Hyperion

I got my first check for $3000 today (an annual subscription for one customer). A few more will be coming in the next few weeks. Feels good after investing so much time and money into this thing. Why do non-profits love writing checks? I gave them the PayPal option but no one took it.

We arrived on the first day of the conference to find out that internet access for the booths wasn't free, and would cost something absurd, like a hundred dollars a day. I set up my phone as a mobile hotspot and hoped for the best (it ended up working fine).

We set up the laptop, connected a monitor, set up the banner and table-sign, filled the bowl with candy, and tried to look professional. I was 26 and self-conscious about meeting many of my potential customers in-person for the first time. Would they think I was too young?

When manning a booth you have to do a few things simultaneously: You have to be friendly. You have to try to figure out what sort of person you're talking to (are they just curious and browsing or actually a potential customer?). You have to answer their questions and get them interested in the product. And, most importantly, you have to remember to write down who you talked to so that you can follow-up after the conference. I failed miserably on that last task for the first four or five people who approached the booth.

If you really want to be a booth-pro, then you should learn to juggle the attendees, giving each person a minute or two before politely disengaging and moving on to the next person. I didn't get the hang of this during the conference. It's harder than it sounds!

The booths were placed near the food, which meant that manning them was feast or famine. We would go hours without talking to anyone and then be stormed by three groups at once before lunch.

I'm also fairly introverted and as the days wore on it became harder to stay friendly and engaged. Thankfully, the friend I invited really came through. She not only picked up the slack but actively brought people over to the booth and made friends with everyone.

We really only had 26 potential customers in Florida. Most of them were at the conference, although I was already talking to six of them. I had three goals for the conference: First, to make sure everyone in the state knew Hyperion was an option so anyone desperate for a solution could make the switch. Second, start becoming a fixture of the Florida homelessness space (to help pick up skeptics in a few years). Third, to meet with a couple organizations that were interested but not sold on Hyperion.

There was a talk in the conference titled, "Digital PIT Collection: Tackling Homelessness One Data Point At A Time," and it was being given by a company! Not the main competitor I already knew about, but a new one I hadn't heard of yet). One of the first things I did was to wander over to their booth, introduce myself, and ask for more information about their company and product. I learned that they did have a product that they were positioning as a solution to the PIT count -- similar to Hyperion. I couldn't keep a self-conscious smile off of my face.

My friend told me that while I was gone and she was returning from the bathroom, she caught the guy from their booth leering over ours and snooping through our material. It was kind of funny -- he avoided eye-contact for the rest of the conference. He could have just asked!

The first day of the conference was slow, and so I went to a few of the talks. I was still new to the homelessness field and wanted to learn. The latter two days I stuck to the booth, thinking my time was better spent there.

I made an exception for one talk: the competing company's. Theirs happened the day before mine. Multiple people told me that the talks were supposed to be vender-neutral, but unlike my joint talk with THHI, this company would be giving a talk alone. Would they really stay vendor-neutral?

I was in a tricky spot. The stated purpose of my talk with THHI was their experience hiring a software contractor (us) to build something for them. It was not about Hyperion (the product I was there to sell). To do this ethically, I probably shouldn't even mention that I had a product. But if this competitor made the whole talk about theirs, would I really take the high road?

We never found out because they behaved impeccably. They spoke in generalities about "digitizing the PIT count" and even refused to answer specific questions about their product. Respect. So I took the high road as well.

I was nervous about the talk, but it went well enough.

After the conference was over, we had six new leads. Less than I hoped for, but I still suspected it was worth going. I wouldn't really know until I followed up.

I was invited by THHI, the organization we built software for in 2019, to give a joint presentation at the Florida Coalition for the Homeless Conference. I started the business to learn and grow -- so I would have gone regardless -- but I also knew that it would be a great opportunity to introduce Hyperion to potential customers.

I could also exhibit at the conference, but it would be expensive. I hadn’t made up my mind whether or not to exhibit when I met with one of my possible customers and he gave me some context: at this conference, three or four presentations happen simultaneously, and so I couldn’t rely on all my potential customers being at my presentation. What’s more, the ones that did attend would need a way to find me after the talk, and so he recommended becoming an exhibitor. I agreed.

I hadn't ever attended a conference or a tradeshow, so I bought and read a book called Trade Show in a Day and approached the handful of people I knew with conference/trade show experience, asking for advice. I learned a lot. I didn’t know you had to worry about getting electricity for the booth, a table cloth for the table, or extension cords. I just assumed you could show up and it would all be easy. Why would they make it so hard on the exhibitors? I think part of the problem is that it's a complex marketplace with attendees, exhibitors, conference-throwers, and the hotels where the conferences are held. We didn't have free electricity or wifi, but I think that was at the discretion of the hotel, and not actually up to the good people at the Florida Coalition for the Homeless.

I bought a 34” x 81” banner with Hyperion’s logo and tagline for about $130, some business cards, and a small table sign to hold the business cards.

I met with THHI to go over our talk. The topic was their success hiring us in 2019 -- not Hyperion (the new product). What’s more, the conference had a neutrality policy for the presenters, so it wasn’t totally clear whether I could even mention that I had a product during the talk. Good thing I had a booth.

I hired my friend to attend the conference with me. I knew that -- at a minimum -- I would need someone to man the booth while I was giving the presentation, but she also had a lot of tradeshow experience that I knew would come in handy.

I brought my laptop and a monitor to demo the admin dashboard, and she brought an extra phone to demo the volunteer site.

I bought an ad in the conference brochure for a couple hundred bucks. It was another several hundred for the booth (which came with a ticket), a few hundred for another ticket, a few hundred more for little expenses for the conference (e.g. an extension cord, candy to encourage people to visit the booth), and another few hundred for the marketing material. Once you add lodging for both of us for three days (an Airbnb with two bedrooms, much cheaper than the conference hotel) and paying my friend for her time, it ended up being about $2500 for the conference. With my pricing, a single customer paying for a single year would make me my money back.

While discussing the conference with THHI, we looked at the conference website. It had a list of the talks for that year. That’s when we saw it: a talk titled, “Digital PIT Collection: Tackling Homelessness One Data Point At A Time.” It wasn’t our presentation.

Was there seriously another company creating PIT count software in Florida? Sort of, but I would only learn the full story at the conference.

Once I decided to offer a generous free trial, the next step was to figure out the pricing. I was hoping to postpone the decision as long as possible, but this proved to be unrealistic. Potential customers (understandably) wanted to know what the pricing would be in future years. Even if Hyperion was free for the 2020 PIT count, they would still need to spend time getting acquainted with the software and training their volunteers. They didn’t want to do all that if they would then be priced out of using it in future years.

I didn’t want the lack of a price to keep people from trying the software, so I had to come up with one.

A lot goes into pricing. When you price your product above or below competitors you’re making a statement about the value of your product relative to theirs. This change is magnified when the difference in price is dramatic (2x or 1/2x the price).

When it comes to software, another thing to consider is the “cost” of the status quo. How much time or money are they saving when using your product compared to nothing at all? How much more revenue will they generate? There’s a strong status quo bias. You will need to build something 10x better than the status quo to get people to switch — not 2x or 3x. Many software products never take off because Excel works well enough.

Another consideration: how many customers do you want to have? If you want (for instance) a million in yearly recurring revenue, then you can do that in a few different ways. You could have 100,000 people pay you $10/year, or 1000 pay you $1000/year, or 100 pay $10,000/year. If you’re targeting mice ($100/year), then you better have a lot of potential customers, an economical way to reach them, and a streamlined onboarding process. If you’re targeting elephants ($100,000/year), then expect a long, high-touch sales process.

I started by looking at my major competitor’s pricing. It wasn’t posted on their website, but through several customer conversations (that I was having anyway) I collected a few data points.

I heard that the pricing was based on Annual Renewal Demand (ARD): an industry-specific metric tied to the funding the organization received from the federal government. Larger organizations told me the base price for the software was on the order of .1% of ARD per year. Smaller organizations told me it was more like 1% of ARD per year. I also heard that many organizations paid dramatically more than that base price for custom features and support. Last, I heard that the larger organizations resented paying as much as they did, but felt trapped because they couldn’t go back to doing a PIT count by hand.

I decided to price Hyperion using a similar strategy as the competitor (based on ARD) -- pricing based on funding seemed reasonable and fair. I also decided to go cheaper. At the end of the day, I wanted my software to be affordable to all the organizations conducting the PIT count, and I didn’t want anyone to resent paying for it.

Ultimately, I used a three-tier pricing structure. 2k/year for the smallest organizations, 3k/year for most, and .07% of ARD for the largest. Based on what I saw, that would make Hyperion the cheaper option for organizations of any size. I also decided to make that price all-inclusive. I wasn’t going to charge organizations to implement features. If adding a feature was the correct decision for the product, then I would build it. If not, then I wouldn’t. I wasn’t doing the organizations a favor by adding a feature -- they were doing me a favor by telling me what they would like to see in the product.

Now that I had an MVP it was time to get more customers.

Calls were more time consuming than I expected, so I settled for cold email. It doesn't have a great conversion rate, but I didn't want that many customers the first year anyway.

I threw up a landing page, hired a friend to find the email addresses of the remaining 400 leads, and started brainstorming email subjects.

I used Hubspot, so I could see who opened my emails and who clicked on links.

A/B Testing

I started with 120 organizations on the West Coast, and chose 4 email subjects and a few email bodies for A/B testing.

Subjects

1. [name] - Make PIT Count Easier (39% open rate)
2. [name], Interested in Beta Testing New PIT Count Software (40% open rate)
3. [name], Quick Question (60% open rate)
4. [name] - Free PIT Count Software for 2020 (44% open rate)

The clear winner was #3.

Bodies

Body 1

Hi [name],

We’re launching our software for the PIT Count, Hyperion, in time for the 2020 PIT Count. Four organizations are on board to try it, would you like to be the fifth? It’s completely free for 2020.

If you'd like to learn more check out our website: www.pointintimecount.com

If you're interested or have any questions I'd love to hear from you!

Body 2

Hi [name],

The PIT Count can be error-prone and time-consuming. We built software that will make it easier and we're letting people use it for free for the 2020 PIT Count.

If you'd like to learn more check out our website: www.pointintimecount.com

If you're interested or have any questions I'd love to hear from you!

Thanks,

Body 3

Hi [name],

We built software specifically for the PIT Count, and we're letting people use it for free for the 2020 Count, so I thought I'd let you know about it in case you're interested.

You can watch a short video about it on our website www.pointintimecount.com.

If you're interested or have any questions I'd love to hear from you!

The response rates were all pretty similar here, and they were too low to really come to any conclusions. All got at least one response, and none got more than two.

The Results

I emailed the rest of the 400 potential customers with the highest performing subject and a slightly altered version of that last body. Almost everyone who opened the email or responded did so within 36 hours. In all, 32 responded (either directly to the email or by submitting a form on the website).

Those that responded weren't necessarily interested. Some asked to not be contacted again. Others said the price (in future years) was prohibitive. Some said they were interested but couldn't use it for the upcoming PIT count for one reason or another. A few stopped responding after a couple emails.

I set up a video conference with every organization who responded. Those generally went well and I learned more about the varied PIT count processes across the country.

Out of the 32 who responded, 8 became likely prospects.

I still had one more tactic to gain customers for the 2020 PIT count: an upcoming Florida-wide conference.

Free trials are tricky. If your product is good, then you want as many people to try it as possible. On the other hand, although some percentage of the people who try the product will convert to paying customers, many won't. You can fool yourself into thinking more people are interested in your product than actually are. You won't know whether you have a viable product or not until the trials are over.

With Hyperion, both the benefits and drawbacks were magnified. My customers are non-profits with tight budgets and I knew many purchases required approval from a board. Requiring a champion to go in front of a board and argue for an increase in the budget would be a major barrier to adoption.

On the other hand, because it was a software product used for a yearly event, offering a free trial would mean postponing income for a long time.

That said, because of the high-risk nature of the use-case, and because adopting the software would mean changing process and training hundreds of volunteers, I knew that if they used it for the first year it would be a significant sign of interest (and I would have some reason to think they would convert).

All in all, I decided to make it free for the first year. I won't really know how many customers will end up converting until the middle of next year, but I'm optimistic.

After I quit my job, I had two prospects. But because the PIT count is federally required, the US government maintains a public list of all organizations required to conduct it. That's how I initially discovered there were 400 potential customers.

I returned to the well and started with all the organizations in Florida (where I lived at the time). There were 26. I started with the smallest and started making cold calls. Most didn't answer the phone, and most that did gave me the run around. In the end, three were willing to talk to me. Two of the three were largely because of referrals from THHI the organization [I built the software for in 2019.

The director of one of the three really liked me and my vision for the software (at this point I had a small prototype), and he sent an email to all the organizations in Florida, recommending they take another look. This was completely out of the blue and not something I asked for. That led to two more interested organizations.

If we include THHI and the two organizations I met with earlier, we're up to eight promising leads.

I read The Mom Test and sat down (virtually for those not in Florida) with each of these prospects and asked them a bunch of questions. What was their current workflow? What would they like to see in the software? What problems were they looking to solve? I asked what they thought of my pricing, and how likely they were to use the software in 2020.

I learned a lot from these meetings. I spent the next few months fleshing out the prototype into an MVP. Once I was done, it was time to try to get more customers.

We knew people were interested, but we didn't have a product. We were both employed at this point and so we both spent our free time quickly throwing something together that would demonstrate the functionality we thought people would want. We used VueJS, Firebase, and Netlify.

I already wrote about the very beginning of Hyperion Data, but if it weren’t for a single email the adventure would have ended with contracting.

My partner and I got an email in May 2019 from someone at THHI, connecting us with a representative from Amazon. That representative was looking to help another non-profit digitize the Point In Time (PIT) count. They wanted to talk to us.

We told them that we were interested. I did some research before the meeting. It turns out about 400 organizations conduct the PIT count, many more than I would have thought. What's more, a company was already out there with a product specifically for the PIT count and they had about 50 of these organizations as customers! Unfortunately, their prices weren’t listed.

We met digitally with the representative from Amazon and (surprisingly) members from two different non-profits, both looking for software for the PIT count.

I used the meeting as an opportunity to learn more about their problem. Why not go with the existing product from the other company? What’s their current workflow? When would they need to decide what they would use for the 2020 PIT count? One of the non-profits was using the existing product, so I asked them how much they were paying. You can’t get information you don’t ask for.

We learned that many organizations were paying this company close to 15k per year, and that many were unhappy. They felt gouged by the prices but without any options. They were disappointed by the reliability of the product and the quality of the support.

After that meeting, I decided I would build a software product for the PIT count and try to sell it. I’d been saving money since the start of my career waiting for an opportunity. This looked like it.

It would be a lot of work. We didn’t own the source code that we built before, so this would be a new product from scratch. That previous product was tailored to that specific non-profit, anyway. To do this right, I would have to set up meetings with many potential customers to learn about the common problems and workflows around the PIT count.

I told my partner what I was thinking, and he agreed.

I scheduled follow-up meetings with both non-profits and about a month and a half later quit my job to start working on the product fulltime. First thing on the agenda: start talking to leads.