Startup Spark

11 Questions With Micro ISV Owner Stephane Grenier

by Ben Yoskovitz on February 20th, 2007

Stephane Grenier, like most small business owners and software developers, wears many hats and loves every minute of it. (Truth be told, I didn’t ask him if there was anything he didn’t like about his business, maybe he’ll comment on that…) Still, I’m dubbing Stephane, “Mr. Enthusiasm.” Stephane runs his own, small software company (a MicroISV) called landlordMAX, which is a property management software application.

You’ll get a lot out of this interview. Stephane’s been around the block, he’s tried a lot, he’s motivated and dedicated. If you’re thinking of starting your own business this interview might just push you over that edge…

INTERVIEW HIGHLIGHTS

• Stephane points out beautifully that you need to look at the total lifetime value of a customer to your business, not just today’s sale. I see this forgotten so often by people it’s incredible. If you get this, and you get the value in your current customers as easier revenue (among other things) versus new customers, you’re on the right path.
• When talking about helping his customers, Stephane smartly says, “…you never know who you’re helping. They may not turn out to be your best customer, but they may turn out to be your best referrer.” If that doesn’t smack you in the face as being very, very smart, I don’t know what will.
• Stephane is candid about how he does things. This is something I’m seeing a lot of with other MicroISV owners including Andrey Butov and Patrick McKenzie. I particularly like Stephane’s take on technical support and why he doesn’t charge for it.
• Stephane understands what it takes to be an entrepreneur. When I ask him about competition, he hits the nail on the head. When I ask him about what it takes to start a business he demonstrates incredible passion. You’ll have to read the interview to see what he says.
• Something I haven’t heard any other entrepreneur really say which intrigued me was that Stephane likes to take credit. Of course, he takes the good and bad credit, but he enjoys taking that credit - and to me, this speaks in part to the need for a healthy ego as an entrepreneur.

THE INTERVIEW

1. Please provide us with a brief, personal history and how you started your own software company/MicroISV?

I’ve always been trying to start companies since I can remember. LandlordMax was not the first, but it’s my most successful one so far. The difference between LandlordMax and all my other endeavors is that I really pushed hard for this one, I mean I really gave it everything I had! Success was the only option, I just couldn’t afford for it not to succeed.

I started LandlordMax as an alternative to getting another job. To make a long story short, about 4-5 years ago I was working for a company in Los Angeles building some very exciting software. Things were going well but at some point “black Monday” (at least that’s what we called it) reared its little head (this was about 2003) where our company decided to pull the plug on our project and downsize the team drastically from about a dozen people to me and another person. Needless to say, this was no longer a safe job by any means, so me and my wife decided to leave LA (we’d been there for 3 years) and move back home to start our own company. Why wasn’t failure an option? Because when we moved back home, I was going to start a company full time and not look for employment. I was going to go for it!

It just so happened that at about the same time a good friend of mine who had just bought a triplex suggested that there wasn’t any good property management software applications out there, at least none that was worth replacing his MS Excel spreadsheet. So taking that idea, I started to work on LandlordMax. Originally it was meant to be a replacement for MS Excel, but with time it grew into much much more. I’d say now about half our customers are property management companies, with the other half being private investors (we even have one city, one bank, and several colleges using it.) The largest portfolio that I personally know of consists of over 600 units. That’s a lot of properties if you start to consider the dollar amounts going through the accounting part of the application.

2. Do you work full-time on your MicroISV?

Yes and no. This is a loaded question. I generally put in full-time hours, but they’re not the normal 9-5 hours.

3. Do you work alone? Do you outsource anything, and if so why do you do so?

I definitely have some help! Initially the company was just me, especially the first year or so when I wrote it. After that, it had to grow, there’s just no way I could do everything by myself. I’ve had to hire a graphic artist, developers, marketing, etc. I don’t generally keep people employed if I can, I much prefer to outsource on a contract basis. I’ve found this model has worked better for me.

4. I noticed on the Contact page of your website it says, “All support requests are guaranteed to be responded to within 1-2 business days of submission.” Do any customers ever comment on that?

That’s an interesting question. Most of our customer feedback has been overwhelmingly positive as you can see from our success page. One person even suggested that the quality of our support alone is worth the price of the software. I guess what I’m trying to say is that we rarely, if ever, get any negative feedback on our support because we almost always answer on the same business day. I’d rather under-promise and over-deliver than the other way around. I also just added the 1-2 days as a buffer should we ever find ourselves getting overwhelmed during the peak season (the week before everyone’s taxes are due for example.)

How important is customer service to the success of your business?

Extremely! Our customer service has an amazing reputation. Originally we wanted to be know as the “Easiest” property management software. If you’ve ever read the 22 Immutable Laws of Marketing, the author suggests that you can only own one word in the minds of your customers. We wanted that word to be “Easiest”.

At least that’s how we started. I believe we still own the word “Easiest” because we get a lot of extremely positive feedback about this. But what’s been interesting is that a large percentage of our feedback is also about how good our customer service is. We’ve received a lot of referrals just because of our customer service. I don’t post every comment we get on our success / testimonials page, but I can tell you a lot of people are impressed and have taken notice, it’s been incredibly viral!

Additionally, one of my personal beliefs with dealing with customers is that you can’t just look at today’s sale, but at the total lifetime value of the customer to your business. If someone is happy with your software and your service, they will continue to purchase upgrades. Now as we all know, customer acquisition costs are much higher than renewals, therefore it’s often very much worth the extra effort to help your customers.

As well you never know who you’re helping. They may not turn out to be your best customer, but they may turn out to be your best referrer. For example, when I was living in LA, I met a good dentist that I referred a lot of people to. Before I left, he mentioned to me that he had never fully realized the power of referrals. He had gotten so much business from my direct referrals that he basically offered me any type of dental work for free before I left! From treating me well (without knowing if I would refer anyone or not) he got so much business that even he couldn’t believe it himself. If you want other very similar examples of the power of referrals, a really good book is called The Tipping Point.

5. What differentiates your product from the competition? How closely do you follow the competition?

Quite a few things. Firstly we’re the “Easiest”. This is our #1 differentiator. For those of you who aren’t familiar with this market space, most of the our competitors are just simply difficult to use. For example with one software I was playing with when I was originally looking at market viability, without naming names, I couldn’t even enter in a tenant and building. I’m a software engineer and I couldn’t even do this! Talk about a non-intuitive user interface. They may have all the best features, but if no one can use them, then what’s the point? So right from the start LandlordMax was designed to be extremely easy to use.

Second, we don’t charge for technical support. Almost all our competitors do. Actually many software businesses do. I really don’t like this business model because it’s a conflict of interest. Think about where the incentives are… If you can get your customers to call you, you make more money. In this case is it in your best interest to design a really easy to use software? Not really… Not only that, but talk about a way to really frustrate your customers. In their darkest hour, when you can be a shining light you become this little sinister person that will only help them for money because your software is not working as they expected (the key here is “as they expected”). I’d rather be seen as a hero than an enemy, especially when it comes to the total value of our customers.

Another major differentiator is that most of our competitors adjust the price based on the number of units you enter within the software. So in essence, they basically throttle back the software unless you pay more. Much like the old IBM mainframes where you had to pay a higher price to flip the switch and get more processing power. It doesn’t cost these companies anything more to throttle up the software, well maybe some lost revenues. But at the end of the day, we get a lot of customers coming to us because of this. They might have a smaller real estate portfolio and expect to grow, or they have so many units that any other software would cost multiple of our price just because of the number of units. Or they may have a lot of turnover in their properties and therefore need to keep track of a lot of properties for a short amount of time. Think about it this way, imagine if Microsoft Word charged you by the document. It just doesn’t work for me so I won’t force it upon my customers either.

As for how closely do we follow the competition, very little these days. When I initially started LandlordMax, I did some substantial research on the competitors. But these days, we’re generally just trying to beat ourselves. That’s the hardest never-ending game. It’s also the most fulfilling.

Why don’t we look at the competition? Firstly, all our features are suggestions from our current customers. We really pride ourselves in listening to what our customers say, and trust me we do listen. I’d say about 90+% of all new features in every version since the initial version are customer requests. We obviously can’t implement every request, but the more a feature is requested the more likely it will go into the software. By doing this, we don’t really need to study our competitors. As well, how do we know if their listening to their customers?

6. I want to start a MicroISV tomorrow. What’s the first thing you’d tell me to do?

Are you willing to do what it takes? This is not a sprint. It will take time and effort.

The most common thing I see with new entrepreneurs, no matter what the business, is that they start off sprinting and fade quickly. To give an analogy with going to the health club, everyone starts with the best of intentions going almost everyday, but within 2-3 months, only a very small percentage still continue going to the gym. The same is true in business. Many budding entrepreneurs go right at it, spend all their time on their business for the first 1-3 weeks. Then it starts to fade down. Maybe it’s that barbecue at your friend’s house, the Super Bowl party, whatever, there’s always something. Suddenly they’re no longer working every day but rather 1 day a week until it eventually vanishes completely.

Running a business is not a race, it’s a marathon. Pace yourself, keep at it. These things take time. Expect to make a lot of mistakes, I know I sure did. I can tell you of many examples where I lost time and money trying things that didn’t work out as expected (many are listed on my blog FollowSteph.com.)

In that respect, don’t start a business if you’re not willing to follow through. It might be possible, but I just don’t think you can start a business working 1 hour a night and a few hours on the weekends. I just don’t see it, but I’d love to be proven wrong here. It takes time, and you have to be willing to commit. As Robert Kiyosaki (the author of Rich Dad Poor Dad) said, you won’t be able to succeed unless you set your priorities. Now I’m not saying neglect your family and friends, not at all, but rather that you should expect to make some sacrifices if you really want to succeed. For example, I no longer watch sports because I use that time to work on my company. You have to set your priorities.

Another thing I often see is people looking at the final product first. They don’t want to go to market until they get the ultimate product. The reality is that it’s often impossible to get it all perfect the first time. Plus you probably can’t bankroll yourself that long! So look at what’s the minimum set of features your product needs to start selling. Do that first and then expand. This doesn’t mean write buggy software, it means look at the minimum feature set first.

To give you an example, the very first version of LandlordMax didn’t have the concept of Landlord’s (property owners). I skipped this initial concept because it would have delayed the release of version 1.00 by another several months. It would have been great to have, and it would have expanded the demographic I could sell to, but without this I could still sell it to private real estate investors (not property management companies at that time). So the first version of LandlordMax didn’t offer the ability to save Landlords. This was of course quickly added within a few months with version 1.02, where it really opened up the software, but it also gave me an additional few months of revenue to bootstrap the company! On top of that, I got a lot of feedback from customers on the software that wouldn’t have be possible otherwise.

Invest in yourself. I can’t tell you how often I’ve heard people who think they have great ideas but are not willing to put any of their own money down against it, not even a couple hundred dollars. If you don’t believe in yourself enough to invest a couple hundred dollars, why should I invest anything in you (even my time)? You’ve just told me you don’t believe in yourself so neither will I! But stepping back a minute, expect it’s going to cost something to start a business. If you’re serious, invest in yourself. With that same token, I generally suggest that you first start with an idea that you can self fund (bootstrap). Yes you might be able to get investors, but it will be a lot harder. I generally hear things like “I had this great idea but no one would fund me” (maybe its not the idea, maybe it’s the fact that you won’t invest in yourself). Either way, that’s not a valid excuse, start smaller.

Don’t be afraid to try things. You will fail at many things. So what? That’s all part of the game. Try things. Get rid of what doesn’t work and keep what works. For example, we tried an in-house affiliate program with LandlordMax. It worked OK, but it was very expensive to manage in terms of the time it took. We’ve therefore moved this program to a third party service that takes care of it all for us. We recently tried phone support (free phone support) for several months and discovered it didn’t work for us (which I wrote about in detail on FollowSteph.com).

This leads me into analysis paralysis. Too many people have it. As you get use to running a business, you realize that there’s no way any one person can always come up with all the right answers. At some point, you can only look at so much information before you need to make a decision. So make one. Going somewhere is better than not moving at all, even if it’s sometimes not fully in the right direction. Get inertia on your side, start making decisions. Don’t dwell too much on the bad decisions of the past. Once you’ve learned your lesson, move on. Keep moving. If you don’t move, you won’t get anywhere. And I can guarantee you that you’ll end up someplace different than you expected. It will be just as great, if not greater, but it will be slightly off. It’s impossible to predict the future accurately.

And lastly, and most important of all, EXECUTE!!! I can’t say this enough. Most people talk a great game, very few do anything past talking. Execution is key! My favorite example is when people tell me “I thought of that years ago, if only I had…”. Well the reality is that ideas are a dime a dozen, it’s the execution that’s hard. Very few people execute. Why? Because this is where all the effort and hard work go. It’s the hard road. Execution is key! Stop thinking about it and get on it!

7. What marketing techniques do you use, and how would you rank their effectiveness?

What marketing techniques haven’t I used is probably a better question. Since I’ve started I’ve read more marketing and sales books than I even knew existed! There’s a lot of information out there. What I personally found is that you have to try everything and keep what works. It’s different from business to business, and sometimes even within the same niche market!

For LandlordMax, I generally run tests on effectiveness and keep what works and what doesn’t. For example, Google Adwords is fairly effective for us. My blog FollowSteph.com also drives a lot of traffic and sales for LandlordMax. Press releases work to some degree. Google organic search ranking works great. Word of mouth is phenomenal! Probably our best avenue but also the least intentional (also the hardest to generate). I consider great technical support a marketing device. The large effort we put on making LandlordMax easy to use is another marketing device.

After that our marketing techniques continually change. For example I’ve given seminars, written press releases, been published, tried banner ads, word ads, affiliate programs, etc. You name it. Each has their own effectiveness. As a personal preference, I like marketing techniques that scale quickly, are automated, and are cost effective.

8. How effective is your blog as a marketing tool? Do you find a lot of customers read it and comment, or is it mostly there for SEO purposes/organic traffic?

Very effective! But to be effective you have to be honest. Talk about the good AND THE BAD! I’ve mentioned in several places on the blog where and how I’ve made mistakes. It’s important to show good and bad, not just good. Personalize it. Give your company a story (a real story, not a fictional one), a life to it. People like to read stories so tell them what’s going on. Give your readers a sneak peak of what’s coming. Create a community. Give them something for reading your blog.

As I just mentioned, a blog is a great way to personalize your company. Show what you’re made of. If you look at Joel On Software, I find that a lot of people will look at FogBugz because they like what he has to say. If you believe in the people behind the product, you’re more likely to buy that product. You won’t be able to please 100% of the people, but what you’ll be able to do is let people know you and how you go about doing business. And people will do business with people they can trust and respect.

As for how many customers read it and comment, I honestly don’t know. Is it there mostly for SEO and traffic purposes? Initially it started as a way to grow traffic, but now it’s more my way to communicate about LandlordMax and everything I’ve learned. Originally I talked mainly about real estate because I wanted to attract the main demographic, but as time went on I noticed the topics were becoming more and more about running a business, and LandlordMax in particular. Overall these days I no longer look at it as a traffic generation tool, but more as a way for people to understand who and what we’re about.

In case you’re interested, I now measure the traffic on FollowSteph.com in the tens of thousands of unique visitors per month. I haven’t broken a hundred thousand unique in a month, but I’m sure it can’t be that far off.

9. Break down a typical day for us.

There is no such thing as a typical day when you run a business… There’s not even a typical week. On average I spend at least 1-3 hours responding to support questions myself. Depending on where in the business cycle we are, I might be developing code, I might be running a marketing/sales campaign, revamping the website, planning for the future, etc. It’s always changing based on what’s the highest priority right now.

10. Why don’t you have a lot of information on yourself and your background on your blog and website? Is that done on purpose?

Yes this is done on purpose. It’s not that I’m trying to hide as much as I value my security. After having read the issues that Darren Rowse faced with his blog Problogger.net, I’ve decided to add a layer of security because you never know in today’s day and age. I’ve never had any issues because I treat people with respect, even if I might not agree. But even so, you never know… So it’s just an extra safety measure.

11. What’s the best thing about running a MicroISV, and what does the future hold for you?

What’s not the best thing? Honestly it’s great! Yes it’s a lot more work than a normal job. But you know what, the rewards are also a lot bigger. It’s not just about the money, because there’s definitely a monetary aspect behind it, but it’s much more. I think the easiest way I can describe it is as the world’s best job. You’re the boss, you choose the direction, you move forward. You decide just how well it will be executed. And the reward is proportional to what you put in. It’s not someone else who will decide if you will advance in your career or get that raise (or bonus), you decide.

Another great aspect that I really love is that you get to take credit. It’s a double edged sword because you need to take the good AND bad credit, but it’s great to be able to take a lot of the credit!

What does the future hold? A lot! We’ve already got this year and next year planned out. For example, in one of my last blog entries on FollowSteph I talked about looking at a Mac version of LandlordMax. I also want to add a browser based version of LandlordMax before year end but we’ll see if that doesn’t get pushed to 2008. We’re also looking to add many new and exciting features within the software. Whether or not this will all happen is another story, but that’s our goal. If you don’t push (i.e. execute), you won’t get anywhere. My personal philosophy is that I’d rather attempt to travel around the world and only get 50% of the way there than to try to travel across town and make it there with some time to spare. The higher and more audacious your goals, the farther you’ll get in absolute terms!

Conclusion

A huge thank you to Stephane Grenier for this interview. I think it’s our biggest, richest and most diverse interview to-date, and I very much appreciate the time Stephane took to answer my questions.

For more information on Stephane and his adventures as a software entrepreneur, check out his blog at FollowSteph. It’s got a ton of content that’s great for software developers, MicroISV owners and entrepreneurs in general.

Tags: Customer Service, Entrepreneur Interviews, Entrepreneurship, landlord-max, landlordmax, micro-isv, microisv, small-business, software, stephane-grenier, technology

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