- Macbook Air
- Light Point Security
- RSA Conference
- Launch Festival
- Pirate Metrics
- Why Free plans don’t work
[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.
[00:18] 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 15th?
[03:35] Mike: Yup.
[03:35] Rob: And I was like, “Oh, mine’s April 15th 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 15th and then do the personal stuff by April 15th.
[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.
[06:15] 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.
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