RightMessage Year 1: From $75k Launch to Virtually Bankrupt to Product Market Fit – Shai Schechter

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0:10so I have a friend who used to work at MIT in the early 90s and it was when the World Wide Web had just been invented and through his work there he ended up creating one of the world's on the first hundred websites ever and he told me that at the time when he made a website you would send an email to Tim berners-lee the inventor of the web and he would list your website on his website of all the websites now it turns out you can't do that anymore Tim hasn't replied to any of my emails there are more than 100 websites now and I love had two or three people are still

0:53making notes at that point more than 100 and it's that's that's about the caliber of this talk so there are more than hundred web sites now we can we can build a great site we can build a great apps we can build a great product people won't just show up to it right and this was something that I'd learnt over the years and it's something that kind of we'd put things in place to try and make our launch work and bring people in and it did what we didn't realize is that that's not all there is to it sometimes even if you have a decent launch there's

1:31more obstacles ahead it's not all plain sailing and I think some other people in here have experienced something similar so I want to touch something I want to talk about today I want to talk about our journey over the last year or two building write message and it's a story with some ups and downs as you can probably tell from the title so I want to split it into three parts first part is the launch which I think went pretty well we were happy with it and so I'm going to go over some of the things that we did that I think contributed to it working this is a selfie of me on launch

2:10day we were happy and then gonna talk a little bit about what happened after launch because after launch things kind of plateaued things didn't go quite how we wanted it was more this and this and this you may recognize some of these faces from your own startup there was a lot of that final one and I'm gonna kind of talk about why that happened like I say I think other people have maybe seen that happen and maybe what we can do about it and - part 3 is we were able to kind of learn a lot from that we were able to rebuild we were we were able to kind of

2:45start up and to the right again in a more kind of sustainable weight so gonna walk through those things so first of all I didn't always want to I didn't always know I wanted to work in software I was about 5 years old someone asked me what I wanted to be when I grew up and I told them I wanted to be a librarian in the daytime and a stripper at night this is true so my parents were kind of relieved when I when I went into a software business instead and because they don't like books and so I worked in kind of software consulting marketing

3:27marketing consulting I have run my message in my second sass my second sister made any money and so I've kind of bounced between those and a couple of years ago my friend Brennan Dunn and I started working or started launched write message some of you probably know Brennan he's been I think at 15 micro comps so you may have crossed paths it's a lot does anyone has anyone already heard of right message before this conference you'll know okay awesome so if everyone else briefly right message is a a website personalization platform the idea is that the different people who come to your website have different needs and if you can figure out what

4:05those needs are you can stickmen people into those needs you can tailor the marketing that you show them to resonate with those needs and your conversion rates go up and everyone is happy it's kind of it's a marketing tool it plugs into your website and that's that's what it does so long before we were talking about building a SAS this is kind of the first bit that's relevant these are some tweets from 2015 2016 2017 from Brennan and from myself where we had an even thought of building a SAS we hadn't had plans to build the SAS we were just kind of consulting in this space and Brennan was doing some

4:44things for his own infrared website and that he was he was he was trying some of this personalization we were both seeing it working really well but we weren't setting out to build a SAS and I think that's kind of relevant because one of the things that sometimes doesn't work is to try and Lister decide you're going to build a SAS and then build it and then try and fight the audience we weren't trying to build the SAS at all when trying to do anything like that we were just kind of seeing some stuff that works in a in a space that we were that we were both working in and we were

5:13yelling to everyone about what we were doing we were showing everyone what we were doing and some people started following along and I think without without realizing it we were kind of starting to follow like this micro comm playbook right this idea of like looking do you have an audience first of all before you start just setting out to build something and it got to the point these people that were following along with what we were doing we started to see that there might be this this market for us like people wanted a way of doing what we were talking about without writing code and that kind of thing and

5:48so and we still kind of said we don't want to build a SAS like if unless it's definitely the right thing to do and so we decided that we would kind of test the water and if we were going to do this we were going to pre sell it first and so we said we are not writing a line of code unless we can get 10 grand $10,000 of pre-order money in the bank when we sent out this email to the people that had been starting to follow along and kind of saying yeah we're thinking of doing this if you want in you can pay some money in advance it'll

6:22be a discount on what it what the final price would be we said well kind of we'll help you get set up it's like free consulting the money back guarantee there's it will send you monthly reports of how everything's working even those monthly reports were we were trying to like build as little code as possible so we were like even if we do do this those monthly reports which are now ad like a proper part of the product at that time we just piped everything into Mixpanel and took screenshots and emailed them to these people so we were kind of trying to build as little as little as possible so

6:56we're doing those pre-sales and it's kind of it's another one of those things that sometimes hear about at microcon and we did get the presale money and we started to build this thing and it was it was a little side project and this was kind of we started just building in the open again another kind of thing you hear from time to time or again and again are microcon we started to just send screenshots like this is what we're working on this is this is how it looks at the moment some of them are really crude I mean this was really really basic this literally says right message

7:32logo in the in the corner like we hadn't there was a lot we hadn't done yet but we were just sharing everything and it helped build that audience more and more and when we weren't sure what to do with the feature we weren't sure what to do with something we'd asked we had these people that we could ask now so it would say like we're not sure whether you would with this be better for you with that be better and people would comment and it just helped keep us going in the right direction kind of gave us more confidence we were building the right thing and it was great for motivation as

8:01well because we post something and we'd get messages back you know this sounds so amazing this is extremely powerful I'm sitting here with goosebumps you guys rock heart eyes emoji heart eyes emoji open HTML nerd tag man crush close HTML nerd tag and not even sure what that means but people seem too happy and and there were other things you know we had the landing page we had the email list we were building up building up all this stuff and I mean it works it helps it's it got us a lot of attention and and it helped kind of keep us keep us on track a little bit and then we got this

8:42email this was from the CEO of one of the one of our first customers our pre-launch customers where they basically said like do you want to take investment that we've been following what you're doing if I could convince you to raise this is my favorite part half a million or a million or whatever to help you grow and it starts with suspect the answer is no because they knew that we were bootstrap as we'd always bootstrapped and we were gonna say no because we were bootstrappers and we always bootstrapped but we kind of we thought like it's kind of naive to just decide like we don't like investment so

9:24we're not going to do it and so we took a step back and we said like why why have we never done that before what are our concerns with that and we replied to him and we said like these are some of the things like this is why we are leaning towards no like and I'm sure you've kind of you've seen these all you've heard of these so you've seen companies do things like this we said we don't want to we don't give up all the control you know we don't want to give out board seats and and have investors that are telling us what we have to do

9:51and the response was okay there will be no board seats you'll you'll keep full control and we're like okay that's helpful but we want to you know we want to stay loyal to our customers we've seen other businesses where they take investment and now they have to do things to please the shareholders and it's not always and the customers interest and we don't like that and he was like fine there will be no they won't have any like the investors won't have any say day-to-day you'll you'll keep doing what's best to your customers and we're like yeah well what about kind of we can have to put

10:26together a pitch deck we're gonna have to go find these yeah it convinced these investors it's time-consuming and he said I'll I've got the investors I can get them I have investors in my company I'll do everything you won't lift a finger and at that point we're like okay this you've kind of taken out all the reasons why we would ante if we were ante the things that come along with investment and we're like this this kind of makes sense then it's gonna help us grow we can go full-time we can we can build this faster we can build a little team to accelerate things as we took the

10:59money and we launched beginning January which we hired a few people sped things up you know January we launched and this was kind of MOR at the beginning we launched about seven and a half grand MRRR and we had about 75 grand a lot of it was annuals and pre-launch and so on so about 75 grand of revenue at that point total and seven and a half grand monthly and we were happy this was this was kind of this was great this was this is what we wanted and the following months of February kind of flatlined and we were like that's kind of that's normal we've seen

11:39that happen everyone who has been following along has now bought the ones who want to like the next month is is that's okay and we watched kind of this happen the next month will that okay we've got a bit more and then this and then this and we're like okay this is we've done something right we're at almost 20k just under 20 K revenue four months after launch em are our monthly revenue right this is great like we can you know we're gonna be retiring soon this is gonna be us on a boat with I think t-pain apparently that's you know it's gonna be great 20km RR 4 months after launch party

12:22right and there were a couple of problems brewing the first problem the first one in itself isn't necessarily a problem but is that that 20k we were not profitable yet we were spending more than that on you know we'd hired people and people are expensive and itself there's not a problem because if we kept growing in that way we'd be profitable long before long before we ran out of money the bigger problem was kind of we were we were pouring and we were marketing we were we were like we just need more customers like this we can be profitable soon and we're just gonna get revenue

12:57from wherever we can we get all these new customers and just keep doing what we're doing it's all great but the second problem was there was some chair on the horizon it takes us to part two so the month the following month June kind of flatlined like this and we're like a cave you know we had it we had we had that happened just after launch as well it might just be a temporary thing is the summer people are going away and it kind of recovered and then this and then this and now we're like what the hell's going on right and this is kind of

13:36concerning again because we're spending a helluva lot more than that each month on on team and so we did what any and a smart entrepreneurs would do we freaked out no we took a step back and we're like we need to we'd like we have to figure out what's going on here and like we need to know why this is happening firstly like there's two aspects to why the first one is very simple what's the immediate cause and what I mean is if revenue is going down like something is that's either there aren't people coming in the top of the funnel anymore and do we need to fix that or

14:18people are kind of taking out trials but they're not we actually didn't have trials at this point but if you do then that's another possibility people are taking our trials they're not converting you can figure out what's up with that in our case it was churn it was it was the a lot of customers still coming in and then a lot of them cancelling this was our revenue this is Archer and a revenue churn for the months after launch you kind of you might be forgiven for thinking okay that's fine if that's if that's dollars churn that kind of makes sense because you were growing so fast so you're gonna

14:54churn more dollars that's kind of normal but this was percent churn so it kind of hovered 5% at the beginning and then up to 10% and before the year was out like we were we were over 15% Chen and we just we hadn't been paying nearly enough attention to this and from speaking to people it turns out it's a very common thing I've spoken to a lot of people even over the last couple of days who have kind of seen this happen kind of big launch and then Plateau and it's from people dropping out and robee even talked a few years ago Micro Kampf drip did something pretty similar

15:32it something happens a lot and we just needed to figure out why we needed to fix it the bottom line was we didn't have a product that was exactly what our market needed yet or we didn't have product market fit and we kind of we tricked ourselves into thinking we did because of that big revenue right we we kind of in my head if you made that much money then you kind of you had a bit of fit don't think it's always the case I think what we were seeing is partly because a lot of us have got kind of better over the years we've learned how

16:12to launch something to revenue instead of launching it to nothing I've learned how to build that audience sometimes what happens is those people are signing up they don't know yet whether it's whether it's going to work for them and they they cut you some slack because they know it's new and it might take a few months before they decide yeah this is definitely not right for me and they're also they're more loyal they kind of they've been following along they there's a lot of there's a lot of kind of yeah there's a lot of loyalty to you from those early launch customers it doesn't mean you've got something right

16:48yet it means that they see that there's a problem your solution might not quite be the one they need so what could we have been looking at we were kind of we took we took the high revenue as a sign that we were we were doing right like I said churn is a good thing to look up the downside of churn is that you find out much later so China's like it's a very lagging indicator it's kind of it tells you immediately that you had a problem four months ago it's it's the kind of if you need to be watching it but it also it doesn't tell you stuff

17:28early so other things like a lot of people like to look at these kind of survey kind of questions so there's MPs where okay there's a whole methodology around NPS but the bit I'm kind of interested in here is the idea of how likely are you to want to recommend this to people if you can figure out if you can get a sense of how of whether people are like I am definitely going to recommend this like I love it versus the number of people who are saying I like I can't see myself taliano about this it's the useful thing to know the naked question is is this idea of like how

18:02this points would you be if you did not have this this has kind of been popularized a lot this year by super human you may have seen they they said they used this to kind of measure how they're how close they work for a market fit they got it from Sean Ellis Sean Ellis I think got it from somewhere else but it's again it's a useful thing to Sean's benchmark is is like you should have 40% if more than 40% of people are saying they'd be very disappointed to not have your thing that can be a good indicator but also just speaking with customers as much as possible like

18:35you get a feel for this stuff you get a feel for people loving this or are they just kind of along for the ride and they're still figuring out whether whether you can help them and so on now we because we had hired we weren't speaking with customers nearly as much as we should have been we've kind of created this abstraction layer between us and customers because like we weren't in the supporting books anymore we had someone for that and we weren't doing all the demo calls because there was someone doing that and so us as the founders were kind of we were a little bit obstructed away and it wasn't a

19:09great idea so Sean Ellis great actors if you haven't reached product market fit yet and again even if you have revenue you may not have this product market fit it is critical to keep your burn low and focus on increasing a percentage of users that say they'll be very disappointed about your product the founders should engage existing and target users to learn how to make your product a must-have so he's basically saying if you don't have heard of market fit yet don't spend money and learn everything you can from customers what are we doing spending lots of money and we build this abstraction layer between us and customers this means do

19:55something about it and there's two things here one is a short-term thing we were very much on our way to running out of money because we've been spending on the assumption that revenue was going to keep growing in the way in a way that it had been and so there's this short-term thing of we need to not run out of money and then the longer-term of how do we fix the Chad I'm going to look at the both of those things in the short term if you are in that position it's not a nice position to be in but you have a few options you can get rid of some of

20:29those people that you're spending so much money on not a nice thing to do you can look at taking less money yourselves or doing kind of pay cuts across across the team again not a great thing to do Josh Pigford their metrics had to ended up doing that one he's talked a lot about that online but they kind of said everyone on the team needs to take less money because we've screwed up here and we're running out well you give out to the investors and you say can we have a little bit more please you need to persuade them that it's a temporary enough thing that you know that it's not

21:08you can fix an other income something like consulting it's an interesting one because probably most people in this room have done this at the beginning of a SAS where where you start where you can't even quit your consulting income that's paying the bills while you get the SAS off the ground and but it's something that you can do later as well and it's always in a way it's an easier thing to do at that point because you're if you're anything like us we had a lot of customers who were saying and what what you're doing I want to buy in but I don't have the time to even implement it

21:43myself can you do that for me and we were like yeah we can kind of we were the authority in doing that at that point it was an easy sell and we would we were like we'll set up the product for you we'll set up all your email marketing things around that it was time consuming for us and I think if you're running a SAS you you know you don't want to be doing things like that and that's not that's not the end goal but it can be something to do in the short term does anyone reckon they know which one of these we ended up doing which we

22:16ended up doing anyone want to guess put your hand up a few people want to guess yet you're all right and we did all of them at one time or another we had to do and we ended up having to one time or another do every one of these and it's not a nice thing to have to do particularly had to do to not run out of money that was how we had to fix the the mistakes we've made and once we've done that and we had enough runway that we could we could actually fix the problem properly we're like okay so smaller team now I think we can be we can we can

22:49figure this out and we start asking why are people churning and I fingers are related but often more important question we're kind of the temptation is to is to look at those people who have left and be like why did they why did they go right we're like what did we do wrong what what would have made them stay and actually sometimes more useful is this why are the people who are staying staying right because on the same day we'd have someone churn and then we'd have someone writing on Twitter like this is the best thing ever finally got right message running it's badass this was like my conversion rates

23:38to my email list have 5x - overnight totally in loooove already seeing higher conversions I'm learning about my visitors it might be the best money I've ever spent on my business and then five minutes later someone's like yeah this doesn't like I didn't get it I don't want it and so we're like we need to go and talk to these people need to go and talk to kind of both groups but and you know it's something that we don't all love doing necessarily speaking with the people but we needed to do a lot of it and so we went to the people all these people who are saying great things and

24:14we were looking we could see we could see from their accounts there were some people who were absolutely crushing it and we went to spoke with them and I'm actually gonna correct that would listen to them and there's an important distinction those calls kind of ideally you should be saying as little as possible and you just want to be hearing from them like we're just guiding the conversation and they're all these times when you can speak with customers that like I said earlier we weren't doing these because we had a team that would kind of doing these things and filtering bits and pieces back to us when we

24:49started doing things like the onboarding calls the customer support we ended up actually learning a lot about what what was going on in our customers worlds anyway without even directly asking like we just got a better feel for how everything was going post cancellation is an interesting one we ended up using the bare metrics cancellation insights widget it's essentially it's something you drop it into your app it swaps out your cancel I want to cancel button for a I want to cancel but let's get some feedback from your first button so just when they press cancel it asked them why we found this work this was this was a helpful

25:35kind of way to get answers from everyone we hacked the product in two ways we changed two things about it one was that we made the comment required and no people have had mixed results trying this and the kind of the the fairies or sometimes the the results is people just kind of press keys on the keyboard they don't care like whatever though we actually found it worked really well for us we got some really valuable insights but like I say other people have found more success with things like just having a straight danzel button and then maybe emailing afterwards and getting more info the second happy that we made

26:13was that when you picked one of the multiple choice answers the prompt for what to type into the comment box would change and it's also really helped so they press like I'm switching to another product which in itself isn't such a useful piece of information that from could become which product are you switching to and why if you don't mind sharing so again we were getting really useful insight and not automating our lifecycle emails also helped us get a lot of insight what I mean is kind of if you're getting if you've got a couple of trials thank you for and it has small handful trials coming in each day or

26:50each week and a Chan hero that here and they're like that's not such a volume that you can't handle that yourself so Brennan and I started just like when someone signed up we would just reach out manually like we switched up all these advanced automations that we had and we just reached out and we were like hey thanks for signing up like let's find like either why or how can we help or how we make sure you're successful late it was just and would maybe look up who they were and it was it was tailored it was and we tell that wasn't automated as well because people are expecting

27:21automated ones now and sometimes we even do it when someone signs up to the email list we don't do it for everyone but sometimes someone signs up team to the email list just reach out like introduce ourselves and see how we can help in just those organic conversations can give so much insight that's you don't know you don't have to automate everything there comes a point when you do have to and when you don't have to it's not necessarily worth doing like I said the kind of the priority when you're if you don't have that product market fit yet if you don't have kind of just more customers coming in and you

27:59can handle and and churn under control and all the rest of it you want to be like the priority is to learn and you can't do that if you've automated away every touchpoint between you and the customer and so we've started trying to figure out like why are people using the product why the people succeeding succeeding what's the benefit and what were they doing before like what do people do when when they're not using right method yet what have they been doing to get that benefit before this has been taught well once or twice at this conference the kind of the jobs to be done idea like everything is

28:34replacing something else that people were doing for us initially what we saw was that a lot of people were doing nothing like personalization was such a new thing that most people were switching from like directly as in terms of competitive switching from they didn't have a product to do with before so we needed to look one level deeper like we were helping increase conversions what are they doing for that right now and how can we fit in that space in their head I really like this this quote questions the places in your mind where answers fit if you haven't asked the question the answer has nowhere to go it

29:10hits your mind and bounces right off so it's this kind of idea like there is a space in someone's head where they're like this is this is my email marketing tool that goes there my you know this is what I do to increase conversions there was no space in their head for this is what I do for personalizing my website and so we started thinking about that the other place I've seen this this always stood out to me does anyone know anyone set what this scene is very knowledgeable so yes this is 2007 first launch of the iPhone and they were kind of it was described in three ways it was

29:48a touch screen widescreen touch screen iPod and the crowd kind of went wild and then Steve Jobs said it's a revolutionary mobile phone and the crowd went even more wild and then he said and it's a breakthrough internet communication device about three people in the crowd kind of went because no one knew where that was and actually the iPhone was so revolution like it wasn't a smartphone it was so far ahead like that wasn't it was a brand-new product but what they recognized is that if they had described it in the way of like it's this brand new thing people don't get it there's no space in their head for that

30:26so they said it's a phone it's a smartphone but this is how it's better another way of putting it like you need competition this is what we found we we were like if people are switching from nothing it's hard for them to figure out what this is this is why people are churning they're coming in they're trying it they're not certain that they're doing things the right way because they've got no experience of this before and they're kind of saying it's it's it's a nice to have it's you know I wasn't doing something for this before I don't need something for it now and so we looked at like how can we kind of how

31:01can we pivot to have more competition essentially and that was what we tried we we said people are using this to get more conversions right now what are they doing for that well they've got these convert these opt-ins email opt-in tools on their website that don't do any of the stuff that we do but that's what they're doing right now to get more people onto their email list or to to sell through their website and so we tried switching to that we said like we are like your existing opt-in tool but we will get you more opt-ins and then we go on to say how and now there's a space

31:35in their head that we can fit into churn started to do this so downwards is good we crossed back below 10% it's not where we wanted to be yet but it's moving in the right direction and it means revenue has started to do this again this is since the plateau so clutter down to about 17 K we're now back up 28 29 so things are going back in the right direction there's more to do but we kind of know what that is because because we've just we're speaking to our customers so much more we're not we're not we don't have to we're not doing everything we can to try and to try and

32:20grow revenue as quickly as possible and to feed a team because we are spending less now and we're in a comfortable place we can keep hopefully this going up into the right in a sustainable way higher when we absolutely need to and that's where we're up I hope there's been something in here that's there's been helpful that you might be able to use in your business or use in the future and thank you very much [Music] [Applause] [Music]