Andrew: This interview is sponsored by Walker Corporate Law. Do you need a lawyer that’s not the local guy that doesn’t really get startups, not the really expensive guys who just want a piece of your business, one who really understands the startup community and is there to help you? If you do, go to Scott Edward Walker of Walker Corporate Law.
It’s also sponsored by Grasshopper. Do you need a phone number where your customers can dial in, press 1 to go to sales, press 2 to go to customer service, et cetera, and maybe even all those numbers actually lead to your cell phone, but it makes you look big? Do you need that kind of feature and so many others? Go to Grasshopper.com.
All right, let’s get started.
Hey there, Freedom Fighters. My name is Andrew Warner. I am the founder of Mixergy.com, home of the ambitious upstart.
A few months ago, I realized that the biggest business lesson I learned, the biggest lesson about building a successful company that came to me, out of interviewing hundreds of proven entrepreneurs, is the concept that I called find the pain.
Basically, find the pain means instead of looking inside ourselves for great ideas, we, as entrepreneurs and creative people, can talk to potential customers about the pain that hurts them so badly that they would pay us, gladly pay us, to alleviate even a bit of it.
Well, the founder you’re about to meet took that concept and built a business with it over the past few months, and as he did it, he taught me a few lessons about the idea of find the pain and how to properly apply it. I invited him here because I want to learn more about the way that he did it from him, directly. I want you to learn from him and to see the way that he used find the pain to build a real product and a real business with real paying customers.
Pieter Eerlings is the founder of ArchiSnapper, which offers architectural site reports without the headaches. Pieter, welcome.
Pieter: Great. Andrew, thank you.
Andrew: How many months has it been right now?
Pieter: Been since we launched?
Pieter: Yeah. We launched in April, so that’s a couple of months.
Pieter: Four or five months.
Andrew: Four or five months. I intentionally invited you here early in the process because I wanted all this, all your process to be discussed while it’s still fresh in your mind, and hopefully we’ll have you back on here as you build and build and build.
Just to give people a sense of where you are with the business, what size revenues are you doing?
Pieter: Monthly recurring revenue today is between three and four thousand dollars.
Andrew: Okay, and it’s recurring because you have a software as a service, which means that when people pay you they get an ongoing relationship with you and you get ongoing billing.
Pieter: Exactly. Yep, yep.
Pieter: It’s [??] revenue.
Andrew: We started a find the pain group on Facebook here at Mixergy about a year ago. I’m looking at the first post that you sent about it, and in it you said, “Two years ago I bootstrapped a software development company,” and then you started to tell us the issue that you had with that. It was going well, but you still had a challenge that you were looking to this new business to solve.
What’s the company that you launched before, and what’s the issue that you had with it?
Pieter: You mean the software or product company, because we. . .
Andrew: No, the service business that you had. You were running a company called Zorros.be?
Pieter: Yep. That’s a Ruby on Rails software development company, so we do custom software for our clients. We built Ruby on Rails software and Ups, iPhone, iPod Ups [??] Ups. It’s nice to do. The problem is that it doesn’t scale, and at the end you are like employed. It’s like a typical employment, except that you have a bit more freedom, maybe, but you’re still building it for your clients in the way how they want it to be done.
Pieter: You’re trading your hours for money.
Pieter: That doesn’t scale. You have to do certain things on certain dates. You have to meet deadlines, you have to commit for fixed price projects. Yeah.
Andrew: In some ways, actually, it seems worse than having a job because no one would yell or give as hard of time to their employees as they do to outside contractors.
Pieter: Exactly. In some situations it’s worse because it’s the worst of both worlds sometimes. And you came to this approach because you started with a different approach. The approach that I mentioned earlier the one that most entrepreneurs take, which is I have a great idea I’ll go build a business. Before you launched this service business, what was that great idea that led you to launch the site called Fikket.com?
It was about 2009. I was employed. I had the great idea. Fikket.com which is like the same thing as Eventbrite so online ticketing on the fly. We take commissions on each ticket sold. And I had that idea. The biggest issue that I have now was that I didn’t validate it. So I just started developing it with a few friends and we worked on it for some months.
Andrew: How many months?
Pieter: Before launching, in our spare time, so after work, let’s say 3 months. Then we launched and for couple of more months hoping that it would sell. But we didn’t do any marketing, we didn’t call any single person to validate if they would use it or so. So we just spent all the time in developing an effective solution for effective problem. I see. I guess if we would have called at least 5 persons we would come up with a better solution for an actual problem instead of effective problem.
Andrew: When you thought about it, you’re a smart guy who’s aware of the problem, who’s aware of the market, who’s aware of what’s available in the ticketing space. There was something about that idea that excited you. I don’t want to just blow it off. I want to understand that excitement that got you to build this site that I’m now on right now that looks great. What was that original idea that got you so fired up that you wanted to build a product around?
Pieter: Why I came up with that idea?
Pieter: Honestly, I don’t remember. In fact I wanted to launch, like so many developers, I wanted to launch sales products. I was like seemed so cool. And we just did it to escape from the typical employmentship. I would say.
Andrew: I see. So it wasn’t so much that you loved ticketing. It wasn’t so much that you found an opening in the ticketing world you just said hey if I could do SAS I could get paid for every time someone uses the software. People around the world will use it to send out their invitations. I’ll keep getting paid. Was there recurring revenue even in this model or was it just for ticket revenue?
Pieter: It was for ticket revenue. It’s also recurring because if many people are constantly selling tickets it’s kind of recurring revenue.
Andrew: I see. As long as an event organizer would use you again for the next event then you got paid.
Andrew: That’s the idea behind it. You are all enthused. Do you remember we all as entrepreneurs have this vision of how the world is going to love our product?. People all over the world are going to use it. Did you have that?
Andrew: What was your vision for that?
Pieter: I just thought that once we would launch it, we would just send a few emails and it would take off automatically without doing a lot of marketing. At first I thought that I was the only one in the world with this idea. Then I saw Eventbrite. So it was a big disappointment that someone else had the same idea. I think that this is stupid because every single idea is already taken. It’s how you do it, how you market it, how you grow your idea. If you act upon it, that’s more important than having the idea alone. What was the question?
Andrew: That moment that you thought that everyone is going to love it. Like I’ll tell you for me. I remember back when I launched grab.com the online contest site. I said in my mind, I visualized Entertainment Tonight covering the red carpet event for some movie premier. And they said, “Oh and there is Jennifer Love Hewitt walking down the red carpet with that guy Andrew Warner who created the grab.com website. That guy just made a killing. Everyone is on it. I can’t get my kids off of it. I can’t get my family off of it”. Now that whole kind of thing. And I just imagined that, of course, everyone was going to love it. It didn’t occur to me that maybe it’s not going to work out that way. It just was the vision that I had. What was your vision?
Pieter: My vision was just like a lot of people using it. It was not for the fame or to be famous. I was really hoping to be able to quit my job. That was the thing.
Andrew: I see. So you just saw visions of money coming in the door, you quitting your job, and finally getting to work on what you loved.
Pieter: Exactly. And building the next product and the next and the next.
Andrew: So you don’t have delusions of grandeur the way I do, but you do have expectations of success and so when you launched it and it didn’t work, do you remember the day that you realized, this is just not going to work out?
Pieter: It was not a day or so. It was more like a process. Like first, okay, I saw Eventbrite, “Oh shit, it’s already existing.”
Pieter: Then I think Eventbrite got some capital like, okay, they go two million dollars. This is not good. Then we did get some users and we did get some money actually so we did get some recurring revenue out of it, but so little that it wasn’t even enough to pay our service.
Pieter: So then at the end, because I gave up my job already. Why because whether Thicket would be a success or not I knew I didn’t want to keep on doing my job. OK. So it was no option to keep on working as an employee. So I gave up my job. So it was a fact that I had to find something that would pay my life.
Andrew: I see. So like Cortez you burned your boats? You said, “I am going to be an entrepreneur. I can’t go back to being a wage earner anymore.”
Pieter: By jumping in the water while you cannot swim.
Pieter: I convinced anyone I would find a way to survive and that was what I did.
Andrew: So you didn’t freak out at that point when you realized, “I can’t even make enough money for servers.” No?
Pieter: No. No. No. No.
Andrew: What you did was you made the best of it by using it as a portfolio piece?
Pieter: Yep. So then. . .
Andrew: How’d you do that?
Pieter: Well, we had some people mailing us, like, Okay, “I like this Thicket too and I’m using it, but I want this and this and this option. Do we have that?” No, we don’t have it but we can build it for you. Because I’m a Ruby on Rails developer, Thicket was in Ruby on Rails so the next logic step. We had quite some people asking, “Okay, I’ve seen Thicket but can you also build an administration tool for whatever.” So out of necessity I would say I started up. I just came up with a name. So ArchiSnapper. I put it online, Okay. The builders of Thicket, we also do custom software. And that went super smooth in fact so within a few months I could hire the first person. The second, the next, and now we are seven persons in ArchiSnapper.
Andrew: I see. And it started out building for money custom pieces to your ticketing software? And then it moved on to you building custom things for clients for money as a consultant because it’s a service company.
Pieter: Sure. Exactly.
Andrew: I see so even Zorros was kind of built maybe not intentionally but it was built with this idea that you were going to solve people’s pain. That you weren’t going to build anything until someone said this is such a big pain for me that I’m willing to pay you to show you how important it is to get the solution.
Pieter: Yep. Service was build out of pains, of customer pains. So they came to us, ‘OK, I have this. I want this. I’m ready to pay you for it.’ It’s not a product, but it’s a service business, but still, every customer that is contacting us at service has a concrete pain and they want to get rid of it.
Andrew: Got it. Alright. So now this is humming along for a couple of years and that’s when you say, “I want to try this find the pain concept to build a new product.” And at the time, can we say what the two, I’ll say a little bit about the two ideas that you told us you had, but you say whatever you can to just give us an understanding of where you were when you were starting out. One had to do with car dealerships and the other with e- commerce. Do you remember those ideas?
Pieter: Yep. Exactly.
Andrew: What was the car dealership one?
Pieter: The car dealership wasn’t an idea that I came up with in fact. It’s Zorro’s client, a car dealer that had that very concrete pain in his administration. I don’t know if you know the brand Renew [SP]?
Andrew: Yep. Yep.
Pieter: In U.S.? Okay. But Renew as a company doesn’t provide any software to their dealers.
Pieter: So they have to come up with Excel access and MS Work apps that they hack together to do all their administration.
Andrew: MS Works apps?
Pieter: Microsoft Works.
Andrew: Yeah. I remember that. That’s what used to come free with, and maybe it still does, with Microsoft computers. It’s their cheap version of Office that comes built in for many windows software.
Andrew: Windows computers. OK. So you were noticing that they were using all this old technology, all this really overly simplistic but not very effective tech and so what did you assume? What was your theory? Pieter: In fact I didn’t notice it. They came to Zorros to have an application built for them to reduce the administration a lot. So one of the dealers in [??] Bergen asked us to make a program just for them. But then, we said OK if they have this, other dealers must have the same problem.
Pieter: So, we built it from the first one and we contacted other dealers. And in fact we were able to sell four more copies of this project. Because. . .
Pieter: It’s small projects. The only problem with this market is that in [??] Bergen alone there is about twenty dealers.
Pieter: So, that’s a very small market.
Pieter: The whole of the center of the [??] Bergen market is 20, 20 clients. And, we have four out of those twenty and the rest is happy with what they have now or they say OK let’s look at it later. So, that’s, we have about 25 percent of the whole market potential. So,
Andrew: I see. So, you found the pain and a pain that was big enough that people were willing to pay and they had the money to pay for it but you realized, ah, the market needs to be a lot bigger or else we can’t grow as big as we’d like to.
Pieter: That’s it.
Andrew: Okay. Did you lose any money on that? Or did you? You didn’t?
Pieter: We still win money on that.
Pieter: How? Because they pay a license fee every year.
Pieter: So, the four clients that we have they pay money more than enough to pay servers and to keep some profits.
Andrew: And did you make sure that they could pay before you started building? Did you charge them the way you might as a consultant?
Pieter: The first one yes because we build it on demand for him. So, we charged him the full amount.
Andrew: I see. And then you got permission from him to make it available to other dealers.
Pieter: Yes. For a small fee.
Andrew: Alright. So, I see how you’re thinking. And, I can see that even though this wasn’t a monster hit. The first attempt at this process already worked. The next thing you were considering was e-commerce shops. What was your thought process around there and what happened to it?
Pieter: The thing was that it was (?) an ID that came from us. So, we thought like OK those e-commerce shops, they must have a lot of data. And if we can just visualize this data better, so that we can tell them who is likely to buy again from them, or who didn’t buy from them for the last two years or like that the typical data trend that is going on. Now we gave up that ID because there is a lot of start-ups in that area. I think it’s crowded there. Yeah. There were a lot of companies, so it not niche enough, not small enough, it’s too big maybe for a bootstrap company like us.
Andrew: Okay. And did you build anything for that? Or you just realized it wasn’t big enough.
Pieter: We didn’t build anything. We just quoted and we found some people that say yes I would like to pay for this but can you tell me more about what it does and so we were still like extracting the pain. But at the same time we discovered that there are a lot of startups in this area. A lot of [??] fool start ups with a lot of capital. We don’t want to compete with them. So, let’s go for smaller niche. Something where bootstrapping makes more sense.
Andrew: OK. So, I can see how you are starting to develop it out. You did this great set of blog polls on your personal blog explaining the process that you took and you allowed people to follow along as they did it. A lot of my notes from here on come from that, from that site. It’s blog.eerlings.com. blog.eerlings.com if anyone wants to see it in more detail. But here’s one of the things that you said when you, I think it was in the announcement polls where you said I’ve got it. I got the idea. You said, we did around 500 phone calls in ten niche markets. How did you find the ten niche markets that you were going to cold call people in to find their pain and see if you can build a product around it.
Pieter: Yeah. It was just like brainstorming but also the niches, but we because of the ,yeah what we learned by now, we knew we had to have some criteria for the niches. For example, we knew that the niches, they had to be accessible online, reachable. So, we wouldn’t come up with a niche like old yoga teachers or so. Because they don’t have any [xx] so we wouldn’t be able to market online towards them.
Pieter: So, the niches would also need to be. . . There is some criteria on my blog like what pictures to pick out and which not to for what reasons.
Andrew: I thought I pulled it out of your site. I guess I didn’t, but it is on your blog. I’ll look it up and see if I can find it as we’re talking here. You knew also that you wanted to have a big enough market to avoid the problem that you had with the car dealerships. You wanted them to have money.
Pieter: Yes. We needed to be able to reach the decision maker. For example, I think school teachers are a rather difficult reach because the teacher himself will not be able to make the decision to buy or not your product, so you need to convince the director of the school. If you are bringing something for teachers but you have to convince the director it’s much more difficult.
For example, the current niche that we have is architects. There are a lot of architects. You can find online directories of architects everywhere. You can find their e-mail addresses. You can buy e-mail lists of architects. They are the decision makers, so if you call them up and you say what you are doing and which [??] you are selling you’re talking to the person who will pull out his credit card. That’s the perfect niche for me.
Andrew: I see. They don’t have to go to a school administrator or anyone higher up to get approval for this. Here’s the list that you had…. you said it had to be a niche market. You wanted to think wider than what the typical developers think. Most developers seem to think only about their world and their friend, and here you reached out and ended up with architects. It had to be b to b. Why business to business instead of business to consumer?
Pieter: I run a business, and $500 for my business is nothing. $500 for me as a person is a lot of money, so I spend a lot of money for everything you can imagine.
Andrew: You’re right. (Paraphrasing) “$500 for a business, yes, we’ll pay for. I’m at home looking at my iPhone in the app store and think, ‘Should I pay $5.00 for this app? I’m not sure.'” You also wanted to be able to reach the market online, as you said. The final criterion is, “We had to be able to reach the business owner/boss directly,” as you said, so you can solve their problem. Do you remember one of the other niches you considered outside of architects?
Pieter: Yes. In fact, we’re a bit more oriented towards people that are a lot in the field because we build iPods, iPhones, and online apps. We knew that if you tried [??] in that space, we already had a big competitive advantage; we didn’t have to hire anyone to do it. We could do it ourselves.
Andrew: Okay. Construction companies for example: The people in construction industry are not sitting at their desks all day long, but they are out in the field and could have a phone. That’s something that you felt you were good at. You did 500 cold calls and said 150 of them actually wanted to talk to you. How did you get people to talk to you? Why did hundreds of people not talk to you?
Pieter: I didn’t measure it, so it’s 150, more or less, I would say. In fact, a lot of them didn’t want to talk to us.
Andrew: You would just call up an architect or veterinarian and say, “I’d like to ask you about whatever.” Then they said, “No, I just don’t have the time.”
Pieter: Yes, exactly.
Andrew: I’ve got your script here that you used. Was it challenging to pick up the phone and talk to a stranger? What was that challenge? Be open about the emotional part of this if you could.
Pieter: You know that you will disturb someone. If someone is calling me just like that, why should I reply? Who is he and why should I reply? I have more important stuff to do. You know that at the end you’re trying to sell them something. You want to help them because you want to build software to remove their pains, but people don’t always see that directly. I didn’t like it.
I’m more like the technical guy and my co-founder is more the sales guy. He did most of the calls, and I did a lot of them as well. After let’s say call number 20 it went smoother and smoother.
Andrew: I’m looking at a script that you used. You said hi my name is Peter from Zorros. We build software for businesses like yours. These days we’re writing software to improve the business of doctor, if you’re talking to a doctor, nurses when you’re thinking of the nursing industry, industrial cleaners etc. I’m calling you to hear if there are any pain points in your business. Any frustrations, any issues, time consuming administrative tasks that ruin your day. Would you have ten minutes to talk with me about that? That would be helpful to build software in the right shape for you. Did you really write that down a script? Or was it just riffing
Pieter: I wrote what you just read. I wrote it afterwards. So, this is what I use most of the times but I didn’t write the script down. No. It was more like, every person is different.
Andrew: So you’re just winging it. But you knew that what you wanted to do was introduce yourself as a guy who makes software. Who’s trying to find the pain that they have so that you can build software for them.
Pieter: Yeah. And, sometimes I said, Okay.We are actually building software for architects or whatever niche. But I would like to hear from you, what should be in that piece of software. Just as if we are over the, in the process of building it. Hence, I need your feedback, you can help me and the thing is that people love to help. If you ask feedback, if someone is asking my opinion or my feedback on something. OK that’s another thing. You’re not disturbing me just for anything. You want my feedback and I can help you and maybe I can even [xx] the piece of software together with you. And, that’s what people love in fact.
Andrew: My friends at companies like KISSmetrics have said that it’s hard to talk to someone about what problem they have directly and have them say exactly what the issue is. Sometimes you have to get to know them and get to understand their day to identify those challenges that are so painful that they’d pay for software to solve. Did you experience that? It seems like you were asking them directly.
Pieter: It’s true. They cannot say, they can often not say what’s really painful for them and what is disturbing them. But the thing is that after let’s say having heard three or five times these same pain points, which is the, yeah the side reports and all demonstration around it. The next call we would say like, hey we are building software for making side reports for facilitating this process. Is that interesting to you? And then it was like they said, Oh yes, sure, this is super interesting for me.
Andrew: I see.
Pieter: We put the pain point on the table. A bit more suggestive. I don’t know if it’s a good idea because you want to be as open as possible. But on the other hand if they cannot come up with any pain points then you mention what you think they don’t realize themselves and then they say Oh yeah sure, this is very annoying. Yeah sure we have enough of that. And then that opens the door.
Andrew: I see. You know what, as an interviewer I have recognized that in my pre interviews, sometimes it’s hard to get people to explain what they do. But if I suggest an explanation for them that’s really off or really on target. They jump in and they start to talk. So, for example if you didn’t know to explain that your software was targeted at architects. If I said, so it’s targeted at kinder-gardeners right?
No, it’s targeted towards people who, you know, architect buildings. Architects. That’s who I want to be interested in me. And you’d be pissed at me. Or if I was right and I said it’s geared towards architects, you’d feel yes that’s exactly it Andrew. You really understand me. Either way, if I’m widely off or exactly on target I get passion out of you and I get you to really express it. It sounds like that’s what happened to you. Am I picking up on it?
Pieter: Yeah. And that’s really it.
Andrew: So, how did you narrow yourself down to architects, when there are so many different fields that you could have talked to. Pieter: It was like, OK we called a few doctors, a few architects, a few lawyers and then with architects we had a few people mentioning the same thing. Let’s say just out of the 50 architects that we called, we had maybe 2 or 3 mentioning this pain point. So, then we narrowed down into that niche. For me I think any niche would be fine. In any niche there is a pain point. You just have to work on it and call enough people to find it. So, for me it doesn’t really matter which niche it was.
Andrew: I said at the top of the interview that your software makes architectural site reports, it offers architectural site reports without headings. I actually don’t even know what that means to be honest with you.
Andrew: [??] don’t even know what that means, to be honest with you.
Andrew: You’re not an architect. I’m not an architect. When someone explains to you their problem, and it has something to do with site reports, how do even understand it well enough to talk to them about it, let alone to solve that problem?
Pieter: Yeah. We visited a few of them, the ones that were the most interested, like, “Okay. We need it. We need it now. Can you build it? Can you build it faster?” So they were asking every week. We visited them, and they explained [to] us every detail of the process because they really needed – they wanted the software. They were typically the bigger companies; they had a lot of people doing those site reports.
So they realized, “Okay, if everyone – if we can take out five hours per week of all of the people that are working here, we save, let’s say, a week per month of time, of salaries, of wages.” So they wanted it, absolutely. And they were able to explain [to] us every detail of the process.
Andrew: Do you remember how they first explained it to you, back maybe, at the time when you didn’t fully understand it? What were they saying then?
Pieter: Yeah, it was quite chaotic. So, they came up with, “Okay, just this and this, and that’s it.” “Ah, Okay. You don’t want to do this?” “Ah yeah, sure, sure. We also need that.” And then… so, it’s very difficult to really know what they want. Also, to be able to keep it generic enough for all the architects. We don’t want to build their ArchiSnapper; we want to build the ArchiSnapper for all the architects.
Andrew: I see.
Pieter: So what it was – it’s difficult to understand what they really want, but on the other hand, it’s something that we always do with our service business, because when we are building software on the mounts, we do a lot of functional designs, which means that we detail out all the aspects of the software before building it.
Andrew: Can you explain it to me the way they might have explained to you what the pain is? I want to – I want to see what a pain that’s worthy of creating a software company around sounds like.
Pieter: Yeah. So the problem is that they have to make site reports, like, for every construction site they have. Every week or so they make one site report to follow up [on] the progress.
Pieter: They go to the sites. They take a camera. They take pen and paper, maybe a voice recorder. So they take pictures, they take notes, they have checklists to check certain things, if everything’s OK. They gather all this data in the classical way, I would say, then they come home, they open up MS Word, they plug in their camera, they drag all the pictures in Word, they type over all their notes, and so… So that’s the actual pain point. And they have to do this for all of the construction sites once per week. So let’s say you have ten buildings that you are working on now. Then you have to do – ten of those – so two reports per day. It’s a lot of time.
Andrew: These are architects who design the buildings and now they’re watching the progress of the construction to make sure that it’s following their design and that it’s moving along properly.
Andrew: I see. And so they’re walking around with maybe a handheld camera, maybe their iPhone’s camera or Android camera, maybe a notebook where they can write down notes, maybe another notebook with checklists or something printed out, and they’re just walking through the construction site doing all these things over and over, very [??], and then they’re putting it together in, you said, MS Works, again?
Pieter: No, no, no. MS Word.
Andrew: Oh, this time, Word. Unlike the dealers, they’re using the Pro version. Word…
Andrew: …to create a document like homework in school, and they do this multiple times a week.
Andrew: I see. And their headache… And they noticed that this sucked. They noticed that it was a pain and that they shouldn’t have to live with it.
Pieter: Mm-hmm. Yep.
Andrew: I see. Okay. So now we’re seeing a lot of different things that have to go in. And you told me earlier that there was some — they wanted to build something that worked for all architects, not just for the one or two that you happened to talk to who were the most frustrated. What’s something that really hurt one person that you realized, ‘No, it doesn’t work. It’s not an issue for anyone else’?
Pieter: It’s difficult to come up with one specific example, but in all the cases, or in most of the cases, it’s details. Like, okay, I always have my – I just imagined something – I always have my footer in red.
Andrew: Ooh, I see. OK.
Pieter: OK. In fact, if we say no we don’t do that, but he’s still using it, then we know we release all the pain because he’s willing to give up his [??]. Don’t do everything forever, just keep it to the minimum and do that very good. I think that’s a key.
Andrew: So, if a software company came to you and said, “Build this software for us.” You thought of yourself as both your client and the software company that was going to build it. So you built specs to show, I guess I’m getting too tangled up. Basically what you said earlier is you treated it like a client and you built specs. Did you take those specs out to your architects and say, “Here, this is what we’re going to build”?
Andrew: What did that look like? Was it technical or was it a set of screenshots? What was it?
Pieter: It was screenshots with pen and paper. Nothing digital. So we just draw it. As they explained, we draw it on the paper.
Pieter: We drove to another architects and we showed those same drawings and we talk them through the process. Like, “Okay the app will do this and this and this. Is this helping you?” And they said yes, I just missed this parameter because I always keep track of the dates when I did the report. Okay. So we added the date because this is quite generic. We showed it again to five architects.
Andrew: It was just pen and paper?
Andrew: So I’m imagining here, I got pen and paper right here. I’m imagining you say, “Okay, you need something that, a button for checklist. Put a check next to it. A button for notes. We’ll put a pencil on that. And you need a button for camera. So we’ll draw a camera right there, that’s my camera. If I do this and I just give you an open screen where you can click on one of these and you’re done. Would that be enough?” And they said, “No, I need a date.” So you said, “Oh, okay. So if I give you another button for date or automatically add the date.” My bad handwriting. “Would that work?” And they said, “Yes.” This is amateurish but maybe a lot better design because you’re an artist.
Pieter: That’s what we did. Yeah.
Andrew: Okay. That’s…
Pieter: I don’t think you need more because people always think the magic is in the tools, but this is super clear for everyone. Yeah. That’s what we did.
Andrew: It wasn’t even Keynotopia. It wasn’t Balsamiq for mockups. Just pen and paper.
Andrew: And then the next step, was it developing the first version?
Andrew: What did you keep in the first version. I read the term minimum viable product several times on your blog. What was in your minimum viable product?
Pieter: They should be able to enter remarks and notes on the iPods to take pictures and to make annotations on picture like a circle because that’s what they do all the time in Works or in Paint.
Pieter: They open a picture and they make a circle on it to, yeah. So that’s what was in there. Then the date, general status fields, and then a way to import their construction sites and data from Excel. Because otherwise they wouldn’t use it if they had to do it all manually. Like some of them have two hundred sites so they won’t enter that manually, of course.
Andrew: What about payment. How did you know that this was not just a nice to have tool, but something that they would really pay for if you built it for them?
Pieter: We didn’t integrate any payment system when going live. So we went live without payment system. Just looked if they sent the report to their clients because that’s what they do when their PDF is ready. The site report is ready. They send it to the owner of the building, to the construction companies, and to all other people that need it. But they knew that if they did this, then they are using it. And if they are using it, they would pay for it.
Andrew: I see.
Pieter: We told them about a monthly fee. We just didn’t say how much it was because they all asked, “How much will the app cost when it’s ready?” And we said, “Okay, use it for free for now. Just test it and if it’s okay for you, we will just ask a monthly fee, let’s say, in two months from now. But for now just use it.” So they knew it was a monthly fee because we didn’t want to give them the illusion that it would only cost one dollar for the app or so.
Andrew: I see. When I asked you before we started when you launched, you said April, but you also said, “We need to make it clear that it wasn’t like there was one launch date in April and nothing happened before and that’s when everything started.” You did make some sales before April, right? Or were you just getting users before April?
Pieter: We were getting users so on boarding them one by one in the beginning. The app was so bad I would say so we launched (?) and it was not so user friendly at all. So we had to on board them and explain to them a bit where they had to click. But despite everything they used it in production so that was like a process between let’s say, I don’t remember exactly, but between February and April, where we on boarding already a few customers and they tested the app for us. And they were using it in production so we knew if we just asked them for money they will pay because they are using it.
Andrew: You mean you’re going into their office on boarding them in person?
Pieter: Back then it was with the phone. We just said OK, this is the app, install it but here is my phone. Call me at any moment during the day, I will help you out. And we got quite some phone calls in the beginning.
Andrew: Did you walk them through it that first phone call? Did you walk them through it at all or you just said, ‘Here’s the app. If you need me call me.’?
Pieter: No. We helped some of them because we wanted to see if they would use it.
Andrew: What’s the biggest bug or lesson that you learned after you showed them this buggy first version?
Pieter: In fact, it was a positive because the excitement for me was when they used it. When they used it and they send out reports full of bugs. The app was full of bugs, not full, but it was buggy, and not user friendly but they still used it. I knew that we were solving a pain point. That was the lesson I learned.
Andrew: I see.
Pieter: You can make an useless app. You can make it super shiny and sexy and make it pretty, but if you don’t solve a pain point it’s much more difficult to market.
Andrew: Got it. OK. So you started seeing people use it and now it’s time to charge them. How do you take people who are using this thing for free and start charging them?
Pieter: We just integrated the payment gateway with an automatic message in the app so the next time they logged on they would see, Okay, your trial is expiring in one month from now.
Pieter: And at the end of the month . . .
Andrew: Excuse me. I had to sneeze. I hit the sneeze button so I could without popping the mic. Was your app low back on charging? Were people upset? Were they okay with it?
Pieter: Not at all. Maybe one or two said, “Okay, this is too expensive.” But that’s like an exception. You always have people that think it’s too expensive, of course.
Andrew: And part of it I imagine, tell me if I’m wrong, is your dealing with business people. They’re not like the users of Instagram who are using it for fun. These are people who are, if you’re charging them, they’re adults, they’re professional, they understand that this is how you make your living.
Andrew: I’m looking at different price points on your website right now. I’m just going to read them out, but AFBG by the time the person’s listening to us, who knows maybe it’ll be days after we publish, years afterward, so this could all change but, small’s $24, normal’s $44, business plan is $119, pro $269, enterprise $529. The big difference is the number of sites that they manage and the number of reports that they get. How did you figure out how to bucket the features and how to price them?
Pieter: Very difficult. This is just guessing in fact, in the beginning because you don’t have any data. If we would have ten thousand users today we could easily figure out the best pricing, but we don’t have ten thousand users. It was guessing. We asked to some of them like how many construction sites do you manage per week, per month, per day.
How many reports do you make? And based on that we wanted that most would like go into the normal or the business plan. We added the small because we want our typical users to be not in the smallest plan. And we added the plan enterprise because big companies have more money and they should pay more.
Andrew: OK. And there’s no free version?
Pieter: No there is no free version. It doesn’t make sense if you sold them in B2B, I think. If you sold the thing, well, they ask money for it and you should even not charge $5 per month. It doesn’t make sense in a B2b.
Andrew: In a moment I’m going to ask you how you got more than just the first customers that were basically your co-partners or co-founders in this product, but tell me about the feeling at this point. You launched a product, you know you’re solving a pain that people have, you know that you’re alleviating to such degree that they’re actually using it. Now how are you feeling?
Pieter: Yes. It’s great because, in fact, I think that the first few recurring dollars are the hardest. You just need months of phone calling, cold calling and extraction developments, some marketing, patience building it. Then you’ve got, let’s say, the first 50 dollars or the first 100 dollars recurring per month. Now you know that you have something scalable and you know that if you could just repeat the same trick, let’s say 1,000 times, you have $50,000 per month.
You just learned a lot and you did all the effort up front. So I think the first few recurring dollars per month are great.
Andrew: It’s a feeling of satisfaction, but also confidence and security because you know that it’s not luck. You know that you’re solving a real problem. You feel comfortable talking to your customers it sounds like?
Andrew: So the first people who you reached didn’t get you to the level of revenue that you have right now. How did you go beyond those first customers who co-developed with you to find your next batch of customers?
Pieter: You mean all the new customers after we launched?
Pieter: We bought an e-mail list from architects and we are doing, right now, heavy e-mail marketing with great campaigns. What we do is….well, It’s not yet online, it’s planned for August. But we sent them an e-mail telling about, “Hey we have this obligation.” But we have several e-mails and we are still seeing which one is converting the best. But the first one is, “Hey we are building an obligation for architects and we are looking for beta testers, trial users.”
Andrew: Really? We’re building this thing and we’re looking for beta testers. No embarrassment about not having it launched, but actually pride that you’re showing them the process.
Pieter: We pretend that it’s not yet ready because we know that people love to be part of building a solution. So we say, “Hey, we are looking for beta testers, do you want to beta test it?” If they say yes, OK, we make their account and they test it. It’s permission to send out the mail to let’s say thousands of architects asking them to be beta testers. That’s the first one.
The second one is downloading sample reports. We send out mail, “Hey we have an app for architects to make site reports. You can download the sample report here.” If they do that they have to fill in their e-mail address. Once we have their e-mail address we send them five to six articles, but not at all related to our tool, just useful information for architects.
For example, how to set up Dropbox in the best way. The title is “How to get the most out of Dropbox as an architect.” So that’s super interesting for them, or how to get more clients with a nice portfolio website. It is not at all related to our tool, but we build a relationship and we build trust with them.
Andrew: So portfolio site for architects, Dropbox for architects, and you’re teaching them and you’re building your relationship with them. Where did you buy this list of architects?
Pieter: I can send you the website, but if you Google it I think it’s on the first page of Google in a list of architects.
Andrew: And you’re just allowed to buy lists of architects e-mail addresses?
Pieter: I don’t know. [laughs]
Andrew: Okay. Have they been responsive or are they saying, “Hey you’re spamming me.”
Pieter: Very few are saying that we are spamming them. Yes, of course we were scared that we were spamming people, but we keep the e-mails very non- spammy. We don’t say, “Hey buy our tool now this is great.” We are really asking for feedback, it’s quite kind I think.
Andrew: I see 35,700 e-mail addresses for $245.
Pieter: Yeah, that’s one. The second rule is that we said we would never e- mail one person two times. So, we’ll only send one e-mail to a person and if they don’t click on it or open it or react, we will not send them another one.
Andrew: I see. OK.
Pieter: Because otherwise it would become really spam.
Pieter: Yeah. And another thing that we’re doing now is, we have hired some book content writers and we are also writing or they are writing interesting book rules for architects.
Andrew: Got you.
Pieter: And the other thing that we will do in September it’s like page advertising.
Andrew: And the idea that got you or the criteria that you had was you wanted them to be online, you wanted them to be reachable online and that’s why now you feel confident that you can reach these people online.
Andrew: It was part of your model. Part of the way that you were doing things. Let me see, so the post that you put up in our Facebook group, find the pain group said we have 2.5 thousand dollars, $2500 a month recurring revenue. This was about a month ago. At the top of this interview you said you’re at 3 to 4 thousand. So, you’re growing pretty nicely.
Pieter: We have a few [xx] but in fact we still have people that say like they said six months ago, OK this is something that I need. But they are only using the tool now because, I don’t know what reason, but the thing is that if you are selling something to a B2B they don’t always have time to try it out now, immediately. So, often you see like a delay between the moment when you first showed them the tool and when they pay you for it for the first time.
And I experienced this myself also when I see a tool online, like hey I need this, it will save me a lot of hours for my business but I don’t have time to do it now, so, only after a few weeks or even months when the pain is hitting me again, I say okay, now I actually need it, for example I lost another backup, okay I will just pay for another backup server now.
Andrew: I see. Yeah. Right and business to business means often a longer lead time versus consumers (?) install right away, they’ll install whatever, just to play with it. Businesses are much more deliberate, have processes already in place they are competing with. I see and they have more to lose.
Andrew: All of this sounds really easy. This find the pain process people have heard it in my interviews now for months but it’s not ever as easy as it sounds. Where is the person who is listening to us right now likely to have the biggest challenge or where are they likely to trip up?
Pieter: It’s a difficult one. But I would say like finding the pain is really the key. Because if you find the pain and you succeed in finding the pain then all the rest of the story becomes more easy. Like I said we had bugs and the UI was not so nice but still people paid us. So this is why, because we really solve the pain.
Andrew: I see.
Pieter: If we send out an e-mail with a list that we bought, e-mail list that we brought talking about up and up that souls are starting to pain. People don’t say it’s spam. Why, because to some degree they agree that.
Andrew: It’s a pain that they really have.
Pieter: Yeah. So they don’t say like, what is this? This is really spammy. They probably keep the e-mails somewhere. So. . .
Andrew: Let me say this to the audience. I’m now asking Peter to think back of where the biggest challenge is in putting this together. If you’re going through find the pain, and you’re using this process that we just outlined and having any challenge, let us know in the comments or find a way to get a hold of me or Peter and just let us know where your challenges are. I am actually curious because I want to do more interviews about this. And I want to know where your challenges are so that I can ask better questions for you next time. And maybe if I can’t fit it into an interview or it’s too urgent then I can introduce you to someone who can help out. Peter, are you open to people asking you questions directly about this process?
Andrew: What’s a good way for them to connect with you? And we’re not done with the interview. I’ve got to ask you two or three other questions.
Pieter: You can find me on twitter. It’s twitter/Peter EER but you will have to share the link I think.
Andrew: Okay. Well, it’s just the standard spelling of your name which we’ll have on this post. No matter how anyone reads this or gets this even people who just want the transcript, people who listen to the mp3 or the video they’ll all have our name exactly as it is. And you just got @Peter.
Pieter: No. Pietereer and then E-E-R.
Andrew: Oh. E-E-R at the end of it. So it’s P-I-E-T-E-R-E-E-R is the full spelling. Alright. Anyone who is listening to this program who is a Mixergy premium member there is a follow up to this. There are a couple of programs that I recommend. The first is not published as of the date that we are talking right now, but it’s recorded and ready to be published. It’s with a guy named Jordy Wardman. He said the same process is one that he went through. But he decided he wanted to charge his customers before he built it.
Unlike Pietereer, he’s not a developer himself and he wanted to get some money from customers both to prove that they really wanted the product that he was going to build and that he could pay developers to build it for him. I asked him to come on and talk to us to teach us in a course, step-by-step how he did it and how he built his company which is called Guest Retain. He showed us how he did it. He talked about how much money he sold before he even launched the product and he was very candid. He even showed the exact mock-up that he created to say to people, “Hey, would you pay for this?”
And when they said yes, he charged them for it. So that’s one course that I recommend if you’re walking through this process. And it will be at Mixergypremium.com. and the other, if you’re a premium member, that I recommend and you’ve heard me say this several times, it’s Cindy Alvarez. She works for KISSmetrics where she has a set list of questions that she asked before they built KISSmetrics to understand where her customer’s pain is.
And if you want a more structured question process, if you want more structured how to organize the answers you get than we’ve gotten in this interview, check out Cindy Alvarez’s course. It’s all there at Mixergypremium.com. And of course, if you’re not a premium member, I urge you to go sign up so that you can take those courses. You can listen to other interviews and courses that will help you. And I selfishly also am saying, ‘Do it’ because the money that you spend on Mixergy Premium allows us to do things like have an editor who will edit this interview, someone who is going to help post it, someone will help with every part of running Mixergy.
The more people we reach, the more you guys are helping us do a better job for them. And keeping me from going nuts by having to do it all myself. So I appreciate the current Mixergy premium members. I hope you go and take those courses. Everyone else go to mixergypremium.com and sign up. I guarantee you’ll love it. I guarantee not just love it, but that it will be helpful for you. You had notes before we started here. Was there anything Pietereer in your notes that we didn’t get to? Any number that you wanted to be accurate about that we didn’t get to share in this interview?
Pieter: No. It was like what I wrote down was between September and November we did the pain extraction, calling. Between November and January we built the list and we sent out already some mails. Unless if you want me to go to my notes, no.
Andrew: No. I just wanted to make sure that there wasn’t anything pressing that at the end of the interview you’d say, ‘Ah, I wish Andrew would have asked me or I wish I would have included it.’ But I think I’ve got a good sense of it here. Pain extraction, that is the phrase. That is what we want. We want to not just come up with our own ideas but extract the pain that other people have and that’s the big message that I’m taking from this interview. You, Pietereer are a big fan of Mixergy. You’ve watched these interviews. I keep saying to the audience, watch the interviews, learn from then, and then hopefully you’ll come back here and do an interview.
When I first started saying that I felt like, what if I’m a fraud. What if people who will listen will never go anywhere? And I felt almost embarrassed to say, but I’m proud that I did. To have you on here to me is, it’s one of the proudest interviews that I’ve done. To know that you were listening and now here you are doing this interview and passing on what you’ve learned to other people. It makes me feel proud. It makes me feel satisfied. How do you feel now as an entrepreneur who has now built a couple of successful companies and now you’re not just listening but being interviewed about them?
Pieter: In fact it’s great. Because I’ve seen so many, let’s say since 2009 I’ve seen so many individual videos, read blogs, some individual videos of you explaining like how you started up and so now it’s like an honor to be on Mixergy, really. And that’s, yeah, it feels great to be interviewed by you and to be on Mixergy. I was also on the Foundation. I don’t know if you know that.
Pieter: I interviewed there so it’s like all of a sudden it accelerates and that’s great.
Andrew: As people are interviewing and interviewing you and wanting to know now and learn from you.
Andrew: I’ve got to thank Bob Hyler [SP], my mentor, who saw you on Facebook in our group talk about this and before I think maybe minutes after you hit the publish button he emails me and said, ‘You’ve got to get Pietereer on. You’ve got to talk to him about how he did his process.’ And bob is always, I’m glad and I appreciate that you’ve, that you turned me on to something new. In this case someone new and helpful. So I appreciate Bob.
Pietereer, thank you. If people want to follow up with you there’s Twitter which we mentioned. There is also the website where they can see what you’ve built based on what we talked about. That’s Archisnapper.com. A-R-C- H-I-S-N-A-P-P-E-R.COM. There is, of course, your personal blog which is Eerlings.com. The blog is on there. How do you pronounce your last name properly? I want to make sure that it’s on record.
Pieter: In Dutch?
Pieter: It’s like Eerlings.
Andrew: Pietereer Eerlings. And that’s where you are? In the Netherlands.
Pieter: In Belgium.
Andrew: In Belgium. Oh yeah. Alright. Well, thank you for doing this interview. Thank you all for being a part of it. Bye.