Episodes

Show Notes

• Dan Norris’ Blog Article on Startup Validation
• My Analytics
• Dominic Patmore of Pilifter.com
• The Lean Startup
• Inform.ly

Transcript

[00:00] Rob: In this episode of Startups for the Rest of Us, Mike and I are going to be talking about whether or not startup validation works. This is Startups for the Rest of Us: Episode 142.

[00:09] Music

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

[00:26] Mike: And I’m Mike.

[00:27] 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?

[00:31] Mike: I got an email from KISSmetrics regarding the app they develop called My Analytics. It allows you to take a look at all your Google Analytics data on your iPhone. Have you seen this yet?

[00:41] Rob: I saw the app. I had an early beta version of that, and it was pretty stripped down at the time. It looked cool but it didn’t do much. Is it pretty cool?

[00:50] Mike: I mean it’s probably pretty similar to what you saw. I mean it does allow you to see at least the basics and stuff. What I liked was it allows you to go back and compare to some of your data from yesterday or the current week against previous data points that they kind of hard code in. So you don’t have a lot options in terms of saying well I want to compare three days ago versus 14 days ago or something like that.

[01:12] Some of those data points are hardcoded in. So you’ve got options for yesterday, this week and then you can go back either one week or two weeks etc. But you can’t just do like a date range or something like that and compare those.  But it does allow you to do at least some minimal comparisons and pull the data right up on your iPhone, which I didn’t have a way to do that before.

[01:33] Rob: Yeah. It looks really nice. The screenshots looked nice and it’s free.

[01:37] Mike: Yup.

[01:37] Rob: No fee to use it. Pretty cool. We got an email from Dominic Patmore and he’s at Pilifter.com. He says I’m been listening to Startups for the Rest of Us since December. It’s comforting to know I’m not the only one seeking to create and maintain small businesses. I wanted to say that your advice helped me help another entrepreneur for making a common mistake. I met with him yesterday and he was explaining his mobile app, which he felt was heading to version 2.0. And his aim was to get venture funding and get bought out.

[02:04] However, when I asked him how many users he had, he said zero. But said he had a number of interviewees who would be willing to pay him. And then he gets to how we become involved. He says hearing your voice in my head, I told him that the best thing would be to go back to those users and get them to pony up on a bet release. My reasoning was that if they so loved the idea, what would they pay to see it go to version 2, 3 or 4. If there’s no one, then maybe it would be better to back to see if the solution is actually addressing a real need.

[02:33] This was in a TechHub space. I think like a co-working space. And there was another developer next to us that jumped in to confirm what I’d said. Thanks to you, hopefully, I was able to steer someone away from putting more money into building something for no audience. Thanks again and keep up the great work. So thanks for writing in Dominic. I loved hearing stories. It’s kind of like second generation. We didn’t directly help someone but it’s like an indirect relationship.

[02:52] Mike: Very cool.

[02:53] Rob: The only other thing is Drip continues to move along. We have 11 early access customers. They’re 8 or 9 of them that are actually active. It’s getting to the point where we have enough people in there that it’s hard to tell what everyone is doing now. But we’re moving forward and keep getting emails about people wanting to use this. So that’s good validation for me.

[03:13] And we did push a big feature live today and that’s going to help with on boarding. And it basically allows people to easily create – it does something no other email app does. It allows you to do one click and have this whole template for an email sequences spit out and then you just kind of fill in the blanks. It’s a neat features and it’s finally out. And then we’re working on split testing next, which is really the last major feature we’re going to implement before launching to the world. So we’re about a month out. Every week the early access users grow and so I’m excited to move forward.

[03:41] Mike: That’s cool. It’s great to hear that you’re moving forward. Personally, for AuditShark, I feel like I’m moving backwards cause things are just going sideways.

[03:48] Rob: Is that right. What’s the problem?

[03:49] Mike: It’s not just even one thing. Like if it was just one thing I can deal with it, maybe two or three it would be all right. But it just seems like all these things that are moving in all different directions all at once right now. It just feels like nothing is going right. For example like the automated upgrade system for all the different things that I had in place that used to working now things are just not working for whatever reason. So whenever I go to do a deployment, basically the entire system stops functioning. And then I had a system of sending emails so that when audits would run, you’d get emails from them. That’s not working anymore.

[04:24] It’s hard to get to the bottom of all of it because there’s so many different, you know, I called them dependencies for a lack of a better way to put it. But all this different things that I didn’t necessarily write that I don’t fully understand how they work. So debugging them and troubleshooting them just takes forever.

[04:39] Rob: Yeah. That’s a real bummer. So its stuff that developers who are still working for you wrote or is it past developers?

[04:45] Mike: Well some of it is libraries. So for example, there’s a scheduler library that is supposed to run things on a scheduled basis. And when it fails, I don’t really get any feedback about why it’s failing or whether or not its continuing to run and it’s just like throwing exceptions in the middle of it.

[05:00] So, I still have to dig into it and try and figure out what’s going on.  Like I said it’s all this different moving parts. They’re all in the air and trying to figure them out is taxing to say the least.

[05:11] Rob: And the bummer is you’re like you’re in early access and so you’re trying to manage that process as well as this technical side.

[05:17] Mike: Right.

[05:18] Rob: I mean it underscores how many things you have to juggle as a software entrepreneur that wouldn’t have to juggle if you were launching say an information product or just a new blog or something that relies more on content. You’re not going to tend to hit all these snags that we do, cause software is very complex.

[05:35] Mike: Right.

[05:36] Music

[05:38] Mike: This week’s episode is kind of inspired by a blog post that Dan Norris wrote about whether startup validation is legitimate or not. You know he’s got some issues with Eric Ries’ book called The Lean Startup. You know you look at the startup community and generally, I’m kind of paraphrasing and over generalizing here. But the startup community generally says if you read this book and do what it says you’re generally going to be successful. But there are a lot of startups out there who’ve tried this approach and just failed miserably. And the question is does that mean it doesn’t work. And Dan has got a plenty lengthy blog article where he’s basically calling out and saying this stuff I tried this and I tried this and I tried this and this stuff just doesn’t work.

[06:21] Rob: Right. He gives a bunch of numbers. How he send out surveys and he gives you exact percentages. Shows the press coverage that he got and talks through how many people he get to sign up for a launch list and all that. So it’s a nice in-depth piece. We’ll obviously link it up on the show notes. But the title is “Is Startup Validation BS?” So, we want to kind of talk through with those.

[06:40] I have to be honest, my views on the whole Lean thing are constantly evolving. I’m still critical of people in a movement who are doing a lot of teaching but they’re not launching startups. In any field, there are academics who are studying and researching and then there are people on the ground who are actually doing, and there needs to be collaboration between those two sides.

[07:01] But the startup space has never really been that way. Academics have always tended to be behind. Like the MBA programs tend to be behind where the actual founders are. Maybe the Lean Startup movement is a diverging of that. And we are going to fit the model that psychology and medicine, computer science, you know those fields have fit for years. But its still a challenge to feel like someone with their feet on the ground who knows the tactics that work and the ones that don’t work to kind of hear this movement that I definitely think has positive points.

[07:33] But to hear some people take it on as like the gospel or the way to do it and that if you do this, you’d be successful; if you don’t do it, you’ll fail type thing. That’s where I say like my views on Lean are evolving. I’m not pro Lean or against Lean. I love some of the tenets of it. And I think other parts of it are questionable and I don’t do them in my own startups.

[07:52] Mike: I think one of the things that comes up in my mind is that there are a lot of these classic mistakes that you can make when launching a product that have absolutely nothing to do with startup validation. And although, you’ve gone through the process of validating your ideas, it doesn’t necessarily mean that you’re still doing the right things. Back in episode 121, we’d talked about seven catastrophically common launch mistakes.

[08:15] And you go through that list and you look at those and even if you validated your startup ideas, if you start going through and you commit all of these launch mistakes, it doesn’t mean you’re going to be successful with your products. I mean it’s very difficult to be successful when you’re shooting your foot every time you try to take a step.

[08:30] Rob: If you think about building a successful product as kind of this triangle or this three-legged stool and you need product  as one of the legs. You need market as another and you need execution as the third. And so you can build an amazing product, but if it doesn’t actually solve a problem that anyone needs you’re going to fail period. If use Lean Startup or you use another method to validate it upfront then hopefully you have found a problem that actually needs solving.

[08:58] And then you actually need to find a market that you can market to. So that’s the second part of it. Then you need to actually execute well. In other words, don’t make the common startup launch mistakes, execution mistakes, marketing mistakes. So there’s a lot of elements that go into it that validation just says hopefully it says you have a good chance of people actually wanting this problem solved, and hopefully the solution that you’re looking at is going to solve it.

[09:24] But that’s how I view it. I don’t think you can get to a point of 99% certainty just by doing pre-validation. You know it get you above 5% certainty we used to get to. Maybe it gets you to 60% to 70% that if you execute really well on both the product and the marketing side, don’t make a bunch of common mistakes then you have a pretty good chance of success.

[09:46] Mike: Yeah. I mean I think it just points out the fact that there are no guarantees and that’s really what it boils down to.  Even if you do all the right things, you’re not necessarily going to be successful. There’s always this asteroid that can come out of left field and blow your startup away. But even accepting that you can go through this process, try to validate your idea and then still fail at it because just not enough people are interested in buying whatever it is you have to offer.

[10:08] So one of the things that I wanted to point out was that even assuming that you have a very large mailing list, that’s kind of a classic assumption is that if you get a large mailing list you’re going to launch, you’re going to get lots of customers very very quickly. And I don’t believe that’s the case. I mean if you have 4,000 people on a mailing list, if you have 1% conversion rate that will get you 40 customers or 20 customers at a half percent conversion rate.

[10:34] I think that’s not true. I mean there’s some fallacies associated with trying to assume that having a large mailing list is going to equate to a large number of customers. And part of that is because of your conversion process. You have to be putting in good calls to action. You have to be telling them exactly what it is that you’re offering, why it solves their problem, how it solves their problem, how much money its going to save them, how much its going to be worth to them.

[10:58] You can’t just blast this out there to a giant mailing list and expect all these people are going to buy your product on day one even if they said they would originally. You really have to educate them about what the product is going to do for them and how it’s going to benefit them. You know blasting out this email is not enough.

[11:15] Rob: I don’t think Dan made, I don’t think he just sent out kind of a random email and said hey buy the product. I don’t recall if I was on the launch list for his original product which is called Informly. But he’s a good content marketer. He’s a good copywriter and he executes pretty well on this stuff. So I wish I knew a little more in depth. That’s actually one thing. His post, I like the way he formed it. I like the way he gives a lot of data. But he doesn’t really talk about what he did to turn people into paying customers.

[11:44] So some questions that come into my head are “Did he launch with a single launch email?” You know did he build up this list of 1,000 or 2,000 people and then just send them a list and say here’s the product, here are the benefits, come and check it out. Or, did he do a long sequence. You know I typically do a four email sequence during launch. I also typically email between 6 and 12 weeks. You know if you’re working on a product for 8 months, I would probably touch base with them every couple of months during that time with progress update to build anticipation and to actually see the response from that.

[12:16] If no one emails you back then it’s kind of not a dead list but it’s people who are not really interested in what you have. But if you get 20 response with people saying this looks fantastic. I can’t wait to get in. Then that’s a whole other story, right. I think the other thing that comes to mind is that Dan has a decent personal brand. So he has a podcast and email newsletter of 5500 people. He has a lot going on. So I found that sign ups from my personal brand audience don’t typically results in trials or sales of my software.

[12:47] I mean, Mike, we have the podcast. I have the blog. We have MicroConf. We have Micropreneur Academy. All that huge footprint and it is a pretty sizeable footprint, I would say I have 10s of HitTail customers out of – there are four figures of HitTail paying customer, and I have literally in the 10s. I don’t even think they’re a 100 people from my personal brand audience who signed up.

[13:10] So if Dan’s list was seeded with a lot of people from his own audience and not from the exact target audience who would actually need this, then that could have been another issue with having – cause he had a reasonable size list. I think it was a thousand. Actually, that’s another question. He mentioned that he has a 1000 person beta list and a 1200 launch list.

[13:30] Do you know what that means? Cause I’ve never separated those two. I think that you should all have them as one 2200 person list and you should pick out a handful of beta testers from that who can run through it. And everyone else is just given basically the early bird the kind of pre-launch discount to come use the app.

[13:47] Mike: I think that what he meant by that is that he had a 1000 people sign up for the beta over the course of three months and go through it. And then there were another 1200 people that entered their email address to be notified of the launch. I mean I’m kind of in your boat. I’m not real clear what he meant by that. But I got the impression that he kept two separate lists. He drew the line in the sand at some point and said okay. Everyone before this point is going to be a member of the beta. Everyone after this point is going to be notified of when the launch actually happens.

[14:17] Rob: Got it. That makes a lot more sense. So, that would be something I would have done differently then. I’m presuming that during the beta that perhaps it was free or he had a free plan or something like that. And that’s one of the catastrophically common mistakes we talked about. He did mention a free plan in the post. He had 4,000 free users and only 15 converted to pay. And that’s the problem with free plans is you give people an alternative. So even if they need their problem solved, if you give them a kind of way to half solve it then they would tend not to want to pay for it.

[14:48] Mike: One of the things that Dan points out is that he went through and did some customer development and started asking people questions about surveys. And one of the things that strike me is that when you’re listening to people who aren’t paying you money, its not going to get you anywhere. Cause nobody wants to hurt your feelings about what your product is. And everyone is going to tell this is a great idea. I would pay for that.

[15:09] But the fact is until you ask them for money, there’s this barrier to entry. If they’re willing to give you the money then you’re probably going in the right direction. But if they’re not willing to cut you a check or give you a credit card then you’re probably on the wrong track or you’re talking to the wrong person. And my inclination tends to be that you’re probably talking to the wrong person as opposed to you’re on the wrong track with it.

[15:33] Because you can usually talk to those people and say, “If you’re not willing to give me a credit card, why is it that you’re not willing to?” It could very well be that it’s not that big of pain point for me. And that’s the hurdle you have to overcome. If you can’t overcome that hurdle then make sure that you are, or you’re talking to the wrong person and you need to figure out how you get to talking to those right people.

[15:54] Because until you do, you’re not going to really find out what their pain point is. You’re talking to people who may have ancillary pain point but it’s not the one you’re trying to solve. You know you’re marketing messages are getting confused, you’re talking to the wrong people, and you’ll never going to get anywhere when you do that.

[16:10] Rob: I don’t think I feel as strongly as you do about having people pay you money upfront. I mean if you look at what we both done with Drip and AuditShark. I have a list put together of emails and I’ve talked to people about the potential price of what that might be. And I’ve shown them the potential features and the potential value proposition and there’s a lot of enthusiasm. And there are people wanting to get into the early access.

[16:34] When I mention the price it will be after the trial, some people have said that’s too expensive and then you let them go. Basically saying that’s fine. I’m not a good fit. But others, you know, they haven’t written me a check yet and they haven’t put their credit card number into the app yet, but I don’t think you need to go that far. I think in an ideal world, you would. But I just don’t think that’s feasible when you’re doing kind of a larger launch like this and you’re trying to get thousands of people on the list.

[17:02] I think the best practice that I would lean towards maybe – you know, the way I look at it is those first 10 customers kind of the people that I interviewed and got on the list in order to validate the idea enough to start coding. Those people I would consider saying all right would you send me a check or would you give me a credit card number.

[17:20] Mike: I totally agree with all of that. But what I mean by listening to people is that if you’re asking them questions like what would make you pay for this? And they say well if you build feature X and then you go off and build it for them. Then they say okay, now I’ll give you a credit card. You’ve solved that particular problem for them but you haven’t necessarily solved a problem that is the same for a lot of different people.

[17:46] Really what I meant by trying to figure out who’s paying you money versus who isn’t is when you start listening to people who aren’t pay you money and you listen to too many of them, then you’re not necessarily solving any one person’s problem or a group of people who all have the same problem. You’re solving these individual problems for different people and you’re not necessarily solving the same problem for lots of different people.

[18:06] Rob: Yeah. That totally make sense. And that’s where that problem solution fit and then product market fit need to be in sequence. Because if you try to go sell to a bunch of people before you’ve solved their major pain point that people are willing to pay for, you’re doing things out of order and you get scattered. As far as I know Dan is not a developer, so I think he was outsourcing development. You can’t just move fast enough unless you have a whole team of people. You can’t move fast enough to hit multiple markets and solve multiple problems at once. And so that could potentially be something that impacted him here.

[18:37] Mike: I think we’ve talked a little bit before about asking for credit card numbers upfront. I just kind of want to emphasize the point a little bit. It’s really more of – I’d call it more of a psychological barrier than anything else. Because when you’re trying to convert people from a free plan into a paid plan, or you’re trying to convince them that after signing up for the product that’s when they should give you the credit card after like a 14 or 30 day trial or something like that.

[19:02] Basically, what you’re doing is you’re putting another artificial barrier in there for them to continue using the product. And really this is a big mistake and the reason why like I said is rooted more in psychology. And I’ll use an analogy here. If you look at enrollment plans for a 401(k) plans, you’ll find that the participation rate is commonly more than 90% were automatic enrollment is isued. And that’s very synonymous with asking for a credit card upfront.

[19:27] If you look at companies where they only have – where has the opposite where you have to actively try to enroll in it, you have to go to the HR department say I’d like to sign up for this. The enrollment after six months I think the statistic is 26% to 43% after six months. And that’s a huge difference. I mean that’s almost four times the difference between them. So what you’re really doing here is you’re trying to give the user value and show them the benefits and not have them do anything extra to maintain those benefits. Your software shouldn’t be any different.

[20:00] And stop asking them if it’s okay for them to continue receiving the benefits of your software. They’ve already made the decision to sign up, so put that in as part of the barrier to making that decision and couple them together so they don’t have to make another one down the road.

[20:13] Rob: Yeah. I think that’s a part of execution and I think its not the only way you can do it, but it’s definitely the rule of thumb that when I’m in doubt ask for a credit card upfront. I think another thing as I was looking through Dan’s blog post I saw I think it might have pivoted too soon. It looks like Informly was launched maybe it was six weeks before he pivoted into something.

[20:32] And as I thought back I realized when I acquired HitTail after I re-launched it, it already solved the problem. And I took me five months even with the marketing knowledge that I have, it took me five months to really learn how to market and how to find the people that really needed this product. And that doesn’t even include the problem solution portion. While I don’t think its going to take five months for everyone, I was willing to be at five months full time and that’s what I was focused on aside from you know there was a couple other smaller task I was doing.

[21:06] But in general I was doing it was pretty much five months full time of my time to really get HitTail where it started to scale. It was growing slowly during that time. But if you expect something to take off fast in six weeks, and you have a free plan and you’re not asking for credit card upfront, and you’re not forcing people to make a decision, and you’re not trying convert them into a paying customer then its likely that even if you have built something good or almost good enough that you’re not going to convert people.

[21:30] I actually have a friend of mine who’s in the mastermind group. He said, he wrote me an email and said I’d tried the content marketing version of Informly and the product itself was pretty rough. So meaning that the product execution wasn’t where it needed to be for this person to pay. And then he said there was zero effort made to convert me into a paying customer. I didn’t get any emails. I didn’t calls to action. There was no credit card upfront. Basically it was some classic mistakes that we see in the startup space.

[21:59] So again, the point of this podcast is not to sit here and point out all the things that Dan did wrong cause that’s not that helpful. I think what we’re trying to say is in light of whether startup validation works or not, it’s a really hard question to answer. But it’s keeping in mind that it’s not just about validating an idea, it’s about validation really talks about the product, right. Does it solve someone’s problem? Everything else the marketing and then the actual execution is another thing entirely.

[22:26] And if you don’t execute really well on that stuff then you can have all the validation in the world but the product itself still might not work. It may work but it may not work as fast as you want it.

[22:35] Mike: We’d mentioned this in the past but it was the long, slow SAAS ramp of death from the CEO of Constant Contact. She spoke at the Business of Software Conference this past year. And that’s just accurate as all heck. I mean it takes a long time to get to where you want. And there are certain things that will give you a step function increase and there’s other things that will give you this very very minimal increase that they work and they work well. But because of the fact that it takes so long to get customers until you achieved this massive scale, those things are not going to measurably move the needle in very very small time slices.

[23:11] Rob: And that’s why SAAS is so brutal, right. And that’s why we talked about having small wins where you do the one time software download. You do the WordPress plug-in or you do the Mobile app or maybe you do the info product or the training course, the e-book. Because things are things that you can kind of get out of the door. They don’t require a ton of support and you can get early wins to build your confidence. So that you can then later take the long slug of actually building the SAAS app, which as we’re finding more and more it takes months if not years to really grow it into a sizeable business.

[23:44] Mike: You know one of the things that Dan mentioned was that coverage in Tech Press doesn’t work. If you’re looking for press coverage to get your customers, that’s probably not going to help very well. But it will give your product and your websites some validation. It will give us some SEO juice. But I don’t think that the traffic that you get in some those types of sources is going to convert into paying customers very quickly.

[24:05] I mean it’s great for those back links. It’s great for the SEO. But in terms of getting targeted traffic, I mean basically what you’re ending up with is that all these people who are interested in new startups and new technologies. They’re going to come check it out and they may sign up. But they’re not necessarily really interested. It’s almost like saying hey check out this tech demo. And you send it out to Reddit and people are going to come and they’re going to get this massive spike of traffic. But they’re not going to stick around because that’s not part of their job. It wasn’t a problem they were trying to solve to begin with. They were just interested in something to use as a diversion for their daily life.

[24:42] Rob: Remember when I got quoted in the – was it The Wall Street Journal?

[24:44] Mike: Yeah.

[24:45] Rob: That resulted as best as I can tell because they didn’t actually send a direct link. It was just a mention. But that resulted in right around seven paying customers for HitTail.

[24:53] Mike: That’s awesome.

[24:55] Rob: Which is a rounding error. It’s completely inconsequential. I’m not saying press doesn’t work. I have heard of businesses. It was kind of like iOS keyword tool and analytic tool for the iOS app store. And they got mentioned on Tech Crunch. And they got $25,000 in recurring revenue based on that mention. That basically built their business. So yes, it can happen if your audience is heavily heavily aligned with that press outfit.

[25:22] But I’ve heard several entrepreneurs talked about, and I’m the same way talked about – I would rather be on Life Hacker or for me it’s like SEO Moz Blog]than I would like to be in the New York Times because those first two are so much closer to my audience. It’s like getting the small tech audience. And by small, you know, tens of thousands of people is infinitely more valuable in getting hundreds of thousands or millions from the general public basically or the general press.

[25:50] Now, Dan didn’t get, you know, he wasn’t on Good Morning America. He was on Mashable, and The Next Web, This Week In Startups, Shoe String and some other startup related stuff. So they were reasonably targeted. They were at least in the tech space. And I don’t know how many sign ups he got. I guess he said he has zero paid users. See, that’s a problem though. In the post, he said I had zero paid users from those traffic sources.

[26:13] Now if he was already launched then you can tell that but if you aren’t launched then you really want to know just how many email addresses did you get. Because getting from that email to the paid customer then depends on your execution and your ability to close those sales. It doesn’t depend on just the validation piece of it.

[26:30] Music

[26:33] Mike: One of the things that I really liked about Dan’s blog post is that he showed some results from his targeted surveys. And he showed the number of people who had said yes, I would pay for this or no or possibly pay for this. And then he showed percentages of how those things stack up. And the one thing that struck me about the survey was that numbers were I’ll say fairly low. I mean it looks like it was less than 100 people who were surveyed as part of this.

[27:00] I don’t think that going and asking a hundred people or less than a hundred people is a bad way to go. But I think you also have to keep in mind that when you’re asking less than a 100 people and saying would you pay for this, yes or no. People are going to tend to lean towards “Yes, I would pay for this” or “maybe” so if you start combining the yeses with the maybes then you’d end with this number that is I’ll say artificially inflated.

[27:25] Because possibly or the maybes you can’t count them one way or the other. I mean maybe you can split them down the middle, but still you’re just kind of guessing. I feel like survey should kind of guide your views and test of your assumptions. But you also have to be very very cautious about the conclusions you draw from some of these responses. If people are paying for it, then that helps out a little bit.

[27:46] Because if they’re paying for the product then any new features that they’re requesting, those are things that are going to keep them. Versus people who are not paying for the product, you really need to find what their problem solution fit is to get them and convert them into a paying customer. And testing some of those assumptions would be helpful, but you have to figure out exactly what the pain point is that you’re solving. And I feel like that that’s what the survey should be for. And it looks to me like – I’ll say that the surveys were a little bit squishy in terms of what the surveys were asking.

[28:16] Rob: Yeah. And for the record, this is when Dan pivoted from Informly which was an analytic aggregator and he pivoted into a content marketing analytics app. And I actually loved this idea to be honest cause we’re doing content marketing with HitTail and I’m working on it for Drip. And frankly, it is hard to track. Google analytic does not do a very good job of that.

[28:35] So I would absolutely pay for something that was easy to set up and that worked. You know when I looked at Dan’s kind of record of people who paid for it. He said that 22% which is like 17 people said that they would pay for it. And then only three people signed up. One cancel and then two weren’t using it. That’s where you basically hit the pavement and you email every one of these people and say, why didn’t you sign up. What doesn’t’ it do. What kept you from doing it?

[29:00] Because I think that that one was a winner. I really do. It’s my personal opinion so it’s not worth very much. But I would pay for something that helped me do a better job of tracking content marketing than Google analytics does. And so, at that point, I wouldn’t have stopped. I would have continued with the pursuit of emailing everyone. Finding out if I had not communicated the value proposition properly.

[29:21] Meaning that if I only got three sign ups out of this whole list then perhaps my positioning or the description, my headlines, you know the value I was going to offer wasn’t good enough or the product  itself wasn’t good enough. It wasn’t solving their problem yet. And then figure out what to do. What to iterate on in order to get to the point where I was solving one of those things. Personally, like I said I think this is a problem worth solving the content marketing analytics thing.

[29:48] And I don’t know of a smaller inexpensive SAAS app that does it. I’m sure there’s $500 a month packages that do it but there’s no one in the startup space that’s doing it.

[29:58] Mike: So what are your thoughts on Dan’s comments on about building the MVP? He says that it’s a lot harder than it sounds.

[30:03] Rob: I think he has a valid point. He basically talked about how Eric Ries talks about building a minimum viable product and kind of talks about that its easy or implies that it’s easy or maybe that just has come to be known as getting a MVP you can do on the weekend and then iterate on it. And that’s the thing. If you take that very literally then maybe you do release before it’s a solid product. And maybe your failure on the product side is because you released too early.

[30:28] So, yes, I actually think he has a very valid point here that it’s very hard to know whether an MVP is good enough. To be honest, I think this is why you have to let a few people in at a time. And you have to find people who when you talk about the single problem that you are going to solve, and there should be only one when you start. When you talk about their problems, it’s the people whose eyes light up or who replied to your email when you send them and they’re really excited.

[30:55] And then you say okay, Mr. Person#1 I’m going to let you in and you’re my first early access customer. Try the app. Does it suck? Is it good? Tell me what it needs to do? Then let Person#2 in. Once you’ve built all Person#1 features. And to do this, it requires a lot of time and it requires a lot of iteration. And it requires quite a bit of patience as well as the ability to tell someone you know I’m not going to go in that direction. That I’m not going to build features that you want. That you’re not my ideal customer.

[31:25] So it’s not as simple like Dan says it’s not as simple as a lot of people expect this whole building the MVP and then iterating on it. It’s not as simple as building up a big list, throwing everybody at it and then iterating, because by that time, you’ve burned to your list now. You had a 2000 person launch list and you send them all there. But if the product didn’t solve the problem then poof you’re done. You have to start over.

[31:46] And that’s where I think really trickling it out very slowly which is the way that I’m doing with Drip right now. After a couple of months of basically having a fully functional MVP, we still only have 10 active people on the system. Because we want to build up those features that these people really need before letting in that next group.

[32:04] Mike: Yeah. I totally agreed. I mean this is probably the most frustrating part about it. And I feel like Lean Startup, the book itself really glosses over this fact that it’s such an iterative process and its time consuming. That’s the part that I think is so frustrating. It’s just so time consuming to work with individual customers in a way that in no way, shape, or form, scales. And developers want to get, they’re like the code is done. It works. Let me just throw it out there. And I don’t have to worry about bugs in the product.

[32:35] Maybe you don’t. Maybe everything is functionally complete. But if it doesn’t do what people expect or what they needed to do then it doesn’t really matter. And you need to somehow get through that process and take that step back and work through things slowly with people. You make sure that you’re solving the broader problems. And once you do it then you can throw it out there. But until you get to that point, it’s very difficult to be able to do that because as you said you’ll burn through your list very quickly and then you’ve got to start over.

[33:05] To me I think that’s probably the frustration that a lot of people find is when they try to build an MVP and they say it’s working. Let me throw it out to people and try to get as many customers as I can as quickly as possible. It doesn’t really work that way. And I don’t think I’ve ever really seen it and explained to say hey you really need to work through this slowly as opposed to just throwing it out there.

[33:26] Rob: And I think in Dan’s defense that’s the point he’s raising. Is that you read the Lean Startup book. You follow what the kind of Lean Startup movement and the folks who are teaching and it’s very high levels and it’s academic. So they’ve never said the things we are seeing right now in this podcast. They never say titrate it out. They never say build the MVP; have a few people using it. You know exactly the steps we’ve just laid out because a lot of them are not actively on the grounds developing products.

[33:52] And that’s okay. It’s not as tactical as it might need to be for someone like Dan who isn’t an experienced startup founder. He probably hasn’t launched a startup like a software product before. When he reads something that is as high level as Lean Startup, he still needs much more detailed guidance. And frankly, I don’t now where you go to get that. I mean I think that’s why we started the podcast. That’s why we have the academy. That’s why we have the MicroConf is to provide that kind of education.

[34:19] Not just in the Lean Startup space but just in general, for software founders who want more detailed actionable step by step stuff. And there are certainly courses out there on Udemy and that kind of stuff. But there’s no real single place that I know of where you can say all right, I’ve read the Lean Startup. Now how do I actually implement the Lean Startup? And I think Dan kind of took some hard knocks himself basically learning that, right.

[34:42] He learned step by step that parts of Lean Startup are harder than they might appear or harder than they were presented in the book. I mean I got to really thank Dan for putting this blog post together, for doing the experiments, for putting all the detail in here, and basically for raising the issues so that we can discuss it intelligently on the podcast. Cause I think this raises the level of dialogue about the whole topic. You know both of us; we wanted to thank Dan for putting this post together for sure.

[35:09] Mike: Yeah. Definitely hats off to Dan. I mean if you look at all the different things that have been written about the Lean Startup, I mean there’s all this stuff that says it’s great. You do this. You do that. Everything is hunky-dory. The reality of the situation is once you start putting feet on the ground it’s not that simple. And it never is. I mean when you’re trying to go from a book to reality. There’s a difference between theory and reality. So going through it and having a – I don’t want to say it’s an alternate point of view.

[35:36] But a lot of the things that Dan expressed I mean some of them are points that I share and some are frustrations that I share in looking at the Lean Startup because it’s not that simple. And it tries to portray it as being a, I don’t want to say a step by step guide. But they’re like if you just these things and pivot a little bit and take into account what your customers are saying or what your potential customers are saying and pivot as quickly as possible and iterate everything is fine.

[36:03] And it is just not that simple. And it just glosses over all of the details and all of the tactics that you actually need to execute on. And I feel like its just too high level in many cases to be applicable to not all startups, because I think that there’s definitely pieces of it that apply to very very many of them. But it’s just not tactical enough or provides you enough information to be able to decide when what you’re doing is completely off the rails from what they recommend.

[36:32] But at the same time, that doesn’t mean you’re doing the wrong things. There are no hard guidelines in there for when you should listen to it and when you should ignore it.

[36:38] Rob: Yeah. As I’ve said from the start, my views on Lean are certainly evolving. And I think there’s a lot of good that can come out of it and there’s some good high level information. There’s also that lack of detail you’d mentioned. And then there are some things that I do think that are questionable or have not worked in my experience at all. So if you’re interested in checking out Dan’s app, it’s at inform.ly and he’s basically pivoting to something that I think he’s now having success with and it’s beautiful client report for freelancer and web agencies.

[37:07] So inform.ly connects to Google analytics and other apps and then it provides a monthly report that you can use as a freelancer or web industry to keep your clients happy. So we definitely wish Dan best of luck with this product moving forward. You know we hope he continues to update us on his blog at thedannorris.com.

[37:26] Music

[37:29] Mike: And if you have question for us, you can call it in to our voice mail number at 1-888-801-9690 or you can email it to us at question questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. You can subscribe to us in iTunes by searching for startups or by 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

• http://www.microconf.com/europe/

Transcript

[00:00] Rob: So this is our extra special episode of Startups For The Rest Of Us 141.5 in which Mike and I tell you that there are only a couple of days left before we do the pre-launch for MicroConf Europe. And MicroConf Europe happens this October in Prague. We are going to have a bunch of awesome speakers that we had in Vegas including Mike and myself, Patrick McKenzie, better known as Patty11 on the Internet. We’ll have Peldi. Peldi from Balsamiq. And Dave Collins from Software Promotions.

[00:30]And so it’s just a couple days left. We don’t actually have that many tickets left to be honest even in the pre-launch. I think we…What did we sell out in like 51 hours or something for the Vegas one this year?

[00:40]Mike: Yup

[00:41] Rob: So I could easily see selling out in a matter of days. So if you are at all interested in going to MicroConf Europe. Which is October 5-6 in Prague. You want to head over to microconfeurope.com and get your name on that early bird list because that’s really going to be probably your last chance to get a ticket.

[00:58] Mike: Yeah, and just a reminder that the MicroConf in Prague is going to be a little bit smaller than Vegas, so don’t get your expectations up for having a larger conference. We are intentionally keeping it small. And again as Rob pointed out, I mean, we’re expecting to sell out rather quickly. So, make sure you are on that list because that’s probably the only way that you are going to be able to hear about it. Just go over to MicroConfEurope.com and that will take you over to the MicroConf website. And just enter in your email address at the top of the page. And we’ll notify you next week when the tickets go on sale.

[01:27] Rob:  Thanks for listening. We’ll see you next time.

 

 

Show Notes

• Rob’s Startup VA Course
• Rob’s email marketing app, Drip
• Mike’s security auditing app, AuditShark
• Book: The 5 Elements of Effective Thinking
• The 5 elements:
  • Understand Deeply
  • Make Mistakes
  • Raise Questions
  • Follow the Flow of Ideas
  • Master Change

Transcript

[00:01] Mike: This is Startups for the Rest of Us: Episode 141.

[00:03] Music

[00:11] 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.

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

[00:25] Rob: I’m pretty fired up. After having kind of a rough month in June with some ads not working and just feeling not like I was making progress with Drip. I’ve made a lot of progress in the last couple of weeks. A lot of good things are going on. So first is the VA course that I’d mentioned. Its startupvacourse.com. I just past the 100 student mark.

[00:44] It’s just a nice milestone and it feels good and I’m getting a lot of positive feedback. People are putting five star ratings into the Udemy. It feels good to launch something that’s fairly small and contained. Unlike these projects you and I are working on that take months and/or years to complete. It’s like getting the VA course out there. It just feels good to publish and to ship.

[01:04] So if you haven’t checked it out, it’s startupvacourse.com. And my other update is that Drip now has five active early access customers who are using it. Have it installed. And then I’m adding two more. I have 2 more log-ins I’m shipping out tomorrow. So my hope is to be between 7 and 10 by next week.

[01:24] And we also nailed down the final features for our prelaunch, which it looks like it’s going to be between three and five weeks from today. I will know almost to the day by the time we record next week. And so it feels good. Every piece of development is laid out and prep for the launch. I got to be honest. Drip feels like a real app now, like I’m using it daily.

[01:43] I’m in there looking at stats. I’m starting to migrate more and more of my lists into it. I think I have four mail Drip accounts across all the stuff that I do including the micropreneur stuff. I think I’m going to start moving some of them into Drip.

[01:58] Mike: That’s cool. It’s always nice to get to the point where you’re actually using your own product, especially if it applies to you in any way shape or form. You’re right. I mean it does give you that feeling that it is a real product. I mean I got AuditShark up and running on one of the servers. Actually, I have several servers but the one that I’m primarily looking at is the server that I use and host over at Rackspace.

[02:18] So I have it up and running there. And I’m looking at the stats and stuff that are coming in the reports. It’s nice seeing that information. But I wish that I’ve gotten a lot more accomplished this past week. Some other things have been moving on. My developers have been kind of plotting forward at the meantime. And I’d talked to one of them and they came back and said “Hey, is there anyway to do this, this and this.” I was like, “No. But I can add it in if you really need it.”

[02:38] We started talking through it and it looks like I got more work to do there. But the things that he proposed are a lot more extra work that other people and customers are not going to want to do. So I’m going to have to do some more backend code. But I’m not going to kind of delay anything. It’s just I’ve been sick so I haven’t made any real progress on my side.

[02:55] Rob: Right. That’s the balance too, right. It’s like if you’re a single founder with no contractors or employees then when you get sick and you’re down, nothing happens. You can’t response to email. It’s a real bummer. So that’s where having at least some help can help really keep your business going. And you know like you and I have actual developers who are helping so that your business can actually move forward in your development process even though you were probably laid up in bed for a few days.

[03:19] Music

[03:22] Rob: This week we have the five elements of effective thinking and how to apply them to your startup. So this is based on a book that I listened to last week. It’s called The Five Elements of Effective Thinking. I will link you to it in Amazon on the show notes. But it’s two mathematicians who got together and looked at how people think, how they analyze, how they learn. And they put all their thoughts into this book.

[03:46] And what’s nice about the book is it’s not that long. They kind of boiled it down. They kept it short. So it’s about 3–3.5 hours of audio, which is less than half of a normal book length. And so today, we’re going to be looking at these five elements. And so let’s dive into this. The first element of effective thinking is to understand deeply. The idea here is not to face complex issues head on but to break them into component parts and to understand those more simple underlying ideas deeply.

[04:17] So the examples that were given in the book are you have to understand basic math before you can start working with Algebra. You have to understand Algebra before calculus. If you try to teach someone calculus and they didn’t have an understanding of basic addition and subtraction and those underlying simple concepts, they’re probably not going to be able to grasp it.

[04:36] What the authors talked about is about breaking things down that no major scientists look at complex problems and try to attack them head on. They actually look for simpler versions of the problem. Well this can help us think more effectively. We also want to relate this back to startups and to launching a product and software and that kind of stuff.

[04:54] And so the idea here and how I see it, how it relates to building an app is breaking your app down into the minimum features you need. So you don’t try to attack the whole app at once. But you launch one piece. You let people in. you build that minimum viable thing that people can use to get value out of it and you expand based on what you learn from them.

[05:11] So you don’t attack the whole complicated at once, you start small. The other thing I thought of is like with the marketing plan. A lot of people I see get overwhelmed. They say how do I mark up my app and how do I drive traffic. Well that’s a huge question. It’s very complex and it’s very big. But if you break that down and you instead just put together a bulleted list like a Google doc spreadsheet and you attack these things. You prioritize them. You attack them one at a time. You’ve broken them down in their components ideas and it’s a lot easier to get started and not be overwhelmed by the complexity of the issues you’re facing.

[05:42] Mike: I think one of the other side of this that, I don’t know if the authors went into this or not, but when you start breaking down a complex problem into much smaller chunks then it makes it easier for you to tackle those in terms of your motivation. Cause if you start looking at this blank slate that you got some problems and there’s this blank slate that says there’s all this different things that you can do. You really don’t have any good place to start.

[06:06] So it can be very very overwhelming and you just back off from it and you procrastinate or you don’t do it or you do all the things that are associated, or related to your business that don’t necessarily move you forward with solving those problems. You know in some ways it’s a morale issue but in some ways its productivity as well.

[06:23] But if you understand the complexity of the problem and you are able to break it down and simplify it into much smaller chunks, then that helps you to bypass those I call them mental issues and actually move forward on it.

[06:34] Rob: Yeah. And that’s actually a good led into the second part of understanding deeply and that’s to choose small wins. So this relates to taking a complex problem and breaking it down into simple underlying ideas, but more specifically choosing small wins. What does that look like? The example the authors gave was the moon landing. That John F. Kennedy said we’re going to land on the moon in this decade.

[06:56] They didn’t put two guys in a spaceship and shoot them into space and try to get them to land in the moon. The first thing they did was shoot a rocket, first they just try to get out of the orbit. And they shoot further up and then they actually shoot something right on the moon surface. It was like going super fast like 5,000 miles an hour or something when it hit. It might even have been faster. And it’s just boom. Hit the moon really hard.

[07:16] But they knew that each of those was an incremental step. They choose those small wins. Very incremental. And it took like 12 or 15 flights before they actually got up there. You know got someone safely landed on the moon. It’s a very complex problem that these brilliant scientists who were doing something no one had ever done in history that they broke down into small wins.

[07:38] To put this in context of launching an app, building software, doing a startup, think about instead of tackling something large and wanting to build long term recurring revenue with the big SAS app, think of building a small win. Like an add-on or WordPress plug-in or a Drupal plug-in. A single feature app, mobile app. Something small that you can launch and learn how to market.

[08:02] You know you and I have even talked way back about being an affiliate marketer to learn the ropes before you build your own products. Because being an affiliate marketer, you can learn. you’ll have a small wins doing that. You can learn the marketing side before you have to dive in head first and attack what is a really complex problem. Which is trying to build something people want, launch that, market it, support it. Just handle all those elements at once.

[08:25] If you break it down and you get some small wins along the way, you’ll just have so much more confidence in your ability to execute as you move forward. So the second element of effective thinking is to make mistakes. We’ve talked a lot about how failure is a stop along your road to success. And the authors basically say the same thing in the book.

[08:43] They say the mistakes are critical part of learning. That effective failure is a critical part. You must learn from your failures. So when you fail, you look back. You asked how you can improve the next outcome. I think what we’ve said on this podcast a lot is that there’s no replacement for real world experience. You can listen to us. You can listen to Mike and I talk. You can read all the blogs that you want.

[09:04] But until you actually launch an app and you start to fail, that’s the only time that you’re going to know a tiny percentage of what it takes to actually do it. And so I like something the authors pointed out in this book. They said think that for any large task you’re going to accomplish, that you’re going to have nine failures and then one success. So that when you do fail that first time when you’re trying to do it that you’re 10% of the way there.

[09:26] And that’s a really good way to manage your expectations so that you don’t crash and burn. We talked a lot about motivation and how you need to maintain that motivation and not get disappointed when you launch your first app and it doesn’t work or when you blow $1500 on ad words and it doesn’t work and all the other stuff. We’ve talked about what you and I have done. And thinking long term, playing long ball and thinking “wow, it’s going to takes me nine failures.” I actually think it’s a pretty good rule of thumb.

[09:54] Mike: I think though an important piece of thinking that if you fail the first time, you’re 10% of the way there. The thing to keep in mind is that when you get to that success it takes you exponentially further forward than those failures do. Those failures do move you forward but they don’t necessarily give you that step function increase that the success will. But once you hit that success, it’s going to count for a lot more than those failures. And it will move you forward and it’s very motivational to be able to do that.

[10:21] Rob: Yeah. That’s a good point. I agree with you. That failures are more likely incremental whereas a big success can be a step function that gets you up there. So the second part of making mistakes is to think about iterating on failure to fill in your gaps. So basically fix what’s broken and then move on and fail again. The examples they gave were things like Hemmingway. He rewrote the last page of Farewell to Arms 39 times.

[10:49] I was thinking about this and how this relates to things I’d been doing for the past decade. I started looking back to the features and tweaks and bugs that we’ve been working on with Drip over the past several months. And I think we’ve closed like 80 different features, tweaks or bugs even in the past couple of months. And that’s total iteration.

[11:07] A bunch of these were things that we came up. A bunch of these were things that early access customers have come up with. And that’s it. I mean as good as the product was when we launch it or when we start letting people use it, there’s just so much iteration that’s required.

[11:22] Mike: Yeah. I totally agree. I mean even with AuditShark I’ve had to back paddle in a bunch different cases, where like I went down this path and things were working fine. But then you start adding, try to scale it up a little bit and try to use it beyond what it was initially envisioned for and then things just fall apart. And then there’s been cases where we just have to go back and just completely rewrite giant sections of code because it wasn’t going to work.

[11:46] And of course that puts you behind, but at the same time you’ve made those missteps. And you know figuring out what those missteps are allows you to go in the right direction that will take you monumentally further.

[11:59] Rob: Yeah. As I was listening to this book I thought of what you should ask yourself is what’s the minimum thing I could build to get you out there, and then ask yourself the question, why does this suck and how can I improve it. So I’ve coined this thing “Rob’s, why does this suck test”. And I’ve started actually asking myself that as I’ve been using a couple of apps that I’m working on.

[12:16] And it’s really helpful to put it in terms of it’s just a very blunt questions to ask. And it’s helpful to put in terms of like “what’s the biggest thing that we can improve now to make this more useful to the people who need it, to make it provide more value to them?” The third element of effective thinking is to raise questions. The authors say never act like you know more than you do.

[12:39] If you’re in doubt say that you’re in doubt and asked someone who knows. Doubt is actually a sign of strength rather than weakness contrary to what society says. When we watched election debates, anyone who has any doubt or anyone who shows any signs of changing their mind or anything like that, it seemed to be some big flaw. What they’re actually saying is being able to doubt your beliefs and being able to take other people’s thoughts and opinions truly to take them into account and allow them to change you is actually a sign of someone who is active learner and someone who is going to move things forward instead of keeping things stagnant like they have been for so long.

[13:19] Mike: One of the things that this reminds me of is the fact that there’s a lot of entrepreneurs out there who have sort of a control freak aspects to everything about their product. They have to know everything that’s going on. They have to either write the code or do all the marketing and everything else. And it just makes me sit there and think you don’t necessarily need to know all that stuff.

[13:38] And having doubt about different things and not fully understanding all the inner workings of everything is not necessarily a bad thing. It also reminds me of the story that Joel Spolsky has on his blog about him pitching VBA for excel to Bill Gates. And he had this giant specs that he’d written over the course of weeks or months or whatever. And he went in there and Bill Gates basically shredded it.

[14:01] I mean he just ripped apart from beginning to end, walked through it and then at the end of it he’s like how do we know all this stuff is going to work with all the dates. And because Joel had put so much time and effort into the spec and understood it thoroughly, he was able to answer that question and say “well, there is one case where there is going to be a problem but I think we can work around that.”

[14:20] And he had a pretty good answer for that. In that case, he knew all the itty-bitty details about what he was doing. But he didn’t necessarily need to know for example how VBA was going to fit into Word or any other applications that Microsoft was shipping. And he didn’t need to. But when Bill Gates was looking at it from his perspective, he is the person in charge. He’s the one who’s trying to figure out whether Joel knows enough about what he’s doing to be able to trust him to make the right decision.

[14:49] And in that particular case, Joel showed yes I know exactly what I’m talking about because I’ve spent the time and effort into this. I’m neck deep in it. And even though Bill Gates didn’t know it, he was able to see that Joel did and was able to look at that and say, “Ah, I can trust him to make the right decisions. I can back off from this. I can focus my attention on other people cause I can trust him to make the right decisions.”

[15:08] Rob: The second part of raising question is to be aware of the source of your beliefs. And the authors talked a lot about our built-in biases. And how by looking at what you belief and why you belief that, you have such a better method for identifying those biases and figuring out, it’s kind of know yourself type thing. Cause once you know yourself you’re able to much better manage what you do and how you do it.

[15:35] I started thinking of a few questions, different beliefs that people in our industry probably have. So think about these questions for yourself. Like who told you that happiness depends on working for 40 years and then retiring. Who taught us is raising funding or starting a multi-million dollar company. Can you be successful if you’re a single founder with no employees making several hundred thousands dollars a year?

[15:56] If your answer is yes or no, ask yourself who told you that. Why do you believe that? What are the underlying assumptions that you’re making to answer all those questions. Here’s another actually I thought of cause it seems to be, it’s a strangely polarizing thing. But does SEO always work? Is it a big scam? Why do you believe that? Why do you belief what you belief about SEO?

[16:16] Cause I’ve mentioned it to some people. And it’s funny cause there’s like a visceral reaction thinking that SEO only cause of black hat stuff. And I’m just curious where you heard that. Being aware of that and raising these questions in yourself when you have such a positive or such a negative reaction to something is just one more way to manage your direction and to wind up in a place where you aren’t sitting there unhappy because you follow these beliefs that someone else taught you that you never questioned.

[16:45] And I think this actually relates back to building apps as well and building software. Because if you’re following this path, and whether its the lean startup methodology or whether you’re listening to Mike and I or whether you’re following any type of methodology, always think about why you believe that and who told it to you. And if their goals and the way they do things are in line with you. Or if it’s a venture capitalist are saying something but you want to be a single founder who’s bootstrapping, you’re goals are not in line. And so you probably don’t want to listen to their advice.

[17:15] Mike: You know Jason Cohen had a great section on one of his talks from the business software a couple of years ago that kind of segmented different, I’ll say leaders in the entrepreneur community against one another. Basically saying that 37 Signals has their view. Fog Creek Software has a different view. If you talked to like Angels or VC they have a slightly different view as well. And they can give you advice that’s just diametrically opposed from each other. But it doesn’t necessarily mean that any of them are wrong.

[17:43] What’s happening is the advice that they’re giving you is correct for their situation and the way that they view the world. And as long as you understand that where that advice comes from is in some ways bias by the people who are giving that advice in figuring out whether or not your views lined up with theirs. It will help you figure out how much stock you should put in that person’s advice or whether it’s just not applicable to your situation at all.

[18:09] Rob: The fourth element of effective thinking is to follow the flow of ideas. The authors talked about looking backwards to see where ideas come from and looking forward to see where they’re headed. What I really loved about this is they talk about how ideas are almost always evolutionary rather than some big leap. They talked about Edison and how he invented the light bulb. And he just didn’t come up with that out of thin air.

[18:32] There were a bunch of other people working on it. There were people who tried other experiments. And then he tried how many hundreds or thousands of different experiment until he got it. If you think about the iPhone, you think about how that evolved from the Newton in what the late 80s and early 90s. Then they tried to build iPad internally. They built iPad prototypes in like 2003 that didn’t work. Then they come out with an iPod touch and then they add the phone to it and then they built an iPad. And then it’s just like on and on. These things are evolutionary.

[19:00] And so the thought was don’t try to go out there and build something that’s completely new. But think about building things that are extensions, variations, or applications of existing ideas. I think this is a really good exercise if you’re trying to come up with ideas for startup is to follow this flow of ideas. So let me give you a few examples. I mentioned three things: extensions, variations and applications.

[19:25] An extension of an idea in the startup space could be a really small like an add-on to Freshbooks or SalesForce or Basecamp or QuickBooks, a WordPress plug-in, something that extends an existing piece. So it’s not some brand new fancy idea but it’s just something that adds value to an existing user base. A variation could be let’s say there’s QuickBooks out there that serves all small business. Well what about QuickBooks online for freelancers, for dog walkers, for plumbers and so on.

[19:54] And then in terms of taking something and applying it to a new niche or a new application take a random technology. You could take QR codes. You could take Near Field Communication or NFC. You could take mobile apps and you say how could this be applied to the problems that any niche has like freelancers, dog walkers or plumbers, etc.? And so, using this as a thought experiment and a brainstorming experiment, you can sit down with a pen and paper. And just think of all kinds of extensions, variations and applications, new applications of existing software, of existing technologies, and think of how they can be mixed and remixed to help just get your mind flowing in terms of thinking of new ideas.

[20:38] Obviously, you need to focus on how these solve a problem. Don’t just come up with random ideas and think that that’s going to be something that you can market. We have to come back to the problem that they solve and you need to validate that and stuff. But a lot of folks that we talked to have problems they get stuck in the idea phase. And this is one way to kind of break that loose is to follow that flow of ideas.

[20:58] Mike: One other thing that you can do to apply this to your own business is to take a look at your product, and try and figure out where it’s going and the different milestones that you need to hit to basically take it in that direction. Because as you are building up, if you’re building up a product portfolio or if you’re building up a single product to start competing with larger product, there’s certain milestones and things that are going to be necessary to have in place in order to make your product able to compete with those other products.

[21:26] So if you look at, as you just mentioned, if you’re going to take QuickBooks online and you’re going to create it for freelancers. Well what are you going to need to be able to do that? And you can kind of sketch that out. But if you have this long term vision of being able to compete with QuickBooks for small businesses, then you’re going to want to be able to tackle that freelancer niche, tackle the plumber’s niche, dog walker.

[21:49] And try and figure out how many of those different things that you can kind of hop to and what sorts of features are going to overlap with all of those. Because chances are, really good that there’s a lot of those things where the functions of the software are very very similar for all those different niches. But then you take those and you just simply morph the marketing collateral a little bit in order to reach those people.

[22:14] You do the SEO that needs to be done. And eventually you get to a point where you’ve done enough work on the product itself, such that it solves all of those problems. But you just need to be able to present them to the different groups of people in ways that make sense to them.

[22:26] Rob: And the fifth element of effective thinking is to master change. The authors say that you basically need to master the first four elements that we’ve already discussed, and actually implement them in your life in order to change how you think and learn. And so, they go into a long discussion about not being afraid to change. Again coming back to the politician example, they talked about how if a politician changes their vote over the course of 20 years or changes their stance on something; it’s view as this big negative thing.

[22:57] But they’re saying in order to be an effective thinker that you have to be open to that. That you should follow changing opinions and passions. That you need to let old ideas crumble fast especially in technology in our space. And you need to be willing to change in the phase of compelling evidence. They give an example of Einstein spending months of work on a single theory. And he received like a letter from another professor somewhere who had said I just proved why your approach can’t possibly prove this theory. There’s no way to do it.

[23:31] And Einstein basically just took all the months of work and he tossed them and he took a whole new approach to it. He actually solved it in a manner of days. But he was wiling to not sit there and question and say that guy is wrong or all this months of work is kind of the sunk cost fallacy, right. All of this is leading toward something. He was able to be wiling to change in the face of that compelling evidence that a professor had sent him.

[23:55] Relating it back to software and startups. There’s always going to be stuff that’s changing. It changes really fast. The technology changes fast, the approaches, how much we’re learning about things like even four or five years ago no one was talking about split testing in the startup space. No one was talking about email marketing. It’s just something that’s come up over the past couple of years.

[24:13] So if you still hold the old mindset of “Well, I don’t do split testing. Only info marketers do that. I don’t do email. Only spammers do that.” then you’re going to miss out. You need to let these ideas crumble fast, roll with the punches and basically keep up with the space or else you’re going to get left behind.

[24:29] Mike: I don’t think it’s necessarily all about letting some of the old ideas crumble quickly. It’s more about being able to do things that are uncomfortable to you, because as you said there is a certain amount of fondness that we have for the old way of doing things. So there’s certain comfortability that we have with doing things the way that we’re currently doing. And it’s a lot easier to point to somebody else’s work. And say well I spent 3, 4, 8 months of my life working out these theories. And I’m fairly confident that they’re correct.

[24:59] So I’m not going to put any stock in your proof that you just sent or this little note that says that the way that I’m doing it is incorrect. I’m going to keep going down this path because I’m so ingrained in it. I know what I’m talking about. And if you’re willing to back off from that and be able to look at different points of view and pursue them down their logical course, then you will be a better thinker for it.

[25:20] As long as you’re not afraid to take those turns or back up a little bit and maybe give credibility to other people and say, “Hey, maybe I am doing the wrong thing or maybe I should be doing this other things.” Even though they’re uncomfortable, it will make you a better thinker.

[25:34] Rob: And the last element of this, your point no. 5, which is to master change. They talked a lot about how experts in any field are often performing a different task than the rest of us. So the example they gave was a pro tennis player. They said if you put someone on the court, who’s never played tennis. When the ball is hit to them, they’re basically looking at the ball and trying to watch it into the racket. That they can’t estimate where that ball is going to be.

[26:00] But that a professional tennis player that as soon as they go the ball go over the net, they can tell based on the spin, based on the velocity, based on the angle they actually know where it’s going to hit. And so they’re running to it right as it heads over the net. And I’ve actually talked to professional baseball players and college football players my brother used to play with.

[26:20] And they talked about the same thing about seeing as soon as the quarterback would release the ball, they know exactly in their head if they had to slow down or speed up. The best receivers and the best outfielders can see that. It’s not about actually watching it into your hands. It’s about knowing right away when its release based on the spin and everything where it’s going to be.

[26:38] And so they’re basically through expertise and repetition, they’re performing an entirely different task than the rest of us would be if we were doing that same task.  And so taking that and extending it in our world of startups and software. Like instead of memorizing facts, you need to understand something very deeply. You have to become a master in things.

[26:57] The more experience you have in any particular field or doing any particular task, then the more frameworks you can apply to it and the faster you can learn new concepts in that space. And so that’s where, you know, if you’re consuming on a superficial level a lot of educational stuff and you’re not actually doing anything then you’re not going to be able to become a master.

[27:16] And you’re never going to hit that level where as soon as the ball gets hit off you can see what your paid acquisition is going to do, or how your contact marketing is going to go, or the little tweaks you need to make to your SEO to make things work, or the costumer development you need to do in order to get people using your app. And so it’s all a learning process.

[27:35] But the idea here is to go deep and to actually understand things deeply so that you can become a master of at least a small element to it and then expand out from there. Because the superficial understanding will always leave you essentially watching the ball into your racket.

[27:49] Mike: This reminds me about a lot of the previous discussion that we had about whether you should become a generalist and learn a lot of things at kind of a shallow level, or whether you should learn several things at a very very deep level and essentially try to outperform all the other people who are kind of dabbling in that.

[28:08] And obviously, at the end of the discussion, we kind of came to the conclusion and talk about the fact that you are much better of going really far down and deep into certain topics. As oppose to trying to round out the things that you don’t necessarily a lot of experience at. So you invest the time and effort to become mediocre at it just like everyone else which really doesn’t buy you a lot.

[28:30] You’re much better off become an extreme expert in certain facets of your career as oppose to trying to shore up your weaknesses and deficiencies.

[28:42] Rob: Right. It’s like following your strength rather than shoring up your weaknesses.

[28:44] Mike: Yup. That’s exactly right.

[28:46] Rob: And this all comes back around. It comes back to simplifying and going for early wins, because if you have a huge problem to attack, you can’t possibly become a master in that. It will take you years to do it. But if you pick a single tiny thing like I’m just going to learn online marketing, or I’m just going to learn customer development, or I’m just going to learn how to code right now. You’ve broken it down into a small enough thing that you can choose some small wins.

[29:09] You can actually become kind of an expert at that. And you can go deep so you can then move on to that next thing and add it to your tool belt. So there’s this balance here, right. You don’t want to become the jack of all trades. You don’t want to have 20 things you’re trying to do. But you may need as a founder you may need four or five really deep core skills that you have to be an expert at, and then you can outsource the rest.

[29:32] So to recap. The five elements of effective thinking are: 1. To understand deeply; 2. To make mistakes; 3. To raise questions; 4. To follow the flow of ideas; and 5. To master change.

[29:47] Music

[29:49] Rob: If you have question for us, call our voice mail number at 888-801-9690 or you email us at question questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for startups or by 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

• Zapier
• 3D Virtual Tabletop
• The Ultimate Sales Machine by Chet Holmes
• MailChimp
• Constant Contact
• Drip
• HitTail
• ThemeForest
• MicroConf Europe
• Clickity.io
• SendGrid

Transcript

[00:00] Rob: In this episode of Startups for the Rest of Us, Mike and I are going to be talking about fighting with gorillas, the cost of writing articles, selling to offline customers, and answering more listener’s question. This is Startups for the Rest of Us: Episode 140.

[00:13] Music

[00:21]Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob.

[00:29] Mike: And I’m Mike.

[00:30] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Mike?

[00:36] Mike: I am recording totally in the dark, quite literally in the dark. There is no light on. So our dishwasher went out last week, so I had to rip it out and have the guys take it away. Unfortunately, whoever owned the house before us wired the lights from my office in the basement to the dishwasher upstairs.

[00:52] Rob: That’s not good. So they’re out right now, until you replace it?

[00:55] Mike: Yeah. And it’s funny cause all my other outlets and stuff work. It’s just the lights that don’t work right now. Having fun in the dark.

[01:01] Rob: Yes. It sounds like it. I have mentioned a couple of episodes ago I launched my startup VA course, the course on how to hire a VA for your startup. And I finally have a domain name. Its startupvacourse.com and that just go to my Udemy landing page. So, if folks are interested in that, getting more details that I’ve recorded an hour video, packed all the information all the questions that I’ve ever received on this topic into one hour video.

[01:27] It have audio transcript, a job description, sample VA training Screencast, the whole deal. So it’s all DRM free. It’s downloadable. And it’s typically $99 but if you’re a podcast listener and you want to partake, go to startupvacourse.com, and use coupon code podcast and you’d get $20 off. And I’ll leave that coupon code off just probably for the next week and then shut it down.

[01:48] But it feels really good to finally launch that. I mention I had a goal of launching three in 2013. I paired that down since Drip still hasn’t launched and I plan to launch before MicroConf. I’m thinking that I’d probably try to do one more video course towards the end of the year once Drip is out.

[02:05] Mike: Cool. I’ve got AuditShark up to 350 security checkpoints now. So, we’re working some issues we discovered with our signup process. But once those are straighten out which I’m hoping will only be a couple more days, we’ll start rolling out to new costumers. My goal is to put anywhere between one or four customers on each week for the foreseeable future until I feel like all the signup issues and things like that are kind of worked out and go from there.

[02:32] Rob: Wow. Congratulations man. So you’re in early access then. You’re really diving in and getting folks using it.

[02:37] Mike: Yup. Finally at that point.

[02:39] Rob: That feels good. Yeah. Is this Windows or Linux?

[02:42] Mike: All of the security points so far are for Windows, but the system does work for Linux. So if you had Linux machine and you knew what you wanted to run on those, I would say it’s almost in some ways like you’re running cron jobs from remote servers and then pulling back that data to a central location. You know it would be done through SSH from my servers into somebody else’s. It is cross-platform. It’s just that in order to access Linux machine, it’s only through SSH right now. I don’t have a native agent.

[03:09] Rob: Got it. Speaking of early access, Drip now has four early access customers, paying customers using the system. There are five with log-ins but only four have actually installed it. Every person we get on board we learned more and more. And right now, Derek, the developer is just cranking through like mad, cranking through all the feature editions. There are almost no bugs, right. Everything is working. We tested thoroughly. Derek’s code is solid.

[03:36] But it’s just all this little tweaks that you need to get one more thing. You know encourage someone to push this button to activate everything or have an arrow that goes here, a better help video or a better this or a better that. So that’s what we’re doing. It’s really honing, trying to, like you trying to get one and four new people using it a week now. It’s a good learning experience and I look forward to kind of getting it out into more people’s hands.

[03:59] Mike: Yeah. It’s funny that as you’re adding people in, you’re getting in all this feature requests. The person that I hired to build all these control points for me, as he was going through and building them, he would ask me questions about how can you do this or how can you do that. He’s picked it up really really well. But there are some things that he was trying to do that he just couldn’t do it and we have to add features in order to allow him to do those things easily.

[04:23] So that’s been something that’s been holding things up a little bit. We’ve deployed some new code update for him. He’s just downloaded him and run through and implemented with the new set of instructions that I gave him. And so far those things seemed to be working well. But you’re right. There’s all this additional feature requests that come in as you’re putting somebody into the system and having them to use different parts of the products and exercise it and say well, this doesn’t work or – it would be nice if this did something slightly different because the way it does, it now just doesn’t work for me.

[04:51] Rob: That’s where it’s important to have good early access customers and people who you trust their opinion and that you can actually either tell them, you know what, we’re not going to build that and have them not throw a fit or realize that a lot of the suggestions that you get if you do have good early access people you are going to going want to build.

[05:06] And so, I think probably 80% to 90% of what’s been requested of us, we build. And it’s because all of my people who are in there right now are other founders and they all have good products. They have good product knowledge, and they aren’t just asking for kind of ridiculous. You know, you can get some people in there who just want everything custom and everything to totally apply to them. That’s obviously a danger when you only have a handful of customers using it because you don’t know really what to build yet.

[05:28] I wanted to update folks on my inbox zero trials. I did get past that road block. I think I had 29 emails when I came back to it. And with the help of suggestion from Rafael Durda who’s a long time academy member and MicroConf attendee. He pointed me to Zapier and I can’t believe I didn’t think of it. But zapier.com it’s basically if this then that for business. So you can set up this recipe to interact between different apps.

[05:59] So with just an handful of clicks, no code, I was able to take any new thread in Gmail that I label with a certain label and it automatically goes into my to my Trello to-do list, so really cool. So now I’m able to do that automatically as needed. And at this point, I still am. I think I’m about a month into inbox zero. And as of  now, I literally have zero emails in my inbox and I’d been able to keep that up really well. So, thanks to Rafael for that suggestion.

[06:26] And the other thing I  wanted to mention is that same week Wade from Zapier. He is a co-founder. He emailed me. And he said they’re in need of dot net contractor or two to do a bunch of integration like exchange and Dynamics and BizTalk. So I know there’s a lot of dot net folks listening to the podcast. If you’re interested in doing some contract work for Zapier, they’re a funded startup and they definitely have money to spend if you want to dive in some SDK’s. You can just email at wade@zapier.com and let him know that Mike and I sent you.

[06:57] Mike: One of our other listeners named Tommy wrote in. Remember when I was talking about how I had some signs up around my office that says focus on them.

[07:03] Rob: Yup.

[07:04] Mike: There’s a web app that he pointed me to that was developed by a friend of his called FocusBell, which you go to this site and you can just plug in a number and it will ring a bell after that number of minutes. It’s very similar to something you might find as iPhone app or something like. But you can use it as a web app and it will just ding in the background of your machine whenever that time expires.

[07:25] Rob: How cool. So instead of needing a sign, you just get a web app. Awesome. So I saw on Facebook you’re learning to fly.

[07:31] Mike: Yes. I went to my first day of flight school today.

[07:33] Rob: How cool. Have you been thinking about it for a while?

[07:35] Mike: I’ve actually been thinking about it for, I don’t know, probably 10-12 years at this point. One of my instructors in college was a pilot. And he had like a timeshare for a plane near the college. And he took a couple of students here and there but I never got a chance to actually go with him. It’s really cheap to get your pilot license up in upstate New York.

[07:55] So after I moved away, I was like I don’t really have time and just various things came up. And my wife remembered from years and years ago that I had always kind of wanted to do some flying. So, for Father’s Day, she bought me a groupon to go to a flight school for a day. So I went there today and had my first flight. They let me take off and everything and it was a lot of fun.

[08:16] Rob: Very cool man. Congratulations on getting that started.

[08:19] Music

[08:21] Mike: So, today we’re going to be answering a bunch of listener’s question. The first one we’re going to answer is from Brendon Duncan. And you might remember Brendon. We talked about him a little bit on a previous podcast. He had that application that it was called 3D Virtual Tabletop. That was basically for Dungeons and Dragons player where it was on your iPad or your Android tablet and it would show a map and you can zoom in and import different images and things like that.

[08:46] He wrote back in to us for some advice and he said he’s released their product in its early stages. So, it’s really more of a demo than a proper product. And he’d like to do some more things with it. But it’s going to cost him some time and money in order to upgrade some of the software tools. And it’s going to cost him really thousand of dollars that he’d really rather not spend if he can help it. He can work around it if he needs to but it’s going to cost him a lot of time to do that. So, right now, he doesn’t havea lot of direct competition in the mobile space, but he knows that some of the bigger players in the industry are going to be heading their soon. So he’s really trying to get the scoop on them before they have a presence there.

[09:19] So what he’s thinking is doing some sort of a crowd funding and he also thinks that that would be some great publicity. And he says my issue is at this stage I don’t know how much each customer is going to cost me for hosting the back end, because he’d like to kind of turn it into a SAS app. And he says I’d like to experiment with a few different ways and or levels to charge them to find out what works. A successful crowd funding campaign could be a disaster if I have thousands of new costumers that I’m making a loss on. On the other hand, if I mention the price in the crowd funding campaign and it’s too high, it will probably fail. I have enough users at the moment to experiment with. But if I just stick with them and don’t try to go big now, I worry about my competitor gaining market leadership in the mobile space like they have in the PC space right now. What sort of things should I consider when I’m making this decision?

[09:58] Rob: My initial thought  is that I really like the idea of crowd finding since it is B2C and since it is for gamers, role playing gamers in particular those things tend to do really well on crowd funding sites especially Kickstarter. I’m actually, I’m a closet Kickstarterer. I fund a lot of things. I fund 10 or 12 things in the last six months. I don’t know. I really like what’s going on in that site. So. I’m familiar with what’s there and this would fit in well.

[10:25] The question mark in my head with this question is he says my issue is  I don’t know much each customer is going to cost me for hosting, like hosting on the backend. I’m assuming he’s going to build a SAS portion of it. And in my mind like unless you have a super resource intensive app, something that does thing like not only just in real time but is like getting bombarded with incoming analytics data. Every time a page loads on a customer site you get a ping like HitTail does. Unless you have that the cost of hosting each user is almost negligible.

[10:58] So, I’ve read through is email that if you get any indication that it’s going to be anything more than just  create, read, update, delete SAS app where you’re putting stuff in and out of the database. I mean if you just tracking some character and tracking some movement and rendering some stuff, I don’t feel like this is going to be any type of extensive expense to host someone.

[11:17] Mike: Yeah. I did not get that sense from him. The only thing I can think of is that maybe he wants to be able to track all the different moves that somebody makes on a map. And I’m just completely speculating here, but he might want to be able to do it such that somebody can network several iPads together through his Cloud application. And then you could basically have like a game master managing all the things, moving all the things like moving the monsters in the PC around and then each of the character he’ll say make your move. You can move up to three spaces or five spaces or whatever. And then they moved and it updates on everybody’s iPad all at once.

[11:51] So that to me says that maybe  it’s a little bit more than I might think but those things aren’t going to be used at all time. There might be five or six people connected in a particular game at any given time and I don’t know what the subscription kind of look like. But I can’t imagine that is that resource intensive especially if you’re doing it like with the REST API or something like that, where you just don’t need to worry about maintaining state across all of these different things because it’s just held in the database.

[12:17] Rob: Right. So I think at this point, you and I don’t have enough information to really comment on that piece. And that’s kind of a critical piece to this because my inclination based on what he said is that, yes, he should do crowd funding. And that its not going to high per user cost to host them. Now at the same time, I don’t think you should give people a lifetime access when they do the Kickstarter. It should probably be a one-year subscription at a discounted rate.

[12:40] You know, Brendon, if you’re doubting how much this is going to cost, I would find a web developer and explain to them what you’re trying to do, and they should be able to give you an idea of like “that’s a piece of cake or wow you’re going to need 20 Amazon ec2 instances   to handle that.” And that will at least get you one step closer to knowing how much you should try to charge for the different Kickstarter levels.

[12:59] I also wouldn’t be concerned. You know, you say on the other hand, if you mention a price  in a crowd funding campaign and it’s too high, it will probably fail.  Well, then it fails. It’s a crowd funding campaign. There’s no real downside to doing that. I mean it’s a bummer if it fails but if you need a certain amount of money for people to use your app and to pay for you app for a year then you need that much money. Don’t undersell yourself and don’t sell a bunch of lifetime membership or even annual memberships way under market and then get six months end and not have the funds to do the hosting.

[13:32] So I would definitely be careful there and I would not be afraid to charge what you’re worth. You know what I’m saying. Like software developers in general tend to want to under price their stuff cause they don’t feel as worth as much as it really is. And so that’s just my sentiment based on the five paragraphs you have here. But I think it’d be a great Kickstarter campaign. I’d probably fund it myself even though I’m not playing D&D these days. I don’t see a real red flag or a reason not to do that. You see some of these RPG’s and other related things getting way overfunded and I think you have the potential to do that.

[14:06] Mike: Something else that jumps to mind is that if seems like if you’re building the infrastructure to actually do some of this stuff, you could probably build either an API or something along those lines kind of in the front end of it. And then use that API to build that prototypes for customers. And by prototype, I really mean something that emulates what customer behavior would be. And then essentially what you’re building is a piece of software that’s going to sit out there, and do some load testing on your system to make sure that you know how much its going to cost you and you know how much of a load it can handle.

[14:41] So you’re basically just building a simulator that helps you gauge that type of activity, what it does, how much you should charge for it, etc. I don’t think that’s uncalled for. The question I have in my mind is kind of what order you do that in, because obviously you don’t want to spend a lot of time and effort and money doing that upfront. It seems like you’re in this catch 22 where you need the money in order to be able to do that stuff and that’s where the crowd funding campaign comes in. But until you’ve done the prototype you don’t know how much to ask for in the crowd funding. So maybe you take the risk and you buy the tools and then you do the crowd funding campaign. I guess that piece is a little tricky.

[15:16] Rob: And I do think he has an advantage cause he’d already released what he says is a tech demo but he sold a thousand copies at 99¢. So he does have a user based. Maybe you could cobble together a test over a weekend to try to get a vague idea even if you get within 50% of what the load would be, that would give you a better idea. The tech demo is also really cool because if you do Kickstarter, you can put together a video demo pretty easily. You can point people to download the existing apps. They can see you for real. It builds more confidence. I mean you are a step ahead of 80% of the kickstarters that I see because you actually have a working app that does something. It’s not just kind of some diagrams and drawing at this point.

[15:55] Mike: So, Brendon, thanks for the question. I hope that helps. Our next question comes from Greg. He says, “Hi, Mike and Rob. I’m a huge fan of you guys. I’ve been listening for quite a while now. I’m getting close to launching my SAS app with a partner. We’re trying to line up some writers for long tail article generation. How much should I be expecting to pay per article for some decent but not great writing around the 500 word mark? Thanks for your time. Keep up the awesome work. Greg”

[16:16] Rob: Well this is a pretty subjective question for sure. You said decent but not great writing. I mean I know people who for 500 words who pay $50 or a $100 but I would call that exceptional writing. It’s a viral content. And then on the super low end, you can get articles for $3 to $5 but they’re pretty bad. Cobbled together I’ll say maybe by a non-native speaker. So I think the sweet spot what you’re probably looking at is between $10 and $20 for 500 words article. And yes, I know you can get them for $7 or $8. You may be able to find them there.

[16:53] But it’s just all that balance of how many people can you find that can generate enough content in your timeframe with enough quality, the quality that you don’t have to go through and edit it. You want to make sure that you’re not spending a bunch of time. If you pay $5 but you have to edit all the articles then you just wasted time. I would rather pay $15 and not have to edit a single one.

[17:12] Mike: One of the things I would do is because going through and reading this can be somewhat time consuming, hire a VA who is a native English speaker and have them vet the article. So send the same articles to like three or four different writers and have them put the articles together. And then have your VA go through and read them, and kind of basically have the VA judge them and kind of figure out which one of those three or four writer is the best writer and then continue to use that, and established essentially a relationship with those writers so that you can leverage them going forward.

[17:44] Otherwise, if you go to a website where they’re basically just hiring all these different writers and you don’t necessarily get the same one every time, then you can run into issues where one time you get a fantastic article for $12 or $13 and then the next time its complete garbage and you have to have it rewritten. By establishing those relationships, you help smooth out those fluctuations from one request to the next. So Greg, I hope that helps.

[18:06] Our next question is from Rick. And he says “Hi, Rob and Mike. Avid listener of the show from London and I think you provide tremendous value to the listeners. Keep it up. I’ve had a modest exit from a brick and mortar turned internet play three years. Now, I’m on to the next project full time which will be a SAS play to a specific niche and I expect the market in play to be 90% high touch offline. I have two questions. First is what tactics would you suggest in contacting and selling the SAS product to offline clients?  And the second question is, in terms of pricing on value, the ongoing cost to me will be minimal but the value provided is high to the client. When competition enters the market they may use penetration pricing. How would you suggest addressing this so my clients wouldn’t switch?  Thanks a lot. Rick.”

[18:44] Rob: The first thing I would do is read The Ultimate Sales Machine by Chet Holmes, and he covers a bunch of offline marketing techniques that I would use almost to the letter if I were to go with offline marketing. It’s going to be postcards, direct mail and some direct email and some cold calling. Those are probably the three or four that I would use. But I would do them in a sequence like Chet Holmes describes in The Ultimate Sales Machine. And it involves finding a list of your dream customers, putting them together, and targeting them over time with essentially a campaign and not just doing this just one off stuff that most people do.

[19:20] The second question was regarding pricing on value. He said the ongoing cost is minimal. Well, the ongoing cost to almost every SAS app is minimal. I mean it can be a $1 per user or less. So that’s very common. You’re concern about competition entering the marketing so this penetration pricing. You know, I wouldn’t even worry about it now. I wouldn’t address it at this point. I think you need to get in. When competition enters, you can worry about it at that point.

[19:43] But if you’re truly going into a vertical niche and you have a SAS app, if you get a head start with people and you become the brand name in that vertical, and you get people using your app and they’re happy with it, most people don’t want to switch SAS apps. I have a bunch of SAS app. I mean I probably spend a couple of thousands a month on across all the businesses in terms of all the SAS apps that we use. I have never once gone out and change because someone dropped the price, a competitor have a lower price.

[20:13] Because the switching cost it’s too painful. It’s too expensive, right. Because I value my time, I value my people’s time. And it’s not just two hours of signing up for another app. It’s relearning that. It’s knowing that it probably has bugs. It’s why is it so much cheaper. The support probably sucks. The app probably isn’t as good, all these things.  So I would be much much less concerned about a competitor coming in and trying to go cheaper at this point. Because by the time that happens, you’re going to be so far ahead of them. And hopefully have tens of thousands of dollars a month in revenue that you’re going to know the space much better than them and you’re going to just be a better marketer. So that’s the attack I would take.

[20:52] Mike: Yeah. What he said. There’s really nothing I can add to that so I’m just not even going to bother. So, Rick, I hope that helps you out. Next one comes from Seth. And he says “First, I wanted to thank you for your inspiration, your resources and the motivation you give to micropreneur community. I had a question about dealing with guilt. Like everyone I’m always surfing the web looking for ideas and getting inspired by things I found. One of the things that I’m always feeling guilty about is copying an idea. I tried to rationalize that I could do I better. But I guess I have a fear of being labeled a knockoff artist. At this point, I’m feeling I shouldn’t surf the web anymore for fear of finding a business idea that I’m thinking of that someone has already done. Am I alone here? Thanks. Seth.”

[21:30] Seth, I don’t always, I wouldn’t worry about it. I mean the fact of the matter is that almost virtually every single idea that you come up with, somebody else will have had it at some point. I can think of any number of ideas that I’ve had in the past where either I didn’t pursue them or I half-heartedly pursued them and then somebody else comes out with something that was either just as good or maybe quite as good but they did a much better job marketing it than I did.

[21:54] So I’ll be honest. I really wouldn’t worry about feeling guilty about copying somebody else’s idea. What I would be concerned about is if you look at somebody’s idea and you literally mimic it. You know complete from copying their entire website, their design, their layout, their marketing plan and then feature for feature their entire product. That’s what I’d probably be a little bit leery of doing.

[22:14] But if you look at somebody’s idea and it looks like a good idea but they’re just not doing very good with the execution, and that could be the marketing execution or that could be product execution. If you feel like you can do better then you shouldn’t feel guilty about providing your customers with a better experience than somebody else’s. I mean that’s what you really need to focus on is: are you proving better value to the customers than this competitor.

[22:39] So what if you are have idea Seth? It doesn’t matter. What matter is: are you are providing value, are you providing good value? I think it really comes down to, are you plagiarizing their site. Are you stealing their intellectual property? And if you’re not doing those things, I don’t see any reason why you should feel guilty about it.

[22:55] Rob: Yeah. Guilt is an interesting way to put it. Because if you’re feeling guilty about it, it either means you’re too hard on yourself or you care a little bit too much about what other people think about you. Would you say that MailChimp copied Constant Contact because Constant Contact was the first email newsletter management system? And MailChimp when it started was very very similar. They didn’t even niche it down. They didn’t really had their unique thing of hey it’s a Mail Chimp and they were going after startups.

[23:22] But really they’re very similar and yet none of us say MailChimps just knocked off all the other email providers, Aweber and Constant Contact that came before them. I agree with Mike. If you take someone’s design or if you a screen by screen knock off that sucks. But if you offer a similar value proposition and either you out market them or your app is better or you just have some unique variation of it, whether that is a niche or just being somehow different, then I don’t see that as being a big deal.

[23:49] Mike: So Seth, we hope that helps you get through that guilt and actually move forward to taking one of your ideas to the next level. Our next question is from Steph. And he says, “Hi, guys. Love the show. I’m taking notes like fiend and I’m doing my best to execute daily on your sage advice. I’m a graphic designer, illustrator and storyteller. And I’d love to know your take on the most compelling arguments to be made for having great design and branding in business. Many small companies don’t see the value in design and choose to cut corners. What problems and pain points does great design solve? Clear communication, consistent messaging and enhance customer experience spring to mind. How many more design specific considerations can add value to a company’s bottom-line. Thanks so much guys. Steph”

[24:27] So Steph, here are my thoughts on it. As a small business great design and branding does very very little for you. And the reason I think that, and you kind of alluded to this in your question, is that a lot of small businesses don’t see the value in it. And I personally don’t see it either. You know you have to focus on what problems you’re solving for the customers. And that’s really to kind of get your foot in the door with the costumers.

[24:49] You’re trying to establish enough of a customer based to just get you through those critical time periods, where you need to figure out whether or not your ideas is going to fly and whether or not you’re going to be able to turn it into a real business. And if you can’t then it could be a couple of different problems. One of which could be okay that niche is just way too small to support a big business.

[25:10] At which point, branding and brand recognition really doesn’t make a difference. Because the people looking for that solution they don’t care what it looks like as long as it works. As long it solves their problem. And it’s not like you’re going to have a lot of competitors in that particular space anyway. On the other side, when you get into a position where you’re starter to get larger costumers, you’re starting to establish yourself in an area.

[25:33] And you’re starting to grow the business to the point that you multiple employees or you’re getting millions, tens and millions of revenue, that’s the point in which branding and messaging starts to provide that extra value. Because then people they’ll see a flyer or they’re see an advertisement on a webpage and then two or three or four months later they’ll see a similar one and they’ll associate it with that company.

[25:55] But until you get to that point till you have a big enough foot print I’ll say it doesn’t really make a difference. And I think that’s probably why you’re seeing this from a lot of small businesses that they don’t care about their branding and messaging because they’re small enough that it actually doesn’t matter. At least that’s my opinion on it.

[26:10] Rob: Yeah. I think there are a couple of components here. There’s design of the product. There’s branding and then the third is messaging. I think messaging is critical. To me, that’s also the same as positioning. It’s if you look at the 10 headlines that I tested when I put up a Drip landing page, I was trying to hone the messaging. And that is figuring out what message resonates with people who are visiting this page. What message resonates with a customers that I want to reach and that I think are going to get the most value out of Drip.

[26:40] I think that is absolutely crucial and probably more important than the other two combined. I think for small startup launching design can be useful. I think it’s helpful when people hit a landing page that is gorgeous or hit a website that’s gorgeous, they instantly think these guys have more funding or these guys are legit or these guys know how to build a product. I bet it’s good. They give you the benefit of a doubt.

[27:01] Now you actually still have to build a good product that provides value to people. But it gives you that instant 3 second test of I kind of have confidence. It starts you up on the right foot that these guys are doing a good job if the design is good. With that said, I also see early stage founders getting caught up, especially first timers, spending months trying to figure out what logo to get. And they go on 99 designs and spend four weeks doing something.

[27:25] But I’ve said it before I don’t even do logos. I literally when I acquired HitTail I told the designer when he was redesigning the site, just pick a good font and put HitTail on the upper left. I literally don’t want to spend anytime thinking about it. I did the same with Drip. Both times the designers couldn’t stand it and they did some little tweak. They put a font and then put a little tail or a little drip of water or something to kind of make it a unique thing, and I actually really like those.

[27:48] But I spend zero time thinking about that. And so there is a balance here. You can go overboard especially if you’re just trying to get something out the door. If you’re in a small niche and its your first one and you’re trying to get it off the ground, you need to pay less attention to design than I think you might think you need to. So pay less attention to fancy logos and hardcore design and don’t blow ten grand on some amazing design and idea you just had.

[28:13] You need to vet it first using the $7 template from ThemeForest. And once you vetted that, maybe consider spending a couple of grand on a nice design. But get that affirmation first, the confirmation I should say, before you just start blowing a bunch of money on a great design. Now there is a caveat. If you’re in the design space then yes you need a great design. Cause designers are going to pick it apart. They’re not going to use crappy design, etc. etc.

[28:37] But the further away from the design space you go, the further away from the technical space you go, the less well designed or the less gorgeous your app needs to get traction. And the thing is once you do get traction, once you do have paying customers, once you have several thousands a month in revenue, it’s so much easier to go back and improve the design and then bring it to the next level. But if you spend all that time and money upfront, and the thing never takes off then you basically wasted a bunch of time.

[28:59] The third point that Steph brought up was branding. And if he means branding like having a logo and having a unified look across all your ads and your website and all that stuff, I’m not really a big proponent of that, especially not with bootstraps startups, especially not people operating in niches. If you can do it, great. But I would never spend a spare moment that I could be spending on actually getting costumers to pay me money. I would never spend that time worrying about having this big unified brand because frankly I never seen a brand to pay the bills. It’s always actually selling to costumer that does that.

[29:32] Mike: Yes. Just to point out the messaging component that Steph had pointed to was great design solves clear communication, consistent messaging and enhance customer experience, which are all things you really can’t measure anyway. But the clear communication, you can get around that with words. Consistent messaging, again words. You don’t need to have as Rob just said a great looking logo. You don’t even need to have a logo. You basically need to make sure that you’re addressing people’s pain point and telling them what the problem are that you solve. But you know as Rob also said, when you’re in the design space, you have to have good design because people aren’t going to trust you as a designer if you’re doing that.

[30:08] Rob: I don’t want someone to write in and say you’re saying design is completely underrated or that you don’t need to do it at all. Because I do get emails with links to landing pages and if they’re crap and people are running away from it or complaining or saying this look unprofessional then yes. You need to rise to a minimum bar that resonates with the people you’re trying to hit. But that minimum can be accomplished again by $7 on ThemeForest landing page rather than trying to cobble something yourself together or using KickOffLabs or LaunchRock.

[30:37] I mean any of these have good enough design to sell ticket to MicroConf Europe as an example, like we didn’t hire a designer to put together a landing page. We use a LaunchRock and just drew one up and put a nice image around it and that’s been good enough and we’ve gotten several hundred emails from that. So think about what’s good enough for your audience.

[30:56] Mike: So Steph, thanks for the question. Our final question comes from Andy at clickity.io. And he says, “I’d been listening to your podcast while driving work over the last few months. I think they’re great and very relevant to us. It’s incredible how apt they are sometimes. Both Drip and AuditShark had released teething problems and so did we. In fact, ours was worst. We pulled our new product completely as we realized they just wasn’t fully featured enough to be able to sell it and providing support might have been too hard.

[31:20] Now, we’re reconsidering our options. You always hear release early and I guess part of the reason for that is so that you can find out quickly how far you are off from having a fully featured product. It can turn out to be very demotivating. I have a few questions. We’re a bootstrap startup on full time jobs. We have a few costumers on our current products but not enough. As it’s a tool that can be used in many different situation, it’s difficult to market it and find costumers. Should we try and find vertical markets or perhaps accept that it’s never going to be the hundreds of costumers we need?

[31:47] Can you see any vertical niches for this product? We’d been on the market for six months. The other options we’d been considering is building something that complements our existing offering more rather than a separate products which our pulled product was. What if there’s new product idea would go up against a major player in the market. Should we fear patents that they might hold? We’re both developers so there’s a tendency to lets build more instead of lets market more. Any inspiration is great appreciated. Andy”

[32:11] Rob: So clickity.io the headlines says easy email delivery testing. And then the subtext says Clickity helps you test the most important part of your site/app outbound email. Protect your business from the embarrassment from a broken email system. I don’t know what this app does. I don’t know if this is SendGrid or if this is something different. So, I think the problem is exactly what Andy said it’s a tool that can be used in many different situations so it’s difficult to market it and find costumers.

[32:37] My advice would be find one of those situations. Pick one, pick the one that’s most dire, pick the one that has the largest audience, pick the one that has the largest audience that you can reach and that is willing to pay for this. And then no matter what your app can do, nobody cares. Just pick that problem and put all your marketing, all of your positioning, all of your branding, all of your messaging around that single problem and start there.

[33:02] And if you dive into that for three months and you run ads or you do SEO or you change your entire whole homepage to focus on that, you get costumer to comes and still nobody buys, then yes I would rethink maybe this whole idea isn’t going to fly. But at this point, this doesn’t show me what pain point this solves at all. And to be honest, I don’t exactly understand though. I haven’t click past the homepage. But I should have an idea on the homepage of the value proposition that you offer.

[33:26] And easy email delivery testing. It makes me think are you testing whether my emails can be delivered. So how does that work? If I’m using MailChimp it will test it or if only I have my SMB server. I mean there are a lot of details here that I think need to be focused on this landing page. And once that happens, I would probably air on the side of not building more cause Andy said they’re developers. They’re going to tend to lean that way. And so I would first look at trying to find an audience for this.

[33:55] Mike: So I thought the exact same thing as you. Is it SendGrid? Is it something else? And when I saw easy email delivery testing my first thought was maybe they’re testing how these emails come up in somebody’s browsers or how they come up in different email clients or something along those lines. And I started clicking around and just based on the homepage alone, I’d probably would just walk away and say I have no idea what this does and is not worth my time and investment if they can’t tell me on the homepage.

[34:23] With that said, I clicked over the API screen and the API screen says integrate emails into your unit test, which to me sounds like a great value proposition. That needs to be on the homepage. I mean that’s perfect. That’s exactly the type of problem that you want to pitch to people and say we do unit testing on emails. So when you send an email to somebody we’re able to go into this fake mailboxes and do all the testing to make sure that your emails are actually getting sent, that they’re showing up, that their right URLs are going into them, those URLs are clickable, etc.

[34:56] This API screen, that’s your tagline. Integrate emails into your unit test. That needs to be on the homepage. I would just take that and run with it. Cause it seems like to me and I’ve gone through this with AuditShark that’s one of the few things that I can’t unit test. I have no idea how to go through and unit test something like that. Could I build something? Sure. Am I going to? Probably not. And the reason I’m not going to is because it’s not worth my time and effort to do it.

[35:18] However, you apparently have a product that can do and I would harp on that and go to your customer base and market to the people who want to do unit testing for emails. None of this stuff is on that homepage. Even looking at the homepage now, after seeing that, it still doesn’t speak to me that it solves that particular problem. Rework your marketing strategy. That would be my advice.

[35:42] Rob: I’m really glad you found that. I haven’t seen it and I agree that’s a great value prop. I also think you should be way developer focused then. I think the headline Mike said could easily go on the homepage and it should say for developers all over this site. Because I didn’t realize that this was a technical tool for developer. Use the jargon that we all use so that people know that wow this is built by developers for developers. And don’t use that phrase cause it’s super cheesy.

[36:05] Even if it say easy email delivery testing for developers then it instantly clues me of like I’m a coder and how is this going to help. So unit test like that’s something that a non-developer is not going to really know what that means. So put that smack that on your homepage, so that when someone comes and they know they’re speaking directly to me and maybe even have that, your code snippet. Don’t be afraid to have code snippets on the homepage.

[36:28] You may want to go and look at stripe.com and see how they’re positioning themselves. Cause they’re basically a payment gateway for developers. And right on the homepage you see for developers. You see some code. You can change the language of the code and rerender it. There’s a lot of stuff there that shows you hat they know how to make things easy for developers. I agree. I think that’s got to be the first market that you hit.

[36:50] Mike: So Andy, I hope that helps. Definitely give us an update and let us know how you do. But I would recommend against folding. You definitely needed more of your marketing to tell people the problem that you’re solving for them.

[37:01] Music

[37:04] Mike: And if you have question for us, you can call it in to our voice mail number at 1-888-801-9690 or you can email it to us at question questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. You can subscribe to us 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

• Mike’s Altiris Training website
• Drip email marketing software for startups
• Trello
• Google Docs Surveys

Show Notes

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

Show Notes

Transcript

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

[00:03] Music

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

[00:19] Rob: And I’m Rob.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[06:53] Music

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[35:31] Music

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

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

Show Notes

• Tom Fakes – http://blog.craz8.com

Transcript

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

[00:09] Music

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

[00:25] Mike: And I’m Mike.

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

[00:31] Mike: I’m sweating in Texas.

[00:33] Rob: And it’s swampy.

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

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

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

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

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

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

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

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

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

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

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

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

[03:40] Music

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[10:17] Music

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[17:01] Rob: That’s not good.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[21:17] Mike: Yup.

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

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

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

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

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

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

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

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

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

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

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

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

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

[25:21] Mike: Yeah.

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

[25:23] Mike: He’s not one of them.

[25:24] Rob: Oh, he’s not. Okay.

[25:26] Mike: No. No.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[37:16] Mike: Cool.

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

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

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

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

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

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

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

[38:07] Music

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

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

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

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

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

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

Show Notes

Transcript

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

[00:04] Music

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

[00:19] Rob: And I’m Rob.

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

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

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

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

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

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

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

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

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

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

[3:27] Rob: Wow.

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

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

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

[03:50] Rob: Yeah.

[03:50] Music

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

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

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

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

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

[06:48] Mike: Not universal.

[06:48] Rob: …as good as – yeah.

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

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

[07:58] Mike: Hopefully, hopefully.

[07:58] Rob: Yeah.

[07:59] Music 

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

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

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

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

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

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

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

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

[11:35] Rob: I agree.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[34:51] Mike: Yeah.

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

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

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

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

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