Marketing Lessons I Learned From Running a Software Company

In this clip, I'm going to talk about the lessons I learned from starting and running a software company. But before we do, before we do, don't forget to subscribe and hit the bell button if you're watching from YouTube, whatever other channel you're on. Don't forget to subscribe as well if you enjoy clips on growing yourself and growing companies. All right, software companies, more specifically, specifically, specifically, I'm talking about software as a service. So SaaS. Okay, I love SaaS. I came from SaaS in the past. Um, and it's, it's great because SaaS software revenue, it's recurring revenue. So you might be paying, let's say you pay $29 a month to Dropbox and it's recurring. You keep paying them over and over and over and it compounds for them. So SaaS grows like, uh, let's go this way. So it grows this way. Okay. Or maybe it's this way if you're watching this, maybe it's this way. Anyway, you know. Um, but anyway, SaaS, the great thing about it is it compounds. The tough part is it takes time to compound. So what I learned is this, Lesson number 1, it takes a long time to get product market fit. So product market fit is when people are actually using your product and they're, they're coming back into your app and they found a lot of use with it, a lot of utility with it. One of the things that Sean Ellis said, uh, in terms of, you know, how do you, how do you find product market fit is you're basically, you ask your customers this question, how disappointed would you be if you no longer were able to use our product? And if more than 40% of people say very disappointed, then you know you have product market fit. So I know that's just like one question. How can you judge everything on that? But that's at least a good indicator that you can go with. Okay. We thought that, you know, we'd build it and then everyone would come and then all of a sudden we'd have product market fit. People would be paying and it would compound. Now what we didn't know is that it takes a long time to get it right. It might take you 5 years, maybe even longer than that to get people to get that kind of, um, that rush with product market fit where everything starts to compound, right? But in the very beginning, like you're struggling. This is why a lot of SaaS companies raise a lot of money in the beginning. 'Cause it's like they need the capital to kinda hold that runway. You know, we're 2 years into it and we're just getting to product market fit. Now the second thing I would say is, if you need to raise money at all, raise it before you actually need it. 'Cause when you actually need it, you're gonna be desperate, and then that's when people can get leverage on you, the investors can get leverage on you. So there's a couple ways to raise money. I mean, you can use friends and family, obviously. There's angel investors, there's venture capitalists, there's even crowdfunding too. So for ClickFlow, we actually had some angel investors, and then we're going through a round of crowdfunding right now. And that's how we decided to raise. So it just depends, many different ways to skin a cat there. But if you think it makes sense to raise money, go ahead and do it. But don't try to raise too much money because if you raise too much money at a too high of a valuation, you're, you might have to raise a down round later, meaning that your valuation actually goes down. Your other investors are not going to like that. So you've got to make sure that you take care of everyone. Now the third thing is I would say one of the big mistakes that I made with our software ClickFlow, at the same time I was running my ad agency Single Grain. The problem with that is when my focus is split, it slows down ClickFlow, right? We probably could have moved a lot faster because the last— there's a 45-day period of time where I was able to focus almost exclusively on ClickFlow and man, we were moving like, we were moving like so fast. It was just like amazing, like night and day. Had a talk with my co-founder about it and he's like, yeah, I feel like we're, we're in essence kind of starting from scratch and the energy is just amazing, right? So I think it's really important that if you're going to do a software company that you focus on it. Um, you know, for us, I mean, you know, what I, what I wanted to do was kind of stabilize the ad agency, uh, make sure we had the right people in the right seat, um, before I went off and focused on ClickFlow. It was very important that you focus and you try to not do too many things because it's already hard enough to do a business. Um, you know, even like a software business, very, very difficult to do. The 4th thing is you have to figure out who you're trying to target in the beginning. There's a software company I had called Kahuna that was actually on the Growth Everywhere podcast and they're about to shut down. Before they decided to focus, build marketplace software for a very specific industry, and then their growth just kind of took off. So I think it's very important for you to focus in, um, and then you can, you can hone in on that industry's problems and solve that problem specifically for them, and people will pay you money for that. Now, the 5th thing I've learned is that you don't want to charge too little. A lot of people in SaaS, they charge too little, and what happens with that is churn is very high, customers are very high maintenance, and, and, you know, generally Sure, it might take you longer to close a bigger contract, but they're less maintenance and you're actually solving like a bigger pain point for them. Okay. So, you know, people will debate me on this. Like I have, I have friends like Syed from, from OptinMonster. He likes to charge lower. Um, and I think there's a, there's a time and place for that, but you have to understand like what need is your software solving, right? So for our software, if it's a smaller website, we can't really solve the problem for them with just SEO testing. So for us it's like, okay, we probably should serve the larger websites and we probably should have a cutoff, right? But even right now, like, you know, this actually leads up to the next lesson. This is, I think, number 6, is you have to do customer development. And customer development means not actually building your software in a vacuum where you and your co-founders think you know everything and you're just gonna build features. It doesn't work like that. You have to actually talk to customers, people that you're targeting, and then from there you learn kind of what their problems are, what their day-to-day looks like, what their worst part of their day looks like, how are they currently solving the problem that you're trying to solve with your software. The main point with customer development is you can't lead them with questions. You can't say like, hey, how do you solve this problem? Do you do it like this, this, and this? Basically you're leading them. You don't wanna lead them. You basically want them, you wanna tease out the answer, and they're not gonna solve the problem for you, but they're gonna get you a lot closer because they're gonna tell you that these are the problems that I'm facing. And the more customers that you talk to when you do customer development, potential customers, the more signal you're gonna get versus the noise. And you can start to cut out the noise, focus on the signal, then you can focus your product roadmap on those specific issues. If you build in a vacuum, you're going to take a lot of development time. You're going to waste a lot of time and resources and it might take you like a year or 2 or whatever and all of a sudden you're dead because you didn't do customer development and you didn't really hone in on what the customer needs. The best software companies in the world, they're always trying to figure out how can I make this easier for customers? How can I solve my customers' problems? It's just going to be like, cause that's what you're trying to do. You're building software to solve problems. Customer development. What I would say is read the book, The Mom Test. I got it on audiobook, really good. It tells you how to do customer development, the right questions to ask, not to lead them, how he failed the first time on his first couple of products. And that's been— I had my co-founder read it as well. And the way we're doing these customer development calls now, man, we're talking to enterprise companies. It's like boom, boom, boom. Like today we got off a call and my co-founder was on cloud nine. He's like, oh my God, like that was amazing. He's like, woo-wee, like in Slack, right? Super happy, right? I was like, oh man, you're super happy. And that's good because Especially your technical co-founders or your technical people on the team, they need validation that they know what they're building is actually adding value. Like for me, I have kind of industry domain expertise, but my co-founder doesn't, right? So when he hears things like that, he's like, man, you know, I feel a lot of energy from what we're building and that will take you a long way. All right, so before we go, before we go, let me know what mistakes you made or what mistakes you think you're going to try to avoid when you are building your software company. Let me know the software company that you're actually trying to build. And if you enjoyed clips like this, uh, videos like this, if you're watching the video right now, go click on the next video over there. Okay? Over there. And whatever channel you're coming from, don't forget to rate, review, and subscribe. It helps us grow. I love you so much. All right? I'll love you extra if you do that. And don't forget to hit the bell button if you're coming from YouTube. That's it for today. See you tomorrow. Bye.