Andrew: Coming up. Do you ever start an incredible project and then something else catches your attention and you never finish that project? Does that happen to you a lot? Well listen to today’s interviewee talk about how he uses a monitor to get things done. If you have ADD or think you have ADD, or even get distracted just a little bit more than you’d want to; that section of the interview is going to change your life.
Second, of course I am going to ask today’s guest about [??] later in the interview than usual, and finally I want you to hear the section about how big a risk today’s guest took. I mean how big a risk are you willing to take for your business? Listen to what happened when today’s guest put it all on the line, so check out the section about his house. Alright, all that and so much more coming up, get started.
Three messages before we get started; if your a tech entrepreneur don’t you have unique legal needs the average lawyer can’t help you with? That’s why you need Scott Edward Walker of Walker Corporate Law. If you read his articles on entropy then you know he can help you with issues like raising money, stock options, or even deciding whether to form a corporation. Scott Edward Walker is the entrepreneurs’ lawyer. See him at walkercorporatelaw.com.
And do you remember when I interviewed Sarah Sutton Fell about how thousands of people pay for her job site? Look at the biggest point that she made; she said she has a phone number on every page of her site because, and here’s a stat, 95% of the people who call end up buying. Most people though don’t call her, but seeing a real number increases their confidence in her and they buy. So try this, go to grasshopper.com and get a phone number that will make your company sound professional, add it to your site and see what happens; grasshopper.com.
And remember Patrick Buckley, who I interviewed? He came up with an idea for an iPad case. He built a store to sell it and in a few months he generated about a million dollars in sales. Well the platform he used was Shopify. If you have an idea to sell anything set up your store on shopify.com because Shopify stores are designed to increase sales plus Shopify makes it easy to set up a beautiful store and manage it; shopify.com, here’s your program:
Hey there freedom fighters, my name is Andrew Warner, I am the founder of Mixergy.com; home of the ambitious upstart and the place where I interview proven entrepreneurs about how they did it so you can learn from them, use what you’ve learned, hopefully build your own success. Actually I know if you use it your going to build your own successful company, but he hopefully part is for me, I hope you you’ll come back and do an interview after you have. That you will share as much as you’re going to listen and learn from this interviews. In this interview I want to find out where do good start up ideas come from. Today’s guest says his idea came from having to do the same thing over and over and over again. Jim Belosic is the unfunded founder of Short Stack; which helps you customize your Facebook page with contests, sweepstakes and more. Jim, Welcome.
Jim: Thanks for having me.
Andrew: That thing that you had to do over and over and over again, what was it?
Jim: Were basically building tiny websites within Facebook pages. So at the beginning people said; hey you know Facebook platform is here now that we have these apps and fan pages and stuff can we add videos, can I add newsletter sign up, can I add all this other stuff to this customized page. So we said sure of course. So we do it for them and the next client would say they want the same thing. So we would start all over and do it then the next client would say the sane thing. Then even if it was the same client returning they wanted the same type of thing just on a different page. We were writing thousands of lines of code to do the same thing over and over and over.
Andrew: Look Jim I know a lot of people who are listening to us will say; Facebook fan page? that’s so easy to build; you just use Facebook system, you build your own fan page, tons if people use it. Why would they need to hire Jim or use [??] software; but why back then would they have needed to hire a consulting company to do what any kid can do for himself on Facebook?
Jim: Well, I mean the Facebook fan page itself, like your wall as it was called or your timeline nowadays, that’s a great start, I mean, I think that is 100% where most businesses need to start and put a lot of their focus. But one of our focuses was leveraging your fan base. So if you have great people and if you have great conversations, if you can point them to an app or a contest or to watch a video or something like that within Facebook, not necessarily kicking them out of that social experience, that’s where we came in.
And at the time, there were only a couple players in the space as far as doing more of a WYSIWYG approach to it. So really, what we were doing in the background is all the security, all of the data processing, the hosting, all this other stuff, and then just letting the client focus on the sexy stuff, the content.
Andrew: I see. Right. If you want to just use a basic timeline feature of Facebook fan pages, anyone can use it, but once you start getting into contests and start getting into hosting videos and start getting into e-mail collection forms and stuff that we expect to have on the regular web, once you start bringing that into Facebook, it’s tougher for the average person, tougher even for the above-average person, and that’s why they hired you.
And you were doing this work… I’m curious about your entrepreneurial background. You got started even back as a kid, right?
Jim: Yeah. My dad, he’s an entrepreneur and self-employed. I think back then we just called it “self-employed.” And he was an architect, and I always thought I wanted to be an architect. But even when I was 10 or 12, I always wanted something. I always wanted a new radio-controlled car or a model airplane or something.
And my parents were, at the time I thought they were really strict, but now I look back and I thank them, because they said, “Well, if you want it, you need to earn some money.” So I’d mow our lawn or whatever, and then the neighbors would say, “Hey, Jim, would you want to mow our lawn too?” But my dad said, “You can’t use our lawn mower. That’s for our lawn. So if you want to have this service, save up your money and get your own lawn mower.” So then next thing I know, I’m doing the neighborhood lawns and I have money and I can have my RC cars and stuff.
So that lesson, I applied it throughout my life, whether I was doing freelance design or website stuff or whatever, just reinvesting in the company, I guess.
Andrew: And that quote from your dad, “If you want it you need to earn the money,” is something that you still follow to this day. You haven’t raised money to build this business. You’ve bootstrapped, and you’ve had some knocks as a result of it. But everything you built, you built because you earned the right to build it and you earned the right to service your customer and you earned the right to build your business.
And we’re going to see how that happened, how this bootstrap business was built, and we’re going to talk about how you went from being a service provider to doing software, and we’re going to show people where you got your customers and how you built up your business with them. But how did you get into consulting in the first place?
Jim: I guess for me, the answer has always been yes when anyone asks for something. When I was.. well, I call it my college years even though I didn’t really go to college. When… I had this job; I was working for a sign company, and it was a great job. And then one day, one of the owners says, “Hey, my daughter is coming back from college on winter break; would you like to take her out?” I said, “Well, no, thank you; that’s the boss’ daughter; no, I’m not interested,” even though she was beautiful and I thought she was totally out of my league. So I politely declined. And then he said, “Hey, she doesn’t know anyone in the area; just take her out,” whatever.
Anyway, the next thing you know, I ended up marrying her. But when you’re dating the boss’ daughter and working at the same company, it’s a little awkward. So I immediately knew, “OK, I can’t work here anymore; I need to do something on my own.”
So I just started doing freelance graphic design and freelance web design nights and weekends. And I was really lucky to have some cool clients, who kind of pushed the bounds. Any consultant is a consultant because they’ve learned over time. So over time, I knew what worked and what didn’t. And the consultancy just kind of came out of that experience.
Andrew: And you started a consultancy nights and weekends? That’s how you built it up?
Jim: Yeah. Yeah, basically…
Andrew: I’m sorry?
Jim: Yeah, basically. You can sleep later on in life, I guess.
Andrew: And that’s kind of the way you also started ShortStack, by working on it in the spare time after you build up your consulting company?
Jim: Correct.
Andrew: So you had your consulting company. So, Kirk, you had your consulting company, you were running it full time at some point. You were getting enough clients to run it full time. Life seemed good, but there was something about the client work, or the clients, that was frustrating you. You gave Jeremy an example of a phone call that rang early in the morning. Jeremy – our pre-interviewer. Can you tell the audience? This is one of the reasons why you said ‘I’ve got to get out of this and discover my new start-up.’
Jim: Yeah, we’re on the west coast, and at that time a lot of our agency’s clients were on the east coast, or in London, or wherever. If something goes wrong on the web, and the website is down, your phone starts to ring. When it rings at 4 a.m. I’m a little friggin’ wigged out when I wake up anyway, it takes me a cup of coffee to get going. So you answer the phone, and people are screaming. You have to go from full sleep to full troubleshoot mode. It starts to get really stressful. And then when they start calling my account execs too, looking for answers, and I come into the office and they’re crying, you know it’s time to make a change.
Andrew: Customers would make your account execs cry?
Jim: Yeah.
Andrew: For what? What would they say that would make an account exec cry?
Jim: It’s always the end of the world when something isn’t working. Even if it’s as simple as a Facebook page is not showing their cat video that no one sees anyway, or whatever. We’d have the best clients, and then we had some of the worst clients. I don’t really know exactly what was said, but when they make personal attacks when it’s a software problem or a data center problem or something like that it’s just really difficult.
Andrew: And they would start making personal attacks. ‘You jerk, you’re supposed to take care of my website. Why aren’t you paying attention to it, how can you be sleeping when my site is down,’ that kind of thing?
Jim: Exactly, we pride ourselves on having awesome customer support. Even when we were an agency we’d bend over backwards. I think you get frustrated to tears when you’re doing everything you can and it’s still not good enough.
Andrew: And at that point you said, ‘I’ve got to look around for some product to build because I can’t be in the consulting business any more.’
Jim: The thing that was scary was, if you are a consultant or a small agency, focusing regionally or nationally, you may have 5, 10, 20 clients at any given time. Some people have less; some people have one or two. What’s really scary about that is let’s say you have five. If you lose a client, January comes around and they go out to bid, and the next hottest agency gets the job, you’re just out 20% of revenue, maybe more. As we started to have that churn, sometimes we’d win a great job and then sometimes we’d lose one. It was always this struggle to get the next one, get the next one, and it wasn’t rewarding any more. We weren’t able to focus on what we really enjoyed doing.
Andrew: The product that you ended up building is smart because as we’ll see it ended up doing well. And the process that you took made sense. You said ‘What are we doing over and over again? How do we start making this into a consumer-facing product that we charge for?’ But were there other attempts before that? Ideas that you tried to productize that failed?
Jim: No, this was actually our first attempt. But I think the reason that it worked is because we’re huge believers in dog food. We dog food our own products, we eat our own cooking, or whatever you want to call it. This product wasn’t designed to be a product. It was designed to be a tool to help us. What we ended up actually doing is after ShortStack was launched and successful, we started going back through some of the other internal tools that we had built, and we were going ‘Hey wait, could we turn this into a product? Could we get this work too?’ Because if you make something to speed up your own day, chances are someone else could use that too.
Andrew: When it was just internal how did it start developing? Do you remember the first version of this internal product, and the next and the next?
Jim: Yeah, Facebook, a lot of the time they were using a lot of PHP as the language. So our first iteration as an internal tool was basically this big huge PHP array that was really ugly. But at least one of our account execs could go into this file and they knew where to make a couple adjustments so it would update without having a developer. That was thing. We had account executives, and then we had developer staff. The developer staff’s time is very limited, because they are always focusing on the next big thing. Therefore, if we could get our AE’s to do the work for us, then it would save us a thousand times.
Andrew: [??] account executives, of course, are the people who talk to your clients. So, if a client would say “hey, can you make this change for me,” then you want the account executive to be able to go into the PHP code at the time and make the change?
Jim: Yes.
Andrew: What kind of change could they make with this?
Jim: Things such as if an image needed to change, some paragraph text, or a video, or something like that. It is very simple, but at the time it was pretty amazing to be able to put up these videos up on the page or something. Therefore, the developer would put together the framework, and the AE would be able to go in and identify these areas that they could change.
Andrew: So, you have a big block of text and someone who does not understand what they are looking at, and the developer says, “see this big block of text right here? If one of your clients wants an image, here is what you change in this block of text to add an image on their Facebook page. If what they want is a video, here is what the line that you change and how you change it. That’s what it was, a big block of text a “how-to” guide that showed people how to go to the right spot.
Jim: Yes. Basically, our developers would put comments in the code such as “DO NOT TOUCH THIS.” Do not touch anything below this line, because you are going to mess up everything.
Andrew: OK. I see. So basically your developers were the whizzywig interface. What you see is what you get, if you ask the account executives. All right. What is the next step that you took?
Jim: I really have to thank the clients that we had at the time because they were pushing the limits of what we could do. They would say “well, it’s great to have these vodeos, but I want to show a whole playlist, and I want people to be able to share it with their friends. I want people to be able to make comments. I want this form so they can enter a contest,” and all these other things. A lot of our features came directly from the users. We discovered that looking at the code and editing it manually was getting very difficult. So, the second generation had a little bit more polish and actually had a graphic user interface. You could choose things from drop-downs. You could paste a URL in a field and hit “save,” but that was sort of the “ah ha” moment in which we said “wait this thing is getting pretty good-looking. Maybe we could just let the clients do it themselves.
Andrew: All right. You had that in mind, but you still did not have a product that was pretty enough for clients to use, right?
Jim: No. Not even close.
Andrew: So, what do you do now that you have this thought to start getting it toward a product that users can utilize.
Jim: You roll the dice. That was the really scary moment. We saw this glimmer of potential, and we thought our clients are so happy with this platform even though it is so clunky. If we really made it polished, I think that there is some potential here. Yet, we were already doing a forty, fifty, or eighty hour work week, and then we considered building this other thing on top of it. We were like “how the heck are we going to do that?”
Andrew: Right. How do you do that? I have talked to consulting companies that have tried to create products, but they never got it off the ground because just as they were getting it going the client would offer them a big opportunity to make money, so they would have to do it. Conversely, the client would yell at them for not spending enough time, and they would have to put their product aside. What did you do to make sure that you could actually create this vision of yours?
Jim: We had both of those problems. I think that the main difference was absolute hunger. We were hungry. We needed the money, and we had a great staff. For better or for worse, it seems as if we always become friends with whoever works here. You start to look at them not as your employees but as your friends or as family. You start to get nervous and think “I could cut three or four of you guys, and that would give me the revenue to hire another developer or whatever, but how can we do it so we can keep everyone here.” That just means belts get tightened, and when you’re hungry, you have so much more focus and drive. I tricked myself into believing that working into 2 o’clock in the morning was my hobbie as opposed to watching TV or playing with RC cars or whatever.
So we just did that for as long as it took.
Andrew: Do you have any kids?
Jim: Yes. I have 2 kids. Actually now they’re 3 and 6 so, you know, at the time I had a 3 year-old and a pregnant wife. So that’s pretty entertaining too.
Andrew: Yes. With that you still found time to build a business and you said it’s because you’re hungry and you had pressure.
Can we talk about that letter that your wife discovered?
Jim: Yes.
Andrew: What was that letter?
Jim: Well, you know, like I said, you have the staff who is your friends, your family. And they have family to take care of too. So for me payroll always come first.
So I found myself paying payroll and not the mortgage which is not really recommended. It was a gamble and, you know, you find yourself going to the mailbox everyday before your wife so you can grab the notice from the IRS or whatever.
But when the IRS has certified mail, they come and knock on your door and you have to sign it. And my wife says ‘Hey, what the hell is this?’, that’s when you have a big sit down talk and it gets really real.
Andrew: Back to that in a bit but for now I want to continue with the software.
You now have this product that you’re spending nights and weekends and your RC time developing. It’s time to start getting real users on it.
How did you get a real person outside of your company to try out your software?
Jim: You know, the very first stage when we unveil is actually again friends and people who kind of worked in town at similar aids. These are something you just call them or email them and say ‘Hey, we have this thing that we’re building. Try it our. You can use it for free. The only thing that we ask is that you tell us what improvements you want’.
After that, you know, we had a little bit of a mailing list, you know, probably 100 people of clients that we had in the past or current clients and we started saying ‘Hey, this is what we’re doing. Check it out.’ And it really snowballed for us. We were really lucky but I think when you focus on the product and the product is desirable, it will snowball itself either way.
Andrew: And you let them use it for free and you got feedback from friends.
What kind of feedback did you get from them? What did you learn that you didn’t know on your own?
Jim: You know, since we had been focusing on the software side of it, we started to become a little disconnected from our agency work. You know, when you have exact stealing with these guys on the frontline, they’re the ones talking to the clients. The client says ‘Can I do x, y or z?’. when you kind of put yourself on the bubble and just focus on the software, you don’t hear as many of those requests.
So doing the beta and again listening to the client was really important. So we were lucky to get some really, really good feedback and some features that we never would have thought off on our own.
Andrew: For example?
Jim: we never put as big on an emphasis on contesting as everyone else did. We thought it was good but you know, we didn’t really decide to make it this huge feature but everyone else [??] over their heads said we have to collect this data. It wasn’t the flash, it wasn’t the aesthetic, it wasn’t how pretty it is. The agencies and users want data, they want the hard evidence of did they sign up for my mail list? Did they make a purchase? Are they going to visit my store? Did they download a coupon?
And you know, I blame myself for the early stages because, you know, my background is in graphic design so I just wanted everything to be nice. No one cares about that.
Andrew: I see, I see. And do they care about it now?
Jim: Some, yes and no. You know, the bigger the brand, the more emphasis on aesthetic there is but we still think, you know, the function is really the key. And it’s still a learning curve for us because we hear about all these guys that are doing this really, really deep analytics, and they’re data mining and everything and it’s just not attractive to me. I always go off gut, but when you’re dealing with a brand that’s multinational and they have billions of customers, it’s really important to get into that data.
Andrew: It’s so interesting that even though you had all this experience, and we assume that everyone wants design because Apple trained the world to love to design, that data was what was bringing customers and what customers demanded. Today you have incredible customers just going off of what I see on your website. On the home page alone I see nbcnews.com, I see Ford Racing, I see Knott’s Berry Farms, AMD, Mint [SP], lots of great customers.
One thing you told Jeremy that I don’t understand about this process. You said, ‘Everyone wants Facebook permission dialog. We said we’re not going to allow it.’
What do you mean by that?
Jim: If you’re familiar with Facebook, if you connect to an app or something like that, you get that Facebook dialog that says, ‘This app would like to do X, Y and Z.’ It wants to get your friend list, it wants to . . .
Andrew: Post on your wall.
Jim: Yeah. All this other stuff. When marketers see that, they go, ‘Oh, can my app do that? I want to grab all that data.’
I think that’s great. If you know what you’re doing and you have a good reason to do that, then go ahead and get it. For our purposes, there’s so much that you can do organically or white hat, where you don’t need to steal all that stuff.
We’ll have someone come to us and say, ‘Hey, throw up permissions because I want to know all their friend lists, and I want to be able to access their friends and get their emails and all this stuff.’
What are you going to do with that? You’re going to just spam their entire friend list or just post onto their wall. What are you going to do? You’re going to have this massive kick back and it’s just going to be terrible. We protect ourselves by disallowing some popular requested features.
Our feeling is, if someone wants to hear from you, they’ll subscribe. They’ll like you, they’ll subscribe to your newsletter, they’ll subscribe to your YouTube channel, whatever. We’ll let the user go through that, don’t go and spam them and their friends in order to try to get more visibility on your brand.
Andrew: I don’t know this part of the business well of Facebook. What kind of spamming can somebody do? If I’m really aggressive and I say, ‘I want to get more customers on my mailing list, and get them to bring their friends to my mailing list,’ what kind of aggressive stuff could I do?
Jim: You can send invites, you can send notifications, you can send all kinds of stuff . . .
Andrew: I can create a page that says, ‘Click this button,’ and I give people an incentive to click this button. Maybe, ‘If you click this button, you’re going to have rock hard abs like that.’
The person clicks the button, permissions box comes up, all the permissions are set to yes, person doesn’t really pay attention, gives me that and gives me all those permissions. I understand immediately, I have they’re email address, and I don’t have to have them type it in. What else do I do? You tell me, what else as a get abs quick schlocky marketer, what else would I do?
Jim: Let’s say that immediately you post to their wall and it says, ‘Jim has just signed up to use rock hard abs. You should too.’
Andrew: ‘Jim’s abs are now rock hard because of this. You should too.’
Jim: Totally. That goes out and it’s not in the users voice. My friends would see that and immediately hide it or flag it as spam or something like that. What people don’t really realize is that Facebook tracks negative feedback, and negative feedback includes hiding a story or unliking a page. Reporting it as spam is, of course, the worst negative feedback. There’re all these other little points that you can gain and once you get enough negative feedback, your app is shut down.
Andrew: Until then though, now I’m on a person’s wall and maybe I can also get on their friend’s walls because the app will post to their friend’s walls, right?
Jim: I would have access to their friend list, so I can target their friends and I can say . . . and this is without using a Facebook ads vehicle, I can target their friends and say, ‘Hey! Jim wants you to come here to get your rock hard abs too,’ or whatever, so you’re getting notifications. You’re getting Facebook spam or social spam.
Some of the non-identifiable data is really interesting. A lot of that you can get through Facebook Insights. It’s interesting to see who your users are and, you know, what locations they’re in and stuff. So as a marketer you can geo-target or you know you can target based on interest. But when you’re trying to get the identifiable data so that you can face to face spam that’s where it gets a little scary.
Andrew: Oh, I see. You’re saying in addition to collecting their email address when they click the button to rock hard abs, I can also find out more them: male, female, age and so on and target them.
I still get spam like this all the time on my wall, maybe because I accept so many people as my friends and they all try all kind of apps. I end end up getting it on my wall and I hate it and I always feel bad for hiding or reporting spam when this stuff comes up because if someone wants to write on my wall I want them to feel comfortable doing it on my timeline. But I guess what you’re opening my eyes to is they don’t even know that it happened. I should just mark it as spam. They are pissed just like I am.
Jim: Right. Unfortunately it’s the developers who give people the keys to do this and you know, I think that they’re developing for a large brand or something, something where the data is going to be going to be used with the best intentions, I’m all for it. Because that’s what it makes Facebook or social media in general so cool. It’s that they’re is interesting targeting but as as a DIY tool, I mean, giving them all this power it can get out of hand really quick.
Andrew: So this is the kind of stuff that I wish that Craig Newmark would have talked to me about.
I used to take my video camera and if I saw someone at a conference I would just start asking them questions. And I think the one interview that I couldn’t post was one with Craig Newmark because I kept asking him questions and his answer was always ‘Well, whatever the community wants you give it to them’. And I’d ask him a question that was a little challenging ‘What if they ask for something that you can’t do. How do you know what you can and can”t listen to or should or shouldn’t listen to’ and he’s say ‘Whatever the community wants. I don’t understand.’
And I think it’s because I must have caught him at a bad time but that just doesn’t make sense. There has to be some decision made about what to listen to and what not. And, anyway, I just couldn’t get anything more than Just listen to the community [??] and I just can’t publish that.
So I understand your thought process. You’re not going to listen to everything the community says. There’s certain things that you’ll do, certain things that you won’t. One thing that you decided to change was [??] because you watch someone use your site.
What happened when you watched them?
Jim: One of the things that I would recommend to anybody watching this is user test and test frequently and often and even when it’s painful. Steve Krug is one of the most guys brilliant guys out there. Awesome.
So we user test as often as we can and you know, like you said, I am watching this user and the first step to create an account is fill out your name and create an user name and then just to make sure you’re not a robot, fill out this [??]. And I see somebody’s [??] and I see somebody’s [??] and I don’t know what the hell that says. And I know I’m going to have to take a couple of times. But to watch one of your clients do it, one of your users that could potentially buy your product and it’s failed and he’s frustrated and he does it again and it’s frustrated. And he put in a user name that was unacceptable so we’re throwing error dialogs up where he can’t even see it. He’s so focused on the [??] and then it’s just snowballing and he’s doing it in user test. Like he’s not even actual user. He’s so frustrated that I know he was just going to abandon, he would have gone on to something else and we would have lost a client.
So you see that and your heart is racing and you’re going ‘Oh, my God. This is my baby and the guy can’t even create an account.’ That’s why we do it because then we can make a change immediately.
Andrew: And so even back then you would bring in a friend and watch them use your site and see where they were having trouble. If they were getting tripped up with [??] it means you need to rethink the way that you ask people to type those scrambled letters that [??] brings up on their screen. If the dialog box wasn’t being seen, you noticed that they didn’t notice it and adjust your flow.
All right. I can see all that. One of your disturbing discoveries was that people was that people didn’t care about design which you care about. And you started to take out graphics.
Why did you take out graphics and change colors and how did that impact your business?
Jim: You know, one of our first iterations, our first public iteration of ShortStack when you could actually go on and use it as a DIY tool, we called it the Fisher Price model. It was, you know, big buttons with lots of colors and drop shadows, and it was pretty darn ugly now that we look back at it. It was very heavy in design. We did because we thought, ‘Well, if we make these buttons bigger, people will see them and they’ll use them,’ or, ‘If it has these colors it will show a certain type of personality.’
What we realized is they’re using a tool. They want to come in there, they want the page to load as fast as possible. They just want it to work easily, they want things to be clean so they can focus on their own design.
We only really realized that through user testing. Strip everything out and everyone says, ‘Wow! This looks so much better and so much more professional.’
Andrew: And the page starts to load faster.
Jim: Exactly.
Andrew: And they’re happier with the product. There’re two things that I need to talk about. How you started charging people and what happened when you started charging them, and also about how you grew your audience. You only had 100 people on your mailing list, that’s pretty fricking small. You can only have so many friends. Even someone like you is limited to certain number of friends. I know you want to go bigger, as we’ll talk about.
Where should I start? Why don’t we start with charging? You decided to charge. Everybody else would say, ‘Go for mass. Build yourself . . . make yourself as part of people’s lives, embed yourself on their Facebook page, and then they’re going to love you and grow.’ That seems to be the Silicone Valley way of thinking.
Why didn’t you think that way? Why did you decide I have to charge people?
Jim: I guess I was naïve, now that I look back on it. The Silicone Valley mentality is, ‘Grow this audience and then hope for an exit. Get your product with a bunch of users, and then hope that someone comes and acquires you and you get a big pay day.’
For me, I wasn’t really in that world, and I’m still not. I want to have a product we gave away for free, Verbata [SP]. We still have a free plan, which is awesome for us, but I servers to run, I have staff, we want marketing and advertising that we have to pay for. We have to charge. I don’t know of any other way to do it. We started out small. Our first plans were $5 or $15, or something like that. Even at that small cost, it helped us cover our overhead and start to make that transition to where we could shut down the agency.
Andrew: That was a goal, right? No more calls at 4:00 a.m., shut down the agency, focus on products. I’m about to have Ash Maurya on to teach a course. He’s the author of ‘Running Lean.’ He says that you should start charging early and, it seems like part of the reason for it is because the price is a part of the product. The other part is to learn more about your customers, to see what they’re interested enough in to pay for.
Do you have something that you learned because someone had to pay, that you wouldn’t have learned if it was free?
Jim: Yeah. I guess we did. We learned how important certain features are to people. If you gate your pricing based on features, you can learn very, very quickly if they care about it or not.
At first, we thought white label was going to be key. For us to . . . on the free plan we fly our logo at the bottom, it says, ‘Powered by ShortStack.’ At paid, we thought, ‘We’re going to remove that logo and everyone is going to want that removed so badly that they’re all going to pay us.’ Very few did for that reason. I guess our logo isn’t ugly enough or something. We should make it bigger and make it flash or something.
That’s me coming from my design background. I thought, ‘I want it to look the way that it should look. I’ll pay a few bucks to remove this logo so I can resell it to my client and make a profit.’ It really wasn’t as important to people as we thought. They were paying for other features. They wanted to be able to export their data easier. They wanted to be able to see more analytics. They wanted to be able to serve larger audiences. Stuff like that was really important.
Andrew: Wouldn’t you just figure that out if they were using the product for free? ‘Hey I want to serve larger audiences. I want more data.’
Jim: I think with our model we wouldn’t have learned that because for free, we can only give so much. Without funding or whatever, like I said, I have to pay for my servers. If we were allowing free members to serve these large audiences and stuff, it would be unsustainable. There’s no way that I could pay for it.
Andrew: I see. How do you start charging people when your product was free?
A: Like you said, charge as early as possible with a couple of new products that we’re releasing. We’re very focused on minimum viable product. What is the absolute minimum feature that we can have where someone will give us a couple of dollars. Once you have that launched, then worry about all the big stuff you’re going to add on down the road. But if you can launch and charge early, those are the best users, when they know that it’s going to have some flaws. We still flew the beta tag, we were ShortStack Beta even during our pay period. People knew that there was going to be issues and that it was going to be a little bare, a little sparse. But some of those people still use us and they’re our best users because they’ve been with us from the beginning and they still give us that great feedback to constantly make improvements.
Andrew: How did you know what to start charging for? I guess you tested removing your logo and you said hey, not enough people are moving over. How else did you figure out what to charge for?
Jim: I don’t know. I guess it’s just trial and error. It’s just gut. Some of it is gut, where you say, I think an agency or a larger business is really going to be interested in this feature, so therefore I’m going to gate it to a higher price. For the consumer level, someone who is just doing it for fun or doing it for their cat’s page or something like that, they’re probably not going to need to see all these in depth analytics. They’re probably not going to be serving a very large audience. I’m fine giving them some stuff for free. Then, like you said, there is no right answer. The only answer is I don’t know. You have to start somewhere and then make adjustments.
Andrew: I see. Justin Mayers said you can’t build a sustainable business on $5 a month. You were charging $5 a month. How did it come out for you?
Jim: I disagree. You can do it, but it has to be based on volume. You have to have something that is attractive to a larger user base. One of the ways that we actually set our pricing amounts was we knew a couple of players in the field that were more enterprise level. They’re operating at a pricing of $5000 a month or more, if they’re serving Fortune 500 companies. So we thought, if we can have similar features, but with a more DIY approach, we can charge significantly less and kind of hit what we call the vast middle. There’s guys who are offering services for free and they’re very simple. Then there’s the enterprise level, which is $5000 or $10,000 a month. If we can be in the middle somewhere, then we charge a nominal fee, give them 99% of the features. I think it’s a pretty great user base.
Andrew: Now, though, you’re charging a minimum $30 a month.
Jim: Correct.
Andrew: How did you come up with $30?
Jim: It just kind of fell into a sweet spot, I guess. We’ve kind of charged anywhere from $5 to $300, depending on the plan and $30 seemed popular. We add features and remove features and see what’s going on. We’ve always grandfathered our users onto the plans. It’s one of the most important things you have to do. Your CEO might frown upon it or whatever. Well, look at Netflix. They tried to change their pricing and it was this huge PR nightmare.
Grandfather your people in. They’re giving you loyalty, so give them the lower price. We have people who are paying us not much at all for some pretty big features right now, but we love them. If you can grandfather them in, then you can test a little more and you can see, someone is actually willing to pay a little bit more. We’ve actually had some of our larger clients, we went out to dinner with one of them and he was, like, please, charge me more.
Andrew: Isn’t that great when people say that?
Jim: You guys are awesome, giving it away. That’s really good to hear. You know you’re doing something right.
Andrew: All right. One more thing and then we’ll get to the house and what happened there. Users. So now you’ve got your product. You know what’s going to be free, you know what’s going to be paid. The basic idea of the product is anyone who has a Facebook page and wants an easy way to add videos, contests, etc., to their site, they could just come sign up for your service and start adjusting and designing their Facebook fan product, their Facebook fan experience for their users. You need to get more people in the pipeline. How do you do it?
Jim: MailChimp is one of our . . . they’re kind of my mentor company. Ben Chestnut [SP] is one of their founders and he’s a brilliant guy. I always find myself reading his blog and trying to figure things out.
We ended up doing an integration with them to bring their product into ours and make it a little easier for both user bases. We flew out to Atlanta to go meet with them and talk to some of their engineers and stuff, and I asked the same question to him. MailChimp had a 5- or 10-year head start on me. I said, ‘We’re trying to buy some banner ads on this site. Does it work really good for you? I saw your banner ad there, should I do the same?’
He said, ‘Jim, focus on the product. It’s the only thing you need to do. Focus on the product. Don’t worry about the ads. Don’t worry about anything else. Make it a good product.’
I was like, ‘Well, that’s a stupid answer.’ I wanted the magic bullet. I wanted to say, ‘Oh, I can buy a banner ad here and that’s all I need.’ That’s really what we did. We focused on the product. We didn’t have a whole lot of expectations. I still have a white board that says, ‘1,000 users,’ on it. We drew it in dry erase. We filled it up with dry erase marker like a thermometer so when we got to 1,000 users . . . our expectations were low. I think it’s because we were boot strapped. We didn’t have investors where they said, ‘You have to have 100,000 people by X.’
We let it grow slowly. We thought if it’s really cool, then people will tell their friends, or maybe they’ll see our little logo at the bottom of the app.
Andrew: That was huge. I’ve heard from people who offer this freemium [SP] model that if it’s a product that your end users’ users will get to see, just putting your logo on the free version will be enough to start growing your business and giving you a cycle because more people will see the free product and the logo, click, and start signing up. Some percentage of those people will end up buying and paying you per month. The rest will keep perpetuating this publicity machine. That’s one of the things that worked for you. I heard that worked for Clickie [SP], clickie.com.
Jim: MailChimp did the same thing. If you’re using their free plan, if you send out emails, it says, ‘Powered by MailChimp.’ One of the things that I would tell your audience is now, all of our apps that our users have created, we serve 900 million likes on Facebook. That’s 900 million people that could potentially see our little banner at the bottom, and I can’t buy 900 million impressions on banner ads. I don’t care how big my email list is, it’s not that big. Having that kind of free logo thing is totally key.
Andrew: It doesn’t work for every business. Obviously, if you’re selling cosmetics on an ecommerce site there’s no way for people to put a logo on people’s faces. If you have a product that your end users’ users will get to see, then it seems to work. What do you mean by serving 900 million likes?
Jim: Let’s say that you have a fan page and you have 50,000 likes to it and you’re . . .
Andrew: Got you. [??] I can’t be on the free plan with you, I can’t be on short stack, the next high up, I have to be on full stack, which allows me up to 100,000 likes. That means 100,000 people hit the like button on my Facebook fan page.
Jim: Correct.
Andrew: Okay.
Jim: If you’re using a short stack app [??] for a contest or something, then we say . . . OK. This page, let’s say it’s for a celebrity or something, this page has 100,000 likes and they’re using a short stack app for their contest, so we aggregate that and we say, OK, that’s 100,000 in the pot.
Andrew: I see. You are serving, the number was 900 million people, you’re servicing Facebook fan pages that combined have 900 million likes on them.
Jim: Correct.
Andrew: The reason that number is important for you is everyone who hits like is a potential viewer of the fan page and that’s because of the way that Facebook decides what to show people in their screen.
Jim: Yeah. The 900 million people, they have a potential of seeing the app that the user’s created and if they’re on our free plan, then they can . . . if they enter the contest, maybe they see our little logo at the bottom. A lot of those, of course, are paid users where they’re not seeing the logo, so they don’t really know who built the app. That’s what’s really nice is we go white label relatively inexpensively. It’s because we want to make sure that agencies and do it yourselfers and stuff, if they have a client, sign up for our service but then resell it to them. The client is paying for your knowledge and your design expertise and your management. We’re providing the platform but if you’re paying us $30 a month and you’re reselling the service to the client for $300 awesome, good for you.
Andrew: I see, I see. If I’m a designer and I have a client who wants me to manage their Facebook fan page I can use your software. Pay the $30 a month to manage their site and then charge them $300 for the service and the software.
Jim: Yeah, you can put a little “powered by Andrew” on there if you want. You know, that’s fine. We have a couple of agencies that are serving hundreds of clients with one account. It’s very profitable for them but…
Andrew: With the $300 a month plan.
Jim: Yeah.
Andrew: All right. You also, so the logo on the bottom of all those fan pages really helps. The other thing that helps is PR, right? You guys got, well what was your earliest PR gig?
Jim: When we, we kind of held off on doing too much PR when we didn’t have the ability to charge. We launched and we didn’t even have the payment system built. Again, minimum viable product. Can you get it out there and start getting feedback? We couldn’t accept a credit card but as soon as we could we said OK, let’s see if we can get some people to know about. Again, my background is more in like advertising and marketing. I don’t really know what PR is or does or whatever. But after talking with a couple of people we said, you know, what if you could be written up in Mashable or if you’re going to be on AllFacebook or something like that as an article? I thought that would be awesome.
I don’t know what they did. Sent some letters and they sent some emails, made some phone calls and the next thing you know I’m being interviewed and our product is being reviewed and talked about. The push that we got from PR versus advertising was night and day. PR is the closest thing that you can get to a referral. You know what, even if someone says hey, it’s a great product but there are some flaws and it’s not for everyone that’s so much better than just a banner ad that says click here, try it, you’re going to love it. It’s like a word of mouth referral. I was totally turned on by PR and going forward, I mean, that’s where a massive…
Andrew: How do you get PR in the beginning when you don’t have PR experience?
Jim: Trust. You know, you talk with a couple of people and you go well, we’ve never done it before but let’s see what you can do. I know what I know and…
Andrew: You hired a PR agency?
Jim: We did. Yeah.
Andrew: Oh, I see. You hired a PR agency and they got you into Mashable and they got you into AllFacebook, etc.
Jim: Correct.
Andrew: What did you pay for PR?
Jim: You know, at the time we were lucky because we were both hungry. We didn’t have a whole lot of money. I think we probably paid, I don’t know, $3,000 for a launch. Something like that, and for a few months.
Andrew: $3,000 got you a full launch over several months?
Jim: Yeah. What you’re looking at though is, you know, you’re not going to be able to go Madison Avenue and pay that. But if you can pay someone working off their kitchen table or just starting out or something like that. It’s important to see that the person is, if they’re going to really go for it. If they’re going to have some sense of ownership or investment in it. These guys did and it was great for us. Now we actually have PR in house. It’s been great.
Andrew: What’s the name of the company?
Jim: Abbi PR. A-B-B-I.
Andrew: I’m sorry, could you say that again? I talked over you.
Jim: Oh no, Abbi PR. They started us out and they were absolutely awesome.
Andrew: That’s not how this interview happened. We just, I think we reached out to you, right?
Jim: Possibly, yeah. But we have our in-house staff who probably responded. I think Sarah has been working with Jeremy. That’s the best thing you can do is create something and let people come to you. It’s so much easier. If you’re an author and you have to go pitch your book to 500 people and you just keep getting these rejection letters it’s really tough. But if you can write something and it goes viral on the Internet and then a book publisher comes to you, that’s way easier.
Andrew: But you guys didn’t do that. You hired a PR agency, and they went out and got you the articles.
Jim: Yeah. They got us those first articles.
Andrew: What happened to the house? We talked about the foreclosure letter. You really were risking everything for this business; you weren’t taking money home; you weren’t paying the mortgage. What happened?
Jim: Yeah. We ended up losing the house.
Andrew: You lost it!
Jim: Yeah. Yeah. We foreclosed, and actually, today we’re renting, but we were just able to purchase a house, and we’ll be moving in in summer, so, you know, it’s kinda good. I’m full circle.
Andrew: You got a mortgage already?
Jim: Yeah. Yeah.
Andrew: So even though your credit took a hit and we’re in a bad economy, you were able to get a mortgage?
Jim: Yeah. Well, luckily, my wife has good credit, too. The thing is, you know, I was so committed… I’ve always been a risk-taker, and I just couldn’t stop. The wheels were turning, and I was like, well, I’ll just miss another payment, because we’re so close, we’re so close. And, you know, I thought my wife was going to be crazy-upset and leave me if she ever found out. And when she found out, she said, “Well, we’re screwed, but we’re screwed together, so, you know, let’s make this work.” And it was really nice. I could sleep at night because then I had her backing too, and it was all for the best.
Andrew: I understand your vision, that you hate doing this kind of work, but for her, what’s her vision? Why’s she taking this big gamble losing her house? What does she want out of it?
Jim: She didn’t really have a choice, unfortunately, because by the time we were losing it…
Andrew: It was gone.
Jim: …we were losing it. Yeah, you know. So the only thing that she had to hang on to was, “Well, Jim says that it’s going to work, so I better help him so that it works, because now this is like our only shot,” you know, “besides… .” She’s always had a job, and she’s a schoolteacher, but for me, you know, if it didn’t work out, I’d have to go get a job somewhere and make it work. But that’s when we really knew, you know, we love each other either way, but it’s just always nice to have a roof over your head too.
Andrew: So how did it turn out? What size revenues are you guys doing now at ShortStack?
Jim: We’re multimillion, officially. Last year was at least double the previous year, and then this year’s probably going to be double that. We typically don’t disclose our actual revenue numbers, but the great thing is that since there is no venture capital or anything and our overhead is relatively low, it’s a great, profitable company, and we’re able to reinvest that profit into new products and better staff and new research and development stuff.
Andrew: So last year, 2012, at least $2 million, but you’re not revealing the exact number. Do I have at least $2 million right?
Jim: Yes.
Andrew: Wow. And profitable?
Jim: Yeah.
Andrew: And how many people work with the company?
Jim: In 2012, ten, and right now we’re at 13, I think.
Andrew: Thirteen people. And I know you guys don’t have a big office, because I heard someone coughing in the background, which means you’re still sharing an office with someone. Even for this quiet conversation, you had to work with someone there and let them quietly work with you, right?
Jim: I’m not really allowed to have my own office, because I can never finish anything. I like to have ideas and kind of get started, and then I go on to the next idea and get started, and the next one. So Adam’s in here coughing. I don’t know what his problem is. He’s usually pretty good at being quiet during these.
Andrew: I wish that there was something — I was waiting for him to sneeze so then I could at least say “bless you.” I just wanted to acknowledge him, but I thought it would be weird if I said “bless you” after he coughed. I didn’t know what to say. Adam, I’m glad you’re there.
So how does Adam keep you on track?
Jim: Adam is detail-oriented. All of my staff is — I try and hire people smarter than me, and I try and hire everyone with complementary yet different skill sets, because I know what my strengths are, but I know what my weaknesses are too. Adam and the rest of my staff is good at saying, “Well, Jim had this vision; he got us from A to B, but here’s all the steps to get to Z. Let’s see if we can accomplish those.”
Andrew: Couldn’t you do that if you had your own office? Why does he need to be there?
Jim: Because I need constant prodding.
Andrew: For example?
Jim: Hey, Jim. You said you were going to review that and get it off so that we can publish it. Did you? No. No, I’ll do it, I’ll do it. No, I’ll do it, I’ll do it. If I’m in my own office with headphones on, people are scared to come in the door or whatever because they think I’m busy, but really? I tell everyone, you have to come and bother me. We practice what’s called flat management or the theory of flat management, which is we don’t have any managers or anything. I consider myself one of the team. If someone needs something from me, I have 12 other bosses. If I need something from them, then I’m their boss. So we trade that off, but even when you say that, people are still hesitant. They’re like, he’s the CEO or whatever. I just keep myself out in the open. My other desk is actually a receptionist’s desk. It’s one of those curvy receptionist’s desks just out in the middle. That’s where I sit for most of the week so that people can come up to me and ask questions and get feedback. If I operate in a bubble, then nothing ever gets done.
Andrew: What you’re saying is you need a monitor. Someone to monitor you and make sure that you get done what you’re supposed to get done. I’ll explain in a moment why, because I think this is an important message to get out there. I found in my life that when I couldn’t get stuff done, having a monitor sit there, sometimes even hiring someone to say just sit and make sure that I do this and if I start to get distracted, you focus me. I’ve been worrying about suggesting it to other people because then they might think that they’re babies. They might think that I’m talking down to them. They might think to themselves, if I need someone in the room with me, then I’m not building the company myself and so I’m a failure for needing this person. I can’t be needy. No solid entrepreneurs are needy. What do you say to someone who heard you say I’ve got a monitor, his name is Adam, the guy does a good job for me and they’re thinking, I can’t have a monitor.
Jim: The sooner you admit your faults or your weakness and you remedy them, that’s when you hit this exponential growth or this exponential ability to accomplish your tasks. Your productivity goes up insane. I consider myself more of a creative, so I’m interested in the idea, I’m interested in the challenge and the problem solving. But when it gets a little ugly, I get disinterested. I’ll move onto the next thing. If you think that it’s a sign of weakness to say, well, I’m going to hire this babysitter for myself or tell everyone, even if you don’t hire somebody but say hey, please, if I don’t get it to you by 2:00, talk to me at 2:15. Talk to me at 2:30. Talk to me at 2:45. Come and physically shove stuff off my desk until I do it. They’ll realize that you get your stuff done and they get their product a little quicker. It just works. I work really good with the opposite style of people too, who are so focused on the details that they can’t see the big picture. So when we work together, it’s perfect because you get a little yin and yang.
Andrew: You have ADD.
Jim: Yeah.
Andrew: I’ve had past entrepreneurs say, I have ADD. They say it in the pre-interview. When I talk to them a little bit, I discover they don’t really have ADD. They have the usual distractions that all of us do or they’re saying, hey, I like to do too many things at once as like a bragging thing, so I don’t include it in the interview. I want to talk about it here because for you, it’s not just something you say, right?
Jim: Yeah. I would never classify myself as it’s a disability or something. Growing up, ADD didn’t really exist. They wouldn’t really diagnose it like they do now with children. It was just Jim’s the class clown or disruptive. I had my desk out in the hall for a semester or whatever in fifth grade.
Andrew: That’s what teachers do to class clowns who can’t sit down.
Jim: Yeah. Exactly. Or they fall out of their chair 20 times. For me, ADD is kind of a superpower because it keeps me active. It keeps me creative. But then it’s this huge problem too because I get these projects up to 50% completion or even 90% completion, but never complete it.
Andrew: Are you on medication?
Jim: Yeah. I’m on medication, which helps. It kind of gives me some super focus for a little bit of time. It’s like having a Red Bull basically.
But, you know, it helps that being aware of it and being transparent about it and letting my staff and my family know, it helps. Because they’ll do things slightly differently.
Andrew: All right. If you had to give up your medication, your medication or your monitor, which would you take?
Jim: My medication.
Andrew Warner: You’d give up the medication and you’d keep the monitor. That’s what’s working for you.
Jim: Oh yes. Totally. Because I haven’t been on medication, you know, except for a few years and, you know, I constantly I’ve had this my entire life, you know. And if I had a monitor, whether it’s a family member or teacher or whatever, I’m always more successful with that. So I’ll have a monitor, no problem.
Andrew: All right. Let me, I want to explain why I’ve been holding up this mug and then I have a few questions for you from a Mixergy Premium member who works in a SaaS based business and says ‘Andrew, you got to ask smarter questions at SaaS based entrepreneurs.’
So first I’ll explain the mug. The mug I’m holding up to my camera here, there’s a camera so people can see it’s from CPC Strategy. It comes to me from a Mixergy fan named Rick Baccus. I asked some of my fans, I said ‘Look, I usually hold mugs as I drink coffee that have nothing on them. If you have a logo, send it over. We’ll try it as an experiment.’
And Rick sent it over. He’s a fan and he’s working on a company that basically it helps you manage your comparison shopping placement. So if you’re in comparison shopping sites where they charge you per clicks, I guess he used to work at a comparison shopping company and now he manages it up for people. The company is CPC Strategy.
When I asked him what he got out of Mixergy and he said the best thing he learned was how to create effective video that will rank high and he learned that from the Action Video Hacking Content creation session that we had. So he’s a premium member that liked the Action Video Hacking Content creation interviews.
If you’re a premium member, go to MixergyPremium.com and check that out to see the videos that influence businesses and help them grow. And if you’re not a Mixergy Premium member, I hope you go and check it out. And in addition to the video session that we talked about, I’m going to recommend that you check out the one that we did with someone from FIFA or Stella who talked about how to get PR.
If you don’t have a PR company or someone in house like Jim does, that video is going to just, it’s going to be priceless for you. So go to MixergyPremium.com and check out Stella’s course on how to get PR for your startup. I guarantee you’ll love that and that, not just that you’ll love that. I’m not here to make you love stuff. I guarantee it’s going to impact your business so much that you’ll be happy to pay me the money that it costs to be a MixergyPremium member. And you’ll want to send me a mug the way that Rick did.
All right. So here are the questions that I got. I’ve got 5 of them. Let’s see how many we can get through.
First, let’s go with the basic one. Do you ever get frustrated with the subscription process and want to go with just charging a one time fee?
Jim: No, not at all. A recurring subscription is really the key. A one time fee means you’re always chasing the next customer. You’re always looking for something new. For me with the subscription, you’re kind of able to hit this goal number, whatever that number is to do where you say Hey, once we have this space, if that stays the way it is, then we’re sustainable. It’s enough to whee you can invest in new products. You can hire new staff. You can do whatever.
And also when you have a subscription and people cancel, it’s a great way of alerting you to Hey, there’s new competition or you’re stale or you need new features. So a subscription is a way of keeping you on your toes. I wouldn’t have it any other way. Every product we do from now on is going to be SaaS.
Andrew: All right. Next question that he sent me was do you have a general rule for what you’ll spend on CAC in relation to LTV? So do you have a general rule for what you’ll spend on cost of buyer customer, that’s CAC, versus Lifetime value?
Jim: No.
Andrew: No. You measure lifetime value?
Jim: Yes, we’re highly aware of what our lifetime value is. But our acquisition we don’t really track too much and I think it’s because we’re a little different with how we acquire. We invest in our staff to do content creation, to do PR, whatever. So, I mean, I could probably divide the cost of that staff versus lifetime value or whatever and see how much my cost per acquisition is.
But the thing is is when you have staff who’s doing your acquisition through PR or whatever, they have other talents. They’re able to contribute to the product in other ways. They’re not just a banner ad or an affiliate or something that only can do one function. So it’s a little different for us.
Andrew: I see. If you were doing more direct paid acquisition, then you’d have to keep track of your cost to acquire a customer, but because you’re not, you can’t connect it. Does that ever bother you, that you can’t connect it so directly that you can’t say, “Hey, we absolutely can hire five more content creators because each content creator is worth this many users and each user is worth that much in lifetime value”?
Jim: Yeah. Actually, this is the first time I’ve really thought about it. Our thought process is actually more about developers; “Hey, if we can get a developer to build this new product, would that allow that product to get to market a little quicker?” Again, it’s a focus on product instead of focus on marketing or PR or whatever these KPIs are. It’s different for us. I’m not really that concerned about it.
I have heard of these crazy acquisition costs, $150 per user to get an LTV of 300. That’s insanely risky for me. If I did know our numbers and if it was a dollar for an LTV of a thousand, then I think that’s great. But anything above that, I would be a little scared about. So…
Andrew: How about churn? The number one killer for subscription economies is churn. In a space that changes as fast as your business does and as fast as I’m guessing his does, how do you minimize churn?
Jim: Again, constant user testing, constantly listening to your users, and then I would also say customer service is huge for us. We go above and beyond with support tickets to make sure that they’re educated, that they’re taking advantage of everything.
Andrew: Can you be more specific, because I feel like everyone says that they have good customer support.
Jim: Well, that’s true.
Andrew: What do you do that’s different?
Jim: Yeah. I’m sorry. That’s total BS. I hate when people say, “Well, we have great customer service.” I don’t know why I caught myself saying that.
Okay. For example, we use Zendesk as our customer service portal, and for some reason, like Zendesk got their wires crossed or something, and we started receiving support tickets from other companies; we got a ticket, and he was like, “Hey,” you know, “my Such-and-Such model bass pedal for my guitar,” you know, “isn’t working.” And one of our developers who is on tickets, he responded back, and he found a PDF of the user manual for this thing. And he said, “Hey, you have the wrong company, but I’m pretty sure what you need to do is plug the black wire into the red wire” or whatever and gave him the answer. And we still try and have that philosophy with everything.
We had a user the other day where they had this big website that they were trying to shove within 810 pixels on a Facebook app. And I’m walking through the office, and I see one of our guys like shrinking this thing, using CSS, like hand-rewriting this website for this user so that they could help display it in their app. And it took him a couple hours, but the response from that user, like “Oh my gosh, thank you so much for helping me,” I know that they’re going to stay with us for a while. And hopefully, they spread that story.
Andrew: What about something like specific usage? Have you been able to tie any kind of activity with ShortStack back to the length of time that people stay subscribed? Like Phil Libin, I think, recently said that people who use Evernote with other apps that aren’t built by Evernote are more likely to stay engaged with the product and then more likely to buy a subscription and stay subscribed. Have you found something like that?
Jim: Yeah. We find that the people who are subscribed the longest are using us for clients or for multiple projects at once. If I’m just using it for myself, if I’m Jim of Jim’s Pizza and I install one contest app to my page and that’s it, your churn is going to be higher than Jim-the-small-agency-working-out-of-my basement-and-I-have-six-clients-and-I’ve-designed-these-Facebook-contests. We are constantly trying to educate people. You have this, here’s how you could leverage it to do more and more and more. It’s an ongoing battle.
Andrew: There was one time that you said something that someone could consider a plug. It wasn’t, ‘Hey, if anyone wants to see what ShortStack really is, they can go, and sign up, and try it.’ It was, ‘You could do it for your customers.’ That’s because people that do it for their customers are more likely to stick around, and be more valuable for you.
One last question. Do you measure success on quality of social proof created by your users or by MRR?
Jim: As far as social proof, if you can put a testimonial or something on your website, yes, it’s great, but I don’t use that as an indicator, at all. It’s nice when you have something. I tend to classify a social proof as more of an ego booster. It’s great for the morale of myself and the staff, but when it comes to someone making a decision to actually convert, to sign up for a free plan or sign up for paid plan, it’s the features that are key to the person. Is it going to save them time or money? Are they going to be able to make money with it? That’s the only thing that matters.
Andrew: I’m about to thank Jim and I’m going to suggest that you do, too. I asked Jim before we started, why he wanted to do this interview. He said, ‘I remember when I was trying to figure this stuff out, and if I can help someone out there, one person out there, who is in that mode where I was trying to figure it out, then that will make this whole interview valuable for me.’
Since that’s what he said, and he didn’t say ‘Help me get promotion’ or ‘Help me hire more developers,’ I didn’t talk about promotion much and I didn’t talk about developers. Just to let you guys know, that’s why he’s doing it. Bottom line, thank him. This is why he’s doing this interview. He is trying to help you. If you feel, at all, helped by this, and if there is anything here you feel you can use in your business, you can use to help change the way you think, then reach out and say, ‘Thank you, Jim.’ Thanks so much for being this open, here.
Jim: My pleasure. This was awesome. This is kind of my therapy, too. I focused for an hour, which is pretty incredible.
Andrew: I appreciate it. Thank you for doing this. Thank you all for being a part of it. Bye.
