011. Dan Norris – 7 day startup

Timestamp

Ash Roy 00:24

Hello everyone. I'd like to sincerely thank you for the huge number of downloads and the wonderful reviews on itunes that's really helped us to get to the itunes New and Noteworthy section. So thanks for that. A quick shout out to one of our Kind listeners in the United States, who's left us a fantastic five star review. VP Carter says, just listen to Asher's interview with Neil Patel. I was slightly familiar with Mr. Patel, but had not yet taken the time to dive into much of his content. Ash's interview was excellent and really helped bring me up to speed with Mr. Patel's outlook and insights. Great stuff. Thank you very much, VP Carter. I really appreciate you stopping by and leaving us that fantastic review. If you find this show useful and haven't already done so, please do stop by and leave a review on itunes and share the link to the show with your friends. It helps enormously with the rankings. Thank you so much. Today's show is quite long and focuses on two topics. The first half is focused on startups and the second half on content marketing. So I've broken the show up into two parts. Here's the first part, which talks mainly about startups. Enjoy. Oh, and watch out for the second part of the show, coming soon to a device near you. Hello everyone. Today I'd like to introduce Dan Norris, the founder of wpcurve.com and the author. Of The Seven Day Startup. And right now, Dan is working on another book called Content Machine. I met Dan at Superfast Business Live Ten earlier this month, where I had. The pleasure of watching him speak. In his talk, Dan shared a very. Moving story about his journey in startups. And how he eventually arrived at his. Current success, which is wpcurve.com. Dan shared some great insights about startups. Including the fact that they must have. Great design, simple names that easily dropped into a conversation, think Slack or Uber. And the importance of growth. A couple of great insights that really. Stood out for me from the talk. Was firstly, the idea of trading short. Term revenue for long term growth, and. Secondly, the importance of focusing on monthly growth. So Dan used an example saying a. $6,000 per month business growing at 15% will hit an annual revenue of $2. Million in two years and $10 million in three years. Dan also loves line charts, which he. Shared plenty of in his talk at FFP Live. And having been trained as a financial. Analyst in banking, the geek in me was drawn to Dan, and we had. A few interesting conversations over the next. Two days at the conference. So Dan, how did I do with the intro?

Dan Norris 02:59

Good, very good. Thanks for having me.

Ash Roy 03:01

No, who are you? Most welcome. So in this podcast we're going to focus mainly on startups and how some startup principles can apply to existing small businesses or somebody who's looking to launch their startup. So let's talk a little bit about what you define as a startup.

Dan Norris 03:19

I suppose the language is important because people talk about starting a business, but for me having a startup is somewhat different to having a normal business because the idea of a startup is to create something that's impactful long term. And so to do that, I think you need to be going after a big opportunity. It can't start a little franchise and that be a startup. That's not really what the startup thing is all about. It's got to be something that's going after a big opportunity. Normally startups would have a little bit of uncertainty. I mean most businesses have some uncertainty but they sort of get more and more uncertain the bigger the opportunity going after. So startups would have quite a bit of uncertainty compared to something like freelancing or opening a franchise or just kind of going out and consulting. A startup would have more uncertainty than that and would normally be a little disruptive or something, have something a little bit unique and different about it. And I think it doesn't necessarily need to get funding. I think a lot of people think a startup is something that's got venture capital funding. I don't think that's necessarily true. I think you can do it yourself in a lot of cases but it is sort of fundamentally different to a normal sort of business that you start.

Ash Roy 04:26

Yes, you did say in your talk that a startup typically should be about a $10 million business or thereabouts that's the order of magnitude that a person needs to be thinking and it needs to have a twist of innovation. And yes, I agree completely that it's not a standard normal business. But tell me, Dan, do you agree that you can start off as a consulting type business or a normal business. And then kind of pivot into a start up?

Dan Norris 04:52

It's not very easy to do that. I sort of tried to do that but I failed. I started out doing agency or freelancing type agency business and eventually I just gave up and scrapped that business and started again from scratch.

Ash Roy 05:05

Okay.

Dan Norris 05:05

And I know some people who've been able to do it that way. There's quite a few well known examples and not so much pivot but sort of started the agency consulting stuff and then on the side built a more traditional software startup or some kind of startup and eventually just turn the agency stuff off once the startup became more interesting. So Basecamp is a good example of that and I know the guys at less accounting did the same thing quite a few people have done that. For me, that didn't really work because I was never really able to do two things. I was sort of never able to work on something that I wasn't keen on, for one thing. So if I was running a start up on the side but my day to day required me to run an agency which I didn't want to run, I knew that that would just fall apart. So for me, that wasn't an option. It is for other people. The other thing you can probably do is build some of these startup elements into your business over time. So with WP Curve, for example, most starters build some sort of intellectual property into their company. They sort of build assets. And if you've got a software company or a physical product or something, then you're naturally building up assets. You might have trademarks or you might just have a bunch of code that no one else has access to or whatever. With services, with WP Curve, we didn't really have that when we started, but I think over time we can build that in. But I still think it's fundamentally a start up because it's somewhat innovative and it's in a large market and it's a high growth business and it's a little bit uncertain. So I think it is a start up and it'll become a bit more of a serious start up over time once we build some of that asset building and intellectual property into it.

Ash Roy 06:32

Okay, so we've established then the startup is a little bit different to a standard business in that it has more uncertainty. It does have a twist of innovation and we need to look at a. High growth kind of business.

Dan Norris 06:44

Yeah, exactly. So my idea when I started this company was I didn't want to go back into an agency, I didn't want a freelance. I simply wanted something that had consistent monthly revenue and something that was growing every month. And for services business, monthly growth, like a recurring services business, monthly growth is definitely what you're after. If you're building something like a software product using like a freemium model where you're giving away a free version of the product, then you probably want weekly growth. And so in businesses that I've got in that space, I'm looking at weekly growth as opposed to monthly growth. But for everything else and from revenue, I think monthly growth is a really useful thing to measure.

Ash Roy 07:24

And actually that brings up a very important and relevant point that I discussed with James Ramco in my second episode in this podcast series. And that is about recurring revenues.

Dan Norris 07:34

Well, I'm a big believer in consistent revenue, consistently growing revenue. I think recurring revenue is sold a little bit too often as the kind of silver bullet for service businesses. And I think there's actually there are quite a few issues with recurring revenue. One is not every service is recurring in nature, and if you try to start a business that isn't recurring in nature and you don't offer a project or a one off version of it, then you're just going to get a huge amount of churn. You're going to get people signing up and they're just going to leave after three or four months or less than that. So I think there's that problem. And then there's also just a simple fact that a lot of people don't want to pay a recurring fee for something. So if you start a recurring business, you are limiting yourself to the percentage of the market that want to pay that recurring fee for something. And that's fine, that often there is a percentage that want to do that. But if you want to go after a really, really big market, more often than not you'll probably have to consider other forms of revenue other than recurring. So in our business we started out with 100% recurring and we gradually introduced other pricing models to basically mitigate those things. So for retention, we have a heavily discounted annual version. So if someone signs up for a year, then that's a much higher lifetime value than if someone signs up for three or four months. And so we give them a discount to encourage them to do that. And then we also have one off jobs and we sort of try to make sure the monthly revenue growth is consistent and we try to make sure the one off job to recurring is the ratio is not too high. But my tolerance for that ratio goes up over time because I realize that that is probably the bigger part of the market, is the market that just wants to pay to solve a problem when they have it. So early on my tolerance was zero and I wanted 100% recurring. But as a business grows, I think it's going to go up a lot to maybe 30% to 40% of our business will be non recurring of new sign ups, right?

Ash Roy 09:27

So this would be a good opportunity to explain to the listeners a bit more about your business. So your business, WB Curve Dan, offers. People unlimited amount of WordPress support in terms of small jobs under 30 minutes, 24/7. Initially it was based on a monthly recurring fee.

Dan Norris 09:46

Yeah, and it still is. It's just that you can get a discount for signing up for a whole year. And if you sign up for the monthly, you have to sign up for at least three months. So you can't just sort of sign up for one month and then leave next month. And we also offer one off job. It's about the same, same price for one job as it is for the monthly unlimited. So for people who just want one job and don't want to sign up for three months, then they get the one off. If they have an ongoing, they need ongoing support with WordPress, then $80 a month is a pretty reasonable deal. Okay.

Ash Roy 10:15

The difference here of course, is because you're offering a new fix, you're offering effectively what is a new product, even. Though it's the same thing if you. Think of each fix as a separate product. Whereas I think what you're saying is if you have the one product and you want to charge people a recurring fee for that, you might not get as good a response. Is that correct?

Dan Norris 10:35

Well, I mean, our business is probably borderline because people come to us with problems to solve and we do tend to solve them pretty quickly. And then there are that percentage of customers who just want us there and have been customers with us from day one because they just want that insurance and they want to know that they've got to defend velopu that they can trust to look after their site. And I know for my business, I would want that because I wouldn't want to kind of email someone at nighttime and not know if they're going to be awake or responding, and I wouldn't want to get on Odesk every time I wanted a website fix and hand over my passwords and that sort of thing. I would pay for that insurance aspect of it. But for people just starting out, they may not want to pay every month. And so if they sign up, sometimes after a couple of months, we'll sort out a few of their issues and then they'll l and then they'll leave. So I think our business is it is recurring in nature to a point, but it can't be 100% recurring because there's a huge percentage of the market that just wants to pay for their jobs to be fixed at the time. There's other things, like I think there's a scale, like some things you're going to have a problem every month, something like hosting, it's up to 100% recurring in nature. They're providing that ongoing service. You're never going to leave a hosting company unless you have a problem with them. Or I mean, even if you see a better deal somewhere, you're probably not going to leave if you got a service business because it's just not worth it.

Ash Roy 11:44

It's a very sticky kind of offering.

Dan Norris 11:46

Yeah, the barrier to exit is quite high. You don't really want to go through that. But then there's other things like people have launched sort of seven day startup companies for just about everything you can imagine. And some people have tried it for things that aren't quite as sort of recurring in nature and have struggled to maintain customers. Some things just have higher churn than others. Like if you think about a community, a lot of people will join a community for there'll be a bunch of stuff they get when they join. So it'll be like, okay, you can join here, you can get all these scripts or you can get these resources, ebooks or videos or whatever, but then after they join, you got to think about, is what you're selling actually recurring in nature? In a lot of cases it's not if they don't become an active member of the community, so a lot of people will come in, they'll get those things, and then they'll leave because they're not really getting recurring value. So again, there's a whole bunch of ways to mitigate something like that. Like, I know John Dumas does like the lifetime membership thing and that just completely eliminates churn. And I'm not saying that that's a great idea to do, but it's just one way you can look at mitigating that. But I think it's worth thinking about. If you're going to say, okay, I want to do 100% recurring revenue, then you really need to think about, are you offering recurring value? And if you're not, then going to be quite difficult to make that work.

Ash Roy 13:01

So if you are going to ask for recurring revenue, you need to think about how you're going to provide recurring value. That's a great point in a community type situation, I agree that it is subject to the individual's participation in the community, and they've got to be willing to ask questions, and people aren't always willing to do that or willing to. Participate in some way. And then, of course, if they don't initiate that interaction, then it isn't reciprocated and then it just falls away. So that is an issue. I can see that. Okay, all right, so let's go back to the idea of startups. We've talked about what a startup is. Let's talk a bit more about why a person would go for a startup. Type business as opposed to a normal business.

Dan Norris 13:45

Well, I mean, I think if you're anything like me, then you're not really in entrepreneurship for I don't know, maybe this isn't true, but I'm not in entrepreneurship so much for the ability to work for myself because that to me, is not it's really not that appealing. I think people think, oh, I'd be so good to work for yourself, but they kind of forget about all the bad things for working for yourself, and they overflate the value of the good things about working for yourself. And that's never really like after doing it for seven years, I don't, I don't hold the value of working for myself that highly anymore. So I'm I'm really in it for other reasons, and that is that I want to create something that is immensely valuable, and I want to create something that impacts thousands, if not tens of thousands of people. And I want to create something that is worth something significant. So I've put nine years of my life into entrepreneurship. I want to get multiple millions of dollars at the end of it, and I'm not prepared to wait that long. And I think if people have kind of got that mindset where they're expecting something more than just kind of working for yourself and not having the boss to report to, then what you want to do is start a company that can be a high growth company and that is pretty much a start up. There's probably a few other ways to do it but to me that is what makes sense to me.

Ash Roy 15:11

Okay, so you want to make a dent in the universe as Steve Jobs would say.

Dan Norris 15:16

I suppose that's a good way to say it, although I'm not sure WordPress support business makes that much of a dent in the universe but I guess that's a good thing to rely relate to if people like State Jobs.

Ash Roy 15:27

What I mean is in terms of the ideology, what you're saying is you want to make a big difference, you want to make a big impact on the world and that is a large motivator for you as opposed to not having a boss to report to. And I agree that there's other ways you could not have a boss to report to and still have a lower risk job. I guess you could just start consulting and that way you're your own boss and closest thing you have to a boss is your customers but you don't have someone to report to telling you how to do things.

Dan Norris 15:58

No, but the closest thing you have to your boss is actually yourself.

Ash Roy 16:01

Yes.

Dan Norris 16:01

And if you're much more critical than any boss would ever be, which I am much more critical than any boss I ever had, porting to myself is not that much fun.

Ash Roy 16:10

Yes. I haven't met many entrepreneurs who aren't very hard on themselves actually. I can't think of one. So if one of the listeners decided that they wanted to do their own startup, what would they do? How would they go about doing it?

Dan Norris 16:25

Well, I mean there's effectively two ways to get into the startup world. One is the kind of traditional path which is to join startup communities and start participating in startup communities and doing events like Startup Weekend and Pitch Days and applying to get into Incubators and meeting with investors and doing that whole, like traditional startup system stuff and try to go through that traditional path, which is basically to pitch your idea to enough people to either get investors or get into an incubator, build that out over the course of the incubator and then get funding at the end of that and become a funded company. That was never really an option for me because I didn't have enough time for one thing. I'm also not very good at pitching things and I didn't have a co founder at the time who I could have used for that sort of thing I do now, but I didn't then, so it was just me. So that system really doesn't support single founders and it also doesn't really support people who are just not suited to that kind of environment. I've never really been that good at pitching idea like I've never pitched an idea in my life and so I think none of what I've done would probably get through that system very well. So the path I chose was to basically look and study and obsess over startups for years and follow all the startup literature and the podcast and the videos and sort of, I guess to some extent hang out with startup people and look at what these companies do. And out of those things, what are the things I can do in my business? And that started to rub off. I think a lot of the stuff that startups do, I think it's not the sort of stuff you read about in like internet marketing ebooks and info courses and things because there's no silver bullets that people can really sell it's more. These companies are just obsessed with product and branding and PR and design, and that kind of stuff rubs off on you once you spend enough time with your head sort of in that space. And you sort of go from, okay, I want to start working for myself, to, I want to build, like, a recognizable worldwide brand that people remember and people talk about and people refer that has hundreds of customers or thousands of customers and maybe 40, 50 team members or something. And my mindset sort of changed once I sort of obsessed over that startup world and and and so the bits I took out of it were, were the bits that didn't involve me having to get funding. So it was, okay, well, I need to create a brand, I need to really focus hard on design. I need to create something that's ultra simple, way more simple than I'm really comfortable with. When I tell people that all our company does is small 30 minutes fixes, like people from the traditional sort of business world are often quite surprised about that. They don't really understand that that is enough to build a business. But in the startup world, just about anything is enough to get millions in funding and potentially a multimillion dollar company. So I think if, if you can think on that scale, then something like WordPress small fixes is well and truly big enough to create a very big company.

Ash Roy 19:28

Okay, that's interesting. So let's dig in a bit on that. I'm interested to understand you did say earlier on that a start up, they're not your traditional business, but WordPress fixes, it's a non start up kind of a business. So the twist I guess you brought into the situation was the ability to provide it on a 24/7 basis and. Also as a monthly subscription, is that correct? That was the main innovation, yeah, that's pretty much it.

Dan Norris 19:56

And just like the idea of having live access to someone with having that live chat available twenty four seven and having the unlimited small jobs and the monthly subscription is yeah, that's literally the only thing that differs between us and the way people were solving this problem before. But it turns out that those are pretty important things. Like the responsiveness is a huge thing, but people really care about that. Like when they, when they submit a job, they really care if that job gets done quickly and the access and availability is a huge thing as well. But people get anxious when they want an issue fixes their site and they don't know if they're developers reading their emails or if they're off sitting in a hammock somewhere on the beach. So I think those two things turn out to be really, really important pain points for people that our service kind of just taps into. And I think just the way we built the business, the way we focus on the monthly recurring revenue early on, the monthly consistent growth and the branding and just doing one simple thing and not doing anything at all, just saying no to hundreds of different opportunities is probably quite different to the way a lot of other people are building businesses. Like it's what startups do, but it's not necessarily what normal business people do. So yeah, I think a lot of that stuff, when I started listening to this Week in Startups and kind of obsessing over the startup world as rubbed off in designing this business, I think okay.

Ash Roy 21:16

And another really important thing you mentioned actually in your talk was content marketing. And do you believe that content marketing is a very important part of a startup?

Dan Norris 21:27

Well, I believe that people it's a difficult question to answer. I think good content marketing can be a huge asset and if you're good at it and you do it well and you're able to do it in a way that grows and scales, then it can be an asset that just keeps rewarding you. And that's exactly what we do. It's all we do is content and sort of word of mouth and we don't advertise and we've built a million dollar business in less than two years.

Ash Roy 21:54

So that was the first part of the interview which mainly covered startups. Look out for the second part of the interview on content marketing coming soon to a device near you. Thanks for listening, talk to you soon.