Drawing the Lines Between Success and Failure – Mike Taber – MicroConf Europe 2016

The MicroConf Europe 2016 Talk Recaps can be found on the central hub page.

Website: SingleFounder.com
Twitter: @singlefounder
Slides:

• built AuditShark
  • Software to ensure security & compliance of servers/computers
  • I had been consulting in that arena
  • I knew the target audience, the problem, the space
  • I still failed!
• Why do these things happen?
  • Our personal sample sizes are too small
  • Lack of publicly available data points
    • is it normal to spend $20,000 on building a SaaS?
    • is it normal to spend 10 months buildings a SaaS?
  • Survivor bias is rampant
    • Buffer, Groove, Baremetrics — We all know the unicorns
  • Self-delusion is far too easy – we are too optimistic with our schedules & budgets
    • I even bought delusionsofgrandeurbook.com thinking “Maybe I’m heading the wrong way and this will make a great story…”
  • Small banks were a mistake: They didn’t actually care about security
    • Bad initial market? Pivot!
    • Problem: The product was built for a different market
  • False Hopes
    • I was waiting for the$500,000 deal with one enterprise customer to go through. It never did
• I failed miserably AND publicly
  • “It could be that the purpose of your life is to serve as a warning to others”
• How do we find relevant data points?
  • It’s not about “I’m doing 5x revenue that you do.”
  • It’s about “Am I on the right track with this?”
  • MicroConf is a place for sharing our stories and data points!

Analysis of 60 Product Launches

• Basic Disclaimers:
  • Everything is self-reported
  • Most questions were optional, so not everyone answered everything
  • Not all results came through the online form
  • There is some interpretation involved
  • There’s some inherent bias in the data due to the audience
  • This is FAR from a complete analysis. A larger study would be needed to establish statistical accuracy
• Break down by Product Type
  • 60% SaaS
  • 14% Books/Courses/Training
  • 10% Desktop apps
  • 15% everything else (Marketplace, WP plugins, Productized Service, etc)
• 70% had paying customers
• Current Product Status
  • 28% launched & growing
  • 25% launched, but didn’t go anywhere and I’m not actively working on it
  • 19% making a non-trivial amount
  • 12% Not launched or recently launched
  • Rest: Sold or shutdown
  • ==> 58% didn’t go anywhere and were either shut down or abandoned
  • ==> 30% became a success
• Resources spent getting to launch
  • Avg calendar time in months: 9 (min 0.5, max 27)
  • Avg product development time: 5 (min 0.25, max 26)
  • Avg customer development in hours: 20 (min 0, max 200)
  • Avg marketing time before launch in weeks: 1 (min 0, max 10)
  • Avg cash spent in Euros: 5,785 € (min 0, max 133,500€)
  • Conclusions:
    • People spent ~40x time on development compared to customer development! Lack of focus on (prelaunch) marketing
    • Succesful businesses spent less time on customer development than failed products (and that is probably a statistical flake and you should ignore it)

Safeguarding against business risks

• Avoid operating outside of “normal parameters”
  • e.g. your SaaS makes less than $300 MRR six months after launch
• Self-funded has a better success rate than VC funded
• SaaS and non-SaaS product guidelines are different
• SaaS products can generally be launched with:
  • 8-12 hours of customer development
  • < $2,000
  • 6-9 months of effort
  • Revenue ramp is really slow
• Non-SaaS products can generally be launched with:
• Tested two different product ideas: ETL Studio vs Bluetick.io
  • Mike was in love with the idea of ETL Studio
  • ETL:
    • Almost impossible to get conversations for ETL
    • not a single discussion got to the point of talking price
  • Bluetick:
    • 16 conversations out of 35 outreach efforts
    • 13x yes, 3x no
    • well-defined, obvious problem
    • 17 Prepayments at $50/month (over $2,000 total)
  • Better response rate AND conversion rate for Bluetick –> build Bluetick
• Common advice: “Talk to more customers”
  • can mislead you into a false sense of comfort
  • Following things are extremely different:
    • Identifying the need ==> Problem identification
    • Identifying the target market ==> Who has this problem
    • Identifying features needed to provide value ==> MVP
• There are many steps, but not just one path
  • Objectivity is critical to developing a product
  • Initial traction can overcome a lot of other hurdles
  • If you’ve launched but revenue isn’t increasing, be cautious of it turning into a zombie product
    • kill it or sell it, but move on
    • Hope is not a strategy
  • Pivoting after launch is a warning sign, but one of many
• Technical difficulty is not a product value
  • Nobody cares how hard your product was to build. They care about how much easier you made their lives

-Christoph