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Episode 70 | Marketing a $1 App, What to Do When You Die, and More Listener Questions

Episode 70 | Marketing a $1 App, What to Do When You Die, and More Listener Questions

00:00

Transcript

[00:00] Rob : This is startups for the rest of us episode 70.

[00:02][Music]

[00:12] Rob : Welcome to startups for the rest of us, the podcast to help developers, designers, entrepreneurs be awesome at launching software products. Whether you’ve built your first product or you’re just thinking about it. I’m Rob.

[00:22] Mike : And I’m Mike.

[00:22] Rob : And we’re here to share our experiences to help you avoid you the same mistakes we’ve made. What’s the word this week Mike?

[00:28] Mike : I’m trying to finally whittle down the massive paperwork that has just kind of stacked up over the past couple of weeks. So mostly invoices but just trying to get my stuff prepared for tax season, you know as you run a business you’ve got to have your taxes done like a month before everyone else. It’s kind of a pain but you know goes with the territory.

[00:44] Rob : Right. Yeah I haven’t even started looking at my stuff, I’ll probably do, I’m going to LessConf next week and then I think after that I’ll probably start looking at it.

[00:51] Mike : Oh you’ve only got like three weeks.

[00:54] Rob : No, not for mine. I’m not a Corp. I’m an LLC, so mine’s due April 15 th yeah.

[01:00] Mike : Oh so you don’t…okay.

[01:01] Rob : I’ve not, I do pay quarterly you know estimated. I don’t have the weird deadlines like you. I think that’s because you’re a corp right?

[01:07] Mike : Yeah. Probably because I’ve to two S Corps and due to March 15 th .

[01:11] Rob : March 15 th ? Yeah. That’s federal too right, it’s IRS not your state.

[01:16] Mike : No it’s just for the business. Like the business taxes are due the 15 th of March and then the following month that’s when my personal taxes are due in because everything is done as an S Corp and it’s all done as a pass through to my own personal taxes. You know that relies on a lot of the numbers that I get from my business taxes. Most of the times everything is done around March 15 th but…

[01:35] Rob : The stuff that’s due on March 15 th is that your IRS or federal taxes or is that your state taxes for your business or is it both?

[01:43] Mike : Yeah I think it’s both.

[01:44] Rob : Okay for me both are due in April but I can imagine if Massachusetts could easily have a different deadline.

[01:49] Mike : Yeah I think with LLC is you get to choose.

[01:52] Rob : Yeah you can treat the LLC earnings as like a pass through like it’s a sole proprietorship or you can do it like an S Corp and I do an S Corp but it’s still doesn’t mean, like it doesn’t mean that I have to file it like an S Corp. It’s kind of weird. Wait, I have to file like an S Corp but I don’t have to file it at the same deadline as if it were an actual S Corp. Everyone’s rolling their eyes and falling asleep right now. We need to move on.

[02:14] So I’m going to LessConf next week I am speaking for the first time at that conference and I have forgotten how hard it is to write a talk from scratch. Because the last time I wrote a talk was well over a year ago and then I did that same talk five or six times, actually it was seven times in one year and by the end of it, I had gotten really good at it where I didn’t need to rehearse. I had honed the talk, I had eliminated the bad parts, added in the good parts, added in good jokes, you know I mean I had all the material there.

[02:44] And just starting from a blank page again and not wanting to repeat any material is shockingly difficult. I budgeted like a day to do it and I’m about a halfway through my third day. Trying to get the material and it’s only a 35 minute talk and so I’m trying to get down. I’m looking forward to LessConf next week in Atlanta but don’t know how many more years of this I’m going to do. I enjoy the speaking but I’m thinking like good grief, I just for got how time consuming it actually is to put together a good talk.

[03:07 Mike : Yeah I know what you’re saying I still got to do something for MicroConf. As you know I don’t even have my talk topic yet. So I’m still trying to figure out exactly what it is that I want to talk about but I’m sure I’ll come up with something. I was considering doing a talk on how to pivot, come up with something. One thing I forgot to mention last week was that remember how I had said that 21times.org had sent out a link to Episode 66, I forgot to mention that they’re actually looking for developers who are willing to write for them as well. They do have funds set aside to pay writers so if anyone out there is interested in doing some writing and getting paid for it they are looking specifically for people who have a developer background to write for them. So just drop a line to them at .

[03:53] Rob : That’s a trip I’m actually going to contact them. I saw that Patrick McKenzie had I think it was a blog post kind of republished through them and so I’d be intrigued to do that as well.

[04:01] Mike : Cool. You know the other thing in doing my taxes and stuff I’ve also decided that I think I’m going to shut down Moon River Consulting completely later this year.

[04:10] Rob : Really? Wow. For listeners who don’t know Mike has to S Corps. One is Moon River Consulting that he typically runs his consulting through and the other is Moon River Software and that’s where he’s run all his product revenue through. So you’re thinking about shutting one of them down, why is that?

[04:22] Mike : Well when I had originally started Moon River Consulting it was because there was this mass of consulting business that was coming in and I really wanted, there were a couple of different reasons I wanted to separate the two businesses. But one of them had to do with legal reasons and those reasons have essentially gone away at this point. There is very very little need for me to actually have both of the businesses and in going through and starting to do my taxes I’ve realized I’m paying for a lot of things twice. I mean a lot of services I’m paying double for.

[04:56] So if I want to have an account on you know for like SEO miles or something like that, it’s difficult to have one for Moon River Software that I also use for Moon River Consulting. And that’s not just one example, I mean there are a lot of other places like you know Fresh Books and various other online services that I would like to use or I am using and it would be nice to have another account to use for other things. But at the same time I’m not willing to shell out all that money for you know two different accounts for what is almost the same business.

[05:29] So really I’m just kind of looking at consolidating a lot of those things and I have kind of done the math in my head a little bit and figure I can probably save two, three maybe $4000 a year just by consolidating the two. And like I said I don’t need both companies any more.

[05:43] Rob : Yeah that totally makes sense. I remember looking at this and you know since I have all the different products I had entertained the idea of incorporating them separately or doing something like that. And I remember that it was a huge added cost. I hadn’t even thought about that, needing MailChimp accounts because you want to split the expenses but that makes sense because all my, Numa group is an LLC and everything else is an umbrella. My products are umbrellas under it.

[06:07] But I do have three MailChimp accounts because I have one for the Numa group, all the products under it and then we have one for the academy and then I have one for Dot Net invoice because that’s a separate partnership so it does make sense that you’d have a bunch of duplicate costs. Good luck with that it sounds like the right thing to do if it can save you some money and hustle and paperwork.

[06:23] Mike : Yeah and it’s really cutting down on the paperwork because if I can hire somebody fulltime just to handle paperwork for me at this point it would almost be worth it. So anything that can reduce the amount of paperwork and hustle that I have to do that’s definitely the way I’ve got to go.

[06:37] Rob : Yeah sure. The Hit Tail billing code is running and since the relaunch it has been about 36 days or something and the reason that’s important is because I have a 30 day trial so I’m actually now starting to get some really preliminary data of how many of the new cohort from the new design, you know where I require a credit card upfront. How many of those folks are actually converting to paid customers and so it is exciting to be at that point where I can start seeing a trend and starting to figure out how to improve that. So other than that I have been just continuing to try to outsource as much as possible the last week to, you know virtual assistants and a couple of CSS guys I have working so.

[07:09] Mike : I would outsource my paperwork but some of it involves scanning receipts and things like that and I can’t, I’d have to scan them and then send them to a VA who could then scan them.

[07:24] Rob : It’s funny because the daycare that takes care of our kids actually had the same issue and there is a service that will do this for you and it’s for, it goes ten bucks a month starting. Shoe Box or Shoe Boxed, you can mail them receipts and they’ll scan them.

[07:36] Mike : Yeah I’ve seen some other services, one of which was you could actually take a picture of your receipt with your phone and upload it and then they would have somebody plug in all the numbers for you and then you could put them in your Excel or whatever. I thought about doing something along those lines but…

[07:51] Rob : Shoe Box has both of those. It has the iPhone and the iPad apps and then or you can just email them or scan them so it has a lot of different options. And that’s what, I actually recommended it to this friend of mine that runs the daycare and she’s like, oh we’ve moved some of my week to week headache to be able to get the receipt scanning of my desk.

[08:10] Mike : That’s cool, maybe I’ll take a look at that one. But this kind of ties in to me eliminating Moon River Consulting and just switching things over to Moon River Software because if I can integrate something like this with Fresh Books and a couple of other things then it would greatly simplify my life and really reduce the amount of time that I spend on all the stuff that’s essentially overhead that I don’t want to have to deal with.

[08:30] Rob : Cool.

[08:30] Mike : I did have one other thing, what exactly is the competition that we have going with TechZing? Do we win something if we win here, what are our goals?

[08:40] Rob : What happened is we were talking about it and we said we were at 75 and so then they said they wanted to get to 100. And so then I said let’s try to get to 125 and then you and I just kind of tossed around and said well oh whoever loses has to buy beers at MicroConf. They haven’t really agreed to that per se but I bet, you know it’s a friendly competition.

[08:58] Mike : I wanted to send out a special thanks to Sean Murphy, he owns the website, recursive.io. And what he did was he actually put together a PHP script that he’s hosted on Get Hub that iterates through all the different languages that iTunes supports and counts all the ratings, adds them up and shows them to you.

[09:16] Rob : Wow.

[09:17] Mike : So he actually plugged it in, he just set with a variable one for startups for the rest of us, one for TechZing and we are currently winning 116 to 80 right now. So 36 ratings more than they do.

[09:30] Rob : That’s crazy, well that’s a cool script man. Bravo, so yeah bravo Sean that’s awesome. I can’t imagine flipping through the iTunes, you know it’s like what API did you need to connect to that or what crazy screen scrapping did you do because it’s not HTML.

[09:44] Mike : He just went directly against Apple’s website, it’s just like a URL call really.

[09:49] Rob : Oh interesting, that makes it a little easier then he didn’t go into iTunes, okay.

[09:53] Mike : He did go into iTunes but it’s you know, it’s sign their I know that, I saw a Jason query in there but it was just a PHP script that he wrote and it just does everything all web based.

[10:02] Rob : Oh that’s cool. Yeah thanks for doing that we can easily keep track of the competition that way.

[10:05] [Music].

[10:08] Mike : What’s on the agenda for today?

[10:10] Rob : Today we’re going to be covering listener questions. I went into the treasure troves of audio and text questions. I was going to pick one out and design a whole episode around it but we have so many all of a sudden. They just stack up and I forget so I think we have another 15 questions in the backlog and I just picked out four or five and we’ll get through as many as we can given the time constraints.

[10:32] Craig : Hey guys this is Craig from Michigan. You guys have been having a lot of recaps or review on the podcast really. And I remember about a year ago Rob you had mentioned you had purchased a bundle of websites, I think they were Ad Revenue or Ad Sense websites. I was just kind of curious I didn’t hear much about that since you purchased them. Have you been updating them, have you been working on them at all, have you sold them? Are they still like within the search engine rankings or are they re affected by Panda this past year, Panda updates from Google? And also do you consider like that a viable business to pursue for someone who’s not necessarily interested in building a web app? So I’d like to hear you comments on that and how those are going. Thanks for your time guys.

[11:11] Rob : Cool. So I like this question because it kind of pointed out, you know it is one of those things that we say, oh we’ll come back to that and we never did. So I’m glad he raised it. I do still have the sites, I have a total of , I bought a block of eight and then I bought two other individual ones. And they paid back their purchase price, I think it was about, within a couple of months actually. I think I’ve owned them for what maybe eight months. They did get hit hard by Panda, they would have paid themselves back pretty quickly. But they got hammered when Panda came out and so they had some issues, I think like traffic and revenue dropped basically by half.

[11:48] So at this point I haven’t updated much of the content. They continued to rank well for the terms that they rank for and frankly I got caught up with MicroConf and then with buying HitTail and then with the next MicroConf and then I’m going to start working on my second book here soon. So they’ve kind of gone on the backburner and I figured that they would. I spent a bunch of time experimenting upfront with moving around the Ad units and just kind of learning about the whole world and it was cool to learn about it but it wasn’t anything I was going to turn into a massive earner.

[12:21] The nice thing about them is they really don’t need to be updated, you know that they can continue to earn even at the level they are now. It’s just kind of bringing in a nice trickle of income, a few hundred bucks a month. I do build a link or two every once in a while and they just, they maintain. So I think overall the final part of the question is, could I recommend that as a reasonable way to make money? And there are a lot of people that actually do quite well with these sites. They’re called Niche sites and the guy at viperchill.com, his name is Glen Alsop, he does pretty well. Then there is actually the AdSense Flippers which, their name sounds like scammy but they’re legit. Like they go Lifestyle Business Podcast and Dan Andrews knows that they know their stuff.

[13:02] And if you’re thinking about going that avenue I would totally check out both those blogs. But I think the thing for me personally is if they can make money but they’re not actually, it’s not actually that interesting to do. I think building a process to maybe produce them you know in an automated fashion would be interesting intriguing to do. But it’s not that exciting for me personally you know. Certainly I think the positive side of it is that it can make a few hundred bucks a month fairly easily with no support, you know it’s not like having a web app.

[13:29] And so then you can then use that to springboard to buy other stuff or to launch other apps and you kind of have a nice recurring stream of revenue there to help get other businesses started which is actually some of the stuff that I did early on in buying some of the non startup businesses that I did. They were really to fund the acquisition of later apps. Well cool. Let’s look at our next question. I’ve kind of coined some titles for each of these, this one is “ what if your product has no defined market?” And it’s from Hanna Wiley.

[13:58] She says, hi Mike and Rob. I listen with great interest to your listener’s question podcast episode 63. You gave the advice to make sure there is a market and get customers before ever creating software. The marketing is more important than the actual coding, customers before product. This seems like great advice, but what if you are like me creating a software application that is completely unique and not solving a specific customer problem? I’m talking about a social app, like Foursquare, Twitter, Facebook or Flickr.

[14:24] I have an IDM passion so this is not just about the money. It’s a totally innovative social utility application that will engage users and it will to monetize and will even be a service to users once they start using it and realize how much they like it. But it doesn’t come up from a specific need, from a specific client profile. With that in mind and considering that I am the idea girl and understand where this can go and have a great knack for marketing and networking, do you suggest I create a prototype to have beta testers use, pitch the idea to investors, outsource a prototype, find a tech co founder? I know this sounds a bit out of scope but I’m sure other listeners out there are in similar situations. Much appreciated. What do you think sir?

[15:03] Mike : To me I don’t want to sound overly negative but this sounds more like pie in the sky, this should do great, this is an awesome idea and everybody is going to love it. The idea of getting the customers first or making sure that they are customers is understanding that there is some sort of a need that people are trying to fulfill, you know they’re having a problem with something. And I guess social applications don’t really fit that. I mean what was the need that Twitter fulfilled? What was the need that Facebook fulfilled and is there any kind of real monetization that you can do behind that?

[15:35] And I don’t think that there is, at least not upfront, whatever you do to monetize the idea is not going to be obvious, those are the types of things that I think fall outside of the scope of customers before product. My suggestion probably would be to start talking to investors and see if you can pitch the idea to them so that you can work on it for a while. It seems to me that this is the kind of thing that they would latch on to. I mean they’re looking for things that are not necessarily a complete shot in the dark but are a reasonable idea that if pulled if and executed well could do extremely well and get a lot of returns.

[16:12] But if you’re looking to monetize and you know keep it to yourself you really need something where you’re solving a problem. But this doesn’t sound like that. It sounds more like you’re interested in building something that you’ve got this vision for and you’re okay with taking the money to do it. And that sounds to me like a perfectly reasonable option. But that’s more for the specific situation, I think that it’s just going to be difficult to say what exactly those customers are looking for because it’s not a problem you’re solving.

[16:40] Rob : Right, there are a few tiers of applications and customer needs and there’s apps that customers don’t know they need and are not looking for. Then there are apps that customers know they need and are looking for and there is everything in between. Actually I have this matrix that I’m going to put in some future talks. Then this will lie in the ‘don’t know they need and are not looking for’. And what that means is you almost for sure that you’ll need to get funding, I mean there is no way this is a microprenuer business, I don’t see any stretch of imagination that you’re going to be a single founder and pull this off.

[17:11] I mean you’re going to need to raise funding and go big or viral with this thing. Now what that means is the chances of you know what Mike and I talk about, kind of the solving a problem businesses, the chances of those succeeding vary but if you get pretty good at it and you can identify a market first and actually get people interested I would say you’ve got a 10, 20, 30% chance of succeeding with something like that. Whereas the idea that Hanna is talking about I mean literally I would give it a one in ten thousand, it’s just a whole different world.

[17:38] Now the payoff if you become Twitter, Facebook or Flickr is obviously much larger. But it’s just such as an astronomically smaller chance, maybe even one in hundred thousand or one in a million. For me having tried I went after three ideas that were not probably this large but I went after three of them when I was in New Haven Connecticut in 2007 all of them failed and I look back at my year and I thought I could have built a real business during this time you know. And that’s what I then did, that’s when I really started attacking this whole approach that Mike and I talked about.

[18:06] So I’m not saying you should or should not do this. If you’re passionate about it, go after it. But a lot of the stuff that Mike and I say is not going to apply to you, like we talk about solving real problems, building real software and actually going after customer needs. That’s the way we build businesses. So I think your first step would be to recruit a technical co founder and I think that the way you’re going to do that is you’re going to need design comps or you’re going to need to have people who tell you that they would use this.

[18:35] So you need to convince a technical co founder to come on board with you and for the two of you to invest an equal amount of time. So that technical co founder needs to invest ten hours a week for six months to build your prototype. You need to figure out a way to invest ten hours a week of your time into doing the marketing and the networking and getting things rolling and probably start conversations with investors. I don’t think you should look for investment before you have some kind of technical prototype. It depends on the complexity of what you’re trying to do but the earlier you look the more of your company you’re going to give them for not very much money.

[19:06] At least if you get a prototype out you get people using it, you have some leverage, you can say we’re worth something.

[19:12] Mike : Yeah I had a conversation a few weeks ago with somebody who was in the midst of going out and looking for funding and he basically said upfront, I mean he’s gotten funding for one of his companies before. And he basically said that at this point in order to get funding you essentially, you need to have a prototype of some kind. And then beyond that as long as you have, in this case it’s a little different because the monetization strategy isn’t clear yet.

[19:36] But if you have customers at least if you have three to five customers, three to five customers is just as good as 100 customers in the eyes of an investor because they feel like you’re going to have to pivot and change and do things a little bit differently anyway. So those things are kind of throwaways. But it proves that, the idea proves that people are willing people are willing to pay for it. With something that people aren’t paying for things maybe a little different.

[19:57] Rob : Right, very good.

[19:58] [Music]

[20:00] Rob : So for our next question I’ve titled this one “ what to do when you die?” And this is from Rob Watsler. And he says, hey Rob and Mike. I’ve enjoyed your podcast and I’ve tried to listen to all of them since the beginning, great stuff. Anyway I’ve missed a few episodes so I’m not sure if you’ve covered this topic or not but I thought it might be a good topic if you haven’t. Topic is, what is your plan if you die or how do you plan for a disaster even if that disaster is the owner passing away?

[20:25] He basically goes on to say that his father had several businesses and he had passed away and they had a bunch of things to think about like should we sell all of his businesses or just some of them? Should my mom take over the paycheck temporarily, what legal things need to get done, you know when do we decide to sell, do we need a broker? Anyway, keep up the great work. Thanks, Rob Wastler.

[20:43] Mike you replied to him via email basically saying, I had thoughts on it, definitely we don’t want to give him or anyone like specific advice on what to do because this stuff is super super complicated. And it depends where you live both your state and your country and how laws work out. I mean inherent taxes and all that stuff. But I know that I have put some thoughts specifically into my portfolio of businesses. And I actually have someone in my mind who, it’s on my to do list to approach him and make a deal back and forth because he and I both have some small web apps and basically say, if I die I want you to sell them and basically give my wife the money and you get obviously like a commission or small fee for doing that and vice versa I will do it for him if he dies.

[21:22] So beyond that I mean you know we have a living trust type thing that you set up but I don’t have any of my businesses in it. And frankly I’ve never even looked into doing so. Have you thought about this before Mike?

[21:33] Mike : Well I thought about it when he originally sent this over and I think that this is kind of a specific situation but I think that in general when you’re setting up your business you kind of have to look at and figure out whether any of those businesses are things that could be perpetuated without your knowledge after you leave or if you know if you’re no longer around. And if that’s the case then it’s possible for you to essentially keep them within the family and then hand them off to your spouse or kids or whoever and allow them to run them.

[22:03] As long as you’ve essentially documented all the things that you’re doing to kind of keep the business running and maybe thoughts and projections for the future at the same time if there’s going to be some things that are just too small. Like I’m sure that there are few businesses you have that generate maybe a couple of hundred dollars a month at most that are just really not worth a whole heck of a lot. In order to keep those going probably takes up a little bit of your time. But are not things that you’re going to be able to pass that knowledge on to other people.

[22:30] So those essentially are things that could either be sold off or should be sold off immediately as opposed to you know holding on to them for your wife and kids. And then there’s those things where they do have a lot of intrinsic value like for example HitTail, I mean you obviously spent a fair chunk of change to acquire it. I don’t think we’ve talked exactly how much but it’s not a trivial acquisition either. I mean that’s something that could fetch a fairly high price. And whether that gets sold the day after you passed away or whether it was two or three months, probably not a huge difference they’d have to do something within a couple of years I would think. Otherwise things are going to start trailing downhill.

[23:07] You can’t just let those things go on autopilot for so long because the traffic is going to nosedive, sales are going to nosedive, people aren’t going to be responding to the support requests, those sorts of things. So those are the types of things that I think you have to take into consideration and in terms of this particular listener’s question I mean I think those are the same sorts of things that you have to address and deal with.

[23:29] One of the big differences that I think that he’s got is that his father’s company also had employees and these were brick and mortar companies. I mean how do you ensure that those employees either still have jobs or keep them posted on what’s going to happen. Maybe in those situations you take the business and you sell it to the employees and say, hey would you guys like to buy this outright? Because the people already know the business, they’re already running it presumably. Hopefully they could just take it over and essentially you’re selling it to them and they’re essentially building on their own future.

[23:56] Rob : Those are good points, those are good differences between what Rob has gone on and you know where you are we have going on. I think it’s also interesting to think about you know my kids are really young but given that my wife has absolutely no interest in learning the tech stuff or anything but that one of my kids may, that my situation may change in 20 years. I’m still in my 30s and so in 20 years you know I hope to still be alive and I may not want to have those sold by a friend. You’re right, like my kid might want to take over assuming they’re still around and doing well. So that’s a perfectly legitimate idea as well and something that will probably change as they get older.

[24:32] Mike : What you said is exactly right. Your situation will change as your age gets older and as your kids start to mature. Maybe they will be interested but at the same time if they’re not, dumping it on them with the expectation of them trying to carry it forward, I mean there is going to be that, I don’t want to say a guilt factor but they may feel sort of an obligation to try and carry it forward when the reality is, one they don’t want to but they’re going to feel obligated to. So you have to take those things into mind, at least have the conversations with people.

[25:04] Rob : Moving on, the next one I’ve titled, “ how to market a $1 app”. It’s from Martin Crets and he says, hi Mike and Rob. He says, love your podcast, listen to them on the way to the office in the mornings. I’m a software developer doing mobile apps since many years back and self employed the last year. Hey congrats. I have a question on how to choose a strategy to market one of the apps I have created. It’s a wallpaper application for Android that bounces balls like soccer, rugby or tennis etcetera around the screen with physics. I have a free version as well with less settings.

[25:35] Since the app is not a SaaS app which is a prescription model and only costs $1 as onetime fee, I can’t see how AdWords would work for acquiring customers. What approach to marketing would you recommend for this type of mobile app and at this price point? Thanks a lot. Keep up the good work. This is Martin from Sweden.

[25:50] Mike : I just heard a discussion within the past month or so but I remember reading it and thinking myself at the time that that was interesting. One of the things that you can do is if you’re a mobile app developer and you have more than one more app, it makes sense to cross promote your applications between them. So essentially if you have this, you know product one you advertise for product two within product one, and within then product two you advertise for product one, as you grow your portfolio of these small applications you can essentially get cross promote the applications.

[26:23] And I don’t think that they need to be related. I think that what you can do is you can say, hey check out our other apps including and then maybe you list those. And you have that as your startup screen or something like that. You just play it for a couple of seconds. The interesting thing that I heard somebody discussing about a month ago was that Apple I believe has some sort of embedded developer network, advertising network that you could essentially advertise other things inside of your iOS apps.

[26:52] And one of the things that they do is they actually provide you with a commission if somebody buys something else within the next I think 24 or 48 hours or something like that. And regardless of what it is that the bought even if it’s whether it’s your app or somebody else’s app that got promoted or if it’s an album or a movie or anything like that, you get credit for it if it’s within a certain timeframe. And the article that I was reading was essentially saying that when you get this going this small network of apps, you can actually make a lot more money from this advertising network than you can from your apps themselves because when people use your apps it’s possible for them to click on something and then they go buy something in iTunes later. And you get credit for it.

[27:35] Rob : I feel like you’ve nailed a couple of good tactics. So the second suggestion you had about the affiliate stuff was really a way to better monetize it. Because there is like two sides to the equation right, there is the cost per acquisition, how much you have to pay to get a person to buy your app. And when you have a $1 app that’s brutal. I mean no, I don’t know of any paid acquisition strategy that could possibly work for a $1 app. I mean AdWords even at its cheapest right now in minimal niches is between 30 and $100 per customer acquisition if you have a 1% closure rate.

[28:08] And in a lot of niches it’s 3 to 500 and up, like for Dot Net Invoice, it’s almost $500 to acquire a customer. So there is no chance that a $1 app is going to work with any of the paid approaches I know right now. So what you are saying is basically to increase that other side, that lifetime value side so that the lifetime value of the customer is not just the dollar they pay you but it’s a percentage of all the stuff they buy your app for the next however many years they use it which is kind of a cool thing right. Because then that could make your lifetime value of a customer four, five or six bucks, you still can do paid acquisition but at least then you don’t have to sell as many copies of the app.

[28:43] Mike : Right. But the two sides of it, the first one was advertising for your other apps within the apps that you already have. So you’re trying to essentially get the customer to buy any given customer who finds your app, you want them to also buy your other apps because you obviously get 70% of that. And then in addition to that there’s this advertising network that, again I’m not familiar with any of you iOS developers out there. Please forgive me for totally messing up all the details on this but there is something out there that you can piggyback on to essentially boost that even further.

[29:14] Now what I think all that stuff does is not address is his fundamental question which was, how do I choose a market strategy for the apps that I have created when I don’t have any customers yet?

[29:25] Rob : Well I don’t know that he’s said that he didn’t have customers but I think your idea of as soon as you have customers you start funneling them into the other apps is a huge win. I mean that’s what I’ve seen a lot of people who are successful with iOS apps, they have 20 or 30 apps in the stores and they cross promote them. Because the real issue with mobile apps is how cheap they are. There really are no paid ways to get customers.

[29:46] And so to address his question of like how do I market this thing, I mean it’s going to be, have to all be three approaches. It’s going to have to be like getting in the top ten list and going on podcast or trying to get on blogs and making a viral video. It’s going to be that kind of stuff which is time consuming.

[30:00] Mike : Or light versions of it. I’ve seen lot’s of apps where there is a light version and then there is the regular version. You know the light version is just a stripped down…

[30:08] Rob : He mentioned that he has a free version that doesn’t have as many features. But it’s like gosh, you know dude you have a free version of your software and then you’re trying to get people to upgrade to a $1 version that you get 70 cents from, you’ve got to sell a lot of copies to make any real money from that. So truthfully I don’t fully get the whole mobile space, I’m just I’m skeptical of it in the long term.

[30:29] I think that in the long term with the market is growing dramatically right now. They’re selling bazillions of iPhones and bazillions of Androids and I know they’ll continue to sell these things. But how many iOS apps am I going to buy over the next ten years? And how much revenue and recurring revenues does that really create? I think while the market is growing you can have an app that’s selling for 99 cents apiece without subscription billing and you can make good money. And we know some developers are doing that, it’s like one or two percent of the apps but it’s still, it’s possible.

[30:57] But I think over the long term I really do question with like without subscription billing how can you possibly maintain high enough lifetime values when you’re really selling something for 99 cents a pop.

[31:06] Mike : I think it’s mentally difficult to justify it but at the same time I do know people who are making tons of thousands of dollars in there and they’re making a fulltime living from it easily.

[31:16] Rob : It seems to me like it’s more of a crapshoot though right? It’s like there are what, half a million, 600,000 apps in the store now and they say like the top 1 to 2% make 90 something percent of the money. I mean it’s kind of like the startup lottery I see, although maybe it’s not as pronounced.

[31:32] Mike : Maybe. I don’t know, it’s hard to say. I haven’t looked at it deep enough into the numbers, I know that there is that dramatic drop off but you also have to remember that the vast majority of the apps in there are free apps. So they really skew the numbers. And I just, I haven’t looked at the numbers enough how realistic it is because you can spin those things anyway you want.

[31:52] Rob : Sure. Yeah and I don’t proclaim to be an expert, it’s just from the stuff that I’ve read. I’m like, I kind of raise an eyebrow when I read it of like, huh how many people is this actually working for? You know it’s the survival buyers thing like how much are we just hearing about the big successes and how long can this last once the market is not growing it like 100% per year.

[32:12] Mike : No that’s a fair question.

[32:14] Rob : Martin I hope that helps.

[32:16] [Music]

[32:18] Rob : Alright this last question is from John Paul Jones. And it’s about Google AdWords. Hi Rob and Mike. Love the show and listen every week. I have an established product that’s been selling for over five years, it’s called FS Flying School Pro it’s an add on for Microsoft Flight Simulator. We get a lot of traffic through specialist news sites but we’ve recently been thinking about trying Google AdWords. I’d be interested to hear any tip for established products that want to do better and whether academy membership or HitTail could provide any benefit. Thanks. John, fsflyingschool.com

[32:51] Rob : So it seems like there’s two parts of the question is should you think about Google AdWords and then could the academy membership or HitTail help him out. As I said before you know AdWords is great but the cost to acquire a customer tends to be quite high. So I don’t know what your product sells for I haven’t been to the website. But unless your lifetime value of the customer is more than 50 bucks I wouldn’t even think about AdWords at this point unless you know you can go in and do a quick search and see what the AdWord costs are.

[33:21] If they are 20, 30 cents a click, then maybe you can swing it but most clicks these days are again over a buck and it instantly means that your cost to acquire a customer is just too high. Now SEO may be a better alternative especially if you’re in a niche that’s fairly none competitive, definitely could be something to check out. You can CPAs cost per customer acquisition that are a lot lower than AdWords. So that’s something I would recommend looking into.

[33:46] In terms of the academy or HitTail, I definitely think if you do go SEO, HitTail can help out. I mean it’s like 10 bucks a month and it’s going to give you long tail keyword terms that people are searching and that you’re not currently ranking well for and that’s just a great system to start cranking out some blog posts for those keywords and to build up a long tail of traffic over time. In terms of the academy so for new listeners Mike and I run something called the Micropreneur Academy, it’s at micropreneur.com. It’s a membership website for people looking to either launch their startup in 4 to 6 months or to improve their startup basically, startup or software product.

[34:19] And so it depends you know. We definitely have modules that cover this, cover AdWords, cover SEO. We also have a lot of other material about getting into the mindset of micropreneurship that goes deeper into the stuff that we talk about on the podcast. So I think the bottom line is I do think it can help, there is a community of folks in there as well. It’s up to you, there is a seven day trial you can go to the website and check it out.

[34:42] I mean I think the last thing I’ll add John is if you do go for Google AdWords there is a really good book by Perry Marshall that covers Google AdWords and I’d recommend checking it out, it’s like called The Ultimate Guide to Google AdWords.

[34:53] Mike : I wonder if there is any sort of affiliate link for selling the Microsoft Flight Simulator.

[34:59] Rob : Oh that he could make some money from? Do you think anyone would come to his site who doesn’t already have Flight Simulator though?

[35:06] Mike : I don’t know. That’s a question for him. Maybe, I mean he does have a Flight Simulator add on so there maybe people coming to his site that he’s not converting because he doesn’t actually have a Flight Simulator. If he had the ability to sell the Flight Simulator and the add on pack for it at the same time, he may very well end up converting more customers.

[35:26] Rob : Could be.

[35:27] Mike : That’s the only thing I think I’d add, I don’t think that Google AdWords is a good way to go.

[35:30][Music]

[35:33] Mike : If you have a question or comment you can call it in to our voicemail number at 1-888-801-9690 or email it in MP3 or text format to . Our theme music is an excerpt from “ We’re Outta Control” by Moot used under Creative Commons. If you enjoyed this podcast, please consider writing a review in iTunes by searching for startups. We are having that free beers contest with the TechZing guys. You can subscribe to the podcast via iTunes or RSS at startupsfortherestofus.com. A full transcript of the podcast will be available at our website startupsfortherestofus.com. Thanks for listening, we’ll see you next time.

Rob and Mike answer more listener questions.

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Episode 105 | How to Pick a Platform Partner

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Show Notes

Transcript

[00:00] Rob : In today’s episode of Startups for the Rest of Us, Mike and I are going to be discussing some rules for looking at technology platforms, stacks, frameworks and API’s. This is Startups for the Rest of Us: Episode 105.

[00:12] Music

[00:20] Rob : 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.

[00:30] Mike : And I’m Mike.

[00:30] Rob : And we’re here to share our experiences to help you avoid the same mistakes we’ve made. Well, I am glad that I have CrashPlan installed in my laptop. As of what about an hour ago, I’ve jumped online to look at the podcast outline you’d created and my laptop won’t boot up. It just locks up at the Window start screen. So, I’m messing around that I’m sure I’ll be able to fix it this evening but if I’m not stress about it like I’m more worried that I’m going to waste 3 to 4 hours screwing around either reformatting the hard drive or whatever but it really is so different than 5 or 10 years ago where like all your data was on a local disk and you didn’t have it anywhere else or you had like a 2-month backup somewhere but between Dropbox and CrashPlan which runs every night and upload my personal stuff and business stuff up to your cloud somewhere it feels — it feels much better.

[01:18] Mike : Yeah, I feel like I’m — I’m kind of in the same boat. I have probably like several different ways of like backing up all my stuff. So, I have — I have Dropbox running for a bunch of data and I have a SugarSync subscription which backs up another set of data and then I have Backblaze which takes an entire machine backup. And then I also have Acronis running which takes a full system snapshot like every night as well [Laughter].

[01:39] Rob : That’s the way to go. You know, as long as it doesn’t impact your performance, the computer performance day to day, it really is nice to have — have some options. What I wish though, you know, so I now how — have a spare router at all times on deck because I’ve now had two brownouts or thunderstorms in the past 6 years that have blown routers but I’m considering like getting an on deck laptop because I’m losing a bunch of time this afternoon. I guess I have this desktop sitting here but as soon as my wife gets home, she’s going to need it. But what do you — what do you think about that? Do you have a spare router and do you have a spare laptop?

[02:12] Mike : But I have extra switches laying around for exactly that purpose like what I do is I have everything going in to my cable modem and then from there, it goes in to my network and I have first thing that it hits is actually one of my servers. So, I can plug it in to either directly in to a switch or in to my server. Like my server I have behind — basically access another wall between, you know, my network and the outside world but I also zip for like VPN and everything else. So —

[02:39] Rob : Right, I got it. Yeah, this router — all the NEC routers that I use have firewalls built. They have a hardware firewall built in and maybe its software. I don’t know but it’s — it’s built in so I have that as well. I don’t have the VPN capability although there’s certainly routers you can buy with that.

[02:53] Mike : Right but I — I mean I do have extra switches and I don’t know if I have an extra wireless router around but I know what you’re saying and then in terms of extra spare laptops and stuff, I have a couple of spare laptops laying around. I think I have 1, 2 — I have 2 spare laptops on top of my regular one and then plus I have a desktop and —

[03:10] Rob : Yeah.

[03:10] Mike : Yeah, you know, I mean I have a whole army of machines here. I can hire like 30 people and every single person will have their own machine.

[03:18] Rob : Not need to scale up. Yeah, and I mean it seems wasteful to have just a laptop sitting around on deck at all times but I really want to get to the point where when this happens because what, this happens like once a year, you know, and I basically lose a day of productivity when I never — when I don’t have that day to give up. And so I’m trying to figure out a way where I can be completely virtual. I would just love to be able to step to the left and log in to this other laptop or this desktop and just not even notice the difference and that — that day is not here even with Dropbox and CrashPlan. I’ll get my data back but it’s going to take a bunch of time for me to, you know, sort this out.

[03:51] Mike : Yeah, I think you’re best bet would be to do something similar to what I do where I’ve got my entire machine being backed up to — I have it actually backed up to a local drive but I also have an external NAS device that I could backup the entire system to. And it would just store differentials everyday or every couple of days or whatever and if I need to go back to another instance of the machine from several days ago or a couple of weeks ago, I can probably do that. And with something like Acronis you can — depending on how you want to do it, you can back up to the exact same hardware which means you either pop out the hard drive and put a new one in and you restore back to that machine or if you have another physical piece of hardware that you would prefer to restore to, you can do that as well even if it’s slightly different. Basically all you need to do is you just need to switch out the hardware’s obstruction layer and mostly software packages that do that kind of backup have the capability to do that for you.

[04:44] Rob : Nice when someone starts that as a service, call me.

[04:46] Mike : [Laughter]

[04:48] Rob : So I was in Pasadena this weekend with the family. We went down and saw the Space Shuttle Endeavour. They retired Space Shuttle and they flew it all across the country and so and then they took 72 hours. They drove it like four or five miles an hour of down through LA from LAX to this — basically, it’s a science center and just awesome. If you’re ever in LA, you should take your kids there because I moved in Pasadena for five years and never went and this thing, it’s a free science center and it’s one of the best I’ve ever been to and I’ve been at at least half a dozen across the country and in Canada as well. So, it was a lot of fun. I also got to hang out with — with Jason Roberts and his wife and kids.

[05:23] Mike : Oh, cool.

[05:24] Rob : It’s a lot of fun hanging out and talking tech, man. You know, there’s just so few people that I ran in to day to day that I’m able to sit down and just engage in like pretty quickly get deep in to like conversation about serious things, you know, like what we do for a living and have someone understand when — when you talk about a really detailed concept about marketing or about a new idea and actually get realistic feedback and it was lot of fun. He’s a kind of — where I always I leave the conversation about — how long we’ve been talking, I leave feeling like we’re in the middle of a conversation. You know I’m saying? Like we — I have so much more to say but it’s like, “Well it’s been we just had a two and a half hour lunch. We have to leave, you know, I got to go pick my kids up.” It was really cool.

[06:06] Mike : That’s awesome. So, hey I came across a couple of different technology blogs say offering advice for choosing technology and both of them misspelled one of the technologies that they were recommending. It was just really bizarre to me that they were able to make recommendations about things that they — and I’m not sure whether it’s just a misspelling or what but it seems had to believe that somebody could make a recommendation about something like a specific distribution of Linux and then misspelled that distribution of Linux.

[06:35] Rob : Yeah, it’s hard not to discredit when people do that. Just like when I’m hiring people like I would send people e-mails or send them a message on oDesk when I’m thinking about hiring them. And if they reply back with like all lower case text with no punctuation and they’re using a letter ‘U’ instead of ‘Y-O-U’, that is a huge, huge red flag for me and I know the person can be, you know, super intelligent and might just be a style thing but I instantly basically discredit them like it’s a major red flag for me. And I feel like the same thing with this technology. If you misspell it, you’re right. You could just be bad at spelling. It could just be a typo but that — that is not both well for my confidence in your recommendation.

[07:14] Mike : Right and to be clear, this was — this was an actual blog post. It wasn’t like it was a transcript. Like I would understand if things come up in our transcript and I’ve seen it come up before where it’s just clearly misspelled and because it’s a transcript, you know and we are using a transcription agency, I don’t expect them to know the spelling of all these different things and that’s, you know, that’s one thing. But this was an actual blog post that was somebody was trying to convince you, “Oh, these are the things you should look at and this why you should use this particular thing.”

[07:42] Music

[07:45] Rob : So I have an answer to one of our most frequently ask questions and that question that we both get on the podcast and I also get when I do public speaking and just, you know, I feel like it kind of floats around a lot is, “How do I get traffic to my landing page if I put up a landing page?” And Dan Norris from Informly which is inform.ly, he wrote a 3-part case study of 13 pre-launch traffic strategies that he’s used to market his startup Informly that hasn’t launched yet. And so it’s a 3-part post and it’s really in-depth. He gives like the actual conversion rates, how many visitors he got and it’s really cool. It’s on my blog, softwarebyrob.com. The third part just went live today and so that is actually the new place. Whenever — because — seriously, I get this question whether it’s in the podcast or I get it multiple times per month and that’s my new answer is to go look at this case study because Dan did a bang of job of running through the — all the topics.

[08:43] Mike : Cool. So what else is —

[08:44] Rob : In fact —

[08:45] Mike : … going on?

[08:45] Rob : Last thing quick HitTail update, just wrapping up the first integration that’s going live since — since I acquired it and we’re integrating with Basecamp. It’s a pretty simple integration. We have a To-Do list in HitTail. We’re just integrating with the Basecamp To-Do’s and it was going to go live late last week but you do some weird thing and you have 500 To-Do’s and certain page locks up, Ajax, you know, issue. So, we have a little bit more troubleshooting to do but that should go live this week and I’m interested to see what impact that has because I’ve said last week, it’s not that a bunch of HitTail people use Basecamp that we know about, it’s that we want to basically be able to kind of market to the Basecamp audience and to be promoted through Basecamp’s Twitter feed and they don’t have a product blog anymore but to be on their Basecamp integration’s page and to see what kind of impact that has. So, luckily it hasn’t been a ton of effort on our part so we don’t need a huge amount of signups in order to justify but I’ll definitely be updating that in the coming weeks. And we have 2 or 3 other integrations already sketched out if this one goes well.

[09:48] Mike : So are you going to make the decision to move forward on those other integrations base on how this goes or you just going to kind of do one or two with those extra integrations kind of regardless?

[09:57] Rob : Yeah, we’re going to do at least two of those others because the — those other two are much more in our — kind of in the wheelhouse of customers who would use HitTail so their marketing platforms like HubSpot, you know, they have an app area and it’s people who are already trying to create content and market their apps and such and so, HitTail is a natural fit for that. Basecamp, the reason we did it first is, number one, because it’s the quickest. It was just not a lot of work on our end and it’s the first integration we’re doing so I really wanted to kind of cut our teeth and learn how to launch it and learn how to kind of get everything going because we have to get OAuth going and there is no ASP, Classic ASP libraries for that.

[10:36] Mike : Really?

[10:36] Rob : So —

[10:37] Mike : Imagine that [Laughter] —

[10:38] Rob : So, we had — we had some work around there but — so we put in — put in some work to get that done and we’re hoping that we can, you know, rip the investment with the — the next couple integrations and that even if this one doesn’t work out and more like maybe an issue of target market and you know, we figured the next — next couple will be — will be solid.

[10:54] Mike : Yeah, I mean that’s a good idea to at least as you said cut your teeth on a couple of them just to figure out where the — the problem areas of your application for doing those integrations are going to be as well.

[11:03] Music

[11:06] Mike : So, today we’re going to be talking about how to pick a platform partner and essentially this is going to be a guide for how to evaluate whether or not a technology or a solution provider is going to be a good partner for you long term. And the problem is that sometimes it could be really difficult to evaluate the solutions of a specific vendor or specific platforms. So, a lot of these are guidelines. They’re not really hard and fast rules and generally what you’re looking for is for red flags and the absence of red flag is something of a green light but obviously you can’t just take a blanket statement and say, “Well, I didn’t see any red flags based on, you know, what we talked about in this podcast episode so everything is going to be fine,” you know, there’s always going to be the potential for downstream something to happen where things are just not going to work out. And sometimes your hand is just going to be force to go in a particular direction due to price constraint or a specific technology that you’re using or timeline but basically, you’d just want to make sure that you are aware of what you’re getting in to.

[12:02] So, some of the things that we’re going to be talking about today are there’s three different types of platforms that we’re really talking about and the first one is a true platform. So, Amazon Web Services, Microsoft’s Azure, Windows, Linux, Google’s app engine, iOS, OS X, those types of things. The second one is technology stacks and frameworks. And this really falls under things like databases, program and languages, the model framework. For example, jQuery, MVC, Ruby on Rails, et cetera. And then the third category is a company or a product API. So, things like Twilio, Twitter, Facebook, Google, PayPal, Stripe or any other payment processor, Basecamp, et cetera. Companies that have an API that they have made available for their products that you could leverage to either do an integration point or to truly build upon the product that they already have.

[12:55] Rob : We’re just going to group all of those things you’ve mentioned in to one big bucket, right, and we’re calling anyone who provides any of those things platform partners.

[13:02] Mike : Yes. So, the first thing to keep in mind when we’re going through this is that there’s a difference between something that where you’re building an integration point between your product and their product versus someone who’s truly a platform provider where you are completely dependent upon them providing the service and this is the difference between like you said earlier in this episode, you doing an integration with Basecamp where you’re not completely reliant upon Basecamp with the exception of where that particular integration versus something like Justin Vincent’s Pluggio application where he’s completely reliant upon the Twitter API being available for him to leverage in order to make his product function.

[13:44] Rob : Right or even if you think about HitTail, it’s reliant on Google and other search engines passing certain information in their search query string. So, it’s not an — it’s an API of sort. It’s not necessarily a sanctioned one but if they all change that or they suddenly stop providing them information, HitTail really is based on their platforms functioning that way.

[14:03] Mike : That’s right. So, we have five guidelines that we’re going to go through. And the first one is that the vendor or the technology place well with others. The first part of it is especially true when you’re talking about service providers. Basically, you’re looking for somebody who isn’t going to steal the ideas of the people who are building on their platform or steal their revenue streams and I’ve seen companies out there where you’ll build a product on their platform or you’ll build a complementary product for their platform and then they’ll look at them and say, “Hey, that’s a great idea,” and then they go ahead and they either try to work with you to work out some sort of a partnership or arrangement where there is a revenue sharing but if that doesn’t work out for whatever reason, they’ll just say, “Well, you know what? We’re just going to implement that ourselves and we’ll take all the revenue.” And because they’re the ones selling that platform to begin with, they basically have first crack at the customers for that revenue. So, they can essentially push you completely out of the market and I’ve seen companies do this.

[14:56] So, what you’re looking for is people who are not going to do that and Microsoft in the 90’s, I think was a company that was really feared for this type of thing. People did not want to go head to head against Microsoft or anything. And Yahoo is kind of the prime example as a company that said, “No, we are not a technology company,” because being a technology company meant that they were going against Microsoft. They wanted to be known as a media company and that works great for a long time. It really kept them out of the sights of Microsoft. But there’s a lot of other companies that you have to be careful around when you’re making these types of decisions and Microsoft today is a lot more partner-focused than they were back in the 90’s.

[15:33] But today, I think in my opinion if you look at company like Apple, you have to be a little bit careful about them primarily because of the extreme secrecy around what Apple does and I think just recently even with iOS 6, the Apple came in and said “Well, Google has been providing the maps for us the longest time and we’re going to ax that. We’re going to create our own maps app.” You want to be careful about vendors who are going to come and swoop in and essentially try and replace you.

[15:58] Rob : Is this also like Twitter when they bought bunch of — couple Twitter clients and then they basically capping API usage so several of the other Twitter clients that are still out there can’t really grow that much?

[16:09] Mike : Yeah, that be — that be one of those in my mind. I mean because obviously they want to make money in some way shape or form off of this other — the Twitter client that they bought but in another way, they’re basically reducing the level of competition by limiting what those other Twitter clients can do on their platform.

[16:26] Rob : Right and it seems like in the 90’s, Microsoft was known as a predator and so, you’ve kind of — you threaded lightly and you expect that they might come after you if you entered the space that they would feasibly entered. With Twitter, it wasn’t really — I don’t think it was really telegraphed before maybe six or eight months ago that they were going to do the changes they recently made to their API’s. But I think until a company has a business model, until they have revenue, until you know how they’re going to make money, they could pivot at any time and basically, knock any of their partners out of the water and that’s essentially what’s happening with Twitter is now going after this advertising revenue model and they’re realizing that they want paid tweets and some other things where they need to control the client experience. So, that decision to go after that forced their hand and kind of made them pushed out their partners who were using the API.

[17:18] Mike : Right but there’s definitely ways to go about that without killing your existing partner. So, for example, they could have said, “Well, we’re not just going to accept any new partners. Nobody else can build on it.” If you are an existing partner you already have an API, you have an API key that you can reach in to our dataset, that’s fine. You could continue doing it.

[17:35] Rob : That’s basically what they’ve done.

[17:37] Mike : No, they haven’t. Actually, they put limits though on how many API calls those companies can do.

[17:44] Rob : Any they already had limits before. They’ve just changed the way they were calculated and then they said you can have no more than like what is it, a hundred thousand unique Twitter handles if you have like a client now or you could have twice as many as you have now. So, you’re right. There is a hard limit now and there wasn’t before.

[17:59] Mike : Right and that’s kind of what I’m getting at there as they basically taken a very adversarial approach to what previously with their partners and the people who helped them grow to the point that they are at now and now, those people are probably struggling at this point to just try and figure out, “Okay. Well, what can I do? How do I make money off of this that, you know, I’ve already invested whatever amounts of money and time in to this particular platform,” and the provider is kind of shocked, you know, maybe there’s not a whole lot that they can do about it.

[18:27] Rob : Probably, now that they’ve done it, people are really weary of Twitter and there are maybe like a — they are not as predatory as Microsoft was in the 90’s but I think they should be viewed with caution, right? A lot of people are now not building stuff on Twitter’s API because they know they can change it at anytime. But before they started making the changes, I don’t know if that they telegraph that much.

[18:45] Mike : So, I think you’re right. I mean that beforehand it would have been very difficult to make the call and say, “Oh well, Twitter would have, you know, is going to eventually screw you down the road.” I don’t think that that’s really a conclusion you could have justifiably come to. I think that by looking at the number of API changes that they made, you could say, “Well, they’re not necessarily — they don’t care as much about the partners that they have because they were breaking things quite a bit from what I understand but I could definitely see how somebody could look at that and say, you know, this isn’t really a good business proposition for us because they keep breaking things for us and they don’t necessarily care about that. And it’s not so much that they would have — you could look at said and well, Twitter is going to become predatory as just — they just weren’t playing well with others which is a little bit different and that’s kind of the real focus with this particular — the first one as they play well with others.

[19:35] Music

[19:37] Mike : The second guideline for choosing a platform provider is that you find a company that really stays true to their core focus. And some companies are chasing multiple revenue streams or you know, in Twitter’s case, they weren’t chasing any revenue stream, it wasn’t obvious but in the case of companies where they’re chasing multiple revenue streams and they’re really not committed to anyone of them, you have to be at least a little bit cautious. There’s nothing inherently wrong with chasing multiple revenue streams but as buyer or a prospective partner, you should definitely be aware that without some level of commitment from them, they’re going to be less likely to be bothered by issues that you could consider critical to your business. One way to help to filter out the types of companies that stay true to their core focus is that the companies that you’re working with, they don’t try to be everything to everyone and you know, some types of customers are just not going to be right for them and sometimes the partners are not going to be right for them. And if you ask them, they’re going to be honest about it and tell you that upfront.

[20:33] And instead of trying to adapt themselves to meet your needs and do absolutely everything that you need or that you are looking for, they’re going to be able to just be honest with you and say, “Look, that’s not something that we can do right now.” And they may couch it a little bit and say, “You know, we may look at that in the future,” but those are the types of answers that you’re going to get from most people who are going to be honest about it. And if somebody comes back and says, “Oh yeah, we have that slated for next quarter,” and then next quarter comes along and then it doesn’t come out and then it gets push a quarter and gets push another quarter. Those are the types of things that tend to bring up flags when you’re evaluating these thunders.

[21:08] Rob : So, the danger here is that if a company isn’t staying true to their core focus, that they could easily move in to your area. Is that the issue?

[21:18] Mike : Well, that’s — that’s part of it. The other risk I think is that they go in a completely different direction and they just stop supporting whatever it is that you were doing. So, as an example, you can take a look at Fog Creek where they started building CityDesk and you know, they were selling CityDesk back in 2000, 2001 timeframe and then they started selling FogBugz. And they came out with version 2.0 of CityDesk and then they essentially dropped it. They never did anything else with it ever again and if you go to their website or you search around for it a little bit, you can still find it today and it looks like they still have in oral form for it but that product hasn’t been updated in probably close to 10 years at this point.

[21:54] So, because Fog Creek is a company was going after a couple of different revenue streams and then one of them took off the risk that I was talking about was essentially they have two or three different products or a company has a couple of different services and one of them takes off, chances are they’re going to double down on that one and if it happens to be the one other than one you’ve chosen, then you’re essentially out of luck. There’s not much you can do about it because they’ve just abandoned the one that you were relying on and it won’t make anymore forward progress.

[22:23] Rob : And this is a similar danger to building something in — if you build something in Visual FoxPro years ago or VB6 and then Microsoft up in — updates it, you know, .NET and kind of leaves your old coding paradigm in the past and all your — your framework they don’t — they don’t really update the language anymore.

[22:41] Mike : I think Microsoft is notorious on this front just because they come up with new types of technologies and you know, especially when it comes to new ways to access data or new frameworks, it could be really challenging to try and pick the winner I’ll say because they may decide, “Oh well, we’ve got millions of users and you know, only 200,000 of them are using this so we’re going to drop that.”

[23:03] Rob : Yeah, I think there’s an advantage to adapting technologies. It’s funny it’s that balancing act. If you adapt them too early, then you have the potential of dropping on something that never takes off. But if you adapt them too late, then you have these technologies only have a certain lifetime, right? I mean if you look back to where — where web pages were original built dynamic web pages in late 90’s, it was C++, CGI Scripts. Then it was — there was Perl and there was this couple of years of — it was like ColdFusion, Classic ASP 1.0 and PHP came up around then and then really PHP is now on 5.0 which is totally different. If you still had old PHP 1.0, it probably wouldn’t even run anymore. So, you had — would have had to move that up. There were desktop apps in VB6. Those got cut off at the knees when .NET came out in 2002. And so if you’re too early in the curve, something you can honestly really pick one bad, right and then take a nosedive and you really get a lot of support for it. But if you wait too late, the thing could basically not be — be use by many people anymore.

[24:04] And it’s not bad of a technology, I mean here I own HitTail. It’s in Classic ASP which hasn’t been updated since, as far as I know, 2001 or 2002. So, it’s at 10 or 11-year old of web technology which is just a crazy statement to say. But it’s not the end of the world that we’re dealing with that. I mean everything still works. The app still works. It’s just that there’s no community around it and if we run in to a hard problem and the solution is not online, we’re really at the mercy of spending hours and hours troubleshooting it. As well as the fact that there’s no ego system there anymore to develop things as — things like OAuth or integrations with, you know, REST API’s weren’t around when Classis ASP was built. And so that’s a trail off you have is that an old app will still continue to work but when you want to update it, you want to do cool and new stuff with it, you probably will have to use a newer language to then tie back in to it.

[24:54] Mike : Well, the other interesting this is that because ASP is obviously on the down swing at this point is that looking forward, I mean how many more versions of — of Windows servers are still even going to support ASP.

[25:08] Rob : Yeah, and I think Windows 2008 server didn’t have it in by default.

[25:12] Mike : It’s not.

[25:13] Rob : Yeah, I think it was the first year where they — you actually had to go in and install it yourself.

[25:17] Mike : I’m going to look at Window server 2012 to see what’s in there but, you know, that’s something you may have to deal with at some point in the near future.

[25:25] Rob : Uh huh, true.

[25:26] Music

[25:29] Mike : The third thing to look at when you’re trying to choose a technology provider is that if it’s — especially if it’s a service provider that they take steps to be safe with and secure with your data. And this — as I said, it applies to a lot more to the platform service providers rather than to integration partners or to just technology providers. But you have to make sure that if, for example, there’s a data breach, they’re going to notify you and they’re going to let you know that there’s something wrong. And if they don’t notify you, then there’s something fundamentally wrong with that company and you really need to be careful about using them in the future. And I think that you can look kind of all over the internet for different companies who’ve ran in to these situations where they have a data breach and either it shows up on some web page somewhere and they just don’t tell anybody about it or they just kind of, you know, do that several weeks after the fact.

[26:20] And I think we ran in to that at one point with our mailing list provider. People started complaining that their e-mails were getting spammed and you know, come to find out it was — it took probably three or four weeks that we found out that our e-mail provider had a data breach and that was exactly what they did. They didn’t bother to tell anybody. They just put up a web page several weeks afterwards because people have been complaining so loudly and there was never an apology. There was never a notification of what was going on. It was just, “Oh, yeah, this happened,” and that was it. And I think you and I just kind of said, “No, that’s it. We’re done at this point.” And we moved everything off of them and then went over to MailChimp.

[26:57] Rob : Which was a painful transition that was AWeber which is surprisingly enough because AWeber has been around for a long time. I would expect that they would have behave better than that but it was — it was pretty shocking and that was, what, two or three years ago that happened. And it’s obviously, it’s painful to move your mailing list because you just, you know, you’re so in trench in to that API. You have the interface down. You have the form embedded. I mean there’s — it’s not a trivial move but that was enough for you and I to decide to — to move everything over to MailChimp.

[27:24] Mike : Right and that’s just a level of trust. I mean if you don’t — if you can’t trust them to do the right thing, then you definitely need to start looking elsewhere.

[27:32] Rob : Right and it’s not that they got breached, it’s just that they didn’t tell us they got breached and we had to wait for complaints to come in from our prospects and customers saying they were getting spammed essentially by, you know, using specific e-mails they had set up for our stuff and I’m so glad that was over.

[27:48] Mike : Also a part of being safe and secure with your data is that if they lose your data and by lose, I mean, you know, the data gets corrupted and they’re not willing to do whatever they can to try and help and they’re not staying in communication with you to let you know what’s going on, that’s a really bad sign. And again, this just goes back to the red flags and looking for things that — signs of things that could go wrong in the relationship down the road and some of these things obviously, you can’t know them in advance but you can search around and find history on companies that had been in business for a while and see what the — the reaction from their users has been over — over time.

[28:24] A lot of these companies have — there’s websites out there where you can go and find reviews and what other people’s experiences are with them. Don’t necessarily trust all the marketing stuff that’s on their website. Go out and find a legitimate third party reviews. Not to say that the reviews on their website aren’t accurate but they are obviously not going to publish things that cast them in any sort of a negative light as well. I mean you — that’s just not something you do on your own marketing material. But if there are user submitted areas, if they have forums, definitely look through those forums and see if you can find out how they would respond to those types of things.

[28:58] Rob : Twitter is probably not a good place to go to see who they have been responding to and look at those conversations.

[29:02] Mike : I think the only down side with Twitter is that you only get so much history there. I mean you’re only going to be able to look back so far. Really what this comes down to is just are these companies willing to own up through their mistakes and everyone makes mistakes and it’s not a big deal that people make mistakes. It’s really how they respond to those mistakes and you know, just keep in mind not everyone customer is a good fit for every single vendor.

[29:22] Music

[29:26] Mike : The fourth guideline we have is that they’re not stuck in the previous decade. Many people make judgments about a company base on their website and to some extent this is good because if you look at a website and it looks like it hasn’t been updated since the 90’s, chances are it probably hasn’t. And if the technology is visually stuck in the last decade, you have to wonder what’s going on under the hood and how long some of that code has been there. And not that code goes bad but problems change over time. And if the company has been changing everything under the covers overtime, then chances are that that front end UI should have as well. And if the front end UI isn’t changing, it may be an indication that things underneath the covers are not changing to meet the needs of new customers.

[30:06] Rob : Right and I think it depends on the business they’re in, right? If you’re looking at someone that’s providing you with, well I mean like an app like Twitter or like some cutting edge social type of thing, you expect to have a fairly modern UI and you expect to have modern REST API’s, not things that are, whatever like web services from 2001. Whereas if you’re dealing with someone or maybe you’re getting government data for something for housing prices or for some old metric that, you know, some — maybe the company is been up for 20 years, you’re going to give them leniency and they — they can have a website that looks older, an API that maybe was built in the late 90’s and you’re going to give them a little more leeway because, hey, they haven’t updated it and they may not have had a reason to do so.

[30:46] So, I mean I think an interesting look is if you look at MailChimp versus AWeber who we’re just talking about, AWeber API is old. They haven’t really updated their UI in years and I think they retain a lot of the customers that they’ve always had but I think if someone comes at the MailChimp website and looks around, they — there’s a very different feeling. There’s a lot more of a hi-tech startup like these guys are constantly updating their app versus AWeber which is more like I’d say very consistent. It’s a more classic aged app. I mean that’s only a bad thing if — if you want new features to be rolled out constantly. I think there’s these pluses and minuses on both sides. But I have heard complaints from people who are still using AWeber that they wish there — there were some new like split testing and you know, features that MailChimp has rolled out that they wish AWeber would get on as well.

[31:34] Mike : And the fifth guideline for choosing a platform provider is that they are able and willing to help you. If they’re honest and willing to tell you when they’re not going to be a good fit for you or if they have documentation and resources that are available that they can point you to and they will help you in the right direction, then they’re probably going to be of good fit for you. But if they are willing to yes you to death and do anything it takes to land you as a customer and then you find out after the fact that they just really weren’t a good fit or that you weren’t a good fit for their services, that’s obviously a bad sign. And you’re going to have to dig a little bit. Chances are good you’re going to have to get on their support.

[32:11] You’re going to have to ask them some questions. Ask them straight forward and say, “You know, will this work in your environment and if so, how is it intended to work?” If you have any questions about how it’s suppose to work or how your product is going to integrate in to their platform and they’re not able to give you satisfactory answers, I mean they don’t necessarily seem knowledgeable about it, either ask for somebody who’s a little bit higher up or you know, take what they’re saying with a grain of salt. Do some additional testing and this might even be a good opportunity to outsource some of that work to oDesk and see if somebody can build a very, very quick prototype using the technology and the ways that they’ve outlined to see if it actually works or not.

[32:47] Rob : In terms of them being able and willing to help you, how does that play in to something like Open Source Software in to like the Google app engine where there isn’t really support?

[32:58] Mike : Well, I think that those types of things when you’re looking at Open Source Software or anything, I mean is there a community behind it because if that community is there, then chances are good that they’re willing to help you but there are — and I can’t think of one off the top of my head but I can imagine that there is probably an open source community out there where there are very close and very not helpful [Laughter] I’ll say and you try building something would whatever the software is and they’re just like, “Oh, you’re doing it wrong. You have no idea what you’re doing just go — so go away.” I can’t imagine that there is very many of them because I wouldn’t — that they would last very long or get very big but I can imagine that there are might be a couple out there that are kind of on a bleeding edge and there’s just like we don’t have time for you, just leave us along figure it out yourself.

[33:42] Rob : Or if it’s a community that’s really small or virtually non-existent I could see that’s like kind of like not having support available.

[33:42] Mike : Yeah, there’s a difference between having dead air and somebody just being not helpful. I could see dead air being much more prevalent than something like, you know, just people just saying, “No, go away.” Really what you’re looking for is are they willing to try and make whatever it is that you’re trying to do work, you know, are they offering solutions or are they offering places you can go for a help. And not to say that they’ll do it for you but they’re trying to make your life easier as oppose to making you jump through hoops.

[34:15] Rob : Is there any way to tell before you integrate with them whether they’re going to be able and willing to help you because like you said they might yes you to death before the sale and then once you get in to it, you know, you build the thing and then they’re not very helpful. How do — how do you avoid that?

[34:28] Mike : Well, I think they’re building prototype is a good way to do it and for prototype you don’t necessarily have to build everything that you’re looking to do. Just try building one piece of it and if it’s something like doing and a lot integration and that’s just one piece of the entire thing and you think that that’s going to be a problem area, work on that one piece or go to oDesk and outsource it to somebody and say, “Hey, I need you to make this work,” and take a look at the output and see if, you know, is it remotely readable? If the person had to jump through hoops in order to get it to work and you know, if you put them in touch with the vendor and they’re not able to help or unwilling to help, then, you know, that says something about what level of support you can expect in the future.

[35:08] I think the big key is making sure that you don’t spend a lot of money before you kind of get in to it and I’ve heard horror stories from people about spending 15, 20, 30, $50,000 before — before they even get something installed and then having to do all these customizations and then coming to find out, “Oh, by the way, this isn’t going to work because of such and such bug that’s unknown issue.” So, I think that wraps up how to pick a platform partner and as I said before the things to keep in mind are when you’re evaluating the vendor, make sure that they play well with others, make sure that the company is staying true to their core focus, make sure that they are taking steps to be safe and secure with the data that you’re putting in to them or onto their services and make sure that they’re not stuck in the last decade and the fifth one is to make sure that they’re able and willing to help you.

[35:56] Music

[35:59] Mike : If you have a question or comment, you can call it into our voicemail number at 1-888-801-9690 or you can e-mail it to us at [email protected] Our theme music is an excerpt from ‘“We’re Outta Control” by MoOt, used under Creative Commons. You can subscribe to this podcast in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.

Mike and Rob discuss how to pick a platform partner using five guidelines.

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Episode 57 | TechZing For The Rest Of Us

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Show Notes

Transcript

[00:00] Rob: This is Startups for the Rest of Us, Episode 57.

[00:03] [music]

[00:12] Rob: 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.

[00:22] Mike: And I’m Mike.

[00:23] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What do think about the updated intro there, Mike?

[00:29] Mike: I love that you run it by me first.

[00:31] Rob: I just feel like our audience has been expanding from developers. There’s a lot of folks who e-mail or even post on iTunes and they’re kind of like, I’m not a developer but I’d still like this. So —

[00:40] Mike: Yeah.

[00:41] Rob: Like we’re gonna broaden our audience a bit.

[00:43] Mike: I do know a sad — the Business of Software Conference ’cause I ran into a lot of people who listened to our podcast there which was kind of surprising but just the number of people who weren’t just developers who listened to it. I found that interesting as well.

[00:56] Rob: Well, hey, we have some very special guests with us today. It is Justin Vincent and Jason Roberts from the TechZing podcast. He just wants to say hello.

[01:04] Jason: Hey, guys.

[01:05] Justin: Nice to be here.

[01:06] Rob: I imagine we have a lot of overlap so a lot of people probably already know you guys. This is gonna be a roundtable, TechZing for the rest of us. I think it’s what we’ll call this episode. The theme for today’s show is how to launch something on the side. And we wanted to pick something, kind of a topic to talk around that all of us have experienced and that we could all kind of lend some insights into.

[01:26] Justin: I think that you’re about to do some updates with — you and Mike.

[01:30] Rob: That’s right. Mike, what’s new with you?

[01:33] Mike: With AuditShark? Well, I spend some time working on the ability to support more than just a single customer. That’s coming along pretty well. There’s a few things that I’m looking at that have some — have you written in code and you made a huge number of updates and you’re pretty sure that it works but you’re afraid that there’s something in there that you screwed up? That’s kind of where I’m at right now. So I have to go back through and make sure that everything is actually working the way I wanted to ’cause I’d rather find the bug than have a customer find it.

[02:01] Rob: Perfect. Doesn’t that mean it works?

[02:03] Mike: Oh, of course, you know. And everything on the internet is true.

[02:06] Rob: Yeah. What about unit test? Don’t you have a suite — or do you have a suite of unit test, I should ask?

[02:11] Mike: I do but not for UI. So this is all UI-related stuff.

[02:15] Rob: Got it. That makes it tough. Well, cool. I have three quick updates, a couple of shoutouts actually. One is — many thanks to Dan and Ian of the Lifestyle Business podcast. That’s actually one of my other favorite podcast, very cool. We’re gonna have Dan on in a few weeks and they just continued to kind of be fans of Startups for the Rest of Us and talk about us on their show. And I’ve seen some folks come to the website from theirs and they blogged about us and all that stuff. So it’s just really cool to kind of be in that community.

[02:43] And there’s another podcast I want to mention called Coder Talk. It started just maybe about a month or two ago. Joey Beninghove and a couple of other developers and they mentioned us, talked about the podcast and talked about my book and then I picked it up in a Google Alert and wound up going on the show, I think episode 8 or 9. So anyways, if you haven’t checked that out and you’re a coder, it’s heavily technical. And if you’re into that stuff, it’s cool to a bunch of coders sitting around chatting about stuff.

[03:11] And then the last one is we now have 62 ratings in iTunes which I’m stoked about. It seems to be growing every week. And I really like the most recent review is by Strict9. I like the second paragraph. He says if you’re just starting out in the world of micropreneurs and single phone to startups, head over to the podcast website and start at episode one. It’s a crash course in almost every issue you will encounter along the way.

[03:35] And what I liked about it, A, it’s a nice compliment but B, I went back and tried to listen to our early episodes and they’re so painful, like we are so stiff and I don’t know. And I actually have feedback from other folks that it was that way as well and we really kind of keep into our own in the teens I think. So anyway, I saw that was funny.

[03:53] [music]

[03:56] Mike: As Rob said earlier, the topic is how to launch something on the side. So we’re gonna go through a list of about five, I guess, high level questions. And the first one is what to build. And, Justin, I’ll ask you specifically because you had this idea awhile back and then you went out, you implement it or you started implementing it and then you ended up changing the name of it and you finally ended up with Pluggio and I’m curious to know how you decided to actually go ahead and build that.

[04:23] Rob: And maybe to start with, you could just kind of give a brief-over of what Pluggio is for new listeners.

[04:29] Justin: Sure. Well, Pluggio is basically a Twitter social dashboard. So it’s actually a social media dashboard where you can author or make twits and you can also add in RSS feeds, get content. It makes it very easy to share content, very easy to create or follow it. And so where Pluggio came from was because myself and Jason started a podcast like you guys have started a podcast and we’re on episode 156 now which is about to be release. And when we started two years ago, we were wondering how we could promote it.

[05:01] And the very first thing we spoke about in the podcast actually, on episode 1, was Twitter. And I just got interested in Twitter and thought Twitter would be an interesting promotional tool. So when I kind of explored how to make the most out of Twitter, the first thing I thought was, well, what I need to do is put good content on Twitter so that if people are following me, they’ll get great tech content and then hopefully, when I post the podcast, they’ll go and listen to it.

[05:24] So that was one idea and I found that it was a pain to do that because I had to go around the net and find great content and then copy and paste the links, store them in a text file and then post them out a few times a day ’cause I didn’t want to flood my followers.

[05:36] So I thought, wouldn’t it be cool if I just had this tool where I could plug in RSS feeds, hack a news name list what I was thinking about and just manually click a little button on any stories that I like, I could kind of go and view the story and then click a button and then we’ll put it to a schedule queue and roll those twits out during the day.

[05:54] So basically that’s what I built and I just bought it for myself in the first place. We didn’t really know at that stage that we were a bootstrapping show. We were not specifically a bootstrapping show but we just talked about it a lot.

[06:05] That kind of evolved over the first few episodes and then TweetMiner was what it was called originally. And I just thought of building it and over decisions for it and everything about it have been on the air over the last 156 episodes. And myself and Jason have been brainstorming it as this has gone along. Now, it’s not hugely successful but it’s earning around $3,000 a month and has about 225 customers.

[06:28] Rob: What made you decide to change the name?

[06:30] Justin: Originally, it was called TweetMiner and the problem with that is it’s just completely Twitter related and as time went by I realized that this opportunity was a bigger opportunity than just a Twitter opportunity, the social media opportunity. And you can with Pluggio, you can post to Facebook, you can post to any social network. So we needed to remove that name of Twitter in there, the twit reference. But also, TweetMiner, the reason I called it TweetMiner was because originally it was to mine the content but somehow TweetMiner just seems a little, I don’t know, a little spammy or something so that’s why I changed the name. And what I mean with Pluggio is it’s just you’re plugged in to every social network, that’s why I changed it.

[07:09] Rob: Got it. So the advice we heard a lot is things like scratch your own itch and that’s essentially which you did here, right? You built a tool that you needed to use. Now, I’ve seen the scratch your own itch thing bail a lot. I actually in general think it’s not very good advice. I think a lot of developers try to build tools for developers and the market is just oversaturated and developers don’t tend to wanna pay and they want to build it for themselves and stuff. But in this case, it has worked out reasonable well.

[07:33] Justin: I wouldn’t do the same again. I wouldn’t. I think that, I only did it because of my naiveté of being a bootstrapper at that time, an entrepreneur at that time.

[07:41] Rob: Got it.

[07:42] Justin: If I had the opportunity now, I would do some basically anthropological research around a specific niche and find a group of people who had a problem and I would build something to solve that problem because it’s just easier to get money that way. It’s been really difficult to create a revenue of Pluggio because of the space it’s in. It’s got so much competition, all the competition is free, no one wants to spend any money in that space.

[08:06] Rob: So you’d go probably more customer development style then.

[08:09] Justin: I would. That’s what I would recommend. If I was gonna start again, I’ll try and find — Jason said something — some problem that needs to be solved that people are willing to pay for.

[08:17] Rob: How about you, Jason? You’ve built many apps. You can give people a brief overview of any of them if you want or the things you’re working on now. But I’m curious how you — ’cause I don’t know if that you’ve ever talked about how you’ve come up with your ideas.

[08:29] Jason: First of all, I’d like to say this is the longest I’ve been silent on a podcast.

[08:32] Rob: I was — I could hear you. I could hear you almost jumping in and then like holding your breath.

[08:37] Jason: I did. I got your intro, there’s about three times. I was like, ah. I’m like, all right. Give him space to talk. So one thing I just wanna add to what Justin said, I think it’s possible to scratch your own itch or find something that you’re really interested in but also do something, anthropological research in finding a niche. I mean, I think it can be dangerous to build a product in an area that you just don’t care about because this is — the going gets rough. It’s easy to just bail. So it’s like, I don’t care about this anyway. This is stupid, you know.

[09:07] And a bit of a sudden you fundamentally are excited about and understand it can give you a real advantage but I think what happens with kind of what you guys are saying is that, a lot of developers, they just want to get developing. So they just start — they code like the first or second idea that comes to their head which is the same first idea that comes to everybody which is why it’s so oversaturated. But I do agree that selling to developers is a dangerous proposition ’cause they don’t wanna pay for much. So it’s just another topic.

[09:32] So what my first — I guess one of my products that I built that may be relevant to discussion was Prezzo [Phonetic] which was a web-based version of PowerPoint and I read an article on the web that went pretty big and a lot of people seem to read how I screwed up my Google acquisition. And it was about how I perceived an opportunity with the webification of the productivity tools. And this is back when Gmail just came out. So I built a — I thought, you know what, all this stuff is gonna go to the web. If I could build one of these tools, be one of the top one or maybe three, I would have a good shot of being acquired by Microsoft, Google, Yahoo, that kind of thing.

[10:12] And I thought PowerPoint would be sufficiently complicated product that there wouldn’t be a whole lot of competition. So I built it over a period of 2 years and the acquisition almost happened but it didn’t. And the most interesting thing Google read the article itself. But the problem was I built something that I really never used or would care to use. So that’s kind of a problem. In some sense, I was just like — it was just something I was building to flip. I wanted to build something that would be bought by Yahoo or Microsoft for $10 million or $20 million and be done in three or four years. And I’m not sure that’s the best thing to do.

[10:55] Mike: I have a question. Did you essentially bootstrap it? I mean, you said you worked on it for 2 years. It sounds like you bootstrap. You didn’t go for funding of any kind, right?

[11:03] Jason: No. Actually I did. So a guy I knew, a friend of mine, who is a very successful entrepreneur and had a lot of capital, had been wanting to invest in another idea that I had. I’ve been working in the trading space, automated trading, algorithmic trading and what’s now termed by most people is high-frequency trading. And right around that time, I was starting to think that the web — I started to notice the web was wakening up again. This is like 2004 and I thought maybe it would be smart to do something in the web and so he was just like, whatever you wanna build, I’ll invest in it. He kind of — essentially brought me on track.

[11:42] So I went off and I started working on a couple of different ideas. The first one was sort of like a web collaboration platform, shared tasks, shared documents, contacts, that kind of a thing. But it seems like there’s a lot of — even then, there’s a lot of companies going after that. So I changed direction once or twice and then I sort of settled on the PowerPoint concept. So I was funded. I mean, I didn’t have to do any consulting or anything. I was able to pay myself a reasonable living salary and that’s what I did. That’s how I was funded.

[12:13] Justin: Hey, Jason. You should mention what happened to your friend who did follow the first idea, your first part.

[12:18] Jason: So when I first started thinking about the web concept, I asked myself, okay, what is the web good for and what is it not do well. And it was collaboration. People are still just e-mailing stuff around. And I thought this collaboration stuff should really work much better and so I started playing around with this collaboration. I think I called it Office G2. That was the name for it.

[12:40] But when — I read an article about Microsoft coming up with a web-based version of SharePoint and that kind of spooked me because the lesson that we learned in the ’90s was don’t compete with Microsoft. Once they’re gonna move in to a space, you might as well just get out and do something else because they’re gonna crush you. And I took that a little too literally. And so I immediately changed direction. I started going down this sort of Wiki round.

[13:02] And not too long after I changed directions, maybe within 6 months or year, I met a couple of other entrepreneurs who live right in my area in Pasadena and they started a company called Central Desktop and they were probably like 2 to 3 months ahead of me. And so when they saw that announcement about Microsoft doing a web-based for SharePoint they were too far in and they were just like, screw it, let’s just keep working on this. I mean — and as it turns out I don’t think Microsoft ever released anything of note if they ever did it and Isaac and Arnold kept pushing on and now, I just had lunch with him yesterday and I think they’re getting close to I think like 75, 80 employees or something like that. I mean, they are extremely successful.

[13:41] So yeah, I mean, I know the lesson is there but it’s just like, don’t worry about the competition or don’t worry about this big companies with what they’re doing ’cause you can’t control these forces and the markets are usually huge. If the market is big enough for a big company to go into it, then maybe it’s big enough to support lots of smaller companies ’cause they’re — not everybody is gonna choose to go with Microsoft or IBM or Oracle. There are a lot of people who are gonna choose other options for different reasons.

[14:04] And then in talking with Isaac and Arnold even if you went on the web and you looked at all the competitors in Central Desktop, there’s a lot of competitors in the space but it isn’t competing. It isn’t stopping them from being successful. They competed directly against the name Basecamp. It was sort of at least early on was a competitor of theirs and 37signals had all this love within text space but I mean, I don’t think they’re doing as well financially as say Central Desktop is.

[14:27] Rob: I think Mike and I talked about a lot about this on the podcast. We go back to episode 5 which is called how to find a niche. We talked about how to find a niche as you would expect but beyond that, I’ve done a lot of riding on it — there’s parts of my book to talk about it and I’ve blogged about this probably every few months ’cause it’s the most common question I get. I think there are way more people stuck at pre-product phase than they are actually working on an active idea. People just get stuck in the analysis of it.

[14:55] Mike: I think that both Justin and Jason agree though that just scratching your own itch is probably not the way to go in general. I mean, you really have to analyze the market a little bit and figure out — are people actually willing to pay for this and if so, what sort of revenue could you reasonably expect from that based on the amount of effort that you’re gonna have to put forward in order to build it or to have it build for you. And I think that’s really — the key is finding something, one, that you’re kind of interested in and, two, is actually gonna make you enough money that it is worth it for you to go in that direction.

[15:28] Justin: Can I just counter that with there’s something to be said for building something and creating some momentum towards moving somewhere. So even if you just stop making something, if you have no momentum and not doing anything and you’re stuck in that stage that Rob just described the kind of pre-product, pre-anything stage, I would say just give it a chance even for a few months to just move in a direction, to just get out of your lethargy and actually start making things happen.

[15:55] Mike: I definitely agree with that ’cause — I mean, there’s so many people who just sit down and they will not do anything thinking that they’re making progress because they’re reading blogs or reading books and learning all these different things, going to meet-ups and — unless you’re actually programming, you’re really not making any progress towards developing your product. And it’s not to say that you can pay somebody to do that for you but the bottom line is that you need to be working towards that and just learning and consuming the information is not gonna do it for you.

[16:24] Jason: If you’re gonna go after something, try and go after something that you can release in a reasonable amount of time because I’ve done this several times where I kind of promise that were so hard that it was just gonna take years of work. And that makes the whole thing, well, just hard, right? I mean, it increases the risk dramatically that you’re not gonna have anything ever that you can sell or make money with.

[16:47] So if you go after something simple and you whittle it down, even if you spent a month or two working on it, if it’s simple enough you might actually release even something, something simple even if it kind of sucks and only a few people are using it. That’s way ahead of like something massive that you’re like 5% done with.

[17:07] Justin: I actually take that one stage further and say if you start working on it, don’t stop programming it. Buy a copy of Balsamiq Mockups and mock that thing up in applicable format so you can start sharing it to people within a week and they can click around it and see what idea you’re thinking about and what product you’re thinking about and you can literally iterate, I mean, you can iterate on three or four products in a month and have an idea of whether people really wanted it. Are they willing to pay for it just through market research but at the same time building something that people can get their hands o?

[17:38] Rob: Yeah. My rule of thumb has been — if it’s beyond 4 to 6 months of development and marketing work to get it to market that it’s really — gonna be really hard for you to get there. I see a big drop off with entrepreneurs I worked with. Once they go past somewhere between 4 and 6 months, it depends on the person, the momentum just drops way off and they slow down. Very few people who have seen that never launched at that point. It is possible, of course, but I’m just talking an odds thing, trying to improve your chance of getting out there.

[18:04] Mike: So are you saying the odds of me actually launching AuditShark are minimal at best?

[18:08] Rob: Slim to none.

[18:10] Justin: Well, but you — here’s the thing. And this is a good thing about having a podcast and having a partner who you can readily speak to about your business. That essentially keeps you in the game, right? That keeps the momentum going.

[18:18] Rob: I agree, yup.

[18:19] Justin: If you guys didn’t have that, it probably be much harder for you.

[18:22] Rob: And you’re an experienced entrepreneur. You’ve been doing it for 11, 12 years now. You are doing it on the “side” but it’s not as on the side. There’s a lot of people where they have 40 or 50 hours a week of the job plus they commute on either end and you do have some flexibility where you take one or two weeks completely off and just work on it.

[18:40] There’s some extenuating circumstances that all make it more likely that you’re gonna get out the door. And I genuinely think that talking about it like Justin just said, talking about in the podcast period has made you publicly accountable to this thing. Like when we showed up at Business of Software last week, I don’t remember how many people came up and were like, hey, Mike, how’s AuditShark? Like guys I never met before. I have no idea who they were. And I’m like, man, you’re really on the hook. I mean, we’re both on the hook, you know. And that’s a good thing I think.

[19:05] Mike: Yeah. I was amazed at that as well. In fact, I’ve been getting people lately just twitting to me and saying, hey, how’s AuditShark coming? When are you gonna launch?

[19:13] Jason: That’s the thing with the product I brought on for almost 2 years now, that was AppIgnite which is an immensely complicated project. And I think if it wasn’t for the podcast, it would be much easier to just sort of bail. But now it’s like I’ve talked so much about it, I would feel really bad about just dropping it. But I have to say that — the couple of things that I have pumping, pushing forward — one of the podcast — the second one is I have a partner on it going on and we have sort of a regular thing where we worked together like an hour, an hour and a half every single work day. So he calls me up or I call him up on Skype and we screen share and work together. And I would recommend doing something like that.

[19:53] If you can — if there’s somebody that’s convenient to work with that you trust that maybe have complementary skill sets or whatever, at least have a very shared vision, just having someone else that you can do something with can really get you going because a lot of times what happen is work or life or whatever just starts getting in your way and it just starts pushing the startup idea further out of your daily habit and then at a point where you just lose all momentum. But if someone’s calling up, saying, hey, we’re gonna work on this tomorrow, we’re gonna work on this, or what’s going on, it just keeps you going.

[20:23] Rob: I think that actually segways really nice into the second — kind of second topic which was the logistics of working on a product, when, where, how much time, etc. And yeah, I think that what you’ve just talked about is kind of this accountability, this daily accountability that forces you to do it or not, not work it at your routine. Anyone else do that? I don’t have a daily accountability but I have a bi-weekly. Every two weeks I meet with a mastermind group here and for us now — I basically asked them to take me to task if I’m not doing the stuff that I should be.

[20:51] Jason: Like I said with AppIgnite I do have a daily schedule that I worked with going on and it’s usually right about 1:00, 1:30 to 3:00 PM every day. My time is kind of right in the middle of the day and then I also worked on the weekends on it. But lately like the project that Justin and I have been working on called AnyFu that is less of a daily through shared work session. It’s more of like we’re working on our different pieces and then we’re just communicating or either we’re talking about it in the podcast or e-mail or whatever.

[21:22] I think if you could get a regular work schedule on something I think it’s easier. I think it’s easier to keep momentum because I don’t think “let’s talk about it” is enough as the importance of that in place and just realizing our long term goal. If you do something every day, it goes so much towards pushing you through the hard spots.

[21:39] Sometimes you reach a hard point but if you’re just like, get on every day eventually, you’re gonna bust through it but if you work on it, you reach a hard part and then you kind of like don’t do anything on it for a week. It’s so easy to kind of forget about them or they won’t work on it and then it just kind of falls out of your mind space.

[21:55] Justin: I have this concept of banking enthusiast, I mean, how like when you gamble and you couldn’t bank your savings. So once they’re banked they’re not on the table anymore. I sort of feel like that same thing applies to enthusiasm. So when I feel very enthusiastic to work on Pluggio, I maybe working a class work — I’m fortunate enough that I’m a consultant so I can choose what I work on — when I get the enthusiasm like, okay, I’m gonna find this right now. I’m gonna switch over to Pluggio and work in that enthusiastic mode because I feel that it just makes it easier to get good work done.

[22:25] Rob: That’s kind of a cool idea. I have found myself since I have a bunch of different projects I’m working on all time. I’ve done the same thing but I’ve never thought about it in that respect.

[22:34] Mike: I don’t know. I think I’m kind of — approach to this sort of a Hybrid Mindset. I had a hard deadline for my master’s thesis at one point where you’ve only got so along to finish it and I had — you’ve got 7 years to finish it at least here in the U.S. and I was bearing down on that 7-year mark and I knew I had to get it done. And it was one of those sins where I didn’t want to do it. I pushed it off for so long and I’m like, okay, well, I’ve already dumped a ton of money at this college for this degree, I better get it.

[23:01] So I just buckle down and I’d wrote a little bit every day and I got a couple of books on kind of guiding you through the process of writing in and the consistent theme that I found was do a little bit every day even if it’s not a lot. And looking at a blank page when you’ve got a couple of hundred pages to write is really intimidating. But if you just concentrate on writing like one sentence, the next sentence is a lot easier than the first. And you kind of get on a role and just like Justin said, you kind of bank that enthusiasm and as you start working on it, it really can build on its own. It helps you get motivated and it helps you get through the points that get to where you need to be.

[23:41] [music]

[23:44] Rob: You know, I just commented that I have a theory about the 4 to 6 month time frame and how it drops off dramatically after that. And so if you look at it on a kind of the logistics of working on it and you think someone’s probably got to put in 10 hours a week at least during that time to get it and obviously more is better. So if we say 10 to 15 hours a week is kind of what’s gonna be required to get something out the door in 4 to 6 months, then you’re looking at 4 months of 10 hours would be like 100 — gosh, I guess it’s around 120 hours total. It seems pretty thin to me and then 15 hours a week, 6 months, the top end would be about 300 almost 350.

[24:20] So somewhere between 120 is a pretty wide range. But 120 to 350 hours to get the one point out the door and that include — that’s not just coding, right? That’s actually QA and it’s getting the marketing website down and it’s getting marketing going. It’s getting all those sales page up, the landing page, collecting e-mails and then doing a launch and all that stuff. What do you guys think about that about trying to limit yourself to something like that to get a one point out the door? Is that realistic?

[24:46] Justin: I’m just thinking that perhaps you’re almost defining a new kind of rule, that rule 10,000 hours to get — to become an expert at something. Maybe there’s a rule for how many hours you need to launce something.

[24:56] Rob: Right.

[24:57] Jason: Yeah. You could break it down to like, okay, work 20 hours for this, 50 hours for that.

[25:03] Mike: If you think about in terms of 40-hour work a week though I mean, that’s 9 weeks. I mean, 360 hours is about 9 weeks and —

[25:10] Rob: Like it’s too much work.

[25:11] Mike: Oh, yeah. And if you’re putting in that much time and effort on something, if you have your idea and you know what you’re gonna do, 9 weeks seems like it’s a lot of time to put something together that is at least sellable.

[25:24] Rob: Right.

[25:24] Mike: I mean, unless it’s extremely complicated. It seems like you could do it.

[25:29] Rob: I guess the hard part is knowing — you got to know that you’re building the right thing, right? So you almost have to factor in like customer development during that time or do it beforehand and really have a good idea of what you’re building when you start that.

[25:39] Mike: Well, I think you do it beforehand ’cause I don’t think you consider it as part of the actual development time because you have to do all this upfront work to decide what it is that you’re gonna build and how you’re going to present it whether there’s competition, whether people are gonna pay for it. And that’s more or less research time. It’s not even development time. It’s the R part of the R&D.

[25:59] Rob: Yeah. I had a spreadsheet that kind of listed all this stuff out. It has all the tasks and has the hour estimates and that’s actually in the academy. I dug that out. I haven’t looked at it in probably a year and I think I did have the estimate. It was 400 to 600 hours at the time. But I’d be interested to see now with kind of just the new paradigm of getting launches out quicker for the fact it could be edited down. ‘Cause I think this is helpful for people, right? If you’ve never tried to build a product on the side I get that question a lot.

[26:24] It’s like, well, how long is this gonna take? How long should it take? And it’s like telling someone you should plan on 4 to 6 months, 200 to 400 or 400 to 600, whatever it is, is actually as kind of weird is that sounds to us to talk about, I think that’s like a decent guide, a decent general rule. You can certainly fall outside of that. Obviously, AuditShark is, AppIgnite is, Pluggio, now, did you launch Pluggio which was Twitter manner at the time, did you launch it in less time than that?

[26:52] Justin: I launched it in 3 months I think.

[26:54] Rob: Okay.

[26:55] Justin: I went from an original idea that we spoke about it ’cause we actually — I think we thought about it on the podcast and I think within 3 months I had to beat the notion.

[27:03] Jason: I know it’s quicker than that.

[27:04] Justin: I think it could have been.

[27:05] Jason: You sent me an e-mail, like, I have an idea. I’m gonna make some money. I think what are you talking about? And he was like, yeah, yeah. Let’s gonna do this thing and you’re like, I have quick idea to make some quick cash. That was kind of how I feel.

[27:18] Justin: Oh, yeah. It’s really been quick cash I can tell you that.

[27:22] Rob: Well that’s an — yeah, it’s an interesting question because a lot of people would kill to have a product that brings in three grand a month. Would you say it’s worth it, what you’ve done?

[27:30] Justin: Okay. ‘Cause I spoke at you guys in the conference, MicroConf, and part of our presentation was that I expected just like Jason said, I expected to make a load of cash and I launched this thing and I kind of went to like $600 a month. And because of my lack of experience as an entrepreneur I didn’t really understand how much time needed to be devoted to marketing from that point forward. So I kind of gave up on it and just left it for 9 months and they just kept on at this rate of $500 and then people on the show got pretty angry with me just like I kept talking about trying to start a new business and they were like, well, you’ve got this one that’s making money. All you need to do is market it.

[28:08] So then I went back into the marketing of it and it kind of took another I guess a year to take it to $3,000, maybe $3,100 revenue per month. So I was never expecting that. If I had known that when I was starting, I better would have done it because it’s like, you have to put this much work in. I mean, it’s almost like diminishing returns. It’s like to reach the speed of light, you need to use more and more explosives to get there. And that’s what I feel like — it’s been like for me with Pluggio, partly why I would recommend working at a different space, the social media for anyone.

[28:40] Jason: So let me jump in here. I think Justin launched — I think he had a beta version like 6 weeks. I don’t think it was 3 months. I think he maybe had beta for a month but you got it done pretty fast.

[28:51] Justin: Yeah, that’s true.

[28:51] Jason: I mean, Justin — once Justin gets on to something like he can’t think about anything else and he’ll just code night and day. I think that’s kind of what you did, felt like a month or 6 weeks. Then you got it up and it was making more than $500. I mean, I think it pretty quickly got up to like $800. It is like $850 or something. And then it kind of sat there. So without a whole lot of work, you got to that $800. It was just getting past that. It was hard, right?

[29:15] Justin: Well, yeah. Because what I have was — at the time I had the ability for people to pay a year in advance in the signup from and I kind of felt once again because of naiveté I sort of felt like I was cheating myself by doing that. So originally, a few people were signing up and they were basically paying a $100 upfront. And so that was really skewing the figures. So one month I was getting $600, the next month I was getting $300, the next month I was getting a $1,000. So I didn’t really understand what on earth was going on. So I decided to just remove the ability to pay the year in advance which I probably should have kept but anyway, that’s the way that I stuck at it and I just only included monthly revenue from that point forward.

[29:51] Mike: But those aren’t problems. Those aren’t really the problems associated with building that. I mean the thing that comes to mind for me is the fact that when you look at like Y Combinator, for example, you’ve got these small group of people who are stuffed in a room [30:06] for like 2 1/2 months and that’s all they do, is they work on whatever their ideas. Now granted, they get more than their 40 hours a week and they’ve got a small team of people but they put these things together and like 6 or 8 weeks because they’ve got demos that they’ve got to do before their 12 weeks is up.

[30:25] Rob: Right. I think they have weekly — they definitely have weekly meetings where they all meet and they have training and they hear a speaker and they’re doing — they are doing customer development or some of them are at least so it’s not just sitting in the basement coding there.

[30:38] Mike: They also have a team of people. So the differentiating factor I think is —

[30:40] Rob: Some of them.

[30:40] Mike: Let’s say about 2 or 3 people and they’re working on it and each of them is putting in 40 hours a week. Say one person is doing the customer development. You got two other people who were doing the coding. What does it take to crank out a beta of something with 2 people working 40 to 80 hours a week on it? It’s like 5, 6 weeks. It depends on how complicated it is. But once they start to get funding, I mean, they can add people, they can start dealing with problems of scale and things like that. And most of those are dealing with much larger types of applications than I think that we’re talking about.

[31:12] Justin: Okay. So basically I’m earning $3,000 a month right now because 2 years ago, I decided to scratch my own itch and then I had the momentum of a partner talking to me about it on the podcast and fans bugging me about it in the podcast for 2 years. And that’s the reason why it’s there at this stage.

[31:28] Jason: But you also took a year off and didn’t do anything. The thing is — sometimes it’s dangerous to extrapolate too much like say, well, you know, it’s gonna be this hard for everyone because you might be that [31:40] Pluggio in a sense that it’s just a hard market to break into or to earn a revenue stream. I mean, you might be able to build something in 6 to 8 weeks and you put in some marketing effort and it just kind catches a little wind. I mean, you think of things like GetHub. They just —

[31:54] Mike: But that’s fine.

[31:55] Jason: It’s not just the right prom at the right time.

[31:57] Mike: Yeah, but I think that the issue that we’re trying to talk about is really how to launch something not necessarily how to deal with it after the launch. I mean, there’s obviously the post launch aspect of it but I think the getting to launch is the thing that a lot of people struggled with. I mean, there are so many people; so many developers out there who have half-written applications sitting on their hard drive that are just wasting space because they just didn’t —

[32:22] Rob: I’m included in that group.

[32:23] Mike: Oh, yeah.

[32:24] Rob: I have a bunch of apps from like 5, 6, 7 years ago. Yeah, all kinds of different ideas. I came across some the other day and I was like, crap, this is embarrassing. I should take a screen shot.

[32:33] Mike: It is.

[32:33] Rob: Of course, it’s public and so people can mock me.

[32:35] Mike: It is embarrassing but you know what, I think we all do it though. There’s tons of things that we start and we’re just like, nah, this isn’t gonna work and it’s not because you got bored with it or you didn’t do the customer development or somebody else came out with the product that you think would kill it. There’s all these reasons but the fundamental thing I think we’re talking about here is just how long does it take to actually get to launch from the time that you decide to do it to the time that you can get that minimum viable product out the door that somebody is going to actually money for.

[33:04] Jason: Yeah, the reason I was bringing that up, the thing about Justin, of how hard it is, it’s just that — and the reason I think it’s important is that, when you make things sound harder than they are then it just is — it can be discouraging like oh, he works so hard and he’s just came with $3,000. Well, he worked hard and he didn’t. I mean, it might have been just the idea. So I often see that people succeed and like don’t do this. It’s super hard and, oh, wa, wa. I don’t know if it’s that hard and I don’t know if you kind of take that much time.

[33:34] Sometimes if you have a better idea than other ideas, or an idea that is just sort of the moment people were more interested in or it’s gonna be more viral, people were willing to pay for. Don’t worry about it being so hard. In fact, the point that you’re bringing up, Mike, is just get something up quickly because there’s nothing that’s gonna give you more momentum quicker than having somebody write you — actually make a payment.

[33:55] So if can get something up after 2 or 3 months instead of quick and even if you get like 50 bucks in for a month or 30 bucks, it’s actually — you could feel pretty good and then I’ll get you to the next point we’re making $150 a month and then $300 and then you’re off to the races. So the sooner that you can get it up and get someone paying you, the better.

[34:12] Justin: Well, what I think has the been most important thing that’s happened in the last two years with Pluggio was very, very close to the launch time. So it really is about the early stage of the development of your business. And this doesn’t necessarily apply to every kind of business but I think that for a business where people are using your product, your SAS product a lot, this is very important. And that is getting to a stage where you have between 3 and 5 people who are like early adopters and it just takes like 3 people who just really loved the promise and the hope of what you’re doing. And they are e-mailing with you every day and basically you have this repetitive cycle where you build the features that they request. And you’re just working with just that tiny core group of people building the seed, grabbing it. That has been the most important thing I think for Pluggio.

[34:57] Rob: That’s cool. Sounds like customer development except that it’s not in person. You’re basically getting your control group together and just getting all the feedback from them.

[35:06] Justin: Well, because they’re passionate about it. They’re trying to build this thing. They got problems they want to get solved. And the chances are that if it’s gonna work for these 3 or 5 people and you’re solving problems for that tiny little group and they’re thinking, oh, well, I’ve got this person who’s building me custom software to solve my problems, then it’s gonna help you because it’s gonna work for a lot more people if they can work for even a handful of people.

[35:27] Rob: Right.

[35:28] Jason: And I got something to add to that actually. So you can actually get to that sooner. So when you have a product, great, you get this early adopters and strike conversation with them. But if you talk about your idea as you’re working on it and I don’t care if you’re talking about on Twitter or on your blog or Facebook or Google Plus, or whatever, then you can start getting some feedback from people because if — you don’t even have to ask for it outright.

[35:52] When you talk about something that’s of interest to other people, they’re going to respond and they’re gonna say, hey, that sounds kind of cool. And people don’t like to talk with their ideas ’cause they are so worried that people are going — that someone’s gonna steal it. But no one’s gonna steal your stupid idea because at this stage it’s just an idea and it hasn’t been proven that it’s gonna make any money. And if it’s already been proven so — but if you’re going after a space where there’s already people doing it, then there’s nothing to steal, right?

[36:16] If you’re gonna steal something, they’re probably gonna try and steal an idea or whether they’re gonna compete with an idea that’s already demonstrated that’s making money, you’re idea hasn’t demonstrated anything. So don’t worry about people stealing your idea. Start talking about it and then you can feed off the enthusiasm that you get back from people saying, hey, I can’t wait to do that. Sounds really cool. Let me know when it’s available, that kind of stuff. But on the other side, if nobody, if it’s crickets — like if you talk about it in your blog and nobody seems to care about it, then that might be an indication that maybe we’re kind of on our own thing.

[36:45] Rob: All right. I think another piece to that is that if you have an idea that’s so easy to steal, that someone could go out and build it and beat you to market then when you launched, you’re gonna launch and they’re gonna build it in two months and they’re gonna eat your launch anyway, right? It’s not really about the technology, it’s about — if they can steal your idea and out market you, then they’re gonna out market you now or in 6 months. Would you rather build it or not?

[37:12] Justin: There’s been a lot of times when people have said, well, I don’t want to tell you my idea. I don’t want to tell you my idea. And then — because it’s like you need to sign some kind of idea or whatever and then they ended up telling me that “their” idea and I just don’t understand it. It’s like, what the hell are you talking about? Like most of the time even when you have an idea or it’s probably not even well formed enough that people actually get it.

[37:33] Mike: Oh, yeah. I remember explaining AuditShark to you at MicroConf and it took a while before you understood what it actually was and what it did.

[37:41] Rob: It takes a while for —

[37:42] Justin: Because you missed out like the key piece of information about AuditShark. I think that — I know I still haven’t heard you say it which is that you actually have actual software that gets installed on each person’s machine and that’s the kind of key component that makes it just work really easy for them. They just install the software and then they don’t need to do anything else from that point forward. Just click a button, the software takes care of everything else.

[38:02] Mike: It’s actually the opposite. They install the software, one machine and they don’t have to install all the others but they still get the information from them.

[38:09] Justin: Right. But the longer the shorter is they don’t have to do anything. They just — it just works from that point forward and it’s like — it collects all their information and saves them an awful lot of hassle and boredom.

[38:20] Mike: Yup.

[38:21] Jason: But in terms of stealing idea, a good example is that the project that Justin and I are working on. We talked about the idea that we’re working on now, AnyFu, a year and a half ago. And not only that we talked about the idea that we thought it could work. We’re saying someone should go do this ’cause we’re working on our own. I was working on AppIgnite and he’s working on Pluggio and a year goes by nobody is doing it, right?

[38:42] Justin: But not only that but we’re talking to an audience of between 1,000 and 1,500 entrepreneurs.

[38:47] Rob: If anyone’s gonna take it, it’ll be them, right?

[38:49] Justin: Right.

[38:50] Mike: Well, but the thing is, those people are also your audience and I think that if they were to do that, and if they were trying to take it “from underneath you”, there’s a certain amount of loyalty that your listeners are gonna have and they’re not gonna want to do that too.

[39:03] Jason: No, no, we actually — we’re telling them that somebody should do this idea. We’re not gonna do it. Somebody should do it.

[39:09] Justin: We wanted it to exist.

[39:12] Rob: If people are curious if you’re listening and you don’t know what AnyFu is, you can go AnyFu.com.

[39:19] Mike: I wanna know, is that intentional?

[39:21] Justin: No, no. AnyFu, you know, Kung Fu, so Fu is — one interpretation is it’s an expertise. So basically any expertise dot com except it’s AnyFu.com.

[39:31] Rob: Right. So it’s just in time expertise. It’s kind of like a high level, hourly Elance or oDesk. So on their landing page, let’s say if Elance and oDesk are the 99 cents store, AnyFu is gonna be like a Tiffany & Co. So it’s high level experts. People who have published, are speakers, who are just super knowledgeable and as far as I know, you guys are gonna limit the number of folks who can be on any given expertise. So if you have a Ruby on Rails or a NodeJS or Backbone or whatever, it’s like the best of best.

[40:01] Justin: It’s people like you, Rob, but not Mike. Like you’re so offended.

[40:06] Jason: We outlined what we thought was a good idea why it would work, why we had paid people for something similar on our own and just by like we needed experts, we want hundreds of dollars web, went through all the problem of trying to communicate them from e-mail and hire them and all that kind of stuff but even though we outlined the business case and how the technology worked, it was still like, okay, so that might work, right? There’s still no proof that would be a business. And that’s why nobody would steal it, right? You can go on the web and you could look at any number of these little startups that are popped at Y Combinator or the other incubators. They’re making money. It’s a good idea. I’ll go compete with them.

[40:42] Mike: The problem with AnyFu I think though is that whoever puts it together is left with this problem where you have to bring two sides together and without one the other one is kind of useless.

[40:55] Jason: Right. It’s the market place problem, right, which is so —

[40:56] Justin: Yeah. And something else is — and I’ll just add to this discussion here is that when we first spoke about this idea, this goes to show you essentially it’s about execution rather than the idea. Because I don’t think that AnyFu would be as successful as I think it’s gonna be if we haven’t spent a year thinking about it, talking about it because it is not. By the time we’ve worked it all out and basically the product that we’re creating, I can pretty much guarantee you it is not put together in the way that you expect it to be put together. It’s completely different to what I had imagined it.

[41:27] Rob: But you know, something that I think listeners should take away from this is every time I’ve seen you guys whether it’s been one on one or at MicroConf, you guys are talking about the idea, you’re asking people questions and you’re listening to the feedback. Both of you guys, last time I was down in LA, we met for a couple of hours each and you guys have really pointed questions, very specific and were genuinely interested, you weren’t just talking about it to blah, blah, blah, here’s an idea. It was like, we’re working on this part, what do you think? Do you think people would use this? Would you use it? How are we gonna get around this problem?

[42:02] And it was like, you really have spent a lot of upfront time developing this idea and being very open about it and public and as a result you have the — maybe the best opinions from the 50 people you talked about whether it’s me or the group of people you were — you had a whole dinner table at MicroConf and you guys were all chatting about it, and they’re all giving you feedback and I know you change the idea because of these things.

[42:26] Jason: Oh, yeah. That was like a 2-hour, that was a 2-hour brainstorming session with I don’t know, 8 to 10 successful tech entrepreneurs. These are all people who would be potential clients and also potential experts and we went through and you sat down, Rob, for a while and we went through a number of like business models and how to make it work and we iterated through about 3 or 4 different versions of it until we hit on what was gonna work because every time someone says well, do you charge an expert to be on the side, and we’re like, no, that’s gonna make sense for this and this reason that a couple of people would throw out and then we’d go to another version and say that’s not gonna scale for this. I mean, like we iterate it so fast because it wasn’t just Justin and I talking. It was a group of 10 people for like 2 hours.

[43:07] Rob: Yeah, and that’s invaluable, right? If you’re sitting in your basement or even the two of you talking on the podcast, the idea would never have evolved that quickly or maybe never would have evolved to that point at all without getting the feedback.

[43:20] Jason: Right. Right, I agree. Absolutely.

[43:23] Mike: We definitely talked about your ideas.

[43:25] Rob: Yeah, man. I think that’s tech way right? Figure out a list of questions. Actually, at BOS last week, I had a list of questions and you know who’s good at this? It’s Harry Hollander and Ted Pitts. They are founders of Moraware software. Every time I go to a conference with them, they come and — they’re always at the beginning to say, yes, well, I have these two questions I’m asking everyone. We’re trying to figure out the, you know, this year it was like they’re trying to hire someone and figure out what the other one was. But that was their goal. It was to get that question “answered” by as many people as possible. And I think that’s a really kind of a cool way to do it.

[43:55] Mike: You know what Ted’s question for me was, why haven’t you launched AuditShark yet.

[43:59] Rob: Yeah, I know.

[44:00] Jason: Well, it’s funny bringing up Ted and Harry because they were at that table with us and I think Ted had a couple of very important points in that conversation and they’ve built successful business themselves so they had some great advise for us and then both of them were saying listen, whatever revenue model you have you got to make sure it scales with the usage because if the first is withdrawing out, it just weren’t gonna scale.

[44:22] Rob: It was like flat fees, right?

[44:24] Jason: Flat fees. It’s like give us a flat fee. You’re gonna charge that and you’re gonna be very sad. I’m saying that craziest — you’re gonna be sad.

[44:30] Rob: You’re gonna make your experts a lot of money and you will get $10 or whatever.

[44:35] Jason: Exactly.

[44:35] [music]

[44:38] Rob: We have three more points that Mike had planned that we answer but frankly we have to have you guys back on.

[44:45] Jason: I’d love to be — I’d love to do it.

[44:47] Rob: That’s the take away here is that we all have a lot to say and we have a lot of experience and stuff. So hopefully folks enjoy the episode and we can either finish up this topic sometime in the future or just choose another potential random one and go at it.

[45:02] Mike: Absolutely.

[45:02] Rob: I had a lot of fun. This is cool.

[45:04] Jason: Same here. It was great. Thanks for having us on.

[45:07] Justin: It’s really, really fun to be on the show.

[45:09] Rob: And if you’re a listener of this podcast and you haven’t checked out TechZing you definitely should. The URL is techzinglive.com. And of course, if you’re on iTunes in search for TechZing you can find both of these guys. And then guys, I know you both have — you both have blogs. You also both have products so each throughout one website, one URL where someone could get in touch with you or where you prefer that they’d go and checks out about you.

[45:34] Justin: Justinvincent.com. That’s my blog.

[45:37] Jason: Yeah, and for me would be codusoperandi.com.

[45:41] Mike: Interestingly enough if you also searched for Startups for the Rest of Us in iTunes, their podcast comes up. So with that if you have a question or comment, you can call it in to our voicemail number at 1-888-801-9690. Or, you can e-mail in an mp3 or text format to [email protected] Our theme music is an excerpt from We’re Outta Control by MoOt used under creative comments. If you enjoyed this podcast please consider writing a review in iTunes by searching for startups. You can subscribe to this podcast in iTunes or via RSS at StartupsfortheRestofUs.com. A full transcript to this podcast will be available at our website StartupsfortheRestofUs.com. Thanks for listening. We’ll see you next time.

Rob and Mike speak with Jason Roberts and Justin Vincent of the TechZing podcast.

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Episode 540 | Bootstrapper News. Twitter Spaces, Indie.vc Closing, Shopify, and More

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Episode 540 | Bootstrapper News. Twitter Spaces, Indie.vc Closing, Shopify, and More

Episode 540 | Bootstrapper News. Twitter Spaces, Indie.vc Closing, Shopify, and More

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In this episode, Rob talks with Tracy Osborn and Einar Vollset, about the recent news that’s come out in the bootstrapper community. They talk about the Indie.vc shutdown, the new features coming out on Twitter, LinkedIn’s new gig marketplace, and more.

The topics we cover

[03:18] Twitter Spaces

[10:05] The Network Effect and Twitter Verification

[14:32] The Indie.vc shutdown

[24:20] Shopify removing the option to work directly with Stripe

[32:34] The new ‘Super Follow’ feature in Twitter

[35:43] Comparing Google Cloud and AWS onboarding

[40:04] The new LinkedIn Gig Marketplace

Links from the show

If you enjoyed this episode, let us know by clicking the link and sharing what you learned.

Click here to share your number one takeaway from the episode.

If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!

Subscribe & Review: iTunes | Spotify | Stitcher

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In this episode, Rob talks with Tracy Osborn and Einar Vollset, about the recent news that's come out in the bootstrapper community. They talk about the Indie.vc shutdown, the new features coming out on Twitter, LinkedIn’s new gig marketplace, and more. The topics we cover [03:18] Twitter Spaces

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about 1 year ago
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Episode 82 | Mailing Lists vs. Facebook, the Coder/Entrepreneur Dichotomy, and Other Listener Questions

[00:00] Mike: This is Startups for the Rest of Us: Episode 82.

[00:03] [Music]

[00:11] Mike: 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.

[00:19] Rob: And I’m Rob.

[00:20] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. How is it going last week?

[00:24] Rob: Yeah, it’s good. I’ve been in and out of town this week and I’m trying to wrap up pretty big HitTail feature I’ve been working on for a while. It’s an integration that allows me to basically have one click articles created for a keyword suggestion so the people can because that’s kind of — the one biggest complaint that people have, one biggest reason people cancel as that they get all these suggestions but it basically creates work for them and the customers will be able to click one link, wait a couple of days and then get an article back for this, the keyword.

[00:50] Mike: That’s really cool.

[00:51] Rob: Yeah. I’m excited about it. It’s been on my list for months ever since like before I relaunch, you know, and so I finally just took the fall this week and it’s one of those things been — both easier and harder than I thought it would be, you know, certain parts have just flown by and some other parts that you would think would just work, have taken, you know, twelve hours or something. So…

[01:09] Mike: Like — like estimating code?

[01:11] Rob: Oh, my gosh.

[01:12] Mike: [Laughter]

[01:12] Rob: No, not that actually. The — it’s the connecting to an API thing that should just work. It’s a SOAP API and .NET is supposed to work just great with SOAP and yeah, the SOAP API doesn’t. It —

[01:23] Mike : I was referring more to the fact that when you’re trying — as trying to estimate how long some thing is going to taking code like sometimes you’re just off by or also [Indiscernible].

[01:30] Rob: Off gazillion, yeah. Right because you’re run in to one thing that should just work that should be one liner code and instead you have — you have to write like an entire class library to handle it from scratch. That’s — I’d rather go down to Bare Metal and basically call SOAP using XML strings.

[01:47] Mike: Oh.

[01:47] Rob: And yeah, exactly. An HTTP post and responses and parsing in that because the kind of SOAP they’re using on their end isn’t working with — with the — the class libraries that are available. So yeah, it’s been interesting.

[02:01] Mike: Do you —

[02:01] Rob: It’s times like this I’m glad I’m a developer because I’m able to just suck it up and do it because I would hate to — if I had, you know, like a higher developer, it’d be a struggle because I bet they had be running at all kinds of problem and it’s kind of hard to communicate. If you’re a developer trying to communicate and saying, “Ahh, this just isn’t working and you know, what should I do? Should I just press through or spend an extra twelve hours to do it or worse, I just got to the point where it’s like, yeah, I’d just need to spend a time and —

[02:25] Mike: And I think it’d be especially hard if you weren’t a developer because then it’d be hard to articulate what some of the problems are if you were to try to hand it off to somebody else.

[02:32] Rob: Exactly like why does this taking twelve times longer than I thought it would.

[02:35] Mike: [Laughter]

[02:36] Rob: Yeah because literally, I thought that all the SOAP connection would take less than an hour because you just give the reference and you get, you know, the whole object structure built for you automatically and when that didn’t work, it’s like, okay. I’ll just spend this time parsing a little XML in and out. So…

[02:51] Mike: Cool. You know, I think I had mentioned last week that I’d be doing a couple of surveys. One was the MicroConf survey and so let’s talk a little bit about that. And then I did another survey for AuditShark. But let’s talk about the MicroConf survey first. I mean we sent out a survey to all the MicroConf attendees and got some, I’d say some pretty interesting data points back.

[03:10] Rob: Yeah, I was — I was quite please because it’s like, you know, you’re at the conference and you’re asking people’s opinions but it’s hard to get a real good gauge because, you know, I mean you can only ask twenty people or so. And so it’s you can’t really get a representative sample unless you made the survey a lot shorter. So I think —

[03:23] Mike: [Laughter]

[03:23] Rob: I picked good response. We had great response last year as well but yeah, some of the key insights I thought we — I guess of the respondents, 80% were first-timers, first time at MicroConf, first time and 20% were had been there last year. The break down of mobile web and desktop, if people could select more than one because, obviously, some people were doing both web and desktop but it was 85% web, 51% mobile and 38% desktop. So that does indicate and we got some feedback that we need to provide that’s kind of a more mobile stuff. And I agree, we definitely need a mobile speaker next year. Then in terms of we had a mobile app that you can install on Android [0:04:00] and iPhone and it was like the schedule and the info about the conference and that was through KitApps.com — KitApps.com, they sponsored it and gave it to us for free which was cool. It turns out 47% of attendees liked it, 25% didn’t find it useful. Around 25-28% did not install it.

[04:20] Mike: Uh huh. So the people who liked it though I mean that basically comes out and says about 60 — 67% of the people who used it, liked it.

[04:28] Rob: Exactly.

[04:28] Mike: And I remember — I remember talking to some people about it and they said, “Yeah, I didn’t really like it because, you know, it’d be really nice to have specific timelines for, you know, when the speakers are talking and what’s going on throughout the course of that 9 to 5 block.” And I said, “You should really put in the actual times that everybody speaking.” And I told them, I was like, “Well, we did that last year and 10 minutes in to the conference, the whole schedule went sideways. And then we were trying to play catch up and everything was off. So there were no points to even doing that.” And the same thing happened this year. I mean 10 minutes in to the conference. I mean we were already 15-20 minutes off schedule. So it didn’t help. I think that it probably would have made things a lot more chaotic.

[05:07] Rob: Yeah. I agree. And several conferences I’ve attended in last year don’t have specific time schedules. They just have speaker orders and they have the expectation that you’ll get a break between each speaker. And I think, I’m pretty sure that’s how we’re going to continue to do it because you’re right, having this — this tight schedule that you can’t stick to because of unforeseen stuff and we had speakers, we have speaker dropped out last year. We had speakers swapping like the night before wanting to go on a different day this time due to health issues. I mean there’s all kinds of stuff that is just out of your control.

[05:36] The cool part, we got feedback on the speakers and all that but the cool part is we, we left some open ended questions of like what are the three things you like the most and what are the three things that, you know, you like the least or that we should have tried to improved upon. And some of the suggestions or some of the thoughts about three things people like the most were same things we heard last year so which is good. That’s mean we’re being consistent but it was the quality of the attendees and the small size [0:06:00] of the conference.

[06:01] And so people were saying you need to keep the price where it is or raise it. You need to keep this, this group tight and you need to keep the — the people who are coming here, they need to be serious because people would — even in the survey, people are giving examples about like they went to a different conference last week and they just had a bunch of people kind of were wasting their time about their attendees and it wasn’t even fun to walk around and talk to people because they didn’t have anything in common. So — so that’s cool like keeping that quality of attendee and the seriousness high and I think has been a real kind of boom for us over the past two years.

[06:31] Mike: Interestingly enough, I think that last year, we had gotten some — I think it was early on we got some initial complaints about the cost of the conference and I think that cost actually keeps those types of people out who aren’t very serious about it.

[06:45] Rob: Exactly. Oh, the approachability of the speakers and that’s again something we heard last year was since we’ve kept it relatively small that you can pretty much meet all the speakers and we asked speakers, when we asked them if they want to come, we basically say, you know, “We want you to do a talk that’s actionable. We want you to come for all three nights and we want you to come to the events because we really — we don’t just want to see you speak, like we want you to interact and help the attendees and…” So we’re trying to get speakers who are interested in doing that and so far, we’ve had good luck doing that. And I definitely be keeping that up next year because obviously, it’s one of the kind of the top three things folks mentioned.

[07:19] Mike: Uh huh.

[07:21] Rob: How about the negatives? Do you want to run through them?

[07:22] Mike: Sure. So the first one that we got back which I was a little bit surprised about was that the Hard Rock Hotel is not very well received. A lot of people said that it was too loud or it was really hard to talk to people during some of the hang out sessions. And one of the things that I noticed was that Monday night was by far the easiest night to talk to people and that was across the street. It’s some place else where it was kind of a private gathering.

[07:44] Rob: Yup. You know, I was surprised by that too but it makes sense and a — enough people said there was a big chunk of people who basically said the Hard Rock is too loud or it was too hard to hang out. And some — there’s one person said it fell like spring break. Another was actually a reality TV show being film there. It was an MTV show that neither you nor I knew about. And so like Saturday and Sunday and even in to like Monday morning, there were just a bunch of kind of spring breakers and I was actually trying to get out to the pool and the guy was basically like, “Uh-uh.” Like he gave me the “you’re not dressed for the pool” because I was in jeans but I think what he really meant was “You’re too damn old to be out in the pool right now.” [Laughter] I think we need to think about it next year, you know, looking at a different hotel.

[08:24] Mike: Well that’s a — I mean if you think about in terms of scheduling, this is the second year in a row where we’ve had the conference and something else was going on that we just didn’t necessarily know about.

[08:32] Rob: Yeah.

[08:33] Mike: And we have to be able to control about it. I mean I think last year we had MicroConf in a middle of Apple’s Developer Conf. [Laughter]

[08:40] Rob: Yeah. And realistically if that wasn’t there, I do think it would had been a different — a different scene. It would have been quieter. But bottom line is, yeah, next year we’ll — we’ll at least evaluate other options and see if we can, you know, potentially swing another hotel.

[08:53] Mike: Yeah, definitely. I really did like the second night over at Rumor across the street.

[08:58] Rob: Yup.

[08:59] Mike: That was put on by the guys over at WildBit which is really cool to do that. So definitely, thanks to you guys for helping us to put that on and putting all that stuff together. I think I get a lot of great feedback from that as well.

[09:10] Rob: We had other positive and negative feedback. This was kind of the most popular. I was surprised to see several comments. People were saying they were disappointed with the Tuesday evening gathering that it wasn’t in a penthouse suite because last year we had just a total last minute, we hadn’t organized anything for Tuesday night and Andrew Warner happened to have this big suite that we — that we had given him and we just hauled in up there and you know, bought some beer and some snacks and hang out. And that was — it was really cool.

[09:35] But this year we tried to do that, you and I tried to get the penthouse suite but it would only hold 75 people. And so we couldn’t do it because we would have had, you know, not being able to have everybody up there. So instead we just went to a bar and slapped down a credit card for a few hours. And I thought it was fine but we got enough feedback that it wasn’t. Some people said they felt not organized and other people said it was too loud and then other people specifically mentioned, “Oh I heard there was, you know, kind of a penthouse suite thing last year and was bummed that that didn’t happen again.”

[10:03] Mike: Uh huh. Yeah, we’ll definitely have to try and find some place that has a penthouse or do something else different I think next year. But you know, it’s good feedback.

[10:12] Rob: It’s always good to hear. So we’ll keep going through that, looking forward to next year and see if I can convince you to do it again. Anything else on your radar for the week before we dive in to some listener questions?

[10:22] Mike: Yeah, I did have that survey that I put together for AuditShark because I talked —

[10:26] Rob: That’s right.

[10:26] Mike: … last week about possibly redirecting it and I talked to some people at MicroConf about it. So I put out the survey, you just used Wufoo for it and put together a short survey. I think it was seven or eight different questions. I really like using Wufoo for this because it tells you like your conversion rates for the people who come and just look at the survey versus the people who actually go through and fill everything out. And it lets you know like all the percentages, page views, all that kind of stuff for it really, really helpful. And I basically asked people — I kind of explained what the problem was to having a third party look over your — your server to make sure that it was configured securely and that you weren’t accidentally doing things that you shouldn’t be that some script kiddie out there is going to end up hacking in to your server over.

[11:12] And I got a lot of great feedback from. I got about twenty responses. And of those twenty, there was only one who said they wouldn’t pay for it and collectively, there was a couple of thousand dollars worth of, I don’t want to call them commitments because I wouldn’t quite call them a commitment but you know, people said that they were collectively willing to pay a couple of thousand dollars for it. So I definitely feel like I’m on a right track with that and I’d just kind of need to flesh out, you know, exactly how that offering is going to shape up and do a little bit more of market development on it and build my list a little bit more. I think there was only one person who said that I couldn’t add them to their — to the launch list as well.

[11:46] Rob: Very cool. So that shows you’re heading in the right direction. Are you able to — you called it like website security audit software or something, are you going to go in to more of the description with them of what it would do or did you already at the top of the survey?

[11:58] Mike: So the basic question that I asked was [0:12:00] “Are you concern about the security of your web servers?” And then on to that I said I can help. And then my problem description was “This survey is intended for people who administer their own web server. If you have trouble sleeping at night because you aren’t a security expert and are constantly wondering if something might be wrong that you simply haven’t discovered yet, please help us to help you by answering some simple questions.” And then I just gave a brief about my prospective solution and just said “AuditShark is a cross-platform, cloud based security product designed to read configuration data from a computer. By analyzing configuration settings and aggregating metrics across servers, AuditShark can tell you where & why you may be vulnerable to malicious attacks on your servers. Using anonymous, aggregate metrics it can rank your security profile in relation to other servers with similar configurations. In a nutshell, AuditShark acts as another set of eyes on your servers to help keep them from being compromised because of seemingly innocuous misconfigurations.”

[12:50] Rob: Got it. So it sounds like you want to do a pretty good description of kind of the solution that you’re proposing for their problem.

[12:56] Mike: Uh huh.

[12:57] Rob: So how many — how many e-mails did you send out and what was the response rate?

[12:59] Mike: I actually didn’t send out any e-mails. So [Laughter] what —

[13:02] Rob: What —

[13:03] Mike : What I did was I posted this as a link to the show notes for last week and —

[13:07] Rob: Okay.

[13:08] Mike: So we’re recording this on Thursday. I put this out there on Tuesday at around 9 a.m. So it’s about 48 hours later and I’ve gotten I think twenty different responses from people, 21. And 461 page views, 4.6% conversion rate. It gives you an average time for submission but it’s wrong. So, somebody left their browser open for like five or six hours. So that really skewed a lot of the results but the first day that it was open, the average response time was about 5.2 minutes. So, people spent some fairly significant time looking at it and reading it. I would suspect that they read the entire description and kind of really understood what it was that they were contributing the information for.

[13:46] Pretty much everything came through either my RSS feed on my blog or through the link from the show notes. I think that the vast majority of it was from my blog to be perfectly honest. I also put some out there on Twitter in the — the referrers for this. It doesn’t [0:14:00] really seem like there was a lot of activity there. I know it got retweeted several times but I don’t see anything coming in here from Twitter at all. And it made just be that it’s not displaying it because the traffic —

[14:14] Rob: I think — is direct because if – because like I used TweetDeck and so that will show for direct traffic is an example to launch twitter.com as a referrer. t.co is the referrer.

[14:23] Mike: I also — yeah, I see t.co. There’s only one. What I don’t like is that it doesn’t show me all of the traffic that came. All it shows me is the people who actually completed it.

[14:23] Rob: Got it. Okay.

[14:33] Mike: Which is kind of annoying but, you know, it’d be nice to see how many of those 400 and you know —

[14:38] Rob: Yup.

[14:38] Mike: … 30 people or whatever came from Twitter.

[14:40] Rob: The only cool what — so where — what’s your next step? Are you going to be contacting those folks to find out more about what they need?

[14:45] Mike: Yeah, so I’m going to start sending — because there’s only about twenty of them, I’m going to go back and I’m going to start having individual conversations with them and kind of clarify exactly what it is that my intentions are and how it would work. And one of the things I asked which I thought was important was says, “What are the two primary concerns you would have about this type of service?” And I got a lot of good feedback about people saying, “Oh, I wouldn’t sign up because of this or that.” And there are things that could be easily address with like an FAQ or something along those lines. It was just because I didn’t give them enough information. But it seemed to me like because they have a real problem, they’re willing to make — also a certain concessions about, you know, signing up for a service that’s actually going to let them resolved that problem.

[15:28] Rob: Sure. Now, that’s great because that’s the way they get started with your, kind of your marketing copyright [Phonetic] getting in the minds of your prospects in for now with that conversation is that exact question you asked is perfect for getting those bullet points on your home page and getting your calls to action in place to kind of resolved those — those issues, those objections that they have early on because otherwise, you know, when you’re doing in-person sales, you know, it’s like people have objections and you address them, you know, assuming your product handles what they wanted to do like you can always just say that objection is essentially not valid, you say very tactfully but it’s harder [0:16:00] to do that on the web unless you know the objections in advance and you’ve asked that. So…

[16:06] Mike: Uh huh.

[16:06] Rob: Nice work.

[16:07] Mike: And the other thing I did was I consciously used the title for this, you know, “Concerned about the security of your web servers?” from a conversation I had with somebody at MicroConf who, you know, had said that, you know, “I would pay for this.” And I asked why and he said he’s like, “I can’t sleep at night sometimes because I wonder if there’s something wrong. It’s like I got a ton of people who are using that server and what happens if it goes down?” And he’s basically said he’d have a very serious problem on his hands just if the server went down, not even if it was hacked but just if the server goes down because there are so many people, I think he had said he have like thousands and thousands of accounts on there. I was just basically lifting his terminology to kind of put it at the top of this. And it seems like it worked out.

[16:48] Rob: Cool. And any other things before we dive in to questions?

[16:50] Mike: Based on some of the stuff, I’m going to, you know, I’ve already got a logo that’s and the works and I’m doing a scope of work for a contractor to build up a new AuditShark sales website for me. I’m going to supply all the content and everything but I need some CSS templates and stuff but you know, those are becoming up over the next week or two and we’ll just go from there.

[17:08] Rob: Sounds cool.

[17:09] [music]

[17:12] Rob: All right. Well, we have a couple of questions queued up. Let’s see how many we’ll get through. The first one is about mailing lists versus a Facebook page and it’s from Brendon Duncan and it says, “I followed some of your advice and started marketing my web app before it’s finished on my site at 3dvirtualtabletop.com.” And that’s the number 3, the letter D virtualtabletop.com. “I’ve been collecting e-mail addresses with MailChimp but I also have a Facebook page. It occurs to me that a Facebook fan is more valuable than an e-mail address because their interest is public and word of my app could spread socially or at least pop up higher in search results especially with Google Plus. Given that my app is consumer-focused, I’m thinking about replacing the e-mail sign up form with a button to like my app on Facebook. What are your thoughts on this?” I love [0:18:00] this app. It’s a D&D, a Dungeons & Dragons Virtual Table Top that runs, it looks like on an iPad or maybe it’s an Android tablet and I haven’t played D&D since high school but, man, I would have love this thing. It’s such a cool demo. I really like the video.

[18:15] Mike: So I think he makes a couple of different points. And the first one is that he’s been collecting e-mail addresses with MailChimp and then he also has the Facebook page. And his thought processes that, you know, the Facebook fan page is going to be more valuable than an e-mail address because their interest is public. I think that the problem with that thinking is that because you haven’t launched yet, I think you’re going to have a very hard time getting any of those Facebook like. I think what you need to do is stick with collecting e-mail addresses through MailChimp and then once you’ve actually launched, then switch over to using the Facebook page or in trying to gather Facebook likes because I think that those initial conversations that you have with people collecting those e-mail addresses is going to be a lot more important to help you target your marketing efforts and find out what it is that people like about the product and what problem they’re truly trying to solve.

[19:04] And then using those conversations to basically fill up a marketing collateral on your website and then using those Facebook likes to kind of spread the word and spread the message because once you’ve launched, then those e-mail addresses are probably a lot less valuable to them — to you than a Facebook likes. But I think that there’s definitely a transition period there where, you know, you use the MailChimp e-mail addresses first and then you transition over to Facebook page later.

[19:30] Rob: Yeah, I’m on the same page. I do not think removing your e-mail sign up form is a good idea at all and I disagree with the notion that a Facebook fan is more valuable than an e-mail address just because they’re public. Your goal right now is to get a list of people who are interested whom you can contact at a later date when you launch. You want to get as many stock together in some form that you can message were they will actually respond. So you can think about this like you could start in theory, you could start a Twitter account and a call to action on your landing page could be [0:20:00] “Follow me on Twitter”. The reason you don’t do that is because A, a lot of consumers are on Twitter and B, the conversion rate, the clickthroughs from Twitter are terrible.

[20:09] The best conversion rates I’ve seen by far are with e-mail. Everyone has e-mail and people just, they tend to read it and they tend to clickthrough. If you could somehow build a fan page, get people to like it and then you could message them which I’m pretty sure is not actually possible. It was possible at one point but Facebook discontinued this it looks like in 2011 and even that when you could do it, it went to a separate inbox and it often did not e-mail people about it. So it really wiser, this kind of a No Man’s Land and from what I’ve read about this, there’s really low conversion rates on this stuff.

[20:42] So number one, I think you need to stick with e-mail but I think there’s an between here. I think what I would do if since you are consumer-facing is have your e-mail sign up form and when they entered the e-mail, they click submit. They arrived at a landing page that says “Thanks for submitting. Check your e-mail. You know, click on the link to be on the list. And since you’ve obviously like our app, why don’t you now click this Facebook like button and potentially a retweet button.”

[21:09] And so then it’s a sequential thing. So, you’re not asking to do one or the other but you’re going to get, you know, everyone who submits an e-mail through is then going to be, you know, fairly likely to then click the Facebook like thing and spread it from there because you got to think about it. If you just got get a bunch of likes on this page and yeah and “goes viral” and you get thousands of people to come to this page from Facebook, what then? What’s the end goal? You still need to sell them something or you need to have their e-mail so you can sell them this app later. So thanks, Brendon for your question and I hope that helps.

[21:41] Our next question is from Brian Donahue at pigeonmoon.com. He says, “Hey, guys. I’m curious what techniques, tips or tricks you have to share about how you balance your programmers mind with your business mind in your daily work. I often find myself torn between what seems like the opposite ends of a spectrum, the desire to be and think like [0:22:00] an entrepreneur and focus on business goals and shipping good enough software and the desire to write great code, learn new technologies and generally scratch the geek itch. I’m curious if you have any good tips or guidelines about how to deal with this. I know that you both hire freelance developers to work on your stuff, I’d like to hear more about how that went initially and how you were able to let go of your need to build a code. You both seem like accomplished developers. I feel like I would be constantly fighting the feeling true or not that I could build it better. Love the podcast.” He says, “Love, love, love. That’s 3X to podcast. Thanks for doing it, Brian.” What do you think, sir?

[22:41] Mike: No. I don’t have any good tips. [Laughter]

[22:43] Rob: You don’t?

[22:2:45] Mike: No, it’s —

[22:45] Rob: It’s a struggle, isn’t it?

[22:46] Mike: Yeah, that’s the problem and I think that this person has to approach it a little bit differently. The way I do it is I think about it as an engineering a business not necessarily to engineering your product and I think to that —

[22:57] Rob: Bingo.

[22:57] Mike: … that helps me big and it may — it may help you, it may not but I think that if you – if you think of it in those terms, you’re still building something and in that sense you’re trying to make that the best that you can. It’s not necessarily your job to make the code the best but what you can do is you can put guidelines and frameworks in place. And I guess it will help that to grow out the way that you wanted to.

[23:21] So one of the topics of my talk at MicroConf for example is building processes and systems and putting them in place to help you build out your business. And I don’t see that as being any different. You put these rules in place for how you want the code checked in, how you want commented, what tools you use, all the different steps that your code needs to go through and essentially, that’s your quality control system. And if somebody is doing something wrong or you don’t like what they’re doing, you need to do one of two things. Either one, you replace them and that replacement could be with yourself but the reality is that shouldn’t be — you know, if you’ve already outsourcing the code, then, you know, if you need to find somebody [0:24:00] else to do it, don’t replace that person with yourself because you can do it better.

[24:03] The fact is you would always be doing that code better, what your talents are probably better use that is engineering the business and finding somebody to fill that role for you. I’d say that’s probably my best recommendation is to kind of step back a little bit and think of it from a little bit higher level than you probably are. I mean because when you start thinking about code, you’re thinking ones and zeros and all the things that need to go in to that and you need to think a little bit more abstract. You need to think more like an architect and you basically, you’re becoming a business architect as opposed to a product architect.

[24:33] Rob: Yeah, I think it comes down to a couple of things. I think it comes down to knowing yourself, knowing what you’re good at, knowing what will make you happy and what you enjoy and knowing kind of where you want to go like what your goals are. And I think that if you really like to code and you really like to get in and learned new things and just write scrappy code and optimizes and architect and do all that stuff, you can need to seriously think about building a product that doesn’t sell like an open source project or something like that because if you really want to optimize your fun and learning, you’re absolutely going to need to go do something where the business part side of it is not the goal.

[25:09] Rob: But if you say to that, “Well I don’t want to waste a bunch of my time because I don’t like my job and I want to quit my job”, then you need, in my opinion, you need to optimize for making money from your product. And in order to do that, you have to start letting go of some of the stuff. Period. I don’t know if any software entrepreneur or micro must [Phonetic] feel otherwise who still codes absolutely as much as they want all the time and only works on interesting things and doesn’t hire it out. And you know, is — that was able to quit their job and live on this. Maybe if you move overseas and it was, you know, a lot — a lot cheaper or something, you can do it on a thousand or 2,000 bucks a month.

[25:46] If you want a build, you know, a substantial full time income, you have to make some sacrifices for that goal and I’m not saying you have to give up code altogether. In the past six months, I probably averaged twenty hours of coding a week and I loved it like when I get in the zone, I’ve absolutely loved it. It’s brought me back to the days when I used to code, you know, forty or fifty hours a week every week. At the same time, I have enjoyed mixing it up and doing the business goals. It’s like you said having the opposite ends of the spectrum existing at both times where you’re bouncing from business stuff and bouncing back to the code. Now the one difference is that since I’m able to outsource code, I’m outsourcing the code that I don’t want to work on and I’m keeping the stuff that is really interesting and that will teach me things and I’m doing it myself.

[26:29] So that’s where I think the trade off comes is once you learned to outsource, then you do give people the stuff that is not as interesting or that you’ve done before that’s not going to teach you, you stick to the interesting things and then if you’re naturally feeling like you’re going to need to do all the coding or you’re going to be gravitating towards that, I think that if you fight that urge, you need to really fight it. You need to always swing towards to the side of the pendulum if you know that that’s your natural tendency is to outsource more than you think you need to and to put more importance on spending time on the marketing and getting — as finding customers for your product.

[27:03] I think Mike is right. I think of it as engineering of business, engineering your marketing process, engineering support processes and even, you know, engineering outsourcing to developers, there really are engineering elements in that and I believe that you can probably find happiness in both of them and like I said, it comes back to knowing yourself and knowing like really deep down what your absolute goals are. So hope that helps.

[27:25] Rob: All right. Question number three is from Kristoff [Phonetic]. He says, “Hi, Mike. Hi, Rob. I’ve got a question regarding pre-launch mailing lists that I didn’t find the answer in the podcast. You’ve been talking about the importance of building a pre-launch mailing list and I figure, the more the merrier. But is there a minimum viable mailing list size one should have before launching the product? For the sake of a concrete example, assume that you only collected e-mail addresses after potential customers clicked on the sign up link on your SAS applications website. Regards, Kristoff [Phonetic].” And then he says, “P.S. Your podcast rocks. Listening to it is often the only reason I get off my lazy ass and go for a run [0:28:00].” Well thanks for that.

[28:02] Okay. So I do have a couple of thoughts. So the conversion rates that I’ve typically seen from launch lists range dramatically. I’ve had launches go at 20% of the mailing size meaning 20% convert in to and the people who buy. I’ve had it as with my book. It was tapped out at about 50% by the time the launch was all done. But that’s a typical. I have seen products launch and get around a 5% conversion rate and it all depends on how well you’ve lay the ground work, how close your product is to really meeting the needs of that market, how ready they are to buy, you know, the timing and there’s a lot of elements, how good your marketing is, what phase of a [Phonetic] product it’s in, all kinds of stuff.

[28:44] Rob: So with that said, I’ve seen mailing list from, you know, in the 50, 60 range up in to the several thousand ranges and it really is definitely the more the merrier because it’s all just, you know, a game of numbers at that point. As long as the list is targeted, you definitely want to build it up as large as possible. I think if you have less than a few hundred on your mailing list that you’re going to have a tough product launch. Typically, I tell people when you hit 500, start feeling comfortable and not just, again, a vague realm [Phonetic] because even at 5%, that’s only 25 customers on your first day and that’s, you know, not like the best launch ever. But if you can get it up in to the 10 to 15%, obviously, that — that really gets you off to a good start.

[29:24] Rob: Now in terms of having a collecting e-mail addresses after potential customers clicked on their sign up link on your SAS apps to website, to me that’s just a testing phase, right? You do that, you build the SAS app marketing website and then you put the sign-up form and you’re trying to validate it. It’s more about conversion rates from people hitting their home page going all the way through to the bi-phase and you’re trying to figure out what that conversion rate is. And you know, if you can get that up in to the 2, 3, 4%, then it seems relatively viable and you can drive enough traffic to that website using, you know, whatever methods available to you. Then you’re starting to think, okay, I actually might be able to build a viable product out of there.

[30:03] Once I decided I was able to build a viable product, I would then switch it over and probably go back to the landing page first because at that point, all you’re doing is trying to optimize for e-mail addresses. You’re just trying to get the most possible before you launch.

[30:15] Mike: I think there’s a couple of things that stick out to me. And one was as you said when you’re trying to validate people who are coming to your mailing list and they’re clicking on the sign up link. I think that just to clarify, he explicitly said sign up link on your SAS applications website. It’s not clear whether he means that there’s pricing before signup page but you really need to have the pricing before that because then clicking on signup a lot of times they’re doing it just because they want to see the price. So that helps to make sure that the people who are getting on to the list are targeted and that’s the other point that I wanted to bring up was how well targeted that mailing list to actually is.

[30:52] Rob: I think that for a launch to be I guess worth that you either have to think in terms of dollar amounts for a number of signups that you want to get and then back up from there and kind of reverse engineer the math behind just to say, okay, well if I — if I’m going to — convert 15% of these people and I want, I don’t know, $500 a month from my launch, then that means that, you know, of those 15% that signed up, there’s going to be another 85% that didn’t. So kind of do the math on that to figure out what that number is actually going to come up to be and it’s obviously going to be depending upon your price point and lots of other things.

[31:26] You need to figure out what sort of a number you feel comfortable with and from there, you know, try and make sure that your mailing list is targeted. I mean and the only you’ll know that is by talking to those people who are going on to your mailing list. I wouldn’t say that there’s a minimum size. I think that it has lots to do with what your expectations for that launch are going to be.

[31:47] Rob: All right. And for our last question, we have from David Young [Phonetic] and he says, “My request for you guys is that I would love to hear more about numbers. What can developers who get in to this type of micropreneurship expect in terms of income? I know that the answer varies widely but would love to hear your two experiences with various types of sites, apps and projects. Pat Flynn has a really cool income progress report and Mixergy’s podcast always have lots of financial data. I think it helps to paint a real picture than in addition to the lifestyle upgrades you can accomplish, the outcomes could be even better than being an employee at a very successful startup. Keep up the great work and I’m really bummed. I missed the first MicroConf. Hope to make it next year. Regards, David.”

[32:29] Mike: I think it’s a little harder to generalize on this type of question, you know, I mean I can talk about numbers that I’ve seen from my businesses and things that I’m working on. I don’t know how comfortable Rob feels about kind of sharing those numbers but obviously, you already seen something from Pat Flynn and from the things that you see on Mixergy. I mean one of the things that I talked to about at MicroConf, I actually showed some of my revenue number. So for last year, my total revenue was about, I think it was 212,000 and then once you start deducting for things that where various business expenses like healthcare and dental and taxes and insurance and all kinds of other things, travel expenses, that sort of stuff, I think it dropped it down to an income of I want to say a 172,000. So it’s about $40,000 in expenses. So that’s an overhead of about say 25%.

[33:17] Rob: Now, that includes consulting income.

[33:19] Mike : Yes, it does. It does.

[33:20] Rob: Just to clarify because I don’t know if David means only from product income. I mean that’s — that’s why this question is hard to answer is that I know people who are making thousand a bucks a month that it —

[33:30] Mike: Right.

[33:30] Rob: … and just want to make a car payment and then we know people who literally make 30K a month who are solo operators. So there’s a huge range.

[33:39] Mike: Yeah. And I think that, you know, that’s part of what makes it so difficult to answer because, you know, the question itself is what can developers who get in to this type of micropreneurship expect in terms of income and…

[33:50] Rob : I think that’s a wrong — yeah, I don’t think that’s the right question to even ask.

[33:54] Mike: I don’t think so either. So I think you’re right, I mean that really is the wrong type of question to ask. I mean it really depends [0:34:00] on what your goals are and what you want to do. I don’t have any doubts that it’s possible to put together a business where you’re making six or you know, obviously, six figures is possible, lots of people are doing it but in terms of putting together a business that makes seven figures and it’s just you, I think that’s possible. I wouldn’t say that it’s common or probable. I think that it’s definitely within a realm of possibility to put together a solo business where you’re making 2 or 3 or $400,000 a year. I think once you start going beyond that point upwards of 4 or 500,000 a year, you almost have to bring on employees because unless you’ve got a lot of processes and automation built-in and you’re outsourcing a lot of different things, I think that’s going to be very difficult to sustain a business of that level without bringing on additional help that’s more of a full time help.

[34:50] But in terms of the question itself, I just don’t think that that’s a right question to ask, you know, what can you expect? That’s so depending upon what products you’re doing or what products, what needs that [Phonetic] you’re serving, you know, what your product as price point, all those different things factoring in to it. So expectations, you maybe expecting $20 million a month and that’s just not realistic.

[35:11] Rob: Yeah, I think the answer to the question is it’s going to involve, no matter what comes back, it’s going to involve a ton of hard work. It’s going to involve a ton of skill, a ton of learning and little bit of luck. And so you can expect that you’re going to have to put a ton of all of those things in and that you’re likely to succeed if you do all those things and you have them all in place. It’s kind of hard because some, you know, you can say micropreneur a bit like I see some micropreneurs that are literally shooting for like a thousand bucks a month and they kind of want to keep their main job and just do it and then other micropreneurs who are shooting for 20K a month and that’s just a totally different goal set, right?

[35:44] I think that if you, if your goal is to make as much money as possible, then you need to optimize your entire process for that and you need to be able to — able and willing to just work like crazy and work towards this, you know, crazy goal. But I think part, a big part of micropreneurship is it’s not optimizing for that in general. You could do it but most people I know are optimizing for the freedom, the location, independence, the lifestyle upgrades. And so I would never pitch it as your outcome, your financial outcome could be better than being an employee at a very successful startup. I don’t — I don’t even think that’s the goal. I think if that’s your goal, then you should go be an employee at a very successful startup. I think your odds are probably better of going out there and doing that than kind of to make like, Mike said, seven figures a year by staying solo. I’d just think the odd — I think the odds that are tremendously small.

[36:34] Rob: But at the same time, I actually think the odds of getting a successful micropreneur business or getting a successful business that can support you off the ground and running is much, much higher than going out and hitting the startup lottery and work in the years in moving to the Silicon Valley or Boston or New York, one of the startup hubs [Phonetic] and putting in a time and putting in the years and basically gambling and assuming that you’re going to cash out on stock options whether you’re the founder or not.

[36:59] So it’s kind of that the two ends, right? If you’re looking at the lifestyle aspects of it, then I absolutely think that you have a better chance with micropreneurship. And if you’re looking at the other end of it and want to make a big, big slam bang in terms of money, then I think you need to go at the other end.

[37:14] The last thing I’ll say is it does at some point can come down to some semantics because Mike said, you know, if you’re going to try to grow a business in to a seven figures, then you’re going to need to hire employees. Now, what is an employee and what is part-time help and what is a virtual assistant and what is a developer that just works for you on oDesk? At this point, I have talked about it before, I have between eight and ten people who work for me a few hours a month at least on oDesk. So I consider myself still independent because I’m not having to manage, you know, 401(k)’s and provide like all kinds of employee leadership and mentoring in a career path and that kind of stuff and yet, I do have to manage people.

[37:53] Rob: And so if your goal is to truly be a solo operator, then you have some limitations. If your goal is to be [0:38:00] someone in the middle which I’m considering myself at this point, I am solo, no one reports to me, I don’t, you know, get phone calls with people ask for management advice or whatever but that’s kind of a middle ground. And then on the other end, there’s — there’s people who are actually hiring and building up companies and that’s like Mike said going to be the way to grow it.

[38:17] Mike: You know, what I had said getting up to 500 to 600,000 there so and going beyond that, I mean you really need help. You know, I was thinking more employees than, you know, outsource through oDesk or something like that but I mean that’s certainly another option. Your problem with that I think is that you definitely need to have your processes nailed down pretty tight if you’re going to be outsourcing it versus having somebody who lives nearby who, you know, just managing remotely who you are employing full time and they’re depending on this as their full source of income.

[38:48] Rob: Yup, it’s a different ball game. Yeah, there are examples of people who are, you know, talking about their income. I know Amy Hoy had mentioned I think she made 330,000 from Freckle, that’s her run rate right now. And I know they’re making another 300,000 from other stuff. I mean it’s easy enough to find people talking about their incomes, the problem is it’s kind of, one, it’s survivor bias and two, they just tend to be outliers. And it’s like five years later, you know, after all the stuff, someone is making X amount but I’m not sure really how realistic that is for someone that, you know, you’re out of the gate and I couldn’t even guess what the odds of that kind of thing are going to be of hitting it at that level.

[39:25] Mike: Yeah, I mean the survivor bias definitely skews that metric because you don’t see all the people who tried and or doing it now but they’re only making a couple of hundred dollars a month. I mean those people are generally not putting all those numbers out there because they don’t feel like they’re impressive or they’re embarrass by them. I started sharing my numbers at MicroConf just because I want to start getting people to have those discussions because I think that if you have a company that’s five or ten employees and you say, “Oh well, you know, my ten-person company made, you know, one and a half million dollars last year.” That’s a lot different than saying, “I have a single-person company [0:40:00] and you know, I made X last year or a 150,000.”

[40:04] It’s the same number per employee but it’s different when you’re saying, “I made this and you know, I was doing everything on my own” versus “My company made one and half million dollars” and I think that having those discussions is definitely important because I don’t think that people talk about them enough and I didn’t go in to a lot of details about why I shared my numbers at MicroConf. But I mean that’s basically it and I think that those discussions need to be had amongst people and I think that it helps people to just kind of judge, not just necessarily where they’re at but to help kind of answer these types of questions of, you know, what can I expect, what is realistic?

[40:38] Mike: And I think that that’s the one thing that’s not in either of our responses yet is that your expectations can be widely out of touch with what reality is and what is possible. And because you don’t know what anyone else’s numbers are, you might have this idea in your head that, “Oh, I can — I can build, you know, $750,000 a year business and you know, everything will be great.” But if you start looking around and you start seeing that the people who are doing that have teams of people under them, you’re going to start realizing, hey, that’s not really realistic.

[41:06] That’s kind of, you know, why I started sharing those numbers just because I think that people need a bit of a reality check sometimes. Don’t get me wrong. I mean I understand where you’re coming from about the point of survivor bias and you know, the numbers get skewed and you got all these people who’ve been doing it for three or four or five or ten years. I mean I’ve been on my own for seven years at this point. So that seven year number should definitely factor in to what I’m talking about here. But you know, it takes a while to get there. It’s not something that’s something that you can do overnight or the most people can do overnight.

[41:34] Rob: I will say that I know a lot, I mean dozens of basically solo software/web/mobile founders who are making full time incomes. You know, whatever that means and some — for some people full time income is 4 or 5,000 bucks a month and for others, they had to get to a 100K before they could quit their job. I know a lot of folks doing that. So it’s definitely becoming, you know, I feel like it’s becoming more and more viable over the years. It’s a good thing for everybody.

[42:00] Mike: Yeah. And I mean that that full time income is definitely the key piece of that whole question I think. I mean it’s not about the dollar amount. It’s about whether or not you can make a full time living and doing it. And I think —

[42:12] Rob: Yeah.

[42:12] Mike: … that’s the — that’s the big piece of it. It’s not as and we haven’t really talked a lot about it. It’s just, you know, can you do this on your own and not be employed by some mega corporations at some place. And the answer to that is absolutely, yes, you can. And will you have to make some sacrifices about where you live or you know, the type of house that you have or the type of car that you drive, maybe. You know, that’s very possible but you know, once you start getting in to it and you start finding that you have 20, 30 or 40, 50 hours a week extra that you didn’t have before that’s syncing to your business, I think that things change very quickly.

[42:44] Rob: The cool part is you’re able to decide it for yourself, right? If you decide that having that free time or not even free time but just time to invest in your business and enjoy what you’re doing is more valuable to you than that second car or than, you know, the neighborhood that you live in. Then at that point, you’ll make the sacrifice and basically take the step down or you work a little harder for the next six months and keep growing the business until it hits the point where it really does support you at the level you’re at.

[43:07] [music]

[43:10] Rob: If you have a question or comment, call it on to our voicemail number at 888-801-9690 or you can e-mail us at [email protected] Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. You can subscribe to this podcast in iTunes by searching for Startups or via RSS at StartupsfortheRestofUs.com where you’ll also find a transcript to each episode. Thanks for listening. See you next time.

Mike and Rob answer listener questions about Mailing Lists vs. Facebook, the Coder/Entrepreneur Dichotomy, and more.

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Episode 504 | 15 Tools We Use to Run Our Business

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This week we chat with Tracy Osborn ( @tracymakes ) as we discuss 15 of the top tools we use to run our businesses. As a followup to a previous, popular tweet , we thought we’d give an update on what tools we continue to use today, as well as share some of the new tools we have started to use.

While tools are necessary for founders, it’s important to find a good balance between good-enough and perfect when it comes to evaluating which tools to use. As Tracy says in the show, “It’s a good lesson for founders because they often want to build something the ‘right way’ from the start. Many times there are tradeoffs and sometimes you have to use the tool that has constraints so that you can work faster. It might not be perfect, but it gets the job done.”

Are you using any of the tools we mention in the show or have a tool you think we should use? Let us know in the comments!

The top 15 tools we cover

  • 6:04 #1 Calendly vs YouCanBook.me
  • 7:45 #2 Slack: how and why we use it
  • 12:20 #3 How we use Notion for permanent documentation
  • 16:21 #4 Google Drive vs Dropbox for Business
  • 18:42 #5 LastPass for Business
  • 20:05 #6 Dasharoo
  • 21:57 #7 Squadcast.fm & Castos.fm to run this podcast
  • 23.57 #8 Drip & RightMessage for email marketing
  • 25:15 #9 Trello for personal business (vs other task management tools)
  • 26:57 #10 Squarespace for websites
  • 30:35 #11 Voxer push to talk audio vs text messaging
  • 32:52 #12 Keynote for conference talks and eBook PDFs
  • 36:02 #13 Tweetbot vs Twitter.com
  • 38:08 #14 Buffer
  • 39:29 #15 Submittable and Pipedrive
  • 42:20 BONUS: FrontApp for email collaboration

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If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!

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This week we chat with Tracy Osborn (@tracymakes) as we discuss 15 of the top tools we use to run our businesses. As a followup to a previous, popular tweet, we thought we'd give an update on what tools we continue to use today, as well as share some of the new tools we have started to use. While

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Episode 496 | “The Press Covers Exceptions, Don’t Compare Yourself to Slack or Zoom”

Episode 496 | “The Press Covers Exceptions, Don’t Compare Yourself to Slack or Zoom”

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This interview was recorded several months ago, but is still relevant despite the pandemic. Colin Nederkoorn, the co-founder of customer.io has taken a unique approach to building their company. Customer.io does marketing automation for the entire customer lifecycle. They have raised funding, but not traditional venture money, and they’ve run it more like a self-funded SaaS. Colin and his cofounder John left their jobs with no savings, and they set out to build an analytics tool. Their story is powerful because of their unconventional approach and ability to persevere through hard times.

The finer points of the episode:

  • 4:05 – The customer.io founder journey
  • 5:23 – Their approach to selecting investors
  • 7:01 – Reflecting on how Colin and John bootstrapped a SaaS app after leaving their jobs with no savings
  • 8:02 – Why they pivoted from an analytics company to selling marketing solutions
  • 13:15 – Finding the balance between innovation vs following the best practices
  • 18:37 – How customer.io became a remote company, and the advantages/disadvantages of building a remote team
  • 22:05 – What customer.io is doing to support the bootstrapping startup community (and why they care about bootstrappers)
  • 24:30 – Marketing approaches that customer.io used in the earlier days
  • 31:55 – The highs and lows of building customer.io

Items mentioned in this episode:

Transcript

Rob: Welcome to this week’s episode of Startups for the Rest of Us. As always, I am your host, Rob Walling. Thanks for joining me this week. Thanks to everyone who reached out about last episode 495 where I went solo. I got more positive feedback about that episode than I have in six, eight, nine months. I appreciate folks reaching out. Let me know what I’m doing right and let me know what constructively could be doing a bit better.

In this episode, I air an interview that I did months ago. It was certainly pre-pandemic and it may even have been before the end of last year. While there are no mentions of COVID or Coronavirus in the interview, I think there are so many lessons learned from the journey of this founder, Colin, the co-founder of Customer.io. Customer.io has taken such a unique approach to thinking about how to build their business, the way that they got it started, and the way that they didn’t go down the venture track but also didn’t straight bootstrap. They were one of the first companies that I had ever heard doing that.

Before we dive into that conversation, if you haven’t heard of helpfounders.com, you can head there. It’s a collaboration between a bunch of podcasts that are intended to help Bootstrap founders and folks who may be impacted by COVID or maybe it’s just an effort to give back, so different podcasts. A lot of us in the bootstrapping space offered up just a couple ad slots but really it’s just more of here’s this company. Here’s what they do just to make the Startups for the Rest of Us listenership aware. This is all voluntary. It’s a non-paid sponsorship. It’s really to give back to the community.

The company I want to talk about this week is called Hugo. It’s at hugo.team. According to the founder Darren Chait, he says Hugo is centralized, searchable meeting notes that connect with tools such as Zoom, Slack, Zendesk, and HubSpot. It’s free for up to 40 users. The target market is SaaS companies of all sizes including brands you already know such as Atlassian, Shopify, and Spotify. They were a good addition to the other work-from-home tools that are growing in popularity. If that sounds interesting, head over to hugo.team.

With that, I hope you enjoy my conversation with the co-founder of Customer.io, Colin Nederkoorn.

Today with me on the show, I have Mr. Colin Nederkoorn from Customer.io. Colin, thank you so much for joining me.

Colin: Hey, Rob, great to be here.

Rob: I’m actually pretty surprised that we haven’t had you on the show before now because you’ve just been in this bootstrapper/ these days, I’m calling it an indie-funded space where folks are raising small rounds but they want to keep control of their company. They want to stay independent. I really feel like you were one of the first, if not the first companies, to do that. I think we have some really good stuff to dive into today.

Colin: Thanks. It’s interesting because I’ve never felt like I belonged in any community, but certainly I share more values with the bootstrapper community than I do with the ‘venture-funded grow at all costs’ community. I guess there’s that great quote from Groucho Marx. I forget what the quote is.

Rob: He says, “I would never be a member of a club that would have me.” That makes sense. As I’ve watched you, certainly, you want to build a real product for real customers who pay you real money, which is something I often say on the show. That is much more in line with this non-venture track startup software.

For folks who haven’t heard of Customer.io, you guys effectively built out and launched over the course of 2012. You really had your public launch in 2013. According to your website right now, your HTML title tag is marketing automation for the whole customer lifecycle. Your headline is, “With Customer.io, you can send targeted emails, push notifications, and SMS to low return, create stronger relationships, and drive subscriptions.” I know you started off doing a lot of emails but now you’re in push in SMS.

In 2012, you guys designed your first logo. As we know what’s important in SaaS is not building a product and selling it to people. It’s designing a logo and printing business cards in 2012. I want to ask you a question about that in a second. I want to get to the timeline so folks can keep it in their head.

April Fool’s Day of 2012, you guys had your first full-time days working on this. You quit salary jobs with no runway, five customers paying you $10 a month, no savings and no income, which we’ll get into in a second. This is great. You can’t make this stuff up. You wind up raising about $225,000 from friends and family later that year. As I said, you launched January 2013 with between $5000 and $10,000 MRR. That’s when you raised a seed round.

You extended that friends and family around to $750,000. You’ve never taken truly venture money, institutional money. It’s been more from people who are willing to just support your vision of building a profitable company not go Unicorn, go IPO, or go home type of thing.

Colin: I think that’s pretty true. I don’t know if I could say that we articulated that well in the early days. I don’t know that we had those values but I don’t know that we self-selected investors based on that alignment. I imagine some of our investors, the other investments that they made either have died or are really big companies now.

Rob: Has that caused you any issues in terms of investors who did want you to go Unicorn? Some investors don’t want a profitable business or they don’t want whatever at $10, $30, $50 million exits. They only want Unicorns.

Colin: Not really. We have about 40 people on the cap table which our lawyer always tells us that’s a lot of people on the cap table. Anytime we need to get people to sign documents, it’s a big headache to get everyone to sign. What that’s meant is that for the people who are investing in a lot of high growth startups, we’re not in the front of their minds. Early on, we got a lot of help from people, but now we don’t hear from them too much. They have a big pile of money. They make a lot of investments. We’re just one of them.

Rob: Today, you have more than 1400 paying customers, 57 remote employees. You mentioned you have a small office in Portland with about five people but effectively a remote-first company. You told me offline that you have been public with revenue recently, that you guys are doing $11.5 million ARR, and that you grew 32% last year.

I wanted everyone to have the context as we go into this conversation to hear about your journey, truly bootstrapping this in 2012, to then raising a small amount of funding to get you to profitability, to help with growth, but never taking the massive plunge that a lot of folks do. I’m curious. You and your co-founder John left your jobs without savings, without income, expecting to be able to make this work. How did that come about? These days that would be an anti-pattern because we know SaaS takes forever. What was your thinking back then?

Colin: I can’t even understand why we did that. It just doesn’t make any sense reflecting back on it. Our milestone that we wanted to hit to go full time was 5 companies paying us $10 a month. How you get from there to full-time salaries is a pretty big leap. I think we just knew that we had to do it and then we’d figure it out. We’d do some consulting or we’d start doing services for companies and be able to charge more. But if we didn’t take the leap, then we wouldn’t be in the ocean. We’d still be on the beach and we’d still be trying to figure out how to take the leap. By throwing ourselves way into deep water, it forced us to figure out how to survive and what we needed to do to realize the business.

Rob: You set out to build an analytics platform. What caused you to alter that course and instead go after email?

Colin: We decided in January that we wanted to build the company. I think in the very early days, we spent some time talking with prospective customers. This was right around the time of Lean Startup, Eric Reis’s transformative book. We spent a lot of time going out and talking to people who we thought would be good customers. What we learned was this is what people felt. I still don’t know how true this is but people felt like they had tons of different analytics tools that help them understand their business. The struggles that they were having were they could see what was going wrong but they couldn’t influence it.

We heard that a few different times. We thought to ourselves with that analytics data, we can make something happen. We can send an email. If we’re embedded into a website or mobile app, we actually know what happens after someone clicks on the email and they go back to the app. We can build this amazing circle or we can close the loop (essentially) and show people the impact of the emails that they’re sending in influencing someone’s behavior in your product. That seemed really compelling. When we started talking to people about that, they wanted that because it actually moved their business, whereas giving them another analytics dashboard didn’t.

Rob: Customer is one of the first tools, if not the first that I ever heard of, where the data that you use to send emails could come from inside a SaaS app, a mobile app I believe you focused on. At that time the ESPs that I was using that were popular were Mailchimp and AWeber. I’d vaguely heard of Infusionsoft. There was Constant Contact but those were just marketing places. They were purely about email blasts which are totally not personal, not behavioral, not anything. Customer was the first one where I thought it’s a very clever use. I love how you guys came about that by saying we’re going to use analytics to power email rather than send emails in order to get some type of click-throughs or whatever.

Colin: I think that we were coming from a venture-funded startup. Interestingly, after we heard this from the people doing customer development, we looked back at our company and said, “Oh, wait, that’s the problem here too. Our marketing person wants to send emails in Mailchimp but she asks the engineering team, “Can you please export a list of people who have done this but not that.” Then, there were all of these transactional messages that were in the code of the application that that same marketing person would want to tweak the language in and we would have to put a ticket. I think we were doing Kanban boards at this point. We would write up a notecard. As the head of product and the head of engineering, my co-founder and I would always deprioritize that no card because it wasn’t that interesting to us.

Customer.io, when we thought about it, if you had the data, you could send that newsletter without having to ask engineers to export anything. If you pull the content out of the code of the application, you could make changes to your transactional emails and all of your trigger-based emails without having to ask an engineer to do anything. It was all about strengthening the relationship between your engineering team and your marketing folks, product, or whoever was responsible for talking to customers.

Rob: That makes a lot of sense but it was a big leap. There are obviously a lot of tools that do it today but we’re talking effectively eight years ago that you were working on this. I have one question for you about designing the logo and getting business cards. Did you ever use those business cards because I chuckle these days. I think I printed some on the move for one conference that I went to or something. Was that something you look back on and you were like, why did we do that so early?

Colin: I think when you start a company, it just doesn’t feel real. I think people print business cards and they make a logo because somehow that makes it more real to them. When you tell someone I’ve started a company and you hand them a business card and it has a logo, maybe that convinces them that you’re real, too.

I think it’s just a lack of confidence in a company actually coming out of the other end of this process. People want to start with business cards and so we did as well. We were going to meetups and other things like that like going to social events where you’re like, “Hey, we started a company.” “Oh, cool. What does it do?” “It does A, B, and C. Here’s my business card. Contact me.” It’s so silly but I think it’s like a playing company. It’s part of the package of the playing company. I don’t have business cards now.

Rob: I was going to ask. Do you still have business cards? No. None of us do. Unless you’re literally in person with people at conventions and you don’t want to do the exchange of your conferences, events, or whatever. You don’t want to do that type this into your phone type of thing. There’s just not a ton of reason to do it these days.

I read through several interviews that you’ve done over the years. I like to do that to prepare for these interviews. There’s something you said and one of them struck me. It’s something I wanted to dig into. You said, “So much of what people consider conventional has never felt right to me and our company.” Could you expand on that and maybe talk about one or two conventional things that you guys don’t do or maybe some unconventional things that you do at Customer.io?

Colin: I think there’s really a balance here. There are things that you want to innovate on and there are things that you should try to find best practices for. The things that felt wrong to me was certainly venture scaling a company didn’t feel right to me. Typically, what I would see is most venture-funded startups fail for one. The approach that I would see founders take when they were scaling a company with venture money was that it was really undisciplined and they were just spending cash all over the place. But at the end of the day, it didn’t matter because they would end up crashing the company and landing a job, working as an investor, as an entrepreneur in residence, or whatever, something like that.

It just bugs me that essentially irresponsible behavior can end up with a positive outcome for people but that’s how that world works. I didn’t feel like I wanted to participate in that. Trying to straddle the line between bootstrapping a company and raising money is something that I never felt like we wanted to do either of those things, the conventional way that people do those things.

We’ve explored things like how to organize the company and how to run the company. Holacracy is something that people have experimented with. That somewhere where maybe at this time we want to explore things like that, but I’ve realized that that’s not a place you want to be innovative and challenge the norm. Unless your company is all about how companies work, you should probably not challenge the norm there and just use the tried and true methods that have worked over the years.

Certainly on stuff like running a remote company, we faced a lot of skepticism from early customers. Our now CMO once told me that he worked at a publicly-traded company back then and he had to go to bat for us internally to say that we’re actually a legitimate business because we made this choice to build a remote company and we didn’t have physical office places.

There’s a bunch of decisions like that. I think I’m a contrarian by nature. I typically feel like an outsider and I like being an outsider. I like the challenge that that creates for people. For me personally, I think the struggle is important. Feeling like an outsider means that it’s never the easy path when you look at technology companies.

I imagine a lot of bootstrappers feel like outsiders in technology but the happy path is you go to Stanford because you come from legacy or something like that. You have a legacy into Stanford. You graduate from Stanford. Maybe you work in consulting or you join a startup. Maybe you go to an investor and work at an investor for a while or you work in Google or Facebook. Out of your experience at Google and Facebook, you can go and raise a really big round of funding. None of those things felt right to me or particularly accessible to me. I resist all of it because I see how it works on the happy path if that makes sense.

Rob: That makes sense. I think that’s where the bootstrapper is in that indie-funded path. I think why it has so much traction is that most of us are outsiders. Most of us don’t go to Stanford. Most of us don’t know a venture capitalist who lives down the street from us. Most of us don’t grow up in the Bay Area. I think there’s a real appeal to having a path where you don’t need to know someone to break into it, where it feels like this, where you are an outsider that you can’t break through those doors. What you and John did is you didn’t go the bootstrap route and you didn’t go to that funded route. You pick the third path that so few had gone down at that point.

Now, there are more companies. There’s EDBC now that is effectively funding companies to become profitable. There’s a Tiny Seed Accelerator I run that is funding companies with the option to become profitable. Even though I’ve done about a dozen angel investments on my own, half of those are in essentially fund-strapped companies. Part of the Startups for the Rest of Us’ drinking game is when I say fund strapping. I always say it’s a term coined by Colin from Customer.io. It’s always the same thing. People have given me crap about it because they’re like why do you say that every time? It was this really novel concept back then. I can imagine that trying to stay away from dogma is almost what it sounds like. You didn’t want to go down the dogma of the VC nor the dogma of bootstrap necessarily. We’re thinking, is there another path.

I think remote is another big thing that in 2012–2013 (as you’re saying), people wouldn’t take you seriously if you didn’t have an office. Was that a decision from the start like this is just what we’re going to do? Have you ever regretted that? I’ve had remote companies. I’ve had a non-remote. I’ve had half remote companies. I know the value of being in an office with someone. Talk to me through that.

Colin: It’s hard. There are many things which are harder when you’re a remote company. We didn’t set out to be remote but we knew the value of deep work at that point. When it was just two of us, we were sitting next to each other, communicating with each other in a campfire chat, because I knew that if I had an idea and I wanted to share that idea with John but he was deep in work, I could just type it in the chat. He would ignore it, continue doing what he was doing, and he’d get back to me later. We definitely knew the value of deep work. We set up to support asynchronous and remote really early on.

We chose to do remote out of necessity because I couldn’t see a path forward building the company in New York City, trying to find the people that we needed and be able to attract them at the salaries we needed to pay to compete against other venture-funded startups in New York City, the investment banks, and all of the people who could pay way more than we could. We had to find a thing that we could offer that none of those people could offer.

To me the value of working for Customer.io as a developer or anyone on the team is you get to do the type of work that you would do if you were in San Francisco or New York, except you can be anywhere. Let’s say you get a co-located job in Cincinnati, Ohio, chances are the engineering problems you’re going to be working on there are not that interesting but we have really interesting engineering problems. That appeals to the flexibility of the work. The interest of the work is what was exciting to me and what was our competitive advantage, essentially, to hire quality people wherever they were in the world.

Rob: That’s the promise and the beauty of hiring remote. You don’t have to pay Berry or New York salaries. You can hire in whatever, the Midwest, the South, in the middle of nowhere, in Washington. You’re able to pay to give someone a higher standard of living without them having to have a long commute.

Colin: We couldn’t afford New York and San Francisco salaries out of necessity at that point, but it was never the goal to spend less on salaries. One of the things that we do now, we increase salaries as soon as we could, 2014–2015, we pay market rates now. We benchmark to the US national average. I think it’s the 75th percentile of the US national average for all of our roles. One of the things we’re still figuring out is how to make adjustments against that for international. My philosophy on this is that if you live in a less expensive place, I want to share in that benefit with you, the benefit of a cheaper cost of living. If you live in a more expensive place, we’ll share in the cost as well, but we won’t fully adjust the salary for that more expensive place.

Rob: I think I want to ask one question. There’s so much to talk about because you’ve been doing this for eight years. There are a lot of aspects of the customer that I think are interesting to listeners. You had mentioned to me offline before we started that Customer.io is not necessarily ideal for bootstrappers as customers because of the pricing. It’s $150 a month to get started. You guys want to fix that. You would prefer to help bootstrappers out. Do you want to talk a little bit about what you want to offer folks who are listening today?

Colin: I personally think it’s a little unfair that there are all these offers and opportunities out there for venture-funded startups. AWS has credits you can get and all of the companies out there do that. I want to find a way for us to better give back to that community and better support the bootstrapper community.

I think as we talked about earlier, we started at $10 a month. Over time, we raised our prices. One of the things that we found by raising our prices is a lower churn because if you have a really low price point, many people will sign up but also many people will churn. We were pulled by our customers to make the product more and more sophisticated. Because of that, if you’re one person working on a company, the investment required to use Customer.io effectively is probably beyond what you want to do.

The sophistication in Customer.io is probably beyond what you want to do, but I think that not every bootstrapped company is really looking to be a solopreneur company in the long run. I think for those companies that want to grow, expand their team, and are looking for a high growth rate, we want Customer.io as a product to be accessible to those people so that they get the value that the companies that pay us thousands or $2000 a month. All of that sophistication, they get that available to them on day one of their company.

I think you shouldn’t have to use crappy tools, basically. We think Customer.io is a really amazing, flexible tool. We want more people to have access to it but it takes investment. If you’re a solopreneur, you probably don’t want to do the investment required to get the value out of Customer.io. We’re exploring this right now. If this sounds interesting to you after checking out Customer.io, if you go to customer.io/bootstrapper that will give you a little more information. We want to have a conversation with you and figure out how to give you an offer that really helps you get started in the product.

Rob: Circling back, I want to look at some marketing approaches that you guys used in the early days and how you got traction. Obviously, this whole journey is hard but I think you and I both know that the first three months, six months, nine months are really trying because you don’t know if you’ve built anything people want. People are giving you all different kinds of feedback. People are telling you you’re too expensive, you don’t have the features, whatever, and you’d have this fragile idea. You’ve been working on this for eight years, $11.5 million ARR now, much less fragile. In the early days, you’ve talked about Twitter actually being an early sales channel and that your word-of-mouth was very strong. Can you talk about how that came about, why that worked, and what worked at the time?

Colin: There were a couple of things that happened in the early days for us. One, this area that we were focused on became a pretty hot space for conversation in tech in general. I think this guy, Paul Stamatiou, wrote a blog post about User Retention as a Service. People were just talking about this in general.

What I would do before we had a product to sell, I would see people talking about the problems we were trying to solve on Twitter, I would reach out to them, and I would say, hey, I want to understand this better. Can we talk? I don’t have anything to sell you but we’re working on this problem. That was a way to gather information to figure out if we were building the right thing.

What I found is under the guise of not selling something, trick people into having a conversation with you but really you’re trying to sell them something. That’s happened to me a couple of times as CEO. It’s really annoying but we were genuinely not able to sell someone anything. That made for really useful conversations with future prospective customers.

I think at that time Rand Fishkin was talking about this problem. He introduced me to people on his team at Moz who were working on it. We did a customer development call. They never became a customer but I learned really useful information from that. It’s pretty typical. We had a signup page where people could register their interest. We would send people to that page and we’re getting a decent number of signups there.

The other thing that happened at this time is I think Patrick McKenzie introduced me to this guy Ramit Sethi. Ramit runs I Will Teach You To Be Rich. He agreed to meet us for coffee. He asked what we were doing to build an audience and communicate with people as we were building the audience. I said we’re collecting all these email addresses. In six months when we launch, we’re going to email them to let them know.

I don’t know if these are his exact words but it was something along the lines of you guys are idiots. You got to talk to the people whose email addresses that you’re collecting because in six months when you email them, they’re not going to remember you. Figure out how you can provide value for them in the meantime. They signed up for something. Give them what you can now that will help build your audience, then they’ll at least remember you when you launch the thing that you want to sell them. That was hugely valuable advice.

One of the things that we were able to do—I don’t know how easy or possible it is to do today, because there’s just so much content marketing out there—we built our newsletter list, we started writing about email copywriting like trigger messages, and had a pretty good following of early-stage companies and CEOs of startups basically, one- to five-person startups primarily. That really helped us in the early days. Over time, I wasn’t able to keep myself motivated to continue to write content and do content marketing. That fell off a little bit, but fortunately, we’ve built a bunch of evergreen content and still have a lot of inbound today. That’s really how the word-of-mouth engine got kicked off.

Rob: That makes sense. That really has become a playbook. It was emerging during that time. I’ll say 2011–2013, 2014 content marketing playbook. It sounds like you and your team by this point executed really well on the product, but you also got maybe a little lucky in terms of hitting this thing at an inflection point with targeted messaging event-based behavioral stuff. I think that’s something that I’ve been talking about. We’re really thinking about this concept of what do I think the keys to success are. I think there are just three things. I think it’s this simple. I think it’s skill, hard work, and luck. It’s a combination of those three. One plus one plus one equals success.

At varying times, if you have a lot more luck, you may need less skill and experience if you get lucky to hit it. If you don’t have a lot of luck and you want to just purely do something you can repeat over and over without having to make a billion-dollar bet, then you need skill/experience and a lot of adding. You need a lot of hard work. It sounds like you had a little of all of them because I’m just going to assume in knowing what I know about you that you guys work your asses off. The hard work was there and you had development skills for sure. It sounds as I just said, you get a little lucky with that thing, but it sounds like you’ve executed very well on that vision is an addition.

Colin: The way I think about luck is that it’s not evenly distributed. You can’t just go anywhere into any market. There’s some luck that you can tap into. There are some areas and there are some products that you could build today where you’d be extremely lucky relative to other products.

I think we were really fortunate in the space that we picked. We had a lot of interest at that time. We had a lot of competitors at that time but it was really nascent. We were able to build a very immature product and get some traction. Now, there’s a much larger moat where the expectations of what our product needs to do on day one are much higher.

When we had five customers paying us $10 a month, the reason we were limiting how many customers we could service and the way that all that stuff worked was my co-founder would write a MapReduce script behind the scenes when someone would set up a campaign. They would write in plain English what they wanted the campaign to do. We would manually look at the data that they were sending in to figure out if it was possible. If it was possible, we’d write a manual like MapReduce query to find the right people to match the campaign.

You could not launch a product today with that approach. Nobody would take you seriously. I think our experience working in tech helped us know that that was an interesting space to go after. Our luck in picking that space has helped us a lot to become successful and really just the luck of who we met along the way.

Rob: There’s always a little bit of that in all these stories especially when it’s folks like us coming from the outside who didn’t have some in this space. I’m curious. What’s the high point of building a customer? What’s a moment you can think over here like this is amazing, I love what I’m doing here, and I’m euphoric at this moment?

Colin: I don’t have a moment where everything was so amazing like I’m sitting there with a glass of champagne, I’m looking at some company dashboard, takes over, and then all of a sudden, I drink the champagne and feel just like pure joy. I don’t have that. Basically, every time one of the people on our team has a child, every time someone buys a house, every time one of our customers is really happy with us and gives us the feedback that our support was amazing or they were able to accomplish something in their job that they hadn’t been able to accomplish before, it’s those micro-moments that make me feel a great degree of satisfaction just deep inside. It’s not revenue-driven. It’s what having this company and what having this product allows us to do and allows the people touched by it to do in their lives that create the lasting feeling of success, if you can even call it that, but really just satisfaction.

Rob: How about on the flip side? What’s been the hardest part?

Colin: There have been moments, knock on wood can’t really happen to us anymore, but we made some decisions early on technology choices. I think in 2015, we had an outage that lasted 24 hours. Basically what had happened was we were using this database technology called FoundationDB. It was acquired by Apple. Apple would not let FoundationDB renew any service contracts and they took the product off the market. We were in production with this thing with no migration path. The service went down. We were hosting the database ourselves but our database went down. We couldn’t recover it and we couldn’t get any help.

I thought that was it. I thought we were going to have to call our customers and say, sorry but we can’t get your data back. We can’t bring the service up. You’re gonna have to take emergency action to migrate away from Customer.io. That’s the lowest point I’ve personally experienced in the company. If you can imagine as a business how you could fail your customers in the most dramatic way, that is it. If service goes down all of a sudden and there’s no recovery, no migration path, no time, that’s it.

Rob: That is devastating. My palms are literally sweaty thinking about it because we never had outages that long but I know exactly. I’ve been in your shoes. How did you get out of this? Don’t leave us hanging. How did you figure it out?

Colin: My co-founder was trying a bunch of things. I think we had someone else on the engineering team or maybe a couple more people on the engineering team who were helping him with this. We’re just trying things, trying to figure out how to recover the database. One of the key aspects of this is this was a distributed data store. There were lots of machines essentially running one underlying database.

The big problem with that is one, it wasn’t necessary for the type of business that we had. Customer data doesn’t relate to any other customer data. There was no need to have a big distributed data store to run our business. Basically there was one single point of failure again. The idea of these things is that a server can go down and the database will stay up but the problem is you still have this single point of failure. When a server goes down, there’s data that needs to get moved around and it overwhelms the network.

We receive a ton of data all the time from our customers sending us data. That made it even harder to recover. It got bad enough that on Twitter I was like, “Hey, we really need some help. If anyone knows anyone who worked at FoundationDB, please can you connect us?” I reached out on LinkedIn to a bunch of people who had worked at that company and were now working in Apple. Some people responded to us. I think we got some help from one or two people there.

We were ultimately able to recover this whole time. As soon as the acquisition happened, we were immediately trying to figure out how to migrate away but it was too much data. We couldn’t do it fast enough, but we ended up getting things back up and running and had to really massage that database every single day to keep it running while we created a migration path.

Rob: Wow. These are the kinds of stories that don’t make it to the front page of TechCrunch. It’s the growth curve of Slack and Zoom that you’ve mentioned offline, how Zoom goes public, Uber and all this, but how many people are talking about the realities of what it feels like to grow up.

Colin, we’re coming up on time. If folks want to hear more about you, they can go to @alphacolin on Twitter. Thanks so much for joining me.

Colin: Thanks, Rob.

Rob: Thanks again to Colin for coming on the show. As we wrap up, I have a couple of emails that came in that I just wanted to mention here before I take us out. I got an email from Adam. He was responding to episode 479 where we talked quite a bit about marketplaces. I think there may have been a question about who’s talking about building marketplaces. He says that they have a podcast that covers building their marketplace called Menyu. The podcast covers their bootstrapping journey. If that sounds interesting to you, check that out.

The other email I received was from Justin. He said, “I just wanted to say thank you. Your show has been invaluable to me and my co-founders over the years. We’ve built a tool. We’re revamping and launching in a few months, but everything from figuring out what LTV for our customers will be to evaluate whether a free model could work for us. You shed insight on a lot of issues we’re going through. I hope we can buy you a beer sometime in appreciation.” Thanks for that, Justin. I really appreciate that. Justin is with forekast.com.

If you have feedback or questions for the show, you can do what Justin did and email [email protected] I read every email that comes into that inbox.

If you haven’t left us a five-star review in whatever podcast app that you listen to, I’d really appreciate it. We’re in Spotify, Downcast, Overcast, iTunes, and all the Apple podcasts. We’re in all the places. Every five-star review that you leave puts a big smile on my face. It also helps keep me motivated to keep doing the show and it helps us to find new listeners. Thanks for tuning in this week. I’ll see you next time.

This interview was recorded several months ago, but is still relevant despite the pandemic. Colin Nederkoorn, the co-founder of customer.io has taken a unique approach to building their company. Customer.io does marketing automation for the entire customer lifecycle. They have raised funding, but no

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Using Technology to Fight Poverty | Rob Walling - Serial Entrepreneur

I recently returned from a three week stay in Ghana, West Africa, where I trained several non-profit organizations how to build websites. Over and over again I was reminded how much we in the West take our wealth for granted.

The federal minimum wage in the United States is $5.15 per hour which, while nice pocket change for a high school student, is not enough to keep a family above the poverty line. However, someone making $5.15 would live quite nicely in Ghana where the minimum wage is $.18 per hour and the per capita Gross National Income (GNI) for Ghana is $320 compared to $37,610 for the US (according to the World Bank, 2003).

Before my trip to Africa, whenever I saw figures like the ones given above, I always reasoned that goods are cheaper in countries like Ghana. Shouldn’t it all just even out?

The short answer is no. The long answer is that it’s because life in Ghana is further complicated by the following factors not present in the U.S.:

  • Unemployment is around 20% and under -employment is suspected to be higher. After six months without a job, $.18 an hour must feel like winning the lottery.
  • Inflation is around 14%, which means each paycheck buys less and less and any money you manage to save becomes worthless within a few years.
  • Although many Ghanaians survive on $.18 per hour, which covers the expense of one meal a day and a few other basic needs, no one earning that wage is in a position to participate in the global economy.

These are all major problems in dire need of a solution, but it’s the third point that hit me the hardest.

Teaching in Ghana My Kingdom for a Book! One of the employees at the IT facility where I lead website training asked how he could learn ASP and PHP (a couple of common web programming languages). He wants to learn web development so he can move to the UK in search of a better life. Since there is very little computer work in Ghana, someone who acquires technical skills quickly leaves the country in search of opportunity. Can you say brain drain ?

In any case, since classroom learning is expensive and since I’ve always been more of a “teach yourself” type of person, I recommended two books to get him started. He looked at me sheepishly and told me that technical books are really expensive. This struck me as odd because I had talked to a guy from the UK just two days earlier and he mentioned a bookstore with technical books at around 70% off cover price, so a $50 book was only $15. Feeling well-informed I began to tell him, but the instant the words came out of my mouth I noticed a look on his face and realized that this is an outrageous amount of money for him. Luckily, I quickly righted the ship , adding “…but I realize that is still very expensive.”

15 bucks. The guy works 40 hours a week at an IT training facility and can’t afford a $15 computer book. He’s not starving. He’s not living in a mud hut on the side of the road scraping to feed his family. But $15 is probably a week’s salary for him, maybe more. At 83 times the minimum wage this book would cost $427 in the U.S., and the book was actually an old edition (from 2001), which as most of us know is almost worthless in the world of computer programming. If he wanted a current edition he would have to pay three times that if he could find it at all.

Does this seem wrong to anyone else?

The other items that proved to be cost prohibitive were a domain name and web hosting. It had never occurred to me that these expenses could be barriers to creating a website, since in the states it’s time and expertise that stand in the way. I won’t go into the detailed calculations, but at $8.95 for a domain name and $4 a month for hosting, it’s virtually impossible for the average Ghanaian to participate in the global economy.

This is, of course, not the worst of it. Ghana has its share of destitute poor; people who live in huts made of dried mud or sleep under overhangs in urban markets, people who have never had enough to eat, people who have no concept of what it means to not be poor and who live every day with their family’s survival hanging in the balance. Women on Beach Why Should We Care? The big question is why should we care about someone else’s problem? It’s not our issue, right? Isn’t it just survival of the fittest? Here are a few reasons to get you thinking:

If you believe in God, Allah, Buddha, or even good old fashioned karma, you know your responsibility to your fellow human being. All of the major religions preach a similar message; if someone is in need we should go out of our way to help them.

If religion is not for you, how about morality? One of the main themes of Weaving the Web , the book by Tim Berners-Lee, co-inventor of the World Wide Web, is that computer scientists have a moral responsibility as well as a technical one. Does it seem right that millions die every year from simple causes such as lack of food, clean water, and preventable diseases? These are people just like you or I dying slow, painful, and preventable deaths.

If morality isn’t convincing, there’s also the United Nations, which has something called International Human Rights Law spelled out in their charter. This law names food, housing, education, health, work, social security and a share in the benefits of social progress as some of the basic human rights.

Something else that makes it difficult to wash our hands of the situation, particularly in Africa, is that our ancestors (for those of us of European descent) colonized and exploited most of the African nations to the point of ruin. This makes it difficult to say that it’s happened through the course of nature and that we should just let nature take its course. It’s hard to move past the feeling that we have some responsibility to help right this wrong. Ghanaian Woman in Front of Cloth Finally, and perhaps most compelling for those who don’t buy anything I’ve said above, history has shown repeatedly that once the disparity between the haves and the have-nots exceeds a certain threshold, social unrest and ultimately violent uprising results. In the U.S. we were insulated from this violence until the attacks of September 11, which many estimate will be the first of many attacks we will see in our lifetime as this gap continues to widen. As Vinnia Jauhari and Edson Kenji Kondo said in their paper Technology and Poverty – Some Insights from India , “If the entire social fabric decays, then what good are the scientific achievements and material wealth if the very survival of life becomes questionable?”

This begs the question: How can technology, specifically high-tech and the internet, be used to fight poverty?

Destitute Poverty Poverty can be relative or absolute; relative poverty is in relation to the rest of the economy, be it national or global, while absolute poverty is in relation to the basic human needs. Destitute poverty is at the bottom of both scales.

For destitute poverty, providing food, clean water, shelter, and medical care are the most critical needs. There are many organizations that provide these services to the poor, and they help remedy a dire need in the world. But once these needs are met, the person’s information poverty must be addressed.

It’s been shown that TV helps people in destitute poverty to see what it’s like not to be poor. With the proper training can you imagine what someone in this situation could learn on the internet about farming, birth control, food and water, disease, and their government? How about the advances that could be made in linking citizens with government services, and keeping government officials accountable for their actions. One of the first things that happens during a coup is the seizure of the national media, typically the radio and newspaper, so the new leader can control the flow of information to the people. It would be much more difficult to control the internet.

The amazing part is that the technology is within reach: a company called SpeakEasy has a pilot project in Seattle where they provide broadband, wireless internet access over an area of 10 square miles, and San Francisco is embarking on a free or low cost campaign to blanket the city with wireless internet, a total of 49 square miles. How long until all you need is a laptop and a solar panel to have cheap ( or free , if Google has its way) broadband nearly anywhere in the world?

The Lower Class The lower class are people who are underemployed or employed, but don’t make enough to support their day to day needs. Although not destitute, this population could utilize additional money to be properly nourished, tend to medical needs, receive education, and have a consistent supply of clean water. One possible approach for helping the lower class, who is able to survive day to day but is in dire need of a higher standard of living, would be to take advantage of the global economy through e-commerce.

Drums By setting up an online store through eBay or Yahoo!, a Ghanaian drum-maker could dramatically increase his market of potential buyers while increasing his profit margins. This idea, though not using the internet, has been executed with great success in Central America where Westerners have set up co-ops where craftspeople create products and elect one person to handle the business aspects. Modifying the idea for the internet, one would find a local with computer skills (the coordinator) and put him in charge of maintaining the online store. The remaining craftspeople would be notified when they needed to ship an item via an email, phone call, or a knock on their door. A small cut from each item would go to cover overhead: the cost of visits to an internet cafe, plus the coordinator’s wages.

One real-life example is a 12″ Djembe drum that sells for $25 in the local marketplace in Ghana runs $90 on eBay. The additional profit on the sale of one drum would cover the cost of internet access, eBay fees, and a large portion, if not all, of the coordinator’s salary.

The Middle Class To help the middle class, the population that lives well on an absolute scale but poorly on a relative scale, Ghana needs a way to participate in the global economy.

Ghana’s GDP, as with most African nations, is based heavily on agriculture with minimal contribution from manufacturing or industry. This is the result of the industrial revolution never taking hold within Africa’s borders, attributable to the fact that most countries were colonies well into the industrial age. Ghana Fishermen This lack of industry results in a scarcity of non-agricultural jobs and means there is a long, uphill climb ahead before sufficient industry is in place to support technical jobs. This is a process that once initiated will take decades. As a result, opening the doors to the global market of technology outsourcing is a good choice for realizing a change in the near term. Outsourcing is a hot topic these days, but I’m not going to discuss the political implications in this article since I’m speaking purely from the perspective of trying to improve peoples’ standard of living.

The main advantage Ghana has over more developed nations is cheap labor. With an investment in their infrastructure to provide more reliable telephone, power and internet capabilities, outsourcing could begin almost immediately. In fact, there are a handful of outsourcing firms in Ghana that handle tasks like data entry and digital imaging services. Other areas that have been successfully outsourced include software/web development, and call centers; since English is the national language the barriers are small.

Speaking on my area of expertise: starting a software firm would require minimal up-front investment (a few computers, a DSL line and a generator) and would reap substantial financial rewards compared to the cost of doing business (or living) in Ghana. One major advantage is that you would have your pick of the best job candidates because you could pay more than the prevailing wage. You’d have to start with simple work since you’d be training as you went; from what I know there aren’t any skilled programmers in Ghana. But starting with the brightest candidates you could find and building an organization of people who are willing to work hard for their money could be lucrative and rewarding. The global economy is favorable to a country with cheap labor who can work through the obstacles in their way and produce a good quality product.

The revenue from even a few large contracts would be significant boost to the GDP and would improve the standard of living of many people. Ghana Beach So What Can You Do? Option 1: If you feel guilt in your stomach like you’ve had some bad tacos, and want to get rid of that icky feeling as quickly as possible, consider giving money or computer hardware to one of the following charities. They use technology to fight poverty around the world, and could put your donations to good use:

  • Computer Aid International – refurbishes, packs and ships donated Pentium computers for re-use in developing countries around the world.
  • WorldWrite – sends quality refurbished PCs to schools and villages in developing nations.
  • Grameen Foundation USA – a nonprofit organization that uses microfinance and innovative technology to fight global poverty and bring opportunities to the world’s poorest people. With tiny loans, financial services and technology, they help the poor, mostly women, start self-sustaining businesses. They’ve helped nearly 1.1 million families in 20 countries.

Option 2: If you think you might want to become more involved, contact one of the following organizations about volunteering your time:

  • Trade Aid – provides improved educational opportunities, from primary education to vocational, management, financial, and entrepreneurial training.
  • The Benetech Initiative – a deliberately non-profit, high-tech company that develops software and other tools to help solve social problems with sustainable enterprise.
  • Grameen Foundation USA – a nonprofit organization that uses microfinance and innovative technology to fight global poverty and bring opportunities to the world’s poorest people. With tiny loans, financial services and technology, they help the poor, mostly women, start self-sustaining businesses. They’ve helped nearly 1.1 million families in 20 countries.

Option 3: If that feeling in your stomach really is from bad tacos and you’re actually inspired after reading this article, I encourage you to contact one of the organizations above to investigate how your skills could assist their efforts and/or think about how your expertise could fit into one of the scenarios I discussed. And while you’re at it, post a comment or send me an email so I know you’re out there.

There’s an old German proverb that reads:

One does evil enough when one does nothing good.

It’s your move.

Photos by Sherry

An essay on Rob Walling's trip to Africa, where he was impacted by the digital divide. He discusses some ways you may be able to help.

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Episode 496 | “The Press Covers Exceptions, Don’t Compare Yourself to Slack or Zoom”

Episode 496 | “The Press Covers Exceptions, Don’t Compare Yourself to Slack or Zoom”

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This interview was recorded several months ago, but is still relevant despite the pandemic. Colin Nederkoorn, the co-founder of customer.io has taken a unique approach to building their company. Customer.io does marketing automation for the entire customer lifecycle. They have raised funding, but not traditional venture money, and they’ve run it more like a self-funded SaaS. Colin and his cofounder John left their jobs with no savings, and they set out to build an analytics tool. Their story is powerful because of their unconventional approach and ability to persevere through hard times.

The finer points of the episode:

  • 4:05 – The customer.io founder journey
  • 5:23 – Their approach to selecting investors
  • 7:01 – Reflecting on how Colin and John bootstrapped a SaaS app after leaving their jobs with no savings
  • 8:02 – Why they pivoted from an analytics company to selling marketing solutions
  • 13:15 – Finding the balance between innovation vs following the best practices
  • 18:37 – How customer.io became a remote company, and the advantages/disadvantages of building a remote team
  • 22:05 – What customer.io is doing to support the bootstrapping startup community (and why they care about bootstrappers)
  • 24:30 – Marketing approaches that customer.io used in the earlier days
  • 31:55 – The highs and lows of building customer.io

Items mentioned in this episode:

Transcript

Rob: Welcome to this week’s episode of Startups for the Rest of Us. As always, I am your host, Rob Walling. Thanks for joining me this week. Thanks to everyone who reached out about last episode 495 where I went solo. I got more positive feedback about that episode than I have in six, eight, nine months. I appreciate folks reaching out. Let me know what I’m doing right and let me know what constructively could be doing a bit better.

In this episode, I air an interview that I did months ago. It was certainly pre-pandemic and it may even have been before the end of last year. While there are no mentions of COVID or Coronavirus in the interview, I think there are so many lessons learned from the journey of this founder, Colin, the co-founder of Customer.io. Customer.io has taken such a unique approach to thinking about how to build their business, the way that they got it started, and the way that they didn’t go down the venture track but also didn’t straight bootstrap. They were one of the first companies that I had ever heard doing that.

Before we dive into that conversation, if you haven’t heard of helpfounders.com, you can head there. It’s a collaboration between a bunch of podcasts that are intended to help Bootstrap founders and folks who may be impacted by COVID or maybe it’s just an effort to give back, so different podcasts. A lot of us in the bootstrapping space offered up just a couple ad slots but really it’s just more of here’s this company. Here’s what they do just to make the Startups for the Rest of Us listenership aware. This is all voluntary. It’s a non-paid sponsorship. It’s really to give back to the community.

The company I want to talk about this week is called Hugo. It’s at hugo.team. According to the founder Darren Chait, he says Hugo is centralized, searchable meeting notes that connect with tools such as Zoom, Slack, Zendesk, and HubSpot. It’s free for up to 40 users. The target market is SaaS companies of all sizes including brands you already know such as Atlassian, Shopify, and Spotify. They were a good addition to the other work-from-home tools that are growing in popularity. If that sounds interesting, head over to hugo.team.

With that, I hope you enjoy my conversation with the co-founder of Customer.io, Colin Nederkoorn.

Today with me on the show, I have Mr. Colin Nederkoorn from Customer.io. Colin, thank you so much for joining me.

Colin: Hey, Rob, great to be here.

Rob: I’m actually pretty surprised that we haven’t had you on the show before now because you’ve just been in this bootstrapper/ these days, I’m calling it an indie-funded space where folks are raising small rounds but they want to keep control of their company. They want to stay independent. I really feel like you were one of the first, if not the first companies, to do that. I think we have some really good stuff to dive into today.

Colin: Thanks. It’s interesting because I’ve never felt like I belonged in any community, but certainly I share more values with the bootstrapper community than I do with the ‘venture-funded grow at all costs’ community. I guess there’s that great quote from Groucho Marx. I forget what the quote is.

Rob: He says, “I would never be a member of a club that would have me.” That makes sense. As I’ve watched you, certainly, you want to build a real product for real customers who pay you real money, which is something I often say on the show. That is much more in line with this non-venture track startup software.

For folks who haven’t heard of Customer.io, you guys effectively built out and launched over the course of 2012. You really had your public launch in 2013. According to your website right now, your HTML title tag is marketing automation for the whole customer lifecycle. Your headline is, “With Customer.io, you can send targeted emails, push notifications, and SMS to low return, create stronger relationships, and drive subscriptions.” I know you started off doing a lot of emails but now you’re in push in SMS.

In 2012, you guys designed your first logo. As we know what’s important in SaaS is not building a product and selling it to people. It’s designing a logo and printing business cards in 2012. I want to ask you a question about that in a second. I want to get to the timeline so folks can keep it in their head.

April Fool’s Day of 2012, you guys had your first full-time days working on this. You quit salary jobs with no runway, five customers paying you $10 a month, no savings and no income, which we’ll get into in a second. This is great. You can’t make this stuff up. You wind up raising about $225,000 from friends and family later that year. As I said, you launched January 2013 with between $5000 and $10,000 MRR. That’s when you raised a seed round.

You extended that friends and family around to $750,000. You’ve never taken truly venture money, institutional money. It’s been more from people who are willing to just support your vision of building a profitable company not go Unicorn, go IPO, or go home type of thing.

Colin: I think that’s pretty true. I don’t know if I could say that we articulated that well in the early days. I don’t know that we had those values but I don’t know that we self-selected investors based on that alignment. I imagine some of our investors, the other investments that they made either have died or are really big companies now.

Rob: Has that caused you any issues in terms of investors who did want you to go Unicorn? Some investors don’t want a profitable business or they don’t want whatever at $10, $30, $50 million exits. They only want Unicorns.

Colin: Not really. We have about 40 people on the cap table which our lawyer always tells us that’s a lot of people on the cap table. Anytime we need to get people to sign documents, it’s a big headache to get everyone to sign. What that’s meant is that for the people who are investing in a lot of high growth startups, we’re not in the front of their minds. Early on, we got a lot of help from people, but now we don’t hear from them too much. They have a big pile of money. They make a lot of investments. We’re just one of them.

Rob: Today, you have more than 1400 paying customers, 57 remote employees. You mentioned you have a small office in Portland with about five people but effectively a remote-first company. You told me offline that you have been public with revenue recently, that you guys are doing $11.5 million ARR, and that you grew 32% last year.

I wanted everyone to have the context as we go into this conversation to hear about your journey, truly bootstrapping this in 2012, to then raising a small amount of funding to get you to profitability, to help with growth, but never taking the massive plunge that a lot of folks do. I’m curious. You and your co-founder John left your jobs without savings, without income, expecting to be able to make this work. How did that come about? These days that would be an anti-pattern because we know SaaS takes forever. What was your thinking back then?

Colin: I can’t even understand why we did that. It just doesn’t make any sense reflecting back on it. Our milestone that we wanted to hit to go full time was 5 companies paying us $10 a month. How you get from there to full-time salaries is a pretty big leap. I think we just knew that we had to do it and then we’d figure it out. We’d do some consulting or we’d start doing services for companies and be able to charge more. But if we didn’t take the leap, then we wouldn’t be in the ocean. We’d still be on the beach and we’d still be trying to figure out how to take the leap. By throwing ourselves way into deep water, it forced us to figure out how to survive and what we needed to do to realize the business.

Rob: You set out to build an analytics platform. What caused you to alter that course and instead go after email?

Colin: We decided in January that we wanted to build the company. I think in the very early days, we spent some time talking with prospective customers. This was right around the time of Lean Startup, Eric Reis’s transformative book. We spent a lot of time going out and talking to people who we thought would be good customers. What we learned was this is what people felt. I still don’t know how true this is but people felt like they had tons of different analytics tools that help them understand their business. The struggles that they were having were they could see what was going wrong but they couldn’t influence it.

We heard that a few different times. We thought to ourselves with that analytics data, we can make something happen. We can send an email. If we’re embedded into a website or mobile app, we actually know what happens after someone clicks on the email and they go back to the app. We can build this amazing circle or we can close the loop (essentially) and show people the impact of the emails that they’re sending in influencing someone’s behavior in your product. That seemed really compelling. When we started talking to people about that, they wanted that because it actually moved their business, whereas giving them another analytics dashboard didn’t.

Rob: Customer is one of the first tools, if not the first that I ever heard of, where the data that you use to send emails could come from inside a SaaS app, a mobile app I believe you focused on. At that time the ESPs that I was using that were popular were Mailchimp and AWeber. I’d vaguely heard of Infusionsoft. There was Constant Contact but those were just marketing places. They were purely about email blasts which are totally not personal, not behavioral, not anything. Customer was the first one where I thought it’s a very clever use. I love how you guys came about that by saying we’re going to use analytics to power email rather than send emails in order to get some type of click-throughs or whatever.

Colin: I think that we were coming from a venture-funded startup. Interestingly, after we heard this from the people doing customer development, we looked back at our company and said, “Oh, wait, that’s the problem here too. Our marketing person wants to send emails in Mailchimp but she asks the engineering team, “Can you please export a list of people who have done this but not that.” Then, there were all of these transactional messages that were in the code of the application that that same marketing person would want to tweak the language in and we would have to put a ticket. I think we were doing Kanban boards at this point. We would write up a notecard. As the head of product and the head of engineering, my co-founder and I would always deprioritize that no card because it wasn’t that interesting to us.

Customer.io, when we thought about it, if you had the data, you could send that newsletter without having to ask engineers to export anything. If you pull the content out of the code of the application, you could make changes to your transactional emails and all of your trigger-based emails without having to ask an engineer to do anything. It was all about strengthening the relationship between your engineering team and your marketing folks, product, or whoever was responsible for talking to customers.

Rob: That makes a lot of sense but it was a big leap. There are obviously a lot of tools that do it today but we’re talking effectively eight years ago that you were working on this. I have one question for you about designing the logo and getting business cards. Did you ever use those business cards because I chuckle these days. I think I printed some on the move for one conference that I went to or something. Was that something you look back on and you were like, why did we do that so early?

Colin: I think when you start a company, it just doesn’t feel real. I think people print business cards and they make a logo because somehow that makes it more real to them. When you tell someone I’ve started a company and you hand them a business card and it has a logo, maybe that convinces them that you’re real, too.

I think it’s just a lack of confidence in a company actually coming out of the other end of this process. People want to start with business cards and so we did as well. We were going to meetups and other things like that like going to social events where you’re like, “Hey, we started a company.” “Oh, cool. What does it do?” “It does A, B, and C. Here’s my business card. Contact me.” It’s so silly but I think it’s like a playing company. It’s part of the package of the playing company. I don’t have business cards now.

Rob: I was going to ask. Do you still have business cards? No. None of us do. Unless you’re literally in person with people at conventions and you don’t want to do the exchange of your conferences, events, or whatever. You don’t want to do that type this into your phone type of thing. There’s just not a ton of reason to do it these days.

I read through several interviews that you’ve done over the years. I like to do that to prepare for these interviews. There’s something you said and one of them struck me. It’s something I wanted to dig into. You said, “So much of what people consider conventional has never felt right to me and our company.” Could you expand on that and maybe talk about one or two conventional things that you guys don’t do or maybe some unconventional things that you do at Customer.io?

Colin: I think there’s really a balance here. There are things that you want to innovate on and there are things that you should try to find best practices for. The things that felt wrong to me was certainly venture scaling a company didn’t feel right to me. Typically, what I would see is most venture-funded startups fail for one. The approach that I would see founders take when they were scaling a company with venture money was that it was really undisciplined and they were just spending cash all over the place. But at the end of the day, it didn’t matter because they would end up crashing the company and landing a job, working as an investor, as an entrepreneur in residence, or whatever, something like that.

It just bugs me that essentially irresponsible behavior can end up with a positive outcome for people but that’s how that world works. I didn’t feel like I wanted to participate in that. Trying to straddle the line between bootstrapping a company and raising money is something that I never felt like we wanted to do either of those things, the conventional way that people do those things.

We’ve explored things like how to organize the company and how to run the company. Holacracy is something that people have experimented with. That somewhere where maybe at this time we want to explore things like that, but I’ve realized that that’s not a place you want to be innovative and challenge the norm. Unless your company is all about how companies work, you should probably not challenge the norm there and just use the tried and true methods that have worked over the years.

Certainly on stuff like running a remote company, we faced a lot of skepticism from early customers. Our now CMO once told me that he worked at a publicly-traded company back then and he had to go to bat for us internally to say that we’re actually a legitimate business because we made this choice to build a remote company and we didn’t have physical office places.

There’s a bunch of decisions like that. I think I’m a contrarian by nature. I typically feel like an outsider and I like being an outsider. I like the challenge that that creates for people. For me personally, I think the struggle is important. Feeling like an outsider means that it’s never the easy path when you look at technology companies.

I imagine a lot of bootstrappers feel like outsiders in technology but the happy path is you go to Stanford because you come from legacy or something like that. You have a legacy into Stanford. You graduate from Stanford. Maybe you work in consulting or you join a startup. Maybe you go to an investor and work at an investor for a while or you work in Google or Facebook. Out of your experience at Google and Facebook, you can go and raise a really big round of funding. None of those things felt right to me or particularly accessible to me. I resist all of it because I see how it works on the happy path if that makes sense.

Rob: That makes sense. I think that’s where the bootstrapper is in that indie-funded path. I think why it has so much traction is that most of us are outsiders. Most of us don’t go to Stanford. Most of us don’t know a venture capitalist who lives down the street from us. Most of us don’t grow up in the Bay Area. I think there’s a real appeal to having a path where you don’t need to know someone to break into it, where it feels like this, where you are an outsider that you can’t break through those doors. What you and John did is you didn’t go the bootstrap route and you didn’t go to that funded route. You pick the third path that so few had gone down at that point.

Now, there are more companies. There’s EDBC now that is effectively funding companies to become profitable. There’s a Tiny Seed Accelerator I run that is funding companies with the option to become profitable. Even though I’ve done about a dozen angel investments on my own, half of those are in essentially fund-strapped companies. Part of the Startups for the Rest of Us’ drinking game is when I say fund strapping. I always say it’s a term coined by Colin from Customer.io. It’s always the same thing. People have given me crap about it because they’re like why do you say that every time? It was this really novel concept back then. I can imagine that trying to stay away from dogma is almost what it sounds like. You didn’t want to go down the dogma of the VC nor the dogma of bootstrap necessarily. We’re thinking, is there another path.

I think remote is another big thing that in 2012–2013 (as you’re saying), people wouldn’t take you seriously if you didn’t have an office. Was that a decision from the start like this is just what we’re going to do? Have you ever regretted that? I’ve had remote companies. I’ve had a non-remote. I’ve had half remote companies. I know the value of being in an office with someone. Talk to me through that.

Colin: It’s hard. There are many things which are harder when you’re a remote company. We didn’t set out to be remote but we knew the value of deep work at that point. When it was just two of us, we were sitting next to each other, communicating with each other in a campfire chat, because I knew that if I had an idea and I wanted to share that idea with John but he was deep in work, I could just type it in the chat. He would ignore it, continue doing what he was doing, and he’d get back to me later. We definitely knew the value of deep work. We set up to support asynchronous and remote really early on.

We chose to do remote out of necessity because I couldn’t see a path forward building the company in New York City, trying to find the people that we needed and be able to attract them at the salaries we needed to pay to compete against other venture-funded startups in New York City, the investment banks, and all of the people who could pay way more than we could. We had to find a thing that we could offer that none of those people could offer.

To me the value of working for Customer.io as a developer or anyone on the team is you get to do the type of work that you would do if you were in San Francisco or New York, except you can be anywhere. Let’s say you get a co-located job in Cincinnati, Ohio, chances are the engineering problems you’re going to be working on there are not that interesting but we have really interesting engineering problems. That appeals to the flexibility of the work. The interest of the work is what was exciting to me and what was our competitive advantage, essentially, to hire quality people wherever they were in the world.

Rob: That’s the promise and the beauty of hiring remote. You don’t have to pay Berry or New York salaries. You can hire in whatever, the Midwest, the South, in the middle of nowhere, in Washington. You’re able to pay to give someone a higher standard of living without them having to have a long commute.

Colin: We couldn’t afford New York and San Francisco salaries out of necessity at that point, but it was never the goal to spend less on salaries. One of the things that we do now, we increase salaries as soon as we could, 2014–2015, we pay market rates now. We benchmark to the US national average. I think it’s the 75th percentile of the US national average for all of our roles. One of the things we’re still figuring out is how to make adjustments against that for international. My philosophy on this is that if you live in a less expensive place, I want to share in that benefit with you, the benefit of a cheaper cost of living. If you live in a more expensive place, we’ll share in the cost as well, but we won’t fully adjust the salary for that more expensive place.

Rob: I think I want to ask one question. There’s so much to talk about because you’ve been doing this for eight years. There are a lot of aspects of the customer that I think are interesting to listeners. You had mentioned to me offline before we started that Customer.io is not necessarily ideal for bootstrappers as customers because of the pricing. It’s $150 a month to get started. You guys want to fix that. You would prefer to help bootstrappers out. Do you want to talk a little bit about what you want to offer folks who are listening today?

Colin: I personally think it’s a little unfair that there are all these offers and opportunities out there for venture-funded startups. AWS has credits you can get and all of the companies out there do that. I want to find a way for us to better give back to that community and better support the bootstrapper community.

I think as we talked about earlier, we started at $10 a month. Over time, we raised our prices. One of the things that we found by raising our prices is a lower churn because if you have a really low price point, many people will sign up but also many people will churn. We were pulled by our customers to make the product more and more sophisticated. Because of that, if you’re one person working on a company, the investment required to use Customer.io effectively is probably beyond what you want to do.

The sophistication in Customer.io is probably beyond what you want to do, but I think that not every bootstrapped company is really looking to be a solopreneur company in the long run. I think for those companies that want to grow, expand their team, and are looking for a high growth rate, we want Customer.io as a product to be accessible to those people so that they get the value that the companies that pay us thousands or $2000 a month. All of that sophistication, they get that available to them on day one of their company.

I think you shouldn’t have to use crappy tools, basically. We think Customer.io is a really amazing, flexible tool. We want more people to have access to it but it takes investment. If you’re a solopreneur, you probably don’t want to do the investment required to get the value out of Customer.io. We’re exploring this right now. If this sounds interesting to you after checking out Customer.io, if you go to customer.io/bootstrapper that will give you a little more information. We want to have a conversation with you and figure out how to give you an offer that really helps you get started in the product.

Rob: Circling back, I want to look at some marketing approaches that you guys used in the early days and how you got traction. Obviously, this whole journey is hard but I think you and I both know that the first three months, six months, nine months are really trying because you don’t know if you’ve built anything people want. People are giving you all different kinds of feedback. People are telling you you’re too expensive, you don’t have the features, whatever, and you’d have this fragile idea. You’ve been working on this for eight years, $11.5 million ARR now, much less fragile. In the early days, you’ve talked about Twitter actually being an early sales channel and that your word-of-mouth was very strong. Can you talk about how that came about, why that worked, and what worked at the time?

Colin: There were a couple of things that happened in the early days for us. One, this area that we were focused on became a pretty hot space for conversation in tech in general. I think this guy, Paul Stamatiou, wrote a blog post about User Retention as a Service. People were just talking about this in general.

What I would do before we had a product to sell, I would see people talking about the problems we were trying to solve on Twitter, I would reach out to them, and I would say, hey, I want to understand this better. Can we talk? I don’t have anything to sell you but we’re working on this problem. That was a way to gather information to figure out if we were building the right thing.

What I found is under the guise of not selling something, trick people into having a conversation with you but really you’re trying to sell them something. That’s happened to me a couple of times as CEO. It’s really annoying but we were genuinely not able to sell someone anything. That made for really useful conversations with future prospective customers.

I think at that time Rand Fishkin was talking about this problem. He introduced me to people on his team at Moz who were working on it. We did a customer development call. They never became a customer but I learned really useful information from that. It’s pretty typical. We had a signup page where people could register their interest. We would send people to that page and we’re getting a decent number of signups there.

The other thing that happened at this time is I think Patrick McKenzie introduced me to this guy Ramit Sethi. Ramit runs I Will Teach You To Be Rich. He agreed to meet us for coffee. He asked what we were doing to build an audience and communicate with people as we were building the audience. I said we’re collecting all these email addresses. In six months when we launch, we’re going to email them to let them know.

I don’t know if these are his exact words but it was something along the lines of you guys are idiots. You got to talk to the people whose email addresses that you’re collecting because in six months when you email them, they’re not going to remember you. Figure out how you can provide value for them in the meantime. They signed up for something. Give them what you can now that will help build your audience, then they’ll at least remember you when you launch the thing that you want to sell them. That was hugely valuable advice.

One of the things that we were able to do—I don’t know how easy or possible it is to do today, because there’s just so much content marketing out there—we built our newsletter list, we started writing about email copywriting like trigger messages, and had a pretty good following of early-stage companies and CEOs of startups basically, one- to five-person startups primarily. That really helped us in the early days. Over time, I wasn’t able to keep myself motivated to continue to write content and do content marketing. That fell off a little bit, but fortunately, we’ve built a bunch of evergreen content and still have a lot of inbound today. That’s really how the word-of-mouth engine got kicked off.

Rob: That makes sense. That really has become a playbook. It was emerging during that time. I’ll say 2011–2013, 2014 content marketing playbook. It sounds like you and your team by this point executed really well on the product, but you also got maybe a little lucky in terms of hitting this thing at an inflection point with targeted messaging event-based behavioral stuff. I think that’s something that I’ve been talking about. We’re really thinking about this concept of what do I think the keys to success are. I think there are just three things. I think it’s this simple. I think it’s skill, hard work, and luck. It’s a combination of those three. One plus one plus one equals success.

At varying times, if you have a lot more luck, you may need less skill and experience if you get lucky to hit it. If you don’t have a lot of luck and you want to just purely do something you can repeat over and over without having to make a billion-dollar bet, then you need skill/experience and a lot of adding. You need a lot of hard work. It sounds like you had a little of all of them because I’m just going to assume in knowing what I know about you that you guys work your asses off. The hard work was there and you had development skills for sure. It sounds as I just said, you get a little lucky with that thing, but it sounds like you’ve executed very well on that vision is an addition.

Colin: The way I think about luck is that it’s not evenly distributed. You can’t just go anywhere into any market. There’s some luck that you can tap into. There are some areas and there are some products that you could build today where you’d be extremely lucky relative to other products.

I think we were really fortunate in the space that we picked. We had a lot of interest at that time. We had a lot of competitors at that time but it was really nascent. We were able to build a very immature product and get some traction. Now, there’s a much larger moat where the expectations of what our product needs to do on day one are much higher.

When we had five customers paying us $10 a month, the reason we were limiting how many customers we could service and the way that all that stuff worked was my co-founder would write a MapReduce script behind the scenes when someone would set up a campaign. They would write in plain English what they wanted the campaign to do. We would manually look at the data that they were sending in to figure out if it was possible. If it was possible, we’d write a manual like MapReduce query to find the right people to match the campaign.

You could not launch a product today with that approach. Nobody would take you seriously. I think our experience working in tech helped us know that that was an interesting space to go after. Our luck in picking that space has helped us a lot to become successful and really just the luck of who we met along the way.

Rob: There’s always a little bit of that in all these stories especially when it’s folks like us coming from the outside who didn’t have some in this space. I’m curious. What’s the high point of building a customer? What’s a moment you can think over here like this is amazing, I love what I’m doing here, and I’m euphoric at this moment?

Colin: I don’t have a moment where everything was so amazing like I’m sitting there with a glass of champagne, I’m looking at some company dashboard, takes over, and then all of a sudden, I drink the champagne and feel just like pure joy. I don’t have that. Basically, every time one of the people on our team has a child, every time someone buys a house, every time one of our customers is really happy with us and gives us the feedback that our support was amazing or they were able to accomplish something in their job that they hadn’t been able to accomplish before, it’s those micro-moments that make me feel a great degree of satisfaction just deep inside. It’s not revenue-driven. It’s what having this company and what having this product allows us to do and allows the people touched by it to do in their lives that create the lasting feeling of success, if you can even call it that, but really just satisfaction.

Rob: How about on the flip side? What’s been the hardest part?

Colin: There have been moments, knock on wood can’t really happen to us anymore, but we made some decisions early on technology choices. I think in 2015, we had an outage that lasted 24 hours. Basically what had happened was we were using this database technology called FoundationDB. It was acquired by Apple. Apple would not let FoundationDB renew any service contracts and they took the product off the market. We were in production with this thing with no migration path. The service went down. We were hosting the database ourselves but our database went down. We couldn’t recover it and we couldn’t get any help.

I thought that was it. I thought we were going to have to call our customers and say, sorry but we can’t get your data back. We can’t bring the service up. You’re gonna have to take emergency action to migrate away from Customer.io. That’s the lowest point I’ve personally experienced in the company. If you can imagine as a business how you could fail your customers in the most dramatic way, that is it. If service goes down all of a sudden and there’s no recovery, no migration path, no time, that’s it.

Rob: That is devastating. My palms are literally sweaty thinking about it because we never had outages that long but I know exactly. I’ve been in your shoes. How did you get out of this? Don’t leave us hanging. How did you figure it out?

Colin: My co-founder was trying a bunch of things. I think we had someone else on the engineering team or maybe a couple more people on the engineering team who were helping him with this. We’re just trying things, trying to figure out how to recover the database. One of the key aspects of this is this was a distributed data store. There were lots of machines essentially running one underlying database.

The big problem with that is one, it wasn’t necessary for the type of business that we had. Customer data doesn’t relate to any other customer data. There was no need to have a big distributed data store to run our business. Basically there was one single point of failure again. The idea of these things is that a server can go down and the database will stay up but the problem is you still have this single point of failure. When a server goes down, there’s data that needs to get moved around and it overwhelms the network.

We receive a ton of data all the time from our customers sending us data. That made it even harder to recover. It got bad enough that on Twitter I was like, “Hey, we really need some help. If anyone knows anyone who worked at FoundationDB, please can you connect us?” I reached out on LinkedIn to a bunch of people who had worked at that company and were now working in Apple. Some people responded to us. I think we got some help from one or two people there.

We were ultimately able to recover this whole time. As soon as the acquisition happened, we were immediately trying to figure out how to migrate away but it was too much data. We couldn’t do it fast enough, but we ended up getting things back up and running and had to really massage that database every single day to keep it running while we created a migration path.

Rob: Wow. These are the kinds of stories that don’t make it to the front page of TechCrunch. It’s the growth curve of Slack and Zoom that you’ve mentioned offline, how Zoom goes public, Uber and all this, but how many people are talking about the realities of what it feels like to grow up.

Colin, we’re coming up on time. If folks want to hear more about you, they can go to @alphacolin on Twitter. Thanks so much for joining me.

Colin: Thanks, Rob.

Rob: Thanks again to Colin for coming on the show. As we wrap up, I have a couple of emails that came in that I just wanted to mention here before I take us out. I got an email from Adam. He was responding to episode 479 where we talked quite a bit about marketplaces. I think there may have been a question about who’s talking about building marketplaces. He says that they have a podcast that covers building their marketplace called Menyu. The podcast covers their bootstrapping journey. If that sounds interesting to you, check that out.

The other email I received was from Justin. He said, “I just wanted to say thank you. Your show has been invaluable to me and my co-founders over the years. We’ve built a tool. We’re revamping and launching in a few months, but everything from figuring out what LTV for our customers will be to evaluate whether a free model could work for us. You shed insight on a lot of issues we’re going through. I hope we can buy you a beer sometime in appreciation.” Thanks for that, Justin. I really appreciate that. Justin is with forekast.com.

If you have feedback or questions for the show, you can do what Justin did and email [email protected] I read every email that comes into that inbox.

If you haven’t left us a five-star review in whatever podcast app that you listen to, I’d really appreciate it. We’re in Spotify, Downcast, Overcast, iTunes, and all the Apple podcasts. We’re in all the places. Every five-star review that you leave puts a big smile on my face. It also helps keep me motivated to keep doing the show and it helps us to find new listeners. Thanks for tuning in this week. I’ll see you next time.

This interview was recorded several months ago, but is still relevant despite the pandemic. Colin Nederkoorn, the co-founder of customer.io has taken a unique approach to building their company. Customer.io does marketing automation for the entire customer lifecycle. They have raised funding, but no

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Episode 482 | The Value vs. Stress of Twitter, Pros and Cons of Remote Work, and Digital Minimalism – A Discussion Show with Derrick Reimer

Episode 482 | The Value vs. Stress of Twitter, Pros and Cons of Remote Work, and Digital Minimalism – A Discussion Show with Derrick Reimer

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Show Notes

In this episode of Startups For The Rest Of Us, Rob does a discussion show format with guest Derrick Reimer. They discuss multiple topics including the pros/cons of remote work, value vs. stress of Twitter, and more.

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Transcript

Rob: Welcome to this week’s episode of Startups for the Rest of Us, I’m your host, Rob Walling. This week, I’m trying out a new episode format. It is a discussion show, so it’s a conversation between myself, my old friend Derrick Reimer, and we talk about a number of topics. We talk about the value versus the stress of Twitter and social media in general, the pros and cons of remote work. We talk about Cal Newport’s new book Digital Minimalism, and then we wind up talking about Josh Pigford’s blog post in the Baremetrics blog that’s titled, I Almost Sold Baremetrics for $5 Million.

What I like about this episode format is it’s pretty casual and we’re covering topics that I think are relevant to many of us and a lot of us are thinking about. I originally thought of structuring this in some type of news, round-table, or show where we’re talking about topics of today. We do that with a couple things, I think the ability to introduce topics that aren’t necessarily news articles or news headlines also works, and the fact that Derrick and I know each other as well as we do really helps with just the rapport in the conversation, it’s not stiff or stilted. I hope you feel the same way about that.

If you don’t recall who Derrick Reimer is, he and I have known each other for years. We met back when I lived in Fresno. He was a young kid who was participating in a startup competition that I was the judge of. He won a couple years in a row. Then, he was thinking about starting to do some consulting work and I said, “Look, why don’t you come, write some code for HitTail?”

He wrote all the early code for Drip and later on, became retroactive co-founder of Drip. So, he and I have known each other. We’ve worked together. He’s been on the show several times talking about starting an app on the side called Codetree that he sold for $128,000 a few years back. Then, he moved to Minneapolis when we sold Drip. So, he and I now live six or seven minutes apart.

We see each other once a month or so and it’s always a good time to hang out and chat. So, I wanted to mix up the format just a little bit and do something that’s not an interview, not keeping up with Mike Taber, not just question and answer, but actually just bringing topics to the table that (I think) might be of interest to you. So let me know what you think.

You can tweet me @robwalling, you can email [email protected], or you can post a comment on this episode, episode 482 and just say, “Yeah, I enjoyed the mix-up of the show format and the fresh ideas in a conversation.” Or you can say, “Got five minutes in, didn’t hold my attention, and I was out.”

That helps me think about and consider maybe we had one of these to the line up every couple months. It doesn’t always have to be Derrick. I could bring on different co-hosts and folks to weigh in, so we have different perspectives.

And with that, let’s dive into the show. Derrick Reimer, thank you for joining me on the show.

Derrick: Hey, thanks for having me again.

Rob: Yeah, I think this is going to be a fun one today, just talking through some interesting topics. I had a few in mind over the past couple weeks, some things have come up where I’m like, “You know, I really want to discuss these with someone,” and I don’t know who to bring on the show to do it. Then, you and I were having dinner last night and we got on some really good conversation topics, so I figured we could jump on the mic and record a few of these.

Derrick: Yeah, we both are a couple of old-fashioned, but we probably should have brought our mics, to be honest.

Rob: I know, I agree. One thing you kicked off with was just talking about something on a lot of our minds, social media in general but Twitter specifically, because that’s big in our circles and the value versus the stress of it.

Derrick: Yeah, for me, my personal journey with it has been the last remaining piece of social media that I really use these days. I’ve given up Facebook, technically, I have an Instagram account but I don’t really use it, and I’m not really hooked on checking those things. But Twitter is a tricky one and I think it is for a lot of people in the text space because it’s where a lot of our industry news is coming from, where a lot of the camaraderie among software developers and start up people is happening. There’s not really (to my knowledge) another platform like it.

There are niche communities in Slack and things like that, but Twitter is the public square for that. It’s been a struggle (I think) for the last few years. I’ve been saying things like, “Yeah, I’ve given up all social media,” but I can’t on Twitter because that’s where work stuff happens. I just become so aware that, for me (and I think it varies from person to person how they deal with it) it’s like Twitter is always the default. I hit a rough spot on something I’m working on and what’s my first inclination is to go check Twitter, go get a dopamine hit, and I’m over it at this point.

Rob: Do you still have it on your phone?

Derrick: I took it off my phone (which has been good) and I actually did another trick where I put all my apps in one folder, so now I just have like a blank desktop screen essentially on my phone. I keep email on there, for example, because I just want to be able to do email mobily, but I don’t want it to be something I compulsively check if I have a break during my day. That’s been a good way to deter that.

Rob: When you put them all in one folder, was it just to make them hard to find?

Derrick: Yeah. It’s like I had muscle memory built where I knew where to tap my thumb subconsciously to open email and now it adds friction to that.

Rob: Yeah, I do that. I’m compulsive with email and Slack, specifically the TinySeed Slack. I don’t do it with Twitter or Facebook and I’ve never really had that problem, but I definitely can see getting into that habit and I try to avoid it. I think the thing with Twitter is I check Twitter a couple times a week and (for me) that’s a pretty healthy balance.

I might post to it more often. A few months ago, I was posting every day and I fell off that wagon. I’d like to do that again, but checking it all the time is not healthy. That’s what you were saying last night. It doesn’t feel good because you’re going for the dopamine hit of someone replying to you, a conversation, likes, or retweets?

Derrick: Yeah. I don’t know if I’m feeling particularly just unsure about something I’m working on or just my business in general, all these existential mini crises we have all the time into building startups. That’s an easy place to turn where I’m going to share some piece of work that I’m doing and it’s going to have some marketing benefit. It’s going to increase awareness about what I’m doing and hope people will spread it around. Maybe someone new will discover my app.

I can justify that there’s some benefit to it, so then I’ll share something and it feels good to get people liking, engaging, and commenting, but it’s pretty hollow and it’s a veneer that’s providing a short-term benefit, but I don’t think it’s the healthiest way to engage with that. Then, when you don’t get the response that you were hoping for, then you feel bad. It’s like, “Why am I doing this in the first place?” This is not a solid way to go.

Rob: Yeah and the struggle is that it’s not just the social aspect. I know you got off Facebook years ago and I think it was easier to justify because there was no work component. There was no way Facebook was going to help you build or grow a company, whereas Twitter might (and I want to put it in italics and bold). We know folks who have personal brands on Twitter, social media empires. I don’t know of anyone who has built a SaaS app and the marketing was all Twitter.

I view Twitter as you can get a small audience and you can get those first few customers or you can get the first people who are going to give you good feedback. It’s part of just building that relationship with people, but realistically, once you have any type of product market fit and you’re actually trying to build a scalable marketing approach, Twitter is not it. If you’re looking at it purely as a utilitarian thing, there’s definitely times and places to do it and be on it, but with all the negatives, it does feel hard to justify to me.

Derrick: Yeah. You can definitely come into it with the strategy of like, “I know the best times a day to post where I’m going to maximize engagement,” I figured out some of those things for myself. Some of it, you can apply methodically. Other parts of it are a lot of the benefits that have come to me has been serendipitous and that’s where I have a little bit of fear that if I were to give this thing up, I don’t know what I’m giving up entirely. I don’t know what random encounters or interactions I might be missing out on and I think that’s for the fear that comes. This could be the thing that catapults my nascent start up into a different realm, if I were just there engaging in the community on Twitter. In reality, I’ve become pretty convinced that’s probably not a very good reason to accept all the negatives.

Rob: I keep doing it, yeah. You make a good point because it isn’t just finding customers, but what about that one relationship you build with the business development where someone says, “Let’s integrate. We’re a web host so let’s integrate.” You’re like a kid and you’re like. “Yeah, that could move the needle.” That’s what you’re saying, it’s like, “Do I want to miss out on those? What’s the potential?” and that’s where they get you. That’s where […], is it has all these negatives, and yet we still want to consider doing it.

Derrick: Yeah. If I think back, I’m frustrated by how many Twitter DMs have actually led to productive business meetings or chats and it’s like, “Why does that have to come to a Twitter DM?” because that’s just reinforcing that I struggle to actually get off of there, because people would have to find my email address or something.

Rob: Yeah, and it does seem like Twitter has declined pretty substantially in popularity. That’s been my sense and just the number of people on it. Obviously, the tech community, the Silicon Valley, plus MicroConf and just startups in general are on there. And the press. It does seem like there’s a lot of journalists, not just like TechCrunch but like Wall Street Journal, big-named journalists are on there and there’s certainly still some value. Remember Arab Spring, there is communication there, there is value to the world that that stuff is able to get out.

It really does seem like people have moved on to Instagram and what are the others? Snapchat, although I guess they’re on […] now. You mentioned TikTok last night and I was like, “Yeah, I’ve heard of that. No idea what it does.” I’m so old dude.

Derrick: Yeah, we’re getting old.

Rob: What are you going to do? If you listen like I was asked on stage, “Are you bullish or bearish on Twitter?” and I was like, “Bearish.” This was last year. I was on my 2016 or 2017 prediction. This is when Twitter was still going strong. There are going to be too many trolls. People are just going to move on, and the nature of social media is that it’s pretty rare for a platform to actually stick around for that long. People just move from one to the next.

I don’t love Twitter and struggle with a lot of stuff on it, although I am still on it. I think there are benefits, especially now with the MicroConf stuff, the podcast and all that. I’m not going to quit Twitter anytime soon, even though I do have some struggles with it. But I’m curious, you’re seriously thinking about getting off of it or quitting it basically. Is that right?

Derrick: Yeah. I’m getting dangerously close to that. For me, my big fear is how am I going to keep a similar type of connection to people in the industry who I’m not so close with? I’m texting or private messaging all the time. How am I going to maintain that? How am I going to still get up-to-the-minute news about stuff? I see a lot of things in the React community, for example. New things emerging or new releases of things and a lot of that I’m getting through Twitter right now.

It’s important for me to know about that because I’m building tooling in that ecosystem. I don’t always want to be the guy who’s a month behind late to the party knowing about stuff, but a lot of these you can think of it as, is that really so bad if you’re a few more days delayed in finding stuff out? Probably not. In that case, for me, I’m trying to look for what are some digests newsletters for example that are in the industry? I’m already a part of some of these.

The Changelog is one of them. They send a weekly summary of what’s happening in the open source world. There’s one for the Jamstack community, too, and I’m on that one. I get a lot of good info from that. These are probably good enough for the news part. For me it’s like, how am I going to keep connection to my “audience?”

The podcast is a good one side of a way to do that. Again, returning back to the fundamentals. My email list, my newsletter list, how can I invest there? The time I maybe would have spent on Twitter carve out some of that time to try to invest that in the email list. Those are some of the ways I’m thinking about it.

Rob: Those are good alternatives. I was going to propose that mailing list and a couple of those other things. The bottom line is, yes, you may miss out on some things, but take the time and invest in stuff. I would say, investment in stuff that is less ephemeral.

That’s what bothers me about social media. It’s just here today and gone tomorrow. It’s not a blog post. It’s not even a podcast episode people go back and listen to. It’s not a book that people will read for years.

With your email list, if you can invest in an email list and repost that on the blog, because email is a bit ephemeral even though it’s a pretty deep connection. That’s when I’ve been off because the entire time we were doing Drip, I was not on Twitter at all. It was the right choice. I didn’t quit it for life though, I came back. Obviously, I’m a little more active on it now, but I do hear what you’re saying. If you tried it for two weeks or 30 days, or something, my guess is you’re not going to want to go back.

Derrick: That’s a good segue, because I’ve been reading a book, Cal Newport’s latest book called Digital Minimalism, which is like Deep Work. A lot of people know about that one. It’s Deep Work principles applied to more of your personal life and how you interface with things like social media.

One of the things you he talks about in there and recommends doing is like a digital declutter. That’s a term he coined for. Basically, taking 30 days and eliminating the things that are causing you problems like social media, that are pulling at your brain and causing it to be distracted, and all the negative side effects that come with it.

Think of this as you’re eliminating all this stuff and then at the end of it, be really deliberate about what you add back in. Don’t think of this as just a temporary detox where you remove all and then at the end, I’ve reset and now I can go back to the way I was doing things.

I’m in the midst of one of those right now. I’m not deleting my Twitter account, but I’m not checking it. I started this off going on a trip where I had very little internet access. That forced me to step away from it and even coming back from that after five days, I already had much less desire to go check it. I do feel a certain amount of Zen just from that. That’s becoming a reinforcing thing already for me. The more time I spend off of it, the less drive I have to go and check it all the time. That’s been healthy, I think.

Rob: That’s cool. How long have you been doing that?

Derrick: Since really the turn of the New Year, so we’re about two weeks in. It’s been good.

Rob: It’s a trip when you change habits like that. How scary, you don’t know if it’s going to work, and then you get in a few days and suddenly you feel this clarity, and then trying to come back to it. I’ve done this with drinking alcohol, social media, or just anything. I enjoy it. There are pros and cons to each of those things. It’s like if I have an old fashion, I feel better. In the short-term, it’s a good thing. Much like checking Twitter. Then in the long-term, I question the value of doing that and going off of those things. Coming back, you just realize how much it impacts your day-to-day or just how it actually affects your life.

Derrick: Yeah.

Rob: And you were saying last night because I haven’t read Digital Minimalism, but you piggy-backed on it and it got you thinking about remote work.

Derrick: Yeah. A thing that he spends a fair amount of time talking about in the book is what does it mean to have relationships and have real connection with other human beings. This is heavily tied in with the era of social media there of text messaging. The fact that we rarely call each other anymore. We are always texting. There’s all these norms that were established in society and a lot of them were around lower fidelity means of communication.

He makes a good point. This is based on some research he pulls into his thesis. We’re wired after millennia of communicating with each other, talking to each other, being able to read non-verbals and verbals, the whole picture, and now we’re reducing our communication down to very binary things. If you think about what’s a reaction in Slack or a like on Twitter? It’s literally a binary piece of information. You compare that to all the richness that comes with someone reacting to something in person. You get to see their face, you get to see them smile, or see them look inquisitive. There’s just so much more you can get from it.

In the one sense, you can think of it as more efficient using these productivity tools like Slack, but on the other hand, how much communication are you missing out on and what does that do to our mental state? You make some pretty interesting points that there’s high rates of depression and mental health among college students in the generation that grew up with smartphones. That’s starting to become really evident. There’s been some research at universities about this and just a really sharp increase in a lot of these issues that weren’t a problem before.

You take all that, bundle that all up, and I start thinking about how are we architecting companies? How are we building teams? I feel like a struggle that you build a 100% remote company. How often do you really have that high fidelity communication with each other? That’s what got me thinking about that.

Rob: It’s tough. My personality is I want to go against the majority opinion. It’s like, “Hey, everyone’s raising venture capital.” “Cool. I’m going to go start one without venture capital,” and that’s going to be a bad thing that I talk about. Or, “Hey, all these Fortune 1000 companies or even venture capitalists want you to be located in one place.” “Cool. I’m going to go start a remote company.” That was what you do and it’s a natural thing that I want to do.

In addition, we have the Remote book by DHH and Jason Fried. It’s definitely a thing and we know tons of startups, especially more in the non-venture track space that we write in, that are remote. And there are advantages to it. You can hire people in cheaper locations. You can hire the best people around the world. Everyone doesn’t have to be local, all that stuff.

I see the value of that for sure, but I’ve always said that the situation we had with Drip where half of us were in one city, and I would have loved for all of us to be in one city. We just couldn’t find the talent in Fresno. Half of us were in one city and we were in the office 2-3 days a week. That was my dream setup and I wish every job that I worked and every company I run, because now with TinySeed, there’s three of us and then with MicroConf, there’s two of us, and we’re all remote.

While I don’t think we should all need to live in the same city—it wouldn’t be practical, because (again) we wanted to hire the best people, and Einar and I are co-founders, he’s in California and I’m in Minneapolis—I would love to see them once or twice a week in person, which is what we did back when we’re doing Drip. And that’s so healthy.

Derrick: Yeah it felt pretty ideal. The nice thing was we can write the rules for how this works. There was inherent flexibility, we weren’t always on the same days every week. If something in life happens and you need to be out of the office an extra day a week, no big deal. But to have that as the default, it felt really good, like hopping in front of a white board with […] getting to work through some tough problems. I was never able to reproduce the same benefits over digital means and maybe someone still needs to solve that. Maybe we’ll get there.

Rob: Yeah, that’s the question that’s like will VR solve that at some point? Can you imagine if VR was super, super high fidelity, you and I can look around, literally feel like we are in front of a whiteboard together, and to get social cues, to where it’s uncanny “Valley” type stuff, like you see these amazing video games or even a Pixar movie. Humans look human enough that you can pick up all the stuff. If you and I can be in a room and literally look like that, maybe that would do it.

It’s a bummer. Some of the things I enjoy the most are lunches and hanging out, but I don’t know if you need that. Maybe that’s the point where it’s solved because video chat isn’t enough. Zoom is not enough because you are not going to sit on a Zoom call for 2–4 hours and shoot the breeze and get those moments that you need.

Derrick: That’s the thing. A lot of the way we are thinking about building companies and the tools that we are building for them, it’s introverted Silicon Valley-type engineers who are helping architects how we socially interact with each other. There’s an inherent bias in that. The fact that we are all about using tools for productivity, an important part of building a healthy team is actually having a relationship that has nothing to do with direct productivity. That’s more of a long-ball type of thing. If we are going to build cohesion, we’re going to be able to go to lunch together.

A friend of mine shared this anecdote, coming back after a long break and catching up on work over the holidays. His wife was relaying this to him and she said, “How was work today?” He’s like, “It wasn’t a great day, but I got to see my friends.” It was powerful. That’s something that you don’t necessarily have if you just stay, show up, and be productive. If your day is not productive, then you feel like you had a good day. If you get to see your friends, you get to see the people you built relationships with, then perhaps you’ll feel a lot more well-balanced.

Rob: Yeah. In Slack, you get the emojis and you get some fun stuff shared on a random channel. That’s fun, but it’s definitely different and it’s hard. Think about with TinySeed, we are a remote accelerator, so this is an issue. We get together three or four times a year and those times are really cool when we’re together. There’s a lot of bonding that happens being in person. That’s something that we are going to be facing and trying to overcome for sure.

In a perfect world, again, I just like seeing people more often. I’m pretty introverted, too. To your point about Silicon Valley people building tools, introverted Silicon Valley people thinking that remote work is, I won’t say infallible but it is the ideal. I don’t think it is for most of the world. I don’t think it is especially for extroverts for people who want to be around other folks. The loneliness and isolation is absolutely being shown. They are doing research on it, there’s going to be a real swing here depending on personality type. There’s a lot here that is not as clear cut as just saying, “Here are the pros of remote work and therefore we should all do it,” because it’s nowhere near that clear-cut.

Derrick: I feel like I’m starting to look at a lot of these things that I previously saw as absolutes and I’m starting to see a lot more gray in them. There are benefits, but there’s also drawbacks and you have to weigh them against each other. One cool anecdote that was from Cal Newport’s book, he talks about the Amish and he talks about how a lot of people just assume that it’s this community of people that decided arbitrarily like, “This is the peak of technology and we shall not accept anymore technology.”

That’s what I thought for many years. It just feels very arbitrary, why are horse-drawn carriages better than cars? I don’t know. It’s just a form of technology. But he talks about if you actually learn about their culture, they always evaluate technology. They are very open to it, but they also evaluate the pros and cons against their value system.

Look at cars back in the early 1900s. They try to mount for a while and then they determine that people who are driving cars tended to leave the community, go to neighboring cities, and engage with people outside the community that led to a breakdown in relationships. They just decided like, “This is not coherent with our values, so we are not going to do it.” I think there’s something really powerful to being open to looking at pros and cons and weighing them against value systems and what you are trying to do.

Rob: Yeah and that’s the thing. There are so many fewer absolutes than we would like. They talk about how it’s a sign of intelligence being able to hold two conflicting ideas in your head at once. That’s what both of the things we just talked about are, Twitter and social media conflicting there has a lot of pros and cons.

The same thing with remote work where you can get a little too gung ho in either direction. I think it’s situational and having the willingness to really think it through on a case-by-case basis, to see the realities of it, and know no matter which choice I make, neither is ideal. That’s the hard part is that neither one is ideal. They are going to come with pretty major cons and figuring out how to work around them as best as you can.

As our last topic before we wrap up today, did you read that article, Josh Pigford almost sold Biometrics for $5 million. That was the title, I almost sold Biometrics for $5 million. He published it about six weeks ago.

Derrick: Yeah, I did check it out. It’s a pretty interesting read just because you don’t generally see this level of transparency about something like almost selling your company. It was pretty fascinating to see someone outline their thought process and what was going on through that.

Rob: I know. Super gutsy to do it. I think that’s why because there can be backlash. If you sell it, obviously it goes public that you sold it, but if you don’t sell it and you talk about doing it, there’s danger there. You could have customers leave. You can have employees be upset. Kudos to him for sharing that and sharing his thought process because it sounded tough. A really tough process.

To start with, he kicked it off and he said there’s always a price. Some people get too hung up. A lot of people are, “I’m never selling my business. Why would I sell my business?” I just don’t know. I don’t think that’s the right choice for most people. If you could become independent wealthy, why would you not do this? I don’t hold it against people certainly if you are going to keep your company but don’t just say something out of principle or out of some belief that this is the right thing to do to never sell your company. Think this through.

Now it’s easy. Let’s say I was running a company. It’s doing $50 million a year and I’m pulling $5 million or $10 million a year right off the top, which is totally easy to do with SaaS because it’s so profitable. If you really enjoy what you are doing, then yeah selling your company for $250 million. How much is it actually going to change your lifestyle?

You can afford a jet or whatever, but if you don’t want that and you are doing what you’re doing, why would you do that? But most of us are not in that situation. If you’re running an app doing a million or $5 million a year, somewhere in there, you are not pulling that much money off typically. Typically at that stage, you are in danger of riding it over the top, the growth can die, we can have a recession, you can get killed by a competitor. There’s all these things that could happen and selling a company for a 3X, 4X, or 5X revenue multiple, which Josh was offered 3.75 revenue.

You are doing $2 million a year and you are going to sell your company for $7.5 million, that is absolutely life changing. If you are making $150,000 or $200,000 a year and suddenly you can sell it for that, life-changing in the real sense of the word. It will change your life. You will have options that you never knew you had at that point.

Derrick: A lot of this talk of like why I would want to sell the thing. I’m working on my best idea. I can’t help but think of the Basecamp guys and that was their narrative for a long time. I feel like nowadays there’s a lot more nuance coming from them, which is really refreshing. Jason Fried was at MicroConf, was it last year or the year before?

Rob: Yeah, last year in 2019.

Derrick: Yeah, talking from the stage and he has been one, much more quick to plan the fact that they early on took some money off the table enough, to where him and JJ were millionaires after a couple of years and felt like, “Okay, we’ve made a healthy amount of return of this business. Now we can write it for longer.” A lot of founders go in blind and say, “Why would I want everyone to sell my company,” and yet, what usually ends up happening is that you are not as financially rewarded upfront as you would be if you were taking your raw skill set and having a salary job.

You’re foregoing a lot of money you could be making. A lot of opportunity cost and you are messing that into your equity that you have in your company. If you do end up five years down the line, things are competitive, whatever market conditions, and now suddenly you can’t achieve profitability, you are unable to sell it when you really want to, and you find yourself not able to extract a return from all of the investment that you’ve put into it.

For Basecamp to say, “Why would we want to sell?” because you were able to take some money off the table early on. Then, he also compared now Basecamp to like, “As if I’ve won the lottery and I’m taking the payout over time as opposed to a lump sum.” That totally makes sense.

Rob: Yup. The odds of them going to a business or something is infinitesimal and they get to work. They love their jobs, they have built a great team, and they get to build whatever they want. They’re building Basecamp version three, already built that. Jason Fried was talking a couple of weeks ago on Twitter, like they’re launching two more things this year. They really are a kid in a candy store.

If I were them, I wouldn’t sell, either, but I wouldn’t tell other people. I know they don’t tell other people not to, that’s not something. But I do think that people hear that and then take it upon themselves to think, “Well, I respect Jason Fried and […], I want to be like them, so I’m not going to sell my company either.” I don’t think that’s smart. I think you should evaluate.

Again, if I were Jason Fried, I would not sell Basecamp either because that sounds amazingly fun, but if you’re not in that situation, where you’re tens of millions a year in net profit is what he said, up from the market […], if you’re not in that situation and maybe you don’t enjoy your job, maybe you’re in a really competitive space, and you think that you could flat line.” Once your growth flat lines, your sales multiple plummets. There’s a really good time to sell and if you ride it over the top, suddenly you’re selling for 1X revenue or less. If you’re doubling every year, you’re selling for 4X or 5X revenue, again, it can be a life-changing amount of money or not.

I’m not encouraging people to sell. I think you should do what you want to do, but just really think things through. Back to that whole article we were talking about where Josh basically says, “Hey, there’s always a price. I wasn’t really that open to it,” but he got an offer for $4.95 million and it was like, “Wow, that would change my life.” Then he talks about just how it was a dead end and the buyers had claimed they had the money, but in actual hell, they got him under LOI (letter of intent), they went out and tried to raise money from investors, it was pretty dang shady. It was not cool. That must have been very, very hard.

Derrick: I can only imagine if that had been the case with our Drip story, because I just know how much stress we were under, you especially because you are really bearing the brunt of it, how long the process was, the due diligence stuff, just even getting to LOI. I’m glad that it moves a bit faster, like things didn’t drag out a year, and then Josh discovered this.

I guess on that sense it’s good that it didn’t go on too long, but even for as long as it did, I can only imagine how much you build up all this anticipation. You start to think, “Well, this is looking like it’s going to happen, they seemed very serious about it. Everything I’m hearing from them seems good.” It’s really hard to shift your mind into the gear of like, “I’m about to have a life-changing exit,” and then for that to be torn away is really a mental struggle.

Rob: Yeah. He said, “We’d spent nearly $20,000 on legal fees, months of time gathering all the docs, and they just disappeared. It was crushing. I was and still am furious with them. They wasted an epic amount of our time and money and then crawled into a new hole when they realized they couldn’t do the deal.” Crushing is an understatement, I would have probably crawled into a hole for weeks because your momentum is gone.

It’s one of those really hard decisions to make, but once you make it, you get a sense of peace about it and then that’s all you want. I remember almost hanging on to it too much because you don’t know if the deal is going to go through until it’s all signed. A month before we were selling Drip, it was like, “I’m so ready to sell this company. But I can’t say that out loud, because then if it doesn’t happen, I’ll be crushed.” I definitely feel his pain.

Derrick: Yeah, it’s tough. I don’t know how you could combat that. You have to enter the process, you have to trust what people are telling you initially. You had counsel, you had advisors and stuff, so I wonder how can you avoid that from happening or can you?

Rob: Yeah. I have no idea. I certainly did not and do not believe that I personally could. You would have to be someone of real fortitude to do it. I do like he links over to another article, where he says, “Five things I learned failing to sell my company,” and one of the things he says is avoid needing to sell. This is something a lot of people forget. If you need to sell, if you’re a desperate seller, you will have terms that are not as good.

Always having the abilities to, “Hey, we are growing, we are profitable. I don’t need to sell.” Those three sentiments will get you the best price, that plus getting a lot of different offers. That puts you in the driver’s seat. It’s the same thing with raising funding. Unfortunately, so many people go out to raise funding when they really, really need funding to do anything and nobody wants to fund those companies. They want to fund the companies that don’t need the funding as paradoxical as that sounds.

Derrick: Even on a small scale. When I sold Codetree, this is happening about around the same time that the Drip sale is going through. I was so focused on the Drip stuff that was going on and this was a side app that wasn’t really growing much, but was still just a nice side income for me. I decided it was time to not have to worry about that anymore, but even just having that, going into that with the mindset of like, “I want to sell this thing because it seems like the right time to do that, but I don’t have to,” it could just keep running on the side for a while and no big deal.

Even just going into the negotiation with that attitude. The seller then later on wrote a blog post about how they felt, like they were at a disadvantaged position because they could come in and say, “No, we really want $20,000 off.” My broker was like, “No, we don’t need to do that.” I’m like, “Cool, then tell them no.” Of course, I’m not going to do that, and then ultimately, I think, trying to keep that mindset of like, “If this doesn’t go through, no big deal. I don’t have to do this.” It helps.

Rob: Yeah, having your backs to the walls. Never good, whether you’re selling a car, selling a house. If you’re in a big hurry, you just get the worst deal. Kudos to Josh for that and for sharing. These are helpful things because (again) so many people don’t talk about it when deals fall through like this because it could have negative repercussions, but that’s something that I do love about our community, is that people are often willing to share experiences to help others avoid the mistakes they’ve made.

As we say in the intro, whether it’s to avoid the mistakes or just to understand, if I get into that situation, what will I do? What is this really like? That’s the other thing. If you have not heard of these stories, if you haven’t heard Josh, you haven’t heard you and I talk about selling Drip or any (I’ll say) real startup acquisition, then all you’ve heard is that on TechCrunch, that Instagram sold for $1 billion to Facebook over a weekend, when they had seven people and not much revenue. It’s like, “Well, that’s how startup acquisitions work.” It’s like, “No, they never do. Never.” This is like one in ten years does that.

The real startup acquisitions take a long time, they’re a grind, they’re typically for a revenue multiple or a net profit multiple if you’re running a different type of business or at a smaller revenue scale. There’s just a bunch of pretty common things that are realistic. If you don’t know that and you’ve only read the popular articles about the outliers, your sale is probably not going to be an outlier. So level-setting expectations with this post that Josh wrote is (I think) good.

Derrick: A helpful piece for the community archive for sure.

Rob: Yup, indeed. Thanks, man. Thanks for coming on the show.

Derrick: Yeah. It was a blast, thanks for having me.

Rob: If folks want to keep up with you, you release an episode every week, podcast episode at the Art of Product, you and your co-host Ben Orenstein. That’s a good bootstrap for podcasts over there. Then you are at @derrickreimer on Twitter. We’ll just send people there, but that is what it is.

Derrick: Yeah. Twitter and derrickreimer.com newsletter. Sign-up there.

Rob: That’s probably the one. That’s almost what we should recommend more, derrickreimer.com. I know you’ve blogged a bit over the years. I think all of us probably wish you blogged more.

Derrick: Yeah, it’s always the thing. It’s interesting to think about trying to do more, like higher frequency, less trying to spend 10 hours writing a piece, and think of it a little bit more like Twitter. That could be an interesting thing, too.

Rob: Sounds good, man.

Derrick: Cool. Thanks.

Rob: Thanks again to Derrick for coming on the show. He is working on his new startup. It’s called StaticKit, statickit.com. If you’re working on static sites stuff or interested in that whole ecosystem, he’s building some pretty interesting tools for static site builders.

If you have a question or even a topic for the show, a news item, just something that you think is interesting that you’d like, or a guest take on, you can email it [email protected], you can attach it as an audio question, or leave us a voice mail at (888) 801-9690.

If you’re not already subscribed to the show (I’m actually surprised), head over to any podcatcher, search for “startups” and we should be in the top three or four. If you want transcripts of these episodes, head for startupsfortherestofus.com.

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We have a theme song, it’s an excerpt from the song called We’re Outta Control by MoOt. We use it under Creative Commons. Thanks for listening to this week’s episode. I’ll see you next time.

Show Notes In this episode of Startups For The Rest Of Us, Rob does a discussion show format with guest Derrick Reimer. They discuss multiple topics including the pros/cons of remote work, value vs. stress of Twitter, and more. Items mentioned in this episode: The Art of Product Podcast

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Episode 482 | The Value vs. Stress of Twitter, Pros and Cons of Remote Work, and Digital Minimalism – A Discussion Show with Derrick Reimer

Episode 482 | The Value vs. Stress of Twitter, Pros and Cons of Remote Work, and Digital Minimalism – A Discussion Show with Derrick Reimer

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Show Notes

In this episode of Startups For The Rest Of Us, Rob does a discussion show format with guest Derrick Reimer. They discuss multiple topics including the pros/cons of remote work, value vs. stress of Twitter, and more.

Items mentioned in this episode:

Transcript

Rob: Welcome to this week’s episode of Startups for the Rest of Us, I’m your host, Rob Walling. This week, I’m trying out a new episode format. It is a discussion show, so it’s a conversation between myself, my old friend Derrick Reimer, and we talk about a number of topics. We talk about the value versus the stress of Twitter and social media in general, the pros and cons of remote work. We talk about Cal Newport’s new book Digital Minimalism, and then we wind up talking about Josh Pigford’s blog post in the Baremetrics blog that’s titled, I Almost Sold Baremetrics for $5 Million.

What I like about this episode format is it’s pretty casual and we’re covering topics that I think are relevant to many of us and a lot of us are thinking about. I originally thought of structuring this in some type of news, round-table, or show where we’re talking about topics of today. We do that with a couple things, I think the ability to introduce topics that aren’t necessarily news articles or news headlines also works, and the fact that Derrick and I know each other as well as we do really helps with just the rapport in the conversation, it’s not stiff or stilted. I hope you feel the same way about that.

If you don’t recall who Derrick Reimer is, he and I have known each other for years. We met back when I lived in Fresno. He was a young kid who was participating in a startup competition that I was the judge of. He won a couple years in a row. Then, he was thinking about starting to do some consulting work and I said, “Look, why don’t you come, write some code for HitTail?”

He wrote all the early code for Drip and later on, became retroactive co-founder of Drip. So, he and I have known each other. We’ve worked together. He’s been on the show several times talking about starting an app on the side called Codetree that he sold for $128,000 a few years back. Then, he moved to Minneapolis when we sold Drip. So, he and I now live six or seven minutes apart.

We see each other once a month or so and it’s always a good time to hang out and chat. So, I wanted to mix up the format just a little bit and do something that’s not an interview, not keeping up with Mike Taber, not just question and answer, but actually just bringing topics to the table that (I think) might be of interest to you. So let me know what you think.

You can tweet me @robwalling, you can email [email protected], or you can post a comment on this episode, episode 482 and just say, “Yeah, I enjoyed the mix-up of the show format and the fresh ideas in a conversation.” Or you can say, “Got five minutes in, didn’t hold my attention, and I was out.”

That helps me think about and consider maybe we had one of these to the line up every couple months. It doesn’t always have to be Derrick. I could bring on different co-hosts and folks to weigh in, so we have different perspectives.

And with that, let’s dive into the show. Derrick Reimer, thank you for joining me on the show.

Derrick: Hey, thanks for having me again.

Rob: Yeah, I think this is going to be a fun one today, just talking through some interesting topics. I had a few in mind over the past couple weeks, some things have come up where I’m like, “You know, I really want to discuss these with someone,” and I don’t know who to bring on the show to do it. Then, you and I were having dinner last night and we got on some really good conversation topics, so I figured we could jump on the mic and record a few of these.

Derrick: Yeah, we both are a couple of old-fashioned, but we probably should have brought our mics, to be honest.

Rob: I know, I agree. One thing you kicked off with was just talking about something on a lot of our minds, social media in general but Twitter specifically, because that’s big in our circles and the value versus the stress of it.

Derrick: Yeah, for me, my personal journey with it has been the last remaining piece of social media that I really use these days. I’ve given up Facebook, technically, I have an Instagram account but I don’t really use it, and I’m not really hooked on checking those things. But Twitter is a tricky one and I think it is for a lot of people in the text space because it’s where a lot of our industry news is coming from, where a lot of the camaraderie among software developers and start up people is happening. There’s not really (to my knowledge) another platform like it.

There are niche communities in Slack and things like that, but Twitter is the public square for that. It’s been a struggle (I think) for the last few years. I’ve been saying things like, “Yeah, I’ve given up all social media,” but I can’t on Twitter because that’s where work stuff happens. I just become so aware that, for me (and I think it varies from person to person how they deal with it) it’s like Twitter is always the default. I hit a rough spot on something I’m working on and what’s my first inclination is to go check Twitter, go get a dopamine hit, and I’m over it at this point.

Rob: Do you still have it on your phone?

Derrick: I took it off my phone (which has been good) and I actually did another trick where I put all my apps in one folder, so now I just have like a blank desktop screen essentially on my phone. I keep email on there, for example, because I just want to be able to do email mobily, but I don’t want it to be something I compulsively check if I have a break during my day. That’s been a good way to deter that.

Rob: When you put them all in one folder, was it just to make them hard to find?

Derrick: Yeah. It’s like I had muscle memory built where I knew where to tap my thumb subconsciously to open email and now it adds friction to that.

Rob: Yeah, I do that. I’m compulsive with email and Slack, specifically the TinySeed Slack. I don’t do it with Twitter or Facebook and I’ve never really had that problem, but I definitely can see getting into that habit and I try to avoid it. I think the thing with Twitter is I check Twitter a couple times a week and (for me) that’s a pretty healthy balance.

I might post to it more often. A few months ago, I was posting every day and I fell off that wagon. I’d like to do that again, but checking it all the time is not healthy. That’s what you were saying last night. It doesn’t feel good because you’re going for the dopamine hit of someone replying to you, a conversation, likes, or retweets?

Derrick: Yeah. I don’t know if I’m feeling particularly just unsure about something I’m working on or just my business in general, all these existential mini crises we have all the time into building startups. That’s an easy place to turn where I’m going to share some piece of work that I’m doing and it’s going to have some marketing benefit. It’s going to increase awareness about what I’m doing and hope people will spread it around. Maybe someone new will discover my app.

I can justify that there’s some benefit to it, so then I’ll share something and it feels good to get people liking, engaging, and commenting, but it’s pretty hollow and it’s a veneer that’s providing a short-term benefit, but I don’t think it’s the healthiest way to engage with that. Then, when you don’t get the response that you were hoping for, then you feel bad. It’s like, “Why am I doing this in the first place?” This is not a solid way to go.

Rob: Yeah and the struggle is that it’s not just the social aspect. I know you got off Facebook years ago and I think it was easier to justify because there was no work component. There was no way Facebook was going to help you build or grow a company, whereas Twitter might (and I want to put it in italics and bold). We know folks who have personal brands on Twitter, social media empires. I don’t know of anyone who has built a SaaS app and the marketing was all Twitter.

I view Twitter as you can get a small audience and you can get those first few customers or you can get the first people who are going to give you good feedback. It’s part of just building that relationship with people, but realistically, once you have any type of product market fit and you’re actually trying to build a scalable marketing approach, Twitter is not it. If you’re looking at it purely as a utilitarian thing, there’s definitely times and places to do it and be on it, but with all the negatives, it does feel hard to justify to me.

Derrick: Yeah. You can definitely come into it with the strategy of like, “I know the best times a day to post where I’m going to maximize engagement,” I figured out some of those things for myself. Some of it, you can apply methodically. Other parts of it are a lot of the benefits that have come to me has been serendipitous and that’s where I have a little bit of fear that if I were to give this thing up, I don’t know what I’m giving up entirely. I don’t know what random encounters or interactions I might be missing out on and I think that’s for the fear that comes. This could be the thing that catapults my nascent start up into a different realm, if I were just there engaging in the community on Twitter. In reality, I’ve become pretty convinced that’s probably not a very good reason to accept all the negatives.

Rob: I keep doing it, yeah. You make a good point because it isn’t just finding customers, but what about that one relationship you build with the business development where someone says, “Let’s integrate. We’re a web host so let’s integrate.” You’re like a kid and you’re like. “Yeah, that could move the needle.” That’s what you’re saying, it’s like, “Do I want to miss out on those? What’s the potential?” and that’s where they get you. That’s where […], is it has all these negatives, and yet we still want to consider doing it.

Derrick: Yeah. If I think back, I’m frustrated by how many Twitter DMs have actually led to productive business meetings or chats and it’s like, “Why does that have to come to a Twitter DM?” because that’s just reinforcing that I struggle to actually get off of there, because people would have to find my email address or something.

Rob: Yeah, and it does seem like Twitter has declined pretty substantially in popularity. That’s been my sense and just the number of people on it. Obviously, the tech community, the Silicon Valley, plus MicroConf and just startups in general are on there. And the press. It does seem like there’s a lot of journalists, not just like TechCrunch but like Wall Street Journal, big-named journalists are on there and there’s certainly still some value. Remember Arab Spring, there is communication there, there is value to the world that that stuff is able to get out.

It really does seem like people have moved on to Instagram and what are the others? Snapchat, although I guess they’re on […] now. You mentioned TikTok last night and I was like, “Yeah, I’ve heard of that. No idea what it does.” I’m so old dude.

Derrick: Yeah, we’re getting old.

Rob: What are you going to do? If you listen like I was asked on stage, “Are you bullish or bearish on Twitter?” and I was like, “Bearish.” This was last year. I was on my 2016 or 2017 prediction. This is when Twitter was still going strong. There are going to be too many trolls. People are just going to move on, and the nature of social media is that it’s pretty rare for a platform to actually stick around for that long. People just move from one to the next.

I don’t love Twitter and struggle with a lot of stuff on it, although I am still on it. I think there are benefits, especially now with the MicroConf stuff, the podcast and all that. I’m not going to quit Twitter anytime soon, even though I do have some struggles with it. But I’m curious, you’re seriously thinking about getting off of it or quitting it basically. Is that right?

Derrick: Yeah. I’m getting dangerously close to that. For me, my big fear is how am I going to keep a similar type of connection to people in the industry who I’m not so close with? I’m texting or private messaging all the time. How am I going to maintain that? How am I going to still get up-to-the-minute news about stuff? I see a lot of things in the React community, for example. New things emerging or new releases of things and a lot of that I’m getting through Twitter right now.

It’s important for me to know about that because I’m building tooling in that ecosystem. I don’t always want to be the guy who’s a month behind late to the party knowing about stuff, but a lot of these you can think of it as, is that really so bad if you’re a few more days delayed in finding stuff out? Probably not. In that case, for me, I’m trying to look for what are some digests newsletters for example that are in the industry? I’m already a part of some of these.

The Changelog is one of them. They send a weekly summary of what’s happening in the open source world. There’s one for the Jamstack community, too, and I’m on that one. I get a lot of good info from that. These are probably good enough for the news part. For me it’s like, how am I going to keep connection to my “audience?”

The podcast is a good one side of a way to do that. Again, returning back to the fundamentals. My email list, my newsletter list, how can I invest there? The time I maybe would have spent on Twitter carve out some of that time to try to invest that in the email list. Those are some of the ways I’m thinking about it.

Rob: Those are good alternatives. I was going to propose that mailing list and a couple of those other things. The bottom line is, yes, you may miss out on some things, but take the time and invest in stuff. I would say, investment in stuff that is less ephemeral.

That’s what bothers me about social media. It’s just here today and gone tomorrow. It’s not a blog post. It’s not even a podcast episode people go back and listen to. It’s not a book that people will read for years.

With your email list, if you can invest in an email list and repost that on the blog, because email is a bit ephemeral even though it’s a pretty deep connection. That’s when I’ve been off because the entire time we were doing Drip, I was not on Twitter at all. It was the right choice. I didn’t quit it for life though, I came back. Obviously, I’m a little more active on it now, but I do hear what you’re saying. If you tried it for two weeks or 30 days, or something, my guess is you’re not going to want to go back.

Derrick: That’s a good segue, because I’ve been reading a book, Cal Newport’s latest book called Digital Minimalism, which is like Deep Work. A lot of people know about that one. It’s Deep Work principles applied to more of your personal life and how you interface with things like social media.

One of the things you he talks about in there and recommends doing is like a digital declutter. That’s a term he coined for. Basically, taking 30 days and eliminating the things that are causing you problems like social media, that are pulling at your brain and causing it to be distracted, and all the negative side effects that come with it.

Think of this as you’re eliminating all this stuff and then at the end of it, be really deliberate about what you add back in. Don’t think of this as just a temporary detox where you remove all and then at the end, I’ve reset and now I can go back to the way I was doing things.

I’m in the midst of one of those right now. I’m not deleting my Twitter account, but I’m not checking it. I started this off going on a trip where I had very little internet access. That forced me to step away from it and even coming back from that after five days, I already had much less desire to go check it. I do feel a certain amount of Zen just from that. That’s becoming a reinforcing thing already for me. The more time I spend off of it, the less drive I have to go and check it all the time. That’s been healthy, I think.

Rob: That’s cool. How long have you been doing that?

Derrick: Since really the turn of the New Year, so we’re about two weeks in. It’s been good.

Rob: It’s a trip when you change habits like that. How scary, you don’t know if it’s going to work, and then you get in a few days and suddenly you feel this clarity, and then trying to come back to it. I’ve done this with drinking alcohol, social media, or just anything. I enjoy it. There are pros and cons to each of those things. It’s like if I have an old fashion, I feel better. In the short-term, it’s a good thing. Much like checking Twitter. Then in the long-term, I question the value of doing that and going off of those things. Coming back, you just realize how much it impacts your day-to-day or just how it actually affects your life.

Derrick: Yeah.

Rob: And you were saying last night because I haven’t read Digital Minimalism, but you piggy-backed on it and it got you thinking about remote work.

Derrick: Yeah. A thing that he spends a fair amount of time talking about in the book is what does it mean to have relationships and have real connection with other human beings. This is heavily tied in with the era of social media there of text messaging. The fact that we rarely call each other anymore. We are always texting. There’s all these norms that were established in society and a lot of them were around lower fidelity means of communication.

He makes a good point. This is based on some research he pulls into his thesis. We’re wired after millennia of communicating with each other, talking to each other, being able to read non-verbals and verbals, the whole picture, and now we’re reducing our communication down to very binary things. If you think about what’s a reaction in Slack or a like on Twitter? It’s literally a binary piece of information. You compare that to all the richness that comes with someone reacting to something in person. You get to see their face, you get to see them smile, or see them look inquisitive. There’s just so much more you can get from it.

In the one sense, you can think of it as more efficient using these productivity tools like Slack, but on the other hand, how much communication are you missing out on and what does that do to our mental state? You make some pretty interesting points that there’s high rates of depression and mental health among college students in the generation that grew up with smartphones. That’s starting to become really evident. There’s been some research at universities about this and just a really sharp increase in a lot of these issues that weren’t a problem before.

You take all that, bundle that all up, and I start thinking about how are we architecting companies? How are we building teams? I feel like a struggle that you build a 100% remote company. How often do you really have that high fidelity communication with each other? That’s what got me thinking about that.

Rob: It’s tough. My personality is I want to go against the majority opinion. It’s like, “Hey, everyone’s raising venture capital.” “Cool. I’m going to go start one without venture capital,” and that’s going to be a bad thing that I talk about. Or, “Hey, all these Fortune 1000 companies or even venture capitalists want you to be located in one place.” “Cool. I’m going to go start a remote company.” That was what you do and it’s a natural thing that I want to do.

In addition, we have the Remote book by DHH and Jason Fried. It’s definitely a thing and we know tons of startups, especially more in the non-venture track space that we write in, that are remote. And there are advantages to it. You can hire people in cheaper locations. You can hire the best people around the world. Everyone doesn’t have to be local, all that stuff.

I see the value of that for sure, but I’ve always said that the situation we had with Drip where half of us were in one city, and I would have loved for all of us to be in one city. We just couldn’t find the talent in Fresno. Half of us were in one city and we were in the office 2-3 days a week. That was my dream setup and I wish every job that I worked and every company I run, because now with TinySeed, there’s three of us and then with MicroConf, there’s two of us, and we’re all remote.

While I don’t think we should all need to live in the same city—it wouldn’t be practical, because (again) we wanted to hire the best people, and Einar and I are co-founders, he’s in California and I’m in Minneapolis—I would love to see them once or twice a week in person, which is what we did back when we’re doing Drip. And that’s so healthy.

Derrick: Yeah it felt pretty ideal. The nice thing was we can write the rules for how this works. There was inherent flexibility, we weren’t always on the same days every week. If something in life happens and you need to be out of the office an extra day a week, no big deal. But to have that as the default, it felt really good, like hopping in front of a white board with […] getting to work through some tough problems. I was never able to reproduce the same benefits over digital means and maybe someone still needs to solve that. Maybe we’ll get there.

Rob: Yeah, that’s the question that’s like will VR solve that at some point? Can you imagine if VR was super, super high fidelity, you and I can look around, literally feel like we are in front of a whiteboard together, and to get social cues, to where it’s uncanny “Valley” type stuff, like you see these amazing video games or even a Pixar movie. Humans look human enough that you can pick up all the stuff. If you and I can be in a room and literally look like that, maybe that would do it.

It’s a bummer. Some of the things I enjoy the most are lunches and hanging out, but I don’t know if you need that. Maybe that’s the point where it’s solved because video chat isn’t enough. Zoom is not enough because you are not going to sit on a Zoom call for 2–4 hours and shoot the breeze and get those moments that you need.

Derrick: That’s the thing. A lot of the way we are thinking about building companies and the tools that we are building for them, it’s introverted Silicon Valley-type engineers who are helping architects how we socially interact with each other. There’s an inherent bias in that. The fact that we are all about using tools for productivity, an important part of building a healthy team is actually having a relationship that has nothing to do with direct productivity. That’s more of a long-ball type of thing. If we are going to build cohesion, we’re going to be able to go to lunch together.

A friend of mine shared this anecdote, coming back after a long break and catching up on work over the holidays. His wife was relaying this to him and she said, “How was work today?” He’s like, “It wasn’t a great day, but I got to see my friends.” It was powerful. That’s something that you don’t necessarily have if you just stay, show up, and be productive. If your day is not productive, then you feel like you had a good day. If you get to see your friends, you get to see the people you built relationships with, then perhaps you’ll feel a lot more well-balanced.

Rob: Yeah. In Slack, you get the emojis and you get some fun stuff shared on a random channel. That’s fun, but it’s definitely different and it’s hard. Think about with TinySeed, we are a remote accelerator, so this is an issue. We get together three or four times a year and those times are really cool when we’re together. There’s a lot of bonding that happens being in person. That’s something that we are going to be facing and trying to overcome for sure.

In a perfect world, again, I just like seeing people more often. I’m pretty introverted, too. To your point about Silicon Valley people building tools, introverted Silicon Valley people thinking that remote work is, I won’t say infallible but it is the ideal. I don’t think it is for most of the world. I don’t think it is especially for extroverts for people who want to be around other folks. The loneliness and isolation is absolutely being shown. They are doing research on it, there’s going to be a real swing here depending on personality type. There’s a lot here that is not as clear cut as just saying, “Here are the pros of remote work and therefore we should all do it,” because it’s nowhere near that clear-cut.

Derrick: I feel like I’m starting to look at a lot of these things that I previously saw as absolutes and I’m starting to see a lot more gray in them. There are benefits, but there’s also drawbacks and you have to weigh them against each other. One cool anecdote that was from Cal Newport’s book, he talks about the Amish and he talks about how a lot of people just assume that it’s this community of people that decided arbitrarily like, “This is the peak of technology and we shall not accept anymore technology.”

That’s what I thought for many years. It just feels very arbitrary, why are horse-drawn carriages better than cars? I don’t know. It’s just a form of technology. But he talks about if you actually learn about their culture, they always evaluate technology. They are very open to it, but they also evaluate the pros and cons against their value system.

Look at cars back in the early 1900s. They try to mount for a while and then they determine that people who are driving cars tended to leave the community, go to neighboring cities, and engage with people outside the community that led to a breakdown in relationships. They just decided like, “This is not coherent with our values, so we are not going to do it.” I think there’s something really powerful to being open to looking at pros and cons and weighing them against value systems and what you are trying to do.

Rob: Yeah and that’s the thing. There are so many fewer absolutes than we would like. They talk about how it’s a sign of intelligence being able to hold two conflicting ideas in your head at once. That’s what both of the things we just talked about are, Twitter and social media conflicting there has a lot of pros and cons.

The same thing with remote work where you can get a little too gung ho in either direction. I think it’s situational and having the willingness to really think it through on a case-by-case basis, to see the realities of it, and know no matter which choice I make, neither is ideal. That’s the hard part is that neither one is ideal. They are going to come with pretty major cons and figuring out how to work around them as best as you can.

As our last topic before we wrap up today, did you read that article, Josh Pigford almost sold Biometrics for $5 million. That was the title, I almost sold Biometrics for $5 million. He published it about six weeks ago.

Derrick: Yeah, I did check it out. It’s a pretty interesting read just because you don’t generally see this level of transparency about something like almost selling your company. It was pretty fascinating to see someone outline their thought process and what was going on through that.

Rob: I know. Super gutsy to do it. I think that’s why because there can be backlash. If you sell it, obviously it goes public that you sold it, but if you don’t sell it and you talk about doing it, there’s danger there. You could have customers leave. You can have employees be upset. Kudos to him for sharing that and sharing his thought process because it sounded tough. A really tough process.

To start with, he kicked it off and he said there’s always a price. Some people get too hung up. A lot of people are, “I’m never selling my business. Why would I sell my business?” I just don’t know. I don’t think that’s the right choice for most people. If you could become independent wealthy, why would you not do this? I don’t hold it against people certainly if you are going to keep your company but don’t just say something out of principle or out of some belief that this is the right thing to do to never sell your company. Think this through.

Now it’s easy. Let’s say I was running a company. It’s doing $50 million a year and I’m pulling $5 million or $10 million a year right off the top, which is totally easy to do with SaaS because it’s so profitable. If you really enjoy what you are doing, then yeah selling your company for $250 million. How much is it actually going to change your lifestyle?

You can afford a jet or whatever, but if you don’t want that and you are doing what you’re doing, why would you do that? But most of us are not in that situation. If you’re running an app doing a million or $5 million a year, somewhere in there, you are not pulling that much money off typically. Typically at that stage, you are in danger of riding it over the top, the growth can die, we can have a recession, you can get killed by a competitor. There’s all these things that could happen and selling a company for a 3X, 4X, or 5X revenue multiple, which Josh was offered 3.75 revenue.

You are doing $2 million a year and you are going to sell your company for $7.5 million, that is absolutely life changing. If you are making $150,000 or $200,000 a year and suddenly you can sell it for that, life-changing in the real sense of the word. It will change your life. You will have options that you never knew you had at that point.

Derrick: A lot of this talk of like why I would want to sell the thing. I’m working on my best idea. I can’t help but think of the Basecamp guys and that was their narrative for a long time. I feel like nowadays there’s a lot more nuance coming from them, which is really refreshing. Jason Fried was at MicroConf, was it last year or the year before?

Rob: Yeah, last year in 2019.

Derrick: Yeah, talking from the stage and he has been one, much more quick to plan the fact that they early on took some money off the table enough, to where him and JJ were millionaires after a couple of years and felt like, “Okay, we’ve made a healthy amount of return of this business. Now we can write it for longer.” A lot of founders go in blind and say, “Why would I want everyone to sell my company,” and yet, what usually ends up happening is that you are not as financially rewarded upfront as you would be if you were taking your raw skill set and having a salary job.

You’re foregoing a lot of money you could be making. A lot of opportunity cost and you are messing that into your equity that you have in your company. If you do end up five years down the line, things are competitive, whatever market conditions, and now suddenly you can’t achieve profitability, you are unable to sell it when you really want to, and you find yourself not able to extract a return from all of the investment that you’ve put into it.

For Basecamp to say, “Why would we want to sell?” because you were able to take some money off the table early on. Then, he also compared now Basecamp to like, “As if I’ve won the lottery and I’m taking the payout over time as opposed to a lump sum.” That totally makes sense.

Rob: Yup. The odds of them going to a business or something is infinitesimal and they get to work. They love their jobs, they have built a great team, and they get to build whatever they want. They’re building Basecamp version three, already built that. Jason Fried was talking a couple of weeks ago on Twitter, like they’re launching two more things this year. They really are a kid in a candy store.

If I were them, I wouldn’t sell, either, but I wouldn’t tell other people. I know they don’t tell other people not to, that’s not something. But I do think that people hear that and then take it upon themselves to think, “Well, I respect Jason Fried and […], I want to be like them, so I’m not going to sell my company either.” I don’t think that’s smart. I think you should evaluate.

Again, if I were Jason Fried, I would not sell Basecamp either because that sounds amazingly fun, but if you’re not in that situation, where you’re tens of millions a year in net profit is what he said, up from the market […], if you’re not in that situation and maybe you don’t enjoy your job, maybe you’re in a really competitive space, and you think that you could flat line.” Once your growth flat lines, your sales multiple plummets. There’s a really good time to sell and if you ride it over the top, suddenly you’re selling for 1X revenue or less. If you’re doubling every year, you’re selling for 4X or 5X revenue, again, it can be a life-changing amount of money or not.

I’m not encouraging people to sell. I think you should do what you want to do, but just really think things through. Back to that whole article we were talking about where Josh basically says, “Hey, there’s always a price. I wasn’t really that open to it,” but he got an offer for $4.95 million and it was like, “Wow, that would change my life.” Then he talks about just how it was a dead end and the buyers had claimed they had the money, but in actual hell, they got him under LOI (letter of intent), they went out and tried to raise money from investors, it was pretty dang shady. It was not cool. That must have been very, very hard.

Derrick: I can only imagine if that had been the case with our Drip story, because I just know how much stress we were under, you especially because you are really bearing the brunt of it, how long the process was, the due diligence stuff, just even getting to LOI. I’m glad that it moves a bit faster, like things didn’t drag out a year, and then Josh discovered this.

I guess on that sense it’s good that it didn’t go on too long, but even for as long as it did, I can only imagine how much you build up all this anticipation. You start to think, “Well, this is looking like it’s going to happen, they seemed very serious about it. Everything I’m hearing from them seems good.” It’s really hard to shift your mind into the gear of like, “I’m about to have a life-changing exit,” and then for that to be torn away is really a mental struggle.

Rob: Yeah. He said, “We’d spent nearly $20,000 on legal fees, months of time gathering all the docs, and they just disappeared. It was crushing. I was and still am furious with them. They wasted an epic amount of our time and money and then crawled into a new hole when they realized they couldn’t do the deal.” Crushing is an understatement, I would have probably crawled into a hole for weeks because your momentum is gone.

It’s one of those really hard decisions to make, but once you make it, you get a sense of peace about it and then that’s all you want. I remember almost hanging on to it too much because you don’t know if the deal is going to go through until it’s all signed. A month before we were selling Drip, it was like, “I’m so ready to sell this company. But I can’t say that out loud, because then if it doesn’t happen, I’ll be crushed.” I definitely feel his pain.

Derrick: Yeah, it’s tough. I don’t know how you could combat that. You have to enter the process, you have to trust what people are telling you initially. You had counsel, you had advisors and stuff, so I wonder how can you avoid that from happening or can you?

Rob: Yeah. I have no idea. I certainly did not and do not believe that I personally could. You would have to be someone of real fortitude to do it. I do like he links over to another article, where he says, “Five things I learned failing to sell my company,” and one of the things he says is avoid needing to sell. This is something a lot of people forget. If you need to sell, if you’re a desperate seller, you will have terms that are not as good.

Always having the abilities to, “Hey, we are growing, we are profitable. I don’t need to sell.” Those three sentiments will get you the best price, that plus getting a lot of different offers. That puts you in the driver’s seat. It’s the same thing with raising funding. Unfortunately, so many people go out to raise funding when they really, really need funding to do anything and nobody wants to fund those companies. They want to fund the companies that don’t need the funding as paradoxical as that sounds.

Derrick: Even on a small scale. When I sold Codetree, this is happening about around the same time that the Drip sale is going through. I was so focused on the Drip stuff that was going on and this was a side app that wasn’t really growing much, but was still just a nice side income for me. I decided it was time to not have to worry about that anymore, but even just having that, going into that with the mindset of like, “I want to sell this thing because it seems like the right time to do that, but I don’t have to,” it could just keep running on the side for a while and no big deal.

Even just going into the negotiation with that attitude. The seller then later on wrote a blog post about how they felt, like they were at a disadvantaged position because they could come in and say, “No, we really want $20,000 off.” My broker was like, “No, we don’t need to do that.” I’m like, “Cool, then tell them no.” Of course, I’m not going to do that, and then ultimately, I think, trying to keep that mindset of like, “If this doesn’t go through, no big deal. I don’t have to do this.” It helps.

Rob: Yeah, having your backs to the walls. Never good, whether you’re selling a car, selling a house. If you’re in a big hurry, you just get the worst deal. Kudos to Josh for that and for sharing. These are helpful things because (again) so many people don’t talk about it when deals fall through like this because it could have negative repercussions, but that’s something that I do love about our community, is that people are often willing to share experiences to help others avoid the mistakes they’ve made.

As we say in the intro, whether it’s to avoid the mistakes or just to understand, if I get into that situation, what will I do? What is this really like? That’s the other thing. If you have not heard of these stories, if you haven’t heard Josh, you haven’t heard you and I talk about selling Drip or any (I’ll say) real startup acquisition, then all you’ve heard is that on TechCrunch, that Instagram sold for $1 billion to Facebook over a weekend, when they had seven people and not much revenue. It’s like, “Well, that’s how startup acquisitions work.” It’s like, “No, they never do. Never.” This is like one in ten years does that.

The real startup acquisitions take a long time, they’re a grind, they’re typically for a revenue multiple or a net profit multiple if you’re running a different type of business or at a smaller revenue scale. There’s just a bunch of pretty common things that are realistic. If you don’t know that and you’ve only read the popular articles about the outliers, your sale is probably not going to be an outlier. So level-setting expectations with this post that Josh wrote is (I think) good.

Derrick: A helpful piece for the community archive for sure.

Rob: Yup, indeed. Thanks, man. Thanks for coming on the show.

Derrick: Yeah. It was a blast, thanks for having me.

Rob: If folks want to keep up with you, you release an episode every week, podcast episode at the Art of Product, you and your co-host Ben Orenstein. That’s a good bootstrap for podcasts over there. Then you are at @derrickreimer on Twitter. We’ll just send people there, but that is what it is.

Derrick: Yeah. Twitter and derrickreimer.com newsletter. Sign-up there.

Rob: That’s probably the one. That’s almost what we should recommend more, derrickreimer.com. I know you’ve blogged a bit over the years. I think all of us probably wish you blogged more.

Derrick: Yeah, it’s always the thing. It’s interesting to think about trying to do more, like higher frequency, less trying to spend 10 hours writing a piece, and think of it a little bit more like Twitter. That could be an interesting thing, too.

Rob: Sounds good, man.

Derrick: Cool. Thanks.

Rob: Thanks again to Derrick for coming on the show. He is working on his new startup. It’s called StaticKit, statickit.com. If you’re working on static sites stuff or interested in that whole ecosystem, he’s building some pretty interesting tools for static site builders.

If you have a question or even a topic for the show, a news item, just something that you think is interesting that you’d like, or a guest take on, you can email it [email protected], you can attach it as an audio question, or leave us a voice mail at (888) 801-9690.

If you’re not already subscribed to the show (I’m actually surprised), head over to any podcatcher, search for “startups” and we should be in the top three or four. If you want transcripts of these episodes, head for startupsfortherestofus.com.

If you have not yet left us a five star review in your podcatcher, please do so. It would mean a lot to me and it helps the show rank higher, helps us get more listeners, helps me stay motivated to keep producing the show week after week.

We have a theme song, it’s an excerpt from the song called We’re Outta Control by MoOt. We use it under Creative Commons. Thanks for listening to this week’s episode. I’ll see you next time.

Show Notes In this episode of Startups For The Rest Of Us, Rob does a discussion show format with guest Derrick Reimer. They discuss multiple topics including the pros/cons of remote work, value vs. stress of Twitter, and more. Items mentioned in this episode: The Art of Product Podcast

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I Have Never Been So Happy to Give PayPal $30/month | Rob Walling - Serial Entrepreneur

Photo by The Consumerist

The process of opening a credit card merchant account is like getting an enema with a rusty potato peeler. It’s something you don’t really want in the first place, and the longer it drags on the more you regret doing it.

This was the situation I found myself starting almost a year ago today (applying for a merchant account, not getting an enema).

Even though I’ve coded more than a dozen custom credit card integrations, have accepted payments online for 10+ years, and sell invoicing software that supports half a dozen credit card gateways, I had never been through the application process myself.

I’ve used PayPal, Amazon Payments, Google Checkout, and the PayPal merchant account/gateway equivalent (Website Payments Pro) with varying levels of appreciation, but I’ve always had one or two complaints. But no more!

For I have stared into the countenance of evil and lived to speak the tale…

A Long Time Ago (In Internet Years) About a year ago I acquired a product called WeddingToolbox . It’s a SaaS app that allows an engaged couple to plan and share their wedding online.

The site was developed using Authorize.Net as the credit card gateway. “No problem,” I thought, “I’ll just pay the original developer to convert it to PayPal Website Payments Pro (WPP). A couple hundred bucks and we’re done.”

Except it wasn’t a couple hundred. The quote from the original developer was $900. Urgh.

I would have taken a crack at it myself, but the site is written in ColdFusion, and I haven’t touched CF since 2000. That learning curve wasn’t going to be worth it.

Normally I wouldn’t have thought twice about this decision from a monetary perspective, but the site was not profitable when I bought it. In fact, it was losing nearly $400 a month due to a long-term contract the previous owned had signed with a hosting company.

So it was a cash shark to begin with and I wasn’t looking forward to dumping another grand on top of what I had paid to acquire it, in addition to the monthly football I was carrying.

And when you do the math the payback is out 3 years (fees for PayPal WPP are $30/month, and Authorize.Net is around $55/month). So even though I’d be paying a bit more each month, I figured it was worth it until I could turn the site around and start making a few bucks. Then I’d invest in upgrading to a different gateway.

Application #1 If you’ve never applied for a PayPal WPP account, the process is as follows:

  1. Click a link in your PayPal account.
  2. Double check your business information is correct and submit.
  3. Wait 2-3 days for approval (I’ve never been rejected).

The application form for Authorize.Net is, simply put, painful.

It’s been a year so I don’t recall the exact amount of time it took me to fill out, but it was close to three hours. They asked for things I didn’t know you could legally ask for. They asked for proof of things I didn’t know I had. By the time I was providing them with the name and home address of my paternal ancestors I realized I might be making a mistake.

After a few hours of toil I clicked submit and then…nothing. Well, that’s not entirely true. I received an email that thanked me for submitting it that indicated billing for the gateway would start right away (but not billing for the merchant account since it had not been approved).

And billing started – I soon saw a withdrawal for the $99 setup fee and the $20 or so monthly fee for the gateway. Hooray! I couldn’t use it but I was sure paying for it.

And then…nothing. This time for real. Weeks went by and no word on my merchant account application. After 3 weeks I emailed them and no response. After 2 more weeks (and another $20 taken from my bank account), I called. And they told me my application had been denied.

“Denied?”

“Yes sir, it appears you don’t have the correct company name at the bottom of your website.” (the old owner’s company name was still there)

“Ok, I can change that. Could someone have emailed or called me about this 5 weeks ago when I submitted my application?”

I apologize for any inconvenience we may have caused you.”

So I updated the company name while we were on the phone .

“Ok, sir, this will have to go back in for approval. Expect to hear from us in a few days.”

And then…nothing. No call, no email. Weeks passed and I called again.

“Sir, it appears your request has been denied.”

“Again, could someone have called me about this?”

“I apologize for any inconvenience we may have caused you. Your request has been denied because we don’t support gift certificates, and you allow people to buy gift certificates on your site.”

I was starting to get a little miffed at this point.

But all was not lost! The rep recommended a company that supported gift certificates. And I began the process once again.

As an aside: Authorize.Net was very gracious at this point. Since I had not used my gateway they refunded all of the charges to date – nearly $160 worth. I was impressed with their willingness to do so.

Application #2 It gets better. The next application involved, I kid you not, a downloadable PDF that I filled out by hand in ink. Ink, people! It brought me back to the glory days of 1996.

After another 2-3 hours of filling out the application, I faxed it to them (oh, the humanity) and then…nothing.

Seriously…I heard nothing for about 4 weeks. I forgot about it, actually, or perhaps formed a mental block to guard myself from undo anger. And finally, I called.

“Sir, it appears your request has been denied.”

“Seriously? Could someone have called me about…oh forget it. What’s the problem now?”

“I apologize for any inconvenience we may have caused you. Your application has been denied because you offer a plan that allows people to pay 18 months in advance. We don’t want to take on the liability of someone charging back during that 18 month period. If you remove this plan I can send your application back through our approval process.”

I explained to her that the website had been live and serving customers for close to 2 years and had never had a chargeback. And the 18 month plan is $79…given our sales volume you’re talking about a tiny amount of money over the course of 18 months.

But they wouldn’t budge.

Application #3 At this point I did what I should have done from day 1. I went back to the original owner of the site, and asked who he used for his merchant account. He gave me their name, I applied (another 2-3 hours), talked to them on the phone 2 or 3 times, and was approved within two weeks. Bravo…I was in business.

The tally at this point was nearly 12 hours of wasted time (this was at a time when I was only working 16 hours a week, so this was a huge amount of my productive time), and around $160 in fees spent with nothing to show for it.

But I wasn’t looking back! I wired up my credentials and everything worked like a charm. Money started coming in and I was happy.

Until the charges started coming in…

They Get You Coming and Going Remember that whole “3-year payback” thing? Yeah, that went out the window in the first month.

The problem I noticed is the fees were not adding up to $55/month, they were closer to $85/month. In addition, about 3 months in I saw monthly fees of $135. But I didn’t notice this right away because several of the fees came through separately, on different days of the month, for different amount each month. It was hard to track how much I was paying, and for what.

This happened to all come at a bad time for me; I had a new baby and didn’t have time to sit on hold with a credit card company. So another month went by and I finally gave them a buzz.

They explained that in addition to my monthly fees there was an annual fee for <insert a good excuse to charge someone money here> and then another one for <contributing to the CEOs yachting fund>. These annual fees would be split over three months, and would amount to…I think it was $150 in total?

“And what about the extra $30/month I’m seeing added to what should be a $55/month fee?”

“That’s for your non-PCI compliance fee.”

“But I am PCI compliant.”

“Oh, well you need to go through our PCI compliance process and tell us about it, then.”

“Could someone have called me about this?”

“I apologize for any inconvenience we may have caused you.”

And it just went on and on. I spent about 2 hours trying to get their PCI compliance form to work, and no dice. I switched back to IE and it still crashed . Their port scanner crashed. I emailed support and they replied with (this is not a joke):

“If you’re using Safari as your internet explorer you will not be able to run the scan.”

I guess this makes sense to some people (internet explorer with no caps = your browser), but I just couldn’t take it any longer.

I was somewhere north of $500 out of pocket, I was chewing through time trying to get things straightened out, and more than six months had passed since I first applied. PayPal WPP…where are you when I need you?

When In Doubt, Get a Second Opinion At this point I made the decision to bail on the traditional merchant account/gateway and go back to PayPal, no matter the cost. My time spent thus far was more valuable than what I would pay to have this work done.

Just for kicks, instead of paying the old developer their $900 bounty, I jumped on oDesk and posted the project. Bids came in and I found an excellent ColdFusion developer in Eastern Europe.

A week later the changes are done.

  • Total cost: less than $100 .
  • Total time spent to apply for PayPal WPP: 5 minutes (with a 2 day approval process).

I want to hit myself in the head right now. For a guy who knows the right way to get something like this done, and trumpets outsourcing from the tops of the hills, it took me way longer than it should have to figure this one out.

But the story ends well…the PayPal WPP code went live yesterday. And today I will call my processor and politely tell them:

“I am cancelling my account. I apologize for any inconvenience this may cause you.”

Afterword I know PayPal has its issues and that their WPP transaction fees are slightly higher than Authorize.Net (though break even is somewhere north of $5k per month in transactions). PayPal is far from perfect; but they’re not as bad as you think when compared to the alternative.

Please share your credit card processing horror stories in the comments.

Serial Entrepreneur Rob Walling talks through his frustration with payment gateways and how he wound up using PayPal's Web Payments Pro (this was pre-Stripe).

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Using Technology to Fight Poverty | Rob Walling - Serial Entrepreneur

I recently returned from a three week stay in Ghana, West Africa, where I trained several non-profit organizations how to build websites. Over and over again I was reminded how much we in the West take our wealth for granted.

The federal minimum wage in the United States is $5.15 per hour which, while nice pocket change for a high school student, is not enough to keep a family above the poverty line. However, someone making $5.15 would live quite nicely in Ghana where the minimum wage is $.18 per hour and the per capita Gross National Income (GNI) for Ghana is $320 compared to $37,610 for the US (according to the World Bank, 2003).

Before my trip to Africa, whenever I saw figures like the ones given above, I always reasoned that goods are cheaper in countries like Ghana. Shouldn’t it all just even out?

The short answer is no. The long answer is that it’s because life in Ghana is further complicated by the following factors not present in the U.S.:

  • Unemployment is around 20% and under -employment is suspected to be higher. After six months without a job, $.18 an hour must feel like winning the lottery.
  • Inflation is around 14%, which means each paycheck buys less and less and any money you manage to save becomes worthless within a few years.
  • Although many Ghanaians survive on $.18 per hour, which covers the expense of one meal a day and a few other basic needs, no one earning that wage is in a position to participate in the global economy.

These are all major problems in dire need of a solution, but it’s the third point that hit me the hardest.

Teaching in Ghana My Kingdom for a Book! One of the employees at the IT facility where I lead website training asked how he could learn ASP and PHP (a couple of common web programming languages). He wants to learn web development so he can move to the UK in search of a better life. Since there is very little computer work in Ghana, someone who acquires technical skills quickly leaves the country in search of opportunity. Can you say brain drain ?

In any case, since classroom learning is expensive and since I’ve always been more of a “teach yourself” type of person, I recommended two books to get him started. He looked at me sheepishly and told me that technical books are really expensive. This struck me as odd because I had talked to a guy from the UK just two days earlier and he mentioned a bookstore with technical books at around 70% off cover price, so a $50 book was only $15. Feeling well-informed I began to tell him, but the instant the words came out of my mouth I noticed a look on his face and realized that this is an outrageous amount of money for him. Luckily, I quickly righted the ship , adding “…but I realize that is still very expensive.”

15 bucks. The guy works 40 hours a week at an IT training facility and can’t afford a $15 computer book. He’s not starving. He’s not living in a mud hut on the side of the road scraping to feed his family. But $15 is probably a week’s salary for him, maybe more. At 83 times the minimum wage this book would cost $427 in the U.S., and the book was actually an old edition (from 2001), which as most of us know is almost worthless in the world of computer programming. If he wanted a current edition he would have to pay three times that if he could find it at all.

Does this seem wrong to anyone else?

The other items that proved to be cost prohibitive were a domain name and web hosting. It had never occurred to me that these expenses could be barriers to creating a website, since in the states it’s time and expertise that stand in the way. I won’t go into the detailed calculations, but at $8.95 for a domain name and $4 a month for hosting, it’s virtually impossible for the average Ghanaian to participate in the global economy.

This is, of course, not the worst of it. Ghana has its share of destitute poor; people who live in huts made of dried mud or sleep under overhangs in urban markets, people who have never had enough to eat, people who have no concept of what it means to not be poor and who live every day with their family’s survival hanging in the balance. Women on Beach Why Should We Care? The big question is why should we care about someone else’s problem? It’s not our issue, right? Isn’t it just survival of the fittest? Here are a few reasons to get you thinking:

If you believe in God, Allah, Buddha, or even good old fashioned karma, you know your responsibility to your fellow human being. All of the major religions preach a similar message; if someone is in need we should go out of our way to help them.

If religion is not for you, how about morality? One of the main themes of Weaving the Web , the book by Tim Berners-Lee, co-inventor of the World Wide Web, is that computer scientists have a moral responsibility as well as a technical one. Does it seem right that millions die every year from simple causes such as lack of food, clean water, and preventable diseases? These are people just like you or I dying slow, painful, and preventable deaths.

If morality isn’t convincing, there’s also the United Nations, which has something called International Human Rights Law spelled out in their charter. This law names food, housing, education, health, work, social security and a share in the benefits of social progress as some of the basic human rights.

Something else that makes it difficult to wash our hands of the situation, particularly in Africa, is that our ancestors (for those of us of European descent) colonized and exploited most of the African nations to the point of ruin. This makes it difficult to say that it’s happened through the course of nature and that we should just let nature take its course. It’s hard to move past the feeling that we have some responsibility to help right this wrong. Ghanaian Woman in Front of Cloth Finally, and perhaps most compelling for those who don’t buy anything I’ve said above, history has shown repeatedly that once the disparity between the haves and the have-nots exceeds a certain threshold, social unrest and ultimately violent uprising results. In the U.S. we were insulated from this violence until the attacks of September 11, which many estimate will be the first of many attacks we will see in our lifetime as this gap continues to widen. As Vinnia Jauhari and Edson Kenji Kondo said in their paper Technology and Poverty – Some Insights from India , “If the entire social fabric decays, then what good are the scientific achievements and material wealth if the very survival of life becomes questionable?”

This begs the question: How can technology, specifically high-tech and the internet, be used to fight poverty?

Destitute Poverty Poverty can be relative or absolute; relative poverty is in relation to the rest of the economy, be it national or global, while absolute poverty is in relation to the basic human needs. Destitute poverty is at the bottom of both scales.

For destitute poverty, providing food, clean water, shelter, and medical care are the most critical needs. There are many organizations that provide these services to the poor, and they help remedy a dire need in the world. But once these needs are met, the person’s information poverty must be addressed.

It’s been shown that TV helps people in destitute poverty to see what it’s like not to be poor. With the proper training can you imagine what someone in this situation could learn on the internet about farming, birth control, food and water, disease, and their government? How about the advances that could be made in linking citizens with government services, and keeping government officials accountable for their actions. One of the first things that happens during a coup is the seizure of the national media, typically the radio and newspaper, so the new leader can control the flow of information to the people. It would be much more difficult to control the internet.

The amazing part is that the technology is within reach: a company called SpeakEasy has a pilot project in Seattle where they provide broadband, wireless internet access over an area of 10 square miles, and San Francisco is embarking on a free or low cost campaign to blanket the city with wireless internet, a total of 49 square miles. How long until all you need is a laptop and a solar panel to have cheap ( or free , if Google has its way) broadband nearly anywhere in the world?

The Lower Class The lower class are people who are underemployed or employed, but don’t make enough to support their day to day needs. Although not destitute, this population could utilize additional money to be properly nourished, tend to medical needs, receive education, and have a consistent supply of clean water. One possible approach for helping the lower class, who is able to survive day to day but is in dire need of a higher standard of living, would be to take advantage of the global economy through e-commerce.

Drums By setting up an online store through eBay or Yahoo!, a Ghanaian drum-maker could dramatically increase his market of potential buyers while increasing his profit margins. This idea, though not using the internet, has been executed with great success in Central America where Westerners have set up co-ops where craftspeople create products and elect one person to handle the business aspects. Modifying the idea for the internet, one would find a local with computer skills (the coordinator) and put him in charge of maintaining the online store. The remaining craftspeople would be notified when they needed to ship an item via an email, phone call, or a knock on their door. A small cut from each item would go to cover overhead: the cost of visits to an internet cafe, plus the coordinator’s wages.

One real-life example is a 12″ Djembe drum that sells for $25 in the local marketplace in Ghana runs $90 on eBay. The additional profit on the sale of one drum would cover the cost of internet access, eBay fees, and a large portion, if not all, of the coordinator’s salary.

The Middle Class To help the middle class, the population that lives well on an absolute scale but poorly on a relative scale, Ghana needs a way to participate in the global economy.

Ghana’s GDP, as with most African nations, is based heavily on agriculture with minimal contribution from manufacturing or industry. This is the result of the industrial revolution never taking hold within Africa’s borders, attributable to the fact that most countries were colonies well into the industrial age. Ghana Fishermen This lack of industry results in a scarcity of non-agricultural jobs and means there is a long, uphill climb ahead before sufficient industry is in place to support technical jobs. This is a process that once initiated will take decades. As a result, opening the doors to the global market of technology outsourcing is a good choice for realizing a change in the near term. Outsourcing is a hot topic these days, but I’m not going to discuss the political implications in this article since I’m speaking purely from the perspective of trying to improve peoples’ standard of living.

The main advantage Ghana has over more developed nations is cheap labor. With an investment in their infrastructure to provide more reliable telephone, power and internet capabilities, outsourcing could begin almost immediately. In fact, there are a handful of outsourcing firms in Ghana that handle tasks like data entry and digital imaging services. Other areas that have been successfully outsourced include software/web development, and call centers; since English is the national language the barriers are small.

Speaking on my area of expertise: starting a software firm would require minimal up-front investment (a few computers, a DSL line and a generator) and would reap substantial financial rewards compared to the cost of doing business (or living) in Ghana. One major advantage is that you would have your pick of the best job candidates because you could pay more than the prevailing wage. You’d have to start with simple work since you’d be training as you went; from what I know there aren’t any skilled programmers in Ghana. But starting with the brightest candidates you could find and building an organization of people who are willing to work hard for their money could be lucrative and rewarding. The global economy is favorable to a country with cheap labor who can work through the obstacles in their way and produce a good quality product.

The revenue from even a few large contracts would be significant boost to the GDP and would improve the standard of living of many people. Ghana Beach So What Can You Do? Option 1: If you feel guilt in your stomach like you’ve had some bad tacos, and want to get rid of that icky feeling as quickly as possible, consider giving money or computer hardware to one of the following charities. They use technology to fight poverty around the world, and could put your donations to good use:

  • Computer Aid International – refurbishes, packs and ships donated Pentium computers for re-use in developing countries around the world.
  • WorldWrite – sends quality refurbished PCs to schools and villages in developing nations.
  • Grameen Foundation USA – a nonprofit organization that uses microfinance and innovative technology to fight global poverty and bring opportunities to the world’s poorest people. With tiny loans, financial services and technology, they help the poor, mostly women, start self-sustaining businesses. They’ve helped nearly 1.1 million families in 20 countries.

Option 2: If you think you might want to become more involved, contact one of the following organizations about volunteering your time:

  • Trade Aid – provides improved educational opportunities, from primary education to vocational, management, financial, and entrepreneurial training.
  • The Benetech Initiative – a deliberately non-profit, high-tech company that develops software and other tools to help solve social problems with sustainable enterprise.
  • Grameen Foundation USA – a nonprofit organization that uses microfinance and innovative technology to fight global poverty and bring opportunities to the world’s poorest people. With tiny loans, financial services and technology, they help the poor, mostly women, start self-sustaining businesses. They’ve helped nearly 1.1 million families in 20 countries.

Option 3: If that feeling in your stomach really is from bad tacos and you’re actually inspired after reading this article, I encourage you to contact one of the organizations above to investigate how your skills could assist their efforts and/or think about how your expertise could fit into one of the scenarios I discussed. And while you’re at it, post a comment or send me an email so I know you’re out there.

There’s an old German proverb that reads:

One does evil enough when one does nothing good.

It’s your move.

Photos by Sherry

An essay on Rob Walling's trip to Africa, where he was impacted by the digital divide. He discusses some ways you may be able to help.

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