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Foreword
When I first had the idea for Baremetrics in October 2013, I couldnt have
imagined Id have a team of seven spread out across the world making our
way to over a $1 million in revenue barely 18 months later.
What started as a little tool to scratch my own itch turned in to something
much bigger and much more impactful than I could have planned.
Weve had some successes (and even more failures) over that time and
have tried to document as much of it as we could. Thats what this book isa
collection of lessons on the success and failures weve had and how they
can apply to you and your business.
Its been an amazing journey so far and I hope the lessons weve learned
will help you as you figure things out.
Just remember: everybody is winging it.

Josh Pigford
Founder of Baremetrics

All the Things!


Chapter 1: The Early Days
How Hacker News generated $1,500 in Monthly Recurring Revenue..6
How to have an overnight success in 10 short years.9
Idea to $5,000/mo in recurring revenue in 5 months..14
How we got our first 100 customers.21

Chapter 2: Your Customers


Customer satisfaction scores are a waste of time.30
The 17 emails we send to engage customers and reduce churn33
How to fully automate customer feedback..43
How to use customer feedback to drive your business.50
How we increased customer loyalty by 125% in 6 hours56

Chapter 3: Managing a Team


Maker to manager: what a startup founder does65
The startup guide to 1-on-1s....71
How I hired a team of 6 without having a clue what I was doing.77
The fallacy of motivation83
The startup guide to hiring a remote customer support rep86
Lessons learned building & managing a remote team100
How to pull off a startup retreat.106
How to organize the chaos of running a startup.116
How to be customer support employee #1.124

Chapter 4: Know Your Metrics


The Holy SaaS Grail: Monthly Recurring Revenue..132
The secrets of LTV..135
Slaying the churn beast.138
Looking at metrics in a healthy way143

Chapter 5: Money, money, money


Why we spent $250,000 in 120 days (and the mistakes we made)146
The startup guide to finding & measuring product/market fit152
How retargeting gets our SaaS $650 for $6.161
Why an unlimited plan is toxic for your SaaS167
4 signs your SaaS business is dying.170
Double your customer value: 7 ways to reduce SaaS churn.175
Build vs. buy: how to blow $100,000 saving money..180
How to deal with competition (or not)..187

Chapter 6: Growth
How we grew from $0 to $25,000/month in 12 months192
Bootstrapped to funded: What's it like?.199
3 things we did to reduce churn by 68%206
How we scored Baremetrics.com for $616.21

Chapter 1
The Early Days

How Hacker News generated


$1,500 in Monthly Recurring
Revenue

And couple of months ago Baremetrics had an absurd amount of


growth, adding $5,000 in new monthly recurring revenue (MRR)
for a revenue increase of nearly 80%. $1,500 of that came from
Hacker Newswhich may be the surprise of the century for me.
I mentioned briefly how the content we started publishing in April was a
major reason for all the new recurring revenue. Now Im going to take a look
at how one specific piece of content that month played such a huge role.

The Hacker News timeline


On the morning of April 3, I posted How Retargeting Gets Our SaaS $650
for $6, which takes a look at how weve been using ad retargeting to
convert visitors to paying customers.

Shortly there after, the article was posted to Hacker News and roughly 15
minutes later was on the front page.
In the 48 hours after the post was made, we added over $1,200 in new MRR
and a few hundred more over the next couple of weeks.

That articles continues to drive new traffic and revenue regularly.


But why? Why did this post resonate so well with a crowd thats notoriously
cynical about everything and rarely converts to actual paying customers?

Why Hacker News converted


Anyone whos ever had anything on the front page of Hacker News will
likely tell you that, with the exception of an influx of traffic, it has no
noticeable impact on business. So what made this instance so different?
I think it has to do with the article focusing on businesses and people that
actually have money.
Most startup/entrepreneurial content on Hacker News revolves around
doing things any startup can take a stab at regardless of the stage of their
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business. Heck, most people on Hackers News dont even have an actual
business. Theyre in some mystical stealth phase that theyll likely never get
out of.
But this particular article was useless to those people. They cant possibly
relate to or even have an opinion on ad retargeting because to do
retargeting you have to have money in the bank to spend.
And thats the kicker here.
The subject matter of the post drove businesses with real money to our site.
Which was perfect because businesses with real money pay for solutions to
real problems.
Its not that Hacker News doesnt have any legitimate business owners that
can convert to paying customers, its that most of the content that gets
posted there targets the wrong peoplethe early stage startups and
wantrepreneurs with no money who argue about inconsequential things
while the real business owners are out building real businesses.

Write for real businesses with real money


There are all sorts of reasons for writing and not everything you write needs
to have the goal of converting people to paying customers. But writing
without some specific goal can also be a waste of your time, and early on in
your business, the last thing you want to do is waste time.
If Hacker News is part of your content marketing (eeewwww) game plan,
then you should be intentional about it. Write and focus on providing value
for people who actually have money to spend. And no, anyone who says
theyre doing anything in stealth does not have money.

How to have an overnight success


in 10 short years

Overnight success is a phrase people love to throw around. Its


the pipe dream every inexperienced entrepreneur hopes for and
thinks will come to them. That same phrase has been tacked on to
the Baremetrics story, and I need to clear the air. There was no
overnightthis was 10 years in the making.
I started building random stuff for the web in the 90s as a kid in high school.
AOL was the Internet. Geocities was my playground.
I got my first taste of business by designing websites for bands, but quickly
realized trading my time for money wasnt terribly efficient so I started
poking around at building my own stuff.
Back in the 90s and early 00s, ad revenue was where the party was at.
Sweet goodness was it ever easy to make money from ads. The glory days. I
decided to build a few sites to try and cash in on this, which resulted in
Internet gems like ReallyFunArcade, ReallyDumbStuff and TutorialOutpost.
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Building those sites showed me there were other ways to make money and I
was hooked.

From toy store to business metrics?


The bulk of learning and building all these things happened while I was in
college. I wasnt out partyingI was holed in my dorm room building stuff
until 3AM.
During these years in college, I happened to develop a bit of an obsession
with urban vinyl toys. Yes, grown folks can and do collect toys.
So, how does my obsession with Dunnys lead to building a business metrics
tool? Does this really tie in to Baremetrics somehow? It very much does. In
fact, Baremetrics would not exist today had I not started collecting urban
vinyl toys a decade ago.
Heres how the dots connect.

The land of toys, package tracking,


surveys and metrics
While I was becoming an avid toy collector, I was still building things for the
web and learning all the different ways you could make money online.
I decided to try my hand at ecommerce with a toy store, called Fugitive Toys.
At this point, I was a newlywed living in a 2-bedroom apartment. My wife and
I literally had toys stacked up to the ceiling in our bedroom.
The toy store was moderately successful (for a small boutique business, at
least) and so we were constantly getting in new shipments of toys from all
over the world. I needed to keep track of where all these packages were
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and when they were coming in, so I decide to build a little internal tool to do
just that.
It stayed internal for a while but then I decided to throw it out there and see
what happened. It was called TrackThePack and you could track packages
from dozens of different carriers all in one place. It even had some jazzy
features like forwarding shipment confirmation emails where wed parse out
the tracking number and add it to your account. I even got to dabble in the
madness that is the App Store with a pretty solid iOS app.
Then, one day, I got an email from David Hauser. Hes a bit of a serial
entrepreneur (co-founder of Grasshopper, among tons of other things). He
was starting up a new business that relied heavily on tracking packages and
I had kind of become the guy for doing that.
I did some consulting for them and then that led to another thing he and his
Grasshopper co-founder were starting up called PopSurvey. They wanted to
re-invent the way online surveys were built and taken and wanted me to be
a part of that.
I eventually assumed the CEO role. We continued building PopSurvey and
eventually Temper and focused on those for a couple of years.
Then, in October of last year I found myself frustrated with the tools
available for SaaS products when it came to finding and understanding
metrics. Things like MRR, LTV and Churn were such a hassle to calculate
and stay on top of.
So I found myself again building an internal tool. This internal tool, one
month later, turned in to Baremetrics.

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And thats how collectible toys led to a business metrics tool.

Stepping stones
I give the story of how all these previous businesses tie in because this idea
of an overnight success is just not reality. It took a decade of shipping
things to finally land on something that had real traction. And I didnt even
mention the dozen other businesses and products I shipped and killed that
werent part of that line of stepping stones.
Baremetrics is not an overnight success. It was 10 years in the making.
My friend Startup L. Jackson says it well: Most successful startups are
overnight successes. That night is usually somewhere between day 1000
and day 3500.

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How you too can have a not overnight


success!
So how does this apply to you? Why should you care?
Nearly every day I get emails and tweets from people asking how to come
up with a new business, how to validate business ideas or how to find
paying customers. But theyre going about it wrong. Theyre overthinking it.
If you want to be an entrepreneur, the key is not to think, its to do.
Stop researching and start building. Fail fast and frequently. I know thats
become clich, but its vital. In the same way you cant learn to ride a bike
until you go out and get on the freaking bike, you cant learn how to identify
and solve real business pains until youve gone out and identified and
solved real business pains.
It simply takes practice. And in most cases it will take years of it. Dont put
up another landing page. Dont build any more hype around your nonexistent product to try and gauge validity. Start building. Start actually
solving problems.
Its risky. But thats entrepreneurship. You cannot and should not spend your
time mitigating risk. Instead, get comfortable with failing and do it often.

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Idea to $5,000/mo in recurring


revenue in 5 months
Baremetrics has grown faster than anything Ive ever built before,
both from a user/usage standpoint and (most importantly) from a
revenue stand point.
I was able to go from initial idea to over $5,000/month in recurring revenue
in exactly 5 months. So, for both posterity and usefulness sake, Ill walk you
through a few things I learned through that process.

Brief History
Baremetrics was birthed out of my frustrations with the other solutions out
there.
Nothing ever worked quite right. They all required a lot of dev work to hook
up correctly, and I didnt trust myself that I was actually sending over all the
data those tools needed to give me the metrics I wanted.
Plus, digging in to each metric was borderline impossible.
Id been using Stripe for a couple of years on two other products and so
knowing Stripe had all this data (really, just about everything Id need to
calculate what I wanted), it made it a no-brainer to just build a tool that
crunched all the numbers from there.
And so it began

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Idea to $5k Timeline


October 14: Initial idea. Sitting in front of my computer smashing my head on
the desk in frustration, I vowed to build this.
November 14: Boom. Launched.
Monthly Recurring Revenue (MRR) growth, played out like this

Month 1: $0. Building the thing like a mad man. Not available publicly yet.
Month 2: $1,000. This is the first month Baremetrics is out in the wild. I
charged from day one (and you should toomore on that in a bit).
Month 3: $1,650. Learning more and more about how people want to use
Baremetrics and slowly but surely growing.
Month 4: $3,200. Well, well, well. What do we have here? Doubled MRR!
Thats what! Ill cover how I did that later in the article.
Month 5: $5,300. I crossed my personal goal of $5,000/mo in 5 months to
the day.
Month 6: $8,300. This is basically where were at today.

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5 Takeaways
Lets jump in to a few takeaways/tips/methods that you may find useful in
your journey towards making bucket loads of cash.

1. Build what you need, not what you think others need
We could debate in to the ground whether you should scratch your own itch.
Me personally? I think scratching your itch is a fantastic start.
Does it guarantee success? Heck no. But scratching your own itch gives you
a leg up on people who are just picking things out of thin air based on their
perception of problems in markets they have no experience in.
At the very least, youre able to learn faster if a product is a good idea
because youre able to talk to more customers more quickly and can relate
to them more readily.
Worst case? Youve solved your own problem.

2. Charge from day one


Youve undoubtably read a slew of articles on how to validate your business
or product. Unfortunately, all of those validation methods are bogus.
There is only one type of validation, when building a sustainable business:
money.
No money? No validation.
1,000 people on your mailing list is not validation. 1,000 people on your free
plan is not validation. 100,000 Twitter followers is not validation.
Money is validation.
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And what you need as a business in its earliest stages is validation.


Otherwise you risk wasting colossal amounts of time doing something
people potentially have no interest in.
Many of us have a psychological barrier to asking people to pay us. Were
afraid theyll tell us no or that its not worth what were wanting to charge,
but finding that out if they will pay you is absolutely vital.

3. Stop trying to attain the perfect product

That Reid Hoffman quotemoney. Literally will print money for you early on
if you take it to heart.
No one will remember how polished your product was/wasnt when you first
launch (hardly anyone will even know you launched). Theyll only remember
if your product created value for them.

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Going back to the previous pointyou need validation for your business. By
shipping as fast as possible youre able to find out as soon as possible how
to best serve your market.
The first version of Baremetrics was rather lacking

Half the metrics


No custom date ranges
Only went 6 months back
No deep-diving in to the data
Updated once per day (if that)
But guess what? The first $2000 in recurring revenue came from that
version.
Launching with that raw version let me get it shipped it a month and
immediately get feedback from paying customers. It bought me time to
learn what Baremetrics needed to do outside of the scratching my own
itch phase.
The feedback was actually worth something. The only feedback I listened to
was that from people who were actually paying me. They had a vested
interest in seeing Baremetrics succeed and so their input was legitimately
valuable.
So, 2 months after being live for everyone to useI scrapped everything and
rebuilt.
Literally started over. New Rails project. New app in Heroku. New design.
New frontend code. New everything. All based on feedback I received from
paying customers.

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And the result? I doubled my MRR in a matter of a couple of weeks.


I created more value and in turn, made more money.

4. Ship fast, ship frequently


The first version of Baremetrics was built in about 8 days. But that was
spread across 30 days of juggling client work, two other SaaS products and
10 days of international travel with no access to really even think about
Baremetrics.
So, you have no excuse for taking months upon months (or even years) to
ship. Youre procrastinating. Youre giving in to the Resistance.
But even after you get your initial product out the door, you keep shipping
features fast and frequently.
Ship basic, MVP-versions of features to find out how (or even if) users want
to use that feature and then iterate on top of it.

5. Price for the customers you want


A $9/mo customer is an entirely different customer than a $99/mo
customer. Theyre a different sales process, theyll use your product
differently and, more importantly, theyll have drastically different support
loads.
That $9 customer will likely make up the large majority of your support
requests. Theyll demand the most. Theyll nag you the most. And theyre
the most likely to jump ship when a competitor comes out with something
similar and charges $8 for it.
You dont want to build a business on customers who will spend more at
McDonalds for lunch than they do on a product that creates value for them.
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You want customers who arent price conscious. That $99 customer is
happy to fork over the cash because theyre mature enough to know that
anything that saves time/money or creates value is worth paying for.
Theyll also be exponentially more loyal. They dont waste their time looking
for things that are marginally betterthey pay for what works the most and
then they get back to building their business.
As a general rule, if the businesses youre targeting dont charge much
money, dont expect to make much money from them.

There we have it
So, there you have it. Some takeaways and methods I used to get
Baremetrics out the door and making money.
As usual, you can always spy on how were doing at our live demo, which
uses our actual numbers.

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How we got our first 100 customers

How do you go from no one on earth knows I exist to dozens of


people I dont know are now giving me a chunk of change on a
monthly basis? Thats the ultimate question, right? Because
answering that is how you start a business. Its a major milestone
for anyone because its a hard one to get to. After that you start
getting a bit of a snowball effect and it self-perpetuates.
However, generating a snowball effect is hard when theres no snow.
So, lets take a look at how Baremetrics (one-click, zero setup SaaS
analytics for Stripe) got its first 100 customers over the course of about 4
months.

What I didnt do
Typical wisdom tells you that you need to build hype and generate buzz.
Start a blog! Collect email addresses! Build a landing page and people
magically drop in their email address! Have a private beta! Give out free

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accounts! Give out coupons! Invite influencers to try your product! Send out
press releases!
I did (and have done) none of those things to grow Baremetrics.
Do some of those things work? Sure. They have the potential to work. You
also have the potential to win the lottery.
I like better odds than the lottery, so I chose not to go those routes. Given
most startups fail, conventional wisdom sounds like a pretty bad path to
follow.

An unlikely, but in hindsight totally


obvious, hero
So, what was the magic pill? How did I make it snow so I could start my
proverbial snowball?
Im going to tell you, but youve gotta promise to hang with me to see this
through. The why is actually more important than the what.
My secret weapon, and source for the large majority of Baremetrics first
customers, was Twitter.
/gasp
I know. Weird. Its even more weird considering Baremetrics has no free
plan, no free trial and the average customer pays nearly $70/mo. Why on
earth would 140-character blobs of text drive dozens of new customers to
spend thousands of dollars in recurring charges?
Since launch, Baremetrics has been shared/mentioned literally thousands of
times (rough estimate is around 4,000 tweets over the past 6 months). But
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why has that driven new customers and, more importantly, new
revenue?!?!
Well, I think theres an explanation. And lucky for you, it has nothing to do
with the number of Twitter followers you or I have.
Twitter is the whatnow, heres the why (and its what you promised to
hang with me for).

The key isnt in the medium or the mode,


but the solution
Itd be great if this was a simple 12 Steps to Make Twitter Print Money post,
but alas, that junk doesnt exist in the real world.
Twitter was the medium, and the real mode was word-of-mouth. But what
drove the word-of-mouth? Why have thousands of people felt compelled to
share a business tool in a relatively small niche (SaaS businesses using
Stripe)?
One word: pain.
Pain, on some level, plays a part in nearly every business decision you
make. Seriously. Look at any B2B product thats been builtever. Its almost
always been birthed out of the need to get rid of a painful process.
The reason is, pain is inefficient. We avoid it at all costs. But in reality, that
painful process is also usually pretty necessary to the health of the business.
Solving a major pain for any business means direct access to their pocket
book.

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How we specifically solved the pain


problem
People were spending hours every week manually calculating these metrics
in spreadsheets or they were wasting their time hacking together their own
half-done solutions with the Stripe API and still not getting all that they
wanted. But these metrics are critical to their business, so the instant a
solution showed up that saved them hours of time, they jumped at it. And
then told all of their entrepreneurial pals.
What made this particular solution conducive to sharing (and what grew our
customer base completely by word-of-mouth) was the immediacy of the
solution.
Baremetrics has no setup process. No settings to fiddle with. No code to
integrate with your app. You click one button and you get a dashboard full
of meaningful metrics (those are our actual metrics, FYI).
You dont have to wait for events to roll in so you have data to calculate days
or months later. You instantly gain insight in to your entire history with
Stripeinsight that many of our customers have never seen before in any
capacity.
That has an intense wow reaction.

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Those are all Baremetrics customers who, with no prompting, posted about
Baremetrics shortly after signing up.
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So what does this mean for you?


Okay, okay. Youve persevered through my soapbox about solving painful
problems for businesses. But what does this mean for you? Is there
something you can do today? Right now?
The quickest way to make this happen, that requires the least amount of
work, is changing your messaging. The way you position your product.
Make it directly address the pain your potential customers are having and
make the choice to use you so obvious, they cant deny it. Because
remember, when people have a huge pain solved, they talk about it. They
want to help other people get rid of that pain.

A shift in your business


Long term, this is a core-business issue. If your product is just nice to have,
youll perpetually struggle to get customers. And getting customers at any
price-point higher than ~$20 will be borderline impossible.
At the core of your business, you need to do at least one of the following in
a major way:

Save time
Save money
Create value (i.e. print money)
Baremetrics does all three. We save businesses the time of manually
entering data in their spreadsheets, we save them money from having to
develop their own solution and we create value by giving them financial
insight in to their business that they didnt have before.

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The combination of doing all three is whats a big win for us and why getting
those first customers (at a premium price point) was relatively easy and
done all via word-of-mouth.

Proving the pain


How did I know Baremetrics would solve a major pain? Or more applicably,
how can you know if your product solves a major pain?
The most efficient way Ive found is talking to real, live humans. Not
blogging. Not tweeting. Not shooting a mass email out to a list asking what
problem they want solved.
Have a real conversation, on the phone, to other people in the industry
youre in and figuring out what they hate about running their business.
Figure out what they spend time doing that could be automated. Figure out
what type of things theyd like to learn more about when it comes to their
customers or their own business.
Then, you launch something as quick as humanly possible. Baremetrics
was built in 8 days and the first $2,000 in monthly recurring revenue came
from that.
You then iterate based on the feedback you get from paying customers.
Cant get anyone to pay? Its possible you havent solved a legitimate pain.
Money is the only validation at this stage.
Once youve got some paying customers, you can start iterating on the pain
point and expand from there.
I scrapped the entire first version of Baremetrics and started over 2
months after I launched. The new version provided much more value and I

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was able to do build the right tool based on the feedback I received from
paying customers.
Within a month of launching that next version, I doubled recurring revenue.
Baremetrics solved an even bigger pain at that point.
For your business, maybe youve got a few paying customers. Maybe
feedback overall is generally positive. But things are moving slow. What can
you do?
Youve got to get to the root of the pain. Maybe youre partially solving their
pain, so what can you do to fully solve it? If youre automating something for
them, maybe you havent completely automated it and so theyre using you
to save a little bit of time when in reality you could be saving them a lot of
time.
You have to dig. You have to get on the phone and talk to your customers
(current and potential).
Thats the hard part and its why most businesses fail. They assume. Making
assumptions about business pain is like a surgeon assuming which limb
needs to be amputated. The wrong assumption will have a detrimental
outcome.

What are you going to do today?


So put this to action. What are you going to do today to reduce pain for your
customers? What can you change about your business in the long run to
make pain reduction a core focus?

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Chapter 2
Your Customers

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Customer satisfaction scores are a


waste of time

Guest post by Baremetrics Happiness Guy Kaegan

One of the first things I did after joining Baremetrics was get us
setup with Help Scout. As I was working my way through getting it
all setup, I paused when I reached the satisfaction surveys, and
decided not to use it. But why leave behind a oft-used tool in the
customer support tool-belt? Lets see

Customer feedback is essential to building a great product. In fact, it is a key


driver of our roadmap (lots of cool stuff that you guys have been asking for
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is on the way, I promise). But support satisfaction surveys just arent worth it
in the early stages of your business.
1.

Support doesnt exist in a vacuum The moment you start asking,


What do you think of your support experience? is the moment support
becomes separate from the rest of what youre doing. We want support
to be as tightly integrated into the Baremetrics experience as the
product itself.

2. Its kind of awkward Theres something odd about working with


someone, getting to know them, fixing their issue, only to then turn
around and say, How was that? Good, okay, bad? We want to build a
relationship where expressing those sorts of thoughts throughout the
interaction is easy peasy.
3. Theyre made for large teams When managing a large team,
customer satisfaction (or CSAT as its called in the biz) is actually quite
helpful. You can get a sense of how individual folks on your team are
doing and where some coaching might be needed. At Baremetrics, its a
team of oneso theres no need to be able to draw comparisons
between different folks, and thats generally the case until you get in the
5+ range of support reps.
4. How do you action it, exactly? A :thumbsup: or :thumbsdown: is a nice
pat on the back (or kick in the pants) but what can you actually do with
it? Comments are incredibly helpful, but a simple yay or nay doesnt tell
you a whole lot. Did we take too long to get a reply? Did development
take too long to fix an issue? Was it something I said? Do I smell bad?
Theres no way to know from a simple smiley click.
5. Theres gotta be a better way Simple ratings are just too ambiguous
and disconnected from the business. In reality, we have a metric thats
amazing at telling how happy people are: user churn. Granted, you
really want to find out if folks are dissatisfied before they decide to

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leave, but thats where NPS comes in (which Ill talk about in more detail
in a moment).
So, just because Im not going to ask people to tell me if Ive done a good,
okay, or bad job doesnt mean Im not interested in feedback. Quite the
opposite, in fact!

Easy, open-ended feedback


Starting today, Ill be including a link at the bottom of support e-mails to a
simple Google Form with two fields: one for e-mail address, and another for
comments. E-mail addresses are optional, so if you want to be anonymous
thats totally fine by me.
If you have something you want to sharekind words, a funny joke, a recipe,
or scathing feedbacktheres now a place to do it. It can be about the
support experience or the company as a whole, we want to hear it all! These
comments will be automagically posted to a dedicated channel in Slack, so
that the rest of our dashing team gets to hear what folks are thinking and
feeling about the product.
Were also gearing up to run another NPS survey shortly. Our customer base
has grown by about 50% since we last did one, and a lot has changed since
then. So its time to put our ear to the ground and get a sense of how folks
are feeling.
To be clear, Im not suggesting you never collect satisfaction scores. It just
doesnt makes sense on a smaller scale. Just as Josh moved from
bootstrapping to accepting funding to accelerate the growth of Baremetrics,
collecting satisfaction scores can make sense at large scale.

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The 17 emails we send to engage


customers, reduce churn & increase
revenue

From the start of Baremetrics Ive wanted to stay away from being
a faceless company. Given were a B2B company, thats relatively
easy. Were not dealing with 10,000 or 100,000 customers here, so
making sure each and every customer gets some sort of
interaction just makes sense.
Keeping in touch with users makes for happier people and ultimately results
in lower churn. But what are some ways to do that?
Heres a breakdown of all the ways we stay in touch with users, including
the exact emails we send in the days, weeks and months after sign up.

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Onboarding
We send out a series of emails in the days after a user signs up. The
purpose of these are to convey the value Baremetrics can provide and
surface features they may not have known about.
We know that if users perform certain tasks, theyre less likely to churn, so
the goal is to funnel them in that direction.
Its worth noting that were constantly tweaking and A/B testing these, and
you should likely do the same. What works for our customers and product
likely wont work as well for yours.

Day 1: Welcome (Founder)


This usually gets sent within an hour or so of sign up. The purpose here is to
instantly give them a connection to someone inside Baremetrics. A lot of
people take me up on the offer for a phone call, which is great.

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Day 2: Welcome (Support)


The purpose of this is to give them another point of contact as well as to
funnel them towards documentation and articles that can help them get
more out of Baremetrics.

Day 3: Team Members


The more of your team that uses Baremetrics, the less likely you are to
churn. The purpose of this email is to help push them towards adding more
team members.

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Day 5: Notifications
Another feature-push email. Notifications make Baremetrics a regular part of
a users daily workflow, so we want as many people as possible to use them.

Day 6: Plans
This email comes from me instead of Kaegan. No particular reason here
other than to mix it up and reiterate that the lines of communication are
always open for both of us.

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Day 8: Non-Stripe Transactions

Day 10: Failed Charges

Day 12: Forecast

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Day 14: Ending


We put a nice tidy bow on the whole cycle of emails letting them know they
wont be receiving any more and to make sure they know they can/should
reach out if they need anything.

Follow Up
We do a series of follow up emails after theyve been using Baremetrics for
a while. Youll notice there are two from me and two from Kaegan.
The ones from me go to the account owner (whos typically also the
business owner), while Kaegans go to the additional users on each account.
We want both the business owner and their entire team to get as much
value as possible out of Baremetrics.

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1 Month Followup (Josh)

1 Month Followup (Keagan)

3 Month Followup (Kaegan)

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Upsells
After a customer has been with us for a few months, we send an email
upselling an annual subscription. This is an example for users on our Startup
plan. Every plan level has a similar email, tweaked with the actual monthly
savings.

40

Cancellations
Early on in your business, the key to dealing with cancellations and
understanding why each one happens. Following a cancellation, I email the
user to try and understand more about what we werent doing well for them,
then I save their response and some pertinent data points in a spreadsheet.

Welcome Tweet

Free Stickers: First week of signup

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Applying these to your business


Now, obviously a lot of these are very much Baremetrics-specific (especially
those feature emails), but the timing and goals of many of these articles can
definitely be put to use for your product.
The purpose here is to increase engagement with not only your product but
also the people behind your product.
The highest-impact of all of these are those welcome emails. I have phone
calls with new customers nearly ever day because of them. Theyre a quick
winno reason you cant start doing them today.
I mentioned earlier that we use Intercom for all of these. Their A/B testing is
fantastic for constantly testing and I highly recommend it.
If you want to learn more about creating emails like these (also known as
lifecycle emails), my buddy Patrick McKenzie has a great video course thats
worth every penny. I purchased it a couple of years ago and it has
significantly influenced the way I interact with new customers.

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How to fully automate customer


feedback

Weve found that NPS surveys are a great way to get actionable
customer feedback at scale. Theyre easy to send, easy for
customers to take, and give a quantifiable data point on how
customer happiness and loyalty is improving (or not).
A few months ago we ran an NPS survey after a bit of a hiatus. Within
minutes, hundreds of responses flooded in, and I spent most of that day and
the next following up, logging responses and sharing those responses with
the team. Assembly line type work. Yuck.
Since then, weve been using Promoter.io, Zapier and Intercom to fully
automate the collection of NPS scores and comments as well as initial
replies to the feedback. Doing this saves a ton of time without
compromising personal touch, leaving you more time to act on that
feedback. Hurrah! Heres how we did it.

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Sending the surveys


Promoter.io has Drip and Throttle features that let you almost fully automate
the continues sending of NPS surveys. Right now we just periodically upload
a list of new customers and then create a new NPS campaign and let
Promoter.ios Drip & Throttle take care of sending it to those customers at
the appropriate time, so we dont over survey them.

Followups
You have to follow up with everyone who gives you a score and or a
comment, or else whats the point of soliciting feedback in the first place?!
But responding to every. single. person gets really draining, especially when
a lot of the responses are quite similar.
When you do get comments along with the NPS scores, the first order of
business is forwarding them to a central place to do the follow-up.

Promoter.io will forward all responses with comments to an e-mail address


choose one that ties into your Help Desk of choice (for us, its Intercom).
But what about folks who dont leave a comment? You need to try to get a
bit more information from them about why they left the score they did. You
can either manually reply to every one of them in Promoter.io or automate it
with Zapier.

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Automating additional feedback


You need to create automatic e-mails to elicit additional feedback from folks
who didnt leave a comment.
Its best to create three separate Zaps with different content for Promoters,
Passives, and Detractors.

Create Your Zap


Create a Zap from Promoter.io to your e-mail provider of choice, and
authenticate both of them. We do this through Gmail, but you could just as
easily do this through Intercom or some other mail-y doodad of your choice.

Configure the Filters

Set your filters so the messages go to the right segment. Above, youre
looking at the filters for Promoters. For Passives and Detractors, change the
NPS Score Type filter to either passive or detractor. Remember, you
need to make three separate zaps.
Fortunately, you can click on the dropdown arrow on this Zap on the main
Zapier dashboard and copy it to create a new one. Woohoo, automated
automation automaception or something.

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Setup the Contact Fields

Make sure this is set to Contacts Email and that the Reply to is set to an
e-mail address that feeds into your Help Desk. Set the other parameters
(CC, BCC, From name, From E-mail) as desired.

Create segment-specific messaging


Next up you need some content for the message depending on whether its
for Promoters, Passives or Detractors.
Here are the messages we send for each feedback type.

Promoter

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Passive

Detractor

Get the scores into a messaging system


Getting the scores in to a messaging system like Intercom or Customer.io
lets you send automated messages to specific segments based on their
score. We use Intercom, but this step should work for any system that has
Zapier integration.
Set up a new Zap from Promoter.io to Intercom, like you did before. Heres
the key bits you want to move over. Each new score you receive in
Promoter.io will be sent to that customers profile in Intercom.

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Now you can do all kinds of cool stuff using those new attributes youve
created!
For example, we created a Beta Team from our Promoters, and Josh
personally follows up with Detractors a few days after the survey result
comes in. Heres Joshs e-mail for Detractors.

Share the feedback with your team


Next step is to share NPS comments with your team!
Like before, create a new Zap, but this time from Promoter.io to Slack. Set
your channel (we have a dedicated #nps channel), a username for the Bot,
and a fun emoji to use as the bots avatar. Heres what the text bit looks like,
as well as what it looks like in Slack.

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Congratulations! Youve now turned a multi-day project into a super easy


task with a few simple-to-setup automations. This is great because youre
likely to run NPS surveys more often, and you can spend more time acting
on the feedback you get rather than parsing through it.

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How to use customer feedback to


drive your business

While customer feedback is crucial to your startup, its also


something most founders have a love/hate relationship with. How
do you decide if feedback is valuable or not? How do you keep
complaints from dragging you down? Where do you draw the line
on letting feedback steer your company?
Well take a look at answers to those questions, along with a story and
announcement about how customer feedback is directly changing a core
part of Baremetrics.

Types of feedback
There are two types of feedback you should be collecting: solicited and
unsolicited.
With solicited feedback, youre actively going out and asking questions of
your customers. Youre sending surveys, emails, and in-app messages. This
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type of feedback happens in more predictable intervals as youre the one


initiating it.
NPS surveys have been the most consistent way for us to get regular
feedback. In addition to those, we send a series of lifecycle emails to
onboard customers (and collect feedback about their experience) as well as
product research messages via Intercoms in-app messaging feature.
Unsolicited feedback is what youll receive most of the time. Its the
random emails, help desk tickets and tweets that come in at completely
erratic times.
Both types of feedback are valuable, but how you collect and take action on
the feedback is even more important.

How to organize feedback


If you just read feedback and never act on it, youve wasted everyones
time. There isnt one right or best way to organize it. The key is to just do
it and do it consistently.
We have two places we organize the feedback we receive.

Asana
We use Asana for project management, but any list-making or project
management tool (Trello, Basecamp, etc.) will do the trick here.
We have a Product Ideas project in Asana that we add items to as
customers (or our team) suggest things. Then, we can add comments to
those items as necessary and prioritize them based on the number of
requests we receive or the business value theyll add.

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Intercom
Intercom is great for understanding the context in which feedback was
given. Was it the result of a bug? Were they frustrated when they sent in the
request? How did we leave the conversation with them?
When doing product research, well tag messages that customers send in,
so its easy to find them all later. We also will tag customers for beta features
so we can automatically message the correct segment of users when we
start beta testing something.

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Many points of feedback in Asana end up linking back to conversations in


Intercom, so theres a decent amount of overlap.

How to decide what feedback is valuable


Youve got all of this feedback, but how do you decide what to do with it?
Between our Product Ideas board, thousands of Intercom messages and
innumerable Twitter conversations, figuring out whats actually important
can be difficult.
Value is a relative term, especially when it comes to new businesses. Your
metrics for success, or what you need to get to the next goal in your
business is highly unique to your stage of business.
While the answer to what is valuable may be relative, the need for
establishing what the next milestone or success metrics you need are not,
as thats how you determine what feedback is valuable. Its easy to let the
vocal minority pull you in the wrong direction, but happens much less
frequently when you know what youre shooting for.
Once youve solidified what the next steps are that your business needs to
take, determining how to value feedback becomes very simple and takes
very little time to decide if you should ignore or give weight to a customers
feedback.
Maybe what you need more than anything is profitability, so doing anything
that delays that is bad feedback. Maybe you need users more than money,
so any feature that slows down signups is likely a bad move. You get the
idea.
Lets take a look at a real world example here

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How we changed Baremetrics based on


feedback
When I built the first version of Baremetrics, my goals were simplistic. I just
wanted simple revenue metrics for the business I was running at the time. It
solved my problems, and then I came to find out it solved problems for quite
a few other businesses as well.
The foundation of nearly all of our metrics came down to two things:
Monthly Recurring Revenue (MRR) and Customers (namely if they were
active or not).
For the past year and half of our existence, we based these metrics on
charges. Internally we called this charge-based MRR. My thinking was
that this was the most accurate way to calculate MRR and decide whether a
customer was active or not. If they paid you, they were active and counted
towards MRR. If they didnt, they were no longer active and did not count
towards MRR. Sounds easy enough, right?
Then as we started growing and hundreds of businesses started using our
platform, we started noticing unusual holes in this method. Failed charges
would cause unexpected dips and spikes. Delays from Stripe with running
the charges wreaked havoc as it was unpredictable about when youd see
charges drop off. And then theres the whole issue of months not having an
equal number of days. February 28 would cram as many as four days of
charges into a single day, showing a big spike in revenue.
There were just so many weird things that would happen because of this
charge based method and the more we talked to customers, the more we
realized it was a major source of distrust. Many were, understandably, wary
of the metrics because they were all over the place with no obvious rhyme
or reason.
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Finally, at our team retreat in January, we started throwing around the idea
of changing the basis of MRR and Customers from charges to
subscriptions.
The more we researched this and the more we tied back the pros as
solutions to the complaints we were seeing from customers, the more it just
made sense. Using this method lets us surface significantly more detailed
and reliable insights, which is ultimately what customers wanted.
So whats the takeaway here? Its crucial to not only listen to customers but
also to understand the motivation for their feedback. Without understanding
the motivation, you could very well build the wrong product.
None of these changes would have happened had we been overly
dogmatic about the path we were on. Listen, understand and take action.

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How we increased customer loyalty


by 125% in 6 hours

Recently, I sent out a Net Promoter Score (NPS) survey to all


Baremetrics users. I was hesitant at first, but it quickly surfaced the
areas where we were really excelling as well as the areas we
needed to improve.
In a previous life, I ran a survey company (which happened to be what I
initially built Baremetrics for since we used Stripe). We had an NPS question
you could add to your surveys and, truth be told, I was never really a fan of
it. That was mostly because we just didnt have the tool setup to properly
run a true NPS survey the right way.
Thankfully, the folks at Promoter.io (who are also Baremetrics customers)
have a product specifically for running a proper NPS survey, and sweet
goodness, when an NPS survey is done correctly, its amazing.
So, lets pick all this apart. First, well take a brief look at what an NPS survey
is, and how we sent ours out. Then, well tackle the juicy bits: what the
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results were for our survey. Well also cover some tips on getting the most
out of sending one yourself.

What is this Net Promoter survey you


speak of?
Net Promoter is a method for measuring the loyalty of your customers
based on a 010 rating. The score you receive after the survey is an
indicator of how likely your customers are to stick around, or how likely they
are to churn in the coming months.
High score = more likely to stay an active customer.
Low score = more likely to churn in the next 6090 days.
The score can range from 100 to +100, and is calculated as % of Promoters
- % of Detractors. Well cover what that means shortly.
The individual score itself isnt terribly important in and of itself, but tracking
the score overtime is a great indicator of the customer loyalty trend which is
quite important.

Promoters, Passives and Detractors! Oh


my!
At the core of Net Promoter are 3 categories of customers based on the 0
10 rating the customer gives you.

Promoters: 9 or 10
Passives: 7 or 8
Detractors: 0 - 6
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Lets look at what each category actually means.

Promoters (910)
These customers are your most loyal. They love the product, they love your
company and theyre more than happy to recommend you to others. Keep
them happy.

Passives (78)
These customers are generally satisfied but may have a small issue or two
that keeps them from really loving your product. This is low-hanging fruit for
you to knock out of the park and turn in to a Promoter.

Detractors (06)
These customers are a major risk. If they stay as detractors theyll likely
churn in the next 3090 days. They need quick attention to resolve the
issues theyre having.

So, what do you do with the responses?


Having some number attached to customer loyalty isnt inherently valuable,
but the opportunity to converse with your customers is.
We followed up with every single rating and either thanked them for their
positive rating (and gave them a way to easily share Baremetrics), or we
asked how we could do better and fix whatever issues they were having.
The ratings are useless without the conversation.

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How we set up and ran our Net Promoter


campaigns
So, how did we set up and run Net Promoter for our customer base?

Sending the survey


We have, roughly, 350 active users. These are people who are currently
paying customers and have logged in to Baremetrics in the past month.
Its important to send the survey out only to current, active users as the
purpose of the survey is to measure loyaltyand I think we can agree that
customers who are no longer active arent exactly the most loyal group of
people for you. :)
We divided up the users into two separate campaigns. The first was mainly
to do a little tire-kicking and make sure there were no issues with the tool
and that people would actually respond.

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Heres what the email survey looked like

First responses
We sent the survey out to the first group on a Tuesday morning. Ratings
started coming in. The first few were greatthen a string of bad ratings
came in, along with feedback on why they werent happy.

The feedback revolved primarily around two things: stability issues and lack
of progress. Both of which weve been working tirelessly to address.

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Our growth has created a lot of stability and performance issues with the
platform and weve been working literally day and night to tackle them (this
past week we actually made a major database upgrade that has almost
completely eliminated performance problems).
In addition to those performance issues, the perceived lack of progress is
something I knew was an issue, but the Net Promoter survey brought to light
just how big of an issue it has been.
Many customers felt that after months and months of big product additions/
changes, wed kind of stopped actually progressing and making it better.
That couldnt be farther from the truth, though.
Then something interesting happened in the middle of sending these NPS
campaigns: we shipped a major new feature.
So, how did that affect future feedback?

The second round and a different story


told
I mentioned that we sent out the first campaign on a Tuesday morning. Later
that morning, we launched a new feature that wed been working on for
quite some time. Something that many users had been requesting.
Then, that Tuesday afternoon, I sent out the NPS survey to the second
group. The ratings and the responses told quite a different story.
In the time between the two campaigns, we had directly addressed one of
the primary issues: lack of progress.
Here are the final outcomes of the two groups

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What youll notice is that the percentage of Detractors didnt change much
(though it did go down), but the percentage of Passives changed quite a
bit.
Our addressing that primary issue had a direct, positive affect on customers
view of Baremetrics, and people who were on the fence had their
confidence in us boosted immediately.
The timing was convenient from a measurement standpoint as it quickly
solidified that were on the right track.

Takeaways and tips


1. Were doing better than we thought
We have a ton of room for improvement, but, honestly, the minority of users
who have had isolated issues have been very vocal and were throwing off
what, I assumed, the general feeling of our user base was. This was a great
opportunity to give ourselves a light pat on the back.

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2. Following up with every customer is crucial


Regardless of the rating, each customer deserves a response. Its fast and
easy to do. Dont skimp on the opportunity to talk to everyone who took the
time to give you feedback.

3. Ignore the scoreinitially.


Our NPS score for the first group was 16, and 36 for the second. Neither
number really means much. Technically, theyre considered good but
whats more important is the trend. As with any metric, a single, individual
number isnt all that useful, but the long term trend is what helps you make
smart business decisions.

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Chapter 3
Managing a Team

64

Maker to manager: what a startup


founder does

Ive long considered myself a maker. Heck, its the first word in
my Twitter profile, so you know its official. Ive been making things
for the web since the late 90s. When I was splitting my time
between building my own products and doing consulting, Id tout
myself as the guy who could do everything. I took pride in my
ability to do design, frontend, and backend, selling myself as the
quintessential maker of things.
Then, Baremetrics started taking off. I quickly realized that being the only
maker wasnt going to cut it, and started hiring. As I hired out all of the
things I had been doing, I found myself transitioning from maker to
manager. I started the transition a year ago and, while Im certainly no
expert, I thought it might be useful to other entrepreneurs making the
transition to get some insight into what it has been like for me and how to
apply to your business.

65

How a manager is different than a maker


Ive struggled with what exactly it is that I do here, which is a good thing.
Were a small team, but everyone here has very specific, clear-cut jobs to do
and have each filled very specific needs. Ive hired people who are each
exponentially better at their craft than I ever could hope to be.
So where does that leave me? I rarely make things anymore, at least in the
honed craft sense. Instead, Im a manageran enabler of sorts. Instead of
making things, I enable my team to be makers, with as much efficiency as
possible.

The job of a manager


At the end of a lot of days, my wife will ask what I did that day and half the
time I have a hard time answering. All the things? It can be hard to actually
feel productive since, to some degree, my job is to make others productive.
Pinpointing the things that you, as a manager, need to do on a daily or
weekly basis can go a long way towards you actually being productive.
If Im honest, there are lots of days where I think, what is it that a CEO/
Founder even does? This post is part me helping other CEO/Founders out
and part verification of my sanity and worth. :)
Here are some of the things I do and the roles I fill in a typical day or week
and how they can apply to you and your business.

Product management
A big chunk of my time is writing project briefs and figuring out our product
roadmapessentially a Product Manager role.
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What comes next? What problems need solving? How do we solve those
problems? What bugs need to be fixed and when? Who needs to be working
on this? Whats an appropriate deadline? What customers should I talk to
about that potential feature?
My day is packed to the brim with answering these types of questions. To
the best of my ability, Im decisive and borderline dogmatic about these
answers. You have to be. Otherwise, youll be buried in half-answers that get
you half-results with no real progress on anything.

Apply It
The more clearly you define projects and work to be done, the less time
product management will take you in the long run.
Define the problem and what the success metrics are (increased signups,
decreased churn, etc.) and then work with your team to figure out the
solutions.

Writing
Our blog is a significant source of traffic and customer referrals for us. Thus
far, minus a couple of great articles on customer support, Ive written all of
the content.
It takes up a large chunk of my time (roughly 20% of my week), but weve
tried really hard to avoid the typical generic content you think about when
you hear the phrase content marketing. Our market is founders &
entrepreneurs, so the best way we know to reach founders & entrepreneurs
is for our local founder & entrepreneur (me!) to write about the ups and
downs and what were learning as a company. Things that are harder for
others to write without having been there and done that.

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Apply it
Not everyone has a target market of founders so this game plan wont
necessarily work for you, but I do think its crucial to actually produce
genuinely helpful stuff if you want to use content as a marketing channel.
Find your content niche and own it.

Customer support
I dont do nearly as much typical customer support these days since Kaegan
came on board last year, but I try to schedule a phone call with all of our
customers regularly.
As part of the lifecycle emails we send, I try to schedule calls with customers
at the two-week, six-month and 12-month mark to see how business is
going. Its not a sales call on any level. I genuinely love to hear how other
founders businesses are going and to see if I can help in any way.
This is high-touch and not scalable in the long run, but as long as I can do it,
Ill keep having calls with customers.

Apply it
Being the face of your company will go a long way in the early days. Do
this as long as humanly possible.

Team happiness
While making our customers happy is crucial, making sure my team is happy
is arguably even more so. Right now, I do a lot of information gathering
with bi-weekly 1-on-1s and tools like 15Five. But Im admittedly not great at
putting the feedback into action consistently.
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The feedback I get from our team affects decisions I make on a day-to-day
basis and I spend a lot of time pouring over Slack chat logs looking for signs
that people are frustrated or in need of help with something.

Apply it
Pay close attention to your team both in passing conversations and in
feedback sessions like 1-on-1s and look for signs that anyone is unhappy
or feeling burned out.

Hire
It comes in waves, but every few months we need to hire someone. Hiring
can be a lengthy and time-consuming process (our Customer Support role
had over 800 applications and took three months to fill).
When Im in the middle of hiring someone, I spend a lot of time reading
applications, doing video interviews and pouring over test projects (for
engineering & design positions).

Apply it
As best you can, try to organize and standardize the hiring process. Use
tools like Workable to keep the pipeline in one place and use a simple set of
starter questions to quickly weed out applicants that are clearly a bad fit.

Financial planning
I think we make a pretty great tool for staying on top of revenue, but at this
point I still have to spend a lot of time in spreadsheets to look at the full
picture of both revenue and expenses (of which you can peer in to).

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I currently use two spreadsheets to forecast the upcoming 12-18 months,


and I revisit them on some level every week or two.

Apply it
Knowing where you stand financially seems like a no-brainer but a lot of
startups fail because they run out of money. Use a service like Bench to
automate the bookkeeping (as manual entry on almost any scale is a bad
use of your time), and then spend your own time forecasting the upcoming
months so you know where to adjust things.

Learning from others


I think the most valuable way to learn is simply by doing. When it comes to
business, Id argue most degrees are useless. You just need to jump in the
trenches and start making stuff.
But I think there is a lot to be learned from the successes and failures of
others, whether thats having a few mentors, regularly chatting with other
founders or reading.

Apply it
Find a group of people who are a couple of steps ahead of you in particular
areas and meet with them regularly. They wont be so far ahead that its a
one-way relationship, and the advice they give will likely be a lot more
applicable.
Also, get a subscription to Blinkist. All business books are mostly fluff.
Blinkist distils the fluff down to the juicy bits, and you save yourself a
massive amount of time.

70

The startup guide to 1-on-1's

If theres one thing Ive found to be true over the past year and half
of building this company, its that Im completely winging it. Sure,
Ive read articles and books on how to build a company, but Ive
never actually done this before and I learn best by doing. So, every
time I come across something that works for us, its a huge win for
me. Doing 1-on-1s has been one of those huge wins.
A few months after I started building our team, I really wanted a regular way
to make sure everyone was happy. I pick up on little grumbles and or
frustrations in our Slack chat, and would make a mental note or would just
talk to that person right away. But I wanted a consistent and predictable
opportunity for our team to talk about things.
Enter the 1-on-1.

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What is a 1-on-1 and why do them?


Prior to building up the team around Baremetrics, Id honestly never even
heard of a 1-on-1. Ive been blissfully self-employed for nearly a decade
and never really had a real job with a manager, so the concept has just
never been a part of my career.
Essentially, a 1-on-1 is a regularly scheduled time for you, as the founder/
CEO/manager/person-in-charge, to meet with the individuals on your team
to learn more about whats going well for them, whats not, what their long
term goals are, how you can help them and how you, as their manager, can
improve.
After youve done a few 1-on-1s with the same person, youll start picking up
common themes that are important to them, small frustrations they may be
having and ways they want to grow. Plus, it gives you an opportunity to learn
more about them as humans and not just employees.
So, how do you do a 1-on-1?

How to do a 1-on-1 with your team


Actually pulling off the 1-on-1 is easy. I mentioned earlier about a 1-on-1 being
regularly scheduled and thats very intentional.

How often do you do a 1-on-1?


I do them every 2 weeks. I know some companies that do them every week
and others that only do them once a month.
Your team size will likely dictate the frequency, but I find every 2 weeks is
the perfect amount of time to keep issues from falling through the cracks
while not constantly being in meeting mode.
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Schedule them, and show up on time


You shouldnt just drop in or send a message saying, Hey lets do our 1-on-1
now! You need to schedule it and then stick to that scheduled time. Dont
be late. Dont push it off until later in the day. Its one of the most important
times youll have with your team and you need to be clear that its important
to you.
I automatically send a team-wide message in Slack every 2 weeks with a
link to schedule a time that works for them.

Most 1-on-1s typically last about 30-45 minutes for us.

What to ask and talk about


Okay, so youve scheduled your 1-on-1now what? What do you talk about? I
typically ask about 5-8 questions each time when meet. Or rather, I let those
drive the conversation.
I try to ask question from a few different topics.
Goals I want to know what their short term and long term goals are, both
professionally and personally. And then I want make sure I help them make
those goals a reality.
Business Even if everyone on your team hasnt built a business before,
theyve likely got some solid perspective that you dont, just because theyre
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not you and dont think the same as you. Hearing how they think the
business could be improved or ways it could grow are always good things to
get feedback on.
Happiness At the end of the day, if your team isnt happy, whats the
point? If theyre really happy, is it because of recent progress on the
product? If theyre unhappy, is it because youre overworking them? Find out
whats making them happy (or unhappy) and youll get a lot of perspective
on what makes them tick and how you can help.
Team Making sure your team is moving along as one cohesive unit is
crucial and 1-on-1s are a great time to find out if there are any issues you
can help resolve before they become a real problem.
Management This one topic is about you. I specifically ask about ways
that I can improve as well as things I can do to help them work better.
Performance Talk about a job well done, or an area that needs
improvement.
Each week I try to ask a different set of questions. Heres a sampling of
some Ive been asking over the past few months.
1.

Is anything in the pipeline unclear or confusing?

2. What could I do to make your work easier?


3. Hows your workload?
4. What are 3 things you would like to see when you show up to work
every day?
5. Do you feel challenged at work? Are you learning new things?
6. What is something I could do better?
7. How could we make our weekly stand-ups more effective?
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8. What do you want to be doing in 5 years?


9. How do you feel your work/life balance is right now?
10. Do you feel like youre on the same page with the team as a whole?
11. How well-received do you feel your opinions are when you offer them
up?
12. What are the top 3 things that you feel waste your time during the
day?
13. Are there any projects youd really like to work on if you had the
chance?
14. Is everyone pulling their weight on the team?
15. Are there any big opportunities you think were leaving on the table?
More than anything you just want to have a conversation. Try to keep it as
laid back as possible and open yourself up as well. This isnt you grilling
them on their performance, its you genuinely wanting to understand what
they need and how you can support them better.

Follow up on what youve talked about


If you ask all of these questions and then never do anything, youve missed
the point. You need to follow up and take action.
I keep track of all of the questions and answers in Evernote and each week I
review what my team has answered and make sure to fix anything that
theyre having issues with, or follow up if there were specific things they
were having trouble with.

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Additional reading & resources


The main thing here is to not overthink it. Just start. Youll figure out after
doing a few 1-on-1s what works for your team and what doesnt, but the only
way to do that is to actually do them.
That being said, here are a number of resources that can help a lot as you
get up and running.

101 Questions to Ask in One onOnes


Quora: What are some good tips for 1:1s with your employees?
Better One On Ones Newsletter

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How I hired a team of 6 without


having a clue what I was doing

Last week I wrote about our experience going from bootstrapped


to funded, why it was good for our business and some of the
things weve learned along the way. I mentioned there were some
big shifts for me and one of those shifts was the transition from
being a solo entrepreneur to managing a team.
I have 10 years of do-it-yourself mentality to undo, or to at least adjust, and
thats been an interesting process. Ive moved from a pure maker to more of
a manageran enabler. Instead of doing all the making, its now my job to
make sure my team is well equipped and fully supported to do what they do
best and for me to stay out of their way.
So, what are some lessons and tips Ive learned along the way?

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The sooner, the better


You should start building a team as soon as it makes financial sense. Im
technically capable of pulling off the high-level development of things, but
Im not an expert at it.
I quickly found myself in over my head dealing with the huge amount of data
we manage and for a couple of months was in a perpetual state of putting
out server fires.
Ben, the first person I hired, came in and within a matter of weeks had fixed
the large majority of the major issues. I should have hired him months
earlier.
Having someone to focus on development freed me up to focus on growing
the business, which is a much better use of my time.

Team communication is key


Were a 100% remote team, covering all four U.S. timezones. We miss out on
office chit chat and the little opportunities here and there to throw an idea
by someone in passing or to discuss something over lunch.
That means we have to be very intentional about communicating with each
other. Even as a team of six its easy for people to go a whole week without
talking to someone else on the team and at our size we have to try and
avoid that.
We use Slack to quickly talk through ideas and questions as well as for the
liberal sharing of GIFsbecause GIFs = culture. Right?!?!

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We also use Sqwiggle for indiviual and team video chats. It shows whos
working at any given time and helps give a bit of a were all here working
and making junk happen feel.

Trust your teams expertise


I dont consider myself a micromanager, and I certainly dont want to be that.
But its definitely a struggle to let go of something thats been your baby
for months and trust that others will want whats best for it too.
Its really important to step back and let the people you hired do what they
do best. You hired them because theyre experts. They are (hopefully) better
than you at the job you hired them for, so quit telling them how to do their
job.
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Your role at this point is to steer the ship. To instil in your team the direction
things need to head and then step back and let them work.

Theres a ramp up period


Once you start hiring, even if its just one or two people, it will take time
before the things theyre working on will start to make a major difference in
your business.
Itll take time for everyone to get in step with one another and to start really
producing things together that make a big impact.
Thats par for the course.
Its also something to consider from a financial standpoint. Can you afford
for the work theyre doing to not pay off for 3-6 months? If not, you may not
be ready to hire.

Equip your team


Every position has different needs. Heck, every person will have different
needs, even within the same job. Make sure everyone has what they need
to do their job well.
On a granular level, that means answering questions and giving feedback
on work as quickly as possible so you arent the roadblock.
On a higher level, thats making sure everyones happy. Some of the things
we do to help in that department is giving these to everyone:

Kindle Paperwhite
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Unlimited Kindle books


Jawbone UP
$250/mo remote stipend that can be used for anything (phone,
internet, food, gym membership)

Loose vacation policy


Those are small things, but they can go a long way in making sure people
dont get burnt out.

Give everyone opportunities to speak their


mind
You cant make the assumption that everyone is happy all of the time or that
they never have any ideas they want to run by you about how the company
& team can be better. There will be times that people are unhappy with
certain things and they will have great ideas for how the company and team
can be better.
But most people wont just come out and say those things. You have to give
them opportunities to say them and directly ask for that kind of feedback.
We do this via 1-on-1s every two weeks. Each time I ask specific questions
(the actual questions vary week-to-week) to get a better idea of where
everyones head is at and if theres anything I can help with.
We even have a bot (MomBot!) to schedule them so they dont get missed!

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Some of the quesitons we ask each time


Hows your work/life balance right now?
Whats a recent situation you wish you handled differently?
Are you happy with your recent work? Why or why not?
Are there any projects youd really like to work on if you had the
chance?

Do you feel over-worked, under-worked, or is the workload just right?


Do you feel like youre on the same page with the team as a whole?
How could we improve the ways our team works together?
Is everyone pulling their weight on the team?
What could I do as a manager to make your work easier?
Is there any feedback you have for me as a manager?
Honestly, as someone whos been self-employeed his whole career, a lot of
those questions feel icky. Like Im sitting in a room in my suit with slicked
back hair talking down to my minions. But in reality, they work really well for
getting feedback.

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The fallacy of motivation

Most days now I wake up before my alarm goes off (at 5am) and I
immediately hop out of bed, excited to get the day started. But that
wasnt always the case, especially when things werent going so
well. Its easy to be excited when the skies are blue, but what
about when theyre gray? How do you stay motivated then? Or is
there even such thing as motivation?
For 10 years I was on a perpetual journey to kick the consulting habit and
just focus on my own products, but minus a few 3-month spans here and
there, it just wasnt happening. I couldnt get over that hump. A couple of
years ago, before Baremetrics was even a spark in my brain, I had 2 other
SaaS products I was building and I was having a rough time on the
consulting side of things. It was such easy money but I was over it and just
tired of working on things I wasnt fully invested in.

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Procrastination masked as hobbies


So, I took a break, though not deliberately. At the time I didnt even realize it
and in hindsight, I wouldnt call it a break at allId call it procrastination.
I started filling my days with anything but work. I started devoting significant
amounts of time to my hobbiesnamely gardening. I spent countless hours
researching square foot gardening, and started a large garden from seed,
building 400+ sq/ft of raised beds. I even rented a skid-steer and flattened
land in my backyard to make way for our little family farm.
Now, all of that on its own is obviously not a bad thing. Gardening is actually
a really good thing, and its something I still love doing with my family. But at
the time I wasnt doing all of those things as fun hobbies. I was doing them
as a form of procrastination.

Procrastination is the most common


manifestation of Resistance because its the
easiest to rationalize. We dont tell ourselves,
Im never going to write my symphony. Instead
we say, I am going to write my symphony; Im
just going to start tomorrow. Steven
Pressfield, The War of Art
I was running away from the work that needed to be done to move my
business forward. I was waiting for some magical beam of motivational light
to come down from the sky. But what I found was that motivation isnt a
feelingits a choice.

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Choosing motivation
And few months after, I realized I was just procrastinating and made a
conscious effort to change that. I buckled down on the 2 SaaS products I
had at the time and vowed to simply make them work. Part of that
determination was getting a handle on what metrics were or were not
workingand thats when Baremetrics was born.
Had I not resolved to show up and work and ignore my feelings, had I
waited for motivation to knock on my door, then Baremetrics wouldnt exist.
Heck, a whole industry of platform-specific analytics tools might not exist.
Its easy to be excited about showing up and working when youre growing
fast and when customers love what youre doing. But what about showing
up and getting the job done when youre not even sure what that job needs
to be?

I write only when inspiration strikes. Fortunately


it strikes every morning at nine oclock sharp.
Somerset Maugham
Many days youll show up, sit down and not know the right thing to work
on to make the most impact, but that is the fallacy. Theres no right or
wrong when youre in a rut. Theres just movement and until you put one
foot in front of the other, youll stay firmly in that rut.
Unfortunately, all the motivational books, articles and speakers in the world
wont help you. Sure, youll get warm fuzzies and a little boost in productivity
for a few days, but itll fade. And when it fades, the only thing thats left to do
is to show up and choose progress.

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The startup guide to hiring a remote


customer support rep

We recently hired someone to head up Customer Support for


Baremetrics. It took 3 months, 808 applications and 18 interviews
before we found a solid fit. Who knew hiring for customer support
would be so tedious?!?! I sure didnt.
Lets take a look at what I did to hire for this position: what worked, what
didnt work, where we found our guy, how much we spent in job postings,
and a handful of other tips.

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Do you need to hire a support person at


all?
Six months ago, I was pretty convinced I needed a customer support
person. Id had a string of extremely busy weeks where I felt like I was
drowning in support requests. I wasnt making any progress on the product
and felt like I was doing a subpar job serving our customers.

I started looking for a customer support person and ended up finding one in
my own house. My wife and I have worked together for years on previous
business ventures, and I knew what she could bring to the table. So, to test
the waters on if I really needed someone to pull this off, she came on board.
Turns out, I wasnt really ready for it. The support load quickly died down
and there just simply wasnt much work to do.

Takeaway
Make sure theres a real, substantial need before you even start the
process. It should be absolutely, unquestionably clear for at least a couple of
months before you start hiring.
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If your company is more than just you, start a rotation of support to lesson
the load and delay hiring as long as possible.

Define the job youre hiring for


Figuring out what job youre actually hiring for is a necessity. When it comes
to customer support, the actual work theyll be doing could vary quite a bit.
We could have kept it really simple and just hired someone to tackle support
tickets all day and be done with it. Pretty much anyone can do that so it
would have been a quick, easy and cheap hire.
But we wanted someone to do a lot more than that, so it changed how we
hired.
Not only did we need someone who could answer support questions, we
needed someone who could teach. A large amount of our support requests
revolve around helping people understand how their numbers are
calculated and what they mean, so we needed someone who could
patiently and effectively walk customers through that and help them get
more value out of their metrics.
Hiring a teacher is very different from hiring someone to process tickets as
fast as possible.
On top of that, I wanted someone who didnt take themselves too seriously.
The world of metrics is stuffy and boring. As a company, we try pretty hard
to be not that and given this person would be the first (and many times only)
point of contact with our company, they needed to be the opposite of stuffy
and boring.

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Takeaway
List out the actual jobs and tasks a potential hire will be doing. Depending
on the stage of your company, that list may be very lengthy and quite a mix
of stuff. Thats fine. Thats exactly what ours was like.
Push the role of the position outside of the typical box. Hire someone who
can do the job youve outlined as well as someone who will define and find
new ways to help the business and customers.

How to attract the right candidates


So you know what kind of applicant youre looking for, but how do you
convey that in your job post?
The way you write your job post isnt about preventing potential applicants
who are a bad fit to not apply (they will either way). Its about selling the job
to people you want most.
There are four things to include in your job post:
1.

Purpose. Talk about the overall purpose of the job and why its so
vital to your company along with some things theyll be responsible
for.

2. Company. Mention a couple of things about your company to show


youre a stable place to work. If youre an early-stage company, you
may not be able to guarantee stability, but you should be able to talk
about why what your company is doing matters.
3. Requirements. List some high level, must-have requirements. You
can leave out the nice to haves as those are typically things that
anyone could pick up after a few months on the job.

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4. Benefits. And then finally, list benefitsthe things that would set you
apart from similar companies/jobs theyre looking at. For instance,
some of our perks are working from anywhere, loose vacation policy,
flexible work hours and certain perks (like home cleaning, movie
tickets, books, music & video subscriptions, etc).

Should you ask for a rsum?


No. For the love, dont ask for a rsum. Theyre useless and just add to the
overhead of processing applications. Theyre overhyped and dont get to
the core of what the person is capable of and can strongly skew your
perception of someone.
Seriously, dont ask for them.

Where to post your job ad


So where do you find someone for remote customer support? The number
of job boards for Customer Support positions are much smaller in
comparison to design and engineering jobs, so it was harder to find places
that made sense.
Here are the places I directly posted to:
WeWorkRemotely $200 for 30 days Definitely the best option. They
have a dedicated Support category, its not overcrowded, and the quality of
the job leads was top notch.
AngelList Free Who we ultimately hired found out about us here, but
its just a really janky experience from an employer standpoint. AngelList
makes it really hard to sift through and process applicants and was definitely
my least favorite experience as far as job boards go.

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NomadJobs $250 for 30 days Solid, concise listing geared directly


towards people who want to work remotely. Lots of great leads here.
SupportOps Free The only support-exclusive job board I found and
given the entire SupportOps site is an amazing resource for helping
customer support folks get better at their jobs, its a really great place to find
folks.
In total, I spent $400 for job postings ($200/mo for 2 months on
WeWorkRemotely & I got a deal on NomadJobs as they were just launching
and needed some posts to get things moving).
Now, it would be irresponsible for me to leave out the job boards and sites
that this position ended up on that I didnt post to. Some of these just
syndicate job posts from places, others are manually curated, but all of them
were useless and the source of the large majority of our worst leads.
Indeed Largest source of leadszero of which moved on to an actual
interview. Every applicant was basically sending their resume to anyone that
would accept it.
Work-from-home sites Sites with names like Rat Race Rebellion, Work
Place Like Home, RealWaysToEarnMoneyOnline and
GetRichQuickSellingYourSoulToAStartup. Tons of job applications came from
sites like these.
None of those were good leads. Literally zero. The work-from-home ones
were the worst because the people coming from them arrived from the
wrong context. They were looking for a job to do on the side. A way to make
some extra spending money. And they had no experience in customer
support.

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I would have loved to be able to automatically filter out and delete any
applications from those sources.

Your own network


Its worth mentioning that your own personal network can be great for
finding people. I had quite a few conversations with acquaintances and
friends of friends who were potentially interested.
Getting a recommendation from someone I knew would have gone an
extremely long way, so definitely pursue that when you can. Thats just not
how ours played out this time.

Managing the job post and applications


There are a number of recruiting apps for this process, and we ultimately
landed on Workable. The price was right and the tool worked well.

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A lot of people just use a jobs email address, but I wasnt jazzed about
organizing and responding to the applicants just via email. Workable has
some additional tools that make it really easy to handle larger volumes of
applications, and it saved a ton of time.
So, what did the process of managing the applications look like?
First, a user would go to the application page. For instance, heres our Data
Scientist job page. They can read about the jobs and then apply (big green
Apply for this job button).
The application is pretty straightforward. The applicant drops in some basic
info, their work history and a few other bits.
Then, in the case of the Customer Support position, I asked two key
questions

Why do you want to work at Baremetrics? This pointed to motivation


and longer term goals. People were surprisingly honest. A laughable
number of people simply said to make lots of money or because I
need a job. I can respect that. :) Unfortunately I cant hire that. Folks
who moved on to an interview talked about wanting to help build
something from the ground up, being a part of something bigger than
themselves, helping others build their businessesthings that I was
actually looking for, and this question gave them an opportunity to show
that without prompting.

How do you think your skills and experience can help our customers?
I wanted to know what they were bringing to the table. How did they
see themselves fitting in to the business and helping our customers
succeed? Being self-aware is a big deal at this stage of our company.
Having confidence (and maybe a bit of over-confidence) goes a long
way as it means youll pull your weight and then some.

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Id generally go through the applications once a day and quickly disqualify


or send a followup email, which starts the interview process.

Should you respond to all applicants, even


if you decide not to hire them?
I didnt do a great job with this, but I probably mass-emailed about 50-60%
of the people I disqualified to let them know we were moving forward with
other applicants.
Heres the template I used (based on what my pal Wade at Zapier has
suggested):
HeyJoe,
Thanks for taking the time to send in your application for the
Customer Supportgig at Baremetrics! Really appreciate it.That said,
were moving forward with other candidates at this point.
Best of luck and hopefully youll stay in touch. We post new positions
periodically and would love to see your name again.
Using Workable, I was able to send that template out en masse in about 30
seconds.

How to interview for a remote position


Assuming an applicant looks, on the surface, like they may be a good fit,
what happens next?

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The initial conversation


As you can see in that screenshot above, there are a number of questions I
ask to get the ball rolling.
1.

Tell me more about your current job. Are you happy there? Whats
their current situation? Specifically, whats making them look
elsewhere for a job? Helps to know this so I can show how
Baremetrics will or wont be a good fit for them.

2. What kind of projects are you working on there? Im wanting to


find out if their current job title is actually indicative of the kind of
work experience they have.
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3. Any side projects or hobbies? This is a big one for me. I need
people who are capable of existing outside of my company. The last
thing I need are folks getting burned out because they overwork
themselves.
4. Why a startup over an established company? Everyone has
different motivations for picking a startup over an established
company. Knowing those motivations helps me understand how to
make sure their expectations are correct and that Im able to help
them succeed. For instance, if theyre interested in a startup because
they want to learn the ropes before doing their own startup, thats
great to know as it helps me provide more guidance along the way.
5. What kind of work schedule do you prefer? This one is about
setting expectations for both sides. Are they a night owl? Do they
prefer to do some work in the morning and then some later in the
evening? Asking this starts the conversation about how we, as a
company, tend to work.
6. Have you ever been self-employed? Since were a completely
remote company, hiring people whove worked on their own at some
point is a major plus as they tend to understand the ebbs and flows of
business more and are less affected by the ups and downs.
7. Have you worked from home/coffee shop/co-working space before?
Its a big adjustment to go from working in an office surrounded by
coworkers to being largely on your own. This question helps me
know if its something Ill need to help walk them through.
8. What are some out-of-the-ordinary things youve done to help out
customers and make them happy? I dont want support ticket
monkeys. I want folks who go out of their way, completely on their
own accord. Hearing about some out-of-the-ordinary things theyve
done helps surface that and shows how creative they are as well.

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After that series of questions gets covered, I make sure to answer any
questions they have and well usually exchange a few more emails.
Once weve exchanged those emails, I have a pretty good idea of if Id like
to chat more with them. At this point, its video chat time!

The video chat


The video chat is really laid back. Its less a time to ask them questions and
more about seeing how they carry on a conversation.
For a customer support rep, its really important that theyre extremely
friendly and easy to talk to, and having a quick video chat is a great way to
figure that out.
I dont have any specific script or questions I use, and thats intentional. I
want them to drive the conversation.
Also, one thing I did with scheduling the video chat was just tell them Id like
to have one soon. I didnt try to tell them times I could do it. I wanted them to
follow up and be proactive about making it happen.

Making the pick


I managed to do most of the video chats all within a few weeks of each
other so theyd all be relatively fresh on my mind.
At this point, all of the really tough, time-consuming work is finished. I have
about as much info as Id ever need to make a decision, and so its just a
matter of going for it.

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Out of a group of 18 people I did video chats with, one guy really stood out.
We discussed start dates, salaries and various other logistics and then made
an offer.
He accepted it, and here we are. :)

Who we hired

Out of 800+ applications, the one who ultimately made the cut was Kaegan
Donnelly. His application came in on the tail end of our search and his initial
answers to those 2 questions we asked in the first application was what
ultimately sold me.
He communicated really well, was super laid back and easy to talk to. Plus,
he had more customer support experience than just about any other
applicant having spent 5 years as a Genius at Apple and nearly 2 years as a
Lead on the customer support team at Hootsuite.
Hes one of the most proactive people Ive ever met and really wanted to
build up the part of our company that teaches and supports our customers
well. Also, hes Canadian, so thats worth something. Maple bacon donuts
anyone?
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If youve interacted with us on Twitter, sent in a support email or used our


live chat in the past few weeks, youve been yapping with Kaegan.

The hiring process


Hiring Kaegan was atypical for us as hes in Canada. Everyone whos in the
U.S. is a full-time, W-2 employee, but since we dont have an office in
Canada, Kaegan gets paid as a contractor.
That makes the paperwork for us insanely simple, soyay Canadians?
Hiring someone is equal parts exciting and stressful. Theres a lot that goes
in to the process and, especially early on, theres a strong OMGBBQ I hope
I dont screw up and hire the wrong person!!!!
Ultimately you just have to bite the bullet and go for it. There are quite a few
other people we interviewed who likely would have been fantastic. But we
could only pick one.

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Lessons learned building &


managing a remote team

The cost of building a startup continues to get cheaper and


cheaper, and one of the big drivers of that is the ability to build a
team of people all over the world. Building a fully remote team
gives you access to talent that would otherwise be completely out
of reach. But it doesnt come without costs (figuratively and
literally).
Working remotely isnt something anyone can do and building a product
remotely has challenges that are very much unique to remote teams. So
how do you build a remote team? How do you build a company culture
around a group of people who rarely see each other face-to-face? What
processes work and which ones dont? What are reasons you might not
want to build a remote team?
This guide is to help you decide if building a remote team is right for your
startup and how to do it effectively.

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Should you build a remote team?


The success of a remote team is rarely due solely to process. You cant just
throw a few tools in the mix, start hiring all over the world and expect things
to magically work. Its something that needs to be ingrained in the fabric of
the company and it requires intentional work to make itwork.
And because its something that needs to be ingrained in the company
culture, its very difficult to tack on after the fact. So answering the question,
should I build a remote team? becomes crucial early on.
To answer this question, lets actually look at the objections people have.

Your team will be far less productive


This is a matter of hiring. As I cover below, you need to hire people who are
Professional Remote Workers. If you hire people who arent self-motivated
or capable of major problem solving, then yes, productivity will suffer greatly.

Communication is tough
Yes. Yes it is. But I think thats a human nature issue, not a location issue.
This goes back to hiring for a remote setup. If you hire people that are bad
at communicating in written form, you will all hate each other within three
months.

Work/Life balance is non-existent


Agreed. Its so much harder to leave your work at work when you work
where you live and live where you work. Set a culture of healthy work/life
balance by having a good work/life balance yourself. Dont work on the
weekends or all hours of the night unless thats what you want for your team
(hint: your probably dont). Encourage time off, encourage analog hobbies
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that get your team out from behind a desk. As long as youre intentional
about this, its a non-issue.

Collaboration takes a hit


This is one objection I tend to agree with. This was really evident at our
retreat earlier in the year when we were all together. In person it was
unquestionably easier to quickly throw things together or hash out ideas.
But thats not to say collaboration cant happen remotely, it just looks
different and requires more work. The inverse argument is that while
collaboration may take a hit, productivity as a whole is better. So Id say it
balances itself out.

Hire for remoteness


There are all sorts of things you can and should do to make your remote
team work, but all is for naught if you hire people who are bad at working
remotely. Thats not a knock on their abilities. They could be amazing at
their craft while simultaneously bringing the whole team down because they
arent great at functioning in a remote setting. Some people thrive in a
remote setup, others dont.
Its imperative that you find people who fit the remote mold if you want a
remote team to function. There are a few qualities Ive found to be great
indicators that someone will be a good fit for remote working.

Self-motivated problem solvers


The biggest quality youre looking for is self-motivation. Will they get the job
done without having their hand held constantly? Are they really great at
problem-solving? Will they do things without asking permission and just

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wing it? Yess to all of those are great indicators of functioning well in a
remote setting.

Great writers
Since most of your communication will happen over chat or email, being
impeccable at writing will go a long way. Brevity is a negative quality for me
(though verbosity can also be a problem). Theres a balance between saying
too much and not saying enough that needs to be found and people who do
a lot of writing (blogging or otherwise) tend to know that balance. A major
positive for me when hiring is having a personal blog.

Non-industry hobbies
Ive found that having hobbies outside of their field are also really positive
signs. When youre working remotely, its easy to feel isolated and totally
consumed by work. People who get involved in hobbies outside of
programming or design tend to get burned out much less frequently.

Communicating remotely
Youve hired a great remote team, but if you dont take communication
seriously, youll implode.
There are a lot of great tools you can use (which you can find below), but
communication is less about tools and more about intent and purpose.
Theres more thought that has to go behind each interaction.
Youre no longer having passing conversations around lunch, youre
keeping your team in the loop so they arent left in the dark. Youre writing
so that others know clearly what work needs to be done. Youre saying
things that, in many cases, will be saved in the archives of your company
forever.
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What you say and how you say it, matters.

Making self-care a priority


One of the downsides to having a remote team is that each person can
easily, without even trying, become a workaholic and totally consumed by
the company. Making sure everyone on your team takes care of themselves
is more important than all the tools and tips in the world for remote teams.
Here are self-care tips for you and your team to prevent burnout and make
everyone more productive.
1.

Have set work hours and stick to them. Without boundaries, youll
work all the time and get less done.

2. Exercise every single day. Even if its just a walk around the block.
Youll have more energy and just plain feel better.
3. Alternate between sitting and standing. Every study under the sun
has shown that sitting all day, every day will quite literally kill you
sooner. On the inverse, standing all day can also have downsides.
Swapping between the two, using something like a GeekDesk, is
perfect.
4. Eat well. Loading up on sugary snacks and caffeine all day will result
in a major crash in the afternoon. Keep your work area stocked with
healthy snacks and eat them throughout the day.
5. Take frequent breaks. You should be stepping away from your
computer at least every hour to let your mind clear and your eyes
focus on something other than a screen a few inches from your face.
Usually when you come back youll have a clearer understanding of
how to tackle whatever problem youre solving as well.

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Tools for remote teams


We use a lot of tools to keep our remote team on the same page. Here are
ones we currently use and love.
Justworks Payroll, benefits and other HR tools. Amazing for remote
teams. Cant recommend them enough.
Slack The de facto tool for so many teams these days. It is in fact all its
cracked up to be.
Asana For product management. You can comment on just about ever
single thing in Asana, making it great for asynchronous communication
around projects and the product your building.
Dropbox: Notes Formerly known as Hackpad, we use Notes for all
document collaboration from ops playbooks to project briefs to blogging to
company handbook content.
Appear.in Amazing video conferencing. Google Hangouts quite literally
never worked for us. We couldnt have a call without technical problems. We
found Appear.in and never looked back.
15Five Weekly team feedback. We use these to augment 1-on-1s.
Abacus Expense reimbursement.

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How to pull off a startup retreat

In mid-January we did our first retreat as a team. Since were


completely remote, this was the first time most of our team had
met and worked with each other face-to-face. Ill take you through
how we planned and budgeted for the trip, what we did, what
worked and what didnt.

Why do a retreat at all?


Since growing our team from little ol me to 6 people, with the exception of
me meeting a couple of our team members, no one else had ever done
more than video chats with each other. And while video chats work fine for
quick conversations, they dont give a great sense of everyones
personalities.
Doing a retreat let us spend a lot of time together and learn those things.
Also, being in one place gave us the opportunity to really brainstorm and
plan out the coming months as well as hash out some bigger design,
development and marketing problems.
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Purpose: Figuring out the point of the trip


We decided for this retreat that wed primarily use it to work in the same
place and tackle some projects that would just be easier in person. Some
companies use retreats as a time to vacation together, others use it primarily
to work. We opted to go the work route since we rarely get the
opportunity to do that in the same location.

Location: How to pick where to go


After making the decision to do a retreat in January, we needed to pick a
location. The general consensus was that everyone wanted a warm place,
given it would be winter.
That basically left two areas: Southern California and Southern Florida.
Average temperatures in both of those places in January is mid-70s which
was as good as we were going to get without leaving the country.
Given we were doing a work-focused retreat, having a great location was
crucial since wed be spending so much time there. The actual city was less
important (in hindsight I should have put more emphasis on the city, but well
cover why shortly). I then headed to AirBnB and HomeAway and just started
digging around until I found a handful of cool houses.
We got super democratic and let everyone vote. Majority ruled and we
ended up with a great house in Palm Springs, CA.
The house set us back $4,200 for 7 nights.

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Lodging: Picking a place that works


What makes for a great space to work for a week? How was that house in
Palm Springs useful for us?

Sleeping space
Make sure youve got enough space for everyone to have their own bed,
and if possible give everyone their own room. We werent able to quite do
that in the house we choose. Everyone had their own bed, but a couple of
people had to share a room.

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Fun
Make sure there are things to do around the house to blow off steam and
clear your head. This place had a pool, hot tub, pool table and putting green
and everybody definitely made use of those things.

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Space to spread out


Even if youre doing a work-focused retreat, most people still like to have a
place where they can sit down and knock stuff out by themselves.
Our rental had a plethora of that. Kaegan even attempted a Darwin Award
by working from the hot tub. The weather all week was perfect, so a lot of
time was spent with our feet propped up outside working.

Kitchen
Cooking was a big part of the retreat and a great way to spend time
together. We had both an indoor and outdoor kitchen and spent a lot of time
(especially at breakfast and dinner) cooking.
Make sure your team eats welldont skimp and buy cheap junk that leaves
everyone feeling bad.

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Travel: Getting everyone there


So after figuring out a location, the next step was getting everyone there.
Were spread out across the U.S. and Canada, so figuring out all the right
flights to get everyone there at about the same time without spending a
fortune could have been a huge stressor.
But as luck would have it, theres a great service called FlightFox that
handles all of that for you.
I gave Alex (my FlightFox Expert) everyones city and he figured out what
airlines and which flights worked best.
We were all scheduled to arrive within about an hour of each other, and
minus a few flight delays, we all arrived pretty close together.
Heres a breakdown of what we spent on flights from where each team
member flew out of:

Birmingham, AL - $335
Lexington, KY - $664
Denver, CO - $491
Santa Fe, NM - $411
San Luis Obispo, CA - $327
Vancouver, Canada - $320
Yes, the Canadians plane ticket was the cheapest. Sigh.
After we got to the airport, we threw down mom-style and rented a minivan.
Side note: I love minivans. That set us back $418.
As a team we spent an additional $300 on taxis and airport parking.
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Total for travel: $3,266.

Eating: How to plan for a teams food


needs
The topic of food was initially the biggest stressor for me. We had 20 meals
to plan for, which is a nightmare when you start taking in to consideration
food allergies, foods that people just downright hate, etc.
I realized I was overthinking it, though, and went really lax with it.
We paired everyone up for dinners each night and so if it was your night to
cook, you chose the meal. Then we went out to eat 2 of the nights. Dinners:
solved.
That left breakfast and lunch. For those, we just went to the grocery store
and loaded up on whatever anyone wanted. Eggs, cereal, bread, bacon,
sausage, salad, fruit, vegetables, etc. We made a few grocery runs
throughout the week to stock back up as needed.
Ended up being really laid back and easy. So, dont overthink it. Everyone
will figure it out.
In the end, between groceries and going out to eat, we spent $1,260, which
averaged out to $30 per person per day.

Itinerary: Making the most of your time


We opted to do a 1-week retreat, specifically a Friday to Friday. Overall
everyone seemed pretty happy with that length of time. Too much longer
and I think we would have felt overworked, too much less and we would
have lost some of the usefulness.
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But what does one do during a retreat?


Have a rough idea ahead of time and giving some high-level structure goes
a long way. I roughly planned out each day by Morning, Afternoon and
Evening, but didnt really get more granular than that, especially for the
Morning section, since everyone has slightly different sleeping habits.

Day-to-day
Most of each day was just us, as a team, working together in the same
place. Mixed in there Id do 1-on-1s, people would take breaks and go for a
swim or go to the gym, wed talk through programming and design
problemsthings like that. The kind of things youd do in an office setting.
Be careful not to over schedule your time.
We did have a few times scheduled out for specific things though

Kickoff
On the morning of our first full day, we had a retreat kickoff. I did a short
presentation on all the things we accomplished in 2014 and then our goals
for 2015 and how wed reach them.
Everyone jumped in with questions, suggestions and concerns and we
hashed all that out. Doing that helped get everyone on the same page for
the week.

Discussions
A couple of days in we had set aside one afternoon to talk out some bigger
company-wide processes and issues. Things like figuring out a better way to

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handle bugs, ways to reduce distractions in Slack, how to better manage the
product as a whole in Trello.
We spent a couple of hours focused purely on this and got a lot of things
nailed down that were now putting in to practice.

Big project
Initially I hadnt intended to do a big project push, but early on we realized
we were really close to having our new Forecast feature done, so we did a 1day push and launched our Revenue Forecaster mid-week.
Id be careful doing a project that takes the entire week to pull off, though. I
think itd probably take away from the team as a whole spending time
getting to know each other and just hanging out, given everyone would be
so focused on getting the project done in time.

Story time
Each night, after dinner, someone from the team would tell their story.
Generally a mix of your personal story but also how you ended up at
Baremetrics. Super low pressure and lighthearted.
Almost everyone mentioned to me afterwards that this was their favorite
part of the retreat and that it helped a lot with getting to know each other.

Getting out of the house


We went out to dinner one of the evenings and a few people got out to go
get massages or go to the gym, but I did a really bad job getting everyone
out of the house.

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Turns out Palm Springs has a lot of 2 things: golf courses and retirement
communities. Neither of which were very appealing and we had a really
hard time finding fun things to go do.
There was a lot of hey, what do you guys want to do tonight? when in
hindsight I should have pre-planned some things to go do.
Definitely will change that for next time.

After the retreat


Once the retreat was over and everyone was home, I surveyed everyone
about what they liked/disliked and what theyd do differently next time.
There were two big takeaways from everyone:
1) Pick a location with more to do 2) Get out and go do those things
It wasnt that I was forcing everyone to work, work, work, its that I didnt do
a good job forcing everyone to not work. So, next time well pick a location
with more to do and Ill make sure we actually get out and go take
advantage of that.
This was our first retreat, but my hope is to do one every 6 months or so.
Grand total for this retreat was $8,750, which is quite pricey, but we actually
came in under what I had budgeted for ($10,000). Having a single house to
rent instead of separate hotel rooms saved a lot of money. In the end, it was
unquestionably worth the trip and the expense and well start planning our
next one soon.

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How to organize the daily chaos of


running a startup

As a Founder, youve got your hand in everything imaginable, from


legal paperwork to hiring to product management to support and
everything in between. Youre pulled in every direction from
everyone whos got your contact info and you feel obligated to
chase every rabbit you think of. But one of the hardest lessons to
learn is that busy does not equal productive.
All of those random things youve got your hand in, all of those rabbits you
chase in the name of traction arent necessarily the most important things
to be working on right then. And that can be a critical mistake.
The catch here is that figuring out what those most important things are
can feel like trying to spot a unicorn breakdancing over a double rainbow.

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What youve probably tried before


The typical line of thought here is that the solution is to somehow rate things
(mentally or otherwise) based on what is most impactful and go from there.
But the fact is, thats just not practical and has a lot of mental overhead.
Certain things may not have direct high impact but are still necessary and
cant be pushed off to more convenient times (yay taxes!).
The other extreme here is to just have a simple to-do list with no priority at
all, but thats too basic and leaves you feeling overwhelmed.
What you need is something thats quick to add to and doesnt overwhelm
you with all the things that need to get done. Showing you everything under
the sun helps no one. Showing you whats available and important given
your current context? Golden.
To pull that off, I use OmniFocus. But how do I use it without it being
overwhelming? Im glad you asked.

The system for getting things done


OmniFocus is one of those tools that, on the surface, seems absurdly
complex. But lets go ahead and be clear hereI use all of maybe 10% of its
features. So, hang with me. My little system here really isnt that
complicated.
Despite all the nooks and crannies in OmniFocus, there are only two
sections you need to know about: Contexts and Projects.
Well take a look at those two things then jump in to how the pieces fit
together on a practical level.

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Contexts
In OmniFocus, theres the concept of Contexts. These can be anything: a
place, situation, mindsetwhatever.
These are my Contexts:
Waiting Tasks that are waiting on
someone else or some event before I
can proceed.
Home For when Im at home doing
non-work tasks.
Office For work-specific tasks.
Errands When Im out running
errands.
Someday Things Id like to get
done one day. Mainly a catch-all so I
dont forget about random ideas.
GTD For Daily Review tasks (which Ill talk about shortly)
You can go really fine-grained with the Contexts, but I prefer to keep them
higher level.
Contexts are the way to answer the question, What should I be doing right
now, given my current location/situation/mindset?

Projects
Projects in OmniFocus are simply collections of tasks, but theres one little
thing that makes them really powerful: the project type.

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You can create Parallel or Sequential


projects.
Parallel projects are the equivalent of a
big bucket of tasks where you can pick
and choose the items to do at random.
Sequential projects are only done in
order. Meaning theres only one to-do
available for you for that project at a
given time and you cant do the others
until youve done the task before it. And
this is glorious. Well cover why
momentarily.
You dont have to put everything in a Project, but if any higher level task
requires more than one or two steps, I typically create a project for it.

Tasks, to-dos, items, actionswhatever you want to call


them
What to-do app would be complete without things to do?!?!
Adding an item to OmniFocus is really easy, but there are a few things you
should set as it will keep things much more organized.

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1.

Action The action you need to take

2. Project What project its associated with


3. Context What context it should show in (see note below)
4. Defer date When to hide the task until (see note below)
5. Due date When you absolutely need to have this done by
6. Notes Any notes, links, attachments you need to get it done.
With OmniFocus, every new item should have a Context. Otherwise you just
end up with a really expensive generic to-do app. Adding a Context has the
benefit of you not seeing that office-specific task when youre out running
errands, for instance.
Now, what if youve got a task that you know you dont even need to think
about again until next month? Thats what the Deferred date is for. When
you set that, OmniFocus wont even show you the item until that date,
keeping your to-do list nice and tidy!

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The hidden power of sequential projects &


deferred dates
The key to staying sane when building a startup is getting everything out of
your head. You will forget things. Every single day. Then youll drive yourself
crazy trying to remember the thing that you forgot. Stop that. Put it in
OmniFocus the second you think of it, and then never think about it again
until its time to do it.

Sequential projects are a beautiful thing because they only show


you the task that you can actually work on right now. Theyre
showing you the next bite of the elephantnot the entire elephant.
Deferred dates have a similar effect in that they hide the item until
its actually relevant.

Pulling it all together in the Daily Review


Ive been talking about lots of disparate bits and pieces of OmniFocus and
the process I use. Lets bring it all together in to how this functions on a daily
basis.
Each morning, before I do anything else, I do a Daily Review.
I have a Daily Review project set up that includes six items that I need to get
done before anything else. I typically do them in order, but its not necessary
(its set up as as Parallel project, FYI). I have a GTD context that I use just
for this project.
1.

Review Calendar This is to remind me of any meetings or phone


calls I have.

2. Process Trello Inbox We use Trello religiously and many times


there are things that need reviewing before they can keep moving
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forward. Doing this first thing in the morning means my team can
keep moving forward as well.
3. Process Intercom Inbox We use Intercom for both support and
automated emails and usually there are a few tickets/emails that
need a response from me.
4. Process Email Inbox I try to keep my email inbox empty and the
key to that is not using it as a to-do list. OmniFocus has the Clip-oTron tool for Mail on OS X that makes it dead simple to create items
out of your emails.
5. Check all projects have a Next Action You should always know
what needs to be done next on a project, otherwise you need to
pause the project until youre ready to pick back up on it. Without a
next action it will sit there for all eternity and youll feel bad about
yourself.
6. Flag priority actions for today The last thing I do is go through and
flag items that I plan on getting done today. Anything thats flagged
gets done and if I finish all of the flagged items, then I can move on to
other items.

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The set up here is that the Daily Review project is set to repeat every
week day. Then you tick the Complete when completing last action
checkbox for the project and it will hide the items until tomorrow! Magic!
The Daily Review is crucial because its the time where you plan out your
day. Its your time to be proactive instead of reactive. You decide what
needs to get done based on your context and when something is due, and
you get it done. Simple as that.

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How to be customer support


employee #1

So, youve landed yourself a new gig running customer support at


a snazzy up-and-coming startup. Congratulations!
I recently found myself in that exact situation after joining the dashing folks
here at Baremetrics. (Im Kaegan by the wayHi! Go ahead and read the
tale of Josh hiring me. Also, follow me on Twitter.)
Theres a ton of content out there about building a startup, but not a ton for
jumping onboard once its already gotten off the ground and overhauling
some part of it. Ill be tackling this from the perspective of my role (Customer
Support), but really anyone who is joining an established startup will find
something to chew on here.
So, without further ado, I present: Kaegans Fantastical List of Things to do
(and not to do) When you First Start Doing Customer Support at a Startup, or
#KFLOTTDANTDWYFSDCSAAS for short.

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Read all the things. Twice. Seriously.


Youve got the skills, the experience, the know-how and the confidence, but
you probably dont know a heck of a lot about the product youre going to
be supporting.
Theres a good chance your new startup wont have much internal
documentation. So here are three places you can undoubtedly siphon some
knowledge from

1.

Your teams chat At Baremetrics, we use the awesome (and


Vancouver-based!) team communication tool Slack. One of its best
features is that its entire history is searchable. Early on I spent time
rummaging through some of the more recent history in channels like
#backend and #business. Youll get a look at whats currently being
worked on (in other words, whats broken) and as a bonus, insight
into your new companys culture. Dont get too carried away though
theres no need for you to know what your designer had for lunch 3
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months ago (though having gotten to know Nick, it was probably


tacos).
2. Historical help tickets Youll learn a ton about how folks use the
product, what the pain points are, and likely get some ideas about
what to work on once you get up and running. For me, it was also
great to get a feel for the way customer interactions had been
handled up until that point. As an example, I noticed that Josh likes to
say :highfive: when something has gone swimmingly, which Ive gone
ahead and appropriated as my own.
3. API and Developer Documentation Baremetrics simply couldnt
exist without Stripe. So I went ahead and read the Stripe API
documentation. All of it. Crazy, right? Well, maybe not. Not only are
our developers heavily using Stripes API, but our customers are
using it as well. Simply put, I needed to speak their language. Im by
no means a programmer, but I can now hangout in our #backend
Slack channel and (mostly) understand the conversation going on
around me.

Takeaway
Your biggest weakness at the get-go is a lack of understanding of the ins
and outs of the product, and thats fine! Take advantage of the time you
have early on to read everything you can get your hands on. However, you
can only learn so much by reading, which leads me to

Get your feet wet right away


If youve already worked in customer support, then youre familiar with
reading and responding to customer questions. If you havent, well youve

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probably (I hope) spoken to other humans before, so youre all set on that
front. So why not jump right in?

Heres a couple of things I did in my first week


1.

Answer tickets Use your resources (chat history, ticket history and
API documentation) and have a crack at it. Ask lots of questions, but
try your best to find the answers yourself. Youll remember a lot more
than if youre handed the answers (teach a man to fish and so on).
Plus, your new team will think youre awesome, which is never a bad
thing.

2. Write and update help documentation If youve been doing some


reading, youll surely have taken some notes (more on that later), so
why not spruce them up a little and offer them to your customers?
Back in college, I found one of the best ways to study was to teach
the thing I was trying to learn to my study group. Its one thing to read
about a concept, but its another to actually teach it. Your customers
will be better equipped to perform self help, and when things get
busy, youll have already completed a major project.

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Takeaway
Dont wait too long to get started. Take that new job excitement and channel
it into something. Of course, make sure to check with your team that its
okay, and have someone look over your work for the first little while.

Write down all the things


The first few weeks are going to feel like an information overload. The
important thing is to make sure youre taking noteslots of notes. You can
use anything: the notes app on your phone, Notepad/Wordpad, Evernote
anything. We use Trello, so I jumped on that bandwagon.

Not only will your notes be great to draw on later when the same question
or problem inevitably comes up again, but you can look back on them and
get some self-assurance (Hey! I know that thing now!).

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The most important thing here is that you are in an incredibly unique and
never to be repeated situation. Youre both a new customer of the product
(in that youre experiencing it for the first time) and youve got a behind-thescenes look into the inner workings of the company. So youre going to
notice thingsbroken things, confusing things, wonky thingsthat youll
never notice the same way again.
Now, why not just blurt these things out as you come across them? Well,
theres a few reasons for that.
1.

Youre still learning the ropes The other side of the newness coin
is that youre, well, still new. Some stuff may seem weird, but you
dont yet know enough to know why things are the way they are. So
hang tight.

2. You probably dont have the answer yet On day one youll notice
some things that could use a little elbow grease, but you probably
wont be able to craft a solution right then and there. If all youre
doing is identifying problems, youre putting the onus on the other
guys to fix it. But youre here to make things better!
3. They know Startups grow quickly, and things that worked six
months ago may not be working now. But theres sooo much going
on, that fixing it has probably just fallen off the radar.
Heres an example: when I started, we were using Intercom to handle
customer support questions. Intercom is fantastic and does a lot of
great things, but once you need to start tracking bugs, feature
requests and answering lots of questions in a day, it starts to show
some cracks. I recognized this almost right away, but I decided to
stick with it for a while until I could propose something better.
Fewer than two weeks in, Josh messages me

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So, FYI, if you find Intercom isnt working as a way to handle


customer support, Im all ears on a different solution. Weve tried a
number of things over the past year, but dont feel shoed in to
Intercom if you think theres something else wed benefit from.
Boom. Josh already knew.
We were already using Help Scout for support documentation, which made
it an easy choice to use for tickets too. By the end of the day, we had
migrated over.
Sidenote: We still use Intercom for most of our customer marketing, just not
for support.

Takeaway
Youve got a fresh pair of eyes and they wont last forever. Soon the quirks
will become the status quo. So take notes and start thinking of solutions!
Youll come away with a smorgasbord of projects to work on for the next
while.

Closing thoughts and next up


I can confidently say that I have broken every single one of these guidelines
in my first few weeks on the job (some more than once). So long as your
founder/maker/boss-person was super thorough in the hiring process,
theyre probably stoked to have you there. So go crazyask questions
break thingsfix thingsthen break them again.
I have at least four months worth of projects lined up, most of which came
out of notes I took in the first week or two. More blog content, more swag,
more Twittering, more of everything!

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Chapter 4
Know Your Metrics

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The Holy SaaS Grail: Monthly


Recurring Revenue
Recurring revenue is the lifeblood of any SaaS. Its what makes
building a SaaS so appealing. You dont have to worry about oneoff sales that may or may not return. If youve got a solid product,
they automatically return. Every. Single. Month. Amazing!
The metric that youll use to track that pot of recurring gold is called Monthly
Recurring Revenue (almost always referred to simply as MRR). In general,
its a straight forward metric, but there are some nuances that youll want to
take in to consideration depending on your business model.
Curious what the MRR is of another startup? Check out our actual MRR in
our public dashboard.

What exactly is MRR?


MRR is all of your recurring revenue normalized in to a monthly amount.
Its a way to average your various pricing plans and billing periods in to a
single, consistent number that you can track the trend of over time.

How do you calculate MRR for a SaaS?


Say you have Customer A paying $100/mo and Customer B paying $50/mo.
Your MRR would be $150.
Thats the customer-by-customer way to do it. Which is painfully tedious and
requires you to spend time in a spreadsheet which will make you want to
kick things in the shins. Bad outcome.
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An easier way to calculate it is to multiply the total number of paying


customers by the average amount all of those customers are paying you
each month (know as ARPU, which we covered briefly in the article on
churn).
So 5 customers paying you an average of $100/mo would mean an MRR of
$500. Ah, much easier.
Baremetrics (analytics & metrics for Stripe) does this entire calculation
automatically for you with a single click. Yes, really.

What about annual or quarterly plans?


Any non-monthly billing period should be normalized in to a monthly
amount. So if you have a $1,200 per year plan, youd just divide by 12
(adding $100 to your MRR figure). For quarterly, youd divide by 3.

Calculating New MRR


As you begin growing your SaaS, youll want to know not only what your
current MRR is, but what factors make up the change in your MRR over
previous months.
If you add a $1,000 in new MRR, you want to know where that came from,
right?
There are 3 elements that make what well call Net New MRR.

New MRR = Additional MRR from new customers


Expansion MRR = Additional MRR from existing customers (generally in
the form of an upgrade)

Churned MRR = MRR lost from cancellations and downgrades


Net New MRR = New MRR + Expansion MRR - Churned MRR
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If you churn more MRR than you get from New or Expansion MRR, you end
up losing MRR that monthwhich would make you sad. Very, very sad.

The holy grail of MRR


This doesnt get talked about much, but one of the most powerful ways of
growing your business is with Expansion MRRthat is, MRR from your
existing customers.
When Expansion MRR is greater than Churned MRR, you get end up with a
money-printing machine that nearly knows no bounds.
If your Expansion MRR always outdoes the revenue you lose from a churned
customer, then your revenue churn becomes somewhat of a non-issue
because every new customer you bring is then giving you more and more
money over timeso much so that it overtakes the revenue you lost from
churn.
This is referred to as Negative Churn.
Expansion revenue typically comes from upgrades to more feature-rich
plans, recurring add-ons or additional users (when you charge on a per-user
basis).
If you arent taking advantage of expansion MRR, I highly suggest you look
in to it and test it for your business.

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The secrets of LTV


Of all the metrics you need to track as a SaaS company, lifetime
value (LTV) may be the most mysterious. It feels difficult to
calculate, and then once you have the calculation, you dont really
know what to do with it whether its good or bad.
Hopefully today we can demystify the metric and offer some insight to help
you use that metric better within your company!

What is customer lifetime value?


So, what is lifetime value? The lifetime value of your customer is simply the
total amount of money youre likely to make off a given customer over the
life of their account.
Say you charge $100/mo for your service and a customer stays with you for
12 months. Their LTV would be $100 12 = $1,200.

Why does LTV matter?


The primary reason LTV is so important for your SaaS business is that it
drives what you can spend to acquire new customers. If your customer
acquisition cost (CAC) is $100 and that same customer has an LTV of $500,
youre basically printing $400.
Can you say money machine?!?!?!
The higher your LTV and the lower your CAC, the faster you can grow your
business.

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Is it really that simple?


Sounds easy, right? Well, it mostly is. The kicker here is that taking the toplevel view weve mentioned thus far isnt a great longterm solution.
Why? Because all customers are not created equal.
You need to know what the LTV is of each major customer segment. For
SaaS companies, thats usually the various price points you offer.
Joe on your $30/mo plan will almost certainly have an LTV that is a fraction
of what the LTV is of Sally on your $200/mo plan. And not just because
$200 is more than $30.

LTV and Churn


The reason those LTVs will likely be so different is because of one nasty
word: churn.
Generally speaking, users on your lowest-priced plans will also have the
highest churn, making it your most dismal LTV compared to the other plans.
And remember what we said earlier? LTV drives what you can spend to
acquire customers. If the average customer takes $200 to acquire, it makes
no sense to spend that to get a customer with an LTV of $100.
Knowing what your LTV is for each customer segment is critical.
This is something Baremetrics (SaaS analytics for Stripe) offers right out of
the proverbial box, available as soon as you connect your account.

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Getting nerdy with LTV formulas


Earlier I mentioned a basic way to calculate churn for a single customer, but
that obviously isnt practical for running your business (since you hopefully
have more than one customer).
Lets take a look at the actual formula for calculating LTV.
LTV = ARPU (average monthly recurring revenue per user) Customer
Lifetime
This could also be calculated using churn (which is a number you likely have
more readily available).
LTV = ARPU / User Churn
The higher your user churn, the lower your LTV will be. You can see why
paying attention to both LTV and churn is so critical.

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Slaying the churn beast


Churn. The archenemy of any SaaS company. No metric causes
more sleepless nights and receding hairlines. Its the slow leak that
regardless of how handy you are, youll never completely plug. Its
the bane of our business existence and we want it gone! Now!
Ahhhhhhhh!
Thankfully, there are quite a few things you can do to reduce it. But first, lets
make sure were on the same page with what churn is, why its so important
and the types of churn there are. Then well tackle some specific things you
can do to reduce it.

What exactly is churn?


Churn can most basically be defined as resources lost or the rate of those
resources lost in a given period of time. Typically its referring to users or
revenue lost and is usually represented with either a percentage or dollar
amount.
For example, if you had a 5% user churn rate, that means each month 5% of
your customer base is canceling.
Or if you said you had $2,000 in monthly revenue churn that means you lost
$2,000 in monthly recurring revenue from either customer cancellations or
downgrades.
The simple formula for it is: Lost Resource / # of resources at beginning of
interval

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Im sorry I just used the word formula. More plainly put, say youre
calculating user churn for the month of May. You had 100 customers at the
start of May and 5 cancelled during the month.
Youd say (5 customers / 100 customers) * 100 = 5% user churn
Important note: you ignore any new customers added during that time
frame.

User Churn vs. Revenue Churn


Most people talking about churn are referring to user churnbut theres
another type as well.
User churn is the number of customers youre losing in a given timeframe
(typically per month or year).
But theres also revenue churn, which is arguably even more important.
Revenue churn is the amount of revenue youre losing in a given timeframe
due to downgrades or cancellations.
The reason why its such a vital metric is that it has a greater affect on your
business. If you look at just user churn, youre ignoring how much revenue
youre losing with those churned user.
A churned user on a $50/mo plan isnt nearly as bad as a churned user on a
$500/mo plan. Just looking at user churn would gloss over the fact that you
lost a major customer. Revenue churn effectively weights your user churn to
be a more accurate representation of how your business is doing.

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Why its so important to measure


Okay, you get the how but what about the why? Why is it so important to
track these types of churn? It comes down to growth and customer
acquisition.
Churn is the antithesis of growth. Its the undoing of all your hard work and
money acquiring customers.
The more customers you acquire now, the fewer there are to acquire in the
future, which means each new customer is incrementally harder and more
expensive to acquire. So if you keep bleeding customers, youre making it
increasingly harder to grow down the road.
Churn also points to a problem with the product itself. You need to identify
what those problems are because that points to the reason people are
churning. Knowing those problems gives you a game plan for reducing the
churn.

What are ways to reduce churn?


So, speaking of thatwhat are some common ways to reduce churn?
You need to make your product indispensable. Make it part of your users
daily workflow. Provide frequent value that they cant live without.
One way to do that is with something like a daily/weekly email report that
shows the value youre providing.
At Baremetrics, we do this with daily/weekly/monthly email reports that
show key metrics.

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Another way to make your product indispensable is with multi-user support.


Adding this feature means your product becomes part of an entire company
or departments workflow, making it much harder to part with.

Whats an acceptable churn rate?


So whats acceptable? Typical good churn rates for SaaS companies that
target small businesses is 3-5% monthly. The larger the businesses you
target, the lower your churn rate has to be as the market is smaller.

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For an enterprise-level product (talking $X,000-$XX,000 per month), churn


should be < 1% monthly.
Most early-stage SaaS companies Ive observed typically have churn around
10-15% for the first year as they work out exactly what their product needs to
do, then theyre able to reduce it pretty quickly.

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Looking at metrics in a healthy way


Most business owners have very little actual business training, myself
included. I dont have an MBA. I didnt study at some prestigious school. Im
an entrepreneur, a maker of things and a problem solver. And my guess is
youre very much like me.
Metrics, in and of themselves, arent terribly interesting. Youd rather be
building your product or serving your customers than staring at
spreadsheets wondering what all the numbers mean.
But youre torn because you also know that those metrics matter. If you
dont pay attention to them, youll never know if your business is doing well
or if its on the rocks.
Most books and guides Ive read provide complex spreadsheets and
dashboards that require you to fill in an absurd amount of information,
demanding you track so many data points its nearly impossible to stay on
top of. And you dont. Thats the problem. In the same way I have no desire
to do bookkeeping, I have no desire track hundreds of metrics.
Thankfully, it doesnt need to be that complex.
Staying on top of hundreds (if not thousands) of metrics is neither helpful
nor healthy. You need to be able to look at key metrics, see how theyre
trending, and then move on to running your business.

Defining what matters


Youll need to identify a few metrics that indicate your business is headed
where you want it to go. These are usually called key performance

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indicators but that phrase is boring enough that you and I both would have
more fun gouging our eyes out.
Depending on the stage and the end goals of your business, what exactly
these metrics are could vary quite a bit.
For our example here, well use Baremetrics. When we launched, there was
only one metric that mattered more than anything else: monthly recurring
revenue. If monthly recurring revenue wasnt going up, then we were doing
something wrong.
But why? Why did that one metric matter so much? Because without, we
couldnt keep working on the product. If we didnt get paid, we didnt stay in
business and our customers no longer had the product they wanted.
You have to find that metric for your business. It could be revenue, it could
be lifetime value, it could be customer growth. It could be literally anything.
But you have to find it and then you have to track it obsessively. Because
knowing that metric means you know how your business is doing and if
something needs to change.
Thats what metrics are ultimately about: identifying what needs to change.
Dont overwhelm yourself with metrics that wont help you run your business
in the stage that its currently in.

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Chapter 5
Money

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Why we spent $250,000 in 120


days (and the mistakes we made)

A few weeks back I wrote about our experience going from


bootstrapped to funded as we raised a $500,000 round, why it
was good for our business and some of the things weve learned
along the way. Now, I want to give you an in-depth breakdown of
why and how we spent $250,000 in the months after receiving our
funding.
The purpose of this post is to give some insight into the costs of a small
team building a startup. Maybe there are places youll realize youre
spending too much, or areas where you could stand to spend more.
There were certainly times we could have done things cheaper or instances
where the money I spent was a bad idea or wont payoff for many more
months. Im definitely not an expert at building a company, so you may very
well balk at some of this. If you do balk, please balk in the commentsno
sense in internalized balking. Its unhealthy.
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Payroll: $200,000
The large majority of our expenses have gone to payroll for our team and
contractors.
We spent roughly $50,000/mo on payroll, payroll taxes, payroll processing
and contract workers. In the 4 months since the funding, this added up to
roughly $200,000.
This is the biggest internal struggle for me. We arent spending Silicon
Valley-amounts on salaries, but were certainly not on the low end. From the
perspective wanting my team to love where they work and not have to
worry about money, Im very happy with the salaries everyone gets.
From the perspective of making our funding stretch as long as possible,
were spending too much here.
This isnt a topic thats black and white, though.
We could have gone the extreme-cost-savings route of outsourcing the
entire development to a dev farm on Elance for a microscopically small
amount, but I guarantee you wed have an awful product. We can all agree
thatd be a bad idea.
On the other end of the spectrum, you can certainly spend too much on
salaries. We fall somewhere in the middle of that spectrum, probably on the
higher side.
This has unquestionably been the area Ive had to learn the most. Figuring
out what everyones salaries should be is unbelievably difficult.
In hindsight, doing what our pals at Buffer do with their Salary Formula
would have been really nice.
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Infrastructure: $8,500
The infrastructure to run Baremetrics, while not huge by any real
measurement, still isnt cheap. It takes a decent amount of computing power
to crunch the numbers for our data set, which is over 55,000,000 records
and just over 65GB in size, and growing daily.
Most of our hosting costs are tied up in Postgres (on Amazon RDS) and
background workers (on Heroku). Were working on moving away from
Heroku, which should reduce hosting costs a good bit.
We typically dont hold back on spending more money on infrastructure as
thats a key part of making sure Baremetrics is useful. We certainly havent
aced this yet, but were worlds better in this department than we were a
year ago.
We also have a surprising number of domains (34, to be exact). Between
purchasing the .com, a few variations on the domain (to handle
misspellings), and domains for some big marketing campaigns in the future,
weve spent around $1,500 on snagging the domains we needed.

Tools: $6,000
We use a lot of tools to make running our business easier. Tools that, in
many cases, replace the need to hire people.
Tools are an area many founders get hung up on. They make the mistake of
thinking its a good use of their time to build internal tools as a method of
cost-saving instead of focusing on adding more value to their own product.
Its one of the things we fight against here at Baremetrics. Some companies
leave saying, Were just going to build our own internal revenue tools.
Then, 3 months later they come back having wasted hundreds of developer
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hours and realized how hard it is to do correctly and they reactivate their
account.
Building something for weeks (or months) just so you can save a couple
hundred bucks is an intensely bad use of your teams time. Youre much
better off spending that time adding more value to your product, which in
turn makes you more money.

Travel: $8,300
The large majority of our travel expenses were wrapped up in the plane
tickets and lodging expenses associated with the retreat we did last month.
Yay plane tickets!
Teams of our size that arent remote wont have these types of expenses,
but its a necessary part of the game for us and something Im happy to
spend money on.

Job Listings: $1,900


Turns out job listings on major sites adds up quickly, with some listings
costing as much as $450.
I broke out some of these expenses in our Guide to Hiring Remote
Customer Support.
In hindsight, the large majority of the job posts were useless. None of our
full-time, paid job listings lead to hiring anyone.

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Advertising: $7,800
The primary form of advertising we do is retargeting (via Perfect Audience).
In the past its gotten us new customers for as little as $6. Lately its been
more expensive, but its still very much worth it for us.
Weve tried Twitter Ads and Google AdWords, but in general those require
sacrificing a limb per click and arent worth it.
This is an area that in hindsight I could have saved a solid $3-4k, especially
on AdWords. I wanted that to work so badly and didnt cut ties soon enough.

Accounting & Legal Services: $9,600


Accountants and lawyers are people I happily pay for, and in my experience
you get what you pay for. I have zero desire to learn the ins and outs of tax
law or figure out the right way to word a contract. Its an epically bad use of
my time and Id screw it up.
A big chunk of this total was spent incorporating Baremetrics and handling
all the paperwork for our round of funding.

Insurance: $2,000
We used Founder Shield for that and it was entirely painless. I dont have
more to say about this because Founder Shield literally made it a no-brainer.

Employee Benefits: $5,000


I want my team to be happy, and part of that is having various perks/
benefits. Its important to equip your team to not only work well, but also live
well.
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For us that means everyone gets a Kindle Paperwhite with unlimited Kindle
books, a Jawbone UP, minimum vacation days, random gift cards and a
$250/mo remote stipend that can be used for anything (phone, internet,
food, gym membership).

Runway
Above I broke out how we spent money for the 4 months following our
funding round. Thankfully, weve brought in over $100,000 in revenue
during that time frame as well, and were growing revenue about 10%
month-over-month.
A common scenario when you take on funding is that you operate at a loss
for a while. The idea being that spending a bunch of money now results in
making more money later. More than you would have otherwise. You
obviously cant operate at a loss foreveryou only have a limited amount of
money to burn through. This is your runwaythe amount of time you have
until you either need to be profitable or find some new influx of cash.
At our current rate, well actually be profitable again well before we burn
through the cash. The only real scenario that would change the situation is if
we make another full-time hire soon. In that case wed effectively end up
with a 12-month runway.
This post is honestly a bit scary for me. It opens the doors wide for extra
scrutiny from potential customers, competitors and other entrepreneurs. My
hope is that offering some insights in to how were spending money will
help both other startups and us to spend our money more effectively
instead of all things money being kept private.

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The startup guide to finding &


measuring product/market fit

Theres this overwhelming urge in the early stages of your


company to prove your idea. You want to validate that youre not
just completely wasting your time. There are some really simple
ways to do that validation (will anyone give you money? is your
churn rate <5%?, etc). Then there are slightly more formal methods.
One of the methods that a lot of startups look to for validation is product/
market fit, and in this article well take a look at what product/market fit is,
how to find out if you have product/market fit, how to get product/market fit
if you dont have it, and some tools and resources to help along the way!
As a caveat, I dont think survey methods, in and of themselves, are all that
special, but I think the process of doing them, and sifting through the
responses, can surface a lot of interesting and actionable data. For instance,
we use NPS surveys for gauging customer satisfaction. I dont particularly
care about the actual score itself, but more the individual responses.

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At any rate, lets jump in!

What is product/market fit?


Marc Andreessen coined the term, saying

Product/market fit means being in a good


market with a product that can satisfy that
market.
Good meaning that the market size is large enough to sustain a business.
It doesnt necessarily mean the market is massive, but certain niches simply
dont have a market regardless of how much you might want there to be
one (i.e. Palm OS app for tracking your Furby collection).
Practically, product/market fit just means you have a product that the market
really loves and cant live without. This is important because if a market cant
live without your product, youre in a very strong position to grow. And if
youre in a large market, youre in a very strong position to growa lot.

How to find out if you have product/market


fit
Figuring out if you have product/market fit is as simple as sending out a
survey, but as a basic rule of surveying, getting at least a 100 responses will
go a long way towards statistical significance. This isnt a survey you send
out to your first 10 customer (you need to be talking to each of them
individually). This is something you send once youve got 100+ customers
(and ideally much more).

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At the core of a product/market fit survey is a single question:

How would you feel if you could no longer


use this product?
With three potential answers: 1. Very disappointed 2. Somewhat
disappointed 3. Not disappointed (it really isnt that useful)
If at least 40% of your respondents answer very disappointed, then that
is a strong indicator of product/market fit.
Thats an overly simplistic way to measure it, but I also think spending too
much time trying to label yourself as having achieved product/market fit can
also be a little futile and doesnt, on its own, actually improve your business.
Whats more important here is the process. Sure, you could just ask that one
question, run the survey and define your business based on that single
number. Or, you could take the opportunity to ask a few other questions to
get better context about why someone answered the way they did! Data is
only as useful as the context in which it is gathered and presented.

How to run a product/market fit survey


Lets take a look at, step-by-step, how to run a product/market fit
survey.

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Build your list


You should only send this survey to current customers. Preferably ones who
have stuck around for at least a few months. If you have both free and
paying customers, you should only send to the paying customers as theyre
the ones who actually affect your business.
Ideally your list is over 100 customers. The more, the merrier.

Build your survey


To get the most actionable insights from your survey, here are the questions
you should ask (well use Baremetrics as the example company).
1. How did you discover Baremetrics? (multiple choice)

Blog
Friend or colleague
Search engine
Facebook
Twitter
Other
You are trying to understand how all of your current customers are finding
you. This will also help you segment the responses later on to figure out
where your most qualified customers are coming from.
2. How would you feel if you could no longer use Baremetrics? (multiple
choice)

Very disappointed
Somewhat disappointed
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Not disappointed (it really isnt that useful)


N/A - I no longer use Baremetrics
This is the core question weve already talked about, with the addition of
one option (N/A). Youre only including the N/A option so you definitively
filter out responses from inactive customers.
3. Please help us understand why you selected that answer. (text area)
If they selected, for example, Not disappointed then you certainly want to
know why they selected it. These answers are extremely insightful because
theyll point to weak spots in your product.
4. What would you likely use as an alternative if Baremetrics were no
longer available? (multiple choice)

I probably wouldnt use an alternative


I would use: ____________
I think most startups pay far too much attention to competitors, but if you
find that a sizeable portion of your customers have a competitor at the top
of their mind, its likely because theyve been researching. This is a great
opportunity to find out exactly why theyve been looking around for another
solution.
5. What is the primary benefit that you have received from Baremetrics?
(text area)
This helps you surface the main reasons customers use your product and
basically writes your marketing copy for you (since you should be selling
benefits, not features).

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6. Have you recommended Baremetrics to anyone? (multiple


choice + text area)

No
Yes (Please explain how you described it)
Similar to the previous question, it helps surface what your customers find
most valuable about your product as well as the language they use, which
you can then work into your own marketing.

Analyzing your responses


Youve run your survey and have a whole pile of responses! Now what?!?!
The primary segmentation of responses should be done on answers to the
How would you feel if you could no longer use Baremetrics? question. You
want to find the commonalities among each of those groups of people.

Not disappointed
If the majority of customers would not be disappointed if they could no
longer use your product, youve got a problem, and not one you can ignore.
Customers do not care about your product, and when youre building a
business on your productthats a significant problem.
Dig through all the responses, try to find out why they dont care. Also, look
at the people who said very disappointed or somewhat disappointed
and see if their responses can give some guidance on how to overhaul your
product.
Youve got a lot of work to do here.

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Somewhat disappointed
When the majority say somewhat disappointed, youre close! Spend a lot
of time segmenting the responses based on the other questions to
specifically identify the customers that said somewhat versus very and
compare them.
Learn what the difference is between those segments, spend time talking to
those customers and make a game plan for improving the product.

Very disappointed
If the majority say they would be very disappointed, then congrats! Youve
got product/market fit! You are likely about to or already have started to
experience some solid growth.
Spend time optimizing marketing messaging based on the responses to the
other questions in the survey. Dont hold back on resources (money, time,
etc) that fuel growth.
If youve ever thought about raising money, this is a prime time to do it as
investor cash can be fantastic when used to fuel an already burning growth
fire (I feel like I should hashtag #growthhack that phrase).

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Does Baremetrics have product/market fit?


Back in April, we ran this very survey. In total, we got 138 responses. Here
are our results.

Very disappointed: 32%


Somewhat disappointed: 58%
Not disappointed: 11%
Were pretty close! Given how early we are in the life of our company, and
how much were expanding in the coming months, Im happy with this.
Certainly room to improve, but I think its a solid spot to be in.
The feedback we received in the open-ended text fields has driven a lot of
upcoming product features and improvements.

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Tools, resources & additional reading for


product/market fit
Now that you know how to run a product/market fit survey, here are some
others tools, resources and articles to help out!
Quora answers to How do you define Product-Market fit?
The Illusion of Product/Market Fit for SaaS Companies
The Never Ending Road To Product Market Fit
Building Product After Product-Market Fit
Product/Market Fit survey for Slack
Survey.io Tool built specifically for sending these surveys.
Thank you to Hiten Shah, whos talk at MicroConf really got me thinking and
researching this as a method of product feedback.

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How retargeting got our SaaS $650


for $6
Retargeting is a mystical world of unicorns and fairiesclothed in a
shroud of banner ads. If not used properly, you can blow through
thousands of dollars in no time and have no new customers to
show for it.
So, since everyone likes unicorns and fairies, I figured it might be interesting
to take a look at how weve been using retargeting for Baremetrics with
pretty great success, acquiring new paying customers for as little as about
$5-6.

What is this mystical banner-ad-shrouded


retargeted unicorn you speak of?
If youre not familiar with it, retargeting is a type of online advertising that
resurfaces your brand/product around the web after a user has visited your
site.
So for instance, if youve visited the Baremetrics site, youll start seeing
Baremetrics ads on other sites around the web, including social networks
like Facebook. And yes, reading this article puts you in our retargeting list.
You shall now be subjected to our beautiful adseverywhere. :)
The idea here is that once youve expressed some level of interest in
Baremetrics (as indicated by the fact that you visited the site), then youre
much more likely to become a paying customer than Joe Schmoe who has
never even heard of us, which is the way typical banner ads work.
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Sounds fantastic from a marketing perspective. Of course everyone


everywhere should do it, right? Well, no. In fact, theres a decent chance you
shouldnt drop everything and start doing it today.

When is it a bad idea?


Lets talk first about who ad retargeting probably wont work so well for.
As you almost certainly are familiar with, most people dont really notice or
pay much attention to ads. To make people take notice and, more
importantly, take action you need to make it clear its worth their while.
Specifically, you need a strong value proposition. If the value youre
bringing to the table isnt immediately obvious, youll need to do a lot more
work and youre at risk of blowing a large amount of cash if youre not
careful. Dont blow cash. Youll be sorry. And sad. And hungry. And
potentially homeless if you seriously overspend. No pressure, though.
If youre just throwing money at some simple retargeting campaigns with
banners showing your logoplease stop them now. Seriously. Stop it.
My buddy Brennan Dunn has written at length about using retargeting
effectively by selling value and not the product itself. I 100% agree with him
on that notion, and youd do yourself a large favor to go read that article.
However, Baremetrics does happen to have an immediately obvious value
proposition (not fair, I know), so lets take a look at how that has worked well
for us.

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How has retargeting worked for


Baremetrics?
For other startups Ive run, retargeting never worked well. Those products
had more complex value propositions in crowded markets and so
everything I tried hit a brick wall. I spent thousands of dollars with nearly no
conversions and I had all but written off ad retargeting completely.
Then I decided to give it a go for Baremetrics just to see what would
happen. And it worked. Hot dog, it worked.

The main relevant number there is the aCPA, which is ultimately the cost per
acquisitionhow much Im spending to acquire a new customer.
The average over the past 2 months has been about $13 across the 2
campaigns Ive run. Typical banner ads have run around $21 per acquisition
and Facebook ads have been about $6 a pop.
Considering the LTV of the average Baremetrics customer is around $650
Im practically printing money here. $6 to acquire a $650 customer is
phenomenal.
But why has this worked so well? Glad you asked.

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Why retargeting has worked for


Baremetrics
The exact reasons why one method works for one company but doesnt
work for another could be debated right in to the ground, but I do have a
hunch.
Baremetrics is immediately recognized as a much needed solution to a big
problem. Stripe offers very little on the metrics side, so pretty much any
SaaS Stripe user has a need for Baremetrics.
On top of that, theyve likely thought about the lack of metrics or, even
better for me, theyve tried to do it themselves and failed. They are keenly
aware that the problem Baremetrics is solving is a major pain point. Theyve
felt the pain and the solution to that pain is immediately obvious.
So the typical scenario here is someone finds their way to the Baremetrics
site, reads about the product, loves the idea, but gets distracted or isnt
convinced the premium price is worth it.
Then, over the next few days, they start seeing Baremetrics ads
everywhere. Seriously. They cant get away from them. They are constantly
reminding of that pain theyre experiencing every day and the solution to
that pain is a click away.
Because our value proposition is so simple and so obvious, it takes
relatively little work to get them to convert. They just need to be reminding
of their pain. No need to onboard them into a drip email campaign or give
them any free resourcestheir pain is blatant and Baremetrics is a no-hassle
fix. Then, the main reason for not signing up initially (price) because less of
an object because that pain has been nagging them more.

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For reference, here is a smattering of the various banner ads weve have or
have had running.

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What should you do?


To start getting your feet wet in the world of retargeting, I suggest running
some test campaigns. Perfect Audience is my tool of choice.
But you need to be very intentional with your testing.
Run two campaigns side-by-side with one being focused on your brand and
the simple value proposition your product offers and the second being one
that drives people to something tangentially related to your product, such as
an email course thats geared towards a specific problem they have. Again,
that article from Brennan Dunn is fantastic walkthrough of setting that up.

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Why an unlimited plan is toxic for


your SaaS
Pricing products is hard. Its one of the most difficult decisions
youll make when creating any type of product (SaaS or otherwise),
as theres no easy or right answer to how much should I
charge for my product?
But there is one bit of advice that I strongly urge you to consider: never offer
an unlimited plan.
Early on I made this mistake with other SaaS products. I had never built a
business on recurring revenue before, so coming up with a good pricing
table was the same as pulling numbers out of thin air. After coming up with
what, I thought, was a great set of plans, I decided Id shoot for the
proverbial stars and throw on an unlimited plan for a whopping $99. Ha!

The temptation to give away the farm


When youre brand new to pricing, its easy to think If I can get anyone to
pay me $99 a month, Ill be set! Youre itching to make some money, any
money, and youll give away the farm to try to entice people to fork it over.
But stop. Stop giving it away. Chances are youre already charging far too
little, and having an unlimited plan just puts the nail in the coffin. Heres
why.

The value/revenue cap


When youre creating pricing plans, you should be pricing based on value.
You need to find a balance of where what theyre paying is comparable to
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the value youre providing, and the more value you provide, the more
money you should make.
With that in mind, does unlimited makes sense? No. Because they get
unlimited value while you just capped how much revenue you can make
on any given customer. Now would be an appropriate time to facepalm.
Do you realize how bad of a move that is? The type of customers who will
make use of that unlimited plan are exactly the customers who will be
more than happy to pay you exponentially more than youre charging!
Theyre the ones who stand to get the most value and the more they use
your product, the more value they get! Charge them accordingly.

Moving to the world of enterprise


A lot of entrepreneurs cringe at the thought of enterprise sales. I know for
me it conjured up images of used car sales men. But the reality is that its
nothing like that unless you want it to be.
When youre offering a product people are itching to use and happy to pay
for, theres no reason you shouldnt charge more for it, and the sky is mostly
the limit.
Many times that means offering enterprise planswhich is just a fancy way
of saying custom plans that do a better job of matching the value youll get
with the revenue we need to keep serving you well.
Throwing a simple contact us if you need a different plans link could
literally mean thousands in additional monthly revenue than you otherwise
would have given away for hundreds. Nobody wins then.

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For Baremetrics, nearly $2000 in recurring revenue comes from our


Enterprise plans, and those Enterprise customers are some of the greatest
customers we have. Theyre happily getting a lot of value and were able to
serve them better. Everybody wins.

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4 signs your SaaS business is dying


Having spent the better part of a decade building various
businesses (B2B, B2C, e-commerce, digital goods, SaaS), Ive
found there are a number of indicators that give insight in to the
health of a business in its earliest stages.
Lets take a look at a few signs that your SaaS business isnt doing so hot
and what you can do to rescue it.

ARPU is less than $20


ARPU (average monthly revenue per user) is calculated by taking the
monthly revenue of all your users and dividing by the total number of paying
users. Its the average amount youre charging across all of your accounts.
A low ARPU translates to low margins. Even if we ignore technology costs
associated with each account (such as server resources), the margins are
almost reduced to $0 because of one thing: support.
Support work is a cancer to progress. It can (and often does) bury new
businesses with a low ARPU as youre generally short-staffed but have
hundreds or thousands of low-paying users that demand high levels of
support.
Lets put it this way: would you rather support 1,000 customers paying $3/
mo or 30 customers paying $100/mo?

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When you consider that those $3/mo customers are usually the most
demanding and least loyal customers youll ever have, you can see why
having a low ARPU can quickly drive your business in to the ground.
So how do you resolve this? Charge more.
If youre B2B and charging less than $20/mo for any plan, youre just grossly
undervaluing the service you provide. If you provide even an ounce of
business value, you should be charging over $20/mo. End of story.
If users wont pay more, then youre not solving a big enough problem or
arent solving it in a way that provides enough value.
If youre B2C, theres honestly very little you can do. Most B2Cs have a
notoriously hard time breaking even. The stories of B2C products surviving
(without being propped up by millions in VC funding) are few and far
between.
Baremetrics ARPU is currently around $6570. Id like to have that closer to
$150200 as it means Im able to offer better support and service to our
customers and also means needing fewer support folks down the road.

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Revenue ceiling is less than $100/mo


Your revenue ceiling is the maximum amount of money youre able to
charge any given customer. Its a great measuring stick of the value youre
product can bring to the table.
But why does value matter? Value has a direct correlation to revenue and
churn.
High value = high revenue and low churn.
Low value = low revenue and high churn.
If youre not able to charge anyone over $100/mo, you need to provide
more value. As you provide more value (which businesses happily pay for),
youll be able to charge more and grow your business faster.
This is also the reason unlimited plans are toxic. They instantly cap your
revenue ceiling.
Baremetrics revenue ceiling is currently around $700/mo and with the
things weve got in the pipeline, that will likely double in the coming 6
months or so.

Monthly churn is over 25%


Churn is the percentage of users (or revenue) that you lose each month.
With a churn rate of 25% or higher, youre bleeding out a fourth of your
business every month. Its absolutely unsustainable.
Businesses that have this high of a churn mask it with pretty high growth
which makes it appear that you arent doing so bad. As long as your growth
route outpaces your churn, then your user counts and revenue will go up.
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The problem is that growth rates plateau. You wont have high growth rates
for long and eventually the charts invert and within a few months youll be
running in the red.
To decrease churn you provide more value and increase engagement.
When you increase engagement with your product, you make it less
disposable.
A couple of quick-fixes to increase engagement are to provide something
like a daily/weekly/monthly email report (which conveys the value your
product offers) or adding multi-user support (which gets a whole team using
your product, making it hard to part ways with).
Baremetrics user churn is around 10% right now. Its double what I want it to
be, but its declining, so were headed in the right direction.

1 year in & less than $2000 MRR


When youve been live and selling your product for a year and still havent
broken a couple thousand bucks in recurring revenue, its likely you arent
solving a real, substantial problem.
When you arent solving a real, substantial problem, its not the time to suck
it up. There are too many easier and more profitable pains to solve.

What about hope?


If any of these signs hit home for you, it can feel pretty depressing. When
youve invested huge amounts of time (and possibly money), coming to
terms with the fact that its not working out is extremely demotivating.
But being honest with what is/isnt working is the fastest way to get to where
you want to be. Lifes too short to do things that dont make an impact.
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Im not talking solve world hunger impact. Im talking the type of impact
that changes your world, the world of your family, your kids, your friends and
the businesses your serve.
I worked on my past two SaaS products for over 3 years, many times
pushing through what I just assumed was par for the course. And then I
launched Baremetrics and realized how much better things could be. In less
than 3 months I surpassed what took nearly 3 years to build up to with
previous products.

Its a tough decision to cut your losses and move on, but pushing through
something that isnt working doesnt end well for you or your customers.
If I can help with thinking through any of those decisions, feel free to post
comments below or send over an email.

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Double your customer value: 7 ways


to reduce SaaS churn
When youre a brand new business, churn is generally something
you dont need to worry about. Or rather, there are probably
bigger wins than trying to figuring out how to reduce churn by a
few percentage points.
But eventually youll have to face it. Growth will eventually taper off and
churn will become a major issue to tackle.
If youd like an intro in to what churn is, the different types of churn and why
paying attention to it becomes of such a big deal, check out Slaying the
Churn Beast from the SaaS Metrics Academy.
Ill assume youre already familiar with what churn is, so well jump right in
and take a look at a few ways you can reduce both revenue churn and user
churn for your SaaS.

Identify the source


To reduce churn, you need to know exactly why it exists at all. Start by
talking to customers who cancel. Dont just send them some exit survey
actually have a human conversation with them like real humans do. Having
actual conversations lets you pick up on intricacies in their explanations that
you otherwise would miss by reading form field entries.
Also, identify some key metrics that indicate someone may be churning
soon. Alex Turnbull calls these Red Flag Metrics. Theyre certain actions (or
lack of) that your churned customers have in common that can help you

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predict if someone may be churning soon. This gives you a list of customers
that you can reach out to and hopefully mitigate them churning at all.

Increase engagement
Engaged users dont churn. Customers using your product on a regular
basis are doing so because they get value out of it. But as soon as their
engagement starts dropping off, theyre much more likely to churn.
Give your customers reasons to keep coming back. Provide a way for them
to get value on a daily basis. This could be in the form of a daily report
showing them whats changed/happened in the last day or showing them a
list of things to do in the coming day. Provide something that makes you part
of their daily workflow.

Help them succeed


When youre building products for other businesses, a major way to keep
them from churning is to make them successful. For example, with
Baremetrics, as long as were helping people understand and know what to
do with their metrics, were helping them build better businesses.
By providing solid metrics and giving insight in to why their metrics are what
they are, we help them run their businesses better.
It may be your tool thats specifically helping them, or it could just be great
customer service.

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Become part of the company workflow


I touched on this earlier: make your product part of your customers daily
workflow. More specifically, make your product part of the workflow of their
entire company.
The fastest way to do this is by having multi-user support in your product.
When multiple people within a company start getting value out your product,
its much harder for them to churn. Youve become part of an entire
organizations or departments toolsetand people dont like changing tools.

Attract the right audience from the start


All the tips in the world wont matter if youve been attracting the wrong
audience. This is a big reason why leading with free or cheap can
backfire on you.
When the first interaction with your company is anchored by free, youre
attracting customers who arent looking for the value you provide.
Attracting an audience thats primed to not only receive but also understand
the value theyre getting means youll have a much easier time down the
road conveying that value.

Convey the value


Speaking of conveying valueit happens to be a great way to reduce churn!
Show your customers on a regular basis the value youre providing or the
pain that youre solving.
One way we do this at Baremetrics is via a daily/weekly/monthly summary
email. Most users regularly receive this email that shows them how their
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business is doing.

The emails not only give them information they want to know, but also tend
to have an I love getting this email from Baremetrics! reactionand you
want people loving what your product does for them.
Summary emails are a fantastic way to convey the value youre providing.

Stay top-of-mind with retargeting


Ive written before about how we use retargeting for converting new
customers, but we actually also use it to keep customers.
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Many people who do ad retargeting filter out users who are already
customers, but we actually show ads to our current customers for the sole
purpose of keeping Baremetrics top-of-mind.
Your product is likely one of dozens of services they use on a regular basis
and it can be easy to get lost in the mix. Using ad retargeting youre able to
gently remind them (especially early on) that theyre getting value from you.

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Build vs. buy: how to blow $100,000


saving money

When youre just getting started and youre strapped for cash, you
typically do all sorts of things to pinch pennies. Its just part of
surviving, and its a healthy thing to do when youre not actually
making any money. The danger, however, is keeping that mindset
after youve got a steady stream of cash flowing.
Its a danger that creeps in to a lot of startups and never goes away, causing
generally sane people to do insane things in the name of not spending
money.

How the story goes


Youre just getting started building some amazing, life changing software.
Youre either building everything yourself, or youre part of a small team.

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Money is tight (or maybe non-existent). Youre doing everything as cheaply


as possible and, for the most part, youre spending nothing other than your
time.
Things like A/B testing, analytics and support software arent even on your
radar because you dont actually have customers yet. At this point, youre
entirely self-sufficient, providing everything your business needs.
But then you launch. You start getting actual customers. You start growing
and your business starts to have needs past your core product.
You realize there are tools that would be really beneficial for growing your
business even more. You start doing research in to ways to better handle
support requests, you find your Google Spreadsheet is a pretty painful (if not
impossible) way to track your revenue growth, conversion tracking turns out
to be pretty crummy with just Google Analytics and youve got an idea for
your signup page that youd love to A/B test to see if it increases
conversions.
You start looking in to popular tools for doing some of those things. And you
freak out. $200 per month for conversion tracking? $400 per month for
revenue insights? Or maybe its something even less. $30 a month for a tool
that, on the surface, seems to just be glorified email comes across as a
waste of money.
You initially just decide that youll do without. Youve made it this far without
those tools, so why not just keep plugging away like you always have? But
more and more you find that you could really use these other tools (much
like your own customers need the tools/services youve built).
This is where paths fork and two different types of people manifest
themselves: Buyers and Builders.

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Buyers
Buyers are the ones who decide to just spring for existing tools out there.
They realize that, while spending $250/mo for A/B testing stings a little, it
will ultimately help them make more money.

Builders
Builders are folks who balk at that $250/mo A/B testing suite and decide to
use their engineering resources to just whip up a little homegrown A/B
testing suite during a weekend hackathon. That $250/mo stings far too
much and cant possibly be worth that.

The Problem
But heres the problem. That weekend hackathon turns in to a few weeks of
getting it just right which turns in to a couple of months of distractions for
the engineers as they tweak all the random edge cases no one considered.
Next thing you know, youve spent literally hundreds of hours building a tool
thats not core to your business. Hours that really hardly saved you any
money. But worse that that, it was hours that werent spent making more
money by improving your core product. Not only did you save an
insignificant amount of cash, you actually stifled future cash. /facepalm

How the math works out


Lets take a look at some numbers here to give you a real world example of
why building is generally an epically bad use of your resources.
Youve got a team of three engineers. You want to build a simple business
analytics tool to analyze all of your revenue, what plans folks are on, how
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much money you made last month and should make next month, upgrades,
downgrades, etc. A dumbed down version of Baremetrics. ;)
Say youve got a few thousand customers, so youd be on the $250/mo plan
at Baremetricsand no way on earth ever in your life would you pay $250/
mo for anything ever anywhere. Absurd! So you decide youll get your team
of engineers to build something internally. How hard to could it be, right?
In reality, it will take at least a month of engineering time. Maybe not all at
once, but the fact is, building an analytics tool correctly is difficult. Especially
when you get in to the really useful stuff. Its just time consuming, whether
you like it or not.
Lets assume those three engineers are getting paid, on average, $90,000/
year.
My 6AM-in-the-morning math tells me thats $7,500/moper engineer.
Multiply that by 3 and weve got $22,500.
Congratulations, you just spent $22,500 to save $250/moa Baremetrics
account for 7.5 years. Statistically, your business wont even exist in 7.5
years.
But! It gets better! Not only were your engineers focused on building that
internal analytics tool, they were not focused on making your actual product
any better.
Say you were at $50,000/mo in recurring revenue and growing at a steady
10% month-over-month. That means in 12 months youd be at roughly
$155,000/mo in recurring revenue.
However, spending a full month, heads down, building a major addition to
your product that reduces churn and expands your market size could have
potentially bumped up that growth to, say, 11% month-over-month. That
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would have meant roughly $175,000/mo in recurring revenue within a year.


An extra $20,000 per month in revenue.

And, if we take the actual earned revenue over that 12 months, in both those
growth scenarios, theres an $85,000 difference.
That means, in the first year after your cost savings experiment, you spent
$22,500 in engineering resources plus $85,000 in lost revenue, for a grand
total of $107,500. Sweet goodness.

Why does anyone do this?


For a long time I racked my brain on this. I just couldnt think of any
scenarios where this ever made logical sense. But I started looking at my
own experiences over the years of building companies and noticed some
commonalities among all the past customers whod had major price
objections.
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Across the board, nearly every single time someone got hung up on price,
they were a consumer-focused business. Most were charging less than $10
a month for their product. Many were charging more like $2 a month (in the
form of a $25/year plan).
The interesting thing is that these companies werent struggling on the
revenue side. Many were making 6-figures per month. Instead, it was a
value problem for them. Their entire business revolved around selling a
relatively low-value product to a high-volume of customers.
They were primed to not place a high value on things that solved business
problems for them.
This is a realization thats held true across four separate companies in four
separate industries that Ive run and, talking to other startups, this has also
held true for them.
Be careful who you take product roadmap queues from. All feedback is not
equal. The value-perspective your customers come from is crucial when
deciding how much weight to place in their feedback.

No money but all the time in the world


What about startups who are pre-revenue? Its easy to get in this mindset
that having certain tools at your disposal will somehow make a big impact
for you. But heres the thing: tools exist to augment and assist with making
money. They, generally speaking, dont actually generate new revenue for
you.
A situation I see a lot is when companies want to A/B test their home page
when theyre only getting a few hundred visits a day. Even if you had a 50%
bump in conversionsit just doesnt matter at that scale. When youre that
early in the game, you need to do things that move the needle in big ways.
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So whats the takeaway here? Its simple, really. Either spend the money to
get the tools you need, or just focus on making your own product make
more money. But dont waste your engineering resources on things that
dont make a big, long term impact.

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How to deal with competition (or


not)

As an entrepreneur, one of the biggest sources of stress you have


with your startup is likely your competition. Its easy to become
really paranoid about each move they make, each feature they
launch and each piece of content theyre publishing. Everything
can feel like its aimed directly at burning your castle to the
ground. So how do you deal with that? Or do you even deal with it
at all?

A competitive change of mind


Back in 2008 I built a hosted ad serving platform. Publishers could sell,
manage and serve ads and Id take a cut. But shortly after it launched (one
week, actually), Google launched Ad Manageressentially solving the exact
problem I was out trying to solve. A few weeks later, I decided to just sell it
off and move on. The mere thought of competing with Google was
depressing.
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A couple of years after that, in 2011, I built a survey platform. But unlike the
ad serving industry (which had virtually zero competition when I started it,
minus some crummy self-hosted stuff), the survey industry was
overwhelmingly crowded. There were quite literally thousands of
competitors.
What changed in three years? What mental barrier dropped that made me
okay with going head-to-head with such a crowded industry?
The change was the understanding that competition does not matter. In
fact, Id go so far as to say you should completely ignore it.
A touch dogmatic? Maybe so. But I think the inverse is much more
dangerous.

What happens when you watch the


competition
Its so easy to fall in to the habit of checking up on what your competition is
doing. You start checking their blog regularly to see if theyve released any
new features, you add their name in Google Alerts, you follow them on
Twitterall so you dont miss out on their next big move.
But heres the problem: doing this puts you perpetually one step behind. It
makes you reactive instead of proactive.
When you built your product, you built it because you were able to solve a
problem in a unique way. When your customers signed up for your service,
they did it because they also believed in the way you were solving a
problem.

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Once you start trying to feature-match your competition, youre no longer


solving your customers problems. Youre solving your competitors
customers problems. And chances are youre not even doing it that well.
Stop solving problems for people who arent your customers. Sure, you may
have some feature parity with your competition, but when you build a
feature and how you build it should only come from and be prompted by the
needs of your customers.

When to pay attention to competition


I do think theres one instance where it makes sense to pay some attention
to competition, and thats when your own paying customers leave for a
competitor. Namely, when you start noticing it happening regularly.
Its important to do exit interviews with your customers to better understand
exactly why theyre leaving, and if theyre switching to a competitor, you
need to understand what it is about the way your competitor is solving a
problem that you arent doing well.
You need to be careful here. You definitely dont need to build out new
features solely to try and save a handful of customers. That may make for a
tiny short term gain, but likely has bad results in the long term with a bloated
product that lacks direction.
The key is find the commonality among all the customers who are switching
to learn what exactly it is you may be able to improve on.

Laser focus
What you and your customers need is focus. Having a strong belief in what
youre building and how youre helping your customers ultimately results in
a better product that solves real problems.
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You wont figure it all out right away. It takes years to build a solid product.
The way you solve business problems on day 1 will be vastly different from
the way you solve the problems on day 1,000.
Competitors will come and go. Youll likely find yourselves heading down
different paths the longer youre in business. Youre each incrementally
improving your product and doing so in different ways.
If youre in it for the long haul, as long as youre laser focused on solving
your customers problems, youll do just fine.

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Chapter 6
Growing Your Business

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How we grew from $0 to $25,000/


month in 12 months

One year after Baremetrics was launched, we hit $25,000 in


monthly recurring revenue. Ive tried a lot of things to grow the
company over the past year. A few things have worked well. A lot
of things have flopped. We grew quickly, then stagnated for a bit,
and are on the upswing now. So, what worked and what didnt?
Its worth mentioning that Ive written about our journey to $5,000/mo as
well as growing to $14,000/mo, both of which may be worth your time if
youre at those stages of your business.

5 things that worked


Here are five things that worked well for growth on our way to $25,000/mo.

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1. Hired people smarter than me


It doesnt matter how amazing you are at design, development, support,
sales or marketing. The fact is, you cant be amazing at any of them as long
as youre trying to do more than one of them.
When youre just getting off the ground, the more you can do yourself or
with a bare-bones team to prove that your business has a fighting chance,
the better. But after youve proved it, its time to start delegating.
The world is full of people smarter than you and you need to do everything
you can to have them on your team. Theyll not only do a better job
specializing in one area of the company, but theyll push both the product
and the business to better places.
This especially rang true when I bit my pride and hired an engineer to take
over the development work. Within weeks Baremetrics was more stable and
faster and we were able to get to work on making the product more
valuable.

2. Increased value (and in turn, ARPU)


Theres a common theme among all successful businesses: they create
value. That value may be in the form of literally creating monetary value (a
CRM that helps you close sales, an ecommerce platform) or, more
commonly, its in the form of a painkiller. A painkiller solves a big problem
that saves customers time and, in turn, money.
Businesses happily pay for products that create value.
A key metric for determining if youre creating real value or not is ARPU
(average revenue per user). A low ARPU can even be a sign that your SaaS
business is dying.
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We spent much of the year focusing on increasing value and it paid off. We
grew ARPU by nearly 70% from $55 to $93. Everything from more features
to solid customer support all contribute to a higher-value product.

Weve dropped back down to $88 now as we reintroduced our $29/mo


plan, but its still much better than it was a year ago.

3. Wrote actionable & relatable content


One of the biggest drivers of new customers has been the blog. A couple of
months after I started Baremetrics, I began writing regularly about things I
was trying and learning along the way and it resonated with other startups
and entrepreneurswhich is handy given thats our exact market. ;)
Here are the articles that contributed the most to growth:

How Hacker News Generated $1,500 in Monthly Recurring Revenue


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Idea to $5,000/mo in Recurring Revenue in 5 Months


How We Got Our First 100 Customers
4 Signs Your SaaS Business is Dying
How Retargeting Gets Our SaaS $650 for $6
How We Increased Customer Loyalty by 125% in 6 Hours
The key takeaway here is that just generic content marketing is not the stuff
that worked well for us. What did work well was when I laid out very specific
things I did and gave tips that other startups could put to use.

4. Embraced transparency by making our dashboard


public
In February, after rebuilding Baremetrics from scratch, I needed a live demo
of what Baremetrics could do. I was faced with two options: spend an
inordinate amount of time meticulously putting together a bunch of data for
the demoor I could just make our own Baremetrics dashboard public for all
the world to see. Baremetrics for Baremetrics.
Laziness won the battle.
It opened so many doors and started so many conversations that even if it
wasnt a direct driver of new customers, it would have been worth it.
But it is direct driver of new customers. People who visit the demo are 5.5
times more likely to become a customer.

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5. Partnered with Buffer on their public dashboard


And speaking of opening doors, the biggest door opened by making our
metrics public was for Buffer to do the same. It had an immediate positive
effect and nearly a year later continues to be the biggest consistent referral
of traffic.

Our partnership with Buffer permanently changed the growth curve for us,
all thanks to a 10 minute conversation on the way to dinner at a conference.

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Things that hurt in the process


While there were a number of major things that helped us get to $25,000,
there were a couple of things that slowed us down.

Raising money
Its slightly counterintuitive, but the process of raising our $500,000 round
of funding had a noticeable impact on growth. Raising was definitely the
right move, but the process of wrapping that up was draining at best.
As Paul Graham says (paraphrased), either youre raising or youre
buildingbut you cant do both. That was definitely the case for me. All the
paperwork, calls with lawyers and the mental roller coaster of the entire
experience took a toll.

Hiring quickly
I hired four of our five employees in less than two months. Given I had nearly
no hiring experience, there was a major learning curve. Getting all the things
in place to properly support a team is a surprisingly huge amount of work.
Payroll, benefits, on boarding, design and development processes, and a
thousand other things.
Bringing everyone on was definitely a good move, and were now starting to
see the byproduct of having a really solid team in place, but it was basically
my only focus for 6-8 weeks.
Tack that on to the tail-end of raising money, and there were about four
months there where growing the revenue part of the business just couldnt
happen. Thankfully were on the upside of that now.

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The coming year


So, whats on the docket for the coming year? $25,000/mo was a big
milestone for us, but this year weve got an even bigger milestone were
after: $1,000,000 run rate. That translates to about $83,000/mo.

Everyone on the team is firing on all cylinders and the big features weve
had in the pipeline for the past few months are about to start rolling out.
Those big features, plus a slew of other things in the works, will make that
$1M run rate a real possibility.

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Bootstrapped to funded: What's it


like?

Ive been building products and creating businesses for a solid


decade. Prior to Baremetrics, Id started just about every type of
business imaginable: consultancy, ecommerce, content, software
and more. And while the business models have all been different,
the one unifying factor is they were all 100% bootstrapped to the
end.
So, whats it like going from a decade of bootstrapping to running a funded
business? And whats it like transitioning a business that started out
bootstrapped to having a pile of cash at my disposal? Has it been worth it?
Is VC money evil? Gahhh, so many questions!!! Lets find some answers.

Naivety
Prior to 2011, I honestly had never given VC money a single thought. I was
blissfully unaware that it was common. My entire thought process behind
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building something was heres a problem, now let me figure out how to
build it. Id teach myself the skills necessary to get it off the ground and
then charge money for it.
I then started building a survey platform and my co-founders put a bunch of
money into it and we started looking to raise a small seed round. I was
dropped into shark-infested waters and it was intensely uncomfortable. Lots
of meetings with VCs who were nice enough, but I always felt like my goals
for the company never jived with their expectations.
I had also only surrounded myself with people who thought like me, which is
great when you want a single line of thinking, but not great when you want
full perspective.
So, after that, I was staunchly opposed to raising money. I went from being
naively unaware of VC money to naively categorically opposing it. Neither of
which were particularly useful or healthy.
Then I launched Baremetrics.

Coming around
Things took off much quicker than anything Id previously done. After
making our metrics public, and then Buffer doing the same, Baremetrics
began to get a lot of exposure.
Our financials were public, which meant our 30%+ growth rate was also
public. Quite a few investors started reaching out.
At first I dogmatically turned down all the calls. I was laser focused on
building Baremetrics and I wasnt about to let some sleazy Silicon Valley
used car salesman try to force my hand.

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Then I realized I was being too harsh. Not on the focus part, but on investors
in general. I was talking to a few pals whod taken on seed rounds and
instead of it being an awful experience for them, it was completely positive.
It wasnt the nightmare scenarios Id pictured or read about and I realized
that there are actually great investors out there who arent greedy and
overbearing.
So, I started taking some of those calls I had previously turned down. I
started having some legitimately great conversations with investors who had
interesting insights. Investors who had perspective and experience in
certain markets that I didnt and many who had built quite a few businesses
themselves.
It changed my entire view on investors.

A unique position
The more conversations I had with investors, the more I realized I was in a
relatively unique and favorable position. I had the power to walk away. I
didnt need their money. I was a one-man show with very little overhead who
was profitably running a fast-growing business.
I was clear about the types of deals I wasnt interested in and was able to
avoid wasting time trying to make deals happen that just werent in my best
interest.
I wasnt interested in giving up board seats or lots of equity and so until I
found an investor who was inline with that and could agree to those terms, I
would walk away.
This past July, I was having a conversation with Patrick at Stripe, which led to
conversations with the good people at General Catalyst. They were

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completely on board with the way I wanted to run things and the type of
deal I wanted to do.
We closed a $500,000 round of funding with really great terms. This was
the deal I wanted.

Why take funding at all?


Waitif I was a one-man show with very little overhead who was profitably
running a fast-growing business, why take funding at all?
The high level answer is that it lets me grow faster and larger by hiring more
people who can in turn build a more full-featured product that in turn brings
in more customers and the snowball continues. But it was more than that for
me.
Im a maker. For me, the process is the rewarding part. The overall
experience is what fuels me. And after 10 years of building things on my
own, I was ready for a new experience. A new process. Something
unfamiliar. That, really, is what my primary motivation was to take on any
funding at all.

But really, whats changed?


So, here we are with a big pile of cash. Whats changed? Whats better?
Whats worse? Am I happy I did it?

Money
The most obvious/literal thing that changed going from bootstrapped to
funded is that my bank accountgrew.

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Having more money at your disposal is unquestionably freeing. I still pay


attention to the bank account. On the first of every month I still update our
12-month profit & loss projections. I still cringe when I see how much Uncle
Sam robs us. But now I dont sweat the small stuff.
Worry whether I should spend $200 on a quick Twitter Ads test? Just spend
the money. Buy Kindles for the team as a perk? Just spend the money. Put
together a company retreat thatll set us back $10,000? Okay, ouch. But still
completely worth it and made possible this early in the game because of
that investment money.

Maker to manager
Growing from a team of one (me) to a team of sixthats been such a major
shift for me. I went from literally handling all design, development, support
and marketing toalmost none of that.
I now spend my time making sure our team has everything they need to
keep moving forward, planning the future of the product and marketing. If
youd have told me a year ago that Id be doing employee 1-on-1s and
planning a company retreat, Id have laughed at you and kicked you in the
shins because thatd have been ridiculous.

High stakes
Most of the time, building a startup isnt stressful. Sure, it can be nailbiting at
times, but for the most part Im 100% stoked to be building something that
people love.
That being said, there is certainly more I worry about. Or, worry may not be
the right word butI certainly have a lot more I need to take in to
consideration.

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Theres just a heck of a lot more at stake now. The biggest thing being that
there are now 5 people on our team who are depending on me to not run
this ship in to the ground. As much as I want to build a great product, I want
even more to do right by my teamthe people whove chosen to make
Baremetrics a major part of their lives.
I want them to look back on their time here and to have loved it and for it to
have been absolutely worth it.
And what about high stakes with our investors money? Thats the argument
many times against VC money is that you become a minion for the investor
and have to make every decision based on their unreasonable desire for
wealth.
That may be true in some situations, but thats completely a byproduct of the
deal you do and who you do the deal with. Thats just not the case for us.
General Catalyst isnt that type of investor and the terms of our deal simply
dont allow for that.
Who you do a deal with changes everything. All money is not equal.

Going bigger
One surprising thing the funding has done is changed my perspective on
what Baremetrics could be long term. Baremetrics started out as a side
project and for a while I had a bit of imposter syndrome, each month
thinking surely this is the best Baremetrics will do, this cant become an
extremely profitable business.
But what Ive realized as the team has grown and our customer base has
grown is that Baremetrics can in fact be a very big business.

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Its motivated me to build something larger than myself and to me thats one
of the most exciting parts.

Bootstrap vs. Funded. Whats the answer?!?!


Okay, but really. Bootstrapped vs. funded. Which is better? There are literally
thousands of articles about bootstrap vs. funding but thats about like
asking hammer vs. paintbrush. Its the wrong comparision. Theyre just
different tools for different jobs.
So the answer to that question is: whatever you think is best for your
business. There are so many people who are bootstrapping and feel like
VC, funding and investor are all dirty words, or that taking on funding is
somehow admitting defeat. That taking on cash somehow says you werent
capable of doing this by yourself.
And you know whatmaybe that is the case. Maybe funding helps get you
over a hump in a way that you couldnt do by yourselfand thats okay. The
key is to do it how you want to do it on your terms.
Taking on funding isnt failure, its simply a different path.

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3 things we did to reduce churn by


68%

If recurring revenue is a rainbow leading to a pot of gold, then


churn is the dirty leprechaun trying to keep it all from you.
Okay, so my rainbow leprechaun metaphor is a little weak, but you get the
idea. SaaS products are amazing because of how recurring revenue has a
compounding affect. That $100/mo customer keeps payingover and over
again. Until they dont. And thats where churn comes in and why its so
vicious to the growth of a company.
Ive written before about how to reduce churn in SaaS, so I wont rehash that
here. But what I want to talk about is how we, in the past few months,
reduced churn by nearly 70%.

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Our churn problem


At the start of the year, we started noticing our revenue churn and user
churn creeping up. At its worst, we were at about 10% user churn and 13%
revenue churn.

Weve certainly seen business with much worse churn, but neither number
were acceptable and they were just making it harder to grow. The problem
was, we just didnt really understand why this was happening.
So, at the end of February, we started Operation Churn Reduction.
The result of this was a 68% reduction in user churn to 3% and a 63%
reduction in revenue churn down to 5%.
But what did we do to reduce churn so much?

How we fixed it
We needed to fix our churn problem ASAP, so I didnt write any content on
the blog for all of March and ignored most email and phone calls that didnt
have a direct correlation to us figuring out what was wrong. Then we did
three things over the course of two months.

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Removed self-serve account cancellation


The very first thing we did was remove the ability to cancel your account
yourself. I know. Gasp! Heresy! Treason! But the reality was, our free-form
let us know why youre canceling text box wasnt cutting it. We just werent
getting anything remotely useful when it came to understand exactly why
people were canceling.
Instead, when someone wanted to cancel, we just made it really easy to
contact us. You could live chat with us on the spot or send a message to us
directly from in the app. Most of the time, wed respond in a couple of hours,
sometimes within minutes (or instantly, in the case of live chat).
At that point, wed say something to the effect of
Hey Sue, happy to take care of that for you! Before we do that, would
you mind letting me know why youre canceling? Would love to learn
how we could have served you better.
The large majority of the time, wed get great feedback about exactly what
was going on and why Baremetrics wasnt a good fit for them any more.
Wed then promptly cancel their account (and many times refund them) and
wish them well.
But! Where this gets really interesting is that we were able to save about
15% of cancellations from actually canceling at all!
These were people who didnt realize certain functionality existed already or
that we were about to launch the very feature they were looking for. In some
cases wed offer a discount on their next month of service to tide them over
while we finished up what it was they looking for.

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These were the same people who would just put something to the affect of
Didnt fit my needs in that cancellation text box and wed never hear from
them again.
Definitely a huge win for us on both understanding the why but also
actually saving a substantial number of customers from churning at all.
Now, the common assumption here is that making users contact you to
cancel will result in lots of angry customers beating down your door and
setting your house on fire. For us, this hasnt been the case at all. Theres
been literally one person who was slighlty upset, while many more actually
used contacting us to cancel as a way to thoroughly talk through how they
wished we could have served them better.
Talking with a number of other companies that do this, their experiences
have been nearly identical. I can see this not working well with a B2C
product, but with B2B Id suggest trying it for even just a few weeks to get
some solid feedback on why users are churning.

Shipped highly requested features


There were a couple of features that users had been requesting for quite a
while and we buckled down and made those happen.
One was Plan Insights, which lets you see a breakdown of all your metrics
on a historical basis.
The other was Data Intervals, which let you group your metrics by day, week
and month.
Both of those were quick responses to what we found through cancellation
feedback: that users were having trouble digging in to their data and
understanding it.
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Provided more education


Another piece of feedback from users was that they didnt know what to do
with the data, so we started spending more time educating customers.
A few of the ways we invested more time on education:

Expanded our Help Desk


Webinars
Adjusted our lifecycle emails to send at more appropriate times
Reached out to users more to make sure they understand how to use
Baremetrics to its fullest

Why its so crucial to reduce churn


I cant stress enough that you have to reduce your churn. Its a literal cancer
to your revenue growth.
As an example, say we started the year with $30,000 MRR and were adding
$5,000 in new MRR every month for the next year. Thatd be great, right?
Well, with the 13% revenue churn we previously had, in 12 months, you know
what our MRR would be? $37,000. Thats frightening.

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Just by reducing churn, not even increasing our revenue growth rate, the
outlook is much different. Taking that same example, but reducing churn to
5%, our MRR after 12 months is a much nicer $62,000.

If your churn isnt in the single digits, its absolutely the only thing you
should be focusing on fixing right now.
What are some things youve done to reduce churn? Need help reducing
your churn? Post in the comments about what youre having trouble with
and Ill be happy to help!

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How we scored Baremetrics.com


for $616

A couple of weeks ago, after 11 months of work, I finally snagged


Baremetrics.com for an entirely reasonable $616. Heres how that
played out.
Back in October 2013, when I birthed the idea for Baremetrics right out of
my skull, I attempted to get the .com. As is always the case with any name
for any good idea ever anywhere on earthit was taken. Sigh.
Thankfully, .io is practically the same thing as .com these days. So thats
what I went with. Given what was showing on Baremetrics.com at the time, I
wasnt terribly concerned about confusion with our product because
butterflies.

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Negotiating the silence


After I registered the .io, I attempted to email the owner of the .com. I wasnt
sure what to expect, given his email was something to the effect of
ThugStreetPreacher4Life@gmail.com, but I sent him a note with a $500
offer.
Silence.
A month later, I sent another email offering slightly more.
More silence.

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This went on for a few more months until I was finally resolved to the fact
that it just wasnt in the cards.
Then, in August, that $500,000 investment showed up. I figured I had a bit
more money at my disposal, so maybe I should just offer more?
I sent Mr. Thug Street Preacher another email offering $2,000, but was met
with more, you guessed it, silence.
I started looking around for a bonafide domain bounty hunter (who hopefully
looked something like Dog the Bounty Hunter) to try and snag it. I used a
guy quite a few people recommended, and even he was no match for
ThugStreetPreacher4Life. We were offering up to $5,000 at this point and
never got a response.
Emails and phone calls were all met with silence. It was maddening. I just
wanted some sort of acknowledgment. Some iota of hope that we could
make it happen. Then GoDaddy came in the picture.

GoDaddy. Ewww.
I transferred all of my domains (and business in general) away from
GoDaddy a couple of years back and have kept my distance since. But that
was the comfy home of baremetrics.com and GoDaddy was my last hope
here.
Initially the domain was set to expire in November 2014, so I paid for their
domain backorder service, hoping to instantly snatch it up when it expired.
But shortly thereafter, the domain was renewed for another year. Thats
when I stumbled upon GoDaddys Domain Buy Service.

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You tell GoDaddy what price range youd like to try to get the domain within,
then they reach out to the domain owner and negotiate a sale. Given the
domain was hosted at GoDaddy, they had much more efficient means of
getting in touch with the owner past the WHOIS data.
So, I put in my price range ($500 - $5000), paid the $70 service fee, and
waited. I had no idea how long the process would take (or if wed have any
luck at all).
Then, 9 days later (and over 11 months since I first attempted to get the
domain) the email came.

SCORE!
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(I happened to be on a 2-week road trip with my family at the time and I


basically started squealing like a little girl in our hotel room when the email
came in.)
I paid for the domain as quickly as possible and a few days later, the domain
was officially in my possession.
How on earth I got this for ~$600 is beyond me. By the time GoDaddy
negotiated the purchase price, our $500,000 investment was public. A 30second search would have made that pretty clear and, in reality, Id have
happily paid more than $600.
Definitely not going to overthink it, though. Im just happy the domain
overlords saw fit to grant it to me.

The takeaway
I wish there was some sort of magic voodoo recipe I could give you for
getting any domain youd like. The fact is, I lucked out. Big time.
If you want another human with far more experience than you at acquiring
and negotiating domain sales, talk to Kellie Peterson of Dotology.
However, if you ended up in a situation like us where the WHOIS info was a
complete dead end, its worth looking in to whatever domain auction/buying
service that domains registrar has.
For us, GoDaddy came through like a champ. I really cant recommend their
Domain Buying service enough as it worked beautifully for us.

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