Thursday 22 March 2018

Startup diary: Ad flops, the marvel of meetups and why you have to 'eat your own dog food'

Richard Rodger.
Richard Rodger.

Richard Rodger

This is the fifth article in my weekly startup diary. I'm writing down my business decisions as I make them, and then writing about how things play out.

At this point I feel we should review some of the decisions so far, and see what we can learn.

The first big decision was to write this column. The most immediate positive effect has been an increased number of former contacts reaching out.

Some of those contacts are interested in building deeper business relationships. This is better than just making new contacts - old friends really are the best.

On the other hand, since I have declared a policy of openness about my startup, I now need to be clear with everyone about what is going to be printed in this column.

That's a complication I did not foresee, which I guess is pretty naïve in hindsight.

My rule is that conversations are private by default, and I'll ask permission before writing about anything I discuss. A great deal of business does depend on customer and supplier confidentiality, even if you're prepared to share your own numbers.

The second big decision was to start a newsletter for a segment of my intended customer base. The newsletter has been going for seven weeks, and now has 133 subscribers, and a 32pc open rate (the proportion of subscribers that open and read the newsletter when it arrives in their Inbox).

Last week I had 119 subscribers. I also wrote last week that I would be trying a number of different promotion tactics. In the end, I only tried a single tactic, the ads. I realised that trying multiple tactics at the same time would conflate results

To avoid this I refrained from any other promotion, apart from a few regular tweets.

Sadly, the ads have not been effective. I've spent about $150 US Dollars for an extra 14 subscribers - yikes! My click-through rate (the proportion of clicks to views) is 0.03pc, which is pretty miserable. I'm going to declare this a failure. Now I could start attempting to refine the ad copy and targeting, but I would need a 500pc improvement to get to my target of 500 subscribers on January 1, 2018. That's unfeasible.

I'm going to focus on personalised emails for next week - again just using a single tactic to avoid conflation.

The third decision was complementary to the second: not to build a software prototype, at first.

Instead I have focused on talking to as many people as possible in the industry, and refining my pitch.

I'm still in the process of doing this, so have not collected the information into a structured form. I hereby decide that the time is now ripe to do so, and will report back on my customer discovery efforts in future columns.

A software prototype will have to be built. There has to be a real product to make this business work.

My plan has been to spend the first three months of the business validating the idea and working out the business model.

At this point we are about 10 weeks in (you have only been exposed to the last five weeks), so software development is due shortly. We'll leave all that to later columns too.

A fourth decision that I have not discussed yet is the decision to set up a little event management agency.

Yes, you read that right. We are also in the business of running technology meetup groups, and other events for technical types.

We run the Dublin Microservices meetup, and will soon be helping to launch the Cork Artificial Intelligence meetup. Tech meetups are small gatherings of between 50 to 100 tech enthusiasts who meet once a month in the evening to hear two or three speakers give presentations about the topic of the group.

You can find all the meetups on Meetups are a fantastic way to connect with your community and I could not recommend them highly enough.

So what business does a Software-as-a-Service startup have running events? Because we need to "eat our own dog food". Eating your own dog food means using your own product to solve the same problems your customers have.

It means experiencing the same growing pains with bugs, poor performance, and lack of features. It is one of the most powerful strategies you can adopt. You know your customer intimately, because you are your own customer.

I am a conference speaker, and a meetup organiser, and a conference sponsor and exhibitor. Although it is these experiences that have inspired me to build a startup, and although I continue to do these things, I still do not trust myself to really understand my customers, unless I am one of them.

Why this decision? Why this brand of dog food? Many of the metsitaba staff at present are focused on the event agency business. And it's currently running at a loss.

Consider the cost of building the wrong product, or even just the wrong features.

One almost universal characteristic of a startup is that you have a limited amount of time to make the business work. If you can't, you run out of money, and it's game over.

Time is so precious, and resources are so limited, that you must deploy them efficiently to have any chance. I have learnt through hard experience that it is very easy to build large and complex software products that nobody wants.

It is the natural tendency of any technical team, and you have to fight it, hard. Getting equivalently high-quality insights directly from customers is difficult. People are often focused on special cases that won't generalise well. Or they like you, as a company, and a person, so they tell you pleasant little lies. Or they ask for things they end up not using, because while they know what they want, they don't know what they need.

Des Traynor, one of the co-founders of Intercom, has blogged and spoken extensively about the need to literally say "no" to all new features.

Every feature is like an iceberg, and has many hidden costs. Features burn up your money much faster than employees. Sometimes, just sometimes, you can justify a new feature, but it must be hard work for the advocate of the feature.

Running my own event agency short-circuits these pitfalls. We get good information because we are experiencing pain ourselves. We can justify a feature because it will stop the bleed of money on the costs of event organisation. Our technical team gets a reality check because they have to answer directly to their own colleagues.

My decision to run events is based on the belief that this will generate a virtuous feedback loop, and make the eventual product much better. This is a pretty big bet, and it will be one of the key assumptions to watch as metsitaba progresses.

Richard Rodger is the founder of Metsitaba. He is a former co-founder of Nearform, a technology consultancy firm based in Waterford

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