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Dane Maxwell AMA-- SaaS, Membership Sites, The Foundation

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KC Dash

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Dane- Thank you for doing this AMA! Great info so far.

I have a couple of questions on the process of finding beta testers, and testing/debugging your software, before offering it for sale.

1) When do you look for beta testers in the process, and how do you find beta testers? How many testers are you looking for?

2) How do you keep your beta testers providing feedback on the software? I assume some move on and get sidetracked very quickly?

3) When do you launch your software to the public? How much testing and debugging is acceptable before putting it out there? How do you handle bugs and software problems after your first sales of the software?



Thank you!
 
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skylizard

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Sep 22, 2011
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Dane - Thank you for your honesty in all of your answers. I admire the passion that you have for your business and in helping others.

I'm curious as to how much, on average, building a typical SaaS can cost?
 

D. Maxwell

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Thanks for doing this Dane its been awesome.

I followed your launch closely last year and had a question.

I remember two applicants you profiled last year, one had sent a looong handwritten letter to you about why he wanted in the program, another chased you on FB trying to get accepted into the program. What were their results with the program?

The long letter was a guy from Slovania. He borrowed money to get in the program from friends and family. He has not built software, but instead is becoming a software consultant to completely build your MPV in 3 months or your money back. He's working with foundation clients as a coach. He joined the VIP tier and worked personally with me and reversed some serious limiting beliefs.

One limiting belief: He had trouble asking for money... asking for the sale was almost impossible. I applied some of my intuitive skills and found something dating back to age 14 where he asked him mom for something and got totally burned by her for asking. This fear came up subconsciously every time since he's asked for money. "It's not safe to ask for what I want." We cleared that. Now he can do it with no problem.

He's very happy. Here's his FB if you wanna chat: https://www.facebook.com/?q=#/leban.matej?fref=ts&ref=br_tf

The other guy who chased me on FB flaked out in month 2, dropped out, and is now working as an employee for a start up.
 

D. Maxwell

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Dane, thank you for doing this AMA.

Questions:

What is your refund policy, and what percentage of each Foundation class has asked to be refunded?

Last year our refund policy was 2 fold "build a software company with 10 paying customers in 6 months or your money back" and... "If you're not happy with where you're at in your life... get a refund."

We had somewhere between a 10 and 15% refund rate. This was a terrible number, we think this year it will be closer to 5%.

We screwed up a a number of things last year that we are correcting for this year.
 
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D. Maxwell

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I was a skeptic when I heard you were going to do this AMA. However, I must admit your answers have been very thorough and very forthright. You seem honest. You haven't shied away from hard questions and have answered some questions I didn't think you would answer. Thank you for doing this AMA. I think you probably changed a lot of perceptions, including mine.

Yeah man, ask me anything is what it is right?

Keep the hardest questions coming. I want to be pushed.
 

D. Maxwell

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I understand you reinvest 25% of revenue back into development, where does the remaining 50% of revenue go to?

Is 25% a typical profit margin for the SaaS businesses you have come across? As I thought it would be higher. Or is that because of the CEO you have running it?

Hey Freeman!

The nice thing about profit margins, is you as the business owner get to decide what you want to run at. And with SaaS, they can be insanely high. I always wonder how much 37signals profits off of basecamp. That SaaS is insane.

The core expenses in a SaaS business are servers and the developer.

When I was running the biz paperlesspipeline, We were at 60% profit margins.

I think you'll see 80% gross margins on a SaaS business.

My buddy has 95% gross margins. (I think, don't quote me on that, seems almost insane).

As we built the team to 7 people in PaperlessPipeline we sit at 25% profit margins now. I will not ever let the business drop below 25% profit margins. We could operate at 40%, but I like employing people and having a bigger team. (especially when I don't have to manage them).

Seriously, the magical feeling isn't in having high profit margins, it's in having a bad a$$ team you can email shit to and have it get done.

When the CEO took it over, we ran at 40%, but he then made a compelling argument to run at 25% = hiring/spending more resources to grow it more.
 

D. Maxwell

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Thanks for being very transparent and thorough, I appreciate that.

There's one more thing I'd like to ask: what do you think about building a small audience first by publishing some good content in a particular market, gaining trust & credibility, learning needs and then creating a software product (and possibly other products & services that fill the needs)? I know it will take more time than emailing and calling companies, but personally I'd prefer to do it this way.

So basically what are your thoughts on building an audience first (example: the way Pat Flynn launches his online businesses) vs product first approach (example: Eben Pagan, as far as I know he didn't have any audience when he was starting his dating empire, he started with a simple ebook and then went from there).

If all of my businesses burned to the ground and I had to start from nothing, this is what I would do.

Here's how I'd do it if I were going after one of my favorite niches I think would be awesome to be serving, Chiropractors.

Seriously, look at this business: Chiropractic Marketing | Chiropractic Website Templates | Chiropractic Websites | About Us

A 100 employee company just helping chiropractors with marketing. Which business would you rather own, be a chiropractor, or help chiros with their marketing? Ding.

Sell tools instead of digging for gold. Money is always in building the tools, not providing the service.

Anyway, this kind of business (with 100 employees) validates that the market is awesome to me. I'd want to enter it when I see a 100 person company serving chiros with basic PPC direct response websites.

What I'd do:

I'd combine mixergy with idea extraction and a mastermind group.

Step 1 - I'd google search the top 50 cities in the country like "new york city chiropractors"
Step 2 - I'd create a blog and publish and find the top ranked chiro's and interview them weekly on their marketing and business practices

(Top ranked chiro's in google have to have their shit together)

Step 3 - I'd market these interviews for free to other chiro's, totally free

(I'd have someone in the phillipines personally find chiros websites and find an email and send them links to the interviews - one chiro at a time)

Step 4 - I'd collect leads on the website for a PDF like "top tools chiros use to run their business cheatsheet"
Step 5 - At the end of each interview I'd have the Chiro share their favorite and least favorite software, taking notes
Step 6 - I'd use the tools from the interviews to create a recommend resource of tools for Chiro's to use in their office, taking note of what's a pain and what's missing
Step 7 - I'd focus a segment of the interview on pains the chiro is experiencing
Step 8 - I'd find the top most common pains and least helpful tools and organize a mastermind group of 10 chiro's who all want that top pain solved
Step 9 - I'd organize bi-weekly calls with this group of 10, asking them to tell me exactly what they want and then show them user interface shots of the product each week as an update
Step 10 - I'd get pre-sales from these 10 for minimum $2k each and use the $20,000 to hire a dev to build the product
Step 11 - I'd launch the product to them
Step 12 - I'd get testimonials
Step 13 - I'd use the testimonials to promote to my chiro list and blow it up to all the other chiros who now trust me because I've been showing them epic content on how to run their practice
 
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D. Maxwell

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Dane- Thank you for doing this AMA! Great info so far.

I have a couple of questions on the process of finding beta testers, and testing/debugging your software, before offering it for sale.

1) When do you look for beta testers in the process, and how do you find beta testers? How many testers are you looking for?

2) How do you keep your beta testers providing feedback on the software? I assume some move on and get sidetracked very quickly?

3) When do you launch your software to the public? How much testing and debugging is acceptable before putting it out there? How do you handle bugs and software problems after your first sales of the software?

Thank you!

1) Beta testing is not a good word to use. It implies they are helping you. You are the one helping them son! You want to switch that frame to champion users / founding members. We don't build the software until we have pre-sales. These pre-sales are the beta testers. So I find beta testers / champion users before any code is ever written.

Remember, if you write a line of code before you get a pre-sell, you are kicked out of the foundation.

2) When your software launches, launch to ONE user at a time. NO MORE THAN THAT for your first 5 users. You want to do it with them on a webinar and get on the webinar, share that persons screen so you can see them, and ask them to register and do whatever first activity is in your app, while you sit silently, watch, and take notes. You want your developer on there so they can see how shitty your initial UI is. It always needs improving when you launch.

When we re-built the UI for PaperlessPipeline, I spent about 10 hours watching users work silently for a week, 2 hours a day, no talking. I'd just watch how they used the app. f*cking incredible insights. No wonder our product owns now.

3) Launch to the public when you can have someone sign up, use it, and pay without you watching. Don't launch it publicly until then. Once you watch a webinar where the person enters their credit card you are f*cking golden. You handle bugs as they come up, one at a time, or lots at a time. How much testing until putting it out there? Until you feel it's usable.
 

D. Maxwell

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Dane - Thank you for your honesty in all of your answers. I admire the passion that you have for your business and in helping others.

I'm curious as to how much, on average, building a typical SaaS can cost?

Skylizard, we like to build a SaaS business to it's first version in 12 weeks.

You have a few options here.

OPTION 1

If you are hiring a developer full time that's 40 hours x 12 weeks = 480 hours

If you are paying $50 an hour that's $24,000.

A bit much, right? I built PaperlessPipeline to first version in 3 weeks for $8k. When you get good at this, you can really get things out quickly and affordably. If you're a rookie, and you don't have guidance, a developer can sneakily take you to the cleaners.

OPTION 2

You have pre-sales and proven revenue before a product exists, this blows developers minds. Offer them a percentage of revenue, no more than 20% while working and up to to a year after they stop working on the product. I'd shoot for 10%, but the best developer? If I found them, I'd offer 20% while starting out. They'd have to work full time for X period of time to lock this percentage of revenue in.

OPTION 3

Offer no more than 10% equity and a reduced hourly rate, with profit distributions paid quarterly from the company.
 

liberty

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Hey Dane,

My question is very basic, but what is your "outline" that you follow for getting in touch with the right person and getting to their pain. I'm kinda scared to get on the phone with people and what key lines would tip my extraction phonecalls more towards success?
 

Chris_Willow

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Hey Dane,
Here are some serious questions:

What are some of the customer acquisition methods you teach?
How do you minimise churn?
What do you do to increase the number of trial users who start using the software?

And a couple of unrelated questions:

How did you end up getting the .com for Foundation? Is there a story behind that?
Sam Ovens seems to be launching his own info product now. Has he too found teaching to be more rewarding?
 

theag

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He has not built software, but instead is becoming a software consultant to completely build your MPV in 3 months or your money back. He's working with foundation clients as a coach.

So he built his own mini-foundation. Sounds like thats the way to go. :fastlane:
 
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M

M&N

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If all of my businesses burned to the ground and I had to start from nothing, this is what I would do.

Thanks once again. Actually the way you described the whole process is very similar to something I plan to do :). Also I was thinking about releasing an infoproduct for my chosen niche before getting into software development. That way I could get some initial funds, trust & authority and testimonials for my business. You've started with an information product (for brokers) before building SaaS too, am I right? Is it still selling?

PS. Do you think these business owners care where my business is located? I mean, I'm from Europe, this will be my first B2B startup and I wondered if US companies have any issues with doing business with offshore guys like me.
 

LibertyForMe

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Dane,

How do you get people to take you seriously if you have no track record of success? (I don't have a track record of failure or anything though, lol) I have thought about doing some consulting on the side, then quitting my job, then using the consulting income (also would free up lots of my time) as a base to build a company (not necessarily SaaS).

How would I get anyone to take me seriously if I don't have a track record consulting, or building a SaaS product?

Thanks,
Jacob
 

Execution=King

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Feb 11, 2011
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Thanks again for this thread.

Sam Ovens is pounding me with retargeting ads making the point that the foundation doesn't really work as advertised (and positioning his consulting infoproduct as the solution.)

e1RAW5G.gif


Frankly, I'm surprised he would take this tack with his marketing (though I'm sure it's effective.)

Questions:

1) Have you and Sam had a falling out?

2) Do you feel that he has a valid point, and if not, why?
 
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sarah.jackson

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Dane,

Thank you so much for sharing your thoughts on this forum.

I have some easy questions for you:
-can you explain the different tiers being offered this year and their price points?
-is it a monthly fee, or do you ask for all the money up front?
-if someone starts at a low tier initially, do they have the option to move to a higher tier?
-have you ever considered giving out a few scholarships to people that can't afford the cost of The Foundation?
 

Nick

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Oct 25, 2011
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Not having any questions at the moment, just wanted to say that this AMA and the way you addressed all the questions added a lot of credibility in my eyes to you as a person.
 

Tank

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Sep 10, 2013
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Sam Ovens is pounding me with retargeting ads making the point that the foundation doesn't really work as advertised (and positioning his consulting infoproduct as the solution.)

e1RAW5G.gif


Frankly, I've never seen a case study turn on the original business like this.

Questions:

1) Have you and Sam had a falling out?

2) Do you feel that he has a valid point, and if not, why?

There does seem to be some incongruiousity (like that word? It sounds even better if your roll the "r") between Sam Ovens current story in his funnel's videos and the story he tells in this interview from Dec 2012: http://thefoundation.com/mindset-with-sam-ovens/

Dane's story is solid.

I wonder if Sam had a falling out with either the girl who was his lead-gen-genie or his Indian web-guy who did the actual work he sold as a consultant? I think this would better explain the changes in the story than a tiff with Dane. Who knows? Whatever....

There are too many good things I have seen and heard from and about The Foundation and Dane Maxwell. I want in!

Even if Dane gave away every bit of the Foundation's training material, I would still want in to be a part of that whole vibe of one community focused on a similar goal with the same strategy using the same tactics. I imagine it would be a highlight of my heretofore wonderful life.

Bring it on.
 
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D. Maxwell

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Can you go a little deeper on your freedom = kindness philosophy?

I'm still experimenting with this philosophy. I'm really rough on it, so I'm going to feel out loud a bit here.

Expect this to NOT be articulate.

I feel kindness is a part of freedom, and the another part of freedom is being true to your feelings. And expressing them.

If you're in a job because that's the advice the world gave you, instead of you honoring your feelings to be on your own...
If you're in an intimate relationship that doesn't feel right, but you're in it because you're afraid of being alone...
If you're in a business you own that you don't feel alive in, but you've settled and rationalize it as good enough...

That doesn't really feel like freedom to me, either.

I feel most free when I can honor my complete feelings, and be kind to myself.

When I don't honor my feelings, and then I beat myself up about it, it's almost like the most complete and total sabotage for myself.

Crap. I feel choked up right now just feeling about it.

When I was just starting out into entrepreneurship, I was 22, and my girlfriend at the time told me she wanted me to wear a suit and go work downtown... I told her to politely f*ck off, I know what I want. When my Dad would show me job ads just in case my entrepreneurship thing fell through, I smiled and told him I don't need those. I honored my feelings instead of being swayed by my loved ones.

It took 1 painful year to finally get any traction with anything, but I didn't give up and I didn't honor anyone else's feelings but my own.

It feels damn good to reflect on that now.

But I did it a little backwards. Instead of being kind to myself or them when they wouldn't honor my feelings, I'd get a little angry. Like "f*ck you" I'm going to do this and show you up punk.

Now my nature is just... "Wow... my heart is pulling me this way and I'm sad you don't support me, but I'm going to move forward anyway, because this is who I am."

That's like the ultimate freedom. Gentleness with myself, my feelings, and others feelings.

Now what's amazing is the loving nature of people I attract in my life. You wouldn't believe how amazing the team of 10 is that power The Foundation with me. All so loving, all so powerful, all superstars, all humble, and all just kick a$$. I don't think I would have attracted them without the freedom in kindness and freedom in honoring my own feelings.

Thanks for the question and if you want me to elaborate more, I can. I greatly appreciate the question. It gives me a chance to explore the nooks and crannies of my heart and mind.
 

KC Dash

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Dane- Thanks again for answering all questions!

I am also interested in this idea of using webinars to get sales. Do you have a sample of a successful webinar you, or one of your students have used in the past that you would share?
 

Charles

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Just got an email from MJ asking me to look at this thread? Just looks like a load of questions and NO answers? Or am I missing something?
 
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AllenCrawley

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Just got an email from MJ asking me to look at this thread? Just looks like a load of questions and NO answers? Or am I missing something?

You are missing something. D.Maxwell is Dane and he's doing a great job answering everyone's questions. Look for his reply's. One of which is just 2 posts above yours.
 

MJ DeMarco

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Bigguns50

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ok...since Vigilanti fessed up, so will I. I was also skeptical at first..VERY skeptical. And the video...I was thinking 'guru' and shaking my head no no no. BUT, your words seem sincere and from the heart. I didn't read anything where you dodged any questions.

I'm still not sure about this 'limiting beliefs' stuff....but I have an open mind and have been thinking about it. Life has taught me anything is possible and I should keep an open mind and think about everything.

Nice to have you here and thank you for contributing.
 
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InMotion

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Dane,

1.) I realize you have designed the foundation for people with no software experience but have you considered spinning off an in-depth software course; working with developers (getting sites built) etc., possibly as a precursor to the foundation? A course like this would be valuable as a stand alone course.

Wouldn't it make more sense to take this course first, before a person gets into the foundation, if the are a total software newb?

I realize this may conflict somewhat with your current advertising material of "no software experience needed" but I believe that this has come up as a concern from past students...mainly in the form of course over load.


2.) At what point in the Foundation do you see the highest number of students dropping out?


3.) You mentioned that you want the Foundation to be able to run without you someday, and for your name not to be attached to the Foundation (loosely worded/quoted)...if this is your "calling" why would you want step out of the Foundation in the future...or do you?


4.) What was lacking in last years Foundation that you have significantly improved on in this years Foundation?

Thanks.
 

Vigilante

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Just got an email from MJ asking me to look at this thread? Just looks like a load of questions and NO answers? Or am I missing something?

You are missing something.

Something significant. Something so large that even though I don't know you, I question your reading comprehension.

MJ emailed you?
 

evlttwin

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There are some solid gold nuggets from Dane in these posts. Unbelievably valuable. Actual SPECIFIC answers, instead of vague replies. You rock dude!

I have one question i guess. Are you a fan of Mind Mapping software, or do you do idea extraction in a group on a white board?

I'm only asking because I just recently found out about this stuff, and it's almost addicting.
 

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