Episode 3a: Smart Bear Live!

Patrick:  This is Patrick Foley and we have Jason Cohen on the line, of course. Jason: Hey everybody. Patrick: And we have to wait for the various people to stop playing multiple things in the background. And we also have Bob Walsh. How you doin’ today, Bob? Bob: Pretty good, how ’bout you guys? Patrick: Good, thanks. I see people logging into the chatroom. That’s cool as heck. I’ll start chatting in a moment when I can multi- task. You have to log in to chat, I’ll think you’ll see there. So be sure to make a free user account and participate in the offline conversation there. As we wait for our first callers to come on board, I wanted to start with a question from a conversation that Bob and I with Merck Coulbrougiff [sounds like] from Beta List [SP]. Ao when Bob and I were talkin’ with this gentleman on our podcast, we always ended with our traditional question, ‘What parting advice would you give to other start ups?’ And he said, ‘Launch. Launch as quickly as possible.’ Literally, ‘Launch a week from today, release something.’ That’s really stuck in my head, the idea of what can you do in the next week? So I have a question for you, Jason. If someone wants to become an entrepreneur, is it more important to keep looking for a really good media idea that you can do a month’s worth of customer development on or is it better to think of literally what complete start up can I make in a week? It’s not going to be a big deal, it’s not going to make me a million dollars, but maybe I can make beer money off it. Do you have an opinion on whether it’s better to create something real in a week or something small and real or keep looking for the right thing that’s gonna let you quit your day job? Jason: I think some of it depends on the circumstances you have. So, for example, if you have never done a start up before at all and your whole life you have worked at Dell, you don’t know anything about how it works, then I think even if you spent a month and did customer development and did things you see on blogs, it’s not clear that that is necessarily preparing you for anything, because everything is unknown. So it my be nice to just get something up, no matter what it is, no matter whether there’s only three people on Earth who could possibly want it. Patrick: Right. Jason: Just do a project on the side that someone else uses. Even though in the end it’s gonna be annoying to support and maybe it doesn’t turn into a company and you kill it, but at least you’ve gotten your foot in and there’s a whole bunch of stuff you’re going to learn by doing. Just like that person said, that way. On the other hand, if you’re used to having side projects and that’s part of your personality. In fact the reason you want to do a start up is because you want to take that energy and that natural passion and say, ‘I wish that could be my job.’ Patrick: Right. Jason: Instead of a bunch of just stuff that turns into hobbies. Then you don’t necessarily need, yet another, little hobby project that doesn’t necessarily go anywhere. You know you can do that part now. That’s part of yourself. And so that means in this circumstance, trying to make it a real company is probably the next step so that you don’t produce another hobby. So that means stuff like thinking about what a business model might be, it does mean customer development. On the other hand, if it’s only a week, and you can get a working prototype for something. What’s the worst case? You blew a week and then you . . . Patrick: Exactly. Jason: . . . get into customer development and it’s a big waste. If it’s only a week, I don’t think that’s a problem. It’s probably fun. I think the only trap there is people say it’s a week and then you see them seven months later and they’re still putting bells and whistles and screwing around with it and they still haven’t talked to anybody. That’s definitely a waste of time no matter who you are. Patrick: Definitely. Cool, thanks. The image I had was kind of a golfer doesn’t go straight out to the course before hitting bucket of balls. You don’t learn how to swing on the course, you have to get to the golf course. You have to play golf. But it’s also a nice to do some practice things and if making a start up in the next seven days is an important way to practice, knock yourself out, that might be useful. What do you think, Bob? Bob: If there’s a part of your start up that can be broken off and launched in a week, by all means go for it. The problem there is that you’re going to be allured to the idea of let’s build another CMS or photo gallery or something easy and try and just knock that out to get it out the door. I think you have to do two things. One is find yourself an audience and a marketplace and that’s something you can start doing within a week. Even if it’s a blog just talking about what you want to build. And the other is you have to watch out for that trap that Jason mentioned. Where you will have it out in a week and seven months go by. It’s not an easy solution and it’s not one size fits all, but I come down on the side of building at least something useful and if you get that out and people start using it, then you know you’re on the right track and you can build from there as you need to. Patrick: Cool. Well I appreciate that. That was a question that I’ve been having, actually a personal thing. I feel like the bar has been raised so much in the last five years in the start up community and I’ve been busy working for a distinctly non-start up company. The only way to really get back into it is to just do it. Thinking about that heavily. Thanks. Well let’s bring on a caller. If this works, I’m going to un-mute the 616 number which I believe is Ryan. Ryan, are you there? Ryan: I think so. Can you hear me? Patrick: Hey I can hear you Ryan. Cool. Well I happen to know Ryan has a real company. He hasn’t been messing around. Ryan, we play a game on this show. You’re going to tell Jason and Bob just the name of your URL, nothing else, and see if Jason can figure out what it is. So what’s the URL for your company? Ryan: The URL is chext.net Jason: Chext? Ryan: Correct. Jason: That’s like C-K-S or X-S or what is that? Ryan: C-H-E-X-T. Jason: Wow, Chext. Well when I hear that I think of writing checks because I feel like that’s all I do sometimes as a founder of start ups is write checks because you don’t see them when they come in. That’s always comes in from a magic account somewhere, but writing checks, you’re always signing stuff. So Chext, it’s like a funny way of saying checks. So I’d say it’s a way that I can get away from having to write all these checks and sign all these things all the time. Totally automate all that so it doesn’t bring me down all the time and instead I can sign all the revenue, because that’s fun. Patrick: How close did he get? Ryan: 50%, sort of. Patrick: All right. Why don’t you tell Jason what Chext is? Ryan: The first part of the word, you’re pretty close. It did come from the word checks or checking or checking account. The second part has to do with text or text messaging and so if that helps you think through what it might do. It helps you manage, at first a checking account, is where the name came from, through text messaging. It does a lot more than that now, but that’s where the name came from. Jason: OK. So I can check my balance by sending a text message and it sends it back to me? Stuff like that? Ryan: It’s not checking your balance of your bank, it’s actually helping you track your spending. So your the one who put in the information and you’re the one who is getting the balances back through texts. Jason: Why don’t I just use Mint and then it’s on my phone? Ryan: You could use Mint and some people who use Chext also use Mint for different reasons. The thing we’re sort of competing with is sort of the immediate things, and the awareness. So, if I’m always just letting my bank let me know when things post, it’ll probably be a couple days later or the next day, or sometime after the fact. Jason: Oh, I get you. Right, so it’ll text me as soon as it clears, I see. So, I get the message from the bank this hit, or this got debited. OK. That sounds pretty good, especially if you’re on a tight budget. I know that a lot of times people don’t know where they are. OK. So, what’s the question? Ryan: So, the question that I had, I was kind of thinking about this, is right now we’re moving from being a free product, so our goal is to get people in the door, and learn from them and get some feedback, see how to use it. To a paid product, so that we can actually become a sustainable business, and I think we’re hitting some sort of analysis process. And I’m wondering if I can hear any sort of suggestions or strategies for getting out of that, and obviously the right answer is just to do something, but I don’t want to do something that we lose all of the momentum that we’ve gained, all of the people who have signed up, I don’t want to abandon them, but I also want to nudge them in the direction that allows us to become a sustainable, paid for product, to build a business around. Jason: That’s a great question, let me ask you one back. So I assume that most people using this have low bank balances, I would never need to use this, in particular. And if it’s a big amount of money, like if somebody is investing in the company I want to know that. Most online banking stuff allows you to get those alerts, in fact I get those alerts like that. So if it’s big I can see, if it’s small I don’t care. So, is that true, that generally, the people who have the most use out of this don’t have a lot of money in their checking account? Ryan: It’s not necessarily that they don’t have a lot of money. Another thing I didn’t mention, is the reason I created Chexts was for myself. Because one of the most important things for me is that it helps me to communicate with the other person that I manage my money with, who’s also spending out of those same accounts, my wife. So Chexts actually texts both of us, so if I go and spend money and record it, she going to find out about it. So that now we’re constantly throughout the day, on the same page. So, it’s not that I don’t have a lot of money, it’s just that I need her to know about it, I need to know when she spends money and visa versa. So it’s not necessarily true, but if you are like another popular group in Chexts is younger people who don’t have a lot of money to manage, but they don’t need financing and all of that stuff. So what they’ll do is track the very little money they have, because they may only have a checking account, but they’re sort of using it for a different reason. Jason: OK. So, my initial gut says that you’re definitely not going to want to go after the people with little money in their checking account. They don’t have that much money, they’re certainly not going to spend it on this, even if it’s useful, because they don’t have the money. And so it makes sense to keep those free. And also, that’s a lot of folks and that’s OK with that momentum. The case of the family checking account sounds good. And that also sounds like a case where, although, of course a lot of families are on a budget, still I can see that the pain is a little greater there, it’s a little more useful. And also, it’s not necessarily true that your account balance is low, it may be what you said, that you’re just trying to track what each other is doing at all. And so that feels like a place where it’s easier to charge. So I wonder if you could segment it as, when it’s collaborative, when there’s more than one person who gets alerts on a one bank account, that’s how you could tell. That’s a really easy cleavage point, it seems to me, segmenting your customers. And it just, you’d have to see, but it just seems logical that those people are getting more value and are more likely to pay. So you said you’re worried about losing momentum. I assume that means in signups. First of all, if you started charging a good amount of money and lost most people, but started to make money, probably, is fine. So especially if you can like trial it for six months or something really long, so that you don’t really lose momentum. And that may be, by the way, to do that is to have a super long trial. There’s a VOIP phone company, I forgot who it is, but it’s one of these like e-telephone, voice mail whatever things, and they do that. They have a six month trial, so it’s like no reason not to come in, and of course by then you’re so used to it, that either you’re getting value or you’re not at that point. So you could use some tricks like that to start charging, but maybe not kill momentum too much. Do you feel like the more users you have it helps accelerate, is there some kind of, maybe not necessarily viral, but that people just tell their friends at all. Because it doesn’t sound like it. It sounds like I get notifications from my account to my phone and there’s not really an opportunity for that explode, other than people just telling their friends like they do with anything they find useful. Is that true or is there some engine there I’m not familiar with? Ryan: Yeah I would say there’s certainly some truth to that. One of the things we find, because we certainly threw out what can we do to make this more viral or to work more in a social way so that we can try to get more people on the system? Try to get those good customers who are going to pay for it. But a lot of people are very apprehensive and we’ve seen a lot of failures with companies like Blippy who tried to make finances and money with social. Jason: I agree. Ryan: And it just kind of blows up and it becomes this big, ‘Hey that’s a really cool idea,’ but it’s only a cool idea for a week and then it’s like, ‘Ah not really,’ not all the really important stuff. Jason: Yeah I agree. Ryan: So we’ve talked about it. Jason: And it doesn’t hit all the pain points. Ryan: I don’t think that that’s going to get us a million users. Jason: No and I agree and Apprese [SP] is another example. I agree that that doesn’t sound that interesting. So if I were you I would say, ‘That is not a viable engine.’ I mean if you can find one in that space, terrific, but there isn’t an obvious one and in fact the examples are counter-examples. So I would say that viral-ness is not the engine that’s going to drive this company and therefore the number of users you have today is not necessarily that interesting and the momentum, so called, is not necessarily that interesting. Whether you had a 100 or a million users today, it’s still pretty much incrementally the same difficulty to get to the next 1000 users. Sort of. Obviously anybody that’s popular, that’s some of it, but, you know, it’s not a fundamental part of your business engine. So you’re going to need another engine. Like the ability to spend X dollars on advertising and gain Y dollars in revenue or something like that. You’re going to need something else that you can effect to change that. And I should stop and let Bob throw in his ideas. I would say don’t worry too much about momentum, because it actually doesn’t matter that much because it’s not part of your core engine. I would say it’s more interesting to have fewer paying customers than a lot of other people. Don’t touch the people who don’t have money. Maybe a long lead time allows you to hopefully not lose too much momentum and try different pricing out and even experiment with pricing. With a long lead time like that you can kind of do whatever you want at the end of the six months. So like pick the really high price point, you realize after six months, which you might, you could always go back to them and offer them a lower price point. Of course they’d be happy about that. Let me let Bob get in now. Bob: I’ve come around to the opinion that the metric of how many people join X service is pretty worthless when it comes to monetization. What matters is how many people consistently use it. I don’t think your service you’re talking about is going to be that interesting to the general public, but I do see a huge play there with those services and sites and portals already out there who are geared toward educating people about finances and holding people accountable about finances. Kind of the model that Game Fit sites have where you partner up with somebody and you support each other as you try and do one more lap or push up. I think those are your natural allies and those are your natural alliances. I think you’d find yourself, you’re going to drop a lot of people when you instantly mention, ‘This costs money.’ Because they’re just around for the free ride, but I think if you time it and you start talking to some of these websites and portals and other people out there who make their money by helping people manage their money better, and by the way, definitely not talking about banks here, I think you’ve got a really good play. Also, you may want to think about getting out of English, or at least away from just English, head for Spanish, head for other languages. I would say Chinese would be a very good one. It’s a different market and you need to connect with the people who already have a burning need. Well they’re already burning, so I would suggest as you move toward a paid model, at the same time, you start diligently building a network of alliances with people who already have a good reason to promote your service. Who knows, they may buy your service in bulk. Ryan: No that’s great advice. It’s funny you mentioned other languages. We actually, one of our partners is a fluent speaker of Spanish, which is one of the reasons we brought him on. A couple weeks away, we want to transition into a Spanish available product and even a product available outside of the US where you don’t even have to use text messaging, but you can use our iPhone app and other things. Surprisingly we have a lot of people outside of the US, like in Chile actually, will tweet and say, ‘God, I wish I had Chext here,’ and we would just have to day, ‘Sorry right now,’ but very soon we’re looking at doing that and alliances with those types of businesses. There’s a lot of companies we’ve talked with [inaudible] financial literacy that all they do, and they charge a pretty good value to consult on how to better manage your money. So we’ve been looking at leveraging that they’ve already got an audience, they’ve already curated a good audience of people and we can just kind of piggy back on that work they’ve done and sort of add value to what they’re already doing. Is that kind of what you were talking about? Bob: That’s exactly what I’m talking about. Everyone from Motley Fool to take your pick of any others. There’s a lot of interest in people’s money. The other thing to say about that is, and Jason may disagree and Pat may disagree, but I don’t think software today has to be morally neutral. I think you’re in a much better position if you take a point of view of saying, ‘Look, we’re going to get you inside the loop of what the information banks are prepared to provide you.’ Why? Because then you’re going to get much better control over your money than banks are again, prepared to give you. I think there’s a moral ground there to take. Maybe that’s because I’ve seen what the last four years have done to people economically and it’s not pretty. Let me put it this way, I can’t see a bank saying, ‘Oh this is a great service for us.’ I can see one of those portals or some other organization saying, ‘This is great, what’s your deal for bulk purchase?’ Ryan: Mm-hmm. Yeah, no, absolutely. Patrick: Kind of related to that, one of the other listeners, Sergei, mentioned would Mint itself be interested in acquiring Chext or perhaps at least partnering with Chext to offer it as a feature to their subscribers? Have you considered going after something as big as Mint? Ryan: I don’t know. I think, and I could be wrong, Mint is such a beast and now that they’re controlled by Intuit, I feel that if they wanted to just steamroll over Chext, they could do so if they really put their mind to it. They could look at us and go, ‘We’re just going to build everything that you’re building and do it faster and offer it to that group of people’, but I don’t know that they want to do that. They don’t make their money by giving you a better way to manage your money. They make money by recommending a new bank account and sort of cross-selling between banks and between financial products and we’re not really doing that. We’re trying to help people manage their money better, which may not mean we recommend you go to another bank. Jason: I think that’s a very wrong way to look at it because you were saying that you know what they want to do, what they want to do in the next five years and what they want to do strategically inside Intuit. Intuit is a company as company is a financial management company. Right? Mint is actually an exception in that they’re using the fact that this financial management to push remote services. I actually sold lots of software to Intuit at Smart Bear. They have 27 business units. One of them is Mint. There’s a strategy at Intuit and there’s a strategy at Mint as well. In fact if I were to describe Mint, you see it as the business model of make money by pushing offers for credit cards, loans, and so forth onto people. But that’s not why people use Mint. People don’t use Mint to get a better credit card. That’s what appears to them. People use Mint because it was an easy way to put a couple of accounts together, see all their accounts in one place, gets these really cool little charts, helps them with budgeting. In other words, it was kind of what QuickBooks Online should have been for people. And along the way got offers to save them money. That’s not why they sent them to Mint in the first place though. Similarly, you are a service which is useful in itself and who knows why that is valuable to whom. Whether it is up-selling other services, whether it’s charging for the service itself, and so forth. I wouldn’t close my mind to those kinds of possibilities. Still though, saying either Mint is interested in us or we go home is also not a viable strategy. Although it’s fine to pursue those things, even if they worked it’s going to take a long time. You’re going to pilot it, if even if they’re interested. If time is of the essence and you’re trying to make this into a business in the meantime you can’t really wait for that unless they want to move fast. Ryan: No, those are great points. Jason: The last thing before we move on is you mentioned that you know a lot of these things and you said you’re in analysis paralysis, which means you’re thinking of a lot of these things, and you’re weighing pros and cons, and at the end of the day you’re not really sure how to move. Because, OK. There’s 10 options, there’s pros and cons, and now what? How do I pick? Especially when it comes to pricing and going back to the idea of charging individual people, you don’t have to charge everybody the same amount all the time in time and space and when they signed up and all that. You can do things like message just 10% of your customers and say this is what we’re charging. You can put what you consider to be expensive pricing on the website, but then selectively decide how to give various kinds of offers to various segments of your users. You could split up people by where they are, or how much money they have in the bank, or how many of these messages they get a day or whether it says family or not. There are all these dimensions that you could split them up on. You can simply discriminate. It’s called price discrimination. Discrimination on race when you’re hiring is bad, discriminating on price based upon behavior of customers is very appropriate. In fact, when companies have tiers that’s the whole point. You’re trying to cleave it along certain lines and discriminate. You could do that, too. You could post either some tiers or maybe it’s just free or inexpensive paid. Even so, you could still decide what to do with your existing users. You could grandfather 100% of them and that way you wouldn’t lose a single person if you’re afraid of that. Or, you could take a certain cohort that you think should pay. Even so, you could go to them, put the pricing up on the website but don’t tell them yet. Don’t announce it to them, they won’t notice. If anybody notices, you grandfather them, or you have the conversation right then. Then you take just 10% of them and say look, starting next month we’re going to start charging $9/month or whatever, and see what happens to just 10% of them, though. Worst case is that 100% of them hate you, leave, and even though you say, ‘Nevermind, it’s free’, they’ll say, ‘Screw you, anyway’, and never come back, but you’ve only lost 10% and you needed to try something. So that’s OK. In other words, what I’m saying is a way to defeat analysis paralysis is you pick something that’s even more on the scary end, but then in a targeted selective way both dimensions and the quantity of people in that cohort that you’re going to message at one time, then that’s when you start trying stuff. That way there’s not much of a worst case scenario and you’re able to try things and feel comfortable. And of course when you try a couple of things and have a couple of those, maybe even 20 of those conversations even if by e-mail, then you’re going to be a lot more comfortable that you know generally what different cohorts are thinking. Then you can start rolling stuff out more officially and more broadly, but feel comfortable that you’re doing the right thing. Ryan: Yeah, I love those suggestions. Those are great. Jason: Sometimes it’s hard to segment, right? You may not have those tools. You may not have that data in the database. You may not have that hooked up to e-mail. You may not have that in accounting. That’s OK. This demonstrates why that is actually a nice investment to make. I think this is true of most companies. It’s a nice investment to make to get that kind of infrastructure going because you can do these things. Ryan: That’s something that we do have a lot of that information, even if we were to go back manually and pick 10 people every day and message them a specific pricing and see how that goes I’m sure that’s totally doable. I think we’ll definitely try something like that. Patrick: Cool. Well thanks a lot for dialing in Ryan. You know I’m cheering for you. Ryan is from my hometown, so keep it up and I’ll keep tabs. We’ll see how it goes. Ryan: Yeah. Thanks for letting me in guys, I appreciate it. Patrick: Thanks Ryan. Boy, I’m pretty happy with this new software stuff we’re using here. Blog Talk radio. Got this nice chat window over here, people talking, what do you guys think? I think this works pretty well. Jason: Yeah, it’s nice. Patrick: All right. Our next caller is Michael. Michael, I put you on mute, can you speak? Michael: Yes, I’m here. Patrick: All right, we can hear you. Cool. Let’s play the name game once more. why don’t you tell Jason and Bob just what the URL of your company is. Michael: OK. It’s churchhubs.com Jason: Churchhubs. Wow, that’s a good name. Michael: Correct. Jason: Well, you know it is actually a challenge to manage a church organization with everything from events that they throw and different people volunteering for different slots and communicating that with different people with different roles, because I may be an organizer of one event and a participant in another and so forth, and I think that the typical tools that are used, this is typically non-technical people, so if you’ve got Excel, you’re already in the top 30% of technology and it’s still sign-up sheets and paperwork and Excel document that only one person has maybe. It’s still hard, and so if you can create a place where you can organize those things and people can participate and share stuff and just save time and all that, that’d be great. So that’s what I think churchhub is. Michael: That’s pretty much exactly right. The back end software for churches. I think you sold some of the churches a little low on using Excel and stuff. They don’t seem to be using a custom-made applications from Windows 98 but there are a little ahead of just using Excel spreadsheets. So, yeah, back end software for churches. Jason: Wow, so it’s like practice management for doctors except for churches. Michael: Exactly right. It’s custom built for them to manage their people, families, groups, and then specifically stuff for churches like address checks, bulk mailing, donations, and IRS print-outs and stuff like that. Jason: Nice. So how many churches do you have right now as customers? Michael: Well, I’m very in the early stage, and my question reflects that. I don’t actually have customers now. Jason: Alright. Michael: I’m in the 30 person feedback range right now. Jason: Great. So, what’s the question? Michael: Do want the background? Or do you just want me to get to the question? Jason: Let’s do the question first. Michael: OK. The problem I have, I’ve talked to twenty-two churches so far, what I’m seeing is what I call the IBM effect. So people that I’ve talked to all seem interested in my product but at the end of the day they all tell me that they’d never go with a start-up, that they’d rather go with a product that’s more expensive or maybe even has less futures just because of the company that they’re going to go with is bigger. So, they always tell me things like, ‘we’re not sure you’ll be around in five years’, ‘if we go to a start-up how do we know it’s safe’, ‘how do we know’, and that kind of stuff. They’d rather just go with the behemoth just. I think of the old saying, no one ever got fired for going with IBM, when I think about the situation. Jason: So, what’s the behemoth right now, in this space? Michael: So, some quick background, there’s probably about fifteen major choices that the churches are going to, and twelve of them, like I joked before, look like their from Windows 98 Visual ++ wizards. And then there’s three relatively new ones that are fast and web based. And all of the churches that are using the old ones are going to the three new ones, so those three new ones are getting all of the customers right now. Jason: Right. Michael: In terms of customers, we’re probably talking fifty to seventy thousand switch-overs. All of the ones that I’ve talked to in the past year or the next year, they’re all looking to switch over, if they haven’t already, so the turn over right now is pretty large and these three big customers, and they’re all pretty good products, too, but their going to be getting the bulk of the switch over right now. Jason: Well, it has to be asked, I’m sure they don’t want to switch all the time, like that’s not ideal, so it makes sense that they’re switching off the old stuff, sounds like there are already three people with open arms to take them and it sounds like they’re all switching en mass right now. It sounds like timing is important in this. For example, if you waited four years, they probably all online with something good enough and you don’t have much to say. So my question, the next obvious question is, if there’s three pretty decent choices, and they already exist, and they’re like the IBM’s of the world and the decision makers don’t have a problem making a decision, what is your advantage? Why should they, like tell me, why should they pick you when you’re not one of these three that already exist? Michael: Well, that was the first thing I ran across. They all said that they were interested in these bigs ones. I made a pivot and decided I was going to try to focus on local churches, so there’s about a hundred and 15 churches within a 30 mile radius, and one of the big futures that these churches are looking for is help. And so my pivot was to offer local help, drive up help, the ability to get someone on site to help whenever they need it, so I’m going to try to focus on local only. Jason: Help? You mean tech support? Michael: Yeah, help, tech support. Helping them figure out how to import people or they couldn’t figure out how to make a person go into a family, how to print this report. These basic kind of help. Jason: Yeah, but that’s just tech support. If that’s the paying point then you should make a tech support service for these products that already exist and then charge them a good amount and you’re done. Like, that’s not reason to build a new product. Micheal: Well, I could hear that argument. My goal was to make something that was simpler that would require less help and then offer on- site support to back that up, to local churches, that was my latest pivot was. And then, someone undercut them on price as well, because the help these companies offer is in the 4 to $600 a year range, so the [inaudible] money that we’re talking about is pretty significant, so cutting them on cost, undercutting them on cost wouldn’t be that difficult as well. Jason: OK. That there’s, I got a bunch of red flags, I have to say, coming up. Number one, service is not something, tech support, again, like if that’s the paying point you can just go after that and there’s no need for a product. Just make a great, affordable service around that because even the thing you said, It’s simpler so it takes less tech support, except I’ll be there for tech support. Which doesn’t make any sense, if it’s easier the whole point is to not need someone to come out, so to me that’s not jiving. Then you said, I’m going to undercut the price. My gut always is, competing on price just doesn’t work. The reason is that, that all you’re doing is making the market smaller for yourself. You’re making your revenue smaller for yourself and you’re saying this product doesn’t do as much and you just told me at the top of the call that price wasn’t really as much of a big deal as some of these other concerns, like you haven’t been around yet, and will you be here in five years, and these other objections. It sounds like the difference between 200, 400, and $600 a year is actually not the thing that’s going to convince them that that’s OK to go with the guy that they don’t know, because of that. Then you say, you’re going to show up on-site, which means more expensive, right? That’s absolutely more expensive without any doubt for you to do things like get on the phone or go there, and yet also you’re going to undercut the price. So that’s telling me that you’re making your margins really small and that makes it feel like, that there’s not a lot of money in this anymore. Local churches are going to be more expensive to go acquire, and you’re going to have to convince them individually and you’re going to get less money and then you say you’re going to give them more human support. It just feels like it’s going to be hard to make a profit on that kind of stuff. But tell me where I’m wrong. Michael: I have a hard time arguing with any of that. I’m just trying to figure out how to break-in and get the first few customers under my belt so that I can look to myself as being a player in the market as well and at that point, then you can go and put yourself on the web and claim you have customers and say you have a big part to play in it. Jason: Well wait a minute. There’s two things here. Because you said I’m going to have low prices and high service and all this. If that’s the model, who cares if you have five customers? Who cares if you have 1,000, if it’s not a profitable, sustainable model, right? So, I think first you have to make these decisions about what your position in the market is going to be, why are you better than those three. Maybe better is the wrong word, for whom are you better is the better way to say. In a way that’s going to be profitable, that if you did have, let’s say, 100 churches, you’d be making some money, and if you had 1,000 churches under this model, you’d be making good money. Now, the first thing is to say how, do I have a structure in which that could be true? And then, the bit about, I just want to get three or five members on the web site, that’s easy. Because you just give it away for them, right? You say look, here it’s free, ‘You’re right, you are my first couple of customers, you’re right you are going to have to put up with a couple of more issues than otherwise because I’m new. On the other hand, I’m going to devise exactly what you need and when there’s some feature that isn’t there that you need I’m going to put it in. And the big guys can’t do that, because they’d have to re-train people and anyway, they don’t operate that way, I can.’ You guys got to find three or five people who are willing to put up with that and give it to them for absolutely for free, because of course it’s worth it to get the name on and to say thanks for putting up with the problems. That’s easy, that’s super easy. If you can’t get people to take it for free, even if it is early stage, then I think that’s a bad indication that you still don’t have enough differentiators from those other three. So that part seems easy to me, to get the three for free. It’s the model and the other part that I guess I’m still a fuzzy on. Michael: Going back on topic, I have offered to give it away for free and offered them customizations and everything and that just gets back to the point that, no, they’re not interested, they don’t want to transition later if I decide I don’t want to do it, they just want to pick one now and work with it for 10, 15 years, I think. So getting the three people, even offering it for free has been a challenge as well. I just run into the same problem. I feel like the people I’m working with, or dealing with, are the opposite of the early adopters, their the late adopters, they’d rather just go with the immediate choice and be done with it. Patrick: You know, one thing, obviously you can take advantage of your being local for those free people, and then you kind of get the benefit of having that hands on help, but the goal is to move away from that by making it better. One other question that comes up for me is, you spoke with 22 churches, does everybody offer exactly the same functionality? Or did you find any new problems that you could kind of flank the issue, and maybe not build a whole back office system, but solve one specific problem that churches have that none of the other 15 are covering, solve it really well so that you stand out and then whether you grow into the other functionality or not, you have a toe hold in this market doing one good thing. Michael: That’s a good suggestion to offer some unique point of differentiation but for the most part what I’ve seen are the three new ones and even the old ones are all 90% the same, just packaged differently. The new ones are obviously offering more social network awareness and more ways to communicate, so that’s kind of where everyone is moving. They are just trying to get that Facebook light aspect to this management software as well to give people a way to pass into the church. I understand and I think that’s a good point to try and find some uniqueness that I could offer them. I can’t think of anything off the top of my head right now, but that’s a good suggestion on where to go. Bob: I have to ask you a question here, just because I went to your site, churchhubs.com. Of the 22 churches that you talked to how many had the physical possibility to look at that site before you talked to them? Michael: All of them should be able to. Bob: I think you’ve got a case of reasoning from the wrong data here, because if I go to churchhubs.com I see a log in screen that tells me absolutely nothing at all whatsoever about what I’m logging onto. I wouldn’t do this if you gave me all the money and all the Viagra spam in the world. The homepage, why do you have a log in for your homepage and nothing else? I don’t get that. It’s not what people want to do. Michael: The people I am writing to know what the e-mail is about so I usually talk to them beforehand. Bob: Yeah, but there is a set of expectations that people have. When I go into the grocery store, I know that money is going to go from my pocket to the cashier, and I’m going to walk out with some physical goods and that’s the way it works. If I go to a website, and by the way if they shared that with anyone else they’re not going to have the same information from this e-mail, I have no idea what I’m getting into. My first instinct as an internet user is to close this browser window instantly because this just screams bad. You need to have a site that tells people who you are, what you’re selling, who you’re selling it to, why you’re different from everybody else, and therefore for certain people, better. Having the log in as the first thing here is a case of getting locked into an assumption that doesn’t do you any service. Michael: OK. Bob: I would question whether or not the 22 churches is meaningful data whatsoever. Not based on this site. if you want to go in the way of having something up there, just put up a one page site saying, ‘I see this problem with the big players in church software, I plan to address it this way, what do you think?’ And give them a way to e-mail you. Maybe you’ll get some response that way. But the page you have right now for churchhubs kills you dead. There’s no chance for resurrection here. Michael: OK. Jason: I agree with that. I think the parting thought here is this. I think you actually said it all on this call. By the way, a lot of the reason why this is so useful is just having to say it out loud and having somebody else echo back the interesting parts, is really valuable. I can’t do it myself either. I have to do exactly this with my stuff, too. This is just what people have to do in order to hear their own thoughts. But I think you’ve actually said during the course of all this, kind of in a Socratic way, everything that you need to know. Because you’ve said, there’s three entrenched players. The people have no trouble moving to them. They don’t even have distinguishing features, they’re 90% identical. And at the same time that have basically what they need. There’s not like any huge holes, maybe there is someone, but it’s not obvious what it is. They basically have it sound, there not even that different from each other, and there’s still three choices. And they don’t have trouble with pricing, and they don’t have trouble with their brand, they don’t have trouble with features, there’s no trouble. This is a typical situation where the market, at least until you figure it out, where some hole is, there’s just no pain. Everything’s fine there’s enough products, so, kind of what you’ve been saying, and I’ve kind of been tooling around a little bit with your software, is that you’ve made a product, which is basically also the same as those three. OK. It has fewer features, but still it’s pretty much the same, and the only thing you have is down sides. Because you’re not a brand that’s well known, and you don’t have people on the web, and you don’t have a business model that’s differentiated, and the one that you suggested of course being cheaper and higher touch is definitely not a good one from a profitability point of view. You’re not bringing anything new to the market and yet you have some draw backs being new to the market. So, this isn’t a good fit right here. But, I think A, the fact that you said the only pain you’ve set so far is that they need more tech support. That could be a very interesting value added thing. Also it could point you to the real pain. In other words, what you want to do is like get inside hundreds of these people, of their brains, and what problems they’re have with these. Well you know the interesting thing to do is to say. ‘I’m a consultant, I know these three tools really well, I’ll help you migrate to it, I’ll help you use it.’ And what’s going to happen is, you could charge by the hour for this. It should be pretty easy to get people because the pain is there and they probably talk to each other and say, ‘You have to call this guy, he’s not too expensive, and he totally sets you up.’ These three companies want you to do that, they may even promote you. Because they want their pastors and so on to be successful with the tool. If the pastors will pay you extra to to make that happen so much the better for them anyway. So in other words, everybody wants you to be successful doing that. Now you may not want to do that, or you may not want to do that forever. But you could do it for a little while and A, make money, and B make contact with hundreds of these people. And find out, because you’re working with them, exactly what the pain points are. And if you do that, maybe you will find that thing and you’ll walk away from that saying, ‘Hey, I found three massive pain points that everybody has that the three people aren’t doing.’ And there you go you just rooted it out and got paid to do it. So that’s one possible path you could sort of bide your time in an interesting way to discover the pain, and then come up with a product. To me, just making another copycat product, what’s the point? Michael: I agree, I guess, you know, I [inaudible] confidence slash arrogance to make a product just as good maybe even better. You know, of course selling that idea to people is always difficult. Jason: But the bottom line is why make a product that’s just as good. You said, ‘I bet I can make a product just as good.’ Why? Why does the world need a fourth product just as good as the other three? I’m sure you’re better than that, you could come up with a product way better than that, differentiated from that. And it maybe in the space or maybe in a related space. Maybe in churches it’s all locked up, but in HOA’s it’s not. Or in co-working spaces it’s not. Or those products are kick ass, but if you look at the building management space maybe they have the same basic kind of things, their products are still stuck in Windows 98. And if you did make one that was kind of like these three, in that vertical, you’d be awesome. Like I don’t know, but find a place where you can be dramatically different and there fore better for certain people. No reason to just copy a market that’s already done. Patrick: Let’s let Melissa have the last word because I like this point. She said, ‘This reminds me of the airline business, it’s just a thing we need nothing to clearly pick between until some companies went for broke and did something extreme.’ And that’s an interesting question. What would the Virgin Airline version of a back-end church system be? Not just as good, but way better than anything out there. Well thanks a lot for calling and keep in touch, I look forward to hearing from you. Michael: Cheers. Patrick: Next up we have Mark Smith. How are you doing Mark? Mark: Hey, I’m doing good, Patrick. Patrick: All right. Now this one, I have a feeling, I wouldn’t be surprised if Jason already knows your company, so our name game might be very short. But tell Jason the name of your website. Mark: The name of our website is digmydata.com. Jason: Dig My Data. Yeah. Well, Dig My Data sounds like you’re digging it up but it also sounds like you dig it, so I’m going to go with you dig it, ‘cuz it’s cooler. So, it’s a bunch of data, it’s structured, you can find stuff that you need, you can make the kinds of reports that you really want, you can cut across different data sets and you can both dig into the data that exists as well as have fun with it because the tool allows both. And then finally, you can download it and use it. Patrick: How’d he do? Mark: Actually, we’re a database of mining accidents. No, no, that’s exactly right, you nailed it. Jason: All right. Mark: So here is my question. We are a company of five, and we have two co- founders, myself and Adam Ride. Hi, Adam. Adam’s on, you know, listening to. And what I’m always interested in, especially as we have more successes and just more things to do is just strategies, tips, tools for two co-founders like us to work together better. Especially things around, where it’s around like, ‘Oh, I thought you were going to talk to that guy?’ ‘Oh, I thought we talked about you talking to that guy?’ ‘Oh, no, nobody talked to that guy like we said we would. Ugh.’ And those kind of things. So, that’s what I’m looking for, is the advice, tips, tools on how do you get two co-founders who are in a co-relationship to collaborate more effectively on shared work? Jason: Hey, Bob, you want to take this one first? Bob: Sure, couple of things you want to do. You want to drive out the artifacts of the process. In other words, kill the e-mail, dead don’t use it, because you’re just going to spend all of your time managing the e-mail back and forth. You need an internet surface that you can write on. Now that could be a private Wiki, that could be pretty much dozens and dozens of different products, but the key thing is you need to be able to just put something there and your co-partner has the expectation that that’s where they go to see what’s going on. Want to talk about the simplest possible solution that you could put into effect in about, oh two minutes? Evernote, and sharing a notebook and going back and forth. In fact, I’m doing that with one of my clients right now and it’s great because we have a clear idea of whose doing what, we don’t have to sit there pawing through e-mails to find out what’s going on. It’s free. It’s backed-up. It’s on all of our devices. You know, it’s great. Now, the formatting will suck. But, it’s not about formatting, this is never something the public is going to see. It’s just about, ‘Hey, Adam, did you call that guy?’ ‘Yeah, I did, he said call him next week.’ The other thing I would suggest, on these sort of interactions, is that you need some mechanism to make sure that that call next week actually happens. And I’d like to recommend a tool to any and all here, it’s called followupthen.com. And if you want to see how that works, send an e-mail to [email protected], and you’ll find out. It’s a great little free, premium service which lives to add to your e-mails a way to be reminded of something in the future and it can be pretty robustly done, in terms of what those reminders are, but it’s ideal for that situation, where you get an e-mail saying, ‘blah, blah, blah, next week’, and you reply and you ccc, I mean you bcc followupthen one week. Like [email protected], and a week later, bing, it’s in your inbox again. Try those two techniques. Mark: So that followupthen looks really interesting. Internally we use Jira for a project tracker to pass things back and forth between our developers and testers. And we’ll do the same thing for ourselves for content writing and some of the things related to our marketing plan and stuff like that. But you know it’s one of those things where we’re big users of Skype and we can get on the phone and talk and that’s a very high bandwidth kind of thing. We all talk and can decide, ‘Yes, we’ll do this, we’ll do this, and we’ll do this’, but you know how it is. Invariably things fall through the cracks. That followupthen is really interesting to me. We’ve always wanted the ability with Jared to be able to say, ‘Please make this ticket go away for a week. Just come back in a week.’ I don’t want it sitting in my queue because I don’t want to feel like I’m not doing stuff I’m supposed to but I need to get to it in one week. That’s actually pretty cool. Bob: What I also suggest is if you do go with Evernote or some other Internet surface, if you will, have a page or note or whatever is the unit of size there that is for a particular day and one for each particular project or product that you’re working on. For instance, a big post that you’re doing and maybe one more for each person that matters to you. [inaudible] comes to mind. And those three sub-surfaces, especially if you’re talking about searchable, especially if you’re talking about a tool where you can just pull content in from your computer pretty much from anywhere, those three will give you a good triangulation so that depending on what you need, you have a good sense of where you’ll find it. Something happening today? OK. What happened a week ago? We look at that. Is it on that project? Great. Oh, [inaudible] called and says he wants to give us a million dollars. What do we have to do? You want the least amount of administration that will support the information flow. So I’d like it. I’m finding a hard time seeing any products, other than Evernote, that give you all those nice features, free if you like, and get to the meat of the matter. So give that a try as well as followupthen, which I really, really like and you’ll see more about that at something I’m doing. Jason: Yeah, those are great suggestions and actually, I personally need to do that at WordPress engine. A couple more things there. First of all, I agree that you have to get out of the individual e-mail boxes of people and get it all together. Obviously, though, you still have to use e-mail because lots of the things that you do, even internally at the company, involve talking to people outside the company, too. And also as you get issues and feature requests and what not from outside, you sort of want all of that in the same flow. Because I think one good way to think about this is, everyday you’re going to do some things in a serial fashion. Each person is going to do something and then do something and then do something. That’s going to happen. So the closer that your tools can reflect that, I think it’s easier to organize things. So, for example, one reason why I like Pivotal Tracker for task management, is literally you just drag and drop these tickets around and they come in an order. There’s no notion of priority, like high, medium, and low because it kind of doesn’t matter. It’s just we’re going to do one ticket, each person’s gonna do one thing at a time. So what is the next thing? That’s it. You don’t have to mess with all these other filters and dimensions and what not. That’s just how it’s gonna be. Pivotal does that. Another one is Trello, that’s a tool out of Fog Creek. Which is similar, it has less of a SCRUM-my feel to it. Anything like that where you can just drag and drop to order them, but it’s still linear in time, I feel is at least having the tool match reality. I think the problem is just when you describe in Jira, ‘I want to make this ticket go away for a week.’ Maybe that’s what you want at the moment, but I would argue that’s not the right metaphor, not the right model for what you’re really saying. What you’re saying is that there’s other things are more important. Like if somehow you got ahead on something and stuff, you might be able to go and do that ticket in five days and not a week. Or you say a week now, but that’s just a week for you to re- evaluate it probably. It may be three weeks before you should really do that ticket. And so doing things like pushing off by a week or this or that, it’s OK, but it’s kind of skirting around the truth, which is that you should have a single ordering of all the stuff that people are gonna do. And at the same time, of course, be able to coordinate it and hand things off and see what other people are working on. Again I like these things to be linear in time like Pivotal and Trello. I would say for the e-mail stuff, Jira’s fine as is say ZenDesk or FogBugz because all of them have an integrated notion of an email thread and a sort of task thread where there’s private messaging that you guys can have. It’s easy to send, to also, though, communicate outside of your company though e-mail. That’s very important. And you can, you know, to some extent either order things or at least refer to them in other tools. So I do agree, everybody’s got to get on one of those kind of tools so that all of that correspondence is visible by everybody, it’s easy to hand stuff off, look at stuff in the past and that sort of thing. So that’s pretty easy. We happen to use ZenDesk at, WordPress Engine I used FogBugz, Smart Bear, they’re both fine, you know, everybody hates their book tracker and everybody hates their test manager. Not because they actually are hateful but just because, I don’t know, it’s just that’s always the case for the team. So, they’re all sufficient. So you just pick one and set it up and go. And one more tool I’ll throw out there that I use personally is something called Toodledo.com. And it’s a, they actually have shared facilities in it, but I’ve never used that. It’s certainly good as a personal to-do manager. I have a very GTD- like style of management, but the tool’s very flexible, allows many different things. And among them are all of the things that Bob just said. Like setting due dates, setting start dates, so in other words, pushing it off, and I don’t want it to be visible until that date appears, and that sort of thing. So that may help, although I am not sure if that will help for your root question which is how you also coordinate among people. And the final thing I’ll mention is, this is unfortunately a drag on time. Like, you kind of want there to be a magic set of tools where there’s only a slight drag of your time. Like, you were gonna spend a certain amount of time doing e-mail and now you’re just gonna spend that amount of time plus 5%, because now it’s in this other tool and now everyone will see it and be organized and the fact is that’s not the case. There’s no tool on earth in which there isn’t, once you have, like you said, five people who are actively trying to coordinate on stuff, it takes time. And the tools don’t magically make the time go away, they just, of course, facilitate it and it’s a lot better than the alternative or what you have now, which is that you’re not spending too much time coordinating, except everything’s falling on the floor, and that’s no good, either. So you also have to just know, you’re going to spend time coordinating. So even after you get these tools. And that’s a penalty for having a team. And it’s part of why a small team is more effective than a big team, because there’s less of that and it’s part of why you should also be thinking about how to decouple stuff. Like even with only five people. It takes a lot of overhead regardless of tool to try to keep everybody on the same page with each other all the time. So there may be a lot of ways for you to decouple that and not make that be true. Maybe there’s two pairs of people, for example, who sort of take on certain types of tasks so that there is less communication that has to happen through tools or otherwise and less overhead. So sort of, trying to decouple those things is also just as helpful as tools to help bring people together, I feel. Mark: That’s, you know, that’s probably something that’s really big, that notion of decoupling. You know, let’s not make this a collaborative task, just run with it. Jason: Yeah, you know absolutely. And it’s especially hard when you’re a founder and especially hard for me because I’m kind of a control freak, right? It’s super hard for me to, like it’s easy for me to delegate a task to somebody else, but it’s super hard for me to really delegate it and walk away, not find out what’s happening every day, not worried about exactly how it’s done or how it looks and just saying, like, you know what? Whatever that person does, it’s not gonna be exactly how I would do it. And that doesn’t mean it’s good or bad, or bad or worse. It’s just not how I’d do it, and that has to be OK if we’re gonna scale what we’re doing in a company. Otherwise, why do you have them, right? So yeah, trying to push stuff off on one or two people as opposed to all five, and really making a conscious effort to not look at it and just say whatever it is, it’s fine. In fact, if you don’t trust them enough for that, then maybe you have the wrong people. And if you do trust them enough for that, then take advantage of that trust and do it. And by the way, they’ll be happier doing it, anyhow because it’s great to be trusted to own a whole project and run with it. That’s fun. Mark: Yup. Yup, I like that. And, you know, ToodleDo, Trello, followupthen, I love this. I feel a list-post coming on, you know, on my blog. But, anyway, all right, guys. I really appreciate that. Jason: You bet, thanks. Patrick: All right. Thanks for calling in, Mark, I really appreciate that. Bob, I know that productivity for start-up founders is an area of particular passion for you. Anything else to add to that? Bob: I think the key thing is, remember the advice that we all got somewhere along the line of, you need a business plan? It’s not so much about doing the business plan. It’s about the process of doing the business plan. And one thing that I’ve seen time and time again, and this has happened to me is, if you don’t document your decisions, your assumptions, the things that you’re testing on, in some way that you come back and look at, you’re always going to be flying by the seat of the pants. You’re never going to have anything like an institutional memory of what’s worked and what’s not worked. You’re going to be doing things based on assumptions that you forgotten are assumptions. So, I think, one big, big chunk of productivity is having some sort of structure, whatever works for you and your founders. I mean, you could, yeah, you could stick hold of this in Excel for Christ’s sakes. You need some sort of structure where you record decisions and events and assumptions especially, and do it in a light weight way. So that you’re constantly building that knowledge based for what your organization is. I think that is one of the three most important things in terms of start up productivity out there. Number two, we’ve already hit on which is, you’ve got to have a way of syncing with the other people on your team. And as light weight as possible, and I keep coming back at that point about light weight because the biggest problem with GTD is, it doesn’t scale to the number of things that people who are doing start ups tend to have on their list. I have list of list of lists of lists and sometimes it’s just very difficult when you start dealing with 7, 8, 900 things you really think you need to do. They can all be broken down to smaller things. So, whatever light weight process let’s you sync with the other people on your team and gives them a reference of what’s going on and how to do it, is great. Third thing on productivity, leverage. That’s not just gain other people to do work for you which is a growing opportunity for a lot of start ups. Because there are things out there I don’t need to do that other people can do for me better. But it’s also just the idea of, every time you do something and you know you’re going to have to do it again, create some sort of checklist of what to do and how you did it. One of the worse things about, you know, living off of Google is that you lose most of your memory about how to do things step by step. It all becomes a big giant loop of going to look at Google, finding out what’s out there, and then figuring out, yet again, what you’re going to do. All I can say is that, if you look at books out there especially Checklist Manifesto. Highly recommend that book. Checklist, even for a simple thing as say posting a post. Immediately move your game up and the more you can do that, the more things you can leverage what you do once. Improve that leverage, I meant, if you can see it that way and move on. The less time and effort it will take and the more, actually the more better quality you’re going to have in doing those things. So those are the three things I would suggest just in general for any and all founders. Patrick: Cool. Thanks, Bob. Bob: Sure.