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Finally, who’s the lawyer that tech entrepreneurs trust? Scott Edward Walker of Walker Corporate Law. But you don’t have to take my word for it. Scroll down to the bottom of his site and see what other entrepreneurs have said about him, including Jason Calacanis of Mahalo who says, “He’s a great lawyer who loves startups.” WalkerCorporateLaw.com.
Here’s your program.
Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart, and I’m smiling because I’m noticing that people now recognize that intro, and they actually will, when they meet me, greet me with a “Home of the ambitious upstart,” so I’m glad it’s making an impression.
How do you go from being a wage slave to building a product empire? Joining me is Amy Hoy, founder of Slash7, and a woman who creates and ships products. The products she creates include Freckle, a web-based software that helps you manage your time, and Year of the Hustle, an online course on how to launch. And apparently a high school student? Where are you? What’s with all the lockers behind you?
Amy: These are lockers at Indy Hall, which is a co-working location in Philadelphia, which is the city that my husband and I are moving to, and so they’re full of stuff that high school students would only dream of having.
Andrew: I see. All right. So let’s start off with money. How much money did you bring in with Year of the Hustle?
Amy: So, Year of the Hustle is actually what the class was called the first time, and the second time around we called it “30 by 500,” sort of refining the marketing message. The Year of the Hustle class, I think it was about $24,000, which I shared with my partner on that class, Alex Hillman, who is sitting right over there actually. It’s his co-working location. And the second class, “30 by 500,” which is actually in progress right now, was just under $53,000.
Andrew: $53,000. How many people in the course, and what do they pay?
Amy: 75 people, between $650 and $750 depending on whether they got early discounts or not.
Andrew: All right. I’m going to come back and ask you what they get for $650 or $750, but let’s talk about Freckle, the software that you created that helps people manage their time. What kind of revenue do you bring in from that?
Amy: So, we started out the very first 30 days after we launched it, it brought in just about $1,300 or $1,400, and now two years later almost to the day, we have a forward going income projection based on our current monthly revenue of just about $190,000.
Andrew: $190,000, that’s the run rate, which means you took the last month, which was January, and multiplied it by 12 and you ended up with $190,000.
Andrew: Did you say how much you brought in last year, in 2010?
Amy: I don’t know the exact numbers, but I think it was about $110,000 or $120,000.
Andrew: Okay. Why reveal this stuff? I ask every guest about their revenue. Some reveal it, some don’t. I know for you it’s a point of pride that you get to give out your numbers. Why give it out at all?
Amy: When I was a younger person, I was afraid of an awful lot of things, including not appearing professional or talking about taboo subjects, and then I got over myself and realized it didn’t make a difference and that I should do whatever I want. So that’s what I’m doing. I really want to inspire other people to make products, because I have tons of creative friends who do freelancing or who have jobs who are creators. They are designers, developers, writers, but they feel that they’re stuck, either because of their clients or because of their jobs. And, honestly, I’m a creator. I’m not a consultant. I discovered there’s actually a difference. Consulting is a totally different skill set than being a designer or programmer. I’m happiest making products and selling them directly. I get to talk directly to my customers, and then they pay me, with money, which is really great. It’s, in my opinion, a much better life than being a consultant, and you get to really help people and change things while also improving your own life. So I’m really passionate about trying to convince other people to join me, and I figure the best way to do that is to offset all this, you know, “Random at Joe’s Startup acquired for $30 million, and no one knows quite why,” by talking about numbers, because numbers are what people are really interested in.
Andrew: So I started off the interview by introducing you as a former wage slave, and I almost didn’t use that phrase, especially when I said you went from that to building a product empire, because it kind of sounds like one of these get-rich-quick stories. “Listen to how Amy did it, and then go out and buy my package and do it yourself.” But I think that in your case, saying that you were a wage slave really applies, because I’ve read you talk about how you felt when you were just a consultant or when you were working for other companies. You said you were a kept woman. Can you describe that? What made you feel like a kept woman or a slave or less than what you were capable of being?
Amy: Well, the truth that people don’t often talk about when it comes to freelancing is that if you’re dedicated to doing the best that you can do as a designer or a programmer or a writer, you often can’t do that for clients, because whether they’re clients on the lower end of the sophistication and pay scale or even the biggest ones who pay the most, so many of the clients’ decisions and requests actually have to do with their internal jockeying for power or their need to feel validated by making changes rather than actually the good of the project. So if you go in as a consultant, at any level, and really have the good of the project at heart, you’re going to end up really jaded, as you either argue with the client or sort of bow to their change requests that don’t make sense.
Andrew: Do you have an example?
Amy: Let me think. Yes. I can talk about this company because they went out of business, which is not related to my work. So, a few years back, it was early 2008. My then-consulting partner and I were working for a company that was a broker for high stakes, huge corporate real estate deals, and we spent three months redesigning the header and the navigation. We kept telling them, “Look, we’ll take your money, but this doesn’t make sense. We shouldn’t be doing this. We should be shipping the product. This is a rabbit hole.” Or another company that I think is still in business, I won’t name, my design partner and I, they just wasted thousands of dollars in pointless meetings. They kept swapping out their project managers, and one of them who clearly had no experience with building web-based software said something to the order of, “Gee, why do we have this heading on the page? I mean, you already see where you are with the tab.” And I was like, “Because the heading is of course 26 to 32 points, so you can actually read it, and the tab is of course 12 points and it’s very small. It’s good for way finding, but it’s not good for knowing where you are.” So I wrote her a long e-mail, “This is contravening 400 years of document design. This is not right.” And she backed out; but it’s like, why? They paid me $500 to sit through that meeting and school them on something that they weren’t interested in anyway. So it was just so frustrating. And both of these projects never shipped because of internal changes, like somebody got axed. It was political. Someone else stole their budget, or in the case of the real estate place, they eventually went out of business because partially, I guess, they never would actually engage in business but rather went around the design cycle over and over and over again.
Andrew: You know what? My goal for this interview — I probably should have announced this in the beginning — is to find out how you went from there to here, and along the way learned how other people can create products and ship them and deal with all the headaches. But since we’re talking about back when you were working for other people, I have to say, it doesn’t sound so bad to collect $500 and give people the response that they want and not have to worry about the consequences of the idea you had failing, or of your business failing and then not being able to pay the rent. As entrepreneurs, I think for the world we give one view, which is, it’s great, you get to do what you want. But at times, if we’re really honest with ourselves, we’re also really freaking out because we have no security. So when you look back, wasn’t that security a good thing?
Andrew: Why not?
Amy: I was miserable, because I was not about serving the clients’ needs. I wanted to create great software, and I wasn’t able to do that because of various reasons. And I had the same problem actually at my previous two actually employed W2 jobs, as well. The projects got axed for no reason.
Andrew: But why is creating good software, why is creating good product of any kind better than feeding yourself consistently and doing what you love on the side, in the evenings, on the weekends, maybe even on the job when’s no one looking?
Amy: I don’t actually see that it has to be one or the other. The way that I’ve structured my business, it’s extremely low risk. We’ve never had a financial crisis in our business. We’re able to make money appear, I tell my friends, on demand because we have these training courses. We have a wide variety of things we do, because I’m actually very risk-averse. So I’ve created a business that’s risk-averse. Meanwhile, I get to ship stuff, and no one interferes. So I have the best of both worlds, and I think it’s doable, it’s possible.
Andrew: I see. Because you’re saying your expenses aren’t that high. You don’t have to pay for expensive offices, you don’t have to pay for expensive software, lots of employees. Am I understanding you right?
Amy: Well, that’s not really the truth. So, for example, right now, my husband and I have an apartment in Vienna, Austria and an apartment in Philadelphia. And I like to spend money. We do spend a lot of money, actually, and we have freelancers who are helping us, and we’re preparing to make our first hire. We want to hire two people in the next eight or nine months, and we know who they are and how much they’re going to cost and it’s a lot of money. But, again, it’s not so much about keeping expenses low because we’re able to increase our revenue to the amount that we desire, because we have this flexible business model and we do these different things.
Andrew: What do you mean by that? When I hear somebody say, “I have the ability to bring money in whenever I want,” it almost sounds like you’re saying you could bring it out of thin air and it doesn’t ring true. I’m sure, for my audience, it’s not ringing true. Give me an example of how you just conjured up money?
Andrew: All right. I’m sorry, but let’s hold off right there for a moment. The fact that a friend would come and say, “You guys are smart when it comes to this, you can lead a session and I’ll give you a share of the revenue,” that I understand. That happens to great people all the time. The leap from there to saying, “I’m going to create my own workshops, and charge,” that’s a pretty big leap, and then of course, from there to say, “I’m going to go across the country and find companies that will hire me and bring me in;” unless we dig into that, it’s going to seem like magic or just some sort of coincidence that no one else can reproduce. So why don’t we start with the leap from the friend who brings to you in, to you doing your own workshop. How do you go from one to the other?
Andrew: Let’s go back in time. You do this session in Washington, D.C. You say it’s time for us to do our own. You have a blog that gives you an audience that you can promote to. You have an e-mail list that you collected before that you can promote to. It sounds like you did some other things. Let’s stay with just that one that you did own your own for the first time. What else did you do to get people to sign up and pay?
Amy: That was pretty much it.
Andrew: That was it. Both those channels, and that did it?
Amy: It worked pretty well. Thomas, where did we do our first live workshop? It was in November, wasn’t it? Was that in Berlin? So we did our first live one in Berlin, and our friends who were putting on JSCONF sent out an e-mail about it.
Andrew: Gotcha. So you reached out to friends who had an audience of potential customers, they sent out an e-mail, you did it. How many people do you remember came to the first workshop?
Andrew: Okay, 20 people.
Amy: We do small classes. That way we can interact with everybody.
Andrew: Okay. All right, that’s great. Let’s go back and dig even further back in time. The very first thing that you created on your own without having to be hired by someone else to do it, without being told that you’ll get paid if you create this, what was it?
Amy: It depends on what the definition of thing is. So, I had become somewhat well known in the Ruby on Rails community a few years ago, because I had written some tutorials and made a couple free cheat sheets that you could download and print. They became quite popular. There wasn’t a lot of information out there on Rails to begin with. Now, granted, I wrote three tutorials. That was it. We’re not talking book-length opuses. They were short blog posts, like, “This is what confused me and because I pestered people on IRC, this is what I found out was the way it actually worked.” So I basically took what I struggled with and turned it into blog posts and a couple single page or two page cheat sheets. That was the first thing I ever really did on my own.
In terms of something larger or more product-wise, Thomas and I made Twistory.com, which is a Twitter emotion visualizer, and we just built that in a day after I kind of pitched the idea to Twitter headquarters and they said it wasn’t really their thing. So I was like, “Why am I waiting for someone to pay me to build it? I could build it.” So Thomas ended up helping me, and that got us quite a lot of exposure.
Andrew: And that was a website where people can go right now and check it out, if they go to Twistory.com, they can hit “Hate” and see what people are saying on Twitter with the word hate. They can hit “Love” and see what people are saying with the word love. There’s no payment there, there’s no revenue there. What’s the benefit then?
Amy: For whom?
Andrew: For you.
Amy: It felt really good.
Andrew: I know that that was a significant step forward for you. I just want to help my audience understand why that was such a major step for you in your story.
Amy: It really was a major step, so thank you for asking. It was the first bit of real software or anything that I had just designed and shipped, that wasn’t a tutorial or something, and that worked. It moved, it did stuff, without waiting on a client essentially. So it got us clients, actually, which was not the plan. The plan was just to ship something and enjoy it, because so many of the projects I had worked on in my jobs and as a consultant never shipped, and it’s intensely frustrating. Actually to dial back a little further, I had helped Ze Frank with Color Wars, and that was a totally ad hoc, no oversight. He’s like, “Do whatever you want.” So that was really refreshing. I was like this is what it could feel like to just do it on your own. And that really, in a way, led to Twistory. And Twistory lead to me going, “Oh! I really can just sit down and do this.” This was only 2007, and I had already been doing design for, oh gosh, 9 years by that point already. So it took a while to realize I could just do it.
Andrew: One of the things I like about your story and the reason that I especially wanted to have you here is that you create both info products and software products. I feel like in the world today, if you create info products, the people who create software look down on you, like, you’re just in the education business. You’re creating nothing and you’re just hyping it up with great sales copy. And on the other side, if you’re just doing software, people who don’t code feel that they can’t learn anything from you because you have some magical power to create products out of thin air with code and they don’t have that power. What I like about you is the ability to do both. Tell me know about the first product that you created that wasn’t software, so that we can bring back the non-software people into the conversation.
Andrew: Was that a pay product?
Amy: It was. We really wanted to just get it out there, because we were working on it for so long, so we put the beta book up for $19, and we told people on our blogs and stuff that they could have $5 off if they bought it now and they would get the final copy. I thought we’d sell a few copies. My friend Eric said, “Amy, what’s the success for you to sell the beta book? How many copies?” I said 50. And we sold 500.
Andrew: Wow. And this was after Twistory?
Amy: This was after Twistory. Let’s see, Twistory was 2007, so this was about a year and a half later.
Andrew: Taking the leap from giving something away for free to actually saying, pay me, people. That’s a pretty big leap. Do you remember what you were feeling when you first did that?
Amy: I was afraid.
Andrew: Afraid of what?
Amy: I was afraid no one would buy it. That’s the number one thing you’re afraid of. I wasn’t really afraid people would say that it was too expensive, because, honestly, I don’t care what people think, most of the time. But I was afraid that people wouldn’t understand the value. I knew the value was there, but I wasn’t sure if I was able to convey that or if people would care. So that was what I was worried about. And then we had read all these books on marketing, and so I knew that we could probably increase sales by saying that we’re going to raise the price, and then we did raise the price. And that we could probably increase sales by offering people who were loyal to us or fans a discount, so we did that too. And people loved that. And so we do that all the time now. But I’ve done so many things in my life that I was terrified of. Up to the age of about 20, I was terrified of people and terrified of public speaking and terrified of all sorts of things, and then I realized that I couldn’t live my life that way. So I forced myself to start going to parties and talking to strangers, and I forced myself to talk at a conference. And no joke, the first real talk I gave at a real conference, I didn’t breathe. So I would talk like this [makes sound], and I heard a recording of myself and about passed out from shame. But that’s the reason that we did it anyways. Because, okay, fear, but that doesn’t mean I shouldn’t do it. But I was quite afraid that no one would buy it.
Andrew: What about the fear that people would buy it and say, “I can’t believe Amy just took me for a ride for this much money, that I gave her my money and this product is something I could have probably find online if I spent some time Googling.” Did you have any of that fear?
Amy: No, and there’s two reasons. I don’t think I actually thought that far ahead. So I was definitely stuck at the, “Will anyone buy it?” worry. But the second thing was, we knew that content wasn’t available out there, and I also know that people were willing to pay for things that are very different, presented differently, in a way that is easier to read and digest and understand, and it’s cohesive. Almost none of that information was even out on the blogosphere at all. But if it were, it would have been scattered over 100 different places. And some people value their time.
Andrew: Okay. But what about the idea that online information wants to be free. Just like you read other people’s blog posts and learn for free from them, and used it to grow your business and grow as a person, why not contribute all that information back to the world and let someone else read from your series of blog posts on this topic?
Amy: I don’t believe that information wants to be free. I know that I have gladly paid, at this point thousands of dollars, but back then hundreds of dollars on books on things that have a cohesive, narrative thread, that walked you through it and held your hand, and that’s not what you find for free, because that kind of effort requires a lot of time and a lot of attention to craft, and no one wants to do that for free. So if information wants to be free, then information also wants to be shallow and spread out and non-linear and basically not easy to use. So it’s like that joke that persecuted Mac users always used to say, LINUX is free if your time is worth nothing. So that, I didn’t worry about.
Andrew: Wow. Okay. So the first thing that you created was Twistory. Did you create anything after that, that you sold?
Amy: That we sold? No.
Andrew: Well, what was the first thing after that that you created and sold? I don’t mean sell as a business, but created and asked money for.
Amy: So we also created CreativeScrape, which is just a very one, two-day hack product, like an alternative way to view RSS feeds that focused on images, and it’s nowhere near as popular as Twistory because it doesn’t have the emotional impact, I think. But there are several thousand loyal users who use the screensaver, and it’s fun. Some day I’d like to revisit it, but we’re busy.
Andrew: What’d you sell that for?
Amy: We didn’t sell that one.
Andrew: Oh, that one you gave for free. So what’s the first thing that you sold after that?
Amy: The first thing we sold, I believe it was the e-book. Thomas, did we launch the e-book first or did we launch Freckle first? We launched Freckle first, actually. So Freckle was the first thing after Twistory that we charged for directly.
Andrew: How long did it take you to launch it?
Amy: We built it over three to four months of one or two hack days a week with our former partners.
Andrew: Three or four months, one or two hack days. What did it look like on day one, when it was launched?
Amy: Pretty crappy. It was missing so much stuff. There was no way to recover your password. We had to do that manually. Reporting was really bad. There was no solo plan. There was no pulse. The reporting didn’t even have graphs. We were missing a whole bunch of other stuff. We had no back end for us. If we had to update something, we had to do it in the database directly with SQL. We didn’t stop your account from being open if your credit card billing didn’t work and just a whole bunch of other stuff. So we shipped one thing, which was really good time entry and okay reporting.
Andrew: That’s what you did well at first.
Andrew: So what about the rest of it? Did you feel any insecurity about releasing a product that people had to remember their passwords for or else find a way to contact you to get their password back, or that didn’t have all those features that you mentioned?
Amy: A little, yeah.
Andrew: Tell me about the way you felt, because I do feel like a lot of the people who I interview here blow off that worry at first that their product isn’t good. We always act like, of course, you have to launch a bad product and you iterate over time and that’s the way it is. But really, when we’re out there and have to build our first product, there’s an insecurity that we feel, and if all we’re exposed to are people that act brave about their insecurity, we’re going to feel like maybe we’re on to something wrong and that’s a sign that we’re on the wrong track.
Amy: Oh God, you cannot listen to your fear. I’m afraid right now.
Andrew: Of what?
Amy: I’m just nervous. This is an important interview.
Andrew: Nervous about what?
Amy: Screwing up. But I just ignore it. I’ve learned to do that. My friend Alex who runs this co-working location, before we launched Freckle — we launched it in December — so that summer, we had put on Fail Camp in Philly, where we got people together and we talked about failures, and I’ve had a few big ones. I admitted that one of the things I was scared of, actually, was that I was going to launch this software, and it was going to be amazing, people were going to adore it, and I would be like, “Why did I waste the last seven years of my life doing projects for other people that never shipped? Why did I do that?” And that’s one type of fear that I had before we shipped Freckle. I was afraid that no one would pay for it, that people would say it was terribly incomplete. I was worried that what if the opposite happened and we couldn’t keep up with its growth, what if we couldn’t handle those password resets by e-mail? Just generally. What if the billing didn’t work at all, what if it crashed, all sorts of stuff. But fear doesn’t actually tell you anything most of the time.
Andrew: I see. You’re saying it’s not an indication of whether you’re right or wrong. It’s just an indication of your own personal insecurity or confidence at the moment, around this specific product.
Amy: A lot of the time, yes.
Andrew: I’ve found that too.
Amy: Yeah. You have to recognize that emotions don’t necessarily reflect reality, and that’s really hard to come to that conclusion and then harder to practice it, but it’s really true.
Andrew: Why not sit down with a pen and paper the way I’m doing this interview and make a list of all the things that you needed that you didn’t have and not launch until you had them? Like password protection, you still remember that today as an issue. Why not add that to the list? Design issues to the list, graph to the list, and say, “You know what, now we have a punch list. We’ll launch once this is done, and then we can be proud that we have all these features.”
Amy: I did that once, like six or seven years ago. I’m really bad with dates, so it may have been five years ago. When Base Camp launched, I was right there when they launched the beta privately, because I was on this private, sort of snooty design community called Yay Hooray, and they were members as well. They launched the beta of Base Camp right there. So as I watched this grow, watched Base Camp grow, I thought, “Well gee, I could do that.” Actually, I didn’t like Base Camp, so I had in my mind gathered a whole bunch of ideas and designed an alternative, at least on paper with words, not necessarily Photoshop. And it just kept getting bigger and bigger, and as you know I’ve never launched a project management application. So I learned a lot from that experience and also watching all these other mega projects fail at my clients and at my jobs. Like, fail, fail, fail, fail, fail, because people wouldn’t let go. So I said, I’m never going to do that. Never again am I going to do that.
So I called this idea the creative atom. It’s not really the minimum viable creative product. It’s smaller, even. I don’t think that most people would have considered Freckle a viable product at all. But for just a few people it was enough that they were willing to pay, at least to check it out. And so it didn’t have a lot of things that most people would consider important, like the billing code only partly worked. That seems like a minimum viable product would have a functional billing code. But I just wanted to get it out there, because that’s what I learned. You’ve got to get it out there, and if no one buys, the first two months, what happens? Nothing bad, right? So you don’t make any money for two months. If you didn’t ship it for those two months, you still wouldn’t have made any money, so it’s no loss, no gain.
Andrew: What if you ship it and for the first two months, you do have some customers who say, “Hey, you know what? I learned coding from this woman. I admired her writing for a long time. I want to see what someone who I followed for so long can create, to learn from her and to model from her in the future.” And then they look at it and say, “What is this? This is the woman who I’ve been following? I’m going to go on all the message boards and I’m going to start telling everyone not to buy this, and I’m also going to tell them that maybe she doesn’t know what she’s talking about, that she was just being a little too boastful in her blogs, a little too competent in her comments on Yay Hooray.”
Amy: Very good point.
Andrew: Did you have any of that?
Andrew: So what would happen if that did happen?
Amy: I would have felt pretty bad. But let me tell you why I wasn’t afraid of that. In essence, that happened to me when I spoke at the first Rails Conf. That was when I had the panicking, didn’t breathe, motor-mouth and then gasping, right? And, I thought, oh my God. Even before I heard the recording, I thought, oh, I royally fucked this up. These are people who think that I’m amazing. And that’s why I was so nervous, because these people think that I was so cool, and I had never really given a talk at a real conference before and I was terrified. So, that happened, and then I felt like I was going to die afterwards, and some dude came up to me and tried to shove $60 in my hand. I’m like, “What are you doing?” He’s like, “You just saved me hours and hours of pain and stress.” I’m like, “What?” And after I heard the recording, I realized the true extent of how terrible it was, because when you’re talking, you can’t really be sure how you’re doing because you have to focus on what you’re saying. So when I heard the recording, I knew it was even worse than I had thought. And no one, except one person, who has a personality disorder if you ask me, ever said anything negative about my talk ever. If they were disappointed, they kept it to themselves. There was no character slandering. It was fine. And I knew Freckle was better than [gasps], you know? In front of 40, 50 people in a room.
Andrew: I see. It is one of those situations where the worst that could happen is just in your head and doesn’t really happen.
Amy: Well, I mean, what did happen that I did was almost as bad as I could have imagined. What could have been worse? I could have peed my pants. But yeah, the consequences of the worst thing happening weren’t anything like you could imagine.
Andrew: Okay. We actually met at a conference this weekend, you and I, and I was onstage watching someone give a presentation. He was one of the entrants. He was shaking like you wouldn’t believe. Really nervous, you could hear it in his voice. We sitting back there could see his hands were shaking, just moving, moving. I can imagine him thinking, “I better get the hell out of here. I’m an entrepreneur. I’m showing that I’m in control of a business here and I should get funding and I’ll be in control of your money if you fund me and I can’t even be in control in of my own body? I can’t stand up here and give a presentation about a product that I supposedly love? I should excuse myself, pretend I’m sick, get out of here, and go recover another day.” But he didn’t, because you know what, the guy ended up winning, and not because people felt sorry for him because he was shaking, but because he had a good product and because the rest of it just worked, and people knew he could figure out what he didn’t know about leadership and what he didn’t know about his product. He’d be able to figure it out.
Amy: I think people also have a lot of empathy. If you’re not being a total dick, they are willing to forgive you a lot, if it’s clear that you’re trying.
Andrew: If you’re open about the mistakes. So, when you launched Freckle, how did you communicate to people how good or how shaky it was, or how their expectations should be set about this?
Amy: We actually blogged very little. We talked about it being a work in development, and we talked about what we planned to do. The main thing was we actually talked to our customers by e-mail. We said, okay, we’re thinking of doing this and that, and we said what we weren’t going to do feature-wise. And for several months it evolved very well. We didn’t really have a concerted plan other than to explain how we were different than other tools in the sense of how you input a time. I think that the way that it worked, and yes maybe the fact that people who knew us were predisposed to like what we do or at least give us a shot, it gave them a sense of what was to come. So we had the one really great part, and the rest of it was quite obviously under development. I think that actually in a way communicated for itself. But we could have handled it much better. I think if we had done a better launch, like more in advance, we probably could have had a lot more to start with. But it worked out. You can screw up a lot and still make money, which is an important lesson.
Andrew: Is it all about money?
Amy: No. Definitely not, but I do like money.
Andrew: What else is it about?
Amy: I like money a lot. Why not? For me, it’s a lot about freedom to do good things. I like to design wonderful software and was having years of pent-up frustration with clients basically not letting me do what I thought would be best. I’m interested in helping people make their businesses better. As a freelancer, as a consultant — it feels like the difference between them is how many zeroes are after your hourly rate — I was tired of fighting against software for time tracking and invoicing, and I knew that there were thousands, hundreds of thousands of other people who had the same moments of frustration with their software every day. It made me think of that bit in “Good Omens,” that book by Terry Pratchett and Neil Gaiman, part where the demon Crowley is being so happy about his design of one of the highways in England, because it causes slow-burn frustration, so much suffering in aggregate, much more than say one really big evil deed. So I kind of think of software like that. It’s killing thousands of people by tiny paper cuts every day, and I want to do something against that. I like making people happy. I like when people say, “I love your software. It makes me feel good to look at it.” So it’s really a 360 degree circle. I like making money. I like making good things. I like making people happier and eliminating some suffering in the world.
Andrew: Why did you, after launching Freckle, not continue to launch more software, more web apps, more similar applications? Why did you do things like what you’re now calling 30 by 500, the course where you teach other people how to create products?
Amy: After the first few months of running Freckle, we kind of hit a productivity problem. We eventually parted with our original partners because we just weren’t meshing as a team anymore, and they wanted to work on other things, and we needed their time and they were doing other stuff. Really, honestly, Freckle in a lot of ways kind of ground to a halt, and the thing about subscription software is that while subscription income is awesome, unless you are extraordinarily lucky, it’s going to take a while to build up an amount of revenue that’s appreciable, that’s actually more than just paying your rent, for example. So with the training courses and the e-book, we were able to create sums of money that came quickly for less effort. It won’t pay off as much over time, but it was much quicker and gave the money to us. So we needed money immediately, and we did things that got us money immediately. We could create a workshop in about a week, for example, and then use that over and over again.
Andrew: I see. Okay. That makes a lot of sense. And with software, it does build up. People keep their subscriptions going, and then new people buy subscriptions, and then the every month the monthly revenue grows and grows and grows, assuming you keep improving the product and staying on top of your users’ needs. You said that you can launch a course in a couple of days, I think you just said?
Amy: I said we could build a workshop in about a week.
Andrew: A workshop that you lead in person or lead online?
Amy: Definitely online would be easier. There’s a difference between making the workshop materials and planning out the content and such and actually launching it. If you do an in-person workshop, you have to find a venue. You have to sell it far enough in advance that people can book tickets and they can convince their companies to pay for it, and so on and so forth. So that’s a lot more overhead and also more expensive. So the first year of Hustle class, I actually created with Alex, after I had created, totally on the spur of the moment, a three hour phone call that just basically talked about the history of how I got to where I was because I thought people were interested in hearing this. I charged $85, or $100 and I donated $20 to charity, and I had eight people on it, which is not that impressive, but I had done it in a week. I had talked about it a week before doing it, or maybe less.
Andrew: All right. Let me ask you this. Because now I think we can hit on something that my audience would really be into. They love hearing about other people’s stories. They love hearing me ask about their money, but what they really, really love is themselves and how they could use this. So, let’s see if we can help someone in our audience build some kind of course or workshop and bring in revenue quickly while they’re building their web app or maybe in addition to it, or maybe not necessarily because of the money, but they want to build a reputation in this space or they want to learn a topic better by teaching it. So let’s talk about first the topic, then how they could get their audience, how they could structure it, and we won’t go too deep in depth. If they want to learn even more, they can sign up for the 30 by 500 course and really learn how to do this. But we’ll give them a taste of this and a good overview that’s useful. Okay?
Andrew: So, let’s say they don’t know how to code. If they know programming well enough that they could teach, that’s a great topic. But if they don’t, what else could they teach a workshop on?
Amy: Well, even if you do know how to code, it doesn’t mean that choosing a topic’s going to be easy. Because you can’t just say, look at what I know and then I’ll make a workshop on it.
Andrew: That’s a great point. I don’t know what I was thinking. You’re absolutely right. So how do we find a topic that we’re good at and that we can teach?
Amy: You have to find the confluence of something that people are struggling with or confused or intimidated by and something that earns people money, or that companies would be willing to pay for.
Andrew: I see. Right, if they earn money, then they’re willing to pay for it themselves. If companies are willing to pay for it, then there’s money also.
Andrew: So how do you do that?
Same goes for, say, Laura Roeder sells all these classes on how to get from zero to WordPress, for people who are intimidated by WordPress, and I think she makes quite a lot of money. And you and I sitting here would be like, “Who would pay to learn how to use WordPress? It’s actually really easy.” But, she thought that too. I believe she said that as well. Like, how can you not know what Twitter is? But we’re not our audience really. So she found people who were confused and willing to pay money because getting a WordPress blog means that you have more business opportunities, and so they paid for it. And that’s what we do with our code workshops, and that’s what I’m doing with 30 by 500. People are saying, “I want to get over there and have a business, I’m scared shitless and I don’t know what to do. Please hold my hand.” I say, “Yes, I’ll hold your hand. Give me money.” And that’s the way to do it.
Andrew: And the way to find out that, as you say, go on a sales safari and look to see what people want to learn is read different blogs, read different question and answer sites like Stack Exchange, Quora maybe, find out what they’re complaining about on message boards. What other issues have you seen that people have found opportunities in? What other big problems have entrepreneurs found complaints for online and created products for?
Amy: Well, people are really concerned that they’re losing sales they could make. So that’s the whole idea behind the conversion experts, the conversion analytic software, A/B testing. People are terrified by split testing. If you write a good article on split testing, you’ll get thousands upon thousands of page views. Yet, there are not really any good products that aren’t paper books about the topic. Why? I don’t know. Why aren’t there more consultants who come in and analyze your own database of data you already have? I have lots of data and I love statistics, but I don’t actually know the right formulas to calculate churn rate, for example. So why can’t I hire someone to do that for me? I haven’t found someone or a product, for example. People are afraid that they’ll launch something and no one will buy it. I think that’s the number one fear. They’ll make the excuse that they don’t have time to build a product on the side, that they think they have to quit their job and work on it full time. Then what if no one buys it? It’s even more catastrophic. So if you can tell people how to make more time to launch a product, that’ll sell.
Andrew: A lot of the topics you just brought up are directly related to your audience. If you created products around all those issues, I have no doubt you’d do well. So you’re really in tune with what your audience wants. How do you do that? How do you know what they’re complaining about, what their issues are?
Amy: I read a lot of crap.
Andrew: What do you mean?
Amy: Hacker News is sort of like Cosmo, right? But you can learn a lot about what people are anxious and worried about by what is popular reading. So if you look at Cosmo and it’s all these sex tips and make-up tips, you can know that women who read Cosmo feel that they aren’t doing their job in bed or on their face with their make-up. So you can look at what people really read and buy and choose voluntarily, and flip it around. Why would you read this? Well, if you’re anxious about X, you read about X and how to do it well. And Hacker News is full of sometimes very silly articles about how I made $2,000 on a side business while doing consulting. It’s like $2,000 is not inspirational. However, people are nervous they can’t even go from zero to $1, and so in that sense it’s inspirational.
Andrew: I see. So you’re seeing that they’re voting up stories about the first thousand customers, and how I got the first thousand customers, or how I got my first thousand in revenue. And you’re saying, if they’re voting up those stories, it’s because they’re excited to read that, and if they’re excited to read it, it’s because there’s a problem they have that they need the solution, they’re hunting for the solution for, and this little blog post that’s really pretty thin, but interesting and related to the topic is exciting them. If that’s exciting, me showing them step by step how to solve the problem is going to excite them way more.
Amy: Exactly. Because a lot of the information on Hacker News is sort of a thin gruel, right? It’s not very how-to, even when it’s like “How I Fired My Co-founder,” it’s still very personal and it doesn’t turn it around and say, “I used these basic steps and maybe you can use these too to use it in your specific situation.” No one does that.
Andrew: Okay. So now you’ve identified a set of problems. How do you pick one of them that you’re going to go and find a solution for?
Amy: That’s an ongoing question. In 30 by 500, my launch class, I have a list of various types of obvious failures. Like if you make a product that no one wants, that’s a big failure. You can’t fix that. That’s a Type 2 failure. You did the wrong thing rather than the right thing, wrong. And you want to make sure that you can manage the product. How fast can you make? How much support does it require? Especially if you’re doing this on the side, you need to pick a project that doesn’t require a lot of support. I don’t think a lot of people think about this. They’re like, “My great idea is to do X, but I would need support people for that.” I say, “Well, why don’t you work backwards from, ‘I don’t have support people,’ and pick a product that fits your life instead?” How fast the sales could be, things like that. So it’s a matter of time to market, potential profit, how much work or crazy effort will it be for you to create it. Is this something you’re already comfortable doing? Like, I don’t do video yet, because I don’t know how to do video really. So, I write, because I already know how to write, and so on and so forth. You have to look at this mixture of factors like viability and time frame and effort.
Andrew: Okay. So you found the problem and you’re saying, what can I create given what I know? Sure, if I knew how to do video, I could create a better product. Sure if I knew how to fly to everyone’s house, I could build an even better product. But given the constraints I have, what can I create?
Amy: Exactly. And what will sell? And what constraints the digital customers have as well.
Andrew: Okay. How do you know? I understand what I can do and what I can’t do. How do I know what customers are not willing to pay for?
Amy: I think it comes down to research and observation. So, this is my answer to a lot of things. I know people say, well, you just know in your gut. But I think gut feelings come from observing without even realizing it and noticing the trends. So if you look at corporate training, you’ll know that a lot of them charge a whole lot more than $500 a day, which is what we charge for our full length master class.
Andrew: Where are you looking at corporate training?
Amy: In this case, I know people who have done it for other organizations like Carson, and Big Nerd Branch. They do multiple day, large training courses or one day. If you search for it, you can still find stuff. I’ve found it easier because I know people who are already doing it.
Andrew: You know people who are teaching for Carsonified or Think Vitamin?
Amy: Yeah, exactly.
Andrew: And they’re telling you, that course on whatever is really popular, and then you know you can create something similar.
Amy: No, that’s not even it, really. It’s looking at, if they keep continuing to do it, they’re probably making money on it. Or you can find out indirectly whether the course is sold out. No one at Carson is telling me this. I’ve known other trainers. Thomas once did a Carson workshop, many years ago, and so he knew how much they charged for it. I think it was $700, for example. So you just collect this information either explicitly or implicitly, and I’ve seen corporate training for $2,000 a day per person. It really gives you an idea of what’s out there and what’s possible, and if people are paying for it, then you know people are paying for it.
Andrew: All right. So maybe people like Laura, who we mentioned earlier, discovered there was an opportunity to create courses on how to use Twitter, maybe Quora becomes the next hot site, and someone in my audience saying, “You know what? I want to teach how to do Quora. I think companies are going to want to participate in that. I want to teach them.” They know that companies are willing to pay. How do they keep their risks small, when they launch, and what do they launch with?
Amy: Well, the first thing they could do is instead of creating a product right up front, they could do some consulting about how businesses could use Quora to promote themselves. So that will give them real life experience with the people who they would want to sell a product to.
Andrew: How do they find customers for that?
Amy: Well, this is a rabbit hole. It could go on forever. It’s the Internet. One of the best ways is to look at what people approach you for, if you do freelancing. If someone pays you an hourly rate to do something, chances are you could make a product somewhere around that, either, “Here’s how I make money,” or “Here’s how you do this thing that could make money,” or “Can’t afford to hire someone? Here’s how you can get this done at a cheaper rate,” and so on and so forth. I call it the three-prong approach. People who want to be you, people who want to learn what you know, and people who don’t want to hire you and they’d rather have it done some other way. Clients and people who want to be you.
Andrew: Let me ask you this, Amy. I’ve been spending about 14 minutes now on this topic. Maybe I’m not asking the right way. Maybe this is the better way to do it. Instead of me leading you through the process, is there a framework that we can give the audience that you could outline here, and then if they want more they can come and talk to you?
Amy: Yeah, sure. Let me see how I can summarize this. This is actually the content of my rather long 30 by 500 class. So the first thing you want to do is to figure out what audiences you belong to.
Andrew: Ah, the audiences you already belong to. Okay.
Amy: That’s really the easiest way. Lots of people have made fortunes selling to people who they have nothing in common with, but it stacks the deck against you. So if you’re going to play poker, I would rather start with two queens or whatever. I don’t know poker, so forget that metaphor. If you can start yourself on the path to success, [interference] do that. One of the best ways to do that is to work with people you know or at least with people you know where to find.
Andrew: So start with communities you’re either involved with or have good access to. You mentioned Base Camp going to the forum, Yay Hooray, that they were a part of, and that’s where they launched their beta. You did something similar. So what is next?
Amy: Exactly. They already had access to those people, so it was easy to find them and learn about them. The key is to figure out what they’re worried about and anxious about, having problems with, desiring to learn, and how they make money. So these are the things that you need to know to basically [interference] to turn into some ideas of products you could make that would either make them feel better, teach them things so they don’t worry about them, or earn more money, which are the best ways to sell products. Easiest, most successful. Then to follow on with that and to come up with a whole bunch of ideas that you could say, well, if you pay me X, I will solve this problem for you. So, like I said earlier, people are anxious that they will launch a product that won’t sell, and so I say, “Here’s how you launch a product that will sell. I’ve done it multiple times.” [interference]
Andrew: I think you might need to unplug and replug in your headset because we’re losing you.
Amy: How that? Better?
Andrew: Oh, there we go. Now we do have the headset. So we’re good.
Amy: USB drivers suck. So I was saying that you can come up with a bunch of ideas where you can present the option, you have this problem, imagine a solution, you can have that if you give me money, which is what all my products do. If you hate time tracking, imagine if it were fun and easy and it helped you earn more money, all for $12 a month. That’s pretty compelling. And then, you need to break down that idea into as few features as possible, the tiniest possible thing that someone, not everyone, that someone might find useful and pay for.
Amy: And then, build that and sell that.
Andrew: Okay. And what would that first product be, often?
Amy: I think it depends a lot on what your goals are. So, I’m really a believer in subscription income because it’s just such a great way to build a lot of income relatively easily, without as much ongoing hustle. So if you need to make 500 sales a month of a product that’s a one-time sell like an e-book, to make the amount of money you want, or you need to find 500 customers who stay as subscribers, one of those is infinitely easier. Subscriptions are the way to go. But they’re slow. So the question is, are you more interested in income now, or are you more interested in income over the long haul? And so, if you need income right now, maybe to even fund your subscription software or other subscription program, then you can start with a training course that’s live. You could sell it to ten people, maybe even in your neighborhood, and then you could take that and you could learn from what they had problems with your product, and then turn it into a better product and then sell it online.
Andrew: See what’s out there and try to build a better one, you’re saying, and sell it online? Did I get that right?
Amy: Sometimes. I don’t worry so much about what other people are selling, but what people need or are interested in buying. So if you lurk in the programmer, startup tech community, you’ll see that people are very happily paying for metric software, for guides like mine, for books on lean, for agile consulting, and all these things. They go to conferences and workshops. So it’s clear that quite a large number of these people pay for these things. So you can say, well, if they pay for e-books and I know this thing and they need to know it and I can write an e-book, well then, we can meet in the middle and have a product that people will buy.
Andrew: I see. I want to know whether this is a rat hole or not. There are two more things I guess that I want to talk to you about. I want more pricing and marketing information like what you gave me earlier, where if you say you’re going to raise prices, people are going to buy. If you give your fans discounts, they’re more likely to buy and so on. I want to go back into that. But let’s talk about the product itself first. What’s the format that you use to create the courses that you’re selling online?
Amy: Are you referring to the live workshops or the 30 by 500 class?
Andrew: What’s the difference between 30 by 500 and the workshops?
Amy: The workshops are actually live. They’re real time. One of us, Thomas or I, is actually teaching with video and audio and slides, and the other person is always in the chat room, answering questions, passing out links, and things that are relevant to what the other person is talking about.
Andrew: And you’re doing that using Adobe Connect, which is a webinar software, right?
Amy: At the moment, we’re using Adobe Connect, but it totally screwed us last week. So we may try to change to another piece of software. We’re not sure which yet. But yes, we use web based software that has the video, audio and slide capability. We use Camp Fire for the chat because it’s text, it’s easier to deal with, not Flash. And we also have homework exercises, so they get live feedback on what they might be doing or might be confused about. So that’s really valuable because it’s live during the class [interference]. Now, 30 by 500 is actually a bunch of lessons, kind of like the most condensed business book ever. I distribute the lessons every week over the course of three months with a one month break for some heavy homework — doing the actual safari, going out there and finding customers and grabbing lots of content.
Andrew: I see. It’s all text-based, PDF based. They go off and do what you’ve suggested, and then they come back to you and they come back to the chat room where they get feedback from you and they get feedback from other people who are taking the session.
Amy: Essentially. We do live chats occasionally and there’s a couple recorded audio lessons to complement the written content, but it’s mostly step by step written content with workbooks.
Andrew: So if a person listening to us wants to get started and maybe thinks, 12 weeks in the session? That’s a lot to get started with. What do you recommend as a start?
Amy: I would check out your local bookstore for old-school marketing books because they are much more in touch. They’re not touchy-feely, how to make your customers love you stuff, which is really not actionable. There’s one that’s good that’s hard to find called “Breakthrough Advertising.” People will probably find that slimy, but if you don’t sell diet pills, it’s not slimy. The techniques aren’t slimy, it’s just what you sell.
Andrew: But I mean, what’s the product they should create? Should they create an e-book? Should they create a text-based course that goes shorter than 12 weeks? Should they do a live session the way you do on Adobe Connect?
Amy: I see what you’re saying. I honestly think that if you’re going to do some sort of teaching product, that the best possible thing you could do is a one or two hour mini workshop. You could do that live, in person, on the Internet with video conferencing stuff, and it could be really low-tech, because if you go out there and do it, you will learn so much about the product, how people react to it, what questions they have, and that will just give you so much information. You could even do it for free, like a free webinar about something you know people are interested in. And build your audience as well. If people are going to come to this, then it’s quite likely that they would then buy a more in-depth, hand-holding product as well. I wouldn’t recommend creating a 12 week course. I would recommend something smaller and more achievable that you can create in steps.
Andrew: One session, one webinar, use Adobe Connect or GoToMeeting or whatever they pick. Pick a topic that they think will be interesting to their audience. I would even say give it away for free but collect e-mail addresses. So, if you want to sign up, it’s free, just give me your e-mail address and I’ll send you a link to this session. If you can’t make it live, we’ll give you a recording of it. If they see that there are a lot of people who sign up for the freebie, then they can create the next level up and sell that.
Amy: Yes. You just need to consider how many people sign up for versus how many people actually see the offer to start with.
Andrew: All right. Marketing. You told us a few techniques that you used to generate sales. Can you give us a couple more?
Amy: Sure, so I said that we started with a lower price and mentioned that we would be raising the price later so that [interference] thinking about it for three months, especially when it’s only $20 to start with. People who are on your mailing list or follow you on Twitter or read your blog or use your open source product, give them discounts, and that’s just a no-brainer. People love discounts. They love feeling that they’re special, and honestly, if people have been with you, you should treat them like they’re special, because they’ve been with you for a while reading your stuff, participating, tweeting at you. Another one would be to go ahead and [interference] your mailing list. It kind of smacks of info marketing.
Andrew: Do what? Sorry, something is happening to our connection all of a sudden. I think it’s back. Go ahead.
Amy: Create a mailing list. A lot of people don’t want to do this because they feel like it’s sleazy info marketing stuff, but the sleaziness factor comes with what you do with it, not with the fact that it’s a mailing list to start with. If people read your blog and they want to hear you talk and they might consider buying something, they want to hear you.
Andrew: What’s your best source of customers? Is it the mailing list or the blog, or is it something else?
Andrew: I see. Okay. So e-mail, Twitter, past customers who are referring and coming back for other products. How about one other marketing technique?
Amy: If you do open source or give away other free content, put a little link on there or a badge, and don’t be afraid to sell it, because if they like your stuff, they’re going to like your other stuff. If they like you, they like you, and they may want to give you money. So, there’s a discount code in the RSS feed for the Scriptaculous website, and we have a little banner on there for our performance book as well. There’s little ads on Twistory for Freckle, for example. It doesn’t convert a lot, but it converts a few. It’s already there. People were there, so it made sense to put our own ad on there instead of someone else’s.
Andrew: Yeah. It is so much better to promote your own stuff than to promote something that is just a little related. All right. 30 by 500, when’s the course starting up?
Amy: I’m going to start selling tickets in the next three weeks. The course itself will start mid- to late-April. I want to wrap up the ongoing one first. If people are interested, they should follow me on Twitter or hit up Unicorn Free, my blog.
Andrew: Unicorn Free is a great blog. I love your writing style.
Amy: Thank you.
Andrew: And the 30 by 500, tell me if I’m wrong, I think that’s the idea that you should be able to get 500 people to pay you $30 a month, or 30 people to pay you $500 a month, and if you do, you have a nice salary coming in and you can build a business on top of that, and you’re going to teach them how to do that.
Amy: Exactly, that’s the goal. I mean, that doesn’t have to be in a single product, like Freckle only just now crossed the $180,000 a year mark on its own. But, over the last year we brought in about $320,000 from our training courses, e-book, and Freckle.
Andrew: That’s last year. 2010, $320,000.
Andrew: I can’t believe you’re giving out that kind of information.
Amy: Why? In 2008, it was zero.
Andrew: Yeah, 2008 was zero. 2010, $320,000. Congratulations on the big step forward.
Amy: Thank you.
Andrew: All right. So check out the website, check out the course, come back to Mixergy guys and give me feedback. Amy, thanks for doing the interview.
Amy: Thank you so much for having me.
Andrew: You bet. Bye, everyone.