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Here’s the program:
Hey, everyone. It’s Andrew Warner, founder of Mixergy. com, home of the ambitious upstart. Today I invited Patrick McKenzie to Mixergy. He is the founder of Bingo Card Creator, and I invited him here because I’ve just been really caught up in his story. He was a Japanese salaryman who launched an online business on the side and he blogged openly about the money he was making. So, as the revenue and profits increased, I and a bunch of other people on Hacker News, really got caught up in his story. He recently earned enough money with the business to quit his day job and focus exclusively on the company. So I invited him here to celebrate and to also find out how he got here and what he’s planning to do next.
Patrick, what is Bingo Card Creator?
Patrick: My elevator pitch for it is that Bingo Card Creator makes bingo cards for elementary school teachers. They use these to do review lessons with class easier and more efficiently than creating them by hand.
Andrew: Why would teachers want to play Bingo with their students?
Patrick: Particularly on Friday afternoons when the kids are getting a little antsy, teachers want to do something fun which still has educational value. Say, for example, play a game of vocabulary bingo. This is an idea in almost every teaching activity book — I didn’t come up with it. Bingo has some advantages from a teacher’s perspective. It’s a game, so it’s fun. It’s competitive, but not in a way that kids students directly each other. Teachers have a feeling that if someone who’s extremely well prepared is to go up to the blackboard and face off head to head with a student who’s not quite so well prepared, then the less well-prepared student is going to feel psychologically crushed after losing. They want to avoid that. But they still want to harness the competitive drive, they want them to pay attention to this lesson and do better. Bingo lets everyone compete against each other in a safe fashion. Students who don’t know the answer to a particular question aren’t exposed as such to their peers.
It scales up to any number of students. You can play Bingo with five kids or 25 kids or 45 kids. The only problem with bingo is that you have to create a unique bingo card for every player. The way that is explained to do that in all the teaching books is you get a stack of paper and you spend the next hour of your life — with your Master’s degree– drawing boxes and printing out words. There goes an hour and then you go back to doing the things that you actually got that Master’s degree do – teaching students and making an impact on their lives. So I was like, “Well, we can cut out the hour and make that a five-minute process, and then have the teachers do stuff that they enjoy more but they’re better at doing, that actually brings value to the classroom.”
Andrew: I actually thought, when I first saw your software, “Why couldn’t I just create Bingo cards myself?” And then I thought in my head, “Yes.” I’d imagined how I would do the first one, and then I imagined the second one would mean to be in random, so, okay, I could do the second one. Then when I thought, “Well, if I had ten students in my class or 20, forget it.”
Patrick: That’s pretty much what everybody thinks about the second time they try this activity. Especially, if you’re a teacher, you don’t ever have just one classroom. You’re going to be playing this game this week, and maybe next week for a different class, and maybe next week for a different class. How many hundreds of time during your teaching career are you going to waste doing this? (This is far from the only thing that teachers waste huge amounts of time on, but one small problem at a time.)
Andrew: I’m here in Buenos Aires where, obviously, people speaks Spanish, and if I went into a classroom to learn Spanish, the teacher might use these Bingo cards to hand out Bingo cards to everyone in the class with different Spanish word in each box. She might call the words in English and have us look for the Spanish words within our Bingo cards that would get us thinking. If we lost, it’s not because we’re stupid, it’s not because the winner is smarter than us, it’s just because he happened to have the right words on his Bingo card, and I happen not to. So I could see how it helps us to save face, and at the same time help us learn.
What was the full time job that you had when you launched this business?
Patrick: Let’s see. I’ve had two full time jobs in the interim. At the time, I was a technical translator at the prefectural technology incubator. That was starting two and a half years ago, in June, 2006 when I started the business.
After August 2007 I became a Japanese salaryman — a software engineer at a major firm in Nagoya. Not *that* major Japanese firm in Nagoya, but they’re a customer of mine, so I won’t name them either.
Andrew: I called you a Japanese salaryman in the intro and you just said it yourself. You’re not actually Japanese are you?
Patrick: No, as you can see rather paler than many of my associates at the old day job.
Andrew: How did you end up in Japan?
Patrick: That’s a good question. So, I didn’t really have the entrepreneur bug when I was younger. I was at university studying engineering and wanted to become a programmer. My dream was to get a nice safe corporate job at Microsoft. When I was in school, outsourcing was starting to get into the swing of things. I thought” I’m not really all that great of a programmer” and if I’m going to be competing against 100,000 engineers graduating every year in India and 200,000 engineers graduating every year in China I’m going to need something a bit better than my mediocre programming skills to get me through that.
If I could do one other thing besides programming, like speak a very difficult language, then Microsoft will have to give me a job. So I looked down the list of languages my university offered and said, hmm, Japan is a big country, they have a lot of money, they don’t have that many great speakers of English (unfortunately), and they have a lot of trade with the United States. So if I can speak Japanese and program then I’ll probably have a nice safe job with Microsoft for the rest of my life. Then I gradated from college and when I graduated I spoke enough Japanese to have a nice informal conversation with someone but maybe not enough to get an engineering design document into my hands, read it, and give instructions to colleagues based on it.
So I thought all right I’ll go to Japan for a little while, learn to speak better business Japanese, then come back to a nice safe job at Microsoft. So I went to Japan for a little while and got a job as a technology translator at the prefectural technology incubator in Gifu prefecture. Gifu prefecture is Japan’s answer to Kansas. We have lots of rice instead of corn but they’re very similar in a lot of ways. My contract lasted for three years. I really like the area that I ended up in. I love the friends that I made here. I wanted to stay a little longer, so I got the job as a salaryman. “Salaryman”, for people who aren’t in the know, is a Japanese coinage for someone who is expected to work extraordinarily hard on behalf of their company from the time they enter to the time they retire. You’re sort of semi-guaranteed employment for life in return for spending upwards of 70 to 90 hours a week working at the day job and then in general being a very loyal employee for wages that Americans would consider rather substandard.
Andrew: I’ll ask you in a little bit about what your salary was. And of course people who don’t know your story are wondering “what’s the revenue for Bingo Card Creator? What is the profit?” But I gotta ask you about the hours. 70 hours working for a company not getting paid a salary that matches what you’d get paid in the U.S. How do you, as you’re going through all that find the time to build a business on the side?
Patrick: You get totally ruthless about not wasting time. I spent in the last 3-1/2 years an average of about 5 hours a week on my business. I know sort of makes me an outlier on the curve for most of the people on your interviews. I’ve got sort of three key words on that: automate, outsource and eliminate.
Automate the things that you can possibly get a computer to do for you that your personal attention doesn’t add value to. So for example if there’s server maintenance that you have to do easy example so the same repetitive procedure that you do every time, anything that’s repetitive and gets done the same way every time should be done by a computer. That’s what they’re good at. So spend 10 minutes to write it once, save yourself 2 minutes a week for the rest of your life.
Outsource: There are many, many people in the world who make less money than you’re planning to make per hour as an entrepreneur. My target when I started was that I wanted to some day make $100 an hour for every hour I was actually physically working on the business. This means that any task that isn’t worth $100 an hour should be done by someone cheaper than me. For example, I used to be a teacher. I like coming up with lesson plans and I like creating bingo card activities, but I don’t love creating bingo card activities. This is something that many many people in the world can do, so I pay others to make them on my behalf. This frees up my time so that I can do things for the business which uniquely require my attention. A teacher who lives in New Mexico does my bingo activities as a part-time gig for her: $100 for 30 activities, which saves me many, many hours every month.
Andrew: She creates some bingo activities for you that teachers can just download and start using in their class?
Andrew: I’m going to ask you about that too. I keep talking about what I’m going to ask you …
Patrick: Oh. It’s no problem.
Andrew: … but we’ve got about an hour together so there will be plenty of time to go deeper into these issues. I especially want to ask you how you automate, outsource, and eliminate.
Andrew: But let me be clear about the facts here. You were working, on average five hours a week on this business?
Patrick: Right. It spiked up at some points.
For a few years [prior to 2006], I had a vague idea: “Well, someday, you know, when I’m older, a little more established, I might want to build a business.” “Someday” kept getting pushed forward to the future. Finally, one week I said, “All right. Screw it. I’m going to work hard this next week and a week from now I will have something that will be saleable.” I actually took eight days. That first version was about a 50 hour work week on top of my actual work week, which was only 40 hours at the time. That is close to the most I’ve ever worked in a week, and I got sick. So I was like, “All right. That’s never happening again.” After that, it fluctuated up and down. When I released the online version, that was probably a few 20 hour weeks in a row, but the average is five hours: a few minutes a day answering emails and 4 ~ 4.5 solid hours on Saturday, then enjoy the rest of the weekend.
Andrew: And as a salary man you worked an average of 70 hours a week?
Patrick: So we have a business cycle like any other business. A very good week would see about 50 hours, a typical week would see 60 hours, and then peak time would be 70 hours or more. Peak time could be as much as three months of the year.
Andrew: Wow. I can’t imagine spending that much time on a business that’s not yours and one that you don’t have shares in and more importantly, one where there isn’t huge growth possibilities or huge learning possibilities for how, like you know, I can imagine working for a startup 70 hours a week with the idea that I was going to take all that knowledge and then go build my own business but without that it’d be really hard. So I’d say an average of 70 hours a week.
Patrick: I won’t be too hard on my day job. They really did teach me a lot. I’m a much better engineer right now — particularly a much more professional engineer now — than I would have been without the experience. It was sort of like graduate school, with better pay. You go to graduate school and maybe you get a stipend but you’re getting severely underpaid relative to your value. But in those three years or however much you spend at graduate school, you pick up more skills and you get a nice little certificate at the end of it. I didn’t get the certificate aside from the fact that I can say, “Hey, I’m a Japanese salaryman,” and get a good laugh out of it. But I picked up a whole lot of skills.
For example: we’re kind of mad about reliability in this neighborhood because we make most of the cars in the world. Recent incidents notwithstanding, when you’re in that sort of industry, failures cost lives. Even in a software business where failures typically don’t cost lives, the engineering culture in this region is very big on processes and techniques to reduce failure. That is something that I’ve done for my business that lets me sleep soundly at night knowing that it isn’t going to break and disturb my four hours of sleep today.
Andrew: Do you have an example on how you did that?
Patrick: How I reduce failure?
Andrew: Yeah. How you use the focus on reducing failure in your business.
Patrick: I told you that I wasn’t a very professional engineer when I started at the day job. Some weeks into my career at my previous day job, I was deploying code to the server. I was doing it in the typically not quite planned out fashion that most programmers probably do when they deploy code to the server. You know, just log in, “All right. I need to CD to this directory and type in these, this, and this.” One of my coworkers asked, “What are you doing?” I said, “I’m deploying code to the server.” He said, “Where’s your checklist?” I said, “What do you mean ‘Where’s my checklist’?” I said, “There’s no checklist. I’m deploying code to the server.” He said, “How do you know what commands you’re going to type in?” “Well, what do you mean, ‘How do I know?’ I’m a programmer. You kind of figure it out as you go along. You type in this, this, you see if it works.” He’s like, “All right, . . .”
Patrick: “… hands off the keyboard right now. What have you done?” And I said, “Well, I’ve just CDed to this directory.” And he pulled the plug out of the wall and says, “You never, ever, ever, ever log in to the server without a checklist which describes exactly what you’re going to type in. And then, after you’ve typed that in, exactly what you’re going to type in to verify that it did exactly what you expected it to do and nothing else.” And I sort of rebelled against that kind of stricture at the start but, oh my God, that has saved me so much time over the years. It’s incredible because if you have that discipline of doing that every single time you touch the server, you will save so much time on down time, so much time on breaking things and save so much time that you don’t have to spend writing letters to your customers saying, “I’m very sorry I screwed up earlier today. I’m sorry that I disappointed your room of 30 children. I will try to make it up to you in the future.” If you don’t have to write that email, that’s five minutes of your life that you can spend on doing things that didn’t make anybody mad.
Andrew: So now you have a checklist today that you use before you touch the server?
Andrew: You do?
Patrick: I have a physical checklist for when I’m doing a deployment. It’s, off the top of my head maybe six commands long; one, two, three, four, five, six. I check them off; dink, dink, dink, dink, dink. And then after I do that, I have the other checklist to verify that it actually took, you know the things that I did that had the expected effect. I missed doing that once because I was exhausted at the day job and, sure enough, that was my biggest down time in four years. So I’m trying to be better at it in the future.
Andrew: You know it’s interesting. I used to have a checklist for even doing these interviews. And I said, “Well, I already know this. I’ve done so many interviews I don’t need the checklist anymore.” And then I ended up doing an interview with Seth Goden that was really early in the morning here and everything was just the way it ordinarily was but because it was so early I forgot to plug my mic in and the whole interview happened with the mic in my computer and I figured that was just a one-time thing; let it go but I’ve been rethinking it. Maybe I should have checklists. Do you ever get to a point where you look at your checklists and say, “Come on. I’ve got to loosen up a little bit.”?
Patrick: I have done that and, you know it’s like flossing your teeth. My dentist always tells me, “It’s okay. You don’t have to floss your teeth. Just floss the ones you want to keep.” You only need a checklist for the systems where catastrophic failure would be problematic. 98% of the time it doesn’t help you at all because you did it all right the first time. That other 2% of the time though, that checklist will save your life.
Andrew: I see. What else do you have a checklist for?
Patrick: For example, my 12 hours of downtime was caused by upgrading the Ubuntu distribution on the server, so I learned from that failure and now have a checklist for that. I also try to write checklists for other procedures I know could cause failure. I have a list of things that I go over when I create a new feature for the software. Did I test this, this, this, this? That’s not all. You had a great interview with Hiten Shah earlier, right?
Andrew: Hiten Shah, yeah.
Patrick: You don’t just need checklists to test mechanical things like whether your code is executing correctly and accomplishing something for your customers. You also need an entry to check “Do I have some reason to think my customers will want this?” Do I have some mechanism in place to check how they’re actually using it? I’ve learned through painful experience over the years that I am not the best judge of what my customers actually want and so, on the checklist, it’s if I’m going to spend a week or two weeks of my life creating something, then I’m darn well sure going to spend the extra 10 minutes to add an A/B test to my website and figure all right, was this worthwhile to create?
Andrew: I see. You’re talking about the interview that I did yesterday with Hiten Shah, the found of KISSmetrics. He told me in that interview that he previously spent, on just one business failure, half a million dollars. He didn’t get a single customer because he was out of touch with what his customers wanted. He didn’t go and check in with them. And he gave us several stories of how he lost thousands of dollars and lost man hours building products that people didn’t want. And then I asked him, “Okay, what’s the process that you go through now? And he gave me, initially as you pointed out now, a checklist of how to take an idea that comes to you in your head and make sure that it’s something customers want and along the way, keep adjusting and pivoting until you end up with the product that they want . . .
Andrew: add another feature going through the same process.
Andrew: Are you telling me that you have a similar checklist for yourself for even coming out with a new feature or new product?
Patrick: Yeah, that’s fairly accurate, although I’ve never wasted a half a million dollars because I’ve never had a half a million dollars to my name, but I definitely burned money. I had a few features that your listeners would probably be bored by which I wanted to include in version 3.0 of my software. I spent 2 months of my development time on them, so 8 weeks times 5 hours a week would be 40 hours. Forty hours of my life making these things. I thought yes, yes these are going to increase sales, and then I looked at who actually used them.
Ofthe first 60,000 people who were exposed to the new version of the program, exactly twelve people actually used those features.
Andrew: So now I’m feeling the pain by the way, because I know just on the hours that I’ve been writing down here, you don’t have hours to spare in the day.
Andrew: So now you have a checklist that will help you understand whether your customers want the product or not. What’s on that list? How do you go through something like that?
Patrick: I think, like Hiten was saying earlier, that everybody eventually fails forward into similar techniques. If I had to put two words on it, I’d say that I’m a real fan of the Lean Startup methodology. I’m not sure I’m the best examplar in the world, mind you. First you should have a reason to believe that something that you’re creating for someone will actually fulfill a desire that they have. That reason could be customers are asking you for it, or even better that you have statistical evidence from your customers’ actual actions on your site that yeah this is something that they could use.
Let me give you an example for that. I have a customization page. Like every customization page it is overloaded with features. It is like Microsoft Office: 10,000 features and nobody uses more than five. My software was similar, if rather less complicated. There were 12 features on the customization page. Looking at the rates of how much customers actually used those, I saw that about 80% of customers actually changed the first two settings. For the next ten settings, only **eight** percent of customers actually touched them.
And only 60 percent of customers were successfully getting through that form. My feeling was only 60 percent are getting through this because there’s so much you know I have to read every line, do I need to change this now, so now thats fine, thats fine. It takes you a minute to get through this overly complicated form. All you really want is your English elementary lesson done for today. So I hypothesized that if this form were only 2 elements instead of 12 elements, more people would get through it. I showed customers just the 2 options instead of the 12 and put a link so that they could get at the “advanced” version if they wanted. That increased the number of customers who got through that step by about 10 percent. Getting through that step is pretty critical to actually figuring out if you want to buy my software. That more or less increases the bottom line of the business by 10 percent. Even though it only takes about ten minutes to do, that really does make that measurable of a change for the business. Your bank account doesn’t know it was only 10 minutes.
Andrew: Alright, I love that. That’s one of the things that I’ve always loved about you Patrick. You’re so freaking methodical. It makes it more interesting to read you blog posts. It makes it more interesting to follow along through your success because it’s not just a random guy moving along hoping he’ll make contact. It’s someone who’s sitting there and thinking through ideas, and if it works statistically, then we can take it into our own business and and try to implement too. And also got a feedback mechanism. It’s got a feedback mechanism that we can use. Is there more on this list that we can talk about now? Is it a formal list by the way? I don’t want to be a big dork about it and take you through a list thats just something you feel out.
Patrick: It’s kind of like cooking from a recipe. You can write down the ingredients and write down the steps, but you’ll always have to taste it in the middle of cooking and decide if it needs a wee bit more salt.
Patrick: The Lean Startup is happening later today. [This interview was filmed on the morning of it.] They probably will produce awesome videos on that. [They did.] So I recommend folks watch those videos because I know I’m going to. It is an iterative development process. You try something, run experiments, gather data with A/B tests or with customer feedback or with any sort of instrumentation of your website. Then you use that data to validate whether your hypothesis of whether something was going to happen or not actually happened. This gives you one true fact about your business you didn’t know before. Then you run it through the loop again and just keep doing it, keep doing it and keep doing it.
Andrew: What’s your website? Someone in the audience is asking. The blog.
Patrick: Blog is kalzumeus.com.
Andrew: Cool. I know the transcribers will appreciate that you spelled it out. And somebody in the audience actually linked to it and of course it will be up on Mixergy too. All right so let’s get into this. Let’s get into the revenue. How much revenue did you make last year in the business?
Patrick: Last year I made about thirty thousand dollars, thirty-one thousand dollars, I think.
Andrew: Okay, and how much of that was profit? What was the total profit?
Patrick: A little less than twenty thousand dollars. I actually published these numbers on my site and I have for the last three and a half years. It’s up at http://www.bingocartcreator.com/stats so you guys can check. Whatever numbers I gave the IRS are up there.
Andrew: All right. And we’re about four months into this year. How do the first four months of this year compare to last year, roughly?
Patrick:January I was up by 70% versus last January. And it’s looking that I’ll probably be up by about 50% this year, so I’m looking at sales of about forty-five thousand dollars and profits of about thirty thousand dollars for this year just on the bingo stuff. I have a new product coming out next month hopefully.
Andrew: Okay. Can you say what the new product is?
Patrick: You asked me that last time too. No, I’ll tell you about it next month.
Andrew: How does the profit that you’re seeing this year compare to the salary that you were earning?
Patrick: Well, so socialization is a funny thing. We’re taught from a very young age that you never talk about your salary with people. But it didn’t make much sense to do that with my business. I felt saying how much I make doesn’t really hurt anybody. I kind of have that feeling about discussing my salary. I’ll give you one data point. The average prefectural household income of the prefecture that I live in right now is about thirty thousand dollars, so not too different from Kansas. I made a little more than that but not grossly more.
Andrew: Okay, that’s all I was looking for. I wanted to get a sense of how you are doing with the business compared to how you were doing at a job. Twenty thousand profit isn’t huge. Thirty thousand from one product, which you’re going to see this year, isn’t huge. And I want to say a couple of things about that.
The first is, there’s a reason why I’m interviewing Patrick and not all the other people who email me with business that aren’t even earning…maybe earning a little bit more. Many aren’t even earning that. Patrick got us all wrapped up in his story. He shared so much data with us that it was helpful to us that we felt like we were on his side, that we were on his team watching him as he built this thing and that’s one of the reasons why I’m interviewing here. I’m all caught up in his story. Also he’s just so methodical and I really urge you guys to go and spell this website and go to his blog and see his data and I think you can learn a lot from watching his system. Okay, so let’s see. Let’s go through some of what you did to make it work.
Andrew: The first thing I’d like to ask about is, how long after you launched did you get your first sale?
Patrick: That was about two weeks.
Andrew: Okay, and by the way someone, Michael [Racousky] in the audience is saying, ‘Thirty thousand. Take in to account that it’s also five hours a week,’ and he came up with the hourly salary in there, in the chat room. Okay, so how long did it take? I’m sorry.
Patrick: About two weeks until my first customer from the date that I opened for business.
Andrew: What was it like during the two weeks before you got the customer?
Patrick: Honestly, I have deep-seated confidence issues. For two weeks I thought, ‘Man, this is the cruddiest thing that I’ve ever put my name on. No one will buy this. I’m embarrassed to even have this out there.’ And then somebody actually bought it. I was kind of floored. ‘Wow! Somebody actually bought this.’ And then, I’m still a little floored every time it happens even though it happens several times most days but, you know.
Andrew: You know, I remember when I built my first business having sleepless nights and endless doubts and comparing myself to everyone else and wondering why I wasn’t doing as well as my friends who got jobs or why I wasn’t doing as well as these people who I read about in the news who were killing it with their businesses. And I promised myself that once I hit a certain level of success, I’d never allow that to enter my life. And sure enough, it’s here. So I thought, ‘Maybe it’s just me?’
I started asking people who were pretty well advanced in the world and who seemed to have it together, people like Fred Wilson. You read his blog. You see that he’s very well thought out. You see the picture on his blog of him and his family walking down the beach. You say, ‘This is a guy who’s at peace in the world.’ I asked him, ‘Do you have this pain? Do you wake up in the middle of the night?’ And he said, ‘Not only do I,’ but he said, ‘A few hours before I did this interview with you, Andrew, at three or four in the morning I was up worried.’ I asked [Su Mondo] the managing director at Clearstone, a Venture firm that’s well-respected. And he’s a Venture capitalist who’s well-respected with a good track record. He’s pretty set in life. I’ve seen him. I’ve talked to him in person lot’s of times, very comfortable. I asked him, ‘Do you feel the same thing?’ Goes, ‘Absolutely. It doesn’t seem to go away.’
So we’re all in the same boat over here. I wonder actually if a Japanese salary man who’s been in the job forever feels those pains. If he wakes up in the middle of the night. And if he does, does he worry about work or does he find some other nonsense to worry about? Or do we all have stuff to worry about? I would like to talk to them and find out. Unfortunately, I don’t have enough of those in my audience so I can’t ask the audience for feedback. But I’d like your input, by the way, even if you’re not a salary man, guys in the audience.
Okay, I took us away from the main goal here which is of learning about your business. Between the time that you launched and you got your first sale, what did you do differently? How did you get that first sale?
Patrick: Well, for the most of the first two weeks I was well, working at the day job. But there’s a whole lot of waiting by the phone or waiting by the email inbox, as the case may be. I was, at the time, I was doing something that is hilariously inefficient and I won’t recommend it to anybody but just to say that I was doing it. I was posting on teacher forums. In there, you know, they have a designated ‘if you have an advertisement, post it here’ forum. So I was going to these little teacher forums and manually typing up, ‘Hiya, my name is Patrick McKenzie and I was a teacher just like you. I have this thing that does bingo cards. Check out my website, please.’
That is not a good idea. And the reason that is not a good idea is you’re essentially working like a retail job, but at scales that would not make sense for a retail job. Starbucks makes sense because they can pay somebody eight dollars an hour to hawk three dollar cups of coffee and anyone who walks into the Starbucks will buy the three dollar cup of coffee. But you’re going into a website that has perhaps 100 people reading it and trying to sell to…trying to get four people to download and have one of them, perhaps as many as one of them actually buy it. And that takes you, you know, hours and hours of your time. And that’s not the way to make a successful scalable business.
I eventually came upon the realization focused more on scalable ways of getting customers like search engine marketing and search engine optimization. Those are my two big tricks as far as getting customers.
Andrew: SEO and SEM. Search engine optimization and search engine marketing. First, I’m assuming, is first came search engine marketing where you bought adwords. Is that right?
Patrick: Actually, no. Google will index a new website very, very quickly. I’m not positive since it was so long ago, but I’m guessing he was searching for “Dolch sight word bingo.” Dolch sight words, for the benefit of those in the audience who aren’t English teachers, are a list created by a pedagogy professor named Dolch of the 220 words that you absolutely need to know as a beginning English reader. And he grouped these lists into lists by grade level. And so English teachers might not know that whole story, but they know that Dolch sight words are words that you need to teach to kids. So a teacher planning a lesson on the Dolch sight words might want to play Dolch sight words bingo.
Back in 2006, there weren’t all that many pages devoted to Dolch sight words bingo, but it was on my page. So the customer probably found that and then bought the software.
Andrew: I see OK so you started getting customers from that.
Patrick: That was my Dolch sight words bingo was paying my rent for probably the first oh year and a half of the business.
Andrew: Wow, OK, so you’re in a business that you want to scale. You found an avenue that worked. What did you do with that?
Patrick: Well so automate, outsource, eliminate. I literally created the Dolch Sight Words bingo page by typing HTML straight into Notepad. It took maybe an hour and a half. Then I made another page on “Dolch sight word lists”, which is another thing people are searching for, and that was another hour and a half, How many activities could a teacher possibly want to do with her class?. Hundreds. Thousands. Am I gonna have an hour and a half to do each of them. Probably not.
So after about a year of running the business, I wanted a scalable way to create webpages like that, so I switched my website from plain HTML to Ruby on Rails. Rails is a server-side technology that I’d never used before but decided OK I’ll teach myself this and then use it for the business. So I taught myself Rails and created a CMS.
(A CMS is something like WordPress: you type in what you want to see into a box on the website, and it shows up on the public website. It was not very impressive technologically — the first cut of the CMS had a lot of things that had to be done by hand, but it let me get freelancers to create the word lists. The CMS would take their list and descriptive text and turn into a downloadable bingo activity. Next to the activity, there was an advertisement that essentially said “If you want something like this but customized, click this button to download my software.”
After I had automated the boring parts of content creation, there was no reason it had to be me physically typing the words into the machine any more. There’s plenty of elementary school English teachers out there who couldtype the words in and who don’t demand $100 an hour in salary. So I put out a call on my blog — “Hey, do you know an elementary school English teacher looking for a little spending cash?” And somebody did. Five somebodies came forward. I gave them a paid test project for $50 and hired the two that worked out very well. And one of them worked out so well we’ve been doing it for like the last three years.
Andrew: How do you know in fact do you know if what you’re paying her per page comes back to you in revenue from customer orders?
Patrick: Oh, I am a total metrics junkie. I can tell you literally to the penny what any individual activity is worth. So I actually did this math a couple of months ago and I’m quoting numbers by memory. Let’s say Halloween, Halloween bingo cards which I’m putting little asterisks on that because it’s not exactly the system I was describing earlier. Halloween bingo cards was worth $3,185 to me last year. Winter bingo cards is worth $60. Owls of East Asia bingo cards is worth zero dollars. If you average it over all the activities, which cost $3.33, they pay for themselves within four months. After four months everything is gravy.
Andrew: I see, so the way that you keep track of it is well you create a page for each of these bingo cards. Halloween bingo cards is different because there’s a whole domain around it right? And it’s.
Andrew: And it’s such a big activity that you decided to feature it in a way that you didn’t feature others. But you create one like Halloween, you tag it with an affiliate code essentially so that you know how many orders are coming in from that page and then you’ve got a chart that says OK this page gave me this much revenue this page gave me that much revenue. I see.
Patrick; That’s pretty much it. You’re right in that structurally it resembles an affiliate code. So you know card I don’t know 123 is Halloween. It’s a little different than an affiliate code though in that the landing page or creative you respond to actually changes your experience after you start using the site. Most affiliate systems don’t do this. If you come in looking for “owls of East Asia bingo cards2 and you sign up for my service, then I’m pretty darn confident that you would like to be using owls of East Asia Bingo cards. So, as soon as you create your account, the screen will say “Start making a new Bingo card” or “You were looking for Alice of East Asia Bingo cards, click here to get started.” They click here to get started, bam! It’s just click to print. So, that’s actually one of the little things I tested if you have that, it kind of increases the number of people successfully print a bingo card by about 20%.
Andrew: The reason you care about that is, the funnel is people come to you from search engines, they register, they download, they use a Bingo card and print it. Then, once they like all that experience, then they buy. So, you want them to print the first one and have that happy experience because the happier and the faster they get to that point, the more likely they are to buy.
Patrick: I think that the faster somebody gets to seeing stuff coming out of their printer, the faster they’re going to give me their credit card, so I try to optimize for that. Most folks will test print a single card to see if they like what it looks like. So I try to get that first bingo card printed out really, really fast. As soon as they print one bingo card and find out they like it, they’re going to figure, “Okay, size of class plus one, 28, print 28 bingo cards.” And then the software will tell them, “It’s only free up to 15. But if you pay now, within 2 minutes, you can have 28 bingo cards coming out of your printer.”
My business has a strong element of immediacy to it. The trial is not time limited, but the number of people who buy on the first day they come to my website, is astronomical compared to anything else. Ninety percent of people buy the first day, all the remaining 10% maybe 90% buy the first week, of the remaining 10% maybe 90% buy the first month. That is probably a very, very uncommon pattern among software as a service sold on the Internet.
Andrew: Tommy in the audience is saying, “Metrics are important, you should know where to focus.” Which made me wonder, can you focus with all these metrics? How do you keep them all usable?
Patrick: There’s an infinite firehose of metrics out there. You have to focus on the ones that give you actionable information. But for this piece of information, I was going to do this; but now that I have this piece of information, I’m going to do something else and that something else is going to be better. If a metric doesn’t lead to a decision like that, there’s no point of watching it. Google Analytics is wonderful, wonderful software. They will give you 10,000 pieces of information. If you want to know the percentage of users from Germany who are using Firefox, who came in looking for Owls of East Asia Bingo cards, it’ll let you drill down to that, and it will only take two minutes of you time. Unfortunately, that information is not useful: there is no decision you can make based on that.
So, when you’re building your business or when you’re building your internal metrics solutions, you want to make them in such a way that very quickly gives you actionable information. For example, I have a page on the website which lists the ten most popular cards for this week. That is obviously very useful information tells me where I should be featuring. After you have a page like that, you figure, “How else can I use this, I’ve done this much work already, how can I reuse that in some way to extract more value out of that.” Maybe exposing it to customers is a good idea because, hey, if 90% of the people this week are looking for Halloween Bingo cards, then a random visitor to the website is likely also looking for Halloween bingo cards. So you create a publicly accessible popular page. And heck, since you’ve gone so far, why don’t you put that on the rest of all the web pages because people are ridiculously sensitive to what’s popular this week in my business. You continue building the foundation that you’ve already built for yourself.
Andrew: We talked about how to outsource, the other two things that you tried to do is automate and eliminate. We’d kind of touched on how you automated. Do you have another example of the routine task that you automated to save yourself some time?
Patrick: I sell a downloadable version of the program and an online version of the program. The downloadable version of the program, I sell to two people who are not very technical. So, their technical relation with their computer is that either their computer is something like a toaster. It does something that they need and then they go away from it. Or, their computer is something like a plaque or a devil box that they really hate and fear and do not like. So, anything that they put on their computer could be lost anytime, and this is a severe fear that they have.
[START AT 45:00]
Patrick: … signed up for the service. So, for example, most affiliate systems don’t do this. If you come in looking for ‘Owls of East Asia’ bingo cards, and you sign up for my service, then I’m pretty darn confident that you would like to be using ‘Owls of East Asia’ bingo cards. So as soon you you create your account, it’ll say, “Start making a new bingo card!” Or, “You were looking for Owls of East Asia bingo cards. Click here to get started.” They ‘click here to get started’. Bam! And so, it’s just, click to print. So, that’s actually one of the little things that I tested. If you add that, it kind of successfully increases the number of people who print a bingo card by, oh, twenty percent.
Andrew: I see. And the reason you care about that is, the funnel is, people come to you from search engines, they register, they download, they use a bingo card, and print it. And then, once they like all that experience, then they buy.
Andrew: And so you want them to print the first one, and have that happy experience.
Andrew: Because, the happier and the faster they get to that point, the more likely they are to buy it.
Patrick: Right. I think, the faster somebody sees something come out of their printer, the faster they’re gonna give me their credit card, so I try to optimize for that. I’ll tell you one thing, though. Most people, what they do first is they’ll try to print, you know, one bingo card, just to see that it’s safe, and when it comes out on paper, it’s something that they like. So I try to get that first bingo card printed out really, really fast. As soon as they print out one bingo card and find out they like it, they’re going to figure, “Okay, size of class plus one. Twenty-eight. Print twenty-eight bingo cards.” And then the software will tell them, “It’s only free up to fifteen. But, if you pay now, within two minutes, you can have twenty-eight bingo cards coming out of your printer!” And, so – I am a metrics junkie, I chart this – The number of people who buy on the first day, of their trial period – it never ends, but – the number of people who buy the first day they come to my website is astronomical compared to anything else. It’s, ninety percent of people buy the first day. Of the remaining ten percent, ninety buy the first week. Of the remaining ten percent, ninety buy the first month. That’s, by the way, a very, very uncommon pattern among things sold on the internet.
Andrew: Tommy in the audience is saying, “Metrics are important, you should know where to focus.” Which made me wonder, can you focus with all these metrics? How do you keep them all usable?
Patrick: How do you keep them all usable? So, there is an infinite fire hose of metrics out there. You have to focus on the ones that give you actionable information, that can, you know, “But for this piece of information, I was gonna do this. But now that I have this piece of information, I’m gonna do something else, and that something else is gonna be better. If a metric doesn’t lead to a decision like that, there’s no point of watching it. So Google Analytics is wonderful, wonderful software, and it will give you ten thousand pieces of information. If you want to know the percentage of users from Germany who are using Firefox, who came in looking for ‘Owls of East Asia’ bingo cards, it will let you drill down to that, and it’ll only take two minutes of your time. Problem is, that piece of information is not useful. There’s no decision that you can make based on that. So, when you’re building your business, and when you’re building your internal metric solutions, you want to make them in such a way that it very quickly gives you actionable information. So, I make a page on my website that if I click on it, it will immediately tell me, “Alright, here are the ten most popular activities for this week.” That is, obviously, very useful information. It tells me about what I should be featuring. And then after you have a page like that, you figure, “Well, how else can I use this bit of information. You know, I’ve done this much work already. How can I reuse that in some way to extract more value out of that?” Well, maybe exposing it to customers is a good idea because, hey!, if ninety percent of the people this week right before Halloween bingo cards, and you’re coming to my website, you are probably looking for Halloween bingo cards, too. So, make a popular page on the website that lists the popular ones. And then, why put it on just the popular page? And heck, why not put it on the left of all the web pages? Because people are, you know, ridiculously sensitive to what’s popular this week in my business. And you, you know, continue building on the foundation that you’ve already built for yourself.
Andrew: We talked about how to outsource? The other two things that you try to do is automate and eliminate.
Andrew: We kind of touched on how you automated. Do you have another example of a routine task that you automated to save yourself some time?
Patrick: Sure. So, I sell a downloadable version of the program, and an online version of the program. On the downloadable version of the program, I sell to people who are not very technical, and so they’re typical relation with their computers is either: their computer is something like a toaster: it does something that I need, and then I go away from it. Or, their computer is some, like, black devil box that they really hate, and fear, and do not like. So, anything that they put on their computer…
[END AT 45:00]
Andrew: He need to be able to write . .Atype of copywritter You have been never before and you need to have a idea about that .
Interviee:And you have people having available with that after success.
Andrew:So what about it spending for it about $25-30 which is not substinable for it .And i was reassuming on my assumptions and who will contact.
Interview:And i was spending on that But i accepted it . One think i need to be .One of my buddies from software company & you know whose hAavve give a try.
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that .I saw tahta i actually saw the case study & research on that . It is really impressive to see taht you were able
to see that you were able to do thAT with google optmiser . And i see lot of people are doing in part time in their day time &
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and nos 2 is that they do not need to go on that .And these is going to add value to the company .And the only enginnering company had done that work through
website now & keep doing things like that . And my value .You need to do that.But you ned to work on that
Patrick: Okay, we’ll let you do that but okay make sure you bring us more value with it. So, it worked out great for both of us. They did get some, I can’t tell you what I did for them, but I’ve done things for them that that I wouldn’t have been able to do without my funky little side projects. They obviously, let me do my little thing for years without ever complaining about it.
Andrew: Let’s take a few points here from the audience. Actually, somebody was asking, is Andrew gonna post this? Absolutely, I will be posting this. I post all my live interviews on the website. I’m actually gonna have a new editor do the editing on this. He’s going to use professional software and here’s the most important thing for the audience, he’s going to clean up the audio, which will be really interesting to see. So guys, this probably will be the first video that he edits, so give me feedback on how the audio is. There’s a conversation in the audience about whether you’re the Patrick who was on Aaron Walls SEO Forum. And yeah, you used to be one of the moderators, right?
Patrick: I’m currently one of the moderators I think, but yeah I’m on his forum. I spend far too much of my time on the internet so my original base was the Business of Software forums and that’s actually where I launched my business. They were very instrumental for me, pushing me to go forward and giving me feedback and ideas. In addition to that, I spend alot of time on Hacker News and on the SEO forum, that’s a paid forum actually. I paid him about two months worth, and then he came to me and said, Listen, you’re leaving such great comments on the forum, I hate taking your money, can you switch over to a moderator, you keep commenting and i’ll give it to you for free. I thought, That works for me.
Andrew: Aaron told us when I interviewed him that he had great moderators and I can see, I can see how true that is.
Patrick: Are the other ones much better than me?
Andrew: Ha, I’m not too sure. I think alot of people go to you for SEO information and online marketing information. Seeing how much you’ve been able to do in so little, it’s really impressive. Let’s see what else, before I go to the next question. Chris D
avis, I’m gonna take your question next, How do you get value out of message boards? I see alot of people in message boards that are trying to get value out of them. They’re going to the right message boards because they have the right topic and the right people, but when I look at their interaction, they’re mostly just hanging out. How do you get real value? And you told me the first time we did this interview, that the people on the message board were helping you through your product and helping you get your first sale. And in the days when you didn’t get even a first sale, they were helping you think through it, and you said in this interview they pushed you on. And while that’s a long way of asking a short question, which is, How do you get value out of online message boards?
Patrick: So, one of the things that- a sentence I read a couple year ago, I don’t remember where I read it but it stuck with me. It’s, Create value, then you capture. So if you’re very generous with what you know and you figured out then people tend to be very generous with you. So I tend to let it all hang out on my blog. If something works, I’ll blog about it. If somebody asks me a question, I’m happy to answer them. It sort of develops your karma, not in the numerical sense like in Hacker News, not in the metaphysical sense. But if people perceive you as somebody who’s helpful when they need it, then they will be very helpful when you need it. Also, my participation on message boards is also a personal exchange like I’m doing this to further the business goals. It’s something that keeps me sane, like, entrepeneurs all have something a little wrong with us, that we’re not doing the 9-5, or 9-3am in the morning job like everyone else in society. So, you can’t really go to your mom and dad, or go to your significant other, or go to your priest and say, Yeah I got two extra customers today because of my SEO. They might think you’re kinda crazy, but if you can be around other entrepeneurs you can talk about that with people who understand where you’re coming from and that’s sort of my cheap version of psychiatry. It’s a little bit broken.
Andrew: Okay, and I promised Chris I’d get to his question. Property protection, couldn’t somebody just clone your site, clone your setup?
Patrick: Couldn’t they? Somebody has done that twice. So, I run this, I won’t tell you who, but a participant on one of the boards, took my blog as basically and cloned my business almost down to the domain name. They were off by one character and oh well.
Patrick: My sales have gone up by a factor of four since that happened, I guess if two more people clone it I can retire…I think entrepreneurs worry too much about competitors, you know there’s a million fish in the sea, there’s a million niche’s out there, there’s a million takes on any one individual niche BINGO cards is not exactly the world’s largest software market, but there’s ten firms in it and I’m probably the fourth biggest. I won’t plug my competitors by name but there’s one that sells mostly to American school districts and that’s business that I’m not capable of going after and I have no desire to go after because it requires dealing with the school district purchasing cycle and chasing purchase orders and things that I cannot do efficiently from 12 time zones away and five hours a week. So they can slice off that little slice of the market or that big slice of the market as the case might be and I can go after what I can comfortably do with my escalable search engine strategy and somebody else can go after some completely different take on the market, for example Bingo cards by the way are a gambling device, some people might think, I think of them of them as an elementary educational device but theres an entire gambling section to the market and I have zero desire to pursue that whatsoever. People come to me and say “excuse me does this do the gambling one?” and I’m like “no but I’ll happily refer you to somebody that is not me that does that”.
Andrew: Why doesn’t it do it? What’s the difference between what you have and the gambling software?
Patrick: Gambling bingo cards have a B-I-N-G-O on top and they have numbers on them and the numbers are restricted so that 1-15 will always be under the “B”, 16-30 will always be under the “I”, etc. etc., and my software intentionally doesn’t do that. The reason is I don’t have any moral objections to gambling in moderation but my local jurisdiction has a legal objection to any sort of gambling device, and so..this is absoutely not a gambling device it is physically impossible to use it for gambling. So it’s physically impossible to use it for gambling. Similiar to Google adwords and Mailchimp, a couple of my vendors don’t like gambling because gambling leads to spam and bad customer experiences so a couple of times I’ve been blocked for “Oh, bingo is a gambling word” and I have to say “OK I’m totally not a gambling operation, I sell to elementary school teachers and pretty much only elementary school teachers, please manually remove the block”. That’s actually one thing, it’s very helpful to be able to point to Google.com talking about the elementary school teacher angle. They’re probably a customer of yours too, you want to be on their good side, right? They like me.”
Andrew: Let’s see what else we got here that I want to talk to you about. Actually let’s do one more thing about adwords since I know its so important to your business. What else have you learned about using adwords well that other people who are customers of Google can use?
Patrick: There’s a couple things. I’m not the world’s best expert on adwords, actually I’ll give you a name, Andy Brice, he runs aperfecttableplan.com, it’s another small software business, rather bigger than my small software business, interview him because he has forgotten more about adwords then I will ever know. That being said, copywriting for adwords is a sort of game to itself, one of the things you’ll learn is that everything you’ve ever learned about writing the english language, writing beautiful, flowery wonderful prose goes totally out the window. You have to take the most direct route to the goal every single time, it will crush beautiful, flowery prose, so I wrote, english teachers have a quirky sense of humor, so I wrote something like “roses are red violets are blue, something that rhymes with .. pick up your bingo cards today”. And I thought “ha-ha that will clearly do better than my standard “ok, create custom bingo cards on your computer download our free trial today” and it got crushed by the boring, straight-forward version. So the boring straight-forward version will almost always win. For some markets putting the price directly in the ad works better. It doesn’t in mine, but that’s something you’ll have to test. A lot of things you’ll find out about in (customer optimization) on your site not on adwords that are specific to your customers or specific to your particular market that’s why you have to get comfortable with testing and find out the truth for your own business.
Andrew: Test test test. I want to finish this off with maybe a collection of tools and services that you use and recommend because I’ve been writing some down here and they’re really helpful…
Worker’s Note: The phrase “customer optimization” in parentheses is what I think he said, it was hard to make out.
Andrew: because I’ve been writing some down here and they’re really helpful. Swift CDs, for example, swiftcd.com is a place where you have your CDs made and shipped out to your customers. We talked about a few forms, SEO book, hacker news. What was that biggest one, the biggest influence?
Patrick: The business of software forms. It’s [Joel Bolcy’s] site. It’s discussed at joelonsoftware.com/?biz. It’s called business of software forms that’s how I always…
Andrew: Actually, now I know which one you’re talking about. If you just go to joelonsoftware.com there’s a link directly to it on top. Any other forms that you use that you’d recommend?
Patrick: Those are the three that I spent most of my time on.
Andrew: Okay. Any tools that you use that you’d recommend? We talked about Google Conversion. We talked about Adwords. What else?
Patrick: So John, who was on earlier, he has Crazy Egg. I’m one of Crazy Eggs earliest customers and quite possibly their happiest customer because they show you where people are clicking on your website which is a key piece of information to learn, particularly when you find out that people are clicking on things that you did not expect to be clicked on. And because it’s a very visual tool you’ll find out almost instantly when looking at a report of your website. And so it gives you high value information that you can make real effective decisions on in a very, very fast fashion which is basically like hitting everything on my list for what great analytics should be. They charge me twenty bucks a month. It’s the best money I’ve ever spent. Use crazyegg.com. Totally not compensated for that one, by the way.
Let’s see another one, eJunky. They wrap Paypal and Google Checkout and make consistent API which has saved me a lot of time for doing payment processing. And they charge something ridiculously low, five dollars a month flat fee.
Andrew: And for new developers, eJunky makes it real easy to create a shopping cart, to add products to the shopping cart. They give you one dead simple code and you add it to your site and you’re ready to roll and start selling. What else?
Patrick: Right. Well, there’s a lot of stuff. So some people in SEO space don’t really trust Google all that much. I have mixed feelings about Google. I love them a lot for many reasons and, on the other hand, they are a giant mega corporation which sometimes does things that I’m not very [so glad] about. So if you’re worried about giving all of your data to the Google juggernaut and you don’t want to use Google analytics, the next best option for generic analytics is probably Get Clicky. Well, the software’s called Clicky. It’s at getclicky.com.
And they also give a realtime view called -I don’t know why they would call it this- but it’s called Spy. So actually you were clicking on my website and I saw someone accessing from Buenos Aires accessing this particular page. Personally, I don’t think that realtime analytics is worth it for most businesses because it makes you a slave to the computer screen when you’re not generating decisions in value for the business when you’re watching, you know, ‘ping ping ping’ on the computer screen. But it’s an amusing tool to look at once in a while and they do know basic analytics like who’s clicking on what page, what search engine keywords are [inaudible] very, very well. And they’re not owned by Google and will not be bought by Google. So it’s…
Andrew: I use getclicky.com and the founder, actually the cofounder of the business, Noah, will be here. I think we’ve got him scheduled for a month in the future so we’ll have him on here soon talking about the business. And I don’t think they get enough attention.
People are now talking about Chart Beat a lot. I don’t know if you’ve used Chart Beat but they do realtime analytics. They’re a beta works company. And when -who was it- Mark [Suster] wrote a blog post about them I instantly introduced him to Noah of getclicky and I said just check that site out too because it’s simple and it’s easy to use. And for people who are listening who aren’t sure if it’s right for them it’s free too. At least for the first 30 days you’ll get every single thing for free and then afterwards you’ll get most of what you need free. All right.
Patrick: One other recommendation for you. And so I’m an AB testing junky. I’m such an AB testing junky that I kind of literally wrote the software that does for rails for most people. It’s called Abingo if you Google. But despite that if you’re not an AB testing junky or you’re not a rails developer, I have a recommendation for AB testing.
It’s called thevisualwebsiteoptimizer.com. It’s run by one guy in India who might also be a good guy to get on the program because Google has a product that competes directly with it. And competing for directly the same, you know, kind of nontechnical marketing type folks. And his product created by one guy in India who had a day job, just totally destroys Googles offering. Google Website Optimizer is a…well I could do an entire interview on why that is not good software coming from that domain myself. His software on the other hand is just
Patrick: His software on the other hand was just amazing. I really wish I’d thought of the idea first because I’d make a million a year with it, but…
Andrew: Why is his version so much better?
Patrick: It has a what you see is what you get interface so you open your website and bring your browser on the page; and say you want to test titles, you click on your title and you type in like “buy bingo cards” on your PC. You click on “buy bingo cards” on your PC and you type in “buy bingo cards on your computer, and enter. And it says “all right, copy, paste this java script on your page.” Copy, paste, and then it will automatically do the A-B test for that.
No writing HTML, no fiddling with any server conversion settings or anything, no worry about the statistical confidence testing. It does that stuff for you. So for sort of a non-technical marketing person who might not be coming from a stats background, it’s just amazing. It’ll do almost everything that my software does without you having to become an engineer first. So that’s definitely a plus for a lot of people.
Andrew: Let me give that domain again because someone in the audience didn’t catch it and a couple of people wrote it in here, visualwebsiteoptimizer.com. And of course we don’t really have an connection with any of these except that Patrick seems to know everybody, and I should probably be interviewing everybody.
All right, well thank you for doing the interview, Patrick. Thanks for working with me on the technology. It definitely helped to have this setup the way we did. You came across crystal clear. You’re looking good on camera. Hopefully I am coming across not too bad. And thanks.
Patrick: Thank very much for having me, Andrew.
Andrew: Cool. Guys, check him out, patio11 on just about every system out there. And of course check out his blog and bingocardcreator.com. I’m Andrew and I’ll see you guys in the comments.