“Why Won’t They Buy My Software?”

We spend most of our lives in more-or-less meritocratic systems where predictable, well-defined patterns of behavior produce predictable results. We go to school, do the homework, study for tests, and get grades roughly commensurate with effort and aptitude. We apply to college and get in to most of the colleges our academic record and application packet would support. We get a job, do what our bosses tell us to, and get paid the agreed amount on Friday. These aren’t entitlements, per se, but we largely feel like we’ve earned them because we did the work, just like the system told us we should.

Then we start our own businesses, and suddenly a) there is no well-defined do-this-then-proceed-to-success path forward and b) sometimes it looks like we did everything right, and in spite of that we don’t get rewarded for it. That is a very jarring transition from the transactional relationships we’ve previously been involved in.


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“Why Won’t They Buy My Software?”

We spend most of our lives in more-or-less meritocratic systems where predictable, well-defined patterns of behavior produce predictable results. We go to school, do the homework, study for tests, and get grades roughly commensurate with effort and aptitude. We apply to college and get in to most of the colleges our academic record and application packet would support. We get a job, do what our bosses tell us to, and get paid the agreed amount on Friday. These aren’t entitlements, per se, but we largely feel like we’ve earned them because we did the work, just like the system told us we should.

Then we start our own businesses, and suddenly a) there is no well-defined do-this-then-proceed-to-success path forward and b) sometimes it looks like we did everything right, and in spite of that we don’t get rewarded for it. That is a very jarring transition from the transactional relationships we’ve previously been involved in.

I frequently get mail from developers who… wait, scratch that. Most people who send me email are businessmen. Some are unaware of that: they still perceive their value proposition to the world as producing working software in exchange for money. They think this makes them a software developer. Writing computer code doesn’t make you a software developer. Getting paid on Friday for writing computer code makes you a software developer. If you don’t get paid on Friday—if you have to worry about sales, marketing, and “all that other stuff”—you’re in (gasp!) business and you need to start acting like it.

So anyhow, I get emails from businessmen who are still following their developer scripts, wondering why they did “the work” and are not getting paid on Friday for it. Overwhelmingly, the reason is that they produced something which no user in the world actually wants to pay for. The secondary reason is they’ve produced something which has no path to market—no strategy in place to connect them to the people whose lives would be improved by buying their product.

Collecting Evidence of Customer Demand In Advance

One powerful technique for avoiding producing software which no one is willing to pay for is to ask people to pay for software prior to it existing. If you can’t find anyone to pay for your proposed software, don’t write it.

This technique is so simple and effective that it is actually threatening to some deve… businessmen. We all fall in love with our ideas (especially after having invested effort into bringing them into the world—this is called “the endowment effect,” where we display an irrational preference for things which we possess simply by virtue of possessing them). We don’t want to admit that a good idea—or even worse, good software instantiating the idea—might not actually improve anyone’s lives.

So we’ve evolved defense mechanisms against getting the market feedback that would teach us this sort of thing. One is a perennial aversion to exposing our ideas to market discipline: since people not buying a product is (perceived as) a fairly clear rejection of it, we make it impossible to buy the product, via mechanisms like extended betas or, in pathological instances, refusing to ship the product at all.

This is frequently justified as “it isn’t good enough to take money for yet,” as if it were not utterly routine in our industry to sell, and accept payment for, software which does not actually exist and will not for years yet. (Note to younger engineers: if you were unaware, there you go: it is routine in the industry for software to be sold in advance of it actually existing. The creatures responsible for this are called “salesmen” and, despite your likely first impression of them, they do have valuable things to teach you, at least a few of which are compatible with you maintaining your soul.)

So just give people that option, as an exploratory measure. “Would you pay me $PICK_A_NUMBER, a month, for this thing I’m proposing?” If you can’t get ten people to say yes to that, then just don’t build that software. Come at the market/problem from another angle, or pick a better market/problem.

In addition to this saving you time on producing software which won’t solve problems for anyone, the discipline of identifying customers before building software will ensure that you can find 10 people to talk to about software prior to writing it. That is surprisingly difficult for many would-be software entrepreneurs, who create software totally in a vacuum and then have difficulty finding anyone in the putative market to talk to about it. Sometimes that is because the market doesn’t exist, but sometimes there is a genuine market opportunity, and the businessman just can’t address it because they don’t have a get-to-market strategy. The nice part about finding 10 customers is that everything you did to find the first 10 will still work when finding the first 100, and somewhere between 10 and 100 you can bootstrap from e.g. converting them one-at-a-time over email to e.g. figuring out more scalable strategies to attract their attention.

Low-touch Sales Versus High-touch Sales

The traditional way to sell bespoke software is with high-touch sales—the aforementioned salesmen take the prospect out for a series of candlelight dinners, quality alcohol, and Powerpoint presentations (hence the alcohol). The software is sold less on what it can do (there is typically a “sales engineer” along for the ride to talk technical detail, but suffice it to say they are very, very much the sidekick of the operation) and more on the rapport built up between the salesman and the internal decisionmakers at the target company.

There are actually ways to learn to do that sort of sales, and it is a very valuable skill, but they’re largely outside the scope of this book. Instead, we’ll focus on low-touch sales, which is a collection of techniques to convert prospects without requiring human contact in most cases. This is the domain of the small software/SaaS company on the Internet, where a compelling website (and perhaps email campaign) is designed to answer enough customer questions to slot them into the free trial of the software, and the free trial is designed to convert a (fairly small) percentage of trialers into customers.

These essays will talk about the mindset you need to successfully sell software at scale. It is, regrettably, a bit different than your current mindset about software. If you build it, they probably won’t come.

The Four Metrics You Care About As A SaaS Business

The majority of small SaaS businesses can be entirely described by four metrics: average plan value (over the customer base), new trials per month, conversion rate of the trial, and churn (loss of paying accounts over time). Improvements of these tend to be multiplicatively effective for the business. You will likely spend time optimizing for one metric and then work on another after exhausting the low-hanging fruit, then come back after you’ve made sufficient improvements elsewhere in the business to make additional effort on the first metric worthwhile.

We’ll discuss specific improvements (both for direct application and as examples of things you could potentially experiment with) which move each of these four metrics.

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