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  • SaaS
  • startups
  • validation
  • finance

66. From Idea to Beta

Hosted by Erin Allard, with guest Philippe Vanderstigel.

Philippe Vanderstigel has launched several start-ups, but not all of them have been successful. Then, one summer, he landed on an idea for a budgeting app which his users loved. Suddenly, he had a new problem: how to maintain an app that people continued to use. Erin Allard talks with Philippe about his years of experience founding companies, and the lessons he learned along the way about how to turn your idea into a functional beta.


Show notes

Erin Allard, a Platform Support Engineer at Heroku, interviews Philippe Vanderstigel, who has launched several start-ups, most recently, RocketChart. RocketChart is a cash flow management and forecast software solution for businesses, and while it's been a success, it wasn't Philippe's first attempt. He's built products that managed online gaming subscriptions to selling sausages online. Some of these ideas worked, and others didn't. Undeterred, Philippe mocked up an image of what he envisioned a budgeting app to look like, and within twenty-four hours had hundreds of people expressing interest in an app that didn't exist.

Philippe talks about the difficulties involved starting any business, namely raising funds and validating your ideas. Philippe very strongly believes that founders need to be directly engaged with their customers, especially in the early stages of the business. He personally responds to every message he receives, and asks direct questions to his users about what features they would like to see before his team spends time building them out.

Of particular importance to Philippe is managing the expectations of his users. He is the only one working full-time on RocketChart; the other two employees, his friend Elie and brother Marc, have day jobs to pay their bills. What this results in is a very calculated and gradual acceptance of new users, which also receive direct one-on-one correspondence with Philippe. This also makes it easier to divide the workload, so that the three of them can continue building a sustainable business without taking outside funding.

Transcript

Erin: Welcome to another episode of the Code[ish] podcast. My name is Erin Allard and I am a Platform Support Engineer at Heroku. And today, I am about to have what I hope will be a very interesting conversation with a startup co-founder named Philippe Vanderstigel. Philippe, hello.

Philippe: Hi. Thanks for having me on the Heroku podcast.

Erin: Absolutely, yes, absolutely. So if I understand correctly, one of our podcast producers came across an article you had written or a blog post you had written for your company's blog called, From SaaS idea validation in 1 day to 150+ Beta signups.

Erin: I've read the blog post and it's amazing. You've outlined step-by-step, pretty much everything that happened in the first weeks or months of the creation of your startup. And so to launch us off, Philippe, would you tell us a little bit about yourself personally, what's your background before we get into RocketChart and what you've created?

Philippe: Yep. So I'm Philippe Vanderstigel, I'm 26 years old. Previously before working on RocketChart, I studied mechanical engineering. It has nothing to do with tech. But anyway, I worked one year in a startup in the delivery field. I managed operations and the providers and some clients. And I quit the startup to work on my own project.

Erin: How were you able to do that? Did you have money saved up? Were you living at home? Most people can't just quit their jobs and go start a startup unless they've done some planning. So what was that like for you?

Philippe: Actually, I had one year of savings, I can live for one year without working. So I make a bet with myself like, "Hey, you have one year to launch a business and earn a living thanks to it." So actually, I just tried to do this and it isn't working for now because it's more than one year. But actually I get a loan to get a bit more of cash put away before getting our first paying customers with RocketChart.

Erin: And what made you feel comfortable making this bet on yourself? Had you in the past done anything like this before? Had you tried to create your own products and get people to buy them?

Philippe: Yeah, with my little brother Marc, we launched an eCommerce website, which basically sells Xbox Live online subscriptions. We found providers in China and Mexico and we bought codes for half the price you get it in stores. And so we sell it online. So this was our first experience in entrepreneurship.

Philippe: And then when I was in engineering school, I get a funny idea. It was to sell quality sausages online and send it through your like your box subscription models.

Erin: Quality sausages?

Philippe: Yeah.

Erin: Okay. I have to ask you about this, Philippe. This is fantastic. Why quality sausages?

Philippe: It was during summer. I was with my friends and we were chilling, doing very French the whole time, and we were running out of sausages and we were like, "Damn, everything is closed." And then we started talking about like it would be cool to get subscription boxes to be sure to always have stuff at the right time, et cetera. So I just tested it and it worked pretty well.

Erin: Really? So you actually had people subscribing to your sausage boxes?

Philippe: Yeah.

Erin: That is incredible.

Philippe: Right.

Erin: I wonder if that would work in America? Maybe it would.

Philippe: I don't know.

Erin: Oh my gosh, this has caught me off guard. I didn't know that we are going to be talking about quality sausages. So you've described two different ideas. You had this eCommerce idea, you did the subscription box. Was there anything else?

Philippe: Yeah. So actually RocketChart as you understood it is not our first attempt with my brother. We also worked on the mobile app, which was called Traveler App. Basically it was Instagram for travelers and Marc, my little brother was the CEO and I helped him on operations and strategy. And we started this four years ago or three years ago. I don't remember well. So here is the short story.

Philippe: Marc got the idea while he was on academic exchange. When he came back to Paris, he came back with this idea and we were like, "Oh, awesome, man. We will be the next Instagram." So we imagined the solution right after he came back. We raised money from our family and friends. It was around 20,000 euros.

Philippe: So Marc hired a freelance designer and a freelance software engineer. They built the product based on our specifications and design briefs. And after 18 months we were ready to launch Traveler. And guess what? Nothing happened.

Erin: Nothing happened?

Philippe: Zero users, zero customers, full fail. And so finally, 18 months to figure out we did things the wrong way. We never validated the idea at the beginning. We never talked to our potential users and customers before building the product. So we simply built a product nobody wants. So the main obvious lesson we learned was to validate your idea first and then talk to your targeted customers. And so-

Erin: Yeah. Yeah. And we'll definitely get into that more. One thing I'm really curious about is you mentioned borrowing money from family and friends to build this product that never went anywhere. Can you talk to us at all about what it's like to have to go back to those people:

Erin: One, to tell them the product was a failure, and

Erin: Two, you're going to need their support later down the road. Right? So how do you keep those folks engaged when you've already had one "failure"?

Philippe: There are two types of people. The first type of people were supporting us. They were not expecting anything when they gave this money. The other type of person didn't understand very well the risk they are taking by giving this money.

Philippe: We had 10 people involved and actually just two of them were like, they didn't understand the way we closed the company and why did we fail, et cetera. It's quite hard to explain to them that there was a risk when you give that money. And we did everything we could to make Traveler a success, but actually we learned so much. So we are thankful for this. Thanks to you we learned many things and actually with the RocketChart we are not going to do the same mistakes.

Philippe: And actually it's quite hard to get back to them and saying like, "Hey, we failed." You feel a bit embarrassed.

Erin: It's a hard thing to admit.

Philippe: Yeah. It's hard for your ego and actually one of the people involved, we don't talk to each other anymore.

Erin: Oh, I'm sorry to hear that. That's got to be tough.

Philippe: Yeah, I try to. It's life.

Erin: Yeah. Well, I appreciate you speaking so openly and honestly about this because I'm sure we'll have some listeners who maybe have been through this before or maybe even your advice here can help them avoid this type of situation.

Philippe: Yeah. Yeah. I hope too.

Erin: This does seem like a really good segue into RocketChart because you did things much, much differently with RocketChart. So I'd like to begin by asking for your other ideas. How did you come up with this idea? Was it a reaction to a problem that you saw in the world or was it just a completely new idea?

Philippe: Back in July 2019, we were on summer family holidays in the South of France, but our father wasn't enjoying at all. He spent an entire afternoon on his laptop and I was like, "What are you doing? Come with us." And it just can't because he was on his spreadsheet updating his cashflow, exporting data from his bank statements. So I asked him why he had to do this. I wanted to know. The answer was simple.

Philippe: Cashflow is the heart of each business. It's vital to master your financial situation, otherwise you can't pay your employees, your own salary, your providers and everything collapse. So it's critical to manage your cashflow, but it requires a lot of time and energy to do it properly, because spreadsheets are manual and laborious to update. There are no simple tools where you can get your transactions automatically synchronized to capture your cashflow and financial situation, at least in France.

Philippe: So at this moment I realized that cashflow management was both critical and a true issue for business leaders. And so the idea of RocketChart was born to make it easier for my father to manage his cashflow.

Erin: I mean, you basically built this for your dad.

Philippe: Yeah.

Erin: I'm so fond of my own dad, I would build anything that he asked me to build. And so I totally understand this. You talked a bit about the Traveler app and how that did not go well. So you had the knowledge before you were starting RocketChart that you had to do things differently.

Philippe: Yep.

Erin: What were those things and what specifically did you do when you first had the idea for RocketChart that was different from how you handled some of your other startup ideas?

Philippe: I had the idea of RocketChart. So the first step was done; but the next step is to validate the idea. So do funders struggle to manage their cashflow? And there are many ways to validate business ideas, but the main goal at this step is to do it super fast and for free because you don't want to spend time and money on an idea no one will ever care about.

Philippe: For RocketChart, I leveraged Facebook groups. It might seem weird, but I simply asked myself, "Where can I reach my target, a.k.a. business funders?" I was part of some very active groups like SaaS Growth Hacks and SaaS Founders and Execs. Actually these groups are awesome because business funders share tips, learnings, and ask for business questions and recommendations.

Philippe: So I designed a beautiful screenshot of what the tool will do and it was a fake screenshot obviously. I just posted it on two groups saying something like, "Hey, we have developed a tool to manage company expenses, track revenue, and run financial forecast scenarios to make better decisions. And I'm curious to know if it's something you actually need and will pay a subscription for." So I just posted this and the results went beyond all my expectations.

Erin: Before we talk about the results, because this is really cool. I want to know how did you create a fake screenshot? Did you just have a designer and do a mock up for you or something?

Philippe: Nope. Actually I simply use the Adobe XD and I did it by myself in like three hours. When my father was struggling on his spreadsheets at the beach, we came back here at our home vacation and in just three hours I make the fake screenshot and just posted it on the Facebook groups.

Erin: Very cool. So I apologize, I cut you off. You were about to tell us about the great success you had from posting these screenshots in the Facebook group. So please tell us.

Philippe: Yeah. So, the results were amazing. Comments and reactions from people were a blast. I remember posting on Tuesday evening in France and it was one of the worst nights of my life because the ting notification rung all night long. People were going crazy. From two Facebook posts, I got 384 people who requested to test the product.

Erin: No way.

Philippe: Yeah. Actually normally a post on those groups used to have 50 comments, but I had nearly 200 comments on each group. So we were like, "Okay."

Erin: So what did you do next? You know now that the idea has been validated. What's the next step?

Philippe: At that moment when, when I get such an amazing result on Facebook group and Facebook groups, Marc, my little brother and Elie decided to join me on this project. It was at this moment because they see the reactions and they feel that there is something.

Philippe: So at that moment we didn't know what our product had to do. What did our targeted customers expect from this tool? Cashflow management was a non-pain for us. We had everything to discover about it. So the next step was to talk with all these people. And this is the scariest step because you have to talk to people for real.

Erin: I'm so glad that you mentioned this because I would also think that this is the scariest step. You have to go out and talk to strangers and probably get rejected a lot.

Philippe: Yeah.

Erin: So how did you... And I also wanted to just to step back for a second. You said that you basically had to learn what the problem was, right? You saw your dad experiencing the problem, you kind of knew what the problem was, but you didn't know what would solve it.

Erin: This is interesting to me because a lot of startup founders, as I think we just talked about a little bit ago, they're solving for their own problem.

Philippe: Yeah.

Erin: But here you're solving for someone else's problem. And so you decided to take the time to understand what that problem actually is.

Erin: This reminds me of something that I've heard in the past around product creation, which is you either pick a product and figure out who will buy it or you pick a type of person and design a solution for a problem they have. And it sounds like you went with the second one.

Philippe: Yep.

Erin: You picked the type of person who's a business founder and one of their main problems is cashflow. And so you and your team decide to build a tool to help them with that. So I just kind of wanted to wrap that up a little more tightly. But next I'm really interested in learning how you got all these people to talk to you.

Philippe: Yes. So basically I created a simple email and message template to start chatting with those business funders.

Erin: Through Facebook?

Philippe: Yes. Some of them actually commented with their email address so I could directly email them, but the majority of people just commented. So yes, it was through messenger, Facebook messenger and I manually sent it to them.

Erin: 384 manual messages?

Philippe: Yeah. Actually, I really wanted to keep things personal and human at this stage to get honest answers and insights, and that's why I didn't automate this.

Erin: And how long did it take you to kind of cycle through almost 400 people?

Philippe: It lasted for one month and a half. All summer, actually.

Erin: Looking back on it, do you think that that was the way to go? Was that a useful exercise?

Philippe: Yeah. Yeah. And if I have to do it again, I will definitely do it again because it was a great way to get a sharp understanding of the pain points, the weakness of the current solutions and the desired outcomes people expect when they manage their cashflow. This step was truly incredible.

Philippe: One thing I want to highlight is we didn't build RocketChart. Those people created it. We got the idea, then our potential customers created the product they would love to use based on this idea.

Erin: So from your communications with almost 400 people, the two main things you wanted to know from them were: what is not working with the current solutions and what do you need instead?

Philippe: Yeah.

Erin: And when they told you those two things, you are able to construct a product that kind of is a customized response to what they told you. Is that right?

Philippe: Yes, that's right. I have one example in mind that is quite interesting to illustrate these points. On RocketChart, you can directly connect your bank accounts and all your transactions are automatically pulled in your dashboard like QuickBooks.

Philippe: So at first, we have never thought about this. At the beginning we thought users would import CSV files with all their transactions to generate the dashboards and it's really laborious.

Erin: Yeah.

Philippe: And while talking to a business funder about how he handles his cash management, he mentioned banking APIs and we have never heard about these APIs. But one thing is for sure now, it took our product to the next level. We would never be there without talking to those people.

Erin: I also was wondering, did you get any early commitments from any of the people you were talking to actually subscribe or buy RocketChart? Did you have those conversations at that time?

Philippe: Yeah, so not at the beginning but after like one month talking to them we get a sharp understanding of what we had to do and we built the landing page and it was a great way to see it. They like signups. We put a "Get Early Access" button to get early signups and we connected Zapier to a Google Sheets to capture those signups.

Erin: So you have the landing page, you have the early-access signup button. People I'm assuming are clicking on the button. They want to try it. Can you talk to us a little bit about pricing? We don't have to talk about specifics necessarily, but I was just curious how your team approached pricing. For example, how do you know how much to charge?

Philippe: Regarding pricing, I got a really interesting talk with a business funder during summer and he still helps us a bit when we have questions. And basically, at the beginning of his company, he was charging like $10 a month for the SaaS.

Philippe: It brings a lot of trouble, like he gets a lot of people who signed up and it generated many supports and actually it wasn't profitable at all for him. And one thing he told me is that it's better to have 10 customers paying $100 a month than 1,000 customers paying $10 a month. You will have more focus to satisfy those customers and the feedback those users make will be far more accurate than feedback from a user who is ready to pay $10. If a competitor sets a price at $9, then he will switch to the competitor. And he advised me to set the pricing like three times more than you think.

Erin: Really?

Philippe: Yeah. So at the beginning we thought like, "Okay, let's make a pricing at like $39 a month for our tool and we just raised our price three times more than that. And at the beginning, our pricing was based on the annual turnover of the company. To make it simple now, we just have one plan which is $99 a month. So if I have any advice on this, it's always set your pricing way, way higher than you think.

Erin: I would also think that the fact that RocketChart is selling products to businesses, you could also charge more because it's a business expense and at least in America, it can be written off for taxes.

Philippe: Yes. It's not the case in France, but yes, for the US, it works well.

Erin: We've talked a lot about everything leading up to the launch. Has RocketChart launched yet? Is it in Beta?

Philippe: Yep. We launched the Beta in early December. I was very ashamed by our Beta. It didn't do what we were saying to anyone. Like it did only 10% of what users expected. We launched because we wanted to get feedback as early as possible and confirm the products with our potential users.

Philippe: And the ultimate goal of the Beta was to figure out how to make RocketChart a must have, not a nice to have.

Erin: It's really interesting... How to make your product a must have and not a nice to have.

Philippe: Yeah. To keep users on your product, it has to be a must have and not a nice to have. Otherwise, they will just churn and you will not bring them back.

Erin: What else did you learn from launching the Beta?

Philippe: The first thing thing we learned was to test, test, test and retest again. And by testing, I mean test what you are doing with the sample, then iterate and then go global. To explain this, I will not take an example from the Beta, but from the step just before when we were gathering Beta signups. It's one of our failed stories.

Philippe: As I explained previously, we had a basic form on the website to capture signups, Beta signups. And we set Zapier to synchronize it on a spreadsheet but because we didn't have a backend at that moment.

Philippe: So we tested the flow and everything was working well. The next day I sent the landing page to people and thanks to Hotjar. I saw a recording of someone who signed up and I was crazy, like it was our first signup and that immediately jumped on the Google Sheet to review the information and surprise... Nothing.

Erin: Uh-oh.

Philippe: Yeah. And it turned out our Zapier went off and why? Because we were on a free trial at this moment-

Erin: Oh my gosh.

Philippe: And we had access to all premium features of Zapier and we set up the Zap with one of those premium features. And the day we launched our free trial ended and we didn't check our inbox in the morning and the Zap had been turned off. End of the game.

Erin: The lesson here is if it's critical to your business, you should pay for it.

Philippe: Yeah. And this is a story of how we lost our first ever sign up.

Erin: You managed to bounce back.

Philippe: Yeah. Yeah, yeah.

Erin: Did you eventually get a spreadsheet full of people who wanted to try your Beta?

Philippe: Yeah, we basically, we had like 150 Beta signups and so as you mentioned at the beginning, I wrote an article about our journey and thanks to this article we get like a 50 or 60 more signups. So it's quite a good number as you know, to read as a Beta to avoid like a mass of users, et cetera. And actually, we only onboarded like 25 beta testers at the beginning.

Erin: So you have a whole bunch of people who want to try the product, but you're only letting them have access in groups of maybe 20 or so? Why are you doing that?

Philippe: I decided to make the Beta onboarding in person. I mean I tried to sit next to the user when he first logged in RocketChart to see like how used the product, how we interacted with it, et cetera. And this way I was contributing the human and personal touch we are so attached to. So it was an awesome way to get incredible insights.

Philippe: After like 30 or 40 demos and onboarding beta testers, we found out a common pattern about feature requests and we knew what we had to work on to deliver enough value. So we stopped the Beta in early January and started to work on the next release of the product.

Erin: Okay. So it sounds like you're actually using these smaller groups of beta testers effectively to make the product better. So rather than letting all 150 or 220 people use it early on, you're trying to use this larger group of people, cut them down into smaller groups and then use these groups to actually make the product better.

Philippe: Yep. Exactly.

Erin: How do you kind of manage all of these people? I'm assuming that some of the people who sign up for the Beta are going to become what we call power users. Some of them maybe won't ever use the product at all. How do you manage all of that and categorize the customers?

Philippe: I should have done it since the beginning. It was one of the things I wanted to highlight is that as I explained, I talked to like more than 300 business funders and it was really hard to get a clear picture of what every personnel would need for the product. We had SaaS product funders, restaurant owners and retail store managers and it was awesome.

Philippe: But needs and desired outcomes are really different from one type of business to another. This is what we did during the Beta. I decided to onboard only tech startup funders. We decided to focus on this personnel because you can't satisfy every people. And so this is one advice I want to give is that it's great to have many, many potential targets and personnel but you have to focus on one of them, I think, in order to make a product a must have.

Philippe: So this is what we are doing now, as we stopped the Beta in January. Actually the product we are building is made for tech startup funders for the moment and then in a few months, we will go the next vertical like hardware startup funders and then digital agency directors, et cetera.

Erin: What other advice would you like to give to our listeners?

Philippe: I think it's really hard to find early adopters and it's a necessity to have early adopters because they will test your beta, they will give you feedback and help you to deliver a high-value product. You have to identify them and maintain a great relationship with them. And I think a pool between like 20 or 40 early users is good enough to get a great product feedback.

Philippe: Actually, finding beta testers or early adopters is quite hard. And because you do know who they are and how to find them... It requires a lot of time and energy but if you have listened closely just to my advice before, you already have the solution.

Philippe: I mentioned the importance of talking to your potential customers to validate your idea, talking to your potential customers even before they are your customers is the best way to find your early adopters.

Philippe: It is one of the learnings we get through our journey at RocketChart. We didn't struggle to find early adopters because we had it since the beginning.

Erin: Right. Right. Because of the Facebook groups.

Philippe: Yeah, exactly. So know market need for the product. Make sure you're using early adopters to help you shape the product.

Erin: Is there anything else?

Philippe: Yeah, I think it's really, really important to define early the type of company you are building because nowadays, we are overwhelmed by press articles talking about how much money a company X has raised or that company Y is hiring 100 people. Some people think it's the only way to grow a company, like raising funds.

Philippe: It's true up to a point; it's easier to spend when it's not your cash. Regarding us, we don't want to raise money, at least for the moment. We don't want to hire people. We just want to run a profitable business, do it remotely and earn a living thanks to it. And this is it. And if we can stay the just the three of us, we are fine. And if you decided to go like in the easy back way, your company will never be the same than if you wanted to bootstrap your company.

Philippe: You have to think about what are your expectations in life. You should draw the line of what you want in life and align it with your business choices because your business will be part of your life whether you want it or not. And this is what I'm currently learning actually.

Erin: Got it. Yeah. I can imagine that as a co-founder, your life is the business and the business is your life and everything kind of flows in and around each other.

Philippe: Yeah.

Erin: The last thing I wanted to ask you... I know there's three of you, so there's you and your brother and then your friend Elie. Can you tell us a little bit about the role that each of you has and how you all work together?

Philippe: Elie is a software engineer. He is really good at backend and front end, but for a RocketChart, he's only doing like front-end part. So he's concerned with the website and the interface of the app. Marc, my brother, is focused on the backend.

Philippe: As I'm the only one full-time on RocketChart, I do all the other work. It means like talking to our users, to other business funders, to get tips and everything else. And Elie and Marc have a day job to pay bills. So they are working on RocketChart only during evenings and weekends.

Philippe: So we had to divide the workload. It was a great way to go fast and be reactive since the very first day. As they are working like as a side project if we can say so on RocketChart, I try to filter everything for Marc and Elie so that they can focus on what really matters, building the product as fast as possible. And I think it's one drawback of bootstrapping. You can't always go full time.

Erin: Well thank you so much Philippe, for everything you shared with us today. Was there any parting thoughts you wanted to leave us with?

Philippe: Yeah, so if people want to connect with me to chat or to ask questions, just add me on LinkedIn. I answer every message. So feel free to contact me if you want to share some tips or if you want to get tips or if you have questions.

Erin: Great, thank you. We'll be sure to put your LinkedIn profile in the notes for this show so people can find you easily.

Philippe: Perfect.

Erin: Thanks again, Philippe. This has been another episode of the Code[ish] podcast. I'm Erin saying goodbye for now.

Philippe: Have a good day. Bye.

About code[ish]

A podcast brought to you by the developer advocate team at Heroku, exploring code, technology, tools, tips, and the life of the developer.

Hosted by

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Erin Allard

Platform Support Engineer, Heroku

Erin is a Platform Support Engineer at Heroku and loves helping customers get their software projects and products out into the world.

With guests

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Philippe Vanderstigel

Co-founder, RocketChart

Philippe is the co-founder of RocketChart, a bootstrapped SaaS company. He mostly reads and writes about SaaS and bootstrapping, never about politics.

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