Ken Vermeille is the CEO of Vermillion Sky, a mobile and app development company that helps startups and enterprises build products that people love to use. Ken shares how he went from a pre-med path to video game development and what he learned about SaaS Startups along the way.
How I Work, Episode 39 with Ken Vermeille (Vermillion Sky)
Ken sits down with Josh Becerra to share the strategies that are working and mistakes SaaS founders are making in the industry. He combines his entrepreneurial background and web development experience to provide SaaS success strategies. Listen now. Plus:
- Building for your audience rather than building to gain an audience
- How to layout your business plan: Lean Canvas 101
- Software development partners: red flags to look for when choosing a partner
Explore more content from leaders in the SaaS marketing community on our podcast. Or visit our blog to find more digital marketing tips and ideas.
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Transcription: How I Work, Episode 39 (Ken Vermeille)
Josh Becerra: Hi everybody, this is Josh Becerra from Augurian, another episode of How I Work. I’m joined by Ken Vermeille. Thanks for being here, Ken.
Ken Vermeille: Thank you, Josh, for introducing me. I’m super glad to be here.
Josh Becerra: Yeah, so a little background on Ken. He’s the CEO of Vermillion Sky, a mobile and app development company that helps startups and enterprises build products that people love to use. I think our listeners are gonna love this conversation because we’re gonna get into like what it takes to build SaaS and, you know, like what are some of the mistakes and things. But before we get into some of those questions, why don’t you just tell the listeners a little bit about your background? kind of computer science and the path you took to get to where you are today.
Ken Vermeille: Awesome. Thank you for that, Josh. So essentially, when I was five years old, my mom bought me a Nintendo. It’s the original Super Mario Nintendo with Duck Hunt. And as a five-year-old, I figured out how to put it together, how to plug everything in, and make everything work. I couldn’t beat Super Mario because I was, again, five. But
I enjoyed the process of playing games. I am in pre-med deciding to become a doctor. I’m sitting in a barber shop and I’m thinking like, is this really what I wanna do? And there was a magazine for a video game school, like hey, make video games and it’ll be awesome and change your life.
Josh Becerra: Yeah.
Ken Vermeille: So I decided to, I decided after like the most boring DNA lab ever. You know, like, what I mean, I remember we spent a week reading about It makes me so fascinated. And then it was time to actually do it. And it was such a big letdown. I just said, you know what? I’m just going to not.
Josh Becerra: Can’t do it. Can’t do it anymore.
Ken Vermeille: Yeah, I just ended up saying, look, I’ll go into psychology or whatever. But that’s not what ended up happening. I ended up going to that video game school, Folsom University, and I started on my path to making video games. During the time, I realized that the video game industry was not treating their employees amazingly, and I essentially decided to start a company of my own, clients,
Josh Becerra: Right.
Ken Vermeille: We made a couple of video games and then we realized that a lot of our clients were asking for websites to market the video game. And then from there, some clients asked, hey, do you make mobile games? And it’s pretty much the same thing to use. We were using the same software to use to build video games as they use mobile games. And we started doing that. And then from there, people started asking us for mobile applications. And then doing all of those things. So we did mobile games, mobile apps, and web applications. And what ended up happening was we started to see a trend of people coming in, having a super awesome idea. We had the technical expertise to build it. There was essentially nothing that we couldn’t do that wasn’t limited by the platform. do everything, their product would not be around anymore because their business failed.
So we spent a little bit of time thinking back like, you know, we worked on all these projects. Some people spend $1,500, $200,000 on building something.
Josh Becerra: It ends up not working.
Ken Vermeille: Exactly. It didn’t work, right? And it was nothing on the technical side of things. And we started to think like, okay, well, what is the process of building a business that actually works, right? And essentially they were kind of putting the cart before the horse by saying, “I have this awesome idea.I want to build this thing.” And they didn’t really have an audience. They didn’t have a following. And they would launch kind of just to the abyss
Josh Becerra: Build it and they will come.
Ken Vermeille: Yes. And so we thought the same thing, right? Because, you know, we’re not coming from the business world. We were artists, developers, data scientists before it was cool. Nothing is going to happen.
Josh Beccera: Yeah. I do think that founders kind of get themselves into that mindset of like, we just need to build stuff. And then if people aren’t using it, we just need to build more features because that’s what the problem is. And I do think that it has a lot more to do with like, your audience and figuring out what they actually want and need. I know that you are a big believer in like the lean canvas, right? And I think that’s like helping founders understand their business concept. And so do you want to tell the listeners a little bit about Lean Canvas, maybe some of its benefits and why you take founders through that?
Ken Vermeille: Absolutely. Yeah, every time we bring on a new client, we need to understand what their strategy, what their overall strategy is. Everybody, actually, everybody from the designers to the developers need to understand it, mainly because there are just micro decisions that happen on a day-to-day basis that if
We don’t know what the long-term strategy is, we’re gonna make the wrong decision. So what the Lean Canvas does, business plan. And it essentially allows us to figure out who the target market is, figure out your revenue source, the channels that you’re going to sell through. And it brings it together all in one place.
We do an exercise where we sit down with our founders. And actually, sometimes a lot of the time this works with established companies. And where we say, okay, you want all of these pieces and what it does is it starts to make ideas concrete. So they might have an idea of oh yeah we’re going to sell it to this audience because they generally like it right. But if they don’t actually know okay well how old is this person? You know where they would find you? What communities are they in? How are you going to even get too much, all this stuff kind of gets covered in that process. And there’s been plenty of times we’ve deterred founders from building something, even though it would work out for us, right? But we’ve deterred them from building something that would not work. And
Josh Becerra: Yeah.
Ken Vermeille: Instead we help them pivot to something that might not necessarily be what they wanted to build, but something that their audience wants.
Josh Becerra: Right. No, I love that. And like the coolest thing I think about Lean Canvas is that it’s like one page because, you know, previously it’s like getting the 60 page business plan and like all these things. And I do think that there are just certain pillars of what you need to understand about your business in order to make the investment in going ahead and building. You are almost like obligating founders who want to work with you to have those pillars like really well thought out and distilled down. I’m sure it makes projects a lot more successful.
Ken Vermeille: Yes, the interesting thing is we did initially think that the solution was the 60 page business plan. And we, there was a point where we were thinking, like, are we in the business of making business plans? Or are we in the business of building software?
So initially that was my thought. And before we even got to the lean canvas, there was a step before that, which is called the business model canvas. For the business model canvas, for established organizations who do have the 60 page business plan, who do have established customer data, who have all this stuff right there, they’re already making money and they can plug things in and make it work.
The other thing about planning on a page is that we don’t only just do one page or one iteration, we do multiple iterations of what the product could be and then we choose that’s what.
Josh Becerra: That’s interesting. That’s very cool. So having like the front row seat in watching kind of founders bring their ideas to the world and having some of that experience of like in the early days of just like, yeah, we can help you build that. And then you build something, spend a lot of money and it falls on its face. Like what would you say some of the biggest mistakes are that you see SaaS entrepreneurs making you’re working.
Ken Vermeille: There are a couple. The one that I’m starting to see a lot is, hey, this product already exists, therefore I can’t build it. Or, on the flip side, oh, this product does not exist and I should build it.
When a product does not exist, like at all, and I mean, I’m not saying like my product exists, but it doesn’t exist in this market. I mean, like this product does not exist at all.
Josh Becerra: The category doesn’t even exist.
Ken Vermeille: Exactly. There’s a high, there’s a reason why it’s either it’s unfeasible, it doesn’t make money, or it is a little bit impossible. And because of that, people will build something, they’ll just go into building something that doesn’t exist and it doesn’t work and you know, they’re kind of just storing money and there are times in where it does work, website, a founder choosing not to build something because it already does exist. They see a competitor or as they’re building their product, they’re trying to pivot and tweak their product to match this product that’s about to come out. To be honest, you should just ignore that the competitors exist and really focus on the problems of your customers. For example, if you look at CR customer relationship management software, there’s HubSpot, there’s all of those things and you know, me being a small business owner every week, I’m trying, I’m just, you know, trying one on and seeing which one fits because each of these different softwares, they cater to a specific set of problems.
And if they, and the actually super interesting thing is as my business grows, it might not make sense for me to use a copper CRM like hub spot. So there are all these factors that actually work in between software that has a lot of competition that you can just carve out your niche and work towards.
Josh Becerra: Yeah, one of my favorite examples is like jet.com, who a lot of people have never even heard of or whatever. But basically, they replicated what Amazon was doing when Amazon was only doing books and selling other things online. Amazon obviously has its hands in a lot of different parts of tech these days. But they took what Amazon was doing, and they replicated it, and they became the second to Amazon from a long way away, but then they got acquired by Walmart, right? So it’s like, you know, it’s not bad to be second best at times, right? So,
Ken Vermeille: Not at all.
Josh Becerra: So we’ve talked about some of the mistakes, right? Like not building something because it already exists or building some new category that like, man, you’re gonna have to really hustle and talk and understand what you’re doing. What about the successful founders that you’ve worked with? Are there like attributes or things that you see them doing that the people who are struggling aren’t doing?
Ken Vermeille: A successful founder will meet with their target market or their customers on a consistent basis.
Josh Becerra: Mm-hmm
Ken Vermeille: Successful founder is in the field talking to people, sometimes even handling customer service requests, and really is just embedded in the world of their clients’ problems. All software really does is it solves a problem for people. And that problem can change, solutions to that problem may come out. And it’s really important for the founder to be very, very embedded in the problem.
For instance, if somebody launches a SaaS application and they set it and forget it, another competitor will come, somebody who is within, who’s close to their customers, who’s building an audience with their customers and essentially eat their who is really on top of understanding the problem to the point where they can describe the problem right back to their customer, that’s the person that’s going to win.
A lot of the time, it does involve sitting down with people, going to trade shows, doing all of the hustler founder stuff, even giving talks and appearing on podcasts. And it also makes my job easier because that means I don’t have to do that for them.
Josh Becerra: Yeah, no, that’s great. And I think that like, there’s a lot of people who default to, you know, while we’re building software as a service. And so what we need to do is figure out like, what is our cost per acquisition? And how is it that we’re going to be able to build something that scales? And so they’re so focused on creating these like campaigns and outreach. you know, hit their goals. But what I hear you saying, and I think it’s very true, is while you might need to do some of those things, the real key to success is being belly to belly with your customer, understanding exactly what their wants and needs are, and building to help them fulfill those things. So
Ken Vermeille:: Yeah.
Josh Becerra: I love the distinction there.
Ken Vermeille: Absolutely. I like Belly to Belly because yeah, that’s exactly what needs to happen. And eventually, you know, the founder would not have to do that. Eventually you hire somebody who is doing that on the day to day.
But that person reports to you. And that person lets you know, hey, you know, chat, GBT for just released, right. We need to, we have to figure out, you know, why are people using and why are people excited about it right.
All of those insights cannot be automated. It has to be done by a person who is in the problem.
Josh Becerra: So, you know, one thing that I think a good question that I think the audience might be interested in is just, you know, you own a mobile app and development shop, and you’re providing these dev services to founders. I think that, you know, not all dev shops, not all are created equal. So like, do you have some advice that you would give to someone who’s trying to choose or are there any red flags that founders should look for when they are kind of vetting or doing their due diligence on software partners.
Ken Vermeille: Yes, there are well first we’ll talk about the red flags. So there is a tendency for Software development agencies to kind of just build whatever you want them to build right, even I fell into this trap and where somebody would say hey, I want to build terrible software and Look at our balance sheet and we said yes, we will build this terrible software for you.
Josh Becerra: We can do that.
Ken Vermeille: Yeah, exactly, right, but that’s that’s really just short-term thinking
Josh Becerra: Mm-hmm.
Ken Vermeille: We did a survey about a year ago of how software agencies do their sales, and a lot of them won’t spend the time with you to really understand what you’re trying to build. They’ll kind of push you into, okay, well, here’s a quote, it’s $400,000. overestimate and under deliver. And it’s mainly because software development is difficult. It’s really difficult to figure out how much something will cost and all that stuff. But one way to get around that is to spend time in a longer discovery process. Longer than it might make sense, right? So if you do like a two to four week discovery process If they’re willing to do a two to four week discovery process and where they’re understanding who you are, understanding who your customer is, working with you to make sure that you are going to get a return on your investment,
That is, if they choose not to do that, then that’s a red flag. So I don’t like to jump into these decisions and make them pretty lightly. Yes, you could look at portfolios. founders will come in and say, have you built something like this? Right? Have you built something exactly like what I want to build?
And generally speaking, 80% of software is just the same. And so if you like someone, if somebody says, hey, we built something and we could build the same thing like in a couple of minutes for you, in like two or three weeks for you, that you’ve seen that you’ve built something similar and they’re going to want to sell you on that very quickly. On the positive side, an agency that will spend time with you, that’s good, an agency that also has a focus on technical expertise.
Josh Becerra: Mm-hmm.
Ken Vermeille: It’s integrated and automated tests, we focus on making sure that the code is clean. We practice architecture clean code. And what that means is that our developers are able to write code. Our developers are able to expend less time and energy to get things done because we spend time testing and refining and tweaking and making it so that as we build, We also have a bunch of questions that may be quicker.
Josh Becerra: I feel like a piece of this is not only do you need to be comfortable with who you’re working with, understand their technical capabilities, make sure that they are building something so that it could potentially scale, not something that would have to get completely refactored a year from now because you’ve got 1,000 users and now your Amazon Web Services bill is like through the roof because like it’s completely held together with duct tape on the back end. Right. So like there are decisions that, if they’re made correctly very early on, they’re going to benefit you over the long term.
Ken Vermeille: Absolutely. And a note to that Amazon services build, there have been plenty of times that we’ve, you know, we’ve spoken to clients and they’re like, yeah, my bill is $10,000. And we’re like, there’s no reason why it should be $10,000. And we’ll kind of look at the code and we’ll look at exactly what they’re your server scales down and or let’s, let’s, uh, you know, set up a load balancer to kind of manage some of this traffic and like there are things that you could do to optimize and yes,
Unfortunately, most of our clients are from people who’ve built something in the past. They had a little bit of friction with either the performance of their dev team or just the performance of the product
It’s terrible and the worst code. I’m not going to say that. But there are a lot of things that we see that we can optimize, right? For instance, a 10k bill, if you take that down to You know $1,000 Then that extends the server runway for nine months, right?
Josh Becerra: Yeah, or it frees up more money to make more investments and new features and things like that, right?
Ken Vermeille: Exactly. And so bad sloppy code and bad DevOps management, it is a time not only is it a time slot, but you’re also spending money on things that you don’t even need.
Josh Becerra: Yeah, yeah. So you go ahead, finish up.
Ken Vermeille: Yeah. Oh, I said, yeah, we fixed that and make it so that, you know, you’re not spending money, you’re building the right product at the right time, and the focus isn’t just making money in the short term, because generally, if we were to build something that would only work for a year, most of our clients, they’re with us two, three years, and that’s just problems for us down the line.
So instead, we focus on building what makes sense.
Josh Becerra: Yeah. One of the things you briefly mentioned, I heard you say, is that you do a lot of things like A-B testing and maybe conversion rate optimization things with your clients. When we were prepping for this, you mentioned that you use amplitude analytics funnels and things like this. You know, at Agurian, we focus a ton of our energy on understanding data and analytics for our clients. We also run A-B tests and do conversion rate optimization. It was the first time I heard a web dev or app dev shop talk about doing A-B tests for their clients. Can you talk a little bit about why you do that? Why do you see it as being important?
Ken Vermeille: Yes, absolutely. So what we, a lot of the time we’ll bump heads with our clients, bump heads in the sense of they’ll tell us that they wanna build something and we might give them a little bit of pushback because again, we want to build the right thing at the right time.
So at the beginning of most projects, we figure out what is the shortest distance from the customer,
Whether that be an in-app purchase or a subscription, we figure out, like, what are the steps to get there? And using amplitude, we create funnels. So in the application, there are steps that a user will take. And then we look at those funnels and essentially try to optimize base off of that. So let’s say download from the app store, I was added to the card, move forward, right?
Let’s say that creating an account is detrimental to the conversion rate, right? So we will A-B test, hey, this 50% of users get the create account option, 50% of the users get no account creation option, and we’ll look at the data and we’ll tie real money to it, and then we’ll see which one makes the most sense.
Generally, we don’t wanna run too many experiments because then things get muddled. But quarterly, we kind of determine what is a goal for the mobile app? What is it that you want to fix? Do you want to increase revenue? Do you want to increase engagement? Do you just want to grow audience use? And so, once we figure out what that is, that’s when we say, okay, here are the experiments that we’re going to run. We’re going to run one every two weeks. And then we’re just going to iterate towards making sure that we hit that So using amplitude, using feature flags, so feature flags allows us to segment the audience based off of some internally defined tags and then ensuring that we’re reviewing those analytics on a weekly basis because
Sometimes things go wrong. Sometimes by implementing a feature, you get like a steep drop and we never want to see that. Well, the difference between our A-B tests, and then we decide what the best thing to do is based on that data.
Josh Becerra: Yeah. Yeah, I think it’s super important. And to get like founders and entrepreneurs in this mindset that like you should always be testing and that, you know, if somebody has some idea that’s different from yours, instead of being resistant to like trying that, you should kind of come at these projects with this like we should test that mindset like, okay, I don’t necessarily think that we’ll see in the data, like if it does or does not work. So it’s really cool as a digital marketer and someone who’s like always pushing our clients to have like this testing mindset and trying to figure out like how is it that we can just get some of those incremental wins over time through conversion rates and other things that you’re actually doing that like on the front end with your clients well before maybe they would ever engage with a company like ours. So that’s very cool.
Ken Vermielle: And the other thing is it also makes the marketers job easier.
When you say, hey, we’d love to see analytics. Who’s using the application? Who’s the target customer? Who are the whale customers? The customers that spend the most money.
We can literally say, here you go, right? Here’s everything. It’s all in that attitude. We’ve set everything up. And generally speaking, when we do get professional marketing and everything off to them and allow them to do their thing.
And in the process of that, there are definitely things that they want to try, because the system is already established, it’s already set up, and they just want to build on top of that. And what
We found that those incremental wins, yeah, 10% here, 5% there, home run, 50%. All of these add up to a really well-polished feeling product and no it doesn’t happen overnight and yes there are times where we’re wrong in our hypothesis and our guesses but the end result is something that usually allows our clients to have some type of financial freedom because generally they’re non-technical other PhDs who are experts at one thing and they want to bring their idea into the marketplace. And so by allowing them to either supplement their income or, you know, expand their income significantly, it’s always a good feeling to see how these small tweaks and changes allow the ultimate big success story of seeing where they are.
Josh Becerra: Yeah, yeah. No, testing mindset is so important in entrepreneurship, in marketing, in building software. So it’s really cool that we’ve got that alignment here. So Ken, this has been an awesome conversation. I have one last question that I love to just ask all my guests. And it’s basically like, are there any books or podcasts or thought leaders that are influencing you today? And if so, why? Who and why?
Ken Vermeille: What am I reading? I’m reading this book called Hyperion. It’s a sci-fi book. And the thing that I really like about it is, it’s completely different from what I would think a sci-fi book would be like. It comes from the narrative of a couple of passengers and they’re talking about this planet and there’s something on the planet. I’m not gonna give any spoilers. this and I’m, you know, watching TV and thinking like this book is way better than anything that’s on TV. Why don’t they make this series or why don’t they make this something. And so it kind of puts me in like the sense of yes, it might be that TV and movies and things are kind of mushing together and everything is like a Marvel thing. But there is still something you can consume for entertainment that’s outside of that sphere.
And, you know, it inspires me to keep moving forward.
Josh Becerra: What you’re talking about is like your own kind of imagination of what this world could look like. It can be so much more vibrant than anything that Netflix could probably produce, right? And it’s kind of your own. And I do think that that’s, that’s really cool about, about like reading, reading books or, you know, on a Kindle or whatever is, is it allows for our own to be involved in that process. Whereas when you’re watching a movie, you’re not using any of your own creativity to add to that story. So, I love it.
Ken Vermeille: Awesome.
Josh Becerra: Cool. Well, thank you so much, Ken, for your time. This has been awesome. And that’s going to do it for this episode of How I Work. Bye, y’all.
Ken Vermeille: Take care.