Saturday, May 7, 2011

A Hard Business Lesson Learned at Stir Trek

Yesterday I attended the Stir Trek developer conference. My company, Kellerman Software was the Refreshments sponsor. It was a fairly inexpensive advertising test, $500 for; a slick in the attendee bag, the company name on the website, a label on the popcorn bags, and the logo in the conference program. The graphics for the slick cost me $114, the slick printing cost $180, the labels $59, the label printing cost $22, and the popcorn bags $36. My wife and I spent two hours putting labels on popcorn bags on a Saturday (our time was considered free). All for a grand total of $911. The goal of the advertising was to get the attendees to purchase a $1400 product for only $99 (Ninja Database Ultimate). The end goal to acquire a new customer that would purchase other items in the future.

I watched people as they opened their attendee bags. I noticed that they did not look at any of the other sponsor material. When they saw the Kellerman Software slick, they read it and then put the attendee bag in their backpack or threw the attendee bag on the floor. I was excited to see that at least they had actually read the advertisement. I was hopeful at this point for a couple new customers from this conference.

When they received their popcorn, there were a bunch of people all at the same time, trying to scan the QR Code that I had put on the bag. Again I was excited about the prospect of new customers. This is what I heard from the row of seats that I was in and the row in front and behind me (they had no idea I was the Kellerman Software CEO):
* What is this thing on the bags?
* A $1400 product for only $99? This must be a joke.
* It probably cost the sponsor $1400 to put the labels on these popcorn bags.
* I can just use my database that I built.
* Ha ha, maybe you can sell your database for $600

I went on to tell the person in back row that the price wasn't a joke. I asked them if they thought it was a good deal. I told them I was the developer of the database. I could tell they were embarrassed at what they said and they replied with "Oh, great."

The person that was sitting next to me had developed a small database to save with JSON. He was upset with me and with Kellerman Software for selling a database. The only features that it had was CRUD. He went on and on about the performance. Of course with hardly any features the performance was high. There were no indexes, no foreign key relationships, no constraints, and no transactions. I guess that is fine if you are not writing a business application.

Clearly even though it is only the day after the conference, with reactions like that, I will not be selling a single license of Ninja Database Ultimate for $99. So was the $911 a complete waste of money? No. Why? Because of the lesson that I learned.

I thought it was maybe just me, the advertising, or maybe it was just too good of a deal. It was none of that. After lunch I heard a bunch of developers talking in disgust about the lunch presentation. Telerik had paid $2500 for the lunch sponsorship and the ability to give a 15 minute presentation. Telerik is a well respected control vendor that is in the top 10 in sales on component source. Here is what the attendees were saying:
* The lunch presentation was a waste
* Thank God the proctor in our room lowered the audio to 20%
* Phil is a good speaker but JustMock is clearly a rip off of Rhino Mocks
* Yeah, I bet if you use reflector you will just find Rhino Mocks in there

Hmmmm. So the reaction to a vendor that has just paid for their lunch is not gratitude but disgust? It is shocking that they accused a respected vendor of fraud. What is wrong with this picture? What is wrong with the attendees?

Most conference developers are business ignorant. The attendees, all software developers, have no idea about conference costs; nor should they. One CodeMash attendee said it best, "Wow these are pretty good buffets for only $110" It costs thousands of dollars to put on a conference. Without the sponsors it would be impossible to put them on.

Some developers believe all software should be free. A lot of the developers at these conferences are at the top of their game. They are always learning something new, they love open source projects, and have their own open source projects. There is a prevalent anti-commercial software attitude at these conferences.

Some developers are dishonest. Since the developers believe the software should be free they daily violate copyright laws by downloading pirated movies and running pirated software. I overheard one developer say recently that he had to start deleting movies from his 2 Terabyte Hard drive because it was filling up. One developer smirked as he said he was still "Evaluating" TestDriven.NET...forever. It doesn't stop at developers, IT managers are dishonest too; I have seen a lot of license violations over the years; a company buying a single developer Infragistics Suite license and using it for 10 developers, a company buying a single user license of Active Reports and using it with three developers. I still remember being laughed at when I told the other developers on my team that I bought WinZip to be honest. They continued to use the 30 day trial for months.

So some of the conference attendees, are business ignorant, dishonest, free loaders. So should this be my target audience? No! No! No! It took me 6 years to figure this out! Wow I feel so stupid just now connecting the dots. My business should target other companies and not developers. I should have known this from all my other advertising tests:
* Did the $10,000 I spent in print advertising work? Not a single person bought.
* Did the $2500 web advertisement on Code Project work? Not a single person bought.
* Did the $2000 SharpToolbox web advertisement work? Not a single person bought.
* Did the $2500 email advertisement on Code Project work? Not a single person bought.
* Did the $911 I spent at StirTrek work? Not a single person bought.
* Did Scott Hanselman's tweets work? Not a single person bought.

I asked one of the developers there if he was going to buy and he said "That is a $100 I don't have." The funny thing is he paid $35 to attend the conference and took the entire day off work to attend. I bet he gets paid more than $8.13 per hour.

Developers don't buy, companies do. Developers recommend but if you try to sell to them they are flat out angry. So with all this information I am going to change my strategy. I was originally intending to sponsor the local CONDG meeting and do some free give aways. The next goal was to sponsor and do give aways at all the INETA groups in North America. I can now see the reaction to that would not be gratefulness but disgust. Developers simply do not like being sold to at all.

Obviously the other control vendors in my industry haven't figured this out yet either as they are still ignorantly throwing money away by sponsoring these conferences. If someone from Telerik, Infragistics, or Component One is reading this, it would be best to stop throwing advertising into these conferences as it does not work. If you can, track sales for the conference; guaranteed it will be zero.

So you may still have the question in your mind. Is Ninja Database Ultimate really worth the $1400? No, actually it is worth $17,000. Over a period of 9 months I wrote 600 unit tests and paid a group of developers $17,000. Yeah, $99 for a $17,000 database is not that great of a deal.

Thus ends my rant. Thank you for allowing me to vent.

Comments?

#stirtrek @stirtrek

11 comments:

Joe Wirtley said...

Greg,

Just wanted to give you a little positive feedback. I noticed your ad in the Stir Trek material; it definitely stood out from the pack. So I took a look at your web site this morning to find out more about Ninja Database pro. And no, I haven't purchased yet, but I did learn about the product, which I had not heard about before this (and may not have heard about for a while if not for Stir Trek).

I am a little confused about something from your post, you say the offer is a $1,400 product for $99. Does that mean the $99 offer is for the site license? (Looks like the pro product is $199 on the site).

In the way of more positive feedback, as someone who helps with a user group, I appreciate sponsors and understand that they make our groups and events possible. You do get some good will when I see you are sponsoring events such as Stir Trek. Whether that good will is worth the amount of money and time you invested is a good business question to ask.

Joe

Greg Finzer said...

Joe,

I appreciate the feedback. If you scan in the QR Code from the popcorn bag or the slick, you get the Ninja Database Ultimate site license with source code and 2 years of free upgrades for $99. That was the secret deal for Stir Trek.

I can understand that the organizers are appreciative of the sponsors but I received the exact opposite reaction from the attendees where I was randomly sitting. It seems that the result of the sponsorship is bad will, not good will.

Thanks,
Greg

Maggie said...
This comment has been removed by the author.
Maggie said...

Greg,

I just went through the paperwork in the StirTrek bag this morning and read your flyer. It reminded me of a message I saw once in shareware about feeding the developers kids. It did not give me any clue what Ninja Database is. I've never heard of it and have no idea what it is still.

No one around me at the Thor screening had an app to decode the popcorn bags. So it was not until I read your post just now that I know what the offer was.

I must hang around a different crowd since I did not hear anyone complaining about sponsors at StirTrek or CodeMash. There was not a vendor session in the theater I ate lunch in so I was not aware of it but I would have been interested to see JustMock demo'd as that is the kind of tool developers will pay for - one that helps you develop software. I did attend and learn from vendor sessions at CodeMash. Databases are not tools for developers to purchase.

You are right that developers are not your customers though. All developers are not dishonest. I have bought licenses for UltraEdit several times as it is the best editor I've found and have no problem paying a fee to use it.

Personally I have never had a need to look into buying third party controls (I don't do much UI work) so those products don't really interest me, but I do appreciate that they sponsor our events and if I ever needed a control I would look to the names I am familiar with from the sponsoring first.

I am very happy that we have so many sponsors for conferences so we can have great learning experiences like StirTrek and CodeMash at affordable costs. I have not worked for a company that would send me to a high cost event like TechEd or VsLive.

Thank you for being a sponsor,

Maggie

Steve Horn said...

Greg,
I wouldn't be too discouraged.

I saw an ad for a ipod the other day...and still haven't purchased. Next time I scrounge up some cash I'm going to consider it.

Sometimes even if your initial advertising touch doesn't convert into a sale, it plants a seed. There probably aren't a ton of wp7 devs out there...yet. But if the time comes when they have a need, they might remember your product.

I've noticed similar attitudes in the developer community...heck I even catch myself with the "all software should be free" feeling. There are so many free tools out there that commercial products /really/ need to be far and away a superior product.

Good luck :)

Greg Finzer said...

Maggie,

You are a rare gem for purchasing Ultraedit. I have purchased CodeWright, MultiEdit, and TextPad in the past. I have heard good things about Ultraedit.

I guess we are talking about the same thing that developers do not directly buy. The sponsorship at conferences only does top of mind advertising. It is expensive to do that when you do not have a product that can be consumed multiple times like Coca Cola or Dominoes Pizza. Your thirsty and hungry several times a day but your need to do FTP over SSH at your company may come once in a blue moon.

Thanks,
Greg

Greg Finzer said...

Steve,

Even though Ninja Database Pro works with Windows Phone 7; most of my sales have been for the desktop. It is odd because I am competing really popular databases such as SQL Compact, VistaDb, and Sqlite. I guess once you start using Ninja Database Pro, you get it. No more creating databases, no more creating tables, no object relational mapping, no more creating primary keys, no more adding columns. All that stuff is automatic.

Thanks,
Greg

Jon Kruger said...

I remember something that I believe Mary Poppendieck said at CodeMash two years ago.

"If you didn't fail, you weren't trying hard enough."

I took this to heart when I heard it. Last year I was working on my own ventures just like you, in my case it was .NET TDD training. I came up with a plan and a strategy and put some time and effort into making it work. Turns out that my strategy didn't work. I sat down and rethought my strategy and came up with a new plan for this year, and it's going much better. But I don't know if I would've arrived at the new plan without the learning experience that I had last year.

It's really easy for developers at a conference who have never tried to do their own business venture (however small or large it might be) to poke fun at other people's attempts to do so, whether it's you or Telerik or anyone else. But you know what? You are the one actually trying to do something. They have done nothing. And you're going to be the one who makes the money.

I'm sure you've had your share of mistakes and failures in this process but you've probably had a lot of success too. But you probably knew that when you came up with the idea and started working on it. When I started working on my TDD training idea, I knew that it might not work, but I also knew that it could be really awesome if it did work. So even if it were to fail, it would still be worth it just to have the chance at the level of success that might come out of it. It's a calculated risk, just like your decision to build Ninja Database or sponsor something. Even if I fail at something, at least I'm not failing to try.

To me all that matters is that you have a good business plan and you are acting on it, and obviously people are buying your stuff because you are still doing it. I wouldn't worry about things you perceive as failures. Sometimes you have to get through the failures to get to success.

BTW, I wouldn't say that what you did was a failure. There will always be people who poke fun at things, but they're not your target audience. There probably were plenty of intelligent, respectful developers out there who will look into your stuff. I usually flip very quickly through the inserts in the conference bag without really reading them, but you had a really good insert. I read the entire thing. I've also learned that your SFTP tool does good asynchronous syncing, I learned that Ninja Database can be used for more than just WP7, and I went and read pretty much everything on your site about it (after browsing through the list of other products along the way). I don't need any of those tools now, but someday one of your tools might be exactly what I need, and now I know more about it.

Keep up the good work, and don't lose your confidence.

Greg Finzer said...

Jon,

Certainly I will keep trying, it is just selling to developers at conferences does not work. The important thing is measurement. Obviously with a QR Code and corresponding coupon code I can easily measure the sales results. Zero sales, zero results. You know as well as I do that when a need arises for a project, open source is looked at first and then commercial products by using Google or Bing. Even though a control vendor has advertized at StirTrek, CodeMash, Day of .NET, Mix, VS Live etc. personally I would look at the feature set and not be swayed by sponsorship.

You would be surprised at how often the 80/20 rule applies in business. 80% of the things you try will fail and 20% succeed. The products that you make, 80% will not sell and 20% do. The customers that you have 20% will give you 80% of the support tickets and questions. The advertising that is tried, 80% will fail and 20% will succeed. Business is not for the faint of heart. You will fail 80% of the time. The key is to fail fast so that you can succeed fast.

Thanks,
Greg

James Bender said...

Hey Greg,

I think you are right about a few things here.

You are right; most developers I know do not buy software themselves. In reference to the gentleman who made the "that's $100 I don't have comment" we prefer to spend our money on attending conference where we get to interact with other developers. I'm not saying this is right or wrong; it just "is."

Many developers have "a say" in what their companies choose. The problem is "a say" is a subjective term running the gamut from "I decide" to "I have no say at all." But, as you know, developers can be known for throwing world class temper tantrums when companies buy software or tools that they don't like (Lotus Notes ring any bells here?)

Because of that, it's important to get your name out there in front of developers. Get them used to you. Get them familiar with you. Make sure that they know "Kellerman" software is really "Greg." That will help quite a bit.

Another idea (one I kinda stole from Telerik) is to perhaps offer free (not evaluation) versions of your tools. You can scale these back to be just enough to give the developer something useful that they feel good about using in their application today, but not so fully featured that they wont ever have a motive to buy the full version. An easy, cool way to deliver these would help too. Maybe you could offer these as nuget packages?

Open source is preferred by a lot of developers, but not because they are anti-capitalism. Most of these guys draw paychecks, so that can't be it. I chose a lot of open source or free versions because not having to buy software frees up that money to do things like go to Stir Trek.

With respect to the guys slagging Telerik at lunch, you are always going to have people like this. They are the vocal minority. Ignore them. They are not interested in what you are selling and trying to win them over (at this stage) is a waste of time.

With respect to why companies like Telerik and Component One and others spend that money, it's because it does work. Those companies would not do it if it didn't. The difference between those companies and yours is that they have a staff of highly-skilled marketing people who do nothing but work on marketing all day, every day. As developers we tend to make fun of these folks, but marketing is a skill that is not necessarily easy to learn or do. With all due respect, your primary skill set does not include marketing. I'm not saying I, or anyone commenting here would do better. Maybe the solution is to find someone with a marketing background and get some advice or mentoring.

Anyway just some thoughts. For what it's worth I think you and Kellerman are doing cool things. I hope you'll reconsider sponsoring CONDG, but I understand if you are not interested right now.

J

Greg Finzer said...

James,

First of all, let me say how impressed I am that you started and FINISHED your book on TDD. Whether it succeeds or fails, you did something. And it of course can be used in marketing for future ventures and presentations, "Hi I am James Bender, and I literally wrote the book on TDD."

Great suggestion on the free lite versions of products. I have personally seen that work from a consumer point of view. On my day job, they had the free version of Team City and they had to buy once they reached the limit. Kellerman Software does have free products, but they are unrelated to the paid products. This has the effect of drawing people to the site but rarely resulting in conversions.

I am hearing a lot of people on this blog, plus twitter, and email saying that it is just important to get your name out there. I am working on that, but now I will do it using free advertising.

I do have a paid marketing consultant, he is expensive but he is worth it.

P.S. Kellerman Software isn't just "Greg" anymore; I have several developers, a BA, a graphic artist, and a personal assistant.

Greg