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Transcript

[00:00] Mike: This is Startups for the Rest of Us: Episode 167.

[00:04] Music

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

[00:19] Rob: And I’m Rob.

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

[00:24] Rob: You know, things are going pretty well. I’ve been spending some time in the code. I’ve been working on the HitTail keyword algorithm. I mentioned that since not provided came through. I found it through the Google web master tools, there’s another source of a bunch of keyword data and so I’ve spent a lot of time repurposing, tweaking that algorithm and it’s actually given me a better – before HitTail could say hey, here’s a keyword and yes it’s a suggestion you strut about or not.

[00:52] Now I actually have a gradient where I can give it a score and it’s a number on like a 1 to 100 scale. So it’s been fun to get back in the code ready to kind of get this thing out. Right now it’s in alpha and I have four different people who’ve sent me spreadsheets and I’m uploading them and seeing how it goes but it’s nice to be moving forward with the goal of getting HitTail back on track basically. Growth had really stalled and things starting to go sideways with it as the value that it provides is a lot less than it did 4 or 5 months ago.

[01:24] Mike: That’s really cool that you’re able to assign a score to those things that you use so people have some sort of ranking to help them decide what they should do next. That’s one of the things that people had asked me to do when Audit Shark was there like this information is great but I need you to score it so I know what to concentrate on. The analysis paralysis that people tend to experience when they just really don’t know what it is that they’re looking at and they don’t have a basis for comparison, that really hurts. And giving them those benchmarks or those ways to sort the data can be really, really helpful.

[01:56] Rob: Yeah. I agree. So hopefully, getting that out into production in the next couple weeks, I’m going to need to get a designer on board to make some minor tweaks to some stuff and then I’ll probably hire a developer. It’s just enough work. I think it’ll probably be 20 to 30 hours of work because there some complex stuff to actually implement it at scale. I’ve realized these days man, if I need to get 30 hours of coding done, it’s going to take me like a month to do it because I can’t get in the flow ever because there’s so many little things going on but hopefully fingers crossed, another few weeks maybe end of February have that all up and running.

[02:29] Mike: Very cool.

[02:30] Rob: How about you? What’s going on?

[02:32] Mike: Well I got an email from Wes O’Hare who put together a resource website for people who make web products and the URL, we’ll link it up in the show notes is produx.co. So check it out if you want. There’s a lot of good information on there. There’s a few couple things I’ve never heard of before. So if you’re building a web startup of any kind there are definitely some good resources there.

[02:55] Rob: I wanted to call out two things. The first is I was on a podcast this week. It’s the Linchpin podcast and I was talking all about email marketing and creating email mini courses so linchpin.net/podcast if you want to check that out. It’s a short one. It’s probably 25-30 minutes. The other thing is Brandon Dunn, lifetime academy member, he and I were emailing about some stuff and I loved the story he sent. He said hey, I set a new personal record. I had an idea for a WordPress plug-in last Friday, learned how to write said plug-in over the weekend because I’ve never really dug in a WordPress before. I’ve run paid ads today plus some inbound from my blog and so far I’ve admitted two new customers who weren’t friends or in my network. I love it. It’s like a super fast implementation. Talk about taking action. It’s at wordpressconversionfunnel.com.

[03:48] And if you do nothing else, checkout that URL because look at the way Brandon puts together this sales page. It’s a long form sales later. Its written from his perspective and it’s all about how the tactics that he’s included in these WordPress plug-in has helped his own business very elegant, well put together, very folksy, it feels like you’re just having a conversation with someone and they’re kind of just telling you about something while you’re sitting at a bar. I wanted to share that with the audience and kind of give an example of a way to get something done well and to do it fast and execute like Brandon did. So congrats sir.

[04:18] Music

[04:22] Mike: We’re talking about how to organize and run a startup mastermind. Over the past couple of months, I think that you’ve probably gotten just as many questions as I have if not more about what is a mastermind? How do I go about putting one together? What sorts of things go on? How can it help? So what we’re going to today is we’re going to take some time and set aside the entire podcast episode for talking about a startup mastermind and some of the different experiences that you and I have had in running our own.

[04:49] Rob: And to give you some background, the term mastermind as far as I know is first mentioned by Napoleon Hill in the book Think and Grow Rich and if you read through that, it’s going to almost barely resemble what we’re talking about today because A) things just have developed so far in the past 75 years since he wrote that book and B) we do some very specific things that work very well because we’re talking about a startup mastermind. It’s not just a generic group of people getting together to talk about something but really focus on a startup right on the startups that you’re all running with other founders. And so I think that’s something to keep in mind.

[05:25] The other thing I’d like to mention is that one of the reasons we’re doing this episode is because Mike and I have realized the value of masterminds in our successes and just the power of community through MicroConf and through the Micropreneur Academy and that’s one of the big reasons that we are revamping micropreneur.com this year and we’re going to put an extra focus on community.

[05:47] And this mastermind stuff will be part of that. I mean we want to foster, help people get involved in mastermind and help them run them well whether they setup local Micropreneur meet ups as we’re seeing spark up. Last count, they were approaching maybe 10 worldwide of these Micropreneur meet ups just people getting together. That’s a little different than a mastermind but there’s overlap there. I mean the flipside is setting up Skype masterminds, as we’ll surely talk about in this episode.

[06:13] Mike: So the first question that somebody might have is what is a startup mastermind? To me, a startup mastermind is a group of people who are business owners or have applications that they are selling online and they want to talk to other people who are in a similar boat, other people who are encountering similar problems have a similar type of business because if you’re talking to somebody who’s running a brick and mortar type business, they’re going to have very, very different problems than you would as somebody who’s selling software over the web. So you really want to make sure that you’re talking to people who are in at least a similar situation as you and these types of people will help you make decisions. You can open up to them. You can talk about the types of problems that you’re having. They can give you suggestions. It tends to be a lot easier to talk to these types of people than it is to talk to your customers or your employees.

[07:04] And as a business owner it can be very I’ll say isolating when you’re running a business and maybe you have employees or contractors and you need advice but you don’t necessarily know where to turn. And a startup mastermind can really help with that because you can open up and you can talk about a lot of different things and essentially lay all your cards on the table and get the feedback that you really need in order to move your business forward. And if you don’t have a mechanism for doing that, then you may very well reduced to talking to your spouse or talking to your friends who if they don’t do that sort of thing, then they don’t have any basis for making decisions or offering advice. It becomes very difficult to get anything out of those conversations.

[07:44] Rob: Your spouse, your employees and your non-founder friends will never ever understand what it is you’re doing at the level that you need them to actually provide you with helpful support and feedback. You must have someone who understands that founders are a different breed and what we’re doing in startups is such a unique thing that talking to your parents or god forbid your employees about this, it almost never yields helpful information.

[08:12] I think the point that you brought up about isolation is a big one and I just double underline that on the notes I’m taking here. Isolation is something you need to avoid. I’ve gone through it. I think a lot of founders go through it. I see a mastermind as a way to get a group of supportive people around you, a way to have accountability, a way to have people invested in your startup not financially but just mentally invested without having a cofounder. So if you do have one or two cofounders, I don’t know that you necessarily need a mastermind because that’s kind of you have your mastermind there. But especially if you’re a single founder, I just view the startup mastermind as a semi-replacement for having cofounders.

[08:52] Mike: So the next question you might have is how many people should you have in your startup mastermind and this number I think can vary quite a bit. I’ve heard a lot of people say 2, 3, 4, 5. I think I heard one group that had I think 6 or 7 people in their mastermind. I feel like that’s way too much. My mastermind group has three people in it and with three people, we each get about half an hour to talk and we talk about our own products and we used to talk about our own stuff every single time we meet so it’s not as if you’re going 2, 3, 4, session or something like that without talking.

[09:24] Half an hour seems like its enough time for you to be able to get through everything that you’re talking about. And if you go a little bit long, it’s usually not a big deal but to me, I feel like three people is a good number to have. I think it can work well if you have two people. I think that once you start getting to a 4 or 5 people I feel like the mastermind gets too big and people don’t necessarily have enough focus and you spend more time waiting than you do talking about the things that you’re working on and getting the feedback that you need to move forward.

[09:52] Rob: Yeah. I take a pretty hard line on this. I think a mastermind, its best startup mastermind only works with 2 to 4 people and I’ve been in one that was 2 people and it worked great. I think 3 is the ideal number because then you’re getting two perspectives on things instead of just the other person. You want someone to have 20–30 minutes to really get in deep because if each person has 5 minutes to talk, you just can’t understand really what’s going on with their business.

[10:20] Now I have heard of masterminds like you said with 5, 6 I’ve heard of 8 person masterminds. Those are just run entirely differently than what you and I do. Those are run where it’s like every meeting 1 or 2 people get to speak for a longer period of time. Maybe you get 20 minutes when you’re on the hot seat and everybody else only gets a 5 minute update. I can’t imagine being part of a group like that. That’s not called a startup mastermind. Maybe that’s some other type of meet up or something else but it’s not at the level that we’re talking about when we’re using the term startup mastermind.

[10:53] Mike: So the next question is how often should you meet? I’ve heard of a lot of other groups that will meet once a week or even a couple of times a week. My group meets once every other week and I feel like every other week is the right amount of time because with half an hour allotted to each person, you get to talk a fair amount but at then at the end of it there’s an accountability area and that gives you – or the week in between each meeting gives you enough time to really buckle down and work on those things. And if you run into any sort of issues, you still have time to be able to get some of that stuff done from one week to the next. If you’re meeting every single week, it almost feels like any sort of commitments that you have or that you’ve set for yourself, it may very well be very difficult to meet some of those commitments just because you don’t have enough time to do it.

[11:40] It’s like okay well I’ve got things that I’m going to work on and its going to take me 2 weeks to do or 3 weeks to do and your report for the week is for 3 or 4 weeks straight is going to be well yeah, I’m still working on that. I’m not done yet. I’m sure you can go into a lot of detail about it but to me it seems like meeting every other week has worked out really, really well for us and with that sort of schedule, you can still move it around a little bit during the week. It’s not that big a deal. I think that we’ve only had to move ours I think twice but we still resorted to email updates on those weeks where we just couldn’t meet. There are ways around that sort of thing but to me it feels like once every other week is probably ideal. I think you could get away with once every week. I think Rob you’re in one that meets every week right?

[12:23] Rob: No, both of mine are every other week and it’s for the reasons you’ve outlined. There just isn’t enough time to bite off a large enough chunk to make it interesting if you’d meet every week. Plus if your mastermind like you said, yours run 90 minutes and mine typically run between 90 minutes and two hours and that’s a big chunk to bite off every week just to sit down and talk about work and not actually work. And so to bite off two hours a week, I want to kill that time but certainly it’s helpful in the broader sense but to not be able to be productive for those hours would be a big deal.

[12:55] I agree with you pretty largely that every other week since to be the ideal tempo. If struggling kind of with your business or with the mental side of it that then it would feel like too long and that there’s not enough accountability that you could feel isolated so that’s where I feel the two week touch point that even if you’re having a rough time, that’s often enough that it can kind of get you back on track.

[13:17] Mike: So here’s another question for you specifically. Since I’m only part of one mastermind group, you said that you’re in two different ones. How does that work and how does that I guess correspond to when you were a member of just one because I imagine the experience is a little different but as you said, dedicating that time every week would be really hard but again you’re in two so you’re basically dedicating twice as much on those weeks where you do have the meeting and then none when you don’t. Do you find that it’s more helpful to have a second one?

[13:48] Rob: That’s a good point because since I’m in two every other week it’s kind of like I’m in one a week. The reason that it works for me is because I’m not in two Skype mastermind groups. I feel like for me, that would be too much time because that would essentially be two hours every week on Skype. One of them’s in person and one of them’s via Skype. And the Skype one is with some more experience founders who are in other parts of the country and we really dig into a lot of nuts and bolts and detailed stuff that literally maybe 10,000 people in the world have any interest in at the level that we’re talking about. I mean it’s just such a small – maybe it’s 50,000 but it’s just a tiny, tiny number. And so there are just aren’t that many people who can discuss the intimate metrics that we’re talking about and really understand the design element. So that’s where the Skype comes in as just finding people to do it is tough.

[14:36] The in person one is a little more casual, it’s a little more fun and we almost always do it at happy hour. And so we go to a pub and we’ll have a few drinks and we’ll have appetizers and then we’ll chat. Sometimes we’ll do it in my house and I’ll host but it’s basically the same thing. I’m pouring drinks and more hanging out in the evening. So that’s where I almost use it as its both a social/have fun type thing but we also, we do get into the nitty gritty of our business but our businesses aren’t as closely aligned as with the Skype mastermind. I think I’d have a tough time being in two intense hardcore masterminds like my Skype mastermind is.

[15:13] Mike: Do you find that you actually get anything done while you’re drinking like that or no?

[15:16] Rob: Yeah. We do. It’s not like we’re frat boys doing keg stands. I mean we’re having conversations. We’re reading from notes, taking notes, asking opinions. Definitely making decisions and helping each other. Yes. We definitely get things done. The nice part about being in person is a couple guys come over and we’re sitting there chatting and having drinks for three hours, it doesn’t feel that long because we’re just hanging out. But being on a three hour Skype call is pretty irritating. It just gets old and you’re sitting or too long and we can be more casual with the time and even at times go into more depth on certain topics just because you have the luxury of being there in person.

[15:57] Mike: So one of the things that we did which was actually a recommendation from you was when we were setting up our startup mastermind, one of the things that we did was we essentially setup expectations for what that mastermind should be and what we expected from everybody. And two other things that really came out was 1) an expectation of complete confidentiality from everybody. Anything that you talked about during that meeting or during those various meetings would not go beyond the people that were there. It was kind of regardless of the topic whether it was personal stuff that came up or whether it was business related or contracts and stuff like that because there are legal issues that you may need to discuss with people and those are the things that you don’t necessarily want going out to anybody else or discuss outside of your circle.

[16:40] The second thing that also came as a recommendation from you was having an opt out clause after some sort of a trial period. I think it was something like eight weeks to say is this working for me or is it not because eight weeks, it sounds like a long time but it was really just four meetings and I think that if you don’t really gel as a group within four meetings or so, it probably isn’t going to happen and you might want to go off and find other people to be part of your startup mastermind group. Are there other rules that you setup in your masterminds?

[17:09] Rob: I can’t think of any but the confidentiality I think is one that I want to underscore because if I’m going to do this, if you’re going to be serious about this, you need to bring it to the table. I bring everything. I bring my lifetime value, my customer churn numbers, revenue, net profit, super decisions I make. I bring stuff in there that I don’t talk about with anybody else and that means there has to be confidentiality. They can’t go talking to other people about it. I think that’s a key. And then you mentioning the out clause, that’s something that I’ve done with both of mine and I think the important thing is that you’re going to probably be setting this up with people you know. Right? It’s kind of friends. And so if it doesn’t work out, there really needs to be a no hard feelings opt out period for 6-8 meetings or whatever.

[17:56] So as you said, yours was four meeting and I think that’s the ideal duration to really figure out if you’re going to get value out of it because think about it. If you get in there and you’re talking and maybe let’s just say you think you know these acquaintances or these friends and you get in and one person just dominates and doesn’t really offer a lot of information and you feel like you’re wasting that 90 minutes every two weeks, you need to feel comfortable that you can say you know what guys, this just isn’t working out for me. I’m sorry. And be able to back out and have that no hard feelings thing. Just as anyone else who comes in, maybe they just don’t feel comfortable. They want to be on their own or whatever that you don’t have the judgment of them if they decided to leave.

[19:34] So I think those are some pretty key aspects of it to keep it less stressful because anytime you’re setting something like this up with friends, it always has the potential to kind of go downhill.

[18:44] Mike: So in terms of logistics, we talked previously about the schedule and for us, we have a very regular schedule. We meet every Tuesday night at 8:30 and it’s from 8:30 ‘til about 10 or 10:30. Do you use a regular schedule or no?

[18:59] Rob: So the Skype one is a regular schedule every two weeks Wednesday morning and then the in-person was regular for a while and now we’ve kind of let it flux and I’ll find that we, unless one of us thinks about it, it will go three weeks and its even over the holidays when I think a month. I was thinking the other day that we need to get it back because it used to be every Thursday afternoon at three o’clock at this one place. There’s a happy hour and so we probably just need to kind of pencil that in the game. I think there’s a lot of value to making it regular because if you have to plan it individually every time it’s so frustrating but if everyone just blocks this thing out for the next year and blocks out that same time on Tuesday or Wednesday or whatever, that’s really the way to go.

[19:36] Mike: Yeah and I think that you and I found that even just recording this podcast very, very early on, just setting that regular schedule really helps because it was like oh well, at this time and every single week I know that I have X planned so I can’t plan anything else for that as oppose to saying okay well I can move this around or always trying to find a place for it and it’s just logistically it’s hard to think and plan for stuff when its constantly changing every week. So I really feel strongly that having that regular schedule is extremely helpful not just for mastermind but for other things that you’re working on.

[20:08] So the same point, using the same type of media mechanism every week to prevent technical issues or from cropping up and switching let’s say between Google hangouts and then to Skype and then to something else, always trying to new things just because they’re new, I feel like that’s not really conducive to having a mastermind or we use Google hangouts every week. I think you said you use Skype?

[20:30] Rob: Yeah. We used Google hangouts for a while but they kept changing the interface and it was causing us problems. Just the technical part of it. People weren’t getting invites and all this stuff so we have switched to Skype. I paid for – you know you have to pay for a pro account for a year. It’s like $50 but then you can do the multiple video Skypeing with multiple people. And so I just forked it over and now at 10 AM we’re all there and I call both people.

[20:55] Mike: Yeah. We’ve definitely had some issues with Google hangouts. It depends on what everybody’s comfortable with whether you use Google hangouts or whether you use Skype, I would definitely recommend this and I think Rob, you’ll probably agree with me that you definitely want to use something that has video. I think that’s something that people might overlook when they’re beginning to build up a startup mastermind and I think that people don’t necessarily think about it but I think having that phase in front of you where people are talking and you’re actually seeing them talk and facial expressions and having them be able to hold stuff up and show you things, that is such a valuable experience because it just adds so much context to the things that they’re talking about. If you’re just hearing this voice on the other end of the line, it’s a little bit disconnected and it doesn’t necessarily give you the same impression that you get when you’re talking to somebody through video.

[21:44] Rob: Invaluable. Yup, I echo that.

[21:47] Mike: So what about accountability? We have our own mechanism for accountability but what do you do in yours?

[21:53] Rob: So we use Google docs. We have a single Google doc with bullet points and the three people’s names in the doc and then we talk about what we’ve done and what we’re planning to do over the next two weeks and challenges that we faced or stuff we need opinions on. I’ll admit that as of late, we’ve started to fall off the wagon with that. I have just started it up again with the most recent mastermind meeting and started updating their Google doc again but we did that for maybe six months and then just kind of we go from the top of our head now and it’s not quite as valuable I think to be able to look back through the history. It’s really interesting to look through the history and see what you’ve talked about and to think wow, you know, I remember when this was making $1,000 a month and now it’s making – that’s just crazy that I was actually at that point. It really gives you a sense of accomplishment and a sense perhaps of what the group has done for you.

[22:43] Beyond that, I know you guys touch base between or you have a message that comes out between your meetings and I think that’s a really good idea. I’ve never done that but I think it could be really helpful. Why don’t you tell folks how that works?

[22:55] Mike: Sure. So as I said before, our startup mastermind meets on Tuesday nights between 8:30 and 10 to 10:30 or however long it goes. And what I do is I essentially assign myself to be the scribe for the startup mastermind and what I’ll do is I basically keep track of who is supposed to be speaking and what the schedule is. So there’s three of us and everyone’s got I guess an assigned slot. And then if I spoke first this week then the next that we meet, I would speak third and I would speak second and then I would speak first again. And we just rotate so that everybody starts in different slots. So it does rotate and that’s definitely helpful.

[23:36] The other thing that we do is there’s essentially three different things that I take notes on. The first one is what people’s previous commitments were and those are generally copied from the previous week so whenever I start a new meeting, I fire up Evernote. I throw everything in there and I basically just write down everything that they said they were going to accomplish last time. And then I have a section for what people’s accomplishments were and then what they have said that they were going to accomplish the following week or the following time that we meet.

[24:04] And then what I do is once the meeting is done, I take the three sections for what people have committed to doing by the following meeting, I throw those into an email that I send out using boomerang that I schedule for the following Tuesday. I might do it on Monday. I forget which. But it’s basically early on the following week so that once about a week goes by you may have kind of forgotten about what some of your commitments were to the group for the next meeting and that email in your inbox basically becomes a trigger that says hey, these are the things that you said you were going to get done. Where are you?

[24:33] And I started this I don’t know, it was probably about after 6 or 7 meetings because I started to realize hey, I’m waiting until Monday to start working on some of these things and go back and look and see what it is that I should’ve been doing for the last 12 or 13 days. So instead, as a trigger to myself I was like well let me remind myself of the things that I should’ve been working on and I said well why don’t I just send this to everybody? And people loved it. I mean nobody complained about it. Everyone said hey, that’s an awesome idea. Thanks a lot for doing that. And it’s worked out really really well and I actually even get requests here and there for me to resend it on occasion if we move a meeting or if we have to skip one because of the holiday or something like that.

[25:16] Rob: Yeah. I really like that idea. I can see the value of it. When we’re having our masterminds, I’m taking notes and then I typically put them in my Trello board when I say here’s what I’m going to do over the next two weeks. I put them in Trello to do but that can get lost pretty easily if I come back and there’s a bunch of email and I really don’t get back to Trello because I’m too busy churning through a bunch of fires. It’s easy to forget that so I could see a lot of value and have that email sent out off week.

[25:40] Mike: The one thing that I liked about what you said was that you guys use Google docs and I don’t know, I guess I didn’t really think about that because I throw all of my notes into Evernote and then I just have a separate note for each of the meetings that we have but it probably makes a lot more sense for me to switch over and take everything, throw it into a Google doc and then share it with everybody so that everybody can see the entire history of everything as opposed to me just having the history in Evernote.

[26:04] Rob: Right. And then other people can modify if maybe you misquote by accident or you put some in there and they decide they want to add some extra things, it’s kind of nice to be able to collaborate.

[26:16] Mike: So next major question that I think somebody might have is how to find people for your mastermind and I think this is a hard question because you really have to look at who your peers are and you have to know the people that you’re going to invite. I mean you at least want to have some sense of what it is that they do. You want to make sure that they are doing the same types of things that you are and for me, I met the people who are in my mastermind group at MicroConf. So for me that made it extremely easy. If you’re going to MicroConf, definitely look around for people to join a startup mastermind with. But what about you? How did you go about finding the people who are in your startup mastermind?

[26:51] Rob: Pretty much the same way. It was through MicroConf and the academy and just kind of the stuff we’re doing. I can’t imagine starting a mastermind with someone I had not met in person. I received this question. How do you find people for your mastermind? And I’ve heard suggestions like well, go on forums or get to know people via email and this and that. And that might work but there’s always a large part to how to people interact and the intimacy of a startup mastermind and what you’re sharing, it really depends on interaction style. Do people listen? Do they always want to talk? Do they want to dominate? Do they just want to give advice? There’s a lot of subtlety there that you can’t pickup over a forum or another non in-person mechanism. So personally I would go to an in-person event.

[27:33] The most masterminds I’ve heard come out of anywhere is out of the MicroConfs. We’re these Micropreneur meet ups and masterminds just springing up out of MicroConf Europe a number of them have already come out of it and same with the Vegas one. And I think the other place where I have seen stuff start to spring up is of course the academy. It’s our membership website so there’s a community there. And like I said, this year we’re going to be doubling down on that and really focusing on building that community and expanding it and so that’s the kind of place that I think you can go.

[28:02] I don’t know if you can go to a public forum like the old business is software stuff or answers down on startups.com or those kinds of places. I don’t know if you can go and do that. I’ve never done it and I haven’t heard of it being done. I’m sure it’s possible but I really think that you kind of have to go to that in person aspect. The other thing I’ll say is when you’re looking for the types of people to invite, you really want to find people that are ahead of you.

[28:30] In an ideal world, the other two people would be just enough ahead of you that they still remember what it’s like to be where you are but that they can give you advice based on what they’ve learned. Now obviously, that’s not possible if there’s three people. Everyone can’t be a head of the other. But what I have found interesting is that in the masterminds I’m in, there’s typically some expertise in a certain area. So one guy might be really solid on UX and ahead of everybody else and another person might be a head in terms of high touch sales and another might be ahead in terms of content marketing, another ahead in terms of paid advertising. There’s these different aspects of it.

[29:04] And so I think when you’re setting up a mastermind, don’t just grab the first three people you know who are your friends who are also founders but think about who is doing what I’m doing? So if you’re running a Saas app, try to find two other Saas founders. If you have a WordPress plug-in, try to find two other WordPress folks and if you’re doing info products, try to find info products etcetera. It’s not to say that’s the only way to do it but I think that in the ideal scenario, if you’re B to B, they would also be B to B and the type of software and they would be relatively close to you within let’s say a year ahead or behind you in terms of the path you’re traveling as a founder.

[29:39] Mike: I found that even when you’re working with other people in the mastermind group it’s really nice to get that additional perspective because other people have different experiences than you especially if their background are different. So I don’t know as I would necessarily shy away from people who are not Saas founders for example because Audit Shark is a Saas based business and the people that are in my mastermind group, none of them have a Saas based business right now. So I still get a lot of good information from them though so I don’t necessarily know as I would shy away from them. I’ve gotten a lot of great things out of it and even just in how to deal with a recurring revenue business, they’ve had some really, really great ideas that I’ve been able to take and implement. There’s other sides of it as well.

[30:21] Rob: Absolutely. It can work both ways for sure.

[30:23] Mike: It depends a lot on the type of people but I mean we’ve kind of talked about that is like you need to have the right types of people and make sure that the personalities don’t clash and get that trial period or opt out clause in there so somebody can walk away with no hard feelings as long as things are working.

[30:38] Rob: I think what you’re saying is personality may trump similarity of business and I would agree with that. The personality mix in your mastermind is going to have 80% to do with whether or not it’s actually successful because again, if you get people, if you come into the mastermind and you feel judged or you feel put down or again you feel like someone dominates, you feel there’s personality clashes in any direction and people are trying to pull away, it can really degrade the experience of the mastermind and it ruins the trust.

[31:08] I’ve also heard that mastermind’s going downhill because certain people just don’t show up or they commit to stuff and they just never do it. I mean there’s a bunch of things that can really kind of degrade the experience so you have to think to yourself are these folks reliable and are they someone who I want to spend two hours talking to every other week and really invest this time? Because that two hours is valuable. As a founder you can do a lot with that and I think you really need to think hard before you get into a mastermind relationship and I think that you will need to make sure that the folks are going to be compatible with kind of your working style.

[31:40] So that’s our show for today. If you have question for us, call our voice mail number at 1-888-801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. See you next time.

Show Notes

Transcript

[00:00] Rob: In this episode of Startups for the Rest of Us, Mike and I are going to be discussing the Product Test: 9 Attributes That Will Determine the Success of Your Product. This is Startups for the Rest of Us: Episode 134.

[00:11] Music

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

[00:27] Mike: And I’m Mike.

[00:28] Rob: And we’re here to share our experiences to help you avoid the same mistakeswe’ve made. What’s the word this week, Mike?

[00:32] Mike: Well, we’ve got an e-mail from Jay Adams who says, “Dear Mike and Rob, first off, you guys rock. I’ve been listening to the podcast for a couple of years. And I really appreciate how you share real world facts and advice about your startup experiences. I finally started my own company focused on enterprise server management and security software called SystemFrontier.com. I’ve formed an LLC in January of 2012, released an MBP in October and got my first paying customer in December. I left a very good IT career on March of this year to go fulltime. I’ve been consulting through my business to help gets the lights on until sales pick up. I’ve got a long way to go but I’m all in. My family has been very supportive and hearing about other single founder experiences just to help me know there’s light at the end of the tunnel. I’d just wanted to say thanks.”

[01:09] Rob: Awesome. So, where’s our page? We need [Laughter] we need to get a page up of people who’ve quit their job. So, this is the first e-mail we’ve received after our call for people who were able to gain freedom from the 9 to 5. So, very cool. Thanks for writing in.

[01:23] I was interviewed last week on I guess I called it a podcast but it’s more of a video blog thing. It’s called the GrowthHacker.tv and I like their tagline. It’s “Growth Hackers don’t watch cable.” So, there’s a bunch of pretty cool video interviews up there. You do need to enter your e-mail address to watch the videos. And I think you can watch some previous three. So, it’s kind of a freemium model. You can the watch the freemium three by giving your e-mail and then youhave to pay a month of subscription to watch the entire archive and future ones. But the interview went well. The guy asked some really good questions and the other folks they’ve interviewed on there were interesting as well. So, I figured it resonates with our audience and some folks might want to get in early while it’s because it’s just launched in the past few weeks.

[02:04] Mike: Pretty cool. Is now – is there a limit of the number of people who can get in or is it like they’re time limited or no?

[02:09] Rob: Neither of those, yeah. It’s just kind of a freemium model where they charge a monthly fee to access the videos.

[02:15] Mike: Very cool. So, I hired a new developer yesterday whose sole focus is going to be on building policy files for AuditShark. And I ran in to a bunch of issues getting him just initially set up but I was able to explain how things get built to him pretty easily. It seemed like he followed it along. Some of these issues, they were like code bugs that were due emerges but I was able to fixed those in less than 24 hours. So, at this point, he should be good to go and I would expect to see some of that stuff coming from him by the end of the week.

[02:42] Rob: Nice. Is this the last thing that you need done for your launch?

[02:46] Mike: It’s the last major thing, yeah.

[02:48] Rob: So, you’re —

[02:48] Mike: I mean there’s always going to be like little things here and there, you know, like the billing code is still kind of in progress but I don’t really need that to launch, you know. So —

[02:55] Rob: Right.

[02:56] Mike: But that should be done later this week, anyway. So, I’m not real concern about that. And then there’s a bunch of user experience stuff that I’m working on this week and touching base with some prospects and saying, “Hey, you know – you know, when would be a good time for you to start signing in and taking a look and see what’s there?” But I also have to kind of push off on that just a little bit until there’s more policies and stuff there because I’ve got to vent this guy’s work.

[03:18] Rob: Right. Yeah, that always takes quite a bit of time upfront to get a new developer up to speed both to find them and then to get them set up and then to start reviewing their work. I mean I guess there are some ways to shortcut that. I’ve done in the past where I haven’t – I’ve given folk kind of one off really localized task where they don’t need to access the source control. They don’t need to get the entire environment set up. They really — or I’ll send them like a console app and I’ll say like, “Here’s three table create scripts. Create them and then write this console app against those three tables.”

[03:50] It’s just in visual studio bare and get it running. Then I’ll take a look at their codes because if they don’t pass that, right, it’s a real…it’s a real thing that I need for the app but if they don’t do that well, if their communication isn’t good, if the code doesn’t work out, if there’s bugs, then I can cut them lose without investing all that time of getting an entire environment set up for them and all that other stuff. But unless you have something like that for them to do, then you kind of have to eat that upfront time of really getting them on boarded in to your team. And it’s definitely no small expense of your time and theirs.

[04:21] Mike: Yeah, I mean this is a little different because I’m just handling him the policy builder. He doesn’t have to have anything else. There’s no visual studio. There’s literally nothing else. I just said, “You know, bring your laptop over with, you know sequel server express installed and I’ll install everything.” And literally, we were done installing stuff in like 3 or 4 minutes and that’s what it.

[04:38] Rob: Okay.

[04:38] Mike: And then I started to sit with him the rest of the time going over, you know, how to build policies with – you know, showed him what I was looking for, showed him how it worked. And he was kind of off and running already. It didn’t take him more than one hour.

[04:47] Rob: Yeah, that’s nice. He came over, a local developer, huh?

[04:50] Mike: Yup, yup.

[04:51] Rob: Nice. I received an e-mail from – his name is Emil and he has an app called Helpjuice which is like a help desk app. And he says, “Man, I effing love your podcast. A couple of months ago, I couldn’t pay for a plane ticket to America and this is our current bank balance.” And he sent me a screenshot of Helpjuice’s bank balance which I thought that was cool. And he says, “…all because of listening to you. I wish I could connect more with you but I know you’re super busy.” A testimonial via e-mail that I wanted to share, I just thought it was pretty funny to see that, that screenshot of his bank balance.

[05:21] Mike: That’s awesome.

[05:22] Rob: Yeah, it’s cool. So, on another note, almost the opposite sentiment, we’ve got an e-mail this week from Rudy at HigherFlow and he is a long-time listener and he’s attended the last two MicroConfs. I‘m going to paraphrase his e-mail basically said, “I came away from MicroConf with renewed energy and a lot of ideas for moving HigherFlow forward. Unfortunately, before I could do any of it, my Rackspace cloud server had a complete unrecoverable failure. I had everything on one virtual server and the reason the cloud server is redundant and it would just fell over it to a new box if anything bad happened. To make things worse, the only backups that I have the snapshots of the virtual machine made daily by Rackspace. And their automated backups actually destroyed the backups that had already been made. So, the end result was a complete data loss.”

[06:06] He basically restarted with nothing. He reinstalled everything from scratch and then he had a database that dev build the database that was 10 months old. He basically lost 10 months of data and in fact, he says, “I don’t even know who my customers are or how to reach them because their contact information was in the database. Looking back, I can’t believe how stupid I was. Lots of lessons to be learned here and hopefully, this story can prevent some other founder for making the same mistakes. HigherFlow is up again and I’m moving over to either OrcsWebor Azure but whatever I do, you can bet I’ll have rock solid offsite backups.”

[06:39] So, certainly my condolences, both of our condolences go out to you, Rudy. That’s like it’s devastating to hear this. Fortunately, it is – it’s uncommon that this happens but it absolutely can happen and even when you do have backups this kind of stuff happen. So, folks that I know are zipping up entire directories or entire database backups and shipping them off to S3 on a nightly or a weekly basis, so that at worse, you lose, you know, handful of days of data.

[07:04] So, thanks for writing in, Rudy. Obviously, it’s really hard to hear that and to know that happened. But I do hope it serves as a reminder for all of us to get our backups in place and you know, so that this type of thing doesn’t happen to us.

[07:17] Mike: Yeah, I think the worst part of this whole story is just losing 10 full months of customer data because like he said he has no idea who his customers are at this point and if you don’t know who your customers are, it’s not like you can contact them to try and fix things either. And a lot of them are probably just going to drop off but I mean those backups are the critical part and it’s just – what do you do at that point? I mean he and I actually e-mail back and forth a little bit and he was tracking them for a while and everything was fine and then he just stopped tracking them because they were always fine and it just went wrong.

[07:45] Music

[07:49] Rob: Okay. So, today we are following up from what we talked about last episode. We talked last episode about the Founder Test which were 11 Founder Attributes That WillDetermine the Success of Your Product. And we looked at attributes that a founder can have that can, you know, either make you successful or not. This episode we’re going to talk about the Product Test: 9 Attributes That Will Determine the Success of Your Product.

[08:11] These are borrowed heavily from The Personal MBA written by Josh Kaufman. He was a MicroConf speaker this year. I listened to that book and really enjoyed it. And what I’ve done is I took his 10 factors and there were three of them that didn’t really apply to software and so, I removed those and then I replaced two of them with, you know, some stuff that does actuallyapply to software. So, what we have is 9 factors that apply more closely to our audience of bootstrap software entrepreneurs.

[08:40] So, attribute number one is urgency. And we’ve talked about this in the past where there are vitamin apps and there are aspirin apps. Vitamin apps are apps that, you know, someone may or may not want but there’s not a lot of urgency when they go to look for it whereas aspirin is something they have a dire or need for. They’re trying to cure their headache. They’re trying to convert something and they have a last minute deadline and it’s just a real urgent need and they need to fix now. That’s what we’re talking about here.

[09:06] Urgency does two things. One, it impacts the length of the sale cycle quite a bit, right? So, if someone has a more urgent need, then you can have a very fast sale cycle of someone typing a keyword in to your Google or search engine finding you and buying you…buying your product within 10 or 15 minutes. So, your sale cycle can be very short versus something that’s, you know, like let’s talk about automating our office or something. That’s going to have a long sale cycle because someone doesn’t need to do that right now. They’re getting by just fine with the substitute. As a result, you’re going to have to wait longer to make sales. You’re probably going to, you know, have to charge more money because you’re going to have to do more high-touch, that kind of stuff.

[09:45] Mike: I think one of the difficult things of this particular one is that when you’re trying to evaluate whether something is a vitamin or an aspirin, a lot of times it boils down to the situation that the person who is purchasing it is in. So, let’s take for example, a software] that converts a Word document in to, you know, ePub format. What you end up with is there will be people who have plenty of time to do that and then there’s going to be people who have very, very little time in order to get it done until you’re trying to sell to them. I mean you obviously have no idea what their situation is.

[10:16] So, there’s going to be some people who buy immediately. There’s other people who are going to look around a lot because they’re just kind of researching, you know, a process for something that they’re doing educational research at the time. So, for those people, the sale cycles can be a lot longer and it’s hard to determine how long the sale cycle is going to be until you know what the situation is for them.

[10:33] In terms of aspirin versus vitamin, you know, that’s a definite need. They need that particular job done and they can either do it manually or they can use software and the softwareis all — so it can save them a lot of time. So, in that case, I would say that that’s probably more of an aspirin than a vitamin. A vitamin is going to help you but not necessarily necessary at the moment. They probably have something else in place that they’re using.

[10:54] Rob: Right. So, you’re saying it’s situational that all of your sale cycle is may not be short but there will be some people who wait until the last minute and do have an urgent need for your product. And then some of them, they may take more time and be planning out and maybe will have a one-month sale cycle on those so that it’s not necessarily going to be uniform. The urgency may not be an absolute. It’s like and maybe a percentage of your sales are more urgent than others.

[11:18] Even if you think about it that way like if you have a game that is not a name brand game, your urgency is pretty low in general, right, because people mostly are just kind of cruising through. Let’s say I’m cruising through the iOS app store looking at featured games and I don’t have the urgency to buy any of them. I maybe wanting to fill some time or something, but in general that whole marketer, that whole niche is not going to be really urgent. Whereas something like a business app that solves a very specific and acute problem, my overall this has a lot more urgency. It’s just be higher on that 1 to 10 scale.

[11:49] Attribute number two is market size. And to be honest, I think for our purposes, you know, unless you’re a huge company finding an existing marketing channel meaning an actual way to get  customers, I’ll say get traffic that people interested in your idea, figuring out how large that is, it’s actually a lot more important than figuring out overall market size because if I build a SaaS app for hair salons as an example, you can look, you know, at some demographic information to figure out, okay, there are 50,000 or a hundred thousand hair salons in the United States.

[12:22] So, that’s your whole market but that’s – it’s completely not relevant to you as a solo bootstrap founder. What’s actually relevant is what marketing channel, how am I going to contact those hair salons and how many of them can I contact and close each month. And that’s a much more relevant piece to this attribute number two I think than the overall look at it.

[12:44] Mike: I think that this is something that not a lot of people give enough thought to when they’re trying to build their product because you really need to be able to know exactly how it is that you’re going to reach these people or at least have a very good idea of what is going to work because if you can’t figure out how to reach these people, it doesn’t matter how good your product is or how well it solves their problem or how cost effective it is for them because if they don’t know about it, they’ll never buy it.

[13:08] Rob: Attribute number three is pricing potential. And the translation of this is basically how much can you charge for your product? So, if you can only charge a $9 dollar one-time fee, you’re probably pretty low on the pricing potential. You’re going to have a tough time growing the product unless you have a really large channel of customers who’s coming almost free. Whereas if you can charge, you know, a hundred bucks, 500 bucks a month, it’s just so much better opportunity, you might have a higher chance of success and then increasing revenue quickly.

[13:36] I think a lot of this comes down to two factors. One is, are you selling B2B or are you going B2C? These days I pretty much wouldn’t do a B2C idea. The B2B market, you can sell on value. Basically you save someone time, save them money or make them money. And there is…there is so much higher pricing potential in those areas and you know, often a lot less support. There’s just a lot of benefits to going with that.

[14:02] Mike: Yeah, I think at MicroConf Jason Cohen had pointed out that pretty much every speaker there were selling B2B in some way, shape or form. And Patrick McKenzie was kind of the sole stand out where he has the Bingo Card Creator where he’s selling it to individuals but at the same time he’s also a heavy proponent of selling B2Bs and he’s also got Appointment Reminder which is a formerly a B2B app.

[14:27] And I would definitely agree. It’s just going to B2C route is – I’m not saying as a recipe for disaster but at the same time, it’s very difficult to go down that road because there are so many different businesses out there that have established needs and when you’re selling based on need, it’s easier than selling based on what somebody wants.

[14:43] Rob: Yeah, I was the other one that has B2C because I have WeddingToolbox andapprentice lineman jobs. And he listed that up there along with Bingo Card Creator and said, “But both of these guys have since moved to B2B,” and everything we’ve launched since then has been B2B. So, it’s definitely the direction that the people moved. I think the exceptions, notable exceptions are if you’re dealing in mobile apps that it’s feasibly since the cost to acquire customer is so low there because so many people are in that ecosystem. It’s a little more reasonable to think about doing it there.

[15:14] You can always point out exceptions. There is – you know, there’s WinZip and FTP programs and that kind of stuff that just have these massive search channels. They’re typically have a lot of organic traffic. And it’s definitely possible. I mean there was a guy on MicroConf who had I’m trying to think it was like tens of thousands of downloads of his free like FTP client every month. And huge chunk of it just came from Legacy Search and he’s just been around for a long time and had a lot of long-tail stuff. That – and that’s great for him but if I were to pick amore ideal business model from the start and I was looking at this factor that we’re talking about here, price-potential, I would definitely be and then firmly in the B2B camp.

[15:54] Attribute four is cost of customer acquisition. So, this is how much does it cost you to find a new customer and to get them to use your app? It’s a pretty long path from the first time some hears about you until they get all the way through to a download or a trial and they’re actually paying you for your application. So, I mean there are several rules of thumb here. One is that online customers are always cheaper to reach than offline customers. There’s just so many more mechanisms. I mean this is basically the stuff we’ve talked about for the past hundred and thirty episodes.

[16:23] You know, another factor to keep in mind to kind of decrease customer acquisition cost is to try to pick something that has urgency so that you don’t have a long sale cycle and don’t need to spend a lot of labor on it because even if it’s your time, it’s still costing you money. In addition, finding businesses where there’s a single decision-maker can help make like a medium or a low-touch sale rather than having to hold someone’s hand.

[16:47] Now, it’s not the end of the world to have to do high-touch sales, right? But it’s just, you know, you got to know what you’re getting in to and you need some type of gifting or some type of desire to do that in terms of lowering your cost of acquisition or at least knowing where it is because if you’re charging 500 a month, it’s okay to have a high cost of customer acquisition, it’s okay to do high-touch sales but you have to know that going in at these two things are going to matched up so that you don’t have a low pricing potential and a high cost of customer acquisition which is unfortunately what, you know, some apps that I’m approached with have.

[17:20] Mike: One of the points that you’ve made in there was having a single decision-maker involved in the process and when you get in to more of the larger business or enterprisey sales, that’s when you start to have like committees and multiple people who are looking at a product and you know, the different decision-makers who are taking a look at it. And what’s really sucks about dealing with that type of sales situation is that you almost have to talk differently to the different people involved. So, if you’ve got a team of technical people, they’re going to want to know all the technical stuff and their manager is going to want to know all of the business stuff. So, you almost have to talk to both of them at the same time on your website and but in different ways. You have to say the same types of things but you approach it differently.

[18:02] So, for example, with the technical guys, you’re going to approach it very technically and say, “This is the time I can save you. This is how I can allow you to do your job easier and help make you look better to your boss,” versus, you know, on another page you might have it more for the benefits of using that products and you’re talking more about the business objectives and meeting those goals and helping provide services for them that are going to save the company money.

[18:26] Rob: Attribute five is the cost of value delivery. Not just a fancy way of saying how much does it cost you to service a customer? So, with a typical brick and mortar, if you had a restaurant, you know, you might look at how much the food cost and the weight stuff and that kind of stuff, electricity, all that. If you’re a software company, it’s a little different because your overhead is going to be a lot lower. Hopefully, you don’t have, you know, many employees. There’s just a lower per customer cost because things are so much more scalable.

[18:54] But I think where those some of those larger costs creep in that you don’t typically think about are a couple of things. One is the cost or the effort to get someone on boarded and using your app in getting value out of your app. Sometimes that can be a semi-manual process if you have like a tag, you know, some JavaScript tracking code that they need to install on their site in order to use your app. You’re likely going to have some type of manual intervention at some point and that’s obviously not a free thing. So, you need to make enough money from your customers to be able to support that.

[19:25] And the other thing is in general just support whether you do e-mail or phone, chat, what-have-you, those are, you know, tend to be a decent chunk of your cost as you deliver value through your app. Then the other one that depending on whether you need to hire a DBA, that’s the one I have, you know, a DBA with HitTail and it wasn’t a cost that I really thought of in advance but since we have a large database and I want multiple backups and be able to restore a point in time and he works every month. It’s a recurring cost for the business.

[19:56] And so, that’s kind of another one is, you know, your IT infrastructure because I think I always think about, yes, I normally need to pay designers, programmers, probably some copywriters, you know. There’s kinds of miscellaneous things of building and marketing the business but these are the ones that maybe have…have snuck in the backdoor as I have…as I’ve grown businesses.

[20:12] Mike: I think one of the cost of value delivery that is frequently overlooked is the support and on boarding. So, like for example, when a customer first signs on, getting them up to speed with what your product does, how it works and how it can quickly benefit them is something that you need to spend a lot of time and effort on. And if you do it right, you can bake that stuff in to the app so that it essentially walks them through the process of on boarding themselves and you can essentially automate that within the application.

[20:40] There are some applications that are going to be a lot more complicated that you’re not going to be able to do that. One thing I saw which was very interesting today was a sign up process for a product that a product itself is very complicated or could be and they actually had  two different sign up forms. They had – it was on the same page and on the left-hand side, you could just say, “Please sign me up right away. This is what I want and you know, just dump mein to the application.” And on the right-hand side of the page it was something along the lines of, you know, get the enterprise treatment and you basically provided some a little bit different information, your name, phone number, et cetera. And they would contact you to help get you on board. And I thought that was a very interesting way to handle the on boarding process based on what the end user thought their needs were going to be.

[21:23] Rob: Yeah, that’s really – I haven’t heard of that. That’s a very interesting approach.

[21:26] Mike: Yeah, I’m totally staying with it for AuditShark. [Laughter]

[21:29] Rob: Yeah, I agree. I think that’d be well worth your time. Attribute number six is the uniqueness of your offer. And this just means how unique is the value that you’re offering in the market, how much can you differentiate yourself from your competitors. And I’ve actually translated it in to something else, how simple is your value proposition? Can you communicate it in three words or five words or the length of a Facebook ad headline or the length of a headline on an HTML page?

[21:58] So, I think there’s two sides of this, right? It’s the uniqueness and the simplicity. And what I’ve discovered is especially as a single founder bootstrapper, having a simple value proposition is really helpful because it instantly removes prospects who shouldn’t be using your app or shouldn’t be interested in it. And so, you can find people who really need that problem solved so that you can kind of tap in to the urgency factor which can help shorten your sale cycle which can help you determine how best to reach them and can help you, you know, lower your cost of acquisition to be honest.

[22:35] So, it’s like – it’s not just about being differentiated from your competitors but it’s actually how well can you communicate the single value proposition. So, I’ll give you an example, when I was split testing the Drip landing page, GetDrip.com, I had number of different headlines. And they revolved around several different value propositions. One of them said, “Reconnect with drive by visitors via e-mail.” Another one said, “Increase conversion rates by reconnecting with visitors.” Another one said, “Let’s use e-mail to create a double digit jumping your conversion rate.”

[23:08] And so, it was different ways of saying what sounds like the same thing but if you really look at it, it’s actually kind of a different value prop. And one of them performed way, way better. It was the double digit jump headline. I had a couple others as well but it’s, you know, being able to split test or to interview and actually talk to people and find out which of the – truly the values that they need out of your app can be very helpful for figuring out when you’re starting out, you need to be laser focused so that you can figure out who really needs your app and what problem you’re solving and that’s where this, you know, uniqueness and simplicity of your offer comes in.

[23:43] Mike: And as you said I mean that helps when you’re trying to optimize your overall conversion funnel because if people come to your website and they don’t think that that whatever it is that you have applies to them, they’re going to leave. So, you really want to be able to increase the conversion rates on whatever the landing pages are that you have. And if you’re able to clearly and effectively communicate whatever your value proposition is there, it’s going to increase the number of people who go through that funnel.

[24:09] In addition to that, it allows you to go in to AdWords and AdRoll and all these other places to leverage those types of paid traffic with some targeted keywords that you know already worked. Those targeted phrases that you’ve already tested, you’ve found what works and what doesn’t and you can put those out there and hopefully, scale up that side of your acquisition funnel.

[24:32] Rob: Attribute number seven is time to get to market. And in this, I’m actually adding money to get to market. So, you may not need a lot of money as a bootstrapper but as we talked about last episode, it can definitely help. So, you know, looking at this on a 1 to 10 scale, if you, you know, can get an app out in a weekend for $0, then that’s probably a 10. And if an app is going to take you a couple of years to develop and cost you 40 or $50,000 in terms of a bootstrapper’s budget, then that would be definitely on a lower end of the scale.

[25:06] Attribute number eight is evergreen potential. Basically, how long is your app going to be able to provide value? Does it rely on an API that’s going to change overnight? Does it rely on a social network like Friendster or Myspace that, you know, slowly loses interest overtime and that doesn’t have the customer base that it once did. Or is it something that that sticks around and has, you know, a 10, 20, 30-year lifespan where it can basically stick around forever providing its value?

[25:35] Mike: I think one of the key issues here is, you know, are you building on somebody else’s platform? And if you are, how long does that platform going to be around? Because if it’s not going to be around for a long time and granted a lot of time you look at any given platform, it’s very difficult to judge what the future that platform is going to be. But at this point, I think it’s pretty clear that, you know, Windows, Linux, and OS X are not going anywhere. You could probably reliably build on any of those three platforms and you’ll be fine.

[25:59] 15 years ago, you probably would have – you know, people would have given you funny looks for building on Apple’s platform because they’re like, well, you know, this has got a really, really low market share. It’s not doing well and I don’t see it turn around. But obviously, over the past 15 years that has changed dramatically. But then you look at other things like Twitter or Facebook or Myspace, those are kind of iffy, you know, who knows what the future of some of those is going to be. And if you were to look at those five years ago, it was completely not clear.

[26:25] At this point, Facebook is kind of a clear winner in terms of Facebook versus Myspace. Twitter doesn’t seem to be going anywhere. It seems like it would be a reasonably safe path but at the same time, you’re building on their API. They can change the rules underneath you no matter what and Facebook could do the same thing. So, those are the types of things that you have to be at least a little bit concern about when you’re evaluating different niches.

[26:47] Rob: Right and it’s not a “never do this” or “always do this” but it’s building on Twitter’s API has more danger than if you’re just building more of a self-contained app that can run by itself, right, building like an e-mail marketing software. Let’s say you build MailChimp versus you build a Twitter client three years ago like which one has more early win  potential? It’s much more likely that e-mail is going to stick around and as it happens, there are Twitter clients that are basically going under or dramatically having to raise their prices or losing customers because of the Twitter API changes.

[27:16] And if you think about Zynga which is, you know, a game developer that developed most of its games on Facebook, well, at certain point, it had to diversified. It went public and the investors were just too concerned that the Zynga was too reliant on Facebook, on the platform knowing that Facebook had more control than Zynga should allow them to. So, it’s definitely something to keep in mind is its evergreen potential.

[27:40] And our ninth and final attribute is recurring revenue potential. Let it be said here for the tenth time on this podcast, everyone take a drink, any app I build from now on will always have recurring revenue. I’ve done the one-time software downloads and I am done with them because every month on the first day of the month, you have zero dollars in sales for that months and you’re scrambling to make it work.

[28:03] So, I’m not saying you should never do, you know, non-recurring revenue but personally, I will never do it. And so, I think this is something to keep in mind as you’re talking about building your app, if you want to grow revenue over time having recurring revenue and subscription is by far the best way to do that because you are then building on something every month.

[28:24] Mike: I couldn’t agree more. I mean the recurring revenue, if you’re not at least looking at ways to establish recurring revenue or to upsell your existing client base in to additional add on I mean you’re really spending a lot of time and effort redoing those sales every single month and what you really want to do is you want to be able to do something once and then resell it forever. And if you’ve got a downloadable products, you have to continue repeating that particular process as opposed to ripping the words of, you know, the software that you’ve already built in month after month.

[28:54] Rob: Yeah, and this is another where especially your first app, the first app you launched, I don’t think it needs to be recurring because I think you need some small wins early on and if you’ve never launched a software product, I do think it’s okay to launch a – like a one-time fee download something like a WordPress plugin or, you know, maybe a mobile app if you have that skill or something downloadable like, you know, Richard Chen has PHP Grid and I think that’s a really cool idea and he built it up and was able to quit his job.

[29:21] But now, now that you have that, the next step then is to think about how do I get to subscription revenue whether it’s with the existing product, finding a continuity program, some additional value you can offer, extra support, something like that. Or if it’s, you know, starting on an entirely new app and then you have the leeway, you have – you bought out so much of your time. You have that flexibility to then go after that long build.

[29:44] I remember the CEO of Constant Contact spoke at Business of Software last year and she said that it’s the long slow SaaS ramp of death [Phonetic] that SaaS app takes so long to build a revenue because just one at a time you’re finding customers for 20 bucks a month, 40  bucks a month and to try to build, you know, a really large revenue stream is a lot harder that way. But that revenue stream is such a flywheel and it lasts a long time.

[30:09] If you can buy yourself some time upfront by doing, you know, like I said some early wins, you’ll have more patience if you already able to quit your job and you’re already enjoying what you’re doing then if building that SaaS app, launching it and getting the revenue high, you know, it takes a year or two or three, that’s okay because you’re already in a position, you know, where you’re not just hitting your job the whole time.

[30:28] To recap the 9 Attributes That Will Determine the Success of Your Product are urgency. Number two, market size. Number three, pricing potential. Number four, cost of customer acquisition. Number five, cost of value delivery. Number six, uniqueness of your offer. Number seven, time and money to get to market. Number eight, evergreen potential and number nine, recurring revenue potential.

[30:53] Music

[30:56] Mike: If you have a question for us, you can call it in to our voicemail number at 1-888-801-9690. Or you can e-mail it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. You can subscribe to us on iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.

Show Notes

• For an excellent write-up of this episode, see this post by Toby Osbourn.

Transcript

[00:00] Mike: This is Startups for the Rest of Us: Episode 133.

[00:02] Music

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

[00:19] Rob: And I’m Rob.

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

[00:24] Rob: Well, remember last podcast how I said we were within one day of getting Drip installed on the first paying customer’s app?

[00:32] Mike: Yes.

[00:32] Rob: We are still within one day. I mean [Laughter] —

[00:34] Mike: [Laughter]

[00:35] Rob: …install paying customer — so, here’s what we did. It was actually really helpful. We got on Google Hangout with Derek, myself and customer number one and he installed it in the morning and gave us some feedback on the early kind of on-boarding. And it was – there were no surprises. I mean he had little feedback tidbits here and there but it was nothing that we didn’t know we aren’t going to work on or wouldn’t just implement right away.

[00:57] But then he hit a roadblock. A couple of things he wanted like he wanted a sync between Drip and MailChimp because he wants to use MailChimp as his core repository because he just has so much invested there and then something else dealing with actually creating e-mails. He wanted more control of images and such. And so, these were basically like show stoppers for him, you know. He was like, “With these things, I really can’t use Drip.”

[01:20] Ands so, back to coding and we are wrapping up both of those features and should hopefully, have them installed, you know, within the next 24 to 48 hours. But it was basically a 3-hour Google Hangout and it was amazingly helpful. It was amazingly helpful to hear his perspective on things like how naming was confusing, how precisely, even though I’ve had conversations with him, I’ve e-mailed with him dozen times at least about how he was going to use it. There were still, once he got in and started using it, these little nuances that you don’t pickup on and a little – the two small features I just named, they never came up before now.

[01:55] It’s a good feeling. I feel much less discourage. That day I was kind of like, “Oh, man. We’re still not on customer one.” But now that we’re getting back to installing them again tomorrow or the next day, it feels good. It’s like we’ve moved forward. We’ve made progress since last week.

[02:10] Mike: That’s really cool. I mean I noticed the same thing when I started walking some people through some of the early versions of AuditShark where there’s certain things that are named in a specific way and it just doesn’t make sense to people. And there are some of those things are still like that but they’re obviously areas that I’ve looked at and said, okay, I got to go through and make some adjustments here. But yeah, just even just naming something as trivial as that sounds, you know,it can make a big difference when the customers get in, they start looking at it because if they don’t understand what they’re looking at, then you have to either educate them or they’ll – you just kind of abandon that because they don’t understand it. They don’t get it.

[02:42] Rob: Right and I had intentionally let Derek moved forward with development and really was not in the app very much. And I did that on purpose so that there would be a fresh set of eyes once we install it on HitTail and sure enough, as soon as we got it working, I logged in and I said, “Oh, you know, we had to move this around. Change the naming, this is confusing blah, blah, blah.” And I was that first run through of just making a little more useable but now, you know, we’re what? Maybe three weeks in I would guess, three and a half weeks and it’s starting to become where I’m comfort able with the app and I don’t see those things anymore. And so, to have another set of eyes, just it gives you perspective, you know. It’s that fresh set of opinions. How about you? What’s new this week?

[03:22] Mike: Well, I’m still wrapping up a couple of things from MicroConf. I still got to get the survey out, you know, just some paperwork issues other than that and like hotel just got back to us today and said that we, “You know, you owe us another $1800,” or whatever.

[03:34] Rob: Yeah and if you’re interested in seeing some photos from MicroConf, go to MicroConfPics.com. That’s MicroConf P-I-C-S.com and that leads to a Google Plus album. We have about 50 pictures of speakers, people hanging out, Mike and I up on stage and all that kind of stuff. So, check it out if you’re interested.

[03:54] Mike: Aside from that, I’ve been doing some more customer development this week for the AuditShark, you know, just reaching out to some more people who are in the security space who already had — that I knew of, the repservers that need to be protected. And just trying to work with them to talk to them about AuditShark and get it installed with them. You know, I’ve already had some preliminary discussions with them and talk to them about pricing and everything else and that all seemed fine to them.

[04:15] So, hopefully — I got word a few minutes ago just before this podcast that the billing code was, you know, ready to go out. So, just needs to be tested a little bit and once that’s in place then I’ll start putting these people on and hopefully, it actually start charging people within the next week or two.

[04:30] Rob: And I say testing some thing [Phonetic] to your billing code —

[04:33] Mike: Yes, yes.

[04:34] Rob: Roll that…roll that baby. I’ll look at possiblyalong [Phonetic].

[04:36] Mike: Well, the thing is I’m not actually billing – like all I’m doing is I think for the first one I’ll just bill them automatically and then after that, there’s all this other stuff in place that says, “Oh, well, if your next billing date is this…” and the first charge just kind of go through and then after that, it’s a matter of targeting people for their follow up recurring billing.

[04:55] Rob: Right, right. Hey, in line with what you said on the last episode about hiring a bookkeeper, I am in the midst of that and I interviewed a bookkeeper today as well as last Friday and found some pretty good candidates. And it was funny one guy I talked to, he asked me about MicroConf. As we were talking, he said, “How’s MicroConf go?” And I was like, “Oh, you must have researched me based on my name.” I was just kind of puzzled and then he told me that he was on the waiting list for MicroConf. It was —

[05:19] Mike: Oh, oh.

[05:20] Rob: It was really funny, yeah. I was like wow. We – I guess we got around. I just wouldn’t expect, I mean, you know, he’s a remote bookkeeper but he’s just in the technology and startups and stuff. And so, he had tried to get in and haven’t got a ticket. So, that was kind of a fun conversation. It actually made me be like, “Huh, I like this bookkeeper.” It’s like if we have asimilar interest, he’s probably going to have a better understanding of my business and he works a lot of other smaller software companies and SaaS companies. So, I mean he’s on his own like he works alone. He has a home office. I’m pretty stoked about him. Hoping we can work something out but I also have a few other folks I’m looking at through oDesk.

[05:54] Mike: Very cool. I signed up for a Square account a while back and I actually gave them enough information for them to send me a Square Reader. So, I’m going to be using this hopefully when talking to people. You know, still I’m early on with AuditShark and say, “Hey, you know, is this something you’re interested in?” And you know, inevitably get the, “Yeah. That sounds great.” And of course, then there’s the question of, “Can I get your e-mail address,” or “Would you pay for it,” or “Will you pay for it?”

[06:18] And of course, the next step is actually getting their credit card information and I’ve got a Square Reader here that they mailed me over the weekend that will allow me to take payment on the spot and it was — I just thought of that as a great way to start validating ideas. So, if anyone has an idea that they’re trying to validate, you’re asking people if they will pay for it if they’re going to prepay for it, you know, using something like a Square Reader seems like a no-brainer because you’ve got it right there or you can actually ask them for money and take a credit card payment on the spot.

[06:46] Rob: Very nice. So, that would have been cool to have at MicroConf.

[06:48] Mike: I know —

[06:48] Rob: You know —

[06:49] Mike: …I thought of it after the fact.

[06:50] Rob: Yeah, you know, there’s another recommendation I can make if you don’t have a Square account is if you have a Stripe account or even you can open a Stripe account like two minutes and then there’s an iOS app called Paid and if you search for like Paid Stripe in the App Store, it’ll come up. It’s 5 bucks I think. It’s a really nice app. It looks gorgeous and it helps you monitor your Stripe account. There’s a lot of reports but then there’s also one page where you can just enter a credit card number and charge it an arbitrary amounts. So, it doesn’t have the cool swipey thing, you know, that Square gives you but it is another way just right on the spot on your mobile app to, you know, to be able to do that. You don’t have to carry around the extra hardware.

[07:29] So, John from BlueBridgeDev.com commented on episode 130 which was the episode where we talked about Unfair Advantages. And he mentioned three additional unfair advantages. The first one he said was assets like a massive savings account, website with good SEO, et cetera. And I like that. I like, you know, once you’ve built up some assets of your own, it’s definitely can be an unfair advantage to someone who doesn’t have those.

[07:54] Second one he mentioned is personal qualities. And I think I preferred to be more specific here but the examples[0:08:00] he gave were like public speaking, strong writer, ability to sell. The third he said is a business model. So, like recurring or exclusive rights or low overhead. And I would argue that. I don’t think that’s an unfair advantage because other people can take advantage, you know, unless you’re Netflix going against Blockbuster where like Netflix weren’t recurring and Blockbuster didn’t or couldn’t because they’re in trench competitor, then maybe that’s an unfair advantage because they can’t pivot quickly enough. But if it’s just two or three startups going against each other, then you’re going with recurring, your competitors can easily switch to it or you going with having low overhead, the odds are your competitors can do that to you.

[08:38] Now, something like exclusive rights to something that would be, you know, an unfair advantage that other people can’t easily duplicate, those were the comments from John and we appreciate the feedback as always.

[08:48] Music

[08:51] Mike: So, when we’re looking at for iTunes reviews, I saw a bunch of new ones out there.

[08:55] Rob: Yeah, we haven’t talked about it on a — ton of new reviews, lot of 5-star reviews. We really appreciate them. Jocelyn Krauss [Phonetic] says, “5 stars, most useful of all startup-themed podcast.” She says, “I’ve been on a startup-themed podcast listening binge and can confidently say this is the best out of two dozen or so shows I’ve sampled. If you’re looking for advice to actually build an online software product, this is the show for you. Keep it up, Mike and Rob and thank you.”

[09:22] Another is from a username that I can’t possibly pronounce because there’s a bunch of numbers and consonantsbut it says, “Actionable, practical and accessible like most other reviews here say, Rob and Mike do a fantastic job of providing not only tactical advice but also strategic advice for people who want to start their own business on the side. The icing on the cake is that they released new episodes like clockwork every week.”

[09:45] We’re looking like comments about that but you know, we have been consistently — I think we’ve released an episode every Tuesday morning for the past year even the weeks like theMicroConf week, we recorded like an extra episode and during Christmas week and New Year’s week we recorded an extra episode. And I think that’s something that we both take pretty seriously and I think it – I’m glad that it, you know, that people noticed and that we have — there’s always something to listen to on Tuesday morning.

[10:08] Mike: Yeah, it’s funny because at MicroConf we were there. I think I was talking to somebody on Monday and they’re like, “Oh, you’re going to be recording a podcast episode tomorrow?” And I’m like, “No, we’ll probably do that like Thursday or Friday.” And they seemed really disappointed and they’re like, “Oh, I’m not going to get a new episode tomorrow.” I’m like, “Oh no, you’ll get it. We recorded tomorrow’s episode last week. We do them about a week in advance.” So, yeah, there were people who were at MicroConfwho were listening to that podcast.

[10:30] Rob: Yeah and that was – on my plane flight home I listened to our Tuesday episode as well.

[10:33] Music

[10:37] Rob: Today’s episode is based on question fromStephen Rhyne. He’s from ThrowingBoulders.com. He’s a long-time Academy member and a MicroConf attendee. He e-mailed me afterwards and he had a question. He said, “Should you enter a niche based solely on opportunity? Or do you need to have passion and or industry experience with the subject matter? I’m trying to understand were keyword counts, customer development results, et cetera stop mattering as much as your passion to execute.”

[11:05] And he actually sent several questions to me via e-mail and instead of writing back with paragraphs of pros, I recorded him a screencast and kind of just talk through some stuff. And before I knew it, I had like 16 minutes of audio and at the end I said, “You know, this – there’s enough meat here that I know we need to talk about this on the podcast and share it with, you know, with the whole community because it’s just – there’s a lot of depth to that question.”

[11:28] The thing Stephen asked is, “Should you enter a niche based on opportunity or do you need to have passion?” The first thing I said is it’s not an either or question. I hate it when people say, “Oh, you should always do this,” “You should never do this,” “This never works,” “This always works.” It just doesn’t work that way, right? There was absolutes either an easy way to think, you want to think black and white but they’re not reality.

[11:49] And so, today’s episode, we’re titling “The Founder Test” and it’s – the subtitle is “11 Founder Attributes that Will Determine the Success of Your Product”. And then later on, perhaps next episode  or in a couple of weeks, we’re going to do an idea test and it’s going to be a number of attributes that determine the success of your idea. And the point of this is to say it’s not should you enter a market based on this or that, it’s to say, it’s a gradient.

[12:13] There are 10 or in this case I guess 11 attributes of you as a founder that all factor in to this decision. And the way I like to think about it, it’ll be ideal if this is a list of 10 because then you can rank each one on a scale of 1 to 10 and then add them up and based on if you add 0 or a hundred, you can say, “Well, I think I haven’t found it but you know, eventually going to succeed or not.” And you can do the same thing with an idea.

[12:37] So, we’re going to be talking again about 11 founder attributes and the first one is your knowledge of the niche or the problem to be solved. So, this is much more in line with what Stephen originally asked was, you know, should you have knowledge? Should you have passion? Should you go in solely based on opportunity? And bottom line is if you have — on a 1 to 10 scale, if you have a knowledge of your niche or the problem to be solved of a 1, then you need to educate yourself and you stand less of a chance if someone has equal founder attributes as you but they have a 10 here, right, that they are in it. They know what they’re going to build, their own customer zero, all of those things play in to how much success you’re going to have.

[13:20] So, again, it’s not – you should never enter a niche that you don’t have knowledge of but it’s definitely helpful to, you know, the more knowledge you have of that niche or the problem to be solved.

[13:30] Mike: I think this is one of those things of where you have to take this in to account. You have to when you’re looking at the competition and you’re evaluating them as to whether or not you should go in and whether you stand a chance against them head to head. This is something you definitely need to take in to consideration because if they know the niche and you don’t, you’re going to be the serious disadvantage regardless of the other resources that you may be able to bring to bear. It’s very difficult to overestimate the level of helpfulness that having that knowledge is going to give you.

[13:59] Rob: Attribute   number two is your technical/programming knowledge. And so, we’re assuming here you’re building a software product and we’re not saying that if you don’t know how to code that you can’t successful launch a software product. What we’re saying is that the more technical knowledge, the more programming skills you yourself have, the higher the chance that you’re going to be able to deliver a finished software product. This is irrespective of whether you write the code yourself or whether you hire it out. In either case, the more skill experience and knowledge you have of programming, the easier it would be for you to actually deliver a finished software product in the end.

[14:35] Mike: I think this matters a lot more if you’re the person doing the code than if you’re the one who’s got knowledge of the problem to be solved. If you have the knowledge of that problem but you don’t necessarily know how to accomplish it, I think that that’s a much easier situation than the reverse.

[14:50] Rob: I would agree because you’re right. I know a number of non-technical founders who have intimate domain knowledge and they know how to solve that problem. And hiring out code, well, it’s not trivial to do that. It’s easier to do that often than it is to learn, you know, a new domain from scratch.

[15:10] So, founder attribute number three is your skill as a project manager. And this assumes that you are going to be doing some type of outsourcing or delegation which is something we recommend and I think your ability or willingness to outsource and delegate is actually the point after that because the more you’re willing to hand off to other folks, the more likely you are to complete a finished product. But you have to be able to manage them effectively and have some type of experience or skill with that or else, you know, projects go off the rails fairly easily as we’ve discussed in, you know, the last couple episodes.

[15:45] Mike: I think that your skills as a project manager are crucial to being able to scale up a business especially when you’re trying to scale it up just past yourself or just trying to take certain pieces of it and say, “Well, you know, this is too much for me,” or “I don’t want to have to deal with this,” or “I can’t deal with this right now because I don’t have the time.”  Those are the things you have to be able to manage and if you cant, it’s going to put you to a disadvantage to anybody else but it’s critical to be able to develop those skills.

[16:09] And the key point I want to make here is that a skill, that’s a learned skill. Just because you sucked at it now, doesn’t mean that you won’t suck at it after trying it a couple of times. And you do get better at it over time. You do learn from your mistakes but the first couple of times, you try and manage a project where you don’t have somebody over the top of you who is trying to push things down to you and say, “Well, these are the things that need to get done. You know, this is the order they need to get done.” When you’re the one calling the shots and you’re the one making those decisions, it’s very difficult the first time but it does get easier over time.

[16:40] Rob: Founder attribute number four as I just mentioned is your skill with outsourcing and delegating. And I think this comes down to two points. Number one is do you have experience outsourcing and delegating? And do you have a confident person or people to outsource to that you’ve already found? Because maybe if you — let’s say it’s a 1 to 10 scale, a 1 might be you’ve never outsource, you don’t have any experience delegating and you have no one to outsource to and you’re going to start by looking on oDesk.

[17:07] And then a 9 or a 10 is someone who has several years of outsourcing experience and already has a virtual assistant or a programmer or a developer or a designer who has extra bandwidth and they are known quantity and you have a known relationship and your communication is already…already set. You know, you’ve already used them and they’re reliable and they not only do – that you understand them but they understand you like they understand your – the way you work and what your expectations are. And so that would be the, you know, the 1 to 10 that I would look at in terms of outsourcing and delegating.

[17:39] Mike: I talked to a ton of people at MicroConf who had I’ll say significant issues with – just mentally trying to do outsourcing because they’re, you know, they always have the mentality, “Well, you know, it’s hard to find somebody,” or “It takes a long time to find somebody. It would be so much easier or so much quicker if I just did it myself.” But you know, when you start compounding those things, you know, on any given project, sure, it’s going to take you a lot longer to find somebody and then implement it. But once you get to 2, 3, 4 or 5 different things that you have them do, that’s when you start seeing there is cost savings.

[18:08] It’s more like when you’re launching a new product where you look at your revenue for example and you have this deep because you’ve got this initial investment but then as that starts to rise, as you start to get more comfortable with the person that you’ve sent stuff off to or you’re gathering money from your product, that starts to rise and you go in to the block. And it’s definitely a worthwhile investment but you obviously have to do it right, you have to be using confident people who aren’t going to flake out. And it takes a lot of practice in order to get good at it. And I see it just the same as being a project manager. It takes time. It takes effort. You do make mistakes but you do learn from those mistakes over time and you get better at it.

[18:46] Rob: Founder attribute number five is your passion for the problem to be solved. And I’ve heard a lot of different arguments about this. Some people say passion is a competitive advantage. Other say passion doesn’t have much to do with it. I,like other things on this list, believe that the more passion you have to solve the problem you’re trying to solve that all of the things being equal that you will come out ahead of someone who really doesn’t care that much about it or just going in to it because the opportunity that, you know, the keyword results and the expected market size and other things looks promising.

[19:20] Mike: I think in some ways this boils down to the amount of success that somebody might foresee coming out of whatever you’re undertaking because if – as you said, I mean if the opportunity causes low and it doesn’t take a lot of effort to get in to it, then people who have kind of a cursory interests are going in to it. If they start running in to hurdles or roadblocks or anything like that, they may very well just give up because, “Oh, it didn’t take much effort to try and get in to it and I don’t really feel like dealing with this,” whereas if you have the passion to solve those problems and really address the market, then you’re going to be able to push through those because you don’t care about those. You want to get through those. You want to be able to solve people’s problems.

[19:58] If you don’t care about it as much and you don’t[0:20:00] have the passion, then you’re not going to bother pushing through them. And I could definitely see how that factors in to it but I also think that it has something to do with, you know, what the potential outcome is, you know, what’s the upside to this. You might, you know, have a lot of passion for solving the problem but you might see that there is this massive upside to it where you could reach a lot of your other goals in life by solving that problem because you can reap a lot of rewards. So, I wonder how much that kind of plays in to it. You know, it’s definitely the difference between doing something because you love doing it versus doing something because you, you know, want the money from it I’ll say.

[20:33] Rob: Right and I think that’s where some people kind of go off the rails on this because just having a bunch of passion for an idea and if you ignore all those other ones, those success factors, then – and you just go, “Oh, I’m just so passionate about this idea but there is no market and it has a very long sale cycle,” and you can’t find a single a decision-maker and nobody really wanted it. It doesn’t solve the pain but like if you ignore all those other things, that’s where you run in to the overvaluing passion and thinking the passion can conquer all. And what we’re saying here is no, it can’t. It’s helpful to be passionate about it but it’s just one of what we’re saying are 11 different factors that kind of compiled to figure out whether or not you’re going to be successful with this.

[21:15] Mike: Yeah, I totally agree with all that.

[21:17] Rob: Founder attribute number six is your ability to build something people want. And to translate this, it’s kind of like are you a product person? Are you an exceptional product person? Do you build awesome UIs? Do you have lot of experience building apps? Do you have flexibility and the openness to change your idea based on someone’s feedback during customer development? If you can really focus and build something people want and you have that experience, then I put you at a 10 on this one. And if you are not a software person and you’ve never designed a software app and I don’t mean graphically designed but done user experience stuff, thought through screens and flow and naming and all of the things  that make an app easy to use, then you’re closer to a 1 on this scale.

[22:04] And so, again, this doesn’t make or break you. You’re going to have to educate yourself and or get a little lucky to build a good app if you don’t have much experience with it or you can obviously outsource that if you can find someone who’s a really good at it. They’re not going to tend to be cheap but this is a place where, you know, you can hire expertise that’s outside of your own in order to boost your number of rating on this one.

[22:27] Mike: I think that the ability to learn from your mistakes probably factors in to it a little bit more than your experience but the flexibility side of this is probably a lot more important than that as well. I mean you need to be able to change your idea based on the feedback that you’re getting from the customers. You need to be able to adapt and understand that just because you think that you have the right solution, doesn’t mean that it is the right solution that people are going to pull out their credit cards and buy.

[22:50] It’s interesting to look and hear people talk about, “Oh, well, Steve Jobs didn’t talk to customers and this and that,” but Steve Jobs is an extreme outlier. I mean he had this vision of what was going to be and what should be and what people wanted and he have, you know, the capital from Apple in order to be able to drive that marketing engine to craft a story to make it happen. Not everybody has access to that and anybody who’s listening to podcast probably doesn’t have access to that kind of resource.

[23:17] So, you really have to think about what is it that people are going to pull out their credit cards and pay for versus what it is that that you want to build for people and is that something that people will pay for?

[23:27] Rob: Yeah, that’s the thing. We’re, you know, we’re going to cover the other factors here in a second. One of them is money. And you could say, well, you know, money is on a 1 to 10 scale in terms of how much money you have to fund this startup idea but as you said, you know, Steve Jobs was worth $1 million when he was 21. $10 million when he was 22 and a hundred million dollars when he was 23.

[23:46] By that time, he’s – if you look at these founder attributes, certainly he had some of this, right? He had skill and experience and such but he had so much money that maybe he would get a hundred points like you and I would get 10 points for, you know, having a decent amount of budget. But he had so much money he could fail over and over and over and actually, he proved that with Pixar like he dumped most of his fortune in to keeping Pixar alive. And when you have such an outlier case like that, it doesn’t necessarily fit in to our model that we’re doing here. I think like you said for most of the listeners, you would fit in to that.

[24:19] So, founder attribute number seven is your skill as a marketer. And I will actually say that this is another one that we should – the weighting should be doubled because marketing is – maybe even tripled, right? Marketing is such a large part of whether your product is going to succeed and I think this falls in to a number of camps but one of them is whether you’re a creative marketing mind, someone like Seth Godin or Matthew Inman. These are people that I bet they aren’t looking at their Analytics tracking and measuring every little number and nuance and split testing and all that stuff but they’re just genius marketers.

[24:48] The other side of it is if you have high skills with Analytics, tracking, measuring, split testing, that’s more of the kinds of things that, you know, we’ve talked about of analytical marketer what myself, Patrick McKenzie, Sean Ellis, Hiten Shah, if you can really nail this part, it can absolutely – it can really tip your scales, you know. It can make it so even a mediocre idea can – it can do well.

[25:09] Now, there’s this old saying that great marketing will just make a crappy product fail faster and I wholeheartedly believe that. So, you can’t do a crappy product but if you have a decent product that you have exceptional marketing, it can make a software product at least a moderate success just by having that over weighting of the marketing jobs.

[25:28] Mike: I think that there’s two different pieces of this that you have to keep in mind. I mean because there’s the people like as you mentioned Seth Godin where he’s got a really great marketing mind and can come up with this I’ll call the most outlandish but typically brilliant ideas of how to go about crafting a story and talking to people. And then there’s the other type of marketer who is very much about the Analytics and tracking and measuring and incremental tweaking to make that story better. And they leverage what they’re learning from that to make their story better versus somebody like Seth Godin. And I would classify [0:26:00] Steve Jobs in this as well but, you know, they have this vision that they can push out there and kind of make people believe.

[26:08] So, I think that those are two different, you know, ways of approaching the marketing side and they don’t necessarily overlap a lot. There’s a spectrum there and you fall somewhere in that spectrum and it’s just how far towards one of the other do you fall and at what intensity.

[26:24] Rob: Attribute number eight is who you know and well, this may not sound like a personal attribute, it really comes down to do you naturally build a lot of relationships and do you have that rolodex where you can call on folks to help you in either give you feedback or to leverage your network to help you promote the product or help make it a better product or to integrate with. I mean there’s just so many valuable things you can do.

[26:47] This actually goes back to our unfair advantage episode where we talked about how just having that unfair advantage of a large rolodex can in fact tip the scales in your way of success. Now, you need to have reasonable ratings for the rest of this but having a really big network and knowing a lot of people, you know, can definitely be a big benefit.

[27:06] Mike: I think the area where this really comes in to as a benefit is the types of people you can go to and just ask questions. And if you’re the type of outgoing person where you can go out and meet new people, you’re in a decent situation but at the same time if you just have a large network of people who know you or you know them, you can approach them and say, “Hey, I’ve got this problem. Can you help me out,” or “You know, can you offer me some advice?” You’ve already got that built-in relationship, you know, it basically greases the wheels. It makes it easier. It makes is quicker for you to iterate through that process as opposed to having to introduce yourself to people in order to get their feedback and opinions on stuff.

[27:41] Rob: Attribute number seven is time. If you have 5 hours a week to work on your idea, give yourself a 1. If you have 80 hours a week, give yourself a 10. Time doesn’t always make people be more productive or more effective but it absolutely can make a difference all other things being [0:28:00]equal. And of course, you can tip it too far, right? And if you work 80 hours a week every week, your productivity or the long hold goes down but having the flexibility to put in longer weeks when needed versus the person who could only work 5 hours, it will tip the scales all other things being equal.

[28:15] Attribute number ten is money and I mean this comes back to the Steve Jobs thing we said a little earlier but even on a smaller scale, you know, if you have basically no money saved up to fund this app or you only have $20 a month that you can spend on it, you’re going to have to move slow and this is a disadvantage and that would be give yourself a 1 whereas if you have someone who saved up even $10,000 or 20 grand, they are definitely at an advantage. And you don’t need a ton of money to do it and we’re not talking about raising money here, we’re talking about having either a few thousand bucks saved up to help you with outsourcing, gaining of knowledge, marketing and not having to worry about little expenses like hosting and credit card fees and all that kind of stuff.

[28:57] And it also allows you just to move a lot faster. You can get an app coded and done twice as fast or more if you’re able to outsource pieces of it or if you’re able to hire a developer 20 hours a week instead of 10 hours a week or you’re able to buy out some of your time. You know, if you’re consulting and you can consult less because you have extra income coming in every month or you have a block of money that you put away, then you can just move faster and that always winds up being a success factor because not only are you able to get to market faster but the quicker you can get to real people using your app, the quicker it benefits you mentally.

[29:32] I mean we know, we talked a lot about how the psychology is a big part of launching an app and not getting discourage is a big piece of that. I don’t know if I’ve said this on the podcast before but I have this thing that said, “Funded companies go out of business because they ran out of money. Bootstrapped companies go out of business because they ran out of motivation.” The only time you’re going to close up shop is when you lose motivation because you don’t have any money coming in the first place, right? So, it’s not a matter of missing payroll. There is no payroll. So, that’s where having some money to speed along the process and get to market quicker can help keep you focused and on the rails and so you don’t just eventually kind of lose motivation and shut the thing down out of disappointment.

[30:11] Mike: You know, I think they look at the money side of this a little bit differently, I mean one of the things that I look at is how are you able to mentally justify spending the money that you do have. I think that having the money is only one piece of it but having a mentality of saying, “Okay, I’m going to pay $20 a month for this because it’s going to get me where I need to go faster,” versus the people who sit there and think, “Well, why should I pay $20 for that when I know that I could do that myself or I can hack together a solution that would do that and it wouldn’t take too much longer than I’m already spending to do that.”

[30:44] Part of it is about time management but it’s about managing your resources to be able to get things done faster and move yourself towards your goals quicker. If you’re not willing to part with some of that money and use it as an investment in your future, then chances are really good that you’re going to have trouble with that down the road and there’s going to be a huge number of roadblocks in your way that you’re putting there because you’re not willing to make that investment yourself.

[31:09] Rob: Founder attribute number eleven is focus. Do you have the ability to not chase after shiny objects and to focus on one thing long enough to bring it to market? Hopefully, that’s four to six months, then to go to the learning phase. Hopefully, that’s three to six months and then to grow that thing. And that may take another six to twelve months. So, mentally when I starta project, I always say, “The next 18 to 24 months, I have to focus on this.” And I may do other things, right? We put on MicroConf and yes, that does take a little bit of time, a lot of time over the course of a couple of months but then it’s done and now, I refocus and put all my energy in to that single project.

[31:47] You’ll notice that right now I’m not looking at releasing a second edition of my book or writing another book. I’m not looking at starting another podcast. I’m not looking at launching a different app. I really am talking most about keeping HitTail going and getting Drip launch because those are the things I’m focusing on. All the other things I just mentioned are things on my long-term to-do list. But I’m not bouncing around and trying to do all of them at once. I know that they are on my long-term road map and that I will get to them eventually. And so, like I said founder attribute number eleven, how well do you focus?

[32:21] Mike: Yeah, I mean this is one of the reasons that I cut back on some of my yearly goals. I mean I think at the very beginning of the year I said, “Oh, I want to write a book by the end of the year and I have it out late summer.” And I actually decided to completely kill that a little while ago. So, that’s one of those things that I just said, “Look, you know, I can’t concentrate on that now.” And even though it’s a long-term goal, I’ve got to push that off. I can’t even think about that right now just because it’s taking up space to my brain.

[32:44] And then I’ve got a couple of signs around my office that just say one word, it’s just FOCUS in giant letters so that when I look up from my monitor, I look around and I see that. It’s just a reminder to me that if I look around and I start to get distracted I see that and I say, “Oh, you know what? You’ve really got to focus on the things that you’re working on right now.” And whatever those happen to be, you need to be able to leverage your time effectively. And I think one of the things that people run in to when they’re trying to shift from a consulting business in to a product business is they’re thinking in the back of their minds, “Oh, well, I could spend two hours doing client and consulting work and I’ll make X dollars,” or “I could spend some time over here, you know, the same amount of time and I may or may not get a return on it.”

[33:23] And that’s not really the right way to look at it. I mean you really have to be focused on those long-term goals and understand that everything you do is an incremental improvement on the previous things that you’ve done. And if you’re not working towards that goal I mean if you’re not making those incremental improvements, it’s never going to improve. You’re never going to find this thing that where you change some text on your website, magically converts 300%. By the way, it just doesn’t happen.

[33:46] You’re going to have to continue doing these incremental improvements and tweaks in your business to try and figure out what works, what doesn’t and focusing on your products, focusing on the goals that you have and just going through the daily processes and weekly processes that you put  forward to move you towards your goals is what you need to focus on.

[34:04] Rob: When I was putting this list together, there are a couple of other factors that I had in there but I – there are almost so fundamental and so general that I didn’t want them in the list but they are honorable mentions and I’ll list two of them here.

[34:16] One is do you get things done? Like are you actually effective when you’re sitting there working? Because I know people that maybe good project manager and decent developer and they have a passion for a project or product but when they sit down to do things, they aren’t that effective. They actually don’t move the project forward and so, if you don’t do that, then that’s almost like a non-starter. That’s actually you have to figure that out or you’re never going to get this project done.

[34:41] The other one is persistence. And again, it’s like such a generality but I’ve seen people start building an idea and then at the first roadblock or the first sign of a speed bump of any kind, they just say, “Well, this isn’t going to work. Maybe this whole entrepreneur thing, you know, is just more than I want to get in to.” Yeah, you’re not persistent enough. You probably shouldn’t even get in to this game because you’re going to have a lot of failures. You’re going to have to deal with that and you’re going to have to — you kind of get over them, learn from them and get better the next time.

[35:10] So, I guess these are less honorable mentions as I’m talking about them and they’re more like fundamental attributes that you need to have sorted out before you even get to, you know, the eleven we just talked about because if you don’t haveeither one of those to get things done in the persistence, the odds of you even getting to launch are very, very low.

[35:29] Mike: So, as a follow up question and some people might be thinking to themselves, “Am I unprofessional if I draw inspiration from scratch my own itch?” What are your thoughts on that?

[35:37] Rob: Yeah, so that’s what Stephen had said. It was another question he had asked. I think the question of unprofessional is not the right one to be asking but it’s more like, “Am I making a good decision if I scratch my own itch or not?” There’s a lot to talk about this, right, about people who want to solve their own problems because 37signals did that, right? And they did it back in 2005, 2006 and then they talked about it. And they kept saying, “You should scratch your own itch and if you’re not doing that, you’re going to fail.”

[36:02] And that’s the attitude that I don’t agree with, right? Because they’re saying it’s an all or nothing thing, you will always fail if you don’t scratch your own itch. And scratching your own itch dramatically increases the chance of success. I think it does increase it, I just don’t think it’s an either or proposition. I guess it comes down to you don’t have to scratch your own itch. I do think you have a higher chance of success, however, there’s a trick here. They started doing that in 2006 and they built Basecamp and Highrise and all these other things. Well, it’s 2013 now and hundreds, if not, thousands of developers have been scratching their own itch. So, all the low-hanging itches have been scratched.

[36:36] So, you have to think at a higher level now. You can’t just go out and build a basic SaaS project management app. You have to have some unique piece to it. So, I would say, yes,scratch your own itch. Go do that. But figure out a way to scratch that itch in a way that no one else has before you. You have to have a noble approach to it. You have to have a noble way to market it. You have to have some type of value prop that will get you heard above the den rather than just saying, “Well, I have a problem. Look, I solved it,” and then trying to figure out how to market it because that’s something we see a lot, right, with entrepreneurs who come either ask for advice. They come in to the Academy, just meeting day to day.

[37:11] I know that people build the product to solve a single problem that onto itself is a problem because then it’s – you find yourself, you know, six months in and you haven’t really validated that there is a need. So, I guess it’s like scratch your own itch but validate that hundreds, if not, thousands of others also have that same itch before you write a line of code.

[37:32] Mike: I agree with you. I don’t think that it’s unprofessional in any way but, you know, as you said there is since 2006, a lot of those personal itches that people that had been scratched. And I think that if you were to look around and start asking the people who went down that road, I think you’d also find a lot of people who failed miserably because they didn’t validate that there was a market. I don’t think that scratching your own itch is in any way, shape or form going to be an indicator of success. It’s the market. Is there a market? Are there people willing to pay for it? And if you don’t take that in to account before you try scratching your own itch, before you even write that first line of code, then it doesn’t really make a difference because you’re not going to be able to turn it in to a fulltime income.

[38:11] With that said, you know, it’s fine if you take some sort of side project that, you know, was reasonably well done and you didn’t necessarily want to productize it or weren’t trying to productize it when you first built it and you know, then you look around and you say, “Huh, is this a product? Is this something people are willing to pay for?”

[38:29] And in fact, I think that that’s how Fog Creek ended up with FogBugz, I mean Joel had this piece of code laying around that he built to do bug tracking and they decided that they would ship it and they cleaned up and shipped it out and people loved it. And that turned in to their flagship product and that’s what they’re known for today. And so, it’s not to say that you can’t do something like that, it’s just that, you know, if that’s something that you did awhile back, make sure that you validate that there is a market for it.

[38:54] Music

[38:57] Rob: So, that’s what we called the Founder Test. It’s eleven founder attributes that will determine the success of your product.

[39:03] Mike: So, first founder attribute is knowledge of the niche or the problem to be solved. Number two is technical andprogramming knowledge. Number three is your skill as a project manager. Number four is your skill with outsourcing ordelegating. Number five is your passion for the problem to be solved. Number six is your ability to build something thatpeople want. Number seven is your skills as a marketer. Eight is who you know. Number nine is available time. Number ten is money and number eleven is focus.

[39:32] Rob: Oh and by the way, before we head out, we are putting on MicroConf in Europe. It’s going to be in Prague in October, October 5th and 6th. If you’re interested in hearing more as details pan out and we find more speakers, go toMicroConfEurope.com. Add your e-mail to that list and we’ll definitely be in touch. Right now Mike and I are the only confirmed speakers but we have a short list that is looking quite attractive. So, if you have any inkling about going, head toMicroConfEurope.com and give us your e-mail.

[39:59] If you have a question for us, call our voicemail number at 888-801-9690. Or e-mail us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. Subscribe to us on iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. See you next time.

 

 

Show Notes

• Macbook Air
• Light Point Security
• RSA Conference
• Launch Festival
• Pirate Metrics
• Why Free plans don’t work

Transcript

[00:00] Rob: In this episode of Startups for the Rest of Us, we’re going to be discussing Seven Catastrophically Common Launch Mistakes. This is Startups for the Rest of Us: Episode 121.

[00:09] Music

[00:18] Rob: Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob.

[00:27] Mike: And I’m Mike.

[00:28] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What is the word this week, sir?

[00:33] Mike: So, I have suffered from a nerd injury.

[00:35] Rob: You e-mailed me you said, “I think we need to push off the podcast by a day.” And you said, “I tripped over my headphone cable and when I was getting up, I think it pulled something in my headphones.”

[00:47] Mike: The USB connector bent that’s when the cable got yanked. So, I don’t know. There is something in there where the Windows recognizes that it’s connected to the machine and it sees exactly what kind of headphones it is. There is no sound coming out of it. And the microphone doesn’t work.

[01:01] Rob: Well, so you bought new headphones and I bought a MacBook Air.

[01:04] Mike: Do you want to trade?

[01:05] Rob: Yeah, mine is – it’s pretty beefy. It’s got a 512 gig SSD drive and 8 gigs of RAM.

[01:11] Mike: Actually the extra space is really not that big of deal to me because mine has 256 gig SSD and let’s see, I have half of it allocated for Windows. The other half allocated for OS X and you know, I still have plenty of free space on it. So, that’s not a big deal. It’s the 8 gigs of RAM would be nice to have but I’d exchange that for a better screen anyway.

[01:31] Rob: Yeah, that makes sense. Hey, I’m finally going Mac. I mean partly because you’ve been able to pull it off well and I know you do. You probably do a lot more Windows development than I do. I’m down now to just a very small amount of some .NET console apps that I maintain. Everything else I could do on a Mac with a good text editor. To be honest, there is no other hardware that I can find that anybody makes that runs a Windows that is all comfortable to Mac hardware. It’s just like crazy that no one has been able to catch up with them but then I really I was playing with the MacBook Air in the Apple Store and the gestures look really – I was just flipping around. It sounds like, wow, this is a nice OS. It’s really impress. So, I’m going to give it a shot but I look at Windows 8 and I’ve gotten on a couple of machines with that on and I’m thinking I know I can learn this but why – if I went go through a learning curve, I might as well just take the time now and jump to Mac, you know.

[02:19] Mike: Yeah, I think that the things that I would say about switching from regular Windows desktop to a MacBook Air is that if you want to run Windows on in too just go at VMware Fusion. So, it costs you like, you know, fifty to a hundred bucks or whatever to buy the software. And then in OS X because it allows you to have virtual screens, you can have that full screen on another window, basically, on another – on a virtual screen and you just three-finger swipe between operating systems and it’s completely seamless.

[02:45] And then the other thing that you’ll probably have to do because you’re a Windows user and you’re used to the function keys actually acting like function keys, you’ll want to remap those so that you have to hold down control function, whatever the function is to get to the OS X shortcuts. So, like for example if you hit – there’s one of them where you can turn the brightness up or another one where you can hold turn the brightness down. But when you’re in Windows, those things typically you’ll do like control F5 to compile in visual studio, that doesn’t work. You have to hold down control function F5 in order to do it. So, the key mappings are a little bit messed up. So, I would advice switching over those key mappings so that you have to hold down the function key in order to get that top row to work in OS X.

[03:26] Rob: Very nice. So, that’s what’s going on in my world. How about you?

[03:29] Mike: It’s tax time. Somebody needs to just kill me. [Laughter]

[03:32] Rob: Yeah, and you know, remember last year, you said your tax date was March 15^th?

[03:35] Mike: Yup.

[03:35] Rob: And I was like, “Oh, mine’s April 15^th because I’m an LLC and you’re a corp.” And then my accountant gets in touch and like “I just filed an extension for you.” So, this year, I’m trying not to do that. I’m actually going to try to file the LLC stuff on time on March 15^th and then do the personal stuff by April 15^th.

[03:50] Mike: Uh huh. So, what else you got going on?

[03:52] Rob: Well, you know, this week actually I have two pretty cool stories, success stories from some Micropreneurs. We have one is from Brecht Palombo. He’s a lifetime Academy member and he e-mailed me this week and he said, “Your Academy got me started and I now have a SaaS. It’s three years old and it broke six figures last year and it’s tracking the low five figures monthly for the last few months. I left my consulting business behind last October.” That was really cool. This is why we do this. I love hearing stories like this. His URL is distressedpro.com.

[04:21] And the other congratulations I want to send out is to co-founder of Light Point Security. It’s Zula Gonzalez. She’s also a lifetime Academy member and they were — Light Point Security was recognized as one of the top ten most innovative security companies by RSA, the RSA Conference I guess in 2013. And she said that they’re going to be presenting at the RSA Conference in February for a chance to win most innovative company. She also got in to the Launch Festival with Jason Calacanis but they got in to a local Maryland startup festival that had like a higher prize and a higher possibility for them to win. So, they bowed out of Launch and they’re doing the one in Maryland instead but lots going on for them. So, I’d just wanted to give both of those guys a shout out. That company again was Light Point Security and it’s at lightpointsecurity.com. So, congrats to both of you guys.

[05:06] Mike: You know, the only other thing I have is that I’ve been working on the documentation for AuditShark because I’ve been talking to people and they’ve looked at how AuditShark works and they say it great what it does but I don’t necessarily understand how to put anything together. So, I’ve been working on the documentation a lot more to kind of help solve that problem and put it – writing documentation for a technical product that’s, you know, when all of the product documentation also is technical, it’s just a nightmare.

[05:31] Rob: Yeah, true is. So, are you doing that yourself?

[05:33] Mike: Yeah, so I decided to just do it myself. You know, it’s coming along and I’ve got  a lot of the documentation out on the website then there’s a development area where I’ve got more documentation that I’m trying to find tune in before I push it live to the website. But it’s getting there.

[05:46] Rob: Any news on the early access, any changes or are you still looking at couple of weeks to end it and going to launch?

[05:51] Mike: No, I’m going to actually do one more round with some early access people. I got to identify. I want to identify about eight people to send in to this next round and once I’ve identified those, I’ll kind of turn them all loose at the same time and kind of see what they think. Get some feedback from them. If there’s anything that I can fix quickly, I will. Otherwise, I’ll just kind of plow forward and push it out there and fix things as needed.

[06:12] Music

[06:15] Rob: We’re going to be talking Seven Catastrophically Common Launch Mistakes. I feel like I’ve been saying the same thing for years. I guess I started blogging in 2005. That’d be eight years but I really started harping on the startup stuff and started to learning and talking about these mistakes that I’ve made. Share insights about putting up landing pages and tracking key metrics and all the stuff and yet, at least a couple of times a month I either hear a podcast or read a Hacker News story, I see something where people are making – they’re still making these exact same mistakes. And I almost feel – I sent an e-mail the other day to a colleague and I said, “I feel like we’re not moving forward like the industry is still making the same mistakes that has been for years and like I want us to push forward from that.” Do you experience the same thing?

[06:55] Mike: Yeah, and it’s usually because you’re being introduced to new people or there’s new people who are kind of coming in to it. So, three years ago, somebody who wasn’t interested in doing a startup is now interested in doing one and three years ago, there was this great idea about building a SaaS-based business and recurring revenue and all these things, and now they’re getting in to it, they’re like, “Hey, did you hear about this new SaaS-based business and recurring revenue.” And I was like, “Well, I heard about it three years ago but you weren’t here then so you didn’t hear the conversation.”

[07:23] Rob: Yeah, so I guess that’s really what this episode is. It’s a collection of mistakes that I’ve heard basically within the last two weeks from a number of different blog posts, podcast discussions and other things. And some of these, personally actually I called it out like “I made this mistake” and other times they just said a quote that made me like smack myself in the head and said, “Oh, man, like how are you running a business? Like how – no wonder it failed.” You know, a lot of these are postmortems on why they failed and it’s like, “No wonder it failed. You made some basic fundamental mistakes.” And we’re going to cover seven mistakes.

[07:55] The first one is not putting up a landing page before you start coding. We talked a lot about putting up landing pages and there’s a number of different reasons for them. Even if you’re not trying to test the market and do a smoke test and validate the idea, even if you’re just going to charge in and code it anyways, not having a landing page is a huge mistake. It’s a huge mistake. I will say it ten more times, it is a huge mistake. You get so much information out of having a landing page up because as you talk to people about it whether it’s on a podcast or whether it’s at a conference or whether it’s just one-on-one as you’re talking them about it, you can always say, “Hey, check out the landing page and it gives you a little more info and enter your e-mail if you’re interested.”

[08:34] And so you get huge benefits from this. One, you get a short, even if it’s just a small list of e-mails, you have people who might be interested in beta testing the thing and getting beta testers who are interested in your app who are in the niche that you’re serving is a non-trivial task. So, that’s – it’s a really big deal. The other thing is allows you to test verbiage and positioning and figure out where traffic is coming from, figure out which sources are converting. There’s so much information you could get before you write along a code or before you launch your app. I’m in the middle of this right now and I’m realizing once again, the intense value that you can get from a simple landing page and running some split test and tracking who converts. I already have a much better picture of who my ultimate customer will be for Drip than I did two months ago before I had this landing page up.

[09:19] Mike: I would add a lot to that but I think that it leads a lot more in to mistake number two which is not tracking key metrics from the start. And really you start with that landing page because not having a landing page is mistake number one and but mistake number two is not tracking the metrics for that landing page. If you’re not figuring out who’s coming in to that landing page, what keywords they’re clicking on to get there, how they’re getting to the landing page, what words on the page are making them convert versus which ones are not. So, if you’re not doing A/B testing on there, you — that’s another mistake. You have to be looking at these things and tracking the right data because if you’re not tracking the right things then you’re not ultimately going to be successful with it because you don’t know what’s working and what’s not.

[09:58] Rob: Right and you don’t have to be a complete data analyst and not focus on building a really good product, right? You don’t have to sit there and analyze data all the time and build your whole business and base it all on this data that’s coming in. That’s not what I’m talking about that. What we’re talking about is just getting a little more information about who’s getting value and who’s interested in your product and especially early on in your product, this information is way, way more valuable than the money that a customer will give you because the money even if it is a subscription, it’s just a tiny little piece of this puzzle whereas getting more inside in to who is actually using your app, that’s a leverageable point, right? It’s something that they can open up an entire new markets or entire new marketing approaches and ideas and it’s just carries itself through. It’s a flywheel on its own to learn that, “Hey, it’s just so happens that women 20 to 40 years old are my key demographic and there are the ones who this is really clicking with.”

[10:54] Mike: Yeah, I mean if – in any given case, if you could give away ten subscriptions to whatever your product is in exchange for a 5% boost in revenue because you have boosted the conversion rate for that, hands down no questions ask. Go ahead and do it because in the long run, you’re looking at that 5% and on day one, yeah, 5% of $10 is 50 cents but when you start looking at a thousand dollars or $10,000, I mean that adds up very, very quickly and that is repetitive and it accumulates overtime.

[11:23] Rob: Right. I heard a comment on a podcast where the guy said, “I don’t know where the traffic came from to our landing page but I think it converted pretty well.”

[11:31] Mike: [Laughter]

[11:32] Rob: And I was thinking to myself how, like how did you do that because don’t you realize that whatever traffic came there that all of those sources are now – depending on how they convert in to actual e-mails, those are your market like those are the people you’re now going to approach to write guest posts or to publish an info graphic or to advertise on their blog or to just something, you know, just network with because they are your people. They’re – if someone is blogging about designers and you build a tool for designers, then that’s it, you know. If it converts, this is your market and learning the stuff upfront early on is critical. So, if you want specifics about what you should track, obviously, put Google Analytics on there, that’s your first key.

[12:09] The next one is spent two minutes to set up a goal in Google Analytics so you can track which of the traffic sources actually convert in to e-mails like actually provide your e-mail and then beyond the landing because this whole thing about tracking metrics, it doesn’t just apply to having landing page. So, that once you get your marketing set up, you should track them as well. I track trial to paid conversion percentage. I track churn even if it’s in approximation, even if you can’t get an exact number. There are — yes, there are five, ten different ways to calculate churn. Pick one. Even if you don’t know what exactly, just pick one and go with it because you will notice the relative change overtime. I mean you look at your churn and it’s catastrophically high about 30% of your subscribers are leaving per month, you’re going to know that you need to fix something. And if you’re not measuring it, you just have no insight in to that.

[12:52] And the last thing I would always look for is, you know, where conversions are coming from. I got to be honest, if you don’t want to track metrics, if this whole discussion feels like a burden, it feels like something you don’t want to do, then I genuinely think you should not be launching a product. I think that one out of a hundred people ho had success with the product, don’t track their metrics and I think the other 99 look at the stuff that we’re talking about and that’s how you build a true sustainable business.

[13:18] Mike: You know, speaking of metrics, remember when we had a podcast when we’re talking about pirate metrics?

[13:22] Rob: Yup.

[13:22] Mike: So, Tyler Moore has a website called piratemetrics.com where he has a product that’s designed to do a lot of what you just talked about. It’s designed to measure acquisition, activation, retention, referral and revenue. So, if you hate doing metrics, then go sign up for that service and take a look at it and see if it’s something that’s going to meet your needs. And it can help you do some of that stuff.

[13:43] Rob: Nice. It’s a really cool site. Yeah, I agree. I think Pirate Metrics is a good option and KISSmetrics can be another one. It’s a little more complicated. There’s a lot to it. That’s the thing is people hear discussions about metrics and it’s like it feels too complicated and so they just don’t anything. The thing is if you measure just two or three key metrics, you are 80 to 90% of the way there. And so, take the advice and go to piratemetrics.com.

[14:09] Mike: And I think that’s a good point is just measuring two or three because you have to start somewhere and until you start digging in to those things and start really understanding what they mean for your business, then it’s hard to figure out what other metrics you should be looking at. So, starting out very small is probably better than starting out with a ton of metrics because a ton of metrics is going to be overwhelming and you’re not going to know what you should be looking at or what is important to pay attention to. Starting with just two or three metrics, you’re going to have a good idea of what those numbers mean after a month or two and then you’re going to say, “Well, based on this information, I need to know that. How do I get it?” And then you start building those additional things in and overtime your metrics dashboard is going to grow to the point that it’s going to support all of the different things that you need to figure out.

[14:50] Rob: So, mistake number three is assuming or saying that people are finding you through word of mouth because what this really means is “I don’t know how people are finding us.” And this ties in with not tracking metrics but everytime I’ve talked to a founder who tells me that their app is selling via word of mouth and I’ve actually been able to go in to their Analytics, everytime I found out that it’s not word of mouth that’s selling the app. Either they have something misconfigured with the Analytics that isn’t showing refers. I’ve seen that happened. I’ve also seen people say, “Well, my direct traffic is growing and I can’t explain why and so, it must just be people talking. It’s word of mouth.”

[15:25] The thing is if you have a SaaS app or any type of app where people come back to it to log in and you don’t figure out a report and figure out a way to exclude those people, then your traffic is going to increase overtime naturally. That’s not word of mouth. That’s just having a thousand customers when you used to have ten and your traffic is just a lot more. So, word of mouth really is not as pervasive or as common as most people think. Most people think, “I’m going to build a great product, great design, app is going to work and everybody going to talk about it.”

[15:52] Now, people telling each other by blogging about it or by tweeting about it or by saying it in some trackable form because if they put it on a blog post and they link to you, then you’re going to see that as a referrer. And that’s not what I’m talking about here. I’m talking about this when people say, “Oh, my direct traffic and I have all this traffic coming in that I just can’t describe and so that must be word of mouth,” that’s the stuff I’m talking about. I think it’s a dream of developers we think that that marketing and sales are scammy that just building an awesome product is going to be enough to do it and the bottom line is you really is not in almost all cases. I’d say one out of a hundred it is and all of the other people actually know where their traffic is coming from and they just don’t assume it’s word of mouth.

[16:31] Mike: I think part of that is just a misinterpretation of the data by someone who is looking at it and saying, “Oh, well, you know, I don’t know where this traffic is coming from. It looks like it’s direct and most of it is direct. So, it must be word of mouth.” And then they parrot that out to other people and people read it and if you’re not thinking about it in this way to understand that that’s probably what’s happening in this original person just misinterpreted the data and then that turns around and gets parroted out because, “Oh, well, they grew their business based on word of mouth. That’s all I need to do.” And that’s kind of how that myth of by word of mouth gets started and that’s how I guess continues to grow and be out there because nobody will kill this myth because there’s no definitive evidence to say, “Well, that didn’t exists.”

[17:13] Rob: I heard someone who wants to be an indie developer. He’s like a freelancer but he was talking about how he didn’t want to do marketing because he thought, “I felt like marketing was scammy or something.” And there are always these examples that are thrown around that they’re like to hear these companies that just all they did was build great products and they didn’t market like everybody else. They just went and did their own thing and focused on the products. And examples thrown out are like Apple, Dropbox, there’s a new app called Mailbox that has 700,000 people on an…on e-mail list. That’s an iOS app. And I think Sparrow is another one. The thing is…is brilliant marketing is invisible and all of these companies have world-class marketing and PR talent. They are machines and they do it so well that you don’t even see it. You’re not seeing behind the curtain. They are so good at it that it’s invisible to you. The fact that everyone is “talking about it” is a carefully orchestrated and constructed PR and marketing campaign.

[18:04] Mike: yeah, I’ve heard a lot of people compare what they want to do to like Apple and just say, “Oh, I just want to build a great product and people will love it and they’ll tell their other friends about it.” And it’s just like that is such a pipe dream. It just does not happen. I mean there are certainly rare cases where it does but by and large that doesn’t happen and the chances of it happening to you are infinite test and really small.

[18:26] So, mistake number four is running an open beta. And you really don’t want to run an open beta because you want to be able to tightly control who is seeing things and you want to be able to directly solicit feedback from people. Now, if you run a beta and you just open it up to the world, what happens is people come in. They’re going to sign up for it and they may check it out, they may not but chances are really good that they’re not going to give you a feedback and they’re not going to give you the feedback that you need because they’re not vested in the product. You’re not putting them through your marketing pipeline. You’re not talking to them in the way that you would to a prospective customer and therefore, you’re not pitching them on the product.

[19:03] So, when they just sign up and just get dropped in to your application, the problem is that they’re just not seeing all of that stuff. So, you don’t get the feedback that you need in order to tweak it such that is going to be effective when you get to the point where you start charging for people. And the second thing is charging people. You really want to charge people as early as you possibly can. You don’t want to give accounts away free to people because you want them to pay for it to help validate your ideas so that you can determine whether or not it’s something that you need to continue with or whether you need to continue to refine your message until you find the pain point that people are having that they are willing to pay for.

[19:40] Rob: Right, imagine that you put yourself on a launch list. You’re a potential customer of an app that you hear about and their e-mail on a landing page. And then two months later you get in a single e-mail that sent out to everyone that says, “Hey, everyone. We just launched. Click here to get in to our beta and give us feedback.” You’re very unlikely to do it whereas if instead you received a personal e-mail from the CEO that says, “Hey, so and so,” addresses you by first name or says, “Hey, you’re on our launch list.” It’s a plain text e-mail that obviously came directly from him. It’s not a list. Him or her. And they say, “You know, hey, we really need – we’d hand pick a handful out of our massive launch list and we would love for you to come in. Have a look at the app and if, you know, if you’d like to test it out, we’d love to have you do it.” And that way you really go – get in to the people who have a dire need for your app, who have desire to actually give you a real feedback. They’re going to take the time to walk through it.

[20:33] And then like Mike said you can make the decision. You’re – let’s say you do like five beta testers and then they gave you a really good feedback. Maybe you do comp them. You know, maybe you comp five people but you don’t comp your all 500 people on your list because these are your best customers. These are the people who are most excited to hear about it and they are the people who you spent months getting on to your e-mail list, getting them to your landing page and getting them to sign up. So, to basically just open up to everyone and comp everyone, I didn’t even realize people were doing this anymore honestly until I heard this a couple of weeks ago. And I was like no, you can’t do this because this is how to start on day one with zero revenue. You’ve heard all this time you go to the launch and then you basically just take your launch list and you throw them in a trash because, yeah, you have a hundred or 200 or 300 users but now you’re supporting them and you have no revenue and people are actually happy to pay. If you provide them value, they will value the app more if you charge them something for it.

[21:26] And then this shows you can already start getting information about who’s using it and why and when people do cancel, you want to know that and you want to know why and if it’s a free plan and they just stop using it, you don’t know if they would have canceled or not. It’s just…it’s just a much more opaque process to do this. It’s not just about leaving money on the table but it is about getting paid for your effort to be honest. It’s about starting off after all of this work and getting at least a little bit of money that can help you bootstrap this app and grow it because it’s hard enough to get this thing off the ground without taking, you know, four months of your pre-launch marketing efforts and just…and throw them away.

[22:01] And mistake number five is launching with a single launch e-mail. In an ideal world, you have at least two e-mails. You can have up to four in my opinion. Your launch is an event. It’s an event for you and it’s an event for people who are actually interested in your app. So, imagine this. You’re on a launch list. You haven’t heard from anyone for two months and suddenly you get this e-mail and it’s like, “Hey, App-tastic has launched and come and see our new app. Here’s the link.” I get this all the time and I don’t remember what list I signed up for. I don’t remember why I’m on this list. I don’t even know if it’s spam or if I actually did sign up for it.

[22:35] So, that is epic fail. Do not do it. What you want to do is send out an e-mail a week or two before your launch and tell the people right on the start, “Hey, you’re receiving this e-mail because you subscribed at this URL and this is the product. This is probably why you subscribed and this is the app – what it is and what it does.” And build a little bit of anticipation. Either send a screen shot they haven’t seen before, short screencast. Send them a link to something they couldn’t have access to before and what this does is it starts building some anticipation with people who are actually interested in the app. If people aren’t interested in the app, put right there at the top, “If you don’t want to hear anymore about this, unsubscribe here,” and include a link and let them get off your list because there will be a core group who’s really excited about or there should be or else you’re not doing a very good job of you know, vetting your product.

[23:19] But what this does is it starts getting you a little bit of data about, “Hey, who’s clicking on this thing? How many people click on that? Are they interested in this app and you know, what can I do to engage with these people a little more?” And so you e-mail them a couple of weeks before hand and then you can either e-mail them the day of the launch or e-mail them a couple of days before and say, “Hey, everything is set and here’s going to be the ultimate pricing and you’re going to get a small discount for being on the list. Thanks a lot. You have a couple of days to take advantage of that.” And then, you know, you can send them an e-mail the day that that expire.

[23:48] So, somewhere between two and four e-mails but make it a little more of a process. It’s like you’re not bothering people. You’re not spamming people. They signed up for a list to hear about your app. Give them something to be excited about. This approach alone can seriously take you from closing 1 to 3% of your list up in to the 15 or 20%. It can easily do that at least getting people to try the app out. Maybe not full purchases but it’s just night and day.

[24:13] Mike: So, mistake number six is having a free plan. And unless you really know what you’re doing, you do not want to have a free plan. And there’s a bunch of different reasons for this. The first one is that it skews your metrics. It makes things way too complicated to try and figure out whether it’s people who are on the free plan are canceling and chances are good that those people are not going to cancel. So, what’s really going to happen is you’re going to have this metric that shows you that your cancelation rate is only 2% when the reality is all the people who are on your free plan, they’re not going to cancel anyway because it doesn’t costs them anything. So, now you’ve got the skewed percentage that in no way, shape or form accurately reflects what your churn is going to be for that application. So, unless you have experience and some very specific knowledge of how you’re going to convert these free users and the paid users, don’t even bother. Rob, you said it best in the – was it at Wall Street Journal where you were quoted as saying free plans are like a samurai sword?

[25:08] Rob: Yeah, it was in New York Times.

[25:09] Mike:  New York Times

[25:10] Rob: And yeah, it was free plans are like a samurai sword. If you’re a master, you can do amazing things with it. But if you’re a beginner, you’re more likely to cut your arm off. I really believe that. It’s just what you said. It’s like having expertise and there are people who can use free plans to fantastic results but it is way, way harder than it looks. You need to look behind the curtain and see how much experiences people have and precisely how they use that free plan that’s very specific uses in very specific ways that they tried to get people to convert from free to paid. There’s all these things in place that if you don’t do these things, you are just screwing up and you’re just seeing the façade of how or it’s on the outside.

[25:45] The other thing is you need a good chunk of money to be able to outlast the free plan because I’ve heard like Dropbox and Evernote, they convert X percent after a year of people using their app. So, do you have the money to support all of those users for a year, you know,  all those free users without getting revenue? If you don’t, then in general it’s not a good idea.

[26:05] Mobile apps are likely they’re different, right? Having a free version with an app purchases or having a light version, I’ve heard these things work very well. The free versions do not really support burden with mobile apps like they are with web based software and in my opinion they can actually can work as a really good marketing channel but that’s not what we’re talking about here. We’re really are talking about having a free tier. Again, unless you know what you’re doing or I mean even look at MailChimp, they didn’t have a free tier when they launched. They got very big and now they just – they know their numbers right? Inside and out, they know all of their metrics. They track everything and now, they introduced a free product.

[26:39] Obviously, they have the knowledge and the expertise to be able to make that work but on day one, when you’re trying to launch, it’s just too easy of an option for everyone to pick and that’s, again, it’s kind of like – it’s kind of a kindle throwing your launch list in the trash because you don’t get people actually using the app and actually paying for it which means they have to commit to it and actually commit to using it and you know, which will ultimately make the app better because they give you feedback and they’re more invested in it.

[27:04] Mike: It can also be a distraction especially when you’re first launching because you might start getting feedback from people, “Hey, I’d like it if it did this,” or “I’d like it if it did that.” But these people aren’t paying for it. So, they’re not seeing enough value in it to pay for it yet you’re going to accept advice from them and that’s really just not a good path to go down because you’re taking advice from people who have a vested interest and not paying for it. What you really need to concentrated on is those people who are paying for it and by eliminating the free app or the free plan for your app, then you eliminate that possibility of bringing in that input from those types of people. And then down the road as Rob said like MailChimp did once they got to a point where they knew what their numbers are and they were able to offer the free plan and measure it and they’ve tweaked it several times over the past 18 months to try and figure out what’s working or what’s not, at what point will we be able to convert people in to a paid version of the application.

[27:57] Rob: Right and I can name a number of people off the top of my head who have launched  with free plans and who close them down or make them extremely hard to find within a few months of launching. Over and over it’s the same pattern. Launch with the free plan because look, Dropbox did it and then you just – you wind up getting 600 users and no one converts and you don’t know what to do and you don’t have the time to figure out or you don’t have the experience to do it and you just kind of bail on it. It’s very common.

[28:22] Mike: You know, I would add a mistake 6.1 to this which is offering a low priced plan which is probably going to be more of a support burden than its worth. And I’ve seen a lot of people where they’ll have – they’ll launching new product. They’re like, “Well, you know, $10 or $20 a month seems right but I’m going to have this $5 plan or $8 plan,” because people, you know, have this mental hurdle about paying more than $10 for something. That’s totally ridiculous. You really need to be charging people what the product is worth and what they’re wiling to pay and not trying to get people to use the product and then in an effort to have them upgrade later. Offer them value upfront. Make sure that it’s going to be at a price point that’s going to support you and the support burdens that you’re going to undertake.

[29:04] Rob: It is a usage-based thing where like Dropbox, your usage is naturally increases overtime and so as you use more space than you would upgrade tiers, I could feasibly having a little price tier but boy, it’s really – I would default to not doing that, you know. I just – I would say that’s a one time where you may consider doing it as if someone is naturally just to be using the product, got to naturally upgrade to those higher tier things and you will lose them otherwise if they’re not going to sign up.

[29:32] Mistake number seven is not growing fast enough. And I know probably what you’re thinking here and say, “Wait, Rob and Mike? They’re like – they’re not all about growth startups.” The thing is well and we’re not, right? [Laughter] You can…you can start a startup and – or start your app, launch your app and not grow it and just grow it to a place where you’re comfortable and that’s okay. It’s not all about growth. The problem is that you need to grow your app fast enough to keep yourself interested in the project or else you’ll abandon it. The number one reason that bootstrap startups fail is because they  don’t make enough money to keep the person interested, bottom line. Not growing fast enough it will kill your app because you either get bored, other things come up. If you launch an app and it’s making 10 grand a month, by month 2, you are much, much less likely to be bored with the thing than if you launch it and you’re making $300 by month 2.

[30:19] Mike: Something else that factors in to that is having the application be able to support all of the costs to that is essentially causing you because whenever you launch an application, typically, you have to pay for hosting, you have to pay for any Analytic services, all these other things that you’re probably using to help promote the app and run your software and all the infrastructure that’s in place, your bug tracking, your source control, everything else, it’s going to costs you at least some money. And it’s not to say you can’t get open source solutions but the fact of the matter is that your time is worth something. So, you have to take those in to consideration and if it’s not covering its cost, unless it’s a real labor of love, you’re going to find that it’s very difficult to continue that for a long period of time.

[31:01] Rob: So, those are the Seven Catastrophically Common Launch Mistakes. Mistake number one is not putting up a landing page before you start coding. Mistake number two is not tracking key metrics from the start. Mistake number three is saying people are finding you through word of mouth. Mistake number four is running an open beta. Mistake number five is launching with a single launch e-mail. Mistake number six is having a free plan and mistake number seven is not growing fast enough to keep yourself interested in the product.

[31:27] Music

[31:31] Mike: If you have a question for us, you can call it in to our voicemail number at 1-888-801-9690 or you can e-mail it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. You can subscribe to us in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.

Show Notes

• Ultimate WordPress Coming Soon Plugin
• The Winner’s Brain
• The 5 traits:
  • Opportunity Radar
  • Optimal Risk Gauge
  • Focused Goal Laser
  • Effort Accelerator
  • Talent Meter

Transcript

[00:00] Mike: This is Startups For The Rest of Us: Episode 84.

[00:03] [music]

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

[00:20] Rob: And I’m Rob.

[00:21] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What are you doing this week, Rob?

[00:24] Rob: I’ve been working pretty hard on refining some parts of the HitTail article, the one-click article feature I mentioned last week. So I got some good feedback from early users. I had about ten, ten orders so far for articles. And it’s crazy and so I’m saying it’s a two to three-day delivery window but with the amount of writers that are available through this partner that I have, one article came back in three hours.

[00:47] Mike: Wow. [Laughter]

[00:48] Rob: That — is it — yeah.

[00:49] Mike: That’s crazy.

[00:50] Rob: They’re only — they’re 400 -word article so I’m, you know, specifying it pretty low because at this point they’re kind of just SEO blog post type things but they’re high quality writing. I mean they’re all, you know, native English speakers and that kind of stuff but yeah. But I think the average is probably been like eighteen hours. A lot of them are coming back in less than a day. There was only one that was on that really assertoric topic that took — it took like almost two days for someone to claim it and they wrote it like six hours or so.

[01:16] Anyways, that’s one good. It feels really good to get that out and get it out in to the wild and to make some refinements to it based on suggestions. So I’m feeling like that’s wrapping up pretty quickly and got to kind of be moving on now to more marketing stuff because this is really — this completes the operation retention that I talked about last week. And so I am really redoubling my efforts and kind of refocusing on doing things more in public. I’ve kind of been under the radar for a good month or two, really, I haven’t done much. Other than the podcast, I haven’t done much of anything in public. And so I’ll be heading back to that.

[01:48] Mike: Yup.

[01:48] Rob: How about yourself?

[01:50] Mike: I read an interesting blog article on the SmartBear Blog by Jason Cohen and it talks about the mid-market briar patch and how going after to been market is generally, not always but generally a losing strategy as opposed to going after the enterprise or small business market because if you’re going to go after small businesses, then obviously the way to do it is generally through SEO and you know, online marketing techniques. But if you’re going after the enterprise market, then you’ll have to scale up and it cost a lot more time and effort and energy in order to land those customers. So some people look at that and they say, “Well, I don’t want to go after that out. I’ll go after the mid-market” which is kind of what I try to do initially with AuditShark and the article basically goes on to say that the mid-market is essentially a briar patch because you spend just as much time, effort and energy going after the mid market as you do going after enterprise customers because by the time those customers are mid-market sized, they already have all these processes and purchasing procedures in place and everything that makes it just as difficult to raise them as it does to get in to an enterprise customer but your return on it is like a hundred times less or thousand times less than it would be if you’re going after an enterprise customer.

[03:03] So you’re much better off going after those enterprise customers than the mid-market customers because it’s the same amount of effort but your return on it is, you know, a hundred extra or a thousand extra or something like that.

[03:15] Rob: Got it and this struck a cord with you because of your early direction with AuditShark of going after banks, right?

[03:20] Mike: Yeah, definitely because I mean my target market for banks. I mean I talked about it upfront was, you know, anywhere from fifty to a couple of hundred employees. It was a little bit more difficult than I originally anticipated. I thought it’ll be a lot easier just based on my early experiences talking to a couple of banks. It turns out that it’s just a lot more effort and it’s just not cost effective to do it.

[03:41] Rob: Right. So what’s in line with exactly his premise at article and that’s cool. Hey, we talked a couple of weeks ago and I had mentioned that I wanted to start mentioning some, some Micropreneur Academy members more often, people who have had success because literally dozens of folks that I know have launched products and, you know, either quit their jobs or enough money to quit their jobs and just don’t and just basically have two incomes coming in. I know a few folks doing that.

[04:07] Anyway, so there’s a guy name John Turner and we mentioned him last week. seedprod.com is his URL and he has a WordPress theme, the ultimate coming soon plug-in for WordPress and it allows — it’s a lot, you know made a lot for the startup movement of having the landing page and collecting e-mails so it ties in a lot before we say but he’s starting in a very elegant way. You know, at one point he turned down a job with, I think WooThemes. I mean he turned down a job with a pretty big WordPress development company. So he — this guy is a very sharp WordPress developer. He has built over the past six months specifically, he’s been working on a little longer than that but he launched and his growing revenue and frankly, you know, he’s not at the point of having recurring revenue up to the point of quitting a job but I think like last month he has enough that seriously considered doing so.

[04:57] So but it just really impressive and cool to see someone come in to the Academy, used the lessons that we’ve laid out and really take a lot of way from. He expressed that he learned a lot from the Academy. So a folks are, you know, interested in that type of thing and so maybe we’ll mention it every, every few episodes just to give people idea of what’s going on there and who’s coming out of it. I’d like to kind of do some little spotlights here and there. But if you’re interested in finding out more about it, it’s at micropreneur.com.

[05:24] Mike: Yes, I’ve looked in to what he’s got for a plug-in and the model that he used to kind of promote was really interesting. He actually didn’t even mean to build a product out of it, what he done was he released this plug-in for a WordPress as a coming soon plug-in and he got — I forget how many tens of thousands of downloads but it was a significant number of downloads was — I think he started out with — about 10,000 and that’s when he decided that he was going to turn it in to the WordPress plug-in in to having a like a professional version of the plug-in. And it’s more or less like an up sell and at this point, I think his free version has something like 70 or 80,000 downloads according to WordPress.

[06:03] Rob: .org.

[06:04] Mike: There, they just, you know, show you how many downloads are and some ungodly number. I mean it’s ridiculous. I mean that’s where a lot of his sales come through because there are certain things that are in is professional version of his plug-in that are not in the free version. I mean I think that’s just a really great way to do it. I mean it seems to fit really well with the WordPress community.

[06:24] Rob: Right. That’s this kind of a standard way I’ve seen evolving. I shouldn’t say standard. It’s kind of becoming the standard way of releasing the free — it’s almost a premium model but the audience is so big and if you can actually get found in that WordPress.org search engine, it’s a lot like ranking high in Google. I mean it’s just another discovery engine and so you can get enough kind of free users that, you know, it can turn in to a reasonably high income stream for folks like us who are solo entrepreneurs. I mean if you are some enterprise company, this wouldn’t even be a blip, right? The amount of income you could make from it but that’s that not the game here.

[07:00] Mike: One of things I’ve been working on lately is I’m working through the website designer with the new site design for AuditShark, my new developer for AuditShark has just kind of come onboard. He’s got about a day’s worth of effort in so far. So he really hasn’t done anything yet but you know, he’s certainly starting to pick some things up and you know, we’ll see how things go. I’m hoping things work out on this side just to help get things moving a little bit quicker.

[07:25] Rob: And at the same time, I think I’m going to have to let my developer go who’s been working on HitTail for a little while. He had just seemed to — he’s a solid developer but he’s not working as far as I’d like and sometimes he just kind of disappears and doesn’t answer e-mail for a few days. So, you know, I have higher standards at this point so I may be looking for another developer which is tough because HitTail is in Classic ASP and it’s not easy to find good Classic ASP developers because of them have moved to .NET by now.

[07:51] [music]

[07:54] Mike: So what we’re talking about today?

[07:56] Rob: Today, we’re talking about five traits of successful founders. So I’ve been listening to the book Winner’s Brain and it’s by Jeff Brown and Mark Fenske. And basically, these guys are two researchers. So they are, you know, they’re fairly academic in the research but they’ve written kind of a layman’s book and it’s about people who succeed and how their brains are different from, you know, a lot of other people and it’s not just people who succeed and it’s people who perform at high level.

[08:22] So they not only took all the research in the space but they also look at interviewing people like Kerri Strug, she was a gold medal gymnast, and a bunch of other high performing athletes, musicians, that kind of stuff. They — as far as I know I think they may have one or two entrepreneurs in there but it really is a lot of it is focused on performance and achieving goals and so, you know, in my opinion it totally applies to what we’re trying to launch companies and such.

[08:49] Now, there are five traits that they named. There’s actually — there’s eight lower level traits that they go through and they called them Win Factors and we’re not going to talk about those because they’re pretty — there are kind of low level stuff. There is like self awareness, motivation, focus, emotional balance but they are the higher level skills that we’re going to talk about today.

[09:06] And the first one, I’ll just dive right in to it. It’s called Opportunity Radar. Basically, their premise in the book is that having these five traits dramatically improves your chance of succeeding at achieving goals whether that goal is to win a gold medal, whether it’s to, you know, play at concierto at some place or you know, what we’re saying here is whether to launch a company. I mean it kind of all goes — goes in that same thing. So the first trait that we’re going to talk about is Opportunity Radar. And the way they defined it is as someone with good opportunity radar recognizes that opportunities don’t always come in gift wrapped that more often than not, they come wrapped in a problem or in an idea that everyone else has missed.

[09:47] So as I was thinking about that I was realizing like in our world by the time something is written about in Inc magazine or Fast Company, it’s too late, right? The opportunity has passed because everyone knows about it. You have to do these things when they are still hard. Do you remember in like the late 90’s or mid 90’s, websites are really hard to build, right? You had to hand code the HTML, there weren’t many resources. It was just hard to do. [Laughter]

[10:11] So I was in college at the time and I remember building static HTML websites and it was really hard to do them. It was hard to make them look good and if you knew  how to make them look good, you could charge a lot of money to do that but to build a similar thing now, would cost one tenth of the price if that. Same thing with web applications, when they start coming around dynamic code and such with Perl and C++ and then there was, you know, PHP and Classic ASP. Those things were a pain to work within the late 90’s and now, today, you can build stuff five times, ten times faster. But if you went back and build that old functionality, you know, the opportunity has gone. You have to take things way up to the next level and be at the edge of the game and be building things that are hard today.

[10:53] The last example is like buying apps and websites before there was Flippa. You know, that’s something I did. I’ve continued to do it on Flippa but there is a lot more competition, a lot more people talking about it now. It’s not that the opportunity is gone but being able to recognize that opportunity four or five years ago, you’re just going to be much better off if you’re able to recognize that when everyone else is not flocking to it, you know, it’s a gold rush mentality that’s being in there before everyone else is starting to mine for gold as well.

[11:19] Mike: That kind of reminds me of Bill Bither story. Bill Bither was one of the speakers at MicroConf and he talked about how his company Atalasoft had — he started it when .NET was first coming out and he started building .NET imaging components because he looked at that, you know, upcoming opportunity and realized that .NET was probably going to be the next big thing and because it was this new platform that people were going to need tools and libraries in order to build other things so he build this .NET imaging platform and he ended up selling it last year for something like $10 million.

[11:55] So you know, definitely having that opportunity radar and recognizing when those things are going to come up, obviously, can potentially make you millions of dollars but at the same time it doesn’t have to. I mean it can be one of those things where you’re in the right place at the right time and you recognized something that other people are just kind of missing or you recognize that, you know, there’s something there and it may not be, you know, the next Facebook but it could certainly justify putting in some time and effort in order to make you a full time income or you know, supplement your income.

[12:25] Rob: Right. And I think another example of that is this whole micropreneur movement that we’ve kind of spearheaded here it’s that getting in to WordPress.org and getting, you know, 10,000 or 20,000 downloads and then turning that in to an income stream even if it’s 5,000 or 10,000 bucks per month that’s a great income stream for a solo individual but it’s an opportunity that everyone else meaning all the other businesses, you know, small business, medium sized enterprise, they’re ignoring it. It’s fitting in to a niche that other people are missing and so many other micropreneurs that I’ve seen succeed are doing that, right? That’s why we kind of push people to look for a niche and what do that niche — I mean often times I’ll say, you know, it should be a vertical niche but sometimes that niche is more horizontal or something like a launching plug-in like John Turner has is a bit horizontal but it still has that niche of being in WordPress and being easily discoverable and having a decent user base.

[13:18] So it’s in that opportunity right up always be on the look out for opportunities, noting things down. I mean I don’t think everything has to be a novel idea like I know that it doesn’t, you know, I still have DotNetInvoice that is completely not a novel idea and that still does well for me. HitTail is, I mean is reasonably novel but it’s, you know, has a unique algorithm but it’s not like some groundbreaking new technology that no one else has ever conceived of. It’s really just an opportunity and space that other people have overlooked.

[13:46] Mike: I think one of the things we should definitely mention here is that just knowing that having the opportunity radar is a good thing, as a little different than how do I develop that and I think that one of the things that you need to look at when you’re trying to develop your opportunity radar is to figure out what problems people have and if somebody is trying to do something and they’re having a hard time doing it and they ask for your advice and you can’t find a solution either, then chances are there maybe a good opportunity there and you should definitely start looking around to see if there are other people who have similar problems but, you know, opportunities as you said at the very beginning of this, they don’t land on your lap, they don’t come gift wrapped and you know, you do need to look for them a little bit and a lot of people will focus on the problems that they’re having not necessarily developing a solution to the problem. They want to find a solution to the problem and if you get in to the mentality of looking for problems to solve versus looking for a solution to those problems, then you’re going to hone that opportunity radar a little bit.

[14:43] Rob: Absolutely and if you don’t already have an idea notebook, you really, really need a place where you can capture them because you will forget to create ideas you have I guarantee it. Nothing please me more than going back through this little black notebook I have and seeing ideas that I really like, you know, that I came up with a few months ago and it’s — some of them are terrible. 80% of them are terrible or they just aren’t going to ever pan out and when I go back through it I can totally tell that they are but that for that 20% that is pretty darn good, it’s like kind of having this gold mine in my opinion of just being able to run through it and think about what’s the viability of this idea and kind of taking — taking it to the next level, you know, in a mental exercise.

[15:20] So trait number two for successful founders is having an Optimal Risk Gauge. The idea of having an Optimal Risk Gauge involves being able to recognize what risks there are, determining how much risk you can tolerate and whether or not you are willing to pay the consequences if you fail. So some questions that we see pretty commonly are things like at what point should I quit my job, how much income should I have before I do that and how large of an idea should I attack, you know, is this niche good enough, how mush risk is involve going to the niche.

[15:52] And all those things, yes we can — you can try to put some numbers together. You can put calculations together and try to engineer it but ultimately you have to have a risk gauge and you have to know how much you are willing to put up with. That’s one big reason that I always say, try to keep your app, your V1 between four and six months of your time because most people should be willing to risk that. If you’re not willing to risk that and you probably shouldn’t do, you know, launch a software product, do startup at all.

[16:18] Some people look out and say, “Well, I’m going to do a twelve to twenty four-month product” and to me, that’s just an outrageous amount time and we see a huge drop off for people actually able to complete that. So taking about in terms of four to six months and are you willing to make that risk, you know? Are you able to calculate how much it’s going to be and tolerate it if that time does go to waste?

[16:38] I took some big risks early on. I shouldn’t say big but they were, you know, four to six month, seven month risks, a few thousand bucks which at that time was quite a bit of money but the biggest one I took early on that did pan out was when I bought DotNetInvoice. So I paid 11,000 bucks when I first bought it and that was a huge amount of money at the time. Now, I still want a salary and doing a little bit of consulting and stuff. So but at the time, I determined that I was willing to take that risk, right? But if I lost it, I would be very disappointed but that I was willing to pay the consequences if I failed.

[17:08] And you know what? Flanking that money down and buying DotNetInvoice turned up to be a great thing for me because when there were bunch of things wrong with it, right? There were like twenty four show stopper bugs after I bought it, bunch of other things. Revenue wasn’t as high as they told me but once I closed, the fact that I was on the hook for that money that I had spent made me ultra motivated to get those things fixed and to get them fixed very, very quickly. And that resulted in, you know, I’ve talked about before but I basically was able to triple revenue in the first few months and that got me to the point of making back that eleven grand in, it was less than six months if I recall. You know, being able to gauge the risk that you’re willing to do, being able to gauge the risk of the action you’re about to take is a super valuable traits of entrepreneurs.

[17:52] Mike: And of course, you’ll have a problem with a risk gauge is that humans are notoriously terrible in actually estimating what the risk levels are and I don’t know specifically why that is. I think that it’s because we put it in our heads that there’s a certain amount of risk involve in something and we try to relate it to other things and unfortunately, because we’re bad at doing some of that Math in our heads say, oh there’s one in twenty chance of this or you know, one in thirty chance of that. You’re like, oh that doesn’t seem that high but then when you start trying to do those numbers in your head, it turns out that that’s actually a reasonable amount of time that those things are going to happen.

[18:32] The whole point is that it’s very hard to figure out how to put those assigned numbers to those risks and I don’t know if it’s a good idea that’s to actually try the assigned numbers to the risks of the things that you’re doing but it is important to think about what you’re willing to lose and what you’re willing to put on the line and whether or not there’s an opportunity for you to get any of that back. So if you spend, you know, six months trying to get something off the ground and it doesn’t work, you have to remember there’s — there’s two things that you’ve lost at that point. One is the money that you put in to and the second one is your time.

[19:04] And I think that the time is probably a lot more important than the money because you can always make more money later on and if you start to become successful then, you know, the money is just going to flow naturally with your other successes and will probably far out strip whatever money that you put in to those failures but the time is something that you’re never going to get back. So it’s really important to make sure that you’re not risking a heck of a lot of time when you’re doing those things.

[19:29] Rob: Trait number three of successful founders is a having a Focus Goal Laser and that’s being able to stay focus on goals long enough to execute. I think we all know people who decide on something and then wonder. I think we all know ourselves to do that at times. And this is again while we come back to that four to six-month time frame of if you set a goal out one year, I’m going to work every night and weekend to build an app for a year. The odds of you achieving that goal, they — they go down.

[19:56] What’s interesting is that I’ve found three things have really personally helped me stay on focus lately over the past probably two years. One of them is being in Mastermind Groups. Those biweekly meetings have kept me on task and motivated and wanting to hit these goals that I set in the previous meeting. So that’s been a big motivator. The other one has been the podcast, this thing you hear me talking on right now and the fact that I’m able to come down together with you, Mike and the listener and basically kind of publicly commit. I mean I don’t come out say I’m going to have this thing done by this particular date but just being able to look forward to talking about what I’ve done is actually a big motivator to me and to be able to talk about both the successes and the failures. I mean if you recall back in February, I had a major disappointment with in terms of trying to hit some revenue goals and there were three or four episodes in a row where I was just down at the times about it and just talking about how I didn’t know how I was going to pull out of it and eventually, I did but it’s a good venue to be able to think that stuff through.

[20:54] And then the last one that helped is I came out of MicroConf both years but specifically this year, super charge. It’s been about five weeks since MicroConf and I have not — I barely been on Twitter, I barely been on Hacker News. I’m so not distractible right now because I have this amazing focus goal laser on HitTail and on getting these things done and it came — it’s stemmed out of a few conversations that I had with a few of the speakers and some of the attendees that just got me so laser focused on getting the stuff done. So that’s been what’s helped to me stay laser focus. I think you need to have the, what the author said is like you have to hone this ability over your lifetime and that it will wax and wane and I’ve totally seen that. The entire months go by where I will just struggle to stay on focus with the goal and you have to know yourself well enough to come back to those things that do help you get focus on your goals again.

[21:52] Mike: I think one of the things that you talk about there was with the Mastermind Groups I mean you are essentially you have this accountability to the people that you have in that Mastermind Group and you know, one of the things that I have seen is that when I’m putting things together for different people to work on for AuditShark or doing different things for, you know, like the mailing list and things like that. What I’ve noticed is that if I know that there is somebody depending on me to get something to them that helps with my focus because I know that they can’t continue until I finish with my part, take enough time to make sure that those are done right. But at the same time I know that it needs to get done. So I’m motivated to get those things done and by the time I get them done, there’s somebody else who needs something. And putting yourself in to that, you know, perpetual motion machine where you’re constantly in a state where you have to move forward. You can’t just slack off. That’s really important to try to achieve and I think that that will help a lot of people with, you know, maintaining that laser focus on getting things done.

[22:53] Rob: So trait number four is Effort Accelerator and this is being able to move from intention to action. So it’s being able to have an idea and setting goals like number — like trait number three said but then actually being able to move from that intention in to action. So we all know people who are thinkers versus doers. And I think actually in my life at times, I’ve been more of a thinker than a doer. I think that reading TechCrunch and Mashable and kind of Inc Magazine and Fast Company, all that stuff, you can really get in to the entreporn thing and be just the thinker, the dreamer but moving yourself in to action and actually taking a step towards getting something done anything, doing anything in public that doesn’t just require you to, you know, kind of sit in your basement, write some code and read articles that other people are writing but to actually do something that’s risky and that scares the crap out of you, that’s what the effort accelerator is about.

[23:42] So I actually knew this really smart guy and I’ve known several in my life but I knew an exceptionally smart and creative guy when I live in Sacramento. He was a filmmaker. He was a musician. He wrote stories like he just was super creative but he never really finish anything. And he would talk about — he’s actually in a band with me and he would talk about writing songs and making movies and we would see clips of stuff and I’d hear like a verse he would write. And was really impressed with what he did but he would never put a chorus to that and he would never commit to sitting down and being disciplined and turning that that intention in to action.

[24:13] So it’s not that — he’s not a bad person and it’s actually not a bad trait to have as long as you know that about yourself and he didn’t know that and he would talk about like, “Yeah, I’m going to write this song. I’m going to write the stories.” And we would sit around and said, “Man, I know that you’re not going to do that just having to look back at the last year of your life.” So knowing that about yourself is a huge deal because it’s being able to then combat that everyday and to realize that that is your natural inclination is to lean towards being a thinker than you rather need to find kind of a job or a place in life where being a thinker is really good or you need to figure out how to just do yourself in to being a doer if in fact, you know, you want to do things like to start a company.

[24:51] Mike: One word that you mentioned that was entreporn which is not entrepreneur but essentially it’s the idea of going out and reading all these books and articles and magazines on things that you want to do but never actually getting around to doing any of them. There are certainly an ad been flow when you’re running your own business of that type of activity but there are always times where you are much more creative than productive and vice versa. So the point that you made a little bit there was that there are people out there and you know, there are mentalities of people can get in to where they’re doing a lot more of the thinking about stuff rather than actually doing that one of those things is, you know, consumption of what other people are creating.

[25:31] You do need to make sure that you’re not falling in to that trap of constantly thinking of ideas and thinking of things that you’re going to do versus actually sitting down and taking the next step in doing them.

[25:42] Rob: I wrote this blog post. It was in 2008. I’m looking at it. It’s about four years ago. It’s called the Single Most Important Career Question You Can Ask Yourself and it basically comes down to the dichotomy of consumers versus producers and it says “Are you a consumer or are you producing things?” It totally fits in to this dichotomy, right? And it’s not that you aren’t 100% a consumer or a 100% a producer. Most will have a mix of both but if you really want to get things done, you have to stir yourself. You have to figure out how to motivate yourself to consume less and produce more because everyone I know who — who’s doing it like who is executing, who is starting companies, who’s being successful, they consume way less than the other people I know. They are so focus on their business that they’re totally motivated and they’re, you know, they kind of have that single focus laser vision.

[26:31] So the fifth and final trait of successful founders is a Talent Meter and this is being able to gauge yours and others competence and incompetence. So there’s this phrase the authors used and it’s the “double whammy of incompetence” which I love. It says that when you’re incompetent and you don’t know that, that it’s twice as bad. And I would actually say it’s exponentially as bad. I know that I am incompetent at certain things and hopefully, I don’t have a lot of incompetence that I’m not aware of because being aware of something means you can either avoid it. You can outsource it. You can try to improve it.

[27:08] There are a lot of options but it’s when you think that you’re great at something and you know, you go on American Idol thinking you’re a great singer and you really aren’t and then everyone laughs at you, man, that’s kind of a lame example of it but thinking that you really are, you know, the person who’s able to write the code and design the website and execute all the marketing for your startup when you have a major deficiency in one of those three areas, it’s a bad thing, right? Being able to gauge yourself and others in a competence and incompetence and it’s going to come in to play when you hire, when you outsource, when you find partners and when you’re trying to overcome your own weaknesses.

[27:44] I think most things on the podcast that we talked about like most of the questions we get comes down to — I typically say if you know that you tend to procrastinate, then lean towards the side of this, you know, then overcome that. I mean I can’t — I can’t even recall how many times in the last 84 episodes that I’ve said that exact phrase “if you lean towards this, then do the opposite” and so the presupposition in there is that you know that you lean towards this. I mean it really does come back to, they call it Talent Meter. I call it Self Awareness. It’s being able to know yourself and to gauge yourself and gauge your abilities both the positive and the negative ones and then really focusing like we talked about on the strengths finder episode really focusing on the positive ones and writing those to the success and shaping your success so that your positive traits fit well in to that and not trying to chase some success where, you know, you have to overcome all your negative traits in order to get there.

[28:38] A good example would be if I wanted to be an Olympic gymnast, that would be a terrible thing for me. I’m 6’2 and a half and I’m rail thin and you know, I don’t have a lot of upper body strength. I mean it’s basically, yes, I can set that goal up and I can work towards it but I’m setting myself up for failure by not realizing. You know, I’m kind of incompetent. I’m not set up to succeed in that arena whereas if I know I’m much more I have an engineering mind set and I’m goal-driven and I’m focused, then I can set up my startup ideas. I can even choose the ones that fit really well in to that framework and I wouldn’t go after something like a social network or something that we take a ton of creativity to build because those aren’t my strong suits.

[29:18] And so being able to evaluate yourself and know whether you’re a really good product builder, whether you’re a really good engineer, you can engineer marketing well so you might wanted to do more SEO and AdWords types of stuff or whether you really in to interacting with customers and interacting with the community in which case you’re probably not going to use those engineering-type marketing approaches but you’re going to go more towards, you know, relationships and partnerships and starting community type of stuff, that’s where this talent meter comes in.

[29:44] Mike: And I think there’s two different things that are kind of going on here is one is that you have to know what your strengths and weaknesses are be able to acknowledge them and the other one is being able to gauge how you relate to other people in those strengths and weaknesses. So for example, you know, the example that you gave was going on to American Idol and thinking that you are a strong singer when you’re not. And there’s thing two different things going on there.

[30:08] One is you are not a god judge of your own strengths because chances are good that there’s a lot of other things that you’re good at. And two is not being able to relate your strengths and weaknesses to those of other people. So I think there’s two different subtle differences between them but they are certainly important to keep in mind.

[30:25] One of the things that I find is in a way very fascinating is that when you start asking people, you know, how attractive they think they are in relation to other people or how smart they are, you know, studies statistically show that the majority of people say that they are above average and statistically that’s just not possible. The Math does not show that that’s correct but people still feel that way. So it’s very difficult sometimes if you’re in that position to be able to figure that out and I don’t know what the answer to that is to be perfectly honest. I mean I don’t know how you would go about addressing that problem. Do you? Can you think of anything?

[30:59] Rob: I think — yeah, I think you have to look at where you’ve succeeded in the past, what you’ve really enjoyed doing in the past and focus on the areas that you’ve been naturally drawn to. So if you’ve had great successes with on engineering Math mind set then that’s going to lean you towards, A, writing code. B, focusing probably more on the engineering-type marketing stuff which is, you know, funnel optimization, SEO, AdWords. I mean more of the Patrick McKenzie and you know, quite a quite a bit of the stuff that I do or I’ve done a lot of in the past.

[31:28] Mike: But I think — I don’t know if that solves the problem because you may be very good at marketing but you have never really had a lot of success at it because you haven’t tried and it makes it difficult to be a judge of that or figure out whether it’s something you should try or not.

[31:46] Rob: Yeah, I don’t think you had to — have to — have actually try the marketing. I just think, you know, I’ve known for a long time what I have certain strengths and certain weaknesses. I mean I would come out and say that I don’t enjoy managing people. I would call that a weakness of mine. So I don’t think you necessarily have to fail at something but you have to maybe do it and really not want to do it or be, you know, be kind of force away from it. And then I think that you do succeed in and you find yourself having a lot of success doing and getting a lot of enjoyment out of, you need to keep track of that stuff and see how that can fit in to a new business venture.

[32:18] So yeah, you maybe never done marketing but if you really enjoyed the things that are, you know, similar to that, you really enjoy talking to people and building a community and partnering it up, then that’s probably the kind of marketing that you want to look at doing and you want to look at doing things more through social networks and building partnerships and such rather than getting in the nitty-gritty of funnel optimization and churn rate and conversion rates and that kind of stuff.

[32:42] Mike: Yeah.

[32:42] Rob: I keep naming the same examples. It’s a little overly simplified but it’s hard without having some right in front of us, you know, to say like what really are your successes and what do you really enjoyed doing and then trying to actually translate those in to things.

[32:54] Mike: Right. But I mean I think what I’m trying to put in to words as more of one of the lines like software developers which is, you know, a lot of our audience consists of software developers and they are software developers because they like to an engineering and building things and they like writing code. And the problem is once they get in to doing things like marketing task like building mailing list and form that in web pages or finding somebody to make something look good for them, those are the things that they don’t necessarily enjoyed because they’re not good at them. What I wonder is how much of that and again, it can be activity related but, you know, how much of that is they just feel uncomfortable doing it in relation to the coding versus they just have an — had a lot of experience at it. So you know, is it something that they should try or not?

[33:40] Rob: Yeah because the first time you try anything, it’s going to scare the crap out of you. I mean the first time I outsource something, I was scared when I wrote the guy the $500 check. You know, it’s like this is a lot of money, what if this doesn’t work out, there’s all these doubts. And then you either get better at it or maybe you discover that you really aren’t good at it and really don’t enjoy it.

[33:56] So yeah, there is a certain level of needing to try things that are outside your comfort zone and seeing if you enjoy it and you feel like you would, you know, enjoy doing that long term. Yeah, I’m not sure there’s an easy answer to that one but I do hear what you’re saying. It’s like if you’ve never tried something and you’re scared of it, how do you know whether it’s going to work out even based on past experience.

[34:17] Mike: If you tried it a couple of times and not really been successful, how much of that is because you’re afraid of putting in a lot of effort in really making a good shot at it or is it just you really not that good at it.

[34:30] Rob: Right. My advice, join the Micropreneur Academy because we talk about all the stuff in there and we can give feedback right? You can interact with us, you can e-mail and you can get on the forums and ask questions. So I do, I do think like someone needs to have that third party, you know, whether it is the Academy, I was kind of joking but it’s like or Mastermind Group or some other folks who there — who there in the crunches with you can give some feedback on things.

[34:51] Mike: Uh huh.

[34:53] Rob: Awesome. So the five traits of successful founders are number one, Opportunity Radar. Number two, having the Optimal Risk Gauge. Number three, Focus Goal Laser. Number four, Effort Accelerator. And number five, Talent Meter. And again, those are from the book Winner’s Brain. It’s by Jeff Brown and Mark Fenske but I really do like the concepts that I’m taking away from it and I am, you know, taking quite a new notes.

[35:17] [music]

[35:20] Mike: So hey, by the way, did you notice that we are up to almost 200 reviews in iTunes?

[35:26] Rob: That’s crazy. I’ll tell you what, our review competition with texting really paid off because we were — were we under a hundred when we started? I mean it really did take a big jump.

[35:35] Mike: Yeah, it did. I think right now — I checked yesterday or the day before and we were up to, I think it was a 192. But it was pretty close to 200.

[35:43] Rob: Some awesome comments too. We have something from Craig McKeachie. It’s in iTunes. It says, “Skipped the NBA. Listen to this podcast. I received an MBA from a school that ranks in the top ten percent of US universities for return on investment and got a great deal out of going through the program. But I can honestly say, I’ve gotten more actionable real world advice from this podcast and it’s a thousands of dollars cheaper.” Awesome. Thanks, Craig. He also came to MicroConf.

[36:08] Mike: Uh huh.

[36:08] Rob: And we have one from a Dan Delario [Phonetic] who says, “I still can’t believe you can get this kind of advice for free. Thanks, Mike and Rob.” [Laughter] But wait there’s more. Richard Chen  says, “I’ve been listening to the podcast for a year. I only wish I knew about it sooner. Rob and Mike are down to earth guys give valuable, practical advice to any internet business bootstrappers. Best podcast of its kind.” Awesome. And the last one Jonathan Richman [Phonetic] from just yesterday says, “Outstanding practical advice to a very candid look at starting your own company with great insights and advice to anyone who can use it immediately.” So thanks a lot, guys. Keep those reviews and comments coming in iTunes. You can just search for us, search for startups and we’ll be one of the top three.

[36:47] So if you have a question or comment, you can call it on to our voicemail number at 888-801-9690 or e-mail it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. And you can find a full transcript of each episode at StartupsfortheRestofUs.com. Thanks for listening. See you next time.

 

Show Notes

• Rob’s Keyword Tool
• Altiris Training

Transcript

[00:00] Mike: This is Startups for the Rest of Us: Episode 76.

[00:02] [music]

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

[00:19] Rob: And I’m Rob.

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

[00:25] Rob: Hey, did you notice the change I’ve made to the intro?

[00:27] Mike: A little bit, yes.

[00:28] Rob: Yeah, I just changed it. But I feel like we need something that’s more broad because I think that in, you know, that we’re 76 episodes in you look at our listener base and it’s not just people launching software products.

[00:38] Mike: Right.

[00:39] Rob: Like it’s far from that. So I feel like we’ll find a better word for the next few weeks.

[00:43] Mike: Yeah. I think, you know, it’s just kind of naturally come out. But I see what you’re saying, I mean because there’s a lot of people who are asking questions with me that are not necessarily software Start-up related or, you know, there are  other products or even, you know, I mean we’d — I think last week we got a question from somebody about — they’re asking about physical products.

[01:00] Rob: Yeah, it was now and again, musicians, there’s inventors, there’s lawyers, there’s CPAs. I mean they’re really is — it runs again and so — anyways, hey so yeah quick update for me. I have this revenue goal for HitTail and it was for February. So it was for, two months ago. And when I missed that goal, I was, you know, depressed and disappointed and stuff. And that’s when I had my little– it was about three or four episodes when I kind of had the crisis of faith with HitTail and just talking about revamping it and really coming back to my goals for them such. Well I round up hitting that goal at the end of March except not exactly.

[01:34] [Laughter]

[01:34] Rob: I was actually — no it’s a several thousand dollar goal and I was $20 shy.

[01:38] [Laughter]

[01:38] Rob: So it was pretty brutal. And to make matters worse, I noticed there were two refunds that had been delayed that should had gone through in February that came through in March and they for $9.95 each. But even with those refunds, I was still — I would have been like 26 cents shy.

[01:53] Mike: You should have put up some Google ads sense. You could have at least made like a dollar.

[01:58] [Laughter]

[01:58] Rob: No. But it really made me realize and I was talking to someone about it and saying, you know, it’s like the goal is a big round number but like hitting that round number, doesn’t matter. It’s like being $20 shy of it is close enough. So I’m — I’m actually quite pleased with — with doing that as long as next month goes up from there. I have this weird thing with HitTail because it has annual subscriptions in addition to monthly subscriptions. And it actually makes it kind of a pain.

[02:22] There are some accounting tricks that you’re supposed to perform but they’re fairly time consuming. You’re supposed to take all the annual stuff divided by twelve and spread it out over your revenue over the course of the year but there is just no way I’m going to do that because it’s a manual thing to do at the end of every month. So as a result, I have — you know, so far that’s fairly choppy revenue that will move up and down by several hundred dollars a month. I wanted to always increase essentially, right? That’s the goal. So I’m working on that.

[02:46] Mike: Cool.

[02:46.] Rob: How about you?

[02:47] Mike: Well I’m off this week. So I’m trying to get a bunch of automation systems in place for the year. And I know I’m not going to see the payoff for most these things for a little while but it’ll definitely kind of contribute to the things that I’m doing this year.

[03:00] One of the things that I started doing this past week also is I outsource some of the AuditShark programming. So that will start to pick up this week and next week. And I know it’s going to take some time for the contractor to kind of get up to speed on a lot of the stuff but I feel comfortable with having him do that because he’s the same person I put in charge of putting my form software over and having look at the work that he did, I feel pretty comfortable just kind of hand him this piece and saying, “Here, go to work on it.” And you know, “Here’s some screencast that kind of help you get started. And the intent is to have work on it full time and I know that I can keep him busy for the first seeable future on it because there’s a lot of little details and stuff that need to be taken care of. So I’m looking forward to kind of getting that process going.

[03:45] Rob: That’s crazy. Yeah, that’s just the first time you’ve outsourced any AuditShark development …

[03:49] Mike: Yup.

[03:49] Rob: … right? Because we’ve talked about this in the past.

[03:50] Mike: Yup.

[03:51] Rob: Wow. Congrats. Congrats for the making the stuff.

[03:52] Mike: Yes and most of the stuff that he’s doing is all UI related. I’ve got all the core stuff done but the UI stuff as you know, I mean anything UI related tends to take a while because you have to get things just right. And there’s always these little nuances that you have to deal with. So yeah, I’m looking forward to it though.

[04:07] Rob: That’s cool. Yeah I actually had kind of a cool thing. I think I’m going to be able to lower my hosting cost as I’ve mentioned in the past like the hosting cost for HitTail is almost 2000 bucks because of the massive amount of disc space that I need …

[04:19] Mike: Yup.

[04:20] Rob: As well as quite a bit of RAM and stuff. And so we, my DBA and I, he — like pulled it on a lighter and I work till 2 in the morning one night and we got clearance from our host, from Micolo to basically do a bunch of high intensity work that would really hammer on the SAN — they gave us certain, certain time frame we could do it that really reduced rate because we get billed based on IOPS, based on IO per second that we hit the SAN. So the more volume I send in a month to the disk, the more I pay.

[04:51] You know, I haven’t really gone over in the past but doing — I was basically archiving like 600 million keywords …

[04:58] [Laughter]

[04:59] Rob: For people who had canceled. Yeah, it’s crazy and that just hammers things, right? Because it’s not just moving data, it’s not copying data. It’s actually hitting indexes. It’s writing to logs and it’s copying from one to another. So I got this very tiny window of like 12 hours on a Sunday and we basically just hammered away this thing and they give me a big break on the pricing. And so my database went down. It was 300 gigs before. It’s right around 80 gigs now.

[05:24] So, it feels so much better like all the indexes had been rebuilt. The database is a way faster. I’m going to be able to shrink my hard drive space because I have almost terabyte of SAN of rate 10 SAN high-speed disk or hard drive space. So this is very… That’s why it’s a thousand bucks and it’s all cloud-based.

[05:41] So yeah, I’m going to be able to, hopefully, cut my hosting bill down. I don’t know if I’ll quite get it in half but it’ll be some, you know, it’ll be 30 or 40 percent down. And the nice part is that it goes right to the bottom line like the apps are already profitable so anything that I can cut out of it does improve the probabilities. So, I’m pretty excited about that. It was a lot of work but it was something I knew we’d — we’d only have to be once. Probably once every few years, we’ll have to do that. So it’s a big project. But I’m stoked that it’s done. And actually, the other benefit is I didn’t think we’d be able to add a non-ASCII character support. So meaning right now, we can only support like the Latin languages but I’ve had several folks e-mail me.

[06:19] One guy actually has a Chinese website and it has multiple millions of visits per month which since it hit they’ll charges based on the number of visits you get, this guy is a big — this guy is a “enterprise client” for me. Like he’s — he’ll probably be four figures a month, you know, somewhere between one and three thousand bucks a month just for him to use HitTail. And we got Unicode support in. We’ve made them in to our cards over the weekend. So super stoke had start approaching now. We’ve had cancelations because people, you know, weren’t able to use foreign characters and — excited. I feel like there’s been kind of a couple breakthroughs right in a row.

[06:52] Mike: That’s cool. Did you actually test it with all that and the non-ASCII characters? Because I mean I don’t have any foreign language websites to even test something like that on.

[07:01] Rob: Right. Yeah luckily, I do have — there are some folks in Western Europe who use HitTail still even though it was kind of jacking some of their stuff update, it was readable. It just wasn’t a hundred percent. And so yeah, I’m actually working with them right now to verify because I can’t read the language, right? I don’t know if it’s — it looks okay to me but I don’t — I want to make sure the right characters on the right places.

[07:21] So — so it’s not fully tested but yes, it is. I knew that the data structures are now and if there’s anything messed up, then it’s only going to be some, some code tweaks which is much easier than trying to change a column from, you know, one type to another in a — in an eighty million row database.

[07:35] [Laughter]

[07:36] Rob: So …

[07:37] Mike: That’s funny. Eighty million row database. That’s probably just one — one table or two, isn’t it?

[07:42] Rob: That’s one table. Yeah.

[07:43] [Laughter]

[07:44] Rob: Yeah so it’s a big one.

[07:46] Mike: Yup. Cool. The only other thing I’m doing is wrapping up the MicroConf sponsorships and I’m hoping to  wrap everything up with those this coming week and there are might be one or two that kind of slip in under the wire but for most part, I’m just kind of [0:08:00] draw line this Friday and say that’s it. We’re — we’re kind of done and then work with the existing sponsors who’ve signed up to make sure that they’re getting the exposure that they want, that they need for the conference and go from there.

[08:12] Rob: Cool. Yeah, same for me. Most of my staff starting to wrap up until we get right close to it, you know, with all the last minute stuff has to happen but pick up the menus this week and just did some other miscellaneous tasks. So it’s starting to feel good.

[08:24] Mike: Very cool.

[08:25] [music]

[08:28] Rob: This week we’re talking about why it’s easy to be great but hard to be consistent.

[08:32] Mike: That sounds familiar.

[08:33] Rob: And I had a blog post that I wrote with almost the same title. It’s basically based on a quote from Steve Martin and he wrote a book called Born Standing Up. I’ve talked a little about it on the podcast in the past but I want to talk more about it because A, I wanted to hear your thoughts on it and B, I just felt like there’s more to say on this topic than I said in that blog post. So we’ll probably follow the similar outline. But I think this is an important message and I know there are a lot of folks, you know, who maybe listen to podcast but don’t actually read our blogs.

[08:59] I can’t remember the last time I’ve gone to my RSS reader. Do you — do you check our RSS anymore?

[09:04] Mike: You know, I used to do a daily export just to make sure that the trend was going up. I used to do like a 30-day rolling average just to make sure that it was going up and I haven’t done that in probably six months, maybe eight.

[09:16] Rob: Oh no, I was wondering if you read blogs via RSS.

[09:20] Mike: No. I haven’t — I haven’t read a blog via RSS in years.

[09:24] [Laughter]

[09:25] Rob: Yeah, it’s that funny  So I use too. I mean this is like, “Is our RSS dead?” Like obviously, it’s not dead. I still look at my RSS subscribers, you know, at least a couple of times a week. I mean that’s kind of a metric — I measure and look at. Make sure it’s increasing but at some point, I just stopped. Like I stopped checking my RSS reader and I looked at podcast more now.

[09:45] Mike: I know what you’re saying. I look at FeedBurners well just to kind of see what my subscribers look like but I don’t actually read blogs through RSS anymore and I haven’t for a very long time.

[09:54] Rob: That’s a trip. So anyways, that’s — that’s a bit of an aside but I think that’s why I want to about on the podcast is because I know that there are a lot of people who listen to podcast who probably don’t read every post that you and I post. So today’s podcast is based on Steve Martin. He wrote a book called Born Standing Up. It’s awesome. It’s his memoir about from when he is born until he finished standup comedy. So it doesn’t cover after that which is all his movies. And you know, honestly, I mean this guy is really smart. Like Steve Martin is very intelligent. He also said that he was not naturally funny which I think is kind of cool. He basically talks through the story and talks about how he learned to be funny. And so he really had to look at it from a scientific approach. And I listened to the audio version of it, of course and he narrates it and it’s very good.

[10:37] But one of the quotes probably one of my favorites is he says, “It’s easy to be great and it’s hard to be consistent.” And what he meant by that is there were tons of comedians that he would run in to who would have these knockout shows like that one show that was fantastic. They killed the crowd but that person could not duplicate that success. It was easy to be great once but it was hard to be consistently great. You know, even extrapolating on that, I realized both through — through Steve Martin’s stories but also through just my own start-ups and products and the blog and basically, anything that — that I’ve done as an entrepreneur that it is easy to be a one hit wonder. It’s easy to get a link from TechCrunch. It’s easy to get one post to the top of Hacker News. It’s easy to start writing a blog and get to 300 subscribers in a few months. I’ve seen several people do that recently. It is really hard to stick around for the long haul and do consistently deliver quality material.

[11:34] Basically, I have three reasons outlined of why it’s easy to be great and hard to be consistent. And so the first reason is that there are no big breaks. So Steve Martin talks about that. That was fascinating. And he said he thought that going on The Tonight Show was his big break and he thought that from the time he was really little. And when he was finally invited on, he goes on for the first time and he expects that this to be it like — once he does this, he set for life. You know, he’s like a career entertainer and it makes his [0:12:00] career and it didn’t change a thing like he still went back to his job of doing magic shows and playing the banjo. And you know, he’s kind of — just a small time entertainer. He said after the second time it didn’t change. After the fourth time, he got recognized on the street by one person but they didn’t remember who he was or where they had seen him. And then he said on and on he kept going back. And after the tenth time, his tenth appearance on The Tonight Show is when he started to consistently be recognized but people didn’t know who he was still. And it took like 15 or 20 times until they like his name was actually there.

[12:35]: So it’s just — this incredible story of like there is no big breaks. The analogy is The Tonight Show or TechCrunch or Mashable or Hacker News or any of these things. They just don’t have the impact than a lot of people from the outside think that they do. Yeah, he would do a standup. You know, this is back when Carson did The Tonight Show. So they would have them on once and then it’d be a couple of months later, they had appear. So this is over the course of a couple of years probably but he was on fifteen times.

[13:00] Mike: Wow. No, I think that that’s, that on, I mean it takes a lot of exposure to get people to recognize you. That’s hard. I mean most people will see that sort of thing. And they’ll, you know — I mean even if you’re getting an e-mail from somebody, you might recognize the e-mail, you might not. I mean just this past week, I had somebody e-mailed me and say, “Hey, I’ve heard this name before but I can’t remember who it’s from. Can you help me out? You maybe you know who it’s from?”

[13:23] I think it takes a lot of exposure in order to for people to recognize who you are and that kind of falls in to, you know, there are no big breaks. I mean that TechCrunch link is going to get you a little bit of notice but it’s not going to necessarily land you a heck of a lot of business from it. At least not just from them. I mean you have to have a lot of different sources of where that traffic is coming from which is why it’s so important to not rely just on Google for example for all of your traffic.

[13:48] Rob: Yeah, that’s a good way to put it in like you — you almost have to have this diversification of traffic. Most successful businesses that I see have some kind of traffic diversification where they don’t have more [0:14:00]: than maybe 80, 85 percent from any single source, right? So they have at least 20 to 30 percent from multiple sources. And those were actually the ones that scale the best, right? Because then if you can figure it out how three of four different sources scale, you better often, like you said relying solely on Google and then having Google — you know, they did their Panda 3.3 Update about a month ago. And it’s just wreaked havoc on a lot of — lot of folks I know.

[14:24] So reason number two it’s hard to be consistent is that — and this is specifically with start-ups and you know, thinking of ideas and launching products. It said it’s easy to think of ideas but it’s really hard to finish them. We all love to sit around and think about ideas and we all love — even if we’re not sitting around. Ideas are constantly hitting our minds for a new businesses. I have a whole notebook full of them right here.

[14:45] And it’s easy just to think about them and it’s even really easy to start sketching them out. It’s easy to start writing some code if you’re a developer. But what’s hard is finishing them and that’s when you have to kind of face the music. You have to get people to pay you for it. And that’s when you have to launch it to the world and those are the really scary things. Right? Those are the things that like put the terror in your heart because if they don’t work, then you’ve invested a ton of time into it. And you have to go do something in public which is typically scary for folks, you know. If you haven’t done it a lot, it is something that — it’s just a natural thing for us to want to become vulnerable and post this thing you’ve been working on for several months. Anyways, yeah. So it’s easy to start things and it’s a lot harder to finish them.

[15:29] Mike: I wonder if that falls in to the kind of the same boat as public speaking. I mean most people would rather be dead than being on stage which means it’s great for the person who’s up there because everyone out there would rather be dead than be where he is. You know, it makes me wonder why is that. And I think that it’s because people don’t necessarily like to be publicly accountable. You know, they don’t want to be the center of attention. I mean you get people on small groups and stuff. They thrive on that sort of thing but when you put somebody on a stage in front a hundred or two hundred people and it’s a completely different story. So [0:16:00] I wonder if having all of that attention drawn on somebody and launching a product is really no different than that because you’re putting yourself out there and people are looking at you and they’re looking critically at the things that you do and or evaluating and judging you basically on whatever the product is that you’re putting there out there. So I could see how people would push off from that and get to the point where they’re about ready to launch and they say, “Well no, I’m going to pull back. I don’t really feel comfortable putting this out there yet.”

[16:30] Rob: Yeah. You know, I think another reason folks don’t want to launch and I think is that it can finally mean that like your failure is complete. I think that’s we’re all scared of failing that launching is when, you know, if you tank at that point, then it’s kind of unequivocal, “Okay, I really have wasted the last six months.” Whereas if you never launch, then you never get that for sure, no. You can almost perpetually push it out and say, “Well, maybe this thing is still going to work, you know.” And I think I — I really think that’s a wrong way to look at it. I’ve had a couple of friends recently who have launched and it hasn’t taken off in the way that they wanted. And you know, that they’re doing their pivoting. You know, that word is overused now but I think that — gives folks a lot of leeway as entrepreneurs. It’s like you don’t have to fail anymore. You can pivot — you can pivot to a new market. You can even tweak your, you know, your idea altogether but you don’t necessarily have to scrap everything you’ve done. You can — with one friend, he’s keeping the domain name because he has great, the incoming links are ready. He’s working in a similar market. He is going to start building an e-mail list again and he’s going to, you know, redo the product and re-launch it. And it’s not going to be — I think it took him eight months to develop it, originally and it’s only going to be one to two months worth of effort to pivot. But think about any old days like I would never have thought of that like five or six years ago. I would have launched and if it failed, I would just tank it and started a new idea where as now, it’s like there’s much more of a trial and error mindset due to the lean start-up that I actually think that’s a pretty good way for entrepreneurs to go because it leaves you an out to where you [0:18:00] can launch. You can “fail” but as long as you learn from that and then you, you just changed direction, you don’t have to lose all the work you’ve put in so far.

[0:18:08] Mike: Well said.

[0:18:09] [music]

[0:18:12] Rob: The reason number three it’s hard to be consistent is that even after a lot of folks launched like Mike and I were just talking about, it can be even worse once you launched because either you have some success, you get some customers and now, you’re trying to market it, you’re trying to support it and you’re trying to add features to your product or you launched and nothing happens. No one cares and you have this huge let down, right? And you get depressed. You get bombed that you spend all this time on it. And so either this as you ramp up in terms of the amount of work you need to put in to it and to this point, you probably even think “Man, launch it.” Once I get to launched it, I hear this all the time, right? Once I get to launched it, then the work will just decrease dramatically and they won’t be able to kick back. And that’s actually when a lot of really hard work starts because now you have paying customers, now you’re dealing with the people factor, you know. Everything is great with your start-up until this pesky customers get involved. This is when the hard work starts. So …

[19:06] Mike: Can I quote you on that? “The pesky customers.”

[19:09] [Laughter]

[19:09] Rob: Yeah, please don’t do that. A friend of mine said that to me at one point, they really made sense. It’s like obviously, we love customer. The customer is why we have our businesses. But it is much easier to sit in a basement to write code and write docs and even to do some marketing than it is to deal with actual real life customers who are paying you money. They had that that weird factor, the X factor of some customers that are demanding. You will often have to spend a lot of time with them and other customers are less so. But it — it really just adds complexity.

[19:36] So the bottom line is that even once you’ve launched, it’s not like you’re finished. I mean that’s really when the work starts. I think we’ve often said that getting to launch is like the halfway mark. And most people don’t think about that and so what happens is when someone launch a start-up, they’ve put all this work into it and then, you know, if it takes off, it’s a ton of work. And if it doesn’t, it’s a let down. But either way, it really is hard to be [0:20:00] consistent to pass that, right? Because they ought to have so much work to do or they’ve been let done. It’s just hard to continue investing and then another six months and to think, “Wow, I have to start this whole process kind of over again and get this product off the ground.

[20:11] Mike: Part of that is just that you have this idea in your head that you get to launch and your work is going to decrease and that’s not the case. So, your expectations were not necessarily in line with reality and I think that that’s probably what disheartens a lot of people because they get to that point and there’s, you know, their expectations are just not what reality is and they can’t handle it. They don’t really know what to do or what to think about it at that point.

[20:33] Rob: And I think on the side note, I realized how much this applies to kind of everything in life. I have friends who create art like they paint, and they will do a really good painting every now and again but they’re not consistent with it. That’s okay if it’s a hobby, right? It’s the same thing with playing guitar. Might have friends who would play guitar and they really wanted to be good at the guitar and they could play one song really well. They wouldn’t invest a time to be consistently good at it. And I think another great example is like with bloggers. I’ve heard this set a lot of people who say, you know, you want to have a popular blog? Start your blog in 2005. Implying that like the only reason that you have a popular blog is because it’s been around for a long time, and that is not true. It is easier to build a blog audience now than at any time in the past with Hacker News and Twitter and all these social sharing things. When I started, it took me 6 months to get the 66 RSS subscribers. It took me a year to get to 250 RSS subscribers. Who today would just have to spend a year day to 250. I bet starting a brand new blog, you can get to 250 in about 2 months, maybe less. If you write some stuff that works well in Hacker News and write with that audience, you know, this consistency, this whole theory, it applies across most things you will do in life whether it’s business or, you know, hobby or anything. If you want to be really good at it, it is going to take consistency.

[21:50] Mike: And part of that comes down to efficiency as well because as you do things over and over again, you make this little tweaks, I mean, it’s not any different than SEO or anything [0:22:00] like that, I mean you’re making this little tweaks that you have to consistently make across all your sides or, you know, across every page on the website or whatever. And each one provides you with those incremental improvement so that when you add another page, “Oh yeah. I’ve got to do this thing that I did before that converted a little bit better” or that made people want to stay on the page or read it. And the same thing with blog post, I mean you have to continuously add in new content, add in new blog post and when you do that, you submit it to all of these different websites and, you know, you’d gain traffic from those and oh, by the way, I found out there’s this other website I can also submit some articles to and they’ll be happy to post the link and share with their audience.

[22:40] Rob: Right. And that make sense what you’re saying about tweaking and constantly almost like split testing constantly because that’s what comedians do, Steve Martin talks about doing that constantly of just trying jokes and they fail, right? And this is why you’ll see a comedian rise to fame and they have this great act. Chris Rock did this. They had these great acts and they become huge and then they record it, they release it on CD and then they can’t go back to the bars. They can’t start over again. Their next show, they have to write from scratch, write a whole show and go back to the, basically playing to big amphitheaters. Almost all of them fail at that because they don’t have the years of trying material of starting with 2 minutes of crapping material, turning it into 2 minutes like good than turning it into 5 minutes of good material which can take months to do. They basically have to just say “Well, I guess I’m good enough now to write a one or two hour show from scratch and the whole thing is going to be funny.” And it just doesn’t work that way.

[23:36] And actually Seinfeld talked about this as well. There’s awesome documentary called The Comedian and he basically scraps all of these material that he had used for, like his – he have kind of one show that he did consistently, that was funny. And his scraps it all and he starts over. It’s after the Seinfeld Show and he just start to playing the show up like a New York club and try material on people, and a lot of it bombs. And that’s it. Right. It’s trial and error. That’s the same [0:24:00] thing we’re talking about like being an entrepreneur is there are a lot of parallels to you because they’re always trying to improve it.

[24:07] Mike: So given all that, one of the ways to improve consistency because it sounds like, you now, you have to try a bunch of different things and some things are going to work and some things aren’t. But, you know, how do you go about making everything better?

[24:19] Rob: Yeah. I think that’s kind of the nuts involved to this thing, right? It’s like how can we help improve that and I have three ideas that I want to throw out. The first is that as entrepreneurs, there is this thing we have called “The Madness”, I think Justin Vincent quote that on texting. You know, when you think of an idea and you’re like “Man, that is the best idea ever.” And you go and write away you like buy a domain name or five domain names and then you start writing code and you’re like write respect and then you put out thing on oDesk, I mean this is all within an hour? And then next day, you wake up and you’re like “What was I’m thinking that? The idea was terrible. And so you basically have invested some time, invested some money into this idea that was basically just madness taking you over. I mean, you’re  stepping to be a lot more. I feel like I have better control of it now. But that’s one way to be really in consistent, is to think of ideas, jump on them, work on them for a day or a week and then just loose esteem because they aren’t actually that good of an idea and you acted too soon.

[25:13] One way to get around that is to basically give yourself a cooling off period. And so the cooling off period, I have, I roll over myself and I never spend money on an idea in the first 48 hours of the idea. And typically it’s much longer than that. I’ll sketch it down on my notebook and then come back to in a few weeks but that helps me keep on clouded judgment once I start plunking down money in time because I really want to use, you know, my money in time to the best of its ability. I think giving yourself a cooling off period is probably a good way to start.

[25:40] Mike: That’s interesting that you bring that up because that Altiris Training website that I came up with, it wasn’t something that I just said “Oh, I’ll go on and buy this domain name or I’ll search for this.” It was something that I kind of out of my mind for, I don’t know, a couple of weeks or a couple of months and said, you know, it’d be really nice to be able to just record a lot of the stuff once and I kind of kick the tires on a while before I actually got the domain name  or [0:26:00] even started searching for a domain name for it and then I just happened to see that AltirisTraining.com [Phonetic] was not taken and, you know, it’s kind of an instant “Okay, yeah. I got to do this and I’ll do it right now.” And then putting together the website. I was just, I was literally just fooling around with some plug-ins and I’ll be honest, I kind of accidently launched the product more than anything else because I was just playing around with some plug-ins that I wanted to check out and say, you know, how do these things work and can I use them on some of the just existing AuditShark stuff that I’m doing and before I knew it within a couple of hours, the website was actually done and I said “Wow. This is going to be a lot easier to launch than I thought it would be.”

[26:35] Rob: Right. And that so much better way to do it, just stretch out that time frame but be more kind of more confident that the ideas are rational one. It would have been cool to do it while you’re all passion about it and do it in the first five hours of you thought about it but you have the potential to kind of just waste that time.

[26:49] Mike: Yeah. I’ve done that as well. I think Justin’s absolutely right when he calls the “The Madness”. I mean because you’re just not thinking clear, can you really need to wait a little while and kick the tires on that idea or run it by some other people or at least do some market research on it at the very least before you poke your head up and say, “Wait a second, was this even a good idea?”

[27:09] Rob: The second way that I have for improving consistency is to get affirmation early and often and by this I don’t mean someone telling you your idea is great but I mean by potential customers telling you your idea is great.

[27:25] Okay. If I could tell you with a hundred percent certainty if you came to me with an idea for say a small software product and I could tell you with a hundred percent certainty that “Mike, if you go full time for 6 months or half time for 6 months and build this and go through your all the toiling but it will succeed absolutely on equivocal way.” There would be a lot less out in your mind, right? It would actually be a lot easier to be consistent I think. I don’t think that we are as entrepreneurs are scared of the work. It’s not the hard work that scares us, it’s the fact that we might be investing hard work into something that’s going to fail and that’s going to waste our time and that we’re misusing our time and our money and our resources.

[28:02] So if I could tell you for sure, it would be a lot easier trip, right? It much less of a mental battle. While no one can tell you for sure, can we get above 20 percent certainty? Can we get above 50, 60, 70 percent certainty? I think we can and the way you do that is by starting to tell customers about it. Building a mailing list, starting to do the marketing. Seeing how many people you can drive to a sight seeing how many e-mails you can capture? I mean, this is the problem, right? It’s like if you’ve don’t do that in advance, it’s not just about having that customer list when you launch so that you get a bunch of revenue. It’s actually about fighting the mental battle that we all fight as we spend 6 months in a bedroom trying to write this code. And it really is helping deal with the mental aspect of it because if you have 500 people on your list, then you’re pretty confident that you’re going to be able to sell few of those and you’re pretty confident of the people have an interest in it. This is why I didn’t start writing my book until I had 5 or 600 people on the list. This is why you and I didn’t start planning a conference until we had several hundred people on the mailing list.

[29:02] These days, I don’t do much without talking to a lot of customers whether it’s in person or, you know, via the marketing trails and getting into sign up for the e-mail list. And there are people like Jason Cohen also did this with WP Engine, WordPress Engine. He said that he had 30 people committed verbally to pay him, I think it was — I think you and I had a price. It was like 30 people, 50 bucks a month before he invested in real time in the idea before he started hiring and pursuing the idea. The first step for him was not, there will be infrastructure. The first step was finding those customers because that gave him early affirmation.

[29:38] Mike: Yeah, that’s essentially just validating your idea has legs and, you know what Jason did was making sure that he had paying customers and, you know, you just do the ballpark math on it and if you get 30 people who are each willing to give you $50 a month, that’s $1500 a month. And if you extrapolate that from, I mean, those are people that he just know and those are essentially personal [0:30:00] contacts at that point but if you can take that and say okay, but what if I can anonymize this a bit and just pitch it to people that I don’t know, how far could I grow this, how far could I take it? And those initial customers are essentially just the validation of the idea and then you can, you know, you grow things from there.

[30:18] Rob: So the third and final way to improve consistency, something we’ve talked about a lot before but it’s about finding accountability and it’s finding some type of accountability group, a start-up community, some people who are going to be able to support you as you go through the struggles of launching and who you’re going to be able to support. I like doing it in person, if possible, if I live in the big city that’s definitely what I would I do. I’m also in a mastermind group, the Over Skype but, you know, it doesn’t just have to be a mastermind group. It can be something like you can go to a meet up group as long as it means consistently and it’s the people who you feel like you can really talk about your idea with. I have actually know a couple of guys who found entrepreneurs locally by going on Facebook and searching for tech entrepreneurs in your area.

[31:02] You know, I think with something like this, it’s commonly called the Mastermind but I think you really want to keep the group fairly small like to 3 or 5 people because as it gets larger than that, you kind of can’t share stuff and be vulnerable without being concern that someone is not going to get what you’re saying or not going to understand it you get into larger groups and everyone doesn’t have a time to just kind of talk about what they’re doing on the projects. And so, you basically want to set up something that meets fairly like consistently, somewhere between 1 and 4 times a month and you want to get 3 other people together on a Skype chat or in person and you want to be able to talk to them, you know, to tell them what you’re going through and support them as well. Like do you think this can also happen in a larger setting? I mean I’m thinking like forums like the Academy Forums or something or do you think that it needs to go beyond that and always be, you know, kind of a private smaller group.

[31:48] Mike: I don’t think that it has to be a smaller group but I think that the key things to make it actually work are that you’re going back into this entire podcast episode, I mean, it has to be consistent and if you’re not consistent about [0:32:00] being accountable to people then, you’re not going to be consistent in implementing your ideas and part of that is also the people that you choose to participate in this accountability whether it’s a forum or Skype chat or whatever,  they need to be serious about it as you are. I mean, you can’t have people in there who are just like “Oh, well, yeah. I’m serious about this. I want to have an accountability group.” And then week after week they don’t do something or they’re very inconsistent about actually committing to following through on the things that they say that they’re going to.

[32:30] Rob: That’s a big part of it. Absolutely it’s that other people have to be as serious as you. That’s a big reason I see that groups fall apart is that you get this varying thing, you get someone who’s just starting out and has 10 ideas and then you get people who are way late in the game, you know, and they were basically already have profitable ideas going and you really can’t, probably can’t team those folks up too easily because they’re just such different places. Yeah, so I think like you said, consistency is a big thing. And it also say I think that, you know, I’m thinking about the Academy Forums versus something like the answers that on start- ups or having a mastermind group. I think it is going to depend on your personality a bit as to what feeds you the most but I think for the most part, having multiple outlets. I mean that’s what I d these days, right? I’m on the Academy Forums. I do frequent in a couple other online communities and then I also have the mastermind and that’s a lot to commit to. I think that as someone who works at home has no co-workers and, you know, I don’t have a ton of personal contact during the week that that’s helpful for other folks who do, you know, who can tend to feel isolated that having multiple outlets can also help with consistency.

[33:36] [music]

[33:40] Rob: If you have a question or comment, call into our voicemail number. It’s 1-888-801-9690 or e-mail it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons.  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. Or you’ll also find a transcript of the podcast. Thanks for listening.  We’ll see you next time.

Show Notes

• JumpBox.com – Open Source as a Service
• Start Small, Stay Small – Rob’s new book
• www.softwarebyrob.com – Rob’s blog
• www.singlefounder.com – Mike’s blog
• Seth Godin’s blog
• Yerkes-Dodson Law – Empirical relationship between arousal and performance

Transcript

[Read more…] about Episode 14 | Overcoming Fear