Category: My Startup

Seven Somethings That Keep Me Smiling

The journey of a founder is tough.  You have to get comfortable with rejection, learn to bounce-back from mistakes made due to a lack of knowledge or experience, and keep hoping that your vision will come to reality.  All the while motivating others, building and shipping a product, and finding ways to make the business profitable!   

 

While I’ve been in startup land for 7+ years, it’s officially been 3 years since I started my entrepreneurial journey as a founder.   It is a hard transition from founding engineer to founder, but I’m actually happier, calmer, and more confident than I was when I first struck out on my own.  Not because business is booming, in fact I’m personally poorer and have more gray hairs than I did when I started, that’s just what happens when you bootstrap!  I’ve gotten smarter and stronger when it comes to dealing with a host of issues to the point that it now takes quite a lot to phase me.  No I haven’t become a robot…  I’ve just learned that spending too much time lamenting means that I’m not spending time enjoying how far I’ve come, and that it will cause me to stray off course from where I’m headed next.  

 

Before becoming a founder I had small bouts of depression and anxiety, and over the past few years I’ve had a long list of really bad things happen to me.  I’m fortunate when they just happen one at a time, rather than all at once!  But I’ve learned to push through all of it.  I don’t let life’s little stresses get in the way of what I love doing most, and I have to be honest and remind myself that I chose this journey!  

 

I know that not everyone is built like me, and they shouldn’t expect to be!  I had a rather tumultuous childhood as an immigrant that has helped me build up a reserve of resiliency.  However, even a few years ago I sought out professional help, but was told that the most I needed was to learn some life coaching techniques.  They have helped me out tremendously.  I say all this because in the wake of a fellow founders death it’s important to recognize that we are all after all human, social creatures, who need support, and nurturing.  There is no shame in going through a rough patch, and actively seeking out help.  The key is to seek it out!  

 

The journey of a founder is a hard one.  Over the year’s I’ve come up with my own secret formula for staying even-keel, and much of it has been inspired by the life coaching techniques I’ve learned. Here are my 7 somethings that keep me smiling:

 

    1. I do something silly!  Like braving the cold waters of  the Santa Cruz bay to body surf with Lyndi.

 

    1. I do something just for myself.  Indulging in massages, chocolate, red wine, and always setting aside time to do yoga.

 

    1. I do something serious. Taking the time to acknowledge that I have comforts and personal freedoms that people, especially women across the world don’t have.

 

    1. I smile and do something for a stranger, without expecting anything in return.  My personal favorite is smiling at those who scowl,  opening the door for them despite their less than peachy nature, or letting them cut in line when they are in a “hurry”. 

 

    1. I do something with good and close friends.  I’m fortunate that I have a lot of friends, who care about me.  There are times that I cannot meet with them, but I do my best to make time.  When I do, I keep it simple like playing a  game, talking on the phone, or just enjoying a meal together.

 

    1. I do something aspirational. Reaching out to those who just might be unreachable, and doing it over and over again until they acknowledge my presence.

 

    1. I do something depressing.  I know this seems ironic, but I like to visualize the worst possible failure that could happen to me.  Once I know what it is, I know that I can handle it even if it happens, and I work hard to try and mitigate it as much as possible.

 

My barometer for success has always been and will continue to be having a smile on my face.  It’s how I  know I’m enjoying myself, and doing what I love.  When things start going a little south I try to do 1 or all 7 of these somethings.  You can try these out yourself, but you may have to find your own special somethings. The most important thing to remember is that sometimes you need a little help and guidance to find them, and that’s OK!

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Preoccupations Over Pricing

Using growth as an excuse for not putting a price on a product or a service is just denying the inevitable, a lack of a business model.  So you can wait, raise a bunch of money, and then figure out how to monetize.  Hopefully you’ll then make enough to have justified the investment.  But let’s assume that for the time being you don’t have a business that is fundable, how long are you going to give away your product before you find out if people really value it?

Too many founders tell me how many users they have, which is fine.  Its great to know that people are willing to help test out your product.  But then when I ask them how much those users would be willing to pay for their product I get blank stares. The founders have no idea, and worse yet they are afraid to ask their users for a price point.   Why?  Because they’re afraid of getting rejected.  Well I hate to break it to you but that’s kinda what entrepreneurship is about, getting rejected, and testing whether what you’ve built is actually a value to someone else.

I’m going to leave aside the case of advertising being the primary monetization scheme, it works for content driven sites, but if you’re building a product that you think delivers clear value you should be able to come up with a price point that is appealing to customers.  (Sidebar: if you do have a content site and drive up enough traffic checkout iSocket as one method to monetizing.)

So let’s get back to the notion of building products that deliver clear value, and asking people to pay for their usage.  While you  might not yet have unlocked what that clear value is, pricing a product is just like product development, it requires that you have a series of conversations with potential customers and iterate.  Over the past 3 years of running BizeeBee I’ve changed our pricing at least a handful of times.  I usually do it when we add new features, products, or when I think something isn’t clear to a customer.  I’ve also run a lot of pricing experiments like sending people who were on a free plan invoices just so they’d have to respond to me, and after I’ve calmed them down and reassured them, I can have a 5 minute conversation to pick their brain on why they aren’t converting to paying customers!  Don’t be afraid of pissing people off, especially if they’re not paying to use your service.

There are other founders who have been in business longer than I have that have also played around with pricing.  I really enjoyed this post by the one of MailChimp’s founders, Ben Chestnut, mostly because he talks about how MailChimp delayed adopting freemium until it made sense for them, and focused on profitability first.

Pricing Model

Ideally you’d work bottoms up starting with cost structure and then factoring in margins to figuring out pricing.  But for a new product or service you cannot go through that exercise just yet, because as you increase your customer base, the cost of servicing them will go up.  So you’ll just have to get used to having new costs structures periodically, and re-evaluating your pricing.

Before you even begin the conversation with a user you need to do the following:

  1. Figure out if your product is a point tool i.e. used once or occasionally.
  2. Figure out if your product is embedded into the everyday life of a customer.

The reason I bring up these two cases is because it will help you to decide whether you need to ask users to pay right away or over a longer time period.  If you’ve got a single use case product ask for money right away, because you won’t have any control of its usage after it leaves your business.  If you think your product will be used continually and its more of a service, then you can offer a subscription model.

I’m not going to get into the length of trial periods in this post.  All I’ll say is, you need to experiment with those too!  What I am for is to consistently convey the value proposition in marketing messages, and then make sure they first interaction they have with the product coincides with that marketing message.  Hard to do, but necessary to increase conversions from free to pay.

Figure out Substitutions and Competitors’ Pricing

  1. If your product is displacing an existing product or behavior, ask your users: What are they currently using as products, and the price points of those products?   
  2. Next tackle the pain associated with its usage.  How much time does it take to use the product?  (Including: setup time, training, tech support, and customer service calls.)
  3. Are there certain features of the existing products that they cannot live without? (If there are features, then you won’t be able to sell them on your product unless its a completely different value proposition, or your features are better than your competitors.)

I don’t believe you can compete on price, ever.   You have to compete on the values you’re offering.  I say this because I’ve lost customers to my competitor and my competitor has lost customers to me.  In both instances it had nothing to do with price, and everything to do with the values we were offering.  Customers who came to us wanted simplicity.  Customer we lost wanted a comprehensive product, that we are still in the process of building, which is fine.  You can fool customers with lower pricing, but you’ll either go out of business if you’re underselling your value proposition or your customers will be unhappy with a low price/low quality product.

How to Set an Anchor

So if you identify that users find your product to be of value then you can put an anchor price.  Here are a few suggestions for how you can come up with an anchor price:

  • Figure out what the ROI of your product is, and how much that is worth to your users.  e.g. Are you delivering new customers to them, or helping them save an existing one?  What is that customer worth to them?  Are you saving them time?  What is their time worth to them?  Or are you offering them an experience (e.g. entertainment value)?
  • Figure out their price point sensitivity based on their persona.  Are they someone who cares about luxury and convenience?  Or are they really sticklers about a budget?

For these two you should be able to figure out a range of pricing.  One thing I will note about placing an anchor is that if you do ever want to change it you’ll have to deal with  magnitude.  For example, increasing a $30 product by $5 is feasible, but trying to increase it by $30 will be seen as doubling.  Same thing with a $120 product, increasing it by $25 to $50 is doable, but when you hit $200 once again its seen as doubling.

Finally, don’t wait too long to enforce pricing.  What you don’t want is for people to get used to your product, and then start to poke holes in it once you do introduce pricing.  Get them to tell you what value they see it in from day 1.  If there isn’t enough value, then either you’ll need to find a new base of customers or build more value into the product.

Just like I tell the yogis I do business with, you’re in business to exchange values, not to give them away.  So don’t be afraid to set a price, and change it periodically, after all it’s not set in stone!

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How to Attract and Sell to Early Adopters

During a recent office hours someone asked me how I got early adopters for my startup BizeeBee.  I started by telling them about what I did for the first 6 months of BizeeBee, back in 2010.

Conversations Create Converts

I had been doing yoga with a number of studio owners for many years, volunteered behind the front-desk, but I didn’t know how to run a studio.  Then one day I was telling Linda, a fellow yoga practitioner and studio owner, about an idea I had to help studio owners.  I told her it was just an idea.  We got to talking and then basically once a month we would meet at a coffee shop in Los Gatos.   At the time I didn’t even know that Linda would be an early adopter.  I just wanted to meet with Linda, to learn about her yoga business.  I ended up helping Linda through some business challenges she was facing by suggesting ways she could incorporate technology to solve them.  Linda was nervous about using technology, which only made her a more interesting person to interact with.

After the first 6 months, I not only understood Linda’s challenges, but I was starting to think like Linda.  Using my close network, I met with other yoga studio owners like Linda.  I took all of their challenges and started to create paper prototypes, which I then showed them and got feedback.

When we were getting ready to launch BizeeBee in December 2010 I went back to my network, and all those who had given me feedback and asked for them to start using the product.  But I didn’t just ask them to use the product, I also asked them to pay.

Valuing Your Product

After spending months listening to people’s problems with managing their studios and working with current tech products, I just assumed that everyone I had talked to would be an early adopter for BizeeBee.  Wrong.  While many people were excited about what I was building there were few who were willing to move away from their existing way of doing things, and even fewer who were willing to pay for our product.  I didn’t just take no for an answer.  I pushed back and asked them why? Why wouldn’t they switch? Why wouldn’t they pay?  And that’s when I started to learn even more!  I learned all the objection points:

  • You don’t have XYZ feature.
  • You’re a startup, we’re more comfortable with the incumbent even though we think their product is crap.
  • We’re too big for your simple solution.
  • We’re too small for your software system.
  • We want something for free.

Great!  I started to compile all this feedback and conveyed it to my team, because after all I wanted them to understand what was going through the minds of our potential customers.  Plus I figured they’d come up with more and better solutions than me. Then I made it a point to follow up with everyone who signed up but didn’t convert to a paying customer.  This is a practice I still follow.  Why?  Because I’m a masochist who loves getting rejected, but only when I get answers to the following questions:

  • How do leads heard about us?
  • Why do leads reject us? (Something which can only be inferred by analytics tools.)
  • What are leads actually looking for?

Going through this process made it even easier to identify who a potential early adopter was, and moving forward where we should focus our efforts to attract them.

Street Smarts

I made two decisions back in 2011 that most people would think were pretty dumb.  The first was I pounded pavement.  For a $27/month product?!  Yeah I know dumb given the price point, and probably not very “lean”.  Well I’m a big fat idiot.  After launching the product,  I spent 6 months visiting almost every studio I could in SF, NYC, and LA.  Sure there were yoga studios where I got the door slammed on my face, but there were also some who were pretty excited at a founder who was willing to travel a long distance to meet with them. (Hey guess what those people have been customers of BizeeBee now for 2 years.  How’s that for an LTV?!)

I actually didn’t care about making a single sale.  I already knew their push back, because I got it from those who didn’t even want to be early adopters.  I pounded pavement and showed people my face to build awareness.  I wanted the community of yoga studio owners to know who I was because I was competing with a 10 year old competitor who had become pretty well known over those 10 years.  I wanted them to know first hand that there was a new alternative.  Hence my challenge wasn’t to just build a better product, I also had to make sure people knew that I was building a better product.

Then my team replicated this awareness building strategy aka marketing through the following channels:

  • Cold calls
  • Postcards
  • Social Media
  • Content Marketing
  • Referrals from Influencers
  • Partnerships

Yeah its a lot.  You thinking building is hard, try selling.

Scaling Sales

I hired a sales guy, actually I tried out a couple.   I thought that they would be the answer to all my sales problems. Wrong. I ended up spending more time answering push back they received from potential customers, that’s when I learned who the real closer was. Me.  As a founder you are the most effective closer on the team.

I fired all sales guys, and instead came up with sales scripts.  I gave the scripts to my teammates to do calls.  But once again I didn’t count cold calls as actual sales, I just thought of them as awareness building.

So where is BizeeBee now?  Doing all of this has lead to a nice sustainable business with a self-service product.  This is pretty great given that I actually just ran a bunch of sales experiments on the side while focusing mostly on building the product, but I’ve got my sights set higher for 2013!

To stay scrappy and scale sales I know what the next set of challenges are:

  • Shortening decision making time
  • Making the product market itself
  • Even clearer value proposition
  • Discovering more effective distribution channels
This is the part that gets tough, its the part where most people close up show claiming there isn’t enough traction, or the market isn’t ready for the product.  Bah hum bug!  No one is ever ready for anything, its why changing behavior is tough.  Here’s what I do know and why I’m gonna keep at it:  
  • I’ve got customers who have been with me for 2+ years, and I didn’t have to strong arm them into a contract!
  • I’ve raised pricing from $27 to $87, and I still have customers
  • I have leads who keep complaining about my competitors’ product but are forced to stick with them, because we still need time to build out more of a comprehensive solution to meet their eneds.

And that’s enough to keep me bizee and buzzing in 2013!

 

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Conversations Potential Co-Founders Should Have

I recently met up with a friend of mine to have tea and catch up in San Francisco. I hadn’t seen him since he had sold his last company a year ago. He was really eager to get to work on his next idea. As he was telling me his idea I got excited, because I had heard this same concept only two weeks ago. A friend of mine in Seattle had already built the prototype for it! I decided I just had to introduce these two guys to each other because I thought they had complimentary skills (one being amazing at technical work and the other . But before I made the introduction I set both of their expectations. I said, “I don’t know where this will go, but I wanted to introduce you two to each other because you have a very similiar passions and interests. I’ll leave it up to the two of you to take it from here.”

After they chatted with each other they got back to me. They were pretty psyched, because they had both found someone to talk to about their idea. Prior to their conversation they had just been thinking about it and working on the same idea alone. But they were both a little cautious about each other because they hadn’t yet met. They had been in partnerships before that hadn’t worked out the way they had wanted them to.

We all at one point have the problem of the partner who initially inspires and excites us to excel, but then at some point things just don’t work out. Usually one person wants to go in a different direction. We have to be aware of this, acknowledge it early on, but also learn to appreciate what we’ve gained from the experience.

If you’re thinking about working on a project with someone new make sure you take time to not only talk about the project, but also about where you each think you can add value and what it is you want to achieve from this project. While it might seem a little touchy-feely to most, having these kind of conversations helps you understand each other and make sure there is alignment. But it doesn’t just stop there, you have to do check-ins periodically.

I know my co-founder Alex and I are pretty honest with each regarding each others behavior commending and criticizing each other professionally. Everytime there is a decision to be made we make sure we both want the same thing. Its made our dynamic cohesive, and the rest of the team feel reassured that they have good leaders in place.

So before you get into a partnership with someone do the following:

  • Ask them what bad experience they might have had in the past that they want to avoid.
  • Setup a clear standard for communicating both the positive and the negative.
  • Make sure their is alignment when it comes to values and the direction your headed in.

If you’re unsure from the beginning, then take it one step at a time, and express your reservations to each other.

Wanna chat with me and tell me about your startup so I can help you too? I offer 30 minute slots for office hours on Fridays at 2pm PST. Sign up here.

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Blurred vision is better than blindness

Everyone by this point knows that one of the primary tasks of a startup founder is to set the vision for the company.  Yes there are additional tasks such as keeping employees motivated, recruiting new talent, and good old fundraising.  But for now lets focus purely on setting the vision.  Initially, this is one of the hardest tasks because there are three things that determine the vision:

  • What will the product be?
  • Who will the product be for?
  • How will the product and company be built?

Know what you want.

The reason its so hard to set a vision is because as a startup founder you have to know what you want.  When I started BizeeBee I knew I wanted to build a tool for small businesses.  In fact all I did in the first 3 months of starting BizeeBee was walk around and talk about how I was going to build a tool for small businesses.  Had I built any of the product yet?  No.  Did I know who I was building it for? Sorta. Did I know how I was going to build the product and company?  Yes!

1/3 isn’t too bad.

So I knew how to build products and I knew how to recruit.  That was a decent start, and that’s where I began.  People who are about to risk something: a day job, their reputation, or other jobs offers, want to at least know that their leader has a decent idea of where they are going.  After all those who join startups know that there won’t always be a smooth ride, some actually thrive on a roller coaster, but everyone wants to know that there is a destination and their leader has charted a course.  Problems begin when founders don’t have a course, are constantly changing it, or abandon the pursuit altogether, this is by the way the quickest path to demoralizing employees.

The other reason its so important for employees to know where they are going is because they’re participating in helping you solve problems.  Letting them know where the company is headed gives them a heads up to start thinking of solutions.  I talked about how we were going to build a solution for small businesses, it had to be a very simple product with a consistent UI, and one that required little no setup.  Then when it came time to start building those became our guiding principles.

Part 1 of vision setting:  talk about what you’re going to build and set some principles to guide your decisions.

Got market?

I’m not going to get into the whole spiel about finding product/market fit because there are plenty of blogs out there that talk about it.  Figuring out what the product will be takes time.

But the one often overlooked point is how will the product shape the business.  The reason this is overlooked is because too many startups take a brute force approach to product/market fit trying a bunch of different product ideas, instead of trying to understand the market first.  This is also why coming up with a business model or monetization scheme is difficult for most.  Placing too much emphasis on the product and not enough on the market is what is driving many of the feature driven companies to exist.  Its fine to be a point tool if that is what you want, but know it, own it and focus.  Don’t spend time touting how you are saving the whales if that’s not part of your product benefit.

As a startup founder you  need to understand the landscape of the market you are in that means knowing the competitors, understanding the problems of potential customers across demographics, and finally figuring out how to differentiate yourself.  Its this differentiation that will help with product/market fit, creating a product roadmap, and then being able to market your product to customers.

Part 2 of vision setting: figuring out your market and what problem in that market you’re aiming to solve.

If you build it, they may come…

Every startup founder, especially those of us who are technical fall in love with the product we’ve built, and think its the greatest thing since sliced bread.  More than likely its not.  So first give yourself a pat of the back for knowing how to build, then go out and look for who is going to value it.  This takes sometime and can alter your vision.  For example, you might have originally built a product for say a yoga studio, only to discover that it only works for small independent yoga studios or private instructors :)  Well thats ok, at least you know who you’re initial customer base is.  You’re vision has changed slightly but now you can go out and look for more of those customers!

These kind of discoveries are merely detours, not a change in direction.

Part 3 of vision setting: if you’re customers don’t come, go out and find them, and tell them about your product!

No one calls a founder a visionary until they’ve successfully executed on bringing their vision to life.  So even if your vision is less than perfect its important to at least have one that consists of knowing what you want to create and how you want to create it.

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Culture of Constraints

In 4 days it will be the 1 year anniversary of launching BizeeBee my second startup. When I started BizeeBee I was determined to put in place engineering principles that I hadn’t been able to at previous companies.  I also wanted to avoid a lot of bad practices that I had experienced throughout my career such as splitting the responsibilities of development and testing, and product bloat.

I know most startups like to take the quick and dirty approach to product development, and then go back and refactor or rebuild their product.  I think that’s great and we’ve certainly refactored a lot of our code base too.  But I started charging customers from day 1 of launching and had to convey confidence to get them to pay.  So I emphasized quality first and foremost.

My vision for BizeeBee’s product and engineering team was to create a simple and high quality product, and to do so cost-effectively.  I communicated these constraints to my team, and we knew there would of course be trade-offs, but we all agreed to these basic principles to guide our decision making and product development process.

Invest time in talent

In any industry employees are not interchangeable.  I know there are a lot of people who like outsourcing and just want something “built”.  This is fine if you are driving a culture of results.  But I truly believe employees need to be engaged in worthwhile work to produce quality.  So I hire for raw talent, hunger, and patience above all else.  I truly believe this is the only way to attract top performers.  You can look at people’s track record, but many don’t have one, so you just have to rest on raw talent and motivation.

Having a talented team is great because it means they will invest time in learning, after all talent is just a byproduct of learning, practice, and refining a skill.

So I invested the time in letting my engineers learn Rails and the entire stack of technologies that went with it.  I also had them talk to experts in the field about engineering process.  We adopted an Agile process and pair program.

Trade-off: giving people time to learn and not spend all their time developing means that less features will be built.  I know most founders would be too impatient with this approach, but I guess that’s why its helpful that I do yoga :)

Cost Effective Quality

I didn’t have the luxury of having enough money to hire QA engineers, but then again I never liked how engineers would abdicate responsibility for their code to someone else.  Not having a QA team meant that my engineers would need to test their own code.  So for the first time ever I got what I had wanted: TDD (test driven development).

Trade-off: once again less features are built, but what is built has a high level of quality.

Simple Design & Integrating Solutions

Over the course of my engineering career I’ve read a ton of design books, because my personal mission of becoming an engineer was to build things that improve human life.  So I wanted to build products that had an emotional appeal, and people would derive joy and want to use them all the time.  Life is already full of stress, the last thing I want to do is cause someone to have a bad day because I built a shitty product.

We don’t build everything, especially if we can find a good off the shelf solution.  If we don’t find one we’ll either build it ourselves, and if its not cost-effective then we’ll wait until we can afford to build it.  This of course means we’re spending a lot of time doing research, talking to vendors, understanding terms of service, and understanding the long terms implications of the partnership.

Trade-offs: this can stall product development but its important to know who you’re getting hitched to :)

I can’t speak for other startup founders but as one who wears both the business and technical hat I’ve had the freedom to create a company and engineering culture that I’ve grown to love and can be proud of.  I have to give a LOT of credit to my two developers: Alex Notov and David Grieser who pushed me into implementing a lot of processes and have made me a much better femgineer.  I also want to thank Jesse Taggert for her help with product design, and introducing us to Kevin Fitzpatrick at  Pivotal Labs.  And last but not least Lyndi Thompson our buzz bee who spreads the word about our product and team, and keeps encouraging me to write code and blog posts.

Its been a good year and I look forward to continuing to build BizeeBee in 2012!

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Challenges of Getting Early Adopters, Acquiring Customers & Monetizing

I’ve gotten some requests recently to write a post on how we’ve gotten early adopters at my startup BizeeBee and how we got them at Mint.  I hate to burst everyone’s tech bubble but there is no secret for getting early adopters.  I also want to address two concepts in this posts getting early adopters vs. methods for customer acquisition.  The reason for the dichotomy is that an early adopter is essentially a product tester and product evangelist.  They will stick around forever and are highly critical to the success of your business because they promote your product, but to me they are not really customers.  Why?  Because early adopters are people whom you get by talking to them directly and they help you build out the alpha/beta versions of your product. They’re loyal, and will give you lots of feedback. Customers are the people you pay to acquire through advertising, struggle trying to keep engaged, churn through, and whom early adopters get to buy your product through word of mouth marketing.

Why do you want early adopters? And how to do you get early adopters?

Because early adopters actually prove product/market fit.  Your early adopters are the folks who are going to use your product, give you honest feedback, and will wade through bugs and various iterations.

First you need to figure out who you’re trying to solve a problem for by creating a persona.  Then you need to get out, show them your prototype (preferably one that is paper-based), and then ask them to try out the actual prototype.  Drop-off point #1, people  are busy…  You’ll get a lot of “sure contact me when it’s ready” or “send me access to a demo”.   In reality you need to talk to a lot of folks before you can even get one to respond, play with the product, and give you feedback, which by the way is the whole point of getting early adopters!

The key to getting more early adopters is to think like one.  Figure out where these folks hang out (online and offline), what they read, where they learn about products, and who they learn about products from.  Then go out and talk your product up in these channels.  What you’ll most likely hear is what we heard at BizeeBee a bunch of: “No, we’re not interested.”  So we changed our approach, instead of trying to sell the product to people we started asking “Why don’t you like our product?  Who do you think would be interested in trying this out?” And that’s when things got interesting…

We got some “Well I know this guy in New Orleans who just opened a small studio…” and a “Oh my studio is too big, but our second studio is relatively small…”

Now of course we get “Well I really need this for my vertical, when is it going to be out?” Hook, line, and sinker :)

The final point I’ll make about early adopters is that they’re great for testing out the product’s concept, workflows, and positioning in the market.

And now the challenge begins…

How do you get customers?

When I first moved to the Bay Area in 2004 I’d heard buzz words like social and viral, because Facebook was dominating the market in terms of growth and there were social networks galore.  Now 7 years later I hear countless stories from startups who basically talk about how they hustled by iterating on the product, and finding the right customer base to target until they saw traction like Airbnb and Square.

At Mint we acquired customers through a combination of AdWords, InfoGraphics, and PR in print (blogs, magazines, newspapers, etc.).  PR was the most significant channel but also the most expensive approach, so I don’t know if I’d advocate it for every early stage startup.

What’s more interesting is the approach we took and how we explored various channels, measured the results, measured engagement, and then looked to see a correlation between engagement and monetization.  IMHO you don’t really have a customer until you monetize off of them.

We monetized off of lead gen, which is one tactic amongst a wide array.  The good news is that unlike the early to mid-2000s when everyone was giving away their product in hopes of  making money off of advertising and users were use to everything being free, nowadays users are willing to pay for things on the interwebs, but only for things they absolutely can’t live without…

Acquire first, monetize second?

Call me a capitalist but I’m not sure when the concept of going into business to give stuff away became the norm.  Yes I think you should pay to acquire a customer, that is of course the point of advertising and marketing, but this phenomenon of essentially giving away your product for free in hopes of luring a bunch of users, getting them hooked on the product, and then charging them seems silly to me.  That’s got to be the fastest way to make a hockey stick graph flip 180 degrees on its x-axis…  Even in a platform play there’s going to be a level of engagement (as in click throughs and conversions).   So what’s the point of having a 100k users if you can only monetize off of 1k or worse 1 of them?  You can of course build a cool product to sell it to someone else, in which case that should be your monetization scheme, i.e. exit strategy.

So to summarize:

  • Get some early adopters to fall in love, play with your product, and give you constant feedback.
  • Getting customers is going to be a bit of a shotgun approach, but measure each channel, and test which ones convert to paying.  Be quick about this unless your gut tells you that some channels take longer than others.
  • If you’re going to give something away for free you need to make up the cost of building it somewhere else.

Remember this is a hard process and it takes time.  But it gets easier if you create feedback loops, listen to what your early adopters and customers are telling you.  If the product sucks fix it, if the pricing is confusing make it clearer, if marketing is expensive look for less expensive channels, and if you aren’t building something that people want then figure out what they do want and build that!

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Getting Your Startup Team to Understand Your Customer

Its been 8 months since we launched our first product at BizeeBee.  When we launched we had 3 customers (yoga studios), they saw the value in what we were building, so much that one studio owner  worked very closely with me for almost year.  Since launching my desire to please customers hasn’t stopped.  The buzz bee and I spend nearly every week talking to customers either on Twitter, Facebook, via email, or on the phone.  I’m always asking for feedback on the product, improving how we react to bugs, and listening to their problems.  Why am I so obsessed with talking to customers?  And why do I care about their business?  Because no one on my team including myself has ever owned or managed a yoga studio!  I’ve worked behind the front desk, and seen how they operate, but I myself have never owned one.  Since none of us have lived the life of a studio owner and we’re designing a product for them, we have to learn to think like them.  Here’s how to cultivate the learning and get your team to understand who you’re building a product for:

1. Develop personas

Sure some would say this is easier said than done because at an early stage the customer is constantly evolving.  But if you’ve gotten some level of product/market fit you should have customers that are using your product everyday, or have some predictable rate of use.  Fortunately for us we have a core group that is using the product everyday, and I know this because I log into the admin I’ve built everyday to see what people are doing.  But here’s the next part that is hard for startup folks to do… pick up the phone and give customers a call.  Yes I know they’re busy, you’re busy, everyone is freakin’ bizee. But I’ve learned more about the nuanced ways in which people use our product by listening to them on the phone or watching them in person.  The other great thing is that once you’ve got them on the call you can learn more about their needs. Its finding out the needs that’s the key to developing personas.

To me a persona is a set of personality traits and problems that a person faces.  We currently have 3 personas that our product works well for, meaning they adopt our product and are relatively happy.  I know those who don’t fit the persona will drop off, and that’s fine too.  Here’s what I do with the persona:

  • I convey it to my team so they develop empathy.  Its that empathy that lets them design and build a product that actually meets the needs of the persona.
  • I use it when talking to potential customers.  When someone calls us, I ask them some pretty basic questions to see if they’re a match.  If they are I try to sell to them, if not I tell them they’d be happy with one of our competitors.
  • I put the personas in ALL of our marketing materials.  I want the world to know who BizeeBee is for and who it isn’t for so that I get a match.

2. Build a Community Brand So You Know What to Build

I’ve always had an issue with the vocal minority and using anecdotes to build features, to avoid it even being an issue I actually took sometime to create a customer feedback forum.  Our customers can post bugs, ideas, and vote up  features.  We use the forum as a guide for what gets built.  There have been a couple times when I have literally dropped everything to build a feature because I saw how popular it was and I was tired of losing leads.

I know there are a lot of founders out there who take a “father know’s best approach” to product development.  That works too.  The reason I chose the community route is because I saw that the people we’re catering to weren’t being heard by our competitors!  The other is that people who have a voice that is being heard are willing to contribute their ideas to improve the product and tell other potential customers about it!

Now the one caveat I will mention is that what gets built still needs to match the main persona.  And this is important, because then your team begins to understand the reason why they are building or refining one feature as opposed to another.

3. Let Ideas Simmer

One of the interesting things I’ve learned about the bees is that on average it has taken each one about 3 months to get into their groove.  By groove I mean building, selling, and communicating with one another.  As a founder you cannot rush this process.  I know it can be painful for them, but watching them go through the process and coaching them through it has actually been really rewarding for me as a founder.  People need time to absorb the vision, adjust to their environment, and let the ideas simmer before they really feel like they get what it is they are working on.  There will be moments of confusion and clarity.  What helps bring clarity is having your teammates talk to customers, read customer emails, and understand the dichotomy of who is and isn’t a customer and why (once again refer to #1).  There will also be a lot of “Why don’t we go after this new group?  Why did so-and-so not convert to a paying customer?”  Instead of answering these questions yourself have the last hire explain the answers.  You’ll be surprised by the results :)

So why is it so important that your team understands your customer, why not just have them shut up and build?  I’m no genius nor am I capable of coming up with solutions to every problem.  I’ll admit I need help selling, building, and running a company.  The more I communicate with my team the more they know what’s going on, and in turn can make educated decisions.  Having direct interactions with customers is even more powerful because part of the reward of being in an early stage startup is seeing that what you build actually matters to people and improves their lives, that’s the greatest motivating factor of all!

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Post-Launch Prep II

startup-launchAfter launching BizeeBee I realized that my initial post on what to do after you launch your startup wasn’t enough to cover all the work that the BizeeBee team has done after launching and thought I’d share some of our efforts.  We launched BizeeBee about three weeks ago with a few yoga studios across the nation.  The on-boarding process was pretty smooth, but once we had customers up and running I had an epiphany:  we have paying customers who depend on us for their livelihood, and we are a reflection of their business.  The team’s entire perspective about how we were managing our development process changed!  Here are the key things we added to our process:

1. Backup and Restore

We were responsible for the reliability of our users’ data.  They need this data to understand the health of their business and convey it to their customers.  If something happens we need to be able to retrieve their data and most importantly restore it!  So we started doing backups, initially daily, but will move to hourly.

2. Testing

We could no longer just deploy to production anytime we wanted because our users use our product daily and hourly to run their business.  While continuous deployment is pretty seamless, I was more afraid of introducing a bug during someone’s working hours, so I wanted plenty of time to test and do a hotfix if necessary.  If testing hasn’t been a priority in the alpha or beta, it should become an imperative once you’ve launched.

Even if you don’t have time to setup a full regression suite, you can take a cue from our development process:  we have all our flows documented, and run through all of them manually every night, even if the feature hasn’t been touched in months.  We also test across the three major browsers: Chrome, Safari, and Firefox.  The last thing I want to break is something simple like password recovery or deal with browser interoperability issues.  We’re working on creating an automated suite that will run daily to ensure code quality.

3. Branches

I initially disliked GitHub but now I love it!  It has made branching and merging a breeze because unlike SVN the cost of checking out and switching between branches is very low.  It doesn’t suffer from the same large data footprint that SVN does.  We created 4 categories of branches: master (current development branch), features (one off apps like internal tools), releases, and hotfixes, and also setup a policy of what could be checked into each branch.  For example, once a release branch has been created we can no longer check in new features only bug fixes.  Instituting these kinds of policies minimizes risk of introducing a bug after a release, and people have a good understanding of the ongoing changes in each released version.

4. Track Customer Support Issues

I created an admin tool that lets me login daily to see our user growth count and feature usage.  This also lets myself and my team troubleshoot any issues that customers might be facing.  It has read-only access to their data and the authorization is limited.  If you find yourself constantly querying logs and databases, and have teammates who don’t know SQL or how to query logs then creating a tool that reflects the data empowers them.  And resolving customer support issues as quickly as possible is critical to the quality of your startup!

These are just a few changes we made, but we’ve got even more in the pipeline: more data encryption, site monitoring, and scaling the system based on growth rate.  I’ll post another follow-up once we tackle those shortly.

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A Founder’s Life

On the first day of second grade, I woke up, packed my lunch, got on my bike, and went to school.  I started this trend in second grade, and I’m still doing it.  To this day, how I grew up is a mystery for my dad, and at dinner parties he’ll mention that since the age of 6 I really haven’t changed.  Once I got to middle school and high school both my parents got extremely busy working and commuting.  So there wasn’t really a lot parenting going on, but despite the lack of “adult supervision” I turned out OK.  My parents of course felt bad that they had missed out and took a much more active role in my younger brother’s adolescence than they had with me.

Its been 10 months since I started BizeeBee.  As a founder I’m faced with the same level of independence that I had growing up.  I have “no boss”, I set my own schedule and goals.  Being a founder of a startup is not a cushy job.  Here are some of the challenges that I did not anticipate experiencing and how I’ve dealt with them:

Resolving human conflict is the hardest challenge

Many people think that building a product, distributing it, and raising money are the toughest problems they will face.  None of those are not the hardest problems or even remotely close.  The hardest problem is putting a team together and motivating them to help you find solutions to these problems.  And above all else that is the job of the founder.

Sure you can outsource away your coding, have a PR agency run your marketing campaign, and hire a college student to manage your social media.  But at the end of the day who are the people that you are going to talk to about building a company or bounce ideas off of when it comes to anticipating customer needs?  Or help you put together a kick ass demo and deck to wow investors?  Its your founding team.  These are the people that will stick with you and want to work with you to build something great.  But in order to accomplish things you have to be willing to work with them and for them!

When month 7 rolled along I noticed people were getting stressed out and taking it out on one another.  There was just too much to accomplish and everyone including me was maxing out on throughput.  But it was my job as the founder to keep the team happy.  So I tried a couple things.  First, I setup weekly 1-1s with everyone.  No matter what was going on it was time that each person had to voice their concerns and talk to me.  Second, I checked in with everyone everyday, not to micromanage, but to see how they were doing emotionally.  Third, I planned time for us to spend outside of the office.  Fourth, I started spending time and money on technology that would make people’s lives better: laptops, monitors, and software.  Fifth, no more Saturdays unless there was an immediate deadline.  Sixth, I gave them more time to learn rather than constantly having to produce.  Seventh, I gave us all time to improve our development process and let the team have the freedom to suggest improvements.  Finally, I started delegating and letting people have freedom to own their area: engineering, product, design, and marketing.  I stopped being a control freak perfectionist, and let others have a real voice and the ability to chart the company and product’s course, and above all else create a culture where its OK to make mistakes.

Don’t do it if you just don’t want a boss

A lot of people tease me and ask if I started my startup because I wanted to be my own boss.  Yes that was one of the motivations, but in all honesty, its no what gets me to jump out of bed.  As a founder, your boss is your team, your investors, and your customers.  I realized that early on, and then my primary motivation became the freedom to build: a team, a company, and a product.

Understand your company culture and where it comes from

When you’re last startup is successful you start to think that that is the way to conduct business.  Wrong.  You’re dealing with a new market, working with a different set of people, and your role is also completely different.  I made the mistake of using my past startup as a model, and it certainly backfired on me (see point 1).  What I realized is that the group of people I attracted and hired to work for BizeeBee were completely different from my previous startup.  Yes this is a group of highly motivated people capable of accomplishing great things similar to the last startup.  But fundamentally this group is actually a reflection of who I am, not of my previous boss.  As such they want to be treated the same way I do and have a similar persona.

You must set a clear and consistent vision

You are the only one in the company that can deal with ambiguity, no one else can and should.  You have to set a clear vision of where you’re headed now, tomorrow, 3 months from now, and next year.  People want to know what your goals are for them, for the product, and for the company.  If you don’t tell them they feel like cogs.    Yes the vision may change and when it does, its up to you to let the others know.  But above all else, you have to be consistent in setting that vision and working towards it.  People are working long hours and producing results, the last thing they want is to satisfy someone’s every whim.  They want to know that you have goals that you’ve set and are working towards accomplishing them everyday.

Slow, steady, and smile!

Before I left my last startup I spent 2 months reading about everything: new technology, management and leadership, customer development, and the list goes on.  I learned a lot, but it prepared me for some challenges but I’m still learning.  Everyday there is a new challenge that requires me to rally.  Somedays the challenges are simple, and somedays they’re extremely gut wrenching.  I fight, hustle, and above all else smile!  Because this is supposed to hard but fun :)

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