In this episode of Startups For The Rest Of Us, Rob and Mike interview Andrew Connell and talk to him about making a full time income with online training.
Items mentioned in this episode:
- Product Hunt
- A Startups Guide to Hiring a Virtual Assistant
- Kajabi Next
- Summit Evergreen
- The Single Founder Handbook
Mike [00:26]: In this episode of Startups For The Rest Of Us, Rob and I are going to be interviewing Andrew Connell and talking to him about making a full-time income with online training. This is Startups For The Rest Of Us episode 236.
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 Mike.
Rob [00:28]: And I’m Rob.
Mike [00:32]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s going on this week Rob?
Rob [01:08]: You know I’m fresh back on the scene after going to San Francisco last weekend for Microsoft’s Build Conference, and Derek and I took a ride up there because we sketched out a little partnership between Drip and the Office 365 team. And they started a new program where, for the Office 365 developers, they are providing them with some software components and other stuff to help them build better software and sell more software, frankly. It’s just kind of like, if you have ever heard of the BizSpark program that they had for startups, it’s similar to that but it’s just for Office 365 developers and Drip is a part of that.
Mike [01:09]: Very cool.
Rob [02:00]: Yeah. It was nice. They essentially purchased a bunch of licenses from us and we went up and had a booth there and met a bunch of folks. Like any trade show, there is a lot of discussions that probably aren’t going to lead anywhere, you’re not going to get a lot of individual customers from there. But the ones that were really key were, the conversations we got in with a few Microsoft folks and as well as some affiliated folks of these other partners who then partner up with us. One company said, “Look, if you integrate with us, we’ll pitch you out to all of our customers, who might even add you as an add-on to one of our plans.” And these guys have a hundred times the reach that we do at this point, in terms of customers. If any of those pan out, that’s an enterprise sale cycle. This could take four months, six months to pan out. But if any of those work, that would be worth all the time plus more that we spent up at the conference.
Mike [02:02]: Cool. Congratulations and good luck with all those.
Rob [02:15]: Yeah. Thanks a lot. The other highlight for me was I got to say hi to Paul Thurrott and Mary Jo Foley from Windows Weekly. I have been listening to that show for a couple of years. And I was able to hang out with Andrew Connell, who we’re actually interviewing in this episode.
Mike [02:18]: Well, on my end, the Single Founder Handbook launched this week.
Rob [02:19]: Yeah. Congratulations, man.
Mike [02:20]: Thanks.
Rob [02:22]: It’s a big deal. Got it out in, what? Four months flat.
Mike [02:37]: Yeah. It’s about four months. It was done in probably two and a half to three and then it took a while for the editing process, and I did a private launch just before MicroConf, and then this week was the public launch. I did something new, I don’t know if I mentioned it last week, but I ran what’s called Thunderclap campaign.
Rob [02:38]: Yeah. You mentioned it.
Mike [02:44]: And I got it up to 475,000 for the reach according to their stats.
Rob [02:45]: Do you think it drove sales?
Mike [02:55]: I’m sure that it drove sales but not nearly as many as I would’ve hoped or would’ve liked. Because the reach, it just didn’t seem to drive as much traffic as I would have liked to have seen. It’s really [crosstalk]
Rob [03:12]: It’s the social thing like, “Hey, I have 10,000 Twitter followers, I’d tweet this and 200 of them see it, and of those 200, ten of them click it.” It gets really small really quickly. Facebook’s the same way with the algorithm that your posts only show up to five percent or ten percent of the people you follow.
Mike [03:40]: Yeah. But, I mean, I ran the math on it and I still expected a heck of a lot more from it. I’m actually going to go through these numbers in a lot more detail then probably publish them, most likely, publicly at some point. But just to kind of give you rough numbers of what I’ve looked at so far, if it was about 500,000, I was expecting around five percent of the people to have seen it. So you figure that’s what, 25,000. And of those, how many people would actually click on it. You think maybe one in a 100 or something like that. So that will be –
Rob [03:41]: I would like a little more.
Mike [03:54]: – yeah. I ended up with about 500 people clicking through. At least that’s what I saw. I guess maybe two percent, maybe that’s not nearly as bad as I thought it would’ve been initially when I was looking at those numbers. I seemed to have expected more for some reason.
Rob [03:57]: Because half a million sounds like such a big number.
Mike [04:04]: It does. It was about 500 click throughs, it’s really what it came down to, so divided by thousand.
Rob [04:09]: Mm-hmm. Yeah, with social media for sure. I mean with the e-mail, I would’ve expected to have been ten times that, maybe twenty.
Mike [04:13]: Oh, yeah, definitely. My e-mail was definitely surpassed that, that’s pretty clear.
Rob [04:16]: Right. And you also get some love on Hacker News.
Mike [04:52]: The interesting thing is that although the Thunderclap campaign itself didn’t directly do anything, somebody saw it through that and then they’re like, “Oh my God, what is this?” and then they posted to Hacker News and it ended up at number two on Hacker News. Somebody else posted that to Product Hunt. Got up to like number five or number six in Product Hunt and then it ended the day in the top ten. Because of that, it ended up getting included in the daily e-mail that Product Hunt sends out. So I got the e-mail from them this morning even though it was posted yesterday. As soon as that e-mail went out, I went over and I started taking a look at my server, and sure enough, people started showing up on the server and inside of my analytics.
Rob [05:04]: That’s cool. And that’s the kind of stuff where would that have happened if you hadn’t have had all the tweets go out? Maybe the tweets didn’t result directly in sales, but if they result in you making it to Hacker News and Product Hunt, there’s a lot of value to that, right?
Mike [05:05]: Right.
Rob [05:08]: Because those places, I do think you could find some people who will buy a book.
Mike [05:39]: Right. I was looking at my server at one point and it was pushing between twenty and thirty megabits a second at one point, just because there was so much traffic coming in and people were signing up for the free chapter that I put on the website where you could just put in your name and e-mail address, just click the button and it would basically add you to the e-mail list, and then you could download a free chapter from it. And that was directly through my website, so, of course, had I thought about it a little bit more, I probably would’ve put it on like a CDN or something like that, but didn’t think too much about it. I wasn’t expecting it to have that much traffic that quickly.
Rob [05:41]: Right. Are you talking about sales numbers publicly?
Mike [05:43]: Not yet. I’m sure I will though.
Rob [05:46]: Have you been happy with the sales numbers or did you expect more?
Mike [06:06]: I would say they are probably a little bit low below what I expected, but the week is not over. And I also have a ton of e-mail signups that could theoretically lead into sales. I’m kind of in the neutral phase at the moment. I think if I were looking at just the raw numbers, I’d probably be disappointed. But because there is all this additional follow up that I foresee that can happen, I’m fine with it the way it is.
Rob [06:07]: Very good.
Mike [06:28]: In today’s episode, we are going to be talking to Andrew Connell, and he worked as a corporate developer for several years. He has been a member of Micropreneur Academy for a couple of years. He has been to MicroConf. He started a training company back in 2009 and he has his own podcast called the Microsoft Cloud Show, and he is going to be here today talking to us a little bit about how to make a full-time income with online training. How are you doing today, Andrew?
Andrew [06:30]: Doing great Mike. Thanks for having me.
Mike [06:42]: Excellent. So why don’t you just give us a little bit of your backstory. We know some of the details ourselves, but I think the listeners are going to want to hear a little bit about where you came from, what sorts of things you’ve done in the past, and what has gotten you to where you are today?
Andrew [07:45]: Sure. We always do long bios but I started as a corporate developer, classic, just an employee at a big company building stuff internally and for outside customers. In about 2007, I went to go work full-time for a company as a contract instructor. After a year of that, I kind of split out on my own to do contract instructing, but as kind of like a 1099 or an independent contractor. It was really appealing because, with training, essentially, you get ninety percent of the revenue before you even deliver the services. So it wasn’t that big of a jump to go from a full-time job to a contract instructor. After I did that for about a year or two, the guy that was doing it, guy by a name of Ted Pattison. I was contracting mostly for him. The two of us started a training business that we ran for about four years. They’re still in business but about two years ago, I decided that I wanted to go back on my own and sold my interest to him. And so for the last two years, I have been doing a lot of video-based training and then content generation for various customers. Very little consulting. I do almost zero consulting these days.
Mike [07:55]: So how did you get started with the online training. It sounds like you got rid of your interest in the training company, which I assume, was that doing on site training at different locations?
Andrew [09:04]: Yeah. And I still do a little bit of that. We hold a public course. We’d rent out a training facility or a hotel ballroom over the span of a week. And then people would register at our company and we’d show up with manuals and virtual machines. I just sit there and teach them all week. But while I was doing that, while I was running the training company, we started to stand up a side business or another line of business, where we were going to do on-demand training, where we would record the courses and then people would come to the site and pay us for the courses. But it was one of those classic things that it was more important to focus on the revenue generating activities, and at that time, it wasn’t. So we were never getting it off the ground but the silver lining in it was that we had a ton of video content that we just weren’t using, we just had no way to go through and deliver it. About that time, there was another company, that where all my stuff is today, called Pluralsight. We partnered with them to essentially do our video trainings. So we gave them all of our videos and just kind of got seeded with being one of the authors there that had a lot of content, because we just gave them, I think that’s 76 or 80 hours of content right out of the gate. We did that, I think, late 2012 or something.
Rob [09:11]: To give listeners an idea, these videos, is it like Screencast with you talking over them or is it an actual camera set-up and you teaching a classroom?
Andrew [09:21]: That’s a great question. There is no camera. It’s essentially like a Screencast. So it’s like PowerPoint slides and then Screencast and then people can download a code samples and stuff like that.
Rob [09:47]: Cool. So it seems like this was a natural transition for you from in-person training to moving online. You already had the skill set, you already have the content. Because you are a software developer at heart, was there ever something in you that said, “I’m releasing an info product rather than an app.” Is that like an ultimate goal of yours to release a software, to build a SaaS app or build plugins or whatever or is the info product probably the right path for you?
Andrew [10:46]: Well, it’s funny you say that. In the last few months, I’ve been wrestling with myself about that. I thought that my goal was to build a software product. I’d always loved the idea, I’d always wanted to build something. But I think recently, I’ve looked at it and said, “I’ve got a knack for this info product stuff.” And as much as I really want to build a product, I had started on the SaaS product but let’s do the podcast for, I guess the better part of the last two years, something told me that say, “You’ve never done this” and these other guys were all saying that it is the hardest thing to jump into and you’re finding it’s the hardest thing to jump into, you should pretty much stop and focus on the thing that’s going to be the best revenue generating for you today. So right now, I’m solely focused on doing info products or video-based training. And there is a lot pieces to it. I’ve got two other friends that are doing software products that I hear the challenges that they’d run into and there are certain things with an info product, specifically around video training, video on-demand training, that I don’t have to deal with at all as far as a software product goes. Major headaches that are just not going to be an issue at all.
Mike [10:48]: Could you give us some examples of what those are?
Andrew [11:28]: Yeah. Sure. The big one is support. I don’t have support. So what I can do is people may send in questions from watching course and I can answer those questions, but there is no ongoing support. There is nothing that breaks, [it’s a video?]. Sometimes you have code samples that don’t work after whatever you’re basing them on is the technology has changed, but it’s not that big of a deal to go fix those. So I don’t have like outages or anything like that that I have to deal with. Because right now where I host my courses, you could think of it like a book publisher model where I just give my videos to a company and then they have a master catalog and people subscribe to their catalog and I get paid royalties based on the amount of minutes that they watch of my courses.
Rob [12:09]: Interesting. I think this is such a fundamental question that if you are listening to this, you should ask yourself. Are info product is something that you are interested in doing? Because I know that some software developers absolutely have no desire to teach and they don’t have, whether it’s the skill or the desire and they don’t want to do it. And that’s okay, and if that’s the case, then I would think about doing like stair-step approach that we’ve talked about here. I think that if you are interested in teaching, that the benefits that, Andrew, you’ve laid out, of the no support, of you can create it, it tends to be a little more evergreen, doesn’t need maintenance, that stuff is a real benefit of info products. And I think putting info products into the stair-step approach, is absolutely a viable way to go especially if you have the skill for it.
Andrew [13:30]: I completely agree. I definitely don’t want to put across the perception that this is the way to go. I mean, it is a way to go and for me, I have a knack for doing this and I enjoy doing it. One of the things I always really enjoyed was standing in front of a crowd or at least a small room and teaching some people, is that I get a satisfaction or endorphin rush or whatever you want to call it when I explain something that someone was confused about and you see that light bulb go off in the same way that when someone purchases a product and that solves the business problem for them or makes their lives easier, the same way that a software developer does. I get that same rush as well and I’ve just decided to say, “For me, this one kind of works.” I just finished three brutal weeks speaking between Europe and the U.S. at a couple of different conferences and I really get a lot of satisfaction from explaining something to someone that was really confused and seeing all these light bulbs go off and having people come up afterwards saying, “Thank you. Now I understand this stuff.” To me, I feel like I have helped someone and so the video training kind of helps that as well. Yesterday, I was doing a presentation, had a bunch of people come up afterwards and they’re like, “I’ve been watching your videos, super helpful. Thank you very much.” I definitely don’t want to put across that, like what you said, Rob, that, “This is the way to do it.” It is a way. There’s so many different ways of going through and doing this solopreneur or entrepreneur kind of lifestyle. This is just the one that works for me.
Mike [13:46]: One of the things that you brought up earlier, which kind of contrasts against my experience doing training was that, it sounded to me like you develop the training courses yourself. You started your training company and you were doing the training for people, it sounded to me like you were saying, you created all that content yourself. Is that the case?
Andrew [14:32]: That’s true. Yeah. It’s a bunch of companies where you can actually buy content and training courses from vendors. I have Microsoft background and Microsoft has a thing called the MOC or the Microsoft Official Curriculum, and you can purchase that each book or each kit. One kit would go to a student from Microsoft and then you can teach it, you can re-sell it. But for us, what we did- we founded our company more of a boutique style where we built our entire training course and then we turned around and we would sell it as our stuff that was better than what you will get from vendors. We also repackaged it and sold it to other training companies to go through and teach. We did all of our own stuff and I tell you, it was quite the learning experience going from building a five day course to building an on-demand course that the packaging and the delivery and how you structure courses, is just so radically different.
Mike [14:46]: Yeah. Different experience that I had was that we were basically mandated. We had to teach the official courses and if we didn’t we would have our training certifications yanked. So we had no options at that point. It was use their stuff or don’t be a training company.
Andrew [15:30]: Yeah. And that was a decision that we had to make. Because, I primarily have been teaching SharePoint or .NET or Office 365 over the last six, seven years, eight years. And with Microsoft, when companies would buy a lot of software from Microsoft, they would usually get training certificates that included as part of their purchase and we had to make a decision that we are going to do only our own stuff. But what that meant is that, we couldn’t accept any other training vouchers that these companies had because we weren’t teaching the MOC curriculum and we weren’t certified as Microsoft trainers. We went the different model of saying, “We’re not going to sell a Ford or Chevy style training, we’re going to sell a Lexus or a Ferrari style training and be a little bit more specialized.” And that worked out really well for quite a few years.
Mike [15:36]: But at the same time, you’re almost an off brand as well because you are not necessarily officially sanctioned by Microsoft either, right?
Andrew [15:59]: We weren’t. We were actually brought in by Microsoft quite a few times to help teach a lot of their developers and a lot of their consultants would send people to our courses. But you wouldn’t get a discount by Microsoft sending you to us or anything like that. We didn’t have any way to accept any of the vouchers that Microsoft was giving their customers. It was just a business decision and which way we want to go and how we wanted to structure the company.
Mike [16:13]: Yeah, the vouchers is the thing that I could see where that would be a painful decision to have to make, because you don’t know what the result of that decision is going to be and ultimately, it could torpedo your company. But at the end of the day, it may also turn out completely fine, you just don’t know in advance.
Andrew [16:44]: You really do. I can’t take too much credit for this one because the guy that I was teaching with as a contractor, he had written his own course where when he quote, unquote “hired me,” I did that in quotes because I wasn’t an employee, I was just a contract instructor, he told me he’d keep me busy at least one week a month and that was like that for a year, which was just a fine income and so, at least on the training side that was a fine income. I saw that that business model already worked and so we just ran with it and just said, “Yeah, we’re not going to take vouchers.” I wish I could take a lot more credit for that, but I can’t.
Mike [16:55]: So in transitioning to doing online training, you said that you use Pluralsight. Are there other training platforms that you evaluated that I guess or was it just what was available at that time and seemed like a good option?
Andrew [18:42]: At that time, we didn’t look at anybody else. And the reason why is because, at the time they were known as a Microsoft Development Training Services Company for on-demand training, but where they were lacking was where we were strong and that was in the SharePoint content. They had a bunch of content that was already there, but they had a ton on-demand and they were trying to get it in there and they couldn’t really get it in or it was going to take them a lot more time to grow it organically. And so we just worked out a deal with them where we provided them all the content that we already had to see their catalog and grow it by, I think it was either, two or three [X?] in that one category. And it made a lot of sense for us because the model that Pluralsight follows is that they essentially, like a book publisher, they do all of the marketing, they do all of the sales, they do all of the customer management and stuff, and you just provide the content and you get paid royalties based on the amount of content that people watch over the course of a month or over the course of a quarter. Since then, I have looked at a couple of different options. There’s other companies out there that follow much more of a, I guess you’d call it a self publishing model, like Udemy or Kajabi. These companies, you provide your course to them, they host it for you, either for a monthly fee or they just take a special cut, and then you are incentivized to sell it yourself, to advertise it yourself and to grow your customer list yourself and in exchange, you bring back a much bigger percentage of each sale than what you would with someone that’s doing more of a hosting model. It’s almost the exact same model of the difference between publishing a book with a publisher, like an O’Reilly or somebody like that, versus doing a self publishing. You keep more of the profit for you when you self publish, but in exchange, you also put a lot more of the leg work in the marketing and the sales and the customer generation.
Mike [18:47]: So how was Pluralsight set up for the customers who are purchasing the training packages?
Andrew [19:46]: Pluralsight’s got a huge catalog of courses and they just pay a subscription to the entire catalog. There’s two different levels. There is one for if you just want to watch it online, and then there’s another level that you get additional things like code downloads from the courses that have them, evaluations, and access to the mobile clients where you can cash courses offline if you are like on the subway or something and you want to watch it. So they pay a subscription and then they get access to the entire catalog. The authors get paid based on the amount of minutes watched, and so it breaks it down. The really simplest way to explain it is that, if Pluralsight pulled in a pool of money over the course of a quarter and they looked at how many minutes were watched of the entire catalog, if you are responsible for, let’s just say, ten percent of that, then you are responsible for ten percent of the entire revenue from the quarter and then they look at your royalty number and they say, “Oh, if your royalty number is,” let’s just pull a number out of the hat, let’s just say it’s fifteen, “Then you get paid fifteen percent of the royalty amount that you are responsible for for that quarter.”
Rob [20:01]: Do you think that Pluralsight was something that worked really well because you got in early or have the terms changed? Meaning, if I came in today, let’s say I went and launched ten or twenty Pluralsight courses of my own, do you think I could achieve similar success to what you’ve seen?
Andrew [21:10]: Yeah, you could. The terms are essentially the exact same as far as I know. Each time I put a new course in, I have a separate contract. So the process they work, again, it’s just like a book publisher, I submit an idea to them for the course, I have to make sure that is not already covered in the catalog because that would be cannibalizing one of the other authors. We go back and forth a little bit, they generate a statement of work, and then we agree to an upfront payment when the course is complete and a royalty percentage. And so the higher upfront payment you get, the lower your royalty is. But the higher your royalty is, the lower upfront you get. So you can say, even though it’s a lot of work, you say, “I only want to take like $250 or $500 when I complete the course in exchange for the highest royalty percentage I can possibly get.” That’s a bit of a game that each author has to play. It’s funny there is a constant debate that each author has amongst each other. Because if you pick a topic that you think is going to be somewhat timeless, I would think you would want to maximize your royalty instead of getting a big upfront payment. But if you pick a topic that might be a flash in the pan, then you may want a bigger upfront payment to get more revenue upfront.
Mike [21:15]: So you are kind of gambling as the author either way. It’s hard to tell which way to go sometimes.
Andrew [21:38]: Yeah. Most of the authors are doing it part-time. They have other jobs they are doing. Most of them I think are trying to get more of the upfront payment in exchange for the amount of work that you put in. Because it’s definitely not a trivial task to put a course together. It’s taken me quite awhile to optimize my development and production process to get it down to a number that I feel really works in profitable way for me.
Mike [21:44]: So with that question, how long does it take to create a course and how long are the different courses?
Andrew [23:08]: Generally speaking, they try to keep courses anywhere from one hour to four hours. And if you are outside of those parameters you have to have a pretty good case and have a back and forth with your editor. For me, I think that most courses work best if they are between an hour to two hours long. Partly because, a lot of authors or a lot of customers use on demand courses as the same way to use textbooks. We don’t go grab a textbook out of the bookstore and sit down and read it like a novel. We pull it off the shelf and look at the index and find that answer that we need or hopefully find the topic what we are struggling with at that time. And so you really have to be creative and smart about how you structure the course and that you also chunk little videos together in maybe two to five minutes segments, so that someone who needs an answer can just dive right in real quick. If you go through and you have a problem with something, you’re trying to figure something out, you find a course that looks like has the topic of what you need, the last thing you want to do is find a video that looks like it’s about 25 minutes long that may have the answer you want. You want to go dive and find a two minute video that explains what the problem is and how you can fix it and maybe has other videos that build off of that. But watching 25 minutes in hopes that it going to answer your question, that’s not a good way to package your course. You want to make sure that it’s easy for someone to get in and out and to be able to take advantage of your course a lot more. So I rarely see courses of, at least of mine, that you watched it all the way through.
Mike [23:21]: So are these videos, are they separated into little subsets of videos? So if you have a course that’s, let’s say ninety minutes long, are there like nine, ten minute videos in there or how does that work structurally?
Andrew [23:32]: So you have course and then each course is structured into modules. So a module would be like a major topic or like a chapter on a book, and then inside of that module, you have multiple clips and each clip is a video file.
Mike [23:33]: Got it.
Andrew [23:47]: I try to make mine anywhere from 45 seconds to no more than five minutes at a max and if it’s a demo that’s going to take a lot longer than that, I try to chunk that demo up into multiple clips into different components and different pieces.
Mike [23:50]: So for a one hour training course, how long does it take to put one of these things together?
Andrew [25:28]: Not to change the question, because it makes it easier for me to answer, but let me explain why I’m doing this. It’s hard because some modules you spend more time explaining than you do actually showing. A module that is mostly slide or is explanation and animations, is a lot easier to put together than a module that is much more demo heavy. And I’ll give you a couple examples. The last four or five courses I’ve done have been anywhere from two to four hours. I first started out with my four hour courses, took me anywhere from 120 to 140 hours to finish the course and that’s from planning the whole thing out, building the all the demos, building the slides, recording everything, cleaning up all the audio and stuff and then editing the videos, producing them and then rendering them all out and writing the questions and such. I have been able to get that workflow down anywhere from a 90-minute to 120-minute course, I can get it done in about 36 to 40 hours. But it’s a process that each author struggles with it. We see a lot of people talking, not just in Pluralsight but I see other people as well, how do you get your process down, how do you take advantage of sites like oDesk, now it’s called Upwork, and how you can take advantage of contractors to help you with the audio clean up, how to help you with the video? The hardest part of this entire thing of doing these video training courses is by far the audio. It is incredible how hard it really is to get into and get it done the right way, audio levels, background noise, good equipment. A lot of people think you can and say, “Oh, mine is just fine” but you can’t get a headset with a microphone on it and think that, “Hey you’re just fine.” You really need some professional equipment both hardware and software to get a really high quality sound out of it.
Mike [25:34]: I laugh because that’s exactly what we do for this podcast, we have had headsets with microphones on them.
Andrew [26:09]: For the podcast that I run, I use my recording rig. But for the headset mics and everything, what we find is that a lot of the background noise, a lot of the extra stuff that comes through that’s not on a dynamic mic or directional mic, that you don’t get from the headset ones, when you’re listening to it for a very long time, which is different from a podcast, but when you’re listening to it for a very long time, it can get to be pretty challenging for people. So the research has shown that it’s a little bit better to have a higher quality sound to get a much better output. So I have invested somewhere around $400 or $500 in the hardware that I’ve got sitting on my desk now.
Mike [26:16]: Now for the courses, you don’t have any control over pricing in any way shape or form, right? That all goes through Pluralsight, correct?
Andrew [27:29]: That’s correct. So for the company that I’m with right now with Pluralsight, I have no control over the pricing and it’s one thing that I have been kind of struggling with or I have been thinking about recently. I do a lot of work for one major software company and I would like to have the ability to package up a bunch of my courses on one topic and sell them to that company for them to either use internally or for them to give away to their customers. Today, I don’t really have that ability. I have the ability to give away free trials. This is the part where it’s a little bit different from a book. Any of the marketing that I do for my courses where they currently are, I’m really marketing the catalog and then trying to convince the people to go watch my course once they have bought a subscription. If I don’t do that, if they just go through and the buy a subscription and I’ve tried to get them into the catalog and then they go start watching someone else’s courses, there is nothing in it for me. It’s challenging because I have no visibility on when I send somebody there, I have no visibility into who my customers are. So that’s another thing that I know that, at least as a listener of the Startups podcast, and I’m sure some of the other listeners are too, that’s something I’ve always kind of struggled with and that I have no way to talk directly to my customers unless they ask a question through a little discussion form that we have on each one of our courses on the Pluralsight website.
Rob [27:36]: Right. It’s kind of like the app store model where you can’t really build a list or an audience and you’re a little bit at the whim of Pluralsight, essentially, in terms of communicating with them.
Andrew [27:56]: Yes. It’s exactly like the app store model. It’s just something that, anybody that’s built an app like that and you want to talk to your customers and do research, you’ve just got to hope that they will interact with you on the comments. So that can be challenging. You have a beat on what people want, you have a beat on what the market needs and stuff and you do your research, but no replacement for talking to your customers.
Rob [28:02]: Right. And just to give folks an idea, you have almost thirty courses in Pluralsight, is that correct?
Andrew [28:10]: That’s correct. But thirty courses, and I would say, ballpark, about anywhere from 100 to 115 hours or 110 hours, something like that.
Rob [28:11]: Of course work?
Andrew [28:13]: That’s correct. Yeah, across all of them.
Rob [28:32]: Andrew, I’m curious. You’re using Pluralsight, you’re obviously having success with it, making a full-time income from it. How much though have you given to looking at a platform like Udemy? There’s several others that are less of a publisher model and they are more of direct connection with your audience where you get a bit of high royalty rate on it, but it probably wouldn’t be as lucrative for you upfront. Have you thought about doing that?
Andrew [31:37]: Yes. So I have a Google doc with about ten different options that I have been doing a ton of research on and spending a whole lot of time looking at it and trying to do the whole like pros and cons on each one. I have the opportunity to speak at a bunch of conferences and I have the advantage of followers on Twitter and something of an audience and I would like to be able to take advantage of that a little bit more than just putting courses inside of a catalog and letting somebody else market them. It’s nothing negative about who I’m with right now, the part of building a software product that is appealing to me is the marketing side. Because I find that it is something I don’t know and it’s a challenge that I’d like to try and tackle. And what I’m doing right now, I don’t have the option of really doing that. So there is two of them that I have been looking at a lot recently. One of them is Udemy. They have a very different model from what I’m doing now where you build the courses, you publish them on the Udemy platform and you don’t pay anything for hosting them there. But if you sell the course through one of your promotion codes, then you keep a hundred percent of the sale minus the credit card transaction. If a customer finds your course organically through Udemy’s advertising or they’re an existing Udemy customer and they find your course by just going to their catalog, then you receive only fifty percent of the transaction. Udemy collects the other fifty percent and you split the transaction cost. So Udemy’s advantages to having a huge catalog and then they can turn around and they can sell their catalog to customers and make fifty percent on each transaction. But I have the ability to market straight to my customers, and let’s just say, if I did a course and sold it for $100, if I sold it, I may sell it for fifty bucks. If Udemy sells it, I’m only going to get fifty bucks as well. So either way, it’s splitting the difference. It works good for me. There are some downsides to that though, where with Udemy, you don’t get your customers. You have a way of talking to them either through broadcast messages or, I’d compare it to like a Facebook style Messenger chat where I can see their name and I can see that they subscribed, but I can’t get their e-mail address. There’s another one that I have been looking at called Kajabi Next. It’s a little bit different in the sense that you pay a subscription per month for hosting a certain number of courses. You get five for one level and you get unlimited for another level. But with that one, all of your transactions happen through Stripe and whenever someone registers for your course, you can do a Webhook to where it get sent out. So if I’m using any other mailing list to go through and maintain a list of customers, I can immediately capture all of my customers that purchased my course. They don’t have a whole discounting model or a whole promotion code model like Udemy does, but I could stand up my own little store or even if I wanted to go, I could use something like Groupon and sell my courses and then get their e-mail address and go into Kajabi and then, it’s called inviting an individual to your course. It’s basically like saying, “Give us their e-mail address, we will send them an e-mail. They can get it for free now.” So I’m kind of going between the three different options. I’m looking at them for a couple of different things. I have a few courses I’m still working on with Pluralsight, but I’m looking at just a couple of different options to see what different challenges are. I really want to take advantage of marketing my own stuff and see what I can do with that, just to see if I can do any better with that kind of a business.
Rob [32:12]: Yeah. I really like that the options are laid out. I used Udemy with my Startup VA course, that’s startupvacourse.com, if folks want to check it out. And I had good results, but it’s as you said, you don’t have access to your people. You don’t know who bought and aside from kind of the internal broadcasting stuff, it’s been fine. If I were to do it again or if I were to release another course, I would probably look at something like Kajabi Next, just because it’s such a no brainer to have that Stripe, [Hookfire?] put it into Drip, right, because we integrate with Stripe and just have that list there and you’re constantly adding to your audience. I think there is a lot of value with that.
Andrew [33:57]: The two things that are bugging about that one. I agree with you, that’s the one I lean towards. But the two things that bug me about that, one of them is that when someone registers for your course, let’s say that they do it outside of Kajabi Next. And so you’ve set up your own store to where if you have courses and you want to package them together and you want to sell them for one rate, you would have to make that sale outside of Kajabi Next because they don’t have a way of doing that. So I would have my own store, I’d sell them those five courses, but then it would be a manual process for me to go grab their e-mail address and go invite them into each one of those different courses and I have to keep track of which ones they have access to. It’s not that big of a deal and it’s something that you could definitely outsource that to a VA, but my fear in that is that if I go down that approach, that someone is going to purchase a course, I’m going to be unavailable for a little bit and I’m going to definitely need to have a VA. They’re going to want to jump in and start looking at that course right away. And will it [out?] being automated, it can be a challenge. The other one though that’s a big one and you just cannot discount this one enough. So Kajabi, they have a bunch of courses, but I don’t think that there is a tremendous population that goes to Kajabi looking for a course. They’re going to find the course through your ads and through your different ways of marketing your course. At Udemy, they’ve got six million people that are looking at their courses. And I’ve got friends that have told me that they have courses there and that, anywhere from three quarters to two thirds of their revenue comes direct from Udemy and not through their own marketing efforts. They are not marketing their courses as much as I think that I would do it, but six million is hard to just say, “Yeah, I’m not going to look at that. I’m going to do it on my own.” That’s the one that really keeps pulling me back and just saying, “Maybe you can live with the fact you can’t talk directly to your customers.” But I’m not sure where I stand on. I keep going back and forth everyday.
Mike [34:27]: I think there is a spectrum there. There’s a tipping point in the middle where early on, it doesn’t makes sense, so you lean more towards something like Pluralsight, where they’ve already got the audience versus much later on when you’ve got your own audience, then you would lean more towards building it and hosting it yourself or doing through something like Kajabi Next, where you kind of maintain control of that audience. But there’s that middle phase that it’s like, “How do I go from this side over here to that side over there, so that I can make more money doing the exact same thing.”
Andrew [35:18]: It really falls down to the person that’s doing the course. If you are doing a development style course, like all my stuff is all about development, software development, and if the traditional developer may not have the desire or the skill set to do the marketing and they may just want to say, “I want to build the course and I want to put it somewhere and let you guys go through and sell it.” To me, I’d like to have the opportunity to try the marketing and to really figure out how to talk to my customers and how to get them to come in, how to re-sell to certain customer and how to do special deals for the companies I do a lot of work for. Or if I’m speaking at a conference, I’d like to be able to say at the end of the conference, “If you like this, here is seventy percent off of this course that I have.” And if they get in there, then I can up sell them on another courses. It just depends. I think it’s part, what you said Mike, and then it’s also part of do you want to go through the effort of trying to market it. It’s just to each their own on this one.
Mike [35:24]: Another platform you might want to look at is called Summit Evergreen. Keith Perhac is behind that. He was one of the sponsors at MicroConf this year as well.
Andrew [35:55]: There’s a [slot?] group that stood up around the Founder Café and I think he was the one or someone else was the one that actually pointed me to them as well. And so I haven’t dug into them as much just yet. It’s on my list of like seven, eight, or nine that I was looking at. For me, I know that I’ve got two things ahead of me before I can actually make this jump if I decide to make this jump to somewhat another platform. I’ve got about at least three months or four months before I can actually do this, and so that’s another one of my research that I have to go through and take a look at.
Mike [36:03]: Well, if you want to hear more about Andrew Connell, he has the Microsoft Cloud Show that you can go listen to, that’s a podcast that he runs, and Andrew, where can people follow up with you?
Andrew [36:12]: Two best places, I’ve got a blog that’s just my name, Andrewconnell.com. Two n’s, two l’s. And then also on Twitter, same thing, just @Andrewconnell.
Rob [36:13]: Sounds great, man. Thanks for coming on the show.
Andrew [36:16]: Absolutely. Thanks a lot for the opportunity, guys.
Rob [36:36]: If you have a question for us, call our voicemail number at 888-801-9690 or you can e-mail us at email@example.com. Our theme music is an excerpt from We‘re Out of Control by MoOt, it’s 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, we‘ll see you next time.
Episode 234 | Eight Things We Wish We Knew When We Started Out
In this episode of Startups For The Rest Of Us, Rob and Mike revisit eight things they wish they knew when they were starting out. After five years of additional knowledge and experience they share some new tasks on the topic.
Items mentioned in this episode:
Mike [00:00]: In this episode of Startups For The Rest Of Us, Rob and I are going to revisit eight things we wish we knew when we started out. This is Startups For The Rest Of Us episode 234.
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 Mike.
Rob [00:23]: And I’m Rob.
Mike [00:24]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week Rob?
Rob [00:27]: Well, by the time this episode airs, I will be heading to San Francisco for Microsoft’s Build conference.
Mike [00:34]: Interesting. So how’s that going to work out?
Rob [00:36]: Yeah, because when we were offline you said, “Oh, because of all the .NET development you guys are doing these days,” because we’re [?] now, but Drip has been asked to be part of one of the Microsoft programs, and it’s kind of a nice little enterprise deal for Drip. They bought a bunch of licenses and they’re going to be implementing – I obviously can’t give too much. There’s an NDA until they announce it, but they’re integrating it into one of their big programs, so they comped us a booth there, and I think I’m recording a couple podcasts while I’m up there, and doing some lightning talks – couple fifteen minute talks about marketing automation and that kind of stuff. So, if you find yourself at MS Build give me a tweet @Robwalling or just swing by the Drip booth, and I’d love to connect with you.
Mike [01:15]: Very cool. So, I’m still trying to catch up on work after MicroConf. I don’t know about you but –
Rob [01:19]: Yeah, same thing. I just about dug myself out of email as of yesterday.
Mike [01:23]: Yeah, it’s funny. I dug myself out of email, and I was down to I think two or three, and now I’m back up to several dozen again. It’s like, “Oh, just let it stop.” It’s almost like the post office. You wish you could opt out of email, like all email, at some point.
Rob [01:35]: I know. My executive assistant I hired has been really helpful over the past two weeks because I went heads-down on MicroConf, and then she just kept everything sorted. And, it’s not that I’m getting any less email, in fact I’m getting more email each month, but she kept stuff in the this week and the today tab. So, when I came back I really only had maybe fifty emails that I really had to respond too, and typically when I come back from MicroConf there’s like between 3 and 400 emails that I basically have to just spend a few hours sifting through and replying to. So, she saved me quite a bit of time. It made me realize she’s only saving me, whatever it is 20 minutes a day, maybe, 20 to 30 minutes, but over the course of a week of not checking email, that time really adds up.
Mike [02:14]: Yeah, but that also comes down to the fact that you have to be using that time for good.
Rob [02:19]: I’ll say.
Mike [02:20]: Because if you end up wasting that time anyway, it doesn’t really buy you anything.
Rob [02:22]: Right.
Mike [02:23]: I definitely use to have that problem where I’d save some time in certain areas, and then I’d just end up wasting it elsewhere, so I wasn’t really gaining anything. So, this week I’m testing out a Thunderclap campaign. If you go over to thunderclap.it – somebody described it to me as sort of like an aggregated buffer app. So, what you can do is go over to thunderclap.it, you can set up a campaign, and you invite people to essentially help promote whatever your product or service is, and it will schedule people’s tweets, or Tumblr posts, or Facebook posts to all go out at a specific date in the future. There’s specific limits about how many people you can invite. There’s different levels that you have to meet, or you can pay for it to just go out no matter what. If you pay for it, then it’ll give you additional benefits of the service, so they have, essentially a freemium model.
It’s interesting because you can invite all these people to promote something that you’re doing, and then at the designated time, they all basically go into the social networks all at the same time. So, if you get a hundred people contributing, and each of them have say 2,000 followers, for example, then you get exposure to like a hundred times 2,000 people, which can be pretty significant. I mean, the time window for that exposure I think is pretty limited, but at the same time, you can get a lot of exposure all at once as opposed to doing it piecemeal and trying to get it throughout the course of like several weeks or months.
Rob [03:44]: Yeah, it’s certainly convenient. I had never heard of this before. I’m assuming it’s a new service, but it’s certainly convenient, and you’re using it for your book launch right? Your Single Founder Handbook comes out in a couple weeks, and at a certain date, at 11am Eastern, all of these tweets, and tumbles, and Facebook posts are going to go live all at once. So, I’m curious to see what impact it has, and to hear back about the experiment.
Mike [04:03]: Yeah, me too. It’ll be interesting just to kind of watch and see what happens. If nothing else, I mean, it’s not like I spent a whole heck of a lot of money on it.
Rob [04:10]: We have some new iTunes reviews, several new reviews actually. We have 417 worldwide reviews, and the most recent are from Trevor Jaye. He says, “Motivational, educational, and entertaining. These guys are great, and the fact that they can put out such great content every week is amazing. I highly recommend anyone looking for a bit of inspiration to tune into these guys as much as possible.” We also got a five-star review from Zach Kessin. He says, “Don’t make all the mistakes yourself. Learn from these guys who are sharing what they know so well.” So thank you very much for the iTunes reviews. If you haven’t given us a five-star review, we would love it if you would log into iTunes, or Stitcher, or Downcast, and you don’t even need to write out any sentences. You can just click the five-star button. We really appreciate it; it helps us keep the show going. It’s motivation for us, and it helps us rank higher in iTunes, and it helps more people find us.
Mike [04:57]: So, I remember reading a blog post from Joel Spolsky years and years ago, about something that they were doing where the interesting part of it was that the CEO was basically dealing with all these printer issues to print labels and manually send stuff out, and I’ve realized that he wasn’t joking when he said that sending products out manually was a logistical nightmare.
Rob [05:17]: I endured the same thing when I initially sold my book. I think I sold 300 copies, and then I had to fulfil them, and I had no plan in place to do that. It’s a lot more work than you think it is to pack 300 books.
Mike [05:27]: It is. It’s way more work than I thought it would be.
Rob [05:30]: I wound up hiring a local college student to come for an eight-hour day and basically fill out custom forms. This is before stamps.com, or at least before I knew it existed, because that’s what I would do now is get the scale and have someone do that. I actually had to go to the post office and do it. So, you had to fill out custom forms basically by hand. So, I had her come over for about eight hours and paid her to affix labels and do all that kind of stuff. It was well worth it. Even beyond that, I still had a bunch of logistical work of printing labels myself.
Mike [05:58]: Got you. Yeah, I found my wife had some things just laying around to be able to print the labels, so that was actually the easy part, but going through all the books and signing them all, that’s the part that really just takes forever. Instead of hiring a college student, I roped my wife into sitting there doing all that stuff for me.
Rob [06:13]: Or your kids, I think any one of those would be a good plan.
Mike [06:16]: I don’t know. My wife put the first couple of labels on incorrectly. They were in the wrong spot. The return address was in the middle, and I’m like, “What are you doing?”, and she’s just like, “I’m sorry, I just wasn’t paying attention.”
Rob [06:25]: Nice. Yeah, I have my eight-year old help sometimes fulfilling Drip t-shirts and books and stuff, and I will often have to correct his work.
Mike [06:34]: It’s almost like hiring.
Rob [06:35]: I know. It’s so hard to find good help, right? So what are we talking about today?
Mike [06:40]: Well, we originally did a version of this topic back in Episode 4. It’s been nearly five years, and the episode at the time was called “8 Things We Wish We Knew When We Started”, and I figured what we’d do is we’d go through that topic again, and see if there are different things that we would say now versus what we said then. So, I wanted to just revisit it. There’s five years of learning between when we did that episode and now. So, is there different advice that we would give ourselves, is kind of the main question. So, I copy-pasted the list into our outline, and I put that at the bottom. I didn’t really look through things before coming up with my list of four and you’ve got your own list of four, but I figured we’d go through them, and see how things are different now than they were five years ago.
Rob [07:18]: This is one of the most requested episode formats. We often get, “Hey you guys talked about x in Episode 15. What do you think now?” It’s pretty frequent, so I can see us doing several of these in the coming months; basically revisiting some old topics and giving a new take on them. It might be interesting to read our lists from Episode 4 before we start. My four from back in 2010, I guess, was that traffic isn’t enough, that one big link won’t make you successful, to thinking years not months, and that marketing and sales take as long to learn as software development.
Mike [07:50]: And my list was: number one, the amount of administrative overhead of creating a business is a lot higher than you think it is, number two, you can’t do everything yourself – outsourcing time consuming tasks is essential to success, three, don’t waste time making the optimal decision, make a decent decision and move on, and four, if it’s easy in the beginning, that’ll probably change – if it’s not easy that’s normal.
Rob [08:08]: Nice. So, let’s dive into what we’ve put together for this episode, kind of the updated takeaways. My first one is to play long ball – essentially, to think in years and not months. Like I said five years ago, I think that still holds true, and it’s something I really believe in, even having moved down the line now and been doing this for longer. I think that kind of ties into the stair-step approach that we talked about a few episodes ago, that I blogged about, that I’ve now had in talks. It’s that the odds are not great that you’re going to start something and have this grand success within a few months. That any time you hear about people doing it, there are typically some extenuating circumstances, that someone has tried five different apps, and then the sixth one caught, and grew really quickly. Or, if someone does it on their first app, that it usually is more of a Cinderella story. It’s a really unique outlier situation if someone does have quick success. So, think in years, not months, and go in it as a marathon, and look to play long ball instead of trying to get instant growth and instant success.
Mike [09:08]: Mine in some ways kind of ties into that theme or idea, because my first one is you can’t skip steps in the learning process. What I’ve realized is that if you try and reach too far, then things are just going to be that much harder for you. And, in some ways, I was kind of thinking about your stair-step approach in this, where there are certain things that you almost have to learn along the way. As you said, I mean, if there’s that Cinderella story, there are people out there who have gone from 0 to 100 in the first shot, but that’s not common. By skipping some of those steps, or trying to intentionally skip them, it makes it that much harder for you. You might as well have gone for something smaller in order to go through that learning process, because you have to go through it in some way, shape, or form. You’re better off doing some smaller things in order to get that experience and the successes under your belt, not just the learning successes but also the financial successes under your belt as you go through it, because if you go too far without those financial successes, obviously your runway’s going to fall short. So, you need to go through those steps in order to learn things as you go along.
Rob [10:09]: My second thing I wish I knew when I started out is the importance of relationships. Especially, seven, eight years ago, as I was really starting to come into fruition and have apps generate the majority of my income, I was trying to do it all on my own, because there really wasn’t a bootstrap community at that point, and I didn’t have connections. I didn’t have a mastermind group. There was no MicroConf . I didn’t have a network that I could leverage. People told me, “You need to build relationships.” Or, I’d read this in books, or hear it in podcasts or whatever. I didn’t realize how important that would actually be, and that having a community of like-minded people – how important that is, how much quicker and enjoyable it can make the journey, not only in ways of people helping you out, offering to promote your product, offering to give you feedback, but even the support of being able to talk to other founders and find out that what you’re going through is normal, and the hard times are what we all go through.
Having a mastermind group to talk to and get advice, some of the key insights of the last couple of years have come out of the two mastermind groups that I’m in. So, I think that if you’re trying to do this all on your own, and listening to a few podcasts, and you’re reading books, and you think that you’re just going to be able to kind of dive in based on pure knowledge and tactics and grow something, I think you’re missing out on a big piece of it, and I think you’re going to dramatically extend the length of your journey, and not in a good way. Right? You’re going to prolong the learning. You’re going to make a lot of mistakes that you would otherwise not if you had folks around to lend you a hand and lend you support.
Mike [11:43]: The second thing I wish I knew when I started out was that establishing trust is a critical step on your marketing path. I mean, I knew when starting out that people do not just come to your website and then buy from you. That’s not common behavior from most people. However, one of the things that I don’t think I fully grasped was the importance of all the different follow-ups and the individual touches from people, whether it’s emails, or different things on your website, or white papers, or phone calls, things like that. I don’t think I fully grasped how important all those little things are, because they add up to a level of trust that essentially helps convince people to buy, because people just online are typically in this mode of “no”. That’s their first thought. “Are you interested in this?” “No I’m not.”
I think it’s just very common for people who are browsing around on the internet, they see an offer of some kind, and their immediate answer is “no”. But, given enough time, and enough trustworthy touches, I’ll say, it essentially brings them over. Especially if they were interested in it at all. I mean, because they need to be able to trust you in order for them to buy into whatever the product or service is that you’re offering. And, it’s not going to be an immediate thing. It might be three or four emails or something like that, it might be an email course, it might be thirty or forty emails. But, you have to get through all of those different things to help establish the trust between you and the prospect in order to get them to essentially come over to the side where they look at it and say, “Hey, I trust this person enough to give them my money, and I think that I’m going to get value out of this transaction.”
Rob [13:09]: Yeah, and there’s varying ways to approach this. I think the two most common are to go out and build a personal brand and build an audience, and people then know, like, and trust you. This is done typically through blogging or podcasting or video blogging, whatever, Instagram, and people feel like they know you. Then you have some type of product you can sell them, whether that is a book, or a conference, or a physical product like Gary Vaynerchuk with wine, and that’s one way to do it. If that’s your thing, and you’re the personal brand type, and you want to build a personality and put in the time, it’s a long road because you have to put in a ton of time creating that content. That does not happen over the course of six months. It’s years and years of showing up every week and producing. I think some people come out and say, “This is the best way to do it, and the only way to do it.” And I totally disagree with that. I think it’s one approach.
The other approach is we see folks who build a software product. They build maybe a SaaS app and they establish trust not through a personal brand, not through blogging and putting out content every week, but through sticking around and building a product name that people start to associate with something, right? It’s essentially a brand, it’s trustworthy. So, you can see examples of this, like maybe with Bidsketch, or I think Baremetrics has a brand, and I think WP Engine now has a brand name. I would venture to say that in our circles, Drip has some kind of brand name. You don’t have to do it through a personal brand; you can build trust, like you said, with getting folks on a product email list essentially, like an email crash course, and building a relationship over time and providing value. Then, when someone’s ready to buy, it’s not some type of cold sale, although it might start off as a cold touch if you’re sending traffic to your site through ads. But, if you nurture them over time through these various touches, you can build trust without having to do the whole personal brand thing.
The third thing I wish I knew when I started out is that certain products have one natural marketing channel, and that in most cases you shouldn’t spend time looking for others beyond that channel. What I mean is certain websites might get a ton of organic SEO traffic. An example of this would be my beach towel website years ago, or if you have an e-commerce site that has long-tail rankings, or if you have a WordPress plugin that ranks in wordpress.org, they get 80, 90% of their traffic from a single source. It’s a very natural marketing channel for that product, but the mistake that I made early on, especially, was to then try to take that product and double down on it, and spending six months or a year trying to find other marketing channels and grow it. Often times if you have a product with a single channel, this is what I call a step-one product, it really isn’t worth the time trying to make ads work or try to do content marketing for a WordPress plugin, or going outside of this single channel that is essentially free traffic.
Mike [15:57]: So, are there any specific criteria that you can think of that would essentially relegate different products into “this is the only channel where this is going to work”, as you said, the natural marketing channel for it? Are there certain criteria or characteristics of them?
Rob [16:10]: Yeah, typically it’s lifetime value. Typically if it’s a one-time sale, and the lifetime value is less than say, I’ll ballpark it at about $120. If it’s less than that, it’s going to be really hard to invest money and acquire customers, because display advertising, pay per click, content marketing, any type of outbound email, any of that stuff, you’re going to need to make more than a minimum of 120. Realistically around 200 is when it starts getting easier. So, if you have one-time sales, and you’re only making 30, $40 off a sale, you just don’t have a lot of choices. If you have a current price, and you’re making more than that, between 120 and $200 that’s when you can start thinking, “Okay, I’m going to invest into some SEO. I’m going to have some articles written. I’m going to start building that email list. I’m going to go beyond buy ads and really expand out.”
Mike [17:00]: The third thing I wish I knew when we started out was that in many cases, it’s better to not know anything about what you’re getting into. Two notable examples I can think of off the top of my head were MicroConf and my book. I think in both cases, these things turned out well, but I wonder, going into it had I known how much work it was going to be, if I was going to go through and follow through with it. I mean, it was something that I wanted to do, but I didn’t fully realize how much work and effort it was going to take. I think a lot of other people have comments on this as well. I think Paul Graham has also said this. Basically, just not knowing what you’re doing can be an incredible benefit because you don’t know how hard it is, and until you get into it you don’t realize it. In fact, sometimes until you’re done with it, you don’t necessarily realize how hard it was. So, you’re willing to take those risks, you’re willing to go through that learning experience because you didn’t know any better.
Rob [17:50]: Yeah, I agree with this, actually. I have found myself in the midst of some things that were worth doing, but they were harder than I wanted them to be. Had I known how hard they’d be, I probably wouldn’t have started them. MicroConf , like you said, is a great example. I think building an app from scratch and growing Drip is another example of the last two plus years of my life spent doing it. These are hard things and I think as founders we have to do them. I think that’s how we’re wired, and if we didn’t do them we would be unhappy, I think, in general. I think that’s kind of what we need to do, but being a little naive about how hard these things actually are I think is a natural benefit, kind of like forgetting how painful childbirth is or something like that. It’s an adaptation that allows us to revisit these pains and keep doing them over and over, in essence.
My fourth thing that I wish I knew when I started out is that having multiple products is good. I like the diversification, I like the experience you get. But, entering multiple markets is not good. This is a mistake that I made early on because there was no one around to tell me that it was a mistake. But, in essence, I feel like I probably wasted quite a bit of time in having multiple small products that were in disparate niches, right? So, I was selling beach towels to consumers, I had some e-books on just random topics that were totally unrelated, I had .NET invoice selling to, essentially, .NET developers, consultants, and some small businesses who wanted control of their data. I had a number of other products, and there was no overlap between the audiences. There’s an old marketing saying that I like, and it’s, “Selling an existing product to a new audience is good. Selling a new product to an existing audience is good. But you almost never want to sell a new product to a new audience.” That’s when it’s hardest, right? When you’re first starting out, you have to do that, but once you get one under your belt, my advice would be to not stray out and try to do this new market and new product thing again, because that’s when the time frame really extends and the learning is so painful. So, if I could do it all over again, I would have looked to take the initial audience of the first product or two that were successful, and double down on that, and essentially, find out what else they needed, and basically build or acquire products like that. I just think the flywheel and the momentum that you build serving the same market, there’s a ton of benefit to it.
Mike [20:13]: The fourth thing that I wish I knew when I started out was that community is everything. I think this relates back to number two for yours, but it’s hard to get by completely on your own. I think that when I started out, back in 2005 or so, there was a part of me that really believed that you could just kind of sit in your basement and work on stuff and things would work out for you. You didn’t need other people. Obviously, a lot of things have changed since then, but I feel like in the last five years it’s really emphasized to me the importance of having all those other people to rely on and talk to, whether it’s MicroConf , or inside a founder cafe, or just in a mastermind group. All these other people, just as you said, they give you direction, they give you these other insights about their experiences that you don’t have, or you’re not privy to, because you didn’t have those experiences. So, they can help direct you on the right path and keep you off of the wrong one.
Rob [21:01]: So, you actually had four more that you came up with, under the “others” category. So, these are like our four bonus things we wish we knew when we started out.
Mike [21:09]: And, it’s interesting. I wrote these down because I was just kind of brainstorming a little bit about what sorts of things that came to mind that either other people have brought to me, or I’ve kind of noodled around in the back of my head a little bit, but we’ll go through these four. The first one was that the more you learn, the harder it is to make decisions sometimes. This kind of goes back and relates a little bit to the fact that sometimes it’s better to not know anything about what you’re getting into. But, if you know a lot about something, sometimes it’s difficult to make a decision because you start thinking about all these “what if” scenarios. You think about all the different challenges and problems you’re going to have, and all these different things, and you view them as roadblocks. So, you sit there and you spend more time trying to think about how to avoid those roadblocks rather than actually sitting down, doing the work, and just saying, “Okay, I’m just going to plow through this, regardless of however long it’s going to take.” So, maybe it takes you a little bit of extra time to plow through them, but you are not procrastinating, you’re essentially wasting all that other time trying to think of ways around the problems that you haven’t even gotten into yet.
Rob [22:08]: Kind of the curse of knowledge, right?
Mike [22:10]: Yeah.
Rob [22:11]: Yeah, I think that the more I’ve learned, I have found it easier to make decisions, but I do think that I found it harder to give clear, concrete advice when people ask questions because I think of all the things that could potentially go wrong now. I see so many more pitfalls. So, I think in talking about it, I have – naturally I put up a lot more caveats. It’s always “it depends”, and there’s a lot of different variables and then you have to give ranges. I think things were so much more clear five years ago when I knew a lot less, and I could just emphatically say, “Yes, you should always do this. You should never do that.” The more I learned, the more I realized that that’s not the case, actually. That’s why I’m suspicious when people come out and use these words: always, never, should, because they reek to me of inexperience, of your view is not broad enough to realize that there are nuances to this and that none of these things are black and white. Very, very rare that you’ll find something that where “never” and “always” apply.
Mike [23:09]: The second one was that you’re never too old to become an entrepreneur. I actually had a couple of people joke to me leading up to MicroConf that, “Oh, I’m going to be the oldest person there.” The reality is it doesn’t necessarily matter. I mean, people have different career paths and different personal life arcs that go along with them. You can be 21 years old, you can be 65, you can be 75. I mean there are definitely entrepreneurs out there who are also advanced in their years. It almost doesn’t matter. You’re never too old to start something new.
Rob [23:39]: The third one is that knowing what you want or need isn’t as important as knowing why you want or need it. I think this depends on your time frame. I think if you’re early in your entrepreneurial career and maybe you’re trying to quit your job, I think knowing that you want and need it and that you’re willing to really drive for it and invest a lot of time, I think that’s as important as knowing why, because I think just getting there is such a journey that focusing on it is huge. Now, once you get there, you’re suddenly going to discover “wow, this isn’t all it’s cracked up to be”. It’s great, but it doesn’t fulfil you for the rest of your life, right, the arrival fallacy in that you get there and then within a few months you then need to start sorting out your “why”. I think that’s at every step. At every goal and big arrival that you think you’re going to have over the course of your 20, 30 year entrepreneurial career, I think first you need to decide on “what”, and then you’re going to get there and you’re going to achieve that “what”, and then you have to figure out “Why did I do that, and why did that fulfil me?” And that “why” that drives you to that next “what”, that next thing of what is it that I’m going to pursue and how am I going to kind of chart this course of starting businesses.
Mike [24:48]: Yeah, for me this one was more about understanding that the “why” is not about what it is that you’re achieving, it’s about the journey to achieve it. Your real goal isn’t necessarily to achieve whatever the goal is, but it’s to enjoy that journey, to go through it, and experience all the things that go with it. Yes, it’s great to achieve whatever the goal is, whether it’s $10,000 a month in revenue, or 50 or 100. That’s great, but knowing that your journey is essentially the driving reason behind it, at least for me, that’s the driving reason. Different people are going to have different thoughts about why it is that they want to achieve these different goals. But to me, it’s the journey that’s important; you have to enjoy life and to enjoy whatever it is that you’re doing. If you’re not enjoying it, then why bother?
And then the last one on my “others” list was “quitting while you’re ahead is not the same thing as quitting”. I remember this as a quote from the movie American Gangster. It just struck me as something that is fundamentally truthful, because you look at that and say, “Well, if you’re quitting, nobody likes a quitter.” But, at the same time, when you’re quitting while you’re ahead, because you know that other things are going to come along that are either better or are going to torpedo all the things that you’ve done so far, you’re essentially recognizing what your situation looks like and making a conscious decision to move on, versus being in a situation where you’re fighting a losing battle that you cannot possibly win. For example, a number of years ago where they were trying to create a calendar app. It was going to be all web-based, and then all of a sudden out of left field Google comes along and announces that they’re coming out with a calendar app as well. Instead of trying to fight against that machine, they did what I thought was a very admirable move, and just decided to kind of pull the plug and say, “We’re going to quit this. We’re going to go on and move on to something else.” They made that as a conscious decision and I think that’s the differentiating factor here, is that you’re making a conscious decision to move on versus fighting against a machine that you know you’re going to lose against, and folding up shop well in advance of that because you’re deciding to say, “Hey, look this is not going to work out. I recognize that. I’m just going to move on and I’m going to do something where I can be successful.”
Rob [26:47]: That wraps us up for today. If you have a question for us, call our voicemail number at 888-801-9690, or email us at firstname.lastname@example.org. Our theme music 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. We’ll see you next time.