Episodes

Rob Walling:
I showed up to dinner and I think my belt buckle … I’d gotten out of a cab or an Uber or something. My belt buckle was literally two inches off to the side. And one guy said, “You got to straighten your belt. You run a conference now.” And I remember thinking to myself, “What in the (beep) are you talking about, man?” I’ve run five of these events, six of these events. This was my house. I remember feeling that. Like, “This is my house. You don’t come in here.” And it’s little levels of disrespect that just don’t need to be there.
And no one else does that. The only people that have come to MicroConf and said things like that happen to be these overconfident folks who had hopped in. And I’m not ragging on San Francisco per se, but we do know that there’s that “startup bro” feel that maybe just doesn’t jive with who I am, doesn’t jive with what MicroConf is, and it doesn’t jive with the community we’ve built.
Welcome back to Startups For the Rest of Us. As always, I’m your host, Rob Walling. And this is the show where we talk about building and growing bootstrapped, and mostly bootstrapped startups, through relentless execution and thinking in terms of years, not months. We know that this is a marathon, not a sprint. And maybe I can throw in another cliché metaphor right here. But no, it’s about thinking about things over the long-term and about shipping something every day, but not expecting that to move the needle immediately. Usually realizing it takes months, or in most cases, years to build something great.
Thanks for joining me again today. Today’s episode is a solo adventure where I talk through a few topics that are on my mind. I’m going to talk about whether bootstrapping, or maybe it’s MicroConf, is the “not-bro,” the “anti-bro” startup movement. Why today I think, in social media especially, it’s cool to be angry and that there’s more nuance to a lot of different situations. I’m going to bring up some examples of conversations I’ve had with my kids recently about that. And then talk about this headline where someone declined a $9 million acquisition at age 18 and then went on to build this company we’ve all heard of. And speaking of nuance and getting a little angry, the headline is sensational and I just want to point out what they got wrong, as well as dive into the difference between working with someone who’s good versus someone who’s great.
So to start off, I want to talk about this “anti-bro” startup movement thing. This occurred to me about four or five months ago, and I put it in this Trello board where I keep my solo topics. And the sentence is, “Is bootstrapping or is MicroConf the “anti-bro” startup movement?” And it felt to me a little weird to even say it. I often don’t want to come out and bring this negativity, this anti anyone mentality, into the world.
But then I was at MicroConf Local in Austin last month, and I want to thank Sarah for encouraging me to talk about this. Because she and I were talking, Sarah’s been to a few MicroConf. She said, “You know Rob, I want to commend you that the community here is so welcoming and it doesn’t in any way have that ‘bro’ vibe.” And she went on to say that she has gone to some startup events where it doesn’t feel great, and the energy in the room is such that it’s not welcoming to everyone. And I actually told her, I said, “I have this idea, and I was going to talk about it but I haven’t and I’m not sure I’m going to.” And she said, “You absolutely could,” and I can give you a bunch of examples. I didn’t want to take it to that point, but realistically, I did want to call this out because it’s something I think we stumbled into accidentally. But then once we got it, we have been very deliberate about guarding.
And it’s that idea of, A, everyone is welcome, and B, anyone can do this. It’s not like you have to be a particular type of person in any way, shape or form to bootstrap. I’ve talked about it as being the great equalizer and I believe that. I believe that almost anyone, now especially with no-code, but with code, with learning to code, with all the resources online today, that people can change their lives through bootstrapping. And not just through software bootstrapping. You can bootstrap product-as-services, you can become a freelancer, you can sell info products. There’s so many ways that bootstrapping changes lives.
And when we started talking about that on this podcast 12 years ago it was two bootstrappers who kind of knew what they were doing, who are not very “bro.” And when I think of “bro” I think of the overconfidence, the swagger, the negging, if you’ve heard of this, N-E-G. It’s like attacking or trying to be alpha, trying to out macho the next person. And it’s this energy that can feel overbearing. So the typical version of that might be, you’re in high school and there’s a bunch of jocks and they’re big and buffed and might makes right. And it just kind of sucks to be around them if you’re not one of them. And it’s a very inclusionary, exclusionary thing. That’s, anyways, how I think of bros.
But what really got me thinking about this originally, is there was a year at MicroConf where four or five people came from San Francisco, and it was crazy. They were the prototypical startup bros. Like they were doing paleo, they were talking about Soylent. They were everything I just said, the swagger, the negative, the, “I’m going to out whatever you … Whatever you do, I have a one-up.” Here I am, running this event, MCing the event, built this great community, and somehow the things they did were all better. And it just came … Really sour, really bad taste in my mouth.
And I remember thinking at the time, “If this is what MicroConf is becoming,” which it wasn’t and it isn’t, “but if this is what MicroConf is becoming, I don’t want to be part of this. I don’t like communities like this.” I’d been to [inaudible 00:05:19] where it’s this big competition to measure who was further along, who was better, who knew more people. It was the name-dropping. It’s all stuff that I just don’t have a desire to be involved in.
And I remember one example was, I was wearing a shirt from … It was called Structure at the time. And it was a pretty nice, fitted shirt, but I am tall and skinny and so my shirts never fit me quite right. And one of the guys was like, “Oh, I see your shirt. This is a tailored shirt tailored for me.” And I was like, “Oh, that’s cool.” “Yeah, you should really get one.” And I’m like, “Yeah, I will. Right now I’m investing in my startup. I don’t have the 150 bucks to drop on a shirt.” But it was this implication that somehow I was less, or my outfit was less, because of that. And again, it was someone’s first time meeting me, it was their first time at a MicroConf. It just feels like there’s a level of respect or a level of appreciation even, rather than starting to criticize or hint that somehow I’m better than you because I have this shirt.
The other comment someone made, it was for these four or five guys in this group, is I showed up to dinner and I think my belt buckle … I’d gotten out of a cab or an Uber or something. My belt buckle was literally two inches off to the side. And one guy said, “You got to straighten your belt. You run a conference now.” And I remember thinking to myself, “What in the (beep) are you talking about, man?” I’ve run five of these events, six of these events. I mean, at the time it was still early, but this was my house. I remember feeling that. Like, “This is my house. You don’t come in here.” And it’s little levels of disrespect that just don’t need to be there.
And no one else does that. That’s the thing. The only people that have come to MicroConf and said things like that happen to be these overconfident folks who had hopped in. And I’m not ragging on San Francisco per se, but we do know that there’s that “startup bro” feel that maybe just doesn’t jive with who I am, doesn’t jive with what MicroConf is, and it doesn’t jive with the community we’ve built.
And so I just want to call this out, because I’ve talked to folks who come to a MicroConf for the first time and they’re surprised that it is so welcoming and that it doesn’t have a bunch of bros in it. And if you’re a listener and you feel like, “I’m not going to fit in.” Like Anna Maste said, what, a year ago when she came on the show, and she said, “I just figured I was a woman with kids, growing a startup on the side. I’m not going to fit into any startup community.” And then she came into MicroConf and found out, “Oh, I fit into a startup community.” That’s what I want to express here. That’s what I want you to take away from this piece.
The second thing I want to talk about is something I’ve been talking to my kids about, but also it’s just constantly circling us on social media, and it’s this idea of, “I’m going to be angry about everything. I want to be outraged.” And I’m not saying that for me, I’m saying it seems like people on social media just want to be angry about everything. And the thing I’ve been telling my kids is, there’s always more nuance to this story, in almost every case. Of course, always is too strong a word. There are some cases where there’s very little nuance. Almost all cases there is nuance.
Elon Musk buying Twitter, cryptocurrency, NFTs, these things are way more polarizing than they probably should be. Now I will admit, Elon Musk buying Twitter is becoming more polarizing in a way that I think it should be, at least as of today. I’m recording this probably a month in advance, and so it’s almost hard to make comments about what will happen if things will completely go off the rails in the next month. But the idea that, say, a company could announce that they were going to issue an NFT and have people just losing their minds about it six months ago, a year ago, was just so surprising to me, because NFTs are just technology. This is being angry at someone for using an SSL certificate.
We can argue about energy usage. My kids were saying, “Well, NFTs use a bunch of energy.” And it’s like, they don’t … No, not necessarily In some cases they do, but there’s nuance. That’s what I’m trying to get to. There’s more to it than the headline take, the hot take that got you to click. The hot take that you read and then didn’t read the full piece. And the full piece, if it wasn’t written by an expert, probably didn’t have great info in it anyways. How many articles have you read in your field of expertise, when it’s written by a layman journalist, and you read it and you say, “That doesn’t make sense. That’s incorrect. They misuse that there.” No one else notices because you’re the expert.
So when the headline says, “NFTs are going to ruin the world. They sucked on all the energy and they’re a scam.” And then no one reads that article, because they just want to see the headline and, again, be angry about it, here’s what I do. I dig deeper or I don’t comment. I educate myself on this. I try to get facts, and I realize these days are facts in quotes now. I still believe there are facts and I try to find them. I try to find the sources that I think are going to deliver balanced information. And if I can’t find it or if I can’t form an informed opinion, then I don’t comment.
And that’s what I’ve been talking to my kids about. I was saying, “It’s cool for us to have a conversation here.” I’m not saying we shouldn’t talk about crypto, NFTs, Elon Musk, or any other polarizing topic. There of course should be discussion and discourse around it. But discussion and discourse on social media is not the same. Almost instantly it turns into name-calling and arguing. It’s completely counterproductive. And it’s just, it’s cool to be mad. And the madder you are, the hotter your take, the more thumbs up and retweets and likes you get, but there’s more nuance to it.
And that is one reason why I spend so little time on social media or when I’m on social media, I absolutely create filters. I mute and block people that I feel like have these takes that are uninformed yet very certain of themselves. The moment I see someone who is so certain of something, using all caps always, all caps never, it makes me very wary of listening to them. Even if I agree with them, it makes me wary that they’re not someone who looks at the nuance of situations, and who has probably formed an opinion based on one or two limited experiences.
The plural of anecdote is not data. I think Sherry heard that when she was getting her PhD in psychology and they did a bunch of research. They said, “Yeah, a bunch of stories does not mean data.” It doesn’t mean qualitative and quantitative or not both important, but this is similar to the startup founder who has one success and then comes out telling everyone, “This is how we should do it.” Or, “I’m an expert. I’ve grown startups and I have all this experience and I have all this knowledge and all these things,” when in fact, an n-of-1 is just that, an n-of-1. So I hope from that you’ll take away, there’s always more nuance, and dig deeper or don’t comment.
Speaking of digging deeper, I got an email for … It looks like it’s from DealMakers. I don’t even think I signed up for this list, but the subject line was, “Declining a $9 million acquisition at age 18 and then going on to build Vimeo.” And I read this. And I texted a friend of mine, Ruben Gamez, you’ve heard him on the show before, founder of SignWell, and I said, “He should have taken the money.” This is an anti-pattern of entrepreneurship. If you’re 18 and you’ve built a business to the point where someone offers you $9 million, you take that (beep) money. That changes your life. You will put yourself through college if you want to go, your kids through college if they want to go. You are set for most of your life with that. Don’t be dumb and believe that this is somehow a virtue to turn down a nine (beep) million dollar acquisition offer at 18.
I was mad. I was angry that they were abusing this headline, and that it was somehow being shown to be virtuous or the right decision. And then guess what? I started reading the piece and it turns out it was a terrible offer. From what I can tell, it was an all-stock offer of $9 million in stock in a private company, some venture-backed company. And then I was even angrier, but I digged deeper. That’s what I did, I digged deeper before I went up and spouted about it on this podcast. Or I never posted it to social media, but if I had, I would’ve then at least had both sides of it of, A, take the money. If you get a life-changing exit, do it, and then take another swing at [inaudible 00:13:12] with your next startup, as this founder did. Because the $9 million acquisition offer wasn’t Vimeo, it was something prior. He had many acts in his play. He had so many more things coming up in his life.
But then secondarily, this headline is clickbait. It’s like, yeah, a $9 million acquisition offer, let’s put that in quotes. It’s a crap offer. Let’s be honest, it’s all private stock. From what I can tell again, it’s like no cash or almost no cash. In that case I probably wouldn’t have taken it. And so therefore the headline that makes me think I should be shocked by it, it’s inauthentic, it’s manipulative.
All right. I feel like I’ve been a little more negative than usual, so I want to do a little positive segment here. I have always been fascinated with outlier performers. Meaning, people who in their field are so good that they transcend that field, some of the greatest of all time. I’ve never played hockey, not particularly a fan of hockey. It’s fine, but we all know who Wayne Gretzky is, and I’m fascinated by how good he was and how he got that way, how he thought about it.
I never played baseball in high school or college or any type of organized fashion. And yet, Facing Nolan is a documentary about Nolan Ryan, just came out on Netflix, it’s very good. And I watched it on the airplane. Not because I care much about baseball, because I’m so fascinated by this man who pitched in the majors for, I believe it was 22 years. He stopped pitching in the major leagues when he was 46 or 47-years-old. He has records people say will never be broken. He has something like 5,000 strikeouts. The number two behind him has 3,900. He is so far, so far ahead of everyone else that it fascinates me.
And I just want to understand, what was his work ethic? How did he think about things? How did he get there? Was it hard work? Absolutely. That is one thing that you hear through all these stories. None of these folks sat on their natural talent. They all worked incredibly hard. And their teammates will all say they were there, shooting baskets, or shooting goals, or throwing baseballs, long after their teammates left. But other names who are outliers. Michael Jordan, Bruce Lee, I love learning about Bruce Lee and how he thought about everything. Paul McCartney. And what’s crazy is, if you watch documentaries about this or you read books about them, is there are commonalities in the stories. And I find that pretty inspiring.
And so I’m going to pull in some audio from a YouTube video called I Learned 227 Beatles Baselines and Discovered This. And the reason I’m pulling it in is I really like the way this basis described Paul McCartney’s baselines and how they developed over time. And how, for the first several years, the baselines were very simple. They’re just root notes. And in fact, so I play a little bass and I play a lot of root notes, and just not that good. I mean, I can play. I’ve played in bands and I can play on stage, but I’m fine. I’m just a solid rhythm bassist.
When you listen to McCartney’s baselines as they progress through the years, the seven years when the Beatles were recording, he really starts upping his game around fifth or sixth album, like Rubber Soul and a couple of others. And he moves from being a root note kind of rhythm instrument to almost being another melody, or to being a harmony behind everyone. And the cool part about this audio I’m about to play is that this bassist shows the basic … He puts in all caps. If you go to watch the video, we’ll link it up in the show notes, but he says, “Not what Paul McCartney played.” And he’ll play it and it sounds perfectly serviceable. And you’re like, “Yeah, that’s cool.” And then when he plays what McCartney played you’re like, “Whoa, that is transcendent. That is so much better.” And I believe that Paul McCartney is one of the best songwriters of modern times, and I believe he’s one of the best bassist of all time.
And this example right here shows you the difference, that even if you don’t play bass, even if you don’t think about music in this way, this is the difference between being good at something and being amazing or being world-class or one of the best of all time. And so the song, Dear Prudence, on the White Album, let’s listen to what Paul didn’t play, the basic version of what a good bassist might play.

Speaker 2:
(singing).

Rob Walling:
And then this is what Paul actually played on the song.

Speaker 2:
(singing).

Rob Walling:
And then one other baseline is from the song You Won’t See Me, and here is What Paul didn’t play.

Speaker 2:
(singing).

Rob Walling:
And then here is the amazing baseline that Paul actually plays on that song.

Speaker 2:
(singing).

Rob Walling:
And here’s what’s funny, even though I never played hockey, didn’t play baseball, and I can kind of play the bass. I can’t read music, I can’t play any of the bass lines you just heard Paul play. I can’t play those bass lines. So it’s not because I happen to music that I am enamored with Gretzky, Nolan, Jordan, McCartney, Bruce Lee, it’s the ability to be so focused on something that you become one of the best at it.
And to link it back to entrepreneurship and startups and bootstrapping, I mean, I think there’s a couple of lessons to take. If you’re truly lifestyle bootstrapping, you want to do what you want to do and you don’t want to be the best at anything, that’s okay. To each their own. But I think I’ve always been a relatively competitive person, as competitive with other people, but also with myself. Competing to get better at things, and I enjoy that idea of mastery. I enjoy when I go back and watch a video that I recorded, listen to a talk, listen to a podcast, read a book or read a essay, and to say, “That’s really good. I’m proud of that.” I think I take a certain amount of pride in shipping something that lives up to my taste.
And I haven’t done that in a lot of areas of my life. I was in bands. We would record music. My vocals were never as good as I wanted them to be, I was always frustrated with it. When I ran track I was never as fast as I wanted to be, no matter how hard I worked. But I have found mastery in other areas where I feel like I’m pretty good at this. Pretty good at recording podcasts now. Pretty good at talking about startups and about thinking about all the stuff we talk about here on the podcast.
And so I think there’s a couple of aspects to this, is if you want to improve, think about how you can put that hard work into play and how you can focus on things. Because I do see people doing too many things if they want to be good at any of them. And launching 10 products instead of focusing on one, or trying to be good at 10 things instead of trying to be good at one, each of these is going to be a decision that impacts how good you can be at something.
And also, this lends itself to thinking about the people that you work with. I’m not saying that the team members you work with, whether co-founders, people you hire, that they need to be world-class, some of the best ever, because it’s just unrealistic. But there is the difference between someone who’s good and someone who’s great. And oftentimes it’s how much they care about it, how much ownership they take of it, and it’s putting in the focused time and working on the right things. I think that’s a big part of this, is you have to imagine the Gretzky and Nolan and McCartney and Bruce Lee, that they worked on the right things. Because if they worked on the wrong things they wouldn’t have gotten better at these tasks.
And I think, again, for you and your teammates or co-founders, what are you focused on? Are you putting in the hard work? Are you putting in the focus, or are you getting distracted by social media every 20 minutes? Are you working on things that last? Are you building a startup that will be around for a while? Are you shipping code that will be around for a while? Are you writing blog posts or essays that will be around for a while? Or are you focused on things like, “I’m going to send out a tweet because I get a dopamine hit,” but that tweet is gone to the wind in an hour. It’s ephemeral.
Each of us probably has a few things we should focus on, and each of us probably has a few things that are the right things for us to be working on. And as I wrap up this week’s episode, I want to challenge you with finding those things for yourself. Wow, so that got kind of deep. I hope that was inspiring for you, rather than a heavy listen. I enjoy doing these solo adventures and hope you enjoy listening to them. This is Rob Walling, signing off from episode 645.

Rob Walling:
Welcome back to Startups with the Rest of Us. I’m Rob Walling, and this week, I talk with Dan Martell about his new book, Buy Back Your Time. I read most of Dan’s book in preparation for this interview, and it’s really an interesting combination of productivity, of being effective rather than being efficient, and also a healthy dose of delegation. And if you’ve read books like The Four Hour Work Week, where Tim Ferris had the first part about being effective and delegating, and then the second part was about starting a business using AdWords and doing smoke tests and stuff. Buy Back Your Time is more of a fully fleshed out model with a bunch of frameworks. Really well done diagrams too, by the way, the book is gorgeous. Obviously, Dan hired a good designer to put this together, but I was impressed by the depth and the uniqueness of these frameworks that Dan uses in this book.
In fact, when I got done reading it, I actually told Sherry that she should read it because she’s right in the midst of hiring a chief of staff and getting a lot of things off her plate, and I felt like there’s a lot in this book that she could learn from, a lot in this book that I learned, and I think if you’re someone who has trouble delegating, has trouble feeling like you’re being effective, it’s obvious that Dan has spent a lot of time thinking about this. And this is from a founder’s perspective, so it’s highly applicable to folks like you and I. And if you’re looking for another book to read, just a couple weeks ago, I was able to get my book website live. It’s my fourth book. It’s called The SaaS Playbook; Build a Multimillion-Dollar Startup Without Venture Capital, and it’s at saasplaybook.com, if you want to see all the ringing testimonials and endorsements from folks like Jason Cohen, Dharmesh Shah, Noah Kagan, and so on. And read a little more about what’s in the book.
See the cover, see a few picks of the inside. The designer right now is working on all the diagrams, and this is why I noticed Dan Martell’s diagrams in Buy Back Your Time and how nice they are because I’ve been looking at my own for the past few weeks. But anyways, head to saasplaybook.com, enter your email if you’re interested in hearing about the Kickstarter, going to be doing that in a couple months. But with that, let’s dive into my conversation with Dan Martell.
Dan Martell, welcome to the show.

Dan Martell:
Rob. Thanks for having me, man. Obviously really excited, big fan. This is cool. This is exciting.

Rob Walling:
Yeah, it’s going to be fun. We’re going to talk about your experience and about your new book, Buy Back Your Time. If folks think shut up and take my money already, buybackyourtime.com. The book came out today, as this episode goes live. You told me offline, two and a half years to write this book. That’s a lot longer than a lot of people take. What was that process? Why did it take so long?

Dan Martell:
It took a while because… It’s funny, Buy Back Your Time is about the buyback principle. My philosophy in life is, before I say yes to something, I actually ask myself the who question, who do I want involved in this project? So it started with Ron, literally, he’s my book CEO. Ron Friedman, he’s multiple time bestselling author. He called me up, consumer of my YouTube channel and was like, “Dude, how do you not have a book yet?” And I was like, “Ah, it’s just not a priority. I’m kind of busy. I’ve run two companies.” And he was like, “Well, you need a book, would you collaborate with me on it?” And I was like, “I’m open to it. Tell me what you got.”
And it’s cool because I think, I don’t know about you, Rob, but the more you build and the more you stay in your lane and you just really try to focus on becoming tip of the spear, and Naval talks about this, the three levels of luck, where level one is you’re just lucky, you win the lottery. Level two is you work hard, you become lucky. Level three, if you’re great at what you do and you do one thing. I’ve only ever done, similar to you, is just software and B2B SaaS.
You eventually have other people come to you with their luck. So their level two luck comes to you. And that’s how I feel with Ron, he’s the one that came to me. He’d obviously had success in books and he was like, “Hey man, I’d love to help you do this.” So that’s why it took two and a half years is because we then worked on a book team, and I also know I’m going to write dozens of books in my career, and I wanted to lay down the foundation and process.
So I actually approached this as almost building the rhythm for writing a book every three to four years. So it wasn’t just, sit down and write, it was, okay, researcher, editor, agent, book team. Even on the marketing side, Daniel on my team who’s managing the launch, these are people I want to work with on all my books. So that’s really why it took so long. And then just the amount of editing, I probably earnestly edited it three big times, full edits. The first version was twice as long, and then it was like 70% or 30% less. And then we went away for five days with my copywriter, Chris, and we just attacked every paragraph in sentence and then did a final restructure, because I’m very framework focused and I remember the first version of my book, my editor Noah goes, “I need to explain…” He’s very kind.
I was like, “Dude, can you just skip to the end?” He was like, “I need to explain to you the difference between a university textbook and a bestselling book.” And I was like, okay, let’s… And he just explained, obviously. I’m just so… If you started reading the book, for me, it even feels like I wanted to grab some of these frameworks and put them in first paragraph. But he’s like, “Look, we need to get people invested in the story and invested in the concepts and then we can start unpacking it.” So I’m really, really, really happy with where it landed. I just finished reading the audio book not too long ago, added bonus stuff.
So literally at the end of each chapter, my audio engineer, Jessica, has never seen somebody do this, but because I do so much videos on YouTube, I literally would just riff. And I would just, at the end of the chapter, I’ve been doing a lot of keynotes on the topic. So I grabbed all the new stuff that obviously didn’t make the book and added it as audio bonuses. So yeah, it’s just been an incredibly fun and creative project, but that’s why it took so long.

Rob Walling:
Instead of just building a book, you kind of built a book factory, I’ll say. Like in programming, there’s factories that would make other objects. And I don’t mean that in terms of churning out the content, but you built a whole structure around producing a book every three to four years, which I think is super cool.

Dan Martell:
And I use an agile development process. I literally took the same philosophy of software development and just applied it to book writing, which drove a lot of my team members crazy because that’s not normal, the way we did each chapter and created a review and literally ran it a sprint process. It was kind of awesome for me because it kept me really close to the final product so that when I came back to edit, I didn’t feel like it was just such a departure. But yeah, it was neat to try to figure out what does the industry do, and then what do I need to have happen so that I feel good about it? And then try to merge both.

Rob Walling:
I just finished my fourth book and I think I’m going to be running a Kickstarter here in the spring, and they’ve all been self published. What I’ve never done before is hired a project manager, which I did this time, then she went out and hired an editor, a cover designer, whatever else, all that there. The interior layout, the interior designer for images, blah blah blah. And now, to your point, I’m already excited about writing my fifth, because I now have a team that as long as they’re around in a year or two, the next one will be coming as well. So I guess that’s what entrepreneurs do, is we build structure and we build repeatable things. If you’re used to building SaaS and software, you don’t want to do it once and throw it away, you want some type of SOP. And so I want to dive into what you call the buyback principle, which is, don’t hire to grow your business, hire to buy back your time. A little counterintuitive, talk me through what that means, flesh that out for listener.

Dan Martell:
Yeah, I call it calendar over capacity. So oftentimes, entrepreneurs, they just keep building. And people have never built companies, they don’t know any better, there’s nothing wrong with it. It’s like, you start a business, an agency, a software company, and then it’s like, I need a hire developer, I need to hire somebody to do copywriting or whatever, and you just keep hiring. The challenge with that approach is, as the CEO, at some point, you’ll hit what I call the pain line. And the pain line is this point where any more growth will create more pain in your life than you’re able to deal with. And what that means, usually it happens, it is different for different people to hit ceilings, but on average, it’s usually about 1.2 million in revenue and about a dozen employees. Where you wake up, you go to work, and you manage all these people.
Are there projects being done? Are they doing it right? You’re checking their work, and you have all these aspirations to get a ton of stuff done that day, and it’s literally three or four in the afternoon, you haven’t done anything except being in meetings. And you’re literally doing all the work that nobody else wants to do, right? You’re managing and project managing and coordinating and paying bills and dealing with fires and all this stuff. And what happens, and this is the biggest risk for business, is the pain line is, they usually, when entrepreneurs feel this, they do one to three things. I call them the three S’s. They either stall, they decide, “I don’t want to grow anymore, I want to just grow five, 10% a year, or last year was more profitable and I worked half the time, so I’m going to go back to that size.”
The challenge with stalling is, your customer’s not going to stop wanting more things or the market’s not going to stop desiring growth. GDP growth happens whether you like it or not. And the truth is, and this is a big one, Rob, as you know, your team wants more opportunity. So if you decide that you want to stall, you’re inadvertently slowly dying. Selling is the next one, which, we get the call, it’s like, “I don’t like this anymore. I thought it would be easier. I had this vision of freedom, my life does not look like that. Maybe I should go do something else.” And then third is sabotage. And that’s an interesting one because sabotage is dragging your feet responding to an email. Because you have a potential partnership in your inbox that could grow your business or you don’t make a key hire decision quick enough and the person takes another job.
All these things that are going to slow you down from winning and succeeding, but you have this psychological adversity and you can feel it on your chest. It’s like pressure and noise. I even talk about the five assassins because a lot of these are self-inflicted. I literally just got a message from an entrepreneur that admitted to me that he’s been drinking way too much this year because of that pressure and noise, and that’s the pain line. So the philosophy of the buyback principle is designed to avoid doing that or hitting that point, because if every time you deploy dollars for labor, right? Because that’s all hiring is, right? I have a resource and I deploy it, that you start first with your calendar and you look at the things that take energy from you and that are low cost to give to somebody else, so that you fill it back up with things that make you more money, that light you up.
Then as you grow through that process, it’s inevitable that you will actually build a repeatable, scalable model that doesn’t have a bottleneck. The reason why they call it a bottleneck is because the constraint is at the top of the bottle, which is the CEO. And when I’ve built all my companies this way, it’s felt way lighter and easier to scale. Whenever I violate this rule, and I go and I hire… I have clients that are like, “Yeah, I’m going to hire a COO.” And I’m like, “But you don’t even have an executive assistant.” They’re like, “What’s the difference?” I was like, “Huge difference.”
Start by just freeing up your calendar and do the work that a COO would do, and get the business to a place where it can actually absorb that type of talent and that cost structure, because that’s not a very efficient way to spend money. So in the book, I obviously break down a bunch of different frameworks like the buyback loop, how to do it, but that is the core reason. If you don’t do it this way, most businesses will end up hitting that pain line and just not succeeding. And I just want more entrepreneurs to build. The whole point is not a four-hour work week, it’s literally to buy back your time to create your empire, to create more art, to give back to the world.

Rob Walling:
So I find it really interesting, you’re talking about hiring a COO without an assistant. You have a whole chapter dedicated to hiring and delegating to assistants specifically. I guess talk a little more about that. You use an assistant extensively. In fact, when we scheduled this podcast, I basically scheduled it with her. And she used my link and then I emailed for the book and she’d said, “Hey, this is Dan’s assistant. I got to this email before Dan did and I wanted to do a quick response.” And so she sent me a copy of the book. So it does seem obvious as you say it, but I’m not sure that I’ve heard someone put it in those terms before of, COOs are expensive folks, director of operations are expensive. If you’re a bootstrap, maybe mostly bootstrap founder, you don’t have the money to hire that. But oftentimes, an assistant, especially if we were to go overseas, they’re not terribly expensive, even for a good one. So flesh that out a little more.

Dan Martell:
So in the book, I have a chapter dedicated to working with an executive assistant because it is literally the highest form of leverage. If I was starting from scratch, we always say, “Start from zero, what would you do?” I would literally hire an executive assistant. I would sell everything I own to keep that person in my life, because it’s literally a one-to-one, 40 extra hours a week of me being able to execute. So in the book, The Replacement Ladder, I literally sat down to explain to people there’s five levels. If you were trying to start from zero and work your way through what types of activities you would hire and what sequence, and it’s based on, again, my background’s in software, I look at it as a math problem. It’s like, I have dollars, and I need to buy back time. What’s the types of activities of the lowest cost that free up my time to go work on the level above it?
So level one is administrative work. And where I think a lot of people make the mistake is, the outcome goals you have to delegate is a hundred percent of your inbox on a hundred percent of your calendar. Why is this? Because I remember one time my brother, he called me up and he’s like, “Okay dude, what’s all the big deal with this executive assistant? I’m super busy,” and he was running a multiple eight figure real estate portfolio and company. Didn’t have an assistant, finally hit his capacity. And I say, “Well, here’s how it works,” And I gave him the structure. Six months later I see him and I’m like, “Hey man, how’s it going?” I was all excited to hear he hired somebody and they were helping them and he goes, “Ah, I don’t know what the big deal is.” And I go, “I know what the problem is. Did you give them a hundred percent of your inbox? As in, they triage your email first and only bring to you the things they don’t know how to deal with?”
He’s like, “No, I just CC them on stuff.” I go, “Exactly. Your inbox is nothing more than a public to-do list for stranger’s, goals and dreams on the internet.” That’s kind of crazy, but that’s how it works. So having somebody else triage that first, all my personal, professional emails go into one inbox, I’m involved in multiple companies. And then my executive assistant, and the reason why I call her an executive assistant, she’s earned that title. Now you can start with a virtual assistant part-time, but you still should delegate your inbox to that person and they triage, and they manage the calendar. Because for me, the way it works is, anything I need is in my calendar. It’s structured, the notes are next to it. When I get on a meeting, it’s all in there, they take care of that, and that way I can go back to back, back and be a hundred percent present.
That’s level one. If you have that dialed in, level two is delivery or fulfillment. It’s, whatever you do, once you sell a new client into your business, somebody else should start to help you with that. It could be onboarding, customer support, could be activating or setting up accounts, managing the customer communication. You might still be involved in the core thing that you do, if you’re a coach, in my world, I still do the coaching, but I do zero other part of that conversation. And that’s level two to just help you build more bandwidth in your calendar. Level three is marketing. You need to have somebody wake up every day and focus, in the two areas there is campaigns and traffic. Who’s monitoring the land?
Rob, how many times have you had something break out there and not know for weeks? It happens to me all the time. A funnel is like, a link’s broken in a funnel, and we’re running ads to this thing. And somehow, somebody saw a comment on a Facebook ad that’s like, “Hey, the thing doesn’t work.” I want somebody to wake up every day and literally monitor traffic, monitor campaigns, and generate new leads for the business. Level four is sales. Now, I actually think most founders should keep those conversations. If you’re buying companies, that should be you, if you’re selling, that should be you. Until it becomes 50% of your calendar. If you’re spending 50% of your calendar on sales or BizDev or whatever type activities, that’s when it makes sense to actually buy back your time and give it to somebody else that owns a hundred percent of the initial conversations in the follow-up.
The ROI of having somebody just pull forward deals in your calendar year that you would otherwise, three days here, four days later, vacation for two weeks, you just put things off. Pulling that forward pays for itself, no problem. And then level five is leadership. Level five is your executive leadership team. That’s when you start thinking about hiring people to lead departments, and you might do director levels or whatever. But to me, those are the five levels of the buyback time, the replacement ladder. If you wanted to argue with me, what’s the dollar I have to spend to buy back the type of activities out of my calendar in the most efficient way for me to fill it up with things that make the business more money and drive things forward?

Rob Walling:
And in order to get there and to evaluate, you have this thing called the loop.

Dan Martell:
Buy back loop.

Rob Walling:
Audit, transfer, fill, right?

Dan Martell:
Yeah.

Rob Walling:
Once you experience the pain, then you audit, you transfer and fill to find those three to help folks understand how to go about this process.

Dan Martell:
Yeah. So the way I think about it is, there’s this process that will never end. Unless you just decide I don’t want to grow anymore because I’m super happy and life is awesome. Most entrepreneurs do not sign up to that kind of mentality. But the buyback loop will always be part of your life. And essentially, once you feel like you’re at capacity, I probably do it every four months just because I’m adding, I’m adding, I’m adding, and I’m trying to buy back my time. Every four months, I do what’s called time and energy audit. So the time and energy audit at a high level is auditing your calendar for two weeks, highlighting things in red that suck your energy, highlighting in green things that light you up, and then using a one to four dollar sign annotation to tell yourself if it’s inexpensive to pay somebody else to do versus expensive.
Once I do that audit, then I put all the things that are red in one dollar sign in a bucket and I try to find somebody else to do it. If I don’t have any $1 signs, it’s only two dollar signs, then I take all the reds that are two dollar signs and find somebody else to do it. It usually correlates to the replacement ladder. But at the end of the day, once you have that list, then you have to figure out how to transfer it. And this is where I talk about the four Cs in the book. But one of my, I think, strategies that are unique, that most people work really hard on, is getting other people to be trained up and create systems and, what people call SOPs, I call them playbooks. But in my world, I use this thing called the camcorder method. I literally record myself doing the work while I’m doing the work so it takes me no extra time. I call it net time.
And then when I’m ready to hire somebody to do the work, I’ve got three to five videos of me doing it and talking about it, that I then give to them, and that becomes the first week of onboarding. So if I’m hiring somebody to manage my inbox, I literally have maybe five videos, 90 minutes each of me starting at three o’clock in the afternoon and going through my inbox and just talking out loud. People don’t realize simple things like, if you email me, Rob, I’m going to grab that email and I’m going to let the person know, “Hey search my inbox to see if we have context.” Okay, you’re going to see these emails, I’ve known Rob for a really long time, then move that conversation forward. You don’t need to ask me. If the person has a history with me, schedule the call.
So you start talking out loud, all these things. So then when you hire that person, they spend the first week training on those videos, they create the SOP. So that’s what’s very unique about me. I give them a template, it’s very simple structure, but then they create the process that they saw in the videos, and it creates a feedback loop for me as the hiring person, to know that they understood what I was asking them to do. And then if for whatever reason, in six weeks, two months, three months, it doesn’t work out with them, I now have training and now a playbook that the next person could follow. See, most people will hold on to somebody that’s an under performer, or not hire because they’re fearful of the amount of time it’s going to take to get them up to speed, and that they’re going to have to take out of their calendar.
It actually creates this compounding effect where it’s like, I don’t have the time to train them but I don’t have the time to do the work. So then you start cherry picking the most useful stuff, but at the end of the day, you just need to take the whole thing, get it off your plate. That’s transfer. And then the last one is fill, and this is where most people get it wrong. Let’s say I gave somebody an extra weekend or an extra day in their week, most people wouldn’t know what to do with it. It’s like, by wave of a magic wand, you now have Friday open, what are you doing on Friday? Well, they’d probably get caught up in stuff and sharpen the song, clean up some systems or whatever. But the truth is, you want to fill your time up with things that are going to propel your business forward.
And there’s only three buckets of those things. Number one is skills. I kind of consider a ladder, so on the left side of the ladder, the first part is skills. Every entrepreneur has to develop skills. And when I say skills, I also mean strategies or solving problems. So it might be like, how do I get more leads? How do I improve my sales process? How do I improve my product development process? How do I increase, decrease my churn? Those are skills that you have to acquire. On the right side of the ladder, the second area to invest time in, is in beliefs. For me, I know if I want to achieve a higher level of success, I ask myself, “Who do I need to become?” Who I am today is not the person because if it was, then I’d have that result in my life. It’s very simple.
So then the question is, how do I develop those beliefs? A lot of people don’t audit themselves. They don’t meditate, they don’t journal, they don’t have somebody they talk to, they don’t have a coach, they don’t have people in their lives that they can challenge their beliefs, and they just keep going through the same motion. At the end of the day, there’s no lack of knowing how to do something. It’s free on YouTube, it’s Google, everything’s there. What stops people is the belief, the confidence, the tenacity, the lens to look at the activity to actually drive that change forward. And then the center of the ladder, the steps, those are character values. That’s who you become. I’m always telling people, “You need to fill up your calendar once you free it up in the next level of area.” So if you don’t have a clear direction where you’re going, what that looks like, to then work backwards to say “Okay, I need to develop this skill, this belief set.”
Some people, it’s just learning to let go, control. A lot of the concepts in the book, and that’s why I put a ton of belief stuff in there. I know that it’s a personal challenge of letting go, right? Because they’re going to be like, “What if they mess up? What if they reply to somebody and they say the wrong thing?” It’s like, my rule, and I talk about this often, is 80% done by somebody else is a hundred percent freaking awesome. Any hour of activity that somebody else did on my behalf that I don’t have to do, even if they did at 80%, which means they will make mistakes, I am so okay with that. I am grateful for that, I am thankful that that happened, so that I didn’t have to do it. And it’s just so funny how people can be so critical about stuff that they don’t want to do.
It’s like, why are you so critical about it? Again, beliefs and activities in your character, who do you become? So that’s what the audit transfer fill process is, and it never stops, right? And it’s like skills, invest in seminars, training, reading, developing, just making it part of the process. Because every person out there that you admire as a entrepreneur, this is what they do. They may not have a framework for it, but I guarantee if you ask them, how have you grown into the CEO that runs this multi a hundred million dollar company? They’re going to tell you a story that sounds very similar to this process.

Rob Walling:
Yeah, the evolution, the smartest people, the most successful people that I know, the people that I admire, I’ll be honest, they’re constantly evolving. They’re so different than they were a decade ago. And myself included, not that I’m admiring myself, but I’m just very different. And I wasn’t ready to have success until I had a bunch of my, well you’re calling them beliefs, I always think of it as mindset shifts though. And it’s the ability to say, “I can do this.” For me, it was a self-confidence thing that I had to work through. I really like what you said about inability to let go. A belief that I’m the only one that can do it, right? The one that can do it best. You talk specifically about two objections, and why they are incorrect. And one is, no one does it right, and the other one is, I can’t afford it.
And the reason I bring these up is because I especially fell into the trap of the second one, when I was bootstrapping Drip. I was doing all the stuff you described it earlier, we were at 10 employees, I was doing all the crap that I didn’t want to bother anyone else with, I was doing the worst jobs, I didn’t like it, started to burn out. And my excuse at the time, my reason at the time was, well we’re bootstrapped, and if I make another 10 grand a month, I got to hire a developer because it’s super competitive. I can’t afford to do this. So talk us through why no one does it right, and I can’t afford it are essentially fallacies that we make up.

Dan Martell:
Yeah, the truth is… And Steve Jobs said this, he said “It’s easy to hire somebody and tell them what to do. It’s hard to hire somebody and have them tell you what to do.” If your experience today with hiring people is that they don’t do it right, then I know the problem, he’s staring at you in the mirror, and you have to confront that. The skillset, like I said, skills of being able to identify and hire great people that play at the things you work at is a skill. I consider myself world class at this skill. And I had to become that because there’s only a certain level of aspiration you can have in regards to the impact you want to I have on the world, that you can do by yourself. At a certain point, it’s like okay, if I want to do more, it requires higher talent, higher caliber people.
And that is a skillset. I actually talk about it in the book, in the talent pipeline framework as an example. If you’re not doing a test project with somebody that you hire to evaluate, Seth Gooden said this to me once. He says “I can’t work with you unless I work with you.” Again, that’s a strategy, that’s a skill that’s around hiring great people. But somebody that comes in that can not only play at the things you work at, it’s the most beautiful things. My bookkeeping team and finance team, they nerd out on spreadsheets, Rob. It would drain me if I had to sit there and pivot tables and analysis and all this stuff and reconciling bank accounts and all this is crazy. But it’s almost like, for them, it’s a game. They wake up in the morning to click all the accounts and they do their thing and they tag stuff and they’re happy.
That’s their happy place. So that’s one thing. And then on the afford side, that mindset, the truth is that, first off, if you don’t have an executive assistant, you actually do have one. It’s you, and you are an incredibly expensive one. That’s just a fact. At the end of the day, when people understand the value of their time, and that’s where I start the book at with this concept called the buyback rate, because you need to understand that you’ve built a business that creates an economic outcome, and you work, so that means essentially, you have a income per hour that you produce based on your current business, and then the only way to increase that capacity is for the business to grow, and you to work less so that… It’s not linear, right? Because you can only work 120 some hours a week until you burn yourself out.
I want you to get better so that a 30 hour, 40 hour week has a disproportionate output. But that’s only going to happen if you hire people to buy back the time to have the space to develop the skills that are more meaningful. Jim Rohn, this OG motivational guy back in the day, he’s like, “Your compensations based on the value the market decides.” The highest paid CEO in the world today makes a hundred million a year. His name is Tim Cook. The reason why the board and everybody in the world has no problem paying Tim Cook a hundred million dollars a year as a CEO is because he made a trillion dollars for the organization. There is levels to your ability to produce a higher level of income, which increases your buyback rate, which means you can hire more people. The problem is, I think what you experience, Rob, is the same thing. Is people hire expensive folks because they’re adding capacity, and they’re not buying back their time.
Now, the cool part is, if you follow the replacement ladder, you can get to a place where you’re adding capacity. And most of the time, when you’re buying back your time, you’re actually increasing the business capacity. You’re just doing higher caliber work. I want to free up myself from doing administrative work so I can go lead my teams, so I can work on product and work on customer success, not answer support tickets. I can pay somebody else to do that and train them up. I want to build the machine that builds the machine. I want to work on strategy and systems. Like you said, that’s repeatable, scalable. And the more I do that, then the more efficient the whole thing becomes, then the income goes up, which means my buyback rate goes up.
It’s a very simple mathematical equation. And that’s literally my scorecard. Every year, I’m like, did I become better? Because if I became better, then that means my income went up and the hours I worked to produce that income should have a higher rate. And if it didn’t, that means that maybe this year was a push. I can learn, adjust how I’m filling up my calendar for next year, and then work through the same buyback loop so that I’m more effective.

Rob Walling:
And as we wrap up, I want to ask you about one more thing. It caught my eye. Towards the end of the book, you have a chapter where you cover four hacks, and we won’t have time to cover them all today. But you have one called 1-3-1. It happens when someone comes to you, a team member comes to you with a problem, and I think the 1-3-1 helps define that and tighten it up. Talk us through that.

Dan Martell:
In the book, I realize, as I was writing it, I needed to add some leadership frameworks because if you just hire a bunch of people and you still show up as this chaotic, crazy CEO, which all CEOs are crazy, being an entrepreneur is a crazy concept, it’s not normal. I had to give them the antidote to their venom, a little bit. And one of them is, they have this desire to just tell people what to do. And I get it because it’s like, I see the problem, I know how to solve it, you’ve never solved it. I’ve done this a hundred times, go do this. Challenge is, we’re not developing our people. And the 1-3-1 rule is a core principle, and it’s part of our culture. In all my companies, I literally, it’s shorthand, we use it all the time. What’s your 1-3-1? And it’s essentially asking the person to come to you, and first off, describe one specific problem you’re talking about.
Because oftentimes, people come to you and they talk in circles. I usually politely ask somebody to stop and say, “What is the problem you’re trying to solve?” And then they define it. Then I ask them “What are the three options they evaluated?” At that point, usually a person says, “I don’t know.” And then it’s like, “Cool, do you need more time to go do some research to come to me with three viable options?” And they’re like, “Yeah, I’m probably going to need some time.” “Perfect. Want to meet tomorrow, same time?” “Yeah, tomorrow works perfect.” “Great, I’ll see you tomorrow.” And then they come back with those options. I had Adam, my head of recruiting, came to me a long time ago and he was like, “We got to hire 12 people this quarter.” And I was like, “Yeah.” He’s like, “Well how are we going to do that?”
And I was like, “I don’t know, but I think your title is head of HR and people so you’re going to tell me.” And he’s like, “But I’ve never done this before.” I go, “That’s okay. You want to see my to-do list? A bunch of stuff I’ve never done before.” But then I was just joking with him because he knew where I was going. But I wanted him to understand, I’m not here to do your job. And I think a lot of people might have a hard time with that, but that’s just the truth. It’s like, look, if I have to do everybody’s job, I’m going to be the bottleneck. I don’t want to be the bottleneck. So I just said, “Look, can you take some time, do some research and come back?” He didn’t even come back. He texted me and he’s like, “I got it.”
I’m like, “I knew you got it.” So the three viable options as the CEO is actually there because, most of the time, Rob, we just want to know the person thought through things the way we would, right? That’s it. We actually know that they have the answer, but even if they gave us the answer without telling us the three options, then we would ask them, “Well did you consider this and did you consider this?” It’s not that we don’t trust them, it’s just, because that’s how we do it. We literally running scenario planning in our head all the time. It’s like, well if this happens, this and this. I’m going to go with this option because of these reasons. And then the last one, so that’s one specific problem, three viable option. Then the one is their recommendation. 90% of the time, it’s like, yep, that sounds great. Do that.
And why this is so powerful is it pushes all the decision and problem-solving to the front line. And if you don’t teach this to your leaders, people that report to you, then you’re going to inadvertently teach them how to do… And I talk about this more in the book, transactional management. You’ll teach them how to do transactional management and then they’ll bottleneck. So it’s actually a learned strategy that’s negative that’ll stop you from growing because you taught your leaders that process. Whereas the 1-3-1 rule creates this uncapped opportunity because everybody’s coming to you. Here’s a problem I saw, here are my three options I looked at, and this is the one I’m recommending. And the person can go, “Oh, well consider this, tweak this. But I think you nailed it. Perfect.” And eventually, you essentially develop people to the point where they don’t even need to come to you unless it’s really big, and the business moves forward so much faster.

Rob Walling:
Buybackyourtime.com folks, want to check out the book. As I said, it was released today. And if folks want to keep up with you on Twitter, you are @danmartell. Thanks so much for joining me, man.

Dan Martell:
My pleasure, Rob, thanks so much.

Rob Walling:
Thanks again to Dan for coming on the show again, byebackyourtime.com if you are interested in learning more about the book and ordering a copy. Thanks again for joining me this week. I hope you enjoy the variety of episodes I’m trying to bring you. Today was an interview with a startup founder who is now an author. Last week was Listener Questions with Derek Reimer. Week before was about no code. The week before was solo listener questions. I’m trying to really mix it up, keep a lot of variety of material coming your way in different formats, because I know some people love certain episode formats, but I like to bring information, new information from outside our little bubble.
I could just have all MicroConf people come on this podcast and we would start to say and think the same things and it becomes a little too homogeneous for my taste. And so I’m trying to A, bring in outside perspectives, but also, looking at the same topics from different viewpoints, right? And different perspective in order to try to fully flesh out our understanding. And hopefully we all learn something along the way. Thanks for joining me this and every week, this is Rob Walling, signing off from episode 644.

Rob Walling:
Welcome to another episode of Startups for the Rest of Us. I’m your host, Rob Walling, and today with Derrick Reimer I’m answering listener questions. We cover topics ranging from how to implement feature flags in your SaaS app, combating imposter syndrome, whether to use the Stair Step Method and more amazing listener questions from listeners just like you.
But before we do that, I want to let you know about MicroConf US next April 2023. Lianna Patch and I will be MC’ing. We have amazing speakers, Claire Suellentrop, Dev Basu, Patrick Campbell. We have workshops. It’s going to be great. It starts April 16th and runs through the 18th in downtown Denver, Colorado. Head to microconf.com/americas if you want to find out more and buy a ticket. Tickets are on sale now. They are going fast. I’d love to see you there. And with that, let’s dive into listener questions.
Derrick Reimer. You’re back on the show.

Derrick Reimer:
Thanks for having me back.

Rob Walling:
By popular demand, and we’re answering listener questions today.

Derrick Reimer:
Whoo hoo. Let’s do it.

Rob Walling:
What led to this is there’s a lot of listener questions all of a sudden, and I’m not exactly sure. I think it’s the YouTube channel ticking up and just more people getting interest, but a lot more questions than in the past. And the interesting thing is I started going through them and I’m like, “Got to answer the video and audio first.” The first question we’re about to answer, I was like, “Oh, I have thoughts on this, but who know who would answer this really well is Derrick.” And then the second one, I was like, “Oh, Derrick would actually probably answer this better than I would.” So then once I had two I was like, “Yeah, I can build a whole show around this,” so I pulled off several questions and we’re diving into them today.

Derrick Reimer:
Very nice. Yeah, I always enjoy these episodes because I think you always invite me to the board where you’re working on organizing your listener questions and I can see the ones in the Derrick column and there’s just enough volume so all of these, on the one hand sort of easy to answer because they’re things that you know I would have thoughts on, so that’s always fun.

Rob Walling:
Yeah, right in your wheelhouse. So we’ll kick off with our first question from Alan and we’ll roll that here.

Alan:
Hi, Rob. It’s Alan from APIable here. I have a question regarding SaaS products. So we currently only have one plan in our SaaS product and this means when a customer logs in, they get access to all of the features that are there, whereas we look to add a second and third plan to our product. I’m wondering if there’s any software out there that can help us to toggle features on and off, for example, to record which customers on which plan to upsell the customer to a new plan. I can, of course, ask my developers just to program all this stuff, but it’s probably going to take two, three weeks, something like that, so maybe we could do this quicker.

Rob Walling:
So just to be clear, he’s talking about adding plans and these are often we call them pricing tiers, but yeah, pricing plans. And he’s saying how can we toggle features based on plans and record which customers are on which plan? What do you think, sir? You may have done this once or twice, Derrick.

Derrick Reimer:
I’ve done this a number of times, yeah, so I mean I think thinking about structuring your billing engine in a sense and how your billing engine marries up with your SaaS product, my thinking on this has evolved over the years, but certain parts have stayed the same. So years ago before Stripe had a nice sophisticated subscription billing engine where they could track all your plans and all that kind of stuff, we used to build all that stuff in the app and you would own the [inaudible 00:03:40] job that hit the payments API and charged the customer and all that kind of stuff.

Rob Walling:
Those were the days.

Derrick Reimer:
Those were the days. Thankfully we’re beyond those. There’s Stripe subscriptions, or Stripe Billing, I think they call it. There’s Chargebee and Recurly. There’s a bunch of different products that have different strengths and weaknesses that you could delegate that out to.
So these days what I do is use Stripe Billing, keep it simple, put my plans there, and then there’s always a certain amount of state that I want synchronized with my local database. And thankfully Stripe has… I mean their API has definitely gotten bigger and more complicated over time, so that’s one thing to watch out for, but fundamentally they have web hooks that you can set up listeners for and listen for when a subscription activates on a new plan or if you’re using Stripe’s billing portal thing, which I’ve been making use of that with SavvyCal and it’s pretty elegant so I don’t have to write the code, that allows the customer to go in and change their plan level.

Rob Walling:
That’s what I was going to ask. So if I’m in SavvyCal and I go to change my plan level, is there an I frame embedded in SavvyCal or do I actually go to a stripe.com domain and that’s how I change it?

Derrick Reimer:
Yeah, it’s a full redirect. I think people have just gotten used to that enough, you know? Even when you’re buying something on a Shopify website, it kind of redirects from the fully designed thing over to a checkout flow that looks more stripy, looks more stripped down. So, yeah, I think these days using the customer portal is… I don’t hear any customers complaining about it or feeling weird about getting redirected to Stripe. And that has the interface for updating credit card, changing plan, adding their tax ID number, all that kind of stuff so it’s nice not to have to own any of that code.
And then when those changes happen, we receive a web hook from Stripe saying a change happened and there’s products and prices in Stripe. The product would be the basic plan and then prices, you might have one for your annual tier and your monthly tier, say, so I keep a mapping of those. Like basic plan and SavvyCal maps to this price ID and this interval maps to this product or whatever, and then when those changes come in, I just update the record in the database that maps that subscription and then you can use that anywhere you need to. Anywhere where it makes sense to sort of gate a feature, you can just check that flag without having to call out to Stripe.
That’s why you want some of this state synchronizing your database. I always aim for minimal amount of state synchronization so I don’t have their list of invoices, for example in my database because if I need to show them that, I can either send them to Stripe UI or make an API request, and it doesn’t matter if it’s slow, but for things like choosing to show a certain feature, you’re going to want that to be fast.

Rob Walling:
And so when you go, actually in your code, to show a feature or not, do you use any type of… I think of Rails having a RubyGem and there’s a bunch of them for feature toggling, right? And I’m sure Laravel has them and every framework probably has them. Do you do that or are you more hard coding where it’s like if this plan then blah, if that plan then blah?

Derrick Reimer:
Yeah, I have a mix of this honestly. So I have kind of one place in the code base where I can ask the question, does this user have access to this certain feature? And so I have one place where a lot of that logic lives that’s kind of explicitly tied to a plan. Sometimes you have a feature where it’s like normally this is on the premium plan only, but I want the ability to enable it for a particular user without moving them fully to the premium plan. And so for me, it’s always a case-by-case basis. It’s a judgment call when you’re architecting it, but if it’s going to be something that you might want to enable, then I usually opt for the pattern of having a flag on the user record that you can set explicitly so you’re not purely relying on the plan level that they’re on, if that makes sense.

Rob Walling:
Absolutely, because I remember we used to have, let’s say, beta or early access individual features with complicated features, especially in Drip where it’s like this one, it might have a bug or it might be a little janky but it’s a whole new UI or it’s a whole new something, and we wanted to test it out in our own accounts and then we’d get… You know, it was Brennan Dunn or Ruben Gamez, just like a Drip-friendly, friend of Drip, and we would say, “Do you want to check this out?” “Yep.” So we’d feature flag, so that’s how you were doing it at the time.

Derrick Reimer:
Yeah, and so for that, for pre-releasing a feature, currently I make use of a library for doing this. There’s one for Elixir Phoenix called Fun with Flags that is just a little subsystem where, and they even give me a little administrative UI that I put behind special authentication so that just us admins can go access that, and just say for this user ID enable this feature, or you could even do things with it like for 50% of users, enable this feature if you want to-

Rob Walling:
That’s cool.

Derrick Reimer:
… gradually roll something out.

Rob Walling:
Yeah, that’s neat.

Derrick Reimer:
It makes sure that it loads the flags in memory so that you’re not doing a bunch of database calls every time you want to ask the question of who can see this feature. And yeah, I make heavy, heavy use of this. I mean, part of our methodology when we start working on features, we break them up into small chunks and we’ll often start shipping little pieces of functionality into production from day one and set up the feature flags.
So usually that’s the first step is figuring out what flag this is going to be under and then anytime we’re passing a user object around, we have a little object of flags on there so we can just check it wherever we need to and, yeah, that helps us really push forward quickly on things and get it into prod and de-risk things.

Rob Walling:
Right, and that’s the big advantage of that approach, right? Because someone who’s been writing software for 20 years hears that and thinks, “Oh, my gosh, pushing stuff into prod that much. The QA and this and that,” but it’s like, “No, it’s 20 lines of code that I wrote today and I’m going to push it in and we have massive unit test coverage and so the odds of having a regression are not huge.” I remember feeling so good about launching big features back in the day. I’m assuming you feel that way in SavvyCal because it’s like, “No, this code, 90% of this code’s been in the app for three weeks, so it’s like nothing bad has happened,” right?

Derrick Reimer:
Yeah, totally.

Rob Walling:
It’s a real nice way to do it. So Alan, there you go. Maybe even more than you asked for. You were talking about plans, but we also talked about… I mean the whole idea of the Fun with Flags thing where you could roll it out to 10%, 20% or individual users, that is invaluable. And if you’ve never built a SaaS app as a developer or product person, you just don’t think about that stuff, but if you have downloadable software, if you have developer component, if you have an app in an app store, none of that…
I guess maybe an app in an app store would, but the others, it wouldn’t make a difference and so in SaaS specifically, this is where having experience building multiple products is so helpful. So thanks for the question Alan, I hope that was helpful for you. Our next question is from Wyatt and it’s about how to communicate product needs to a technical co-founder.

Wyatt:
Hey, Rob. I’m a non-technical founder that has a technical co-founder that I just brought on board. I’m the one on the team currently that has the industry knowledge necessary to understand our customer needs the best and most deeply. We have early product market fit with our current iteration with several thousand in MRR and we’re starting to build more complicated features that are really going to start to separate us from competitors. And these features I think will be critical to our success, not only from a product side but also leveraging these in our marketing.
I guess my question is how do you build/design/mock up product features where I know the customer best and what they’re going to want, and describing the product interface to my technical co-founder and how it should be laid out the best, is this something where you would draw on the back of a napkin and send to them? Mock something up in, I guess, it would be one of the more famous mock-up tools? I guess, how do I go zero to one best with my technical co-founder on how to start initial designs that end up getting built by him in the end, and kind of communicate that properly with him on what to build, how to build it it in the best way that I know our end user would want.
I’m kind of currently just doing this via our Slack communication or Zoom meetings and I feel like this cannot be the best way to do it because I’m sure he’s interpreting things that I’m saying by just the words coming out of my mouth essentially. There’s got to be a better way I feel like to communicate some of the product needs of our customer better. Longtime listener, first time caller. Appreciate any feedback you might have.

Rob Walling:
Derrick, you are a technical co-founder and also someone who has had to communicate product needs, oftentimes to designers, to developers, to your dummy co-founder over here when we were building Drip, no. How do you think about this question?

Derrick Reimer:
Yeah, so I think I would say generally I’m a fan of the low fidelity mock ups. I think Jason Fried talks about using a sharpie instead of a ballpoint pen as kind of a way to picture this so that way you don’t accidentally get more specific than you intended to. It kind of forces you to keep it more high level. I think there’s digital tools to do this, tools like Balsamiq and I don’t know what other tools are out there these days for-

Rob Walling:
Balsamiq and Figma are the two that I think of.

Derrick Reimer:
Okay, and Figma, I think, oftentimes becomes more high fidelity because you can do pixel perfect designs in there, but I bet you can probably also just do boxes and arrows and stuff. And that being said, I wouldn’t get too bogged down with tool choices in this case. To be honest, mostly if I need to do this, I’m sketching it on paper and taking a picture of it and pasting that picture in the ticket.

Rob Walling:
Remember all the whiteboard pictures?

Derrick Reimer:
Yeah.

Rob Walling:
I still have 20, 30, 40 whiteboard pictures of UIs that we would sketch out and they were terrible. I can’t draw on a damn whiteboard and so none of the lines are… But that’s what you’re saying. It didn’t matter. We used to meet, we’re like, “Well, let’s put a text box here and a dropdown list and then we need something blah, blah, blah here,” right?

Derrick Reimer:
Totally, and there’s one other thing I want to mention because I’m getting a sense from the question that he may have been experiencing some miscommunications with his co-founder because it sounds like whatever they’re doing right now, it’s breaking at times, it’s not working super well. And to me this feels like a case where for some of these complicated features he’s talking about where there’s a lot of nuance and information to communicate and voice of customer to bring in and try to capture it all, I don’t know if they’re mainly trying to do this over Slack or other project management tools, but this feels like a case where a shared whiteboarding session would serve them really well.
We had so many of these building Drip and you get to combine the strengths that you both bring to the table. I’m not sure who’s more of the designer between the two of them because a technical co-founder isn’t necessarily the best UX person on the team so it just depends on who has a better sense for those things, but I would bet you that if you put your heads together and hashed out things and got on the same page in front of a whiteboard, you’d save a lot of time over trying to do that over writing.
The alternative is go asynchronous and just write, write a lot and provide a lot of context, which I know teams like Basecamp are a big fan of that approach, and you write these giant documents where you try to brain dump everything you’re thinking into one place, which is cool for other people to be able to go back and read it so there’s some nice archival benefits to that, but I would say if you’re trying to move quickly and not get too bogged down, a synchronous in-person or virtual whiteboarding or however you want to do it, could be really helpful.

Rob Walling:
I would wholeheartedly agree with that, and I think to take it a step further, once you do that whiteboard session, you take a picture of it or you have your screenshot of it and you slap that into… We used GitHub Issues, but hopefully you have some type of project management or issue management thing that you’re working in, whether it’s Jira or what’s the one you use that’s really good looking?

Derrick Reimer:
Linear, yeah.

Rob Walling:
Linear.

Derrick Reimer:
The new hotness.

Rob Walling:
So certainly… Yeah, the new hotness. Any features, bugs that you’re thinking about should be individually documented, but when you’re this early, I think you should be extremely agile and fast moving, lowercase A on that agile, and you can have a conversation. It’s like, “Oh, we realize that customers want this setting and it requires two check boxes and a dropdown list.” I would log in to GitHub Issues, open an issue and I would say, “We’re going to add two check boxes and a dropdown list.” I mean this is what I’m typing, right?
It was like four sentences tops, and then sometimes if you were going to build it, it was done because you knew the architecture. If you were handing it to a developer who maybe didn’t know, you’d be like, “These are going to pipe into this model and go into this.” I’m using the wrong words, but this aspect of the ORM in Rails, but no, yeah, right? But you’re like, “It’s this database table, blah, blah, blah,” if someone needed the architectural or the technical side. But we would build features that were two sentences, eight sentences. When it got complicated, it was a couple of paragraphs and then a lot of visual.
The ones that were more complicated were workflows where we did this huge visual thing and even that was several pieces of 8.5″ by 11″ paper taped together on the wall.

Derrick Reimer:
I remember that [inaudible 00:17:05].

Rob Walling:
You totally remember this, and I’ll see if I can find a picture of it. It would be great for the show notes. But it was that and then I think we just talked about what each of the nodes did and tried to define them in a sentence or two. That was it. And I’ve been at places where, because I worked at a credit card company, I worked for the City of Pasadena, the specs for those things would’ve been 50 pages or a hundred pages for documentation, for reasons, but not reasons that I ever want to experience again. I don’t work in those environments because you just don’t need that much when it’s two people, three people, four people trying to move fast, trying to ship fast.

Derrick Reimer:
Yeah. I find these days when Taylor and I are talking about a somewhat complicated feature, a lot of times I write a couple of sentences in the initial ticket and then maybe a note that, “Let’s discuss this. Let’s hash it out.” A lot of times it’s a little different than I originally envisioned, so I’m glad I didn’t invest a ton of time describing my grand vision for it, only for a quick back and forth to modify that slightly.
And then what’s nice is a lot of times we’ll talk it over, and since Taylor’s going to build that part, he will then write the tickets for it and kind of summarize what we talked about. I think that that’s just a helpful device for him to confirm that he understands what we both arrived at and write it up and I’ll skim over that and if there’s something off then I’ll just note it and correct it. But that’s a great way to just confirm that are we truly on the same page before we start investing developer cycles into it?

Rob Walling:
That’s a really nice way to do it and collaborate and have the double check, and realize when we are talking about these tickets or this feature description, that there’s kind of three components to it in my mind. There’s the user interface, how it looks. There’s obviously the technical details behind it, and then there’s how it acts and operates, the behavior of it. And sometimes you don’t even need to describe the user interface. Sometimes there is no user interface. It’s just a change in behavior of a scheduling blah, blah, blah, background, whatever. Sometimes user interface is literally, “We’re going to add a text box. It’s going to be called first name.”
You don’t need to say, “Use these styles.” We all know what the styles are in our app. So the UI can be complicated with workflows where you and I talked a lot or it can be non-existent. The technical side can sometimes be obvious, sometimes not. “Oh, you’re going to add a field to the customer table to do this,” or it’s just obvious what we’re using. The behavior, that third one, I think, is the one that I would spend the most time thinking about, how we got to get that right, and that’s usually not obvious, I think. It’s often the most, I think, challenging piece to communicate in a way that I know that it should work this way or maybe I don’t. Maybe I haven’t thought of the edge cases.
That would be the other thing is I’d throw a ticket in. You’d come back and you’d be like, “If we do this, we’re going to break everyone’s unsubscribed links or 10% of the unsubscribed links.” It’s like, “Oh, I hadn’t even thought about that,” so we change the behavior to not do that.

Derrick Reimer:
Yeah, I mean that’s ultimately the most important. I think that when you call that user experience where it’s like it’s not user interface design necessarily. That’s a part of it, but what’s the journey of the user? What problem are we trying to solve? And thinking about it a little more high level and then the details sort of take care of themselves. If it’s something that requires a lot of intricate UI design and the developer is not that great at interface design, then maybe that’s the point you loop in a designer to take care of the visual aspects of it. But all of that is sort of downstream from making sure you’re on the same page about the overall journey. What’s the problem we’re solving at a high level.

Rob Walling:
So thanks for the question, Wyatt. I hope that was helpful. Our next question comes from Bavesh and he’s discovered the Stair Step Method of bootstrapping and he’s asking, should I put my main SaaS on the back burner?
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Bhavesh:
Hi, Rob. Just got a question. I’ve seen your new video on YouTube titled, If I Had to Start Over Here’s the Three Steps I’d Take to One Million.” Now I’ve got a question or kind of a dilemma. I’ve been working on a SaaS project for a couple of months now. I’ve been doing interviews and customer research. I’ve been able to lock down the research and their pains through interviews, polls and everything. I’m now working on a [inaudible 00:22:31] for the solution that I’m going to present to them.
Following the video, I’m a bit slightly lost. Would you suggest I start with a smaller project, say a WordPress plugin or Shopify plugin, rather than continue with the main SaaS project to get my feet wet before I should plow through the main SaaS project? So let’s say the WordPress plugin, I’m estimating five to six months activity, whereas the main SaaS project would be another one to two years to go. What’s your thoughts of this, because I’m a bit lost as to taking your advice in the current situation that I am in with what I should be doing? Thanks, Rob.

Rob Walling:
Well, Mr. Reimer, this is a tough one, right? There’s no right answers on this one, but what’s your thinking? How would you go about thinking this through?

Derrick Reimer:
Yeah, so first off, it sounds like he’s doing the right things to set himself up for success as best possible. I hear he’s doing research, doing interviews, talking to people. Those are all great things. The one thing that’s not totally clear to me, because he’s mentioning maybe stepping back and working on a WordPress plugin or a Shopify plugin or something like that and I don’t know fully if he’s implying that these would be scaled back versions of the SaaS that he’s working on or if it’s just kind of a hypothetical alternative path he could take.
And I think the answer would kind of vary because in general I would say… Another thing that jumped out to me was he mentioned a one to two year timeline on building the SaaS, the main SaaS, and to me there’s a red flag because that’s a really, really long time. I think in this phase you want to be optimizing for learning and the trap that you could easily fall into as a builder is doing what you do best, building product, and not actually learning a bunch from the market or figuring out, “Am I on the right track? Is this going to work?”
This is kind of the age old problem that plagues us so often and I think that’s the biggest risk with working on a SaaS where if he feels pretty confident it’s going to take that long, then I would seriously think about either trying to cut scope to shorten that or just think a little bit differently about the process for developing the SaaS. Or potentially if these plugin ideas are speaking to the same market, the same idea generally that he has, but they’re a little bit more scaled back and easier to get to market quickly, then I think that would be something really interesting to think about doing to validate.

Rob Walling:
I’m not sure how much I have to add to your analysis, honestly. I feel the same way about it. These are hard decisions, really incomplete information, but when I saw one to two years I was like, “No, no, don’t do that. No matter if you’re talking to customers or not, it’s just too long.” By the time you’re a year in, it’s just a slog. You have to have some type of traction by that point, whether it’s customers using it, some money coming in. I’m not saying it needs to be 10K a month, but it just pains me to think of someone working probably nights and weekends, I might be guessing. Certainly you wouldn’t do one to two years full-time. That’s a lot of person hours before you get something into the wild.

Derrick Reimer:
That’s my assumption too is that this would be probably something on the side, and I do sometimes hear founders talk about being okay with it taking a long time because it’s just a side project. But I think something that’s really important to think about is your own motivation for the idea. There’s an element to trying to build some traction in the market even before you launch the thing. Hopefully you’re building an email list and these conversations that you had, you want to be able to follow up pretty quickly with something, at least some form of progress to keep the people that you’ve talked to interested in the idea.
And all of that’s going to wane a bit if you’re just slowly plotting along, making progress on the side, and I would bet that your own motivation for it would wane as well. And then what have you learned from that process? I mean, maybe you’ve learned some new technology or something if you’re experimenting with that while building, but have you gotten closer to making progress on the stair step and ultimately becoming independent, if that’s your goal? And so I think that’s an important thing to keep in mind.
It’s one thing if you just want to build something on the side and you’re just interested in doing that in its own right, then that’s cool, but you need to make sure. If you want to be making progress on building skills to bring products to market, then you’re probably going to want a tighter feedback loop.

Rob Walling:
To piggyback on what you just said, funded startups fail when they run out of money. Bootstrap startups fail when the founder runs out of motivation, and that’s what you’re saying is you grind for six to 12 and you start losing. Let’s say if you were to launch after 18 months, that’s the starting line. You’re in a hundred meter dash and that’s like you’re 10 meters in, so how do you then have the years it takes to grow that to replace your full-time income?
I think, in summary, if you were to just say, “Rob, if you were in Bavesh’s shoes today and you didn’t have any network, any audience, any funding, you couldn’t self fund and you haven’t had a success, you’ve never really launched anything, what would I do?” That’s how I like to think about these things. I would not spend two years on a SaaS app, and you said scale it back, which I think is interesting, or I would look at a more step one business. That is what I would do. Yeah, even though I’m a few months in, there’s a sunk cost fallacy there where you potentially are going to throw good time after bad.
But I want to be clear, Bavesh. I’m not telling you what you should do. I’m telling you what I would do in my shoes, knowing what I know, because these are hard decisions. The information’s obviously very incomplete and each of us has to make those for ourselves. So thanks for that question, Bavesh. I hope it was helpful. Our next question is from Matt about developer imposter syndrome.

Matt:
Hi, Rob. Matt here in the UK. I was just wondering if you’ve got any advice for any developers like me who are struggling to get past a mental barrier of not thinking that anything we develop is going to be worth other people paying for?

Rob Walling:
What do you think, Derrick? I’m curious if you ever felt this. Do you remember ever having this type… Because look, we’ve all had imposter syndrome. Let’s be clear. But this particular one where I think no one will pay for something that I’m building.

Derrick Reimer:
Yeah, I do think it’s curious the way he worded it. I was trying to think of the same thing, can I relate to this feeling? Because for me, I think, if there’s one area that I’m confident in as a developer, it’s my ability to build a product and take some pain point and solve it with software. And I think Matt should probably feel confident in that as well. This is our craft, this is what we do, this is what we’re good at, and I have zero doubts that he could build something that is worth paying for that solves a pain for a customer.
I think the bigger thing to be worried about, not to potentially add to the list of things you might be stressed about, but the bigger risk us builders have is skimping on the other side of it. It’s all the things outside of building the product. It’s figuring out how to talk to customers and how to reach them and how to position it in a way that people want to buy it. That’s where things get trickier.
And so I think certainly I experienced that, a ton of imposter syndrome around am I actually capable of being an entrepreneur in the full sense of taking something to market and selling it and putting a salesperson hat on when I need to and putting a marketer hat on when I need to? Those are all skills that are pretty far outside of the builder-developer skillset that, I think, a lot of us developers take pride in honing.
I guess if I had a word of encouragement, it’s try to foster that growth mindset. Recognize that these are all just skill sets, they’re learnable, there’s a lot out there, so there’s a lot of things to study, there’s podcasts to listen to, there’s books to read, but a lot of your best learning’s going to come from doing and so that’s the other thing. It’s like, well what’s the most effective way to get past feeling like I can’t do it is by proving to yourself that you can.
And I think that’s the power of the stair step approach is getting small wins to validate to yourself that like, “Oh, I actually can do these things,” and, yeah, it’s really difficult to build a SaaS app out of the gate and have all of those hundred variables that you have to get dialed in just right. Getting them all dialed in right out of the gate is incredibly difficult, and so that’s where there’s a lot of value in gradually building up your skillset and convincing yourself that, “No, I can do this,” and I’m confident that anyone who puts their mind to it can.

Rob Walling:
I am, as well. I mean at bootstrapping especially, it’s just such a great equalizer. It’s such a platform that does the tool solve a problem that’s worth paying for? Then people will pay for it and they usually don’t care who you are in most cases. They don’t care where you’re from and they don’t care about your background. They just care that this tool solves this problem, and so I love the advice you’ve given, Matt. I think the thing that I would add to it is it sounds like it is maybe a deeper…
I say this as someone with experience of this, of maybe a lack of self-confidence. And I remember feeling, especially in my twenties, feeling very, “I don’t know if I can do this stuff. I don’t know if I’m cut out for…” insert anything. Insert anything entrepreneurial because I didn’t know any entrepreneurs, none in my family. The only business owner I knew was the guy my dad worked for. There was just no history there of this is possible. Especially hadn’t seen it in software, especially hadn’t seen it in anything except Silicon Valley raising funding because I grew up in the East Bay Area.
And so it took me some, I’ll say, personal work working through that on my own. I went to therapy about a bunch of stuff, but that was one of the things. Was like, “Am I cut out to do this?” And you’ll find out you have a lot, all of us have limiting beliefs based on our upbringing. Upbringing or there’s a bunch of different reasons why these things happen, but they’re complete blindsides that you just don’t see, and this one feels like that to me.
And so whether it’s a therapist or whether it’s a mastermind group or a co-founder or just someone who’s in your corner and willing to think this through with you, I think that’s what worked for me. I’ll put it that way. And it wasn’t Sherry, it wasn’t my wife who helped me get through this. It was a third party, even though my wife is a psychologist. The irony runs deep, but that’s not what helped me. It was having some successes along the way as I stair stepped up. I think that’s our third shout out to it but, no, it was little things where I was like, “Oh, [inaudible 00:33:10] voice. Oh, now I’m making $900 a month on this little downloadable invoicing software.” That was what convinced me that I could build something people were willing to pay for because they paid me for it and then that proved it and I was like, “Oh, well if it could be $900, it could probably be 9,000, couldn’t it?”
And then the first dollar you make online is amazing, and then you figure out how do you make $2 and then how do you make$ 2,000? The other thing I would say, Matt, is if you’re not in a mastermind group, that was another game changer for me, both the mastermind with you, Derrick, and Phil back in Fresno, and then another mastermind with Ruben and another person that’s been remote for years and years. Those were less about building up my confidence because actually by time we were in masterminds, I was doing stuff and I was pretty confident I could do it, but you have ups and downs even then.
Whether it’s a lack of self confidence or latent belief that people aren’t going to buy it, it’s going to rear its head in different ways month to month, quarter to quarter, year to year. That’s going to come back. You’re never going to be through it. And so having folks around you who are in it for long term with you who can help identify that and as you talk through it, be like, “You know what, man? I’m going to call you. That’s bull (beep). That’s actually not true. That’s this other voice talking. That voice is not welcome here, because it’s just not helpful.”
And so I think having a person or a couple of people in your corner who can help sanity check… We all have thoughts and I’ve gotten better at it. I think everyone does, but you get better at identifying, “Huh, that thought today is because I’m really tired or I’m really depressed because there hasn’t been sunlight for five days and that thought about this not working or me not being good enough is really an external factor, so don’t believe it today. But if I feel this in a month, maybe that’s true.” And so I give myself time and space to have these negative thoughts and not dwell on them, and if they keep coming back, then I figure out other ways to handle them.

Derrick Reimer:
Yeah, the community piece is really important because we pour so much of ourselves into our endeavors, especially when you’re kind of staking your career on it, it feels like at times. So it takes a lot of emotional energy for sure, and when something doesn’t work, it’s so easy to come to the conclusion that, “I’m just not good enough or not capable,” when a lot of times the answer is maybe there are some things outside of your control that affected that, or maybe there was a tactical error or maybe there’s just something you haven’t thought about, some playbook that you could try running.
There’s usually other ways to problem solve and it’s basically never that I’m a fundamentally flawed person, incapable of getting past it. It’s just you need other people in your corner who can have a different perspective and help assure you that it’s just something to work through. It’s not that you’re incapable.

Rob Walling:
And if you never have these thoughts, then you’re a robot.

Derrick Reimer:
Right, yep.

Rob Walling:
Right? I mean, everyone I know who I like as a human being has these thoughts. There are probably people that are so confident in themselves, it’s called narcissism, where you never have these doubts and I don’t hang out with those kind of people. I’ve met them and they are hard to be around because they’re just so in their own world. Derrick Reimer, you are @DerrickReimer on Twitter. Are you still on Twitter?

Derrick Reimer:
I am still on Twitter these days, yeah. It’s getting to be an interesting place but, yeah.

Rob Walling:
That’s a question we have to ask, yeah. Thanks so much, man. Thanks for taking the time to come on the show. I’m sure the audience really appreciates your insights.

Derrick Reimer:
It was a blast, as always. Thanks for having me.

Rob Walling:
Thanks again to Derrick for joining me today and thank you for joining me this week and every week as we dive into topics for ambitious, bootstrapped and mostly bootstrapped SaaS founders about building, launching and growing startups. I hope the new year has been amazing for you so far. This is Rob Walling signing off from Episode 643.
Do you not use Chrome anymore?

Derrick Reimer:
I use Firefox. I’ve just used it as my [inaudible 00:38:00] couple of years.

Rob Walling:
Did you always use Firefox?

Derrick Reimer:
I think I started four years ago or something, yeah.

Rob Walling:
Okay, what made you switch?

Derrick Reimer:
Honestly, it was at one point there was an update, a Mac update that broke font rendering. It made the letter spacing all tight and I think it was a bug that got fixed. It took two months or something for it to get fixed, but it was messing with my… When I’m paying attention to pixels so closely, it really messes with my design stuff.

Rob Walling:
Yeah, that’s interesting. So if Apple wanted to totally screw Chrome’s market share, they could just do that every couple of months accidentally.

Derrick Reimer:
Yeah.

Rob Walling:
What a trip. Hadn’t even thought about it, but only for really picky UI people.

Derrick Reimer:
Right, right.

Rob Walling:
Because I didn’t notice.

Derrick Reimer:
Probably most people didn’t notice. Well, maybe it was early stages of SavvyCal. I can’t remember which app it was where I was really getting core patterns built out and paying a lot of attention to the spacing of tool bars, nav bars and it all looked extremely jacked up, so I was like…

Rob Walling:
Cracked it. Yeah, that makes it tough.

Derrick Reimer:
And then Firefox, it’s been actually nice. The UI used to be kind of ugly and it’s gotten much more chrome-like and they have syncing between phone and desktop. They’ve caught up on a lot of stuff, yeah.

Rob Walling:
That’s the big thing for me. Yeah, that’s cool. All the bookmarks I have, and I remember years ago when you have to transfer them manually to export and then import. I mean, I know they have all my (beep) data because I have to log in, but I don’t care. It’s so much better when I get on a new machine. I’m like brand new Mac, I install a few apps, I log into Dropbox, I log into Google Chrome and it’s not much [inaudible 00:39:44]. It’s like, “Oh, I got to get my ftp.” I have four or five SFTP things I got to move over, but compared to the old days when I’d spend eight or 10 hours, literally a full workday, just getting a machine set up.

Derrick Reimer:
I know, I know.

Rob Walling:
It’s so nice.

Derrick Reimer:
Yeah, now these days I’m relying almost exclusively on all the Apple migration stuff that’s built in. Like just do it for me, and it generally works out fine. The one thing I didn’t do, I just upgraded my phone finally and forgot that Google Authenticator doesn’t transfer over.

Rob Walling:
Yeah, that is rough. And you know what, dude? I actually switched away from Google Authenticator to LastPass Authenticator because of that, because it does, and I don’t know who… Some of them do and some don’t. I don’t care which you do, but pick one that does because that happened to me once.

Derrick Reimer:
1Password has more and more support for one time password stuff, and it’s magical when it automatically inserts the one-time password. So I have a few… Obviously some Google accounts and stuff were in there and I’m banking on being able to use the recovery codes when I need to.

Rob Walling:
When you need them. Ah, that’s such a bummer. That’s surprising that Google is doing that, A, and B, there are just still a few edge cases in this whole get a new phone, get a new laptop thing, and I don’t think you can get them back once you lose it.

Derrick Reimer:
No, I don’t think so. I mean, it must be baked in, intertwined with the fingerprint of the device or something. There’s something about it that just will not transfer, but Apple doesn’t warn you about that. They’re like, “Cool, you got a new phone? You want us to migrate all the stuff over?”” Yeah, let’s do it.” And then it finishes and it’s like, “We’re done. Should we wipe this?” And I’m like, “Yeah, wipe it, man.”

Rob Walling:
Of course.

Derrick Reimer:
“Do it.”

Rob Walling:
That’s terrible. Such a bummer.

Rob Walling:
Happy New Year. It’s another episode of Startups For the Rest of Us. This is the 13th calendar year in which an episode of this show has been published. It’s great to have you listening today.
In this episode, I talk with Tara Reed of Apps Without Code. We have a great conversation. We talk about her journey, getting into no-code, then starting Apps Without Code, growing it to a $5 million bootstrap company, actually pulling it back to between $3 and $4 million to make it more profitable. We talk about entrepreneurial mindset. She deals with a lot of early stage founders trying to get off the ground by building an MVP or an app in no-code, and she sees some patterns and some anti-patterns. And then we spend a good bit of time talking about the pros and cons of no-code, the amazing things it can do, and the handful of things that it struggles with.
Before we dive into that, if you want to get a headstart on your 2023 goals, join us for the MicroConf Accountability Challenge. The difference between crushing your goals and falling short often lies in the tiny habits and wins along the way. And sticking with those habits can be tough while you’re working solo so we’re running our second annual January accountability challenge inside MicroConf Connect. You can head to microconf.com/accountability-challenge, that’s microconf.com/accountability-challenge to sign up and get your 2023 off to an amazing start. And with that, let’s dive into our conversation.
Tara Reed, thanks for joining me on the show.
Tara Reed:
Yeah, thanks so much for having me.
Rob Walling:
It’s great to finally meet you. I’ve heard a lot about you. We have mutual friends. And I’ve been hearing about Apps Without Code for at least a couple years now. To get listeners on the same page, your H1 of Apps Without Code is, “Finally launch your app idea. Come up with a strong app idea, build it without writing code and make real money with your business.” You’ve been public about the revenue, $3 to $4 million this year. You help people build web and mobile apps. I think I got to kick it off with the question of what made you decide to start it?
Tara Reed:
I wasn’t really intentionally trying to start this business, it really sort of happened. What happened was I was building my first company, which is the previous business before this. I had launched this art startup. And I built this algorithm to match people to artwork based on their taste. And I was blogging at the time about how I had done that without writing any code. I essentially was like, “Let me see how far I can go just building something myself with off-the-shelf tools.” And I kept pushing that. Every time, I was like, “Okay, let me just see if I can do more.” I kept pushing that and was blogging about my journey of building without code. This was far before we called it no-code or this was really cool. This is maybe in 2016 I was doing this.
And I got invited to do a TEDx talk on building Apps Without Code. And I just had an influx of people emailing me saying, “Oh my gosh, I didn’t even know this was possible. Can you show me how to do this too? I’ve already spent $20,000, $30,000 on developers and don’t have what I want. I haven’t had the time to just stop what I’m doing and learn how to code, and it doesn’t quite make sense for me to stop what I’m doing and learn how to code because I’m going to ultimately be the business person, not the coding person.” I just kept hearing that. And for a while, my answer was, “No, I can’t help. I’m trying to run my business.”
And after getting more and more of those communications, I was like, okay, I’m going to help five people. I decided to help five people launch their app. They launched it out into the world. I then opened it up again, I think at that point maybe doubled or tripled the price because people have really had a lot of success with it. And there were 70 people, and I thought, oh wait, I think this is a thing. If you fast forward to now, we have open classes and more elaborate eight week training programs. We’ve trained 150,000 people in 14 different countries. And it’s been so fun.
Rob Walling:
That’s amazing. And you told me offline, I had seen I think somewhere on LinkedIn that you were doing $5 million a year ARR, and then you mentioned you deliberately pulled the business back to do between $3 and $4 million. Talk us through that decision.
Tara Reed:
Well I think a lot of the audience here thinks about bootstrapping, so we know that top line is not bottom line. Your top line revenue is not your profit margin. And so last year, we did a handful of things to get more profitable. One of the things that changed, and I think changed for a lot of people, was just efficiency of ads after iOS 14. And we had to do lots of reorganization around that. What it meant was that we changed some of our practices to operate more profitably but to spend less money on ads, and so top line went down a little bit but profitability actually went up.
Typically when I talk to people in the VC track business space, or why would you do that? Why would you ever intentionally pull back on revenue? But for me, it’s really important for me and my team to be operating a profit first business. And so sometimes you make reorganizations of things so that the team can have the life that they want, so that we can have the flexibility that we want, and so we made a strategic decision there.
Rob Walling:
Yeah. And that’s the beauty of having a bootstrapped or mostly bootstrap business. Oftentimes, we call them independent SaaS or independent businesses where you are not beholden to an investor. You could have an investor, but if they don’t own a majority of the company or don’t have all the provisions, you can make the decision that’s best for you, for your freedom. I know that you talk a lot about lifestyle design and travel and such, so that’s a nice luxury to have. How big is your team?
Tara Reed:
My team is 15 people, and we’re in five different countries.
Rob Walling:
Okay. That’s quite efficient. That’s a lot of revenue for only a team of 15.
Tara Reed:
Yeah. No, it’s really great. I think that we operate leanly but we also want to make sure that we get to design our lives and our days accordingly. I wouldn’t say that everybody’s just only work all the time, eight hours a week; that’s not really our culture. But we also operate lean at the same time.
Rob Walling:
You’ve taught all these people to code and you also… Your team builds apps for them. There’s two different pricing structures. You can pay around $1,700 and get instruction. I could pay this, right? And you would teach us how to build it.
Tara Reed:
Yep.
Rob Walling:
Or it’s like $4,800 and you’ll do that plus build the app for us, I guess. Do you have a success story or two of folks who have launched a business off you? I know you do.
Tara Reed:
Yeah.
Rob Walling:
Do you have a success story or 50 probably? But no, we only have time for one or two of someone who’s built a business that changed their life, in essence.
Tara Reed:
Yeah, there are a ton. I think my favorite success stories are scenarios where people take something that they know a lot about, they’re subject matter experts in. And typically they know a lot about it because it’s related to what they do for work. And there’s something related to what they do for work that is just hard or time consuming and not great.
An example of this, we have an alumni who’s gone through the program who’s in manufacturing. And I didn’t know this, but apparently in lots of manufacturing plants they’re still tracking things with pen, paper and a clipboard. Yep, is that done? Check with pen and paper. And yet everybody’s got a phone in their pocket. He built an app to streamline a lot of that process so that headquarters can really see what’s working, what’s not working, where is this process slowing down? And his first customer was Coca-Cola who white labeled this from him. That’s an example. I can give you more examples.
But the specific thing that gets me really excited about no-code and the opportunity there is that people get to take something that Silicon Valley’s not super excited about building a solution for, the non-sexy stuff is I think the coolest stuff where other people who are not in tech know something about it, they just don’t know how to code and come up with really cool ideas that I think are less likely for us to see in a Silicon Valley based startup or even a venture track, venture-based business.
Rob Walling:
Yeah, and that’s, in all honesty, the name of this podcast, Startups For the Rest of Us. It fits a lot of things. And a little bit cumbersome to say. Originally, it was around I had a family. I couldn’t apply to YC because I couldn’t move there, I couldn’t move to the Bay Area at the time so I was saying, “Well, what about the rest… What about how many millions of us don’t want to do that or aren’t able to?” And it seems to apply in that case as well of it’s for the rest of us who want to start a business that… I call them boring businesses, and I call it that with respect. Most of the businesses I’ve built have been boring. But helping manufacturing or helping-
Tara Reed:
Healthcare. Yeah.
Rob Walling:
Exactly. Yep. These are great niche businesses because you don’t have the massive players coming into them. Yeah, maybe one more example if you can think of.
Tara Reed:
Yeah, okay. I’ll give you maybe a few. There’s another alumni we’ve had go through the program; his name is Josh. When he met us, he has this afterschool program where he teaches students about music and music composition, playing music but also mixing music digitally. And schools would ask him to come do these afterschool pop-up programs all the time, but he can only do so many of them because he’s only one person. And so he built an app that allows students to compose and compile pieces of music and songs together and work in teams. The teachers can give assignments and grade and all of that. He built this custom platform for this and then licensed it to 23 schools in the state of Virginia, for example.
Rob Walling:
Wow, that’s incredible.
Tara Reed:
That’s another example of something you know something about that it’s hard or time consuming or manual and creating product around it.
Rob Walling:
Yeah, it’s interesting because when I talk to founders, and what I see across MicroConf and TinySeed is that about, I believe when we did our state of Independence SaaS survey, 90% of the bootstrapped and mostly bootstrapped SaaS founders, 90% of the teams have at least one technical founder, at least one developer; nine out of 10, in essence.
And some of the best combinations we see is a developer co-founder plus a subject matter expert. It’s the subject matter expert who can then do the sales and do the customer success and do all that. With no-code, low code, you can maybe get away without that developer because you don’t necessarily need that. Now, maybe you need it later on, maybe you need it to get big, maybe you need it to scale. And we’re going to talk about that in a minute because I love having you on here as an no-code expert to be able to talk about the pros and cons of it. I find it lining up with my experience of subject matter experts who have this deep domain knowledge and being able to build something that they know that they need.
Tara Reed:
Yeah. And I think the bridge specifically, to comment on what you were saying where you need the subject matter expert and the programmer, what no-code allows you to do is you’re still programming. And we can get into some of the limitations here. I do think you still need to have to learn the ability to think an engineer, to the if this, then that, but otherwise this, and really be able to immerse yourself in if this, then that logic. For some people, that’s really hard. It’s not really related to what they do in their day-to-day job so I do think you still need to think an engineer or at least learn to think in that logical, linear way because you’re still programming. You’re not coding, but you’re programming still, nonetheless, with no-code. You’re drag, drop, point, click, and then giving logic sentences of what to do. And I do think that’s one of the limitations, though. One of the limitations and downsides to no-code is that it’s not no effort. And it’s also you still need to be thinking logically and linearly about what you want this to do because the app still can’t read your mind.
Rob Walling:
Right. Just because it’s no-code or low code, however we want to describe it, as you said, it doesn’t mean no effort and it doesn’t mean it’s not complicated still, right?
Tara Reed:
Absolutely, absolutely.
Rob Walling:
Because you can tie together 10, 20, 30, 30 things. A simple example, Scratch, I’m sure you’ve heard of from MIT.
Tara Reed:
Yeah.
Rob Walling:
Both my kids started doing that when they were three or four. One of my sons built something that was big and I won’t say cumbersome, but I saw it as a… I was a software engineer myself, and I was like, “Oh my lord. No, we need refactor this whole piece.” It was no-code, but it got as spaghetti as code can get. There’s still those types of limitations, right?
Tara Reed:
I think that’s right. I think there’s a couple different waves of no-code that have come out. When I was starting in no-code in maybe 2016, 2015, it was like stringing together lots of different tools. You have your type form which talks to Zapper, which talks to this, which talks to that. That was the first iteration of this. And then we started to see platforms come out in a more cohesive way. The Bubbles, the Glides, the Adalos where you can do a little bit more in one stop shop. Even still, though, you can engineer your logic in a way that is really not that sustainable. There’s still the ability to do that.
I think depending on which tool you choose, they give you more or less space to have something that’s not sustainable. I think if you look at a tool Bubble, for example, which really gives you a blank canvas, I would say bubble probably has the highest functionality capability of the no-code tools out there. There’s also the highest learning curve. If you are not really skilled at thinking like an engineer, it’s really difficult. And also, because it gives you a blank canvas, there’s no training wheels, there’s lots of messiness that you can engineer. If you look at an example that’s more like Glide, there’s more training wheels. You can get moving faster. There’s a little bit less functionality and capability, but it’s harder to engineer something that’s really unsustainable in how you built it.
I’m going to add one additional layer to this, which is that the biggest, I think, capability limit that we see with no-code now is it’s not so much about how you engineered it and if that was sustainable because there’s a lot of tools that give you guardrails, I think it’s more about data limits, how much you can store and what your storage access is.
Rob Walling:
Is it storage or is it throughput? I’ve been calling it scale, issues with scale. And is it both?
Tara Reed:
It’s both, it’s both. If you look at some of the tools, they’ll articulate it different ways. Some of them will do it as rows of data that you have access to and how many actions you can run; and it’s some combination of those two things of your throughput and also of your storage. And those are the places where you run up into limits. And a lot of those limits are just what the platform set as the limit. But those are limits, those are limitations. I still think the trade-off of I got this up and running in a couple weeks, in a couple hours is still worth the limitations you might eventually run into. I think it’s still worth it to get revenue and get going and get customers first, but there are limitations.
Rob Walling:
Yeah, I would agree. We have built, with TinySeed and MicroConf have built, I believe it’s three, and it might be four, we used to call them line of business apps. They’re internal applications to run processes. 20 years ago, I was coding these from Scratch and Pearl, PHP, whatever. And now we needed something, we affectionately call them Pat and Vat. They are podcast Airtable and video Airtable, so obviously what platform they’re built on. But they’re just workflow things where I get a email that says, “A new video needs to be created for YouTube. Here’s the title.” Once you’ve created it, upload it to Dropbox, paste the link here, and click it as ready to edit. Change of status. This is all CRUD, it’s create, read, update, delete. It’s not super complicated.
But the bottom line is before this, it was Google Sheets and Google Docs. And then we moved to Notion with the Trello interface, KanBan interface, which was fine but it was not customized at all so it was clunky. And our producer, Ron, came on. And he’s not a developer, but he’s technical, but he doesn’t know how to write code. And he built both of these in, I think it was two or three weeks.
And look, does it scale to as far as my last SaaS app could? No, it doesn’t. It doesn’t need to because it’s internal. If I was building it externally, if I had to try to productize this and sell it to other people, I do think we’d run into some issues. And we could probably talk about those in a second because those are the cons that I do see around… Cons, limitations, whatever it is around no-code.
But I agree with you that the MVP, if I was not technical and trying to start a company, do I want to pay $20,000? Do I want to spend a year or two learning to code and build these? Or do I want to spend three weeks, get far enough to prove it out to make enough revenue that maybe I can then find a developer who can build it? Or maybe I can raise investment if that’s where I want to go. Are you seeing that type of stuff play out?
Tara Reed:
I’m not only seeing that type of stuff play out, but we do that internally. I’ll give you an example of this. Actually, this year is the first year that we started building tools for entrepreneurs and app planning, app thinking through here are all the questions you need to think through in your app and dynamically show them the questions they need to plan through for things. This is the first time of us doing that. One of the things that we’re doing is opening up our LMS because right now our learning platform is just for students that are in our eight week training program. And we’re opening that up to the public. This is an exact example of how we are even using no-code.
Rob Walling:
You’re going to sell it as a SaaS, the platform that you built internally?
Tara Reed:
Yeah. One of the interesting things that’s happening with the company is we’ve operated as a coaching and agency business and are really moving into SaaS now. And a lot of that is just because we’re able to use revenue from the other side of the business to build software. And it’s good timing because we already have a large audience.
But what I’m saying is even as we open that up and open up the lessons and videos and tutorials to the public, we are going to eventually, down the road, code this just because it’s going to link in with some things that really hit up into the limitations of no-code. But we’re first building it without code. We already have lots of audience and traffic, so we’re still building it with no-code. But the reason we’re doing that is so that we can get quick insights about what’s working and not working and be able to feed that back to the engineering team so that they’re not wasting any time; they know exactly what’s working and not working by the time they get to it. And so that’s an example of how we even use it, where we will build the first version, the first MVP, the first six months to a year of the product with no-code, and then even you transition it from there.
Rob Walling:
There used to be something called paper prototyping where you would draw out a screen on paper, and then someone would click the button and then you would put another piece of paper over it. Or mock-ups. Figma, I believe, has click through mock-ups; probably Balsamic as well where it’s a mock-up trying to simulate an app, and you’re trying to click through and get user feedback. And you’re taking that really just a half step further where you’re actually building it out, storing the data, moving it in and out.
Tara Reed:
Yeah, that’s exactly right, that’s exactly right.
Rob Walling:
And so before we get in, I want to dive a little more into pros and cons of no-code then talk about entrepreneurial mindset. Before we do that though, I wanted to ask your preferred platform. Is it Glide?
Tara Reed:
Glide is my preferred platform. It’s the main platform that we teach. We’ve taught other tools in the past. The reason we teach Glide is the combination of capability and learning curve. I think that they find that middle ground really well. And I think there are other tools that can do more things, but the learning curve drop off is not as balanced and so it’s better to get people something where they can get moving and going and launching and deploying. And so it’s my favorite tool for that reason.
Rob Walling:
Glide must love you. Are bringing them a ton of business? You have to be one of their biggest ambassadors.
Tara Reed:
I don’t know that we’re tracking it, but yeah.
Rob Walling:
Yeah, that’s cool. We’ve already touched on some pros and cons of no-code. And the reason that I bring it up this way is we do get this question at least once a quarter, maybe every couple months of, “I’m trying to build this in no-code. What should I watch out for? Should I try to do this in no-code?” Or even there’s questions that are like, “I’m about to pay someone $30,000 to build this for me.” And then I’ll pop in with this, “Sounds like something you could at least build an MVP in no-code.” Even if you can’t service 1,000 customers, you can get to a point.
I want to throw out to what I think are the three biggest positives around no-code. And I’m curious if you agree with them and then if there are others that you know of. But the first is that you don’t need to spend years learning to code. It’s a no or low developer requirement, which is amazing, so it’s a lot cheaper time wise and money wise if you had to hire it out. Second is speed. We’ve already touched on this. If I were to hire a developer to build or write it myself to build Pat and Vat like I just described, it would’ve been months of effort, no doubt. And we built it non-technical in a couple weeks. And the third one, maybe it’s a combination of the others, but I like to say that bootstrapping is a great equalizer, meaning almost anyone can bootstrap a business of some kind, and you don’t need permission to do it.
You actually have a phrase about building your own playbook. You just built your own playbook. I’m assuming the playbook’s available, they weren’t going to work for you. And then Bryce Roberts of Indie.vc has this phrase, permissionless entrepreneurship where you don’t need anyone’s permission to bootstrap a business. I see it as great equalizer. And I see if you can code, great. If you can’t, maybe no-code gives more non-technical people the ability to find that great equalizer.
Tara Reed:
I get to work with lots of people who do code and who love using no-code because they can move faster, they can validate do people want this? Will they pay for it? What are the main features that they need? And get that answer really quickly, and then they decide to go code it. I would even say it’s useful for people who do code too.
Rob Walling:
Okay. Those are my three. You have others that you’ve thought about?
Tara Reed:
I think your three are right. I think I would put an asterisk on the speed piece because I think that getting something out there quickly or your ability not to get something out there quickly, it’s probably the biggest killer of people’s entrepreneurial dreams that I see, just you’re in analysis paralysis, you never got it out. It went on the back burner, then you came back to it. Not using your momentum, that I think is people’s biggest downfalls in entrepreneurship, not knowing how to leverage that. And so getting something out there quickly is so important.
Rob Walling:
Yeah. I named three, but almost speed should be on there twice because it’s so important. That’s what you’re saying.
Tara Reed:
Underline it. Yeah.
Rob Walling:
Underline it. Yeah, no, I totally agree. Before we dive in, I want to talk about entrepreneurial mindset. But in terms of some of the drawbacks that I’ve seen, we already talked about scale in terms of some type of limit, whether it’s the number or the volume or whatever. My last company was an email service provider called Drip. And I don’t even remember the numbers, but I remember at one point we were sending 100 million emails a month. Is that right? Yeah. No, no, it was more than that. But anyways, I questioned if a no-code app could do that, could keep up with it. There’s a scale there. There are limitations on what you can build it. It’s within the limits of platforms because again, I don’t think today you could build… I know today you could not build Drip with no-code. It was a big, complex app. It required custom code, basically, to do it.
And then I think the last one that we’ve run into with Pat and Vat and our other stuff is the UX UI can be challenging. And I’m not that picky but I’m a product guy so I’m picky enough that I’m always like, “Ooh, can we change this? Because it’s pretty janky.” And Ron will be like, “That’s the only calendar widget they have. It just works that way.” I would have a tough time, I think, if I sent Pat and Vat out into the wild. I would almost feel a little bad of it’s great for internal, but for having other people use it, I’m like, “Ooh.” And maybe it’s the fact that we use Airtable. And I think the UI of Airtable is not great, Glide’s probably better.
Tara Reed:
Think that’s right, I think that’s right. I think there are tools that give you a lot more flexibility on the UX UI, all the way to tools that give you full blank canvas flexibility. Sometimes that’s good or bad. If you have no design sensibility… I am not a designer, you should not put me in charge of designing the UI because I’m going to put something wild and not great. If you are one of those people, you actually maybe don’t want one of those tools that gives you full blank canvas. But I do think now there’s a little bit more spectrum of options that you have. I would put Airtable on the least flexibility end of the spectrum there. I would put maybe Glide on the lower flexibility side of the spectrum, but not all the way there, and then Bubble on the far, you design the UI the way that you want to design the UI. I agree with all of those. I think maybe the last one, there’s a little bit more options in terms of UI.
And I think that on the second one that you mentioned about just features that you can and can’t do, there are some limitations there. I think some of this, though, is around mindset about how you’re approaching launching. My question that I usually use for myself is if there’s a feature that is hard to do or I can’t do in no-code, the question that I have for myself is will adding this make me money right now? Right now, not down the road. But will that change the revenue of the business or will that change the user signups of the business significantly? Usually the answer is no. If it is, I think it makes sense to look at other options. But I do think that you’re going to run into one feature set that you want to do that’s going to be tricky to build with no-code, and so I agree with that second one too.
Rob Walling:
Very nice. And do you have any others that you think maybe I missed?
Tara Reed:
Yeah, I would elaborate on the things that you can’t do. Here are some things that I still see are really tricky to do and hard to do with no-code. If you want to build virtual reality headset software, I still haven’t seen a good tool. I have seen good AR tools. And Facebook has one. There’s a couple for augmented reality, but virtual reality not great tools out there.
If you want to build… I don’t know, what are the things people are absolutely not… I do think HIPAA compliance gets tricky. Your list of resources just immediately shrinks. I think that will change long term, but there’s lots of people who are like, “We’re not going to touch that right now.” What else? Randomly, you know those emoji apps or the emoji keyboard comes in, you can’t alter your emojis?
Rob Walling:
Mm-hmm.
Tara Reed:
And let me think of what I’m trying to think of use cases where not at all.
Rob Walling:
That’s a deep cut.
Tara Reed:
Yeah. Not at all.
Rob Walling:
Yeah. Only someone who’s knee deep in it, like yourself, would know that. Yeah, wow.
Tara Reed:
Although maybe I have another list I can maybe share with you guys, we can put in the comments, the list of things that we typically get that are like, “We can’t do this at all.”
Rob Walling:
Yeah. Can’t do it. Yeah.
Tara Reed:
But I actually think you would be surprised at the limitation of the logic that you can implement here. And I just think it means that you have to choose a tool that has more flexibility.
Rob Walling:
Awesome. Well, let’s switch it up. Let’s talk about entrepreneurial mindset. The reason it’s so good to be able to talk to you about it is, A, you’re an entrepreneur yourself, B, you work with a ton of people who are trying to get businesses off the ground. And I think between you and I, thousands if not 10s of thousands of entrepreneurs that we’ve been exposed to.
And I think I want to kick it off, it’s like we can go down the design patterns and the anti-patterns. What are the commonalities that you see in folks who come to you? And oftentimes, as you’re saying, subject matter expert, someone who works in manufacturing or medical, no entrepreneurial experience, I’m guessing. Maybe even didn’t have an entrepreneur in their family. That is me, actually. Why do some of them succeed? What do you see in them?
Tara Reed:
Okay, so a couple things. First one is good fear management. If launching a business was not scary, everybody and their mama would have a million dollar business. And so it really is scary. Putting something that came from your brain out into the world for people to look at and see and judge, that in itself is scary. And so I think lots of people are looking for it to feel not scary first, and then they’ll do it. And it doesn’t actually work that way, it works in the reverse. You do the scary thing anyway, and then after you do it a couple times, it’s no longer scary to do, like hitting publish or asking people to sign up, sharing the link with people; those are the things that are just scary to do. That’s the first thing. People who do well have a good ability to manage their own fear around things.
Rob Walling:
And what’s interesting is episode 14 of this podcast, which was 12 years ago, is called Overcoming Fear. And of our first 100 episodes, it was one of the most popular. We’ve actually done replays of it. And even 650 episodes later I listen to it and it holds up because we all have that fear of launching. We have a fear of being criticized, we have a fear of looking dumb, we have a fear that no one will care, we have a fear that everyone will care, we have a fear of people’s eyes on us and saying, “This is great,” and a fear of success we have a fear of… Right?
Tara Reed:
Right.
Rob Walling:
Managing fear, that’s a really good one.
Tara Reed:
And the reality there is most people aren’t even paying that close attention to you. They’re worried about themselves. They’re not judging you that hard. They actually think in reality that what you’re putting out there and the fact that you’re putting something out there is really cool. They admire you. They think that’s awesome. That’s most scenarios.
Another one, and maybe this is a subset of fear, maybe it’s completely separate category, is managing a relationship with money, abundance, success I’ll put in the category. This is something I think for me that was really hard. And I think I’m just now eight years into entrepreneurship as a whole, really getting a grasp on. I think maybe some of that is I didn’t grow up in a wealthy family. The idea of investing in myself felt really scary to do. The idea of putting money into the business felt really scary. Those sorts of things made me really nervous.
I think the second thing of things I see that make a difference for people, success or not success, is really managing that relationship with money and abundance and not being in scarcity mindset of, “I can’t do this. I can’t go learn, I can’t go invest myself, I can’t pay for the software that I need because there’s not going to be enough, there’s not enough resources.” That’s another big one.
Just to put a quick note on this, I had to really invest in working on this for myself. I actually ended up doing a lot of hypnotherapy to help me with this, which sounds like super woo woo. Me several years ago would be like, “What are you talking about?” If I heard myself saying this. But there were lots of scenarios where just I didn’t have the relationship with money management to be able to run a company like I do now. It wasn’t there.
Rob Walling:
I share that, actually. I grew up without much money, and scarcity was my upbringing. We weren’t homeless, I don’t want to exaggerate it, but there were times when I was drinking powdered milk as a kid or my mom… It’s stuff. It doesn’t matter that much. Solidly working class is what I often say, which is fine. And every dollar counted, man. If I could get the socks for $2 cheaper at Costco and Target, I knew it and I would go to Costco. Or if the gas was 50 cents… Or not 50, 10 cents cheaper, then I would drive somewhere.
The problem was at a certain point, I made a bunch of money. I got rich in a way that is… And even me saying that sentence, I feel very uncomfortable saying it, to be honest. But why is that? Because I have this unhealthy relationship with it. And I’ve had to work on that.
And even to spend $100 on something that’s worth so much more to save time for me, to hire someone to come out and replace the [inaudible 00:31:37] on the garage door. I’ll spend six hours on a Saturday. I don’t anymore, but I used to because I grew up construction family, and to pay someone a couple hundred bucks to do something, my wife was like, “Dude, you’re nuts. You have so much. You could be with the kids, you could be doing some work, you could be… Whatever it is, relaxing. You need to chill out with that.” And so I realized at a certain point that I also had an unhealthy… It was an adaptive thing for me as a kid, and even as an adult, to be honest, because we came out of school making/// what did I make? $17 an hour at my first job. Hey, that’s great. Living in the Bay Area, can’t even afford a… We’re going to live in a trailer in a trailer park? We didn’t have the money.
And then suddenly, I had more and more. And I really liked this one because I don’t know that it’s talked about enough, probably not because it seems like whining on the yacht. You’ve heard this phrase of it seems like, oh real first world problem, so much money. But it’s like, even at the point where you… Let’s say you make, for the first time ever in your life you make $100,000. And that may be three times what your parents ever made, or something. That point, you should start adjusting. Now, you don’t go crazy and buy a Maserati, but are there ways that you can do that better? Are there ways that you can manage your money without just this tight fisted fear of every dollar?
Tara Reed:
Yeah. And I think it comes down to a trust in yourself and the ability to generate more. I do think that entrepreneurship really takes that, a trust in yourself that you’ll be able to flow money back to you. You’ll be able to create value for someone in some kind of way that you’ll be able to get resources. And if you don’t have that you, it’s really hard to take risks on an idea. And so that’s where I think it shows up for people. I like the example that you gave of even if you’re just making more money than your parents have made, it still shows up.
I think there’s two places where I see it show up for founders really specifically. The first show up of it is I don’t want to spend money on the software tool that I need because I’m trying to find a totally free way to do it. And while it’s really good to be tight on your expenses, there’s also a scenario that you run into where it’s like, yeah, but we need the tool to keep moving and to get going and to get the customers, so let’s just do that. Well, we’re going to be able to add value to people so we’ll get back.
I also see it show up a little bit later in the stage of but I don’t want to hire anyone to help me. I got to find a way to do everything myself. That’s the next stage place that it pops up. And it just requires a work on your relationship with abundance and not having scarcity mindset. That’s another thing.
Rob Walling:
Makes sense. You have any others you want to throw out? Other adaptive qualities. Or even go to the opposite, anti-patterns.
Tara Reed:
Yeah. The last anti-pattern is around the lack of scrappiness. There’s almost like a if you don’t have money for something, you need help from someone, you don’t have resources to do that, that’s fine. The inability to go, “Okay, how could I make this work? What if I bartered? What if I asked that person what they’re up to in life right now and what they need help with and found something that I could help with and then in exchange, they helped me with this thing that I need help with?” That, I think, is a big one.
And I think no-code is a really good tie in for that. It appeals to people who are scrappy, who are like, “Maybe it’s not going to be perfect.” Like in the scenario of bartering with someone. In an ideal scenario, you would have the payroll budget to hire them, but you don’t right now. In an ideal scenario, you would know how to code or have the technical co-founder, but you don’t right now. Or even if you are technical, you would have the product already out there and have feedback on it, but you don’t right now, so here’s the thing we can do, roll up our sleeves.
And I think what comes with that is a comfortability with not being perfect, it not being perfect when you put it out there. And I think when people are in full perfectionist mode, it’s really hard to launch something. Even if you had a full development team, the first thing you launch is still not going to be perfect. What’s that quote? Reid Hoffman says, “If you’re not embarrassed of the first version of your product, then you launched too late.” That willingness to put something out there and get feedback on and iterate over time. I think that the reliance on everything having to be perfect at first launch is it a anti-pattern.
Rob Walling:
Big time. Better done than perfect. That’s a phrase. I actually had that on a T-shirt, I think user list gave me. But I love the way the last two things you said tied in; lack of scrappiness. It’s like a lack of creativity, a lack of just getting it done, just the inability to just get done when it’s hard, when you don’t have the money, whatever. And maybe to jump in and do it yourself and to learn, I remember teaching myself X, Y, Z even though I only needed it once, but I needed it at that time. And I spent too many days learning it. Facebook ads was what it was, actually, where I spent an entire weekend reading all the books back in 2011. And I was being scrappy because I didn’t have the money to hire consultant and so I just did it. Each of these has, I think, a pattern and an anti-pattern.
The shadow side of that is you can’t then take that too far. You get down to the point where you don’t want to bring anyone in because, well, I can do everything because I’m the entrepreneur. And even if I have the money, I’m going to keep more money for myself and do it. And then of course that’s burnout. You move slower, you grow slower, you don’t whatever. Each of them, I think, has both sides.
Tara Reed:
That’s right, that’s right.
Rob Walling:
Well Terry Reed, it’s been amazing you on the show.
Tara Reed:
Yeah.
Rob Walling:
Thanks so much for coming on.
Tara Reed:
Thanks so much for having me. It’s been fun. Yeah.
Rob Walling:
Yeah. If folks want to keep up with you, you are on Instagram @tarareed_, and of course also on Instagram @appswithoutcode, and appswithoutcode.com. Thanks so much.
Tara Reed:
Thank you.
Rob Walling:
It’s great to be here on this third day of January 2023. Thanks for listening this week and every week. If you feel like you want to change someone’s year, maybe send them an episode of Startups For the Rest of Us or post a link to the show on Twitter. We’re @startupspod, I’m @robwalling. If you’re still on Twitter, that is, by the time this goes live. It’s great to be back in your ears again this week. This is Rob Walling signing off from episode 642.

Rob Walling:
Over the past probably five, 10 years, I’ve done a bunch of work to get better at that. So I worry about a lot fewer things, even though those are possible. So is it possible I’ll get struck by lightning? Is it possible I’ll get in a car accident? Is it possible I can go out of business next week or get sued, or have something terrible happen? Yes. All of those things are possible. Should I be worrying about those? That’s the real question, right? Welcome back to another episode of Startups for the Rest of Us. I’m your host, Rob Walling. And today, I’m going to be answering listener questions from bootstrapped and mostly-bootstrapped startup founders who are thinking through things like dealing with high churn when your tool is project-based, who to listen to in the early days to improve your product, and many more topics than that.
I did want to let you know that the website for my new book is live. Title of the book is The SaaS Playbook: Build a Multimillion-Dollar Startup Without Venture Capital. So it’s not solely focused on bootstrapping, but it’s bootstrapped and mostly bootstrapped SaaS companies, as you often hear me say on this show. So head to saasplaybook.com if you want to check it out. You can obviously sign up to the email list so I can notify you when the Kickstarter for the book begins. And of course, if you’re on other email lists of mine, you’ll hear from me as well. But I’m excited about this. It took me a lot longer to write the book than I would’ve liked. I had a bit of writer’s block in the midst of it. But in the end, I’m really excited about the end product. And I’ve had, I don’t know, a dozen people, maybe 15 people whom I trust who are SaaS founders … some really experienced, some still in the early days … read through it.
Gotten a lot of helpful feedback that allowed me to improve it, and then a lot of positive feedback telling me that I’m on the right track, right? Because this, like anything we do … I call products art. SaaS products are art. Music is art. A book like this, it’s art. It’s our product that we’re putting into the world. And anything like that in the early days, before you’ve had tens, hundreds, thousands of people consume it, it’s very fragile and it’s hard to tell if it’s good or not to be honest. And at a certain point, you get so close to your own art that it becomes difficult to tell if it’s valuable, if it’s going to be helpful for people, if it’s too obvious, if it’s not obvious enough, if it’s too deep, or not enough. So all that said, I’m super excited about the book. More excited than I’ve been about shipping a product like this in a long time. You can find out more about it at saasplaybook.com or, of course, I’ll be talking about it on this show in the coming months.
Before we dive into that, if you want to get a headstart on your 2023 goals, join us for the MicroConf Accountability Challenge. The difference between crushing your goals and falling short often lies in the tiny habits and wins along the way, and sticking with those habits can be tough while you’re working solo. So we’re running our second annual January Accountability Challenge inside MicroConf Connect. You can head to microconf.com/accountability-challenge. That’s microconf.com/accountability-challenge to sign up and get your 2023 off to an amazing start. And with that, let’s dive into our first listener question from Alex.

Alex:
Hey, Rob. My name is Alex. Love the podcast. You said recently that anything above 7% or 8% churn is “company on fire” level churn. And by this metric, our startup is very much on fire. The major conundrum is that a lot of our churn is due to people’s projects finishing. For example, we have grad students who use our tool for their dissertations, but they stop using it once they graduate. They love the tool, they use it for a couple of months, but then they just don’t need it anymore. Luckily, our top of funnel is large enough that we’ve built a company that is solidly profitable, which is nice. But the churn is causing our MRR to plateau.
We’ve settled on a strategy of capturing the lower end of the market and then trying to grow upmarket from there. We have some really old, hated incumbent competitors. So we believe there’s a market there for the taking, and we’re hoping that the upmarket users will have lower churn rate and a higher monthly spend. We were curious if you had any thoughts on this strategy or had any ideas of other things we should be thinking about. And also, if you have any advice or examples for how to grow upmarket, we would love to hear it. Thanks so much. And also, I’ll be at MicroConf Europe, so I will see you there.

Rob Walling:
Thanks for that question, Alex. This is definitely something that I’ve seen founders face before and it is challenging. And there’s a few ways to think about this. I can’t tell you one way that’s going to be right without you probably experimenting with it. But one way to think about it is maybe you’ve built a one-time use product. Not every product should be a subscription product. As much as we, as the business owners, love subscriptions, if the use case doesn’t match it may be time to think about just one price for a year. Instead of $30 a month, it’s $300 per year. And if a student only needs it for a project, they have to pay for a year and that’s it. There’s just no other option. And then those who do use it ongoing will pay annually. So that’s one way to think about it.
Another is to make it a one-time perpetual license. That feels a little odd to me. If it’s not just something they download and then can use on their own laptop without needing to phone home to a server, like if you’re running a web service, Any type of lifetime or perpetual deals are dicey. They’re dangerous to say the least. So that doesn’t make as much sense to me, unless you do make it that downloadable thing that people can run on their own without needing your servers. Another option is to essentially almost have a pay-as-you-go model. SparkToro tested this out. And in their early days, since they could also be a project-based tool, they actually had project-based pricing in essence. I think you got a week’s worth of access. And in the end, they stopped it. The idea was to reduce churn because the churn is troublesome when you’re a business owner. But in the end they decided, “Nope.” They were okay with the ins and outs and the complexities of that.
MailChimp has pay-as-you-go pricing. Loadster, which is at loadster.app … Similarly, it’s project-based. That’s a TinySeed batch one company. And you can imagine load testing your website. There are some people who need to do that once or twice a year, and there are some people or businesses who need to do that on an ongoing basis. Big companies, agencies who are rolling out a lot of websites. And so the founder, Andy, actually toyed with several different models. Tried it without pay-as-you-go, tried it with pay-as-you-go, tried it with pay-as-you-go plus pay-as-you-go subscriptions. There’s all different stuff he toyed around with, and he’s found his optimal model. And if you do wind up offering pay-as-you-go, it should be a lot more expensive. Like 3X, 4X the price of the monthly equivalent. So that’s an interesting one to think about. It adds complexity to your pricing, but it’s definitely a design pattern that I see people use.
And then the other way I thought about it is maybe if the people doing it project-based are all students, maybe there is just a student price. I’m making numbers up, but if your tool’s $30 a month right now and a lot of students use it for two or three months, maybe the student price is $99 for a year and everyone else is either monthly or annual. I don’t know if that’s the case, if there are non-students also using it on a project basis, but that would be another way to approach it. Lastly, you could just leave everything the same, but segment your churn based on folks who you think are using it on a project basis. If anybody cancels within two or three months, “All right, they were project-basis,” and that churn’s going to be outrageously high versus people who use it ongoing.
You figure out a way to segment the churn so that you can see what your, maybe, true monthly churn is versus your project-based churn. Thinking of them as two separate numbers. That last one’s a little dicey., Obviously it’s going to be imperfect. And if you ever go to raise funding or to sell the company, if your churn is 10%, 15% a month, you’re going to have a real headwind towards convincing any outside investor, or acquirer, that your business is not on fire. Those numbers just aren’t good. And so I, personally, would give some thought to how to make this better.
In addition, you asked about going upmarket. Honestly, it’s a huge topic and it just depends on who’s upmarket, do you already have competitors upmarket, or are you going above upmarket past them? Whether you have to add new features … Obviously, changing your pricing going upmarket means charging more. So are you going to be charging so much more that you’re going to be going from, say, teams of one or two up to teams of 10 or 20, and you’re going to go from low-touch sales where people self-onboard, to high-touch sales where you need to have a customer success person and a one-call or a three-call close? Are you going to have to go through procurement? There’s all these questions that without having those specifics, it’s just too much to cover.
So honestly, Alex, if you want to write back in or send another video question … The reason Alex’s question is getting a answered today, even though I have 30-something questions in the queue, is that he sent an audio question in. Audio and video always go to the top of the stack. And so Alex, if you want to head back to startupsfortherestofus.com, hit that ask a question link at the top of the page. I’d be happy to dig into that in a future episode. So thanks for the question, Alex. I hope that was helpful. My next question is a video question from Matt Lasker.

Matt:
Hey, Rob. Matt Lasker back again from PlayerBook. Quick reminder, we are gameifying the sports playbook. This is my third video call, so I appreciate all the feedback. You always have such great insight for me. You might just have to admit me to TinySeed with all the help you’re giving me, so I do appreciate it. This question is about the feedback loop. The prototype’s almost done, and I just want to really ask you a direct question about who I should be gaining my initial feedback from. I have built a community of about 1,500 to 2,000 through YouTube, and a website that I built off that YouTube channel. I built an audience of individual coaches that I would love to have demo it, work with their players on it, and get feedback from them directly. I think that’s a great place to start.
But there’s also this second grouping that I want to target with this initial MVP. Let’s just call them weekend camps, where 50 to 100 kids all kind of go to one place. It’s a kind of a quarterback training camp, and I want them to be a target as well. But I’m not sure whether I should let them see this very first version one and just stick with the feedback loop from my initial community members, where there will be a little bit less visibility … Or if I should just say, “Let’s just go for it,” get it to as many eyeballs as possible, get as much feedback as possible. It doesn’t matter if they’re maybe a higher level target down the line or not. Just get it out to as many people as possible. So I just really want to know if I should stick with less visibility initially to get the feedback started, or go bigger. Thanks!

Rob Walling:
Thanks for writing in again, Matt. I always appreciate your questions and the context as well. I definitely remember answering your past couple questions. So my thoughts on this are that in the early days, you don’t want as much feedback as you can get. Now, people often struggle to get feedback. I don’t think that’s going to be the case with your product. I think you’re going about it pretty deliberately. You have this audience built up. I think people are going to give you feedback. When I see some bootstrappers launch and no one is signing up … they don’t have product market fit and they’re churn as high … they often struggle to get to the bottom of why that is because no one will give them feedback. And in that case, yes you do want more feedback. You want more conversations. In your case, I would be really concerned about showing this.
What you’re calling an MVP … and I should take just a little side jag here … I want to make sure you’re not calling it a beta product. If it’s buggy, you can call it beta. If it’s not buggy, even if it’s just small, if it’s minimally viable, I would call it early access, right? This is early access. I believe Peldi from Balsamiq calls it that, and I loved that idea. We did early access with Drip and people paid for early access. They weren’t given lifetime, free use of the product. They weren’t even given a discount. They weren’t given a year free. We didn’t offer any of that. We wanted to build something that was so valuable to them that they were willing to try it out. And that that pain point, the need to solve that problem was such that they were willing to try it out.
Am I saying you should never give discounts? No. I’d be fine giving 20%, 50%, some number off the first year. It’s a nice courtesy. It’s the least you can do for people. You’re also going to probably be listening to them and building features they specifically asked for, so that’s also kind of a cool courtesy. And it’s a neat advantage they have as early access participants. All that said, one of the hardest things to do in the early days is if you get too much feedback and it’s from too many different groups. So I remember back in the early days of Drip, I was getting feedback from bloggers, from SaaS founders, from downloadable software people like the WordPress plugin folks, there were photographers that were using Drip, and some others. And the feedback across those four or five verticals was very different and that made it very hard for me.
And my big concern is if you have an audience of individual coaches who have these ongoing needs, where they have a team for an entire season, or an entire year or multiple years … I’m concerned that they are going to have different needs than someone who is a coach at a weekend quarterback camp. I played football. I was a wide receiver, and so I went to these week-long camps, actually, in the Bay Area. So I have context for this. And my relationship with my high school coach and my college track coach was very different than the coaches that were at my week-long or weekend camps, so I’m making an assumption here that their use cases are going to be different. I don’t know much about your product so I don’t know if that’s correct. But if you do think the use case is going to be different and the needs are going to be different, you probably don’t want all that feedback all at once.
I would personally think about, “I have this owned audience.” You have permission to contact the 1,500-2,000 folks that you have through YouTube and the community that you’ve built. I would most likely start with them and not go big yet and kind of iterate with that audience, and see how things go from there before I branched out into another audience. ]I don’t think you have full-time developers. If I recall, you’re working with an agency or freelancers. If you don’t have high feature velocity and you’re getting a lot of feedback, it can be overwhelming. I mean, you can get so much feedback that you have six months of building to do and you kind of can’t do much during that time because you’re like, “Wow, this MVP. It was not minimally viable. It was completely unusable.”
So then, you get to sit on your hands for months and months. And if you’ve gone out to this other audience that doesn’t know and trust you like your own audience does, it can be challenging. That’s my gut feel based on, I’ll say, the limited information I have so far. That’s how I would proceed. So thanks for that question, Matt. I hope it was helpful. Our next question is another video, and this is from Jonathan.

Jonathan:
Hey, Rob. What’s up? My name is Jonathan. Doing the fourth take already in a video question. Talking to you all the way from Israel. I am an aspiring bootstrapper. I was wondering … They say and you say, also, before you write a single line of code, you need to validate the target audience, the target market, to see that they need your solution and that they have the problem you are trying to solve. And only then, when you see that there are enough of those and validate your business plan, only then you should start writing code and promote your business. So I’m wondering when you do that process of sending out those copies and your idea to other people and asking people around, how do you manage the risk of being exposed, of your business idea being exposed?
Especially when you have nothing yet built, so you are taking a big risk because you don’t have something already that is enough progress to protect against certain competition. So I’m asking this: How do you deal with this risk? And I’m specifically trying to reach out to markets outside my country, so I’m doing paid ads in Facebook. I’m wondering whether I should avoid certain countries. Should I just not do that and go word-to-mouth?

Rob Walling:
Thanks for that question, Jonathan. I know that speaking into video can be difficult, so I appreciate you taking a couple cracks at it. This is a sentiment that I definitely hear among developers. I hear it less among non-developers because I think they aren’t folks who would go out and build something really easily, right? But as developers, we think everyone is able to do it. The interesting part is the actual subject line of Jonathan’s question. “Should I worry about people copying my business idea?” And if you look really close at that language, it’s, “Should I worry about it?” And I want to change that and say, “Is it possible that someone will copy your business idea?” Absolutely. Is it probable that they will copy your business idea? It depends. Some business ideas are really, really good. And once you hear them you’re like, “That’s amazing.” And if you have one of those? Yeah, someone’s probably going to copy it. If you don’t have one of those and you build it up to $40-$50K a month, odds are pretty good someone’s going to copy it. It’s inevitable. This happens, right?
So then the first part of your question was, “Should I worry about people copying my business idea?” And I know I’m taking it a bit literally here, but I want to think about this. Because I, personally, have naturally high anxiety and I worry about way too much in my life. I have worried about way too much throughout my life. And over the past probably five, 10 years, I’ve done a bunch of work to get better at that. So I worry about a lot fewer things even though those are possible. So is it possible I’ll get struck by lightning? Is it possible I’ll get in a car accident? Is it possible I can go out of business next week or get sued, or have something terrible happen? Yes. All of those things are possible. Should I be worrying about those? That’s the real question, right?
And I don’t think that as a person trying to execute in a high-pressure environment, whether you’re running a startup, running an accelerator, doing whatever it is that I do day-to-day … I don’t think worry is all that helpful. So perseverating or worrying about something happening, I have come to realize … Who said this? Someone else said this and I thought that was great. It was, “Worrying is like paying a debt you don’t owe, but with your emotions.” It’s really interesting, right? It’s the “would’ve, could’ve, should’ve” or what could possibly happen. And if you let your life get tied up and hung up on worry … Again, I did that for the first 30-something years of my life and I regret it. It made my life less enjoyable. And if you are tied up in those kind of cycles of everything is fear-based, it’s not super helpful and it can make you more risk-averse than perhaps you should be. It’s like asking, “What’s the worst that can happen?” and really answering that.
If you’re a developer working on something on the side, what’s the worst that can happen? Usually, it’s that you’d spend a bunch of time on a side project that doesn’t pan out. Okay, are you willing to risk that in order to potentially have a SaaS app that’s doing $10-$20K a month? That has to be up to you, or you’re going to leave your day job because you do have something making five or 10 grand a month? What’s the worst that could happen? Well, you could get put out of business and you then need to go back and get a day job, which is what you had last week. And even in this economy, if you’re a good developer, I think you’re going to work. These are each decisions you have to make for yourself. Now, that really wasn’t your question. Your question wasn’t, “Should I worry Existential Rob?” Hey, Philosopher Rob! Why don’t you weigh in on whether I should worry about things?” I know that’s not what you’re asking.
Your real question is are people going to steal your stuff? Are they going to steal your idea? And the answer is I don’t know. I don’t think so. It’s unusual for an idea to get stolen in the idea phase. Usually, it’s you launch something, it gets some traction, and then some people on Hacker News or Indie Hackers or Quora or whatever, Stack Overflow, wherever you’re talking about it … or even going on podcasts and talking a lot about your business. Especially if you say, “I had quick success and I built this in a week! And now, it’s doing $10K a month,” or whatever. That type of stuff attracts competition. It attracts copycats, right? It attracts people who want an easy win. So I would say that’s more often … It’s that phase. Or it is when you get to that half million, million-dollar point and you are a mini brand and you have traction, and people see it and hear about it and they want to copy it.
I have heard a lot less about someone who has an idea and they floated out there, and someone steals it and builds it and somehow, maybe, gets to market before them. In fact, I don’t know that I’ve heard of a single example of that. Not to say it never happens. I don’t know of every idea that’s ever launched, obviously. But kind of in the past 15, 17 years since I’ve been doing this … It’s not that ideas are worthless. Some ideas are better than others. But it’s usually that our ideas are so not fully-formed in these early days that they’re just not worth taking. If I think about the idea of Drip, it was not what Drip ultimately became. And in fact, the idea of Drip was not that great. It was just an email capture widget and an autoresponder. That’s it. It just wasn’t that great of a product idea, in terms of not being that novel.
It’s all the learning and the conversations that came from that, and then the product decisions that I made in the early days, that led us to building something amazing. But that wasn’t the idea from the start, and that’s often what happens. I’ll be honest. Most people have an idea, and by the time they get to product market fit and get to the point where they hit escape velocity and they’re growing, the idea has actually adapted and morphed quite a bit from that initial incarnation. And realistically, if someone can copy your idea, it depends. If they can get to market first, sometimes being first to market is an advantage, and other times it’s not. So that would be a bummer if someone got to market first. There’s already a bunch of competitors out there and you’re just another one. I just don’t know how much it matters.
And there are ways to even think about mitigating this, which is, as you said, to kind of go word-of-mouth only, right? One-on-one conversations, whether you’re doing cold email and having conversations. You’re not doing anything in public. You’re not running ads. You’re not doing the big landing page thing. That’s one approach to take. I’ve never done it that way. If you look back at my relaunching HitTail after I acquired it, at launching my first book, at launching MicroConf, at launching my first online membership community for bootstrapped founders, at launching Drip, launching TinySeed, all of those … There were a couple one-on-one conversations, but then it was a landing page that said pretty much what it was going to do. The book and the conference and the apps, the SaaS apps, and TinySeed … They said what they were going to be, and someone could have come out and copied me. And in fact, every one of those things has actually been copied.
Every one of the things I just mentioned was copied at different phases. Sometimes, it was just a competitor that copied features and copied some verbiage. And other times, it was almost a pixel-by-pixel recreation of what I had, which was a little annoying. And it’s super annoying when it happens, but that does happen eventually. And so I think, is it worth the risk? That’s a question you have to ask. It’s just a matter of risk tolerance and thinking, “What are the odds this is going to happen? And is my idea so incredible that everyone else is going to want to steal it? For me, the answer’s always been no. And I think for most founders, with most ideas, that’s also probably the right answer. So thanks for that question, Jonathan. I hope it was helpful.
My next question comes from Craig. He says, “Hey, Rob, I’m thinking about signing up for MicroConf Connect. I’m early in my startup and still working a day job. I’d like to sign up, but I’m unsure if I’m too early. I’m still validating the idea and getting a landing page in place. I am pre-step one of the stair step method. Are there any qualifications for joining Connect, and is there a cost to join .big fan of the pod and the content you provide.” Thanks for the email, Craig! I wanted to answer it on air. I actually replied directly to him. But just in case I haven’t been clear, MicroConf Connect is our community. It’s a Slack workspace where we have … I think it’s over 4,000 bootstrapped and mostly-bootstrapped founders now. It’s a pretty incredible place. Very positive, good amount of volume without being overwhelming. We moderate it heavily.
And so the answer to your question, Craig, is the only qualifications are that you are a founder and that you’re not a service provider. We don’t want a bunch of lawyers, investors, CPAs, anybody who’s trying to sell services to founders. We want it to be a community of founders, much like MicroConf has been from the start. And that’s just to keep the quality up, right? That’s to keep someone from pitching their stuff. And we obviously have some trouble, as any growing and vibrant community does, with people getting a little over-pitchy and having to moderate a bit. But it’s really, pretty minimal based on the size of the community, to be honest. The second part of your question is, “Is there a cost to join?” The answer is no there is not, nor are there any ongoing fees to be part of Connect. So we’d love to have you join. You can head to microconfconnect.com if you want to check it out.
My next question was from Twitter. I tweeted back in August. I said, “In your personal life, money can save you hours. In your startup, money can save you years,” and I got this great reply from Arvin Peter. He’s @RvnP on Twitter. He said, “Hiring project level thinkers versus task level workers! How do you go about identifying when you need that, and how do you go about finding such a person?” I liked this question! We can talk about these frameworks or theories of task level versus project level versus owner level as someone being maybe more able to manage more and more complex things. But to actually identify, “What person do I need in this role, and then how do I find that person? How do I interview for it? How do I craft a job description to do it?” I think is a really good thing to look at.
So first, let me talk about, “How do you identify which you need?” Obviously, it depends on the role. If you’re hiring a director of X, Y, Z, they at least need to be a project-level thinker. If you’re hiring a manager of engineering, a manager of blah, they have to be able to do something aside from being an individual contributor. Basically, individual contributors often are task level thinkers. Not always. You can get some ICs that are project-level thinkers, that are higher level thinkers. But if someone’s managing a group of people, or managers who manage groups of people, you have to be able to manage multiple projects. And so therefore, by definition, you have to be a project-level thinker or starting to edge.
Once you become a C-level, or even VPs, you’re kind of an owner-level thinker at that point, if you’re good. Because you have to be not just thinking about, “Oh, here’s these projects,” but thinking out a year. “Where is this headed? What happens when these plateau?” Consuming new information, reading books, going to events, listening to podcasts, and taking all of that and using it to make your role or your department better. That’s more owner-level thinking. It’s when you own a business and you’re constantly thinking about how to improve it, and not just how to drive projects forward. That’s a big piece of that owner-level thinker. And so identifying when you need what often, usually … especially with bootstrappers … it comes down to money. Usually, you just can’t afford owner-level thinkers. They’re just very expensive. They often become co-founders because you need to pay them an equity. And if someone’s that good and you don’t really have the tremendous budget to pay them, that’s often what happens.
If you have an individual contributor role where you just need an assistant, an executive assistant, a virtual assistant, you need someone to write blog articles, you need someone to run a pay-per-click ad campaign … Really, they can be task-level thinker, right? But the moment that they have to do, let’s say, marketing strategy, or they have to start deciding what features are built in your product … Usually, founders do that. But let’s just say it’s this one level up from doing the work and not just thinking, “I’m doing a task now, but what am I going to do next week and next month?” That’s when you start to need those project-level thinkers.
In a perfect world, you would hire a ton of project-level thinkers. Even individual developers … I’ve known several who are also project-level thinkers, even though they were coding. And it makes them really good because they’re thinking ahead. They’re super-senior. It’s that emotional intelligence that goes beyond just being a good coder, being a good developer. But actually, thinking ahead to what’s best for this product, what’s best for the team, what’s best for the company. Those are the folks that are amazing to find. They’re usually just very expensive. And as I said earlier, if you’re hiring someone, let’s say, to run marketing for you as a manager of marketing, a director of marketing, they have to be a project-level thinker. If they’re going to be managing several people who are working on projects, by definition, they have to be involved in those projects and have to be able to manage them.
And then the second part of Arvin’s question was, “How do you go about finding such a person?” I mean, really, it comes down to the title. And this is where job titles are actually important. I used to think they were (beep). After I left these big corporate jobs, where there was all this hierarchy, I started making up job titles. It turns out that’s not the best way to go, as I actually talked about that a bit in my MicroConf Europe talk just a couple months ago. But in essence, when you have a title like a director, a VP, a C-level, even a “manager of,” that’s going to imply a project-level thinker, and the bullets in that job description should reflect that, right? You don’t have a Director of Development where there’s no bullets in there about managing a lot of projects or about managing a bunch of developers, or about driving the whole team forward. That has to be part of it.
And if you’re looking for, let’s say, a mid-level or a senior software developer, probably won’t have those kind of bullets. I mean, you want them to be part of the team, but do they have to drive projects? Do they have to be a project-level thinker to be a mid-level software developer? I don’t think so. They can crank on their code and they can get the next task done, and they can do the next task until the end of the sprint and then go. If there’s someone above them in the hierarchy who is doing that project level thinking, then that all works.
So I hope that was helpful, Arvin, if you’re listening. Or if you’re not, to any of the other listeners out there. That’s the last question for the day. If you have a question, you can email it to questions@startupsfortherestofus.com, or just head straight to the website, click the “Ask a Question” button at the top. As a reminder, saasplaybook.com is now live and you can learn more about my new book that’ll be kick-starting here in a couple months. Thank you so much for joining me this week and every week on Startups for the Rest of Us. This is Rob Walling signing off from episode 641.

Rob Walling:
It’s a bird, it’s a plane. It’s another episode of Startups For The Rest Of Us. I’m your host, Rob Walling. Today is another episode of Hot Take Tuesday.
This is our news round-up format where we take the most important news stories of the day that affect bootstrapped and mostly bootstrapped SaaS founders. And we bat them around and we give our hot takes on topics today ranging from whether we are actually experiencing a recession, how to think about that as a startup founder. We dig into ChatGPT, which is the open AI project that is all the buzz right now, and we talk about Elon Musk acquiring Twitter and the drama or lack of drama, depending on your perspective, around this entire endeavor. But as always, we relate it back to bootstrapped and mostly bootstrapped startup founders who are trying to figure out how these events impact us and our companies, if at all. And all the while I tried to keep my guests from derailing the podcast episode.
Our first panelist for Hot Take Tuesday is Tracy Makes on Twitter. Tracy Osborn, welcome back to the show.

Tracy Osborn:
Happy to be here.

Rob Walling:
We got some good topics today. Our other panelist, many of you know him well. This dower gentleman to my left, Mr. Einar Vollset whose Twitter feed is filled with things that only make sense if you are actively watching the World Cup or a Giants game. Einar Vollset, welcome to the show.

Einar Vollset:
Thank you very much. I was upset this morning because it turns out that Aaron Judge is going to stay with the New York Yankees, which is a disaster. See what I mean?

Rob Walling:
I have no idea what you’re talking about. Is that a sports ball team?

Tracy Osborn:
I was going to say my brain just went reeeee.

Rob Walling:
I don’t know who or what. I caught a baseball team in there, I think. The man who is not going to derail today’s episode, Mr. Einar Vollset.

Einar Vollset:
Thank you for having me.

Tracy Osborn:
It’s not going to happen.

Rob Walling:
All right, we’re going to kick it off with the topic that everyone’s talking about this week. Chat.openAI, which by the way, if you forget the name of this and you try to find it via a Google search, I couldn’t because I couldn’t remember it was called Chat.openAI, so I went in for like “AI chat” and “artificial intelligence chat” and a “chat thing” and there’s just all this crap out there. So they need to work on their SEO. I had to actually go to Twitter. Chat.AI hit the scene in the last week. Everyone seems to be searching for things, getting answers. Some are funny, a lot are accurate, some are inaccurate. Are we already tired of seeing people post these conversations on Twitter? Tracy you want to weigh in first?

Tracy Osborn:
I was wondering if you’re going to leave the Twitter part in, because I know that one of our potential topics for today was talking about Twitter in general. And I have not been on Twitter in the last couple weeks, but the sci-fi nerd in me feels like this is the first step to having a computer do-do-do and then it calculates and does things for you. You need to have some sort of crappy AI that’s, I don’t know, being an AI. And so I think that’s on its own, really neat to see this last few months of really picking up on this idea of like, “Okay, this is the first step to something that could be like AI, I don’t know, maybe Skynet apocalypse somehow in the future.

Rob Walling:
Hopefully not. But Einar, do you for one, welcome our future robot overlords?

Einar Vollset:
I do.

Rob Walling:
That’s a deep cut. Anyone, just me?

Einar Vollset:
I do. I totally welcome our new overlords. I’ve been an AI fan for forever. It was one of the topics that I considered doing my PhD in. So I think it’s amazing what they’ve done. It fits the… It’s got the perfect profile for what amazing technology because A, everyone sort of, kind of, treats it as a toy at the moment and the mainstream news hasn’t really picked up on what’s going on. That’s one of the most shocking things to me about this. My Twitter feed is just nonstop ChatGPT. Nonstop. Nonstop. And I read the Wall Street Journal, the FT or The Times or whatever, and it’s like nothing. It’s like it didn’t exist. I’m like, “What is happening here? This is a giant step forward. And it’s like they weren’t even paying attention.” This is the most shocking thing to me. But yeah, I mean I really like it.
I think you’ll gain feed like the sort of mill of people who are like, “Oh no, AI’s going to take over everything and blah, blah, blah. All the jobs are going to end.” And it does do some amazing things with co-generation and accessing APIs or that sort of thing. But I don’t think it’ll be… I don’t think Google will fire all its engineers and just switch to open GPT, to put it that way. I don’t think that’s on the cards. It was one of my portfolio company founders, actually Pierre with Scraping Bee, he was like… This morning he tweeted something. Did you see this tweet? It was like, “Hey, I figured out how Google can have a 90% profit margin. They should just have all their queries ask ChatGPT and they’ll have a 90% profit margin, assuming 10 trillion searches,” which I thought was pretty funny.
But it is interesting because I mean, one of the most interesting takes I’ve seen… So there’s a bunch of stuff we can dive into because I’ve spent a lot of time with it, but one of the most interesting things is like, “What does this do to Google? What does it do to search?” Because people are like, “Whoa, this is actually better than my Google search interface now.” Which is quite something because the way, and it sort of makes sense, because if you think about Google, at least the way it used to be, it’s like it generates value or information from the sort of link graph in the world versus with open GPT it basically builds its intelligence based on the things that are on the internet but it’s not the links. It’s the text and the implications of the text. It’s a very interesting model.
It’s genuinely one of the first things I’ve seen. I’ve been like, “Truly, this could hurt Google. Not immediately, but something like that really could.” And people complain and they say, “Oh, it’s just going to hallucinate facts.” That’s fair, but I’ve also seen it reference its sources. I have a… There’s a tooling that goes in, so instead of just calling, playing in the playground or whatever, you chain all these things together and you give it access to basically searching the web and fetching data from the web and summarizing data in the web and then referencing that data in the response. And that sort of gets rid of that concern because then you know the references’ sources. So yeah, I’m super excited. I really like the space. It’s probably over hyped at the moment. It usually tends to be. There’ll be a trough of sorrow in 18 months when everything is in the crapper. But I think two, three years from now we’ll look back and we’ll be like, “Oh yeah, this underlying technology really enabled a couple of amazing new companies at least.” I’m sure about that.

Tracy Osborn:
Yeah, I have memories. My job, 10 years ago, it was a lead generation for online education and they wanted to get the SEO pages for every, I don’t know, artistic degrees in New York, artistic degrees in Pennsylvania, artistic degrees in blah, blah, blah, blah blah. And so this company I worked with hired a whole huge amount of writers. I don’t know, it was like 50 writers, just churning out all of these little snippets so they can have them on the pages and therefore the pages would rank in Google. Again, this is 10 years ago. And so that whole industry, I guess, of just hiring groups of writers like that is gone and I’m happy for it. It seemed like a pretty lame job anyways for those folks. And I remember, no, they were pretty unhappy too.

Einar Vollset:
Tracy The Content Farm Producer.

Tracy Osborn:
Yeah. Yeah. Exactly. Yeah. Content farms. Yeah, that’s the word for it. So that was my former job of watching that happen and I’m very happy that doesn’t exist. I didn’t really think about the replacing of Google, which is lovely to hear. That makes me even more excited because me and everyone else in the world searched for things on Google now and it’s just like, you aren’t as good as I remember you used to be. Stop ignoring the words I’m using. Stop switching out the… Oh, it’s like Google saying like, “Oh I know what you really want to search for.” And I’m like, “I know what I’m doing. I’m searching for the thing I want.”
And it just drives me… I’ve been just driven up the wall with Google, so that’s exciting. I like this idea that we can have something that will be… Take us back to getting good information from my… If you have a query and you want to ask it. Can we call it Ask Jeeves? I feel like this is a dream of Ask Jeeves.

Rob Walling:
Ask Jeeves.

Tracy Osborn:
Yeah.

Rob Walling:
You’ve just invented-

Einar Vollset:
That’s right.

Tracy Osborn:
It’s what Jeeves promised.

Rob Walling:
Registers.com.

Tracy Osborn:
You put in a query and then you get the answer and we are finally there.

Rob Walling:
Yeah, remember that.

Tracy Osborn:
It just took a while.

Rob Walling:
It’s a trip. 25 years later.

Einar Vollset:
Yeah, I think one of the most interesting things too is, if you think about it, it allows you to give context and expand, in a way that doesn’t really work all that well with Google. So it’s hard for me to do the following, do a broad search on Google and then have a subset of those results and then search within those results, but only those results and do that two or three times.

Tracy Osborn:
Yeah.

Einar Vollset:
But a language type model that remembers state is a much more natural way to interact with a data set in that way. So there’s a bunch of things there that are very interesting.

Rob Walling:
The state is a big deal.

Einar Vollset:
Yeah, I think so.

Rob Walling:
The state is a huge deal. Can you imagine when this is built into our Amazon Echoes and the Google Homes or whatever and you can literally just ask the question and actually get an answer because today it’s garbage. You ask Alexis something and she’s like, “According to blah” and cites something and half the time it’s garbage. It doesn’t answer your-

Tracy Osborn:
And then you get an ad afterwards.

Rob Walling:
And then… I don’t. I must be paying for a premium or something but-

Tracy Osborn:
Oh, some people are talking about getting ads or it’s like, “Also did you know blah blah blah blah” or something. I don’t have an Alexa. I’m just hearing people talking about how they’re trying to throw ads in. Anyways continue.

Rob Walling:
But in order for this to work and replace Google searches or whatever, if I’m in a browser, because I think in terms of voice interaction, this is just head and shoulders above anything we see in the space, once they adapted to that. In terms of actual Google searches, at first when someone started suggesting Google’s in trouble, I see it on Twitter where they type in, “What’s the average rainfall on the Amazon basin” and then it gives a response or whatever. But A, it has to be right. It needs to be at least reasonably accurate and it’s not today. So that’s refinement though. And then to your point Einar, I want to see it reference sources of some kind because that’s important. When I do a Google search and I see 10 results, I’m absolutely looking at those domains. I look at the headline to see the result and then I’m like, “Who told me this?”
So for example, I just searched how many Google searches result in zero clicks because I actually think this is perfect for that, right? Sometimes I want to search and I want to say top websites for this or I want a list of 10 apps that do something because I’m trying to compare them, right? And in Google that works today because I get 10. But there is a portion of time where I literally just want to know a fact. I want to convert Fahrenheit to Celsius, I want to know the average rainfall on the Amazon basin to reference that Farside comic. Once again, I want to know something that maybe is a little plain flight duration from here to there, whatever. And those zero clicks, which they’re around 20 to 30%, depending on how you count it according to Search Engine Land.
So I did that search in Google just now and I saw these numbers and they’re all conflicting and Search Engine Land is a brand I trust or at least it’s a resource that I trust to be relatively accurate. And so that’s what I want is knowing the source helps me have confidence in the results, right? Which I think GPT can add, as you said. The other thing is I thought to myself, “You know what I want? What if I want five or 10 different SaaS apps because I just want to kind of noodle through them?” Well you could ask… What are we calling it?

Einar Vollset:
ChatGPT.

Rob Walling:
Chat-

Einar Vollset:
GPT is the underlying thing.

Rob Walling:
Okay. ChatGPT

Einar Vollset:
That’s why you didn’t find anything. GPT is like the-

Rob Walling:
No, because I was like, “Open AI chat, blah blah blah.” But so if ChatGPT, I could just ask it, “Give me the top 10 blah,” and it could give me the 10, right? That was a mental hurdle early on of like, “Well, I like having a bunch of results in a Google search.” ChatGPT could do that if you just ask it. You just learn how to use the… It’s just a slightly different interface. It’s really interesting.

Einar Vollset:
It allows you to think and really ask queries about over data sets that you couldn’t possibly because you are not Google. Google can figure things out like this but you can’t because they’ve constrained the interface to be this, this is what it does, and the technology doesn’t understand if you query it differently. Whereas with open GPT, really you can query it in different ways. And that’s the most interesting thing because you could have your own special way to talk to the Oracle, whatever, that gives you the data in a certain way that you really want. That’s only the way that you do it. That’s not possible in Google, which is pretty cool.

Rob Walling:
Think about that interface inside a company. We spent so much development time pulling a report for our BI team or pulling a report for the CEO of about metrics and this and that. We didn’t have metrics. Imagine if you had this interface over a sequel database and certain people have.

Einar Vollset:
And they actually still exist. You should look at some of the language models that chain them together where it’s like you basically just describe… So instead of a writing API code and having your code doing it, you have a description that’s just a word description of what this is, what the API does, here is the parameters, this is the kind of questions and answers you can get. Go use this API, which is pretty cool. Then you can chain these things together and you can do honestly what a lot of developers do, which is chain different APIs together and add some secret sauce. That becomes much more fungible and much easier to do and then it can hallucinate facts.

Rob Walling:
Yeah.

Einar Vollset:
Someone said that on Twitter. Again, clearly I live on Twitter, and someone said, “One of these days, very soon, an open AI will hallucinate, basically come up with something that isn’t true and we will just assume that it is and we won’t find out until it’s been considered a fact for years.”

Rob Walling:
That’s going to be one of the challenges.

Tracy Osborn:
I feel like I kind of do that with Google’s Instant results. I just take them by fact too and I’m like, “Oh I trust Google.” But I don’t know, it could have been feeding me wrong facts. The other day I searched for converting so-and-so Euros to USD, which has always worked perfectly, except for last time it decided, I think it took my local location and instead of doing USD, it did Canadian. So I just completely ignored that side of the thing. And I almost grabbed the number before I realized that the little calculator said.

Einar Vollset:
The Canadian dollars are pretty much worthless, right? It’s like two to four or five dollars?

Rob Walling:
Hot Take Tuesday.

Tracy Osborn:
Yep, which is why I wanted to do USD but it was just like even Google is like… I don’t know. It feels like they’re getting… I was going to say getting wronger. They’re getting worse. And it’s just like, “Oh come on.” It says my query has a USD. It’s right there.

Rob Walling:
Yeah. Wrapping up this section so we can move on to the next topic. Tracy, I want to get your thoughts on, it feels to me like a lot of AI is open source slash commoditized. It’s given away. So this is a show about startups, right? About building SaaS companies, B2B in a lot of cases. Is there an approach? What’s the path to bootstrap or mostly bootstrap a great company in this space or is this one of those spaces where that maybe just isn’t likely to happen? I think about VR for example, and it’s hard to bootstrap in that space. You can be a game developer, you can be an indie game developer, but actually B2B stuff, it’s either expensive to build or whatever. So I’m curious to get your thoughts.

Tracy Osborn:
I mean it’s kind of like my husband’s an author of the popularest, whatever word… Of Python open-source project Euro lib three. And it sucks that he built something that’s used in pretty much any system that’s using Python. If you’re using PIP or Virtual End, it’s using those systems. But it’s the same situation where there was a tool that was created, it was opensource, people did it for the love of the everything. And then it is being used in companies that are now the startups that can do more because they have these open source tools. So there’s the same thing when it comes to AI and it sucks that there’s probably a lot of work, just like in open source, where a lot of people are putting out a lot of hours at their time, they’re not being paid for those hours of time, and then it’s going to be used in other places where the companies are going to be the ones creating revenue.
So it’s the same situation as the open source world and the open source world is constantly doing conversations about how do we fund open source creators? How do we support them? And they usually surround foundations and grants and big organizations like Google paying out for those, some of the largest ones. And possibly that’s what’s going to happen with the AI, right? Where it’s like how do we, I don’t know, support the development of this? But then there’s going to be this whole other layer of startups that are rebuilding, utilizing these tools.

Rob Walling:
And we at TinySeed have backed at least two AI focused companies. So it’s all B2B stuff. You can look it up on the portfolio page. So we think there’s some opportunity there. But I’m curious, as we wrap this topic, Einar you have other thoughts on that, about whether there’s opportunity here or whether it’s going to be an uphill battle due to the hotness? Is it so popular everyone’s going to jump in?

Einar Vollset:
Yeah, I mean unlike Tracy, I’m not an open source communist.

Rob Walling:
Hot Take Tuesday.

Einar Vollset:
No, no, I’m only kidding. But I think I actually worry less about like, “Oh, is this open built and open source and then commercialized.” I understand that take. I think one of the more bigger challenges is, let’s look at right now, what is the best tool out there? Large language model. It’s open AIs, whatever, blah blah blah. That’s a commercial tool. I think what’ll happen is people will experiment with this on an open source or closed source free version, get to where they want to do and then they’ll realize, “Okay, we have to train our own models.” I think that becomes a key thing. I think if you’re going to do an AI startup, eventually you’ll end up at least fine-tuning or if not building your own models from scratch, obviously using libraries and things. The way that I think a ChatGPT is, like I said, it’s similar to Google.
Do you build a startup on Google? No, not really. You don’t sort of… You can’t build that into as the foundation and then build on top of it. You can build alongside it, you can build competitors, you can use tooling, whatever. But I think it’s the same thing with Open GPTs, it’s sort of an amazing tool. I think it’ll be hard to have a competitive moat if you don’t have your own language, if you don’t have your own training sets, if you don’t have your own model. I think that will be true.

Rob Walling:
Right. Because otherwise it’s a commodity. It’s kind of like forking an open source project and just trying to sell it without-

Einar Vollset:
Yeah, I do think some… There’s opportunity certainly for people to write, who use this or you can license or do this kind of thing and then customize that interface to whatever work situation makes a lot more sense than just an API call or a chat interface. I do think that makes a lot of sense for people. But for example, I don’t think everybody… And this is already going on. The best example of this is all these copywriting AI companies. Basically you could do whatever it is that they do using open GPT and it’ll be much cheaper than their interface. But the fact is their customers don’t care that much. They just want the value from it. And so if it’s 25 times more expensive but it’s more tailored to their use case, maybe the model’s tuned a little bit, that makes a lot of sense.

Rob Walling:
Our next topic is the worldwide economic climate. Case in point, when I go to Google and say, “Is the US in a recession right now?”, the top result from forbes.com says, “Yes.” We entered it in summer of 2022, the next result says, “No.” And that’s from another relatively reputable source. So my question to you, Tracy, we see a lot of companies across our portfolio. Do you have thoughts on whether… Are we seeing evidence of recession across B2B SaaS companies or, I don’t know, in your everyday life?

Tracy Osborn:
I want to note that there’s like a layering of hot takes. Because when you’re looking at Googling and reading these results, then it’s like one is a hot take saying, “Yes we’re in a recession” and then one is a hot take saying, “No we’re in a recession” and then here we’re hot talking and hot taking on the hot takes. Anyways, just noted that. Company wise, I don’t know. I am not an economics person and so I feel like there’s scientific things around a recession. There is people talking about having trouble closing enterprise deals. I think Einar probably can speak more towards that in terms of people not wanting to spend right now, they want to save and maybe punt on some of the big deals that could be going through. There are a lot of people who are doing quite well. So I don’t know, you guys probably can speak more about what the difference is between those two companies.

Rob Walling:
And the way I’ve been describing it is between TinySeed and my own stuff I’m invested in, I think it’s like a 125, a 127 companies. And at any given time, just in normal times as things are growing, there’s always a chunk, 15, 20% who are growing really well. There’s a certain number, maybe 15, 20% who are really struggling. And then there’s this whole middle that is growing decently but not amazingly. And they’re figuring things out and those numbers aren’t exact, but you get the idea.

Tracy Osborn:
They haven’t quite shifted, right? It feels like it’s been relatively the same.

Rob Walling:
No, I feel like it has shifted. I feel like they’re… If it’s normally 15, 20% are seeing slower growth, I think that number maybe is like 25 to 35% right now. It’s not everyone, but I think the number is larger and this is… There’s a bit of gut feel here. I mean we can look at the graphs and such, but that’s kind of my sense of it. And I’m definitely hearing more… I’m hearing more chatter about that from companies I’m invested in. Now I also wonder if sometimes that-

Tracy Osborn:
Is it kind of like a loop? I mean, I’m not saying that-

Rob Walling:
The cycle.

Tracy Osborn:
There’s things that are definitely happening right now, but once people start talking about it and more people start talking about it and then everyone gets worried about it. So again, I’m not actively tracking this.

Rob Walling:
Yeah. Einar, what do you think?

Einar Vollset:
I believe that I saw in the sort of May, June timeframe, July, definitely a spiking churn. I think around that time is when a lot of companies were like, “Okay, we’re definitely heading into recession. What software aren’t we really using? What should we cut? What should we renegotiate?” That sort of thing. I think that played out. I saw a number of portfolio companies reporting. I mean some that had never had churn being like, “Oh crap, we had our first churn. Somebody canceled. Hopefully they’ll come back.”, type thing. So I think that’s true. I do think that too is right.

Tracy Osborn:
Yeah, a lot of you people saying big accounts are dropping. Do you think it’s… Is there a difference between the big accounts and small accounts?

Einar Vollset:
I think I see more churn in… I think I saw more churn in the smaller accounts.

Tracy Osborn:
Okay. Yeah.

Einar Vollset:
I think the bigger accounts. I think what happened is I see that enterprise sales cycles are lengthening and I see that the churn is increasing in the smaller accounts. I think certainly there’s so much uncertainty that I think a lot of the stuff that I’ve been hearing has been like, “We thought this thing was in the bag. We’ve been negotiating for nine months and now they say they’re going to do a budget review and get back to us next year.” I’m hearing a lot of that on the enterprise side and I think that’s true.

Rob Walling:
To wait and see.

Einar Vollset:
Yeah, and it’s funny because some founders, they going into this year or during the year, they were like, “How can we increase our prices to make sure that we make up for inflation?” And I was always like, “Yeah, how about trying to keep the customers at the price that you’re doing right now?” Yeah, but I think that’s what I’m seeing. Lengthening enterprise cycles at a bump in churn. I think churn has come down a little bit. I think we definitely had a situation where a lot of people were canceling things that maybe would’ve been spread out over the next six to nine months when they realized that we’re not really using this thing. And so maybe it was sort of front loaded in, sort of, that May, June timeframe. So I’m hoping that’s the case. But certainly on the enterprise side, longer sales cycles and like, “Hey, let’s talk next year on things that people just assumed were in the bag.”

Rob Walling:
Prediction time. We are recording this in December of 2022. Tracy, six months out, let’s say June of 23. Are things better? Are we starting the upcycle again? Are things worse or are we still kind of bumping along where we are right now?

Tracy Osborn:
I mean it’s hard not being an optimist. I think it’s my role here is always to be the optimist, to be the foil to Einar’s pessimist sometimes.

Rob Walling:
Hot Take Tuesday.

Tracy Osborn:
I just want to have hope for the future. So, I mean what? A lot of the recession is probably lingering effects from the pandemic. And the pandemic is at a point now, I think, of things are truly now starting to return back to somewhat what was going on in say 2019 and things are wobbly, but that by June maybe we’re in a better place. So I feel optimistic. Einar is probably more scientific about this. This is all gut feelings for me.

Rob Walling:
I think it’s all gut feelings for all of us. It’s a prediction of the economy. No one knows what’s going to happen.

Einar Vollset:
There’s more science on my side.

Tracy Osborn:
I mean he reads Financial Times and Twitter.

Rob Walling:
And they’re just making guesses too. Einar, what are your thoughts here, six months from now?

Einar Vollset:
Yeah, so I think a couple of different things. I think that depends on who you’re asking is it going to be better for. I think consumers are still working through a cash cushion that was excess savings from the cash injections that came during COVID. So I think there’s a lot of people… You see that with credit card spend versus savings, that sort of thing. I don’t think that’s really played through the markets yet. And I think those type of things will be reflected and will start to hurt more consumer facing companies. But by June, do I think the stock market will be further down? No. I went long on the S&P 500. So maybe that’s the jinx that means we’ll go out with another 20% now.

Rob Walling:
Oh no, you doomed us.

Einar Vollset:
But I don’t think the stock market will be worse off. I think some of the uncertainty will have played out. I think some of the expectations, particularly if you’re looking about investment side, I think finally some of the founders will realize that valuations have been reset and you can’t… You’re not going to be a billion-dollar business with three million ARR. That’s not a thing anymore.
But yeah, I think there’s consumer hurt coming and more through that timeframe and I think as a result more consumer facing companies will be hurt more. I think B2B SaaS will be relatively insulated and honestly I think most of the pain that Python in that sphere is done. I mean you look at the B2B SaaS, public B2B SaaS companies, multiples are way down. From 21 times forward looking revenue to six or five or whatever it is now. I think that’s too low. I think… And you know can just look at the cloud ETFs, they’re down 60% from the peak, type thing. Do I think they got further down to go? I mean maybe, but I think they’re going to come back faster than people expect.

Tracy Osborn:
One thing on the consumer side, don’t you think that consumer hurt is already here and you think it’s going to get worse, because the inflation stuff? I know that my cost of living in Canada, I mean probably everywhere because of inflation, but in Canada things have skyrocketed. So do you think that consumer… You think it’s going to get worse from what people are already affecting right now?

Einar Vollset:
Yes. I think consumers are being cushioned by the pain of inflation by their savings, still. And I think that’ll run out sometime in the year and that’ll then impact earnings on the consumer facing company side. That’s what I think.

Tracy Osborn:
Interesting. Okay. Yeah, I’m hearing a lot of chatter. Just again, it’s my local area.

Einar Vollset:
This is sort of what you need. You basically need… This is how you get inflation down, is pain. People are… I don’t understand politicians who are like, “What are you doing? You’re causing unemployment whether you’re raising your rates.” I’m like, “Yeah, that’s exactly what needs to happen.” You need to increase-

Rob Walling:
It’s a cycle.

Einar Vollset:
Yeah.

Rob Walling:
We have to have down cycles to have anything and-

Einar Vollset:
You got to do it. This is literally what they’re trying to do. It doesn’t make any sense to complain that, “Hey, don’t you know you’re causing this?” I’m like, “Yeah, that’s exactly what they’re trying to do.” Yeah, it’s not going to be super nice but I think on the B2B SaaS side is relatively insulated.

Rob Walling:
That’s the thing to think about. It’s so interesting to ask that question from a consumer perspective, from a large business perspective, from a public company perspective, from a SaaS company or a startup that was three million ARR and raised it a hundred million or 500 million valuation. Each of those will have a different outcome. And the people who raised big buckets of money at these outsized valuations have a hell of a lot of work to do because multiples have collapsed so far that they have to 5x revenue, 10x revenue to get back to the valuation that they got two years ago. So that’s a whole different story.

Einar Vollset:
There were SaaS companies. In 2021, there were SaaS companies doing three million ARR that were raising in a billion dollar valuations.

Rob Walling:
Bananas.

Einar Vollset:
There’s a lot of things. With the public market, multiple… I can’t even do the math in my head. 300 times ARR or something insane. Now a public company is trading at six times. There’s an awful lot of things that have to go right for you to get even close to that.

Rob Walling:
Yeah, and so that’s where the resilience of SaaS in general, especially B2B SaaS, but also companies with unit economics that actually kind of make sense. And look, there are absolutely venture backed companies that are growing fast, that do have decent unit economics. We hear the news stories about those that don’t because they often implode, but the majority of the MicroConf, TinySeed, bootstrapped, mostly bootstrapped ecosystem by definition has to be pretty capital efficient. And so I do think there’s insulation, even if there’s headwinds depending on your space, right? Because we can each industry, if you’re servicing schools versus government versus SMBs versus large… Each of those is reacting slightly differently. But across the board, I agree with you, I think I’m a fan. B2B SaaS.

Tracy Osborn:
That’s why we do what we do.

Rob Walling:
Before we move on, I’m going to weigh in. I think that within six months, same question I was asking the two of you. I think it will be about the same unless some world event happens and the longer we’re in kind of this bumping along, the more likely something is to happen because it’s just time. And I mean by someone invading another country, heaven forbid. Bad things that have happened that have sent us into recessions before. There’ve been black swan events, terrorist attacks, pandemics, whatever. Again, I’m not predicting nor desiring any of those, but if one of those happens, we will see another big drop. And if that doesn’t happen, I’m probably just in the middle. I’m neither bull or a bear on the next six months.

Hello listener, this is Rob. Chiming in about a week and a half after this episode was recorded. I wanted to intro and perhaps caveat this next segment where Tracy, Einar and I discuss Twitter, and Elon Musk, and all that. And the challenge with recording on news topics like this is that sometimes these stories change so quickly and certainly the Twitter story has unfolded over the last few weeks. This episode was recorded before the journalist were suspended. It seems like the verdict is still out on what is going on with that. But I just wanted to put a caveat in here to realize that our opinions expressed in this episode were from news as of a couple weeks ago and as things unfold in the coming weeks, I imagine those opinions might change. So with that, let’s continue the episode and dive into the next topic.

Last topic of the day, Twitter. Elon Musk. This is truly a topic for Hot Take Tuesday. Tracy?

Tracy Osborn:
We have the two opposite sides. The court, Tracy and Einar.

Rob Walling:
I don’t know. We’ll see, right? So Tracy, Elon, obviously I don’t need to… He took it private, everybody knows this. He’s making changes. You can pay eight bucks to get a blue check. There’s stuff happening. He’s trolling people with his tweets, etc. A, are you still on Twitter, and B, do you think Twitter is better or worse given that Elon is running it?

Tracy Osborn:
I have been trying to kick the Twitter habit for a long time and I stayed on it because it was useful for my career. It was useful for me to get information from other people that are in my space and get early information, I would say, as eventually people write blog posts and whatnot. But that was truly the place where to find what people were actively working on. It led to a lot of speaking opportunities in my career. I’ve been on Twitter for 10 years, but for me, it was devolving into going on there and going, ugh, because there was so… It was incentivizing. This is pre Elon. Twitter was already going in the direction of incentivizing a lot of Hot Takes and a lot of knee jerk reactions, a lot of negative negativity and whatnot.
And for me, personally, my life is stressful enough already. And so I will open it because I’m like, “Oh, I should do this for my career.” And then I’d be like, ugh, and I close to move on to something else, the more… I’m kind of moving into more private communities and that kind of stuff.
So the Elon thing was like, “All right cool.” I have the reason, I have the perfect motivation to just be like, “I don’t have to be on here anymore. At least until the dust settles and maybe evolves into something different.” And it’s a little depressing at being such a fan person of Twitter for so long and then utilizing it so heavily for my career. It is kind of disappointing to feel like, “Oh crap, now I’ve lost this opportunity that I had in the past that… I don’t feel like… Feel exists at this current moment.” And it is funny, when I do click on… I sometimes accidentally click into it and it’s like, “You have 25 notifications,” and I click onto the notifications tab and it’s like, “You missed these tweets from Einar Vollset.” It really wants me to read it.

Einar Vollset:
That’s what you get.

Tracy Osborn:
It’s all Einar.

Rob Walling:
Cursed.

Tracy Osborn:
Every single one I think. So…

Rob Walling:
The algorithm is doomed.

Tracy Osborn:
Really. I’m missing out on all the tweets of Einar and it’s really reminding me every time I load. But that’s my personal thing. I want to say one other thing in terms of that’s my personal tick. There has been something I’ve been seeing with TinySeed because I follow all the Twitter companies that if someone is accepted into TinySeed, the TinySeed account only follows folks that are in our ecosystem. So generally our founders and their companies, if they have Twitter accounts. And that has been decreasing in number and the more… I’ll find accounts where they’re inactive, they’re not really being used. So, company wise or for TinySeed, as a company account, it’s also becoming less useful because the folks it seems like that we are investing in and the folks who are probably applying are using it less and less. I don’t like LinkedIn.
Kind of feel like that’s LinkedIn now. And I have to figure out how to investigate that because I am years of hatred of LinkedIn, just again that’s on a personal account. But I have been noticing this trend as I’ve been running the TinySeed Fund Twitter account and that the folks that are apply… People either don’t have accounts or the accounts are not used very often. And there are some people who do have accounts and that’s really great. But overall it’s kind of become less useful for TinySeed Fund. Still going to use it for TinySeed Fund and stop using it for personal stuff. Of course, we’re still running our accounts for TinySeed Fund because I think it’s a really great. It’s still a resource to find those folks, but just overall it feels like it’s different than it was in 2019.

Rob Walling:
Einar Vollset. Same question.

Einar Vollset:
Yeah, yeah. I’m still on Twitter. I don’t see myself leaving Twitter. That’ll be crazy. It’s half my life. I have the completely opposite view, I think. Well, so I think first I will say this, I don’t think the algorithm really impacts me because I don’t use it. I have it set to the latest tweets and when I switch it to whatever Home is, aka, the algorithm, I see a lot of crap. And I think in general, for a long, long time, both Facebook and Twitter and whatever their algorithms were basically just optimizing for the most engagement, which a lot of the time ended up just being rage. So that’s unrelated to Elon, but that’s sort of how I interact with Twitter. And I think, honestly, I don’t think I’ve seen much change on Twitter. It isn’t different to me. It doesn’t matter. And I think that combined with the fact that I think the news media has completely lost their mind when it comes to Elon Musk. For some reason he’s become the big bang.

Tracy Osborn:
It’s the trash fire everyone wants to follow.

Einar Vollset:
And it’s completely insane to me. I’m like, “What did the guy do?” Let’s just calm down, stop hyperventilating and think about what he actually did. Did he buy a company and fire a bunch of people? Yeah, sure. But so does a lot of people. I think it’s telling to look at the way in which these news organizations have been treating the way that Elon Musk legally bought Twitter and was forced to do so and wanted to back out. But the board forced him to go through with it and then he fired people and people are trying to get him to fire… Stop advertising, get companies to stop advertising.
He’s like, “Well then he has to fire more people.” Then you’re using that as a bad… He’s such a big bad man. Compare that to how they been reporting on SPF. I think it’s disgusting. I think the way that somebody who’s been portrayed in the news media, if you just read the main news media about Elon Musk and about SPF, you would think that it was Elon Musk who stole billions of dollars from people and was just waning about in The Bahamas. But it’s not. That to me is completely insane.

Tracy Osborn:
Elon Musk is also… He’s been spending months. He has years of being on Twitter, being a troll in lots of different ways. It’s not like, “Oh random CEO took over Twitter and is making changes.” It is a very controversial person who has inserted himself into the conversation in crazy fat manner.

Einar Vollset:
But he doesn’t… Don’t follow him then. Turn the algorithm off.

Tracy Osborn:
But that’s the media. He brought the media to him and then he can’t complain about the media then following him to Twitter and then reporting on his things because he’s been doing this service to bring the media’s attention and everyone’s attention on him.

Einar Vollset:
Yes, I don’t mind them reporting on it, but if you look at the angle, it’s like every day it’s like, “Oh, Twitter.” It was only three weeks ago, Twitter was supposed to go down. Sourced in the big news. NBC was saying goodbye. We’re giving up and this is going down anytime now. Well sourced, sources. Complete as usual. Honestly, to me, people have completely lost their mind here. If you didn’t know that Elon bought it, if you didn’t read in newspapers and you didn’t follow Elon, you wouldn’t know. That’s my Hot Take Tuesday.

Rob Walling:
Hot Take Tuesday. This is where I… There’s a nuance to this because I don’t like… I’ve seen some tweets of Elon’s that I do not, I do not agree with. I do. They are trolly, but I have always respected him as the Tony Stark of our day of an industrialist who’s getting done in a way that no one was building rockets. And he figured it out. No one was doing electric cars and he figured it out. So I have this push pull of, I have respect for things that he’s built, but I also don’t. He and I don’t agree on a lot of things and I wouldn’t represent myself in that way. I have made predictions, so many predictions about Twitter over the years. We used to do prediction episode at the end of each year, and in 2017 I predicted Twitter would have major issues continuing a decline.
And in 2019 I predicted that they would be acquired. And much like the person who predicts eight of the last two recessions, I feel like I should be vindicated that I finally, they did, they lived up to this. My take on whether it’s better or worse at this point is TBD. I don’t think it’s better for sure. I mean the blue check mark, whatever. I don’t know that I’ve seen other changes. Like you, Einar, I don’t really use the home feed that much. I use it a little bit, but not much. I do think that the circus, the media circus around it is not helpful. Now we can blame the media for that. We can blame Elon for that. We can blame both of them for that. And that’s the way I’m thinking about it. I think that’s detrimental to the whole situation because it’s just a bunch of noise. And as we just agreed, if none of that was being reported on, would we have noticed much of a difference. Tracy, any closing thoughts?

Tracy Osborn:
I mean, the Elon thing is funny because I feel like he’s a kind of bull in a China shop and it just was something we weren’t really seeing with his other companies. And now that he’s in a company itself that is a media communications company and then firing a bunch of people and then that all those people are going to be already using that service to talk about those things and blows up. I feel like this thing was kind of happening at other companies like Tesla that we just didn’t see. I mean there’s a lot of-

Rob Walling:
Do we know that or are we… Because I haven’t looked into this, but I haven’t heard that. So I hate to speculate and act like…

Einar Vollset:
The problem is for me to say… I want to say I’ve read that, but I can’t have a proof right now. And I do say that there is… I’m in the market for an extra car and I’m not getting a Tesla, not because of Elon, but because there is a whole subreddit just talking about the quality issues. They’re having huge QA issues right now with Tesla. So it’s one of those things where they’re like… I’m happy that they’ve started and they really started that trend of electric car companies. I’m at this point where I’m just like, “I’m not going with Tesla because they’re having major growing pains right now because of the way that they probably had to start up because they were the first, and that’s why I’m going with different car.”
But I’m just like, “It’s interesting about how he obviously has a management style and that management style was perhaps the same in these companies and perhaps it was less visible because it wasn’t on a media company.” And it’s kind of interesting to think about what effects happened when someone who has a certain management style but goes into something that is public or so wildly talked about publicly.

Rob Walling:
See, it’s interesting for me because one of my sons came to me a couple days after the Twitter acquisition and he said, “Yeah, Elon Musk bought Twitter.” And I said, “Yeah, I know.”
“And he got rid of the board.” And I said, “Yeah, I know. If I took a company private, I would too. That’s what you do.”
“And he fired all the execs.” And I said, “Yeah, that’s what I would’ve done too.”
“And he’s going to do layoffs.” And I said, “That’s what I would do too.” To him he… And at school it’d have been presented like, “Oh my gosh, this guy did this stuff that’s so unpredictable.” It’s like, “No. No. No. If I had bought a company like that, I probably would’ve done all the same things.”Again, Elon and I do not agree on a bunch of stuff, but if I’m going to buy a big company that’s over-

Tracy Osborn:
I was going to say, would you do Friday 2:00 AM code reviews? I think that’s more the astonishing thing.

Rob Walling:
No, no. And that’s why I’m saying, but that’s a detail. Yeah.
I’m not saying, “Oh, everything Elon did was good.” I’m saying these top level bullets that my son brought are like… I was like, “No, that’s what you do when you buy a company.” But no, 2:00 AM code reviews or the “get it done by this or you’re fired” or whatever. There’s a bunch of stuff. It’s like, would I run a company like that? No, I wouldn’t. So let’s talk about the.. That’s kind of what I told him. I was like, “Everything he’s doing is not right. But the four things that you just mentioned, I actually think are what any sensible person would do.”

Tracy Osborn:
I mean, everyone else’s going on layoffs, Google, Meta. Everyone else too, and they’re not being reported on the same way.

Rob Walling:
Exactly.

Tracy Osborn:
But it is like the, “Ooh, look at this Twitter- tweet of this person holding up a stack of papers talking about, “Okay Elon, I’m ready for my code review.” And everyone’s like, “That’s ridiculous.” And then it just goes viral. That kind of stuff is not helping.

Einar Vollset:
But again, think about why did you see that? Why did you see that? You saw that because the algorithm surfaced it for you.

Tracy Osborn:
I follow Leah Culver too. Who was the one that did it.

Einar Vollset:
I didn’t see it. Because I don’t follow people who are in that drama thing.

Tracy Osborn:
Leah Culver is an old friend.

Einar Vollset:
Yeah, I just don’t follow those people. Again, so it doesn’t come up because I don’t follow the algorithm. I mean, honestly, my honest to God view on this, and it may be deeply cynical, is that I think what has happened, the reason why there’s so much heat and so much drama around this is because to journalists Twitter’s very, very important and they had a very special status under the previous regime, and they’ve lost that status and they’re losing their…

Tracy Osborn:
I mean, worthy. I thought that was the best part of Twitter is when that we moved into this world of having news access, easier access to folks and easier access for information to come out from journalists and governments and companies and support teams and all that. Now it feels like those are the things that I care about the most and they’re going to go away in favor of people all the time.

Einar Vollset:
I only use it for posting, so this is great.

Rob Walling:
Oh, wait a minute. This is-

Tracy Osborn:
I know.

Rob Walling:
Ladies, gentlemen, folks, listen to this episode. That is why we have Hot Take Tuesday, is that we can get opposing viewpoints, sometimes agreeing, sometimes opposing viewpoints on the topics of the day. If you want to follow our panelists, Tracy Osborn-

Tracy Osborn:
Follow her on Twitter, who’s not on Twitter’s on anymore, but I’m on Twitter at Tracy Makes.

Einar Vollset:
@Tracy @Mastodonsocial.

Rob Walling:
Oh yeah. What’s Mastodon? @Mastodon.something.

Tracy Osborn:
Oh, my God. I’m not giving you a response. I don’t use Mastodon either. I’ve decided I’m done. Oh, God. There goes my camera.

Rob Walling:
No, that was a table flip.

Einar Vollset:
No.

Tracy Osborn:
Actually it looks better now. So that’s great.

Rob Walling:
@Tracymakes on Twitter.

Tracy Osborn:
I’m shaking my computer so much that my ring light fell down. Tracy Makes on Twitter. Thank you. Follow me with not responding there. Follow Einar and you’ll get spams with all of his tweets.

Einar Vollset:
That’s right.

Rob Walling:
Einar Vollset on Twitter if you want to hear live tweeting of sporting events. And of course, as always, I’m @RobWalling. We’d love to connect with you. Thanks everyone for listening and we’ll see you next time. Thanks to Einar and Tracy for taking time to join me on this pod today. As we enter this holiday season, I hope that you are having a restful time, or at least looking forward to having a restful time over the next few weeks. This is a great time of year to take a step back, to reflect on the last 12 months, the progress you’ve made, probably the hurdles that you faced and even the progress that you didn’t make that you wanted to. It’s a time of year to take a minute or an hour or a day, if you can, and look back and look ahead and reflect on things that you wish had gone differently, things that went amazing, and look ahead to think about things you want to get done in the next year. As always, thanks for joining me today and every episode. This is Rob Walling signing off from episode 640.

Rob Walling:
Welcome back to another episode of Startups For the Rest of Us. I’m Rob Walling, here with the cold that I’m getting over. I caught it last week while in Malta. We had an amazing kickoff for our European TinySeed batch followed by MicroConf Europe in Malta.
I did not leave unscathed though. For the first time ever, more than 30 in-person events, I missed a day of MicroConf. I was so sick I had to stay in bed. It was absolutely devastating to me. I effectively lost my voice, and it wasn’t going to be a good scene if I went and tried to MC it.
So mad props and thanks to producer Xander and the rest of the MicroConf team for stepping up and making it happen. Just goes to show you we can’t do these things alone. These should be lessons that we all know by now. But at some point, you’re going to get sick. At some point, you’re not going to be able to show up. And having amazing people that you work with that have your back is what it takes to do this over the long run.
Today I’m talking with Andrew Berkowitz, the founder of Suggestion Ox. And we dive in to the secret sauce to building happy, motivated teams. We talk a lot about trust. We talk a lot about not having these strict policies that have been in place for a hundred years because the job market and the way we run companies today is and should be different than the way we ran companies 50 or a hundred years ago.
So without further exposition, let’s dive into our conversation. I’d like to welcome Andrew Berkowitz to the show. He’s the co-founder and CEO of Suggestion Ox, which is a feedback platform that helps HR teams build truly candid communication between leadership and employees. And before that, he co-founded TeamSnap, which was a sports management platform that was acquired in 2021. Andrew, welcome to Startups for the Rest of Us.

Andrew Berkowitz:
Thank you, Rob. It’s great to be here.

Rob Walling:
Absolutely. It’s good to have you. Today we’re going to be talking about trust, the secret sauce to building happy, motivated teams. That sounds like a book title and a subtitle. Are you secretly working on a book?

Andrew Berkowitz:
I might be secretly working on a book. Might be at least secretly working on some content to help get more customers.

Rob Walling:
A manifesto? Yeah, great.

Andrew Berkowitz:
Yes.

Rob Walling:
That’s awesome. I’m glad we’re talking about trust in building teams because this is something that I think when I started… When I started as an entrepreneur, it was all four hour work week type. You hire a bunch of freelancers; no loyalty to you. And really, they’re a black box I need a thing done. They’re task-level thinkers, right? And I was the project owner level.
Eventually I realized, if I want to get big, seven, eight figure company, I need to start hiring what I call team members, right? Employees, but team members who are in it. And whether they’re W2, whether they’re 1099 is irrelevant. Because sometimes 1099, someone’s overseas, you just have to do it, right? So that, the designation of how they’re paid is separate in my head from whether they are a core part of your team.
And a big thing that I always leaned into was this concept of loyalty. I’m loyal to you, you’re loyal to me. And what I learned is that’s a byproduct of trust. The trust is actually the core. I thought loyalty was the core because that’s how I was raised. But trust is the core. Trust between the employee and the employer. Tell me why you’re fascinated with this topic; what you’ve seen that basically instigated you reaching out and saying, “Hey, let’s record an episode about this.”

Andrew Berkowitz:
Fundamentally, there’s been a shift in the balance of power between employer and employee over the last 20 years. It started with the internet where people could work from anywhere, so suddenly you could take your skills anywhere; not just to your town, but anywhere around the world. So accelerated by COVID, employees have so much more power now. There’s not just one game in town for where they can work.
So when you think about what people are looking for, they want to be part of something. They no longer want to just feel like they are working for a company, that they’re owned by the company. They want to feel like they are part of it. And I always like to say, about my employees, “I don’t want them to feel like they work for my company. I want them to feel like they are my company.” And that comes from being bought in, from being passionate about what you’re doing. And I think the root of that is really trusting people like you’d trust your family members. We talk about companies being like a family. And companies aren’t really a family because you can’t fire your family members. But when you treat people with that trust, they’re part of your family, they will dive in with you, and they will run through walls for you.

Rob Walling:
I always caveat the idea of a company being a family with more of the Netflix approach, which is the company is a high-performing team. And you can think of it as a sports team if that analogy works for you. It could be a chess team. It could be a group of adventurers in a Dungeons and Dragons adventure, whatever analogy. But it’s a team trying to accomplish a goal, and there’s trust there too. I ran track which individual but also team sport ’cause we had relays and no team scores. And also played football. And you had to rely on the person next to you. And frankly, I wanted the best players on the field. And if you were my friend or not, if you weren’t the best right outside tackle, then I didn’t want you because then I was going to get hit because you were going to miss the block.
And I think we’re on the same page with that, right? Whether it’s family or team, there’s a level of trust and a level of wanting to be around other people who are good at their job if you are, so that they don’t drop the ball.

Andrew Berkowitz:
Yeah, and the pushback that you hear on building the trustful organization is essentially, “If I give this trust to people on my team, are they going to perform?” You see it all the time with people asking, “If I’m not tracking the hours that my people work, are they going to goof off? Or if I have a flexible vacation policy, are people just going to take off for six months?” And the answer to that is, if you have high performers on your team, in no way are they going to do that. Because high performers, they want to perform. They want to take pride in the craft of their work, and they want to do great stuff. And so when they feel like they are working for you as a hired gun, and they don’t have your trust, and you don’t have their trust, they’re not going to be interested in doing that.
But when they feel like they are completely bought-in, part of your team, they want to do great work. And think about the great people who have worked for you. They want to do the great work. You don’t have to police them.

Rob Walling:
Yeah, did I ever track the hours of my best engineers, my best whatever, program managers, event…? Nope. Never cared. I want to dig into this so that people understand, a founder or aspiring founder who’s listening to this understands exactly what we’re saying. Perhaps the difference between maybe the old way of doing things and what you’re proposing, which is it’s not like you’re proposing something that should happen in the future. This is happening. Companies are already run in this deep, deep trust fashion. You already mentioned something like not tracking vacation time, not tracking hours, more looking at results.
This is how I run my companies. I have. So I’m saying this for the listener of I’m going to play devil’s advocate during this episode because otherwise I’m going to nod and agree and say, “Yep, that’s pretty much how I do it. Yep, that’s how you should do it. That’s worked for me.” But I want to play the other side of the coin because there are absolutely people listening saying “Yeah, this won’t work, and here’s why not.” And so I need to play that role in this episode. So we named a couple things like some specifics of unlimited vacation policy. That’s something you were saying.

Andrew Berkowitz:
And I wouldn’t say unlimited. Unlimited always gets people freaked out because they’re like, “Okay, Joe’s going to take off for six months to the Himalayas.” So I like to say, “Flexible vacation policy.” And again it’s, do I need to police my people’s vacation, or can I trust them to take the right amount of vacation? Because the old model is essentially you get two weeks or you get three weeks a year, and you basically take that. You ask for permission, and you take that.
The new model is: what do you need to be highly productive? It starts with high productivity. And then it’s going to be different for different people. I have had employees who are, they basically, they’re like a nine to five person, Monday through Friday. And they slow and steady. And they get stuff done that way. And a couple weeks of vacation a year is all they need.
I’ve had other people who, they burn really hard. They’re 12, 14-hour days to push out a feature. And then boy, they need a week off to decompress. And so, one-size-fits-all doesn’t work. And I need them to say what’s going to be right for them. And I need to push down to the team what’s right for the team. There’s a big fear that well, if I have a flexible vacation policy, everybody’s going to disappear at once right before our big release. Well, you put it on the team. You say, “Our vacation policies, you’ve got to coordinate with your team to do the right thing for yourself, the team, and the company. You put company before team. You put team before self. And then you put yourself. And it’s your job to work with your team to figure out what the right thing is.”
I’ve had people come to me and say, “Can I take vacation at this time?” And I’m like, “I don’t know. Talk to your team. I’m the boss. I don’t know what you’re working on. I don’t know what your team is working on. Work it out with your team.” It makes no sense for me to approve your vacation because I don’t know what you’re doing.

Rob Walling:
Right. Okay, so that that’s vacation policy. Let’s talk about there’s hours, right? Flexibility of work hours.

Andrew Berkowitz:
Yeah. That’s the big one. I mean people really want to be able to set their own schedules right now. And it’s partly because they’re trying to find that work/life balance. But it’s also because everybody is productive in a different way. And we all know you can have somebody sitting at their desk from nine to five. Maybe they’re getting something done, maybe they’re on Facebook. If they’re a developer, they might be working on their side project because every developer’s got a side project. Hours as a proxy for getting work done is totally meaningless. So what people want to be able to do is set their own schedule.
And again, the fear is, if you let people set their own schedule, they won’t work. Or they won’t be there for that client call, or they won’t be there for their team meeting. Well, that’s not how you manage trust. You say, “You’re in charge of your schedule with your team and with our customers and with the company. Set the schedules that’s going to work best for all of those.” And it’s going to be different for different people. But somebody can’t say, “Well, I don’t work at nine, so I’m not going to do the team meeting at nine.” That doesn’t work. Trust is saying, “Within the parameters of being highly productive with your team, what is your schedule going to be?”
And the magic of this is when you stop saying, “These are these specific hours that you must work,” people will give you a lot more flexibility in terms of what they are willing to work on. So I’ve seen a lot of founders say, “I can’t get my people to work on weekends, or I can’t get my people to work evenings when the servers go down.” And that’s because you’ve told people, “Well, your hours are nine to five. And boy, it sure would be nice if you gave some extra time.” Instead, just say to people, “Your hours are you make your hours. You figure out what we need.” And highly motivated people will figure out, “Oh yeah, we need to do this release at 10:00 PM on a Saturday night, not at 2:00 PM on a Monday. I’m going to work those hours because I have the flexibility to figure it out.”

Rob Walling:
Do people want some type of idea of how much they should work in a week? Like, “Hey, you can work when you want, but our standard work week is a 40-hour week. And if you need a day off, take a day off because we have that flexible policy.” So it’s like, “If this week needs to be 32, that’s fine. And some weeks it will need to be 48 because we have a deployment, because for whatever, because we’re working an event. Some weeks, it will be 60.”
I was in Malta last week with the TinySeed MicroConf team, and I can’t even count. I don’t know if we worked 60, 70-hour week. It was crazy if you count all the stuff we were doing. And then immediately I tell everyone, “The moment you can take one or two days off, when we’re back, in addition to Thanksgiving,” because Thanksgiving is sometimes fun and sometimes stressful, depending on your family. I was like, “We need to take some time off. Everyone try to carve that out.”
But all that said, I’ve always thought of it as, “You’re flexible. Get your stuff done. Let’s collaborate in essence and be a team that’s driving it forward.” But personally, I’m not saying right or wrong, but this is how I do it. I like to say, “Our work week is a standard 40. In general, try to get 40 hours of work done a week.” Do you think that’s helpful or harmful? Do you think that that is more of a butts in seats attitude of hours worked?

Andrew Berkowitz:
I think guidelines are helpful for people. I think if you have nothing there, it’s hard. So I do like to say… I think a policy I wrote before was essentially, “Yeah, we work an average of 40 hours a week. But there’s going to be some weeks where you put in 50 or 60 hours; there’s going to be some weeks where you put in 20. And the key is, we’re not counting, you’re not counting, none of us are counting. We’re just trying to do the best we can.”
And it’s the same with vacation policy. On a flexible vacation policy, I think people want some guardrails. And so I think the policy I wrote before was, “Most people take about three weeks of unplugged vacation a year. But maybe your daughter’s getting married, you got a special opportunity to go to Indonesia for a two-week wedding. This year, you’re probably going to take a little bit more than that. Another year, you might take a little bit less than that. And again, we’re going to be flexible on it. We’re going to figure out what you need.”
Because really, if you are trying to hire really great people, and you should be trying to hire the best people, you should be thinking about the long game. It’s not how much vacation somebody took this week or this month or this year. It’s how productive are they over their career with the company? And I want somebody to be thinking on multiple-year horizons. I want my employees to be thinking about, I’m going to be here for many years, so what I do this month or this year is not as important as what I do over my career at the company.

Rob Walling:
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And is location and other factor here? ’cause we’ve talked about vacation time and work hours. I realize COVID changed this. But in 2019, if you went to so many companies and said, “Your people can work from anywhere. Would you allow that?” it would’ve just been so many more nos than I think today. But do you factor that in as well as a level of trust of “I don’t care where you are as long as we’re not breaking any state laws.” ’cause if people move to another state, you’re supposed to pay taxes in that state, blah blah blah. Let’s put that stuff aside. But let’s assume they almost become nomads, and they’re kind of moving. Do you factor that in to this flexibility?

Andrew Berkowitz:
I think it’s part of it. I don’t really want to relitigate the work from office, work from home thing again. Because honestly, you can have remote workers with no trust whatsoever. You go on Amazon, you see devices that people can buy that jiggle their mouse every two minutes, so the tracking software that their company has can think that they are sitting at their desk. So companies have any number of ways of tracking their workers who are working at home. So I think they’re kind of separate.
I am obviously a strong believer in remote work. I think it’s great. I think, in general, people can be more productive at home than in an office, over the long haul. But I think that is somewhat separate from trust. And I think for most startup entrepreneurs, you’re not opening an office the first thing you do. Generally speaking, in 2022, you are generally starting remote.

Rob Walling:
Getting an office, in this day and age as a startup, is an antipattern now. I see it when people are like, “So I’m going to raise some money so I can get an office.”And I’m like, “But what? Are you manufacturing hardware device? Warehousing things? Why would you need this?” Yeah, it’s a trip.
So I always hated being in the office. When I was an employee, I hated being in the office five days a week. I hated the nine to five or whatever the numbers were. I hated all this structure. And so when I started companies I said, “We’re not doing that.” So that’s why I started it, was because I wanted to build a company that I wanted to work at. But what you’re saying, I never really factored in. I figured maybe it’ll be more productive, less productive. Maybe I’ll get better people. I don’t know. That’s just the company I want to work at. So that’s why I built it.
You’re coming at it from a different angle though. You’re actually saying, “No, this will allow you to hire and retain better people. You will build a stronger team, and you will have a better company.” Right? Or am I putting words in your mouth?

Andrew Berkowitz:
No, that’s exactly it. Think about what people are looking for right now. Essentially, anybody who works for you can walk out the door and find an equivalent or better job somewhere else because we can all work location-independent now, essentially. So the question is, what are people looking for?
And I think what people are looking for is what we’ve always been looking for as humans, is we want to be part of something. We want to feel like we have a community. We want to feel like we are bought into something. And I think that really comes from the culture you are building and that culture of trust.
So one thing we really haven’t touched on… We’ve talked about the mechanics of how you run, where people work, how they work, what their day looks like. But there’s really a second component to trust, which is the what are you communicating to your company, to your employees, and how are you using transparency to really build that trust?
Because I think there’s also the old school way of doing it is you just tell your employees the minimum that they need to do their job. You don’t tell them what your big company plans are because your fear is that they’re going to run to your competitor and share that information. You don’t tell them the financials because you don’t want them to tell competitors if your numbers look good. Or if your numbers look bad, you don’t want them to immediately go out looking for another job because they see that the company’s in trouble.
But contrast that with what’s a trustful approach? A trustful approach is you share all of that with your employees, so they feel like they are partners in the business. You tell your employees the same thing you would tell your co-founders. And if there’s bad news, if the numbers don’t look good, your employees are going to figure that out eventually. They’re not stupid. But why not tell them that now and let them run through a wall for you to solve that problem.
At my previous company, we had some months that looked pretty bad. The numbers just weren’t adding up. And we didn’t hide that from our employees. We told them. They could see, boy we really need to turn this around or else obviously we’re going to have to lay some people off. And so they immediately dove in, worked harder, looked for ways to save money. They were partners in making things better rather than people who we had to hide things from.

Rob Walling:
But what if you have something that’s maybe a crisis but you believe that it’s temporary? You believe, oh we hit a bump this month, and this happened. Or whoa, we got a big tax bill. Suddenly the company had to pay 300 grand out, and we’re coming real close to not making payroll, but I think we’re going to make it. We’ll be okay. What about that? I realize this is kind of edge-case stuff, but I think, a lot of times, a lot of things in a startup are transient. And they come and go quickly. How do you think about that?

Andrew Berkowitz:
It’s a good question. A CFO I worked with once told me that transparency isn’t necessarily sharing everything. It’s being willing to share everything. So I don’t think you necessarily have to share every potential bump in the road. The problem is, if you don’t share it and then it becomes a thing, then your employee, you’ve essentially busted your trust. Your employees are going to be like, “Oh, you knew about this three months ago. Why didn’t you tell us this?” So you need to be darn sure that it is transient and that you’re going to turn that around. Because if you don’t, then you’ve lost your trust.
And it’s always a challenge to know what should you share and what is too much information that that will get employees spun up unnecessarily? But in general I think share more. You also have to share the context. A lot of employees are not going to have the business context that you do. But being forced to share that context actually creates much more business-literate employees, which is going to be better for your company.
If most employees in most companies don’t know how to make a business case, that manifests in people constantly calling you up and going, “Well, we need to add more head count.” That’s the first thing employees say. “We need to add more head count” because they just see there’s more work that needs to get done, so let’s just add more head count. And so really having them understand the fundamentals of the business and how business works and the levers that you use to make money helps them think through, oh, I see we can’t afford more head count/ we need to be more strategic in terms of what we’re trying to achieve, or something like that. And when employees feel like they’re partners in this, they’ll also push back on you. They’ll turn around and they’ll tell you, “Your roadmap is completely ridiculous. We cannot achieve this with the people we have.” But unless they have the full context, they can’t tell you that.

Rob Walling:
One critique of this that I’ve… I was going to say, “I’ve heard,” but maybe it’s in my own head, is that I do most of this, but I run small companies on purpose. At scale, I really question if this works. This works at 10 people because I’ve done it. I bet it works at 50, maybe at a hundred. At a thousand people, I question. Or 5,000 employees, I question if this level of trust will work because it’s like anything else. The more humans you get involved, the more likely you are to have outliers, both good and bad; the amazing people and then the bad actors who are silent… What is it called? Silent quitting? Quiet quitting that’s happening these days? Which I heard is this big overblown thing and is not happening any more than it used to. But whatever, it’s people just slacking off because they’re remote, and they have the mouse shaker thing you talked about earlier, right?
It’s the same reason that we often hear, “Countries like Denmark have this amazing system, healthcare, whatever it is, and it just works. And why can’t we do that in the US?” And it’s like, “Well, because aren’t there 10 million people in Denmark? And there’s 300 million in the US.” It’s just more complicated. You know what I mean? So I feel like that same, as things scale, (beep) breaks in ways that are really unpredictable.
And any system that I’ve seen scale needs usually more structure. Bigger companies have more structure, I think, because they need it. If I was at a private school with a hundred kids… I was at a public school with 180 kids, growing up. Very little structure. My son goes to a public school now with 2000 kids. And there’s way more structure. And I think it would be absolute chaos if they didn’t. So what do you say to that critique of this idea: this trust works amazing. But yeah, until you grow up?

Andrew Berkowitz:
Well, I think it’s going to look different at every stage. That’s the thing I’ve definitely seen over my career, is every stage of company looks completely different. And so what trust looks like at a two-person company, a 10-person company, a 50-person company is going to be way different than a 5,000-person company. But when you think of a 5,000 person company, it’s really a collection of smaller teams. And each team can still have this same microcosm of trust, even if it doesn’t manifest it the same way for the entire company. So it’s going to be different at whatever size for sure. But think about the team size. And really a lot of building a trustful organization comes down to your managers. And as a startup entrepreneur, it’s you. You’re essentially the manager. And so you’re managing whatever it is: three, ive, 10 people. As you grow and you start getting other managers in, you have to train them in thinking this way too.
And it’s tough because most of us do what has been modeled to us,, and most of us have worked in traditional companies where the company owns your time and the company tells you exactly what to do. So you really need to bring in managers who are a hundred percent bought in on this. I think one of the keys to trust, which really this works in any size company, is that it goes both ways. It’s not just me, as a manager, trust my employee to get their work done, say they’re doing what they’re going to do. It’s also employees really trusting their manager and leadership. It’s really trusting my manager to be super candid with me about what’s going on in the business and how my performance is. We’ve all been in the experience where we go into our quarterly or our annual review and we got our fingers crossed that we get a good review. And that should never happen.
Your manager should be telling you how your performance is weekly or biweekly or whatever your one-on-one schedule is. So part of trust is me, as a manager, being willing to say the hard things. Being willing to say, “Hey, your performance has not been good. You need to pick it up.” Or “Hey, I know we give you a lot of flexibility to set your schedule. You’re not producing. I don’t really care when you work, but you’re not producing, and you’ve got to do that.” So it’s really managers saying hard things, which is hard. Having those hard conversations is hard.

Rob Walling:
That was the hardest part of learning to manage for me. I see management as there’s leadership, and then there’s supervision or management. It’s two components. And the leadership was always like, “I know where I’m going, and I’m excited about it. Anything I do, I’m stoked to do it. Otherwise I’m not doing it.” And so, to get other people stoked about it has never been a challenge for me. The hardest part has always been, man, I’ve got a good team, I really like them. How do I tell this person they’re dropping the ball? And I do it now. But it took me years and years of practice.
And I think that if you’re hiring people who are generally good people who are generally nice as well, and they’re becoming managers, and you’re training them, that might be the number one thing that I try to communicate is, “You have to do this. You just have to learn how to do it.” And if we need to role play it, if we need to buy books, if we need to watch YouTube videos or buy courses or whatever, learn how to give constructive feedback. There is a book called Crucial Conversations that I read. It was recommended to me by Ruben from Seinwell, where I still almost all my good ideas. That book had a real mental shift for me. So I think if you’re listening to this and you’re wondering, how can I get better at that? I really liked it. Andrew, do you have any other resources you use to get better at that?

Andrew Berkowitz:
I think one thing that’s really helped me as a manager is create an atmosphere, in my one-on-ones with employees, where it’s really clear that we are going to spend time in every one-on-one talking about the negative things. So I used to manage a lot of designers. And designers are notoriously stoic, for whatever reason. And so basically in our one-on-ones, I would basically say, “You have to complain about three things in this one-on-one. And one of them has to be something about me.” So I basically force them, “You cannot say nothing.” And they can always come up with something. “You don’t give me enough feedback” or whatever it is. So basically, every time we get into a one-on-one, we’re not just going to talk about happy, positive things. We’re going to talk about the problems.” And some weeks they’re very minor problem.
Some weeks, you have to complain about something like, “Well, I felt like this release came out a little bit too fast, and we should have had a different color of blue.” But then some weeks it’s going to be like, “I think our parental leave policy sucks.” So you need to prime that. And when you start priming that, then I think it becomes easier for you as a manager to realize, okay, well, I’m going to have some too. So we’re going to talk about some things that were negative here too.

Rob Walling:
Touching on a couple points we’ve talked about and some critiques of this approach that I think would be interested in going down is one thing you said is, “You have to hire great people for this to work.” There are only so many great people. Where does everyone else work? If you’re great, are 10% of worldwide…? Or let’s say you’re hiring in the US because and I are in the US. For the sake of this, even though we both hire outside the US.
But just for simplicity, how many potential employees, team members are there in the entire US of working age? Then how many have any skills that maybe you and I could hire for? And then what percentage of those are quote, unquote “great” and would work with this? Is it 10%? Is it 50%? It’s not 90%, right? So where do those people go work? And how do you make sure that, as you scale this, again, can I find 10 great people remote? Probably. Can I find 500? I don’t know. I think, at a certain point, the bell curve kicks in, and a certain percentage of your employees are not great by definition.

Andrew Berkowitz:
I think that’s true. And maybe great is too high a bar. Maybe solidly good with good intentions. I think that fundamentally, up until a few years ago, the world of work was predicated on this theory that, left to their own devices, my employees will goof off. If I don’t police my employees, they will goof off. If I’m not watching them, they won’t work. And also, if I don’t police my employees, they will steal from the company.
That is how we have thought about employment for years and years. And I just think most people are better than that. I think the vast majority of people are not going to steal from the company. The vast majority of people, they want to do good work. And they want to do good work because they want to accelerate their careers. It’s great when somebody is totally bought into your mission and wants to help you build the widgets that you’re building and wants to change the world.
But it’s also okay if they just want to do great work because they want to make their resume better because they want to move up in your company, they want to make more money, they want to grow that way. Either way. And I think most people do. Now, are there bad apples out there? Absolutely. There are people who will try to steal from you. There are people who will goof off and not do the work. But when you build your company policies around the lowest common denominator, you end up punishing everybody, and you end up ultimately punishing your company.
So you need to think, what is the penalty for getting this wrong? For example, if I have a super flexible vacation policy, and somebody books a three-month vacation, what is the penalty for that? Well, for one thing, you’re probably going to fire that person. But is your company out of business? You’ve been embezzled? You haven’t. So just think about, don’t make policies for the lowest common denominator.

Rob Walling:
Speaking of that, we have a flexible vacation policy. Every company I’ve ever run has had one. But I still approve vacation. I know you said earlier, you don’t. You say, “Go talk to your team.” Oftentimes, like if you look at the TinySeed team, there’s five of us. So it’s not, “Go talk to your team.” We are the team. We are just one team. So I still do that. And same on the MicroConf side. There’s five or six of us. And people do come in order to coordinate. We have to coordinate schedules. Like you said, you don’t want everyone out of… No, we have an event that week. Everyone can’t be gone. A few of us have to be here.
So what I’m saying is, even within this realm of trust in building these trustful companies and trustful teams, there is still flexibility because you know said, “You don’t need to run it by me, go to your team” Whereas I’m saying, “No, I still do that.” But I feel like we’re still in the same orbit compared to the bigger momentum of the last 50 or a hundred years of institutionalized work is what you’ve been talking about, which is nine to five and the lack of trust and a bunch of guardrails in place to keep people in line.
One thing you just brought up that I want to touch on is you said, “There will be bad apples.” People embezzling from you is one thing. And I think that’s a very, very… It’s possible; it’s a very small number. People who will slack off, I think, is a larger percentage. Is that just a cost of this approach? And is it just…? What do you call it? It’s collateral damage, right? If you build an amazing team using this approach and you get to the point where you’re at 40, 50 employees and you do have one or two people who slack off, that’s just the price you pay?

Andrew Berkowitz:
I think you’re going to see that whatever kind of company you run. You can have a company where it is strict nine to five, we’re watching you every minute, there’s no trust whatsoever, and you’re still going to have a couple people who are slacking off. Because again, whether somebody is actually being productive when they are sitting at their desk is highly questionable. So I think the beautiful thing about trust is it turns this conversation to productivity and to results. We are really gauging people on what have you produced? And when I hear founders say, “I’m afraid to give people this kind of flexibility ’cause I’m afraid I’m not going to know if they’re working…” If you don’t know if your people are working, you have a problem with understanding what the outputs are for your team. For a developer, I’m pretty clear on what the outputs are. And those outputs are not sitting at your desk from nine to five. Those outputs are pushing bug-free, workable code.
And if I’m hiring a social media manager, I’m pretty clear on what those outputs are. It is managing my social media. So I really don’t care anything other than what you’re producing. And it makes the conversation so much simpler because you stop having these conversations where people say, “Boy, I’m working really hard.” It’s like, “I don’t care how hard you’re working. I care about what you are producing.” It simplifies the whole thing. And you can find your bad apples really fast because they’re not producing.
And the magical thing about this is you can’t hide in this way of working. At a strict nine to five, sit at your desk, show up before the CEO shows up, follow all the policies and procedures, you can hide for a long time. Because you can look really busy for a long time.

Rob Walling:
Even more so at in-person.

Andrew Berkowitz:
Oh yeah.

Rob Walling:
Have you ever been in an office with cubes where it’s like, “Well, everyone had to show up at nine, and we leave at six, and we have an hour lunch,” And there’s five people in my department who were doing jack (beep) all day, but I knew it because I was on their team and I’m like, “I’m shipping five times more software than this person.” But they showed up, and so no one asked questions. Whereas if we had been remote… To your point, Tracy Osborne is also the biggest fan of remote. She always says, “Just because you show up at the office doesn’t mean you’re actually working.”

Andrew Berkowitz:
Yeah. You got to know what your outputs look like. And if you don’t know that, if you’re not sure how much a senior developer should produce in a week or a month, that’s something you got to get calibrated on because you just don’t know what your outputs are supposed to look like. Similarly, you can hide a lot as a leader if you’re not forced to stand up in front of your company every month and show the financials.
We’ve heard so many stories of like, “Oh, I was surprised that they just laid off a thousand people. Because as far as we heard, everything was going great.” So being forced to stand up in front of your company and tell them everything, it really makes that conversation a lot simpler. People really hate uncertainty. And people will write their own stories. So if you are not transparent with your employees and telling them what’s really going on, they will write their own stories. And you’ll lose far more people who just imagine that things are terrible than just telling the answer.
One of the great things I learned from a previous co-founder was he loved to stand up in front of the company and answer hard questions. And so we’d do a company meeting every couple weeks. And we’d have an anonymous form where people could just, in real time, submit whatever questions they had. And it was tough stuff. It was, “What is happening with our strategy? This makes no sense.” Or “Why don’t we have more diversity?” Or really hard questions. And he just loved to stand up and answer those questions because it built trust with the team. They knew we can ask whatever we want to ask, and they’re not keeping secrets from us. And it turns out that people don’t necessarily need to love your answer. They just need to know that you’re listening and that you have an answer.

Rob Walling:
And is one of the reasons that you built Suggestion Ox, at suggestionox.com, because you wanted people to be able to anonymously submit feedback to their teams and their managers and such?

Andrew Berkowitz:
Yeah, I think, as we talked about earlier, everybody wants to build a company culture where everybody can be a hundred percent candid all the time and say the hard things and ask the hard questions. But the reality is not everybody is willing to do that. And a lot of employees have been burned. A lot of employees have been in a company where you asked a hard question, and you got fired. It takes time to build that trust. So that’s why we built that particular product, is we just know people need psychological safety to say the hard things, ask the hard things. And as a manager, you need to know it. If there’s a problem, you need to know it.

Rob Walling:
Folks want to keep up with you and see the subsequent content you’re creating around this. I hear a book on the horizon. They can head to Twitter. And you are Andrew Berkowitz, just like it sounds, or suggestionox.com. Thanks so much for joining me today, sir.

Andrew Berkowitz:
Thanks for having me.

Rob Walling:
Thanks again to Andrew for coming on the show. Thank you for listening. I hope you enjoyed that talk. I enjoyed the spirited discussion and the ability to just bat ideas back and forth and talk that topic through. I hope you enjoyed it. This is Rob Walling, signing off from episode 639.

Rob Walling:
Welcome back to another episode of Startups For the Rest of Us. I’m Rob Walling, and today I welcome Justin Vincent on the show. We talk a bit about how to generate startup ideas, plus look at eight ideas he brings to the show that you can steal. Justin and I had a great time talking through these ideas. He had sourced them from a few mastermind friends of his, as well as his own brand. He has a tendency for coming up with ideas. I really enjoyed our conversation. If you don’t know of Justin, he is the co-host of the TechZing Podcast, and he also, last time he was on this show, was running nugget.one, which is a community for early stage founders, as well as bunch of business ideas, 4000 he tells me. I thought it was 800, but 4000 different business ideas that he had gathered over a few years. He is no longer focused on that. He’s moved on to a new idea, which we will talk about in the show, so let’s dive right into our conversation about generating startup ideas.
I want to ask you about coming up with startup ideas because A, it’s something that you have done a lot. I mean, I heard you do it on TechZing, your podcast, many times coming up with ideas and even just bringing new ideas, talking through them with your co-hots. But I also watched you start Nugget, nugget.one, which we’ve talked about here on the show before, where you didn’t generate all these ideas yourself, but you did bring them in, evaluate them, and kind of churn them through, and there’s 780 of them or something like that.

Justin Vincent:
4000.

Rob Walling:
Are there? Oh, my gosh. I was looking at the premium ones. So 4000, holy moly.

Justin Vincent:
Yeah. That’s right.

Rob Walling:
And you have generously allowed me to talk about some of them in the YouTube series that I’m doing. About every six weeks, eight weeks, I do a, here are some SaaS ideas to get your mind going basically. And so the YouTube channel, I’ll start showing some of those. But really today I want to talk about A, your process for coming up with ideas, and then you had some ideas you wanted to bring to the show, that you wanted to talk to listeners about.

Justin Vincent:
Yeah. So since we set this up, I’ve just been thinking through stuff. I’ve asked a couple of people for some ideas. And let’s see, I’ve got nine ideas for you. I’ve got two ideas that I think would be good for solo boot strappers because there’s a specific kind of context. I think your context really matters about the idea that you pick. And that’s actually kind of a big part of why I started Nugget in the first place, because I realized I was really bad at picking ideas, so I wanted to just do that thing where I got a chance to test it out many, many, many times. And ultimately, you know what I’ve learned over 25 years? I’ve learned that I need to do a to-do app because that’s where I’m at. That makes the most sense for me. And it’s finally, I’m going to actually build something very good that’s very useful. There’s so many different lessons that you learn as you execute ideas and realize things.
For example, building on Twitter or building on other platforms, it’s like, “Okay, these guys can shift the ground from under my feet.” That’s a really high risk. So okay, I’m going to pick ideas where I don’t build on other people’s platforms, or other things that I learned like with Light, the mobile delivery app. No, don’t pick an idea where you have to manage loads of people because that’s really painful. Just do something that … So ultimately, it just boils down to, okay, for me, the best thing for me to be working on is something that I can just totally do by myself. I can be the sort of one man wrecking crew, and I can bring really high value to people, and I can work with customers and develop features that they like. That’s my sweet spot. Might be different for other people.
So anyway, that was a little side tangent there. So I’ve got two solo boot strapper ideas. I’ve got four ambitious boot strapper ideas for you. I’ve got two VC ideas for you. And I’ve got one absolutely out there idea.

Rob Walling:
All right. Shall we start?

Justin Vincent:
Yeah, please do. Yeah, let’s go for it. Okay. Let’s go through it in that order, so we’ll do first of all … And as I go through them, let’s do some banter as well. So if you just give me your instant impression, then we’ll have a quick little talk about what a go to market might be, what the downsides and upsides might be. Okay, first one, this was something that I actually had a look at and had a go at doing a few years ago, maybe four or five years ago, transcription for team meetings. I did pretty well, I file dated it, I got it out there on a few different sites and I did really well at that first stage of getting consumer interest. But when I actually went to really build it, it didn’t match the expectations. And the main reason is because transcription for meetings is a really good thing to have. You want to be able to take notes. You want to turn them into text as you’re having a call like this or just a regular Skype call with your coworkers.
The issue is that the AI was just not good enough to transcribe audio that had background noise, or had crappy phone connections, or whatever. But now there’s a new game in town, OpenAI Whisper. And I’ll send you a little link to this, but basically it’s completely open and available to use. It’s un-restrictive software. And the key point here is it’s finally good enough to transcribe really bad phone audio quality into good meetings. And so people might say, “Okay, there’s going to be a lot of competition in this space,” and this is something else we should probably touch on as well. Competition doesn’t matter in my opinion when you’re talking about the beginning of seeding something. I mean, look at you and Drip. I mean, you went into a space that had an insane amount of competition, and you just executed and executed, and all of a sudden, you built a mountain just as big as the other people’s mountain. That’s the point.
So actually, competition is great because it means there’s validated market here. So what you can do is you can use a system like this and you could build a custom SaaS app for teams to share and search their notes. They can maybe comment on transcriptions. They can share transcriptions, export them. It could be a plug in at the computer level that plugged into Zoom, or Slack, or many different things. Or you could plug in at the operating system level and just start tracking the audio, the audio stream, and start transcribing from there. That’s the first one.

Rob Walling:
All right. So my first question to you is: Who needs transcriptions of their meetings? And the reason I ask is I have this thing called the Five PM Framework, where it’s five Ps and one M. It’s the problem, the purchaser, the pricing model, the market, product market fit, or product founder fit, and the pain to validate it. And it’s a mental framework of thinking through. It’s idea evaluation, just a checklist of a bunch of questions and stuff. I’ve talked about it eight episodes ago or whatever. And they’re in that order, it’s problems, number one, purchaser, number two, blah, blah, blah.
I don’t have this problem, and so I’m wondering who does. I’m not saying no one does. I know someone does. But why is it that I run two teams of however big they are, six and five? And we have team meetings and we just never record them. We either take notes, or we remember, or whatever people put on their to-do list. So who does have this need?

Justin Vincent:
That’s a great question. And I think it’s about notes and getting it into … When you just take notes, it’s kind of a bit limited because you’re in the middle of … You’re thinking about two things at the same time. You’re thinking about taking the note, capturing what they just said, and you’re thinking about what they’re saying right now as you’re writing the note, so you’re a little bit bifurcated mentally. So I would imagine that for the person taking the notes, it would be super helpful to just have this stream that they could just really quickly type in the keywords, just quickly go through it, and just go, “Okay, get that out into the bullets,” and then also be more present in the meeting. I think that would be my answer.

Rob Walling:
So your ideal customer, or in this case, the purchaser would be someone who works at a company where they tend to take a lot of notes in their meetings. And again, that’s not me. That’s not our company. I don’t know why. We’ll have meetings and it’s like, “Okay, so now we know there’s an action item.” We assign it to Rob. It goes in my Trello board right then. And then we sent it to Tracy, it goes into whatever her to-do list app is. So yeah, there’s really relatively few. I guess, you know what the difference is, those are update meetings and planning meetings. Brainstorming meetings, we do take notes. That’s the difference. So it’s when we’re trying to come up with this whole new concept for a new type of MicroConf event. We run through a bunch of stuff. We put it in Notion, actually, and we just have bullets and we’re moving them around and blah, blah, blah. So maybe is that the case where this works better?

Justin Vincent:
I mean, I think so. I mean, I’ve had hundreds of those kind of brainstorming kind of meetings. And you write stuff on white boards, and you say a lot of stuff, and a lot of it gets lots. And then a couple of days later you’re like, “What was that thing I said?” And you kind of look for it, but the white boards erased. The notes are gone. It’s like having an undo button.

Rob Walling:
Yeah, where you can go back to it. Yeah. So I can imagine producer Zander, producer Ron and I are having a brainstorming meeting, and we record it, and I can send it to rev.com for a buck a minute or 45, whatever, 75 cents a minute. Or I could send it through … Castos has AI generated transcription built into it for nothing, 10 cents a minute or whatever. And there’s just some services. So what is the idea that you have, how is it specifically good for meetings? What is built on top of it that is more than just me taking an audio and getting a transcript?

Justin Vincent:
Let’s just go back to the previous question you asked. I could do this other thing. Why should you use your product? That as a basic reason to stop to someone doing a product doesn’t make any sense to me because new products come out all the time. Why should someone use Drip when they can use Constant Contact? You know what I mean?

Rob Walling:
Drip was a better product. I mean, it was substantially better. It was noticeably better.

Justin Vincent:
So it would obviously be painful to send in … It’s annoying to have to like … Okay, you need to extract that audio into a file in some way. You need to send it. If it’s a purpose built tool, then it’s going to basically automatically do all that stuff for you. You don’t have to think about it. It’s operating like the NSA. It’s like-

Rob Walling:
Actually, have you ever jumped in a Zoom meeting, and then the person shows up, and then their AI bot jumps in? And I think that’s what it … I don’t even know what it’s doing. I think it’s recording and transcribing. Yeah.

Justin Vincent:
I don’t know. I don’t know.

Rob Walling:
There are sales tools that do this, where they will transcribe and then analyze how often the person says, “Um,” or how often, which keywords when used a lot, tend to lead to sales or whatever. So yeah, this is interesting.

Justin Vincent:
But it’s also about the character of the app. It’s about who you are as an entrepreneur creating the app and how you connect with your audience. That’s a huge part of it as well, so you can build a really interesting and strong audience just from the character that you are, how you promote it, the reasons why you do it, so all that plays into it as well. This is where I was talking about why I love the fact that you’re kind of passion driven about the market comp stuff is it’s not just about executing a business. It’s about you, you the founder are in the middle of that business, and that’s a huge part of why it’s going to succeed or fail, product founder fit, just like you said.

Rob Walling:
And specifically because you said these two ideas, the first two, are for solo boot strappers. These are more lifestyle boot strappers. This is not a multi million dollar ideas as you’ve presented it. It could feasibly be, but probably not. It’s more like a: Can I get this to 10K a month? Can I get it to 20K a month? Right? And for that, this could be it. And so for someone listening to this, if I were thinking about a next step is I would try to talk to as many people as possible to find out who has this problem, what they’ve done to solve that problem, much like out of The Mom Test. You have this problem. What else have you done? And if they haven’t done anything, maybe it’s not worth it. How much would they pay for it? These are the conversations I’d be looking at to have next.

Justin Vincent:
That’s true. Yeah, okay, so let’s move on to the next one. We’ll count that one as transcription for team meetings, idea number one.

Rob Walling:
Right.

Justin Vincent:
So number two, this comes from a TechZing listener on the TechZing Discord, Will Whit, online time capsule. And this again is for solo boot strappers, so all the caveats that we just said apply to this. So basically, online time capsule, upload files that get encrypted and give them a release date that would automatically trigger de-encryption at a point in time, days, months, years, or decades into the future. You could release it to a specific email address or you could release it to a public release stream on the main site. So on a public page, it shows a list of upcoming releases and it allows people to specify if the title is visible for the release or not. So the key point here is this could be useful for journalists. It could be useful for promotion. It could be useful for PR, or it could be useful for your family for stuff [inaudible 00:12:27].

Rob Walling:
Fascinating. And so it could also send a Tweet, feasibly. That could be the release of it. Right?

Justin Vincent:
Yes, it could send a tweet, yeah. Absolutely.

Rob Walling:
Or a Facebook post, or post to Reddit, or post to Hacker News. Sorry. I’m just [inaudible 00:12:40].

Justin Vincent:
So basically, it’s fully encrypted data release on a time. But it’s different to a dead man’s switch. It’s different to a dead man’s switch.

Rob Walling:
Yes, because this is based on time rather than a particular event. It’s not like when I do … Because I actually thought I have some information I want to relay to my family when I kick the bucket, but I don’t particularly want to give it to them now. And I’m wondering how to do that in a way that is easy. But this isn’t that, that’s the event, in the event that I die. This is more like a date based thing. Right?

Justin Vincent:
To do what you want to do, there’s a site called deadmansswitch.com, which would do what you want to do. But then this becomes super interesting idea. Who is the person behind this? Do I trust them? Is this really going to be released in 50 years?

Rob Walling:
Will it be around? I mean, that’s the other thing. As a solopreneur, how many of these apps do we see built and then gone within six months because they didn’t generate enough revenue? And so yeah, if I book it for five years. So what problem does this solve? The one thing you named that is someone who … Because I also can’t see myself using this, but maybe I’m not thinking creatively enough. So I’m wondering who would. Would a journalist? Let’s say I’m under embargo, which means I get a story, I can’t release the story until 8:00 AM on Thursday. Normally, you go into your CMS, you schedule it to go live 8:00 AM on Thursday on your WordPress instance or whatever. How do you think about this working for journalists?

Justin Vincent:
I mean, I didn’t until just this second, but-

Rob Walling:
Until you said it. Yeah. Or anyone else. Who has the problem?

Justin Vincent:
I think the point is it’s about … I mean, you could really use this for nefarious means. Couldn’t you? You could release different information bombs. You could use it in a bad way just as much as you could use it in a good way.

Rob Walling:
Absolutely. Especially can it be anonymous? We haven’t talked about that.

Justin Vincent:
Yeah. It could be like with WikiLeaks kind of usage.

Rob Walling:
When you first started saying that, I was like, “Is this a WikiLeaks link?”

Justin Vincent:
Because the other point is, other point with the ideas that I’ve come up with here, we could’ve come up with really sensible ideas. I could’ve just said, “Okay, build a CRM,” because essentially, if you want to make money and you want to guarantee to make money, go into a huge market, compete with other people, and just build something that people are already using and this definitely makes money, like a CRM. Just take your own niche version of it. But the problem is that’s kind of boring to talk about on a show.

Rob Walling:
It’s boring and it’s also very, the table stakes now are very, very high. To build Drip today, years of development as a solo developer that you cannot get anyone to sign up, so those are amazing markets if you have funding, or if you have multiple people working on it. But yes, these ideas are certainly less boring than just talking about that. So yeah, let’s look at our next. You have three or four for the more ambitious boot strappers.

Justin Vincent:
I’ve got four ambitious boot straps, four ambitious boot straps. This next one is, a lot of you talk about my process. So for me, a lot of ideas that I come up with are just as I’m walking around and it just seems like, “Huh, that should be the solution for that problem.” So this one is an ambitious boot strapper project, and it is pest control using drones. So where I live in this big complex, there are seagulls pooping and congregating on our roofs.
And the complex owners have spent tens of thousands on a laser system to get them away, and those lasers are really not very good, whereas what you could do is you could simply just put a drone that parked on the roof. It has a little parking spot, and when it sees a bird, using AI, it just sort of flies up and sort of acts aggressively and it chases it off. And the innovations for that are, it would need AI to check, to sort of decide when birds were there. It would need to be kind of quiet, and it maybe could emit some kind of noise to annoy birds or something like that. But that I think is an interesting, ambitious bootstrap.
Oh, the other thing is you, just generally speaking, you could use drones for pest control in many ways. So you could use it in a field to get rid of crows that were eating crops. You could use it to get rid of, I don’t know, foxes, or rabbits, or whatever, many different applications.

Rob Walling:
Interesting, this feels less like a boot strapper idea and more like something I would raise funding for. How would you bootstrap this?

Justin Vincent:
Well, because you’ve got to many builder kit drones these days, it’s not super expensive to do that. You’ve got so much access to AI stuff, data modeling and stuff like that. So I think it’ll probably take more than one person. I think it could take a couple of people. Look, by default, if something is an ambitious bootstrap, it can be a VC. It can be VC funded. But the problem with VC funding is, as you know, you gradually lose agency and control of your business, and use lose more and more percentage of it, and you end up working for someone else. So what would be nice if you were going to do something like this would be to try not to get into that position.

Rob Walling:
So obviously, the problem is obvious. What you’re saying is pest control, I used to life in Temple City, and there were these parrots. You know the parrots. I’m sure you’ve heard them. Yeah, they’re very loud.

Justin Vincent:
Yeah. We’ve got them in Pasadena. Yeah.

Rob Walling:
Yeah. The rumor is they escaped from somewhere at some pet arboretum at some point, and they bred. And they’re these wild parrots. They’re so obnoxious. So I think the problem is pretty obvious, and you’re saying this is not a hardware play. You don’t make your own drones. It’s a software play. Is that right?

Justin Vincent:
I’m saying it’s a whole, it’s a holistic play. Obviously, as something scales, you get better. You bring more stuff in house. I mean, that’s what Elon Musk shows us. If he’s proven anything, over time to become more and more successful, bring more stuff in house. But yeah, in the first place, you buy it, you don’t build, so you sort of cobble the pieces together, and then you just work out. Because when you get deep into a problem, like the list problem is I’m doing this text editor thing, the deeper you get into it, the more revelations you have. Holy crap, if I do this kind of thing, I could make it amazing because of these little granular tweaks. Well, that’s what any startup’s like. And I think this would be like that. The components would be the hardware. You’d need to get the good hardware to do it. You’d need to have a good AI to do it. And there’s also, there’s a charging station and just it needs to be quite autonomous. That’s another kind of point about it.

Rob Walling:
That’s a thing. I agree. I see the money in this one not being in selling to individual apartment complexes, but in going to facilities, like let’s say a campus, like Facebook campus in … Is it San Jose, or Campbell, or wherever they are? And they have all these buildings, and you know that they have bird problems and pest problems and whatever, and selling to … Start with them because that’s a big sale. But you kind of get your proof of concept going and then you figure out people. I’m even thinking whenever I’m around Europe, Italy, or France, or whatever, there’s just all these pigeons everywhere. And they have all these spikes that look ridiculous and don’t actually … The pigeons still land everywhere.

Justin Vincent:
Exactly.

Rob Walling:
So there’s in those public squares and all that.

Justin Vincent:
It could definitely be a VC. I mean, it could definitely be a VC idea grow at a very fast pace and it could be a massive business. And it’s not just the birds thing. It’s also farming. For organic farming, think about that. One of the hardest things about organic farming is not using pesticides or whatever, I don’t know, whatever chemicals they use to keep things away.

Rob Walling:
Yeah. This one’s interesting. I do think if I were to do it, I would raise money right from the start. I would not try to bootstrap it. Not saying you couldn’t, I just think when you bootstrap you go slower because money in your personal life saves you hours, money in your business saves you years. And so this is one that is probably inevitably going to happen I think. This is just going to be a thing, so I need to get there faster. How fast can I get there by raising money right?

Justin Vincent:
Just to what you just said, this is inevitably going to be a thing. I mean, that is actually, that’s true with pretty much any idea. If it’s worth any salt, it’s going to be a thing, so just another reason why I get kind of irritated when people say, “Oh, you can’t do it because of this and because of that.” Okay, next one, prerecorded live interviews. Here’s an example of it. I think it could be used in multiple ways. This one comes from, by the way, comes from Jeremy Nunan, who you matched me with in my mastermind group, who I really appreciate. I’ve got two great people in my mastermind group, Chas and Jeremy.

Rob Walling:
Awesome. MicroConfmasterminds.com.

Justin Vincent:
Yeah. So screening job applicants with prerecorded questions, but getting live answers. So the key point here is applicants go to a page, you can talk to them by text, or you can talk to them by video in a prerecorded way. And then ask them questions, and then they respond to the interview, but they don’t really have time to go away and Google it or whatever, so you can get their sort of moment of thinking answers, but you can do it at scale. So think about you could really scale the applicant inbox review process. You can get way more than just a resume. For example, let’s say you wanted to create a really deep pre qualifying applicant funnel for developers. The first one could be simple resume level, just ask some basic questions. Then the next one gets deeper on technical stuff. And so you can get those higher quality candidates in an automated, scaled way. And there’s a lot of different customers for this. Customers could be companies. Customers could be agencies, many different customers.

Rob Walling:
That’s interesting. So you’re saying me as the interviewer, I would pre record five different questions of, tell me about yourself. What are your biggest strengths? There would be better questions than that. But I record those individually, and then they would be in an interface like QuickTime, or Loom. I mean, it’s obviously a built interface, but they basically … Or almost like a Zoom thing, where it comes up.

Justin Vincent:
Yeah.

Rob Walling:
That’s interesting.

Justin Vincent:
And it’s live, and so the other thing is, by the time the … Because think about how much time is wasted just getting to the right people. So by the time your staff, who are your really good people who work for you, who are expensive, by the time they get to see anyone, they’ve got a show reel to look at. They’ve got a show reel. So that just helps everyone in every way of that hiring process.

Rob Walling:
Yeah. There’s something I like about this and something I don’t like about it. And the thing I really like about it is the efficiency, like you said, and I love asynch, oh, my gosh. I want my whole life. I want my whole life. I wish you and I could record this podcast asynch because just finding time on both of our calendars, I guess you and I are probably an exception because we actually have pretty open calendars. But a lot of times, I’ll go to try to record a podcast and it’s like, “Well, the next time we can do it with a busy person is a month from now.” And it’s like, “I’d really like asynch.” So I like those things.
Couple things I struggle with, with this, is I think as a candidate, I might feel like this is the dystopian future, 1984, cattle call, really couldn’t even take the time to chat with me. There’s always the charitable view of technology, and the uncharitable interpretation is like, “Well, if big tech just put me through a process, inhuman,” so I think that some people could feel that way.

Justin Vincent:
Let me just say, so that could be set up with expectations. That could be sort of kind of managed through expectations, and even the person asking the question could say that. And by the way, just so that everyone knows, on every idea I’m personally undecided, every point, until I see it’s successful. So I’m not pitching it as I definitely believe in every idea, I don’t know. I’m in the same position as you. I’m sort of like, “Yeah.” But I think it’s interesting.

Rob Walling:
Oh, totally. Well, that’s why it’s helpful for us to play the opposite side. I mean, sometimes on this podcast, I will literally play devil’s advocate, where I am saying things that I don’t agree with because if we both agree, it’s not that interesting.

Justin Vincent:
Right, right. Yeah.

Rob Walling:
So I’m coming up … I’ll come up with a pro, you can come up with a con. I don’t have an issue with that. I know that when we’ve tried to have developers record a 60 second video of just tell us. And we’ll get very few applicants because developers don’t want to. Other roles, like sales, customer success people who are more used to being on camera don’t have as much of an issue with it. So I do think there’ll be a hurdle, like a hurdle, and maybe this is better for certain roles.

Justin Vincent:
Maybe it’s just audio.

Rob Walling:
That might be even better too because I have another thing I heard, and then we’ll move off. I don’t want to spend too much time on this. But someone had a hiring process where they did require video, and someone brought up the idea of diversity, and of someone not wanting … That some folks shy away because it’s like, “Well, when they see me on camera, if I’m not a cis white male, then maybe I’m lower on … ” Right? So but audio could potentially get around some of that, although you’d still have gender stuff. Whatever, yeah. I don’t think we need to go too far into this, so interesting idea. What’s the next one?

Justin Vincent:
Okay, next one. So we’ve had to interesting, that’s all I actually want. I just want to see if you find them interesting. That’s the main point for me. Okay, so number three, this is actually for me, this is something that I’ve posted in Nugget. It’s a problem that I had thought about. I never really got into it because I think it will require a significant amount of work, but I do think that there’s a lot of potential here. A special diet builder, okay, so special diet builder. So step one, scrape every food recipe on the internet. Step two, create an interface to build any diet you want, gluten free, vegan, nut free, paleo. Step three, present recipes in a unified format with a link to the original. You can sell this to nutritionists, to the general public, medical professionals. Or you could create multiple landing pages and do an ad or an affiliate play. But a key point is, with a food framework, if you just limit to a specific food framework, it’s much easier to stick to an eating and diet plan.

Rob Walling:
I’m much more bearish on this one. See, I don’t like B to C stuff. You need buckets of money to churn as high, blah, blah, blah. Would copyright be an issue with this, or scraping all the stuff? And then even if you link to it. But you’re selling it to them, yeah.

Justin Vincent:
Well, you’re selling it to nutritionists, and you could sell it to nutritionists. You could sell it to … I mean, there’s a consumer aspect, which you could sell it to consumers. But probably another aspect would be to sell it to businesses, so it’s both.

Rob Walling:
All right. I’m just going to squint my eyes at you and say, “What’s the next one?” I don’t like this one. That’s my least favorite of all.

Justin Vincent:
Okay, yeah.

Rob Walling:
This one and online time capsule, they’re together at the bottom of the list for me.

Justin Vincent:
Okay, I’ll give you online time … Okay, so this one I just thought of. This is my most recent one, so I’ll just read through the spiel and then we’ll talk about it. Casting director talent finder, this is one of many possible ideas that there are for things like Midjourney and DALL·E2. But it’s just something I’ve been thinking about a lot recently because there’s so much of it out there. I’ve seen some blogs recently where they imagine what cartoon characters would look like in real life by working them up in DALL-E or Stable Diffusion. And the end result looked like real people, real and very well done. And I’ve also seen how easy it is to create people’s faces based on a description.
So what I was thinking is you could build a system for a casting director talent finder, like a SaaS solution. Essentially, it would have two steps. One, generate the face that you are ideally interested in for your project. So you go through your whole project and you develop all the faces. And then step two, basically, you use facial recognition to search through IMDB and all the different talent websites where actors are available, and then sort of pull them back. So some notes about this, the movie business is all about the look. That’s the primary driver of talent search. This would increase the number of close matches for casting directors significantly and save them an insane amount of time. It’s a nice B to B revenue model. It could be sold as two separate products or plans. Number one, the ability to build the face, and number two, the ability to find the actors. The key point here is that it could save hours of legwork and get better results.

Rob Walling:
That’s super interesting. This is what I love honestly about running TinySeed, is that we get these applicants and I’m able to look through just ideas I would never even know about or think about, and this idea is one I would not know about or think about, but I like the use of just the roundabout, it’s the look to AI, to reverse image search is really what it is, which I think is great. So here’s where I like this one because it’s fun and it would be the validating this is not that hard. Right? If I were to try to, next step from this, I need to talk to 20, 30 casting directors. I need to say, “If we built this, does this make sense?” And find out. Is this not within their process? Do they not start from the look? Do half casting directors don’t give a crap about the look, and they give a crap about something else? That’s what I want to know because I know so little about this industry and this process, that I want to know how do they actually do it across 20, 30 different casting directors.

Justin Vincent:
They must just have to look through thousands of photos.

Rob Walling:
Maybe. I don’t know. I don’t know how they do it, and so I’d want to find out, and not just from one because I guarantee there’s … Is it casting directors? Or is it … Yeah, no, I guess that’s what it is. Right? It is, that’s the right role.

Justin Vincent:
But it could be casting directors, but also, it’s the other people, like the main director and that kind of stuff. So it could sort of create this central hub around the casting of it. You could have a dashboard for the director, for the producers, and then I think there’s something there. This could be a VC kind of thing, or it could be a bootstrap kind of thing as well.

Rob Walling:
Yeah, it’s interesting. All right. What’s next?

Justin Vincent:
Okay, so we’re onto the VC ideas now. I’ve got two of them here, one of them from Chas, who’s also in my mastermind that you set up, and then another one that I just thought of. And I genuinely have no idea if this is any good, or this is a complete pile of crap, I just don’t know. But what I see is, I see VCs in the media kind of complaining about stuff like founders having parties, stuff like that. So I had an idea to create a cash burn alert for VCs. So you use Plate to plug into all the startups’ accounts, look at the spending heuristics. If a huge party spent on ridiculous stuff happens, alert the VC. VCs can offer potentially better terms on the deal if you’re prepared to just at least have this basic monitoring.

Rob Walling:
Oh, man. I love your stuff. This is so funny. So this is monitoring. It’s like, “I’m going to invest and I’ll give you an extra million dollar of your valuation if you allow us to … ” [inaudible 00:30:30].

Justin Vincent:
If I could just check that you’re not being a total child with the money that I give you.

Rob Walling:
Oh, you’re killing me. So yeah, that’s interesting. So you can get alerts, that’s the key thing.

Justin Vincent:
Yeah, it’s alerts.

Rob Walling:
Because obviously, VCs have the information right, so they can look at your books. But do they want to every quarter comb through it and look at every expense? No, they don’t. And so you’re saying you’d set up some type of way to look.

Justin Vincent:
You’d have good heuristics, but just say, “Eh, eh.” They hired a yacht with a hot tub.

Rob Walling:
Oh, my gosh. How would it know that though? It would just see a big expense. It could be the office rent, or it could be payroll, or it could be a one time expense to invest [inaudible 00:31:12]?

Justin Vincent:
That’s implementational details. That’s not my problem.

Rob Walling:
Oh, man. You hand waver. Dude. Okay. So I’m just going to shrug my shoulders and say, “Hey, it’s VC backable idea.” I could see it. I’ve seen weirder ideas backed by venture funding.

Justin Vincent:
This could help de-risk investment potentially, if anyone was prepared to [inaudible 00:31:33].

Rob Walling:
It’s pretty rare, honestly, the big launch parties and the yachts. It is so rare, so few companies do it, so that’s where I’m a little bit like … I really like it. All right. What’s the next one?

Justin Vincent:
This next one is, I’m afraid this isn’t funny. This is Chas’s. This is really serious. This is a proper business. It’s the least fun of all the ones we had, but it’s probably the most serious that you could actually turn into something big. Basically, ETL data pipeline modeling tool, a no code tool that can ingest and transform huge amounts of data and export it in a transform format to other systems with parallel processing, IE, it’s a pipe between two systems. It kind of sounds like Zapier, but that’s actually different because that just works one event, one line at a time. This is for bulk data movement, so think Yahoo pipes, but industrial scale.
So examples, let’s say you have to migrate one petabyte database from Postgres to a different structure, no SQL database, rather than writing scripts and spinning up lots of infrastructure, you just point this tool at it and it will auto scale that massive data slurp and save on developer time because that’s what normally happens with these kind of situations. You just have to create a whole bunch of stuff that you never use again. So ETL extraction transform the load, and it is really slow waiting for big data to move around the place, really, really slow. I think that a lot of companies, just to pick something out, Facebook or whatever, just a tool that could just really scale and make it fast to move massive amounts of data around could be very, very helpful.

Rob Walling:
This feels like an almost boot strappable business, at least to start with because you could built it on a smaller scale. I mean, first thing I would do as a founder is I would want to find out. What does the landscape look like? Not to say, “Oh, someone’s doing this, so I’m not going to build it.” That’s not what I’m saying. It’s: Who’s doing it? Who’s adjacent to this? How are they doing it? What’s working for them? What’s not? What’s my angle to get in? How am I going to be better, or different, or something? Right? And this is a piece of software that maybe you start with it only does MySQL to Postgres. What are the biggest, what are the most common, what’s the single most common database migration today from one to another? If I were to boot strap it, if I were to venture, you build 10 at once because you have 10 million in the bank. But if I were to take it slow, it’s like a lot of people moving from MySQL to Postgres, let’s see how we do that. I like your no-

Justin Vincent:
No code.

Rob Walling:
No code. Yeah, no code, sorry. And I see a need for this if it doesn’t already … If the problem is not already solved really well, this is a fascinating idea, and I could see it both being boot strappable and VC because you could … This is one that where you could make enough money to make it make sense, even at a small scale, versus some of the other ideas. A lot of VC ideas, they don’t work at small scale. That’s the point of them. Right? This is a dev toolkit, but also the whole service to do it as well.

Justin Vincent:
It’s the service that … But let me just, I’ll play a little devil’s advocate about this one. I was sort of thinking about it because I’ve done these kind of things a lot as a developer of 25 years building big systems. One issue that I was thinking is, okay, you make the middle part really fast, so you scale up, you do parallel processing, but you’re kind of limited by the input and the output points. If that database you’re slurping from is slow, or if the database you’re inputting to is slow, that’s sort of your limitation. So you could make it really fast in the middle, the transform stuff, but you might be a big limited on both ends by what’s already there. But maybe that’s fine, it’s just still this point of I think a lot of cases are, it’s slow in the middle. It’s the transform stuff. It’s transforming so many petabytes, and you have to build parallel system that transforms that and keeps it all in order and stuff.

Rob Walling:
All right. So you’ve brought eight ideas, thanks so much, two solopreneur, four ambitious boot strapper, and two VC. Although, I think you could kind of bootstrap one of them. But do we want to go high and low, top one or two favorites? Do you have favorites? Or are you just agnostic to all of them? Because see, I have opinions. Right? That’s what I bring to this, is through my lens, the ones I think that are most interesting, through my lens of boring because I like boring businesses. Right?

Justin Vincent:
That’s a really good point that you bring up, because of thinking through 4000 ideas, I am agnostic to all ideas. And I believe that any idea can be successful until it’s proven otherwise. And that’s kind of why I believe in the whole fail fast concept. Just go out there and test it and speak to people, and just fail fast and move through them as quickly as possible.

Rob Walling:
Yeah, awesome. Do you mind if I do my top two?

Justin Vincent:
Please do, yeah.

Rob Walling:
So my favorites of this, I mean, obviously, I really like the ETL data transfer tool because it’s technical. It’s just nerdy enough, it’s just boring enough, and I’m sure it solves a problem someone has, so I really dig that one. I also, that casting director talent finder is just fun and interesting. And I’m not saying I would go out and build it, and I personally wouldn’t even be the person to build it. But if someone is in that sphere at all, where you’re around filmmakers, casting directors, the movie industry, it’s just a fascinating use of a new technology, and it’s that get there early. Right? One of the advantages I talk about in startups is getting there early, and this could potentially be something where you could get there early. There’s obvious headwinds, obvious behavior changes, blah, blah, blah. We could talk through the negatives, but I dig that one quite a bit.
For me, the funniest one was the cash burn alert for VCs. I don’t know why that tickled me, it’s hilarious because it’s so out there, and I’m going to throw that. And then probably my least favorite, the ones that I don’t quite understand the … I think I just don’t understand the problem they solve is the recipes, it’s B to C, and the online time capsule one, where even transcripts for meetings, where I don’t have the problem myself, I’m sure someone has that problem. And the drone pests, I wouldn’t do the drone one because I don’t like hardware. But it’s a problem. And so how are we going to [inaudible 00:37:34] each of these applicant pre recorded interviews, it’s problem, so each of these I can see, except for again, I’m not saying there’s no problem, it’s just of these eight ideas, those are probably my two least favorite for me. Well done, sir.

Justin Vincent:
Oh, sure.

Rob Walling:
Justin, thanks so much for bringing all your amazing ideas to the show and discussing them with me. If people want to keep up with you on Twitter, you are at Justin Vincent. And of course, nugget.one if they want to see the project you used to be working on, and now see trylist.io for what you’re working on now. Thanks again for coming on.

Justin Vincent:
Thank you. Thank you so much for having me.

Rob Walling:
Thanks again to Justin Vincent for joining me. Thank you for listening this week and every week. It’s great to have you here. I appreciate all your support on social media, Reddit, Hacker News, all the mentions, they mean a lot to me. This is Rob Walling signing off from episode 638.

Rob Walling:
If you’re looking for the podcast where we talk about non venture track startups, how to build them, launch them, and grow them, you’ve come to the right place. It’s Startups For the Rest of Us. I’m your host, Rob Walling. This week I answer listener questions ranging from which is better B2B or B2C hiring for your first sales role, bootstrapping a two-sided marketplace, and many more. If you’re in the US, I hope you enjoyed your Thanksgiving last week, and if you’re everywhere else in the world, I hope you enjoy this episode as I dive in to listener questions.
Before I do that, if you haven’t checked out our YouTube channel, it’s MicroConf.com/YouTube. And I’m releasing a video every week where I talk through specific topics. I actually have a full video on B2B versus B2C SaaS, which is better. I’ve talked through funnels, talked through validation, talked through lowering churn, all kinds of stuff. Every week a new video is coming out. I’d encourage you to check it out, MicroConf.com/YouTube. And with that, let’s dive into listener questions.
Our first question of the day, it’s actually not a question, it is a statement made in a tweet by Daniel Nguyen. He runs KTool.io. And this sentiment just resonated with me, so I wanted to bring it up in this episode. His tweet reads, “You either die a consumer startup hero or you live long enough to see yourself become a B2B SaaS founder.” And that is like the nerdiest humor, but I like it. I’ll be honest, I have seen quiet a few B2C founders pivot. They see the churn, they see the price sensitivity, and they wind up pivoting into B2B if at all possible. And KTool actually looks like a pretty interesting tool. Send anything to Kindle Fast. So you can send blog posts, Twitter threads and newsletters to your Kindle. When I check out his pricing, it’s five bucks a month, eight bucks a month, 15 bucks a month for family. And those price points are in line with something I would pay for.
I think I pay, what do we pay $16 for a family plan of Spotify. And you think of the Netflix and the Disney Pluses and all that. But at this price point, I imagine his churn’s quite high and his average revenue per user is probably 5 to $8 a month. And that makes it tough to do anything because you can’t really afford to run ads, you can’t afford to do most of the marketing approaches that I often talk about here on the show. And so that is, that’s the pain of running a B2C business. But I hope Daniel is doing well with it and obviously wish him the best to grow in the business.
Our first question today comes from anonymous, and it’s a question about hiring sales people.

Speaker 2:
Hey Rob, a question for you. I have a SaaS product that is targeted towards medical professionals, so either dentists or doctors. And I was thinking of hiring a salesperson to engage with specific clinics. And the reason for that is the sales cycle’s a bit longer. Medical professionals don’t necessarily buy technology or SaaS necessarily just by visiting a website from my experience. And so I think you’ve made an analogy, is it a vitamin or is it medicine? Like they take it once or do they need to take it daily? And I thought to explain that, I don’t have enough credit necessarily yet to kind of have that displayed on the website and I’m working towards that with content. But would sales people help me elevate or accelerate faster? And if so, where would you find great sales people and what criteria would you use to hire them? And then another part of that question is how would you compensate them? What would the compensation structure look like? Thanks so much.

Rob Walling:
Thanks for that question. So one clarification I wanted to make is vitamin versus aspirin is not about taking something once versus needing it daily. It is that aspirin is an urgent need and you want to be an aspirin. You want to be a medicine as you said. But when I have a headache, I will drive to the store and buy that right now because I need it to cure a pain point, versus a vitamin is a nice to have. That’s what those terms really mean is you will see some SaaS apps and startups in general that really struggle to gain traction. You’d say struggle to find product market fit if we’re going to be jargony about it. But people just put off the buying decision because they can. If I run out of vitamins, I don’t necessarily run down to the store that day. I may even forget to take them for weeks or months. It’s not such an urgent pain point.
So that is a problem and it is a challenge if you build a vitamin app. A lot of analytics dashboards or vitamins, people don’t tend to want to, founders and marketers. I guess there’s a left brain marketers that really like the analytics dashboards and there’s a lot of analytics dashboards that I’ve seen launch and fail because people just sometimes don’t really need to dig into that. Well, they should be, but they don’t want to. Maybe another analogy is like spinach versus ice cream, where everyone wants ice cream and most people don’t want to eat spinach or kale. But realistically, it’s what they should be doing. I view that as separate from this conversation a little bit. It ties into it, but if you’re targeting dentists or doctors, they’re not going to self-serve onboard. You are choosing customer pain over competitor pain.
Hopefully, you don’t also have competitor pain. And the difference is customer pain is when you tend to have a longer sales cycle, you definitely need to do high touch sales. And oftentimes, they are lower on maybe the technical acumen, so they’re not designers or developers or founders or people who are just native online all the time. They’re non-technical, and they’re going to run into some issues. They’re going to need more onboarding and support than other folks. And that’s what I mean when I say it’s customer pain. If you choose competitor pain, let’s say I’m going to start an ESP or CRM softwares, there’s a lot of competitors. But oftentimes, especially in the early days, you’ll get folks who kind of know what they’re doing and your early customers will be early adopters and they will be more technical and usually need less handholding. The worst of both worlds is if you have competitor pain and customer pain.
And that is not something that I would be trying to do these days. So in this case, you’ve chosen customer pain and in that case, you absolutely need to be doing high touch sales on this. Yeah, I don’t know of a single app aimed at this type of dentist, doctors, legal, professional folks who are going to want to self onboard and just figure stuff out. There are just so very few early adopters in those spaces. In addition, if you’ve gone into that space where there’s going to be a sales cycle and more support and you’ve built a vitamin, that’s a real problem. Yeah, that is a business ending issue. And I think that if you have a feeling that you have built a vitamin and you have customer pain, I’d be looking to pivot whether I pivoted my ideal customer or whether I pivoted the app into something that is an aspirin, that’s something I’d be thinking about.
Your actual question is whether sales people would help you accelerate. And what I don’t know, the hard part about this, I have no context. So do you have revenue? Do you have customers yet? Are you a team of five and you need a salesperson? I’m going to make the assumption that you’re early stage, you haven’t found product market fit. And in that case, I cannot imagine anyone but the founder doing the sales. I don’t know of a single instance where that has worked. Most people don’t even try it. You, as a founder, you know the product the best, you know the space the best, you know their pain point, you know the problem it solves. You have all this stuff in your head that you’re going to take for granted. And if you hire a salesperson, they’re going to have none of that. There’s no process to give them because you have no process yet. This is again, making that assumption that you’re solo or you have one employee or something and that your sales process is not documented and working as a well-oiled machine.
I would not bring a salesperson into a sales process until we had a repeatable sales process that is relatively proven. And I do the demos similar each time, and you can teach someone to do that or the visits to the dentist’s office. And if you’re working nights and weekends, and this is a side project, then this is a bad project to build as a side project. This is where you need to quit the day job to go sell this thing. And if none of that works, then you pivot, right? Or you just pick a different product altogether or you go try to raise funding and that allows you to then quit the day job. If you do have a proven repeatable sales process and you’re going to look to hire sales people, in terms of where I would find sales people, I would hire a recruiter.
And I wouldn’t be going after whatever the full service, like 15% of first year salary recruiter. I’d be looking at a more startup focused, bootstrapper focused service. There is Remote First Recruiting from Dan and Ian at Tropical MBA. And there is Avra Talent, which is run by Maren Kate, who was a MicroConf speaker last year. And these are more reasonably priced recruiting services and I think you get plenty of value out of using them. Those two firms and other firms like them have hired more salespeople than I will ever hire in my life. And so I would not be going out looking to do this on my own. And they will be a big help in figuring out criteria as well. And you can always look at Steli Efti’s material on how to hire salespeople. He has a bunch of MicroConf talks as well as eBooks often that he gives away for free, or very reasonably priced. You can read to learn more about that. So thanks for the question, anonymous. I hope that was helpful.
My next question is about bootstrapping a talent marketplace. It’s from Ben Atwood.

Ben Atwood:
Hey, Rob. Ben here. I am a graphic designer based in London and I’m in the process of building a design specific marketplace. So we want to be competing with the big boys like Fiverr, Upwork and 99designs. However, those platforms are generally strongly disliked by the design community. So our big idea is building a platform or a marketplace that designers actually want to use and want to get work from.
Now, I really want to bootstrap this business. However, I know in the past you have said that it’s very difficult to bootstrap a marketplace. So I’ve been thinking about this problem and have a potential idea I wanted to run by you. So I was thinking maybe instead of focusing on design as a whole, we could narrow it down, niche it right down to a specific subset of design, for example, UX/UI, which in theory would mean would be able to target our customers a lot better and recruit them easier. And then over time, kind of build the marketplace out into all categories of design. So do you think that’s a good approach to take? And if not, do you have any specific tactical advice on how to bootstrap a marketplace? Thanks mate. Bye.

Rob Walling:
All right. So my first piece of advice is don’t. I don’t know, why does everyone do this? Just stop with the marketplaces already. Just build a SaaS app or build a step one business and provide value when you have one customer, or 10, or 100, you provide the same amount of value. Charge real money for a real product that you sell to real customers and really stop it with the two-sided marketplaces. Now with that said, I will answer your question of if someone put a gun to my head and said, bootstrap a two-sided marketplace, what would I do? Well, number one, I wouldn’t bootstrap it. I’d raise funding because you’re going to be fighting a war on two fronts, so you’re going to need a lot of ammo. Number two, I would build one side of the marketplace first. So if you recall when I say don’t bootstrap a two-sided marketplace, the end of that sentence is unless you already have access to one or both sides of that marketplace.
So for example, if you think of starting a startup accelerator or a venture fund that’s going to invest in startups, it’s a two-sided marketplace. You need to find both investors to invest in your fund and you need to find founders who are willing to take money from you, who are interested in what you offer. So if I had neither of those, I would not start a venture fund. I would not start a startup accelerator. It just so happens that through this podcast and MicroConf and all the stuff, the blogging and the books and everything that I’ve done since 2005, I happened to have access to both of those and frankly, didn’t know I had access to the investor base. But as we did raise the funds, I realized just how powerful it was to have built the audience and the network and the brand that I do have.
So with that said, how do you translate that to you? Well, I wouldn’t go out and start a marketplace. I would start a service or something that provides value to designers. Some examples, Dribbble started years ago. Should Dribbble maybe start this marketplace? They probably should because they already have access to them. So how do you replicate that? I’m not saying replicate Dribbble, I’m saying replicate the access to all the designers. So whether that’s a blog that they all start reading, think of like Smashing Magazine could do this, right? Because they have a bunch of designers and they would just need to then bring in people who want to hire designers. That’s not that hard. So do you start with a content play to drive designers and you build that up over a year?
See, people who start two-sided marketplaces don’t want to hear this, right? It’s like spend 6, 12, 18 months building up one side of that audience and then boom, your cold start problem really is not that big of a deal. That’s when you can bootstrap it. So whether it’s a content play, you start a blog, whether it is a gallery or whatever you call it, Dribbble, which is where you can post, like a portfolio site and you get a bunch of designers on there, whether you are teaching things, whether you start a stack exchange like thing for designer. Whatever it is, start something that gets a bunch of designers there and now you only need the other side of that marketplace and that other side actually isn’t that hard to find, right? You could do that through ads, you could recruit one on one. We know a lot of people who want to hire good designers. So thanks for the question, Ben. I hope those thoughts were helpful.
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My next question is also anonymous, and it’s about acquiring an app. Anonymous writes, “I’m in the middle of buying a web app right now, my first one. Based on my initial conversations with the seller, it looks like I can get the app for two years worth of revenue.” And he tells me the numbers, asked me to keep it confidential. It is low revenue and almost certainly does not have strong product market fit unless he’s just not marketing it at all. Otherwise, I would expect the revenue to be higher. Back to the question. “I do have some concerns. First, the tech stack he uses is non-standard and it’s not hosted on one of the major cloud players. I’m an engineer but my preferred stack is not the one that he’s built it in. And I’m sure I could take the time to learn his stack, but I’m not sure I want to learn everything from scratch on a new code base. Second, the app is based in a particular country and the domain name is not a dot-com, it is that country’s top level domain.”
So for example, there’s what co.UK or .DE for Germany. It has that specific thing. “And when I signed up for his app, the registration email went to my spam folder.” So that’s a little disconcerting. “That said, there are a few positives to the deal. I was considering building my own competitor but figured if he would like to sell, I could kill two birds with one stone and eliminate competition, essentially have a good business which I could take over and improve. I believe I can take this to the next level. How should I go about valuing such a business and figure out whether or not it is worth acquiring?” Yeah, this sounds kind of rough. I’m going to be honest. At this level of MRR, and just for you as a listener, I’m going to say it’s somewhere less than 2,000 MRR. At this level you don’t have much, right?
You have a few customers and you have a code base, but it’s a code base that you don’t even want to code in and you don’t have enough revenue to hire someone to run this business or to code on the business. Now, I bought an app called HitTail that was doing, it was right around 2,000 actually. It was probably 2,000 MRR. I paid 30 grand for it back in 2011, and it was in classic ASP, which is a language I knew but didn’t want to code in and would be hard to find developers for. The reason I bought it though was that it had been a lot bigger. It had had a free plan, it had a bunch of links and mentions in the New York Times, Wall Street Journal, Forbes, Entrepreneur because the previous owner was a PR person. And so they got a lot of press mentions when the app launched in like ’06, ’07, and then it was just kind of dying off in 2011.
But I knew that there was a lot of data, there was some proprietary stuff in the code, but there was also just this big footprint that I knew I could build SEO on and I knew that it had stuff that would’ve been hard for me, hard or impossible for me to replicate. And so that’s what I’d be looking for, is if you’re going to pay this sum for this app, it’s like is the code base a year’s worth of work, six months worth of work? Or, do they have already a flywheel of SEO or something else going on? Or did they do a launch? Customers trickled in and they’re just kind of hanging around because you kind of have a cold start problem. You’re a little bit ahead of where you would be if you were just starting out. But I struggle with having to get a new domain, because you have to get a new domain for this because I wouldn’t leave it as the country specific. I’m assuming you want it to be more general.
I’m less worried about the fact that it went to your spam folder, that stuff can be fixed. But the tech stack, if this was doing 20 grand a month and I had product market fit, well, it’s a whole different story. I know it’d be a lot more expensive. But then you could say, “Well, is it worth rewriting this?” Right? So that’s what happened in the end with HitTail is I worked on it, I hacked the code myself for a bit. It was pretty painful because classic ASP, even in 2011 was like over 10 years deprecated. But I did later find a classic ASP developer who worked on it and then I got HitTail up to about between 20 and well it was about almost 30 grand a month. And then when I was thinking about selling it, because Drip was taking off one of the developers I’d hired to work on Drip, we were Ruby on Rails stack, I had him rewrite HitTail in Rails and that made it, I’d say, a sellable asset at that point. Because I think in classic ASP would’ve been very, very hard to sell.
But it doesn’t sound like the parallels match up with this app and I would either be looking to acquire it for less money. And personally, I don’t even think the purchase price is the problem. I think it’s more of even if you paid half of what you suggested, is this still worth it? And that’s where there are some details that I would need to dig into, to really know what the value it is that you’re acquiring. Those are my thoughts, Anonymous. I hope they were helpful.
My last question of the day is from Prabat. Subject is Mom Test. Pratt asks, “Hey, Rob. I’ve been following the instructions on your podcast. Let’s hope someday I will be able to write in and be a proud listener with a successful business. I’ve been doing some mom test interviews for my products. However, sometimes I’m still scared of being copied. I know I might be paranoid. Am I?” Keep sharing.
So number one, products. Why are you working on multiple products at once? Focus on something and roll with it until you decide to bail on it and then move to the next one. But the other thing is, yeah, this fear of being copied, if I were to tell you, oh, don’t have any worries about being copied and then someone copies you, that kind of sucks because it can happen. It’s just very, very, very, very rare. It’s more likely that you’re going to be copied if you launch and have success and talk about it online. And then at some point… We saw it happen with Baremetrics. We’ve seen it happen with some other apps.
I mean even Drip, Drip started having success and then there were some kind of copycats that crept up. When HitTail was having success, there were copycats too. That was kind of an interesting one. It was like the exact same value proposition. But someone sees you having success and they come out of the woodwork to do that. The thing you have to keep in mind is, number one, you are going to have to out execute competitors at some point. The other thing is hopefully you have some secret sauce, you have the knowledge or the skills to be able to implement this. And I would question if most of the people, unless you’re talking to a bunch of aspiring startup founders in MicroConf Connector on Indie Hackers, then yeah, maybe some of those people would copy you. But if you’re serving a niche of non-starter founders, it’s just the odds of someone copying you are so, so small.
And even within the startup founder space, everyone has their own ideas that they love. I’d say it’s more unusual for someone to do this than I think most people think. With that said, it obviously happens from time to time. In fact, most of the things I’ve done in my life that were worth doing were copied at some point, including TinySeed, people have tried, after MicroConf had success, people have tried to compete with that. And that’s where you do have to think about how can I build moats? How can I build a brand such that if they replicate my features, it doesn’t matter because they’re a commodity and I’m not? And this is where you have to think about, eventually you are going to have competition. And while you don’t want it right out of the gate, I think the value of doing mom test interviews or the value of validation and the value of talking about your product before it launches outweighs the risk that someone copies you.
That’s just a personal decision for me. Everything I’ve ever launched, I’ve talked about way in advance of launching it. Drip had a 3,400 person launch list before we launched. And that was because I was talking about it far and wide on this podcast, on every podcast interview that I was doing around that time. I was running ads to it and we didn’t have a product, right? But someone could have come along and copied that. But I figured, well, someone will do it eventually. And at this point, I wanted the interest, I wanted to beat the drum and have that great launch list and that early traction. And to me, that was way more important than the potential small percentage risk that someone was going to copy my idea. So thanks for the question Prabat, I hope that was helpful.
That’s our final question of the day, but if you have a question you’d like answered on the show, please email questions@startupsfortherestofus.com, or just head to the website, click ask a question in the top nav and you can submit a video or audio, which goes to the top of the stack. Or if you submit text, I will definitely get to it at some point. Thanks to everyone who keeps sending the questions in. I think these episodes are super helpful for the audience. I’ve had overwhelmingly positive feedback about them and there are no episodes like this if people aren’t sending in their listener questions. So thanks to everyone who’s been sending them in. This is Rob Walling signing off, from episode 637.

Rob Walling:
Welcome back to Startups For the Rest of Us. I’m Rob Walling, and in this episode I’m talking with Claire Suellentrop about the new book she co-wrote with her co-founder, Gia Laudi. The book is called Forget the Funnel, A Customer Led Approach to Driving Predictable Recurring Revenue. Gia and Claire have run a consulting firm for the past several years where they are working with startups and SaaS companies to help them learn more about their customers in order to drive more revenue. And this book is essentially a distillation of a ton of their learnings. So with that, let’s dive into my conversation with Claire. Claire Suellentrop, welcome to the show.

Claire Suellentrop:
Rob, thanks so much for having me.

Rob Walling:
It is so nice to talk to you again. It’s been… I was trying to think, was it MicroConf, do you remember, 2017 in Vegas?

Claire Suellentrop:
2017 or ’18. But really in either case, what feels like a lifetime ago now.

Rob Walling:
It’s been a while. Yeah. Well, and I was telling you before we hit record, it was super cool to meet your co-founder of Forget the Funnel, Gia Laudi. It was super cool to meet her. And today we’re here to talk about the book that you have co-written with Gia. It’s called Forget the Funnel, A Customer Led Approach to Driving Predictable Recurring Revenue. First question, Forget the Funnel, why that title? And I think it’s the name of your company as well, but where did that phrase come from?

Claire Suellentrop:
Yeah, it is the name of the company as well. And Gia was just recently on Lenny Rachitsky’s podcast. They were discussing the same why Forget the Funnel. And there’s this really funny clip of Gia going, “Funnels are gross.” But to be more specific than just funnels are gross, what that really speaks to is the fact that even prior to Gia and myself having met, we were leading marketing at two different, both very fast growing SaaS companies, way back in the wild days of the 2010s. And really it speaks to the reality that for a SaaS business, for a recurring revenue-based business, thinking of marketing as an activity that ends when a new customer signs up is just the tip of the iceberg. Because if the business lives and dies by customers being retained over time and expanding their usage over time, then the idea of a funnel doesn’t really work as an analogy anymore.
That is the origin story of Forget the Funnel. We bought the domain when we met in person probably about a year before my first time speaking at MicroConf. So it’s been, what is that, I guess coming up on six years now that we’ve been working under that moniker.

Rob Walling:
Yeah, well the cool part about it is it’s so intriguing because the first time I heard it I was like, “Well, what does that mean?” And maybe want to ask more. And that’s a cool phrase. That’s a cool way, a purple cow if you will, that gets someone’s attention. And so in the book, you’ve actually broken it up into three sections and you have this three phase process for customer led growth. The first step is get inside your best customer’s heads. The second is map and measure your customer’s experiences. And then the third is to unlock your biggest growth opportunities. Let’s start with the first one. Get inside your customer’s heads. Is this Jobs to be Done interviews? How do you go about getting inside customer’s heads? And actually you know what, I’m going to pause that question and I’m going to go back and say does this apply to really early stage folks? If I have 10 customers, I’m doing $300 a month, am I too early? Or where are we starting to think that we can take this approach in this book?

Claire Suellentrop:
That’s a super good context setting question. So, the process or the framework that we’ve put together over the years can be used at the super early stages to at least guide your efforts in figuring out who your best customers are, how they think, what the struggles are that they feel. It definitely is more suited to and more kind of easy to walk through when you have a larger set of healthy, engaged, paying customers. There’s two chapters right next to each other, Learning From Customers and Learning From Future Customers.
And the future customers one really speaks to that experience of being early days enough with your product that you don’t have an ideal customer base to learn from. But when we talk about getting inside your customers’ heads, and you mentioned job interviews and that is a part of it. But even before that, where we really start when we’re working with a company is getting clear with the team on whom within your customer base right now gets your product? They get it from a mindset perspective. They’re not trying to force it to work in a way that you didn’t really design it to. They’re low burden on your customer success team. They pay for it happily. They’re not asking for discounts and they’re the people that you want to go clone more of.
So in contrast, I was recently just on a kickoff call with a company we are in the process of starting to work with right now and I had the head of sales there, the CEO, the president, really important people, stakeholders in the room. And in this conversation I was trying to get from them, who is that best customer for you at this point? And asking that actually helped them realize we don’t actually have internal alignment on what makes up a best customer. We’ve got these big enterprise deals that we’ve pulled through the sales process that are healthy from a monthly recurring revenue perspective, but also we don’t really know if we want to serve the enterprise or if we want to move down market and expand. And so it triggered this whole internal reckoning.
So getting clear on who your best customer is in the first place is ground zero, step number one. And then from there, yes, using jobs interview. We also have a short survey, which is kind of like a mini jobs application, mini jobs interview to understand not just why did they sign up for your product, but before that, what was the trigger in their life that made them realize their old solution wasn’t working? And then what were the methods they used to find new ones, which is massively useful in prioritizing your marketing channels. And then when they found your product, what was the differentiator that drew them to you versus anything else on the market? And oftentimes what we find from that is internally teams don’t really have a research back sense of what differentiates them in their customer’s eyes.

Rob Walling:
And that’s where surveys and interviews. There’s different ways to couch it from there. If someone’s hearing this and already they’re like, “Take my money,” they can go to forget the funnel.com, there’s a link in the footer called our book and you can get the pre-release because the book comes out next year in 2023. But you can get a PDF of the book for $25 if you want to check it out.

Claire Suellentrop:
Yes. And additionally, if you want to just shoot me an email, if you do want to buy the book and then you want access to the Jobs to be Done interview questions that we use, we have those for free in our resource library on our site. So, we’ve got lots of materials to help with that piece as well. I know interviews can be really intimidating for some.

Rob Walling:
Yeah. But what I like is that 10 years ago I would hear talk to your customers and I was like, I don’t know how to do that.

Claire Suellentrop:
What does that mean?

Rob Walling:
Yeah. And now there’s books like Forget the Funnel there. I had Jim Kalbach on the show. He has an amazing book now I forget, I think it’s called Jobs to Be Done colon, some subtitle, but someone could search the archives if they want to see it. Michele Hansen has a book, Customer… Do you remember the name of it? Deploying Empathy I remember because it’s a pun on deploying code, Deploying Empathy.

Claire Suellentrop:
Yeah. I love what she did with the title. I guess I’ve been under a rock because I had not heard of Michele’s book until just a couple of weeks ago. And then I was like, oh my god, everybody needs this.

Rob Walling:
Right. And that’s the cool part is I just named three people who are talking about Jobs to be Done. [inaudible 00:07:40] is another, but you each have different angles on it. And that’s what I like is for me, I am absolutely still a nube talk to customers person. Each time I read one of these books, like Forget the Funnel, I think, oh, that’s a different angle on that, even though I’ve heard pieces of it before. Because as you and Gia you’re running…. Do you call Forget the Funnel a consultancy or an agency?

Claire Suellentrop:
We call it a consultancy. It could be a whole nother conversation on are you an agency, are you a consultancy? How do you figure that out? But yes, we do call it a consultancy. So keep going.

Rob Walling:
And you’re working with SaaS companies day to day. And so I imagine years and years of experience doing that. It just piles into your brain of these are the best practices and these are the ways we do it for our customers and that our clients and that’s what’s baked into this book.

Claire Suellentrop:
So I really like that you raise that jobs can be applied in different ways. And if you Google Jobs to be Done, there’s even of the people who develop the framework, there’s different approaches and applications of it. So, you’re absolutely right that the way that we run these interviews and these surveys is what has worked really well for us over the course of working with SAS companies for the past however many years. But that said, there is such a wide application of the jobs framework. So it was the same year that I spoke at MicroConf big year for speaking. I spoke at Business of Software and I was so intimidated because I was giving a talk about using Jobs to be Done for messaging and copy. And Bob Meoesta was in the audience and I was just terrified because this person who pioneered this framework is watching me present on it. But he was such a chill guy.
And afterward I shared that with him and he was like, “You got to know, you’ve taken it and you’ve figured out a new way to use it and that’s great. And somebody else is going to take your way and they’re going to figure out a new way to use it. And that’s great.” And there was a lot that you can do with the jobs framework. This just happens to be how we have kind of operationalized around it, so to speak.

Rob Walling:
And I like your thought process in the book. You have some prescriptive questions and you have examples of bad questions and good questions. You have leading slash closed questions and then in this table you have on the right, you have open ended and good questions. So I want to read the bad and the good. The bad one is, “Are you happy with your experience so far?” Presumably using my SaaS product? And the good phrasing of that is, “How would you describe your experience so far?” Because it’s not leading. You’re not saying, “Are you happy?” Because then it’s like uh. And then another bad one is, Which competitors have you tried?” Versus, “How have you tried to solve this problem in the past?” So again, open ended not leading. And then the last one is, “Which is your favorite feature, A, B, C, or D?” Versus, “When you first tried a product, what was it that convinced you it would solve your problem?” You have a whole list of questions that you can ask. I assume these are just taken from practice and practice and you doing a bazillion of these interviews.

Claire Suellentrop:
That’s exactly right. And the I guess rule of thumb that guides all of these is when you’re trying to figure out what experiencing your product was like for a customer, the goal is to get out of their way. We all have the curse of knowledge about our own products. We know all the ins and outs, we know the full feature set, but customers don’t live in the world of your product day to day. And so by keeping these as open-ended as possible, you actually invite them to give more organic and natural responses. And it’s really surprising. It sounds common sense to say, oh, to the point you raised earlier, learn from your customers. But there is a lot of surprising amount of technique involved to make sure that you’re not accidentally adding in bias or giving them a false set of choices that they wouldn’t have made for themselves.
So that last one, for example, which is your favorite feature, A, B, C or D, could give you an indication of, okay, of these four features, this many people said this was their favorite. But had you left that question open ended, they could have volunteered a totally different aspect of the product that you wouldn’t have even been aware was important. So, learn from your customers is, it’s really good advice, but it’s very generic. And so what we were doing with the book is trying to remove that level of vagueness around talking to your customers so that it can be a more paint by numbers practice.

Rob Walling:
And that’s what I like about it. I like fairly prescriptive books. And how do I say this in a very complimentary way? What my books get complimented on is people say your books are short, but they’re really compact. And this is, I have a pdf, it’s 121 pages. I can read that in a few hours in an afternoon and I don’t need a 400 page treatise on Jobs to be Done or in talking to my customers, I really want 100 to 200 pages of just tightly packed with examples and pretty prescriptive these days. When the book tells me, “Talk to your customer” and then has three paragraphs about what that looks like, I’m like this is not helpful. But you have, “Here’s the questions to ask. Here’s a way to ask it in a good way and a bad way.”

Claire Suellentrop:
The level of brevity and compactness, I have to give credit to April Dunford for. I’m sure many folks listening have already read her book, Obviously Awesome. It’s on positioning your product. And she described speaking to her target audience, which is founders and executives at mostly B2B, more enterprise SaaS companies or tech companies. And she would ask, “When do you do most of your book reading?” And the answer that she heard a lot was, “Oh, if I’m on a flight somewhere or if I’m driving somewhere, I’ll listen to an audio book.” And she was like, “Okay. So on a flight, how much of a book do you usually get through”? And a very common response she got was, “I don’t know, about half.” And so she decided, okay, I’m going to write half a book. And we took that example, that experience that she had and ran with it, number one, because she’s very successful and smart. And two, because we really appreciated how compact and actionable her book was. And we wanted to emulate that with ours as well.

Rob Walling:
I wrote my first book was 40,000 words. It’s 204 pages in a pretty small format. And I did it because I was so tired of slogging through bullshit books that were padded to fit on a Barnes and Noble shelf and have a spine that was wide enough to whatever. And my spine was not wide enough to have anything on it. But it didn’t matter because we’re selling in a new… It’s like five hour audio book or something.
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I want to ask you about, so chapter four is called Learning from Future Customers and I’m intrigued by that phrase, tell us what that means and if you have an example you’d like to give so folks can understand it, that’d be great.

Claire Suellentrop:
Sure. So future customers could also just mean target audience. There’s nothing that really sets it apart from the target audience concept, but two chapters back to back that both say learning from some type of customer just seemed to be a better theme. Examples though. Okay, so this does speak to how this process can be adapted if you don’t yet have a bunch of happy, engaged paying customers to learn from. So, the best example I can reference is actually the one that’s in the book itself. I could come up with others, but the innocent spring of 2020-

Rob Walling:
I remember it so fondly, wasn’t it great. How is this story going to end, Claire?

Claire Suellentrop:
Oh no, I’m already waiting for the punchline. We had started working with this really cool product that targets restaurants. So really, really robust basically all in one restaurant management software. So it managed the front of house, it managed payment acceptance, it managed back office things, like bookkeeping, product inventory. It was this big product, long sales cycle, heavy implementation. Especially if this company’s target customer is restaurant groups that have at least several locations and they have a large enough operation that they realize they need to streamline things. Well, then COVID hits and every restaurant is forced to shut down and they’re trying to figure out how to stay alive. And Gia and I are like, “What are we going to do?” No one is in the market for operations software right now. They’re all trying to figure out how to keep the lights on.
And so we have to sit down with the team and admit as a group, “Okay, we know this thing is not going to sell as is until restaurants are in a better position. So, what can we do in the meantime?” And what we started doing was looking around at various Facebook groups, forums, different online spaces where restaurant owners and managers and operators can hang out because even though it’s a very, very large market, it’s also a very connected market. There’s a lot of online activity within this target audience. And what we saw as a pattern was, and I’m sure you experienced this as well, a lot of restaurants had primarily… They hadn’t had to prioritize their online presence prior to COVID. Maybe they were just super popular in their region and they got a lot of foot traffic or their online presence was really just a display of their menu. But suddenly everybody’s like, “Oh my God, we have to become a takeout restaurant now. How the fuck do we do this?”
So within the larger feature set of this product was a really genuinely pretty simple and clean online menu and ordering system. And so what we did was with the team, we pulled apart, and I don’t mean from an actual product perspective. If customers signed up through this experience I’m about to describe, they basically sell all the other robust functionality hidden away. And we in a sense from a marketing perspective, separated out this online menu and ordering system part of the product and made it free and available to restaurant owners or managers who were trying to get set up with an online ordering system for the first time. It also had the competitive advantage of if you wanted to not only directly accept orders, but if you wanted to take orders through DoorDash and Uber Eats and all the other third party players, it had that capability as well. And so with that, we launched a wait list to see, okay, is there enough room in the market for people to even be interested in this right now? And it turned out that the answer was yes.
So, I’m describing something that sounds like we came up with it over a weekend, but obviously this was several weeks worth of work to go out, learn what pain points people were expressing in the various environments that they hang out in, come up with a way to map a specific feature of the product to that pain, build out a landing page that has messaging that matches that pain to see, okay, is there demand? And ultimately the company ended up onboarding I want to say it was just under a thousand different restaurants onto that mini version of their product. And those that actually ran restaurant groups later then became paying customers of the full fledged product. So, hit me with follow up questions because I know I kind of rambled through that, but that’s one example of target audience research versus customer research.

Rob Walling:
Yeah, no, that was a really good example actually.

Claire Suellentrop:
It’s very akin to Amy Hoy and Alex Hillman’s 30 by 500 approach where they talk about sales safari. So if anyone’s listening and went through 30 by 500 or read any of their books, this should probably sound familiar.

Rob Walling:
Right. As you said, it’s audience research. It’s going out, people who aren’t using a product already because really the latter half of the book focuses on you have a customer base. How do you find more people like that? It’s about growth, not necessarily this can be applied to early stage customer development, but that’s not what the book focuses on. The book focuses on, you’re here, you’ve had some success to whatever degree. I would say 10K MRR, 100K MRR. There’s some number that you have, now let’s double down on that. And how do you provide them with enough value that they stick around and how do you then find more people like them? Find more customers.

Claire Suellentrop:
Yeah. A lot of companies when they come to us, they have reached some level of success, exactly like you said. And they’re like, “Okay, how do we double down on that? Or we’ve gotten this far mostly through word of mouth. We’ve never done really any organized marketing. Or we’ve tried marketing, but it’s been really piecemeal. One time we ran some ads, one time we tried blogging, one time we tried a podcast, but we don’t have a system in place yet.” So that level of we’ve gotten this far, now how do we get this far is I would say, yeah, really the sweet spot for where this makes the most sense.

Rob Walling:
And a really good example I’m seeing in the book is a company that our listeners should be familiar with. It’s SparkToro. Rand Fishkin has been on this podcast at lease once. I’m actually an angel investor in SparkToro. And so I’ve talked about them before. But something, if we jump into the latter part of your book where you talk about, let’s say you do interviews, you do surveys, you have this information, how do we then operationalize that? How do we take that? There’s a whole section I’m skipping due to time, but it’s about mapping it. Mapping the raw information to kind of takeaways, that’s not the technical term, but a term I’m going to use here. But then how do you take that and you bridge your customers success gaps? And I know that you did a project with SparkToro where it was something about, was it onboarding? It was struggling to reach first value. Can you talk us through how that worked? And wherever you want to start in that process would be great.

Claire Suellentrop:
Yeah, so this is one of my favorite aspects of the whole process. So as you mentioned, part of the middle of the book that we’re kind of skipping past covers the process of taking all this raw data that you’ve just gathered and figuring out what the so what is. And we do in the book and with the resources we’ve built, we have a pretty systematic way of being like, “Okay, this question we asked provides this data. Question two provides data point B.” Anyway, once you’ve gotten past that, then what you have is this organized understanding of four customers who are hiring your product for a specific job to be done. What were the particular aspects of your product that they found especially valuable in solving their job to be done?
And what we get to do at that point, which is always a huge value and so much fun with companies, is map what customers say is valuable to the actual product attributes that create that value. So the customer says… Let’s actually use SparkToro as an example. We’ve found a couple of different jobs to be done people hire SparkToro to do. But just one example was it makes me look good in front of my clients or my boss or whoever I have to pitch my marketing plan to because I’ve got data to back it up. So knowing that it makes me look good or smart in front of other people tells us, “Okay, what are the features in SparkToro that enable someone to do that?” There’s an export feature. There is a invite other users feature. What are all the other… We can basically sit down with the SparkToro team and say, “Tell us all the ways that someone can take the data they got from SparkToro and make it visible to other stakeholders.” So, that’s just one.
There’s other value themes that people express with SparkToro. There’s one that I’m forgetting now. I think it was being able to monitor trends over time on certain searches and SparkToro has this lists feature where you can… I’m going to mess up the exact tying of the functionality, but all said and done, customers say these things are valuable, these are the features that deliver that. With that understanding, you can then, honestly, we do encourage people to put themselves in their customer shoes and go through the experience themselves. So Google your own product’s name, click on what the search result is, look at your homepage, look at your product page. Where are all the different places that that value isn’t being conveyed or made obvious as it could be? So with SparkToro, there was huge opportunity to better convey that value that customers found and the features that drive it in the onboarding process.
So there were a number of things that they implemented. One, their head of marketing, Amanda, who is a rockstar, wrote up an onboarding email series highlighting what those features were and where you could find them within the product. I want to say the team implemented a product like an onboarding checklist. So create your first list, invite your first team member, or do your first export, whatever it might be. So really what they were doing was onboarding optimization or conversion rate optimization. But instead of it just being based on generic best practices, they were doing it through the lens of what their best customers found valuable and using that as the way to decide what actually needed to change about the experience.

Rob Walling:
That’s super cool. So, they implemented that and what were the results?

Claire Suellentrop:
Yeah, so it was about a month later that we checked in to see how things had gone. And just by the onboarding updates alone, no changes to anywhere else outside of the experience, they had doubled their trial to pay or their free to pay conversion rate in a month, which is wild.

Rob Walling:
Crazy. Yeah, that’s great. That’s what we call low hanging fruit is finding something that is not months or years worth of work to widen your top of funnel or do whatever. So, that’s a pretty big win. Claire Suellentrop, thanks so much for joining me. If folks want to keep up with you on Twitter, you are Clairesuellen, S-U-E-L-L-E-N. Of course we’ll link you up in the show notes and as I mentioned at the top of the show, forgetthefunnel.com and there’s a link in the footer to buy this amazing book.

Claire Suellentrop:
Thank you so much for the kind words and for having me on. Always good to be chatting and see you in Denver next year.

Rob Walling:
Absolutely. Yeah. We should take this moment to say that as of maybe a week ago I learned that you’re speaking in Denver, MicroConf US in Denver in 2023. And so we’ll get to hang out again. That’ll be awesome. And then the book will be launching around that time too?

Claire Suellentrop:
Ideally the goal is to have the physical copy ready in advance of that timeframe, so as long as Gia and I can stay on track.

Rob Walling:
Yeah, I know how that is. I’m working on my I have my fourth book right now and I just finished the manuscript. And I look out and I’m like, I need type setting, I need design, I need a cover design, I need printing, I need… I’m like, man, it’s going to be months and months until I can get this thing out of here, so I feel your pain.

Claire Suellentrop:
Yeah. Well best of luck on the… Are you already done with the manuscript? You said you just finished the manuscript?

Rob Walling:
Yeah.

Claire Suellentrop:
Okay, congrats. Congrats on that milestone.

Rob Walling:
Yeah. Thanks. Needs to get edited, but yeah, no, it’s a good spot. But just so people aren’t confused, you have a preview copy people can buy. It’s a PDF, forgetthefunnel.com, if they want to check out the book. And if you’re listening to this and you do buy the book at mention Claire and me, I’m @Rob Walling, and just thank Claire for coming on Startups Pod and dolling out the knowledge. Thanks again, Claire.

Claire Suellentrop:
Absolutely. Thanks so much for having me, Rob.

Rob Walling:
Thanks again to Claire for coming on the show and thank you for listening this week and every week. Whether it’s 5 episodes or 500, I really appreciate you coming back each week, leaving your reviews, leaving your comments at mentioning Startups pod on Twitter. Mentioning it on Hacker News and Reddit and Quora and just anywhere people are asking about podcasts. All of this helps to spread the word and keeps me motivated to recording and shipping this podcast every week as we’ve done for the last 12 years. This is Rob Walling signing off from episode 636.