SmoothSpan Blog

For Executives, Entrepreneurs, and other Digerati who need to know about SaaS and Web 2.0.

How Do You Beat a VC’s Best Companies?

Posted by Bob Warfield on March 15, 2017

I read a great article by Tomasz Tunguz recently called, “The Best Content Marketers In The World.”

Content Marketing is literally the engine that powers my bootstrapped business: CNCCookbook.  It provides me with a very nice living (income on par with public company executives not counting their stock sales) and has grown quickly and consistently for years.  I credit all that to Content Marketing.

CNC-cookbook_logo2b_horiz

Content Marketing is the engine that powers CNCCookbook.com…

Basically, I write articles and people are attracted to the company’s website to read them. The vast majority of my visitors find me via Google Search.  I’ve been at it for a while, but so far, I am the only employee of this company.  I write our software, perform customer service, fill orders, and do all the marketing.  The whole thing is getting to be busy enough that I may have to break down and hire our first full-time employee later this year, we will see.

Tunguz’s article didn’t give me exactly what I wanted, which was to know who these World’s Greatest Content Marketers are.  It’s about a conversation he had with a marketing executive that went like this:

I once asked a VP of Marketing at a top SaaS company how she thought of content programming. What is the right type of content to create? I asked her. She replied with a brilliant little insight, “I look at way the best content marketers in the world do it. The TV networks.”

That’s the sort of remark that VC’s dearly love because not only does it sound smart, it makes them sound smart when they pass it along at the next Board Meeting.  It’s perfect grist for Mahogany Row.I use buttons

And the details are interesting.  They boil down to using an editorial calendar to make sure you’re properly and individually addressing the different marketing personas you need to reach.  I can’t quarrel with it and in fact, I use an editorial calendar to do exactly the same thing at CNCCookbook and have been for years.  I never really thought of it as something TV Networks do, it’s just something that occurred to me when I first learned what a persona is.

Think of a persona as what you get when you answer the question, “What kinds of people buy my products?”  Typically you can create these sort of stereotypes and there will be several of them.  For CNCCookbook I use roughly the following:

  • Professional Manufacturing CNC’ers
  • Hobby CNC’ers
  • CNC’ers who use CNC Routers to work in wood

I could break things down with much finer granularity, but this works pretty well.  I even arrange my product landing pages so folks self-select their own persona by answering a question up front:

PersonaPage

That particular set of buttons isn’t exactly my editorial personas because it works better to map this product’s features to the machines they’ll be used with.

What caught me about Tunguz’s article was the thought of we might measure content marketer’s in order to judge who the best ones might be.  Given that the intended function of content marketing is to create traffic to a site, it would seem that some sort of metric that has to do with ROI on traffic might be the way to go.

I admit I was also vaguely uneasy with the notion that TV Networks are the World’s Greatest Content Marketers. I suspect that on an ROI-based metric, that very well might not be the case. But we digress.

Being still curious about who a great content marketer might be that I could learn from, I wondered who the marketing executive Tunguz talked to might be. I went to his home page at Redpoint, to try to see if a “Top SaaS” company was listed. Alas, no.

But there was the obligatory list of some of his investments in a nice logo block:

TunguzCompanyLogos

Perhaps one of these companies was doing a bang-up job with Content Marketing. I am always trying to find new examples to emulate and learn from. And with the kind of budgets VC Startups have for marketing (insanely out of reach for my one-man company, LOL) and the talent of many of their execs, it seemed a good bet.

HP-10C

Yes, I’m an engineer and this marketing stuff doesn’t come naturally to me!

Now being an engineer (this marketing stuff does not come to me naturally!), I like to be analytical. And I often evaluate traffic metrics for various sites to try to understand who has a clue before I just blindly take their advice. I have over 200 growth hacking-related blogs on my RSS Reading list, and I actually researched the traffic data for each one before I added them.

So, I popped open my favorite tool for this sort of thing, which is called “Ahrefs“. It does a lot of things, but for this task, I wanted to get an idea of Google Search traffic each of those sites was getting.

Here’s what the Ahrefs report looks like for CNCCookbook:

AhrefsCookbook

There are other

There are a number of other services that will do the same thing, and they all share the delightful trait that traffic numbers are an approximation based on their sampling technique.  The takeaway is they won’t match your real numbers (mine for the last 30 days were about 6x that, for example), so use them for comparison only.

In this case, the comparison is against the stats for CNCCookbook and Thomasz’s startups for comparison:

VCStatsA

There’s a couple of ringers in there too as I included a Reality TV Series that as far as I know is the only CNC-related TV Program ever. It’s called Titans of CNC:

TitansTV

It’s your basic Orange-County-Choppers-Does-CNC reality show. Not a bad show, but his content is not doing nearly as well as mine. Wish I had all the money his sponsors give him, LOL!

The other ringer is Haas CNC.  They’re the world’s largest maker of CNC Machines and a publicly traded company.

Here’s the thing I am sure you’ve already noticed–with just one exception, CNCCookbook is beating all these outfits.  That’s with no ad budget, no venture capital war chest, and one guy who isn’t even a marketer doing all the work part-time.  I don’t spend nearly the majority of my CNCCookbook time on it.

If that’s not a ringing endorsement for Content Marketing, I don’t know what is!

Content Marketing works extremely well.  It’s the most efficient form of marketing I know, and the only one I recommend for bootstrapped companies who don’t have the luxury of big budgets.

For those of you who are wondering how I manage to do so well with CNCCookbook’s Content Marketing, I have a system.  It’s very analytically-oriented as you would expect from an engineer.  It is a system that others can duplicate-I have trained a few and they did well with it.  It’s also a system that I’ve proven works in a number of spaces besides CNC.

I have great news for Thomasz and his Startups too.    I am currently hard at work producing an eCourse that will show others how to use this system.  Heck, maybe even Titan will try it.

It will be some months yet before the coures is finished, but it will be comprehensive and complete.  If you want to be sure to hear when it’s available, the best thing is to get on a mailing list I’ve specifically created to keep people posted when the course is ready.

Join the Mailing List

 

Posted in bootstrapping, business, Marketing, strategy, venture | Leave a Comment »

Symantec: World’s Worst Customer Service?

Posted by Bob Warfield on January 9, 2017

Recently, I needed to purchase an SSL Certificate to get a Norton Seal on my web site.  Such seals signify the site has been swept for malware and generally give visitors a sense of confidence that the site is legit and safe.

Originally, the seal could be purchased separately (and more cheaply) from the SSL Certificate, but Symantec changed all that about a year ago.  If you run an e-commerce site like my CNCCookbook, such seals are a tax–you can’t live without them as they can significantly affect your conversion rates.  I ran a test a few years ago where the seal swung conversion by 30%!

So, when my old seal ran out at the end of 2016, it was time to renew with an SSL Certificate.  Seems like a tried and true enough sort of thing, so I signed up.  The site assured me all would be operation within 2 business days.  Here we are business day 5 into the process, and still no seal.

The notes said they’d be in touch to confirm I was really associated with the site, but I could find no evidence of either email or a phone call.  I figured I’d better get onto their Customer Service system and ask whether they needed anything from me.

That’s where the trouble started.

I didn’t have an account on their support portal.  Like so many companies, this requires a separate sign up from being a customer.  Talk about not having a 360 degree view of the customer.  Seems inexcusable for a company the size of Symantec, but unfortunately, they’re probably also at that size where they start thinking customers are just a burden to be minimized once they’ve got your money.

Anyway, I signed up for the account so I could submit a ticket and my first challenge was that submitting a ticket requires me to speak some Asian language–Chinese or Japanese, I presume:

symantecchinese

Apparently Symantec expects me to speak an unknown language to file a ticket…

Notice there is no obvious way to change the language on this page, and there’s no way to tell what the prompt is even asking for.  Some number, I’d guess.  Perhaps it is a support ticket ID?  I’ll probably never know.

And why ask in whatever language this is?  Are they trying to guess the language based on my IP?  If so, everyone else seems to think I’m in Oakland, California.  So far, I am seriously not impressed with Symantec’s Customer Service chops, unless, of course, their goal is to prevent me filing the ticket.

I’m not so easily deterred though.  They did screw up their evil plan by providing a “Submit Case” link.  So I clicked that.  Things are a little better on the new page:

SymantecChinese2.jpg

Let’s re-enter all the information they already have!

Well this is awesome, they want me to re-enter all the information they already have because I’m a customer.  Nice job, guys!  I see you’re still trying to understand the whole CRM thing.  Maybe you should get some help with that?

Of course, you have little choice but to comply.  So I entered mass amounts of information, and eventually I’m down to telling it what product and version I have.  Well, the product is “SSL Certificate” and they have no version number so far as I know.

Guess what you get back from that?

symantecversion

Say what?

Say what, fools?  SSL Certificates don’t have a version number?!??

Eventually, I discovered you can circumvent this if you submit a “Non-Technical Support Issue.”  But, Heaven help you if you can’t produce your order # or customer serial # if you go down that path.

Now I wait to see if any meaningful help comes back from this black box.

Symantec: world’s worst support?

They’re definitely on my list for it at this time.  I will be contacting the reseller too in order to see if they can expedite.  I’ll report back on that as a postscript to this article.

Posted in saas | Leave a Comment »

World’s Best PC Keyboard?

Posted by Bob Warfield on October 11, 2016

type-heaven

Every 2-3 years, I manage to wear out a keyboard.  With nearly 3000 articles written for my CNCCookbook blog alone, 5 other blogs, and countless emails responded to, I guess that goes with the territory.

Normally, I don’t think too much about what keyboard to buy, I just head over to Staples and get whatever they have.  This time I decided to order online, and while I was at it, I checked around for some reviews.  Was there some ultimate keyboard that wasn’t too expensive I could try?

It turns out there is an ultimate keyboard, and if your day involves lots of typing, you need to check one out.  I hate to be suspenseful, but I put a whole keyboard review over on CNCCookbook, and even with this premium keyboard, I’m not going to retype it all again here.

Click the link, head over, and check it out.

Posted in saas | Leave a Comment »

Reflections on Six Years of Content Marketing in a Bootstrapped Startup

Posted by Bob Warfield on September 6, 2016

4shotssep10thumb

I just put the finishing touches on one of my biggest content marketing efforts to date, an ambitious article called, “Beginner’s Step-By-Step Guide to Making CNC Parts.”

All told, it took almost two months of part-time effort and was as much work and words as a small novella.  I don’t expect to win any literary prizes with it, but I do expect it to help a good many CNC (Computer Numeric Control, the field my business, CNCCookbook, is serving) Beginners to launch their journey into the world of Robotic Machine Tools that make things for you.

Writing the article has left me feeling reflective about the CNCCookbook journey.  It’s become one of the biggest if not the biggest CNC-related blog on the Internet.  I’ve accomplished marketing goals all by myself that a lot of top marketing people would love to recreate.

CNCCookbook has been a magic business for me in the magical world of CNC.  We live in an age of 3D Printing, which gets most of the Hype, but also of CNC in general.  Computer-controlled machine tools that are even more sophisticated than those that put Men on the Moon are available not just to businesses, but also to hobbyists and small businesses operating out of their garages.

I recently interviewed Zach Kaplan, the founder of Inventables, for the CNCCookbook blog. In the inverview, Zach remarks that there are some 300,000 manufacturers in the US today, but he thinks within 10 years there will be over 3 million manufacturers.  This amazing growth will be fueled by the power of these entry-level CNC machines such as the X-Carve CNC Router that Zach’s company, Inventables, sells.

I think Kaplan is probably conservative, and that we’ll get to that 3 million manufacturer mark much sooner than 10 years.  We live in an unprecedented time of opportunity with desktop CNC to help us make products and the Internet to help us market them.

I’ve interviewed many small CNC businesses that got started from nothing and are doing very well.  A great example would be the little Iowa company of one Brad Martin that makes bottle openers in the shape of grenades.  It’s called Tactical Keychains and affords Martin a nice living where he is growing steadily and is his own boss.

X-Carve is VC-Funded, while its chief competitor, Carbide3D (another outfit I’ve interviewed from time to time) was crowdfunded via Kickstarter. My own company, CNCCookbook, was created with no external capital, just my own sweat equity.  Those are really the rungs on the evolutionary funding ladder–VC, Crowdfunding, and now Bootstrapping.

Lately, I’ve noticed motion away from conventional VC by a number of savvy entrepreneurs.  They’ve realized that the economics are not that great when they take Venture Money.  Certainly nowhere near as good as the economics for the VC’s themselves.

Companies like Atlassian, Github, SurveyMonkey, and Mailchimp have shown that you can grow a company quite large without ever taking any capital.  VC Jason Lemkin writes that the cost is 4 more years to reach a given size.

Personally, I think 4 years is a pretty small price to pay for the lower risk and superior economics that are possible when you bootstrap.  I’ve had plenty of experience with Venture Money–CNCCookbook is my 8th Startup and VC’s were involved with the other 7.  I wish I’d embarked on CNCCookbook and the Boostrapping path 10 years ago.  I’d be that much further ahead on a journey that looks like it has no ceiling.

Today, I take home more cash than I have taken home from any of the VC companies.  That doesn’t count stock option money, but it’s still pretty darned good when you consider I’ve been an executive for two companies that made it to pretty decent sized public firms.  I was able to do this all by myself–I have a few part-time employees, but have gotten here largely through my own efforts.

I owe my success to my ability to write software, but just as much if not more to my ability to do Content Marketing.  It’s been my magic bullet, and it works something like this:

  1. I give away valuable content about CNC, the market I’ve chosen to be in.
  2. People find the content via Social Media, Search Engines, and Referrals as other sites link to CNCCookbook.
  3. They visit, consume the content, enjoy it, and pass on the word.  I can’t claim it’s viral, but it’s pretty darned good.
  4. As they become regular readers, they’re exposed to content about the kinds of CNC problems my software solves.  It’s fairly low-key, and I try to avoid ever being spammy. Eventually, those customers that have the same problems take a free trial of our software.  If they like it, they buy it, and I get to repeat the cycle for others.

If you’re wondering about the details of all that, I haven’t written about it much, although I mean to at some point.  For now, the best you can do is visit another of my web sites, which I call Firehose Press.

Firehose Press is an odd site.  It’s a blog where I haven’t written a single word of the content.  That’s right–not a single word.  Instead, it contains clippings from every marketing article I’ve ever read that influenced me on my CNCCookbook journey.  Y ou’ll see there’s a lot of them.  But, it’s your opportunity to take a personally curated tour that will let you follow in my footsteps.  I’ve distilled out the best material for you.

Give Firehose Press a casual browse.  If you’re interested in how to market a Startup Business, you will almost certainly find something valuable there.  After all, it’s from some of the best minds in marketing.

Posted in saas | 1 Comment »

The Economics of VC Startups for Individuals

Posted by Bob Warfield on July 9, 2016

Huh

Should you take 1 eight-year startup job or 4 three-year jobs?

Jason Lemkin asks and answers an interesting question for career seekers in VC Startups:

Is software a great industry to job hop?

His conclusion is, “No,” largely because he makes the case that you won’t make nearly as much money.  His concerns are:

  1. You don’t vest much.  He estimates 15% a year allowing for future grants.
  2. You may not be able to afford to buy the shares when you leave if the strike price is too high.
  3. If you get RSUs instead of options, you may get nothing when you leave.

I’ll address #1 in a minute, but let’s talk about #2 and #3.

Not being able to afford to buy the shares implies you’re joining the startup relatively late. The average startup requires 7 years start to finish to reach liquidity.  How late does the startup have to be before you can’t afford to buy your shares?  Tough to say.  An early unicorn would certainly do it.  But in most cases, my guess is you’re at least halfway through the 7 years.  So you can no longer buy shares at say the 3 year mark.

Okay, but is that a problem if you join at year 3 and allocate 2 years to figure out whether it is worth staying the remaining 2?  Unless things are still seriously hot after your 2 years are up (year 5), it seems to me you can still look at it as a 2 year stint and maybe just buy fewer shares.  If the thing really is a Unicorn, you’ll need fewer.  In other words, reason #2 is not as compelling as it seems–you don’t have to settle for nothing, you will get a chance to look at a few more cards in the poker hand during the 2 years, and you may simply wind up with a smaller return if you mistakenly leave early because you didn’t buy all of your vested shares.

Issue #3 I look at totally differently.  Do you want to join a startup that offers RSU’s (Restricted Stock Units) instead of a options?  Do you want to join a startup that gives you nothing if you leave after having given them 2 years?  Personally, I just wouldn’t sit down to play at such a table.  The house has things rigged too thoroughly in their favor.  I’m sure there are endless anecdotes about companies with RSU’s that made fortunes for their employees, but remember-the odds are already heavily stacked against you (shortly we’ll see just how much).  Do you really want this additionally risk?  And are companies that operate this way more or less successful?  Are they more or less likely to be good to their employees, people like you?  Color me skeptical.

Now let’s get back to concern #1–“You didn’t vest enough to make real money.”  You only got 15% of what you could’ve gotten instead of 100%.  Let’s look at it somewhat differently.  First, your resume looks terrible if you have a new job every year, so you need to stay for 2 years, not 1.  That gets you 30% rather than 15%, a big step up.

Second, concern #1 is expressed as though making the money is a sure thing, and it most certainly is not.  I prefer to look at it this way:

Should you take one 8-year job or four 2-year jobs?  Which one has the highest likelihood of putting you in the money?

If we look at it that way, and make a few assumptions, it’s possible to model the two scenarios in Excel.  In fact, we can handily run a Monte Carlo simulation and see what results we get.

Here are the assumptions I used for the simulation:

– You can either stay in 1 job for 8 years (about what it takes to go from 0 to liquidity in round numbers) or you can take 4 jobs and stay 2 years each.

– Your chance of picking a winner is 1/8. 1 in 8 deals wins.  Overall 3 out of 4 VC deals fail to return the investor’s money.  It’s a sure bet that a fair number that return the money still won’t return anything to you as the VC’s have all sorts of preferential terms in the deal.  So let’s just say it is 1 in 8.

 

– If the 1 job guy gets a win, he gets 100%. If the 4 job guy gets a win, he gets 30% (2 years at Jason Lemkin’s 15% a year figure).

Now we do 5000 iterations of that in an Excel spreadsheet for a Monte Carlo simulation. Here are the results:

– The 1 job guy only has a 14% chance of getting his 100% of shares to return. I wonder how many would sign up for a startup if they soberly concluded those were the odds?

– The 4 job guy has a 42% chance of getting his 30% of shares in the money.

Whoa!

Way better odds for the portfolio effect of taking 4 jobs with 2-year stints. So now the decision is a utility curve issue. Say we’re talking $10 million. Do you want a 14% chance at $10 million or a 42% chance at $3.3 million?

Jason has said that absolutely the most important thing is to make your first few million–he should be voting for the 42% chance at $3.3 million if you’ve never made your first few million.  He then advocates swinging for the fence to make 10x more, after you have your first few in the bank.

I’m not even sure that’s the right strategy, it is again, a utility curve thing.  What’s your goal?  How much will you sacrifice to get to that goal?  How much is enough money?

roll-the-dice

How lucky do you feel?

Or, look at it this way:

You only have so many deals, so many throws of the dice, in your entire career.  How many are left, particularly when you consider that many feel startups are a young person’s game?

I don’t feel startups have to be a young person’s game, BTW, but I do think you have to find some way of achieving a portfolio effect to maximize your likelihood of success.  Otherwise, you’re working your tail off and taking substandard pay mostly to help your investor’s win big due to their portfolio effect while the greatest likelihood is you’ll make absolutely nothing.

PS:  Now you’re wonder if your odds will be better because you’re smarter and this deal you’re looking at is just so good. Let’s say your odds are the same as the VC’s–1 in 4 deals will hit instead of 1 in 8.

What does doubling the odds do for you in the Monte Carlo simulation?

Recall we originally had a 14% chance of making 100% and a 42% chance of making 33%.  If we double the odds per deal, we now have a 26% chance of making 100% and a 69% chance of making 33%.

I don’t know about you, but having the odds favor me on each 2 year stint to the tune of 69% sounds awesome.  Heck, I might even succeed at more than one of the 4 stints, which would get my 33% up to 66% or maybe even more.

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A/B Testing is a Great Idea for SaaS Startups

Posted by Bob Warfield on May 19, 2016

Tomasz Tunguz (Redpoint VC) and Lloyd Tabb have got it wrong–way wrong.  Tunguz recently published an article based on a conversation he’d had with Tabb that suggests early and mid-stage software companies can’t benefit from A/B Testing because they don’t see enough web traffic to make the results statistically significant.  They suggest that instead, they should make decisions based on qualitative data:

… interviewing users about the whys underpinning their points of view on price, reviewing the video of people exploring the product, and opinions about design. It’s the qualitative data, the acumen of an brilliant designer, the insight of a skilled product manager, the empathy of a master marketer.

Ouch!  Back to anecdotal evidence and marketing decision making by the most important person in the room.  Back to the bad  old days, in other words.  There’s nothing wrong with doing those things they suggest, but before you bet your company on the results, you must A/B test them.  These are just inputs to decide what to test, in other words.

PickardFacePalm

Back to anecdotal evidence and the bad old ways of marketing…

Before we throw the AB Testing baby out with the bathwater, let’s take a closer look at what’s possible.  The Chief Witness for Tunguz and Tabb is Optimizely’s Sample Size Calculator:

optimizely_sample_size

Optimizely’s Sample Size Calculator…

It’s a great tool that I use all the time, BTW.  They’ve selected the default view, which suggests that if you have a baseline conversion rate of 3%, and you want to see a minimum 20% detectable effect with 90% confidence, you will need 12,000 visitors to the page.

There are two key questions to explore before we can agree or disagree with the proposition in an informed manner:

  1. Are these the right inputs for Sample Size Calculator?
  2. Given the right inputs, is the sample size too large for most startups to attain?

For the first question, I submit that the defaults are actually not very relevant at all. Requiring 90% confidence or be willing to accept anecdotal evidence is pretty silly.

Heck, I run my own bootstrapped startup, it’s entirely my capital that’s at risk (I’ve accepted no outside investment), and I would be thrilled to ring up 70% confidence interval tests all day long.

As it turns out, Optimizely will only let us go to 80% confidence, but Google’s A/B Testing will tell us it’s evaluation of the confidence regardless of level.  I will add that the statistical confidence is also not the only factor we should consider.  It’s important to make sure you really have a representative sample.  For example, test results may vary by day of the week, so I never accept a test that’s run for less than a week, even if the confidence is 90% or more.  In fact, I typically prefer 2 weeks as a minimum.

Cutting the Optimizely confidence down to 80% gets us down to a sample size of 11,000. Let’s next consider the baseline conversion rate.  3% is not an especially good benchmark for a product landing page.  Groove.com surveyed SaaS companies and came back with a visitor-to-trial conversion rate that averaged 8.4%.

If we plug in an 8% conversion at 80% confidence, the sample size plummets to 3,300 visitors before we can measure a 20% detectable effect.  We’ve cut it almost 4x, but we’re not quite done.  What about that 20%?  Is it not worth conducting A/B tests unless they result in 20% differences?

Here I’ll turn to my own experience AB Testing for my own company, CNCCookbook. In the last 8 months I’ve conducted 55 A/B Tests.  The average change between the baseline and the variant I measured was 30%.  Are you surprised?  I was VERY surprised at how much impact even seemingly little things could have.  FWIW, 44% of my tests yielded a positive improvement, 29% showed the idea failed, and 49% of the tests failed to reach statistical significance.  I have no idea how that compares to the scores for other marketers, but I am very happy with the results.

If we plug that 30% number in, we get to a sample size of 1,300 visitors.  Applying my rule that I usually test for 2 weeks, we need to come up with less than 100 visits a day to the web page we’re testing.

Is that bar too high for startups to clear?  It shouldn’t be if the marketers are doing their job right.  I’m a one-man bootstrapped company and my CNCCookbook site sees about 15,000 views a day to the site.  I get about 250 a day to the home page and about 450 a day to my product home page.  As I write this, Google Real Time Analytics cheerfully informs me there are about 50 people running around on my site.

Clearly I can do very statistically significant A/B Testing and it has benefited me quite a lot. I get over 6000 visits in 2 weeks so I can measure as little as a 15% change in that time, and even less if I am willing to let the tests run longer.  Incidentally, don’t overlook the value of a test that ISN’T significant.  That test is telling you at the very least that even if it is bad, it is no worse than the statistically measurable results.  So, if we can test to a 20% detectable effect, adopting the wrong variant will do no more harm than 20%.  Sometimes when we need to move ahead boldly, knowing we can do no more harm than that is good enough.

Granted, I’ve had this company for a few years, but if I can get this far by myself, a VC-funded startup should be able to do at least as well and much faster.  They have to in order to have much hope for a Unicorn-valuation.  Tabb’s company, Looker, the one that presumably prompted the discussion, looks like it should have a little less than half the organic search traffic I get based on SEMRush results.  Clearly, Looker should be able to benefit tremendously from A/B Testing if it chooses to.

So, VC Board Members–expect quantifiable results from your portfolio companies and don’t take sample size whining for an answer.  Entrepreneurs, saddle up and ride this A/B Testing horse–it’s a powerful tool that can really move the needle.

My best advice for startups right at the beginning, BTW, is start building your audience BEFORE you build your product.  I call it achieving Content-Audience fit, I’ve been writing about it for years, and it is absolutely the very first thing a founding team should do when they get together.  Achieving it provides a number of powerful validations for your team, but more importantly, it validates there is a reachable audience, and in reaching it, you gain a powerful tool for shaping your journey to Product-Market Fit.  Not to mention, you set yourself up to achieve enough traffic to do meaningful A/B Testing just that much sooner.

Stealth Mode is harmful in this respect–it delays your access to Content-Audience fit for no meaningful benefit.  So what if the world knows what broad market you’re working in or even what broad problems you write about?  You don’t have to tell them anything about your product or how it helps solve those problems.

No more excuses–get on with  your marketing people, and do some rigorous AB Testing of it!

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What Really Caused Our Manufacturing Jobs to Move to China?

Posted by Bob Warfield on April 28, 2016

Every now and again, a good rant can be cleansing.  I mean that in the best possible way.

Today, for example, I had a good rant after reading that Fred Wilson, a Wealthy and Influential Venture Capitalist in New York, was “Bothered” by the “Losing Jobs to China Discussion.”

Fred’s not long enough on facts to do much more than be troubled and hand wave away the discussion.  In his mind, there won’t be any manufacturing jobs because automation is destroying them so quickly anyway.

RobotsTakeJobs

It’s really the Robots that took all the jobs…

Fred doesn’t think it’s worth bothering with the Manufacturing Sector because soon there won’t be any jobs left after automation anyway.  Far better to make everyone an IT guy or some such.  We’re in a transition we should double down on be happy with.  Something like what he says here:

The US and a number of other countries around the world are building new information based economies. That is the long term winning strategy.

So while we can critique our leaders (business and political) for giving up on the manufacturing sector a bit too early, I think the US has largely played this game correctly and will be much better off than the parts of the world that have taken the low cost manufacturing jobs from us.

The thing is, most all of this is a lot of Lies, Half Truths, Myths, and general Bollocks that got started by people who would benefit from offshoring manufacturing and is maintained as a cherished belief as so many myths are just because it’s been a self-fulfilling prophecy. In other words, if we destroyed our manufacturing economy it must be because our manufacturing economy was doomed and not worth saving in the first place.

Take the Robot argument.  It’s uber-popular in VC circles because people like Andrew McAfee have made careers out of pushing this thesis.  Yet, if we actually look at the numbers (which I do in detail in the article below), it’s very hard to make the case that Robots have taken more than maybe 20% of the jobs away.  That’s a far cry from eliminating an entire market segment or deciding they’ll never be able to produce enough jobs to be worth considering.

The reality is the whole thing was manipulated by a variety of parties, is based on a large number of non-truths, and is relatively easy to reverse.  Moreover, it would be extremely valuable to reverse it.

For all the detail, check out my longer post with facts and figures over at CNCCookbook, my own Manufacturing-related company.

It may be that article hit a nerve, because Fred’s site deleted a comment wherein I referred to it as “spam,” LOL.

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Bad Advice on Free Trials from Marketers Who Should Know Better

Posted by Bob Warfield on February 18, 2016

262_1

I just read a post on the KissMetrics Blog by Cody Lister entitled, “More Trial Users is Not the Answer For Your Startup’s Growth.”  It’s not a terrible post.  In fact, some aspects are pretty decent.  Lister basically wants startups to focus on better engagement and the onboarding experience and less on just running as many people as possible through the trial process.  He wants you to be sure you’ve got product market fit before you try to scale out with as many trials as possible.  I have no problem with the latter, BTW, but it is unrelated to the areas I do have a problem with.

Unfortunately, perhaps due to the act of trying to make the point as persuasively as possible, he strays into at least one area where I think his advice is dead wrong.  It’s way too Black and White, and whenever someone gives me a Black and White answer, I instinctively look for the exceptions to the rule.  Let’s put aside that in fact more free trials will help you to grow, it simply may not be the optimal thing for you to be focused on right now (or it may be, it all depends).

Instead, let’s drill down on the area that really got me thinking it was bad advice from a marketer who should know better.  Lister states:

Eliminate Or Reduce Free Trials

What if one day, your team just decided to shut down your free trial accounts that were past 14 days since their sign up date? Would you suddenly go out of business?

No, you’d save money from server costs and force people to make a decision.

It’s only when your free trials run out that you know whether the end user found your product worth paying for.

You need to figure out how to improve the engagement of your existing trial users to convert them to paid users.

ConvertKit and Edgar, which today generate millions of ARR, never offered free trials.

I often come across startups that give away free trials for 30 to 60 days. I just don’t get it.

I could not disagree more with his advice to eliminate or limit free trials to 14-days.  He states it as an absolute to the point that, “he just doesn’t get” why anyone would be stupid enough to offer a 30 or 60 day trial.

He gives only two odd exceptions to his rule:

  • A B2B SaaS offering costing more than $200 a month.  No explanation whatsoever why the arbitrary figure of $200 was chosen.
  • An offering where personal data had to be entered and value received increases proportionally to the amount of data entered.  He argues this creates switching costs, which is worthwhile, but actually misses the point.  What he misses is not only does it create switching costs, but the more data in services like DropBox, the more likely the user is to experience the “Aha” moment that closes the sale.  Switching costs come later, after the user is satisfied and someone else wants to woo them away.

Let’s dig into it with a couple of real world examples that I think will help explain the real reasons why you need to think about your Free Trial in terms of the user experience and not in terms of arbitrary advice from marketers.

Ironically, one of the reasons I tried but did not adopt KissMetrics (the very blog where this is posted) was because I could not tell within 14 days whether it would deliver value. In fact, KissMetrics is a wonderful illustration of the problem with this one-size-fits-all advice.

It’s biggest benefit is a better understanding of your sales funnel. So ask yourself, “How far does a user travel in the funnel in 14 days?” Further, how much of the 14 days is needed to get things set up and to accumulate enough people travelling through the funnel to make things even interesting?

You can now see where I’m going.  It might very easily take more than 14 days to get to that “Aha” moment where I see the value in a product like KissMetrics and I’m ready to pay up for it.  In fact, for my company, it really was longer than 14 days.  This was exacerbated by various aspects of the KissMetrics user experience.  It took the service time to accumulate enough data points to show me any funnel reports.  It took me time to understand the service well enough to get my funnels set up properly.  And it took time given my web site’s traffic to accumulate enough data points to see any kind of picture clearly.  BTW, it’s no small web site, I get 2 million uniques a year.  Pretty good for a small business.

I believe 30 days would’ve worked nicely for my case, but alas, I only had a 14-day trial to work with.  So I moved on.

Let’s try another recent personal example: Drip, the marketing automation app.  I wrote about my experience with them recently.  They had a 21-day trial.  During that time I was trying to:

  • Learn a complex new application
  • Tie in my mature and complex email best practices
  • Develop a new lead nurturing automation campaign far enough to evaluate the product

I felt it was reasonable that my “Aha” moments for Drip would include:

  1. Verifying it could do what my existing provider, Mailchimp, was already doing for my business.
  2. Verify that it could so something that Mailchimp couldn’t via its increased automation features. After all, Drip was going to be more expensive–it should show me some magic relative to Mailchimp during the trial.

As I documented in my write up, I was unable to accomplish these tasks within 14-days despite trying like crazy to get them done.  I had a mixture of problems ranging from product bugs to unclear UX to my own stupid noobie user mistakes.  I could not even get my email newsletter out, despite trying hard for 2 weeks running, so I couldn’t even verify Drip worked as well as Mailchimp, let alone see the impact of its new features.

I wound up sending Drip’s Founder an offer–extend the free trial and work with me until we can make my Drip experience a happy one.  In exchange, I’d buy the product and write about my experiences in places like this blog.  He declined, saying many of his competitors didn’t offer a free trial at all.

Here’s the thing:

If you’re going to offer a free trial, you really should make sure it is long enough that your users can reach the “Aha” moment where they’ve confidently demonstrated your product’s value and it’s an easy choice to reach into the pocketbook and become a paying customer.  Ignore all the other rules of them because reaching the “Aha” moment is the only thing that matters for your Free Trial.  That is its singular purpose.

If you’re not going to do that, why have a free trial at all?  I can’t imagine a reason unless it’s just part of the old bait and switch–get them to commit a little, even just give us their email, and each thing they give up will make the next thing that much easier.  That’s a well-understood marketing concept, and it even works to an extent, but is that really the way to build your successful business?

I can’t believe marketers think so, at least not the good marketers.  Please tell me you’re not in that camp.

Length of trial is something that should be tested, preferably AB tested if you can arrange it. Don’t get too greedy and eliminate your trials before your customers can experience the “Aha” moment that guarantees they will love the product. If you can make that happen in 14 days, great, but don’t just assume that’s the case.  Give them whatever time they need. Even offer to extend the free trial for ANOTHER 30 days if they’re not done evaluating.

You’d be surprised what treating your customers as human beings rather than inventory will do for you.

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Drip: Great Idea, Not Ready for Prime Time

Posted by Bob Warfield on February 5, 2016

As I’ve written recently, I’ve had some problems with my Email provider Mailchimp.  I use Mailchimp to do a variety of emailings as part of my software company, CNCCookbook.  We’re a bootstrapped company that makes software for CNC Manufacturing, and we’ve managed to do very well largely using Content or Inbound marketing.  The company is completely bootstrapped, yet we have traffic that makes us the largest CNC-related Blog and Content resource on the Internet.

The problems with Mailchimp were not life-threatening.  Basically, they were getting some links wrong in the Plain Text version of my RSS Newsletter.  They have been quick to follow up, comping me with some free months and promising to get the problems fixed.  There’s a reason they’re as large as they are and they know how to handle customers.

The thing is, I’ve wanted to move up to a more powerful Marketing Automation solution. To do so, I needed features that were missing from Mailchimp and that it doesn’t look to me like they will be adding very soon.  In essence, they boil down to more powerful Workflows that let me do highly personalized Lead Nurturing.  I believe Lead Nurturing is the next step in getting the maximum value out of my large mailing list (nearly 50,000 members).

So I took this as an opportunity to try another vendor, and I settled on Drip.  The information on their web site made it look like they had the functionality I needed and I had seen that some of the sites I value for marketing information were using Drip.  The price was reasonable for a company like mine–a bit more than Mailchimp but bringing more functionality.  Best of all, I really felt their marketing slogan was perfect for my needs:

Lightweight Marketing Automation That Doesn’t Suck

Unfortunately, despite a week of working hard with Drip, it became clear that it just wasn’t ready for Prime Time.  At least not for a firm the size of CNCCookbook (which doesn’t seem all that large to me being bootstrapped by one guy who is an engineer and not a Marketing Guy).

Let me describe what I was trying to do and what problems I encountered so that others may understand.  By all means, if you’re aware of a solution that can deal with these things without breaking my bank, let me know about that too.  The Marketo’s, Eloqua’s, and Pardot’s in the world can probably do it with ease, but they’re far too expensive.  Even Infusionsoft looks extremely expensive to me.

Step 1:  An RSS Email Newsletter

CNCCookbook has grown through content marketing and I put out 3-5 new articles every week on our blog.  I build the mailing list for that blog via various forms and popups on the web site coupled with premium content offers for signing up.  One of the reasons I picked Mailchimp at the time was that it made it extremely easy to automate a newsletter with an RSS feed, and one of the reasons I picked Drip is that it clearly advertised the same capability.

Drip does a lot of things with their RSS (and other email workflows) that I love:

  • With one click you can specify to do a follow-up remailing to those who didn’t open the first one.  This is hugely valuable all by itself.
  • Their email creation UI is fully on part with Mailchimp’s and even a bit cleaner and easier to use.

But, there were problems–some major, some minor, all added up to my not getting a single Email Newsletter out before I decided to cancel my trial after a little over a week of intensive effort.  Here’s what I found:

  • You have to request the RSS Feed feature be turned on.  I found this to be odd and off-putting.  It’s like they’re not very proud of it or something.
  • It does show up in the UI looking like something of an after thought.
  • There’s no way to do Mailchimp’s useful “Forward to a Friend” link.
  • You can’t customize the Subscription Management page.
  • You can’t manually control whether a user gets the HTML or Plaintext version.  In fact, I don’t think you have a way to even tell which one a given user has chosen though the UI shows both.
  • I was never able to successful send myself a Plain Text version so I could verify it was good to go.
  • Importing my Mailchimp list took hours.  Makes me wonder just how scalable this SaaS app is in an age of Cloud Scalability.

That was all stuff I got my head around and was willing to move forward with.  But then there were some major gotchas.  For example, you can set the RSS up to generate the bulk mailing but wait for you to approve it before it goes out.  You can even trigger its generation without waiting for the once a week date so you can use it to debug your efforts.

Bravo, very cool feature!

But the bad news is, each time you trigger it, it won’t run again until the specified interval.  So, if you test it, but don’t send the mails, you can’t do it again for real for 1 week.  Whoa, totally unworkable and the reason I never sent one email newsletter.

Lead Nurturing and Fancy Workflows

This is where the product really shows promise.  On paper, at least, it is capable of much Marketing Automation Coolness.  Want to trigger actions based on what people are doing on your site?  This is the Holy Grail of email personalization, and Drip can do that.  You drop a little Javascript snippet on every page and voila!  They are now monitoring all that activity.  You can even bring up a subscriber and see the activity.  Tres Cool!

Want to know if they opened emails or clicked through?  No worries.  There’s even a lead scoring mechanism.  Oh boys!  Now you’re ready to put together some awesome Lead Nurturing Workflows, right?

Well, not so fast.  Let me describe the very basic lead nurturing program I came up with, and my attempts to implement it.  Here is the basic Lead Funnel I was after:

LeadFunnel

No Rocket Science, right?  The Brand Loyalty stage is about our giving value in the initial emails by sharing our most popular and valuable articles.  Gradually, we start to introduce some popular articles that are about the sorts of problems our software addresses.  Then we provide articles that show how our software solves the problems.  Finally, we provide articles that show why we are the best choice.

What we want to use the workflow in a product like Drip to do is to determine which articles are being read.  Based on that, we may escalate or fall back from one stage in the funnel to another:

LeadFunnel2

Based on which email links readers click, we may escalate them to later funnel stages.  If they quit clicking or opening emails, we drop back and start over because they’re not ready…

Again, this is pretty basic lead nurturing, so I’d expect most products to be able to handle this kind of thing.  Here are the obstacles I encountered with Drip:

  • Inability to work with large numbers of links in Visual Workflows.  For example, they’re very excited about their new Visual Workflow Editing.  It looks awesome in the demo, but for even middling complex workflows it is very cumbersome.  For example, you can’t horizontally scroll the diagrams.  I was stretching the window across 2 32″ monitors but still lost the ability to edit when I wanted rules based on 5 links.
  • You can use their Rule Editor, but it is going to be a lot of work.  What would be ideal would be to simply enter a list of links that trigger a new campaign, with one campaign assigned to each funnel level.
  • There’s one single lead score and one threshold for everything.  I need separate funnels, campaigns, and lead scores for each product.  I want to potentially trigger transition to another level of the funnel not just on links clicked but on leadscore.  Maybe a score of 25 = Awareness, 50 = Consideration, and 75 = Decision, or some such.  Not possible–Drip’s Lead Scoring is way too embryonic.  It would also be nice to be able to reset or reduce the lead score if the prospect fails to move forward and we fall back to wait for another time.

There were a number of other detail level fit and finish issues, but I tend to overlook those if a company is moving at a good clip and working with me.  Speaking of working with me, I will say that Drip has some of the best Customer Service I’ve yet come across.

What Now?

I really wanted to work with these guys, their product has a lot of promise.  But I had so many problems during the 21 day trial it was clear I wasn’t going to get it figured out.  So I sent the founder a proposal.  If he’d comp me a quarter and work with me on the issues, I’d work with him.  I’d write about his product, serve as a case study, and provide him with input.  In the end, I’d be a decent sized account for him too as we’re off the top of his published plans.

I was surprised when he turned me down:

Hi Bob,

Thank you for taking the time to put your thoughts down and let us know your situation. I’m sure it’s been frustrating so far as you’ve attempted to get setup, and I appreciate you touching base about this.

From your email, it sounds like a tool like MailChimp, AWeber, or ConvertKit is actually going to be your best bet. It seems that Drip isn’t a fit for what you’re looking to do based on the number of issues you’ve faced. We are unable to extend trials past 21 days as you’ve requested (our competition, such as Infusionsoft, AWeber, ConvertKit, do not offer free trials at all).

With that said, I do appreciate you getting in touch and I’m sorry this last week has been a challenge. I wish you the best of luck with whichever provider you settle on.

Best,

~~~


Rob Walling
support@getdrip.com

 

I probably shouldn’t have been, but I have always gone out of my way to work with folks who are providing good feedback about problems that I knew we would have to solve to move forward.  CNCCookbook seems to me is small enough and the problems we had seem broadly applicable enough I would’ve thought we were in that category.

In any event, we have parted company.  I wish Drip all the luck, as I mentioned, I really believe in their core value proposition.  Companys like CNCCookbook need affordable marketing automation.

I do have a couple of other potential solutions in mind.  Heck, maybe Mailchimp will keep moving in this direction, I don’t know.  I will keep you posted.

 

Posted in saas | 9 Comments »

There’s Something Terribly Wrong With Mailchimp

Posted by Bob Warfield on January 29, 2016

MailChimp-Send-Email-Campaign

Unfortunately for me and my customers, my campaign went to 50,000 and it was wrong due to Mailchimp bugs…

I use Mailchimp as my email provider for my business, @CNCCookbook.  For the past couple of weeks there’s been a terrible bug.  My email RSS newsletter come out with all bad links for users that selected the Plain Text version.  Every single link is bad the emails–they either go to a non-existent page or to a totally unrelated page.

At first, Mailchimp tried to convince me it was a format problem at my end because I was using the matching quotes so many editors produce.  The problem is, you don’t have to look at the XML for the RSS feed very hard to see that explanation is ridiculous.  Sure, those quotes are there, but the syntax of the RSS Feed makes it very obvious that those quotes are part of the article and not part of the link.

After two weeks of back and forth, they finally admitted they had a problem and that this was, “Not expected behavior.”  They weren’t able to quite bring themselves to use the “B” word–BUG, but that’s clearly what it was.  They also informed me they had no idea how long it would take to fix.

I waited a week, my newsletter went out this week, and I got more complaints from customers.  One was particularly galling–my customer, whose is male, was addressed as “Lillian” in the newsletter.  I quickly checked their profile in Mailchimp and it was not “Lillian”.  In fact, there are no Lillians in the mailing list whatsoever.

At this point, Mailchimp has been slow to admit there is a problem, slow to get a fix (still don’t have one) and it’s a serious problem.  I found another similar report on Twitter, so I’m not the only one.  After the first week of trying to get Support to even acknowledge the problem, I took to copying the company’s founders on the emails.  I even asked my own audience to write to them in my blog post explaining what had happened.

Mailchimp doesn’t really respond much to all this.  There is no sense of urgency.  If the problem is widespread, it’s a real disaster for them.  From my own perspective, the poor customer service (it’s just totally unresponsive) and the fact that this isn’t the first time I’ve had customer service issues with them have led me to start looking for a new provider.

Posted in saas | 5 Comments »

 
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