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Archive for the ‘bootstrapping’ Category

Jump Starting a Small Business With Cloud Services

Posted by Bob Warfield on November 18, 2013

PennyPincherSo you want to start a small business, perhaps a bootstrapped tech company?  Good for you, I enjoy mine immensely.  Let me suggest you adopt a rule that I’ve used for a long time:

If it’s available in the Cloud, use the Cloud Service.  Don’t roll your own or manage your own server, even if it is a server in the Cloud.

The thing about a good Cloud Provider (or SaaS service, if you prefer), is that their service is their business.  If they’re doing it right, they can afford to know a lot more about it, do the job a lot better, and deliver it a lot more cheaply than you can.  Meanwhile, you have plenty of work to occupy your time.  Keep your focus on doing those things that uniquely differentiate your business and delegate the rest to the Cloud whenever you can.

That’s the high-level mindset.  Using this approach I have consistently taken companies that had significant IT burdens and gotten them down to where it takes a talented IT guy maybe 1/3 of their time to keep things humming along smoothly.  This for sites that have millions of visitors a year–plenty for most small businesses.  BTW, my instructions to the IT guy were to spend that 1/3 of time automating themselves out of a job.  They’ll never get there, of course, but all progress in that direction is helpful.

Why So Much Cloud Emphasis?

Let’s drill down on why I think that’s the way for small businesses to go.

First, there’s no need to deal with hardware and so that whole time-consuming effort of ordering the servers and setting them up is eliminated. You can turn cloud-based services on or off in seconds.

Second, the cloud-based services know how to manage their services because that’s all they do.  Suppose you choose to base your web presence on WordPress. You could deal with setting up the WP server on an Amazon instance and still be in the Cloud, but now you have to manage it (keep all the security updates going, run backups, optimize for speed, etc.). That takes time and expertise.

Or, you can let a service like, ManageWP, or do all that heavy lifting for you.  Now you don’t even have to think about it much—it just happens and they follow industry best practices it would be hard for a small business to emulate.

Third, you can scale up and scale down. Small business traffic is very bursty. One day some big site like Techcrunch writes about you and your site is melting down—nobody can access it. You needed to scale up fast! The next day you’re back to your normal small business traffic. If you had invested the time and money in big scale, it’s wasted on those days laying idle. But, if you choose the right cloud-based host they can scale up and scale down automatically for you.

BTW, this is critical for good Google results as they penalize slow sites on SEO.

Okay, How Can My Business Use the Cloud to Best Effect?

I’ll cover this one by what I see as the critical business phases:

1. Reach your audience

Job #1 has got to be creating a web presence that lets you reach your audience. You need to do this even before you have a product to sell them, because you’ll need to take advantage of the time you spend building product to optimize that audience touch point. Towards that end, you’ll want the following:

–  Web Site with Blog: I highly recommend building that around WordPress using a WordPress Cloud Hosting service. It lets you leverage the huge WordPress ecosystem which means lots of off-the-shelf plugins and know how to make your web site sing with minimal effort on your part.

–  Analytics and A/B Testing: Get hooked up with Google Analytics via a plugin for WordPress so you can monitor what people do on your site and use that feedback to improve your Audience attraction and engagement. A/B Testing lets you try pages side by side to see which one works best. It takes time to optimize, so don’t wait until you’re ready with product. Start day one trying things to see what works.

–  Social Media: Get your Facebook, Twitter, and LinkedIn pages going ASAP. If nothing else, you need to nail down your presence and brand in those places. Use WordPress plugins to automate the interconnection of Social Media with your web site.

–  Domain: Don’t bother picking a company name until you nail your custom web domain. Read up on SEO aspects of that to make sure the domain is helping you pull traffic. Get yourself a DNS service such as DNSMadeEasy or one that Amazon provides. This will let you tie together disparate Cloud Based services under your brand and domain.  The DNS decides what computers actually get the message when someone types in a URL.  It’s like the central switchboard of your web presence and you’ll use it for all sorts of things.  It’s also your lifeline if some emergency strikes a Cloud provider and you need to bypass them to get to an alternate of some kind.

–  Email: Gear up both your firm’s employee email plus an email service you can use to email customers.  Start building your mailing list day one so you have as big a list as possible available to help when you’re ready to launch. I like services like MailChimp for the mass mailings and services like Google Apps for employee email. Be sure your email service includes easy integration to your WordPress blog and start a weekly email newsletter from day 1.

–  SEO: Learn to master your own SEO activities. It affects every aspect of your web presence. You have two audiences—people and the machines that are performing search at places like Google or Bing. You can’t afford to fail either audience. There are a variety of Cloud Services that can help you with this such

–  Surveys: You need all the feedback you can get to guide your efforts to reach your audience. I like SurveyMonkey and Qualaroo.  Survey Monkey does complex surveys.  Qualaroo does neat little spur of the moment unobtrusive surveys.  Both are extremely useful.  I use Survey Monkey for targeted surveys that go out via email and blog posts.  You get a survey when your free trial ends.  I use them to research market topics.  They’re great for creating interesting content–people love to read survey results.  Qualaroo is on key web pages asking:

“Would you recommend this product?”  on the download page

“What articles should we be writing?”  on the blog

“What can we do to make this product more likely something you could buy and use?”  on the pricing page and elsewhere.

–  Customer Service:  Customer Service isn’t just about fixing product problems.  It’s about giving your audience a way to reach you and a way to reach each other to engage.  As such, it’s worth setting these systems up from Day 1.  For my businesses, I want a Customer Service solution that offers a pretty big menu:

Trouble Ticketing.  This is the classic Customer Service app but it’s the one you’ll use the least often if you’re doing it right.  Consider Trouble Tickets to be a failure.  A failure to prevent the problem before it started.  A failure in documentation or user interface/experience.  A failure to communicate.  The customer’s point of last resort.  You have to have Trouble Ticketing, but you want to do everything in your power to make sure Customers never have to use it.

Idea Storming:  I love giving customers every possible way to provide feedback.  Ideation is the ability to put an idea on an idea board and vote on it.  Give customers a fixed scarce number of votes and then pay attention.  Whatever rises to the top on the voting is something you need to deal with.

Forums:  Own your own forums even though there are lots of forums out there.  Make them private and require some form of sign up.  This is your exclusive User Club.  Be very responsive on the forums.  Go there first and Trouble Tickets second.  If you help someone with a problem on the forums, others can see the answer and potentially be helped in the future.  If you help someone by closing a Trouble Ticket, you only helped them and the effort is not leveraged.

Knowledge Base:  You want a KB integrated with the rest of the Customer Service experience so that as someone enters a Trouble Ticket, they are directed to KB articles that can potentially help.

I use a service called User Voice to do all those things except the forums.  I use a free BBS service for that.

2. Build your product

If you’ve got a software company, or perhaps an e-commerce company, you’ve got to build some software.  There are helpful Cloud services here too:

–  Source Control: You need source control day one.  Being without it is like jumping out of an airplane without a parachute.  I like Github but there are lots of others.

–  Bug Tracking: For bug tracking and the like, Atlassian and others have this base covered. Don’t confuse it with Customer Service software, which I will cover under E-Commerce.

–  Online information resources: There are so many here I can’t begin to count, but we live in an age where there are literally thousands of developers helping each other online in all kinds of ways.  StackExchange can answer almost any technical question you might have. Online forums are there too for more specific areas.

–  Consulting: Need quick design work but don’t have a designer on staff yet? Need a specialized piece of code written that’s just part of your solution but nobody knows how? Need a little extra testing help or maybe some tech writing? There are tons of services like Elance that can get you some high quality temporary help.

3. E-Commerce

For this stage, you have a vibrant audience, big and growing email list, and your product has had a successful free Beta test. Time to start charging. Here are some things you may need to take the order, process payments, and handle the accounting:

–  Shopping Cart: If you chose WordPress, there are tons of plugins to help. But, they’re not the only game in town either.

–  Payment Processing: Who will process credit cards for you? Lots of possibilities ranging from Paypal to Stripe.  Be sure your processor covers International sales and any special needs you may have, like recurring payments for subscription services.

–  Accounting: A lot of these services can connect to QuickBooks to make your bookkeeping easier.  Scope that out in advance.

How Do I Choose the Right Service?

With so many different kinds of Cloud Service, it is hard to be specific. So, I’ll talk about the generic:

– Look for an online and vocal fan club for the service. It doesn’t take long with Google to see which services are loved and which ones are marginal.

– Look for companies similar to yours that use the service proving someone else has tried it and succeeded. Try to contact those companies and see what they think of the service. I’m not talking competitors—they won’t help. But there are always similar kinds of companies that don’t compete at all.

– Make sure you have a roadmap for what you need your services to be able to do for at least the next 2 years. Get your developers and others to review the proposed service against the roadmap and make sure you won’t have to switch down the road. It’s a good exercise to have that Roadmap available anyway—it’s just a wish list of everything you want to do for Marketing, E-Commerce, and Product over the next 2 years.

– Get your developers to look carefully at the published API’s for the services. Even if you won’t be using any API’s early, someday you might. The quality of the API’s is an indication of how well architected the service is too.


You can build a pretty amazing online Customer Experience if you make full use of available Cloud Services as described.  If you have build all of it, set up the servers, do the backups, install all the updates, and so on, you’ll be wasting a lot of your time that could be spent doing other things.

Posted in bootstrapping, business, cloud | Leave a Comment »

The Trend to Part-Timers, Freelancing, and Consultants Over Full-Time Employees

Posted by Bob Warfield on August 8, 2013

FreelancerOffshoring, Outsourcing, the switch to freelancers instead of full-time employees, and all of the other ways big business wants to shed expenses at no apparent cost is a trend that’s well underway.

Shortcuts all have a price of one kind or another. Usually that price is hidden from the bean counters that wanted to do these things for short term profit bumps regardless of the impact on quality, visibility into what was being done on behalf of a company, actually creating value that belongs to a company and is reproducible, making sure that talent is loyal and believes in the company and its goals, and so on.

As for freelancing, when you force someone to stand on their own two feet, when they have to learn to fish for themselves, suddenly, they get a much clearer picture of their real value to the organization and of the organization’s value to them. Successful freelancers are some of the hardest people to recruit on the planet because they know the organization doesn’t bring them much value while they are creating a great deal of the real value.  That’s why you have to pay consultants more.

If you find yourself having to go it alone, it will start out very scary.  You’re going to have to stretch to learn to wear more hats.  You have to learn to market yourself, for example, and to network to find business.  Cast off your fears and welcome those challenges.  Quit trying to join a large organization or get Big VC to back your idea.  You can go it alone more than well enough to come out way ahead.  After all, business wouldn’t be doing this to you unless they didn’t value you all that much.  That tells you something about how they will treat you if they did decide to hire you.  OTOH, you are also undervaluing yourself.

Why make the same mistake as the business whose decision you so disagree with?  Recognize your inestimable value and get to work for yourself.  Enjoy being your own boss.  Embrace the change and use it to improve your life.

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

Too Many Would-Be Entrepreneurs Are Thinking About Their Ideas, Companies, and Investors All Wrong

Posted by Bob Warfield on April 19, 2013

snake-oilAs so often happens, the serendipitous intersection of one too many notes from the same chord in a short time have prompted me to post.  In this case, I am seeing a lot of evidence that would-be entrepreneurs just don’t think about their ideas, their companies, or investors as they should.

Case in point: I recently had dinner with a friend to do some catching up.  He explained that another mutual acquaintance had an absolutely brilliant idea for a startup.  My friend really wanted to be a part of it, and he confided that they were thinking of going the Y-Combinator route.  I’m sure it’s annoying to my pals (especially the ones who are themselves Angel or professional VC investors), but any conversation that focuses more on the investors than the idea and business models immediately launches me down a set path that the recipient often finds a little bewildering if not downright antagonistic.  Despite all that, I asked my friend why he wanted to go with Y-Combinator?  Why get any invested capital at all?

He spent quite a while, too long really so it only lit my fire brighter, talking about the $30,000 they would receive in exchange for 15% of the company.  I asked him to explain what the $30,000 would allow him to do that he couldn’t otherwise accomplish on his own.  After all, $30,000 is really not very much money.  This goes to the heart of one way Entrepreneurs don’t think right about their plans.  If $30,000 seems like a lot of money to you, if it seems like an enabler of some kind, it’s my belief you’re using it to solve the wrong problems, and that in fact, they aren’t real problems to start.  You’re thinking of using it to quit your Day Job, to hire others, or to pay for advertising.  You don’t need to do any of that, as it turns out.

Let me explain–I’m a firm believer in Bootstrapping ala 37Signals.  Their formula is pretty simple–you can build a company on 10 hours a week while you keep your day job.  David HH wrote a great post on this not too long ago entitled “All or Something “.  The gist is that you don’t need to adopt an all-consuming commitment to get something interesting done.  The intro to his article is worth reading carefully:

One of the most pervasive myths of startup life is that it has to be all consuming. That unless you can give your business all your thoughts and hours, you don’t deserve success. You are unworthy of the startup call.

This myth neatly identifies those fit for mission: Young, without obligations, and few if any extra-curricular interests. The perfect cannon fodder for 10:1 VC long shots.

They’re also easier to rile up with tales of milk and honey at the end of the rainbow, or the modern equivalents, “compressing your working life into a few years” and “billon dollar waves”.

But running your life in perpetual crunch mode until the buy-out or bullshit-IPO fairy stops by your door is not surprisingly unappealing to lots of people.

In fact, what you do might even be better and more successful if you take your time by only working 10 hours a week on the idea.  I’ve seen this for myself with my CNCCookbook bootstrap.  The problem is you think you know exactly the right thing to build and if you could only get it done, riches would be yours overnight.  The reality is that nobody knows exactly the right thing to build in a vacuum.  You benefit by interacting with the market, and it takes time for the market’s message to come back to you and be properly infused in what you’re building.  You can’t infuse it at a 100 hour a week pace because it simply doesn’t come to you fast enough.  It requires a feedback loop and a little more gradual change.  This applies not just to the product itself, but to achieving a content-audience fit and then growing that audience to an interesting stage.  If you think otherwise, then you’re not being realistic.  You’re looking for that long-shot of completely unbridled demand that will seize your company and carry it in the vortex to the Land of Oz.  You’re looking for that 10:1 VC long shot.  Unfortunately, you don’t have a portfolio so that the 10 that didn’t work before the 1 that did doesn’t sink you.

Here’s the other issue–if you can’t overcome the kinds of problems $30,000 will solve without the $30K, you may not have the right idea or you may not have the right team for the idea.  Creating a successful multi-million dollar company is a big accomplishment.  If all it took was $30K, a little advice, and some networking, there’d be a lot more people with their own multi-million dollar companies.  There’s a set of skills your team must have.  There’s a set of qualities your idea and market must have.  Without them, $30,000 won’t begin to fix the shortfall.  $30K is just a convenience, not a solution.  It’s not even aspirin, it’s a vitamin pill.

So $30,000 is actually not really very useful to someone that is focused on the 10 hour a week plan.  Certainly it isn’t worth giving up say 15% of your company and potentially a lot more than that in terms of control and heartache that will still be there long after the $30,000 has been spent.  To his credit, my friend did get off the $30K after a little while and suggest that having all that networking and mentoring would be worthwhile.  That’s actually something I see as being much more valuable, but in truth, it actually isn’t all that hard to come by in Silicon Valley.  After all, the networking is one reason why we put up with so much cost to live here, isn’t it?  If you think you need an incubator to be mentored, to ask questions, and to learn how to do it, ask yourself how that’s any different than signing up for a bunch of the Anthony Robbins-style self-help seminars?  You know the kind–some flashy personality is telling you they have all the answers and they’re willing to share them so that you too can be a multi-bazzillionaire loved by everyone.  All for a price.  Guess what, this works for some people, but for most, they could’ve had the same answers without much effort.  I told my friend I’d be happy to help him understand how to launch and build a business having founded 4 software companies and been involved in 7 software startups.  I also told him the cautionary tale of those making their livings off such advice.

Hacker News is a good place to find such people, and I’m not picking on HN for it, that’s just where the paying customers are for these peddlers.  I call them the Entrepreneur’s Self-Help Gurus.  Don’t get me wrong–there are some dynamite folks out there who can and will help you, but I’m referring to a different sort of group.  These are folks who did something that if examined closely, was not an especially big deal.  Yet now they’re making more than they ever did on the not-especially-big-deal telling other people how they did it.  “I’ve got the secrets, and I’ll share them for just a small fee.”  Perhaps they created a software company in an odd little niche, never cleared more than $100K with it, but now they’re making $200K and more telling others how to do it.  To me, there is something wrong with that picture.  Just for kicks, I signed up for a bunch of the more popular pay-for-content mailing lists.  You can get them on sale all the time from AppSumo, for example.  After going through about four of them promising everything from SEO expertise to how to get 10,000 Facebook followers, I finally quit.  I hadn’t managed to learn a single useful thing from them.  In fairness, if I had been at the very beginning of my journey, they might have helped a little, but everything they had to say that was useful was available for free on some blog somewhere on the Internet that I had already read.  FWIW, I keep a clipping blog of such information I call Firehose Press.

I finally realized, that what these people were selling, was not the information, but the confidence to use the information.  That’s not something I really needed, and I hate to be a wet blanket, but if that’s what you need, are you sure you’re ready to be an entrepreneur?

One more thing on the subject of networking–you can go have coffee with so many extremely talented and successful people in Silicon Valley at the drop of a hat that it’s ridiculous.  People here are incredibly generous with their time.  Heck, if Y-Combinator fascinates you, go look up the Alumni and go ask them what they learned there and what they got out of it.  You just need to find a friend of a friend to introduce you and most decent people will share a cuppa joe with you.  Why not?  I often do.

Okay, so maybe the networking mentoring isn’t the thing.  What about all those juicy introductions to VC’s?  I have several problems with this one too, being the VC Curmudgeon and all.  It isn’t that I haven’t dealt with the VC’s.  In fact, they’ve been involved with every company I’ve been with until this latest one.  Let’s start with the intro process.  It’s not hard.  You need a CEO who they would want to talk to and an intro from someone they know.  If you have such a CEO, they can get that VC intro from someone they know.  VC’s actually want to meet people, they just want to meet people who won’t waste their time.  Same with Angels only it’s even easier to meet one of them and you might not need that CEO quite yet (but you will, so may as well find them so they can help you from going too far astray).  You don’t need Y-Combinator to meet these people.  What you need to meet a VC is pretty simple:

–  A product finished enough to be sold.

–  Real paying customers who will say extraordinary things about your product.

–  Traction.  The amount varies with the space, but there needs to be evidence that pouring gasoline on the fire will make it bigger in a hurry.

Too many entrepreneurs think investors want to give them cash to make some or all of those three things happen.  I won’t say it can’t work that way, but it works less and less that way every day in the Valley.  Y-Combinator, for example, used to invest more than $30K.  Most of the VC startups I’ve done raised a couple million dollars on a slide show and a team.  Those days are long gone.  You’re going to have to bootstrap to a greater or lesser degree (and mostly greater) anyway, so you may as well get started learning how to do it, even on 10 hours a week.  In fact it’ll be better if you limit yourself to 10 hours a week–it will teach you to focus.  The realization that I had to bootstrap to raise VC is what set me on the bootstrapping path, by the way.

Too many entrepreneurs think they need something to be able to be entrepreneurs.  They need money, advice, connections, confidence, permission, or at the very least, a guru they pay to tell them how it’s done.  But here is the amazing thing: you don’t need any of those things.  You can do everything that needs to be done in 10 hours a week to build a very successful multi-million dollar a year company.  Do that first, ahead of worrying about investors, and you will be 10x better off.  Because, here’s the thing, if that company explodes with a growth rate beyond your wildest dreams and you need a lot of capital right now just to keep the site up and running, that’s not a crazy home run extraordinary case for the VC’s.  That’s what they expect to see.  That’s what they’re looking for to get their checkbooks out.  That’s table stakes and we’ll see where it goes from there, whether you can monetize it, whether you’re the right ones to run it, and whether it is a passing fad.  If you have a deal at that stage, congratulations.  You’ll have to beat the VC’s off with a stick, and you’ll be able to dictate your terms.

But what if you don’t have one of those?

Don’t despair.  Remember:  an Enterprise Software Company that puts together a steady-but-not-sexy business and manages to get to $100M in revenue and an IPO is often seen as a failure in VC portolios.  They want the $1 Billion deals.  But you?  Heck, you’d be thrilled to be the 100% owner of a $15 million dollar a year software business with 20 employees that was throwing off cash like crazy and whose customers loved you.  That is unless you are that rare Zuck/Gates/Ellison/Brin type that really does care more for power than money or lifestyle, of course.

One last reference to recent influences that spurred this post.  I saw Jake Lodwick’s post in Pando Daily, “An Acquisition is Always a Failure.”  I understand exactly where this guy is coming from having had 2 of the companies I founded acquired.  Surpass was acquired by Borland and that was the Quattro Pro product and Integrity QA was acquired by Pure Atria.  Surpass was a great acquisition.  I joined Borland, we sold over $100M of Quattro Pro the first year, I moved up through the ranks to eventually run R&D for Borland in its heyday, and it was a fabulous company to be a part of.  I learned a lot.  Pure Atria was a great company too, but it didn’t last.  Six months after I got there it was gobbled up by Rational.  They already had a product with a brand that competed with Integrity QA’s product and it was based in Boston, not Silicon Valley.  Despite Integrity’s product being one of the most innovative things I have ever worked on (Genetic Algorithm-Based Software Testing), it basically never went anywhere because politically, it was stuck in a closet where there was no light.  It exists today as an IBM product called TestFactory, but it’s growth was stunted and it never recovered.

It’s fascinating to read the comments in Lodwick’s article and contrast them with where Jake is coming from.  He says:

Whereas we’d once been free to work on whatever seemed interesting, we now found ourselves in vaguely defined middle-management roles, sitting through pointless meetings where older doofuses who didn’t understand the Web challenged our intuitions and trivialized our ambitions.

That was basically my experience working for Oracle, where I learned a lot, but couldn’t accomplish much.  Similar with Rational.  Big Companies do work much differently than smaller ones, or as Jake says:

They’re another class of entity entirely, more concerned with sustaining their own rhythms and control structures than experimenting with strange ideas from acquired ex-founders. It wasn’t long before I was ejected like a virus.

Then he describes the frustration of being loose with money, but without company all founders who get acquired feel:

With a fat bank account, I was pretty set to do whatever I wanted for a long time. The sale afforded me the ability to make art, invest in other companies, and unwind. But it didn’t take long to realize that my new life was a hell of a lot less exciting than running an independent company had been.

So true.  Then we have the commenters, and as I read through them, it’s hard to see them as being focused on much but the money, whether this is an indictment of what they need to do (investors need an exit/cash out), or whether there aren’t a few examples where an acquisition made a thing far greater than it otherwise would have been (Android).  Most of them missed Jake’s message and wisdom entirely.

Here’s the thing.  At one point Jake talks about getting $50,000 checks each month.  Do the math carefully before you decide you need a VC-scale company to make enough money.  I went through one of those VC-backed Enterprise Software IPO’s, and while I made good money, it was #3 on my hit parade of exits.  Owning a business 100% that plops $50K checks on my desk each month would’ve been a much better deal, and this is to say nothing of all the deals that crash and burn because the VC was driving for a 10:1 Long Shot.  You have to live through a lot of Ramen noodles on the long shots, then maybe you’ll see that big payoff.  Or maybe you’ll have been diluted out of your mind and it won’t be such a big deal.  I’d have been much better off owning that $50K/month business that I could keep on running that doing the IPO I did.

In the end of the Day, as an Entrepreneur, you need to get crystal clear about a few things:

–  How much money do you need to get from your venture?  If $1M a year is a happy number, the chance is a bootstrap is much less risky than a VC deal.  Remember, income equates to investment portfolio about 20X.  That $1M a year income stream requires a $20M liquidity event after taxes before you can live like that without working.

–  How much control do you have to have?  Hey forget whether you’re an ego maniac.  I’m talking of control more akin to artistic control.  The control to deliver on what you do well.  On why everyone always says they love you, but that Boards, CEO’s, and Professional Managers are only too quick to override if it suits their agenda.  If that artistic control to do what you do best is important, adding people who own significant parts of your company can only dilute that control and maybe even result in your being “ejected like a virus.”  OTOH, if you want Bill Gates or Steve Jobs-style control over an industry, you’re gonna need VC’s.  If you want to change the world with Electric Cars and Private Spacecraft like Elon Musk, you’re gonna need VC’s.  Just be really honest with yourself about what you need versus what might be nice to have.

–  Most importantly, how will your venture change your life?  What does it have to accomplish to make you happy?

Too many entrepreneurs get signed up for the promise of (to quote David HH’s article), “compressing your working life into a few years.”  Sounds great, but it better be just a few years to put up with the amount of BS that kind of pressure cooker entails.  And the truth is, it is never just a few years.  It’ll be 10 long years to reach the conclusion, assuming it is a happy one.

Why not start out with a venture that makes you happy every single day you pursue it?  If it has VC potential, you’ll know soon enough and you can decide then what path to take.  If it doesn’t have VC potential, you may still wind up realizing everything you’d hoped for and more.  Even better, it may be at much lower risk.


Posted in bootstrapping, business, strategy, venture | 6 Comments »

Charging for Your Product is About 2000 Times More Effective than Relying on Ad Revenue

Posted by Bob Warfield on February 22, 2013

BootstrapsI was reading Gabriel Weinberg’s piece on the depressing math behind consumer-facing apps.  He’s talking about conversion rates for folks to actually use such apps and I got to thinking about the additional conversion rate of an ad-based revenue model since he refers to the Facebooks and Twitters of the world.  Just for grins, I put together a comparison between the numbers Gabriel uses and the numbers from my bootstrapped company, CNCCookbook.  The difference is stark:

Ad-Based Revenue Model CNCCookbook Selling a B2B and B2C Product
Conversion from impression to user 5% Conversion to Trial from Visitor 0.50%
Add clickthrough rate 0.10% Trial Purchase Rate 13%
Clickthrough Revenue  $      1.00 Avg Order Size  $ 152.03
Value of an impression  $ 0.00005  $      0.10 =     1,976.35 times better

Let’s walk through it.

Both sites have visitors who convert to something more.  In the case of the Ad-Revenue model, presumably it is a person who creates an account on a Facebook or Twitter-like site, thereby becoming a user.  Gabe says that conversion rate for a really strong property might be 5%.  It can be much lower, like 1 to 3%.  I went with the optimistic 5%–the model is already too hard to contemplate 1%.  In the case of CNCCookbook, the conversion is from visitor to Trial user for the software.  We have a 30 day free trial on all our products.

From becoming a User or Trial User, the next conversion rate is monetization.  For the Ad-Revenue model, I did a quick search for clickthrough rates on display advertising and came up with 0.1%.  Sure, you might get your Users to click on more than one ad over time, but let’s just keep these numbers simple.  They’re not going to click on 2000 ads to even the score, after all.  For CNCCookbook, we have a very high conversion rate from trials–about 13%.  I view that as a commentary on the high quality of our software–people like it if they try it.  I understand conversions in the 5% are more common, so you may be forgiven for deciding the ad revenue model is only 1000 times less effective than charging for a product.

Okay, given those conversion rates, we take the average revenue per transaction and multiply all that on through to find the value of an impression.  What is it worth to you to bring another visitor to your site?

In this analysis at least, it’s pretty easy to see why bootstrappers need to be charging for their products and not relying on ad revenue.  Unless you just happen to have an amazingly viral product, it’s just too hard.  You have to rack up way too much traffic to get to interesting revenue levels.

Or, to put it like 37Signals:  Charge for your products, Dummy!

Posted in bootstrapping, business, strategy, venture | 4 Comments »

Just Got My Vanity Plates from LinkedIn

Posted by Bob Warfield on February 12, 2013

I recently got a notice from LinkedIn stating that my profile was in the top 1% out of 200 million in terms of how many people had viewed it.  So, they sent me my vanity shot:


It’s a nice letter.  I admit I puzzled over who could be spending so much time checking out my profile–seems like a lot more than 1 in 100 people would be ahead of me in terms of attention and name recognition out of the 200 million on LinkedIn.  I would count most of my LinkedIn contacts for starters.

However, it didn’t take much thought to conclude this was probably due to my bootstrapped company CNCCookbook.  We get about 1.5 million visits a year to the web site, making it one of the top CNC sites and almost certainly the most popular CNC blog.

In other words, my marketing is working.  That’s a good thing in a bootstrapped SaaS company.  What a great Age we live in when a SaaS company can be created by just one man and reach so many.

Posted in bootstrapping, business | Leave a Comment »

Is Silicon Valley Worth the Cost for Tech Startups and Bootstrappers?

Posted by Bob Warfield on January 9, 2013

SiliconValley_mThere’s always some article or other in the blogosphere rambling on about why XYZ will be the next Silicon Valley–they’re quite popular.  I just read an interesting piece that has some clues about the true costs of living here (yes, I live at least near SV and have worked most of my career in SV).  The article is really about how much top paying companies pay in the Valley, but it strays into the realm of cost of living.

While we can quibble with the accuracy of the numbers and ancillary factors like quality of life (undeniably good in the Valley or in NYC as some on Hacker News opine), let’s assume for the sake of discussion that while salaries are higher, they are not high enough to offset the much greater cost of living relative to other parts of the world.  Looking a the way our great state operates and as well as the Economy, it’s going to get worse too.

What does that mean for Tech Startups and Bootstrappers?

This is a poignant question for me because I moved my first startup to Silicon Valley from Houston, Texas in the late 80’s.  At the time it made total sense and I have no regrets, although even then it took us years to make enough money and then to screw up our courage to buy expensive California real estate and own a house again.  The reason I moved was not access to technologists or building product.  I was hiring great software developers out of Rice University (one of the best CS schools in the country) and University of Houston.  They were cheap and cheerful and we built software good enough to receive acquisition offers from both Borland and Microsoft (we wound up being bought by Borland and the product became their Quattro Pro spreadsheet).  Heck Silicon Valley itself hires tons of developers all over the world.  Building software in Houston was very cheap back then.  We took our company all the way to profitability for about $600K in capital over 4 years.

What got me to move was the marketing side.  Even back then I wanted a less advertising-driven and more content-driven marketing strategy, and the way to do that was through PR.  So I was doing media tours.  I was on planes to either the East or the West Coast to talk to the people I needed to talk to–there was no leverage to being in Houston.  I was also desperately in need of marketing advice, and there was nobody to talk to in Houston, Texas about how to do marketing for a high tech software company.  We worked with Ogilvy and Mather’s Compaq team for a while and they did great creative, but it just isn’t the same in terms of getting the right strategic sense.  So, after much deliberation, we moved.  It was absolutely the best thing for us and there’s nothing at all I regret about it.

Flash forward to today.  Are there still compelling reasons to endure the higher costs?

My central thesis for moving–the need to network in order to learn and influence–still exists, but it is weaker.  There are still plenty of great developers available elsewhere, and I would not come to SV just to gain access to them.  I might do so if I was a non-technical founder who wanted a technical co-founder who had “Been there and done that.”  I don’t know how else other than track record the non-techie could tell whether the co-founder was any good.  But not to put together a team.  You can build any product there is with a maximum of 10 developers, and you can find 10 good developers in any major city that has a school with a good Computer Science program.  Been there and done that.  While that leaves out a lot of territory, it also opens up a lot of territory.  If you are yourself a seasoned developer who hires well, you can probably even skip the need for a “Good Computer Science Program” and you’ll still wind up finding enough developers.

Let’s also talk about hiring non-developers.  I have less feel for that, but my sense is this is also available much more broadly than just Silicon Valley.  For one thing, I’ve worked with some fantastic people on content marketing who happened to be in Silicon Valley, but there wasn’t any reason to believe you couldn’t meet people like this elsewhere.  They weren’t so steeped in SV Startups that they’d be impossible to find.  If I were a Techie Founder desperately in need of my non-Techie Soul Mate Co-Founder, I would go on the hunt for the most successful blogger I could find in my area who I could get interested in my audience and in learning whatever they didn’t already know about how to turn their blog into a marketing tool.  You can do a lot with a blog.  Having worked with lots of Marketers in Silicon Valley, I think it is harder to find great content creation people than it is to find the Marketers, and I mean no disrespect to the Marketers.  It’s just that what has to be done on the Marketing side is pretty easy to discover:

–  SEO for your content

–  The idea of a funnel and Conversion Rate Optimization with A/B testing

–  The usual need to know how to ask for the sale

A little bit of that and a whole lot of super valuable content will get you off the ground surprisingly well.  That’s why so many Techies seem to actually get somewhere bootstrapping.

But getting back to this issue of networking to learn and influence, I believe those advantages are still possible, but they are far weaker today, and particularly weak for Startups and Bootstrappers.  We can learn so much more from the Internet and freely available content there than I could from buying books in the 80’s when I moved my company.  Endless people are making a living telling you exactly what to do.  I keep a clippings blog called Firehose Press for every article I read about marketing and sales that was a good one.  There’s tons of data there culled by daily reading.  More stuff than you can possibly act on.  While it would be handy to just hire or co-found with someone that already knows all that stuff, I don’t personally think that would be very easy even sitting in Silicon Valley.  For one thing, I have met a lot of Marketing people and very few understand SEO and the rest of it very well–they hire agencies to do that work.  As for Content Marketing experts, they are scarcer than Hen’s Teeth.  My own blog outperforms the metrics for the blogs of most of the companies I have worked for.

I can only really see three strong reasons for Venture Startups and Bootstrappers to be in Silicon Valley:

Energy, Fashion, and Bubble Riding

These are all somewhat intangible, but related.  There is undeniably Energy to be had by going to visit your startup buddies and talking about ideas, techniques, hopes, dreams, gossip, and what everybody is doing.  If you are getting energy from that experience, you’ll find it hard to get outside the community.  Sure there are places that claim to be the “Next Silicon Valley”, but I’ve talked to a number of folks who went from here to there and they say it is disappointing once you’ve experienced the real thing.  So I won’t deny that energy, but I will say there are also some negatives there.

Building a business is a lonely job, and despite the number of get rich by following my advice businesses there are, you are only going to get rich by keeping your own counsel.  It won’t happen because you and your young drinking buddies figured it out together.  Advice is good, but the best quality of real leaders is they make the right decisions absent enough data to have it handed to them.  That’s why CEO’s can be so tough to deal with sometimes.

Let’s also keep in mind that there are also monoculture risks in being too steeped in a community.  Yes, you can keep a finger on the pulse and understand the prevailing fashion trend (gee, are we doing photo sharing today, coupons, or some goofy check-in and review Consumer Internet play today?).  If you’re a dedicated Bubble Rider, you need to sense of what’s happening.  That’s what you do is jump on or ideally create the Fashion Trends.

But, it is not clear to me and never has been that this is a particularly low risk play.  I think it is much higher risk than simply solving real problems that real customers have.

Venture Capital

If you’re determined to raise Venture Capital you will have to be where the Venture Capitalists are.  You need to do that both to Influence them and to learn who they are and how to approach them in a way that is successful.  You can’t do that remotely and I am skeptical you can just get on a plane and visit Sand Hill Road when you need money.  Relationships have to be cultivated over time.  This is a serious Network Effect that isn’t going to change any time soon, and I think it is by far the strongest reason to come to the Mecca.

Pilot Accounts for Enterprise Software

If are so fashion challenged, as I am, to seriously contemplate Enterprise Software, you will need to find your initial Pilot Accounts.  If you handle everything right, they become your Reference Accounts.  You need about 10 of these carefully nurtured Kobe Beef Customers (hey, if they want a daily neck message, get your little hiney over to their offices and lay one on them) so that when the poor schmucks you actually plan to charge retail come through the door they have someone to talk to who will say nice things about you.  Trust me, you’re going nowhere without the Reference Accounts.  You can get started making real money with fewer than 10, but once you get 10, you can quit worrying about the Kobe Beef process and hopefully you’ve treated your other customers so well they are automatically Reference Accounts too.

To get your first Reference Accounts is going to be a function of networking.  It will be rare that you can just walk in the door cold and get someone at a Big Company to make a bet on your sorry startup self.  No, it’s only going to happen with someone you or someone you know already knows because they’re the only people that’ll trust you.  Either your sales guy will crack open his Rolodex (sorry, probably starting to be peeps who don’t know what that is!) or you’ll talk to someone you golf with, or something similar will happen.  While that can happen outside Silicon Valley (or insert other Tech Mecca Here), it is more likely to happen in SV.  The reason is because the Big Cos with offices in SV have done this before.  If you go cruising into some Oil Business cum Frac company in Houston, Texas, maybe they haven’t ever taken a flyer on a fly by night like your startup.  Maybe your pal knows he can lose his job if it blows up, whereas in SV they know it is all part of being on the Bleeding Edge.  Heck they have offices there partially because they want to talk to people like you so some can rub off and become a balm for their Innovator’s Dilemma.

Thing is, if you’re going to need a bunch of Reference Accounts, consider that you might need to do that in Silicon Valley.

Conclusion (aka When Am I Leaving Silicon Valley?)

On balance, if I was a young guy living outside SV looking to Bootstrap a new company into being, I wouldn’t start by moving to SV.  I’d just go for it and I expect I would be successful sooner, making more money sooner, yada, yada.  I would care about VC because I want to Bootstrap and I don’t care about Enterprise Software because it’s too hard to Bootstrap.  I would make sure I was reading all the right blogs and I would figure out how to do some remote networking in case I needed a service or some advice from someone not in my burg.  It can be done and works pretty well.

If, OTOH, it was going to be critical to raise VC, perhaps because I want to do Enterprise Software or because I’m a Bubble-Riding-Fashion-Seeking-Consumer-Internet-Kinda-Guy, I’d quit fooling around and get myself moved to SV.  There’s no substitute for it.

If I was a young SV guy who’d had some success and was thinking of starting my first Bootstrap company, I would seriously consider moving out.  I’m talking about a someone who is either single or at least doesn’t have kids.  Getting off the salary crack pipe is hard, but if you’re at the stage where the equity in your house will practically eliminate the mortgage in another town and you need to get your overhead to be cheap, cheap, cheap, it makes sense.  Ideal would be if you can go as a Techie/Non-Technie founding team.  Move to Austin or some place together.  Think of the adventure.  You’d be successful and self-sufficient that much sooner.

Now I’m an older guy already living in SV and Bootstrapping a company.  When am I leaving SV?

I probably won’t ever leave SV.  Too many friends here and the kids are teenagers at that time when moving them is really tough.  I do think about it largely from an economic point of view from time to time, usually when I visit some place like Houston that is much cheaper.  Summers there are pretty nasty though.  If I keep having thoughts of moving there, I’m going to have to change my visits to happen during the summer.


Hey, what about those VC Incubators?  How can I possibly be successful with an Incubator?

Sorry, but I’m not a big believer in Incubators.  They’re giving you very little in exchange for what seems to me to be a lot.  Largely they’re giving you confidence because they’re selling the age old self help value proposition:  “We know the formula for wealth and we’re willing to teach it to you for a price.”  Here’s a little secret: everything they are going to teach you is readily available for free or at very low cost on the Internet.  The only thing they have is their reputation which is the magic pixie dust that’s going to tell you that THIS is finally the one true formula.  Guess what?  There is no one true formula.

Go read the books by the 37Signals guys.  They have a great reputation too and it is a lot cheaper.

BTW, VC intros are part of that One True Formula.  Incubators can get them for you, but you can also get them for yourself.  It’s not really that hard but it is also not really that important.  I was getting them in frickin’ Houston, Texas at the tender age of 22 right out of school.

The VC’s won’t give you any money until you have something worth investing in.  Go get that done and you can get the meeting with the VC’s.

Posted in bootstrapping, business | 3 Comments »

No office, no boss, no boundaries: The Life of a Bootstrapper

Posted by Bob Warfield on January 7, 2013

LonelyUmbrellaI loved this CNN article that I found courtesy of Hacker News, except for the sketchy spin on loneliness.  It captures some of the lifestyle I’d like to have, though I’m not there yet.  I have been able to quit my day job, but I’m still low enough in six figures and busy enough with the business that living continuously on the road is somewhere, um, down the road.  To give an idea, here is what my day looks like, give or take a half hour on the timings:

6am to 7am:  Wakes up, triages email, RSS Blog Feeds, and News on iPad from bed.  Decadent, I know, and a disgusting habit, but I’ve grown to like it enough I will admit to it.  I use my iPad for information consumption and triage.  I hate typing on it (methinks the Microsoft Unicorn er Surface will fix that), so at most I read the email in Gmail and either star it for futher attention on a real PC or archive it.  This is a common workflow for me and I also use it for my RSS Blog Feeds.  I subscribe to about 200 blogs at the moment, so being able to rapidly triage is critical!

7:30am:  Sit down in front of PC to do CNCCookbook Customer Service.  Order fulfillment, question answering, and site metrics monitoring all fall in this category.  Between Customers, Beta Testers, Trial Users, and other miscellaneous contacts, I am dealing with a population of about 6,000 that want a piece of my time in some way.  My tools for this time include GMail, User Voice (my Customer Portal software), a PHP BBS clone (our User Forums which I call the Customer Club), Google Analytics, and Mailchimp if I need to check status on some mail campaign.  For example, every Wednesday morning we do a big mailing of our blog digest and I like to check which articles are getting the most traction.

8:30 – 9am:  Depending on how much is going on, I am ready to progress from customer service to writing software.  It’s important that I shut down the web browser and bring up my Agile Backlog (that lives in Excel because it is just so easy and I don’t have to coordinate with a team) and Adobe Flashbuilder.  Time for heads down software development.  I take a break after every 2 or 3 Agile Backlog items are retired or every 2 hours to hour and a half, whichever comes last.  I find the breaks refresh my ability to concentrate and help stave off a stiff back and neck.  Ideally a break will consist of a walk on at my new treadmill desk and a bit of Web Grazing (it’s more leisurely than Web Surfing) on my iPad.  Of course, I will take the opportunity to do a quick Customer Service check-in on the walk and deal with any issues when I get back to my PC.  If the weather is nice, I’ll take a short walk outside.  You can see Monterrey Bay from my house.  Breaks are 10-15 minutes and I think they correspond to time in an office spent at the water cooler, restroom, or chatting with coworkers.

11:30 – Noon:  Go to lunch.  Unless I am really in a crunch mode, I want to leave the house for lunch.  I have lunch with my wife MWF and with a co-worker, friend, or other contact on Tuesdays and Thursdays.

1 – 1:30pm:  Back to work.  I do a quick Customer Service check then I am back on the coding with breaks cycle.

3:30pm:  Go offsite for coffee.  I am a total coffeeholic.  My ideal office-style work environment will be within walking distance of at least one Starbucks-or-better quality coffee establishment.  I will then proceed to take people on walking meetings for coffee, one in the morning, one in the afternoon, instead of looking them in a conference room.  Works great.  Unfortunately, I can’t really justify more than one coffee outing a day in my new Bootstrapper’s Lifestyle.  I don’t have anyone to meet with really.  Nevertheless, there are quality of life issues, and it is important to step back from the individual tree I am banging head against at the moment to review the status of the forest.

4:45pm’ish:  Back to work.

6pm:  Dinner with Family.

7pm:  Back to work.  If I am really up against a deadline (all self-imposed, but they really always are), I will keep coding.  Otherwise, this is when I do my marketing work.  The vast majority of marketing at this stage consists of writing content.  I averaged 5 blog posts a week in 2012.  To do this work, I keep a big Delicious bookmark list of things that might turn into articles.  Or they might not.  If I can’t face writing at 7pm, I will allow myself up to 1 hour to go Surf the web to research article ideas.  The rule is I have to stick to content that is relevant to my audience.  Content creation happens about 5 nights out of the week.  The other two involve setting up A/B tests, working on web design, web analytics, and grooming my Agile Backlog for Marketing.  Everything except the Editorial calendar is managed from my Agile Backlog, including all marketing.  The Editorial Calendar works better by immersing myself in ideas and seeing what ignites the Muse.  Something always does.  Ideas either come from Surfing the Web, looking at my Delicious Bookmarks, or through Keyword and other Analytics Analysis.

9-10pm:  Knock off.

I don’t watch TV except for Kindle Fire episodes after 10pm.  When I went to Windows 7 64-bit, my last first person shooter computer game quit working.  I have studiously avoided starting on another.  While I do play games, they’re simply ones that get old after 10 or 15 minutes of play.  I follow this routine religiously 5 days of the week.  On the weekend, I follow the same routine unless there is a Quality Alternative.  The QA’s include a structured activity with the family such as seeing a movie or going dancing with my wife (we love live music).  The other source of QA’s is getting time in my own Machine Shop where all of this started.  That’s what I had to do to scrape up an extra 10 hours a week to start Bootstrapping with a Day Job and that’s what I’ve kept to since leaving the Day Job.

On vacations, I bring a laptop that is equipped to do all of this work.  I have access to everything from any computer thanks to the magic of Dropbox, 1Password, and having signed up for as many Cloud/SaaS alternatives as I could.  I prefer not to write code on vacation as time is short and that’s not why I am there, but I can and do keep up with Customer Service and will even manage to write a bit of content–more like 1 or 2 articles a week instead of 5.  If I know I will be travelling, I tee up 3 or 4 articles that can be published before I leave.

That, in a nutshell, is the life of this busy bootstrapper.  From my Bootstrapping Odyssey post you can get an idea of the marketing results and deliverables that can be accomplished on such a schedule.  From a coding perspective, Github suggests I committed about 900,000 lines of code (Adobe Flex for the most part) during 2012.  I only worked full-time the last half of 2012, so hopefully I can do more in 2013.

I love the Bootstrapper’s life I have found.  It’s hard work, sure, but I’d be working just as many hours at some Venture-Funded Startup if I wasn’t doing this.  I know, because I’ve done that 6 times before.  I’ve also had the luxury of taking long periods off between gigs. It takes time to find the right position at an executive level.  Periodically, I consider whether I would be happy retired and living off the fat of the land.  Then I spend whatever money I’ve made on silly toys in a move akin to the old explorers burning their ships in the New World so there can be no turning back.  Life is empty for me without the act of creating something–products, companies, new relationships, new experiences, and new interests.  Perhaps it is my sense of mortality, but I realize after just a couple of months that I haven’t yet accomplished everything I want to in life and it’s time to get back to work.

As for the loneliness aspect, the guys described in the CNN article need to get out more or something.  I miss coffee with co-workers, but I have always been an extrovert at heart and keep friends and contacts for years and years.  I’ve made a wealth of new ones as part of CNCCookbook, so the journey continues.  I was talking to one developer friend about Bootstrapping and he wondered aloud whether it would be possible to work from Venice, Italy.  I opined as how if the company were successful enough, I’d encourage it just so I could fly there periodically to meet with him.

Posted in bootstrapping | 9 Comments »

A Solo Bootstrapping Odyssey: 2012 Was The Year I Quit My Day Job

Posted by Bob Warfield on January 6, 2013

For those who like Bootstrapping Case Studies, here is mine.

2012 was the year I moved on from a Day Job and started doing my Bootstrapped Company CNCCookbook full-time.  I’m not the first to do so, and certainly not the last, but I thought I’d provide a historical background and then some data on CNCCookbook in 2012 along with lessons learned so far to help those that follow.  There are a lot of other stories along these lines that range from extreme bootstrapping successes like 37Signals to smaller successes like patio11’s Bingo Card business.  This is not my first entrepreneurial endeavor, but rather my 7th.  However, the others were all venture funded while this has been the first that I bootstrapped from scratch without any outside investment.

CNCCookbook was incorporated 2 years ago in late 2010.  We sold our first software in November 2010.  The product was called “G-Wizard Calculator“, and it is a very specialized calculator for CNC machinists.  I started the company largely because the Silicon Valley VC Startup scene had veered a long ways away from my vision of what startups ought to be and always had been for me.  I wanted to have fun building awesome software that solved real problems my customers had and gave them good value.  I wasn’t much interested in Riding the Bubble, lucrative as that can be.  I was more interested in doing the sorts of thing I read about from people like Seth Godin than in building the next Consumer Internet app.  In short, I wanted to build value the Old Fashioned way, or at least that was the delusional fantasy that has sustained me on this enjoyable journey.

I quickly discovered there’s quite a lot to be learned in the course of bootstrapping, but fortunately, I found all of it to be interesting.  Some of the key problems you will have to solve to build a successful one man software company include:

–  How to take orders and charge for the orders.

–  How to control access to your software so that you can have free trials, paid subscriptions and renewals.

–  How to get people to try your software.

–  How to provide customer service by way of answering questions and dealing with all the minutiae that comes of helping customers complete their purchases and learn how to use the software well enough to realize the value they’ve purchased.

–  How to keep the business moving forward and growing at an acceptible rate.

–  Perhaps most of all, how to juggle all the balls while getting everthing done and holding down a Day Job using only 10 hours a week.  If you can’t manage your time effectively, get fired up to do more after a long day at work, and know what not to waste time on, bootstrapping may not be for you.

Back in 2010, I had a reasonably thriving web site/blog that I’d started in order to chronicle the machine tool hobby I’d started 10 years before.  2007 was the first full year the web site was in operation.  Prior to the end of 2010, I did little to the site except write blog posts that were interesting to me on an irregular schedule.  People tell me I’m a pretty good writer, and I had a substantial readership with nearly 600,000 visits in 2010.

Here’s some data on site traffic from 2007 through 2012:

CNCCookbook Site Traffic

CNCCookbook Site Traffic

From 2010 to 2011 growth flattened out because I was splitting my attention too many different ways and not producing enough content.  At the end of 2011 I instituted a rule that I would not work on marketing unless it was after 7 pm in the day.  2012 grew like crazy because I had figured out the content marketing formula and I was cranking on good content rather than wasting time on things that didn’t matter.  We did very well ending 2012 with over 1.2 million visits.  Is that a lot or a little traffic?

Look at it this way.  The market leading CNC software company is Mastercam, and SEMRush says their organic traffic is 10,810 while CNCCookbook’s is 4,032.  If a one man shop can get 40% of the traffic of the market leader, I’d say that’s pretty good.  In fairness, they count on being sales driven and using a reseller channel, but even so, that’s not too shabby.  Not only does content marketing work, but it works well.

We attract our visitors entirely via the content, whether through referrals from other sites or via organic search traffic.  There’s no paid advertising except when I am experimenting off and on with it.  As a solo entrepreneur, I don’t have a tremendous amount of time to spend on site traffic.  In fact, I have a rule that I only do marketing work after 7 pm in the evenings.  The rest of the time is devoted either to customer service or building product.  Not only does content marketing work well, it is extremely time and cost efficient, at least if you’re good at producing content that works.

Despite my marketing “curfew”, quite a lot of marketing gets done.  To give an idea, I logged 126 specific events in my marketing event log that I use to try to understand what was going on when the various analytics changed.  Events are typically things like running an A/B test of some landing page.  There are another 100 or so items from my Agile Backlog for marketing marked as completed that didn’t deserve logging as events to compare analytics to.  As another metric, I wrote 239 blog posts–about 5 a week on average, during 2012.  In addition, there was more content produced, such as detailed tutorials on the two areas of industry practices that my two software products are designed to help out with:

–  Feeds and Speeds:  This term originated with manufacturing and machine tools, though High Tech embraced it too.

–  G-Code Programming:  G-Code is the “assembly language” of computer controlled machine tools.

Content marketing aficionados will recognize these latter two as the sort of “Evergreen” content that is extremely valuable in terms of SEO and generating a solid foundation of site traffic.

Early in the process of starting CNCCookbook, I decided Content Marketing was the only way to go.  As a bootstrapper, I didn’t want a business that required lots of expensive advertising because I didn’t want to invest the capital.  I had the opportunity to try my Content Marketing theories back before they were as fashionable as they are today.  I used both CNCCookbook and my day jobs at the time, Helpstream and Hotchalk, as the test vehicles for the strategies.  They worked extremely well for all 3 companies, which is a testament given how different they are:  CNC Manufacturing Software both B2B and B2C, SaaS Social CRM/Enterprise Software, and Online Education.

I had a real leg up with the CNCCookbook web site, because I knew I had already achieved a Content-Audience Fit and that I only had to learn how to optimize the content machine further.  My Marketing philosophy was that I would give away tons of valuable content (or at least content that is as valuable as I could make it, but the numbers show my audience felt it was valuable too) with little or no marketing “spam”.  I do not spend a lot of time asking for the sale and the content on my web site is designed to attract any machinist, not just machinists who are ready to buy my products right away.  As a result, I get to build a relationship and some reciprocity debt with my audience before I go for the sale.

The sales funnel works like this:

1.  Attract people to by offering valuable content that scores well in organic search.

2.  Priority #1 is to get them signed up to the mailing list so they can continue to receive the valuable content in weekly blog post digest.  At the end of 2012, we had about 16,000 names on our mailing list.  I get very decent open rates and site visits each Wednesday when I send out the weekly blog digest.  About 1/3 to nearly 1/2 of the list will visit as a result.

3.  Visitors in this active “content community” become aware of our products through content.  We report all product progress via the blog.  When solving any problem, mention relevant related capabilities in our software.  Report periodic special offers in the blog.  They also become aware through various “ads” that appear at the top of the screen (Hellobar), bottom of screen (homegrown slideup banner), and in the navigation panel on the left as well as the “Software” menu at the top of every page and the site’s Home Page.  All of these vehicles direct users to the various home pages for our software where they can sign up for a free 30-day trial.

4.  During the trial, we use an email drip campaign to try to make sure users are coming up to speed.  The email sent is intentially kept friendly and conversational and is directly from me.  I try to avoid making it too “slick”, and I try to make sure everyone gets what they need to come up to speed and be as productive as possible during the trial.

5.  The product itself also has a number of features designed to enroll folks into the community and help them along.  I’ve discussed these in a prior blog post.

6.  The product and email drip campaign will countdown at the end and present the trial user with links to purchase.

7.   Whether or not they purchase immediately, we work hard to keep them on our mailing list.  We run sales periodically, about every 6-8 weeks, that substantially increase our close rate (some folks will only buy at a discount), but we don’t want to run them so often that people only buy at the sale prices.  I think this timing, which was worked out via testing, has served us well.

To date, about 16,000 have participated in the product trial.  13% will end up buying, a number that’s pretty high for software free trials.  The software is sold via SaaS-style subscription at $69/year, and renewal rates are pretty decent, although we haven’t been selling long enough to see very much of that yet.  Sales in 2012 were up about 120% versus 2011.

The software side is interesting too, but I’ll save the technology details for another post sometime.

Going Full Time on CNCCookbook:  Lessons Learned

I went full-time on CNCCookbook July 1, 2012, so I have 6 months into it.  The company throws off sufficient revenue that I can pay myself what I would make in salary at a startup.  Typically, my position would either be VP of Engineering/CTO or CEO, and I’d be paid at the upper end of startup salary scales, so I’m pretty happy with CNCCookbook.  Our revenue grew 150% plus in 2012, and if it keeps on like that, it’ll be a very happy experience indeed.  I own 100% of the company, and have taken no outside investments.  I started actively trying to make it a business in mid-2010, at the 37Signals recommended pace of 10 hours a week.  I went full time after 2 years, and reached salary-parity with a Day Job, or Escape Velocity as I like to call it, 2 1/2 years into the exercise.  I love the business, products, and customers and I’m very pleased with the path I have chosen, so much so, I wonder what took me so long.

I’ve just started working part-time with some developers who I hope will ultimately join CNCCookbook when we’re large enough to be able to hire them.  Meanwhile, I have a 10-hour a week plan for them to participate, and that’s worked well.

In no particular order, here are some lessons and thoughts I have for others who want to try something similar.

Things That Worked

–  I had the luxury of starting this company having already achieved Content-Audience Fit.  I knew quite a lot about my audience, I knew what content they were interested in and hence what problems they wanted to solve, and I even had quite a lot of empirical web analytics data to go on.  In hindsight, I wouldn’t call all that a luxury.  I can’t understand how to do a decent job bootstrapping a company without it.  Anything else and you’re just building a product that you’ll throw over the fence and hope someone will consume.

–  I focus relentlessly on spending my time doing things that nobody else can do for my business.  If I can buy a solution, preferably SaaS, I will do that rather than build it even if I know I could do a better job.  That means I bought my e-commerce solution (1ShoppingCart), customer service (UserVoice), hosted wordpress blog (, and a lot of other things.

–  I’ve taken a radically different approach to the back-end of my SaaS software architecture, which I call “Fat SaaS”.  In essence, I put as much intelligence as I possibly can into the client and keep the back-end very simple.  It all runs on Amazon Web Services, is highly scalable, very reliable, and didn’t take much effort to build.  Eventually I’ll write about it.  The thing is, focus your efforts on what your customers can see and be delighted by.  The rest is just plumbing.

–  I am firmly of the opinion that our high close rates are due to not only the quality of the software, but also because we don’t use the hard sell.  The trouble with a hard sell is that while it may increase close rates for those ready to buy, it can so turn off those who are much earlier in the funnel that they won’t return when they are ready to buy.  Having seen the process at a lot of companies, frequently they’re not even measuring the impact on the later tail of prospects.  They’re only interested in what’s closing in the next 3-6 months.  I still see significant sales even 1 year after the end of the free trial.

–  We appeal both to hobbyists (B2C) and businesses (B2B).  This sounds odd and unworkable, but for the community of machinists, it works fine.  Based on various surveys I have done, we seem to have about 60% professionals and 40% hobbysists.  The professionals will pay more and require less support, but the hobbyists get the word out in the various online communities.  The reason I can serve both markets is the participants are passionate about machining.  I believe passion is an essential litmus for content marketing success (and likely bootstrapping success).  If you can’t detect passion in the audience, how can you get them interested in your content?  How can you get them to tell others about it?

–  Only having 10 hours a week for the first 2 years was beneficial.  When you’re learning what to do, having a lot more hours available doesn’t necessarily help.  It takes time for the ideas to percolate, for the right influences to be felt, and for the results to be measured.  Heck, it takes time to think of all the ideas.  You don’t have them all up front so that all you have to do is implement them as rapidly as you can.  And of course, limited resources maximizes your focus.

–  Using an Agile Methodology to run everything including the business and marketing side has been hugely beneficial.

–  I have never owned or touched a server for this business.  It’s all been in the Cloud from Day One.  It started at LunarPages, my original El Cheapo ISV, and fairly quickly migrated to Amazon.  Today, the site is entirely on Amazon.  Static pages are hosted via S3 and we use the service to host WordPress.  My order of preference in implementing a service is:

  • Defer it.   Do you really need it now?
  • Use SaaS.  They do it for a living.  Are you really going to do a better job or is it a distraction?
  • Outsource it.
  • Build it.  Least desirable.  If I build it, it better be highly differentiated and valuable to my audience.

–  I farmed out the simple back end we use for authentication so I could focus on the machinist-specific client.

–  There is a tremendous art to using Sales (by that I mean special prices for a limited time) to enhance your revenue and close rates without trashing your average selling price.  Learn to do that as early as you can through experimentation.

–  Measure everything.  My primary measurement tool is Google Analytics.  But, I get lots of data from SEMRush, SEOMoz, SurveyMonkey, and the various telemetry I’ve built into my product.  All the key data goes into a weekly marketing report as a row in a spreadsheet.  I focus entirely on the trends and let the absolute values work themselves out over time.  If the trends are right, you can’t lose.  There’s no more powerful force than compound interest.

–  Drive the business with the metrics.  If you can’t measure it, it isn’t real.  If you don’t have an Analytics + Metrics + Decision Making Machine, you don’t really have a scalable strategy, you have a bunch of gut ideas that may or may not work.

–  Taking on 3rd party software to resell.  See my note below about the Road Ahead.  This has worked extremely well for us and added about 30% to our top line revenue for very little effort.

Things I Wish I Had Done Differently

–  Our first product was easier to build, but was too cheap.  At $69 a year, you need a lot of customers before you can quit your Day Job.  Being able to charge even a little more would’ve accelerated the process, assuming we could still get it sold.  One of the problems is that being a solo bootstrapper, there were real limits to what I could produce, especially while having to learn all the other non-technical jobs.  A bootstrap team of 2 or 3 could attempt a much more ambitious first product and probably get to full-time viability sooner.

–  The scalable formula for growing a Content Marketing effort is simpler than I thought.  Over time, Google has made it harder and harder to play SEO tricks.  The more I wanted to find the Tricky Secrets, the more time I wasted.  This is one reason why I eventually limited myself to working on marketing after 7pm at night.  In mosts cases, only three things have mattered:  Doing good keyword research.  Doing enough A/B testing.  Producing great content.  Figure out what formula works for you, and as soon as you have a scalable formula, focus on scaling it.  Save time for a few experiments, but not too many.  You don’t have enough attention to split too many ways.  There is such a thing as Minimum Viable Marketing and it is just as important as Minimum Viable Product.

–  I made some bad choices on various services I signed up for.  This was mostly a function of being largely review-driven and not having a clear enough idea of my long-term needs.  The heart of the commerce platform for CNCCookbook is email.  Initially, I chose a service called 1ShoppingCart because it integrated everything I thought I would need in one package.  1SC turned out to have a very poor set of API’s and was better suited to sales of physical goods than SaaS software.  I’ve made it work, but at this stage, mostly as a shopping cart.  After having looked at a lot of email platforms, and gotten a pretty deep false start with Constant Contact, I am finally happy with MailChimp.  I would’ve saved myself a lot of trouble if I had started everything from MailChimp and built out around it.  Spend time reviewing the API’s of any service you sign up for.  You never know when you’ll want to dig into them.

–  I started with a static web site for historical reasons.  CNCCookbook was originally formatted much differently than a blog so it didn’t occur to me to use blogging software.  Today, I have integrated WordPress and love it.  If I had it to do over again, I would probably have simply built everything on top of WordPress.

–  Social Media are helpful, but deliver a lot less marketing value than you would think.  Automate your use of them and let it ride.

–  I got started focusing on my mailing list late.  There was no way to sign up for the list or even get a real RSS feed until the beginning of 2012.  This was a huge mistake.  A good mailing list is as much an asset as anything else your business will have.  Treat the people on it well by not wasting their time and you won’t be disappointed.

–  Our products are not a pure SaaS model.  When the subscription expires, the product continues to deliver considerable value, though far less than if the subscription is paid up.  The jury is still out on whether I gave away the cow instead of selling the milk on that deal.  I am happy with renewals, and it may be that without this feature I would’ve had far fewer sales to hobbyists, so I can’t truthfully say I would do this differently.  But, it is something I think about a lot.

The Road Ahead

CNCCookbook’s biggest problem is lack of product.  We have a fantastic readership, traffic is growing steadily, and the word of mouth around our first product and the web site is great.  It’s become the de facto standard and we’ve even signed up a bunch of big name manufacturers who use it.  Our problem is not having enough software to sell into this channel.  As soon as I realized this, I went in search of 3rd party software I could resell to this audience and was successful with a couple of packages during 2012.  I would guess they added about 30% to our revenues.  2013 will be the year we ship our second product, and hopefully also our third and our fourth products.  My suspicion is that this will radically scale the business along every dimension and I’m really looking forward to it.

I was pleasantly pleased to discover that once you have a one man SaaS business, you can run it from virtually anywhere in the world that has a decent Internet connection.  All my servers are in the Cloud, and all my tools will fit on a laptop.  Consequently, I’ve had the pleasure of being able to run the business from the cabin of my Alaskan Cruise Ship, from a rented condo on a dive trip to Cozumel, Mexico, and from my hotel room in Waikiki.  It’s been a real blast and I’m eagerly looking forward to what comes next.

Posted in bootstrapping, business, strategy, venture | 13 Comments »

Converting Content-Audience Fit to Product Traction

Posted by Bob Warfield on December 18, 2012

tractor-pullJason Lempkin has a new post out about gaining traction after your product ships.  He says it’s hard, much harder than building the 1.0 product which was already hard, and he makes some concrete suggestions on how to go about gaining traction:

–  Finish hiring your core team.  Presumably you’ve left the sales and marketing until post-1.0?

–  Get attention for your app:  “Whatever you can possible do.  Go to every conference.  Speak at any possible event you can, no matter how small.  Win every award. Try to get every blog to write about you.  Reach out to anyone and everyone in your space.  Be respectful, but totally, utterly, shameless here.  Do whatever you can possibly think of here.”

–  Hit the pavement and get early customers and partners

–  Lavish attention on every single customer and lead

–  Plan your next release carefully–it may be your last

Wow, put that way, the job seems really tough!

After reading the account, I do have memories of startups that had to solve the traction problem through brute force and shoe leather.  They were painful and very scary.

The thing is, success is about being prepared (with a healthy dose of luck, though chance does favor the prepared mind).  As I tell my kids, “It doesn’t matter how smart you are, if the other guy already did the homework and knows the answer while you’re still trying to figure it out, he looks smarter.”

So it is with achieving product traction.  This is why I wrote my earlier post about achieving what I call “Content-Audience Fit” to tell Founders it has to be their first priority, even ahead of building a product.  Possibly even ahead of knowing what product you will build.  I say this for two reasons.  First, if you don’t know your audience, you can’t build a great product anyway.  While you might think you know your audience, how can you be sure until you have Content-Audience Fit?

If you have Content-Audience Fit, the following things are true:

1.  There is a reasonably large audience that is steadily growing and is consuming your content.  They care about what you have to say in the market you’re interested in.  They are subscribing to your mailing list, following you on Twitter, liking you on Facebook, or whatever other Social Medium works for your market.  Consequently you know what Social means to your market.

2.  You are part of the Conversation taking place on the web for your chosen market.  You are posting in their online communities.  You’re on the blogs of the key influencers (you do know who they all are, don’t you?) commenting.

3.  You are so familiar with the commercial players in the market that you’ve helped the Market Audience understand some of them better.  You’re commenting on their blogs too.  That establishes you as an agnostic authority in the market.

4.  Because of your participation in all the right conversations, and because of the quality of the content you’re producing, Key Influencers will recognize your name.  You are beginning to get folks asking you unsolicited questions as a recognized Expert.

There is a not-so-subtle difference between this Content-Audience fit and “Get attention for your app”.  It’s because you’re getting attention for your content.  You’re establishing yourself as an expert, not a guy shilling your products and company.  Because your content is very high quality and it’s being given away freely, you’re invoking the principle of reciprocity, which is a powerful force when marketing and selling.  You’re laying the groundwork to present your selling proposition from a position of strength, after your prospects have already decided you’re the expert.

Imagine being able to validate your product vision, and eventually early versions of the product with that kind of Audience insight.  It’s invaluable.  It should be a requirement.  Yet so many companies build the product first and consult the Audience afterward.

Second, you need a strategy to make this business of gaining Product Traction easier.  I love the definition that strategy is what you do to make winning easier.  If you ever needed a strategy, it is when you launch your 1.0 product!

So how do we convert Content-Audience Fit to Product Traction?

Back up.  Let’s get the timing right first.  You don’t want to start trying to achieve Content-Audience fit after you’ve built Product 1.0.  That’s way too late.  Here’s a mini-case study:

I took Helpstream, a Social CRM startup, from being invisible to having a successful blog that had achieved Content-Audience fit in about six months.  At the end of the six months, the key influencers knew who we were and were starting to write about us.  For example, Paul Greenberg, the “Godfather of CRM”, wrote a short passage that perfectly signals good Content-Audience fit:

A few weeks ago, I had a discussion with fellow Enterprise Irregular Bob Warfield, who is the EVP of Products for a company called Helpstream. I have to admit, when I saw Bob’s rather cogent commentaries on the Enterprise Irregulars site, I became curious as to what he did and what the Helpstream company dealio was. I asked him and we set up a demo and a conversation between me, Bob, and Anthony Nemelka, the President and CEO of Helpstream and a long time industry veteran.

That second sentence telegraphs where we’re going and why Content-Audience fit is so critical to a product launch.  Because of my “cogent commentaries”, Paul asked us for a demo.  Imagine Content that is so good, the key influencers are coming to you, rather than you going to them hat in hand trying to get a meeting.  I would budget a minimum of 6 months and perhaps as long as 12 months to achieve your Content-Audience fit.  Sounds like you need to get started at the same time you start the Product, right?

This is an insight that is missing from many startups.  In fact, many want to do a stealth launch and keep everything secretive.  Feel free to keep your product aspirations a secret, but you’re nuts if you’re not belting out super high quality content for your audience from Day 1.  That means as you sit around the table with your fellow Founders, and you ask the question, “Who is spearheading our drive for Content-Audience Fit and who is writing all that content?”, there had better be a good answer.  That marketing guy you partnered with who has never actually done a blog, he has just simply hired people who did blogs?  We might be past the evolution in how marketing is done for that to be a good idea.  First question I ask any marketing candidate at any level is, “Show me your blog?”  If the response is, “Huh?”, the interview is not going to go well.  It’s no different than asking any question about marketing deliverables.  Would you hire someone who had never had any contact with advertising of any kind?  Content marketing is so critical to small companies, how can it be an afterthought?

As an aside, I recently came across a bootstrap business called, The Wirecutter.  The Founder achieved Content-Audience fit before they ever started this little company by writing for Gizmodo, Wired, GadgetLab, and MaximumPC.  How about grabbing one of the big name bloggers in your space as a co-Founder?  How about at least as an advisor to help you get to Content-Audience Fit?  Have them brutally critique your content until you get it right.

BTW, people like Paul Greenberg have extremely high standards.  There is a reason they get nicknames like the “Godfather of CRM”.  They are trusted and they didn’t get there by being dummies or shills.  If your content doesn’t have something really meaningful to say, you’ll get nowhere with this strategy.  But if you get the meeting because your PR firm pounded hard enough on doors, and then in the meeting you still have nothing to say, you’re going nowhere anyway.  So:

It is critically important to do the work of achieving Content Audience Fit!

That’s it.  Full Stop.  End of Sermon.  Don’t.Mess.It.Up!!!

Okay, now imagine you’ve got that fit, as defined by the 1,2,3,4 list above.  Let’s use it to produce traction.  This is done in the following ways:

The Audience that’s ready to Jump Now is ready.  Invite them in.

There are always those influencers who get an edge by working harder to learn than the others.  Always those prospects who are ready to buy now and want the new new thing.  If you have achieved Content-Audience Fit, all you need do is announce the availability of a product and any of these people in your audience will be likely to check in.  Start with  your Beta Test.  You can keep it as controlled as you like, but put the announcement out through your content channel and be sure to communicate at least your value proposition well enough so people will want to jump in.  If you don’t have a big enough audience yet that having 5% of them answer your invitation, you don’t have Content-Audience Fit.

Give the Early Adopters an Amazing Deal and Make Them Heroes

You don’t need revenue yet, you need credibility.  You put out the call to action, and the right people have self-selected by coming forward.  They like you or else they wouldn’t have come forward.  They’re active in the online world or else they’d have no idea you existed.  They’re raising their hands to tell you they care.  Make it easy for them to feel like that was the best decision they ever made.  Focus your spotlight of attention entirely on them.  Save your bandwidth so you can give them completely unreasonable amounts of it.  Make them heroes and they will make you a star.

You need to charge them a little bit or it isn’t a real transaction.  Give them the best deal you will ever offer in your corporate history and make sure they know that in the nicest possible way.  Give them attention and services that will never be available to others in even a year’s time.  Plug every member of your team into the success of these early customers.

When that fire has caught, you can ask them for a favor.  You can ask them to help you get the word out.  At the very least, you need them to be a willing and able reference.  Next step up, you need them to be a case study.  Grand Prize:  you need them to be a source of referrals.  Try to discreetly make sure when you sign them up that they’ll be able to do some of this, at least serve as references.  You can’t ask for that favor up front, but you can find out if they’ve ever been involved with early software, done references, yada, yada.

Earn the Right to Raise Your Price and Sell Bigger Deals

The company I mentioned earlier, Helpstream, had nearly every marketing automation company as customers for our Customer Service Social CRM product.  I remember calling each of these CEO’s, who were all entrepreneurs like myself, and asking them what Helpstream could and should do going forward.  Phil Fernandez, CEO of Marketo, shocked me by telling me, “Bob, I don’t know if I should be saying this, but you should raise your prices.”  Even more shocking was that Phil wasn’t the only one to tell me that.  So we did, after carefully making sure to grandfather existing customers with appropriate agreements so that they were taken care of.  There was virtually no pushback whatsoever, and it helped the business tremendously.

What had happened is we had earned the right to raise our prices by delivering on our promises and raising our credibility.

The ability to price higher comes most from credibility.  Sure, you might have the world’s greatest product, but nobody knows that if you don’t have the credibility.  Can you see where having good Content-Audience Fit is the first step on the credibility journey?  Beyond that first step, it is your conduit for telling your customer’s stories and continuing to build that credibility.

The next step is being able to tell your Early Adopter’s stories.  In terms of closing business, there is nothing like being able to have a prospect talk to a customer that gushes about your product.  At Callidus Software we used to invite prospects to our User Conferences precisely to maximize the exposure to that kind of sentiment.

Startups are enaged in earning the right to raise prices and to sell bigger deals throughout their history.  Successfully getting your first 5-10 reference accounts is just the first rung on that ladder.  Each company you sell to would like to know that they’re not the largest deal you’ve ever sold.  Raising the size of your largest deal earns you the right to sell even larger deals.  Accumulating this asset of referencibility is your primary deal closing accelerant until you’re large enough to point to being the market leader or perhaps to being a public company.  Gordon Moore’s Chasm Crossing can largely be seen as the process of establishing the credibility needed before those who are not Early Adopters will buy.

All along your journey, your Content continues to establish your company’s expertise in its chosen field.  You never walk away from that–you just keep building on it.  If your references are your Sales Accelerant, your successful Content is your lead generation accelerant.  Establish your web properties as the go-to spots to learn about what your customers care about.  All the best marketing startups like Hubspot, SEOMoz, Marketo, and Eloqua are working this way.  Maybe that’s a clue for the non-marketing startups that this is how marketing is done these days?

Lead With Content for Competitive Skirmishes and Insights

Competitors are great for startups.  If you’re the only one in a market, you have to undertake to grow that market all by yourself.  With competition, the cost is shared and the market can grow much more quickly.  In addition, picking a fight is a sure way to add passion to your content and help drive more traffic.  You can’t agree with everybody, but you need to agree with the position your key audience want you to stake out.

Take advantage of that with your Content strategy.  See which conversations your competition are dominating and wade into those conversations with your own viewpoint.  That viewpoint has to carry substance, but when it does, if you win the audience’s hearts and minds who are watching the conversation, they will come your way.  You can’t win them all, but this is where you start stacking up the different value propositions.  This is where you carve up the market into micro-niches that are looking at things each a little differently.  Here’s where you find out which micro-niches matter, and which ones are dead ends best left to the competition.

Passive sonar gained by just passively consuming the content from your space is great, but so much more can be learned through active pinging of the landscape.  See how they respond to your messaging, analysis, and insights.


There’s a lot of work required to achieve traction.  But, if you subscribe to my Content-Audience Fit idea, you’ll begin that work Day 1 at your company.  When you’re ready to enter Beta Test, you’ll have a lot more going for you than your sales guy’s contact lists and willingness to burn through shoe leather.  You’ll have an audience that wants to come to you, embrace your product, and help you spread the word.  FWIW, Helpstream wasn’t my first or last experience with Content-Marketing Fit.  My bootstrap company, CNCCookbook, thrives on the notion today.

Posted in bootstrapping, business, Marketing, saas, strategy, venture | 4 Comments »

The Very First Thing a Founding Team Needs to Do: Achieve Content-Audience Fit

Posted by Bob Warfield on December 10, 2012

Audience3DA lot of entrepreneurs,  when faced with the question, “What’s the most important thing to do first?”, would answer, “Build a product.”

Big mistake.

The most important thing to do first is to find an audience.  It may be that building a product is an integral part of growing your audience, but you’re not ready to build a product or grow your audience until you’ve found the right audience to start with.

How will you know you’ve found your audience?

There are some important signs.  For example, you can participate in their communities and be well received.  An even better test is you can get their communities to consume your content.  Before you’re going to have much hope of achieving Product-Market Fit, you’d better achieve Content-Audience Fit.  When you have that fit, when traffic to your web site is growing steadily and you’re starting to get some big spikes in traffic from particularly compelling content, you’re close.  When you can measure growth in the audience’s commitment to your content, for example, when your mailing list for your blog is growing and people are clicking through the weekly digest to get to the actual articles, you have achieved some degree of Content-Audience Fit.

Content-Audience Fit is a surprisingly high hurdle.  It is higher than getting a bunch of random people to sign up to try a free software product, for example.  The reason is that there is less value being offered by the content.  People actually have to be willing to spend some of their attention on your content simply because it is that good.  They do it because you’ve demonstrated you understand what they want and that you have something worthwhile to offer.  There are tons of people that will play with some free piece of software for a short time, and you’re probably not even set up to measure how hard they played with it yet.

With Content, all you need is a blog to deliver the Content from and Google Analytics to measure its impact.  Maybe augment that with a MailChimp account so you can actually start to aggregate some followers to your Tribe and use the Analytics there to tell how committed they are.  Anyone who is willing to undertake the hard work needed to consume your Content and decide they like it well enough to want to keep consuming it is a valuable member of your Tribe.  The more you can grow the Tribe, the more voices there will be to help you get your message out, to tell you what problems they need to have solved, and to guide you in the next phase of your journey:  achieving Product-Market Fit.

To be a successful Bootstrapper, you’re almost certainly going to have to be a Content Marketer anyway.  Advertising is typically going to be too expensive before you get some capital and a following.  So do yourself a favor.  Forget the product for a little while.  Focus on achieving Content-Audience Fit.  When your past striking flint and blowing on the tinder, you’ll have a little fire glowing.  It’s a big accomplishment.  So far it’s just kindling, but soon you’ll be ready to throw a real log or two onto that fire.  That’s when you build your product, as soon as the Content Kindling has caught and you can see some actual flames.  The timing will be perfect, because your costs will go up and your available attention for producing product and content will go down as soon as you ship your product.

You can’t afford to be just starting to look for Content-Audience Fit after the product is ready to ship.  That’s too late.  And it’s a terrible time to discover your market has no passion for what you’re trying to do.  That bit of news was tragically knowable with a lot less effort if you had only started out finding an Audience.

Extra Credit Note to Investors:

If you find a team that knows how to create a product, we both know that’s not enough.  You’ve raised the bar on that some time ago.  But if you find a team that has achieved Content-Audience Fit, they’ve demonstrated a critical marketing skill.  At the very least, you know that this team can present compelling content that draws a significant audience.  Combine that Audience Insight and ability to compell the Audience with a decent Product and that’s the essence of a startup that will grow.  I am surprised every time I walk into a startup and ask who in Marketing is a hard core blogger and hear back that basically nobody is and they’ve outsourced that task to technical writers of one kind or another.  Those startups are proceeding on a wing and a prayer that they actually understand their Audience.

Posted in bootstrapping, business, Marketing, strategy, venture | 13 Comments »

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