Episodes

Show Notes

• Lifestyle Business Podcast
• MicroConf
• Foolish Adventure
• YCombinator
• AuditShark Private Beta – September 10th
• AppSumo
• inDinero

Transcript

[00:00] Mike: This is Startups For The Rest of Us: Episode 88.

[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.

[00:20] 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. What’s going on this week, Rob?

[00:25] Rob: You know, I want to give a shout out to Dan and Ian from the Lifestyle Business Podcast. They just wrapped up their first in-person tropical MBA mini-conference. I think there were eleven or around a dozen entrepreneurs that are kind of in their audience and they just wanted to bring them together in to one place. And the cool part was in the most recent episode of the LBP, Dan had mentioned that us doing MicroConf and talking a lot about kind of the inner workings of it, you know, our behind-the-scenes episodes we’ve done each year, he said that we may had part in influencing him to kind of do an in-person event because — it’s actually an uncommon thing in terms of podcasters who build an audience and you tend to interact with people via e-mail, via the podcast itself and maybe via a blog but it is indeed, you know, kind of a rare occurrence for a podcast to actually blow up in to a full-pledge conference.

[01:13] Yeah, I’d just wanted to congratulate them and it felt good that, you know, we may have been a very small part of the inspiration or at least got the spark going in his mind of, hey we, you know, we should bring folks together in to one place and they did it. You know, we do it in Vegas. They did it in two weeks in the Philippines.

[01:28] Mike: Yeah, I can’t imagine trying to coordinate anything like that overseas. I mean I think that that just be really hard and it’s funny because we’ve gotten a couple of requests from people, I guess more than a couple for us to do like a MicroConf in Europe. And  it’s one of those things where it’s — it’s honestly kind of intimidating to even consider doing something like that. For them I think it’s a little different because they knew the area and they know how to get in and out of the country and all these — all the logistics of coming in themselves. But for us to do something in Europe seems extremely intimidating just because we’d have to deal with booking our hotel over there, you know, depending on the country they — we would have to deal with the language barriers and things like that. And I think that a hotel, it’s a lot easier to get by speaking English but I just can’t imagine trying to get people to come in from a foreign country and to actively trying to pursuit that type of an audience and bring them in.

[02:19] Rob: Yeah, I think they, you know, they did it smart. They started small like I said they’re only about a dozen folks there. They didn’t do — I mean it wasn’t like MicroConf where there is a hundred and sixty people there and we fly speakers in from around the world. I mean they just, Dan and Ian led the sessions. This is just based on — listening to the podcast. I don’t have any insider information. But Dan and Ian led the sessions. I think they had — they had Tim Conley from Foolish Adventure and maybe another expert or so. And it was kind of more like a seminar. It was a two-week long thing and it was — people hacking away, you know, kind of day and night trying to get to launch and then meeting during the day and giving inspiration and feedback and all that stuff. So it was just super fast iterations. And I think the whole — the whole program actually run two months, maybe a little longer than that and a combinator in this two-week hackathon. So it was — you can almost think of it as like maybe a Y combinator type of thing where they got a group together and you know, they let them feed off of each other’s energy and then folks gave each other feedback and such.

[03:11] But that would definitely be easier to organize in the Philippines or something if you had someone living there like, you know, Dan. I guess he’s not living there but he’s, you know, he frequents there and you only have eleven people to worry about because you’re right, if we’re — if we had to do something in like France or I don’t know, Western Europe or anywhere, there would be — there’d be some hurdles for us to have to jump in order to get — pull off a MicroConf. And I have seen, yeah, we’ve had at least a dozen requests to do something like on the East Coast to the US or in Western Europe. I think definitely on our radar but that maybe a year or two out until we really have everything, you know, dialed in with our — our West Coast one and then we can think about hiring someone to help us with the, you know, something in England might be the best place to do it actually. It’ll eliminate the language barrier and it’s just, you know, a nice Central easy place for people to get to I think.

[03:59] Mike: Well, having a second MicroConf in Europe would certainly alleviate the problems associated with, you know, keeping MicroConf small because then we’ve had two instead of one. [Laughter]

[04:07] Rob: Yeah and as you know, I mean based on people that write in as well as folks in the Micropreneur Academy, we have a quite an audience in Europe and I think when I first sold my — when I first put my book up for sale, I was surprised that 40% of the sales were from outside the US and there was a big chunk of those were in Western Europe. So I actually do think like there, you know, that we do have enough of momentum there that we probably could pull it off in terms of ticket sales. It’s just all the other stuff that goes along with it that I just don’t think you and I have the time right now. You’re trying to get AuditShark out of the door. I’m trying to grow HitTail and it’s like taking or I have the ball to do, you know, another conference and it doesn’t feel like a wise move at this point.

[04:46] Mike: Just recently we actually got a podcast question which we’ll probably cover in the near future, a question that came in from somebody in Zimbabwe so —

[04:53] Rob: Yeah, it’s always — it’s always crazy. How about you? What’s new with you? Any — any AuditShark news?

[04:57] Mike: Yeah, I’ve been trying to figure out exactly how much longer it’s going to take to get AuditShark out the door and I went through all the different bugs or the majority of the different bugs and cases that are outstanding in order to get AuditShark to launch. And I’ve started cutting things left and right. And it’s funny because things that used to be must-have’s to me if — I guess I’ll say, I’ve dialed them back and [Laughter] then just kind of threw them away and said, “You know what? I really don’t need that.” And it’s just interesting how my perspective has shifted in terms of just trying to get the product launching out the door.

[05:31] Rob: Do you have an example of like a specific feature that you’ve — that you used to think was a must-have and that you’re able to get rid of it?

[05:38] Mike: Yeah, I can — I think one off the top my head which was a — because everything is in Azure, I wanted to be able to run things like reports and things like that on a daily basis or weekly basis or whatever. And one of the issues with running that stuff in Azure is that because everything is distributed, there’s no expectation of concurrency anywhere. So when you deploy an application out there, it has to be written in such a way that it can run on its own or with other copies of itself. So if you have a scheduler for example, the problem with a scheduler is that you can’t just deploy it out there and have everything run because the first part of the problem is, you know, the redundancy. I mean the primary purpose of using Azure is to, you know, rely on that redundancy and if you only have one copy of that Azure worker role or web instance out there, then there’s no guarantee that it’s going to stay up and running.

[06:33] You know, they move things all — all around all the time. They bring things up, they bring things down and you have no control over that but you’re using things on a platform and the expectation that they have basically set forth is that if you build your application correctly, they can bring one of them down and they set up rules so that they’ll be in different machines and different physical hardware so that they can bring one down and then bring you up another copy of it some place else. And your traffic just kind of gets a load balance between them. If you deploy a single instance, you don’t get any of that redundancy and the problem with Azure is that it can drop that instance at any given time and you’ll basically lose everything scheduled during that timeframe until it comes back up again. So it’s possible for the thing to go down and then you lose it, you know, anything that will — was scheduled to go off during that time will basically be gone. It just won’t happen. So whether it’s reports or whether it’s specific tasks that need to go on and that you really have no notification or way of knowing that that scheduler went up and down.

[07:31] Rob: So it’s —

[07:31] Mike: And that’s kind of a problem. [Laughter]

[07:32] Rob: Right, right. But what’s the feature that you had that you’re not going to do?

[07:36] Mike: It has to do with organizing the data and the building reports off of it.

[07:41] Rob: I see. So you had a feature organizing data building reports and you’ve decided to drop it because it’ll get you to market faster. Why the change of heart? What convince you that you could do this now? Is it just looking at it with fresh eyes? Or is it that it’s serving a new market now?

[07:57] Mike: No, it’s more of a I’ve decided not to try and build a redundancy in to it and if it —

[08:03] Rob: Got it.

[08:03] Mike: … hacked out, then there’s only so much I can do about it, so it’s one of those things where what’s the harm if somebody doesn’t get a particular report especially if it happens within the first couple of months of the application being live.

[08:16] Rob: Is it — is it a report that would run in the background that’d be e-mailed to someone or it is someone —

[08:19] Mike: Yes, no. It’s —

[08:21] Rob: Okay, a background report.

[08:21] Mike: … it’s back end process. At that time, there’s this process that scheduled that will kick off and run a report. Well let’s say, 12:04 the — the Azure instance drops and then comes back five or ten minutes later. Well, that scheduled repot is not going to execute. So it will never execute. It actually won’t execute until the next day. So that daily report will not go out pretty much for anybody, you know, for you running this process once a day and just a report is just one example. I mean there’s a lot of other back end processes that, you know, I’m looking at that I might — I may end up scheduling. But if that’s the case, how often could it happen, you know, if you only have something scheduled once day, chances are good that it’s probably not going to it hit very often.

[09:01] Rob: Right.

[09:02] Mike: But I mean there’s a lot of things where people are going to be putting schedules — schedules in to the system. So they’re going to say, “I’m going to schedule my audit to run on my servers at 1 a.m. or 2 a.m. or 3 a.m.” Oh, what happens when those things kick off and —

[09:16] Rob: I see.

[09:17] Mike: I’m caching them on the client sides so I don’t think that that’s going to be an issue. It’s going to be more if the customer decides to make it change in the near, you know, somewhere around the time that audit supposed to kick off and it’s just not going to be able to stop it in time or reschedule it and —

[09:32] Rob: Right.

[09:32] Mike: … I look and I said, well that’s probably not a huge deal right now.

[09:35] Rob: But how hard is that to fix after you’ve launched if it becomes a big deal?

[09:39] Mike: It’s a — it’s a very challenging problem like it does shoot —

[09:41] Rob: Got it.

[09:42] Mike: … it fault tolerance. Scheduler is a very hard problem.

[09:44] Rob: Right, so it’s not — yeah, it doesn’t but it doesn’t become any harder because you do it after launch. It’s the —

[09:48] Mike: Yeah.

[09:48] Rob: … same difficulty basically to do it now and do it later.

[09:51] Mike: Right. And now all —

[09:52] Rob: Yeah.

[09:52] Mike: … I’m doing is just saying well there is only so much I can do. I think it would be a significant engineering effort to make it work and I’ve talked to some people within Microsoft to say how would you actually do this and you know, they’re still trying to get back to me.

[10:05] Rob: Yeah, it seems like — a pretty big limitation with Azure because I have — you know, I’m on a basically a cloud server which is essentially a really beefed-up VPS, right, Virtual Private Server and that’s what runs HitTail. And I have at least a dozen tasks that run in the background daily. They’re — there’s billing that runs every night. They’re, you know, they’re all console apps, right, just Barebones EXE’s that pulls off out of the database and do something with it and then — and then stop. And so there’s — there’s billing. There are — there’s an eMailer that you get keyword, e-mail alerts. There’s a few reports that it actually generates and e-mails to me about the number of trials of previous day, the high volume users, you know, just different stuff so I can keep track of it. And when they don’t run once, it’s actually not catastrophic. I mean even billing has choked a few times. I’ll, you know, upload a buggy version and it’ll crash. And since I’ve written it so that if I run it the next day, it’ll go back the previous two days, obviously, it’ll go, you know, kind of bill everyone who should have been billed by now. But that’s pretty rare that that happens and I can count on it running everyday because I’m using the Windows Scheduler. The Azure doesn’t have anything like that or it doesn’t have an equivalent, you know, mechanism.

[11:15] Mike: You can do those things but because of the way AuditShark works, it’s a little different. At least about the underline architecture for it is such that when something is scheduled to go off, it’s not initiated on the client. So what happens is it’s initiated on the server. So the server says “I’m going to spawn this task and this task needs to happen on the client.” So what it does is as part of that scheduled task on the server, it creates an entry in one of the Azure queues and because the clients are pulling in to the system and saying, “Hey, do you have anything for me to do? Do you have anything for me to do?” It creates that task basically on the fly. So it’s more of the fact that it is time sensitive in terms of the delivery and not the fact that, you know, there’s this report — I mean the reports was just one example.

[12:03] Rob: Right.

[12:03] Mike: And it’s probably not a big deal if it runs, you know, if somebody doesn’t get a report Tuesday night and they get one Wednesday or they, you know, it doesn’t kick off Tuesday night and then Wednesday morning I look at it and say, “Oh this didn’t get out. Let me fire it off manually and just go ahead and do it.” That stuff, I don’t think is a big deal. What is a big deal is if somebody schedules their audits for the middle of the night and then none of them run.

[12:25] Rob: Yeah, I agree. So it’s — it’s early July right now. And you are honing in on — on what timeframe for doing your beta and other stuff?

[12:35] Mike: I was going to say September 1st.

[12:37] Rob: Yeah. So somewhere like first week of September is what you’re looking at?

[12:40] Mike: Yeah, the first or second week of September, probably at the latest.

[12:43] Rob: And that is what — that’s when you’ll have beta to – you’ll let like a handful of beta testers in to start?

[12:49] Mike: Yeah, I mean that’s probably when I’ll start opening up to, you know, multiple private beta testers. I mean I’ll probably be reaching out to a couple of them within the next week or two to see if I can get some of them on in August. So it’ll kind of be, you know, there’ll be some that will come in on August, probably only one or two, maybe three tops and then hopefully, once I get in to September, then I’ll kind of flashed out more of the issues and you know, add in more private beta testers. And then I think that the first, first or second week of October is kind of what I want to shoot for a full blown launch.

[13:21] Rob: Because Labor day is September 3rd and that’s a holiday. So, you’re looking at September 4th or you’re looking at the September 10th?

[13:28] Mike: I was looking at September 10th because –

[13:29] Rob: Right.

[13:29] Mike: … if I’m talking to these people beforehand, you know, the Monday afterwards or the day after and say, “Hey, would you like to beta tester?” I want to talk to them beforehand. I’m going to talk to them in August at some point.

[13:39] Rob: Let’s say a date. Let’s say it’s September 10th and it’s just so that we can revisit this in — I mean that’s basically two months away because it’s July 10h today. So you have two months to get — get your stuff together. What happens between now and then? Is that all feature development?

[13:53] Mike: So some of it is feature development, I’ve still got that back end tool that is being built and that, you know, working through a number of different usability bugs right now but I have to have more conversations with people about what their expectations are for what the tool tells them because the engine, you know, the engine works the way that it works. It grabs data from the machines and puts it out on to the servers and I can run at least minimal reports at this point. But what I really wanted to find out from people is what things they’re interested in knowing about their machines. Are they more interested in — in like the vulnerability side of things or they’re more interested in path side of things? Are they more interested in industry standard configuration policies?

[14:35] I mean I’ve been reading a lot lately more of to gaining marketing material for my website and in looking through different ways that machines are — are hacked in to or compromised, a lot of those breaches come from system misconfiguration. So that was kind of really what my goal was. But I want to know is that people or something to people are actually really concerned about or is it, you know, just the data there, out there is telling me hey, this is a scenario of serious concern and it becomes more of an education process because I don’t want to have to educate people as much as possible. I really like to have them to say, “Yes, I recognize this is the problem. I want you to tell me what all the issues are with it.” And the product can do it. It can do all of those things. I just really need to figure out I guess what my landing point is in terms of the content that’s loaded in to the system. So —

[15:25] Rob: Very cool, man. Two months obviously we’ll be talking about it between now and then but I’d just kind of want to get — get something on the calendar so we can check it out as it — as it gets closer.

[15:34] Mike: So I have a question for you. You —

[15:36] Rob: Yes.

[15:36] Mike: … you had done this, the articles for HitTail and you had started pushing that to people and having them be able to request articles based on the keywords. How is that going?

[15:47] Rob: You know, it’s — it’s going quite well. It’s actually going better than I thought it would. I knew that there’ll be interest in it but there had been multiple articles purchase pretty much everyday. And so I did almost eighty articles. It was like seventy five articles in June that were sold and then looking to — I’m actually on track to beat that in July. And so what that’s done is I talked a little bit about it last time but in effect as raised the lifetime value of a customer because that revenue aside from the — the money that goes to pay the authors, that revenue is now — it’s pretty much pure profit. It just — it goes straight to the bottom line and as a result if I divide that whole, you know, the big bucket of revenue by the number of active customers, I have this — this bucket of money that’s basically increasing lifetime value and it means I can now spend more money to acquire a customer and that really was the original goal. I mean I talked about this in MicroConf talking. It was definitely the goal was to increase that lifetime value because aside from — from increasing prices or keeping people from canceling like lowering churn rate, selling extra things to people, extra value, extra things that they need is one of the best and easiest —

[16:58] Mike: Yeah.

[16:58] Rob: … ways to kind of increase a lifetime value of a customer. So you have more money to work with when you’re doing your marketing. So I’ve been pretty happy. I’m actually getting in to some paid acquisition with HitTail to haven’t done up till now because the funnel was so — it was a leaky funnel is what the phrase I use. People were just bailing during the trial and then the churn rate was high but I got that tamed and so now I’m actually, looks like I’m going to be able to use some — some paid acquisition and make money out of it pretty easily. So it’s — it feels like a good time to be — to be doing this. I’m really glad the articles have worked out to say the truth. And I think for the amount of hours that I spent building it, it’s probably been the most profitable feature that I’ve implemented in the past almost year that I’ve owned HitTail now.

[17:41] Mike: That’s really cool. I mean a lot of that sounds very similar to just basically selling additional products to your, just say, audience.

[17:49] Rob: That’s what exactly what it is, yup. So with DotNetInvoice when we wanted to increase lifetime value, we added on. We have a QuickBooks Integration, you know, little modules that’s like 99 bucks. And so it’s along the same lines, right? It’s just selling one more thing that people probably have already requested or maybe they haven’t but you know that it’s a good compliment to the service and create a lot of value for both you and the users doing that. The funny thing is maybe the punch line to the whole thing is yes, my — my revenue, my profit went up but I have this monthly milestones I’m trying to hit and typically it’s like I want to grow by a thousand dollars month over month, right? So it’s a small growth right now but I missed the milestone by $14 this month which I did two —

[18:29] Mike: Oh.

[18:30] Rob: … months ago as well, right? So it’s like one more article would have pushed me over the revenue mark. But again, it comes back to, okay, so fairly, you know, by — by comparison to 14 bucks it’s a pretty large number and I missed it by 14 bucks like it actually doesn’t really matter because I’ll blow past it next month, anyways. But it was just funny to add those numbers up and be like, “Oh, it’s going to be close, it’s going to be close. Oh…” That the agony —

[18:54] Mike: [Laughter]

[18:54] Rob: … just defeat, you know. But it’s nice to see – to see the growth coming. I’m actually I saw a big rush of traffic because I did the AppSumo deal in June and that went well. It sold a lot and so I should be expecting a big chunk of cash from that that I’m done hoping to feed in to my paid acquisition funnel to just, you know, be able to leverage that cash in to buying some ads through some different channels I’m trying out and hopefully, continue to grow the recurring revenue because the AppSumo deal is all one-time revenue, right? They basically bought a year’s worth of HitTail for a discounted price but I want to take that cash and put it to good use by building recurring revenue and that was really — really the goal of it.

[19:31] Mike: Now, did you include the — the money from the AppSumo deal in to your June numbers or no?

[19:37] Rob: I did not, no. Yeah, I know the AppSumo deal I bet will do between two and three times my monthly June revenue that I will — I will net two to three times the month of June revenue purely from that AppSumo deal. That’s — the audience is huge, dude. So they, you know, it’s a really quick influx of cash is what it is.

[19:55] Mike: Uh huh. So basically based on what you just said though, you know, what you’re supposed to do generally when you’re doing accounting for these types of things is when you get those one-time revenue spikes that are for a year in advance, you’re supposed to take that whatever that number is divide by twelve and then amortize it over the course of the next twelve months. So realistically, you did probably —

[20:15] Rob: Right.

[20:15] Mike: … hit then.

[20:16] Rob: I did.

[20:17] Mike: That $14 is covered I think. [Laughter]

[20:18] Rob: Yeah. Oh, it definitely is. I’m just not — I’m just not going to do that because I’m going to — I get paid, you know, in about a month. They pay net 60. So I get paid in early August and I’m basically going to just reinvest that right back in and I’m not — probably not going to count – I’ll probably put an asterisk in my little revenue tracking sheet and say this month, you know, I took away X thousands of dollars from the AppSumo deal but I’m not even going to — I’m really way, way more interested in recurring revenue. This one time burst in revenue even if they are high four and low five figures, I won’t say it’s not interesting to me but it isn’t as nearly as interesting to me as something that is building up that monthly recurring flywheel, right? It’s the flywheel that I want to get. So just because I can — if I can license something or you know, do one big sale that goes in one big influx of cash, I want to take that money and just reinvest it back in to  creating more flywheel revenue, more recurring revenue.

[21:09] Mike: No, I understand that. It’ll make sense to me. I mean I was just saying that in terms of your the charts and stuff that you’re putting —

[21:15] Rob: Yup.

[21:15] Mike: … in for, that was just probably, you know, divide by twelve and then add it in every month for the next twelve months.

[21:22] Rob: But yeah and based on accounting and tax accounting and all that stuff, I’m sure that’s what I’m supposed to be doing but it’s kind of yeah, I’ll just lump it in with my annual revenue at the end of the year. Hey so, you’ve been working four tens.

[21:33] Mike: It’s going pretty well although I’m not particularly thrilled about getting up at 5:30 in the morning. I mean I’m sure there’s people who listen to this and are like, “Oh 5:30 is nothing. I get up at 4 or 3.” I am not a morning person by any stretch of the imagination. I mean if I — if I were a president of the United States and I could had the power to abolish mornings, I totally would. Like no work anywhere, would get on before noon. [Laughter]

[21:55] Rob: So but you’re — but you have Fridays free now, right? You’re basically able to get — if you’re traveling, you’re able to get home a day early and —

[22:02] Mike: Right.

[22:03] Rob: Have you been able to put in time on AuditShark on those days?

[22:05] Mike: Yeah.

[22:05] Rob: … just spent and do another stuff.

[22:06] Mike: No, it’s been on AuditShark so, you know, I’ve been getting home late on Thursday evenings or you know, really early in the morning on Friday but then I get up Friday morning and then I have pretty much all day to work on AuditShark which is really kind of nice. And you know, because I have — I’m off to five contractors working for me right now. So I have all of them doing different things but managing them, you know, in the evenings is much more of a full time job than I thought it’d be because —

[22:32] Rob: Yeah.

[22:32] Mike: … I have to direct people all over the place and say, “Oh, you need to do this,” or “This isn’t right,” because I have everything going through FogBugz, you know. And it’s nice to be able to manage all that stuff in there but at the same time, I feel like there’s times where I have to micromanage things because they are all contractors. And I think maybe this is a little bit of a difference between employees and contractors where contractors will not do something unless you explicitly tell them to do it —

[22:57] Rob: Yes.

[22:57] Mike: … versus employees who will probably look and hence say, “What should I be doing to kind of move —

[23:01] Rob: Yeah.

[23:01] Mike: … forward?

[23:03] Rob: Right.

[23:03] Mike: So I felt like —

[23:03] Rob: Right.

[23:04] Mike: … I’m doing a lot more micromanaging than I would like to be but I don’t know if there’s another choice right now because it’s not like I have the money to hire — hire somebody full time.

[23:12] Rob: Right, you know, that’s what I’m going to say. I think as you move up to chain, what I’ve discovered because I’m starting to move up to chain with a few oDesk contractors with kind of some positions that I have and what I mean by moving up to chain is you start making money for my business that we’re working on and then you have a little more budget to pay them because you’re not just syncing money in to it. And so I’ve sort of hiring people that are a little more expensive than I would have originally hired. And I’m finding that those people tend to be more forward thinking even as contractors and I have people who are making suggestions about improving my business which is super helpful and it means that you’re exactly right, you don’t have to micromanage when you start getting good people like that but they tend to be a little more expensive for sure.

[23:55] Mike: Yeah, I mean I have one guy who’s been with me since January so he’s — he’s done things like that where he’ll see something and he’ll just do it and I’ve told him upfront in numerous times like, “Look, if you find something or see something that should be fixed or could be done better, just go ahead and do it.” And there’s been several times where he’s just like, “Oh and by the way just to let you know, I did this,” and I was like “Wow, that’s awesome. Great. [Laughter] You know, great. Thanks.” So he’s definitely aware of those types of things but, you know, I don’t — obviously, I don’t get that from everybody. One of the things that I’ve had the contractors worked on is the AuditShark’s sale site because I — the site is out there right now. It’s okay. It was just kind of meant to have a website but I’ve put a lot more thought and effort in to the website itself as a, you know, kind of sales machine at this point. So what I did was I hired out to design and had somebody build everything for me and then I had to put together. And basically, what I did was I generated all the content for all the different pages and one of the things I found was remember that survey, the Wufoo survey that I was running a couple of months ago?

[24:55] Rob: Yup.

[24:56] Mike: What I did from that was I was trying to build like the FAQ page because most larger applications are semi complicated applications have an FAQ section. And what I did was I went through that and one of the questions in my survey was “What concerns or questions do you have about AuditShark?” or “Would you have about, you know, a service like AuditShark?” And I basically was able to fill out my entire FAQ based on what people answered there.

[25:23] Rob: Nice.

[25:23] Mike: Oh, the nice thing was it was people raising objections. I mean and that’s really what —

[25:29] Rob: Sure.

[25:29] Mike: … what the people were saying —

[25:30] Rob: It’s perfect.

[25:30] Mike: … is like, you know, “This is why I wouldn’t use this product.” And I was able to say, you know, somebody — somebody said “I would be concerned about the quality of the code,” for example or “I would be concerned about how trustworthy the application is.” And of course, you know, how do I answer that because I’m a small company and that basically just laid it out in the sale site and then the FAQ and just said, “Look, you know, I’m one person. I’m building this but here’s my online profile. Here’s my LinkedIn account. Here’s the podcast that I run. Here’s the conference that I helped run. I’m all over the internet. I have absolutely no intentions of starting my — my entire online identity over again.” And you know, and that’s basically what I’m kind of relying on for my initial trust. I think that it’ll change overtime as it becomes I’ll say more corporate and I established a lot more generalized credibility in the field but you know, for now, I don’t really have a whole heck of a lot to rely on. So…

[26:24] Rob: Right. And I think you’re — you’re ahead of the game because when I bought HitTail basically the trial to conversion funnel was just a bit small. I mean it was like, I don’t know, 1% or something of people who started trials converted. And one of the things that I did after I relaunched in January was e-mail. I had my VA e-mail everyone who canceled during their trial and asked why they canceled. And he did that for a few weeks and I got this great list of essentially were — they were objections. And so you already have that and you haven’t even launched yet. So that’s awesome. But what I did is I took those objections. I categorized them and there were seven different groupings basically and there were things like, “I don’t have time to use HitTail,” and so I said, “Okay. What’s the solution?” The solution is they should be able, you know, write articles with one-click and that’s why I built the one-click article feature.

[27:13] Another one was “I don’t understand the difference between this and Google Analytics,” or they’d say things like “I get the same information from Google Analytics.” And the fact is that it is just not true and so I was like, “Okay.” So the solution to this is to educate them. And so during the trial now, I had the 30-day trial, people receive about — it depends on how often you log in and some other things you do but you receive about between four and six e-mails during that 30 days. And some of them are purely educational on like SEO, you know, on content generation and other ones are — are more specifically to HitTail and so one of them is just two questions. So it’s kind of like the two most important questions I think people have and it has the questions that has kind of a one sentence answer. And then it says, “You know, here’s a link to a 60 seconds screencast that does even — an even better job in answering these questions specifically.”

[28:06] And so if they click through from the e-mail, they go on to my FAQ and there’s a big video, you know, that they can watch right in their browser and it answers that. It’s my voice. It’s me doing a screencast and I have Google Analytics on the left hand side and I have HitTail on the right and I show how you can have 1000 keywords someone found before in Google Analytics and HitTail has the same 1000 but then the suggestions are only twenty or thirty of those. Like it’s picked out the best ones you should target and that’s the key difference between the two things. So that’s just one example but there were like I said seven different objections essentially and that’s — those seven objections that I packaged together, you know, in a document, that became operation retention, right? And I talked a little about that a few episodes ago and that operation retention essentially doubled my conversion rate. The original 1% [Laughter] the trial to conversion rate went way up when I relaunched and I added credit card, you know, needing a credit card before a trial.

[29:00] But it had – still, it did not gone up as much as I wanted and so from there, I’ve now, you know, increased it by a hundred percent using this — this operation retention. So the nice part I mean the way it ties in to what you’re doing is you already have some of those objections. Certainly new ones will come up later. Once you launched, some people cancel, you know, you want to do the same thing and find out why they canceled. But you’re definitely ahead of the game on that to already have those and be able to put them in an FAQ and then I would suggest, of course, during their trial that you do like I did. You already have the info so you can just maybe call them out. You could put them right back. You could even put the text directly in to an e-mail, you know, and do one of the e-mails during the trial or you could link out to them. But definitely I have seen a noticeable increase in my conversion rate because you’re essentially able to communicate with people, you know, using the phrasing and the same questions that — that other people have had.

[29:46] Mike: Yeah and that’s been the great part of it. What I’m planning on doing the private beta that I’m doing is talking to people and asking them, you know, kind of what they’re objections are to the products then and help and use that to essentially set up the — the auto responder for when people do sign up and be able to send them some of those things upfront. I might actually — I might gather some of that information upfront and then not implement it and then wait a little while like wait maybe a month or two and just measure my conversion rate and then implement it and see what my conversion rate is afterwards because if I do it upfront, I’m not going to have any idea whether it had an effect or what kind of effect it had. I’m not real sure which way I’m going to go on that but, you know, it’s definitely something I plan on gathering.

[30:30] [Music]

[30:33] Mike: If anyone out there is using inDinero, they probably seen this already but basically inDinero decided that they were going to do away with their free plan. I mean we talked about it at MicroConf and you know, the idea is that if you’re going to be eliminating the plan or changing your pricing or something along those lines then typically what you do is you grandfather the people who were in that plan before hand and you just let them keep using it and then you start charging all of the new people. Well, they didn’t do that. They basically said, “All you people who are using the free plan, you have until July 31st and then we’re going to get rid of everything and you have to upgrade between now and then or you’re basically going to lose your data.” So I kind of understand, you know, I sent them an e-mail and said, “Look, what’s going on here? You know, this is a pretty unusual to see this kind of thing.” And I didn’t get a direct response back. I got this generic response from their CEO probably the next day or the day after kind of explaining their decision. But the initial contact that I got was just “Hey, by the way, you have to pay for this within the next thirty days or we’re going to close your account and delete all your data.”

[31:35] Rob: So they just fumbled, right? You can’t do that. If you’re — if you’re going to do that and cancel people’s accounts, you have to give them three months, six months. You got to give them a lot of notice. You’re still going to piss people off when you do that but then at least, you know, you’re giving them time to do it and I don’t see then — the logic of doing this. This really is the whole why free plans don’t work thing. Everyone thinks a free plan is a great idea. It’s going to be a great marketing approach but in the end, it rarely, rarely works unless you have doves of money in the bank and you know exactly what you’re doing, almost it never works. I’d say 99% of free plans that I see, they get removed. You can probably name a handful of free plans like Dropbox and — that’s the only one I can name right now but —

[32:16] Mike: Gmail. Gmail.

[32:16] Rob: Gmail, thank you. Well and Facebook is free, right? I mean there are free apps but these are enormous, enormous apps. If you don’t have apps with hundreds of millions of users or a huge bank account balance, it’s very unlikely that free plans work. And we talk about this before with like MailChimp. They have a free plan now but they didn’t have one for years until they were enormously profitable. And now that they are — I mean MailChimp is minting money basically. They have added —

[32:45] Mike: They handed it differently though. They handled it pretty differently.

[32:47] Rob: I know they added a free plan — they added a free plan back in. They didn’t have one to start and so they’ve added it. Now that they know their funnel, it’s optimized. They know how many free users will confer all the stuff. They can now afford to do that but to do it from the start and then cancel it like this, it’s — it’s bad news, man. And inDinero seems to do this. They seem to fumble the ball on this kind of hard, what do you call it? It’s like a decision. It’s a decision that you make that’s going to piss people off and they don’t seem to be able to handle it very well.

[33:14] Mike: And like I — I would have been okay with it if they sent me an e-mail like before they even did it, you know, like I understand its decisions like this they sometimes have to be made and I would have been okay with it if I gotten an e-mail that says, “Hey, look. We’re really sorry. We put up this free plan and not only is it not working now but we are actively losing money. And we need people’s help and this is what we’re going to do. We’re got — we have to start charging for this plan if you really want it and we’re going to leave it in place until the end of the fiscal year,” because this is financial data so the problem is that because they did it after I forget when I got the e-mail, I’m pretty sure that it was last week, but it was basically after the six-month mark.

[33:54] So basically most banks and stuff, they only let you go back six months after that — or three months and — and pull out the data electronically once you get past that three or six-month mark depending on the back, it’s kind of a pain in the neck to go back and get stuff from beforehand. So like even if you’re doing QuickBooks or pull in transactions through QuickBooks, a lot of them only allow you to go back three months, so that means that there’s like three months of transactions that I would have to manually pour over some place else.

[34:21] Rob: Yeah.

[34:21] Mike: And it’s just like you’re totally screwing your “customer-base” who kind of helped make you popular enough to get you to the point that you are. And I got no notice and that’s really what pisses me off about it. It’s like I got no notice. It’s financial information and then say, “Oh, and by the way, if you don’t want to lose this, you know, you’re going to have to pay us, you know, $30 a month.” And I basically have to until the end of the year. I’m not happy about it. I already signed up. The other thing that they had said in their e-mail was “Oh, you can log in and you can get your data.” Well they replaced the log in with a popup like a modal popup. They come up and says, “You know, your free trial has expired. Please enter your credit card information.” See, you can’t even get your data out unless you pay.

[35:01] Rob: Yeah, yeah, that’s — that’s a bummer. Have you e-mailed — I wonder if you e-mailed them directly if they had export your data but —

[35:06] Mike: I did and they did —

[35:08] Rob: Yeah.

[35:08] Mike: … sent it to me. And they said —

[35:09] Rob: Okay.

[35:09] Mike: … “Oh that’s a bug we’re fixing it,” but…

[35:11] Rob: Right. In full disclosure, I have three inDinero accounts that I’ve — that we’ve been paying for; the Micropreneur Academy and MicroConf has one and then I have one for all of my Numa group businesses and DotNetInvoice has one because that’s a separate partnership. And so I’ve liked inDinero. I like some of the stuff they do. I think we commented a couple of months ago about how they kind of flub the thing around tax time where they removed a bunch of or a couple of different types of categories and it basically wracked my data right as tax time was coming and then I e-mailed them and didn’t get back to me. It took them like ten days to get back to me. And I had — I spent like three or four hours doing manual updates to it. So that made me mad.

[35:49] But in general, they — they have hustled and they’ve done a decent job at the product and it is one of the better products out there for doing this, so I’ve always cut them a lot of slack but this kind of thing is in my opinion and I’m not even — I don’t have a free plan so I’m not like directly being affected by this but this is — it’s a bad sign for me, right? It’s a bad sign that they aren’t being more careful with the kind of changes that they’re making to their apps and giving people more of an opportunity to — to get their data and to upgrade gracefully and that kind of stuff. Do — we received an e-mail right? Someone suggested a different app that does something similar?

[36:23] Mike: Yes, somebody sent an e-mail. Well, actually it was unrelated. They had sent an e-mail to us commenting about episode 85 where we’re talking about free and low cost solutions for entrepreneurs and it was called Wave Accounting. And it looks largely similar to inDinero. I haven’t signed up for it yet. I probably will but it looks very, very much like inDinero except that it is free. Basically, the way they make money off of it is kind of like Mint where they make recommendations and suggestions to you for different products and then they get paid commissions on those products.

[36:58] Rob: Right. Yeah, I got to be honest, with then trying to launch with free I’m very skeptical. I would not, personally, would not —

[37:05] Mike: No, it’s —

[37:05] Rob: … put my accounting on it because I know they have a revenue model but they’re going to hit scale and if they don’t, they’re going to come back and probably pull the same thing that inDinero has.

[37:12] Mike: They — they — I don’t know. They’re claiming they’re getting tens of thousands of users signed up every month and they’ve — I don’t know how long they’ve been around. I haven’t really dug that far in to it.

[37:22] Rob: Sure.

[37:22] Mike: But I’m definitely going to start looking at it.

[37:24] Rob: I’m just telling you I’m —

[37:26] Mike: I agree.

[37:26] Rob: … personally hesitant to base my business accounting because of how complex it is on an app that that is free. But I would prefer to pay. If Wave was this good and they charge me and I was able to pay, I would prefer to do that. And obviously not for — like for an app like Facebook, I’ve, you know, I would prefer to use it for free because that’s how it is and it doesn’t — doesn’t matter if Facebook went away, it wouldn’t bother me. But if I’m in Wave Accounting and I’m six months in and suddenly something catastrophic happens or they have to shut down because they don’t have money or they, you know, pull this — this thing like inDinero did and they suddenly want to charge everybody and they’re going to lock my data up then, you know, that’s not going to work.

[38:02] Mike: Yeah, I mean for me, it’s not about having to pay for it. It really isn’t. It’s about —

[38:06] Rob: No, like hey —

[38:06] Mike: … how it was handled. I don’t mind paying for it and I mean this is — the business that I have this for is more of a shell company at this point and I’m just not — I’m not really using the data but I kind of need —

[38:18] Rob: Yeah.

[38:18] Mike: … to have it some place. So I threw it in — in inDinero because I knew that it was going to be under their fifty-transaction a month limit.

[38:24] Rob: Right.

[38:25] Mike: So —

[38:25] Rob: They’re not grandfathering thing it is, that’s a big deal.

[38:28] Mike: Yup. I got to tweet about it and you know, from them saying, “Sorry, please contact our e-mail support,” “Sorry you’re unhappy, please contact our e-mail support.” I think that they could do a better job handling it. It’ll be up more of upfront about things but I don’t know, whatever.

[38:42] Rob: Yeah. You know, I had to shut down HitTail’s free plan after I acquired it because it was just tanking the server. There were so many people using it for free that had been using it for years and years. And I basically I approached them with kid gloves as what I tried to do. I mean just e-mailing, letting them know they had a long time to — as much time as I could give them, I could — they could export their data. I offered them a discounted plan, you know, I kind of went the whole nine yards and was apologetic and said it was — I mean the reason that thing was having outages was could — which because there was too much load on the server and there wasn’t enough revenue coming in. So I’ve been through this myself and I wasn’t able to grandfather people in. There was a very real reason why I wasn’t able to grandfather people in but at least I won’t say I did it perfectly. Certainly, I had a few complaints but I guess I thought — it seems like I thought through it a little more because I knew people are going to be upset. I almost — it almost seems like inDinero maybe didn’t think anyone would be that upset about this.

[39:35] Mike: I — I don’t know like I said I’ve been — there’s — there’s a few different things. One was being completely locked out and not being able to get back in the short timeline, you know, their complete lack of notice. I mean if it been three months or six months or something like that, that’d be different or if they just said, “Look, in October or November or something like that, then we’re going to have to stop offering this free plan,” but it was just — there was no notice or whatsoever and then just the way that they’ve handled it since then, I just turn — it turns me off to them completely at this point.

[40:03] [Music]

[40:06] Rob: Well, listener if you have a question or a comment, you can call it in to our voicemail number at 888-801-9690 or e-mail us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. Subscribe to this podcast in iTunes by searching for Startups or via RSS at StartupsfortheRestofUs.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.

 

Transcript

[00:00] Rob: On today’s episode of Startups For The Rest of Us, we’re going to be talking about whether you should have multiple websites for multiple products and some ways to generate residual income. This is Startups For The Rest of Us: Episode 87.

[00:12] [Music]

[00:21] 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 that we’ve made. What’s the word this week, Mike?

[00:35] Mike: I have completed the code merge that was giving me absolute nightmares last week. [Laughter]

[00:39] Rob: Oh, the merge. So to give the listeners a little background, you had a couple of developers working and like they were both checking coding that would conflict.

[00:46] Mike: Yeah.

[00:46] Rob: Is that right? And you would have to do manual merging? Why wasn’t Subversion or Git handling that?

[00:51] Mike: It’s because it was the Visual Studio’s .Designer files which Microsoft for some reason decides that they’re going to reorder things when they go back in to the designer files. So if you two different people make changes, you’re not guaranteed that the changes in each of those files are going to be in the same places and because it’s kind of an auto-generated file, there’s not much you can do about it. So I actually wrote a utility that would sort the contents of the file and make it so that it was a lot easier to merge.

[01:19] Rob: How interesting. Yeah, I never ran in to that. I think when I was on big teams doing .NET development we use Vault or we did used Perforce but we had the lock file checked. So there if you check something out, it was locked to avoid this kind of thing.

[01:33] Mike: Yeah.

[01:34] Rob: You know, so two people couldn’t edit the file at the same time and maybe that’s why — maybe that’s why they did it at those companies.

[01:39] Mike: It could be. It could just be the type of file too. I mean because everything else merged fine. It was just a couple of .Designer files and a couple of .resx files and you know, I found a utility that would sort the resx files so it’s a lot easier to manage but the .Designer file, I couldn’t find a utility for that. So I just — I wrote one. It took me probably two or three hours to write it where it’s going through by hand. I probably spend six or eight hours before I just kind of gave up [Laughter] and turned to writing a code.

[02:06] Rob: Yeah, that’s brutal. So I guess it’s been about three and a half weeks now, I launched the article feature, one-click articles on HitTail and it’s continuing to do well. I finally sent out an e-mail to all the paying customers. Before that I basically just had a splash screen when people logged in that they would see, you know, articles were available but about a week ago, I finally sent an e-mail to everybody who’s paying and they, you know, continue to ramp up. So I think we’ve done over sixty articles in like twenty five days. So it’s been a nice pace and as a result, the lifetime value of my customers has, you know, assuming this pace keeps up as increased quite a bit. So it’s definitely been, I mean the entire goal really is to increase the lifetime value so I have more leeway when acquiring customers that I can do more creative things and some things are getting little more expensive.

[02:56]So it’s been — been a good experiment. We have had three kind of returns. One I was able – we were able to fix. My admin fixed it himself and then actually, the other one he fixed as well. There’s only one where we had to… gave someone’s money back or we asked for kind of a rewrite. That’s what we’re going to do is have a hundred percent money back guarantee on the article quality. So I actually, to be honest, I expected by the time we got to sixty articles, that there would had been a lot more just manual labor like trouble, you know, support issues, keeping that like an articles or just different things that had happened and so far, it’s just been kind of a walk in the park. I’m knocking on wood right now because I don’t want to jinx it but so far I’m really happy with the level of effort we try to expand versus the revenue that we’ve received from this feature.

 

[03:41] Mike: And you kind of did a soft launch with it too, right? I mean it’s not like you just blast it out to everybody and said, “Hey, there’s this brand new feature that we think you’re going to love.”

[03:48] Rob: That’s true. Yeah, the soft launch was just the splash screen and so it was very slow going because only thirty to fifty people log in a day and so some trickled in for several days and you’re right, I did fixed several issues during that time and so by the time I e-mailed, gee, as close to a thousand people that really had helped that I had fixed those things, you know, that I hadn’t just on a big launch without tweaking it first.

[04:10] Mike: Cool. I think that by the time we record the next podcast, I’m going to have a definitive date for when I’ll be starting my close beta for AuditShark.

[04:18] Rob: I love it. So that will be next week. We can have a count down timer.

[04:22] Mike: Great.

[04:22] Rob: Mike’s timeline.com and it’ll be a JavaScript count down timer. I like the idea.

[04:27] Mike: Isn’t there some website where you can — you go there and you have to pledge something or you give them a picture of you from high school and you have to meet your launch date and if you don’t meet it, they tweet it out and they e-mail it out to all your friends and family.

[04:42] Rob: I like this. If you know that URL –someone send it to me.

[04:46] Mike: About the other thing is I think along with my launch date, I’ll at least know what the date is but I’m definitely going to start my closed beta program on that date and then I’ll probably give myself maybe four or six weeks to give myself time to get some feedback from people and talk to people and get some of the different bugs and stuff fixed but I’m feeling good about it. I mean things are — things at the back end are starting to really come together with the code merge that I did and the guys had been making really good progress on the back end code. And it’s just been more of — I’ll say it, I feel like more like a project manager than actually a developer at this point.

[05:19] Rob: Right. And when your tight on time, sometimes it’s the best way to be.

[05:23] Mike: Uh huh. And I switched over to four by ten hour days for my consulting work for the next month or so. So that will give me an extra day every week to work on stuff and I’m still working on things in the evenings to get everything done. But so far things are progressing nicely.

[05:36] Rob: Nice, four tens. That’s a nice schedule.

[05:39] [Music]

[05:42] Rob: All right, so shall we dive in to our first question?

[05:44] Mike: Yeah, what we got on deck?

[05:45] Rob: Our first one is from Andrew and he says, “Hi, Rob and Mike. I’m in a process of launching my first SaaS product and the help you guys give on the podcast has been invaluable. While researching and developing my app, I came across another product opportunity in the same niche. I’ve already coded the second product and it’s ready for launch. I want to launch this product with the goal of bringing in some cash as well as building another source of potential customers while I finish coding my original idea. My question is whether I should launch this as a standalone product with its own website or as part of a suite of products that would eventually include both applications. There will be a big crossover in the original content I can create and blog around the two products. So from a marketing stand point, I’m leaning towards the later approach which is the single site that has two products. What are the advantages and disadvantages you can see for each approach?”

[06:37] Mike: I think it’s a tough question. I’m not real sure which direction I would go with this but I think that I might lean more towards one site and then kind of split it in to a couple of different subdirectories and that would be more for I think technical reasons than anything else. It probably would also give you a little more credibility in the website itself because it is a new product and credibility is one of those things that is I think a little difficult to establish early on but if you have two different products with different marketing material around them on the same website, then it tends to lend each credibility to the website itself. If you have your own website that is essentially forming social proof for the website but at the same time it can work because you do have the two products there and the people who look at your website and they see that you have two products, they’ll say, “Oh, this company is legitimate,” “They have a legitimate product,” “They have, you know, legitimate customers presumably” and it does reinforce that a little bit.

[07:31] But I also wonder how difficult it’s going to be to do both of them at the same time because I’ll be honest, I mean I’m in the middle of doing multiple things at the same time and it’s very, very difficult. So I think my advice would probably be to start with one product on the site and build it for just the one product and then integrate the second in to it when you’re ready. I don’t think that trying to do both at the exact same time is probably the way to go on this one.

[07:57] Rob: Yup, I agree with that last part. I think trying to do multiple products is the kiss of death and the only way you can do multiple at once is if they’re like information products and you don’t have the support and adding features and all that stuff to go with it. You can kind of write it like an e-book or something or screencast. You can build it and then it’s done and you know, you don’t really need to put a bunch of time in to it. Yeah, I do think it’s definitely a mistake to try to do both at once. And I also would agree that you want to get one of them out there, get it marketed, get — you know, get the blogging going, get the SEO going, get whatever other channels you have going and then introduce the second one to add a later time once you’ve once you feel like you know the market better and really hesitant to put two products on one website. And there’s a bunch of reasons why but I think the most prominent one is that there’s a lack of focus.

[08:42] Anytime I come to a website and it’s trying to sell me multiple things, it doesn’t do a very good job at any of them. So as an example, Mike, you and I, basically have kind of a suite of products if you think about it. We have the podcast. We have a conference, MicroConf. I have a book that’s related to the same genre. We have the Academy. These things were all related, right? So in theory, you could say well we lend credibility to each other so could just have a single landing page that’s like the Micropreneur landing page and then have a drop down list or have four things in the top and have — and have conference, book, you know, online startup school and podcast, But when you think about that, it doesn’t lend itself to a lot of things. Number one, it doesn’t lend itself to SEO very well because the content is not highly focused and Google likes small articles that are focused.

[09:27] And the other thing is it just — it overwhelms people when they arrived at the website. There’s too many decisions, too many choices and people often wind up just doing nothing. There’s too many paths to follow. What I would recommend if it’s at all possible is to create basically a chain or a long funnel and so you figure out which of these products is lower cost and which of them people are more likely to buy first. And then you set up a website for that and you market the crap out of that and you get, you know, people to buy the product. You support the product. You provide way more value than people pay for and now you have these paying customers and now, just like we do at the podcast and just like we do with MicroConf and the Academy and the book, it’s like you can kind of start tying them together. And you can say, “Hey, since you bought this, I provide quality stuff. You have the experience. You know that I took care of you and now, here look at this other thing I created that’s equally as good and it’s in a similar niche.” So I almost see this as a more of a back end product so you’re doing them in serial rather than trying to market them in parallel.

[10:24] Mike: I think one of the situations where I could see this working really well is if the products are, you know, if one of the products is actually a plugin for the other product or there is a huge integrations between them but as you said, I mean you need to start somewhere I mean even with something like, you know, the products from 37signals. You know, you look at the marketing material for them and they’re really on their own and it’s only until you get in to them and you start using them that you see that there’s additional integration points in them and that you can sort of leverage data between them and kind of stay in one interface. It’s pretty well hidden I’ll say. But I definitely agree with what you said that trying to separate them and if they are in the same niche market trying to figure out which one people are going to buy first and then use the second product as essentially an up-sell from the first.

[11:11] Rob: All right, hope that helps. Thanks for the question Andrew. Our second question today is from Ryan Higgins and he’s asking about top performing residual income generators. He says, “Hey, guys. I really dig your show. Appreciate all of the grassroots tips and have employed many in my online work. Over the past three years I’ve had success selling professional services online but I find this time consuming and often very demanding as I promise response to online clients within twenty hours from receiving their e-mails. I’ve also created modest revenue through AdSense ads and downloadable e-books I’ve written on various subjects. To be honest, I much prefer this later business platform as it seems to run automatically whether I tend to it or not unlike the online services part of my work.” So obviously, he’s talking about products versus services, right? It’s consulting dollar for hours versus building a product that’s much more leverageable.”So my question is what are some other creative ways you’ve seen people generate self regulating income online? And keep up the great work. Ryan, a Canadian in Shanghai.”

[12:10] I’ll take a crack at this one first. So Ryan is basically asking about, you know, other ways that he can monetized his knowledge and monetize his experience but not just trade dollar for hours. And obviously, there’s a big challenge upfront when you’re trying to build the products it’s that you need to find out products that people need or want and you have to spend the time to do it and there is a risk that they may not buy. And that’s where, you know, consulting is such an easier road because you can just have someone pay you X dollar for certain amount of hours and you’d just kind of cash it upfront. But on the flip side, that doesn’t — it doesn’t scale at all. It’s not leverageable over time. It’s just it’s not a way to really build a sustainable business. And so I guess Ryan is looking for other creative ways for people who generate online income and I mean that’s — that’s basically like this entire podcast is about and kind of what the Lifestyle Business Podcast and Smart Passive Income and Foolish Adventure.

[13:04] I mean I would listen to all of those podcast. It’s basically about taking your expertise and starting blogs, podcasts, writing e-books, building software, providing value and in a productized form that, you know, helps people get what they need done. And you can see this all over the place. I think maybe the best example I’ll bring up is like Foolish Adventure. If you never listened to that podcast Tim Conley has this thing called Three Product Approach and it involves having a free product and that’s typically a blog or a podcast that you’re giving away for free and then your second product is also free but you ask for an e-mail address so that’s where you build your newsletter up. And then your third product is when you sell. So that’s typically like maybe an e-book. Sometimes it can be a membership site and that’s his flow and he kind of came up with that concept then it gets — it’s really good.

[13:52] So I mean that’s one way to do it. I think that’s a creative way but I think, you know, there are certainly other ways. Mike and I throw a conference and it’s not, you know, massive revenue-generating thing but it is something that that raises our profiles and it’s fun to do and it does make some money now. So that’s — that could be a creative way. Obviously, writing e-books, writing physical books like I did, you know, paper back books and starting online membership websites are all great ways and if you have desire and you have experience in software, then that’s of course what we, you know, that’s something that Mike and I focus a lot on, on this podcast is building apps, building plugins, building something of value. I mean we know number — a number of entrepreneurs who’ve seen a lot of success in the Micropreneur Academy building WordPress plugins for folks, for in all types of niches, building SaaS applications, building desktop applications, building mobile apps, all that kind of stuff. So you know, I hope that gives you some starting points.

[14:43] Mike: One of the things that you mentioned kind of in passing was something I was going to bring up which is membership sites. And it sounds to me like what you’ve said was “I’ve created some modest revenue through AdSense ads and downloadable e-books I’ve written on various subjects.” And if those e-books are on related subjects, then I think you could probably take a lot of that material and put it in to some sort of a membership site where you’re charging people, obviously, to be a monthly member of that site and provide them access to that material but because it is a membership website, I believe that you could probably charge them significantly more than if you’re going to take all that information and just distribute it as an e-book. So essentially you are would be able to migrate the content from your e-book and into the membership website. And I think you obviously you want to add additional things in to the membership website not just, you know, do a direct copy from the e-book that could significantly boost revenue for you from that particular, you know, line of products as well.

[15:45] The other thing I would mention is that if you already created some sort of a modest revenue through some of these e-books, I would look in to trying to distribute them further and trying to get them out there. I mean it seems to me like a lot of the products that people have with things like this is they get to the marketing stage and they don’t do very well with it and they give up too easily and they don’t necessarily find the upper balance of where they can take something. So a lot of times they’ll give up early and you know, just not push it far enough and they’ll say, “Well, I need to look for a new product because this one has tapped out.” And the reality is it may not have tapped out, you know, are you sure that it has. And so those are the things that I would definitely look in to as whether or not those e-books can be pushed further, whether he could do additional marketing around them and increase the monthly revenue from them.

[16:30] Rob: Nice. So I give generalities on this one and you give the specifics. High five.

[16:34] Mike: Virtual high five. [Laughter]

[16:36] Rob: All right. Our next question is from Rasmus in Denmark and he says, “My product and question is around generating a valid amount of relevant traffic within a reasonable period of time to be able to validate my idea. I know you briefly mentioned AdWords to buy traffic but are there other channels or sources of relevant traffic. It would also be relevant to know more about the AdWords source, for example, volume, time span, et cetera as well as what volume you see as a reasonable validity. I know about setting up AdWords campaigns and get throwing keyword limits et cetera. Personally, I don’t have an established audience like you guys have. So how do you validate an idea if you’re starting from scratch? Would love to hear a podcast allocated to this topic. All the best, Rasmus from Denmark.”

[17:18] Mike: So I think that the things that we’ve talked about previously definitely applies to this. I mean, you know, you’re not going to be able to do SEO and drive a lot of traffic in a reasonable amount of time and I’ll define reasonable as in, you know, two to four weeks, something like that because SEO does take time. You’re going to do some stuff and it’s going to take Google two or three weeks to just either indentify your website or to put in to the rankings and then you’re going to have just take time to figure it out what changes you need to make. And it’s just, you know, a long convoluted process. I think you’re much better off trying to identify people who you want to target and then either use AdWords, Facebook ads or Twitter advertisement to try and drive traffic to your website. And from there obviously, a number of different methods you can use to try and figure out whether or not your idea has legs but two that I would look at is one, seeing if they’re actually clicking through for to the buy now button and then another one is if you will put some sort of a survey out there and start asking people, you know, is this something you pay for and how much would you pay for it. Maybe put a newsletter out there.

[18:22] And I wouldn’t do all three these things at the same time. You know, maybe put the pricing page there and after they click through for pricing or through the buy now button say, “Sorry, this is unavailable but sign up for our newsletter or take the survey.” Or you could kind of chain them together and you have buy now button and then sign up for the newsletter and then after that you can ask them to take a survey. But definitely don’t put all three of them on the same page at the same time. You want to chain them together to get better results for that. But those are the types of things that I would look at. I know that Rob and I both have a decent number of Twitter and RSS subscribers for the podcast or the blogs and everything but I don’t see those as very big generators for at least half of the business ideas that I have. I just don’t see those as legitimate ways to send traffic mainly because it’s untargeted.

[19:10] Rob: Yeah, I would agree. Typically an audience like the one we have isn’t actually that great for the products we’re launching. I experienced very low signup rates from blog readers and Hacker News readers when I relaunched HitTail in January and that was not unexpected. I mean I just don’t expect. You know, a lot of people are just getting started out to really want to pay monthly for a service that they probably can’t use until — until down the line. So Jason Cohen experienced the same thing when he launched WP Engine and he said they got — he got a handful of customers from his blog audience. What an audience gets you more of is it gets you the ability to partner up with people, to raise funding. It’s much, much more about relationships than it is about actually, you know, driving traffic and trying to get people sign up for a mailing list for a product that’s not related to it.

[19:54] I have a couple of thoughts on this. First thing is Rasmus, you got to ask is your audience online is your niche that you need to reach? Are they online at all? Because if they’re not then, you know, all this online stuff we’re talking about just isn’t going to work. You’re going to have to resort to a more offline stuff. So if he can determines they actually are hang out online, I wanted to take a step back  and say, don’t just rely on driving people to landing pages and getting their e-mail addresses. Talk to people like try to meet with them in person if they are within driving distant from you. Try to get them on Skype to have a conversation. It is so much more valuable for you and for that person if you can actually have a conversation instead of just a simple e-mail survey or simple e-mail conversation even. I would say that well all the stuff that I’m going to list and Mike talked about is good and it’s good for driving some traffic and getting an idea, getting a list that you can then contact, that’s not the end goal. The end goal is actually engaging with people and having conversations.

[20:48] I’m going to throw out some ideas. I think the first thing you should do is look at if there any conferences within a few hundred mile radius of you that caters to this audience and try to go to that conference so they can meet people in person and have discussions with them, get and idea if what you’re building is at all going to serve them. I would also look for forums that cater to this audience. Obviously, examples to that in our niche since I know them because I hang there or things like Hacker News and you could totally do an Ask HN if you have a product coming out and you can post a link there and that would bring people to the landing page, you know, you can ask them what they think to the idea. You can go on Corra and you can either ask questions or you can answer questions. And you’ll know that none of these are scalable solutions. You’ll never just going to turn a dial in this and bring million of visitors but that’s not the point. At this point, you have to do things that don’t scale and it’s going to take a lot of time. You either need a bunch of time or need a bunch of money and I’m assuming that yet at this point, you don’t have a bunch of money. So I definitely think Corra is under use for that.

[21:44] I also think that creating an infographic right off the bat. I mean you can get an infographic created a pretty nice one from between two and three hundred bucks. I found people both on oDesk and Elance to do that. That’s a great way to drive 30,000 people to your website in 24 hours if it goes viral. And if you make it good, you make it for that niche. You know, it’s a nice way to draw a lot of traffic for a small spend. You brought up AdWords, yes, its the old main stay. If you’re in a tough niche at all that’s competitive, you’re going to pay three to five bucks a click. So AdWords these days for me is more of a last resort but, you know, it could be something you can look in to and I think those four other ideas I’m going to try.

[22:23] One, I would look in to Facebook ads since the demographic targeting is so good and that you can test a lot of ads at once. It’s not about where to go. You can get some pretty cheap clicks there and then StumbleUpon. You can get 10 cent clicks but you can’t just send people to a landing page. You have to send them to some content like an engaging by a blog post that then links over to a landing page. If you send them just to a landing page, they will bail. And then the other two Mike mentioned actually. He mentioned Twitter ads which I have heard some people getting some decent success and then I guess the last one Mike didn’t mention which is Buy Sell Ads and that’s the display advertising. You buy them month at a time and they have your bunch of different niches now and you can spend as little as maybe twenty bucks and you’ll get a fairly low click-through rate because they are banner ads but you can definitely get niche traffic from a service like that.

[23:11] So those were like six or eight ideas kind of off the top of my head. But this to be honest, this process right here is what I did when I was creating the HitTail marketing plan. For the months leading up to acquiring HitTail, I would sit down for fifteen minutes at a time and sketch out a huge list of ways that I thought that I might be able to market HitTail and I just kept stuffing them in to that doc. And overtime it became a really good corpus of all these ideas. There’s about twelve pages of it and I’ve been working through it since I acquired it eight months ago. And I recommend if you’re thinking about launching your product, think about doing the same thing. Make the huge list and then start peeling off ideas and using them, you know, to send traffic at the landing page and some of them are going to work well and then you’re going to reuse those when you get to, to actually launching your product. So I realized that’s a lot of information but I hope that helps Rasmus.

[23:59] All right, for our fourth and final question today, we have an e-mail about beta phase. It’s from Kevin Marshall and he says, “I was wondering if you guys could speak a little bit about closed beta test versus just letting everyone all in at the beginning. I see a lot of startup websites in a beta stage. Sometimes they even close it off at the start and require you to sign up for a request invitation. Sometimes you may get that invitation, yet often you don’t. Overall, my question is how important is it to even have this testing phase? Is a customer more turned off because they see and realize their inner beta or they’re more turned off when they realize that a site they felt was fully polished and ready to roll is not?”

[24:40] Mike: I’ll take a first crack at this one. I think that if you’re putting together a beta and you are telling people that they have to sign up to get an invitation request and they’re not actually sending those out, my inclinations I believe that they’re doing something wrong. I don’t know if that’s a good idea. I don’t think it’s a good marketing tactic. I don’t think that in 95% of the cases that that generates any sort of anticipation or demand for the product. That’s the sort of thing that Apple could pull off or Microsoft could pull off. It’s not something that much smaller companies like us can do. It’s just doesn’t work. The purpose of a beta is usually to flesh out the bugs and make sure that there are no major problems that are going to be encountered by people once you open up the gates. And I think that if you’re going to do a beta, I think you typically wanted to do some sort of a closed beta first. I don’t know if having an open beta is really going to do anything for you because you’re really just not getting the information that you want from people. If you have a close beta, then you can essentially hand select those people kind of categorize them by the type of people they are.

[25:46] So if you had a mailing list and you are asking people information about them before you got them on to mailing list and you can essentially categorize those people. You might say, “Okay, well I want to grab five people from the low end category who would be on the lowest plan five from the middle and five from the top end. And you would essentially arrange it so that hopefully, you can get all five of those in there from each of these categories. But if you can’t, you go to the next person in line and the next person until you find people who are willing to actually sign up and use the product whether they pay for it or not is a different story. I don’t know. I have to give a little bit of thoughts to that but I also think that it depends a lot on the product itself as to whether or not you want people to try and pay for it. It depends mostly I think on where in the product development process you are and whether or not you’re confident that there’s a market for it.

[26:35] So part of it comes back to the purpose of the beta and what your purpose is because different people have different reasons for running that beta. Some people, they’d just want to use it to, you know, flesh out any major bugs or many major process problems that are in the software. So there’s other people who want to use it to actually test the code because they didn’t test it themselves or they aren’t really sure about it and there’s people who are trying to get people in to the beta program to essentially test to make sure that they have a product that was worth selling. And if you’re at that point, then it’s kind of too late for that. I mean you really should have done a lot of that leg work upfront but even if you haven’t, working with people individually is going to give you a lot better feedback than if you just open up the floodgates and try and get a lot of people in.

[27:17] If you segment your audience in to groups of ten or fifteen people what you’ll find is that all it takes is I think the number is twelve people to individually talk to them one on one and those twelve people will give you exactly what you need which is the same as you would get from having more of an open beta from like ten groups of fifteen people because people are going to be much more willing to give you that individual feedback that you’re really looking for if you interact with them one on one whereas if you’re doing something that’s more like a focus group where you have a lot of people in it they say, “Oh well, I’m not going to answer this. I don’t really have time. Somebody else would do it. I don’t have to.” So as soon as your response rate plunges and you have to talk to more people whereas if you — if you get down where you’re talking to people one on one, you’re individually working with these people who you’ve put in your beta program. You’re going to get the information back that you need is, you know, directly relevant to the goals that you put in place for that beta.

[28:13] Rob: Yup, you nailed it with that last one. It’s called the diffusion of responsibility and it’s psychological concepts that when, you know, it explain like when a group of people all get an e-mail, typically, most people will just not do anything with it but if you e-mail each person individually, then they know kind of your eyes on them and they’re much more likely to do something. I would agree with you. You’re going to get far better feedback if you have a much smaller group and you deal with people individually and you let them know whether you’re going to deal with them individually and that your beta list is only five people or your beta testing group is only five people or ten people. If I had a list, let’s say I launched was to 500 people, I would probably invite hand-pick five of them and they would either be friends who are in the niche or acquaintances who are in this niche that I’m targeting who are actually going to use the product and would pay for it long term or you know, if I didn’t have any of those, I would probably just randomly pick the top five of the list and e-mail them and invite them and let them know that it’s a very, very small group.

[29:11] This allows you to do a couple of things. One, it allows you to get a lot of detailed feedback because they’re going to be more willing to give it to you. It also allows you to kind of burn through your beta testers because you haven’t run a beta before what typically happens is you’re bringing a group of people and they look through the app and they look through and a lot of them find the same things, then you go away for a week and you fix all that stuff and you approved it. And then you come back to them and when you ask them again, they will tend to just go in for about three minutes and breeze through and make sure you fix the stuff they asked and that’s it and so you kind of do you burn through beta testers. They aren’t just unlimited resource but if you have that list of 500, you let five in, then you e-mail another five and you say, “Hey, this is like my second round of beta.” You kind of do the same thing with them and you get another around of feedback until you feel like you fix the major bugs and you fix the major usability issues.

[29:58] So kind of just to summarize I would definitely keep it small between five and ten people each round. I would only go multiple rounds if I needed to and I would keep the rounds as short as humanely possible. If you can do five days, seven day iterations, that’s what I would do. I would not do two-month long betas unless it was absolutely necessary. The other two points that I’ll touch on is what’s nice is if you get the beta testers in early and they like the app and you work with them one on one, you kind of build relationships and you build some early users and those early users can be real champions of your product long term. If they get in, they feel like they have a little bit of ownership, they’ll be the first ones, you know, when you launch, you can ask them to tweet it out or ask them to tell their friends. And they’re much more likely to do it then just this blanket list of 500 people because you’ve actually kind of build that kind of relationship.

[30:43] In terms of offering them a discount or comping, I say it would depend on how much work they actually give you. I think upfront, I would say, “Will you be a beta tester, spend some time and know in exchange for a lifetime discount on the product,” and I would just leave it at that and not specify it. And then some people are going to do so much work and give you so much of value that it’s going to just be worth comping them for life period, like I’ve done it in the past. It’s totally a no brainer and then other people are going to do less work and you know, maybe you give them 40% off or 50% for life assuming it’s a recurring product. I think the last point, the one that I didn’t cover is Kevin asked is this phase is even important to have, should you have a beta, a beta round. And I think even, you know, a simple as this article functionality that I just wrote in to HitTail was I mean it’s really just one single feature, even as simple as that was I essentially had a beta phase. It was only a week or two but it led a trickle of customers come in. There were absolutely bugs. There were usability issues. There were some minor things on certain browsers but having that was invaluable for when I kind of unleashed the firehose on it.

[31:50] And so yeah, if I was launching an entire product and I’d only done some usability and unit testing and you know, some integration testing but I really hadn’t had the actual users use it, I would be concerned with mailing out to my 500-person list and letting in a horde of people who I’m trying to sell the app to. I’ll be concern about doing that without having at least one round of testing and you know, preferably if some stuff was found going through another round until it — it just feels like it’s clean and it feels like the app is improved. I can almost guarantee you no matter how good the app is, no matter how good your feel it is, until you’ve done this round of testing and that an actual users use it, you are not going to uncover probably 70% of the issues that are going to rise as soon — as soon as people start doing it.

[32:33] [Music]

[32:36] Mike:  If you have a question or a comment, you can call it in to our voicemail number at 1-888-801-9690 or you can e-mail it to 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.

Show Notes

Transcript

[00:00] Mike: This is Startups For The Rest of Us: Episode 86.

[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: And I’m Rob.

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

[00:25] Rob: Well I was down in Los Angeles hanging out with some friends and I managed to hook up with Jason Roberts who lives in Pasadena. Jason Roberts is a co-host TechZing. My wife and our two kids went over to his house and his wife, Sandy, cooked us some burgers and we just had a really good time. It was cool to meet his family, you know, you heard about them on the podcast. Yeah, they’re just like — just like he describes. They are all blonde. They look Swedish. But we had a really good time. So thanks. Thanks to Jason and Sandy for hosting us and we got to just — it’s so good, you know, to sit down and just talked tech and we talked startups and we talked podcast. We talked behind the scene stuff. He’s going to do a lot of meaty stuff sitting around a pool, drinking glass of wine and watching the kids.

[01:04] Mike: Did his wife get in on that discussion?

[01:06] Rob: She and my wife actually did and they started talking about how they neither of them listen to our podcasts and then Sandy joked and said, “You know, we should record a podcast about what it’s like to be married to a startup founder.” And we’re actually looking at putting something together like that and I think it’d be really interesting for Jason to interview the two wives or perhaps my wife to interview them as a couple to find out the dynamic. So anyways, we’re talking about doing something like that just about kind of how to have a family and keep sane and trying to launch your startup and there’s — there’s a lot that could be learn from hearing other people’s experiences.

[01:41] Mike: I think I remember Scott Hanselman. I think he had his wife on at one point and they were talking about either possibly writing a book or actually they were in the process of doing it and putting something together that was along the same line. But I definitely recall something from the Hanselminutes Podcast about that.

[001:59] Rob: Cool. Yeah,I know he’s had his wife on a couple of times but I didn’t know that they’re writing a book till today.

[02:04] Mike: Yeah, I could be misremembering that.

[02:06] Rob: How about you? What’s going on?

[02:07] Mike: Me, in Ohio right now, Columbus. I got a free room upgrade for Father’s Day. So I’m in a king size suite. Kind of spent some time with the kids by the pool and got a pool cover for the pool which I didn’t think it would make that much of a difference but it adds about ten degrees to the pool.

[02:24] Rob: I couldn’t say —

[02:26] Mike: It’s in the mid 80’s.

[02:26] Rob: Yup. At some point, it gets too hot. When it gets to be about one, it’ll get up in to the one like 109 or 110 in Fresno for a few days during the summer and the pool gets too hot to swim in like its feels like a hot tub. It’s not that it burns you but it is not refreshing at all.

[02:41] Mike: Ahh.

[02:41] Rob: Well hey, we have some new iTunes reviews just in the past few days, some of the good ones actually. One is from a Rich Hart. He says, “Great advice and cut AuditShark lose.” [Laughter] People are — people are starting to make comments in the iTunes reviews which I think is funny. He says, “Mike and Rob, I absolutely enjoy your weekly podcast. It’s always timely relevant and informative. Since I’ve started listening, I’ve created an internet business. Cut my teeth with using VA’s and find myself pushing everyday to make something happen.” Then he comments he says he thinks it’s time for you to let AuditShark in to the wild.

[03:12] And we also got a great comment from Zach and he says, “The art of enlightening others, I have to say I’ve learned more from these guys than I ever learned in business school. It just goes to show there’s no substitute for experience. Thanks, Rob and Mike” And then I like his comment. He talks about how we commented on needing a conference coordinator for MicroConf next year and he says, “I disagree. What you need is a franchise.” So [Laughter] we’re — become McDonald’s. He says, “You’ve already built the model, why not spread the love. Imagine hundreds of mini MicroConf’s across the country managed by local micropreneurs. The mini MicroConf’s remain small, personal and retaining the value of points express by past attendees.”

[03:35] Anyways, interesting suggestion. Don’t think we have any plans to do that right now. That would be more like franchising it in to almost a meetup group. So I mean Lean Startups certainly has experience a lot of success with that. I think there are several hundred Lean Startup Groups around the world.

[04:01] Mike: Yeah, I think so. You know, micropreneur meetup groups is really any difference is just there’s a huge difference between having a full-blown conference versus something local where people get together on probably a more regular basis.

[04:13] Rob: Right.

[04:14] Mike: But you and I talked about putting on something even smaller than MicroConf and just the level of effort, it’s just hard.

[04:21] Rob: Right. It’s hard to justify it, right? If you’d just do a regional conference, you can’t get the same level of speakers.  You can’t get the same level of attendees. If you try to do it one day, people won’t come in from further away than, you know, a few hours drive and you just — you kind of lose a lot of what we considered to be the magic of MicroConf. With that said, there are several meetups. And I’d say I’ve probably been contacted by six or eight people who say they are basically doing like a micropreneur meetups. And there’s — there’s one in Australia that we’ve already mentioned. There are several kind of in the Midwest and a few on the east coast. So there are things springing up. Yeah, maybe long term we’d figure out a way to better help facilitate that.

[04:53] Mike: I’ve been to a couple on the east coast. Usually it’s more me kind of organizing it or saying, hey, I’m going to be in this area for the next week or two weeks or whatever and then people going to reach out and three or four or five people want to get together, then we just go out some place to have dinner or something like that.

[05:14] Rob: Right. And the meetups I’m talking about are more like accountability meetups and sometimes they get a speaker to come in or they’ll share knowledge that that one of them maybe discovered over the past few weeks. I’ve actually done some video Q&A with a couple of them as well where they’ll just Skype me in and then we’ll have like a 30-minute thing and they’ll talk about the projects and we’ll just chat about it. Any updates from you this week?

[05:34] Mike: Well, I had an interesting discussion with Patrick McKenzie this past week about AuditShark pricing. One of the things that he’s been doing lately is he set up this training area of his website and I just — I signed up for it because I like hearing the sorts of things that he talks about. The first one was a video that talks about how to make your first product experience awesome and then he followed it up with I think it’s called the Black Arts of a SaaS Pricing which was pretty interesting. And it’s kind of timely because I’m looking at pricing for AuditShark right now.

[06:02] So I e-mailed him and just say, “Hey, this is what I’m doing. What do you — what do you think of it?” And he had some interesting takes on it. His idea was actually to instead of doing like a per server pricing for AuditShark, essentially use different levels. So you know, maybe the first level and say — he was just throwing numbers out there but say $50 a month for up to five servers and then up to $500 a month for twenty five servers and then I think the next level was fifty servers for $500 and then five hundred servers for $5000, then above that, contact us for enterprise pricing.

[06:34] Rob: Are those the specific tiers he laid out?

[06:36] Mike: Yeah, those are the tiers that he laid out which I found interesting because of the numbers and I was like, well it seems to me like one server and $50 would probably be more appropriate than, you know, five and fifty but I was also looking at that thinking to myself, well, if you do one in $50, it doesn’t give you a lot of leeway to do some of the techniques that he kind of outline which was if you change your pricing tiers and then measure kind of the before and after conversion rates and you also calculate the profit margins from each of those, it allows you to change the numbers on the page without changing the actual prices.

[07:12] I found that interesting. I didn’t realize it until after the facts but obviously I said, “You know, you don’t need to reply to this. And this just got my internal thoughts.” But then I started beginning to think about that. I was like, oh that makes sense. You can just change those numbers without changing the pricing because obviously changing the pricing on your page is kind of a big deal but if you just change the features that you’re associating with each of those pricing levels, it’s not nearly as big of deal.

[07:35] Rob: Absolutely on with HitTail just within the last month as about a month ago based on some advice and discussion in one of my Masterminds some guy said, “You know, you should raise your pricing.” We kind of discuss how to do that and what I did was I kept my pricing the same and I lowered the number of visits that each tier gets. It is the same pricing just like you’re talking about. That’s resulted in zero changing conversion rate which is awesome because it means that I’m essentially making more money, right? Because I’ve essentially raised my pricing because these people are signing up, you know, they’re being upgraded in to higher tiers. I can totally see that. I hadn’t — I’d never thought about the advantage of having that when you’re split testing pricing but it’s definitely a good tip to have.

[08:12] So I’m intrigued, I’ve actually giving this quite a bit of thought because there’s been several apps that I’ve been — been kind of working with some entrepreneurs and they’re looking at having that strict per seat pricing that you and I have discussed, you know, you’ve always kind of have that number per month, per server or per seat for AuditShark and we batted that around. Even over the past week, I thought about like the advantage of tiers and that you can essentially segment customers. So it’s not just this linear escalation of pricing but it’s to add one more server, you know, they only had ten bucks a month but they actually have to jump up a tier in essence, right?

[08:48] And now, as soon as they go to eleven or they go to sixteen, they kind of go over your tier than they do have to make a substantial jump. And that’s how most apps work now, right? That’s how SaaS apps work. I mean if you look at, you know, Basecamp or Highrise or any of these, it’s not a gradual — it’s not a per user cost. It’s actually doubles. It’s – the rule of thumb that I’ve always use as you pick a price and then you double it and you give them more than twice the amount of stuff they get at the lower plan. And so his pricing though it sounds like he was doing 10x.

[09:15] Mike: Yeah.

[09:15] Rob: He had 5500 and 5000. That’s typically a broader range than I do. I mean I would think of 4999, you know, 199 but —

[09:23] Mike: It was five servers for $50, twenty servers plus some sweetener for five hundred or two hundred servers for 5000 and then two hundred plus was call.

[09:31] Rob: Got it —

[09:31] Mike: That’s what it was. It wasn’t 550 or 500, it was — the point I was kind of getting at was at the very low end, it was not one server, it was five and that was kind of the starting point. He said that the idea was that if you have ten servers, you’re likely a very, very different business from somebody who has only two, you know, regardless of whether they are high-value servers or low-value servers. You know, somebody with ten servers has — well, like what he likes to refer to as a metric ton of money. And he said that it doesn’t really makes sense to charge linearly from one to ten in his estimation.

[10:02] Rob: Then that totally makes sense. And that’s why there’s a couple of guys that like I said I’ve been talking to and I’ve recommended they do tiering as well. And I think I’ve always look back at the FogBugz model. I’m realizing that I’m not a fan of that model and I see lot of disadvantages to doing it that way.

[10:16] Mike: I think that with FogBugz once you get past a certain point, it actually becomes much, much less expensive. So for example, I’m looking at their pricing now, from 24 to 150 users, they have a tier which is 599 a month or 719 a month for both FogBugz and Kiln. And then the next level up is a 151 to a thousand users and that one is $1,199 per month for both FogBugz and Kiln. So you can —

[10:42] Rob: So that’s insanely cheap.

[10:44] Mike: Yeah, I know it is. That’s — I found that interesting that they —

[10:46] Rob: Yeah.

[10:47] Mike: … kind of go to that at the higher end, they’re not charging–

[10:49] Rob: I agree.

[10:50] Mike: … targeting exponentially more.

[10:52] Rob: Yeah, that’s tough. That’s a tough sale for me. They either know something about their numbers that we don’t or they’re leaving money on the table with that. I wouldn’t discount stuff that much at the high end because like Patrick says and this is been very obvious in every business I’ve ever had, the people who are at the higher end tend to have more money to spend. And in general, you can’t just charge them more per seat, right? You can’t charge the little guy in a less per user and then as you go up, you actually charge more. I mean you have to give — you do have to give some kind of discount but it’s a huge mistake in my opinion to have an enterprise plan where 80% discount or something, you know, if you have a thousand users. That’s the way everyone does it and your competition does it, that’s how you have to price it and that’s fine and that maybe the case here.  But I’ve never had a business where as it gets to the high end, I give substantial discounts.

[11:36] Mike: Yeah, what I find really odd is that it’s $30 a month for both FogBugz and Kiln and then if you just kind of extrapolate that and say well for a hundred users that would be $3000 a month but on their pricing tier, that’s unlimited and in fact, their low ends tier goes from 24 to 150 people and that’s only $700 a month.

[11:56] Rob: So they give a really big price break as you go up.

[11:57] Mike: Yeah, when you started getting in to enterprises they expect like —

[12:03] Rob: Yeah.

[12:03] Mike: … a 50% discount, you know —

[12:05] Rob: Right —

[12:05] Mike: … that’s — that what they expect.

[12:06] Rob: And I bet FogBugz competition which is where it’s like Atlassian and a few others, I bet they do the same thing and I bet this is more of a competitive move. If you publish pricing on the web, you’re going to have to be competing with those folks whereas if you have a product that, you know, doesn’t have a direct competitive, then it’s a lot harder to do that.

[12:10] Mike: Yeah, I think that Atlassian specifically targets enterprise customers with their pricing.

[12:30] Rob: Yeah, they do.

[12:30] Mike: So there’s — there’s this considerably different but it also requires considerably more resources in order to run it.

[12:35] Rob: Right. Okay. So no final notice on your pricing but it sounds like you’re working on it.

[12:40 Mike: Yeah, I’m working on it and I’m definitely going to move towards a some sort of a tiered pricing model, you know, I’m having my designer rework my sales page, my pricing page a little bit so that it’s got four different levels there instead of three. And as somebody pointed out to me when they were kind of reviewing the pricing page was that I had green check marks and red X’s next to some of the different sets of features and they’re like that looks like a warning flag to me of “Oh, don’t choose this because of this.”

[13:08] Rob: Right.

[13:08] Mike: Which I found interesting so I’m going to — I had talked to the designer already and said, “Look, you know, you got to remove those red X’s and they have to be like grayed out X’s instead. So —

[13:18] Rob: Right. But once you get started with your pricing stuff, I would guess that first ten or twenty customers you have, you’re going to be negotiating pricing and then you’re going to trying to figure out what works for them and then you’re going to learn more as you go. I mean the bottom line is when you’re starting out, you’d just have no idea what people are willing to pay. You can ask them all you want and make a best guess at it but we’ve known several founders who, you know, go in to it in the first twenty or thirty customers all get different pricing based on how they’re — how they’re able to pay.

[13:46] Mike: Right. Yeah and honestly, we’ll probably do the same sort of thing when I launch AuditShark. I mean I’m going to go to the people and you know, I probably won’t specifically publish pricing out there. I mean I’m going to go to my list and start talking to people individually and start signing them on. They’ll probably all have different pricing and till they get in and start using the product and then I can get feedback from them to say, “Now, that you’ve seen it, is this worth what you’re paying?”

[14:10] Rob: That’s the thing. Yup, you have to figure out if you’re providing the value that because you can convince someone with marketing to charge them, you know, a little lot higher than you otherwise could but then when they get in there if your churn rates really high because they’re like, “Ahh, this isn’t worth it” then you need to adjust pretty quickly and it’s such a heavy learning experience the first several months you have an app out because it’s just so young and you’re trying to figure out which way to where to go that try the most value for them.

[14:32] Mike: Right. And I think you can definitely short change yourself in many ways on that on some of the pricing. I mean you can say, “Oh well yeah. I’m only going to charge you $10 a month” when you should really be charging them a hundred and they’re getting a hundred dollars worth the value out of it.

[14:44] Rob: Right. And but I think the thing is early on like when you only have ten or twenty customers, some people are going to get in and they’re going to get, you know, a lot more value. You’re going to under charge them, bottom line and you’d just have to do that and just grandfather them in and move on. I mean that’s just the way it goes, right? Because you’re not going — this app is not going to have ten or twenty customers. You’re hoping to have hundreds if not, thousands of them. And so if you’re really mucking around with pricing early on which you should be to figure out that the optimal, you’re going to make some mistakes both high and low as you go forward. And so I don’t think, you know, if someone is paying ten bucks a month that they really are getting hundred dollars worth of value, well, good for them. Thanks for being a charter customer. I mean that’s —

[15:18] Mike: Thanks for the feedback. I mean that’s —

[15:19] Rob: Absolutely.

[15:19] Mike: … what you’re doing. You’re basically paying for them in a way for their feedback. I mean sure they’re giving you money but you know, feedback.

[15:26] Rob: Right, right. And I don’t believe in large betas. I believe in very small betas and you can give discounts to beta people. I wouldn’t use that as a reason to kind of under charge everyone. You know I’m saying? I mean I might bring in a handful of people four or five and give them a discount but I think beyond that, you really got to start getting to where people are basically getting the value out of it that they’re paying.

[15:45] Mike: Right.

[15:46] [Music]

[15:49] Rob: So I got a e-mail this week from Tope. He’s a long-time Micropreneur Academy member and he’s a founder of App Design Vault. And this is a great e-mail. He says, “Just got an e-mail from AppSumo today and it made my day. HitTail was featured alongside my product App Design Vault.” And then he took a screen shot of it and attached it. “I’m a lifetime Academy member and a lot of what I learned went in to the marketing and the DNA of App Design Vault. I quit my job seven months ago and making — and I’m making a full-time living from the business. So definitely seeing your product and mine in the same context is a good thing to see. Thanks for all your help on the podcast and the Academy. Thanks. Tope.”

[16:25] So this is just — it’s another one of those success stories like this is a stuff a love hearing, right? This is [Laughter] why we’re doing the podcast. This is why we started the Academy. Frankly, App Design Vault kicks ass. I’ve always love this idea. It’s basically iPhone App design templates. And he’s got a great call to action on their home page. If you’re an iPhone app designer, it’s a no brainer. He says, “Give me your name and your e-mail. I’m going to send you an app design worth $70 to your inbox just for doing this.” And then, you know, he says, “Join over 2000 users who are making their apps rock.” And it’s just a big gallery of all kinds of different iPhone app design templates. This is just such a great market to be in right now, right? Because instead of actually building the app, they’re selling the tools for people to build apps and since it is such a growth market, everyone is talking about it. There’s just a lot of search going on and there’s a lot of people talking about it. So I love — I love the niche and he executed it well. So thanks — thanks for letting us know, Tope.

[17:15] Mike: Yeah, that’s really cool to hear. I mean I saw the AppSumo e-mail come in as well and I saw HitTail right next to App Design Vault and that was — it’s pretty cool to see. I mean it’s that point —

[17:24] Rob: It is.

[17:24] Mike: It’s nice to talk to people but then to see the social proof I’ll call it, it’s very cool app.

[17:29] Rob: Yeah. So you have that — the AppSumo deals are going to pretty well. They run their deals for longer now. It’s kind of a different set up. They used to just do one day and they would e-mail everybody but it’s like they have the list segmented now.

[17:39] Mike: Uh huh.

[17:39] Rob: So it’s kind of several weeks that I have to wait to really — I can see daily updates but it’s not like this big massive traffic like it used to be. Used to basically be on e-mail support all day for eight hours [Laughter] because you get so many questions because their list is like 6 — 700,000 people. So when they e-mail out to, you know, it’s — it’s a rush of traffic. But so far, it’s doing very well and sales are going well.

[18:02] Mike: Yeah, I hadn’t thought about how to manage a list like that but it does make a lot of sense that they would segment their list like that so that way they probably evens things out a bit. So it’s kind of space little things out and they level out the traffic a little bit.

[18:14] Rob: Right.

[18:14] Mike: It’s very cool. I somehow landed an accountability partner for AuditShark this morning.

[18:20] Rob: Sweet. How did you that?

[18:22] Mike: I didn’t actively try for it. Somebody contacted me through my blog and basically in a very nice way said that “I’m going to e-mail you assuming that it’s okay with you, I’m going to e-mail you every week until you get AuditShark launched and out the door.” So I thought that was really cool. And I had — we had an e-mail exchange back and forth a couple of times to kind of let him know where I was with AuditShark and what sort of things were going on. I sent him an e-mail link to the temporary sales website that I’ve been working on just so he could kind of see what it looked like and where the things are at. And he said he liked it. He had some good suggestions for it. So I’m going to take some of those in to account and you know, rework a couple of different things.

[19:02] One of the things that I got was that I keep hearing from people that they think that I’m waiting until everything is perfect with AuditShark before I launch it and you know, people are saying, “Oh, you got to launch it. You got to launch it.” And it’s not that I’m holding off until everything is perfect and that, you know, all my I’s are dotted and T’s or crossed. It’s just things are just not ready. I mean I can give it to somebody right now and it would work and would do what it needs to do, the problem is that the back end of it is kind of builds around this idea of a set up policies and a library of these control points that you select and you can push down to your machines and pull it back the results for.

[19:40] But the problem is I don’t have that library built and I don’t have a good way to get things in to that library. So that’s what the tool developers that I’ve hired are working on right now is they’re working on the tools that will build those control points and build the policies that will then go in to the library. So I’m hoping that they’ll be done with that within the next four or five weeks but the UI is complicated So you know, until that stuff is done though, I can’t really move forward with pushing the product out which sucks in a way but at the same time, you know, I’ve also got other things to work on while they’re doing that.

[20:11] Rob: Yeah, I think I mean to summarize, you built AuditShark yourself for a couple of years. You spent two years. You were – or maybe a little more than that and you were focusing on banks and you thought that banks were going to be your market. You had it in there and as it got towards at the end, you found out there were a couple of things. One, that your — kind of your customer development, your discussions with banks were misunderstood, right? They were talking about one thing. You interpreted it differently. When you finally got to it, it turns out you hadn’t actually built what they wanted. And B, the sales process was going to be so high touch that you decided you didn’t want to go down that road.

[20:45] Now we can go to on all types of discussion about whether, you know, what you could have done earlier to avoid that and all that stuff but that’s fine. Once you got there, you realized, I can’t do this. I’m not going to go forward with this and so you decided to pivot. And then you were saying, “Okay, I have this code base that does something and it can help some group of people. Where is that market?” And as MicroConf came around, you started asking folks there and it turns out you’re going to be probably pivoting towards servicing people who have web servers and app servers and you’re going to be scanning for like vulnerabilities and that kind of stuff. That takes retooling of your app, right? Bottom line like you needed then figure out what the new feature set is. You don’t have to rewrite the whole app but you absolutely have to either you or have someone else write some code to now get AuditShark to do what this new market needs.

[21:15] Mike: Yeah. And the thing is there’s not a lot of that piece that needs to be done. It’s just the fact that there’s this library in the back end that needs to be populated somehow. And the —

[21:39] Rob:  Right.

[21:39] Mike: … only good way to do it is to manually do it at the database

[21:42] Rob: So there is work that has to be done whether it’s code or not and some work has to be done to make it fit this new problem you’re trying to solve. You’re now trying to reachieve problem solution fit, right? Or achieve it. Period. So now you’re trying to achieve it with this — this new market, this new group of people and that is going to take time. You do a lot of consulting. You consult, you know, most of your — of your full time hours during the week and you’re also doing a blog and a podcast and doing this other stuff. So it’s not as if this is your full-time gig. So the fact that it takes you a couple of months to pivot is not surprising to me but it does seem like a lot of comments are coming through that are saying why haven’t you launched yet.

[22:19] And while this has been a long, you know, a long process, a two or three-year journey of you figuring this app out. Some mistakes were made. At this point, I don’t think you can launch like you have to get this stuff done before you do it and of course, I would love for you to pull a bunch of all nighters and launch next week but that’s just — that’s not realistic. If you think Mike should talk to more customers or get in to more detail or do more customer development, that’s fine like I can deal with that as like a more valid opinion. I just don’t think it’s reasonable for you to say, “All right, you should just launch tomorrow because the app is actually not done. It doesn’t solve the problem that you’re trying to solve at this point.

[22:50] Mike: Yeah, that’s definitely accurate. There’s a couple of tools that need to be built in order for the product to really work in this market. And right now, it’s just not there.

[22:59] Rob: Our relationship is never really been about like keeping each other accountable with our apps like I don’t come to you and say, “Hey, I need feedback” or “I need you to keep me accountable on this” and you haven’t either and that’s why the accountability episodes where we really dove in to AuditShark, we’re kind of weird because we don’t necessarily have that relationship. We do have a business partnership with MicroConf, the Academy and the podcast but aside from that like I don’t particularly like unsolicited feedback, let me put it that way. So when people give me unsolicited feedback and they tell me how they think I should run my business or how they think I should develop my product, I don’t like it and I irritated with those people in general.

[23:31] And so I don’t feel like I should sit here and tell you unsolicited, “You should do this, that and this with AuditShark” because it implies that somehow one of us knows better than the other or something like that. Now if you came and said “Rob, you know, I really want your feedback” which you have. You’ve actually done that offline several times where after the podcast, you’ll show me your sales site and you say what do you think? But to sit here in a public form and for one of us to kind of dictate to the other, “Well Mike, I think you’re doing this wrong and you should do this, that and this” I just, yeah, I just don’t know how – how helpful that is and you and I don’t particularly have that. We just don’t have that relationship, right?

[24:02] Mike: Yeah. I mean you made some points. I mean I’ve gotten some unsolicited feedback from people saying, “Oh, you should do this and this and this.” And I’m looking at that feedback saying I understand where you’re coming from because I haven’t share all of the information with you but you’re so far off in left field but that’s just not even remotely close to accurate. And I don’t even know where to address how many problems there are with what you just said. So it is hard and you know, I try to share as much as I possibly can on a podcast but I obviously don’t share everything. I think this particular episode we’re doing a lot more just because we’re focusing more on, you know, what sort of things we’ve been working on but I don’t think that everybody wants to hear about AuditShark every episode or HitTail every episode. I mean that’s not —

[24:40] Rob: Right.

[24:40] Mike: … what this podcast is about.

[24:43] Rob: Right. The issues that we discuss here a lot deeper and a lot more complex than we probably play them out on this podcast. I got a good e-mail. I thought it was funny. It kind of relates to this topic of maybe someone outside your business thinking they know more, you know, they know what’s best for it. I got — I got an e-mail. A guy was canceling HitTail and he said, “Thanks for canceling my account. If you guys offered a plan of $4.95 a month that allowed the X visitors a month rather than, you know, whatever your currently offering, I’ll definitely be back. At this certain level that’s when I started to see proper visitors and feel free to passes feedback on to your people, I’m sure you’ll get a lot more business doing this as well.” And so basically he’s saying to lower your pricing. Funny thing is I get — probably get an e-mail like this maybe one or two a month from the several hundred people that signed up for trials. That’s right —

[25:27] Mike: Is it your lowest plan $10 a month?

[25:29] Rob: It is.

[25:30] Mike: So he’s saying that this extra $5 a month is just not worth it.

[25:34] Rob: That’s what he’s saying, yeah.

[25:36] Mike: Oh, okay.

[25:36] Rob: And it’s so hard to make money at $4.95 a month for anything but the implied message here is that the best price is less than– it’s always less than whatever you’re charging. The best price is always that, right? And whenever you get these e-mails and the second thing is always imply to charging less will always result in loads of customers. And neither of those is accurate as we’ve known.

[25:57] Mike: As single support e-mail would totally blow that $4.95 out of the water.

[26:01] Rob: I know. When you are living and breathing and inside something and you know all the numbers in the metrics, I know that I do not want customers at $4.95 like it’s just wouldn’t work. It would lower my lifetime value too much. So I will pass, you know, on customers who want to pay $4.95 and if they’re able to get value out of it at $9.95 and up — I mean I have customers paying a hundred dollars a month and are very happy with the app and I want to get a lot more of those.

[26:24] Mike: No, I totally understand and I completely agree. It’s so hard to explain to people that they’re wrong because they don’t have the data but you don’t necessarily want to share the data with everybody either.

[26:35] Rob: Yeah, I don’t — I didn’t want to say explain to them that they’re wrong. I don’t know if it’s about right or wrong. I think it’s more about how you, you approach the business, right? It’s like if you want to take your business up market and try to make it like more valuable and find the people who are willing to pay the higher end prices, then you go about things a certain way. But if you’re trying to go for a freemium product, I mean that — frankly when I bought it, it was — there were some freemium users and people were saying “You should start a free plan and you’ll get a bunch of customers and…” I’ve never seen it work with bootstrappers.

[27:01]I can’t think of a single bootstrap company that has ever kept their free plan around. A lot of people launch with it and then they winded up cutting it out. There’s that Why Free Plans Don’t Work blog post that Ruben did on my blog that was on softwarebyrob.com. It was quite a successful post because he pointed out this fallacy that we can use the same approach as like a venture funded company trying to do the freemium model and what freemium can work is very, very difficult to pull off. So I need these most people’s images of how a product should be launched and the pricing and all that stuff is sorely warped if they haven’t actually done it themselves.

[27:35] Mike: Yeah, I considered a free plan for AuditShark but I couldn’t think of a good way to actually make it work and provide enough value that people would view it as a valuable service but limited enough in such that they would want to upgrade and I just couldn’t come up with anything this kind of — it’s not worth of time and effort, really.

[27:54] Rob: Right. So anyways, I think kind of to close that loop. We were talking about AuditShark and whether you should be launching right at this very minute or whether you are in process of pivoting and that you need a little bit of time to pivot. If there’s one thing that I would say, I would like to see you talking to consumers like actually talking to them on Skype or pretty intense e-mail conversations. But before you build something, I want to make sure — I would like to make sure that you’re building really what they need.

[28:19] Mike: Yeah. At this point, I mean the product is what it is and there is not much but the core of it is going to change. I mean it can pull back results from a machine pretty much anything that you want. I think what I really need to find out is what sort of format they’re looking for the data to come back. I mean what underlying problem is that they’re to solve and for the most part of the people that I’ve talked to have said that they want some level of assurance that somebody is looking over their shoulder and making sure that they’re not doing something dumb on their machines. I really feel like there’s a big difference between what the small people want versus the big people want.

[27:01] So like the large customers, they basically want to save money because to them a data breach is obviously is a huge deal but it takes them forever to close the loop on that and notify customers whatever the statistic was. There was something like $43 per record loss. So you lose a hundred thousand records and you know, there’s a couple of million dollars in cost associated with that because you’ve got all these other things that you need to do and this is more for like losing credit card information. But for a small customer that, you know, let’s say that you were using AuditShark for, you know, your server and what it would cost you if your entire HitTail server was cracked open and hacker stole all the data. I have no idea how to even estimate what that would cost. I mean I have no idea how many customers but let’s say that it’s a thousand customers for easy math and you know, $43 a record that’s, you know, $43,000.

[29:44] Rob: Right.

[29:44] Mike: Is it realistic to say that that’s how much it’s going to cost you? You know, I don’t know. I’m not — I’m really not sure when it comes to things that are not credit card related. I mean you can look at all these studies but it’s very skewed because those much smaller businesses don’t report that information. They’re not statistically significant, you know, because regulators don’t come down on those small companies. So it’s just very hard to translate those larger customers and the fees that they pay for those data losses into the much smaller customers. So I think the motivations for buying AuditShark are going to be radically different.

[30:18] Rob: Right. That’s what you’ve started to pin point, you asked that question in the survey kind of why would you need this, what would your pain point be. Your working that in to your — your copy, your marketing materials and that’s what I’m saying. I think that going deeper into those issues and trying to figuring out if there is one or two or maybe three issues that you kind of segment people in to that they’re trying to combat and figuring out which one of those to attack first but keeping it as simple as possible. I mean it’s like, you know, I’m coming back to the HitTail feature I just released with the articles. I started off with this awesome spec and I drew it up like a true developer should and it was gold plated and had all this logic in it and I looked at it said “God, that’s going to take a month to build.”

[30:57] And I just threw everything out and I said I’m not going to — I was going to offer three different levels of quality. I was going to offer all these choices of length. I was going to offer all these — there are all these features, you know, with the market place, rather market place I’m working with that I could choose and I basically just hard coded all of those in the code and I made one length, one quality level one price. You click the button to order or not. And as a result, I could totally simplify that you and I are in the entire integration. And it sets, you know, it’s a really minimal feature. Basically, I stripped it down and I think that’s where you’re probably headed or I hope you’re headed, you know, it’s to figure out what that minimally viable feature set is  in order to get that those first customers onboard.

[31:37] Mike: Yeah, I’m not so worried about the feature set because like I said I mean the product’s library is what it is. I mean the product does what it does. I’m not changing that at this point. How I portray to the user is a little different. I mean I may need to massage that stuff a little bit but I mean in a fundamental level, it tells you whether something is configured properly or not. There’s an error message that could pop up as well or there is something that comes up and it shows up as purely information. So you know, like the operating system it’s Window 2008. Okay, well that’s not right or wrong. It’s just it is what it is. And then you’ve got, you know, you might say, well it’s the latest service pack installed, yes or no. And if it’s not, that’s a bad thing. If it is, then that’s a good thing, you know. So you’ve got your okay’s versus not okay results. And then the fourth thing that can come out is honestly an error. And that covers pretty much every single case you could possibly think of for pulling back configuration information.

[32:27] [Music]

[32:30] Rob: So I think I’ve selected my next product idea.

[32:33] Mike: Oh yeah? What’s that?

[32:34] Rob: Yeah, well at this point, I’m going to keep it under wraps.

[32:38] Mike: [Laughter]

[32:39] Rob: The thing is I’m months — I could literally be six to twelve months out for even starting to work on it because I’ve got — I’m trying to stay focused and I’m dying because you know, like us entrepreneurs, we totally want to do the next thing because the next thing is way cooler than anything we were working on now. Yeah, right now I’m like focused with an exclamation mark, right? I’m like trying not to wander off the path like HitTail. I’ve just gotten the funnel optimized. I’m starting to market it again after a few months off and things are really starting to take off. They’re starting to do well how about I said that way. As much as I’d like this next idea and I think that it could provide value to a lot of people, I don’t want to have a bunch of ideas going at once, you know?

[33:14] Mike: Yeah, I talked about it in our previous podcast where I said that me having AuditShark going and then this Altiris Training site, then my forum —

[33:21] Rob: Yeah.

[33:21] Mike: … software is kind of being reworked and I’ve actually had sales requests and questions and stuff come in for all three of them in the past week and it’s just — it’s a juggling act. It really —

[33:32] Rob: Yup.

[33:32] Mike: … in a way kind of sucks. You know, it’s my own fault for putting myself in this position but I’ve had people sign up for the — the training site and there’s things that are just not ready yet. And then I’ve had people come in and say, “Hey, can you get the demo up and running for your forum software? I really like to see what it looks like specifically so that I don’t have to buy a site unseen.” There’s all these things going on and as I said before, my worst fear is that everything is going to kind of come to a head at the same time and that’s starting to happen. So I —

[33:58] Rob: Right.

[33:58] Mike: … I would definitely hold off. [Laughter]

[34:00] Rob: Yeah — and the thing is I mean I say I think I’ve settled them my idea. I haven’t settled any idea. I’ve settled on the fact that there maybe a need for certain thing is and what I really need to going to do is start talking to people, getting out there and if there really is a need and verifying and all that. And frankly, I don’t have a ton of time to do that right now and I don’t have the focus to do it. I totally could outsource it like I could sketch stuff up and send it to a developer and have them starting building it. But I just — I don’t want — I don’t think that’s a right decision right now. I think that I need to do more on research upfront to make sure that it’s solving the problem and I need to basically not be doing either those things because I really — I’m struggling to fight off the urge to start this product and I should just stick with HitTail for now.

[34:41] Mike: Yeah I have several other things that I have thought about and I’ve got them in a Google doc somewhere and I’m just looking at them. Every once a while, I look or I’ll glance at it and say, “Man, I’d like to do that but there’s just not now”, you know.

[34:52] Rob: Yeah.

[34:52] Mike: And I don’t think that there are market opportunities that are going to go away anytime soon.

[34:56] Rob: Right.

[34:56] Mike: So I feel like I’ve got time.

[34:59] Rob: I am coming up on a one year anniversary of owning HitTail.

[35:02] Mike: Oh cool.

[35:03] Rob: … that crazy? Anyways, you had I think one more thing you want to chat about.

[35:06] Mike: Yeah, actually. Do you have like a build server for any of your products?

[35:10] Rob: I used to.

[35:12] Mike: You used to —

[35:12] Rob: I don’t have at this point.

[35:13] Mike: You don’t okay? Okay. Because I was wondering how you – right now I’m starting to run in to some issues because I’ve got multiple developers working on, you know —

[35:20] Rob: Oh yeah.

[35:20] Mike: … the same code base.

[35:21] Rob: Yup.

[35:22] Mike: So merging code and making sure the check-ins from different people are all —

[35:26] Rob: Yeah.

[35:26] Mike: … working and it’s starting to become kind of a pain in the neck. I did start taking my build server and moving it out, you know, in to Rackspace that I didn’t had it hosted locally so it could do everything out there. And it’s one of those things where it’s like I would love to have that build server up and running right now so that it could do all those automated checks and everything else. I just don’t have the time in it.

[35:46] Rob: Does it — do any of your developers have the expertise to — I mean isn’t it CruiseControl? Is that still the standard because a couple of years ago, last time I set it up that’s what I used. And most developers knew how to — most .NET guys they know how to install that.

[35:57] Mike: Yeah. I’m using Final Builder. So –

[36:00] Rob: Okay.

[36:00] Mike: … it’s a little bit different. You know, I don’t know. I might be able to hand it off to one of my guys.

[36:04] Rob: Kind of give it off. Yeah. Obviously —

[36:05] Mike: Yeah.

[36:05] Rob: Obviously, you have to check it and make sure it’s done right but that might be — might be the better solution. You’re using Source Control at this point, right?

[36:11] Mike: Yeah, yeah.

[36:11] Rob: Were they able to merge? Okay. So it’s not like they have standard copies.

[36:15] Mike: Right, right. And I mean everyone is using Kiln and you know, they’re checking their code in and the issue that I’m running in to is just it’s like certain times not everything is being checked in so that in compiles on their machine but it doesn’t necessarily compile for anybody else.

[36:30] Rob: Right.

[36:30] Mike: So that’s one of the issues.

[36:32] Rob: That’s a big one. Yeah man, as soon as you ramp up to two developers from one, it is such a big deal, right? It is like a big leap. And then going from two to three, it’s not as big of a leap because you get these processes handed out.

[36:45] Mike: Right. And that’s what I’m trying to figure out is how do I put this process in place without actually having to do [Laughter].

[36:50] Rob: Yeah. Now, I hear you.

[36:53] Mike: So I mean part of it, you know, making sure that the code is good quality and everything else. So I’m going to have to do some of that anyway. I mean I’m going to have to review the code which is not that big of deal. It’s just making sure that it’s all following the rule. So I think there’s FxCop or something like that. I used to use it. It’s basically to make sure that all the code was following specific standards but I haven’t used it in a while. But I was had the issue. It would flag a lot of different things and say oh, this is wrong or that’s wrong and it’s like, no, that’s fine, don’t worry about that. And I never really dug in to it enough to figure out how to tackle some of those switches. So maybe — maybe you’re right. Maybe I just hand it off to one of these guys and say, “Hey, can you, you know, work with the build server and just straightening out all the stuff?”

[37:32] Rob: Or you could at least give it a shot.

[37:33] [Music]

[37:36] Rob: So if you have a question or a comment for us, 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 should subscribe to this podcast in iTunes. You can search for Startups or you can go to StartupsfortheRestofUs.com and subscribe via RSS where you’ll also find a full transcript of each episode. Thanks for listening. See you next time. 

[Read more…] about Episode 85 | 21 Free And Low Cost Solutions For Running Your Business

Show Notes

• AuditShark
• Wufoo
• Wufoo Survey for AuditShark
• KISSmetrics
• HitTail
• CrazyEgg
• Inspectlet
• 99 Designs

Transcript

 

[00:00] Rob: This is Startups For The Rest of Us: Episode 83.

[00:04] [music]

[00:12] 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.

[00:22] Mike: And I’m Mike.

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

[00:29] Mike: I am undertaking a lot of work to create work for others right now.

[00:32] Rob: Yeah. [Laughter] Yeah, this is the work that you can’t outsource, isn’t it?

[00:36] Mike: Yes.

[00:36] Rob: It’s outsourcing your work you can’t outsource outsourcing your work.

[00:39] Mike: Yup.

[00:40] Rob: So what have you been up to?

[00:41] Mike: So I’ve been going sort of a hiring binge lately. I hired somebody to build out the AuditShark sales website for me. And essentially just come up with the design for it. I’d say for the last year or so, I basically have the same sales website out there. I really haven’t spent a lot of time or effort on it. Right now, I’m kind of focusing my efforts on building something that actually looks good and addresses the paying points that have been kind of brought to my attention that people are willing to pay for from that Wufoo survey that I ran. So I hired somebody for that and right now I have a job opening for another .NET developer to add to the person who I already have working full time on the AuditShark code that he’s working on. So hopefully, by the end of this week, I’ll have two people working on that and the other person will be working on the website. And then I’ll have to start generating the content and stuff that’s going to go in to the framework that he’s building for the website.

[01:34] Rob: You have a WordPress site up right now, right? Just a WordPress theme that you customized like a year ago or something —

[01:39] Mike: Yeah.

[01:39] Rob: And you had the logo design, you know, by someone. So what’s the rationale at this point to go back to the drawing board? Do you have like a much better design for it or I guess why would you spend a time now to go back and do that rather than use what you have?

[01:53] Mike: There’s a few different reasons. One is to kind of switch it off of WordPress and I’ve started integrating KISSmetrics to kind of all throughout my website. And one of the things that is — I don’t know. I won’t say it’s a real pain in the neck to do it with WordPress but I don’t like the — the look and feel that comes out. I’ve seen the — the particular theme that I’m using quite a bit out there and it’s starting to wear on me a little bit. So I’d like to have a little bit more control over it. And the other thing I’d like to do is I’d like to make the sales site and the application itself look a little bit more like they were built together because right now, they just don’t. But you know, it’s — it’s something that I’m going to have to do eventually and if I get started now, then it’ll  be ready in like the next couple of months because it’s not like you can just say, oh well I’m going to redesign this and a couple of days it’s done. I mean it takes time to get it done.

[02:44] Rob: Right.

[02:44] Mike: So I’m spending the time now to find somebody to do it and then, you know, hopefully, in the next couple of months that it’ll — that it’ll get done and I won’t have to worry about it.

[02:53] Rob: Got it. And in the meantime, are you continuing — you had some survey results and you had fifteen or twenty e-mails I think and you were going to contact those folks and kind of do some customer development interviews to find out more in depth about maybe their needs and how you would structure your copy on your marketing site as well as potentially what you would build in to the product. Have you continue with that?

[03:16] Mike: Yeah. So I started talking to people and getting a little bit more of an understanding of specifically what they’re looking for. And one of the things that I’ve come across is that in both the copy that’s on the website and in my discussions with people, it’s not inherently obvious exactly what the product does and why it’s important. So one of the things that I came across was that the fact that AuditShark will dynamically look at your machine and figure out what it’s supposed to be looking at is now something that’s clear.

[03:45] So for example if you have a patchy installed in your website, then it will run all these different things on your machine to make sure that the patch is lock down and you know, if it’s a Unix or a Linux machines, it will track different places to find out what user accounts had been created and then we’ll monitor those overtime to make sure that they haven’t changed because one of the things that people should be looking at in order to secure those systems is our new user accounts being created. And if so, you know, what are those user accounts? It needs to notify you and those are the things that you should regularly do at some point anyway but most people don’t. But if a new user popped up on your machines, obviously, that’s something you would probably want to know about. If you did it, that’s fine but if you didn’t do it and you just get this notification that says, oh, there’s a new user account that’s been created and has got, you know, UID of zero, well, that’s probably a problem.

[04:36] Rob: Got it. Hey, I have a question. How many hours do you estimate that you’re going to have to spend to basically kind of repurpose the code that you have the AuditShark code or expand it to fit the new product idea that you’re exploring? Or do you know that yet? You know, the full feature set.

[04:50] Mike: I don’t specifically know that yet. I mean a lot of the stuff is going to stay the same and I haven’t even really look at what needs to fundamentally change in order to meet that new model. I don’t believe it’s a lot but not a lot is not quantitative I’ll say. I would say maybe fifty to a hundred hours but it’s probably fifty to a hundred hours that I mostly likely would have spend anyway because there were a lot of things that just weren’t done. So if the things would work and they would do what they’re supposed to do but there are use case scenarios that I hadn’t accounted for yet and this particular one is one of those — use case scenarios that I had thought of them like, hey, I think the people would want to use this for, you know, their web servers and I didn’t have a use case scenario for them being able to install at on a web server. It was solely around them installing it and like an active domain environment and then running there.

[05:42] So this is a use case scenario I had always scoped out and thought of ahead of time and I don’t look at it as being extra work that I wouldn’t have done had I gone in this direction. I think I would have done it anyway. It’s just the matter of timeline I guess.

[05:54] Rob: Right, that makes sense. Have you thought about just putting up a landing page? While you’re doing these interviews, you know, you do have a decent idea what people might want but you could get a pretty attractive landing page that’s not use by anyone, you know, like off of themeforce.net. They have, I don’t know, like seven to twelve bucks in there. There’s some pretty nice one of these days. You know, John Turner has — he’s an Academy member and he’s doing really well selling his ultimate coming soon plug-in which is cool because  you can then have a theme on the back end and then just have this plug-in that’s, you know, swaps at a landing page as your home page. But I guess you’re moving away from WordPress but for now, you know, you could keep the WordPress install and use his plug-in and just have a few senses describing the specific paying points.

[06:34] Mike: Uh huh.

[06:34] Rob: And then push off the website construction until — the marketing site construction until after you’ve had more time to talk to these customers and potentially have even gotten started on updating the code with the final feature set and then kind of set someone off on — on building it. Have you consider that route?

[06:50] Mike: Not specifically, I mean one of the things that I was a little bit concerned about in doing something like that is the SEO that I’ve done on my existing web page but I don’t know is that’s a huge hurdle to overcome. The bigger issue is kind of putting things on to that coming soon page that makes sense in — and or in line with what people are looking for. You know, some of that I think I’m still kind of straightening it out but I think that there’s probably enough interest in what I’ve talked about so far. I mean virtually every single person who answered the survey with I think two exceptions out of about thirty that said, “Yeah, add me to your mailing list.” That side of it I think turns out pretty well. But I don’t have a good reason for not doing that so —

[07:30] Rob: Yeah, I mean —

[07:30] Mike: … that’s probably something I move forward with.

[07:32] Rob: I see two kinds of benefits to doing that over going at in building the full pledge site right now.

[07:37] Mike: Just a correction though, I’m —

[07:38] Rob: Yup.

[07:38] Mike: … I’m not having the whole site built up. I’m having basically a template build for me with all these different HTML and CSS Snippets for different things that I may want to put in to the site —

[07:48] Rob: Yup.

[07:48] Mike: … and those will go in to like a full blown .NET web application that I’ll kind of put together. Why I put the contractor on is just basically building out the design for it but not the actual content.

[07:58] Rob: So I guess that I want to see the benefits in the landing page. Does it focus you’re — you’re just going to get more e-mails from it, period. You know, any visitor you send there is going to read it, read the few bullet points you have and then either give you their e-mail or not or is it if build out more of a full site after navigate through to give you their e-mails. So you have a higher conversion right there. In addition, I think — I think you’re right. You’re still kind of an early in the journey of figuring how exactly what AuditShark is going to become. And so not too hard to put together some bullet points a few senses to describe again. Probably harder to build out, you know, the full three, four, five page site with the tour and all that stuff.

[08:31] Mike: Right. That’s a good suggestion. I think I’ll do that. What about you? What have you been up to?

[08:31] Rob: About a week and a half or two weeks, I mentioned that I had rolled out Chinese character support and actually Chinese Search Engine Support which is the two different things but they’re related.

[08:45] Mike: Uh huh.

[08:45] Rob: I rolled them out with HitTail. So now, like these search engines like Baidu and this one called the Sogou and just a bunch that I can’t pronounce frankly, they now worked with HitTail which is cool and I have an “enterprise client”. My first four figure a month client trying it out now.

[09:02] Mike: Cool.

[09:02] Rob: So we’ll see how that appends out. I’m like cautiously optimistic. I tend to be skeptical when like really good things happening or like a “big break” but it could be — it could be a nice one, you know, it can be good for revenue. So he’s about seven days in to a trial. I just touched base with him so…

[09:18] Mike: Cool.

[09:18] Rob: That’s kind of the update on that. Now what I’ve really been working on for the past seven to ten days is this one-click article support because I mentioned last time that one of the main reasons that people were — were canceling their HitTail accounts was because it was adding stuff to their To-Do list, right? It gives them the suggestions that they should target but they don’t want them to go out and either try to write themselves or hire a writer. And so there are a few services that basically have these big pools of writers and you know, they offered to write articles for you and there are a few of them with API’s.

[09:51] Mike: Oh really?

[09:51] Rob: And so — yeah. So integrated with — with one of them that has 80,000 writers, not all are active but they have huge pool of writers. And so, you know, it’s kind of a no brainer for someone like me to — to integrate there. There are some other services, a lot of by the services that integrate with them and kind of use them as their back end Mechanical Turk almost, right? It’s like the turnaround is one to two days depending on the length and get a full pledge article and there’s like a bunch of different pricing tiers and all that stuff. But I made it super simple. I’m calling this an MVF. It’s a Minimum Viable Feature.

[10:21] Mike: [Laughter]

[10:21] Rob: Instead of actually — and when I sketched to that, of course, you know, I’m the developer entrepreneur. I was like “Oh man.” I want there to be all these choices and you could do 300 to 400, 500, 600-word. You can say I want SEO or not. How many times should it, you know, should these keywords appear in there. I want the people to be able to submit it and then review it and preview it and accept it or reject it and that — you know, there’s always options available to their API and I kind of cranked up at estimate and realized there’s no way I want to build all of that. So I just — I chucked it all. I said, “When you click this button, we charge your card on file 18 bucks for one 400-word SEO article and it comes back in two days.” And there are a few options, you know, you can change the title and change the keyword and do a few other things but it is super, super stripped down and if this works and it appends out and A, it helps retention and B, it actually, you know, generates the revenue because obviously I’m marking up the service a bit so there’s a little bit of margin for me.

[11:15] If that works, then I will go on and expand it and certainly add it, then adding it, you know, and making it a 300 and 500-word options. It’s not actually that hard at this point. I mean I kept all that stuff in mind while I was coding but I just — to do all UI work to support that would also really make the form a lot larger. So I pushed that live yesterday and it, you know, I’m super stoked that that’s finally done. It’s just — it’s kind of the biggest new feature that I built since I acquire the HitTail.

[11:39] Mike: Uh huh.

[11:40] Rob: And I haven’t launched it like I haven’t announce it to anyone. It’s soft launched now. I had placed one order myself just to make sure everything works. And so far that’s good. And then I think I’ll slowly start e-mailing customers in like ten or twenty person chunks and just kind of see how it goes before I really do a big blast in the promotional campaign.

[11:58] Mike: Uh huh. Now, you’re going to be measuring how many people kind of go through that funnel whereas you start telling more and more people about it.

[12:05] Rob: Yeah like how many people see the page —

[12:07] Mike: Yeah.

[12:08] Rob: … and click versus not. Yeah, I will be. Yup. So I have — I have KISSmetrics to install. I also have Google Analytics. But you know what? Good point I should actually install maybe Crazy Egg or even Inspectlet. Inspectlet is like the inexpensive version of ClickTale where does a screen recording of people doing stuff.

[12:23] Mike: Uh huh.

[12:24] Rob: And Inspectlet supports JavaScript and divs and all that because I have — it’s basically a Lightbox that pops up. So I probably should do that just to watch people on that specific page. I may —

[12:34] Mike: Yeah because if they’re not seeing it, then they’re not going to, obviously, click through it but you want to make it visible without being I’ll say intrusive.

[12:40] Rob: Yeah. And I’m planning on adding like a little new, you know, icon at the top in HitTail, you know. There are grids that you can sort and you can page and do that stuff but there’s not a lot of adornment on purpose because we want it to be simple and fast but if I put a big new icon at the top, I’m hoping it’ll draw to people’s eyes.

[12:58] Mike: Cool. Hey, did I tell you that I’ve did a contest on 99designs for new AuditShark logo?

[13:03] Rob: You did. You mentioned that to me.

[13:05] Mike: I finally went through and actually approved one and got all the files and everything transferred. So I’ve got that. I already sent that off to the designer who’s working on the sales website template that I’m going to using and hopefully, he’ll be integrating that in shortly. And I’m hoping to get some screen shots and stuff back just to kind of see what he’s working on in the next couple of days. But the logo I think turned out really, really well. I ended up with I think 110 different designs to choose from. There were probably three that I thought were in my top three. [Laughter] It was basically those three that I kind of work through a couple of different iterations and there was a fourth one that I kind of threw in at the end just making in to the finals.

[13:46] If you’re not familiar with how 99designs works when you’re doing a logo contest, basically, you pay a specified amount whether it’s a bronze, silver or gold contest and you pay more for the gold contest than you do for the bronze. And the one I did was I think $500 and the people who just start submitting their designs to you and you get to rate them and comment on them and send them back for revisions or whatever and they’ll just keep submitting them to you as long as you are I’d say pretty diligent about providing feedback about what you like, what you don’t like when it gets to a certain point, I think that’s about three and a half days in, they kind of draw the line. You have to pick your designers, who you want to move on to the finals.

[14:24] There are certain designs that people would come up with and you just don’t like anything that they come up with. So — those are the people you wouldn’t want to bring on to the finalist stage and then of those, I just picked four to go on to the finalist. And then of those four, I picked one of their designs and I had them tweaked a couple of things and what was it — I think five or six days and it was done.

[14:41] Rob: How cool. How much to that one have cost in?

[14:43] Mike: It was 499. So —

[14:45] Rob: Cool.

[14:46] Mike: … $500. One of the things that was kind of interesting was I put it on Twitter that I had been drawn in this contest and somebody called me out on it over episode 71 via Twitter. And if you will recall episode 71 it was “Things you shouldn’t pay for early on in your business.”

[15:02] Rob: [Laughter]

[15:03] Mike: You have that?

[15:03] Rob: You know, it’s funny. I was just going to mention this because that’s one thing I don’t pay for. I don’t have logos for anything, like I do it on purpose now. Like the Academy has no logo. The only reason HitTail had a logo is because the designer who’s designing had said, “I need to put a logo here.” And I said, “Just put a text.” And he said, “No, I have to do it.” So he just did one off logo. But yeah — so I was going to ask you about that and give you a little crap about it but I’m glad someone else [Laughter] headed me off.

[15:27] Mike: No, I mean he did and — you know, it’s a good point. I think a lot of the things that I said, there are still a whole true. I mean which was primarily if it’s not making you money and it’s not going to make you money, then what difference does it really make? But at the — at the other end of the spectrum is, you know, I would still have to have something there and I would have to have some. The very least stylize text and you can look at stylize text and say, “Well, that’s a logo.” And as like, “Well, I don’t really want that.” It was more of a personal preference on this particular product. In looking what I ended up choosing, I think that it fits really, really well.

[15:59] Rob: And here’s the thing, you can make general rules like we talked about 71, you shouldn’t spend money on stuff, you know, before you need to spend it. But the bottom line is there are a couple of things, one, as an entrepreneur, you can have some indulgences. If you really wanted a nice logo, then go buy yourself a nice logo, you know. But when you’re doing it, you know that it’s not going to dramatically increase your click-through rates to your signups or anything.

[16:19] Mike: Right.

[16:19] Rob: Just know that going in to it that you spent that 500 bucks and it’s not necessarily going to have a high ROI but if you needed that to like feel excited about the project, then do that. That’s not a big deal as long as you know it.

[16:28] Mike: Well the other thing that does — as you said, I mean if it excites you about the project to actually do that and it really did. I mean seeing the logo kind of help energized me a little bit and put me in the right frame of mind to kind of go on and tackle a lot of other things that I kind of had on my plate for AuditShark. So I think it was helpful for me but at the same time one of the things that I think is important about AuditShark is because it is kind of a security product, I think that it lens credibility to it by having a nice logo. In many cases, a logo is probably not necessarily going to land you any sales but at the same time I think for this particular product, having a logo is going to help it land sales that might have otherwise been on the fence.

[17:06] Rob: Right. You can definitely take it too far and you know, I talked about indulgences and doing stuff just to get you excited and you can spend a hundred of hours or a thousand of dollars doing something stupid just because it gets you excited. And obviously you don’t want to go that far. But you’re not doing that here. And I would agree with you like we’ve talked about different ways kind of a tiers of building sales websites and at the very bottom by an HTML template right above that you can buy a premium WordPress theme. Above that you can get a — a kind of a low end custom-design and you can go a higher end and we’ve done — I’ve definitely done all of those tiers and I know that they impact click-through rates and they impact conversion rates but for some of them like when I read at HitTail, I paid top dollar.

[17:45] I paid the most that I ever paid for a design ever, [Laughter] you know, in all of the sites that I built. And that was a little bit of an indulgence but it was also a little bit of me getting really excited about the idea and wanting something that I could be proud of. And third, it was like you said, it was about building some credibility for this thing because it is kind of an — it bring you something to another level, right? It’s not some really tiny niche product. It’s something that you do want to have a lot of credibility and therefore, there are some — there’s some give and take there. There’s some things that may be on the boarder of, you know, how early you should have them done and how much you should pay for them and if you have the money and you really are going to — kind of go bigger and go with the bigger idea, then some of those things can be done earlier on or you can invest more money than you otherwise would have if you might be going after, you know, more of a niche idea or you’re a more cash strapped.

[18:30] Mike: Because I know that there’s money here, I think it makes it a little difference. So if this was a new idea that I didn’t know if it was going to fly, that’s when I would probably be a lot less likely in a way to spend the money on, you know, the logo. In just drawn in the survey, I’ve got anywhere from 1500 to $2500 worth of commitment so far based on, you know, the survey. I can definitely see that there’s money there. So it doesn’t bother me to spend $500 on making it looked nice.

[18:58] Rob: Right. Now, you said something that you said because I know this is going to work and I think, I personally think that’s taking it too far at this point.

[19:05] Mike: Uh huh.

[19:05] Rob: I do feel like you’ve gotten some positive affirmation of your hypothesis —

[19:09] Mike: Uh huh.

[19:09] Rob: Like to me, at least maybe I’m a pessimist or something, in the back of my mind it’s like, no, you still need to prove this out.

[19:14] Mike: I guess no, it’s probably not necessarily 100%. It’s I’m fairly confident that I’m on a right track. Not necessarily that this is going to work and I know exactly what I’m doing. It’s more of that I’m on the right path. That’s more what it is I think.

[19:26] Rob: You’re encouraged, yeah.

[19:28] Mike: Yeah.

[19:28] Rob: And that I would agree with.

[19:29] Mike: Uh huh.

[19:30] Rob: So I went in to a little indulgence of my own last week. I was knee-deep in code doing that one-click article feature and just for kicks, I wanted to try a little bit of paid customer acquisition so I set up some Facebook ads and had kind of a blast with it. I forgotten how much work it is to set up and maintain Facebook ads because they just burn through people so quickly.

[19:53] Mike: Wow.

[19:54] Rob: For those who have — yeah, for those who haven’t —

[19:56] Mike: I like the — stock price as it goes down, right? [Laughter]

[19:58] Rob: Oh my gosh. Tell me that’s a disaster. [Laughter] Anyways, that’s a whole other podcast but —

[20:03] Mike: Yup.

[20:04] Rob: … but it was fun. With Facebook ads, you target a demographic and you tried to get the demographic to a certain size and then you really got to go for the visual — the visual and the headline or — for the most part, all accounts to get the — the attention. But then you basically, a Facebook just shows the ads over and over to the same group. If you niche it down properly, then your number of people that you’re displaying it to is not huge. And so Facebook will repeatedly show it to those people. And so if your click-through rate goes high, your cost per click goes low but then pretty soon, your click-through rate just plummets because people get blind to the ad because they’ve seen it so much.

[20:36] So realistically, like if you put an ad up and you have, you know, an audience size based on the demographic you’ve chosen of around a hundred thousand people, it’s like two or three days and the ad is done. And so, I put up three or four ads, A/B testing a bunch of different stuff and they were just gone in like two and half days. And then I put up another — I put up like nine the next time. And I had a bunch of, you know, image I was — images. I was using different headline combinations and testing and it was fun.

[21:01] I was spending about twenty to thirty minutes a day on it and in total, I’ve dropped — I guess it got pretty good click-through rates about 50 cents a click and I spent about 300 bucks. Yeah, it was a fun experiment. I wound up getting a bunch of customer, well, a bunch of trials, anyways. And that my current trial to paid conversion rate it looks like I will be about — it was about six months of a cost of the average revenue to acquire a customer. So if that makes sense so I —

[21:28] Mike: Yeah.

[21:28] Rob: … it’s about six months of my average revenue number in order to acquire each of those customers assuming they convert the way my other — my other customers do from trial to paid. So now, I want to get that down to below that. It should — I wanted to be more around three. Since I’m bootstrapping, I don’t have this huge pool of cash to dump on it but —

[21:44] Mike: Uh huh.

[21:45] Rob: … it was a fun experiment. I shall of — it was way too much work. The thing was is for the amount of work and even, you know, kind of the money I was investing there are so many other options at this point that would work better than that.

[21:58] Mike: I can see that. So when you’re I guess doing this Facebook ads, I mean do you have a lot of control over how much I guess gets spent or how much they get showed to people? I guess how much control over the process do you have?

[22:11] Rob: So first, you specify all types of demographic information, right?

[22:15] Mike: Uh huh.

[22:15] Rob: What they’re interested in and what they have in their profile and their age range, their gender, you know, all these different stuff. And then you can do cost per click and then Facebook will just show it as much as they think — they have an algorithm obviously that shows it and if your click-through rate is high right off the bat, then it’ll drop your cost per click and they’ll show it a lot more because they want to make — it makes them money and it makes you money.

[22:38] Mike: Uh huh.

[22:38] Rob: And then you can also choose cost per thousand, right, CPM —

[22:42] Mike: Uh huh.

[22:42] Rob: … where it just — it’s not cost per click but it’s actually cost per thousand impressions. And that way with a little different, they still had an algorithm but they seem to show it a lot more. They kind of didn’t care about the click-through rate, right? Because that’s not they’re billing on and so that was — allow me to get to add in front of more people and so I tolled around with both of them. I got on this one, I got the better click-through rate using the cost per click and in the other campaigns I’ve done, I’ve had CPM worked better. So it varies from time to time. I’m sure there’s — as a rule, certain people can get a phenomenal click-through rates or CPM I’ve heard and I’ve seen that happened on one or two campaigns. And then from there, you set your daily budget. That’s how you — how much you show, right? Once it’s out of money, then it stops showing.

[23:25] Mike: Got it. Yeah, I was just kind of curious how Facebook’s model for advertising stuck up against like Google AdWords. So…

[23:32] Rob: Yeah, it’s definitely getting more sophisticated. It was pretty simple about a year or a year and half ago but they’re adding more features and I think the algorithm is getting a little better. I mean I imagine now they have IPO’ed, you know, they really need to kind of take this up a notch.

[23:45] Mike: Yeah. And I would imagine that they probably have a lot more data about the users that they’re showing this too to figure out whether or not that’s going to fly for them or not. So…

[23:45] Rob: Yeah, it’s so with me.

[23:54] Mike: Yeah, I’ve been doing some data analysis on my end for the Wufoo surveys that I’ve did for AuditShark and one of the things that I found that it’s interesting but not surprising is that the people who have Window servers are willing to pay roughly twice what the Linux admins are for the same thing.

[24:12] Rob: Interesting. Yeah, that makes sense, right?

[24:14] Mike: It makes sense but it also makes pricing difficult, you know?

[24:17] Rob: Yeah.

[24:17] Mike: I mean I had roughly the same amount of people who had Window servers as had Linux or UNIX servers. So it’s —

[24:17] Rob: I was going to ask you that.

[24:26] Mike: Yeah.

[24:26] Rob: But that’s some — you know, I was talking, I mean this was a couple of years ago but Joel Spolsky had said — we’re at the Business of Software Speaker dinner. He and I were sitting two chairs down from each other and there was this whole discussion about Linux versus Windows users and all that stuff.

[24:40] Mike: Yup.

[24:41] Rob: He basically said that their Linux users of FogBugz were only — it was a very small percentage. It were somewhere around 15% or 20% but the day, at least for them for their market and actually accounted for a substantially higher percentage of their support issues. They must have — some people had said, well it’s because they are more hobbyists, you know, they’re in to PHP or whatever so they’re not going to be in to the Microsoft stuck looking for a cheaper solution and they don’t or maybe not as enterprise. You don’t know what they’re doing as much. Other people had said, well maybe your Linux product isn’t as good or it crashes more something and he, you know, contented that it didn’t. So that’s an interesting thing to think about too. I wonder if there will be any kind of ease of views or higher support burdens if you go Linux versus Windows or go both.

[25:27] Mike: Yeah, that’s one of those things that — it worries me a little bit just because if — if I kind of go down on the price in order to gain those Linux customers is that they’re going to kill me on support side of things.

[25:38] Rob: Yeah, seriously. And so you’re not going to charge 99 bucks for Linux and 199 for Microsoft Window?

[25:44] Mike: [Laughter]

[25:46] Rob: I would have to lean towards going Windows only when you launch then.

[25:49] Mike: Yeah.

[25:49] Rob: I got to go for the higher end to start with, right?

[25:52] Mike: Right, right.

[25:53] Rob: Especially if you have the equal amount. I was going to say if you have more or the same amount of Windows.

[25:57] Mike: Yeah. I think I have to go back and double check the spreadsheet but I think that they were — it was roughly equivalent in terms of the respondents. And I know that there was one person who had come in and said, “Yeah, I pay for it” but it really skewed the numbers because they had like, you know, 75 Linux servers or something like that. So that made up the bulk of them. But in terms of the actual number of people who chose them, it was significantly less. But yeah, I mean the distribution I am looking at it now. There were eight who had said Windows on this spreadsheet. So on this particular one, there’s eight of them in here that say Windows and then sixteen who said Linux, you know –

[26:36] Rob: That’s not 50-50. [Laughter]

[26:38] Mike: It’s not but the people who had Window servers tended to have more. So for the couple of exceptions there was the one that like I said have 75 that skewed at pretty far on the direction of Linux but otherwise, it was — it was mostly the — and the other thing is people going to answer more than one thing. So there were several people who had both Windows and Linux.

[26:56] Rob: What are you going to do? Do you think you’re going to come out Windows only and do the higher price to start with?

[27:00] Mike: I’m still trying to figure it out because one of the things I’m looking at is a lot of the competitive products that are out there I mean because I asked what are you currently use for monitoring on your server because Ted from Moraware had I kind of ran my survey past him first and just to get some feedback on it and he’s like, “This looks good.” The one thing I’d asked is what other monitoring solutions people pay for already because that might be kind of a self selecting crowd of people who are willing to pay for those types of things which —

[27:26] Rob: Sure.

[27:27] Mike: … gave me a great idea. I was like, oh, well if you’re already paying for those things then, you know, it would makes sense for me to either integrate with them or partner with them in ways that would allow me, you know, use my software alongside of theirs, et cetera. People pointed out what other tools that they use to monitor those servers. So I got a lot of information that I probably wouldn’t have gained otherwise and you know, just been looking at some of those offering or what they do. And some of them I just never heard of before and then other ones like, you know, Pingdom and Cloudwash . I mean those things, you know, pretty straightforward and I call them more well-known. You know, it’s just interesting looking at all that data.

[28:02] Rob: Yeah, it is. And you know what that helps you is this concept that I’ve been telling in one of my talks called Integration Marketing and there’s a few entrepreneurs doing it really well right now and I’m actually diving in to that my next marketing/technology challenge with HitTail is I have four different companies that want to integrate with me so — that I will either create an API and have them ping in and grab some keyword suggestions or you know, go out and integrate with their app market place.

[28:31] And the cool part of it is that I’m only integrating with people who already have customer basis and are willing to either e-mail or blog about the integration. And so I get this link and a mention and it sends a bunch of traffic, you know, it’s not — it doesn’t have a long fly wheel effect but you know, it — what it brings is this nice big chunk of people who kind of signs up for the — for the product and since it’s a SAS app, you get the recurring revenue from them. It’s not I mean really the cause is to do the integration, you know. So either I pay someone to write the code or I write the code myself and that’s where you in your survey have just asked about future integration partners, right?

[29:07] Mike: Uh huh.

[29:07] Rob: And if they’re already using Pingdom and these other things, whether you actually do a physical code integration with them or you just basically just to have these customers and I’ll them know about you and you have your customers and kind of do a joint venture e-mail type of thing. That’s a great way to go. It’s kind of a low cost guerilla marketing tactic but it works out really well. That’s the next steps for me after I get this whole article thing launched and I’m going to do a little promotional over the Chinese character thing as well and then move on to these things which had been on the book since like February. I started getting contact to them in November-December from a few shopping cart vendors and a couple other companies that will remain nameless right now but I’m pretty excited about — about doing that. These companies have few of intensive thousands of active paying customers. So —

[29:52] Mike: Uh huh.

[29:53] Rob: … could be — could be a nice — nice expansion of the customer-base.

[29:56] Mike: Yeah, definitely building an API that people can kind of interface with and [0:30:00] get data in or out of your product is helpful in leveraging your product is more of a platform, you know, as more people do it, it’s just gives you a larger breath, increasing your luxe surface area I believe.

[30:13] Rob: Right, from texting. But you know, in terms of the API I would never go out and just build an API and say, “Hey, here’s API. People can use it” because that’s an — that requires marketing too, right? You have to go out and recruit people to do it.

[30:25] Mike: Right.

[30:25] Rob: Only reason I’m building one is because I have four people onboard ready to do it now and I vetted them. They have, you know, between 500 and tens of thousands of paying customers and they are ideal integration partners because they are like shopping cart vendors who are great candidate for HitTail because e-commerce sites get a lot of value out of it and then there’s a few others that are marketing type software that were just the keyword suggestions really, you know, would work well and a couple of them, again, I am integrating in to a very consistent and a couple of them are going to pull for me and need an API from my end. So but yeah, I would never just go out and build — you do see this kind — it was like the web 2.0 thing, right, was to become a platform and build an API and I don’t think that’s a good move straight upfront. I mean I think you have to — you have someone to need it before you build it.

[31:09] Mike: And those people who need it, you simply work with them to figure out what it is that they need and you build —

[31:13] Rob: Exactly.

[31:13] Mike: … from that stuff in to an API and then as other people start using it and leveraging it, then you build out other things on top of it. You don’t —

[31:21] Rob: Exactly. Dude, that’s right. And my API right now it’s all built. It’s one call, one method call, get suggestions.

[31:28] Mike: [Laughter]

[31:29] Rob: You know what? There’s authentication and then they’ll get suggestions because that’s all I need right now. And now and some days someone will lead some dynamic tracking code and then — then we’ll build that out so it’s an MVF as well, Minimum Viable Feature. I think I need to write a blog first about MVF because I Googled for it. I’m not — someone surely has talked about this before and of course, it’s nowhere to be found.

[31:47] Mike: [Laughter]

[31:48] Rob: Maybe we’ll rank for it with the transcript to this podcast.

[31:51] Mike: Yeah, maybe. It’s funny that you mentioned building an API because with AuditShark a way a lot of the data is pass back and forth that’s all done through web services. So in a way, I almost have an API that’s kind of sit in there. It’s just not documented for anybody else to use.

[32:08] Rob: And you need the authentication later on their security authorization authentication.

[32:13] Mike: You do but I use a token for just about everything.

[32:15] Rob: Oh nice.

[32:16] Mike: And that token is built in to the product. I think it can be pretty easy to surface that in other locations but I think mine is probably different than most API tokens and that my token is only valid for about an hour. So —

[32:29] Rob: All right.

[32:30] Mike: … most — most services you signup for, they have this API token and you know, you can click a button and reset it at any time but otherwise, it’s valid until the end of time. My system when you pass things back and forth establishes a token which is randomly generated for you and that token is valid for the next 60 minutes. And if it times out while you’re in a middle of doing something, then the next function call will basically say, “Hey, this token has timed out, you’re going to have to request a new one.”

[32:55] Rob: Nice.

[32:56] Mike: So —

[32:56] Rob: Yes, it sounds like you have something that built in already.

[32:58] Mike: Yeah.

[32:59] Rob: Yeah. Have I talk about operation retention?

[33:01] Mike: No, what is it?

[33:02] Rob: This was like the big movement. In January when I relaunched HitTail, I got this big influx of traffic and then thirty days later when the trials ended, I got to start seeing the conversion rate from trial to paid and then I started watching the churn rate of paid customers how many canceled per month. And right away, it was not good. I was just clutching my eyes as I watched [Laughter] these numbers go in the wrong direction and they were just bad. They weren’t anywhere near the goals that I had. So I’ve started doing a bunch of marketing and a bunch of people coming in but I have this leaky funnel, right? And it was better than the old HitTail design. It was better than the old HitTail trial, all that stuff but it wasn’t where I wanted it to be.

[33:41] So I sat down and wrote in my notebook. I said “Operation Retention.” All I’m going to focus on, I’m going to stop all marketing. I’m going to stop anything that takes my time and I’m going to focus on getting the churn rate down, driving the trial to paid conversion rate up because the number of visits to trials was great like that’s — it’s totally in a rate of where it should be. I could tweak and get a little more out of it, you know, just test copy and A/B and stuff but their big glaring bottlenecks the big holes where the trial to paid conversions and the cancelation rate early on.

[34:14] So I wrote down eight things. I contacted customers. I had my VA contact everybody who canceled to ask them why they canceled. I put together a spreadsheet and I figured out that there were seven or eight main reasons people were objecting and some of them included things like it adds things to my To-Do lists. I want to have to be able to one-click an article and that’s why I built this feature. Other said they said things that alluded to the fact that they didn’t understand how the product worked. So they would say like, “Well the suggestions are all around the same topic and that doesn’t help me” whereas that’s actually a really good thing. And so I realized I needed to educate. And so there were three or four that were like that where I needed more education. I needed the people who were using it to understand how it works, to understand the benefit they could get out of it.

[34:55] So I listed these things out and one by one, I’ve been scratching them off and with the release of the one-click article feature, it’s done. The education I did through screencast during the trial and so people they had a few e-mails during the trial and I basically just had a question in there and would have – and once they answered and then the link went off to a screencast. Now since I started operation retention, my trial to paid conversion rate is up 100%. It has doubled.

[35:21] Mike: Wow.

[35:22] Rob: Yeah, in three months and I’m super stoked about that as you can imagine. And then the other thing the churn rate is one half of what it was when I started. So I’ve 4x’ed the funnel in essence.

[35:32] Mike: Nice, very nice.

[35:33] Rob: Yeah, I’m going to go in to more detail about it. I’m probably going to write maybe a book chapter under it. They just, you know, there’s a lot of stuff that I tried that works, some of them didn’t work. There are still tweaks to be made and it is kind of a minimum viable effort, an MVE at this point. Now, I’m just getting ridiculous with that.

[35:50] Mike: [Laughter]

[35:50] Rob: But no, it’s like some of the screencast, I mean they’re not like fantastic. They’re not well produced. It was me sitting there recording for forty five seconds and then just pushing it on to the server because I wanted to get the stuff done as quickly as possible. But even with that kind of home brood effort of really not having stuff professionally done and not spending a ton of time thinking it through, they had dramatic impact on, on these numbers. So, I’m super stoked. I’m also — I’m just stoked that it — I’m stoked that it worked. I’m stoked that kind of the hypothesis was validated. And just that, you know, all the stuff that we talked about it holds true, man.

[36:20] Mike: Very cool.

[36:21] Rob: You’re building the funnel, plug in the holes.

[36:22] [music]

[36:25] Mike: So if you have a question or comment, you call it in to our voicemail number at 1-888-801-9690 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 the 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.

Transcript

Show Notes

• Mike’s AuditShark survey
• Trello
• FogBugz
• HitTail
• Ambassador
• Adii
• Altiris Training website
• Mike’s forum software

Transcript

[00:00] Rob: This is Startups For The Rest of Us: Episode 81.

[00:03] [music]

[00:11] 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.

[00:21] Mike: And I’m Mike.

[00:22] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Mike?

[00:27] Mike: I am reorganizing a billion things. [Laughter]

[00:30] Rob: Yeah.

[00:31] Mike: Mostly my to-do list and how I’m kind of managing things and how I’m assigning myself tasks and things like that. I started using and I’ll say I started playing around with Trello from Fog Creek a little bit.

[00:41] Rob: Yeah, I’ve heard — I’ve heard a lot about it. I’ve even heard it in like some non-techie podcast and such. People talking about the reason and when they said I’m like “Hey, wait a minute. That’s — that’s for us nerds, right?” Like normal people aren’t supposed to use that that kind of stuff. Some people are saying it’s pretty cool for like task management or to-do list management or how does it work?

[00:57] Mike: Yeah, it’s really good for list management of any kind. I mean they have — if you have like an organization that wants to manage a set of tasks or you have a project going on and you can do, I don’t want to say everything that you can do with and something like Basecamp because there’s obviously things that you can’t do but I think that it would be really good as either a supplement or you know, a compliment for Basecamp or possibly even a replacement. I’m not sure. I haven’t really taken to that extreme yet. You know, you can create this little card, basically a virtual card and you can move the cards around in the screen, you create all these different lists and you can put in votings or if you have something that you’re working on — and there’s a kind of goes in to like KanBan where you put things, if you have like a case for a new feature or something like that, you can have people voting on them. And you can make some of these things public, some of them private, et cetera. And then you can create organizations where, you know, you have your organization and then you can invite outside people to view the things that you’re working on.

[01:55] It’s really cool but it’s very much a horizontal application not so much for a cool application like FogBugz is a vertical and this could be use, you know, as you said not just by nerds but by pretty much anyone.

[02:06] Rob: Right. And when it first came out, you know, it was on Hacker News eight months ago like the day it launched and —

[02:12] Mike: Right.

[02:13] Rob: … it looked to me or it was either be just with the way it was discussed or the way it was positioned it looked like an agile development tool and I thought it was a project management thing for software projects. And so I kind of poked around it a little bit and then just bailed on it but the fact that people are now using it more as task management or to-do list management is actually intriguing to me because aside from pen and paper, I have never found a better way to manage my ongoing to-do list and I’ve tried pretty much everything. I mean I’ve tried GTD and Excel spreadsheets and I have a lot of stuff in FogBugz but that doesn’t work that great for me either. So if you actually get in and start using it, I may take a crack out of.

[02:50] Mike: One of the things that you can do in it is like you can take a FogBugz URL and paste it in to a card and then it will put like the little kiwi logo as a little button on top of that card and you could take the cards and you can drag them around and so you can — essentially reorder things so you know how if you’re looking at a project within FogBugz, like if everything has the same priority, you can’t really organize them within that priority for example but you could do that here.

[03:16] Rob: Yeah, you can in FogBugz but it’s not easy. You have to add —

[03:20] Mike: It’s kind of [Indiscernible].

[03:20] Rob: … you have to add another column that’s caught in it. It’s called like burn down or order of. It’s for agile development and they — I just added that in the last couple of years that wasn’t there for years. And then you add numbers. Yeah, it’s not a visual way to do it at all. So —

[03:32] Mike: Uh huh.

[03:33] Rob: That’s — that’s a nice touch then.

[03:34] Mike: Yup.

[03:35] Rob: I forgot to give something away at MicroConf.

[03:38] Mike: [Laughter]

[03:38] Rob: [Laughter] I e-mailed you this week and I was like “Why I just get this e-mail from Amazon that I’m getting a copy of Diablo III like [Laughter] I didn’t order this. I haven’t played video games in years and we were just going to give away the, you know, obviously there was no box or anything because Diablo III just came out yesterday. So we’re going to give it away in spirit and then send it to someone later. We forgot to do that. So we’re going to run a contest on the podcast here. [04:00] I should have this box in my hand I think today actually. So we are seeking topic suggestions for future podcasts, topics that we haven’t already covered and the 15th topic. We’re going to randomly choose that topic. The 15th topic suggestion we get is going to get this copy of Diablo III assuming you actually want it.

[04:17] Mike: It sounds good. And I think we’ll —

[04:19] Rob: We’re having this to send us at questions@startupsfortherestofus.com. Hey, did you meet Glen Germaine at MicroConf?

[04:25] Mike: Yeah, I did.

[04:26] Rob: Yeah. So he had e-mailed in and he runs mypractice.net.au but he asked a pretty detailed questions. You know what? He did e-mail in and it was a long e-mail that basically outlined our entire episode on the outsourcing, on outsourcing to developers. So you never recorded that episode and he took that information, that advice and he actually went and put it in to play. And so he flies in from New Zealand to the Vegas for MicroConf which was just awesome. So he took like 25 hours of time. And then he introduced himself to me and told me the whole story of like how he had used our advice and how it worked out pretty well for him.

[05:01] And so I was going to talk about it today anyways but then I noticed it looks like you already have him in the list like he wrote us an e-mail and kind of summarized his outsourcing experience.

[05:10] Mike: Yeah, he did. I verify it for as a lot of what he said. Basically looked at everything that we laid out in episode 64 and then first step that he went through is he placed the job on oDesk for a Dot Net Developer. And since it was his first hire, he decided to keep tight range on the entire process. So he created it as private instead of doing it publicly so only the people who he wanted to invite would have be able to apply. And he sent invitations to about 20 candidates and then received 12 applications out of those. And I think that I had talked about it before and the last time I went through this process for Dot Net Developer, I got something like 80 or 90 applications in the first 24 hours. I had considered making it private and just inviting people but then I decided to just go ahead and make it public just based on, you know, what people’s availability might be.

[05:54] But what he did was he went and he limited the search for the people who were in the Eastern Asia region because he wanted somebody who’s close to his time zone because, obviously, he lives in New Zealand. And he also limited the search to people who rated themselves a four or five in English proficiency it’s because he wanted somebody who had really good communication skills and then he set up a Google calendar with a range of times over the course for about a week and invited all twelve of the applicants to a Skype interview. And of those twelve people, two of them didn’t have microphones so he just kind of rolled them out. And then in going to this process, what he found was that the radium for the English proficiency was basically pointless because until he actually talk to somebody, you know, looking at their e-mails is one thing but talking to them is a completely different story.

[06:42] So, he spent about ten or twenty minutes doing each of the Skype interviews. And it wasn’t really technical interview he was doing. It was just kind of get a feel for them and their ability to communicate and he judged their technical ability based on some of the previous projects they did. And he said that it only took him three or four minutes on Skype to be able to rule out a lot of the applicants and identify those who really stood out. And at the end, he had two of them who stood out and he, you know, he offered the job to the first who’s his first choice and that first choice took the job. And then he just set up a time and said, “Look, we’ll try this out for four weeks and then we’ll kind of review how things are going.” And so far he said he’s been really pleased with the quality of work and everything else has been a complete success and you know, the rate that they agreed on was $12 an hour.

[07:25] Rob: And that’s awesome, right? It’s like an article success story —

[07:27] Mike: I know, I know.

[07:27] Rob: … that he actually took all of these and put it in to play because when he wrote, he had concern — I mean tons of concerns about the process, understand and please so. It’s not super simple and he handled it really well. But he also had concerns because his — his app is complex. He can’t afford to hire someone full time to work on it and he was concerned that it would take him as much time to explain the task as it would for him to do it but he basically said no, all like all that’s behind him and everything is — everything is working out great. So, awesome. Nice job, Glen. I’m really and — and you know what? It makes me feel really good because it’s like we invest time and effort in doing this podcast and it’s like no one is actually — I know people are listening to but if no one is actually implementing it, then there really isn’t a huge point. So to hear success stories like this is really encouraging.

[08:08] Mike: Yeah, definitely.

[08:09] [music]

[08:12] Rob: I’ve been spending the past it’s been about a week and a half. It’s pretty much since I got back from MicroConf making HitTail support Chinese characters. I had a bunch of cancellations or handful of cancelations several months ago when I re-launched it. And people were canceling because it wouldn’t support like even basic Eastern Europe or Western Europe like Umlaut and you know, it’s pretty simple unicode stuff. And so I got that dialed in fairly quickly but to get to support Chinese characters and Chinese search engines is a lot of work. Let me just say it’s way more work than I thought it would be.

[08:45] It’s basically trial and error and you know twelve hours into something I finally figured it out. And I also figured out that like Java script and DB script, Classic ASP, they cannot handle certain types of encodings. They just aren’t completely not built to support it whereas Dot Net can with one liner code can basically translate between every encoding anyone is using in the search engines. So I actually had to resort to some crazy Hackage and I have Classic ASP Calling .NET at one point.

[09:14] Mike: Are you serious?

[09:16] Rob: Yeah.

[09:16] Mike: Really?

[09:16] Rob: And COM Interop, yeah.

[09:17] Mike: Oh.

[09:17] Rob: I know it’s brutal. It’s not actually that complicated to do but it was just the last resort because you know, there’s that barriers that’s going to be performance ahead on it. I tried to do Ajax and just have Java script call in to an ASPX page but there was cross domain issues there because there’s security implication. So all that to say I genuinely was like Chinese characters, all I need to do is get an nvarchar, you know, unicode column in my database and I’m all set. And that was completely, completely wrong. So it took me about two twelve-hour days. So I’m almost 24 hours of work and then there’s still some little like little bugs, maybe 1 out of 10, 1 out of 15 are coming through which is weird encoding. So luckily, I’m able to knock those out now but it’s such a monumental effort, dude. Not only just to support all the characters but to like to deal with, you know, search engine query strings and it feels good to almost be done.

[10:06] Mike: That’s kind of crazy. I can’t imagine, you know, having to support Chinese characters. I mean it’s do you get a lot of requests to your site from Chinese websites?

[10:15] Rob: Yeah, well that’s the thing is, I mean I would not have spent a time on this if I hadn’t. I actually had a couple of people cancelled because it wouldn’t support it and then I have a site on deck who’s basically going to be, you know, if he comes on board there — probably my first and “enterprise customer” that just have a huge website. It’s a consumer web facing website but it’s China and it gets, oh to say gets millions of hits per month and since my pricing is cured based on the number of visits you get, it’s, you know, several thousand dollars in monthly revenue if I’m able to get him onboard.

[10:47] Mike: Wow.

[10:47] Rob: So that was almost exclusively, the reason I spent so much time getting this done. And now I’ll see if he actually, you know, comes through and gives it a shot and everything but I had originally hope, oh, I’m going to bang this on for hours and then you know, get him using it but obviously it took longer than that. So hopefully, it still comes through.

[11:05] Mike: Uh huh. Cool. Earlier, I started using Trello a little bit and one of the other things that I did to kind of reorganize some of the things that I’ve been doing is I created a virtual users in FogBugz. Have you ever done that?

[11:18] Rob: I haven’t. Are they users that you don’t get charge for?

[11:22] Mike: Yes. You basically —

[11:23] Rob: When’s that –

[11:24] Mike: You create these virtual users and they don’t have a log-in. They can’t actually get in. It’s typically use for assigning cases to like a group or to this queue that is unassigned that hasn’t been kind of taken by anybody and people can just kind of pop them off and start working on them as they get time or whatever. What I did was I actually took a bunch of cases that were in there and created virtual accounts for several, the different things that I’m working on and took all the things that were assigned to me and assigned them off to these virtual users and the idea being that once I get to the point where I’ve hired somebody to actually performed these tasks, then I’ll just basically take them and reassigned them to that user and set up to this virtual user.

[12:04] Rob: Yeah, that’s a nice way to do it just to get things off your plate and kind of clear it up. Now is one of your tasks that you’ve added to your task list to hire someone to do that.

[12:12] Mike: Yeah, it was three of four different virtual users that I added and in exchange for adding those three of four new cases to my queue I got to offload like 250 things.

[12:22] Rob: Now, that’s nice. Are they development tasks or should they more VA like admin staff or is it a mix and you actually need to create an admin user and a development user and …

[12:31] Mike: No, most of it is development task to be honest.

[12:34] Rob: Got it.

[12:34] Mike: I’ve been considering adding an account for the VA that I use but I don’t know. I have reservations about paying an extra 25 or $30 a month for a VA to use FogBugz if they’re not doing like support task, you know.

[12:46] Rob: Right. If it’s just simple one off step, you can e-mail it anyways it might…

[12:49] Mike: Right, yeah.

[12:51] Rob: I think this is a really good exercise that if someone is using any type of project management software, they start assigning stuff to a non-existent person and it — it’s like future VA. That’s actually a pretty good exercise to see what you think you could outsource. I have to do this about every 30 to 60 days, I have a calendar reminder that pops up and it says, “Go to your task list and take off everything that you don’t want to do, you’ve been procrastinating on. It’s been on there longer than a few weeks and try to assign that to someone.” And so it’s an exercise I go through because I always fall back in to the trap of wanting to do everything myself. This is an intriguing way to do it and if you’re managing or introducing with FogBugz anyways, it’s certainly would work.

[13:29] Mike: Yeah, we’ll — I think the problem that I ran in to was just that there were so many cases assigned to me that I’m looking at and I’m trying to figure out, “Okay. What should I be working on next?” And there’s just this massive pile of things that need to get done and it’s almost back to that and mountain of stuff that you’ve got no idea where to start. And I just look at the number of cases assigned to myself and it’s just like this is way too much. I’ve got to figure out some way to whittle this down the things that are, the important things that I need to be working on versus the things that I could presumably there outsource or have somebody else do. And it actually gave me a much better perspective on the things that I’m able to outsource. So in doing this, I created these other virtual users and it gives me this basis to be able to say, yes, I have enough work to be able to keep somebody busy doing these things for the next three weeks or three months or whatever.

[14:19] Rob: I set up a HitTail affiliate program and it’s through Ambassador, getambassador.com. And I wanted to find out what your thoughts are on the percentage, a fair percentage of recurring revenue. So HitTail, you know, it’s like 10 bucks a month or 20 bucks a month for kind of the bottom two plans and it goes up from there based on traffic. But I’ve seen, you know, you see web host where they give the big payment upfront it’s the $50 or $100 bounty to sign up but I’d almost prefer to do, you know, just a percentage of the recurring revenue because I think it’s a nice thing to be able to offer to people. Most affiliate programs don’t do that. So I’m bouncing around. I feel like 15% is probably as low as it can go and still be reasonable, you know, still want make people want to — want to promote it at all. And I feel like going over 30% is probably tough. It’s, you know, just tougher for the margin right to give right off the top to just someone. So I’m — I think — I’m thinking I’m going to start it around 25% and move it based on feedback I get and …

[15:21] Mike: I don’t know to me, you know, 30% seems low but at the same time it is recurring revenue so it’s not really just 30% and that lifetime value could theoretically be fairly high. So —

[15:32] Rob: Right. That’s — that’s the thing when you’re selling an eBook, you know, it’s typically between 30 and 50% that — that you’d see on commission but this is obviously, you know, a much higher lifetime value. But I don’t know if everyone will understand that or not. I’d just I feel like giving away 40 or 50% of our top line revenue.

[15:49] Mike: Yeah.

[15:49] Rob: It is a top sell for me to do it.

[15:51] Mike: That seems — yeah, I think 40 or 50% seems high for a SAS app, you know, on that recurring model. You know, it’s I would think that 20 or 25% would be reasonable.

[15:59] Rob: Uh huh. Yeah. And that’s what I think. I think a webber and lot of like MailChimp and those or in that range as well. So, you know, the lucky thing is that since I’m small, I can still make adjustments pretty quickly. Obviously grandfather and people and who get sales but it’s like and it seems like it’s too much or too little. It is enough to make adjustments. So, I think I’m going to start at 25.

[16:19] Now, this is mostly, I mean, so Ambassadors mostly they’re trying to give affiliate marketing a good name. It’s essential with their doing. It’s mostly for like your customers to market your app. It’s actually pretty cool idea. And so if you go to, to getambassador.com, I know the guys who owns it but I really like the tool and the thing is that it makes it feel not like someone is slapping your product but like they’re genuinely excited about it. Although I do have a public facing there’s, you know, if you go to HitTail.com there’s an affiliates link in the very bottom footer but more than that I’m going to be promoting it inside, you know, once you’ve signed up and you’ve actually become a paying customer.

[16:53] It’s those people who really do have a good testimonial to give. And so Ambassador allows me to just kind of pop something up to those folks that says “Hey, you know, here’s – your link is or you’re already signed up because you are customer and if you put this Facebook link, then, you know, it’ll just post it on your wall. If you click this Twitter thing, it’ll post it to your Twitter feed or whatever.” So the people do want to promote it, they don’t really have to. It’s not like they’re true affiliate marketers when they have this big list. They really just want to kind of talk about it to their friends and that’s more of the – of the goal that Ambassador facilitate. So …

[17:22] Mike: Right.

[17:23] Rob: It also serves as a public facing affiliate program too. So it’s – it’s an interesting – interesting experiment. I have it had good luck in the past with – with affiliate programs like with DotNetInvoice and there was one other product that I – that I tried it on and it was just kind of – it was kind of to me, you know, just the results for were so-so and it was more work that it was worth.

[17:41] Mike: Yeah. I think that was definitely a good potential for this as opposed to some other things that maybe get lower traffic or that you don’t necessarily have people involved a lot more with the products.

[17:52] Rob: Yeah. Like it’s too tight of a niche other products or if you really tightly niche it that almost a question if it works as well as something like this where a lot of more people could use it.

[18:01] Mike: Like for example, one thing that I think would not work well is something like QuickBooks, you know, it’s –

[18:06] Rob: Got it.

[18:06] Mike: … a horrible  application and everyone uses it but it’s not like anybody is really invested in the success of the product, I mean, nobody cares, you know –

[18:16] Rob: Right.

[18:17] Mike: … it’s in to it, you know, who cares about how they do.

[18:21] Rob: Right. Right.

[18:22] Mike: So you’ll definitely have to let us know how that goes.

[18:23] Rob: Yeah, I will. I will. I’ve already – it’s already all implemented. It just a matter of fitting it in to my marketing queue because I want to, you know, let the customers know about it and kind of do a little campaign around it. So, should be here in the next month or so.

[18:35] Mike: Cool.

[18:36] Rob: Do you have an AuditShark update?

[18:38] Mike: So, one of the things that I did at MicroConf was I walked around and I had these little business cards that I had created that I printed out, you know, they just basically had a space for a name and e-mail address and it just said “Yes, I would pay X dollars a month for that.” And one of the things that I’ve been looking at over the past couple of months was whether I’m really going in the direction that I want to go with my – with AuditShark and to – I guess to give you a better idea of what I was looking at was I was actually considering going after funding for it. And, you know, I talked to different people, you know, whether the idea was fundable or not, it was told that basically, you know, it is a fundable idea. I knew people who could introduce me to the right people but it wasn’t something I really wanted to do.

[19:21] What I was trying to figure out whether or not going in the direction of banks was even, you know, something that was going to be ultimately viable and more for my goals and anything else. I mean I know that I could get to them and talk to them but it would almost require that I have money. And it’s just – it’s gotten to the point over the past six or six months or so that I just – I don’t really want to go in that direction anymore. And part of it came about because of looking it, talking to some of the different banks and getting some of their feedback and, you know, figuring out who it is that they deal with.

[19:50] So, what I’ve been trying to figure out is, you know, what do I want to do with AuditShark? I’ve got this great utility that can go out and gather information, is there a way that I could essentially turn it into SAS model where I’m going after I guess smaller dollar sizes versus smaller number of customers we have but with large dollar amounts because, you know, the examples I’ve used in the past were if you have, you know, 80 or 50 or 100 machines then it’s $5 a month per machine and, you know, you’ll look at that and you’re talking to 400, $500 price tag which almost requires that you go talk to these people in person.

[20:26] So, what I’ve been looking at is well, okay, cool. How can I turn this around a little bit and maybe charge $25 a month for a single machine and go after a much larger audience, you know, because obviously HitTail is kind of in the same ballpark in terms of pricing. I mean, you charge anywhere from –

[20:44] Rob: 10 bucks. $9.95 and it goes up, up in to —

[20:46] Mike: Yeah.

[20:47] Rob: … in to the hundreds.

[20:48] Mike: Okay. So, I was looking at doing possibly the same sort of thing and I’m like well, how can I kind of twist this around and then I went to talk to some people at MicroConf and I actually got commitments from people to pay me $350 a month for it, the total.

[21:02] Rob: With total, right. Not each.

[21:04] Mike: So, but basically the idea would be that, you know, they were concerned about the security of the web servers, you know, are things configured correctly, are there ways that people could get in? Are there vulnerabilities on my web server? And Adii had actually talked about getting hacked at MicroConf, I mean, that was one of the – I don’t want to say it was the – the whole theme of his talk but, you know, it seriously affected his business. I mean, and getting hacked like that can completely put you out of business. And the people I talked to were kind of worried about that and one of them had actually said “Oh, when I heard you were taking AuditShark to bank, I was a little disappointed because it sounded like it was something that I could use.”

[21:41] So, just in discussing it with them, you know, I got three different people to basically put down “Yes, I would be willing to pay for that if you came out with it and, you know, ended at me as a target customer.” And so I’m looking at possibly shifting things over and going after the market of people who have web servers  that they want to make sure it locks down.

[22:02] Rob: Okay. Cool. So, you’re talking about doing a pivot then. You’re talking about taking the same code base. You obviously need to make some changes but it’s not like some completely, right?

[22:10] Mike: Right.

[22:11] Rob: And doing a market, essentially market pivot, you’re solving a different problem

[22:16] Mike: Uh huh.

[22:17] Rob: Right? A related problem but it’s a different problem for different market. How many people combined into that 350? Is that three people or four people?

[22:25] Mike: Just three.

[22:26] Rob: Okay. So, are you going to, yeah, so I guess the next step in my head would be to talk to more people, right?

[22:32] Mike: Right.

[22:32] Rob: It’s like three people is great but –

[22:33] Mike: Yup.

[22:34] Rob: … are you going to talk to more people and how do you find those people? Because when you’re at the conference, that’s awesome, but, you know, you’re only going to be at conference once or twice a year but, you know, kind of what’s — what’s the marketing channel that you would look at finding more of these people?

[22:46] Mike: What I’ve done in the past was – and I was looking for something a while back when I was trying to figure out where I wanted to go with this. One of the questions I’d asked on my blog was about WordPress security because I was considering at that point going and, you know, auditing machine specifically for a WordPress vulnerabilities or examining the files and stuff that were on those machines for permissions error, some things like that. And I got a fairly reasonable response from just my blog, so I think that’s probably the first thing that I’m going to do is I’m going to put it on, on my blog and say “Hey, is this something that you’d be interested in and just go to Wufoo.com and just create a very quick little survey and just post it there.” And see what kind of response I get from people and see if there’s a genuine interest there because what I’d really like to do is get commitments from at least ten people before I actually decide to go in that direction.

[23:33] Rob: Right. And obviously the podcast if there are any listeners out there, I could announce it on the next episode and Twitter and all that. Yeah, so that’d be – that’s probably a pretty good first step for getting that customer development started. So you want ten commitments, is that what you’re saying?

[23:45] Mike: So, looking – definitely looking for ten. Obviously if I can get more than, that’s great. It’s just more of a testimonial that I’m on the right track with that idea and that it’s something that people are genuinely interested in doing.

[23:54] Rob: Right. How do you know that what you’re describing to each of these people is what they are imagining?

[24:01] Mike: One of the issues with the banks was just that “Oh, well. It kind of was what they needed but they still wanted that third party person to come in and whereas I was looking to replace them. I think that the people that who would be reading my blog and, you know, listening to this podcast quite frankly or probably a bit more technical than managers of banks, you know, the other thing that I’d be looking at is the target market is probably people who don’t, not necessarily spend a time and effort but they’re concern enough that they want to spend the time but they don’t want to spend the time. You know what I’m saying?

[24:30] Rob: Sure. Yeah. They’re concern if that they want it done but they don’t have the time. They want to outsource that time to hopefully an app.

[24:36] Mike: Right.

[24:36] Rob: Because they had gear  rather outsourced it to you through the app.

[24:39] Mike: Right.

[24:40] Rob: That make sense. Are these enterprise folks that you’re talking to –

[24:43] Mike: No.

[24:43] Rob: Let’s say that you talked to twenty people and you get ten commitments or however many people you talked to, you get these ten commitments that you want and so out of the gate hopefully most of them come through so you have a nice, you know, small chunk of recurring revenue when you launch. From there, you know, you’ll want obviously a scalable marketing channel of some kind and you have plenty of time to figure that out but I’m wondering if these guys aren’t enterprise kind of what is the marketing channel beyond the blog and the podcast and Twitter because that was – that was going to run out pretty quick where you think you might be able to go from there.

[25:14] Mike: I’m still kind of working that out because I mean I really want to see if it’s something that people are interested in and if so, then trying to figure out how to reach them.

[25:21] Rob: So, it’s more of a build something people want. If they want it, they’re willing to pay for then you’ll – and if it’s – if the price point is enough, frankly you can afford to do even do some outbound stuff and more medium and, I don’t know, hi-tech sales but yeah, at least medium to higher tech sales.

[25:36] Mike: Right. I can still go to outside consulting companies who do manage services for example for some of their customers and one that comes to mind is the company down in Providence where I’ve talked to them a little bit about AuditShark kind of early on and they have this established customer based where they’re bringing in, I forget what it was. It was like six or eight million dollars a year where all they’re doing is manage services for all these different companies that are in that area.

[26:02] And, you know, one of the things that they don’t really do or do well is checking the machines for security. So, like people’s web servers and things like that and they would definitely be able to leverage that in to their customers. Something else that somebody had mentioned to me was they’re like “Hey, if this was like an add on from my hosting provider and for an extra 20 or $30 a month or something like that, you could check my server to make sure that it’s not configured in a manner that it’s, you know, terrible for security then, you know, that’s almost seems like a no brainer to me to just say, oh yeah, I’ll take this option for an extra 49.95 a month.”

[26:41] So that really there’s a lot of different ways it could go. It’s just kind of getting to the point where I have people who say “Yes, this is something I’m definitely interested in.” And then kind of going after it. But I want to make sure that that demand is there first.

[26:53] Rob: Right. So, right now, you have the blog and the podcast, you have your consulting work, your – you’re still working on the form software AuditShark, anything else?

[27:05] Mike: The AltirisTraining.com site.

[27:06] Rob: AltirisTraining.com. Okay. [Laughter] Remember when Hiten Shah — [Laughter]

[27:10] Mike: Yes.

[27:11] Rob: Remember when he said focus? Now, I’m the pot calling the kettle black here because I work on too many things.

[27:15] Mike: I know. It’s funny that you mentioned focus because literally just last night, I printed out in, I forget if it was 160 or 260 point fund. The word focus with an exclamation point and I’ve got two of them hung up in my office right now that I can see from here. [Laughter]

[27:29] Rob: Got it. Okay. So, is Altiris Training still going to happen or you’re going to move forward with that or you’re going to put it in the form on hold while you do the AuditShark stuff.

[27:39] Mike: I’m not doing much of anything for the form software right now and then with the Altiris Training’s website, most of the legwork for that has been done. I have to post some videos, I have to sign up for, you know, a Wistia account. I actually had somebody go sign up for it and they couldn’t complete the process of signing up for it because I didn’t have everything configured right. So I have to go back to that person and see if they’re still willing to sign up but, you know, that stuff is I think still going to move forward. I don’t see any issues there. I mean, I think I’ll spend maybe an hour or two a week building out some of the content but other than that, I’ll be able to outsource a lot of having that posted to the site and basically integrating all the content. My sole responsibility will basically be to record it and then kind of maintain the SEO progress.

[28:24] Rob: Yeah, that’s what I was going to say. It’s the marketing I’m more concern about because I know you can automate almost everything except for this green cast but getting enough people there to make it, you know, worth your time and to kind of grow the business.

[28:34] Mike: But I also have somebody who’s the company I do consulting for or through, they’re willing to put it out to their customers. I already have somebody lined up to pay for as soon as it’s done. So I’ve got a $500 sale basically sitting there waiting for me just as soon as I’m done.

[28:48] Rob: Nice.

[28:49] Mike: I am juggling a lot. I’m trying to figure out, you know, and that was part of the things that I’ve been doing over the past week to try and figure out how I’m going to get better organized and kind of get more things done with less effort.

[29:01] Rob: Right. You know, I have this rule that I go back to people say, you know, “Rob, you’re totally unfocused because you work on all these things at the same time.” But the secret that I have is that I never build two apps at once like if I buy an app, I stop pretty much everything else I’m doing except for the blog and the podcast. And I work on that app. And I work and work and work and then once I’m done, like once I feel like it’s in a good place, I find some good people to do the development, to do the support and, you know, sometimes the marketing and then boom, you kind of pass it off and then I watch it and then as fires come up I’ll have to deal with the stuff. But I never tried to build two businesses at once or two products at once because I find it just – it’s just too hard.

[29:41] Mike: I’ll be honest, I’m kind of in a position right now where I – I know that building the things that I’m building right now is going to be too difficult to manage building all of them at the same time. So I’m trying to pipeline them a little bit where I’ve got AuditShark in a position where I’ve got a developer who’s working on some back end utilities and code for it and I’m doing more the upfront customer development to make sure that when, let’s say down the road in a month or so, I get to the point where I say “Yeah, I want to go in this direction and this is something I’ve at least proved out the concept, the people are willing to pay for it then I can switch over to working on that a little bit more and hit it more on the marketing side.

[30:021] But for the time being I’m spending probably more time doing marketing for the form software for Altiris Training. Because the Altiris Training stuff, I don’t feel like I have to do a lot of marketing because there are such little search engine traffic for it, I think that a lot of it is going to be driven by either word of mouth or by direct sales which that stuff is essentially being handed off for me, anyway. I don’t have to necessarily worry about that stuff. So I’m in this weird situation where everything is kind of bit a different stage and right now it’s manageable and my concern is that things catch up to one another.

[30:54] Rob: Yeah. If everything ramps up at one and then you’re like you’re in over your head

[30:58: Mike: Yeah, that’s my biggest worry right now, is that when something catches up with something else.

[31:02] Rob: Right. So are you planning by next week show then or do you think you’ll have done more of this customer development research for AuditShark?

[31:10] Mike: I will definitely have created the survey and put it out there. I don’t know how many of the results I’ll have by then. What I’m actually thinking of doing is not putting the survey out to my site until this episode goes live so that when people listen to the episode, if they have some thoughts on it or if they actually want to come check out the survey and take the survey then they can go to the survey and check it out. I’m sure that I’ll just launch it straight from my blog and I can put in just a note in the show notes this episode that’d be pretty quick and painless to do.

[31:37] Rob: Yeah. Sounds good.

[31:38] [music]

[31:40] Rob: So I know we intended to answer listener questions.

[31:43] Mike: [Laughter]

[31:44] Rob: But we basically have just given some updates. I think we wrap up this episode and then maybe next week we have – looks like we had four questions queued up and we usually have 20 something in the pipeline.

[31:56] Mike: Yeah, we’ll definitely do listener questions next time. If you have a question or comment, you can call it on our voicemail number at 1-888-801-9690. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. If you enjoyed this podcast, you can subscribe in iTunes by searching Startups or via our RSS at StartupsfortheRestofUs.com where you’ll also find a full transcript of this episode. Thanks for listening. We’ll see you next time. 

Show Notes

• MicroConf 2012
• Pictures from MicroConf
• Montabe (provided the picture slideshow app)
• WildBit (sponsored Monday night’s party)
• WP Engine (Jason Cohen’s Company)
• Balsamiq (Peldi’s Company)
• Software Promotions (Dave Collins’ Company)
• Woothemes (Adii’s Company)
• Eliza Brock Software (sponsored the little red notebooks)

Transcript

[00:00] Mike: This is Startups for the Rest of Us: Episode 80.

[00:02] [music]

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

[00:18] Rob: And I’m Rob.

[00:19] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. How are you doing this week, Rob? Are you getting sleep?

[00:24] Rob: I am getting so much sleep now that MicroConf is done. It feels good. I had a really tough time sleeping the night before and the two nights of even the night after, you know, you and I were up till probably 3 in the morning with that band of what, maybe 20, 20 folks you stock around that late. I went upstairs and I was thinking “Oh, I’m going to sleep till noon. No kids, no flight till 4 pm and sure enough I’d woke up like, kind of like anxiety where in that like 8 in the morning.

[00:48] Mike: Yeah. When I got there Saturday night, the next day I slept I got nine hours of sleep I think and then for the next three nights I got around 4 and half to 5 hours of sleep each night. [Laughter]

[00:59] Rob: Totally worth it, man. I had a blast.

[01:02] Mike: Yeah. What was your favorite part?

[01:03] Rob: I really enjoyed connecting again with people who we’ve seen last year as well as meeting a bunch of people who I’ve already met through the Micropreneur Academy who have called and e-mailed us through the podcast, comment on the blog, bought the book and e-mailed me. I mean, there’s all these ways that I meet people virtually and then finally meet them face to face, it’s really cool. This is like the original reason I think we started talking about putting MicroConf on period is that we have this kind of network around the world of people we wanted to connect with and there was really no event where we can all get together and so our excuse for doing that is getting really good speakers and putting us all in a room for three days.

[01:41] And so my favorite parts were, you know, the breaks and hanging out in the evening and just hearing what people are up to, giving feedback, getting advice, I mean I, you know, pitch some ideas to a bunch of people just to get thoughts on, on how I should move forward and I think my biggest takeaway is I’ve come back way more motivated like I had just had been attacking my list specifically a lot of stuff on HitTail because I got some comments and feedback and thoughts and both from speakers, you know, Jason Cohen and Hiten Shah and those guys as well as just, you know, all the attendees. There were a lot of really knowledgeable attendees this year. That was cool. How about you? What was your favorite part?

[02:15] Mike: I really like just talking to everyone who was there. I mean, there were a lot of people there who had just never been there. I mean, what do we have? Probably 50 people or so from last year but because we grew the conference by so much, it was a much smaller percentage of the people that were there but yeah, just talking with everybody, getting ideas, feedback from things that I’m working on and talking to them about things that they’re working on.

[02:38] I sat one night, I think it was the last night we were there and Patrick Foley and I just sat there and hashed out what the problems would like he has this idea for our products and I walked him through it and talked to him a lot about it and I was like that doesn’t really solve our problem from me and I didn’t get it for a long time and then suddenly things started to click for us and I was like “Well, that could solve this problem that I have, you know, could just kind of organized in the conference everything.” And he, you know, one of the things it was talked about was, you know, marry the problem not the solution so he was kind of thinking a lot about the thing he wanted to build versus the problems that it would be solving for people and I’m like, well, you know, this is the problem I have and he said “Yeah, I can do that.”

[03:18] It was really great to talk to people about the problems that you’re having and then frame them for them or help them out in any way that we could. I mean, I connected on so many people like somebody said “Oh, I’m having a problem with this.” I’m like “You should talk to so and so …” It was just in all these conversations that I had with people. I was just connecting people left and right. That was really cool.

[03:37] Rob: Yeah. I have to admit I enjoyed that. It’s kind of like having your whole network or at least like the best of the best of your network there in person. But it really was, all right? Like people would ask you questions. It’s like I don’t know the answer but this guy totally does like he’s also doing mobile apps right now. Have you met Patrick from Inkstone Software, you know, it’s just that great feeling of like knowing enough people that we could really help them out [0:04:00] as well as being help to ourselves like I ask a lot of folks about their thoughts on a bunch of… on a whole slew of topics and it was cool.

[04:06] Experts, man. I mean, seriously there were — I didn’t even realized there were attendees there who were founders of, like the guy from YouNeedABudget.com, there were like 17 person, 20 person software startup and he was just an attendee and I had no idea and he introduced himself, that was awesome. I mean, there were – and there’s a guy named Sameer from ProProfs.com –

[04:24] Mike: Yup.

[04:25] Rob: … who again, I had never met, hadn’t heard of and he, I mean, their company’s doing really well. He’s explaining to me how many millions of visits they get a month. I mean, there were some, you know, really cool attendees and there were some, you know, really high end people in attendance as well as all the people, I mean, so many people we know from the academy, the academy who have like awesome businesses that you know, totally support them and, you know, they’ve left their jobs because of. And I’ve actually realized that’s something we don’t do enough and I think we might want to start on the podcast or either bringing them on or at least mentioning them.

[04:54] I had forgotten how many people in the academy have actually, I mean, I basically lost track and as I start to meet them I was like “Oh yeah. Antonin Hildebrand from TotalFinder.com. I totally [Laughter] – I remember you but I kind of forgotten that.” It’s success story like he did never product when he join the academy and then he launched it and he totally quit his job and he’s like travelling the world now.

[05:15] And there’s a lot of those people and so I think that it was a reminder of like yeah, you know, we need to be better about kind of bringing, bringing those stories to light because I think they’re inspirational.

[05:25] Mike: Yeah. I was surprised that a sheer number of people from the academy that were there. I brought one of those little stamps and I had the guys at the – who were working at the front desk every time somebody would come up to register just asking if they were an academy member, we stamped in their name tags so that you and I could identify who the academy members were but also say can identify each other. Kind of connect people together to some degree and I was just oddly shock in the number of people who were there who are also in the academy.

[05:55] Rob: I agree. By the way, that was genius [Laughter] to do that because I was keeping my eye at the whole time but yeah, how many, I mean, there were 164, 165 people including speakers, sponsors, attendees, I mean the whole deal. My guess is there were 30 to 40 Micropreneur Academy members —

[06:12] Mike: Probably.

[06:13] Rob: You think there were that many?

[06:14] Mike: I —

[06:14] Rob: Yeah. I mean, I saw a lot of, lot of the smiley face stickers.

[06:17] [music]

[06:20] Rob: So today we are going to be covering basically going through MicroConf 2012. We’re going to talk about some of our favorite moments, favorite speakers, just, you know, different stories that came out of it. Do you have anything else you want to cover before we dive in?

[06:33] Mike: I probably talk about AuditShark a little bit. I talked about AuditShark to a bunch of people who were there and kind of got some good feedback on future directions for it, so …

[06:42] Rob: But I thought it was cool because A, you were doing customer development basically on the spot, right? You were asking some folks and then B, at the very end of the conference as it was closing before their kind of last party you basically said like if anyone’s interested in the service that does this like come up and talk to me and you said like I’m thinking about pivoting AuditShark to this but I want to hear about it.

[07:02] So, that was – that’s like the perfect example of what you should come to the conference with. It’s something like that, right? Because you’re going to get a ton of value at a very quickly and that’s something that’s hard to do virtually or harder to do virtually than it was to just do in person.

[07:14] Mike: Yup. And I actually got commitments from people to have pay for it.

[07:17] Rob: That’s cool. So wait, we’ll cover that —

[07:19] Mike: Next time. [Laughter]

[07:20] Rob: … in Episode 81, yup. We’re talking about 2013 although of course as usual I haven’t decided that I’m actually going to do at 2013 conference. We – we already have 156 people on the e-mail list, the early bird list for next year which —

[07:33] Mike: That’s the crew and squad if you say no and then get —

[07:35] Rob: Yeah, I know.

[07:36] Mike: I’ll tweet out the address. [Laughter]

[07:38] Rob: I’m going to get hurt. Yeah. So, but last year we only had I think 250 e-mails throughout the whole year and now, we now already have 150 and it’s only a couple of weeks after, so it was obviously, obviously doing something right. I think the Twitter stream was a lot – lot hotter this year as well, seemed like if we’re picking in on it.

[07:55] Mike: That 150 number or 156 number kind of scares me though for next year because it’s like what do we do to —

[08:02] Rob: I know.

[08:03] Mike: … maintain the quality, I mean, I – I had at least half a dozen of people come up to me in just various times and say “Hey, this is the best conference I’ve ever been to. “ And I’ve been, you know, one guy made a point to say “And I’ve been to a lot.”

[08:16] Rob: Right.

[08:17] Mike: And somebody else said he’s been, you know, 25, 30 conferences and he said that the MicroConf is by far the best. In a way it’s kind of scary because it’s like okay, we’ll now … How do we tap this next year or can we tap it or, you know, —

[08:28] Rob: Right.

[08:29] Mike: … can we at least meet expectations.

[08:31] Rob: Right. I think, well I think there’s a couple of things that are going on in my head. I think one thing is that we take what we learn from this year because we changed a bunch of things from last year, right? We had two more tear downs, we had shorter talks, we had longer breaks and I felt like all that went well and then moving forward. I think next year we may want to have one or two panels, shorter panels that are done well. I think we may want to consider having fewer speakers and longer breaks. I think we may want to have let the audience do some short talks, like do some 15-minute talks, 10 or 15-minute talks because there were a lot of very knowledgeable people who I think could lend inside but who may, you know, who aren’t like tap your big names speakers or whatever they know but they have a lot of knowledge in there, in their domain.

[09:11] And so I think there’s, there’s ways that we can continue to kind of keep it varied hopefully without diluting it, right? Because you don’t want to go so far work just like all panels, all workshops and it just kind of not – it’s not as valuable. I think the other thing is we need to be pretty consistent about — if you attended this year, we kind of need to let you know first and let you in first because I do, I mean, it sold out in two and a half weeks this year. My guess is since we’re talking about not growing it, not making it larger that we’re going to sell out in that time or shorter next year. And so I do think that previous attendee should kind of get some priority.

[09:46] I mean, I talked to a lot of people about whether we should grow the conference another 40 or 50 people or whether we should raise the price a hundred bucks and there’s a bunch of things we can do like we want to make the conference better but we need a coordinator to do that. We need – we should need more resources to do it and [0:10:00] moving to the Hard Rock this year was a lot more expensive than it was last year and so, you know, if we raised the price to hundred bucks which basically became the just of what everyone who I talked to one-on-one told me, that they would prefer to just pay a little more and keep the conference small and keep the quality of the — of the attendees high was a big concern.

[10:17] Mike: One person e-mailed me and said that they’d be okay with adding another 40 or 50 people so long as it was, you know, the same type of crowd.

[10:27] Rob: Yeah. And that’s – I just don’t know how can you guarantee that. We get a certain number of thousand bucks, 1500 bucks and then it’s like that were a bunch of enterprise people start coming in and you’re going to start getting, you know, C level folks from Oracle and Microsoft not that that’s bad but it just not what we would, that’s not the conference we want to throw.

[10:42] Mike: Right.

[10:43] Rob: So hey, let’s pop in to day one and just look at maybe your favorite speaker or two, what you took away and that kind of stuff to give listeners an idea. Day 1 was – it was Jason Cohen from A Smart Bear, Hiten Shah who found the KISSmetrics and Crazy Egg. And then we did some website tear downs and then I spoke and Peldi did an “Ask me anything” and then you spoke and then the last was Dan Martell who a lot of people may not have heard of but probably one of the most inspirational if not the most inspirational talk in my opinion. So of those folks what – who do you like best? What did you takeaway?

[11:21] Mike: Well, I’ve heard Jason Cohen talk about – he talks about honesty and I heard that talk at the Business of Software and I liked it again, I mean, it’s not like a lot of stuff changed from, you know, when he gave it there. But it still resonates. I mean, it’s still a great talk and it’s still great and great topic. The other one I liked was – I like Peldi’s just because it was very free form. It was very different than a lot of them and Peldi is just entertaining, I mean, he’s great to listen to, great to talk to and has a way of portraying things or putting things at in a ways off-the-cuff but it seems like he’s thought it through in his head. I don’t know how he comes up with some of the stuff that he does but it’s – it always seems like he’s thought it through and maybe he hasn’t. Maybe he just thrown it out there as ideas but I really like his as well.

[12:05] Rob: And for the listeners, Peldi did “Ask me anything” so he had 45 minutes and it was purely Q&A. He didn’t do a presentation. He put up some topics and people got to ask him anything about it. So, he’s businesses, I mean, it’s growing. He’s with eleven people now and so he has a lot of experience going from basically a single founder all the way up, up to where he is now, multi-million dollars in revenue.

[12:24] Mike: Yup.

[12:25] Rob: Well cool. Yeah, I really enjoy it. So I’m very pleased we had Jason Cohen go first. I think he kicked off the conference. I just don’t know if there could have been a better speaker in that slot, you know, he kicked it off with the honesty thing and it really kind of resonated through all the talks I thought and a lot of people who I talked to said he has was one of the most compelling talk. It wasn’t a ton of takeaways. It wasn’t like here’s how to market your business but it was just a way of thinking about kind of running your business and being really honest with kind of with everything you say and that that’s actually better for your bottom line. He tries to prove it through a series of a stories and stats and all that stuff, definitely enjoyed it again.

[13:03] And that’s why we had asked him to come there, right? I mean, we had seen his talk and wanted him to come and share with the gang at MicroConf. I really like Hiten’s. I was like I like what he has to say but —

[13:13] Mike: Yeah. That was the – that was the other one that I really like as well was Hiten’s.

[13:15] Rob: And he of course had a bunch of stuff, I mean, he’s grown KISSmetrics and Crazy Egg. One was venture founded, one is bootstrapped and he’s just done, you know, really well with both of them and so tons of knowledge. We did have videos taken of all the talks and our current plan is to release them inside the Micropreneur Academy to Micropreneur Academy members, so it’ll be – we’ll probably release like one a month as they come out. And then, you know, we don’t have plans beyond that at this point.

[13:43] My other favorite talk and the one I heard a lot about when I ask people was Dan Martell’s. And his is about again, not a ton of actionable stuff but it was really, it was inspirational –

[13:53] Mike: Yeah.

[13:53] Rob: He had this anecdote about his brother who was basically going bankrupt, trying to be a homebuilder. It was customer development as what it was with [0:14:00] homebuilding. He realized that like women typically make the decision when buying a home. If a couple is buying a home, the woman typically makes a decision and so he got a bunch of women, got them together and took them out to all these homes and asked them “What do you like best about it?” And basically the designed the best home based on the opinions of these women and just has it amazing homebuilding business now because of this customer development approach.

[14:25] Mike: Yeah, I mean, one of the examples that he threw out was his brother. He went in to go see his brother and his brother’s house was virtually empty and he went in, you know, there’s no couch, no carpets, no lamps, no, nothing. And he goes in and asked his brother if he got robbed and his brother said “Well, these houses, I was told that these houses display better if they are furnished and I don’t want to go buy furniture so I took all of my furniture out of my house and put in, you know, just the display house” which is getting things done that need to get done in whatever way you possibly can.

[14:56] Rob: Hey, so how did you feel during your talk and after? Did you get any feedback? What are your thoughts? How did you feel overall?

[15:02] Mike: My talk?

[15:04] Rob: Uh huh. Yeah.

[15:05] Mike: It resonated for some people. I don’t know. I didn’t get a huge amount of feedback. I have seen a couple of people who have tweeted out things here and there. One of the conference goers put out a blog article and have us written through it. It was really funny. He said that Mike had what was surely the best “I’m an entrepreneur but I’m also a computer science geek” moment of the conference. [Laughter]

[15:27] Rob: Nice. Yeah. You had the coolest Scott Adams quote. It was –

[15:31] Mike: Losers –

[15:32] Rob: Losers have goals, winners have systems.

[15:34] Mike: Yup.

[15:34] Rob: Is that right?

[15:34] Mike: Uh huh.

[15:34] Rob: Yeah. That was a good quote. I saw that on Twitter several times after you talked.

[15:39: Mike: Yeah, so that was the legist of my talk and for the people who weren’t there, I mean, I basically talked about being able to pipeline the processes that are in your business and relating it to how a processor does things and being able to pipeline that stuff so you can get more things done faster and not lose work that you’ve done and the idea that you really have to position yourself as a builder of processes in your business not necessarily the person who is executing them.

[16:07] And honestly like when you’re building a software product, it’s the exact same thing. You’re building a process and you’re letting something else to execute it and not something else as the computer.

[16:15] Rob: So, I thought the tear downs went pretty well like we had thrown them together kind of last minute last year and it felt like a nice break to me. For the listeners tear down is basically the audience just starts calling out website so you’ll just call out your website and whoever’s up there, the first day it was Jason Cohen from A Smart Bear and the second day it was Dave Collins from Software Promotions and Patrick McKenzie from Bingo Card Creator and his blog and they just basically look at it and they give their advice on things you should test basically it’s like your button should be bigger, the copy is off and I don’t understand what that saying. Here’s maybe you could rewrite it like this, they kind of click through it and it’s just as really interesting. Public, evaluation of your site and, you know, people call out their URL and they just sit there and just scribble down notes like crazy.

[17:00] And I even saw people approaching like Jason Cohen after his talk and after the conference saying, “Hey, could you do a quick tear down of mine?” And then he would run through theirs in two or three minutes, you know, just one-on-one.

[17:10] Mike: Yeah. I think those tear downs are definitely a must have at the conference from now on. They are nice changer pace and they definitely break up the day. What did you think about your talk? Did you get any feedback on it?

[17:22] Rob: You know, I didn’t get much feedback which tells me it was probably one of the last memorable talks of the conference. I think we had such – we had such an amazing group of speakers and I’m not just saying that because we put the conference together but it really was the conference that you and I wanted to attend, right? That’s what we’re building here, is every conference I have felt like “Oh, you know, this speaker or that or that part of the schedule just didn’t work or whatever.” And we’re trying to do it exactly how we want and obviously that’s resonating, you know, within a people that it’s working but I think I’m a pretty good writer now. I think you and I do a good podcast. I think I’m a good entrepreneur. I think my public speaking is actually maybe one of my lesser abilities.

[18:02] Mike: Your speaking is pretty good. [Laughter] I would say it’s better than mine.

[18:05] Rob: Oh, well, thanks. I appreciate that.

[18:07] Mike: I think what you’re probably seeing is that I got this a little bit as well, people didn’t necessarily want to come up and talk to me too much about my talk or other things that were going on. They just didn’t want to bug me because they could probably see that I was busy and there were lots of stuff going on, I mean, we got a conference to manage.

[18:23] Rob: You know, Mike, I hope that’s the case. I didn’t really think about it. I just — normally when I speak afterwards like a lot of people approach me and we talk about the stuff and then for the rest of the conference I went up talking to people about the contents of the talk and that didn’t happened a single time of MicroConf and so maybe you’re right. Maybe it was just the people were giving us, you know, leeway so to speak or more concerned about giving us feedback on the conference rather than the actual talks that we were giving.

[18:48] Mike: Yeah. I mean, some of the feedback that I got was more – I don’t want to say it was in passing but it was like the hallway thing like “Hey, I really like your talk. It resonated with me and, you know, I really –

[18:57] Rob: Got it.

[18:58] Mike: … like this and that.” I didn’t get a lot of feedback right away but then at the very end of the conference, I mean, somebody went – I think you were up there asking what people had gotten out of it, you know, the first two things that were called out were both from my talk. It was –

[19:11] Rob: Yup.

[19:11] Mike: … marketing Monday concept and then the other one was building processes instead of setting goals.

[19:16] Rob: Yup.

[19:17] Mike: But –

[19:17] Rob: No, I thought that was really cool.

[19:18] Mike: I didn’t get a lot of feedback during the conference. I really think it’s just because people wanted us to focus on having a great conference as oppose to talking with — specifically what our talk was but I can totally see how, you know, you might be a little concern about it because I mean, I even have my concerns about getting up there and talking because you’ve got all these great speakers and it’s a little intimidating, I mean, I was looking at the conference, you know, the line up of the speakers and I’m like, you know, usually you want to go just after somebody who might or might not be so good or, you know, kind of average and I’m looking at the speaker line up saying “Man, there’s no good place to go.” [Laughter]

[19:53] Rob: Yeah. Yeah. I was before Peldi and basically after Hiten Shah and you’re after Peldi and before Dan Martell.

[19:59] Mike: Right.

[20:00] Rob: Like that’s brutal.

[20:01] Mike: Uh huh.

[20:02] Mike: But I’m –

[20:02] Rob: Yeah.

[20:02] Mike: … there from other speakers too though, you know, like —

[20:04] Rob: Yeah.

[20:04] Mike: … I’d say probably we close to half of the speakers. Basically said it’s an intimidating line up to speak in because everyone, you know, they all look up to each other. So …

[20:14] Rob: Right. That was the cool part is like at the speakers dinner. So we have the speakers dinner Sunday night and you get these people together and they — they either all know each other or they know of each other and they really wanted to meet one another.

[20:24] Mike: Right.

[20:25] Rob: And so you’re basically getting this really talented group of folks together and the conversations are just riveting. And that’s actually, oh next year, I think we want to do a — we only did a 2-hour speaker dinner. I think we want to do a 3-hour speaker dinner because I felt like I had to bail too early and that we — that we can sat there for another hour easily.

[20:42] Mike: Uh huh.

[20:43] Rob: What did you think — we get on the day two in a second but I wanted to get your thoughts on like our giveaways. We had a couple of candles, we had a candle fire and then we had a couple lifetime memberships to the academy, we had software from sponsors. In general, how do you feel like all that went?

[20:57] Mike: It went smoother than I thought it would to be perfectly honest. And I think a lot of that had to do with switching from — last year, I just drew numbers and had everybody — I had a number put on the back of everybody’s badge. So everybody had to look at it. And this year, I just drew names out of a box and that —

[21:15] Rob: That was better.

[21:15] Mike: … was so much easier. I was surprised at how well the Swingline stapler went over. [Laughter]

[21:20] Rob: Yes, you had a red Swingline, right?

[21:22] Mike: Yeah.

[21:22] Rob: From Office Space?

[21:24] Mike: Yup.

[21:24] Rob: People were so — that was the runner-up prize that you — the last thing given out was the XBox with connect, the XBox 360 with connect. Then the runner-up prize was the red Swingline. That was really cool.

[21:33] Mike: Yup. People loved that. So hey, what do you think about the party over at Rumor on Monday night?

[21:40] Rob: Definitely, yeah. WildBit sponsor this party, definitely higher class than we’ve ever done, you know, our MicroConf stuff is a — it’s always good and solid but we typically are like, “All right, come to a bar and have some drinks.” But they had orders. It was out on a patio. It was really a nice, nice venue. I was happy that we were there. And in fact, if we stay at Hard Rock, if we do it at the Hard Rock again next year, I would want to inquire and find out about the venue again because I just — it was nice through its outdoors.

[22:06] Mike: Uh huh.

[22:06] Rob: Yeah, it was 8 degrees until 10 at night which was nice. And it was just good to be outside for a while, right and not be inside casinos the whole time —

[22:14] Mike: Yeah, it was definitely — it was definitely nice to not hear the cha-ching from [Laughter] from the slot machines —

[22:20] Rob: Yup.

[22:20] Mike: … all night along.

[22:21] Rob: Now at the Hard Rock actually, I never heard it because of the music. It was kind of cool to have a soundtrack playing of, well, just good music from the last 30 years.

[0:22:28] Mike: Uh huh.

[22:28] Rob: Did you notice that? Like it was — they have the slot machines from way, way down and the music was turned off because that’s their vibe, you know?

[22:35] Mike: I didn’t notice.

[22:37] Rob: Yup.

[22:37] Mike: I was too busy, you know, doing other things. I did —

[22:39] Rob: I was too busy putting on a call.

[22:40] Mike: [Laughter] What were you doing?

[22:43] Rob: I think overwhelmingly people were like, yes, better venue, right? We did the Riviera last year which was an older hotel. Hard Rock’s newer or hipper. It’s just — it was nicer. Do you think in terms of about the feedback you got and your impression of what we want to do next year, do we want to — do you think you — would you go back to the Hard Rock? Would you look at a similar hotel, you know, in Vegas about the same level? Or do you think we should move up? What do you think?

[23:03] Mike: I would say the same level is fine. I would have, you know, definitely, consider going back to the Hard Rock and the fact that Rumor was right across the street was definitely a plus. I got some feedback from people that they said that it was — they liked that it was off the strip a little bit.

[23:17] Rob: How interesting, okay.

[23:18] Mike: Uh huh. So —

[23:20] Rob: I think for some folks, some folks had never been to Vegas and they want a block in to the strip because they obviously, you know, you need to see it if you never been but I had not thought about that though because we were secluded and that’s probably a good thing —

[23:30] Mike: Uh huh.

[23:30] Rob: … because people didn’t tend to wander off, right? We did tend to stay close and kind of stay as a group and do a lot of chatting. Is that — was that the implication that people were saying since it was off the strip, it was less distracting?

[23:40] Mike: Yeah, that was part of it I think. I think it was just the fact that it wasn’t — because on the strip things tend to be a little bit, I’ll say over the top, I guess. And it didn’t seem like that at the Hard Rock at all. So I will definitely —

[23:51] Rob: Right.

[23:52] Mike: … go back there. I think the only downside that I saw was getting across the street to Rumor was actually a little bit of a pain in the neck. [Laughter]

[0:24:00] Rob: It was like a game of Frogger.

[24:01] Mike: It was. It was something —

[24:02] Rob: Right? [Laughter]

[24:02] Mike: … like Frogger.

[24:04] Rob: I did like that it’s like a $12 cab ride from the airport instead of a $25 cab ride like the north end of the strip is.

[24:09] Mike: Or a $40 if, you know, if they ask you if you want to take the highway and you say yes and they get off the south side and then all the way around. [Laughter]

[24:15] Rob: Awesome. That’s a trick question. Let’s talk about day two of the conference. So it was the WildBit sponsor the party at Rumor which is just — it was a boutique hotel across the street. So then day two, who were your favorites and most memorable?

[24:29] Mike: I mean I like them all. Patrick’s got a way with words, I mean way with his stories and you know, it’s hard to discount any of those. I mean because they’re both entertaining and educational at the same time. I mean everybody had great things to say. I learned a lot from listening to Dave talked about Google AdWords.

[24:46] Rob: Right. So that’s Dave Collins from Software Promotions. He’s been doing Pay Per Click stuff for ten years I think he said. Yeah, it’s a long —

[24:52] Mike: Something like that. He added up the hours on screen and amounted out to something like 11,000 hours —

[24:59] Rob: That’s right.

[24:59] Mike: … that he spent working in Google AdWords. And he had some really interesting insights that I guess I hadn’t considered before and honestly, it makes me think that, oh, maybe I’ll go back and give AdWords a try because I’ve honestly, you know, avoided going in to Google AdWords just because it’s not that I don’t understand it really, it’s more that I don’t have the time to dedicate to it. It’s not like I can sit there on top of the campaigns that I’m running and manage them and pay attention to them a lot and part of it is just not knowing how everything all fits together but the other side of it is I just don’t have the time and I wonder if using some of the techniques and things that he talked about would make it a little bit easier for me.

[25:39] Rob: Right. Well, that was the other thing he said that you should spend one to one and a half hours, maybe it’s one to two hours a week managing your AdWords and I had never done even if when I was working from it and spend not much time. So that’s an interesting, kind of an interesting mind set shift that if I want to run a successful campaign these days, that’s probably where you need to be.

[25:57] Mike: Uh huh.

[25:58] Rob: It just occurred to me we have not mentioned MicroConfPics.com. If people go there, there’s a picture slideshow and it was basically any picture that was tweeted with a hash tag MicroConf is added to that slideshow. And that was provided for us by Chris at Montabe, montabe.com and he’s a Micropreneur Academy member and he has this product called Montabe that allows you to have people basically just submit photos in to the stream. And it’s pretty cool. It’s — I don’t know if you sipped it through but I was watching it while I was waiting for my flight and there’s a lot of good stuff, just speakers and there’s some other random stuff for like people, you know, saying “On my way out of MicroConf” and so it’s a picture of, you know, the gas station or something but there are some good ones in there.

[26:38] Mike: I’m looking at it now. It’s pretty awesome seeing all that stuff —

[26:41] Rob: Yeah.

[26:41] Mike: … on there.

[26:42] Rob: Won’t leave it up till I think till next year, you know.

[26:44] Mike: Yeah.

[26:44] Rob: There’s a longer URL. It’s like montabe.com/ you know, whatever but we just have MicroConfPics.com directing there.

[26:50] Mike: Right.

[26:51] Rob: When I talk to people about what they thought was the most inspirational talk because I guess you should back up and say like one of the first things that I said when the conference open was you should get — I want you to get at least one piece of inspiration and three actionable takeaways from the conference. So do that, write them down and then at the end, I’m going to ask people about it. And so then at the very end we got, you know, hands raised and people are calling out all these things that they were going to do next week based on what they’ve learned at the conference whether from the speakers, side conversation or whatever.

[27:16] And so in asking about the inspirational stuff, a lot of people mentioned Adii. Adii is the founder of WooThemes. A lot of folks use it. We use it in the academy. And he had flown in from South Africa. It was like 31 hours of travel each way. And he had a great story just of really bootstrapping and starting small and then getting big very quickly. He had a big growth curve and even like the week before MicroConf, they basically got hacked. Someone deleted everything from their servers including all their backups and he almost didn’t come in to MicroConf but he did and he adjusted his talks so that it included some stuff about his hack. It turns out they move to WP engine because, you know, they’ve been hacked so they moved over there and then they got DDOS at on WP Engine so it took some of their servers down.

[28:00] So we had basically speakers because Jason Cohen, you know, is the founder of WP Engine and two speakers who had basically had sites down within the day or two before MicroConf and I told them both, you know, you and I both told them like “You guys don’t need to be here if you need to go take care business.” But they had their teams on it. That was a cool story to hear. And neat to see that they were able to come in and I felt like they were enjoying themselves and weren’t too hung up on that. And obviously, you know, everyone is back up now. And to summarize like Adii’s — the title of his talk was “How I went from zero to seven figures in 13 months”. So that’s pretty, pretty impressive.

[28:34] Originally talked with, it was like two years but then when he looked, he said, oh it was only 13 months. And there were a couple of volunteers I really wanted to thank. Robert Graham, he’s an academy member. He volunteered to help out with the AV stuff. Just hope to getting people miked up in with the sound. And then Dave Rodenbaugh who was the photographer last year also an academy member and listener of the podcast and such, he helped out. He took all of the official pictures and I don’t think those are on MicroConfPics yet but once I get them from him, I will submit them because that will be — he took like the speaker group photo and you know, bunch of stuff on stage and really had the run of the place.

[29:12] And so we had no plans. We had a welcome reception Sunday night. WildBit sponsored something Monday night. And then we knew that we would throw something together Tuesday night but it was like two hours beforehand and we walked in to this sports bar and basically said, “Can we come in here in two hours throw down an American Express and get a 120 people in here?” and they told us yes. So we round up going in there, having some drinks, chatting and just kind of wrapping up the conference and exchanging ideas and thoughts and such. What was your favorite part of that, that part of the evening?

[29:40] Mike: I would say that it was near the end of the tab that we put together where I got an itemized bill for everything that if I look around, I’m sure that I still have it but it was probably about three or four feet long and there’s — there’s actually a picture of it they got tweeted out and it’s on that on the Montabe site at MicroConfPics.com. But it shows me just holding it up and it’s, I don’t know, down to like my waist easy. [Laughter]

[30:06] Rob: Yeah, I like that. Eliza Brock that one —

[30:08] Mike: Yeah, I think so. Speaking of Eliza, she also — she made this really, really cool little notebooks. She had those made and sent them over to the hotel to hand out to everybody. And it’s this tiny red notebooks and they say “Think Small” on them.

[30:23] Rob: Yup. And there are like nice leather bound. She got in touch with us in advance and asked if she could basically sponsor the conference in that way and she put, you know, business card in there. She’s a Ruby developer I’m thinking. We got more positive feedback about that than probably any other giveaway I thought. I mean people are really taking them. My wife is still has hers and is using it as a notebook. She really liked it.

[30:42] Mike: Yeah, I used it for throughout the conference just because I needed something to, you know, write down all of — all the different giveaways and things like that so that, you know, I wouldn’t forget them when we were up on stage and everything else. And you know, she made various notes about different things I want to make sure we covered.

[30:56] Rob: Typically you get this big bag and it’s full of a lot of paper and a lot of, I don’t know, t-shirts and other books and stuff and we do all almost all digital aside from that little notebook we did. And we talked about it quite a bit more the first year but I don’t anyone really ask the second year but we just do that because we don’t want to create a bunch of waste, right? We don’t want people throwing the bag away and throwing the t-shirt away and all that stuff.

[31:16] Mike: Yeah, I mean there’s not much point to, you know, conferences generate a lot of waste so there’s not much point to giving people stuff that you know is just going to end up in the garbage. And I see that in other conferences I’ve gone to where I get a bag and you know, some t-shirts or books or things like that and I look at most of it and I’m just like I’m not really crazy about any of the stuff. So, we’d tried to, you know, minimize as much of the impacts as we can. And there’s a couple of different ways we do that and obviously, one, we don’t give away things that are just going to ultimately end up in a trash. And the second thing is that the conference badge holders that we used, they’re actually biodegradable.

[31:53] Rob: That’s right. I brought them back last year and composted them.

[31:56] Mike: Uh huh.

[31:57] Rob: I was just reminded, my wife came just for 24 hours and we left our kids with some friends. And so she came out. She did my intro, right? She introed me before my talk and we got a lot of positive feedback about that. And then [Laughter], people were saying, she’s a psychologist, and they were saying that she should talk next year. And then I saw a thread on Twitter and it started getting retweeted. And it was like, “I want to see Mrs. Rob Walling.” [Laughter] And this was @robwalling, you know, that’s my Twitter name. And someone says, “I want to see Mrs. @robwalling talking next year about the Psychology Entrepreneurship.” And then one was like, “I want to see Mrs. Rob Walling talking next year about the Psychology of Raising a Family and how to do that and you know, be an entrepreneur.” And it was pretty cool. I would actually — and then Hiten actually came up and he was saying like, “You should write a book” and it was kind of fun. Her intro kind of blew me away because I totally did not expect the heartfelt intro she gave.

[32:37] Mike: Uh huh. Yeah and that kind of brings up something else we didn’t, you know, talk about so far is that the conference itself, even among the speakers, it was very family-oriented. That’s not the vibe that you get from most of other conference. I mean honestly from any other conferences I’ve ever been to, it’s just not the vibe you get from them.

[32:37] Rob: That is interesting like because basically, didn’t Jason Cohen have a picture of his daughter? Yes because he talked about one of her toys broke and it fit in to that context of the conversation. And then almost every — every speaker after that had a picture of their child. But MicroConf is not like the YC crowd, the Y Combinator crowd. It is more people 25 to 45, maybe a little older. It’s that range, right? Because of most of us have families, have a mortgage, are not in the position to raise venture capital. I mean that’s why we’re doing it. And so it’s people who are going to be more likely to listen to this podcast rather than, you know, this week in Startups with Jason Calacanis or to apply for YC funding and be able to live on Ramen and then move to Boston for three months.

[33:46] And I think I got several attendees. I had them tell me that they were maybe surprised by that, that they thought they would come and it would be, you know, more of like the Startup funded-type of conference and just the entire attendee-based was different.

[33:59] Mike: A couple of speakers made it a point to mention that, you know, the reason we do this isn’t necessarily to get rich. It’s to, you know, make a living and support our families and you know, so that they can in turn support us. I mean making money is great and all but it’s not necessarily the “and all be all” of why you do what you do. I mean it makes for a nice score card I guess but ultimately, there’s a lot of things in life that are much more important than money.

[34:23] Rob: Right. That comes back to the freedom and the lifestyle, right? And that’s what we — I mean we don’t — we don’t bang on the lifestyle there in too much because it’s kind of cliché these days. But we do, you and I do talk a lot about like putting your, basically putting your life before your business and using your business as a way to support that and they provide the frame for you and you know, your family and just flexibility and the happiness you can get from that without having to go after this huge eight figure pay out or raise, you know, huge amounts of money and put your family through the ring or during — during the course of it.

[34:54] Mike: Yeah, that’s not something I think I could do. I mean I’ve considered in the past going after funding but, you know, looking back on it, I really don’t think that it’s something that I could realistically do.

[35:06] Rob: I try — we tried to raise angel funding. I say we, there’s a couple of a MBAs I met in New Haven. We tried to raise angel funding a couple of times, it didn’t work. And then Y Combinator, I applied and got to the second round. I mean I was in that whole cycle thing, you know, that’s back in 2007. And these days, it would be easier. I bet, you know, I wouldn’t have a hard of a time raising funding but I just don’t — that’s just not the path that I think either of us want to travel these days and obviously, there are a lot of folks that agree with us because MicroConf is the conference for self-funded startups and single founders. It’s not about raising money. It is about building businesses that are profitable and that don’t require that kind of sacrifice to your life in order to get them going.

[35:45] Mike: And I think that’s what resonates with so many people. I mean I think that’s why we’re able to go to a conference for a 40% year over year and it looks like conceivably we could probably grow out more if we really wanted to but there’s other considerations there as well.

[35:59] Rob: What do you think we could improve next year or what are the things you thought while we were doing it like hey, this isn’t working or we should add this or that?

[36:07] Mike: Ugh, tough question.

[36:08] Rob: Because we did everything so perfect.

[36:10] Mike: No. You know, it’s interesting because Monday night after the party that WildBit had thrown at Rumor, I was talking with a bunch of people there specifically about the conference and they said that this year’s conference was so much better than last year’s. And I started pushing for information skill. I started asking, you know, what makes it better, why is this year better than last year. And nobody can give me a concrete answer for anything. I mean obviously —

[36:36] Rob: That makes it hard.

[36:37] Mike: The venue itself was obviously an upgrade and I asked, well, does everything seem better because the venue is better. And the answer was no but, you know, nobody could really put their finger on exactly what made things better. You know, maybe it had something to do with the speaker line up, maybe it didn’t. Maybe it was the location. Maybe it was the atmosphere. I mean because the atmosphere at the Hard Rock is significantly different than it was at the Riviera. So I tried to dig in and find those things. I think it’s probably going to take some time because I don’t have anything at the top of my head that I can come up with that says, you know, we screw this up. It’d be nice to have a coordinator and that’s part of what, you know, raising the price with allow us to do is to have a coordinator so that we can spend our time connecting people together rather than managing and running the conference itself.

[37:25] Rob: Yeah, I would agree. Now, we’re going to be sending surveys out to the attendees. So that’ll help us well getting more feedback. I got lot of in person feedback and some via e-mail and most of it was from stuff that was in my head or it was — it’s minor tweaks. It’s like, “Oh, you should maybe add a panel here. You should maybe do some shorter talks here and there.” It was stuff that I think could visibly make it better but would also be experimental. It’s not like, “Oh there was a big …” Like last year was year, it was obvious that the talks, they were too long, they were back-to-back, there weren’t enough breaks. I mean I feel like we fixed that this year, you know, we shorten them down and we made a lot of tweaks [0:38:00] that I think really improve the experience at the conference. I think the venue was also a lot better. The room was just it had a better feel to it. It was tight but I thought that was cool. I thought there was a lot of energy in the room because it wasn’t this huge open space like last year’s conference room was.

[38:15] Mike: Yeah, I think that that’s definitely something that I think we should maintain is making sure that the space is kind of tight. I mean not that we really have much choice about it this year just because the space was — I mean that they had available so the things really worked out in that regard but definitely having only — what do we have? I think three seats available in the entire place and that was it. And that definitely help with the vibe and the atmosphere of the place.

[38:41] Rob: Yeah, so I guess we have to take a look at the surveys once we get them back. Obviously we do already have a running list of potential speakers for next year, some thoughts on some tweaks and minor improvements but overall, man, you know, I’m glad it’s over this year and I had a blast, obviously, a lot of work. Are you up for doing it again next year?

[39:00] Mike: Yeah, I am. It’s interesting because how was it? It was probably about three days after the conference I got — I was really depressed like all weekend. I’m like, oh the conference is over and I’ve got — I’m really energized and you know, motivated that I’ve got all the great ideas and stuff. And I think I was depressed because I’m like, oh no, where do I start? [Laughter]

[39:20] Rob: Yeah.

[39:20] Mike: I think that was it —

[39:21] Rob: That makes sense.

[39:21] Mike: … more than anything else. It was — it took me I think most of the weekend to get out of it. I think yesterday I kind of solidify things and today’s even much, much better than that. So I’m at the point now where I’m like, kind of gone whole again but it really took a few days for me to kind of swing out of that. And I don’t know why. I mean that just seems countered through to me. I didn’t expect that at all.

[39:41] Rob: I think I went to the same process. I think maybe I was — I had a little easier time because I took a lot of things people said and channeled it directly in to like, “What am I going to do with HitTail?” because HitTail has been my goal project to work on once MicroConf was done. So I was already thinking in those terms. So it’s maybe a little easier to translate that. But I agree. It took me [0:40:00] — I mean jeez, my wife and I actually went on, well with the kids, went to Yosemite just drop off a hat and she’s like “Let’s go up. It’s about two hours from here.” And so we went up and then we just stayed and we stayed until through Monday. During that time, it was just kind of rest and relaxation to kind of regroup. And so it was almost a week after MicroConf before I could even sit down and to e-mail again. And of course, I had I don’t know 400 unread e-mails or something but there’s definitely some recovery time afterwards to kind of regroup because I think you’d just have so much going on in your head, you know, thinking about the conference and just try to participate and provide value and get some value yourself.

[40:34] Mike: Yeah, I was listening to episode 74. I think it was last week or the week before. You know, we were talking about the number of things that we each had that we were working and I’ve said that after MicroConf is basically over and it drops off our list of things to do and I don’t know what I was thinking saying that because all the stuff now that MicroConf is over that still needs to get done. [Laughter]

[40:55] Rob: All the clean up by now, me too. I’m reimbursing speakers and you’re dealing with sponsors and thanking, I mean, doing all that stuff. Yeah, there’s still another, another week or two of it.

[41:00] [music]

[41:07] Mike: If anyone is interested in signing up for the MicroConf mailing list, go to microconf.com and we’re already taking e-mails for the launch for next year. And as Rob said earlier, I mean unless you’re on that list, chances are good that, you know, tickets are going to be gone by the time they get out to I call it the General Press of people out there.

[41:27] Rob: And if you have a question or comment, please call it in to 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 if you just search for Startups or you can subscribe via RSS at StartupsfortheRestofUs.com where you’ll also find a transcript to each episode. Thanks for listening. See you next time. 

Show Notes

Transcript

[00:00] Rob: This is Startups For The Rest of Us: Episode 79.

[00:03] [music]

[00:11] Rob: Welcome to Startups For The Rest Of Us, the podcast to help developers, designers and entrepreneurs be awesome at launching the Startups whether you built your first one or you’re just thinking about it. I’m Rob.

[00:20] Mike: And I’m Mike.

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

[00:29] Mike: Beer makes you smarter. [Laughter]

[00:30] Rob: Wait, what? I’m confused.

[00:32] Mike: I’ve saw this article and it basically said that beer makes you smarter. And it was based on — pretty sure it was a formal study from the University of Illinois in Chicago. And they basically took 40 participants and took 20 of them and gave them a couple of beers before putting them in to this game and then challenge them to — they’ve give them three words and a series and then they would challenge them to name a forth word. And the people who had a couple of beers were dramatically better at naming that forth word than the people who hadn’t.

[01:03] Rob: Right. So, it doesn’t actually make you smarter. It makes you better at this very specific task.

[01:08 ] Mike: Yeah, it — and they actually thought that it had a lot to do with coming up with ideas. If you have a couple of drinks then and there’s something about the way that, you know, the chemicals react within your brain that make you better at problem solving. I saw a variation of this particular article someplace else that had some different theories on it. So there was nothing actually concrete on it and I’m sure that it would take much more studies which I would be more than happy to part take in. But —

[01:33] Rob: Me — [Laughter] This fall off — this falls in line with something I’ve read years ago and something I’ve done quite a bit is when I want to sit down and do writing and I really want to get a lot done in 10 in the evenings especially, I will have a glass — one to two glasses of red wine to help me do the first draft and just get it out unedited and then when I revised, I will tend to want to be more empt and really in to the material more detail-oriented. And that’s when I do like a cup of coffee or some kind of caffeine [0:02:00]. And I read years ago that it’s like one glass of red wine to write, one glass of coffee or a cup of coffee to revise. And now I’m seeing other people, I think Tim Ferriss was on the TV show the other day called A Day In The Life on Hulu. And he does the same thing. He’s basically like I have one to two glasses of red wine in the evening right before I start my writing. And I thought it was, that covers this I mean this fits in to that, right? It’s the whole creativity and kind of left brain versus right brain like activating certain censors. I’m sure it’s what it does.

[02:26] Mike: Yeah. I’ve found that I’ve been able to like if I have a couple of beers, I’ll be sitting and writing code and stuff. And I’ll be — I haven’t measured it but I feel like I’m a lot more productive could be just the beer talk. [Laughter]

[02:37] Rob: Right.

[02:38] [music]

[02:41] Mike: As you were saying, today is MicroConf. What’s the — what’s the word on your — your end?

[02:44] Rob: Today is MicroConf. We obviously recorded a week earlier but actually it’s going live on the day that the MicroConf is happening. So hopefully, we’re having fun right now and everything is going well. There may be a week off next week and then the week after, we’ll come back with our — our MicroConf wrap up episode. And I also wanted to give a shout out to Steve at digitaltoolfactory.net and actually a thanks because he talked about one of our episodes and he basically said I love the title, “Startups for the Rest of Us has the greatest quote ever on entrepreneurship”. [Laughter] And the quote was from a couple of episodes ago and it was the “Employees complain entrepreneurs to get it done”. So that was cool. Thanks for quoting us there, Steve.

[03:20] And then the other thing, there were several comments on episodes 77 and 78. These are on the actual blog sites startupsfortherestofus.com. And Justin Jackson said a couple of things based on we were talking about forums and CRM Software and such. And he — he reminded us that Basecamp isn’t CRM Software. It’s Highrise with the CRM Software. Basecamp is Project Management. So, we just misspoke there. And then the other thing he said is that we’re making assumptions about visiting a competitor who is an — who has an outdated website. He said that they just updated their site, which they haven’t really touched since 2004. What were they doing? Serving customers. “Our business was growing so fast from referrals.” They literally didn’t have time to update it. So they’re at industrymailout.com.

[04:05] And I have — I have some thoughts on that because I still think — I think it depends on whether your market is online or offline —

[04:11] Mike: Right.

[04:11] Rob: As other — you can tell, you know, if that business is really hitting it and whether you can out market them online. If their site really is old and they’re growing by referral, that’s good for them. But if — if there is demand online and they’re not going after it, I do still think that what you said which was, you know, old sites can be an indicator that they’ve kind of check out their online marketing and I think there could be room for you.

[04:32] Mike: Yeah and again, I mean that list that we talked about was just things that you can look at. I mean, not any single one of them is going to be concrete proof that you’re going to be able to evaluate them effectively. I mean you really have to combine a bunch of different things before you can come to those decisions. But again, it goes back to beating them online and if their site hasn’t been updated, it doesn’t matter how well they’re doing offline, you know, the fact is you should be able to beat them with the online marketing. But — I mean he does bring up a very valid point that if they’re doing great business offline, then it probably doesn’t take much more than a site redesign for them to kind of bump themselves up in the search engine rankings especially if they’ve had a site for a while.

[05:10] Rob: Yeah. So thanks, Justin for that comment. We appreciate everyone who’s — who’s participating whether they’re e-mailing us at questions@startupsfortherestofus.com, calling in to our voicemail number at 888-801-9690 or posting to the blog.

[05:25] Mike: Are you front loading that stuff now?

[05:27] Rob: I —

[05:27] Mike: [Laughter]

[05:28] Rob: It’s a one final comment. This was on episode 78 and it was by Mark Stephens. This was the episode titled Things You Should Give Up. And he said, “One thing I would add to your list of things to give-up (especially for startups) is to give up the need for everything to be perfect. Some things just need to be okay and you can then focus your efforts for perfection where it matters. Geoffrey Moore did a brilliant talk on this a few years ago at Business of Software.”

[05:50] Mike: That’s a fantastic point. [Laughter]

[05:52] Rob: I know. I know this.

[05:52] Mike: Really, really is.

[05:53] Rob: That’s a good one. Yeah, we should’ve maybe if we had time we could added a few more to the list but I second that thought.

[06:00] [music]

[06:02] Mike: Today we’re going to be talking about the top five reasons that your business fail. When you talk about Startups, the issues of success and failure tend to come up. And what we’re going to be focusing today on is business failure rather than product failure. There’s nothing inherently wrong with your product idea failing but when the business itself fails, there’s fundamental flaws in the execution of the business and the business going after or certain products.

[06:26] So, that’s kind of the — just to what we’re trying to get at today is that there’s differences between product failure and business failure. And we’re focusing today on business failure.

[06:34] Rob: Are you — are you talking about like if a business has multiple products that one of them can fail or you’re talking about just a single product not working, doesn’t mean that your business fails, you can launch another one?

[06:45] Mike: Yeah, sort of. So if you have — if you start a business and you start pursuing a product and that product fails for whatever reason, you can pivot and go to a new product or you can launch a variation of that product or a completely new product. And your business hasn’t failed but the product has but that’s okay. I mean, building and launching product is kind of a process that you have to go through and some products are going to do well and some of them aren’t. But you obviously want to minimize the product failures as much as possible because that minimizes the amount of time that you have to, I guess meander through business trying to figure out which products are going to do well in keeping business and which ones aren’t.

[07:22] But if you have fundamental flaws in your business and in the execution of the plans for those different products, then you’re going to have much more serious issues and it doesn’t matter what products you have. Then you’re eventually going to fail because the business itself fails. It’s not necessarily the product failing.

[07:39] Rob: Yeah, let’s dive in.

[07:40] Mike: The first reason that businesses will fail is because you don’t actually get started. And this one I think a lot of people fall in to this. Too many people spend too much time building up the idea of a business rather than actually building the business itself. And we talked about some of these things back in episode 71 where we talked about all the different things that you shouldn’t pay for early on in the business. And by doing all of those things instead of trying to build the business and build the products that you need to launch, then you’re never actually building the business itself.

[08:10] Rob: Yeah, this reminds me — I published a post a couple of years ago now probably and it was called Lesser Known Traits of Successful Founders or something. And one of the traits that I listed was how quickly do you respond to opportunity. And I feel like that has a lot to do with people who I’ve seen succeed, right? It’s — there’s a difference between sitting with a notebook and making list of 10, 20, 50 business ideas over the course of many years which I used to do and I think a lot of wannabe founders are guilty of doing. And I don’t say wannabe in the native way, I really just mean people who want to start companies. I think that it’s more about, you know, having a bunch of ideas and really thinking them through too far before you actually just start putting some feet on the ground and you start talking to customers and get an idea of people want to do it.

[08:57] I’m actually, you know, in typical entrepreneur fashion, I have my notebook and even in the last week I’ve been adding new business ideas, new product ideas to it as I’ve read a few essays that have got me thinking and already I’m looking at them and saying what can I do this week or next maybe after MicroConf that can give me an idea of whether or not this will succeed without me mauling them over for six months like I used to like. Over analysis is just — it’s so painful and it’s so, so common I think with a lot of us.

[09:27] Mike: It’s something else that goes along with that that you didn’t directly mentioned was if I need too much time trying to think of the perfect idea because it’s going to be really difficult to find the perfect idea these days. I mean you’ve mentioned it another of times on previous podcast where the best time you started business was five years ago and then the next best time was four years ago. I mean, you really — you’d just need to get started and if you’re not getting started, then you never going to get anywhere.

[09:51] So, number two on the list is giving up too early. This is the almost the opposite of not getting started. It’s just giving up way too early. When you run in the hard times, you basically have two options. You have to either give up or you push through. And it’s a lot easier to give up than to push through as hard times.

[10:07] Rob: This is a very tough question to answer of whether or not you should give up or push through when you hit a road block. And I’ve actually been having conversations with a few different entrepreneurs over the past couple of months, the guys who were just getting started. They’re early in idea phase. Some of them had written code launch and then got their initial customer base and realized that they needed to pivot. Basically that it wasn’t a viable business even though you had a market research show that it was. There’s obviously a lot of uncertainty but I would say that there’s a lot of art in there being entrepreneur. But others are still in the idea phase and the question that comes up most often is when should I dump this idea. There’s no answer, right? I mean it depends. There’s no one answer.

[10:48] The biggest realization that I’ve had as I’ve talked to these guys is that sitting there, having them go often do some research, pound up the numbers, give it some thought, talk to some customers and then come back to me and have a conversation. For me to then try to get to the meat of the question has worked out really well. And the reason is because the person doing, the entrepreneur doing the research is too close to the problem. They can’t actually see the forest for the trees and I’m removed enough from it. I haven’t done all the research. I haven’t spend only hours in it but then I’m basically able to ask of these the key questions and we can sit there together and obviously not making the decisions for these guys but to kind of push them in the direction of doing some more research or maybe think about when they are really passionate about the idea. And almost — there’s almost never a yes or no. It’s almost always comes down to if you’re really passionate about this and you really think it can succeed, then even though some of the signs are saying no, you should do it.

[11:44] And then on the flip side, there are even some minor road blocks here and you just kind of aren’t that interested in the idea? Maybe if you found out that the idea is viable and there is a market for it but it’s going to require a lot of say cold calling or in person sale and you’ve just not or not sure you want to do that, then maybe even though it could [0:12:00] be a viable business, maybe you should think about not doing it. And that’s typically where it winds up, right? It winds up being a personal choice because it’s almost never a yes or no. It’s more option than not a weighing of different positive and negative factors. And getting that list of positive and negative factors on to a piece of paper is challenging but I really recommend the two-person approach that would kind of stumbled upon here in the past few months.

[12:23] Mike: And just to be clear of what you’ve said so far is completely focused on giving up or not as opposed to taking the product and pivoting, right?

[12:31] Rob: Yeah, that’s right. So that’s also been part of the conversation. These days, I would never — almost never tell an entrepreneur to totally give up not unless you really don’t want to be a founder anymore. To me, that’s — that’s when you give up but almost — in almost all cases, it’s been pivoting the thing. And even, you know, one guy like pivoted from something to help with documentation and he was almost pivoting, going to pivot like in to a completely different vertical but there was at least some code base he was going to reuse and there was some knowledge that he had learned about how businesses make purchasing decisions that he had learned by talking through some initial prospects and the couple of customers that they did purchased from them. So, it’s really — I guess I’ve heard the phrase like a pivot is just, you know, a switch to another product idea and a leap I think is when you really probably keep the same company shell but you just almost revamp the product entirely, maybe moving in to a completely different product.

[13:19] So, I think if we say that giving up is doing a leap or doing a pivot, then — then that’s what more of what I’ve been talking about. I haven’t been telling anyone to give up being a founder.

[13:27] Mike: The number three on this list was being unable to pivot. But again going back to the original topic for this particular podcast, it was giving up too early on a business, not necessarily on the products because products, you can — you can obviously give up on a product because as you said it just doesn’t appeal to you anymore. But if business itself and running the business doesn’t appeal to you anymore, then that’s, I would say a much more serious fundamental issue than just not being interested in the product.

[13:54] Rob: Yeah, this actually relates back to another one I’ve post Lesser Known Traits of Successful Founders that I’ve mentioned and it’s how flexible are you. You know, if you’re married to a product idea or business idea and you’ve been following it for — in your head for years, it’s hard to let it go. You become married to it and that’s a real dangerous especially with how quickly things move these days. And so having the flexibility to just say I’ve built this awesome, you know, whatever it is a CMS or invoicing software and it’s totally not working out in this vertical and I’m just going to switch and I’m going to now do it for mortgage brokers. To be able to do that, if it’s the right business decision, it can be a real indicator of whether or not you’re going to succeed as a founder.

[14:33] I think every startups story that you read involves several adjustments to the vision. And even though you read and you think oh PayPal and Netflix and all these companies that achieved big success where with that from the start Facebook is the same way. When you really read the story and you get in to it and you heard the founders talking about it, they almost all started as pretty different ideas then they’ve eventually round up and the founders were smart enough to noticed that they needed to change course and they had the flexibility and the willingness to perhaps give a part of their initial vision or all of their initial vision when they realized that, you know, another part of the business was essentially taking off.

[15:11] Mike:  So number four on the list is you don’t make the business a priority. And I think this trap is really easy to fall in to for a lot of people especially when you’re first getting started because you always have time down the road and if you keep telling yourself that there will be time later, I’ll get to it, I’ll get to it and you don’t make time for the business if you don’t make the business itself a priority for yourself, it just never going to happen. I mean, you really need to buckle down and execute on things because that’s insanely important for being successful.

[15:39] Rob: And I think the big question that, you know, you should ask yourself if you can start to this, “Can you focus long enough to deliver? Are you focusing on the business or are you letting other things become a priority?” We talked about in the past about how it’s really fun to watch TV and go hang out with friends at Happy Hour but those friends typically aren’t the ones that are starting a business on the side and so, if you have a 9 to 5 and you want to start a business and you want to go out every night, something has to give.

[16:04] The other thing I’m seeing is the phase of innovation and the phase of how fast things are moving, it feels to me like it’s accelerating even more. Even in boring niches where there was no competition 5, 7 years ago. They’re starting to be some competition and then as you edge in to even minorly interesting niches, there’s a lot more competition and that was a couple of years ago. And then as you get into the bay hot tech areas, you look at things like Pinterest or any type of Facebook or location-based mobile apps, all that stuff.

[16:35] Like if you wait 30 days, the landscape has changed substantially enough but if you have not acted quickly and gotten something out, you may have miss the boat. It’s that fast like it’s a matter of months before the really hot niches are changing and we don’t necessarily recommend getting in to the hot niches because they do change so fast and they tend to have people working 24/7 on a move, raise funding and all kinds of stuff. But as I said, this trickles all the way down and even in the medium to low interest niches that aren’t that sexy, they’re changing so fast that you really need to think about how quickly you can move and get to market these days.

[17:09] Mike: And the last reason your business will fail is because you aren’t building processes for your business. This goes back more to making sure that you’re building things that can be repeated. You know, you need to build a business process for handling whatever it is that it can be handed off to somebody else to be repeated and that comes to just about anything whether it’s your sales process, your funnels, the code itself, I mean what you’re trying to do when you’re building your business is build processes that can be followed that can later be skilled and by skilled I mean either hand them off to somebody else so that one other person does them or you handed it off to a computer. But then you take those things and you can essentially off load them from yourselves so you can concentrate on other things.

[17:51] Rob: Have you heard the term “Earn out”?

[17:53] Mike: I have heard the term, I don’t recall specifically what it is.

[17:56] Rob: So an earn out is if you sell your business and the acquiring company makes you stick around for what’s called an earn out.

[18:04] Mike: Oh yes. Yup.

[18:05] Rob: So you get some of the money upfront and then if you stick around for two years, you get another big check or one year, you know, whatever the term they decided. And I was actually talking to a founder whose business got acquired probably about a year ago now. I was just e-mailing with him this week and he said that they had so many processes in place and so much of the stuff was — I won’t say automated but it was basically documented and enough was automated that he was able to walk away with the holy grill of acquisitions which is where you get your money and you walk away the day of the sale closes. That’s very rare.

[18:38] The thing is these processes, they don’t just make your life easier while you’re running your business. They actually make you way more attractive to an acquiring company if you ever want to sell it and it will basically increase your revenue, your income per hour work. Because the more you automate, the less you have to work in your business and the more you can really, you know, work on your businesses as Michael Gerber says.

[19:00] There is the book called Built To Sell. It’s called as like a parable, like just a story of this guy who’s selling his business and when I first started listening to it, I kind of groaned like this is going to be terribly cheesy but it turns out by the end I was really rooting for the guy in the story. The author covers things that you should do if you ever plan on selling your business and how to make it more saleable and talks about getting repeatable processes and getting paid in advance and having recurring revenue and being specialized and just some things like that.

[19:25] It’s pretty sure a book. It’s worth to read but the most important thing I took away from it is even if I don’t want to sell my businesses, all of the things he says in there are ways to make your business more efficient and just make it a better business for you to run. So that you can spend your time doing things that are more interesting to you that could include maybe potentially, you know, starting launching other product line or doing something else that is fun. I mean as entrepreneurs we’re creators and we want to do the new stuff and so, you don’t want to sit there day to day doing things that you could essentially just processes for and hand off to other people peacefully.

[19:56] Mike: Yeah and everything that you said was kind of a whole point of that is, you know, if you’re putting these processes in place, then those processes can – they can be followed by you but they could be followed by somebody else or by one or more people that just scale out and help make your business that much more profitable so you’re working, as you said, on your business as supposed to in it.

[20:16] Rob: So, hey Mike. I want to add one other. I know we said top 5 reasons but one occurred to me as we were talking. And it’s one – we definitely covered this before because it’s more of a psychological or mind set one. But the question I throw out is do you have confidence in your ability to execute? The question is not “Can you execute?” Because I believe most people can execute on ideas and most people can eventually be successful if they work hard enough at it and trying of ideas that will eventually happen.

[20:42] The question is do you have confidence in your ability to execute? Do you really believe that you can do this? And are you going to stick around after the first 6-month low, you know, where your sales drop, do you believe that you can correct that? Because if you don’t, then the odds are that you are going to do number two which was give up too early because the less confidence you have in your ability to execute, then the more likelier are going to be to basically close up shop.

[21:07] Mike: Yeah, I found there were things that I’m either not interested in doing or that I feel like I don’t have the ability or knowledge to do it. I tend to procrastinate with those things and put them off in a way that’s not much different than just giving up. I mean, it’s amazing how little time that it actually takes once I’ve made those decisions to buckle down and do it. There was something I was trying to get through, I don’t know, maybe 3 or 4 weeks ago and I kept putting it off and putting it off and then finally I just said “Look, I got to get this done.” And I just sat down and did it and it took me like two hours to do.

[21:39] Rob: Yeah. Have those all the time and so frustrating. It is crazy, huh, when you’re gifted at something or when you’re skilled at it like writing code, I think that’s why we all fallen to the developer’s trap of I can write codes so I’m going to go build the product because that’s what I know had to do whereas the marketing staff talking to customers, market research, whatever, you know, all these other things are going to building the product that may in fact be more involved with the success of the product than the actual code you’re going to write. We ignore that because we procrastinate.

[22:06] I think we do it on purpose as much as just maybe not having confidence in our ability to execute on these things or feeling like you’re wasting time because learning is time consuming. I mean if you go out and start doing talking to customers and you’re not very good at it, you almost feel like “Oh, I’m just wasting my time. I could be back home, you know, just writing tens of thousands of lines of code.” It’s so much more efficient but I mean as we know, it’s like yeah, it’s efficient unless you’re building something no one wants and the way to find out if they want it is by talking to those customers.

[22:34] Mike: You know, that’s one of the challenges that you kind of have to overcome is just buckling down and working through those tough times or do you have confidence in your abilities actually execute on those things.

[22:44] Rob: I think what’s interesting is you don’t necessarily have to have like the utmost confidence and I am a brilliant marketer if you’ve never done it, you know, or I am great at customer development if you’ve never done it. But you have a confidence in your ability to go over on those things.

[22:56] Mike: I almost want to say that even comes to that, I would almost say that it comes down to your ability and willingness to go out on the limb and actually making attempt and if you’re making an attempt then chances are good that you’re probably doing more than the guy next to you.

[23:12] Rob: Yeah right. When you’re reading Hacker News articles, it is probably equivalent to two weeks of actually launching a startup. Right? I mean I’m making up numbers —

[23:21] Mike: [Laughter]

[23:22] Rob: … a little bit of something like that, it’s like a 100 to 1 ratio of the amount of progress and learning and understanding you will achieve by actually doing it and failing than you would by just reading about other people doing it and failing.

[23:35] Mike: Or just being mediocre at them and you don’t even have to be the best in the world at it as long as you’re actually trying it and that you are making progress. I mean, that’s the important thing as you’re making progress towards those things.

[23:46] Rob: Yeah and if you look back at anyone’s story, yours and mine included, I had a number, I think yeah, I never actually set the timeline out until I was on Mixergy a couple of months ago but it was like I had five or six failed ideas that I actually launched. I had ten more that I met, you know, [0:24:00] never been satellite the day that I had mentioned but I had a number that I spent months and months building and then launch and they failed before I have my first success. And you even look at these gaming companies that have sold for hundreds of millions recently but bottom line is like OMGPOP which is sold for a hundred something million. They had nothing in the bank like the dude had just laid off a half of his staff and he add $1800 in the bank and they had been around for six years and had 15 failed games and then this one was the fastest growing iPhone app ever in terms of downloads.

[24:31] Now, that’s hitting the startup lottery in a way and getting acquired but the bottom line is if you didn’t have skin in the game and if you didn’t keep coming back at it and have some failures, you know, that wouldn’t have happened. And the same thing with Rovio. Rovio had over or at least 15 games in mobile games and that kind of stuff. And by all accounts, they were not doing that well before Angry Birds and then Angry Birds is, you know, it’s basically a multi-billion dollar franchising now. They’re doing a TV show, they’re doing a movie based on Angry Birds, all the licensing. My kid has gummy Angry Birds that he bought at the Candies. I mean, they’re going all out on this thing and again, I’m not saying “Oh, do this and you will have a billion dollars because that’s not the goal. The realization is these guys failed a lot just like all of us have. Very, very few entrepreneurs come out of the gate and — and hit it big their first time. Every entrepreneur I talked to has had failed ideas before they succeed.

[25:23] Mike: Yeah, and even if you look at the — I don’t want to set a gold standard of, you know, entrepreneurs, you know, a lot of the high profile bloggers that you probably write over the years Fog Creek at Joel Spolsky at their home. What was one of their first projects [Phonetic] is I think CityDesk I believe.

[25:38] Rob: CityDesk, yup but it was like a CMS.

[25:39] Mike: Yeah. And that thing failed. I ended buying it at one point because I wanted to see what it was like and you know, started using it for my blog for wall and I was just like “Yeah, there’s just some contents that’s not working out the way that I want it to.” But, you know, that’s one of those examples where you look at somebody like him and say “Well, you know, he’s done all these things over the years. How could he possibly gone wrong? He worked at Microsoft and …” But that right there was one of those failures that, you know, nobody talks about and I think it’s important to realize that everyone has those failures. It’s just a matter of how you react to them.

[26:09] [music]

[26:13] Mike: So I think that about wrap us up. Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons.

[26:19] Rob: Hey, did you know there’s a live version of “We’re Outta Control” by MoOt on Youtube?

[26:23] Mike: I did not.

[26:24] Rob: We should totally look it up, yeah, I’ve been seen it on Twitters and people were like they were mentioning that there’s a live version of “We’re Outta Control” on Spotify. I went on Youtube and search for it and they’re performing it live like it’s kind of cool to hear it. Of course I listened to the verse because we never actually play that part. Yeah, so we’ll link it up on the show now and so people can just search Youtube for MoOt “We’re Outta Control” to see that video.

[26:43] Mike: And you can subscribe to the podcast in iTunes by searching for Startups or via RSS at StartupsfortheRestofUs.com.  Thanks for listening.  We’ll see you next time.