Episode 114 | The 5 Stages of a Bootstrapped Startup

Show Notes


[00:00] Mike: This is Startups for the Rest of Us: Episode 114.

[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.

[00:19] 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. How you doing this week, Rob?

[00:24] Rob: I’m doing good. I feel like the new year is really starting to ramp up and people are back signing up for apps again and it’s exciting.

[00:33] Mike: Yeah, I know what you mean. There’s a number of things that were on my list of things to get done last year that never did but they tended to be more of the clean up nature and I’ve starting to bang through those kind of get them off of my mind and off my plates so that I can work on other things.

[00:46] Rob: Yeah, I had several of those as well. I also finally did my 2-day retreat just to do some thinking. You know, I walked like miles and miles a day and thought and looked at my goals for 2013 and how I wanted to accomplish those and what was going to take. And I looked both at for personal and professional and I just thought through them in-depth. I did mapped them out in quite a bit of detail in a bulleted list and then I put them in to my idea notebook where I’ll be referencing them throughout the year. It was a really good way to start the year actually. I recommend if you can…can take even just 24 hours and get away from kind of the hectic nature of your life to really sit down and think about what you want to accomplish in the year. I found it to be pretty valuable.

[01:25] Mike: Cool.

[01:25] Rob: How about you, what’s going on?

[01:26] Mike: So, I’m in the middle of finalizing things for releasing AuditShark to someone of my early access customers next week and I plan on giving them to access to everything that’s been built so far. And I’ve touched based with the couple of them but not nearly as many as I would like to. So, that’s something I need to work on a little bit more but fortunately, the contractors that I have doing some of the development work, they’ve been just concentrating on the technical side of things which freeze up a lot of my time for all the marketing stuff and that’s going really well right now. I’m really happy with all that’s going on. Hopefully, the trend will continue and my previously stated goal, I was thinking about it last night of not doing code. I decided I have to retract that just because I enjoy doing code on occasion. I think kind of touching things on occasion as opposed to digging in and actually trying to solve some of the down or dirty problems.

[02:19] Rob: Yeah, there’s a big difference between coding on major projects and just hacking your script out because I’m like you. I can’t get away from the code because I enjoy it too much. I really do love writing good code. It gives your mind a rest if you’re busy thinking about, you know, a lot of other stuff. So you just sit there and code for an hour or two can be pretty enjoyable. So, I’m with you. I don’t think I’ll ever get away from it and I don’t really, really have the desire to. But getting away from having to do it 10, 20, 30 hours a week, that’s definitely I can see that as an admirable goal.

[02:50] Mike: Uh huh.

[02:50] Rob: So, other stuff…other stuff that’s new with me, is with HitTail I have three small launches plan for the next probably 14 days. We have an info graphic that was ready in December and it’s about long tail SEO, trying to get some Twitter buzz and you know, wherever else it is, you do with an info graphic to generate some interest. And then we integrated with HubSpot which is a pretty big one for us. So, we’ll be talking to them trying to get the yeses, that integration marketing thing I keep talking about or it’s like you integrate with folks and then you get them to promote you and it gives you reason to talk about what you’re doing. My product manager did a bang up job on the integration on the code and everything. So, it’s pretty cool. It’s something I’m pretty proud of. Yeah, we have a joint e-mail going out as well over the next week or so. So, that’s why I feel like, you know, when I said momentum starting to build for the year, I have like lot of anticipation about these three things because we’ve been sitting on them for almost a month now. They were done in early December and it was like not going to, you know, I’m not going to spend a time to promote now while everyone is offline. So, I’m very excited to kind of kickoff 2013 with three pretty good little marketing efforts.

[03:53] Mike: Now are you doing any technical things on the code-based itself for HitTail to enhance the product  or they are just minimal things that you’re doing here and there? Is that mostly about marketing at this point?

[04:04] Rob: We are definitely still writing code. We’re adding…we’re doing integrations and when you…we’re also adding new stuff based on customer requests. So, there had been some request dealing with like the article work flow and or changing that code as well as some…there’s another piece of information called the Score that we have that is not in the UI and we’re going to be adding that soon. But it’s no…there’s no major features. I mean HitTail itself if you think about it is just one feature, right? It really just goes through the keywords and gives you the ones that you should be ranking for but aren’t…that’s all it does. And so we’re not adding another major section to HitTail at this point. We are still tweaking code and making things better. It’s not really a product-driven…or a product development-driven business because we’re not raising against another competitor who’s also building a bunch of features.

[04:50] At this point, there are still so many people who don’t know about HitTail who can use it features that having someone code on it 30, 40 hours a week is…is just a waste of time, right? It’s that building features for feature’s sake, we’ve already have…we already have brought a market in. So, there is…it’s more of a focus for sure on marketing for the time being. Although I do have, you know, I do have some…bigger features that we may look at later like in late 2013 that would actually change the nature of the product, make it a larger more complicated product. But I just don’t want to go there yet until we have more of a larger user base and just have more experience with it.

[05:24] Mike: You’ve kind of got the product market fit at this point so you don’t necessarily need to invest a ton of time in to new features and you can instead use that time to work on the marketing, maintaining and then expanding the user base.

[05:37] Rob: No, that’s right and that’s actually, you know, something more…what we’ll be talking about today. We’re going to be talking about five stages of a bootstrapped startup and in these phases, HitTail has kind of made it to that phase where it’s not just about building the product anymore. We are still improving the product but there’s that product maturity cycle, you know. Eric Sink did a great presentation about this where he talks about the toddler product and then like the pre-teen and the teenager and just as it gets older, eventually, every product after it’s been around 10, 20 years like it just you really aren’t adding that many features anymore. You’re just…you’re kind of maintaining and you’re trying to launch new products to fill the new cycle. So, HitTail is certainly not there. It has really, you know, it’s been around for seven years now. So, it’s more mature than a lot of products out there.

[06:20] Mike: Cool. So one of the other things that I’ve mentioned a few weeks ago was the e- mail marketing campaigns that I was working on for another company and those campaigns are doing really well. The primary focus of them has been to get people registered for some webinars that they’re doing and we’re up to more than 250 people registered for this webinars. And for me that’s kind of shocking more because the sign up form to these webinars is nine required fields plus four optional fields just to sign up for the webinar. It’s just that crazy the amount of information that’s being asked. And you know, it’s information that this company wants and really kind of needs to be able to follow up effectively with these people because it is not just about getting them to a webinar and then sending them e-mails later on. I mean they want to be able to call these people and talk to them on the phone and figure out who it is that they’re talking out to. So, they’re definitely giving good information but the fact that they’ve had 250 people sign up for these webinars and give over all of this information and just knowing the size of the e-mail list that we’re sending it to, the e-mail lists are not very big. So we’ve actually gotten a really big response to them.

[07:20] Rob: That’s really good. Yeah, you had mentioned before that, you know, maybe the e- mail list hadn’t been e-mailed to in a while. Do you feel like the 250 registered attendees you received, are those people that already have a relationship with the company that they already know, like and trust them?

[07:35] Mike: No and I went back and I looked at some of the early signups from the list and it looked like not one single person who we had e-mailed had signed up. So, I started doing some digging and found that a lot of our traffic was actually coming from LinkedIn groups. So the links to the webinar had been posted on the LinkedIn user groups for the people who we are targeting and the vast majority of those signups came [0:08:00] from that location as opposed from these e-mails. So, I don’t feel like the e-mails themselves helped significantly but I’m just happy with the…I guess the overall results.

[08:10] Rob: Wow, yeah, that is surprising. I wouldn’t think that…I just would never think of LinkedIn marketing like that.

[08:15] Mike: I wouldn’t have either but, you know, just looking at the numbers and the stats and I haven’t checked them in several days. I mean it’s gone up dramatically over the past probably three or four days in terms of the number of signups. But definitely early on from the first round of e-mails that I sent out, there was not one that was from somebody that we e- mailed. Now, they were some from companies that we did e-mailed. So, I don’t know whether or not, in all the people we targeted were managers of these companies. So, my impression is that these managers turned around and forwarded their e-mails to people that that work for them and said, “Hey, this is probably relevant to you.” I would not have expected any of the managers to actually show up.

[08:53] Rob: Right, right. So, do you think that given the success of LinkedIn that their client might actually advertise on LinkedIn now?

[08:59] Mike: I’ll probably recommend that we use LinkedIn but the fact is we didn’t pay any money for it. So, it was just in the user groups and in the user groups, there is some, I don’t know, 3 to 5,000 people who have essentially opted in to being members of these groups. I mean because in order to be a member of a LinkedIn group, you have to actively go say, “I want to be a member of this group.” So, they’re getting e-mails…a lot of them are probably giving digest e-mails and says, “Oh, this is the activity that’s been on this list.” And in there, there’s a link that basically says, “You know, here’s this webinar that you might be interested in.” So, a lot of the traffic has been coming from those locations.

[09:36] And the only reason I actually found this out was because there were somebody that had signed up that I knew I worked with before and I remember looking at the numbers and like, “Why did none of these e-mails that I‘ve sent to match up with the people who have registered?” And I saw this e-mail who had registered and I said I know that I have not e-mailed him and I know who he is and I’ve got his contact information. So, I called him and asked and I said, “You know, just trying to track this down. Where did you get this?” And he’s like, “Oh, I got it from LinkedIn.” And then I tracked it down and just  backtrack. It was obvious once I’ve found that and then, you know, because not all of us is just tracking that I would like to have has been set up but they were being sent to a different URL that I was not tracking.

[10:12] Rob: So last update for me Drip development is going well. I saw the first demo of the app and I also got the marketing design, this whole site’s design and it’s sliced now. Still, just have a landing page up at GetDrip.com and that’s…that’s actually doing well. I had a surprised…I went on a podcast, the Foolish Adventure with Tim Conley and talked about marketing software and that went viral. I think it went to the front page of Hacker News and in there I mentioned Drip. And so, I got a big boost of…of subscribers over the last couple of days. So, that’s kind of nice. I mean the conversion rate won’t…shouldn’t be fantastic, right, because Hacker News traffic in general doesn’t convert that well but it was kind of nice to see people hitting the side and I have a decent conversion rate to e-mails. So, it tells me the…the messaging is at least partially on and then finally decided on hosting. We’re going to go with EC2 which is Amazon, obviously, their Elastic Compute Cloud. And a lot of factors play in to that. There’s pluses and minuses to Rackspace and EC2 and Engine Yard and Linode and I looked at one other and we decided to go with it.

[11:16] Music

[11:19] Rob: Today, we’re going to be talking about the five stages of a bootstrapped startup. So, I was listening to an audio book called Brain Trust: 93 Top Scientists Reveal Lab-Tested Secrets to Surfing, Dating, Dieting, Gambling, Growing Man-Eating Plants, and More! The book is okay. It’s purely entertainment but one of the scientists does research in to the development of industries and how a technology evolves and he’s going to be writing a horribly academic book. I went and researched this. There’s no chance I’m ever going to read this book. It’s called From Art to Science in Manufacturing: The Evolution of Technical Knowledge but the cool part is he summarized the whole book in like this 5 to 10 minutes snippet and I thought it was fascinating and it actually applies really quite well to the model of a bootstrapped startup…and the phases that you go through as you’re…as you’re taking your startup from launch, you know, onto…on to being a successful venture. The stages that he outlines are for industries and so he basically says like take the healthcare industry or the firearm manufacturing industry or aeronautics. And industries evolve overtime and these evolutions take place due to market pressures.

[12:28] So, they might start off as a craft where early on to be, you know, in aeronautics to be a pilot, you really are an intrepid flier. You have a leather helmet and goggles. There is no processes. You’re building your own plane like no one build planes early on, right? Then from there to step two or stage two which is like rules and instruments and that’s where other people are doing it. You collaborate. You start actually having altimeters and instruments to do things and then there’s, you know, another stage where you get procedures and then one where you start automating things. And that’s where today just like autopilot in airplanes. And then the final stage is computer integration and that’s where like computer actually takes over the entire process and you really don’t need human intervention. So, those are the five stages of the outlines and he does a pretty cool walk-through of like how it’s…healthcare is just in stage two or stage three and firearm manufacturing is all the way, I think it’s in stage four but it took 200 years to get there. Whereas things these days like whether it’s like designing websites or you know, being some type of technical expert, they might mature…instead of 200 years, they might mature in 15 or 20 because of the pace…the pace of the world has changed so dramatically.

[13:39] But what we’re going to talk about is how the same five stages can be applied to a bootstrapped startup. Stage one is craft and that’s where you can only learn something by experience or preneurship. It’s where you’re a lone gunman. It’s basically the Wild West and you’re a pioneer of going out and doing something. And so if we apply this to a bootstrapped startup, this is where you are trying to find a problem to solve. There’s no rule book for this. There’s no guideline or no processes for how to do this. We do have frameworks and a vocabulary for speaking about it. A lot of that’s come from people like Steve Blank, Eric Ries, you know, the blog is fair who talks about these things. That’s where product market fit, problem solution fit and iteration and all these terms can help us talk about it. But really there is no predefined set of directions at this stage. And so this is where you’re trying to find a problem to solve, trying to find the market to solve it for and you’re trying to get to launch so that you can confirm that you are in fact solving a problem for that market. And if you aren’t, then you look back and you start again and you can actually iterate in this…this craft stage for quite some time until you, you know, until you figure out that you are solving a problem and can move on to stage two.

[14:51] Mike: So I think this is interesting. How do you know when you’re done with the craft stage?

[14:56] Rob: So the craft stage as I’m defining it is once you…you definitely have problem solution fit meaning you have found a problem that people have voiced and you are now solving that correctly. So, you have launched an MVP. People have tried it. You’ve definitely iterated on that and you’ve actually solved a real problem that they have.

[15:18] Mike: Oh cool, so what’s the second stage?

[15:20] Rob: The second stage is the rules and instruments stage. So, this is where…I’m putting a few goals in this stage. This is where you really are searching for that product market fit to confirm that you actually have it and then to just start scaling things up. But the goals for this stage are to try a lot of marketing approaches and figure out which one is working and which one is don’t. And it also helps you to define your positioning and how you’re going to talk about your product, how your customers, who eventually going to be trying to gather in groves, how they speak about your product. And you’re going to have to do a lot of things that don’t scale. So you’re going to have to do everything you can to spread the word even if you’re doing blog commenting and commenting on forums and things you would never do once you hit scale but right now, you’re just trying to find that group of people who really needs and wants your product and during this time as you’re moving forward, you’re looking hard at your funnel because that funnel, your conversion rates to trial, conversion rates to paid and you know, a little bit about your retention, that tells you when you’ve hit product market fit, right? That tells you when you’re going in the right direction and you’re starting to find a group of people who actually do need your app and are willing to pay for it.

[16:27] The last goal that I had that I’ve done many times and I really recommend people do before they get on stage two is to stop handling support e-mail and other admin tasks because at this point, you’re no longer that lone gunman, the intrepid flier you were in stage one and you need to get anything automatable in to the hands of another human being, right? It’s not time to start writing a code to automate everything yet but it is time to start giving yourself more time to build this business because you don’t have enough knowledge to start building some processes.

[16:58] Mike: And a lot of this relates to developing a product specifically versus building processes and stuff for your business because these five stages of bootstrapped startup, although it sounds like it maybe applicable to the company, you know, and the way that you’re defining it, it’s more applicable to building a product and building that product up and taking it through these five steps. And then if you want to repeat those steps, you can and you may apply some of these things to the business itself as you’re going through that process.

[17:25] Rob: Actually see as being for product development, for marketing and for support, all three of those pieces of your startup follow this process and typically at the same time. So, if you think about stage one which is craft, I’ll give you an example. When I first bought HitTail, I was building the product, did all the code. I was answering all the support e-mails and I was doing all the marketing.

[17:46] Mike: I think what I was thinking more along the lines of was accounting processes, how you’re handling legal agreements and things like that, business structure. Those types of things are not kind of covered in this because when you say five stages of a bootstrapped startup, and bootstrapped [0:18:00] startup implies the company not necessarily the product. That’s kind of what I’m getting at.

[18:06] Rob: Got it, yeah, that makes sense. I guess it depends on the type of startup you’re launching. If you have a SaaS app and you’re already have an accountant and a lawyer, I don’t think that your accounting and your legal stuff goes through five stages.

[18:16] Mike: Okay, cool.

[18:17] Rob: Can you…but can you think of a countered example where your accounting and legal and business like would go through these five stages?

[18:25] Mike: I think if you’re transitioning your business from a consulting business in to a product space business, you might go through this or if you have downloadable applications where you are selling them and then you transition in to like SaaS-based applications or you start transitioning in to the markets that are heavily financial or security-related where you need to start changing the terms of service and agreements and things like that you want to post on your website because those things, although they are related to the product, they definitely relay it back to the company as well. So, you have to make sure that all your bases were cover if you’re trying to gain revenue for those and you don’t want to be assuming additional liability for those types of things. So, I could see that those things that are business related would need to go through changes as you transition through different types of products.

[19:15] Rob: I see.

[19:16] Mike: So, I mean there’s…there’s all these things that I think are probably one offs for those types of situations that you probably wouldn’t necessarily have to go through nearly as many stages. I mean you sign an agreement with Apple to be able to distribute through their app store so there’s more to it than just signing an agreement. But my point is that there are much fewer stages that you have to go through for those types of things but they are required in order for you to be able to operate.

[19:38] Rob: Got it. So you’re right, five stages of a bootstrapped startup; marketing, product and support. That’s really what I’m talking about —

[19:45] Mike: Right.

[19:45] Rob: …because I’m not talking accounting and legal.

[19:47] Mike: Yup.

[19:47] Rob: Yeah. All right, so stage three is procedures and this is where you formalize how you use gadgets at least in terms of pilot and getting airplane. So, in 1935, the US Army Air Corp invented  a pre-flight checklist. So, they already have instruments but they sat down and they said, “There is an absolute checklist that you must do everytime there’s a process that saves a lot of lives.” And they just started making thing more procedural and in the startup, this is where I see you have all of your support stuff completely documented. You know, you have it handed off to one or more people. So, as the founder, you’re now not touching that anymore. You maybe tier two or tier three but you are done with the supporting everything anymore. You’re not the craftsman. Another thing that you should have is you should have like your deployment and your development process is in place. This is where you need to start standardizing and this is actually the part where a lot of like true blue founders who really love to run from one startup to the next start getting a little bored, right? This is where a lot of processes get put in place and you have to standardize because it just makes it easier as you start to work with more people but it can also constrain maybe creativity especially of early stage founders.

[20:53] And this is where in terms of marketing you start doubling down, tripling down on a marketing approaches that work and you really are getting to scale with this and in order to get to scale, you have to have processes and procedures in place and then you have to have marketing approaches that do in fact work during this time or also working on reducing churn and increasing your lifetime value since when as a bootstrapped startup, you start thinking about hiring someone to help you with marketing, hiring someone to help you with development and you really don’t have the bandwidth to do everything anymore. And this is not necessarily a stage that you have to go to. There are micro ISVs that micropreneurs who stay in that stage two and that’s not a bad thing but if you do want to grow past it, these are the types of things, the procedures you need to put in place in order to get…get to stage three and really start scaling it up.

[21:38] Mike: I think the thing to point it out here is that it really seems like in order for you to progress to stages three, four and five, you really need to have a product and a business that

is going to support the type of income to be able to bring those additional people on because obviously you can’t start formalizing these things and hiring people if you don’t have the revenue to justify it.

[21:57] Rob: Absolutely. Yeah, you either need revenue or you need funding. You know, we’re just talking about bootstrapped here because it’s what we’re more familiar with and I just think it’s more relevant to the audience. But if you have funding, they tend to jump around. They tend to jump straight to stage two and then they’ll often skip the procedures and put…do premature scaling so they’ll kind of part of stage three. And it’s a gamble, right? You can move faster when you do that but it’s also the reason that a lot more funded startups fail is because they try to move too quickly and they prematurely scale. Did you see that report? It was the Startup Genome Project and they said…I think it was the number one reason that startup failed was premature scaling.

[22:36] Mike: Yeah, I definitely remember seeing some of…some stuff from them but I don’t remember the specifics of it but I think you’re right. That was definitely high in the list.

[22:43] Rob: Yeah, the other was like founder disagreements-

[22:46] Mike: Yup.

[22:47] Rob:…was a big one and then premature scaling which means in essence you have too much money and you’re try…you just start hiring people and trying to market and spending money growing the business before you really know anyone wants your product. You know, you kind of leap through the stages too quickly.

[23:01] Mike: So one of the things that I think that’s interesting about stage three is that what you’re really trying to do is you’re really trying to make sure that you’re putting yourself in a position where the things that you’re doing are the most valuable to the business. And that includes making sure that the processes behind the business and behind the product itself are going to scale or that you will be able to scale them out by farming out some of that work to people base on a process that you have developed and your value that you’re providing at that point and in that stage is to build the processes and then hand it over to somebody else to execute.

[23:36] Rob: Exactly, everything in stage three is about leveraging you and about getting high leverage out of your time.

[23:43] Mike: I think that both Patrick McKenzie and I had touched on this at MicroConf in 2012.

[23:48] Rob: And if you’re a member of the Micropreneur Academy, you can see both those talks right now inside Micropreneur.com. All right, stage four is automation and this is in terms of aeronautics, this is where they invented the autopilot where it’s autonomous but it’s with human supervision. The goals for a startup in this phase are basically start writing code to handle things that are currently being handled by humans. So they go past it the human automation point and actually make it truly code automated and weren’t just supervised by people. So, this is where basically all of your working, marketing and support tasks, they are heavily documented and or as automated as possible. So, the step is just about continuing, pretty much continuing the work that you begun in stage three.

[24:32] Mike: I think without stage three, you’ll be very hard pressed to be able to make stage four work because if you don’t have those procedures formalize, it’s hard to automate things when you don’t really truly understand everything that’s going on and it really seems like you have to have been in stage three for long enough in such that the automation is made easier because you don’t have to deal with all these exceptions. So when you’re writing an automation code, one of the big risks I’ll say with writing an automation code is that if something changes or something is unexpected that happens, then your automation basically goes completely out the window and you’ll spend 10 to 20 times as long fixing it and make again things right as it was if you knew about that in advance and you were able to write in those exceptions in to your automation code. So, it really seems like you have to been in stage three for long enough such that you will have identified those exceptional cases and then you can program them in for the automation side and stage four.

[25:29] Rob: Exactly, and then that brings us to stage five which is computer integration and that’s where humans are removed from the functioning system that humans become technicians maintaining the machines. And so obviously aeronautics is not there yet. There are certainly a lot of manufacturing industries that have made it that far. And I kind of just threw some goals out here partially and jazz but the goals here are to, you know, if you want to or to hire a product manager or a CEO and then to either retire to Tahiti or to your next startup [0:26:00]. Alternatively, you can stick around and you can continue to improve and grow the business but if you reached stage five, you really have built like an awesome once and…potentially once in a lifetime bootstrap business because most startups will never make it to this stage. This is one that it is functioning at scale and you found a product that people love.

[26:22] I think with startups maybe like Squarespace and that’s a massive example but that was a bootstrapped startup that really has made it to a place where it is operating at scale. And you know, you can even think of maybe some smaller examples that may not all the way be in stage five but they definitely have processes in place and they’re growing. They have employees, places like WooThemes, Clicky, Grasshopper, startups that are really hit their stride and while they may continue to grow, as the CEO or owner, you could, you know, literally hire someone to…to kind of run it.

[26:53] Mike: This whole idea of removing humans from the system and the humans become technicians maintaining the machines really reminds me of the Despair poster called adaptation and it reads “The bad news is robots can do your job now. The good news is we’re hiring robot repair technicians. But the worse news is we’re working on robot-fixing robots and we did not anticipate any further good news.”

[27:16] Rob: [Laughter] Very nice. So, I’m at despair.com. It says, “At Despair, we offer the cure for hope.”

[27:20] Music

[27:24] Rob: Well that wraps up our look at…the five stages of a bootstrapped startup. And review, stage one is craft. Stage two is rules and instruments. Stage three is procedure. Stage four is automation and stage five is computer integration. And we have a listener question today.

[27:39] Mike: So, this one comes in from Ashkin and he says, “Hi, Rob and Mike. First of all, thanks a lot for the best podcast for startups. Your work is simply amazing. I have a few focus areas these days that I run concurrently; monitoring or consulting products, blogging about startups in my country, developing my own product to help with contractors and learning new stuff and new technologies. So, my question is how do you recommend splitting my time? Should I dedicate a single day to working on things or should I do some things each day and essentially multitask?”

[28:08] Rob: Well, I think the first thing. So he have four different tasks he’s working on. He says his monitor consulting projects. He’s blogging about startups. He’s developing his own product with the help of contractors and he’s learning new stuff. And I would start by taking a look at that list and figuring out what you can eliminate or automate more. Let’s look at the blogging. What is the purpose of the blogging? If that’s for fun and entertainment, that’s great but that should not be as high a priority as these other three items on the list. So, that’s the first thing I would look at is elimination. Learning new stuff and even new technologies, we all love doing that. However, are you at the point where you maybe need to stop learning temporarily and that doesn’t mean that you never learn a new technology or a new marketing approach but that is valuable time that you could actually be applying to things. So, if you took a 6-month hiatus on blogging and going out and specifically seeking new things to learn that didn’t directly apply to what you’re doing, then now you’re really down to two things. You’re basically building a product and you’re monitoring and consulting projects and that’s probably where I start.

[29:16] Mike: Well, he also mentions that he is not just monitoring the consulting projects but marketing for new ones and I totally agree with everything that you just said and that was my first thought as well. You’ve got four different things going on. Blogging, unless it’s directly related to your products, I would probably cannot outright because it’s not going to contribute financially to you because it sounds to me like the intent here is to transition from consulting in to products and if that is the intent, then blogging does not sound to me like it gets you there in any way, shape or form. Learning new stuff does not get you there unless it’s directly related to building your own product and you know, I agree with Rob. I would definitely get rid of both of those and then just focus on two things and the reality is you’re really focusing on one which is to develop your product so that you can get out of consulting.

[30:02] Rob: And then his second part of his question is should he divide up day to day or should he kind of stripe his calendar and do two hours of consulting, monitoring and then two hours of building his own product. I personally would divide up each day and that, you know, gives you…because basically monitoring, consulting projects and marketing for the next one, there’s probably work to be done on those everyday and there is probably work to be done developing your own products everyday. And so sure you could, you know, go one day and then flip back and forth but if something urgent comes up, it would in my opinion be nice to kind of…already have that on your calendar I guess.

[30:38] Mike: I think part of the problem with doing marketing efforts is that there is really no end to them. You can do them for an hour or you could do them for 300 hours straight and you will still not be done. It just does not matter. So, I think that for my stand point, it will probably make a lot more sense to block off amounts of time that you’re going to work on each and your focus shouldn’t necessarily be on the end goal. It should be focused on making sure that you have a process in place such that you continue executing that process. And if you look at setting yearly goals, if you’re trying to achieve some massive goal, the best thing to do is not think about achieving that goal. The best thing to do is think about putting the process in place that will put you in a position to achieve that goal at some point down the road. So, if you want to lose weight, don’t focus on losing 50 pounds, focus on going to the gym everyday because that’s the part that is going to get you to losing 50 pounds. And similarly with landing new clients and developing a new product, what will get you to having a finished product is dedicating an hour everyday of your time to building that product or two hours or three hours or whatever it is that you can actually set aside.

[31:49] One of the things that I’ve been trying this week is blocking out my calendar with the exact timeframes that I am going to be doing different things. So, yesterday I had my calendar set up such that from 7 o’clock to 8 o’clock I was going to be getting up and getting ready and then from 8 to 8:30, I was going to be traveling and then from 8:30 to 5:30, I was going to be at work for a consulting customer and then 5:30 to 6, I’d be headed back. And I literally blocked out my entire day and I was off by about 15 minutes for one piece of it and I stayed up a little bit later. I even blocked out time for me to read at night before I went to bed and then I blocked out time for me to go workout. And it really helped me to maintain focus on the things that I had to do because looking at my schedule, I knew exactly when I would have to stop something so I was hyper focused on making sure that I got as much under in that time window as I possibly could because I knew that I didn’t have any extra time to spare because my entire calendar was blocked out from 7 a.m. to 11 p.m.

[32:47] Rob: I think that’s a good point actually. If you look at the tasks that we’re kind of have left, assuming he…he is able to eliminate the ones we’ve mentioned, he really has to monitor consulting projects market for new ones and develop his own product. If…left unchecked monitoring and consulting projects will turn in to a fulltime job. So, if you need to time box to crap out of that one and if you can time box that to 30 minutes a day and basically have, you know, once a day meeting or if you can 30-minute…if you can time box it to 30 minutes three times a week or just as tiny tiny as it can be and still keep the projects going, that is a, you know, a great way to do it and then as you said, if you also time box the marketing and you keep those to just an hour or two per day, then you can spend, you know, a big chunk of the rest of your time actually doing what it…it sounds like your number one priority is which is developing your own products because you want to…you want to get out of the consulting hamster wheel.

[33:40] Mike: Thanks, Ashkin. I hope that answers your question.

[33:42] Music

[33:45] Rob: And if you have a question for us, you can call it in to our voicemail number at 888-801-9690 or e-mail it to us like Ashkin did at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. You can subscribe to this podcast in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.

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3 Responses to “Episode 114 | The 5 Stages of a Bootstrapped Startup”

  1. I love the topic of this show. Have you checked out Dr. Robert Maurer’s Book “The Kaizen” Way (he’s out of UC Davis I believe). The gist of it is brain hacks to get around the amygdala (‘lizard brain’s) natural function to stall of from making changes.

  2. I haven’t seen it; I’ll make a note to check it out.

  3. In relation to “stage 3” and this part:
    “[24:32] Mike: I think without stage three, you’ll be very hard pressed to be able to make stage four work because if you don’t have those procedures formalize, it’s hard to automate things when you don’t really truly understand everything that’s going on and it really seems like you have to have been in stage three for long enough in such that the automation is made easier because you don’t have to deal with all these exceptions. So when you’re writing an automation code, one of the big risks I’ll say with writing an automation code is that if something changes or something is unexpected that happens, then your automation basically goes completely out the window and you’ll spend 10 to 20 times as long fixing it and make again things right as it was if you knew about that in advance and you were able to write in those exceptions in to your automation code. So, it really seems like you have to been in stage three for long enough such that you will have identified those exceptional cases and then you can program them in for the automation side and stage four.”

    In my experience, in corporate environments linking stage 3 and stage 4 has proved very counter-productive.
    What I have seen (time and time again) is this:
    – Stage 3 – A business process/flow has been put in place to manage the creation, administration and flow of some data. This process is centred around people and their relationships in the org-chart.
    – Stage 4 – A consultancy (or in-house IT team) is called in to automate the same process. The requirements (due to the existing formalised procedures) end up creating automations that remind me of the Honda Cog advert! (http://www.youtube.com/watch?v=_ve4M4UsJQo)
    This happens precisely because everyone is so familiar with the existing manual procedures that no one is questioning why this has to be automated in the same way.
    For example, systems are broken into multiple parts with communication interfaces in order to mimic the stage-3 behaviour…
    Have you seen Wall-E? Have you noticed the typing robot – TYP-E? 😀 (http://pixar.wikia.com/TYP-E)
    This is exactly what you get when stage-3 drives stage-4. :-/

    I suggest that, Stage-4 should be the great opportunity to re-analyse your flows in order get the most you can from machines.

    Take care.