In episode 692, join Rob Walling for a solo adventure where he addresses a variety of topics. He stresses revisiting your onboarding to evaluate your product’s “minimum path to awesome” and warns of conducting “mirror research” instead of market research. Rob also tackles why being the cheapest option is not always the best positioning.
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Topics we cover:
- 1:33 – Walking customers through signup to first value, revisit your onboarding
- 4:29 – The early entrepreneur’s trap: “We are pre-revenue still…”
- 8:31 – Not being the cheapest option
- 14:31 – Mirror research vs. market research
- 17:16 – Learn the rules like a pro so you can break them like an artist
Links from the Show:
- Register for MicroConf US in Atlanta, April 2024
- The SaaS Playbook
- Episode 456 | Launching a 2nd Product + Revisiting Freemium with Ruben Gamez
- TinySeed Mentors
- Comic Lab
- Episode 685 | 7 Things You Should Never Do (A Rob Solo Adventure)
- Episode 687 | An 8th Thing You Should Never Do, Things That Don’t Scale, and More Rob Solo Topics
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!
Right now I’m just giving examples of perhaps anti-patterns of getting in your own head and staying in your own head and thinking that just because you prefer it, that your customers do as well and that your market does as well. And look, if you’re selling to other developers, maybe that’s true, but the moment that you step outside of that and you start selling to anyone who is not writing code 40 hours a week, you need to seriously rethink your approach and to think, not of how you buy, but how do they buy.
Welcome back to The Startups For the Rest of Us. Today is a Rob’s Solo Adventure where I’m going to talk about making sure that your product works. Talk about how little you’ve proven until someone gives you money, why not being the cheapest option can be good for your positioning. And maybe one or two more topics depending on how the time shakes out. Before we dive into that, tickets for MicroConf US in Atlanta next April 2024 are on sale.
This event will sell out. If you’re thinking about coming to Atlanta, April 21st through the 23rd to see me co-host this event with Lianna Patch and to see speakers like myself, Rand Fishkin, and several others, head to microconf.com/us to grab your ticket before they sell out. We had an amazing event just a few months ago in Denver, and I expect the event in Atlanta to be no different.
So microconf.com/us to grab your ticket today. So the first topic I want to cover today was actually sent to me by content producer, Ron. He helps make sure the podcast gets out on time and is really in charge of getting the YouTube videos all through our editing and production process and out every week, 52 YouTube videos a year, 52 episodes of Startups For the Rest of Us per year. In that role, producer Ron gets a lot of cold email outreach.
In this case, I actually got the cold email and it was AI for podcasters. And so that sounds intriguing, could this be something we could use that could help us get the podcast out faster? So I forwarded that to producer Ron. He signed up with a credit card. He tried the app, didn’t work. I think it crashed or 404’d or something that obviously just didn’t produce a result. So he left. He came back later that day or the next day, tried it again, still didn’t work.
So he says, “All right, my credit card’s on file.” So he goes to unsubscribe in the app, can’t do it. So he has to get on chat or email with the support person and he says, “I need to unsubscribe.” And the support person didn’t ask anything, didn’t ask why, didn’t ask if it worked, just said, “Okay.” And so think about the level of effort, the amount of time and money that was just wasted and the opportunity that was just wasted by not having their signup flow and their application working as it should be.
It’s you have one job and the job is to make sure someone gets through your flow and then that they just get that first very simple use case. This is not a complicated app. It’s not as if you’re logging into marketing automation where there’s 50 different features and one of them broke. It is basically a one, maybe a two feature app. It’s kind of just a feature wrapped in a web page. And the challenge is we are actually a really easy customer to sell to.
We pay money, we self-sign up. If it works and it’s great, we don’t need to talk to anybody. We self-onboard. We have budget. It’s crazy. So I think the big takeaway here for me is when was the last time you or someone on your team went through your own onboarding and actually tried what you think the first feature people should try is or that first step of the onboarding flow?
This is one of those things that can easily get lost and forgotten because you deploy it once and you polish it up and then a year later your app, your positioning, your entire funnel, even maybe even your ideal customer profile has changed. But we just forget to revisit those first few steps, those first few moments that are so critical for new customers.
So hopefully this can serve as a public service announcement for you to either assign it to someone on your team or to just step through your onboarding and try to travel your minimum path to awesome, that first spark where you think, “Man, this is a really cool piece of software.” And make sure that that is not only frictionless, but that it works. My second topic is from a cold pitch.
Someone cold emailed me saying they had a B2B SaaS app. The idea was interesting. I’ve never invested in an app where the founders have cold emailed me. It’s always through, it has traditionally been through MicroConfs, and of course now it’s through TinySeed. But I believe someone emailed me and I was trying to size them up to figure out are they a fit for TinySeed, either the accelerator or our investment syndicate. And they had a good story and they had a solid founding team.
I like the app idea. I think I went back and forth once or twice and I was like, “Great, what’s your revenue?” And this sentence, I’ve heard this in the past, I’ve heard it multiple times, which is why I’m bringing it up now. This sentence always kills me. Sentence was, “We are pre-revenue still as we have been focusing on early user acquisition with a free offering.”
And that makes me cringe. Because unless you’re a pretty experienced entrepreneur or free really well, don’t do this. This is the early entrepreneur’s trap. Yeah, that’s what it is. I talk about several big mistakes, common mistakes that founders make in the SaaS playbook, and one of them is translating your app to other languages to or early or it’s white labeling or adding other verticals too early, underpricing your product, right?
These common mistakes that folks make. Another one is thinking that free users offer any value. Now, if you’re a second, third, fourth time entrepreneur, if you really know free, if you have listened to Ruben Gamez, speak about it. If you’ve listened to me take Ruben Gamez’s four criteria for when free plans work and you’ve heard me say them on this podcast, then maybe you try it out.
But what I find is it’s an excuse for doing something hard, which is charging people. It’s an excuse for at a minimum telling people, “I’m going to charge you when you get value from this product.” The first several months of Drip, as I was hand onboarding new customers, first 10 or 20, I would say, “Look, I’m not even going to take a credit card from you. Get in. Let me help you get onboarded. Let me know how much help you need. When you start seeing value from it, let’s get a credit card on file. It’s going to be 49 bucks a month.”
And some people got onboarded in a week and some people got onboarded in six weeks. And in fact, it helped me understand how long I thought that our trial should be once we were automating this. But had I just told them, “Oh yeah, it’s just free. I’m just getting free users.” Unless there is a network effect where getting free users actually increases the value of your business, in almost every case, almost every case, I see of an early stage or a new entrepreneur trying this, it’s a mistake.
Because it’s noisy as it is when you have 10 or a hundred or 500 users of an application. There’s so much noise. You don’t know who to listen to, you don’t know what to build. You’re getting conflicting, distracting reports of, “Build this feature. Pivot this way. Have you thought of just replicating all of Mailchimp’s functionality inside your app and adding a mobile Android and iOS apps?” It’s too much already.
And if you’re doing it free, what you’re doing is not segmenting your customers to find out who really needs this. Who is this truly a pain point for? Because if it’s painful, someone should be willing to pay for that. And if they’re not, it’s probably time to move on. Right? On this podcast I talk about B2B SaaS that solves a problem, a pain point that people are willing to pay for, people in businesses are willing to pay for.
And so if you are not able to charge someone something and you’re getting free beta users, “Free beta users,” I’m doing air quotes for those of you listening to the audio, you have proven so very little until someone gives you money. Specifically with B2B SaaS, you’ve proven almost nothing until someone gives you their credit card.
I want to talk about my third topic of the day, and it’s around positioning about not being the cheapest option. So every once in a while on Instagram, I come across an ad that I really like, and I think several companies have copied this ad. I don’t know which one was the original, but I’ve seen it for pens, I’ve seen it for shoes. And the one I have in front of me is for socks. But I like the tone of it, the confidence of it. The headline is, this ad is for socks.
And the headline is, “They’re not cheap because they’re not cheap. It’s not cheap to make a sock that lasts four times longer than cotton. It’s not cheap to create a merino wool that won’t lose its shape. It’s not cheap to reduce waste by 80%. It’s not cheap, but it makes a big difference. Introducing Aerowool, four times the life of Cotton. Twice the performance, one fourth of the waste.” That was an ad read for Aerowool, but you get the idea, the confidence.
They’re not making excuses, they’re not trying to be Walmart. And this is how I’ve often felt about the businesses I built, specifically TinySeed. I was at a dinner with a friend, kind of in the broader MicroConf ecosystem within the last six months, and they are not a founder and they don’t raise money and they don’t know much about fundraising, but they said, “Yeah, someone told me that TinySeed money is expensive.” And I said, “Yeah, that’s true.”
We are not the cheapest money. By design, we are not the cheapest money. If you want cheap money, go to a doctor down the street, a dentist, maybe a local angel group, go try to raise on Sand Hill Road, go to one of kind of the copycat like the tier B, tier C funds, whether they’re indie funds or whether they are major venture funds. Those have cheap money because they have no differentiator. Right? They don’t have world-class mentors like TinySeed.
They don’t have the Hiten Shah, the Claire Suellentrop, the April Dunford, Asia Orangio, Chris Savage, Rand Fishkin, Jordan Gal, Steli Efti, DHH, Jason Fried. They don’t have that mentor list, right? It is a who’s who of B2B SaaS. You can go to tinyseed.com/people if you want to see the full mentor list. They don’t have myself and Einar Vollset giving you advice. They don’t have a year-long program. They don’t have the best B2B SaaS alumni network with 151 companies, 250, 275 founders.
And look, this piece here, I want to be super clear, not an ad for TinySeed, but what I’m telling you is the reason that we are able to not be the cheapest money is because of the value we provide. We’re not a commodity, right? When you’re a commodity, then it’s a race to the bottom and it’s who can get it here the fastest and the cheapest at a quality that’s good enough that it doesn’t break. And in thinking about your own positioning, I’m not saying everyone needs to be the premium play.
In fact, if you can find a hated competitor that has artificially kept prices up because of their brand or because of the space or because of their sales model, you can slip in underneath them and actually be less expensive and have an amazing product, there’s a real opportunity there. But for me, by the time I’m building a brand, by the time I’m at a million ARR, 2 million ARR, and people list me as one of the top two or three options in a space. I say, list me, they list my product, my company, as one of the top two or three options in a space.
That’s when I’m starting to think about pricing power. Because now people are coming to me, to my product by name. They’re not just looking for a generic replacement and looking for the cheapest option. So in this conversation, I actually posted this in the team TinySeed Slack. Because I said, “I like the thinking about this, and this is how I think of TinySeed. We’re not the cheapest money and there’s all these reasons.”
And Alex, who’s our program director in Europe for our EMEA program, he rewrote the ad just in our Slack and posted it. And I want to read that here because I like it. He said, “Our funding isn’t cheap because we’re not cheap. It’s not cheap to build a program that’s four times longer than the average accelerator. It’s not cheap to create a world-class group of industry-leading mentors. It’s not cheap to connect a network of hundreds of SaaS founders through events worldwide.
It’s not cheap, but when it comes to your business’s growth, it makes a big difference.” Thanks, Alex. I use that without permission. I’m sure he won’t mind. But I liked that thinking of if you are going to be the premium brand, don’t apologize for it. In fact, do the opposite. Point out that you are more expensive and why. Get ahead of the objections by saying, “We are not the cheapest option.”
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My next topic is on mirror research versus market research. This is a quote that I heard from the Comic Lab podcast. I’ve referenced them several times on the show, actually pulled, it’s one of those, it’s two comic artists. They’re comic creators, they’re entrepreneurs, and they do Kickstarters and Patreon and they have books and they have stuff online. And it’s neat to see the overlap between startup founders and comic, these two comic artists as well as the things that are different.
And that’s why I listen to the show. I love going into other disciplines that are tangentially related to see what I can learn. And so in a recent show, one of the hosts said, “Are you doing mirror research or market research?” Mirror research is when I look in the mirror and I say, “Well, this is what I would prefer. Therefore, that’s what everyone would prefer.” Market research is when you listen to prospects, customers and your broader market. Developers are famous for this. For saying, “Well, I would never pay for that because I could build it in a weekend.
I would never pay for that because I could cobble it together in no code, low code or some other form. I don’t like to talk to salespeople, so I’m not going to do sales.” No one likes talking to salespeople. “I’m not going to do demos because they don’t work. They’re annoying. I’m not going to have high prices or have prices that increase with the value someone gets because I don’t like that kind of pricing. I don’t like that with MailChimp that as I get more subscribers, I pay more money.
So I’m going to start a competitor where it’s just flat pricing for infinity subscribers.” And that last one is actually kind of what BeHive is doing right now and they’re having success with it. So I could talk about that as a case study on another episode. Right now, I’m just giving examples of perhaps anti-patterns of getting in your own head and staying in your own head and thinking that just because you prefer it, that your customers do as well and that your market does as well.
And look, if you’re selling to other developers, maybe that’s true, but the moment that you step outside of that and you start selling to anyone who is not writing code 40 hours a week, you need to seriously rethink your approach and to think, not of how you buy, but how do they buy. To think not how you approach a purchase process, onboarding and retention, but how do your customers and your market think about this.
And the way to get educated on that is to have conversations with them, to observe them as they use your application and to ask a lot of questions and figure out who’s succeeding and who is not, and what can we do differently to help more of them succeed rather than stand in front of a mirror and ask, “How would I like to buy and assume that my insurance agents,” if that’s who I’m serving, “Are going to in any way think anything like I do,” because they’re probably not.
So that was mirror research versus market research. My last topic of the day is about ventriloquism and how it doesn’t work in comics, but realistically, it pulls from the Pablo Picasso quote that says, “Learn the rules like a pro so you can break them like an artist.” And I have a couple examples of this actually. I think this really drives home with SaaS in the sense that if you want to do something creative, like have a free plan in a B2C two-sided marketplace, first learn the rules of the common pitfalls that people run into.
Right? So if you’re thinking about doing a free plan, maybe launch an app without a free plan and learn how that works first or maybe have a lot of conversations with folks who have actually made free plans work. Don’t just gut your way into it. Learn the rules of what makes them work and not before doing it.
I think of this with all the rules of thumb I have around should you ask for credit card upfront or not? Should you do demo only or should you offer demo plus start a trial as an option? What are the rules of thumb around B2B SaaS pricing? There’s a lot of them around enterprise pricing. There’s all these rules, and they’re not rules, they’re rules of thumb, they’re guidelines.
And now that I have them kind of locked in my head and all lodged as this whole framework, again, that I kind of bled onto the page, so to speak, for the SaaS playbook. That’s my most recent book, saasplaybook.com, if you haven’t read it. But now that I have them in my head, I kind of have a gut feel of when they should be broken because I know the rules, rules of thumb that is, because there are no rules.
Right? There’s no hundred percents, but there’s a lot of eighties and 90 percents. 80, 90 percent of the time you should do this unless you have a really good reason not to. So in SaaS, it’s pretty obvious to me that this idea of coming in not knowing any of the rules, you’re likely going to make some really basic missteps. The common mistakes, I referenced some of them earlier, but there are dozens of them. Things SaaS founders should never do. I talked about this, what? Five, 10 episodes ago.
Those are the rules of thumb that you should learn and then learn when to break them. And the example I referenced earlier is about ventriloquism not working in comics. I would never even think about ventriloquism in comics. But referencing Comic lab, again, they were talking about this rule between the two of them of how trying to have ventriloquism in a written art form, a visual written art form, like a comic. Imagine Garfield or Calvin and Hobbes and them trying to do ventriloquism.
You could pull it off, but you really need to know how to do it. It doesn’t really work in comics unless you are an expert, unless you’ve learned the rules so you can learn how to break them. And I loved that analogy of it because again, this is something I just would never think about because I’m not a visual artist, can’t draw to save my life, but I love that thought of, it’s just kind of a rule of thumb.
And they talk to a lot of beginners, right? That write into their show and they’re like, “Yeah, it just doesn’t work in comics.” Basically, don’t try it. And then the other example that I thought of as I was talking to someone about Rob Walling Drinking Game, the Beatles, and they were asking, why were the Beatles early songs so kind of generic and poppy? You go back to 62, 63, 64 and you have She Loves You and Please Please Me and I Want to Hold Your Hand.
I still enjoy these songs, but they aren’t very deep compared to Sgt. Pepper’s and A Day in The Life and Strawberry Fields Forever, even Yesterday, Let It Be, Hey Jude, these amazing songs that are timeless and some of the certainly, inarguably some of the best songs of all time. But you compare it to their early work and they do covers and they write just a lot of kind of catchy poppy four chord songs.
And I was trying to explain why that was. And I was like, “Hey, it was a sign of the times.” That’s how everyone else sounded. And then the Beatles, once they were number one, they just started innovating. And so they drove really the shape and the direction of music in the mid to late 60s. But realistically, I think a big piece of this is that Picasso quote, “They were learning the rules so they could learn how to break them.”
The early songs sounds so old because they had to conform to the norms of the day to get on the radio. Right? They had great songwriting at the time, but it was very much this template of this three minute song with a verse, a chorus, a verse, of chorus, a middle eight with a solo and then a verse, a chorus and an ending. And then they got popular. And once they got popular and their name was recognized and their name was a brand, then they could start getting creative.
If they’d been creative before getting on the radio and being really popular and selling a lot of albums, they probably would’ve never gotten popular. So then they could start setting the trends, right? No other songwriters, popular songwriters of the day were doing introspection about themselves, like the song In My Life. And Yesterday. They were doing deep topics, psychedelic topics like on Revolver or even Sgt. Pepper’s and Magical Mystery Tour.
And after that, pretty much whatever they did was considered ahead of its time and cutting-edge. And in fact, that stuff that they recorded on a lot of four tracks and a few eight tracks, which is mind-blowing, they recorded it 60 years ago, still holds up today. But the Beatles had to learn the rules first, and they had to conform to the standards of that day just to get on the radio before they could break so many of the norms of music and songwriting of the day.
Speaking of the day, I’m about to call it a day. I really appreciate you joining me for this episode and every episode of Startups For the Rest of Us. If you haven’t left a five-star review in your podcatcher of choice, that would help me a lot. And if you haven’t read the SaaS Playbook, you should head to saasplaybook.com or Amazon.com and pick it up. It’s only $10 on Kindle. I also sell it for $10 on PDF on my website. And if you have read it and you like it, it’d be amazing if you could leave me a review on Amazon. Thanks again for listening. This is Rob Walling signing off from episode 692.