The Longcut: A SaaS Business Podcast

Episode 011: How to Build an MVP

Welcome, Episode 11 of the Longcut Podcast, where we're busy poking holes in the myth of the overnight success.

I'm your host Ryan, and today we're doing something a little bit different.

I don't have a guest today; instead, I thought it would be fun to talk about MVPs and let you in on some of the secrets that we use to successfully create brand-new web products.

I also want to give you an update on the podcast, because I'm going to be changing the format a little bit.

It turns out, making a podcast is really time-consuming. In the past couple of weeks, I've had a little bit of a hard time balancing my regular job, which is building MVPs with my agency Booster Stage, and landing new leads for the podcast, doing interviews, etc. all that goes into producing great content. I'm not going to lie, I got a little behind.

So, dear listeners, I hope you'll forgive me, but I'm going to take a couple of weeks sabbatical from the podcast to catch my breath.

When we come back, I'm thinking about doing a seasonal model, where we'll record a series of episodes around a particular topic affecting startups.

I'm also going to move to a biweekly publishing schedule, just to be kind to myself.

I'd love to know what you think about that, and if you have any thoughts on what kind of topics you'd like to hear about, email me at Ryan@thelongcut.fm.

Now, let's talk about how to create an MVP.

• Sell Your Byproducts: Sometimes you have to operate a particular business for a while to recognize that a hole that exists in the market. If you're watching for it, you may realize that the hole is more valuable than the business you're actually operating.
• Don't be afraid of a big pivot. Spreedly started out as a subscription management service, similar to Stripe. Several years into it, they realized that what customers really wanted was a way to store credit cards in a PCI-compliant payment vault. They eventually decided to sell the subscription product, which had until then been their bread and butter.
• What are your customers telling you?  Your customers are talking to you; listen to what they have to say. It's tempting, especially for startup founders, to double down on what we perceive is the problem that needs to be solved. Instead, open up to the idea that you may be wrong, or that there may be something that you haven't thought of yet.

Today on the Longcut we’re talking with Mason Hale. Mason is the founder of TeamTopia. TeamTopia’s flagship product is SwimTopia, which helps teams streamline and manage the logistics of running a swim team.

Proactively narrow down your niche audience. Many entrepreneurs have a product or service that they try to apply to as large of an audience as possible. Instead, niche down and narrow your focus - you can’t meet the needs of everyone, everywhere. You’ll be enabled to communicate and connect with your market in a way that is really hard to do if you're trying to do it all.

Charge your customers right away. Don’t have reservations about asking your customers to pay for your idea - build something that they will pay for, as is. If no one is willing to pay upfront for what you’re providing, it’s a critical sign that your business will not be self-sustaining in the long run.

Don't take failures personally. Business owners are wired to be emotionally attached to their enterprises. The kind of people who are attracted to the entrepreneurial life tend to be final decision makers - but not knowing how to disperse responsibility leads to hypersensitivity. Don’t let your identity get overly wrapped up in what you're doing, as these pride-laden mistakes hurt efficiency and the bottom line.

• What to look for in a venture accelerator. Much of the value in the top-tier programs—the most famous and sought-after accelerators like Y-Combinator and TechStars—has to do with the halo effect. You'll have contact and mentorship opportunities with people who can really help move your business forward. Second-tier programs can also offer a lot of value in the community. Beware of programs whose primary emphasis is on the mechanics and structure of the business process.
  
• Entrepreneurship is a skill that can be learned. The post-industrial economy is here. Many corporate jobs are migrating to outsourced skilled labor. This is going to necessitate the learning of very diverse skillsets by self-employed people and entrepreneurs who are working increasingly in a decentralized and meshed economic environment.

• Whether you realize it or not, you’re modeling entrepreneurship to your kids. That’s a good thing. Brian was an entrepreneur before he knew he was an entrepreneur. His upbringing in many ways prepared him for a career of self-employment. For all you parents out there listening; take this lesson to heart: don’t be afraid to bring your kids into your confidence about your business. The lessons you’ll teach them just by watching you will change the way they see the world, and will probably inform their own career choices.
  
  
• Entrepreneurial enthusiasm is the fuel that drives us. Brian experimented with several different businesses, and you can still hear his enthusiasm for those early wins. Small things, like getting his first customer, and earning his first $59 from his Wordpress theme, were like gas in his entrepreneurial engine.
  
  
• Productized services can be easier to launch than SaaS products. A productized service is a service that you offered in a tightly defined package. There’s not a lot of variation in the process of what you do from one customer to another, although the outcome - whatever it is you deliver to the client - is unique to them. AudienceOps is a great example of a productized service: they provide custom content production. Although the content that they develop for each customer is unique, the process is the same, and so it can be done very efficiently. Brian was able to launch AudienceOps very quickly without having to build any infrastructure up front (that came later).
  
  
• The only way to get it right is to get it wrong a whole bunch of times. You have to be willing to risk getting it wrong; otherwise, you’ll never start. Start something small, launch it, see what you learned, and then improve your approach for the next time. That’s how you work up the ladder to success.

The very earliest days of a startup's life are some of the most exciting, but they're also arguably some of the most risky. Decisions must be made in the early days about all sorts of things that will affect the future of the business: what products to offer, what kinds of customers to serve, what marketing channels to use, what sort of company culture to build, and on and on.

Although for many startups the table stakes (investment of time and money) are relatively low, there are plenty of funded startups with a substantial amount of capital on the line. Whether the investment is time, capital, or both, there are ways to reduce the risk involved in starting a business.

Today's guest, Ada Ryland, works with early-stage entrepreneurs to help de-risk their startup enterprises.

Nathan Barry is the founder of Seva (formerly ConvertKit). I had heard about ConvertKit's story from Nathan before, and it really stuck with me. ConvertKit is an amazing company. They've had incredible growth recently, and it's easy to look at where they are today and think it was a foregone conclusion.

Little did I know that there was a time when Nathan considered giving up on the idea.

I sat down with Nathan to ask him about why he didn't give up on the idea, and what it was that helped him turn it around.

Are you serious? Nathan had to be confronted with a decision: either shut down the company or go all in and invest in it. Fish or cut bait, as my dad would say. Nathan asked himself hard questions, like: have I really given it a fair shake? And the answer that he came up with was no; he hadn't. Listen to Nathan describe his thought process and why he decided to go "all in".

Your niche is probably not narrow enough. ConvertKit was an email marketing tool, but there was no way that statement was going to get any market traction against their competitors. Nathan niched the call to action down to "Email marketing for professional bloggers". But even that was too broad. Eventually, they began targeting incredibly narrow niches like "email marketing for professional paleo recipe bloggers. At first, this may seem unreasonably specific. But this tight niching allowed them to literally make lists with names and addresses of people who they could reach out to individuals to invite them to try the platform. Which, by the way, is code for "direct sales".

Direct sales are the most important, and maybe the most overlooked, way to grow a SaaS business. Many SaaS founders are scared of direct sales. Maybe because it's hard, maybe because it doesn't scale. But we're starting to see a pattern here, and that is that direct sales can consistently move the needle for companies that need to grow. It's not enough to do inbound marketing and wait for customers to find you. You do need to do that, but if that's all you do, you may not make it. You also need to actively go out and find prospects and invite them to use your product. As Nathan points out, doing so—talking directly to prospects, listening to them describe their processes and their pain—can help you to better understand your customers and how your product can serve them.

Your WHY can (and should) evolve. ConvertKit has changed a lot over the years. In the beginning, the purpose of ConvertKit was to help himself and their employees to take control of their own careers and financial lives. Now that they've accomplished this purpose, it has shifted to be more outwardly focused; to help others achieve this same career and financial freedom through their businesses. Nathan explains how the new name, Seva, does a better job of communicating this sense of service.

Brennan Dunn is the co-founder of RightMessage, and the founder of Double Your Freelancing, a community of freelancers and agencies, offering courses that help freelancers increase their rates and charge what they're worth.

Brennan's latest venture, RightMessage, is a tool that helps marketers build highly targeted messaging for website visitors. The idea behind RightMessage is that you want to talk to people differently depending on who they are and what their needs and interests are. RightMessage allows you to change the content on your website to speak directly to the person who's visiting your website. It's an extremely powerful tool that lets marketers do things that, until recently, were only available to the most sophisticated internet marketers.

If you've been following RightMessage since they launched in February 2018, you might think it looks like an overnight success. As usual, that's not the case. The idea of personalizing website content for your visitors is not new, and it's something that Brennan was helping freelance web marketers do through Double Your Freelancing.

In this episode, I caught up with Brennan to ask him the story behind RightMessage. Brennan paints a picture for us of how his early experience shaped his knowledge of sales, and how validation for the idea started long before they started writing any code.

Pre-selling is a powerful way to validate your business proposition and generate early cash flow. Brennan pre-sold the product before they began building it.  This is a technique a lot of founders could take advantage of.

Direct sales are not always the first sales channel that comes to mind for SaaS founders. But direct sales can help to get your product on the map. The first 100 customers for RightMessage came from direct sales, not from SEO, or content marketing. That’s not to say that you can ignore those other channels and just do direct sales, but selling directly from the very beginning can help to pump a lot of momentum into your growth flywheel.

Don’t rely on SEO to move the needle when you’re starting out. Very few people are probably searching for software that does exactly what your software does. Think about how you can meet people where they are now and prepare them and nurture them and condition them to be a customer.

Shelley Delayne is the owner and proprietor at Orange Coworking in Austin, Texas. I wanted to catch up with Shelley because she is someone who has remarkable insight into the psychology and the mental landscape of independent entrepreneurs.

Shelley opened Orange Coworking partly out of her own need for a place to work outside the house. But she quickly realized that the need for community—to be around other entrepreneurs and self-employed knowledge workers in a supportive environment—was something that many other people felt.

Most business failures happen in the head or the heart of the entrepreneur. Founders, especially solo founders remote workers, need community and support. Sometimes more than we realize. We need to be around like-minded people who understand the unique kinds of struggles that we face.

Self-motivated people are really bad at self-congratulating. It's important to pat ourselves on the back—or let someone else pat us on the back—every now and then. Celebrating those small wins and little victories prevents them from being forgotten in the rush to get to the next thing.

Discovering what motivates you—truly understanding why you're doing it the first place and what changes that you want to affect in the world—is so important.

Working around other entrepreneurs on a similar trajectory, which happens in coworking spaces, can help you build entrepreneurship as a core competency. This is because you’re literally sharing the same space with people who have knowledge and skills that can help you fill your own gaps, just as you can help fill theirs. When your workplace is truly a community, as it is at Orange, members have the opportunity to help one another advance professionally.

Ken Wallace is the mind behind MastermindJam.com, a community of entrepreneurs who come together to support one another through mastermind groups. Mastermind groups are peer-led groups of 3-6 people who meet on a regular basis to help each other discuss and accomplish their business goals.

Giving things away for free is not always an effective way to grow a base of early adopters. It seems counterintuitive: people should be eager to try something new for free while you’re working on it, right? But it turns out that people don’t value things that are free. And certain products, like mastermind groups, are intrinsically valuable. Ken found that giving away the mastermind group matching service for free was actually raising red flags in prospects’ minds. They wanted to be part of a group where the other members had skin in the game. Lesson: even when you’re just starting out, don’t assume that it’s necessary to give away your product or service in order to secure early adopters; often it will have the opposite effect.

Building things are risky. Whether you code it yourself or pay someone else to do it for you, there is risk involved. If you build it yourself, the risk is that you’re trading an enormous amount of time for the product. If you outsource it, the risk is monetary. But there are ways to manage this risk:

1. Don’t “build it and they will come”. Instead, build marketing into your process as a core competency.
2. Build something small and iterate on it.
3. Don’t fall into the “how hard could it be” trap. Even the simplest idea can go off the rails if you don’t take control of the process.
4. Don’t manage individual developers unless you are confident that you can be a project manager, and your developer is really good at understanding the vision that you have and delivering fast and quality work.
5. There are agencies that specialize in building MVPs. They’re generally more expensive than freelance developers but also can be more efficient.

There is no "there" in entrepreneurship. If you’ve ever been sailing, you know: once you get to your destination, it’s over. That was the fun part. The point of sailing is not to get somewhere; it’s to go sailing. Business is like that also: the process is a large part of why we do this at all. That’s not to say we don’t have a goal or a destination in mind, but the analogy teaches us that we can find satisfaction in each stage of building a business, even if we’re not “there” yet.