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March 11, 2014 Smart Bear Live 8: Edwin from MeetingKing.com
Welcome back to Smart Bear Live … the show were Jason speaks with entrepreneurs looking to improve their businesses. In this episode, Jason talks to Edwin from MeetingKing.
Listen to this episode if you want to hear about a founder who has a product and users and paying customers … and is trying to figure out how to take his company to the next level and grow faster.
PRODUCER’S NOTE: Do you wish you could hear Smart Bear Live episodes more often? Well maybe you can help – the show needs a new producer! I’ve loved being part of the show, but now that I’m part of the growing team at Moraware, I don’t have time for a serious podcast. If you are passionate about business, good at writing, decent at scheduling, can learn to edit audio, and want to help Jason share more interviews, then contact me to see if you could be the next producer of Smart Bear Live. –Patrick
https://blog.asmartbear.com/wp-content/uploads/2014/02/SBL007-MeetingKing.mp3
Transcript
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Edwin:  At MeetingKing, our goal is to help the world get rid of bad meetings. I got annoyed with bad meetings that I attended and also the
meetings that I chaired I was not very satisfied with the results. So I analyzed why is that? Why are the meetings so bad? If you look at the
problems, it comes down to two issues: people are not prepared, and there’s no follow-up. And when you look at the tools that we use, I mean we’ve made
so many technological advances, but really to manage a meeting there’s not a practical tool available. We use email; we use Word; we use task manager;
we use a file sharing tool. And to combine all that information, it’s just not practical. So in the end, we do not make an agenda so nobody’s prepared
for the meeting. We do not keep track of the tasks that we agreed upon so things don’t get done. Everybody just scribbles their own things on a piece
of paper and three months later we discuss the same issue again and don’t make any progress.
So that is a little bit of the philosophy behind MeetingKing. We started
with the product about three years ago, development, a year later we
released it. So let’s say about a year and a half, the product has been out
for real. We did an interview before, Patrick, together with Bob. A lot has
happened since then. We now have somewhere between 20,000 and 25,000 people
that have created an account and get a decent amount of traffic on the
website. People are willing to pull out a credit card.
Jason:  So how many of those 20,000 people are paying customers?
Edwin:  I hope you don’t mind if I don’t go into details, but hundreds
of them. So conversion rate percentage, of course it can always be higher
and we’re doing a lot of stuff to make that higher, but it’s in line with
other applications.
Jason:  Yeah, one percent conversion rate is pretty normal.
Edwin:  I’d say actually I think I’m a little bit above that.
Jason:  So what are your challenges right now that you want to talk
about?
Edwin:  Yes, the challenge that I have is the product does a lot of
stuff, it does meetings, and it organizes information. What should I focus
on in my communication? What is a simple message to convey either both or
one of the things that I can pull people in?
Jason:  Okay, and probably pull people in that convert, right? You
don’t need just more traffic; you want more people that are going to buy,
right?
Edwin:  Correct. That’s of course the ultimate goal.
Jason:  Who is buying it today? Is it smaller business? Is it big
companies? It obviously can’t be a single person because that person
probably doesn’t have many meetings. On the other hand, if it’s a huge
company, maybe they do need this although it’s hard to imagine them
replacing a task tracker at a huge meeting with a small tool. So who is
buying it today? Is that the kind of person you want to buy? Or who is it
that you want to be the buyer?
Edwin:  Okay, I have different types of customers. So on the one hand .
. . and those are the people that are more interested in the specific
meeting part are churches, nonprofits, and small organizations. I have
schools and businesses. Now most of the businesses are small to medium-
sized businesses. I’ve had some very good conversations with a large
insurance company.
Jason:  What do you mean by a medium-sized business? How many employees
would a medium-sized business have in your definition?
Edwin:  Small to medium, so I have people that have teams of five
people in their company, 20 people in their company up to 200.
Jason:  Okay. I’m just clarifying. Some people have different
definitions of that.
Edwin:  Yes.
Jason:  For example, like in America, small business is up to 150. I
mean they have these definitions. So anyway, it sounds like it’s almost
completely small organizations, under 1,000 people, and you listed a lot of
folks who traditionally have low budgets.
Edwin:  Correct.
Jason:  Nonprofits, schools, churches and so on, which of course is
problematic in general unless that’s what you want. So it sounds like
you’re getting people who have low money. Not too many people involved in
the whole organization, certainly not in the immediate group, and they just
want to get a handle on things, which makes sense.
If I collect all that together and call that all small business,
which is a little unfair because of course they are different in how you’d
get after them and so on, but for now, if I collect all that and say small
business and organizations, is that what you want to target? Does that make
sense to you and you’re like yes, I can get a million of those guys just
like Fresh Books did and so forth? I’m going to do just like that and get a
million of those people over the next 5 to 10 years? Or do you not want
those customers?
Edwin:  That’s actually why we’re having this discussion. Those
customers are fairly easy to sign up, but if I look at where most of the
money comes from, and those are the larger licenses of five or ten users,
that is according to your definition then the small businesses and small
businesses include actually the Mexican Stock Exchange, Chamber of
Commerce. In Spain I have large companies.
Jason:  The question is do you want those five to ten license guys? Do
you want to try to make a thousand-license product? Do you want to go after
the ones that are even smaller? What is it that you want to do for your
business? You said you get more money off the things that are actually
businesses and the groups are at least five people, so is that where you
want to focus?
Edwin:  I think that at the moment I should focus on those. Eventually,
as it always goes, you have a lot of ideas on how you can grow the
business. Eventually I would like to go into bigger companies because I can
come up with a lot of arguments why this would be a great tool for a big
company. But big companies move slow. It needs to be more mature, so let’s
focus on the small-sized companies where my ideal customer and the people
that pull out credit cards is in general the CEO.
Jason:  Okay, so that’s a very small company in which the CEO is
pulling out the credit card for meeting software because even people with a
hundred people, the CEO is not the person pulling out a credit card for the
meeting software. They’re doing something else by that point.
Edwin:  I tend to disagree. I have a couple of guys that I interact
with very frequently. They are the CEO, and they give me a lot of feedback.
They’re early adopters. They really like the tool. They are so happy that
they finally have a tool to manage their business.
Jason:  If I’m managing my whole business with this tool, I don’t have
100 employees. That’s what I’m saying.
Edwin:  Then I communicated that incorrectly. I do think that most of
my customers are small/medium businesses. I have people from schools; I
have people from churches, etc. But if I look at my signups, most signups
come from small businesses.
Jason:  Okay.
Edwin:  And just to clarify it a little bit, small businesses, I have
people that run software companies; people that actually run a chain of dog
grooming saloons; people that run a bunch of French . . .
Jason:  I get it. So part of the dilemma is there’s meetings; there’s
the meeting management at the meeting; there’s preparation for the meeting;
then there’s follow-up from the meeting.
Edwin:  Yes.
Jason:  And to me, trying to replace someone’s to-do software or their
actual organization software? That’s a challenge. For most people, to-dos
come from a lot of places. Meetings are definitely one of those places, but
email is another primary way that that comes in. And for some people, they
want to have one tool for home and work and so you have even more use cases
and there may even be things that are shared and not shared. You kind of
get into all this stuff when you get into to-dos or project management in
general, which are not really the same thing, right? But both things,
product management and to-dos, are entire industries on their own and for
good reason:  because it’s really complicated, lots of segmentation, lots of
personal preference.
And that’s also true on the business level. Asana’s a good example of
something that’s trying to be sort of project management, lightweight
project management, definitely to-dos, definitely shared, definitely for
small teams, and they’re doing really well there, and they’re also trying
to replace email and kind of get in the way of email. So that’s an example
of a company trying to do that and be sort of unique in that way, and of
course they don’t particularly have meeting management built into it.
But what I find, and we use Asana and I know other people use Asana, but
people generally do have Asana open during the meeting and that is where
the to-dos are placed so that there is follow-up because this goes right
into the shared project/to-do system and that’s how that gets satisfied.
So as you get into to-dos and follow-up and management, that side of you’re
talking about? As you get into that side, my feeling is, if I’m giving you
a gut reaction, my gut reaction on that is “whoa, that is a whole universe
of stuff and it’s going to be really hard to make something that is unique
and awesome.” And Asana is obviously one of a hundred companies doing
something like this. On the one hand, it’s massive. I grant you it’s
massive.
On the other hand, it’s a whole universe and you’d need an interesting
perspective on why you should go attack that market and face all that
competition and noise and everything that’s in the market. Now as you scoot
over to the meeting side of things . . .
Edwin:  May I . . .
Jason:  That becomes more interesting to me because for example, we had
the top product person at Asana at our office showing us around and talking
to us about how we use it. And in particular, we talked about how we use it
for meetings. And so they described it, “Well, we often use it like this.
We’ll put a meeting in Asana in the following way and use tasks in the
following way,” and basically showed me how you can use it that way and
it’s useful that way to an extent, but it’s really clear that it’s not
designed for that and that it’s sort of a hack or a bolt-on or a way to try
to put it in when it’s not really a part of the tool.
And so if you have something that makes meetings truly good, and maybe some
of that is scheduling because scheduling’s always a bear; prep is
definitely good, as you said; maybe it integrates into some other tools,
I’m not sure for follow-up, but the more you get into that meeting side of
things so that rather than sitting in front of Asana or a Google Doc that’s
shared or as you said just notebooks and pencils, that we have something
that’s actually making this meeting move quickly. We’re hitting the agenda.
We’re not running over. We’re hurting people who come in late so that they
stop coming in late. That’s a big meeting problem. What happens if someone
can’t make it?
There’s all these things that happen in a meeting that are in fact really
annoying, and no tool that I’ve seen, and what I mean is like Asana and so
on, addresses those things. Getting through the agenda is a really
difficult thing and time boxing stuff and setting conversations aside to
come back to. These are all really important things that happen in meetings
that people are generally really bad at managing, and a tool like Asana
certainly does not help you manage that.
So the more you move into addressing the problem meeting specifically and
not about managing to-do tasks and certainly not the whole business, but
even minor things, the more interested I personally am that you’re carving
out something interesting and novel. So when you’re thinking about
marketing positioning to me, that side of it is the interesting side of it.
Edwin:  Correct, I fully agree and the name MeetingKing already says
that my initial focus definitely was on meetings, right? Now what I’ve
found is that especially the larger licenses, 10- and 25-user licenses, in
the beginning I lost those customers after a couple of months. Their
challenge was that they couldn’t manage the tasks afterwards. I had all
kinds of filtering functionality in there, but it wasn’t very practical. So
with that feedback, we worked on the new version. The new version has
actually a very, very strong task manager.
I would like to make the argument that MeetingKing has a better task
manager to manage your tasks related to a general manager than Asana. The
reason is that let’s say you have a general management meeting. So what you
can do is you add a group or a tag to the meeting, general management. And
then you and the CFO and the marketing guy and . . .
Jason:  Hold on, wait, hold on.
Edwin:  Yeah?
Jason:  This is too complicated because we’re talking about marketing
messaging, right? So give me in one sentence why your task management is
better than Asana, or maybe two sentences. But you don’t have all this time
on your homepage to describe how it works.
Edwin:  That’s exactly my challenge. That’s why we’re having this
conversation.
Jason:  It’s not clearly better if you can’t articulate it really
briefly. Then it’s not clear why it’s better. So like for example, with
Asana, just to give you an example, they would say what’s better is they
reduce emails because there’s all kinds of emails of coordination that you
don’t have to do when it’s coordinated in the tool. And on top of it, it’s
real-time and all these other things. So that’s a very simple way of saying
it’s task management, but it’s getting rid of emails that of course no one
wants emails. So what is your nutshell? Because saying something like, “My
task manager is better than Asana,” or “It’s better than Remember the
Milk,” or it’s better than . . .
Edwin:  There are a million others.
Jason:  There’s a million, but people love them. They have many, many
man-years of development and customer development in them. So to just say
look, in the last three months we made one that’s way better? That’s fine,
but you must have a simple way to articulate why that is. It can’t be some
really complicated, detailed description of why that is.
Edwin:  Okay. MeetingKing is like an accounting system for all your
discussions and your tasks. In an accounting system . . .
Patrick:  Can I interject a second?
Edwin:  Sure.
Patrick:  This is Patrick. I’m looking at the homepage. Personally, and
Jason, correct me if you disagree, but I see this as a mistaken features
and benefits. And even what you were just going into is a feature. I don’t
care about features per se, I care about the benefit. So I don’t want . . .
the first headline you have is collaborate before, during and after
meetings. I don’t want to collaborate before, during and after meetings; I
want a successful meeting. So how can you translate the reason I have to
collaborate before, during and after meetings into the feeling I’m going to
get of having a successful meeting? And same with all information in one
tool and one place. I don’t care about that except for the result that it’s
going to get me.
Edwin:  No, and I completely agree. My messaging at the moment is too
much on features and not enough on the user point-of-view. What do I gain
from it? That needs to be improved. That’s why I say okay, I have these two
main areas that the product does. And what I was just saying is with
MeetingKing, I can say . . . like in an accounting system, you can say, “I
want to know exactly the expenses that Jason made for product ABC related
to marketing in that period of time.” And that is what you can do with
MeetingKing. If I run a chain of restaurants, I bundle all my information
that I have from one discussion with the manager of restaurant 25. But in
that one discussion, I talk about HR; I talk about inventory management; I
talk about local marketing campaigns.
Then, at the end of the week or during the week, I have ten meetings with
ten different managers. At the end of the week, I sit down with the VP of
marketing at the corporate level. And what you can do with MeetingKing is
then filter out from all of these meetings everything that has to do with
marketing activities, and the same for HR, etc. So you have this cross-
filtering or cross-information. It’s bundled in different groups. You have
your general management meeting and in your general management meeting you
talk about product development, about marketing and about finance.
Jason:  All right, but you can’t talk for five minutes then say . . .
Edwin:  I know. I know, that’s . . .
Jason:  All you just described is that things are tagged and I can look
at things by tag instead of by meeting. I get that, but that’s kind of any
to-do or project management system has tags and you can view it that way.
Edwin:  Well, it goes a little bit beyond that because these tags, also
you can define it as a project group and a department. So you have your
marketing department, and everything that’s created with the marketing tag
will be visible to the marketing department. So it goes a little bit beyond
just simple tagging.
Jason:  Okay, but you have people that have only got five people using
it. Is that what they’re doing? The five people are doing all this stuff?
Edwin:  Oh sorry, so the business model . . .
Jason:  That’s not what you described.
Edwin:  The business model is that the organizer has to pay. So
companies that have a five user license, it means that they have five
organizers, but they probably have something like 20 or 30 people on it.
Jason:  Okay.
Edwin:  Yeah, like I said, the marketing guy can then filter out
everything that’s relevant to him. The filtering is very simple and I even
want to make the filtering because we have functionality for file sharing.
If you make an agenda, you can include attachments in the agenda. So the
file sharing, we can use the same filtering method. So organize your
information; that is the USP.
Jason:  Okay, organizing information is not a unique selling
proposition. I’m still having trouble, because you’re all over the place
with stuff. I mean now you’re telling me you’re into file sharing. I’m head-
smacking because it’s like oh my God, now we’re going to compete against
Box, too.
Edwin:  No, actually I want to integrate with Box. I don’t think I
would want to compete with Box or Dropbox. No, no, no.
Jason:  I think looking at the problem with trying to find your
marketing message is you yourselves do not know what it is that you want
your product to be and want your customers to think of it and what benefit
they want from it. Like for example, you said you had some of these bigger
accounts and you lost them because there wasn’t sufficient task management.
Edwin:  Right.
Jason:  So you said, “Well, I can now do much better task management.”
In that case, you’re a task management system. You’re a project management
system. It is a multi-departmental project management system, which is
really cool, because it means everybody can do all their stuff and see
exactly the slices of things they need and some things that they’re
controlling, some things that they’re viewing and so forth. It’s integrated
through in-person stuff like meetings as well as electronic stuff I
imagine, because if this is just meetings them obviously you’re missing a
ton of other stuff that’s related to the project like email. So presumably,
it has to cross into all those things as well.
So I guess to me, again, my visceral reaction to all that is that’s a
rabbit that you’re just going to chase forever. So you add all this stuff
where files can be attached or referenced from Box and that can be tagged.
Again, everything you’re describing to me is about project management and
task management. Everything you described to me is in that. In fact, it’s
the whole point of the meeting in the way you just articulated it is in
order to turn into things that you can then pull up later or track whether
they happen later, and then also cross-cut so you can report, for example,
to another department how the things relevant to them, how that transpired.
Edwin:  Yes.
Jason:  So that’s still project management where meetings is just one
of the ways in which data comes into this thing. So that’s the sort of way
I interpret what you’re doing, because although it’s called MeetingKing,
you’ve not talked almost at all on this whole call about anything about
meetings. It’s all been about project management. And when you lost
customers due to not having project management, your response was to make
project management.
But to me, that’s a never-ending thing. You’ll make a certain set of
features, then a certain set of customers will be satisfied with that
amount of features. But there’s always more, because project management is
this ridiculously large thing to go down, especially if you’re just one or
a few people doing everything in the company. There’s just too much to do
when it comes to that kind of project management.
Edwin:  We’re on the same page. When I said that we’ve improved or that
I added functionality for the task management, I am talking about the
interface, the accessibility of functionality that we had because tasks and
meetings go together. If your meeting doesn’t result in tasks, you might as
well not have had a meeting.
Jason:  Well, that’s not true. I mean there’s all kinds of meetings
where there isn’t necessarily a takeaway for everyone.
Edwin:  Yes, I know there are informational meetings. But I think . . .
Jason:  Another one for example, sometimes on one-on-ones, there’s
specific tasks to go do but sometimes there’s a lot of status and a lot of
broad things a person’s working on which you wouldn’t necessarily
categorize as a task or a project.
Edwin:  Right, but you cannot make . . .
Jason:  There’s lots of things.
Edwin:  You cannot make a meeting tool that you use for all your
meetings if you don’t have task management. Suppose only half of your
meetings would have tasks in them, you cannot use two different tools.
Jason:  See, here’s where I’m disconnecting. I hate meetings and I
think we run meetings very poorly most of the time.
Edwin:  Yes.
Jason:  And I think that’s the fundamental observation you had making
this company.
Edwin:  Yes.
Jason:  I feel like there’s a lot to do in solving that. And if you’re
going to insist that I use a certain task manager in order to solve it, I
can’t solve it. In other words, if I’m thinking about this just from a WP
Engine perspective for a second as a potential customer, when you come up
to me and say, “Meetings are awful because half of them don’t even have an
agenda, and the ones that do, you don’t stick to it and they go long. And
the takeaways that people have to go do? Who knows if they went and did it?
No one checks them.”
When you have weekly meetings, which many of my meetings are weekly,
and if you’re talking about GMs, many of your meetings are periodic like
weekly, like daily standups or weekly one-on-ones or other kinds of sinks?
In those meetings, often you want to know, “Wait a minute, what happened in
the last meeting? Did we do the things we said we were going to do from the
last meeting?” There’s a lot of callbacks to the last meeting in those
kinds of periodic meetings.
Edwin:  So may I . . .
Jason:  When you start telling me about all those pain points, I think
yes, yes, yes, this is such a pain point. I want to solve this so badly.
You’re right. You’re right. Tell me more. I want to solve those things. And
again, I’m talking about pain benefits now like Patrick was saying. I don’t
care about what the software looks like yet.
Just yes, that’s a problem. If that software solved those things; if
it made my meetings run on time; if it made sure we got through the agenda;
if it helped make sure people would come prepared; if it let me tie one
meeting to the next and ask did we do it? Those sorts of things, if it did
that as benefits, forget about how, I don’t care how, I’m really
interested.
But as soon as you say, “Yeah, but the tasks that come from there,
you have to manage that in the tool.” So now I have to wonder whether a
task is in Asana or whether it’s in this tool in order to do project
management or task management. Suddenly I’m disconnected and I say look, I
can’t have two project management tools for everything. It’s got to work
together somehow.
So if you can solve the meeting part and have the meeting part be more or
less wholly solved, I am so in. But as soon as you say I’ve got to take
over more parts of project management or I can’t really give you the
benefit, I’m out. And I wonder . . . now I’m just one data point, of
course, but again, if you have a really tiny company they probably can do
all the task management inside you because they can probably use anything,
right? But as you want to go upstream with the larger companies with more
budgets, which I think is what you’re saying you want to do, focusing on
the thing that is unique about you which is the meeting component to me is
the interesting part, not the tasks.
Edwin:  So then it was not my intention to go all the way on the tasks
without spending a lot of time on meetings because I think that that is
where we really have something unique to offer. So just to close off the
task part at least for the time being, yes, I would like to create an API
integration, so if you use Asana, great, for your tasks.
Jason:  No, no, no, because there’s too many project management things
and you’re only one or a few people. You can’t integrate with everything.
It’s got to be something where . . .
Edwin:  There are tools like Zappier or If/Then or something like that.
So if I make an open API, you can make a bridge for the tool that you use.
Jason:  It’s too complicated. I’m looking at your own homepage of who
your customers are:  businesses, schools, nonprofits, towns, churches and
clubs. Nobody can do an API.
Edwin:  No, they can’t. They can’t. And maybe . . .
Jason:  We should stop going down this road, because I think the
point’s made and it’s fine. So the thing is, what’s on the homepage? To me,
solving the problem of meetings is really interesting. And the more you can
stick with that and not get off into all this other stuff, the better. And
so if I’m then just going down your homepage, and again, just reacting to
what’s on it with regard to the question, “What could the positioning be?”
Or “What could it tightly be?”
So I’m looking at it, and the first thing I think is the design is simple.
It’s very easy to read and it also feels very small, like a small business
and for a small business. And that’s probably good. I mean right now that’s
who you’re selling to, so it’s nice to have a good, friendly thing. And in
fact, saying, “Look, hey, we’re a small business but we’re doing something
really interesting” I think is a good message. So to the extent that you
want to keep at that particular demographic, I think that’s fine. It
doesn’t have to be a super high-gloss whatever, especially with the types
of people you listed who are buying it. I think this is accessible. But
looking at it, so MeetingKing . . .
Edwin:  Would I be able to attract other people if the design would be
different?
Jason:  Some people think the design matters a lot more than that. I
think this looks like no designer made this, right?
Edwin:  Thank you. I did it myself.
Jason:  Right, which is again I think a simple, honest, accessible
thing as a result. That’s the result of that: it’s clean and easy to
access. And so I think you can’t charge a lot with this design, but you’re
not trying to charge a lot. You’re trying to get small businesses who don’t
have a lot to give you anyhow, so I think for now that’s fine and that you
don’t need to spend a lot of effort on that.
So if I’m looking, MeetingKing’s obviously a brilliant name. I love
it. It’s kind of already obvious what it does, which is great.
Edwin:  Well yes, you say that, although a lot of people think, “Oh,
yet another WebEx or GoToMeeting.” And even if they didn’t read this stuff,
they have it planted in their head that it is yet another WebEx.
Jason:  Okay, good. So this gets to the headline, which says more
productive meetings in three steps. Now the headline I don’t like, and the
reason is anything like productive or simple or saves time, all these
things, they’re very generic. They don’t paint a picture in my mind how my
life will be different.
I haven’t looked at the video yet, but I should be able to understand
from the headline and get some kind of emotional reaction to the headline.
And actually, I don’t want to take three steps. I would really rather not
take steps; that’s actually work. So that doesn’t sound good, right?
Edwin:  Okay.
Jason:  So to me, I like a really emotional thing. And also you can use
this emotional thing to show that you’re not WebEx or not Screen Share. So
for example, we talked just now about all of these different things at
meetings that are horrible, right?
Edwin:  Yep.
Jason:  Are you tired with meetings running late, but not getting
through the agenda? Or around you have a meeting, then everyone leaves and
comes back in a week and forgot everything that happened and nothing got
done? These are things that I think a lot of people would nod their head
and go, “Yeah, that’s stupid. That’s horrible. Yes, that’s me.”
Edwin:  Correct, correct.
Jason:  We’re not going to wordsmith it on a call like this, but I
wonder if something like that where you evoke this thing in someone that
goes yeah, that sucks, that would to me be a better grabber than something
very generic in promising there are steps coming my way that I have to do.
Let’s just evoke the pain, right? Then it’s like oh, yeah, that sucks.
Wait, this does something for that?
Then you have your thing, your MeetingKing, your assistant to help
your company or school or club have more productive meetings. Now you don’t
have a lot of space right here if we’re keeping your design, so I get it
that you probably want to show people who are in schools and clubs that are
not businesses, “Hey, this is for you too.” But you also just said on this
call that eh, business is where you make your money. So what I would
suggest is you could keep that list down below, but if you want business
then say business and don’t list the other ones.
Edwin:  Right. The challenge is it is such a horizontal product, how do
you . . .
Jason:  No, it’s very easy. You just don’t do that. You say it is this.
You decide this is my target customer, which you started doing on this
call, right? You said the best customer is . . . you can’t have one
employee because meetings are just too easy and you don’t really have them
formally. You can’t have 5,000 employees. You could, it’s just we’re not
targeting that.
The whole point of this is not to say you can’t have these other
customers, but rather honing in on which customer right now is perfect. So
of course if you have a big company, you can use it. Of course if you’re a
club, you can use it. But we’re just not going to name them as ideal.
So you say now, ideal is the whole company has between 20 and 500 employees
and the organizer generally works between 5 and 15 people within the
department and the same number of people outside the department because
when they’re in that state they really have a lot of stuff to meet about
and organize and repeat. Their life is just hell. That’s the perfect
customer.
You see what I mean? You do that and you build this really ridiculous
customer for whom they have every single pain you can imagine and they
really need the help. And then have that person in mind as you write
everything. So what would you write where that person would go, “Oh my God,
that’s me?”
So you wouldn’t say company, school or club to hit that person. And maybe
not even assistant. Maybe. That’s an interesting word, assistant. But with
that person in mind, it helps you actually track meeting-to-meeting or
follow-up from one meeting to the next or under managing tasks, it’s not
really managing tasks is it? It’s more like holding people to account
meeting-to-meeting or things that are related to each other and thread
together . . . I’m not sure. There’s these kinds of words like that.
Like for example, if I’m just looking at these bullets here, “Tasks from
previous meetings are automatically added to your new agenda.” I get that,
but what I’m really trying to do though is not auto-add tasks to agendas in
meetings. What I’m really trying to do is follow-up or double-check or how
did we do or really quickly, only five minutes, can we double-check and can
people come prepared so we can double-check whether we did what we said we
were going to do, but also we only take five or ten minutes to do it?
This is obviously too many words, but do you see what I mean? That’s the
thing that I want to hear in the text here is that you’re going to give me
that. And so saying literally “tasks from previous meetings are added to
this meeting,” that’s not really telling me that. That’s not telling me
that I’m going to get that. But listing these things? That sounds awesome.
Edwin:  Right, yeah, nothing will fall through the cracks. Nothing will
drop off the radar.
Patrick:  You can channel Cathy Sierra on this and say that the users,
you become a Meeting King. You know, you want your users to be badass, not
you be badass. All of these are about the product being badass. So if I
were a badass meeting person or if I were a Meeting King, my agendas are
stuck to. My minutes get written after my meetings. My tasks get done
afterwards. So consider maybe wording in terms of how the user’s meetings
are going to be after they start using Meeting King? My meetings, unlike
the other bozos in my company who aren’t using it yet, my meetings, stuff
gets followed up on.
Edwin:  Yeah, my meetings are productive, on-target and things get
done.
Jason:  Well, look, nobody sits around and goes man, I wish my meetings
were too productive. It’s true, you do wish the meetings were more
productive, but that’s just not what someone says.
Edwin:  I do get a lot of searches for that, by the way.
Jason:  When someone’s looking around, when they’re talking internally
and saying, “Hey, how can we make our meeting more productive?” They may
say that, but really again, I think there’s more evocative things.
So for example, again, I think creating steps is bad. That’s again
getting into how it might work, but I don’t want steps, at least not on the
homepage. You can imagine a how it works thing and you say okay, here’s how
it works. Pre-meeting is good because your agenda is set first and people
are prompted to come to the meeting having done certain things.
During the meeting . . . so when you talk about how it works or a
tour and that kind of stuff, then it makes sense to do that. But right on
the homepage, there’s different ways of course of doing this here. Another
idea would be to say matching up . . . the sort of pain solution match-up
process can work. You can get creative and not make it really boring, but
you can say things like, “Tired of people coming to meetings unprepared?”
And that’s the title.
Then the paragraph under there is like three or four sentences tops
that just says, “With MeetingKing, your agenda is set before the meeting
starts and is sent to all the participants. Furthermore, each one knows
with what they’re supposed to come. So now, when someone comes unprepared,
they have no excuse.”
Here’s another one, like “Tired of meeting minutes disappearing into thin
air?” You know what I mean? Something like that. Or, “Tired of going into a
meeting and forgetting what we talked about last meeting?” There’s these
key pain points like that. You can literally have question-answer in a
sense. And again, not features. Or maybe a couple features here and there,
like “it even integrates with Outlook.”
Features like that are good to make people feel like it’s going to work
with stuff that they have, that’s good, like you have there with Google
Calendar and Outlook Calendar for the agenda. That’s the kind of thing to
throw in that is good because you’re reassuring them this is going to be
easy. It’s going to work with the stuff you’ve got. But that sort of thing
would describe to someone if they can’t answer yes to those questions,
they’re not a customer.
Edwin:  I like that a lot.
Jason:  And if they do answer yes to the questions, there you go. They
found you. And then I’m not confused at all with the task management stuff
because it’s very clear this is all about meetings and the accountability
of what’s going on in the meetings which is different from project
management when you use words like that. I think those are good words.
Maybe that’s not the perfect word, but to me, to an organizer saying let’s
get some accountability here? It sounds like yeah, yeah, yeah, lack of
accountability is definitely a pain point for most meetings I would say.
Edwin:  Yeah. No, I completely agree. Also, the reason why my focus has
been on the meetings even though I have the functionality for the tasks,
etc., I have quite a few users that use it actually exclusively as their
task manager and some of them don’t even use the meeting part; they only
use the task management part.
Jason:  So what?
Edwin:  No, that’s great. But the challenge with task managers is there
are a gazillion out there, so how are you going to communicate it? How are
you going to position yourself?
Jason:  You don’t. See, you’re doing a kind of classic thing. I used to
do this a lot as well. You’ve put all this time and effort into tasks, and
so you want to talk about it. In other words, it’s like you want to talk
about equal weight about things depending on how much work it was to do it
or how unique it is. But neither of those things is necessarily right.
Again, I hate to beat on Asana as an example. I just happen to know a
lot about them and they’re being very, very successful. So just to beat the
dead horse, one interesting thing is what they want to do is replace email.
But they’re not going to say on the homepage replace email with this
because everyone would run away and say what? I’m not going to replace
email. It’s ridiculous, right?
Edwin:  Yeah.
Jason:  So the whole entire goal of the company is not on the homepage.
Imagine that. And you can’t believe the amount of thought and features and
things they put into trying to make that true, trying to make that a
reality, but they don’t talk about that ever because it’s not what anyone
wants to hear. It should happen. That will make them successful if it
happens, because internally they talk about it all the time, but that’s
different than what you say on the marketing page. The marketing page has
to be based on what that person is seeing, what they’re willing to accept
at this moment, what’s going to resonate with them and what’s going to make
them want to try it.
Now once they get in and see stuff and experience it and start exploring
and see that that’s totally different? But we’re talking about homepage.
We’re talking about positioning and we’re talking about marketing. That’s a
whole different thing. So even if 90% of your effort were in task
management, I would still say . . . and people discovered that that’s
actually huge and started running their business that way or whatever?
Fine.
But your hook is meetings. That’s what’s interesting and unique about it,
until such time perhaps that that other task stuff is so insanely amazing
that in fact it can stand on its own. And then, hey, you change. That’s
cool. But right now, I’m sure there are really awesome things with the task
management but I’m equally sure you can’t make a homepage that’s so
compelling on the task management front that it’s going to defeat all these
really big names that have amazing stuff. Not yet; not from a marketing
perspective yet.
So again, none of this is me trying to say what you should do for product
development, in fact, or what you should write in code in fact. I’m not
saying that at all. I’m strictly saying on the marketing side, it’s this
meeting pain solution to me that’s unique, interesting, emotional, it’s a
pain, and so I think that’s where your focus has to be on the homepage.
Edwin:  Okay. I think that’s a very clear conclusion that you draw and
I can find myself in that. That is a challenge that I have been wrestling
with. Okay, what am I going to communicate? How can I communicate it very
quickly and easily and stand out? And standing out to a company that got
$10 million dollars in funding even before they started Asana is going to
be very hard if you bootstrap it with your savings.
Jason:  Exactly. That’s exactly my point is you’re up against either
startups with funding or just entrenched names that have just been around a
long time and have a ton of customers and brand value. If you’re going
against that, you’d better have something really interesting and different
and something-or-other, and you do. It’s the meetings. So it’s like stick
on that meeting. Follow your nose when it comes to the customers, but stick
to the meetings on the marketing side. That is what you have that they
don’t have.
Edwin:  Yeah, if I get people saying, “Hey, I’d rather cancel my
meeting than go to one without MeetingKing,” yeah, that speaks for it.
Jason:  Yeah. I want to go to this homepage and think me, as the
founder of WP Engine, I want to go in here and think, ‘Oh my God, we need
this,’ and then sign up. And right now, I’m looking at write an agenda. I
already write agendas. Minutes? I just take the minutes either in Evernote
or write in Asana and manage tasks that I put in Asana. Like right now it
doesn’t seem like we need it, but I bet you we do need it. I bet you we do.
Edwin:  I agree, but how can I convince you?
Jason:  But that’s what I mean. How can you convince . . . so I
describe some ways you can at least hook me so that I don’t get bogged down
into those things and think I’ll use Asana for that. You don’t want me
bogged down on that. You want me going “oh my God, I’ve got to try this
thing,” so that I can see in fact I do need it and I have a better mindset,
a mental model for this is what I’m supposed to be getting out of it. I’m
supposed to be not only making an agenda, but something that makes people
prepare and come to the meeting prepared. And if they’re not, I can see
that and give them that feedback right away and the tool helps me do that
perhaps so that we get better at meetings.
Help me get better at meetings. Help make all of us better at meetings. And
one final thing I’ll say on this, and maybe we can change topics, but one
final thing I’ll say is you made a very important point which is the
organizer pays, not everyone else. It’s the organizer who is getting the
most benefit, and the other people hopefully get benefit and eventually
maybe they sign in at some point and it’s better if they use it, blah,
blah, blah. But the key thing to getting a new user is to get an organizer
by himself to use it, to see that it’s great, then bring everyone in. It
seems like the key moment.
Edwin:  Right.
Jason:  And so you can use that on the homepage too. So here it says
it’s sort of helping your whole company have more productive meetings, but
maybe you should talk to that organizer personally instead. Your meetings
are a mess. People come to your meetings without preparing, and you don’t
know how to give them the right feedback to fix that. Let me help. Your
meetings run late. Why? Let us help. You know what I mean? Talk to that
organizer and get that guy to sign up. You know, again, you’re right, the
whole company benefits and so on. But maybe if you can hook that organizer,
that’s another thing I would add to the sort of pros and your mindset as
you do this homepage.
Edwin:  Okay, that’s very useful feedback. So I think I have something
else, something to do in the next couple of days here.
Jason:  Yeah. I think another thing you wanted to talk about was the
whole keep bootstrapping or raise money question.
Edwin:  Right. So I really believe that I’m onto something here. I get
a decent amount of traffic. My marketing site is hosted at WP Engines so …
Jason:  No wonder you get so much traffic.
Patrick:  And it’s fast.
Edwin:  Yes, it is. No, I’m a very happy customer actually. Because I’m
so successful, I have to pay these overage fees so I’m happy with that. But
anyway, so I get a decent amount of traffic. I get quite a good conversion
rate from people visiting the site to creating a trial.
Jason:  Wait, let’s just go to the top. Why would you want to raise
money? Most companies should not raise money. Most companies do not raise
money. You’re a bootstrapper with lots of experience. You clearly can
produce a product and so on. Why do you want to raise money? Why is this
even on the table?
Edwin:  Because I have so many ideas. And I really believe I can do, on
the sales part, so much more if I have additional people. And the thing is
I’ve been doing this alone. I think it was either in one of your blog posts
or one of your other interviews, but being alone, it’s getting hard at
times.
Jason:  Okay, hold up. These are really important things. So first of
all, if you had more people, there’s more things you can do.
Edwin:  Yes.
Jason:  That’s true in engineering; it’s true in sales; it’s true in
marketing. I’m sure it’s true across the board. That is always true for all
startups until they get old, right? That is always true. So that by itself
is not a reason to raise money. If you raise money, you’ll have more
people, but the stakes are also higher, the requirements are higher, and
you still don’t have enough people.
So I get that, but raising money actually does not address that. And
then you said you don’t want to be alone. Well yeah, you could potentially
find a cofounder. With higher pricing and other things in that nature,
maybe annual pricing and so on, you could probably get enough money
together to start having an employee if a cofounder doesn’t sound good.
Raising money completely changes what the company is and what the outcomes
can be and what your job is. Lots of things change. So hiring more people
and being around more people and getting more things done is not actually
one of the reasons.
Let me ask you this: what is it that you want as the endgame of this
company? Do you want to make a billion dollar company? Do you want to make
a company in which you personally take home millions of dollars, but it
doesn’t really matter what other form that might take as long as that’s
happening? Do you want to keep it a tight group of people where you know
everyone’s name forever and it’s just a high-performing, awesome group of
people? Or do you want to have a thousand employees someday? What is your
goal with the whole company?
Again, regardless of how you get there. What do you want? What would be the
best end-state for you? Do you want to sell it someday?
Edwin:  Yes, but that’s not short-term. In seven years my daughter will
go to college and travel is my biggest hobby so it would be great if I can
cash out successfully in seven years. But before that, I would like to
build a profitable business, a business that can exist on its own.
Jason:  Okay. Why?
Edwin:  Well, because I think that’s the very essence of a successful
business, that you can make profit with it.
Jason:  So would you say literally building a profitable, growing
business is fulfilling because it’s sort of doing something good in the
world, what a business should be, and all that sort of stuff for you?
Edwin:  Well, I think it is the ultimate measure of you’re offering
value to people that they are willing to pay for it. Yes, I think I would
get a lot of satisfaction out of that, and I am already getting that.
Jason:  That’s true. Okay, and when you say you’d like to exit someday
in the next seven years, let’s say between now and seven years from now,
what kind of money are we talking about that you want to have from that
exit? If it’s half a million dollars, that’s not enough.
Edwin:  No, that doesn’t help.
Jason:  I’m guessing if it’s $500 million, it’s enough. So what’s the
minimum you want to get out of it to where you’re like bang, I got enough
money on it that I never have to worry about money again or whatever it is
that your goal is.
Edwin:  Right. I’m 47 now. I’ve had the fast cars. Money is . . .
Jason:  So how much? Five million? Ten million? Just give me a number.
What kind of exit do you need to be successful?
Edwin:  Okay, I always look more at value than at what can I get for
it? Is it good?
Jason:  I know, how much money? Is it ten million? A hundred million?
What is it? One million?
Edwin:  No, one million doesn’t get you very far. Ten million, I think
I can be very, very happy for the rest of my life.
Jason:  Okay. How about five?
Edwin:  I have to think about it. Look, this is kind of a funny
discussion because it might be that . . .
Jason:  It’s not funny. It’s exactly what we have to decide in order to
know whether these tactics are the right thing.
Edwin:  Jason, listen, if the company is generating a lot of profit and
there is a huge cash flow, then five million might be way too little.
Jason:  That’s not what I’m asking you. I’m asking you how much money
do you have to have in the bank account to walk away from it to where
you’re saying great? Of course if the company is making five million a year
in profit, you wouldn’t sell for that. No kidding. That’s not what I’m
asking. I’m trying to figure out what end stakes are good for you, and it
sounds like an exit between five and ten million would be a good minimum
where you’d say “yeah, if there’s something in that general zone, all else
being equal, I’d be happy. That’s it. I don’t have to make a 100 million to
be happy. I’d be happy with ten; I’d probably be happy with five.”
Edwin:  I don’t need a 200-foot yacht with a helicopter, no.
Jason:  Okay, so all the things you’ve said so far are telling me do
not raise money. So you said I value making a profitable company. That’s
important to me that it be profitable. That’s the point. That’s the measure
of success is that it’s a self-sustaining, profitable, growing company.
When you raise money, that isn’t the goal. That is explicitly not the
goal, and that won’t be the goal for those seven years that you’re talking
about wanting to run this for roughly. I know that’s rough, but still. It
won’t be the goal, and it won’t be the kind of company that you’re
building. So it’s interesting that the fact that that’s kind of against
your nature, which I totally understand by the way and agree with that
nature, but that isn’t what the goal will be. So that will be dissonance
for you.
The second thing is exit. There is no venture capitalist who wants an exit
in which you would only make five or ten million. And the trouble with that
is you would be happy with that exit, again, assuming it’s a fair exit of
course. But assuming it’s a fair exit, a venture capitalist, and I’m
explicitly not saying angel because we could talk about angel and they’re
sort of special so that might work out.
But a venture capital, if we’re talking about institutional money, venture
capital is not interested in any kind of outcome where that’s all the money
you make because it means they wouldn’t have made much money and they’re
not interested in that. They’re not signed up for that. And to be fair,
when you take their money, you’re not signed up for that either or you
shouldn’t be.
Edwin:  No, I do think, and I realize that very much, that if I were to
take venture capital, the whole game changes. You know that I ran WinZip
before. I first did it for the founder. After that, I did it for a private
equity firm then we became a part of a larger corporation. The game changes
very much. So if I were to raise capital, I understand that I have to run
the business differently.
Jason:  Yeah, but the point is this. You’re 47. You’re not going to get
a lot more cracks at building a big business that can exit for five or ten
million dollars, right?
Edwin:  Well, I hope I still have some years left, but no.
Jason:  I know, but you don’t have five more cracks because building a
business that is that valuable just takes time. That’s all.
Edwin:  Yeah.
Jason:  So anybody in their whole life doesn’t have ten cracks at it,
right? You only have so many cracks at it. So the idea of being able to
make money from now until some kind of exit if any, and the options with
it, what it can look at and what size, if you’re bootstrapped or angeled
and we’ll get to that, they’re vast. There are many ways for that to
succeed and there are many ways for you to make money along the way and so
on.
With VC, that’s simply not true. If the company absolutely skyrockets
and does incredibly well, then typically you can take some money off the
table in subsequent rounds and stuff like that which may add up to what
you’re talking about, that kind of money. That’s okay. But now we’re into
such a slim chance. The most likely outcome is that you wouldn’t make money
at all.
On the other hand, it doesn’t take you much money to be literally never
wanting for money again. And so, again, to me, and again I don’t know you
personally so this is all just very superficial. But the things that you
want? “I only need a little bit of money to never have to work again. I
want a company that’s profitable.” And you strike me as someone who wants
control over the company and wouldn’t particularly like to become a GM
again. You’d rather stay a CEO this time is my impression. These things are
not commensurate with raising money, at least institutionally. So it feels
to me like that’s not there.
Now one other thing there is that also you don’t have the data right now
for that. What I mean by that is startups nowadays that raise money have
absolutely ludicrous metrics. It’s hard to imagine how they even got it. In
the consumer space, the saying is a million active users is table stakes.
You’re not even going to talk about raising money if you don’t have a
million users.
Now this is not a consumer company, but even in this, you have several
hundred users. They pay something like . . . I’m just looking at the
pricing page. The middle one says $40 a month, so let’s just say on average
they pay $40 a month. I don’t know what they pay. These are all numbers
that are really small that are not going to interest institutional VC. This
is not an interesting growth rate. It’s not an interesting amount of money
or an interesting number of companies.
Of course you’re going to change the homepage, but if I’m going off of
that, just for what the company is today, and I see schools, nonprofits,
etc., I’m instantly out because those companies are horrible for venture
capital. For venture capital, right? You just don’t have enough traction on
the business side to demonstrate that that’s there.
So in other words, the bottom line is you’re not prepared right now in
terms of the market, the product, the metrics anyway for VC, and it doesn’t
sound like you’d be happy with VC. So my initial thing on the VC angle is
not a fit for what you want and for what it is. Does that make sense? What
do you think about that?
Edwin:  It makes sense, and it’s also why I’ve been doing it this time
with being my own angel and self-funding it. And of course I’m very
fortunate that I can afford that. Sorry?
Jason:  That’s called bootstrapping, right.
Edwin:  So I’ve been very fortunate that I’m in that position. The only
reason why I bring this up is that gee, I really think that I’m onto
something. I think I might be able to speed things up, especially now that
everybody always talks about the book The Lean Startup. I really like the
book Nail It then Scale It. Why not get a partner?
Jason:  You’re not ready to scale yet. You’re not nearly in scale phase
yet. Well, I guess you don’t want to tell me how many people sign up a
month or do you?
Edwin:  I prefer not to, or at least not while we’re recording if you
don’t mind.
Jason:  Unless you’ve got all these hundreds of customers in one month,
you’re totally not ready to do anything with the word scale in it. That’s
not happening right now. You don’t have a product market fit; you’re not
able to describe who the customer really is; you’re not getting 10 or 20
people a day paying you. You’re just not having to deal . . . you’re not
having issues of scale to deal with and to go apply money to. That’s just
not what’s happening right now.
You’re still trying to find this is exactly what we are. This is why people
buy. This is who we’re selling to. We’re starting to see if we spend a
dollar, we make four like automatically. You’re still seeking all of these
engines of the business, which is fine. It’s just what phase you’re in. And
therefore, not ready to do anything with the word scale in it. And again,
that doesn’t have the metrics that a VC wants. And anyway, again, you don’t
need to.
Now angels are a different story because there are all kinds of angels and
typically angels don’t care about the nature of the exits, meaning because
an angel doesn’t have a fund with all the fund dynamics, they’re not
subject to that same portfolio theory. Now some people say that’s why
angels lose a bunch of money, but that’s their problem. The fact is that’s
how they act. The fact is typically angels are happy to just get their
money back. If that’s the exit, they’re fine, because oh good, I get to
play with the money again. That’s the attitude, right?
Edwin:  Yeah.
Jason:  Typically, angels are very, very happy if you have an exit that
makes you independently wealthy and gets them even just a small return.
Typically they’re thrilled because that’s kind of why they’re doing it.
Look, there are a few professional angels and again you won’t be able to
get any of those because you don’t have metrics to back it up.
So for example, some of the companies that I’ve been angel investing
in, they literally have hundreds of thousands of active users just going
into angel rounds because they’ve already bootstrapped stuff. They’ve got
some small seed stuff. And the number of companies available to have those
kinds of metrics are actually surprisingly large. And so professional
angels that have access to real deal flow? They don’t have to make bets on
companies that don’t have a lot of traction yet.
Now every company starts with not having much traction before it gets it,
right? That’s what they all look like so it’s like what the hell? But they
have the luxury, the ones that are sought after, the professional ones that
are sought after. They have the luxury of saying “right, but I see a lot of
deals and everyone wants me to be in their deal. And so I have the luxury
of sitting back and saying hey, I don’t have to take that bet because the
next company that comes along will be further along and I’ll take that
bet.” So people who are great and have good deal flow have the ability to
not have to take as much risk. And that’s unfortunate for folks who are
still trying to prove it out and still trying to build it up.
And so that leaves you with angels who are more like friends and family or
just not those professional ones, again, the ones I’m talking about where
look, this is fun money. They want to be a part of something. Maybe they’re
on Angel List, maybe not. Maybe it’s some local angel forum kind of thing,
there’s a lot of those.
Edwin:  Yep.
Jason:  Often they’re successful businesspeople and they’ve got a bunch
of money so they just set aside a couple million for this because it’s fun.
And again, they don’t have much expectation of return. Everyone wants to
make a return, of course. But at the end of the day, they just want you to
be successful and happy and maybe make a little return. It’s fine. Now they
typically won’t be terribly strategic to you in terms of helping with
recruiting or strategy or anything like that. Sometimes they are.
Edwin:  Or press coverage?
Jason:  Or press coverage, right. Probably not. But it’s just money. So
it just solves the thing you were saying where it’s like “look, just give
me some money and there’s four things I know I can go do that will help
because X, Y and Z will bring me . . . I know if I just do some more
marketing, this will happen; I know if I get press, that will happen. I
have evidence that if I make these features, I can go get these customers,”
or whatever. A list of stuff. So if it’s just getting money, as they say
dumb money, then angels could be a way to do that.
And that’s fine, but again, there’s also all these downsides. There’s all
this paperwork. You have to report to them. Some of them want to bother you
all the time. It’s hard to tell them to go away because you have their
money. So even then, it’s always better if you don’t, right?
Edwin:  No, like I said, that’s why I have been doing it so far on my
own dime. There’s a third alternative, and that’s a cofounder.
Jason:  Oh, yeah.
Edwin:  You briefly mentioned that already. I’ve had some exploratory
talks with people, but there’s a huge challenge of course and I think I’m
probably not the only one who struggles with that. “Gee, I’ve invested all
this time. I’ve invested all this money.”
Jason:  So?
Edwin:  You get a cofounder onboard. How do you split equity? How do
you split revenue? How do you do that?
Jason:  You work it out. No, it’s not 50/50. You just work it out
unless they’re coming with a whole lot of stuff behind them that really is
going to be worth a lot. But look, you just set up something where if it
doesn’t work out in the first year, they don’t get anything. So you know
you have a rip cord if you need one. You make sure all the prenup stuff is
good. Make sure you have a lawyer for that and so on. Make sure you can
undo it if you have to.
Edwin:  Yep.
Jason:  And yeah, look, of course it’s a risk. What if the person is
bad? What if they screw things up? In some ways, the worst thing they can
do is be mediocre because then you can’t point to something they screwed up
and say this is why you have to leave, but on the other hand, they’re not
killing it and they’re not really doing it. In fact, that’s kind of the
worst outcome.
Edwin:  Maybe it is, yes.
Jason:  But look, just because you’re cofounder doesn’t mean it’s 50/50
and you may or may not call it cofounder. You may call it employee number
one with a really low salary and really generous stock options and as the
company grows, you’ll fix their salary. Maybe that’s one way to go, right?
It doesn’t have to be that.
Reid Hoffman has some interesting stuff about cofounders. He says there’s a
lot of kinds of cofounders. There can be a cofounder that shows up four
years later, because cofounder in his kind of thought process, and I like
the way he thinks about it, it’s someone who acts like a cofounder. It’s
someone who works the 16 hours a day, 7 days a week like you do for real
and absolutely is poured in all the way and is making that kind of impact
that you can feel and see. It’s undeniable and it’s forever and their
identity is locked up in it.
These are the kinds of things that you can call them honorary cofounder or
something, but these are the qualities that are important. And of course,
it’s not 50/50 stock or any of that kind of stuff. Of course there’s a
prenup and of course you control the company and you decide and you should
be able to decide that person can’t be here anymore. Of course, that’s not
the attitude you have going into it, but legally that needs to be the case,
right? So you have that.
So yeah, of course it doesn’t mean 50/50. So I think that’s a great idea. I
think it’s interesting to think about what would that person be, exactly?
What is the hole you need? Is it more the marketing/sales side? Is it more
the engineering side for you to do those things? And maybe an interesting
way to attack that is to ask what would the perfect person there look like?
So for example, if you say look, marketing, sales, marketing, sales, the
product basically works. We just need more people to find out about it. If
more people find out about it and understand it, they buy it. That’s what’s
happening. I just need that to happen. Can you find someone where they have
a rolodex of some people they can call to get going on some of the bigger
things? Can you find a person who has some really good marketing experience
in an adjacent market? It’s not meetings, but maybe it is to-dos.
Could you pull . . . Asana’s too new, but is there a marketing guru at what
are some of those to-do software . . . like Remember the Milk. Is there a
marketing person at Remember the Milk you can hire and say look, what you
did is great. Everyone knows who you are. But instead of flogging this
thing that’s never going to add a feature ever again, how about become a
cofounder this time and really make a difference? You know what I mean?
That kind of an offer.
So again, what would that person look like? What will they have done? What
might their title be today that you could search LinkedIn on or you could
pummel your network around? And it all depends on what you need them for.
For all I know, it should be an ace developer so you can do those things. I
don’t know. It’s useful to think about what would that person bring to the
table other than working really hard that would give you an edge or maybe a
shortcut?
Edwin:  Just boost it?
Jason:  Yeah.
Edwin:  Yeah, okay. Well, the people that I’m talking to would actually
fit the skills that would be very welcome to increase visibility and just
give it a boost. It was a couple of years ago that I needed a technical
cofounder because I’m not a programmer myself, but I have now a very good
technical team that I’m really happy with so I’m all set with that.
Jason:  Nice.
Edwin:  So yeah, it’s good stuff to think about.
Jason:  Okay. And then the final thing is just getting the revenue up.
Edwin:  Yes.
Jason:  A lot of things are solved with revenue. Is there a repeatable
advertising channel that’s going to get you people? Can you try an annual
plan and see if people will do it? And if they don’t want to do it right
off the bat because maybe they can’t commit that much right off the bat, is
it something you can go back after a month or two and offer people? That’s
the kind of thing that generates a huge amount of cash flow immediately
which is exactly what you need to plow back in to do these kinds of things.
And some of that may be exactly to hire this other person to do
whatever, like acquisition, and fuel the growth that way. Or it could just
be as simple as look, there are some paid ads that actually work and maybe
you know some of those. And it’s just look, if you could just apply two
grand a month instead of $500 a month, that would already make a difference
and a few people switching to annual would just hand you the money.
Sometimes, there are simple things like that.
When the company is small like this, small changes in cash flow like that
can actually make a big difference in your ability to apply that to growth.
And you’re not going to 10x your growth in one month, obviously, so if you
can just get a boost and make next month twice as big in growth as it
would’ve been, and then do that again and do that again, that’s actually
pretty meaningful pretty quickly and you only have to move money around a
little bit in order to try to make those effects.
Edwin:  Yeah, yeah. Okay.
Jason:  The final thing is I just think the prices feel really small,
really low. I don’t know if that’s due to people having credit cards under
limits they have to reach at bigger businesses, and the fact that it does
say clubs, schools, etc. that have no money at all. But that is something I
would definitely consider changing. It will change the demographic of who
tries it and who can buy it, but your RPU is so low that there’s very
little you’re going to be able to do to acquire customers profitably.
Edwin:  Correct. I am actually planning on experimenting with pricing.
I mean both you and Patrick, Patrick McKenzie, there’s a lot of interesting
information and discussions out there on the value and the pricing of
software-as-a-service. So it’s definitely worth it to do experimenting with
that.
Jason:  Charge more. That’s it.
Edwin:  That’s what it comes down to.
Jason:  No, seriously, forget all those metrics and ratios and crap.
You just have to charge more. Your RPU is too low.
Edwin:  What do you think about my business model where the organizer
needs to have a paid account and participants, they can provide comments
and they can contribute to the agenda. They can update tasks. They can do
so with a free account. Do you think that’s a good business model? Or do
you say . . .
Jason:  Yeah, I like it because only one person has to be convinced to
get going. I don’t like companies where you have to get a whole bunch of
seats just to start. That’s a barrier. You just want one person to have to
be able to make the choice and to cause it to happen. Now of course you
want people to login so that you can know about them and do stuff like
emailing them and say “hey, you’re a participant in that meeting. Did you
know you can use this to run your own meetings?” Right? And try to get them
to in fact become an organizer under that same company. So I love the idea
of just get in with minimum barrier, but then try to use that to grow the
tool.
But all that means is you just need to charge more per organizer. Again,
like this Pro Individual? $10 a month? I see there’s the checkmarks and all
that kind of stuff around what you can do, but the point is I don’t care
what you can do. It’s just so little money that you just never, never can
make money at $10 a month and you certainly can’t afford to pay for user
acquisition at $10 a month. And so to me, everything here needs to get a
lot more. And you’ll have to do better at explaining the . . .
Edwin:  The ROI?
Jason:  No, not the ROI, the value. ROI . . .
Edwin:  Well, isn’t that the same?
Jason:  No, it’s not, because ROI is when you say things like “if you
save ten minutes per meeting times this many meetings, you’ll save this
much money and time and the tool costs this, therefore it’s profitable.”
That’s an ROI argument, and nobody thinks that way. Nobody. Nobody actually
does this calculation, believes it, and no one’s budget works that way. No
one gets to pay for meeting stuff out of their budget because they saved
time and it comes out of some time budget. That isn’t how company budgets
work. That isn’t how people think.
Edwin:  Yeah, one of the challenges is that meeting cost is not a
separate line item on the P&L statement so nobody attacks it.
Jason:  That’s correct, but your tool is a line item somewhere on a
credit card bill. But in no place do you see on the P&L you saving money
somehow. We know, you and I know, of course it delivers all this extra
value above those dollars. We know that. But the P&L doesn’t know that,
right? That’s not going to show up. And that’s why the ROI argument is not
useful.
So rather, the person simply needs to believe it. In other words, you have
these testimonials on the front page that are really great. “I swear by it.
I’d rather cancel a meeting than go to it.” Okay, so a person that says I
refuse to do a meeting without it, a person who says that, it’s worth $10 a
month? That’s it? The feeling that they get by saying that, whatever that
feeling is, whatever that reason is, they think that not because of an ROI
or calculation, but because of something else like the alleviation of the
pain of meeting management of not tracking what people do or agenda writing
or whatever the thing was. It’s worth more than $10 a month to that person.
I know it just from what they said. So is it worth $100? I don’t know. But
not $10.
So definitely, you have a lot of tiers. You only have a couple hundred or a
number of hundreds of customers, so I can’t imagine you would necessarily
need all five tiers. On the large end, you might say call us, so you can
actually talk to someone and negotiate something much bigger; Twenty-five
organizers is actually kind of a lot.
Edwin:  Yeah. I actually have a few of those. One is a very large
school system.
Jason:  That’s my point, so how come it’s only $124 a month, right?
That’s a lot of organizers for a little over $100. That doesn’t make sense
to me. That should be much higher or probably have been negotiated
separately so you could kind of ask how much have you got?
So anyway, that’s just a long way of saying raise prices. The value
has to be higher than this. If people are really getting value out of it,
then they’re getting more value than this anyway. That’s the truth. And if
their budget doesn’t allow them to pay more than $10 a month, you can’t
have them as customers anyway. You can’t afford it.
Edwin:  Okay.
Jason:  You can’t afford it. If you can have 1,000 people immediately
today say, “I’ll give you $10 a month,” you still couldn’t afford that. It
sounds like oh, that’d be great until you do tech support for 1,000 people.
Then how did you acquire them? With what spend did you acquire them and
when do you get that back? It actually doesn’t work. And you’re
bootstrapping which means you have to have profit to pay yourself, and then
you have to have profit to use the business, to put back in the business.
You have to have extra money to do these things. And at $10 a month, you
will not have extra money to do things.
So to me, you just have to raise these prices then the people have to
believe it’s worth that. And things like the homepage change we made is
part of what will do that. It’s that feeling of yeah, this is what I’m
getting and this is why when the bookkeeper, the inside accountant, comes
over and says “hey, what’s this $79 a month charge again?” They’re like “oh
man, I use that like ten times a week for all my meetings. We have to have
that.” And they go “oh, okay, whatever.” Right? That’s what you need. That
little moment is what you need. And since they’re spending the company’s
money, the only question is budget and their willingness to tell an
internal accountant about it. And in that case, anything under $100 is
probably something they can do if they’re getting value out of it.
And again, maybe $79 is too much for the low plan. I get that. But if the
low plan was more like the $40 that your small is and maybe the next one is
$99 and that pro large is more like $500? Let’s get this stuff up there so
you can get some extra cash.
And then finally on that, consider after you do that and after you sort of
settle on what your new prices are that are working, consider going back to
your existing customer base and asking them to pay more. That’s a whole
other discussion really, but . . .
Edwin:  Yeah, I was going to say, I don’t like that. People who have
supported me from the beginning, I think . . .
Jason:  That depends. It depends on who you ask. And maybe some people
you don’t ask because it’s not appropriate or you don’t want to, but there
are people where if you described it like a human being, they would be
happy to pay more. There are people where you’d say look, obviously, this
is a small business I’m trying to run here and I’m trying to make this
product better for you and have good support.
Edwin:  Yeah, and continue to invest in development.
Jason:  Well, yeah, but that’s for you. You can say “Look, what I
realized is at the prices I have now, I can’t afford to do it. They’re too
low. And you at the big company paying $40 a month for 5 organizers? You
probably know that $40 a month is not really enough to sustain me as a
business. This is one of the things that I’ve figured out.
So I’ve got new pricing, and this I do believe will be enough. I’m
going to hire another engineer. I’m going to hire a tech support person to
make sure that if you have any questions, you get them answered. I’ve got a
list of stuff that you, the customers, have asked for that I’m going to
do.” In other words, you can really make the case and I think a lot more
people than you’d think, if you make a personal plea that it’s not about
the company but you and building your company, they’d actually react quite
well to that.
And even if a few people cancel, if a lot of people do it you make a lot
more money anyway. And again, you want customers who are in this with you
who do understand that. These are good customers. These are happy customers
and happy for you. This is a good relationship. And someone who says “No,
it has to be $10 a month. I’m out of here.”
Again, that’s not really a great customer relationship anyway. It’s not
clear they were getting a lot of value anyway. They certainly don’t
appreciate what it’s like for you as a small business owner anyway, so they
may be let down by other things like you not having 24/7 support the one
time that they needed it. They’ll probably be disappointed then too, right?
Edwin:  Right.
Jason:  It’s not necessarily a bad thing. And again, you’ll hold out
people you know. There are people you know you’re not going to ask them or
something. Fine, right? But a lot of those hundreds of people might be more
willing than you think, and that kind of a cash boost immediately is pretty
darn significant right there. Again, it’s such a big change to the company
for you to do it because it all goes to the bottom line, obviously. You
really should consider doing it.
And one last thing on that, one last little trick, you can make this
impassioned plea and then say this. “Now I appreciate that you’ve been with
me since the beginning, and I wouldn’t want someone raising prices on me
even if it was kind of needed for the company. So here’d what I’d like to
do. I’d like to offer you right now you can stay at your current rate
forever, and I’m not going to bother you about it and it’s perfectly fine,
or you can join me at the new prices and join me in making this company
successful. Either way is perfectly fine.” Leave it at that and see what
people do.
And that way if people really, really . . . if they write back and say
“Look, dude, I love you but I really don’t have the money,” you can say
“okay, that’s cool, I understand that.” And everything’s still fine, right?
But the customer also knows that they’re sort of paying under, and that
might be good for support later on.
So that’s okay, but then the people are like “Yeah, dude, I’m with you.
Let’s do it.” Those people are now opting in. So again, that’s just a very
long way of saying I think there’s ways of doing that that are very
friendly, very human, perfectly fine and perfectly ethical and can change
your cash flow by thousands of dollars a month.
Edwin:  Okay, definitely something worth trying. Like I said, I am
planning on experimenting with my pricing and that could be then the second
step.
Jason:  Yeah, experiment first then when you lock it in you go back to
your audience. The only other thing is if you’re experimenting on the web,
you may need to tell your customer base or at least be aware because if
some of them go back to the site and see different pricing, they may be
surprised and then worried, “Wait, does this affect me,” and so on. So
maybe say nothing. Maybe tell them something. But just be aware of that
potential problem.
Edwin:  Well, a possible solution would be that I announce it a month
before that now the price is $9.95 and next month it will be $19.95 or so.
Jason:  No, that’s not enough.
Edwin:  That’s not enough?
Jason:  No. Charge more. Not $19.95. More.
Edwin:  I don’t know. It’s interesting because I had a discussion about
pricing with a very successful friend of mine in the software business and
he said “Oh, you’re way too expensive.”
Jason:  That’s fine. Not everyone can be Neko Mech [SP].
Edwin:  I’m not mentioning names.
Jason:  This is not that kind of product that you literally sell a
million of.
Edwin:  Right, it is not and I do think in a lot of cases it does offer
a lot of value, both monetary by saving time, but also the fact that you
just get things done and that is even much more important. You start with
the completed tasks from the previous meeting, so you start off on a good
note. “Hey, look what we accomplished.” Yeah, I think that is important.
You have a positive setting when you start.
Jason:  Sure, yeah. That is the right argument, not the ROI argument.
So look, if you want to lower prices, do it, but I think if you dropped all
your prices by half you would not multiply your actual paid users by say 4x
that would overall make you 2x more money. I don’t think that would happen.
But I do know you’d have two more tech support and you would not extract
much money out of big customers.
Whereas if you go the other direction, you’re likely to have much
more profit per customer and still have pretty much the same number of
customers. That’s generally what people find, by the way, when they raise
prices dramatically is the sign-up rate doesn’t change at all which is the
most common result. And I say most common because I’ve talked to a lot of
startups about this. I can start listing them. I probably shouldn’t just
for their own sake, but time after time.
And by raising prices by things like 10x, and that doesn’t mean you should
necessarily raise it by 10x. I’m just saying typically you raise prices.
When they’re this low, I would say the $9.95 is really too low. Maybe $39
is a better place to start. Maybe $29 if you really don’t have the stomach
for it. And then get up to $99 quick or $129. Get up above there really
fast and then have that high upper tier. Typically, you see no change in
signup rate.
Edwin:  Now one more crazy idea that I have. I think GitHub had it,
maybe they still have it. So I’ve had these long conversations with the
insurance company, and in the end they decided it was too immature or I’m
too small of a company so they didn’t want to move forward.
Jason:  Right, okay.
Edwin:  So big companies are interested in it. What if I offer an
inside firewall solution that they can install on a local server?
Jason:  No, don’t do that. I don’t think you have evidence they want
it. You don’t have 20 companies who are using it and saying, “This is
great, but I really need it inside the firewall,” and giving you thousands
and thousands of dollars a month. You don’t have that proof. Just because
people contact you doesn’t mean that that’s interesting.
Edwin:  No, but if you just put it up on the pricing page? “Hey, we
have this inside firewall solution. It’s $25,000 per year plus X per user.”
Jason:  If I were you, I wouldn’t want to sell those. Have you done
that before where you’ve supported hosted things behind the firewall?
Edwin:  No, but I’ve had lengthy discussions with the main developer
about that.
Jason:  Right, but it’s hell to do that. It’s ridiculous. If I were
you, at that price, I wouldn’t do it.
Patrick:  You get into this whole version thing that’s . . .
Edwin:  No, I’m aware of the challenges, but if the money is good
enough . . .
Jason:  That money is not good enough. That’s pretty shitty money for
that.
Edwin:  All right.
Jason:  You said 25 a year, not a month, right?
Edwin:  Yeah, $25,000 a year plus let’s say $50 or $100 per user. $50
per user or so.
Jason:  Again, it wouldn’t be worth the time to me to accept that
incredible additional complexity of now you don’t have just your one
[server] that you control and maintain and have data from that you can do
whatever you want to at any time. Now all of a sudden you have a
proliferation of other things that are behind firewalls that you don’t
control if and when they upgrade. You don’t really know what’s going on
there. You have to manage these images and deal with whatever that is.
There’s going to be authentication systems because you’re going to have to
integrate with LDAP or Active Directory because that’s another thing these
companies want. It’s just this whole ream of stuff that just starts coming
in. I don’t know why you’d want to do that rather than focus on the company
that’s working.
Edwin:  Okay.
Patrick:  It also changes the tone of where you have it now, you have
users who are excited to use the product and you can grow out a tribe
inside an organization. If you’re selling all at once, it’s going to be
used by fiat. Then people say, “Well, we have this system. You’re required
to use it.” It changes the whole tone of the way you communicate your
entire product to users I think.
Edwin:  Okay. Yeah, I mean the bottom-up approach of course is really
nice if you get a couple strong evangelists.
Patrick:  It’s certainly different. I tend to prefer the more evangelist
approach as well. But at a minimum, they’re very, very different.
Edwin:  Yeah.
Jason:  Look, the bottom line is the last thing you need is to add
complexity to anything you’re doing because there’s only you and a small
team of developers and hopefully one or two other people soon, but that’s
all. Anything that adds complexity and complication or multiple things or
anything and cost? Man, I would just run away from that. Run away.
Edwin:  That has always also been one of the things at WinZip. We kept
it simple, the business model. But fortunately there we were in a position
that we could occasionally say, “Nope, sorry, we don’t do that.”
Jason:  Look, every hour that the team spends trying to do this thing
that’s going to be a constant nightmare to do, every hour you spend in
there could’ve been spent on something that makes it more valuable in the
first place. It could’ve been spent on a feature that makes somebody want
to buy it. Every second you spend dealing with selling that, you could’ve
been getting PR that gets a hundred signups that are cheap to support and
deal with. Every time someone deals with a tech support call from an old
version of something or other and you don’t remember whether some option
was there or not? It’s an unbelievable burden to have when you could be
spending that on things you know are much more likely to be valuable to
you.
Edwin:  Okay, makes sense. Makes sense, those arguments. Yeah.
Patrick:  Gentlemen, this was fun.
Edwin:  I really appreciate your time and sharing your insights. I
thought it was a very good conversation, and I enjoyed it.
Jason:  Thanks, I had fun too. I want to see the new homepage because
we still need help with our meetings I think.
Edwin:  Yeah. Well, there’s nothing to stop you from starting to use it
now.
Jason:  Yeah, right.
Patrick:  You’ve got to thrill him first.
Edwin:  Okay. Well, thanks again, and I look forward to having a link
on my website to your blog.
Jason:  Okay.
Patrick:  Thanks, guys.
Edwin:  Thank you. Bye-bye.
Jason:  Bye.
The post Smart Bear Live 8: Edwin from MeetingKing.com appeared first on @ASmartBear.
...more
1h 33min
March 11, 2014 Smart Bear Live 8: Edwin from MeetingKing.com
Listen to this episode if you want to hear about a founder who has a product and users and paying customers ... and is trying to figure out how to take his company to the next level and grow faster.
...more
1h 33min
September 04, 2012Smart Bear Live 7: More from AZ Disruptors
Welcome back to Smart Bear Live, the call-in show with Jason Cohen, sponsored by Software Promotions. In this episode, we share three more interviews from our AZ Disruptors meeting last fall. Hamid Shojaee, CEO of Axosoft, cohosts a group of Phoenix-area startup founders (Jason was on Skype video – everyone else was in the room … it works way better than you’d think):
Dan from Member Desk
Cofounder question
Gelie from Networking Phoenix
Listen to this episode if you want to learn about getting your great new solution in the hands of important customers … decide whether or not to work with a cofounder … and how to get a board of advisors.
And please tweet your thanks to Software Promotions for sponsoring Smart Bear Live! (e.g., “Thanks @TheDaveCollins for sponsoring #SmartBearLive!” or just retweet this one).
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Transcript
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Dan:  Hey, Jason.
Jason:  Hey. What’s the name of the company?
Dan:  The name of the company is Member Desk.
Jason:  Member Desk? You know, my daughter, she’s only 2 and Member is how
she says remember so it makes me think about just how you remember, but
that’s not most people. But Member Desk sounds like you run some kind of
organization and the front desk is sort of the metaphor for a lot of stuff.
There’s a sign in sheet for volunteer stuff. There’s scheduling. There’s I
don’t know, memberships. There’s just stuff and most organizations are bad
at it and don’t have somebody devoted to it. So Member Desk is a virtual
and yet it can also be physical, literally sitting in the front of the co-
working space inexpensive way to do that for pretty much any organization.
Dan:  That’s pretty decently close, actually.
Jason:  Right. So what is it really?
Dan:  Member Desk is a hosted membership site software. Let’s people sell
premium digital content online without dealing with any of the technical
stuff.
Jason:  What is premium digital content mean?
Dan:  Videos, music.
Jason:  Why is that premium?
Dan:  Because you’re not giving it away for free. You want people to pay
for it.
Jason:  Premium means for money.
Dan:  For money. Yes.
Jason:  So selling music.
Dan:  Music, videos.
Jason:  Because you said premium digital media, so I didn’t get selling
music out of that.
Dan:  Yes. That’s one of the possibilities.
Jason:  Selling music. Selling videos. Selling stuff that can be delivered
electronically but you want to make money. Aren’t there a bunch of
companies who deliver stuff electronically and let you make money on of it?
Dan:  There’s a difference. Basically Member Desk creates a membership site
for you where people will pay you, say, on a monthly basis. $10 a month,
$50 a month, whatever, and then they get the user name and password to
access their membership site; Then they get access to all the content that
you allow them access to based on how long they’ve been a member.
Jason:  OK. So this is a Paywall-type thing. This is like what Andrew
Warner does with Mixergy. Where, if you sign up to be a member and pay
monthly, then you get access to the whole archives and all this other
stuff. You’re in once you pay.
Dan:  Yes. Exactly.
Jason:  OK. And so this is a way for just everybody to implement that.
Dan:  Yes.
Jason:  That sounds good.
Dan:  It could work for anybody, but what we’re doing right now is we’re
focusing on the music industry; because we’re actually running the
premium fan site for the 70′ band Chicago right now, and they’re super
happy with it so we decided to focus on musicians. Because musicians have a
ton of content that can be sold digitally. And that kind of leads into my
question because music and all content really is a pretty tough industry.
So my question is how do you get to the people that you need to talk to in
these industries? How do you get to the decision makers when they have so
many people guarding the door?
Jason:  They do. They do, and when you get into music or Hollywood it’s the
worst. Like at least in IBM you try to get into IBM but you know what
titles to go for and find them in LinkedIn and they have admins, but you
can get around those admins and all that. Hollywood and music, you can’t
call Madonna. That’s not ever going to happen. Those kinds of industries
are very much who do you know and that kind of stuff, unfortunately. So
actually I have been advising a company in Austin, who is also in the
music industry; and they actually started with an idea not dissimilar from
what you described, but they are not doing it now. They now do extra-
merchandise so fan selling other fans merchandise that they made but this
time with IP rights and everybody makes money, which is pretty cool. But
they had the exact same problem. That they had to sell the band on it. One
thing I learned from there, is that the manager is the first step. If the
band members want to do it, that’s fine but A, They are harder to find
anyway. And B,The manager often is the one controlling how the money works.
So, if the manager’s on board, you’re probably going to start and if not,
you’re don’t regardless of the band. So the manager, that’s one thing. And
the good thing about managers is that they manage multiple bands, and all
the managers know each other too. So the good news is, if you can get your
wedge in there, one manager levers you into bunch of bands, which is
already nice and that therefore more with your effort; and it’s easier
once you’re intrenched that you could be this person doing this. But if it
were easy to break in with a product for the music industry, which is sort
of like, “I got a game. How do I get people to know about it?” They’re
like, It’s a game. It’s hard. It’s expensive.
There isn’t an easy, cheap way to make everybody know about a game because
everybody is making a game. So it’s not going to be a patent answer. But I
wonder if one answer could be that there are these other technology
companies like this one I’m talking about. It’s called Bitvibe. They do
have some traction. I wonder if another technology company in which you
don’t compete, so that then doing one thing means they wouldn’t do the
other and yet you’re both going after the same people. I wonder if it would
be useful to team up with one of them. Not to merge companies or anything
like that, but simply to say “We’re all trying to get in here. We don’t
compete. Maybe we should try to share some of this as we go because we’re
all trying to do this.” It could work although people are usually pretty
tight about that. The way Bitvibe broke in is that the co-founder is the
drummer for several really big bands that you’ve heard of from the 80’s and
right now he’s in Gregg Rollie Band. Gregg Rollie is the other guy in
Carlos Santana. So pretty top, not A+ list but enough. But the answer is
the co-founder’s been in the industry for 30 years and he’s somebody and so
they can get meetings. So, like in most things, is who you know and
networking and finding out the next person in line, the next person in
line.
Patrick:  You know, I think most start ups are not like that. In other
words, if you look at the most start ups on Earth, their success is not
depending on who they know. But in music and film, I’m not sure I know
people who just break into music and don’t know anybody and have no ends.
That’s a tough one. Hamid, do you have any insight in this?
Hamid:  It’s kind of interesting. So Member Desk is actually an AC
disruptors company, that incubator that we have going here. So Leon and I
have met numerous times, about marketing strategy and the music one is that
developed after Chicago became a customer. But until they had become a
customer I think the thought was that the site might be used more for
people who have very popular blogs or they have content that they write
about about sports or medicine or whatever topic that they become an
experts on. Then over time they start building a library of that content
that they then sell as a monthly subscription of some kind. Or maybe they
have forums that they have premium access for the members. So that was sort
of the direction that we thought about going in and it’s just hard to
figure out the marketing strategy around that.
Dan:  Exactly. One of the things is that it’s software that can be used by
pretty much anybody so how do you narrow it down? How do you focus?
Jason:  Yes. I think you do have to focus. You probably don’t have enough
time and money and energy to go after multiple markets at the same time so
having Chicago, that’s fantastic. And again, if you’re successful with
them, if they show success, which they have big enough of a fan base, you
should be able to.
Dan:  They’re very happy so far.
Jason:  They may be happy but if you show some sort of objective success
like look, Chicago had, I’m just making this up, 200,000 people in their
email list, they had 77,000 people in their fan club, which by the way was
people literally mailing out their things and getting stuff. And they’ve
successfully moved most of those people to this, and now making monthly
money and more money than ever before because of this, and now they’re all
digital and now so easy to do that, and you have that complete story, I
don’t know why their manager wouldn’t push you on to the other bands they
manage. It’s more money for everybody.
It’s like why would this not happen? So I think you use this, again, as a
wedge and go from there if you really focus on getting this out of the
park. Not just they’re happy but the next person has to be bowled over,
whatever that means. Alternately, if you wanted to go after this other
stuff, I think you can certainly can. I think that makes sense, that
market, and it’s even pretty obvious how to find those people. They sort
of, like there’s some standard places that everybody like that reads. Like
a lot of people that read Copy Blogger are the kind of people that might do
that, and Copy Blogger does guest posts and does other things that you
could assume insinuate yourself in. There’s even conferences around
conferences that you could go to where those kind of folks are. These
people like the guy behind I will teach you to be rich, I forgot his name.
Dan:  Ramit.
Jason:  Ramit. He’s a conduit to it and first of all he’s a perfect
customer for this. Although, we don’t need to go in deep in that. He might
not be just because of his particular style but what he is is definitely
the kind of guy that if he got behind this and explained this as a
strategy, he might be able to put 1,000 in your lap.
Dan:  Interesting.
Jason:  So going after those kinds, the influencers of those people like
Ramit. So in other words, it’s pretty clear how you would go after that
thing that’s a growing market. There’s a lot of people who are experts or
have a book that want to make money in other ways just like this. Bob Welsh
is another one who is sort of plugged in that kind of world, and is helping
other people through that kind of thing right now. I think there’s
definitely places. The fact that Andrew Warner id doing this at the moment.
He’s obviously got an implementation already. but he would have probably
use this had it been available.
Dan:  I don’t know if you’ve heard. Lous C.K. just came out with the same
exact model
Jason:  I did. The same thing, right. It was just $5 period but how much
better would it be if it was $5 a month. You’d be under the gun to produce
more content, I guess. But I don’t know. As fans, of Louis C.K. maybe you
do it, because you’re fans.
Dan:  If you’re a big fan you would.
Jason:  What about Adam Corolla? I could totally see some kind of special
with Adam Corolla. Or another example would be This Week in Start-ups.
Where they have the producers thing. It’s the same thing. It’s an
exclusive club, blah, blah, blah. Any podcast or maybe blogger, but
podcast, for sure, like them, that’s over a certain number of listeners,
and that’s not a million people, but it’s 1,000?
Dan:  Yeah.
Jason:  And you know how to find them because just go look at iTunes and
go through the top lists and just go. So I think it’s pretty clear how
you’d reach out and do that, but that’s a whole different thing than trying
to make Chicago work.
Dan:  Yeah, exactly.
Jason:  I do think you have to decide, for now. That doesn’t mean you
can’t decide “Nah, screw it. Let’s go after the other one”.
Dan:  Yeah.
Jason:  Right. You can do that any time you please and that’s OK, but I
think you have to decide now. But of course, braking in at the very
beginning is hardest in any industry, for any start-up, of course it’s a
huge challenge, of course there’s no easy answers, but I’ll give you one
other possible answer because you’re talking about breaking in. When you
say break in it usually means at the top.
Dan:  Yeah.
Jason:  How do I get in front of Lady Gaga’s manager? Yeah, I don’t know.
Right? So there is the other direction, and it’s harder but it’s sort of
if you can do it then you’re in the driver’s seat and you can just do it
which is to go the other direction. Go after the Lady Gaga fans somehow
directly.
Dan:  Interesting.
Jason:  Make the unofficial Lady Gaga Fan Club which they pay for and when
they come knocking on your door saying “There’s thousands of people. We’re
getting emails all the time. They’re paying money. Who the hell are you?”
you say “You’re right. I don’t want to own this. I want you to own this.
I was just trying to get your attention. Now, let’s talk about you can
actually promote this and make it from 1,000 people to 100,000 people and
we can all make a bunch of money”.
Dan:  Interesting.
Jason:  See what I mean? Now, I don’t know that that’s easier because
it’s a bunch of consumers, how do you reach them, I don’t know. They don’t
read Hacker News, so I don’t know. That’s not necessarily a great idea,
but it’s a brainstorm of you can go the other way to get their attention
potentially.
Dan:  Great, I like that. It’s something to look into. It might not be
easier, but something to look into.
Jason:  You know, it may be easy for a particular band or something.
There’s some reason why you have an in with the fan groups of one of them,
like there’s a local chapter guy and he thinks it’s the best thing ever.
You’re like “Well then get your local chapter on” and he does and so in
other words it still might be just a wedge to get in, but that guy’s easier
to find. The chapter organizer of Lady Gaga Fan Club in Arizona, that
person you can locate and you can talk to that person. So, you know,
there’s not as powerful, but at least you can talk to them.
Dan:  That’s true.
Patrick:  Hey Jason, Patrick, sorry. Going in the other direction I
thought you were going to say go after smaller bands that have more
immediately to gain, so there’s bands who play for 1,000 people a night who
might really need the money that this generated. What do you think about
going after smaller bands instead of huge acts?
Jason:  For sure. It’s always easier to get at the smaller people.
There’s probably some clips where the amount of money they could generate
is actually not that interesting.
Dan:  Yeah.
Jason:  And they probably don’t have a very good, well, some of them might
have a good connection with their fans and be able to move them to do it.
But another thing I learned is that a lot of these big bands, they have a
ton of fans but they really don’t know how to message them.
Dan:  Yeah, that’s true.
Jason:  You may have a million Twitter followers, they probably don’t.
They may have a mailing list, it’s probably not even around the number of
fans they actually have. If they’re really organized they have a fan club,
and Chicago probably does because they’re so big and organized, but the
smaller ones surely don’t. So maybe if you found the smaller bands who are
also really good at communicating with their community. That might be a
good sweet spot, because then they may be able to get 1,000 people to pay
them $5 a month, and that’s pretty good.
Dan:  Yeah, for a band that’s great.
Jason:  It’s possible. I mean, it’s easy to talk to very little bands and
just say I feel like the amount of revenue for you is very little. The
amount of training and selling is very high. So I don’t see that, again,
as a stepping stone, OK, maybe, but even so if you have little piddly bands
that go around and don’t make a lot of money, I still don’t see how that
leads you to the managers of the big bands and convincing them that they
will make a lot of money. I don’t think one leads to the other, so I’m not
sure that you’re making that much progress.
Patrick:  OK.
Jason:  That direction, but maybe medium. I’m not sure. This is still
outside my, you know, I don’t know that much about the market of this, so I
don’t really know how those behaviors go.
Patrick:  That’s cool.
Dan:  Great. Thanks for all those ideas.
Jason:  By the way, one last one is if you find a power manager that runs
40 people and they actually give you the time of day and think it’s pretty
cool take them into the fold so that they personally want to do this. Give
them a small percentage of the company, but they have to bring in, not for
nothing, they have to contingent upon them bringing 10 bands, or a certain
amount of revenue, I don’t know, something that you would then say “Oh man,
is that worth it”.
Dan:  OK.
Jason:  Because then they’re personally motivated to do this for you, not
even just for money. Now it’s pride and then telling everybody how they’re
an investor in this hot tech start-up and all this garbage. That’s what
you’re also giving them so that they want to go do this for you.
Dan:  That’s great.
Jason:  If that helps you mint the company it’s totally worth, I don’t
know, 5% of the company.
Dan:  Yeah sure.
Jason:  If that lands you 10 big acts and gets the ball rolling and gives
you legitimacy and blah, blah, blah and he can pick up the phone, my God,
that’s clearly worth it.
Dan:  That’s great.
Patrick:  Awesome.
Dan:  Thanks, yeah.
Patrick:  Thanks Dan.
(strum)
Interviewee:  Jason, how are you doing? My question is, what’s your opinion
on co-founders? So, the company I’m in now is not a software company and
I’m really interested in that space. I have degrees in computer science and
networking but I haven’t kept up on the latest technologies. What’s your
opinion on finding a co-founder? Like somebody who is more of a technical
person, versus just learning the new technologies myself and implementing
something.
Jason:  Well, I think the decision of having a co-founder or not is very
personal. I don’t think there is answers, or industries, or things. I feel
like some people probably are just too much of a control freak to really
have a co-founder.
Interviewee:  Right.
Jason:  Then there are other people who are only comfortable with a co-
founder. And of course there’s the usual pros and cons right? Like with
more people who are not taking salary, you can literally do twice as much.
And that’s really important for an early stage start-up to be able to move
as fast as possible etc., etc. But you also have to agree on things and
this and that. Also when you go through the down and ups with someone else,
that’s just so much better than having to rough it on your own. It is rough
to do it by yourself. But then again, especially looking ahead to what does
it mean when you start taking salary, and how do you divide up the company
and what if it goes sour, which it often, often does. In three years what
happens? And if you sell the company can you sell it for enough that
everyone still. So again, there are clearly pros and cons. I guess I don’t
understand the context in which you are asking. You’re saying you haven’t
kept up with the technology, so should you go find someone who has? That
doesn’t seem like a good reason to do anything.
Interviewee:  Should I find somebody that is up on the latest technology,
so then I don’t have to waste a year.
Jason:  Why? Who cares? Why do you have to make a company on the latest
technology?
Interviewee:  Well, I’m talking web development. I haven’t really developed
any web applications. It’s a web app that I want to do.
Jason:  So you’ve never done a web app and you want to make a web app
company.
Interviewee:  Yeah.
Jason:  Then I would get someone else who’s done it. Or, decide that this
is going to take a long time. Which is okay. Is it Okay if this takes a
long time? Or is this a race?
Interviewee:  No, there’s no race.
Jason:  Oh, well then you can decide. Because you could get someone and
then you go faster or you could say, “No, I want to learn this. There’s no
time pressure so I’ll simply take a long time to build it and who cares.”
Interviewee:  Yeah, that makes sense.
Hamid:  The other thing to consider is, is it going to be a technology
company? Or are you building a web app to service a non-tech field. And
that’s sort of an interesting thing because if you’re building a web
application that could sort of not be on the latest technologies and have
the greatest whiz-bang UI interfaces, and the greatest user experience; but
you are servicing this market that is way under-served. The one thing that
you might be able to do is outsource the development costs of it. I don’t
know what your investment potential is.
Interviewee:  Right.
Hamid:  But if you’re trying to build a technology company without having a
technology co-founder, I think that would be a huge problem.
Jason:  I agree.
Interviewee:  Thanks.
(strum)
Gelie:  Hi.
Jason:  Hi.
Gelie:  All right, so the name of my company is networkingphoenix.com.
Jason:  Yeah, and folks who have common interests and want to find each other
in the interest groups that they can go to can find each other on this
centralized location.
Gelie:  Very good. I’ll give you an A. So, basically what it is, is it’s a
website, and we compile and promote all the different business networking
events in town on the calendar.
Jason:  Right.
Gelie:  So the core of the site is the calendar, and the reason people come to
the site is because of the calendar. Then we have different things built
around it. So, when you land on the site and try to click on anything it
will let you view the event once, but then it says “Hey, if you want to see
more events now you’ve got to create a profile”. So, they go to create a
profile, and it’s free. It’s like LinkedIn, right?
Jason:  Right?
Gelie:  So you create a free profile, you promote your business, whatever you
want to promote, and now you’re in my database. So, we’re three years old.
We’ve got about almost 20,000 members.
Jason:  Wow.
Gelie:  We are actually one of the most popular local websites here in Arizona.
Jason:  Yeah.
Gelie:  And four times a year we do these big networking events where we get
about 1,500 to 2,000 people attending.
Jason:  Wow. Where do you do that?
Gelie:  Resorts here in Phoenix.
Jason:  Oh wow. That’s cool.
Gelie:  Glad you think it’s cool.
Jason:  How much do you charge them to attend one of these events?
Gelie:  Well, it’s free.
Jason:  No!
Gelie:  But no, it’s free for them to attend. Well, it’s not free for the
sponsors and the people that exhibit at these events.
Jason:  Well yeah, but man, even if it was $5.
Gelie:  Right. Everybody says that. But that’s why nobody has events as big
as ours because everybody gets greedy and wants to charge, right?
Jason:  Fair enough.
Gelie:  So this is where we’re different.
Jason:  But you make some money on the event?
Hamid:  I like how she at least answers that question.
Gelie:  Oh, I’m sorry.
Hamid:  She’s like bam!
Jason:  No, no. That’s good.
Hamid:  Exactly. She knows her business. It’s very good.
Jason:  I mean, you could still have premium members who decide they want to,
just like LinkedIn, right? You pay, you get a little more.
Gelie:  Wait, wait, wait, wait. Right. So I was going to say the core of
business…
Jason:  But you make money on these events, right? Because of the sponsors,
but you make money on these events, right?
Gelie:  Correct. The core of the business though, the revenue model, so it’s
free to join, but then there’s the optional paid membership.
Jason:  Right.
Gelie:  Right? So it’s $10 a month. You sign up, then the monthly and then we
have an annual, but you can attend other organization’s events for free.
So I negotiate the free tickets and I just become this middle person.
Jason:  Right.
Gelie:  So you sign up for free, and you get your passport and now you can
attend different chamber mixers and all this other good stuff, different
educational seminars. So in a nutshell-
Jason:  How many people do that?
Gelie:  Right now we have just over 1,000 and we’ve had the product out for
about a year and a half.
Jason:  That’s a long time.
Gelie:  It is a long time, and so we’ve been watching the trend, right? So,
when do they sign up? Why do they sign up? Why do they drop off? So,
there’s definitely things we know we need to improve on but we haven’t
been, I haven’t had the data, right? So I didn’t know. Now that I do
know we’re kind of getting into that phase of “Okay, now we have to take
this product and fill in all the different gaps”, right? So why are all
these people falling off? Well the good thing is a lot of them actually
tell us why they’re leaving. So we know we can improve. But, that’s not
really, so my question to you is, So where I am in the business is we want
to expand, right? So we want to take this to different cities and keeping
that local feel. So we’ve got networkingphoenix, networkingsandiego,
networkingwhatever, fill in the city. So we’re kind of trying to put
systemizing everything; but what I’m struggling with is going into year
three because everybody’s been doing their own thing, right? I’m actually
very fortunate because I’ve had the same employees pretty much since day
one.
On one hand that’s good; on the other hand that’s bad, because I don’t
really know what they do on a daily basis. So, we’re trying to systemize
it so I know I have 10 minutes here, so actually, I’m not going to ask you
that question, because I’m more interested in my other question, which is
how do I build a board of advisers? Okay, so this is kind of a few part
question I’m going to ask you and then you can give me your overall thought
process. So I’m looking to build a board of advisers because I kind of
need a sounding board or I feel like i could use a sounding board and then
really why would somebody want to be on my board, right? Because I’ve met
with a few VCs and Angels and I’m not really looking for money as of right
now, but I always just kind of like to bounce ideas off of them and they’re
like “Well, you know, if you’re talking to me, that means, and I’m a VC,
that means I’m going to want to invest and blah, blah, blah” but then they
say “But not everybody would want to invest”. So, Okay. How do I find
these people?
Jason:  Well what do you want them to do?
Gelie:  I need a sounding board, right? Because I need to be able-
Jason:  Well then just find, you’re a network of, you know 20,000 people. I’m
serious. So what you need is to find people like, they’re business-savvy,
they’re interested in this for whatever reason, they also want you to
succeed, they like you personally, and that’s it. Then they’ll be a good
sounding board.
Gelie:  Okay. Right. But, I mean, not like how do I approach them, but, yes,
how do I approach them, only because I’ve never been in the situation and I-
Jason:  You’re a networker.
Gelie:  Listen, I know, but I get it. I can approach a lot of people, but I’m
not going to approach a lot of people.
Hamid:  I take cash if you’re…
Jason:  Yeah.
Jason:  I don’t see what the dillema is. You literally say…
Woman:  Why? Why would they want to be in my board? Okay, there’s this “why
would they want to be in my board?” So maybe, you can give me some insight.
Is it because they just want to put their name on something cool, or what?
Hamid:  The problem that you’re describing is one that a lot of founders
have. Jason, maybe you can sort of elaborate on this. But I think it’s
difficult to ask people, even if those people would be more than willing to
do it for free or to spend their time making other people successful,
because somebody helped them along the way. But it is difficult to ask, and
that’s one of the things that, as an entrepreneur, you have to sort of get
over the hurdle that you have to get over. But how do you get over sort of,
how do I approach this person?
Gelie:  Right.
Jason:  To ask, and what are they going to think of me, you know?
Gelie:  Right. Yeah. Because there’s a million people that I’m sure will
want to do it…
Jason:  Hold on. Hold on.
Gelie:  But I don’t want them on the board.
Jason:  Right.
Jason:  You don’t seem like you have a problem approaching people and
talking to people…
Gelie:  I’m shy.
Jason:  Or saying whatever you think. Okay. So that’s not the problem.
Gelie:  You’re right.
Jason:  You’re afraid that that they don’t… Why would they volunteer
their time? What’s in it for them? Is that what you’re worried about?
Gelie:  Yes. Yes. Yes.
Jason:  Well, Okay. Number one. Who cares? As long as they want to do it,
it’s Okay.
Gelie:  Okay.
Jason:  Number two. People do it because it is fun for people who are doers
and are intelligent and like thinking about problems to hang out with other
people who are like that and to see those things happen. That is just fun.
That’s life.
Gelie:  Right.
Jason:  It is fun and life. Imagine how many emails I get asking to pick my
brain about this with that, right? And everyone, of course, the automatic
answer is no because of the time, just time. But every once in a while, I
say yes. And why do I say yes? Because that person just seems like they’d
be interesting and they’re doing something cool, and they seem like they’re
serious, which you obvious are because you got a growing concern and all
that. You just want to. I’ll put it this way. All these organizations and
stuff, where people are obviously at a net loss in time and money for
pretty much any organization in town that you send people to, why are they
doing that? Because they want to hang with people who are interested in
that thing and talk about it. That’s why they’re doing it.
Hamid:  One of the things that I’ve done a few years back, a couple of, me
and buddy, who happens to also have a software company, we were talking. We
thought exactly the same thing. It would be great if we could have a sort
of advisory board, and we ended up inviting five other people, that
happened to be from all over the country, that also have software
companies, to a joint meeting in Las Vegas that we were going to spend a
day talking about our businesses. That meeting turned into, now, we’ve been
doing it for five years. Every five, six months, we travel to a city of one
of the companies. It might be Dallas, or Toronto in Canada, or Florida or
Boston, where each of the companies are and we’d become each other’s sort
of sounding boards and advisory boards for a day; and we’d take turns going
around the table. So one way would potentially be a mutually beneficial
thing, rather than just, simply, incoming advice, right? Rather than a
board of advisers that’s just for you, what about a board of peers that you
give them just as much advice as they give you? That sort of worked out
really well for us. So that’s another thing to consider, another way to go.
Jason:  Yeah. I agree 100%. I know quite a few people who do that. Usually,
it’s local just because it’s easier, right? You just find other local
entrepreneurs that you can just meet with once a month.
Jason:  Well, that’s…
Gelie:  But, yeah…
Hamid:  It’s hard, often times, local. But even if it’s international, not
international. But even if it’s national, our trips cost about $1000 per
trip. And we do it every three, four, five months. So let’s say three times
a year, I spend $1000 on a trip. So that’s $3000 a year on an amazing sort
of meeting that I couldn’t have locally because those companies don’t exist
locally. I can’t find seven other software companies about my size.
Gelie:  Right. Right. And that actually was my point, is that yeah, you’re
right, there are a lot of people, but I don’t want to talk to them.
Hamid:  Right.
Woman:  Because it’s unsolicited advice and more than anything
Jason:  Look. I think what you should do is decide who are the people that
would be perfect for the board…
Gelie:  Right. Which was…
Jason:  And then just go ask them to be on it, and then when they say yes,
you can ask them, why then? And that would be a…
Hamid:  Why are you wanting to do this?
Jason:  This is really easy. I don’t
know…
Gelie:  But seriously… It’s good for me get some feedback and insight on
it just because, like I said, I don’t know, this is like a new arena and I
typically don’t like to talk to people about my business and details. I
mean, I have certain people I talk to about it, not bringing outsiders in.
So, the few times I did venture into that world, it was kinda of ugly
because maybe I met with some wrong VC’s or whatever.
Jason:  I don’t know. You’re just, I don’t know, justifying something? Just
do it already. You said you want a board adviser, so go get one, and if
you’re not comfortable with it, then don’t do it. I mean, just do it, and
then you can ask them why. By they way, I know we’ve got to go, but you got
to charge more than $10 per person, because right now you’re making $10
grand a month off of that and that’s not enough, especially if you want to
spread out to other cities because there’s no… I mean, to what end? So
you can hire one more person. I mean…
Hamid:  It’ll turn back on in just..
Jason:  That doesn’t make any sense to me.
Gelie:  We tried. That’s actually really interesting feedback, and we tried
doing that and it did not work as well as $10. We actually make more money
charging out $10 because more people sign up and stay longer than…
Jason:  Okay. Well, that’s fine. But then, in some other way you need to be
making more money, or else, I don’t know why your’e even going to a
location.
Gelie:  That’s not the only revenue stream. That’s the core of it, but the
thing is I have 20,000 people to sell to, and I haven’t even had a
marketing program for it. It just runs itself.
Jason:  Well, maybe you should do that before you expand to other cities.
Gelie:  Absolutely.
Jason:  In other words, you haven’t figured out this model, yet, that’s
really cutting off money.
Gelie:  Right. Oh, right. So we’re not expanding tomorrow, but in order to
expand, so this is exactly why I’m looking to place people around me, so I
can actually bounce things off other people because I haven’t had that this
whole time, so.
Hamid:  Your first step is to systemize everything. And then…
Gelie:  Exactly. Right. Which is what I was starting with because we need
to just get this system down.
Jason:  More money.
Gelie:  Yeah. No, absolutely. I mean, like I said, there hasn’t even been a
marketing program for this passport program.
Jason:  All right.
Gelie:  All right. I’m taking up to much time.
Hamid:  No, you’re…
Gelie:  Thank you.
Jason:  Thank you.
Patrick:  Thanks.
The post Smart Bear Live 7: More from AZ Disruptors appeared first on @ASmartBear.
...more
32min
August 08, 2012 Smart Bear Live 6: Jared from Padseeker.com
Welcome back to Smart Bear Live, the call-in show with Jason Cohen, sponsored by Software Promotions. In this episode, Jason speaks with Jared from Padseeker.com.
Listen to this episode if you want to hear a really tough conversation about refining a cool idea into a profit-making business. This is a long episode (1:20), but it’s a conversation that will resonate with a lot of early-stage startup founders.
Don’t forget to sign up for the wonderful Business of Software conference to hear Jason speak in person.
You can subscribe to Smart Bear Live on iTunes (please review the podcast as well!) … and if you’d like to appear on a future episode of Smart Bear Live, send an email to the Smart Bear Live producer, [email protected], to schedule a recording with Jason.
Transcript
Automated transcription services provided by:

Jason:  Hi, Jared, tell me a little bit about your business.
Jared:  Well, the name of the company is Padseeker.com. So we’re trying to
build . . . I guess the best way to describe it is some sort of analogy,
that Padseeker would like to be for rental properties and real estate what
Shopify is to e-commerce. I think that is a pretty good one-sentence
synopsis, but I can give you more information if you’d like.
Jason:  So what’s the idea? I’m looking for an apartment and this is the
best place for me to find one? And if I’m trying to rent out a place, this
is also where I go? In other words, it’s a marketplace, or what?
Jared:  Yeah, I think initially the real focus of Padseeker is going to be
an on-demand solution to create a website for property management.
Jason:  I don’t know what “on-demand solution” means. You mean website?
Jared:  Yeah, it’s a website. I mean, if you own a few buildings, or maybe
you own many buildings, maybe you have a website, but you’re not happy with
it. Maybe you didn’t think it was worth it to spend $5,000 or more on a
custom website, something along those lines. I mean, imagine, in an
abstract sense, how you might download, say, WordPress, and you’re doing
that for content management, or for a blog. And I know that there are some
online solutions, I’m not exactly sure if your site is . . .
Jason:  Well, look, every apartment I can find has a website already, and
then there’s stuff like CraigsList, so I don’t understand why anybody needs
this.
Jared:  There are quite a few property management companies that have sites,
but they’re somewhat out-of-date in the sense that . . . I think that our
biggest, our easiest group of people to target or market to are people who
. . .
Jason:  The question is, if they already have a website, how come it’s not
just Craigslist? Because that’s where people are going To go for things
like that, to find apartments. They’ll just Google it, and they’ll find
apartmentratings.com, for example, which is really good at SEO, and is
basically a way to find apartments, with ratings even, and it’s very
popular. Why do we need this thing?
Jared:  That’s a very fair and good question. I think, for an individual
company that has their own property website that it may not have some of
the features that they used to have. I guess I’m more targeting property
management companies.
Jason:  So why is it called Padseeker?
Jared:  Because that . . .
Jason:  That implies it’s for people finding apartments, but you’re saying
. . .
Jared:  That’s a very fair point. The idea was to have a single source of
information, as far as people creating multiple sites, and then eventually
have an API where people could build stuff on top of Padseeker in the sense
that multiple companies would put their properties into Padseeker, get
their own site out of it, as well as have an API where people could
potentially grab that data. I mean, that wasn’t necessarily the . . .
Jason:  Okay, wait, but who cares about grabbing the data? That’s already
there, there’s already websites that have all the data. I don’t get this.
So it’s property management software? With a customer-facing front end as
well so it also manages your front-end website? Is that what it is?
Jared:  All right, the first stage is primarily . . . you have a property
management company, but you don’t necessarily have a website for yourself,
or if you have a website, you’re not happy with it. You did it five years
ago, it doesn’t have Google Maps, not mobile compliant. My goal is to say
to them, “I can get you a much more affordable and up-to-date solution for
your website.” And to get as many customers as possible in that respect.
That’s primarily what the first stage of the business is going to be, and
that’s what I’m going To focus on, and that’s what I’m trying to get live.
So I certainly appreciate you trying to burst the bubble, but it’s . . .
Jason:  So it’s not property management, it’s just the website for a
property manager so that they have a presence that’s not outdated, and
which presumably makes it easier for people to find it, and if they find
it, to actually discover the apartments that they have, and where they are,
and that kind of stuff.
But from what I can tell, that’s not how people find apartments anyway.
They go through apartment locators because, for the clients, those are
free, and you get to tour around and look at them, which is what you really
want to do, and they help winnow down the results, and you and I know that
they don’t really give you the full gamut of what’s available, they only
have certain things they get kickbacks for, we know.
We know it’s like that, but nevertheless, it’s easy, it’s free, they will
show you things that are more or less in the area and price range that you
want. That’s how you find an apartment, so I don’t understand why the
property management needs a modern website. So have you talked to some of
these property managers.
Jared:  I have. I’ve had about four conversations. One of them is . . .
Jason:  Great. So why did they say they want a new website? Because I can’t
believe they get a lot of traffic anyway of normal humans finding
apartments that way instead of through one of these SEO websites or through
a physical apartment locator.
Jared:  I would agree. I think part of it, initially, would just be to have
a presence on the web and the ability to say, “Hey, if you want to . . .
Jason:  No, no. What did they say? Why did they say they’re going to throw
away their website and use you? They said it’s because what?
Jared:  All right. The first customer that I had the most receptive
conversation with is, they don’t have a website.
Jason:  No, not at all.
Jared:  They deal with specific . . .
Jason:  Okay. So it could be you, it could be a WordPress site, and you may
be a faster, cheaper way to get to a website. Okay. So, that’s one.
Jared:  Yeah, that’s part of it.
Jason:  That’s a really easy one, but, then again, most people have
websites, I’m sure.
Jared:  There are a few people that don’t, or if they had a website done,
maybe more than five years ago, it doesn’t have mobile compliance. It
doesn’t have Google Maps. It’s a way to get a lot of the features that I
think a modern apartment management company might want or feel like it’s to
their advantage.
Jason:  You had four people and they all said, “We’re in.”
Jared:  One said, “We’re in,” and the other three were, “Well, I’m curious
to see what you have, but don’t talk to me until you’re done.” So,
essentially, “It sounds interesting, and potentially I might be . . . ”
Jason:  Okay. Why is it interesting? What do they expect it to do? And
don’t tell me maps. That is a means to some end. What is the end? Are they
expecting apartment locators to discover them and then add them to their
rounds? Are they trying to get to the end customer?
Jared:  They are. I mean, essentially, one of the features I was going to
add was the ability to easily create a Craigslist ad. It’s all a matter of
funneling people from other sites to your particular site. I mean, hey, you
post an ad for an apartment, you generate a nice looking ad in Craigslist,
as opposed to just something in simple text.
Jason:  It sounds like, though, that you’re just stabbing around at things
you could do that they might want. You’re not using these firm words like,
this guy told me that if we could automatically post a Craigslist ad every
week, because those ads get stale and could roll off, so you have to keep
at it. Also, you have to rotate the content and put them in different
categories, otherwise this or that happens. Our software will do that. They
say, “Oh my God, if you do that, that’s big time. Then I’m interested.”
I just made that up. I don’t even know if that’s true.
Jared:  Yeah.
Jason:  If you don’t have that detailed and someone saying, “Oh, man, I
need that.” Just adding a Google map to a website, I mean, you might as
well just be a web developer and charge $100 an hour and have a WordPress
template and knock us out and charge them $5,000. It cost you less than a
week because you’ve got your template and you’re fast and smart, and you’re
done.
Unless you have something tangible, that they said I will pay X dollars if
you do this thing, then you’re just a web designer, which is fine, but then
just do that.
Jared:  Okay. Based on the conversations that I’ve had, where someone spent
$5,000 on a website say five years ago, and whether they have Google Maps
or not, the whole idea of getting a better website or getting a better
product, that’s not something they want to do. They had, maybe, a bad
experience or it cost a lot of money, and the whole idea is to pay between
$25 and $50 a month to get a higher quality website than what they have
right now.
There’s other ideas beyond just that. I realize it seems all kind of
nebulous right now.
Jason:  Here’s what it seems like. You’ve talked to four people. Let’s say
they all do it. All you’ve proven is that you can make $200 a month in
revenue off of some basic websites. Even if you can get 1,000 people doing
that, that’s really not much of a company, because with all the expenses
around 1,000 people and acquiring them, answering their questions, and “How
come we can’t put this here?” and the hosting costs, that’s not even really
much of a lifestyle business yet.
So, you probably could build that company, because, of course, they want a
website. Presumably your websites aren’t so bad. You can probably do that.
That’s not . . . If you want to do that, I guess just do that. But, again,
that doesn’t seem like even a good lifestyle business.
That doesn’t seem like the kind of thing you want to do. You want to do
something else. My question is what’s something else? It sounds like you
haven’t discovered yet what the something else is. Why not discover that
first, because that’s the interesting part?
Jared:  All right. One of the things that I’m really fascinated by . . . I
guess you could say that that first part of that idea, as far as giving
people websites, it is not necessarily the end destination. It’s also the
ability to create an API of properties.
Jason:  No way. No, it’s not. I think there’s no way any property manager
has ever told you, “You know what I really want is an API.”
Jared:  But here’s the problem that currently exists, as far as the . . . If
you have an individually hosted solution, even if you have an API, how are
people going to find you? On the other hand, if you get 1,000 people…
Let’s say if, for argument’s sake, I get 50 people in Chicago to sign up
because that’s where I’m located at, and I get between 10 and 20
properties. Well, if I get 50 people with 20 properties, I now have 1,000
properties.
Let’s say you wanted to build a site on top of that API. I mean, one of the
ideas that I was talking to somebody about . . .
Jason:  Wait, stop. You’re not addressing the point, which is that the
property managers . . . This is all a means to some end that you still
haven’t told me. They want to double the leads coming to their website.
They want to increase the conversion on their website. They’re trying to
sell units through their website. They’re trying to attract apartment
locators and give them all the tools to encourage them to show people their
units so that more units get sold.
You have to get to what is it that the property manager goes, “Oh, my God.
I’m going to make more money because my vacancy is going to go down,” or
because, whatever. I have not heard that yet. If the idea is, “We’re going
to sell more units.” “Well, how is that possible?” “Because through Google,
we’re going to have thousands of people coming to your website, where today
it’s just 10 a day. Now it’s going to be 1,000 a day. You interested?”
If it’s not that straightforward to their bottom line, then it’s all just a
means to an end and blah, blah, blah, and techno-babble, and it’s not what
they want. There’s no way anyone says, “Oh, I can’t wait to be part of a
network with an API.” That isn’t what they want. They want units filled.
They want cheaper hosting. They want – I mean, I don’t know. But it doesn’t
sound like you’ve discovered what that thing is, or you’re not telling it
to me.
Jared:  I mean, if it winds up that I get 1,000 customers paying between $25
and $50 a month . . .
Jason:  No, not winds up. You have to find people that say, “I will give you
$300 a month if you can get the number of leads to my website to go up to
100 a day instead of 10 a day.” See what I mean?
Jared:  Yeah. I don’t think that’s what I’m selling, or that’s not what I’m
going after, and that’s not what I have.
Jason:  Well, what is it that they want to have happen with their business?
Jared:  The ability to market their properties better as opposed to the way
. . .
Jason:  To who?
Jared:  To anybody that’s looking, whether it’s creating a Craigslist ad.
It’s the ability to say, “Here’s my business card. These are where the
properties are,” to hang a sign on the outside of their apartment building.
Jason:  No. They already hang signs on the outside of the apartment
building, and we all know that is not how you sell apartments, right? It’s
almost no walk-ins. It’s all apartment stuff. Sometimes there’s walk-ins.
But if there are walk-ins, they just walked in. It has nothing to do with
what you’re talking about. So, let’s say it’s Craigslist ads.
Jared:  Okay.
Jason:  It’s too hard or they don’t know how, or it’s just tedious.
Jared:  It’s tedious? Maybe there are certain aspects to it that’s annoying.
They forget to do it. They can’t track whether they’re working. They want
to try different messages and see which ones are working better, but that’s
too much work or they’re not technical enough. I’m making this up, but
supposing that’s a thing, that sounds good.
I would like to hear a property manager say, “We know people find us
through Craigslist ads. We don’t know how many. We don’t know how to
improve those ads, and it’s too much of a pain in the ass to post them and
post them often enough. The person who I assign it to at the office have
other duties and they don’t really know either, and it just doesn’t work
well.”
You say, “Right. For $50 a month, I will completely manage your Craigslist
ad stuff. You’re going to get a report every month of how much impact they
had. How many people saw it, maybe, maybe you can’t tell that, but how many
people click-through. Of those people, how many people did some interesting
action, like they spent more than a minute on your site or they filled out
a contact form,” or something that you decide that they agree is somewhat
valuable.
You make this little report, and then furthermore overtime with your
expertise and your testing – again assisted upon your amazing, special tool
– you’re even going to improve this amount of leads and conversion, and
quality of leads over time, because that’s part of the service. You’re
going to charge, and I’m making this up again, $199 a month for up to a
dozen Craigslist ads, or Craigslist ads for up to three properties, or
something like that.
They’re going to get these reports and it’s month-to-month, so if they
don’t feel like it’s getting value, they can cancel. So, there’s no reason
not to try it, and by the way, if they go through the first and they don’t
like it, it’s a money-back guarantee for the first month. I just made all
of that up.
Jared:  Yeah.
Jason:  But that is at least a testable business hypothesis. There’s this
pain. It sucks. Your tool completely solves the pain. Full visibility for
them. Hands-free for them. Will they pay that much money for it? Trying to
reduce some of the barriers to entry, like they can cancel and other things
so they don’t feel locked in. They feel like it’s easy to try this and see
if they like it. That is a formulation of something you could go out and
try to sell. If five people say yes, you could actually try it.
Here’s another thing. You seem gung ho in building websites and building
technology, which is fine. But with this kind of stuff, again, they don’t
care about the technology. Let’s just for now go with this Craigslist
assumption, because at least it’s a business. The other stuff you’re
talking about, to me – I still don’t understand the business model and the
pain point. You obviously haven’t talked to people to identify it yet. So,
let’s just use this as an example.
Jared:  Right. I understand your skepticism.
Jason:  Wait, let’s just use this as an example . . .
Jared:  Okay.
Jason:  . . . because it’s tangible and the other stuff is not tangible to
me yet. So, then what I would do with this Craigslist idea, is I would go
sell it to people with no code, no code at all. Then, I would wait until I
had five or 10 people who literally gave me the money, the $199 a month or
whatever it is. They literally said, “Okay, here’s my credit card,” or “my
PayPal,” or however they do that, right?
So, you have it. You know now that they want this for this amount of money
for sure, because, look. If you could find even five people – but 10 is
better – then for sure there’s 1,000 people out there like that too, right.
If you did that, now you’ve got something like one or $2,000 a month of
revenue, proving that this is interesting.
Now, what you do is you fulfill this by hand. You write to Craigslist. You
log into Craigslist with their account or however that works. You make the
links with bitly or something that allows you to track stuff. You request
access to their Google Analytics so that you can track the rest of it. You
make the report to Google Analytics, “This many clicks. This, this, this.”
You make a cool custom report, which you can very easily export and format
into a nice one-pager for them, and so on.
You try different ads in Craigslist. You try different ad text in, I don’t
know, whatever other stuff that you feel is good to try, and you do it. The
first month that you make the reports, you make the stuff, no code. You
figure out what is interesting. What does work? Do they like that? Did it
produce the traffic they wanted?
Maybe, for example, maybe they won’t be impressed with . . . Maybe the
number of people that actually make it to the contact form is never going
to be that good.
Jared:  Jason, I’m really sorry to interrupt. Listen, I totally respect you.
I wouldn’t be calling if I wasn’t looking for your opinion. It’s taken me a
long time to get to this point, and it sounds like you’re talking about a
different business idea at all. Those things [inaudible 17:38]
Jason:  No, no, no. I’m not. No, I’m just using this as an example. If it’s
not Craigslist, fine. Then, just cross-apply all this to the other idea.
But, in other words, the thing that they want done, you can probably just
do. You can probably do it with very little code or a little bit, or a
couple of tools, just to prove out that this is what they want and you can
deliver it. Then, they want it, and then of course, everything I just said,
you can build an incredible tool.
Maybe it’s self-serve for them. Maybe you use it, I don’t know. It sort of
depends on how well that rolls out. All of a sudden, you have a scaleable
business with a scaleable tool set that you know they like. You have some
nice testimonials from them now, because you kick some ass. That’s a
business.
This other stuff about, if it’s just a website then it’s a website, and
okay. If it’s something else, we’re going to drive more leads. Your SEO is
going to improve. We’re going to manage your Craigslist. We’re going to do
property management. Conversions of your website will improve. All of those
things would be great businesses, and I understand you have a big vision
and it’s going to be many things someday, and that’s fine. But it won’t be
many things on day one. It’ll be something.
So, I feel like you have to find something that they’re going to pay for,
more than one person. Find a way to deliver that to them in the easiest,
quickest possible way, and that’s how you can sort of validate that you
have a business that people will give you money for.
Jared:  Okay. You’ve thrown a lot out there and I sort of have to process
that. I can certainly see the direction of the business potentially
changing. At the same time, it’s taken me a long time to get there and I’m
sort of pretty committed to this as far as this idea. I’ll be honest with
you, I’m willing to fail if it turns or I have to pivot, or something along
those lines, or something along those lines. If I only get 50 customers
paying $20, or $40, or $50 a month for a website, and that’s not enough to
sustain myself, or that’s not enough to give me [inaudible 19:42].
Jason:  Wait. Wait, hold on.
Jared:  I’m willing to fail with this idea.
Jason:  Wait. Let’s just do the math. You’re willing to fail. That’s very
brave, except why bother when you could be failing faster in some other
way? You said it took it a long time to get to this point, well let’s try
to accelerate how fast you can learn and fail, and get two points that
work. So, let’s go down this road. Let’s say how much money they’re going
to give you per month for a website? What have you been quoting them?
Jared:  Between $25 and $50 a month.
Jason:  All right. Let’s call it $50 because I think you can probably,
honestly charge them $250 a month because, for example, there’s a company
here in Austin that charges real estate agents $150 dollars a month plus a
$1,500 dollars set up fee for a very generic real estate agent site with
like 3 pages, here’s me, here’s my face, here’s my properties. Call me.
Like, in other words, almost nothing. Certainly less than what you’re
describing and they get away with $150 bucks a month plus $1,500 setup so I
think you can go a lot higher. But let’s go with your numbers.
Let’s round up and say it’s $50, $50 bucks a month and let’s say this
company does pretty well, how many property owners do you feel like in the
span of a year could you have sign up on this system?
Jared:  I’m hoping to get at least 25 customers by the end of this year.
We’re hoping to go into beta in maybe, I’m targeting February so a very low
estimate would be 25.
Jason:  But then the year wears on and you’re acquiring more customers and
so let’s say at the end of May next year, how many customers could you
have?
Jared:  I hope more than 100.
Jason:  200?
Jared:  Potentially.
Jason:  All right, let’s go with 200. That’s good.
So 200 people each giving you $50 bucks a month, right?
Jared:  Yeah.
Jason:  So that’s $10,000 a month, right?
Jared:  Sure.
Jason:  In revenue. And then there’s some hosting costs. I’m not sure what
it is but I bet these sites don’t get a lot of traffic. I’m sure you’ve
built this in a way that’s intelligent for multi-tenant lists and whatnot
so hosting costs are probably what? $500 a month?
Jared:  Right now it’s less than $50.
Jason:  No. Not right now. Once you have 200 customers.
Jared:  If I get to 200 customers as far as capacity I’d have to look at
what it would cost. It would probably be at least a couple of hundred
dollars a month, if not more.
Jason:  Probably more because remember you have to remember you have
backups and stuff. it kind of piles up so let’s say $500 a month for that
and there’s other stuff. Like, in order to acquire 200 customers, you might
do some advertising or go to a show or bang the phone or do some Google
ads. I don’t know but there’ll be some costs in acquiring customers, right?
Jared:  Sure.
Jason:  So that’s probably a couple of grand a month. So probably what
you’re looking at, assuming the high end of what you’re talking about cost-
wise, you’re probably making something like $5,000 to $8,000 grand a month
for yourself assuming you have no other employees. You’re still doing all
this yourself.
Is that the case?
Jared:  Yeah.
Jason:  So is that okay? That sounds good?
Jared:  Yes.
Jason:  You want this to be a lifestyle business where it feeds you and
hopefully it does more than that, right ?
Jared:  Theoretically, yes. Again, I have grander ambitions for just getting
200 people to sign up for the service but yes. If it even made half of
that, I would consider that a success as far as a feather in my hat and say
I did something I’d never done before.
Like I said, I’m willing to fail but even if I get that half of what
you’re talking about, I would say I accomplished something and I’m
learning something and it might lead to the next thing or it might just be
exactly what it is.
Jason:  Okay. So in other words, part of this is just you’re sort of
exploring a new career and your own boundaries and what you enjoy doing and
it would be great if it throws off some money, that’d be cool, which is
great. I love that. It’s such a healthy attitude. I wish more people had
that attitude with their startups.
Great. That’s great.
Now, if you’re going to do that then here’s what I think. You absolutely
should charge a lot more. Because you’re not trying to get, you just said,
like you’re not really aiming at getting like 1,000 or 2,000 people online.
It’d be cool if you did but like that’s not even really the goal. You have
a bunch of things that you’re trying to achieve and making the biggest,
baddest company as fast as possible is not on the list actually, right?
Jared:  Yes. That’s a pretty accurate description.
Jason:  So here is what I think you should do. I think you should consider
this. Not a modernized website because as soon as you say things like I’m
building you a modernized website, then you get put in this category of
okay, right now I pay GoDaddy $10 bucks a month for this old WordPress
thing so I can maybe stretch it to $20, $30 bucks a month if it’s better.
You put yourself in that position when you call it things like a modernized
website.
On the other hand, if you position it as this is the platform for the
online presence, kind of like what you said, but specific stuff. Like, “We
know that this will increase your SEO and you’ll get more traffic. We know
that people will stick. We’re constantly trying out and developing new
techniques, so month to month we’re not just serving traffic like some web
host would do.”
“We’re literally discovering better ways to attract traffic, engage people
with your site, get them to Tweet about it, get them to user contact form,
increase your SEO position, etc. We’re constantly figuring these things
out, and we’re constantly tweaking these things on the site, so that we’re
constantly improving your footprint. That’s part of what you’re paying
for.”
In other words, if you position it as this kind of a value to them, then
you’re not in web hosting anymore, and then you could absolutely justify
$150 a month. Maybe more, but let’s start with that. Also, I think a setup
fee makes a lot of sense. There’s almost always a setup fee. I understand
maybe the first few people, when you’re trying to get going, maybe you
can’t get away with that. I’m not sure. But when you’re at customer #74,
there are going to be setup costs, right?
Jared:  Yeah.
Jason:  Because their own content needs to get in there. There are photos,
their maps, [I need] five properties, not three. I don’t know. There’s just
stuff, and they’re not technical. They’re not going to set it up that well,
and if you set it up for them, you’re going to do such a better job. You
know that, and that’s going to make them more successful and happier. You
know that and they know that, and it’s absolutely normal to charge a setup
fee.
So, again, using this model locally, of people with even less money than
the property agent people, and they get away with $150 a month, plus $1,000
or $1,500 setup fee . . . For example, you could roll other things into
that if you still feel uncomfortable charging that much, or if they need
more to charge that much.
So, for example, you could say, “Part of that $1,500 setup fee is I sit
down with you on the phone for two hours or an hour, and I ask you
questions about, well, what is important to you? What kind of things do you
want to say about this property? What do you want to rank highly for? Is it
luxury? Is it affordable? Is it convenient? What are the things about this
property that we want to highlight?”
In other words, you sit down and you do a counseling session, and then you
can tune the site to them. That’s part of why there’s a $1,500 setup fee
because it’s going to be really good.
Jared:  Okay.
Jason:  You know what I mean? This is all brainstorming.
Jared:  I understand what you’re saying.
Jason:  But here’s what happens now. Now, the math changes completely,
because with $1,500 setup, let’s say $1,000 setup times 100 customers.
That’s $100,000. You’re going to do that setup stuff anyway to get their
website to work because they’re not technical. They can’t make all this
stuff look good and all that. They don’t know what to write.
So, that’s $100,000 right there, and that $150 a month, that extra $100 is
just pure profit, right? Because your costs don’t go up charging $150 over
$50. Same cost to you.
Jared:  Yeah.
Jason:  Let’s say you have 200 customers. That’s $20,000 of profit per
month in your pocket. Let’s say it is only 25 or 50 customers like you
said, and it doesn’t even get to 200. But still, to get 50 customers,
you’re actually at the same place monetarily that we just said you were at
200 . . .
Jared:  Yeah.
Jason:  . . . because it’s bottom line money, that money. That setup fee
means you can do things. Like, if this does start growing, you can afford
to do whatever like hire someone else to help on-board people, or spend
more money on marketing, or I don’t know. In your words, you could afford
to fail at different things because you have the extra cash to do so and
it’s okay.
So, especially because you’re not trying to get 1,000 people on the site
real fast, and so you want to make it real cheap so it’s a no-brainer.
That’s not what you’re doing. So, I would go way upscale with it and make a
lot of money on these guys.
Jared:  Okay. All right, so let me tell you about the ambitions for the
project that I have if I get more than 50 or 100 customers I’m charging $25
or $50 a month. I’ve talked to a couple other people that are at least
somewhat interested, and it’s more conversation, not necessarily they’re
going to pay for it. But here’s a perfect example. There’s somebody I know
who is involved with an association dealing with people who are
handicapped, and whenever you’re dealing with an apartment, you’re trying
to get an apartment that’s ADA accessible.
Jason:  Right.
Jared:  They would like the ability to post properties that are ADA
accessible. That’s one of the goals of Padseeker and the API in the sense
that I want to offer people the advantage of, “Here’s not just your
website.” I hate to say it. That’s sort of like the honey to draw the first
initial customers.
Jason:  That’s fine.
Jared:  It’s the ability to say, “Your property will not just show up in
your own website, it has the potential for other people that will build on
top of the Padseeker API to show you ADA, American Disabilities Act,
compliant properties on this other site. Or dog-friendly. Or, I mean
there’s any number of options, but that is the reason why I want to keep it
relatively low, and I certainly understand [inaudible 30:14]
Jason:  Wait, wait, wait. Let me ask you about that.
Jared:  Sure.
Jason:  I totally understand what you just said, kick-ass. Now explain what
you meant about, “That’s the reason why you’re trying to keep the price
low.” I don’t get why one leads to the other.
Jared:  Because I feel . . . I feel like if the price is too high for some
people that have a website, or even don’t have a website, they’re not going
to see the advantage of, “Why am I paying,” let’s say, for argument’s sake,
$100 a month. You’re talking about the price point that you were
discussing. If you’re paying $100 a month, that means $1,200 a year. That’s
probably on par with one of the solutions that are available now.
Essentially, if you own a property management association, or you own a few
apartments, and you want a website, you have two options. Your first option
is to pay $5,000 or more, significantly more, for a custom website, or you
can pay somebody for an existing template. There are even plugins available
for WordPress. But at that point, once you hit $100 a month, that’s roughly
what some of the other companies that exist in the marketplace are doing
now.
Jason:  Right.
Jared:  And I could see even doing that at some point when I had enough
properties. I mean, I’d be thrilled if I built a company that had 50
subscribers, maybe they were paying $50 a month, and then we tried to build
another site on top of the API that . . .
Jason:  I still didn’t hear, though, why . . . I mean, to me, if you’re
providing even more value, then you should be even more expensive, right?
Jared:  Because that value doesn’t exist, that . . .
Jason:  I know.
Jared:  . . . ADA-accessible site doesn’t exist anymore, that dog-friendly,
and that’s…
Jason:  I know. But isn’t the website you’re talking about building, even
without the API, the basic website you’re talking about, isn’t that at
least on par with the other things they have available to them?
Jared:  Yes, yes.
Jason:  Or better, hopefully? At least incrementally better?
Jared:  Right now, I mean, I have a long ways to go, I mean, we’re going To
add stuff, but yeah, I feel like based on what I’ve seen with what’s
available now and what we’re offering, it’s . . . if it’s not there, and it
won’t be there on beta, it will be, but within a short period of time.
Jason:  Okay, so here’s what I think. I understand all that, so here’s what
I think. Anything we talk about with all this doesn’t apply during beta,
because those people are receiving product that’s not fully baked, they’re
early, before you have a track record, there are all kinds of reasons why
they’re special. Maybe they get it for free, maybe it’s really cheap, maybe
it’s free until you launch and then they get 50% off for life, whatever,
right? Just take care of them. So let’s set them aside for a minute,
because whatever . . . you’re going To take care of them and it’s not
going To apply to them, right? So let’s go . . .
Jared:  Yeah.
Jason:  So let’s go to customer 15 and higher. In other words, it’s not
beta, it’s live, you’ve got enough testimonials and nice things that that’s
not an issue anymore, they’re not betting on an unknown anymore, you have
sufficient features, right? Because you’re past that period. We’re 20, or
however many you think, 35, whatever you say the beta period is, whatever
that number is. Let’s talk about . . . because, for them, you’re just going
to do whatever is right, you know?
So let’s talk about what happens after that. My feeling is, if you’re at
least as good at just the website as their next best alternative, I don’t
understand why you wouldn’t be at least the price, if not more, than their
next best alternative. I don’t know why you would need to undercut that
price because I would assume that your site . . . again, ignoring the API
for just a minute that your site is incrementally better. Maybe not a
completely disruptive website, no, but it’s more modern, it’s better, it’s
easier for them to change, it . . . I don’t know, your SEO is smarter, it’s
incrementally better. So why shouldn’t you charge the same amount or even
more?
Jared:  Well, right now, it’s not. I mean . . .
Jason:  I know, but we’re not talking about right now.
Jared:  Okay. We’re talking about a year from now when I have all the
features? I mean, I feel like I would have a hard time asking for more than
the $50 until we, myself, or somebody else, builds, say, the ADA-accessible
site. I mean, I live in Chicago, and I’m not far from Northwestern
University, which is in Evanston. One of the ideas was to get —
Evanston’s a relatively small town — try and get some of these other
people to sign up and then have a site that was just specifically targeted
to Northwestern University students, things of that sort. And I don’t . . .
Jason:  Hold on. Wait, wait, wait. I get all that. When you do that, it is
worth more, and I’m not arguing with any of that. But I’m still stuck on
this thing with the website. You’re not comfortable charging more? So . . .
Jared:  Until the value can be justified. If I were to say, “Listen, some of
the other companies that have websites, it’s going To . . . ” I think it’s
going To be easy for a few of them that either have a lousy website, or an
out-of-date one, for them to say, “Yeah, I can justify paying $50 a month,
$100 I’m not entirely sure. I think $50 is not unreasonable.”
Jason:  Hold on. First of all you need to ask them. You need to propose,
it’s $150 bucks and see what they say. And if they say why is it $150
bucks, you need to have some pretty good answers. Because the SEO is
better. Because people don’t bounce off of it and I have the numbers to
prove it, or whatever.
But explain to me then why this real estate agents pay $150 bucks a month
for a WordPress site literally in which they can buy a template for $80
bucks and shuffle around some images and have a site.
Why do they pay $150 bucks a month?
Jared:  Why do they pay $150 dollars now?
Jason:  There’s thousands of them right now doing it.
Why in the world are they doing it?
Jared:  I’m a little thrown off. I guess I don’t have the answer to that
question.
Jason:  Yes. It’s an interesting question.
Here’s another example. I know WordPress consultants where they do build up
the site through, like you said, three grand, five grand, whatever. And
then they put in like this retainer. Like you need 5 hours a month for my
time, plus all the hosting costs included and it’s going to be $200 bucks a
month or $150 bucks a month. And they’re almost always successful in doing
that.
And of course, they go put the site on something really cheap. It probably
cost them $5 to $10 bucks a month per site, tops. And they made us think
like they’re creating WordPress latest version and I don’t know, like
whatever it is that they do, right?
Jared:  Okay.
Jason:  $150 bucks a month, there it is again. Like the hosting cost are
$10 bucks a month but somehow they are able to charge $150 bucks a month,
what you and I, technical people would consider trivial services. With the
insane markup of like 10x, right?
So my point of all of that is it’s a little bit rhetorical but not really,
to ask, why are they paying that? My point is just to comeback what you
said when you said, “I’m not comfortable charging $150 bucks a month
because we don’t have enough.”
And what I’m trying to get you to see is that I think you’re thinking of
this as how good is this offer, how many features does it have, how does it
stack up to stuff and how hard would it be for, what’s an alternative, how
hard would it be for them to build this another way? And that’s what the
value is. Therefore, that’s why I should charge.
And what I’m trying to do is push you in exactly the other direction. They
don’t care what your technology is. They don’t care how much it costs for
you to host it. They don’t care how much each feature took to build, etc.
There’s something’s that they want, which is where we kind of started the
call with. I don’t know what those are. Increasing traffic, increasing
their Google Search.
Jared:  I understand. You’re asking for one thing. Why is someone to pay
that money? What is the justification for me paying that money? And I can
give you a simple one.
One sentence answer. Anything that gets somebody into that apartment a
month earlier than they would have is creating value. If you’re paying $50
to $100 a month or whatever a month, if you put someone in that apartment a
month earlier than you would have for any number of months earlier and
they’re paying $800 to $1,000 dollars, you’ve made your money back.
And for $50 dollars a month, that’s $600 a year and if you get somebody in
one month earlier, that’s creating value. But the easiest way to say I can
charge more is, say for arguments sake, we’re talking 2 years down the
road, if you had 2 or 3 or 10 different sites that where using Padseeker.
I had a friend of mine who was talking about “I want to create a site that
deals specifically with this issue, trying to reduce your commute”, if you
could put your data into this application and maybe it’s 5 or maybe it’s
100 different sites built on top of the API means your property will go up
to that site and find that person, make it more likely that the person
that’s looking for that type of apartment they’re looking for actually
finds it, that is where the value is in that software.
And right now when you just have a site, I hate to say it, even though I
think it’s valuable to have a website, $50 dollars a month does seem like a
ridiculous amount of money. I have a hard time charging more than that
because if you have 10 or 20 properties and you get somebody to go to your
website, there’s not a huge guarantee that you’re going to get somebody’s
rear end in that apartment faster. It will with the potential growth of
having 50 to 100 clients with 1,000 properties and having at least 3 to 5
different websites that are built on top of your application that means
other people are looking at your stuff.
And I always think about the ADA accessible thing because that’s a very
specific market and if you say I have 20 apartments but I have 2 that are
ADA accessible and this website says you have 2 units available in your
price range or the amount of bedrooms that you’re looking for, that is the
truest value of what Padseeker provides or hopes to down the road.
That’s assuming I get to that point. That assumes that I get 50 customers
to sign up for this and actually you having a website, your property, your
ADA specific property is being shown on this particular website. That’s
where the value is, and at that point, once there’s something built on top
of Padseeker, yeah, I think I could charge $150 to $200 a month because
you’re not just offering the website, you’re offering the ability to market
this individual property or certain types of properties to specific people
that are looking for that.
Jason:  That still the means to the end. The end is get an ass in the
apartment faster because vacant apartments just cost you money. One way is
you have a special ADA site, and that drives a bunch of traffic, and there
are many other niches as you just described, and you want to open it up so
that’s it easy to have a lot of these, but what I think it comes down to is
driving a whole lot more very qualified traffic to a website that converts
well. Is that true?
Jared:  Yeah, I mean, yeah.
Jason:  Okay, so here’s what I would say. I’m still not negating the
vision. I get it, and I think it’s great, but I’m still trying to figure
out, because you also say, “that’s down the road, that’s down the road,”
and so I’m trying to figure out, how can we maximize the amount and the
value now.
I think it sounds like the pitch is, you need A) more traffic to the
website, and not just crap traffic. You need more real traffic to the
website, and B) you need that traffic to actually result in people getting
apartments faster. Just getting people to look at the home page is not
valuable. Getting them to actually get an apartment, to say yes and sign
on an apartment, is really valuable.
That’s two things; more traffic and more conversion that you can tell. It
sounds like if you could just fill an apartment every couple of months that
would pay for a website that’s $150 a month, if you could prove that,
right?
Jared:  Yeah.
Jason:  Here’s an idea. What if your website, and I know they could do
what I’m about to say now, but they would have to build stuff, and figure
it, and you could build this pretty easily, what if you made on their
website a way for someone to print out a special offer, and the special
offer is probably stuff like, “if you move in by this date, the first
month’s free,” or it’s half off. Stuff like that. I know for property,
especially from commercial renting, stuff like giving away a month of free
month is very easy for them to say yes to because they know that gets them
a tenant for a certain period of time, and that’s a very easy give-away for
them. No sweat, right?
Jared:  Okay.
Jason:  In commercial real estate it’s almost a given that you sort of ask
for a couple of months off, and they always say yes because it works, and
it works with their financing on their side and all that stuff. It’s very
easy for them to do it. Here’s what you could do. What if your website, a
visitor comes, and you’re like, “Hey, we have a special end-of-year thing,
and if you move in by December 31st, you can print this out, bring it in
and get your first month off,” or whatever the property manager agrees to.
Of course that thing is tracked, right? Because that thing is a thing you
generate even though they can print it as a PDF or whatever it is that
prints the webpage. You’ll determine an easy way, right? Whatever it is,
you can track it because it’s got some numbers there, and that’s going to
get back to your analytics about where it came from and whatever, but the
bottom line is every time someone redeems one of those it’s 100% proof that
you did it through the website, right?
Jared:  Okay.
Jason:  Every time that happens they know they just made whatever their
average lifetime value is from the customer, which I’m sure is 1000s and
1000s of dollars, right?
Jared:  Yes.
Jason:  If you did that on a website where you could actually track
whether the website was working, because this is a great offer. Shoot, if
I was looking for an apartment, and you told me a month free, I’m probably
print that sucker out. That’s going to save me $800. That’s a lot of
money to save. That’s a pretty good incentive for the person, right?
Jared:  Mm-hmm.
Jason:  You could probably track how many print outs there were, too.
Just part of your own funnel. That would be kind of cool to see. Anyway,
you only have to show a couple of hits. To me, you’d probably only have to
show a couple hits a year to justify a pretty expensive website, and again,
I think you could do that before there’s an API, before you have a way to
generate a lot of traffic, and just say here’s a website we’re encouraging
people to get into the apartment, and we will know if it works or not.
Either their going to redeem these things, which means it’s working, or
they don’t, and we’ll all know.
Jared:  Okay.
Jason:  Right?
Jared:  Yeah.
Jason:  Now you can justify a lot of money because they can do the math,
and they’ll know. Now you can justify the $150, because how else will they
print coupons. Then imagine all the stuff that suddenly starts appearing.
We’re going to put Craigslist’s ads and try stuff, and we can actually
track it all the way to whether they got the apartment, or like you said,
we’re going to have the ADA site, and these other sites, and it’s going to
just generate more traffic.
Now imagine this. I wouldn’t do this today, because you don’t know enough
about the behavior of these people, but let’s suppose you are good at this,
and this does work, people redeem these suckers and property managers go
ape. What if the way you got paid was every time someone gets an
apartment, you get $500, or $1000, or something? So that’s it, if you
don’t generate leads for them- No, wait, forget leads. I take it back. If
you don’t generate asses in the apartment, you don’t even get paid. But if
you do, you get a nice commission. I bet you could do that. Right now,
that would be a pretty big leap of faith on your part because you don’t
know if you can convert that.
Jared:  Yeah. That also involves, as far as being available from potentially
9:00 to 5:00 . . . Maybe not; up until this point, the application I’ve
been primarily trying to develop is as much self-service as possible, and
not having to be intimately involved with talking to human beings from 9:00
to 5:00.
Jason:  Wait, why would you . . . ? No, you’re not talking to humans from
9:00 to 5:00. This is a coupon they bring physically to the apartment and
redeem there; you’re not involved.
Jared:  How would you go about saying you rented this apartment, and they
printed this ad, and this is the person that did it? How can you trust the
apartment management company to pay you the finder’s fee?
Jason:  You’re right, it might not work. But, here’s what I would bet: if
it doesn’t work, if they’re pretending like it doesn’t work, then you’re
going to shut off the website. And if it is working, they don’t want that
to happen. So I agree with you, and so maybe that’s a bad idea. We’re
brainstorming, right? You’re right, that might be a bad idea. Fair
enough, right? That’s fine.
But your bottom line is, they can now measure how much this is worth to
them, and it doesn’t take a lot of hits in this idea to make it worth a lot
of money per month. And you could do that first, today, with the website –
how are you different from their alternative? Well, there’s this feature
and this map – Okay, fair enough, you need to have a base line of modern,
good stuff, no doubt. And you know how to do that; you’re already doing
it, of course.
Here could be the magic thing that nobody else has, this coupon thing which
gets – just what you said – gets the ass in the chair sooner, gets the
person in the apartment sooner, and they know it. And that is insane; if
you could do that right, that’s the Holy Grail for them. It proves that
you’re worth a ton of money; now you could charge $500 a month for the damn
website.
Jared:  This is the whole basis on which the advertising industry is built –
you have no idea where your traffic’s coming from and should just pay us
money, hopefully we’ll get people. I guess what I’m hearing you saying is,
imagine someone gets to the site and they click a button, and they print
out a flyer that says, “you get a month for free.” You could say, “Listen,
this is somebody that would not have found you under normal circumstances,
and therefore, we created value.”
Jason:  Well, two things. 1, they may not have found you, or they probably
would have just left this website and not printed anything out or bothered.
That’s probably true. But here’s what we know for sure: if you put a
time limit on that – which you should, because you’re trying to get them to
act – what you said is, if you could get someone even a month earlier into
that apartment, then they would have. Even the same person that was going
to find you anyway, if you could get them in there a month earlier, you
just told me, that’s worth money to you.
So what I would say is, “it’s pretty likely that this person would not
have, in fact, printed out something from your website and got over there,
because there was no compelling reason to. We gave them a reason to.” So,
number one, you’re right, this is probably a new customer you didn’t have
before. But number two, they sure might not have moved this quickly, and
you got them to move faster. That’s the worst case, is you got them into
the apartment sooner. Probably, that was a new person.
The more this happens, in other words, as you get better at driving traffic
and at converting that traffic, which, again, is something you know will
get better over time, whether that means better SEO, whether that means an
API that just drags really highly qualified people in all the time, there’s
lots of ways in which you can increase the amount of this clearly tangibly
valuable thing, and you will.
You have this vision with API and these other sites, awesome. That will be
another part of your secret sauce for why this drives a ton of value that
they can even measure, unlike every other form of advertising that they
have. I mean, that’s incredibly valuable.
But, even on day one, I’m still trying to drive to you, how is it on day
one your website’s still worth $150 a month or even $500 a month? I’m
exempting the beta people, as usual. On day one, once you’ve got your
version 1.0 set and you’re onto customer 23, how is it even before the API
this is worth a ton of money? And the API’s only going to make it more
valuable, right?
Jared:  Yeah. It’s a lot to think about. You know what, the reason I called
you was I was hoping that you could help give me focus as far as priorities
because I spoke to those four or five people on the current version of the
product and the answer I got was, “I’m interested but only when you
actually have something.” And the reason I even looked for this
conversation was I was hoping you could sort of . . . the reason I called
those people was because of listening to your show and [Stars] for the rest
of us and other things that do you marketing before your apps is live. And
because I got the reaction I got from the people I talked to, which is “I’m
interested but don’t talk to me again until you have something,” I was
trying to figure out what the highest priority is and this conversation is
very relevant.
I was debating whether I spend more time as far as trying to talk about the
marketing aspect, or just go back to wood shedding and writing code and it
sounds like you still think I need to put more time at least into talking
to people that . . it sounds like you’re trying to get me to think beyond
where I am right now, or at least add a feature that currently doesn’t
exist and maybe initially that hard to do but it’s sort of . . .
Jason:  What I’m trying to get you to do is to tap into something where
their eyes get wide and they go, “Oh, my god. When is this going to be
done?” And that’s not the reaction you’re getting yet.
Jared:  No it isn’t.
Jason:  If I had to guess, the reason is that what you’re pitching right
now is an incrementally better website for a reasonable price, which is
okay, but why would they get excited about that? And why wouldn’t they push
you off to wait until it’s done because there’s no . . why would you? What
are you going to talk about if that’s all there is? So, what is it where
you go, “hey, what if I could prove whether or not I was filling apartments
faster than you are now?” What if I was the only . . . what if I took all
your marketing, which you can’t measure at all and made it measurable?
That’s what you said, right?
Jared:  Yeah.
Jason:  What are some thing like that potentially where they go, “Oh, my
god.” There’s that great quote from the guy I think it’s from the late
1800s actually. “I know half of my marketing spend is wasted, I just don’t
know which half.” Everybody relates to that. And you know you can determine
which half and more importantly, you can justify the site. First of all
you can mock up what the screen would look like with the offer on their
homepage or whatever it would, whether it be print button. You could just
make a one screen shot mock up of what does that look and say, “hey, if I
could prove whether I’m filling apartments because the software does all of
this automatically, then would you be interested in giving me a trial run?
Just a trial. You don’t have to switch it forever. Just trial. Listen, I’ll
do it for free for three months, just would you try it?”
In other words you got to get some kind of commitment of like, “Oh, yeah,
if you build that thing, then I’ll try it.” That’s different from just come
back when it’s done. I’ll take another look. That’s not a commitment.
Jared:  Okay. So, can I ask you a quick question?
Jason:  Yeah.
Jared:  As far as relative to this idea, it sounds like I have to sell these
people on the idea of giving away a month’s rent free. That’s part of the
pitch. Does that sound like a accurate description?
Jason:  Well, just in this particular brainstorm of this particular way to
maybe fill an apartment faster and also because I’m pretty sure that works
with their financials. But is might be some other idea but something that’s
tangible that you can track, they can track, everyone agrees that it’s
throwing thousands of dollars into their bottom line. Let’s put it that
way. Because just what you said, because we know apartment was filled that
wouldn’t be or it would have been filled some time in the future, which is
bad. It’s absolutely making thousands of dollars when that event happens we
all agree to it. This was just an idea about how to do that. You might have
other ideas and so might they.
Jared:  Okay. Well, I’d love to keep picking your brain, but I probably have
to go at this point.
Jason:  Here’s a weird idea. What if you paid for it? In other words, let’s
say this. The website is 500 bucks a month and you say here’s the deal.
It’s 500 bucks a month. That’s a ton. I know that. And it’s totally not
worth it to you unless I can prove I’m filling apartments, right? Of course
if I can prove it, it’s a no-brainer.
Jared:  Yeah.
Jason:  Okay. Here’s how you do it. You take all the risk off of them and
you say here’s the deal. It’s 500 bucks a month. there’s a money back
guarantee going back three months. In other words, you cancel at any time
and get your last month back. So if this isn’t working, then don’t worry
about it. You make the coupon and you pay the first month’s rent. How
bizarre is that?
Jared:  That takes revenue that I don’t have yet.
Jason:  You do if it’s $500 a month.
Jared:  Okay. Yeah, that’s not crazy.
Jason:  Well, it may be a bad idea because maybe the apartment is $2,000,
and if you’re successful then you’re out of money because you’re putting
too much money. So that may be a bad idea, in fact. But this is what I
mean, just try to break into just different ideas. How can you remove the
risk from them? The more you can remove risk from them and demonstrate
exactly what changes their bottom line the most, whatever does that, that’s
what’s going to be compelling to them.
So, what I just said is probably bad because the more successful you are,
it costs you more money, so in retrospect, probably a bad idea. But you see
what I mean? That’s the kind of brainstorming you want is, how can you just
generate a lot of value out of this that they agree to?
Here’s one last thing you said, “I’m wondering whether I should go back and
write code and do what they said,” which is to make it and then come back
to them. That’s what they said, right? “Should I do that, or is that my
priority?”
I think the easiest way to see that just writing more code is definitely
not the priority is this, that you know, I know for a fact, you can go away
in February, or whenever you said. You will come back with a website that
has all the features you need. It looks nice, it’s compelling, and it’s a
good choice given the alternatives. I know 100% you could do that. Don’t
you?
Jared:  Yeah. That sounds like a very realistic proposition.
Jason:  Yeah, there’s no risk there because you know how to write code.
Jared:  Yeah.
Jason:  And the websites are, at this stage, before all this cool vision
stuff, but at this stage, the code is also pretty easy. There’s a lot of
work to do, but there are no scary, unknowable things to figure out, right?
You’re going to do it. 100% chance you’re going to do it.
So, 100% chance that in February or March, you will have a certain website
that’s a better alternative. You could probably get some people to give you
$20 to $50 a month for it. I’m sure of that. I’m sure if you call a bunch
of people and their alternative is $100, yours is just as good and it’s
$30, I’m sure some people would do it. I’m sure. Is there any doubt?
Jared:  No. There isn’t a lot of doubt.
Jason:  Okay, so that’s why not to do that, because you can do that, and now
all that’s happened is it’s three months later and you’ve learned nothing
at all. In other words, you’re no closer to knowing whether this is a
business or not, or if it’s financially successful or not, or how much you
could charge, or what features that they really need to get excited about,
or . . . I don’t know, anything.
Anything about the business and the market, and the customers, and
anything, you will absolutely 100% do it, and you will absolutely 100% know
nothing more than you do today. So, the business hasn’t progressed at all.
You’ve just done some busy work that, you know?
So, there’s no way of knowing, since you haven’t learned anything during
that time, there’s no way of knowing if that was the right stuff to build.
There’s no way of knowing if those four people will turn around and go,
“Now, that’s what I wanted.” No way.
So, it’s not the right thing to heads-down and do it. Simply because, if
you could spend even a week or two talking to two dozen people and having
some of these other ideas that might get them excited and so on and vet all
those, you’re going to come back with a much better idea of what those next
three months should be. Then you do the next three months and do those
things.
So, why spend three months – at which time the business has not progressed
at all – when you could split the compiler down completely, take a week or
two now, actually figure out what you should build, and then do that for
the next two or three months? Knowing that there’s a light at the end of
the tunnel, because you found people saying, “Well, now, if you did that,
I’m giving you $50 a month,” or “$150 a month,” or whatever it is.
Now you’re confident that those next three months is time well spent
because people have literally told you, “I’ll give you money if you do it.”
So, why not do that, I would say.
Jared:  Put it this way, I’ve been doing this for long enough that I have to
think about what you’re saying and sort of . . . It’s not a huge change,
but it’s certainly a different focus as far as what the point of the
business is.
Jason:  No, it’s not. It’s not a huge change at all. In fact, there’s no
change at all to your vision, in fact I think it enhances your vision. What
I would say is this, yeah, it could be a huge change in what the first step
is of your business.
Jared:  Yeah.
Jason:  I submit to you that having an okay alternative website at a decent
price is not that interesting of a first step. In other words, what it
means is you’re leaving all the interesting parts for later, instead of
trying to make this step also interesting and also compelling. I think you
should try to make this step compelling and I think you can. I think
there’s no reason not to try to make this step compelling. It’ll only make
the future steps even more compelling.
Jared:  Okay.
Jason:  I’ll do one last thing. So, you’re a developer, right? You’re an
engineer, is that true?
Jared:  Yeah.
Jason:  So, if you tackle a big, new development project, which of course
this is, a long-term, big, new development project, you always take the
risky stuff and do it first, right?
Jared:  Yeah, and that’s the thing is the whole idea of having multiple
domains pointing to the same IP address. That is something I did not know
how to do when this project started, and once I got over those humps, as
far as using sub-domains and what not, and handling incoming traffic, that
was sort of the biggest hurdle for me. It was very gratifying that I’m at
the point where the stuff I need to do now, I know how to do, and it’s not
as intimidating and concerning to me.
Jason:  Exactly, and that it was the right thing to do, wasn’t it? Because
if you did the stuff you knew how to do, and then you left the risky part
at the end, well, A) then you don’t really know how much time this is going
to take because the part you understood is done already.
Jared:  Yeah.
Jason:  Then, also, what if that thing that was risky that you didn’t
understand, what if that required an architectural shift, so that all that
stuff that you already knew how to do now has to be changed. Now you’ve
wasted time because it turns out to do the domain stuff, it has to be this
and that. That means your code has to change.
Well, crap. If I’d done that first, then the simpler stuff that I knew how
to do, I could have just done it. Now I’m wasting time redoing some code
only because I did it in the wrong order. Right?
Jared:  Yeah.
Jason:  Okay. So, what I’m submitting to you is now… Okay, so that’s all
within the scope of development, and you already intuitively do that
because that’s the right way to tackle a development project, risky stuff,
unknowable stuff first, stuff you understand later. That’s the right order
of operations to minimize the overall project risk and to minimize the
amount of work you have to do, right?
Jared:  Mm-hmm.
Jason:  So, what I’m asking you to do is zoom out another power of 10. Now
consider all of the development effort to be something that you pretty much
have under your control and it’s pretty much risk-free. It’s under your
control. You know how to do it. It’s just a matter of time.
The part that’s risky and unknown is everything else. Will they give you
money? How much? What’s the market? How do you actually tap into something
that’s valuable to them, instead of just the website? That stuff, that is
the unknown, risky, question mark part of the project. The whole
development part is known. Of course, you could zoom back into development
and then there are details, and you’d sort that.
But at this scale, wouldn’t you agree that all of this stuff is the
question mark, and the development is the part that you’re comfortable with
that you could absolutely do? Therefore, the same reasoning applies. You
should do the risky stuff that you don’t understand first, because that
will inform what you do with the stuff that you do understand.
Just like the domain stuff might have thrown off code that you did and
you’d have to rewrite it, similarly, when you get out there and talk to two
dozen people and talk about expensive websites and have some of these ideas
that go to their bottom line and you’ve talked about, you might discover
it’s a whole other product. Or at least – maybe it’s not a whole other
product. Maybe that’s taking it too far, maybe it’s not.
But still, selling this website might be, sure we have a website, but all
of a sudden you can track your marketing, and that’s the thing or whatever,
right?
Jared:  Yeah.
Jason:  [You can] totally inform what features you do between now and
February. I’m totally making this up, but you might be working on a
calendar widget, and now you realize, “Forget the calendar widget. I need
the coupons,” and get going. I just made that up.
Jared:  Yeah.
Jason:  But you see what I mean?
Jared:  No, [inaudible 1:04:09]
Jason:  In other words, that was the… So, you’ve got to do it in the
right order for yourself to not do extra, useless work that you could have
avoided. Same argument.
Jared:  Okay.
Jason:  So, I don’t think the vision is different at all. I think, rather,
I’m trying to get you to reorder the steps in which you get to a version
one of phase one of your business. If you reorder the steps, I feel you
will have a stronger, more powerful, more compelling version 1.0 of phase
one. I think you’ll get there faster because you’re minimizing the amount
of rework you’ll have to do in order to get to that version 1.0 of phase
one. Does that make sense?
Jared:  Okay. Yeah, it does.
Jason:  So, everything after that, I’m not agreeing with at all.
Jared:  Okay.
Jason:  But I think you could re-order it and rethink how you’re
approaching Version 1 of Phase 1 to be much more valuable and much more
likely to be successful coming out of that stage just by re-ordering how
you approach these things. None of these things are negating what you’re
doing. You might go out there and discover if you had a cheaper version of
the same thing they would fall like dominoes, and you’d have 1000 people by
the end of the year. That’s kind of cool, too. I don’t know what you’re
going to find.
Jared:  Yeah.
Jason:  I positive that you don’t know, either, and that’s the next thing
to fix, is to know that. Then you’ll know it, too, because you’re smart,
and you’ll take all that feed-back, and you’ll go, Okay. This is what rung
their bell and this didn’t. Shoot, the more I charge the more they were,
“Okay, but I better see results,” and you said, “God damn. They were
willing to pay me that much money?” Or just the reverse, maybe their
super price sensitive. I don’t know, right? I positive you don’t know
either, and if you find out you’ll know what to do between now and February
and March that will make 10-20 people give you money, and I think more
money than you think.
Jared:  Okay.
Jason:  Great. I had a bunch of fun. I think this is a cool idea. I
love it when you have an industry that’s way behind the times and you have
relatively simple technology that can come in and fundamentally change
their ability to do business. If you could fill apartments three or six
months earlier, and you can prove it, that is fundamentally changing their
bottom line, and you can charge a lot of money for that, and the technology
doesn’t have to be outlandish.
Jared:  Yeah.
Jason:  At least not Phase 1, and so on. Of course, as you’ve been
saying, you have a vision of how you can sort of scale the effect that you
can have for property managers even higher and, of course, in different
locations and all that kind of stuff, to where this could just be a
juggernaut, and you could be “the way” to do websites for apartment folks,
because how could you not do it this way just like with Adwords where once
you can measure it, how can you not try to do it and measure it?
Jared:  Yeah.
Jason:  It may turn out to be good, it may not, but how can you not try
it? People do try it because, how can you not?
Jared:  Mm-hmm.
Jason:  Like you said, it doesn’t have to be big to be successful. Maybe
it just ends up being, you’ve got 20-50 people, they’re super happy with
you, you’ve developed a tremendous service for them. You’re charging them
$200 a month, and they’re thrilled because they’re making $1000s a month
more before of you. They’re thrilled beyond belief. You grow at a pace
that’s comfortable for you, you do the APIs, and you expand to other
locations if and when you choose, and you make a ton of profit. That’s
awesome. It doesn’t have to be Google.
Jared:  Yeah.
Jason:  It could just be a kick-ass, profitable little thing that you just
sort of decide how fast and how far you want to take it. Brilliant.
Jared:  I really appreciate your time. You’ve given me an awful lot to
think about, and . . . I’m glad I had this conversation. You certainly
helped me sort of think of perhaps I was getting a little too hung up on
the website as far as giving the website. It always seemed like it was the
“you get more flies with honey” as opposed. I’m more fascinated by the API
and the data . . .
Jason:  I know you are.
Jared:  . . . and the ability to build stuff on top of that, and the
ability to list your properties at multiple sites, than I am about the
site, even though I do like the idea of giving the site. This conversation
has helped me realize what I’m really curious about, which is the API and
the ability to get people into an apartment faster and helping customers
with that.
Jason:  Then I would suggest this. I think there are two rational ways
you could sort of address what you just said, that the website is not
interesting and the API data is, and two ways you can tackle this that I
think make a lot of sense. One is you could decide, of course the website
is not interesting. Of course it’s a means to an end. Therefore, the more
you can make just the website alone super-compelling, and may mean a low
price, but I feel like usually low price doesn’t always make it compelling.
In fact, it makes it look less valuable. That’s an aside.
The more compelling you can make the website, probably though, because it’s
delivering insane measurable value to them, right? The more you can do
that, although that’s not your primary passion, and it’s not the vision of
the company, it’s a means to an end, the better you conduct the ball out of
the park with that, where they just go, “Holy crap!” and give you good
money for a great website, that enables your big vision more than anything
else could at this phase.
You agree, you have to first insinuate yourself in there, and then you can
have enough data that the API makes sense and so on and so forth. So, for
this phase to work, you have to make . . . Even though this is not your
primary passion, you still have to make it work as well as possible, which
means making it super compelling for them.
Also, by the way, the more money you can charge for them for this, a, the
even more money you can charge once you send even more traffic to them
through the API stuff. It funds whatever you want to do. The more you can
get out of them, the more you can fund that API, et cetera. Maybe you can
build five of these sites simultaneously because you have money coming in
like crazy. You can hire people. You know what I mean?
Jared:  Yeah.
Jason:  The money can only enable what you want. So, even though you’re not
excited about it, it’s an enabler for what you are excited about, and it’s
the first building block you have to do anyway as a means to what you’re
excited about. So therefore, throw all your weight and energy behind it
anyway, knowing that it’s the best way to get to what you’re excited about.
That’s the first path that I think is very rational, and also, that I
recommend that you do.
The second path is to say, “I need to follow my passion. If my passion is
an API, I should build an API. Why am I dickering around with websites? I
don’t need to dicker around with a means to an end. If I am passionate
about building an ADA site, and setting that up with people, why don’t I
just build an ADA site and figure out a way to suck the data out of these
other sites, not build a website.
Jared:  Screen scraping?
Jason:  Of course, go scrape the stuff . . . Look, it’s Chicago. Remember,
everything I say is just Phase 1, it does not necessarily have to be
scalable to the whole country. You’ll figure that out some other time,
right?
Jared:  Yeah.
Jason:  Some other time you’ll figure out how to make this big time. For
now, you can literally pay an intern or oDesk person to literally go
website by website and type crap into a spreadsheet. Right?
Jared:  Mm-hmm.
Jason:  Now you have your data. You go make the ADA website, which is, I
agree, a brilliant idea. You spend all of your time and energy trying to
get attention for this ADA site, drive traffic to it. Go to the, like you
said, the few people who are drivers for stuff like this, who you know.
They say, “Oh my god, this is the website we’ve all been missing.” You just
make that happen.
Don’t try to displace a website, which is hard, you have to build all this
code, which, honestly, is the same kind of code that is everywhere else.
It’s not even innovation, and you only get $20 a month.
Jared:  Yeah.
Jason:  Just go like, “Screw that. Why am I building a crappy means when I
can just jump to the end?”
Jared:  I enjoyed doing it. I mean, there are things. I used technology that
I had not used before, and I enjoyed trying to do stuff that I never tried
to do before.
Jason:  Sure.
Jared:  So I never felt like it was a labor.
Jason:  Right.
Jared:  Perhaps, at times it’s been too much of a fun project. I mean, I’ve
had this idea for years, but it’s only in the past six months to a year
that it’s sort of changed into, “Oh, I’m going to do it this way and this
is . . . I think it could succeed.” I’ve always enjoyed the coding part of
it. It never felt like it was a pain in the rear. I’m intrigued by the idea
of . . . You know, I liked what Shopify has done, in the sense that they
have this gem that uses, I think it’s called Liquid, where it allows people
to template. You can do the same thing with any programming language.
The whole idea of, “We’re going to make it easy for you to get the back end
and you can do whatever you want on the front end.” I mean, I’ve enjoyed
that process. I’m more fascinated and I have greater aspirations for API. I
do not want to do screen scraping because I know a few people who have been
involved with the property management business. They’re people who
literally, they just start sites. They scrape other sites. They don’t give
you quality data.
Jason:  Right.
Jared:  Because data is no longer connected to the person that owns the
property.
Jason:  Right.
Jared:  That was the advantage of you’re giving somebody a website. You’re
making it easy for them to understand this is how you say, “All right. This
apartment is no longer available,” or “It’s not in the neighborhood that
you’re looking for.” You know?
Jason:  I agree, 100 percent, but the screen scraping is just to start.
Then you still have to get good data, I agree. It’s just a bootstrapping
way to get moving and get some momentum.
With that path, here’s the direction you go. You build the site. You start
with the screen scrape data. On day one the data is fresh. As the time
passes, it’s not fresh. Okay, you can use oDesk to sort of make it a little
fresher, but it still sucks. I agree.
But, if you can get it generating really quality traffic to their website,
and you can prove it, again, through maybe coupons that you get from the
ADA site, right, not from there site. Now you put the coupons on the ADA
site. You get a property from this, and here’s the coupon, and you do it.
It doesn’t matter what’s on their website. You do it through the ADA. Then
you start proving, “I am filling apartments for you.”
At that moment, aren’t they ready to do anything you ask? “Oh my god,
you’re filling apartments for me.” You say, “Yes, and I can fill more, but,
here’s the deal, I’m only going to do this for you for three months because
I have to have accurate data from you. I refuse to display old data because
it’s bad for my customers. It’s going to be bad for my site. You must
update your site.”
Now, does that mean you control their website, or maybe they have a log in
to some other system where they do it? I don’t know. You’ll know that.
You’ll figure out what that means. But, in other words, you first prove to
them they need to work with you because you’re sending them leads. And
you’re about to stop sending them leads, unless they give you good data.
Which could happen in any number of ways.
You see, that’s the direction you then push it, which I think is very
powerful. I love that idea. I love the idea of proving it first. So that
they, I mean, how compelling is that? I’ve sent you – I’ve filled three
apartments in the last three months. And now I’m going to shut it off.
Unless, you get an account with me. It’s this much per month. And, you keep
your data fresh. And we have ways of tracking. You have to keep it fresh.
And if you don’t keep it fresh then we’ll, whatever. And that’s incredibly
compelling. Because they don’t want to turn off the hose of new customers.
Are you kidding me? So, I love that path, as well.
So, I would say this: You like doing the website, so you did it, you
learned a lot. This is good. That’s not a bad thing. But, you also have to
decide right now if this is going to be a business instead of a hobby. You
have to decide what is going to be the shortest path to a product that’s
compelling, making money for you and other people, et cetera. And now, if
that’s not a website, then you have to say, that’s a [sum] cost. I’m not at
all reluctant or sad that I did it. Because I learned a lot, and it was a
blast. And that’s what life is about, isn’t it? So, no regrets. But just
because it’s been great up to this point, doesn’t mean it’s necessarily the
right business choice now.
Jared:  Yeah.
Jason:  And it may be building this other website, which by the way you can
do quickly now that you’ve learned so much from building the other website.
See, it wasn’t in vain after all. That’s the right way to go, and that’s
the way to hit your passion. And it’s a great business direction to go, in
that way. And then you don’t have to bother with these websites, which is,
sort of another thing.
I love that path. And I think you should consider that it’s a sum cost. And
not use that as weight of whether you should continue doing it or not. It
should be based on a business choice. Not based on the fact that you happen
to have been doing that for the last year. But, again, I also like Plan A,
which is:  Yes, you do the websites. But you figure out how to make even
just the websites into a good business. And then when you do the thing
you’re passionate about, the thing you’re passionate about is now literally
funded by the website thing, and enabled by the website thing.
I think that’s also building a plan that continues around your current
direction. Except, again, reordering the order in which that you do some of
these functions in your business. So that you do achieve that when you
finally release [inaudible 1:17:40]. Does that make sense? I think both of
those are very rational and very good ideas. And only you can decide, of
course, what you want to do.
Jared:  I guess I’m leaning towards A. I really appreciate your time. It’s
given me a lot to think about. And I’m just glad you had me on.
Jason:  Well thanks for doing all this. It’s really hard to do this, and be
honest, and get criticized.
Jared:  The first 20 minutes were brutal, Jason.
Jason:  Well, you were telling me about solutions. And it’s not. It’s
something else. It’s something awesome. I mean, what if it’s, you walk in
and say, “I will add fifty grand to your bottom line. Want to know how?”
“Yeah!” Because I said blah, blah, blah. That’s what it is. It ain’t no
solution. It ain’t no website. That’s just a means to an end. That’s the
exciting part, and I think you have it. I think you totally can do this.
And we’ve brainstormed some things, but if you go into these meetings with
some ideas and you talk to 20 people, you’re going to find the ideas. And
then, that’s going to be so exciting. And now you’re going to build
something. Whatever that is. Whichever of these paths you take, and so on.
That is going to be genuinely really valuable. That means you can charge a
lot, make a lot of money, and that’s better than just going heads down and
making the same website as everyone else has.
And then you put it up in March and you still don’t have good template for
a property management website. What the hell? That’s not what your passion
is. And you totally have the ability to do something that’s just, I don’t
want to say bigger, that’s the wrong word. More compelling and more
valuable.
Jared:  Absolutely.
Jason:  Well, thanks again for coming on.
Jared:  Thank you.
Jason:  And let us know how it goes.
Jared:  I will do that.
Jason:  Okay.
Jared:  All right.
Jason:  Thanks.
Jared:  Take care.
The post Smart Bear Live 6: Jared from Padseeker.com appeared first on @ASmartBear.
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1h 21min
July 24, 2012 Smart Bear Live 5: Dan from SyncBloc.com with Mark Suster
Welcome back to Smart Bear Live, the call-in show with Jason Cohen, sponsored by Software Promotions. In this episode, special guest Mark Suster joins Jason to talk with Dan Bowen from SyncBloc.com.
Listen to this episode if you want to learn what a VC investor thinks about “Internet scale” and how you can usually simplify your idea by charging a fair price for your product.
You can subscribe to Smart Bear Live on iTunes (please review the podcast as well!) … and if you’d like to appear on a future episode of Smart Bear Live, send an email to [email protected] to schedule a recording with Jason.
Transcript
Automated transcription services provided by:

Dan Bowen:  My name is Dan Bowen, and I’m up in the wine country in Healdsburg, California north of San Francisco, and the company name is SyncBloc, S-Y-N-C-B-L-O-C.
Jason:  SyncBloc. Well I know what Sync is, but Bloc. That feels like a set of entities working together for a common goal. I guess the goal, maybe Sync allows them to do that, to become a Bloc and synchronize their efforts. So I think it’s for people that are trying to do a political movement together, it allows them to get on the same page and be organized so that they’re more powerful than they were individually.
Mark:  Oh come on, that’s way off base. SyncBloc is a place that takes incredibly large files that are all stuck on your offline non-cloud service and helps you sync it with the cloud. We all know the success of DropBox, but let’s be honest. It’s really used for small documents and images and stuff like that. When you really need to sync big stuff, you need SyncBloc.
Dan:  Well, I obviously haven’t been memorialized in your memory yet, Mark. No, it’s best thought of as CRM for families, individuals, and the businesses and organizations they interact with most.
Mark:  Oh crap, this is Dan. I should have put it together. I know exactly what you do. That’s unfair. And that’s what your name is. Look Dan, so I know exactly what your company does. I know exactly who you are. I should have put two and two together when I realized you were in the wine country. The brand hasn’t stuck in my brain so much as the whiskey has. I’m not sure that’s the right name for what you do, because what you do is more of a consumer proposition, and I think the word sync is very technical, and a very technocratic kind of IT sync up my crap kind of stuff. If I were you, I would look… not that you’re looking for this advice, but I’d look for a simplified brand.
Dan:  Understood. I’ve certainly gotten that feedback. We’ve gone back and forth on it.
Jason:  I’d add to that. When you describe it as CRM, you and I know what that is, we know what a CRM is. But I bet these people you’re selling to, almost none of them know what it is. Anyway, again it sounds corporate. Although that’s fine, because you had your little phrase that communicates it, but aren’t you anyway going to need a little phrase that communicates it to your actual end users to put on your website? I think you’ll need that phrase anyhow, so you might as well also have that phrase instead of saying CRM, even if that’s what it is. So, is it like a shared family contact list and calendar and stuff like that? What is it?
Dan:  Our goal is really to get beyond search social and the inefficiencies that search social and mobile have introduced to us.
Jason:  There’s no way families are sitting around saying, “If only somebody could reduce the inefficiencies that search social.” There’s no way this is the language that anyone uses. If I talk to a family and you show them one screen shot of this, what would they say it is for them? Finally the family is organized. Now I know what Billy’s calendar is when he changes it. What would they say it is?
Dan:  I think you started to mention it. It’s rich contact management, event planning, notification services, and task management, but at the family level. And connecting individuals to those businesses and organizations they interact with most, with critical information. I think that we get lost in search and social.
Jason:  Can you give me an example of something where it really sucks for a family, but if they had this it would be super easy? Like, the dentist keeps changing the appointment, and I never know if I’m taking Billy to school or you are. Poof, now they have this, and Dad just takes a look and says, “Oh, I’m taking him to school.” What’s the deal?
Dan:  Take it even one step easier than that. Do you have the telephone number for your dentist in your phone? Does your wife have the same telephone number? Do you have the insurance that’s related to that. I think the problem that we have right now is we’ve got amazing tools in our pocket. We’ve got amazing calendar tools, we’ve got contact management tools. No one uses them, because they quite simply require too much effort for someone to engage them.
Jason:  I use them.
Dan:  Well, you and I also just mentioned that we’re on the bleeding edge of technology.
Jason:  I bet there’s someone in the family who has all the information. I bet I know who that someone is most of the time. And then everyone else has these little pieces of information. That might be a better way to describe it. There’s usually someone who’s kind of the gatekeeper of all this, knows where the files are, knows where to find the stuff, but everyone needs it.
Dan:  You bet. No, I agree.
Jason:  Not that you asked, but you’re using a lot of very generic things that I think could apply to pretty much any kind of data organization company, whatsoever. I think you’ve got something pretty neat. Why not make it really human and just say, “I took my kid to the dentist, and then they prescribed this thing. So I went to the pharmacy and realized that I didn’t have this number that I needed, which is silly. How come I don’t have that number? Well, everyone in the family can’t have all the numbers all the time. Except yes they can. Now they can all have all the stuff.” That would be pretty neat.
Mark:  So Dan, now that we’re done with five minutes of telling you everything you never asked, what the F do you want to know?
Dan:  Actually, the reason I called really wasn’t to discuss what we’re doing. I’m in development right now. We’re building a product. This is actually my third company.
Jason:  So what’s the question?
Dan:  The question is really directed towards the definition of Internet scale. I was in a 10-year company.
Jason:  I Just ask what the question is.
Dan:  My question is related to all this talk that I hear in the Silicon Valley about Internet scale. With the exception of Facebook and Twitter, it seems like this magic 10 million user number is a rare benchmark that companies hit, and yet that’s only 10% of the mobile market. It’s a fraction of the overall Internet market. I continually hear this reference to Internet scale, and I’m trying to get an idea of what people like Mark and other Vcs, when it comes to mind, when you’re looking at products and you say Internet scale, what does that really mean to you?
Mark:  I tend not to use that term, but I’m not opposed to that term. Let me direct you first of all to my blog. It’s called Both Sides of the Table. I think you know that. If you do a search in quotes on “deflationary economics,” it tells you my thesis on Internet investing. It’s quite simple, which is when you had systems where you had limitations on distribution or transportation of products, it enabled you to operate with a certain cost structure. That cost structure for traditional industry, for historic reason, remains high. When you can offer something that’s deflationary and significantly deflationary, meaning you massively drive down the cost structure, and you massively drive down the profitability, you really need to hit scale, really serious scale, to build a huge business. I think very large businesses are built on the back of the scale.
You’ve mentioned a couple companies, but I would throw out Craigslist and eBay. I would throw out people like YouTube, or even the scale that you see of Yahoo! or an MSN or an AOL in terms of portal distribution. You see scale increasing at places like Pinterest, and you see scale increasing at places like Instagram. Once you get to a certain scale and it reaches a tipping point, if you have network effects, meaning there’s such a tight network that goes to a single place to do a single kind of transaction that popping up and doing it somewhere else becomes harder to do. Then you have a business that’s defensible. And when you’re operating on “Internet scale”, let’s call it 10 million users plus or 100s of millions of page views, then introducing new product offerings at very low prices, even at low margins produces enormous returns. I think that’s what VCs maybe are getting at.
Dan:  Thank you, first of all. That’s helpful. It’s also at the same time a little confusing when you see the daily barrage of the next Me Too app for the last eight months that’s been produced in the same space. Trying to figure out how the Silicon Valley… again, my last venture was not built here. I bootstrapped it on my own. Trying to learn this environment..
Mark:  But Dan, I want to say, your language, you have to be careful about not coming across as a grumpy entrepreneur. Let me say this to you. 99%, maybe 99.8% of companies should never raise venture capital. Venture capital, it’s a very particular industry. Overwhelmingly, you can build very successful businesses that are not Internet scale, that become $20, $40, $80, $150 million dollars and don’t have the same kind of return structure that you see on the Internet. Venture capitalists are raising money from other investors, institutional investors who expect certain returns from us. And to get those returns, we need very big wins.
At GRP, the partnership that I work at, we have produced 15 companies that have exited north of a billion dollars. You don’t exit at north of a billion dollars unless you’re operating at scale. So just because our industry is structured to try and find huge outsized returns doesn’t make, first of all, doesn’t make that right for most entrepreneurs, and it doesn’t make it bad. Now the second part of that, which is “Me Too” businesses. That’s just a function of too many VCs chasing similar ideas, and that’s always going to happen, and that’s fine. I think the smarter VCs are never trying to fund idea two, three, or four in a category, but define what they believe the next categories will be.
Dan:  I hope I didn’t come across as too miserably grumpy. This has been a big education for me up here.
Jason:  Here’s another thing to keep in mind that you can actually do one and then switch to the other, if it makes sense. In fact, that’s exactly what happened to me with WordPress Engine. The initial concept was this thing doesn’t have to be big to make money. In fact, we were cash flow positive, including everyone’s salaries and everything in seven months. That’s pretty fast. That also showed we had a nice profitable business and something that enough people wanted. It doesn’t matter how many people that is. It could be 100 or 1,000, but that’s enough to make a profitable business. OK. As long as we built the business that way. Then we hired two people and got profitable again in another six months. But the market we’re in, which is WordPress hosting is huge, because 10% of the websites on the Internet are run by WordPress. So the potential market is enormous, even though we weren’t really attacking it as a big market sort of a company.
But as we showed, we had this solid company and product people wanted and so forth, it simply was an option to say, “Do we want to try to grow much faster and maybe raise a little bit of money and use that money to grow faster, work on some strategic things that would secure us some long-term competitive advantages, instead of just having a profitable, growing company that’s good, but doesn’t have overwhelming advantages over the competition?” We decided, yeah, we’re going to do that. And then we did raise some money, and now we’re doing that, and our growth rate has gone up literally exponentially as we did that, which is really neat.
But we didn’t have to do that. We could have decided not to do that, and then we’d have a company growing less fast, but profitable. And so what? That’s great. So, I guess it’s just a long way of saying, if you want to focus on who your perfect customer is and someone who will give you money because they have this pain so bad, that yeah, they’re going to part with dollars to see it fixed, you don’t need many customers to make money. Maybe just 50 or 100 customers and you’re making enough money that this is your deal. And then, you really can have your pick of what to do. You don’t necessarily have to know, at the outset, how you want to scale or grow the company if you don’t want to. You sound sort of skeptical of… I can see these big successes through the go big, go Internet scale. You’ve bootstrapped a company, so you can see all those things, and you’re skeptical of the VC side. I think that’s healthy, and you don’t have to choose right now, if you don’t want to.
Dan:  Jason, we’re certainly leaning more towards what you said. I’ve been slowly establishing relationships in the VC world for that long-term potential. And Mark, that’s why I’ve reached out to you. I mentioned that once before. That’s really our longer term goal is to make sure that we have some relationships in line, if and when that opportunity presents itself to push. I’ve been trying to define some of these things for myself. That’s why I asked the question about how you guys defined Internet scale as it relates to the VCs.
Jason:  But see, it may not matter. Mark just got through saying, it matters when either the margins are small or this and that where you need to multiply by a million for it to be interesting. But you don’t necessarily have to build a company in which that is the structure. So, in our case, we’re playing in a huge market. Even so, we didn’t play toward a thing in which we barely scrape by with money on each one, and so we had to play in a big market. In fact, it’s almost stronger not to. It’s almost stronger to say, “Look, If I can find 100 families to give me, I don’t know, $19 a month, $49 a month, whatever, for the stuff. If I can get 100 to do it, you know there’s a million families around the world that would want this. If I can just get 100, the market’s there. All of a sudden you’ve proved a lot of stuff.
I say proved maybe in quotes, but actually I’d like to ask Mark sort of across the table that way. Does that make sense? If you see someone going, hey, I’ve sort of built it for, maybe you could call it profitability, but showing traction revenue, and now I’m ready to scale it big, and I don’t know if I should still charge. Does that evidence, even if it’s just 50 or 100 people but in a big market? Is that super interesting to you? Or do you want to see that growth curve start to bend, and you want to see that direction of the company, and just getting 50 people to pay isn’t interesting?
Mark:  Let me start with a disclosure, which is I am a very happy user of WP Engine. I think the great thing you guys did is step into a market that was unfulfilled and needed more players like you. The reason I started working with you is I started by using WordPress’s own hosted product. But that had great limitations, because they restrict you from using JavaScript, and therefore you couldn’t do plug-ins. I then took over the hosting of that and started hosting at RackSpace. The problem is my site kept falling down. I had denial of service attacks. I had people who came and hacked into the site through a known exploit in RackSpace and changed my header to a Polish auto company. I wanted someone to manage all that. I just want to produce content. So, you’re offering as a customer, as a consumer really spoke to me, and I think that’s some evidence for the market opportunity that you have. Let me talk more broadly, which is, listen, everyone always says, “The VC said I needed traction, and how can I get traction without VC? The VC said I needed traction. Let me tell you what you need traction means. You need traction is code word for no. That’s all it means. It means no. It’s a very soft, polite way of saying no. What it also means is, I don’t actually want to tell you no, because then you might be pissed off with me and not come back if you get that aforementioned traction.
What Vcs are investing? So VCs invest in different stages. You have seed stage, A round, B round, C round, D round. Those correspond with how much capital they want to invest at which price points. The later the round, the higher the letter in the alphabet, the more the expectation of real revenue, real customers, real usage, real traction. But what VCs are really looking for is a sense that the management team has extraordinary potential as individuals, that have some sort of domain knowledge or some sort of technical or market or product or customer knowledge that other people don’t have. And the VC has to imagine that the market that you’re service either has an existing market that’s being served inefficiently, or there’s going to be huge latent demand for what it is that you’re going to offer. Frankly, that’s all they’re really looking for. Even if they can’t articulate that in their own brain, that’s what they think.
The overwhelming majority of VCs are lemmings. And you’ve already said it yourself, Dan. Why do people fund so many “Me Too” things. Because it’s far easier if I’ve seen four of these that each raise 5 or $10 million from the brand name VCs to say this is obviously a good idea. I think people call that social proof, and I think that’s a terrible investment thesis. What I’m looking for is the quirky idea that I think no one else is thinking of, that no one finds sexy, but I’ve got an entrepreneur who’s so passionate and knowledgeable about that area that they can persuade me that they’re going to make that an opportunity.
I’ll just give you one example. I started looking at YouTube networks about two and a half years ago. Every VC I met in Silicon Valley was saying, “We don’t invest in content. We don’t invest in video. It’s a hits driven business.” But every entrepreneur I saw on the ground in LA here was massively trending up. I started to develop a thesis that the future of content distribution is going to be different. It maps to the ideas of deflationary economics, and content production I think is becoming more predictable. I think video distribution in the future is going to look more like the Gilt Groupe than it is going to look like NBC. Meaning I’ve got a direct relationship with my customers and I send them daily curated things that I know they’re going to enjoy and like or that they have self- selected. That is a lot more predictable of a business. The reason I mention all this is every VC I know is cynical, and I was seeing the numbers on the ground, and I’m licking my chops saying, “here’s an enormous opportunity that other people aren’t seeing and isn’t going to risk being “Me Too?”
Jason:  So Mark, what should Dan do? He’s not sure which way to go. What should he pursue, and what should he do right now to progress the company and maybe intentionally delay the choice, or maybe he shouldn’t delay the choice. What should he do next?
Mark:  I’ll say this for public consumption, because I’ve told this to Dan privately I think twice already. I think, first of all, you’ve got to get a product live and in the market. You’re going to learn a lot from that and get a lot of feedback. Number two, I think you really need in your brain a really tight definition of an economic problem that you’re solving and why that’s going to be valuable. Valuable either because people directly are going to pay you money or because third parties are going to pay you money to reach your user base. You’ve got to really have your head on straight about how you’re going to acquire customers more cost effectively than other people are going to do.
I would study the history of whose done what you’ve done in the past and why they’ve failed, because you and I both know a number of people have tried to enter this category unsuccessfully. So that’s really the answer for me. You’ve got to find a way to get some developers working with you to ship your product, test it, learn some lessons. From those lessons, you can begin to develop a relationship with VCs to say, “here’s what I’ve learned, here’s what’s working, here’s why we’re excited.”
Dan:  Thank you for that. Just so I can follow up with you there Mark, we have. We have actually started coding. We have a former very senior Microsoft Exchange engineer that’s writing code now. I’ve certainly taken your advice to heart, and we’re in process on that. So as we get closer, I will certainly be in touch. Everything you’ve said is exactly the track that we’re heading towards right now.
Jason:  The thing I took out of what Mark just said that really rang in my ears was, a lot of people have tried this before and failed. That’s really, really interesting. The fact that a lot of people have tried it means maybe there’s something there. The fact that they failed doesn’t mean you’ll fail necessarily, but it does if you can’t articulate why this time it’s going to work. One thing that everyone likes to hear as an investor is maybe now is the time that the idea can come to fruition. Something changed. Now everyone has a phone. Now people understand these kinds of systems, etc.
Now they’re ready for it. Or you’ve got some new insight that none of the other people had, and that’s the thing.
You’ve got a handful of all people who, by their actions, are demonstrating that you’re right, that is the one thing that just unlocks this. Otherwise, it’s just really easy to lump you into that, everyone’s tried, everyone’s failed, and you haven’t really told me even plausibly why you’ll not fail. Saying, “This time I’ve got a senior Microsoft developer” ain’t it. I realize you didn’t’ say it was. It’s just starting, but that’s not it. These are all means to that end. So to me, I took all of what Mark said, and that’s the thing that rang at me. Because if you don’t solve that part, I think it’s just too easy to lump you in with the folks that tried and failed before.
Dan:  Couldn’t agree more. Absolutely.
Mark:  Great, awesome.
Jason:  Good luck, Dan.
Patrick:  Thanks for calling in, Dan. Really appreciate it, and hope to catch up with you soon.
The post Smart Bear Live 5: Dan from SyncBloc.com with Mark Suster appeared first on @ASmartBear.
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25min
May 15, 2012 Smart Bear Live 4: Nick from PinfoB.com at AZ Disruptors
We’re back in gear with the podcast! We’ll be more regular now. Here’s the deets if you’re unfamiliar with how this works.
Audio attached here, downloadable on iTunes or below, and transcript below.
Listen to this episode with Nick from PinfoB.com to learn how to tell customers no.
Transcript
Automated transcription services provided by:

Announcer:  Welcome to Smart Bear Live with Jason Cohen. In this episode, Jason speaks to Nick from PinfoB.com at the AZ Disruptors Kickoff meeting in December with co-host, Hamid Shojaee.
Nick:  The name of the company is PinfoB.com.
Jason:  Well, it’s certainly a very complicated company because the name is difficult to even spell. Lucky for you, domain names are not case-sensitive or you’d be sunk already, right?
Nick:  Right. Right.
Jason:  PinfoB? Well, I don’t know, fob sounds like freight on board, which is where you’d get things delivered. And so, I guess PinfoB is something that locates where all those things are so that when drivers are going around making their deliveries like UPS, but also other guys, they know where to go, they’ve got it on their mobile devices and it optimizes their routes.
Nick:  Wow. No. However, I think I’m now going to find that company and sell them the name or I’m going to go start it. That was great.
Jason:  All right. What is PinfoB?
Nick:  PinfoB, it actually stands for personal information broker, which is what we do.
Jason:  Okay.
Nick:  And so, we take your personal and consumer information and then we sell it, but then we give you the money.
Jason:  Right. That’s interesting.
Nick:  Yeah. And so, the benefit to the customer is that they get a little bit of money. It won’t be more than like $20 to $25 a month, but then they also, because we know a lot about them, they won’t get junk mail from us, they’ll get actually targeted relevant stuff, offers, deals, etc. And then on the client side, we can super, super target e-mail campaigns and whatever other things.
Jason:  Yeah, we get that part. That’s super. They’ve opted in and you have all their information and it’s probably accurate. They’re not just guessing because my grandma gave me a subscription to, what was it, it was that weird little thin magazine, you know what I’m talking about.
Hamid:  Lighthouse? Highlights?
Jason:  Highlights? Oh that’s a good one, and all of a sudden we got sweepstakes. I was put in a category of: I must be a senior because you can’t possibly read this stuff if you’re not over 67 and so I just got sweepstakes from then on. Hopefully, you can be more targeted than that.
Nick:  Yeah, absolutely.
Jason:  It sounds like people do this to you anyway, and so it sounds like life proceeds as before except you make $20 a month, which I guess is better?.
Nick:  Right.
Jason:  Do you have any control over this beyond that?
Nick:  Well yes, our members have control over everything. So they can control whether or not it’s e-mail, voice messages, whether it’s text messages, however, they want to get contacted, and they choose what they’re giving us and what they’re not giving us, so we can really target it. So really it’s just half of the benefit is the money, the other half is information about stuff you want.
Jason:  Okay. And what’s the question?
Nick:  The question was: How do you know when to tell customers no.
Jason:  Like what?
Nick:  So that’s both sides, so we have really kind of client sides, so we try to do everything we can to make our clients as happy as they can possibly be.
Jason:  Which client?
Nick:  So clients would be the ad[...]
...more
10min
October 24, 2011Episode 3a: Smart Bear Live!
It’s Episode 3 my little “Loveline for startups.” Introduced a few months ago as an Austin event, I’m now doing this live audio advice column to the web, taking phone calls from startups around the country. My co-hosts were Bob Walsh and Patrick Foley, hosts of the well-known Startup Success Podcast. It’s awesome having podcasting experts on board, Bob with pithy advice and Patrick producing and organizing the show which is a lot more work than you might imagine. You can listen by subscribing to my podcast on iTunes, or it’s enclosed in this blog’s RSS feed, or you can just download the mp3 of the first hour. Why listen? Especially if you don’t normally listen to podcasts? Because then you’d miss out on:
Whether it’s better experience to build a complete, tiny startup or to do more in-depth customer development for a meatier problem.
How to move from a free to a paid product without losing all your users
How to differentiate yourself in a crowded market (and when perhaps you shouldn’t try)
How cofounders can collaborate without going crazy
Why you need to focus on a specific niche, especially in a field with dominant players like CRM
When you don’t need to pursue outside funding and how to deal with people who insist you do
Here are the companies who called in:
Ryan Montgomery from Chext
Michael Abernethy from ChurchHubs
Mark Smith from DigMyData
Noel Sequeira from Creative Riot
Mel Bugai from Booker
If you have feedback and advice for the companies on the call, or feedback for me about the show itself, please leave a note in the comments!
Transcript
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Patrick: This is Patrick Foley and we have Jason Cohen on the line, of course. Jason: Hey everybody. Patrick: And we have to wait for the various people to stop playing multiple things in the background. And we also have Bob Walsh. How you doin’ today, Bob? Bob: Pretty good, how ’bout you guys? Patrick: Good, thanks. I see people logging into the chatroom. That’s cool as heck. I’ll start chatting in a moment when I can multi- task. You have to log in to chat, I’ll think you’ll see there. So be sure to make a free user account and participate in the offline conversation there. As we wait for our first callers to come on board, I wanted to start with a question from a conversation that Bob and I with Merck Coulbrougiff [sounds like] from Beta List [SP]. Ao when Bob and I were talkin’ with this gentleman on our podcast, we always ended with our traditional question, ‘What parting advice would you give to other start ups?’ And he said, ‘Launch. Launch as quickly as possible.’ Literally, ‘Launch a week from today, release something.’ That’s really stuck in my head, the idea of what can you do in the next week? So I have a question for you, Jason. If someone wants to become an entrepreneur, is it more important to keep looking for a really good media idea that you can do a month’s worth of customer development on or is it better to think of literally what complete start up can I make in a week? It’s not going to be a big deal, it’s not going to make me a million dollars, but maybe I can make beer money off it. Do you have an opinion on whether it’s better to create something real in a week or something small and real or keep looking for the right thing that’s gonna let you quit your day job? Jason: I think some of it depends on the circumstances you have. So, for example, if you have never done a start up before at all and your whole life you have worked at Dell, you don’t know anything about how it works, then I think even if you spent a month and did customer development and did things you see on blogs, it’s not clear that that is necessarily preparing you for anything, because everything is unknown. So it my be nice to just get something up, no matter what it is, no matter whether there’s only three people on Earth who could possibly want it. Patrick: Right. Jason: Just do a project on the side that someone else uses. Even though in the end it’s gonna be annoying to support and maybe it doesn’t turn into a company and you kill it, but at least you’ve gotten your foot in and there’s a whole bunch of stuff you’re going to learn by doing. Just like that person said, that way. On the other hand, if you’re used to having side projects and that’s part of your personality. In fact the reason you want to do a start up is because you want to take that energy and that natural passion and say, ‘I wish that could be my job.’ Patrick: Right. Jason: Instead of a bunch of just stuff that turns into hobbies. Then you don’t necessarily need, yet another, little hobby project that doesn’t necessarily go anywhere. You know you can do that part now. That’s part of yourself. And so that means in this circumstance, trying to make it a real company is probably the next step so that you don’t produce another hobby. So that means stuff like thinking about what a business model might be, it does mean customer development. On the other hand, if it’s only a week, and you can get a working prototype for something. What’s the worst case? You blew a week and then you . . . Patrick: Exactly. Jason: . . . get into customer development and it’s a big waste. If it’s only a week, I don’t think that’s a problem. It’s probably fun. I think the only trap there is people say it’s a week and then you see them seven months later and they’re still putting bells and whistles and screwing around with it and they still haven’t talked to anybody. That’s definitely a waste of time no matter who you are. Patrick: Definitely. Cool, thanks. The image I had was kind of a golfer doesn’t go straight out to the course before hitting bucket of balls. You don’t learn how to swing on the course, you have to get to the golf course. You have to play golf. But it’s also a nice to do some practice things and if making a start up in the next seven days is an important way to practice, knock yourself out, that might be useful. What do you think, Bob? Bob: If there’s a part of your start up that can be broken off and launched in a week, by all means go for it. The problem there is that you’re going to be allured to the idea of let’s build another CMS or photo gallery or something easy and try and just knock that out to get it out the door. I think you have to do two things. One is find yourself an audience and a marketplace and that’s something you can start doing within a week. Even if it’s a blog just talking about what you want to build. And the other is you have to watch out for that trap that Jason mentioned. Where you will have it out in a week and seven months go by. It’s not an easy solution and it’s not one size fits all, but I come down on the side of building at least something useful and if you get that out and people start using it, then you know you’re on the right track and you can build from there as you need to. Patrick: Cool. Well I appreciate that. That was a question that I’ve been having, actually a personal thing. I feel like the bar has been raised so much in the last five years in the start up community and I’ve been busy working for a distinctly non-start up company. The only way to really get back into it is to just do it. Thinking about that heavily. Thanks. Well let’s bring on a caller. If this works, I’m going to un-mute the 616 number which I believe is Ryan. Ryan, are you there? Ryan: I think so. Can you hear me? Patrick: Hey I can hear you Ryan. Cool. Well I happen to know Ryan has a real company. He hasn’t been messing around. Ryan, we play a game on this show. You’re going to tell Jason and Bob just the name of your URL, nothing else, and see if Jason can figure out what it is. So what’s the URL for your company? Ryan: The URL is chext.net Jason: Chext? Ryan: Correct. Jason: That’s like C-K-S or X-S or what is that? Ryan: C-H-E-X-T. Jason: Wow, Chext. Well when I hear that I think of writing checks because I feel like that’s all I do sometimes as a founder of start ups is write checks because you don’t see them when they come in. That’s always comes in from a magic account somewhere, but writing checks, you’re always signing stuff. So Chext, it’s like a funny way of saying checks. So I’d say it’s a way that I can get away from having to write all these checks and sign all these things all the time. Totally automate all that so it doesn’t bring me down all the time and instead I can sign all the revenue, because that’s fun. Patrick: How close did he get? Ryan: 50%, sort of. Patrick: All right. Why don’t you tell Jason what Chext is? Ryan: The first part of the word, you’re pretty close. It did come from the word checks or checking or checking account. The second part has to do with text or text messaging and so if that helps you think through what it might do. It helps you manage, at first a checking account, is where the name came from, through text messaging. It does a lot more than that now, but that’s where the name came from. Jason: OK. So I can check my balance by sending a text message and it sends it back to me? Stuff like that? Ryan: It’s not checking your balance of your bank, it’s actually helping you track your spending. So your the one who put in the information and you’re the one who is getting the balances back through texts. Jason: Why don’t I just use Mint and then it’s on my phone? Ryan: You could use Mint and some people who use Chext also use Mint for different reasons. The thing we’re sort of competing with is sort of the immediate things, and the awareness. So, if I’m always just letting my bank let me know when things post, it’ll probably be a couple days later or the next day, or sometime after the fact. Jason: Oh, I get you. Right, so it’ll text me as soon as it clears, I see. So, I get the message from the bank this hit, or this got debited. OK. That sounds pretty good, especially if you’re on a tight budget. I know that a lot of times people don’t know where they are. OK. So, what’s the question? Ryan: So, the question that I had, I was kind of thinking about this, is right now we’re moving from being a free product, so our goal is to get people in the door, and learn from them and get some feedback, see how to use it. To a paid product, so that we can actually become a sustainable business, and I think we’re hitting some sort of analysis process. And I’m wondering if I can hear any sort of suggestions or strategies for getting out of that, and obviously the right answer is just to do something, but I don’t want to do something that we lose all of the momentum that we’ve gained, all of the people who have signed up, I don’t want to abandon them, but I also want to nudge them in the direction that allows us to become a sustainable, paid for product, to build a business around. Jason: That’s a great question, let me ask you one back. So I assume that most people using this have low bank balances, I would never need to use this, in particular. And if it’s a big amount of money, like if somebody is investing in the company I want to know that. Most online banking stuff allows you to get those alerts, in fact I get those alerts like that. So if it’s big I can see, if it’s small I don’t care. So, is that true, that generally, the people who have the most use out of this don’t have a lot of money in their checking account? Ryan: It’s not necessarily that they don’t have a lot of money. Another thing I didn’t mention, is the reason I created Chexts was for myself. Because one of the most important things for me is that it helps me to communicate with the other person that I manage my money with, who’s also spending out of those same accounts, my wife. So Chexts actually texts both of us, so if I go and spend money and record it, she going to find out about it. So that now we’re constantly throughout the day, on the same page. So, it’s not that I don’t have a lot of money, it’s just that I need her to know about it, I need to know when she spends money and visa versa. So it’s not necessarily true, but if you are like another popular group in Chexts is younger people who don’t have a lot of money to manage, but they don’t need financing and all of that stuff. So what they’ll do is track the very little money they have, because they may only have a checking account, but they’re sort of using it for a different reason. Jason: OK. So, my initial gut says that you’re definitely not going to want to go after the people with little money in their checking account. They don’t have that much money, they’re certainly not going to spend it on this, even if it’s useful, because they don’t have the money. And so it makes sense to keep those free. And also, that’s a lot of folks and that’s OK with that momentum. The case of the family checking account sounds good. And that also sounds like a case where, although, of course a lot of families are on a budget, still I can see that the pain is a little greater there, it’s a little more useful. And also, it’s not necessarily true that your account balance is low, it may be what you said, that you’re just trying to track what each other is doing at all. And so that feels like a place where it’s easier to charge. So I wonder if you could segment it as, when it’s collaborative, when there’s more than one person who gets alerts on a one bank account, that’s how you could tell. That’s a really easy cleavage point, it seems to me, segmenting your customers. And it just, you’d have to see, but it just seems logical that those people are getting more value and are more likely to pay. So you said you’re worried about losing momentum. I assume that means in signups. First of all, if you started charging a good amount of money and lost most people, but started to make money, probably, is fine. So especially if you can like trial it for six months or something really long, so that you don’t really lose momentum. And that may be, by the way, to do that is to have a super long trial. There’s a VOIP phone company, I forgot who it is, but it’s one of these like e-telephone, voice mail whatever things, and they do that. They have a six month trial, so it’s like no reason not to come in, and of course by then you’re so used to it, that either you’re getting value or you’re not at that point. So you could use some tricks like that to start charging, but maybe not kill momentum too much. Do you feel like the more users you have it helps accelerate, is there some kind of, maybe not necessarily viral, but that people just tell their friends at all. Because it doesn’t sound like it. It sounds like I get notifications from my account to my phone and there’s not really an opportunity for that explode, other than people just telling their friends like they do with anything they find useful. Is that true or is there some engine there I’m not familiar with? Ryan: Yeah I would say there’s certainly some truth to that. One of the things we find, because we certainly threw out what can we do to make this more viral or to work more in a social way so that we can try to get more people on the system? Try to get those good customers who are going to pay for it. But a lot of people are very apprehensive and we’ve seen a lot of failures with companies like Blippy who tried to make finances and money with social. Jason: I agree. Ryan: And it just kind of blows up and it becomes this big, ‘Hey that’s a really cool idea,’ but it’s only a cool idea for a week and then it’s like, ‘Ah not really,’ not all the really important stuff. Jason: Yeah I agree. Ryan: So we’ve talked about it. Jason: And it doesn’t hit all the pain points. Ryan: I don’t think that that’s going to get us a million users. Jason: No and I agree and Apprese [SP] is another example. I agree that that doesn’t sound that interesting. So if I were you I would say, ‘That is not a viable engine.’ I mean if you can find one in that space, terrific, but there isn’t an obvious one and in fact the examples are counter-examples. So I would say that viral-ness is not the engine that’s going to drive this company and therefore the number of users you have today is not necessarily that interesting and the momentum, so called, is not necessarily that interesting. Whether you had a 100 or a million users today, it’s still pretty much incrementally the same difficulty to get to the next 1000 users. Sort of. Obviously anybody that’s popular, that’s some of it, but, you know, it’s not a fundamental part of your business engine. So you’re going to need another engine. Like the ability to spend X dollars on advertising and gain Y dollars in revenue or something like that. You’re going to need something else that you can effect to change that. And I should stop and let Bob throw in his ideas. I would say don’t worry too much about momentum, because it actually doesn’t matter that much because it’s not part of your core engine. I would say it’s more interesting to have fewer paying customers than a lot of other people. Don’t touch the people who don’t have money. Maybe a long lead time allows you to hopefully not lose too much momentum and try different pricing out and even experiment with pricing. With a long lead time like that you can kind of do whatever you want at the end of the six months. So like pick the really high price point, you realize after six months, which you might, you could always go back to them and offer them a lower price point. Of course they’d be happy about that. Let me let Bob get in now. Bob: I’ve come around to the opinion that the metric of how many people join X service is pretty worthless when it comes to monetization. What matters is how many people consistently use it. I don’t think your service you’re talking about is going to be that interesting to the general public, but I do see a huge play there with those services and sites and portals already out there who are geared toward educating people about finances and holding people accountable about finances. Kind of the model that Game Fit sites have where you partner up with somebody and you support each other as you try and do one more lap or push up. I think those are your natural allies and those are your natural alliances. I think you’d find yourself, you’re going to drop a lot of people when you instantly mention, ‘This costs money.’ Because they’re just around for the free ride, but I think if you time it and you start talking to some of these websites and portals and other people out there who make their money by helping people manage their money better, and by the way, definitely not talking about banks here, I think you’ve got a really good play. Also, you may want to think about getting out of English, or at least away from just English, head for Spanish, head for other languages. I would say Chinese would be a very good one. It’s a different market and you need to connect with the people who already have a burning need. Well they’re already burning, so I would suggest as you move toward a paid model, at the same time, you start diligently building a network of alliances with people who already have a good reason to promote your service. Who knows, they may buy your service in bulk. Ryan: No that’s great advice. It’s funny you mentioned other languages. We actually, one of our partners is a fluent speaker of Spanish, which is one of the reasons we brought him on. A couple weeks away, we want to transition into a Spanish available product and even a product available outside of the US where you don’t even have to use text messaging, but you can use our iPhone app and other things. Surprisingly we have a lot of people outside of the US, like in Chile actually, will tweet and say, ‘God, I wish I had Chext here,’ and we would just have to day, ‘Sorry right now,’ but very soon we’re looking at doing that and alliances with those types of businesses. There’s a lot of companies we’ve talked with [inaudible] financial literacy that all they do, and they charge a pretty good value to consult on how to better manage your money. So we’ve been looking at leveraging that they’ve already got an audience, they’ve already curated a good audience of people and we can just kind of piggy back on that work they’ve done and sort of add value to what they’re already doing. Is that kind of what you were talking about? Bob: That’s exactly what I’m talking about. Everyone from Motley Fool to take your pick of any others. There’s a lot of interest in people’s money. The other thing to say about that is, and Jason may disagree and Pat may disagree, but I don’t think software today has to be morally neutral. I think you’re in a much better position if you take a point of view of saying, ‘Look, we’re going to get you inside the loop of what the information banks are prepared to provide you.’ Why? Because then you’re going to get much better control over your money than banks are again, prepared to give you. I think there’s a moral ground there to take. Maybe that’s because I’ve seen what the last four years have done to people economically and it’s not pretty. Let me put it this way, I can’t see a bank saying, ‘Oh this is a great service for us.’ I can see one of those portals or some other organization saying, ‘This is great, what’s your deal for bulk purchase?’ Ryan: Mm-hmm. Yeah, no, absolutely. Patrick: Kind of related to that, one of the other listeners, Sergei, mentioned would Mint itself be interested in acquiring Chext or perhaps at least partnering with Chext to offer it as a feature to their subscribers? Have you considered going after something as big as Mint? Ryan: I don’t know. I think, and I could be wrong, Mint is such a beast and now that they’re controlled by Intuit, I feel that if they wanted to just steamroll over Chext, they could do so if they really put their mind to it. They could look at us and go, ‘We’re just going to build everything that you’re building and do it faster and offer it to that group of people’, but I don’t know that they want to do that. They don’t make their money by giving you a better way to manage your money. They make money by recommending a new bank account and sort of cross-selling between banks and between financial products and we’re not really doing that. We’re trying to help people manage their money better, which may not mean we recommend you go to another bank. Jason: I think that’s a very wrong way to look at it because you were saying that you know what they want to do, what they want to do in the next five years and what they want to do strategically inside Intuit. Intuit is a company as company is a financial management company. Right? Mint is actually an exception in that they’re using the fact that this financial management to push remote services. I actually sold lots of software to Intuit at Smart Bear. They have 27 business units. One of them is Mint. There’s a strategy at Intuit and there’s a strategy at Mint as well. In fact if I were to describe Mint, you see it as the business model of make money by pushing offers for credit cards, loans, and so forth onto people. But that’s not why people use Mint. People don’t use Mint to get a better credit card. That’s what appears to them. People use Mint because it was an easy way to put a couple of accounts together, see all their accounts in one place, gets these really cool little charts, helps them with budgeting. In other words, it was kind of what QuickBooks Online should have been for people. And along the way got offers to save them money. That’s not why they sent them to Mint in the first place though. Similarly, you are a service which is useful in itself and who knows why that is valuable to whom. Whether it is up-selling other services, whether it’s charging for the service itself, and so forth. I wouldn’t close my mind to those kinds of possibilities. Still though, saying either Mint is interested in us or we go home is also not a viable strategy. Although it’s fine to pursue those things, even if they worked it’s going to take a long time. You’re going to pilot it, if even if they’re interested. If time is of the essence and you’re trying to make this into a business in the meantime you can’t really wait for that unless they want to move fast. Ryan: No, those are great points. Jason: The last thing before we move on is you mentioned that you know a lot of these things and you said you’re in analysis paralysis, which means you’re thinking of a lot of these things, and you’re weighing pros and cons, and at the end of the day you’re not really sure how to move. Because, OK. There’s 10 options, there’s pros and cons, and now what? How do I pick? Especially when it comes to pricing and going back to the idea of charging individual people, you don’t have to charge everybody the same amount all the time in time and space and when they signed up and all that. You can do things like message just 10% of your customers and say this is what we’re charging. You can put what you consider to be expensive pricing on the website, but then selectively decide how to give various kinds of offers to various segments of your users. You could split up people by where they are, or how much money they have in the bank, or how many of these messages they get a day or whether it says family or not. There are all these dimensions that you could split them up on. You can simply discriminate. It’s called price discrimination. Discrimination on race when you’re hiring is bad, discriminating on price based upon behavior of customers is very appropriate. In fact, when companies have tiers that’s the whole point. You’re trying to cleave it along certain lines and discriminate. You could do that, too. You could post either some tiers or maybe it’s just free or inexpensive paid. Even so, you could still decide what to do with your existing users. You could grandfather 100% of them and that way you wouldn’t lose a single person if you’re afraid of that. Or, you could take a certain cohort that you think should pay. Even so, you could go to them, put the pricing up on the website but don’t tell them yet. Don’t announce it to them, they won’t notice. If anybody notices, you grandfather them, or you have the conversation right then. Then you take just 10% of them and say look, starting next month we’re going to start charging $9/month or whatever, and see what happens to just 10% of them, though. Worst case is that 100% of them hate you, leave, and even though you say, ‘Nevermind, it’s free’, they’ll say, ‘Screw you, anyway’, and never come back, but you’ve only lost 10% and you needed to try something. So that’s OK. In other words, what I’m saying is a way to defeat analysis paralysis is you pick something that’s even more on the scary end, but then in a targeted selective way both dimensions and the quantity of people in that cohort that you’re going to message at one time, then that’s when you start trying stuff. That way there’s not much of a worst case scenario and you’re able to try things and feel comfortable. And of course when you try a couple of things and have a couple of those, maybe even 20 of those conversations even if by e-mail, then you’re going to be a lot more comfortable that you know generally what different cohorts are thinking. Then you can start rolling stuff out more officially and more broadly, but feel comfortable that you’re doing the right thing. Ryan: Yeah, I love those suggestions. Those are great. Jason: Sometimes it’s hard to segment, right? You may not have those tools. You may not have that data in the database. You may not have that hooked up to e-mail. You may not have that in accounting. That’s OK. This demonstrates why that is actually a nice investment to make. I think this is true of most companies. It’s a nice investment to make to get that kind of infrastructure going because you can do these things. Ryan: That’s something that we do have a lot of that information, even if we were to go back manually and pick 10 people every day and message them a specific pricing and see how that goes I’m sure that’s totally doable. I think we’ll definitely try something like that. Patrick: Cool. Well thanks a lot for dialing in Ryan. You know I’m cheering for you. Ryan is from my hometown, so keep it up and I’ll keep tabs. We’ll see how it goes. Ryan: Yeah. Thanks for letting me in guys, I appreciate it. Patrick: Thanks Ryan. Boy, I’m pretty happy with this new software stuff we’re using here. Blog Talk radio. Got this nice chat window over here, people talking, what do you guys think? I think this works pretty well. Jason: Yeah, it’s nice. Patrick: All right. Our next caller is Michael. Michael, I put you on mute, can you speak? Michael: Yes, I’m here. Patrick: All right, we can hear you. Cool. Let’s play the name game once more. why don’t you tell Jason and Bob just what the URL of your company is. Michael: OK. It’s churchhubs.com Jason: Churchhubs. Wow, that’s a good name. Michael: Correct. Jason: Well, you know it is actually a challenge to manage a church organization with everything from events that they throw and different people volunteering for different slots and communicating that with different people with different roles, because I may be an organizer of one event and a participant in another and so forth, and I think that the typical tools that are used, this is typically non-technical people, so if you’ve got Excel, you’re already in the top 30% of technology and it’s still sign-up sheets and paperwork and Excel document that only one person has maybe. It’s still hard, and so if you can create a place where you can organize those things and people can participate and share stuff and just save time and all that, that’d be great. So that’s what I think churchhub is. Michael: That’s pretty much exactly right. The back end software for churches. I think you sold some of the churches a little low on using Excel and stuff. They don’t seem to be using a custom-made applications from Windows 98 but there are a little ahead of just using Excel spreadsheets. So, yeah, back end software for churches. Jason: Wow, so it’s like practice management for doctors except for churches. Michael: Exactly right. It’s custom built for them to manage their people, families, groups, and then specifically stuff for churches like address checks, bulk mailing, donations, and IRS print-outs and stuff like that. Jason: Nice. So how many churches do you have right now as customers? Michael: Well, I’m very in the early stage, and my question reflects that. I don’t actually have customers now. Jason: Alright. Michael: I’m in the 30 person feedback range right now. Jason: Great. So, what’s the question? Michael: Do want the background? Or do you just want me to get to the question? Jason: Let’s do the question first. Michael: OK. The problem I have, I’ve talked to twenty-two churches so far, what I’m seeing is what I call the IBM effect. So people that I’ve talked to all seem interested in my product but at the end of the day they all tell me that they’d never go with a start-up, that they’d rather go with a product that’s more expensive or maybe even has less futures just because of the company that they’re going to go with is bigger. So, they always tell me things like, ‘we’re not sure you’ll be around in five years’, ‘if we go to a start-up how do we know it’s safe’, ‘how do we know’, and that kind of stuff. They’d rather just go with the behemoth just. I think of the old saying, no one ever got fired for going with IBM, when I think about the situation. Jason: So, what’s the behemoth right now, in this space? Michael: So, some quick background, there’s probably about fifteen major choices that the churches are going to, and twelve of them, like I joked before, look like their from Windows 98 Visual ++ wizards. And then there’s three relatively new ones that are fast and web based. And all of the churches that are using the old ones are going to the three new ones, so those three new ones are getting all of the customers right now. Jason: Right. Michael: In terms of customers, we’re probably talking fifty to seventy thousand switch-overs. All of the ones that I’ve talked to in the past year or the next year, they’re all looking to switch over, if they haven’t already, so the turn over right now is pretty large and these three big customers, and they’re all pretty good products, too, but their going to be getting the bulk of the switch over right now. Jason: Well, it has to be asked, I’m sure they don’t want to switch all the time, like that’s not ideal, so it makes sense that they’re switching off the old stuff, sounds like there are already three people with open arms to take them and it sounds like they’re all switching en mass right now. It sounds like timing is important in this. For example, if you waited four years, they probably all online with something good enough and you don’t have much to say. So my question, the next obvious question is, if there’s three pretty decent choices, and they already exist, and they’re like the IBM’s of the world and the decision makers don’t have a problem making a decision, what is your advantage? Why should they, like tell me, why should they pick you when you’re not one of these three that already exist? Michael: Well, that was the first thing I ran across. They all said that they were interested in these bigs ones. I made a pivot and decided I was going to try to focus on local churches, so there’s about a hundred and 15 churches within a 30 mile radius, and one of the big futures that these churches are looking for is help. And so my pivot was to offer local help, drive up help, the ability to get someone on site to help whenever they need it, so I’m going to try to focus on local only. Jason: Help? You mean tech support? Michael: Yeah, help, tech support. Helping them figure out how to import people or they couldn’t figure out how to make a person go into a family, how to print this report. These basic kind of help. Jason: Yeah, but that’s just tech support. If that’s the paying point then you should make a tech support service for these products that already exist and then charge them a good amount and you’re done. Like, that’s not reason to build a new product. Micheal: Well, I could hear that argument. My goal was to make something that was simpler that would require less help and then offer on- site support to back that up, to local churches, that was my latest pivot was. And then, someone undercut them on price as well, because the help these companies offer is in the 4 to $600 a year range, so the [inaudible] money that we’re talking about is pretty significant, so cutting them on cost, undercutting them on cost wouldn’t be that difficult as well. Jason: OK. That there’s, I got a bunch of red flags, I have to say, coming up. Number one, service is not something, tech support, again, like if that’s the paying point you can just go after that and there’s no need for a product. Just make a great, affordable service around that because even the thing you said, It’s simpler so it takes less tech support, except I’ll be there for tech support. Which doesn’t make any sense, if it’s easier the whole point is to not need someone to come out, so to me that’s not jiving. Then you said, I’m going to undercut the price. My gut always is, competing on price just doesn’t work. The reason is that, that all you’re doing is making the market smaller for yourself. You’re making your revenue smaller for yourself and you’re saying this product doesn’t do as much and you just told me at the top of the call that price wasn’t really as much of a big deal as some of these other concerns, like you haven’t been around yet, and will you be here in five years, and these other objections. It sounds like the difference between 200, 400, and $600 a year is actually not the thing that’s going to convince them that that’s OK to go with the guy that they don’t know, because of that. Then you say, you’re going to show up on-site, which means more expensive, right? That’s absolutely more expensive without any doubt for you to do things like get on the phone or go there, and yet also you’re going to undercut the price. So that’s telling me that you’re making your margins really small and that makes it feel like, that there’s not a lot of money in this anymore. Local churches are going to be more expensive to go acquire, and you’re going to have to convince them individually and you’re going to get less money and then you say you’re going to give them more human support. It just feels like it’s going to be hard to make a profit on that kind of stuff. But tell me where I’m wrong. Michael: I have a hard time arguing with any of that. I’m just trying to figure out how to break-in and get the first few customers under my belt so that I can look to myself as being a player in the market as well and at that point, then you can go and put yourself on the web and claim you have customers and say you have a big part to play in it. Jason: Well wait a minute. There’s two things here. Because you said I’m going to have low prices and high service and all this. If that’s the model, who cares if you have five customers? Who cares if you have 1,000, if it’s not a profitable, sustainable model, right? So, I think first you have to make these decisions about what your position in the market is going to be, why are you better than those three. Maybe better is the wrong word, for whom are you better is the better way to say. In a way that’s going to be profitable, that if you did have, let’s say, 100 churches, you’d be making some money, and if you had 1,000 churches under this model, you’d be making good money. Now, the first thing is to say how, do I have a structure in which that could be true? And then, the bit about, I just want to get three or five members on the web site, that’s easy. Because you just give it away for them, right? You say look, here it’s free, ‘You’re right, you are my first couple of customers, you’re right you are going to have to put up with a couple of more issues than otherwise because I’m new. On the other hand, I’m going to devise exactly what you need and when there’s some feature that isn’t there that you need I’m going to put it in. And the big guys can’t do that, because they’d have to re-train people and anyway, they don’t operate that way, I can.’ You guys got to find three or five people who are willing to put up with that and give it to them for absolutely for free, because of course it’s worth it to get the name on and to say thanks for putting up with the problems. That’s easy, that’s super easy. If you can’t get people to take it for free, even if it is early stage, then I think that’s a bad indication that you still don’t have enough differentiators from those other three. So that part seems easy to me, to get the three for free. It’s the model and the other part that I guess I’m still a fuzzy on. Michael: Going back on topic, I have offered to give it away for free and offered them customizations and everything and that just gets back to the point that, no, they’re not interested, they don’t want to transition later if I decide I don’t want to do it, they just want to pick one now and work with it for 10, 15 years, I think. So getting the three people, even offering it for free has been a challenge as well. I just run into the same problem. I feel like the people I’m working with, or dealing with, are the opposite of the early adopters, their the late adopters, they’d rather just go with the immediate choice and be done with it. Patrick: You know, one thing, obviously you can take advantage of your being local for those free people, and then you kind of get the benefit of having that hands on help, but the goal is to move away from that by making it better. One other question that comes up for me is, you spoke with 22 churches, does everybody offer exactly the same functionality? Or did you find any new problems that you could kind of flank the issue, and maybe not build a whole back office system, but solve one specific problem that churches have that none of the other 15 are covering, solve it really well so that you stand out and then whether you grow into the other functionality or not, you have a toe hold in this market doing one good thing. Michael: That’s a good suggestion to offer some unique point of differentiation but for the most part what I’ve seen are the three new ones and even the old ones are all 90% the same, just packaged differently. The new ones are obviously offering more social network awareness and more ways to communicate, so that’s kind of where everyone is moving. They are just trying to get that Facebook light aspect to this management software as well to give people a way to pass into the church. I understand and I think that’s a good point to try and find some uniqueness that I could offer them. I can’t think of anything off the top of my head right now, but that’s a good suggestion on where to go. Bob: I have to ask you a question here, just because I went to your site, churchhubs.com. Of the 22 churches that you talked to how many had the physical possibility to look at that site before you talked to them? Michael: All of them should be able to. Bob: I think you’ve got a case of reasoning from the wrong data here, because if I go to churchhubs.com I see a log in screen that tells me absolutely nothing at all whatsoever about what I’m logging onto. I wouldn’t do this if you gave me all the money and all the Viagra spam in the world. The homepage, why do you have a log in for your homepage and nothing else? I don’t get that. It’s not what people want to do. Michael: The people I am writing to know what the e-mail is about so I usually talk to them beforehand. Bob: Yeah, but there is a set of expectations that people have. When I go into the grocery store, I know that money is going to go from my pocket to the cashier, and I’m going to walk out with some physical goods and that’s the way it works. If I go to a website, and by the way if they shared that with anyone else they’re not going to have the same information from this e-mail, I have no idea what I’m getting into. My first instinct as an internet user is to close this browser window instantly because this just screams bad. You need to have a site that tells people who you are, what you’re selling, who you’re selling it to, why you’re different from everybody else, and therefore for certain people, better. Having the log in as the first thing here is a case of getting locked into an assumption that doesn’t do you any service. Michael: OK. Bob: I would question whether or not the 22 churches is meaningful data whatsoever. Not based on this site. if you want to go in the way of having something up there, just put up a one page site saying, ‘I see this problem with the big players in church software, I plan to address it this way, what do you think?’ And give them a way to e-mail you. Maybe you’ll get some response that way. But the page you have right now for churchhubs kills you dead. There’s no chance for resurrection here. Michael: OK. Jason: I agree with that. I think the parting thought here is this. I think you actually said it all on this call. By the way, a lot of the reason why this is so useful is just having to say it out loud and having somebody else echo back the interesting parts, is really valuable. I can’t do it myself either. I have to do exactly this with my stuff, too. This is just what people have to do in order to hear their own thoughts. But I think you’ve actually said during the course of all this, kind of in a Socratic way, everything that you need to know. Because you’ve said, there’s three entrenched players. The people have no trouble moving to them. They don’t even have distinguishing features, they’re 90% identical. And at the same time that have basically what they need. There’s not like any huge holes, maybe there is someone, but it’s not obvious what it is. They basically have it sound, there not even that different from each other, and there’s still three choices. And they don’t have trouble with pricing, and they don’t have trouble with their brand, they don’t have trouble with features, there’s no trouble. This is a typical situation where the market, at least until you figure it out, where some hole is, there’s just no pain. Everything’s fine there’s enough products, so, kind of what you’ve been saying, and I’ve kind of been tooling around a little bit with your software, is that you’ve made a product, which is basically also the same as those three. OK. It has fewer features, but still it’s pretty much the same, and the only thing you have is down sides. Because you’re not a brand that’s well known, and you don’t have people on the web, and you don’t have a business model that’s differentiated, and the one that you suggested of course being cheaper and higher touch is definitely not a good one from a profitability point of view. You’re not bringing anything new to the market and yet you have some draw backs being new to the market. So, this isn’t a good fit right here. But, I think A, the fact that you said the only pain you’ve set so far is that they need more tech support. That could be a very interesting value added thing. Also it could point you to the real pain. In other words, what you want to do is like get inside hundreds of these people, of their brains, and what problems they’re have with these. Well you know the interesting thing to do is to say. ‘I’m a consultant, I know these three tools really well, I’ll help you migrate to it, I’ll help you use it.’ And what’s going to happen is, you could charge by the hour for this. It should be pretty easy to get people because the pain is there and they probably talk to each other and say, ‘You have to call this guy, he’s not too expensive, and he totally sets you up.’ These three companies want you to do that, they may even promote you. Because they want their pastors and so on to be successful with the tool. If the pastors will pay you extra to to make that happen so much the better for them anyway. So in other words, everybody wants you to be successful doing that. Now you may not want to do that, or you may not want to do that forever. But you could do it for a little while and A, make money, and B make contact with hundreds of these people. And find out, because you’re working with them, exactly what the pain points are. And if you do that, maybe you will find that thing and you’ll walk away from that saying, ‘Hey, I found three massive pain points that everybody has that the three people aren’t doing.’ And there you go you just rooted it out and got paid to do it. So that’s one possible path you could sort of bide your time in an interesting way to discover the pain, and then come up with a product. To me, just making another copycat product, what’s the point? Michael: I agree, I guess, you know, I [inaudible] confidence slash arrogance to make a product just as good maybe even better. You know, of course selling that idea to people is always difficult. Jason: But the bottom line is why make a product that’s just as good. You said, ‘I bet I can make a product just as good.’ Why? Why does the world need a fourth product just as good as the other three? I’m sure you’re better than that, you could come up with a product way better than that, differentiated from that. And it maybe in the space or maybe in a related space. Maybe in churches it’s all locked up, but in HOA’s it’s not. Or in co-working spaces it’s not. Or those products are kick ass, but if you look at the building management space maybe they have the same basic kind of things, their products are still stuck in Windows 98. And if you did make one that was kind of like these three, in that vertical, you’d be awesome. Like I don’t know, but find a place where you can be dramatically different and there fore better for certain people. No reason to just copy a market that’s already done. Patrick: Let’s let Melissa have the last word because I like this point. She said, ‘This reminds me of the airline business, it’s just a thing we need nothing to clearly pick between until some companies went for broke and did something extreme.’ And that’s an interesting question. What would the Virgin Airline version of a back-end church system be? Not just as good, but way better than anything out there. Well thanks a lot for calling and keep in touch, I look forward to hearing from you. Michael: Cheers. Patrick: Next up we have Mark Smith. How are you doing Mark? Mark: Hey, I’m doing good, Patrick. Patrick: All right. Now this one, I have a feeling, I wouldn’t be surprised if Jason already knows your company, so our name game might be very short. But tell Jason the name of your website. Mark: The name of our website is digmydata.com. Jason: Dig My Data. Yeah. Well, Dig My Data sounds like you’re digging it up but it also sounds like you dig it, so I’m going to go with you dig it, ‘cuz it’s cooler. So, it’s a bunch of data, it’s structured, you can find stuff that you need, you can make the kinds of reports that you really want, you can cut across different data sets and you can both dig into the data that exists as well as have fun with it because the tool allows both. And then finally, you can download it and use it. Patrick: How’d he do? Mark: Actually, we’re a database of mining accidents. No, no, that’s exactly right, you nailed it. Jason: All right. Mark: So here is my question. We are a company of five, and we have two co- founders, myself and Adam Ride. Hi, Adam. Adam’s on, you know, listening to. And what I’m always interested in, especially as we have more successes and just more things to do is just strategies, tips, tools for two co-founders like us to work together better. Especially things around, where it’s around like, ‘Oh, I thought you were going to talk to that guy?’ ‘Oh, I thought we talked about you talking to that guy?’ ‘Oh, no, nobody talked to that guy like we said we would. Ugh.’ And those kind of things. So, that’s what I’m looking for, is the advice, tips, tools on how do you get two co-founders who are in a co-relationship to collaborate more effectively on shared work? Jason: Hey, Bob, you want to take this one first? Bob: Sure, couple of things you want to do. You want to drive out the artifacts of the process. In other words, kill the e-mail, dead don’t use it, because you’re just going to spend all of your time managing the e-mail back and forth. You need an internet surface that you can write on. Now that could be a private Wiki, that could be pretty much dozens and dozens of different products, but the key thing is you need to be able to just put something there and your co-partner has the expectation that that’s where they go to see what’s going on. Want to talk about the simplest possible solution that you could put into effect in about, oh two minutes? Evernote, and sharing a notebook and going back and forth. In fact, I’m doing that with one of my clients right now and it’s great because we have a clear idea of whose doing what, we don’t have to sit there pawing through e-mails to find out what’s going on. It’s free. It’s backed-up. It’s on all of our devices. You know, it’s great. Now, the formatting will suck. But, it’s not about formatting, this is never something the public is going to see. It’s just about, ‘Hey, Adam, did you call that guy?’ ‘Yeah, I did, he said call him next week.’ The other thing I would suggest, on these sort of interactions, is that you need some mechanism to make sure that that call next week actually happens. And I’d like to recommend a tool to any and all here, it’s called followupthen.com. And if you want to see how that works, send an e-mail to [email protected], and you’ll find out. It’s a great little free, premium service which lives to add to your e-mails a way to be reminded of something in the future and it can be pretty robustly done, in terms of what those reminders are, but it’s ideal for that situation, where you get an e-mail saying, ‘blah, blah, blah, next week’, and you reply and you ccc, I mean you bcc followupthen one week. Like [email protected], and a week later, bing, it’s in your inbox again. Try those two techniques. Mark: So that followupthen looks really interesting. Internally we use Jira for a project tracker to pass things back and forth between our developers and testers. And we’ll do the same thing for ourselves for content writing and some of the things related to our marketing plan and stuff like that. But you know it’s one of those things where we’re big users of Skype and we can get on the phone and talk and that’s a very high bandwidth kind of thing. We all talk and can decide, ‘Yes, we’ll do this, we’ll do this, and we’ll do this’, but you know how it is. Invariably things fall through the cracks. That followupthen is really interesting to me. We’ve always wanted the ability with Jared to be able to say, ‘Please make this ticket go away for a week. Just come back in a week.’ I don’t want it sitting in my queue because I don’t want to feel like I’m not doing stuff I’m supposed to but I need to get to it in one week. That’s actually pretty cool. Bob: What I also suggest is if you do go with Evernote or some other Internet surface, if you will, have a page or note or whatever is the unit of size there that is for a particular day and one for each particular project or product that you’re working on. For instance, a big post that you’re doing and maybe one more for each person that matters to you. [inaudible] comes to mind. And those three sub-surfaces, especially if you’re talking about searchable, especially if you’re talking about a tool where you can just pull content in from your computer pretty much from anywhere, those three will give you a good triangulation so that depending on what you need, you have a good sense of where you’ll find it. Something happening today? OK. What happened a week ago? We look at that. Is it on that project? Great. Oh, [inaudible] called and says he wants to give us a million dollars. What do we have to do? You want the least amount of administration that will support the information flow. So I’d like it. I’m finding a hard time seeing any products, other than Evernote, that give you all those nice features, free if you like, and get to the meat of the matter. So give that a try as well as followupthen, which I really, really like and you’ll see more about that at something I’m doing. Jason: Yeah, those are great suggestions and actually, I personally need to do that at WordPress engine. A couple more things there. First of all, I agree that you have to get out of the individual e-mail boxes of people and get it all together. Obviously, though, you still have to use e-mail because lots of the things that you do, even internally at the company, involve talking to people outside the company, too. And also as you get issues and feature requests and what not from outside, you sort of want all of that in the same flow. Because I think one good way to think about this is, everyday you’re going to do some things in a serial fashion. Each person is going to do something and then do something and then do something. That’s going to happen. So the closer that your tools can reflect that, I think it’s easier to organize things. So, for example, one reason why I like Pivotal Tracker for task management, is literally you just drag and drop these tickets around and they come in an order. There’s no notion of priority, like high, medium, and low because it kind of doesn’t matter. It’s just we’re going to do one ticket, each person’s gonna do one thing at a time. So what is the next thing? That’s it. You don’t have to mess with all these other filters and dimensions and what not. That’s just how it’s gonna be. Pivotal does that. Another one is Trello, that’s a tool out of Fog Creek. Which is similar, it has less of a SCRUM-my feel to it. Anything like that where you can just drag and drop to order them, but it’s still linear in time, I feel is at least having the tool match reality. I think the problem is just when you describe in Jira, ‘I want to make this ticket go away for a week.’ Maybe that’s what you want at the moment, but I would argue that’s not the right metaphor, not the right model for what you’re really saying. What you’re saying is that there’s other things are more important. Like if somehow you got ahead on something and stuff, you might be able to go and do that ticket in five days and not a week. Or you say a week now, but that’s just a week for you to re- evaluate it probably. It may be three weeks before you should really do that ticket. And so doing things like pushing off by a week or this or that, it’s OK, but it’s kind of skirting around the truth, which is that you should have a single ordering of all the stuff that people are gonna do. And at the same time, of course, be able to coordinate it and hand things off and see what other people are working on. Again I like these things to be linear in time like Pivotal and Trello. I would say for the e-mail stuff, Jira’s fine as is say ZenDesk or FogBugz because all of them have an integrated notion of an email thread and a sort of task thread where there’s private messaging that you guys can have. It’s easy to send, to also, though, communicate outside of your company though e-mail. That’s very important. And you can, you know, to some extent either order things or at least refer to them in other tools. So I do agree, everybody’s got to get on one of those kind of tools so that all of that correspondence is visible by everybody, it’s easy to hand stuff off, look at stuff in the past and that sort of thing. So that’s pretty easy. We happen to use ZenDesk at, WordPress Engine I used FogBugz, Smart Bear, they’re both fine, you know, everybody hates their book tracker and everybody hates their test manager. Not because they actually are hateful but just because, I don’t know, it’s just that’s always the case for the team. So, they’re all sufficient. So you just pick one and set it up and go. And one more tool I’ll throw out there that I use personally is something called Toodledo.com. And it’s a, they actually have shared facilities in it, but I’ve never used that. It’s certainly good as a personal to-do manager. I have a very GTD- like style of management, but the tool’s very flexible, allows many different things. And among them are all of the things that Bob just said. Like setting due dates, setting start dates, so in other words, pushing it off, and I don’t want it to be visible until that date appears, and that sort of thing. So that may help, although I am not sure if that will help for your root question which is how you also coordinate among people. And the final thing I’ll mention is, this is unfortunately a drag on time. Like, you kind of want there to be a magic set of tools where there’s only a slight drag of your time. Like, you were gonna spend a certain amount of time doing e-mail and now you’re just gonna spend that amount of time plus 5%, because now it’s in this other tool and now everyone will see it and be organized and the fact is that’s not the case. There’s no tool on earth in which there isn’t, once you have, like you said, five people who are actively trying to coordinate on stuff, it takes time. And the tools don’t magically make the time go away, they just, of course, facilitate it and it’s a lot better than the alternative or what you have now, which is that you’re not spending too much time coordinating, except everything’s falling on the floor, and that’s no good, either. So you also have to just know, you’re going to spend time coordinating. So even after you get these tools. And that’s a penalty for having a team. And it’s part of why a small team is more effective than a big team, because there’s less of that and it’s part of why you should also be thinking about how to decouple stuff. Like even with only five people. It takes a lot of overhead regardless of tool to try to keep everybody on the same page with each other all the time. So there may be a lot of ways for you to decouple that and not make that be true. Maybe there’s two pairs of people, for example, who sort of take on certain types of tasks so that there is less communication that has to happen through tools or otherwise and less overhead. So sort of, trying to decouple those things is also just as helpful as tools to help bring people together, I feel. Mark: That’s, you know, that’s probably something that’s really big, that notion of decoupling. You know, let’s not make this a collaborative task, just run with it. Jason: Yeah, you know absolutely. And it’s especially hard when you’re a founder and especially hard for me because I’m kind of a control freak, right? It’s super hard for me to, like it’s easy for me to delegate a task to somebody else, but it’s super hard for me to really delegate it and walk away, not find out what’s happening every day, not worried about exactly how it’s done or how it looks and just saying, like, you know what? Whatever that person does, it’s not gonna be exactly how I would do it. And that doesn’t mean it’s good or bad, or bad or worse. It’s just not how I’d do it, and that has to be OK if we’re gonna scale what we’re doing in a company. Otherwise, why do you have them, right? So yeah, trying to push stuff off on one or two people as opposed to all five, and really making a conscious effort to not look at it and just say whatever it is, it’s fine. In fact, if you don’t trust them enough for that, then maybe you have the wrong people. And if you do trust them enough for that, then take advantage of that trust and do it. And by the way, they’ll be happier doing it, anyhow because it’s great to be trusted to own a whole project and run with it. That’s fun. Mark: Yup. Yup, I like that. And, you know, ToodleDo, Trello, followupthen, I love this. I feel a list-post coming on, you know, on my blog. But, anyway, all right, guys. I really appreciate that. Jason: You bet, thanks. Patrick: All right. Thanks for calling in, Mark, I really appreciate that. Bob, I know that productivity for start-up founders is an area of particular passion for you. Anything else to add to that? Bob: I think the key thing is, remember the advice that we all got somewhere along the line of, you need a business plan? It’s not so much about doing the business plan. It’s about the process of doing the business plan. And one thing that I’ve seen time and time again, and this has happened to me is, if you don’t document your decisions, your assumptions, the things that you’re testing on, in some way that you come back and look at, you’re always going to be flying by the seat of the pants. You’re never going to have anything like an institutional memory of what’s worked and what’s not worked. You’re going to be doing things based on assumptions that you forgotten are assumptions. So, I think, one big, big chunk of productivity is having some sort of structure, whatever works for you and your founders. I mean, you could, yeah, you could stick hold of this in Excel for Christ’s sakes. You need some sort of structure where you record decisions and events and assumptions especially, and do it in a light weight way. So that you’re constantly building that knowledge based for what your organization is. I think that is one of the three most important things in terms of start up productivity out there. Number two, we’ve already hit on which is, you’ve got to have a way of syncing with the other people on your team. And as light weight as possible, and I keep coming back at that point about light weight because the biggest problem with GTD is, it doesn’t scale to the number of things that people who are doing start ups tend to have on their list. I have list of list of lists of lists and sometimes it’s just very difficult when you start dealing with 7, 8, 900 things you really think you need to do. They can all be broken down to smaller things. So, whatever light weight process let’s you sync with the other people on your team and gives them a reference of what’s going on and how to do it, is great. Third thing on productivity, leverage. That’s not just gain other people to do work for you which is a growing opportunity for a lot of start ups. Because there are things out there I don’t need to do that other people can do for me better. But it’s also just the idea of, every time you do something and you know you’re going to have to do it again, create some sort of checklist of what to do and how you did it. One of the worse things about, you know, living off of Google is that you lose most of your memory about how to do things step by step. It all becomes a big giant loop of going to look at Google, finding out what’s out there, and then figuring out, yet again, what you’re going to do. All I can say is that, if you look at books out there especially Checklist Manifesto. Highly recommend that book. Checklist, even for a simple thing as say posting a post. Immediately move your game up and the more you can do that, the more things you can leverage what you do once. Improve that leverage, I meant, if you can see it that way and move on. The less time and effort it will take and the more, actually the more better quality you’re going to have in doing those things. So those are the three things I would suggest just in general for any and all founders. Patrick: Cool. Thanks, Bob. Bob: Sure.
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1h 5min
September 12, 2011Episode 2: Smart Bear Live!
It’s “Loveline for startups,” if you like those kinds of phrases. Introduced a month ago as an event in Austin, this time we moved this live audio advice column to the web, taking phone calls from startups around the country.
My co-hosts were Bob Walsh and Patrick Foley, hosts of the well-known Startup Success Podcast. It was awesome having podcasting experts on board, especially Patrick who was on-site with me at Cospace in Austin, interrupting a vacation with his family to drag over $1000 worth of audio equipment to make sure we got a high-quality recording.
You can listen by subscribing to my podcast on iTunes, or it’s enclosed in this blog’s RSS feed, or you can just download the mp3.
Why listen? Especially if you don’t normally listen to podcasts? Because then you’d miss out on:
Whether it makes sense to give away a product to consumers as a sales path to a paid professional/enterprise product.
Why even if someone gave you money for your platform, you still might not have a business model.
How changing your tagline completely transforms how someone perceives your company, and therefore whether they might be interested in your product.
What a hardware company needs to do in the next three months in order to raise a Series A.
Three specific things a small company should do to make a newsletter effective (or possibly not waste time with one at all).
Here are the companies who called in:
Matt Spradley (@mattspradley) from Vignature
Sean Tierney (@scrollinondubs) from Scratch Audio
Seth Samuels (@theConverati) from Converati
Carrie Requist (@uGrokIt) from uGrokIt
Vadim Kleyzit (@kleyzit) from StresStimulus
Sergey (@usabiliTEST) from usabiliTEST
Plus, if you have feedback and advice for the companies on the call, or feedback for me about the show itself, please leave a note in the comments!
Transcript
Transcription services provided by:
Patrick: Welcome everyone to Smart Bear Live. We have Jason Cohen on the phone.
Jason: Yeah. In fact, in person, right next to Patrick. Welcome to the second edition of Smart Bear Live. The first one we did live in front of 70 people. This time we’re doing a call-in show, which is kind of how I want it to be anyway, reach more people. Thanks for dialing in.
The co-hosts today are Patrick Foley and Bob Walsh who run the start up success podcast and Bob blogs over at 47 Hats. A lot of you know him from there, what’s the name of your blog, Patrick?
Patrick: Patrickfoley.com.
Jason: See, that’s easy. Patrick’s got all of those crazy, ganglia, audio equipment here, which is awesome, I feel kind of pampered and spoiled, it’s pretty neat. He’s also going to be manning the chat client there on the dial-in and organizing who asks the questions, which I have not seen yet neither has Bob, for the most part. I think we should just dive in. You can visit at our various sites if you don’t know who anybody is and we should just get started. This is by the way, like love line for start ups if you haven’t seen us before.
Patrick: Nice. All right. We’re going to start today with Matt Bradley an East Texas, boy, how ya doing today Matt?
Matt: All right, how about y’all?
Patrick: Cool.
Jason: So, Matt, what’s the name of your company, just the name of the company?
Matt: Vignature.
Jason: Vignature. Yes, well if I had to guess what that was, Vignature, it sounds like a signature, so maybe it’s an identifying thing of some kind. Vig, vig, video, video signature?
Matt: Exactly.
Jason: You weren’t supposed to tell me, good we can stop. It’s video signature, what does that mean? Tell me what that means?
Matt: OK. What we provide is basically an image based electronic signature so you have irrefutable proof of the signer.
Jason: OK.
Matt: When you sign a document you can either sign it with your mobile phone using your webcam or using your webcam it takes an image of you as a signer as you click to sign.
Jason: That’s really nice, in fact it’s better than a signature sometimes if you have their face. That sounds great. So what’s your question today?
Matt: We have a consumer product and a business focus product. They both use the photographic, use the camera technology to take a photo of the signer in real time. The consumer product is a subset as far as the infrastructure it utilizes of the business product, but we view it as a, and we also don’t plan on making much revenue . . .
Jason: Let me interrupt you for a second, what’s the question first?
Matt: OK. The question is should we even consider marketing and selling the consumer product when we primarily want to get revenue from the business product?
Jason: Why would you? If you want to get revenue from the business side, why would you not just focus on getting revenue?
Matt: Because the consumer product is a subset technically of our business product so it doesn’t require anymore effort on the technology side, but it obviously requires a different marketing approach than the business side.
Jason: Wait a minute. Usually you spend marketing dollars so you can make money. On the business side, obviously you can do that. Let’s assume that technical challenges for the consumer side is zero, like you said it’s a subset. But building the company manning the technical side is usually not even the problem anyway even if you haven’t built this yet, right?
Matt: Yeah.
Jason: So, you’re going to spend marketing dollars to get to people who are not going to give you money. Tell me why that’s a good idea?
Matt: Because we actually also view it as a marketing expense because the consumer traffic will drive interest in our business product.
Jason: You have a consumer product today or you don’t?
Matt: Yes, we do and people actually love it. You can download it on the iPhone or Android app and we’ve already seen interest in a specific business verticals for consumers who have used the app to sign documents and send them back to businesses.
Jason: So how many of those people who are using the consumer version today, how many to date, have actually moved up and bought the product, because they moved then to the professional edition?
Matt: Zero because we haven’t currently started selling the business product yet.
Jason: So how do you know that you can make money on the business product?
Matt: Because we’ve talked to businesses they’re willing to use it. We already have businesses using it we can’t, from our MVP strategy, we don’t even have a way to charge for the product yet.
Jason: OK. My feeling is that if it’s that valuable, then someone should pay for this. This is a really obvious app to pay for. So how does it work. They’re going to pay $5.00 in the app store? They have to have an account with you? What’s your concept of how they’re going to give you money?
Matt: On the consumer side it’s free and the application on the phone is always free but on the business side through our back-end as far as the features we’re adding the portal to support storing the documents and accessing the documents in the future, that’s what we’re charging for, it’s a monthly subscription fee.
Jason: OK. So the consumer’s don’t need to keep track of their signed documents, so they don’t want to use it or what?
Matt: They’re not right now, exactly. If they did, they would have to upgrade to the premium model.
Jason: This doesn’t really sound like consumer and business to me, actually. It just sort of sounds like, there’s a lot of people who need to sign documents, probably everybody.
Matt: Yes.
Jason: Most people who would even think that they need to take a picture and get some kind of proof of it, that’s not a normal consumer. Normally you just sign it and there’s already apps, by the way, where you can just digitally sign it or drag your finger around the screen, that all exists. And actually a lot of those are free or it’s a one time app purchase. I’m not saying you can’t compete against them, I’ve seen that already, so what. So you have this more interesting back end way to make money, but the average person definitely does not need this, right? I mean most people do not think about this.
Matt: That’s one of the reasons why I’m calling. Originally we basically developed the technology because of the fact that it’s an irrefutable signature and there’s potential and there’s a lot of interest in government sectors, financial sectors, insurance sector, but it turns out that the mobile application was so easy to use, it’s actually easier than the scripted signature methods on the capacitive touch screen, because all you do is tap and it takes your picture.
Jason: Right.
Matt: Because of that and because it was so easy, and the uptake was so easy, we just said ‘Why not?’, because once again it’s a subset and then when a business gets a document signed by one of these individuals, they’re curious and they go visit our website.
Jason: Yeah, are their lawyers OK with that, when a document comes back with a face and no signature?
Matt: We haven’t had a single signature questioned yet.
Jason: And how many signatures have gone through?
Matt: Several thousand.
Jason: Oh, that’s great
Patrick: So you’re saying there’s a viral nature, too.
Matt: Yeah, that’s kind of the whole idea, well from the consumer perspective we can see people assuring and then it drives interest on the business side and once again, the way we found out there was interest, one particular market that we’ve seen interest is reverse mortgages, because people are concerned with fraud and those signatures. We would have never found that out without the consumer product.
Jason: Well here’s what it sounds like to me. I think using the words ‘consumer’ and ‘business’ may be artificially segmenting this stuff out. It certainly threw me for a loop because it seems to me like the average Joe just doesn’t care. So maybe it’s not a good idea to draw the line between consumer and business and say that that’s some kind of important thing, maybe instead the way to think about this is, there’s this free app you can use it by itself and it’s viral because obviously there’s always two people involved in a transaction, maybe more than two. That’s great, you have this thing that doesn’t cost you much to support. Even people who sign stuff all the time are not gonna be throwing gigabytes of stuff through your system everyday, so it’s gonna scale very easily with a lot of free users.
Then you have this back end, as you said, you don’t have to say business, right, and why should you. What if it’s an angel investor who just wants to keep all this stuff online. Is he a business? Why even bother trying to say that he is or isn’t part of some segment. So just say there’s this great free app that just does it, and then if you want a system of record and it’s secure and you want to be able to look through it, then there’s other things, like some of these things might expire after a year, maybe it could give you an email telling you, ‘Here are the things that are expiring in the next quarter.’ That would be kind of usual to have. Not an MVP, right, but you can see how that more sophisticated back-end could start adding value over time to people who care about all those documents.
I wouldn’t make that separation, instead I would just say ‘It’s this amazing free app for signing anything that happens to be faster and more secure than a signature, how cool is that? It’s free, so there’s no reason not to use it, and by the way if your getting these there’s this back end.’ And by the way, you should also be pushing this back end. If I use this app, I should have to put in my e-mail address, and then you can do things like e- mail me a PDF that’s like a receipt almost that this happened.
Matt: We are currently doing that.
Jason: Right, so now you have this big email list that’s oped in, obviously. Which means you can use it to say, ‘Hey, you have all these documents’, you know how many documents they signed so you can say, ‘Look, we know you have 13 PDFs kinda floating around you email, for only, I don’t know what it’s gonna cost, but at your size for only $20 a month, we’ll manage that for you and we can tell you when anniversaries of those signatures are coming up, that sort of thing.’ So, I can tell you, a really obvious use for this would be NDAs. The thing about NDAs is they all expire.
Matt: Actually, we have a lot of NDAs that go through. We have the documents, not only do we encrypt the documents but we have the names of the documents that go through our system.
Jason: Yeah, an NDA expires and usually it’s on a year style boundary, so best if you knew when that was, but what would be perfectly fine is if you told me, ‘Hey, an anniversary of a signature of this document is coming up.’ Because things that expire generally do so in units of years, and so that’s actually really nice to know when I can kind of shred this thing and it’s no longer there. That would be a service, and this is an excuse now, to e-mail everybody and tell them about this, ‘And by the way, if you paid money we would be doing this all the time.’ and so forth and so rather than saying, ‘consumer with fewer features in business’, I would say it completely differently and just say there’s a free component which is usable by itself and there’s a for money component that adds value, and not use those words.
Matt: OK. Because you know that’s really how we differentiate it. We actually call it the recipient product on our end, but we are searching for a better language as far as how to describe our product. If you don’t mind me extending a little bit into the question, like I told you we’ve had a lot of interest in the enterprise market. But those are long drawn out processes. A lot of potential in particular with a large consumer product company. Should we continue to focus on this consumer side or the free component when we have these big enterprise deals we are trying to negotiate?
Jason: Well, any of these deals are going to take forever to close.
Matt: Yes, exactly.
Jason: And then there is going to be some development. And that is going to drag out for some reason. And then they are going to want to pilot it. And all that stuff is fine, because probably just one of those could make the whole company I am guessing. So that’s fine. It also cannot be your primary strategy. It’s just going to take too long and it’s not in your control and so forth. And so I would pursue those and think of them as second priority.
The first priority is you have to get control over your own business. I mean that’s already difficult because you can’t control what other people do. But to the extent that you can control the growth and usage of your product. Of course that’s what you have to do is get your arms around that. So one of the things I would challenge you with is, what is like the most important driver for this business. Is it the number of transactions? Is it the number of people who are using this app? Is it just the number of people who have it installed? Is it the number of e-mails that you have because of the app? I think you could make a pretty good case for any of those actually, like all those are rational. I would sit down and ask like, what of that is really going to drive to revenue.
So in other words, having fewer people who use it more than once a month probably drives to revenue more than just having tons of people that barely use it. Because if you barely use it it’s cool, and there is some value and I agree with you with that, and that’s neat. But that’s not the best driver. But you may argue and say, ‘no, no, no, the more e-mails we have, we can just continue telling about cool stuff, we’ll learn more and we’ll come out with the new product and we can e-mail it. No, the e-mails are key’, you might argue, and that’s a fine argument, too. But I would have that debate internally, decide, and then let that drive what you do as far as this product is concerned. What you call it, how you promote it and so forth. And even which features you decide to put in the free side or not. Because obviously you want to select the features that will grow that one number that’s important to you.
Matt: That makes a lot of sense. I actually feel pretty good about it. We’re pretty on track with the stuff you said, but then you definitely helped.
Patrick: Good, well thanks for calling in Matt. I appreciate your time.
Matt: Well, thank you guys.
Patrick: And, certainly know that I am cheering for you. Take care.
Matt: Alright.
Patrick: Alright, next up. Actually, before I introduce you, there is a little format that Jason does. I’m going to warn people. Jason does not know anything about the companies. I offered to brief him on some of these companies, he said, ‘No, no, no, it’s more fun if I don’t know.’ So, Jason is going to ask for your company name and he’s going to try to figure out what you do from the company name. So play along with that if you don’t mind. So next up we have Sean Tierney from Scratch Audio. Sean, are you there?
Sean: Yeah, what’s up guys?
Patrick: Awesome, how are you doing, Sean?
Patrick: Good.
Jason: That is a cool name, Scratch Audio.
Sean: Thanks. What do you think we do?
Jason: Yeah. I don’t know. When I think of Scratchy Audio I think of LPs. They can have scratchy, on the other hand you kind of what them to. And it’s like some ineffable thing that’s missing now, I guess maybe it’s effable, it’s the scratchy part. So I think Scratch Audio is trying to make the sort of cold, digital sounding audio sound more warm and feel more like an LP?
Sean: Interesting guess, not anywhere near it. I guess the etymology of the name is more, think of it like a post it note and basically the ability to take an audio segment and share it and collaborate on it and post it. Kinda like the way Google docs lets you do with documents, only an audio track.
Jason: Cool. OK. And what’s your question today?
Sean: I don’t actually have a specific question as much as, Patrick invited me on and he’s seen what we do, he’s played with the demo, and he just thought you know sharing what we do and maybe getting a sanity check on the approach that we’ve taken would be interesting.
Jason: The approach to the business model or the product or what?
Sean: Yeah, so, it’s . . .
Jason: Which one?
Sean: The business model. We’ve basically made the technology, we did the mistake that they tell you never to do which is to make a cool technology without thinking about the business problem you are solving. So we are kind of retrofitting the business model on top of it now that we have this killer technology.
Jason: So what is the current theory of the business model?
Sean: So it’s two front. We have the technology, we’re actually post- revenue now. We got our first revenue last week via a licensing deal on a company out of LA that already has an existing business and they saw our technology is being able to increase sign-ups, reduce overhead, all that.
Jason: Is licensing what you expect your business model to be?
Sean: I see that being part of it, yes. I see there being, basically like a platform play with the technology, but then also we have an idea around, basically becoming a customer of our own platform, and we’ve built this thing called Mix Fork which is like the first application built on the platform.
Jason: Who said they were going to buy a Mix Fork?
Sean: Well, Mix Fork is like a, it’s a service targeted towards bands, basically lets people…
Jason: OK. So which bands said that they were going to buy Mix Fork?
Sean: Which bands said they were going to buy it. I mean we’re working with one band right now, nobody said they are going to buy it. We’re about a month…
Jason: So, in other words, you’re making the same mistake again, right?
Sean: Sure.
Jason: Right? You built a platform, oh yeah, I forgot, I should find out who wants the platform. Well, we’re not sure but maybe someone does so we’ll go poke around and then you decided, OK. I’m going to build an app on the platform. But, nobody wants the app either, yet, right? Or at least you’re not asking people if they do.
Sean: No, we are.
Jason: You are? But no one said they wanted to pay for it?
Sean: No, no, no. We’re very early in the process of testing all this stuff, so I would say we haven’t confirmed or refuted whether people want this yet. The thinking is that bands, it’s very difficult to monetize music right now, just selling music and rising above the noise, is just hard. The thinking is that we can enable bands to expose the raw audio stems, let their fans personalize it and make their own mix, and they’re going to be much more inclined to buy that personalized mix.
Jason: Why do you think that that’s true? What evidence do you have that bands want to do that and fans want to do that?
Sean: I mean, it’s speculative. We talk to bands, they all seem to say, ‘Yes, it sounds like a great idea. Let’s do it.’ But obviously no one’s paid us yet. At the same time, we’re a month into it, so it’s too early to say.
Jason: Why are you a month into it, though? Why build it at all until you have at least a dozen people who are going to pay for it? Why write any code when no one’s committed to buy it yet?
Sean: There’s no code involved in Mix Fork. It’s literally using the exact same scratch audio technology and it’s just a way of packaging it and presenting it to people, so we haven’t invested a ton of time in that. I hope you don’t take that away from this.
My question to you is, given the limited scope of what you know about what we do right now, and that we do have a customer who’s buying the platform, we have this theory about, very similar to the last guy with the signature technology, that this consumer side of it, having bands actually pushing it out there and getting their fans to use it could broaden the usage of it, and then that just gets a lot of eyeballs and opens up doors for the platform side. Does that seem like a viable strategy to you, or what would you do if you were in our boat?
Jason: You can count on one finger, or one hand, maybe one finger even the companies who actually make a profit on API’s or platforms. It’s hard. Nobody wakes up in the morning going, ‘Man, I wish I had a platform. Man, I wish there was another API.’ It’s really hard to push it. People buy apps, not API’s, and you got no evidence that anybody wants to. It sounds good, of course if sounds good to me, too, but until people are opening up their wallets, it doesn’t count. Do you guys need to make money or is this a fun project?
Sean: No, no, no. It’s clearly, this is a business. We do have a customer, we have Songs Ink in LA bought our technology to increase the sign-ups and engagement and whatnot with their users where we delivered it yesterday. We do have a customer for that. It’s clearly not going to be a huge market, and so in absence of having a very clearly defined market, the thinking is that we can use this technique of working with bands to just get out there, get usage of it and worse case, have a bunch of people using the system.
Patrick: Jason, I remember on the last show, you were talking to a guy about the idea of building an asset that there are times that you can reasonably say, ‘Clearly I have an asset here, I haven’t yet figured out how to monetize it, but the asset itself seems worthwhile.’ How do you evaluate whether or not what you have built, so in this case, what Sean’s talking about, Sean, can you describe what the asset is that you have and that clearly has value even if you haven’t yet figured that out?
Sean: The asset is, we essentially ported garage band to the web. We made a browser based multi-track recorder that has the desktop comparable experience. That’s the asset. It’s a Silverlight, it’s a whole stack. We negotiated our cost down to zero, we’re running it on the Azure platform. It’s Silverlight based. It works pretty well. Everyone that uses it likes it, it’s just it’s not clear yet how we’re going to be able to charge for it.
Jason: So, let me put it a different way. Right now, nobody’s using Mix Fork because that formulation of this thing, that packaging, doesn’t exist yet. Fine. Let’s suppose 1,000 people are using it. Is that better? Are you making money? Is there some value to having 1,000 people use it instead of ten? What is the increased value of having 1,000 people using it instead of ten?
Sean: Sure, at that point we’re either charging the bands to do it or another strategy. We had this whole charity strategy we outlined. Maybe we create it as a fund raising tool for charities, pair them up with the bands and take a cut of the revenue from that. There’s one hundred ways it could play out and we just don’t know at this point.
Jason: Yes, it’s very hard to point to any companies making money doing something like that, and that’s the problem. Charities, number one, don’t have any money and bands don’t have any money. Very few bands make money. There’s a company I advise who does sell things to bands and it’s almost impossible to sell to them even though they have incredible competitive advantages.
One guy is in a well-known band and has amazing connections. They talk to Justin Bieber’s agent, Lady GaGa’s agent, people like that. That’s how into that market they are. It’s absolutely competitive advantage and it’s still almost impossible to get anybody to move at all, much less pay money for stuff. In their case, they’re actually generating new revenue from the band so it’s easier to take a cut because they’re not charging the band. They’re generating new revenue and then, obviously, it’s easier to take a nice big piece because it’s, essentially, free money for the band. So, if you can find some way to do that, it sounds good.
But, I guess, naively, it just seems like if the point is the fans can remix, well, they do that anyway. It’s easy to find remixes of songs. I get it that there’s the stems, I get all that. You say there’s a hundred ways to monetize it, but I don’t see easy paths to monetize it. There’s many ways and none of them are proven and it’s very hard to point to examples of companies that have proven any of those paths, especially with bands. There’s no prior art to point to and say, “See, a lot of people are making money doing this.” They’re not. You don’t have any evidence of your own in the business plan of people making money.
What I would do is this: let’s say there are one hundred ways to make money. I don’t believe that, but let’s suppose there are. Pick one or two that are the best ones, the easiest ones, and try to see if you can do that. See if you can get bands to pay for this before it exists. I know that sounds really weird, but, actually . . .
Sean: No, no. We’re on board with the whole lien. We’ve actually tested some subscription plans where we don’t even have the plans in place, but we’ve done multivariate and serve different plans and see who clicks through.
Jason: That’s not what I’m talking about. I mean, someone wrote you a check even though it doesn’t exist yet.
Sean: Is that ethical, do you think?
Jason: Yes. Sure. Of course. Well, A, If they literally write you a check, don’t cash it. B, you can give them a refund if you want to. In fact, you could even decide later you’re going to do a beta program, you’re going to do it for free,then thank them for coming on board. You can refund that because it’s really a test to make sure they are actually engaged and not just telling you, ‘Yeah, I guess it’s cool’, which is what they’re doing. If I’m a band, why would I say no? I’m going to let my fans do stuff that’s cool. Why would I say no? Of course I’m going to say OK. It doesn’t mean anything. It doesn’t prove anything. You haven’t learned anything about whether this is actually valuable to them or if they’re just saying ‘yes’ because, why wouldn’t they.
As soon as you say, ‘Write me a check for fifty dollars, that’s it, just fifty bucks,’ that’s when you start finding out if they’re willing to pay even fifty dollars for it. That’s what I would say to do. Decide on a couple ideas for what the business model could be and then go actually get some money. I mean, little money, not a lot. Not a big licensing deal, just a little something so they’re putting their money where their mouth is.
Sean: Sure.
Jason: You say there’s one hundred ways and it’s easy. I’m telling you, there are not one hundred ways, it’s not easy and almost no one is able to do it. So, if you have no evidence of, at least, a particular way that some people are picking up on, then it’s really hard to believe.
Sean: Cool. All right. Thanks for your advice.
Jason: Good luck.
Bob: Sean, are you still here? I just want to ask you one quick question. What if the band’s customers asked them for this service? Would they then listen?
Sean: Yes, like asking your doctor for advice when you’re in pain.
Bob: I think you need something, along the consumer side, that makes it really easy. When they pick a piece of music, they push a button and off goes an e-mail to that band saying, ‘I’m one of your biggest fans, but I can’t do X.’
Sean: Yeah. That’s a really interesting idea.
Bob: You need some demand somewhere. I can see the benefit, but you need some demand somewhere. Just wanted to throw that in.
Sean: Yeah. That’s a really good suggestion.
Jason: You know, Sean, let me also throw in something positive, since I just realized everything I did was taking a big dump on everything you said. Let me make this positive by throwing in another brainstorm. I really like what Bob said, in fact that’s what made me think of this. How can you make the band more money? If you could figure that out, you’re in. Because of course, every band wants to make more money. Every band wants to make more money. Kiss is really good at it all the way down to guys that are not very good at it, right?
For example, one way a band makes money is that people subscribe to be in their fan club. That’s like annual or monthly money. That’s the best kind of money that you can possibly have. Plus it’s elite that you can do special things for them. Everything about a fan club is this really powerful mailing list and they’re paying for it and you know who you’re best fans are and you can do stuff for them. It’s the best thing.
Patrick: They’re the ones who’d want to have a remake contest.
Jason: Aha, see this is what I’m getting to. What if the deal is who wants to remix the stuff using the, as you say the stems, or whatever the right word is? It’s only available to people who are in the membership club and the results are only available to people who are in the membership club. Other people can buy the thing as a CD or you get it for free when you’re inside the membership club or whatever, I’m just brainstorming I don’t even know.
What can you do to drive people to, for example, become a part of the fan club? That’s super-duper valuable. This is just an excuse to do something really awesome and that’s why they’re going to join then killer, right? That’s a great thing.
Man 1: OK. Cool. All right. Keep working on it Sean, thanks. Bob, thanks for unmuting there, or I guess being unmuted. One little point I want to make there on something Jason was saying, there’s kind of the view of customer development with the idea of having a button, seeing if someone clicks on it without, and then when they click on it says, this isn’t implemented yet. That is one way. There is nothing wrong with that, but as Jason was saying, an arguably simpler form of customer development is just finding some customers, just find people who are willing to pay you money. You have to decide which ones appropriate for your situation.
Jason: Just be clear, when I tell you, when I say things like, get people to give you money before you have a product that’s easy for me to say, right, because I’m not sitting there doing it? Except that’s exactly what I did at Word Press Engine. More than one of the companies at Capital Factory did that too and was getting, they had, one of them had over two dozen companies literally give them money before they had a product. It’s not in the abstract. You can do that when the product is really compelling and it really demonstrates that it’s compelling. OK. Let’s move on.
Man 1: All right. The next person we’re going to go to here is the young guy named, Seth Samuels.
Seth: Hey, How’s it going?
Man 1: Good. How are you doing?
Seth: Doing Great.
Man 1: Why don’t you tell Jason what the name of your business is and see if Jason can figure out what it does just from the name.
Seth: Sounds good. Thanks Jason for taking some time. The business is called Converati.
Jason: Converati?
Man 1: Converati.
Jason: Converati?
Seth: C-O-N-V-E-R-A-T-I.
Jason: The Illuminati of, the conversational Illuminati. So that’s people who sit around in smoking jackets and suck on cigars. Here’s what we think about people who smoke cigars and actually my wife smokes cigars so you know, but I know she smokes cigars and she drinks whiskey and she has this really hard pallet, it’s really awesome. You go to a bar and she get’s like a Guinness and a whiskey and I get like a Margarita. Then again, she’s a chef and awesome.
Anyway the thing about people who smoke cigars is they take a drag on it right, and the next thing is they turn their hand around and look at it. You got to look at the end, I don’t know why you got to take a drag and turn it around and look at that mother, right there. I don’t know what they’re looking for. Maybe if it’s still lit, I don’t know what’s going on but that’s part of the deal you’ve got to look at the thing.
So anyway, the Converati sound like people who are expert conversationalists who sit around in smoking jackets and look at the butt of their cigars and swirl their brandy in the glass and have amazing conversations with French intellectuals. What is it really?
Seth: Well, I didn’t have the French component normally added but otherwise I’d say that’s pretty spot on.
Jason: You know why? Did you know the French, intellectuals were philosophers in France. They’re like rock stars, best selling novelists . . .
Seth: Is that right?
Jason: Oh, absolutely. There’s a woman there, what’s her name, Elizabeth, someone probably knows and will put it up on the chat, but I forgot who it is, she just came out with another book, she’s literally like one of the rock stars of the country and she’s literally a philosopher. So anyway go ahead, I’m sorry, I’m monopolizing all of your time. So, tell me again exactly what it is that you’re doing in a sentence or two, and then what your question is.
Seth: Absolutely. Basically, it’s a great vehicle to connect people who have mutual interests, and that’s what we’re trying to do. My question is: I’m curious to hear what your perspective is on using mobile as an alternate approach to a broad problem that people have identified through customer discovery, what not. Specifically the broad problem is like I mentioned, trying to connect people who have shared interests but don’t yet know each other. They’re not friends on Facebook, but want to connect their conversation.
Just to give you some context, we started out focusing on the web as the context that people could come together around, like a web page. We found that comment lists and forums, as well as e- mail threads, were not great for trying to have a back and forth discussion. To try and solve that, we built a browser extension, to have those user conversations take place right on the webpage. But there were some concerns about install friction and scalability. Obviously it’s tough to scale a business based on a browser extension alone.
So we looked to mobile, since it’s more widely accepted that people will install stuff on a phone, but the premise felt different. The reason I’m calling in is that I”m curious about your perspective on how we can tell whether going after mobile is a complete pivot away from the initial problem, or an alternate approach, given that using a phone is is very different from using a computer, at least to look at web content and talk about it with people, and have a back and forth discussion about it.
Jason: What I heard you say, maybe I got this wrong, is that you started on the web, and it didn’t really work, even though the web should be the most frictionless and obvious place to do this. Then you did a browser extension, but obviously it’s too hard to scale installs, and it gets complicated. It almost sounded like you moved to mobile because it was easier to get something installed, which is definitely not a good reason to switch a platform and go mobile. Besides, the web is the easiest thing, where there’s nothing installed an everyone has it, including on phones. I don’t see why going mobile automatically is better.
I have two questions for you, one is about mobile. Why did you select other than the install thing? What is it about being mobile that’s actually important to your goal? The second thing is, you said your goal is to connect people with mutual interests. That’s what all of social media in the web is for. There are 1,000 sites that say, ‘Put in your twitter handle, I’ll tell you people you should follow and get to know,’ and ‘If you’re going to this conference, here’s how to get to know other people who have your interests,’ and, ‘You should read blogs,’ and all sorts of things, Facebook, and liking, and everything there is about connecting people with mutual interests.
That can’t be the goal, that’s what the whole internet is doing. Surely you have some more specific thing you’re trying to do here, like actually make them meet, actually make them talk, force them to meet each other almost like a dating game but it’s not romantic, or something. You’ve got to help me out here and give me a goal that isn’t just the goal of everything.
Seth: Sure. A specific example is, I went to a…
Jason: Give me your goal that isn’t just connecting people with interests, because that’s not enough.
Seth: The reason why we chose Converati as a name is that we felt that people who have shared interests, not just that they like something, but that they want to talk about it, whether it’s great food or a political issue, that conversation was the medium to do it. It just didn’t feel like there was an environment where you could have a group discussion with people, it was more like comments, one to many messages, Twitter, et cetera. You’re bringing up a good point, because connecting is very broad in and of itself.
So the goal isn’t just to make connections for people, but to help people have an environment where they can actually have a discussion with folks they don’t necessarily know, are friends with, colleagues, or what have you.
Jason: So it’s a forum.
Seth: Sure.
Jason: That’s what forums are. And there are already forums on every topic known to man. So what’s the difference between you and a forum?
Seth: The setup of Converati is not just to have a public space. We call them campfires, or huddles. They’re to allow people to form specific discussion groups, or forums, as we’re calling them within that larger group. In a traditional forum, anyone can jump in, and you have a big problem with trolls. Otherwise forums would be great, but trolls are the primary problem, and they skew a lot of quality. We want people to have an environment where they are able to form smaller group discussion settings within the larger group, but still find people to include.
Otherwise, e-mail would do that, but e-mail is only available to whoever it’s addressed to, and click ‘reply all’ upon responding to the group. Something where folks can have that quality discussion, yet allow it to be open to others to join in. In our case, we’re using a request-based system to do that. So if you’re not in a discussion, then you would request to do so. Instead, the premise is forming new small discussion huddles within a larger, crowded room, if you will.
Jason: And is this discussion based on lots of topics, or just one topic?
Seth: Given that we built the extension, we, in turn, didn’t focus on a specific topic. That’s one thought, just to be more focused. For example, politics is a great place where we could have focus, just because there’s a lot of back and forth debate. We weren’t necessarily sure how to focus in just on that, so right now it’s on any topic.
Jason: So is this sort of like Quora, but for different topics, because Quora seems like a thing where there’s a discussion group, there’s a little mini-topic, and they control the quality. There aren’t a lot of trolls on Quora. It’s pretty nice. Or Stack Exchange isn’t really a discussion. That’s like another step away from what you’re talking about. So that doesn’t seem right. But maybe Quora is a little bit, although I guess it’s still not a discussion. It’s still a one to many in an order, but it’s still not really a discussion like you’re talking about. Is that right?
Jason: I would agree. I would agree that Quora is interesting because it has that quality, but it’s still one-to-many.
Seth: So first of all, don’t say this is connecting people with interests, because I think what you’re saying is really valuable. Not just allowing, but encouraging conversations at the scale and quality control in which you can actually have a discussion on something, where you get to find people, in the sense that it’s a larger forum, but then when you actually sit down and talk to people, it’s more like sitting down in a room and just talking to a number of people. It might be two, maybe ten, probably not much more than that, and to be able to form and re-form these groups like you might at a party.
Maybe a good analogy would be, what’s the best cocktail party you’ve ever been to? You mill around the room, everyone in the room is awesome, and you form and re-form these groups that are small enough that you can actually have a real conversation. And the people in those conversations are intelligent enough and sensible enough and are not trolls so that you actually have something intelligent and something interesting happens there, and then you dissolve and re-form into other things.
That analogy, and doing that on the web, and getting rid of the troll problem, etc., that sounds really valuable, but I wouldn’t describe that as connecting people with mutual interests, right? That’s so broad. Is that right? Is that more what you’re talking about?
Seth: Yes, so essentially it’s digesting a large room to form that conversation group, I suppose.
Jason: OK, so let’s get back to the mobile question. You said we made a mobile app. So why would you make a mobile app? This doesn’t sound like mobile app at all. When I want to communicate to people a lot, I want to be able type, probably on a keyboard. I don’t know why I’d do this on the go, per se. I don’t get it. Why mobile?
Seth: We were, someone said, why don’t you look into mobile? I think you answered that partly, which is you don’t do it just to have an easier install, but that was one of the reasons, honestly . . .
Jason: No, no, because everyone with a mobile app has a web browser, and you already have this on the web, and the web is the easiest no-install thing. And it works on mobile and desktop. You already have the obvious platform for this, right?
Not that you couldn’t make an amazing rich mobile app to complement it, I get that, but that’s not where you are right now. You don’t have, like, an amazing thriving thing where everyone understands it and it’s super-popular and now you’re just going to enhance it with an amazing native mobile app. That’s not what’s happening, right? So I don’t know why you’re bothering.
I would make it mobile-friendly. I would make it so if I go there on an iPhone, it’s very usable, of course, right? Because you don’t want to cut out mobile, but I don’t understand how this is a mobile play, per se. It sounds like that’s not your fundamental issue. Your issue is going to be to get a critical mass on some general topic like politics so you can form and re- form these groups and have enough people there where that’s a good thing, right? Is that not the problem?
Seth: So would you have a focused website, just like Quora’s approach, where they have the questions and all that exists within Quora’s walled garden? The reason I’m asking that is because we felt like the things that people would want to talk about existed outside of converati.com. They existed on the web page they’re reading when they get up in the morning, anyway. So that’s why we said, oh, let’s just build an extension so they can have the discussion right there. But there’s a lot of stuff that doesn’t work well with the extension.
Jason: Well, if we got your new analogy of the amazing cocktail party, then no, it doesn’t make sense for it to be around a blog post. A blog post may kick it off, but it doesn’t make sense that I would go to a blog post, then what? Because there’s some real timeness here. Not super real time, not like Twitter . . .
Seth: Quasi-real time.
Jason: Quasi, like there’s some decay, like if people haven’t talked for three months, because it’s high value. I don’t want to end up, as a user of this, I don’t want to end up with a thousand conversations which all sort of. . . every once in a while someone posts something, even if it’s good, because that’s not, I think, the value that you’re bringing. Would you agree with that?
Seth: Yeah, I would.
Jason: So even more so then, it doesn’t make sense to be on some blog post someone might read two years later. Right, I think you need to control that experience a little more.
Seth: Actually I think there is something interesting in that, however, where people find things at different points in time. If you start a conversation, you start it up with three people.
Jason: That I like. Using a thing that I just read to strike a conversation sounds brilliant. Right? Piece of news, an insightful blog post, an inspired blog post, something you disagree with. Using that as a tickler as the sand in the oyster, right, that’s going to make the pearl. That makes a ton of sense. I’m not sure it makes sense to have the conversation there.
Seth: Interesting. See that’s what I’m interested in. Like, OK, so then what happens when you read it? People do have the conversation there in the form of a comment list, but no one reads them because they are full of junk. So how do you cross the chasm, if you will, to go from reading to where the conversation is and will people get lost along the way?
Bob: Seth, I think you’re missing two points. First off, normal people who are doing their average sort of thing, don’t talk to strangers. There’s no real incentive. When an event happens, be it Columbine, University of Virginia, Mumbai, earthquake when you didn’t expect one, whatever. That’s when they want to talk to strangers.
So what if you had on the mobile side a way that you could put in things you’re interested in and if something, let’s say close to you geographically or close to you emotionally, happens, you could just push a button on this app and get connected to a trusted list of people who also want to talk. The point here is you gotta get rid of the trolls, but you gotta have some sort of emotional energy going on to get people kicked into talking to strangers.
Seth: You bring up an interesting point. Jason, I wanted to share this as well. One of the other reasons for mobile is, Bob you’re exactly right. It’s events that often bring people together. So one of the assets that we saw in mobile is that it can utilize geo- location, but that’s very different than web location, which is some webpage. So I would agree that geo-location is interesting because if you’re at a conference, let’s say. You go, you’re excited to hear what’s going on, but you don’t know all the people around you.
I was just at DreamCourse in San Francisco yesterday and that’s exactly what happened. I’m sure there’s a lot of people that would love to have that discussion. The most we do right now is we use a twitter hash tag, but again, these are one to many replies. They are very asynchronous. So that would be a strong point on the mobile side, but again a little different than what Jason was talking about, but I’m glad you brought that up, Bob, because that is the primary reason why, other than the easy install, that we’ve really looked to mobile as an interesting path to take.
Jason: I get the whole geo thing, except if you don’t have a specific use case for it in mind, then you’re just saying something that a lot of people are saying today, right? If, yes you have geo, but you don’t know what you’re going to do with it, are you actually going to connect people in real-time? Are you going to say ,’This guy’s in the same coffee shop as you, you should go talk to him,’ because if so that actually sounds like it could be awesome. But if it’s sort of just like, ‘Hey there’s geo, maybe someday we could something.’ Why are you bothering? You have a very difficult path. You have a networking problem. If you get to critical mass, good for you, but getting there is super hard and we’ve seen tons of these stack overflow knock-off kinds of companies. Dozens and dozens try and fail because they couldn’t get critical mass, not because their software was bad or they didn’t have good ideas, but it’s really hard to get critical mass.
So to me, if I’m thinking, ‘How do you focus your energy on something useful to you?’ That is your primary problem. That’s the thing to get over. Making the experience so amazing that it’s amazingly sticky is the thing you want to do. Secondly, make it viral after that. Once I’m stuck to it then it’s easy for me to drag in people that I feel should be part of the system. For example, stack overflow was sticky because of the rating thing. I guess Quora maybe is the same and also because it was an invite only thing to begin with. So it was a walled community. I was in there in that beta program, so I can tell you, super high quality, you wanted to be part of this, you wanted your rep to be high in this community because it was a group of people you respected and so forth. Like it had all these makings of exactly one of these rooms you’re talking about except maybe a little bigger. The kinds of things you’re talking about, high quality.
Then of course they had to open up the gates and see how to manage that, you’ll have to do the same thing. Quora again the same thing. That’s already really difficult to pull off and get critical mass for. Maybe like gmail and these things, actually Stack Overflow was like this a well, where you have invites. As long as you have a small group of trusted people who are zealous about the platform, because it is good, and then you give them this limited number of invites and as those people come in so long as their reputation stays high the original person gets more invites, because they’re inviting the people you want.
In other words you can easily build in the thing that allows you to grow and keep the quality high, for at least a little while and get to that critical mass where you’re rocking and rolling and then you can start experimenting with wider things. So that’s just a whole long way to say that I think that kind of stuff is your main problem that’s going to be why you are successful or not.
Unless you can, again you have this amazing theory of geo that’s like all different, then more power to you. But if not, you’ve gotta attack the main thing.
Seth: Just on that point, are you convinced, at least from your perspective, that that sticky component is easier to create in the web setting, the Quora like setting, as opposed to the mobile geo setting? Just from the little that we’ve spoken about each.
Jason: Well you haven’t yet told me why being mobile or being geo would be better or more sticky? So that means I don’t see it. Maybe there is reason. The other thing is I think being sticky is key. You want people who show up and do a conversation and come back and do more conversations. It’s so compelling that they would rather come back here and have the conversation than wherever else they might have that conversation or maybe not have it, right?
Patrick: I want to get Jason’s perspective on one thing Seth. Full disclosure I know Seth, he’s a friend of mine. Went through West Michigan’s Incubator Program, I think it’s related to what we’re trying to do here. What intrigued me about Converati from the beginning is I worked for a company that I love, Microsoft. And it is impossible for me to engage people online in meaningful conversations. I mean it’s comically impossible. Go to ZDNet and look at the quality of conversation. And if Seth can solve that problem. I have to think that’s valuable to companies like Microsoft.
So with that in mind, the problem of bringing civilized discourse to people who aren’t going to come to a Microsoft property necessarily, but might be a company like Microsoft or another big company who has issues with communication on the web, how would you think about that problem and approaching a business model that way?
Jason: I think there’s at least two ways to do the business model here. There’s the obvious one which is advertising which I hate, but Quora and Stack Exchange are big enough to pull it off. I still hate it though. I don’t think it’s in general a great way. However, I do believe in the whole sponsorship thing. What would make sense, let’s say it was about start-ups, then it would make sense for example, for BizSpark to be the sole sponsor of the whole site. So there’s not ads everywhere and you’re not bothering everybody, but it just says, ‘Hey this is an awesome thing the reason it’s totally free is because Microsoft wants these conversations to happen because they’re awesome and because BizSpark really does want to promote start-ups.’ Which they do by the way. They do try to sponsor things like that because they do want start-ups to succeed and they do want you to buy into their program because it’s a great way to get a bunch of Microsoft stuff essentially for free. So that makes a lot of sense to me at least to bootstrap up the company, get enough revenue to run it. I think that kind of big sponsorship makes sense.
Of course if you let them pollute things with inside the content, that’s going to ruin the whole thing especially when you’re too small and a little bit of that will poison the well and you’re all finished. So I don’t like that.
Now that’s all one side of things. Another way is you could take the old, remember when AOL was the big spammy thing? It was the cheap way to get online. Maybe you don’t remember. And then there was Compuserve. It was AOL V. Compuserve. The deal was AOL was super cheap it kind of sucks and everybody is like a 13 year old or crazy pedophile and that’s the deal on AOL.
Then there was Compuserve. Compuserve was expensive. I forget now what it was, but I want to say it was . . .
Patrick: 12.99?
Jason: No more. It was like 30, 40, maybe more. It was a lot more. So AOL was givin’ you essentially all free hours. But Compuserve was super expensive but as a result you had really high quality people. You didn’t have all those spams and trolls and things. And companies wanted to be there and sell their wares. It’s pre- qualified as people spent money and even spend money online in a world before online. So here was a place where they were charging people for entrance and that was the thing that kept the quality high.
I think you can actually do that. I think if you said to people, ‘Look the internet is full of crap. We’re going to charge $20 a month to be in the walled garden. I know that sounds kind of weird, but everyone in here is gonna be pretty good.’ And it’s an interesting way to select people. Some people you would want in there won’t pay. I mean it’s all true, it’s a weird choice, but I just want to bring it up as a business model where you end up with real revenue, perhaps slower growth, but every single person who comes is automatically sticky, they’re spending money to be there. As long as you don’t screw this up they’re going to want to be in this kind of place, and you’re not dependent on sponsors, although I suppose you could take them. Although, at that point maybe you don’t want to, because I paid money, now I don’t want to see an ad, right? So I just want to throw that out there as a way to simultaneously develop revenue and keep the quality high.
That, by the way, is how a lot of very high-quality walled communities work today. For example, I mentioned earlier that my wife was a chef. Early in her career, she was a personal chef, meaning she comes to your house and cooks. There’s an association called the American Personal Chef Association. It costs a lot of money. It’s like $600 a year. That’s a lot of money to be part of some association. What do you get? You get a big binder of stuff that tells you how to be a personal chef. But here’s the thing, you get access to the forums. Forums is where you actually get to ask questions. ‘Oh, this happened,’ or, ‘I need a recipe for that,’ or ‘This person’s allergic to onions. What the hell do I do?’ These are all literal things. I didn’t make these up. They were super valuable, and high-quality because it was a paid walled garden.
Patrick: It’s the Angie’s List.
Jason: Yeah. Angie’s List. So there are examples modern. You don’t have to go back to the ’90s to find these examples, either. That’s an interesting path that sort of achieves all of your goals at the same time, maybe.
Seth: Yeah. There’s definitely some concerns around, just how it can grow. Obviously, you mentioned focus very early, and so I think charging for it wouldn’t be a bad strategy, either, in terms of obtaining focus on a really specific group, because if you say, or if one says, ‘I don’t want to charge because then no one will sign up’, well, I think there is an element of it where you don’t want everyone in the world signing up right away. You want to kind of control who gets in and things like that, and so it could be an interesting route. I hadn’t really thought of it ever, quite frankly, because it is pretty scary, but interesting to bring up.
Patrick: And the nightclub can still let people in for free if they want to.
Bob: And if you incrementally charge by idea, for instance New Zealand and J Query, then you can see where the interest is, and build those communities out.
Patrick: Yeah. Awesome. Well, thanks, Seth.
Seth: Well, thank you so much guys. I appreciate it again, Jason, and I look forward to seeing how this progresses.
Patrick: Sweet. I appreciate you calling in. Let’s go to another caller here. I want to go to someone who is very early on in the process. Let me see. Kari? Can you hear me?
Kari: Yes I can.
Patrick: I asked that question wrong. It was really, ‘Kari, will you say something so that I can hear you.’ And indeed, I could. So, Kari, can you tell Jason the name of your start-up, and see if Jason can guess what it is from that.
Kari: OK. The name of our start-up is You Grock It.
Jason: Oh. Cool. Why have I heard that before, though? I think I’ve heard of this.
Kari: You have not. The word ‘Grock’ is certainly around, but, yes.
Jason: It sounds familiar, which is good, especially if I have never heard of it before, and it sounds familiar. That’s awesome. You have pre-branding, for me, at least. ‘You Grock It’, that means you understand it. So I’m going to guess that it’s a site that teaches people stuff so that they can grock it.
In other words, I need to rock something so I go there and I can grock it. On the other hand, it could be exactly the opposite. It could be a site where I go there so I can laugh at people who don’t grock it, or don’t know what ‘grock’ means, actually.
Patrick: I have to chime in one thing. I actually, when I saw your email, I thought it was ‘You Groke It’. So capitals might be your friend as you brand these things. Even though I know what grock means, I thought it was about plants when I first saw it.
Kari: That’s interesting. I’ve been trying the capitals so I thought it was right. But we’ll be working on that.
Jason: So what is it?
Kari: So in this case it’s a bit of a bastardization of ‘grock’. It is a consumer electronics product to help families find misplaced stuff.
Jason: OK.
Kari: So in this case, knowing something is knowing where it is, and being able to find it.
Jason: So that’s not what the word ‘grock’ means. You know that?
Kari: I do understand that.
Jason: OK. Alright. So how does it work? So I lost my keys, but now what? How does it know where my keys are?
Kari: So what it uses, is it uses RSID technology. Its tags are small, lightweight, cheap, and battery-less.
Jason: Yeah. I know what they are.
Kari: You can put one on everything.
Jason: So that’s what I do? I have to stick crap all over my crap that I lose, and then, of course, it can find them as I walk around? It’s sort of like, when I press the ‘find’ button on my phone base and it starts beeping somewhere, except it doesn’t beep. I have to walk around with the receiver, right, and wait until it responds?
Kari: You have to walk around with the receiver and find it, yeah. That’s why our target market is families.
Jason: Yeah.
Kari: Because when the kids start walking, the stuff starts walking, and the kids don’t know where it is.
Jason: I had that on vacation. Abby, my 2 year old daughter, took my ring off the nightstand, and so it was gone. That’s all we knew, is it was gone, right? And we eventually found it in our backpack where she had stuffed it. Of course, she’s not also able to communicate that she had done that, or where she had put it, so we were just pretty lucky that I got it back. I get it. Although, I might not be able to put an RFID on the ring, but that’s OK, I could put it on my key chain at least.
Patrick: It would be a fashion statement.
Jason: Yeah. OK. I get it. So what’s your question?
Kari: My question is, our day one on this is Tuesday. We are that early, we’ve been knocking around with it but we’re going full-time on it next week.
Jason: Nice.
Kari: And there’s just two of us. And so, I want to know what advice you have for us in this extremely early stage, about how to prioritize all the work that needs to get done, and also how to assess when it’s time to hire a consultant, or when it’s time to just bring on the first couple of hires.
Jason: Oh my God. So is this thing built yet?
Kari: This thing is not quite built yet. Proof of concept is done, but it is not to the hand held stage, so that is obviously from a technical side the first thing we have to focus on.
Jason: Well, if you’ve been following the rest of this then you’ll know what my next question is. Who are the families who have said they are going to pay for this unit, and how many of them do you have on your list, and how much money did they say they were going to pay for this little package of a receiver and a number of RFID tags?
Kari: Well, I do have some answer to that, not as good as I’d like to have, but again, day one starts next week. I have a survey. We’ve been talking to…
Jason: Just give me a number, is it ten people, or 100, or one? How many people say they’re going to buy this thing?
Kari: I have 25 people who said they will pay for it, but not necessarily as much as I need to charge.
Jason: How much do they want to pay?
Kari: They want to pay $50 or under. I’m probably not going to be able to get this built with margins like that now, but . . .
Jason: Well, here’s the thing about electronic stuff, maybe you know this already since you’re embarking on this, but of course I did a start-up in electronics. Your initial stuff and your initial products are super expensive, it’s really hard to make a profit on those because it’s so expensive. But once it’s successful and you want to go make a million of the widgets, it’s incredible how the margins come down on everything.
And so, doing this for $50 is totally doable. The RFID stuff is really cheap and is only getting cheaper, the receiver stuff, all that kind of technology, I don’t know if it’s powering a screen or if it has Wi-Fi, but even if it has Wi-Fi, this wasn’t with the RFID, but we built a thing that was completely web- enabled and it was Wi-Fi and it had graphs and logs and crap, and the whole thing cost $15 in cost. So, you can make this for $50, $49.95 or something, eventually. So I wouldn’t worry too much about that.
But here’s the other thing that means. That means you have to raise money, or you have to have an investor, I should say. Electronics cost money. I’m sure you’ve already done the financial modeling before you quit your job, but you’ve got to have all this inventory and you screw it all up and you build these prototypes, and you’ve got to have a lot in stock, and then you ship it, and people ship it back. It’s incredible, the amount of cash that is just held up in the operation of the business, months and months and months of product is held up. And by the way, if you grow, it’s worse, because you have to buy ahead for what you’re going to be growing, and it sits there in various forms, parts, completed things, returns, shelf, etc., for months and months and months. So you have to have months and months of growth level amount of stuff sitting there, and that just eats money. And so you have to have a ton of money. So the first thing I’d say is, do you have a ton of money so that you can actually build and ship this stuff once you’re ready to do so?
Kari: We are able to self-fund through prototype, and I don’t want to go try to find money until I have something to show you how it works, and when you can see it working, the power there is strong. So, we’re set to self-fund until we go look for it.
Jason: OK. So you asked what to concentrate on. Here’s the thing. You’re going to have to raise money, so that’s the goal. The goal is not to be profitable, the goal is to raise money. So what is that going to mean?
The number one thing is traction, meaning actual consumers who rip the weird-looking prototype out of your arms, even though it kind of doesn’t work half the time, even though it’s way too expensive, they rip it out of your hands anyway, and they say ‘I have to use this.’ When that’s happening, and you can say look, they don’t want to pay me that much, but they paid me $50. That’s not working out yet, but people are spending $50. 20 people gave me $50 for this thing, and are using it, and here’s three of their stories where you have a little video of them going, ‘Oh my God, my kids blah blah blah’ and all this crap that makes it very real, that’s the number one thing you do when you raise money is show traction. Doesn’t have to be a lot, it can be 20, that’s good.
The number two thing is of course that it works. That’s what you just said, that you’re going to make something that works, so good. That’s the thing to focus on, a thing that actually functions as you describe, and have it be really nice. I think one of the annoying things that Apple has done is made it that consumer electronics is having to get better and more ergonomic and look cooler and all that stuff, which sucks for the rest of us, but that’s the case. It has to be the kind of thing where you go, oh, that’s cool, which is difficult. It’s [inaudbile] but it’s especially hard to do without much money because there’s a lot of packaging. Packaging is expensive, as you know, you’re not going to be making plastic molds or anything. But you’re not going to be machining and building plastic molds because it’s going to cost $30,000 so you’re not doing that. So you better not be spending your money on that.
You’re also going to have to find investors who want to invest in this, which is interesting because most VC’s is not in electronics it’s in bio-tech and hi-tech and so forth. I would find those people early and say this is what we’re doing. Of course, you’re not raising money yet, you’re . . .
Patrick: Find those people, those investors.
Jason: Those potential investors early and you’re saying, ‘Look, I’m not raising money yet but I want to tell you what we’re doing because I want to be able to come by in three months and show you what we’ve done.’ Another one of the greatest things you can do, when you don’t have a track record yet as a company, is create a track record by talking to them. Ping them every month and saying now we’re here, now we’re here, now we’re here. Mark [??] calls it just connecting the dots. Showing them that there’s more than one dot otherwise you show up at their office and they have only one data point, the crap you said that day.
You can develop a three, four, six month history with them, even though they’re not investors, just by showing that you’re making progress. I’d say that’s the number two thing after traction that’s hardest to find in a company that you’re trying to invest in, is people who actually get stuff done and makes progress from month to month. Progress can mean we learned this is total crap and we had to start over goddamn it, that’s progress, that’s great. Discovering early that you’re wrong, being introspective and moving on that’s progress too, all that stuff’s progress right? Especially since you said you quit your job that means you should be making a lot of progress every week or month.
If the goal is raising money then you have to be thinking what am I doing to achieve that. Showing traction, showing, in other words really having proof from the customers, showing data points which means talking to them now even though you’re not ready to raise money. Then of course, a product that works, that’s probably the big three things.
Kari: Cool.
Patrick: Hey Kari, I met this inventor, in my area of west Michigan, he told me he built a better box cutter and this guy’s all passionate about it and was actually quite profitable, a simple little invention. He was at a start up event evangelizing to the people there who might be inventors to attend local inventors users groups essentially. He said, ours in our area we’re really good for fiscal inventions. Have you sought out those kinds of groups in your area?
Kari: It’s a good point. I’m in a bit of a remote area, but I’ve been seeking those out more virtually. My co-founder is our technical guy and he’s been seeking that out through personal contacts and stuff like that we are trying to build up [inaudible]
Patrick: I would seek out mentors, people who can keep positive but who have succeeded in building physical things that you can meet with and get inspiration and coaching from, because there are people who have succeeded at this and I would do what they do.
Kari: I appreciate that and the same vein, my co-founder and I both really believe in leaning and trying to apply the [inaudible] the hardware has been interesting already and it’s just going to get more so, if you guys have any resources there feel free to [inaudible].
Patrick: Yeah. Write it down and write a book on it.
Jason: Well, you say that except that’s where lean came from is building hardware, right? That comes from Toyota’s production system, that’s building stuff. So of course there’s a lot of priority on that. I would say this don’t get all caught up in whether something’s lean or not. The goal is not to be lean. The goal is to be successful and lean has a lot of these great principals, which pretty much comes down to the shorter the iteration is the better. Learning counts as value, especially early on. Be introspective and honest with yourself and I would add with your customers, but that kind of thing. Those are sort of the principals of lean that are of course easy for you to apply in any project that you do and are probably wise because it helps you deal with the uncertainty and risk. Those are hard to processes that help you cope with unknowns.
I wouldn’t worry about that too much. The place where you can be super lean is where you discuss things with your customers because there is no reason why you can’t develop as much information as possible from them about how much money will they pay, why are they buying it, what does it have to do to be understood, do you have to be able to drop it in a pool? Probably. That doesn’t mean you’re prototype has too, but the more information you can gather, if you walked in later to an investor meeting to where you talked to literally 100 people well, actually you talked to more you have a list of 100 people that literally will pay you $50 or at least you have the amount of money each one would pay and with all this information like yeah people want this. This is the demographics of the people. Are they families with two or more kids? Is that the perfect customer? If you can figure out what that is, which you don’t need a prototype for by the way, you can just do this. You should also be able to prototype. You can do this at the same time without any doubt.
If you put all this effort into that and you walk in going ‘Look.’ ‘Cuz you’re going to walk in and say, ‘I want money and when I get it I’m going to do X’ and X is sell some units or whatever. So if you walk in with the complete demographics. If I know exactly who are target customer is, then you also know how to advertise to them or call them or find them or go to some meet-up that they go to. Like maybe PTA is the perfect place, maybe it’s soccer moms, I don’t know how you find them, but if you have the demographics, then you can go find them.
So this is all what you might call validated learning, if you’re using lean terminology, but these are all things that you can do that are all very valuable that show you are business minded. So that when you walk in, for the money, this is another risk area which you’ve helped alleviate. You know who they are. You know where to find them. That’s very valuable. A lot of companies, in fact, callers today, right, they have a product, but they don’t really know who their perfect customer is and therefore where to find them. That’s something you can definitely accomplish.
So most things about this company you cannot accomplish without money. Right, it will never be in a nice pretty case all shrink wrapped and at Best Buy without some money. Which is fine, it just means that those are all things not to worry about right now and focus on the raising money part. So there’s a lot of things you can do that a lot of people won’t walk into those same people’s offices with. So like my first reaction is, ‘It’s obviously useful, but I don’t think people would buy it.’ I’ll tell you why.
To me this is like selling backup software. People don’t buy backup software until their hard drive crashes. At that very moment that their hard drive crashed, they’re very susceptible to buying backup software, but at almost no other point in their life do they want to do it. No one wakes up in the morning going, ‘Man I should really buy backup software.’ You just don’t and then you get screwed and then maybe you go out and look for it. And that’s a very difficult sale, because it’s the kind of sale where you catch someone at a certain moment in their life. A small, brief moment in their life where they are the perfect customer, they are going to spend 50 bucks right now, so they never lose their keys again, or whatever. That’s the moment, but it’s very hard to sell stuff where that’s the moment. But you can totally disprove me and I think you can. You can disprove me by finding those hundred people that say, ‘Well I don’t know, I’m not necessarily in that moment right now, but I’m telling you I would whip out my Visa and give you $69 plus shipping and handling right now for it.’ And you would totally disprove my worry on that.
Kari: So here’s what’s interesting and where I’ve gotten the 20 people from so far. I’ve done a demo, that is a slide show with a mock-up. We’ve done a survey and I’ve just done interviews on it, and next week we start going hard on it. What we’ve found that is really fascinating is that combines with what you just said is that the initial survey after the demo is lukewarm to OK. ‘Yeah I see this problem, yeah, I have it.’ Two weeks later they’re calling me back, ‘Are you done with that yet, I’ve lost so many things in those last two weeks and knowing that this product existed or might exist, I need it now.’ So better than backup software, you misplace things a lot more often than you crash.
Jason: OK so that’s interesting. There’s good and bad about that. The good part is you can implant this concept in their head that it is a real need and they will come around and see that, I love that part. The bad part is, you said, ‘After a demo.’ Well that’s not how you’re going to sell this thing. It’s going to have to be mass marketed.
To be clear you’re doing the right thing. ‘Cuz right now you shouldn’t be taking out an ad, right. I’m just sort of jumping to the end of the story and what the investors are going to see as like, ‘How do we sell a million of these?’ It’s gonna be ads and spots on things and stuff like that. So it’s great when it’s an impulse buy you see a thing, ‘Oh yeah’, and I buy it, perfect. But you’ve got this weird time delay. So somehow they have to be able to see an ad for it and it stick enough in their head, unlike a demo which is obviously sticky because they just spend 15 minutes with it. But it still sticks in their head enough that two weeks later they remember and go get the thing. That part is actually very hard. So what that means is, you need to have a way to be sticky when you first show it to them so that you can follow up later when you know they will be ready to buy.
So if that’s another thing to think about. How would I do that? How would I tell someone about this, but in such a way that it’s sticky enough either because I continue to e-mail them or because it is in their mind because they keep seeing it every day or there’s some mechanism which two weeks go by and they’re still thinking about it. So if you can think of some marketing mechanism, not that you’d implement today, right, but would be a mass-marketing system for that. That’s compelling.
Kari: One of the other things I’m trying to test early now is tag lines and messages to see. My theory, I’ve gotta test the theory, is that people aren’t looking for a solution because they don’t believe the solution exists. The solution is, ‘Don’t be so stupid to lose your stuff, don’t let the kids lose your stuff.’ And that’s not a solution because I don’t want to think about it because it’s painful. If I see that there’s really, actually something that might solve this problem, I’ll notice it when I misplace stuff. I’ll allow myself the emotional pain of noticing how painful this is because I see there might be a solution. That’s the feedback we’ve been getting.
Jason: Here’s what I would do about that. I would decide how it is you could reach some people. That could be AdWords. That could be guest posts on some blogs, maybe mommy blogs and so forth or organization blogs. That kind of stuff. Actually, Bob can speak to that really well. That kind of thing where the kind of people who would buy this would be and you’d know who that kind of person is better than I would.
Test this by doing the following. You have a landing page. A one page landing page that just describes what it is, says, ‘Never lose something again because it’s just like when you lose your phone and you press the button on the base and it finds it.’ Or some kind of super easy analogy where everyone gets or maybe just a picture of something beeping like sonar from the corner of the room. Something like that where I can tell in 5 seconds what this does, 3 seconds what this does. With a box that says, ‘This product is coming soon, if you sign up now to get on our waiting list, there’s no obligation. When we do come out with it we’re going to give you 50% off,’ or something like that and that’s it. Just see if you can get people to do that or Kickstart.
In other words because you just said ‘I can get in front of them and then I can do this.’ Again, you can do that without a product and you should. Now you’re going to have a mailing list that you, by the way you can go do stuff to. Like send them a survey to find out more about who these people are. You could maybe get some of them on the phone ask them how much they would pay for. When you do come out with it by the way, hopefully you have the list of a couple hundred that you can poke to get the first dozen or two dozen units into their hands or something. So there’s all kinds of value out of doing this. You’re proving something about the business and what people wand and you’re also developing more customer development opportunities and you’re developing your alpha test list. All kinds of reasons to do this. And you can do this now. Let’s just say between now and when you raise money, you can do this so that you again, as you might say in Lean, you have all this learning knowledge about the market, and how you’d get there, and how you’re going to sell, and what the price point is, see how valuable that is?
Bob: Kari, couple quick things. First off, the URL and the name doesn’t work for me. However, smallthingseasilyfound.com is available. Next, you’ve heard of Square, the credit card reader that you plug into your iPhone? If you can go that way and I have no idea if you can, that would be a way of shedding 9/10 the cost of the device. Third, I’m not so sure about the mommy thing.
Kari: I’m not so sure what you mean by go the way of Square. I know Square, but I’m not sure what you mean.
Bob: OK. They have a postage stamp credit card reader that plugs into the iPhone. So they’re using the iPhone’s storage power, all those good things and that becomes a different device. Now it’s a credit card reader.
Kari: That’s actually what we’re going to do. You’ll attach to your smartphone.
Bob: The third thing, I’m not necessarily sure moms and dads are necessarily the people who are going to pay for this. I think that people who are concerned about surgical tools, automotive tools, construction tools, aircraft tools, etc., are the type of people who, not without a blink, sign you a big check.
Patrick: That’s interesting.
Bob: One aircraft tool in the wrong place will ruin your day and the plane and everybody. So I’m thinking that it’s more approach. It’s for people who have small things and they need to be easily found.
Kari: Yep. I don’t really want to say pivot, because I’d rather not pivot there, I’d rather make that the next step.
Bob: You leverage. You leverage what you got. Everything else. It’s a different website and maybe not even much more than that. But I’m just suggesting that, “Small Things Easily Found, that’s going to have a whole lot better SEO for you than ‘You Groke It.’
Kari: Where we were going with ‘You Groke It’, was to do something like Tivo, and define a different word for looking or searching or finding.
Jason: But you’re not using a different word. That word already has meaning. If you’re going to define a new word, which I actually agree with Bob, but if you are going to define a new word, then actually define a new word, not one that comes with baggage.
Kari: I hear you.
Patrick: Cool. Thanks for calling in. I appreciate it.
Kari: Thanks for all your help.
Patrick: All right. We have time for at least one more. Videm, are you available?
Videm: Yes, I’m here.
Patrick: That was you who had a question about newsletters, correct? Is that something you’d like to ask?
Videm: Yes, exactly Patrick. It was just a question that came up at that particular moment. It’s not a very strategic question but still, again my name is Videm [inaudible], I am actually from [inaudible] product name. We have a product called Stress Stimulus. I was wondering if I’ll be given the same guessing game about guessing what a product is about?
Jason: OK. Stress Stimulus.
Videm: Right.
Jason: Wow.
Patrick: I think we just experienced some.
Jason: Yes. Stress Stimulus. Stress is the silent killer and we all have it even if we don’t want to admit it and we think we can go on forever. Maybe if you induce it on purpose, you can show people where it comes from and how it feels so they can find out what the stimulus of stress is in their lives and therefore manage it better.
Videm: It’s actually a tool for stress testing and low testing web applications.
Jason: Oh, that’s good. I like that. So what’s your question. Let’s get to the question.
Videm: Actually the question is that we’re now at the point where we need to get a newsletter going with the product news. I’m receiving everyday maybe half a dozen newsletters, but I don’t keep them for too long in my Outlook.
Jason: Right.
Videm: I wish I kept all the copies of these well illustrated and well worded e-mails to use them as a sample or as a template, but virtually I can’t find them. In other words, there is no service which will allow me to search those e-mails that are widely available, like newsletters, which can be used as a template.
Web content is well indexed and well cached these days, but it looks like e-mails are not as much.
Jason: OK. Well, first of all it’s easy to get examples of newsletters. You just sign up for a bunch of crap and wait. Then you’re going to get a bunch in about a week. That was easy. Here’s the thing. I don’t think that’s what you should do, because listen to yourself.
You said, ‘I get a bunch of newsletters, the thing is I didn’t keep them. I just deleted them. I wish I had some.’ Yes. You didn’t keep them, because they’re not that useful. You just threw them out. In fact, if there were some that were really good you wouldn’t have thrown them out. You would have archived them and you would have had them.
Or you would at least read them regularly and you would already know what they are, what they look like, and what kind of content they have. This, to me is the problem with most newsletters. Most of them are so boring and useless, people don’t read them anyway. I’m not sure why you bother with a newsletter when it’s going to be so bad.
The thing is this: if you just want to do product updates and that’s the point to just communicate product updates with your customers and that kind of thing, awesome. Go get a free blog over at wordpress.com, I would say use my company WordPress Engine, but don’t. Go get the free one at wordpress.com, right?
Post your product updates there, people who want to read it via RSS can, people who want to get e-mails can. Everybody can consume that the way they want to. You can also Twitter about it I guess or any of that other garbage. You’re done. That’s it. You did product updates. If that’s all your going to do, there’s no reason for it to be a newsletter or anything like that.
However, if you actually want to make a real newsletter, and get value out of it, I think that’s awesome, too. Then it’s not product updates, it has to be something good, which of course means good content. You could spend literally a career talking about building newsletters that people actually want to read, and building a business off of it.
Another problem you have is when you look online for advice about newsletters, a lot of times it comes from people who literally make money on the newsletter, which is not what you’re talking about. You want to use the newsletter to do things like get more users of your product, or maybe cultivate your existing users, not necessarily to make money selling an eBook, which is what most newsletter advice is.
You have to be careful about most of that advice. But still, to the extent that advice talks about how to build a thing like a newsletter that people want to pay to get, well gee, if your newsletter has those same elements, that it’s so good that you would pay to get it. Awesome, right? You just got a newsletter people will read especially if it’s for free.
I would sort of turn the question back on you, although also I should throw this over to Bob because he’s been thinking a lot recently about making money on things like a newsletter. I bet he has some more insights for you, but I would turn it back on you and say like why do you even want a newsletter? What are you trying to get out of it? And therefore, is the newsletter the right form? If it is, what’s the right question because it isn’t copying all the newsletters that you think are so uninteresting that you delete it.
Videm: Right. Actually the newsletter is one possible mechanism. The goal here is simple. We ran a product beta for about five months.
Jason: Wait, wait, just tell me what the goal is in one sentence. The goal is?
Videm: The goal is, just get updates to people who signed on already to mail requests.
Jason: OK. Well, then forget it, you don’t need to copy forms, you just have what I said, you just have a public blog. People can subscribe to it, or if you have a mailing list, like a MailChimp or something like that, just go to MailChimp and get a default template that doesn’t look like ass and they have plenty of them that look fine, and do it. I mean, if that’s all it is then you don’t need to spend any time duplicating something. You’re done.
Videm: Yeah, I agree with you, but one thing that, this is an enterprise too, so most of the users would be corporations and I think they have a little different standard when they look at the new company.
Jason: No, no, no, no, no. So, at Smart Bear, I also sold to enterprises, we did six and seven figure deals, these are big companies, OK? To this very day, our product update e-mail comes out of that terrible mailing list software that everybody uses. Do you know what I’m talking about? What’s that thing called?
It’s like text only, it’s weird. It doesn’t even have a logo somewhere. It’s the worst possible thing, that’s how we do it. Right, we’ve got like over a 100,000 customers, it’s a huge company, it’s enterprise like, no, that’s completely not true. And to the extent that you do want to look professional though, right, and have your e-mails look good and not look like what I just described, that’s a perfectly valid statement that you don’t want it to look like that. Cool. Once again, you go to MailChimp or Constant Contact or Emma or any of those things, they all come with professional looking templates. You just click on one that has stuff you kind of like and type and your finished. It’s going to look plenty professional. If it’s just product updates and your not trying to get more out of it than that, then you shouldn’t spend more time than that on it.
Videm: I’m saying, it’s perfect. It makes things much easier, I thought that there is some kind of standard and it would be better if newsletters were more presentable.
Patrick: No, I work for a big enterprise and I care much more about spelling and grammar than any visual cues. I prefer plain, actually. In fact, actually, I’ll be specific, I am for more likely to read your newsletter if it looks good on my mobile phone than if it looks nice in my browser. Which means, keep it simple, because if I’m standing in line, yeah, I’ll give your newsletter a read. If I’m doing work, I’m going to delete it just like you do.
Videm: But Patrick, I want to ask you, would you read a newsletter which is in text only format, not even HTML?
Patrick: Of course. Yeah, I wouldn’t care. If I cared about what it was you were sending. As you said at the beginning, you delete most of the ones that you receive. I’ve kind of been judicious about unsubscribing from most of the newsletters that I get when I realize that I’m not really reading them.
Jason: You have to think about it for a minute. If you get an e-mail that just looks like text, it came from a person. Because when people do one of those spammy whatever newsletters things it’s all fluffy and it’s got a picture of somebody that’s clip art and, right? Like, when you just get an e-mail from a human, it just looks like text and those are the ones you read. And the other ones, you automatically associate with, uh, some newsletter? Did someone subscribe me? No, this is a tool I use. It’s worst, a lot of times, actually, to have it be all fluffy and look like all that stuff. So, it could be the best thing that you can do is make a text and literally say, ‘Hi first name, comma. We just came out with a new release of blah blah version 3.8. Here are the list of new features. Colon. Bullet A, bullet, bullet, bullet. If you have any more questions we’re always here to answer. Thanks. Signed, you.’ That’s it, like, because that’s what you would e-mail, people would read that.
Patrick: I’ll describe to you an exact site that does that. Go to kissmetrics.com, go to their blog and sign up for KISSmetrics blog and you will have an example of what Jason just described. You know, their nice, it says: ‘Hi Patrick, thought you might be interested in this topic today.’ That’s all you need to do. Just copy them.
Videm: And it’s OK, even to sign it with your name in oppose to my company.
Jason: No, it’s better, it’s better to sign it with your name because I read e-mails from humans. I don’t read e-mails from robots. Humans sign their names to things.
Patrick: Definitely.
Jason: I mean, what do you think is going to happen if they see it came from a human instead of from a marketing department, that they’re suddenly going to decide to stop buying your software? I mean what do you think is going to happen?
Videm: No just to play devil’s advocate, they can say well its lack of one person company or two people company?
Jason: No here’s what you do, you sign it, ‘Videm comma Director of Client Relations.’ Right, that doesn’t sound like a small company.
Videm: Right
Jason: And it’s true.
Patrick: Or it’s just, I mean, it’s perfectly reasonable that the presidents sends the newsletter, that’s perfectly normal.
Jason: By the way if 37signals, the founders and presidents is where the e-mails say they come from and Fog Books, it comes from Joel [??], like these are products with millions of users and very big enterprise customers, too. It doesn’t matter and again they’re only getting this if they bought your product already. We’re finished with all that, if they didn’t want your stuff they already didn’t buy it. They’re already customers, they’d have to decide to un-buy it or cancel or something and they’re not going to do that on the bases of whether you signed it ‘Videm.’ But Bob you’ve got some newsletter, you’ve been researching these letters recently, right? Do you have any advice for Videm?
Bob: Yes, a couple of things. Girst off, conversion rates on fancy picture e-mails is lower than text like nice topography text like e- mails. That’s one. Two, if you’re doing engagement for purposes of getting customers that’s one thing, if you’re just putting out announcements to your base, yeah, go with the blog but if you have something to share with them, that is valuable, and they’re not a customer, than you can make sense of this.
Three, there’s a company called TeenyLetter.com, MailChimp bought them today. They fit right in the space between gmail and MailChimp. So you can send out as a person a newsletter that feels really good as a newsletter/e-mail and it looks really professional, and by the way it’s free right now, I would definitely check into that.
MailChimp by the way, at least to my opinion, is the single most important technology other then what you do with your website, that a start up can do. Because that’s, as of the way things are now, if people want information from you, if you can pass that hurdle and get into their inbox you have a much more meaningful opportunity with them than just having more stuff out there. Make sense?
Videm: Perfect, yes.
Patrick: Videm one more thing, if you have fewer than say 300 people that you’ll be sending this to, do you have fewer than 300?
Videm: Well about 300 actually.
Patrick: OK. Check it, one more tool to look at is Send Personally. It’s an Outlook add in, anyone who is still managing to listen on this call, you receive an e-mail to me that I sent, was sent personally. It’s an Outlook add in that you just create your email and instead of hitting the send button you hit the send personally button and it goes through the process of everyone whose on the two line, it creates a separate e-mail for them. I mean it’s just so insanely simple and then the other thing is to Jason’s point about being personal with the way you send it, then it literally is coming from you, from your Outlook e-mail, and it feels like your writing an Outlook message and I think you can even just, I think it will expand a mailing list so you just have a distribution list in Outlook and boom that’s your news letter, done.
Videm: Yes I was looking at Gray Benefits because you can merge it with whatever customer data base you have.
Patrick: Yes it’s a great little product for like 30 dollars, it’s awesome.
Videm: Perfect. Made a lot of notes. Thank you guys.
Patrick: All right I’m going to un-mute people; everyone as we wrap up here and if anyone has any additional questions.
Sergei: Well if you guys have a five more minutes I’d like to ask one?
Patrick: Sure it this Sergei?
Sergei: Yes.
Patrick: All right Sergei, what’s your question?
Sergei: We’re still guessing the company names or?
Patrick: Yes let’s do that.
Sergei: It’s Useability test.
Patrick: Oh hello, I’ve seen you on Twitter a bunch of times, right?
Sergei: Yes.
Patrick: I mean it seems like it’s a great name right, even if I get it wrong it’s still a good name. It seems like its useability testing, I assume it’s online because everything else takes effort and we know how people respond to having to take effort to do things even when they’re valuable, so, it means I can make an account with you guys and say, ‘I want you to visit this website or do whatever, here’s some goals I want people to take, I want them to videotape it, I want them to talk, I want them to do things, like try to sign up for my thing, or use a feature and I’m going to watch while they do it. And get all those awesome things that Steve Croak tell me to do and I don’t feel like buying pizza for someone to bring them in and you’re going to do it online for $100 and I’m going to get three of these videos and it’s going to be amazing.’
Sergei: There are a couple of companies that actually do that, but, no, I am actually going to try to stay away from the direct involvement in observing the users.
Jason: OK. So what do you do?
Sergei: Actually the type line of the company is Usability Testing Tools, but the long version of it is Usability Testing Tools For Everyone. But before I get to everyone I need to make sure that I actually run it by people who actually use it in the industry. I recently posted a message on one of the groups on LinkedIn, and I offered a coupon if anybody wants to try it for a year and I think about in a month I got about 70 people asking for coupons. So, all of them are usability experts or usability analysts. That kind of people, so, I got pretty good feedback. One lady from Portugal is teaching a class at the University to usability people and.
Jason: OK. Let me interrupt you. What’s your question?
Sergei: OK. Unrelated to this all. One of the people that actually replied to my e-mail and tested the tool, he contacted me and he said that he would like to see if he can collaborate and he would like to help in anyway. The question is, I don’t really have cash, you know, I have a couple of people signed up but I told him up front that I don’t have money to pay you. What can I offer him? How do you evaluate the company at this early stage?
Jason: What do you mean he wants to collaborate? What the hell does that mean? Be specific, he wants to write code for you? He wants to sell stuff? He wants to be a partner? What does he want?
Sergei: Well, I haven’t really talked to him yet because I don’t know what to offer him.
Jason: But what does he want to do? I mean is he a coder, is he selling, what?
Sergei: No, he’s not a coder, he used to do something sales. He’s in some sort of occupation, director of, uh . . .
Jason: OK. So complete the sentence.
Sergei: Accounts or something, so it sounds like he would be good at.
Jason: All right. Hello? So, complete the sentence: The role he would have at Usability Test is everyday he would . . . what?
Sergei: I don’t know yet, he called a couple of times to speak to Charlie.
Jason: Well, then this is really easy, forget it. We don’t even know what he’s doing, this is crazy. I mean, the answer is . . . let me finish. Hello?
Sergei: He got great reviews from people, he is more of a project manager type, I guess.
Jason: You can’t even tell me what he does. You can’t even tell me whether he is going to sell, he’s going to support it, he’s going to demo the product, he’s going to do marketing. Like, you can’t even tell me what he’s going to do. I’ve asked you now like three different times, in different ways, what is he going to do? And your like, well we don’t know, maybe a little of this, maybe a little of that. Well, then forget it. He needs to, you know, anybody that joins your company, whether it’s an employee or something else, because you don’t have money so then it’s equity and dah, dah, dah, they need to significantly move along whatever it is your trying to do. Like, get paying customers, or, maybe move it from 70 to 1,000 people doing the demo, or something that significantly changes what you’re doing, otherwise you don’t have the time to risk on somebody you don’t know, and train them on stuff and what if they don’t work out? Which they probably won’t by the way. You know, you don’t have the time for that kind of stuff, unless, it might have a huge effect. And so, he may have a huge effect but you can’t even articulate what it is.
So I would just respond to him and say, ‘Hey, you want to collaborate. That’s great, I love that you love what I’m doing. I read the recommendations people left you on LinkedIn, it sounds like other people like you, that’s awesome. What do you think you can do for me?’ If he can’t really answer that then I think, he has. And if he can, then you’re having a conversation around that. He might say, ‘Well, I’m a great product developer.’ My guess is that you don’t need a product developer because you are a product developer. If he says, ‘I’m a product manager.’ great, you’re a one person company, you don’t need a manager. You need people that do stuff. If you’re not building something or selling it, I don’t know what you’re doing when you’re a three man company, right?
So, or maybe he says, ‘I have a magic touch where everywhere I run around people magically buy stuff from me.’ Oh, that sounds good, that sounds like something you need.
Sergei: Well, if he can prove it, you know. I’m not just going to take the word for it.
Patrick: Absolutely.
Jason: Well, OK, but at least he has to be able to articulate what it is that he proposes, the effect that he proposes he can have on your company. Either he hasn’t said or you haven’t heard because I keep asking what he’s going to do and it’s like, ‘Well, I don’t know, some stuff, manage some stuff.’
Sergei: Well, at this point there is so much to do that I could probably use help in any field, but I agree, I need to know what he is doing. But again, let’s say we talk and he says, ‘I can sell stuff.’ Do you I just ask him to try it for commission, percentage, not the company but the sales or?
Jason: That depends on a lot of stuff. Do you have something that’s salable in the first place? Or are you setting him up for failure?
Sergei: I do have something to sell.
Jason: No. You just said, no one’s ever paid for it. So no you don’t, you . . .
Sergei: No, there are a couple paying customers.
Jason: OK. So, maybe it is. It all depends on the situation what it is that makes sense. Of course, you try before you buy with humans especially, when you’re a one person shop. What you said is, ‘There is an infinite amount to do here I can use help with all of it.’ Not true at all. You don’t need an accountant because you’re not moving money enough. You don’t need lawyers because you’re not doing anything like that yet. You don’t need a project manager because there is nothing to manage. You may or may not need a sales person, if this is like a $1,000 product, then it would be great to have a sales person because that’s the kind of sales it is. If this is a $20 a month product, then you probably don’t need a salesman.
What you need is an online marketing expert who can get a whole bunch of people in the door, is awesome at conversion funnels and all that kind of stuff. Maybe even start a newsletter about what you’re doing because that might actually be a really smart thing for this kind of field, to stay on the top line with people. Especially since this is the first of many products you expect to make so you want to make a relationship with those people. That’s a whole other kind of person.
So I completely disagree with you that there’s lots to do and that you can use help with all of it. You have a limited amount of time and taking on anybody in any format is a lot of time suck and a lot risk and is not going to pay off as much as whatever you think it is.
I run into this all the time by the way. I am constantly working with somebody, I hire a consultant even an employee and I have these expectations of what I think it’s going to do for me and for the business. This is not a disparaging statement, it’s just that it never works out to be as good as you’re hoping it will be. That’s not because of them, it’s because you have these expectations that they’re going to magically make certain things go away. It just never works out the way. I still have that problem. I still think that, I have to consciously think, no, it’s not going to be that good. I still have that problem it’s human nature.
That is why I am kind of focusing and saying, no it’s not true that anybody can help you. It’s not true that it’s OK to go into some nebulous thing with someone because he can sort of have sales experience or he’s not a programmer or something. Not good enough. You need to know exactly what it is that he’s proposing, that he’s going to do for the business and you have to believe that that’s a really big deal. That if he does that, and even if he doesn’t do it that well, he can still change the business by an order of magnitude, 10x more customers, or 10x more revenue, or whatever. Something important to you. If you can’t find that then the answer’s an automatic no. That’s easy.
Sergei: OK.
Patrick: Sergei, if you haven’t already, go to businessofsoftware.org and find the blog and they just posted the transcript, and especially the video, of a talk Jason did last year where he goes through the process of getting a sales guy involved. What was the name of the sales guy, it was the hipocrafal [SP] name? Phil?
Jason: Frank.
Patrick: Frank, and go through that and he explains a lot about why you shouldn’t doubt yourself in contact support and with sales people. If you haven’t watched that, it’s great.
Sergei: OK.
Patrick: Thank you so much.
Jason: Me, jumping on you about this, it’s because I am telling you most, maybe all founders on earth, make these exact errors. Absolutely me included, and like I said, to this very day, to this very day I go up against these things and have to consciously, actively remember that’s not how it is and rethink it myself. So I’m jumping on you only because I see me in you and I see almost every founder on earth in you and I want so desperately for you to not make this error, at least not this time and not this way. Make it some other way. Don’t think for a second . . .
Sergei: I’m buy myself and I’m not accomplishing a lot and I’ve got to do all these taks and I’m not making progress on my code and . . . [SS] . . . I feel like I need to do something because you read those glorified stories of how teams build.
Jason: I hear you and I’m not arguing with any of that stuff, that sounds great. So what I’m going to do again . . .
Sergei: I’ve got to take a leap of faith at some point.
Jason: No. No. First of all, you try before you buy. I mean yeah, it is a leap of faith at some point, but that’s really sounding like you’re jumping off the cliff with total risk. Number on, you have to at least have a plausible idea of what they’re going to do for you. Number two, you try before you buy. You try it for two weeks, four weeks, whatever. Number three, of course, you do reference checks and that does not mean stupid things people write and link in and even calling the references is difficult because people say nice things because they’re listed as references of course they say nice things. It’s better to find someone else that was also at that company they worked with, that’s even better. But even if you talk to that person, you have to take it with a grain of salt, and think, ‘This person’s going to say reasonably nice things. Are they really over the top nice things, or are they just kind of nice things?’ You have to kind of judge that. Like, there’s a lot of nice things you can do to, to sort of help that.
But again, it has to come back to how this is going to completely change what you’re doing today. Not just out of feeling of like, ‘I’m by myself, I need someone.’ OK. Good, but that’s not the reason you picked this guy. You could start soliciting for a co-founder, you could start soliciting that on hacker news, or going to local meet-ups, or finding other people online that you have an idea of what could be the ideal co- founder, and then solicit them. Like, these are all good ideas if you want to go out and get some more help. That’s cool.
But, again, you have to be focused on what it is you want from them, because you’re only going to get half of whatever you expected anyway.
Sergei: Sure.
Patrick: Thanks for asking your question, Sergei. Thanks to everyone for staying on with us this time. It was as pleasure for me, I hope it was a pleasure for you, as well.
Jason: Bob, do you want to say anything?
Bob: It’s always neat when you can take a look at somebody else’s issues, when they’re going to start up, and see the thought process toward solving that, and I’m looking forward to the next one.
Jason: Yeah, me too. If I could leave with something, it’s this. It’s very easy to give advice. It’s very easy for us to tell you what to do, and so, and we’re not necessarily right. You just said in one sentence what your company does and we don’t know anything about you. We don’t know what your goals are, we don’t know personally where you’re at, and, you know, there’s like all kinds of things that are actually important, if you were to dispense advice properly. And so, this is not dispensing advice properly, actually. This is taking a stab with a very small amount of data and hopefully giving you, what you should really take it as, these are some good ideas. These are some things that are maybe worthy of consideration, but the best thing you could do is take away this sort of attitude, whether that means more self-doubt, or whether that means, no there isn’t just one way to do it, or, ‘Yeah, I do have to decide what’s really important to me and then focus on those things.’ I think that’s some of the themes that, just for whatever reason, appeared today, and those are useful and things that you can take away and actually apply, because obviously those are good things and easy to miss when we’re doing the day to day aspects of the business.
And just to be self-deprecating again, again like, there’s so many things that I do, for example, at Word Press Engine everyday, where if I were not doing it, and looking at myself, I would be admonishing myself, ‘Why did you do this when you should have done that? How come you made this choice? How come you’re not asking those questions?’
Because when you’re in the midst of it, you can’t, you don’t have that perspective that an outside person gets. So, you know, I wouldn’t be surprised if a lot of you on the call actually had some of these thoughts to listening to other things, even though it’s hard to do it to yourself. And so another thing to do is to form little communities. I think there”s a company here that might be able to help with that. But form these little, like, little support groups and find people who are going through this kind of thing, and have these kinds of discussions because you can attack each other, in of course, in a constructive way, like we did today, and that is valuable. Being more introspective and listening to other things, and then, of course, making your own choice in the end. And we will do more of these, so i you make some progress, or if you don’t, hopefully you’ll call back in the future and we can do it again.
Jason: All right. Thank you very much, Jason. If anyone has any feedback, I sent you an e-mail. Feel free to reply back and I’ll make sure it gets properly handled. Thanks!
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1h 45min
August 08, 2011Episode 1: Smart Bear Live!
I finally started Smart Bear Live. It’s “Loveline for startups,” where entrepreneurs get to ask any question about their startup and have me and a rotating co-host tackle the problem and devise constructive next-actions.
Like most ventures, it didn’t work the way I’d imagined. For the last year I envisioned it as a weekly call-in radio show, and in this incarnation it wasn’t call-in, it wasn’t on the radio, and it’s not weekly.
But we did it, it was a blast, and you can listen to it in my podcast (iTunes, or enclosed in the usual RSS feed, or raw mp3).
Why listen? Especially if you don’t usually listen to podcasts? ‘Cause otherwise you’ll miss out on stuff like this:
How I illegally got 25,000 students at the University of Texas to use my FastScheduler software in the 90’s.
We transform a company’s trajectory by rephrasing a long, confusing diatribe into a three-word pitch.
When should a company focus on growth only, ignoring the business model and revenue?
How to “size a market” when there’s no good data, and some common pitfalls when you try.
This episode was expertly co-hosted by Joshua Baer, founder of OtherInbox, progenitor of Capital Factory, angel investor, and previous founder of SKYLIST and UnsubCentral, both sold.
Thanks also to our sponsors who made it all possible:
Capital Factory, Austin’s hottest startup accelerator, for buying everyone beer & soda
ServerBeach, the entrepreneur-friendly, affordable hosting company, for buying everyone pizza.
GroupCharger, the community organizer’s secret weapon, for renting out all of Cospace for the event.
The Struggling Entrepreneur Podcast, Fred Castaneda for supplying the audio equipment and post-production work.
Core Media for the awesome high-quality video embedded below.
So take a listen, and let me know in the comments what you liked and what we should do differently. And if you’re feeling generous, leave a review in iTunes so other people can find us that way.
Or, watch the video on YouTube:

Transcript
Automated transcription services provided by:

Jason:  All right. Great. So welcome to the inaugural edition of Smart Bear Live, which is a new thing that we’re trying. and if it’s awesome then we’ll do more and if it’s not, then we’ll never do it again. So I’m Jason Cohen, probably everybody here knows that I’m ‘a smart bear’, not smart bear, but ‘a smart bear’. And this is Joshua Baer, a different bear, no relation.
Josh is the founder of OtherInbox right now, and previously the founder of SKYLIST, and UnsubCentral, both of which he sold already. And he’s also the inventor of Capital Factory, which is Austin’s sort of version of like TextStart or Y Combinator, that kind of thing, we’ll talk about in just a second. But tonight, of course, the point is to answer some questions, get some start- ups unstuck, and hopefully be entertaining too in the process.
Now if you cast your eyes downward into your hand, many of you will notice it’s in the shape of a C. And the reason it’s in the shape of a C, because it’s holding beer. Yummy beer, from Black Star, co-op here in Austin. And that is provided courtesy of Capital Factory, buying everybody a beer, or a soda, if that’s what you like.
Since Josh is the inventor of Capital Factory and the buyer of the beer by extension, I’ll let him describe Capital Factory. I think that’s a good excuse to talk about Factory, that we got this from it.
Joshua:  Great. Capital Factory is a, I think the in phrase for it is an accelerator, some people called it an incubator. It’s really, kind of like it’s own thing. But really it’s all about helping early stage companies to get to the next level. Which most of them is either getting their first customers, getting profitable, raising a round of funding, obvious kind of things most early stage company are thinking about.
And so what happens is we have a competition. In fact each year, we got a couple of hundred companies that apply, from around the country, from around the world. We pick five, and some of the people that have been with the program are here tonight. Those five companies each get $20,000 in cash, they get a place to hang out during the summer with all the other companies, where lot’s of mentors are. And then there’s 20 mentors, all have build and sold, usually multiple companies, some have take their company public, some have done other things. And we meet with them every week, and we yell at them every week, in a constructive way. And really try to help them push things forward and get them focused on the right things. figure out what’s really important to them. A lot of companies come in and up changing their name, or their business model, or lot’s of other things along the way. But I think everybody feels like they really get a lot out of it, it’s really helpful.
So we have a third class going right now, five really awesome companies, which we haven’t announced yet. And it you want to find out about them, we are going to be watching them all at Demo Day on September 7th, so about a month away. And something we’re doing a little bit different, Demo Day is always, we have our third one, it’s been just incredible. We have about 300 people, it’s always sold out, it’s tons of investors and bunch of press, and some entrepreneurs that get in. We tried to let all the investors in first. And the first year, Mike Naples, Jr, was one of the key notes, he’s a prolific, early stage investor, he’s involved in Twitter and bunch of other really great companies. Last year, Naval Ravikant, who founded AngelList, among a lot of other great things he’s done. But something really relevant right now is, if you are starting to raise money, you aren’t on AngelList, that’s your one take away you should come away with tonight and just go sign-up for AngelList, because it’s really helpful. And Dave McClure from 500 startup, was also our speaker last year.
And so this year, we got Bob Metcalfe, who invented ethernet and founded 3Com, is now professor at University of Texas. And Brian Sharples, who founded HomeAway, which just went public, a very great, awesome, success story. And then we have our five companies. And then something we’ve never done before, is we have 10 other Austin companies also getting to present as well. Because we have all these investors there and all these people as well, and so if we can we want to help other companies as well, and create a bigger draw for more investors to come.
So we got most of the spots filled, but if you know of a great company that’s, ideally is fund raising right now, that wants to get in front of a lot of investors, please have them reach out to me. Because we love to find out about them and see if we can help them get funded.
Jason:  Very cool. And also the twitter hash tag is Sbelive. In case anybody is doing that. So let’s bring out the first victim, who is the first victim, Sarah?
Sarah:  First up is David R.
Jason:  David R. Okay. So remember, just say name and company name. That’s it. Come up here. Get’s to sit up here the whole time too. There’s your little microphone. This is going to be great. Just name and company name. That’s it, start with.
David:  David. My company name is Raise Text.
Jason:  Cohen: Race Tex? Like T-E-X?
David:  The other one.
Jason:  T-E-C-H-S?
David:  You got it.
Jason:  Wow, RaceTechs. So if had to guess what this is I would say, I think it’s pretty obvious, right? Like if I’m a racer I’m planning a race, or maybe if I’m in a race, and I want to use technology to get better so maybe it’s to measure my heart race or my performance, showing me over time, predicting. That’s what I would guess it is. What do you think it is?
Josh:  You’ve obviously never in a racecar. No, I think it’s all the measurement stuff around, like, the G forces in the car and how fast it goes and what your lap time is and what your fuel emission’s are.
Jason:  Okay. So in just one sentence what is it?
David:  Event management and performance measurement technology.
Jason:  Event management?
David:  For running cycling and triathlon.
Josh:  Doh! We both went to cars!
David:  It translates well into the market. The customer understands what it is.
Jason:  Okay. And so what’s the question?
David:  The question is what are the best practices for calculating total addressable market, customer acquisition costs, and the lifetime value of that customer?
Jason:  I don’t know the best practices. Let’s do your customer lifetime value, your market size. That’s really the question, right? So event’s for triathlons and what else?
David:  Running, cycling, and triathlons.
Jason:  Okay. So running, cycling, and swimming?
David:  Correct.
Jason:  But not swimming?
David:  Well, it could be duathlons. There’s a number of combinations.
Jason:  Okay. Well how many events are there a year, in just America, that do that?
David:  Approximately 60,000 events.
Jason:  Wow! That’s a lot of triathlons.
Josh:  And running and cycling.
Jason:  How much is running out of all that? It seems like running’s really popular.
David:  Running would be over half. The fastest growing sector is triathlons. Market sizing is one of the challenges as a result of there being a Gartner Report and . . .
Josh:  You don’t need those anyway.
David:  . . . Nike and Adidas and Under Armor and some of those executives are advisers for our company and it’s a challenge for those companies as well.
Jason:  So it may be a challenge but they sell into the whole market so they have no idea how big it is?
David:  It’s the specific portion of the market, which would be multi- sport.
Jason:  Well, how much do you think you can charge per event?
David:  Our margins are something that I wouldn’t put onto a podcast.
Jason:  No, not margins. When you talk to them, you’re like ‘I’m going to charge you $100. I’m going to charge you $1,000.’ What number do you tell them?
Josh:  What’s an average bill?
Jason:  Power of ten.
David:  Well, the total adjustable market that we have since today?
Jason:  No, no, no. You talk to one event planner and you say, ‘I’m going to charge you $100 and your going to get this or $1,000.’ What’s the number, roughly?
David:  That ranges from 1,000 to 100,000 depending on the size of the event.
Jason:  Woah, 100,000 for one event? I like that. Cool.
Josh:  I think with this kind of thing, you can try to sound big or you can try to sound smart.
David:  Another promise you’ll never deliver?
Josh:  That wasn’t the direction I was going. Some people try to make is sound like ‘Look how big the market is!’ And in doing so they talk about things that aren’t really the market in which case all the investors just blow off whatever you say anyway because everyone know that it’s like, ‘It’s a billion dollars.’ but you look at it and it’s not really a billion dollars because then you start to slice it down all these different ways. We don’t get all of that, and this much is spent on the sport but there not spending that on the stuff that I do, right? Either your going to be in the ‘Here’s the size of the whole market because I have no idea.’ and so it’s really big and you can just assume that even though I’m not getting the whole thing there a lot of play in there or there’s room to create more value so if you can prove, people spend a lot on races in general, so there’s room for me to take something out of it. That’s one direction to go.
Or you can really razor sharp like, ‘Look, there’s this many events a year. There’s 60,000 events. I think they make on average $15,000 off each event. I think I can take 10% of that in fees, so that’s 1,500 X 60,000 and boom, that’s the size my market. It’s going to sound a lot smaller but people are going to believe and think, ‘Okay. That’s really what it is’, and you’re going to sound a lot smarter when you talk about it.
Jason:  And by the way, it is smaller. It isn’t the whole market. All this, ‘I’m going to get 1%.’ No. That’s not the deal and that’s not how anybody thinks, actually, that I’m going to get 1% of whatever.
Josh:  And this is your chance to sound smart. This is your chance to actually make it look like you actually do understand what your market is.
And the other thing I’d say is you want to triangulate. Usually you don’t have good information, especially if your in a start up and it’s not some really established thing. It’s great if you can look at a public company because lot’s of public companies have to disclose all kinds of information so you can go pour through their filings and their S1’s and their other things and find out how many customers they have or what there average payment is and lot’s of other things you could use to extrapolate it. Or you could see what they think the size of the market is and what piece they have. But, often what you’re going to end up doing is triangulate. You’re going so say ‘I think there’s 60,000 things and I think the average they make you pay is this.’ So that gives me one number. And then another way to calculate it is there’s this many runners and if I can get this many of them engaged and this many to participate in races and if I can get each one of them to pay a certain amount per runner, you can come at it three different ways and see if that triangulates and makes sense.
Jason:  The other thing is you can go bottom up as well and you can say, ‘Look. We’ve already got a dozen people saying that they’ll do it and I wasn’t even trying. We can easily get 1,000 of those 60,000 over the next year or two. We just can.’ And if we did at, I don’t know what the average is let’s just suppose it 5,000 out of the one to 100,000. So we could be a five million dollar company a year just if we get to 1,000 and that sounds really easy. Now that’s not a pitch to a VC because it’s still five million a year which I think to most people in this room, me included, sounds like a really nice little business. For a VC looking for a huge Twitter like exit it’s not, but then again you’re in a market where there isn’t going to be a huge Twitter exit anyway. If you’re talking to an angel who would love to have a business that’s doing single digit millions in revenue and is profitable and is worth probably ten times that, that sounds great and very doable and then it doesn’t matter how big the market is. The point is this is a small piece of whatever it is and it’s very plausible you can get there.
David:  Could I follow up with a question?
Jason:  Please. We haven’t gotten to lifetime value yet.
David:  With the size of the market do you address what you currently have a product to sell to that existing market or what we’re planning to build based on those revenue’s from the cash generating . . .
Josh:  You’ve got to sell the dream.
David:  The follow up as well.
Jason:  When you’re raising money the investor’s betting on the next n years so it has to be on whatever you’re going to do. On the other hand the proof that you’re the right person to do it and they should bet on you is what you have today. It is both today because it’s proof that there is something and it’s a business and that people do want generally what you’re talking about and then, of course most of it is the vision of, and can be this. But I’m not going to believe you can even do that unless I believe that you’re doing it today in some capacity. So that’s why those very hard number are useful.
David:  Thank you.
Jason:  So in lifetime value usually you talk about, I mean you can talk about that for any business of course, but usually it’s recurring. I know there usually annual races but is the idea that you sign them up for multiple years or is this really one race at a time?
David:  It varies. It could be single race, 100 participants. We also just landed a contract that’s 600,000 participants.
Jason:  600,000 participants? What is that? Can you say?
David:  It’s the, well no.
Jason:  That’s huge, how many could, I mean how….
David:  It’s not a single event.
Jason:  Oh it’s not? Okay.
David:  It’s a single director.
Jason:  That’s fantastic. It sounds like you don’t have a single lifetime value because you have different demographics of customer. You have these one-offs and the lifetime value is the one-off. Now you hope they come back next year, they probably will if it’s good software, right? You could maybe argue that the lifetime value is twice whatever you get in one year because maybe they come back or you can be conservative and say 1 or 1.5. That would all be fair.
David:  Some of them stick around for 25 years.
Jason:  But they may not get you again. That’s the point, right?
David:  Not for certain.
Jason:  So you might say 1.5 because maybe they would, maybe they wouldn’t kind of thing, because the probability of anything happening is 50/50. It’ll either happen or it won’t, so that’s easy. And then you have these big guys where it’s a huge transaction and maybe you can lock them to a big contract for a cheaper rate, which is super valuable. I feel like, again, it’s also easy because you’re talking about a three month contract or, I’m sorry a three year contract or a whole year contract, whatever the thing is. I feel like you want a segment and I think if you do a segment it’ll be really obvious how to do the lifetime value of each of those segments. And then the question is how many of those are there and I don’t think you have to have a perfect answer to that. I think you’ve just shown how it can grow in these different ways.
David:  So the cushion is imperfection across the board for any of these calculations?
Jason:  Yeah. I think when you’re selling the dream you sell big. When you’re trying to prove what you have already done and this is why the should invest in you in the first place because you’re the right person for it, you get super concrete and conservative so you don’t look like you’re crazy. You look like you’re telling the truth and the reason they’re investing in you is this bigger vision.
Josh:  The one thing I’d say in order to navigate the selling division and where we are now is it’s okay to paint this really great vision and just make sure no one’s every confused about which part you’re talking about. When you’re talking about the vision they understand that’s the vision. They don’t hear the pitch and then think, ‘Oh, well that’s already all built,’ because then they’re going get really disappointed when they find out it’s not really all built and it doesn’t do all that. You don’t have to dwell on it. You can say, ‘Here’s the vision. Blah, blah, blah’. and then you can have one slide at the end that say’s, ‘Okay, here’s where we are now. We’ve gotten up to this point and through this, this, and this.’ You put yourself on that path, on that trajectory and you’ve still spent 90% of the time talking about what it’s going to be and everything else and you get them all bought in and excited about that but by the end of it they don’t walk away feeling like you pulled something over their head. They totally understand. Okay. There’s the vision, and they’re this far along, and that’s what they proved so far.
Jason:  I guess maybe the final thing is, this may not be a market that’s super big. And that is fine, as long as that’s how you’re pitching what it is.
Josh:  And don’t pretend that it is.
Jason:  Yeah.
David:  No, we just have a pivot plan. Down the road.
Josh:  Is that because the market’s not big, or that because it doesn’t work?
David:  No, we see that as a way to access that larger market.
Josh:  I don’t know if I would call that a pivot.
David:  Okay.
Josh:  Usually a connotation of a pivot is . . .
David:  A redirect.
Josh:  Yeah, something that doesn’t work, so I’m trying something else.
Jason:  It’s sort of like Step One, and it’s going to be Phase Two where we’ll get something ten times bigger. nd so that’s fine. Not even having heard your pitch yet, I would guess that Phase One makes a lot of sense, and you’ve probably lots of data you’re doing to prove that you probably could do Phase One. And Phase Two, you probably have no data, maybe “I had a great meeting once kind of thing!” and no software, and not really any data other than that, you do have some experience and you’re going to be developing it, which is fine, because that is also normal. But that’s not going to be that compelling in terms of proving ‘I know this is going to be in our future.’
So maybe the way you can cast it is, there’s many ways to tenax this business. So here’s a core business that’s pretty easy to argue we can get. We have already one way in which we’re pretty sure is a way to tenax what this business is, that we’re not going to do tomorrow, but that this is going to lead to.
There are other ways too. We’re going to find them, because we’re building a real business, and we’ll be able to use all that to find it. This is one of them, but you don’t want to hang your hat only on the one, because A, we’ll all know you’ll learn something, and it’ll be something else by that time, and B, you don’t want it to be only one because then if it doesn’t work out that that’s the one, then what?
Josh:  Kip McClanahan, who’s an investor here in Austin, has a blog called reoverthinking.com. He has a set of blog posts about what your invest index should be, and what your slide should be, and that’s my Bible for where to start if you’re going to go make an investor deck. In particular, he has a slide on there, he says it’s the money slide, and it’s the Phase One, Phase Two, Phase Three kind of vision. And his example had something to do with routers, so they were selling, this was fifteen, twenty years ago, selling routers into the home. So first, we go sell these cheap routers that people put in their house, let’s them get internet stuff.
But then, once we’ve got routers in a bunch of houses, now we can layer on this service layer on top of it where, now service providers can remotely check the router and see what’s problems there are and get information back and sell services on top of it. And once we’ve got a bunch of services on top of it, well then we can go and start delivering content down through the router or something else. It shows the vision where first we can dominate this place, and that by itself is good, that’s a good business. But then once we got that, that puts it in the position then, our business really shifts. Then we can get into this larger opportunity, this next piece, and kind of showing that vision is this succinct kind of way.
One other thing with that, consistent with that, is Bob Metcalf has chided me that my five secrets to a killer elevator pitch should be three secrets to a killer elevator pitch. Everything should be in threes. Just because that’s what’s easier for people to remember. So same kind of thing with that. Don’t have two phases, have three phases, because that’s just easy for everybody to understand and to deal with.
Jason:  Okay. Good. Thanks.
Josh:  Thanks.
Jason:  Excellent. So before we bring out our next person, I got to tell you this. So recently at my company, we’re Press Engine, that’s wpengine.com, we’re in a bind and we needed to get a bunch of dedicated servers because our stuff is all about performance and speed and all that. We needed to get a bunch of servers up, and fast. You’re probably thinking Rackspace came to the rescue, because if you live in this area of the world, as it says on all our local news stations in Central Texas, ‘Your Central Texas news leader,’ not Austin. So you think of Rackspace because they sponsors a lot of stuff and they do whatnot. But the fact is, especially for startups like us, and I imagine you guys, they’re expensive. I don’t want to say anything bad about them, nothing wrong with them of course, but in this case, people that came to my rescue was a company called Server Beach, which is also from Central Texas, because they’re also in San Antonio. I think they and Rackspace poach off each other all the time. It’s all the same thing, really.
Josh:  You found ServerBeach?
David:  That’s correct.
Jason:  So anyway, they are the one that came to the rescue. They’ve got great prices, they also have good service, though. I think a lot of hosting companies do now – or at least when they want to. And they’re really entrepreneur friendly. And in particular, for example, having lower price prices makes them more entrepreneur friendly, I think, that’s part of it.
And in particular, they’re sponsoring tonight as well. In fact, all the pizza that you got back there, on the other hand that’s not a C-shape, it’s kind of in that pizza claw shape, that’s from ServerBeach. And in fact there’s two guys here from ServerBeach. Over here’s there’s like the sales guy-looking guy in the white shirt, that’s Kevin, right? And then there’s the cool guy over there, I guess you’re both sales guys, really, right? Those are the sales guy.
That’s okay though, they’re really nice. See, you would think the sales guys are going to be like, slick guys, and they’re not. And that just shows you, because if the sales guys aren’t that bad, then you know the rest of everybody’s going to be super cool. So this is a good thing, right? Okay.
So anyway, talk to them. And they’ve offered everybody here, and I don’t know if they’re talking about the thousands of people on the podcast, we will find out maybe later, but if you tweet, is it @ServerBeach? Is that, would you like someone to tweet? Is someone listening to @ServerBeach?
Man:  I mean, if anybody really needed hosting, then the idea was to reward you for coming here tonight. And if you needed a dedicated server and you’re not happy with the hosting you’re getting today, you’re welcome to come to us and you’ll get, I guess, the 30% off, no set-up fee and it’ll be on a month-to-month agreement so you can try 30 days at a time. So it’s very low risk which is a beautiful thing, being entrepreneurs. But just to kind of reward you, we’d like to sweeten the deal as well as sponsor it.
Jason:  Yeah. 30% off, no set-up and they brought shirts, and pizza! So it’s kind of ridiculous, they’re obviously losing a lot of money, and we appreciate that. Okay. Let’s do victim number two.
Sarah:  Okay. Next up is Renee.
Jason:  Uh-oh. All right.
Renee:  I’m used to it. They kicked me in the nuts every week for all last summer.
Jason:  So name and company is not going to work, because we know, so let’s get right into it.
Josh:  You’re supposed to make something up.
Renee:  I’m Renee with Pizza Claw.
Jason:  Pizza Claw? Okay. Well, I don’t think, like, when I eat pizza my fingers get all greasy. And I like greasy pizza but I don’t like greasy fingers, and so I imagine this is some kind of pizza glove or something I could get into? It’s only got like three finger holes, so in case I’m missing a digit it still works for me, and that’s how much forethought you have, because you’re focused. Am I right?
Renee:  Yep, that’s the company!
Josh:  Yes. We’re done!
Jason:  Right.
Renee:  And I want to make my Pizza Claws faster.
Josh:  If it’s doable.
Jason:  And more secure, with a smile!
Renee:  So yeah, the Forecast is just a really simple way of telling your friends where you’ll be later. It’s like, Check-In tells your friends where you are now, Forecast tells your friends where you’ll be later.
So my question is something that we’ve always wrestled with at our company because we’re a social company. When do you transition from focusing on users and viral growth which is sort of, like, you know, the really hard nut to crack when you’re doing a social company, to caring about customers and business model? Should it be happening in parallel time or should you say fuck one, and concentrate entirely on one before the other?
Jason:  Yeah, that’s a good question. I always go towards business model, always. That’s just me personally. If it doesn’t make money to me it’s a hobby and all that. However, you have a business where, if it’s a ‘social business’, and maybe a better way to describe it is a business in which if there’s under then a certain number of people doing it, whatever the thing is, whether it’s free or not free, and whatever they’re doing, if there’s not at least a certain kind of critical mass of people, it’s kind of useless. There is no business model of any sort ever; it’s impossible. But if there is, not only is it valuable but it gets more and more valuable as people are on it. All of a sudden, and this is like what Twitter is. You know, Twitter is worth some ridiculous billions of dollars.
Josh:  8 billion.
Jason:  8 billion, some stupid thing, and they’re not making any money. Nobody even knows how, they admit they don’t know how. It should be a joke but it’s not because it’s got so much and it’s so valuable, somehow, and we’ll just figure it out. Because if we can just figure out what it is, boof, we’re good, like Facebook did, right?
So I hate saying this but, the answer is, like, you need a lot of people before the business model and this is a good reason for VC. This is a good reason to go get a whole bunch of money so that you can afford to spend time getting people. But then your number one thing has to be growth. Nothing has to be more important than growth. Nothing, nothing, nothing.
Renee:  So, where’s that inflection point where you start to worry about business model, so you don’t become Twitter? But that would that be a problem to have, right?
Josh:  I mean, it’s going to be different for each company. I think you kind of, when you ask the question you already define socials to mean, ‘We don’t have to make money.’ That was kind of like the way you asked the question, like as if you were a social business. A social business, to be something that uses social, that doesn’t have to be something that needs to be built without making money. There’s social businesses that, you know, and there’s social monitoring tools, there’s social things for helping salespeople make, close deals. They make money right away, right. So your definition of social is, we don’t know how to make money. We’re just trying to get a lot of people using it. And if that is your model, which is the Twitter model, right? Then I think, like you said, you got to be totally focused on growth, because that’s all it is.
So OtherInbox was not a social business, but was a, we don’t know how to make money business, in the beginning. Or at least we didn’t have that part of it done yet. So we knew in order for us to really make money, we needed, we think we really need about 5 million users. And we knew we needed, just a million, to even like to test it. Even to do anything, we need a million users.
So we have to just focus on getting that number. And that number is a little vague, but I have a sense of that from like the testing that we’ve done. And we honed that over time and it turned out that was about the right number.
And so, until we have a million users, we couldn’t make any money. Like it wasn’t even like we got to focus on making money, there was nothing to focus on. It was just focus on going to get users. And which, we still tried a few times and found that it was totally useless, not worthwhile. Then once we got to a million users, we were at the point where we could test some stuff, it’s still actually wasn’t that important. Because still the amount of money we’re going to make off of it, wasn’t that significant, it wasn’t as significant as I wanted to be. It’s probably not enough to get profitable just on that.
And so, that’s kind of the next inflection point. If you get to a point where, if you were to focus on the business model, you can make enough money that you can be cash flow positive. Well, that’s a good decision to have to make. Like now, okay, shouldn’t we focus on that and get cash flow positive. Or should we just keep growing as fast as we can? And so now, there’s a great security that comes from being cash flow neutral. Because now, you don’t have to raise money and if you have a social app, that’s growing, even at any kind of a rate, like OtherInboxes we have almost, any given day, anywhere from 5,000 to 10,000 people a day signing up.
So if we can just hang out, we’re getting more valuable everyday. Right, like we can get to cash flow neutral, then it’s okay to just to hang out, let more users come in. Now, we don’t have to figure out the business model. We just need to be able to get enough money to keep the servers running and keep growing. And that’s completely different than maybe figuring it out, which is identifying the things that’s going to really scale into big exciting business.
Jason:  At the same time just having growth of users, even if they are, ‘Active’ by some definition that’s reasonable. It’s still not necessarily valuable. So what I would do also, just think of this as, is just getting the growth, is the mass of users an asset? Is it a thing that has value? Would someone buy that thing, because it has some kind of intrinsic value?
For example, with your check ins, so there is bunch of people checking in. Is that important? Like if there is a million people checking in, at least once a week, is there like a myriad of ways you can imagine that’s valuable. Maybe there is, maybe it’s like everything, like you can advertise them, you can get patterns, there’s data, local businesses can do stuff like that, etc.
Or is this something that is kind of vacuous. So like, in fact one of the problems with Twitter is, so if I handed you Twitter, you still wouldn’t know what to do with it. Like all the data are already public, so it’s not like having it is valuable. If having that data were valuable you can predict something or you can sell some kind of analytics on it that nobody else could get, that will be valuable. But it’s not, it’s all open. Okay, so that’s not part of the asset. What is the asset of having that stuff? And so, I’m not sure what it is, I mean, well, there is different ideas, but we’re not talking about Twitter anyway.
So with OtherInbox, OtherInbox is categorizing email. Little kinds of interesting things that might come out of there. So one of the things that’s public is, there is a service called SubjectLines, and you can tell already from the name, what that means. If I see those email, when it gets delivered, I can tell you what subject lines in emails tend to get delivered better. That’s like the holy grail of email marketing. What subject lines get’s delivered better? Holy crap, that’s insane. That’s an asset, to have that.
What are some other ways? I don’t know. If you’re looking at e- mails all day, I mean I should say that, that’s taking it too far, there is always privacy things, they’re not looking at e- mails all day. I shouldn’t say that. But like if you have anonymous access to e-mail, like it’s kind of unreal, all kinds of things might be possible. And so that’s definitely an asset.
Where as, is check in an asset? So actually that’s a question. Is saying where I’m going to be, an asset? If it is then as it grows, you are getting something of value. And that growth is not just, ‘We’ll figure it out, it’s magical’. No. It is a valuable asset. And yeah, we still have to figure it out, but we’re sure it’s an asset somehow. But is it? Is check in, an asset? And foursquare and Gowalla as far as I know, so far haven’t figured out, if it is an asset, to how to think of it that way.
Josh:  You think foursquare is at that size, they’re big enough, they can start monetizing it now. They’re starting to put some deal in right now.
Renee:  It seems that they are trying to put that effort in, right now. But that’s the front foot of their business right now is figuring out that business model.
Jason:  Right.
Josh:  I think with foursquare, it’s actually in question. I mean, as much as everyone gets the idea of, ‘I’m going to give you a coupon for checking in somewhere a lot or for trying to get you to go’, like, I still think there’s a little bit of a question of how big does that business really get and what’s real. I would argue, I don’t know if Jason would agree, I think with Twitter, I think most people don’t question it. They realize that there’s a lot of really valuable communication and information going through Twitter and they still don’t exactly know how to monetize it, but they know that it’s still really, really valuable, and its obvious to me that its really, really valuable.
Tying back to the question from before about phases as well we talked about. So, for OtherInbox, it ties into the same pieces of what’s the critical mass to get them? So phase one was, get to a million users, and now we can, for example, we can’t really, like, we can do a little bit of targeted advertising but the audience, believe it or not, isn’t that big for doing that. We can now just start to pull out subject lines did and say, okay, let’s look for some trends. Let’s see what’s happening. And we get a taste of what kinda what comes next.
Now, at five million users, we see, we know which e-mails are receipts, and right now if we try to target something and say, let’s show this ad to everybody who bought something from, you know, from an airline in the past month. We’d get like 50,000 people, or like 100,000 people. Its starting to get, the airlines are probably good on this, its starting to get interesting. But at five million it gets to the point where we could be like, okay, let’s get everyone that’s bought something from Best Buy. And there’s 150,000 people that match that criteria. And now that’s big enough to be interesting to somebody. And so, you know, its another kind of phase milestone. Then you get to a million users, we can start to pull out some trend data. When we get to five million users, we can actually start to target really interesting segments. When we get to a hundred million users, I don’t know. Obviously we take over the world.
Jason:  That’s a non-rhetorical question. What is it about checking in into the future that is an asset growing?
Josh:  And any different than foursquare?
Jason:  And one answer could be, its the same as foursquare in a sense that if foursquare figures it out then so will we. And that’s not the worst answer because a lot of people are betting on foursquare and [inaudible]. To me, its not a terrific answer because it means, ‘I don’t know either.’ I hate the argument that, but they could just do it. You know, anybody could just do anything, whatever, I don’t care.
But, you know, if that’s. But you could say if foursquare tries twenty things and only one works, that’s a bad sign. That means there’s not a lot of ways for this to work. Maybe not even one. So should you have some ideas? I don’t know that you have to have an idea of monetization, but you should have an argument for why its an asset.
There is a plausible out on this. There will be a way to monetize it because there’s something of intrinsic value of this happening already. For Twitter, you could argue it’s that people are using it and communicating kind of everything from overthrowing governments, oh my God, to trivial stuff. Everything is happening there and its happening on them. And so in the same way that a broadcast network has intrinsic value because they’re the ones showing NBC at night, there is value there, there’s going to be value there. What is the intrinsic asset that you can define in there?
Josh:  Can I say right here then have you kick it back?
Jason:  Please.
Josh:  So, I think that the thing that’s really valuable is and different than the check-ins, you know, is we are catching people in a state of mind where they haven’t really made their mind up. This assumption hasn’t been tested yet. That they’re in a state of mind where they’re more influenced because they’re deciding where they’re going to go. They’re looking for some place to go, so you’re catching them in a different cycle than you are when they’re already someplace.
Jason:  But isn’t also the idea currently that I broadcast where I’m gonna be because I would like to have a happenstance of someone meeting me there. And if part of the model also is that you are diverting me from that kind of breaks the social part.
Josh:  Well I think there are two points there. I think if you catch someone right before they make a forecast, perhaps they’ve said they’re going to a restaurant or something, you suggest a different restaurant so you can bias them that way. If they’ve already said where they are going, you could suggest a complimentary place to go afterwards. ‘I’m going to a movie, there’s a bar that’s nearby.’
I think that’s different than foursquare because foursquare is very much present tense as where future tense and if its in the future you can still affect the future.
Jason:  There’s got to be some weird, like, demo slash presentation about what you just said, like, ‘we know the future, we can still change it!’ In a world where Twitter is rich! Sweet. I don’t think that’s a bad, I don’t think that’s bad at all.
Josh:  Okay. Cool. That’s generally what I say.
Jason:  I also think its kind of testable, like, you could, I could see, like, you know, doing weird things to one percent of your user base.
Renee:  That’s our next phase. To define, like, what I think of as a social company, its one where you start with doing user development as opposed to customer development where you’re solving a user problem that people aren’t going to pay for directly, but you’re solving the problem nonetheless. And I think companies that aren’t social, are the one’s that are solving a problem for somebody that are actually pay you directly.
Josh:  I think that’s a freemium. I still think you’re abusing social groups.
Renee:  Yeah, but we never expect our users to pay for anything ever. It’s not like there is a free one and more expensive one. And I think that’s like…
Josh:  An ad supported model. It’s still not social.
Renee:  Yeah, so maybe that’s a better way of…
Josh:  Social means people interacting.
Renee:  Right. So, yeah, it needs another term, rather than calling it a social one. But doing that customer development, when does that start? Do we start that experiment now, but I guess that goes back to when we started the conversation.
Josh:  What’s the minimum you need to do it? Like there is a certain logic part of like Okay . . .
Renee:  I think we can start doing it right now. It’s all about that distraction, like I think some business models we can test right now.
We got our users that are pretty evenly distributed around the globe, so I think there is some business models you can test better than other ones. Like if we tested like a hyper local thing, that wouldn’t really work, because we don’t have the density.
Josh:  I don’t think you should worry about it.
Renee:  Okay. Thank you.
Josh:  You need to get lot’s of people forecasting. You’re not there yet. You know like when there is really lots of people forecasting, then your like okay, this is now figuring out what else to do with it.
Jason:  Yeah, I think so too. And I think who ever was financing this part of it, I think a perfectly valid thing to say is, the goal of this round is to get, and you should have a goal, of what you possibly could get on this round, before this. But that’s the goal, we’re doing this to get this much activity. We do have some ideas of what that means and you do. So like, it’s not like we just run into the tunnel with no light at the end. We have some ideas how this could work. But obviously that’s a distraction right now. And if we can show this kind of growth curve that looks all pretty, we know we’ll get the next round because there is out’s and a big growing thing anyway. And that’s the plan, that’s the phase two is the next round. And I think planning for that is actually a good thing.
Renee:  Depends on the business model until series B.
Jason:  Well, I’ll have that plausibleness to it. That it’s an asset, there’s things we can do, there’s things we can manipulate. Here’s why it’s not foursquare. Those are vital, otherwise it’s just like, oh, it’s foursquare, except weirder and you’re not foursquare. Right? So did it work? No. Okay.
Josh:  I think the other thing you need to be thinking about a fund raising or two is setting those goals. Say, our goal is to do this and especially because you don’t plan on being cash flow positive, or neutral at that point, you want to be finding investors now, that are signing up for the whole row.
You’re going to be like, ‘Okay. This is what we’re going to do, you give me a million bucks now, and we’re going to get a million people using it. Once we get a million people using it, you’re going to give me two million bucks.’ And right? And you get them to go like, ‘Yeah, when you get two million users, I’m going to give you two million bucks.’ That doesn’t really mean that they’re going to do it unfortunately. But at least you explicitly set these expectations, and then you can come back to them and be like, look I did what I said I was going to do.
Jason:  The fact that it is nebulous, so many people up for this right, this particular kind of company, which there’s tons of. Like everyone invested in Gowalla and foursquare for example. It’s some kind of investment really.
Renee:  Cool, I really appreciate you guys. Thanks.
Jason:  So I guess everybody notice we are in this awesome co-working space. How many people are, this is the first time to cospace? Wow, like at least half. So now you know what an awesome place cospace is. This is like coolest co-working space, maybe the coolest space at all in north Austin. And it’s even more cool when it’s not full of folding chairs and stuff borrowed from next door. See these like cool blue chairs? It’s like that, like the nice furniture and nice desk. Not fold out tables or anything. It’s really nice space, it’s really bright, you can see all the windows. There’s lots of events like this. there’s classes, there’s all kinds fund stuff. This is a neat place to be.
However, we would still not be able to be here, well, we could, but it would cost us $100 per hour, I think, to rent out the place. A company called Group Charger is footing the bill for that. I’m just going through all the people who paid for stuff. Because I’m too cheap to pay for anything. See, that’s how this works. And so Group Charger actually bought us the space here at cospace for tonight.
And Group Charger is a neat company, as the name might suggest, they help group managers, add a lot of value to their groups. And this is what I mean. So let’s say you run a church group or a alumina association or something like co-working space like this. You’re used to things like newsletters and events announcements which are fine, everybody does that. But it’s not really, it doesn’t make a community out of it, it doesn’t really add that much value, it’s just a billboard.
So fore example what I do all the times is, I’m always introducing people to each other, right? Like I know some IOS west developer come up wants the business, and I don’t know anything he can do at the moment, so I say, I don’t know. And he wants to join a start up, and then I see some other start up, they needed IOS developer, so I introduced them. Right? This happens constantly. And if you’re a group manager, it really ought to be happening constantly, right?
So I’m running his email, little paragraph of the bios of the people and I’ve got to come up with a short bio for everybody. I mean, it just, it’s sort of mundane and it takes lots of time, but it’s super valuable for the people. And as a group manager, of course, it be incredible if you’re doing this like five times a day. And that’s just one of the things the GroupCharger does, is it facilitates those kinds of introductions and makes this super fast. And these other things it does too. But that’s just one example. So if you manage any group, GroupCharger is a much better way to actually add value to the members themselves. And so you can go to GroupCharger.com and check it out, if you want. And that’s Curtis’s company. There’s Curtis, Hey Curtis. So you can talk to him about it too, if you think it’s cool. So thanks to them for the space.
Okay. So third victim. Kyle’s the third victim. Kyle’s the third victim. Name and company only.
Kyle:  My name is Kyle Simpson. My sort of a parent site company is Gigabyte Solutions with a project that I want to talk to you about, is called GoLookAt.
Jason:  I think it’s like Hot or Not, except the idea is that you saw some chick or a guy at a club, and then you take a picture like, ‘Oh, my god’. But then it’s geo-located and it’s combined with where you’re going to be, or where you’re hoping to be. And you sent it out, and you’re like, ‘Dud, you got to go look at this chick’. And then that hopefully that brings your friends in. And then if they do, you get free drinks at the bar. And that’s how you make money at it.
All right. So what’s GoLookAt? It’s a great name, what is GoLookAt?
Kyle:  GoLookAt is a three tier thing, it’s basically…
Jason:  Oh God, no, no, no. Just tell me what, it’s not a three tier thing, just tell me what it is.
Kyle:  It’s not URL shortening, but URL bettering. It is social bookmark sharing, and it is link safety.
Jason:  Well, let’s pick one of those things. What’s the best one?
Kyle:  The one that’s build.
Jason:  Okay. Which one’s that one?
Kyle:  The URL bettering.
Jason:  Better. What’s that, better, means nothing to me, What is that?
Kyle:  So people think about URL shortening . . .
Jason:  No. What is bettering? It’s better because?
Kyle:  The URL is shorter. I say the best URL makes more sense to people. It tells what it is and gives you more data about that URL, than the original URL.
Jason:  So give me one example. Because I don’t get this at all. I think if it’s short I can say more stupid stuff in my Twitter thing, that comes before the little short URL.
Kyle:  Yeah. So, I say, you say that in the URL, rather than as part of the disconnected text about the URL.
Jason:  So it’s http://ohmygodyouhavetolookatthissoawesomeitstwitterfinallygoingt omakemoneytheyjustannouncedit.com? Or something?
Kyle:  Sure. So, consider Youtube URLs, they don’t tell you anything at all about the content of that. When you shorten it to a bit.ly link, you also don’t know anything about the content of that video. You don’t know if it’s safe for work, etc.
But if you have a shortened URL that says, funny/cats/video, you know exactly looking at that URL what it is. You also have data about that URL that can start to categorizing information and make it easier to find.
Jason:  But doesn’t if also have to be short, so I can fit it in a twit? Because that’s where most people use this stuff.
Kyle:  If I’m writing out a twit, and I write out the sentence, ‘Go check out this funny video about cats’. That’s much longer than bit.ly/funny/cat/video. It’s self descriptive URL that’s shorter than the text that I would write in a tweet.
Jason:  So you still use it in Twitter or you don’t?
Kyle:  You can use it any where.
Jason:  But that’s what you expect is that I would use in Twitter, and just say less?
Kyle:  There are people using it. Yes.
Jason:  Oh, they are using it. How many people are using this?
Kyle:  It’s a build system. I got 60 people using it. There’s been three thousand created and over 200 thousand clicks on those website
Jason:  Oh, that’s a lot.
Kyle:  So the key here, but before we start, I just want to say, my question is a little higher level then what the guy before was asking. I’m not specifically asking about how to monetize this idea, or whether the idea is good. I’m saying if you have worked on trying to monetize an idea, like this idea, and you struggle with the monetization of an idea, does that mean you should abandon the idea and move on?
Josh:  Usually.
Jason:  So you have tried to monetize it in what ways?
Kyle:  I haven’t actually put monetization into code.
Jason:  And so, you just said you tried and failed?
Kyle:  I have done, talking to a lot of people about it. If I monetize this way, does it make sense? And I got a lot of feedback.
Josh:  You failed to think up a way.
Kyle:  I failed to make money on it, but it also doesn’t cost me anything since I host it on my own server.
Jason:  Well, yes. It does, it costs the most valuable thing, which is all of your time and attention. Yeah. It costs a lot. Because if this is a bad idea, you’re wasting the thing that you can not buy and can not get back. And it’s not like you’re going to get like better memory and be faster, smarter, 10 years from now. None of us are, right? Maybe this guys are really young. So maybe that’s, but not us, this is really valuable time
Josh:  For general interest definitely no. Usually if you can’t figure out even if money is offered for it, unless you’re super passionate about it, and think it’s worth doing it, and not getting paid for it, then you should stop.
Now the only exception is, if this is so mega viral and you think this could be so big, so able to use it, that it could be Twitter and it doesn’t matter. And it’s usually not. That’s what I said, usually the answer is no.
Now in your particular case, the whole business model is, does it make more people click on it? That’s all it is. And if it does, that’s super valuable. Your pitch is not, it’s better, it’s more descriptive, it’s more people click on it. That’s all you have to lead with, you have to be like, “We make URL’s that more people click on’. Then everybody gets it, right? And so all you need to do is test that. Which is really easy to test. You just prove that more people click on it, and if you can go put up this thing, ‘Hey, we can use this one instead of bit.ly, 10% more people click on it’. You’re done. This whole thing and you’re done and it’s really valuable. That sounds awesome if you got it.
Jason:  So this is the feature benefit thing. We’ll get down the side track because this is useful. This is the feature and benefit thing. You came in and said what it is, is it puts things in the URL. No, it gets more clicks.
Now the reason it get’s more people click on it, is that they understand that it’s safe for work, or they understand, whatever it is, it’s better, because it’s descriptive, so they’re willing to click, that’s why they click on it. Which is super interesting, because it’s also different, but that’s not really the thing. Anything that got more people to click on it, I would just, in fact I did, because not that long ago, Okcupid, they have this great charts of all these bizarre stuff? Well, someone did something like that, I don’t know, if it was them, but someone did something like that, where they said, they showed all the URL shorteners on Twitter and the propensity for people to click on a link, based on the shortener, which you would think there’s no difference, it’s just a random jumble of characters. Bit.ly by far are clicked more often, not more bit.ly clicks, just because it’s used more, no. More clicks just because it’s bit.ly. Well, after that I just switched to bit.ly and never looked back. Is that still true, I don’t care, because I got my shortener, I just did, and I promise you a lot of people did when they saw that. So if you can say the same thing for whatever reason, who cares. And it’s more descriptive. Oh, bonus, right?
So don’t want to get off the side track, so also there’s so many ways to monetize. and if the issue is just, if people do click more or some other benefit, maybe, that is obviously number one, but if there is some kind of benefit. Then there could be lots of ways. For example there’s a website, Let me Google this for you, do you know that site? Do you know that they make lots of money? You know how they make lots of money?
Kyle:  Google Affiliate Linking? I don’t know. How?
Jason:  Because when you go to make one, it’s so fun and funny to make one, there’s a little ad on the bottom. If you’re trying to make $8 million a year, forget about it. But if just like trying to make a cool lifestyle business or you say like, ‘Okay. This is not a big business, but hey if this could just give me a couple of grant a month even. that be kind of cool, it’ll pay for servers and pay for the next thing’, and maybe the next thing is more URL stuff, and you’ll build on that. But it’s like it’s a place to start, and it’s a way for people to know who I’m. And by the way when I do my next thing, which is also URL shortening- ish, because it’s security in one of the other things. I’ll use this as a way to get eyeballs, just to see that I exist. Because I’ll just put in my own ad slot. In other words, you’re building some thing kind of nice. So is that a company, no, but that doesn’t mean it’s not valuable especially it’s not taking a lot of your time and a lot of money. Then you need more than 60 people, you need more than that. But like you could do that, you can just use that model and you’re done, like it doesn’t have to be more than that.
Josh:  He just totally talked you down. This is big. You should go just make a lot of money helping people get more people to click on things. That’s a great example of like all these pitch stuff. Like your pitch, your best pitch is all 4th grade language, it’s we get more people to click on your links. You don’t have to say anything else. No fancy words, no we’re better-er, or no, just, we get more people click on your links. These our links, more people click on it. Like you just say it 10 times, really simple, like that’s all you have to ever do. And they will be asking you. How do you do that. Then you get to answer all these other cool stuff.
Jason:  Yeah, forget those tiers and better. My reaction is what everyone is thinking, except what they do is they just turn off and stop listening to you, instead of doing what I do, which is to be rude and throw it in your face. Right? That is what they are doing, I guarantee you. What are three tiers? ‘Oh, my god, three tiers’.
Kyle:  It get’s more people to click on links.
Jason:  It does, what is it called?
Kyle:  It’s called GoLookAt.
Jason:  That makes sense. It says GoLookAt, I’m going to do it. That’s a great name. It fits. By the way, so let’s go down this, because it’s so big if you can do it. So how would you measure whether it gets more clicks?
What would you do? Because if you can answer that, you could set it up, where ever that is, and then you can find out, if it’s not, you could do things and try to make it so and you can seek this. So how can you measure that?
Kyle:  Yeah, so, I had thought about that kind of idea like how do I actually figure out somebody is going to click on funny/cat/video link more than the YouTube link. I can’t think of any other way, other than A:B testing and tweeting.
But maybe there are other ideas, but I thought about creating URLs to really hot popular things that people are talking about on the Internet. Create two URL’s, one bit.ly url, and one with more descriptive tags. Maybe a couple of versions of some descriptive tags. Kind of like an SEO person who try to figure out the best things they can write in the URL. Put those out there on Twitter and then watch the statistic. I already got the statistic generation, and so I just have to watch it.
Josh:  So the hard parts are someone’s likelihood to click on it, is going to vary a lot, based on the relationship between the follower and the person they are following. So you can’t like me twit it and him twit it and compare like, he’s got 2,000 followers and I got 2,000 followers, it just doesn’t work.
So I think what you want to look for is like, something that’s got recurrent twits. Something where they regularly, like once a week, or once a month, they do something to drive, that way they can like, alternate that maybe and try to get the same audience on the same thing. We definitely want so find somebody that does this.
Kyle:  So somebody that does five tweets a day, have them take one day to do one set of length and the next day to do another set?
Josh:  It’s never going to be perfect, but yeah. And then at least you’re comparing like the same set of people, the same thing.
Jason:  You have another problem, which is you don’t have another end, you don’t have enough data points. So for example, let’s say you have, which is millions and millions of people to click on stuff all the time, everyday. Everyday a million people clicked on something that you made. Well, then you could do stuff, like you could say, ‘It’s going to be your shortener and it’s going to be in random letters, it’s not going to be tagged.’ And this and that, and you have so much data, that all that noise, all that error, could be canceled out. Because there’s so much data. But you’re not there, and like little things like, If I re- twitted one, and it went, then that will skew something.
On the other hand, one thing that does happen on Twitter, I have noticed is that, people re-shorten. Like I always twit, I have a new post on Monday when I have one, right? Every kind of weird URL shortnet comes out. Like bit.ly, the tcode and all that garbage, and then lot’s of those bit.ly one’s like, shouldn’t bit.ly just pick one random set of letter. I know there’s infinite number of letters, but still, don’t you wanna collapse the space a little bit? But they don’t, I guess.
So if that happens, so maybe you do have data, even when it does that, because it get’s moshed like that. But it still needs to be like, huge end for you to be able to say, all the error cancels out and I win. Right?
Josh:  I disagree. I think you can do the simplest test in the world and say, look this went to hundred people and it get’s this many clicks, and we test another hundred people, and we get more. It’s all in the comparison. Then you get to do bigger tests, than you get to do bigger tests. Like go get the simplest smallest test you can find and just show lift and then you get to do bigger tests, you get to do bigger tests, you get to do bigger tests. As long as that keeps working, your good.
Kyle:  I think the biggest danger I was trying to figure out in terms of comparing links is, it’s really hard to find two links that actually have like the same interests in value to people. Like a funny cats video against the video from TechCrunch, not going to have the same click statistics.
Josh:  No, usually same video, same followers.
Jason:  It’s the same thing. Same message.
Josh:  I was searching Google, trying to figure out, if we could like do some kind of like buy search key words, put that as the URL. I was trying to see what it actually show you of the URL. It’s not like a perfect tests, but you can at some level, be showing two ads, and the only thing that is different between them is, one’s got the bit.ly url, and one’s got yours and more people clicking. It’s not perfect, but that might be interesting, and pretty easy to do.
Jason:  Okay. Here’s a weird idea. Sometimes this tiny little psychological things have huge effects, right?
What if just by having GoLookAt.com/something, anything, even random letters again, make people click it more. I don’t know if that’s true. It’s a command, maybe it’s true. Sometimes that stuff works.
Kyle:  You’re talking about the vanity portion of the URL, is that what you saying?
Jason:  I’m saying, do you have GoLookAt.com?
Kyle:  I have GoLookAt.com. I have GoLook.At. I have go.ly and bunch of others.
Jason:  So what if it’s true and this will be pretty easy to test. That just GoLookAt.com/random letter, is better the bit.ly/random letter.
That’s something you can do without all those tagy stuff. If you can show any lift there, number one, maybe you can get people to start using it because of the lift. And number two like, okay, now you can get into complicated stuff like different tags, which tags should put nsfw, do I have to ask the users first before I tag it? That all sounds interesting but more complicated than just, it’s another shortener that people click more, which just the domain name might do, so you might have even simpler ways to do that.
Here’s a weird idea. What if you do duplicate twits. Like you literally twitted in rapid succession, like just one second after another the exact same twit, with the two things. You randomized the order that you do that in. And you just do that, even though it’s duplicate twits, and that sucks, but like people sort of get over it. And your immediate friends can understand, because you’ll just tell them what you’re doing. Your immediate friends can understand. And maybe even randomize in your own minds, hopefully. Because those 60 people, they could understand this, right?
Josh:  You have to get someone else to do that, which it’s even harder. You can get some of your followers to do it.
Kyle:  Just one thing to point out about how hard it is. Doesn’t require anything about my service, or the interface for you to tag. That’s part of the viral nature of this. If I see a link that has funny/video and then I think it needs the word ‘cats’ on it, when I share I add the word ‘cats.’ It didn’t require anything. I just captured the log.
Jason:  Yeah, but nobody knows that.
Kyle:  I know, but it . . .
Jason:  Because that person . . .
Kyle:  . . . it’s a psychological thing to connect the thing over with.
Jason:  That sounds very hard for me because the person doing this doesn’t know you, and they don’t understand this thing. They don’t know they can do that. And there’s no other place on the internet, can I just add crap to URL and it works, so no one’s going to do that until they really understand who you are. I wouldn’t depend on any of that. Something that they’ll just do just like they would anything else. But GoLookAt.com is a great thing. If that alone does it, man.
Josh:  So his website shortened tag share better. Not just shorter, but better URL. It just needs to say ‘Get more people to click on your links.’ That’s your headline.
Jason:  Try this for a week and see. Now how are they going to know? They don’t have a way to test it either. So what? As long as they don’t see anything go down. Right? I’m serious. Why not?
Kyle:  Okay.
Jason:  I would try that. I would certainly try it for a week just to see. I don’t know how we would measure it, or know it, but if something good would happen to happen during that week anyway, I’d probably be a huge Gleer. You know that story about the guy who wants you to send him a thousand dollars a year for stock picking advice. This is what he does. He starts up by sending a letter. And it says, ‘Next week the stock market will go up.’ And you’re like, ‘Whatever.’ And it does. Okay. You get another letter in the mail. ‘This week it’s going to go up again.’ Alright. It does. Next, you get another letter, this time ‘It’s going down.’ And it does. This happens six times, eight times in a row. You’re like, ‘This guy’s amazing, I’m definitely sending him a thousand dollars. But what happened was, he started by sending out 32,000 letters. Half of them said it would go up, half of them said it would go down. Now, whichever one was right, he went to that half and he sent more. Right? So there’s going to be this segment of people who’s going to be, “Holy crap!” and is definitely going to sign up for a thousand dollars a year to get a stupid letter that means nothing. So I don’t see why you can’t take advantage to that effect, and say, ‘Your shit’s going to go up this week.’ All these people are going to try it, hopefully. For some of them, something’s going to happen. ‘We tweeted a bunch of time, I don’t know. You win.” It’s not an experiment. Why don’t you use that to your advantage? Okay. That sounds good. Thanks.
Believe it or not, I have another person to thank. I know. So you see all these microphones around. This is all due to Fred [inaudible] who is right over here. Hey Fred. He hangs out at cospace a lot, which just goes to show again how cool cospace is. And Fred’s doing all the audio, just saw his super expensive audio equipment and he described to me these things I’d forgotten now, whether this is at a 90-degree angle, or 120- degree angle. All the AV guys are like, ‘He’s such an idiot.’ Anyway, all this cool stuff, Fred set that up. And also, if you’re listening to this other podcast, he also mixed it and did a fantastic job. Hopefully. But you’ll see.
Fred has a podcast of his own called Struggling Entrepreneuer. Strugglingentrepreneurer.com. You can imagine what that is about, because it’s also a good name, and interviews people all the time and different phases of their business and it’s a bunch of fun. I’ve been on there once. Maybe I’ll be in there again if I’m lucky.
Fred:  Your posts are always in there.
Jason:  My posts are in there apparently, so there you go. So thanks Fred for doing all the audio.
Sarah:  All right. So next up is P.J. He’s a cospace member. He’s going to read for someone who wants to remain anonymous. So go easy on him.
Jason:  So picking this up, this is an anonymous person. I guess we’ll find out why in a second.
Josh:  I tried to get the person to wear a disguise, but it didn’t go over.
Sarah:  Well, he did. He’s disguised as P.J.
Jason:  Very believable.
P.J.:  Hey, I’m really glad to be sitting up here in front of everybody. Even though this isn’t my thing, so, I did speak with him for about five minutes about more of the situation here. My surrogate, I’ll just say, we help people in neighborhoods communicate and connect. So think, what about people can go build communities around it. I am a CEO that’s very passionate about what I am doing and I’m really committed to what I do, and I don’t necessarily want to have to pivot. But what should a founder do when it becomes evident that the correct pivot for a company’s product leads to an area leads to an area where he has little or no passion? Everyone’s telling me I need to pivot in this direction. Not passionate about it. Should I rework the product until people respond differently, find a new CEO, or what? I have investors.
Josh:  It’s a great question.
P.J.:  I have investors, that’s why I don’t want . . .
Jason:  This is a great question, and that is a good reason to not want to do it in public. This is one of those that’s really hard to answer without being able to do Q & A because what it comes down to is what you really want and I mean in life and those kind of like big . . .
Josh:  Look out there.
Jason:  . . . questions, person. It really gets down to what’s important to you.
P.J.:  Community building is important to me.
Jason:  Yeah, so, no, that’s not what I mean. I mean what you really want. Do you want to be an entrepreneur? Do you care? Is it more important to be an entrepreneur and have a company or is it more important to do something, like build a community. You can be a community leader of five things and maybe that’s enough. That can be enough, you don’t have to be a god-damned entrepreneur. It’s okay, all right? There’s lot’s of ways to be fulfilled and to maybe even add more value to yourself, more happiness to yourself, and those very communities by being super involved in them. You know you don’t have to do this.
On the other hand, if you have investors, you do have a fiduciary responsibility to them, for the company. It could make sense to say, ‘Okay, I do have a real duty, maybe even an ethical one, to see this through somewhere,’ but again it’s very hard without being able to ask questions to come up with something very specific about what that could mean.
P.J.:  He’s giving me some I mean . . .
Josh:  Do you know how much money he’s raised?
P.J.:  No, I don’t. I’d say less than $1 million would be my guess.
Josh:  Okay. So that kind of helps. I would put it in a bucket based on how much money’s been raised and that’s a vague bucket, but really it’s more actually what the investors expectations are around that. If you raise $500,000 and you go try to do something and it doesn’t work, most investors I know, they’re investing at that stage and that amount of money, they shouldn’t be doing that unless they understand that there’s a chance they can lose their money, it’s not going to work. Most of them, I think, would not think your some terrible person if at the end of that you give it an honest try and they feel like you really put an effort in and it didn’t work. Then at the same time, if you, obviously, they can’t feel like you quit to early or you didn’t give it a real try.
But if you’ve raised a lot of money or it feels like you’ve really built it up and you sold that you were going to deliver on this, and you said you’re really committed to it. Then I think there’s more of an obligation to go try to produce a return for your investors or take care of them, take care of their money. From a selfish perspective, just because you might go see them again later and they’re not going to invest with you again, if they don’t feel like you acted responsibly. That’s kind of the fiduciary responsibility that Jason talked about.
I think it’s going to vary in there where you’re at, but it’s like, life’s short. You definitely shouldn’t be working on something you don’t want to do and your not excited about. I think that’s a great reason to say, ‘Great, that’s what we should do. I’m not going to do it, if there’s somebody else that wants to come in and do this or we can find someone else to do this, great, then I should step away and I should expect to give up a bunch of equity if I don’t want to do it. I’m going to give up a lot in that, too.’
At the same time, I think there is also an obligation of, ‘I’m not a quitter. I’m going to try and make the best of this, and see it through, and take care of my investors the best I can.’
Jason:  Yeah. What I heard was that there is another path. There is a correct path to take. It’s not that it failed. It needs to pivot. It’s not a failure. It’s just different and your not up for the different part.
P.J.:  To pivot, I think in this gentleman’s case, I don’t mean to interrupt you Jason, but there’s so many people who have already pivoted into this space and none of them are making any money either.
Josh:  So, it’s not like it’s obvious this is the answer.
P.J.:  Right. Because people are pivoting into [inaudible] or people are pivoting into geo-location or something. There’s a lot of people doing that kind of thing. We’re talking about community engagement within a housing addition or within a local community. I think what you said, is that can be enough in itself, but the pivot, if everyone’s saying pivot into these places where no one is making money, now what?
Jason:  Are the investors one of the sets of people saying you have to pivot?
P.J.:  I believe the investors are maybe putting some pressure on this gentleman.
Jason:  Is it true that the business is really a fundamentally different business from when it pivots? It’s really like, you might as well start from scratch, except we got a team.
P.J.:  When i talk to him it’s not fundamentally different.
Jason:  So, if it’s not fundamentally different, this is why it’s Q &A, but . . .
P.J.:  It’s the passion part.
Jason:  I know, but if it’s not fundamentally different, then why is there no passion anymore, what happened?
P.J.:  Right. I don’t know.
Jason:  Is it a trivial change and suddenly you’re not interested at all? There is obviously is a reason, right? I don’t mean that facetiously, but it would help to know what it is, to be specific about how to fix it. I will say one other thing, especially if it’s a small amount, which means it’s not a big V.C., it’s angel’s, or friends, and family, or something. As entrepreneurs we feel like we go through all this gruff. We’re in our head and we have anguish for all this stuff and we’re worried about what other people think, and there’s expectations for us from our friends and family and investors and other people. What you forget is that when it’s an investor, especially an institutional investor, the investors have heard all of this shit before. None of this is new. You’ve gone seven years and you’re burned out and you don’t want to tell your investors, they know that. They’ve been telling you to take a vacation and you won’t.
In fact, I was once in a board meeting where they literally told somebody, ‘We want you to take a sabbatical for three months. We think it would really help. We can tell you’re burned out. If you keep doing this you’re definitely going to leave, and, I’ll tell you what, if you take the sabbatical for three months and you come back and you’re still burned out you can just leave. We don’t care. We’ll still pay you for the three months. But, we think you need this.’ Now, that’s a sophisticated board, but the point is that they know. So, if the choice is total flush it down the toilet I don’t care anymore I’m out and that’s it, that’s what you’re facing, then why not? Be super honest. Bring it in and say, ‘Look, I want to work this out. I don’t want to leave you on a break, and, by the way, I’m not going to run out tomorrow. I want to make this right even if it takes six months to a year to make it right. Let’s all figure out how to make this right so that I’m not running it anymore.’ I’m guessing this person doesn’t want to do that.
P.J.:  No. He’s a very high level of integrity.
Jason:  So, offline, or whatever you want to call it, we could talk a little bit more in detail and then come up with a specific way to do that or a couple of ideas for how that might come about.
P.J.:  I’m sure he will be talking to you.
Jason:  Yeah. I’m sure. Anymore it’s hard to do in the abstract.
Josh:  Yeah. It definitely comes down to that. With everything in life you’ve got to balance when you quit. On the one hand, the winners are people that never quit, by definition. On the other hand, you’re stupid if you’re just banging your head against the wall.
P.J.:  You have to cash out at some point. Well, I cashed out.
Jason:  Are you speaking as you now or this other person?
P.J.:  I’m speaking as me. Yeah. I’m sorry.
Jason:  Oh. Well, congratulations. It’s not helping.
P.J.:  Then I will just step aside.
Jason:  Okay. Thanks. That’s good. Great. Okay. Number five.
Sarah:  Okay. Franz.
Jason:  All right. Name and company.
Franz:  Franz-Smile and the company is Trackster.
Jason:  Trackster. Is it spelled in a normal way or is it x’s and no vowels?
Franz:  It’s C-K.
Jason:  It’s Trackster. Okay. Well, you’re tracking something. When we first had a child, we had this log. My wife made this thing in Excel and it was every little thing. It had a poo-poo and a little poo-poo not a big poo-poo. It was green. It was brown. It was green and brown. It was green on the left, brown on the right. Her left, her right. You needed it because, god forbid, that poo-poo didn’t come out every day. We’re sitting there for 24 hours and it was a whole mess. There is software that we actually stared using to Trackster that stuff. So to me, the last time I had to track something that closely was that, so even though the name’s not there, I’m going with “Poo-poo Tracker”.
Franz:  I need to check into what song you’re listening to. Well, it’s completely different from both of those. It helps students at UT track events on campus.
Jason:  Events. Isn’t there all ready an event calendar somewhere that you can look at?
Franz:  Yeah. But, it’s not very helpful.
Jason:  Why?
Franz:  Because it’s just a list in an e-mail and you can’t really tell what’s going on.
Jason:  But, it’s a list in an e-mail of what’s going on, so why can you not tell what’s going on?
Franz:  No one looks through it because it’s in plain text.
Jason:  Okay. So yours is not. It is instead what?
Franz:  It’s an interactive tool to help students find what they’re interested in and just explore.
Jason:  I have no idea what that means. Is it a calendar? What do I see? What is it?
Franz:  You put in your interests and what type of academic events you’ve been a part of and what you want to be a part of and it supplies you recommended events based on that information.
Jason:  So, it’s a recommendation engine for events?
Franz:  Mm-hmm. It helps you.
Jason:  But just the UT or is that just where you’re starting because the data is there and so on?
Franz:  It’s starting with UT because I’m going there right now.
Jason:  Right. So it grow into next, for example, “Oh, you go to this event and other things in Austin, and you didn’t even know there was an event to do X,Y, and Z, but it’s telling you that and that’s super interesting to you, right?
Franz:  That’s a possibility. But we’re starting out with academic events.
Jason:  Okay. So what’s the question?
Franz:  The question is what’s a good way to engage students to use the service or incentivize organizations to promote the tools?
Jason:  Well I can tell you how I got 25,000 people, at UT, students, to use my software at UT when I was going in. And hopefully this won’t get me arrested because it was not legal.
So what I did is, at UT, I don’t know if they still do this, but there was a student directory in the mainframe system, which was UT cat, right? I don’t know if they still have UT cat for the, okay. Anyway, so, it’s a green screen, right? You know what that means? No? Okay. This is not going well. All right. Anyway, you know what telenet is? SSH? Have you done that? Oh, good. Okay. It’s like SSH, except that’s your whole world. It never gets better than that. There’s no Iphones. That’s it.
So you can go into this thing and you could search for a name and find names and it had an e-mail address for the student, in the UT cat, which of course now, I don’t know if they could even do that nowadays. So what I did is, I logged in and I searched for nothing, which gets you to the first name, and then it shows you ten names. Then I would do a screen print, except instead of a printer, I sent it into a text file. There’s all the characters, right? And then I would have the thing hit enter on the little search line, which gets you to the next page. And I did that however many, whatever 50,000 divided by ten. Well, I guess I know what that is, but divided by the page size is, and there’s this big ass text file. Then I wrote a script to go in there and get all the e-mails which is pretty easy because they’re all in the same place, because it’s the mainframe so it’s not like it word wraps or anything. Mainframe’s don’t do any of that kind of stuff. They just puts stuff in the same place every time. It’s really nice for that screencraping.
Then I got all the e-mails and guess what I did next? I emailed everybody! More than once and said hey, I got this really cool thing called Fast Scheduler dot com. It schedules all your things at UT. E-mail was pretty sweet already. Like I doubt if a lot of them even checked that, at that point. Even knew that existed. Anyway, then it got in the paper and all this stuff, and I got calls from the tower, where the people with money are. Which I thought I was going to get reprimanded from sending e- mails. But they didn’t know about that because they’re not that sophisticated either. And so what they really brought me in there is, that they wanted to have Fast Scheduler because they had no way of doing online class scheduling, and so this sounded pretty good. And here’s the big offer. So this is my first offer to have a company of mine be purchased essentially. And the offer was, that I could work there for $7 an hour. That was the whole offer. I declined the offer. Anyway, that’s how I got a lot of students at UT to look at Fast Scheduler. I’m not saying I condone it, I’m just saying it’s one way to do it.
Franz:  So, I get into the computer school system, steal the e-mail addresses and spam everybody, all on Jason’s suggestion?
Jason:  No, I’m not condoning it, just making an example.
Josh:  My suggestion was pay them, students especially.
Franz:  What if you don’t have any money to start off with?
Jason:  Actually Josh’s good stories about getting college students to do stuff. Right? The trilogy, wearing the shirts and everything. Right?
Josh:  Well, that’s still spending a lot of money though.
Jason:  Yeah. Right. But you don’t have money, right?
Josh:  So that’s the whole thing. It’s like so many people come with technology. I’m going to build this thing. It’s cool. I built this thing. Just logically used it and forecasted all the time and it’s great. And they don’t fundamentally understand that that’s the easy part, most of the time. Like that’s why it’s so easy to come up with. Yeah, like I know how to do that. I want to make something that let’s you check into a location, so I can make a list and I’m going to check in, they’re going to hit the check in button and then it’s going to write that into the database. They checked in. And that’s the easy part. The hard part is getting people to do anything. Like anything at all. For free or payment, is really hard. And so that’s like having a really good business idea is often more about having a really clever idea about how you’re going to get people to do something, than about what they’re actually doing. And it’s so depressing, right? Like you want it to be that, you thought of this great idea and now it’s the thing. And actually it was those damn marketing guys, that was what mattered, is that they knew how to go sell it.
Anyone know what Proactive is? They’re advertising that everywhere, right? I don’t know that much about it, but I’ve seen it and I’ve read about some case studies about it, and there’s nothing really that special about it. They’re just really good marketers and they figured out how to get it to the right people and the right way and the right marketing, and they went and pumped this product out, right? And made a crap load of money.
But then they didn’t really spend, it wasn’t like they had some really great secret sauce that actually really worked better than everything else, maybe someone will dispute that, but that’s just stuff that I write. I think a lot of things are going to come out that way so, for you that’s the thing can you come up with some really clever way to get it in front of everybody?
When Facebook started, when Jason did what you’re talking about, sometimes you can get in ahead of the system and then it’s like those don’t even apply anymore. You’re in a whole different world, can’t do that anymore. It used to be search marketing was a way you could do stuff and now it’s totally saturated and overpriced. It’s not nearly as good a place to get things.
Jason:  I have some ideas for you, because Josh is right that is the hard part for almost every company on earth that’s the part that’s hard.
I have some ideas, because having tried to monetize Fast Scheduler I actually went down some of these roads, I have two ideas for you. The way to think about this is who is it that actually does care? The individual student sitting there in Jester, thinking god I am literally living in prison, I’m literally in a prison, did you know that Jester was designed, do you know this story about why a Jester looks like a prison? Jester was the second largest dormitory on earth, then this dormitory in Russia burned down so, now it’s the number one biggest dormitory on earth. Jester, and if anybody has ever seen it, it’s just a bunch of sepia toned brick with these tiny little windows, just like a prison. The reason is the person that designed it, designed prisons. That is what they did, they literally designed a prison and that’s Chester, with the fold out beds and all that kind of stuff and much the same activity to, from what I can tell.
This person sitting there in Jester mourning the fact that the bed has to slide away or else they can literally touch the walls, with both hands, they don’t care at all about your tool. They just don’t care. So the question is who does? Who has a vested interest in seeing you succeed? It’s not anyone in Jester. So I can think of at least two groups of people who care. Number one, is all those event organizers because they have the exact same problem you have. They want to get people to come to their event and they don’t give a crap, partially, because they just don’t and partially because they don’t know about in the first place. They have the same problem.
Your friends, for example, you can go to all of them, all of the events on campus, which you know obviously because you probably scraped it from somewhere and you can tell them all, ‘Hey, it’s in all of our interests to get all of our attendees to use this site. Because even though we will of course, introduce them to other events the people that came to your event already know about your event your not losing someone, but if we all do this we will all get more people to come out to events period.’ All of the events should promote to all of their members every time, you’re service cause it is in their personal interest to do so. Now will it make them do it? I don’t know but that’s a lot, that’s suddenly a whole lot of promotion because they want to.
The other set of people and this is getting more into the business aspect, is there’s this whole eco system around you. People who also want to get to the students who don’t care. Like [inaudible] who wants to deliver the pizza, and the bars on 6th street, who want you to go to that bar on 6th street right? There’s all these people who really want to get to students. It’s like one of the ideas I had for Fast Scheduler, if you just say advertising it’s like well, just a general advertising is not going to do anything, but what could, is you find just one business, just one, that’s somewhere in the campus area or in the 6th street area and so forth, just one, who wants to use you to get to students and give them the whole run of the site.
It’s going to be, what did you say the name of the thing was? Trackster. Pretty good name, but maybe, so anyway, it’s going to be ‘The sponsor, Trackster.’ It’s going to say, ‘Trackster brought to you by Papa John’s.’ Maybe not quite as obnoxious right, but it’s going to be just Papa John’s, or just [inaudible], or just the bar on 6th street, or just Sherlock’s but they probably don’t want students, I don’t know or maybe they do, I don’t know but just one and they have the whole run of the site. It’s in every newsletter, it’s on every page, it’s on every everything and it’s still not that many pages. It’s okay, that’s not what you’re selling that’s what you sell to generic advertisers.
There is someone who is sort of desperate like [inaudible], they went bankrupt. They probably want people to show up and they probably have some advertising budget and maybe it’s cheap, just to start out $100 a month. Maybe when you get more traffic you can ask for more, just get something, some kind of interest to get it going.
But here’s the other thing whoever that is they can distribute it. One of the things that I did is I talked to, I think it was Papa John’s operator near campus, and I said, ‘Hey, you should put a flyer on top of the Papa John’s box,’ because you know they always do that, ‘That goes back to me so, you’ll sponsor the site, you’ll promote the site, and if people follow they still see you again, you’re not losing anything, in fact, it’s better.’ Like the coupon thing except it’s you. And that’s what you want. You want every pizza that goes into your [inaudible] to have you on it. Big, big flyer they can’t miss it on top of the pizza. They can help distribute it and in exchange they’ll have advertising. Don’t worry about, am I still doing that in a year? No, your not, you’re doing this for a month just to see what the hell happens, right? So who has a vested interest in seeing you succeed? Go make friends with them and see if you can help each other spread the word about each other.
Josh:  To me that sounds a little bit if I can paraphrase, that part of that was, get together all the people who have stuff that nobody wants to see, put all that in one place, and then tell all the people that nobody wants to listen to to yell as loud as they can, and see if then lots of other people see it. And then go to the company that’s bankrupt and try to get them to pay you.
So while that may work for Jason, because he’s a really good sales guy, I don’t really buy it. I think you need to think about, why is someone going to use it for the first time? What’s the benefit to them? For the URL better-er guy, it was we get more people to click on the links, right? Once you nail that thing, we’re all just assuming that’s actually true, that it’s going to make more people click on the links, but if that were true, that’s all you need to say and now I know why I will try it.
Jason:  Well, I know what the one thing is, it’s more sex. It’s got to be meeting people. It has to be meeting people. It has to be.
Josh:  Exactly, so that’s what it was. Get our newsletter and you’ll have more sex.
Jason:  Yes. It’s got to be more sex. It’s more sex.
Josh:  So, what’s the substitute for more sex? You can’t actually say ‘more sex’.
Jason:  You could. You could say that.
Josh:  Well, you could, but, you’ve got to really wrap your head around, the way you described it was like here’s what you’re going to do to get me to do the thing that you want me to do. You’re going to come in, you’re going to put in your interests. Nobody wants to come in and put in their interests! They want the thing at the end. They want the what am I going to get, and . . .
Jason:  Sex.
Josh:  . . . sex. And I’m going to tell you what events to go to. You know, honestly, you’ve got to work on that one. That doesn’t sound to me, like, super compelling, really big problem. Like, wow, I’m going to really take some time out today and make sure to go sign up for this thing because I’m really concerned, I don’t know what events to go to. You’ve got to figure out how to make that more sex.
Jason:  So you say you don’t want to go there. What do you want to go to?
Josh:  He doesn’t want to be a porn site.
Franz:  Yeah, that.
Jason:  No, no. I mean, you’re not, you’re a means to an end. Everyone’s crawling around UT, what are they doing? What are they spending 90% of their time doing?
Franz:  Looking for sex.
Jason:  You sound so dejected. Is it true? Maybe it’s not true. Maybe they don’t want sex. No sex.
Franz:  The thing we’d all get to do is just, like, help save time, and better your own personal goals.
Jason:  Right, because that’s what everyone at UT goes around, you know, ‘Hey dude, what are you doing tomorrow night?’ ‘Dude, I’m bettering my own personal goals. I’m going to be so much better. You know why? Going to an event. Found it on Trackster. I’m so going to be better tomorrow than you, dude. What are you doing?’ ‘I’m going to a party, dude!’ ‘Oh.’
Josh:  ‘Going to have sex.’ It sounds kind of harsh, but you’ve got to get over that, right? You’re describing as you’re going to help better yourself. That’s not how people talk, and that’s not how students talk. I’m bald, I’m not like a student any more, but I’m pretty sure that’s not how they talk.
Jason:  So, the goal is, of course, to, you don’t have to say that, obviously, but that’s the kind of thing, okay. You could widen that a little bit and say ‘meeting people’, because, maybe I go to the event to learn stuff, but I go to class to learn stuff, and I know the events and the meet-ups and stuff are also about learning and stuff. Oh, okay. But I think it’s fair to say, without invoking sex, that also it’s to meet other people who are interested in the same stuff you are and to gather, do more of that stuff. That’s what the astronomy club is. You learn a little bit in the astronomy club, but mostly it’s going to be in the astronomy classes, and the club is just hanging out with other people who like to look at Mars, again, at 9:45 at the top of RLM. That’s what we’re doing. Okay, sex is probably also there and that may be the end goal, but it’s also meeting people, and that’s fine.
So, you could go there, meet people. Meet more people who like the stuff you like. Here’s one. Everybody says you go to college and you discover who you are and you find out, ‘Oh my God, there’s other geeks like me who like weird stuff like looking at Mars all the time, and everyone kicked the crap out of me in high school. And here, if I go to the roof of RLM, or wherever the hell it is, right, I get to look at Mars with other people who don’t think I’m weird. In fact, I might even be able to have sex with some people up here! Because they don’t think I’m weird, it’s not a turn-off. It’s the reverse!’
Okay. So even if you stop short of the sex, it’s still, you could tap into that I am going to college and part of that is I’m accepted by the other people on this roof in the middle of the night, and we should be. I can see look towards Mopac and I can see there’re these awesome parties that I’m not a part of over there, and I wish they would turn the lights downward, because I’m trying to see and there’s light pollution, right? Like that’s, everyone’s thinking that, so maybe you can tap into that aspect. Leave off the sex, even though that’s there, obviously, and go to the ‘find other people just like you. You’re not alone, people do want to do this.’ Did you even know that people are doing this? This is how it is. UT is one of the biggest campuses on Earth, if not THE biggest undergrad program on Earth, if not the biggest undergrad program in the country. This is part of what the experience is; you get up and let them go to sex in their own head and you don’t say it. It is absolutely true and they can go there themselves, and they will, of course. Does that sound good? So what is your line now? You should sign up here because you will?
Franz:  Meet other people with your same interests.
Jason:  That sounds better. I think if you worked on it, you are on the spot obviously, but if you can think about… I think that is better. Meet other people like you. For example, do you have a secret hobby? Do you have a secret interest? I guarantee you, on a campus of 50,000 people, there are hundreds of people who actually share that. This is how you find them, because you certainly cannot broadcast it. This is how you find them. That sounds pretty awesome. Okay. Thanks.
Franz:  Thanks.
Jason:  Do we have time for one more, Sarah? Great, come on up.
Josh:  Do not worry, you will feel pain.
Jason:  We will apply pressure to the pain point.
Man 2:  Oh, I cannot wait now.
Jason:  Your company name is?
Man 2:  There is no company name.
Jason:  Okay. That is fine. What is going on?
Man 2:  There is a pain point when you into a big, huge store like Wal- Mart or Costco, when it comes to finding a little, narrow jar of olives from a particular place. Also, maybe you care about a sweater in some other stores.
Jason:  Okay.
Man 2:  Because I have a hardware background, I know I am really close to solving that problem with…
Jason:  What problem?
Man 2:  Finding that little jar of olives.
Jason:  Easy, I go to Amazon, it is there and I buy it. What else have you got?
Man 2:  Okay. Well then those stores are in trouble.
Jason:  No kidding. Of course they are in trouble.
Man 2:  Yeah, definitely.
Jason:  They started with the book stores and closed most of them down.
Man 2:  Yes.
Jason:  All right? Now they are moving on to the other ones, and maybe they won’t close them down, but if I want a specialty thing, I go get it.
Man 2:  Yeah.
Jason:  By the way, I said, ‘Amazon’ and not even that, I go put it into Bing, isn’t the whole point of Bing is that it can find me 27 different ways that I can get this thing? From the wholesale and some weird-assed retailer who is drop shipping directly, who even knows why, I don’t care. All I know is there is 20 things to pick from, they all have weird ratings. They have shipped these same olives 17,000 times and their rating is 4.9 out of 5, fine, buy it. Right?
Man 2:  Mm-hmm, very true. Very true.
Jason:  Alright, so?
Man 2:  Most of the businesses, well most of the money, or consumers of that can happen, it happens indoors unless it is always going to be on the map.
Josh:  You have a chip that finds where a product is in a store?
Man 2:  Yeah. I think of it as earphones. It is just something really simple that you can add to your phone and it would be like earphones.
Jason:  I am in Central Market, I am shopping around and I got my normal stuff, and I remember, ‘I need these weird olives.’
Man 2:  Mm-hmm.
Jason:  I go to the olive section, because I know where that is. I can ask somebody. I go to the olive section. I know it is not where the coffee is. I go to the olive section, right. There is this wall of olives and I think, ‘Oh my God!’ Is this chip accurate enough that it is going to tell me it is right over there?
Man 2:  Yes, it would.
Jason:  Yeah?
Man 2:  Yeah.
Jason:  How does that work?
Man 2:  It would be like sending centimeter resolution, location systems are not that good, they are statistical and not always . . .
Josh:  You should start with Home Depot; I am always lost in Home Depot.
Man 2:  Yeah.
Jason:  That is right.
Josh:  Home Depot and . . .
Jason:  Although the people that go to Home Depot, they just know where everything is.
Man 2:  Yeah.
Jason:  They are contractors, they would never walk around with a thing, right?
Man 2:  That’s very true, and now they have more people waiting at the front to help you out.
Jason:  So what is the question?
Man 2:  The question was, how can I find what I want? You said you can go on the net and do a search.
Jason:  Yeah, I think everyone does that.
Man 2:  There is another issue that businesses have, they want to know if their floor layout is working. There was a story where some guy [inaudible] several walked in and then…
Josh:  What’s the question?
Jason:  Yeah, what is the question?
Man 2:  Sorry. Businesses want to know . . .
Jason:  No, what is the question? The question is…
Man 2:  Oh, I’m sorry. The question that I have is, it is like an H.R. question. Where are the technical people?
Josh:  You want to hire people?
Man 2:  Yeah, sorry. I want to hire people. I want to hire like an . . .
Jason:  Do you have money to hire them with?
Man 2:  No, it’s really . . .
Jason:  That is not really hiring people.
Man 2:  Oh, okay.
Josh:  Indentured servitude.
Jason:  Right. So, you want people to be co-founders and are technical to do something?
Man 2:  Exactly.
Jason:  You have to have some great idea, which they are also going to buy into, wholesale, and they are going to want to forgo salary and do whatever they are going to do. They are going to quit their job for six months, or they are going to work on the side, whatever they are going to do, where they are there investing themselves into this. Whatever it is, which is obviously undefined at this point, because you talked for a while and we do not know what it is yet, if you could define what it is and make it really exciting, then maybe you can find someone who also thinks it’s really exciting and you’ve found a co-founder. Now, also it would be nice if it wasn’t just an idea, but the Home Depot in Austin, Texas, is all ready to go. We just have to build it, but they’ve already signed and said, ‘Look, we’re going to do it. We’re going to be a pilot. We get it. And if that works, we’re going to take it.’
It would great if that was all done which you should be able to do if this idea is so good. You don’t need a prototype. You don’t need a little gadget that fits in your ear. You should be able to walk in and go, ‘What if I had . . .’ and whatever the thing is which you haven’t figured out yet. It should be so amazing that they just go, ‘Oh my God. We’re in. We’re in. You should build this and come back. We’re absolutely in a 100 percent.’ And you say, ‘But I didn’t even tell you the price yet.’ They’re like, ‘Fine, $1,000 we’re in.’
If you have that, it sounds pretty good, but you don’t have that yet.
Man 2:  I did a little built in prototype to see how well . . .
Jason:  And, so, what store owner said I’m in for $1,000 bucks? Right. So, that’s the thing to do, forget prototype. You’ve got to get them to buy in on the thing before it exist. You don’t need anything to go figure this out.
Man 2:  Okay.
Jason:  When I started WordPress engine I started by just, I literally had nothing, no website, no domain name, no company name.
Man 2:  Right.
Jason:  I didn’t know what the features would be. I did’t know anything. I just thought, like, I need this thing for my blog. My blog goes down every time I get on HackerNews. So, it seems like other people might have this problem with their WordPress Blogs, maybe. I mean it’s plausible, right? And, so, maybe I’ll go out there and talk about how we won’t go down. Not TechCrunch themselves, but, like, if you’ve got an article on TechCrunch we wouldn’t go down. That kind of thing. And then also it would be faster in the process. Like, your site would load faster and something else maybe. I have a bunch of ideas about what those something else might be.
And I just started talking to people. I had nothing, no power points, nothing. I just started saying, well, if I had this thing and it was word precedent, it was scalable, would you buy it? And they say, ‘No.’ ‘Why not?’ ‘Well, you know, I do get a traffic sometimes, but it’s not all the time, like, I’m not going to switch and do all this stuff and pay more money and all of this crap just for that. No.’ Well, ‘Okay. Did I mention that also we’re super good at security?’ ‘Oh, no, you did mention that.’ Yeah.
WordPress isn’t actually that insecure. It’s usually the hosting company and other things around that and anyway that’s us. We do the blah, blah, blah, things to fix it. ‘Oh, that’s sounds better. I don’t want to get hacked.’ It’s sort of like backup ware. Nobody buys backup software and then they crush. One day they lose everything and they’re like, ‘Crap’, and then like the first thing they do when they get their machine back is they buy the backup software.
Anyone who’s gotten hacked is the same way. Because when you say hack, that someone got hacked, they go, bing, ‘I’m in. How much did you say, $50 a month? In.’ Right? Because they’ve had that. So, I talked to literally 30 different people and some of them got off on the security, some was the speed, some was the staging area, whatever. At the end of it I found, again, nothing. I had nothing but yacking like this, right? I finally ended up with, okay, there’s three things that if I do this they’ll pay $50 a month, price to, price has to be part of it to. Then we started and of course then people brought it. I already knew that because if I could find 30 and out of the 30, 20 said they’d do it, there’s going to be 20,000 of them to in a market as big as WordPress. So, you could do the same thing. If you had thing that was so good that you could find several store owners in Austin who said, ‘Well, I’m definitely in on the trial. I need to see this work. I would pay $1,000 . . . ‘ or whatever the hell it is. If it worked, if you found them and then you know if there’s three in Austin then of all the chains and stuff that you know then you multiply by orders of magnitude.
However, I don’t know what it is you’re talking about yet. But this is what you do in order to try to get the proof that this is even something worth doing. What is the idea? Is it solving something they give a crap about? And then you can go find a tech guy to give up his job.
Josh:  And then you can go get money easy because you’ve done all that other stuff and you just got hire a tech guy because if you’ve proven all of that it’ll be easy to go get a check and say, ‘Hey, look, I’ve got these customers and they say they’re going to pay me this month once I build this thing, so, give me the money, so I can build the thing, so I can paid by them and . . .’
Jason:  Yeah, it sounds so easy. I’ll just go talk to them and discover some stuff. It’s really hard and most people don’t do it. Like I’m telling you this and if I had to bet, I would bet definitely, like, very good odds that you won’t talk to anyone. The next best odds is you’ll talk to maybe three people and then make a decision one way or another. Neither of those is right. But that’s what most people will do. I don’t know if you’ll do it or not. I just bet it because that’s what people do. You tell them to go talk to 30 people, they hear me to say 30 people and they’re like, uh, and they go talk to three people and sort of make up their mind. That’s not it. It’s 30 people, not 3, 30.
We want to do some new stuff at WordPress Engine, right now. I’ve talked to 20 people. I need to talk to some more. I think I’ve got it, but I’m still going to talk to more. I’m not confident, even though I’ve talked to all of those people, even now and all of these things, that’s the deal and most people won’t do it and, so, they won’t put in the time.
Man 2:  Okay. So you need certainly a better sample to get a better idea or if something’s going to be . . . .
Jason:  You say things like people have problems finding the olives. The question is this: Does the person who runs Central Market think that’s a problem? It could be a problem but if they don’t think it’s a problem it doesn’t matter. There are a whole lot of things that have to work. They think it’s a problem, people aren’t buying olives as much as they should or whatever the hell. Which is probably not true; people go to Central Market to buy weird olives. All these things have to be true for them to think this is a problem. So it’s unlikely that they do. But you might find something else out. You might go in there talking about the olives and they go, ‘God, I don’t give a crap about olives but let you tell you something. My warehouse is a disaster. I just lost four pallets of olives because they were in the goddamned corner, we have nothing tracking that and all these olives that I imported from . . . that are supposed to go on the shelf rotted . . . ‘ I guess olives don’t rot so maybe that’s a bad example. But you know what I mean. Something rots in the corner because they didn’t know it was there. ‘I need the tracking system for the warehouse.’ Oh.
Who knows what you find out when you go talk to the people who are living this thing and have the money. I also would not be married to the nebulous sort of idea that you have, but if you have certain skills, like you know I’m good at geo, I’ve got some mobile, or whatever the hell it is that you’ve got, just be super open minded. ‘Oh, he just talked about the warehouse. Let’s talk about the warehouse some more.’ Don’t be fixated on this one idea. What is going on in there that maybe you could build?
Man 2:  Okay. So find out what they really need in there in basically the real world where they’re facing problems?
Jason:  Basically, the real world. Yeah. That’s the best place to be. Basically that. That plus a little bit of Narnia. Something like that. A little bit of Neverending Story. Great. All right. Thanks.
Well, thanks everyone for coming. This was a bunch of fun for me anyway. Did everybody like that? You want us to do this again sometime? Yeah, awesome? Well then we probably will. I think Sarah’s about to fall over, right? Let’s have a round of applause for Sarah, too. Organized the whole thing. And of course she’s a fundamental member at cospace so it just proves again how awesome cospace is. So anyway, thanks everybody for coming. See you soon.
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