This is the second installment in the Startup Spending Guide series, where we are exploring how early-stage startups should spend their non-payroll money. In the first installment we defined “early-stage startup” and enumerated areas where early-stage startups need to spend money. In this installment we’re going to cover areas where free tools are not only available, but preferred. In the final installment we’ll cover areas where startups should not spend money despite common advice to the contrary.
When free is better than paid
Free is rarely better than paid. If you spend enough time watching people discuss new products on Product Hunt or Hacker News, it’s easy to see this sentiment echoed: People would rather pay a small amount of money for something they can count on than integrate something for free that may disappear in a few months.
For certain categories, though, a mature tool with an ample free tier and a clear path toward scaling your usage as you grow can not only be good enough, but preferred. Herein are the categories from which you should be using free products — and why.
The freebies you should be using
Website monitoring is one of those things that every website should have. Even if your product is “just a WordPress site” and you have no tech team, the last thing you want to do is find out that your site is down from Twitter. To solve this, check out something like StatusCake or Uptime Robot.
When things go bad, you’ll want to have a way to communicate the problem to your customers. With a quality product and an entry price of $29/month, something like StatusPage.io is a steal and totally worth it — but for a completely free option, just point status.[yoursite].com at Tumblr and use that to update people when your site is down. For more information on how to run your status page, check out our blog post on the topic.
Exceptions are what happens when things go wrong and you see pages like this. Lots of sites out there don’t have exception monitoring, and instead rely on users reporting issues. This is not how you build a successful product.
Your code has to live somewhere. GitHub is clearly the winner in this field, and if you’re developing any open-source software, having your repository on GitHub has become the status quo. For your private repositories, however, you need to pay. Instead, you can host your private repositories on Bitbucket or GitLab and save more than $300/year.
Customer relationship management (CRM)
This is going to get me in hot water with some folks out there, but my experience is that early-stage startups should not use traditional CRM software. Instead, use Trello, Streak or Google Sheets for CRM. The reason is relatively simple: In the early days, you don’t know enough about your sales cycles to warrant going all in on a tool.
You may start off closing a few monthly customers after weeks of negotiations, but after six months you may realize there is more money in simply offering your service as a self-service SaaS. In the beginning, use the flexibility these simple, free tools allow, pay attention to where efficiencies can be gained and once you step out of the “early-stage” go find a tool that really solves your needs.
In the early days, you might not have much usage of your product, and your incoming support tickets will be even lower — but that’s no excuse not to set up a great help-desk system. It’s easy to let tickets slip through the cracks when the volume goes up, but it’s just as easy to forget about a ticket when you’re not used to answering them. I made this mistake once, and it cost me a huge customer. Don’t repeat my mistakes.
A mature tool with an ample free tier and a clear path toward scaling your usage as you grow can not only be good enough, but preferred.
There are many great free tools out there for support. We like HelpScout because they not only offer a forever-free tier, but they also offer an in-app support widget called a “beacon,” which is very handy for giving users a way to contact you while they are using your website. As you grow, you can pay to host a Knowledge Base and manage multiple help inboxes.
I see lots of companies get overly concerned about data-driven marketing in the early days, but the hardest part of getting started with email marketing is getting into a rhythm of emailing your customers/subscribers regularly. Until you do that, it’s not worth spending money on more advanced products.
Whether you’re starting out announcing blog posts, sending updates to investors or notifying people of new features, MailChimp is the way to go. They offer up to 2,000 subscribers for free and have all the extras you’ll need, like open tracking and templating to give you the data to know when it’s time to graduate to something more mature.
Some kind of system to get customer feedback is a requirement; there is no shortage of tools out there, each with their own focus. For the founders, marketers, customer success managers and product managers out there, you might want to check out the behavior-driven-questions product that my company (Ramen) has created. In addition, you may also find success using Hotjar for heatmaps or Drift for in-app chat.
Social media management
From my experience, social media for an early-stage company is great for three things: showing off your culture, providing an outlet for customer support and — most importantly — simply showing you have a pulse.
Everyone thinks they need to get really serious about analytics and tracking so they can see how effective their social campaigns are going, but your mileage will vary greatly. Case in point: Ramen gets 5x the signups from comments we make on Disqus threads than we do from social posts.
With all this in mind, it’s key to use a social media management tool that does its job — sharing posts on social media — and gets out of your way. Buffer is that tool. The free tier lacks some of the analytics and bulk publishing functionality of more advanced tools, but for making sure your social media game is on point, it is the best place to start.
By “team communication” I mean group chat. There are established products like HipChat, and new products like the rocket ship that is Slack. I’m a huge fan of Slack for one reason: It lets me funnel different types of notifications to different channels, then fine-tune how I’m notified on a per-channel basis. In some channels (like #errors) I get notified on every message. In some channels (like #support) I get notified on every message until I’m taking a day off, then I can mute that channel for 24 hours. I’m sure other tools like HipChat have similar capabilities, and both offer substantial free tiers.
Until next time
That’s it for this installment of the Startup Spending Guide. The final part of this series will cover some common “gotchas” when it comes to spending money. Spoiler alert: It includes things like not spending money on that premium domain everyone is telling you is critical to your success.