A Smart Bear

Hiring Employee #1

Jason — Mon, 02 Nov 2009 14:30:37 +0000

It's a big decision to make your first hire, because what you're really deciding is whether you want to keep a lifestyle business or attempt to cross the chasm and maybe even get rich.

(Cartoon by
Andertoons)

Assuming you're really in the market for another pair of hands to screw things up help out, the question is how to acquire resumes, how to pair them down, and how to identify someone who is going to work well in your company.

There's already a lot of great advice about hiring at little startups. Before I give you mine, here are some of my favorite articles, in no particular order:

Smart, and gets things done by Joel Spolsky — The classic guide to what to do during the interview and how to know whether to "hire" or "not hire."
Why startups should ALWAYS compromise when hiring by Dharmesh Shah — There are many attributes you'd like to see in a hire, but compromise is necessary; here's how to do it.
Five quick pointers on startup hiring and Disagreeing with Entrepreneur Magazine by Dharmesh Shah — Assorted tips, all important.
Hazards of hiring by Eric Sink — Great tips, including some specific to hiring developers (for more on the latter, here's another).
Date before getting married Part 1 and Part 2 by Dharmesh Shah — A strong argument in favor of working with a person rather than relying on interviews.

I'm not going rehash those or attempt a "complete guide to hiring."

But I do have some fresh advice you might not have seen before:

Hire "startup-minded" people

If a person just left IBM, is she a good fit for your startup?

If she left because she couldn't stand the crushing bureaucracy, the tolerance of incompetence, and the lack of any visibility into what customers actually wanted, then she sounds like a person ready for a startup.

Or therapy.

On the other hand, if during the interview she asks how often you do performance reviews, that means she doesn't understand the startup culture. If she says "I thrive in environments with clear requirements, written expectations, and defined processes," run away as fast as your little legs can carry you.

Startups are chaotic, rules change, and there is no "job description." It's better to make a strong decision that turns out wrong, and admit it, than to plan ahead or wait for instructions. Potential earnings (e.g. stock, performance bonuses) are preferred to guaranteed earnings (e.g. salary, benefits).

You already live by this Code of Turmoil because you're the entrepreneur; you have no choice. But normal people do have a choice and most people abhor chaos. Big companies don't behave this way, and most people are accustomed to working for big companies.

You have to hire someone comfy with the bedlam of startup life.

Write a crazy job description

You're not just hiring any old programmer or salesman, you're hiring employee #1. This person helps set the culture of the company. This person has to mesh with your personality 100%. You're going to be putting in long hours together — if they don't get your jokes, it's not going to work.

So why wait until the interview to see whether your personalities mesh? Put it right in the job description.

Be funny, reflect your personality, reflect the uniqueness of your company. A requirement can be "God-like Power over the Java Virtual Machine." A job description can include "wrangling with MySQL, making Javascript do what Bill Gates never intended, and changing the pellets in the urinals."

You should see the results in the cover letters. If after a job posting like that the person is still sending the generic B.S. cover letter, you know they're not for you. If they respond in kind, good sign.

And anyway, one day they might actually need to change those pellets, and then you've got it in writing!

Do not use a recruiter

On young startups using recruiters, Brian Menell sums it up nicely:

"If you find yourself wanting to hire a recruiter, hit yourself in the head with a frying pan until the feeling goes away."

You need to hire an absolute superstar, and recruiters are not in the business of helping you find superstars.

In fact, their incentives are exactly opposite yours. Here's why.

Recruiters are like real estate salesmen: They make money when you hire someone. They make the same amount of money whether it takes you four days or four months to find that someone. So every day that passes, every additional resume you request, every additional interview you set up, the recruiter is making less and less money per hour.

In fact, there's a floor that the recruiter can't go below, so the more you take your time to find the right person the more they'll push you to settle for someone you've already rejected.

The exception is a recruiter who works by the hour rather than for a hiring bounty. These are hard to find but they do exist. I've had luck only in this case.

Resume are (mostly) useless

Think about your own resume. Is there anything on there that qualifies you to run your own company? Not just "experience" generically but really relevant knowledge? I'll bet there's very little. But it doesn't matter, right?

Right, so it doesn't matter with your first few employees either.

Resumes are useful only as talking points. That is, when you have a candidate on the phone, you can use the resume to ask about previous experience, test their knowledge of technologies they claim to have, etc. Resumes are conversation-starters, but they imply nothing about whether the person is right for you.

One particularly useful trick with resumes is to dig deep on a detail. Pick the weirdest technology in the list, or pick on one bullet point they listed two jobs ago that seems a little odd to you. Then go deep. Don't let them say "It's been a while" — if they can't talk about it, how can they claim it's experience they're bringing along?

Writing well is a requirement

I don't care if this person is going to spend 60 hours a week writing inscrutable code that only a Ruby compiler could love. I don't care if the job description is "sit in that corner and work multi-variate differential equations." Everyone has to be able to communicate clearly.

In a modern startup everyone will be writing blog entries, twittering, facebooking, and God only knows what the hell other new Goddamn technology is coming next. But whatever it is you can bet it will require good communication skills.

In a small startup there's no layer separating employees from customers. Everyone talks to everyone. You can't have your company represented by someone who can't be trusted with a customer. In fact, everyone needs to be able to not just talk to customers, but even sell them. Remember, even tech support is sales!

In a small startup everyone has to understand each other's nuances. There's enough crap you're having to figure out without also having to decipher an email. There's enough about your business you don't understand without having to understand garbage sentence fragments in a README file.

Therefore, some part of the interview process has to include free-form writing. In fact, there's a particularly useful time for that....

Screen candidates with mini-essay questions

When you post a job listing — especially on large-scale sites like Monster or Craig's List — expect a torrent of resumes. It's not unusual to get 100 in a day. You need a time-efficient system for winnowing them down to a small handful worthy of an interview.

Screening resumes is not an option, because as you now know resumes are useless. Besides, you don't have time to read hundreds of resumes.

Instead, prepare an email template that asks the applicant to write a few paragraphs on a few topics. For example:

Thanks for sending us your resume. The next step in our hiring process is for you to write a few paragraphs on each of the following topics. Please reply to this email address with your response:

Why do you want to work at [company]?

Describe a situation in your work-life where you failed.

Describe a time when you accomplished something you thought was impossible. (Can be work-related or personal)

Thanks for your interest in [company] and I hope to hear from you soon.

Here's what happens: First, most people never respond. Good riddance! Second, you'll get lazy-ass responses like "I want to work at your company because I saw you are hiring" and ludicrous answers like "I have never failed at anything."

Resist the temptation to reply with, "You just did."

Maybe 10% of the respondents will actually answer the questions, and you'll know in two minutes whether this person can communicate and, yes, even whether they seem fun, intelligent, or interesting.

One exception to this rule: If the cover-letter is truly wonderful, that's a rare, great sign and you can probably skip right to the phone interview.

Always be hiring

The rule of thumb is that it takes 3-6 months to hire a really good person. Why so long?

Good people are rare, so it takes a while to dig them up. Like truffles. Or weeds. No, not like weeds.
Good people won't change jobs more often than once a year — probably more like every 3-4 years, especially if their employer appreciates their abilities and compensates them accordingly. So you have to find this person in their "once every three years" window.
Good people gets lots of good job offers (yes, even in this economy) so when you do find one and give them the writing test and then the phone interview and then the in-person interview and then discuss compensation and then provide a formal written offer... there's a good chance they just accepted an awesome offer somewhere else. (This happened to me all the time at Smart Bear.)

This means if you start hiring when you really need someone, that's too late. You'll be "in need" for months.

This means you need to be hiring constantly.

So how do you "hire constantly" without being drowned in resumes and interviews? The answer comes from another attribute of good people:

Good people choose where they want to work, not vice versa. They hear about a cool company, and when they're interested in new work, they call you.

Your company has to be a place good people will seek, not where you have to go fishing. How do you manage that, especially when you're small? Ideas:

Develop your blog/Twitter so you have a steady stream of eyeballs from people who like you.
Attend local meet-ups and user groups. Meet the woman who runs the group — she knows everyone worth knowing.
Sponsor a meet-up at your office. Don't have an office? Co-sponsor with someone who does, like another company or a co-working place. (OtherInbox is a great example of this; they sponsor the monthly Austin on Rails user group and the annual Lone Star Ruby Conference, and as a result all the best Ruby developers in Austin already want to work for OtherInbox.)
Ask your friends for resumes of people they didn't hire but who they liked. That is, people who are good but just weren't a fit for that company.
Try to get your "Jobs" page to rank well in local-only search. So e.g. "java programmer job in austin tx," not something impossible like "java programmer."
Take everyone you know to lunch periodically and ask if they know of a candidate. Yes you can ask them by email but often being in-person brings out more information. Or maybe one of them will be interested himself. (That's happened to me a few times.)

Don't be trapped by what you think hiring "should" be

You're hiring a friend, a trusted partner, someone you'll be spending 10 hours a day with for the foreseeable future.

You're not hiring a Systems Engineer III for IBM or a Senior Regional Sales Manager for Dell. The "rules" of HR don't apply to you (except the law).

Think of it more like getting married than hiring an underling.

Going with your gut is not wrong.

Do you have more tips for hiring? Leave a comment and join the conversation!

Rich vs. King in the Real World: Why I sold my company

Jason — Mon, 19 Oct 2009 13:30:00 +0000

I sold my company, Smart Bear, in December of 2007. I haven't talked about it at all on this blog, and it's time I spill my guts about the whole affair.

You'd think selling a company would be a glamorous, exuberant experience, but I was surprised at the reactions I got. These are actual quotes:

"How could you sell your baby? I'm shocked."
"I thought you said things were going well. Hmm."
"You're such a sell-out! You used to be one of the few cool people I knew."

Interestingly, 100% of the negative reactions were from people who had never started their own company. But that doesn't make them wrong, and it doesn't make their words sting less, especially when they're your friends.

Now that almost two years have passed, I can relate exactly why "selling my baby" was right for me. Hopefully this thought process is interesting to you and possibly useful in the happy event that you're faced with the same choice, but the truth is I just need to get this off my chest.

I need to explain to those who still consider me a sell-out.

You've probably heard about Noam Wasserman's "Rich or King" choice: Company founders are either in it for the money ("Rich") or in it to build a lifestyle and personal identity ("King"). FogCreek and 37signals are built to be "King;" all venture-funded companies are built to be "Rich."

Noam says that successful founders make the "Rich or King" decision up front, and that though it doesn't matter which path you take, you must be consistent in your actions. You can't mix "be king" tactics with "get rich" end goals.

Except I did mix "Rich" and "King," and it worked.

See, it's good to be "King," but what do you do when you're at Trudy's "North Star" Tex-Mex Restaurant tucking into a chile relleno (with salsa verde, black beans, and the ground beef filling), and the guy across the table looks you in the eye and offers you enough money that you never have to work again?

I was always in it for the money, especially in the form of acquisition. Everyone who came to work at Smart Bear was indoctrinated with this attitude in no uncertain terms; on more than one occasion I had put it:

"We're simple country whores — we'll do anything for money."

Profit was the rule behind every choice we made. Although the end goal was always acquisition, my attitude was (and still is) that the best way to get yourself acquired is to be profitable. Profits prove the business is operating well. Profits validate the market. Profits make minimum valuation easy. Profits mean the buyer converts balance-sheet money into bottom-line profit-and-loss money — a trade every large company wants to make.

Most of all, profits mean you don't need to sell, which gives you the ability to walk away from a deal. You have little negotiating power in any deal unless you can happily walk away.

On the other hand, I knew I would only be happy building a genuine, great company, where the product solves a real pain, where customers are given white-glove service, where "tech support" is the only sales force, where we leave the world a little better than we found it, and where every employee is smart and gets things done and is trusted with any decision.

And I wanted the ego-inflating trappings of running a company. It's cool at parties to say "I run my own company." I wrote a book that got so popular (in my little corner of the world) that people would bring it up to me to sign. (We gave the books away for free so the joke was that by signing I doubled its value.) When I walked onto a tradeshow floor it was like Norm on Cheers — I knew everyone and they knew me. I got to present at cool venues like Joel and Neil's Business of Software Conference.

And I write this blog, shamelessly exploiting the fact that Smart Bear (and two other companies) were successful to convince you that I'm worth reading.

In short, although the goal was "Rich," I achieved it by behaving like the goal was "King." I don't know why people find this contradictory; after all, acting like "King" means building a long-term, sustainable business, and that's exactly the kind of business that gets acquired.

Still, because "King" was enjoyable and Smart Bear was profitable, I still need to explain why becoming a "sell-out" was the right choice.

The first thing to understand is the non-linear relationship between "cash in personal savings" and "financial freedom":

There's a line you cross where your savings alone will fund a reasonably lavish lifestyle. At the risk of sounding like George Bush, this is a Freedom Line — freedom from restrictions about what you can do with your life, family, and career.

My observations:

A movement from left of the line to right of the line changes your life fundamentally, giving you the freedom to do whatever makes you happy, forever.
If you're crossing from left to right, it doesn't matter how far to the right you go. (Sure, $100m is a different lifestyle than $10m, but it's not as critical to lifestyle or happiness as just crossing the line.)

#1 is what was offered to me at Trudy's Tex-Mex. #2 means it almost didn't matter what the offer was, so long as it was big enough.

Some people gave me a hard time about #2. The typical argument was:

Your company is growing 100% year over year. It's profitable and throwing off cash. Why not wait another year and let revenues double again, which will make the company six times more valuable (assuming 3x revenue valuation, a reasonable ballpark for a growing software company).

Here's the best analogy I've come up with to describe why this is flawed logic. It's called the Box Game:

Imagine I have two opaque boxes. Box A contains $10. Box B has a 50% chance of containing $20, and a 50% chance of containing nothing at all. You pick either box and take whatever's inside. Which box do you pick?

Of course statistically there's no difference, so this isn't a question of math or economics or intelligence; it's a measure of your attitude towards risk.

Most people pick box B. After all, the difference between $10 and $20 is trivial and it's more fun and exciting to pick B.

But what if the numbers were different?

Now box A holds $5,000,000. Box B either holds $10,000,000 or nothing, 50/50 chance. Which do you pick?

You pick box A. Of course! Because it moves you from the left of the line to the right. And because a "chance of moving even further" isn't worth giving up the certainy of that life-altering event.

This is my argument in favor of #2 and against "wait and see." This is why I sold.

In my case, the correctness of my choice was made painfully clear by the economic crash in 2008. Had I held out for "another year and far more money" — box B — I would have found an empty box.

I know this for a fact — another company (can't say who, sorry!) was offered a deal at the same time I was. This founder wanted to roll the dice (box B) and delayed the buyer. Two quarters passed and revenue failed to grow; the buyer nixed the deal. Months later with the recession in sight, the founder approached the buyer again, this time willing to accept a low offer. The buyer refused; that ship had sailed.

There are those for whom this calculus doesn't apply because they want to be "King" no matter what. I'll bet Jason Fried wouldn't sell 37signals for $100,000,000; neither would Joel Spolsky sell FogCreek. Are Joel and Jason being irrational? Of course not. But neither was I.

As of December 2007, I have the freedom to work on any project I want for the rest of my life while simultaneously providing for my family, never again worrying about bills, debt, having a place to sleep, or sending our daughter to any college she wants.

I can stay home with my wife and new baby girl for as long as I want, having all the precious time and experiences and memories that they say money can't buy.

But, in the sense of securing that freedom, it can.

And by crossing the line, I did.

Are you disappointed? Am I a sell-out? Comments welcome.

Ask your startup questions on OnStartups Answers

Jason — Mon, 12 Oct 2009 13:30:38 +0000

I'm giddy about this new project!

Dharmesh Shah of OnStartups started a new website for entrepreneurs, and he graciously invited me to co-moderate the site.

OnStartups Answers is a new site where you can ask any question about startups: Starting, ideas, raising money, going alone, co-founders, marketing, hiring, shoestring budgets, accounting, sales people, cold-calling, technical talent, what to do when you're burned out.... anything.

It's awesome, and it's not just a "forum" or a "community" or some other generic crap like that. Here's why:

Other entrepreneurs answer the questions, and a vote-based "reputation system" ensures that good answers "bubble up" and highlights people who consistently produce good questions and answers.

Among those people already contributing awesome questions and answers are well-known successful entrepreneurs and investors including:

Joel Spolsky of FogCreek and Joel on Software
Dharmesh Shah of OnStartups & HubSpot
Rand Fishkin of SEOmoz
Nivi of VentureHacks
Neil Davidson of RedGate Software and Business of Software
Adam Smith of Xobni
Peldi Guilizonni of Balsamiq (yes that guy)
Alex Papadimoulis of DailyWTF and Inedo Media
.... and me!

I'm honored and thrilled that Dharmesh asked me to co-host Answers, but what's really fun is that we all get to meet new people, hear new ideas, and get questions answered quickly.

After all, the Internet is huge, but somehow it manages to be an echo chamber. In theory we have direct access to everyone with an email address, but in practice the ocean is too big to find new people we like and trust.

So it's exciting to think that, in our little way, we're building a place where you can get quality, varied answers to questions about startups, and get to know some new people who you would have otherwise never have met.

Besides, how cool is it to get your question answered directly by Joel Spolsky?

I hope to see you on the site! Leave a comment and let me know what you think.

Here's that link again: http://answers.onstartups.com

P.S. Those of you familiar with StackOverflow will notice that this is a StackExchange site, built on the same platform. It's been interesting being on the administrative side of building the site and bootstrapping the community; let me know in the comments if you want me to write about the experience.

Response: Sacrifice your health for your startup

darla — Mon, 05 Oct 2009 13:30:39 +0000

This is a guest post from my wife Darla, herself an entrepreneur and chef with a healthy dinner delivery service and a food/recipe blog. Darla and I made different trade-offs with our businesses and I wanted her to share her perspective.

A lot has been said in response to Jason's post about sacrificing your health for your startup. Some think his position is excessive; some say it depends on your goals. Can you run a lifestyle business that doesn't require so much personal sacrifice?

I did. I started Fork In The Road, a wee little healthy dinner delivery business. I actively chose to stay small and was profitable and happy for years. So what about sacrifice? Here's my story.

I have the typical ambitions of an entrepreneur but I also wanted to plan for my future as a mother. Some women can divide their time and energy between kids and a career, but trying to do both would make me incredibly unhappy. From the start, I decided that when I got pregnant I would walk waddle away from the business for as long as needed to give 100% to my family. I also wanted to have time for travel, for visiting my family far away, and for a social life.

Knowing I would stay small, I kept overhead to a minimum. I avoided rent payments by cooking in client's homes. When I got big enough, I rented kitchen space from a caterer instead of building out my own kitchen. I did as much as I could by myself without hiring help until finally I gave in and hired one employee. The goal was to make a profit while always maintaining flexibility. If I was going to stop working to be a mother, I didn't want to be responsible for a full staff, a lease, and a huge amount of overhead.

Fork In The Road was exceedingly successful, especially in the notoriously difficult food industry: Nice profits, solid customer base, over 1500 local email addresses on my weekly mailing list, a growing reputation, and regular features in local magazines (like being on the cover of Austin Monthly, pictured at right). There were too many orders to fill and 12 hour workdays were becoming 16 hours. It was hugely tempting to cross the chasm and see how far the business could go.

If I were going to take the leap, this was the time to move to my own kitchen, likely to cost $30k to build out, $50k per year just for rent and utilities, and be bound to a 3-year lease. Time to buy delivery vans and hire and train cooks and drivers. Time to consider delivering to nearby cities, from which I was receiving constant inquiries.

I started to give in to my ambition. I negotiated a lease for a perfect, cheery kitchen space, and started pricing equipment. I was ready to sign on the dotted line.

And then my sister called."What weekend are we going camping?"

My stomach sank. I felt nauseous. I couldn't go. We had been going on an annual camping trip for years. In the past I would just close down for that weekend and eat the loss. But now there would be this new expensive lease and new employees and revenues were going to have to grow 5x to become profitable again; I couldn't just leave and go camping. I found myself trying to think of ways to explain this to my sister without sounding like I was putting work before family. But there was no good excuse; I was putting work before family.

This trip was a dear tradition. If I was torn now, how was I going to feel with a baby?

I walked away from that lease the next day. We scheduled the camping trip.

I took active steps to limit the growth of the business. Advertising and press releases stopped. Order capacity was capped—we began to sell out each week rather than grow revenue. Menus became more limited, the delivery area severely restricted. Some customers were (understandably) pissed off.

I started to take plenty of breaks, completely closing the business at times to travel with Jason. I took very long Thanksgiving and Christmas vacations, with plenty of time to visit my family in another state. Fork In The Road was the definition of a lifestyle business—small and based on values other than just making the most money. I had attained my goal of having time for fun and family and kept making a very nice profit, even though there was no growth.

Sounds great, right? I made good money doing what I love and now I get to focus on my family. We now have a one-month-old baby girl and I can be a stay-at-home mom without feeling like I have to keep working to feed the business' growth or keep employees' jobs intact.

It is great. But what I haven't told you is that I still had to sacrifice a lot.

During those early years, desperate to get established, I worked myself ragged. Time for fun? Ha! My legs were swollen from being on my feet for 10 hours a day, there wasn't nearly enough sleep happening, and the "healthy" chef was eating pizza after long shifts more often than I'd like to admit. The home phone which also served as my office phone rang around the clock. I drank too much in a misguided effort to take the adrenaline edge off a night of frantic cooking when I needed to go to sleep as soon as I got home. For many months I was going to work at 2:30 a.m., cooking until 9 a.m., sleeping an hour, and then driving 150-200 miles making deliveries until 6 p.m. When not cooking, I was doing the accounting, maintaining the website, drumming up business, getting press, talking to customers, creating menus, and building delivery schedules. Later, I finally hired a prep cook. But early on, there simply wasn't enough money to hire any help.

It is hard to grow a business to a profitable level. Orders don't come in by luck or magic.

I had no social life. Even when I had time, I had no energy. It's not like anyone would have found me interesting anyway; I was so consumed with the business that I didn't have anything else to talk about. If you wanted to discuss how to more efficiently make 200 servings of food in a few frenzied hours, alone, on an awful stove, I was in. Otherwise, I was completely zoning out.

Just as I supported Jason being so single-minded in those days, he had to do the same for me. If we hadn't been so supportive of each other, we would have been in trouble.

Once the business had grown enough to be profitable I finally reaped the benefits of staying small. Orders and work hours became reliable and stable because I wasn't always chasing down new customers. Exercise was back in the routine, decent nights of sleep, vacations, a sensible diet, and the ability to be social and interested in other people's lives. Now I am devoting myself to being a mother, having already established myself enough that I can go back to work at any time. It was one of the best decisions I ever made.

But in order to achieve the work/life balance I eventually attained, I had to sacrifice just as much as any business owner, large or small. Even a lifestyle business requires obsessive devotion to get going. You might have to sacrifice your healthy habits, your social life, or your reliable day job paycheck.

Something always has to give.

What are you thoughts on this? Is your story different? Leave a comment and join the conversation.

Find what's blocking sales with under a day of work

Jason — Mon, 28 Sep 2009 13:30:00 +0000

Last week I beat you up about why the number one way to increase revenue is by getting feedback from lost sales. Feedback from the field, not adding new features, not polishing the website, not even talking to existing customers.

That's right, talking to existing customers isn't good enough! They bought in spite of your faults; you need to talk to the other 99.9% of your potential customers who aren't so forgiving and understanding.

But how?

(Cartoon
by
Andertoons)

It's unfair of me to say "find out what's stopping sales" and then not tell you how to go about it.

So here are eleven ways to collect empirical data about why people are checking out your product but not buying it, most of which can be implemented in less than a day.

1. Add a short, optional form before your download/eBook/whitepaper so you can follow up.

"But forms are a barrier to downloads," I hear you cry.

I know this argument, but if you don't have feedback you can't fix your product, and if a hundred people download in silence and don't buy, it doesn't matter that they downloaded.

Besides, if you do it right, adding the form doesn't necessarily mean fewer downloads. I didn't used to believe that sentence I just wrote until we did it at Smart Bear. Sure enough, no impact in the number of downloads. None.

So how do you "do it right?" I wrote a nice, long article with specific tips, learned by experimenting in the field, that you can put to use in less than a day. Read it here on the Avangate blog.

Getting email addresses means you can follow up about the trial. Half of them will have forgotten to start the trial. Half will have gotten stuck and silently stopped. Half don't realize you're a friendly, happy, small company that wants to spend time making them successful.

For those who end up not buying, if you ask them "why" you'll be surprised how many will tell you. How can you afford not to know this information?

2. Have an opt-in newsletter.

You don't have a newsletter and you don't have time to write one. You don't even know what to put in one.

I know, and I don't care! Prompt them anyway, because someday you'll want one, and then you'll have a bunch of email addresses.

There's no reason not to build an honest, opt-in, no-spam list of people who are interested in your product. My experience is that most people on such lists aren't paying customers! So this means you get all sorts of excuses to gently ping interested people who haven't given you money. Such as:

Praise the features in a new software release.
Give a tip about a feature they might not know about.
Tell a customer success story.
Highlight a nice article someone wrote about you or which argues that a service like yours is valuable.
Announce a partnership with another vendor they might use.
Give them a time-limited coupon.
Tell them you'll be in their city and ask if they'd like you swing by and do a demo.

If you don't accumulate these emails, it's a tremendous waste, for nothing. Add the checkbox.

Update: Somani from Worklog Assistant asks: "How do you manage your subscriber list? I'm stretched thin enough; I don't want to write a custom app."

Answer: Use an on-line newsletter system like Constant Contact, MailChimp, or Emma. They provide forms you can drop into your website; they accept and confirm the email addresses for you. Then when you're ready to send a newsletter, they have special deals with the major email providers (e.g. Yahoo, GMail, Hotmail) so your newsletter won't be accidentally marked as spam.

3. Offer free stuff for feedback from lost sales.

Hunt down the contact info for people who trialed but didn't buy and give them something for free if they'll talk to you for 15 minutes about why they didn't buy.

(Guess this means you'll have to get their email address, huh?)

At Smart Bear we gave $2010 to Wikipedia, $5 at a time. It was amazingly successful.

What can you give away?

Cool stuff that promotes something good for the world (e.g. something from Etsy)
Give money to charity so you can write it off and the other person feels good (e.g. $25 donation to Kiva or Wikimedia Foundation or Free Software Foundation)
$25 coupon to Amazon (it's easy and "Amazon" means "anything you want")
Swag with funny/cool content promoting your company (T-shirt, mug, mousepad)
Cool stuff having nothing to do with your company but which is desirable to your audience (e.g. calendar of XKCD cartoons or Despair posters)

It's worth $25 at least; probably $50. You don't have to offer it forever, just until you start hearing the same things over and over again. Or budget $1000 and run the offer until the budget is gone.

4. Hunt down the contact info for one customer and get them on the phone.

I know, it's an "existing customer," and I just told you they can't tell you why other people aren't buy. But I want you to ask about their buying experience.

Well, of course you should also talk about what's bothering them and what they'd like to see next, and in fact that's the excuse you can use for the call. But carve out at least 15 minutes to interview them about the trial and buying process.

Ask them things like:

How did they hear about you?
(Tells you which marketing sources are worth spending more time/money with)
What information on your website convinced them to download?
(Tells you which messages are important; if they're buried, make it more obvious; incorporate into ads)
What was the main reason they bought the software?
(Tells you their primary pain point, the one you should address on your home page and ads)
What part of the trial process was confusing or difficult?
(Tells you where other people are probably dropping out of the sales process)

5. In your product uninstaller, ask why they didn't buy.

This sounds dubious I know. Why would anyone bother? They're already uninstalling, why would they give you the time of day?

But the fact is, this works. People like to give opinions. Don't take my word for it — check out this comment on last week's post where Mo Flanagan from WindowTabs volunteered that this technique was "eye-opening" for his company.

The FireFox browser not only asks when you uninstall, it even asks if you merely cancel an install!

Sure, most of the time you'll get nothing and sometimes you'll get useless crap like "You suck," but sometimes you'll get gold.

As with the Help Menu link, don't bother making a custom form to get the feedback, just pop up an email client or web browser with a form asking why they didn't buy.

While you're at it, why not add a field that says: "If you'd like to be notified when we address the problems you've raised, put your email address here."

6. Solicit testimonials from existing customers.

Besides being great marketing fodder, testimonials are where you discover the real reasons your customers love you. The real pain you solve, the true impact of your software on their daily life, whether you really do have "legendary" service, etc..

For the things they highlight, consider: Are those things obvious from the get-go to new visitors to your website? Are these things obvious while someone is trialing your product?

For the things you thought were great about your product or company that they don't talk about, maybe you should reconsider whether those things are actually important. Listen to your customers' point of view, not yours. Listen to their stories, not your vision.

Here's an example. This is an actual customer quote for Smart Bear's (my) software development tool:

"When we introduced Code Collaborator, it was like someone broke the ice in our group. With some common ground to start conversations and help us get to know each other, we came out of our cubes and actually talked to each other. As a result, now we collaborate more often to design and test features as well as review them."
—Anand Kalyanavarathan, Program Manager, Siemens

Notice how there's no mention of features or why we're better than the competition or whether we're SaaS or not. It's a story about how this tool changed the social dynamic in the company from isolation to collaboration.

You can see this sentiment reflected in the bi-line on Code Collaborator's product page: "When code review is easy and fun, it actually gets done."

7. Add links (for web apps) and Help Menu items (for desktop apps) soliciting feedback. Or ask on "quit."

It should say something inviting and human like "Complain" or "Yell at us." Just "Feedback" is too corporate and unfeeling. Prove that you want them to click that link!

You don't have to create complex forms or mess with proxy servers, just open a "Contact Us" form on your website or launch their email client.

We did this at Smart Bear and a sizable percentage of all feedback email comes from that link in the product. You can probably add this to your software in an hour. Why not do it?

Keith from Redcort software suggests also prompting users when they exit the product. Would that bother a user? During a trial, this is no different from any other "annoyance" buy-me-now box, but has much great opportunity for reward.

8. Give away free copies of your software in exchange for product reviews.

Reviews not only give you feedback about your software, they also double as publicity.

Don't worry about getting bad publicity. If your product is DOA they won't bother writing a review, because writing "I couldn't get it installed" doesn't make for an interesting article. If they like some parts and dislike others, that's OK. In fact, there's data that shows people are more likely to try a product that has mixed reviews that one with rave reviews, provided the reviewer gives details!

The smaller the blogger the more likely they are to help you. Remember, even a blogger with 17 RSS subscribers can provide valuable feedback.

9. Give away copies of your software in exchange for a 30-minute feedback session.

After the trial period elapses, almost no one buys, right? So you send some emails to beg them etc., but almost no one responds, right?

So you have these people who were interested enough to download but absolutely are not going to buy. I propose you give them the software for free.

You're not losing money on the sale because they weren't going to buy anyway. You exchange the free license only if they get on the phone with you and really talk about why they couldn't shake the money loose from the boss.

The only way you "lose money" here is that you have to provide tech support without revenue. But the feedback about lost sales is more than worth it.

Besides, those people will tell their friends (free publicity), and you can set limits like "only one free seat per company" so that they can't pull this trick on you twice.

Also you don't have to offer this forever. By the time they tell their friends and suggest that if they wait they could get a free seat, you'll have ended this program because you'll have gotten 10 meetings and you'll know how to get those friends to actually purchase.

10. Find a local startup/entrepreneur/user group in town and pitch your product.

Most cities have an informal support group for startups. Ask whether you can pitch your product to the group for practice and feedback.

It doesn't matter if you're pitching in front of entrepreneurs, investors, or a local user group. In fact, the latter is great if they're also your potential customers — you get to do a sales pitch in a friendly environment.

Even if you don't get great feedback, having to do a presentation forces you to rethink what's important and interesting about your software and how to communicate that to others. Frequently this exercise reshuffles some ideas that end up on your home page and advertisements.

11. Use UserVoice or GetSatisfacion

These web-based services solicit feedback and then allow people to vote on each other's ideas. The cost is free or cheap depending on service options. Both of these services are ubiquitous on the web so people generally know how to use them.

I recommend allowing anonymous responses, otherwise many people will be discouraged by having to create a new account or forgetting the account information they created.

Don't worry about people crapping up your forums. You won't have much feedback at first so moderation is easy, and in my experience at Smart Bear we've had hundreds of entries and comments and thousands of votes, and we haven't once needed to delete something.

Please, just do something

If you're not actively getting data about lost sales every day, you're in the dark. These techniques are easy to implement so there's no excuse not to try some.

If you still think you "already know what they're going to say," try it anyway. If you're right, hooray for you.

But if you're wrong, these techniques could be the difference between molding a product people will actually pay money for and going out of business with an idea you thought was perfect.

What other techniques do you have? Leave a comment!