How not to win friends (and customers) as a SaaS business

We’ve been giving Sodeco a try recently at ParentPaperwork, like most of these online tools there is a 14 day trial, after which you need to sign up for a subscription. At the end of the trial we decided not to subscribe, we were not really seeing a marked result, and we have a great deal of other social and content promotion work underway, so adding another tool to the list was only going to happen if we really could see value returned.

My problem arose when time came NOT to pay. A few days ago I received the usual prompt that my trial had ended and we needed to pay. Screen Shot 2015-04-24 at 10.42.04 am

Notice the wording in the email. I’m presented with two options – either I can subscribe, or my account will be deactivated. I’m not a big fan of web sites having my personal information unless really necessary, so ‘deactivation’ doesn’t really fit the bill for me. And given I’m in the SaaS game I’m presuming that leaves me open to ongoing marketing approaches.

So I go to Socedo and login, thinking I must be able to locate an option to delete my account.

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Unfortunately not. After login a popup modal window opens presenting three subscription choices. I cannot close the modal, nor access my account information. I do not think this is acceptable, and I said so in an exchange with a Socedo support person. They deleted my account as I requested.

Socedo’s tactics are blatant, they are coming from the view that the best way to sell their product to a customer is to give the customer no choice. Companies need to recognise customers must be given choice – and one of those is not to purchase a product. Companies must also recognise that users must have the right to control their personal information. I will not do business with an online company that does not offer me the option to delete my account and the associated personal data they are holding.

I reckon Socedo would win many more friends with an option that says “Not Today Thanks”, if the customer selects this, then there’s a magic opportunity to re-orient the relationship into something that can still be ongoing. Perhaps “That’s fine, but we’d love to stay in touch, would you mind if we added you to our newsletter list. Oh, and would you mind telling us why you don’t want to subscribe at this time.”

One of our main challenges in SaaS (or indeed marketing any product) is understanding why a customer chooses not to purchase. If we are smart, we can see these customers as opportunities.

 

Moving on – leaving icix.com after 11 years

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It’s been a weird, strange kind of a day, because today marks my last day working with icix.com. I don’t have my diary for 2003 anymore, but nearly 11 years ago, around the middle of August, I took a call from my youngest child’s godfather, who coincidentally happened to be an advisor and mentor to a bunch of startups and business people.

He told me he knew of a couple of guys who had secured investment and were trying to build a web site, but having problems coming up with something that worked. I said I’d go and have coffee with them, and in a dingy office on the NEC campus in Melbourne I met Matt Smith and Tim Marchington, the founders of icix.

Before too long the “coffee” morphed into them asking me to build a site, from scratch, to be ready in 5 or 6 weeks, without access to the previous developer’s 6 month’s worth of work. A short time frame, but we prevailed and to cap everything off, Tim’s wife gave birth the day the site launched – two births in one day!

Since then I’ve worked almost continuously for icix, although with a bit of a break in the mid-2000s after the sale of our Artshub business and the birth of our youngest child. She had a number of health issues, starting with severe epilepsy at 5 months old, and culminating in open heart surgery at 20 months, so we took a great deal of time out from all work related projects to look after her, something I am grateful the Artshub sale money enabled.

I wish I could say I am leaving icix because I’ve had a better offer, sadly I cannot. After spending 12 months trying to firm up my ongoing contract status we were not able to come to an mutually agreeable arrangement.

Maybe it’s a cultural difference but Americans seem to favour the shock and awe approach to any negotiation, I’ve seen even the most inane meeting turn into a slanging match in my time in San Francisco. Many Americans in business appear to regard the smallest negotiation as a competition, ignoring that this only results inevitably in a winner and a loser. It’s in contrast to my experience in Australia, and indeed the UK, where in general a consensus approach is more the norm. Obviously tough decisions can lead to disharmony, but I always feel a more collaborative attitude prevails, seeking to find the balance between the needs of all parties, whether it’s deciding on a venue for lunch or negotiating the sale of a company.

In this instance, after a year of being told how valuable I was to the company, how they’d welcome an opportunity to provide me with pathways to expanding my contribution, eventually I was presented with a contract offer with a pay rate less than I was paid to build the original icix site all those years ago. I felt incredibly disheartened, not just because the amount was so low, but because it seemed the last 10 years had not mattered one jot.

All this was in the name of ‘sustainability’, I apparently don’t fit their system, so I needed to be ‘standardised’, which is also saddening because it means they don’t understand that if everyone is slotted into a convenient generic box, there’s nobody empowered to disrupt, to call out something as rubbish, to act as the irritant that forces people to think twice.

Standardisation is another word for bland in my dictionary. Every company needs a rebel, although that’s far from how I ever would have described myself. But I’ve always been the odd one out at icix, the square peg in the round hole, which led to a constant stream of people asking for my help, my advice, my accumulated knowledge. And in turn I hope I added some colour to offset the routine.

There are some fantastic, dedicated and talented people I have had the privilege working with at icix, and others who have already moved on, either voluntarily or because they too did not fit the cookie cutter mould. I certainly wish all of them the very best whether still at icix or in their new roles. There is a close coterie I will miss terribly because they’ve become my friends as well as colleagues.

One thing I definitely won’t miss are the work hours, for the past couple of years I’ve managed an engineering team spread between San Francisco and India. So 5am has been my normal work day start time to talk to the USA, but I’d still be answering Skype chats at 7pm from the Indian team, meaning I’ve been available and online for 12 or more hours a day, including Saturdays given the Americans are a day behind. That kind of routine takes its toll on your health and family.

One benefit of no longer being at icix is as an outsider I can keep a close eye on their progress. I have a decade of my life invested in the company. Of course I’m privy to much internal information that I cannot share publicly, but from now on I’ll have no more access than any other outsider, and can cast a more critical eye over their public activities and progress.

Later today I’ll be pouring a drink, possibly two, and indulging in a little reflection. And then consider how best to embark on the next 11 years.

5 stages of validation for a startup business idea

Someone was asking Fiona and I about our views on validating an idea for a startup, they had been prompted by, amongst other things, posts on Pollenizer. Over lunch Fiona and I came up with our 5 stages of validation of a business idea for startups.

Our view is there is no such thing as validation of the complete business proposition until you’ve actually made a shedload of money, which thus provides the validation. It’s fine to test your ideas to a limited audience, or small groups of informed experts, but you are still guessing when you assert that because they all think it’s a winner, you can go slap a deposit down on your private island. Or super yacht  or whatever bauble you are planning to spend your billions on.

Stage 1 – Run the idea past domain experts

Talk is cheap. So talk a lot. Go find people in your market, buy them lunch, ply them with booze and sketch the idea for them. If they respond “fabulous” then great. If they express concern, then listen to their feedback and revisit your proposition. It doesn’t mean it’s a bad idea, you may not yet have learnt how to present it. Rinse and repeat.

Stage 2 – Build prototype MVP and run past potential users/trend setters

Make something people can try. Doesn’t have to be all the bells and whistles, but sufficient that a potential purchaser can gain a good understanding of how your product will work; what it might do to make their lives easier, save them money – showing them how you intend to solve their pain points is essential because people will pay you money to alleviate pain. Rinse and repeat.

Stage 3 – Get pilot users for prototype

Build out your prototype and find a small group of users/customers/suckers to use the product for real. Make sure these users are friends, family or people you have strong relationships with for when you have a catastrophic failure. Because you quite likely will. Rinse and repeat.

Stage 4 – Sell it to someone for money

Make a proper version, with the feature set you have distilled down as being the core proposition. Take money off someone for them to use the product for real in the big bad wide world. Then go sell it to another customer. And another. Nail down the sales funnel, process and cycle. Rinse and repeat.

Stage 5 – Sell it to shitloads of people for shitloads of money

Do Stage 4 but x 100, or x 1000, and preferably x 1,000,000.

Congratulations you have validated your business idea. You can now subscribe to Private Islands of the World.

 

And this is why the banking system in the USA sucks – $40 fees to transfer $150 between two accounts at the SAME BANK!

BofA

I’ve been following with interest stories in the media about the US banking system getting its act together and introducing Chip and PIN security for credit cards. A credit card transaction protected by a chip (embedded in the card) and PIN (a PIN as opposed to a signature) is a much much more secure payment, and far less open to fraud.

I read an article today headlined “American businesses are holding credit card security back“, which actually seems to be more about how the US banking system is holding it back – they are pushing for Chip and signature, a lower grade of security. I particularly thought this quote from the American Bankers Association was a good indicator of the banking sector’s resistance:

“You’ve got both banks and retailers struggling with how to find the right mixture of providing security to customers, yet also the convenience that American customers expect.”

Their argument is consumers don’t want another PIN to remember. What a load of tosh – for most people this is a furphy. I have a Visa card, that is also my EFTPOS card. It’s the same PIN. Nothing more to remember. And is anyone seriously suggesting that signing is faster than tapping in a four digit number?

We’ve had Chip and PIN in Australia for quite a while – along with contactless payments like Visa PayWave, where you just wave your card at the payment terminal for transactions under $100. Terrific technology that saves heaps of time.

Along with card security, it would be nice if the US banks sorted out the fundamentals. Take my experience this week. Someone in the USA owed me $150. Normally he would wire payments to my Australian account, but that costs him $35 for the transfer fee, which seemed silly for $150. The money was sitting in his Bank of America account, so I suggested he just transfer it to my Bank of America account. I never have much money in there, but it’s useful to have a few dollars lying around to cover Netflix and iTunes (for the US iTunes Store).

Here’s where the lunacy begins. My friend sends me the money. The bank charges him a transfer fee of… are you sitting down with a stiff drink in one hand … $US25. I then log into my account and, as you can see from the above screenshot, I’ve been charged a $15 wire transfer fee. A total charge of $40 to move money from one savings account to another WITHIN THE SAME BANK!

Patently ludicrous. If this was Australia, I could have logged into my National Australia Bank app, typed in someone else’s NAB account, and sent them the money, with no fees, and the money be immediately available to the receiving party (it takes a two or three days for Bank of America to make the cash available).

It’s no wonder that disruptive startups like Square, Stripe and others are tackling payments and banking in general. I’ve heard loads of excuses – oh, the inter-changes between the banks in the US are so much more complicated; or, there are multiple funds transfer exchanges; or, there are so many players in the market it’s difficult to gain cooperation and agreement. Whatever. But given the industry association that claims to lead policy for the US banking system itself seems resistant to introducing change, I suspect the main impediment is that more convenience for customers might lead to less price gouging opportunities for all the players with their snouts in the financial services trough.

Yet it seems to this unqualified economist that addressing fundamental structural weaknesses in an economy, such as the ease and free flow of payments, surely must be a driver for growth and expansion. Which then suggests the US banking system is happy to favour short-term profits over long term economic and social benefits. Now where have we seen that before? Oh yup –  when they buggered the home mortgage sector and kindly bestowed the GFC on us all.

Apple definitely taking selling iPhones in China seriously

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I can tell Apple is taking the new opportunity of selling iPhones in China really seriously. This update just turned up on my iPhone, and I don’t even live in China. Presumably every iPhone5 user in the world has to install an update just so they can fix a provisioning problem with iPhones sold in China. ‘Provisioning’ is all about activating a new phone on to a phone network, so it looks like they’ve had some issues with Chinese customers unable to use their shiny new smartphones.

Rare bouquet for Telstra, selling unlocked iPhone 5

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It’s rare I pay a compliment to Telstra, they’ve been the source of so much pain over the years, and their domination of the telecommunications market in Australia is akin to Godzilla in a childcare centre, but for once I must give them kudos.

I upgraded my trusty iPhone4 to the new (and very very good) iPhone5s the other day. A key issue for me was unlocking the phone – removing the lock that carriers put on handsets to make sure you can only use the phone on their network. I need my phone to be unlocked so I can swap to my USA SIM card when I’m in America.

In the past unlocking a phone has even incurred a charge – from memory a jaw-aching $100 or $150. But nowadays it’s free – just go to the Unlock page on the Telstra web site. And here’s the massively good and useful news “All iPhone 5 models are already unlocked. “. Nothing for me to do!

It’s one in the eye for telcos in the USA, where they persist selling phones locked to the carrier, with complicated rules about when you can unlock – for example, usually you need to own the handset outright – eg not be paying it off as part of a phone plan contract.