What I learned bootstrapping a 6-figure business from school

When I got to college three years ago I set two goals for myself. By the time I graduated I wanted to:

1. Be well read
2. Learn how to build a real software business

By real business I meant a business that has paying customers from day one and that makes enough money every month that I could work on it full time when I graduated.

Although I wouldn’t go as far as to call myself well-read (I don’t think that’s something to be achieved, just pursued) I can confidently cross goal number two off of my list:

In about 11 months we’ve built Firefly up to well into the 6 figures in recurring revenue.

We’ve done this primarily through two channels: on-site website signups and large partnerships.

In July we announced a partnership with Olark to roll our cobrowsing out to their 5,000 paying customers. We’ve also struck similar deals with much larger customer support companies as well as companies in other verticals like financial services.

What makes this somewhat special is that there’s just two of us working on the business, we’re entirely bootstrapped (except for 20k from the excellent Dorm Room Fund), and this year I’m going to be a senior in college.

Because the past few years have been such a crazy ride, I wanted to take some time to write down some of the things I’ve learned along the way. Continue Reading

You’re selling it wrong

The other day I had coffee with two friends, we’ll call them Peter and Alex.

Peter is working on a new startup, and Alex runs a large organization. Here’s how Peter pitched what he’s working on:

Peter: So basically I’m working on a startup called W. It does X, Y and Z for large organizations. It’s especially great if you need to organize and respond to lots of support emails.

Alex: Wow, that sounds awesome. We definitely need to respond to lots of support emails for Organization X.

Peter: Yeah, it should be perfect for you guys. Would you pay for it?

Alex: Hmmm, I’m not sure. I’d really have to think about that. I think I’d have to see the product before I could say.

Here Alex is pulling away. Peter senses this and pushes further.

Peter: It could really save you a ton of time though. Think of all the hours you spend answering support emails.

Alex: Yeah, yeah definitely. It’s just I think I have to see the product itself first.

Awkward silence.

Ok, let’s stop and rewind. Where did this pitch go wrong?

The first thing to note, is that Peter is doing the right thing by asking for money.

If you’re in Peter’s position, the only way you’re really going to be able to tell if someone is going to buy your product is if they actually give you their credit card number.

But the thing to be aware of when you’re pitching your startup is that you’re not asking for an early customer’s credit card because you want their money – not really. You’re asking for for their money because it’s an excellent way to elicit useful information: people aren’t polite when money is at stake.

The problem is that when some founders ask for money, instead of using it as a tool to gather feedback, they end up steamrolling the person on the other end. They unintentionally smother the signals that are being given off in the conversation because it feels like the goal is to get the credit card.

To be clear, the goal is not to get a credit card: it’s to get information.

The first sign of trouble was right after Peter asked Alex if he would pay for his product. His response was, “I think I’d have to see the product before I could say.” With a response like that, it’s clear that Alex is pushing off a purchasing decision.

Peter sensed this, but he was in Sell Mode so he pushed further about the potential benefits of his product: “Think of all the hours you spend answering support emails.”

Now Alex feels trapped and antagonized. So instead of doing what Peter wants and agreeing to buy, he just politely pushed him off again by saying, “It’s just I think I have to see the product itself first.”

And after that second attempt the conversation was basically over. Peter learned nothing except that Alex didn’t want to buy his product that day.

But that’s not really useful information is it? What Peter needs to find out is: why didn’t Alex want to buy?

Here’s what should have happened:

Peter: So basically I’m working on a startup called W. It does X, Y and Z for large organizations. It’s especially great if you need to organize and respond to lots of support emails.

Alex: Wow, that sounds awesome. We definitely need to respond to lots of support emails for Organization X.

Peter: Yeah, it should be perfect for you guys. Would you pay for it?

Alex: Hmmm, I’m not sure. I’d really have to think about that. I think I’d have to see the product before I could say.

Here Peter encounters the same resistance as before, but instead of steamrolling over it he decides to find out where it’s coming from. The first thing to check is whether Alex can actually make a buying decision for his organization.

Peter: Gotcha, no problem. So if you were going to buy software like this, what would the process be like?

Alex: Well basically I’d take it to my team and we would discuss it. Fred is in charge of the support side of things so it would really depend on how useful he thinks it is.

Bingo. Now Peter knows that Alex was resisting because he couldn’t even buy the software if he wanted to. Now Peter should find out if there are any other reasons why Alex didn’t want to commit, and also how much his organization might be willing to spend.

Peter: Oh that makes perfect sense. Do you guys use any software that does this already?

Alex: Yeah, we actually bought Zendesk for everyone in the office. It’s about $24 bucks a month per person.

Now Peter knows that he can at least charge $24 bucks a seat. Now he needs to find out more about how they use Zendesk.

Peter: Interesting, how do you use Zendesk right now?

Alex: Glad you asked! I love Zendesk, but there are also some things I wished it had…

Do you see how easy it was to take an antagonistic pitch that lasted 4 minutes, resulted in zero sales, and generated no useful information and turn it in to a long, meaningful, and constructive conversation where both parties are engaged and interested?

Be prepared to listen when people give off subtle signals. Read between the lines. Ask for money because it’s the best way to get useful information, not because you want money.

Always try to listen more than you talk.

Public speaking for introverts

A few days before I have to talk in front a lot of people I get this queasy feeling in my stomach that won’t go away.

I don’t want to eat. I just want to cancel the talk because I don’t want to deal with the stress.

My hands get sweaty before I get on stage. I feel like I want to run away. I consider asking someone else to get up there instead of me.

And then I walk out there, do what I have to do, and everything works out fine. I’m usually even pretty exhilarated by the time I get done. Continue Reading

How to get your first 10 customers

Preface: the assumption for this essay is that you’re building a B2B app, and you have something built but you’re having trouble getting people to pay for it

There are three problems with getting your first few customers:

1. You (probably) don’t know how to sell things
2. You don’t know who you’re selling to
3. You don’t even really know what you’re selling

Nobody tells you how to answers these questions, and so most people go out to get initial traction in a haphazard way:

1. They have a vague idea in mind for who wants their product
2. They’ve already built the product, so they put together a landing page which which, like, totally speaks to the core value proposition
3. They write some combination of any of the following:
   A few half-baked ads
   A few forum posts
   A few comments on relevant blogs
   A few blog posts
   A few cold emails to journalists (because, dude, we would BLOW UP if we could just get ‘Crunched)
4. They send these out into the wild, and (no surprise!), get very few responses
5. They conclude that the product must suck and that nobody wants it, because Mark Zuckerberg did exactly the same thing to launch Facebook at Harvard and look at how that worked out for him

If you try to get initial traction this way, it’s very difficult to untangle why it didn’t work:

Were the ads targeted to the wrong keyword?
Was the copy not compelling enough?
Was the sample size too small?
Or does no one want what I’m selling?

When they fail to get initial traction, most people conclude that the product is the problem. That no one wants what they’re selling.

They never consider that the way they’re selling might be COMPLETELY wrong (either in the way the product is being pitched, who it’s being pitched to, or some combination of the two.)

I think most of us have been lulled into this sense that the second you post your new product to a listserve you should automatically get sucked into a 4 minute montage scene featuring dark ominous 9 Inch Nails background music only to be spat out at the end with enough money to buy that estate on the Amalfi Coast.

And when that doesn’t happen, our first response is always to blame the product.

Formally this is called the actor observer bias which tells us that we tend to blame things that don’t go right in our lives to circumstances beyond our control:

“No one responded to my emails, so the product must suck. Nobody wants it, otherwise it would already be on TechCrunch.”

This is wrong. Here’s the truth:

You have learned nothing from spending $200 on Adwords, or writing a few comments, or sending cold emails to journalists.

Let me repeat: You have learned nothing. You get a big Zero. You have no actionable information.

Your product could suck. But it could still also be completely your fault. Or it could be completely random that you didn’t get any responses. Maybe the journalists were having a bad day, or the three people who clicked on your ads were just bots.

The point is: buying a few ads, or sending a few emails, or writing a few blog posts is not enough to conclude anything.

Untangling why you’re not making sales seems like an almost insurmountable problem, especially when you realize that at the beginning you don’t even really know what you’re selling.

The problem with startups is that you have to figure out WHAT you’re selling AS you’re selling it.

It’s like having a big black bag with a product inside it, and you have to run around selling it to people you see on the street. And worse, you’re not allowed to look into the bag to know what it is you’re selling. You can put your hands into it and feel around, but that’s the extent of it.

Ok, so how do you deal with this? How do you start to figure out what you’re selling, who you’re selling to, and how to sell? How do you get those first few customers? Continue Reading

So that’s what they were talking about

There’s a great scene from Woody Allen’s Manhattan that goes like this:

Mary Wilke: Facts? I got a million facts at my fingertips.

Isaac Davis: That’s right, and they don’t mean a thing, right? Because nothing worth knowing can be understood with the mind. Everything really valuable has to enter you through a different opening, if you’ll forgive the disgusting imagery.

I think it poses an important question for entrepreneurs:

What can we understand intellectually? And what, to paraphrase Woody, has to enter you in a different way? Continue Reading

Why you’re on a startup rollercoaster

Let me know if this sounds like you:

Some days you feel like what you’re working on is going to turn into the biggest company, like, ever. You feel like you’re on top of the world. Like all you really have to worry about now is how you should style your hair on magazine covers, and whether Ben Mezrich is going to write a totally unauthorized account of your meteoric rise to fame and fortune. “No comment,” you’ll say when you’re asked if everything he says about you is true.

But on other days you feel like everything sucks. Like all of this was a total waste of time. Like your prospects are slimmer than a candle in a hurricane. Like you’re surprised that you could ever think that your idea could ever go anywhere.

And the funniest thing is that rationally you know that there is very little difference between the days when you feel great and the days when you feel terrible. In other words, even though you feel different nothing meaningful about your company has really changed.

In short: running your company is an emotional roller coaster. Continue Reading

On negotiating your first few partnerships

This post was republished on PandoDaily.

Dealing with partnership contracts as a new startup is hard.

There’s very little in the way of “standard” terms and conditions when it comes to software (at least that I can find). Everything is specific to the kind of software you have and the kind of company you’re partnering with. When there’s no standard to work with, the first few deals can be kind of a pain if (like us) you’ve never done this before.

The way we managed to get through this was:

1. Get good advice about what’s reasonable from people who have been there before
2. Once you’re actually in the contract phase have a good lawyer (I love you Lowenstein Sandler!) to help you craft language and avoid common pitfalls

Because a lot of this advice cost me about time, money, blood, sweat and tears I thought it might be worthwhile to talk a little bit about these kinds of deals on a high level and get into some specific things that we’ve run into that are helpful to think about. Continue Reading

How to read a lot of books

This post was republished on Lifehacker

My girlfriend says I have a thing for books.

I probably spend more money on books than any other expense aside from food. Walking into a bookstore with a good selection (like Strand in New York, or Pyramid Books in Princeton) makes me want to rent a truck and haul their entire stock away to pile in my house so that I can read every single one of them. Continue Reading

Why are you in such a rush?

This post was republished on PandoDaily. You can read it here.

I see a consistent attitude among a lot of young entrepreneurs both technical and non-technical that I think leads to more harm than good:

They’re always in a huge rush.

They’re always in a huge rush to get the prototype out, to get it on TechCrunch, to get it to go viral, to raise money, to reach a million users in the first year, to be bought for a billion dollars the year after that, to retire to a beach somewhere before they’re 25.

And they always have a ton of reasons for why they’re in a rush:

• “It’s a market opportunity that’s huge and I’m the first person to realize it so I need to move as quickly as possible to take advantage of it before competitors swoop in and claim it.”
• “If we don’t get it done by the time I graduate then I’ll have to get a job so I only have a limited time to make it work.”
• “I want to prove whether or not I can do it so I know if it’s a legitimate career path. So I’m giving myself 6 months to make it happen otherwise I’m going to do finance.”
• “The funding climate is great right now and I want to raise money before it goes away.”
• “When I graduate I don’t want to have to move back in with my parents so I either need to raise money for this, or make enough revenue to live on. If I can’t do one of those by June I’m going to have to find a job and shut it down.”

These rationalizations play off of the way an entrepreneur “should” think: move as quickly as possible at all times, do not pass go, do not collect $200. If you’re a real entrepreneur you’re only going to experience success by throwing yourself 100% into your idea from the very beginning even if you have no experience or skills and very little else other than manufactured conviction.

Moving as “quickly” as possible feels good. It feels productive. But ultimately I think being in a rush often slows you down. Continue Reading

19 things that should be fixed

I don’t normally do list posts, but I thought this might be a fun departure from my usual 2,000 words. Maybe you’ll find your next startup idea in here. Feel free to add your own to the comments section.

1. When they bring you bread and butter and the butter is too hard to spread

2. When I call in to a customer support line for the 10th time they still have no idea who I am or what my account number is

3. If I’m disconnected from a customer support call I have to go back through the phone chain again and start over

4. If I’m looking at an ad it doesn’t have a box at the bottom that says “Is this relevant to you?”

5. Chrome opens up a new process every time I open a new tab

6. I forget 99% of the things I read

7. My weather app can’t tell that I’m going on a trip soon and show me the weather in the place I’m packing for automatically

8. It takes 4 emails back and forth to schedule a coffee meeting with someone

9. When light switches aren’t backlit so you can’t see them when it’s dark

10. When they don’t put light switches on the left side of the door so that you can easily turn them on as you walk into a dark room

11. When doors have “pull” handles and are actually “push”

12. Window latches that don’t tell you what state they’re in

13. When I’m on a train and four people have MiFi’s and I can’t pay to use one of them

14. When buildings have great comfortable seating areas for people to do work in but have forgotten to put power outlets near them

15. When a sign in form says “username” but I actually signed up with my email

16. When a sign in form says “email” but I actually signed up with a username

17. When a video player crashes before it starts playing, I refresh my page, and am subjected to the same ad I just watched

18. When a bus has wifi but it doesn’t actually work so I end up wasting 10 minutes vainly turning WiFi on and off, reconnecting, and then refreshing the page

19. When I have no more clean socks