation.

[36:00] Rob: Yup. It’s next steps.

[36:02] Mike: I know some people who work in the high tech sales area for basically doing cold calling for enterprise sales. And they routinely make at least 50 to 60 calls a day and they might get 2 or 3 a week that they are able to basically hand over to sales reps to go after for the next step. I mean it’s not unusual to make that many calls in a day and have to continue making that many calls and not just getting very many that they’re able to turnover. In the past couple of weeks I’ve been doing cold calling or warm calling for AuditShark and as Robert said the conversion rate of that type of question or that type of call is significantly higher. I mean I haven’t had anybody in the past 2 or 3 weeks that I try to talk to say no I don’t have time, I don’t want to talk to you.

[36:52] Rob: Right and I think we should be clear here. The reason we’re talking about cold calling again is it obviously has a place in customer development, a place before you have a product is going to be super helpful for touching base with people who aren’t necessarily online and they’re a huge amount of niches that are not online. And even if they are online, they’re still instant way to get better feedback, to [iterate] quicker. There’s some value there. I don’t think any of us are espousing, you know, leaving online marketing behind and going out and having me stop my SEO and HitTail and just cold calling a 100x a day. That doesn’t make sense.

[37:24] We have these online marketing skills for a reason that we can bring a lot of people to our site and convert them. It’s kind of like one more approach that you can try out and obviously it’s especially good for some very specific instances. And I think I haven’t done out on cold calling, I have done some very specific emails to some companies that I know could really use some of my products. And it’s not like I get this list, a buy a list. It’s nothing like that. It’s I would pick out a single person and hand send them an email and be like hey, it’s almost like you can call cold email. But of course unsolicited cold email and spam in the US. But it’s like a personal note for me and it’s commenting on how I think this product can help them.

[38:06] So I can totally see the value of this outbound approach just what cold calling and cold emailing you know postcards and all that kind of stuff really is more of an outbound approach that we have been talking about. But there’s definitely some value there. It opens up a new market. So Robert earlier you mentioned that your conversion rate often depended on how well you were able to generate a list, like to get the call list. If I were to generate a call list I would go to Google and search for companies. I would have my VA do it then I would just put them in spreadsheet and kind of order it by some criteria. Is that how you get it or you have other recommendations.

[38:43] Robert: Yes. I had a professor in college that used to always say the answer is it depends especially when you ask marketing question the answer is pretty much always it depends. But that it’s usually a good approach to start with. There are some other places to get information about industries. It depends on what kind of industry you’re going after. If you’re going after some of the older more established industries they’re usually associations, state registry, big companies that basically just sell list like Hoovers or there’s half a dozen others that are pretty good sources of information and most of which you can get for free in different ways.

[39:24] And starting with googling is a pretty good way to start. It’s especially effective if you use a VA but you have to be a little bit careful. It depends on the types of calls you want to make and the volume of calls you want to make. I think that’s a great way to get 30 or 40 people to talk to. But if you’re really going to call 200 or sustain calling 20 or 30 a week or something then it’s going to breakdown fairly quickly.

[39:51] Rob: Right. You’re just going to run out of prospects. Let’s say someone is listening to this and they’re thinking about writing software for electrical contractors to help them with some part of their business. And they’re thinking obviously they’re not exactly target online audience that they can really drive them to a landing page and get emails. How many people do you think if they put together a list from Google of 40 or 50 local electrical contractors, do you think that’s enough if they called all of them to vet this idea or not, to kind of have an idea of whether their software idea has legs.

[40:30] Robert: In my experience, that’s enough people to talk to. I think if you can actually talk to 20 or 25 people you get a fairly clear idea. Some people will quote higher number, some people will quote lower numbers, some people will change it up and say you need 5 sales or 10 sales. The best advice I got on that front was Jason Collin picked up a tweet of mine asking a similar question a while back and he said you can stop whenever you don’t learn anything anymore. And so from that perspective you really want just to find the place where I called 20 or I’ve called 30 or 40 and I’m not really getting new things from what these people are saying. Either there’s not something I can solve here. There’s not some inconsistent or a lot of this people would pay for this.

[41:17] Rob: Got it. And here’s the big question and I know the answer is it depends. But I’m wondering do you mention price?

[41:26] Robert: You may or may not mention price in your initial call. Sometimes I used calls especially with local people in the early stages is a way to setup a face to face but you definitely mentioned price at some point in the process. It’s got to be part of you deciding if this is a viable business or not. Cause it doesn’t matter if you have something for electrical contractors that all of them want to buy but all of them want to buy it for $9 a month and you need to be $50 a month then you still have nothing.

[41:56] Rob: Right. All right well, you know, Robert I appreciate you coming on the show. Your eBook which is at coldcallingbook.net is I know it has other stuff. It talks about writing script, the importance of taking note, dealing with gatekeepers and I think you have an appendix for sample notes that you took and sample scripts and all that stuff. If someone was interested in finding out more and going deeper into this topic they can go to coldcallingbook.net. But if they want to catch up with you I know you have a blog or you talk about this kind of stuff as well as process to getting your own startup off the ground. Where would they find you?

[42:28] Robert: The best place is whitetailsoftware.com, that’s the blog.

[42:32] Rob: Very cool. Well thanks again for coming in the show and we’ll see you at Microconf 2013.

[42:37] Robert: Thanks a lot guys.

[42:38] Music

[42:41] Rob: If you have a question or comment, you can call it in to our voicemail number at 888-801-9690 or as Mike would say 9960 cause Mike transposed the numbers last week, or you can 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 transcript of each episode. Thanks for listening. We’ll see you next time.

[43:10] Mike: You know it’s not funny when you have to explain the joke.

[43:13] [Laughter]

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Episode 105 | How to Pick a Platform Partner

Episode 104 | Podcasts For Startup Founders

Episode 103 | Nurturing Leads in Your Funnel, Planning for Growth and How to Buy a Website

Episode 102 | 4 Levels of Income Generating Web Apps

Episode 101 | Key Takeaways from Business of Software 2012

Episode 100 | Startup Advice From 9 Successful Founders

Episode 99 | Outsourcing a New UI, Two-Sided Markets, Handling Incoming Calls, and More…

Episode 98 | Eight Sentiments That Do Not Bode Well For Your Startup

Episode 97 | Premature Scaling

Episode 96 | Cold Calling with Robert Graham

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