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It’s Paul.

 

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It’s Florin. What are we grinding today?

 

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Well, Florin, definitely today we’re not grinding specialty coffee because since it’s a crisis, we don’t have money anymore for specialty coffee. So previous out of it. So if in the previous episodes we were actually grinding specialty coffee before episodes, today we grinded just regular coffee.

 

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We couldn’t even grind coffee. So if we’re going to be fully transparent here, like other people from the cyber portal, we’re going to say that we just actually got ourselves a cup of coffee down at the corner and it cost almost one dollars.

 

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And this is not because we are running out of money, but because during.

 

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A crisis we wanted to support the.

 

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Local entrepreneurs and you pay attention to your spending or your costs. Now, Florence, I think it’s worth discussing in this episode a little bit. If you’re a startup nowadays, during these times, what do you do? Are there some advice? I don’t know. Do you, for example, how to say, put your startup on autopilot? You make sure that your ads budgets are having access to your credit card and you go on the beach and you relax and you stay away of all the problems until the crisis is over.

 

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I know that we keep joking, so as the episode dropped, we kept joking and stuff, but that’s a very good question, the one about autopilot. So while in usual and normal times you can leave things on autopilot and do other things, you can no longer do that during the crisis because all of your metrics are wrong. Nothing that you repeated last month can be repeated this month and it won’t be able to be repeated next month. And you can’t actually repeat things from one week to the other. So you got to keep improving, keep implementing, keep looking at what you’re doing. And nothing can be on autopilot, not even your drip campaigns that you keep sending on and on. They also need to be changed to address the new market conditions. And nothing will work as it used to work.

 

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Sorry, we’ll continue on this, but I think there might be listeners who ask themselves a drip campaign?

 

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Yeah, so drip campaign is what’s called a drip email marketing campaign, the full name of it. And it’s where you have a couple of people who signed up somewhere and you keep sending emails to them in a sequence of emails. And usually when you have a winning sequence of emails, you keep sending that on and on to all the new people who come and join your audience.

 

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Okay, so basically, from what you said, it’s pretty important during these times to keep an eye on them, to make adjustments here and there. So you make sure that they are working or still working.

 

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Yes, because most probably they are not going to be working anymore. So it’s like it always is, right? You need to keep changing your product, adapting even if you’re not having, like, a product, you’re offering a service. You need to keep adapting what you’re telling people, because communication doesn’t work as well as it used to work. And people are stressed about a lot of different things and a lot of different subjects like nuclear war, threats and others, and they will not be as receptive as they used to be. So if you had the conversion of 3%, you’re not going to have that conversion anymore. And if you want to get that conversion back, you need to keep putting in hours and keep putting it work to make it work. And maybe you need to change your offer, maybe you need to change your product, maybe you need to change your branding. You could be doing a lot of different things to get a 3% conversion back, but you will not keep having a 3% conversion on your automated campaigns anymore.

 

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I was laughing because when you said they are worried about nuclear wars, I wanted to say or the $8 or how is it now?

 

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The Twitter checkmark. Yeah. That’s people’s greatest concern these days. Oh, man. I mean, we’re doing startup espresso. We don’t have a Blue check mark, and if we’re going to get a Blue check mark, we’re going to end free speech forever. So we don’t want to do that.

 

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But you can buy us a few coffee so that we can buy coffee and not the Blue check mark.

 

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Yeah, please sponsor us so we can buy coffee from Square Mile again from London. And if we don’t do that, at least buy us an army of Twitter bots so we may sponsor this podcast and promote this podcast like all the other cool kids that are currently doing on Twitter.

 

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Now, getting back on track, let’s say my emails are not converting as they were before.

 

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I am certain that if you had emails, they will not be converting as it did before. I’m 100% certain of this.

 

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Okay, do I drop them completely? Do I shift to lead them? Do I?

 

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You can. You can do that if you replace them with something else.

 

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Okay. But I think it wouldn’t be the most best thing to actually delete them because there might be nothing wrong with them. But the fact that the things are as they are nowadays, it impacts them, definitely. And it might be that, I don’t know, in a few months, in a year, I don’t know when this will end, they will work again. So probably, I don’t know, an idea would be that’s a good idea or a new one. Pause them. Exactly. Experiment with them from time to time.

 

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Yeah, that’s a good idea. Basically, you could pause your existing campaigns and try new campaigns during the times of crisis, and then when the crisis is over, go back to your previous campaigns.

 

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Yeah, because I think this is like a trap in which quite a few are falling because you might even see, for example, churn rates increasing. And you say that there are some issues with your product, which might be because, I don’t know, for example, you did something, you annoyed your client and the turn rate increased. But it might be that because they’re cutting costs, your product might be one of them.

 

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Yes. So Churn rates definitely at the schooling company, we have quite a few products and we are seeing a lot of churn, and in most cases, it doesn’t have anything to do with the product. So if we got stressed and panicked over this, we would try and invest more in making changes and we would be using the budget for something that can’t be won. It’s inevitable that you will have Churn. Now, the good news is that once the financial crisis is over, many of those people who churn right now will come back to you, especially if you keep a very active line of communication with them and you’re actually awesome to them. You keep doing great things for them via email, social media, wherever you’re communicating. If you’re using your phone, just keep calling them, keep doing what you’re doing, because when the crisis is over, they’re going to come back to you and they will still keep ignoring your competitors. So that’s one thing to do. You will see the churn coming back, so don’t get too panicked over it. Now, I guess in crisis mode, it’s a lot harder to build a product when you don’t have a stable product because you will not understand what’s going on with Churn.

 

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And that’s why you need to invest a lot of your time in talking to customers, which you don’t usually have to do yourself as a founder, especially if you’ve got like a huge company and you’ve got other people handling this kind of stuff. But now it’s a good moment to actually get back in those trenches and talk to people because you might learn that it has nothing to do with your product, with your current pricing. They’re just shutting down their businesses and they can no longer afford to buy from you, or they’ve been laid off and they can no longer purchase because they have more pressing concerns regarding their finance.

 

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Actually, it’s interesting. So you basically said that it might be hard to build a new product, but I was thinking in the same time that it might be a great opportunity, because you might give it for free to your early adopters because they don’t have money enough to spend on your competition. And they could help you with advice, with feedback, improving the product.

 

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That’s true. I was just talking about churn, so you can test Churn and you can make decisions based on Churn.

 

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Okay, I wanted to clarify this a little bit so that we don’t get misunderstood on this part.

 

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Yeah. And I think there’s a lot of conversation that can be had around this topic. Maybe you guys are going to go to startup espresso Live. Maybe you’re going to go in the main menu and click on the Facebook Group and let’s have a conversation inside the Facebook Group for entrepreneurs because it’s very interesting. Like you have people like Andrew Chan who is like a really smart dude in the startup area who’s been writing essays on a lot of things that made a lot of sense and they’re still applyable today, which is very interesting because not a lot of entrepreneurs can say that they’ve written something and still good today. And one of his things was to actually cut some of the marketing spend where it makes sense and develop something new. Because then when the crisis is over, you’re going to have something new to sell and it’s going to be a new line of revenue for your business. And then you’re going to easily get back on track, which is a lot smarter to do than to keep spending money on ads, for example. I mean, of course it depends from business to business, but it’s one avenue to build a product.

 

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Now, as I’ve said, the problem with building a new product during these times is that you cannot test churn and even if you’re going to have very low conversion rates for your paid product, it may not be that the paid product has something wrong with it. It may be, as I said, businesses are shutting down, clients are being laid off, they don’t have money to spend with you anymore. And the other part, the ones who still have some money, maybe they don’t want to spend on what you’re offering, not because they don’t need it, but because they’re currently buying shares in Amazon because they have such low price and it’s a great time to make investments if you have a lot of cash laying around.

 

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Hopefully you’re not buying bitcoin now.

 

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Yeah.

 

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Dutch Coin Disclaimer this is my personal opinion only. Now, Florin, you said that yes, you might cut costs from marketing, for example, but let’s think a little bit. Is there any way, for example, for me to still making good marketing or trying a few other things regarding marketing that maybe help me but at the same time reduce my cost? I don’t know. For example, social media. Can I use it in a way in which it will help me with the sales, with being still present?

 

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Yes. So social media will definitely help you prove that you’re still active. So a lot of people are now looking at companies and they’re saying that they’re having financial troubles. So if you haven’t gotten a new investment to generate buzz around your startup, then a lot of people might think that you’ve already gone out of business. Now, if you managed to use social media to make, I don’t know, a new giveaway, to make some games for the community, to offer something to different communities on the web, then those people, your main audience, that you haven’t converted to clients yet, they will still see that you’re still being active, and they will want to do something with your business. So either promote it or start buying something from you or discussing with you about anything or offering you feedback. So a lot of things that you can still use.

 

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Actually regarding this part we’re discussing with you, I think that would be nice if, for example, you or some of your employees or your cofounders are just going in, I don’t know, different groups on Facebook and giving advice based on their expertise.

 

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Yeah, you should do that. If it’s brandable.

 

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Yeah, definitely. As a brand I would say so. Not from your personal account?

 

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Not from personal accounts.

 

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Because using your brand, people are not.

 

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Really going to remember you. And that’s like the most honest way to say it.

 

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No, and I think this is a valuable advice that you give in here, which I took it for granted that when you do this, you do it from the brand account and not from your personal account. Because in the end you want to promote the brand.

 

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The only way, I guess you could actually do it from like a personal account. It doesn’t seem very branded in the case where people, if they hear your advice, they instantly go and DM you, they direct message you. So that can happen. I’ve seen industries where this can happen. You go in with your personal account if it’s looking good, you don’t have weird pictures on your profile and you have something that’s more professional. More professional, kind of like an industry influencer, a thought leader. If you have something like that, people will trust you, they will believe you and then it will message you and you will actually be able to make a sale from that interaction. So that’s even better than going and promoting landing pages or blog posts or thought pieces where you then convert them via email and they join your audience or you use retargeting pixels or stuff like that. So it may be valuable. And even from a personal interaction you may obtain leads who then bring new business to you.

 

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The only thing to take in consideration when you do this is that it will take a lot of time because you need to reply to those persons engaging conversations. So that takes time.

 

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Exactly. And you need to be active. So if you dropped your sales skills for a while, this is a good time to pick back on your sales skills.

 

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Any other ways of using social media, for example? I don’t know. Would you spend more on ads on social media? I know you said in the beginning of the episode, but no.

 

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So I would go to Education Cloud plus I would create a free account and there I would place the code called DM ten K to learn all about using hashtags on social media and also social media communities in such a way that I will be able to promote my message and not get banned from the groups. So there are very clear strategies, very clear ways in which you can make people actually engaged and love the content that you post without the content looking spammy or annoying whatsoever.

 

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So basically, I think, if I’m saying correctly, this is a course that will teach you how to use social media without blowing your budgets.

 

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Definitely it’s going to be basically your time. So it’s going to be free, especially if your time doesn’t make a lot of money right now. There’s not a lot of cost of opportunity is the perfect time to actually invest in doing something yourself because that.

 

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Will give you results.

 

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Yeah, that will give you results and that’s what you need. So even though they’re not the best results, it’s still better than destroying the runway that you still have fear.

 

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You said at some point that maybe it’s harder for you to take investment or you don’t have enough money still secured or something like that. Now, the reality is that actually it’s quite harder to take investment nowadays.

 

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Yes. So I’ve learned pretty recently about something called discounted cash flow. And that thing works against you during times of crisis because any respectable VC, when they invest, they are going to place discounted cash flow on the sheet when they make the investment. So usually that’s a percentage and it takes into account the financial downturn and the financial problems of the time and of the years during which the investment is supposed to bring a return. And if that return is, I don’t know, they expect to make ten X the size of the investment in ten years during financial crisis. And it’s very clear to everybody by now that we are doing a financial downturn and that it’s going to keep going down through 2023. They’re going to have like a very big modifier there. And with that modifier taken into account, they will basically expect in ten years, not a ten X return. Maybe it will be an eleven, maybe it will be a twelve, maybe it will be a 15 X return. And if they actually place your next investments, your next rounds or your next payments for the investment, and they make metrics that you need to reach or goals that you need to reach and they place this into your contract, you’re going to be in a very bad position.

 

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So you read a lot of Star News like somebody got an investment of $20 million, they didn’t get $20 million in the first day. So they’ve had multiple milestones that they needed to reach. And if they factor the discounted cash flow into this, then you’re maybe not going to be able to hit those milestones and the whole investment will fail. So it’s a lot more dangerous for you as a funder to take the investment.

 

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Yes. I think it’s even more important to keep an eye on the cost and on the cash flow.

 

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Yeah. And during these times, you actually need to be certain that you’re going to make that return happen because it’s not as free floating money as it used to be until now.

 

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Yeah. And I think you can also pay a little bit of attention, for example, of your development costs or I don’t know, seeing, for example, if the servers that you’re using are costing way too much for basically your current usage because probably you won’t grow at the same pace as before. So you might reduce it to be this. Now, regarding the cost with the development, I think you can keep an eye on basically the features which are not the most interesting or the most used and maybe now even more cut from there. I don’t say that you need to do this during times like this, but nowadays even more. And actually we’re seeing something interesting. A few days ago when we discussed about features like this, you even had a name for them.

 

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Yeah, I was just thinking about the dogs. So you’re going to have features that are basically dogs, so they’re not helping you grow right now. They’re not producing a lot of money right now, and they might do something in the future, but you’re not certain. So that’s when those features that you’re currently trying to do, they are just dogs and you need to quit investing in them. So if you have something that currently generates a lot of money, keep that on the table. Milk the cow as much as you can. If you have something that you think will grow, you can still spend money on it if it keeps driving growth, but not as much money as you do on your cash cow because you currently need cash and that’s what you’re missing. So in normal times, you wouldn’t really care about the dogs because maybe, you know, sometimes maybe something comes out of that serendipity, all of that stuff. Sometimes just by experimenting a lot, you become lucky and you find a new feature that’s going to drive most of your growth. Maybe you make a spin off, maybe you make a new product.

 

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You can do a lot of things with the dogs and that can be done. We’ve done it countless times at the squirrel company and we’re very lucky to be able to keep experimenting. And that’s how we kept growing and reaching the point where we are today. Because without doing that, we would have died a long time ago. But during times of crisis, you only need to care about the cash cow. Keep investing in that, making sure that that keeps working perfectly. Do any tweaks you need to do to the cash cow and then focus a little bit on growth. And if you have something that seems really nice and in the future, will grow really well and you’re super excited about it, just pause it for a while and start doing that only after the crisis is over. So you need something that’s certain and that’s right now, it doesn’t mean that you need to change other things. Like you don’t want to reduce the amount of time you spend on branding because branding is long term, you don’t have to destroy that just for the short term. But in terms of features, the features that would be really cool in the future, maybe not invest in them right now, because now you need something else.

 

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But keep in mind that it’s good to stick to your roadmap and to the features which are important because you don’t want in a year from now to actually have a product which is bringing no added value anymore. It’s still the same product because you just milk that cup.

 

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Yeah, that’s why I’m saying that you need to think about the features that are bringing growth at the moment.

 

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I think this is very important, something to keep in mind, who would bring.

 

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Growth, something that is already bringing growth and just really focus on that.

 

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Yeah. And also I think it’s really nice because you also said about experimenting, to try to experiment with different things in your product to see if something might increase conversion or help you with sales inside your product. For example, it can be, I don’t know, a nice offer which is not intrusive and all these kind of small experiments that you can do without affecting the user experience.

 

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Yes, and there’s a very good way to do that. We’ve done this on Education Cloud Plus quite a lot of times now, and it worked in getting us Premium Pass members to actually pay for Education Cloud Plus to get access to all the courses inside. And how we’ve done this is we didn’t go and say we have this great offer, come and join Premium Pass now, it’s the best price you’ll ever get and none of that stuff. So we just offered immense value in the emails. The emails got the users to the platform, they logged in or they signed up, they had their free accounts and while they were playing around with their free accounts and the information we provided via email, they saw an offer which they could click to go and buy. And it was very non intrusive. All of the marketing and communication was made for helpful stuff. And once they entered the platform, they could see something that’s very small and if they want, they click it, if they don’t want, they don’t click it. It’s that easy. They’re not being pushed for a sale. And that actually generates great sales even during times of crisis.

 

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Because if you get somebody from their email, from their inbox and you say you need to spend money, they’re going to be like, I don’t need to spend money. The inflation is huge I’ve got all of these problems in my business. I’ve got all these problems at home. I need to think about electrical energy and gas for my home during the winter. So there’s a lot of things that I need to take into account. I can spend money on what you’re offering, but if you show the value first, they understand that there’s value and they could get even more value by going after something that’s discounted. Then maybe they will take you up on the offer or not.

 

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Because even if it’s not an offer, at that moment, you can just basically allowing them to purchase the premium subscription because they saw enough value and they decided that I want to upgrade my account. So I have an easy way to do this from the product.

 

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Yeah, so what we’re trying to suggest here is maybe instead of doing only sales emails and sales events and product launch formulas, they love product launch formulas, but maybe they don’t have a place in the market right now because nobody gets excited about new sales because they don’t like sales at the moment. You can do things that boost your monthly active users. You get a lot more people in to your free accounts, especially because most of you are doing a lot of apps where you also have a free plan or membership sites and you can get everybody into the accounts and then they get a lot of value and then they remember, oh yeah, I actually want to buy this. So this is actually really cool. And you’re going to stand out from all of the other desperate marketers who are targeting people’s inboxes because they need to make cash and you’re going to break through the noise and you’re going to drive people to your app, which is always great, and they might decide.

 

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To buy, I think, Florida in the end. We need to not forget the fact that you need to provide value, because if you will provide value, your users will stay with you. And I think that in these times, the ones that were great at marketing without providing value will see things going back. I love it if you provide enough value, I think you won’t have.

 

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Right. So I really love the direction that this conversation is going because this is exactly it. So people will want to see you during these times. They want to see that you haven’t gone out of business. So you need to keep engaging them. Now, instead of being desperate about obtaining sales, you can do what we’ve suggested earlier or you can do things that are enchanting. We have a thing called Enchant where we try to enchant the audiences and we think about Taylor Swift and I feel enchanted to meet you and all of that. But the thing is that this has been the biggest driver of growth since the financial downturn started because instead of going after sales, we kept providing price drops. Games giveaways a lot of gamification, a lot of great things to our audience. And our audience said, well, these guys have helped me during these very hard times, so let’s see what they are offering at the moment.

 

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Will we added this and cut you when you sing or not?

 

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No, I have a great voice. I think that Tayte would totally love to have stage with her.

 

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Okay. Yeah. So basically, I think this is something.

 

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We play her song during every meeting that we have on the Enchant segment, so she’s a very important person.

 

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I think. I’m getting older, but yeah, I think that if you provide value, you won’t have so much of a big issue as if you’re not. Because if until now, people were not really careful where they were spending money, now they might be and they actually are.

 

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Yeah. As people, we have lots of different problems every single day due to the financial downturn and everything else that comes along with it, and that determines the financial downturn. So when we see that there’s just a bunch of people going after our money, we’re not really happy about it, are we? But if we see that somebody still keeps offering value and we keep engaging with their emails, they become top of mind and they can’t lose the top of mind. Even though the invasion still continues and more wars are about to start at the moment, and even if those things are happening, we still care about the people who are currently trying to provide value, and they’re doing their best to help us, and we will never forget them. So this is interesting to see, because if you’re the guy who just pops up and just tries selling, selling, selling, selling, we will instantly forget you. No matter who you are, we will forget you. And you’re going to become completely relevant. When people are going to see your emails in their inboxes your ads, on Facebook, your messages on social media, they’re going to instantly disconnect.

 

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But if you can keep providing value and finding new ways to provide value during these times, you’re going to make money during the crisis and after the crisis is over, a lot of the people who churned right now, they’re going to come back to you.

 

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And I think Florian wants a musical career because he was beating the drums also. So if you hear something, florian trying to do drums while he sings.

 

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Yeah, I used to be a drummer, so yeah. Bad habits.

 

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Florence, anything else that you think we should tackle? Because I think there was quite some good information here and I think it would be really nice to see what our listeners are also doing now. So I think their tips or their advice on the Facebook Group, I think.

 

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They should go to startup espresso Live. They should go and click on the Facebook Group and join us in a conversation to. See how many of them are doing ads, how many are trying to acquire new users, how many are trying to reactivate older users, and how many of them are still engaging in constant conversations with their audiences. So I think it’s going to be interesting for everybody to see and for everybody to talk about this, so that all of us, as a community of startup founders and entrepreneurs, can learn more about options for our businesses.

 

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So drop your messages and start conversations or reply to conversations on the Facebook group. And until next time, drink good coffee. But even more.

 

🐿️

Yeah, let’s grant better coffee.

 

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Next time, pay attention to your startup and invest the time in it. See you next time. See you next.