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

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About Christoph

Christoph lives in Munich, Germany and is bootstrapping his own SaaS application as a part-time entrepreneur.

He likes to write on this blog about anything of relevance to single-founder bootstrapped software startups.

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