Category: English

Keep it simple, talk to users – how Toggl has gotten to 20.000 paid users, and counting

I attended one of lunch talks at Garage48 Hub yesterday, the guest was Alari Aho, co-founder of Toggl. Toggl is a SaaS time tracking app that is doing well. They have more than 300.000 registered users and around 20.000 paying users. It’s a freemium product that is free to up to 5 users per team.

Due to the nature of the lunch (no slides, people ask questions, and sometimes very random questions) talks Alari didn’t go too deep into any topic, but he openly shared what Toggl has done and have his suggestions for other SaaS startups. In this post I’ve tried to structure Alari’s nuggets under different “headers”.

The first lesson is focus

Toggl was started as a side project in a software development house back in 2006. For the first couple of years it didn’t make any money and growth was rather flat. Things kicked into gear when client work stopped due to recession and the team properly focused on building the product.

Another aspect of focus is building an app that does one thing very well, and talks to other apps, not a “swiss-army knife”. To provide more value Toggl has introduced additional products like Planner or made Toggl better by making it simpler (eg. remove features that are being used by 1% of users) and faster to use.

Toggl has some very specific target groups like lawyers or designers, and the company has been toying with the idea of making dedicated apps for each one. But so far users in different verticals have rather homogeneous needs, and there hasn’t been a real need for that.

For wantrepreneurs Alari’s advice was to do one thing at a time rather than build several products and “see what sticks”, because it takes time to do something properly. He advises to plan 2 years for getting something done properly, and not counting on much income during that period.

Talk to users a lot

When probed about the most important things that have led to Toggl’s success, Alari emphasised the importance of talking to customers. They frequently travel to US or UK with the sole aim of visiting customers, seeing first-hand how they use the product and getting feedback. He brought the example that sometimes a feature that works well in the office simply doesn’t work in real life.

Toggl has also introduced some scalable means of talking to users. For example, when they found out that conversion to paid is much higher for users that have invited the whole team, they set up an email that encouraged users to do just that. 14% of people who received the email invited the team vs. 7% for those that didn’t.

Be very pragmatic about marketing

Toggl only hired their first marketing person a couple of months ago. This is not to say Toggl hasn’t done any marketing, they’ve just been very pragmatic about it (like the email example above).

A whopping 75% of traffic to Toggl comes from non-branded search (try googling “time tracking”). And this hasn’t come by itself – they’ve invested into SEO-friendly website and good copy. It also helps when you’ve been around since 2006 and been linked to by LifeHacker and lots of forum posts and discussions.

To get the word out Toggls emailed around 20 relevant bloggers back in 2006, and – lo an behold – one of them wrote about Toggl. This trickled over into posts downstream and the company hasn’t had to work hard for PR later.

Today Toggl does lots of marketing experiments. For example, Dropbox-style “refer people to get free service” didn’t work well – there were some signups but they didn’t convert.

Raise prices when you can, and raise money only when you need to
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Toggl started out by charging $1 per user and now charges $5, without introducing new features. With the latest price hike, existing users kept the old price for 3 months, and could lock in the price for 12 months thereafter by paying in advance. 5% of customers decided to leave but because 10% decided to pay upfront, revenue increased both in short and long term.

Toggl was initially funded by proceeds from software development services, and is profitable today. They haven’t felt the need to raise addiotnal funds and, as of now, are planning to self-finance future growth.

Photo courtesy: Kadri Uljas of Garage48Hub

Estonian for dummies

When I joined Skype’s marketing team in London back in 2007 I was one of the few Estonians in the office. My new colleagues often pinged me to get linguistic help – to learn expressions for rapport building and jokes, or to understand a comment made in that cryptic language.

So I produced a Lunch & Learn session to share the basics of Estonian and teach some critical expressions like Can I get a receipt for that order of 18 sambucas. Not only did the session prove popular, dozens of people have asked me for the materials later. The last request was yesterday, so it only makes sense to finally publish the materials here.

Estonian in a nutshell

  • Spoken by about 1.1 million people
  • One of the few sources of character Õ
  • Belongs to the Finnic branch of the Finno-Ugric languages.
  • Grammar, albeit reformed, is a nightmare.
  • 14 cases for nouns and adjectives. For example ‘idu’ vs. ‘eo’ vs. ‘eolt’ – it’s the same word!
  • No grammatical gender

Pronunciation

  • Vocals and most consonants exactly like in Spanish
  • The most rolling Spanish/Scottish R ever
  • Not a single letter goes unpronounced
  • Pronounce double vocals like you mean it. Tiit = Tiiiit.
  • PS. Capital of Estonia in not Tallin!

Estonian cheat sheet

Estonian cheat sheet

Originally, there was also a slide deck, but that doesn’t make much sense without notes. Maybe one day when there’s more time (than 24 hours in a day)..

Telling stories at Seedcamp London

I can’t say attending Seedcamp with Talentag yesterday was “great fun”. It was intense, and while we had a good time, it left us exhausted and overwhelmed by the end of the day. But it was useful as hell for getting quality feedback and meeting people. Seeing so many smart people who have done it before, and that are doing it in front of your eyes, also gave a nice motivational boost (after a night’s sleep).

Timo Rein has written a great post about the benefits of attending Seedcamp, and tips on preparing, and there’s no point repeating his points. Instead, I’d like to summarise a masterclass by Saul Klein and Chris Riley on telling stories.

The black line on the wall

Saul kicked off the talk by showing one of his holiday snaps. Slightly sharper than the ones my grandmother used to torture me with, but otherwise a rather unremarkable photo of his family in an ancient-looking place with a black line across the wall. Because of this line a few people in the audience recognised the place as Masada, the 2000 year-old fortress in Israel. This line makes Masala different from thousands of other old fortresses, and any holiday pic featuring said line is instantly recognised.

It was this metaphorical black line that the session encouraged us to look for and develop in our startups. Some of Saul’s sound bites that resonated with me were:

You need to tell your story to a class of 7 year-olds. Not to mention that you need to be able to tell the story to your friends and family.
Great storytellers know their audience. That said, Saul insisting that great storytellers “sleep in customer’s beds” got the response that this not scalable, and also depends on the product in question. :)
Pick a field big enough for a never ending story.
Saul concluded that a crap product doesn’t fly even with the best of stories, marketers and agencies.

Chris Riley started with a clip that he claimed to about the most exciting thing in his (rather exciting by most standards) professional life. If was the first couple of minutes from this video:

Not a word about technology. Rather a story of Apple and the industries the company had revolutionised. At that very moment I acknowledged that I was taking notes on the said “breakthrough internet communications device”. Which kind of proved Jobs’s point.

Jobs’s storytelling greatness is even more evident in this video, contrasted with Gill Emilio’s lifeless style.

More examples of great storys

Mini. The idea of Mini has outlasted the original product. Current incarnation of Mini has nothing to do with the original because it’s made by Germans, works reliably etc. But today’s Mini stands for the same things than a Mini back in 1960′s.

ALO Audio. Selling the quality of sound through traditions of electronics manufacturing.

Again, very little about the car, lots and lots of stories. (Eminem’s story, history of Detroit, hint to Ford installing Microsoft Sync in their cars). By the way, it sold lots of cars.

Path that tells a story of its own with design.

There are more story examples on Saul’s Checkthis page.

Discussions, conclusion

Riley pointed out that 90% of the work of storytelling, whether by Jobs or auto manufacturers from Detroit, is done by the audience, not on the stage. The full story is formed in people’s heads. For example, of the Nike ads in the 1990s, not everyone understood every commercial, but “curiosity was up” and there was strong interest to find out what was up.

When someone in the audience remarked that startups can’t afford to have superstars appear in their TV clips, Riley pointed out that Apple’s “Think different” commercial used copyright-free images and was without any special effects.

When asked whether startups should mention competitors in their story, Riley encouraged to certainly show how one is different from competitors (and showed this video).

In conclusion, always be telling a story and make sure to apply to Seedcamp. Seedcamp Budapest is in October already.

Last orders for KnickerMail

I helped to launch a service called KnickerMail in December 2010, it was a service that let people send designer lingerie as a greeting card. Our ambitious objective to “see what happens”. Kriss Soonik had started to get an increasing amount of orders where the person making the order and the recipient were two different people, so she wanted to see whether sending lingerie would work as a standalone service. I had recently quit his day job and wanted to explore different startup projects, so I created the site based on a Shopify template. It was a very lean operation, costing just a couple of hundred dollars and a couple of evenings worth of work, as documented by ArcticStartup.

We managed to get a good amount of press (UrbanSpoon NYC, Glamour, etc.) as a result of active blogger outreach and this quickly trickled into sales. It turned out that people, mostly Americans, were happy to shell out more than $60 for a pair of knickers in the mail. We passed our first $1000 in revenue fairly quickly and it seemed we had created a profitable niche operation.

Today, about 20 months later we’ve found out that this was only partially true. The nature of the business doesn’t accommodate much repeat business and virality, so in order to sell we needed to create a steady stream of new traffic. PR proved much more difficult at times other than Valentine’s Day, no matter whether we did it ourselves or hired a freelancer, though we had some success. Inbound marketing generated some traffic from guest posts and SEO but the sales this generated wasn’t substantial. And paid channel trials didn’t convert into sales profitably. All in all KnickerMail proved to be an extremely niche business that generated some sales seasonally but that demanded some money (Shopify fees, marketing) and attention (the most pricey resource of all) all year round.

We had a couple of ideas how to grow out of our tiny niche, for example add designers or add products beyond just lingerie, but neither of us felt this was our battle. We had learned great lessons in ecommerce and customer service, and we’re glad to have given this a profitable shot. Nevertheless we’ve decided to go for a solution that Schumpeter would be happy with. We’re doing a little “creative destruction” and will shut down KnickerMail as it exists today. This will free up time for other, bigger ideas.

If this made you feel like sending a lingerie greeting card to someone, do it before Sunday 29th.

Lessons learned:

  • If you have an idea, put it out there with lean startup methodology. Shopify is awesome for all things related to selling stuff online.
  • When doing PR outreach, start as far upstream as possible. My first pitch (via someone “neutral” tipping them off) was to SpringWise which is read by cool curators all around the world, and this got us on the radar or UrbanSpoon NYC, which got us more coverage in turn.
  • Be generous and proactive with unhappy customers
  • It’s relatively easy to start ranking for long-tail keywords. We got many first page position for phrases like romantic long distance relationship gifts by just putting out a post, without any link building.
  • The most important thing is team. Although this project turned out be a loss-maker (when I factor in time I could have spent on other projects) I’m very glad I participated, because working with someone as creative, no-BS, fun and ambitious as Kriss is a benefit in itself. Not our last project together, I’m sure (No pressure, Kriss :) )
  • Niche is good, but watch out for niches that are simply too small. Not enough money to be made, but perhaps more importantly risk of losing motivation.
  • Know when to stop. Schumpeter’s “creative destruction” concept can be a bit painful to execute, but it’s the only way to get to bigger projects and successes.
  • Life Lessons: Don’t Be A Dick

    Being good is just a matter of temperament in the end.
    – Iris Murdoch

    I recently tried out a couple of blogger outreach services. One of them presented me with the following signup page, and signing up to the Pro plan seemed like a better option, because the “free” option wasn’t actually free to use. No-brainer, I thought, if I don’t like the service I can cancel in the first month, $20 is not such a big deal.

    When a 240 dollar charge showed up on my bank statement, I was understandably disturbed. I re-checked the page and yes there is the Billed annually there but come on, font 6 shouldn’t officially count. As the service wasn’t quite what I needed anyway I immediately sent a rather cocky email to the service, asking for a cancellation and refund.

    The reply didn’t take long to arrive:

    I am sorry that you don’t like our price, but we don’t actually refund clients. I will make sure that your subscription is cancelled.

    And cancel my service they did ie. I could not even log in to download a receipt, which of course didn’t make me happier. I contacted my bank to cancel the payment, sent out a condemning tweet and sent another email to the company, threatening them with spreading the word about that approach of yours. I heard nothing back and so I sent another bitter email. Still nothing.

    After my bank told me that small print on the web is not their concern, I realised I was in the state often referred to as “fucked” in customer service speak. I had parted with my money, got nothing in return and was on my own.

    A couple of days later I realised I still needed an receipt. I contacted the company again with a much more reasonable tone, having accepted defeat. The reply was quick; I got my receipt and even promised access to the service. I was pleased that someone was answering my emails again, so I decided to ask for refund one more time, politely explaining that I didn’t need the service and that this money would come from my own and not very deep pocket.

    And guess what, I got a reply back that they they can make an exception to their refund policy. I felt glad, and really stupid. Why had I taken the threatening position in the first place when an honest friendly explanation did the trick? We hugged (read:apologized each other via email for mishandling the situation) and went our separate ways.

    The service is Blogdash by the way – not what I needed but maybe works for you.

    Be kind, for everyone you meet is fighting a hard battle.
    – Plato (or someone else. Long story )

    To companies, especially startups: don’t be dicks. Not refunding people for a service they don’t need is plain wrong on one hand, and bad for business on the other. We do have this thing called social media after all.

    Note to self and everyone that is a customer of something: let’s not be dicks. At the other end of the keyboard there is a human being who is most probably not the cause for the thing that annoys you. Little bit of friendliness can go a long way as I believe I’ve now proved.

    Epilogue.

    I needed to cancel another service a short while later. Coincidentally, I had troubles accessing my account there, too, and my first email was without a response again. My lesson still fresh, I wrote them a second email which wasn’t bitter:

    I became a paying member and now wish to cancel my account and stop all payments to you. Nothing personal, I just don’t need the service.

    I can’t login with [my email address] as your system doesn’t recognise the email address for some reason.

    My accountant will kill a kitten every time you take a payment from my card and I don’t have a receipt. Please close my account, stop taking money from my account and end this crime against cats. They deserve to live. Please confirm receipt of this email.

    Thank you,

    Andrus Purde
    Kitten lover

    I was answered this:

    We are animal lovers here and will do whatever it takes to preserve the lives of kittens. J

    As requested, your account has been removed from our database. You will not be billed anything additional.

    Q.E.D.

    We need to talk

    Better than a thousand days of diligent study is one day with a great teacher.
    – Japanese Proverb

    During the last couple of months I’ve participated in about 30 mentoring sessions. I was part of Ajujaht program with Achoo and attended a couple of events in Garage48 hub; this resulted in fruitful discussions with the likes of Jon Bradford and Andy Lopata. At the other side of the table I mentored Startup Wise Guys teams and have been insistingly offering my 2 cents to kid brother’s startup project and HoseWear.

    And a piece of knowledge sunk in during this period. Which is that if there is such as thing as “the most important thing for early stage startups” it is not capital, office space, rockstar team or pitching contests.

    The most important thing for startups is feedback.

    The best source of feedback is customers, but at the earliest stages a startup team is often not too sure about what they do, and who for. Second best feedback sources are people that know technology, business, the process of customer development and/or other people. Mentors and advisors, that is.

    Feedback is important for the same that you glance at a mirror before heading out for an important meeting or date. Because you’re _in_ your clothes you don’t see that this striped shirt (or hoodie, for this demographic) doesn’t go with those jeans. They just don’t match. Similarly, if you’re a team living and breathing your startup idea, you don’t recognise all the things that could be improved with your proposition, business model, technology, team, etc.

    So, what should (new) incubators focus on

    It’s become a popular meme to criticise the growing number incubator and accelerator programs that are popping up around the world. In my view more is better because natural selection quickly weeds out the best accelerators, as well as the best teams within each accelerator. I would just encourage placing focus on access to mentors and advisors, not on grants, foosball tables in the office and such. If startup teams have access to a pool of top mentors and advisors, results will come.

    Ajujaht, Garage48, Start Smart and others that have given startups in the region access to great people so far – kudos for doing what you’re doing.

    Estonian Ministry of Economic Affairs amd Communications, that I hear is busy summoning an accelerator backed by the Estonian government, I hope you’re listening.

    Instant proof of concept for Achoo

    So last week we publicly launched Achoo which was kindly covered by TheNextWeb and ArcticStartup. It’s a big thing for me but until we have good lessons to share, I won’t bore you with details. I’ll share just one thing that made me smile the day before the launch. Someone contacted me on LinkedIn, saying:

    Hi Andrus! In Ducksboard we are big fans of sales CRM company Pipedrive emails, and I saw in Achoo that you were responsible of the copywriting. Would you be interested in a freelance position as a copywriter?

    So heartwarming! Being able to track down people behind work you like was one of the main reasons we set out to create the service. And not just to hire them but to know what they’re up to, learn from them and ask questions from them. If you’ve accompished something you’re proud of, and haven’t added it to Achoo yet, you may be missing out..

    “Earn this” – Achoo, the €2000 prize and motivation

    We applied to the Estonian Ajujaht upstart competition with Achoo, and got selected to pitch at the finals in May. This also earned us a €2000 prize that we’ll happily put to work for the site.

    This vote of confidence had an interesting effect. It didn’t trigger a celebratory mood, because the success of this venture is not up to any jury to decide, but users (also, €2000 is not enough for three people to retire on). Rather, it had a positive effect on the motivation because failing to do a great public beta launch soon would not only make our team look a bit silly, but also the people in the jury that voted for Achoo instead of many of the other ideas.

    The emotion wasn’t quite as strong as in the finale of Saving Private Ryan, but I like the effect this had, and cheers to Shy CTO for nudging us to apply to Ajujaht.

    On a side note, we’re bootstrapping Achoo for the time being – but I guess I’ll know more about “motivation through indebtedness” if and when we raise funds for Achoo.

    Marketing reading list

    I was recently invited to a Sunday guest workshop/lecture about startup marketing for DDVE Master’s students. One of the questions I was asked was good books and other resources about marketing. Here’s the list I sent over, with some later additions:

  • Viral Loop by Adam Penenberg gives a good overview of evolution of viral marketing concepts from Tupperware parties to just before the time companies like Zynga took viral concepts onto a completely new level. Apparently every new employee in the Facebook marketing teams gets to read it.
  • Don’t Make Me Think by Steve Krug. If you’re building anything on the web, you’ll want to read this. Perhaps not the latest thinking in UX and web design, but author makes some points that were just as valid 7 years ago than they are now.
  • Influence: The Psychology of Persuasion by Robert Cialdini. Not really a marketing book, rather a book about the applications of psychology into marketing and selling. A useful read nevertheless.
  • The Four Steps to the Epiphany by Steven Gary Blank. Not one for a beach holiday – and I’m speaking from the experience. A bit textbooky, but the good news is that it covers the process of customer development so thoroughly it’ll probably stick with you forever. Must read for tech startup builders/marketers.
  • Inbound Marketing by Brian Halligan and Dharmesh Shah. Dharmesh is the king of inbound marketing but he only shares the very basics in this book. Great if you’re new to content marketing, a little light if you’re intermediate to advanced.
  • Clockwork Pirate (free ebook) by Kelvin Newman. The guy behing The Internet Marketing podcast has put together this short and very practical book on link building.
  • …and don’t forget the classic Positioning by Al Ries and Jack Trout.
  • All these were Amazon affiliate links by the way. If you choose to buy any of these books, I’ll use the proceeds on liquor, women and gambling, so don’t worry, this won’t result in more reading lists.

    When it comes to blogs then there are more good ones than a mortal could ever read. I try to stay on top of Conversation Marketing, SEOMOZ blog and Startup Marketing blog and count on twittersphere to bring me the rest of marketing news and trends.

    Also, I’m a big fan of podcasts because I can use my commute or otherwise “empty” time slots for consuming them. I regularly listen to Internet Marketing podcast which is practical and SEO-focused, and Six Pixels of Separation, which is a collection of interviews with authors and thinkers in the field of communication.

    Any good ones I’ve left out?