5 Lessons I Learned When I Created My App or SAAS: “Not everyone will love what you create” with Nick Schiffelbein and Mitch Russo

Not everyone will love what you create. It could be the first person you talk to about your product or the 100th person, but eventually you will find someone that doesn’t like your product. Whether that dislike comes form a place of jealousy, a place of anger because they are forced to use your product and it’s changing their day-to-day process, or something else, it will eventually happen. Listen for constructive feedback from such users, but don’t get sucked into their negativity. Sometimes there is genuinely good feedback from such users and often it can be simply a training issue or mis-understanding of perspective on how your product solves a problem. Above all else, know that you can’t please everyone and that you don’t need to. There are billions of people on this planet, and you won’t get along with all of them.

As part of my series about the “5 Lessons I Learned When I Created My App or SAAS”, I had the pleasure of interviewing Nick Schiffelbein, the chief technology officer for LOCATE Inventory in Orange County, California. Nick attended San Clemente High School and Saddleback Community College before graduating from the University of California-Irvine with a degree in computer science in 2009. His father, Mark, was a long-time director of information technology at Saddleback. He taught Nick and his two twin brothers, Zack and Jake, to write web pages when the boys were just eight years old. The three of them learned it in one afternoon. Nick officially entered the computer field at the age of 14 while working at the Student Services Center at Saddleback College. He was originally hired to work in the game center, but once his superiors discovered his talent with computers, they quickly re-assigned him and the young teenager was soon creating web pages and flyers for the SSC. In high school, Nick parlayed his computer-savviness into a data-entry position with Coast IRB, a company which oversaw clinical trials. He had dabbled in programming at home with Linux and open-source software, and he quickly excelled at that position. It wasn’t long before the company’s CEO asked him to work as a programmer, and he created a data-entry platform that allowed for multiple users. It was during this time that Nick started to tinker with his own programming skills that he would later use to create LOCATE. He continued to work throughout high school, which helped him save enough money to go to college. At UCI, he took two elective courses that furthered his quest down this path, one in computer forensics and another in computer vision. Upon graduating from UCI, Nick landed a job in the mortgage industry. The company did audits on behalf of mortgage insurance companies to see if fraud had been committed during the loan process that would preclude the company from collecting on a default loan claim. This was excellent timing economically as the results of the 2007 crash were just bottoming out and claims were soaring. While at this job, he met Scott Parrott, who would become an important mentor. Parrott took Schiffelbein’s creative mind and offered a structure with which to apply it for building applications. He offered standards he had used in the past while writing specifications for large-scale software, and the two brainstormed about long-term functionality while building roadmaps to get there. Nick ended up writing an application to manage post-closing quality-control audits that were newly instituted after the crash. The company sold this software so he decided to move on to something new. This led him to FishBooks Pro, which ultimately became LOCATE Inventory several years later. Nick has constructed three large applications and a few smaller ones. LOCATE, however, is by far the largest application he has written. Away from the computer, his hobbies include flying, reading, watching movies, working on home renovation projects, good food, and relaxing behind the wheel of his cars.

Thank you so much for joining us! Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?

I’ve been fascinated with technology since I was a little kid and that doesn’t seem to be by coincidence. My father had a long career in technology as did one of my grandfathers. My other grandfather was an engineer. I started out building computers with my dad, and then at the age of eight he taught me to make web pages in HTML one afternoon. From that day forward, I was fascinated by the power of software. I started working part-time doing network administration and general computer maintenance for end-users. After working in the hardware/consumer world for a number of years I kind of felt like I was running out of things to learn and I saw where the glass ceiling was in that sector, so I decided to return to software for my college degree. I wrote two applications (both private applications for previous employers) during my time in college and at my first job outside of school, but it was an acquaintance from my computer consulting days that I would reconnect with five years after college that would lead me to create LOCATE.

What was the “Aha Moment” that led you to think of the idea for your current company? Can you share that story with us?

Interestingly enough, LOCATE wasn’t an “Aha” type of idea. It was the culmination of years of having to say, “We can’t fix that” or “the software won’t let us do that.” I joined FishBooks Pro, now New Tack, in July of 2013. At the time both of my brothers were working for the company and had built some plug-ins and add-ons for a well-recognized inventory platform, Fishbowl Inventory. The company specialized in eCommerce integrations and custom reporting for Fishbowl Inventory. As our company’s ambitions grew and we worked with more customers, we started to feel trapped by Fishbowl. There were things we couldn’t do (lack of API access), and customers were coming to us looking for guidance. We wanted to help them, but didn’t have a sustainable way to do so. After working for FishBooks Pro for only a year, we decided to pivot. We decided to start working on a new cloud-based inventory-management platform that would address the years of frustrations George (LOCATE CEO George Keliher) and my brothers ran across. So we started writing out all the things we knew had to be different: summarized accounting, better kitting, FULL API access, and more, and these became the founding and guiding principles for LOCATE and they are what we look back to for every decision as we push the software forward.

Can you tell us a story about the hard times that you faced when you first started your journey? Did you ever consider giving up? Where did you get the drive to continue even though things were so hard?

By far, the hardest moment in LOCATE’s history for me personally was March, 2017. LOCATE had its first two customers on after we had been writing the software for about two years. Our first customer had come aboard rather smoothly and had few requirements out of the software. They did wholesale business with only a handful of larger orders. Our second customer had implemented LOCATE about a week or two prior to March. They did both wholesale and retail business, keyed and eCommerce orders. Very quickly, the amount of data going into LOCATE skyrocketed and the number of requests we were processing went from a lazy 25–50 a minute to 200–300 a minute. The small servers we were on were struggling to keep up with the load. Latency and bugs seemed to be bursting forth in every module we had spent months testing before launch. One other developer and I had written all of the API code for LOCATE and were in charge of it, the database and the server infrastructure. We worked 12–14 hour days for the entire month of March, including a number of weekend days. We were rolling hotfixes pretty much nightly and new version releases were going out weekly. On Mondays, we would come up with our lists of missing features that had to be added, and on Fridays they would go out. It was a breakneck pace and the software moved forward very quickly. We scaled up our servers among other changes as well, and after the longest 30 days of my life, we cleared the other side with a functioning product processing 250–300 orders a day. There were plenty of times we could have given up and admitted we were in over our heads with how large the software had grown, well beyond our original idea. Several things kept me going though, the first being how long we had already been working on LOCATE. I didn’t want to see that time wasted or squandered. Second, and probably more important, was our customers. The owner of that second company, who is still a LOCATE customer today, was on calls with us once a day relaying information from the front. He took an extraordinary amount of risk choosing to work with us, and he took an untold amount of blowback during those first 4–6 weeks that they were on the software spending extra money on labor as the system wasn’t performant or efficient enough to process the volume they were doing. To his credit though, he NEVER lost his temper when talking with us, even when we could sense he had taken a verbal beating and I will NEVER forget that. He showed true leadership in a time of crisis and kept pushing through and that is what got me through that hellish month.

So, how are things going today? How did your grit and resilience lead to your eventual success?

Two and a half years after those first two customers joined LOCATE, we have experienced 100% year-over-year user growth. We are on track to process a half-billion dollars in commerce through LOCATE this year. We have 100% customer retention and our customers are growing by leaps and bounds. LOCATE is 100% bootstrapped. We have taken no large investments to date. One hundred percent of our code and support is done in our Orange County office. Our team takes tremendous pride in the responsibility we have to keep our customers moving. They, like us, are small businesses, each with their own unique needs and we love taking on the challenges of finding ways to deliver on what they need, while still keeping the software consistent, maintainable, and easy to use. I’m proud to say we have never taken the easy way out on anything that we have implemented. If something is broken, we fix or replace it, we don’t do Band-Aids. And as such, we are able to continuously innovate and extend the software without tripping over poor architectural choices.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?

After launching with our second customer, we received a phone call about three days later and they wanted to know how to initiate a return. I remember one of my brothers and I looking at each other with sheepish looks on our faces as we realized we had never considered the fact that customers return items. Needless to say, we spent that week implementing our Return-Order module. I think the big takeaway from this is that no matter how much you prepare for something, there will always be surprises. The key is to keep moving forward. Adding an entirely new order type with new workflows, and forward and backward inventory effects (exchanges vs. credits, etc.), is no small task to add into an application, especially in a week, but we took some time to talk to the customer about their needs and expectations for return functionality and then began architecting the solution. That solution has scaled well and from the original three return workflows, we have recently added another with yet another coming in the next release. Never sacrifice the quality of the code simply to check a box.

What do you think makes your company stand out? Can you share a story?

Definitely our passion for inventory. Inventory is probably one of the least “sexy” subjects out there. Accountants often despise it, businesses look at it as a necessary evil, and if you haven’t worked in a warehouse or practiced accounting, you probably have no idea what is involved in it.The problems that arise in inventory-based businesses are subtle but fascinating. Quite often, a seemingly trivial problem can actually reveal a much more complex situation because of the layers involved in inventory management. All major inventory tasks have some underlying accounting component (consuming, purchasing, manufacturing, selling, etc.). Then you have operations, which is interested in auditing, permissions, efficiency, etc. Then you have business owners who care about their bottom line (margins), efficiency, expenses, etc. Every feature in LOCATE starts with mapping out the accounting. I think this is why so much of LOCATE is seamless and easy to use because we baked the accounting in from the start, we didn’t try and add it in later. A perfect culmination of all of these demands came together when we built our Use-Order system.

A common problem in the inventory industry is sending samples out. This is a trivial task in most people’s minds, just grab some product off the shelf and ship it out. Most achieve this by keying in a $0 sales order to get the fulfillment process kicked off in the warehouse, but a simple pass of some of our business layers reveals the subtle complexity to this simple task. The sales and marketing team is typically the impetus for the need to send out samples, sometimes the business owner. These teams live and die by their margins and sales numbers. A $0 sales order is not good for your margins reports as they appear as a nasty loss. The operations team wants the orders to go through a standard fulfillment process to ensure inventory is maintained accurately. The accounting team wants that transaction classified differently to ensure the appropriate tax write-off is recorded. LOCATE took all of these requirements and created a completely new type of order, which we call a Use Order to make all of these requirements, and more, possible.

Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?

I have been faced with this challenge a number of times in my career. Burn-out is very real and something that you have to be COMPLETELY honest with yourself about. My mother has always harped on me about work-life balance. My younger self never worried or cared about it, but as I’ve grown older, I see the importance in having unplugged time away from work. Taking a long vacation, at least every other year, and I’m talking about over a week in length, is incredibly restorative to a frazzled mind. Go somewhere new and just be a kid again, soak up new sights, sounds, and experiences. As exhausting as a long vacation can be, I find that I’m super-energized to get back to work when I get home. Also, never feel bad about an occasional lazy day at home watching TV or reading a book. Make sure not to fall into a habit of this, but a day here or there can also help recharge the batteries. Have a hobby that is not work-related is another great suggestion. I love working on my house, driving, and enjoying good food. If I’m feeling stressed, taking a drive along PCH to grab a burger can really help me decompress.

Whatever it is, find what works for you and don’t neglect the signs of burn out.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?

It goes without saying that none of LOCATE would have been possible without the founder of FishBooks Pro, George Keliher. It was his vision of bringing together motivated young minds and giving us a platform to reach for the stars that made LOCATE possible. I have learned and continue to learn much from him.

In terms of a more technical mentor, that would most certainly go to my former boss, Scott Parrott. Fresh out of college, I knew enough to be dangerous with coding. Scott taught me a framework to operate within when designing software, particularly databases. That has been a guiding principle for every application I have written since meeting him. His knowledge on workflow and auditing are cornerstones in LOCATE’s code base, and they are the reason we can offer features that no other inventory platforms can. Scott and I spent many late nights architecting features for the application we worked on together, many of which never had the time to be implemented, but going through that creative process of having a problem and running through ideas, and fine-tuning the solution until it checked all the boxes, and then working to future-proof that idea until it solved problems we didn’t even know we had will stay with me forever.

Ok thank you for all that. Now let’s shift to the main focus of this interview. Approximately how many users or subscribers does your app or software currently have? Can you share with our readers three of the main steps you’ve taken to build such a large community?

LOCATE has approximately 750 users, with more sold and awaiting their go-live dates. LOCATE is alive and growing today because we have created a compelling value proposition for companies.

First and foremost, we have features you wouldn’t typically find unless you implemented a larger ERP system, but LOCATE doesn’t have the large upfront and ongoing costs that most ERP systems do. These features drive efficiency, and to compete in today’s markets, you need every advantage you can get.

Second, we are knowledgeable, excited, and truthful about what LOCATE can and cannot do, and we don’t make exceptions or offer special treatment. As I mentioned before, inventory isn’t a “sexy” subject, so finding a company that is excited about it and is solving real-world problems while being innovative is a hard task. LOCATE and the team behind it check these boxes and work hard every day to increase value for our customers so that they can continue to grow and succeed.

Finally, marketing. LOCATE didn’t spend any money on marketing until about 4–6 months ago. We relied 100% on word of mouth and prior consulting customers to fuel our growth. As someone who has never had to work for a business that needed to market, I must say it is a powerful tool when coupled with a powerful product. The hardest part in selling a great piece of software is making sure your potential customers know you exist. Yes, search engines can get them to your page, but when six major companies own all the search terms people use to find your type of product, not being in those top six ads means you are that much less likely to ever be clicked on.

What is your monetization model? How do you monetize your community of users? Have you considered other monetization options? Why did you not use those?

We are a floating, concurrent-user, month-to-month license model. This model was adopted for two reasons: it corrected an injustice we saw going on in the SaaS world where you assigned user licenses to specific accounts and only those accounts could sign in, and second, we wanted every user to actually use their own accounts so we could maintain an accurate audit history of everything happening in LOCATE. We don’t sell our users data, we’re not in that type of business. We are exploring additional monetization options in which we feel we can bring additional value to our customers, but that is key in any decision we make for LOCATE. Making a decision purely to bolster revenue without offering additional value is a surefire way to get your customers looking at alternate solutions because you’re making the transaction about money, not value. Early on, we considered tiering LOCATE by separating manufacturing functionality into a different plan along with other arbitrary functions like you see in some SaaS products. As a programmer, I despise such decisions because they create arbitrary road blocks in the code and add complexity where there need not be any. You end up spending more time working around your own walls between tiers than creating new functionality to benefit your users.

Based on your experience and success, what are the five most important things one should know before one wants to start an app or a SAAS? Please share a story or an example for each.

1. Don’t think you have to have the end-all solution at launch time. To a certain degree, I believed this, hence our two years in development before launching LOCATE. Obviously there are certain minimum requirements for any application to actually offer value, but for an initial launch, figure out your core value proposition and get that out there. You are bound to miss things, but if your value is there, your customers will help you fill in the missing pieces.

2. Never just give your customers what they ask for. This sounds contrary to my first point, but I promise its not. When a customer asks for something in a piece of software, they typically ask for something specific, “could you make this one click rather than two” for example. This is a coded message for what they actually want. When a user asks for something, they do so from the perspective of how they use the software within their business and life. More often than not, I find that usage/context to be overly specific, or flawed in the sense that they aren’t solving more of their problem either because they don’t know you can with the software, or because they think that is too big of a request. Ask your users questions about what they want. Ask why they want these things or what they were trying to do when they came up with the idea. You possess all the knowledge of your product when you create it and have a much better understanding of what is or is not possible given what you created. You have to approach requests from that perspective or risk piece-mealing your product as your customer spoon-feeds you their ideas of what they think you should make.

3. Not everyone will love what you create. It could be the first person you talk to about your product or the 100th person, but eventually you will find someone that doesn’t like your product. Whether that dislike comes form a place of jealousy, a place of anger because they are forced to use your product and it’s changing their day-to-day process, or something else, it will eventually happen. Listen for constructive feedback from such users, but don’t get sucked into their negativity. Sometimes there is genuinely good feedback from such users and often it can be simply a training issue or mis-understanding of perspective on how your product solves a problem. Above all else, know that you can’t please everyone and that you don’t need to. There are billions of people on this planet, and you won’t get along with all of them.

4. Have people inside or outside your business that you can ask for advice. Running a business is an eye-opening experience. You will be asked questions that you genuinely don’t know the answers to and be asked to make decisions with little or no information that potentially have lose-lose outcomes. Having people that you can trust to talk through these situations with is critical to your mental health and your ability to navigate tough choices and decisions. You need to find experienced people who have run businesses before, or worked in your industry, because your best friend might be the “coolest dude you know” but if all he says is “I don’t know what I’d do” you aren’t any better off than you were before you asked them.

5. Have a cheerleader. This can be you, another person working in your business, or an outsider, but you need someone to keep the project moving during good times and bad. Customers can fill this need once you reach the market, and trust me there are some AMAZING people in this world that truly appreciate others that bring value to their lives and businesses. When times get tough though, having someone give you advice on how to proceed is only half the battle, having someone root you on to actually get that work done is a whole different thing. Whether you are self-disciplined enough to grind it out, having someone that is excited to hear what your working on makes creating new features that much more exciting.

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

I have always understood that exercise is important to maintain one’s health. Most are taught this at a young age, but only recently have I realized that health in this context is not limited to just your physical well-being, but also your mental well-being. Exercise is a meditative process. You can vent stress and anger in a constructive way. You can run to forget or move past a bad memory, or you can happily break a sweat to some upbeat music. Exercise gives your mental state a way to physically manifest itself, helping you get past whatever you’re dealing with. Given the amazing power of exercise, I would like to see health insurance companies supplement or cover gym memberships for their customers as long as customers maintain a certain level of attendance. As a small business owner, I would never encourage a business to just give away something without benefit, but I think the health insurance companies would see a dramatic drop in their payouts as more and more folks received a cheap, but significant preventative benefit from their monthly payments to these large health insurance companies.

How can our readers follow you on social media?

I actually rarely to never use social media, but folks should definitely follow LOCATE on Twitter (@LOCATEInv). My sister-in-law Kylie does an amazing job putting out content for our followers.

This was very inspiring. Thank you so much for joining us!

About the author:

Mitch Russo started a software company in his garage, sold it for 8 figures and then went on to work directly with Tony Robbins and Chet Holmes to build a $25M business together. Mitch wrote a book called “The Invisible Organization — How Ingenious CEOs are Creating Thriving, Virtual Companies” and now his 2nd book called Power Tribes — “How Certification Can Explode Your Business.” Mitch helps SaaS company founders scale their own companies using his proprietary system. You can reach Mitch Directly via mitch@mitchrusso.com

5 Lessons I Learned When I Created My App or SAAS: “Not everyone will love what you create” with… was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.