A Product Market Fit Show | Startup Podcast for Founders
00:07:28 · Pablo Srugo, Dane Atkinson
[00:07:28] S1: Tell me just a bit about that company, SumAll. What was the idea there? [00:07:31] S0: We had seen this pretty demonstrative shift from the small business to start spending in digital from what was conventional advertising. It felt the time that Shopify was one of our earliest partners. Facebook and Google had a huge amount of data that they couldn’t get the attention to share with their customer. Actually, Toby and Harley, a bunch of those people were really early advocates as we put together a platform that let the user see and understand their data, but it didn’t work. The lesson I learned there, as hard as it was, and you do learn more from the ones that aren’t the rocket ships, but that struggled. We ended up with a half million small businesses, so we ended up with one of the larger platforms, but that data was very hard to action. We got swept aside in this, and I think definitely a topic we’re talking about, our customers just absolutely loved it. They would spend hours a day. They would print out the reports and share it with their team. I think it was like 15 times Google Analytics usage was our usage case, and we’re growing 20,000 customers a month, which having just come off Squarespace. It was a big number to get to early in your life. It didn’t correlate to people spending money. At the end of the day, we’re like, okay, now everyone’s using this. We want to start charging for deeper analytics or printed reports. What’s my data? Oh, am I going to pay for my data?
00:07:31 · Dane Atkinson, Pablo Srugo
[00:07:31] S0: We had seen this pretty demonstrative shift from the small business to start spending in digital from what was conventional advertising. It felt the time that Shopify was one of our earliest partners. Facebook and Google had a huge amount of data that they couldn’t get the attention to share with their customer. Actually, Toby and Harley, a bunch of those people were really early advocates as we put together a platform that let the user see and understand their data, but it didn’t work. The lesson I learned there, as hard as it was, and you do learn more from the ones that aren’t the rocket ships, but that struggled. We ended up with a half million small businesses, so we ended up with one of the larger platforms, but that data was very hard to action. We got swept aside in this, and I think definitely a topic we’re talking about, our customers just absolutely loved it. They would spend hours a day. They would print out the reports and share it with their team. I think it was like 15 times Google Analytics usage was our usage case, and we’re growing 20,000 customers a month, which having just come off Squarespace. It was a big number to get to early in your life. It didn’t correlate to people spending money. At the end of the day, we’re like, okay, now everyone’s using this. We want to start charging for deeper analytics or printed reports. What’s my data? Oh, am I going to pay for my data? [00:08:48] S1: Do you think this is because something like Google Analytics is free, so there’s that benchmark? Because if you’re getting value, presumably you would pay.
00:08:48 · Pablo Srugo, Dane Atkinson
[00:08:48] S1: Do you think this is because something like Google Analytics is free, so there’s that benchmark? Because if you’re getting value, presumably you would pay. [00:08:56] S0: I think it hit home understanding your customer cohort. In selling to the enterprise, as an example, it’s easier for there to be a calculation of impact. How is this data actually guiding decisions? How are we able to make real value out of it? Then you can attach a fee to it. A small business, and I’m talking about this a lot, is characteristically struggles to make those calculations. Even medium-sized business because at the time, it’s hard to assess that impact and there’s a lot of [unclear] to it. I think you’re right in part because some of the services out there were free, and the data inside Shopify was, you could download it if you went through the hassle. Same thing for Facebook, same thing for that. What was really the value of creating utility in that data? We knew from the functional side that it was huge. We knew that they were driving their business – that they were guiding their decisions, that they were taking on our automations, which would create content for them. All these things had effect. It was a small business. It was really hard to cross that chasm. Having come from a pay model, which was Squarespace, I want to try a freemium model. There are a lot of lessons on that model where you’re getting the conversion from that to a paid system. It really is only 3% or 4% of your customers that will come over, which is tough.
00:10:09 · Pablo Srugo
[00:10:09] S1: That’s the hard part is where do you draw the line? You need to let them in. You need to let them get actual value from your product, but you can’t let them get so much value that it’s never worth converting. I find that’s always the big place where at the early stages, founders are struggling with. What’s that line? What’s the feature that – Slack is one that everybody understands, and I find it’s such an obvious one, as the history. At some point, you hit a message cap or you can’t see your history or whatever. If you’re a serious user, you’re going to pay for that. If you’re not, you’re going to still get the value. It’s just that perfect word. Just works out the nature of the product lets that happen. But that’s not that simple in many other freemium cases where you look at your features side by side and you’re like, if I cut it here, no one’s going to use it. If I cut it here, no one’s going to pay. It’s a delicate balance.
00:10:59 · Dane Atkinson
[00:10:59] S0: It’s hard now to actually say ego plays an even bigger part of that, because one of the nice thing – one of the challenges in building capitalized businesses is that you really want to live into the promise you had with your investors and your team, and getting usage on freemium feels like you’re winning. Now, I’ve got actions. People are looking in analytics. They’re printing reports. You’re doing things and everyone gets excited. Your board writes your bigger checks, like everybody’s leaning in, but you’re lying to yourself because you haven’t closed that loop. A lesson that I learned from Squarespace, and I probably shouldn’t get much closer to my heart, was we originally had, or during the cycle time, a 30-day trial. You build your site and everything else, and we quickly discovered that the length the trial actually was inverse effective. The shorter we made the trial, the more customers converted. The corollary to it, successful conversion was actually number of modules. In this case, at the time I was there, how many different components to the site? What was your investment as a buyer that I made into the product would be a better threshold for conversion than anything else. We started engineer. How do we get people to upload content? How do you get people to really feel attached to it? When you get, which my next chapter, my ego or just a successive hat through life got in the way, I’m like, people are fully engaged. It’s going to be a obvious conversion. I think that something to keep in mind is when you’re building these things, you really need to pressure test what is the future you will pay for. I think that that rope is almost always better, tighter. People do give way too much. Very quickly, when folks to the platform, and they get their thesis or the vision behind the company, they’ll decide, okay, I want to go in or I want to go out. Making them have a year and a half free and then the third mail button costs money. It’s incredibly hard. Because also the psychology is now this platform’s free. Slack was brilliant because their strategy was less about the threshold was not good in market muscle. They really found a way to get infection inside of corporate buyers through consumers.
00:12:51 · Pablo Srugo
[00:12:51] S1: Tell me more, actually, just on that Squarespace one, because I found that interesting. Why would letting somebody have a 30-day trial versus a 15-day trial actually lower conversions?