- ZipGrade – iOS, turns a teacher’s iPhone into a scantron grader
- Use Twitter Lead Gen Cards to Boost Your Drip Campaign
- David Hehenberger’s WP Plugin business, FatCatApps
- Our hot seat guest was Matt from Quote Manager Pro
[00:00]Rob: In this episode of startups for the rest of us, Mike and I have our first ever founder hot seat with Matt from Quote Manager. This is Startups for the Rest of Us, episode 189.
[00:16] Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products, whether you built you first product or your just thinking about it. I’m Rob.
[00:25] Mike: And I’m Mike,
[00:26] Rob: We are here to share our experiences to help you avoid the same mistakes we’ve made. So where we at this week sir?
[00:30] Mike: We have another bootstrap list in our success, his name is John from Zip Grade and he says, ‘I started listening to your podcast about two years ago while having a fulltime job in a commodities trading firm, each day I on my two plus hour roundtrip train commute, I started building an app that turns a teacher’s iPhone into a grading scanner. Last week I gave notice at my job so I can spend the summer focused on building the product and the company in time for the new school year in the fall. It’s a leap of faith, but with support from my family and friends, I think it’s a viable approach based on sales growth and research.’ And he goes on to say that he’s graded 1.6 million tests with his app and 15,000 installs and several thousand paying customers.
[01:05] Rob: Awesome, congratulations John. That’s really cool. We have another one. When I was in Scotland last week I met David Hamburger; he has a WordPress plug in business also a podcast listener. He quit consulting a while ago because of this WordPress plug in business, said he’s followed a lot of our advices about doing WordPress first, wants to do SaaS ultimately but he’s taken a bite out of it early and so he’s making enough revenue now. He’s kind of travelling the world, he’s in the tropical MBA crew, so he does a lot of perpetual travelling but I added him to our success stories page as well and he has a WordPress pricing grid plug in. You can check that out at fatcatapps.com.
[01:42] Mike: So in other news, Google hates me
[01:44] Rob: Why do they hate you?
[01:45] Mike: Well I have evidence in my Google Analytics account that they hate me. The panda update went out a couple of weeks ago and I apparently got hit by it.
[01:53] Rob: Yeah, Panda 4.0, yeah
[01:54] Mike: AuditShark seems to have been hit by it, but on the bright side, it seems like it’s coming back. About three or four days ago things went back to the way that they were and they’ve been there ever since there, since Friday
[02:06] Rob: You weren’t doing any funky SEO stuff there, were you? Did you build links or anything?
[02:10] Mike: No, I wasn’t. I think that what happened is that they pushed out an update and then it probably, you know, kind of like similar to some of their other ones where they push on an update and it goes a little bit too far and then they make some tweaks and then it pulls back a little bit and then puts some people from the red zone, back into the black zone.
[02:25] Rob: Right, Google hates me on any given month as well. So I wouldn’t feel too bad about it. I need a Postgres DBA. Do you know one?
[02:32] Mike: You know what; I don’t even know anybody using Postgres.
[02:36] Rob: Really, so they’re not easy to find. But if you’re listening to this and you are Postgres DBA, or I mean if you are a systems admin with heavy Postgres DBA experience, I need someone to help with. We are migrating an app from one system to Postgres and needs some optimization help with it and then get backup set up and then just monthly backup monitoring, so. I’m looking for someone freelance.
[02:55] Another thing I wanted to note is guest post went live today on Drip’s blog and its blog.getdrip.com, It’s a really interesting hack for building your mailing list for free using Twitter lead gen cards. I won’t go into the approach too much but it truly is a free way that if someone’s on Twitter, you can put this lead gen and pin it to the top of your feed and then if they click the Join Us, all they have to do is click the Join Us button and since Twitter already has their email address, it opts them in right away and you just paste certain amount of code in and this dude the guy who did it, put the submit URL for his Drip form right into Twitter and so it just posts it right to his Drip campaign and so just with one click, you can get people in there. And I’ve already seen a few tweets, someone said it was actually Derrick Bailey, he said that they received like a thousand opt ins in the last month. Really cool hack and it’s written up like in grave detail on the drip blog, I wanted to call attention to it.
[03:51] Mike: Very cool.
[03:52] Rob: Last thing I have, have you seen the TV show Halt and Catch Fire?
[03:57] Mike: I have not.
[03:58] Rob: Okay, so it’s a new show on AMC, it’s two episodes in and its basically, it’s very similar to Mad Men but instead of advertising execs, it is set in like 1981/82 right around the time that IBM PC is being developed and so its all about the people who are trying to reverse engineer the IBM PC. Basically make the first PC clone. So far it’s pretty good, it’s pretty well executed and they’ve invested in the writing and the acting for this show, so, very good show for our audience. Very good show for the nerd in me, the geek in me who likes to see a high quality show based on stuff that you are familiar with because they are showing all types of chips and they are talking about operating systems and using acronyms, VLSI and I’m like, ‘Hey I know what…I learnt about that in college,’ So I don’t know if it’s for everyone but I would recommend it
[04:43] Mike: Well the real question is, is it accurate? Because I’ve seen some of those shows where they try to act like they know what they are talking about and for 90% of the people on the planet, they wouldn’t know anything otherwise, but then they’ll get some of the acronyms wrong and you are just like, ‘Oh, dear God’..
[04:57] Rob: From what I’ve heard and what I’ve seen, they have a couple of consultants on the set at all times. There’s like an IBM thing at the very beginning and they got the exact same font and they wanted to replicate that in the display. So I think that they, as far as I can tell, they are holding pretty near and dear to that. They knew that it would be a bunch of computer people watching it, and they knew that we’d nitpick it. So I think they are being kind of cautious in that respect.
[05:22] Mike: So today we’re going to have a hot seat style interview with Matt from Quote Manager Pro and if you want to get in touch with Matt, his email address is Matt@quotemanagerpro.
[05:32] Rob: Yeah, I guess the other thing is that Matt mentioned after our interview that he is interested in finding a person or two for a Skype mastermind and so if you hear his story and it resonates with you, and you feel like you are working either slightly ahead or slightly behind him in a similar niche, like a related app idea, I would consider emailing him at the email Mike mentioned earlier because certainly getting together in a mastermind would be a good idea.
[05:58] Mike: So this week, what we’re going to do, we’re going to have sort of a hot seat style interview with Matt from Quote Manager Pro and what we’re going to do, this episode is going to be a little bit different than most of the episodes that we do and we’re going to have Matt talk to us about what his application is, how it works, what pain points it solves and what market he’s going after with this. And then we’re going to start asking him some questions, he’s going to ask us some questions about how he’s going to attack this market, and how he can take his product to market.
[06:24] Rob: Matt is prelaunch. He’s working on a product called Quote Manager Pro, it solves a pain point of his, and he emailed us out of the blue. Mike and I had been discussing it for a few months
[06:34] Mike: So Matt, I guess we’ll start off and how are you doing today?
[06:37] Matt: Doing well. I appreciate this opportunity to speak with you today. I’m really excited about it.
[06:41] Mike: Great, I think maybe you should give us a little bit of short description of the app and kind of what problems it’s solving.
[06:47] Matt: Sure, so Quote Manager Pro is targeted at the manufacturers around the world really. I’m focusing on the US, but really what it does is it allows for companies who are manufacturers that build assemblies, might be electrical assemblies, pneumatic assemblies, liquid fluid distribution assemblies, these types of assemblies when their quotes are put together for their customers, the process of going to get quotes for the line items, the components, the build to print items that go into that build is very manual. So it’s usually done through email. So it’s a process of emailing multiple suppliers for every line item.
[07:26] And then that estimator as it’s called in the industry, is waiting on that supplier to feedback information to them so that they can then make a decision about which supplier they want to award that business to and then they have to take that over and put it into a spreadsheet where they can add it all up, put it together, by multiple quantity breaks and then they have their total material costs. So Quote Manager Pro is going to effectively automate all of that. So the industry is a bit old school in its ways, so it’s going to be a bit of a challenge to educate the industry about this automation
[08:00] Mike: Based on that, what is the current status of this. I mean obviously as Rob said, you are pre-launch but is the application built, do you have any early access customers that you are working with, where are things right now?
[08:11] Matt: The application is in development. I’ve been working with a developer, and I outsourced the development to a company in India, that was mostly driven by cost. It’s about a month into development right now, and we’re targeting a release in, a beta release sometime in the August time frame. As far as who we’re marketing it to or who I’m speaking to or have been speaking to in the way of customers, I really really wanted to focus, before I even started any development, I wanted to focus on validating the idea with multiple customers. It solves my own pain because truth be told I have a day job to work, and I work for a manufacturer and I’ve had this pain. I’ve suffered with this pain for eight years, believe it or not, so it’s taken me this long to really realize that I should do something about it and I can do something about it. So, I went out and I contacted a lot of different companies in the industry, a lot it’s initially about eight or ten companies and just asked them, just by cold calling or people that I had in my network, I asked them, I educated them on the software and made sure that it was going to be something that would suit their needs like it did mine. So, it’s been validated and I’ve got a great response, there’s going to be some people that it doesn’t work for but I’m anticipating a large market that it will solve a problem.
[09:30] Rob: I’m curious, when you spoke to these eight companies, was it easy to explain. Are they all on the same page in terms of everybody using, I think u mentioned they used Excel to manage this right now. So when you called them up and you said, ‘Look the estimating process is this, I’m going to have software that’s going to automate that’. Was that enough or did it require an in-depth conversation where you really had to explain to them how you were going to automate this?
[09:56] Matt: It’s a pretty in-depth explanation, like I mentioned earlier, it’s kind of an old school mentality, so it’s a little difficult to pull people from that manual way of doing things with Excel and simple email to a SaaS solution. I dare not mention the phrase SaaS because nobody’s going to know what that means. It’s a good in depth conversation to have because they are experiencing the same pains. Like in a lot of cases, you don’t know you are experiencing a pain until somebody lets you know that there’s a different way of doing it. So those conversations have been successful.
[10:29] Rob: Okay, so if you spoke with eight or ten companies, how many of them told you, ‘Yes, this absolutely fills a pain point and solves something for us and we’d absolutely be at least willing to give it a look’.
[10:41] Matt: I’d say it’s at least 80%
[10:44] Rob: Okay, did you talk price, did you talk a specific price when you spoke with them
[10:48] Matt: Some of the customers I have, about four of them I had and they…something of this, it’s easy to demonstrate an ROI so, I did talk price with them and they said absolutely, that would be something that we would be interested in at that price point.
[11:04] Rob: Got it. And you have price plans from that. I see you have like a free plan, it’s pretty low usage, and then you have like 139 and maybe a 299 and up, right, so it’s enterprise-ish. Not true enterprise, but it’s kind of like it’s above the tiny little SaaS pricing which is warranted because this is obviously a high touch sales market. You’re not going to put up a learning page and gather emails and then run Facebook ads and automate split test your way out of this one. This is definitely a very time consuming sales process, long sales cycle and so the high price point based on what I’ve read about the product is definitely a requirement in order to just justify the time that either you or someone else is going to spend. Given that, how did you come up with the pricing?
[11:46] Matt: I can easily, like I’ve said, do some ROI numbers and say, if it saves a person…if it increases their efficiency by 10%, meaning it saves them 10% of their time, then I can easily calculate that on a monthly basis and therefore I have a value that I can put on it. There was a little bit of guessing, I’m kind of walking around in the dark here a little bit because I’ve never done this before. So I’m trying to use as much as an analytical well thought out model as possible. So I tried to use a mathematical formula like I mentioned to come up with something, but I also wanted to have a price that is low barrier to entry. There’s companies out there that have…I talked to a company a few weeks ago that’s got fifteen estimators, so that would be fifteen seats. In my plan that would be an enterprise level sale, but there’s others that are just mom and pop type of operations where they have one. So I didn’t want it to be a barrier entry to them either, because I think, like I said, it’s going to provide a lot of value to them as well.
[12:45] Rob: Sure, now I know we’re going to dive into marketing stuff. In terms of your pricing, it’s always in the dark. Every time we come up with pricing, you really- no matter how many times you do it, you’re kind of just taking your best guess to start with and then as you get feedback, you’ll be able to- as you get feedback and as you become more of a name, right? You’ll become a brand name at some point. If you launch and everyone going to start using Quote Manager Pro, then you can raise prices. So I think you’re fine for now. I would consider, and looking at prices, you have five plans. I would consider getting rid of the free plan just because I’m not a fan of free plans, and especially in this enterprise market. You can easily offer a long trial, right? because you can say 30 day trial or you can say 60 day trial or you can even get people in there and continuing to extend their trial as you work with them through the sales cycle. But I don’t know if many higher priced apps like this do a free plan, per se. It’s kind of off the books. It’s like call us, and they’ll give you a free plan while you’re adopting it, but once you start using it in production, you’re paying a hefty price for it.
[13:50] Mike: Yeah, I was going to mention that as well. I would kill that free plan. And part of the reason why I would kill that, I think Rob made some good points about being able to extend somebody’s trials for as long as you need. But the fact of the matter is that, because this is such a manual sales process, you’ve got to do a lot of hand holding for these people because most of them- you said yourself already, just in talking to people, there is a hefty amount of explanation that needs to go into it upfront. you don’t want them to say, ‘Oh, well this is great, but what I’m going to do is I’m going to use your product and because I can use the free plan and I don’t need to have files and stuff uploaded, I can just have them email me those files and then manually enter data or whatever’, they can kind of get around those things anyways. So I think that maybe you just want to kill that free plan to kind of by pass that issue. But also just kind of simplify your pricing because you’ve got five plans down there and I look at it and it’s just like, wow, you’ve got free, and then you’ve got pro and enterprise and enterprise obviously is going to be much north of a thousand dollars a month but then you’ve got zero on the other end, and it just- it looks awkward. It puts a weight on what the value of the product actually is.
[15:03] Matt: Yeah, that’s an excellent point, I hadn’t thought of it that way. The whole reason, my whole thought process of having- adding that free level there is to really hook people in at a low level. I am going to offer a trial, I was thinking fourteen days there and that’s just an arbitrary number; I’d love to hear your thoughts on that, I think you mentioned a longer trial period might be beneficial but again the zero dollars per month was going to be, as you see there’s a limited amount of disk space and a limited amount of bandwidth, so two things. One, it would hook people in to get people to use it, even if they think that they don’t need it. And then number two, once they reach those limits, they would QuoteManager Pro would probably be integrated into their processes and then they would want to- they would go to that first paid level.
[15:49] Mike: The thing is, though, I’ve seen like my uncle does stuff in the manufacturing industry. And I’ve seen some of the files and stuff that he deals with and you can have one file that will literally chew through 20 Megs and like three, four, five those and you could chew through your entire bandwidth very very quickly. So that free plan at that point kind of goes out the window. It’s not useful for those types of things, whether they are CAD drawings, some of those things can be just massive. You want to be very careful about some of those limits as well. I’ve seen people get scared off just by those limits, because they are like, ‘Oh, I’ve got these files that are huge, so I’m not going to sign up for this plan because it only gives me 10 gigs of disk space and I know that I’m going to need 40 or 50 and there’s nothing that kind of talks them through saying that that’s not going to be an issue because you can buy extra disk space or anything like that. And that’s not on here but that’s something to kind of think about or keep in the back of your mind. It depends on what specific niches that you are going after and what types of files they have, what size those files are. So I almost might back off of those limits until you kind of get enough customers in there to kind of figure out what the averages are. Because it seems like what you are trying to do is put the cart before the horse where you want to say, ‘I want somebody to move from 139 dollar plan to the 399 plan if they go over 100 gigs of space but reality is you might have these customers coming in and they might be chewing up either significantly less or significantly more.
[17:13] Rob: You are selling the not truly non-technical users they are not going to know what 100 gigs really is. Or what that means. I think that you’re pricing looks more complicated that it needs to be. It looks more technical than it needs to be to a non-techie. We all know what gigs are and I totally get it. But the storage is fairly cheap especially if you are using something like S3 or a server with a bigger hard drive. So I would agree with Mike at this point, I would probably remove the limits until you get ten customers in there using and paying it. then you’re going to be able to see the curve and you’re going to be like, ‘Wow, these guys are using a tremendous amount’ And even then, I don’t know that I would put limits as much as I’d just raise prices across the board. Unless you feel like they really understand what these limits mean, if you were to have these phone conversations with the eight people that you’ve already talked to and say, ‘Hey, you can have 100 gigs a file’, if they were to say, ‘Oh, I know exactly what that means’, then you’re safe doing it, but my guess is that’s not the case given the folks you’re dealing with.
[18:11] Matt: That is great feedback. Not to belabor this point, but the point of that was to number one to have a tipping point so that they would get over a hundred gigabytes and then they would have to go to the next level. Number two it’s a limit, just kind of as a safety precaution before we roll out in case they start using a huge amount. Then they would have to- because I don’t want the cost to be prohibitive. If its unlimited, and somebody’s using it- just blowing it way out of proportion, a terabyte, then I don’t want it to be eating away at the profit and cost more than it…
[18:45] Rob: That makes sense. I think initially, I think I would handle it- your first ten customers, you are going to personally be handling them the whole way to get them on and get them using it and I think during your discussions this is something that can be handled with nuance, because you can say exactly what you just told us. Right? Like you can say, ‘Look, there’s no hard limit’ or you can say, ‘Hey, the limit on all the plans is 500 gigs. Just kind of make up a number that you feel comfortable with. They are not going to know what that means upfront, and then you’ll be able to see pretty quickly as they start using it, ‘Oh, these guys aren’t using anything’. The limits may be irrelevant. Everybody may use less than ten gigs. Or if you get in there and it really is an issue, then the pricing needs to adjust to that, but I feel like you don’t know yet and getting your first five or ten customers in is not going to be- even if you are underpriced, it’s probably not going to take you under if you have maybe some kind of limit that you communicated to them at some point.
[19:38] Matt: Okay, great
[19:40] Rob: I’m back and forth on this. But I would consider not doing tiers to start with and just doing a per user pricing, to keep it really simple. And seeing how that goes. If you look at…
[19:51] Matt: Just a quick question if I can interject, Is there any industry data that talks about- that measures the effectiveness of projects, SaaS projects like this that have done on a per user basis or on a limits basis?
[20:06] Rob: No, I haven’t seen it. And the idea is that the per user, if it really is a per user thing, like that the more user who use it within a company the more value they get out of it and everything else doesn’t really cost you money, then per user is simpler and per user is better for your customer. It’s just because then they can come and they don’t have to get auto upgraded to a tier where, like right now you have a one user and then the next year is three users and the next year is five users, so when they go up to that second tier, it’s not ideal for the customer. You’re making more money, but they are not getting the value out of it, because they may only have two users at that point. So that’s kind of the push and pull. I don’t know any data about this or any studies anyone has done with it, that’s just how I think about it as I’m going into it. So early on before I have a brand name, before everybody loves my product and before it’s something that’s easier to sell, I would lean towards making it simpler especially for the initial customers. And thinking about not doing tiered pricing and making 99 dollars or 149 per user and then put a flat limit on usage and then allow them to buy extra disk space if they need it, it’s probably how I’d do it
[21:13] Mike: Yeah, I think if you talked to Patrick McKenzie, some of the consulting that he’s done in the past, he’s basically shown outright that if you- generally speaking, if you go more towards a tiered pricing model, you’ll make more money. In the early stages I don’t think you should necessarily be concerned about making as much money as you possibly can and optimize for profit; you need to optimize for figuring out what your marketing plan is and getting people on boarded and figuring out all the hurdles and the objections that they have and the way to do that is to remove as many possible things as you can so that they are not asking questions about stuff that’s totally irrelevant. So for example, when Rob and I were talking about the bandwidth and disk space, you remove those things and those questions don’t even enter their minds, just like, ‘what does 300 gigs mean? How much stuff am I going to have that I can upload?’ If don’t even show it, they are not even going to think about it.
[22:01] Matt: Right, got it.
[22:03] Mike: So we’ve talked a little bit about the application and what it does. I think the next place we want to go is to start talking about what sorts of marketing have you done so far. It sounds like you’ve talked to some early prospects; gotten some feedback from them about the fact that they do have these issues and they are willing to pay for it. What sorts of marketing plans have you put together and road maps have you laid out as to where you think you’re going to be going next with the product and how are you going to reach out to people?
[22:30] Matt: This has been an area where I’ve struggled in the past. I like to think that it’s coming together a little bit better with this project but I’ll just let you know where I’m at. So I’ve kind of segmented the marketing approach into stages. And one is prelaunch, and then post launch and then onboarding and then retention. Really the marketing for reasons that we’ve already talked about, the most effective marketing that I’m seeing is calling. Is talking to people. I’ve done some emailing using my ISP, but then I’ve recently started to use a CRM package to do some emailing and that’s not been effective. [23:08] There have been a few people that have responded but generally people either don’t open the email or maybe 20-25% open it and I get very very few responses. So, it’s been a challenge. I think a lot of the marketing plan that I have, I’m finding that it really is intertwined with the tools that you use. And that’s CRM tools and also marketing automation tool. So this is an area that I’m having to quickly learn about and how to utilize the tools that are out there, they are relatively new tools to me since my last start up which was iPhone apps in 2009, I think. So since then, a lot has changed and I want to utilize those as much as possible.
[23:50] Rob: Yeah, I think before we dive into marketing or as we go into it, I guess the question in my mind is, have you solved a problem yet? I feel like we’re still- you know that you have a problem and you know that you are building a solution for it. How can you validate with those, you said you called eight to ten people, 80% of them said they were interested, so let’s just say they are seven people. Seven people that said yes, they are interested in this. What’s the quickest way or easiest way to talk to each of those seven now and figure out if what you are building is going to solve their problem? Because we don’t know that yet. Is there a way to get them screenshots of what you are planning to build or what you have built, have they already walked through that? Or is that all done?
[24:35] Matt: So yeah, I get what you’re asking now. So no, the answer very quickly is no, its not- the development is not at a level to where screenshots are ready. I do have some wire frames that I just made out in PowerPoint and they are really kind of awful to be honest with you. I’m not much of an artist but they get the point across to a developer. I’m hesitant to send those wire frames out to potential customers because I just don’t want it to look bad. I don’t want them to get the first impression that it’s going to look horrible like this and then that’s it for them. So I’m actually waiting to the point where those screen shots are available and that will probably be, I’m hoping six weeks or so, six or eight weeks and then I can use that as a tool in my marketing efforts. As of right now, I’m just smiling and dialing as they say, when I can I’m calling people and I’m really introducing myself as a software entrepreneur and getting feedback and letting them know with words here are the features. That’s all I have right now.
[25:33] Mike: You said you work in this industry, the manufacturing industry, correct?
[25:38] Matt: Correct.
[25:39] Mike: So you have seen, not competing products, but other types of software products that they generally use, right?
[25:46] Matt: Not really. As I mentioned earlier, it’s very manual. Its email and Excel and some people have given me feedback or sent me screen shots of their own systems of doing it and I’ve validated that they are doing the same thing that we do.
[25:58] Mike: Okay, I guess what I wanted to concentrate on was not sending them screen shots and things that you have so far because I’ve done some work in the manufacturing area and I’ve seen some of the stuff that they use and some of it is just God awful ugly. And that’s being nice.
[26:15] I don’t know as I’d be too scared about that, sending what things you have, because what they’re ultimately end up seeing is going to be better. And I know you said you did these in PowerPoint, I might recommend using something like Balsamiq Mockups to build the UI and present those to them, because then it’s very clearly a mock up and it doesn’t give them the impression that it’s done. And that’s one of the key advantages of using something like Balsamiq. And it’s only I think 80 dollars or something like that for a license. But you need to just build these screenshots and send them over to them and say, these are the thing that you would use. And you don’t have to build everything, you can just build the pieces that you think are going to be most interesting to them and show them generally how it’s going to work.
[26:56] Because they are going to want to know, ‘what is the process for using this product going to be like, how is it going to integrate into my system and how is it going to integrate into the process that I currently use. As manufacturing, they are probably not going to want to change the way that they do things and you need to know that upfront. you need to know what processes they are currently going through, you know generally what they do, but there’s probably a lot of nuances that you’re not necessarily aware of between the different companies, You’re going to need to account for those. And my concern would be you spend the next couple of months building this thing and it matches for you but they may do things in a slightly different order or just different enough that it makes it difficult for them to sign on because now they have to change their process. And as you said, they are old school, they don’t want to change but that’s going to make it difficult for them to say, ‘Hey, let’s drop what we’re doing and sign on to this.’ Because they don’t want to change what they’re doing now. They want to make it as seamless as possible.
[27:53] Matt: Right, okay. That’s great feedback. The bigger problem is how do I manage my time? How do I accomplish things with a limited amount of time? Because I’ve got a day job, so, I’d love to hear if you have comments there.
[28:05] Rob: I think you have three risks that I see. The three biggest risks are have you really solved the problem. And you don’t know that for sure yet. I know that you know you’ve solved your own problem, but it’s going to be another month or two until you know if you’re able to solve every one’s problem, the seven people you have on the list. So that’s something I think you want to answer and eliminate as quickly as possible. The next thing is, just the adoption rate of non techies, non-technical folks don’t jump from app to app, it’s going to be an enterprise sales process and it’s going to take months and months of working with each client to get them to sign on.
[28:42] Now, the good side of that is if your pricing is structured accordingly, it’s not going to matter, because you’re revenue is going to grow. Even if you want to sign up one new customer a month, if they are paying 300 bucks a month, that’s actually, a decent growth rate for a really early SaaS app in a market like this. In a non-hockey stick market. That’s your second risk. And I think you’re probably well aware of that, that you’re not going to be able to put up a landing page and get people to sign up directly from it. I would take some hints from companies like Hub Spot or like MoreAware software. I don’t know if you’ve been to MoreAware software but Ted and Harry are friends of ours, longtime MicroConf antendees, and they sell software to countertop installers. And it’s a similar audience, it’s more of the construction of the industrial area, People do not buy from the website. Ted and Harry don’t do SEO as far as I know.
[29:32] If you go to their pricing page, there are some pricing grids, but then its call to buy. Because the almost always, not almost, they always have to walk people through it and tell them what it does. There is like a pdf order form but the reason they don’t have the try online or anything like that and the reason that I’m not wild about you having a free plan or even having a defined free trial, is that you’re going to be dealing with each person one on one and so you’re going to be able to decide what they need and give them that individually. That’s much more of what this is going to look like, so, I think that’s the second risk, is just figuring out how to optimize this sales process and I think taking hints from Hub Spot and MoreAware where you’re trying to get people to do a webinar, do a phone call, do a demo, that’s what’s going to sell this. Not them reading a sales page and clicking a free trial, because they are not going to take the initiative to do this because what they have works now, it works well enough and it’s a pretty big commitment for them to get into new software and then try to sell their company on it, their boss on it and all that stuff.
[30:34] So I really do think it’s going to take time with you or someone that you hire truly sitting down and doing a sales gig. Those are the two big risks. The third one is exactly what you just said, your time on a weekly basis. You have a full time gig and so you’re going to be trying to tackle this market that is going to require a lot of time for each sale and you’re going to be trying to tackle it on nights and weekends, presumably. And I think there are a number of ways around it. So, I’ll throw one out. I read through your emails because you talked about this at length and it was helpful for me to think about it today. I think you have two options. One is that if you have money, if you have some money saved up, that you need to hire someone to do this. Someone how is experienced enough at sales and who is hungry and who is willing to learn about your product and really take this thing forward.
[31:26] I think this is a risky approach. I don’t know anyone who has made this work, who has not been- typically the best sales person is the CEO, it’s the founder, it’s the first person, because they know it, so no one’s going to sell it as good as you. And especially in these early days, it’s going to be really really hard. So even if, let’s say you found a top- a really good software sales person, and don’t get me wrong, software sales people they make a lot of money. There’s a lot of money in software, so you’re going to be paying top dollar. You’re not going to find someone on Odesk for fifteen bucks an hour to do what you need. You may be able to piece some of it out into just doing a demo of it; you can farm that out to an assistant or to someone but you’re not going to sell software in these early days unless it’s someone who’s really hungry for it. I just don’t think it’s optimal at this point.
[32:10] I think the next best solution is for you to either have the time to do it, to make the time to do it or for you to find a cofounder. I’m a single founder and I’m not often telling folks to find cofounders but someone without equity in this venture, it’s going to be hard in these early days unless you think you can scrap it through. Because here’s the thing, if you scrap it through and you do this early customer development on your own, get those first ten customers in, at that point, you may have a sales process that’s down and that you know well enough. And the product may be mature enough and by then let’s say you have ten customers, and average monthly is 300 bucks and now you have three grand a month to play with in addition to whatever extra from your salary, you have a little bit more. So if you can scrap it out just for the next x months, let’s say takes you six months or nine months to get the first ten paying customers in there, I do think you’re in a better position at that point. You’ve also reduced risk, so then the equity you have to give away is lower. That’s kind of my initial thoughts
[33:06] Mike: One that I found helpful is targeting customers who are not in your time zone. If you have a full time job that you’re working eight to five or nine to five or something like that, then presumably everyone else is kind of working on a similar schedule and what you can do is once it gets to the end of the day, you can go up to your car, go on your way home or if you live close to the office, you get home quickly and you can start making calls into customers who are in different time zones. So I’m on Eastern Time and if you go to Google and you just search for manufacturing in California or manufacturing in Oregon, or manufacturing in Washington State, search down there’s probably a handful of links that you’ll find one from Wikipedia that lists a bunch of manufacturing companies that are based in each of those states.
[33:51] Now on Wikipedia, there’s literally a category that’s called manufacturing companies based in x and it’ll show you whichever state. Go through those lists and start targeting those people. Because what that’ll do is that’ll give you a couple of extra hours where you’re at the end of the day, you’re off hours for your company and there still working because it’s still three o’clock there or four o’clock there and you can make those calls which is still very regular business hours for them, but it’s not for you. And they’re not going to care one way or the other. So that gives you a good starting point to be able to get in front of those people and talk to them in a way that fits everyone schedule
[34:27] Matt: Yeah, I agree, great feedback and that’s actually something that I’ve had success with. I do- I have been doing that where I get to the house at 5:15 or so and then start calling and it’s 3:15 on the West Coast, so that has been successful for me and some of these customers where I’m generating interest with have been on the West Coast. What about hiring- I’m kind of concerned about your comments that you can’t find anybody on Odesk for fifteen bucks or whatever. I’ve dealt with people oversees the whole time I’ve been doing startups which is probably ten years or so, but there’s only been two startups but anyway, I think it’s more prevalent now and available to us now as a group of entrepreneurs but are you really sold on the fact that there can’t be somebody in say the Philippines that would be able to do a decent job for appointment setting or something.
[35:17] Because, if I’ve got a huge list of potential clients, I need to weed through those and categorize them out, the ones that are interested or the ones that have zero chance
[35:26] Rob: Got it, yes, I definitely think you can find someone to do that. Just to do the initial call and just train them to answer some very basic questions and do a pitch, yes, I do think you could find someone. I have not personally done it. I know some folks who have hired people to do that – assistants and such, I do think that’s probably a viable way, is to figure out what can you strip away. There’s the core sales gig and you kind of need to handle that right now, but what else can you strip away. And there’s actually a service, there’s a couple of services that have cold emailed me and maybe when we’re off the call I can look for that because I have them in a marketing doc somewhere, but they’ve cold emailed me and they said they are like an appointment setting service.
[36:04] Matt: I try to be as realistic as possible with my situation and realism is that I’m busy all day long, so I’m trying to find resources and ways that I can work around that. So I’m actually already using a person in the Philippines to do some web research and find companies. That list that I’m calling off of, she’s doing a great job with that and that’s very inexpensive to do. But the next level I think is that verbal communication with a potential customer, so yeah, I would appreciate any type of service or something that you might recommend or if anybody could recommend a service that I could use, or they have used that would be fantastic.
[36:42] Rob: Sure, feel free to post that in the comments for this episode. It’s episode 189.
[36:48] Matt: One thing that I hear a lot in podcasts is sort of the theoretical things about how to set up marketing programs and the different stages of marketing and the ARRR model and the get keep and whatever, I can’t even remember anymore, but I don’t hear a lot about the tools that are used- that companies use successfully to make that happen. I’ve heard marketing automation is something that I’ve just in the past few days started to do some research on and there’s things like InfusionSoft and there some other ones that can be fairly expensive, so I want to try to avoid that expense as much as possible. What recommendations do you have for integrated CRM and marketing automation tool to get the word out but also to help manage the existing customers and the potential customers?
[37:39] Rob: I’ve got to be honest; I think you’re getting ahead of yourself by thinking about marketing automation. Split testing, all of the marketing stuff that comes with scaling, you are months and months away from that.
[37:51] Matt: I don’t disagree, I like to be- take a systems approach towards a project as much as I can so I like to set up early for that, so I don’t have to come back later and set up. And now since the project is in development I figured that that’s one area that I can try to set up or at least have an idea of which direction I might want to go. But I don’t disagree with you on that.
[38:13] Mike: I think the issue though is that by spending the time on that now, you’ve already said flat out that you’re strapped for time. If you’re going to spend time going after that aspect of it, what are you not getting done that you could have spent that time on? Because six months, nine months down the road, once you get in a better position, your needs may very well change and chances are really good that they will change which means that all the time that you spend now is completely wasted.
[38:38] Rob: yeah, and I can throw out some simple recommendations that will help you in the present day because even if you only have ten people you’re talking to, having a very simple CRM just to weave people through the funnel I think could be helpful. And there’s something called Pipe drive, pipedrive.com that I would take a look at. It’s probably stripped down just enough that it’ll work really well for your solution. Certainly something like Sales Force is going to be way overkill, its way expensive and it’s complicated. But you’re doing a sales job now for probably the next six months, rather than a marketing job. I think building an email list, you could sign up for MailChimp and throw a form there, you could sign up for Drip, and put a drip email capture form, probably worth doing, might take an hour or two. I’m building marketing automation into Drip right now; we’ve just launched some of it, so that could be a less expensive. Because InfusionSoft is about 200 bucks a month, Drip is like 50 bucks a month and we’re going to raise prices soon, but all of that really just feels too early. I don’t feel like you know yet if you’ve built something that people want. And the premature optimization and the losing of even a few hours a week is not something I would recommend at this point I think.
[39:48] Matt: Okay, so maybe focus more on continued validation and then just potential sales.
[39:54] Rob: Sales, yes. Because marketing and sales are obviously two different things and you’re talking about marketing automation, which is down the line. You need to just start that marketing- that funnel optimization and all that stuff once you’re starting to scale. And who knows when that’ll happen. You’ll know when it happens but you may never get there. A lot of apps never get to that point where they can actually retain someone, retain enough customers to make it worthwhile. I think sales and investing into sales and investing into lead gen, you’re already on that track. You know where you need to go with this. Everything you said indicates you know that you have to do high touch sales and you know you’re going to have to spend a lot of time to do it, the more leads you have in your funnel, that would be great. So if you can figure out a way to easily do that I think the way that you found that works is the cold calling for now.
[40:38] Obviously in bound marketing is going to be something but is very time consuming to do that. And are your people going to be online? Are they doing any types researches? Is it worth doing SEO for some of these terms? You don’t know yet. It could be worth some research, but I don’t think it’s going to be a high volume of leads, but if you’ve done some keyword research at all and seen if there are any searches for your software, you would have to know what that term is. It’s kind of estimate software but it’s very specific for manufacturers. I think there’s perhaps some value in there but I would hate for you to go down the rabbit trail of writing a bunch of articles and setting up a blog and then not getting any traffic and cold calling would have yielded you several thousand dollars a month in revenue by that point.
[41:22] Mike: So Matt, I think that about wraps us up. Do you have any final questions for us?
[41:26] Matt: I have millions of questions but we don’t have that much time, so what you’ve offered has been fantastic information and getting your perspective is very helpful for me so thank you very much. That’s about it I can think of right now.
[41:40] Mike: Well thanks for being our guinea pig
[41:43] Rob: I appreciate you coming on the show Matt
[41:44] Matt: Glad to be here. I hope it’s useful to some people out there
[41:48] Mike: If you have a question you can call it into our voicemail number at 1-888-801-9690 or email it to us at email@example.com. Our theme music is an excerpt from We’re Out of Control by MoOt, used under creative comments. You can subscribe to us in iTunes, by searching for startups or by RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening and we’ll see you next time.
Great show. I think Matt should consider an annual pricing model. At his current price point a monthly plan is kind of a nuisance for larger customers, whereas an annual plan is one PO and easier to get all the needed approvals within that organization.
Thanks for the suggestion Nick. I hadn’t given this much thought but you are right in that some companies don’t have a system of processing credit cards monthly. I have given some thought to this possibility but have not explicitly noted it on the website that yearly plans are available.
I will add that to the pricing section.
Great show, very inspiring and informative. Please do more of these.
Agree with both Rob and Mike – expand your screen mockups and keep talking to as many prospects as possible.
The more you do this the more edge cases you will find and be tempted to modify your existing specs being built.
If you can find 2 to 5 prospects who sound really keen to trial the product when available – then concentrate on solving their problem. If you can make them happy – find more customers like them and start solving slightly different problems to attract slight different customers.
I think you will find this is exactly how Drip is evolving.
Good luck – I hope Mike and Rob do some some short updates in the coming months when you get to launch – first customers etc.
Hi Ray. Great comments and thanks so much for sharing.
Your suggestion about finding 2-5 users to test/trial/beta is exactly what I am going to do. The great thing is, I’ve already got them locked in and they are willing.
That number is reasonable for me from a time perspective so that’s the number I fell on as well.
I will keep Rob and Mike updated by email in case that want to give updates.
Rob & Mike –
FANTASTIC SHOW. We need MORE of these shows where you place a founder on the “hot seat.” You should have founders at different stages: (1) customer discovery phase like Matt;
(2) founder with 1-10 customers whose trying to still figure what features to build and testing his product;
(3) founder with 50-100 customers who has a validated product and is trying to figure out who to scale, market, etc.
(4) founder who has quit his daytime job and is dependent on his SaaS and what issues he is facing with scaling, customer support, hiring, outsourcing, etc.
These interviews showing founders’ struggles teach us so much. Please, please, please, have more of these interviews!!
Hi Rob & Mike
Thought this was a great idea for the show, please do more of these – really educational.
Mike, I thought your comment about using the timezones to your advantage was great.
Duncan from Vetter
“One that I found helpful is targeting customers who are not in your time zone”
…I’ve only just realized that my timezone (GMT+8) has been essential to me being able to have a full time day job and do Salesy stuff like Demos. It does require me to be up early/in bed late, but its worked out really well.
Great point Mike!
Really enjoyed this Hot Seat format. I hope you guys plan on doing lots more like this. Hearing the tips in context was refreshing and more memorable than, “5 ways to this…” or “3 reasons to that.”
Great show. Thanks.