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CP5: Building Mind-Maps and Managing Tasks with MeisterLabs - Podcast with Michael Hollauf

 

Martin: Hi. This time we have a one – or long-time favourite of mine, who is Michael from MindMeister. I can remember when I was still at university, I thought to myself: “Hmm, maybe I should start mind-mapping a company myself.” When I saw Michael, I said: “Hmm, maybe I would look for another business modeller.” Hi Michael! Who are you and what do you do?

Michael: Hi Martin! Thanks for having me. First off, I didn’t know you – almost became a competitor – but you know I’m glad you didn’t. So my name is Michael Hollauf. I’m an Austrian and I now run, together with my co-founder, Till Vollmer, I run a company called MeisterLabs and we have two products. One of it you mentioned, it’s MindMeister for online-based mind-mapping tools and the second one is MeisterTask, it’s a collaborative Canban-style task manager that is fully integrated with MindMeister and a few other tools as well. We just launched last year.

Martin: Great. How did you start this company?

Michael: Actually, we’re coming up to the 10th anniversary of the company founding this February, so next month.

Martin: Congrats.

Michael: Thank you. The product MindMeister itself has been around for good eight – eight and a half years. We launched it about a year after we founded the company. We’ve got a story behind us out there.

Martin: And what did you do in those, like, twelve or eighteen months before you launched MindMeister? Did you work on other ideas first and then iterate it? Or was the vision, “Yes, we like to do something like mind-mapping but maybe we’ll just work on the prototype maybe during our spare time and if we see some traction then we will switch to it full-time.”?

Michael: Yes, it was a bit like that. All I can grew out of another company that we founded three years before. Till and I were at an outsourcing company. We had a team of Java and Rubin developers in Romania and we did projects for other companies. And when you have, sort of, a service company, you have a lot of work to do in the one side but you also have downtimes when you have fewer projects, you have, sort of, free time with the people. And we tried out a few ideas – different things like 3-4 ideas like I would say, small tools. One of them was an online browser-based mind-mapping visualization. That kind of really felt right so we developed it further and then I think we started to found the company that would be a product company, would be MeisterLabs. In the 12th month before the launch, we just developed a product for that.

Martin: And what made you think: “Oh, maybe we are on the right track with Mind Meister back then”? So did you receive some great traction in terms of user acquisition? Because I still can remember the first time I saw you, you had something like 1,000 or 10,000 subscribers which wasn’t that much back then. But was it something like this type of market validation or was it some kind of radar customer feedback which made you think: “Yes. We’re on the right track.”?

Michael: So, the first feeling we got that we were on the right track was just from us personally and showing it to our friends, trying it out with people inside the company. We all thought: “This works better than we thought; there could be a market for this”. And then after that, it was a private beta launch like you mentioned, in that private beta launch we got a lot of feedback really quickly. So we started with an invitation of about 200 people and I think within a couple of days, we had a thousand people there. So those 200 people invited had invited other people and it quickly became a thousand and then, actually, within two or three weeks, to ten thousand people. The fact that people invited others and sent the link around showed us, alright, this sure is something that some people at least have been waiting for.

BUSINESS MODEL OF MINDMEISTER

Martin: Great. Michael, let’s talk about the business model. So, when you first launched the model, it was something like as you said a free model but later on you added a freemium model. Can you elaborate a little bit on that? So how did this evolve and how did it work?

Michael: Actually, we did have – right from the launch; we had a freemium model. The only things we didn’t have were premium features. Yes, we had the pricing plan as well as the whole billing system so you could use a credit card and everything, but we didn’t really have features that were available to the freemium version. The funny thing was though that from Day 1 – and I think actually on Day 2, the first person paid, you know, a huge amount, I don’t know the cost back then, I think 30-40€, but they paid because they liked the product without having any need to pay. So that was pretty interesting. I mean, obviously the real payments in higher numbers only came when they actually had premium features and when we started to put up some restrictions on the free usage, they have to do otherwise, you won’t be able to sustain your business.

Martin: And how did you try to balance growing the customer base which is, from I understand, you’re mainly driven by signing up free users and secondly, balancing this with developing, let’s say, premium features so you can monetize them because you are only having limited resources? How did you try to balance those two things?

Michael: Another very good question. It’s at a point where we always have this question about it and still do it actually. But for a long time, actually still up to now, we went more for the giving away free as much as you can to increase virality to get in front of as many people as possible who if they don’t pay, might at least invite other people, you know, that might help you grow virally and try to make the features so that people who that are actually using it, not only professionals but definitely the ones who use it professionally and for business purposes but also who use it really more deeply, that they will pay. You let special users in it for free because in the end of the day, they are unlikely to pay for it anyway if I’m honest, and the ones who use it really deeply; you try to convert by adding features, that they would need, into the premium plan.

Martin: How did I come to it, think about MindMeister before I was doing some memory training and I was thinking about: “Okay, what type of cool business application could I start? And then I came to MindMeister and it looked very, very simple and easy to me. So now, the question is: What are the reasons you keep out competitors out of the way? What is the secret sauce? Is it the scale, is it the simplicity, is it just because you’re somehow market leader in this kind of segment already?

Michael: I think all of it placed together a little bit. We were the first to launch but not by a lot. Actually, I think about two months after we launched, the first competitor came along with you know, quite a similar solution, he was technically different, it was actually flash-phase back then, the competitor. It was the same browser-based mind-mapping.

Yes, the thing is that definitely something we always prowess one of our USPs is simplicity – the focus on usability, on simplicity, on a beautiful design that we try and update regularly and keep fresh and keep modern, also again try and focus on a simple user interface that doesn’t overload the user, that keeps the learning curve quick and steep and that’s what we still do with that product with all the other products as well. At least I believe it’s one of the keys to success for all kinds of apps.

Martin: And when this competitor arose like two months after you’ve launched, what had been your thought or reactions to that?

Michael: Desperation, initially. In the first few years, whenever a new competitor came along, we would be quite depressed and think: “Oh god, what if they do it so much better than we do?”, “What if, they take our market away?” It hasn’t happened fortunately. If you stay on the ball, if you keep pleasing the users, keep making your app better, keep providing it with service, it’s unlikely to happen, unless Facebook or whoever decided to enter your niche. It hasn’t happened and we learned to live with it much better. So these days when we see a new app, we’re like: “Right, okay, so yup, looks good but we’ve come a long way and I think they will have to come a long way as well.

Martin: Can you elaborate a little bit on the current team set-up and what is actually your focus? Are you seeing yourself more like a, let’s say, marketing customer acquisition company or are you perceiving yourself more as a tech company or maybe something totally different?

Michael: I think we would like to perceive ourselves as a marketing growth customer acquisition company but if we’re being honest, we’re a tech company. That’s not a bad thing in itself either. My co-founder, Till and I were both techies from our background, we’re still techies at heart, I think. Although in the last years we focused much, much more on things like marketing, growth and even finance – all these things, you have to obviously do if you run a company. So we do that much, much more with built teams there to do that, but in the end of the day, after everything, I think it’s the product that counts. You have to have a great product, you have to provide a great service, you can increase your success obviously with marketing but I think no amount of amazing marketing could turn a dot into a gold nugget.

Martin: And how many free users that you need to acquire so you c ould become cash flow-neutral at least after many months?

Michael: I think as we had about a hundred thousand users or something in free users in total that, I think, that that wasn’t breakeven yet. But I think it was between a hundred thousand and three hundred thousand, somewhere there we had a monthly recurring revenue that helped us pay the costs, running costs of the company. Well, we were only free people back then, still it wasn’t a huge running cost. But like I said, we focused a lot on getting many users so the conversion rate wasn’t amazing to paid users so we needed quite a lot of free users to actually pay the costs, but it grew quite quickly.

Martin: Good. And at what point of time did you think about adding another product and creating, let’s say, an overall brand like MeisterLabs?

Michael: Early on, about three years ago I would say. So we launched it nine months ago, we took our time building the second product; we wanted to make it really good. It took about two years actually. But we saw a few things:

First of all we saw: mind-mapping is a stage in a process and it’s usually the first stage in a project. Three years heavily in the start phase of a project, when you exchange ideas, when you brainstorm, when you map out your project, and then comes a point when you go into implementing the project and working on everything. Then you need a different tool, and we saw a lot of users dropping off, of MindMeister maybe coming back a couple of months later for the next project but actually dropping off. We said, “Okay, let’s, you know, it’s a shame that they have to move to another tool because we don’t provide anything for them.”

So we thought: “Okay, that would be a nice point to offer them a product that’s integrated with MindMeister and supports them in that second phase of the project.” We thought there’s lots of task mission tools around, of course it’s a huge market, it’s a very important market and we thought we have a lot of ideas that could make it nice, make it very usable, very simple, combine some of the things we like in other tools and create something we hope users will like.

Martin: Why did it take you two years to develop this prototype? And second question would be, lots of start-ups have the belief that: “Let’s ship it early, get the customer feedback and then iterate on the live product” which apparently you did not do.

Michael: Exactly, yes. I have to say, looking back I’m very happy with the result, it is one thing. We took our time, we took a long time, we went through many iterations of design and so on and when we shipped, it was a really, really good product. But, looking back, I think we should have probably come the other way, we should have done it quicker, come up with something quicker, got feedback faster. That’s what we’ll probably try to do working in the next product. That is a lesson learned, I would say. Although again, I couldn’t say if the result would be the same. You know, looking back now you don’t know what would’ve happened if you went the other way. Taking too long with a product has a lot of drawbacks apart from the fact that you know, we came up later, we did. You know, you have to keep your team motivated and developers as well, if you take too long to bring out something, obviously the market moves. So my take away from that experience was next time spend more time on a smaller initial prototype and try to ship it faster.

Martin: When you started with the company, you had a very limited scope of what you wanted to achieve, like for example with MindMeister, and then adding further products. For me, the question is what is the bigger vision which combines those different product ideas?

Michael: Well, the bigger vision is to cover the entire creative process inside a high-tech company, so to speak, because that’s our target market, our main target market. The creative process, I mean creative project that starts out with a brainstorming bit, product development bit, and some sort of marketing campaign bit, anything else. Right now we cover the first two phases, the brainstorming phase and the actual project carrying out. There is a missing piece at the end, there we have some ideas for that as it is one missing piece in there and we might come out with it with a product that covers something there and closes the circle to the next project.

Martin: How are those products integrated? So, for example I look at MindMeister, how is it then integrated to MeisterTask?

Michael: When you’re in MindMeister, you can switch on MeisterTask toolbar and you can connect each mind-map with a project, so to speak. And if it’s not connected you can just right from there, create a project for this mind-map, although I’ve made a mind-map that’s connected with the same project and all that. So, let’s say kind of a one-to-many relationship there. And then in the toolbar you’ll see all the people that are in your project. You see little avatars from photos of them, and you can very easily just drag any mind-map node, any topic onto one of those avatars and what it’ll do, it’ll create a task for that person in the project.

We, for example, we a lot our weekly meetings, and in weekly meetings we mind-map all the things we go through and then, with that okay, so that’s actually that’s something that, you know, Andrei has to do. So, we make the task and we drag it onto his face and he has the task assigned and the project management system and he can start working on it after the meeting.

Martin: What’s the idea of MeisterTask based on several customer requests or was it more of a vision of you both that you said: “Oh, it would be very interesting if we are working on this creative process and therefore the next logical step would be this although customers didn’t request it.”?

Michael: We had many customer requests to enhance the task management functionality in MindMeister. In fact, there’s a little bit of a task management functionality there like all mind-mapping tools, they allow you to sign a priority onto a node and the person and due date. But it’s very, very lightweight, so it has no follow-through, no process behind it. It is also very little, in terms of task functionality.

Customers wanted more there. So it was visible customers used it for task management as well but we didn’t want to blow up a, sort of, partial functionality of a mind-mapping tool and then make it into a mind-mapping tool more complex, more low fit. We thought: “Okay, since this is something different what people do, then this should be done in a dedicated tool.”

Martin: One option would have been if I’m having this kind of modular market where I’m having mind-maps and I perceive you as a clear market leader in that. And now you’re entering into another market which is more task related etc. So, did you receive some kind of reaction from the other task-related companies that were just adding mind-mapping functionality, and then the competitions in those two markets are even increasing?

Michael: We haven’t seen that yet as such. I think it terms of market size the mind-mapping market is a very focused but still very niche market. Usually when companies are in a market of a certain size, they expand into bigger, adjacent markets. They usually don’t expand so much into smaller adjacent markets. So we haven’t seen many task management tools expanding into mind-mapping. We see quite a few of our mind-mapping competitors adding task management but they usually do it differently, they add some more functionality into their product.

ADVICE TO ENTREPRENEURS FROM MICHAEL HOLLAUF

Martin: So Michael, over the last let’s say ten to thirteen years, what have been the major learnings that you can share with other people starting a company? Like some the stupid mistakes an entrepreneur can do, or maybe some very cool things he should do?

Michael: Well, that could potentially be quite long. People interested in the story, there’s this article on TechCrunch that kind of tells our story, in quite details.

Whenever I talk about the learnings from 7, 8, 9 years ago, I always mention the fact that this was 7, 8, 9 years ago and that also the market, the internet market, SaaS market has moved a lot since then. So, when I talk about the way we launched with a private beta, had invited people, gave them invitations, that’s something that worked back then. Quite uncertain whether it would work as well now because many people have done it and the market has changed and you need to shout much louder these days to get their attention than you used to so many years ago.

But I think some of the other learnings are still quite valid for example: the other one I mentioned is focus on making your product usable, focus on the user, try to give him a nice feeling when he uses it. That is one key to success that we’d had, modest as it may be compared to some other companies out there of course. But I still believe that that’s one of the big things and we are not ready to compromise on usability doing anything. So we will discuss any small user interface change in the name UI for a very long time to make sure that it doesn’t make things more complex or scare users off. So that is something we are good at.

Some of the things that we’ve learnt over the years that we weren’t so good at, we also learned that they were important, have to do with obviously with marketing, with analytics especially. So analytics is one of the things that everyone knows is hugely important. In terms of measure, how your tool is used, measure what your users do, measure the conversions, all your key metrics, beware of key metrics. But I think at the same time, everyone who knows how important it is, very few actually know the numbers very well or do enough on that side. And that’s something that becomes more difficult to do the more you grow. So, if you start up with a small tool, and you build all the analytics and your measurements right in the beginning that’s much easier than if you do it years later when you have quite a large tool.

Martin: You said that analytics is very important. In the beginning, you didn’t know how your valid proposition and business model will look like because you’re iterating, etc. Do you think it’s a very good idea to have analytics from day one although you do not know what it is because it costs money to set up analytics, analyze etc, etc? Or do you think even though you should be very agile and iterative, still analytics should be done on day one?

Michael: Yes, I think it should be. Like I said, it’s very easy to build it into a small product and I don’t think there’s any real cost associated with it if you don’t have a lot of traffic yet. Most of the tools that are out there will let you use it for free up to I don’t know how many thousands of impressions per day or logs per day. Once you grow, it’ll cost money but then you could hopefully afford it. It just helps you know your business, it helps you to keep things simple because if you measure everything you will also not run the risk of building too complex work flows into your tool, billing flows, conversion flows, and sign-up flows because it’s hard to measure them.

The other thing we’ve learned, we’ve had quite a difficult set-up of ­­in terms of 30-day-free-trial with or without the credit card. And we actually went back and made everything much, much simpler. First of all, it is better for the user, easier to understand for the user, and second, because it’s much easier to measure.

Martin: What tools can you recommend for analytics?

Michael: So, we are using a mixture at the moment. One of the tools is everyone talks about is quite good, really, it’s Amplitude as it lets you log real, granular user events inside your app and see what users do, look at funnels about what they’re doing in the app. We still use Google Analytics for main SEO things.

There is a couple of other SEO tools, on-page optimization tools and so on that are out there but there’s really too many to make any clear recommendation. We use on-page, we use search metrics, we use a few of those but take your pick. Something is better in each of the tools but overall, as long as you use something, that’s good enough.

Martin: And when you wake up in the morning, what are the 3 to 5 key metrics you are totally interested about in order to assess whether your business is running well or not?

Michael: When I wake up in the morning I usually unfortunately think of the tech things. I should think about those key metrics more. But some of the things we’re deeply looking at are, with intention, something we’re looking into very much in MindMeister. So, we look at different things in different products. In MindMeister retention is our focus and that’s because, like I mentioned before, it’s a bit of a seasonal product – you use it when you start a project, and you map it out, you create a couple of mind maps, share them with friends. Then when you fund that, you go away maybe for a long time and maybe come back. So our goal with that tool is build it into the usual work lifes of people more like we use it on an on-going basis and there we focus on retention. We have a lot of new users and we have four to five thousand new users per day, still growing, it’s pretty amazing. It’s important to show the people what they can do with the tool and keep them as users.

With MeisterTask, it’s different. MeisterTask is a much more techy product once you use it because once you had a project there, once you had a task in there, unless you manage to finish them all, you will continue to use it, you know, you can continue to make more tasks, continue to share it with people. There, for us it’s more important to show people this is here as well, so this is an alternative if you’re using, let’s say, Asana, Wunderlist, or Trello, have a look at this because we think it’s better for these and these reasons. Most of the people who’ve seen it have agreed and the challenge there is how to get in front of those people.

Martin: Great. Michael, what other learnings did you perceive over the years?

Michael: So one other thing we’ve seen is it’s also been the way we’ve developed the second product, MeisterTask. If you had a problem and you don’t find a solution out there or you don’t find that you like and you then build a product to solve that problem for you then it’s quite likely, very likely so to speak, that there will be others out there, probably many others who had have that same problem and for whom you will help solve the problem with your product, so to speak. We did this with MeisterTask, we had this problem ourselves, how do we do our tasks after we’ve the mind-mapping. We built something that we wanted to use that helps us in our product development in our company, helps not only the tech team but also helps the marketing team and the sales team to manage their projects. So, we looked at companies our type, our size with different departments that would like to use an all-in-one tool together and built it for that. And we looked at the second characteristic as well there, we looked at companies – small companies like ours that work with freelancers, we have an external designer, we have an external iOS, Android developers and so on. And so we built the tools so that it also works for those people. You can write there, they have access to it, they don’t have to use only that and you can look at this use case and when we launched it had seemed that we weren’t the only ones who had that problem. So I think, build something for yourself that you really happy with and others will follow, so to speak.

Martin: Great. Michael, thank you so much for sharing your insights and if you’re looking for a great task manager, check out MeisterTask. Thanks!

Michael: Pleasure.

THANKS FOR LISTENING!

Thanks so much for joining our fifth podcast episode!

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Special thanks to Michael for joining me this week. Until next time!

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