In this episode of Startups For The Rest Of Us, Rob and Mike talk live at MicroConf Europe about the four unfair advantages to faster SaaS growth. They also expand the topic to things that seem like unfair advantages but aren’t and how to improve your chances of getting an unfair advantage. At the end of the talk they do a short Q&A with some audience members.
Items mentioned in this episode:
- Slides from Presentation
- Woo Themes
- Crazy Egg
Rob [00:00]: In this episode of ‘Startups for the Rest of Us,’ Mike and I are going to discuss the four –
Mike [00:04]: Stop. You didn’t say it was episode 300.
Rob [00:06]: Then I say this is episode –
Mike [00:10]: All right.
Rob [00:10]: This is going to be good.
Mike [00:11]: We do stop like this on occasion.
Rob [00:13]: Oh, I love it.
Mike [00:13]: I’m not kidding.
Rob [00:14]: In this episode of ‘Startups for the Rest of Us,’ Mike and I discuss the four unfair advantages for faster SaaS growth. This is ‘Startups for the Rest of Us’ episode 300.
Welcome to ‘Startups for the Rest of Us,’ the podcast that helps developers, designers and entrepreneurs be awesome at building, launching and growing software products. Whether you’ve built your first product, or you’re just thinking about it. I’m Rob.
Mike [00:44]: And I’m Mike.
Rob [00:47]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, sir?
Mike [00:51]: Well, we are live with an episode. We’ve never done a live episode before. And we’re recording at the 10th MicroConf in Europe, in sunny Barcelona.
Rob [01:00]: Indeed. And we have some audience participation going on. We’re going to have a Q and A at the end. But I have to admit it feels very different to record here in front of 110 people, instead of sitting home alone in my office with the mic muted.
Mike [01:12]: Yes, very different. Not necessarily intimidating, but it’s just all eyes are one you, and you’re like all of our general screw-ups are going to visible to everyone.
Rob [01:21]: Right. So we do have an interesting announcement. A little top secret preview, both for the audience here and the folks that are going to hear it next week. MicroConf in Vegas this year is going to be two conferences back to back. So we’re doing MicroConf as usual – MicroConf that we’ve done for the past several years – April 10th and 11th at the Tropicana. And then we’re doing something called MicroConf Starter Edition. And that’s going to be on the 12th and the 13th. And there will be more info to come on that later. But if you’re interested in potentially coming to Vegas for either of those two day conferences that we’ll be running back to back – and they’ll have an evening reception that overlaps – come to MicroConf.com and enter your email.
Mike [02:02]: Awesome. So, anything else new this week?
Rob [02:05]: Hanging out in Barcelona.
Mike [02:05]: Awesome.
Rob [02:06]: Pretty cool.
Mike [02:06]: What are we talking about this week?
Rob [02:08]: We’re talking about the four unfair advantages for faster SaaS growth. And this is specifically the self-funded edition. This is based on a MicroConf talk I did in Las Vegas just about four or five months ago. We actually have some slides the folks here in the audience will see, and maybe we’ll publish these in the show notes or something, if Josh contacts us.
Mike [02:24]: Yes, that would be cool.
Rob [02:25]: That would be nice. The whole premise of this is that as I was putting together this talk, I was trying to think of – I’ve had a lot of software products over the years, and some that are not software products, and DRIP, of all of them, grew way faster than the others. I had a SaaS app called HitTail before this, Wedding Toolbox, DotNetInvoice, CMSthemer, Beach Towels. I wrote a book, ‘Conference.’ Just other stuff. And I started thinking, “Why is it that DRIP got such traction so quickly?” Once we had product market fit there was a lot of growth. How did this happen? What was the anomaly?
And so, I started thinking through the differences of how I had changed, how my skills had changed, and I was trying to attribute it to just, well, I got smarter, I had a little more money, I had a little more skills. Then I took a look at some other fast growing SaaS apps. I looked at things like Baremetrics, Balsamiq, Bidsketch, Woo Themes, Clarity, Basecamp – some of these aren’t SaaS apps, per se. Woo Themes is a subscription WordPress theme service – WP Engine and others. And was trying to pick out what was the advantage that these had over other apps that maybe launched around the same time, even in similar spaces or overlapping spaces, but didn’t have kind of this meteoric growth. A lot of these apps were growing 10, 20, 30% a month in the early months, and once they stopped reporting – because eventually most people do stop telling all the numbers once the table stakes get high. I’m trying to figure out what it was.
So I looked at these. I looked at a whole other list. This is from, I think, our Founder Café homepage, just looked through apps and did research. I talked to some founders. So, this is mostly anecdotal, but it’s based on my experience, my conversations with hundreds of SaaS founders and even other software product types. So, I dug in and I picked out four things I know are unfair advantages. And I think one of them is a requirement for fast, early growth. I couldn’t find an app that was growing quickly that didn’t have at least one of these things in place. When I say “quickly” I don’t mean it was growing three, four, five percent a month. I’m talking the ones that – remember when Baremetrics came out and Josh was publishing his early revenue? And we were like, “What in the world? This is really fast.” It’s that kind of growth. And it may not sustain forever, but at least in the early days how he got there. I’m sorry. We’re going to also talk about things that seem like unfair advantages but aren’t. And then we’re going to talk about how to improve your chances of getting an unfair advantage.
Mike [04:45]: Why don’t we talk a little bit about what an unfair advantage is. An unfair advantage is really a competitive advantage that you have over other people, and whether that’s other people or other businesses. And there’s a bunch of different ways to define this. Probably one of the better ones comes from Jason Cohen. He says that the only real competitive advantage is that which cannot be copied and cannot be bought. This encompasses a bunch of different things. And I think the really important piece here is that there’s a differentiation between those two sides of it. It cannot be copied and it cannot be bought. So, cannot be copied. There’s a lot of different reasons why something might not be able to be copied. You may have some insight or knowledge, for example, on a very specific type of business. Or you may have a background that relates to how a particular process is done, or a new roadmap for how version 2.0 or 3.0 of something is coming out, and you’re involved in the creation of that. Those are the types of things where you have that insider knowledge that nobody else has, and they could learn it but it’s going to take them a long time. The second side of that is it cannot be bought. If you get funding, you still are not going to be able to replicate that. Those two factors in place, I think Jason has got it brilliantly on at that point. The combination of those two factors, that’s what makes it a competitive advantage.
Rob [06:04]: So let’s dive into the first one. Unfair advantage number one is if you are early. So, it’s to be early. This is probably the most common as I looked through. As I ran through Baremetrics and – what was it? Woo Themes? – they were an early one. I think I actually talk about them in a second. I shouldn’t start naming the companies. But being early is a very common way. If you’re early into a niche, it’s a way to get fast early growth, because there’s just no other options for you at the time. The issue with being early is that it’s temporary, because typically – unless you’re in a very small niche – there’s going to be fast followers. So, if you’re the first one to launch into, let’s say Woo Themes as they created their first subscription premium themes, there were dozens of them by the next year. It doesn’t necessarily go away, because you can still keep that brand recognition, but you are going to bring competition. Especially if you talk a lot about your success, which we’ve seen some people do, and bring competitors into the space.
Mike [07:01]: And it seems like there’s places where just being involved in a particular space, or on a particular platform, just by virtue of being there you can almost make yourself early anyway. In some cases you just completely luck out. You happen to be in the right place at the right time, and there’s not necessarily an element of skill or your relationships involved. But if you are – let’s say that you’re working with Woo Themes and you already know the people – you know the founders personally – and they come to you and they say, “We’re building a platform, and we want to be able to build a mechanism for people to build plug-ins on our platform.” By virtue of having those relationships you are able to leverage yourself into being early there. There is a large element of luck involved. You can’t necessarily depend on being early all the time, or even most of the time. It’s something that is just going to happen, and you don’t really have a lot of control over it.
Rob [07:51]: Being early is basically feasible in very small markets, because at this point those tend to be the markets that are underserved in this day and age. In 2016, there are SaaS apps in all the major markets. So it’s going to be feasible in small markets, or in emerging markets. What I mean by that is markets that don’t really exist yet. So again, you think of Woo Themes premium – WordPress was around, but it was really kind of an emerging market when Woo Themes came out. And Stripe had been around a little while, but how many SaaS apps had built on it when Josh launched Baremetrics. Stripe Analytics was an emerging market when he hit that. The other thing is being early requires swift execution. So if you get out early and you build something and you get to market, if you’re still working your fulltime job and you only have five, ten hours a week to work on it, and you do get any type of pickup, you’re going to get trucked. You’re going to get caught and you’re going to get overtaken quickly. So, once you get out ahead, you really don’t want to lose this be early advantage. We look at our two criteria. What do you think, Mike? Can being early be copied or bought?
Mike [08:49]: Not easily. If you are able to quickly execute on something that you see it coming out, and you have the money to be able to do it, then yes. But by virtue of the type of company that would have that type of money, they don’t move quickly. You have that advantage of being small, being able to out-maneuver them and implement something fast that they’re not going to be able to get there in front of you. Now they may get there a little after you, and that poses a bit of a different challenge just because they come in after you and they do have more money than you, they do have more resources, but, hopefully, you can leverage yourself into a position of “dominance.” And if you are early, it’s probably in a small market anyway. And chances are good they won’t come after you.
Rob [09:24]: Very good. Some examples of folks who were early. I’ve already mentioned Baremetrics. It’s SaaS analytics for Stripe, Joshua’s first to market as far as I know. Balsamiq. So Peldi’s startup was a really early mockup tool, basically. If not the first one that I had heard about that was kind of made for the modern age, and wasn’t the old kind of Visio style. Bidsketch, a friend of MicroConf, Rubin Gamez, was really the first proposal software made for the web, and he got early traction with that. Woo Themes, as I said. And then Basecamp. They were the first web-based project management tool that I remember. I’m not sure if they were the number one, but they certainly were the first early entrant.
So as we’re going to walk through these four unfair advantages, I kind of want, instead of everyone just listening, I want you to think to yourself, “Where do I stand on a scale of one to ten?” But I was trying to think what does that mean? What does one to ten mean? And so, I think maybe one to Basecamp. Or one to Baremetrics. Where do you think your app, or the app idea that you have, stands on this rating scale? And this may not be super relevant to you. We have three other advantages, and maybe they’ll be more relevant. But if you are thinking of launching something, it’s good to know. If you think about DRIP, it was probably a one or a two. It wasn’t early. We have hundreds of competitors so that wasn’t necessarily our unfair advantage. So it’s okay if you don’t have some of these.
Mike [10:38]: I think there’s some challenge in trying to figure out where you are in that spectrum, because you look at something like Basecamp now and they have 30 or 60 employees or something like that. And they have millions of dollars that are coming in, and hundreds of thousands, or millions, of subscribers. And knowing whether or not your market – or the thing that you’re going after – and whether or not it’s going to ever get to that point, it makes it difficult to try and relate yourself to where they are. One to Basecamp, I think there may be a better way to put that. I’m not sure.
Rob [11:05]: There probably is. Maybe when we do this next time you can write the outline. No, I was only kidding – BOOM! I only do that when it’s live. I don’t –
Mike [11:13]: I’ll write your talk next time.
Rob [11:13]: All right. Unfair advantage number two is who you know. This is your network. These are the people, not just who you know, but who would be willing to endorse you, who would be willing to promote you to their audience, who would be willing to advise you, or make intros. It’s deeper than just, “Oh yeah, I know that guy who sat next to me at MicroConf.” It’s like, is this person willing; do they know you, like and trust you enough that they’re willing to put a little bit of their reputation on the line in front of their audience, or in front of someone else who has an audience that they’ll make an intro to?
Mike [11:47]: Yeah. You’re basically asking them to spend their social capital on your behalf. So you have to have at least some level of trust, or knowledge, there. And it’s not really just about the type of product that you have, or how good it is, because if you’re just launching a product it’s probably not very good, and you have to have that relationship with them that they know that you’re going to be able to come through, or you’re willing to do what it takes and put forth the effort. As opposed to, “Hey, I’d like an introduction to [Beth Flynn?].” Or somebody else like that. And there’s a lot of social capital there, and if that product tanks, or that relationship goes south for whatever reason, then it’s really their reputation on the line. It’s not yours. So that makes it challenging.
Rob [12:25]: Another caveat, or note about this, is that who you know, you kind of need to know people that your competitors can’t access as well, because there’s potentially a loss of value there. I think if someone was an affiliate for you and a competitor, it could work, but it certainly has a lot less value if your networks overlap heavily. It would be really nice if your network was very different, and the two circles didn’t overlap much. So what do you think, Mike, who you know? Copied, bought?
Mike [12:51]: Definitely not. Well, it depends on your friends, and who you know, and whether they can be bought or not [laughter]. I think that there’s definitely difficulty in copying, or buying, either one of those things. With certain types of markets you can kind of buy your way into relationships. For example, a reseller market, you can spend money taking people out to dinner and convincing them to promote your products, especially if you have the type of margins that are there in order to, essentially, compensate them for that time, or that’s their business. It could very well be that they’re getting paid to promote products and they don’t necessarily care. But I think that, in general, you probably don’t want those types of people to help you promote your product anyway.
Rob [13:27]: And some examples of businesses that were grown based on the person’s network, based on who they knew, AppSumo is one. Most people don’t remember but Noah Kagan was pretty much an unknown in our circles in 2012, 2011, whenever AppSumo launched. And, in fact –
Mike [13:45]: He spoke at the first MicroConf.
Rob [13:47]: That’s right.
Mike [13:47]: He was not known until after MicroConf. We can make that claim.
Rob [13:50]: Yes, I guess so.
Mike [13:51]: I don’t think so.
Rob [13:51]: The two aren’t correlated, but they happen to line up. So, when he launched AppSumo it was a “deal a day” site, where he would get these big bundles of software and he’d discount them, and the first deal they every did 20 or 25% of the deal sales went to Micropreneur Academy members. Somebody posted it in our forums, and it was just the perfect lineup because we all consumed software and stuff, and it was kind of a founder bundle, or startup bundle. And he just picked up the phone and started calling me. And I’m like, “Who is this guy?” A) I don’t like talking on the phone and b) who are you. I get a lot of phone calls. And we talked and I had no idea. And he’s like, “I was employee number seven at Facebook.” And I’m like, “This is crazy.” But he built a lot of that business based on relationships. And he either built them – like he did when he picked up the phone and called me – because later on we did a deal together. He put HitTail on AppSumo. He was able to build these bundles because of his extensive network of people. Then he was able to get affiliates and just do all types of crazy stuff. And it was based on his network.
Clarity.FM from Dan Martell. Dan Martell is also a MicroConf speaker. That dude just knows everyone, and if he doesn’t know you, he will soon. He just utilized that network really well. Clarity.FM is advice for founders and entrepreneurs. It’s actually a network of successful founders who you can call on the phone and just book like ten minutes of their time for X dollars, and it was a marketplace, right? Few of us in this room, if any, could start a marketplace like that, because you need so many high-end founders. And he just picked up the phone, wrote emails, and was able to populate this business. And he later sold it. He sold it a couple of years ago to Startups.co.
WP Engine is another one. Jason Cohen talked early on about how his network didn’t allow him to grow WP Engine, but it allowed him to hire really good people because of his blog, and it allowed him to raise funding like that because he was well known. So those two things contributed heavily towards his growth. And then a shout-out to [Carthoop?]. It’s an honorable mention, because he’s still working on it and growing it. But Jordan, as I view it, he knows a lot of people, especially in his space. So he’s in the e-commerce space. He just has a way of — I see it, and I remember Dan Martell meeting everybody, and suddenly Dan Martell knows way more people than I do in my own circle. And Jordan’s the kind of guy who’s doing that. So these are some good examples.
Mike [15:59]: I kind of joked about it earlier, but every single person behind those companies has been a MicroConf speaker at one point.
Rob [16:05]: I didn’t do that intentionally –
Mike [16:07]: I know.
Rob [16:07]: – but it is – when I’m going to write this and outline it it’s kind of like I’m going through and I went to all these startup lists and all these – I did go through all the MicroConf speakers and I just put this huge list of SaaS apps and startups together. And I was thinking which one do we know grew fast? Which ones didn’t we? And then breaking down the criteria. So there is definitely some bias here. It did come out of me.
Mike [16:26]: Yeah. There’s definitely bias there, but I also think that there’s a correlation with those types of people, because they travel in the same circles. And when you tend to get into a particular – and social network is kind of a nuance term, I think at this point – but when you get into a social network of people – and I would say that MicroConf people are a social network of people. There are various other ones out there. There’s startup groups in different cities. They’re all their own social network. So you have those social – maybe social circles is a better way to phrase it – but when you get into a social circle, you can very quickly and easily be introduced to other people, and over time those relationships develop. And, as you are kind of alluding, over time those relationships develop into something where you are able to just tap into those relationships and talk to people and just get-to-know-you basis, and you’re able to use those people to grow your business. And “used” is probably a strong term, but leverage that relationship.
Rob [17:18]: So, on our one to ten scale, where do you stand between one and maybe a Jason Cohen, in terms of your network?
Mike [17:25]: Jason Cohen knows everybody.
Rob [17:27]: He does. It’s crazy. All right. Unfair advantage number three is, who knows you. So this is your audience. This could be an existing customer base, where there’s people who may have perhaps bought an info product from you. Maybe it’s folks who have subscribed to your one-time sale WordPress plug-in and then you’re going to launch a SaaS app. It’s people who know, like and trust you.
Mike [17:46]: And it could just be people you’ve worked with before. Most people discount, or undervalue, LinkedIn to some extent, because a lot of people will use it as a mechanism for just kind of increasing their network connections in efforts to be able to leverage that into success, or download the list of emails, and they’ll just start introducing themselves to other people. But when you connect with somebody, a lot of times people will start with the people that they’ve worked with in the past, people they actually shared a job experience. Then, from there, you start finding, “Oh, there’s these small groups of people that I worked with maybe at a startup ten or 15 years ago that went on to do other things, and I didn’t realize that these two people now work at the same company, and I worked with them – one at this company and one at this other company – and now they work together. You can also leverage those relationships to ask them about other people; your second or third connections in LinkedIn. And I’m not saying that LinkedIn is the panacea for all of your networking issues, because it’s certainly not. But you can use that to gain some visibility, and it works in the reverse as well. Those people will see you on the other end. So you see it from your perspective, but you are on the other end of that as well.
Rob [18:51]: All right. What do you think, Mike, who knows you, your audience? Can that be copied, can it be bought?
Mike [18:54]: It goes back a little bit to who you know, and whether or not those relationships are reciprocal. Because just because you know somebody doesn’t mean that they know you as well. There’s that element of trust that you can leverage, and whether or not you have a voice that they’re paying attention to in any way, shape or form. So, it definitely can’t be copied or bought. It can be re-implemented, but it’s going to be at a slower growth rate. You’re probably much better off being in a position where other people know you than you know of them on a peripheral basis. For example, I know Jason Cohen, but it’s not like I’m on his inner circle or anything. And he knows who I am, but the relationship is not, I would say, directly equivalent in both ways.
Rob [19:35]: All right. So, examples of businesses that have been built on the who knows you, but built on an existing audience. SumoMe. So going back to Noah Kagan, he had already had AppSumo, he had a very large email list. 750,000. I think they’ve kind of made it public. And then when they went to build SumoMe, they basically had the big email list that they could get started really quick, and they got to six figures in the installs – hundreds of thousands, or over a hundred thousand pretty quickly based on that list. They took their existing audience and they very intelligently turned it into a software success.
Edgar, meetedgar.com. This is Laura Roeder. She had an audience of folks who had bought training and information products from her on social media and Twitter marketing. It may have been Facebook, too, but definitely Twitter marketing. Then she started a SaaS app for essentially doing just that. It had a system to it, and was able to pretty quickly get to – I think she got to $100,000 a month of MRR within, was it six months or ten months? It was very fast. Anomalous growth.
KISSmetrics. Hiten Shah, Neil Patel. They started Crazy Egg. They had an audience of marketers who said, “These guys build good products.” When they came out with KISSmetrics, they already had that list of customers, and they had a small marketing audience, but they really had a lot of customers who trusted them.
LeadFuze. Justin McGill started this as a productized service. It was doing cold email outreach. He actually had what they call BDR’s – business development reps – he had a staff of them who were doing email outreach. They were actually doing some for DRIP. They would go get customers. Then he built LeadFuze, the software product, behind it using that revenue. Then he sunsetted that productized service, and now LeadFuze is a SaaS app – and he’s public about this so I can say it – but they hit 30,000, 31,000 in MRR in a short time. Again, it’s like six months or something. So it’s pretty good growth.
Then DRIP. I would say that one of the big reasons that I got early traction, and that Drip was able to grow the way it did, was a little bit because of my network. But I think a bigger part of that is because of who knows me. It’s because when I said, “I’m launching something and I think it’s good.”, people would listen. They would at least give me the time of day. Whether they were going to switch that day from MailChimp, I at least got the benefit of the doubt.
Mike [21:41]: I think there’s an important distinction to make here when you use the phrase “Who knows you?” It is not necessarily who is in your audience that knows you. At least not the number of people because, for example, ‘Startups for the Rest of Us’ has 11,000 listeners or weekly downloads or something like that. All it takes is one person in that audience who they may know 200,000 people, or 300,000 people, and they may have a channel that you can leverage. So, even though your particular audience, the people listening directly to you, may be lower than you’d like, it doesn’t necessarily mean go out build an audience. You could very well have just five friends, and one of those people, all it takes is their relationships. And if they know who you are and they know what you’re building, “Oh, let me introduce you to so and so. They can help you.” That’s where that social capital comes in. That’s where those social circles are really helpful. So, it is not necessarily equal in both ways. But that’s an important distinction about “Who knows you?” is not just about the number of people that know you. That number gives you a bigger surface area, but it also gives you those people that may have their own relationships that can work in reverse for you.
Rob [22:45]: The influencers. So, in terms of “who knows you,” where do you stand from one to ten with ten maybe being someone like Noah Kagan, who has, obviously, a very large audience. And our fourth and final unfair advantages for self-funded SaaS founders is growth expertise. This one’s a little tricky. Growth expertise is knowing the tactics, knowing the strategy, and having experience doing these things. It’s not just reading about them, but it’s having this in-depth knowledge of it. And it’s people who we think of as the best growth people. That’s what I mean by expertise. I don’t mean someone who has toyed around with stuff, or someone who has done some marketing. And there are people, who without an audience – this was the tricky one where I said, “I have apps here that have grown with no audience and very little network as far as I can tell. And they weren’t early so how did that happen?” And every one of them there was a founder, or there was a marketer there, who just knew his stuff, his or her stuff. They just nailed it. And that’s what I’ve encapsulated with this one.
And copied or bought is a tough one on this. Copying, very hard. It could take years to get that expertise. Bought, could be bought perhaps with equity, but the best growth people we know they don’t just work. You can’t just pay someone $200,000, $300,000. These growth people, they’re not going to do it. So bought, very, very hard. You would need to give away a chunk of equity.
Mike [23:55]: I think that’s the key piece there. You can pay for expertise, but there becomes a certain level of expertise that is, I’ll say, early enough in a particular technique of some kind that is really difficult to buy them. You can go out and you can find people that are doing consulting for $20,000, $30,000, $50,000 a week for certain things, and you can’t buy them. There’s stories from unnamed individuals who’ve probably been a little bit public about – without naming names – and they’ve said, “I was offered $1 million dollars for annual salary and I turned it down.” And it wasn’t to say that they couldn’t be bought, because they were obviously doing the consulting work, but they didn’t want to be tied to that, and there was no equity involved. So when you get into those situations, to find somebody that is that good that early, without offering them equity, I think it would be really challenging to be able to buy them.
Rob [24:42]: Some examples of these companies are companies like Sean Ellis’ Qualaroo, who’s here in the house.
Mike [24:48]: Actually, it’s not Sean Ellis –
Rob [24:49]: Sean Ellis. Yes, I know he sold it, but he grew it and then sold it. But Qualaroo’s a sponsor of MicroConf this year. That’s not why this is here. I put this here back in April. We have Buffer from Joel and Leo. They were a little bit early into that market, but they weren’t the first. There were plenty doing what Buffer was doing. But is it Leo? Leo’s the growth guy, is that right? I forget if Joel’s the – Anyway, one of them is the programmer and one of them is more the growth guy. And that dude just hustled, and they didn’t know anybody. He cold emailed me, and he knew Hiten, and then he cold emailed me and said, “I’d love to do a guest post or two on your blog.” And I was like, “Well, you know…” And he showed me examples of his writing. I get a lot – if you have a successful blog then you get tons of offers for this. I typically turn them down but I said, “Well, give me a sample.” And his writing was really good. Over the course of a couple weeks, he did two guest posts. I found out later he was doing one guest post a day on all the big blogs. If you go back and you look at that time when Buffer was getting started, you look at everybody, like Jason Cohen, my blog, on Startups, [?] blog – just pretty much every blog you can imagine that has any type of influence, any type of link-back authority, and Buffer has a guest post on that. He was just hustling. He had growth expertise and he had hustle.
Crazy Egg is another one where they didn’t have an audience at that point but Hiten and Neil, let’s just say, they’re at the top of their game, and some of the best in the world at this.
Mike [26:04]: Going back to your Buffer example. When you do that type of thing and you’ve reached out to Hiten Shah or Rob Walling and you get at least some visibility. You said yourself, “I had no idea who this guy was.” And you asked for a sample of his writing, and then started looking back and seeing where else it was that he was being published, you can leverage those relationships, because really what you’re doing in a way is – back to your stair step approach – you’re leveling up the people that you’re talking to. You’re talking to people who have fairly large social circles, and you leverage that relationship into a larger relationship that they may have with somebody else who is bigger. Then you go bigger, and you keep going bigger. And you go, “By the way, I did a blog post over here for Neil Patel. And I did one for Rob Walling. And I did one for Hiten Shah.” And then it’s like how do you turn something like that down? You can leverage those types of relationships, but you can’t just go for the big fish. You’ve got to work your way up to it.
Rob [26:51]: In terms of growth expertise, I’d ask you to think about, “Where do you stand on a scale from one to ten, where ten maybe someone like a Sean Ellis or a Neil Patel?” Whoever you think in your mind is maybe the best of the best. So, a couple other things that I’d say are not unfair advantages, and that a lot of these are just table stakes for competitive spaces. If you’re going to go into a space with 100 competitors all of these are table stakes. If you go into a niche that’s maybe smaller and doesn’t have a tone of competitors, these will get you an advantage, but it’s not an unfair high growth advantage having just these things. I have five or six things here. One is great design and UX. I love great design and UX, most people in here probably do. But this alone isn’t going to cut it. This is table stakes if you’re going to be in a competitive space.
Mike [27:32]: And the reason is because that can be copied. You can very easily copy that.
Rob [27:36]: Copy or buy it.
Mike [27:37]: And that goes back to Jason’s quote, “You can copy it or buy it.” You can go buy the same theme that they did. Or you can buy the same designer that they used. There’s way to copy a design. It’s not a big deal.
Rob [27:46]: Technical or design skills. While, again, I think these are super valuable, most of us in here do. These are things that can be bought for a couple hundred thousand dollars. You could hire a really good technical or design person, or a great design or UX person, unlike that growth thing. Money. Money’s not an unfair advantage. Maybe unless you’re the only one in an entire space that has money, but money is cheap these days. It may not be forever, but it’s pretty easy to get a round of funding. As we’ve heard a lot of people just having some success, and then people are throwing hundreds of thousands of dollars at you. This is the climate we currently live in. Five years ago it wasn’t that way, right after 2008, 2009 – which I guess is not seven years ago – and in five years it may not be that way. But right now money is pretty easy to get.
An uncopiable idea. When I was researching unfair advantages, this came up in a few of kind of the big MBA like Stanford Business Review, Harvard Journal of such and such MBA stuff, and an uncopiable idea is something like a Google where you have that killer algorithm and it’s completely uncopiable. And the reason that I don’t think this applies to us is because this is for self-funded SaaS, and I could not think or find a single self-funded SaaS app that ever had an uncopiable idea. So that’s why it’s on this list. Domain expertise. Let’s say you’re selling to lawyers. I think that’s a good thing, that if you were a lawyer, your brother’s a lawyer, your co-founders a lawyer, that is really good. Not uncopiable though. And then passion, interest, time, focus. Again, these are table stakes. These are things that I used to think, “If I have that, I have an advantage over people.” These days I don’t think you do.
Mike [29:13]: I think everything that you just listed there, all of its stuff that you could either copy or buy. And they are helpful, but they’re not the only things that are going to get you to a higher level.
Rob [29:21]: So if you look at the four unfair advantages we’ve listed – we’ve listed be early, who you know, who knows you, and growth expertise. The latter three – who you know, who knows you, and growth expertise – those come with you. Those are skills, or assets, that you can bring with you from product to product, year over year. Being early – I’m not trying to downplay that – I wish I could be early actually. I think that’s the thing is I’ve never been early to anything in my life. I’m not the creative type. And I think that there are certain people who are just going to be thinking that way and are going to be at the right place, at the right time. But for me, I like to develop repeatable models that can be used over and over. That’s what we do at MicroConf is try to teach things that, not just say, “Well, go be early.” because that’s not helpful. Because you don’t know how to do that. We like to teach things that are fairly repeatable, testable, validatable. And so these latter three are things that you can take with you over time.
Mike [30:10]: You’re not even early to the podcast half the time.
Rob [30:12]: I know. I have to keep you waiting. And so, to wrap us up – there’s just a couple of more minutes here – it’s interesting, as I looked at my stair-step approach, where I talk about building one-time apps and then stepping up to one-time sale apps, like WordPress plug-ins and such. Then stepping up to step two which is selling enough of those until you can buy your own time. And then eventually stepping up into recurring revenue. This fits pretty well with this whole unfair advantage thing, because if you do this right – you’re going to launch a WordPress plug-in for e-signature or for lawyers or for something. For sales people. For ecommerce. Then you’re probably going to launch maybe a few more WordPress plug-ins in that space. And by the time you get to step three, and you’re trying to do recurring revenue, which is really hard as we kind of all hear over and over, you may have that. You’re likely to have maybe some growth expertise in that. Maybe you have a network of people in that space, which is who knows you. Maybe you have an audience in that space, which is who you know. So the ideal is that if you travel a path that you would build these skills and build these unfair advantages up over time as you go through your journey.
Mike [31:13]: That was actually an interesting thing that I looked at. Even on your stair step approach, early on you look at the things that you did. It was the WordPress plug-in, all the single products, the one-time sales, things like that. And you didn’t even really have any unfair advantages at the time. You were basically in learning mode. You’ve got the learn, build, grow stages for, basically, how DRIP went. But early on it was just you were learning, and you were in learning mode the entire time. And eventually you got to a point where you learned and then people knew who you were. And then after that it was kind of going a step beyond that. So you built up these unfair advantages over time. And I think that that’s an interesting point, is that just because you don’t have them now doesn’t mean that you can’t have them in the future. Being able to build them over time, there’s a trajectory that you can get, and as you build that trajectory – as you build more products or launch more things or do different things in different markets – you learn to toggle the levers in ways that will accelerate the growth in ways that were previously never possible.
Earlier in Steli’s talk, somebody had asked him could he have started with Close.IO and he said, “No, I don’t think that I could have, because there were a lot of things that we needed to go through and we needed to learn.” And I think that that’s very true for most of the paths that many of us are on as self-funded bootstrappers. You really need to go through those missteps and learn those different things along the way. As you get further advanced you learn the techniques and the patterns that come up where you can turn that knob just a little bit tighter and get a growth acceleration that you never thought possible, or that you weren’t comfortable with.
That’s one thing with, for example, building an email list or sending out emails. People are very hesitant in their early days. You’ve got 25 subscribers. “Oh, I’m really not sure about hitting the button on that email that I’m going to send.” It’s 25 people, it doesn’t matter. There’s people, as they proceed past that, you get to 2,500 and 25,000 and you’re just like, “Okay, whatever, I’m just going to hit the button.” And it doesn’t matter at that point because you’re comfortable, you’re confident that you’ve gone through those missteps, and it doesn’t make a difference anymore because you’ve learned what to do and realized that some of the mistakes that you make, they don’t matter nearly as much as you think that they do.
Rob [33:12]: I like that you used the phrase “self-funded bootstrappers.”
Mike [33:15]: Sorry.
Rob [33:16]: So the question we want to leave you with today is, “Which of your advantages do you want to increase?” And now I think we have time for just a couple questions from the audience.
Mike [33:24]: I made up that term, by the way. “Self-funded bootstrappers.”
Rob [33:27]: Self-funded bootstrappers. Hiten would love and hate it, right?
Mike [33:28]: You want to hear another term I –
Speaker 3 [33:30]: He would hate it.
Mike [33:32]: I’ve got another one I made up. Plagiarism.
Rob [33:33]: Plagiarism. Nice.
Andreas [33:35]: I’m Andreas. I’m the founder of [Hunter Recruitment?]. And I was thinking about the unfair advantage, and I was thinking about the problem because we are building a platform with a validation machine. But really maybe our unfair advantage is the people that we know, the tech people that we know. We are [residents?] right now in [Google Campus?] in Madrid, and probably the disadvantage is the people that sit down near to us. We really want the other startups outside the campus know these people could be. I don’t know if you agree with that.
Mike [34:17]: I would say it does map back to that, because it is partly about who you know and who knows you. And I don’t want to directly say it’s because of geography at that point, because you sit close to them. But in a way it is. You are sitting very close to them. How many other people are sitting close to them that are doing what you do? That are trying to connect tech people with businesses that are trying to hire them? So there is that element of geography, but when you translate it to the internet it’s not exactly one to one mapping.
Andreas [34:39]: A relationship.
Mike [34:42]: Right. But that relationship is there because you sit around the corner from them. And you’re probably going to give somebody who sits around the corner in another cubicle the time of day, whereas if somebody just cold calls you over the internet and says, “I’m James Kennedy from Rubberstamp.IO in South Africa. I’d like – “. You’re not going to pay attention, unless you wanted that and you’re basically right there.
Rob [34:59]: Any more questions? May be time for one more.
Speaker 4 [35:04]: What do you think about software patents, because I think there are some companies who use them and abuse them as an unfair advantage?
Rob [35:13]: Software patents?
Mike [35:14]: Software patents, yes. I think both Rob and I have lots of things to say about –
Rob [35:16]: Travesty.
Mike [35:17]: – patents.
Rob [35:17]: Yes, I have a lot of opinions on that. Go listen to the ‘This American Life’ and the ‘Planet Money’ episodes on it. It’s absolutely catastrophic. That’s my opinion. Software patents in the U.S. were not allowed until 1998, and since then it has become an absolute epidemic.
Speaker 5 [35:31]: Okay, thank you. A quick question. How do you recognize when you’re early then when you are wrong?
Rob [35:36]: That’s good. This is our last question. How do you recognize when you’re early or when you’re wrong? Okay, so this advantage is to be early and hit it at the right time rather than – you’re talking about being too early. Being too early to a market is where there’s no one there that needs it yet. And then in a year you see someone launched the exact same thing and it takes off. So like Foursquare had been done like six times. Facebook had been done three or four times, almost exactly the same way, but there was something about the flux of technology and such. You know when you’re right, because you’re right, and the curve looks like this. And you know when you’re wrong – I guess what I’m saying is, you said early versus wrong, and I’m saying too early is equivalent to wrong. But this early advantage is actually when it works. It’s the perfect time. You’re just early ahead of other competitors, but you hit the market at the right time. That’s what I meant by it.
Mike [36:31]: I would say you don’t know until way after the fact. If you are early there’s varying degrees of early. There’s “way too early”, which is – as Rob said – is effectively wrong. But there’s also near the tail end of it, when you’re basically ready to give up, there will be an uptick in growth and that’s going to start giving you hope. And you maybe stick around a little bit. That’s the point where you would recognize, “Hey, I was just early,” versus you were way to early and you get to that point and you just give up. And it’s a matter of how much time do you spend in the “zombie product” land where you’re not really making enough money to be able to support it and be able to grow it the way you need. And I think that boils down to trajectory at that point. How fast are you growing whether it’s users or installs or money? Those are the three things that you can, at least initially, measure a business on.
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In this episode of Startups For The Rest Of Us, Rob and Mike discuss several of their takeaways pulled from talks at MicroConf 2016.
Items mentioned in this episode:
Rob [00:00:00]: In this episode of “Startups for the Rest of Us,” Mike and I discuss our key takeaways from MicroConf 2016. This is “Startups for the Rest of Us”, episode 284.
Rob [00:00:18]: Welcome to “Startups for the Rest of Us”, the podcast that helps developers, designers and entrepreneurs be awesome at building, launching and scaling software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob …
Mike [00:00:29]: And I’m Mike.
Rob [00:00:29]: … and we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Mike?
Mike [00:00:34]: Well, last Thursday, I added my first customer to Bluetick.
Rob [00:00:38]: Just shortly before MicroConf, huh?
Mike [00:00:39]: Yes, the day before my self-imposed deadline.
Rob [00:00:43]: Nice. So, what does that mean [?], then? They’re in early access, and they’re clicking around and sending emails – that type of stuff?
Mike [00:00:50]: Here’s the issue. I had them create an account, and we were kind of pressed for time because they were traveling on Friday, so I knew that we had to at least get them into the system so that I could take a look at stuff on the back end and make sure – because there’s a bunch of jobs on the back end that do a lot of data processing. I put them on. All of those things worked, but here’s your public service announcement for the day: don’t go in and change a bunch of things that are working perfectly well the day before you do that [laugh].
Rob [00:01:15]: Yeah, I was going to say – as soon as you started saying “…he created his account”, I almost completed your sentence, said, “And then everything broke?” because early access is always like that. All the stuff that worked two days ago totally breaks on them.
Mike [00:01:26]: I went in, and I had a bunch of changes made because I was going through and testing things. I was like, “Oh, this is a little bit clunky. It would be nice to make these changes here to make the flow a little bit easier”, and, unfortunately, we busted a couple of things. Of course, since it’s all based on different routes and stuff inside, the [rest?] API, you break one thing and the whole thing kind of falls down. There were a lot of things that worked, and then there were just certain things where there were core features that we ended up breaking which unintentionally. We got everything back and working within 24 hours; but, of course, I was leaving for MicroConf on Saturday, and he was traveling for the next couple of days. But we’re revisiting it this week or early next week, and we’ll go from there.
Rob [00:02:07]: Very nice.
Speaking of MicroConf, we just spent the last – what – three, four days in Vegas. This is our sixth conference in Vegas and our ninth overall, including the ones we’ve done in Europe. This was the first time we’ve had it at The Palms, and The Palms was – I’d say, cost-wise and décor-wise, it’s maybe a slight step up from the Tropicana, where we’ve traditionally had it. I really enjoyed the time this year. I feel like it was a good mix of – we had a lot of returning attendees, as we usually do. We had quite a few new attendees, and that was neat, a lot of first-year attendees. We even had a lot of first-year speakers. We didn’t have a lot of returning speakers from years past, a lot due to scheduling and other stuff like that, and also just wanting to have a fresh year to kick it off.
How did you feel about it overall?
Mike [00:02:50]: I agree. It was nice. I really liked some of the features that The Palms has versus where we had it at the Tropicana; for example, the food court and the fact that you can walk around a little bit more. It feels like you’re actually getting somewhere rather than just walking down massive hallways that almost have no end and seemingly no purpose [laugh]. Did feel like a slight upgrade. I liked the conference areas better; but, you know, it’s not necessarily all about the conference area either. It’s about the people that you’re meeting, the people that you’re talking to and things you’re learning.
Rob [00:03:20]: Yeah, that was the thing. As always, the hallway track as valuable or more valuable than the notes I took from the talks. It was great to see everybody who came. We had about 220, 230 people, and then we sold some “better half” tickets where folks bring their spouse and significant other, so I got to meet a lot of those. That’s always fun, because MicroConf – it’s not like other startup conferences where you’re there to talk about grinding away 90 hours a week. Our families are intimately involved in the startups that we’re doing, because many of us have significant others and/or kids, and it’s kind of cool to meet that person in a startup founder’s life and be able to have them have some glimpse into this crazy conference that that person goes to and maybe meet a few of the folks from it.
Mike [00:04:01]: Yeah, I had some interesting conversations with a bunch of people’s husbands, wives, boyfriends, girlfriends – that kind of thing. It was definitely interesting talking to the “better halves” and seeing what they thought of not just the conference, but the things that their “better halves” were working on as well.
Rob [00:04:16]: Sure. So, let’s dive in. We have several takeaways that we pulled out from the talks. I think we’ll go kind of in chronological order. There’s not enough time to cover every talk, so we’re just going to pull out some highlights. The speaker that kicked us off was actually Des Traynor. He’s the cofounder of Intercom, and he talked about building and scaling products, his lessons learned from four years and 8,000 customers. He had a lot in there. He’s done a lot of talks for Jason Calacanis, like their launch incubator. You hear it on the TWiST podcast, and he just always has such brilliant insight. He’s such a product guy, right? He knows what to build, how to build it, when to build, how to communicate that. He’s really focused on product and how that ties into, of course, marketing and growth.
I’d say the key thing, probably my number one thing – I took several notes from his talk, but one priority list that I really liked – he said it’s these priorities from the top down. The first thing that you should think about in your development cycle is improving a feature. The second one is getting more people to use that feature. The third thing is getting people to use that feature more. So, first it was more people to use it. Now it’s getting people to use it more, like more often. The fourth one is building new features. It’s in that priority order, which is contrary to what most of us do and how most of us think about product development, right? Most of the time it’s build new features, build new features, and that’s what customers and trial users are requesting when, in fact, Des is saying you need to think about improving existing features, getting more people to use them and more often.
Mike [00:05:38]: I really liked there was a grid that he put up that essentially showed what you should be working on and what has the most impact. There were a couple of different columns that he had there, and it was all based around how many people are using a particular feature and how often. You could see things like, in the top right, if everybody was using it and it was very often used, those are the places that you should be concentrating on.
He also talked a lot about how you are divvying up your team and assigning them to different parts of the project, where most software development teams will say, “Okay, we’ve got these 35 feature requests. Let’s put five people on each of them,” and that’ll take up everybody’s time. The reality was that he talked about bringing a bunch of test customers in, or existing customers, or prospective customers and saying, “Here’s $100 virtual dollars. Please vote on what it is that you would like us to implement.” Inevitably, what you find is that most people will vote for a couple of features, and a lot of the rest of the ones are completely unimportant, and you’re wasting a lot of time and effort and resources building those things that people just, quite frankly, don’t care about. His main point behind that was that you care a lot about implementing certain new features, and your customers don’t care at all.
Rob [00:06:51]: Another talk that I think had an impact on the first day was Claire Lew’s talk. She’s with Know Your Company, which is a spinoff of 37 Signals. Her talk was titled “An Unconventional Business,” and she talked about having a business without recurring sales. It’s a software company that allows other companies to learn more about their employees and what they’re thinking and that kind of stuff. It’s a one-time sale up front. It’s $100 per employee, and then there’s no recurring. She talked about how that is unconventional in today’s model of monthly SaaS charges, or even annual charges. She also looked at the sales process and how there’s only two of them. It’s not this big team of people doing stuff.
What were your thoughts on Claire’s talk?
Mike [00:07:31]: What I thought was interesting was the sheer number of demos they do and their focus and emphasis on gaining customer trust versus optimizing for revenue. Obviously, there’s the idea that you could charge a subscription model, or you could raise your prices, or charge some sort of annual maintenance fee or something along those lines. But when you look at what they’re doing, they’re really optimizing for the trust of the customers, and in some ways that reflects on their future revenue. I think Lars called it “expansion revenue,” because as those businesses grow, they will continue to pay the $100 for new employees. Or, if an employee leaves and they hire a replacement, then they’re essentially responsible for that extra hundred dollars, but it’s because they are so focused on getting the trust and buy-in of the CEO and the company executives and many of the employees that it makes a heck of a lot of business sense for those businesses to continue using their product and their software. So, it’s not necessarily recurring revenue but, as Lars said, it’s that “expansion revenue.”
I think that that’s an interesting take on it. I don’t think that most businesses, especially the ones at MicroConf, certainly don’t focus on, “How can we gain trust?” rather than, “How can we get more money?” More money is typically the focus, because it’s commonly easier to get more customers than it is to gain absolute, 100 percent trust of the existing customers that you have; but I also think that that’s probably true because of the way that their product is sold. You really need to be well-trusted by the company in order to just hand over contact lists and contact information for every employee you have.
Rob [00:09:08]: Yeah, and there was some discussion. There was a question during the Q&A and then that evening of folks questioning that one-time sale and wondering how they can make it a subscription business. I would guess long term that Claire’s got to be thinking about how to do that, because it is just so hard to grow a business when there’s a one-time sale; but all that said, I did like her principled rationale that the reason it’s a one-time sale is because they get that commitment from the company to implement this, and they don’t want them to cancel it in three or six months. She believes that once they do this, she wants them to have it forever. It’s a tough balance; and I think, perhaps, they’re in a bit of an edge-case scenario where – you know, personally, I don’t like one-time-sale businesses. I wouldn’t own one myself, and I think most businesses are moving towards recurring; but I wonder if hers could be in that realm of an acceptable exception.
[00:10:00] Another session we had on the first day that folks enjoyed was our Q&A session with [Stelle?] and Heaton, which turned out pretty good. An hour of Q&A is a bit long, and I think we made a little bit of a mistake in the schedule with that. I think I’d probably cap it at 30 minutes. That’s not saying anything about [Stelle?] and Heaton. It’s just too long to do a full hour of someone answering questions. But it was cool. It was like a live version of their podcast, and I thought that it was pretty valuable for the audience.
You were actually moderating that. You essentially read the questions and asked them the question from the audience and stuff. How did all that feel?
Mike [00:10:32]: As you mentioned, I was asking the questions initially, but we kind of primed the pump by having people submit some questions in advance and asked, I think, five or six different questions and then went out into the audience and started taking questions from there. I absolutely agree with you that it may have been just a little bit too long, but I think there’s good reasons for that. When you have a Q&A session like that, I think what tends to happen is that you get the people who are asking the questions who are the most vested and interested in the questions and the answers, and there’s probably a sizable chunk of the audience that isn’t necessarily as interested in that particular one. If you have too many of those in a row, then it’s difficult to maintain your focus and interest in the discussion. You and I have seen this especially with questions that come into the podcast, or when we’re doing internal, worldwide Founder Café calls where, if you don’t necessarily do any sort of moderation on the questions that are coming in, or filter them in any way, shape or form, then what you end up with is a lot of random things that come up that are difficult to maintain everyone’s interest for a long period of time.
So, I think that that’s probably what we ran into. For the podcast, when we do Q&A episodes, we typically decide which ones to manually respond to and do just one-off answers back to people versus ones that we think that are generally applicable to a wider audience. Those are the types of ones that we end up reading on the air in Q&A episodes.
[00:11:57] The one thing I do think is that, for the people who are asking those questions, they’re hyper-interested in those, so after the day, Heaton and [Stelle?] did an “office hours” after the first day, and they had so many people attend and so many questions, that they actually had to do a second day of them. It was only probably 20 or 30 people or something like that; but, still, that’s enough people with that hyper focus that it worked out really, really well for them.
Rob [00:12:22]: Another talk that had a lot of good takeaways was Patrick Campbell from Price Intelligently. He runs essentially a 20-person consulting firm focused on SaaS pricing. One thing -there were many, many takeaways from his talk, because he’s very tactical and he dove into a lot of stuff. He’s such an expert on the topic that it’s actually a little daunting when he says what you need to do in order to really get a good handle on your pricing. It’s a lot of steps; and I think he said it took him, like, eight hours to do it. There was a case study he did with his mom in a business she was starting, but I think that would take a long time for someone like myself, who hasn’t done the extensive pricing research that he has.
One thing that I really liked about his talk is – we’ve all heard of buyer personas, where you take a certain persona. If you have SaaS users, you might say SaaSsy Sam is your SaaS user persona. Then Billy Blogger is your blog user persona, and then you talk about their feelings and the decisions they use to buy and the factors they think about and if they’re price-conscious and all this kind of stuff. He took it a step further, and I hadn’t seen this. He actually added cost to acquire customer, so CAC values and LTV, lifetime value, to each of the personas. That was a real mental shift for me. I have all this in my head, and we talk about it internally about how we serve these three or four pretty tight verticals. With Drip, really it’s three verticals. Then there’s these other ones floating out there. Actually pulling out the CAC and LTV and all the other metrics by vertical is a pretty interesting idea, right, and it’s going to show you who your most profitable and least profitable are. In addition, he talked about you have to write all this stuff down; and that’s something that, while we have a bulleted list of the verticals, we don’t have the full-on list of all the buyer personas. That was a big takeaway for me was to sit down, draft this up and then do some data mining and figuring out some numbers to put to each of these.
Mike [00:14:14]: Next on our list, you talked a little bit about some different, unfair advantages, specifically, four different unfair advantages for faster SaaS growth. Why don’t you talk a little bit about those four unfair advantages?
Rob [00:14:25]: Sure, yeah. I did a shorter talk this year. It was a little bit a retrospective where I looked back and was trying to figure out at a higher level why has Drip grown faster than any of my other software products, like exponentially faster. Then I started looking around and saying of all the self-funded SaaS I know that has grown quickly, why have those grown faster than just the run-of-the-mill SaaS apps. I made a big list and did an analysis, and I talked to a few people and figured out that there really are four unfair advantages in order to have this 2X, or 5X, or 10X growth that we’re seeing in apps like Edgar, or Basecamp in the early days, or maybe Bytes Kits in the early days, or Drip, or like a SumoMe. There were these examples that were pretty obviously growing faster than everybody else.
I started with a long list of unfair advantages and, one by one, I realized that a lot of them actually didn’t make a difference. The four that I narrowed it down to – and you can have more than one – are, number one, to be early to a space. Second one is who you know, so it’s your network. Third is who knows you, so it’s your audience. The fourth is growth expertise; it’s how much expertise you have growing a company. It was fun. It was a little short, 20-minute talk; and I felt like, hopefully, it gave people ideas of stuff to be working on even if they don’t have a product yet; if they’ve already launched a product, how to try to get one of these in the space they’re in; or, to prepare for a future product that they’re launching.
One thing I meant to say, or I should’ve said, is that growth is not the end-all, be-all. Everyone doesn’t need to want to grow all the time. Of all people, we are the lifestyle startup crowd, right, where it’s like – I don’t build these startups just so they can grow. We build them so that we can have fun lives and we can have these great lifestyles. Even having faster SaaS growth in the title, I debated whether to do that, but that’s really what the talk happened to be about. If you’re out there and you’re thinking, “Well, I don’t really want super-fast SaaS growth,” that’s okay. This is just something that was there to help folks who maybe don’t want to travel a ‘long, slow SaaS ramp of death,’ or at least want to move along a little faster.
Mike [00:16:31]: Our next speaker was Tracy Osborn, and I think Tracy’s story was pretty interesting, because she has run both a funded and a non-funded startup. She ran WeddingLovely, and I think she called it something else earlier on. She had gotten funding from 500 Startups and was working on it then, and then later on – did she say that she took it private, or was it a spinoff of what she was doing based on that?
Rob [00:16:55]: It was the same company, so it was still funded, technically, the whole time; but she basically tried to run it like a bootstrapper, yeah.
Mike [00:17:02]: Right.
Rob [00:17:02]: So, once the funding was gone, she didn’t shut the company down. She was then just trying to make it profitable, which is not what people who give you funding really want.
Mike [00:17:09]: Right, yeah. I got the impression that the people who had given the funding, initially they were just like, “Okay, yeah. We’ve decided this is a failure, and we’re going to write it off at this point,” but she still took it forward. It was really interesting to see the contrast between how she approached it before when she had money versus when she didn’t later on.
Rob [00:17:29]: Yeah, I agree. The real takeaway from her talk wasn’t that funding is bad. It’s that flip-flopping between funding and bootstrapping with the same company is bad, because the priorities and the way you build the business is just so different. To be honest, I liked her talk in terms of the narrative. We go for about an 80-20 breakdown of actionable/tactical versus inspirational and narrative-driven, and hers was definitely in that 20 percent. Maybe we’re 90-10 in MicroConf most years, but hers was definitely in that 10 or 20 percent of a good story and seeing a lot of mistakes that she made. Just her perseverance. She kept calling herself in the talk. She’s like, “I was the cockroach that would not die, and I just have kept the company going.” It was an interesting story to hear and kind of a cautionary tale in terms of figure out if you’re going to be funded or bootstrapped and then go that direction.
One thing that I would add, though, is, again, there’s this in-between of fund strapping, where you can raise a small amount of funding, but it’s from people who understand you’re not going to go for that $50 million idea; because WeddingLovely is a wedding marketplace. In that case, you really do have to get big. You have to hit scale in order to make it work. She had just started, let’s say, a B-to-B SaaS app; and she took some funding, then decided to go bootstrapped. I actually think it could’ve worked a little better, but it’s neither here nor there. I just think it was an interesting story and pretty well told on the stage.
Mike [00:18:53]: Yeah, I think the two, main takeaways that I got out of it was, one, her references to being “the cockroach that just wouldn’t go away,” and saying, “Look. I’m going to buckle down, and I’m going to make this work, and I’m going to make this happen. Even if I get slapped down, I’m going to come back, and I’m going to do something else and try and figure out something to make it work.” I thought that level of sheer tenacity and perseverance was very admirable, because I don’t think that you see that a lot. I think that most people tend to throw the towel in just a little too early. Obviously, there’re times where you can take that too far, but it was interesting to see the level that she went to just to even be able to meet people. That was the other thing, the lengths that she went to in order to meet certain people that she knew would help make a difference in her business.
Rob [00:19:38]: Another session we did on the second day was kind of the surprise session that we had not announced. Patrick Collison, the cofounder of Stripe, showed up. He was just there for about 24 hours. He had said that he’d been following MicroConf for a couple years and that he really wanted to come check it out, which was obviously a big compliment to us, given that Stripe is a $5 billion company. They raised $260, $280 million. He’s just a powerful dude in Silicon Valley, even as young as he is, so it was neat to hear that we were on his radar at all and that he would take the time to come down. He met with a bunch of attendees. He got feature requests, ideas and all that stuff, but he did a 30-minute Q&A up onstage about the early days of Stripe.
I really liked how he talked. They bootstrapped that thing. That’s what probably none of us remember. He said they bootstrapped it until it hurt, and then when they eventually hit the point where they could not go any further, then they raised their first round.
Mike [00:20:30]: Yeah, I really liked the focus of them on their early days about what their customers were doing and how they were using the product. One of the things that he talked about was that, because Stripe is essentially an API that you make calls into, what they had very, very early on was they had it wired up so that whenever somebody made a call to one of their APIs, it would actually email them. Obviously, that is not going to scale long-term. Obviously, it can’t at this point. There’s no possible way that it could do that; but early on they were watching what people were doing, what data they were receiving and what sorts of errors people were getting and what data was being returned to them. It helped them focus in to figure out where people were having problems, so that they could determine, “Is the code bad? Do we need to fix that?” or, “Do we need to go back and update the help documentation?” “Do we need to update some example APIs, or example code that’s on the website?” and things like that. It was really interesting to see some of the technical engineering things that they were doing to essentially help them do that product development.
Rob [00:21:33]: As day two started coming to a close, we had Peter Coppinger from Teamwork.com, and he basically talked about their eight-year journey. It was even more than that, because they were a consulting firm before that, but it was about an eight-year journey of their SaaS app Teamwork, which is project management. They were doing consulting at the same time as they were launching it. Then they made a lot of mistakes. He said that, as a developer, really he still wants to code even though he’s the CEO of a 63-person company, and that he still does write some code for it. He talked about just the mistakes that he’s made over the year and how he thinks that they could’ve gotten to their present level, which is 12 million in ARR – he thinks he could’ve gotten there years earlier if they had started marketing sooner, if they had started sales sooner. He said, basically, if you have your head down for too long and are just pounding away at features and such and not looking outside, that you’re going to hurt the business.
Mike [00:22:25]: Yeah. I think that it was interesting to see the number of mistakes and the types of mistakes that they were making. The fact that they were still able to make it work is a testament to the type of product that they were building. I hesitate to say that everybody can make those types of mistakes and still be able to get to where they are. Obviously, there are different types of products and different markets, and they will naturally break out into varying levels of success, but it’s interesting to see the path and the growth curve. Then looking back at it, they can say in retrospect, “Oh, had we done X, Y or Z sooner, then that would’ve seriously helped us.” I think the one big thing is just the marketing side of things. They just paid so much attention to the code, because they were developers, and that’s what they were comfortable with. It wasn’t until they really started focusing and buckling down on the marketing side of things that things really started to take off for them.
Rob [00:23:17]: Yeah, I agree with you. I think a lot of folks, if they made the same mistake, would probably tank. Teamwork had that advantage of being in a big space, and they were there really early. I think it was like 2007, maybe, when they launched the SaaS app, somewhere around there.
Mike [00:23:32]: Yep.
Rob [00:23:32]: And being a SaaS project management product at that point, there was really – what – Basecamp? That’s the only other one I knew. I’m sure there were more, but I think that they did have the wind at their back, and I think Peter’s right. I think they’d be further along at this point if they had made the right choices, but even making those mistakes, they still survived; and not every business could do that. You’d probably need one of those big four, unfair advantages, if you’re going to make all those mistakes, in order to get to where they are.
Mike [00:23:58]: One thing that I thought was really interesting was the fact that they acquired the teamwork.com domain for – I think it was like $675,000. You look back at their growth curve, and you could see this definitive inflection point at about the time that they got that. I don’t think that a domain name is going to be the turning point for most businesses, but I think that in their specific situation, because of the type of software they were – and the previous domain, I think, was teamworkpm.net obviously, kind of an awful domain. They knew that. That was not even a question, but when they got the teamwork.com domain, it really gave them a level of validity and, I guess, authority that people looked at it and said, “Oh, you have teamwork.com. This must be a legit website and a legit app, so let me give it a shot,” versus previously, you look at teamworkpm.net, and it’s like, “Meh, I’m not so sure about this.”
Rob [00:24:49]: Yeah, I get the feeling – there were a couple questions during the talk, and then someone asked me about it later that evening. There was kind of some folks who I don’t know that they believed that the teamwork.com acquisition was the actual reason that the curve spiked up like that. What made it even muddier was that, like the slide – I think when the slide was converted, something happened where he had an arrow to where teamwork.com was acquired, and it was in the wrong place. So, it was hard to tell exactly the inflection point, if it was before or after the domain acquisition. If it was, that’s pretty crazy. That’s a huge deal, and if just getting the dotcom for your business did that, it really is kind of a vote for maybe ponying up some dollars for a domain name.
Mike [00:25:33]: But I also think that that’s just a matter of looking at the website and being able to explain, “Oh, this is teamwork.com.” If it’s a one- or two-word domain, it gives it that, I’ll say, air of authority –
Rob [00:25:45]: Yeah.
Mike [00:25:45]: – you know what I mean – for the larger enterprises, and you’re able to attract larger customers based on the name alone versus, as I said, teamworkpm.net. You’re not going to get Johnson & Johnson saying, “Hey, let’s dump a lot of money into this and sign up for a ton of accounts.” It’s just not going to happen.
Rob [00:26:00]: Right.
Rounding out our conference, the last speaker was Lars Lofgren. He ran growth for Kissmetrics for many years, and he’s spoken at MicroConf Europe in the past, actually. This year, he was talking about the three SaaS growth levers. I’ve seen parts of his talk before, and I really like it. I took a ton of notes from him. It was definitely one of my favorite talks of the two days, because it just reminded me of so many things that we should be doing at Drip, things that I’ve had in mind, or are on a list somewhere. It reminds me of how important they are.
The levers are: fixing your churn and then getting cohort expansion to work, which means expansion revenue as people are upgrading; and, finally, getting acquisition going. So, a lot of lessons from Lars. One of them that rocked people’s worlds is he talked about if you’re really going to try to grow this fast, have world-class churn before you scale. That means that you have product market fit and that you want your churn in the 2 to 3 percent range. He used this expression if you’re above 10 percent, your business is “on fire.” I’ve always liked that expression when he’s used it.
Mike [00:27:03]: And not in a good way either [laugh].
Rob [00:27:05]: Exactly. Exactly.
Mike [00:27:07]: Yeah. Some of the parts of his that I really liked was the fact that he looked at churn, and he said, “Here are all the different reasons why somebody might churn out.” Or, not all of them, but a bunch of them. Then he listed a bunch of churn reduction ideas. Then he categorized each of those and said, “These are bad. They’re just not going to help you.” Then, “These are marginal wins, and then these are major wins.” The things that fell under the “major wins” category was fixing your product onboarding; improving the value of the product; and then 30-, 60- and 90-day onboarding programs. It was really interesting that he broke those down. Then he said things like removing self-service cancellation. That just does not move the needle for you. But if you fix the product’s ability to onboard people, that’s a major, major win; and you’re going to be able to scale up very, very quickly because of that.
Rob [00:27:53]: Yeah, that’s what I liked, is that he called out these tactics that a lot of us might think to reduce to churn, but he said that basically covers up your churn problem. It doesn’t actually fix it. So, things like down-sells, or forced annual plans, et cetera, are not things that you want to do if you want to grow to this scale; because it just covers up the issue, and it will hurt your credibility long term. It hurts your brand, and people start thinking about you as just more of a fly-by-night company rather than someone who’s building something valuable for the long term.
Mike [00:28:22]: The other thing I really like that he pulled out was the fact that there’s a big difference between marketing and sales, and they can be at real odds with each other if you get to a point the marketing team is able to bring in a lot of people into the top of the funnel, but if sales can’t close those because the product is bad. He called it the “alligator funnel,” because you’ve got that top of the funnel, which is increasing, and then the sales are just flat and they’re not going anywhere. Then the marketing teams and the sales teams are essentially pointing the blame at each other, and you have this internal problem. The root cause is essentially because the product itself is just not able to do what the customers need it to do. That was a very interesting thing. I’d never heard that before.
Rob [00:29:03]: Overall, it was a nice ninth conference. I feel like we’re just starting to get the hang of this thing now.
Mike [00:29:07]: Yes. Only nine or ten more, and we’ll be good.
Rob [00:29:10]: We’ll be [laugh] – exactly. No, so it was good. A big thanks to everybody who attended. Obviously, thanks to our sponsors, and thanks to Zander for all the help in pulling it off. I don’t think we’d really still be doing MicroConf if we hadn’t found someone to help us put it together each year, because that takes a lot of the burden and the time investment off our shoulders.
Mike [00:29:29]: Yes, definitely a big thanks to Zander and everyone else who helped out. It’s very nice to have people like that on the team.
Rob [00:29:34]: And if this sounds interesting, we’re throwing another MicroConf in just a few months, July 31st and August 1st of 2016. We’ll be in Barcelona, Spain. If you’re interested, go to MicroConfEurope.com. There’s a little Drip widget in the lower right where you can enter your email address, and you’ll be one of the first people to hear about it.
Mike [00:29:53]: I think that about wraps us up this week. If you have a question for us, you can call it in to our voicemail number at 1.888.801.9690; or, you can email it to us at email@example.com. Our theme is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. Subscribe to us on iTunes by searching for “startups” and visit startupsfortherestofus.com for a full transcript of each episode.
Thanks for listening, and we’ll see you next time.
In this episode of Startups For The Rest Of Us, Rob and Mike discuss their seven takeaways from MicroConf 2015.
Items mentioned in this episode:
Rob [00:00]: In this episode of Startups For The Rest Of Us, Mike and I discussed our seven takeaways for MicroConf Vegas 2015. This is Startups For The Rest Of Us episode 233.
Welcome to Startups For the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at launching software products. Whether you ve built your first product, or you ‘re just thinking about it. I ‘m Rob.
Mike [00:27]: And I’m Mike.
Rob [00:28]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Mike?
Mike [00:33]: Well, I got back from MicroConf about maybe 12 hours ago. I got in around midnight and it’s 1:00 in the afternoon right now and I’m still recovering even though I had an extra day on the tail end of the conference. So, I don’t know about you but I’m tired.
Rob [00:45]: Yup, yup. Feeling pretty out of energy. I slept until noon two days after the conference and still just can’t quite recover. I can’t quite catch up. I didn’t even stay up that late. I didn’t drink very much. It just kind of takes it out of you. It’s this extrovert hangover, I think.
Mike [00:59]: Yeah. I drank a lot of water but I really didn’t drink anything else. It’s just constantly. It’s weird because it’s Vegas so of course it’s weird because it’s Vegas so of course it’s actually dry and I felt like I was over drinking water and I was always just not drinking enough and I always felt full though because of that.
Rob [01:12]: Yeah. For sure.
Mike [01:13]: So, one of the things I heard from a lot of first-timers at MicroConf was that it was really intimidating because there were just so many people there but I got somewhat mixed reviews about the attendee badges. So what we did this year, which was a little bit different in previous years. In the past what we did is we gave people things that said basically returning attendee and some people kind of as a joke started putting like two, or three, and four of them on their badges. So this year we switched over and to help eliminate that, we’ve handed out this first-time attendee ribbons essentially that you could hang underneath your badge. And some people loved them and then there were a couple of people I talked to who were just like,Yeah. I ‘m not wearing that.
Rob [01:49]: Yeah. For the most part, I heard that people liked it because it allowed them to connect with other folks who were also first-timers. I think I only met one person who said that they didn’t want it on there, that it was like a badge of shame or something, but I thought it was a good idea and it allowed folks to connect.
Mike [02:03]: Yeah, I did too and I don’t know how you felt about it but I felt it was, if you saw somebody with a first-time attendee badge it was like,Hey, come talk to me.
Rob [02:09]: Exactly. Yup. I felt the same way. Sherrie told me the same thing that she was kind of trying to help post, help like welcome folks who had the first time. I got an interesting email from Scott Ewell of Bootsrapped with kids, both he and [Brock?] made it to the conference and Scott said,This was a more rewarding experience for me the second year. Last year I felt a little intimidated/overwhelmed by it all, but this year, seeing familiar faces from last year and reconnecting was a really great experience. And then, this is a part of like I said,I think there’s an evolution from. And he has a number of steps and it’s; number one, working in Corporate America; number two, discovering micropreneurship; number three, attempting something and feeling the impostor syndrome; number four, connecting the one or two others doing the same; number five, discovering the broader community; and then number six feeling part of the broader community. And it feels like for Scott, this second time that he’s really starting to connect and feel part of that broader community which is both MicroConf but obviously even beyond that.
Mike [03:04]: Yeah. That ‘s a really interesting way to put all that. I really like that. It’s not something I could really probably thought of in those terms before. But yeah, those are definitely great points. I really like how he just kind of laid it out like that. One of the things that I found this year and I don’t know if you felt this way, even though the conference was about the same size, it felt harder this year to get to everyone. So for example Scott, I went to the gym one morning, I think it was on Sunday morning, and I had a longer discussion with Scott at the gym while we were working out that I did any of the time. I barely saw him the rest of the conference.
Rob [03:33]: Yeah. I think just due to the fact that so many people come back to MicroConf. We get between a 60% and 70% return rate that everyone knows each other now. A lot of people know each other. And so, it means that you have more people that you want to talk to and there were probably a dozen people who I know really well that I just never got a chance to talk to even though I saw them around.
Mike [03:54]: Yeah, same here. I think there were a lot of people who I know them online but I hadn ‘t really met them in person and I wanted to carve out time and talk to them and it’s just never really got around to it. We were never in the same place at the same time or busy in other discussions, something along those lines, but I don’t know, I don’t know what the answer is there. [crosstalk] conference.
Rob [04:11]: I know. Yeah. We haven’t grown it. It’s been the same size for two years. We definitely have some discussions to have just around making sure that first-timers get a chance to engage with people. There were some chat on Twitter about trying to get more women to the conference. I think these are both things that you and I planned to discuss and try to attack for next year.
Mike [04:31]: Yeah. I had some conversations with some people at MicroConf. So if anyone has any thoughts or suggestions, feel free to privately email us and we’ll kind of take them under consideration, especially if it’s just around like ideas about what to do, about some of those things because Rob and I have our own thoughts and opinions on it but it’s just the two of us kind of thinking about these things and talking through them and relaying what other people have told us and just the conversations we have had. And so if you have thoughts on these things, just feel free to email them to us.
Rob [04:56]: So I want to dive into our seven takeaways for MicroConf this year. The first one is that relationships are crucial and I think this came out in a number of talks. This also came out in a number of conversations I had in the hallway track of people talking about how valuable their masterminds are. I started thinking about it and the number of times I mentioned Derek, Rubin or Jeff Epstein in my talk, probably 20-25 times just kept saying,Yeah. I was trying to make this decision. And then I asked their opinion or Derek and I decided this, for a guy who ‘s kind of a single-founder type and likes to do stuff solo, I sure mentioned other people and how much they ‘ve helped me a lot.
Mike [05:35]: Yeah, I find that too. I think it came out a lot more at the conference and just on that note if people are looking for a mastermind group, there’s a website you can go to called mastermindjam.com and Ken Wallace is behind that and he basically helps put people together into mastermind groups based on a profile of like different criteria and things like that. So if you’re interested in one, definitely go to over mastermindjam.com and Ken will try and put you together with like-minded individuals.
Rob [06:01]: I’m glad Ken did that. You and I have been talking about doing something like this and just haven’t had the time so it’s great. So he’s a Micropreneur Academy member and he came to MicroConf this year and he obviously sees the value of mastermind group. So I like that there’s a resource for our community to take advantage of that.
Mike [06:14]: I think the second major takeaway for MicroConf is do not hang stage lights near a sprinkler system.
Rob [6:20]: Yeah, in case you haven’t heard, we had a sprinkler go off in the middle of the conference and it spilled black smelly water that had been in pipes for 50 years all over the back of the room. Luckily, it was the back and not the center so we got a few people wet, I think a pair of shoes, and maybe a laptop were ruined but that was pretty surprising. What were you thinking when you saw that happened?
Mike [06:42]: I remember thinking,I’m not entirely sure what’s going on but I’m glad I paid that extra dollar for terrorism insurance just in case.
Rob [06:50]: Seriously. Yeah, it was a complete shock. This thing just goes off in the back of the room and people start scattering and again luckily, it was all the way against the back wall so it wasn ‘t like it was above a huge group people, but people pretty much evacuated the room and it was right as we were heading in the lunch and I was thinking right as that happened like,Wow. Is this it? Is MicroConf over this year? How are we possibly going to recover from this? But within about 10 or 15 minutes, I started realizing,This will go on. Even if we just get a portable PA system in here and we do some groups until they can get a room for us, I could do my talk without slides. I just started thinking of all the alternatives that we could start doing and realized that the conference would not be over.
Mike [07:32]: Yeah. It kind of goes back to all the different problems we ‘ve had over the years to be honest because somebody asked me,How’s the conference going? And every time that anyone asks meHow’s the conference going?, I always turn around and ask them. Yeah, because if they don ‘t see anything, then it’s going great because there’s all this stuff behind the scenes that you and I see that things are going wrong and if nobody notices then things are going great. And pretty much every year, we’ve had something go wrong and almost nobody has ever noticed. And this is I think the first year that something major has happened where it’s not like you can hide that. It happened right in the middle website tear downs and it was obviously that something is going on. It cleared the room. So, you just have to kind of deal with it and move on. There was a little bit of indecision there it’s like,Okay. What is going to go on now? How do we handle this? How do we move forward and not just have to end the conference right this second?
Rob [08:21]: Yeah. And the nice part is since it was during lunch, the hotel was able to scramble and get another room set up and in essence, they did it over lunch and then for about another half hour. So we lost half hour of the schedule but we just ran a half hour over towards the end of the day. So we didn’t lose any programming and the only thing that it did was put us 30 minutes behind schedule which is pretty impressive to be honest. I was thankful that Zander was there to handle that and that the hotel was able to scramble that quickly and get us back on track.
Mike [8:49]: A bunch of people said that it was kind of amazing that we were able to recover as quickly as we did from that little incident, not exactly little but from that incident, it was just amazing how fast we were able to recover. And Zander did a fantastic job. I can’t count the number of people who came up to me and said,Wow. Zander is awesome. He does a really, really great job helping you guys to this conference.
Rob [9:07]: Yeah. He’s really taking a lot of the load off of us. So, our third takeaway from MicroConf 2015 is that if you have a product that you need to find your fit first whether you call it product market fit or whether you call it building something that people actually want and are not churning out of, that you need to find that before you start marketing. This came up in a number of different talks. I think most notably my talk focused on it for a good third of the talk and Hiten Shah spent maybe a third to a half of his talk talking about how to find product market fit, what it looks like, how to measure it. And in the responses to the survey that we sent to attendees afterwards, a lot of folks were talking that this was their number one takeaway is to not just build something and then try to run all these marketing approaches that we always hear about but to build something, ensure you have this fit, and then start marketing because if you start marketing before that too hard, then you will just lose a lot of money and basically pour it down the drain.
Mike [10:06]: Yeah. It’s about the efficiency of what your marketing is because if you don ‘t have that product market fit first in your marketing, it’s just the efficiency is so much lower because you’re going to convert all that worse and people are going to churn out faster because what they bought is not going to necessarily what they were expecting and I think that ‘s really the main takeaway from that. It’s more about the efficiency of your marketing.
Rob [10:26]: Fourth takeaway from MicroConf was that buttons matter and to test them, and often to test them in conjunction with headlines. And this was from Joanna Wiebe ‘s talk. Joanna is from copyhackers.com and her talk was one of the highest rated this year and I thought it was a very, very good talk. She talked a lot about how much the text on buttons actually matters and just showed a number of split test talking about why that ‘s the case and why we often focus too much on headlines and don ‘t look enough at the text that we’re putting on buttons.
Mike [10:58]: One of my big takeaways from her talk was that there’s always a lot of these best practices that people repeat over and over again and the reality is that a lot of them don ‘t necessarily pan out and you still have to test them and even if they’re best practices, you still have to test those things because it’s not always clear that they ‘re really going to work that way.
Rob [11:15]: If you haven’t followed Joanna, I’d recommend checking out @copyhackers on Twitter or right in copyhackers.com because she has some really exceptional content around copywriting and conversation rate optimization. Our fifth takeaway was actually from one of the attendee talks. So over the past couple of years, we’ve allowed attendees to submit talk ideas and then before the conference they are voted on by the other attendees. And so, I think this year we got around 35 talk submissions and we took the top 12 and so these actually all 3 of these last takeaways are from attendee talks. This first one is from Jacob Thurman and he’s been to every MicroConf as I know I think for the last five and he talked about selling his single-founder software product. He called it a [Micro ISP?] but it’s in essence just him running the show and it was a fascinating look at what it took to build this up and then the decision-making process of whether to sell and how much to sell it for, and he had some really actionable takeaway that seems like that would be all kind of a gut feeling. But he had this great spreadsheet where he laid it out and he also talked about how to make big decisions and not make them poorly.
Mike [12:28]: A couple of other things that were takeaways from his talk is to not make big decisions when you’re not at your peak level of performance and he had this acronym called HALTS, H-A-L-T-S. It would basically stood for, don ‘t make big decisions when you are hungry, angry, lonely, tired, or sick because you’re going to make good decisions at any of those points. And it intuitively makes sense when you think about it that way but if you’re making those decisions in the moment, then I can definitely see how you would make the wrong decisions and come to regret them later.
Rob [13:00]: Yeah, and for the record the HALT acronym without the S it’s actually very famously used in psychology and he talked about that and then he realized he had a stomach issue during this time where he had stomach pains and so he added the S to it and I thought that was pretty clever.
Mike [13:14]: And I think this is the topic that most people in our community don ‘t necessarily talk a lot about because it almost seems like there’s not a lot of buying and selling in our particular space, I’ll say. I know that there is some but I think it’s just not widely discussed.
Rob [13:27]: Yeah. It seems like more and more this is happening as our space is getting more mature because there are more people self-funding. You would see Patrick McKenzie selling a few. I’ve obviously bought a lot in the past and sold a few. I think Brian Castle sold one or is selling one. [Field Erickson?] selling were [?] but I mean there is becoming a little bit of liquidity as more of us are doing it and I think as we kind of stair-step up, it can either autopilot your old ones or you can sell them and selling them is not a bad idea to get a nice little chunk of cash. Now in the old days, selling them meant putting them on flip and getting 12 to 18 months ‘ worth of profit which was a drag but now if you actually build a good product, you can get 3 years ‘ worth of net and it makes it more realistic to do, right. It makes it more worthwhile I guess I’ll say because it allows you to take that money and then invest it up into more complex products.
Mike [14:17]: Yeah. That ‘s kind of the leveling-up that we’ve kind of talked about a little bit on this podcast in the past. So, it’s good to see that stuff going on though.
Rob [14:24]: Yeah. Our sixth takeaway was from Ted Pitts attendee talk, and Ted is with Moraware Software. He’s one of the co-founders Ted and Harry who have been to a lot of the MicroConfs as well and they run countertop installation software. So it helps countertop installers to schedule and do things like that. And he talked about the most important SaaS metric that no one talks about which was profit, and I thought it was cool because he talked about how they’re doing substantial amount of revenue with only seven employees, and that they’re not a big sexy Silicon Valley startup but they ‘ve been in business for, what was it? 10 years, or 12 years.
Mike [15:01]: Yeah. It ‘s a long time.
Rob [15:03]: Yeah, it is. And you know what, they’re just legit like they’re just around and they’re stable and both of them have [known?] an attendee talks and Harry has been on the podcast back around episode 40 or 50 and they’ve just kind of been around the community and I like their presence, and I like that they’re not going after these big startup ideas even though they have a successful business. They haven’t thought of flipping it and selling it to go after something more sexy, and that they’re really just content to run this highly profitable business that kind of owns this niche and it does really well with it. I think that’s something to be kind of respected. I respect what they have done and I like to hear Ted talk about it in his talk about them at finally achieving profitability even though they ‘ve kind of been profitable for years but just talking about the rough ups and downs of getting here.
Mike [15:47]: Yeah. I thought it was interesting to how Ted put things into perspective with really just talking about profit. It opens up your options, is really the bottom line. It lets you do things that you might not otherwise have the ability to do and just being able to have that profit around to use as you want it or you need it. Obviously, if you need it then you have to spend that money, but you don ‘t have to spend the money. You can just keep it and there’s nothing wrong with that. There’s nothing wrong with just keeping the money.
Rob [16:12]: Our seventh takeaway from the MicroConf 2015 was from Jordan Gal ‘s attendee talk and he talked about outbound email and called emailing prospects and essentially said doing sales calls, doing sales emails for prospecting and what I like about his talk is it was 12 minutes. It was super actionable. He laid out all the numbers of exactly how much it cost to compile a list, to send the emails, to work with the leads. It was really compact and he showed all the tools that he used, and so, I appreciate that. I think that ‘s something we’ve always tried to do with MicroConf is to have actionable talks that you can basically takeaway and use in your business next week and Jordan has definitely delivered on that.
Mike [16:50]: Yeah. That was a very tactical talk. He told you exactly how to do it. It was basically a play-by-play of this how we do this and this is how you can too, and I thought that that was very, very useful.
Rob [17:01]: I think that ‘s part of the feedback we got from the survey. What’s nice this year is we’re recording this episode but we have already sent the survey and received feedback from the attendees and that is typically not the case. But some of the feedback, as always, it ‘s mixed, right? Some people I want more inspiration, some say less inspiration. But one of the threads that I was noticing is some folks wanted some more tactics and I don’t know quite why that happened this year but it seems like there were some highly tactical talks and maybe fewer technical talks that we’ve typically had.
Mike [17:31]: Yeah, I’m not sure. I think it depends a lot on where people are in their business which is another one of those discussions you and I kind of have to figure out because there ‘s those people who have come back. I asked in the audience, how many people were at the different numbers of MicroConfs and so who was there for the first time, who had gone to one or two, three or four before. And then there were probably a larger number of people there who have been to five MicroConfs than I would’ve thought based on where you are, you’re going to want different amounts of tactics and I think we’d need to go back and take a look at some of the feedback and kind of figure out where people are at before we made those judgment calls. But it’s an interesting discussion to have and an interesting problem to think about. So, you have to look at those things and maybe take those into account as well.
Rob [18:12]: Yeah. That ‘s a really good point. I think that is probably why we’re getting more and more varied feedback where in the early years it was pretty consistent like,You should do this to improve the conference. And it was obvious that ‘s what we needed to do, but now we get this wide swath of input and i think it comes from having some folks who are, there are still a handful of people who are looking for an idea, who attend MicroConf but that ‘s really a minority. But we do have people who are just launching and just getting started and then we have folks who are running literally multimillion dollar software companies, and it’s kind of like how do you present enough content for all of those groups, that whole spectrum to be happy with it when they get something out of it.
Mike [18:51]: Yeah, to be useful to everybody. If you’re catering to everybody, you’re really catering to nobody and that ‘s kind of what makes it toughest because there’s this big spectrum from right now of people who are first-time attendees and they’re just kind of thinking about it. They just don ‘t even have an idea yet, and they’re there for inspiration, and then you do have the people who have been to five and they ‘ve got a business that ‘s doing several million dollars in revenue every year. Catering to both those types of people at the same time, I think it’s really, really challenging for the speakers.
Rob [19:17]: One other thing we tested out this year was workshop. So we did two workshop the day after MicroConf. One was headed up by Hiten Shah and the other by Patrick McKenzie, and you had actually wanted to do this for several years and I’ve been kind of against them to be honest just because I’ve never seen them well executed. And then when I went to DCBKK, Dan and Ian ‘s event last October, I saw workshops that I thought were well executed. And so far, the initial feedback was that the workshops were worth it and we haven’t even pow wowed on this offline but I get the feeling that this is something that we’re going to want to continue because I think that is where the more advanced folks were catered to. Because if someone is doing 50,000 MRR in their business, they aren’t necessarily going to get a ton out of general talks anymore but these workshops for Hiten and Patrick really dug in to everybody ‘s funnel and everybody ‘s process and gave super actionable points of how to grow. I get the feeling that ‘s where they got their money ‘s worth.
Mike [20:19]: Yeah. I talked to several people because what I’m going right now is I have to go back through and look up everybody ‘s information and reach out to them but I want to schedule at least 10 or 15 minutes to talk to every single person who went to a workshop if I can get them on Skype or on a call or something like that. And I’ve already had three or four of these discussions already because there are people who stuck around after the conference, but that was the sense that I got from people. There were definitely things that we could’ve done better upfront in terms of communication and letting people know what the workshops were and what was going to be in them, but we didn’t get tickets out until partly into January. So, we got that done and we got that all taken care of and then all of a sudden, we ‘ve got workshops to deal with and if we don ‘t do them this year, we have to wait another year to do any sort of iteration on them. So, I wouldn’t say that they were added in after the fact but the reality is it was just working on them was held up by the fact that we didn’t have a signed contract for the hotel until January. So, some of that was our fault buty the people coming out of the workshop by and large, all I’ve heard is great feedback from them just,Yes, I would absolutely do this again. It was fantastic. It was very, very helpful.
Rob [21:22]: So does wrapping up MicroConf Vegas make you excited for MicroConf Europe here in the fall?
Mike [21:29]: As long as there’s no sprinkler systems involved.
Rob [21:31]: I know. Oh, we’ll get planning on that soon. So, to recap, our seven takeaways from MicroConf Vegas 2015 were number one, that relationships are crucial; number two, don ‘t hang stage lights near a sprinkler; number three, find your product fit first and then start marketing; number four, buttons matter, test them; number five, don ‘t make big decisions when you’re not at optimum performance; number six, the most important SaaS metric no one talks about is profit; and number seven, how to run an outbound email campaign.
Mike [22:01]: If you have a question for us, you can call it into our voicemail number at 1-888-801-9690 or email it to us at firstname.lastname@example.org. Our theme music is an excerpt from We ‘re Out of Control by Moot used under creative commons. Subscribe to us on iTunes by searching for startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening and we ‘ll see you next time.