THE STARTUP CHAT

[0:00:00]

Steli Efti: Hey everybody, this is Steli Efti.

 

[0:00:04]

Hiten Shah: And this is Hiten Shah. And in today’s episode we’re going to talk about something that a lot of companies are starting to do and some companies have actually done and built massive businesses and gone public off of a strategy like this. And the thing we’re going to talk about is how to use free stuff, free tools, free not E-books or anything but actual free software. Things you build with your engineering and product team in order to do marketing. And I’m going to start with the most kind of popularized example of this that people talk about a lot is HubSpot. They started with a took called grader. Grader.com. G-R-A-D-E-R.com. They still have it. And that was one of their biggest sources of leads for the longest time. And that’s how they did lead gen. It helps you your website and it told you that you should use HubSpot basically. And there’s a lot of free marketing for them that they got out of it. So that’s my example to kind of kick off the convo about this sort of really important and ket strategy for doing marketing.

 

[0:01:05]

Steli Efti: Yeah so I’ve always, I’ve seen this being done a lot. I know you guys with your companies have done this quite a bit. This is something I’ve never done. We’ve never done a close out. We’ve never released a free tool, a free piece of software, Chrome extension, anything of that nature as a growth and marketing tool. But we’ve thought about it, we’ve talked about it, and it’s definitely something that’s on the for this year. But one thing that has always stopped us was never a lack of ideas. In our case oftentimes it was just a lack of I think commitment to doing that because we’re looking at our internal engineering resources and saying, well we don’t have enough developers to be deploying resources to a marketing app like that. We want all of our developers to focus on our core product. And well, what about working with a contractor or going to a freelancing website. Well who will project manage that? And then who will maintain the app and the code base? And I think that, that kind of … Maybe being overly critical or overthinking this has always stopped us from investing in it. So maybe from your experience, how do you make sure that you choose the right app or the right thing before you invest in it that could really … Because the app needs to have some kind of a virality or ISO, it needs to be attracting growth without you having to spend marketing and sales resources on promoting the free app or the Chrome extension or anything like that. So how do you pick the right tools or apps as a marketing campaign? And then how do you project manage? How do you allocate resources? How do you think about that? I’m sure you’ve advised companies that were like, “Yeah we don’t have the resources, we don’t have the time.” We don’t know out of these 20 app ideas, which one could really drive growth. I’m curious about your thoughts and what you see work well, versus maybe you’ve seen also examples of companies doing this very unsuccessfully?

 

[0:03:08]

Hiten Shah: Yeah. Alright a bunch of stuff there, it’s awesome. So just like everything else in marketing, it’s an experiment. So first, treat it like an experiment. When you think of it like that, you’re going to be like, wait, I don’t want to put a lot of resources to it. I might not even want to spend a lot of money outsourcing it. So one real good way to pull this off would be … And I’ll get into the other aspects of it, but just getting it done would be like do a hackathon day or two and have the team focus on this problem. And I think the problem here is we want more leads. Or we want more signups. That’s usually why you would do this because it’s a marketing oriented thing. And so you can just time box it. So you could take one engineer one week, or an engineer and a designer one week. Or you could take, do it as a hackathon type thing and a fun little project where people throw in their ideas to come up with some kind of free tools and stuff like that, that you could do. And I’ll get into the idea side and how do you pick and lla that stuff. But to me, it’s like most companies when they think about this, actually most companies when they do this they accidentally figure it out. And end up just building some tool. There’s also a lot of other options like don’t build one tool, but build a bunch of tools and do it for search traffic. So AB testing calculator, a significance tester, things like that in the AD testing market are pretty popular in terms of free tools that every single AB testing tool builds because they want that search traffic when people type that in because it’s highly relevant to their customer. So that leads to my point about the ideas. The point about a free tool, is to solve a customer’s problem that leads them to wanting your product. Or that indicates that they are a high intent lead, or a high potential purchaser or a person that would sign up for your product. That is another key kind of framework or way to think about it. Another way to think about it is with HubSpot. In HubSpot’s case they had grader.com. And the logic that I would use is, well if my site sucks, and HubSpot will help me make my site better, shouldn’t I be able to for free figure out whether my second site sucks or not, right? Or where it sucked or where it could be improved? And so grader was the whole psychological theory that we’re going to analyze your website and then tell you what problems you have and then if you sign up for our product or become a lead, we’ll talk you through how to fix it and sell you something, right?

 

[0:05:40]

Steli Efti: Right.

 

[0:05:40]

Hiten Shah: So for me, it has to fit in some part of the customer journey and the customer mindset. And solve a problem for your customers. And not every product has that opportunity as easily. That being said, if you know your customers really well and you know what problems they have that are bringing them to you, you can start hypothesizing what free tools you could build very easily.

 

[0:06:05]

Steli Efti: Yeah the approach of this might be even to just go and see there’s a tool out there that has significant traction with your customer base at the right point of their buying journey. And either see if you can purchase the tool, Chrome extension, app or copied and improve on it, right, to improve effectively. Just coming up with some random idea that’s never been tested and there’s no point of reference if that would work or not. You just go and find something that already exists.

 

[0:06:36]

Hiten Shah: Yeah and I’m going to call out a certain point here and a certain set of companies just because I find it fascinating and it’s just more of a quick case study. But there’s a company called Loom that creates what they call quick video. And those videos you can sort of … They’re in your browser. You install a Chrome extension. You hit a button and you can just take a video of whatever’s on your screen with your face and then send it to a coworker. And this company has been iterating for a while and they created that sort of new type of behavior or functionality, whatever. Now, there’s two other companies in the space that existed long before Loom did. These companies, one is called and another is called Wistia. And both of those are video hosting platforms. So in theory, you’d be like, wait, they’re a video hosting platform. This other thing is actually an active communications platform through video, right?

 

[0:07:31]

Steli Efti: Mm-hmm (affirmative).

 

[0:07:31]

Hiten Shah: Well this start up Loom figured this out and so over time as Loom figured that out and started getting traction, those other two companies I’m going to say got smart so to speak. And use this strategy that you just described, which is they say Loom being successful, so they both have competitors to Loom in their market now. And they’re video hosting companies. But think about it, if you want to increase video creation, or make it easier for people to create video, which neither of those companies were thinking about really in this way. Then something like Loom makes a lot of sense. To be a feeder into your product or something you should just own.

 

[0:08:08]

Steli Efti: I love it. Well how do you make sure that if you launch an app or purchase an app or copy an app with a tool and it gets a lot of free activity, I’m always curious about, you mentioned already that it needs to be at a kind of logical step in the buyer journey. But how do you … What are realistic expectations in terms of turning that free traffic or usage and converting it into real leads or trials or customers for your business?

 

[0:08:41]

Hiten Shah: It’s the equivalent of a blog. Where unless it’s very well done, you can’t really do it. And I think a blog works in stages just like free tools do. First you build it, create the content, launch the blog. Then you get good at making sure the value proposition, the content you’re creating or the product you’ve built has some traction and that you can actually get people to come view it and use it. In the case of a tool, just like a blog post or a blog right? You’ve got to get people to come view it or it’s not even worth blogging at all. And so you have to build something that people actually care about. And if you build something that people care about and that has some spread and you’re getting traffic for it, that’s great. Where people go wrong is they don’t do the homework up front on that buyer and customer journey in figuring out what is the right tool to build and can it spread? So all I’m trying to answer when I think about a strategy for marketers and marketing as the reason you do this is one, will it spread? And that’s not the number one thing, both of these are super important. Will it spread? Is it something that can be popular? Is there some way to build sharing in or inviting in, or anything like that because that helps things spread. Can we get traffic for it? Can we get search traffic for it? Do we think we can win? The search result, that’s another example, right? Or is there some social media component where people want to share this in social media, right? Is there something that we know that will get people to come to it and more and more people over time. You have to assess that. The second thing, and they’re related because every idea has to balance both of these is does it actually connect to our product in some way? Does it make sense for us to build this? Is it even better, does this just turn into the free plan for our product somehow? That’s what I love. And then you’re a freemium business, which we’ve talked about this a lot, right? And someone emailed me I think they might’ve emailed you too, I don’t remember. But one of our listeners, and they said, “Oh I’ve listened to that freemium episode 10 times. And that was one from a while ago. It’s because people don’t talk about this. Yeah, people just don’t talk about it. They just object and say, “Oh, Freemium doesn’t work.” Well that’s not true. Anyway, so I think the free tool thing gets me excited because to me, that’s a way to have a free component in your business that gets you a lot of word of mouth, it helps build your brand. And if you pick it right it will convert. But I treat it like blogging at first. But smarter because you’re building a tool. So you have a lot more ability to get people engaged and get some kind of retention on it too.

 

[0:11:22]

Steli Efti: Yeah and we’ve talked about … For the people that are interested, there’s two Freemium episodes. It’s episode number three, so the very third episode we ever recorded was a Freemium episode. A legendary one by now. And then episode 250 will be kind of revisited the topic. But we talked about the idea of first building an audience and then building a product for that audience, right? Talked about creating a blog first and then building a product or with Kissmetrics you even had a Twitter account first. You curated a lot of stuff and a lot of followers. And then you build a product for that audience. And similarly, your strategy could be to be launching a or multiple free apps and building free user bases for a product that you’re going to build down the line.

 

[0:12:17]

Hiten Shah: Yeah you should do that. If you’re going to launch something and you’re not there yet, and you’re building it, build some small component of it, or build this free tool first and build that audience. Because that audience, if it’s correct and its related to solving a problem in the market, that’s an audience that’s going to use and buy your product eventually. And starting that early is definitely smart while you’re figuring out the rest of the business out.

 

[0:12:39]

Steli Efti: I’d say probably one of the constraints on this is that even with your full fledged product, we talk about MVP’s, mineral products. And moving fast, shipping early, iterating. If you know that what you’re launching is even kind of more of a marketing tool, then their actual final product that you’re trying to build, you should probably be even more concerned about resource constraints and speed. So you can’t be planning this to be developed in a six month cycle to be released for a free app because if it’s wrong or if it’s not doing right, you just invested way too much time and energy in it. Do you have a framework typically? It all depends. But what do you think is the right amount of time from specking it out to building it, let’s put … I don’t know if we should add the research time up front or not. But how much time do you think people should have as a framework on investing in building a free app?

 

[0:13:38]

Hiten Shah: That’s a really good question. I like moving super fast on this stuff. So it can take as quick as a week if you already have the research of knowing what problems your customers have and what kind of free tools either exist in the market. So to me, it’s a research first thing. If you don’t have the research, it takes one to two weeks to get the research together typically, especially if you want to really do it right and actually go interview customers. And interview people and understand what problems they actually have, which you might not know yet. For me, the process of doing research, user research, customer research, customer development, all these other great things that are now buzz words but they’re really useful to you if you use them. They lead to the insights that lead to free tools. So to me, it’s actually a core part of product development that you’re paying attention and as you’re doing product development, you’re learning exactly what kind of free tools you can build. You’re also learning what kind of ways you can grow your business too. Because people are telling you all kinds of things if you’re doing that process correctly. And so I like to bake it in, into the product development process. So I’ve been able to figure these kind of ideas out within a week, all the way up to a month depending on if I have a cold start or if I’ve already got some research and some customers to go talk to or research to go look at.

 

[0:14:57]

Steli Efti: I love it. I wanted you to see some numbers so people had the framework. I wanted people to have a “holy shit” moment where they’re like, “Oh my God, this is the time that I should think in.” Because my biggest fear is people are like, “Yeah, I’m going to build a free app.” And once I speckle it out they’re like, “Oh, we’re going to work on this. In four months it should be done.” No, move faster, right? Move a lot faster on this. Awesome, alright. I think that, that’s it for today’s episode. If you already have a free app that’s really working well for your business, please reach out to me and let us know about it. I’m curious about this so I want to learn more about it in general. Or if you are planning to do one and you need some help and some feedback, everybody knows is the man when it comes to product. Reach out, let us know, we want to know what you know, and we want to teach you what we know to help you succeed with this stuff.

 

[0:15:47]

Hiten Shah: Yeah we love this. Let’s do it.

 

[0:15:49]

Steli Efti: Alright, bye bye.

[0:15:50]