Startup Advice from Patrick McKenzie

Disclaimer: This content was originally edited and aggregated from a Q&A on betalist. It was strewn out over disqus comments and I thought it would be easier to read it inline like this. It can also be tricky to read disqus comments on mobiles or with ad blockers. Subsequent to writing this article, betalist made the content available via a PDF.  The content is copyright of the respective authors including Patrick McKenzie (patio11) and betalist. A huge thanks goes to Patrick McKenzie for his incredibly insightful advice.

How to Start

  • Remember, everybody starts with (roughly) nothing.
  • The best way to get from nothing to something is not continuing doing nothing.
  • “Hope for the best” is not a strategy

How to Get Your Content Marketed with Zero Followers/Exposure

Question via enq: When starting from scratch – having no followers, no mailing list and so on – what would you recommend doing to build these? Just create a blog, write some quality content and hope the best? Or what’s the best way to build trust, authority a mailing list and market a product in the beginning?

After having created something which is genuinely worthwhile, go to the people who already have the audience you want, tell them you’ve created something worthwhile (for reasons X, Y, and Z), and offer to do more stuff specifically on their behalf if they will in turn recommend your worthwhile things to their audience (who will love them, and by extension your gatekeeper, because X, Y, and Z).

How to Find a Pain Point

Question via John Wang: I have trouble coming up with good ideas. How can I discover a pain point like

Talk to people who have businesses and ask what their two most pressing problems are. Repeat this exercise as often as possible. Ideally, focus on businesses which you like, which are adjacent to areas you’re already knowledgeable about, and which have money to spend on making problems go away. (e.g. piano teachers probably don’t, insurance agents probably do.)

Advice for Consultants

Question via mdlane: Besides “charge more”, what’s the best piece of advice you could give to someone just starting out as a consultant?

For newbie consultants: prefer engagements which give you something which you can keep in addition to the paycheck. This could mean public testimonials, public case studies, or work whose particulars you can point to.

Question via Jason Bishop: I am aware that you pursue consultation business leads by attending things like conferences and trade shows. Do you recommend this approach to other consultants, and if so, how do you identify and engage these potential clients? How do you pursue and follow-up with them? In general, what does this lifecycle look like? Do you have any specific tips to someone like myself who is interested in making these sorts of relationships for his small business but is not particularly extroverted?

Attending target-rich environments (or creating them, in the absence of events in your space already) is a great customer/lead acquisition strategy for consultants in a wide variety of niches. How do I identify clients? Well, if I’m at an event, I’m there to have as many interesting conversations as possible.

For example, if this were a conference and you and I were having an interesting conversation about the software business, I would naturally at some point ask what you do. And if you mentioned that you ran marketing or product at a B2B SaaS company with 10 employees or $X0 million in sales, that would ping my radar pretty hard. At some point, I would ask what your main problems at the moment were. You’d tell me customer acquisition. I would give you advice for customer acquisition. Prior to exiting the interesting conversation, I’d tell you that we had had an interesting conversation, and ask to get your contact details to continue it in a more relaxed fashion later. Then back to the circuit.

Getting Your First Customer

Question via marckohlbrugge: If an early-stage startup hasn’t done anything in terms of conversion optimization yet, what would you recommend? What metrics should they start tracking, and what are some common quick wins most startups can implement? What about pre-launch startups?

If you’re so early stage that you don’t have a single customer yet, STOP. You don’t need numbers, you need customer #1. Recruit them by pressing the flesh, working your networks, selling door-to-door, or what have you.

Have less than 10 customers? Same answer. If you can’t find 10 customers you run the (substantial) risk of rat-holing in a numbers game while chasing a product that doesn’t solve a painful enough problem to convince people to actually buy it.

Add an email opt-in in return for some incentive. It is much easier to convert people who are reading your emails on a once-a-week basis than to convert people who are cold leads. It is also easier to sell someone on giving an email address than insta-sell them on changing part of their business life to adopt your solution.

Your first few clients will almost invariably be someone known to you through your pre-existing career. Reach out to past employers, friends who’ve moved on to new jobs, etc, and say that you’ve hung out your shingle recently and would appreciate them recommending you to any $YOUR_SPECIALTY_HERE projects they’re currently aware of.

Got no friends/professional history? In that case, you go to a target-rich environment, like any sort of meeting of business owners in your community, and bring them something which is useful. For example, a presentation on how to $USE_ANY_TECHNOLOGY_TOPIC to $ACHIEVE_ANY_BUSINESS_GOAL. It really isn’t hard to be much, much better at tech than your average business owner. People will come up to you after the presentation and say “Wow! I didn’t know that was possible with email / web sites / mobile apps! Say, how would you do it if you were me?” Take them out to coffee, sketch out the plan, then put a price tag on it.

Thoughts on Good Design

Question via mdlane: What are your thoughts about the place of good design in conversion optimization, marketing, etc.?

Good design can often be an asset. Many designers assume that it is necessarily an asset. This is unfortunately not the case. Sometimes things which are very unfashionable to designers work like absolute gangbusters.

Deciding on Product Features

  1. Ask customers what their top problems are
  2. Assert the existence of a product which would solve that problem
  3. Ask them if it is worth some number that you picked
  4. If they express interest, ask if they’d commit to buying it at that price if you delivered it

Question via Shawn: Can you recommend a way to find what features or aspects of your product customers will pay for, and how much?

People will frequently underestimate what they would pay if you ask them to pick the number. “Yeah, uh, I’d pay $20 for that.” That’s useless feedback. He probably won’t pay $20. You’d much rather hear “You know what is killing me right now? I’m so swamped with customer support that I had to decline a $X00,000 RFQ yesterday because I am just too busy this month to answer it! Eff my life!” (Parts of this story are true of my own recent experience.) If someone credibly promised a solution to my customer support problem and said “… And that is going to cost you $5,000”, I’m going to just compare $5,000 to “I turned down Y% chance of winning $X00,000 in revenue because of this problem. This fixes that problem? I can multiply, thanks. Where do I send the check?”

It’s much better to get something in front of customers and be able to hear (and measure) what works and what doesn’t, fixing the sucky bits as you go, than it is to develop in a vacuum and hope you guess the shape of the future correctly. Very few people do that.

SaaS Metrics

  • Leads per Month
  • Conversion from Lead to Paying Customer
  • Average Price Per Month
  • Churn Rate

Question via mdlane: What do you think are the most important business metrics a SaaS product should be tracking/calculating regularly?

Assuming a B2B SaaS product which is not funded, there’s basically only four numbers you need to worry about: number of leads per month, conversion from lead to paying customer, average price per month, churn rate. Graph and review them weekly. Your definition of a lead might be “website visitor” or “person we can talk to in a sales process” depending on what you are selling. You can drill into these metrics a bit, for example constructing funnels to track where EXACTLY someone falls out, but these will be the numbers you look at over and over again.

From a business perspective “monthly recurring revenue” is obviously pretty darn important, too, but changes in that number are ENTIRELY predictable if you know the big four.

As for tactics, assuming you’re at 3,000 plus visitors a month, A/B testing is quick to implement. If not, focus on traffic acquisition.

How to Keep Motivated

Question via cathodion: Hey Patrick, back in your salaryman days, how did you find the energy or motivation to keep working on your business when you were working insane hours at the day job?

The thought which kept me going on a few hundred nights and Saturdays: I have worked 70 hours this week for a giant megacorp. As of this instant, none of that work matters. I will get to keep absolutely none of it. After I have separated from this megacorp, nobody will remember it. Now I have a choice with my one hour: do I watch television, and end the week with nothing, or do I spend one hour on my business, and end the week with something?

End the week with something. If you make a habit of this, you can crawl out of virtually anything.

Marketing Suggestions

  • SEO for generic keywords
  • Happy clients refer their friends who also own/run businesses
  • Lifecycle email

Question via Rachel: How would you handle high churn for a SaaS in the marketing space that people love to use, but only need for a certain period of time?

In general, I’d suggest building something that people want substantially all of the time rather than for just brief chunks of the time. If you put a gun to my head and say “This is the use pattern in our industry, and we can’t change products. Deal with it.”, figure out a way to plug into their internal decision making processes such that you know before they do that they’re going to need it again, and get in touch with them proactively about making that happen. i.e. Email re-engagement.

Also, I’d strongly consider some sort of pricing model where you get people to pay annually or whatnot — “Look, you know you’re going to need this again on another project, so why go through the start/stop hassle when you can have it around when you need it without needing to beg your boss for the credit card again.”

Email Marketing Thoughts

Question via Espree Devora: How often do you suggest sending an email to your subscriber list and is there a particular length you would recommend not exceeding?

I generally advise people that if you’re sending less than once a month, you’re probably not writing enough to make a meaningful impact on your business or keep yourself on your customers’ minds. I generally shoot for “every week to two weeks.” In very busy portions of my editorial calendar or for very focused audiences that you’ve attracted for a particular mission (for the customer!), you can get away with 2 to 3 times a week for short periods.

Many email marketers suggest “short and easily consumable” for message lengths. Personally, when I write, far and away my best writing is in essay form, and they’re rarely below 4,000 words. I apologized for writing a quick note once and it came in at about 2,500 words. This length turns off a lot of people — they tell me so. That’s fine — there are plenty of people who will write 50 word blurbs, and people are free to join their lists. The folks who get on and stay on my list stay because they LIKE when I dig into a topic at its natural length.

Question via Chris Duell: What are your top 3 tips for startup entrepreneurs trying to bootstrap their marketing / PR

  1. Make personal connections with journalists
  2. Pitch basically pre-written stories which insert yourself into something that they already want to write about.
  3. Make connections

What’s one local place you could go where business owners or people with hiring authority hang out? What’s one thing you can teach them which will make their businesses better? Execute on that once. Now you don’t have no connections. Continue executing and refining on it.

Suggestions on SEO

Question via Rachel: When it comes to marketing for Appointment Reminder, what have you found to be your biggest generator of business? SEO, content marketing, cold calling, cold emailing, etc?

You generally want a mix of pillar content to get links and build authority plus filler content which attempts to rank for your money keywords. If you’re starting from zero, build pillar not filler. You can always backfill with 500 word posts designed to rank for a single term later.

By the way, a sufficiently credible blog is valuable even if its SEO sucks. My blog gets virtually no traffic for any keyword other than brand keywords for me. It’s still hugely worthwhile to my business.

Reducing Abandonment/ Increasing Conversion/h4>

  • Add Risk Reducers
  • Reduce Negative Surprises
  • Offer Free-Shipping
  • Abandonment Emails

Question via nick: If i’m noticing a high abandonment rate, what methods would you use to test to plug those gaps in order to get some of those conversions back? We all know the emailing letting people know they left stuff in their carts, but is there more effective ways of getting them to convert or is it just a blind email and pray?

One of the most successful general ideas in reducing abandonment is adding risk reducers and reducing negative surprises people have when they get to the later phases of the checkout process. One negative surprise is high shipping charges, which is why almost all e-commerce sites try to offer some variant of a free shipping deal.

Also, if you have their addresses when they’re abandoning, go ahead and drop them 10 or 20 a personal email from the CEO saying “Howdy. I am the CEO and noticed you were about to purchase something yesterday, but didn’t. I don’t want your money if it wasn’t right for you, but I’d love to talk to you for five minutes and figure out why it wasn’t. This would really help our small business better serve our customers. I’d be happy to send you a $20 Amazon gift card for your trouble.”