In episode 679, join Rob Walling for another solo adventure where he answers listener questions. He discusses how “mock features” can be implemented to close deals with certain buying dynamics, how to recover from a failed launch, and the benefits of phased launches to minimize those. Rob also gives advice on creating organic content for a SaaS and suggests alternative marketing strategies to content creation. Finally, he covers what an engineer might encounter during an acquisition in a small startup and how to dive into consulting and contracting.
Topics we cover:
- 3:43 – Mock features for B2B SaaS
- 6:20 – Recovering from a failed launch
- 10:37 – Advice for a consumer-facing “vitamin” product
- 12:53 – Creating content to market SaaS tools
- 17:13 – Acquisitions for startups with small engineering teams
- 20:24 – Consulting for junior and mid-level engineers
Links from the Show:
- The SaaS Playbook
- MicroConf Connect Applications are Open!
- Episode 671 | Working on What Matters, Left-handed Threads, and Being Lucky (A Rob Solo Adventure)
- Ab Advany’s “Mock Features for B2B SaaS”
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
In a phased launch, you get them in, you realize, “Oh, pricing’s screwed up, don’t have the features.” And then you correct that. You launch to the next few 100 people. I’ve done it myself. I’ve seen other folks do these phased launches. And that is, I would say a much, much more optimal way to bring a product to market.
Welcome To this episode of Startups For the Rest of Us. I’m Rob Walling, and this is the podcast where we talk about building amazing, bootstrapped, and mostly bootstrapped companies to change our little corner of the world. We believe that you don’t need venture capitalists to start your company. We’re not anti venture capital, but we’re anti the narrative that the only way to start a tech company is to raise buckets of funding. This week I’m answering listener questions on topics ranging from building mock features. It’s a really interesting Twitter thread I want to talk about in this episode, how to recover from a failed launch, creating content for your SaaS tool that is outside of your expertise, and more.
Before we dive into that, I’m on a mission to get to 105 star ratings on Amazon for my new book, The SaaS Playbook, Build a Multimillion Dollar Startup Without Venture Capital. If you have bought the book and you enjoyed it and you think it deserves five stars, it would be amazing if you could go to amazon.com and whether it’s dot com or whether it’s your country’s extension of Amazon, a five star rating and maybe a comment, would really help me out.
I kind of chuckle because as I record this, The SaaS Playbook is the number one new release in the venture capital category of Amazon. I think because it has the word venture capital in the subtitle because the subtitle of the book is Build a Multimillion Dollar Startup Without Venture Capital. And the book has already been a number one new release and bestseller in several different categories ranging from entrepreneurship to, there was one really esoteric one that I don’t remember, but it was kind of a subcategory of another tech entrepreneurship thing, and today, it’s venture capital. So again, would really appreciate it if you could potentially give me a review there.
And one more thing – We’ve recently re-opened the doors for our online community, MicroConf Connect. MicroConf Connect is our virtual hallway track. It’s a vibrant community of SaaS founders helping each other and discussing wins, challenges, and frankly how to grow faster. A couple months ago we paused new sign-ups to improve the platform based on your requests. With MicroConf Connect 2.0 we’re rolling out three membership tiers packed with new perks like weekly co-working, exclusive discounts, a searchable content library, and more. Whether you’ve been a member of Connect or not, you really should check it out, Microconfconnect.com. And with that, let’s dive into listener questions.
My first one is not a question, but a comment from listener Tom who is commenting on episode 671 all about hard work, luck, and skill, where I talked a lot about how success is a combination of these three things, hard work, luck, and skill. Tom says, “Just a thank you for your podcast keeping me going, slapping me upside the head sometimes to keep focused and persevere.” And thanks for that note, Tom. I always love hearing from listeners even if they don’t have a question and they just want to thank the show for keeping them motivated.
Because that’s how I think about it too, I don’t think of it as Rob is keeping me motivated. It’s the show. Startups for the Rest of Us is its own entity, its own flywheel, that keeps going every week and it delivers value back to me in terms of motivation to keep shipping and I hope that it delivers value back to you in terms of strategies and tactics to implement to grow your startup faster in terms of motivation and inspiration. Whether it’s me talking about solo topics or me interviewing someone on the show, I try to bring a variety of topics and thoughts and concepts to the show to keep it feeling new and to help you get where you’re going faster. So thanks for that comment, Tom.
The next topic I want to cover is from Twitter from Ab Advany, and we will link up this thread in the show notes, but I was impacted by the genius of Ab’s approach and we were talking about it in the TinySeed Slack and several people commented about how they’re either doing this or would consider doing this, and I think it’s a really clever hack. The tweets go like this, “Mock features for B2B SaaS. It’s one of the techniques I’ve used in the last 10 years to sell $6 million worth of software licenses. When you were selling software above $1,000 a month, there is a weird dynamic happening that doesn’t occur with lower pricing.” And Ab continues, “We would build mock features that the buyer would demand before purchase, but were almost never used by the super user or end user of the product.”
Let me give you a very specific example, and this is me chiming in. I used to call these checklist features. So when we were growing Drip, people would say, “Do you have split testing because we need to split test everything?” And eventually we built split testing and 1% of our users used it, but everyone thought they wanted it. Aspirational features, or checklist features, is what Ab is talking about. Ab continues, “A buyer who wanted to buy the software for $10,000 a month on a two-year license, so if you do the math on that, that’s a quarter of a million dollars. This buyer requested that there be an ability to build a report generator with 20 different kinds of filters, and we said we can do that, but we only built it as a mock feature in the following way. We added a button deep inside the software that only specific customers could see. When clicking it, they could request a report with all the filters. After submitting, we showed it will take 48 to 72 hours to generate. You will receive an email when it’s finished.”
This is so great. “But guess how many times the feature was used in the two years the customer licensed our software? Zero, nada. We have built more than 50 of these mock features in the last 10 years. Some were requested and we would then manually execute them, but most were never used. These kinds of mock features only work if the buyer isn’t the same person as the end user or the super user. Most buyers don’t know their own users and come up with ridiculous demands during the sales process. Mock features are an easy way to increase your closing rate.”
So I really appreciated that thread. I think it’s a great idea, and again, it doesn’t work when you’re building software for $100 a month or when you’re selling to the end user. But if you are selling to some corporate procurement person, Ab is 100% correct. I’ve seen it myself. Ridiculous checklist requirements are very common, and I thought this idea of building mock features was too smart not to share on the show.
My first question question of the day is from Laszlo Kiss about how to recover from a failed launch.
Hi Rob, this is Laszlo. I previously asked you about better to further development game platform or get into the SaaS business. I followed your suggestion and my own feelings and began to concentrate on my SaaS project named Real Feedback. It’s an AI powered user feedback chatbot. However, I made some mistakes with the launch. It gained significant traction initially, but I launched too soon, so the product wasn’t very stable yet and the pricing plan weren’t properly figured out. Since then, I’ve improved the product and that fired my first users, but the initial hype has completely disappeared. Do you have any strategies for recovering from a failed launch like I had? I would really appreciate any advice on relaunching and regaining momentum after messing up the initial release. Please let me know if you have any suggestions.
As always, voicemails and video questions go to the top of the stack. Thanks for this question, Laszlo. It’s tough to have a failed launch like that. It’s not uncommon. Most of us don’t have product market fit. None of us really have product market fit before we launch, and that’s why the way around this is to start marketing the day you start coding such that you have a list of 500, 1,000, 10,000 people interested in your app such that you don’t have to do the public launch until your product is ready, until you have an idea that you do have some product market fit. And so if you’d had that launch list, you could have trickled out to 50 people or 300 people. In a phased launch, you get them in, you realize, “Oh, pricing’s screwed up, don’t have the features.” And then you correct that, you launch to the next few hundred people.
I’ve done it myself. I’ve seen other folks do these phased launches. And that is, I would say a much, much more optimal way to bring a product to market rather than try to do the big product hunt, Reddit Hacker News launch where this is what you run into, and now you find yourself in a more challenging situation. I’ll say it’s certainly salvageable. The way I would think about it is, I now have a better product and I now have my pricing dialed in more and I’m ready to take it to market.
And so, if there were other launch avenues that I could tap into, let’s say you didn’t do a product not launched, then now I would launch it. Alternatively, just market it like every other SaaS product. People think that a launch is so important and in fact, so many of the products that we see being successful had mediocre launches at best, or maybe they didn’t do some big launch. They really just started cold calling, cold emailing, they started content, SEO, integrations, partnerships, all the blocking and tackling that it takes to grow a SaaS app.
So can a launch get you a few customers, a few dozen customers, a few 100 customers? Maybe. But you don’t need that to build an incredible 6, 7, 8 figure SaaS company. So I wouldn’t take it too hard in terms of the launch failing. I would chalk it up as a learning experience. I hope that folks listening to this podcast will learn from it and I would get to work on marketing the product.
One last thought on this is with Drip, we did do a Drip 2.0 launch, because the 1.0 launch happened in, say, November of 2013, and we peaked at 8 or 9,000 MRR and then plateaued because to your point, our pricing wasn’t figured out, our features were not there, we didn’t have product market fit, and we spent the next nine months agonizingly moving towards product market fit, and eventually we had it in August of 2014. And I wanted to do essentially another launch to the world, and so I called it Drip 2.0 and I described our journey. I described how we built something people didn’t want early on, and then how we found product market fit and how we saw trial to paid accelerating and our churn plummeted and it was very obvious that we had it.
And so, I launched Drip 2.0 and I hit the product hunt and our original launch email list and, frankly, my personal email list. And all the places that you would do a launch, I hit them again and I said, “This is Drip 2.0. Here’s what I learned and here’s why this is interesting.” I’m really relaunching something that’s not totally different, but that now is a much, much better product, and something that you’re more likely to be interested in. So that’s another alternative, is you can do this like 2.0 launch or revamp launch where you say, “Oh, remember how we launched and that thing wasn’t that great? Well, it is great now because we learned a bunch and encourage people to give another try.”
My next question is from Zach asking for advice for a consumer vitamin product. “Hey Rob, I’ve fallen in love with a product to scratch my own itch. It’s absolutely a vitamin.” So you’ve heard me say aspirin and vitamins, aspirins solve a desperate pain point and vitamins are nice to haves. “It’s also consumer facing, not for businesses. It’s completely free for now. Maybe I can add display ads if enough people use it. I know there are a lot of red flags here. The early feedback is pretty positive, but some mixed feelings. Do you have any advice for navigating a consumer facing vitamin product? My itch has been scratched, but it’s hard to know how much energy to put into a product like this.”
This is kind of within my policy of not answering questions like this on the podcast. And I don’t mean to be glib about it, but I can’t help you, because consumer facing products are a completely different world. I have owned a couple of them and they are not in my wheelhouse and they’re not something I enjoy dealing with. The churn is way too high. If you’re not Netflix or Disney, they’re very, very, very difficult to grow. And no matter how much I say this, people continue to do it and that’s fine. But this show, my expertise, I just can’t help you.
And especially if it’s consumer vitamin. Are there some that are successful? Have I seen some get huge traction because of virality or because they figured out Instagram ads? Of course. In your shoes, I would not ask me. I would look for an expert on that topic. Is there a podcast, YouTube channel on someone who builds consumer vitamin products, because they’re going to know so much more about it than I will. And I have kind of this, it’s a little bit jokey stance on this podcast, but I’m kind of serious about it. I’m not going to answer questions about two-sided marketplaces about bootstrapping them unless you already have one side of the marketplace, because my answer is just don’t.
And same thing with a consumer vitamin product. I can’t give you advice, because my advice is don’t do it. It’s scratch your own itch. That’s great. Don’t put any more time into it and start a B2B SaaS. Do the stair-step approach. Do one of the other approaches that I’ve seen be so much more repeatable and work for so many more people rather than going down this path that I have seen fail for myself and hundreds if not thousands of other aspiring founders. So I do appreciate the question, Zach, and obviously I wish you the best of luck, and I’m guessing there is a chance that you can make this work, but unfortunately I’m not the person to weigh in on this because I just can’t help you like I can with B2B SaaS.
My next question is from Jordan Riddle.
Hey Rob, this is Jordan Riddle. I’m in Columbia, South Carolina. Just want to say thanks for everything. I’ve been following you for a while and it’s been really helpful. My question is about coming up with organic content for my SaaS tool. So I’ve created a tool that’s not really in the space where I have worked before. So I’m struggling with creating content because I don’t know a whole lot about this space, but I still feel like it’s a useful SaaS tool. So what I want to know is how you just juggle creating content and where the best bang for your buck is of coming up with organic stuff, if I should do it myself, if I should get a part-time job and then hire a writer to do it for me. Just looking for some insight on what’s the best way to go about that. Again, thanks for everything and I look forward to hearing from you.
Thanks for the question, Jordan. It’s a good one. I’m sure it’s something other people have run into. So first off, I want to say this is the challenge of starting a tool catering to folks that are outside your profession. Now, I know a lot of folks who do it and are successful. Some of the approaches they take is they don’t necessarily create content, they do cold outreach, they go to in-person events and trade shows, integrations and partnerships. It’s the 20 B2B SaaS marketing approaches I outline in the SaaS Playbook. And they execute on all of those. They don’t do the content and SEO plays because they aren’t an expert. So that’s one way to think about it.
Another is to hire a writer, as you said. You said get a part-time job so that you can hire a writer. So it depends on what your financial situation is, but certainly if you’re catering to accountants or salon owners, you can find an accountant or a salon owner with some spare time or someone with knowledge of these topics, whether it’s on Upwork or a writer’s marketplace, and you can find folks with expertise in these fields. Another option that I’ve seen is to bring a co-founder on for whether you have the developer entrepreneur, then you have the subject matter expert, and that subject matter expert has that expertise in accounting, bookkeeping, or in interior design. And that is a relatively common founder combination that I see in the MicroConf and TinySeed communities.
So I guess to summarize, you have a couple options. One is don’t create content, just do all the other marketing approaches or just pick one other frankly and execute on that to where you don’t need the expertise to create the content. The second one is, yes, hire a writer with subject matter expertise, not a generic writer who’s going to have to learn it like you would. And I would not encourage you to, say, use ChatGPT or other AI because I think without the expertise yourself, it’s going to write really bland content. Because the content I see around topics that I know and understand, I can see through it pretty quickly. I think the AI generated stuff, it just isn’t there yet. And so if you don’t have that last 20% to get it, again, it’s 80/20, Where AI can maybe get you 80% of the way there. But if you don’t have the last 20% yourself, I think it’s a tough road. And if you’re competing against other people who actually have the expertise and are trying to rank for these SEO terms or folks who are doing the content pop where they’re trying to get virality on the Hacker News, the Reddits and such, I just don’t think you’re going to do it with AI generated content at this point without human involvement.
I will say that one of the very first businesses that I built, in fact several of the businesses I built, I didn’t need content for. And we see a good chunk of TinySeed companies, which is a sample size that I have, or maybe it’s just all my investments. I think I have 151 B2B SaaS investments. There are a lot of them that don’t use content and they use the other marketing approaches. And so, I wouldn’t necessarily say that that is the one way to go. If you can make it work, it’s a great scalable, sustainable flywheel to build, and there’s a reason a lot of people go in on it, but it’s not a hard requirement to build a great company. So thanks for that question. I hope it was helpful.
My last two questions are a little different than the ones I often answer, but I was intrigued by them. This first one’s about being an employee of an early stage startup and the last one’s about consulting and contracting, which I think a lot of us think about, especially early stage founders who maybe are trying to quit the day job and get to working full-time on their startup. I think hearing more about these topics can be helpful.
So this first question is from Tyler and he asks, “I’m just joining a seed stage startup with a lot of traction. I’ll be basically the third full-time hire, and I have a sense that the business is looking for an acquisition during my tenure, which is likely if they’ve raised funding. It’s a small engineering team. It’s just me. I’m excited about what an acquisition means for my equity and also for my resume. And I’m also curious about what a typical acquisition looks like for a small team of a recently acquired SaaS. As anything in business or software goes, I’m sure the answer is it depends, but I’d appreciate it if you could lend insight on this situation. Say a small company gets acquired and has a solo engineer with equity, does that engineer usually get hired to the acquirer? Do they ever get contractually obligated to stick around for equity to vest, i.e. to help with a smooth transition, or is it usually a clean break? Are the single trigger/double trigger clauses the only mechanism at play here? Or do businesses have some other way to determine what is required of the team? Personally, I’m excited to experience any outcome. I’m just curious how you would conceptualize your future if you were me and assuming a desired acquisition actually happens, of course.”
So yeah, I think it’s an interesting question. Of course it depends, but realistically, in almost all of the acquisitions that I see, maybe it is truly all, but in 99 plus percent, the acquirer wants the team. The acquirer wants the team. It’s very unusual that they just are acquiring technology, and unless you’ve built some amazing novel tech, the team is one of the most valuable pieces of it. So the first question, does the engineer usually get hired to the acquirer? The answer is usually yes. Do they ever get contractually obligated to stick around for equity divest? So that’s going to depend on your equity agreement with your current employer.
When I have issued equity in the past, I have made it fully vest if we were acquired, because I wanted my people to own that equity or own those options or be able to purchase the options when the acquisition came through such that they were not compelled to stick around by agreements we had already made, but that the acquirer, if they wanted them to stick around, could make them an offer for additional stock options or additional incentives to stick around. So I have heard of founders being contractually obligated to stick around in order for equity to vest. It’s often called a key person clause where in order to get the full purchase price, you stick around for a year or two years or three years, but usually, not in all cases, usually what I’ve seen is that for employees or engineers, they are offered a new grant of stock options in the acquiring entity and then that starts vesting over usually four years. And so that really is the motivation to stick around.
It obviously depends on your specific agreement and how your options are vesting, and if they don’t have that acceleration clause and you have options that are in the middle of vesting, let’s say you’re two years into your four year, I suppose the acquirer could elect to have all of your stock vest instantly and then issue you new, or they could just say, “Well, we’ll roll that into the acquiring company.” Could that happen? Yeah. Have I seen it happen? Not a lot. I also think the size of the acquisition is going to dramatically impact this. If you’re part of a company, as you said, where you’re the only engineer, it’s going to be different than if there are 1,000 engineers. But thanks for that question, Tyler. I hope it was helpful.
Last question of the day comes from Jay Lee asking about consulting for software engineers.
Hey Rob, huge congrats in your new book, The SaaS Playbook and thanks always for your podcast. So my name is Jay, I’m from Southern California, and I had a quick question about consulting. So it’s not about SaaS, but you do mention consulting quite a lot, especially related to your early days. As someone who is a software engineer and my background is from big tech, I know pretty much nothing about consulting. I know it’s about helping people and giving advice, but what is consulting? Could you give us a one-on-one breakdown? How do you find your clients? Do you just start in your network? What’s the pay like? Can a junior engineer or a mid-level engineer also be a consultant? And generally things like that, because I would really like to know what my options are aside from just engineering. Thanks so much.
Thanks for the congrats on the book, Jay. So when I use the term consulting, really I did some consulting. I did a lot of contracting. And the way I think about it is if you’re a software developer, contracting is where you’re writing code for dollars per hour. And so originally I was writing code for $60 an hour, and then I started blogging and making a name for myself around 2005. Suddenly I had people coming directly to me. I could go get retail rates of $100 an hour, and then it was 125. And then I think by the time I stopped contracting, consulting, it was 120, 150 an hour.
Now, if you go to an agency these days and you’re going to contract for them and just write code dollars for hours, basically you could call it you’re a 1099 contractor, the rates are going to vary, but you’re going to get lower rates if you go through an agency versus finding clients yourself. And you’re also going to get a lower rate if you go onto a marketplace like an Upwork. But Upwork can be a great source for finding new clients. So I often use consulting and contracting interchangeably. They aren’t exactly the same. I think consulting is more about giving advice and not implementing, and contracting is usually about someone who is doing the work. It’s a software developer who is writing code. And I did a bit of both, but certainly what paid the bills was contracting.
And then Jay, you asked about how do you find your clients? Do you start with your network? Yes and yes. What’s the pay? It depends on where you live. It depends on the kind of work you’re doing. Honestly, you can charge $10 an hour if you live in the Philippines, and you might charge 150, $200 an hour if you live in Los Angeles. Can a junior engineer or a mid-level engineer be a consultant? Yes, they can. I think to start off with, you want to find people who need software development or web development or whatever your expertise is. They need help with that. And this might be big companies, it might be small companies, or it might be someone who’s looking on Upwork to have you do a little one-off project. One-off projects sound amazing and like you’re going to have a bunch of freedom, but realistically it’s so feast or famine.
I used to work project basis and I would make $15,000 in one month and then I’d make $0 in the next month, and that wasn’t a great feeling. And I would be stressed of when’s my next project coming along versus if you can find someone who can put you to work for 10, 20, 30 or full-time every week. Honestly, you’re less of a consultant contractor and you kind of become, you’re not an employee per se, but it becomes more of a consistent income for you. That’s what I think of as being self-employed, you’re not actually in control of your own schedule, but you’re not an employee. It’s kind of being in between. There’s employed, there is entrepreneur, and there’s being an investor. Those are the four links up the chain.
And being employed, we all know what that means. Self-employed is when you’re selling dollars for hours, whether you’re consulting, whether you’re a contractor. If you’re doing it individually and let’s say you’re running a full service organization where you have 30 developers working under you and you are now just doing sales and operating the company. That’s when you’re an entrepreneur, when you’re leveraging other people’s time to generate revenue. If you’re still leveraging your own time as a consultant or a contractor, that’s when you are self-employed. And obviously being a SaaS founder, that’s where I would say, “Oh, you’re an entrepreneur there because now you’re leveraging technology in order to make more money than you could make by charging dollars for hours.”
So the only reason I’m weighing in on this is because I did this myself and I moved from W2 employment to being a freelancer/contractor/consultant, which I’ll just say they’re different, but they’re kind of all the same thing for the purpose of this conversation. And that helped me transition to having products full-time because I was stair stepping on nights and weekends while I was doing this. And then I was able to dial back my contract work from five days to four days to three days as my product scaled. And it was a nice balance for me where I didn’t have a boss, per se, I did have a client or two, but it was a good in-between for me. And that doesn’t work for everyone. I hear some people say they just can’t manage it all and it’s too hard to work on your own products that aren’t really making much money when you can bill $150 every hour for 40 hours a week. It is hard to say no to that contract work, because the money is “easy” compared to building your software product or building up revenue for a SaaS product.
So there are trade-offs there. I’m guessing there have to be better podcasts or YouTube channels for this particular question. If you really want to get into, “Hey, how do I transition from full-time work to being a contract or consulting developer?” I don’t know any off the top of my head, because it’s just not an interest I have these days. But I would certainly look around whether you ask on Twitter, whether you head to Apple Podcasts or YouTube to look for folks, like What is the Startups for the Rest of Us equivalent show for folks who are in your situation and looking to get into that self-employed contractor freelance game. So thanks for the question, Jay. It was a good one. As I said, it’s a little different than I often answer on this show, but I felt like a lot of folks might be thinking about the same thing.
And with that, I’ll remind you that I am on a quest to get 105 star Amazon reviews for the SaaS Playbook and would really appreciate if you loved the book and you feel like it’s five star worthy, heading into Amazon and giving it that five stars. Thanks for joining me this week and every week. This is Rob Walling signing off from episode 679.