Josh

Rob Walling :
Welcome back to a special Thursday episode of Startups For the Rest Of Us where we continue on with TinySeed Tails season five as we follow Harris Kenny on his journey to grow outbound sync. We’ve had a great response to these episodes from founders and TinySeed investors alike. If you’re interested in diversifying your portfolio and investing in ambitious early stage B2B SaaS companies, we’re currently raising fund three for TinySeed. We recently returned more than 100% of our first TinySeed fund and frankly, we’re just getting started. If you’re interested in joining us, check out our thesis at TinySeed dot com slash invest, and if you fill out the form there, it goes directly to my co-founder a r. You can also reach out to a R directly at E-I-N-A-R at TinySeed dot com. Let’s dive in.  

Harris Kenny:
It is weird. I do wonder like, oh, is this the best idea I’m ever going to have? Maybe mean, hopefully not, but maybe this could be a really big thing. I mean, we were having calls now with pretty big companies and I do know that there’s features in Trello that if I shipped them right now, I would turn them into revenue immediately.  

Rob Walling :
Welcome back to TinySeed Tales, a series where I follow a founder through the rollercoaster of building their startup. I’m your host, Rob Walling, a serial entrepreneur and co-founder of TinySeed, the Startup accelerator for ambitious SaaS Bootstrappers. Here in season five, I’ve been talking with Harris Kenny, founder of Outbound Sync. Last time I spoke with Harris, he had just closed his biggest contract to date. Now he’s hit another impressive milestone.  

Harris Kenny:
Hey Rob, quick clip for the pod 20 K. Let’s fucking go. I dunno, I’m still sinking in, but really, really feeling a little overwhelmed. And also, what’s the next thing about hitting 20 KMRR? So yeah, hit it. Head of schedule. Had been hoping to hit this in May. That had been kind of the end of our TinySeed year, but it’s today’s February 20th, so hit it ahead of schedule and I’ve had a sheet of paper that says 20,000 sitting over my desk for, actually, I don’t remember when I put it up, but for a while. So I get to take it down and I put up the next one. Next goal is 30 k. Going to celebrate, going to get dinner with my wife just to hit the milestone. I never really celebrated getting into TinySeed. It always felt like the beginning of the next thing didn’t quite feel like a full accomplishment on its own, but I’m going to celebrate this one for sure.  

Rob Walling :
You sound excited. You should be. It’s a big fucking deal, man.  

Harris Kenny:
It was really gratifying. I mean it was so funny. Of course at the very end, I’m stuck at 19 nine for a week. Of course. It was so funny. And then finally it popped and it was like, oh yeah, totally. I mean, it is not the end, but it definitely, it was the first major, major revenue milestone and I think because it was externally validated of, yeah, this is a new, I mean the TinySeed is vested in whatever, like a hundred or two, I don’t know how many companies at this point. So it was a helpful thing of that’s a real number I should focus on. And so that was a really helpful thing for me to a really simple, really clear goal. Right? Remember so many other things going on that it’s noisy sometimes.  

Rob Walling :
Yeah. Did you celebrate?  

Harris Kenny:
Not yet.  

Rob Walling :
Okay.  

Harris Kenny:
Although I had already been getting dinner with my wife and we brought our 1-year-old. Our older kid was older, daughter was with grandma, and so my instinct was like, oh, well let’s just call this dinner that we’re already having anyway. Let’s just call this the celebration dinner, which is not the best. It’s kind of a cop out. It’s like, what’s wrong with you? Why can’t you just be happy about this and be a normal person and be like, you did it. It’s great. Go do something. Get something for yourself or do something. So that’s a thing I think I need to look in and work on. But anyway, but I was like, okay, so I’m not going to do that. That was my instinct and then I pulled back from it. So we are going to make a plan and do it and do a dinner and just get a chance to reflect on getting here because it kind of reflects, I’m not fully done. 30 is we’re profitable on the planes in the air, but 20 is big and I want to do something for it.  

Rob Walling :
You hit 20 K and then within days, you sent me this in Slack quote, I’m quoting you. Overall things are good, but I’ve also felt very anxious since hitting 20 K. Like I’m close, but not there yet. Runway’s still an issue. If I fail now, it would be excruciating. So I’m having to up prices and sell better and make harder product calls I want to play to win and not play to not lose. I really don’t want to go raise more money and I’m up against the wall in terms of personal expenses with me being the number one drain in the business due to having two young children, this is what I call the arrival fallacy or not, I call it. It just is what’s generally called. It’s like, dude, did you even celebrate for a day for 24 hours? No. You started worrying about it and it’s good. There’s a balance here. If you don’t ever worry about it, then you don’t get there. Part of the stress that Yerkes Dotson curve is that you have enough stress to make you perform at a high level and then too much stress. Eventually you collapse, you implode, right? So runway is still an issue and I can imagine that, but this is why I was asking, did you take enough time to at least say, man, 20 KI made it.  

Harris Kenny:
Yeah, I mean, no, definitely not.  

Rob Walling :
And as you think about this, if I fail now, it would be excruciating. I would agree with that. I don’t see that happening at the way you’ve, based on the way you’ve been executing so far, but 30 K feels within. It doesn’t feel easy, but it feels simple. It’s a straight path. So we get some companies to come into TinySeed where I see a straight path to some number. I think you get to be 10 KRR or I think this can even be a hundred KMRR business, but you’re not going to make it past that because of market size or some other thing. And then we talk about how are you going to actually get there? You’re going to have to pivot. You’re going to have to change strategy. You’re going to have to add more integrations. You’re going to have to do whatever you for you. I don’t see that there’s no limit right now. And so 30 K feels pretty much blocking and tackling, showing up every day and doing the same thing you’ve been doing for the past six to 12 months. That’s how I see it. How do you see it?  

Harris Kenny:
No, I think that’s right. Chat. BT thinks I’ll get there in June if I did a little CAGR thing for me. Great. Yeah, no, I think that’s right. I think that we have the right combination. I mean, there’s two decisions that I made probably six months ago around starting Salesforce and then probably three months ago around starting building for other platforms besides or in addition to Smart Lead. And I think those two decisions back then are why we are where we are now. I think if I hadn’t made those decisions now, I think I’d be in a very different position because we’re seeing, especially on the sequencer side, we’re seeing customers who had been using Smart Lead are now asking us, oh, we’re actually going to move everything over to instantly, or for all new clients, we’re going to move them over to this new platform. 

And had I not started building that back in December, I would’ve lost that revenue. We totally would’ve, I think, plateaued over the course of January, February and potentially would’ve had been down. So I think because of those decisions, I do agree. I do think now with this set of options, we’ve got enough options that we can kind of flex between that we support in terms of the integration sets on either side of where we sit, that I do think we can get to 30 K because of that. I do agree. I think it’s just getting these features out, notifying customers that they’re out posting about it on LinkedIn and YouTube and doing a little bit of co-marketing with the platforms too to help get in front of their customers.  

Rob Walling :
How much are you burning each month right  

Harris Kenny:
Now? I mean it’s around 30, right?  

Rob Walling :
30, 30 K per month that you’re  

Harris Kenny:
Reporting or spending 20, sorry, we’re negative 10 now,  

Rob Walling :
Basically.  

Harris Kenny:
Okay. So as we increment up, I am slowly extending that runway.  

Rob Walling :
How long is your runway right now?  

Harris Kenny:
Right now I would say it’s probably six months now. And that’s assuming no prepaid. Most, almost all of our customers are month to month right now, so that’s assuming no prepaid, although I do have one annual that’s supposed to come in at some point. It’s like a net 45, so I kind of forgot about it, but yeah, so six months at that rate, it could go around 60 k the bank right now, and there are levers I could pull with my own personal finances if I had to before having to go out and do a raise money conversation or whatever. So right now I’m trying to increment up on prices, figure out the things that we have to do to get Salesforce, new Salesforce customers because asking for very specific things and then I’m having to sell better. I get on a call and I say, oh, it’s 800 bucks a month now. 

Whereas the first couple of Salesforce seats I sold, I did for one 50, which I knew was low, but it was just like, I’ve got to get some revenue on this. I’ve just been spending engineering months on it. I need somebody to use it. So that was a calculated, maybe bad but calculated choice, but now I have to follow up and I’m using a digital sales room and I’m like, Hey, you talked about these two things being important. Are those still important to you? I’m having to sell and not just sort of pay a blab for 30 minutes on a demo and be like, do you want to pay or not? So it’s challenging a little bit. I mean it’s not that complicated, but it’s definitely, it’s harder. Increasing prices is not as easy as just increasing prices.  

Rob Walling :
That’s right. It’s a bigger lift to change the sales process.  

Harris Kenny:
Expectations change. Yeah, exactly.  

Rob Walling :
You said, I really don’t want to go raise more money and I don’t have a strong opinion, to be honest. If you were to come to me and say, I really want to raise more money, I’d be like, great, you’re going so fast and you’re in such a big space, you can do it. And I don’t think it’ll be that hard, but if you come to me and say, I really don’t want to raise money, and if you came and said that and you were about to run out of money, I’d be like, well, this is not smart. You’re making a bad decision, but you’re on the cusp there where you have six months and I think you’re going to make it. So either way you do it, it’s your choice. I’m willing to give you advice on it obviously, but I don’t have that strong, oh, 98% of the time I would do this or that in this situation. But I am curious to hear you say, I really don’t want to go raise more money. Why?  

Harris Kenny:
Yeah. I feel like when we get to 30 K, I actually would be open to having the conversation then from a position of strength of like, look, we got to this point. I did it. I mean it’s been in April, 2019, I went out on my own as I started my first company, April Fools Day accidentally on May 1st, 2019 was my first day fully on my own. About a year later I discovered stars For the Rest Of Us and I would walk around a park by our house with our then 1-year-old and I would listen to the pod. But anyway, so I’m coming up on six years since I went out on my own and I feel like we get to profitable. I will have done it. I will be a non-technical founder of a software company in 2025. I will have the schedule flexibility to spend time with my kids. 

We have our house. We live very fortunate to live in a good part of Denver. I will have, it’ll be the end of the beginning in my mind. And I think if I can get there and then I can be more strategic about like, okay, we’re going to raise money to go solve this problem or to do this faster, that feels like a very different position than we’re going to raise money because I have to get to this point. Maybe at this point there would be somebody who’d be willing to write the kind of check that TinySeed wrote for us a year ago, but there’s just not that many people out there like that. And I am watching other companies in our space in the outbound space raise that kind of money, and I’m watching how it’s affecting how they make decisions, and to me, it just feels like it would be a distraction, and I don’t think I need to do it. 

I think I just need to stay disciplined and just focus on the most important thing to do to today, this week, this month. I think if I do that, I don’t need money to do that. So that’s just kind of where my head’s at. I think it’s possible if we get there, it’s the end of the beginning. I have this company now, and then maybe from that vantage point I look out and I say, Ooh, this is kind of cool. What if we raise money to go tackle this or whatever, but I don’t know what that is yet.  

Rob Walling :
So of all, you kind of have some objections to raising money that you listed, and of all of them, the only one that I agree with is that it would be a distraction. It always is. Everything else you said, I don’t actually think is true. If you want to know the truth,  

Harris Kenny:
I do. I don’t know what I’m doing. That’s the only thing I know for sure.  

Rob Walling :
Totally. No, but you said, will I be able to find many investors that would write a check and not? I think what you’re implying is and not expect me to raise a series A in 18 months, the non venture track. And the answer is yes, you can absolutely find them and you would, you’d be able to raise this the way you’re growing and the space you’re in, you would be able to raise money. I’m not saying it’d be 48 hours to closing the deal, but you mentioned getting to profitability and feeling. I think it would be calm in your soul and then you’d be able to set sites on the next thing. Investors at this stage, you don’t need to be profitable. You’re not burning 50 KA month. You’re burning 10 KA month with six months runway. You’re in fine shape. So every objection that you have, I just want to, and again, I don’t care if you raise money or not. 

I’m not trying to convince you either way, but what I do want you to have are the facts, or at least how I view the reality of the situation. I don’t want you to have objections against something that may not be true, and those are the reasons you’re not doing it. So that’s the only reason I call it out. Someone might be listening to this thinking the same thing. And so if money really is the number one stressor in your life right now, you get to think about it of like, Hey, if I had a couple hundred grand, 2 50, 400 K in the bank, not in your personal account obviously, but in the business account, how would that change it?  

Harris Kenny:
It is weird. I do wonder, oh, is this the best idea I’m ever going to have? Maybe, I mean, hopefully not, but maybe this could be a really big thing. I mean, we are having calls now with pretty big companies, and I do know that there’s features in Trello that if I shipped them right now, I would turn them into revenue immediately. I literally have people being like, Hey, just tell me when it’s ready. There’s a version of me that, or there’s a version of this company where I see that more clearly than I’m seeing it right now, and I’m not just so focused on my current month, American Express Bill or whatever.  

Rob Walling :
In our last episode, Harris had done most of the prep work for SOC two and was entering the observation period. I wanted to follow up to see how that process was playing out.  

Harris Kenny:
I don’t give myself a ton of credit, but I think there’s a couple of big things that I got, and they’re all connected, which is that I felt like this scaled outbound kind of growth hacking approach was going to go mainstream. And if that was true, then I would have to make a few decisions. Salesforce integration and SOC two being I think the two big ones, and I do think that is true, bigger and bigger and bigger companies with more and more budget are adopting these tools or hiring agencies. And so SOC two is part of that, and I think we talked about it briefly last time, but I think it’s totally made our company better, our product better. We’re handling security issues better, and I’m really proud of that and it’ll be great to have the report and be able to put it out there, but on the sequencer side, none of the tools that we integrate with have it. 

So it’s really unique for us to get that. We’re going to start getting pulled into more procurement now, and I know that their sales team is going to be up on a call and they’re going to talk to some enterprise buyer and they’re going to be like, well, we don’t have SOC two, but if you’re using outbound sync, outbound sync is the thing that connects to your system and they have it. And so I think they’re going to start pulling us in more than they do right now. They’re being friendly and they’ve sent some stuff our way, which I’m grateful for, but I think it’s going to become more of, it’ll be in their internal wiki or Slack or whatever of Yo bring Harrison to sit on a demo so we can close this deal, I think, because otherwise they’re going to say, no, we’re not going to give you right access to our system.  

Rob Walling :
Can you tell the listeners or explain to them who this, you said they are going to bring us in? Who is they?  

Harris Kenny:
Oh, sure, sorry. Yeah, so the sales engagement platforms that we integrate with, so that would be right now smart lead instantly email, bison and SaaS mail. So since the last time we talked, those three other tools are all new  

Rob Walling :
And none of them are SOC two, but if your SOC two somehow that  

Harris Kenny:
Helps. Yeah, I think that these mid-market, so we’ve closed a couple of mid-market deals since we last talked. Like sendo is one, which is pretty cool because they’re early adopters of tools. And so if you look and see their testimonials on some of the different outbound sites, I think it’s a really good indicator that they signed up for us. They tend to pick winners. I feel like they have a really strong culture in their Go market org is like, anyway. So to me, I was like, oh, cool, we’re kind of in this club now where their team was like, yeah, we need this. But you get in this procurement process, they see a demo, they’ll look at instantly or Smart Lead and they say, yeah, this looks great. We’re landing in spam with our current approach, using our primary domain and using whatever tool we’re using, but in the next call, I’m going to bring in our Salesforce admin and they’re going to have questions, and that person is the one that kills the deal for the sequencer company. 

And so I think that’s that point where the sequencer company would say, Hey, actually, app on Sync solves this problem. Here’s a trust center if we want, you can have Harrison on a call and he can explain how we can follow your data governance requirements basically. And so it’ll become, I think, an ace in the hole for them to get those deals across the board when they’re selling direct. I’m a big, big, big believer in the value of agencies, but if this keeps mainstreaming, I think it is. I also think that some of these teams are going to buy direct from the platforms and not just ask an agency to run it for ’em, but we’re also watching our agencies move up market and they’ve told me that they’re now putting outbound sync in their decks, and I’m watching them onboard bigger and bigger companies than they were 12 months ago, and now they’re consistently saying, we got another one and we need outbound sync. And so we’re helping them move up market, which is pretty awesome.  

Rob Walling :
A lot of the stuff you describe of how you’re growing and the success you’re having might sound to someone like you happen to be at the right place at the right time. There’s a lot of right place at the right time with you. That’s not an accident and that’s not luck. There’s a little bit of luck involved in all of this, let’s be real. But I think that you have made pretty strategic bets on where the puck was going and is a chance it wouldn’t go there. But it seems like a lot of the stuff that you do, the bets you make, if they work out, they have pretty significant asymmetric upside. Would you agree with that?  

Harris Kenny:
Yeah, definitely. Best one, 2013 married my wife. That’s worked out really well. Yeah, so I’m a gambling man. No, I agree. I think that I’ve definitely, it’s funny because I’m actually, I’m not a risky person. I like being on my feet. I don’t like extreme sports. I don’t like mountain biking and things like that, but there’s certain things where I think I say to myself, you got to go for it. And so I’ve made some big bets with this company and in other parts of my life over the years where in general, I’m a pretty steady ed, not a thrill seeker, but there’s certain things where it’s like, dude, you either put chips in or just get away from the table. And this has definitely been one of those running. That agency I think gave me some insight into for three and a half years before this, I think gave me insight a little bit into what was going on. For sure.  

Rob Walling :
Another bet that Harris made was building an integration for the HubSpot app marketplace. This took a bunch of engineering time and effort, and I was wondering if it had paid off over the last few months.  

Harris Kenny:
It’s different, and so the discoverability is much lower, but I think that what it’s helped with, we’ve had a couple of people that just randomly stumble upon it and download it. I think it’s just more helped with credibility and getting through the process than anything else, because when we weren’t in it and we would go to install it, it would give this warning of this is a random app, and that goes away and that came up and people would mention it. And so I think it’s helped with that. It’s helped with SEO, so I am glad we did it. We were essentially an unlisted app for a year before we did it, and we’re going to end up doing the same thing with, although I’m starting to talk to their team now about getting into their app partner program and being an app exchange, official app exchange partner for Salesforce, which was, I think when we first talked about it, you’re like, doesn’t this take a year? 

I was sort of misunderstanding. You can be an unlisted app, whatever you want, but to be, it does take a year to be a real, they do a security review and stuff. So yeah, I think worth it, but only after we had super validated that HubSpot users had this problem in and of itself, it is not driving demand, but I think that with Salesforce, it will be different. I think when we become a Salesforce app exchange partner, I think it will mean it move the needle more for us just based on how I’m seeing it.  

Rob Walling :
Tell me about your Salesforce integration right now. You’re an unlisted app, 

And you were telling me offline that in fact, you built this integration, which I’m sure was not easy to build. I’ve seen the Salesforce API back in the day with Drip. We were going to integrate with them, and I was like, oh, no, there are things you cannot unsee. We looked at their Derek and I looked at their docs and we’re like, ah, no. So I don’t think it was the easiest thing to build. And in fact, you had asked some folks, should I build this? And they were like, no, we wouldn’t use it, or something like that. Can you tell that story of how it was completely not validated and you built it anyway, and then I want to hear was it worth it?  

Harris Kenny:
Yeah, I think that might be the highest risk engineering time I’ve spent since starting this was on Salesforce. So I went into the smart lead Slack community, which is super active, and I think at least once, but maybe twice, I asked, Hey, we’re working on Salesforce. We’re the people who made the HubSpot integration, now we’re going to Salesforce, who’s interested? And literally nobody responded, not even a reaction emoji of a rocket ship or whatever, which you, these communities, it’s like a lot of rah rah stuff. It was just nothing. It’s total lead balloon. And part of me was like, okay, literally nothing. And I asked around, and at the time, a lot of our agencies were like, oh, well, a lot of our clients aren’t using Salesforce, so I don’t know if we would need it yet. But I think this goes back to my one core thesis of this scaled outbound movement would growth hacking movement would go mainstream, and if that was true, what else would be true? 

And this fits into with that one idea, which is like, well, that means bigger companies with Salesforce will also want it. And we had one example of a prospect who was like that, and then what really clinched it for me was when we got a support ticket of a screenshot of Salesforce, and I was like, what the heck? Literally, how is our data in a Salesforce account? And they were like, oh, well, we’re actually using HubSpot’s data sync to get it in there. And a couple of other users validated that of like, oh, yeah, that’s the only reason why we bought the HubSpot integration is because we want it in Salesforce. And I was like, oh, but I didn’t know that. And so then it was like, okay, okay, okay, this is hidden masked demand. They’re  

Rob Walling :
Hacking your tool demand to a result that you could get. Oh,  

Harris Kenny:
Man. Yeah. So it’s like, oh, there is demand, actually. So then we decided to start building it, and it was definitely harder than I thought it would be. It took more time, and even as we rolled it out, I’m like, cool, we have it. We log emails to the email object, and then people are like, well, why do you log emails as emails? We want you to log the emails as tasks. And I’m like, why would I do that? And then I learned how the data model works and oh, actually tasks are really useful. So it’s like, okay, great. Now we have emails as tasks, and then they’re like, oh, well, that’s great, but whatever. So that’s why I say when we throw engineering hours at this, I know that there’s revenue there because I have literally prospects who are, as soon as you support the lead object, we will sign up, but right now we have to use accounts and contacts or whatever. 

And so we’re slowly expanding our footprint in Salesforce. I still consider it a beta. I don’t consider it fully feature complete, but I think that in a month or two, we will cover the overwhelming majority of stuff that comes up in that first call. And now I feel like I’m wearing an account executive hat. Again, going back to, I mean, literally 12 years ago when I did that, and I have qualification questions where I’m like, okay, do you do this, this or that, do this or that? And then at the end I’m like, okay, I know what implementation is going to look like. So that feels more enterprisey as well.  

Rob Walling :
Any idea when folks will start paying you to use your Salesforce integration, or is that already happening?  

Harris Kenny:
Already happening?  

Rob Walling :
It is. Okay. It’s in now, but they’re paying for it.  

Harris Kenny:
Yeah. Yeah, already happening. We had our first one, I think in December, so this is February now, and then January, February. And I mean, honestly, this is kind of weird, but I’m actually kind of enjoying building for it because it does so many things, and I think what they’re doing with Agent Force is really interesting. We play on the data context layer, and so once that’s in the crm, there’s actually a lot of stuff you can do with the outbound sync data for automation and AI stuff. And so I like what they’re doing with ai. So yeah, we have PIN customers. Santoso was another one of those. And I think I’m increasing prices now as we’re doing more, and I feel more confident on the call and I’m like, we can do this or this. I know that took time, so I’m going to make you please pay me for it. Whereas before, it was kind of like, I don’t even know if this thing is going to fully work, so if you want to take a flyer on me, we can see what happens. But now it’s like, yeah, yeah, yeah, let’s do it.  

Rob Walling :
So between now and the next time we talk, which probably be a couple months, has been our usual cadence. What are you most excited about in the business?  

Harris Kenny:
I’ve been pushing really hard on getting instantly in SaaS mail and email by Send and Salesforce, and I really just want to get them full feature parody. A lot of explaining like, oh, we don’t do that yet, but it’s coming soon. I feel like that will be, and I think we’ll also get to 30 K around that time, and that’ll feel like V, one of this is a company, it’s a legit software company that’s profitable that has a handful of really legit integrations. So I’m excited to not have to be talking in circles around like, yes, we support instantly in Salesforce, but we have one feature that’s not there yet. That’s just kind of annoying. And I know it’s annoying for our CSM too. He’s fine. It’s fine. He’s doing great. But so that, I’m excited to just be really, really objectively looking forward to that. I’m excited about MicroConf in a couple of weeks. That’ll be really fun to meet up with our cohort. So myopically focused on getting to 30 K right now. Somebody asked me like, what’s next after that? And I’m like, I honestly have no idea.  

Rob Walling :
That’s the next peak. I can’t even see beyond that.  

Harris Kenny:
Exactly.  

Rob Walling :
I got to get there and then look.  

Harris Kenny:
Yeah, exactly. So I’m just so tunnel visioned on that, and I don’t know if it’s good or bad, but I literally can’t think about, I mean, I have broad idea, but  

Rob Walling :
Well, I’ll tell you what it is. It’s 41 6 6 7, which is half 1,000,500 K, or that’s, I’ve been down this road. I know exactly. First it’s 40 K and then it’s 41 6, 6 7, and then it’s 50 K. I mean, it’s pretty easy. But the question is, do the current integrations and the current way you’re executing, does that allow you to get there? Do you have to make adjustments? Harris seems to be on a tear with a trajectory that just keeps going up, but with all that growth, hurdles are bound to show up. Will his bet on SOC two and marketplaces payoff and will he need to raise an additional round to keep up with growth? We’ll talk about that and more next time on TinySeed Tails. I hope you enjoyed this episode. If you’ve ever wondered what it’s really like inside TinySeed and want to hear a raw, candid coaching conversation between Harris and I, we’ve put together something special for you at TinySeed dot com slash bonus, you should check it out. I’ve never released anything like this before. I hope you enjoy it. It’s at TinySeed dot com slash bonus. 

Rob Walling:
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You’re listening to Startups. For the Rest Of Us, I’m Rob Walling. In this episode, I sit down with a longtime podcast listener named Zamir Khan, the founder of Vid Hug. And as you’ll hear in this episode, there have been many touch points on this very show where Zamir has sent in a voice message or I wound up chatting with him back in 2021 when I did my call for anyone going through an exit. And I’ll talk to you for 20 minutes. So you’ll hear us recount this in this episode, but it is a pretty incredible story of a founder who started a B2C SaaS company and was really struggling, struggling to get traction, was struggling to grow it, and spent years facing the headwinds that we talk about on this podcast, high Churn. It’s hard to charge a subscription. I believe it was a one-time fee at the time, and it’s just really hard to get momentum in a business where the numbers are against you. 

And then if you listen to this episode, you’ll find out what caused his revenue to explode more than 100 x per month and an eventual offer to buy the company for an amount that we don’t disclose on the show, but it’s an amount that means he never has to work again. And you, dear listener, get to hear the whole show and learn whether he took that offer or not. It’s quite a journey. And in the middle of the show, we’re going to have a clip from episode 433, which I believe was in 2018, maybe, maybe 2019. And we’ll have a six, seven minute clip of his prior voicemail. And you’ll hear me and my former co-host, Mike Taber, answer his question. And it’s all relevant. It all ties in to his story and the eventual outcome. Before we dive into Za Me’s incredible journey applications for TinySeed, my B2B SaaS close today, September 9th. If you want the right amount of funding, an incredible roster of mentors, a world class network, an instant community of some of the best B2B SaaS founders in the world, head to TinySeed dot com slash apply. And if you miss the application, head to TinySeed dot com slash apply. Enter your email to be notified when applications open in the future, or likewise if your business isn’t quite ready, but you want to stay in the loop, TinySeed dot com slash apply. And with that, let’s dive into our story.  

Zamir Khan:
Zamir, welcome to the show. Thanks, Rob. It’s a bit surreal to be here, but I’m very excited  

Rob Walling:
Still. The listeners know you and I were just talking and I knew you were a listener of the show, but you said you were listening since before I bought tail, so that’s 2011 at least. You might be an og, like 14, 15 year listener, which is a trip. So here’s the big question. Are you going to listen to this episode?  

Zamir Khan:
A hundred percent,  

Rob Walling:
Yeah. Okay.  

Zamir Khan:
Yeah, this is a bit of a bucket list thing for me. Yeah,  

Rob Walling:
Awesome. Love it, man. So I’ve obviously in the intro told people a little bit about what you built and how you changed your life through SaaS, but I want to hear firsthand from you what it felt like when you saw millions of dollars appear in a bank account through after a lot of hard work, a lot of skill, a lot of luck. You saw more money than I’m guessing you had ever seen in your account. Walk me through how that felt.  

Zamir Khan:
Yeah, I think the answer may not be what one might expect, but I think the overwhelming feeling is one of relief because having gone through a fairly lengthy process with selling vid hug and one that my sample size is one in terms of experience there, but I don’t think there are sale processes that are a hundred percent smooth, but it had its ups and downs and definitely relief that all of that time and efforts came through. And also, I think I didn’t have the time or the energy to really absorb it fully because I knew next step was let my team know what had just happened. And then my heart was with making sure that they’re feeling secure because the entire company was acquired, the team, I wanted to make sure that they knew that they still have jobs and they’re part of this journey still, and they’re needed with the product. 

So that’s where my mind was. It was seeing that number was surreal and unreal. And definitely there was a little bit of celebration happening with my wife, but then it was like, okay, that’s cool, but we got to move on and there’s still a lot of work to be done here. That was, it was over time, I think as I had the chance to transition into my new role and frankly have a lot of responsibility taken off of my shoulders by the larger company that I was now a part of that I had over time, more time to appreciate the new reality of, okay, life is different now.  

Rob Walling:
Yeah, that’s a good way to put it. I think it takes most people quite a bit of time. It took me months to realize, oh, I love what you said, life is different now. I think there was a moment for me where I bought, I don’t know, a million dollars of Vanguard Mutual Funds. You know what I mean? It was like, I need to deploy this. I’m not going to do it all at once. And I was kind of a little bit of dollar cost averaging in, but I remember being like, who does that? Who buys a million? And it’s like, well, me, I guess now it just blew my mind. And that was a moment because having money in a bank account, it’s just a number on a screen. There’s utility to it, but it doesn’t feel, but to me, owning assets investments was like, oh, this is where the rubber meets road. And that’s where I was like, oh, okay. I’m in a different place than I was a few months ago  

Zamir Khan:
For sure. And I think the question people in that situation often get is, what did you buy to what toy? And I didn’t buy a Ferrari or something like that. I wasn’t in that mindset anyway, but for us, we had actually just bought a new house that needed a lot of work to be done to it. It was an old house. And before this, we were having to make a lot of decisions of like, well, we have a certain budget and we can do A or B, but we can’t do both. And so the difference for us was like, let’s do both. That was the kind of splurge, so to speak. But I wasn’t driving a Ferrari the next week  

Rob Walling:
That came, A year later, you strike me, someone who’s very pragmatic and will not over  

Zamir Khan:
It hasn’t happened yet.  

Rob Walling:
Yeah, yeah. You’re still thinking about it. I want to read a little excerpt. I asked you to put together a timeline. It helps us kind of navigate the story. And here’s a quote from this. You said, I was an avid listener to your podcast, and I completely bought into the philosophy, and yet I found myself on a path that broke most of the rules, B2C, low cost, one-time payment, an industry in which I had no edge. I knew this. I knew I was playing on hard mode, and yet I continued to do it. And I think because someone listening to this episode might be thinking, what the fuck are you doing, Rob? Why do you have a B2C success story on here? This kind of goes against the thing that I’ve developed over the years. We used to take B2C questions, Mike and I, and then I took it for a while, and then eventually I’m just like, I just don’t have anything to say here. 

Most of the time it doesn’t work out, but I followed your story is the thing. And you not only sent us in, I think it was an email question back in maybe 2018. It was episode 433, and I want to play a little excerpt of that here. You not only sent that, but then you and I stayed in touch and to cut forward, there was a few years ago, it was during the pandemic in 2021 where a, now it’s on the podcast. Look, if you’re selling a company right now, it’s the biggest decision of your life probably. And if you need 20 or 30 minutes of my time, do it. And I did a bunch of calls, I don’t remember how many 10, 15 calls with people just to do it. We were all at home not doing anything anyways, and you and I then chatted, and that’s when you told me, I was like, how’s it going? 

What’s going on with vid hug thinking, oh, what? It’s a cute business. And you’re like, someone made me a tremendous offer for this and I was blown away and we had a good conversation then. And so that’s one of the reasons I want to bring you on here. I also, bringing on counter examples, no one’s, right a hundred percent of the time, I have my rules of thumb of when things should work and this and that, and B2B I think is the best, but you’ve kind of proven that you’re the, what is it, the exception that maybe proves those rules?  

Zamir Khan:
Yeah. Let me say first and foremost, I’m not here to say you should go out and do a solo B2C Bootstrap startup. I’m not here to say that I believe that my journey is an example of what an other worldly event you need to happen to actually help you win in that space. As a bootstrapped founder, it’s clear that the pandemic was so big for Vid H’s growth. It was everything. What I tend to say to people is the pandemic was the largest marketing campaign possible for something like Vid Hug. It’s like if we had had millions of dollars of venture funding to do marketing for Vid Hug, it still couldn’t have done what the pandemic did for it. And so I think for any founder to rely on some event like that coming along would be a little  

Rob Walling:
Foolish.  

Zamir Khan:
Yeah,  

Rob Walling:
Because it was a big swath of luck. You were right place at the right time and you were doing things in public and that created an opportunity and you created your own luck. But in essence, yeah, I think you and I talked offline, it’s like if there was no pandemic, vid hug is not the exit that you had. It’s not the product that you wanted.  

Zamir Khan:
No, and I think my email question into you and the rest of my journey is a sign that I am not going to sit here and say I knew what I was doing, and I knew that this shift would eventually happen. I didn’t. And as I put in the notes, frankly, just before the pandemic started, I was at the point of almost giving up on Vida and I parked it and decided to focus more on my consulting because I had a family. I needed to pay the bills. So I’m not going to sit here and say that I knew it was coming, but it is that old saying of luck is when preparation meets opportunity. And I believe this is a firm example of that.  

Rob Walling:
Yeah, I agree too. All right, so now I do want to roll your question, and Mike and I weighing in saying, Ooh, B2C is, oh, I don’t know that I, and I think I’m several times, so it’s a nice side project, but wouldn’t, it’s a step one busy, you know what I mean? I can say that. So we will roll that here. Our next question is about how to approach a B2C company. And this is a long email, so I’m going to summarize it. He says he’s a huge fan of the podcast, started listening about five years ago. He’s a senior developer. He’s always had the product itch, and he’s working on an app. It’s called Vid Hug, V-I-D-H-U-G, vid hug.com started as a scratch your own Itch project for his mother’s birthday. And it’s definitely B2C. It’s low LTV, it’s non-recurring revenue. He says, I feel like I have a mini rob on my shoulder most days saying, what are you even doing with this question mark? 

Exclamation point thing is, I don’t really have a counterpoint for you except for a feeling. And that feeling comes from talking to customers that are now able to do something they previously could not. The plan moving forward is to focus on growing organic channels on the B2C side through SEO and referrals, and also build a B2B side, which would bring recurring revenue. Do you think I’m crazy for even trying this? And just as a point of data, he has basically a free tier, and then he has one that is $15 and it’s a one-time thing for the B2C side. What do you think, Mike?  

Speaker 3:
Well, to answer his question directly, am I crazy for even trying? The answer is yes. It’s just a matter of how crazy we all are.  

Rob Walling:
Exactly. It’s just a spectrum,  

Speaker 3:
Huh? Just varying degrees. Yes. 

So going back to the question of are you crazy for trying something that’s B2C? I would say no. I definitely think that there are opportunities out there for people to build B2C businesses that are solid and profitable. It’s just a matter of making sure that you are methodical about how you pursue your different traffic sources and putting people on your mailing list and optimizing the product itself for revenue and getting people into it and making them happy. And if you can do those things, it doesn’t matter whether it’s B2B or B2C, you’re still going to have happy customers who are going to give you money. But that last piece of it’s the key part, they have to be happy and give you money. If they’re not giving you money, then you don’t really have a business. And I think that’s the challenge that most people run into with B2C companies is that your LTV tends to be much lower and you need a larger number of customers in order to make it work. But if you can get those viral components, and there are a lot of viral components to something like this, you can email out to a bunch of people, and if one person gets in there and they email 50 people, now you’re in front of 50 people instead of just one. That’s a huge viral aspect that a lot of things that try to do B2C don’t necessarily have, and because this has that kind of baked into it, that’s an encouraging sign. It’s not the only thing I would look at, but it’s definitely encouraging.  

Rob Walling:
Yeah, it’s tough because B2C is just hard. It’s just a different game with this customer lifetime value. You can’t run ads, you can’t pay salespeople, you can’t, there’s so many things you can’t do. So it’d literally be outreach to bloggers and offering it free to bloggers and sponsoring bloggers. And I keep saying bloggers, podcasters, whatever, people with audiences. If you got, here’s the thing, if you got a bunch of Instagrammers with huge followings, YouTubers, bloggers, podcasters, yeah, it would be possible to grow this, but it’s a completely different playbook than what we typically talk about or what you’re going to hear from MicroConf speakers, for example, or in the traction book where it really is more focused on doing a lot more B2B stuff. So you just have to ask yourself, is that what you want to do? Do you want to build those relationships with influencers? 

And it’s not going to be the core of the hrs workflow or the core of a manager’s workflow. It’s a nice to have. And I think that’s the other thing to think about is I had businesses in the early days that only made a thousand a month, 2000 a month, and frankly, I learned a lot from them. It was a stereotip approach, and I learned how to whatever, run ads and do SEO and do display ads and do AdWords and that kind of stuff. And I took that experience with me to the next thing. So in its current incarnation, do I think Vid Hug can be a mid six figure business? I don’t, and it’s just my opinion, right? It doesn’t mean I’m right or wrong, but I don’t see an angle there as it stands today. But then again, I could have said that about Drip the month it launched because it was just an email capture form, and then we kept pivoting and grinding and customer developing and slow launching and doing all the things that you heard me talk about on this podcast over the years and eventually got it into the seven figure mark. 

And so that’s the thing is as it stands today, vid Hug, it is a cool side project, and frankly, I’m impressed that you’ve gotten it to $600 a month given the price point and all that. But I think it depends on how you’re thinking about it. If you think about it as good learning and you want to build it up to a grand two, three grand a month, that to me seems doable. And it’ll be learning and it’ll be a little bit of income. I don’t know how you would ever get it passed there. Maybe you’ll eventually come to the point where you see an angle to do that. I also had a lot of businesses that never did. I had eBooks and info products, and I had e-commerce site and I had small software products, and I had one time software products and all of those topped out, and I could never get them past, let’s say between 505 grand a month. 

I had several that were in that range, and eventually I either sunsetted them or I sold them as I moved on to bigger things. And so my gut is that Vid hug will fit into that space, that role in your entrepreneurial career, and there’s certainly a time and place for those, and you just got to figure out, I think, how you were thinking about it and where you want it to take you. So yeah, obviously Mike and I were, it’s funny. I think we were right. We were right, but also wrong. Obviously, we were technically incorrect because it became something most, but we couldn’t have predicted the pandemic, where as you said, I love this phrase you used. You said, I basically got to problem solution fit, but good vibes don’t pay the bills. And C, basically the pandemic shifted the market and brought product-market fit to me. Most of the time, you have to tweak the product to fit the market, but the market basically shifted to you, which I think is a succinct and very clever way of saying it these days. Vid Hug is located@memento.com. Memories are made with Memento, and it started off as something that you built to fix a pain point that you experienced with your mom’s 70th birthday. You want to tell us that story?  

Zamir Khan:
Yeah, that’s right. So this was back in this late 2016. My mom was turning 70 years old, the milestone birthday, you want to do something special, and I come from an immigrant family. My mom’s family and friends mostly don’t live close by. They live in other continents. And so we thought, well, what if we got everybody to record a video message to mom and put that all together into one video? And my mom was turning 70, she’s the youngest of her many siblings. And so you can imagine the crowd, the audience that I was trying to get recorded videos sent to me digitally from. And so I experienced the challenge with that. I did actually put together a little webpage where they could visit it, use their webcam, record a video, and that would automatically get sent to me. And that even that, as clunky as it was, was easier than record something and put the file in Dropbox and or try to email it to me, but Gmail attachments won’t allow that kind of thing. 

Then I put them together in iMovie. It took me a long time, even though I consider myself a technical person, it’s just you want it to be good and perfect by the end of it. When I was going to show her the video, I was honestly sick of the project. I was like, I spent way too much time on this, but let’s see, let’s show it to her. And it was as I would find out again and again, and again with Vid Hug, it was one of the most impactful gifts that she’s ever received. She was speechless. She cried. She told me, especially because her generation is not as digital. She told me this one friend that you had in the video from Australia, I haven’t seen her face in 25 years because we write each other letters, but we haven’t necessarily shared selfies because we don’t do that. And so I know that’s a generational thing, but that just showed me the depth of the impact of it. And I think it was my brother’s partner, she said she knew I was techie. She knew I liked to hack on things. She said, you should build something that anyone can do this. And that just started the idea. And I was like, yeah, wouldn’t it be cool if more people did this? Because it didn’t take so long to do.  

Rob Walling:
And so you built an MVP and it seems like spare time, 20 17, 20 18 hacked something together. And did you originally give it away for free, or did you have kind of a Stripe link from the start?  

Zamir Khan:
No, the bare bones MVP was very, I had read the Lean Startup and I was trying to be good. So my MVP was simply a webpage where you could submit videos, and it was me, I moving the clips together on the background. 

And so I was doing that for family friends. I was kind of advertising it as a service just to validate, is this something other people want? And I got good feedback from that. Then I was like, I don’t want to iMovie these things. And so the technical challenge was like, can I build the video editing automation on the background? So I built that in the cloud, very rudimentary, and that’s when I first started charging for it with Stripe. And that was very basic. It just put the videos together, no background music, no audio normalization, almost no graphics of any kind. The process would succeed probably 85% of the time. And the rest I was I moving? Yeah. So then incrementally, there were newer versions after that that were faster, better graphics, more music. And actually the last incremental version that I made, which was a really big step up in terms of what the user got, was released a couple months before the pandemic.  

Rob Walling:
Wow. So just luck meets opportunity type or preparation meets opportunity in that case. So when you added a strip link to it at middle of 2018, I have in the notes, and did it make any kind of money over the next year or two? Was it this like hundreds a month?  

Zamir Khan:
Hundreds. So yeah, I wrote into the pod, I got to 600 a month, and that was because of some fortunate marketing on my parts. I was a technical person figuring out how to market. I was on Quora answering all the special occasion related questions. And at that time it was tough because not only had I picked B2C, I had picked something new that people didn’t really know was an option for them. They weren’t searching for group videos, so I had to find who were the people who really, really needed this product and were desperate for it. And so I was trying to get into communities related to, let’s say family with people deployed in the military and people in long distance relationships basically I found were the ones that really were coming to this product. So yeah, hundreds of dollars a month. It was a side project. Obviously I was still doing technical consulting work to pay the bills, but I was passionate about it because every user that came along and used it had that same reaction of like, wow, this, I only spent $15. A lot of them told me I would’ve spent a lot more had I known what the impact was.  

Rob Walling:
How much were you charging? It was a one-time fee, right?  

Zamir Khan:
Yeah. I think I started at $12 and then I increased to 15. And again, early stage, I was that founder who was like, I was putting 90% off coupons out there just to try to get people to use it, and gradually got away from that. And so you can see the mountain, you have to climb $600 a month is not a lot, but it’s a decent amount of users you have to attract. And they churn every time one time, right? One time. So  

Rob Walling:
You need 50 new people to convert and pay you every month to get to 600. And that’s where one time is difficult. That’s where B2C is difficult, the pricing is low. And so I think what we said in the podcast episode is like, you just don’t have money to market. You can’t really do much. You can’t buy ads. It has to be these free marketing approaches, which is free, which is your time, and that you did Quora and Reddit and Facebook. But here’s the thing. You went out, we talk about hard work, luck and skill. You put in hard work. You reached out and got a crucial backlink from a blogger who had a listicle about long distance gift ideas where they said video, and you’re like, Hey, can you just add a link to Vid Hug? And that was a flywheel for you, right?  

Zamir Khan:
Yes. Yeah, I love that story. So I was still listening to the pod at the time, and I knew I needed content. And so I did start a blog for Vid Hug, and I was writing my own, but I knew, again, that was a long-term thing that wasn’t going to happen right away. So I knew the terms I was interested in were related at that time to long distance relationships. And so one of the top terms for that was a listicle about long distance birthday gift ideas. And it was from somebody who had an e-commerce business where they sold birthdays in a jar basically, or a gift box, but it included birthday cake in a jar, I believe. Really a lovely idea. And they had this article of here’s the ideas, and obviously their product was in that list, but number four was make a video. 

And almost all, I remember all the 10 links or all the 10 items in the list had a link, but the fourth one didn’t, the video one. And so I thought about it and I didn’t want to just cold approach them. So I actually did a little bit of research on this founder. She was on an interview somewhere. I listened to it. And so the one, I reached out to her, I had done my research, and so it was an approach where I, I had spent some time learning about you, and I think that made her receptive to talking to me. And we actually got on a phone call together and had a good talk. She was a solo founder of an e-commerce business. I was a solo founder of Vid Hug at the time. And she just said, yeah, I’ll do that. I’ll put that link on you for there. And because of where she ranked, that was immediately like boom, one to two sales a day just from that link, which I know again, doesn’t sound like a lot, it’s not a lot of money, but for me at that time, that was a level that was a stair step for Vid Hug, and that actually gave me more motivation to keep going with it.  

Rob Walling:
And that’s the thing I like to underscore on the podcast a lot is flat revenue, no revenue, even just any type of flat revenue is really discouraging. And spending tons of time nights and weekends and having the number not go up is harder than most people realize. And so getting, as you said, one to two a day, 30 to 60 a month, that becomes, it’s not technically MRR, but it is recurring ish as long as that keeps ranking. And so that’s what you were seeing, which can really help boost your motivation for a while so that if we smashed forward, that was in 20 18, 20 19, you put the Stripe link on, you did a lot of one-time things that don’t scale, like we said, Quora and Reddit, Facebook, you get that link. And if we smash cut to February of 2020, right before the pandemic starts, you had vid hug up to a thousand dollars a month still on paper use. And so that gives people an idea of you were spending years, nights and weekends to get it from, it was at 600 I think in 2018 and then a thousand dollars a month. It’s a tough thing. And you said, I considered selling it even had interest, but didn’t complete the sale. So you were kind of just like, I don’t know if I want to keep doing this. I mean, you were kind of done with, yeah, what was the story there?  

Zamir Khan:
Yeah, so again, like you said, that’s early 2020, and as somebody who was a freelancer consultant, that’s the time that I did my annual taxes for the previous year. And 2019 was the year that I took the most time away from billable hours to work on Vid Hug. And it was easy for me because I enjoyed working on Vid Hug. Again, it was a fun project from a technical perspective, and the customers were having great experiences, so there were good vibes, but it allowed me to ignore the stuff we’ve been talking about with the low revenue numbers. And so that was staring me in the face at the time of doing taxes. It was like, whoa, okay, I’m having fun and I feel passionate about this project, but I have a wife, I have a family, and I have a mortgage. And I think anybody who’s been a freelancer consultant also knows that you don’t get promotions when you’re in that position. 

You don’t get a new job title every year, and you probably have a peer group where you’re seeing people make real tangible progressions. So that combined with like, whoa, my income was a lot less than it was in previous years, and UG is what I have to show for. It really made me examine it and think, obviously I wasn’t ready to fully step away from it, but I said, I’m going to put it on the back burner and I’m going to focus on my consulting. There was one other piece there that was making me feel that, which was, the other anecdotes is about the support that I had to do for Vid H because it’s a B2C business, low cost, and actually, I think you’ve said this before, sometimes the lower the cost, the more support you might have to do for those users. And so most of the users of the products were, I mean, almost all of them, lovely, but it’s a technical thing, and it’s attracting people who are non-technical. 

And again, I’m the solo founder. It’s a side project. It was buggy at the beginning. So I remember one time I was with my family, we were at a nice cottage in the back country, doesn’t have wifi and not good cell signal, and I’m trying to have a Help Scout conversation with a customer, and my family is inside playing board games, and I’m standing on a rocky beach holding my cell phone out to try to catch a signal until I feel my phone buzz with the next response from Help Scout. And that combined with seeing what it meant for the bottom line, it was like, this has been fun, but is it really worth it? That was kind of the feeling.  

Rob Walling:
Yeah, I’ve been in that same situation up on the coast of Maine at one point early on when I was doing everything myself, 2008 or oh nine, and I was there with the family, had a young kid, and I remember trying to get sales service to answer responses, and I also had some one-time sales stuff at the time, and it was just like, what am I doing? What is happening right now? I don’t want to be doing this. And especially for 12 or 15 bucks one time, every email you respond to is like, well, I just kind of, you know what I mean? None of this was worth it. So yeah, I could see how you’d be discouraged not only lack of growth, but the support. And then one month later to March of 2020, and I think you sent me a graph, which is awesome, but it’s like your daily active users goes from, I dunno, approximately 250 a day to 5,000 a day by the end of March. So it’s not like a 20 x increase. And obviously this has something to do with the lockdown. You want to talk us through the logic that caused that to just spike up? Was there suddenly search volume or were you being mentioned? What was the real, or was it just all direct and people were somehow, yeah, I just dunno how they were finding you.  

Zamir Khan:
Yeah, it was a crazy time. And I think the funny thing is that I think most people assume that because I was deep in this product and I understood who needed it, that I would know right away what would happen, but I feel a bit stupid. I was so focused at that time when things started locking down, when they announced that our kids wouldn’t be going back to school, I was focused on, I’m back with my consulting business. I’m moving that from the coworking space back to home. My wife and I need to watch our three kids as they’re at home and make sure that they’re still getting some education. And of course, I was watching the news and frightened about what’s going on. Vid Hug was at that time, like a Google Analytics tab that I kept open on the side. I like to see the real time, who’s on the site and how many people are using it and that kind of thing. 

And I remember trying to pay attention to my consulting work and noticing that the number of users on the site kept growing. You could watch it literally in real time. And as you saw in that graph, it just kept going. I wish I had the a hundred percent clear attribution to say what drove that. But what happened was that people couldn’t celebrate in person anymore. I knew that Vid Hug helped people celebrate who couldn’t be together in person because I knew it was used by people in long distance situations, but now everybody couldn’t celebrate in person. And so my feeling was that it was a combination of a few people found the product and knew about it probably through that link that I landed. But after that, it’s got a viral loop built into the product. That’s one of the advantages. So if somebody does a vid hug, we call them the organizer, they’re the one that’s commissioning, they’re making the video, they then invite their friends and family of the person that it’s for to participate in the video. 

Sometimes they invite 100 people, 200, sometimes 20. But a lot of people, all of those people come to vid hug and record a video. They’ve now seen the platform. They understand in a sense what it makes. And if only a handful of those people, a small percentage of them later say, oh, my mom’s birthday is coming up, or My son’s birthday is coming up and I don’t know what I’m going to do because it’s, that’s what happened. And the thing that surprised me, many things surprised me, but we would see happy second birthday videos on there. People were making birthdays for the kids, which I didn’t never thought this product would be for that because kids have birthday parties in person. And so we were seeing that. We were seeing schools use it immensely for teacher appreciation, for just staying connected with each other while they were all at home. And so from March, April, may, that growth just kept going like a freight train.  

Rob Walling:
And the viral loop, I think is a huge key to that. I talk in the SaaS playbook about SaaS virality, specifically different Facebook virality is different than SaaS virality, but within SaaS demarcated, strong virality and weak virality. So let’s do weak first. A good example of this is Savvy Cal or Sewell, Sal’s Scheduling Link. Sewell is electronic signature. I can send you a link to book me. I don’t invite you to be a user. I don’t invite you to contribute, but you’ll see Powered by iCal, and that’s what I call weak virality. Same thing with electronic signature. You’ll see, oh, he’s sending documents through Sewell. Cool. Strong virality is when I invite you, virality is Slack, where I’m the tech lead on my five person dev team, and I invite my four other people. They create an account and they do stuff, and they interact with it more deeply than just clicking a link or clicking a thing. 

And so Vid Hug has, at least by my arbitrary definition, strong SaaS virality, even though you still weren’t SaaS, you were still one time, but it drove the attention. And once people have used it, then they get the idea, oh, well, I could send this to my friends and my family and all that. And so you hit milestones. I love that you listed this. I hit milestones. More revenue in one hour, then usual in a day, more revenue in one day than usual in a month, more revenue in one day than all of 2019. Then you started working seven days a week, 14 hours a day. And so your wife must have, I mean, she was just on taking care of three kids duty. You had no time to do anything. What was your time spent doing? Was it mostly support or was it scaling and bug fixes?  

Zamir Khan:
All of the above. There was a lot of supports, and again, when we plot out the metrics of how many users that used Bid Hug actually needed support, that percentage is very low. But because a single customer brings 100, 200 people to the platform, people who record videos would still come in to support and say, often they’d have a webcam issue that wasn’t our problem, but they’re on Vid Hug using it. And so we would support them through that. Or somebody who’s being sent the video, I, I’m trying to watch the video, but my old Windows machine doesn’t have the right codex on it, that kind of thing. So yeah, even though it was a low percentage of the number of active users that needed support, my Help Scout inbox was just full. And so I was doing all of that. Luckily, I had, again, this is preparation meets opportunity. 

I built Vid Hug with a serverless backend using the serverless framework. So it was using microservices on the API side. And that actually scaled fairly well. I had some minor hiccups there, but I do feel like if I had it running on, and I’m not advocating this as a reason, because again, this is such a one-off, but if I had running on a small server, it would’ve completely just, it would’ve been trouble fallen over. So there was little things. It was all in AWS, but definitely had to tweak some things there. And also if people remember during that time, even large services were having trouble because everybody was moving to work from home. Everybody was going remote. The internet was just under strain. So a lot of the issues that we ended up having were larger third party services that we relied on going down. We had an AWS outage. We had at one point in time, vid Hug was using Digital Ocean and they had an issue. So those kind of things, but of course, your users don’t know that. That’s, to them, that’s a vid hug issue, and that’s fair. There was that and yeah, bug fixing, because at that time, I’d never had so many people with so many different devices and browsers, recording videos in the browser has come a long way. At that time, it was still device dependent, browser dependent, lots of those things.  

Rob Walling:
And to give people an idea, I had said, you went from 250 actives a day up to 5,000 a day by the end of March, and by the end of April, you’re at almost 80,000. So it just, I mean, talk about exponential. And in April, again, we talked about you were at a thousand dollars a month plateaued in April. You did six figures of revenue. And I remember you emailing me during this time, you could probably pull it up, but I remember you were extremely stressed and you were like, this is brutal. And in the notes here, you sent me, it sounds ridiculous to say that I experienced trauma from a wildly successful growing business, but I did. You were staying up till 3:30 AM at one point because there was this service in Romania that went down and they were asleep. And the downside of Vid Hug is quoting you. The downside of Vid Hug being so special to users was that when it didn’t work, you were responsible for ruining someone’s birthday or anniversary. Every single user was truly there for a special occasion. So this sounds like not fun at all.  

Zamir Khan:
Yeah, yeah, absolutely. So it’s the upside of experiencing the user’s joy when their occasion comes off. But you get to experience the downside of that too. So in that time was again, a third party service to have our videos recorded in the browser and then transcoded and sent to our servers. We used a third party service by some bootstrap founders who were in Romania, and they built a great product, frankly, and for the most part it did work. But like I said, that early stage of the pandemic was not really a good time for many services. And so they did have some downtime when they basically got, my understanding is they got DDoS by one of their other customers, another customer who didn’t realize that they were going to have so much volume. And so that meant that nobody could submit a video to Vid Hug during that time. And I think I have this in the notes too, just to give you a picture. At our peak in May, a video was being submitted to Vid Hug every second incredible  

Rob Walling:
Volume.  

Zamir Khan:
So every second, or maybe a little bit less than that, somebody was not able to submit a video to Vid Hug. And these people were, I’ve been invited to be part of my friend’s birthday, and now they’re not going to get my video because it’s not working for me. Or I remember talking to someone like, I’ve been working on this video for my husband for weeks and it’s birthday is tomorrow, and I want to surprise him with it, surprise him with it, but it’s not ready because the rendering platform isn’t working. And while those times were rare, my heart was so intertwined with this product as its creator, as its founder, that I soaked in when the products worked well, and I loved that, but I felt heartbroken when this happened to users. And I remember that night, I remember, I want to say I remember it well, but it was not enjoyable. 

I was exhausted, and I remember just sobbing with my wife next to me. She was kind of comforting me and frankly saying to her, I don’t know if I have it in me to keep going. And I did. It sounds crazy to say when you say the revenue numbers, I thought about pulling the plug, thought about putting up a static page and saying, sorry, folks, I just can’t do it anymore. And I’m happy that I was able to connect with some advisors and hire some help and dig out of that place. But I almost got to that place where it wasn’t worth it to me no matter how much money it was making.  

Rob Walling:
And that’s a really weird place to be, huh? Because as an entrepreneur or an aspiring founder, when you’re doing it nights and weekends for years and years and years, all you want is success and sometimes success, even when it doesn’t come this quickly, it can still be extremely stressful. I can certainly speak to experiencing that with Drip, which again, didn’t grow nearly exponentially like this, but I remember thinking, shouldn’t I be happier? Is this what I’ve wanted for 10, 15 years and now I’m here? And it’s like, this is not very fun. And that’s a really, really interesting place to be. Why do you think you didn’t pull the plug?  

Zamir Khan:
I definitely want to give some credit to my wife that she was very supportive and she wasn’t the kind to say, no, don’t pull the plug. You should keep going that strongly. But she was there for me and kind of in a way, this will pass. These things always do pass. And it did. And what I found, even though I was answering so many support questions during that time, almost everyone was so understanding. They were like, oh my gosh, I’m speaking to the actual creator of this product. I had in my signature er, Khan founder and CEO of Vid Hug. Little did they know I was the only person working for that company, but they felt special. And they said, oh, you’re looking at this right now. You’re responding to my email in the middle of the night. Thank you. And so that made it a bit easier. But I have to give credit to my wife, Heather, just like when I was out on that beach holding the phone out for Signal, she wasn’t saying, why are you wasting time on vid hug? It’s not paying the bills. She never said that. And so I think for a lot of founders who have been through this journey, they know that it takes more than just one person. There’s other people behind the scenes that make that happen.  

Rob Walling:
My wife, Dr. Sherry Walling, has a phrase that your spouse or significant other, your life partner is your original investor, your original. So if you raise subsequent funding, your original investor is that person was there with you because they put up with your bullshit. And I say that about because she put up with my bullshit for years and years of the nights and weekends, and I think that is almost a requisite to be able to pull it off. It is hard to do this alone.  

Zamir Khan:
I love that term because yeah, they go all in, right?  

Rob Walling:
Yeah. And so obviously you get this popular this quickly. You received inbound interest from a lot of investment firms, including Sequoia, including Punchbowl, which is a digital invitation and greedy card platform that wound up acquiring you in 2021, I believe, is when it finally closed. But you were getting this inbound interest to raise funding, and you’re thinking to yourself, I’m just trying to keep this thing afloat. I’m a bootstrapper. Do I need to raise funding? Do I want to raise funding? Right. It’s going to complicate things. But in 2021 it was Matt is the CEO of Punchbowl reached out again, and instead of investing, he says, maybe we should buy you. Was that even on your radar before then of selling? Were you thinking about, I mean, or were you just trying to keep your head above water? I’m guessing by this time you’ve hired some help, you have some support, help. This is a year-ish, nine months after pandemic started, but what was your mindset as you entered this negotiation that eventually resulted in an LOI and them closing the deal?  

Zamir Khan:
Yeah. First, I want to take it back to that early time period when I first had that inbound interest, and including from Matt at Punchbowl, who at the time I did not know at all. I consider him a friend now, but at that time, it was just some random guy from a company that I hadn’t heard of, and he reached out to me. A lot of people at that time reached out to me say, Hey, I was in a vid hug, or a friend gave me a vid hug, and I love the platform. Let’s talk. So at that time, like you said, there were still so many fires that I was fighting. I used the phrase building the airplane while flying it, that I didn’t even have the capacity to entertain such ideas. And as far as investment, I said, look at the company’s bank account. 

I’m not spending that money right now. I don’t need an influx of cash. I need other things. And so it was hiring that we needed to do team building because we basically experienced what you might consider four years of growth in three to four months. And so the company had a lot of catching up to do, and that’s what we did over that time period in 2020. So when Matt came back around, and that was unexpected to me, he came back around in 2021 and said, Hey, how are things going? Do you have time to chat again? And when the conversation came to, I’m not interested in investing, I’m interested in buying the company, then I had time because I had a team in place. I wasn’t working such a crazy schedule. The product had improved to the point where it was working well, and we were actually looking at, we were doing active marketing, we were looking at building out different features, maybe going after a B2B market a little bit. 

And we had already had also some other inbound interest for, it was never like, we want to buy your company. But it was like, let’s talk about integrating vid hug with our product in a way that I knew the eventual goal. There was just, it was an audition. So when Matt came around, I was in a place where I had the time to have that conversation, and I was also in the place of someone who had gone through four years of growth in four months, and I was burnt out. And I was like, oh, here is a company, a strategic buyer who has a team who has been at this for over a decade full of smart people who can help me and work alongside me. And that seemed very appealing. I was like, I still want to work on vid hug, but being the CEO of this company, which means a lot more than the stuff that I’m great at, which is product development has taken its toll, combine that with just pandemic life with kids. I knew there was a change coming. I knew the pandemic would end, and I knew that we would navigate our way through that. But that was daunting. And so when this opportunity came along, I was like, let’s talk.  

Rob Walling:
Yeah. And I remember when you and I talked on the phone, then in that early 2021 timeframe, I was surprised at the amount of money you were going to get because I thought of it as a one-time B2C. My valuation criteria obviously is going to be skew better for B2B for subscription. And you certainly had the growth, but even I remember we talked about, I was like, if you don’t sell now, when the pandemic ends, does this keep going or does it not? It doesn’t seem like it will. And there was a whole thing about that. And so I was also, because to me, that’s, it’s not platform risk per se, but there’s an existential risk to the revenue. And so when they made the offer, I was quite positive about it, or at least in my heart. I don’t know if I couched that on the call or not, but I remember being like, dude, this isn’t enough money. 

You never have to work again. I would in your shoes, seriously, seriously, seriously consider taking this. This does not seem like a bad decision long term. And this allows you to work on and do whatever you want forever rather than worrying about, Ooh, as the pandemic goes away, declines ends, whatever we want to phrase it, is this business still viable? With all that said, all exits are painful. There are no smooth times of selling your company. And so as we wrap up, because we are hitting time, I’m curious, can you summarize from LOI to close? Was it happy go lucky? This is amazing, everything’s great. Was it like, holy shit, this is way harder than I thought it would be. And man, I wish Rob and Sherry had written exit strategy five years earlier so that you could have read it and it would tell you how painful it would be.  

Zamir Khan:
I definitely wish I had exit strategy on my desk during that time, a hundred percent. It was not easy, and that’s not to say that I was dealing with anything unusual, but it’s a process. And again, with a small company, with a small team, this is not something that I wanted to present to my team and say like, Hey, we might sell the company, but it might fall through. So I knew that’s something that I had to do quietly keep the company operating because there was a lot to do, and also have these conversations and go through this due diligence. So that was challenging. It was extra work. And then at times, at one point, the other side went quiet for a long period of time, and that was incredibly stressful for me because I didn’t know what was happening. Later. I would learn that that had nothing to do with vid hug, nothing to do with me. 

It was just something that was going on on their end and not intentional, but even up until I would say one or two days before closing, and we’re talking about a process that lasted several months, there were points in time where I thought, oh, this might not go through. That’s incredibly stressful because throughout that process, you’re trying so hard to stay level and say, this may not happen, and we’ll continue with the company and we have a plan for it. But I think anyone who’s been through it knows that at some point in time, you get to a point where if this doesn’t happen, I don’t know how I’m going to go on.  

Rob Walling:
Yeah, exactly. That’s one of the hardest parts is you get attached to the money, but you also get attached to the idea that it’s not going to be so stressful and that you’re going to have to be able to hand off a bunch of hard stuff probably that you don’t want to do to someone else. You get attached to the idea of, yeah, I think you can really clearly see a future that you like better than the present. And to realize that could just get taken away from you at any time. It’s like, oh, this is hard. It’s a hard way to live.  

Zamir Khan:
Absolutely. It was that. And also I had put so much time that process that I could have put into growing Vidhu and preparing for what you said, the market shift that was coming. I knew what we needed to do, but I had just taken so much time away from that that I could have put towards it for this. So it was a bit of a sunk cost feeling too, that fear of  

Rob Walling:
Yeah, for sure. And so you actually stayed working with the acquirer who is now called Sincere. You worked with them for another four years, which is unusual for someone to hang around that long. You didn’t have golden handcuffs for very long, if at all, but recently just what, four or five months ago, you flew the coop, you went solo, you’re hanging out. Are you building another thing? Don’t build another thing, by the way. Not yet. Give yourself a minimum. Six to 12 months is what I want you to take because you do have the luxury of that time. So how you’ve been spending your time and why has it been some of the best months of your life? I remember this time where I was just like, oh, this is why I did all of this for, this is amazing.  

Zamir Khan:
Yeah. I think one thing about staying at Sincere for a while, which I had a great time at, great people. I loved continuing to work on Vid U, which became Memento. One of the things that allowed me to do is slow down from founder mode to executive employee mode, but still it’s different. It allowed me to bring some work life balance back and it allowed me to start building things into my life that I knew I would want to do after that journey ended. And so one of those things was I became a fitness instructor, like a group. If you think of those fitness classes at the gym where there’s like 30 people working out together, I do that. I started coaching my daughter’s soccer team, those kind of building in those activities that good for mental health, physical health, and also keep me from going all in on some other projects in the near future. But the way that I stay in touch with what I love is building new products and startups. I have invested in a few startups locally, actually, founders that I kind of came up with through my journey. And so in advising them and working with them, I get to still, I think as Rob still get that taste of the trenches and the ups and the downs, but I also get to step away from it at times and not have it be on my mind all the time.  

Rob Walling:
Yeah, it’s a really nice, really transition. Well, man, hell of a journey. Thanks for chronicling it here in so many ways on this podcast. From your email back in the day to tell on your full story today. If folks want to keep up with you, you are on X Twitter, it’s Zamir Khan, KHAN, but the I is a one. So we’ll link that up in the show notes if folks want to follow what you’re up to next. And of course, memento.com if they want to see what you’ve built. And you’re on LinkedIn as well. Thanks again, man, really appreciate you coming on the show.  

Zamir Khan:
Thanks for having me, Rob. It’s been a pleasure.  

Rob Walling:
Thanks so much to Zamir for coming on the show and telling his story. And thank you for listening this week and every week. This is Rob Walling signing off from episode 794. 

Rob Walling:
We’re back with episode three of Season five of TinySeed Tales. I hope you’re enjoying the season so far. Before we dive into the episode, I wanted to let you know that TinySeed applications are open for our Fall 2025 batch. If you’re a B2B SaaS founder with at least $1,000 of MRR and you’re looking for the perfect amount of funding, a community of ambitious like-minded founders and a network of world-class mentors, you should apply. If you know your metrics, the application only takes about 10 to 15 minutes to fill out applications close on September 9th. Get all the details at TinySeed dot com slash apply, and even if you miss the application deadline, enter your email@tinyc.com slash apply and you’ll be notified next time we open applications. Let’s dive in.  

Harris Kenny:
I believe really firmly that we are ahead of the market. I think that the users that we’re signing up and the prospects we’re talking to today represent the very beginning of a big chunk of a bell curve of the market that’s going to be changing its process.  

Rob Walling:
Welcome back to TinySeed Tales, a series where I follow a founder through the rollercoaster of building their startup. I’m your host, Rob Walling, a serial entrepreneur and co-founder of TinySeed, the startup accelerator for ambitious SaaS Bootstrappers here in season five. I’ve been talking to Harris Kenny, founder of Outbound Sync. In our last episode, Harris moved on from a broad market approach to zeroing in on agencies helping clients with cold outreach. Time will tell if the move paid off, but early indications are that it’s working out soon after closing the biggest contract in the history of his company, Harris sent me this audio message.  

Harris Kenny:
We just closed our first enterprise deal. It was really nerve wracking. Ended up spending a bit of money with attorneys going through the contracts and things like that, but we closed an annual contract for $20,000, the largest we’ve ever closed by far for rep on sync. And then we’ve got two other mid-market deals in pipeline that are going to be for our Salesforce integration. Then another couple of Salesforce ones pending, so we’re going to go from one to five paying Salesforce customers probably over the course of a month, and MRR is just, it’s hopping up. We’ve got a couple agencies now that are really growing and so we’ve got some nice expansion revenue with them and this feels like the beginning of a big jump. So it was like three months of pretty flat bouncing around, just hovering around an under 10 KA month and then all of a sudden it has just popped and I feel like this is going to be another good month. And then if this continues through to December. So anyway, feeling really excited and it’s funny, after those three months of flat revenue, I was genuinely wondering if I was making the right decisions. I was just spending money and spending money and spending money, but right now it feels like those bets are paying off. I feel more confident than I ever have that this might work.  

Rob Walling:
So it sounds like things have, I dunno, turned a corner, may not be the right way to put it, but where were you flat, relatively flat for three months and now it’s like things are really accelerating based on all the investment of time and money that you’ve been doing over the past few months?  

Harris Kenny:
Yeah, definitely. I mean, there was a few things that happened at once when we got into a TinySeed and I was spending a lot of time shutting down my old agency, which now I can say officially we have no clients left, and I talked to my accountant, we like, here’s the roadmap for dissolution of the entity, all that. So that’s really happening. So that was a little bit of a distraction. I was also a little nervous to spend the money. It was the most money I’d ever seen in a bank account before, and so this kind of evolutionary instinct of hoard and then also how to spend it and so it took time to spend some of it. So while all that was happening for a few months, revenue was flat. We had a little bit of new customers, but a little bit of churn. 

And so then I was starting to get anxious about that and I was questioning do I know how to do this actually or did I only build a pretty good idea? And then I don’t know actually how to run a software company. I technically don’t know how to run a software company. I’m learning right now how to do it. But then September was our highest month ever followed by October, followed by November, and now it’s December. Again, highest month ever. And the anchor for that is an annual $20,000 contract. I’ve never signed an annual contract worth this much before. We had one earlier annual contract a couple months ago, but it was just for 5,000. So this is like we went through the process, we went through procurement, we went through legal, I had the privilege of paying our attorneys to review the documents and a lot of things that I had just invested in around security and stuff. 

When I was doing the questionnaires, I was actually checking the boxes of like, yes, we literally are doing these practices. Whereas before I spun out Aon sync, I had gotten the security questionnaire and I didn’t even know I looked back at that old spreadsheet and I didn’t even really understand what they were asking me. There were things where they asked and I was like, I literally just didn’t understand it and now much, much, much longer more complex procurement form. I not only knew it, but we were doing it. And so that just felt like, oh, okay, we’re playing a different game. It felt like I could one day have a salesperson doing this and not me. And so that just felt like really big progress even though they still haven’t paid us yet, but it’s net 30 and hopefully they’re going to pay the pay invoice. Yeah, so that felt like in the beginning of this is more of a software company, we’re growing, we’ve got these big contracts and I can have that conversation with the procurement team. I understand now a little bit of when they’re pushing back on what they’re pushing back on and what we can say yes to and no to, and all of that was just like I had no idea a year ago at all.  

Rob Walling:
For a long time I’ve been saying if you have to go through procurement $25,000 minimum a cv, and now I think I’m up to about given inflation literally and just how many years it spent. It’s like I think it might be 30 or 35 is my number. It’s almost 30 grand a month that makes it 2,500 in there. So I got to raise my prices, I think. So I mean if you truly do have to go through a full procurement process with security questionnaires and all that and potentially redlining your terms of service, whatever, all that happens, it’s expensive. When you pay your own lawyers to deal with this. Harris started the SOC two process about three months ago. It can be tedious and expensive and many early stage founders want to avoid it as long as possible, but it can also be a big unlock for closing bigger deals.  

Harris Kenny:
So we’re basically at the finish line and ready to start the audit. We implemented a lot of changes and actually they’ve been really beneficial. So I’m a non-technical founder. There were a lot of things that maybe a engineer founder would’ve set up from the get go that I mean, I’ve just always said to, we have one engineer and it’s just been like, Hey, let’s just focus on what customers need and whatever you need to do your job, but I’m not going to give you extra stuff to do. And so he was just pushing to production basically. And there were practices that SOC two requires that in hindsight we’ve implemented them and it’s been really good. So one of them is we have a staging server, and so we test every feature before it goes to production. And I know that we probably should have been doing that the whole time, but whatever. 

We didn’t even have customers in the beginning, so it kind of like wasn’t worth it. Another thing was security, which is actually already benefited us. We have now a web application firewall installed in Heroku, and we caught a potential issue that one of our integrations was sending over payload that could have been a cross scripting attack. And so we caught that because we had this add-on and engineer caught it, we troubleshot it and came up with a fix. It turns out there was no malicious issue, but there could have been. So basically our infrastructure was doing its job and none of that was in place prior to starting SOC two. So then we were able to tell our customers like, Hey, we’ve identified this issue. Here’s how we are now solving it. It’s actually not something we can control just getting this data, we’re getting these webhook payloads, and then we got to figure out how to deal with them and we want to make sure because we have right access to yours or your customer’s CRM, like your Salesforce, HubSpot, we need to make sure that we’re being diligent about what we’re passing along basically. 

And so it made us look really good and we have a status page, which we didn’t before, but we have that because of SOC two. And so I said, here’s the writeup of the incident and here’s the updates and here’s how we resolved it. And all of those things just felt like as we were doing it, it just felt really good and I feel like it established credibility with customers because we’re between these big platforms and so we have to prove ourselves of how do I know you’re not messing up on this? 

Who are you really? To me, and we’ve closed quite a bit of business because of it. We have gone through this big enterprise deal we just talked about, but also quite a few others. I’ve just sent them a link to our trust center and they’re like, okay, great. Yep, we can see you’ve got a lot of stuff in place. So I mean it has investing in that has improved our product, improved our customer support and increased our sales. It just forced us to grow up a little bit in ways where I want to take the company. I want it to be doing multiple millions in a RR, and so it’s like, okay, we were going to have to grow up in these areas. And so it kind of forced that to happen in a structured way where, I don’t know, I’m really glad about it. People gripe about it and I sort of get why, but in hindsight, I think if this thing works out, I think that’ll end up having been a really important decision at the time.  

Rob Walling:
Yeah, I would gripe about it. I hate that kind of stuff. You’re building a business and you come from the sales side and you know that to make sales and to get big fast, you’re going to have to close big deals and to close big deals, you’re going to need SOC two in this space, you just inevitable. And so you have just accepted it like a mature adult. I would tantrum and be pissed off the whole time and I would complain about it like a baby because I’m here to make great software and I’m like the crafts person and I’m like, oh, I want to do product and design stuff and make sure this is all elegant. And so I’d be like, ah, this sucked too. Why do I need this? This is just a headache. But you have just on this particular instance, I’m sure there are other ones where you take the opposite attack and that’s what we see within TinySeed. There are certain founders who are more like me who are like God kicking in screaming, just scratching and clawing. You have to pull from my cold dead hands. The knot not going to SOC two. And then there are those who are just like, nah, it’s not fun. But I also know that I’ll probably close literally hundreds of thousands of dollars in a CV next year if I have this that I will not if I don’t. And so that becomes the question that a lot of founders have to ask themselves  

Harris Kenny:
For sure. And it’s given me a better lens to understand what’s happening with our product. I understand technically much better how our product is working because of it.  

Rob Walling:
We’ve been talking about getting SOC two certified, a process that doesn’t come cheap, but that’s just one piece of Harris’s growing expenses with a young family at home and a business that’s scaling up. Every financial decision carries extra weight. I wanted to understand how he’s navigating these waters.  

Harris Kenny:
Before I ran an agency for five years, it was profitable. It had to be, but it was never like a breakout success. I was never able to fully hand things off. I was never really able to take a vacation. It was always hard still, even though I was financially successful. But also I had an LLC that had a sub S selection, so I was able to pay myself in a different way. I had distributions. I had a lot more flexibility starting up on sync. I wanted it to be proper software company, and this wasn’t a TinySeed requirement just in my head. I was like, I want to set this up from the beginning clean and not have it be muddied with my five year LLC with three different accountants and two different lawyers. And it’s like, I just want this to be a fresh solid start. 

And so that change, I did not fully realize how much that shift of, okay, now I’m only getting paid a salary because Zon zinc is a C corporation. And so now we have payroll through a DP and that’s it. That money that I get paid, that is my money. And I was just used to before being like, well, I can take a distribution out of here and make sure I can cover this or that unexpected expense. So that introduced a pressure that I didn’t think through fully at the time. I had five years of not having that kind of constraint that I sort of forgot what it was like I could always figure it out. Basically. I always found a way I landed bigger client or this or that. I started spending the TinySeed money more to get the growth going. And I would say both of those investments have been worthwhile. 

Developer is very productive. He’s doing great. We talk very little. He just cranks on stuff we check in. It’s a really great relationship and I can tell the difference him going to 40 hours a week, the productivity is way outstripping the percentage increase of time that he’s working. And then the CSM has been good because it’s freed me up. So he’s focusing on onboarding, getting new users. That hire has worked out so far really, really well. We went through dynamite jobs, recruiting board, remote first recruiting, and they found a very good candidate. I think he’s really taking ownership of things, he’s just running with it more, and that’s freed me up to focus more on sales. I think that’s why these last couple months have been getting better in terms of sales. I think that with these three people, me and CSM and engineer, my goal is that we get to 30 KMRR and that would give us plenty of head room at this point to be default alive. 

I’m just kind of trying to run as hard and as fast as I can to get to that. I could lower that number though if I reduce my own drag on the business. So in the home front, I’ve been implementing a budgeting app called yap, you need a budget. And we now have four months of my wife and I have four months of budgeting data of our own spending down to the cent. I did my own books for a while and I took accounting classes in business school. So fortunately that’s actually been pretty easy to do it just as you sit down and do it. So I’m trying to figure out how do we tighten up spending on the personal side so that I can reduce my salary, that I can extend that runway a little bit more. But yeah, right now I’m thinking about this a lot right now and we’re good now, but projecting out six months, I’m kind of like, okay, well, would I do a revenue-based financing? 

Would I pull some money out of retirement? We’re not running out of money yet. We’ve got money in the bank, but because I have this salary, I have these hard edges that I have to operate within. I kind of have to plan out further than I’ve ever had to plan before. It’s totally connected. And we had a little bit of churn, and it’s really hard to not be get too down about that. It feels like, oh, everything’s jeopardy. I was close and now I’m further. So there’s that. Yeah, it just feels like everything is all in one  

Rob Walling:
Basket, man. It’s tenuous because you grow another five or 10 KMRR and you’re like, well, finally we’re breakeven or we have a profit. Oh, now, but I need to hire an engineer to keep up with X, Y, Z. So I’m not saying it never goes away, but it really is, even when you’re doing a million, 2 million, 3 million a year, it’s always this balancing act and you do get more margin, but it’s not like at 3 million a year you have a million or 2 million just pouring out out of the bank account into your personal one. There’s still a stress, but the thing that as a founder you have to keep in mind is don’t sacrifice your own personal finances or your families in order to get the company going. But yes, there is risk. So how do you balance that? That’s the hard part. That’s why founders as a rule tend to have more anxiety and stress in their lives than employees of big companies, but employees of big companies tend to have a lot more depression than founders do. 

And there’s multiple studies that have verified that. Sherry, my wife has talked about this in a few talks. It is more stressful. The upside is significantly higher, but that does not come without some risk and some uncertainty. And those two things are tough and they’re tough on you and they’re tough on your partner or significant other so far, I think you’re thinking about them in the right way because you can be so stressed about them that they keep you up at night and that you hate being a founder. And if you sell this company or shut it down for years from now, you never want to do it again. Or you can not worry at all about it. And you can be like some people and they take out 50, 60, $70,000 of credit card debt to start their company and they’re not nearly risk averse enough. And it’s like there’s some balance in between of how do I be mindful of this risk but not let it destroy the journey and not let it be on my mind every minute of every day?  

Harris Kenny:
Oh, totally. I mean, I think fortunately, I’ve got some levers I can pull. I mean to go into my personal finances a little bit, I’ve got a universal life insurance policy that I had set up when we first got married. It’s like, okay, well let’s cash that out. Let’s set up a term policy that’ll actually pay out way more. And then, okay, I’ve got that little bit to pay off some debt, so now I’m reducing my month to month debt servicing that I’ve got in this area, better insurance than I had before. So there’s little levers like that that I’m pulling in a few different areas to. And then I mean, there’s hope on the horizon. Currently. I know for a fact that 35% of our income goes to childcare, but we won’t have young children forever. School is on the horizon. And so it’s like, okay, it’s possible that in three years we’re at MicroConf and I’m like, Rob, drinks are on me because the company’s ripping and we just freed up multiple, multiple thousands of dollars a month and free cash flow that aren’t going towards childcare. I do. I have that on the horizon that I think is a reasonable thing to look forward to. It’s not like maybe I’ll be on a boat, but it’s not like I’m going to be a hundred millionaire or whatever. That feels like a reasonable thing if I could just get there. That’s my mindset right now. We’ve gotten really far in a short amount of time. I think I can get there. I just have,  

Rob Walling:
It should get easier. I mean, you are still very early in this business and the early days, everything’s fragile. Even your knowledge and confidence that business is going to work is pretty fragile. Your product-market fit is really fragile. Your sales process is fragile. You are thinking of who is this revenue going to stick around? Is it going to continue to grow? All of that’s fragile still. And that does solidify as the company matures. Harris has talked before about expanding to other CRMs outside of HubSpot. One of his newest missions was to integrate Salesforce, and I wanted to see how that was going  

Harris Kenny:
Well, so okay, I didn’t cheat, but I did maybe bend the rules of what maybe you were thinking a Salesforce integration is because there’s two ways to integrate with Salesforce. And we did a connected app, which is essentially a private unlisted app. And so that allowed us, and this is what we did with HubSpot too. It allows us to sell to Salesforce customers. They just basically create their own authorization for our web server to hit their Salesforce account. So that was how we moved so fast. And then the other thing we did was we started with a tiny, tiny, tiny footprint of what it does. And so we just solved a very basic problem of we log emails as activities. Do you want that? And enough people were saying, yeah, that they’ve started paying. So we have multiple paying customers. We’ve got a mid-market company that we’re in procurement process with now who wants that, and then another one who has said, Hey, I’m going to sign up for this probably in the next week. 

So I think that we’ll go from $0 in Salesforce revenue to probably like 2K MRR probably by the time we hit January, all of that closing basically over the course of a month. And then if we do that, if all of our other numbers stay the same, I’m just doing quick calculator math here, that’ll end up being like 15% of our revenue. So that’s pretty cool. But we’re using Salesforce brand as distribution, but not the app exchange. The same thing we did with HubSpot. I talk about it on LinkedIn and I talk about other agencies and I say, if you use HubSpot, we can support you. But the HubSpot thing, I was really, really, really, really proud of getting that, and that was cool. But we were selling a HubSpot app for over a year before we were in the marketplace, and I think we’re going to do the same thing with Salesforce. It literally fast could be a year, and that’s moving  

Rob Walling:
Fast. That’s moving fast and getting a V one out there, and then you built thousands and thousands of MRR. I mean, you could have supported yourself almost full time on the business and didn’t have to wait for any of that. And this is what the best entrepreneurs do. They get it done real fast and then they turn around and say, all right, well what’s V two? Well, V two is getting in the app marketplace. Then we get promotion and all that. You got into even the HubSpot app marketplace, it felt fast to me. I don’t know what the timeline was,  

Harris Kenny:
But yeah, I had only took two weeks. Crazy. We were so ready. We blew past their request.  

Rob Walling:
You already had paying customers on it. Normally you go in the app marketplace with no customers and then they’re like, Nope. Testing for months and you need to have this many beta users and you already use it through it. That’s another  

Harris Kenny:
Example. Exactly.  

Rob Walling:
And you said, and I quote, we are the first smart lead integration in the HubSpot app marketplace, and you sounded really proud of that  

Harris Kenny:
Before even Smart lead themselves.  

Rob Walling:
Yeah, before their own integration, you beat smart Lead. So that’s got to be a pretty big point of pride for you.  

Harris Kenny:
Oh, for sure. Yeah. I think we’re shipping really fast. I was in the chat with the founder of Smart Lead and he was like, you Ship, which they have a great engineering team, so I know he really means that as a compliment in their world, they really value engineering. We move fast and we’ve got two other sales engagement platforms that I think are going to potentially open up market for us. It’s the same core product, but competitors to Smart Lead. And I think again, we will be the first integrations listed for those tools. And I think that when we move, our positioning is going to change to be like, Hey, if you’re using one of these outbound tools, we’ll be the one that gets it in your CRM the right way. I think we’ll be able to charge more. That’s kind of what’s on the horizon. But I think that this play that we just ran Smart Lead, I think we’re going to run twice again for two other tools. And now I’ve got people being like, do you support list? Do you support this? Do you support that? And so we’re starting to get a wait list forming for other tools, and that just kind of feels like to me, again, we’re in these more advanced stages of becoming a real company call that market  

Rob Walling:
Poll where it’s like, and you’re getting data because you’re like, oh, we have three requests for limbless and we have two for this other tool. I don’t know the baseball enough to know, we know what the tools are, but two for this other tool. And then it’s not necessarily you build the one that has three and not two, but it’s a signal that you didn’t have two months ago. And so now you have all the CRMs on one side and you have all the what? Cold email tools I guess on the other side, right? That’s what you’re thinking.  

Harris Kenny:
But could be LinkedIn, could also be phones.  

Rob Walling:
Yep. So there’s a lot to be done here. And this is one of the reasons we invested in you and invested in this business is because in you, we asked ourselves, do we think he will figure this out? You were early, right? We don’t know if the business is going to work. Do we think that Harris can do this? And the answer was, yeah, I think he can do it. And then why did we invest in the business? Because it had traction, it had people that wanted to pay you, and I see the potential of this to be a seven or eight figure error or a company not with the initial product you had. It was what smart leads to HubSpot and it was very simple and it was first Zaps and then you had someone write, I mean that’s not an eight fit your business, but all the division that you’re starting to paint here and the request, the market pull, you’re starting to get that absolutely could do 10 million or more in a RR.  

Harris Kenny:
Yeah, I believe so. And I will say I think this, to me, this is why TinySeed is different. It is still fundamentally a venture endeavor. The risk of investing at the time. I mean, it reminds me of when my wife decided to marry me. It was like the rest of your life are you, are you sure potential? You see potential? Yeah. I’m not sure that I would marry me at this point. We got married, not super young, but it was a while ago. We’ve been married for a long time. But yeah, so it’s fundamentally there was a risk there. And so yeah, I feel like you all took a chance on me and it’s been cool.  

Rob Walling:
You’re making good progress, man. Looking ahead over the next one to three months, we will record in the next one to three months. What are you most excited about?  

Harris Kenny:
I believe really firmly that we are ahead of the market. I think that the users that we’re signing up and the prospects we’re talking to today represent the very beginning of a big chunk of a bell curve of the market that’s going to be changing its process. We have taken customers away from outreach and they’ll do a demo with me and I show them the reports and how we put the data in their CRM and they have said, okay, great. What email tool should we use? I don’t even care. I just need the data that you are giving me. And so to be taking customers from outreach, which is a unicorn, arguably created the sales engagement platform category to be taking users from them as a connector app, which I think we’re doing more than that or solving deeper problems than that. To me that’s a really big deal. 

And we, we’ve got two customers, one we just closed and another one that’s about to close that were like this and they’re like, whatever, however we need to send the emails. I just want the way that you are putting it in that system. So I think we just keep moving down that path. I think there’s a lot more people to come basically. And I think the people we’re helping right now, early adopters. And so if that’s true, then I think we’re going to have really good mojo. I think we’ve got some really good agency partners, and I think that when we add build out Salesforce, and when I start talking about Salesforce more and posting about it more, and when we add some of these other engagement platforms, I think that we will start unlocking more pieces. So I’m really confident in that potential, and I think people are spending a lot of money on their tech stacks, not able to answer the questions that we’re helping them answer. And so I need to figure out how to become a more mature product marketer to capture that, because I talk to customers who get it, but can’t trust. I can’t wait for everyone to get it. 

But I think that’s where the opportunity is. And I think that when I look at where we’re taking business from, it’s not just people who are using Zapier right now. It’s people who are spending a lot more money on much more sophisticated tools being like, yeah, but this still isn’t really solving my problem. And you are. That is like, okay, cool. It’s super motivating. Outreach is fine. Maybe we’ll integrate with Outreach. I have no beef with ’em. Like whatever. It’s just a B2B SaaS software, who cares? But the competitive side of me is like, okay, yeah, we’re doing something. We’re making a mark, we’re getting people to switch, which is cool.  

Rob Walling:
What started as a simple connector app has evolved into something much more ambitious. Harris Harris’ finding his product isn’t just competing with simple automation tools. It’s pulling customers away from industry giants. And in today’s market where companies are scrutinizing, every dollar spent, their tech stack outbound sink seems to be resonating. The question is, how far can this unexpected momentum take him? Find out next time on TinySeed Tails. I hope you enjoyed this episode. If you’ve ever wondered what it’s really like inside TinySeed and want to hear a raw candid coaching conversation between Harris and I, we put together something special for you at TinySeed dot com slash bonus. You should check it out. I’ve never released anything like this before. I hope you enjoy it. It’s at TinySeed dot com slash bonus.  

Rob Walling:
You’ve stumbled upon another episode of Startups. For the Rest Of Us, I’m Rob Walling, and in this hot take Tuesday, I welcome back Einar Vollset and Tracy Osborn as we talk about chat GPT five and the struggles they’ve had with that release, whether we’re in an AI bubble and a few other relevant news items, one of them actually deeply relevant to SaaS sales. Before we dive into the episode, I wanted to let you know that TinySeed applications are open for the Fall 2025 batch. If you’re a B2B SaaS founder with at least $1,000 in MRR and you’re looking for the right amount of funding, a community of ambitious like-minded founders and a network of world-class mentors, you should apply If you have any questions about the program or the application process, we’re also doing a live q and a with the TinySeed team this Wednesday, September 3rd on YouTube. We’ll link that up in the show notes. If you know your metrics, the application only takes about 10 or 15 minutes to complete applications close on September 9th. You can get all the details at TinySeed dot com slash apply. Alright, let’s get into it. Welcome back to Hot Take Tuesday. I have two guests, my recurring panel, and this is by popular demand and by that I mean two people have mentioned it to me in the past six weeks saying, why don’t you do Hot News Day anymore? And I was like, I don’t know. People have been traveling, it’s been summer. So here we are. We’re going to cover stories ranging from, well, it doesn’t, everyone want to hear us talk about American politics and crypto. 

We’re not going to do either of those things. We’re going to be talking about I he did. He’s like, I want to talk about both GPT five. Is it worse than 4.0? Are we entering an AI bubble with the limits that folks are starting to put on it? Windsurf and that whole debacle of employees getting hosed and more topics. First, I’d like to introduce my panelists, the head of product for TinySeed and MicroConf, Tracy Osborn. That was awful. That was awful.  

Tracy Osborn:
Do you want to do that again?  

Rob Walling:
Welcome to the show.  

Tracy Osborn:
I was going to say last time I was here I was wondering if you’ve realized I have a title change since the last time at this time. It’s been that long.  

Rob Walling:
It’s been a while. You used to be Tracy makes on Twitter and that’s where we’ll leave it. No wait, you’re Tracy at Tracy Osborn. Where are you? Tracy Osborn dot com on Guy. I am. Okay. And we’re still counting down the days until you owe a and RA thousand dollars and buy us both sushi dinner that was in there, right?  

Tracy Osborn:
Sushi, we never determined what the terms were between Twitter. We did. We did. Oh god.  

Rob Walling:
We did three years and I think it was a hundred million sign up. It wasn’t even active. It was like 50 or a hundred and we kind of balanced, I think it’s a hundred.  

Tracy Osborn:
Elon Musk has a lot to go. So I remain hopeful  

Rob Walling:
That other person chiming in is our very own a r volt co-founder of TinySeed, the founder of Discretion Capital, the best sell side m and a firm for SaaS between two and 20 million. A-R-R-A-R Volt. Welcome to the show.  

Einar Vollset:
Thanks for having me.  

Rob Walling:
Alright, let’s dive in to our first story. This is actually story zero and we’ve been talking about this for the past couple weeks and getting a lot of positive responses is what I would expect on X Twitter and the like. TinySeed, our startup accelerator for ambitious B2B SaaS founders has returned fund one, meaning we have returned more capital to our investors LPs than they invested. This is a six-year-old fund and a RI believe with other benchmarks or with the benchmarks across venture capital funds. We are in the top 10%, potentially top 5% of funds of that vintage. So you want to talk, why is this a big deal? I’ve never run a fund before and I was like, oh, that’s neat. And then I’m like, no, that’s not neat. This is a big deal. Why is  

Einar Vollset:
That? It’s a big deal. I mean I think it puts us in the top 10 if not top 95% of that vintage and it’s not just like, oh, that was a really crappy vintage. The fact of the matter is that venture funds have gotten to the point where traditionally partly because of how tech funds, tech companies stay private for longer, that sort of thing, they get longer and longer and longer before they return any funding and certainly before they start return the fund and multiples on that. So actually I just saw there was a stat out about Carta where it says basically, and DPI is the term distributions to paid in and basically says over 12 years in only about half the funds have returned one XDPI. So what that means is if you invested in all the venture funds out there and you held it for 12 years, only about half those funds would even have returned your capital. 

So yeah, it it’s a big deal. And also I think crucially for us, it’s not just like you can return the fund and then have nothing left in which case yeah, wasn’t so great. But the fact is for us for fund one, we still have the majority of the assets are still growing. It’s a very good sign very early on. VC is funny in the sense that one career where people don’t really know and you don’t really know if you’re any good until 10 years in. So it’s a good place for charlatans and fast talkers. So we’ll see if that includes us. But yeah, it’s a very good sign and yeah, I feel very good about it. And also crucially, look, we return the money of the people who trusted us the first time around this was fund one, it was an unproven thing. A lot of people called us, this is really stupid, it’s not going to work out. You’re never even going to get your money back. And at this point we’ve proven wrong and we can tell those people to go themselves and give the people more than the money that they think back. They’ve already gotten their return on their capital with more to come. So that feels good.  

Rob Walling:
Yeah, really exciting. Tracy,  

Tracy Osborn:
The thing I didn’t realize before I started working here, because before I was a startup founder, I raised some money from VCs, but I didn’t really quite understand how VC economics worked. And the return to the fund is super exciting because compared to startups where you’re like you’re doing super well and you can reinvest those profits into the business and continue growing, we have to continually raise new funds. So if we have this massive success on our first fund that proves out our thesis and proves that what we’re trying to do is working and is working really well, that means we can raise more funds and we need to raise more funds in order to exist because we can’t, all the returns and whatnot, it’s not coming back. The TinySeed for us to invest in other people, we have to raise new funds in order to do that and then we live off, run the company essentially off those management fees. So on one hand it, it’s super awesome to return that fund, but it’s also for me it’s like, yay, I get to have a job for longer because of this. I like that part.  

Einar Vollset:
It’s also pretty strange. It’s like, look, investing is like this. You take people’s money and you’re basically saying, I’m better. I know better than you what to do with your money and you should give your money to me instead of doing whatever you want to do with it yourself. And being able to prove that out with actual cash in the bank instead of arguing about markups and paper, paper returns and all this stuff feels really good.  

Rob Walling:
That’s the thing, we came out with a thesis A that bootstrap B2B SaaS founders would even take money. There was a whole conversation around this in 20 17, 18 as I started talking about this at MicroConf and there was a real pushback from a small group, but why would they take your money? Why would they give up equity? They should spora. So there was that thesis. Then there’s a thesis of does this return even close to the s and p 500, right? Because if it doesn’t return that over what 10 years or whatever the horizon is, no one’s going to give us more money and it’s not viable. And so those were our thesis and obviously the first one has been proven because we funded 204 companies in the past six years and the second one, the signs are good, we’ve returned the fund and as you said, more than the initial investment. 

So folks are already getting returned and there’s still a lot of upside with that in mind. Fund three, TinySeed fund three is closing soon we have a little bit more room and if you are an accredited investor anywhere in the world and would like to put some money to work in handpicked high quality, I would say some of the best deal flow in B2B SaaS in the world head do TinySeed dot com slash invest and you can read our thesis and if you fill out that form there, it goes directly to a R’S inbox and he will reach out. Before we move on from this topic a R, the last post I put on X Twitter got a question from Daniel Westendorf and he asked, are you able to share the distribution of returns? Was the majority from a few portfolio exits or something else? And obviously we don’t give exact numbers, we don’t need to because we’re a private fund, but what’s your sentiment around this?  

Einar Vollset:
Yeah, the short answer is yes, it’s exits or partial exits from one or two or a small number of the portfolio. And that’s sort of very much in line with the thesis that we wrote ahead of actually fund two, which is like, look, this is still a power law type environment. It’s not like all the companies are going to grow uniformly at the same rate. There’s still going to be some companies that outperform to the point where, yeah, it’s obvious that this is what drives performance. And that’s sort of been proven out for us as well.  

Tracy Osborn:
And if anyone’s curious about what this all means, we do have this on our website. It’s like tiny c.com/thesis. So if you are a data nerd, definitely check that out. I think it’s really interesting, again, coming from someone coming from startup world coming into vc, seeing how these things work behind the scenes, check out our thesis if you want to read more.  

Rob Walling:
Alright, moving on to our next story. Something that’s on a lot of folks’ minds right now is GPT five came out what, two weeks ago and there is a lot of talk. I mean we have a Y Combinator thread or hacker news thread that we’ll put in the show notes, but you can go almost anywhere on the internet and just search for is GT five worse than 4.0 And it does seem like there’s a little bit of friction online. Tracy, do you have thoughts you want to kick us off on whether do you have firsthand experience with it or what’s your sentiment around what’s going on?  

Tracy Osborn:
I think I am definitely not a power user, but it was really interesting yesterday, well I guess in the last week because if I’ve launched and you couldn’t choose what model it was using, it was choosing in the backend whether it was going to be using the slower, more expensive whatever robot to answer your questions or the fast quick one. And then just yesterday I was using it again and they added those two things. I was divorced from the discussion on the internet about which one’s better or the other, but I was like, oh, thank goodness you can finally choose. I don’t want it for me. I didn’t want it to choose and I wanted to pick. And then I found this whole wash of information of people screaming about different models and which one is the better one. And then people, it’s understandable if you are not able to choose which one, whether you want it to be fast or slow or using the expensive cycles or not because if you’re on a paid account, there’s this expectation of having the most expensive version. So I can kind of see why they monkey patch this back in the thinking, I guess they call it thinking or fast or the other two are. Anyway, my experience was just kind of seeing this in the last week being like, oh cool goodness. And then finding this bike on their friend and be like, whoa, it’s huge here. I am sure Einar has things to say though, so I think I should pass it over the him.  

Einar Vollset:
Yeah, I mean, yeah, I have opinions. There’s a couple of different things here like is chat GPT five better than oh four or 4.0 or however, whatever the name is. I mean I think it is, I use it a fair bit and I think there’s no doubt in my mind that GT five is very good. I think one of some more vindicating things for me is that I’ve been saying for a while actually in the talk that I was supposed to give at MicroConf Nola that Tracy you expertly gave, one of the points I make is like look, and this was about will AI kill SaaS, which has been a big question for the last couple of years since Chatty came out. It’s like, look, everyone’s just going to come so smart now, so soon that you’re never even going to need any SaaS. You just talk to it or it is just super intelligence and it’s like there’s all this stuff. 

And my point has been if you look at the data of how quickly it’s improving and how much it’s improving per step, it seems to me to be doing the opposite of what all these AI doers are talking about. All the AI boomers are talking about like, oh, it’s this sort of idea of foam or it’s exponential takeoff and it’ll soon be so smart that we’ll be ants to it. And I’m like, yeah, okay. But that’s not what the data shows. The data shows it’s reaching looks to be reaching some kind of asymptote. This asymptote could be very high, but still to me it seems like each new model that comes out, whether it’s from chat GPT or Google or Grok or whatever, it seems to be an improvement, but it’s a smaller improvement. It’s a smaller step up than the last one. And I think chat GPT five just sort of confirms that view in me in that look, this is something that, yeah, it is an extremely disruptive thing to technology. 

There’s a lot of stuff here that is disruptive. It is different. It’s capable in a way that it’s obviously a very new, very capable technology. But do I think we’re going to be amped to it in two years? Do I think we need to bomb data centers because otherwise humanity has ended because of chat g, PT seven? No, I mean that’s bullshit. It always was bullshit. If you looked at the data, this was crap. Honestly, when it came out, I looked at it, I was like, eh, there’s some really smart people that basically told me I was an idiot when I pointed this out. And there are just some fundamental scaling laws underneath the capability growth. That just means that as you make another step in capability, the amount of compute that you need to add to make it smarter as it were just grows exponentially. 

So you get a linear increase in capability with an exponential growth in compute and that just doesn’t work. You need a data center the size of the moon to get to the next step just by scaling and beyond that it’s like, ah, now it’s a data center the size of the galaxy, come on. It just doesn’t work that way. And so for our listeners, to a degree it must be sort of relieving to see that GPT five isn’t superhuman, isn’t going to reproduce any SaaS at any time with a flick of a button for 20 bucks a month. And so it’s more like, okay, this is an extremely capable technology that you need to stay on top of. You need to incorporate it into your SaaS business, you need to incorporate it into your business or you will be left behind, but you don’t need to become a plumber. I mean, nothing wrong with plumbers, but it’s not like technology as a job is over. So yeah, that’s what I think  

Rob Walling:
When a R had talked about the Asim tote whenever it was, you mentioned that a year ago or six months or something that resonated with me already because the first GT that I used, the first chat GPT that I used feels pretty similar to the one that I used today. It’s a little better. It’s obviously, but it’s improving in a small way. And I broke my own personal rule, which is never read the Hacker News comments because this is just a, there’s no article here, it’s just a Chad GBT is slow and no better than four. And it asks a question, but I did the first comment says, G PT five is better as a conversational thinking partner than 4.0. Its answers are more focused, concise and informative and it goes on. And probably that’s probably accurate. The thing that it reminds me of is we are thinking like chat GPT, the new model is going to be able to do everything better than all the old models. 

And that’s the difference is I think we’re getting to this point, I’m probably not the first person to say this, but where there’s going to start being GPTs just for this, if it’s like a brainstorming GPT and it’s optimized for that versus long form copy or short form copy or conversation or coding. There’s all these uses people are using it for and if it was a GI then maybe it could do all these things, but it’s not, and I don’t see a near future where that is. So I think the specialization of these models already exist obviously, but I don’t know that most people think about it that way and they just think new model better on everything. And I don’t think that’s going to happen.  

Einar Vollset:
I think that’s definitely true. I mean to the point where when DPT five came out, so I pay for the pro level, 200 bucks a month, whatever, and when it came out I was genuinely a little sad that I couldn’t talk to 4.5. That’s still, it’s like it almost, it has personality, some of it and I really like four or five. And so when they discontinued four or five, I was like, this is a right here because in some ways five is more capable in some of the tasks that I have it running on. But 4.5 was just a better conversation list. It just was. And so when it got it back, I was like, yes, thank you. I’m extremely happy to have and that’s true. I was a little sad when it disappeared and now I’m like, yeah, it’s back. It’s amazing.  

Tracy Osborn:
And also I want to say four or five also had, there’s some amount of, I dunno the right word for this is neutering, but it felt like it was kind of pulled back a little bit that they’ve in five now there’s some topics that we’ll talk about, but I believe also with five that it’s hasn’t been prevented from talking about certain topics as much as it was in four five. Have you run into that in  

Einar Vollset:
I thought four five was pretty, actually one of the interesting things is they said, what was it? Oh yeah, only pro users. So the $200 a month are going to be able to use four five from power in. And because it’s apparently is an extremely expensive model. And the nice thing about four five is it doesn’t have a thinking per piece. And it’s like when you’re doing back and forth, I don’t want you to be thinking, I don’t want you to spend a minute and a half thinking about the response you just to respond. And to me that seems to be, it almost feels like four, five is the, which I guess five is two, like the five fast maybe. Although that does seem a little brain dead compared to four or five, it’s like four or five seemed to me this is where the current paradigm is able to go with pure scaling without those kind of thinking hacks on top of it. That’s what it feels like to me.  

Rob Walling:
There was speculation on X Twitter about maybe it wasn’t speculation, maybe it was backed up with data or whatever, but it was kind of like five is less good, but it is because it’s cheaper and OpenAI is thinking about cost and there were folks kind of piping in with that. So maybe that’s part of it too.

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Our next story is kind of, I’m going to frame it as I don’t know, are we in an AI bubble? I think the answer is obviously yes with the amount of money flowing in, but the idea is what’s it going to look like as it pops? And I have a Reddit thread here, but this is another one where AI compute is essentially being given away for far less than it takes to produce, right? Open AI and and all of these are losing hundreds of millions, billions of dollars, whatever it is because they are buying something for a dollar and giving it away for 20 cents. So there’s a couple ways to think about this. I mean I know people got, developers got pretty angry online when suddenly it was like, wait, they’re limiting my, I don’t even remember what service it was. It was a cloud code or something. 

It was like, now I have limits on this thing. And it’s like, well of course, because you’re probably chewing up $500 worth of AI and you’re paying 20 bucks a month, this doesn’t make any sense. So that’s kind of a first topic. But the other one is it reminds me there are a lot of wrappers and a lot of SaaS apps that I think where AI is at their core, where all they’re doing is taking AI and taking these virtually free, almost free compute credits and doing things with them that if they were actually charged what it cost, it would be completely ridiculous, like creating headshots for me or creating thumbnails or creating internal building or outside any of these small image things or the conversion things. I think if you actually had to charge with that really cost, these are unviable businesses is my hypothesis. And that’s what I want to throw out to the panel is if you have thoughts on that. Let’s start with you A, what are your thoughts here?  

Einar Vollset:
I think it’s hard to tell. It’s one of those things where I think actually, okay, yeah, it’s expensive now, but again, I think a good enough capability is probably achievable on a self-hosted model. And for a lot of these businesses in certain times, certainly with fine tuning and as you talked about, you get different models, specializations. So yeah, maybe these startups, they can’t just do whatever, just do API calls to the latest model to chat GPT, and as they crank up the cost there, maybe that’s become sustainable. But I also think, okay, if it becomes so expensive that your model doesn’t work well then given the specialization you’re in, and particularly if it’s something like a very specialized vertical SaaS thing that you’re doing, okay, you can probably get as good if not good enough models by getting your own model, open source model, fine tuning that, really honing it towards your use case, which honestly, to be honest with you, some of these companies probably need to be doing anyway or thinking about it once you get to scale and you’re a certain size, okay, really you just want to be, if this then that plus API calls to open, okay, well then they have you buy the balls versus if I had a 20 million A or business that was doing that right now, I’d be like, hmm, yeah, let’s spend some money and some time figuring out can we have our own open source model? 

What does it look like to fine tune that model so that we can host it so that we can really control the whole stack is what I,  

Rob Walling:
Yeah, there definitely is. It is interesting. I want to pass it to you in a second, Tracy, but that makes me think that these underlying AI provider, the L-L-M-A-P-I providers, I imagine that what happens when they do GPT dash cheap and we know that it’s like the one oh or two oh version, but it’s a fifth or a 10th of the price. And to your point, and it’s good enough to do a lot of stuff, it was good enough 18, 24 months ago, but it’s way cheaper. So that could be a thing of the future where we haven’t really gotten to the point of really thinking about cost because I paid 20 bucks a month for chat GPT and I don’t even think about it. And if they charge me 50, I would still pay it, but I don’t know the cost is out of line. I don’t think it’s anything that a lot of us are thinking about. I don’t think about the cost of AI these days. How about you, Tracy? What are your thoughts here?  

Tracy Osborn:
This is the place where if you’re a founder of building tools and services off of ai, a lot of folks are doing that right now and the people a couple of years from now, if you’re thinking now about what are the risks and you’re seeing these changes come down the funnel, you’re seeing things become more expensive, you’re seeing maybe you’re not going to have as much functionality as before. You can’t just build right now and assume it’s going to be that way forever. So the people who are thinking about it today are the ones who are more likely to be living still existing a couple years from now because they already have the expectations that this is going to happen. It’s going to get more expensive, it’s going to get harder to use. You need to start putting the work in today to future-proof yourself. 

And if you don’t a couple years from now, it could be like, oh wait, I built this whole business on the fact that this was really cheap and now it’s gone away and oh, my business is over. This is so sad, not so I was like, think today changes are happening so fast that thinking of different ways to differentiate yourself, think out different ways of how do you get that data, how do you provide that data to your customers? What can you do to futureproof yourself is going to determine who’s going to be still around in a couple of years versus not.  

Rob Walling:
Our next story is about Windsurf, which was a venture backed startup that do I need to say allegedly, allegedly screwed its employees, but we will link to a tweet from one of the employees who basically said, I was employee number two and I’ve worked on AI and code for years and all of my options, my vested shares, I basically got 1% of that value. And the quick summary of this, I mean it’s kind of complicated, but open AI in July, early July of 2025, almost acquired Windsurf for $3 billion, but the deal fell apart. Google swooped in and Acqua hired, and again, I don’t know if I need to say allegedly what are the facts here, but Google struck a 2.4 billion arrangement, a non-exclusive license to windsurf technology. They basically gutted the company non-exclusive license, but they hired the CEO, the co-founder, all the key r and d leaders, but no equity or control of the company changed hands. 

And so then another company cognition jumped in and acquired kind of what’s left, which to me feels a bit like a shell of a company, but early employees are like, I got nothing. The investors and the founders supposedly roughly half of that 2.4 billion. So obviously 1.2 billion went to investors and founders and there were some money left in the company. But again, it feels kind of gutted and really what I want to talk about here, it’s an interesting situation because it feels like the social contract of Silicon Valley was violated, and we’ve heard little stories about this over the years. I think toptal is either an LLC or maybe they raised a safe and they never converted it to equity and allegedly the founder just never converted it. So no one actually has equity even though they invested and is just taking money out of the company. 

Again, allegedly. But in this case, people did get screwed and oftentimes when I read these types of stories we talked about on this show on a hot tech Tuesday, the founders of one of these betting sites, how it sold for a billion dollars and they didn’t get any money years later. And we talked through how that actually works and usually they don’t report the whole story is what happens. It’s like, yeah, they sold their shares or they took secondary out early on, or they raised hundreds of millions and that diluted themselves into nothing. There’s usually more to the story than they actually report, but in this one I feel like the employees got screwed and this is kind of So do you want to kick us off a R? What are your thoughts on what happened here? If this is a precedent? I mean if this is dirty pool,  

Einar Vollset:
I mean I have to admit, I in shock when I first read the story and it’s still like it’s got to be Is it a breach of the social contract in Silicon Valley? Hell yeah. Hell yeah, it is. Are you kidding me? It was supposed to be a $3 billion. Imagine if you’re the employee, right? You sit around and you’re like, oh crap, we’re being bought by OpenAI for $3 billion. I’ve made it. I’m doing options math. What Porsche am I buying? I’m buying the Tahoe place immediately or do I wait six months? Things are good. And then you come in and you’re like, oh, the deal fell apart. And the founders and some people like the selected ones are getting almost as much money or maybe more and going to Google and I’m behind with the Unchosen ones in this company now where Google owns a license to what? That’s not cool. Even if there was some argument they were saying, look, they put a hundred million dollars investment into the company and this was the equivalent of what the leftovers for the people and you could have divot that out and they chose not to blah blah, blah. I’m still like, yeah, still you got is what you did. You got  

Rob Walling:
It is not good at all. I think it’s bad precedent and I hope this is not something that people start doing. Tracy, what are your thoughts  

Tracy Osborn:
As someone who has been in around Silicon Valley since it’s way too long? It’s really funny looking not funny. Haha, back in the day in the early two thousands and these first employees, the first employees, big things were happening. These first employees are also becoming millionaires and whatnot, but it feels like over time investors and acquiring companies have figured out, I don’t know, this might be hearsay, but it feels from my perspective that there is now a bag of tricks that they have. There’s all sorts of little tweaks and little rules and contractual things and things you can put into term sheets and whatnot that make it harder and harder for these first employees to get any sort of winnings from things like this. And it does suck. It does feel like that social contract is broken because people come into Silicon Valley and you’re going to join a startup and you’re going to get rich and it feels like it is getting harder and harder for that to actually happen. And the only way, like you said, so join a F company as an employee, you just make more money. You don’t have to worry about any of this or you’re startup popping and increasing your salary that way, but it’s hard to expect or you can’t really expect anymore to have this big payout from your startup that you joined as an employee number one, and now the founders are making bank  

Einar Vollset:
Well. So I don’t disagree with that. I mean to a degree I don’t disagree with it. I think there’s always like, look, there’s a difference between a company sort of not going all that well, like a soft landing type stuff. And in those type of situations, quite often it’s like the founders get taken care of. The founders end up with some sort of a package because their buddies at Google Acqui hired them and they’re now worth, look, they got not billions but multiple millions or even 10 million over time if they stayed employee versus yeah, in that case common shareholders are wiped out and it’s just like, look, you got a job, good luck.  

Tracy Osborn:
I mean you’re probably hearing all this stuff about everyone fetching about Phils in the Silicon Valley, right?  

Einar Vollset:
Yeah, yeah, exactly.  

Tracy Osborn:
All the elderly employees were like, no, but Phils was an example. They were not doing well when you looked at their actual numbers, and so they just got bought by PE and everyone underneath was wiped out anyways.  

Einar Vollset:
Yeah, there’s numbers of stories and there’s all sorts of things, but it’s like to a degree, there are other scenarios too where you see this often with private equity type buyouts and more equity hire type buyers, whereas this actually, actually the investors are getting screwed where it’s like they come along and they say, look, we’re going to buy this company for 50 or a hundred million dollars, but actually we’re going to pay 3 million for the equity or one X on the equity and the rest is carved out for retention. That happens too. And really what it boils down to is it’s about what the founders decide to fight for. That’s what it’s about, and that’s just what it is. My sort of view on this is like, yeah, does it reflect badly on the Wind source founder? Yeah, I think it does.  

Rob Walling:
I think it reflects poorly on Google’s part too, and I think it was Deep Mind, which is, I don’t know if that’s a company or a department within Google, but I think anytime employees, one of the great things, Silicon Valley has done a lot of good things and a lot of not good things. And I think one of the good things it has done is allowed folks, whether you’re a founder or whether you’re an early employee to participate in upside of companies. And there’s a lot of places in the world where that doesn’t exist. There’s a lot of places in the US where that doesn’t exist. And I think Silicon Valley has tended in general over time to do a decent job of that. Not perfect, but this is, and I think it’s a real problem,  

Einar Vollset:
I think because the big difference, this is not like an acqui, well, it’s on paper, it’s an acquihire mostly because of regulations around who can buy what. But it’s like the original deal, which was a successful holy crap, that’s a big number deal. It was 3 billion. The Google Acquihire is 2.4, that’s ballpark, same number. So you got screwed as if this was a soft landing for the founders, but it was a massive payday for the founders. That’s the big difference.  

Rob Walling:
And I think there are only with the middle class declining in the us, which is a major problem, there are only so many opportunities for unquote the American dream. Does it still exist the way it did 60 years ago, 70 years ago? I don’t think so. And I think that that’s a problem  

Einar Vollset:
I’m going to disagree on here. I actually think one of the interesting stats about this declining middle class stuff is actually, yeah, the middle class is declining, but that’s partly because the upper class expanding,  

Rob Walling:
Is it?  

Einar Vollset:
Yeah. Yeah. So it’s like, look, the middle class is declining, but also because people are getting richer, smaller  

Tracy Osborn:
For percentage of people are getting richer while a larger percentage are getting part,  

Rob Walling:
I think a larger, yeah, I think people struggle when I go to get gas or buy avocados, I’m like, if I was making 20 bucks an hour, how the fuck would I afford this stuff? It’s crazy expensive. Yeah, that’s true.  

Tracy Osborn:
But good for those people who are getting rich.  

Rob Walling:
Yeah, I mean  

Einar Vollset:
Billions of dollars. Well, I mean, what are the craziest things about me lately? What are the truly holy crap bananas thing for me is what Z’s doing with poaching AI  

Rob Walling:
Researchers. That’s insane.  

Einar Vollset:
People are getting paid, if that’s true. I started reading these numbers. This is no one’s getting paid out million.  

Rob Walling:
What? The  

Einar Vollset:
Million dollars?  

Rob Walling:
I thought it was a hundred million dollars where the complete package, including equity and salary and all this stuff for multiple AI researchers as a salaried employee. Yeah, it’s  

Einar Vollset:
Unprecedented. Hey, Z, if you’re listening to this, I would totally leave behind TinySeed for a hundred million dollars package  

Rob Walling:
If you need a podcaster and a voice of ai,  

Einar Vollset:
A really opinionated Norwegian, actually, I think I probably do it for like 99.  

Rob Walling:
Yeah, give you a discount.  

Einar Vollset:
Oh my gosh.  

Rob Walling:
Yeah. Special  

Einar Vollset:
Discount. Yeah.  

Rob Walling:
And to be clear about the previous story with Windsurf, I obviously more than anyone, I don’t begrudge any founder to want to change their life or to get rich building a company. I think capitalism and democracy have done a pretty decent job of that. And if anyone believes in it, I do. But this in particular, these kind of edge cases where people get screwed I think is a real problem. And my hope is that it is not something that continues. Our last story of the day is more of a SaaS focused, not news of the world, but it is an article on founder labs.io how to sell if your user is not the buyer, for example, your developer is a user, but the CT O is the buyer, and this is by Nate Riter. And we of course see this with TinySeed companies. Where it’s easiest thing to do is if you are a bootstrap founder, you are patient zero meaning you have the need, you validate it, and then you build it for you exactly who uses it, how they use it, and then you sell it to those people and it’s one user and they make the decision that is the best scenario with B2B SaaS, but it’s I would say probably the minority of SaaS that we see. 

And so at a certain point, you do have to learn how to sell to folks who are not your end user. And Nate talks through some thoughts and best practices. Tracy, what are your thoughts on his piece?  

Tracy Osborn:
I love this. I think it’s, like I said, we see this a lot with TinySeed and a lot of people are like be like, why can’t it be easier than this? Why can’t these people just pay for my, but they have to go through all these hoops where they have to talk to their manager and their manager has to talk to the buying team, and they’re like, well, by talking to this developer that’s saying how this would be such a great win. But then they as the founder and as the owner of this tool are divorced from being able to be in the room with those decision makers. This article does a really good job, I think, of explaining what you could do as the star founder in your product to make it easier. A couple of the things that I mentioned I thought were really great was if you think through this and you’re able to build ways, tools and resources for that, the non-buyer, the person who’s using using your product, make them tools and resources or things that they need to convince their leadership, you should do that. Think through three steps ahead. You have to do a harder sales process in that way and think through what the entire sales cycle is like and see through what tools you have on your end that you can give to those folks to help ’em make the deal and just talk to people. But I know those are just kind of like band-aids. I’m sure Einar has some thoughts here. As a true salesperson on this three person team, Einar, what do you think?  

Einar Vollset:
I thought it was a good article. There’s a bunch of stuff to this. I think for me it’s more like, it’s more like, yeah, I don’t disagree on this. And I think at a higher level, I think a lot of particularly bootstrap founders, they struggle conceptually or culturally or whoever. You pointed out this notion that a lot of them, not all, but they just want make money when they’re sleeping. They don’t like buying. They’re not the typical enterprise software buyers. And so they can’t believe that somebody doesn’t want to go to a sales page and there’s the pricing and you just click and put your credit card in, and why isn’t all software in the entire world? Why isn’t everything like this? They think it’s a dark pattern to hide pricing and call sales is a dirty word and all this stuff. And the fact of the matter is almost 100% of the time, okay, let’s call it 80 90% of the time, if you think you’re different, you’re probably not. 

You can get to, I would say 1 million, 2 million, 3 million of a RR somewhere in there for a lot of vertical SaaS businesses. With that sort of self-serve model, you can differentiate the pricing and you got to figure out, there’s a lot of stuff, don’t get me wrong. There’s a lot of stuff you got to get right to get to that level too. But a lot of businesses, once they get to that stage, if you want to keep increasing your growth and take from that one to 3 million up to like 5, 10, 15, 20, you really need to start unlocking enterprise sales. And what that means is dealing with issues like this. And the fact of the matter is a lot of founders just don’t want to do that. And actually, and shout out to Jason Cohen, friend of the show who he put out a new metric here on the max MRR that I thought was quite interesting. 

And it’s this notion that given where you’re at in terms of your churn rate and all this stuff, how much new MRR you’re booking, what is your exit max, MRR, where is your atom tote to pull back to an earlier point? And the fact of the matter is you can do that math earlier on. You can know, given where I’m at now and the kind of new MRR and booking and the churn rate that I’ve got, once you get to a certain size, you can do the math and know where you’re going to tap out at that. And fundamentally, you need to bend that curve. You need to change those metrics. And those metrics typically landed like, okay, you landing larger accounts who churn less? That’s just the way it is. And what also pisses me off sometimes is I see these founders, they get to 1 million, 2 million, whatever, and they’re like, this is like, I can’t figure it out, or I just don’t want to do anything more. 

And then basically, if you don’t do anything more, you’ll stall out and your business is worth less and less, even though you’re maybe growing slightly or they’re like, I’m going to sell to this private equity group that comes through the door and they’re like, whatever they’re paying, but I don’t care. It’s for good money. And the fact of the matter is a lot of these groups, what they do, this is what they know how to do, is they figured out, look, if you got it zero to one and you got it to a million or two or three and you didn’t build out an enterprise sales effort, and it’s clear that it could do so much, so much of the value of what you created compounds to them very quickly, you could have spent five or six years getting it to one or 2 million and then they buy it and then two, three years later, they make 80% of the money.  

Rob Walling:
This is why when founders are listening to advice on the internet, you need to ask what’s the source and what are their goals? It used to be, well, we’d see all this funded, like the VC backed advice for startup founders. You have to go after a billion dollar market and you have to have to have and bootstrap founders were doing this and be like, I have to go after a billion dollar market. And that’s where I came in and was like, no, stop doing that. You’re a bootstrapper. You don’t need all the stuff that you see venture-backed folks saying. And that’s why if you listen to any of the big VCs, there’s usually some nuggets of truth, but there’s a lot of bias towards becoming a unicorn or a deck of corn. And a lot of that stuff will actually break a bootstrap company. But even within bootstrapping, I had this realization, well, it’s about eight or nine years ago, that there are the lifestyle and the ambitious bootstrappers, this is the way I term it, right? 

And lifestyle bootstrappers are more like the indie hackers where it’s like, I don’t want to do stuff I don’t want to do, and I just want a business that’s, I’m willing to limit my growth and my aspirations based on my comfort zone, how much I want to work, whatever it is I want my lifestyle to be. Number one. I was that until about 20 11, 20 12. And then when we started Drip, I realized, oh shit, I have a tiger by the tail. This could be life changing. I’m going to switch. And I went into a different mode where I then sacrificed some things. I worked more than I should have. I sacrificed some of my quality life for a few years in order to get rich is basically what the thing was. And that’s I think, something that folks miss online, and you’ll see it on X Twitter, you’ll see an indie hacker arguing with someone who wants to build a $10 million SaaS. And really what you need to do are different in those two cases. And so you can say, well, you should never do this. You should always do this. And it’s like, well, not if I’m designing my life and my company a little differently than yours.  

Tracy Osborn:
I wanted pop in here just to triggered a little thought in my head in and around sales that I’ve been doing sales for our new product in tiny C, we have a SaaS institute. We’re working with 1 million plus a RR founders and bringing, we have the accelerator, we have this process of way do we grow our companies for the accelerator we’ve been doing for the last six years. We have this new product that where it’s like mentorship advisors and coaching, coaching facilitated masterminds in SaaS Institute, and I’m doing the sales for that. This is brand new to me. I love to build products. I haven’t really done sales before. I’ve been talking to founders within TinySeed for the last six years, but how much people hate sales. And the thing that really changed my perspective on this is that thinking about sales, it sounds kind of silly, but it’s like sales is everywhere. 

Sales is just understanding the perspective of the person you’re talking to, understanding what they need and figuring out on your end how to give it to them or how match their needs. And so if you’re talking to someone who is not necessarily a buyer, how do you give that person who is not the buyer, the tools that they need to make this happen? When I’m talking to someone and trying to convince ’em to spend a couple thousand dollars a month to join our coaching program, what can I say to reassure them of the value of that? What do they need in order to be reassured that value? This kind of has leaked into my thoughts for everything I do when I’m talking to Rob about my job. A lot of that’s sales too. What does Rob need? He’s shaking his head at me. What does Rob need? 

What do Rob and Einar need? And when I am talking about what I’m doing in my job and would I want something, how do I freeze that in a way that I am reassuring them of the things that they need, but I’m also getting what I want? And so when founders come to me and they say like, oh, I don’t like to do sales. I think that a interesting way of rethinking it is it’s not a scary process. It’s literally you kind of have to think one step ahead. The person I’m talking to, how do I get them what they need? How do I understand what they need and how do I get it to them? And then sales becomes a lot easier when you think of it that way.  

Rob Walling:
Tracy Osborn, people can find you on the internet at Tracy Osborn dot com and of course, Tracy Osborn dot com. On Blue Sky, you’re broadcasting to us live from the gift shop of a 1980s ski lodge. Thank you so much for making the show today.  

Tracy Osborn:
It’s true. Glad to be here.  

Rob Walling:
Einar Vol set you, of course are posting and arguing about the Giants on X Twitter at Einar vol set. We will link that up in the show notes. You of course,  

Tracy Osborn:
Do not judge us by his Twitter feed.  

Rob Walling:
Yeah, no, no, no. His opinions do not reflect that of Tracy or a TinySeed. Einar is, of course broadcasting from a discreet garage where he looks like he’s about to hold the annual meeting of his Rotary Club. So we will wrap it up here. Einar, thanks so much for joining  

Tracy Osborn:
Sweet Burns at the end,  

Rob Walling:
Sweet Burns. The other joke was, I’m expecting to see your Bowling Trophy collection appearing just off camera inside the wood panel behind you. All that said, you too. Thanks for joining.  

Tracy Osborn:
Yeah, glad to be here.  

Einar Vollset:
Thanks for having me.  

Rob Walling:
Hope you’ve enjoyed this episode of Hot Take Tuesday. If you liked the show format, please give me a shout on X Twitter. I’m at Rob Walling, and if you look at the Startups Pod Twitter account, you’ll see a tweet with a video clip from this week’s episode that I typically retweet. Just chime in there and say, I really enjoyed this episode. You should do more of these, because I don’t know, the last time we did one, it was probably six months, and I’ve gotten a couple requests over time to do it, but I often just kind of forget about doing ’em. So if you want to hear more of these, let me know on Twitter. Thanks for tuning in this week and every week. This is Rob Walling signing off from episode 792.  

Rob Walling :
Welcome back to Season five, episode two of TinySeed Tales. Before we jump back in with Harris, I wanted to let you know that if you’re a founder who’s looking for the right amount of funding, a community of like-minded founders and a world-class network of mentors, you should apply for TinySeed. Our Fall 2025 batch applications open on September 1st and close on September 9th. Also, on September 3rd, we will be doing a live q and a with the TinySeed team, so you can ask any burning questions ahead of submitting your application. TinySeed is the world-class accelerator for B2B SaaS founders, and if you want to work with me and my team, you should head to TinySeed dot com slash apply. There, you’ll see all the details and you can sign up to get notified when the q and a is going live, as well as when applications open. That’s TinySeed dot com slash apply. And as a reminder, the episode you’re about to listen to takes place a few months after episode one. That’s the beauty of TinySeed Tales is that I follow a founder over 12 to 18 months and we record six to eight episodes. So there’s these lovely time gaps between the episodes where we can really see things unfold. So with that, let’s dive in to episode two.  

Harris Kenny:
I’ve had calls with these traditional rev ops shops agencies, and they don’t go anywhere. They don’t get it. They don’t understand why. So even though on paper it seems like that would be a great fit as a HubSpot partner with 25 million in annual revenue, that should be a great account, but it’s actually this little scrappy half a million dollar a year agency that’s excited about what we’re doing, and I don’t know where it’s going to go, but momentum wise, it feels like there’s a lot of momentum happening with the types of people that we’re working with.  

Rob Walling :
Welcome back to TinySeed Tales, a series where I follow a founder through the roller coaster of building their startup. I’m your host, Rob Walling, a serial entrepreneur and co-founder of TinySeed, the first startup accelerator designed for Bootstrappers. In this episode, I pick back up on my conversation with Harris Kenny, founder of Outbound Sync. Last time we learned that Harris has made the hard transition from agency owner to SaaS founder, and in just over a year has built his MRR to $10,000 a month since we last spoke. He’s been working on his positioning and has decided to do a Zoom in pivot to focus on agencies who are using outbound sync. I wanted to dig in and find out why he was making this move.  

Harris Kenny:
We did roll it out, so the short version of the genesis of it or the decision was at the kickoff for our batch. Talked about it with you, made you talk to me about it outside of the elevator for a couple minutes. Talked to Andy who’s in my batch, and decided to just push out a data sync only and lower price version, and it has gone very well. It’s working kind of how exactly you would hope the agencies will. They’re now talking about it in their sales process. Some of ’em are actually starting to put it in their decks and in their contracts of like if a user wants a CRM integration, they’re going to use outbound sync and there’s additional costs, and then they close these deals and they just send me a Slack message. And so we’ve got expansion revenue now and they’re happy to do it. 

I’m trying to figure out the balance of the support that they’re supposed to get because some of their clients are kind of needy and others are really easy. Some of the agencies do the onboarding on their own. Other ones, we do it and they’re requiring a lot of help from us. So I would not say that the operational side of it is figured out, but in terms of it’s growing, they’re happy. We’re signing new agencies. We just signed a first client with a very big agency that has 150 active clients, and this is just one for them, but obviously that could grow a lot. So yeah, it’s really working very well. But we do still have teams that come to us and we have to have brand and we will talk about security, and we have to also be able to stand on our own feet because those end clients are also evaluating us too, because we’re the ones that are ultimately going to connect with their CRM and outbound sync is the thing that’s showing up in their CRM data. So yeah, so there’s this balance of serving the agencies but also building our own direct thing. And I’m still figuring out, but in short, we’re making money. I’m glad we did it. We’re going to keep doing it, and there’s still a lot of figuring out to do, I think.  

Rob Walling :
Do you feel like you are going to focus on serving just agencies from now on and either not market to not sell to other customer types or even turn them away? What’s your thinking there?  

Harris Kenny:
Yeah, I am starting to lean that way, even just unconsciously because they understand our product so well and the problem that it solves so well, the sales process is very low friction, right? Because they get a customer and the customer says, Hey, okay, we use Salesforce, we use HubSpot. It’s really important to get this in the CRM, and they already know why. They already know why outbound sync. They’ve typically tried to do some automation on their own. They understand the value of it, and they love being able to just pass these questions off to us. And so yeah, I’m finding myself spending more time there and thinking about features for them. They have very specific features that they want that we can definitely build that I can see that would be valuable for them. I think that if a direct team comes in and they’re motivated and they’re ready to go, it’s like, of course I’m happy to work with them. 

And we’ve had a couple, we had one that between our recordings that came in, I had one call with them, one call closed, they onboarded themselves. I literally haven’t heard from them in over a month, but the data’s flowing and they’re happy. But there’s definitely a lot of teams are not in that situation, and so it’s like I don’t want to chase someone down if they don’t have the internal alignment and decision-making ability to move forward. I mean, it can take a year plus of conversations because for our product to be used, there’s hundreds of other things that have fallen into place. And then with the agency, those things have all fallen into place basically.  

Rob Walling :
So you have a customer type that is easier to sell to really just understands the product better, that is easier to onboard, that probably potentially has less price sensitivity, maybe passing it along to clients. They are less support. They will probably be higher annual contract value because all these things, so that feels like at your stage, early stage, that’s it. That’s CICP, right? And let’s just be honest, if you hit two, three, 4 million and you’re like, wow, I’ve just got a lot of agencies here and it’s slowing down, obviously you can kind of go back. You can undo this decision at any time. But for now to become positioned and known for being the sync engine for agencies, I think is a really interesting approach.  

Harris Kenny:
I’ve thought about giving ’em a seat for free and being like, Hey, use this for your own campaigns because I know they’ll make content about it. And from a cost perspective, it’s not really that big of a deal. And I know if they get familiar with it that they would use it. I don’t know, maybe I charge ’em a low price, but I feel like if I say, Hey, here’s a free seat, they would be jazzed about it. And as they’re getting more mature, well, okay, so this is a little bit of a sidebar, but something that’s happening in this agency space is there’s this huge disruption happening where you’ve got these traditional marketing and rev ops and CRM shops, and then you have this emergence of this tool called Clay and these lead gen agencies that are really going to the real job to be done. 

The reason why most people hire agencies in the first place marketing and sales agencies is they want more leads and a lot of agencies will do other things On top of that, they’ll build forms and landing pages and persona development and hundreds of thousands of dollars of extra services. And so these other agencies have come up, these cold email growth hacking clay agencies that are just going to the main thing that people want, which is like, here’s leads for your sales team from scratch. And so there’s this balancing act of the traditional ops shops and stuff are starting to encroach on this space. They’re getting listed as experts in some of these tools, but I see their LinkedIn posts and I watch their videos and it’s like they don’t get it. They’re just missing the point. And so in my head I’m like, who’s going to, as this encroachment is happening between the two who has a skillset that’s harder to learn? 

You have these scrappy agencies that are doing the hardest possible thing, getting business from nothing. Then you have these, it’s hard to run a rev ops and CRM shop, but you’ve got referred leads, you’ve got this whole infrastructure, you’ve got a huge multi-billion dollar SaaS company snowplowing for you, and then they’re trying to be nimble, but then the nimble people are basically trying to learn how to do the easier things. And so I suspect that these agencies that we’re working with are going to grow and they’re going to start adding more services, much easier services, delivered paid ads, these other things. So anyway, this is a little bit of a side thing, but I’ve had calls with these traditional ops shops agencies and they don’t go anywhere. They don’t get it. They don’t understand why. So even though on paper it seems like that would be a great fit, it’s a HubSpot partner with 25 million in annual revenue. That should be a great account, but it’s actually this little scrappy half a million dollar a year agency that’s excited about what we’re doing. And I dunno where it’s going to go. But momentum wise, it feels like there’s a lot of momentum happening with the type of people that we’re working with.  

Rob Walling :
There’s a shift in the market  

Harris Kenny:
Happening  

Rob Walling :
And this is what we see. We see this a shake up or a shift or whatever we want to call it. You’re calling out momentum in this direction in it and can see that from the outside. I’m like, I know something’s happening, I’m hearing, but I don’t understand exactly where it’s going. I hear from folks like you and Valentine, the finding mail in this space. The same thing happens with email marketing or marketing automation. It’s like every five to seven years there’s this big shakeup, and I was in on probably the last one or two times ago that was my startup. And these days it’s players like beehive and substack that are, they’re redefining it in a new way. And I remember when beehive launched, I was like, wow, I don’t know that that will work. But they figured something out. They had their lead, and there are things that are changing. 

This is why it’s so hard to run a SaaS company for more than, I don’t know, 10 years. It gets the markets shift and especially a 10-year-old SaaS company is a lot of legacy code and you start moving slower and you can’t hit that momentum. So I’m bringing up product stuff, of course a product guy. But you’re seeing the market shift and you’re saying that the old agencies almost don’t understand that there’s a sales marketing, there’s an understanding, there’s a shift in the understanding of where the puck is headed, and you feel like you’re more towards the cutting edge of that.  

Harris Kenny:
Yeah, that’s right. And they have relationships with the traditional vendors in the space. So they have a partnership with ZoomInfo, they have a partnership with an outreach or a SalesLoft. So they get a new customer and they say, now you’re subscribing to ZoomInfo, you’re paying them a hundred thousand whatever, plus a year. Now you’re subscribing to Outreach or SalesLoft. So it’s just there’s a lot of cost and process and legacy stuff that’s built into that. I mean, I guess we’re part of outbound sync is kind of part of this unbundling movement that’s happening. And it’s API driven and webhook driven and data portability. You still end up spending money, you just spend it in different ways, but you can do a lot more interesting things right now. But my public pricing and my public positioning, I haven’t made that change yet. It’s still kind of an if you know sort of thing. But I’m in the WhatsApp groups with these agency owners. I just got off a call with one and he’s like, Hey man, yeah, I’ve been following your stuff forever. This is how we’re doing this stuff right now. But we have this one client and I wanted to see what you’re up to lately, but he already knows me. And so I don’t need to be necessarily aggressively marketing to them explicitly as such because I’m already kind of in those watering holes.  

Rob Walling :
For years. I’ve been saying build your network, not your audience. And the inbound interest that Harris is getting is a perfect case study of why this is so helpful. When we spoke with Harris in episode one, he was building out, his team was worried because he was hiring ahead of revenue. I wanted to check in to see how things were going.  

Harris Kenny:
I mean, I’ve been running a fully bootstrap business for five years, and so I just have some real habits, ingrained habits built in that were built in there. But beneath that, I have taken some chances and then this was the big chance, okay, I think this is maybe the best idea I’m going to have. I don’t know what else I’m going to come up with the rest of my life. Maybe this is it, so let’s go for it. So I remember we were sitting around the table at the kickoff for our batch and each person was going to bring up ideas, things they needed help with. And my big thing that I’ve been wrestling with was like, oh, is my developer working out or not? And this is how much he’s working 15 hours a week, but it seems like he’s got these other projects. 

And I remember just everyone around the table was just like, what are you talking about? He needs to be full time. What are you expecting him to get done? And 15 hours a week, it was just immediate. You don’t know what you’re talking about. Everything’s fine. Yeah, I mean there was not even, especially in a room of contrarians and independent thinkers, usually someone’s going to come up with some reason why there’s another way. But literally every single person was like, yeah, yeah, 40 hours. I was like, cool, okay, I’ve got 19 minutes left in my 20 minute, I got to think  

Rob Walling :
Of something else,  

Harris Kenny:
Idea session, what else? And everybody’s right. I mean the change has been massive and I like him. I like working with him and the output is just way, way better. And so we’re rocking. I mean we’re shipping stuff really fast. And then the customer success, a couple months ago when we were talking about this initially, I remember just being like, oh, I don’t know. And you were like, trust me, you will find 40 hours a week for a customer success person. Just trust me. And I was like, okay, I hear you. Okay, lemme shut down my old agency and get my feet under me. But here we are three months later and I am swamped in customer success stuff, onboarding tickets, feature requests, it’s all good. There’s no problems with the product, it’s just the natural thing that happens when you’ve got a few dozen companies using your thing. 

It’s all normal stuff. And fortunately, I did start the hiring process with Dynamite Jobs about a month ago. So my new CSM did start on Monday of this week. And so he’s ramping pretty quickly and I’m amazed they found him, his experience. He had been a third hire at a SaaS company before where the first was a founder, the second was a full-time dev, and then he was the third founding CSM. It’s like the same thing here. He’s familiar with HubSpot, confident, willing to take on a challenge, excited to be do the remote thing. It was a tough hiring process, but dyna, my jobs made it easier, but it was tricky. I dunno, I wasn’t sure I’d find somebody, oh, the applicants were all over the map. I wasn’t sure. What do I really need here? So there’s this heuristic of hiring for people based on what they’ve done, not based on what they can do. 

And so then I’m like, okay, but what is it of the things that people have done that I’m looking for? So like CSM experience, is it like HubSpot experience? We make this HubSpot product. Is it understanding outbound tools? Is it working at a small company? And it’s kind of all of these things. And so different applicants had different strengths across those different areas. And one amazing one came through but wanted a ton and ended up ghosting anyway. And it’s like, okay, well I got to find somebody who’s excited and sort of crazy enough to be a third hire at a company. I mean, that requires a type of person, risky. It requires a lot of trust in me. Yeah, so that was what was tricky. It was hard to find apples to apples comparison because we have these different requirements and then different ones were strong in different areas.  

Rob Walling :
It’s always tough. Customer success and marketing are two unexpectedly complex things to hire for. And I don’t want to dismiss hiring a developer, hiring sales, hiring support, but it’s kind of like you need to be able to sell, you need to be reliable, get it done. You need to understand the product. And a developer we can go through, but it’s like you need to write good code. You need to not be a jerk and you need to do whatever else and show up and be reliable. Customer success, there are a lot floats into that. It’s like you’re rapport with other individuals. Do you know how to re-architect my entire onboarding and track metrics? That’s part of customer success. Now, not everybody needs to know how to do that, but others do. There’s ongoing, there’s a lot to it that other, and it’s still a new role. I mean, the first time I ever heard the term was probably, I dunno, 20 12, 20 13. So this is a decade old versus a sales person as old as time. You know what I mean? And customer support goes back, what do we think 50, 60, 70 years? Success is a newer role. And so it can be hard to hire for because there isn’t as much, not legacy, but as much foundational knowledge about it.  

Harris Kenny:
Yeah, for sure. No, I agree with that. He’s working out 

So far. I mean it’s been a couple of days, but yeah, he’s eager he, he’s taken on new things and I have a decent, there’s the pieces of a CSM role in place, so he’s not starting from scratch, which I think is helpful, but I’m like, Hey, here’s our onboarding. There’s a single page in our knowledge base, and then there’s this onboarding plan tool that we use. They’re not the same. They’re out of sync. So one of your first things, go through those, identify the inconsistencies, identify some room for improvement. And he started to do that. He actually has an engineering background, which is kind of interesting. He studied engineering in school and then worked for aerospace company before going into SaaS. And so in the interview process, he had said a few things like, oh, we should do a root cause analysis of what went wrong. 

And I remember just thinking like, oh yeah, our product is really technical. And the thing is, our customers don’t really want to talk to us. I mean, they’ll be happy to chat, but we kind of need to be in the background. If they’re talking to us a lot, that means something is really not working. It’s not a product where it’s fun to talk to the team. It’s like sync issues and stuff. And so it’s like, okay, I need someone who’s going to be able to really drill down. And so I really, I thought that skillset was cool because I just thought it was kind of more to what we need to be able to do, just really drill down and understand why these properties aren’t mapping or whatever. Because we can’t hand wave away a problem. It’s either syncing or it’s not. And someone who can figure that out quickly is like, that’s a very valuable skill.  

Rob Walling :
I love how fast Harris is iterating. He’s been exploring, integrating with Salesforce, which can be challenging to say the least. Before our conversation, he sent me this audio note.  

Harris Kenny:
I have this sort of Eureka moment. I’m pretty excited about it. I know we’re not going to talk for a little while, but I wanted to share it. So context are go to market motion, working with agencies continues to be getting more and more traction, and several of these agencies are working with customers who are using Salesforce. Now, I’ve only built this HubSpot integration, but I really built it kind of painstakingly to think about how everything maps. And what I’m really excited about is that our HubSpot sync to Salesforce is working very cleanly. I just spun up a developer account in Salesforce after having a call with a series E startup. So just a ton of traction, really mature company with a lot of money, and the agency they’re working with is crushing. They’ve booked 90 meetings for them so far, and so they’re really happy with their agency, but they want to get that agency’s work in Salesforce. 

And anyway, it’s working. I was surprised that it worked as well as it did. But it looks like I had been building for this because I built, I think so tightly to HubSpot that it worked. And so this is opening up a whole different set of doors for us. I think in the short term, I want to focus on the HubSpot to Salesforce path, but then there’s also room to potentially build just a standalone Salesforce integration and serve a hopefully different section of the market. Yeah, I dunno, it’s a Friday afternoon right now, almost four o’clock and unbelievably excited.  

Rob Walling :
And this Eureka moment wasn’t just groundbreaking. It seemed to reignite something inside Harris.  

Harris Kenny:
I haven’t had a feeling like this since kind of early days. I discovered that multiple users had already been using our product in Salesforce, which I didn’t know. Nobody had told me that or asked or anything. Not that they have to, but it just never came up. And that was part of the downside of the agency thing is that I just didn’t realize that. And so then I tested it myself. I spun up a dev account and it worked. It’s like, oh, you can go from outbound sync to HubSpot to Salesforce. And then I talked to more and more people and realized, oh, actually quite a few users are doing this. And then these new enterprise deals that are coming in are also saying, oh, we actually need, so this is the thing that more and more I’m hearing that people actually wanted, people that understood the value of the product tended to be actually in that ecosystem. Now there are also HubSpot people, but it was the Salesforce people who were kind of more into it. So that was an interesting learning. And then when I spun up the sandbox account, I actually kind of liked it. I hadn’t used Salesforce in 10 years, but I kind of liked it and it was said, no one ever. Well, so you’re the one. 

Well, I liked it because for the reasons why a lot of people don’t like it. In HubSpot, it’s very intuitive and it’s user friendly, but it’s like Apple versus Android. And sometimes I want to see a big settings menu with a compact tight table where I can see everything, and it’s not nestled between these dropdowns and you got to click through to this, to this to to actually get to the toggle. So in a weird way, it was kind of like, oh, I feel like there’s a lot in front of me here. So I dunno. It was just interesting. It was a very unexpected response because in the HubSpot ecosystem, it’s very territorial of like, oh, orange, good, blue, bad, whatever. So it was like, okay, this is kind of interesting. So we talked to a company that made a toolkit product, and so basically it was a quick integration. 

They’re basically themselves infrastructure as a platform, as a service. So they’re an IPA and work kind of an ipa. I was like, okay, well maybe we can work with them. And then anyway, the developer jumped into it and he was like, I’m not getting the error messages I need from these API calls. I think I can just do it on my own. I was like, honestly, man, you’ve got me here. I trust you. Whatever. Take a shot at it, work on it for a couple of weeks and let’s just see what happens. He kept doing some bug reports here or there, but in general, this was his focus for a couple weeks, and sure enough it works. We’re going to be announcing a Salesforce beta. I just posted on LinkedIn. We already to our agencies were like, Hey, I’ve got customers that want the Salesforce thing, so send me a Stripe link and let’s go. And already we’ve solved problems that you can’t do if you’re doing the HubSpot sync,  

Rob Walling :
Then the Salesforce integration, you’re in beta. It took you weeks five to six weeks. Is that right?  

Harris Kenny:
Yes. Which is kind of crazy to me. I think it’s because we spent a year and a half on HubSpot that when Vitali jumped in, and also what we do isn’t actually that complicated. All things considered something like a drip. It’s like there’s a lot going on with that product. I mean, we’re basically like, does this contact exist or not? If not, create it, log these emails to it. I mean, there’s more to it, but fundamentally, I think other products have a lot more problem things they have to think about. We’ll see, I might be talking to you next time and be like, Rob, I was wrong. We missed it. We forgot this thing. We hit an iceberg. I don’t think  

Rob Walling :
It’ll be on your side though. I don’t think it’ll be your code. It will be. If anything, the experience that we started having and that other founders have had as they’ve tried to do this, is that Salesforce says, oh, great, you have this code now in order for anyone to deploy it, you need to go through our security audit and our this and that audit. And each one of those takes two months or something waiting on Do you have to do any of that?  

Harris Kenny:
I think that, I mean, to get formally listed in the exchange, yes, but because that’s not how we’re acquiring customers, actually, it’s been a year and a half. We’re like, there’s one app in front of us in the queue before we’re going to get listed in the HubSpot marketplace. We haven’t even been in the HubSpot marketplace yet because we’re in these other,  

Rob Walling :
You’re sound direct.  

Harris Kenny:
So I think that we’ll be able to get away with being like, Hey, this is a beta developer version of the app. And then over time, yeah, we’ll be in the app exchange and we’ll pay the few thousand dollars. And we are starting SOC two tandem with this because the Salesforce people, they want SOC two. And so I suspect that if we do that, then it’ll make some of the security stuff easier because we will say like, Hey, here’s our trust center, and we ended up, yeah, that was a whole thought process over the last couple of weeks.  

Rob Walling :
If you’re unfamiliar with SOC two, it’s all about making sure your company’s security controls and data handling practices are up to snuff. It’s like getting a seal of approval that says these folks are doing things the right way when it comes to protecting customer info. And as startups want to move upmarket and sell to bigger companies, SOC two can be a game changer, but it’s expensive and it’s a ton of work.  

Harris Kenny:
Looking through the SOC two attestation, it makes sense to me these policies and controls that we should put in place. Sometimes some of that stuff just feels like a song and dance, and I’m sure that a little bit of it is. But I mean, for me, as a non-technical founder, we’ve got one developer. Some of these things are very good for me. If something happens to him for whatever reason, if we have these controls in place, I’ll be in a better position in terms of being able to business continuity or something happens to me. So it’s funny, but some say, oh, you’re too small to do it right now. But because we’re small, I look at these things and I’m like, these are actually kind of viability of the business. If we can resolve these, it actually kind of helps me sleep a little bit better at night, which is kind of funny. But yeah,  

Rob Walling :
That’s the glass half full view of it. Most people hate SOC two and hate going through it, and you’re like, this, actually, you are definitely, you’re on the optimist side, which I think is really good for you as a founder.  

Harris Kenny:
It’s like, oh, what happens if the one person who is putting code in production, what happens if thing happens to them? I should probably have an answer to that before it happens.  

Rob Walling :
So you wrote me a note and the note said, I realized we weren’t really spending the TinySeed money yet. It had been three months, and we had effectively only spent $8,000 of the check you wrote us and revenue growth had slowed with you being bogged down in customer success stuff. So talk me through where you are with that. Have you started spending more money? Is this the hires and the full time and that kind of makes all that work?  

Harris Kenny:
Yeah, definitely. There’s just old habits from how I’ve been running my business, and so I was treating that money in the bank. It wasn’t there. But something that you’ve said that kind of rings in my ears from time to time is that having more money in a business can save you years of time. And so I sort of made this decision of it was customers and prospects were coming in and they were asking for these things. They were asking for SOC two, they were asking for Salesforce, and it was like, okay, well, I probably just need to spend money to do those things. So now we’re in this spending era a little bit. And so my job now is to get it back. So it’s like, okay, we’re going to start sending the link to our trust center for our security stuff to people. And so now you need to come up with pricing for what those people who ask for that thing, what are they going to pay? 

And I went to an old startups For the Rest Of Us episode, I just searched security and I’ve listened to every episode that I found where security came up in the Spotify search thing and something about five figure annual contract value stuff. We did close our first annual contract. We a company where it was like, okay, the people are willing to sign that type of contract with us even before we have the Salesforce or the SOC two. So that gave me a really big boost of confidence because I’d never sold an annual contract of anything in my life of my own companies. And so it was like, okay, we’re solving a problem enough that they’re willing to write that check. How much more would they be willing to pay if we could solve these problems even better? So we decided to go. I went with Vanta, which is kind of like the category creator in the GRC compliance software space, because I just kind of want to get it done the first time, send it to people, and they’ll be like, cool, you pass review and not have to go back and forth and maintain a bunch of stuff and a Google Drive and things like that. 

So yeah, so that was the decision of consciously, let’s spend this money, let’s get these deals in rework pricing and try to be a little bit more confident in the sales cycle instead of before being like, well, it’s supposed to be 500, but you could pay a hundred and it’s month to month, but you can actually cancel yesterday. It’s just like, come on, dude, this is cool. You built something cool. Sell it. And I think part of it’s going to give me the confidence to do some of that.  

Rob Walling :
Harris’s bold moves are paying off an outbound sink is gaining momentum, but as he navigates this entrepreneurial roller coaster, every decision carries weight. Will his growing confidence be the key to unlocking even greater success? Buckle up for next week’s episode where we’ll follow up on his SOC two compliance journey. Find out how he’s scaling outbound campaigns without losing the personal touch, and talk about a potential positioning pivot that could catapult outbound sink into a whole new league. Don’t miss out on the twists and turns of Harris’s journey next time on TinySeed Tales. Hope you enjoyed this episode. If you’ve ever wondered what it’s really like inside TinySeed and want to hear a raw candid coaching conversation between Harris and I, we put together something special for you at TinySeed dot com slash bonus. You should check it out. I’ve never released anything like this before. I hope you enjoy it. It’s at TinySeed dot com slash bonus. 

Rob Walling:
It’s another episode of Startups For the Rest Of Us, I’m Rob Walling, and this week I talked to Yaniv Bernstein, who has been both a founder and an executive at companies ranging from small startups up to very large orgs, including 10 years at Google. He’s been a VP of engineering, he’s been a COO, he’s been a consultant and he was a software engineering leader at Google and these days he’s been giving advice to founders that want to go from startup to scale up. He’s seen a lot of companies fail, as many of us do as they try to get past that 1 million, 5 million, 10 million a RR phase. And one of the big drags on a company as it grows is when a founder isn’t able to make that transition from being the CEO of a 10 20 person company up into the 50, a hundred, 200 person company. 

And that’s what we focus on today as we talk about going from scrappy to scalable, what it looks like to evolve your role as a founder, as your company gets bigger. And speaking of growing your company, I run a premium coaching program called the SaaS Institute. SaaS Institute is a private coaching community designed for B2B and B2C SaaS founders doing a million in a RR or more. There’s one-on-one coaching. There are masterminds and there is an amazing online community that will be meeting in person. The idea is to get you the systems and the support you need to scale from a million or more up into the 10, 15 and 20 million marks. We have some incredible coaches, including Jordan Gaul, Taylor Hendrickson and Mark Thomas, and our first group is very small, and that’s amazing because you get a lot of one-on-one attention. In addition, you get to chat with me and get my best advice, SaaS institute.com. We’d love to have you. And with that, let’s dive into my conversation with Yanev Janni Bernstein. Thanks for joining me on Startups For the Rest Of Us.  

Yaniv Bernstein :
Thanks, Robin. Really excited to be on.  

Rob Walling:
Yeah, it’s been a long time coming. I was on your podcast that you co-host called the Startup Podcast, creatively named. I was on that a couple years ago and I think we’re talking about recording another episode soon so folks can go check out. Certainly go check out that episode if they want to hear us. We talked a lot about bootstrapping versus raising funding. I think  

Yaniv Bernstein :
That’s the one.  

Rob Walling:
And you have been a founder, you’ve been a COO, you’ve been, I believe, a VP of engineering. You have been a coach, advisor and investor of a lot of startups, so you have quite the gamut of experience. Did I miss anything?  

Yaniv Bernstein :
Yeah, well, the first 10 years of my career, I was a software engineer at Google, so I started off at Big Tech and I think over the course of career, I’ve been going smaller and smaller earlier and earlier stage to the point now where I’m now the co-founder and chief technology officer of a very early stage company called Violet. So I think one thing that has helped me to do Rob, which maybe we’ll touch on this episode is because I’ve come from later stages to earlier and earlier stages, I kind of know what comes next. So when I’m an early stage founder, I know what it looks like to start to scale and then reach that really large stage as well.  

Rob Walling:
Yeah, and that’s what we’re going to talk about today, right, is the role of a founder slash CEO and how that changes and it changes fondly as you go from listeners will hear Noah this phrase, you build a product, then you build a business, then you build a company, and probably even beyond that, then you do all kinds of stuff, but the role of that founder has to change, and this is where we see folks like myself where my last SaaS app got to 10 people and doing millions in revenue, and I was like, this isn’t very fun. 

I just didn’t enjoy that phase. And so I had the decision of, oh, so do I raise funding and kind of hire a COO? Do I replace myself? And we were growing fast, but a lot relied on me. Do I sell? I had all these options of like, well, it’s not fun, and how long am I going to keep doing this? Then there are other folks who make that great transition and really enjoy, I think managing teams of 30, 40, 50 people. I just talked to Braden Dennis, who’s the founder of fiscal ai, and it was just him and three co-founders, and now they raised a $10 million series A. They thought they were going to bootstrap and they just raised $10 million series A and they’re at 40 people now and they’re going to scale up. So you don’t know what’s coming down the pipe except you kind of do, because as you said, you have seen these later stage and you’ve coached and advised founders in these stages.  

Yaniv Bernstein :
Yeah, that’s right. And Rob, you said it’s completely true. The role completely changes, so you’re still the founder and CEO or whatever it is, but the role is a completely different thing and you realize that, and you also had the maturities to say, that’s not for me. Both of those things are actually quite rare. I think the two biggest issues I see with people is firstly, they don’t recognize that the role has changed. They think that what got them here, we’ll get them there, that they can keep doing the job the way they did it when it was just them and a co-founder or just them solopreneur it and they actually become a liability to their business. Or another common thing is they recognize that things have to change, but they dunno how to let go. You said, okay, I’m going to sell my business. 

A lot of people are like, well, I hate this, but I’m going to keep doing it anyway. And of course the whole company feels that as well. So yeah, one comparison I like to make is I love how you say you build the product, then you build the business. We sometimes say you build the thing which is a product, and then you build the thing that builds the thing. But actually for those who are parents listening here, I think it’s actually a lot like having a kid except Rob, that you can’t sell your kid, but when you have a newborn, you are their parent. You have one job when they are five years old, 10 years old, 1530, your job is completely different. If you wipe your 15 year old’s butt, you’re not going to have a good time. And so you have to realize that even though your title hasn’t changed, parent, your role has fundamentally altered nearly reversed. You’re doing something completely different from what you were doing at the beginning  

Rob Walling:
And in your mental model of this, I’d love to pick this apart and find out how you think about it. You’ve seen more later stage stuff than I have. I see a lot of early stage stuff, up to 10, 20 employees, and I see a handful that get into the 30 40, but that’s usually like, oh man, they’re going to have a big exit or they’re far beyond where I’m at. But I’m curious if there are some particular stages that you have been brought in to advise or coach or consult that you see it’s like, oh, it’s usually at X revenue or X employees, and then there’s not just one. There has to be kind one at 10 to 15 and one at 30 to 50 pm or something. What’s your mental model of all that?  

Yaniv Bernstein :
Yeah, I mean, the funny thing is this never changes. The first time I realized that this is a problem, that the founder role changes, it was actually my early time at Google. I joined Google in 2006, so that was early-ish, but not very early. We already had 5,000 employees or something, and the founders, Larry and Serge, who are some of the smartest people on the planet, they used to run the company by basically walking into a room asking the team what they did, put it on a whiteboard, and then they would use their superior knowledge and intelligence and context to give really great advice, and you would take their advice and walk away. By the time I was there, we had hundreds of teams, and they would do that once every six months. They had 15 minutes. They’d come in, you tell ’em what you’re up to, they didn’t really understand it, they would give you some bad advice. 

And then when that happened to me, I was straight out of college and I asked, what do we do with this bad advice that we just got? And my tech lead said, oh, ignore it. I thought ignore the founder of one of the most successful companies in tech because those guys had not kept up with the scaling of their organization, they hadn’t adapted their role. So it’s recurring. But yes, I think the first time it happens is probably when you go past five or 10 people where you’re not able to just be all round the table, everyone knows everything that’s going on. You start to build some structure into things, and if you build structure into things, Rob, as you know, without actually being thoughtful about it, you end up with silos. You end up with different parts of the organization. I guess maybe that’s the way of thinking about it, around 10 people. You are now an organization. You can’t just have 10 people in every meeting, in every discussion on every Slack channel. You need to start differentiating it. So you’re organizing your team and organization maybe sounds like something that applies to a very large company, but no, I think it starts at 10  

Rob Walling:
And I want to keep going with that and find out what the next one is. But I want to touch on a couple things first. So many of us Bootstrappers folks who listen to this show left big organizations because they’re political or they’re to work for. And so I know when I went out to start my company, I was like, either I’m going to be totally solo or I’m not going to have any of the craft, the mission, vision, values, the process, what makes it all bad? And then it took me years to realize, oh no, it’s actually, it was working with people who were unmotivated and bad hires and I couldn’t pick who I wanted to. And if I actually hire amazing people, we do need a little bit of mission, vision, values, not too much, but as long as we’re living up to it, like I say, my mission, the mission of this podcast mission at TinySeed MicroConf is to multiply the world’s population of independent self-sustaining startups. 

So we have a mission and that’s what we do. And all of it does it in different ways. Some of it’s given away for free and some of it is giving people money and investing. But I had to come around to that realization of, oh, don’t throw, I threw the baby out with the bathwater. And I think a lot of people do. The other thing is eagle zoning. He’s the founder of Balsamic, did a talk at MicroConf that I think just went live on the YouTube channel, microcomp.com/youtube. Folks want to check that out. And he talked a lot about how he made the mistake of he didn’t want any process and he wanted a completely flat organization. And that lasted until about, I don’t know, 20, 25 people, and he said it was just catastrophic and he was trying to reinvent stuff and he’s like, oh no, there is prior art here, folks 50. There are decades if not centuries of prior art around how to do this. Well, maybe not within a startup per se, but at least how to organize larger numbers of people.  

Yaniv Bernstein :
I think the common problem is not enough structure and process, which is a funny thing to say, right? But if you think about it, there are two pathways that have found has gone through either like you say, they’ve worked at a really big company, they see all the process and all the croft and the mission vision values on the wall that everyone ignores and everything like that. And they say, that’s crap. The problem is all of the process. I’m going to have something without process, which is a misdiagnosis or they’ve never been at a big company and they’ve just never seen process or structure before, so they don’t know what they’re missing. And so you end up with organizations that are under scaffolded, and I made this mistake as well, but what you need is the right amount of process or maybe we call it minimum viable process, that it should be something that’s there to support you, not to strangle you. 

And I think people often give this negative view of it, which is it’s bureaucracy, it’s red tape, it gets in the way. No, it’s there to support you. And if you think about, I’m a software engineer for those who are more technically minded, if you think about building a large code base, you don’t just write the same sort of spaghetti code that you would if you were just building a throwaway script. No, you have tests, you have architecture. Maybe once you’ve reach more than a few people, you document it, right? You’re not doing that to make your life harder. You’re doing it to make your code base maintainable and to maintain a certain level of velocity as you go forward. And I’ve always taken that software engineering way of thinking and I’m like, okay, if you’ve got a system of people, you’re building a system of code, now you’re building a system of people, how do you architect it? How do you actually think about making sure it works efficiently and is robust and maintainable?  

Rob Walling:
Have you read anything or seen any type of resource that talks about this? We are going to get back to your next phase. We got to 10 employees. I want to hear the next one, but have you done any writing on it or talking or seen? Is there a book? Is there something we recommend that kind of talks more in depth? Because you and I will just touch on these things of like, oh, at 10 we should, you said introduce more process. And I’m imagining someone listening to that and being like, what does that mean?  

Yaniv Bernstein :
Well, it’s funny, actually, I have a blog or newsletter that is dormant, I haven’t written in it for years, but it’s called People Engineering precisely for the reason I mentioned. It’s a software engineering approach to running systems of people. So there are a number of articles in there. I wrote that when I first became A COO, which really is about, I think when done right is you are the chief architect of the organization. So yeah, like I said, I haven’t been on it for years, but if you subscribe, you never know, I might start writing in it again. Otherwise, please take a look and it might provide some useful pointers.  

Rob Walling:
You have an archive there. It’s at newsletter dot people, ENG, like people engineering.com, and there’s an archive link in the top of, I’m presuming all your awesome. Let’s talk about the next phase. So someone’s at 10 employees and they’re putting in a little bit of process, just a little bit. I used to tell people this just in time process, I don’t want to ratchet up too much. Where’s the next phase that you see folks stumbling?  

Yaniv Bernstein :
I think the next phase probably around 50. It really does depend on a few factors anyway, between 30 and a hundred, let’s say. But I’d put the mode at 50, right? Where you are now doing more than one thing at a time. You have multiple teams that are each operating autonomously, maybe not quite independently, but that’s the point, right? You can’t just say again, look at some of the bigger teams. You’ve got your engineering team or you’ve got your sales team. You can’t just say, oh, everyone in engineering is just doing one thing or everyone in sales. So maybe that’s one way of thinking about it, Rob, when you get to 10, you can’t just have everyone in every meeting. You might start to say, well, not every engineer attends the meetings. You start to get maybe a bit of a functional breakdown by the time you get to 50, you’re having cross-functional teams, let’s say, right? 

You’ve got the team that’s doing your market. Sorry, I know you don’t like marketplaces for boots, traffic. I was going to say marketplace. You’ve got a team that’s doing your mid-market and a team that’s doing enterprise or whatever it is, and they’ve got different roadmaps, they’ve got different processes. And if you’re not careful, then things really start spinning apart there. On the sales team, you might also divide things up by market size or you might say, oh, look, we’ve got our customer success teams and our BDRs and SDRs and all of that. You’re putting more of that structure in. And so I think every time you are in a situation where you upgrade the complexity of your structure because it’s important you’re changing your architecture, you then need to change your way of working to match that,  

Rob Walling:
Not only your way of working, but really your way of thinking, right? It’s like your role is your job title stays the same, but your role completely transitions. Do you have a thinking? When I think about going from zero to 10 employees as let’s say a single founder, and let’s say the founder maybe is a developer who it’s SaaS and they built the product, so they run product, they probably manage the engineers. Usually they have something to do with marketing, although they don’t want to and they had to hire all the people and they’re kind of getting stuff in. So they’re just right now still a utility player and they’re probably managing everyone, or they maybe have one manager. But let’s say you’re at, what is it? What should it look like at 30 people or 50 people? Let’s just pick a number somewhere in there. 

I have 30 employees, 50 employees, and I’m still that founder, CEO, but the org is there and it’s healthy because it could easily be I’m the founder and this is a big flat org, and everyone’s still reports to me a little bit like the Larry and Sergey story you told earlier, which is, well, that sounds like a catastrophe. So what’s a better way to maybe structure the org and to think about what things might we want in place? We probably need some mission vision values. We probably need an HR handbook, probably need some other stuff that I’d love to give folks an idea about.  

Yaniv Bernstein :
I think that there are a couple of things to this, so maybe one way of thinking about it, and again, this is very much similar to having a young baby. At first, you are the person doing everything. You are writing the code, you’re doing the sales calls, everything like that. You’re basically solo. Then up to about 10 people, like you said, everyone reports to you. You are still the person who knows everything, who can hold the complete context of the business in your head, who everyone reports to directly. And so you can be quite directive. Maybe you’re not actually writing every line of code, maybe you’re not taking every call yourself, but you tell people what to do and what you tell them is good is right. It’s a better decision than they could make themselves a lot of the time because you have that superior context and both at the high level, but also all the way down to the granular details at 50, that’s no longer possible. 

You can’t have 50 people reporting to you directly, so you don’t know all the people as well as other folks in the company. You cannot know every granular detail of what’s happening in your company. And it’s funny, and maybe this is, when I say it’s between 30 to 150 people, there are a number of things that affect that number, but one of them is how capable the founder is of just holding vast amounts of context in their head. And it’s one of those classic cases of a strength turning into a liability or into a weakness, which is the more you can hold in your head, the further you can go before it all starts crashing down around you. Maybe you can hold a hundred folks worth of context in your head because you’re very clever and very hardworking, but every person hits their limit, right? 

Larry and Sergei, maybe they could handle a thousand person org, but they couldn’t handle 3000. And so there is that as well. And so you’ve got these increasing levels of indirection, and perhaps to a certain extent it does follow reporting structures as well. First, you’re writing the code, then you’re managing the people who write the code, and then once you get to 50, you need another layer of management in between. And like you said, every person who has had that idea of, oh, I don’t need managers. We can have a flat structure learns that they were wrong. It might seem that, again, management gets a bad name from big companies where you’ve got pointy head bosses just wasting space. But good management is essential to a growing organization. And so then you’ve basically, as a founder, you’ve got an exec team. I know Rob, before the call, we were talking about this and you said, well, bootstrappers don’t necessarily like that term executive, but I actually, I want to bring it up anyway because I think that’s another limiting thought, right? 

Because what you’re saying is, as a founder, not only I’m now acting through my leaders and that team is my team, they are executing, that’s what they call it, executives. And you are there to run that team. So first you’re writing the code, then you’re managing the people who are writing the code. Now you have a team who manages the people who write the code or do the sales calls or whatever it is. And that’s why you talk about mission, vision, values and process and so on. You’re not in every room. You don’t have all the context. So as a founder, you still want to be in control. You still want the company to grow and evolve the way that you want it to. And so now you need to say, how can I make sure that the decisions that are made, the conversations that are happening are the ones that I would want to happen even when I’m not in the room? 

Because there are a whole lot of meetings, there are a whole lot of rooms that you are no longer in because you can’t be everywhere at once. And so you’re actually talking about scaling yourself as a leader. And I think when you think of it that way, it seems a lot more appealing than saying, oh, we’ve got a bunch of processes and standards and mission, vision values. It’s saying, this is how I get to be in the room even when I’m not in the room. And that is actually the work that you start doing as a founder.  

Rob Walling:
That is a really good point. And it’s something that I encountered at, well, I guess it was a little bit after selling Drip where I started managing managers, but even more with TinySeed as I’ve promoted folks who become managers, and the thing that I’ve struggled with is I learned how to manage and I feel like I’m a good leader. I’m not phenomenal, but I paint the vision. I get us in a direction nuts in bolts wise of a lot of things I don’t, are not my favorite, but I know how I manage and I know how I think about managing. So then when I promoted someone on our team to become a manager, and they said, okay, how do you think about management? Help me think about this. What should I read? What resources? And I was like, oh, I’ve never trained someone, not never, but I have not trained anyone recently in becoming a manager. 

And I had to then think about what was my process and how do I actually think about this? You can kind of be natural at something and if it works good, but you may not know really what makes you good. What are you doing right and what are you doing poorly? Usually you have blind spots if you’re not examining it. And so that was a big realization for me of like, oh yeah, if I’m not deliberate about this, it’s going to be a mess if I’m not deliberate about making sure that the people that get on the bus are the right ones, but also that the managers are really dialed in and doing this well, suddenly it felt like I was losing control of things because there are folks now in Microcom, TinySeed who don’t report to me, and I only see them every six months at an event. And that’s, we’re not even a huge team. We’re 10 people. But that realization alone that you just set of you’re kind, I think you said duplicating yourself or replicating yourself, that blew my, that’s a tough one. It’s a tough one, and I think it blows a lot of people mind. Do you want to talk more about that? How can one think about doing that? Well,  

Yaniv Bernstein :
Yeah, I mean absolutely. And it starts with that realization that you are highly, highly dependent on your managers. 

Again, I’ll use that child analogy. When you have a baby, you basically own them what you want them to do. That’s what they do, except for crying. As they get older, as they become teenagers, Rob, well, you’re no longer in control, but you can only influence. You can create rules and guardrails and set values and so on because you are no longer their complete dictator. And it’s the same with the company. So you have this team and you can say, yeah, it’s my company. You’re a bootstrapper. Maybe you in a hundred percent of it, but just because you in a hundred percent of it does not mean you’re in 100% control because you have got people and people have their own needs and their own ways of thinking and their own levels of autonomy. And so when you have managers, yes, you need to train them well to be managers, but you also need to keep them very close. 

They’re your eyes, your ears, they’re also your arms and legs. You work through your managers. One of the things I’ve seen, it’s a very common mistake, and it can be so hard. This is part of the letting go, is if I’ve got a team that is reporting to a manager who is reporting to me, and I want that team to do something, it can be so tempting just to talk to someone on that team and say, Hey, could you please do that for me? But then this is the example of this is a teenager, that person’s going to go do it. That manager’s going to feel that you’ve undermined them in their role managing that team. They’re going to be pissed off. They’re going to come to you. The team’s going to get confused. So again, how do you get things done when you don’t get to just tell people what to do anymore? 

It’s AI time at the moment. Everyone’s talking about context, which is great because I think it actually helps you realize how important it is. You only get good responses from AI if you give them the right context. It is the same with people. So your managers and your teams more broadly, you need to give them the right context in order again to make those decisions that you would make if you were in the room. And so that’s when it comes down to all of these big company concepts, Rob, that get a bad name because they’re done poorly at big companies or whatever. You can call it context or internal communications or whatever your job is to say, this is what you need to know in order to make the right decisions. And that is both principles, right? That’s when you talk about the mission, vision, values, this is what we’re trying to achieve, this is how we achieve it, this is what matters to us. 

This is what good looks like to us as a company. It is also certain process things and there’s context. You start to be a person whose job it is to make sure everyone in the business knows what they need to know about the business in order to make good decisions. If they make bad decisions because they don’t have the right context that’s on you. And so that’s the hardest thing. And like you said, I actually think a lot of founders don’t like it. To your point, you sold Drip because you realize you didn’t like it, but a lot of founders aren’t able to let go. And then at least as well, you have to realize your job is now context setting process or structure creation. Let’s say. If you’re actually doing the thing itself, then you become a liability to your own company. And that’s a very painful realization, I think, for a lot of folks, but it’s just the reality of it.  

Rob Walling:
Yeah, that makes sense. I did want to add, by the way that we sold Drip part of it, I was unhappy with the fact that I was managing 10 people. I would’ve kept doing it. The other part is that we had a bunch of inbound interest and then we got an offer that we couldn’t refuse, so that helped grease the wheels, so to speak.  

Yaniv Bernstein :
Of course,  

Rob Walling:
It wasn’t just like, oh, I don’t want to manage the 11th person. I’m going to sell this thing. It is more to it than that. Okay, so context. How do we communicate that to people? Is it status meetings? Is it an orientation of this admission, vision, values, principles, this how I make, this is how we make decisions, this is how we operate, this is how we treat our customers, and then it’s keeping them in the loop with weekly meetings or biweekly. What is that? How do you get that into, especially your managers? How do you get that into their system?  

Yaniv Bernstein :
Well, I think this is how I personally say this is how you can still keep it fresh and feel that sense of control is you get to choose, right? This is a design exercise where you say, okay, and again, come back to that people engineering thing. There is more than one way to get this done. What is a way that you as a founder resonate with, are you good at all hands meetings or are you good at writing emails, or are you good at having one-on-one conversations? That’s up to you. The end result is everyone in your organization needs to understand the ground rules, the protocols for making decisions and for getting things done, what matters and what’s happening in the company that affects them, that affects their ability to make the right choices. I talk a lot about decisions because ultimately every bit of work that you do is a series of smaller and bigger decisions. 

It’s fractal all the way down to what do I name this variable or how do I talk about my company? But it comes down to you need to tell them, otherwise they’ll figure it out for themselves, and what they figure out for themselves may not be what you want them to. I like an all hands meeting, but other people might like writing. I’ve seen leaders who even from quite an early stage communicate effectively to their teams with a weekly newsletter, and that’s great. That scales really well as the company grows. But actually, I think the biggest one, Rob, and my favorite book in this whole area is Five Dysfunctions of A Team by Patrick Lencioni. It’s quite a famous book, and what it is actually about is it’s about managing managers ultimately, and that the point that they make is as a leader, the managers who report to you, they are your team and you are their team. 

So if I’m the head of customer success and you ask me as the head of customer success, who is your team? It’s tempting to say, oh, my team is the customer success team. All the people who report to me, no, your first team is the leadership team that you’re a part of. You are running the company together. And so you need to be thinking, okay, that’s as a leader, that is your vessel for pushing context. That’s your main control mechanism is we’ve got a team and it makes it a lot less lonely and not quite the main topic of this episode, being a founder is really lonely. Being a CEO is really lonely, but if you realize you have a team, so when you have a problem, you don’t say, what do I do? We say, what do we do? How do we solve this problem? As a team? It makes it so much less lonely, but it also means you’re able to push your message, your context, so much more effectively across everybody in your, let’s say, your 50 person organization because all of your leaders are on the same page because they’re part of one team.  

Rob Walling:
I like that. The other thing that we haven’t touched on, but I think should be completely obvious, but it might not be is it’s not just the things that you’ve said. It’s that you have to be really careful about hiring the right people because no amount of context or no amount of everything we just said will save you if you hire someone who is a manager or is bad with people or is too scared to ever disagree with the boss and is hiding. There’s all these types of real kind of weaknesses, I will say, or issues that someone can bring that you can’t get around just by being, again, just by being the perfect boss and the perfect communicator and the perfect founder.  

Yaniv Bernstein :
Yeah, strong agree. I think one of the lessons in humility, again, going back to a parent, being a parent, is you don’t get to dictate how your kid turns out. If you hire somebody, you have limited control. Even if you’re the best manager in the world, you have a limited ability to influence how effective that person is at their job. So I think this is not about saying you shouldn’t do absolutely everything you can as a manager, as a leader to help a person, but ultimately it’s up to them. It’s about who they are and what they can do. And so yes, hiring well and firing well, which is the unfortunate part of the job, but also a really important one, and you don’t ever have to love it or even stop hating letting people go, but I hesitate to think that it’s possible to do a really great job of running a company without letting people go sometimes. 

So hire carefully. And for me, that’s really about, there are two things for me. I’m being interested in your thoughts on hiring. One is starting with formulating the role. The way I think about it is people are very, again, this is a bad habit that they do learn from big companies. It’s like, let’s write 15 bullet points on five years of experience with this or that technology or doing that, and I’m like, no, okay, let’s start with the problem we’re trying to solve. Same as the startup itself. What is the shape of the hole in my organization that I’m trying to fill or in my team? And then reverse engineer that too. This is the type of person who is the right shape for that hole. And so I think if you do it that way, you have a much better shot at actually attracting the sort of people that you’re looking for, but also evaluating them accurately rather than against their accomplishments or particular skills. 

It’s like what is the shape of the whole? Are they the right person for that? And then the other thing is no matter how good your interview process is or your decision making processes, I’ve learned the humility to realize that there’s still a lot of noise. There’s a lot of error around that. So you need to think what is the way to get to defer the decision as long as possible, which means can you have that person on a contract for a while, do a trial. If you’re in a country where you can have at will employment or probation periods, make sure you actually structure that in. You won’t know for sure if someone’s really great until three or six months of working together, and so how do you get to that point that you have that if you can’t do that, then you are going to end up carrying people who are not right for your team.  

Rob Walling:
It’s an important point to drive home is most people wait. Almost everybody waits too long to fire and making a decision of who to bring on your team based on a cover letter and 2, 3, 1 hour interviews, but it’s kind of how we do it, but it’s tough. You’re not going to be right all the time.  

Yaniv Bernstein :
Yeah, I think that’s the point. I used to obsess over the perfect interview process. What is the ideal interview process? And again, I still think it’s important, but I also recognize the limitations of any set of three one hour interviews. By the way, actually, one thing that is valuable is reference checking again, which I think nearly everybody gets wrong. Either people don’t bother checking references or they do these kind of bland milk toast sort of reference checks where everyone just says, oh, yeah, I worked with him and she was great, or whatever, and you don’t actually get to know anything about them. I treat reference calls as an interview. I’m basically interviewing the person on behalf of the other one, right? I’m like, tell me about them. What are their strengths? What are their weaknesses? That can actually give you a big leg up, but like I said, there is no process. There’s no perfect process. Like you said, people always wait too long to let people go. You know what I’ve never heard in my career is I regret letting that person go. You know what I hear all the time is we should have done it sooner. And so by the time you’re wondering whether you should let that person go, my advice is you’ve probably already waited too long,  

Rob Walling:
And it’s tough because nobody likes to do it, and it’s not fun. Nobody likes to do it  

Yaniv Bernstein :
Unless you’re a psychopath. But this is not the podcast for psychopaths, right?  

Rob Walling:
No, it’s not. There’s a few of those in the startup space, but not  

Yaniv Bernstein :
Here. Yeah, that’s right.  

Rob Walling:
Well, Jan, I get the feeling we could talk for hours about this topic, but we are at time. Your name is Yanev Bernstein. Folks can find you on LinkedIn as well as since they’re listening to this podcast, of course they might like your podcast. It’s called The Startup Podcast, and they can find it wherever greater podcasts are served,  

Yaniv Bernstein :
And on YouTube as well  

Rob Walling:
And on YouTube. There it is. Yeah. Thanks for joining me today.  

Yaniv Bernstein :
Alright, thanks so much, Rob. I really enjoyed the chat.  

Rob Walling:
Thanks again to Janna for joining me on the show. It’s been great having you this week and every week. This is Rob Walling signing off from episode 790.  

Rob Walling:
Is this really an episode of Startups For the Rest Of Us on a Thursday? That’s right. For the next six weeks, you’ll find new episodes of TinySeed Tales Season five in this feed every Thursday morning. If you’re not familiar with TinySeed Tales, it’s a narrative style season based show where I follow a founder. As they navigate the ups and downs of building a SaaS, we dive into their journey to find product-market fit, optimize the product, scale their business, and hopefully reach escape velocity. These episodes were recorded over the past year, so you’re going to get an inside look at a founder’s journey. The goal is to give you honest insights into the challenges, setbacks, and hard won victories that come with growing a real SaaS company. If you’re new to TinySeed, it’s the startup accelerator I run for ambitious bootstrapped SaaS founders, and it’s the first accelerator of its kind Twice a year, we fund B2B SaaS founders who want just the right amount of capital, a community of like-minded, ambitious founders and access to mentorship advice and everything else you’d expect from a world-class accelerator applications for our fall 2025 batch open on September 1st. 

This time around, we’ve shortened the application window a bit and we’ve tightened up the process, so we’ll get you a definitive answer much quicker. Avoiding the drawn out uncertainty common in other investment processes. The application is intentionally short and focused, and if you know your core metrics, it usually takes about 10 to 15 minutes to complete for all the details and to get notified when applications open, go to tiny c.com/apply and get on our mailing list. Let’s dive into this first episode of season five.  

Harris Kenny:
My name is Harris Kenny, I’m the founder of Outbound Sync, and it’s an integration product between sales engagement platforms and CRMs.  

Rob Walling:
Welcome back to Tiny Sea Tales, a series where I follow a founder through the rollercoaster of building their startup. I’m your host, Rob Walling, a serial entrepreneur and co-founder of TinySeed, the first startup accelerator designed for Bootstrappers. This will be our first episode of season five where we follow Harris Kenny, founder of Outbound Sync. Harris has made the hard transition from agency owner to SaaS founder, and in just over a year has built his monthly recurring revenue to $10,000 a month. In my first conversation with Harris, I asked him why he applied to TinySeed in the first place.  

Harris Kenny:
My SaaS product is built out of my agency, and it was the fourth iteration of a SaaS that I tried over a total of five years working myself. What really pushed me was that it felt like it was starting to really take off. I was feeling that the rocket is entering the atmosphere and it’s shaking and the bolts are moving. I was getting more deals coming in and bigger and bigger prospects and very mature companies saying, Hey, yeah, we’re interested in this. Here’s a security questionnaire and these things. It just started compounding and actually someone reached out to me who’s a TinySeed portfolio company, and he was like, Hey, you should think about applying to TinySeed, and I was like, oh, actually, it’s funny. It’s a long story. I’ve been following TinySeed for years and I kind of forgot about it to go into building mode, but now that I’m here and this is working, maybe I should throw my hat in, and so reached out to a couple of TinySeed founders. But yeah, it was that feeling of like, Hey, what if this works actually, and that was exciting, but also I don’t know that I want to do this alone basically.  

Rob Walling:
That’s a good way to think about  

Harris Kenny:
It. Not fear of success, but oh, this seems like it could actually work, so it’s like I should not get in my own way being alone. Yeah. If I’m alone, I feel like my odds of success are higher with TinySeed, basically. That was why I should try, but if it didn’t work, I was going to do it anyway.  

Rob Walling:
Some of the challenges of being a solopreneur are obvious, the loneliness, the isolation, no one to spitball ideas with, but then there’s also this very practical human need to succeed if for no other reason than to support your family.  

Harris Kenny:
I started my own company five years ago before my wife and I had kids because I wanted to have the flexibility and I was always able to in services, it’s very flexible. I was always able to pull a rabbit out of a hat and make it work, and we have great house, we’re very fortunate, but with SaaS, it was kind of like, okay, it is time for me to take this more seriously. When we got this new house, the process of getting a mortgage was so frustrating of how I paid myself through my own company and it’s like, okay, it’s time for me to grow up a little bit, and if I’m going to run that kind of company, I’ve known how to make it work kind of like a street rat, like Aladdin or whatever, but it’s like, okay, now I’m kind of entering a different world where there’s due diligence and process and uptime and you can’t just make up for it with a smile and working extra on a Saturday. It’s like if that thing is down, it’s down and you messed up and it’s a huge problem. So it was all of that, but also the upside of it’s like the best business model ever, and if I could be the one running that kind of business, the reward is pretty substantial and it’s really leveraged work. I solve a problem once and I sell it X times versus one and over one over,  

Rob Walling:
And also it’s recurring.  

Harris Kenny:
Yes.  

Rob Walling:
Let’s say you went and raised friends and family or you raised an angel round and you hustled and you got money that wouldn’t replace the community, the mentorship, the connection, but there are other programs certainly out there. There are funds that have communities or there are accelerator regional accelerators. There are other options, and I’m curious if you evaluated those or for you, why TinySeed over the alternatives?  

Harris Kenny:
Yeah, I think that TinySeed, it was definitely an end of one when I got to this point because MicroConf community, this is going back to 2020, kind of started me down this road and start small, say small, and the stair stepping method, those ideas were very early on. It was small dominoes that started, but it took a while for the dominoes to get bigger basically. And so it kind of shaped in my mind how I was thinking about what I wanted a business to do for me, for my life, for my family, and then I went through this circuitous route. So I think that’s part of it. It was very early influence in terms of setting what’s possible. In my mind, it’s like it doesn’t have to be a billion dollar company to be successful. There’s actually many, in fact, hundreds of millions of different little price points between zero and a billion that would be really successful. 

So I think that’s part of it. And then it was sort of wandering through the desert, trying a lot of ideas, trying to run the agency slowly getting better. I mean, we had some good months. I mean, I had some agency months where we were over 30 K in build services. Good. It was a good agency, but as the SaaS part started growing and that MRR kept growing relative to the agency side, it was like, no, I really wanted to build a B2B SaaS company. I don’t want to build a productized service. I don’t want to have some goofy combination of things like multiple bets, a little app here, a little app there. I want to build a single B2B SaaS company that solves a really specific problem and that moves up market and that can solve enterprise level, really highly complex issues of what we do are on block lists and syncing data. 

It actually gets pretty thorny, and we’re in a really, really small area, and so it’s just like, I’m going to need more power firepower like my team and I want to build a B2B SaaS company. That was it. And the other ones I talked to that I looked at over the years were like, well, we’ll invest in this, but also this. And also their thesis was so scattered that it was kind of like, I don’t really want that and I want somebody who’s going to be like, Hey, let’s talk about churn for two hours and we want to talk about it, and you want to talk about it. And by the way, you have 12 friends who are all similar spot who also want to talk about it. That was what I wanted, not just a general panel about how do you keep your customers happy. It’s like, no, no, I very specifically want to solve this churn problem.  

Rob Walling:
Yeah, no, and that makes a lot of sense, and that is how my career as a professional has evolved because if you go back to MicroConf in 2011, it was the conference for self-funded startups. It was not SaaS, and it wasn’t until really 20 15, 14, somewhere in there where I was like, oh, SaaS is where I want to be, and the deeper I go, the more value that I can provide, and by deeper I go, I meant startup For the Rest Of Us went all SaaS at that point, and I just told people I’m not answering questions about info products anymore. It’s not that I don’t like info products. It’s not that I don’t make info products. I have courses, I have books. Everything I do on the MicroConf side is kind a course information product. It’s not that I don’t like those, it’s that I can’t help you as much if I’m not focused. 

It’s why my books now, I have wrote a book called The SaaS Playbook. It’s not the Startup Playbook because for exactly what you’re saying is the moment that you rise up one layer of abstraction, you lose granularity and two hours on churn makes no sense. If there’s a biotech company next to you and a hardware company on the other side and a two-sided marketplace on the other side and a B2C company on the other side of you, you don’t share that same depth. And I was concerned early on about pigeonholing, and frankly when we launched TinySeed a and r, my co-founder, for folks who were listening Cog, he was like, it’s b2, B Cs, that’s what we’re doing. I was like, but maybe what if I’m the person who was like, but we could and I think it’s the best decision we made  

Harris Kenny:
Looking at our batch. It’s like these companies are structurally similar in the important ways, but so different. And it’s amazing how much you can learn when real estate titles is one of our batch companies and Go links, but then you hear ’em talking and you’re like, oh, actually no, this is totally relevant. Even though if you talk to a normal person, they would be like, those are three different companies,  

Rob Walling:
But a lot of commonality,  

Harris Kenny:
So I can see how, and you learn from that. So yeah, it’s just a very specific way to operate. But within that, I think there’s a lot of variety.  

Rob Walling:
Well, and it speaks to secretly slash not so secretly, what do any of us want to do? We want to operate a company that is probably best in class, and I want my companies to always be the gold standard. So I want Drip to be the best at what it did, and I want people to think highly of it, and I want MicroComp to be the gold standard for bootstrapped entrepreneurs, and I want TinySeed to be the gold standard for B2B SaaS accelerators, period. I want to be the best in the world, otherwise why am I doing it? And it speaks to that’s a long road. You have to build a brand, you have to do all this stuff, but it speaks to that it was a factor for you of, oh, well, I’m B2B SaaS and therefore I want the best that I know. I dunno, I guess that means a lot. I normally on tiny sea tails, I’m not the one kind of having a realization, but every time I hear that kind of thing of why did you apply? And it’s like, well, your B2B SaaS and so am I. It’s like we made the right decision. You know what I mean? Going narrow is often often the right decision.  

Harris Kenny:
Yeah, well, I mean especially at that point, because at that point our MRR was, I mean this is April, it was like 7,000 or something like that. And I still had mean in May, this was my last full month of the agency, we did $30,000 in revenue, but then almost a third of that was the SaaS. So I was getting basically my time. I was really busy then, and then I had these big customers who were paying me big amounts and the SaaS was getting close. I was like, I don’t probably don’t need to do this. But when I talked about it with my wife, she was really encouraging of, this is the thing that you’ve been wanting, you should go for it. Don’t go halfway. And I will say two months out from that decision, just speaking about the point about focus, these two months of the SaaS now really taking off and then the agency petering out and slowly winding down. 

It has been so much work running both. And during the process, I remember Tracy was like, look, you run your company, but just so you know, if you’re working on it, we want it to be the thing that you’re working on. We don’t want you to have seven other things going on. Which I was like, okay, I get it. Okay, no problem. But two months of having both is like I literally, I don’t know if I could do this for another month or two because, and so I’ve seen this relief, but also I’m having much better ideas and I’m having, we can talk about the go-to-market stuff, but that is starting to really, really accelerate. And I’m also seeing with my team, our developer, he was part-time before and then once joining TinySeed, I could say, Hey, you’re 40 hours now. And oh my gosh, he’s just ripping and I’ve got a funny story from the kickoff about that, but he’s just ripping through tickets. 

And this is kind of goofy, but personal example. We have a nanny who he hired and we’ve had this mix mishmash of daycare in the past, but having a full-time nanny who she’s really good and she’s like, this is what I do. I take care of kids and I help you help your family. She’s helping her in the house and she’s doing laundry and she’s cleaning and she’s so playful with the kids and she’s coming up with these activities and it’s so different than when we had a part-time nanny and then a grandma here and then spend time with a neighbor there. So there’s this whole deeper thing that I’m kind of processing about focus energy and what are you doing, whether it’s our developer or a nanny or me having one company, and it seems so obvious, but it’s just slowly permeating my whole brain.  

Rob Walling:
I’ve learned through personal experience that when you try to run multiple companies at once, all of them suffer and so does your personal life. That’s why we require any founder we invest in to fully commit to their idea. That’s what I told Harris when he applied to be part of TinySeed, and he was skeptical at first, but ultimately he came around  

Harris Kenny:
When I said, okay. I thought it was like, okay, this is kind of not a concession, but a little bit of a concession. But of what I’ve come to realize is that it has actually, I think benefited me disproportionately because I own most of my company, almost all of it still. And so my company’s doing better, so I benefit way more. And my personal life, my whole thinking on that has flipped. I mean, I wasn’t salty about it before, but I was kind of like, okay, this is a choice. I’m giving something up here, but I feel like I’ve just been freed to just build this thing that after spending all this time years trying ideas and posting and getting feedback, I finally have this idea that really smart people are like, Hey, I want a, so it’s like just do that thing. This is it. Just do it a lot. You  

Rob Walling:
Have caught a tiger by the tail, lightning in a bottle, whatever analogy we can use for it. And it’s like, don’t that up by half-assing it because someone will eat your lunch. This is what would happen if you worked on this and three other things is it would grow slow. You wouldn’t give a full attention. You’d be distracted when you’re doing dishes, when you’re walking around, when you’re in the shower, whatever. All your thoughts are scattered between three and four things. It doesn’t get the attention it deserves. It’s not even the hours, as you said, you have best ideas when you’re focused and your best ideas are what’s going to 10 x this business? It’s not the split  

Harris Kenny:
Focus. There are two agencies who had been working on a similar thing, and I’m seeing us separate. I’m seeing us getting mentioned organically in other places, and I’m seeing us getting referrals like, oh, that’s Harris’s thing that, oh, outbound sync. That’s all they do. Even though those other agency owners, by the way, are super smart and I know that they’ve built really good integrations that are working for their individual customers, but they’re also doing their thought leadership posts and they’re also trying to get known for other things. And so I’m seeing that play out right now. What could be a direct competitor versus a Zapier make or something?  

Rob Walling:
I want to touch on something you’ve already brought up, which is you had an agency doing outbound for paid clients, and as you said, you built it to 30 grand a month and you launched a successful SaaS out of that agency. The thing with building a SaaS out of an agency is every agency wants to do it. Some agencies try and almost none succeed. It’s very, very hard to be running agency or consultancy managing clients. You have freelancers or full-time people doing day-to-day work. It’s like, I got to give 40 hours of work in just for the clients that I’m trying to do the SaaS on the side. Is it nights and weekends or am I not taking paying work to do this thing that is not paying me or may never pay me? And that’s the balance, right, is if I can bill a hundred dollars, $200 an hour, whatever it is, thousands of dollars a month, why wouldn’t I just do that? Then actually focus on the thing that might bring me thousands of dollars a month, a year or two down the line? My question for you is how did you do it? When most fail, why have you succeeded?  

Harris Kenny:
I think the first thing I would say that I feel is that where I am right now is that this is kind of the getting into TinySeed, winding down, the agency starting this ass is kind of the end of the beginning. And so I see the early development of the project is kind of prologue, and obviously there’s a lot of work to be done from here, but how did I get from prologue to here? I think I just really, really, really wanted it. I really wanted to have this kind of company seeing other SaaS founders who kind of got to later stages and what their life looked like. And it was just like, I want that. I want to be around. It’s really important to me to spend as much time as I can with my kids, but also have resources so that they can do cool things and travel. 

My wife and I love to travel, so I think that I really wanted the outcome and this idea I stumbled on by accident. I had a customer who basically wanted this product. They were right for the wrong reasons, they were too small to need it versus what I’m seeing who actually needs it these days. But I built it just because I felt like I could, and frankly, I wouldn’t be here if I didn’t have Chad GPT because I built the first version of this with Chad, GPT, and I thought it was like, I saw there’s this funny quote of we do hard things, not because they’re hard, but because we thought they would be easy. And that’s how I ended up here. I was like, oh, I can do that a make.com scenario, no problem. And then I use chat GPT, I just need one API call and I can do everything else in make. 

And then I posted on LinkedIn and more people were interested. And so I started bundling with my campaigns and I started saying, Hey, if you want to do outbound with us, you have to be using HubSpot and we use our integration. And so it was kind of forced coupling of the two products. And then if the product was falling short, I could always make up for it on the services side. And then slowly I started to have people say, well, we don’t want to do campaigns with you, but that sync thing sounds cool. Can we just have that? And so then I sold a couple of those and that was the first time I felt like, oh, I have actual SaaS revenue here. They’re just paying me for a product and I haven’t talked to them in a month. And I checked in with them. 

Service anxiety was like, Hey, how’s everything going? And they’re like, yeah, man, great. What’s up? Why are you emailing me? I was like, oh, have a good day. Alright, see you. Good to hear. Let know if you need anything. So that was how I think stepped into it. I did a trade with a development shop, running campaigns for them, and then they refactored the code from low-code to code. So it took four months of low code, two months of refactoring to real code, and then that’s when things really started. So I kind of count our MRR in October when it was running through the real platform and I wasn’t manually connecting make scenarios and stuff like that. The product was just so bad then that it really didn’t count. So yeah, that’s kind of technically how I do it, but it was nights and weekends and it was weird hours. 

There’s one story that I just like, I’ll remember this for my entire life. So we had also had some really intense family medical stuff. That’s a conversation with our day. And then my health also, it’s been hard to be healthy. I’ve not had the best lifestyle, losing a lot, not a lot of sleep, not great food, not great exercise. So it’s been very difficult. It’s required a lot of different sacrifices that I’m trying to correct a little bit now. It was three 30 in the morning in Denver, one of these early customers who said they wanted it. I connected it through make this guy’s in Warsaw, he’s in Poland, and I’m messaging him on Slack. I’m like, Hey, I fixed that bug. He’s like, okay, great. I was like, do you want to talk about it? I just want to make sure that it’s working. 

He was like, now, right now, aren’t you in Denver? I was like, yeah, I’m awake. Are you free? Let’s talk. And so we hopped on a slide huddle and we talked for 10 minutes and he was like three 30 in the morning and he was like, are you okay? I’m like, yeah, yeah, I’ve just been working on this for five hours. I’m not doing any kind of drugs or anything. I’m just working on this for five hours and I need to hear from you that it’s working so I can go to bed head. And he was like, you’re a zombie. I was like, I dunno, I just really want to solve this right now and then I’m going to go to sleep. And so not being a developer, there were times where things were probably way harder. Like GPT isn’t actually that good at writing code, but it was like sacrifices like that, being lucky, having good support, a lot of other things. But yeah, that’s my reflection on that stage.  

Rob Walling:
I like that and I want to tease it out. I often say success is three components of varying degrees. It depends on the story. The components are hard work, luck and skill. And the hard work is you doing what it takes and staying up till three 30 morning than doing it. I’m not saying that neither you or I agreeing you should do that every night, nor is it healthy. But sometimes there are points where you have to do this, you have to do the work, you have to schlep, you have to be the janitor or you have to pull an all-nighter to do a thing or work a 60 hour week here and there, not for the rest of your life to make it work. So the hard work is obvious, the luck, I think there’s a bit of luck that you stumbled upon an idea that was an obvious need from the start. 

And this is where it’s like, is it luck or did you make your own luck by starting an agency, by developing the skillset that you have as someone who can sell, as someone who found clients, and as someone who put in the work to build an agency to 30 K to then create opportunity for yourself. So I say doing things in public creates opportunity and by in public sometimes that’s a blog. Sometimes that’s starting a company and then realizing, oh, there’s actually a deeper need here. So all of these factors are at play in your story. And there’s an element too of, I guess we could put it in the skill bucket, but it’s like you were smart enough to realize, oh, this need for this customer is something that I should build in no code, or I should build a code, frankly. But you didn’t have the skill at the time. And so it’s like there’s a scrappiness to this story of just kind figured it out, went, did G PT and wired it together with make, I know some founders or aspiring founders who just wouldn’t, they wouldn’t take action. They wouldn’t do, is it too risky? Am I wasting the time? What if this doesn’t work? What if it breaks and the client gets mad at me? What? And it sounds like you took a lot of action very quickly because all of it doesn’t have to work just 70 or 80% of it does, right?  

Harris Kenny:
Yeah. Yep. Yeah. I mean, my threshold was can I get this working well enough that I can with a straight face talk about it on LinkedIn and I mean WhatsApp groups and Slack groups with some outbound folks too, and share it and see if people are interested enough for me to keep working on it. So that was my threshold. I never misrepresented where the product was, but I would literally finish something and then be recording a video of three minutes later being like, look at what Aon sync can do Now. There was no one month leadup. If we’re releasing something new, it’s like literally, I just finished this. It’s worked one time. I’m going to talk about it.  

Rob Walling:
And that we see this with the most successful TinySeed founders. I have a list of all the seven figure TinySeed companies in a simple note doc on my phone. And if you go down that list and you look at the founders, guess what all of them do? They all move very quickly. They ship things very quickly, and they generally work on the right things. They’re not right all the time, but they’re right enough at the time. You don’t need to be right a hundred percent if you’re right, 60, 70, 80%, but you’re just shipping a lot of things quickly. You hit it. It all doesn’t have to work at this point. It’s cliche to refer to the entrepreneurial journey as a roller rollercoaster, but it’s not inaccurate because there are challenges, fear and times when nothing’s working. But there’s also optimism, things that excite you, moments where everything comes together. I was curious to find out what was keeping Harris up at night? What kind of headwinds was he facing?  

Harris Kenny:
It is definitely myself still. There’s the mindset shift that I’ve been trying to undergo in the last month has been pretty big. I have some pretty hard coded things around money and how I spend my time that I’m trying to rewire now to grow into someone who apparently has a company that was backed by an investor, and not just an investor, but TinySeed, who I really admire and respect. And so it’s like, oh, I kind of need to become this thing that I am on paper, and that’s how I spend my time during the day. It’s like hiring more help, hiring a landscaper, for example, to help mow the lawn. I take pride in, yeah, I’m mow my lawn, I’m happy to do things and work on things. I don’t have everything done for me. But it’s like, yeah, okay, if you can find someone to do that for 40 bucks, should you be doing it? 

Does it make sense for you to be doing it? And I mean, when I started my career, I mean, I remember in the very, very early days, my first job was an unpaid internship, cold calling 2009 in the recession. And my first job, I would skip lunch just to save money. And so I have certain things with money where I need to kind of think bigger and pursue the bigger opportunity. And it is pretty intense. It’s really rewiring stuff that’s pretty deep seated. And so I feel like if I can’t do that, if this doesn’t work, it’ll be because I couldn’t figure those things out. I couldn’t get past my own stuff. I think that the market opportunity is there. I keep having better and better calls. I’m having very interesting opportunities. Our MRR keeps growing. We passed 10 k and MRR in nine months, and really smart people are liking it, what we’re doing. 

And so that is the thing that I, and so it’s exciting in a way. I feel like I’m progressing and growing and getting better as a person and more well-rounded. And if I can have more capacity to do these things, it’ll benefit everything I’m trying to do in my life. But yeah, it’s like, yeah, but I have to do it faster than it’s a real forcing function of, Hey, it’s time now to do that, to make these changes, to become this version of this company and this version of myself. So yeah, that’s the hardest thing. And this feeling of pressure of if I can’t figure it out, that’s what I’m feeling right now. It’s like now there will be a stage at which something will happen where I’m like, Hey, I couldn’t control that. That was because of external forces or whatever. But yeah, right now it’s that pressure. 

Overall, it’s good. I want to be there. Pressure’s a good thing. Pressure’s a privilege. It’s good to be in the seat that I’m in. I would trade it, but it’s different than before when it was always like a side bet and well, if it doesn’t work, I can always do something different. And there’s comfort in the way I was doing things, but it wasn’t compounding. I wasn’t building assets. I wasn’t building wealth. I wasn’t really moving forward. It was just like, I’m flexible and I’m kg and I’m making it work, but if I want to be build something, then I have to make these changes. So yeah, it’s definitely that. Not to turn this into a therapy session, but that’s definitely the thing right now for sure, for me.  

Rob Walling:
And on the flip side, what is going well? What is working? What are you excited about? What gets you up in the morning?  

Harris Kenny:
It’s definitely the things that we’re enabling customers to do. I feel like we’re actually very far ahead of our users and our users are very far ahead of the market. So because the way our product works is very different than the way that most of these native integrations work in the market and the way that most teams are doing things these days. So I’m excited because we’re working on stuff that’s really on the edge. And I’ll have a conversation once a week with somebody who sees that and they’re like, okay, well, here’s how I want to apply this to doing cold calling, or here’s how I want to do a data enrichment workflow based on what you just showed me that outbounding can do. So that’s exciting. I feel like if I can enable those kind of people, that the one to three year horizon for the company is really exciting. 

Because right now we’re in a niche of a niche of a niche. I mean, it’s a really small part of the market who gets what we do? And then even within that, there’s only certain people where I get on calls and they’re like, oh my God, yes, this is it. So those conversations are super motivating. So we’ve got some features that we’re working on that I think are going to pay off in that way that I’m excited about. And then some bigger companies, for sure that are talking to us, I mean, there’s partnerships that we’re doing with agencies that are going very well. There’s this broader conversation of what other integration work? Could we do other platforms? That’s kind of interesting. But yeah, I think in general it’s like I feel like we’re ahead and people who are ahead are finding us and getting excited. And that makes me think that there’s a solid future here, because I’ve seen the stuff that I was doing on my agency a few years ago that are now mainstream two or three years later, and the companies that are supporting that are literally growing 10 x. And so I think that if I’m ahead, I think we’re ahead then the future is really exciting. And even now the growth is good, but I think it could be a lot better. And so that’s exciting. I think  

Rob Walling:
Harris seems to have caught a bit of lightning in a bottle as he moves forward. He’ll have some big decisions to make. Should he add support for additional platforms, double down on a narrower ICP, or widen the aperture and go for a broader market or go after something else entirely. That’s next time on tiny Seat Tails. Hope you enjoyed this episode. If you’ve ever wondered what it’s really like inside TinySeed and want to hear a raw candid coaching conversation between Harris and I, we put together something special for you at TinySeed dot com slash bonus. You should check it out. I’ve never released anything like this before. I hope you enjoy it. It’s at TinySeed dot com slash bonus.  

Rob Walling:
If you’re listening to another episode of Startups, For the Rest Of Us, I’m Rob Walling, and today I’m joined by fan favorite Derek Rimer. As we dive in to listener questions, this episode runs a little long and I let it run long because we dove really deep into a couple of these questions and I felt like the deeper we went, the more kind of knowledge we unlocked, and so I really appreciated Derek spending the time with me today and going over our allotted time, and I hope you’ll stick around to the end even though it’s longer than a typical episode because I really do think some of the things we dug into today are far beyond the surface level of what we could have dug into by only spending five or six minutes answering each question before we dive into our conversation. MicroConf Europe is only six weeks away. 

It’s in Istanbul, Turkey from September 28th through the 30th. We already have an amazing docket of speakers, including Michelle Hanson, Mark Thomas, James Mooring, and myself. We’re going to have more than 170 attendees, and last year we had folks from across 30 countries and something like 25, almost 30% had at least a hundred k of MRR, not a RR. So it’s a really amazing group of bootstrap founders to be in a room with. This event will sell out, and in fact, we are 89% sold out at this point. We’ve sold out all of our in-person events for the past few years, so if you want a ticket, you’re going to want to head to MicroConf dot com slash Europe. In addition, I want to tease that we are going to be releasing the first episode of season five of TinySeed Tales on Thursday, so keep your eye out for that in this feed. I hope you enjoy the new season. And with that, let’s dive into my conversation with Derek. Derek Reimer, welcome back to the show. It’s  

Derrick Reimer :
Great to be  

Rob Walling:
Back. It’s great to have you, man. We are digging into listener questions today. Have some across some great topics like how Crucial is a co-founder, how can I balance security with producing products and many more? And our first comes to us from Thomas Parker. I’m hoping I’m pronouncing his name, but he’s asking how crucial it is to have a co-founder.  

Speaker 3:
My name’s Thomas. Thanks for all the value you create and share. A friend told me about TinySeed when I was starting my project Prism, which you can find at Prism Guide last fall, and I’ve gotten a lot from the podcast since then. I’m wondering how crucial you think it is to have a co-founder, especially in terms of general success, but also in terms of being a company that TinySeed would potentially fund. I have a 15 year career in the niche world of self-directed education where I co-founded an education model and nonprofit network called Agile Learning Centers. I’ve worked on tech projects on the side as a product or project manager, but I’m not a developer. This past fall I realized I had enough technical knowledge that was some AI coding tools. I could probably build an application that could solve some pain points that the school my wife and I run has had for over 10 years as it relates to documenting and communicating the value of emergent self-directed learning. 

I was in a cave for 10 weeks with Claude. I had a friend who’s an experienced engineer give me advice and check my work along the way. Fast forward seven months and I’ve got a dozen micro schools using the application and a bunch more planning to use it this fall along with verbal commitments to pay for it starting in September. It’s currently July 4th. I thought that after getting this first version up and running, I would definitely need a technical co-founder to depend on, but now after building a lot of new stuff, especially with Claude code and having another friend check the work, I’m starting to wonder if maybe I don’t, of course I’ve tried to poach friends from their high paying jobs, but no dice. I don’t want to work with the wrong person, but I also love the idea of having someone that I can really depend on and think deeply about the product with. So should I keep sailing or hit the brakes and find a technical  

Rob Walling:
Partner? And I want to say one thing before I pass it to you, Derek. I actually think this is maybe two questions. One, there’s this idea of just having a co-founder period. The other is having a technical co-founder. If I’m not, and I’m building SaaS specifically, so maybe we can separate those two and you can answer one or both. I’ll just kick it to you and then I obviously have some thoughts on my own.  

Derrick Reimer :
Yeah, this is an interesting one I think because we’ve, even you and I think in listener questions before I’ve talked about co-founder dynamics and having ’em, but I think the interesting piece here is sort of that line of thinking around, okay, but we’re kind of entering a brave new world here of AI tooling that allows non-technical people to get really far with building software products, whether you call it a prototype or an MVP or even pass it as a full blown production grade application doing this without necessarily having the rigorous oversight of someone technical on the team. And I think that’s really the interesting of the moment bit here, and I don’t want this to come off as disrespectful at all to tenacious founders who are doing this and building products without having someone technical on the team. But in general, I find this a bit alarming. 

I would feel like I always have to put a timestamp on this. We’re talking mid-summer 2025, things might be different in three months, six months a year, who knows where tooling’s going to go, but at least in this moment, I’ve worked a lot with LLMs helping me write code in my various products, and I would say I would’ve a hard time trusting an LLM to produce code that is necessarily up to snuff on security and just maintainability in general. But I think there’s been a lot of memes passed around over the last few weeks and months about apps that are vibe coded that then people are hacking really easily. So especially if you’re not prompting an LLM with the knowledge that a developer would have, you don’t necessarily know what to ask it to do in terms of making sure that authorization and access are locked down on all end points and just all the different things you would think about as a web developer. 

The LLM may not know if that’s a priority for you, and if you don’t ask it to do it, there’s a chance it won’t. These types of things don’t often get caught until someone pops open and developer tools and looks at the API request it’s making in the background and discovers, oh, you have this unsecured endpoint where I can query all your users or whatever. So I think there’s a lot of reasons to be concerned about trying to go deep into production with a code base that hasn’t been at least kind of curated by a developer. I know you mentioned he has a friend who’s a developer who’s kind of spot checking his code, and that’s good on him for doing that, but I think if you’re going to build a SaaS, it’s worthwhile to try to have someone as soon as possible on your team kind of in charge of the technical side. 

I think there’s also the piece of most of these tools today that help you build a V one of a product are kind of effective because they’re able to hold most of the product in the context window of the LLM. So in the early days, it kind of knows everything all the time and it can keep building stuff, but as soon as your code base gets sufficiently large where it doesn’t all fit in the context window, that’s when figuring out how to basically manage the context gets more and more difficult and it starts producing things that it doesn’t necessarily know. You have this other area of the code base not all in context, and so you start getting spaghetti code, duplicate code, things that are not well factored, and I think that’s kind of a hard cliff that a lot of people are bumping up against these days. Now maybe we’ll get to the point where there’s nearly infinite context and this is not a concern anymore, but at least for now, this could be something unforeseen that will catch you out when suddenly the AI is not really able to produce features like it has been in the past because you reached this hard limit.  

Rob Walling:
Yep, a hundred percent on the same page. And what strikes me is the conversation you and I had two, three months ago. Well, it was the whole d and d group and you specifically were talking about your process with how you use AI to help augment and make you faster writing code. I haven’t done it right? I haven’t used AI to write code, and you basically said, yeah, tell it what to do. And then I looked through it and I’m like, oh, it did all this wrong, and then I tell it to fix these things and then I make sure that it’s fixed. You as the super senior dev are spot checking and making sure it’s security, it’s maintainability, it’s ness, it’s whatever else, and you’re sanity checking that. It’s the same way where if I ask chat GPT to help me outline a YouTube video or to help me brainstorm blah blah, blah, or I have a tweet I want to say on this thing, like write the tweet, I then look at that and say, man, it really messed up by my, I have a taste, I have an editorial eye. 

I never copy and paste straight out of Chad GBT into anything. It’s never a hundred percent there. It might get 90% and in most cases it’s more like 75% and I have to then tweak it and transform it to make it to me, make it good, make it great. And so without that step, that’s where as a non-technical or as an entry-level dev using chat GBT, it’s kind of two entry-level devs working together is what it feels like. And here’s the thing that can work, I’m going to do a metaphor here with construction, like of constructing a building, you and I as not, I mean are handy enough to use a screwdriver and nail boards in the thing with a place you and I could go out back on my property and we could build an outhouse. I would feel confident that you and I could figure that out. 

We could watch YouTube, we could go to Home Depot and we could even maybe build a tool shed from scratch. Now maybe it wouldn’t all be right angles, but we would figure it out. The moment that I said, dude, I want to build a two car garage, will you come help me? That’s when I start thinking exactly. It was like, no, this is not a good idea. Well, what if I was a like, dude, I want to build a one story house. Come help me a two story house. I want to build a commercial building that’s three stories. I want to build a skyscraper you can build if you’re going to build a tiny little utility that converts PDFs to MP threes, which isn’t really a thing, but you know what I mean, cool vibe, code, that thing. It does one thing that’s your outhouse. 

The moment you’re building Savvy Cal, the moment you’re building drip, you’re talking commercial buildings, you’re talking maybe not skyscrapers, but it’s a totally different thing. And so that’s where as a non-technical founder, you just got to be really careful with this stuff. It can often work in the short term. You can get something into production that’ll work in the next, it’ll work for a month, it’ll work for five months, it’ll work for six months and then until it doesn’t bugs all over the place until you change any line of code and it breaks six other places, AI doesn’t fix that. It’s the same thing we see with TinySeed companies across 204 companies. We funded and I think 300 something founders and 85 to 90% of the companies have at least one technical founder and the ones that don’t, the 10, 15% that don’t code maintainability, code velocity, security, just all this stuff is always their number one issue inevitably. And so it’s not that we don’t fund teams with non-technical founders, but this will be your biggest headwind.  

Derrick Reimer :
Yeah. Do you feel like this is always the question, so you’re a founder, solo founder, at least like he is for the moment and he’s considering, should I chop and try to find a co-founder or should, I guess the alternative would be maybe you find someone, a dev contractor who’s within a budget range that he could afford and have that person start to take over the vibe coded code base, or how important do you think having someone with equity stake at this stage versus hiring contractors? Yeah, I know I can think of some folks that are good friends of mine that are in this seat of solo founder and I’m sure they’ve struggled here and there to even know how to hire developers. So that’s something that’s tricky, right? So yeah, how do you think about this?  

Rob Walling:
That’s always a hard part and that’s usually the issue with folks who let’s say pre AI and pre no code, well, not pre no code, but before no-code got really good at building stuff. Even three, four years ago, non-technical founder would hire a freelancer, a contractor because again, alright, so I’m going to build a one story house or a two story house. I’m not going to ask Derek to come over, but I am going to hire a single carpenter off of Craigslist and say, come build that house. Do they know how to architect a house? Do they know structure? They don’t. They know how to write some code is the analogy. And so a carpenter can nail boards together and we’ll know some stuff, but that house is not going to be what it should be. You really do need expertise in a team of people, and that’s product and all the other stuff. 

That is the tough thing is how do you know how to hire a developer who really knows what they’re doing when you don’t know what you’re doing? Now you can get a friend or you can hire a super senior dev to help you interview and it might work out In most cases, that person stays with you for six to 12 months, then they leave. Then the next person you hire says, we need to rewrite this entire code base from scratch. It’s completely, I mean I see this over and over and over, which is always like, oh boy, this’s the headwind, right? So this is one of those tough things. If I were to say, I want to me Rob Walling, I want to get into manufacturing, I’m going to design and manufacture tabletop board games, or I want to design and manufacture hardware of some kind, I have no experience doing that. 

So it’s like should I learn it? I’m not a designer. Should I learn design or should I go hire a designer? I guess design’s a tough one. That’s one you can just identify. This is where some of the analogies breakdown is. There’s no long-term maintainability of design. If the design is good and I see that the pieces look good and the board looks amazing, great ship it, it’s a game code, much like a building has this under, what is it? It’s like the iceberg. There’s stuff under the water that you don’t see that this will you a year down the line or two years down the line once you’ve had success that, so we’re pretty doom and gloom on this and it’s not always the case, but it is the majority of the cases who are not having a technical co-founders really can come back to bite you.  

Derrick Reimer :
Yeah, I mean I think about how hard even being a developer, how hard it is to keep a code base maintainable. And I would argue most developers don’t have a code base as maintainable as they would want it to be because you make decisions and then you learn some things and a year goes by and you learn more about what features you maybe should have built from the beginning and now they’re bolted on in a way where you’re not quite happy, but you’re constantly making these practical decisions of like, I’m not going to go back and rewrite this entire subsystem. It’s not worth the effort. So instead we’ll bolt the thing on, but it’s not as pristine and perfect as it could have been. And then you just layer those decisions on again and again and again over the life cycle of a product and before you know it, you’re always contending with a certain amount of technical debt that you don’t want to have around, but you can’t justify pumping the brakes on the entire business to go and pay down that technical debt. So yeah, it’s just a lot to think about even as a developer and if you don’t have a developer on the team, the AI is not going to be, the AI is just, it’s just fancy auto complete really for thinking about it. So it’s not necessarily, yeah, it’s not thinking about these things.  

Rob Walling:
And that’s the thing. Back to your earlier question, which I didn’t answer, which was could you hire a developer and how important is it that they have equity? In my opinion, this is one of these things where this is not an always absolute thing. You just hear there’s a leaning, I’m like 90%, 95% on these opinions. There is a little wigga room. I have seen some work, I’ve just seen so many not work for me. If I was starting a SaaS tomorrow, I would want to be working with a developer who had ownership of that code base and who had equity in the company and I would find that person is what I would do, especially if I’m not going to write the code, I can’t imagine doing it any other way and having it long-term work. It’s the thing, it can work in the short term, get the MVP as you said, or get that just enough to prove it out. 

But it’s likely if they don’t have equity and want to be in it for the long term that you are going to have to rewrite it. And we see this, we’ve funded a handful and I don’t know the exact numbers, but it’s five or less of no code basis, no code apps I guess I would call them. They’re built in Airtable bubble, that kind of stuff. And all of them have been rewritten or will need to be rewritten. It just doesn’t work when it’s pure SaaS play. If you’re a service on top of SaaS, it’s one thing, you can manage it, but I think it’s just too core to the business to not have someone have ownership of that. It’s kind of like saying, I’m going to hire my first sales person right now and have them do all the selling and it’s like they don’t even know what you have as a founder. You kind of have to do that.  

Derrick Reimer :
I will say on the non doom and gloom side of this, I feel like five years ago we would’ve said, try to prove out your idea by building something, cobbling something together with spreadsheets and a Google Doc and a Google form or whatever naming the tools jour from that era. And I would say now it’s a lot easier to build something that looks a lot closer to a full-blown production app as your prototype for something out. And so I think that still that’s a good thing and that will help you do your validation efforts better. And then I think the big thing is having the restraint to not keep a prototype in production if it’s not actually up to par on what you want to maintain, but you should probably try to make that decision as early on as possible. I think it’d be pretty painful if you take your prototype and then you end up bringing it into production and you go a year, two years in where you have all these customers using this thing and then you have to stop the world and rewrite. 

That’s going to be pretty painful. I’ve always been a fan of the product you build from the start, try to keep that code base and not have to scrap it and start over if at all possible because you build up so much knowledge and you pay down, you find bugs and you fix them and all of that gets lost if you scrap the code base. So yeah, so I think that’s the tricky thing and maybe this code base that has been built by the non-technical founder is still usable and moldable into something else. It’s possible you might be able to hand that off to a developer and they can sort of continue maintenance of the same code base, but I don’t know, I would be thinking about trying to do this as early on in the life cycle as possible once you’re sure like, yep, we’re going to go forward with this as a business.  

Rob Walling:
And I like what you’ve said about the plus side is that the tools today are so much better than they were five years ago, whether it’s AI or no-code, they are, you can build full blown line of business apps. Now we have several within MicroComp and TinySeed that were built by non-technical people who just kind of figured it out and we use ’em and we didn’t have to pay a bunch of money to have ’em built, and we certainly are not paying a third party. And that’s the thing is not only for validation, but if you get to three K, 5K MRR with something that’s clunky, but it’s a tool shed or a garage that you’ve built with ai, that’s a lot of validation there. Now standing still for six months to rebuild it, which is usually about what it takes from what I’ve seen. 

Again, this is not a tiny little utility that does PDF to MP three conversion. This is a real app that actually has logic and such. Standing still for that time can be painful, but what other option do you have? You’re a non-technical person starting a SaaS. There is a headwind there for better or worse. So thanks for that question, Thomas. I hope it was helpful. And I think the second thing we never, this is the longest answer ever to a question, but second thing we didn’t address was just having a co-founder in general and he asked specifically around TinySeed funding. So we have funded gobs of single founder companies and I don’t remember the exact number, but it’s probably 50% if I’m guessing our single founder and another 35% are two founder. If I were to just ballpark it, so that puts us to 85, maybe even more. 

Maybe it’s like 60 35 or something, probably not that you get the idea, it’s half or more are single founders and that’s fine, especially if you are a technical founder. The biggest challenge of being a single founder is it’s kind of lonely. You don’t have as much of a sounding board now. You can have advisors, investors, mastermind, partner, just friends, network or smart people that you can reach out to, especially if you’re in, obviously if you’re in a network TinySeed, you have a ton of smart people you can reach out to, but even in the broader MicroComp space or whatever, but the loneliness and the I’m all on my own thing, it can get old. Some people love it and most people eventually find that it’s a little bit of a drain to not be able to celebrate the wins with someone and to also go through the hard times with someone. You and I both done both. You’ve been a single founder as you are right now. You and I were together on Drip. I’ve had both single founder and co-founders on my stuff, but what’s your reflection on just that difference?  

Derrick Reimer :
Yeah, I see the pros and cons of both and obviously I’ve done both in different seasons. For me, I love working autonomously because I can move so fast and I can kind of stretch my abilities in a bunch of different areas and I find some joy in that for sure. But I also think on the flip side, the really hard part about it is it takes so much activation energy all the time from the founders of a company. I don’t think the same thing comes from employees. It has to come from the founders or founder to just keep the energy going behind a company and you’re usually going to have one bias in one direction. Mine is definitely, I’m biased towards building and the business and marketing side is a necessary thing because I’m building a business and I’m not just building a product with no customers. 

So what that means is I’m constantly having to fight against my desire to just build more and to focus on the other areas. And if I had a co-founder who was the kind of classic split of one person in charge mainly of product and dev and the other person in charge of sales and marketing, then you can both kind of default to your zone of genius and that’s where you spend most of your time and you both deploy your founder activation energy in that direction and it’s a great thing. So I think yeah, it’s a challenging road to be a solo founder, especially if you find yourself kind of in the midpoint cycle of a business where it’s like we just kind of have to muscle through this and keep going and keep mustering that activation energy and balancing the zone of genius thing and being willing to devote a good chunk of your time towards an area where maybe you don’t feel like that’s your passion, but it’s necessary for the business.  

Rob Walling:
That’s a good summary. So thanks for that question. Hope it was helpful. We’re going to bounce to our next one. This is from Kelly about how to balance security with producing products.  

Speaker 4:
Hi Rob. I’m a software engineer and I would love to start my SaaS journey through contracting. I have a family member who is in an underserved industry that could use a lot of help when it comes to automating mundane tasks and creating workflows. I know to automate tasks for myself, but how could I possibly make and package something for someone else in a secure manner? I feel like I need a degree in cybersecurity before ever feeling qualified to produce something for a customer. Will I ever reach a point of, okay, this code is safe. It feels like code needs to be absolutely perfect before shipping, so I become too scared to even start. I fear I will spin my wheels and never ship anything because it will never feel secure enough. Love the podcast. Thanks so much for all your help and  

Rob Walling:
Insights. I liked her phrase about getting a degree in cybersecurity or something like that. So as always, this is that balance of risk versus reward and what you’re willing to take on. But Derek Rimer, you have shipped many, many applications including very complex ones into the wild with real live customers, and you do not have a degree in cybersecurity, so I do not. How do you think about  

Derrick Reimer :
This? Yeah, I find this funny too that this follows the previous question where we’re kind talking about vibe coded code bases and how they’re a little lax on security. And then here we have the other side of it where I think Kelly identifies herself as a software developer. I don’t know what her exact experience is, but has the technical background and yet is still nervous about the security risk of shipping code into production with real customer data. And I can definitely empathize with that. I mean, I feel like I’ve had to fight malicious actors in all the businesses I’ve had, whether it’s spammers trying to abuse our systems, that’s usually how it plays out to my knowledge. I’ve never had someone try to hack a database and successfully get into any systems, but just knowing that at all times there are bad actors out there scanning the internet, trying to break into web applications can be a bit unnerving. 

So I have a couple of thoughts on this. I think you’re probably, again, I don’t know your background exactly, but you’re probably more qualified than you think you are. I think these days as we’re learning about web development, a lot of these things are just sort of either baked into the frameworks that we’re already learning. So if you’re using Rails or Laravel or Phoenix or any of these modern frameworks, they come with a ton of best practices baked into them because there’s just so many developers using them all the time, and most of us don’t have that degree in cybersecurity. So we’re having to lean on the tooling that the open source community kind of has collectively pulled together. And these days, all of these major frameworks have so much built into save you. I remember back in maybe the two thousands or something people were dealing with SQL injection attacks all the time where people try to paste in a string to hack an SQL query. 

And these days I would say 99% of web developers are just using ORMs, the object relational mappers built into the framework and that handles all of the escaping and sanitizing of user input. So the odds that you’ll run into an SQL injection attack are very slim if you’re using the baked in tooling that has been heavily tested and just kind of patches over a lot of those problems. The other thing I think about is kind of leaning hard on platform as a service whenever possible for actually deploying stuff and kind of keeping your infrastructure as simple as possible. So these days I don’t stand up my own EC2 instances and make myself be responsible for patching the firewall and making sure that there’s no open ports and all that kind of stuff. Like yes, you can do that, but it’s extra time and there is that fear that you’re going to miss something or there’s some kind of operating system patch that you didn’t apply in time. 

So rather than worry about that these days, I like to lean on platforms as a service that I trust that will manage all those aspects for me, and it just keeps things simple. Now it’s their liability to make sure that the OS is patched and that the firewalls are in place. And of course if you’re choosing a reputable one, they should have all that stuff documented about their process for it. And there’s a handful of these that are very well established at this point. So that’s the approach I choose. Same for the database. I don’t stand up my own servers to run my own databases. I use a managed database host that has all of their firewalls locked down, and really what you want to be concerned with is where data lives and where it flows. So if you’re using managed providers for your servers and your databases and you can kind of easily map how the data flows between them, you’re going to be in pretty good shape.  

Rob Walling:
That’s a great summary, but Derek, isn’t everyone moving to rolling your own hardware? You want it to go bare metal hard. You see this online and it’s like, dude, if you have a hundred million dollars in a RR and you’re board, you should go roll your own hardware. You know what I mean? And I already talked about this on the podcast or has it just been private where it’s like, come on man, it’s not a good use case for 99% of bootstrappers.  

Derrick Reimer :
Yeah, ultimately, I think it’s the only justification you can really make for it is one, if you just want the technical exercise of doing it, but two, if you want to try to save cost and at the scale that I would say 99% of listeners of this podcast are at, it’s not worth trying to save the cost. Just lean on these companies that are building this tooling and assuming all the liability for, there’s a huge incentive for these platform as a service companies to not have vulnerabilities. And I like to rely on that  

Rob Walling:
Big time and you and Al, even with thousands of customers paying you, you’re still able to afford like a pass is not a blocker for you. With Drip, we started on Heroku and Drip was very big and very complicated and we did have to migrate off within the first year I think, which was a pain. I remember that being a big hassle, but I’m glad we started where we started. It got us there quick. We didn’t have to roll our own stuff. And frankly, maintaining the DevOps effort from then on to maintain our servers was necessary. It was a pain in the ass.  

Derrick Reimer :
Yeah,  

Rob Walling:
It was a pain in the ass. If we could have stayed on even paid Heroku quite a bit of money, we would’ve done it. So it’s another reason I appreciate Kelly’s question, and I think you’ve covered it quite well.  

Derrick Reimer :
I would say it’s the kind of thing where if you have to ask the question, then that means you’re probably in a pretty good position to build something that’s quite secure. It’s when you’re not thinking about security at all, it’s when you’re going to run into problems. So just the fact that you’re asking is a good sign and if you feel like there’s some fundamentals that maybe you’re missing, I’m sure this is not a great answer, but I’m sure if you just Google for a basics of web security kind of course or something like that, there’s got to be some things out there that kind of just outline these are the top things to be thinking about when you’re trying to secure a system just to give you that primer.  

Rob Walling:
Yeah, so I hope you appreciate that answer. Kelly, obviously we’re not security experts, nor are we lawyers or anything. A lot of it is around risk tolerance and frankly, we used to, when I was a contractor consultant writing code dollars per hours, we had the gold plated, the gold plated version of the software, which is like, oh, we’re going to spend, this was back in the early two thousands, so it’s like an extra 20% to write some tests and an extra 20% to do a ton of security, this and that. And the quote got bigger and bigger and bigger, and it’s like it’ll be relatively secure, it’s net, and we follow best practices. So even without that extra 20%, it’s generally secure enough, but if we spent that extra 20 grand or 40 grand or whatever, we can really lock it down. And that’s kind of what you’re balancing here is it’s like how much effort do you put, do you have an LLC right now versus kind of just being a sole proprietorship? 

Do you have insurance? I forget what all the insurances are around a business. We have an operations person that handles that, but there’s two or three types of insurance. Do you have those from day one with zero customers? Most people don’t. Not to say you shouldn’t. I’m not giving you advice to not to, but that’s kind of where we are is thinking about how far do we go to fix problems that may or may not happen at this point. So thanks for that question, Kelly. Our next question is another question about security. This one’s about security and compliance objections when bootstrapping enterprise SaaS. Steven says, I’m building an app and the ideal customer I’m targeting works in sales at enterprise companies. I’m trying to bootstrap, but one objection I’m encountering is that these enterprises have high bars for security and compliance. For example, they expect any new vendors to have SOC two type two, ISO 2 7 0 0 1, I dunno if I’m pronouncing that right. And or GDPR compliance ISO 27,000 in one. I don’t know how you would say that. 2 7 0 1. How have you seen Bootstrap startups tackle these requests, even though they’re not my ICP? Would you just sell to SMB and mid-market until you had enough revenue to invest in these kinds of security audits? I’ve seen all manner of approaches to this, but how have you thought about this?  

Derrick Reimer :
Yeah, I think so. Some of this is for my own stuff. Some of this is just from talking to other TinySeed founders who have been sort of dealing with this lately. But I think one I would try to assess how vital is having these formal certifications, how actually much do they care? Could you potentially get by with a really robust set of security documentation and policies showing that you have an instant response plan and yada, yada, yada, all the different things, the policies that these formal frameworks want you to have in place. Could you get by with having some of this stuff without investing in the full audit? Maybe that’ll get you still into your ICP, but you’ll probably still deal with some objections. But is that enough to get started and maybe get your first couple of customers and assuming you are charging a high enough price point, which this sounds like kind of true enterprise, so this should be hopefully a decently high price point then that you could maybe use that to sort of then parlay into a more formal security audit to get formal certification. 

The thing that I’ve learned from other founders who have at a relatively small scale actually gotten SOC two certification is that it’s not as bad as we make it out to be like, yes, it’s a lot of paperwork, it’s annoying, especially us impatient founder types have a real hard time slogging through a lot of paperwork that feels like security theater, but in reality, it’s not unattainable. There’s platforms that have all of these documents that you’re going to need for the audit, all kind of cataloged, you pay them for it, and then you get these checklists and you can go through one by one and set all your policies and wire up all of your hosting platform for making sure that you have all the controls in place in your systems. So there’s a lot of automated tooling around it. And then it’s just the expense of paying for the audit and you generally get your own auditor for these things. 

So you don’t want to go too cheap to where people won’t trust the audit that you have, but also you don’t want to spend hundreds of thousands of dollars on an audit that’s way too expensive. So you need to try to find an auditor that’s kind of within a budget range that you can accept. But basically I think this is more of a speed bump than a roadblock to use Rob Walling par lots. And if you’re truly selling to the enterprise where the price point supports it, then I wouldn’t be too afraid of trying to get some of these certifications.  

Rob Walling:
Yeah, I’ve seen a mix. I’ll be honest. We have some tiny C companies that get it pretty quickly. Some tiny C companies take the money, our money and put it towards SOC two because I believe the first initial is what, 20 to 30 grand maybe? And that’s a lot for a bootstrapper out of pocket. But if you take TinySeed money, it can help you get it. And if it really is an issue, it gets you a long way to the second part of his question where he’s like, would you sell to SMBs and mid-market even if it’s not in the icp, in order to get enough revenue and prove it out, I might. Yeah, I would have to make that decision if truly the enterprise is my end customer and as you said truly they are going to want SOC two or something, especially from a little no name startup, there’s a reason because everyone’s scared of data breaches and they want you to know you have it. 

It’s just it’s hard. It is difficult to bootstrap a business when you need that. And so most of the companies that I see, most of the TinySeed companies that I see thinking about SOC two who have not gotten it yet, it is because they have a kind of non-enterprise ICP that is building their MRR in the meantime until they can justify getting SOC two type two. If you never sell to enterprise and you don’t need SOC two, don’t get it. It’s a pain. This is just my advice, I should say. I wouldn’t get it if I didn’t really, really need it. As you and I both know, we hate heavy process and just security theater. It’s not that bad, but it really is just stuff. I didn’t get into startups. I didn’t get into building my own company to do that. But with all that said, generally it’s probably a good thing for the industry. 

It ensures that folks aren’t just going willy-nilly and building AI prototypes and pushing it. I don’t think you can get talked to back to our first question. So yeah, it’s a tough balance and it is kind of a bootstrapping conundrum. If you raised funding, whether from TinySeed or Angels or whatever and you’re going into the enterprise, it would just be a no brainer. You just get it. You just do it. You spend the few months and you pay the money and you just do it because it will win you more deals if you’re selling an enterprise. The balance is what if I’m not sure yet, how do I know when to justify it? And I think that’s kind of what we’re talking about is like, yeah, I’d probably try to figure out if there was an ICP that can also use the product that’s not in the enterprise or you just got to go all in and make that decision.  

Derrick Reimer :
Yeah, I’ve been doing HIPAA compliance framework for my new product line that’s doing kind of appointment scheduling for medical is one type of customer where they value that. So I think it has quite a bit of overlap actually with SOC two. But the nice thing about HIPAA is itself attesting, so you don’t pay for an external audit or it’s not required to basically to claim HIPAA compliance, but there’s a bunch of controls that you want to have in place so that in the event that something happens and so that you can demonstrate to your end customers that we have all these controls in place to support our claim of HIPAA compliance. But in general, I found a lot of these things seem like overkill. They are overkill for the size company that we are, most of the default policies have eight different roles kind of by default in them. 

So these are the responsibilities of the CEO. These are the responsibilities of the IT manager, the VP of global sales, the VP of global hr, the dah, dah, dah. And these are the default roles enumerated in a lot of these things. And in most cases, I collapse all of them down into these are the responsibilities of the CEO o. So it’s like clearly these things are kind of designed by default for larger companies. But that being said, a lot of the practices that they’re asking for are actually good things to have in place. Good kind of from a legal perspective and from a liability perspective. So there are kernels of good in there, even though it’s well known that having SOC two compliance doesn’t actually mean that your product is secure. It just means you’ve gotten the check mark, but there’s still good in there to infuse into the way you handle data, the way employees engage with it and all that.  

Rob Walling:
So thanks for that question. Hope it was helpful. Our last question for the day comes to us from Misha on building a lasting culture with a bias toward action.  

Speaker 5:
Hi Rob, this is Mike, frequent listener, occasional question asker. You have another question for you. Building out a startup, it’s growing well, getting friends to help us, looking to hire some engineers soon as we’re doing that. One conversation we’ve had a few times is about building a culture with a bias towards action, bit of a corporate speak there. It’s a conversation that I’ve been part of throughout my career. It’s rare to find that in my experience, whether it’s a large company or a five person startup, there’s no guarantee that that’ll be the case. So how do you think about that be a conscious decision? So instead of focusing just on, we’re going to hire people who we deliver over ship frequently or interview for people over ship, but really thinking about the culture of the organization from the start where we can focus on go build stuff, go ship things. You don’t need permission, don’t go breaking stuff, don’t go break the law, however, go experiment. What are your thoughts on that? What have you seen work again as a conscious decision by the founders and by the leadership of the startups, the companies that you’ve invested in part of?  

Speaker 6:
Thank you.  

Rob Walling:
Alright, Derek, what are your thoughts here? As someone who has a bias towards action? It’s interesting because oftentimes when I have a trait or when I have the urgency, a lot of founders do, it can sometimes be hard to get other people to do that because it’s so intrinsic to you. You’re not even sure how I motivate them to do this. So I’ve given a ton of thought to this concept and idea over the years, but I’m curious to hear your thoughts first.  

Derrick Reimer :
Yeah, in my mind it comes down to kind of two pieces I think. How do you get this instilled into your company? Well, I think it comes down to who you hire, what’s the personality traits of those people and their past experience and also what are the ways that you operate? It’s one thing to say in a mission statement, we bias towards action, but do the ways you operate actually align with that? So on the WHO piece, I think the big thing is I’ve found in talking to developers who have worked for larger companies almost exclusively tend to have sort of this sort of slow methodical way of operating the air on the side of caution. It’s create something but then wait for full consensus and everyone to check off on it. And it’s the way you need to operate in a lot of larger companies because maybe they’re more risk averse and that’s just how they do it. 

And I think that can be really difficult to work out of somebody to pull it out of their mind. I’m not saying it’s impossible. Maybe you’re talking to someone who’s like, I’ve worked in these environments and I hate it and I just want to be able to take initiative and move faster so that maybe you find someone who’s been in large company environments and is kind of reacting against it and looking for seeing your company as a breath of fresh air where they can actually stretch their legs and do their craft without all that ceremony and stuff. But yeah, I think that’s something really important to kind of suss out and just what are they motivated by, what are they comfortable with? I think there’s a lot of people who maybe are just more comfortable in that larger corporate environment where there’s a lot of safeguards and there’s a lot of cross-checking. 

And so trying to put someone who that’s in their DNA into your company, it’s probably going to be tough to get someone to bias to action. And then I think just the way you operate, I think it requires you to trust people a lot to take ownership of things. And that’s something I think you have to evaluate in yourself to make sure a lot of times people who are biased to action also can be control freaks. So I think that’s something you have to be careful. Are you hamstringing the people that you want to have trust in and you want to give them a lot of leash to do things and move fast, but are you trying to micromanage stuff? Because that can counter against this narrative of we want to bias towards action, but I also want to maintain strict control over everything. You’re going to hamstring yourself. So I think that’s the other piece that one’s more about you as the founder or as the person leading the company. Are you actually allowing people to ship code? Do you require multiple code reviews on every single feature? If you do, you might be working against your desire to have biased to action. So those are just a few thoughts.  

Rob Walling:
I had all of those written down. Derek and I do not compare notes before we do these. And oftentimes I make notes as you talk because thinking out loud or thinking in my head I guess in this case, but especially the last piece you said of you can say you want to buy a storage action, are you ready for people to make mistakes? Are you ready for people to do things that you don’t agree with or that they took the action and you’re like, why did you waste eight hours doing that? And it’s like, well, I was acting in the way I thought I would. You know what I mean? And so are you ready for there to be miscommunications or for you to lose control of things? And then a lot comes back to who you hire because judgment, if they’re going to have a bias towards its action, you want their judgment to be good. 

There are some folks we know their judgment just in general on certain areas is just not good and they can’t get out of their own way. And I wouldn’t want them to have a bias towards action at my company. I think the things that they’re going to work on are not going to move the needle or are going to be misdirected. So similarly, I kind of broke it down in my head into three parts, two of which you said, you said it’s who you hire, and that was one of mine. And then you said it’s how you operate. I have who you hire, and specifically just like you said, small companies I have in parentheses, meaning I pretty much if I run a five person team, almost without exception, I will not hire someone from a 500 person team. Just won’t do it because retraining that culture, that thinking that there is no process you have to do your stuff is so very hard. 

And so again, I say almost without exception, I want people from other small teams who have worked on teams of five to 20 period end of story. And that kind of helps limit that. You talked about how you operate, which came to this phrase that I wrote down, which was you can’t punish people for making mistakes. If you want everybody to have a bias towards action, mistakes are not bad on their own because they show that people are moving in a direction. Now if someone makes either the same mistake over and over or they’re just constantly, again, this comes back to their judgment that they kind of are just always not doing things really well. Well then you’ve made a hire or you’re not communicating well. The other couple things that I thought about were communicating this on a frequent basis, and you touched on this when you said if it’s in a mission statement or a vision statement or whatever, bias towards action, or I guess it would be values, but it’s like no one cares. 

It’s every week or every day or whatever. Are you communicating that there is an urgency to what you’re doing? And actually John Esco did a pretty good job of this. He was the CEO who took over Drip, I guess after me and Clay Collins. And he would say in the weekly meetings every, we’re in a start. Every month is like a quarter. Every week is like a month. We got to get stuff done. That’s how he communicated it. I communicated differently. The TinySeed MicroComp team feels a sense of urgency. They all do. And I don’t use that same metaphor that John did, but we all know we got to get stuff done. The team is small and we’re super, how do I say? We punch above our weight. We’re very efficient. We do the work of a team that’s twice our size. There’s an urgency because we’re just getting it done. 

And there’s a constant communication of, here’s the other thing. What we’re doing matters. If you are a mid-level developer manager at Target or Best Buy or General Mill, whatever, I’m not trying to throw shit at any individual company, but just some big company of 5,000 people, you’re often working on stuff that just kind of doesn’t matter. And how much buy towards action do you want to have when you just don’t give a shit about what you’re building? The luxury, one of the luxuries we have as small companies is any individual person, engineer, whatever, can have a huge impact and ship stuff to production and interact with customers. And do you remember these days with MicroConf TinySeed, I say we’re trying to multiply the world’s population of independent self-sustaining startups. That’s cool. If you’re on board with that, it’s really fun. That’s the urgency. And we communicate that often. 

There’s a vision there. There’s an interesting problem and there’s urgency to get stuff done. So there’s a bias towards action. But even with Drip, we were building email marketing software, marketing automation software. Is that that interesting? You know what, the team, the 10 of us when we got acquired, people were really into it. We were into it because there was something really interesting about being close to the metal. We all believed in this scrappy team. We were number 12 on venture beats or list of the best marketing automation platforms. And we were like seven people in a closet in Fresno. And all the 11 ahead of us had raised tens of millions, if not hundreds of millions of dollars. That was cool. We were the underdog. And there was something about the bias sword action was part who we hired. You think of everybody on the team at that time. 

And also we just felt it. We felt like we were doing something interesting and each of us were making a difference. And collectively we were making a dent somehow in the broader market that people were paying attention. There was a feedback loop of you did something this week and next week customers are raving or ranting about it as the case may be, but at least we did something interesting. So that’s kind of a long way of saying it. And I almost want to put all of the stuff I just said into chat GPT and say, give me four bullets, but you, you know what I mean, really summarize that. 

But I think you touched on hiring and operationally, and I think both of those are valid, but I also would put forth that there’s that vision and that interesting problem. And Avi Cal has the same thing. It’s like I’m building scheduling links and scheduling software, and one could say, well, you could do that in a very boring way and be like, oh, cool, come work for us and build stuff. But the people who work with you are like, let’s do this. Why is that? Because it’s cool because they’re making an impact because it’s fun and because they see the customers using it, and there’s this virtuous feedback loop.  

Derrick Reimer :
Yeah, I think it’s the people who are working with you should also be kind of enamored with this notion of being able to have an impact on your corner of the industry. I think most companies out there would say that they’re trying to have an impact. The 5,000 person company, 10,000 person company, it’s moving in a direction and it’s making some kind of impact as it continues to chug along. But when you’re one of 5,000, one of 10,000, you, your ability to move the needle is very low versus being in a smaller environment. And so I think that should be probably top of the list on the reason why someone to join your team do they care about that. Because if they don’t, then they’re not going to be necessarily motivated by that, and you need a lot of that motivation to move at the pace that’s required on a really small company.  

Rob Walling:
Good stuff, man. So thanks for that question, Michelle. I hope that was helpful. Derek Rimer, folks want to keep up with you. You of course are Derek Rimer on X Twitter, and the best scheduling link on the internet is savvy cal.com. But give us an elevator pitch for the new functionality because you teased it in the episode and it’s about it’s appointment booking. And that’s different than scheduling. Who should reach out to you or at a minimum should sign up if they’re interested in revamping their stuff?  

Derrick Reimer :
Yeah. Something that we’ve heard over the years is from people who are building something kind of like scheduling related in their business that requires them to take appointments from people, but they need to build all these custom flows around it. And so they’re not necessarily looking for an off the shelf savvy Cal meetings, meeting, booking type of thing. They’re looking for more of scheduling infrastructure that they can weave into their platform. And so we finally decided to tackle that problem. In addition to our meeting scheduling software that everyone knows and loves, hopefully we have this kind of new appointment scheduling software and we’re trying to, in this initial rollout phase, trying to talk specifically to agencies that are building these types of custom flows that involve scheduling. We’ve already onboarded our first customer and they’re a fertility clinic that needs to take initial consultations from their website, and they had this very manual process that involved calling the office and putting something on the schedule in the medical record system. And so we worked with our first agency partner to build this custom intake flow that includes the Savvy Cal appointments booking widget, embedded right into it, and it’s gone well. So we’re looking for basically more people who are building these types of projects. Could be medical, could be for law firms. There’s a bunch of different types of service-based industries that might be able to make use of this.  

Rob Walling:
Amazing. And if they want to reach out to you, what’s the best way for them to get ahold of you?  

Derrick Reimer :
Yeah, hit me up over email. It’s derek@savvycal.com and I would, I’d love to chat.  

Rob Walling:
Amazing. That’s D-E-R-R-I-C k@al.com. Yes. Thanks again, Derek. Thank you. Thanks again to Derek for coming back on the show, and thank you for sending in all those amazing listener questions. If you have a question you’d like to hear us answer on the show, you can head to startups For the Rest Of Us dot com, click ask a question. In the top nav video and voicemail questions go to the top of the stack as well as more intermediate and advanced questions, but we do get to all the questions at some point. So thanks again for listening this week and every week. This is Rob Walling signing off from episode 788, listener. You have found the hidden track of this podcast episode. I’m springing this on Derek. He has no idea that he’s going to be answering espresso trivia from frothy to hardcore. It’s going to be good.  

Derrick Reimer :
Okay.  

Rob Walling:
All right. Let’s do a few of these courtesy of chat GPT. So here’s the best part is if it hallucinated any of the answers you get to tell me, oh no, that’s actually wrong. But I asked it for folks who don’t know you are my go-to. If I’m going to ask someone about espresso, about what is the perfect temperature for the, how many psi should I tamp the, you have a manual espresso? Am I saying this thing right? Am I using the right terms?  

Derrick Reimer :
Yeah, yeah. Like a miniature version of an espresso machine you’d see at a coffee shop.  

Rob Walling:
Got it. So like super legit and you make the best lattes I’ve had at someone’s house. Alright, first question. These goes from easy to hard. What is the name of the creamy caramel colored foam that forms on top of a properly pulled espresso shot?  

Derrick Reimer :
What is crema?  

Rob Walling:
Yeah, Alex. Alex, what is crema? Yes indeed, sir. Ding, that gives us one correct answer. What’s the ideal brew temperature range for extracting espresso? You can answer in Fahrenheit or Celsius. I have both or Kelvin and I can do the conversion  

Derrick Reimer :
Add 50,000 to exactly  

Rob Walling:
273, I believe.  

Derrick Reimer :
Yeah. Okay. I’m trying not to cheat right now because if I look across my office, there’s a little readout that’s blinking the temperature. It’s like the PID unit that constantly keeps a constant temperature in the boiler. And this has stalling now because, I’m trying to  

Rob Walling:
Think, this has a range of 10 degrees, but you could, if you name the exact middle, the range or something in  

Derrick Reimer :
Ballpark, I think we could do it. This is somewhere around in the high one nineties to 2 0 5, something like that. Oh,  

Rob Walling:
There you go. Perfect. It says between 1 95 and 205 degrees Fahrenheit for those of you anywhere in the world, but the US that’s between 90.5 Celsius to 96 degrees Celsius in case you were curious. Very good. Dude, that’s two out of two so far. What’s the generally accepted pressure in bars? It says, but you can do PSI if you want. What’s a generally accepted pressure used for extracting espresso?  

Derrick Reimer :
I want to say it’s around 15 bars.  

Rob Walling:
I have nine.  

Derrick Reimer :
Nine. Nine bars?  

Rob Walling:
Yep.  

Derrick Reimer :
Yeah. Okay.  

Rob Walling:
Alright. Maybe we’ll do one more. I mean, is this even fair? Do you know espresso history? Which Italian company is often credited with inventing the modern espresso machine?  

Derrick Reimer :
Take a guess. La Marzo.  

Rob Walling:
La Poni.  

Derrick Reimer :
Okay.  

Rob Walling:
Yeah, let’s count that one. That one feels like it’s like I, what’s the recommended weight range in pounds or kilograms for tamping espresso to ensure even extraction  

Derrick Reimer :
30 pounds of pressure.  

Rob Walling:
There it is. Ladies and gentlemen, this is why Derek Remer has a permanent guest spot on startups For the Rest Of Us. It’s not,  

Derrick Reimer :
But I was going to make you lose my espresso cra. I was a little,  

Rob Walling:
Little nervous, really sweating it. I just throw things at you without even telling you. All the startup knowledge that we’ve just shared in this episode doesn’t compare to what you’ve just dropped to all the listeners. Thanks for  

Derrick Reimer :
Participating. It’s good stuff. 

Rob Walling:
You’re listening to Startups. For the Rest Of Us, I’m Rob Walling. In this episode, I have a conversation with Braden Dennis. He’s come back on the show. He’s the co-founder of Fin Chat and they have recently rebranded to fiscal.ai after raising a $10 million series A. I don’t cover a lot of venture raises on this podcast because we focus on bootstrapped and mostly bootstrap companies. But now and again in our ecosystem, we are seeing bootstrappers who catch lightning in a bottle and they realize that the opportunity that they’ve stumbled upon as much more potential than they originally thought. And some of those folks decide to sell early. Some folks continue to bootstrap and others decide to go that venture route. And today, Braden and I discussed that decision about why he and his co-founders decided to shoot for the moon. As you can tell by the title, we also talk about how they shut down a $1.5 million a RR product. 

And we do a quick recap of what got them here. You can hear more of that in his prior episode, which I mentioned during the interview. Before we dive into that conversation, I want to let you know about our MicroConf local chapters. Building a Business can be isolating, but it doesn’t have to be. So inside MicroConf Connect, which is our online membership community, we are launching local chapters to help you meet each other in person. Our first local chapters will be taking place in Barcelona, Toronto, Sydney, Austin, and London, giving you the chance to share challenges, exchange ideas, and build relationships with other founders in your area. Alongside these local chapters, we’re also opening up the MicroConf Ambassador program. If you want to help bring founders together in your city, you can apply to become an ambassador. We’ll provide everything you need, a comprehensive playbook, promotional support, and swag to make your events successful because no event can be successful without swag. 

Am I right? If you’re looking for accountability, collaboration or just good conversations over coffee apply to join MicroConf Connect and become a part of the community. To learn more about local chapters and the ambassador program, head to MicroConf connect.com. And with that, let’s dive into my enlightening conversation with Braden. Dennis Braden. Dennis, welcome back to the show, Mr. Walling. It’s always good to see you. So good to have you, man. So you are on episode 705 of this very show. It was March 19th of last year, so just over about 15 months ago. And we talked about how your SaaS app called Stratosphere, how you went from bootstrapped to taking money from Tiny Seeds. So we said mostly bootstrapped to then going venture backed. And I believe you had raised what pre-seed round, what was it? 2 million, 3 million? It was one and a half. One and a half. 

And we covered a bunch of topics. You rebranded to Fin Chat and have more of an AI bent where you could chat with what public market data really is the thing that you have, how you had launched a second product and you and I talked through, I was like, my advice is usually not to, and when is an exception. Right? We talked through in that episode and then you, I mean, I guess catch us up. You raised that venture round and now you’ve just raised another. You’ve raised a $10 million series A, which is a load of money for a bootstrapper. And I still think of you, I mean you guys are moving fast. It’s a big ambitious space and you’re now a venture back company, but when you and I first met you, were a podcaster with a little B2C personal finance app. So catch us up on the last year or year and a half.  

Braden Dennis:
Yeah, I mean total funding to date is now 13 million us. And it sounds insane to say because it’s not so long ago. I met you for the first time in Austin, Texas after TinySeed, and yeah, it was like, okay, we’re just going to take this little bit of money. Me and my co-founders we’re going to try to get this to a few million in a RR. I mean, at that point, your only goal is like a million in a RR, a million in a RR, a million in a, I will be happy when I hit 1 million forever.  

Rob Walling:
You’re going to be happy forever,  

Braden Dennis:
Forever, forever. I’ll be fully content. There’ll be nothing wrong with the world. And so that was our goal. And then yeah, we launched this kind of second project because almost more out of curiosity, what can we do with an L-L-M-A-P-I? It took off. So then we kind of merged the products and then more and more has happened since then. We’ve had more ambitions to actually just go after these big players, go after the data infrastructure, what we can do with AI behind the scenes. And so we figured we pivot a little bit away from the chat name. People were kind of pigeonholing us to that name, doing it with the series A makes sense. And the prize that we were then now set on, we realized that we were going to need a significantly more amount of capital somewhere between five and 10. And every venture investors take more and go try to get this thing. And you know what? I don’t think that’s venture investors trying to be evil. They’re actually right. They’ve seen pattern recognition. You’re going to need more capital. This is AI and you’re up against people who are raising hundreds of millions of dollars in some cases.  

Rob Walling:
And so let’s talk about that rebrand. So you’re now@fiscal.ai and your H one is the modern financial data terminal, go from idea to confidence with clean global financial data, trusted by the world’s leading public market investors. And your site looks gorgeous, by the way. It’s a really nice rebrand. So moving from fin chat to, well, fiscal is a great name, especially fiscal ai. So the part of that was to not be pigeonholed as just like a chat app. Is that the idea?  

Braden Dennis:
Yeah. We’re like, okay, we’ve become finance plus AI and FinTech kind of resembled that. But we would talk to these big bank investors, these public market investors. We had two problems. One, they thought it was just a financial chat. They thought we were maybe like a Bloomberg chat competitor, which was not really true. It was a full actual data terminal product. So they were pleasantly surprised when they came to the demo. But still we were underselling a bit what we were doing. And two, a lot of big bureaucratic financial buyers. They had almost all AI chat domains blocked on the server. They didn’t want anyone putting in customer sensitive information, proprietary trading data, stuff like that. And so we were just always blocked. So those first demos, no one had ever seen the product before and that was really hurting our go-to market.  

Rob Walling:
That makes sense. And as you said, timing it with the series A makes a lot of sense because you have the money to acquire the domain and to do the redesign. You touched on it briefly, but I want to double click on this thing you said of we had raised the 1.5 million and we had fin chat and it was working, and then we decided to be more ambitious. We decided to take on the, I forget the terminals of the world or something like that. And that’s why you raised the series A, right? You just need a bunch of money to do something. But tell me what that is. Why do you need a bunch of money? Is it just because the others raised it and who are you competing? Maybe talk us through fin chat. What is it? What was it in 30 seconds? And then what is fiscal and how is it so different that you needed to raise eight figures of funding in order to go after that opportunity?  

Braden Dennis:
Yeah, it’s a fantastic question. So the landscape of our industry today is dominated by primarily three or four massive tens of billions if not hundreds of billions. Each player of market cap on the public market, some of their stocks are worth over 100 billion, many of them in tens of billions of dollars. And so if you think about what they do, they are essentially aggregating financial data with people at scale, tens of thousands of people manually aggregating financial data at scale. And our vision was how can we do this better, faster, cheaper with technology? And so as our ambitions started to grow in terms of going after that big prize, it became clear that one, we were going to need a larger team, we’re going to need a lot more engineering, especially on the data side, and we’re going to need a pretty thought out B2B go to market plan that is not going to fly with a million or two in the bank. 

I think it’s a little bit tricky to understand, but one of my investors said with salespeople and the most talented go-to market folks, they’re either going be the newest people on your team because there’s a lot of churn, or the highest paid four or five times more than the CEO O at a successful startup. And I was like, that really broke my frame of reference because it’s like, oh wow, they’re actually going to make way more money than me if they’re closing deals the way that we actually need to go from zero to five to 10 to 20 to a hundred million in a RR. If you just reverse engineer how much these people should be making, it’s significant. So you kind of need a little bit more capital if that’s what you want to do. It’s not the only route. Capital is just a method to live in the future, as you would say. And I totally agree with that. The people that I wish I could one day afford or or work with, I can work with them now. And that’s awesome. To me,  

Rob Walling:
It’s a big deal. I like what you touched on with what your investor said because most founders, especially bootstrap founders, don’t realize that a salesperson, a GTM person at a startup like yours, if they make, let’s say a salesperson makes a million dollars in it’s obviously salary plus commission, they should be generating, I think that it’s a loose 10 to one. I think they should be generating 10 million in a RR for you, so therefore it’s a really good deal for you. Even though it sounds a million, what are you insane? We can’t afford that. And it’s like I think what you’re touching on is  

Braden Dennis:
Most folks would be like, oh, I’ll never pay someone that much. But then if you say, Hey, do you want 10 million in a RR? They’d be like, of course I pay a million for that. No problem. Exactly. Yeah, yeah, exactly. And so that has taken me a little bit of time to come to terms with a little bit, and once you come to terms with it, then you can really actually build the right team and grow and make the right capital allocation decisions. And sometimes it’s not always the cheap scrappy way. You can still be frugal in other ways and I’m recording this from my very cheap office.  

Rob Walling:
Yeah, totally. Well, and that’s the thing, right? It’s like could you bootstrap or mostly bootstrap this idea? Maybe you would just have to approach it really differently and you would’ve to grow it slower and you could still maybe build a smaller business that’s super profitable, maybe I don’t know all the intricacies of it with the AI and the costs and stuff, but there’s usually multiple ways to build these businesses. Super bootstrapped, mostly bootstrapped, and then raising a bit of money and then raising a load of money, which you’re teetering to me, you’re teetering right on that shit load mark. But if you want to go after something that is really crowded, where it is winner take most and where it’s a land grab, that’s what it feels like to me is that what is happening in your mind  

Braden Dennis:
Across just the three players. And this is not including Bloomberg because Bloomberg is privately held, so it’s hard to say what they’re doing. Most people think they’re doing over 10 billion in a R, but just the major public companies in terms of what we’re doing and the segments that we’re competing, 13 billion in a R across that kind of oligopoly. And so it’s worth going after this prize in my mind. And I think the more that I’ve built, the more that this has remained true is when we were working on something with a smaller goal and really just focused on that 1 million a RR, which by the way is a great goal for everyone who’s starting the business. It’s not like I was spending less time thinking about this, losing less sleep than I am now about what I want to do with the business or the amount of work required or the weekends or the evenings. I’m all in regardless. So let’s go for something really big, especially if I’m going to take on investor capital. I mean, I’m running an investor financial data business. I came from this as an investor first, so I taking someone’s capital seriously because I was on the other side of that transaction for 10 years prior. So yeah, I mean I’ve been an investor in public markets since the day I turned 18. I could open up my non-registered account. So this has been something that I’ve thought about for a long, long time.  

Rob Walling:
Do you feel like taking this much money, obviously it implies that you have to get a lot bigger. I’m assuming you want nine figures meaning a hundred million plus of a RR and maybe 10 figure you’re talking 13 billion of a RR. You want to took that. I mean I don’t think it hurt your feelings to get to a billion a RR, so obviously it means your goals, your aspirations, they’re just bigger. They have to be. Do you feel like simultaneously that increases your chance of failure?  

Braden Dennis:
Yes, it does without a doubt. And I think that this is the one thing that me and my co-founders hummed and hawed on the most as I sat them down because I deal with all the fundraising and talking with investors as the CEO and I told them guys, this changes our floor of success has to be so much higher. Our ceiling can be a lot higher, but the floor is now on level 12 in the elevator and we’re only on level three right now, so we have to go a lot higher for this to be a success now if we go down this route. So we had to come to terms with that. But like I said, we’re still hungry. We still wanted to work for it. We’re like, we’re probably going to get there anyways. It’s just going to take us longer if we have to scrap this all together with a million in the bank versus 10.  

Rob Walling:
Yeah, it makes sense. Something I’m really happy with is that when Einar and I sat down to figure out the TinySeed investment terms, and this was seven years ago, it was 20 18, 19, we were just trying to figure out all these terms. There was indie VC had kind of this thing where you could pay back and buy back equity and it was like phantom equity and it was like maybe that’s interesting, but also it’s a little complicated. And then other competitors came on the scene with similar things, but they had accidentally or intentionally exploding terms where if you raised and you didn’t pay it back, suddenly they own three times more of your company than they originally. Just bizarre stuff. We are like equity is equity. Equity has existed for a thousand years, 800 a very long time. And so let’s keep it pretty simple. We do have a side letter of course, because there’s salary and participation caps and stuff. 

You couldn’t just pay yourself a million dollar salary and not pay TinySeed anything, blah, blah, blah. But one of the things we wanted to be really careful about was that we want TinySeed companies after they take our money to have optionality. If you never want to raise money again and you want to basically be mostly bootstrapped great, if you want to raise a bit of money, if you want to raise a lot of money, we didn’t want that to negatively impact your ability. And you are one of several founders who have raised a lot of money, seven or eight figures and had, at least from my perspective, I just signed the docs, I don’t actually, lawyer tells me to read, doesn’t seem like our terms or being affiliated with TinySeed had any negative impact on your raise. Is that true?  

Braden Dennis:
No, and I think that you guys have been easy to work with because what I’ll say is the newest investor in always wants to be the biggest swing in what? So they basically, as the lead will take those terms and previous investors, of course there’s dilution, there’s no way around this kind of inevitable feat. You get your markup, there’s a little bit of dilution. That’s the world of raising additional capital. Same with my holdings too. We’re all losing a little bit on new money in, but the terms that are coming in with the largest investor is kind of like they want it their way. And you guys have been very easy to work with on hey, they want this way, but you’re still going to get this. You’re still going to get that. You’re still a major investor. You don’t lose any of this or that. And I think that that’s a good way to do it, right? Because you’re giving us optionality to keep growing. If we to didn’t want to take any money, that’s also fine too. So I think that’s the right way to do it because businesses change over time. A startup doesn’t. When we first met, my business was a lot different. It was two names ago, Rob, $10 a month if I remember. It was  

Rob Walling:
Crazy.  

Braden Dennis:
It’s night and day. So you have to be flexible, you have to be pivoting and you need investors that are open to that as well because really good investors know that you’re betting on that. I’m going to figure it out.  

Rob Walling:
And that’s something, I’ll tell you what, early on with TinySeed, I did a MicroConf talk and I remember saying something like if we start funding, I don’t even think TinySeed existed, but I was like if I was going to invest in Bootstrappers, it would be one round and then they’d never raise again. They’d never have to raise again. And I remember coming off stage and a R was like, don’t say that because you don’t know and it was a real good wake up. You don’t know if they’re going to want to raise some businesses. We might invest $150,000, $200,000 and it was a very small amount of money in the scheme of things. And if they catch lightning by the tail, they might want to raise 3, 5, 10, 20 million. And it’s a small subset of Chinese companies, but there are decent chunk of folks who’ve done it. 

And so a, I’m glad that our terms, that was the intent was to allow that optionality. That was a big thing with TinySeed is hey, you can sell for 10, 20 million but you can also go after the big one. But it is a reminder or maybe to a listener. There are a lot of listeners who are just diehard, bootstrap, bootstrap, bootstrap. I just want a lifestyle. That’s what Drip originally was. I was trying to build a little lifestyle business that was going to generate a bunch of profit and then guess what? I found a bigger opportunity and I just took it in a different direction and that changed my life. I was open to that possibility of changing my mind. Did you think when you bootstrapped stratosphere, I had to, since it’s two names ago, I almost said fin yet, when you bootstrap stratosphere in your mind, were you early on will never take money. I would take money on the right terms, definitely want to raise money. Where were you on that bootstrapping continuum?  

Braden Dennis:
I mean I think I’d be giving myself a lot of credit if I think I had any sort of clue what was going to do at that point. But generally I wanted to build something that would, me and my co-founders could pay ourselves a little bit of money, maybe hire a couple people. My dream was to have this kind of bootstrap can do whatever I want cashflow business so I could live in Bali and surf every day. That was kind of my goal. But things change the business change, your personal life changes and you just want different things, especially when we started this business. I’m 29 now, so I was 26. I didn’t know what I wanted to do beyond what I was going to eat for lunch that day. So I don’t think I had a grand vision other than I knew I wanted to be an entrepreneur. That’s pretty much it. And I knew I wanted to help solve the problems that I saw in finance  

Rob Walling:
And you were open to being open to what comes and it’s like, hey, maybe we’ll go bigger. Maybe we’ll rebrand, maybe we’ll raise some funding. I’m curious as, I mean you’re a 29-year-old CEO of a company that now has 34 people on your team and you have six more starting shortly, you’re about to be the CEO of a four person company. I mean that’s bigger than any company I’ve ever run. Drip was 10 when I sold it. I guess I was running a team within the acquisition or the acquirer of maybe 21 at the end. But even TinySeed, MicroConf all combined today is still like 10 people. So 40 is significantly more than I would even enjoy. I just don’t enjoy managing a lot of people. There has to have been some maybe learnings, growing, pains, just all of that stuff. Again, you’re obviously highly competent, very intelligent, but you’re a young dude. I don’t think you’ve managed 40 people before. So what is this feeling like for you these days?  

Braden Dennis:
When we hit 25 people at the end of last year, I had a major wake up call. It slapped me in the face once we hit 25 and I hadn’t built the right infrastructure for a company to exist at 25 people. We were just flying by the seat of our chair. It was just me and my three co-founders and then I woke up and there’s 25 people and it’s like, whoa, okay, we got to see. I have to actually become a CEO. And so I started trying to learn and trying to focus and just take the realization that this is not just me and my co-founders hacking away trying to make money on the internet anymore. This is people are making real money, real salaries, real lives working for us and we need to build a really sustainable scalable company as we can go. And so that’s the wall I would say is 25. And I was like, okay. I say I’ve been the CEO of this company for two years, but I haven’t been now I need to be. And I think I’ve gotten a lot better honestly.  

Rob Walling:
What were some examples of things that maybe weren’t working that you had to then add structure in order to fix  

Braden Dennis:
A book? I’d recommend to everyone is called the great CEO within. It’s the tactical guide to company building. It’s short, it’s like 200 pages. It’s just step-by-step advice. There’s lots of amazing CEOs who have chimed in certain sections, whether it’s Brian Armstrong of Coinbase or the guy who did Clearbit. A lot of people came together to build this book and it’s a book that every Sequoia founder is given when they invest in them. And so I read that book that really helped me frame around this idea of if I have to do it twice, it needs to be an actual process or written down somewhere. A company, Wikipedia, it can be as simple as just utilizing a Google drive better and file systems, just little things like that. If I have to do it twice, it needs to be a system. A lot of stuff you’re going to start having to repeat all the time, whether it’s hiring, whether it’s operational stuff, whether it’s sales. 

I was wasting so much time starting from scratch every time I was doing something. So that really, really helped. And then secondly around how to properly encourage my employees to succeed and tell them that they’re doing a good fricking job because a lot of them are doing an amazing job. And I think that before I was just, I assumed that they knew that I thought they were doing a great job. It is amazing what happens when you tell just some simple recognition of how good of a job they’re doing. Some people who are killing it at our company, crushing it, working so hard and they’re so happy here. But it is amazing what some recognition or some recognition on a team call could do some structure. Every Friday, every single person in the company talks at our meeting now. Before it would just be me telling them what we’re going to do next week. Now it’s every single person telling me what they’re going to do and asking me how I can help them. So that has massively changed the way that the business has operated, I would say. But it’s not hard, Rob. We’re doing stuff that’s way harder than these things that I’ve had to figure out. This is easy, easy stuff, but it goes a long way.  

Rob Walling:
Yeah, that’s a great book recommendation by the way. I don’t know that I’ve actually read it, but I have heard, I’ve seen it and I know folks recommend it.  

Braden Dennis:
No fluff in that book. It’s very straight to the point. Yeah, it’s tight.  

Rob Walling:
Yeah, it’s real tight. Yeah, 200 pages. Do you enjoy being the CEO of a 40 person company specifically?  

Braden Dennis:
Sometimes no.  

Rob Walling:
Yeah, yeah. I was going to say, because there’s got to be some hard days. There’s got to be some complicated days with it.  

Braden Dennis:
There’s some complicated days, but there are some days that are so freaking good as well that the highs and the lows are certainly there. And if I don’t manage myself with the highs and the lows, my employees know it and feel it. So I have to be pretty even keel. So there are certainly days that are not as fun. There are certainly days that are a ton of fun, but at the end of the day, I don’t want to do anything else differently right now. So it would be a problem for me when there was hard days if I was just like, ah, there’s something that I really want to do that’s not this, but I don’t have that. I want to see this thing work really well. So that kind of keeps me going. Yeah, I  

Rob Walling:
Think growth also always used to keep, I know your growth curve obviously because I’m an investor in AC and it’s like you’re growing very fast and for me, M-R-R-A-R-R going up into the right, it made a lot of ills go away for me. I was just like, you know what? It’s working. This is hard. It’s not supposed to be easy, but if you’re doing all this grind and it’s flat, it’s terrible. It’s the worst. You’re just like, none of this is worthwhile. I’m wasting my time. Why am I doing this? So it growth cures most ills. I think  

Braden Dennis:
A r growth solves a lot of problems, including my ability to sleep well at night.  

Rob Walling:
Exactly. Alright, so I want to ask you, we were talking offline and you threw some bullets into a doc for me to help guide this conversation and one of the things that you said was something we could talk about was why I shut down a B2B product that went from zero to one and a half million a RR in 12 months and then I shut it down. Talk us through what was that product and why?  

Braden Dennis:
We started licensing our AI copilot product, which is basically you could converse with all the financial data, get it to build you graphs, get you to summarize transcripts, slide decks. Everything was preloaded into there. We exposed that product while we were trying to build a ton of other product. So it was just a lot was going on. It was a bit of a distraction, but the money was flowing in. It went from zero to a million and a half of a RR growing 20% a month consistently. Even when I shut it down, it would probably be like two and a half, three today, maybe more. The problem with it was we were signing big customers, one of them was $250,000 a year. Several were in the hundreds of thousands of dollars. Someone that just tens of thousands of dollars and a lot of customers were coming offline pretty quick and telling us quickly that they were not going to renew. 

And the reason for that was we solved a key problem at one point that chat, BT couldn’t handle any of these queries very well. That problem went away and the foundational model started to kick our asses at our own game. And so we started to see the writing on the wall. We’re like, okay, this is not actually what we’re good at us doing rag for them and solving this quick problem for these customers. It’s probably a quick solve because they want AI on their platform. Yesterday the CEO’s begging the product team, why is there an AI not on our product? We were a quick solution, a quick fix for them, but it wasn’t the right solution for them. Then they would say to us, how do I connect my customer service bot to this as well? Or how do I connect my customer? Clients are asking how they do their own account openings and it’s getting confusing. 

This was a very narrow product and we said, oh, sorry, I can’t help you with that. You’re going to have to build it from scratch with our data. And then they started doing that and that had product-market fit, and so we shut down this out of the box solution that so many people loved right away because the actual slower longer implementation we’re customers that I think will be with us forever. And that is a materially different type of anxiety. When you see 30 customers sign up and 15 of them turn before three months in, that’s brutal. Terrible, terrible. So we just said, screw it. We are going to shut it down with the financing. And that’s what it is. It is what it is.  

Rob Walling:
Wow. Yeah. These are hard decisions. Did you feel it’s hard decisions we in complete information, did you have much doubt when you did that? Because that’s a one way door ish type of thing that’s really hard to undo. Were you convicted and you were like, no, this is the right way? Or were you like, oh, he and Han trying it on for weeks and months?  

Braden Dennis:
I knew it was the right decision when I was, how much it was causing issues with our development team for building the long-term product that we actually envisioned because there was a lot of bugs. It was a lot of customer service requests that we just were not getting for our core foundational product. People were way more happy there. So a combination of churn and distraction from the dev team was enough for me to go, look, this is not what’s going to make this business a success, so reverse engineering that. Yeah, it’s tough to say no to that much revenue when you’re at our size, but I think it was the right call. It’s still really early to say, right, it sucks when customers ask us today if they can come buy it. And I’m like, no, you can’t. I got  

Rob Walling:
To say no. Turning down revenue is the worst. Yeah, the worst is saying yes to revenue and having it churn, but the second worst is turning down revenue. I want to switch topics a little bit. I just have maybe two more questions for you, but one is about, you have three co-founders, so there’s four of you total. And I’m curious, we talked about this last time we recorded, so I won’t go too far into it, but I’m curious now that you’re here where you are with a 40 person team and you’ve raised all this money, what’s maybe the biggest positive to having that many co-founders and the biggest negative that you’ve seen?  

Braden Dennis:
The biggest positive is that there are four of us across the different parts of our business that have an amazing leader on day one. That’s the biggest positive. So me as a CEO, my chief product officer, one of my co-founders, my CTO, one of my co-founders, so they run tech and product and they are outstanding at what they do. And then my CO Adrian runs all of our data operations and just operations in general, and he is the dream hire. So I had kind of the dream hire on day one from day one, building the business, and to me that is super, super valuable without a doubt. Plus I love these guys, so it’s nice. It’s great hanging out with them every day. So it’s just a good team. We get along great. The biggest downside I guess would be I could see the potential for clashing when it comes to decision-making, hiring product decisions, long-term vision. 

But I think if you were to ask my co-founders, they would say that I’ve earned their trust to unequivocally make almost all of those decisions and ask them if it’s okay and they give me the green light, but we don’t pose strategic questions and say, what do we think? I pose the strategic question, say, this is what I’m doing, this is where we’re going to go. Does anyone have major issues with this? If so, then speak up, then we will reroute, but if not, and I’ve gained your trust and your leash to be able to make these decisions, then let’s go. So everyone focuses on what they’re good at, and so I think the pros majorly outweigh any cons in my view.  

Rob Walling:
Yeah. Well, it seems to be working for you too with the growth and the success. Obviously raising funding is a tool and it’s a milestone. It’s not the finish line. You and I both know this, so I don’t want to, that’s not worth saying on the  

Braden Dennis:
Finish line. Got a lot further away when you do this money,  

Rob Walling:
It just extended the finish line. So last question for me today is regarding TinySeed, when this episode goes live, TinySeed applications will open like a week or two later for our next batch or 16th batch or something like that, September one. And I’m curious, I don’t know quite how to ask this question and maybe it’s like what are the top three or four things you and your team, your founding team got out of TinySeed, or maybe if someone’s on the fence they’re listening to this, what would be the benefits for them joining? And maybe you could even say, what if you want to do X, don’t join TinySeed. You know what I mean? The pros and cons. We don’t have to go full person cons, but it’s kind of like what did you get out of tiny C that would lead someone to apply it and want to do it?  

Braden Dennis:
Yeah, there’s three things. So if you’re comfortable with saying, I think it was 200 K that we raised from you guys, and so at that time nowadays I’m like, what do I do with that? Right?  

Rob Walling:
Yeah.  

Braden Dennis:
But at that time, when you have 10,000 in the bank, it’s everything, right? So it’s that frame of reference. So that did materially actually help us. I’m not going to lie, especially with our vision, which it was in a sweet spot for us at the time. Of course, the vision changed, the ambition changes, but at the time it was the right amount. The second thing that I think was super helpful was just, yeah, just early on we were using you and a NRA lot around pricing, which customers are working, what do you think about this strategic is freemium versus not. Some of the basic questions that you talk about on this podcast a lot are super helpful for anyone listening, but it’s even more helpful if we can talk specifically about my business. I can learn from Joe’s other business, but when we’re talking specifically about my business, it’s obviously a lot more tangible. So that would be the second thing. And then the third thing is I don’t actively participate in the Slack community, but if I have a question, I know it’s going to get answered really well by 30 people in the matter of hours. So I would say I am more of a receiver of information more than a giver on there. So it’s probably more of a one-way street for me. It should probably be a little bit more reciprocal, but that’s just kind of what I get out of it. It’s amazing me, to be honest,  

Rob Walling:
I’m glad. And it’s funny with the first batch or two, the Slack group was obviously tiny. There were 10 founders and then 20 founders or whatever, and Einar and I used to have to answer a lot of the questions and it was just like, well, no one else knows. And so I am going to give my best answer, and there’d be others stuff trickle in. Now by the time we have an advice needed channel, for those who don’t know, by the time I get to any question, there’s already five responses and I tend to look through and be like, Ooh, that’s smarter than what I would’ve said. Oh, he’s done it more recently than I have. Oh, she has better insight. And it’s usually like what they said with an arrow up, or maybe I have a little bit to add, but it’s like I’m no longer the expert. I don’t have to be the me Rob Walling doesn’t have to be the expert on everything, and I shouldn’t have to be because there are 300 something, there’s 204 companies and I think it’s 310 founders. I don’t know the exact number, but it’s very knowledgeable. People like yourself that are really knee deep. If someone’s like, Hey, I want to know how ML stuff and data and financial whatever me, I don’t really know, but you or your co-founder Kevin or one of your other founders is going to really know it.  

Braden Dennis:
Even stuff like this, we’re a Toronto, Canada based startup and there’s a Canada channel, and we have specific questions around our tax situation, our HR situation that we’re a little underserved because most of those questions on the internet or in these types of Slack communities are specifically about US tax or US regulations. So for us to have our little corner where we know we’re dealing with the same context is pretty helpful.  

Rob Walling:
That’s great. Well, Braden, thanks so much for coming back on the show, man. Folks want to keep up with you on the internet. Of course you’re brado capital on X Twitter, and if they want to see what you’re building, it’s fiscal.ai. Thanks again for joining me. Thank you. Thanks again to Braden for coming back on the show. And thanks to you for listening this week and every week. This is Rob Walling signing off from episode 787. 

Rob Walling :
If you’re listening to startups, For the Rest Of Us, I’m your host, Rob Walling. In this episode, I talk once again with Kevin Wagstaff, the co-founder of Spector. And if you recall, he was on the show just a month or two ago talking about how he and his brother bootstrapped their SaaS to a $90 million exit. In that episode, I made a call for questions if you had any questions about how Kevin got where he is trying to go. And I received an email filled with an entire episode’s worth of questions. Turned out to be a really great conversation. I think you enjoy it. Before I dive into my conversation with Kevin, if you ever wished that you had an outsider’s advice from someone who’s been in the trenches of trying to grow your SaaS past 1 million, 2 million, 3 million a RR, then you should check out Tiny Seeds SaaS Institute. 

That’s at SaaS institute.com, and it is our premium coaching and mastermind community where you’re going to get all the advice, the comradery, the mastermind interactions, and one-on-one coaching that you want. It’s exclusively for founders doing 1 million a RR end up and it’s only SaaS founders. We’re currently forming our next mastermind group and we have one or two slots left. We’re still in the early stages of institute, and so if you want to get in on the ground floor as a founding member while the community is still small and you’ll get a ton of one-on-one attention, should check out SaaS institute.com. And with that, let’s dive into my conversation with Kevin. 

Kevin Wagstaff, thanks for coming back on the show. Oh, of course, man, you make it easy. It is a pleasure to have you back for the second time in just a couple of months. For those who don’t know, your last episode was episode 776, how bootstrapping led to a life changing $90 million SaaS exit. And if the title was even longer, it would then say, and a subsequent exit at 110 million that he co-founded with his brother. There’s whole thing folks should go listen to that 45 minute conversation we had. But in that episode I asked for questions because your story was so compelling and there’s so much more to it, and we probably could have done three hours and still only touched on elements of it. And so I asked folks, send an email, hit us up on X Twitter if you have questions for Kevin, and we got this amazing email from Tom at Garage tool app and he gave us a full episode’s worth of questions. So that’s what we’re going to be diving into today.  

Kevin Wagstaff:
Appreciate the specificity on ’em too. Your listeners, I think are so dialed on this stuff. It makes the content easy when they ask such great deep bootstrappy SaaS questions.  

Rob Walling :
That’s what I liked about him too. There’s no question here of Kevin, what are your top three advices for nude? You know what I mean? Or what’s your number one piece of advice for new entrepreneurs? It’s like, I mean, to keep going, persevere, work hard, but this is detailed and let’s dive right into the first one. The cool part too is several of these are multi-part questions, so I think we’re going to get in here pretty good. So first question, Kevin mentions that he approached Facebook groups to do some of his early marketing. So Kevin, did you have to offer anything in return for that? And if so, what did you offer?  

Kevin Wagstaff:
Initially we did offer a discount on the software because we just, no one knew who we were brand new. Got to get someone to join this group. So I believe we offered a godfather type grandfather deal of six months free and grandfathered price for life, the cardinal sin. But after we got 10 or 20 or 30, the main pitch was access to the founders. So it’s like, hey, if you have ever been with a software where you didn’t change or didn’t like how little change was happening, guess what? You can talk to me directly in this group and we’ll dialogue back and forth and then follow through on that. So really it was like you’re going to hear directly from the people that make the decisions here.  

Rob Walling :
And were you going into existing Facebook groups or did you start your own Facebook group and try to pull home inspectors into it?  

Kevin Wagstaff:
Yes, both. So we spent so much time on there that it was like half the time we spent in our own group fostering those relationships and creating rich content, asking good questions, being in so many threads to make our group good, but then we would also go into other groups and answer questions half the day basically.  

Rob Walling :
Did you do both of those things, meaning your own group and posting in other groups? Did you do both of those kind of from day one?  

Kevin Wagstaff:
Yeah. Yeah. Got it. It was basically the first and last place every day for I’d say for sure the first two years we visited, which was exhausting and taxing and don’t recommend it for most people. Do you want to be happy or do you want to spend that much time on Facebook?  

Rob Walling :
Well, do you want to be happy in long term because you build an incredible business but unhappy in the short term? Dude, I tell you, I dunno if you listened to, it was last week’s episode, but I, I think it was my 12 biggest mistakes that I made as an entrepreneur in my 10 best decisions or something like that. Why I succeeded in spite of those 12 mistakes is what I was trying to pull out. One of them that I said was a boon for me was willing to just grind to grind and do stuff that I didn’t want to do and nobody wants to do. And I was thinking of, there’s several founders that I think of who do this, Jordan gals one and Ruben. There’s these folks who come on the show that I know that I know their grind stuff, but you were another person in my mind when I was writing that of thinking about our conversation and specifically around Facebook groups like do any of us want to do Facebook groups? No, but you did it because you do.  

Kevin Wagstaff:
That’s where the customers were and I was getting good positive engagement and interaction, and if I’m getting one to a hundred people in any given month closer to being a customer, it’s like, I’m going to keep you talking to me. I’m going to get you to like me, and then you’re going to want to do business with people you like. So that was just the mentality. I kept asking questions and they kept responding. So I’m like, cool, let’s keep this going.  

Rob Walling :
You did it because it worked well enough and it didn’t really matter if you wanted to because it worked well enough and you wanted to build a great business more than you wanted to be happy at the beginning and ending of your every day. Is that accurate assessment?  

Kevin Wagstaff:
Pretty much. And I didn’t really care about work-life balance. I think COVID and kind of the current culture and climate, I think people do believe, and some of ’em are right, where you can kind of have your cake and eat it too, but it was an all out kind of burn the boats. We’re going to do this for years and we’re going to show up every day and show people that we’re ready to elbow a way in to be a competitor in this space, not we’re going to show up, see if it works, give it that half committal. That just wasn’t the mentality and it’s not right for everyone, but we knew we had to go fully into this to show people that we’re trustworthy.  

Rob Walling :
And as a reminder, you co-founded Spector your SaaS that we were talking about with your brother. So when you say we, that’s who you’re talking about 

Going off script here because Tom didn’t ask this question, but something you said brings something up for me, which is you said I didn’t think about work-life balance. So someone hearing this might think A, that’s not healthy. How long can you do that? They might also think, is that what it takes? Is that what I need to do to be successful? So for you, I mean I’m curious about both of those questions, but it’s like for you, because had times of no work-life balance, but my goal was I only want to do that for X amount of months or in terms of drip, it wound up being a few year, few more years that I would’ve liked, but again, in the end it worked out, right? So how did you think about that? Were you just like, no work-life balance and I’m just going to do it until it’s done? Or were you kind of like, eh, I can do this for a year or two before I really need to back off?  

Kevin Wagstaff:
Yeah, I want to hear your experience on this too. Yeah, ours was similar, whereas we knew it’d be this undetermined amount of time from a few months to maybe a year or even two, ended up being longer than that ended up being two, three years of burning the candle both ends, but it was intoxicating seeing growth and results. And so anyone that’s competitive or kind of a junkie in that way of seeing the numbers go up, we watch the fricking MRR chart every day and it’s like if you like video games, we grew up playing video games every little boop, boop, boop, and we were just like, okay, we’re total addicts for this, so let’s just keep it going. And yeah, we still on the weekends would play volleyball or workout once or twice a week. It’s not like the sleeping under your desk kind of lore of you’re literally withering away. 

And at times we felt like that, but yeah, I don’t want to over glamorize it either. Yeah, everyone always has the quick response of like, well, that’s not good for your health and relationships. Well, it’s like, yeah, no shit. We wanted to do what most people wouldn’t so we could get a result that most people don’t get because everyone wants work-life balance. We all want to be happy all the time, but that’s why so few companies probably succeed. And so it’s like, I don’t know, I found the endurance from sports and me and you had our athlete talk of doing hard things for a long time trains you mentally for that. And I really felt equipped and there was times I was like, yeah, give me more. I can go another hour. And it was like 11 or 12 at night. And so I think everyone can generate that within them. I don’t think you have to be special to be an effort guy.  

Rob Walling :
I agree. One thing that you said in there that really resonated with me is it wasn’t just that you two were grinding hard is that the MRR kept going up and that’s the feedback loop because if you had done what you were doing and there were no results and you’d plateaued at three grand or four grand, you know what I mean? And you can only do that for honestly months. I couldn’t grind for a year with a plateau like grind the way you’re talking about, which I have done periodically. I try not to do it, but if the feedback loop is that we’re adding a thousand a month to three 4,000 a month, then how do you not do that?  

Kevin Wagstaff:
Even if it’s top of funnel or if it’s like, Hey, we’re seeing incremental growth 1%. Hopefully that’s all you need to see, but everyone’s bars are different for what keeps them fueled and going what your TAM is and all that. But yeah, to your point, was it hard those couple months where you’re like, gosh, we keep pivoting. Things are plateauing. Those are demoralized. We had stints of that too where it’s like our chart doesn’t show a lot of that, but there were months when the interest rates stuck and it was like, oh crap, this is more exhausting now.  

Rob Walling :
That was my memory of my times of grinding were as long as the results came, I kind of forgot about how hard it was, but it was the months where, yeah, we grew 200. It was often Decembers and Aprils for something and for some reason, and April I always assumed it was tax season for the US or whatever, and people were distracted. And December was obviously because holidays and those months if we, you’d grow nothing or you’d go 300 MRR when I’m used to growing 5K MRR and I would just be like, oh my gosh, now I’m exhausted and burning out. It was interesting how the burnout only hit me when there was no feedback loop  

Kevin Wagstaff:
And maybe those are the months if we were to do it again where we do cut out an hour earlier and go work out hard or make sure we’re eating healthier and kind of managing that. That’s probably what I would do differently is know the seasonality of our business and take care of myself a little more.  

Rob Walling :
Yeah, I agree. And also, again, I know I say this a lot, but it’s like every time that I was doing more work than I want it to be, it was always like, this is a season. This is not permanent. And I don’t know if this season is a month or if it’s five months or six months. I never did it for a year straight like that. I did feel stressed for a couple years, but I didn’t work more 40 hours a week for more than a couple, two, three months at a time. It sounds like you guys were doing more than that.  

Kevin Wagstaff:
Again, I don’t want to undersell or under characterize here that the point in time we felt this huge momentum shift and like you said, the feedback loop was there. And so I definitely am grateful for that and I know it’s a lot easier when the scoreboard keeps going up, but we wanted to capitalize on it. We didn’t want to take it for granted. So in a way I thought we were being grateful for the opportunity given by saying, let’s just quadruple down here every day.  

Rob Walling :
Yep. Go with what works. And so to get back to Tom’s questions still relating to Facebook groups, Tom asks, were you worried about some of the admins of these Facebook groups being allied with some of your competitors? The biggest Facebook group in our industry is Allied with one of our competitors, and this competitor is actually building a pretty sizable audience. Was that a risk for you?  

Kevin Wagstaff:
Yeah, I was terrified of that. I hated those. Those guys were the hardest to even, it’s being the new kid on the playground and you see all the cool kids hanging out in big groups of them and you walk out there and they just point and laugh at you. That’s how I felt. My wife got so protective over me, she thought she felt like I was just getting bullied online for a whole year. So she’d be wanting to get on Facebook and curse these guys out, and I’m like, sweetie, that won’t be a good look for us, so I’ll be okay. I’m a grown man, but I’m not going to lie. These other Facebook groups were really hard to get into and the ones affiliated with competitors. I had to really go in hat in hand and just say, Hey, I’m here for the good of the industry. 

I don’t care if you guys use Spector. I want to help you guys market your businesses better. I want to help home inspector save time and just repeat that mission, vision, values statement over and over and showing up. You have to do the work and show up every day and show them like, Hey, I’m not here for a quick sales pitch. And then I also showed vulnerability. That always helps in life, I think of going in there and saying, Hey, look, I know we don’t have the features of Home Gauge because at the time we didn’t. I was like, look, they’re the big elephant in the room. I get it. Most of you use them and love them, you’ll never leave ’em, and that’s fine. But I’m here for people that maybe want something different or a change and I’m here to help. And that whole takes the edge off of I’m here to help. 

And then I became a part of the community and I had relationships and talked with guys on Facebook for five years before they did a trial. I saw a trial pop up three years ago and I’m like, oh my God, I talked to that guy on Facebook eight years ago and I never sold them once. I just hung out. I just kept hanging out on the playground. That was kind of the play. I can’t say that was all intentional. That’s what ended up happening. I can’t say I didn’t have a crystal ball, but there was guys. I was just like, dude, you’re going to bite my head off every time I say anything, and that’s cool. I still love you kind of deal with it.  

Rob Walling :
Yeah. Yeah. And soles, people think your only marketing approach was Facebook groups. That’s what we’ve talked about for the first 10, 15 minutes of this show. Let’s bounce to SE because Tom had a question about that and he said, I did some quick SEMrush research on home inspection software, and it seems like the search volume is pretty low. So what keywords did you concentrate on to do your SEO and how did you find those keywords?  

Kevin Wagstaff:
It’s a great question. Good job, Tom. Doing your homework on SEMrush. We’ve all used it and love it. Yeah, small volume. So it’s a small industry just like imagined garage app, your wrap and sign addressable market is, and so I said we have to rank first for home inspection software. That’s the only game in town. We only had one or two keywords, and so it was a big hill getting in the industry saying, oh my gosh, home gauge and home inspector pro rank first and second. Everyone loves ’em. Everyone goes there. How are we ever going to supplant them? Turns out just content every day for years can bust through that when your competitors aren’t doing it. So YouTube is owned by Google second biggest search engine on the planet. So keep in mind good YouTube presence, I just believe has something to do with the main algorithm. 

I don’t have any proof of that, but I have to believe clicks and signals into YouTube help. So I made YouTube webinars, videos, any blog article turned into a YouTube video. Rob, you’re no stranger to creating content, so you know this. But then I looked at adjacent keywords. So I think s CMR is great if you use the magic keyword tool, it’ll give you adjacent keywords in kind of the next bubble out from the main keyword. And for me it was if someone’s looking for what association do I belong to? If I want to be a home inspector, what tools do I need as a home inspector? Hey, what are licensing requirements in Oregon for a home inspector? So I literally spent hours writing a master article on the requirements of every state to become a home inspector, and I got them from the state licensing websites, spent a whole day copying and pasting, and then I created that master article. That article ended up ranking first or second for home inspector requirements. So then I was getting them when they were thinking about being a home inspector, they were clicking on Spectra and I was like, you’re going to see our name when you’re just thinking about it. So hopefully six months down the road you’re like, oh yeah, for some reason I want to use Spector. So every industry I think has bigger and bigger circles of keywords  

Rob Walling :
As you talk. It strikes me that you had short-term results. And what I mean by short-term results is being in the Facebook groups, you were bootstrap and two founders, so you had to have some type of revenue coming in. You couldn’t just say, well, we’ll have revenue in a year. Let’s have a free plan. So you needed some type of, Hey, we need a couple hundred MRR or whatever it is, a thousand MRR each month to kind of grow. But everything you’re saying is, but then it took a year or two or three to work, and over time that snowball it paid off for you. Was that intentional or is it a hindsight thing of Well, it took longer than we thought, but we just kept grinding because we figured it would work. Or at the start, were you like, this is going to take a while?  

Kevin Wagstaff:
Yeah, so at the start we were like, Hey, it might take a year to get to the point where we can pay ourselves even a couple grand a month. And so in our episode, I briefly mentioned it, but I offered kind of marketing agency type plans to customers for the first year. So we were charging three to 500 a month for me to personally manage their SEO because that was my specialty and kind my background. So I had at any time between 10 and 20 home inspectors who would pay me three to 500 a month to write two blog articles a month to go to their website, optimize keywords, title tags, kind of the basics of SEO to signal to Google what your site’s about. And that floated us for the first six months a year where we had 10 20 k, let’s see. So it was like 500 a month, 10 to 20 customers, so whatever that maths out to a couple grand a month to at least cover our bills, float us a little bit. 

And then I kind of phased those out and told them, Hey, can’t do this anymore. Here’s a good recommendation to kind of pick up your SEO, like a local agency. I’d find them one to link up with as the software MRR started to ramp up. So it was kind of like, Hey, this is what I’m good at. I can contribute in this way, and then phased into the software piece. And then we ended up hosting websites as part of our offerings. So we have about 2000 websites that we host now, and it’s a great profit margin segment.  

Rob Walling :
Tom’s next question is about product-market fit. So he says, I ended up listening to some other interviews that Kevin took part in one of the interviews. Kevin said, you knew we had product-market fit when they had 10 customers. Was this the metric that you used to decide you had product-market fit or was it something else? And having 10 customers was just a side effect.  

Kevin Wagstaff:
Keen observation, definitely not the number of customers, but more about solving the critical pain point. Once I heard it from 10 customers and then they signed up, they believed we addressed that pain point. So it was more like, Hey, you want to save time on your inspections? I get it. Okay, what’s the main choke point here? Okay, it’s in the app. You’re spending too much time in the app tapping around that pisses you off. You want to spend more time with your family. Once I felt like we were on the path to solving that and people started signing up, that felt like maybe pain point market fit or a product pain point fit, however you want to word it, but I asked every one of them, if you had a magic wand and you could wave it and solve something about your software, what would it be? A couple guys said, I think I found that with you. I was like, okay, we’re onto something here. I took that. That was our marketing headline from there on out, their words, not mine, where I’m like you said you’re spending, you could spend more time with your family if we save you an hour. Oh, that’s marketing gold. I’m using that everywhere. Who doesn’t want more time to grow your business or to spend with your family?  

Rob Walling :
I believe that phase you talked about is problem, solution fit. It’s where you’ve identified a problem and the solution, it can be software, it can be anything. It doesn’t have to actually be code, but if you find that, then you can now say, all right, let’s pile more on or let’s write the code to do it. Sometimes it’s kind of human automation or you’re doing a productized service, for example, as the solution, but it sounds like you already were there where the code was actually was nailing it. Another marketing approach that worked really well for you was word of mouth and Tom asks, when doing word of mouth marketing, were you worried that you might upset your market and the criticism that would come when you started doing it, or were you just ready to roll up your sleeves and roll with the punches when you picked that marketing  

Kevin Wagstaff:
Channel? Tom will probably understand this well, but we did not understand the constant criticism we would get in this industry basically from everything we did at any time.  

Rob Walling :
Why is that? Tell me more about that. I’m not sure I understand why  

Kevin Wagstaff:
You’re going to laugh. So home inspectors point out what’s wrong for a living. They go into a home and look for up to 300 things that are wrong with it.  

Rob Walling :
Of course,  

Kevin Wagstaff:
They don’t point out what’s right. Every email, every decision product we’ve made, there’s been at least one person that tells us this is the worst decision of all time and we’re going to crash and burn and we should have listened to them. So you kind of get used to upsetting 10% or less of your user base or the broader market at any given time. I don’t know if that exists in other places and spaces. I know B2C can be more forgiven  

Rob Walling :
B2C when you serve software engineers or QA people because they’re the same thing. But software developers are the good ones who QA their own code or whatever. They’re super fricking detail and nitpicky I bet. Serving lawyers, right? They like detail. So yeah, there’s  

Kevin Wagstaff:
Doctors, lawyers.  

Rob Walling :
Yeah, there’s a few of these. So anyways, yeah, keep going with that.  

Kevin Wagstaff:
So yes, once we kind of started getting out there and just showing up kind of unapologetically, all kinds of criticism, all kinds of bullseye from people saying, your types come around every year. You’re not going to last get out of this Facebook group. You’re a vendor. Oh, you guys are just a cheap version of this, or you’re an expensive version of this. So I think the mission was always connecting with people and each time we talked to a customer, they saw a little bit of who we were. We lost money on so many customers that we spent an hour or two with talking, just learning about them and their industry and shocker, a lot of customer, a lot of companies neglect their longtime customers that aren’t profitable to them. So we talked to solo home inspectors that got no attention from their software. They didn’t talk to the founder of their company anymore. 

We were like, Hey, we got on calls, me and Mike. So I’m like, Hey, you’re on with the lead engineer and the lead marketer. Tell us your problems. Tell us what you want. But yeah, that creates word of mouth when they’re just like, Hey, Kevin and Mike are the real deal. They’ll listen to you. Oh, they’re chiming in on this thread right now. We answered so many fricking pointless threads, a hundred deep nested, no one’s going to see this. Someone’s always going to see it. So that’s the nitty gritty work where I’m like, that’s the grinder in us. That was like, that creates word of mouth.  

Rob Walling :
And did you try to get to a certain churn rate or a level of confidence in Spectra before you went that route? Before you started doing the real viral or word of mouth stuff?  

Kevin Wagstaff:
No, we did that from the beginning just because we witnessed another founder in the space that just lived in the forums and threads. So he was on the main association forum and Facebook answering everyone. He was everyone’s friend. Everyone knew him and respected him, and we were like, okay, we’re going to do that. So in a way, we just were like, that clearly works and resonates to connect with people one-to-one on social media where they are meeting them, where they are not trying to get them to go into TikTok or Facebook or somewhere else. So we saw him doing that and we were like, that’s the playbook. Just go do that. And churn was a slap in the face for our industry. We did not know it’d be like 3% a month. It was brutal. So once we started to see that survival rate, we baked that into our numbers and said, Hey, at any given point, a quarter of our user base or a third of our user base could go down. That’s scary. So we need to always be marketing and growing. And that was kind of my side of the house was like, that’s why I lived on Facebook, because I’m like, I have to get every new inspector that comes in the industry or at least win share, I got to get half of ’em.  

Rob Walling :
Is the churn high because they’re kind of people to do it on the side or the retirees and they just decide to stop doing it? They decide to stop being a home inspector or is there some other reason?  

Kevin Wagstaff:
Yeah, you’re onto it. It’s like there’s a seasonality and then there’s about half the states in the US It’s not regulated at the state level. So in Colorado you could roll out of bed and be a home inspector. So then you get guys that jump in, they do a couple, and then they’re like, I don’t want to work hard to grow a business, so I’ll cancel. So the cancellation and resign up rate was we couldn’t make sense of our numbers for the first six years.  

Rob Walling :
Yeah, totally. That’s hard, right? It’s like, well, they turned three months ago and now they’re a new, but they’re not new out of you. That’s always clunky. I’m going off script because we’ve talked a lot about things that worked for you. It seems like you generally had success with the stuff you tried, the Facebook groups, the word of mouth, SEO. Were there things that you and Mike spent time doing marketing wise? I’m thinking that didn’t work. Were there approaches that didn’t work and if so, how did you, I get this question all the time. How did you know they weren’t working? How long did you give them until you made the decision to stop doing them?  

Kevin Wagstaff:
Paid ads never seemed to hit for us, and it might’ve been the lack of expertise and sophistication with targeting and kind of the full stack setup, but running campaigns out of Google and Facebook paid tended to result in tons of clicks, tons of wasted spend. So it was kind of like we looked at that channel for a few months. We gave, I think we did a three month pilot and we were getting clicks from bad keywords. We didn’t dial in the right negative keywords in Google ads. It was like we were getting car inspection guys and things like that. But then even once we dialed it in, we felt it was a lot of people just clicking around late night, maybe not as serious. And so we just kind of tracked that to conversion and said, man, we’re batting one for 40 here, one for 50 not to, it doesn’t justify the spend. So we cut that. That was never a good route, was paid acquisition. It seemed like a product where people would kick the tires on multiple softwares, not necessarily be ready to buy right away. I need an email marketing tool today.  

Rob Walling :
And also we talked about in the interview that your annual contract value just isn’t that high paid ads, especially Google, you just need a lot of money and I believe yours was, there’s a thousand and then there’s a 2000 and a 3000 a CV depending on if you stack things or something, but it’s just not that much if you’re going to try to buy AdWord.  

Kevin Wagstaff:
Yeah, lifetime value’s got to be up there and the tens submit hundreds of thousands to really spend that, and we knew we could go meet these same people at conferences and they’re in the field working too, so a lot of times our demographic was not online all the time, and so it kind of made sense. Affiliate marketing, we also failed at where it was working with some of the biggest associations and partners in the space. It was like, here’s our affiliate link. We’ll share 10 or 20 bucks with you. It was kind of peanuts at the end of the day compared to just going to another conference making relationships or writing, making 10 more YouTube videos. And to me, we watched the numbers over months and then we tried to boil everything down to math, which I think most founders can appreciates. What does the math say?  

Rob Walling :
Last question from Tom. You mentioned that the home inspection industry is really slow to catch up on technology. Are you ever worried about someone being offended by hearing this? I feel the same way about my industry and sometimes I catch myself about to say it in a demo, but I stop myself.  

Kevin Wagstaff:
I want to ask you after this, Rob, if you’ve said things that have offended people throughout your journeys, you said a few times I knew they’d probably be offended, but at the same time, I also knew if it was the truth and it was something I observed and was undeniably true, that it would be okay to say because many of them admitted that to me. They’d be like, Kevin, I’m not a techie. I don’t know this stuff. I rely on you guys for that. You guys are the nerds. We were like, yeah, we’ll be your nerds. We were just like, cool. We kind of branded ourself on let us be Your technology stack was kind of how we talked to them of like, dude, you build garages, you inspect homes, you do whatever. These trades guys, they want to outsource all that to us, so let them and be upfront about it. 

And yeah, the competitors probably did not like me out there saying that of like, Hey, there’s not a single good tech solution in the space. I’m marketing my business, man. They can go out and say their message, but if we are getting our ass kicked by a ServiceTitan, I’d probably say that too. I’d be like, man, ServiceTitan does everything. We’re going to try and compete, but they’re crushing it. And yeah, occasionally you put a little spin on things to help your company, but I was okay with that and I got slandered for it. I took my licks.  

Rob Walling :
Yeah, the thought of, well, specifically I guess the phrasing that Tom used is you mentioned that the home inspection industry is slow to catch up on technology. To me, that’s not an offensive statement. That’s an industry as a whole. I will hear here I am on the podcast. Do you want to hear me offend people? The legal industry tends to be more laggards than not certainly any type of trade. I mean, my dad was an electrician for 42 years. I was an electrician on and off for years, and my brother runs an electrical contractor. All of the trades, all construction mechanics, they focus on what they do well, which is fixing with their hands and building things and do they really want, and it’s a generalization, but it’s like if you look at a bell curve maybe, or distribution across folks who are electricians versus folks who are web designers or something, it’s like how many of those folks really want to get into software and are interested in it and just have a high acumen for it and mess around on their computer on the weekends? The numbers are different. It just is, right? So I don’t think it’s not that you’re saying one individual now, it’d be offensive if I said, Kevin, you yourself are really not technically adept or whatever. Unless you were like, yeah, no, I totally am not, then it wouldn’t be offensive. But  

Kevin Wagstaff:
If it’s true,  

Rob Walling :
Yeah. So I don’t know. I wouldn’t be too concerned about this, especially if you’re talking about an industry as a whole, my guess is most people probably would agree with that. I guess the thing though that you then touched on, which was almost a separate thing, was saying our solution is the best and there really isn’t that much. Really isn’t any good tech here now that could be offensive to competitors? And I mean lightweight marketing automation that doesn’t suck was the H one of Drip for years. So what does that imply? That implies, and then  

Kevin Wagstaff:
I remember that.  

Rob Walling :
Yeah, and then I named, because I wrote the whole copy for that long form landing page, I named Crap, who was it? It was Infusionsoft. It was Marketo. It was part up by name on that page. Now, I did not name MailChimp. I always thought they were good tech, and I did not name HubSpot because I thought they were good tech and I’ve always respected as founders, but any of the other marketing automation I would throw under the bus, did I offend them? I don’t know. Did they even pay attention? Was I just too much of a gnat for them to even bother with? Who knows? Did somebody probably read it and say, that guy’s kind of a dick? Maybe it maybe happened, but did I believe it? Did I ever say anything on that homepage that I didn’t wholeheartedly agree? I was so passionate that why are you screwing your customers? This pisses me off that your software sucks and you overcharge for it, and you force ’em into annual contracts. You don’t let them see the software touch it until they’ve paid you for the whole year. So anyways, yeah, you can tell I’m getting off on a rant here, but  

Kevin Wagstaff:
Yes, but you spoke what you knew to be true, and then you could back it up. And as long as you’re saying what you believe to be true, if someone calls you on it, if you just show up and say, am I wrong here? Let’s look at it together. I’m happy to be wrong, but does this suck? Does Infusionsoft suck? Is it hard to use? Yeah, I don’t think they’re bad people,  

Rob Walling :
But I don’t think the tool is good and I don’t like their sales model.  

Kevin Wagstaff:
Yeah, yeah, yeah. Depersonalize it. And I just love that you stood kind of on what you knew to be true and you weren’t afraid to say it. And I think it takes a little bit of irrational confidence maybe before we were big boys, but you got to be okay taking that risk because it forces us to step up then right? Then you were like, I better make sure Drip doesn’t suck. I got to make sure that’s the thing.  

Rob Walling :
I’m calling my shot. I’m opening myself to attack now. Right? It better be amazing and it better without a doubt be better than these things I’m calling out by name. Yeah, there’s a certain amount, and I’m not a conflict person. I don’t enjoy it. I can do it, obviously I have to sometimes, but it’s not my wheelhouse. It’s not like a strength of mine. I know friends of mine who are really good at it, they love debating love, getting an argument or even just conflict just ignites, ha, I can be right about something. Me, I’m always like, I don’t really want to get in a fight that feels like a waste of time. But I was always willing to risk that and to do it and defend myself and my company if I knew I was right about it. And I knew much like saying lightweight marketing augmentation, that doesn’t suck. It’s not just marketing, but it truly was a stance that we were taking. That’s what Drip, when we came on the scene, we were like, all the other platforms are kind of mediocre guys. And our whole thing, our USP, our positioning, our whole positioning was based on that. And so that’s where I was willing to go to the mat for it because it was important to differentiate ourselves in the sea of competitors.  

Kevin Wagstaff:
I love that you said that because for you guys watching and listening, I’m the same way. It’s not like we are just like cocky, brash, and we came out that way. I’m very conflict avoidant and was even more so at the beginning of this spector journey. I grew up a people pleaser. I was that kid in my family, and so it hurt me. It made my heartbeat fast. Every time someone would trash me on social media and people would say things about the software and me personally, and it always hurt every time. And there was times I quit going on Facebook for five, 10 days at a time to regather myself and get my confidence again. I hated it. I hated conflict. But I also realized I had to find my voice the way you just said you did of maybe not finding it, but you spoke what you knew to be true. My self-growth journey throughout spec Torah was like, do your homework and then unapologetically say what you want without being a dick, and that’s possible that you can do that. And so I thought about my wording a lot. I got reps on camera the way we’ve both done over the years on YouTube. So it’s like I got used to saying things in a certain way where I was like, Hey, I’m not being a here, but I just objectively think we are better and here’s why. But I’m happy to debate it. Happy to talk about it.  

Rob Walling :
Kevin Wagstaff, thanks for joining me on the show again, man. It’s great to have you.  

Kevin Wagstaff:
This is so fun, man.  

Rob Walling :
It’s cool. It’s neat to be on the other side of the AirPods, huh? Because you were a long-term listener and is it weird to be on the show now? Did you listen back to your first episode?  

Kevin Wagstaff:
Not yet. I’m scared to, but I was around listening. I remember I went back and listened to the first, yeah, I went back and listened from one, I think years ago when I first started listening first episode. So I’ve been in an OG for a while, but I get energy out of just talking about in retrospect now to our past selves, if that makes sense of us 10 years ago. It’s so fun and humbling, and I just want people to all crack their industries and win such a fun journey.  

Rob Walling :
Well, it’s great having you on the show, man. If folks want to keep up with you on X Twitter, you’re Kevin Wagstaff three. That’s the number, Kevin Wagstaff and the number three. And I think that’s it, right? You’re not on LinkedIn, you don’t do, don’t have a main website you want to send people to.  

Kevin Wagstaff:
Nope. Just there. And then if people have more questions, they can find us or they found us for this one, find us on the Twitters.  

Rob Walling :
Awesome, man. Thanks again for joining me.  

Kevin Wagstaff:
Awesome. Thanks brother.  

Rob Walling :
Thanks again to Kevin for coming back on the show so soon. I really enjoyed our conversation. I hope you did as well. And if you keep listening, I’ll keep recording. This is Rob Walling, signing off from episode 786. You found the hidden track. Kevin and I are going to talk a little bit about his experience as an athlete, a college athlete, and then you played pro ball. Tell us a little about your experience, but the reason I want to get into it is I was also a high school and college athlete and it had a huge impact on my ability to be an entrepreneur and succeed at it. And so I want to hear a little bit about your experience around that too.  

Kevin Wagstaff:
Yeah, I’m such a believer in it. It doesn’t just have to be athletics, but it’s what we share in common and what we’ve drawn from. But it was just something I was so solely focused on basketball from age eight basically to 28 to basically when we started Spector something, I lived, breathed. I always was a repetition person. I wanted to be really good, and my parents just said, Hey, if you want to be really good practice. And then somewhere along the way I got really inspired and motivated to hone the craft and spend time at it. And so when you spend so many thankless mornings and nights lifting with the team, working out, shooting, staying after practice, you just kind of get used to refining something until it’s good and sticking with it. And I read a very pivotal, I’ll get into this in a second, but played college basketball and then had a chance to play on a semi-pro team in the Philippines afterwards. 

Did that for a very short stint, came back home because I had a young daughter and realized I’d make more money with my brain than playing basketball. So said goodbye to that dream, had to disassociate from the athlete in me and was kind of had a few years of being lost in a way of that athlete identity until I came across a Mark Cuban blog post that talked about business being his new sport. He liked basketball and he only played in high school, but he said, business is 24 7. And the way he talked about it, I was like, oh my God, I could channel the sports mentality into business and get rich doing it. This sounds incredible. So then it was more just finding the what and kind of had to abide my time until we found the thing that I could really be a psycho about the way I was a psycho about basketball.  

Rob Walling :
Yeah, obsessive.  

Kevin Wagstaff:
Obsessive. What about  

Rob Walling :
You? Well, when you say the sports mentality, I’m going to tell you what that translates to me, and you can tell me if you feel the same way to me. Academics were always easy. I read from the time I was like three years old doing math in my head, whatever. All that stuff kind of came easy. Sports were really hard for me. I’m not physically naturally gifted, and so I was slower than the other kids. I was skinnier, I was weaker. I couldn’t push as much weights as anybody. And I played football and ran track and all this. The big thing with sports for me is I would work day in, day out with basically no positive feedback loop for weeks and then months. And then I’d have that first meet if I was running track and I’d get the first feedback loop of, oh, I’m doing okay or I’m not. 

And then the next week, then I’d have another feedback loop of, oh, I’m doing better. And whether it was just pure time-based or whether it was placing in the races. But the thing there is this ability to have delayed gratification and to work towards a goal that is months and months out now, I never thought, I mean, I ran track from the time I was, what, 14 until I was 23 through college. So I wasn’t old enough to, I never thought in terms of years, who in three, four years I’m going to be better. I just didn’t think that far out. But I definitely thought out, Ooh, in six months I’m going to be faster. In nine months, I’m going to be faster. And I didn’t play instruments growing up. I didn’t do anything else in my life. I think that had such delayed gratification till I became a founder, till I became a, well, at first it was a blogger where it’s like I got to build an audience over a year or five or 15 podcaster. But being an entrepreneur was where it hit me. So that’s when you say sports mentality to me it’s like, no, I’m going to put in the reps even though I kind of have nothing to show for an extended period of time.  

Kevin Wagstaff:
Does that resonate with you? 100%. And to build on that, some of those reps, I imagine you pushed your body to a point of near failure and exhaustion to be great.  

Rob Walling :
Yeah, I to throw up every week or two in the early parts of the season.  

Kevin Wagstaff:
So once you push your body in a way that’s physical pain, you feel it. Whereas emotional pain is different and it’s sometimes harder, sometimes not as hard as physical pain. And so that’s why by even working out, working out, pushing your body, once it’s pushing your mind, then you’re like, oh, I could do this. I got energy left in the tank. I got renewable energy here. I can keep going. You find levels within yourself to just say like, oh no, I can push harder and not let it ruin my day or impact me because you’ve done it physically. So part of it was, oh, we’ve pushed ourselves way harder. We got this.  

Rob Walling :
Yeah, that was something I thought of often. The other place where I think this holds up is learning an instrument over the course of many years, which I am not. I play the guitar, but I’m not that good at it. And so I never did the hardcore practice, but my kids when they were younger, Sherry, and I said, you will do something hard every day. You will either do a martial art, you will play an instrument, or you will play a sport and you will do that six days a week. And I mean, that’s pretty brutal. We’re just like, no, no, no, no. And it’s not because I want you to be a concert jealous and violin, which is what they play, or that I want you to be a black belt martial artist, or that I want you to be a track athlete. It’s that I want you to know what it’s like to build something over time and to do hard you don’t want to do to have a payoff years from now,  

Kevin Wagstaff:
Man, life lessons in a world that just keeps moving quicker. They are going to be well equipped. What would you say, Rob, to someone who didn’t play sports? Because I’m always curious when I’m like, man, it’s so natural to us. What would you say to someone who had other things?  

Rob Walling :
Well, and that’s the thing, there’s a bunch of TinySeed founders who, a bunch of founders I know who are super successful that I don’t think played sports as a kid. Anybody that I’ve had on this show, I don’t think most of them did. And so I think there are other ways to do this. I don’t think you and I should frame this as, oh, this is how you’re successful is if you played sports. I don’t think that’s it either. I think each of us has our motive. One, you need some motivation. I think there has to be a goal. My goal was to make enough money that I had some type of freedom and I wasn’t worried constantly about money and then, hey, I can quit the day job and then hey, I don’t have to work again. That was a strong goal. So that’s the first thing. 

But the second thing is I think you need some type of intrinsic motivation. And I think if you played sports, you know what that is. But I think some people are also just intrinsically motivated to do stuff. And I don’t know if that comes from upbringing. There are some folks I know who kind had to get a job from the time they were 12 or were working from the time they were 10. And to them, work was just a part of life. Doing work that you didn’t want to do was just it. So I think that could easily be it. So I think there are many paths. I just think sports is perhaps an ease. It’s really easy to see the comparison in the through line.  

Kevin Wagstaff:
Yeah.