Episodes

Show Notes

• MicroConf 2012: The Conference for Self-Funded Startups
• HitTail
• AuditShark

Transcript

[0:00:00] Rob: This is startups for the rest of us episode 60.

[0:00:04] [music]

[0:00:13] Rob: Welcome to startups for the rest of, podcast that was developed for 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 Rob.

[0:00:22] Mike: And I’m Mike.

[0:00:23] Rob: And we’re here to share our experiences to help you avoid the same mistakes that we made. So what’s going on this week Mike?

[0:00:28] Mike: I am in full recovery mode.

[0:00:31] Rob: Yeah you’ve had like minor surgery right?

[0:00:34] Mike: I went in and I had some spinal injections done. You know it’s funny that I’ve talked to other people and they’re like, oh I didn’t feel a thing and I’m just sitting there thinking to myself “ yeah but you’re not immune to Lidocaine.

[0:00:43] Rob: Yeah so oh really, it doesn’t work for you, it doesn’t make you numb?

[0:00:47] Mike: No.

[0:00:48] Rob: That’s not cool at all.

[0:00:49] Mike:  And people don’t believe me when I, especially doctors don’t believe me when I tell them that that stuff just doesn’t work on me. But the last time I was at the dentist I had six Lidocaine shots plus two bone drills and that was when I finally stopped feeling pain.

[0:01:02] Rob: Wow. Well I’m sorry to hear that man you’re already on the road again right, okay sure.

[0:01:07] Mike: Just for this week and next week though.

[0:01:09] Rob: Okay but you’re able, at least you’re able to travel and such.

[0:01:13] Mike: Yeah.

[0:01:13] Rob: I was just thinking getting shots in your back would kind of hinder that for a while but it’s good you’re…

[0:01:16] Mike: It actually didn’t. Things were actually a lot worse before I had the injections so it’s a steroid cortisone injection because some of the lower discs in my back were having fragments that were breaking off and what happens is it gets inflamed and then they’re supposed to kind of dissolve on their own. But they haven’t been and it’s because the whole area is inflamed and not infected or anything but it’s just you know irritated. So they don’t naturally dissolve on their own and because of that it basically creates more inflammation which creates more swelling and everything just you know, the cycle just kind of repeats. So it gets worse and worse.

[0:01:53] The day I had the injections it was last Wednesday and things were actually pretty bad and then I took things easy for the rest of the day. And then the next day things were a little bit better and the day after that it was better. And I had a three hour car drive a couple of days ago that was pretty rough afterwards. But other than that I’ve been feeling pretty good.

[0:02:10] Rob: Yeah the astute listener will notice that we missed an episode last week, we didn’t release any and it’s because Mike had this procedure and took a medical leave,  a medical week from the podcast. So hey I want to give folks an update about MicroConf, you and I were just talking about it before the podcast. Basically at this point we are we’re honing in. We had already talked about Tropicana and Hard Rock and we still are looking to making up our mind. But some dates I wanted to throw out for people to mark on their calendars for potential dates are April 16^th,17^th, April 30^th May 1^st.

[0:02:42] And those, don’t buy plane tickets yet obviously, it could feasibly still change and be a whole different month but that’s what we’re looking at. We’re upstaging it this year, last year we were at the Riviera which is an older hotel and we’re looking to just go you know quite a bit more upscale per popular demand. And we already have some awesome speakers lined up, keep your ears out we’ll be talking about that in the coming weeks.

[0:03:10] You know today we’re going to get pretty heavy into Audit  Shark. I got a long email from a listener and a guy we both know of. I wanted to give folks an update on Hit Tail. So you might hear it in my voice I am pissed off right now because I freaking, I spent the last 12 hours basically until about 1:00 in the morning  last night and then I got up and I just worked all day today. And all I’m trying to do, it’s a six page web application, that’s what Hit Tail is right. There is a marketing side, that’s 200 and something pages but inside in the back end it’s about six or seven UI pages and they’re very simple. They pull out of a database and they display in a grid.

[0:03:45] And I cannot get, I have a new design  for those and all I’m trying to do is integrate one, the first one into the old code and I can’t do it. Everything is broken.  There are so many includes, there’s like eight or nine JavaScript and ASP files to make a single page work. The structure of the code is so bad that it’s just a cluge and I have looked at rewriting it and it would take me several weeks. And so I don’t know there’s no simple answer but this is totally, this is like the lowest, probably the lowest point since I bought the app, you know I bought it three and half months ago.

[0:04:21] I just have to get through and struggle through it, this is the last thing that’s keeping me from basically re launching the site because I need to get the new look in before I market it because it’s so dated right now.  I just feel like it’s going to be  a pretty leaky funnel. Remember the big mailing I did last time? I mailed like 4000 people, they were old customers that had cancelled and such.

[0:04:40] Mike: Yeah, yeah.

[0:04:41] Rob: That turned out really well. I got somewhere around 50 or 60 new signups.

[0:04:46] Mike: Oh my God.

[0:04:47] Rob: Yeah. And anywhere between there’s some $10 plans and some I think I got a couple of $30 plans as well. So yeah it’s a SaaS app so it’s acquiring revenue so it’s pretty nice. It really really helped and then I have a recurring monthly now that essentially emails anyone who has cancelled but is still sending us requests and that we have new keywords for. And you know they get emails that says,  hey we have new keyword suggestions for you if you want to check them out you can come sign up.

[0:05:11] So it’s kind of a nice little monthly reminder for folks who’ve cancelled. Yeah so things are going really well on that. I mean I’m really pleased with the new signups and I’m pleased with the way that the marketing has gone. People are pleased with the way the app is coming around, people who have used it. You know there’s a couple of hundred customers now, over a couple of a  hundred actually.

[0:05:29] And that’s really good. It feels good in terms of you know, I feel like the app is validated and it’s working again. But in terms of getting this new look and I’m just like furious. I’m hoping by the next podcast I’m just done or you know like 80% of the way there  because I had wanted to get this done sooner so that I can start marketing the thing. But looks like will, the big marketing push will definitely have to wait until after the first of the year now.

[0:05:54] Mike: Now are all these includes or they are all JavaScript includes?

[0:05:58] Rob: There is a bunch of Java Script and there is several ASP. It’s classic ASP so it’s Olean technology but…

[0:06:04] Mike: Got it, got it. I mean you could for the JavaScript itself if you’re having those sorts of failures you can download Firefox and use Firebug.

[0:06:12] Rob: Yeah.

[0:06:12] Mike: That would certainly help with that because you could step through all the JavaScript and find out where it’s failing and then make sure that those things are in there.

[0:06:18] Rob: Yep. Without Firebug I would have been sunk, I would have been sunk. I have been using that to look at the, you know http requests. You know the other thing that screwed me is Chrome will not allow you to set a cookie with the domain local host but it doesn’t tell you that. So I’m trying to log in for like two hours and I’m like, there is something crappy in the code it’s not picking up my cookie. And just over and over I’m like…and you can’t step through at ASP so I’m like the response not right, where is it failing, where is it failing?

[0:06:49] And finally I was just like on whim after seriously two hours of screwing with it I went and got into Firefox and it work and  broke in a different way. And then I’m like, what is going on? So I went online and sure enough if you’re, since I’m running on local host Chrome won’t allow you to send a local host cookie. And not it [0:07:07][inaudible] yeah and it totally screws you so. Little things like that, there has been like ten things that have just been weird tricky Ajaxy, you know things that are so hard to see because you’re not able to step through and see them in a debugger and it’s all kind of guesswork that’s what going on.

[0:07:23] Mike: Mmhmm. Yeah that does kind of suck. I mean I ran into, not quite similar issues for AuditShark  because I had to develop locally. But I’m using SSL certificates so that makes things a little bit challenging because everything, everything is done over SSL. So I have to make  sure that in my Java environments I’m also using you know SSL as well. So I have an SSL certificate for my laptop, one for my desktop and then I also have one for my server a bit of challenge.

[0:07:54] Rob: Right. No, that makes sense. Yeah I’ve resigned I mean this is, this is the downside taking over a code base, and I know that I knew that going into it. You know that taking over someone else’s code is always hard and like I said this is the low point. I’m not saying, “ Oh I shouldn’t have done this”. I have no regrets like I’m very pleased with it. But I’m just at that low point where literally like two hours I was just spouting curse words at the computer you know, so pissed off.

[0:08:21] And questioning every hour that ticks by I’m thinking how I could rewrite this. It would take me several weeks but maybe you, should I do that should I do that. And so there is that doubt in the back of my mind of, do I just rewrite this whole damn thing? And so I started sketching out what might look like. I actually started writing a spec and recorded a screen cast for a developer who works me to rewrite it in ASP and NVC. And the more I go into it the more I realized although it’s only six or seven pages it is, it’s quite complicated.

[0:08:51] And it’s seems simple when you look at it but as you enumerate everything they’re going to have to do and how they have to do it because you can’t just use basic queries right? You can’t just say “select star from this” because one of the tables has 1.2 billion rows in it. So you have to have a very specific query structure. So there is just, at that point it’s like “ huh this gets more complicated”. And I’m going to lose, have bugs and I’m going to lose some features and you just now that goes when you go to rewrite something. It’s always more complicated than you think it’s going to be.

[0:09:19] Mike: No, I definitely know. I mean just look at how long I’ve been working on AuditShark, my original intention was to, what was it, have it out of the door and possibly….

[0:09:29] Rob: After ten weeks?

[0:09:30] Mike: I think I wrote a blog post about it a while back it was back in July or something like that. That was when I was looking to originally push things out and start going live with it and here it is five months later.

[0:09:41] [music]

[0:09:44] Rob: I think we want to get pretty deep into AuditShark and specifically some comments that I’ve heard both from this email I got from a friend of the podcast, Lester Burk as well as some stuff you know Ted mentioned, Ted Pitts mentioned base as  a software and other people have mentioned you know offhand to both you and I think.  And it seems like it might just a good discussion to kind of dig into some specifics, some points about AuditShark and some points about maybe some confusion about what AuditShark is. How you have, or haven’t been marketing it, have or have or haven’t been developing it, you know just different opinions that people have and kind of just hear your side of the story.

[0:10:19] Mike: Sure.

[0:10:20] Rob: Lester was at MicroConf last year, he is a Micropreneur Academy, I’m pretty sure he is a lifetime member. He sent a very long well written well thought out email to me. He’s like, I have concern about AuditShark and Mike and I’m concerned that you know he’s going to release and nothing is going to happen.

[0:10:37] And I read it and I was like this is good and I forwarded it to you and so Lester I apologize, I just, it totally didn’t occur to me. Because I thought it was just so well written but he’s really given constructive things. He just is, but he tells it like he sees it.

[0:10:49] Mike: I sent a couple of emails back and forth to Lester and I even told him the questions he asked are really good questions. I told him flat out, I said I don’t think you should temper those questions in fact they should probably be a little harsher because and not just for the questions he asked me but in general when you’re asking questions it makes whoever is answering them be spot on with their answers.

[0:11:09] And they have to have clearly thought through what their answers are to those things and being prepared for those types of things makes them truly  think about what it is that they’re doing and whether or not they have seriously considered the ramifications of whatever path they’re on.

[0:11:24] Rob: Right.

[0:11:25] Mike:  And I told him like I didn’t take offense to anything he said one bit and he asked me very good questions. So we’ll definitely get into those also.

[0:11:33] Rob: Cool. I don’t think I’m a great accountability partner. I don’t push things right? I ask your opinion you say, “Oh this is what I’m working on” and then I let it go. And it seems like other people they just tend to push more and for some reason that’s not like my personality. So even this email stuff I’m going to read is just like more forceful than what I would tend to say on the podcast.

[0:11:51] And so this is motivation for you to think about how maybe you reshape, how you talk about AuditShark and this is motivation for me to think about how I kind of push you in future podcasts. So first quote was from the last where he says “Frankly I hear myself in the things Mike says and thinking that reciting technical manouche is the same as business progress. Does Mike actually enjoy the marketing? In your book,” that’s my book Start Small Say Small “you come right out and say that it will be 15% coding and 85% marketing. But you let Mike of the hook with 85% coding and 15% marketing progress”.

[0:12:25] And then he puts in a quote kind of a you know kind of a chuckle, kind of like “But it’s so good it would sell itself”. So he’s just, he has a concern that you’re not working enough of marketing that really when we do our updates I do tend to talk more about doing marketing tasks and you tend to talk more about technical challenge that you faced.

[0:12:42] Mike: He’s absolutely right, I talk more about the technical side of the things that I have been working on primarily because they’re the things that I am most focused on at that time. And it’s not to say that I’m not doing any marketing because I certainly I am. I mean I’m doing like building, I’m building a mailing list.

[0:12:57] So one of the things that I haven’t really talked about so far is that I have been putting together a newsletter where it’s very leading to whoever subscribes to the newsletter. And the idea is to essentially teach the subscriber to the newsletter about compliance and the things that they should be looking for and the things they should be doing. And it’s not technology specific in any way shape or form, it doesn’t even relate to AuditShark at all. What it relates to is specifically how they should go about their job and what they should look in the tools that they use to get that.

[0:13:28] Now I’ve done compliance software before actually built compliance software and I know what sort of things people are looking  for because I’ve done enough compliance consulting. And the things that enterprise companies look for are basically the same things that smaller companies look for. The problem is the enterprise companies tend to have external regulation that dictate what they need to do. The smaller guys it’s more of an honor system, they’re supposed to looking at certain things but in general they’re supposed to look at their environment and start identifying where there are regressions to their security policies.

[0:14:02] And it makes it difficult for them because there’s not necessarily established benchmarks for them to look at and it just makes it difficult for them to know what they should be looking at. Their first question is always “ what is everybody else looking at?” And AuditShark will help them with that. But I don’t necessarily say, “ hey AuditShark is going to solve your problems”. I say this is what you should be looking for. And then kind of let them make those mental leaps in talking about AuditShark.

[0:14:30] Rob: That newsletter or the series of articles you have is obviously, you can put it in auto responder where people give their email you drip it out to them over the course of a few months.

[0:14:40] Mike: Yep.

[0:14:40] Rob: Could you release that now? Do you need a product in order to do that?

[0:14:43] Mike: No I don’t. And what I’m waiting for that is to kind of finish out my thought process in the newsletter so I’m out to about four or five newsletter articles right now and I’m trying to think of how I’m going to mould it such that it comes to a logical conclusion. And say, “ this is kind of where this newsletter ends, if you have any questions let us know blah blah blah, etcetera”. But I’m kind of in a cliff  right now. So until I address that cliff I’m not quite sure whether or not I should move forward with pushing that out.

[0:15:17] Rob: Why are you making it end?

[0:15:18] Mike: The newsletter is more like  an introduction to compliance and an introduction to it kind of has to end somewhere.

[0:15:24] Rob: I guess honestly if I had a list and I’ve got a few hundred subscribers if it’s going to be  a decent funnel I wouldn’t stop it. I wouldn’t say that’s the end of this thing. Because you know someone may not buy within two months right?

[0:15:37] Mike: Mmhmm

[0:15:37] Rob: I mean it make them six, you may have a six months cycle on this thing, you don’t know yeah.

[0:15:42] Mike: I think, you make a good point though. Why should it end at that point? And the idea is I guess it’s kind of like anything where you’ve kind of pitched enough of your products or the idea behind your products and what it can do for people. And granted in this particular newsletter I’ve been focused more on the problem of compliance in general. What I’m looking at for kind of the next set of newsletter articles is to trying to weave AuditShark into that such that it becomes more of a sales pitch.

[0:16:12] I mean initially its education, education from the standpoint of I’m an expert in this particular area these are the things that you should be looking for. And then morphing that into more of this is how AuditShark can address these issues that you may have thought of and oh by the way, here is a coupon code for a free trial for 60 days or whatever for being a member of this list. And then leveraging that over time to hopefully try and convert those people.

[0:16:37] And then obviously you have to measure how many people are, eight newsletters in who have purchased, how many people are 12 newsletters in who have purchased. And trying to figure out where is the inflection point of where people convert the most.

[0:16:51] Rob: Right. It sounds to me at least the feedback I’ve gotten is that people want to hear more about this kind of stuff you’ve been doing with AuditShark. You mentioned that you have been doing marketing with it. That you’ve done some link building, you’re working on some SEO and that you’ve written these lists, episodes of a newsletter. What else, like do you have, I mean I’ll throw out an example. Like with HitTail, over the past five months, six months since I started looking at it, I put up a Google doc and I started a marketing plan. And all it is a bunch of bullets, like I’m not into big formal plants.

[0:17:19] It’s a huge bulleted list and I started with Noah Kagan’s  Mint.com marketing plan that he published online a year or two ago. And I morphed that towards HitTail and it includes low touch, high touch, all these different kinds of marketing approaches. Some of which, I mean obviously I did a bunch of his because I’m not going to do similar things it’s just not, you know it doesn’t translate.

[0:17:42] But then as I’ve been reading or listening to podcasts of blogs or books, anything over the past six months I’ve expanded that plan. And at this point I have 11 pages solid single space bulleted list. And that freaking thing is ridiculously good, like I’m not trying to pat myself on the back but I get so excited when I look at it because I have this ream of to me like interesting potentially valuable, hopefully highly valuable marketing approaches that are catered to HitTail.

[0:18:11] And it isn’t vague stuff. It includes specific tactics and it includes specific websites that I’m going to do this on or this with. Realizing that half of them, 75% of them eventually are going to fail but I’m going to basically find you know the approaches that work really well. What do you have in place for AuditShark right now? Do you have bulleted list, is it all in your head, are you just looking at like marketing through SEO in this newsletter? Is it going to be cold calling, is it going to be like, what is your plan?

[0:18:39] Mike: I haven’t formally written most of it. I keep most of it in my head. I will be the first to admit it’s probably a terrible terrible place to leave everything like that because I’m sure that there’s things that I’m missing. I do keep some things in Evernote probably not nearly as much as I should. I’ve got some things kind of distributed between my iPad, my phone and I should really use Evernote on all of them and I just don’t.

[0:19:02] So I could definitely do a better job in that regard. One of the things that Lester brought up was that he doesn’t hear me talking anything about customer development. Have I even shown this to people? I have done a demo, I did a demo for three people at one point all on the same call basically walking them through the interface, walked them through how it would work, what it does, what sort of reporting they’re going to be able to get out of it.

[0:19:24] They liked it, they were impressed enough by it that they wanted to continue the discussion as I got further down the road with it. But I was at least able to get some of that initial feedback. A couple of weeks ago I had a day off where I actually went to all four of the banks that are in my hometown. And just basically walked in and started talking to them and saying, “ you know I just want to talk to  your IT department”. I got in and talked to them and said, “ This is what my idea is” and tried to kind of hash out the things that  I had been working through my head in terms of what my plan is.

[0:19:55] But the target market, I’ve kind of talked about is really small business, small banks. And when I talked about compliance software being generally enterprise software, AuditShark is really not aimed at the enterprise. And by enterprise generally I think of a thousand employees and up. That’s not necessarily the number of employees or computers that constitutes an enterprise, really enterprise is just a label. I mean if you go out to small companies like Axosoft for example they have an enterprise version of their products, it is aimed at ten developer companies, ten developers or ten employees is really not an enterprise but that’s the label that they have placed on it.

[0:20:30] So that’s the expectation that people have for their software. With my software my target market is really companies between 50 employees and about 250 employees.

[0:20:42] Rob: So is  that 50 nodes?

[0:20:44]Mike: Yes.

[0:20:44] Rob: And 250 nodes so obviously for those who are new AuditShark is auditing software, it installs on a server and then it’s charged per node. I think there is a little client piece that installs on each client Mike or not?

[0:20:55] Mike: No, no, you install it on one…

[0:20:57] Rob: Okay so it’s all on the server okay.

[0:20:58] Mike: Yeah you install it on one machine and it agentlessly queries information from all the other machines.

[0:21:04] Rob: So then if you have 50 nodes, they pay, the pricing is still five bucks per node per month, 50 nodes ten buck, okay.

[0:21:10] Mike: Yep.

[0:21:11] Rob: So it would be 50 nodes would be 500 bucks a month that they would pay you and obviously 250 would be 2500 a month. So these are definitely see, this is actually an interesting thing because I have been confused in the past and I’ve mentioned like, Mike I don’t think anyone is going to find your site through SEO and buy from you. I think everything, every sale is going to be high touch, definitely at first and probably for ever because it’s such an expensive price point.

[0:21:34] You may not be selling to enterprises but it’s an enterprise price point in my opinion, 2500 bucks  a month for  250 person company is, you know it’s decent chunk of change, 30 grand a year. Would you agree with that or do you think that you’re going make sales off your website? Someone is going to click an “add to cart” button and buy this you know this $1000 a month software?

[0:21:51] Mike: I don’t think I’m going to make sales off my website. What I do expect to happen though is I’m going to get leads from the website…

[0:21:58] Rob: Absolutely.

[0:21:58] Mike: And I’ll be able to follow up on those leads. So that’s really what I’m looking at from the website perspective. My anticipation is not that somebody is going to browse through my website and I’m going to get a 1000 visitors and ten of those are going to say “oh well I’m just going to buy your software” and they’re going to plunk down $2500 a month, that’s just ridiculous it’s not going to happen.

[0:22:20] But what I would expect is that maybe somebody signs up for a newsletter. And they give me their email address which basically is permission to email them at which point I can personally email them and say “ hey just wanted to let you know if you’re interested in it, I can schedule a demo of the software and walk you through how it works or talk about maybe the compliance problems that you’re having and do more of some personalized one on one stuff”. Because at a price point for 500 or $2500 a month it is worth my time to go after them individually.

[0:22:50] Rob: Absolutely.

[0:22:50] Mike: A price point of $10 a month is not, it’s absolutely not worth your time.

[0:22:56] Rob: Right. I think the question you were getting at is enterprise versus not enterprise, I mean it’s just a label. I think you know Lester brought up he said when he’s spoke with you at MicroConf you had said you had a friend who ran like a bank with 500 nodes who may be interested in AuditShark. And then lately you have been saying you know that this is an enterprise software. So you’re saying like you don’t consider 500 nodes to be enterprise software even though that’s like five grand a month.

[0:23:20] Mike: I think for compliance software it’s not and the rationale behind that is that when you get into a much larger environment and it’s to step back and take a look at the industry of banks a little bit, there are about 8000 to 8500 banks in the United States. The average branch size is about ten. So ten branches you figure maybe ten employees per branch, about 100 employees on average.

[0:23:43] Unfortunately if you chop out like the top, I don’t know was it ten banks or so they constitute 70% of the market, that means that the other 8490 banks constitute the rest of them. So your average branch size drops from 10 to substantially lower amount maybe three or four. You go to any given town here in Massachusetts and you will see at least one local bank if not two. Here in my home town we have three, there are three local banks. And one of the ones that I went into a couple of weeks ago I went in and I talked to them, I just said “ I just want to ask some questions”, they sat down with me.

[0:24:22] And I said, “ what are you doing to manage your environment and how are you dealing with the compliance issues?” And they said, “ well we hire an outside consulting company to do that for us”. Which incidentally is something that I had heard before so that kind of goes to another point that I’ll make in a second. But to drive kind of deeper into this particular perspective where I’ll say, in discussing with them it seemed like I was having a hard time explaining to them what AuditShark was and what it did.

[0:24:47] So I tried to simplify things a little bit and say “ okay well you guys log into your machines you have a policy and you know you log into the computer by typing in your username and password and it authenticates with Active Directory”. And they said “ We don’t use Active Directory”. And I said, “ excuse me how do you manage permissions and everything? Do you use Novell?” And they said “ No what’s Active Directory?”

[0:25:10] And at that point I realized that this was not my intended customer. Because they had no idea what Active Directory even was and one of the things that my software relies on is the existence of Active Directory. They were using it, they just didn’t know it and the reason they didn’t know it  is because they had outsourced it to this other company. The other thing I found out from them was that they were an 18 employee company which means they didn’t even have an IT department.  So they’re relying on an outside consulting firm which to me leads me to something else I learnt from talking to other prospective customers that the smaller  banks tend to rely on these outside IT consulting firms.

[0:25:46] And there’s a limited number of them and these banks tend to work with the same ones year after year. So one of my go to market strategies is actually going to be approaching firms and saying “ hey here is what I can do for your banking customers” and letting them kind of do the legwork a little bit or the introductions to help make into those accounts.

[0:26:09] Rob: Right so you’re talking then about into selling into IT consultancy IT auditors right?

[0:26:13] Mike: Almost kind of like an, I haven’t worked out all the details in my head about how that would work yet. But you can almost think of it as a high level like an affiliate program where they…

[0:26:22] Rob: Sure it’s like Symantec do that, Norton and those guys.

[0:26:26] Mike: They do but they don’t really offer software as a service. I mean they have resellers and in a way this is a reseller arrangement as well but because it’s a SaaS application it complicates things. You know whose customer is that at the end of the day?

[0:26:40] Rob: Microsoft does that actually. They do SaaS and its form or fashion so you may want to look at their model of how they do it because they have partners who go and sell and they split revenue some, I don’t think it’s 50 50 but in some form or fashion.

[0:26:55] Mike: Yeah I have seen for like for Exchange Server you can definitely by Exchange email boxes and stuff and there are different companies that will host it and then Microsoft has their Office 365 I think it is that you know there’s resellers out there for that I believe as well.

[0:27:09] Rob: Right. I like the approaches that you’re talking about. I like that you’ve talked to folks, it sounds like you’re learning stuff from banks. My biggest concerns as you go to sell Audit Shark is that it sounds like you have a lot of different avenues that you are trying to pursue and without doing it fulltime I am concerned that you are not going to be able to do any of them to the extent that they need to be. Because you know you and I both know how intensive, time intensive high touch sales are.

[0:27:32] And so you are going to get some leads through your website. I’ve not doubt that you’re rank first in terms, you will get some leads and you will be following up with those guys. But if you are not doing that 9:00 to 5:00, 9:00 to 9:00, five days a week and you are doing that evenings and weekends then how are you going to even begin to do out, you know basically external prospecting with these IT auditors and develop the product? And once you get it installed at an Alpha site or a Beta site you are going to be working with those guys.

[0:28:00] I mean it just seems like you are really going to be strapped for time and there is a lot of complexity, sounds like there is complexity or just a lot of different options for the sales channels. I don’t know, how do you plan to sort that out?

[0:28:12] Mike: Yes, the answer to most of those is yes, there is a lot of complexity and one of the things I am doing now in talking to people is trying to figure out what is going to be the most valuable in terms of my time. What’s going to be the most fruitful in terms of learning those first customers, those early people who are going to give me the feedback that I need.

[0:28:30]And it is not to say that I can’t somehow morph Audit Shark a little bit so that it is less aimed at banks or maybe uses the same backend and it’s something at a price point that people could afford. So I am not removing options like that from the table. I am definitely keeping them in mind. But I haven’t come to firm conclusions on how to deal with some of those things because you are absolutely right about the fact that those high touch sales are going to be very time intensive. I may have to do a lot of hand holding there is no doubt that I am…

[0:29:00] Rob: The installation, you are going to have to help with the installation especially early on you are going to have to…

[0:29:05] Mike: Installation, installation is almost a joke.

[0:29:05] Rob: You think it is, we think it is [0:29:09][inaudible] invoice. It is like FTP this and run a sequel script that’s all it is and we spend so much time supporting that because people do not know how to do it or they do it wrong. Or they have a server that is all jacked up and doesn’t have components that every other server should have and they don’t. I know you have an MSI and you have a really nice installer and all that…

[0:29:28] Mike: What I have at this point is once you have created an account in the website it directs you to go to a page where you download a zip file you unzip it, you run the executable with the command line of the install and that’s it.

[0:29:43] Rob: So they have to open the command line there you go.

[0:29:45] Mike: Right.

[0:29:45] Rob: That’s a support ticket right there, no I am serious dude it’s…

[0:29:48] Mike: I know

[0:29:48] Rob: I know that sounds so simple and I could do it. But so many people are going to screw that up, I guarantee it so…

[0:29:54] Mike: I understand and…

[0:29:55] Rob:  Or it is going to crash or whatever you know there is going to be something there.

[0:29:58] Mike: Yeah.

[0:30:00] Rob: So but that’s neither here nor there. So yeah you’re going to have installation support you’re going to have sales, you are going to have lot of stuff going on.

[0:30:05] Mike: But it’s not like installation, if I needed to do the installation for somebody I could do it via a WebEx or go to a meeting or something like that and literally be done in about two minutes. It is not really that difficult and I have already got something to work on my list of things to do to put together a PDF that outlines exactly how to do it. And then I am going to take that PDF and I am also going to create an HTML format of it that goes on the download page that says, this is exactly how you install it complete with screen shots.

[0:30:31] So I am looking at ways to mitigate those types of problems. I mean one of the things that I spend some time on that didn’t need to be there kind of from my minimum products but it dynamically creates the zip file for the user when they go to download it.  And it does that so that it can insert their customer specific data into it.

[0:30:52] Rob: Right, yeah.

[0:30:52] Mike: So that the user doesn’t have to do it because otherwise I would have had them open up an XML file and then modify some stuff that would have just been, it would have been a nightmare.

[0:31:00] Rob: Right, bottom line let’s just say they get the command line and they get it installed and they are going to run it and they are going to, stuff is going to come back, they are going to have questions for you right. Especially the first 10, 20, 30 customers you selling this to they are going to be all over you for support. And you need to be all over them supporting them just to keep this stuff going.

[0:31:18] So super time intensive and I guess the question that, that may be the question that has been in the back of my mind the whole time is, I mean Lester points it out several times. He says, “Mike says this isn’t enterprise software. But he talks about like long sales cycles, high touch sales, higher price points. You know having an auditor involved maybe selling through an auditor as a partner into these banks is definitely more enterprise than not”. Stuff like that, its like has a one person’s software shop ever successfully actually sold mission critical software to a bank. If the bank switches to Mike’s stuff and you are hit by a bus, you know what is his story to his customer.

[0:31:52] There are certain things that go along with enterprise software sales. Things that we have just covered that Audit Shark will have long sales cycles, higher price points, needing like a partner, you know having an IT auditor that is a partner but then you sell through, you have to recruit them, give them a cut and then you know get into the bank potentially cold calling, high touch sales in general.

[0:32:16] I mean so these all really are much more enterprise than say HitTail, right? Being a lower end you know price point SaaS App or done at invoice those are obviously not enterprise. And this is more it is sounding to me like it’s more enterprise than not. You may not be aiming at Fortune 500 or Fortune 1000 but there are enterprise considerations that come with building this product. How do you plan to run an enterprise sales organization as a one person shop?

[0:32:43] Mike: I don’t believe it will stay one person forever. I have kind of resigned to the fact that if I wanted to actually grow this out it has to be more than me I can’t possibly do everything and I understand that. I mean if you look at the code base for the product, the code base alone is I think 65,000 lines of code right now. And this for what I refer to as my minimum viable product for this there is no way around it.

[0:33:08] And it sounds like a huge amount of code for what it does. But in many ways what I have done and how I have done it is necessary for what my long-term vision is which is not something that I have really shared with people because that vision kind of needs to come to fruition before I start talking too much about it. There are things that I want to be able to do that if I start talking about them I feel like it would not only derail me but would invite competition for things that I don’t necessarily want people to go after yet.

[0:33:38] And I understand that there’s lots of people who will say well you know, talking about your ideas it’s how you get them to become reality it’s, nobody is going to steal your ideas. I understand that but there are other things to consider. I think you are right in your assessment that there is a lot of things to consider and there are a lot of things that I am just not going to be able to do or handle as a one person shop and I don’t expect to be able to. But over time I also expect that this product is going to grow to the point that I am going to hire people to help me out with it.

[0:34:10] Rob: Right but I mean there is always that point where you like you have more support and sales efforts, prospecting efforts and all that stuff you have way more time than you do money. You may need 40, 50 hours a week you are working you know doing consulting and then you are doing this and other 30 plus hours a week. But you are not bringing in enough money to hire someone. I mean have you thought about that I mean like at what point you think you can bring in an employee or a contractor to help out?

[0:34:37] Mike: Not specifically it really, the money has to be there. I mean I can already cut my hours, and I have already talked to the company that I do a lot of subcontracting through and told them flat out I would like to cut my hours. And that is so that I can start working on Audit Shark on not necessarily a fulltime basis but on a more regular basis. And they are interested in potentially being a reseller for it because they have looked at it, they have seen what it can do and they know what my capabilities are.

[0:35:03] They have an established customer base I have no doubt that I could leverage them to start selling it to some of their customers. And that would cut out probably two thirds of the issues that you raised. You know for example how am I going to find time to do demos? I don’t need to find time to do demos, I could teach them how to do demos, I could teach them how to talk about the product.

[0:35:23] They already have the customer base I don’t need to find them. So there are a lot of those issues that basically get resolved by working with resellers and partners. The real question on my mind is how to structure of the compensation because it is a SaaS App how do you do that? And that’s not an answer I have right now.

[0:35:42] Rob: Honestly we could talk about this for like another hour. I have more questions and there is even more stuff Lester talked about in the email and I am sure you can certainly talk about it for hours. It seems like we might you know want to continue addressing this in future episodes and I think that…

[0:36:00] Mike: We could ask people to send in questions for me.

[0:36:02] Rob: Send in questions, yeah I think maybe sharing what you have in mind could potentially help other folks beyond just the kind of the development of it.

[0:36:13] Mike: Yeah I definitely agree, I mean I can certainly be more than happy to share the things that I can.

[0:36:19] Rob: I think people listen to podcasts because they want to hear our stories.

[0:36:21] Mike: Right.

[0:36:22] Rob: You know what I am saying, they want to hear what you are doing, what you are thinking and basically like how are you marketing this, how are you thinking about it because I think that’s why people tune into the show.

[0:36:29] Mike: Yeah

[0:36:30] Rob: It is to hear our trials and tribulations and they really hear the failures. It is not that everything has to work it’s just people want to hear us try stuff, you know.

[0:36:38] Mike: Yes. It really seems like the way that I need to go for this is leveraging resellers to get into those accounts where because it is high touch sales those people who already have their relationships that’s going to be important. That is going to be key to me pushing a product out and getting people signed on with it. I am not going to get those people driven on my website in the volumes that I need and be able to establish the trust that I need.

[0:37:04] Rob: Yeah I would agree. I think it’s going to be too time intensive and it’s going to take too long to ramp up. I think that resellers are obviously good, it’s intensive to do that right? You have, it sounds like you have some existing relationships so you won’t have to cold call to find resellers. But just finding resellers and managing them as an example with [0:37:22][inaudible] voice we have resellers and it is way more of a time sink than we have ever gotten money out of it. Obviously resellers work for some business but my experience as far has been that it is not that good.

[0:37:32] It seems like your like Audit Shark and the banking model is different and they may be more used to that and they maybe more of a viable option. But I wouldn’t underestimate the time that it would take to get them on board and trend and constantly reminding them to push your product right because otherwise  they forget and they are not going to sell your product for you unless you kind of tell them to do that.

[0:37:52] Mike: Right, yeah and I have talked to three different consulting/service companies about Audit Shark and all three of them were interested in either becoming a reseller for it or talking to their customer about it and having them buy it directly. There are a bunch of different options there. It is just really a matter of me finding out what model fits because I have given a lot of thought to how different resellers models work, and I am not terribly happy with any of them that I have found really so far. I mean if you take  a look at for example Microsoft.

[0:38:25] Microsoft reseller model is that if they sell direct to you, you have to buy at a significantly higher price point. I mean you buy the full MS RP and the reason for that is because they don’t want to undercut their resellers. If you look at other companies like Symantec, what Symantec does is they have, you know a two tier distribution model where they sell to distributors and then everybody else all their partners buy from distributors. And that is not really any big secret.

[0:38:54] But when you start talking to those customers or to those partners, you can go to any of those partners and you can ask for a price quote for something and then you can ask for a price quote from somebody else. And depending on you know what level of a partner somebody is with Symantec or you know what their discounts are with their distributor you can start playing price words between them. And you know their sales reps are going to go back and forth. And then you will end up with in fighting between your partners who are trying to resell your products because they are trying to make margins.

[0:39:27] And I don’t really like that model just because of the fact that let’s say you are a reseller for me and let’s say I am going to sell my software to you for $6 per node and then you turn around and resell it to you know whoever you want. If I make the same deal with somebody else and they are able to sell it for $6 basically the two of you if you are competing for the same customer you are going to be going back and forth with the price. And you are going to lower the price back and forth between each other to land this one customer and all it does is devalue the product.

[0:39:56] And I don’t like that whole concept because it basically just puts a minimum price on everything. And at the end of the day honestly it’s I am going to get whatever it is from the end customer and then you are going to get some cut of it. I don’t necessarily like that model. What I have been considering is something in more of a form of a rebate where I have a little bit more control over it where depending on the customer aligns with me directly. And then I turn around and provide a rebate back which almost fits in more with a SaaS model anyway.

[0:40:28] Rob: Right sounds like there is a lot of question marks around that model, I mean sounds like…

[0:40:31] Mike: There are…

[0:40:32] Rob: I mean you have talked to resellers have you demoed for resellers?

[0:40:37] Mike: Yeah.

[0:40:36] Rob: I mean it sounds like that is kind of your next gig if you are going to go that route. Like next time we record the podcast, do you have anything scheduled between now and then where you are going to demo or show it to a customer or anything like that?

[0:40:49] Mike: Not on my calendar last I think it was Thursday or Friday I had a conversation with one who was, they wanted to take another look at it. And just because they had some more questions about it and at the time when I first demoed it to them it didn’t have, it really wasn’t full featured at this point. As of last week sometime I would say that I am basically done with Audit Shark in terms of being able to install it for a customer and have them use it.

[0:41:14] There is one outstanding bug that I have to fix that I kind of introduced in the process of implementing the scheduler that where it doesn’t save the data properly. So I need to fix that but that shouldn’t take more than you know maybe an hour or two of work to fix. But beyond that the product is done I can install it in somebody’s environment and it will run on a scheduled basis it will run the audits it will, you can go to the website, you can click a button, you know just by choosing a couple of dropdowns, you specify the policy, the group of machines, you click audit and it will execute that audit as quick as possible against those machines and it will pipe all the data back up into the internet.

[0:41:50] So everything is basically working at this point, it is just a matter of tweaking some things in the UI to make things more comfortable adding some of the documentation, I have already had a lot of the documentation added into it. But having those as you pointed out having those conversations with those prospective resellers is probably going to be pretty important. And I haven’t, I don’t have anything specifically in the product right now that allows somebody to sign on a customer as kind of a subcomponent over their account so to speak.

[0:42:19] Rob: Right and that’s probably not something you want to build at this point, you want to sell at my opinion you want to sell before you even start writing any of that kind of stuff, you know what I am saying?

[0:42:28] Mike: Yeah.

[0:42:29] Rob: Get some money in the pocket.

[0:42:30] [music]

[0:42:32] Mike: The one thing that I would say for anyone who is listening is if you have questions or you want to hear more about what my plans are or thoughts are or something doesn’t make sense or if you think I’m way out and left you on something, feel free to let us know. You can call in a question or comment to our voicemail number at 1888019690 or you can email in an MP3 or text format to questions@satrtupsfortherestofus.com. Our theme music is an excerpt from ‘We are out of control’ by Moot used under Creative Commons. A full transcript to this podcast is available at our website startupfortherestofus.com.

[0:43:04]If you enjoyed the podcast please consider writing a review on iTunes by searching for startups you can subscribe to this podcast in iTunes or via RSS at startupsfortherestofus.com. Thanks for listening we will see you next time.

Show Notes

• Lifestyle Business Podcast
• Tropical MBA
• Tropical Workforce
• AuditShark Compliance Software
• HitTail Keyword Tool

Transcript

[0:00:00] Rob : This is start ups for the rest of us, episode 59.

[0:00:03] [Music]

[0:00:14] Rob : Welcome to startups for the rest of us podcast for developers, designers and entrepreneurs, the ultimate software launching product. Whether you’ve built your first product or you’re just thinking about it. I’m Rob.

[0:00:22] Mike: And I’m Mike.

[0:00:23] Rob : And we’re here to share our experiences to help you avoid the same mistakes that we’ve made. What’s the word this week Mike?

[0:00:28] Mike: Well I spent most of this past weekend completely rewriting the guts of the Windows service that customers are going to install for Audit Shark and the reason I rewrote it is because I started putting together the installation instructions for it. And it was a lot more difficult to get it installed that I thought because obviously you know I need customers to be able to install it and I did it on my development machine and I was doing some I’d say kind of funky things to get it installed. And I got to the point where I said this is just going, this experience is going to suck for the customer. So I basically re wrote it so that the installation is literally just a single command line, you know you can unzip the Zip file that’s got all the files and stuff and you put it wherever it is that you want. You call the executable with the install parameter and that’s pretty much the end of it. It would just work, it installs itself as a Windows service and you just  from there.

[0:01:23] Rob : Nice. See that’s, and that’s like iteration, it’s like you get the thing to Alpha and then you realize there is this early step that you’ve kind of forgotten about because you probably haven’t installed it for months because you know just in dev environment. And I don’t know fixing that feels like a nice step towards getting this thing ready to go in customer machines so that’s pretty cool.

[0:01:42] Mike: Yes it was really cool to see it actually work because all of the stuff that I had in place it’s sort of works but there were some funky things that kind of happen, it’s just not going to work for the customer. It’s not going to present the experience that I want the customers to see.

[0:01:57] Rob : Cool I think, I want to talk a little bit about Hit Tail because I’ve gotten several emails like people asking, like so what is Hit Tail, what does it do? And I feel like it’s funny I kind of talked about it early on yeah its SEO Keyword tool. But like people don’t really get the idea and it’s a super simple idea and I can almost say in one or two sentences. Hit Tail which is the app that I’ve acquired it’s a software it’s a service app, all it is at its purest form is a way to find out the keywords that you should be targeting on your website. So the SEO keywords you should be targeting. And the way it does that is it doesn’t use the Google data that everyone else uses. Like Google keyword tool you can plug into that and you can do all types of analysis.

[0:02:37] And that’s what Market Samurai uses, that’s Micro Niche Finder uses, that’s what all the tools that you do keyword research with essentially use that same corpus. It’s basically  all just conjecture based on what people think people are searching for. It’s reasonably accurate, it’s a good estimate. What Hit Tail does is you install a snippet or Java script on your website like Google Analytics and so Hit Tail is able to see all of the keywords and all the traffic you’re getting. And it actually looks at the proprietary actual real time information in your traffic. And then it analyzes it and it says, these are the keywords that you’re going to rank easily, they have enough traffic you should write a blog post or you know write an article about this and you’ll appear on the first page of Google for this terms.

[0:03:25] That’s what it is. That’s all it is. So really the whole app could be one page. You install a Java script and the whole app could just be this list of keywords that you should then either write about or hire a writer. I have writers I can recommend, that I do recommend to Hit Tail customers. So that’s it. Now the app is more than one page because we have, there is a long tail diagram and there’s real time refers and there’s you know other stuff that we give you. But the bottom line is it’s all about the keywords that no other tool can tell you and at this, the recommendation algorithm has analyzed 1.2 billion keywords.

[0:04:00] I was looking at it, I thought it was  700 million and I looked in the database last week and it’s  billion. You and are both accused of not selling hard enough, like we don’t plug our products, we don’t talk about the academy very much. And it’s just not kind of not our way right? We’re just more mellow dudes. So I’m not like trying to push Hit Tail on people but I genuinely believe in the value of this thing. I mean this is why I bought it. I’ve been a customer of it for five years and you know there are several thousands, there’s actually about,40,000 people who’ve tried Hit Tail that are in the database. And I have like raving fans who you know were really frustrated with the old ownership because it kept going down.

[0:04:34] I do truly believe there is value for people here. You know it doesn’t work for everybody, you need at least, between three and five thousand visits a month. You probably want at least 15, 20 of content on your site. But once you have that it can definitely provide value of the price. Its 10 bucks a month at the lowest plan and it goes up from there. So any questions?

[0:04:53] Mike: Not really, I mean I’ve looked at it before so I know…

[0:04:56] Rob :So you know what…yeah.

[0:04:57] Mike: I know what’s got yeah.

[0:04:57] Rob :The website right now as of this recording you know doesn’t do a good job of conveying what I’ve just said. It’s hard to…

[0:05:03] Mike: It really doesn’t.

[0:05:04] Rob :No. And even the app itself when you, if you log you got an account you don’t know what to do. It took me a long time to figure out the app is not very usable. So that’s why I’ve been talking about it, the whole website is being redesigned, the app is being redesigned to basically underscore what I’ve just said. You know to tell you how to use and how to go about getting the most out of it.

[0:05:22] Mike: It’s interesting that you mention the app is being partly redesigned just to help people or help new customers get the most out of it because right now I’m in the process of pursuing a copy of early customers for Audit Shark and that’s exactly what I’m zeroing in on and asking them for feedback on is, does this stuff make sense to you? Do you even know what to do, what sort of things are missing from the UI, to basically help you make sense of what you’re even looking at because that’s important. I mean that first impression is going to be what they see and if they don’t have  a good impression of your software when they first log in, they’re never going to log in again.

[0:05:59] Rob :Yeah I agree. I think it’s a huge piece that’s often overlooked but you can have a great you know marketing and sales funnel and get people to your trial and basically if that first user experience, that first run experience is crappy you’re going to have a leaky funnel and people are going to be falling out of the bottom of it. For great first time experiences you can look at Apple. Anytime you’ve opened an iPod, an iPhone you just this amazing magic feeling when you open it. And 37 Signals does it great with software. That even when you sign up for the trial and they’re basically guide you through what you should do. They’ll often have some sample data populated so when you get to this page, the first page is not blank like a lot of apps are when you first log in. they actually give you some data so you know what stuff is supposed to look like.

[0:06:42] Mike: Wow that’s a great idea. Actually I’m glad you said that because that was something I was wondering about for Audit Shark and that’s something that I’ll probably put ads like my list of things to do is to basically give them a flag that says enable or disable sample data and it basically will just show them data that they could look at that you know isn’t necessarily their data but can show them, this is what the application could look after it’s been populated. So you know kind of what you’re looking at and you don’t see all these blank charts and everything. That’s a great idea.

[0:07:13] Rob :Yeah. There’s two good ways to do it, one is just like you said where you have some sample data that they can add a flag on or off or they can just delete, easily delete all of it when they start. The other way that I’ve seen is to just have, it’s almost like a light image as the background of the page. And the image is of a fully populated data set. And so if you look you can see it but it’s kind of light it’s almost like a watermark. And then as soon as you start entering stuff that image changes to you know more of a white background. So that’s kind of a tricky way to do it but it means you don’t have to deal with you know actually data in their database. But then they can’t sort it, it’s all static and stuff.

[0:07:51] Mike: Right, right. I’ve seen that done before too but I think that just having fake sample data in there will probably be the  quickest and easiest way to get it done.

[0:07:57] Rob :I think for you… yeah I do too.

[0:07:58] Music.

[0:08:01] Rob :Today we have a very special guest. Dan Andrews for the Lifestyle Business Podcast. You’re going to learn all about how to hire interns, why the line should be blurred between employees, VAs, contractors and interns and basically hear a lot of knowledge from Dan who has 11 folks working for him and has basically bootstrapped $1 million product business. Not software but actual physical products over the past couple of years with his co-founder. So Mike and I had the pleasure of interviewing him, he’s in Bali and he stayed up late to talk to us. So I guess let’s divert into that interview.

[0:08:38] Music.

[0:08:41] Rob :So today Mike and I are here with Dan Andrews of the Lifestyle Business Podcast. You’ve actually heard me give me shout outs several times in the past. And I’ve been listening to Lifestyle Business Podcast which I’m going to refer to as LBP from now on. I’ve been listening to it since somewhere around episode four and they’re now on, what are you now on Dan, episode…

[0:08:58] Dan: 83.

[0:09:00] Rob :83 yeah. So they go weekly in there. Why don’t you say hi to the audience Dan?

[0:09:04] Dan: Hey everybody. It’s good to be on the other side of the mike this time I guess. I’m usually on the ear buds doing this show.

[0:09:11] Rob :Nice. So in about a week you’ll get to listen back to this.

[0:09:14] Dan: Yeah.

[0:09:14] Rob :So why don’t you give folks an idea, you know there’s probably a lot of folks who haven’t listened to the LBP. Give them an idea of what it’s about, what you’re about, just kind of get them introduced.

[0:09:25] Dan: Sure. So I’m a four hour work a week so like I had a job, a 9:00 to 5:00 guy and that book really influenced me. I was running a manufacturing company at the time and I read the book and it just like hit me like a ton of bricks I was like yes. You know because my passion was always to travel and I really never saw it as a possibility for me. And immediately after having read that book I sat down I thought well what could I do with a  business that would allow me to start to free up some of my like you guys are talking about location independence. I scoped out with my friend and business partner Ian who is my co host as well an e commerce company.

[0:10:00] And we just got started like absolutely from  square one with a Yahoo Store and put it up and started selling some products and here we are four years later and it’s just been an amazing ride. I think about halfway through we decided to start podcasting about all the stuff we were learning and sort of build up a community around what we were doing. And here  we are four years later it’s not, so I’m in Bali right now, Ian’s visiting me for six weeks and that’s been an incredible ride.

[0:10:27] Rob :Yeah and I haven’t told you this before but what I like about your podcast is that you guys are legit. You’re not information marketers trying to sell people want to know how to make money online. You guys have started, essentially it’s an online business or several online businesses that self physical products. So one of your lines of business is cat furniture right?

[0:10:45] Dan: Unfortunately…

[0:10:48] Rob :Unfortunately?

[0:10:48] Dan: Yes tough market. I wouldn’t recommend it.

[0:10:51] Rob :You also sell stuff related to hotel, servicing hotels is that right? I mean I don’t actually, you don’t actually talk specifically about it I’ve just heard you mention it.

[0:10:59] Dan: Sure we sell key boxes, we sell security like safes and stuff, we sell portable bars for conventions and hotels It’s kind of like a hodgepodge, it’s similar to your approach, you guys take the software. I mean we buy into markets based on key terms, based on maybe a passion that we have. So we’re probably actively involved in six or seven e commerce markets right now.

[0:11:25] Rob :Got it. And some of the them Ian actually designs or you guys design products and have them manufactured and you deal with manufacturing in China and that’s a lot of the stuff you’ve talked about in the podcast. And then others I assume you resell, you don’t design all the lockboxes and all that.

[0:11:39] Dan: That’s right we do a lot of drop shipping as well.

[0:11:40] Rob :Right very cool. So Mike and I wanted to have you on to talk about finding staff cheaply because it’s something that you’ve talked  a lot about on the LBP, you’ve talked about getting interns. I know the Tropical MBA if people haven’t heard about it, it’s a way that you’ve convinced some really bright folks to come on board for basically a lesson they would make as a salaried employee. But you fly them around the world to the Philippines or Bali where you’re living now. You put them up in a house and you get this genius, I’ll say kids because I’m 36.

[0:12:13] Dan: [Laughs]

[0:12:13] Rob :I know they’re like in their 20s but they’re like genius kids to help you out all kinds of crazy stuff. And you guys are running, you did a million bucks this year huh?

[0:12:20]Dan: We did a, actually probably I think this week we just clicked over to a million bucks so.

[0:12:27] Rob :Congratulations man.

[0:12:28] Dan: Crazy, thank you.

0:12:28] Rob :Yeah. So today we’re going to talk about how to find staff cheaply. And I guess I want to start by maybe introducing the four kinds that I have in mind. We’ll probably wind up covering all of them. As you know we don’t tend to do straight up interviews, we tend to do more like interactive discussions because  Mike and I have experience with this stuff as well. But I think you have a unique lens to put to this because like I’ve never hired an intern and I actually some specific questions about how you might go about doing that.

[0:12:56] So I’m going to get started with the four kinds of staff. The first is employees, and that’s what a lot of people think of you know when they’re thinking about starting a business. I know that Mike hired employees, you hired several employees in Philippines Dan. And then I have for myself I don’t think I have, maybe I’ve hired one employee in the past ten years. So the second kind is contractors and that’s what I’ve tended to stick with and I’m sure we’ll all have some insight on that. The next is a virtual assistance and then the final is interns.

[0:13:25] And so we’re going to kind of cover each of those. I’m sure there are going to be a lot of overlap and similarities and such. Mike you’ve been pretty quiet so far, sorry about that, talk briefly about which of these have you had experience hiring.

[0:13:38] Mike: For me it’s been employees, contractors and virtual assistants. I’ve never hired an intern, I looked around a little bit for an intern a while back, had somebody in for an interview but it was, I knew the person kind of peripherally through some you know links I had back to college. So it wasn’t like he was a complete unknown and he ended up going to get an internship at Google instead so [Laughs]

[0:14:03] Dan: [Laughs].

[0:14:05] Rob :How about you Dan? Have you covered all the, all four of those?

[0:14:09] Dan: Yeah currently I think we’ve got all four.

[0:14:11] Rob :Like I said so I’ve definitely hired a lot of contractors and VAs. I think I’ve hired one employee although I’m trying to think it might have been myself that I hired. You know when you set up an LOC like hire yourself. And then but I have, I did hire quite a few, probably 10 or 15 developers at a previous job and I gave a couple of hundred interviews over the course of a couple of years. So I definitely have experience in that realm. So it seems like Dan has the unique intern hiring experience here.

[0:14:38] Dan: Well I can, I can share my big fat principle. So for everybody who’s sitting there saying like, ah I don’t want to listen to this joker talker.  Like arguing, that’s development stuff. So  this is the one message I will leave to the audience. It is as entrepreneurs, as people who have businesses, by like travelling around the world and meeting so many people that are both aspiring to do this and have managed to pull it off, we are in such a unique position and it’s one that aspiring entrepreneurs. Like when I was 22 years old and had a crappy job I was just praying that some guy would you know put an ad up on Craigslist and say, follow me around with a notepad and do my crap work, I’ll teach you how to be an entrepreneur.

[0:15:16] And that opportunity just did not present itself. And now with things like you know the blogosphere, you can do that, you can present those opportunities to other people and people are just dying to learn directly from people who have business.  So I think that’s the number one thing that entrepreneurs undervalue, they’re not, they sort of get caught up in their own world and they forget how meaningful that information is to other people. And by now having nine interns through the Tropical MBA program and a bunch of employees I’ve realized how valuable that experience is for them to actually learn and work directly with people.

[0:15:50] So I think I constantly see entrepreneurs sort of just second guessing themselves, maybe not being so confident about it. But I just want to reassure the entrepreneurs out there how valuable that is to other people that are aspiring to do that, even if you don’t feel that successful yourself.

[0:16:07] Rob :Right and that’s a good point. If you have experience it’s like you said basically by offering to share that you can get really smart people to come work for you as interns or you know one of your other types. And thinking about the intern question because that’s kind of the big thing on my mind, you’ve like I said some really smart kids to come work for you by sharing your knowledge. Why do you then continue to have employees, contractors and VAs? What role do they fill that the interns don’t?

[0:16:33] Dan: Well the interns get hired. So that’s sort of what ended up happening and I didn’t really expect that because at the beginning I was like well if you come work for me for six months I’ll help you get your own business off the ground because that’s sort of the whole reason they wanted to work for me in the first place. But what I realized and you know remembering back to my own experience is that it takes longer than six months to launch a business generally. So they ended up wanting to stick around longer. And so I just brought them on the payroll and that was that.

[0:17:02] And  so I think one of the things is that the lines between these things are very unclear for me because it’s not so clear what an intern is versus a VA or what an employee is versus a VA. And like you know it’s my Drupal developer in  Manila a VA or an employee? It’s not quite clear in our organization. What ended up happening with the interns in particular the people I brought on to be mentored, a lot of them I ended up hiring. That’s been great.  In fact we’ve run unpaid internships more classical type internships through our California office. We do industrial design out of that office.

[0:17:37] And you know those interns have come and work for free for college credits and then we’ve ended up hiring two candidates who’ve done that. So we see internships as a springboard into employment in our company.

[0:17:48] Rob :Got it. So I find it interesting that you kind of blur the line between employee, contractor and VA. Do you still have all kind of four types working for you?

[0:17:59] Dan: Why are we blurring the lines? [Laughs]

[0:18:00] Rob :Yeah I mean why do you, why would you have employees and contractors still? Is it just for short term stuff that you hire contractors or have you thought about moving everyone to W2?

[0:18:11] Dan: A lot of it is so caught up in like the story of our business. So basically I started using my location independence to start chasing down more cost employees. So first I went to Vietnam and then I went to the Philippines. You know everybody has heard about the Philippines and the VAs there. And then I decided wow people want to travel with me so then I started inviting interns over. And when I hired those interns it wasn’t like I was going to put them on the payroll of my California company. So what we ended up doing was opening up offshore companies and the paying them out like contractors. And obviously there are much lower rates than what you traditionally think of an employee.

[0:18:48] So  we’ve got people in California back at like at the classic, they’ve got the 401K and they’ve got their health insurance and all that kind of stuff. But the guys that are sort of traveling the world doing my ad words and PPC and SEO and all that kind of stuff, those guys are paid out just like contractors would be. Does that make more sense?

[0:19:04] Rob : Yeah it does yeah.

[0:19:05] Dan: So it’s crazy, it’s totally illegible [laughs].

[0:19:08] Rob :Yeah but what’s funny is it sounds like it’s brought on more like government red tape or regulation or just it’s the specifics of bureaucracy that force you to do that rather than like you, it sounds like you view everyone as just part of your team and it doesn’t really matter if they’re a contractor or an employee, that just a designation you have to make to satisfy government taxes and such.

[0:19:28] Dan: Exactly. And that’s my philosophical way of you know just managing the business in general. If I’m paying you a 150 bucks to do a gig for me welcome to the team you know. And that’s the way I look at it and also that’s the way I do management because I find it so creatively draining to delegate. And so what I need to do is infuse sort of the vision of the business into these people around me so that they can take care of it for me and they can sort of lead themselves.

[0:19:56] That’s why yeah this whole idea of the classic, oh you have a VA and there is a Rip sheets and they’re just like follow the 15 steps on that sheet and then voila you’ve made your money on your VA, I’ve never done that. It’s never worked for me.

[0:20:10] Rob :Right. I have about seven or eight different contractors who work for me. Several of them I would classify as VAs and then see I classify developers and database administrators kind of technical people differently just maybe because I am one but I don’t call them VAs. But I do have VAs who basically do tier one email support and it’s mostly a process. Like it mostly is a Google doc and a Screen Cast that gets them started and then they have these snippets to reply. It’s not all robotic, I mean I still have to hire good people who are fluent in English and all that stuff.

[0:20:40] But they’re more like, I guess a VA in a company they’re more like the people in the call center who are a bit removed from the core team building the product. And that maybe a detriment to what I’m doing. I mean I guess, what’s your perspective on that? Like do you, when you have people doing admin work and you also have people doing hardcore technical SEO, building products and stuff do they interact and they all know each other and they really are part of cohesive team or is there separation there?

[0:21:07] Dan: On the one hand it can be business specific. So we don’t have like, I’m kind of jealous of businesses like that. I think our business is kind of haywire and it might be  a reflection of who I am. But mostly what I would do is instruct the people on the team to go hire out contractors from either people in our personal network because generally we do or people on Elance or Odesk or something like that. So often times it’s kind of like admin tasks, nobody on the team wants to do that stuff because we very much have this kind of like upper route feel in the company. People, you know we encourage people to push things forward and be creative.

[0:21:40] So when you put a bunch of admin work on their desk they’re kind of like, eh not so much. We take contractors on outside countries from either Odesk or Elance to do a lot of that kind of stuff.

[0:21:49] Rob :Got it. Okay. So you know we have a lot of folks who listen to this who listen to our podcast, who are probably you know either just building an app or have launched or thinking, wow when do I hire someone and what do I hire? You know do I try to look for an intern first? Do I look for a VA? Do I look for a contractor? Mike give me some perspective on your thoughts on that. Like at what point does someone need to start thinking about getting outside help and maybe what should their first step be when they start.

[0:22:18] Mike: I think that the time you start looking for help is about the time that you kind of get to this point the business can actually support having it so you have to have a business first. I mean if you’re hiring in advance of the need then you’re, I won’t say you’re throwing money down the drain but you’re basically taking a risk. The business that you expect to come may not come at all. At which point you are paying somebody money which essentially becomes a money sink which you somehow have to support that but because the business isn’t there you can’t sustain that for very long.

[0:22:50] So you have to make sure that the business is able to financially support that and I’ve made that mistake in the past and I know others who’ve made that mistake, but if you’re hiring in advance of the needs then that’s just a bad idea.

[0:23:02] Dan: My hand was raised when you said I know others have done that. And I’ve done it a bunch of times and a lot of times what I do is I hire because I want to avoid the emotional labor. So if it’s like I know there is money over here somewhere right? And alright well I know I can hire someone in the Philippines for $400. So I’ll hire them and I’ll like sort of push them in that direction and say go make the money.

[0:23:24] And that’s like the worst strategy ever. It always just loses you $400 a month [laughs]. That’s why like you know cut the suspense for you, that’s what’s going to happen. So yeah I mean you’ve got to go and identify a repeatable scalable source of income or at least a sustainable one and you have to forge that yourself. I mean that’s what entrepreneurs do. You have to build that, you have to talk to the first clients and then plug somebody in. I tend to plug people in  super fast. Like when I find out that source of income is going to pay for itself I will immediately hire.

[0:23:53][Music]

[0:23:56] Rob :I guess that leads us to kind of the first steps to how to find an employee, contractor, VA or intern. Dan in your experience is it similar for all those four types? I imagine the intern process might be different than the other three. What would you say?

[0:24:10] Dan: First of let me talk about a bit of an opportunity that I’m trying to spearhead on the web which was sort of based on how to I wanted to live. So there is this phenomenon called Location independent entrepreneurs or location independent freelancers. And this has just been gangbusters for our business is identifying young people, generally young people but it’s not limited to them who want to travel the world as they work. And this is just an incredible subset of people and if you can tap into them I used to be backpacker. And that’s where like all this wanderlust came from. And the magic number for backpackers is 1000 bucks a month.

[0:24:47]And a lot of our websites need you know incredible amounts of, we need to do a promotion every day but plus we do customer service plus we need to do this, we need to do that, it’s tough to find a Filipino VA to do all that. But it’s really to find like a recent college grad who is in a really tough job market who wants to hang out in Thailand and do all that stuff for you and essentially that’s like the market that I’ve been trying to put my hiring fingers into to incredible results.

[0:25:15] Rob :Got it and that’s what Tropical MBA program right? Where you bring folks around the world and…

[0:25:20] Dan: Right. So I’ll shamelessly plug a free service which I’m trying to get off the ground, it’s called Tropical Workforce which is basically just a job board and it’s free. Anybody, a listener on this show wants to post a gig or an internship there you’re more than welcome to I’ll help you with that. And yeah it’s a bit of an experiment right now. We just started it a couple of weeks ago. But the idea is basically take the idea of the Tropical MBA and extend to other entrepreneurs. You know all my entrepreneurial friends are basically like, oh I want to do a Tropical MBA I want to do it, I want to do it. So this is sort of our task with that.

[0:25:52] So that’s to back up and that’s basically something that I’m really excited about because you know this websites, there’s a lot of moving parts, there’s a lot of not so just…I’ve tried the whole Filipino VA thing, you know I lived there for a year and a half. I thought it was going to make me rich, I thought I was going to sit in Manila, get 20 agents for my business and it was going to be gangbusters and no bueno.  So the, what I found is that the travel those are amazing and because you’re offering them the opportunity to travel which is deeply deeply core motivation for them, they really deliver well.

[0:26:27] Rob :So how would that apply to someone like me who lives in Fresno California, you know wife, a couple of kids so I’m not going to be able to move around the world. Does that still apply to me even though I don’t live in Thailand or Bali?

[0:26:38] Dan: Well like I said like my right hand man who you know does all of my social media websites, all podcasts, in fact he manages two contractors. He would just jump ship if you offered him a job tomorrow [laughs].

[0:26:51] Rob :Got it. I see.

[0:26:54] Dan: But yeah I don’t think you need to, you don’t need to be traveling at all. I think you just need to extend the mentorship and you need to input in the time, that’s the biggest thing is they want to be able to work with you and see the vision and see how it works from the inside.

[0:27:09] Rob :So it seems like you have kind of a funnel going on where you attract people, you attract really smart younger people into this internship program and you can essentially you know it’s like you said you pay them 1000 bucks a month and they’re able to travel. They’re able to learn from you the mentorship that they require, but they also giving back a lot more than you can get from maybe from a $400 a month VA like you said. And then if they work out, I imagine some of them are phenomenal and those just fit right into your kind of your employee funnel.  And if they don’t work out then you know you part ways. That’s how you’re finding people these days?

[0:27:42] Dan: Yeah and they all become evangelists too. So like a lot of my top blog refers are successful bloggers that sort of came out of the program as well. So there’s all kinds of side benefits and everybody is getting together and doing stuff. I think when I step back and look at our whole business it’s just giant hack to try to get staff involved cheaply. And maybe that’s because you know we’re not developers and so we were always a bit hamstrung especially when it came to our development efforts

[0:28:09] You know it’s just so tricky for non developers to hire developers and so always trying to hack that situation. We’ve used bonus incentives, we use commissions so we have guys in China that work for us on commission only. We’ve used outsourcing, we’ve used in sourcing which is this whole I live in Bali I invite guys to come to my house and then we use the mentorship thing. So there’s sort of a broad range of these morphed our organization like you said to turn into a funnel. Because for me that’s the process, I don’t build scalable software platforms like I have to have something. My platform is my people, the team.

[0:28:42] Rob :Right. How many folks do you have working for you?

[0:28:45] Dan: It depends how you count. We have 11 and one is a business partner by the way. You know I want to make sure that I mention the captain. He’s, it all goes down because of my wonderful business partner Ian, also the most expensive employee. Just found out the other day he costs 50 cents on every dollar I make.

[0:29:02] Rob :How cool [Laughs]. Nice.

[0:29:05] Dan: So we have 11 people full time right now.

[0:29:08] Rob :Got it. Wow.

[0:29:10] Dan: And that’s kind of amazing for a company that’s the size of ours. For us that’s how we feel like we grow things, it’s by growing the team.

[0:29:16] Mike: But Dan, Dan I have question for you. When you brought in some of these people as interns and I know you set forth kind of the expectation that they work for you for six months and then maybe they go off and do their own business. But and then you turn around and you said, hey I’m going to hire you full time and whether that’s, you know whatever label you put on that as either employee or contractor, I think it’s kind immaterial. But what are your thoughts around the longevity of that person sticking around? I mean do you not offer somebody a job if they’re really gung ho about building their own company and leaving? I mean do you decide to not bring them on fulltime or do you say, hey that’s cool whenever you decide to do it? What are your thoughts around that?

[0:29:59] Dan: The way that we do it is I can kind of have always have an image in my head is like every person they want to get somewhere. Like they have their own personal idea of where they’re trying to get with their life. And I try to figure out how my business can sort of be a superhighway for them. So if this person like I just know he wants to travel and I’m not going to get off the travel bug. So I want to figure out how I can help him travel better than he could do it on his own. That way I’m going to get his best energy.

[0:30:26] Another way to answer the question is just to say we try to understand what their core motivations are. Our first intern Sean Ogle who is now a successful blogger, internet marketer. I just knew his passion was with his own projects and so what I did was supported him full stop and basically pushed him, you know pushed him out as hard as I could and said you have to do this.  And so I think you know we get pretty up close and personal with really what they want to do and try to deliver that to them.

[0:30:53] So you know of the things that has never worked for as an employee, as a manager is trying to be possessive or try to control people. So I try to do the opposite which is try to push them. So if that’s going towards their own projects I’m offering them you know mentorship, I’m offering them investment, I’m offering them whatever it takes to get out of the door and what it is they want to do.

[0:31:13] [Music]

[0:31:17] Rob :I wanted to find out if there is anything else, I mean I feel like you have so much knowledge on this topic that you could kind of riff on it for hours. But is there anything that I’ve missed or anything you’d like to tell, anything you’d like to share with them about this topic that I haven’t asked about.

[0:31:30] Dan:  I think there is one element to team building that we haven’t touched on yet which is masterminding.  The cheapest way to get somebody on your team is to I guess maybe get a partner. It’s cheap in the short run, expensive in the long run. Maybe even cheaper than that is just to put together a mastermind group and I know you guys talk about that on the program. And that’s the simplest way just to get started with this idea of working with others.

[0:31:54] And for me masterminds have just, it seems so simple. It’s like such a simple thing right, like put up a blog post and say, here is who I want to talk with on the phone every week and here is you know here is the profile and are you out there? And if you manage to get those people on the phone, my experience has been profound, like absolutely light years ahead in the business. That’s a great way to get started, if you’re a solopreneur it’s to reach out and try to have a mastermind.

[0:32:18] Rob :You know that’s really good advice. It’s actually something I’ve been meaning to talk about for a while because I’m now involved, I’m involved in person mastermind and then I’m just starting a Skype mastermind with different kind of folks.

[0:32:29] Dan: Oh cool.

[0:32:30] Rob :And something,  a question I get a lot is I’m a solo entrepreneur should I find a co founder? And I tend to say you know unless you really know someone and you really you know essentially going to get married to them I would say go solo. Mike and I recommend that approach as a rule. Unless you do have a partner who’s likeminded and you know there is a lot of stuff that comes together.

[0:32:49] But then the next follow up question someone always asks is well I need someone to bounce ideas off of, I need someone to support me and to talk me through stuff. And that’s, I realized that answer is a mastermind. Someone doesn’t need equity to support you and give you feedback and understand your business. I think that’s my new thing is like masterminds are substitute for co founders or can be if you find the right people.

[0:33:10] Dan: I’m in locks up with you guys on this point. And we even have a name for it, we call it an accountability partner. So people are just really mess things up by jumping into partnerships way to early in the process.  Absolutely agree to get an accountability partner, a lot of people in my immediate network have done this and they’re on the phone every Friday night at 8:30 pm and it’s stastic. And it really really helps.

[0:33:34]Rob : Yeah something I’m starting to see when folks do that, when they do an accountability partner over time  if they are a crappy accountability partner then you guys tend to drift apart. And if they are really good, you tend  to drift towards starting a business with them which I think is, an accountability partner is a good way to vet them maybe as a potential partner over the long run. You know you spend a year being accountable to each other and then once you start the marriage it’s kind of like you’ve been dating for a year and you know each other pretty well.

[0:34:02] Dan: No question. It’s great advice, it’s great advice. Partnership is a sinking ship [laughs]

[0:34:06] [Music]

[0:34:10] Rob :Well Dan really appreciate you coming on the show. Where can people find out about you? Where would you like to send folks?

[0:34:16] Dan: Sure the best place to catch me is the tropicalmba.com. That’s my personal blog and I do a podcast there as well. That’s  the best place to find me. Also we do the lifestylebusinesspodcast.com if you’re interested in podcasts so…

[0:34:29] Rob :Yeah I would definitely…

[0:34:29] Dan: It’s 2:00 in the morning [laughs]

[0:34:32] Rob :Yeah, hit iTunes, go Lifestyle Business Podcast, highly recommended. Thanks again Dan.

[0:34:39] Dan: Thanks guys.

[0:34:39] Rob :Alright.

[0:34:40] Mike: Thanks Dan.

[0:34:41] [Music]

[0:34:44] Mike: If you have a question or a comment you can call it into our voicemail number at…

[0:34:48] Rob :1-888-801-9690.

[0:34:51] Mike: Or you can email in text or MP3 format your questions at startupsfortherestofus.com. Our theme music is an expert from Moot used under creative commons.

[0:35:01] Rob :If you enjoyed this podcast please consider writing a review on iTunes and you can subscribe to us in iTunes or via RSS at our website. A full transcript of the podcast is available at our website, startupsfortherestofus.com.

[0:35:12] Mike: Thanks for listening we’ll see you next time.

 

Show Notes

• AuditShark Compliance Software
• HitTail Keyword Tool

Transcript

[Read more…] about Episode 58 | Inspiring Stories from Aspiring Entrepreneurs

Show Notes

• TechZing Podcast
• Pluggio
• AnyFu
• AppIgnite

Transcript

[00:00] Rob: This is Startups for the Rest of Us, Episode 57.

[00:03] [music]

[00:12] Rob: Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob.

[00:22] Mike: And I’m Mike.

[00:23] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What do think about the updated intro there, Mike?

[00:29] Mike: I love that you run it by me first.

[00:31] Rob: I just feel like our audience has been expanding from developers. There’s a lot of folks who e-mail or even post on iTunes and they’re kind of like, I’m not a developer but I’d still like this. So —

[00:40] Mike: Yeah.

[00:41] Rob: Like we’re gonna broaden our audience a bit.

[00:43] Mike: I do know a sad — the Business of Software Conference ’cause I ran into a lot of people who listened to our podcast there which was kind of surprising but just the number of people who weren’t just developers who listened to it. I found that interesting as well.

[00:56] Rob: Well, hey, we have some very special guests with us today. It is Justin Vincent and Jason Roberts from the TechZing podcast. He just wants to say hello.

[01:04] Jason: Hey, guys.

[01:05] Justin: Nice to be here.

[01:06] Rob: I imagine we have a lot of overlap so a lot of people probably already know you guys. This is gonna be a roundtable, TechZing for the rest of us. I think it’s what we’ll call this episode. The theme for today’s show is how to launch something on the side. And we wanted to pick something, kind of a topic to talk around that all of us have experienced and that we could all kind of lend some insights into.

[01:26] Justin: I think that you’re about to do some updates with — you and Mike.

[01:30] Rob: That’s right. Mike, what’s new with you?

[01:33] Mike: With AuditShark? Well, I spend some time working on the ability to support more than just a single customer. That’s coming along pretty well. There’s a few things that I’m looking at that have some — have you written in code and you made a huge number of updates and you’re pretty sure that it works but you’re afraid that there’s something in there that you screwed up? That’s kind of where I’m at right now. So I have to go back through and make sure that everything is actually working the way I wanted to ’cause I’d rather find the bug than have a customer find it.

[02:01] Rob: Perfect. Doesn’t that mean it works?

[02:03] Mike: Oh, of course, you know. And everything on the internet is true.

[02:06] Rob: Yeah. What about unit test? Don’t you have a suite — or do you have a suite of unit test, I should ask?

[02:11] Mike: I do but not for UI. So this is all UI-related stuff.

[02:15] Rob: Got it. That makes it tough. Well, cool. I have three quick updates, a couple of shoutouts actually. One is — many thanks to Dan and Ian of the Lifestyle Business podcast. That’s actually one of my other favorite podcast, very cool. We’re gonna have Dan on in a few weeks and they just continued to kind of be fans of Startups for the Rest of Us and talk about us on their show. And I’ve seen some folks come to the website from theirs and they blogged about us and all that stuff. So it’s just really cool to kind of be in that community.

[02:43] And there’s another podcast I want to mention called Coder Talk. It started just maybe about a month or two ago. Joey Beninghove and a couple of other developers and they mentioned us, talked about the podcast and talked about my book and then I picked it up in a Google Alert and wound up going on the show, I think episode 8 or 9. So anyways, if you haven’t checked that out and you’re a coder, it’s heavily technical. And if you’re into that stuff, it’s cool to a bunch of coders sitting around chatting about stuff.

[03:11] And then the last one is we now have 62 ratings in iTunes which I’m stoked about. It seems to be growing every week. And I really like the most recent review is by Strict9. I like the second paragraph. He says if you’re just starting out in the world of micropreneurs and single phone to startups, head over to the podcast website and start at episode one. It’s a crash course in almost every issue you will encounter along the way.

[03:35] And what I liked about it, A, it’s a nice compliment but B, I went back and tried to listen to our early episodes and they’re so painful, like we are so stiff and I don’t know. And I actually have feedback from other folks that it was that way as well and we really kind of keep into our own in the teens I think. So anyway, I saw that was funny.

[03:53] [music]

[03:56] Mike: As Rob said earlier, the topic is how to launch something on the side. So we’re gonna go through a list of about five, I guess, high level questions. And the first one is what to build. And, Justin, I’ll ask you specifically because you had this idea awhile back and then you went out, you implement it or you started implementing it and then you ended up changing the name of it and you finally ended up with Pluggio and I’m curious to know how you decided to actually go ahead and build that.

[04:23] Rob: And maybe to start with, you could just kind of give a brief-over of what Pluggio is for new listeners.

[04:29] Justin: Sure. Well, Pluggio is basically a Twitter social dashboard. So it’s actually a social media dashboard where you can author or make twits and you can also add in RSS feeds, get content. It makes it very easy to share content, very easy to create or follow it. And so where Pluggio came from was because myself and Jason started a podcast like you guys have started a podcast and we’re on episode 156 now which is about to be release. And when we started two years ago, we were wondering how we could promote it.

[05:01] And the very first thing we spoke about in the podcast actually, on episode 1, was Twitter. And I just got interested in Twitter and thought Twitter would be an interesting promotional tool. So when I kind of explored how to make the most out of Twitter, the first thing I thought was, well, what I need to do is put good content on Twitter so that if people are following me, they’ll get great tech content and then hopefully, when I post the podcast, they’ll go and listen to it.

[05:24] So that was one idea and I found that it was a pain to do that because I had to go around the net and find great content and then copy and paste the links, store them in a text file and then post them out a few times a day ’cause I didn’t want to flood my followers.

[05:36] So I thought, wouldn’t it be cool if I just had this tool where I could plug in RSS feeds, hack a news name list what I was thinking about and just manually click a little button on any stories that I like, I could kind of go and view the story and then click a button and then we’ll put it to a schedule queue and roll those twits out during the day.

[05:54] So basically that’s what I built and I just bought it for myself in the first place. We didn’t really know at that stage that we were a bootstrapping show. We were not specifically a bootstrapping show but we just talked about it a lot.

[06:05] That kind of evolved over the first few episodes and then TweetMiner was what it was called originally. And I just thought of building it and over decisions for it and everything about it have been on the air over the last 156 episodes. And myself and Jason have been brainstorming it as this has gone along. Now, it’s not hugely successful but it’s earning around $3,000 a month and has about 225 customers.

[06:28] Rob: What made you decide to change the name?

[06:30] Justin: Originally, it was called TweetMiner and the problem with that is it’s just completely Twitter related and as time went by I realized that this opportunity was a bigger opportunity than just a Twitter opportunity, the social media opportunity. And you can with Pluggio, you can post to Facebook, you can post to any social network. So we needed to remove that name of Twitter in there, the twit reference. But also, TweetMiner, the reason I called it TweetMiner was because originally it was to mine the content but somehow TweetMiner just seems a little, I don’t know, a little spammy or something so that’s why I changed the name. And what I mean with Pluggio is it’s just you’re plugged in to every social network, that’s why I changed it.

[07:09] Rob: Got it. So the advice we heard a lot is things like scratch your own itch and that’s essentially which you did here, right? You built a tool that you needed to use. Now, I’ve seen the scratch your own itch thing bail a lot. I actually in general think it’s not very good advice. I think a lot of developers try to build tools for developers and the market is just oversaturated and developers don’t tend to wanna pay and they want to build it for themselves and stuff. But in this case, it has worked out reasonable well.

[07:33] Justin: I wouldn’t do the same again. I wouldn’t. I think that, I only did it because of my naiveté of being a bootstrapper at that time, an entrepreneur at that time.

[07:41] Rob: Got it.

[07:42] Justin: If I had the opportunity now, I would do some basically anthropological research around a specific niche and find a group of people who had a problem and I would build something to solve that problem because it’s just easier to get money that way. It’s been really difficult to create a revenue of Pluggio because of the space it’s in. It’s got so much competition, all the competition is free, no one wants to spend any money in that space.

[08:06] Rob: So you’d go probably more customer development style then.

[08:09] Justin: I would. That’s what I would recommend. If I was gonna start again, I’ll try and find — Jason said something — some problem that needs to be solved that people are willing to pay for.

[08:17] Rob: How about you, Jason? You’ve built many apps. You can give people a brief overview of any of them if you want or the things you’re working on now. But I’m curious how you — ’cause I don’t know if that you’ve ever talked about how you’ve come up with your ideas.

[08:29] Jason: First of all, I’d like to say this is the longest I’ve been silent on a podcast.

[08:32] Rob: I was — I could hear you. I could hear you almost jumping in and then like holding your breath.

[08:37] Jason: I did. I got your intro, there’s about three times. I was like, ah. I’m like, all right. Give him space to talk. So one thing I just wanna add to what Justin said, I think it’s possible to scratch your own itch or find something that you’re really interested in but also do something, anthropological research in finding a niche. I mean, I think it can be dangerous to build a product in an area that you just don’t care about because this is — the going gets rough. It’s easy to just bail. So it’s like, I don’t care about this anyway. This is stupid, you know.

[09:07] And a bit of a sudden you fundamentally are excited about and understand it can give you a real advantage but I think what happens with kind of what you guys are saying is that, a lot of developers, they just want to get developing. So they just start — they code like the first or second idea that comes to their head which is the same first idea that comes to everybody which is why it’s so oversaturated. But I do agree that selling to developers is a dangerous proposition ’cause they don’t wanna pay for much. So it’s just another topic.

[09:32] So what my first — I guess one of my products that I built that may be relevant to discussion was Prezzo [Phonetic] which was a web-based version of PowerPoint and I read an article on the web that went pretty big and a lot of people seem to read how I screwed up my Google acquisition. And it was about how I perceived an opportunity with the webification of the productivity tools. And this is back when Gmail just came out. So I built a — I thought, you know what, all this stuff is gonna go to the web. If I could build one of these tools, be one of the top one or maybe three, I would have a good shot of being acquired by Microsoft, Google, Yahoo, that kind of thing.

[10:12] And I thought PowerPoint would be sufficiently complicated product that there wouldn’t be a whole lot of competition. So I built it over a period of 2 years and the acquisition almost happened but it didn’t. And the most interesting thing Google read the article itself. But the problem was I built something that I really never used or would care to use. So that’s kind of a problem. In some sense, I was just like — it was just something I was building to flip. I wanted to build something that would be bought by Yahoo or Microsoft for $10 million or $20 million and be done in three or four years. And I’m not sure that’s the best thing to do.

[10:55] Mike: I have a question. Did you essentially bootstrap it? I mean, you said you worked on it for 2 years. It sounds like you bootstrap. You didn’t go for funding of any kind, right?

[11:03] Jason: No. Actually I did. So a guy I knew, a friend of mine, who is a very successful entrepreneur and had a lot of capital, had been wanting to invest in another idea that I had. I’ve been working in the trading space, automated trading, algorithmic trading and what’s now termed by most people is high-frequency trading. And right around that time, I was starting to think that the web — I started to notice the web was wakening up again. This is like 2004 and I thought maybe it would be smart to do something in the web and so he was just like, whatever you wanna build, I’ll invest in it. He kind of — essentially brought me on track.

[11:42] So I went off and I started working on a couple of different ideas. The first one was sort of like a web collaboration platform, shared tasks, shared documents, contacts, that kind of a thing. But it seems like there’s a lot of — even then, there’s a lot of companies going after that. So I changed direction once or twice and then I sort of settled on the PowerPoint concept. So I was funded. I mean, I didn’t have to do any consulting or anything. I was able to pay myself a reasonable living salary and that’s what I did. That’s how I was funded.

[12:13] Justin: Hey, Jason. You should mention what happened to your friend who did follow the first idea, your first part.

[12:18] Jason: So when I first started thinking about the web concept, I asked myself, okay, what is the web good for and what is it not do well. And it was collaboration. People are still just e-mailing stuff around. And I thought this collaboration stuff should really work much better and so I started playing around with this collaboration. I think I called it Office G2. That was the name for it.

[12:40] But when — I read an article about Microsoft coming up with a web-based version of SharePoint and that kind of spooked me because the lesson that we learned in the ’90s was don’t compete with Microsoft. Once they’re gonna move in to a space, you might as well just get out and do something else because they’re gonna crush you. And I took that a little too literally. And so I immediately changed direction. I started going down this sort of Wiki round.

[13:02] And not too long after I changed directions, maybe within 6 months or year, I met a couple of other entrepreneurs who live right in my area in Pasadena and they started a company called Central Desktop and they were probably like 2 to 3 months ahead of me. And so when they saw that announcement about Microsoft doing a web-based for SharePoint they were too far in and they were just like, screw it, let’s just keep working on this. I mean — and as it turns out I don’t think Microsoft ever released anything of note if they ever did it and Isaac and Arnold kept pushing on and now, I just had lunch with him yesterday and I think they’re getting close to I think like 75, 80 employees or something like that. I mean, they are extremely successful.

[13:41] So yeah, I mean, I know the lesson is there but it’s just like, don’t worry about the competition or don’t worry about this big companies with what they’re doing ’cause you can’t control these forces and the markets are usually huge. If the market is big enough for a big company to go into it, then maybe it’s big enough to support lots of smaller companies ’cause they’re — not everybody is gonna choose to go with Microsoft or IBM or Oracle. There are a lot of people who are gonna choose other options for different reasons.

[14:04] And then in talking with Isaac and Arnold even if you went on the web and you looked at all the competitors in Central Desktop, there’s a lot of competitors in the space but it isn’t competing. It isn’t stopping them from being successful. They competed directly against the name Basecamp. It was sort of at least early on was a competitor of theirs and 37signals had all this love within text space but I mean, I don’t think they’re doing as well financially as say Central Desktop is.

[14:27] Rob: I think Mike and I talked about a lot about this on the podcast. We go back to episode 5 which is called how to find a niche. We talked about how to find a niche as you would expect but beyond that, I’ve done a lot of riding on it — there’s parts of my book to talk about it and I’ve blogged about this probably every few months ’cause it’s the most common question I get. I think there are way more people stuck at pre-product phase than they are actually working on an active idea. People just get stuck in the analysis of it.

[14:55] Mike: I think that both Justin and Jason agree though that just scratching your own itch is probably not the way to go in general. I mean, you really have to analyze the market a little bit and figure out — are people actually willing to pay for this and if so, what sort of revenue could you reasonably expect from that based on the amount of effort that you’re gonna have to put forward in order to build it or to have it build for you. And I think that’s really — the key is finding something, one, that you’re kind of interested in and, two, is actually gonna make you enough money that it is worth it for you to go in that direction.

[15:28] Justin: Can I just counter that with there’s something to be said for building something and creating some momentum towards moving somewhere. So even if you just stop making something, if you have no momentum and not doing anything and you’re stuck in that stage that Rob just described the kind of pre-product, pre-anything stage, I would say just give it a chance even for a few months to just move in a direction, to just get out of your lethargy and actually start making things happen.

[15:55] Mike: I definitely agree with that ’cause — I mean, there’s so many people who just sit down and they will not do anything thinking that they’re making progress because they’re reading blogs or reading books and learning all these different things, going to meet-ups and — unless you’re actually programming, you’re really not making any progress towards developing your product. And it’s not to say that you can pay somebody to do that for you but the bottom line is that you need to be working towards that and just learning and consuming the information is not gonna do it for you.

[16:24] Jason: If you’re gonna go after something, try and go after something that you can release in a reasonable amount of time because I’ve done this several times where I kind of promise that were so hard that it was just gonna take years of work. And that makes the whole thing, well, just hard, right? I mean, it increases the risk dramatically that you’re not gonna have anything ever that you can sell or make money with.

[16:47] So if you go after something simple and you whittle it down, even if you spent a month or two working on it, if it’s simple enough you might actually release even something, something simple even if it kind of sucks and only a few people are using it. That’s way ahead of like something massive that you’re like 5% done with.

[17:07] Justin: I actually take that one stage further and say if you start working on it, don’t stop programming it. Buy a copy of Balsamiq Mockups and mock that thing up in applicable format so you can start sharing it to people within a week and they can click around it and see what idea you’re thinking about and what product you’re thinking about and you can literally iterate, I mean, you can iterate on three or four products in a month and have an idea of whether people really wanted it. Are they willing to pay for it just through market research but at the same time building something that people can get their hands o?

[17:38] Rob: Yeah. My rule of thumb has been — if it’s beyond 4 to 6 months of development and marketing work to get it to market that it’s really — gonna be really hard for you to get there. I see a big drop off with entrepreneurs I worked with. Once they go past somewhere between 4 and 6 months, it depends on the person, the momentum just drops way off and they slow down. Very few people who have seen that never launched at that point. It is possible, of course, but I’m just talking an odds thing, trying to improve your chance of getting out there.

[18:04] Mike: So are you saying the odds of me actually launching AuditShark are minimal at best?

[18:08] Rob: Slim to none.

[18:10] Justin: Well, but you — here’s the thing. And this is a good thing about having a podcast and having a partner who you can readily speak to about your business. That essentially keeps you in the game, right? That keeps the momentum going.

[18:18] Rob: I agree, yup.

[18:19] Justin: If you guys didn’t have that, it probably be much harder for you.

[18:22] Rob: And you’re an  experienced entrepreneur. You’ve been doing it for 11, 12 years now. You are doing it on the “side” but it’s not as on the side. There’s a lot of people where they have 40 or 50 hours a week of the job plus they commute on either end and you do have some flexibility where you take one or two weeks completely off and just work on it.

[18:40] There’s some extenuating circumstances that all make it more likely that you’re gonna get out the door. And I genuinely think that talking about it like Justin just said, talking about in the podcast period has made you publicly accountable to this thing. Like when we showed up at Business of Software last week, I don’t remember how many people came up and were like, hey, Mike, how’s AuditShark? Like guys I never met before. I have no idea who they were. And I’m like, man, you’re really on the hook. I mean, we’re both on the hook, you know. And that’s a good thing I think.

[19:05] Mike: Yeah. I was amazed at that as well. In fact, I’ve been getting people lately just twitting to me and saying, hey, how’s AuditShark coming? When are you gonna launch?

[19:13] Jason: That’s the thing with the product I brought on for almost 2 years now, that was AppIgnite which is an immensely complicated project. And I think if it wasn’t for the podcast, it would be much easier to just sort of bail. But now it’s like I’ve talked so much about it, I would feel really bad about just dropping it. But I have to say that — the couple of things that I have pumping, pushing forward — one of the podcast — the second one is I have a partner on it going on and we have sort of a regular thing where we worked together like an hour, an hour and a half every single work day. So he calls me up or I call him up on Skype and we screen share and work together. And I would recommend doing something like that.

[19:53] If you can — if there’s somebody that’s convenient to work with that you trust that maybe have complementary skill sets or whatever, at least have a very shared vision, just having someone else that you can do something with can really get you going because a lot of times what happen is work or life or whatever just starts getting in your way and it just starts pushing the startup idea further out of your daily habit and then at a point where you just lose all momentum. But if someone’s calling up, saying, hey, we’re gonna work on this tomorrow, we’re gonna work on this, or what’s going on, it just keeps you going.

[20:23] Rob: I think that actually segways really nice into the second — kind of second topic which was the logistics of working on a product, when, where, how much time, etc. And yeah, I think that what you’ve just talked about is kind of this accountability, this daily accountability that forces you to do it or not, not work it at your routine. Anyone else do that? I don’t have a daily accountability but I have a bi-weekly. Every two weeks I meet with a mastermind group here and for us now — I basically asked them to take me to task if I’m not doing the stuff that I should be.

[20:51] Jason: Like I said with AppIgnite I do have a daily schedule that I worked with going on and it’s usually right about 1:00, 1:30 to 3:00 PM every day. My time is kind of right in the middle of the day and then I also worked on the weekends on it. But lately like the project that Justin and I have been working on called AnyFu that is less of a daily through shared work session. It’s more of like we’re working on our different pieces and then we’re just communicating or either we’re talking about it in the podcast or e-mail or whatever.

[21:22] I think if you could get a regular work schedule on something I think it’s easier. I think it’s easier to keep momentum because I don’t think “let’s talk about it” is enough as the importance of that in place and just realizing our long term goal. If you do something every day, it goes so much towards pushing you through the hard spots.

[21:39] Sometimes you reach a hard point but if you’re just like, get on every day eventually, you’re gonna bust through it but if you work on it, you reach a hard part and then you kind of like don’t do anything on it for a week. It’s so easy to kind of forget about them or they won’t work on it and then it just kind of falls out of your mind space.

[21:55] Justin: I have this concept of banking enthusiast, I mean, how like when you gamble and you couldn’t bank your savings. So once they’re banked they’re not on the table anymore. I sort of feel like that same thing applies to enthusiasm. So when I feel very enthusiastic to work on Pluggio, I maybe working a class work — I’m fortunate enough that I’m a consultant so I can choose what I work on — when I get the enthusiasm like, okay, I’m gonna find this right now. I’m gonna switch over to Pluggio and work in that enthusiastic mode because I feel that it just makes it easier to get good work done.

[22:25] Rob: That’s kind of a cool idea. I have found myself since I have a bunch of different projects I’m working on all time. I’ve done the same thing but I’ve never thought about it in that respect.

[22:34] Mike: I don’t know. I think I’m kind of — approach to this sort of a Hybrid Mindset. I had a hard deadline for my master’s thesis at one point where you’ve only got so along to finish it and I had — you’ve got 7 years to finish it at least here in the U.S. and I was bearing down on that 7-year mark and I knew I had to get it done. And it was one of those sins where I didn’t want to do it. I pushed it off for so long and I’m like, okay, well, I’ve already dumped a ton of money at this college for this degree, I better get it.

[23:01] So I just buckle down and I’d wrote a little bit every day and I got a couple of books on kind of guiding you through the process of writing in and the consistent theme that I found was do a little bit every day even if it’s not a lot. And looking at a blank page when you’ve got a couple of hundred pages to write is really intimidating. But if you just concentrate on writing like one sentence, the next sentence is a lot easier than the first. And you kind of get on a role and just like Justin said, you kind of bank that enthusiasm and as you start working on it, it really can build on its own. It helps you get motivated and it helps you get through the points that get to where you need to be.

[23:41] [music]

[23:44] Rob: You know, I just commented that I have a theory about the 4 to 6 month time frame and how it drops off dramatically after that. And so if you look at it on a kind of the logistics of working on it and you think someone’s probably got to put in 10 hours a week at least during that time to get it and obviously more is better. So if we say 10 to 15 hours a week is kind of what’s gonna be required to get something out the door in 4 to 6 months, then you’re looking at 4 months of 10 hours would be like 100 — gosh, I guess it’s around 120 hours total. It seems pretty thin to me and then 15 hours a week, 6 months, the top end would be about 300 almost 350.

[24:20] So somewhere between 120 is a pretty wide range. But 120 to 350 hours to get the one point out the door and that include — that’s not just coding, right? That’s actually QA and it’s getting the marketing website down and it’s getting marketing going. It’s getting all those sales page up, the landing page, collecting e-mails and then doing a launch and all that stuff. What do you guys think about that about trying to limit yourself to something like that to get a one point out the door? Is that realistic?

[24:46] Justin: I’m just thinking that perhaps you’re almost defining a new kind of rule, that rule 10,000 hours to get — to become an expert at something. Maybe there’s a rule for how many hours you need to launce something.

[24:56] Rob: Right.

[24:57] Jason: Yeah. You could break it down to like, okay, work 20 hours for this, 50 hours for that.

[25:03] Mike: If you think about in terms of 40-hour work a week though I mean, that’s 9 weeks. I mean, 360 hours is about 9 weeks and —

[25:10] Rob: Like it’s too much work.

[25:11] Mike: Oh, yeah. And if you’re putting in that much time and effort on something, if you have your idea and you know what you’re gonna do, 9 weeks seems like it’s a lot of time to put something together that is at least sellable.

[25:24] Rob: Right.

[25:24] Mike: I mean, unless it’s extremely complicated. It seems like you could do it.

[25:29] Rob: I guess the hard part is knowing — you got to know that you’re building the right thing, right? So you almost have to factor in like customer development during that time or do it beforehand and really have a good idea of what you’re building when you start that.

[25:39] Mike: Well, I think you do it beforehand ’cause I don’t think you consider it as part of the actual development time because you have to do all this upfront work to decide what it is that you’re gonna build and how you’re going to present it whether there’s competition, whether people are gonna pay for it. And that’s more or less research time. It’s not even development time. It’s the R part of the R&D.

[25:59] Rob: Yeah. I had a spreadsheet that kind of listed all this stuff out. It has all the tasks and has the hour estimates and that’s actually in the academy. I dug that out. I haven’t looked at it in probably a year and I think I did have the estimate. It was 400 to 600 hours at the time. But I’d be interested to see now with kind of just the new paradigm of getting launches out quicker for the fact it could be edited down. ‘Cause I think this is helpful for people, right? If you’ve never tried to build a product on the side I get that question a lot.

[26:24] It’s like, well, how long is this gonna take? How long should it take? And it’s like telling someone you should plan on 4 to 6 months, 200 to 400 or 400 to 600, whatever it is, is actually as kind of weird is that sounds to us to talk about, I think that’s like a decent guide, a decent general rule. You can certainly fall outside of that. Obviously, AuditShark is, AppIgnite is, Pluggio, now, did you launch Pluggio which was Twitter manner at the time, did you launch it in less time than that?

[26:52] Justin: I launched it in 3 months I think.

[26:54] Rob: Okay.

[26:55] Justin: I went from an original idea that we spoke about it ’cause we actually — I think we thought about it on the podcast and I think within 3 months I had to beat the notion.

[27:03] Jason: I know it’s quicker than that.

[27:04] Justin: I think it could have been.

[27:05] Jason: You sent me an e-mail, like, I have an idea. I’m gonna make some money. I think what are you talking about? And he was like, yeah, yeah. Let’s gonna do this thing and you’re like, I have quick idea to make some quick cash. That was kind of how I feel.

[27:18] Justin: Oh, yeah. It’s really been quick cash I can tell you that.

[27:22] Rob: Well that’s an — yeah, it’s an interesting question because a lot of people would kill to have a product that brings in three grand a month. Would you say it’s worth it, what you’ve done?

[27:30] Justin: Okay. ‘Cause I spoke at you guys in the conference, MicroConf, and part of our presentation was that I expected just like Jason said, I expected to make a load of cash and I launched this thing and I kind of went to like $600 a month. And because of my lack of experience as an entrepreneur I didn’t really understand how much time needed to be devoted to marketing from that point forward. So I kind of gave up on it and just left it for 9 months and they just kept on at this rate of $500 and then people on the show got pretty angry with me just like I kept talking about trying to start a new business and they were like, well, you’ve got this one that’s making money. All you need to do is market it.

[28:08] So then I went back into the marketing of it and it kind of took another I guess a year to take it to $3,000, maybe $3,100 revenue per month. So I was never expecting that. If I had known that when I was starting, I better would have done it because it’s like, you have to put this much work in. I mean, it’s almost like diminishing returns. It’s like to reach the speed of light, you need to use more and more explosives to get there. And that’s what I feel like — it’s been like for me with Pluggio, partly why I would recommend working at a different space, the social media for anyone.

[28:40] Jason: So let me jump in here. I think Justin launched — I think he had a beta version like 6 weeks. I don’t think it was 3 months. I think he maybe had beta for a month but you got it done pretty fast.

[28:51] Justin: Yeah, that’s true.

[28:51] Jason: I mean, Justin — once Justin gets on to something like he can’t think about anything else and he’ll just code night and day. I think that’s kind of what you did, felt like a month or 6 weeks. Then you got it up and it was making more than $500. I mean, I think it pretty quickly got up to like $800. It is like $850 or something. And then it kind of sat there. So without a whole lot of work, you got to that $800. It was just getting past that. It was hard, right?

[29:15] Justin: Well, yeah. Because what I have was — at the time I had the ability for people to pay a year in advance in the signup from and I kind of felt once again because of naiveté I sort of felt like I was cheating myself by doing that. So originally, a few people were signing up and they were basically paying a $100 upfront. And so that was really skewing the figures. So one month I was getting $600, the next month I was getting $300, the next month I was getting a $1,000. So I didn’t really understand what on earth was going on. So I decided to just remove the ability to pay the year in advance which I probably should have kept but anyway, that’s the way that I stuck at it and I just only included monthly revenue from that point forward.

[29:51] Mike: But those aren’t problems. Those aren’t really the problems associated with building that. I mean the thing that comes to mind for me is the fact that when you look at like Y Combinator, for example, you’ve got these small group of people who are stuffed in a room [30:06] for like 2 1/2 months and that’s all they do, is they work on whatever their ideas. Now granted, they get more than their 40 hours a week and they’ve got a small team of people but they put these things together and like 6 or 8 weeks because they’ve got demos that they’ve got to do before their 12 weeks is up.

[30:25] Rob: Right. I think they have weekly — they definitely have weekly meetings where they all meet and they have training and they hear a speaker and they’re doing — they are doing customer development or some of them are at least so it’s not just sitting in the basement coding there.

[30:38] Mike: They also have a team of people. So the differentiating factor I think is —

[30:40] Rob: Some of them.

[30:40] Mike: Let’s say about 2 or 3 people and they’re working on it and each of them is putting in 40 hours a week. Say one person is doing the customer development. You got two other people who were doing the coding. What does it take to crank out a beta of something with 2 people working 40 to 80 hours a week on it? It’s like 5, 6 weeks. It depends on how complicated it is. But once they start to get funding, I mean, they can add people, they can start dealing with problems of scale and things like that. And most of those are dealing with much larger types of applications than I think that we’re talking about.

[31:12] Justin: Okay. So basically I’m earning $3,000 a month right now because 2 years ago, I decided to scratch my own itch and then I had the momentum of a partner talking to me about it on the podcast and fans bugging me about it in the podcast for 2 years. And that’s the reason why it’s there at this stage.

[31:28] Jason: But you also took a year off and didn’t do anything. The thing is — sometimes it’s dangerous to extrapolate too much like say, well, you know, it’s gonna be this hard for everyone because you might be that [31:40] Pluggio in a sense that it’s just a hard market to break into or to earn a revenue stream. I mean, you might be able to build something in 6 to 8 weeks and you put in some marketing effort and it just kind catches a little wind. I mean, you think of things like GetHub. They just —

[31:54] Mike: But that’s fine.

[31:55] Jason: It’s not just the right prom at the right time.

[31:57] Mike: Yeah, but I think that the issue that we’re trying to talk about is really how to launch something not necessarily how to deal with it after the launch. I mean, there’s obviously the post launch aspect of it but I think the getting to launch is the thing that a lot of people struggled with. I mean, there are so many people; so many developers out there who have half-written applications sitting on their hard drive that are just wasting space because they just didn’t —

[32:22] Rob: I’m included in that group.

[32:23] Mike: Oh, yeah.

[32:24] Rob: I have a bunch of apps from like 5, 6, 7 years ago. Yeah, all kinds of different ideas. I came across some the other day and I was like, crap, this is embarrassing. I should take a screen shot.

[32:33] Mike: It is.

[32:33] Rob: Of course, it’s public and so people can mock me.

[32:35] Mike: It is embarrassing but you know what, I think we all do it though. There’s tons of things that we start and we’re just like, nah, this isn’t gonna work and it’s not because you got bored with it or you didn’t do the customer development or somebody else came out with the product that you think would kill it. There’s all these reasons but the fundamental thing I think we’re talking about here is just how long does it take to actually get to launch from the time that you decide to do it to the time that you can get that minimum viable product out the door that somebody is going to actually money for.

[33:04] Jason: Yeah, the reason I was bringing that up, the thing about Justin, of how hard it is, it’s just that — and the reason I think it’s important is that, when you make things sound harder than they are then it just is — it can be discouraging like oh, he works so hard and he’s just came with $3,000. Well, he worked hard and he didn’t. I mean, it might have been just the idea. So I often see that people succeed and like don’t do this. It’s super hard and, oh, wa, wa. I don’t know if it’s that hard and I don’t know if you kind of take that much time.

[33:34] Sometimes if you have a better idea than other ideas, or an idea that is just sort of the moment people were more interested in or it’s gonna be more viral, people were willing to pay for. Don’t worry about it being so hard. In fact, the point that you’re bringing up, Mike, is just get something up quickly because there’s nothing that’s gonna give you more momentum quicker than having somebody write you — actually make a payment.

[33:55] So if can get something up after 2 or 3 months instead of quick and even if you get like 50 bucks in for a month or 30 bucks, it’s actually — you could feel pretty good and then I’ll get you to the next point we’re making $150 a month and then $300 and then you’re off to the races. So the sooner that you can get it up and get someone paying you, the better.

[34:12] Justin: Well, what I think has the been most important thing that’s happened in the last two years with Pluggio was very, very close to the launch time. So it really is about the early stage of the development of your business. And this doesn’t necessarily apply to every kind of business but I think that for a business where people are using your product, your SAS product a lot, this is very important. And that is getting to a stage where you have between 3 and 5 people who are like early adopters and it just takes like 3 people who just really loved the promise and the hope of what you’re doing. And they are e-mailing with you every day and basically you have this repetitive cycle where you build the features that they request. And you’re just working with just that tiny core group of people building the seed, grabbing it. That has been the most important thing I think for Pluggio.

[34:57] Rob: That’s cool. Sounds like customer development except that it’s not in person. You’re basically getting your control group together and just getting all the feedback from them.

[35:06] Justin: Well, because they’re passionate about it. They’re trying to build this thing. They got problems they want to get solved. And the chances are that if it’s gonna work for these 3 or 5 people and you’re solving problems for that tiny little group and they’re thinking, oh, well, I’ve got this person who’s building me custom software to solve my problems, then it’s gonna help you because it’s gonna work for a lot more people if they can work for even a handful of people.

[35:27] Rob: Right.

[35:28] Jason: And I got something to add to that actually. So you can actually get to that sooner. So when you have a product, great, you get this early adopters and strike conversation with them. But if you talk about your idea as you’re working on it and I don’t care if you’re talking about on Twitter or on your blog or Facebook or Google Plus, or whatever, then you can start getting some feedback from people because if — you don’t even have to ask for it outright.

[35:52] When you talk about something that’s of interest to other people, they’re going to respond and they’re gonna say, hey, that sounds kind of cool. And people don’t like to talk with their ideas ’cause they are so worried that people are going — that someone’s gonna steal it. But no one’s gonna steal your stupid idea because at this stage it’s just an idea and it hasn’t been proven that it’s gonna make any money. And if it’s already been proven so — but if you’re going after a space where there’s already people doing it, then there’s nothing to steal, right?

[36:16] If you’re gonna steal something, they’re probably gonna try and steal an idea or whether they’re gonna compete with an idea that’s already demonstrated that’s making money, you’re idea hasn’t demonstrated anything. So don’t worry about people stealing your idea. Start talking about it and then you can feed off the enthusiasm that you get back from people saying, hey, I can’t wait to do that. Sounds really cool. Let me know when it’s available, that kind of stuff. But on the other side, if nobody, if it’s crickets — like if you talk about it in your blog and nobody seems to care about it, then that might be an indication that maybe we’re kind of on our own thing.

[36:45] Rob: All right. I think another piece to that is that if you have an idea that’s so easy to steal, that someone could go out and build it and beat you to market then when you launched, you’re gonna launch and they’re gonna build it in two months and they’re gonna eat your launch anyway, right? It’s not really about the technology, it’s about — if they can steal your idea and out market you, then they’re gonna out market you now or in 6 months. Would you rather build it or not?

[37:12] Justin: There’s been a lot of times when people have said, well, I don’t want to tell you my idea. I don’t want to tell you my idea. And then — because it’s like you need to sign some kind of idea or whatever and then they ended up telling me that “their” idea and I just don’t understand it. It’s like, what the hell are you talking about? Like most of the time even when you have an idea or it’s probably not even well formed enough that people actually get it.

[37:33] Mike: Oh, yeah. I remember explaining AuditShark to you at MicroConf and it took a while before you understood what it actually was and what it did.

[37:41] Rob: It takes a while for —

[37:42] Justin: Because you missed out like the key piece of information about AuditShark. I think that — I know I still haven’t heard you say it which is that you actually have actual software that gets installed on each person’s machine and that’s the kind of key component that makes it just work really easy for them. They just install the software and then they don’t need to do anything else from that point forward. Just click a button, the software takes care of everything else.

[38:02] Mike: It’s actually the opposite. They install the software, one machine and they don’t have to install all the others but they still get the information from them.

[38:09] Justin: Right. But the longer the shorter is they don’t have to do anything. They just — it just works from that point forward and it’s like — it collects all their information and saves them an awful lot of hassle and boredom.

[38:20] Mike: Yup.

[38:21] Jason: But in terms of stealing idea, a good example is that the project that Justin and I are working on. We talked about the idea that we’re working on now, AnyFu, a year and a half ago. And not only that we talked about the idea that we thought it could work. We’re saying someone should go do this ’cause we’re working on our own. I was working on AppIgnite and he’s working on Pluggio and a year goes by nobody is doing it, right?

[38:42] Justin: But not only that but we’re talking to an audience of between 1,000 and 1,500 entrepreneurs.

[38:47] Rob: If anyone’s gonna take it, it’ll be them, right?

[38:49] Justin: Right.

[38:50] Mike: Well, but the thing is, those people are also your audience and I think that if they were to do that, and if they were trying to take it “from underneath you”, there’s a certain amount of loyalty that your listeners are gonna have and they’re not gonna want to do that too.

[39:03] Jason: No, no, we actually — we’re telling them that somebody should do this idea. We’re not gonna do it. Somebody should do it.

[39:09] Justin: We wanted it to exist.

[39:12] Rob: If people are curious if you’re listening and you don’t know what AnyFu is, you can go AnyFu.com.

[39:19] Mike: I wanna know, is that intentional?

[39:21] Justin: No, no. AnyFu, you know, Kung Fu, so Fu is — one interpretation is it’s an expertise. So basically any expertise dot com except it’s AnyFu.com.

[39:31] Rob: Right. So it’s just in time expertise. It’s kind of like a high level, hourly Elance or oDesk. So on their landing page, let’s say if Elance and oDesk are the 99 cents store, AnyFu is gonna be like a Tiffany & Co. So it’s high level experts. People who have published, are speakers, who are just super knowledgeable and as far as I know, you guys are gonna limit the number of folks who can be on any given expertise. So if you have a Ruby on Rails or a NodeJS or Backbone or whatever, it’s like the best of best.

[40:01] Justin: It’s people like you, Rob, but not Mike. Like you’re so offended.

[40:06] Jason: We outlined what we thought was a good idea why it would work, why we had paid people for something similar on our own and just by like we needed experts, we want hundreds of dollars web, went through all the problem of trying to communicate them from e-mail and hire them and all that kind of stuff but even though we outlined the business case and how the technology worked, it was still like, okay, so that might work, right? There’s still no proof that would be a business. And that’s why nobody would steal it, right? You can go on the web and you could look at any number of these little startups that are popped at Y Combinator or the other incubators. They’re making money. It’s a good idea. I’ll go compete with them.

[40:42] Mike: The problem with AnyFu I think though is that whoever puts it together is left with this problem where you have to bring two sides together and without one the other one is kind of useless.

[40:55] Jason: Right. It’s the market place problem, right, which is so —

[40:56] Justin: Yeah. And something else is — and I’ll just add to this discussion here is that when we first spoke about this idea, this goes to show you essentially it’s about execution rather than the idea. Because I don’t think that AnyFu would be as successful as I think it’s gonna be if we haven’t spent a year thinking about it, talking about it because it is not. By the time we’ve worked it all out and basically the product that we’re creating, I can pretty much guarantee you it is not put together in the way that you expect it to be put together. It’s completely different to what I had imagined it.

[41:27] Rob: But you know, something that I think listeners should take away from this is every time I’ve seen you guys whether it’s been one on one or at MicroConf, you guys are talking about the idea, you’re asking people questions and you’re listening to the feedback. Both of you guys, last time I was down in LA, we met for a couple of hours each and you guys have really pointed questions, very specific and were genuinely interested, you weren’t just talking about it to blah, blah, blah, here’s an idea. It was like, we’re working on this part, what do you think? Do you think people would use this? Would you use it? How are we gonna get around this problem?

[42:02] And it was like, you really have spent a lot of upfront time developing this idea and being very open about it and public and as a result you have the — maybe the best opinions from the 50 people you talked about whether it’s me or the group of people you were — you had a whole dinner table at MicroConf and you guys were all chatting about it, and they’re all giving you feedback and I know you change the idea because of these things.

[42:26] Jason: Oh, yeah. That was like a 2-hour, that was a 2-hour brainstorming session with I don’t know, 8 to 10 successful tech entrepreneurs. These are all people who would be potential clients and also potential experts and we went through and you sat down, Rob,  for a while and we went through a number of like business models and how to make it work and we iterated through about 3 or 4 different versions of it until we hit on what was gonna work because every time someone says well, do you charge an expert to be on the side, and we’re like, no, that’s gonna make sense for this and this reason that a couple of people would throw out and then we’d go to another version and say that’s not gonna scale for this. I mean, like we iterate it so fast because it wasn’t just Justin and I talking. It was a group of 10 people for like 2 hours.

[43:07] Rob: Yeah, and that’s invaluable, right? If you’re sitting in your basement or even the two of you talking on the podcast, the idea would never have evolved that quickly or maybe never would have evolved to that point at all without getting the feedback.

[43:20] Jason: Right. Right, I agree. Absolutely.

[43:23] Mike: We definitely talked about your ideas.

[43:25] Rob: Yeah, man. I think that’s tech way right? Figure out a list of questions. Actually, at BOS last week, I had a list of questions and you know who’s good at this? It’s Harry Hollander and Ted Pitts. They are founders of Moraware software. Every time I go to a conference with them, they come and — they’re always at the beginning to say, yes, well, I have these two questions I’m asking everyone. We’re trying to figure out the, you know, this year it was like they’re trying to hire someone and figure out what the other one was. But that was their goal. It was to get that question “answered” by as many people as possible. And I think that’s a really kind of a cool way to do it.

[43:55] Mike: You know what Ted’s question for me was, why haven’t you launched AuditShark yet.

[43:59] Rob: Yeah, I know.

[44:00] Jason: Well, it’s funny bringing up Ted and Harry because they were at that table with us and I think Ted had a couple of very important points in that conversation and they’ve built successful business themselves so they had some great advise for us and then both of them were saying listen, whatever revenue model you have you got to make sure it scales with the usage because if the first is withdrawing out, it just weren’t gonna scale.

[44:22] Rob: It was like flat fees, right?

[44:24] Jason: Flat fees. It’s like give us a flat fee. You’re gonna charge that and you’re gonna be very sad. I’m saying that craziest — you’re gonna be sad.

[44:30] Rob: You’re gonna make your experts a lot of money and you will get $10 or whatever.

[44:35] Jason: Exactly.

[44:35] [music]

[44:38] Rob: We have three more points that Mike had planned that we answer but frankly we have to have you guys back on.

[44:45] Jason: I’d love to be — I’d love to do it.

[44:47] Rob: That’s the take away here is that we all have a lot to say and we have a lot of experience and stuff. So hopefully folks enjoy the episode and we can either finish up this topic sometime in the future or just choose another potential random one and go at it.

[45:02] Mike: Absolutely.

[45:02] Rob: I had a lot of fun. This is cool.

[45:04] Jason: Same here. It was great. Thanks for having us on.

[45:07] Justin: It’s really, really fun to be on the show.

[45:09] Rob: And if you’re a listener of this podcast and you haven’t checked out TechZing you definitely should. The URL is techzinglive.com. And of course, if you’re on iTunes in search for TechZing you can find both of these guys. And then guys, I know you both have — you both have blogs. You also both have products so each throughout one website, one URL where someone could get in touch with you or where you prefer that they’d go and checks out about you.

[45:34] Justin: Justinvincent.com. That’s my blog.

[45:37] Jason: Yeah, and for me would be codusoperandi.com.

[45:41] Mike: Interestingly enough if you also searched for Startups for the Rest of Us in iTunes, their podcast comes up. So with that if you have a question or comment, you can call it in to our voicemail number at 1-888-801-9690. Or, you can e-mail in an mp3 or text format to Questions@StartupsfortheRestofUs.com. Our theme music is an excerpt from We’re Outta Control by MoOt used under creative comments. If you enjoyed this podcast please consider writing a review in iTunes by searching for startups. You can subscribe to this podcast in iTunes or via RSS at StartupsfortheRestofUs.com. A full transcript to this podcast will be available at our website StartupsfortheRestofUs.com. Thanks for listening. We’ll see you next time.

 

[Read more…] about Episode 57 | TechZing For The Rest Of Us

Show Notes

• AuditShark Compliance Software
• HitTail Keyword Tool

Transcript

[00:00] Mike: This is Startups for the Rest of Us, Episode 56.

[00:03] [music]

[00:11] Mike: Welcome to Startups for the Rest of Us, the podcast that helps developers 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 going on, Rob?

[00:24] Rob: I am excited to be back recording again, knowing that we’re actually gonna publish this thing in a week or two. We got so far ahead of ourselves that I’ve had all the stuff to say. There’s been this big agenda building up whether it’s updates for my products or just people, you know, asking us questions on Twitter that they wanted to address on the podcast that I now have this huge bulleted list of stuff and so — I mean, it’s almost been — aside from the business software episode, we haven’t recorded in almost two months.

[00:51] Mike: Mm-hmm.

[00:52] Rob: Mm-hmm. That’s all he can give me.

[00:55] Mike: That’s the only response I could come up with. I’m on short notice here. Mm-hmm.

[00:58] Rob: Nice. I did notice that in our outline, I think I have like 17 bullets, and yours is none.

[01:05] Mike: Yes, well, you know, I lost power this past weekend so, you know, pretty much everything my world has come to a crash and halt. I just got power back yesterday. So it kind of sucked.

[01:18] Rob: Well, like for four days?

[01:19] Mike: Yeah.

[01:20] Rob: That’s brutal, man. I’ve actually have this neck problem, shoulder problem that has kept my productivity severely hampered for almost a month. I really haven’t posted in my blog. I’m having trouble just typing at all. And I’ve been to the chiropractor and, you know, it’s a neck thing ultimately but it’s kind of jacking up my shoulder, the muscles there. And so as of yesterday, I now have a standing desk.

[01:44] Mike: Really.

[01:45] Rob: Yeah. And this is on the recommendation of a chiropractor and, you know, it’s this big movement right now, right, in the tech world. My dad worked in construction and the construction tailors they always have drafting tables which were standing. And he said, yeah, it just keeps you from sitting down all the time which really is not good for us.

[02:02] So I was entertaining the idea of buying a full standing desk. There’s an expensive one but what I’ve heard is one of the best at geekdesk.com and I kept panning back and forth. It’s like 800 bucks plus shipping which wasn’t the end of the world but I have a really nice desk at home that I already like and I don’t really have room for another desk.

[02:20] So instead on the recommendation of a friend, I got ergotron.com. If you go there, it’s just a workstation which is like this big piece of metal that like clamps on the front of the desk and you can mount a monitor and a laptop and a keyboard and a mouse. So I have basically a two-monitor set up going ’cause my laptop is one of them. You can just push it and it goes up or you drop it down and you can sit when you want to.

[02:46] Of course, my legs are sore from standing, you know, last couple of days. But this one was only, gosh, I think it was about 385 bucks. I actually got it on Amazon with prime shipping overnight for 4 bucks. Yeah.

[02:58] Mike: I love that $4 thing.

[03:00] Rob: You know, when I’m buying like low and stuff, it doesn’t make sense but, man, you spent 400 bucks and this thing was a ton. So it’s like 4 bucks for overnight totally. It’s an interesting experiment. Everyone who I’ve talked to who’s done standing desks just swears by them now. You know, they love them and you don’t stand all the time, right? You can go up and down depending on when your legs get tired and stuff. But it just helps to change positions and still be able to work. It is a trip to — I mean, like writing code and writing blog post standing up is very weird.

[03:29] Mike: Yeah. I don’t think I could do that. And I think that’s more because I kind of have the opposite issue where if I’m standing for too long then I have problems and you seem like you’re the other end of the spectrum where if you’re not standing, you have problems.

[03:41] Rob: And that’s weird. Remember I was calling you Darth Vader — this is a suffer ’cause you have the “them” thing. It was like a box that was stimulating your nerves so that —

[03:50] Mike: Oh, yeah. It’s called the TENS unit. If you have muscle problems, you can get a TENS unit. And what a TENS unit does is you put these little pads on either side of the muscle that’s giving you problems. If I remember correctly, my understanding is that it sends electrical signals through the pads and essentially interrupts the pain signals that go to your brain.

[04:08] I mean, don’t get me wrong, it can hurt in that area if you jack it up too high. I only put it on 30% power and if I go to 32 or 33, it really starts to hurt. I’ve talked to people who’ve said, oh, yeah, I put mine in 100. I’m like, I don’t know how you do that.

[04:25] Rob: Yeah, that’s crazy.

[04:26] [music]

[04:29] Rob: Basically, this is the first episode of what we’re gonna call our update episodes where the content is not our typical actionable, instructional stuff. It’s more about updating on the status of our products, what we’ve been working on. We’ve gotten feedback from several people who said they wanted to hear more of that. And since we’ve only been releasing every other week basically every other week, we’ll be on normal format. And then every other week in between, we’ll be kind of an update format that could be shorter. They could be 10 or 15 minutes if we don’t have a lot to update on. Or, frankly they could be a full length if, you know, we just have a lot going on.

[05:03] And I’m sure it’ll lead us down interesting paths. I think there’ll be minimal outlines, so it’ll be a more fluid conversation and it’ll be a lot more focused on what we’ve been working on probably with AuditShark and HitTail and potentially, you know, stiffer blogging about or something like that.

[05:18] This is the first one. So if you’re listening to this and you think, well, I wanted some actionable stuff to play to my app, I don’t know. You can wait around but I wouldn’t guarantee it in an episode like this. We do have, gosh, I think I seriously have like 8 or 10 bullet points here in this outline now that are pretty interesting so stick around.

[05:33] [music]

[05:36] Rob: I listen back to our part one and part two of how we left our jobs and I realized that several times in my story I kept saying I’m risk-averse. And I’ve realized that I might have overstated that, that I’ve kind of realized over the years that I don’t like taking big risks but the more I thought about it, the more I thought I’m not actually risk-averse, I just never wanted to bet so much that it would ruin me since some entrepreneurs do that and I guess since some do and I don’t, I’ve been saying kind of in my own head like, yeah, I’m risk-averse ’cause I’m not willing to basically go bankrupt or to go 100 grand in debt to launch my app.

[06:09] And I guess I just wanted to kind of clarify that. It’s not that I don’t take risks, I definitely would — you know, I’ve risked frankly years of nights and weekends working on stuff. I mean, that’s a risk on to itself and I have risked big chunks of money but it’s money that I essentially can afford to lose. That if I lose it, I don’t lose the house. It’s money that I’ve built up for this kind of purpose.

[06:28] And I think one thing that made me realized it and I was listening to Richard Branson’s book called Business Stripped Bare. I mean, it’s decent. You know, not much applicable for me but one of the points in it, he says that he cashed it — he doesn’t use the term risk-averse but he basically said that he would never bet more than he could afford to lose even with his company.

[06:45] Like his record company was making $10 million a year and he was gonna make this big leap and start like producing artists but he couldn’t bet the company on it and so he had to take it slower and in essence he was kind of saying, yeah, I was risk-averse in the sense that I never wanted a loss to ruin me. And he talks about launching Virgin Air as well doing the same thing. But I’ve been kind mulling that over the last few weeks.

[07:09] Mike: That’s interesting. I hadn’t read that book so I didn’t know how to back up behind it. But I mean it makes sense. I mean, if you have spent all this time and effort building up a business. I mean, you don’t want to risk it all on something that could very well be a pipe dream. It’s not to say that you haven’t done your research or anything behind it but you don’t wanna put all of your eggs in that basket and then have somebody dumped it on you. I mean, there are things that can happen that are completely beyond your control.

[07:36] And even though you may think that you got all your ducks on a row, there are things that just come out of left field and there’s nothing you can do about them. There’s no way you could have foreseen them or change them. You know, like for example, me losing power this weekend. I figured I might lose power but I didn’t realize the extent of it. There’s things you just can’t necessarily plan completely for.

[07:54] Rob: Yeah, and that’s a good point. I think even experienced entrepreneurs, it’s like the more experience you get, the more you —

[08:00] Mike: The more afraid you are.

[08:01] Rob: Yeah. Because you realized that no matter how good you are at the stuff at launching companies, building products, whatever it is, your success rate is still 50-50. You know, if you get really good, are you one in three, one in two? I mean, I think Branson would say that like he launched — I’m trying to think what their failures were. I think maybe Virgin Cola was a failure and I think they have a couple of others. And he’s really damned good at it. And same thing with you and I, we talked about our failures all the time. Even after you’ve had your first success, you don’t necessarily have the string of successes then. I mean, some of them still fail even though you know “know what you’re doing at that point.”

[08:35] Mike: Well, that’s what — honestly, that’s what bugs me about these people who are out there and like, oh, you don’t learn anything from your failures and we don’t make mistakes and it’s like, well, you know, that’s  a lot of crap. I mean, everybody makes mistakes and everybody goes through those times where you try something out and it either completely bombs or just does not work out the way that you thought it would and you have to adjust on the fly in order to make things work.

[08:57] And there are times when as I said something comes out of the left field and there’s just no way you’re gonna be able to make it work so you have to be able to — and I hate this word — where you have to pivot to be able to do something else and make things go your way or even just abandon that path completely ’cause you can’t always make it work.

[09:14] Rob: Right.

[09:15] [music]

[09:17] Rob: We got a cool shoutout from english.stackexchange.com. I’m sure everyone’s listening to this podcast knows what Stack Exchange is. Well, it is a network of question and answer sites. And so the English One is English language and usage. And someone asked, well, could the link in the show — but basically someone asked the question, “What does the phrase for the rest of us mean?”

[09:40] I’m coming across this one a lot recently. I Googled to find its meaning but with no luck. For example, from Startups for the Rest of Us and it links over to our website. He has a phrase — it’s our intro, right? Welcome to Startups for the Rest of Us, the podcast that helps developers be awesome at launching software products. I just thought that was cool. Then there’s, yeah, there’s a question and good answer. “For the rest of us” in the context of the above webpages indicates that the author has found other resources explaining what they’re explaining. It can also mean in layman’s term, for the common man, for the average Joe, that kind of stuff.

[10:10] So I thought that was a pretty — not only interesting that, you know, it came upon Google obviously. So it’s kind of neat to see it on the Stack Exchange site but like for the rest of us, I guess I’d always thought that that’s what it meant, right? It’s like for those of us who aren’t doing the mainstream VC funded thing that everyone kind of talks about in the media, right? And what the media talks about it and then we’re doing it for the rest of us, the rest of us who can’t move to Silicon Valley, raise a bunch of funding, you know, work long hours for lower salaries and hopes of stock options panning out.

[10:40] Mike: That’s exactly what I was — I kind of intended by it. I mean, I remember getting the domain name a long time ago and I remember thinking at the time, I’m not quite sure what I’ll use this for but then I just kind of threw it out there and say, hey, what about we use this for the podcast because I had it laying around and I’m like, I wasn’t quite sure what I was gonna do with it. I was thinking of actually using it for a blog or something like that but it really kind of fit in with the podcast.

[11:05] Rob: Yeah, totally. Speaking of the podcast, you and I were just talking the podcast is now pumping 500 gigs of bandwidth per month so that’s half a terabyte for those who’re calculating. That’s just all episodes, you know, whether we have 56 every episode downloaded on October was amounted to about half a terabyte. And if we averaged 35 Megs per episode which is probably a decent average, that’s about 15,000 episodes downloads last month so that’s cool. We’re also up to 49 ratings in iTunes and we really wanna thank people for that.

[11:37] Mike: 59.

[11:38] Rob: Yup, 59. It helps tremendously, you know, to grow our audience as well just give us motivation to keep doing the podcast. We also got several new reviews. We wanna thank James Montgomery, Fast Alana, KCDStine and Chris Yo for commenting in October. Oh, here’s a cool one. Look it actually mentions —

[11:56] Mike: And D112345, don’t forget him.

[12:01] Rob: Are you making that up?

[12:02] Mike: No, I’m serious.

[12:03] Rob: All right.

[12:04] Mike: October 4th.

[12:05] Rob: One guy, actually James Montgomery says, “I’m still on the Hamster wheel but these guys are helping me map my way to the escape hatch. Keep up the great work.” So that’s cool. I won’t read all of them but there’s some actually really complimentary reviews and we wanna thank folks for doing that.

[12:19] Mike: You mentioned earlier the question about the previous podcast. I actually — if you go to StartupsfortheRestofUs.com and you look at the episode 54 and look at the comments in there, I just got absolutely slammed on my —

[12:33] Rob: Oh, you did.

[12:34] Mike: — my consideration of offering phone support for AuditShark at some point in limited phone support ’cause obviously I said I’ve been toiling with the idea of offering phone support only on a couple of days or joining certain hours kind of like office hours. And we actually got a couple of people who called — two different people who called in within hours of when the podcast went live, wasn’t it? It’s like two calls and then three or four comments, you know, right away.

[12:58] Rob: People are all over it, yeah. This was our most contingent issue ever I think.

[13:04] Mike: Yeah, which is kind of bizarre I think. I think people got the wrong impression about what AuditShark is really meant for because people were really saying you can’t offer no phone support for an enterprise level product and AuditShark is not an enterprise level product. It’s basically the idea of taking an enterprise product and repositioning it for the small business.

[13:24] I have absolutely no intentions of selling it into the enterprise. It’s just not meant for that. Could I do it? I probably could but I have no intentions of going that route because there are other products that are positioned there. So what better way to take an existing product or an idea and grow it than to build something that does kind of the same thing and then just simply reposition it for the small business? I mean, there’s lots of products out there that have done that sort of thing.

[13:50] Rob: Yeah. I actually, you know, when I was at BOS, I was talking — I was sitting next Ruben Gomez of Bidsketch and he actually mentioned it at one point during one of the talks, one of the speakers brought up. Bringing an enterprise product essentially down to the masses, the smaller and medium size businesses is a great strategy if you can pull it off. And Ruben turned to me and he said, that’s a pretty good market opportunity to just look at what enterprise products are out there now that there is not essentially, you know, a SAS version like that $99 a month version of that and could you pull it off as a $49.99, $1.99 version.

[14:26] Mike: Or even just an equivalent in the small business. I mean, if you look at — I’ll use backup software because lots of people will go out and look for backup software for the enterprise and there’s these massive solutions that, you know, they’re designed to handle terabytes of information and be able to back them up on a daily basis. And if you run them — if you just run them, the numbers, the mathematics on, okay, well, how much data can you pump over a gigabyte connection, you know, per hour.

[14:51] It turns out that it’s actually kind of a difficult problem to solve once you start scaling but if you turn that into a SAS product and you target it at smaller businesses and say, look, I can give you, you know, backups or remote backups online for fraction of the cost because some of those products, they cost like $1,000 per server that you wanna backup which is absurd but these enterprise level companies will charge that because they can get away with it. You know, if Ruben kind of have that idea that’s definitely a great strategy. I mean, that’s kind of what I did with AuditShark and you can definitely apply it to a lot of other businesses.

[15:27] Rob: Yeah, and I think to get back to the like the listener comments, they were thinking you’re going after enterprise but I would still contend that you figuring after banks because you’re talking about  going after small banks, right, to start with. I would say that having no phones support is gonna be better than like 4 or 5 hours a week than essentially having office hour phone support. My guess is they’re gonna look at office hour phone support as being a detriment, kind of like, oh, this guy is a small company. He can’t pull off a full phone support, you know so he’s doing this halfway. The more I thought about if after like really listening to the episode, the more I kind of wanted to express at.

[16:04] Mike: I forget why I even got the idea from it but I remember since then I was on the GinzaMetrics website and they actually have a pricing plan for I think it’s their highest level plan and as part of the support package, it says the founder’s cellphone number or something like that.

[16:21] Rob: Yup, it’s like the CEO cell number. Yeah, I think that’s a great thing. I’ve toyed with putting that in HitTail’s thing but I didn’t — but yeah I think that’s really cool. Yeah, it’s an expensive plan, you know. I think it’s several hundred bucks a month for that one.

[16:33] Mike: Oh, it’s like $2,000 a month or something like that.

[16:34] Rob: Oh, is it?

[16:35] Mike: Yeah. It was not cheap at all. Mine’s priced a little differently where that is based on levels whereas mine is based on per number of computers you have so I suppose I could just say if you’re the largest customer, you get my cellphone number but it’s not like I can take somebody’s cellphone number back, you know.

[16:51] Rob: But you could offer premium support too. You can offer premium support and you could do it with the Google voice number so they don’t get your actual number. And then if they call and they don’t have premium support obviously you can filter them out or whatever.

[17:03] Mike: Yeah. I think right you’re there. Just go on without a phone number of any kind. It’s probably the better way to go.

[17:07] Rob: You’re gonna be better off at least until, you know, they start saying why don’t you have phone support. We won’t buy if you don’t have phone support. Then obviously think about doing it —

[17:15] Mike: Yeah.

[17:15] Rob: — if you wanted some monetary. But I almost feel like I wanna get into hearing a little more about what’s going on with you on AuditShark. I’m gonna try to stay away from getting too technical ’cause I don’t think that our audience really cares about that stuff, right? I don’t wanna talk about — I’m not gonna talk too much about languages or new libraries or anything I’m using. I’m gonna be talking more about the events that are happening and maybe more marketing and just kind of entrepreneurial topics. I guess nothing’s new in the last week because you’ve been down for 4 days but you know, it’s been —

[17:48] Mike: No, that’s not true. That’s not necessarily true ’cause last week was the business and software conference and that was from Monday to Wednesday. And then Thursday and Friday, I actually got a lot of work done ’cause I didn’t lose power until Saturday.

[18:01] Rob: So then where are you? And let this be a warning to you, I am channeling Ted right now. So you better just — you better just come. You better bring it.

[18:09] Mike: Bring it, okay.

[18:10] Rob: Yup. Why haven’t you launched?

[18:11] Mike: ‘Cause I didn’t have power, that’s why.

[18:13] Rob: That’s why you didn’t launch? You’re not excused. What could you have done to get around not having power?

[18:18] Mike: I could have bought a generator.

[18:19] Rob: Yeah, exact —

[18:20] Mike: Unfortunately, they’re all gone. And you needed — and in order to run your computers off of a generator, you actually need to have — I forget what they’re called but they basically smooth out the power.

[18:30] Rob: Power cleaner and inverter.

[18:31] Mike: Yeah, something like that. I forget what it is.

[18:34] Rob: Anyways, let’s not go down that rabbit hole but well, yes. So what’s going on? How close are you to launching and selling? How close are you to selling to your first customer? That’s actually what I wanna hear.

[18:43] Mike: You know, I could probably be ready to sell to a customer today. I have to go through and make sure that certain things are correct. But between Thursday and Friday, I mean, Ted kind of booted me in the tail and really made me think about what needed to be done and what sort of hurdles I needed to overcome before I could start selling it. And I spend Thursday and Friday addressing those things.

[19:06] So between Thursday and Friday, I finished redoing some of the things on our built server so I can essentially click a few buttons or actually just click one button and it will check out all of my code, recompile it, put in the latest configurations that are for the production system, push everything out to Usher using you know, power shell and then reconfigure all the Usher services so that they are targeted for my particular deployment and then make it live.

[19:35] I mean, I actually had it live for several hours while I was just doing testing and I got all the SSL certificates working as well. That was something else that I had — I knew would probably be — I thought it would be pretty straightforward but it was actually quite a bit more work than I thought it would be just because the web services that I’m using on the back end but I got through that.

[19:54] At this point I could actually probably start selling it. As I’d mentioned to Ted, there’s some things that I don’t have right now which I don’t really need to have in order to get my first customer and there’s one issue that I would need to overcome in order to sign out a second customer but theoretically I could start selling it today.

[20:12] Rob: And so are you gonna make a sales call this week?

[20:15] Mike: I was going to try this week and then some things got in the way in terms of my schedule so I don’t actually have time to try and make a sales call for probably another couple of weeks. But in the meantime, I’ll be able to work on hammering out those last couple of issues. But I can certainly try maybe pet tapping to my e-mail list that I set up a while ago to see if there’s anyone who’s interested in signing on and trying to work through it.

[20:39] Rob: All right. So it sounds like you’re there except for you don’t have time to make sales calls. So that’s interesting then. It’s gonna require obviously to get this thing going since it isn’t just, you know, find me on the internet and buy my $29 product using your credit card while I’m sleeping product. Your first sale actually is gonna hinge on you. It’s gonna be high touch, you’re enough to visit in person and that essentially means you need to have the time to be able to do that in your schedule. Like you need to almost start scheduling that as part of your time.

[21:09] Mike: Sort of, but not necessarily. I’ve been tracking my rankings in Google for various search terms and I’ve actually been doing fairly well. I’m ranked on the first page for I think two or three different search terms. And then on the second page for probably two or three more. And the one would be really, really nice to have is compliance software and I’m finally ranked in Google for it. I’m unfortunately on the 28th page but I’m ranked.

[21:33] Rob: Yeah, yeah. You’ll get there. I mean, that will take 6 to 12 months I would guess even if you’re hitting hard.

[21:38] Mike: Right.

[21:39] Rob: This is just so generic, you know.

[21:40] Mike: Yeah.

[21:41] Rob: But so you can rank in Google for this stuff but I still think you’re not gonna sell $1,000 a month order over the internet. I think you’re gonna have to probably talk to someone on the phone. I mean, jeez, for DotNetInvoice we actually wind up doing at least medium touch sale where people will e-mail us before they’ll buy. Or I’ll have to talk to them on the phone. So I’d imagine that that’s almost gonna have to be a necessity. Do you have that —

[22:02] Mike: I’m not sure we’ll be though because I think DotNetInvoice is a little bit different in that you have to buy it in order for you to actually try and install it in your environment. With mine, you can — I mean, you get a 30-day trial for it and I’m not gonna charge you until after those 30 days are up so you can sign up for an account, you’ll be able to, you know, install that one window service in your environment and then try the software without talking to anybody.

[22:28] Rob: Got it, right. If people are finding your site right now, are they downloading it? Do you have the download available? Is it downloadable and usable or is that the part that’s not —

[22:36] Mike: That’s the part — I haven’t put that stuff live yet.

[22:39] Rob: Got it.

[22:40] Mike: But again, I can only support one customer at the moment because the way certain things are configured, there’s — which there’s nothing I can do about it so I want that for sale to be more of a high touch thing so — but people are coming to my site and they are signing up for the e-mail list.

[22:55] Rob: Okay.

[22:56] Mike: So I’m gonna probably tapped into that e-mail list either later this week or early next week and just put some feelers out there and say, hey, this product is — I don’t wanna say beta ready but I can say it’s basically live and then see who is willing to give it a shot and then work through any issues they have and just kind of do it as a one on one basis for each of them.

[23:16] Rob: Right. Okay.

[23:17] Mike: Just to, you know, one on one e-mail discussions instead of just a blanket, hey, this product is live instead of using MailChimp to actually just send them an e-mail. I’ll just go grab their e-mail address and send them a direct e-mail and said, hey, you know, this product is ready. Just want to let you know and by the way, if you’d like some help, I can walk you through it. And then just see what kind of responses I get.

[23:35] Rob: Right. And then in terms of the high touch with the in-person sale you’re gonna make, you kind of have first sale in mind. Were you looking at what, a week out or two weeks out from that?

[23:43] Mike: Probably at least a week if not two. Probably two weeks, yeah.

[23:47] Rob: So maybe two podcasts from now. That’s the next update podcast. You should either have done it or be ready to do it that week. Okay.

[23:55] [music]

[23:58] Rob: Well, cool. I’m gonna move on to HitTail updates. It’s been a couple of months, right, since we’ve updated. And I have been working a lot on this thing. I’ve been — although I’ve had the shoulder issue where it backed me off for about 3 or 4 weeks, before that I worked for the designer. I get a new marketing site design that I’m very pleased with. And I went high end on this one. Either if it’s really cheap I go with the WordPress theme and then if it’s kind of a mid-range, I have a design for my use offshore and they’re good, not out of this world but they’re very good value for the price. And this one I went way high end with the friend of a friend who, you know, is here in the States and he’s just a fantastic designer but he’s very expensive.

[24:35] But as a result I’m just super happy with the design and then I got the HTML, CSS created. I was gonna go with the recommended contractor but she was booked out almost a month. And so I went with PSD2HTML.com. I don’t know if you’ve used them before but they turned out some really solid stuff. I was very impressed with the work. I actually had the designer look it over just to make sure I looked right and he’s like, wow, these guys did a fantastic job. So that URL is PSD2HTML.com. A lot of people probably heard of them but I never realized it’s just getting so freak and complicated, the CSS stuff you can do now.

[00:25:09] And all the options that they have when, you know, in building the stuff out. I mean, it was like, there’s — it’s like mobile compatibility, IE6 compatibility, you want CSS 2, CSS 3, CSS — it was like 2.2, 2.3, all the stuff. I seriously just placed the order, I had to do research. Like it took me an hour to place this thing in order because I — you know, I really just want some PSDs turned into HTML but there’s so many options, so many ways you can SEO optimized it and then, of course, that takes longer so it’s more expensive to do that. But once I got it back, it is fantastic, very impressed with their markup and I don’t know if I just got a really good guy or what. But it took them about 8 days. They also get some jQuery. I mean, they kind of did what I needed to get done and they did it quickly.

[25:52] So now it’s in the hands of developer who I hired on oDesk and he’s an ASP developer, ASP and ASP.net ’cause that’s what the site is written in. And so he’s now integrating it into the marketing site, and marketing sites couple hundred pages so it’s gonna take him a few weeks to kind of get everything working. And then once I push that live, man, I have this 11-page marketing plan that I’ve put together and I don’t want to execute on it yet besides it already gets a decent trunk of traffic. It already gets, you know, several trials a day. But at this point I don’t want to start pushing traffic to it ’cause the site looks like crap and it’s not gonna convert, the funnel is not optimized, you know. I got — I wanna get that stuff down, so that it’ll not send in traffic into this leaky funnel.

[26:32] Mike: Oh, I have a question about it though. How are you going to verify that your new design is actually not a leaky funnel as well?

 

[26:39] Rob: I am gonna do a split test on some of the pages. The new design doesn’t look like the old one so it’s kind of hard, you know, it’s kind of hard to just split test because it’s a pretty dramatic difference from one to the other but I know right now I can kind of watch people just drop off and wander off, you know, looking at Analytics. I know that the form, it’s all rules of thumb, right? It’s like the registration farm is like 15 form fields and the pricing is confusing. It’s not well presented. There’s a bunch of different lengths. There’s just so many things that take people out of the — kind of out of the flow. And the new design doesn’t have that but it’s purely based on experience at this point because it hasn’t been tested.

[27:18] So what I’m gonna do is I’m gonna role it out, well, first I’m just gonna look at how the conversions go based on — I already have the existing number and just take a peak of what the new numbers are and that’s obviously not a true A/B test because, you know, it’s gonna be different traffic, right? It’s gonna be like the last 3 months versus the next month or whatever. So it’s not the same traffic being split, however, I mean, I really can’t do what I’d like to do which is a page by page split test because it would just jar people too much that I think it would ruin the split test.

[27:48] Mike: Yeah, definitely.

[27:49] Rob: You know, ’cause they look different. So yeah. And then I’m gonna look — I’m gonna do traditional. I’m gonna do it as if it’s a normal site, right? As if it’s a brand new website where you roll it out and you watch it, channel it, you could crazy egg and you, you know, watch people baling, watch the high bounds rates and then really pound when people start a trial, then you actually contact them, you know. You send them an e-mail and say, hey, you’re in the middle of the trial and see you haven’t installed the code if that’s the problem.

[28:15] Mike: Right.

[28:15] Rob: It’s not — that is happening as of last night. So I just got that code live that actually e-mails people during their trial. Otherwise, they would just sign up and they would never hear from us again.

[28:26] Mike: Here’s my chance for a hard hitting question. When are you gonna change the copyright notice from 2008 and 2009 on the footer?

[28:35] Rob: The problem is they have — they do not use includes. So that’s on 250 places so I’m not changing it until the new design goes live. Yeah, no, there’s a bunch of stuff like that. I don’t wanna wrangle on this but it’s just like if I were to architect the site from scratch which I’m able to do now, I would do it totally differently than I did. They have just tons — they have images and CSS files and JavaScript files in the root, right? Just in the root, not in a JS directory.

[29:00] There’s like 7 CSS files just in the root so as a result you have like two, three hundred files in your root and it’s just a big mass. Also, yeah, they didn’t use service that includes or they kind of wrote their own. I’m not sure why did they did but they did it. It’s kind of confusing. I understand it, but it’s not worth explaining. They just didn’t use this traditional include this footer thing. And as a result I can’t go one place; I have to go to 250 places to replace anything in the footer basically. Anyways, I think the — a couple of the big wins that I’ve gotten over the past couple of months is one — trials now actually end after 30 days and they didn’t use to. I have people when I pick this up, there were — have been on trials for like two years.

[29:42] Mike: Have they been using it the whole time?

[29:44] Rob: Yeah. Some of them have, yeah. Yup, and it just — you know, there was no Cron, there was no script running that ended trials after 30 days. In addition, there were no e-mails being sent during the trial. So again, people could just wander off and they did. So now I’m actually looking in the database saying do they have any referrals coming in and then sending the appropriate e-mail based on what they have installed and how many suggestions they have and stuff.

[30:08] So other than that, man, I mean, my hope is that by the next time we talked about this stuff, that I’m close. I don’t think the new marketing site will be up just ’cause there’s so much to do. Well, you know, I know it won’t be up because I’m not gonna roll it before I can redesign the app because the app is so — again, it’d be jarring to be cruising to this marketing site and then go to the old app design. So the app is being redesigned right now. I just got the final kind of one page design today and now we’re gonna start on the other page. So I do think it’ll be about a month until this is all done but once it’s done I’m gonna turn on the faucet and try to get traffic.

[30:45] Mike: I’ll make sure I bet on you and make you commit to that month then.

[30:48] Rob: Yeah, yeah.

[30:49] [music]

[30:52] Rob: I think we’re about at time, Mike, for this episode. We saw up several kinds of shoutouts and some questions and other stuff to talk about but certainly we can cover them in the next episode.

[31:03] Mike: Yeah, definitely.

[31:04] Rob: If you have a question or comment for us, you can call it into our voicemail number at 888-801-9690 or you can e-mail it to us at Questions@StartupsfortheRestofUs.com. Our theme music is an excerpt from We’re Outta Control by MoOt used under creative comments. Please consider writing a review in iTunes by searching for startups and then you can subscribe to this podcast in iTunes or via RSS, StartupsfortheRestofUs.com. A full transcript is available at our website StartupsfortheRestofUs.com. Thanks for listening. We’ll see you next time.

Show Notes

• Business of Software

Transcript

[00:00] Rob: Coming to you live from Boston at the Business of Software 2011 conference, this is Startups for the Rest of Us, Episode 55.

[00:08] music

[00:16] Rob: Welcome to Startups for the Rest of Us, the podcast that helps developers 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 and help you avoid the same mistakes we’ve made. What is the word this week, Mike?

[00:32] Mike: It’s really strange looking at you from across the room and recording.

[00:36] Rob: Yeah. So Mike and I normally record across the country. We’re finally in the same room and we have microphone issues that when I talk it echoes. So Mike and I are sitting across this huge room from each other to try to avoid it. Aside from that, we are here in — we’re in Boston and we just wrapped up Business of Software 2011. It’s a two and a half day conference for what the founders call “real software companies” not like Startups that are just trying to do crazy stuff but it’s typically  companies that are little further along in the process.

[01:04] I mean, we did this last year and had, you know, got a lot of positive feedback and had good fun doing it. So we kind of want to bring up some highlights that we had here in terms of the talks as well as share experiences of really great — the whole conversation of which, I think yours was the most valuable thing for me. So to start off, what’s your impression, Mike? You’ve now been to two Business of Software conferences, what are your thoughts?

[01:26] Mike: I really like the conference. The speakers and stuff are obviously — Business of Software is a somewhat expensive conference but the speakers for the most part were top notched. I mean, I really liked hearing their views and opinions on different things and obviously, you know, you get the range of speakers and you get more from some than others. And I think that the two that kind of pop out in my head is being the ones that were my favorites to listen to were Clayton Christensen and Jason Cohen. And Clayton Christensen talked about —

[01:56] Rob: What — to take a quick step back, Clayton Christensen is the author of the Innovator’s Dilemma —

[02:01] Mike: Right.

[02:01] Rob: — which a lot of people probably heard of and I think he’s written five other books and he’s a professor at Harvard. So yeah, go on.

[02:07] Mike: So he talked about building disruptive technologies and being able to identify those things that are going to come into a market and take the incumbents and basically push them out because they are building completely innovative technologies that are just completely disruptive to the existing incumbents. And it really struck a chord with me ’cause that’s what I’m doing with AuditShark to be perfectly honest.

[02:33] I mean, I’m coming into an existing formally entrenched market where enterprise sales is really where it’s at and the only place that you that you can get these, the types of offer that I’m building it is from an enterprise corporation and they have a very specific way of presenting their software and the way of selling it and nobody else is doing it. And that’s kind of what I’m doing is just being disruptive to their business model and it has really just struck a chord with me.

[02:58] He gave a lot of examples and the two that kind of stuck out was one was vacuum, two, it was some transistors and how there was a transition from vacuum tubes to transistors and, you know, obviously a different voltage level but they were just a lot smaller. And then for Digital Equipment Corporation where they rose a promise through great management but they fell through the same management. People looked at that as an example and say, well, how could that have possibly happen. And it wasn’t so much the management as it was that there was a new disruptive technology that was coming into the world which was, you know, personal computers where DEC usually made money from mainframes.

[03:33] And although they saw it coming, there was really nothing they could do about it because their hands were kind of tied. They couldn’t really destroy their existing business model without going into that business but at the same time by choosing to do nothing they killed themselves anyway. It was interesting to see that the incumbents in a business where there’s a disruptive technology, there’s nothing that they can do about it. There’s no good way for them to fight the fight.

[03:56] Rob: Right. Well, I would — where the story is about IBM and how they did it twice. How they went from mainframes to microcomputers and the way they did it, well, they basically started an entire separate business unit that almost acted like its own company. They located it like several states away and they have no contact with the old guys and so they were able to behave with autonomy. They moved to make computers and then years later, they moved to what — to PCs and they were the only — he said they were like 9 mainframe manufacturers and IBM is the only one that made it to microcomputers, all the 8 others died. And then — or mini-computers I think. And then there were 9 minicomputers and only one made it to PCs and it was IBM. And they did the same thing both times which is really a fascinating approach when you think about it.

[04:40] Mike: Well, I thought it was more fascinating that he was able to show this is what happens if you can’t do it and this is what happens if you can. He had solid examples to back up the analysis and hypothesis behind why that stuff happens.

[04:54] Rob: Yeah. So I’m really interested — like I said, he’s written several books and I read Innovator’s Dilemma probably 10 years ago and I don’t remember much of it so I’m making it a point to get at least one of his books and maybe turned them on audio and I’m gonna be listening to them in the coming weeks.

[05:10] Now, the stuff he talks about doesn’t particularly apply to me because I’m not — I don’t intend to disrupt large markets. It’s like all the examples he used are like IBM. I mean, they’re billion-dollar companies. So I’m like I can’t think of any true application to my businesses right now. He’s still a super smart guy. His talk was awesome. I know that his books are gonna be good. So yeah, I’m putting them on my list. I think maybe, well, for entertainment for me than the actual business changes but I think for you, I think you’re right since AuditShark is more of a disruptive force. Yeah, basically, the whole time he kept saying, this stock is to help people who want to kill a big competitor or what to not be killed by a small competitor. And you obviously are the small competitor. So that’s cool. Yeah, you also mentioned Jason Cohen’s stock, right?

[05:55] Mike: Yeah. That one definitely rang home as well because his entire talk was about you really need to be honest in your business and he talked a lot about how honesty makes money. And if you look at business in general, the lying is expected in the business, it’s expected when you’re making deals, when you’re doing sales. And, you know, he showed some examples of some various things where it just was very obvious that those things were lies like the Republic of Cuba and the People’s Republic of China. And when you look at these labels that people have slapped on and you go, ha, ha, ha, that’s funny ’cause you know that it’s just completely not true but it’s so commonplace in many areas that people just glossed over it. And it’s common knowledge that honesty is supposed to win but people don’t do it.

[06:41] He came up with several examples of how it was amazing that by being honest about who you are, what you do, that people respond to that and they will actually cut you slack for not being as bigger, not being able to respond as well to different situation and obviously he used all these examples. I think pretty much everybody use all these as an example for different things. It was just really great to see that sort of thing. It got me thinking about what I’m doing and saying, well, do I really need to act like a larger company here. Do I need to, you know, say, oh, well, I have multiple employees when I really don’t. It just rang home to say, well, you know what, I can just say flat out I don’t have any employees. I don’t, you know, have any sales support staff or I don’t offer these things and here’s why. And I think that he’s right. He’s absolutely right. People will respond to that and people will cut you slack for it. So he just kind brought those things to mind and said, you know what, I think I’m actually gonna do it.

[07:36] Rob: Yeah. Here’s what I like about Jason’s stock. He basically had one premise. And it was to be honest. And he was trying to show how companies who have been honest, meaning, that they actually don’t edit reviews of the products that they’ll let — there’ll be negative reviews even on their own website, that they succeed and that sales increase and that by — even allowing maybe reviews from people. That means you won’t have as many returns because when people buy something, if they write a review of it that it says, oh, this thing is good but, you know, this one part doesn’t work. But if you then buy it, then you already know that that one part doesn’t work.

[08:10] So he basically had some data and some anecdotes and was supporting basically a single thesis and I really appreciated that. In addition, I took away like you did a couple of points. I think one is that I’m gonna try on at least one marketing site for my products to point out what my product does not do. He said like going into sales call. If you say, look, my product doesn’t do this, it gains credibility. And right away you can then say but it does do this and it’s very believable because the press will know if he’s telling the truth. And what’s funny is after that, I went and did — I put on a workshop on copywriting and I had a landing page for my book before I publish the book. And the tagline for the thing, the main sentence of it was the book for people who don’t have $6 million of funding in their bank account.

[09:00] And I realized that using a negative is actually a great way to niche and to like raise your focus, your product and to say like, we don’t have these features. It’s not for this people. And I totally want to do that. And I actually think about what HitTail — like what can I say that it doesn’t do to show how simple and focused the tool is. So I absolutely took away actual things that I might not be using to modify the marketing website and at least for HitTail and I’m thinking about doing it for that invoice as well. So I’m definitely pushing that one.

[09:28] Mike: Yeah. And I do that actually on the AuditShark website where I say that it’s a client software for small business which in a way it implies is that it is not for the enterprise space and I don’t think that I’d ever really put those thoughts into words or analyze those things the way that he did and the way he illustrated it in the stock. So I appreciated it too. I thought it was a great way to put it.

[09:50] Rob: We’re not gonna go through all the talks, obviously, there were too many to fit into the show. But there was, let’s see Alex Osterwalder who has written a book called Business Model Generation. His talk was good. It was basically out of the book. I’ve read the book before. His material is about innovative and disruptive business models and do it didn’t and doesn’t apply to me per se. But I was actually thinking about you because of AuditShark. Does it apply? Do you think you’re bringing a disruptive business model to your space and did you find resonance in Alex’s stock or was it or not?

[10:22] Mike: I do and I did. And during the course of the talk he actually had people do a workshop and I was sitting next to a pair of guys, one of them was from AMD. So we said this really doesn’t apply to me so why don’t we do you instead. And we just walked through the exercise of setting up and specifying what the resources I need to succeed are, what are the inputs or the outputs. What sort of value propositions I have. I’ll say that it was an exercise that I’d already gone through in my head but it was not quite as formalized. The exercise that I’ve gone through in my head previously probably included every single one of those things. Like I said, it just wasn’t nearly as formalized but I had answers for every single one of them and I have them right at the tip of my tongue ’cause I knew exactly what my answers for all of those things were.

[11:08] And I think that being able to clearly identify what space you’re attacking and who your competitors are and how you’re going to go about beating them and what things you need to succeed, those things are extremely important to being able to put together successful business when you’re trying to bring it off the ground or if you’re trying to reposition it in the market, you know. How can you go about bringing this to market? What sort of things are necessary? What things can you get away without, etc.?

[11:34] Rob: Cool. That after new — two workshops which were different this year. The previous year, it had been at lounge tables that their, you know, you pick around people based on which talk that resonates with you and just discussed it. And that has — I mean, that has much of use. I particularly enjoyed that part. So this year they actually ask folks to give one-hour workshops based on a very specific actionable topic. And so as I said, I put one on copywriting and, you know, sales, marketing, copywriting for landing pages and home pages. And I thought that went really well. There are four to something people in it. So it wasn’t like I could sit around the round table and just talk. I did some slides but I have a lot of exercises as well and I’m hoping I can actually do that talk again just ’cause it was fun and I know I had to make it better now that I’ve given it once. Which one did you attend? What do you think?

[12:24] Mike: I went to the one on the characteristics of SAS application. I’ll be honest, I probably didn’t learn necessarily nearly as much as I thought I might have and it was mostly because it was talking in a more of a general fashion about the types of sales, models, some of the financials about custom acquisition cost, and you know, how to do marketing sales and how your customer lifetime value has to be greater than your customer acquisition cost. It seems like those were more of an intro to SAS. You know, it’s just not quite what was I expecting. It’s not that it wasn’t valuable information ’cause I think it’s certainly was. But I think I was probably further along than somebody who was really the target market for that particular workshop.

[13:04] Rob: Sure. Did they wrap up and attend the party? Was that evening at the Whiskey Priest here in Boston? I took awesome conversations. You and I actually talk for a while and that was cool. We talked with — I went to talk with Patrick Foley, with Ruben Gomez from Bidsketch. I talked with a guy named Jude who works at FogBugz and he does quite a bit of marketing for them. He’s also a developer. And then I had a good conversation with Jason Cohen. We round up sitting at a table with some folks from Light One Security and just discussing all types of — Patrick Foley was there and he was, you know, defending Usher and Microsoft and then Jason Cohen were like, lob fireballs at it if you like. You know, I developed dot net for years and it’s such a disaster, you know. It’s hard to keep up with everything and then I was interjecting that I just acquired HitTail which basically is like a classic XP with some dot net.

[13:55] And so it was cool conversation. We talked about business models. We also talked about programming and then, you know, just kind of wander around. But I got to be honest those kinds of conversations, those are probably the most valuable thing for me these days when I go to conferences. I always enjoyed the talks but I don’t get as much out of it. Yeah, these days I find that when I go to conferences, I keep the most value I get from them is actually in the hallways. I still learn stuff from the talks but I think as I gain more experience it — I just learn less and less. I must need more focus talk because I’m hyper-focused in my apps now. You know, I’m looking at very specific issues that I’m struggling with. And the broad stuff I kind of already uncovered.

[14:32] So the talks with Jason Cohen and asking specific things. Even if the guy’s from Formstack, if you have — I don’t know if you talked to those guys, but Formstack’s kind of like Wufoo. I mean, they’re online form builder. They’re SAS app and so there were these cool insights that they were able to lend. I had questions for them. Also, know we had taken from AppSumo course and Ruben from Bidsketch. And there were probably five others. Anytime, oh, you know what, I get to meet Ian Landsman for the first time. That was awesome from  User Scape, HelpStop is the product.

[15:00] Again, ask them questions like what’s your biggest lead driver today. And we’re starting a lot of traffic to you. And talk about some approaches that I just had, oh, I haven’t heard those, you know. So I noted them down and I’m gonna look at implementing for HitTail. So the most notes that I have are from conversations like I had at the Whisky Priest and frankly just in the hallways and in between and after.

[15:24] Mike: Yeah. I found myself sending myself e-mails here and just so that when I was — you know, when I was sitting there listening to the speakers I had my laptop on. I was taking notes and everything ’cause there were times like the things last year that I just completely forgotten about or I said, oh, that’s really good. And I came out of speaker presentation feeling really great but not really remembering everything or nearly as much as I wanted to. And I found myself when I was talking to people about different things, I would send myself an e-mail just so that I made sure I reminded myself about whatever it was that they were talking to me about. But yeah, I totally agree. The conversations that you have with people in between the sessions and, you know, at lunch and dinner and everything else, those are insanely valuable.

[16:05] Rob: I know they Livestream — this is the software this year. I don’t know if they’re gonna have it online or whatever. I do want to revisit a couple of points of some of the talks but, yeah, overall I don’t feel like I need to watch it all again. You know, I feel like I got the most out of it and if you did watch the Livestream, I’m sure you got some cool stuff but I do encourage you to think about actually attending this or another conference. I’m just walking in to one of the sessions this afternoon and David Cancel who started Performable, they started it by HubSpot, is walking out and I go to introduce myself and he’s like, hey, Rob. Hey, ya. We just start — you know, we just got into this awesome conversation and he had this really it could be — like for me, it could be a game changing suggestion for HitTail. I could probably blew it up about this opportunity, you know, there’s no market place and blah, blah, blah.

[16:50] But it’s like crazy and it’s just like, wow, that was like two minutes of my time. That right there could make the entire three days’ worth it, right, just that two-minute conversation.

Well cool. Hey. So I have a question for you because I’m like — there were a couple of talks that I really, really wanted to see and one of them was Patrick McKenzie. I didn’t make it. I’m hoping that I could watch it online. I heard some people raving about it, talk about how specific he was. And now I also heard some folks saying that it was like too specific that it wouldn’t work for their business ’cause they are obviously in a different, you know, kind of different line of business. But what were your thoughts on it?

[17:27] Mike: I can see how people could have taken it in a way and said, well, yeah, that doesn’t apply in my business because it’s too small. But there were lot of examples that he gave and many of the things that he worked through were actually not from his business. They were from some of his consulting customers so I can understand. And maybe there’s just a missed perception about what things applied to their business and which ones don’t. But he talked a lot about the examples of different types of funnels. So, for example, e-mail funnels, trial funnels, you know, going through the sale cycle, figuring out the core usage of your products and who’s using it and how. And these are all things that have nothing to do with the actual checkout and sale of your product when you guys should be doing that too.

[18:09] But there’s all these other things that you can be testing and creating funnels with and he talked about how to do all those things and then, you know, what you’re supposed to be doing with a funnel, some of the different tools that he uses, you know, the general rules of thumb to follow like having a shorter funnel is probably better and, you know, removing steps in the funnel is definitely hopeful for your bottom line. But the fact that those little improvements that you make are multiplicative as opposed to additive so when you increase something by 0.5% in the beginning, you don’t get a 0.5% increase at the end, you get a 0.75% increase, for example. You know, and some statistics majors can figure out the actual math on it. And it depends a lot on how big your funnel actually is but a lot of was about how to — how A/B testing is not medicine. It’s medicine for example, it’s not a solution if you have a bad product.

[19:01] Rob: Well, cool. I apologized to the listeners for the background noise. Obviously, we’re at a conference in the side hallway and folks are walking by. So hopefully if you’ll just based on our great content on the day.

[19:15] Mike: Overall, the conference was well worth it. I mean, people talked about that, oh, it’s an expensive conference. Do I really wanna pay that much money for it? And it’s not so much the conference that you’re really paying for, it’s the interactions with people and I think we’ve talked about having Ted on at some point. But the very first night we were there, Ted was asking me some very difficult questions about why I haven’t launched AuditShark yet and that alone was worth coming to this conference for because it really made me think about what sorts of things I should be doing. What things are important and more importantly what things are not important.

[19:51] Rob: Yeah. That was actually really cool. So it’s Ted Pitts from Moraware software. And a lot of you may remember Harry Hollander was on — it was to more of Episode 40 talking about hiring like professional services companies. Well, his business partner is Ted and Mike had known him for a couple of years now. Yeah. He was totally decadent to you with accountability essentially and I was joking that like I should be doing this on a podcast ’cause Ted was doing a way better job of it of basically busting your chops than I do. Yeah, you’re right that was fascinating and it was actually really good for me to hear as well ’cause it was just he was asking good questions. And its good questions when you removed from a process, you can just put someone’s feet to the fire and say, why aren’t you doing this? And when you’re kind of too close to it, it’s hard to ask those questions.

[20:33] You’re right, that was really cool. There was a cool little thing at the end of this second day where Peldi from Balsamiq interview to getting John Nese who owns an entire store. It’s called the Soda Pop Shop and all it does is sell soda, right? Sounds like they have a 500 or 1,000 different kinds of soda. And it was just — John interview and afterwards we had a soda tasting where you just have to taste all kinds of crazy types of soda that you’ve never heard of. But you had mentioned to me earlier that you asked question during that talk and that it was — there’s kind of an appropriate answer. So I wanted to hear, you know, have you told the listeners what happened?

[21:11] Mike: Right. So the question that I’d asked him was that the context of it a little bit is that this person had a supermarket that he was selling a lot of different things then and Pepsi came in and said we would like you to — oh, I’m gonna sell you this palette of Pepsi for X and he said, well, how much am I gonna make on. And they told him. He said, well, why would I wanna do that? I don’t want to because, you know, I know that my customers can buy it somewhere else. And they said, well, you can’t tell us you’re not gonna care of this. This is — we’re Pepsi.

And a long story short, basically, over the course — of a couple of years I think it was, he essentially decided that he was going to start selling nothing but different sodas from around the world and one of the things that I asked him was that wasn’t he afraid of what was gonna happen when he sort of going down these roads and started going against Pepsi and Coke and, you know, the big soda companies. And he said, it’s very easy to make decisions when you’re going bankrupt and it was just the most appropriate thing I could possibly think of. I was just like, I absolutely know what you’re talking about, you’re absolutely right.

[22:20] Rob: Right. And it ties into your talk at MicroConf. You had talked about your business swinging from — I don’t remember. It was like plus 90K, they’re like negative 70K or something within a couple of months where you are based — I mean, you weren’t going bankrupt per se but your business was essentially not solvent. It’s like you said, you had to make decisions to fix that. It was just such an appropriate response and I thought I thought it was good.

[22:42] music

[22:45] Rob: You know what being here has made me excited about is starting to plan MicroConf honestly. We actually haven’t announced it on the podcast but we’ve decided to do MicroConf 2012. I finally after months I’ve talked you into doing it. Luckily he’s viewed it.

[22:59] Mike: And the listeners know that’s a lie because we’ve talked about it before.

[23:04] Rob: And I’m the guy saying, I don’t wanna do it. But, yeah, so we decided to do it and we’re actually gonna sit down right after this podcast and start talking about it. We’re thinking somewhere between April and June, Las Vegas, 2012. We’re gonna start looking at hotels and put together our shortlist for speakers and such. So it just got me excited to get the band back together. Frankly, it’s like people I saw here I haven’t seen any years since the last BOS and to revisit here about what the businesses are doing and in the show. You know, what I’m doing was it got me all fired up to do it again here in six months ’cause frankly, waiting another year to do it is just too long for my case. I think I can do this every three months, honestly like that would be like the ideal, not this particular conference but just different conferences where for software folks.

[23:43] Mike: Yeah. I totally agree. I mean, it’s just great getting in back together with people and being able to talk to them face to face and get their ideas because certain things kind of come to the forefront of your thoughts when you are talking to them directly versus when you’re just kind of conversing over e-mail and saying, hey, can you help me out with this or what is it you’re doing over here. You don’t necessarily get those conversations or talk about the things that are — I guess the most important to you when you’re doing it via e-mail.

[24:10] Rob: Yeah. It’s just hard. It’s so different to say that there was at least for an hour at a table with someone, you kind of have to start asking questions that you normally wouldn’t talk about at too many conversation. And you start warming up to folks and you’re willing to tell them more and they’re willing to tell you more and that’s when it really gets interesting, right? That’s when you start hearing things that can become game changers for your business is just hearing from the trenches. It’s things that are like so cutting edge or so experimental that they haven’t been written about or talked about it yet, and that haven’t been in talks but it’s like these guys, like I tried the specific thing and it’s crazy. You know, it happens to be working right now. I don’t know if it’s gonna work two months from now but it’s like, wow, I wanna try that or a variation of that, you know. You wouldn’t hear about that otherwise.

[24:56] Mike: Right. I’ll give you a very specific example was last night we went out to dinner. We went — it’s all the way over to Chinatown from here. And we had dinner at this French restaurant right on the edge of Chinatown. And we got talking about pricing and how to price a new product and I was very interested in how the guys at the table had priced their products and how they had gotten their start and one of them told me honestly said, our first hundred customers, every single one of them paid us a different rate because most of it was high touch sales, at least initially it was high touch sales. It’s not anymore. But it gave them an idea of what people were willing to pay based on the conversations that they had and one of his first sale, he said, we went it, we offered three different price points and I asked one, it was $500 a month. And they actually laugh and said, well, pay double that. And they did pay double that. And then next one, they went to and said, well, the price is $3,000 a month and that completely fell apart because the company said, well, our budget is like $20 a month.

[25:55] So it was just very interesting to see. It’s a very valid way I think of testing how you determine what your pricing is, is just by asking those people and sure you charge some people more and you charge some people less but they’re okay with that because you’re providing value to them.

[26:09] Rob: Right. Yeah. I know that’s good. That’s a good example.

[26:11] Mike: But that’s not something I would have ever learned from one of those speakers. I mean, maybe they would have mentioned it or something like that but it’s just something I don’t think would have come up.

[26:18] music

[26:21] Rob: My closing thoughts are obviously BOS is a great conference. Everyone — everyone hears that. We do that every year. There are several folks who really are doing something unique in this world that we’re living, the software and startup world. Obviously, we can make it 2012. Or, even catch the videos. I don’t know if they’re gonna be online or not. And they were Livestream but I don’t know if they’ll be there afterwards. But if you catch them I definitely recommend it and you know, if you attend it and you’re listening to this, feel free to give us a call or send us an e-mail at Questions@StartupsfortheRestofUs.com. I’d love to hear your thoughts and you know, we can obviously read them on the air next time. Oh, you know what, you and I had conversations here that were pretty valuable and it was about the podcast format. Our release schedule has been every two weeks and what we’re gonna start doing is we’re gonna start doing a weekly podcast again. But what we’re gonna do is — this is based on feedback we received here as well as over the past few weeks. But why don’t we — we’re gonna just do Mike and I discussing our products, right?

[27:17] It’s kind of our update of what we’re doing, steps we’ve tried, our thoughts on it. So those shows maybe short, if you have a lot to say. I could see some of being 10 minutes. I could some of being 30 or 40 minutes like a normal podcast. And the beauty is that, you know, people could hear our updates and such. And I also basically could use time I spent preparing. That obviously helps us because we’re busy. And every other week, one of you, the normal thing of what we’ve been doing for the past year. It’s obviously resonating with folks where we do more of a structure, tutorial type of thing. Basically, if you don’t like the update you’re receiving, you can skip them or something but we hope that people are just interested and wanna listen about them. Did we agree to that or did I just ambush you to that?

[27:55] Mike: No, that’s fine. I think we did kind of agree to it. We just never really formalized, said yes, we’re gonna do this. So I think we both just thought it was a great idea.

[28:01] Rob: All right. Well, that wraps us up for Episode 55 and we’ll see you guys again next week.

Show Notes

Transcript

[00:00] Mike: This is Startups for the Rest of Us: Episode 54.

[00:04] [music]

[Read more…] about Episode 54 | How We Left Our Jobs Part 2

Show Notes

Transcript

[00:00] Rob: This is Startups for the Rest of Us: Episode 53.

[00:04] [music]

[Read more…] about Episode 53 | How We Left Our Jobs Part 1

Show Notes

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 [00:00] Mike: This is Startups for the Rest of Us: Episode 52.

[00:04] [music] [Read more…] about Episode 52 | Getting Off The Hamster Wheel

Show Notes

• The Nine Levels of Traffic Quality
• How to setup Goals in Google Analytics

Transcript

[00:00] Rob: This is Startups for the Rest of Us: Episode 51.

[00:04] [music] [Read more…] about Episode 51 | How Traffic Quality Can Make A 10x Difference In Your Business