We’ve learned a lot from businesspeople at the top of their game. Here are some of the biggest takeaways.
Six months ago, we launched a new series on this blog.
We set out to interview successful entrepreneurs – businesspeople at the very top of their game – about how they took their businesses to $100K in monthly revenue… and beyond.
I expected it to be successful.
After all, it was exactly the sort of thing I craved: the most valuable lessons from the entire careers of people much more successful than me, condensed into an easily readable format.
But I didn’t expect it to have such an impact on our own business.
The truth is, we’ve taken key insights from the monthly interviews, and applied at least one from each entrepreneur to Groove… and the results have been incredible.
Today, I’m sharing the top takeaways for us (yours might be different, which is why I encourage reading all of the interviews in their entirety) from the six interviews we’ve done so far.
I hope they’re as valuable for you as they’ve been for us.
Hiten Shah, Co-Founder, Crazy Egg and KISSmetrics
1) Have a “Forever Free” Plan
We used to have a free plan at Crazy Egg and decided to stop making it available for new customers. It was a short-term great decision for increasing revenue but I believe it was not the best decision for the long-term.
If I’m starting a new SaaS business today, I would highly consider having a free plan that you invest resources in and plan on keeping forever.
2) Optimize for Speed
I believe that startups should be optimized for speed.
Speed is their greatest weapon (often times the only weapon). So, when I see decisions that should be made faster or a focus on the wrong things it really bothers me and makes me want to convince them to start making more decisions faster.
Often times it’s the speed of decision making that gets in the way of growth and progress.
I’ve come up with a bit of a formula for speed:
“Speed = Focus + Sequence”
You can only move fast by figuring out what to focus on right now then breaking that down into small steps so you can prioritize the order you work on these steps.
3) Learn – and Use – the Exact Words That Your Customers Use
My big piece of advice for founders is to spend your time figuring out the words your customers and people in your space use to describe their problems and the solutions to their problems.
This involves everything from customer interviews, interviews of potential customers and your target market all the way to reading other people’s blogs in space, industry magazines and business publications.
Rick Perreault, CEO and Co-Founder, Unbounce
4) Use Facebook Ads to Validate Your Idea
I had the pain, and I needed a solution, but I wanted to see if other people had the pain. At first I went out to my network, and that was encouraging, because others in my network had the same pain. But then I thought, ‘my friends and family think it’s a good idea, let’s go out to the world and see if this pain is universal.
I used Facebook ads and sent people to a survey I created on Survey Monkey. I remember that you could target people by profession, so I had 42 marketers fill out my survey and leave me their email address where I could contact them. They all expressed the same pain. The more people we interviewed, the more the vision and the solution came together.
5) Resist the Temptation of Changing for Big Customers
It’s especially tough when you’re bootstrapping, and you’re Ramen profitable, and you start getting recognized brands calling you up saying hey, if you just build this feature, we’ll buy. It’s so tempting, but it’s also a huge distraction.
We fumbled around for two years trying to do everything for everyone, and it took a lot of discipline to get focused. In order to have a business that’s actually a good operating business we needed to pick a tightly defined customer segment, focus, go after it and win.
6) Don’t Be Afraid to Charge High Prices (If Your Product Is Worth It)
At first we thought, ‘no one’s going to pay for this. Let’s just have a $10 plan and $25 plan.’ In hindsight, that really, really hurt us. It derailed us from our focus. For our $25/month plan, it cost us, on average, $150 to acquire a new customer. Yet the average customer on that plan would stay with us for 4 months. They churn high because they were just experimenting with Unbounce.
And then, after raising their prices…
We finally started attracting marketers that actually had a budget. Our support costs went down because our new customers didn’t need as much help, and the feedback we got was so much better.
When our pricing actually began to line up with the customer profile we wanted, we’d get feedback that would help us build a better product that people would actually pay for, since it was coming from the people actually paying for Unbounce. With the old $10 plan, we’d get people screaming for features that wouldn’t even up even paying for the product.
Ben Congleton, CEO and Co-Founder, Olark
7) Conflict Can Be Very Valuable
(On living with his co-founders)
When you’re living together, you can’t escape each other, so you’re forced to deal with things (or fail). I think that by putting ourselves in this forced situation, it really helped the core team grow a lot, really quickly.
We learned to understand each other’s communication styles, how to make conflict positive, how to disagree in a way that’s productive. For example, I used to have a tendency to be pretty defensive and passive-aggressive in some situations, while Matt is a lot more direct. In the end, I’ve completely come around and now I’m much more direct. You learn a lot about yourself when you have to directly deal with conflict.
Even though we have a much bigger team now (and they’re all over the world), it’s something that we now try and train our team on: understanding the value of conflict and how really good, productive things can come out of it.
8) Hire Yourselves First
You don’t want founders to be unhappy. It’s hard enough running a company, you don’t also need to feel poor at the same time. So we followed the policy of ‘hiring ourselves first.’ As soon as we could, we began paying ourselves salaries — though nowhere near Silicon Valley salaries — before making our first ‘real’ hire.
9) Identify (And Understand the Roles Of) Paid and Free Users
We started modeling usage on Olark, graphing the chats that our customers were having. We identified that the people who had more than 20 chats a month tended to have a lot more than 20 chats a month, so we just started gating our free product at 20 chats at month.
So anyone who’s having less than that is probably not really serious about communicating with their customers, and anyone that’s having more than that probably would be happy to pay us.
You should have some mechanism within your product where you have an understanding of who’s getting a lot of value out of your product (and would most likely pay for that value). Those who aren’t getting a lot of value shouldn’t have to pay, but they can basically become advocates for you, especially since the carrying cost of those customers is very low.
Neil Patel, Co-Founder, Crazy Egg and KISSmetrics, Founder, Quick Sprout
10) You DO Have Enough Time
It’s just bullshit. It’s like, you don’t have time to blog but you have time to watch three hours of TV? You have time to hang out with your friends and get drunk.
Yeah, you might have to make sacrifices in life and you might not have as much fun, but who cares? If you want to do something and you want to get good at it, you have to put in the time and effort.
Often, people don’t have the time because they’re inefficient in their lives. I use tools like RescueTime, which tells me where I’m wasting time and how to fine tune everything so that I can focus on the most important tasks.
11) Wake Up Earlier
I wake up early, I do think that’s important and I do try to do some kind of working out in the morning, whether it’s running or whatever it may be. Doing something early in the morning just usually helps me.
If you get up early you’ll do the stuff that you typically wouldn’t do. For example, if you’re healthy as an entrepreneur, you eat healthy and you work out, then you’ll probably work better, too.
Now if you say “I’m gonna go work out at 5 o’clock at night,” the problem is that 5 o’clock comes and you’re like, “I’m so exhausted from work, I don’t have time to work out, I just want to go home and relax and chill,” so unless you do the stuff that you don’t like doing – which is usually the stuff that’s good for you – early in the morning, you’re probably not going to get it done.
12) Write for Your Paying Customers, Not General Traffic
When we first started off, we would just write content that would generate traffic, as opposed to content that specifically benefits a potentially paying customer.
It was a mistake.
We would teach people how to optimize your blog or optimize in search engines, but our paying customers aren’t bloggers. Our paying customers are typically SaaS business and Ecommerce sites.
Rand Fishkin, Co-Founder and Wizard of Moz, Moz
13) Set Big, Hairy, Audacious Goals
My favorite example is the moon mission.
It had this super clear big hairy audacious goal: put a man on the surface of the moon, and return him safely to the earth.
The guy steps on the moon and comes back okay. All right, then we did our job, right?
That’s super measurable, and then you have all these things, like, strategically, what do we need to do? Well, we’re going to need a ship. Ok, now we’re going to figure out fuel and an environment for him to survive in, and some sort of suit that he can walk around and then you have all the tactics, like all right, you make the boot.
I think that model works really well: set one big hairy audacious goal, and then all of your short term goals and tactics fall from that.
14) You CAN Build Culture Without Much Money
We found things that we just enjoyed doing together that didn’t have high costs associated with them.
The way we ran meetings.
The way we did planning.
The way we sent each other emails and the way we did internal communication.
A lot of culture is the user experience of the company itself.
Everything from what machines we work on and what kind of desks we get and what our office environment is like; you don’t have to spend that much money to make that enjoyable.
For example, we just said: you know what? We’re going to make it so that our expense reports are just crazy easy… actually, screw that. Since there are only five of us here, we’re going to have the person who takes care of our finances do everyone’s expense reports, so we just don’t have to worry about that.
Small things like that are a great way to not necessarily spend more money, but make people feel better about their experience at the company.
Moz had no money for forever. From 2001-2006, there were at least four months where I didn’t take a full paycheck, or didn’t take a paycheck at all. And my paychecks at the time were only $750 every 2 weeks.
We still had fun. Matt and I would stay late in the office and play CounterStrike on a server we set up, or we’d hang out after work together and watch TV at my house.
You can build an enjoyable environment without much money.
15) Streamline Your Schedule to Stay Productive
One thing that really helps me is keeping all my communication and obligations through two channels: email and calendar.
I have everything go through my email or my calendar so if there’s nothing on my calendar and I’m at inbox zero, I have nothing to do and I can do whatever I want.
But if there’s anything in my inbox or something in my calendar, then I have to do the thing on my calendar until it’s done and then I have to go take care of my email until that’s done, but that means that I never have to worry about anything else.
I don’t answer text messages, and if you leave me a voicemail, I’ll never reply to it. I looked on Facebook and I have like 700 messages I’ll never read. I don’t respond to all the crazy messages on LinkedIn.
If it comes through my email, I’ll take care of it. If not, it doesn’t exist.
David Hauser, CEO and Co-Founder, Grasshopper
16) Get a Lot Out of a Little
We started Grasshopper with no money except what we and our families could put together, but we knew we’d have millions of dollars in expenses. This was before AWS, there was no such thing as Twilio or infrastructure for phone systems.
We had to physically build servers and put them in a data center. All together it should’ve cost us a million dollars, but we got it for around $150,000.
We had to figure out how to get creative with suppliers. We learned to sell our story, and that helped us get crazy terms with our suppliers, many of whom essentially loaned us money in the form of equipment or whatever else we needed.
We weren’t saying, hey Dell, help us out. We were talking to smaller companies where we might be talking to a VP, or even a founder. We were telling a story about how we were going to grow and have hundreds of thousands of customers, and instead of buying one server next year, we were going to buy 20.
We said, look, we’re young, we’re doing something new and different and we were very honest about not having the money to do it. But we convinced them that we would be loyal to them and that we would grow. We showed them our business plan, we showed them all of that “regular stuff” but ultimately we sold them on the vision that we were going to do something different.
17) Paid Advertising Works. Period.
We’ve always been big believers in paid advertising, and quite honestly I get tired of the marketing “experts” that talk about how all we need is to go viral.
That’s great, and we spend a lot of time and money on our blog and our social media presence, and those things are important, but there are so many companies missing out on huge opportunities because they won’t advertise.
I’m sorry, but it just works. There’s no question. We all buy stuff because we see ads, and that’s not changing.
The channels might be changing. When we buy ads on Terrestrial radio, we might also be buying ads on streaming services because that’s where people are listening, but we’re not shifting everything to streaming just because that’s the new thing. Terrestrial radio still works.
18) Don’t Waste Time Going After TechCrunch
I think those big blogs are a waste of time.
They might get you a little SEO bump because they have some weight to their links, but that’s the only value I see in them for growth.
It’s cool to be on the top of Hacker News. You get a lot of traffic, but unless you’re marketing to that very specific demographic, it’s not very good traffic.
What’s funny is that TechCrunch hates writing about Grasshopper. We’re not raising money and we don’t really fit their narrative, so they don’t write about us. We have a very small competitor, and TechCrunch wrote about how they hit a “big” monthly revenue milestone. We were making their MRR every few hours.
I think marketing is about focusing on where your target market actually is, and not the stuff that makes you feel good.
What Have You Learned?
While these are 18 of the most valuable lessons to us, there are literally hundreds more that we’ve gleaned from these interviews.
We’ve gotten great feedback that the series has been useful to other entrepreneurs, and I’m thrilled about that, but frankly, I find the value that we’ve gotten from these insights has easily delivered a huge return on the investment we’ve made.
If you’ve been following along, I hope you’ve learned a lot, too. And I’m curious: what have your biggest takeaways been?