Patrick McKenzie – Paint By Numbers: From Productized Service to SaaS – MicroConf 2017

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    • Quick story about the patio11 thing
      • Lived in Japan for 13 years
      • Get confused for people A LOT
        • My Harry Potter phase…
        • My Keith Perhac phase…
          • 2 white software engineers in town
        • My Eminem phase…
        • Started working at Stripe last year
          • “Hi, my name’s Patrick and I work at Stripe”
            • Not…Collison
            • So I’m only called patio11 at Stripe
    • Sold >$1MM worth of software
      • Revenue not profit
      • Took over 10 years
      • Not easy sailing
    • Bingo Card Creator → Kalzumeus → Appointment Reminder → Starfighter
      • All seems up and to the right
      • Starfighter — worked very hard. People loved it
        • It failed. Totally and completely. Mostly my fault
    • Wife: you are unhappy right now
      • Friends: you should look for other options
      • Professionals: this is affecting your health
      • Didn’t listen to them
    • Landlord: “Patrick, I didn’t get the rent this month”
      • Owed $280,000
      • Has a happy ending, but.
    • Don’t Start In SaaS
      • If you can possibly avoid it
      • Start another business first
    • Things you’ll do running a SaaS business
      • First step is develop an app, right?
      • You have to…
        • Develop an app
        • Design
        • Testing
        • Server admin
        • Security
        • Automated Deploys
        • Backups
        • Invoicing
        • Emails
        • Bookkeeping
        • Onboarding
        • Customer support
      • People tell me I have a knack for this marketing thing
        • Absolutely untrue
        • Took me 5.5 years of nights and weekends before I felt comfortable enough to go all in, 2006-2011

 

  • Build your business first
  • Write your software later.

 

    • Your target for next year: $12k/mo
      • The $10k thrown around at other MicroConfs — adjusted for inflation
      • Predictable, repeatable revenue
      • From a lot of experience selling $24 products to teachers, retirees…
        • You want to be selling to businesses
        • “Sell to the economic section of the planet” (Nick Disabato)
      • People here worried if they can even sell their software for $20/mo
        • You want to be selling to businesses
    • “Who here feels confident they can sell at least 1 enterprise business on 6-figures”
      • Not many
    • “Who here has ever sold a business on “I show up at your office. You pay me $3k+/mo””
      • You thought that was a job
  • Productized consulting
    • Everyone knows what a product business looks like vs a service business
      • Product — you get something
      • Service — you get something done
    • Haircut for son
      • There’s no “let’s figure out a MSA”
      • What problem brought you here?
      • It’s just “you get one of a choice of several haircuts”
    • What makes good productized consulting offerings?
      • Operations — run a business process for them
        • If there is a thing that they log in to (Tarsnap; Mailchimp), then they have to log in to do that thing.
        • They’re busy. They often don’t put the effort into it they know they should
        • We will do that work for you
        • For a repeatable amount of money
      • Reporting / analysis
        • Pull numbers, make recommendations
        • “I will find the data source for you. I will do the analysis. I will make suggestions. You implement them. Great day for everyone”
      • Training
        • Teach people what you know
        • Teach people how to do their jobs better
    • Most important two words at MicroConf, that I say every year
      • And will continue to say every year until I die
      • CHARGE MORE
      • At Stripe — before I even joined, there was talk of a “patio11 mode” in the Stripe software, that would suggest “$1? Don’t you mean $1.99?“
    • I can’t just tell you “double your prices”
      • Well I can
      • But if you haven’t started yet, doubling nil is nil
      • If you’re selling infoproducts, steal these prices. They’re plenty good enough to get started.
        • $49 I’ll teach, you do the work
        • $99 I’ll teach and inspire, you do the work
        • $249: I’ll teach, inspire, and get you started; you do the work
        • Advanced mode
          • $499: …I’ll remind you that you have to actually do the work
      • Training
        • On-site: $5k/day, min 2 days, you pay travel. $3k if you record it
          • Videos are valuable to them. They will pay for video
        • Online (private): $250/seat (or $5k) + $3k if you want the videos, ½ day
        • Online (public): $99 for a lecture, $249 a half day
          • You’re selling to the economic centre of the planet. Those aren’t high numbers
          • More than a half day online, gets boring
            • Tried giving 2-day online training before. That was a mistake. Many didn’t even show up to day 2
    • Productized service: $800/mo
      • You dramatically underestimate the number of things a business will pay $800/mo for
        • You could take the trash out for them for >$800/mo
          • That’s not a joke. A company with >20 employees pays more than $800/mo for this. Their employee time is too valuable to do it themselves
    • Things to build, in order
      • A landing page. Plant a flag on the internet. “Hi. My name is Patrick. And I do ……”
        • “If you know you’re interested in this, give me your email address”
      • Three artifacts to demonstrate your expertise
        • Artifact: a thing that demonstrates value
        • Don’t just write content. Write something valuable. That tells the world you know about this thing
      • Sales page for the offering
        • Here’s the thing. Here’s how much it costs
      • A one month email course which sells offering
        • Give me your email address. I will send you this course. It will help you X
    • What’s actual productized consulting heavy on?
      • Your raw brainsweat. The thing you already do. Whatever you’re paid to do at the moment.
      • Repeatable outcomes which are visible to clients
        • Not good to wall yourself off and do your thing and then send your client an invoice for $800/mo
    • Turning a performance into a routine
      • Vegas: people literally say “I impersonate someone else and do a specific thing that they do better than me” and people pay to watch it
    • Sell things the market already buys
      • If you’re a Rails developer and you teach people in your office about Rails security, sell a course on it
    • What’s that look like for a real example? (“Backup Czar”)
      • “You haven’t restored a backup recently? You don’t have backups”
      • 45 minute scoping call
      • Request for access to systems
      • “I’m going to do X for you every month. You will get your first X in Y days”
      • “I’ve done X.”
    • Use Remarq.io
      • Make beautiful reports
        • (Never tell clients you produce “PDFs”. That’s not valuable)
    • Automate the toilsome bits
      • The repetitive, grinding parts that just have to get executed
      • A real life example from Stripe (forum stats)
        • I graphed daily active users
        • Wasn’t worth writing software for. I logged in daily/weekly, and counted the daily active users manually
          • Put them in a spreadsheet
        • …I should toil less on this
          • Wrote SQL, etc, to pull from Discourse, do it’s thing, feed back into Stripe’s reporting system
          • Removed my brainsweat
          • If you slap a name on that, it’s a SaaS business
    • Integrations
      • Integrate with Zapier. Integrate with Slack
      • Helps you scope to people who are already paying for software, and already using complementary tools
    • Fundamental theory of recurring revenue businesses
      • Revenue = (acquisition * conversion * price) / churn
      • “I will implement this feature if: it produces radically more value, faster, for my best customers”
    • Software is increasingly social
      • Aggressively solicit invitations to colleagues early in onboarding flow
      • Write emails designed to be forwarded to other people
      • Integrate with Slack
        • Conversations happening around things that are happening with your software are a very good thing
      • Onboarding: “give me the email addresses of others who would get value from this”
    • Businesses are expensive
      • This is good, because your customers know this → will spend money on you
      • This is bad, because it means you have to pay for stuff
        • My expenses last year: $160k
    • Returns are back-weighted
      • Everything you produce, artifacts, are assets that may be sold one day
    • Make friends. Keep them.
      • This is a ridiculously lonely business
      • Your spouse might not understand exactly what you do every day
      • Society might not understand exactly what you do every day
      • Use MicroConf to find lifelong friends. I have found many here.
        • Do find each other. Do help each other. No matter how successful you are, there will be down times
  • @patio11 or [email protected] or [email protected] (not [email protected]!)
  • bit.ly/atlas-mc17 — if you want to incorporate with Atlas (and PLEASE talk to me!)
  • bit.ly/patio11-mc17 — free course about lifecycle emails
  • https://stripe.com/atlas/guide — nuts and bolts of business
  • https://training.kalzumeus.com — you all should be on my email list
  • Q&A
    • “Your consulting, services, often come from domain knowledge you had outside of the software industry. Could you speak about domain knowledge from previous jobs (outside of software domain knowledge) and how we can turn that into value?”
      • Many of you have commercially relevant skillsets outside of what you do day to day
      • Every white-collar skill gets better when you can write software
        • It’s like literacy
      • Writing + software. Project management + software. Etc etc. They all help
    • “What kind of businesses are good fits for Stripe Atlas?”
      • If you are seeking to raise money, Atlas is totally built for your needs right now
      • If you want to do an LLC, I want that to happen through Atlas in the near future
    • “Visible repeatable outcomes. The backup example isn’t a very visible outcome — do the reports help with making it more visible?”
      • Yes. This is true in your day jobs as well. You have a responsibility to make what you are doing visible to the rest of the company.

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