Episodes

Rob: Today on Startups For the Rest of Us, we dig into listener questions. We discuss building a SaaS with little development experience using no code for your MVP productized services, stair-stepping, and bootstrapping a two-sided marketplace. Really, questions ran the gamut.

There are some great questions today that Ruben Gamez and I cover. You know Ruben as the founder of signwell.com and @earthlingworks on Twitter. I really appreciate him joining me today.

Before we dive into those questions, Steve from Skills DB Pro sent in a video ask. He went to startupsfortherestofus.com. He clicked ask-a-question at the top. He didn’t ask a question this time. He said they do a lot of enterprise sales and he wanted to offer some thoughts and ideas that haven’t been covered on the podcast, but that have helped him and his team scale his company. We’ll roll that here.

Steve: Hey, Rob. Steve from Skills DB Pro coming to you from Bozeman, Montana, a long term listener. I appreciate all your help. I started my business by accident and I think I would be totally lost without you. 

I’m going to talk a little bit about selling to the enterprise. It seems to be a big subject on your podcast. It’s something that we do a lot of, so I have a fair amount of experience with it. We have different approaches to it than you’ve mentioned it in your show before, so I thought I’d share them quickly.

First, what we do is when we’re selling to the enterprise, we keep our dollar-a-seat SaaS model. But then what will happen is, for example, we took on a brand new client in one of the states, who I’m not going to mention their name, but it’s a thousand users. It’s only a $1000 month contract, but what we did is that we added an additional $18,000 or an additional $3000 a month of Project Support Services at the beginning.

It’s an amazing sale because they go, oh, it’s so cheap. It’s only $1 ahead. But then they’ll go ahead and pay the $3000 a month because it’s a separate line item for Project Support Services. It’s such an easy sell because all you have to do is say, well, do you really have time to do this? Almost always, they’ll be like, yeah, we can really use that help.

Inevitably, they almost always renew that service. That service is a very, very high margin item for us. I wanted to throw out the Project Support Services. We keep our SaaS prices lower, but we get a lot of that enterprise-level stuff for all the things that are enterprise. I don’t have time to go through it here.

The other thing that will happen a lot of times is they still ask for custom programming. We always charge for that and we call it expedited updates. If they’re not willing to pay $5000 for an expedited update, they really don’t want it. Anyway, I got four seconds left. Hope you find it helpful. If you want to know the information, reach out.

Rob: Thanks for those tips, Steve. I love the naming most of all, Project Support Services and expedited updates. I think it’s a mental shift like when I went from calling things betas to calling them early access. Having that naming is and can be important, so I appreciate you writing in.

If you have a tip for listeners of the show that you feel like have never been covered, feel free to go to startupsfortherestofus.com. Click that ask-a-question and send in a video or audio snippet. We can pass it along to the listener base. With that, let’s dive into listener questions.

Ruben Gamez, thanks for joining me on the show again.

Ruben: Thanks. Thanks for inviting me.

Rob: Yeah, it’s always good to have you. Folks know you as the founder of SignWell and Bidsketch. You’ve been on the show many times talking about plateaus, talking about rules of thumb in terms of trial to paid, funnel metrics, and of course, answering listener questions. Are you ready to dive into our first one?

Ruben: Yup, let’s do it.

Rob: All right. This first one is from Haibert at simplyrem.com. It is a video question. I should mention, if folks send audio or video questions, they can record yourself on your phone, send me a Dropbox link or a Google Drive link questions at startupsfortherestofus.com or you can go directly to Startups For the Rest of Us. There’s an ask-a-question link in the top nav and then you can just record yourself right on the website on your phone or on your computer.

Those go to the top of the stack. If you send in-text questions, we always get to those as well. They just have slightly lower priority, but Haibert sent in-video questions. We will roll that now.

Haibert: Hey, Rob. My question is, what level of expertise would you say the founders of B2B SaaS should have in order to create a successful product? Would you say that they need to be senior developers? Or would you say even if you’re a beginner and as long as you know how to get by, you should start and there’s a chance you might get somewhere? I just want to know what your thoughts are on this.

Rob: I like this question. I think, oftentimes, we get the, do I need to be a developer or not? It’s a very binary way, but Haibert, I think, is asking, how much of a developer do I need to be? I want to be clear, I don’t think he’s asking, do I need to be a developer to start a SaaS or to be a founder? We know a bunch of founders, Craig Hewitt and other non-technical founders we could insert here. Jordan Gall and there are several.

I don’t think we answer, do you need to be a developer in order to start a SaaS? I think specifically, he’s asking how good of a developer do I need to be to code to actually build the SaaS? What are your thoughts?

Ruben: It really depends on the complexity of the app. It’s hard to generalize when it comes to something like this because you could have SaaS products that are relatively simple, more CRUD-like. Even certain parts might be people-powered so that there’s really nothing complicated to build out.

Anyone who’s just starting out with development that has a few months of experience that could do some of the basics would be able to build that out. The problem is, it’s just not going to be good code or probably have to be rewritten at a later time, even the more simple version of it. If it’s the first product that somebody’s building out the first thing, it’s just not going to be very good.

I think it gets tricky when we’re talking about something that’s complex. I think the tough part is that not only potentially could there be some really bad bugs and things like that, but it can drag on for a very long time, way longer than you expect, especially if you don’t have experience like estimating projects and how long something will take to build. Everyone, even very experienced developers think things will take way less time than they actually take. I think there’s real danger there.

Somebody who’s looking to do that should probably consider at least hiring, if they can afford a full time dev or part time dev, it could just be somebody to help mentor them, or coach them on some of the more complicated parts, or outsource the more difficult parts. It doesn’t have to be all one way or the other. That’s what I would say.

Rob: Yeah, I like that take on it. My first thought when I read this was, HitTail, the SaaS app I had before Drip, was kind of just one feature with a bunch of tables. There were some scaling issues because it had a JavaScript tag, so it would send a request back every time you got a search engine hit. But realistically, you could have hacked it together.

In fact, it was hacked together. The codebase was not great. It was classic ASP and it was a spaghetti mess when I acquired it. Then we rewrote it in Ruby on Rails. That complexity, I think he could pull it off. But then to build Drip, which is exactly what you’re saying, is like simple versus not simple.

The cost of building an app, getting some traction, and then running into performance problems that are literally unsolvable without a complete rewrite of at least a section of your code is pretty easy to do. If you don’t have the experience as a developer, as soon as you get into anything that needs to be performed, you just don’t think about queues, being async, and threading. There are just these advanced topics that it’s years in that you really get your head around these.

We have a couple of questions later about no code. I think low code is super interesting these days, where you learn enough JavaScript that you can take Bubble or Airtable and Zapier, and you kind of time together. You can write some JavaScript when you hit the edge of that platform where Airtable or Bubble kind of lets you down and you can drop into the code and do it.

I think that’s super interesting because then, no code and low code don’t scale that well anyway. One of the drawbacks to them is they don’t scale through production SaaS code. If you can find something to build that you can do and no or low code, I think that’s interesting.

Coming back to the stair-step, a step one app, where you build for the HubSpot Salesforce marketplace, you build for the Zendesk or HelpScout marketplace, you build for Heroku, Atlassian, Cloudflare, or DigitalOcean. There’s a whole list of these. We’ll link it up. It’s at rocketgems.com.

Ramy, who runs Rocketgems, is a fan of the stair-step approach. He put together a list of 68 B2B SaaS marketplaces with opportunities for indie hackers. I didn’t even know 68 existed. You have always heard me say my top five. I’m always like, it’s WordPress, Heroku, or Shopify. There are two others that I sometimes read out.

For there to be 68 of them is pretty intriguing. I think building in a marketplace like that is a lot simpler. I don’t think your code has to be nearly as complex because you’re building an add-on to Shopify or an add-on to Freshdesk to allow a piece. It’s not a full-blown SaaS app. Do you agree with that?

Ruben: Yeah. Generally, I would agree with that. It depends. We know really complicated ones. I like that guideline as doing that and looking into something that you can build with no code maybe most of the way and then using code for the rest of the stuff. The other thing that I was thinking about is if they don’t have experience, how likely are they to know that something is complicated to build or not?

Rob: Right. When you and I say complicated versus not, how do you even judge that if you have never built a production app? In a future solo episode, I had this idea or just this thought of working for other companies and working for whether it’s startups or big companies, I think that experience is so valuable not just as a dev, but learning to hire people.

I didn’t learn to hire people when I was running my own startup. By the time I was there, I had already been part of 30 or 40 people’s hiring process, whether I was the manager, a technical interviewer, or you were doing phone interviews. I did like 100 phone interviews, phone screens, more than that, actually, over the course of two years at this one job.

I was like a tech lead there. I liked doing it. It was 15 minutes. I would ask people to try to dig in other stuff. By the time I went to hire my first contract dev as an entrepreneur, I at least had that experience. Similarly, by the time I went to write my first line of production code that I owned, I had been doing it for several years and I think there’s a trade-off.

I wished I didn’t have to do those things because I didn’t like working for other people. But I did come into it with certain skills that I learned during the day job. I think that’s applicable here. Is there an opportunity? I know, Haibert, that you don’t want to go out and get a day job, but it is interesting. The most learning I’ve ever done, the fastest I’ve done it in terms of being a developer is once I started doing it 40 or 50 hours a week for someone else.

Ruben: Yeah, I agree. It is very different. Before I got a job as a developer and I had a job as a dev at one point, I was doing projects on the side for myself, for people. That was okay, but I didn’t learn nearly as much as when I actually got my first development job and had to basically work based off of other people’s real-world business requirements.

Rob: Yeah, and it’s a trip. It’s weird to be on a startup podcast and tell someone to get a day job. Honestly, I’m just presenting it as one option. It’s just an option that I think works for you and I because you and I both did our day jobs and that’s one reason that we could do it. But then we have tons of examples of folks who never did it at a day job and are still really good.

Derrick Reimer is a good example. He never had a job coding. His job coding was when I hired him to do contract work on HitTail and then hired him to do contract work on Drip, but he already had the skill set. He had self-taught. You can totally self-teach this as well.

I do like the idea that you talked about like hiring a more senior dev to mentor you and to look through your code. Even if it’s a few hours a week, whether you pair program or whether they look through your commits and they tell you what sucks about what you’re doing, I think that could be amazing. I think you can make a lot of progress doing that.

Ruben: Huge and not expensive compared to hiring somebody to build it entirely for you.

Rob: That’s right. Awesome. That’s one we haven’t received. We’ve received related questions, but not exactly like that in the past. Thanks for the question, Haibert. I hope that was helpful. Next question is another video question from Jim Huffman.

Jim: Hey, Rob. How are you doing? My name is Jim. I live in Seattle, big fan of the podcast. I have a question for you. I want to launch a SaaS company, but I’m thinking of launching at first as a productized service to test if the value we deliver works and two, if the customers would actually be excited for what we’re offering and have good retention.

For context, we’re a growth marketing agency called GrowthHit. We’re good at driving traffic and growing things. We’re weak in developing software products, so we’d love your advice. Is this a good idea or is this a really dumb idea? Thank you.

Rob: I like this question. What do you think, Ruben?

Ruben: I think there’s a difference between productized service and basically software. What they’re talking about is done for you. Yes, you can kind of test the value that you’re delivering to people, but it’s not the same thing. It’s nowhere near the same thing.

You can get a lot of insights into what you might need to build for a product where somebody signs up themselves and then they use the tool or their team uses the tool to do the work that your team was doing for them, so that they, in the end, get the value that they seek. I’ve known multiple people who’ve taken this approach, then built out SaaS, and had a tough time selling the SaaS.

Generally, often, it’s people who tend to not be as strong building software. It’s almost like, yeah, if we prove this out, then we can build the software almost like an afterthought. In reality, building software involves a lot. If themselves or their team is going to be using this software to try and get this […], there’s a ton there. What do you think?

Rob: I think you’re right. I like the idea of doing a productized service because I think a productized service as a business is very similar to running a SaaS. You just don’t have the software, you don’t have the product. I think the learnings of having the funnel, these folks are already good at it. But the learnings of building the funnel, the customer support, and dealing with essentially feature requests, changes, or whatever, I think there will be something there.

Your point is also very valid that taking that same productized service and trying to spin it into a SaaS. I don’t know. I’m trying to think of a time when I’ve heard that work, actually. I would like it to work.

Ruben: Steli with closed.io, except that we don’t know how many of their existing customers moved on to because it is literally somebody else doing the work for you to, okay, now you have to do the work using this tool. There’s a big difference there.

Rob: That’s the hard part. Yes, Steli, they had built a CRM internally because they didn’t like any of these CRMs. They had an elastic salesforce, basically, where you could add new salespeople. They built their own CRM and then they released that CRM as a product. I think that’s the thing. So much of the value is in the done for you. Here’s a counterexample that is totally theoretical and I’m making it up. I always imagined HitTail.

Again, coming back to HitTail, that was just, tie this thing into your website, it gives the app your keywords that you’re ranking for, then it suggests keywords that you should be targeting, and gives them a 1-5 ranking or something like that. That was an algorithm that could have been run on an Excel spreadsheet.

Ruben: People could have done it, right, exactly.

Rob: People could have done it. I talk a lot about human automation, hiring a VA to do it. That, I think, is interesting because it wasn’t done for you. We didn’t go out and then do the SEO for you. But it’s like, if HitTail could have been launched originally, it’s not software. It could have been built into Airtable or into Bubble to come back to no code. Just the work and the mental grind or whatever, the algorithm is just a human in a spreadsheet.

That’s different from what you’re saying. Most productized services are not that. Productized services tend to be done-for-you. It’s done-for-you podcast editing. It’s done-for-you SEO content. It’s done-for-you cold outreach. The service is the value. The software to do it has much less value.

Ruben: I think it can work if it’s maybe something small in scope, done-for-you keyword research like you were talking about with HitTail. If your software product is really close to the experience that they’re getting with a done-for-you service, I think that’ll work.

Rob: Yup. Here’s the thing. If you’re running an agency now and your revenue is spiky, a productized service will even that out, assuming you have decent churn. You can make it to $30,000 MRR or $40,000 MRR with a productized service in not a long time if you have something that’s a lot of value. There is an advantage to that.

What we’re saying is if it’s truly a done-for-you service, trying to spin that into then build software to do it is really, really hard. We haven’t traditionally seen that work. Versus, if you start with the idea of a service that isn’t done-for-you and it’s just a small lift that you essentially are human automating.

As you said, Ruben, the experience is almost equivalent. You still get those keywords in a spreadsheet. Whether it’s in a web browser or whether it’s a CSV that’s emailed to you, then the value is almost equivalent. Yeah, it’s an interesting distinction.

Ruben: Yeah. I do like the idea of also productized services for revenue early on and maybe fund the building of a tool. But then again, it’s moving over to a tool and all those other challenges.

Rob: Right, that is part of the stair step. I could see someone doing productized like Craig Hewitt did. Productized service with Castos Productions, formerly called PodcastMotor. Then he acquired a WordPress plugin that was podcast hosting and then he built Castos, which is now doing really well.

That’s the thing. If I were doing a productized service, I would start to think about what app can I acquire. Do I then have the revenue to buy something even if it’s nascent? Of course, that’s always my MO. I want to jump to product-market fit if I can, even if I spend tens of thousands of dollars and it saves me 18 months. If I can fund that with another project, that’s worth it to me.

Ruben: Yeah. The Craig example, notice how he didn’t create a product that did what the service was.

Rob: No, and he later merged them in, but they still are two separate products. It’s podcast editing and production, and then it’s podcast hosting. Both public and private podcasting, obviously, castos.com. All right, thanks for the question, Jim. I hope that was helpful.

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Next question is from someone who asked to remain anonymous. He says, “I want to thank you so much for all the value you put out into the world. You and Indie Hackers have taught me so much more than I learned in school studying marketing and entrepreneurship.” That was my experience with trying to look at junior college courses of entrepreneurship.

“Here’s my dilemma/question. I work at a VC-backed startup pre-seed that is blowing it. Making all the mistakes at being bloated with VC money lets you make not talking to customers, building tech because it’s cool, not because it solves a problem, and spending way too much money on stupid stuff like offices or PR for a product that’s not ready for PR yet.”

Ruben, this is when we say, more money in the hands of someone who knows what they’re doing can get you there. It’ll save you years. If you have more money in the hands of someone who doesn’t know what they’re doing, it will just burn money like it’s on fire.

Ruben: We’ve seen a lot of that recently.

Rob: Yeah, big time with Bolt. It’s not both, it’s the other one.

Ruben: Fast.

Rob: Fast, yeah. Not just them, we see it in a lot of stuff.

Ruben: Right, all the time.

Rob: This experience has pushed me into looking at independent startups rather than big venture-backed. I fell down the rabbit hole and I came up with my own business idea. I’m planning to solve my own problem with tech, validate the idea, and talk to as many customers as possible.

The idea is a two-sided marketplace. It’s basically a matching service. I’m going to keep it anonymous because he asked me to. He says, “It solves a problem that I had a few years ago, so I built out an MVP using Bubble.” It’s like they’re sponsoring this episode. I think that’s the fourth mention.

The next question or two is about no code as well. He says, “Here’s the issue though, it’s a two-sided marketplace, which is a red flag. Serving a market is notoriously a pain in the ass to serve. They are price sensitive. This means higher churn and fighting two wars at once.”

Yes, I often say it’s like you’re launching two products at the same time. What could be easier? “The question I’m struggling with internally is, do I ditch the idea and all the work I’ve done to start a B2B business with way lower churn or keep going a little further on this one and see where it takes me?”

At this point, I don’t believe he’s launched still. He’s talked to customers. He said, it’s something they want and I think they will pay for. He says, “My take is I should keep pushing, especially because it’s a problem I’m passionate about. I’ve done the hard work. Now I just need to push through this plateau.”

I’m not sure what the plateau is because I don’t think he’s launched yet. Maybe no one is actually signing up. I’m also concerned that I’m overthinking this, but I’d love your thoughts on this generalized problem of sunk costs and when to pivot or persevere/how selective to be with business ideas when getting started. Thanks for letting me rant on here and thanks again for all you do.

Wow. Yeah, there’s something there. What are your thoughts? Everybody knows my thoughts on bootstrapping two-sided marketplaces. Let’s see what you think about his scenario.

Ruben: I kind of liked the higher level question of when to quit and went to continue. Does he say how long he’s been working on this?

Rob: No, it’s light on details. That’s the thing. I’ve talked to a bunch of customers. I don’t know how many that is. It’s something they definitely want. I don’t know how he definitely knows that, and I think they will pay for it. What does he think they will be? I would almost want to know, what exactly this many people have said. With that in mind, yeah, continue.

Ruben: It’s hard to say because a lot of details are missing from this. Two-sided marketplaces are tough. I think everyone who’s tried them or knows about someone who’s built it feels like they’re tougher. It seems like I would not recommend them for people just getting started. I would not go into it myself, unless I felt like I had a clear advantage in one area or the other.

If I’m just starting from scratch and I have no advantage, I would lean against a two-sided marketplace. Besides that, as far as whether to continue or not, I think it kind of depends on whether how much work—there are a lot of things that I wish we had more details on, but it depends on if you’re the type of person who tends to just work on stuff for too long and not switch. We know a lot of people like that.

I think they would lean more towards switching if they’re having those thoughts because they usually don’t and they just stick with stuff for too long. If you’re the type of person who just has a ton of projects in your history and you’re never finishing these projects, maybe not this one, maybe it’s okay to switch on this one, but I would lean towards the other direction.

I saw, recently, there was a good Twitter conversation about somebody asking. I’ve been working on this for two years. I think it was like $2000–$3000 MRR. Should I keep working on it? That’s all they asked.

It was interesting to me how many people were like, yes, continue and keep going because it can take time and all this stuff? My first thought was that two years is a long time. Opportunity cost is real. That’s a real thing. Another two years and then maybe your double at that mark, there’s a lot of context that’s missing from that as well.

Generally speaking, because of my expectations and based off of what I’ve seen, that’s just too slow. I don’t think it’s a good thing that people spend years—this year is off your life—working on things that are moving this slow. 

Now, that said, it also kind of depends on what the expectations are. If this is just something to help pay for some of the bills and they have a full time job. There’s a lot of context, and then it could be totally fine. It could be okay. That much slower pace could be fine because they have other things that they’re focusing on.

I think, in general, we want to be supportive. It’s really easy for people to just say, keep going, but I think more people should not, more often. If it’s that hard and they’re really, truly working on it, and they’re putting in effort in the right areas like marketing and not skipping those areas, I think people more often should move on to other projects.

Rob: I like the point you made about knowing myself. I said that a lot. If you tend this way, then consider the opposite. And if you tend that way, then consider the opposite too. I think that such a big part of me going from being unsuccessful to successful was getting to know my own tendencies better and then fighting against them. Fighting against the negative tendencies, the anti-patterns that come out in my mind.

Some of the entrepreneurs who I see, most of them who aren’t successful over and over don’t have the self-awareness to realize, man, I’m self-sabotaging here or I’m making the same mistakes over and over. We could go down a whole rabbit hole of how to figure that out.

I think on this topic specifically, it’s not that I’d say never start a two-sided marketplace. Mostly, I say bootstrapping a two-sided marketplace is almost destined to fail. I can think of maybe one or two examples. Usually, that person had some type of edge.

As you said, they already had an advantage. Like Dan and Ian with Dynamite Jobs, that’s a job board. You need two sides. They already have a big audience certainly on the candidate side and then on the hiring side because they’re like a sister podcast of Startups For the Rest of Us where they have entrepreneurs and they have people wanting to be entrepreneurs or wanting to work for entrepreneurs.

They already have a chunk of both sides of that. They bootstrapped it out of their current business. They self-funded it. I would say, yeah, go do that. That’s actually using your competitive advantage because they have a moat. They have 12 years, 13 years of podcasts and an audience in their online community.

If I were in the anonymous question asker’s shoes, I think I would be having done the research and feeling passionate about this problem. I would go ask the people. You’re going to charge one side of it. I would go to those people now and I would say, I’m getting this matching service setup. I’m going to charge $50, $100, $500, or whatever it is and just say, I’m going to do this one-off right now.

It’s not a marketplace yet, but pay me the money or commit to paying me the money, and I will go find that you probably pay me the money. I would actually want to be paid if I’m going to go do the legwork. I’m going to go find you an amazing mentor and see who actually ponies up.

This is different from pre-selling a SaaS app that you’re going to build for six months. This is really a consulting service or a matching service. Ultimately, you want a two-sided marketplace. Again, clarity.fm is a good example of that where you get entrepreneurs, experts, and consultants on there. Then you get people seeking to be matched or even to pick them out on a website. Dan Martell hustled like crazy to get people on there to get the experts.

Ruben: The nice thing about a lot of these is that you can prove them out really fast. You don’t need to build software for them in a lot of these situations. I like that advice. I think that’s right. They’re at the place where they should prove out what are the riskiest parts of this. Can you prove those out quickly? You can without software, 100% do that and see if it’ll work.

Rob: Yup. You’re going to prove out both sides of it. If you’ve talked to 5, 10, 15, 20 people and no one’s willing to pay you, probably no one’s willing to pay you. If suddenly, five people write you a check or charge that card on Stripe, then you go look for mentors, and no mentors want to do it, you’ve just disproven that side of it. Great, it’s done. The hypothesis is canceled and we move on to the next thing. That’s how I would think about it.

He built a prototype in Bubble, which is cool. But I don’t even know why you need to do that. It could literally be an email with a few questions to do some matching of what you’re looking for. I don’t know how complex the matching process is.

We do mastermind matching with MicroConf. That’s at microconfmasterminds.com. We do that, I think, every quarter. We do ask for quite a bit of information. It’s basically like reform.app, Peter Suhm’s. It goes into an Airtable and then we mess people up manually. That’s what the service is.

We didn’t build some incredible algorithm. We could long term build an incredible algorithm based on time zones and this and that. Right now, it’s a manual matching. That’s an interesting one where you could call it a productized service, but it’s more just like human automation behind a web form.

Ruben: It almost goes back to that productized service question, where we talked about, what are the ones that are more likely to work if you create a software product for it? This kind of sounds more like that.

Rob: Thanks for that question, Anonymous. I hope that was helpful. Our next question, the last of the day, is actually two questions from two different people who sent their questions within a few days of each other. These are both about no code.

Eddie Larson writes, “I’m curious about your thoughts on the no code platforms and the solutions being built on them. I’m using bubble.io and love its robust capabilities. Is this something you see as a framework that you could use to build an MVP or something that you could sustainably build an actual startup on, you could grow, and not run into scaling issues? Thanks for always being my go-to podcast and providing great episodes.”

Next one is from Carl. In a similar note, he says, “I was wondering what you think of using no code solutions to build and bootstrap SaaS businesses. What are the downside risks other than platform risk? I’m thinking of using Bubble, a no code platform that seems very promising to build a lifestyle business as a side hustle.

I’m unsure if I would then pay someone to create the app properly,” he means in code, “if it proves successful, or if I could use Bubble forever. I’d love to hear your thoughts and experience.” I love the content. All right, sir, how much thought have you given to no code? What do you think about their questions?

Ruben: Not too much. I liked the idea and I was excited about it at one point. I asked a few people that seem to be digging into no code and what their experience was because I was super curious about how it’s working. Are people actually building real businesses with it and what’s going on? Those cases where I asked people what they were doing with it, the answer was kind of the same.

It was interesting. They were doing small stuff, but it just wasn’t there to where they can build a software startup a SaaS, not in the way that we typically know SaaS products. I think it’s kind of related to what we’ve talked about to where, I like this where you can create more simple products, something kind of early to prove out an idea if you truly need the software.

In many of those situations, I question whether you even need to build something and whether you can just run it with people as a service or just behind a form. People are doing the actual work and things like that. I’m not an expert in this, but based off of what I know about it, those are my thoughts on it.

Rob: Yeah, I think we’re in line. I actually did a full 20-minute talk on this called the SaaS Founders Guide to no code. It was for MicroConf Remote about six months ago. You can find that for free on our YouTube channel. We’ll link it up in the show notes, SaaS Founders Guide to no code.

Basically, I went through that. I did a bunch of research, both through Google and talking to some founders I know who have experience with no code, and tried to wrap my head around the use cases that I could see for this. A lot of it was some basic automation.

no code is great for being quick to build, easy to maintain, and not needing to code. I feel like building an MVP, doing simple CRUD, and some internal tools like a line of business apps. When our entire podcast production is now through no code. It’s through Airtable because it’s just easier than building it out into code. But that’s not a product that we’re going to sell to other people.

In fact, let’s say we did take the Startups For the Rest of Us workflow from Airtable and start selling it to other people, I think we could get five or 10 people paying for it. What’s interesting is it would be very, very hard to automate. That was one example that would be hard to automate with humans. Then I would want to have code written and build it from scratch.

Ruben: It would feel very MVP, right?

Rob: It would, that’s it. The scalability would make me nervous. There’s some brittleness because it’s integrated with Zapier. One out of 100 of those don’t work right or one out of 500. Whatever number it is, it’s too much for my comfort zone.

We can’t customize the UI. It’s great for line of business. It’s great that our producer, Ron, was able to put it together using Airtable in a few weeks and he’s not a developer. But to make a product the way that I think we traditionally think about it, longer term, I do think that you have to usually get code involved, unless you’re going to do something like, again, say mastermind matching where it’s a service that you’re offering. It’s like, fill in a form and then we churn through some stuff in some table. Do you know what I mean? That’s a whole different thing.

We’re not selling the product though. We’re selling the end result. The result is the mastermind. We could literally do that by sending you an email, having you respond to it, and just a human matching it. I think that’s where it is.

I think an MVP is not a bad way to think about it. I don’t want to sound down on no code because I’m not. I love that it exists. I love that more people who are nontechnical are able to build technical-sh things to accomplish these tasks.

Imagine the world before Zapier. You don’t have to imagine, we were both there. Remember, to tie anything together, you were doing a webhook, which wasn’t even webhooks back then. It was like this to an HTTP post with a query string, and then I’m going to parse this. It was a mess.

Ruben: It’s a big difference. It’s much better. Yeah, 100%. I agree. I like the idea, that’s why I was so excited about it for a while and talking to people trying to see what is actually being done. I think it’s promising. It’s there for certain things, just not there for building entire SaaS businesses.

Rob: Yeah, but here’s a question. Do you think it ever will get there or do you think it will continue? Because I think each year, no code does more and more. I don’t think no code will replace developers myself, but I do think that it will allow more and more to be done. If we look five or 10 years out, can you build an entire SaaS on it?

Ruben: Tough to say. It feels too big of a challenge, but maybe. I don’t know. I would hope so. That would be pretty cool. What do you think?

Rob: Back again to that simplicity, imagine Shopify or Heroku having their own no code platform that had their domain objects and their domain model built into it. You’re not trying to use Airtable, which is just a generic database to tie things together. But to build a Shopify add-on or a WordPress plugin, now I’m getting back to the same list to build any of those step one businesses, it’s literally building blocks.

The domain is known. You don’t have to build a generic tool. I think building add-ons is probably where I see it going. I cannot imagine building an ESP out of no code and that working. I can’t imagine in 20 years that being possible.

Ruben: Yeah, there would have to be some pretty big advances made in a few areas. It does go back to how simple is it going to be what you’re trying to build on the software side? How complicated does that need to be?

Rob: Remember, let’s say 1999, just to build a website, everything was all custom code, custom HTML, and then these website builders started coming out. There was the Yahoo Builder. Later on, Squarespace was years later, but there started to be these builders, where you could just get more done. And it was like, okay, sweet. I don’t have to worry about that. Now I can build more complicated things. 

I’m going to start doing stuff with the database, making dynamic this and that, and making it searchable. I’m going to build shopping carts. I don’t know how many shopping carts you built, Ruben. But I’ll tell you what, from 2000 to about 2003, I think I built like 15 shopping carts from scratch each time because it was before Shopify and the other carts that are out there.

Because there became these no code solutions or these prepackaged solutions, it didn’t mean, oh, no, we don’t need developers anymore. What it meant was, good, now I can work on really custom-hard problems. We could move on and we could build Basecamps. We could build Mailchimps, and we could build ever-increasing and more complicated software and leave maybe this more mainstream generic software. I don’t say generic in a bad way, but generalizable and highly horizontal software.

That just happened with SaaS, but the same thing might happen with no code where really, early simple problems, little add-ons, and then, oh, there’s a website builder, and then, oh, I can build a whole cart by drag and drop, or whatever. I don’t know if it’ll be the same things in the same order, but I do think it’s from low complexity to high, that just then frees up development resources to then do more complicated things.

Ruben: If it progresses in that way, then I think it would be generally a good thing for what people are able to put there. They’re still nowadays if you think about how much time, effort, and money is spent on a lot of these things, which really do feel like they should be a lot easier, more simple, and already figured out. It just feels like way too much. If those areas could be taken care of with no code, I think that would be a big deal. That’d be great.

Rob: That was a good question, gents, about no code. Thanks so much for sending those in. Ruben Gamez, you are @earthlingworks on Twitter and you are working on signwell.com, which is an electronic signature.

Folks, if you’re currently using DocuSign or HelloSign, you really should head to SignWell and check out what he’s building because like a true indie SaaS founder, you’re innovating and building a pretty cool product over there. We use it ourselves here at TinySeed and MicroConf. In fact, we liked it so much. TinySeed invested in it. Check it out, signwell.com.

Ruben: Yup. Thanks for the invite. I appreciate it.

Rob: Hope that was helpful. If you have questions for Startups For the Rest of Us, you can email them to us. You know the address. You can go to the website. I really appreciate it when folks send in their questions or comments because it helps us know that this truly is a worldwide global community of ambitious SaaS founders.

We have people at all stages. Folks who are just looking to launch a side project, get a couple $1000 a month in revenue, and prove that they can do it, maybe prove it to themselves, maybe prove it to their family members, prove it to the world. Then we have folks running multi, if not deca-million dollar businesses, who have just a wealth of experience. That’s what makes this audience and this community great.

Thank you so much for joining me every week. It’s really a pleasure to get on the mic here and wrap up episode 605. I’ll be back in your ears again next Tuesday morning.

Rob: You’re traveling to another dimension, a dimension not only of sight and sound but of mind. A journey into a wondrous land called Startups for the Rest of Us. This is episode 604. I’m your host, Rob Walling. Today I talked with Derrick Reimer about a number of topics. This new SquadCast integration, how he makes product decisions, whether he would prefer to fight one horse-sized duck or one hundred duck-sized horses, and things we bought for $100 and $1000 have added much more value to our lives than their price points. 

Derrick and I go way back. I’ve known him for probably 12-ish years and I always love jumping on the mic with him because we know each other well and we can go from topic to topic and just have a fun conversation. Frankly, it’s similar to a conversation he and I would have if we were just hanging out one afternoon going to a happy hour. In this case, you get to listen in. It’s much more of a conversation than an interview.

You may know Derrick as the founder of SavvyCal or as the cohost of The Art of Product podcast. If you haven’t seen his design and development work, he’s a full full stack dev. Head to savvycal.com and check it out because he makes pretty amazing products. That’s one of the reasons I want to dive into his decision-making process which is about features to build in today’s episode. Without further ado, let’s dive into our conversation.

I want to show you something. This is completely impromptu and this is not one of the topics I brought to discuss today, but a delivery from Apple just arrived. I want to show this to you. We can describe it to the listeners. Basically, Sherry has an awesome full standing desk. They make them in Portland. She has the laptop stands where you put the laptop up so it’s at your eye height. She has no external keyboard or mouse. 

I walk in when she’s typing and she’s up on her chair, literally typing on her laptop. This is six inches off the ground. I’m like, what are you doing? This is the worst posture ever. I was like, would you like me to get you an external keyboard and mouse? I went to the Apple website and compared it to Amazon as one does, the prices and deliverability. 

Apple says for the new wireless keyboard and wireless mouse, we can get it to you tomorrow for $8 shipping or we can deliver it by courier for $9 in the next two hours. I guess I’ll take option b. It shows up and in true Apple form, it’s a really nice bag, but the kicker is look at this.

Derrick: A pull tab?

Rob: There’s a pull tab on the top of the bag. All Apple staff have these amazing experiences, the opening experience. Listeners, I realized this is not the best radio but I’m so impressed. They just think about that. It’s the details of packaging. 

Derrick: I have a similar story. My wife just sadly was pulling a towel off the counter and her Apple watch was sitting there and it went with it, hit the tile, and shattered the face of the watch. We priced it out like a new one versus repair. Repair is pretty expensive, but to get a fully tricked-out newer generation will be double the cost. We’re like maybe we’ll just repair this. Let’s see how that experience goes. 

You put a request for this. They send you a box, you open the box, and it’s like a brand new Apple product box that has the little pull tabby thing. You open it up and there’s this little sheet that you pull the cover off and you nestle your watch face inside, then you press it back down, and it holds it suspended in this little plastic capsule. 

They have these little pieces of tape that are the pull tabby thing that Apple provides. They give you pictogram instructions for how to close the box, how to tape it properly, peel the shipping label off so that it’s the return label on it. Everything is just highly curated. It’s so Apple. 

Rob: That is something that is amazing and obviously has world-class industrial designers thinking through that stuff. They have the luxury of being able to do that because they have this amazing product line. I know Steve Jobs from day one always wanted everything to be beautiful, but they didn’t have the money to do it. 

The Apple 1 was wooden. It had a wooden case where you had to build your own really. It was just a wooden board. The Apple 2 was nice for that time, but it was a plastic molded case and Steve Jobs historically spent way too much on it. Once they have a home run, doesn’t the phone and iPad make their own money? 

Derrick: I think so. 

Rob: I think that’s the thing. I think the laptops themselves don’t make much money, but they have the luxury of being able to do whatever they want. Isn’t Apple’s MPS one of the highest in the world? It’s like in the 90s. That’s crazy. 

Derrick: Do you think Apple’s influence on us—because of course we are obviously heavily influenced by putting Steve Jobs on a pedestal and wanting to mimic how they operated—made creators of software pay attention to too many details or do you think it’s had a good impact? 

Rob: That is interesting because one could say, if your software is amazing, people love it. A great product can help sell itself. On the other hand, if you’re bootstrapping especially and you over-engineer the UX, you make everything perfect from day one. It’s detrimental because you don’t launch. 

I think overall engineers and designers who are mostly bootstrapping default to spending too much time on the product. I think just across the board, that’s in general. There are exemptions to it, man, because if you build something, I know you spend a bunch of time. SavvyCal UI, the Drip UI, the Codetree UI, you spend all this time. 

To me, it felt worth it because it was just so elegant and so next level versus I think the majority of people—myself included—probably spent too much time on the code and too much time tweaking the UI, but it wasn’t incremental to the next level. No matter how much time I spent when I was a developer or I was building for front ends, I couldn’t get it to that Apple polish like you can. There’s so only so many. I think overall it’s detrimental, but that doesn’t mean I want them to keep making amazing hardware. 

Derrick: Right. I do think it’s interesting because you can argue that Apple is just part of their DNA that they have these really elegant experiences, but it’s not that important. I’ve heard people say you can’t compete on user experience. It has to be more fundamental than that. On the flip side, I have several friends with Android phones, the green text message crew. 

Rob: That’s savage. Geez. Starting it off right. 

Derrick: From time to time I’ve looked at their phone, and I haven’t interfaced much with an Android phone, but when I try to look ahead and do something on their phone, the interactions are just jerkier. It’s 80% the same but that extra 20% makes all the difference. I don’t think I could get away from the Apple ecosystem because of user experience. 

Rob: It’s subjectively not as good. Not because I’m not used to this placement, it feels cheap too. That’s such a trip. I switched from Windows because obviously I used to be a Windows developer and I switched around 2011, I think, to Mac. The reason I did it was not because of the OS. It didn’t bother me at all. 

In fact, when I got into Mac OS—it wasn’t called that time—I actually found that the windowing was garbage. I always needed utility to properly window in Mac. It’s not as good as Windows. I switched because of the hardware. I wanted that metal, I think I got a Macbook Air. I wanted that metal, I wanted that trackpad. Now when I go back and my son has a Dell that he uses or a Chromebook. It’s hot garbage, man. 

Derrick: I know. 

Rob: The click is plastic. Does no one else know how to make this or is it just too expensive?

Derrick: Yeah, it’s shocking to me. I don’t understand. Companies with literal billions of dollars in their war chest—we know that Apple has many, many billions, their competitors are giant—and yet they can’t nail the trackpad. I don’t get it.

Rob: Yup, the trackpad. Then for me, there’s the aluminum. I just love the metal laptop and I bought a Dell that was kind of doing it, but it was made of plastic, and it wasn’t just that. I returned it and I bought a Mac and I was just like I’m just going to buy the bullet and switch. Switching kind of sucks as you know because it’s like I don’t know what to do, none of my apps work. 

The other thing was the three-finger or four-finger swipe where you have multiple desktops, you needed an add-on to do that on Windows. I think they do it now, but I was just like this is fundamental. Get this in the OS. 

Derrick: Yeah. 

Rob: Folks want to hear about SavvyCal. They want to know what’s going on because it’s been six months. I want to call out one thing. You integrated with SquadCast. Holy moly, that saves me time. SavvyCal obviously is a calendar, scheduling, and booking link that I send to people. What I had before was a SquadCast general room that was just hardcoded. You just have a base room that is your personal meeting room in essence and I would hard code that. 

All recordings went into one room. I have 45 recordings now so it’s kind of hard to manage. You integrated with them and now it forks off a new room every time someone books, which is exactly the behavior I wanted. I’m so stoked. 

Derrick: That was a fun one to build because it wasn’t a crazy amount of effort on our behalf because we have integrations like this already. We have a Zoom integration where we can very typically spend a separate room for each calendar invite. We already had a base on the codebase where that was happening.

It’s cool that the SquadCast team is in the TinySeed ecosystem so we’re already friendly. I can’t remember where this one originated and it might have been just a one-off request. Podcasters are definitely a segment in the market that we’re paying a lot of attention to. We have a lot of exposure there from different marketing partnerships that we’ve worked on. 

It might have been just one of those people requesting it, taking a look, and it’s like, oh, they have a nice API. We can just hit this endpoint. You pay some API key in and spend up a room. I felt like that was one of our leveraging advantages of being small and nimble and being able to just crank out an interrogation like that. 

I will say that the reaction you have, I was just exposed to this group of podcasters going through this little cohort on learning how to podcast and someone brought up SavvyCal and the room just discovered it. Everyone was going wild for it which is just incredible to see. 

Rob: That’s so cool to see. What a trip. Back in the day, when you wanted a SaaS app, let’s say when you were 21 and you were, I want an app that’s going to make $10,000 a month and will support me. I think we would have probably thought a) maybe it’ll never happen but b) I don’t know. Now you’re here. You’re living the dream that you’ve wanted your entire teenage years and your early 20s. How does that feel? Do you ever think about that? 

Derrick: I try to. I try to remember because it’s so easy to just be onto the next thing and be onto the next stress and worry. One thing that I’m very aware of is you get to a certain revenue milestone and then you start growing your team. I was talking to some founders of MicroConf about this. 

Suddenly, you feel very poor again because payroll is expensive. Now I’m graduating from reaching these milestones as a solo operator and it’s amazing and is basically replacing a nice developer salary worth of money. Then the next phase is growing the team and suddenly there are new mountains to conquer there. Now we have to grow in order to sustain continuing to grow the team. 

That’s always a looming stressor in my mind, but I do try to take stock as much as I can with the fact that this is kind of the golden age for my entrepreneurial career and that’s something worth celebrating and feeling proud of.

Rob: Yeah, it absolutely is. So folks have a reference point, the last time you were public about revenue, you said you crossed $20,000 MRR and that was six months ago or a year ago?

Derrick: Yeah, I bet that was around the last time we recorded in November. I think it was around that time. Growth, I will say, has been continuing to plug along nice and consistent like any good bootstrap SaaS app. It’s been a fun journey. I feel like, back to my previous point, trying to take stock of the progress we’ve made and also feeling very aware of the fact that the roadmap is super long, there are so many good ideas, and I obviously want to build them all at the same time but that’s not possible so incremental progress.

Rob: Yeah. Are there any features that you’ve just launched that you’re stoked about or that you’ll be launching? You’ve already talked about maybe launching in the next month or two?

Derrick: I feel like the last couple of months have been investing a bunch into a couple of bigger projects that I’m hoping will have a nice return for the company. We’re really excited about a Close CRM integration that we’re about to release and I think we might be the first scheduling tool to natively integrate with that ecosystem. I feel like the type of customers that would turn to Close are kind of an ideal SavvyCal customer. 

You’re not wanting to go into Salesforce yet and you want a nicer experience that focuses on being a little bit of a better tool to use. I think there’s a lot of alignment there and so I’m excited about seeing what this looks like to kind of copromote with another really great bootstrapped company. 

The other feature that we’re working on is meeting polls to basically allow you to send out a poll similar to what you could do with Doodle, propose some times to a group of people, and have them vote on times that work best for them. This is going to be a free feature. We’re dipping our toes in the freemium waters. 

Rob: Excellent. 

Derrick: I’ve been kind of thinking about freemium since day one with SavvyCal. It’s always a conversation if I look at the playbook of the biggest players in my space, Calendly being the biggest one, they’ve obviously grown a lot off of the viral loop component of having a free version of their product. That’s something that I can’t ignore, but also revenue is nice too for sustainability and profitability. 

I think this feels like to me a good middle ground of building something additive to what the product is today and offering that for free, so I’m not cannibalizing anything that we have already. It feels like a good first entrance into freemium.

Rob: I feel like it’s a great first link of the chain is the term I would use. Engineering as marketing plus, plus. When we think about engineering as marketing, it’s like I’m going to build a website grader, HubSpot SEO website grader and you go get your website graded. Okay, this is not the first link in the chain because the next step is not, oh, there are more features available in the website grader and it’s a paid plan. It’s like it just happened to be built by this company who also runs a CRM marketing software. 

You are giving them functionality that is actually heavily related and I’m guessing that it’s easy to just sign up your account and it’ll be available on that account. It truly is a freemium model and it is a really elegant way to do it.

Derrick: Yeah, and it gets their account kind of set up. You’ll ideally still want to connect your calendar accounts so that when you’re creating a meeting poll, you can see your events there and know what times you’re available. It kind of already sets your account up for success for the full paid experience as well. So yeah, I’m pretty stoked about it.

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This is the part of the show where I ask you a question that I already know the answer to, but I know that folks listening to this who followed the SavvyCal story, they see you, your feature velocity is exceptional and it seems like there are many developers when it was just you for so long. 

Also, it feels like you build the right things. Some mistakes founders make is they work on the wrong things and it’s hard. There’s certainty and uncertainty in certain areas of your business. It’s certain that once I know we should build this meeting feature. It’s certain we can build it. Now it’s uncertain if we’ll build it really well and it’s uncertain if we even should build it. Email support is a certainty. There are these things that are just pretty certain. 

What to build and marketing are usually the two big uncertainties—marketing, execution, what to do next, blah, blah, blah. What is your mental process for looking at that list and saying, here’s what we’re going to build. This is our roadmap. How do you decide on that?

Derrick: It’s tricky. It’s an art form because if you try to get too scientific about it and you’re like I’ll poll my customers and the one that gets the most upvotes, we’ll build that. That’s kind of a recipe for disaster because oftentimes, your customers don’t actually know exactly what they need. You can’t expect them to necessarily be that inventive. 

Also, you’re not necessarily optimizing for exactly what people are demanding. What you’re trying to do is steer the ship in a certain direction that is aligned with your strategy. I think it’s really important to have a vision that is rooted in who am I building this for and learning at a higher level what problems does this group of people experience, and how can I build to address those problems? As opposed to getting really specific with customers and trying to do one of those feature upvote-y things. 

I kind of avoided those because I felt like that would put extra pressure on the masses who are voting for this feature and maybe it aligns with strategy, maybe it doesn’t. It is a careful balance like how much time you spend talking to customers and trying to soak in feature requests versus stepping back and saying this is where I think we can be different from what’s on the market today. This is where I think we can really level up the status quo outside of what people are asking for. 

I think the answer is probably somewhere in between. I think I have this tweet that I tweeted once that is like product development is the art of disappointing customers at a rate they can accept.

Rob: That’s a great thing to say. 

Derrick: People are always going to be mildly disappointed because you can’t build everything, even small features. A lot of small features have to wait on the roadmap for a surprisingly long amount of time just because there are always a million things that you could be building and you just have to pick a few at any given time to be working on. I think it’s like trying to stay in tune with what are the things that people are really, really needing. 

When you start to spot those patterns, we used to see this all the time at Drip, I feel like where it’s just like in the last two weeks, I’ve heard multiple times of people asking for the same thing, maybe in different ways. If it’s something that seems pretty valuable, seems broadly applicable, and is low effort, then I like to build those things quickly. I think there’s a lot of value in providing some quick wins and it really generates a lot of goodwill from customers when you’re able to do that, but you can’t be that reactive all the time. 

I think the probably the latest iteration in our process that has helped is thinking about things in six weeks cycles. What that does is gives you enough room to say, all right, in this time period we know we want to bite off this more ambitious project. If we don’t give ourselves the time to work on bigger projects, then we just end up optimizing for the smaller quick wins because those feel a lot better like quicker dopamine hits, right?

I like thinking of things in the six-week cycle where it’s like what’s the big ambitious thing we want to do here? Then all the rest can be kind of filled in with smaller things that are those quicker wins.

Rob: Very nice. Well said.

Derrick: A bit rambly, but those are my thoughts.

Rob: It’s a complicated topic. As you said, to me, it’s way more art than science. There is some science in it because it’s like how many requests and what percent do I think will use it? Even that’s a guess. It is an art. Then there’s a lot of, as you said, strategy, vision, founder gut, and you’re not going to bet a thousand. 

I don’t know what a good batting average is or what building features that a lot of people use, 60% or 70%? There’s some number in there and I think that sometimes the bigger more ambitious features, they’re more risky. If I’m going to spend three months building something, I need a little more justification than just I think this is going to be a hit.

Derrick: Yeah, and it’s interesting. I’ve started thinking of features more as bets similar to—as Cory and I are talking through—different marketing projects that we can invest in. A lot of that stuff comes down to do you want to add time or money into the equation? If we want to up our SEO game, there are some things we could spend money on that would probably accelerate our results faster. 

Some of these things, the one we’re facing right now is coming with a 12-month commitment, several $1000 a month. Not nothing for a company of our size. It’s like, what’s the ROI on that going to be? I don’t know exactly. It should show results. There are case studies that seem positive, but also don’t necessarily generalize so we can’t know exactly what the results are going to be.

That’s just kind of taking a bet. Similarly, with building products, you’re mostly betting on are you increasing technical debt in something that you’re going to have to maintain moving forward? What’s the initial cost gonna be? How much engineering time are we burning? What’s the opportunity cost? What things are we not building because we built that feature?

Rob: That’s a trade-off especially when you’re small. I know even when we got big, when we were 18 engineers or something when we left Drip, we did have more leeway and I know more bandwidth to push stuff through. When it’s just one or two of you, that’s a lot of weighing. 

The thing I say all the time, mostly being a founder, is making hard decisions with incomplete information and this is the definition of that. The hard decisions where we’re going to bet $20,000, $30,000 over the next year where we’re going to bet a month, two months, three months of time to build a feature.

Derrick: Yeah, and that’s the uncomfortable part. As the numbers get bigger, the bets get bigger. In the early days, you’re betting that you don’t have much to lose, and also the upside is not as big. Whereas now it just increasingly gets bigger.

Rob: Yeah, that’s right. I was talking to a founder, this was probably over a year ago now but he really struggled. He’d been running his business on the side, but not charging for it for a year because he had a fear that no one was going to pay for it. I was like, you need to find that out now, bro. 

He really struggled. He said, I’ve worked jobs my whole life and here I am and I don’t know what to do next. I just want someone to tell me what to do. I felt so bad, but I was like, that’s not what this is. You’ve signed up for something that is the exact opposite of that, for better or worse. It’s amazing because you can do whatever the hell you want, but you can do whatever the hell you want and you have to pick what you’re going to do otherwise, you’re just going to flounder.

Derrick: That is such an interesting thing that you don’t necessarily realize until you maybe have a conversation like that where you’re like, oh, yeah, that adds an extra element of stress to the whole thing because the buck stops with you. Every time you make a decision, there’s not a boss to go cross-check it with. There’s not someone else who’s like, well, ultimately, it’s their responsibility. It’s all you. Getting comfortable with that I guess is just part of the entrepreneurial journey. 

Rob: It’s a learned skill, I think, and I don’t think most of us are taught that because we go to school in the US from kindergarten to 12th grade and you always know what the next thing is. You have these assignments, you’re going to do it, then you’re going to graduate from third grade, fourth grade, and fifth grade. You go through high school, then pretty much you’re either going to trade school, you get a job, or you’re going to college. 

If you go to college, sometimes there’s a Master’s degree, Ph.D. You get out in the world, you’re probably going to get a job within your field, maybe not, then you have a job and then you have a boss who tells you what to do. The first moment when you are literally working on something it’s like, I have to figure this out. I think we’re not trained very well in a standard education system to go off and do our own thing. 

Derrick: Yeah, I would agree. 

Rob: All right, so I’m going to mix it up. I have a fun question for you. Would you rather fight one horse-sized duck or is it a hundred duck-sized horses? That was a question someone asked to Courtland Allen and I and people have just been talking about it. I do want to hear your answer. I don’t know if you heard our answer.

Derrick: No, I did not.

Rob: One horse-sized duck or a thousand duck-sized horses? It’s either a hundred or a thousand, I forgot what the number is. It doesn’t really matter, right?

Derrick: Oh, man. It’s a great question. I’m stalling.

Rob: That’s a terrible question. Can you give me a definition of the word? Can you use the word in a sentence?

Derrick: I guess death by thousand duck bills sounds terrible, so I would rather have one organism to fight.

Rob: Oh my gosh, really? Look at you. Geez. I went with a thousand or a large number of duck-sized horses. 

Derrick: Oh, duck-sized horses. They’re little tiny horses. 

Rob: Duck-sized, little, tiny horses. That doesn’t mean your answer is wrong. I just thought a horse-sized duck, that bill is going to do some damage.

Derrick: Death by a thousand hooves. That doesn’t sound great either. I’m going to take on that giant duck.

Rob: The big guy? Your weapon of choice? Freemium.

Derrick: Exactly.

Rob: I do have another question, a little more serious but still on the fun side, what is something that you’ve bought, let’s say, in the past six months for under $100? It can be right around under $100 that you feel like has given you way more value than that $100? We’ll both answer it and then we’ll do it for $1000 as well. What do you have for $100?

Derrick: This one kind of impacts my daily life so I put it in this category and it’s a coffee roasting kit. 

Rob: Tell me more. 

Derrick: This was about $65 and it’s basically a stovetop popcorn popper. There’s this company called Sweet Maria’s and you can buy green coffee beans from them, unroasted, in small batches. I generally roast coffee once a week using this and it takes about 15 minutes total, so it’s not a huge time commitment. 

In exchange, I get this added element of joy because coffee is a big part of my life. I drink it every day, I have several cups, and usually in a couple of different forms. I have a cappuccino in the morning and maybe a pour over in the afternoon. Getting to play around with different roasting levels and different regions, and every time I have a cup of coffee, it’s just a slightly different experience. I get to take a little joy in that.

I feel like it made that kind of daily ritual just slightly more special. I think that has been a big value add in my life. Also, it helps that it’s way cheaper buying green coffee beans, significantly cheaper. Before that, just buying locally roasted whole bean coffee was $20 a bag or whatever. Now I’m spending $100 on beans every six months or something.

Rob: That’s cool. You’ve always been the artisan with the manual latte cappuccino machine and I know you temp it to exactly 31 psi or whatever. That’s not the right number, but I know you tamp it. Your cappuccinos are second to none. It makes sense that you’re going back further in the chain. Soon you’re going to have a coffee plantation. You’re going to get an acre of land here in Minneapolis.

Derrick: I think that’s where I draw the line. I’ve watched videos on this website. Here’s a video of the place where these beans were made, so hipster, but man, that’s a very manual grueling process just to get these like unroasted little beans, oh my gosh.

Rob: It stops there. Cool. That’s a good one. For me, it’s an Amazon Echo Show in the kitchen, which is $125 but they’re always on sale for around $100. Then I had an old Echo Show that I traded in so I got like $25 off plus 25% off, so literally, we paid $50 for the new model. 

What I like about it is it’s an eight-inch screen and it sits on the counter. It’s got a nice speaker so you can listen. The tunes sound great because it’s got speakers all around it. I set a bunch of timers. I have three four-timers going at once when I’m cooking and you can pull up recipes on it and they’ll be on the screen. You can scroll it, it’s a touchscreen. It’s only eight inches so it’s not huge and it’s kind of widescreen, but it totally does the job. 

For us, our house is big. We live in Minnesota so we have a basement, we have a first floor, we have a second floor, we have a rooftop deck. To get a hold of kids who have headphones on, even listening to anything on an Audiobook quietly, is impossible in this house. The Echo is basically an intercom. I can either drop into any of them, I can drop into all of them, or I can just do an announcement. 

In fact, when I’m traveling, often in the morning when I wake up, I will type in an announcement that goes through all the Echoes and they do it in the Alexa voice. It’s like, hello, this is your father speaking. I miss you today. 

Look, I get it. Some people just do not want Amazon listening in your house and I get it. I don’t care. I use it all the time. In fact, I have the little one on my bedside table, my nightstand, and that’s my alarm. I ask it about the weather. I can use it to turn plugs on and off in the room. None of this is news to most people, but it really is home automation. I don’t want to rewire the house. 

You just buy this $15 plug, you plug it in, you name it in the app, and then you just say, Alexa, turn on the sound machine or turn off the sound machine or whatever and you can set timers. When the Christmas tree was here, I would plug them both into smart ones and I had automatic schedules. It’s just all the things and it works. You want it to be simple, you want it to work, and you don’t want it to be expensive. It’s finally here, the promise they’ve been making since 1985 of all this automation, it’s pretty sweet.

Derrick: That’s cool. I think I’m probably going to need to revisit it. We haven’t had voice-commanded devices in our house for a while, but we did have quite a few smart devices like hue bulbs and the little switch thing you can plug anything in and it’s on an internet-connected thing. We have that for our sound machine and lights in the bedroom so you have to get up. 

I’ve just observed that a lot of this feels like truly a downgrade from the analog iteration before because now if I want to turn this light off, I have to pull up my phone, open the right app, and click the thing. There’s a little bit of latency. Whereas this is more like bringing the technology of the clapper, but a little smarter.

Right now, in my setup, there’s kind of something missing where to me it feels most of the time a downgrade. I actually have a remote that ties in wirelessly to the IoT switch thing, which just feels funny. It’s probably routing through the internet when I click a button instead of just speaking directly to the device.

Rob: Very cool. How about $1000? Something you bought for $1000 that you feel like it has been super cool.

Derrick: This one’s a quirky one, too. Again, along the theme of things that impact daily life, I have this device and I promise it’s G-rated, but it’s called the BedJet.

Rob: Oh, this is going to be good. What does it do?

Derrick: It’s this little thing, I think it was like a Shark Tank product actually. There’s this little device that has a hose and you slip it under your sheets, basically, so it’s on top of your mattress and there’s a remote for it. You can turn on heat or cold at different levels. It’s similar to what you get from an electric blanket, but it’s even more versatile and it just pumps air under your sheets.

Rob: Fascinating. 

Derrick: I live in a newer apartment building and these things are extremely well insulated. Even in the wintertime, there are points where we are like, do we need to run our air conditioner right now? Just because they retain heat so well. I’ve talked to other apartment dwellers and temperature control, especially at night, is just so tricky to get right. This has been a huge upgrade. 

When I started using it, figuring out, and dialing in what the right settings are, I was getting a consistently better night of sleep. I wasn’t waking in the middle of the night or kicking a leg out because it’s hot or whatever. But I always like to sleep with the covers on. I don’t like just sleeping all exposed. This just helped dial in just the right experience.

Rob: Anything that can help you get a better night’s sleep is worth its weight in gold. Whether you use a sound machine. I wear an eye mask because I used to wake up at 5:30 in the morning. As I’ve gotten older, I’m more sensitive to light. I used to be able to sleep in. I used to sleep very deeply and very heavily, and I used to sleep through everything. I don’t anymore. 

I think once we had kids, things started changing too. I now use an eye mask and then usually, in the middle of the night, I wake up and actually put earplugs in, which I didn’t use to do. Temperature control is not a huge issue for me, but I can imagine anyone who has that issue, this can be a big deal, man. 

In true fashion, my $1000 item is another technology product, but for me, it’s this big curved monitor that I have. I got it about maybe a year ago. It’s a 38-inch Dell. It was right around $1000. I think it was a little more, it’s probably like $1200, with tax maybe $1300. There’s a 34-inch. 

One of the reasons I realized it is because in the spirit of Sherry getting that keyboard and the mouse that I talked about at the beginning of the show, she got the 34-inch equivalent of mine. I’m going to be honest, the 38-inch is a little too big. I have it on an arm and I can move it. I never look at the right six inches of the screen. The 34 would have been fine, but it’s curved. When you get that big, it’s hard. Your head has to move so much—first world problems, right?

The reason it’s amazing beyond just it being an awesome monitor with a lot of screen real estate, because I believe you can kind of never have too much, is it is a USB-C hub. As much as I like Apple products, I […] hate that there are only two Thunderbolt, USB-C ports, whatever they call them. There proprietary stupid name for them. 

There are two of them. Why are there not four? There should at least be four. There should be six. I had so many dongles and then the dongle stopped working and you’re carrying it around. Even at my desk, I’m just like plug, plug, plug. Now it’s at the back of this monitor. I plug my hardware, my ethernet cable right in for my mesh. We have a mesh router because we can’t get the service out of the house without a bunch of them. 

I have that ethernet cable plugged in and then I have the mic. I have a camera plugged in. Then there’s just a single USB-C coming out of the Dell monitor and I plug it into my laptop in the morning. It’s my docking station, really, and it is huge. I was kind of iffy about it because you can get the I think the same model without the USB-C hub in it. It’s an extra $100 or $200, I’ll spend that and I did, and it’s like I’m not going back now. When Sherry started eyeballing my setup she’s like, I’m ready to grow up and move to that setup so I just ordered her a monitor today.

Derrick: That’s great. Yeah, I went ultra-wide probably six months ago and it has been nice. It was an adjustment figuring out how to do windowing on it properly because you’re not maximizing anything anymore getting real close to that, so that was tricky. I’m currently maxed out on my ports and it was a serious puzzle to solve.

Unfortunately, my monitor doesn’t have the hub built-in, but I have this old external hub that I actually dug out of an old bin where I had electronic stuff from prior iterations of setups. It has just enough ports and my camera communicates well with it. I have this other simpler Apple dongle thing, but it wouldn’t feed my webcam feed through at the same time as the other. There’s some kind of data rate thing. I don’t know why Apple makes it so difficult, come on.

Rob: It feels like they could do better. When I got the new Air and it had two, I was like I’m going to send this back for the MacBook, then the MacBook Pro. I looked and it only has two ports too. I’m like, how are they doing this? I get that there’s no headphone jack in the iPhone anymore. That still irritates me because their AirPods are so and so. This is a real mess. 

I use windowing software called Magnet, which is in the Mac AppStore, probably $20 where I have keyboard shortcuts and I can just boom, boom, boom, place in a grid, and I can do left third, middle third, right third. I can do top or bottom, I can do quartiles. You can set up custom ones, but frankly, they have 20 presets. Do you use software like that? Because I cannot stand dragging the edges of the window. It’s not going to work for me.

Derrick: I did a little searching around and I was surprised that there didn’t seem to be one like the de facto winner. Where’s the Coda software equivalent? I couldn’t find it, but I did find this one called Rectangle that’s very simple and I think it might even be open source, but it’s actually good.

Rob: Geez, he’s throwing shade. Send emails to Derrick. 

Derrick: The UX, I’m saying. Open source is not known for fantastic UX.

Rob: I know what you’re saying. I use WordPress. I like it, the UX is a bit rough.

Derrick: It doesn’t feel like a developer made it, I’ll say that. I only learned a few of the keyboard shortcuts. I haven’t committed all of them to memory. It’s something that I will gradually probably build up muscle memory on those things. It’s still a little bit frustrating and I hop around a lot too so I’m only at this station for a small fraction of the week and then I’m like hopping around to go sit in the living room for a while, go to a coffee shop. I just love moving around a lot. That means my muscle memory is very slowly building up on it, but that’s about the best I can do.

Rob: You learn what you need. All right, sir. Well, thanks for taking a few minutes to come chat with me today. I got some feedback at MicroConf that some folks were like, when you bring on people that you have a rapport with and that you know already, those are the best shows. The Courtland Allen’s, when Einar and Tracy went and we went off the rails about news stories. It’s good to have you on because it’s just always easy conversation and good radio.

Derrick: Yeah, thanks for having me back. I echo their sentiments. Every time I hear some of the regular guest hosts rotate, it’s always a pleasure. Glad to be part of it. 

Rob: Awesome, man. If folks want to keep up with you, obviously, savvycal.com, if they want to check out what you’re working on, and you are @derrickreimer on Twitter. Thanks again, man. 

Derrick: Thanks. 

Rob: As we wrap up this episode, thank you so much for joining me this week and every week. I hope this episode provides some motivation, maybe some thought process, or some strategies that help you grow your business in the coming weeks and months. I’ll be back in your ears again next Tuesday morning.

Rob: It’s another week and another episode of Startups for the Rest of Us. This is episode 603 and in it, I have the most incredible conversation with David Darmanin. He’s one of the founders of Hotjar and I had not realized that Hotjar had been bootstrapped to $40 million in ARR, 170 employees, a fully distributed team, and that they had exited for an obviously incredible sum. In that ARR, we’re looking at a nine-figure exit. 

What I hadn’t realized was that they had bootstrapped the company and so much of the early marketing was DTC. It was a direct-to-consumer approach with their launch and even with the way they thought about it in the early days. I was honestly blown away by David’s approach to entrepreneurship. 

I’m just surprised he hasn’t been on my radar before as a bootstrap SaaS founder who almost immediately struck me as one of us. Someone who might listen to this podcast or someone who should attend a MicroConf. After we recorded this episode, I actually asked him straight up. I was like, you and I need to meet at some point. Would you come to a MicroConf? There is one near here.

I think that there is a future with David because of the amount of wisdom he has and his posture of learning. If you’ve listened through this interview, just all the books he named, and he just wouldn’t know a subject so he’d go read all the books on this subject. It has books by Seth Godin and a lot of classic books Selling the Invisible. A lot of classic books that we talk about in our circles. It was such a good conversation. I actually let it run long as you’ll notice by the episode length. I honestly didn’t want it to end. 

Before we dive into that, I want to jog your memory for episode 569 of this podcast, which came out last September. It’s called The Life Changing Decision of When to Sell Your Company. It was with Anna Maste who started Boondockers Welcome with her mom. MicroConf played a big role in her deciding not to sell the company and then she later sold it for an incredible sum. 

She has been interviewed on another show. It’s called They Got Acquired. We will link that up in the show notes, but I never tired of hearing Anna’s story because it is so inspiring for someone to have done this on the side while raising kids, as so many of us have done, and to have had such an exciting journey and for it to have ended the way it did. 

Anna actually recently did an attendee talk on MicroConf here in Minneapolis and it was great to finally meet her in person. If you haven’t checked out Anna Maste episode 569, you should. As well as her episode on the new podcast, They Got Acquired. With that, let’s dive in to my conversation with David Darmanin of Hotjar. 

David, thanks so much for joining me on Startups for the Rest of Us.

David: It’s an absolute pleasure to be here, especially having seen your story and how much we have in common.

Rob: I know. I am so happy to have you here. You are quite the success story having built Hotjar, effectively bootstrapped to $40 million ARR, and then you sold it last year. A hundred and seventy employees, 100% distributed, which we did with Drip but a lot of people weren’t doing that. A lot of people were building their companies in an office or with a couple of different offices. 

Before I get into it, if people haven’t heard of Hotjar, your H1 is to “understand how users behave on your site, what they need, and how they feel fast”. It’s behavioral analytics. You can screen records of customers’ heat maps, that type of stuff. We actually used it at Drip. This is the definition for me of mostly bootstrapped. On the show a lot, I say bootstrapped and mostly bootstrapped startups because you brought in $300,000 of your own money and your ex-boss, who you brought in as the entrepreneur in residence, put in $400,000. 

You did have some capital to start, but my understanding is you didn’t raise any capital after that and to build a business on $700,000 of your own money, not outside funding, to $40 million and then to exit, and I know your purchase price isn’t public, but for listeners, it depends on growth and stuff but pretty easily four to eight times ARR. We know this is hundreds of millions of dollars. I’d say it’s a pretty easy couple of hundred million dollars exit. Again, you don’t have to confirm or deny any of that. 

That is really an incredible journey and unlike many others that I’ve heard like MailChimp was this massive, mostly bootstrapped exit. Hotjar has to be in the top 10 that I’ve heard about. It’s pretty incredible. 

I think a big piece of your story is so unique because honestly, we could record two hours here. There are so many interesting story arcs we could tell. An interesting part is that you brought a DTC approach to building a B2B business, a direct-to-consumer approach. Do you want to talk about, is that your CRO background that brought that in? Then maybe explain to folks how you approached building this B2B SaaS company as more of a direct-to-consumer marketer?

David: Yeah, I think that’s a great point. Before I answer that question, I’ll also clarify because I think it’s interesting from a bootstrapping point of view how we finance the business as well, to clarify a little bit of that. The figures that you mentioned actually didn’t even come all at one go. The format was and I think this was something that resonated a lot when I heard your talk, which is that I was working as a consultant. I was making really good money but it wasn’t fun. I wasn’t enjoying it. I wanted to build equity, I wanted to build a product. 

What I did was for the first six months of the business, I continued to work as a consultant and in parallel as CEO but I invoiced all my clients throughout the business. That was actually the first revenue. That’s where my share, the $200,000 came from, which is quite interesting. Then my ex-boss, Johan, put in I think was around $200,000 only in the beginning and that was it. 

Then later on, when I really felt the need to scale things up, we put in another round, which we never really needed or used. We discarded it because then we were profitable immediately. I want to say that also because I don’t want to give the impression that you need that amount of money to do this. It really wasn’t completely needed. A lot of it was we’re very lucky to have had that cash to have saved it up and he was a successful entrepreneur so that definitely helped. 

Coming back to your question about the direct-to-consumer. There are two pieces to that. First off, all the cofounders worked in Johan’s business. Johan employed me and then I employed Jonathan and Mark and then Eric was hired by someone else. I think the person actually hired him and then ended up joining Hotjar […]. 

We were a direct-to-consumer company. We were making software for PCs back when smartphones didn’t exist. This was our bread and butter, what we know. More importantly, none of us had any experience in B2B before. I remember that I think that the key point for me was this light bulb moment was reading the essay by Paul Graham, which was even back then quite old and spoke to the consumerization of the enterprise. 

The principle of this piece was that the way enterprise software is sold doesn’t make any sense and the more human way that we sell consumer products is very likely going to take that over. When I read that, I was like whoa because I felt this, and I had been through it as an executive in that first software company. We’re buying software that is just so horrible and we couldn’t get access to it. We built Hotjar in a way for ourselves five years back, but also building on that vision of what we knew was to come. 

In fact, one of the most important premises that we had for building Hotjar, for our success was not only the go-to-market strategy in the model, but also, it was a very basic premise that we were going to build the best support that we possibly could because we knew that that was such an important piece of selling in the way that we sold.

Rob: Got it and talk to me about that support piece. Did you just have a lot of really good customer support people? Concretely, what was the biggest difference between you and your other competitors?

David: I was reading a lot of books around the time, and to be honest, I think in my previous job, I was speaking to the founders yesterday, Conversion Rate Experts who hired me. It was my first remote job. I remember landing this role and traveling to the UK and I was just so blown away that I had read no books compared to this crowd I was meeting. 

I quickly made the list and started reading. This had a huge, huge impact on me. I think around this time, I’d read Delivering Happiness, which had a really big impact on my mindset. There was another book Selling the Invisible, and it just made so much sense that when you’re building and selling something, which is not really that tangible, with Zappos it was more tangible, but especially in SaaS, the experience, the exchange, and the relationship is digital. 

Ultimately, we decided that we would think about support in a different way. One of the very first things that we wrote, I think came before our values, was what we called our ethos. We wrote an ethos of how we behave with the customer. I think it’s still public. If someone had to Google for it, ethos Hotjar. 

Basically, the principles spoke around things like very basic tactical things. Like say pm, deliver am. Never over-promise. It’s always our fault. I think it culminated in the users are gods. If they didn’t put their trust in us and we didn’t exist. Later, we translate this into a value we call respect. It’s absolute total respect that we’re not business just transacting. There are people at the other end of this and we need to treat them with the right respect. That I think was the fundamental piece here.

Rob: This week’s sponsor is Trustshoring. Trustshoring helps you find reliable pre-vetted developers of software development agencies. Turn to Trustshoring if you need to build an MVP, scale your team or product, or have issues with your current developers or codebase, and need guidance on your SaaS journey. Trustshoring makes software development and remote hiring easy for all kinds of founders, technical and non-technical. Book a free no commitment call with Trustshoring CEO, Victor Purolnik, who I met at many MicroConf. Visit trustshoring.com to book that call. That’s trustshoring.com. 

I have an ebook that I wrote called Start Marketing the Day You Start Coding and the idea is always that especially software developers go and they build in the basement for a year, then they come out and nobody wants the product because they didn’t build a launch list. They didn’t do any pre-marketing. 

These days I would almost call it to start marketing before you start coding. I have a friend who launched this amazing SaaS company. He built the marketing website and started doing SEO 18 months before they were able to launch a product because SEO takes a long time.

I have always been a proponent of even if I’m going to do a lot of customer development, I have a lot of one-on-one conversations. The first thing I do when I have an idea is to get a landing page up. I’ve pre-sold or built launch lists for downloadable software back in the day to 10, 12 years ago for SaaS, we did it for Drip for info products and courses. 

I did it for a book, Start Small, Stay Small. MicroConf was literally a landing page before we had anything. TinySeed was a landing page before we had a fund and all that. A lot of people still don’t do it. You started with a landing page and you started marketing while folks were developing the alpha. In fact, I think at some point, didn’t you have 60,000 emails on a launch list?

David: Yeah, and we were largely inspired by Robinhood who was doing this really, really effectively. I think it was around 2014. I remember years before I saw the Gmail launch with the beta that they did with the invite of five people and everything. I was like oh my God, this is amazing. I want to run a beta one day. I never managed to do that. I had read a lot about betas and how they run and alpha, so that was quite interesting. I love doing research, you’ll notice. 

When we came to launch Hotjar, there were two things that influenced us a lot. One was a failed product that we had done before, which was basically us being smart about what we can build that we can sell. We were doing it completely the wrong way around. We built a SaaS product for the retail and hospitality industry, which was like a loyalty program. It was building in all the marketing things that we had built over the years. 

We learned a lot doing this about what makes people act and how you can drive loyalty as well, but we had no idea how to sell this because we didn’t know the industry at all. That was a big mistake. That was number one that is very inspiring to us about how we do this. 

Number two, the research that I spoke about, the whole beta thing. What did we do? There were a few steps that we did. The first thing that we did, actually, even before we started looking at an alpha was an interesting story. I wanted to make sure I was bringing people together and that we were working on different projects. I wanted to make sure that we could work together. 

Actually, we built this very weird, stupid product which is called Prioritizer. Basically, it was this basic interface where you input ideas, then you vote on them, and it automatically prioritizes something for the group. We built that very quickly and the idea was that we wanted to see whether it was a team fit even before there was anything else. We did team fits very quickly. Again, all of this is born from failures. I wanted to make sure I avoided previous failures. 

Having done that, we did two things in parallel. Jonathan and I, Jonathan is the designer’s front end and I had a background in design, started building the interface of what it would look like and the landing page. I’m drawing on my Conversion Rate CRO experience, and the engineers started building the alpha. Is this actually possible?

By the time they had the answer data-wise because Hotjar processes a huge amount of data. When we knew that it was feasible to do this at scale and offer this to thousands of teams, we immediately pulled the trigger on the landing page, which said, here’s what we’re offering, are you in? 

We did all of this that I mentioned within the span of I think around two months. It’s been two months and it is done. We immediately knew we were onto something because as soon as we shared this with some friends, we started seeing people come in that we didn’t know. Names that we didn’t know. It was spreading. There was word of mouth and it was at this point that we knew that we were scratching an itch that many other people had.

Rob: How did you build up that list? Were you running ads? Was it social?

David: That’s a good point, 60,000. 

Rob: That’s a lot. My biggest launch list ever I think was 4000 or something. I hustled that so I have a lot of respect for 60,000.

David: I missed that important part of the question. Johan and I, back in the previous company, had done a lot of direct marketing so we had a very good understanding of the fundamentals of the acquisition costs of a user or a customer, in this case, it was a customer. Also, we had done so many ads at scale in that software business that we were doing a few years back. 

Having said that, previously, we didn’t have word of mouth. This was more kind of direct marketing selling software kind of thing. What was interesting to us is that we were seeing word of mouth in the initial stages of doing this program that we did so we started to layer in some of the things that we learned from the previously failed product. We had stuff like if you recruit five friends, then you get x months free. If you recruit more friends, you get a t-shirt. Those were fixed rewards. 

Then we also had more competitive rewards. If you’re in the top 20 of the list at the end of this, you get a lifetime account of Hotjar—which was for many agencies and people using software like this—was mind-blowing. Contracts for this type of software were in the $30,000, $40,000, $60,000, and $80,000 so they were like holy […], this is huge. The perceived value was very, very, very high and then we did other competitive kinds of things as we went along. 

We also told people on the list and gave them ideas of what they could do. Send a blast to your email list, write a blog post, and then go promote it here. We were literally like building a team out there that was kind of promoting this for us. 

We started to see that the word of mouth was working really well. In tandem, we also deployed what we knew and paid. I had done a lot of research about how paid works and I’d studied some of the pioneers in this. When we think about books like advertising methods from the ‘50s and ‘60s. I read a lot about this. This was very easy for me to do on the side. 

What did I do? I went to Facebook and I targeted the personas of who we were, the founders of Hotjar because that’s who we were building it for—digital marketers, product designers, product managers—and I started testing loads of different variations of ads. We were very lucky that Facebook had quite recently started offering this so it wasn’t very competitive. It wasn’t expensive. It was very easy to target large groups of people. 

I tested different visuals, different ad copy, and different positioning. Within two to three months, we had found this really, really effective ad proposition. Then what we did was we took that and back then there was already this feeling that email is kind of dead. We knew that was not the case. We went to big publications that had huge email lists, imagine Designer Monthly, for example, or Smashing Magazine and whatnot. 

We went to them and said hey, we’ve got this really valuable, interesting new product, which is in beta. There’s huge value to your readership. How much do we have to pay you to do an email blast of your whole list and then we just started doing this over and over using that high-performing ad from Facebook. This just exploded. We were buying, but we were getting email signups at the cost of $5 or $6. It was very, very effective. 

Then we also worked with platforms like Earlybird and BetaList. We’re also lucky because this was the year I think that Product Hunt launched. We were one of the very first self-hunted Product Hunt. We layered a lot of these things. 

Then what I was also doing was writing a weekly email list to everyone on the list telling them what we’re working on, the internal workings, and the challenges that we’re facing. Rather than doing content, we were leveraging word of mouth, paid marketing, and then sending emails to our group to kind of create this a little bit of a community, which helps again spread the word and what more. This word of mouth, this kind of mobilizing the community was always reducing the overall cost of getting that email, which is the way we saw it more holistically.

Rob: Right, and to do this and pull it off, you need to know your numbers. That’s what so many people who start to get into paid acquisition don’t realize is that just hearing it’s $10 a click for this or it’s $2 a click. If you don’t have an idea of what the rest of the funnel is going to look like then you can’t do this well at scale. 

You must have known in your head if I can buy an email, again you’re not buying the email, but you’re paying to get someone to opt in to an email list for $5, that might sound really expensive to someone. Five dollars just to be able to communicate with someone. But you must have had an idea, well, we’re going to convert X percent, We have the cash in the bank and the lifetime value is this, 

The virality, the viral loop that you added with the word of mouth means if every email turns into three emails, then I’m only paying $5 divided by three. That’s how I would think about it. Is that what you were thinking as you’re doing this?

David: That’s a very good point. Interestingly, I’ve never covered this topic. We’ve been interviewed a lot about this, but no one ever asked about it. But you’re right, we spent a lot of time back then. We literally drew out the funnel and we said, okay, what if we convert at 5%? What if the lifetime value is this?

We modeled out very low prices, but we’ll do an upsell price. Let’s say we can convert 20% of customers to a higher price. We were very lucky, in a way, to know these fundamentals having run a direct-to-consumer business before to understand what that engine would look like. Then definitely takes the guts to also burn €10,000, €20,000 on first failing.

The ads are not going to work. Also, you need to push on some of these ads. You need to put money behind it before you start to see the conversion rate go up as well. So there’s a little bit of that going on as well.

Rob: You had a luxury with five people working on this product that you could focus yourself on all this marketing stuff on sending a weekly email to a launch list. I know a lot of solo founders and they’re trying to build the product. They’re trying to support early users and they’re trying to get marketing going. It’s definitely a challenge.

I can see if you’re working with high performing people. If your founding engineers are really solid, there is an advantage of you being able to focus full time on marketing. It sounds like a lot of work and it sounds complicated, I know it’s not.

I’ve done a lot of stuff. I haven’t done the viral thing you did, which I think is brilliant. But all the other stuff I have, I’ve run ads at a decent scale. I know that it is like a part time job, if not, more just to keep those things running because they burn out and you got to recycle the audience. It’s not set and forget.

You send in an email every week. That’s not 20 minutes of work. That’s half a day, maybe a full day for putting graphics in if you’re doing screenshots, if you’re doing a screencast, whatever it is. That seems like you’re being able to dedicate that time and expertise.

I’ve been talking about it. Success is hard work, luck, and skill. I know you said you got a little lucky, but I think you put in a ton of hard work. I think you had a ton of skills that you had built from these prior experiences as a marketer and a product person.

When it came down to it, I have a number here that after adding a paywall, you get this big list that you wound up closing 5% of the initial launch list to convert it to pay. Is that your recollection?

David: Yeah, it’s complicated. Back then, we didn’t spend a lot. I’m glad that we didn’t. We didn’t spend a lot of time on measuring these things to the absolute detail. There’s a lot of faith in these things would work out.

In later cohorts, we knew we were converting at around 5%–7%. I suspect from that initial group, we probably converted even higher, but I suspect we also churned more of them quicker. We don’t care about that because that was our initial group.

We consider this to be the wave that really created the brand that is Hotjar that then lasted for years, still until today because then there are many other things that we did that I think were very smart. Anyone who was in the beta and became a customer, we put them on our founding list first. We put a page with their names.

When we went live, there were a lot of initiatives and things that we did. I think that initial philosophy of taking care of the user and thinking about them really was effective. A small detail, anyone who made a suggestion or reported a bug, we would personally get back to them and thank them when we either fixed it or actually did it. This was something that we insisted upon. It was just so effective.

Rob: I want to call out to listeners that when we watch these launches, whether it’s Apple doing it, whether it’s Superhuman, the way that they built up their big launch list, Robinhood, like you said, mint.com was similar back in the day, they don’t happen by accident. It’s not luck, it’s a ton of […] work. Just hearing you talk about it, I want people to understand it because there are some folks or audiences, 75% developers, maybe 80%.

I’m a software developer as well. I don’t write much code anymore, but I know that back in the day, I felt like the hard work of doing this was building the product. I would look at people like Robinhood, Mint, or Hotjar get this momentum and I would think, well, I guess they got lucky.

Maybe I’ll kind of try to replicate what they did not realize you were probably putting 40, 60 hours a week in plus I bet our co-founder was working. This is a true months and hundreds and hundreds of person hours to get this kind of result.

David: I think you can top bill those hour numbers. Again, keep in mind, my role was I was kind of—a CEO at that size doesn’t make sense, it was more of like a product team. I was kind of the product owner, although Jonathan was more than the product manager. He took on more because that was complicated.

Then it was running marketing. Johan was doing all the media buying, but he was also helping with the product strategy and all that stuff. Then we were all doing support, all of us. I was also consulting on the site to keep that money coming in.

This was six, nine months of 80-hour weeks, including the weekend, so everyone, all of us. This was the price we knew we had to pay for if we were going to bootstrap this. The good thing I think that we did is we sat down and we said, okay, are we ready to do this together?

We knew that there was a very, very good team spirit at this point of, let’s do this together. The goal is very clear. What we’re trying to do is very clear. Yeah, it worked out very well.

Rob: Yeah, it’s obvious. I’ve had seasons of 60-, 70-hour weeks, but I know they’re a season. Usually, it’s a month or two. You did it for an 80 for 6–9 months. I know that must have been really tough, but you weren’t going to do it for 10 years. You knew that. You knew it was going to be a big push and that you’d be able to back off.

David: Yeah, but I would go as far as saying, back then, it was so easy to work those hours. Compared to last year, that was so easy because none of us had ever experienced anything like this before. When you have 60,000 on the list, we built this little dashboard that updated everything, it was so clear that we had a product-market fit from a concept point of view.

You’re right. Yes, we worked our asses off. But if the luck is not there, there’s been studies about this, timing is the highest, I believe, contributing factor towards success in a startup. The timing for us was just absolutely brilliant. All the incumbents were still selling at very high prices with a sales approach. When you think about it, it’s crazy that in 2014, this industry, there was no product-led approach. Just wait another year and that was out.

There were just so many emails and inbound interest and people emailing us. Agencies were saying, how do we get in? People want to invest. It was just insane. The energy behind this, it was easy. But yeah, we wouldn’t have managed to do this for much longer.

Rob: I want to call out to listeners. Often on this podcast, I talk about how selling a low-priced product, $20, $30 a month, you’re not going to get to millions or tens of millions in ARR. It’s not a hard and fast rule. But it means if you’re going to do it, you need to have massive volume. You prove to the market out in advance.

If you had tens of thousands of people on an email list, 60,000 folks, if you had done all that work and had gotten 3000 people, the business would have been fine. You would have had a few hundred customers. It would have been an okay, I’ll say a mediocre, SaaS business because the pricing is too low. But when you have that wide of a funnel or that large of an audience and you’re as good a marketer as you and your co-founders are, that’s when you can make a low-priced product work.

David: I think fundamentally, that is what led to the successful recipe that is Hotjar, which is I mentioned that previous software that we built for the hospitality and retail industry. It took us months, we’re building this product and building and building. Then we realized, crap, there’s a winner here already in this category in the US.

There’s a ton of money. They’re a massive brand, huge. I think at the same time, I read the book, The Dip by Seth Godin, which speaks about this. The first, second, and third plays in the category are the big winners. And I suddenly realized, we weren’t thinking big enough. It was as simple as that.

We have to think much, much bigger, but play to our strengths. I think that’s where I suddenly realized, I’m using these tools to try and build these new products. But actually, what I should be is disrupting the tools that I know so well and there are hundreds of thousands of people that want to use.

Rob: I love that you keep referencing, I read a book, I read this book, I did this research, I read the Paul Graham essay because I’m exactly the same way. I’m looking at my Audible library. There are 782 titles in my Audible because I am an audio person. Some of them are my kid’s, but I have probably a hundred of them. I have listened to them. If I don’t listen to them, I get rid of them. I’m exactly the same way.

When I wanted to learn Facebook ads back in 2011, 2012, my SaaS was called HitTail back then, I went and I bought every ebook, I bought every course. I read every blog post that you could find in the first five pages of Google about how to run Facebook ads. Then I dove in and did it, and it worked.

I was willing to grind it out for, like you said, willing to risk a few thousand bucks, willing to risk hundreds of hours of my time. I like that. To me, maybe it’s a bootstrapper ethos or maybe it’s just a founder ethos of being willing to dive in and learn things that you don’t know and then execute well. I love it.

You grew to a million ARR six months after your beta launch. Then from 2015 to 2016, you went from $1 million to $3 million ARR. Really fast growth. I think I’m getting these from Built to Sell. My producer listened to your interview on Built to Sell.

Shout out to John Warrillow. He’s actually who connected us. I love what John’s up to. I appreciate the connection because he said, David is an amazing founder and has an amazing story. I was like, what? Any SaaS, right? It’s right in the wheelhouse of this. I appreciate that.

Obviously, the 60,000-person email list got you maybe to that initial million, but then you tripled again in less than a year. What were you doing there? Was it just more of the same? Was it ads, was it virality? What was the playbook?

David: Classic advertising principles, more of the same. We just kept on doing more of the same, making it more sophisticated, and then I introduced this very simple way to run the business. I love simplicity as a true product design person.

What we did was we created a very simple spreadsheet, month by month, which lists income and expenses. Then we had very rudimentary forecasts of our MRR. Then I introduced something which we still use until today, which is we had the profitability goal for the year. We’d say this year, we want to have 90%, 10% EBITA. I’m just inventing that as a number.

The Google Sheets would automatically attribute the 90% to our expenses in terms of budgets, so 90% of the MRRs. Then I split that. I did some research about typically how much is spent on product marketing and SaaS products. I allocated that per department, which didn’t exist back then.

Over time, we tweaked the profitability number, and then automatically, the leaders we were hiring had these numbers already there so we don’t need to approve, discuss budgets, and whatnot. Why was this important? Because this automatically assigns the value, which within marketing would then go to the subgroup which is advertising.

That number automatically grew month on month and we knew we just had to spend this. It had to be done. We didn’t overthink attribution on that because again, going back to the very beginning of where we started from, we know that we would have someone using Hotjar who has a mom-and-pop shop, but their cousin is the CMO in enterprise business. How do you measure that? How do you attribute that?

With this big goal that we had of becoming the winner in the market, we looked at attribution on a more global level, not on a campaign level. Having said that, on a campaign level, we just look at, are the signups coming in or not? We didn’t obsess too much about the quality of the signup. What does that mean? 

If we run a campaign and we’re just getting no interaction at all, no one’s creating a Hotjar account, we know it’s inherently bad. The ads are not working, the channels are not working, it’s the wrong audience. But as long as we’re getting those good numbers on signups, we didn’t care because we wanted to build the foundations of that.

There was also something else that was happening at this time. What we didn’t realize is that initial campaign that we did, where we told people to write a blog post, email people, what had happened was we had an army of people that had written on Quora, blog posts, everywhere with all these backlinks.

Another thing that happened was that we had feedback tools within the product group. Each survey that was running on a website was a backlink again to Hotjar. We started to build so much domain authority, and this was always our strategy that then was quite late for us. We did kind of the opposite of what everyone was saying.

We started content then. We were starting off with a domain, which was the strongest hubspot.com, nearly, which is crazy. We’re still lagging behind on content. That was great from a marketing flywheel point of view where things build upon each other.

Rob: Yeah. There’s so much to your story. If you and I didn’t have a hard stop in 10 minutes, I want to keep going on it. I want to make sure we cover your exit because I think not only do you and I shared some thoughts about it before we started recording, just the agony and the stress of what an exit can feel like, but it’s just such a nice cherry on top of this incredible business that you built.

I think a big question I have is, if you bootstrapped this—5 founders, 170 employees, $40 million in ARR, what made you decide to sell? Why not keep running it?

David: I think we’re going to need another hour with that question. I’m joking.

Rob: I did a whole talk on why I decided to sell Drip.

David: The best way that I can summarize it is because I agonized over this for a very long time, and as you know and you mentioned it, it’s horrible because there’s something you need to keep a secret. It’s something you want to speak, talk to people about, but you cannot. That becomes a very internalized debate.

I think the best way to summarize it is, logically, I knew we had to do this. Everything from a logical standpoint made sense. We can discuss what that looks like, how we built up the logic. But from the heart standpoint, it felt wrong in every way. I think a little bit of it because we built Hotjar with a lot of soul, love, and care, that kind of felt like the whole selling-out piece, which I now realize is absolutely wrong.

If we look back at the beginning of this journey, we shifted away from selling our time to building equity, to building a product, and to building something. I think intrinsically, if something cannot be solved, then it doesn’t have value. I think it always has to be on the table.

We were always honest with the team. We’re not actively looking to sell. We’re not actively looking to go public. This is a private business that would be profitable and sustainable that lives to our vision and cause. But if the right offer, if the right thing comes across, we will definitely consider it. We always said this. This was definitely a case of this was something interesting. Let’s break that apart. 

First off, I think in a personal space, I was in a tough spot. Quite honestly, I wasn’t enjoying being a CEO at 170 people. It wasn’t what I wanted to do. I am a product designer. That is my background with a bit of marketing in there. I’m a creative. I think when we reached that size, I wasn’t enjoying it. It was very clear what had to be done, but I wasn’t enjoying doing that work.

Again, another book I read was The Great CEO Within, which talks about eliminating the things that don’t give you energy and doing more of the things that give you energy. Part of why I felt very tired was also with no investors, there was no board. I’m chairman, company secretary, board member, CEO, shareholder—the whole thing. I start to realize, actually, I can make this more fun if I am the board and the chairman looking at where we take this company.

I read the story of Patagonia, Let My People Go Surfing, another great book. This sounds much more like a good match for my soul. I was very lucky to find the amazing leadership people to join the company, one of which is Mohannad who is our CEO today. We started working on this transition where I would become the chairman, he would become the CEO.

With this pretty much completed but not public yet because as a remote business we have to incorporate in different countries to make this happen so it was crazy, Contentsquare had already spoken to us quite a few times and approached us again. And this time, it was serious. They were planning to raise a big round. This was early in 2020, ’21.

Again, it was an immediate no. There’s so much going on. We have a plan. We’re building this out. We now have a just cause. We took something out of Simon Sinek’s book about just cause. It felt very exciting, it was a good time.

As the months progressed and as the numbers started coming in, actual offers, when we start to look at, okay, there is a similar philosophy, there’s a similar ethos to how they’re building the product and their vision of the future of what this would look like, they’ve agreed to keep the business separate. That wouldn’t impact our team. The team is not going to get screwed over.

Our customers, they don’t want to change anything. If anything, they want to learn from us. It’s not a takeover to take over the data or the product and all that stuff. Those are done. Those were the very big things. But then we also started to crunch the numbers.

We created what was called a loyalty program for the team. We said, although we’re not planning to sell, although we’re not planning to go public, in the event that this happens, a percentage of the company’s price would be distributed to the team in the form of bonuses.

When we put this, we started to think, okay, I would never be the CEO of going public, but maybe Mo would want to, right? We started to visualize all these different outcomes. When you start to look at the price they were giving us and the likelihood of other outcomes happening, this was just a no-brainer.

Everyone would come out as a winner. Then on the back of it, Hotjar was facing some challenges to invest faster in technology, to invest faster in the product. There was a lot still happening, a lot of businesses, forming partnerships, and acquiring each other. It was very clear that the industry is coming towards this consolidation that is happening.

It just made so much sense for us to do it with them. There was the previous relationship, the history, European. They also have the bootstrap history as well, they raised. It just made so much sense, logically.

Rob: Yeah, a lot changes when you look at a piece of paper that has several commas in that number. I remember everything was hypothetical for me until I got a first offer letter. I think it was probably a letter, an LOI. And I was like, wow, that is literally millions of dollars. That could be in my bank account if we sign this thing.

When it goes from theoretical to practical to reality staring in the face, a lot changes. Some soul searching goes on. You know I’ve referenced my MicroConf talk 11 years to overnight success. That’s on YouTube, if folks want to check it out. I talked through my thought process of doing that. It was complicated. It was not a no-brainer to do this stuff. For us, it was 11 months from the first conversation to close. For you, it sounds like, was it a couple of years?

David: No, not really. Actually, it was months from getting serious to actually closing. As I said, there was a relationship that spanned years more of inbound interest that we never took seriously, funnily enough. It was always like, yeah, whatever kind of thing. It was fun, though, because I also developed a relationship with the other CEO and we talked about challenges and things.

I’d say from a money standpoint, Hotjar was incredibly profitable. We even did a dividend. To be quite honest, I already felt quite financially independent. I knew that I was good. But to be honest, there was also a little bit of pressure I was feeling from the co-founders, so I think we’re getting tired of all this. There were many 80-hour weeks being done.

They were kind of starting to question, listen, what’s going to happen here? There were also members of the team thinking, where’s this going? Where’s this taking us? I think the fact that Contentsquare had even more ambitious, bigger plans, I think part of it, to me, was actually more making this less about David as a founder because it was becoming that.

I didn’t like the pressure, the weight on me, and making it more about this movement. To be honest, there was a very big thing that I spoke to them about, which is we showed them our just cause which was quite bold. And I said, this has to be about just cause. We talked about building a just cause together.

We talked about building a B corp or becoming a B corp in the future. What would it take to go public potentially together to make this a long-lasting business? That was another of the objectives that we had that I had listed when I started Hotjar.

Selfishly, to be honest, obviously, there’s the money. When you start looking at this, not only do I never need to worry about this, but my kids and possibly even their kids. That’s huge, and my sister, and all that. I think selfishly, it was less about the money and more about removing that weight from my shoulders, which had come to be a little bit too much for me.

Rob: That sounds like it. David, I think you and I could honestly talk for hours and we should. We need to get together in person here in the next year once the veil of COVID has lifted.

If folks want to keep up with you, you are David Darmanin. It’s just your first and last name on Twitter. Of course, hotjar.com if they want to see what you’re working on. Thanks again, sir. Thanks for joining me.

David: Thank you. Again, an absolute pleasure.

Rob: Hopefully, now that you’ve listened to that, you understand what I was saying at the beginning of the show. Just David’s approach to things, his mental models, just the sheer intelligence and execution just emanating from him is really just so inspiring to me. I want to thank David for coming to the show. I would not be surprised if he were on future episodes of Startups For the Rest of Us. I do hope to be able to meet up with him at some point. 

Thanks for joining me again this week. If you enjoy the show and you want to do me just a small favor, a five-star review in whatever podcatcher you use would be amazing. With that, I’ll be back in your ears again next Tuesday morning.

Rob: Welcome back. It’s Startups For the Rest of Us. I’m Rob Walling. This week, I talked with Nick Fogle of Churnkey about a number of things.

One interesting point we touched on in this conversation is about the difference between bootstrapping B2C and bootstrapping a B2B company. It’s something we’ve talked quite a bit about on this show. I think you’ll enjoy that part of our conversation and hopefully the entire conversation that I have with Nick today.

Before we dive into that, I want to let you know that MicroConf Remote is happening today when this episode comes out. It’s happening today, tomorrow, and the day after. Tuesday, Wednesday, Thursday, May 3rd through 5th. Tickets are still available.

We are talking all things money. We’re covering sales, personal finance, pricing, and alternative sources of funding. We do it for 90 minutes over three days to make it easy on your schedule. We also have this amazing new platform that is like a first person walkthrough environment.

You just got to go. You got to go to microconfremote.com and there is a video you can play there to check it out. Because if you haven’t seen a remote event, and I bet you have not seen one on a platform like this, you should really check this out because producer Xander is pulling out all the stops on this one. I’m super excited to be hosting that this week.

If you haven’t got your ticket already, head to microconfremote.com. If you just want to opt instead to just get the videos, we do have a video-only price for that as well. Microconfremote.com if you’re interested. With that, let’s dive into my conversation with Nick Fogle of Churnkey.

Nick, thanks so much for joining me on the show today.

Nick: Thanks for having me. It’s kind of a dream. I’ve been a longtime listener, so it’s a little surreal being on.

Rob: It’s super cool. That happens now and again with folks in MicroConf or TinySeed. It’s always nice to have listeners on because you know the show format. You know how it’s going to go. Let’s be pretty tactical. Let’s be entertaining. Let’s tell all the most entertaining parts of the story and inspiration, so people can walk away with actionable things.

I think in that respect, we will dig into your story of building and growing Churnkey and touch a little bit on a prior business that you built. I want to kick this off with a super tactical question because Churnkey is personalized cancel flows for a healthier subscription business.

I imagine, you see a lot of do’s and don’ts within churn as you have views across a lot of subscription businesses. Are there one or two things that people should really be doing to think about reducing their own churn?

Nick: The first thing I’d suggest is that you need to figure out why people are canceling. If you don’t have some form or some way of getting feedback for why your users are actually leaving, that’s your number one priority. Then, once you start to collect data and you know why people are leaving, you can offer them things that will entice them to stay.

It’s important to remember that not everybody who leaves wants to leave for good. In some situations, a pause might be the best thing you can give them. They’ll come back and reactivate within a few months. That’s revenue that you save long term.

I often like to tell businesses that it’s a lot easier to offer somebody a pause or offer them a discount, then going through the whole customer acquisition cost lifecycle again and having all the excess spending that that’s going to involve.

Rob: I like these suggestions. These are things that we built by hand in Drip. I built these by hand in HitTail as well. We had a form when you cancel that says, can you give us a reason. We required at least five characters, so people would put ASDF, ASDF and submit it.

We switched to not having that and then I would have an automated. Instead, I had an automated email that went out five minutes after they canceled that was just like, hey, I’m the founder, I would love it if you could write a quick reply. That for us at that point in time and the stage of our product got us a higher response rate of reasons, basically.

What have you seen? Is it pretty common in your experience that a lot of people won’t fill that out and say, this is why I’m canceling? Or are there even ways to entice them to do that?

Nick: If you create a really simple survey that’s literally bubbling the answer, that’s probably the best way. The freeform feedback field, it’s kind of a recipe for depression. As a founder, you got to grow some thick skin and realize that you’re going to have some people that are just irate, they’re angry, and they’re going to tell you everything that’s wrong.

Overall, you have to separate yourself from the business. That’s something that we see a lot with founders. You get so focused on growth. You don’t want to know why people are breaking up with you.

It’s happening and you’re like, I’m going to overcome that with growth. It’s just a fact of life. It’s not really because a lot of those people who are leaving, there’s a reason they’re leaving. You might be able to counter that reason with the alternative to make them stay.

Rob: You mentioned having a pause, having a discount. Are there other alternatives that you’ve seen work?

Nick: Yeah, it depends on the business. In some situations, there might be a product that has a little higher technical learning curve. In that situation, one thing I suggest people use is an integration with your support chat.

If somebody selects a reason that says, I’m having technical issues, then with Churnkey, you can automatically trigger Intercom, Drip, or whatever your chat solution is to pop up and have a customer support person right there to just help this person along.

Another alternative is to get them on a better plan. If they say it’s too expensive, the discounts work really, really well. People tend to be price sensitive, particularly right now, and are getting better about checking in on their subscription spending every month.

You have to be proactive as a business and think about what’s going to entice these users who are budget sensitive to stay. Discounts can work. Sending them to a different pricing plan can also work based on the usage.

Churnkey allows you to segment your different user groups. If somebody is on the top plan, you can move them to the lower plan. All of those things work. There are quite a lot of different options, though. Some people will alert somebody on their team to give you a call.

You mentioned the emails. I wanted to touch on that because that’s something that we tried, like the immediate reactivation emails. With Wavve, our previous business, we worked so hard to craft these reactivation emails that would be like, we’re so sorry you’re leaving and be a personal handcrafted message. It would have a very, very lucrative discount that says, hey, if you want to come back, here’s 100% off for two months, just share your feedback.

We got maybe one out of 30 people that left would actually fill that thing out. I haven’t seen as much success with that. Again, it does depend on the business. Those are just some different angles of attack.

Rob: Right. Those can be done with code. You could get in and hack JavaScript, or hack your server side stuff, or you can use a tool. There’s Churnkey and there are obviously other competitors in this space that can do similar things. But I should clarify that the email we were sending was not a reactivation email. It was just a, why-did-you-cancel email.

That’s all I was trying to find out. Then if we would do reactivation, we would do it later. I was just trying to get data. I was the customer development type stuff of like, why is everyone churning or what can we do to improve the product?

Nick: The ASDF thing is something we see. Our customers ask us all the time, what can I do so that people actually answer? It’s really a question of volume. Some people are busy. They’re mad that the subscription is so billing. They just want to get out as quickly as possible. That’s fine. Let them go.

If they don’t pick any of your other offers and they’re going to skip out on the feedback, that’s okay. It’s a numbers game like anything else. If you’ve got a hundred people cancel, a large majority are going to fill that out.

Rob: Churnkey has been around about a year. You launched it in February of 2021. But really, Churnkey kind of stemmed out in a very similar story to the way that Drip kind of spawned out of HitTail. Indeed, we had internally of collecting emails on every page. We started building an internal tool.

That’s what happened with you, with Wavve. You’ve mentioned Wavve already. Would you like to tell people what Wavve is? You exited that business, I believe in 2020. Talk us briefly through that. I’m curious most about the evolution of moving from Wavve deciding to sell it and doubling down and going all in on Churnkey?

Nick: We sold it in March of 2021. We finalized that deal. It’s funny, 2020, all the purchasers went home because we were thinking about it. We talked to brokers and all this stuff.

To start at the beginning, my co-founder, Baird Hall, and myself wanted to start a startup. Our wives actually introduced us. We were both going at it alone on different things. We decided to create a community for different audio groups centered around sports teams. It was called uTalk Sports.

We were shortly sent a cease and desist letter for trademark infringements, which in a prior life, I was an attorney. I should have known and to check the trademarks. But anyway, we rebranded to Wavve. It quickly became apparent after a year grinding on this thing that people weren’t going to pay for it.

It was maybe before Audio was as popular. It would have been like a precursor to Clubhouse. I think that’s a good way to describe it. But one thing that’s interesting about bootstrapping, staying in an industry, and being close to the different problems the industry is facing is you begin to find problems.

My advice to a lot of people who are indie hackers or bootstrappers is just stick with it and look for problems. Eventually, one will present itself. Looking back, it can seem lucky. But over time, you’re going to increase your surface area and have some home runs.

With this product, it was failing. We weren’t able to get anybody to pay us for these communities. As a last ditch effort, I found an old GitHub repo that WNYC made, that allowed you to turn audio into video. I got a little IP address on an EC2 instance and had this as an internal tool.

Our existing users love the videos that were created. They said, hey, we don’t really care about this community thing, but can we pay you to use that. I’ll pay you $10 to do it. Over the course of three or four months, we realized, all right, this is the thing.

We reincorporated and launched this new Wavve product. We grew pretty slowly at first. Over time, podcasting continued to grow as an industry. These things shared very well. People would see the little Wavve watermark. They’d come subscribe and we kept building out features.

We hit a problem. The problem was churn. With podcasters and any type of prosumer, really, a prosumer would be somebody that is like a hobbyist, different tools like social media scheduling apps, anything that can help you be a creator. These things all fit that prosumer market.

Churn is very high because people will try something for a few months. Either due to the cost or just lack of time to work on it, they’ll leave. With Wavve, we were doing about $20,000 in monthly recurring revenue.

We were looking at our churn. We were looking at our growth and we realized this business is going to hit a churn ceiling at $25,000 or $30,000. It was pretty demoralizing to realize that. We had a sense of why customers were leaving, but we didn’t really know.

It’s sounds silly now. We waited really long to implement any kind of user feedback when people were leaving. This was about 18 months after we started this new business. We’ve just started requiring some customer feedback.

A lot of people would just do the ASDF thing. But over time, we realized there were two things very common. People wanted to take a break from podcasting because it’s seasonal or people had budgetary reasons.

We’ve been optimizing for features, technical debt, and fixing bugs. We’ve spent so much money and time working on those things, but it’s not why our customers were leaving. Most of our revenue problems were around these two other issues.

We started working on a few things internally that would help us with this. The first was the ability to pause if somebody needed to pause. That worked pretty well. We actually hired a churn consulting agency too at this time and said, hey, can you help us improve our churn further? It’s hard to say if the big agency was able to move the needle much.

What was clear is that this automation was working very well, enough to dedicate more engineering time into understanding the data and experimenting with different ways to retain more people. 

Rob: I think it’s relatively predictable, at least if folks have listened to any episodes of the show. When I hear consumers are prosumers, I think, yup, low price point, high churn. 

The moment I look at Wavve, which is wavve.co, and your monthly pricing, there’s a free plan, it’s for the aspiring creator—it’s funny—and it’s like $13 a month, $20 a month, $33 a month. I would assume, yeah, you’re going to have a really high churn. You’re going to have 8%–12% monthly churn probably.

I bet your higher plans probably churned a little lower. There are all these patterns that you see. This is not unexpected (I think) with a business like that, but it still sounds like you have built something people wanted, which is kind of cool.

We have had folks on this show, Christopher Gimmer with snappa.com, who is into seven figures with a similarly priced prosumer aim. Then there’s veed.io. We had Sabba speak at MicroConf Europe a couple of months ago.

They also have some low price plans, but they have such enormous volume, hundreds and hundreds and hundreds of thousands of uniques a month. That’s how you outrun that kind of churn. It sounds like you were hitting something that would not be unexpected, but it still can be really hard on a business.

Nick: People don’t talk about it. As founders, it’s demoralizing when people leave. It’s hard not to take it personally because you put so much time and energy in your business. It can be something that you just put off and you procrastinate, you kind of stick your head in the sand. It’s important to separate that and just say it’s not personal, it’s business, they’re leaving, and they have a reason for it.

We continued working on this prototype, what would become Churnkey. Our retention got better and better and better. We were saving more users a month and we were able to crush through that plateau at $30,000, which was like the former growth ceiling. We got to $50,000 and then we said all right. I’m a financial pessimist. I’m always like, it’s over. We peaked and then we would crush through it because we’d find our top line growth would increase and we would cut churn a little bit more.

Churn is such a game of margins. If you decrease churn by 0.1%, that unlocks so much more MRR. The mathematics can hurt your head if you’re not used to thinking and compounding terms. It really is.

Once we realized that, we were like, it’s worth throwing all of our engineering hours into this because if we can cut churn another two tenths of a percent, the sky’s the limit. Eventually, we got Wavve well over $100,000 a month. Part of that was just higher growth and the creator movement continuing to go strong. A big part of that was being able to reduce churn.

Rob: It sounds like you have a great business. I believe you grew it to $150,000 MRR at a certain point approaching $2 million ARR and then you sold it. Why? Why would you sell a business that’s so amazing that you had worked so hard on?

Nick: It’s a hard one. I’m not super active on social media. I was not like a core user of Wavve. It was a fun problem to work on. It’s fun working on those kinds of technical problems. We’d been working in that podcasting space for about five years. We weren’t loving the operational role we had at Wavve anymore.

Rob: How big was the team?

Nick: About seven or eight, but there were only two of us that were full time on it, Baird and myself. I only went full time the last few months. We only had contractors. We didn’t have any employees, so it was super lean. We never hired a single W-2. It was just 1099 part time.

There are some challenges in operating a business when you only have contractors because of different kinds of churn. The contractors leave and you got to do knowledge transfer. There were just a lot of things that came up.

I think we’re realizing we need somebody that wants to operate this business operating it. We were starting to get more imbalance from M&A. We had a broker we talked to. I had a ton of student loan debt and some other things that I was hoping to pay down. It was just time.

Rob: I get it. I sold a company, too, that was also growing and doing millions. It’s a similar situation. For me, mine, it was a lot of like, I’m concerned that I have millions and millions of dollars tied up in an illiquid asset. That makes it tough. This was 2015 when I was thinking about it.

These days, I would think about maybe selling part of my company if I still wanted to run it and still believed in it. It sounds like as much as you believed in it, it wasn’t that interesting to you anymore. The operations of it make a lot of sense.

I was going to specifically bring up the idea once you said that it was all 1099 contractors. We’ve seen some folks in the bootstrap-ish space try it and have it not work very well. You get a lot of task-oriented thinkers. You are now the project- and the owner-oriented thinker. You don’t have anybody.

Everything comes back to you and there are these cracks. Courtland Allen and I talked about it last week where things fall through the cracks. Then you’re the owner and you’re like, I don’t really want to be dealing with that. Was that part of it?

Nick: That was. In my whole career, I’d always worked like a day job. Wavve had been nights and weekends. I probably worked 60 hours a week for five or six years there, where I was trying to pay down student loan debt and make Wavve happen.

I didn’t leave my day job until June of 2020. A lot of that reason now represents so much of my net worth. What on earth am I doing and still trying to do everything? We had some contractors that we’re having to pay more and more. Things were falling through the cracks. They weren’t doing that good at work.

I think that became a problem. We never got super organized around the contractors. It was just very reactive. As we grew faster and faster, it was like, okay, this thing has a lot of potential. We love building things. We’re like, what else can we start?

We had worked on Churnkey. It wasn’t called Churnkey yet, but we’re like, this is something that everybody needs. It works so well for our business. We really love the idea of helping other founders and businesses to be more successful. That’s what took us into Churnkey.

Rob: Right. Switching from prosumer podcasts or social media folks to like, let’s help other founders because that’s a more interesting space for you personally, it sounds like. You heard me talk about freedom, purpose, and relationships. It sounds like you had the freedom to do that. Because if you’re going to sell a multimillion-dollar SaaS company, you can work on whatever you want next.

Nick: Yeah. I will say this as just a little side note. I’ve always been like, man, that lump sum. You get the lump sum and you’re just set. You go retire or something.

I can sympathize with retirees now. There’s something about having passive income and the recurring nature of that that’s more comforting than a lump sum that you have to manage, where you’re worried about inflation. I’m worried about all the different things. What is my family’s burn rate versus the amount I’ve saved?

Back to your point, thinking, what would you do if you were going to sell another one? With Churnkey right now, we’ve talked a lot about this as a team. We hired a new head of sales, which we’re super excited about.

Our biggest thing to him, he’s talked to a lot of VCs and these different companies, where everybody is looking for that big liquidity event. I said, it’s nice to get this liquidity event. What’s even better is that steady recurring income every month. You have the control to lever that business up or lever it down when the time comes.

Rob: Yeah, I can see that both ways. I’ve had both because I had HitTail doing about $25,000–$30,000 a month and it was almost all profit. It was 80% net margin, 90% net margin. That was amazing. But what ran out of me there was I lost interest and I didn’t think I could grow it into a multimillion dollar business.

I didn’t think the space was big enough. Then when I tried to “autopilot” it, like I always say, there is no such thing as autopilot. Every 12 months, every 18 months, it’s just something Google would smack.

The competitor would come up. It would start to decline. I’d have to turn my focus to it. It just doesn’t happen. I think if you’re able and willing to focus on it like you are with Churnkey, then having a business is amazing. You’re not so concerned now about, well, all my net worth is tied up in this thing.

You already have a big lump sum sitting in a bank account. That ease, that stress goes away. You know what I mean? That’s at least been my experience of it. It’s like this mental transition of, oh, my gosh, this is every dollar. Everything that I built for a decade is now tied up in this app. I remember being really stressed about it.

Nick: Yeah. Baird and I met at one point at a coffee shop. The first time we had an acquisition offer, it was like a little less than a million. It was a year-and-a-half after we started. We were on Indie Hackers Open, revenue and everything. I was like, let’s do it. Let’s do it. This is it. This is our best offer ever.

Thankfully, Baird was in a little better place than I was financially at the time. He was like, I think this still got some room to grow. We doubled down. We were like, okay, we’ll sell in 2020.

We’re meeting with brokers and everything. Then in March 2020, everybody went home for Covid. We were fortunate that we delayed it and delayed it. We’re much better off because of that.

Rob: Because the business multiplied, in essence, during Covid because everybody started podcasts. It was social media and podcasts because we don’t have any in-person events anymore. You kind of have that Covid cut both ways in a lot of different directions, but there are certainly some companies that really benefited.

Nick: One thing that’s become more prevalent recently is just the small individual people that are acquiring businesses with MicroAcquire and things. For me, I had over $200,000 in student loan debt. I had a small family and a lot of other obligations. When you see that money, you just get dollar signs in your eyes. You’re like, all right, let’s do it. You’ll lose all rational capability to process that.

I think that’s becoming something that more founders are having to come to terms with. You’ve got these more liquid markets for your business to sell it. It’s very easy to settle for something that’s way less than your business would be worth in this current market.

I think that’s a point of caution that you should never just jump on a deal. Take some time to think about it. Always DM me on Twitter if you ever have questions. There are people like Rob that are more equipped than I am to answer that, but I think that’s worth being wary of.

Rob: I liked that you brought that up and called it out because it is a really good point that I don’t think I’ve called out enough. We see whether through TinySeed companies, companies I’m invested in. I have almost 80 investments across those two. Almost all of them have had some type of inbound acquisition interests. They all get inbound investment interest.

What you’ll find and this is pretty well-known in the M&A space, it’s even called out in John Warrillow’s book that he released last year. That one’s The Art of Selling Your Business, I believe. It’s pretty well-known that if an individual is emailing you from a private equity, micro private equity, and they’re like, hey, I can do this really fast and we’ll just get this thing done, they are trying to get a value price.

They’re basically going to try to lowball you because let’s say you’re doing $2 million a year and they’re going to be like, hey, we’ll give you $4 million or we’ll give you $5 million, that is rock bottom if your business is bleeding out and declining. That’s the price. But if you actually took it to market, it’s a more complicated process and it takes more time.

I see businesses doing $2 million a year, getting $10–$20 million if you actually get a number of people involved in a bidding process, basically. It’s more work, but they’re trying to do off-market deals. It’s what happens. That’s what you’re saying. Be really wary of that.

Nick: Yeah. The market is totally opaque. I think MicroAcquire and some of the marketplace style things are better for getting a sense of like, maybe this is what it could be worth. We were fortunate that we talked to a bunch of different brokers and had a good sense of what we could eventually sell for.

We were lucky also that we didn’t have to use a broker to do the deal at the end of it. They’ll take a 10% or 15% cut of the deal. It’s better than what you could lose if you go prematurely into something. The quick turnaround of 7-day close or 30-day close is too good to be true. Run away if somebody offers that.

Rob: If that’s the big benefit, that’s usually the equivalent of seeing the billboard on the highway that’s like, we buy any house, like a cash offer for all your houses. We’re not saying they’re shysters. We’re not saying they’re doing things that are unethical or dishonest. They are value buyers. They will make it easy and that’s the benefit.

The benefit is not that you get the best price for your company. Know that going in, that if you did spend a few months, usually, you get multiple people involved and run a process. Whether it’s through a broker, you have a Quiet Light, and there’s MicroAcquire. There’s Discretion Capital if you’re in the seven figures of ARR. There are ways to maximize. It’s usually not the easy path. It gets you the best price. Usually, you kind of got to grind it.

Nick: Yeah, it really is. To bring it back to Churnkey and why we built it and decided to make this a dedicated business, the brokers told us right away like, oh, you’re going to have a really bad value multiple because your churn is 13%, 12%.

Rob: This was on Wavve?

Nick: This was on Wavve, yeah. At the time, Churnkey didn’t exist, but it was the prototype for Churnkey within the app. We just built a little bit of it out and we were just like, all right, if we want to get what we want out of this business, we need to double down on churn and make sure we figure out a way to solve it.

That was one of the biggest motivators, which is like, we got to get a better value multiple if we’re ever going to sell this thing. If anybody is out there that is thinking of selling the business in the future, that’s a big factor that acquirers are going to look at. What is your churn rate?

The math is simple, too. If you’re looking at what could we be acquired for, you just think about monthly, what are you making? How much more would you make if you actually got your churn handled? Then you multiply that times 12 to get your annual revenue and then you multiply that by your revenue multiple. It makes a huge difference.

Rob: Acquirers are usually looking at your growth rate. That’s probably number one. They’re looking at your churn rate or calculating when it’s going to naturally plateau. They’ll often look at your price point. If your price is too low, it just makes it harder to grow. But if they think there’s room to expand it, that’s a good thing. There’s a lot that goes into that.

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So you sell Wavve, which I’ve been through a few of these. I remember refreshing the bank balance, and looking at it, and the feeling of overwhelm. I was actually just telling someone offline how I basically started crying. I got all choked up because it was years in the making. It was my whole life in the making.

It’s from the time I was 11 years old and said, you know what, I don’t think I want to work for other people when I get older. This was that moment of like, this is freedom. That was the freedom line for me. I want to find out from you. Do you remember what that was like? Do you remember looking at the bank balance when it all closed? What was that emotion like?

Nick: It was life-changing knowing this. It’s kind of surreal, too, that this actually happened. It was almost so surreal that it took it a while to set in. It wasn’t like an immediate motion thing. It was like, oh, it happened. Then I was like, oh, holy […], it happened.

I grew up in a situation where my family’s wealth was just destroyed through bad investments. When I think about my legacy, I think about my children. It’s like, wow, I can change my family tree through this money and being a good steward of the proceeds from that transaction. That was the big thing that was overwhelming, thinking about the impact it has on not just me, but my whole family.

Rob: Yeah, I remember getting choked up when I fully funded our kids’ college funds. When I pushed enough cash into those two. We did, Sherry and I. She was off doing calls.

I remember logging in and just saying right in that 529, just boom, boom. I saw the money and I was like, we didn’t have this growing up. I’m so glad that I can give this to our kids. Even with the cost of education today will graduate with no debt.

Nick: It’s an incredible feeling.

Rob: Yeah, that’s great. You have this other business. It’s not a business yet. It’s just a product or it’s a product idea and you’re saying, all right, we’re going to start Churnkey. We’ve already had a bunch of success with Wavve. We know what we’re doing. Surely, this one will be easier.

Nick: Every time you say that, Baird, my co-founder started another business called Zubtitle, which is similar to Wavve. They do subtitles. He was like, oh, yeah, like we got Wavve. This one will be easy and the same thing. It took a lot longer.

Churnkey was a lot more different because instead of prosumer B2C style customers, we’re going B2B. We were not prepared for a longer sales cycle because founders are busy. The people you talk to have other priorities. Sometimes they don’t prioritize churn because they want to avoid it or sometimes they just got a really busy product roadmap.

Whatever the reason, it definitely took us a good six months to get a handle on how different it was going to be and that it was going to be a totally different journey building Churnkey than it was building Wavve.

Rob: I think B2B versus B2C is probably a big piece of it. I also think that to use Wavve—I haven’t used it but I’ve used Headliner, which I think is similar to make audiograms—is just low barrier to entry. You log in, you upload an image, you upload audio, click hey, I have a thing. That’s it.

But to implement Churnkey, I need to be committed to it. I need to put some JavaScript widget. There’s just a bigger decision even if it wasn’t B2B or B2C. I feel like it’s both of those things probably coupled.

Nick: It’s usually more than one person. You’ve got a founder or some decision maker and then an engineer. Sometimes there’s a disconnect there. Realizing our process has to be much more formalized.

At Wavve, there was no sales cycle. It was just inbound, free account, upgrade. We’ve had some customers. We’ll do a demo and then at the end of the demo, they’re like, all right, I’m installed, I’m all good. We’re like, why are we even demoing if you’re that interested? It’s easy to install. But when somebody has a lot of other things going on, it can get pushed back and pushed back.

Part of the reason we hired a head of sales was to find somebody who’s really experienced with managing a pipeline across a longer sales cycle and handling all the follow-ups. It’s a lot different when you’re trying to scale B2B versus B2C.

Rob: And you guys have been at it for about a year now. I know you’re building Churnkey before that. But if you launched in February, it’s almost February 22. Any key learnings or anything you want to share with folks that maybe were unexpected for you?

Nick: Yeah, it’s been just about a year. That first quarter of 2021 was kind of a wash because we’re so busy with the Wavve transaction. We never underestimate how time consuming SCL can be. We really just got rolling in March. I think the biggest thing is just learning to be more patient when it comes to closing deals and onboarding customers.

We expected things to just take off like a rocket ship right out the gate. That was unrealistic and it was based on our expectations from starting Wavve and some other businesses that were more B2C.

This one, you have to be better organized for B2B, I feel like. I think that’s something that we had to learn as we went this time. We’ve got to get organized, and we’ve got to actually track our customers better, and get HubSpot, and do the B2B stuff that’s not as sexy or glamorous.

The thing that I’m getting excited about is, we’ll close one or two customers in a month. Somebody had told me last March, okay, you’re going to close two customers in August. I would have said, well, what a failure. But the revenue from those two deals was more than enough to cover things.

You tend to underestimate deal value when you’re so used to volume. I think that’s maybe a big learning, getting used to lower volume and more hanging in the balance. Then also learning to fill up the funnel and relentlessly pursue deals, which we have not done a great job with. And we’re working on improving that, so that we’re top of mind.

A lot of people are interested. So many people want to work on their churn. We just have to keep reminding them, so that we find that time to get it implemented.

Rob: I think you’ve called out the big differences between low touch and high touch funnels. It’s like low or no touches. I need a lot of volume. I am optimizing and probably split testing. Everything’s automated, everything’s a video. I don’t have time, it’s $10 a month, I cannot do demos.

The moment you switch mentally to high touch, it’s different. If you haven’t done it before, you have to learn that. Whether you learn it from listening to this podcast or from Steli Efti’s MicroConf talks or whatever, or whether you learn it firsthand, which sounds like a lot of what you did, it can be a shock. It’s a lot of little mental switches that need to flip to get used to it.

Nick: Yeah, motivation is a big one. It can be very demoralizing when a week goes by. It’s like, oh, we didn’t have any demos this week. You’ve got to look at the big picture and really pace yourself.

I think that’s another key that I’ve realized with this business. In B2B, you have to be more careful to pace yourself because you don’t have as many quick wins. It’s helpful to set goals and milestones that help you understand that you’re making progress and learning, even if you’re not hitting the volume that you’re used to.

Rob: As we wrap up, I had one question for you about your decision to join TinySeed because you’re in the current batch of TinySeed. It doesn’t sound to me, based on your prior exit, that you needed much money from TinySeed to grow the business.

Money is always great. Of course, we can grow faster and we can have less risk. Am I right in that assumption? And if so, what was the impetus?

Nick: You’re correct. We were self-funding Churnkey. We were comfortable to do it for a while longer. We realized we had some knowledge deficit, some of the team. It was hard to admit that we just had this big exit. It was all over social media. We went on these founder talks.

It’s demoralizing when you’re like, okay, but we’ve got this new business and we feel like we don’t know what we’re doing again. We’re back at square one. It’s also funny because we kind of snubbed our nose. We’re like, oh, we’re not going to do an accelerator last year.

Somebody’s first topic, you guys should do TinySeed. Rob’s cool. I listen to his podcast. It seems great, but maybe it’s not for us. Really, that’s based on a bad perception we had about the idea of an accelerator, like the traditional regional accelerator which we’d had a bad experience in a previous business with one of those. It just didn’t push the needle for us.

Anyway, we talked to a lot of founders. We heard great things about TinySeed. We recognized that TinySeed specializes in B2B SaaS. That’s what we needed. We looked at the mentor list and we saw like, okay, we’ve got some current customers that are on this TinySeed mentor list. Let’s talk to them.

The more we talked, the more we dug in. We were like, wow, this seems like it would be a great fit. It would fill this gap that we have, where it’s also helpful to have accountability, too. I think that’s something I didn’t realize we needed because we’re all pretty goal-driven. We’re hard workers. But there’s something about a program like TinySeed that forces you to get organized and to set milestones with more rigor. I think that was another benefit. 

Overall, I would say, the whole team has been blown away by how helpful it’s been. The money is nice because it helps to offset your own personal risk a little bit and helps us to get more aggressive with a hire that we felt we needed. The biggest thing is everything that comes with that, the masterminds with the other founders.

It’s funny, too. I’ve got two little kids and we found out that you guys were doing the retreat in Scottsdale right after the batch closed. It was so hard because I was like, oh, man, it’s only eight weeks out, I don’t know if we can do this. The rest of the team could and I was like, dang, we just got this money from, I got to go out there and represent the team.

I was so charged up after coming out there and then going back because I’ve never talked to that quantity of B2B SaaS founders that are going through the exact same thing. I talked to our team right when I got back. I said, hey, we’re not doing badly at all. We just need to change our expectations and get a little bit more, as you said, tactical about the way we’re making certain decisions.

Rob: Awesome and thanks. I never asked that question intending it to be a big TinySeed ad, but it often turns into that. I have to ask someone who grew up his whole life not taking compliments well. Basically be like, oh. I realized that at my core, you know what I believe? That I would not be working on TinySeed if I didn’t believe it was the best out there for B2B SaaS, because I don’t do things half assed and I don’t finish second.

I think a lot of us founders are not only competitive, but we take pride in what we’re building. When I hear you talk about TinySeed like that, I think to myself, awesome. That’s exactly what we envisioned. I’m glad that’s how it’s coming to reality for you.

Nick: It’s amazing that it’s only been around for three or four years. The companies that are coming through it, it’s been phenomenal. I think that’s one of the benefits, too, that we underestimated the value of the cohort, like being brought on as a cohort.

I know some people do the rolling program and you can reach out, but nobody wants structure right now. Everybody wants to go Async. Async’s nice. That’s our default, but there is something that’s really great about having a structure in place that forces you into these conversations.

You have these collisions with other founders, where you realize this is something that they’re doing that I should try. In Scottsdale, everybody was like, what are you guys doing? You need to hire a head of sales. So we did it and it’s already going well. I can talk a long time about it. Maybe we’ll talk again in a year or two and I can give the full debrief.

Rob: Indeed, once you’re an alum. Einar and I spent a lot of time in the early days thinking about the batch approach because it would be easier. It would be less expensive. It would be simpler to do it all Async and not do batches, but we just believe too much in that approach and the value we think it brings to founders.

With that, we’re going to wrap up. If folks want to see what you’re working on, churnkey.co. You said you’re not really on Twitter, so it doesn’t make sense.

Nick: I’m on Twitter. I don’t post a lot. I’m more of a lurker. Just @nickfogle. DMs are open. I have people occasionally that will message me and ask for helpful advice or questions. Feel free to message me if you’re starting a business or if you’re running a business. If you have any questions, I can offer value. I’ll try to do that.

Rob: Awesome. Thanks again, Nick, for coming on the show.

Nick: Thanks for having me.

Rob: Thanks for joining me again this week and every week. If you haven’t subscribed, hit that subscribe button. If we’re not connected on Twitter, look me up. I’m @robwalling. I’ll be back in your ears again next Tuesday morning.

Rob: Welcome to the first ASMR episode of Startups for the Rest of Us. If you don’t know what ASMR is, look it up on YouTube. My kids troll me with it all the time, so I wanted to do that so I can show it to them later. I hope you’re having a great week. Today, I had an awesome conversation with the co-founders of CodeSubmit. 

CodeSubmit is a SaaS with built-in take-home coding challenges that allow you to identify great candidates using real tasks, not brain teasers. The married co-founders, Dominic and Tracy, were part of our TinySeed batch two years ago. I think it was 2020, I can’t even keep it straight anymore, but they made amazing progress during that year. In fact, they 25X’d their MRR during our batch year. 

Today, we dig into how they did that, that moment when they hit what I’m dubbing the bootstrapper hockey stick, working at a company as a couple, finding the right marketing channel that allowed them to do this, and of course the recurring segment how did you know when you had a product-market fit? Without further ado, let’s dive into our conversation.

Tracy and Dom, welcome to Startups for the Rest of Us. 

Tracy: Thanks for having us, Rob. We’re really excited.

Dominic: Thanks for having us. 

Rob: It’s great to have you on the show. You are the founders of CodeSubmit. It’s codesubmit.io. Your H1 is to make better hiring decisions with take-home coding challenges. Identify great candidates using real tasks, not brain teasers. 

I like to give listeners an idea of the stage you are at. Some folks give out MRR, some give team size, and some give […]. Anything you’re willing to share with our listeners to give them an idea of your stage?

Tracy: Sure. CodeSubmit is a team of about eight. I and Dom are full-time folks, but we have quite a few contractors that work for us, some for a very long time, so I’d say we’re about eight people. 

Dominic: And we’re profitable and growing. 

Tracy: Yeah, that’s true too. 

Rob: Yes, you are growing. I have access to your MRR because you’re a TinySeed company. You had a bootstrap or hockey stick moment. It was about a year ago and I want to go into that a little later. For now, I want to find out what the obvious question is, why build a platform like CodeSubmit? Was it a problem you’re experiencing or something else?

Dominic: Initially we built CodeSubmit to scratch our own itch. I was a hiring manager at an early-stage tech company in Munich and Tracy was a tech recruiter and then, later on, joined a more product-focused role. I needed a way of sending take-home challenges to my candidates in my interview process and I just couldn’t find a platform that offered the exact type of product I needed. I sat down one weekend and built the very first version together with Tracy with her input from her recruiting process at her company. 

Tracy: Should I talk a little bit about that a little bit? As a tech recruiter, that was what I was doing when Dom and I started CodeSubmit. We had a process that we were using to vet candidates. It was a pretty early company still, we had about 40 employees, and they just raised their Series A, so it’s time to hire that for those tech roles. 

We were using a process, which I think is very similar to a lot of small startups in Europe, very similar to what Dom’s process was at his company, where we would have a take-home challenge, maybe a step two or three, and in the interview process you’d have that screening call with the recruiter. Then you’d maybe have another call with one of the hiring managers on the tech team and they’d ask you if you’d be interested and willing to complete a take-home challenge. 

How we were doing that back then was we would create a Google Doc with a prompt and we’d send that to them maybe with some supporting files via email. Then, of course, the tech recruiters are the ones liaising between the candidate and the hiring team. They would come back with technical questions and we would not be prepared to answer them as the recruiters most of the time. We’d have to go back to the hiring manager, ask them, and it was a lot of back and forth. It would take a long time and it was not very convenient for the candidates to submit their assignments in the end. 

I think I expressed that issue with Dom and he said hey, we’re experiencing that at our company too. Dom and I had worked on some small, fun projects before together, but we thought it could be a cool opportunity to try something bigger, see if we can build something for ourselves, and that’s kind of how we got started.

Rob: When I first heard the idea—I spoke with you in an interview—it resonated with me because we did the same thing at Drip. We hired maybe 20-something engineers while I was there, and it was a very similar process. We did both take-home and also pair programming. We would sometimes do that and I see that. I actually hadn’t remembered but you have both of those built into the product. 

The issue I always had with the take-home stuff is Derek and I would sit down and it’s like well, what tasks do we want to give this person and then we try to think up a challenge. Usually, we’d almost put something real out of the codebase like a real problem, but then we’d simplify it, and then we’d send it to him. We would reuse that a few times and then we’d have to come up with another one and then Derek would review it. It was cumbersome. 

Someone would submit a Ruby file, I don’t remember, check it into a GitHub repo and then they come through it, and blah-blah-blah. That’s what I was thinking about trying to code in a browser anyway. As a non-developer these days, I was thinking back to all the presets and all the customizations that I have in my own IDE, and even getting someone else’s laptop and trying to code on their laptop, I think could be challenging.

The other interesting thing or the big piece that I’ve always been intrigued by is you have a kajillion coding challenges built into it. As a hiring manager, I don’t have to come up with them. They’re already designed and you have 20 languages or something?

Tracy: More. Today we support over, I think, 65 or more different languages and frameworks with our library.

Dominic: This is also definitely one thing where we are very different from our competitors. Our competitors focus a lot on the language and algorithmic side of things. Nowadays, most of the development is done with frameworks and libraries, and you very rarely will build something completely from scratch. Our coding challenges are focused. 

We try to simulate the work that the candidate will face at the job as closely as possible, and this includes frameworks. The majority of our coding challenges actually are framework-based. You will find JavaScript and React. You will find Python, Django, Ruby on Rails, and all these language and framework combinations in our library.

Rob: Got it. Cool. Listeners now have a pretty good idea of how the product itself works. The two of you saw this problem essentially at your day jobs and said we want to go build this. 

You’re bootstrappers, most bootstrappers go nights and weekends and they do it until they can raise a small amount of funding, have a spouse who can support them, can have some money in the bank, or whatever. What was that like for you?

Tracy: When we started, I was actually doing this tech recruiting job and was also finishing my master’s. Dom was working full time as well. As I mentioned, we were kind of thinking we try something as kind of a fun project initially to scratch our own itch and see if there was any interest before we would go all in. 

We actually ended up working on it for nights and weekends for quite a long time and it was every night and every weekend once we started building. Do you want to say something about the MVP because that’s also interesting?

Dominic: We had an MVP or a very early version of the product probably after two or three weeks. The core functionality was for sure there, but it was very ugly. It didn’t have a lot of features that you would expect. There was no login, there was no account creation.You’d have to set up everything by hand. There was no billing or anything like that. It was really just the core of the product how do I get this coding challenge to the candidate with the least amount of friction and how can I then afterward assess this coding challenge. 

This part we had actually done after a very, very short amount of time and with this initial version, we went out and went to our own companies where we were working full-time and pitched it to them, pitched it to companies in our own network, and this is how we got our first four or five customers onboarded onto this crappy product that barely worked. 

Then we just burnt the midnight oil for the first 6–12 months. Every night after work, every weekend, every public holiday we would sit there and make the product better and serve our customers better, and very, very slowly we got customers onboarded.

Rob: That’s the grind that I like to call out on this show that I think some podcasts or some YouTube channels kind of gloss over, the easiness of bootstrapping, the easiness of starting a business. I did the same thing. I worked nights and weekends for three and a half years on different projects. I was a consultant so I would taper back my hours and stuff, but it’s a lot of work and I do get questions sometimes. 

Listeners write in and say this is hard, or it’s too hard, or I can’t find time to do this, or I don’t have the money to do this. I always say hard work solves all that. Unfortunately, I didn’t sleep as much as I would have liked for a couple of years on and off doing this. It sounds like you all did the same thing for a year plus.

Tracy: Frankly, there’s no glory in it. Your friends aren’t saying what an awesome endeavor you’re undertaking, cool that you spend every waking moment, that we haven’t seen you for three months, you can’t make it to our dinner parties. Everyone’s wondering why you’re doing this. It’s funny to look back now and everyone is very positive and says congratulations. It’s great to hear that you were able to quit your job and do this full-time. But back in those days, it was crazy. You do have to get through all of that. It’s hard to say it’s as easy as disingenuous. I don’t think there’s anything easy about it. 

Dominic: For sure it’s not easy. On the other hand, we don’t have children yet and no real other responsibilities besides our jobs. We’ve earned this lucky position that we both had well-paying tech jobs that allowed us to go home and spend this time in the evenings to code and all our own things. We were lucky in this regard as well.

Tracy: Yeah and lucky that we did it together because I think it’s harder to continue to burn the midnight oil if you have a spouse who is not doing the same and is wondering how long it’s going to take before they start seeing some of the benefits of this time.

Rob: That’s right because if friends don’t believe in your idea or friends are upset that you’re not going to a dinner party, it’s one thing. Those relationships heal and they’re still your friends now. But if your spouse doesn’t believe it, and you get six months down the line, it creates issues. I’ve talked about that a lot on this show for sure, as well as over on Zen Founder, a podcast that I do with my wife. 

That kind of begs the question if you’re married and you started a company together? What is that like? I can imagine that you’re having some challenges and that you’re working all day together and then you’re hanging out at dinner. Are you talking about work? Does work bleed into everything? I think I know the answer, but it hasn’t been net positive for you? Do you think about being married or would be easier if you weren’t in a relationship starting this company together?

Dominic: This is actually one of the questions that people ask us the most, is how can you work with your spouse? How can you be so successful working with your spouse and not be on others’ throats all the time? For us, it has been such a positive experience and for us, the benefits really greatly outweigh the disadvantages. 

The biggest advantage for us is that a company is a roller coaster. There are times when everything’s great and there are times when it’s not so great. In those times when it’s hard and difficult, we have each other’s back, and we can support and motivate each other. When it’s great, then, of course, we celebrate together. It has been such an amazing journey for us.

Tracy: I agree. I think it’s not for every relationship. But for us, it’s been amazing. The other thing, of course, that’s a huge advantage is it’s almost like being a solo founder in the sense that the company is owned by the family. Dom and I are 50-50 founders and it helps us to align our family goals well when we both have the company goals in mind.

Everything feels very aligned on the same trajectory. I think it helps us plan for the future as well since we work together rather than two separate families trying to kind of more or less align. I think that’s a huge advantage if you can do it, if your relationship works that way. For us, it’s only been a benefit but I think we are a little bit unique that way.

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You’re building this product nights and weekends, you’re grinding it out, you apply to TinySeed, and you get into the batch. You were pretty early at the time, but the TinySeed money allows you to go full-time in May of 2020 in the midst of COVID. It just occurred to me, as I’m saying this date and you were making good progress. You were growing a little bit each month. 

As you got into early 2021, something really clicked and I referenced it earlier, but it was this bootstrapper hockey stick moment right around February. What changed between the prior 20 months of working on the product, half of that which was full- time because you had the TinySeed money. But something really changed and your revenue just started ticking up quite quickly.

Dominic: I think the biggest thing that changed for us that was sort of this catalyst of this hockey stick moment was we realized that the acquisition channel that started to work very well for us was SEO and we started to take SEO very seriously and started to double down and invest a lot of time into content marketing into our SEO rankings. We were lucky that we had Kevin and Pierre on our TinySeed calls—Scraping Bee—and that helped a lot. 

We started to realize that this channel actually works well for us. We sort of doubled down on it, reduced the money we spend on our acquisition channel—time and money we spend on our acquisition channels—and really focused on SEO. Since then we have consistently had 10%–15% growth month over month and slowly and steadily climbing to our next big revenue goal.

Tracy: I would also say, Rob, you mentioned COVID. CodeSubmit is one of the types of companies that are a digital tool for interviews, asynchronous interviews. We offer a couple of different interview types. There are tons of companies that suddenly found themselves in need of an alternative to in-person interviewing with COVID and making that very difficult. 

We did benefit a bit from this whole shift into more digital or remote-friendly interview practices. I think our focus on SEO has kind of lined up well with that transition taking place and folks starting to kind of look at these keywords that maybe there wasn’t as much traffic going towards before COVID. Suddenly, we were well-positioned to capitalize on that traffic. 

It definitely helped us, some companies were not so lucky, of course, when COVID came. We did see, like everybody, that little dip right after when everyone’s trying to pull back some of their expenses. In the long run, I think we’ve definitely benefited from people switching to a more remote-friendly or asynchronous interview style.

Rob: And you have customers like the US Air Force, Apple, Netflix, and Audi. These logos are crazy, really impressive. That actually leads us right into a recurring Startups for the Rest of Us segment called, when did you know you had a product-market fit?

Dominic: As I mentioned, I think once you start to see a consistent growth of 10%, 15%, sometimes 20% month over month that was the moment when we realized okay, we have what is called product-market fit. Also as you mentioned, these big corporations, multibillion-dollar corporations using our product, even if it’s only teams in a larger corporation, but still getting through this due diligence process at the Air Force, for example, that sort of gave us confidence that the product is in a state where we have this product-market fit.

Tracy: Yeah I can pursue customers and logos like that. Earlier, I’m sure, Dom already mentioned our ugly MVP, which would never have worked for some of our existing customers. The product definitely reached maturity at some point where we were getting customers consistently, that month over month growth was consistent, and we could consistently get through that due diligence or that procurement process with some of the larger customers definitely.

Dominic: These are customers that we did not reach out to. We’re terrible at cold outreach sales really, really bad. We had hiring managers from these companies sign up for our platform and try the tool. Typically when this happens, you have a little slack notification. We see that new people sign up. 

When we see a Netflix or an Apple person sign up, then we reach out to them immediately like hey, we’re the founders. If there’s anything we can do to help you get started on the platform let us know. In 99% of the time, people reply and they’re happy that they have someone on the other side helping them get started on the platform. This is how we build a relationship with a very large company being only the two of us and a small team.

Rob: Yeah, and there are different playbooks for growing SaaS. I think the SaaStr Jason Lemkin playbook is outbound sales, it’s building big sales teams, and that’s it. That’s the note that he used to build several companies to great success. Does it work? It does. 

It also depends on the space. The inbound playbook is really interesting as well. I think it’s harder to pull off. I think you sometimes have less control of it because you’re not just grinding and doing this outbound thing and you’re relying on content to rank and you’re relying on people to find it. Most of the businesses I’ve ever built, actually all of them, were built on inbound. That was my suite of tools. 

We did some outbound with Drip, where there was a third party who did it for us as a productized service, and it broke even at best for us. There are also a lot of spaces where both are great. If you can get both inbound and outbound working that’s an amazing engine. 

I do want listeners of the show to know that it’s not just one note that does these things. Maybe if you want to become a unicorn SaaS, it’s all outbound and blah-blah-blah. If you want to build an amazing $1 million, $5 million, $10 million SaaS company, you can do that with either inbound or outbound. You can do it with affiliate marketing. 

There are all these options you have when you don’t need to get so big. I need to be a billion dollars in five years, it’s like well, I guess you kind of have one playbook, probably. We have amazing options as bootstrappers, or mostly bootstrap companies, who don’t need that, just that ravenous growth.

Dominic: For sure. I think that sounds so cliche, but it’s one of our superpowers that we are so small because there are a couple of advantages that we have here over big VC-funded companies. For example, we can put our pricing very transparently on the website. People, companies, and hiring managers can sign up for our service without having to talk to a sales rep. A lot of people don’t want to do that. They just want to sign up and try the software that’s possible with us. 

Another thing is that we can give a lot of attention to our clients. I have one funny story. I saw the head of engineering of Techstars signing up for our service and I was online at that moment. I reached out to him with this little intercom bubble, saying hey, Techstars. I heard about you guys. Cool that you signed up. Is there anything I can do to help? He’s like yeah, sure, let’s jump on a call, jumped on a call with him, and they have been customers ever since. These are things that don’t scale, but they work really well in this inbound capacity.

Rob: Again, both work, but there’s magic in inbound because people are already warmed and primed and then they’re not on the defensive because they’re actually interested and they want their questions answered. I’m curious, you’ve obviously landed on this amazing channel and it’s growing for you. You tried a bunch of stuff before that. Can you remember how many different marketing approaches or channels you were trying to work through before you landed on content?

Tracy: We have done paid ads, we’ve tried going into forums and looking for communities that maybe could leads at some point. We actually did, at some point, even straight-up try to do the whole cold outbound strategy. I think that’s what I imagined. I’m a first-time founder, Dom was not, but for me, that’s kind of what I imagined being, I wouldn’t say naive or just not aware of all the different ways you can acquire customers in SaaS. I thought it was a sales process. It’s also how the companies that I worked for in tech found their customers, it was always outbound. 

I think we had quite a few outbound sales strategies. We even early talks to a couple of folks to see if who came from that background sales guy who maybe wanted to also work nights and weekends with us and tried that that for quite a while, I’d say the first six months even, because that’s also how we got our first customers—by reaching out to our network. Those folks weren’t cold, they were warm. We could establish a relationship with them very easily. We already knew they had a problem that we were trying to solve. It was a different situation.

Dominic: We disliked the outbound sales process so much that we had to sort of create appointments in our calendar every Friday in the evening at 7:00 PM, we have a call […]. That’s from 7:00 PM to 9:00 PM. We would do cold outreach to people. We would call out or shoot people on LinkedIn that are hiring managers at some companies and it just didn’t work for us. Also, it wasn’t fun. It didn’t work for us, it was very demotivating.

Tracy: Also time-consuming. We called it sales happy hour to give it an exciting vibe, but it was not fun. I think the TinySeed mastermind also really solidified. I did content very early. Content marketing was something we looked at very early. I like to write, I have a Medium blog. I got lucky with one of those articles I wrote about taking home. It’s still very performant. 

I think it’s still a great article, but it wasn’t tied to our domain in any way. We got some views from it and those people are actually clicking on the link to come over and see it. We actually saw that folks were signing up from that, which was wild because with outbound sales weren’t doing anything for us. I think we were already looking at the content. 

We hired one of our contractors who still is working with us to this day around that time to kind of help us with our blog. Then we joined TinySeed and met Pierre and Kevin who were also having a lot of success with SEO and content. We’re in the mastermind with them and I think they were learning a lot and we were learning a lot. We very quickly realized that this channel was something we should pursue and then we started seeing the results from that. I think that’s kind of how we ended up going full all-in on SEO.

Rob: I called it out earlier, but Pierre and Kevin are the founders of ScrapingBee and so folks can follow them on Twitter. They’re actually transparent with their revenue. They’re north of a million ARR now and they grew really fast also on this front of content in SEO. 

I don’t want listeners to take away that content works and cold outreach doesn’t. That’s not the point. The point is to find what works in your space. You’re going to need to experiment based on your product, based on your customers, based on your space, and you’re going to find one or more that works eventually, hopefully, assuming you can find product-market fit. 

That’s really the takeaway here because there are companies that I have invested in and advised or just are in the MicroConf Community that cold outreach is amazing for them. It’s the main driver and there are some that cold outreach and content both work and that’s amazing because now you have two channels that work and you have diversification. Then there are folks like you where content and SEO are really the main drivers of growth.

Dominic: We still do some paid marketing and I refuse to give up on the paid marketing. I think it’s still ridiculous that you can pay $5 and appear on the top result in Google over all your competitors that have tens of millions in revenue and funding. We do get some customers from this. It’s just that the majority of our customers come from SEO. 

Rob: As we move towards wrapping up, I want to ask you, as folks who’ve seen thousands, if not tens of thousands of take-home assignments be sent out and completed. I love to get the idea from founders who do have this broad swath of knowledge in a specific domain. Are there any big mistakes that you see customers making or either side that are really best practices or big mistakes that you see folks making?

Dominic: One big mistake that we see is that some companies are trying to use take-home challenges as a filter for their candidates. The problem is that, typically, take-home challenges take a longer time to complete, and if you send a candidate to challenge very early on in the process where they’re not really invested in your company yet, they might not be willing to put in the time to complete the challenge for you. There are different ways of assessment that, in our opinion, work better in the early stage of the interview process. That’s one big mistake. 

Another big mistake is that we see some challenges that take way too long to complete. For us, we see that a good ballpark is between two and four hours. That’s something that most candidates should be able to comfortably do, maybe on a weekend or in the evening. A big mistake is that we see some companies send out challenges that take weeks or a full week to complete. Given that a lot of candidates have a family life and full-time jobs, it’s just impossible for them to complete the challenge that takes such a long amount of time.

Tracy: You should also be ready to invest the time to review these submissions. If your hiring team is sending out a challenge that’s going to take seven days or even a whole weekend, you also have to consider how much longer a long challenge is going to take your hiring team to review it. 

They should be prepared to review it and they should be prepared to invest the time to actually look at these submissions if you’re going to actually send one out. There’s a whole host of reasons to keep them short, but candidate friendliness and incentivizing that candidate to actually continue with your hiring processes is really important.

Dominic: One thing that you mentioned, Rob, when you used take-home challenges at your companies, that you would use something that’s sort of coming out of your codebase is very close to the actual job that the candidate will work on, that’s already a very, very good sign. 

We see some companies that use challenges that are so far from the domain that this company is working in, a very, very algorithmic-heavy and things that the candidate will never ever work on. It doesn’t make sense to test the candidate for something that they will never work on anyway. Use something that is close to what the candidate will face at the job. 

Rob: When I send them FizzBuzz, that’s not what I should be sending. That’s a deep cut there, a deep programming cut.

Dominic: Unless your company does a lot of modular operandi operations, then you shouldn’t do that.

Rob: Yeah, the trick questions that were popular back in the 80s, and 90s at Microsoft, and then the programming challenges of here’s an array of numbers reorder them in the fastest way. It’s like, I don’t write code. I’m building web apps. I actually was asked questions when I’m a web developer to do these hardcore algorithmic things. It’s like I can figure this out but how is this testing how am I going to be a good fit at your company? This is really just testing did I study computer science in college and have I seen this before?

Dominic: Or did you study Leetcode or any of these other coding challenge websites for six months prior to your interviews? It doesn’t make a lot of sense, in most cases.

Rob: Last question for you today, before we wrap up. I think you’ve used the term lifestyle business for your own company. Lifestyle businesses is a pejorative term in Silicon Valley. I think people take it that way of, oh, we can’t fund that because it’s a lifestyle business. That usually means that the founder’s not working very much or that they’re just trying to fund their lifestyle. 

I built lifestyle businesses my whole life and then that’s what I wanted to do, was just not work a day job and essentially you need that business. Drip became more than that and it’s great and it was life changing for me. 

I think these terms, bootstrapping, lifestyle business, I don’t know how important they are or whether they need to kind of just transition out of the lexicon because I’m just building an amazing, profitable, mostly bootstrapped business. Does it really matter? What are your thoughts? I’ve heard you talk about how life-changing your lifestyle businesses have been. What are your thoughts on it?

Tracy: For me, I’ve been working in companies that are VC-funded. I think a lot of founders, especially first-time founders, imagine their entrepreneurial journey as this meteoric rise. You start, you raise a ton of money, you grind and build this great culture and this great product, and then someday somewhere down the line you sell it for millions of dollars. It’s life-changing and you walk into the sunset. I think that with that mindset, you lose some of that benefit of taking the slower route. 

CodeSubmit for Dom and I has been life changing. We never set out to raise millions of dollars. To this day, we still aren’t considering that path, who knows for the future. We knew this was something we wanted to build sustainably and since it is our family business in a lot of ways, it makes sense for us to pursue this not just for the company to grow and for the mission, which is very important to us. It’s great to see people get hired, I love that about it. 

Also, it’s been life-changing for us as a family, to grow this company, to have the freedom to pursue our own business, to have the flexibility to travel when we want to, to make our own decisions as executives, to have some creative freedom and how we pursue and build this business.

Dominic: I think as you said, Rob, the term lifestyle business in the Silicon Valley startup community is almost like a derogatory term. It’s like this is a bad business. These founders don’t want to become a unicorn. It’s a bad business. In my opinion, it’s very important for us to build a profitable, sustainable business that can sustain and support our lifestyle. 

That doesn’t mean that we don’t have very ambitious goals. We want to get to $10 million ARR over the next couple of years. This is for sure a very ambitious goal for us. We have monthly growth goals that we want to reach and keep. For us, it’s just important that this is a business that down the line can support us, support our employees, be a great place to work for us, and also for anyone that joins our company. I think there’s nothing wrong with that.

Rob: Thanks so much for joining me today. People can find you at codesubmit.io.

Dominic: Thank you so much. 

Tracy: Thanks, Rob. It’s been great. 

Dominic: Thanks for having us.

Rob: That’s a wrap on this episode. I hope you enjoyed CodeSubmit’s story as much as I did. I appreciate you listening every week to the mix of episodes I have. There’s an interview here. There’s a solo episode there. There’s a news round up there. I look forward to bringing something back into your ears again next Tuesday morning.

Rob: You’re in the right place. It’s another episode of Startups For the Rest of Us. I’m your host, Rob Walling. Every week since 2010, we’ve been shipping content for ambitious startups; founders who want to maybe not change the whole world but just change their little corner of it.

Thanks for joining me today. I’m excited to dive into listener questions with Rob’s Solo Adventure. Today, I’m going to be talking about things ranging from diversity in startups to timing for mission, philosophy, and values, how to develop features for a new app, whether to go wide or go deep, and several others.

But before we dive in, I want to let you know that tickets to MicroConf Remote 4.0 are now on sale. For this event, we’ll be talking about all things finance for bootstrap founders. We’re going to cover topics like pricing, budgeting, accounting, financing, and investing. The event is virtual. It takes place on May 3rd through the 5th from 11:00 AM to 12:30 PM daily. I believe that is Central Time, but I will need to check on that. Register now at microconfremote.com and use promo code MCmoney (MicroConf money) at MicroConf Remote to get a special deal. Hope to see you there.

My first question is from Justin at beamjobs.com about diversity in startups. Justin says, “I’m a huge fan of the podcast. I’ve been listening quasi-religiously for about four years. Working in the hiring space, I see firsthand how subtle and not-so-subtle factors conspire and leave certain groups of people massively underrepresented in tech. 

I’m curious. As someone who’s been in this space for many years, how do you think about these issues? More generally, for those of us that value creating a more equitable and diverse startup ecosystem, what are some things we can and should do to make that possible?” Great question. Thanks, Justin.

I think I’ll start with the end in which Justin asked, what are some things we can or should do to make it possible for there to be a more diverse startup ecosystem? That is Silicon Valley. It’s venture-funded, bootstrapped, and mostly bootstrapped. I see that as a win for our companies and for the entire ecosystem, the more diverse opinions and individuals that we allow in, encourage to join, or make feel safe enough that they want to dip their toe in.

I’m obviously a firm believer—I think it goes without saying—in diversity, equity, and inclusion. Since MicroConf in 2012, we have had some very deliberate efforts to improve the diversity of the ecosystem because I feel like it’s all of our responsibility. It’s not just the people running an event or running a fund but attendees as well. 

If you’re out there thinking, how can I improve this, go out of your way to look for more diverse candidates when you’re hiring at your own company. I’d say making an environment that is safe and welcoming to anyone who wants to show up regardless of racial and gender categories goes a long way towards doing it. And inviting people in.

One of the biggest ways we’ve seen diversity improve at MicroConf, and it has improved since the first event in 2011 where we had 3% female attendees, I believe. I’m going from memory, but it was very low. That was why by the time we got to 2012, we were like, how do we fix this? It turns out, surprise, it’s not an easy fix. This is not something that anyone can wave a magic wand or anyone could snap their fingers and make this suddenly equitable and amazing. If we could, we would do that. But this is a decades-long effort. 

I believe MicroConf has gone from 3% to about somewhere in the 12%–15% just speaking purely of female attendees or non-male attendees, depending on the event. We have numbers also for racial diversity, ethnic diversity, and all that, but I don’t know those off the top of my head like I do these other ones.

What we’ve seen is there has been an improvement. In fact, the attendee breakdown now at a MicroConf is in line with the general startup ecosystem. We run the State of Independent SaaS Survey every year and have done it for the past three years, and we ask about these things. One of the reasons is because we wanted to get a picture of what the ecosystem is like. 

The whole ecosystem needs to improve. You can’t magically say, well, the ecosystem only has 10% of this category of individuals, but we’re going to somehow get 20% to attend at MicroConf. It’s just not the way it works. We have made incredible efforts to reach out to groups to comp tickets. That’s why our scholarship program exists. And it is a long, slow battle. 

That brings me back to the point I was going to make, which is that one of the biggest differences we’ve seen is when individuals who are already in the ecosystem invite someone they know into the ecosystem. Invite someone to a MicroConf who is not a white male. White men are—I wish I knew the number off the top of my head—I think 80%–88%, somewhere in that range of people in the broader bootstrapper indie SaaS startup ecosystem. Anyone who is either not white or not a man is, by definition, underrepresented in the ecosystem. 

We’ve seen great strides being made with folks inviting an underrepresented friend to a MicroConf, asking if they want to attend a MicroConf Remote, or inviting them to listen to Startups For The Rest of Us since it’s a free podcast and it’s available. I would hope and encourage you to think about it as something that’s available to everyone, even underrepresented founders. That’s one way that I think about it. 

Frankly, we could write a whole book on it and do many podcasts on it, but I want to say that one other thing we realized at MicroConf (specifically) is there are things we can control like who speaks from the stage, and then there are things that we really don’t have much control over which is who buys a ticket or gets a ticket and attends the event. For a long time, we tried to change the second one. That just has not been as effective as having more diverse and underrepresented founders in MicroConf On Air, on this podcast, and on every MicroConf stage. 

If you go to microconf.com, we have a DEI pledge. You can read about it in the footer. It outlines a lot of what I’ve said here. But one thing that we realized early on was we didn’t just want to have the same percentage of (let’s say) women on stage as there are in the broader ecosystem. We want to try to double that number. We want to make progress, at least double. 

There have been times where we 3X or 4X that number, such as with our most recent two TinySeed batches. Forty percent of our companies have had at least one underrepresented founder versus in the broader ecosystem. Again, it’s that 12%–15% number. It’s a pretty low number. 

I think that each of us can and should play a part. It’s not one person’s responsibility. It is all of our responsibility to contribute to diversity and startups and make people feel included and welcomed in this ecosystem. That’s what I love about bootstrapping. 

I know the word meritocracy in Silicon Valley. People roll their eyes at it. I agree that it’s kind of […] as you can tell by the numbers. Bootstrapping (to me) is about as close to meritocracy as I know anywhere because when I start my companies, when I’ve underrepresented and over-represented friends who’ve all started these bootstrap companies and made hundreds of thousands (if not millions) of dollars, no one knew who they were because they didn’t need to go ask anyone for permission. They just needed to build a business. 

While I can’t sit here and say, well, everyone has an equal starting point—because that’s obviously not true—what I can say is that bootstrapping is an incredible equalizer. It may be the biggest equalizer in business today. It’s certainly not venture capital. 

I know that all VCs are not equal and a lot of venture capitalists are making efforts toward building a more diverse and inclusive startup ecosystem, but bootstrapping is that next level because it’s all on the merits of a business. At that point, it has built something people want and are willing to pay for, and you can build an incredible business without asking anyone’s permission. 

It’s a great topic. Thank you, Justin, for asking the question. Obviously, that’s a short summary of my thoughts on the topic, but I hope that was helpful.

My next question was an anonymous question. Someone had just emailed me. He said, “When is the right time to work on things like company mission statements, philosophy, and values?” And he says, “Hint, I don’t think they belong at the same time.”

That’s an interesting question. I often say I think a lot of us left and started our own companies because we didn’t want to deal with BS like company mission, philosophy, and values, because we’ve all worked at large companies that use these buzzwords—philosophy, values, mission—and then don’t live up to them. They’re made up in some boardroom and are fiction. 

I was against introducing these into the companies that I was starting, but about the point that you hit (I’d say) between 7–10 people, you start to realize that if you don’t set some type of agenda for the company or mission and values, then it will happen on its own. If you don’t get people’s buy-in at that point, then by the time you get to 15 or 20 employees, you can have a real problem on your hands. 

For me, mission is something that I like to have these days. I think I’ve said it on this podcast, but my mission is to multiply the world’s population of independent, self-sustaining startups. It lets me know and reinforces what I stand for. It helps me see the common thread and easily explain the common thread of this podcast of MicroConf and of TinySeed. All three of those are helping to multiply the world’s population of independent self-sustaining startups. 

But back in the day when I was starting amazing bootstrap lifestyle businesses to make $5000 a month or $250,000 a year, I didn’t need a mission. The mission was I’m going to provide value to an end-user such that they’re willing to pay for it. The mission is for me to learn a lot of interesting things, to have freedom—that was a big mission—to gain purpose by building interesting things for customers who need them, and then to maintain healthy relationships. Those really were the early missions. 

It depends on where you are on your journey as to if you’re going to have a tiny little company with 3 or 4 contractors. I don’t know if you need a mission, but I do think at 7–10, it’s like, what are you doing? What is your company doing? What is the value that you provide? I do think at that point, it’s worth sitting down, chalking up a sentence, and mulling it over. It probably took me several months to really land on the mission that I stated earlier.

In terms of philosophy and values, I do think it’s interesting. I was interviewing Omar Zenhom. He’s the founder of WebinarNinja. He talked about how they didn’t put values in writing anywhere and that they were just communicating from one person to the next. Then, they got to a point where there were 15 or 20 employees. 

The company had always had a value of frugality because they’re bootstrapped. New employees were joining with the Fortune 500 mindset where they were not being frugal. He realized that this really needs to be written down. Frugality, then with a nice little paragraph, maybe with an example or two about where we came from and how we think about this. 

It’s that example where I realize if you don’t do it by the time you get to 10–15 employees, even if it’s only 3 things, your top 3 values that the company holds. I think the big thing for me is to try to make them specific and try to make them something you really believe and hold dear such that you would say it in a team meeting with a straight face and put it on the website with a straight face. It shouldn’t be a marketing copy. It should actually describe how you’re operating today and potentially how you aspire to operate.

What a lot of those Fortune 500 companies do is they write what they really want to be and they’re not actually acting that way. It’s just eye roll–worthy both inside and out. We agreed to protect the interests. Our values are to protect the interests of investors, customers, and this and that. It’s so generic. If you have something that’s just implied and should be in everyone’s values, then don’t do it. It’s too generic. That was a great question. I hope it was helpful.

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The next question is from Salman. The subject line is how to actually develop features for a new app. Salman writes, “When working on a new project, there are various ways to complete features. One style is to go deep into a feature and make it near-production worthy. Others may take a broader approach, create a skeleton structure, and then go back and fill in the details on each specific feature. What style do you prefer? Are there certain habits that eventually lead to a project never shipping?” 

Yes, there are many habits that lead to projects never shipping, like people getting in their own way, building in the basement or in their garage for a year, over-building features, gold-plating software, building a bunch of features nobody needs, not talking to potential customers, procrastinating, and not wanting to make mistakes. There are a lot of habits in that respect.

I don’t know if the question is coming from someone who’s basically saying, I’m going to build these six features and I know that’s going to be my initial app. Should I do an iterative approach where I write some skeleton code, I come back and cycle down, build the database layer, and build the layer below that and then below that? I think that’s (to me) just a preference style versus I’m going to go deep and build a full feature all the way to production.

I would almost say the question is not super relevant. I don’t think it’s the right way to think about it. The way I think about it is figuring out what is the minimum feature set that you have? What is the minimum lovable product (MLP) or something like that where it’s a product that people can actually use and get value out of? What is that minimum feature set and how are you determining what that is? 

If the way you’re determining it is asking yourself, not talking to potential customers and going into the market, it’s probably not going to be correct. Something that I would be focusing on is how do I determine the minimum features that I need to ship something that people want and maybe are willing to pay for, or at least get me closer to that and then iterate?

I can talk about some things that I wouldn’t build and in fact, we didn’t build in the last couple of apps that we launched. I can use Drip as an example. We didn’t have a password reset when we launched. We didn’t have billing built because we knew we had a 30-day trial time and we had 30 days to build our subscription billing. Even then, we didn’t need it to be a subscription. We knew we could run it manually if we needed to. 

We didn’t build the ability to delete things. People could start an email, they could send an email as an email service provider—think of MailChimp with different features—and they couldn’t then go back and delete that email. Eventually, someone would need that, but we didn’t build it in. We didn’t build sorting in that email grid. We built minimum analytics. It was just bare bones. 

If that’s what Solomon is asking, then I do think that you have to ask yourself what is that minimum lovable feature? How can you build it in a way that is functional and that early adopters will get value out of but that can save you weeks of dev time?

One example I can think of that is we built 35 integrations in about 18 months with Drip because if you think about it, as an email service provider, we wanted it to be a hub for a lot of data, both inbound data coming into us—triggers that came in—and actions that went out. We integrated with a bunch of shopping carts. There was Stripe, PayPal, and Gumroad. I can’t remember the others, but we integrated with a bunch of carts. 

We integrated with a bunch of things like Zapier and a bunch of automation providers, but the V1 of each of those integrations, we didn’t know how many people would adopt them. We would go in and we had a framework. We could launch a V1 of integration with a third-party with about four hours of code if they had a good solid REST API with good documentation, maybe eight hours if it was a little less than that. Now, there were some old curmudgeonly integrations. I think the PayPal one took us several days because it’s PayPal and it’s 23 years old or whatever. But we could build integration in less than a day on the technical side. 

Then, to be honest, we spent more person-hours than a day building out all the marketing, copromotion, and the business development side of it. We would launch that and it didn’t have OAuth built-in and all the bells and whistles of a finished integration, so maybe you have to go copy and paste an API key and maybe you have to do some things that aren’t ideal.

But then we’d see what the adoption was. We would start getting support requests of, oh my gosh, this integration is amazing. Now I can tag all my people who buy through PayPal or Stripe. I can tag them as purchasers or as customers. This is game-changing for me.

Then over time, we’d see, oh, there are 80 people using this integration. At a time when we had 1000 customers, we had 80 people using an integration. That’s a lot of people. Let’s throw it in the feature queue to circle back on this and do a V2 version, which just makes a little better error handling, surfaces the OAuth, or whatever. Then, we had a V3 that actually included OAuth. 

That’s how we thought about a lot of features. Not all of them. You have to weigh that thought of certain features. If you launch them as V1s that are not fully baked, it can be detrimental to your product and to your brand.

An example of one of those was our visual workflow builder. You can go to drip.com until today and you can see that workflow builder and what it looks like. Launching that half-baked would have been a bad decision. 

In fact, my co-founder, Derek, was the lead developer and he spent five months of his time building that. We were okay with that. We agreed that this needed to be amazing. It needed to look and work amazing. We built basically another product launch on the back of that because I believe it was the third visual builder that was in existence in terms of marketing automation. It was the easiest to use, we innovated in a few areas, and it wasn’t totally drag and drop. They had these exit nodes.

Anyway, there were several things we did that no one else did. We wanted it to work really well. We got a massive influx. Our growth doubled that month and it was a sustained doubling of growth. It was an incredible launch and an incredible feature. 

We did not bet the company on it because if it had flopped, we wouldn’t have stayed in business, but we did bet five months of engineering time. One individual did it all on his own, but we bet a lot of time engineering time. Frankly, if it hadn’t worked, competitors were making progress against us during that time. It was painful to do that. 

That’s how I think about it, Solomon. I think it’s a good question to be thinking about this, but realizing what you build is perhaps more important than the specifics of how you build it aside from you should write unit tests. I would never build another app without having unit tests because that became such a blanket of comfort when we would want to make gutsy adventurist decisions that were going to break a bunch of legacy stuff but we knew it was better for the way that the app is moving. The massive test coverage we had gave us the confidence to be able to do that. 

A lot of apps that I’ve seen who don’t have that get crufty and buggy. If you want to build something for the long-term and you want to build a business you can be proud of, you need to seriously think about spending the extra time to write those tests from the start. Don’t be in such a hurry that you don’t do it. Thanks for the question, Solomon. I hope that was helpful.

Our last question of the day is from Louise O’Sullivan. He asks, “How do I start? Hey, I love your podcast. It’s given me such a great insight into the world of startups and introduced me to lots of interesting companies I’ve never heard of. I’m 24 and I just graduated from my computer science bachelor’s degree in Ireland last May. 

I’ve always wanted to be my own boss and run my own company. I’m very ambitious and love building things once I get started. I’m never good at coming up with ideas though and I find myself always panicking that I’ll never be able to work for myself because I’ll never be able to get started. Currently working as a software dev for a large company, but I don’t want to be here forever. Do I need to calm down and wait for inspiration or do I need to leave my comfort zone and actively search for an idea? Any advice would be great.”

It’s a good question. In my opinion, you need to actively search for an idea. I would be in forums like Indie Hackers and MicroConf Connect. I would be in those communities watching other people to see how they come up with ideas.

I believe the number one way that folks come up with ideas according to our State of Independent SaaS Survey is a problem that a coworker, a friend, or a colleague has experienced, or a problem that they experienced at work. Usually, it’s a problem that someone around you has. 

We have a bunch of TinySeed companies that have had bad customer experiences where they had a home improvement contractor working on their house and the communication was terrible, so he decided to build a CRM for home improvement contractors. It’s called Builder Prime.

We’ve had folks who have just made cold calls, like you probably heard 20 episodes ago with a senior place. He came up with an idea, made 30–40 cold calls, and realized that wasn’t a good idea, but it gave him the information to pivot into a new idea. 

It’s that whole thing of getting out there and doing things in public—like making cold calls, setting up landing pages, blogging, writing, or tweeting—that creates opportunity. A lot of times, that’s where you will come across those opportunities or those business ideas that maybe you wouldn’t have if you were just waiting for inspiration to strike.

Even listening to podcasts like this or podcasts like My First Million or Tropical MBA. These are podcasts where people talk about businesses and pain points. I think it was the last episode or maybe two episodes ago where I specifically said, if someone built a solid competitor to Submittable, I would be interested. 

There are pain points that we experienced running TinySeed, MicroConf, and this podcast that could easily be businesses. Just tuning in to these types of shows, being around these types of people, absorbing that, being on the lookout, and keeping that idea notebook. I’ve talked about this quite a bit. As you come up with ideas, as you hear ideas on podcasts, as you listen to audiobooks, or whatever, jot them down and then let them simmer. We have a 48-hour waiting period on buying domains. 

Otherwise, like Dan and Ian say, your GoDaddy account or Namecheap account starts looking like the Boulevard of Broken Dreams. You don’t want to get carried away and start registering a domain for every idea you put in that notebook. Give it two or three days to simmer down. 

That’s what I would be doing. I would be on the lookout for problems and pain points that I experience in my work and in my day-to-day personal life. I try not to let it be too much personal stuff because then you get into B2C and of course that’s not something that I love.

The other thing I do think about, Louise, is if you haven’t checked out the stair-step approach to bootstrapping, a lot of that talks about, hey, if you’re gifted at writing or building courses, maybe start there and use that to level up your skills. But if you really want to build a software product, consider looking at one of the ecosystems like Shopify, AutoCAD, Photoshop, and Heroku. 

There are all these ecosystems (even WordPress) where you can build an add-on.  You don’t have to learn all of the things at once. You can just learn building the product and supporting it, but a lot of the marketing and even the billing are often handled for you. I believe there is at least a semi-complete list of 15 or 20 of those “app stores” that you can build a web app into. I could keep going with them, but look for a list of those and then think about which of these you think might be the best fit for your skillset. 

I feel your pain and I’m glad you wrote in. I will say we’ve all been there. I was there. You’re ahead of me. At 24, you’re already thinking about this and already listening to a podcast like this. I think that you will cut a lot of time off of your journey. I of course wish you the best as you get going.

That feels like a great time to wrap up. I’m almost out of listener questions. If you have a question, please email it in to questions@startupsfortherestofus.com or just head to the website, startupsfortherestofus.com. There’s an Ask a Question link. You can send in a video, text question, or audio. 

Video and audio always go to the top of the stack. I haven’t actually had video or audio in quite some time. It’s been several months now. Maybe I need to go check my automation. Maybe that’s it. Maybe there’s a bunch in the backlog.

All that to say, thanks for joining me again this week. As always, it’s great to have you here. Hope you enjoyed this episode. Do send in your questions for the next listener question episode. I’m @robwalling on Twitter. I look forward to connecting and I’ll be back in your ears again next Tuesday morning.

Rob: Welcome back to Startups For the Rest of Us. This is episode 597. We are approaching that 600-episode mark. In today’s episode of the show I talk with Ashley Baxter. She’s the founder of With Jack which is located on the interwebs at withjack.co.uk and their h1 is “Be a confident freelancer.”

With Jack gives peace of mind and protection for UK freelancers through insurance, professional indemnity, public liability contents, legal expenses, et cetera. Today, Ashley and I dig into her pretty incredible story about losing her father. She was relatively young and she took over his insurance business and it failed. It didn’t work out. But how she bounced back, started With Jack and the successes, failures, trials, and tribulations that have happened since then has been a pretty incredible journey.

She actually spoke about it at MicroConf Europe. I believe it was in 2019, so almost three years ago. She’s come so far since then, and is really still pushing the boulder up the hill and making progress.

Before we dive into that, tickets to MicroConf 4.0 are now on sale. During this event, we’re talking about all things money. We’ll be talking finance for bootstrap founders covering topics like pricing, budgeting, accounting, financing, and investing. This fully remote and virtual conference takes place May 3-5, 2022 from 11:00 AM to 12:30 PM daily. Register now at microconf.com and use promo code MC money. I hope you enjoy my conversation with Ashley Baxter.

Ashley Baxter, thanks for joining me on the show.

Ashley: Well, thanks for having me. It’s been so long since I last spoke to you.

Rob: I know. We met at MicroConf Europe 2019. For some odd reason that I’m still trying to figure out, I never had you on Startups For the Rest of Us. It kind of doesn’t make sense to me, because I think there are a lot of interesting things to talk about with your story building Jack. You call it Jack or With Jack?

Ashley: I call it With Jack.

Rob: Okay, so withjack.com. I would describe it as insurance for freelancers. But do you have a tech twist on it? I mean, you’re a MicroConfer. You’re an entrepreneur. When I think of insurance in the US, it’s like there are farmers, and it was like my uncle sold insurance and he wore a suit and he had an office in a strip mall. I don’t think of you as that. Can you talk to people about what the difference is and how you’re approaching this with a different mindset than perhaps it’s typically someone who’s brokering insurance?

Ashley: I think like originally, I really wanted to explore how to improve the whole onboarding experience of getting a call and buying insurance. I think one of the things we’ve done quite well that’s different to a lot of other providers is that we’re super niche. Instead of all of the big competitors that I’m up against, that are selling business insurance, they’re trying to do it for estate agents and freelancers as well, and accountants—everybody.

You end up getting products that you don’t understand how they work. You end up buying products that you never need because that experience has not been tailored for you. That’s kind of where I started. How can we make this a really pleasant onboarding experience, a really slick experience of getting a call, buying a policy, and doing it in a way that because it’s so laser-focused on creative freelancers, they’re getting exactly the products that they need?

Rob: Got it. So you understand that niche so well. I said withjack.com, it’s with jack.co.uk. I apologize. Your h1 is “Be a confident freelancer. We protect you and yours on the high seas of freelancing.” If you haven’t seen this site before, listener, you should check it out. The design is on point and it does not feel like traditional insurance. Are you a designer? Did you design it yourself?

Ashley: I’m not a designer, but I really love good design and technology. That’s the whole reason that I didn’t get into insurance for that reason. The whole reason that I ended up sticking around in insurance was because I felt like at that time—things are much better now—insurers were not paying any attention to good design and current technology.

I’m not a designer, but I really appreciate good design. I worked with Scott Rayleigh, who I don’t think freelances anymore. I think he is in full-time employment now, but he was my designer. So I do have an appreciation for good design.

Rob: Where does the name come from? With Jack.

Ashley: I named the business after my dad, because he was the whole reason that I got into insurance. When I was 18 years old, I was at college studying music. I wanted to be a famous drummer. My dad was running an insurance business solely online, focusing specifically on landlords. 

He passed away when I was 18. And because I was the only person in the family with some experience building websites and deploying them—because I’d done so far a bunch of bands that I played in—it kind of fell on me to keep my dad’s business going. He was never able to make a success of his business. I wanted to take everything that I learned from that and put it into my own thing, which was With Jack.

When I was coming up with a name—I’m terrible at naming things, actually. I knew that I wanted it to have a nod back to my dad. So in the end, I just ended up naming it after him and the character that you see on the website, that is of course based on my dad.

Rob: That’s super cool. Wow. I do want to dig in. You sent me a really nice email with more to that story of basically how you weren’t able to make his business work. You used the phrase, you ran it into the ground. That feels a little harsh to me but I do want to cover that.

Before we do, I think there are folks listening that might be curious what stage you are with With Jack. I have to say two withs, but oftentimes founders come on, and few of them will share MRR, but a lot of them will say, well, I’m profitable, three people on a team or whatever, and we’re profitable. But what can you share to give us an idea of where you are?

Ashley: Yes. I feel like I’m not 100% happy with where I am with With Jack. I feel like it could be a lot further along. There are a lot of positive signs there. I’m fully supporting myself. I’ve just brought on somebody to work with me one day a week for the first time. We are charging ahead towards a really cool milestone with a business where within a few months, we’ll have written £1 million of premium. We’re growing every month so we’re heading in the right direction.

I am able to live this life that I like. I have this cool little office that I’m in right now. I have my strength coach that helps me lift heavy weights, and I have my season ticket at a football stadium that I love. So I really liked the life that I’ve built for myself but I still think With Jack should be a lot further ahead, especially considering the length of time that I’ve been in business now. But mostly considering how much work I put into this business, I feel like I’ve not yet seen that return on investment.

Rob: I think most entrepreneurs would echo that statement of I’m happy with my business but I wish it was further along. It feels like it should be further along. When you say you’ve put a lot of work into it, how long have you been full-time on it?

Ashley: I actually think it might have been just before I spoke at MicroConf so I was shooting weddings because I used to be a freelance photographer. That’s how I funded a lot of the tech side of things—the website, the core system, all that stuff was funded through doing photography. I’m pretty sure—I might be wrong—it was either 2019 or 2018 that I shot my last wedding. I just felt like I’d lost a lot of interest in shooting weddings.

It felt very not fair to take people’s money when my heart wasn’t in it anymore. I found it a bit soul-destroying to be working all week on building With Jack and then messing with weekends because that’s when people get married. So yeah, pretty sure it was 2018 or 2019 that I went full-time on With Jack. With that said, let’s just discount 2020 from everything since that […] during that period.

Rob: Speaking of your strength coach, I think I saw a picture of you on social media throwing, Were you deadlifting? You were throwing a lot of weight. What was that? You hit a PR (personal best) right?

Ashley: Yeah. It was 150 kilograms.

Rob: 330 pounds, 2.2 times, 330 pounds. Holy moly. It’s like twice what I weigh. My gosh.

Ashley: Is it really? That’s so cool. I like being strong. This is kind of a new thing that I got into because of lockdown and I really missed not being around a barbell because gyms were all locked down here in the UK. Then when they opened back up, I was like, I missed the barbell so much, I’m going to go hard on that barbell. Yeah, I really got into deadlifts and back squats and all that fun stuff.

Rob: So incredible. I’ll just say there were a lot of plates on that bar. When I saw it, I was like, oh, I’m impressed. So let’s circle back. You had mentioned you are 18 years old, your dad passes away, which, obviously, must have just rocked you and your whole family. I guess why was it you that stepped in to take over this business? I don’t know if you have siblings or if your mom or who else was around to do that, but it just feels like at 18, I barely knew which way was up. I was just doing stupid […] on the weekends, and I couldn’t have taken over a business.

Ashley: I think there are two reasons. I do have a sister and she’s very successful now. She runs a fashion business and that’s her thing, fashion. There was no crossover whatsoever with my dad stuff. My mom, she is just not techie in the slightest, so she wouldn’t have known what to do. That’s kind of where it came to me and the conversation that I had with my dad, because when he was ill. His heart was working 7%. So it was pretty obvious where things were heading.

Him and I had that conversation where he just said to me look after the family, and I did that. Like I said, I had a little bit of experience with building websites, just because I’d played in bands from the age of 14. I feel like that’s how a lot of people get into building websites as they start off making them for their bands or their friends’ bands.

I had a little bit of knowledge in that respect, but absolutely zero understanding of insurance, the audience that my dad was serving, which was landlords, so I had to figure all of that stuff out. Obviously, I didn’t do that good of a job because the business didn’t grow. It just gradually went down.

Rob: Which is a bummer. Was he an insurance broker as well?

Ashley: Actually no, he wasn’t. The best way to describe him was, I suppose with our terminology, would be more like an affiliate. I went on and did the whole thing like I’ve committed this whole insurance game. I’m fully authorized and approved by the FCA and all of that boarding, regulatory stuff.

My dad never went down that route. He basically built a bunch of websites and was so good at SEO. He got four, five, or six of them ranking on the first page of Google for his chosen keywords. Then people were coming on to the website, clicking a link and they were getting sent to the insurer or that he was referring them to.

Rob: Lead gen. Okay.

Ashley: Yeah, he did an amazing job of that, just purely through Google rankings. But no, he wasn’t a broker.

RobL Got it. So that’s the difference. Because I was going to say, today, you are making a brokerage work. You’re successful at this. I was going to ask what was the difference there, but it sounds like his superpower was SEO. 

I ask people who have often said on this program, like putting a website or business on autopilot. Usually over time, it will decline, it’s hard to keep it stable or growing, especially with Google involved, because Google just tends to do updates. They tend to just not delist but derank things over time. This stuff just kind of falls off if you don’t maintain the leads, so there was no recurring revenue, right? It was just a lead is worth X amount. Then if you don’t have the same amount of leads next month, then it’s declining.

Ashley: Yeah, and the worst part was, his timing couldn’t have been worse, because when he passed away, two massive changes happened in that industry. One was that these comparison websites popped up. I don’t know if you get them in the US, but over here, we’ve got GoCompare, confused.com, all that stuff, they popped up. Suddenly, people were flocking to them to buy their insurance. They weren’t using Google as much. That was one thing, one big change that we saw. 

It was difficult for us to get on those websites because what they do is they show you a list of providers. People are just going to choose the cheapest, so that encourages this behavior amongst providers where they are driving the price of their insurance rate down. So you’d only really make money if you bank on that customer sticking with you for 3–4 years. That’s fine for those companies with big cash flow but it wasn’t fine for us, considering we were a small, independent, family-owned business and didn’t get that cutting revenue.

The second big sucky change was that just as he passed away, Google completely changed their ranking algorithm. They went from ranking based on factors like keywords to social factors, content like blogs and things, the stuff that my dad had never focused on. Not only that, but he did do a little bit of keyword stuffing, and we got completely blacklisted.

It was a really hard time to come into the business because we went from that was how he’d made his money, it was a big success and worked for him, to him obviously passing away, and me stepping in having to figure all this stuff out. Then having our websites completely removed from the one place that actually brought us business. I think the big lesson there that we can all take away is to never depend on one channel to run your business.

Rob: Yup, the diversity of incoming leads is a huge issue. It’s platform risk, in a sense, right? We talk about that a lot. These days, you can build a pretty amazing add-on or an App Store app (for lack of a better term) on Shopify, on Heroku, or WordPress. There are all these ecosystems that you can build in. You can get traction really quickly because they already have a bunch of traffic to their app stores or to their add-on repositories. 

You get search traffic. Usually, their SEO is not that hard because we’re not as sophisticated as Google and you can rank and then you can build pretty, pretty interesting businesses pretty quickly. The rub comes when you have any modicum of success—I mean, get to half a million to a million a year—you start crossing that line, the provider that the main platform takes notice, and then they come a knockin ‘.

I’ve seen it happen to at least one business that was doing several million a year on a platform just got destroyed. It sucks and it feels like it’s not fair, but it’s their platform. They can do what they want. Google is the same way. How many businesses have you and I seen first or second hand just get destroyed because all of their reliance was on Google? It’s unfortunately a common story.

Ashley: It’s certainly—on the positive side—something that I’ve been able to take into my own businesses to make sure that I’m not depending on that is one channel. It is one channel and we do really well from it, but there has to be others, too.

Rob: That’s how all the businesses I built always had multiples, except for the very, very smallest ones. Usually, I remember even in the days when I was focusing really hard on Drip and wanting to rank for email service provider, email service software, whatever. It was like 10% of our leads, maybe 10%–15%. There was a variety of it. Now, I would have loved for that to be better. It would just happen to be really competitive when you’re competing with MailChimp, AWeber, and Infusionsoft.

It’s a trip, because if I was in your shoes, and I inherited this business for my dad, then I couldn’t make it work, I would personally probably run as far away from insurance as I could. 

But you now got your broker’s license; you leaned into it. What was that transition like? Did you ever have that feeling? Like that rage quit, table flip feeling of I’m going to get the hell out of here and go do something else that has nothing to do with this.

Ashley: No, because I really like the challenge. I feel like I’ve had three pretty pivotal moments in my career in insurance. The first is purely circumstantial. It was the circumstances that happened to me. I found myself in insurance because my dad passed away and I was left with his business.

The second transitional moment came when I realized I wanted to stick around and give this industry a good shot, because I had developed an interest in design and technology, as I’ve mentioned. Back then, insurers were just doing a terrible job with bringing their processes up to date, up to the current age. I thought I wanted to have a go and see if I can do that, if I can improve the onboarding. We were using software that was 20 years old, like proper legacy software.

That was the second moment, realizing okay, I found something. I’m not interested in insurance at this point, but I found something about this career that I quite enjoy and I want to see if there’s anything more to that. That’s when I started to learn to code more back-end stuff and work with designers.

Then the third pivotal moment, which is where I’m at right now, I would say, and hopefully there are more pivotal moments to come, it’s when I realized that, sure, it’s great to build things that look and function nice. But let’s be honest. Absolutely nobody in the world is walking around today going, wouldn’t it be great if I could shave 60 seconds off buying insurance, like if it could take me 30 seconds instead of 90 seconds. Nobody is walking around thinking that.

It wasn’t really a big problem that I was trying to solve just by making things look nicer and improving the onboarding. Sure, the conversion rate will increase, people will have a nicer time buying insurance, maybe they’ll get the products that they actually need and all that lovely stuff. But my audience (freelancers) are walking around worrying about when their clients are going to pay them, or worrying about having so much work on their plate, are they going to get that deadline done, or having a difficult conversation with a client, knowing that’s placed with insurance where I want to create products or sell products that actually solve these types of problems. 

So that’s kind of been how I got into insurance. That’s what kept me in insurance, the interest in design and tech. Now, I’m really excited about actually coming out from […] a problem perspective. What is it that freelancers want to achieve? What insurance products can we build to help them get to that desired state?

Rob: I bet you’re thinking about it in such a unique way, because no mainstream broker who serves a bunch of people has any idea, who serves a bunch of niches or just as a broad horizontal offering is going to be thinking about it at that level that you are.

Ashley: So far, I haven’t really seen people think about it at that level. Just today, I saw another competitor pop up, and I had a look at their website. Again, it’s just all the same stuff—buy insurance in 60 seconds, manage your policy online, all of that stuff. Like I said, it’s nice, it’s going to help you, but that’s not why people are buying insurance.

We have to understand the reasons why they’re getting a policy and for us, that’s why the whole ethos With Jack is to help you be a confident freelancer. Believe it or not, I wholeheartedly believe that insurance can help you be a confident freelancer.

Rob: For sure. It’s interesting. Something we talked a little bit offline, but I was going to bring up is this concept of a vitamin versus an aspirin. Vitamin businesses are, we all know, we should take our vitamins, we know we should eat our spinach, but if there’s no impetus or a push to do it, I don’t know, maybe I’m not going to buy insurance this month, because nothing bad happened. There’s just nothing to push me to do it versus aspirin is like, oh my gosh, my hair’s on fire.

I need a way to record a podcast, so I’m going to sign up for SquadCast because it’s a desperate burning need that I have today. You’re in a vitamin business and that’s tough. How have you thought about that? Because I imagine that might be part of what you talked about, it’s not where you wanted to be, the business isn’t where you want it to be. Have you ever thought that well, maybe that’s just the way these go because they are vitamins in essence.

Ashley: Yeah, 100%. What I’ve noticed is that insurance, in my opinion, is the best thing in the world when it works, but only 5% of our customers actually make a claim. You’ve got 95% of people who are buying a product that on a practical level they’ll never have to use.

I do believe that every freelancer benefits on an emotional aspirational level, because like I said, it helps you be a competent freelancer because you can go into projects and be a bit more confrontational with clients who are maybe going to try to take advantage of you because you know that if they do ever take things a little bit farther, you have a team of people in the background ready to help you. But let’s be honest, most people don’t ever think they’ll find themselves in a situation where they need to use their insurance, and 95% of them are […].

We know that there are two million freelancers in the UK so it’s a decent-sized market. I would guess that 75% of them are uninsured. The difficulty that I’ve had is not just selling a product, but it’s been trying to educate the market about why they need this product. That’s the bet that I’m finding really difficult. I agree with you. I think that’s why I’m not getting the growth that I want.

The way that I’m kind of thinking about things right now is, like I said, we’ve got a bunch of customers that insurance is great when it works, but it only works when a fairly specific set of circumstances happen, which is either a threat of legal action, or somebody trying to recover money from you. 

We know that there are all of these other freelancers experiencing definite problems that are falling through the cracks. That for me, is the missing piece of the puzzle. I need to figure out what to create—might be insurance related, might not be—or what to build that helps the freelancers that are falling through the cracks. There’s 100% a missing piece of the puzzle with my business right now. I’m trying to figure out what that is. I haven’t figured it out yet but I think I will. I think once I do, you and I will be having a very different conversation.

Rob: Do you think this ties into you becoming a delegated authority? You mentioned this to me in an email. I had no idea what that meant but you said delegated authority means the insurers authorized me to quote and bind on their behalf, which then means I can build the tech to do it for me as opposed to sitting at a computer all hours of the day.

You were saying you do “sales renewals, midterm adjustments, cancel it.” You do all this busy work. It’s admin work that really you as the founder of this business shouldn’t be doing. Does it feel like that’s going to be a turning point in that could be a turning point in the business?

Ashley: Yes, it does for a variety of reasons. Firstly with a delegated authority I can actually create my own products. That’s going to be really exciting. Instead of selling somebody else’s, I can identify things that we can add in there that will serve our customers even better, so I’m excited about that. But also having the technology to do everything for me, instead of me sitting at a computer at all hours of the day processing quotes, sending out renewals, binding people’s policies when they bought one.

It will free up my time to then work on other areas of the business that will bring more value to people. But also, it will just free up my mind, because I’m so tired of sitting there doing this work. I feel like I’m not getting an opportunity to let my mind go to places where I’m thinking about new products or new services. I’m finding, as I’ve mentioned before, that missing piece of the puzzle. I feel like I’m unable to figure out what that is right now because I’m just constantly consumed by doing all of that manual work.

When I get my delegated authority, and I have the technology to do it for me, that is going to free up my time. It’s going to free up, give me some more mental freedom and space to come up with new products and services to bring more value. I do think it’s a really important step for the business. 

However, one thing I worry about is—Rob, you have come across these founders in the past, and I’ve come across them too—we need to build a product, to build an app. They have a handful of users and you’re asking them how they’re getting on. They say, yeah, things are fine. I’m just in the middle of refactoring the app so that it can scale just in case I miraculously get 20,000 new users overnight, or they focus on building a massive new feature based on the request of one non-paying user, and you’re from the outside looking in, look at that and think this is not right.

That’s not what you should be doing. I do worry that I sound a bit like those founders when I’m like, as soon as I get my delegated authority, everything will fall into place. But I do think it’s important just to free up time, and help me get my life back and be able to start working on the important parts of the business that are going to help me deliver more value for freelancers.

Rob: Do you have anyone? You said you have a customer support person, I believe, helping you part time. It sounds like the stuff you’re doing could potentially, in the short term, be delegated to an admin assistant, an executive assistant, someone like that. Do they have to have a broker’s license to do what you’re doing?

Ashley: They don’t have to have a license, but they do have to adhere to some regulatory stuff. There’s just a certain amount of CPD and stuff that they have to do. But yeah, that’s going to help me enormously. I don’t know why I haven’t done it sooner. I’ve just been very resistant. I’m a bit of a control freak. You probably speak to a lot of founders like that, where you just want to do things yourself because you’re capable of it and you’re worried that somebody else doesn’t do as good a job as you. 

At the same time, this is a really good stop gap between me getting the delegated authority. I can still at least outsource a little bit, block off eight hours on my calendar that day to focus on working on the business. We haven’t quite got to that stage yet because it’s early days, and she’s just learning the ropes. I reckon that this will pay off in another month or so. I can honestly see myself getting to the stage where I’m like, why did I not do that sooner? Or even asking her to do more hours. I’m really excited about that. We’ll see where it goes.

Rob: Yeah, very common, right? Hard to let it go. They’re not going to do it to get a job as I do. It’s the kind of mental refrain. Then usually it’s why didn’t I do that a year earlier or more. 

I kind of want to wrap us up with this story you were telling me offline about basically having a competitor steal all your stuff. I’ll just leave it at that vague description, and then you can share whatever you feel comfortable sharing.

The reason I want to cover this is this has happened to me multiple times. This happens to a lot of founders. I’ve had probably two or three conversations with TinySeed founders in the last probably nine months, where they’re like, this competitor is stealing all our crap and it’s really bothering me. Usually as we dig into it, it’s like, yeah, they don’t know what they’re doing so they’re copying you because they don’t know what is making you successful.

They think copying your font or your headline, or your naming, or your features, or whatever is what it is. But it’s not, it’s the magic that you have. Usually that’s the case—not always. Talk us through what happened. How did that make you feel? I’m sure it made you feel like crap, and then how it turned out.

Ashley: It’s happened a couple of times, actually. But the sore one was the first time it happened, because I think the first time it happens is a bit of a shock. I was the first provider on the market to focus specifically on freelancers. That obviously doesn’t mean that I’m the only one that should be in that space. Other people are going to come in but I was the first to do it.

I remember my designers came to me, and obviously you looked at With Jack’s website, and it’s got a very distinctive design. They came to me and they were like, just a heads up, a company approached us. They said that they’re a competitor to you, and that they want something similar to you. We just thought you should know. 

I took a note of it and I knew how hard it had been for me to start this business with all of the regulatory and compliance stuff, so I wasn’t too worried at the time. Then their name popped up again when I was having a chat with the insurer that I work with. I realized, oh okay, I really have to look into these people a bit more. Then I looked into it just to see if I’d ever had any previous dealings with them, put their name into my inbox, and I popped an email from them a few years before being like, hey, really interested in what you’re doing, we’d love to pick your brain sometime.

I just realized that at that point, they hadn’t launched so I didn’t actually see the visual aspects of the website. But when it launched, there were definitely a lot of similarities. There’s the whole, nautical vibe going on, too. Same insurer, had tried to work with the same designers, same demographic, going after the same market, a lot of similarities with the design element of it, too.

What really, really scared me at the time was that they had funding. I just thought, well, this is it. This is it for me, because I can’t compete with that. They’ve got more resources, bigger team. Honestly, I was terrified about the whole experience. I remember finding out about it when I was on holiday as well. It ruined the holiday because I couldn’t stop thinking about it.

Fast forward, and however many years later, and honestly, it ended up not impacting my business in the slightest. I know that they actually had to do a bit of a fire sale. Just as an aside, I’m not fully convinced yet that funded insurtechs, as they’re called, is the route to go because (obviously) with funding, you need to get a lot of traction to show that you warrant that next round of funding.

With insurance, it’s such a slow burner, as we’ve established with the way that my business has been growing. Even if you build the best company, the slickest onboarding, the nicest design, whatever, people do not feel that way about insurance that they’ll cancel their current provider and come flocking to whoever the new kid on the block is.

So yeah, it didn’t end up working out for them. They had to sell it. It’s a very similar story with the next startup that did a somewhat similar thing, too. It’s quite cool that I feel like yeah, me, the one person bootstrapped business is still here to tell the tale. We really shouldn’t be afraid of all these big scary VC-backed businesses that try to come into our turf.

Rob: It’s often the case, where mostly bootstrapped startups who are quite capital-efficient, executing, getting customers, doing all the blocking and tackling the SEO, the content, the cold outreach, closing sales. They always want to go faster, but then they see the big funded competitor, and they think, oh, no, this is a huge deal.

More often than not, that funded competitor is less knowledgeable of the space, less experienced, and just has a bucket of money. Sometimes that bucket is half a million, sometimes it’s $2–$3 million, unless they are prior founders or have some unique insight into the market. It’s often kind of dumb money, for lack of a better term. Other people will say, smart money is from a VC or an angel investor who knows what they’re doing, who’s been in startups, and dumb money is from a dentist or a doctor who’s just writing some money. 

That’s not what I mean, here. I mean, it’s just money that’s been pushed into a market in a way that’s not being deployed as surgically. Because if you, Ashley Baxter, had half a million dollars in funding versus no name clown who raises half a million dollars and doesn’t know insurance. I’ll say I’m no name clown. I could raise half a million dollars and say, I’m going to compete with Ashley. It would be really hard for me to do that because I don’t have the years of experience that you do and I don’t have the patience.

A lot of capital doesn’t have patience, right? That’s the difference between how I invest in TinySeed invest, it’s very longer term. It’s not like, oh, we need to get our money out and have an IPO and this and that, and you need to hit these growth targets for us or we’re not going to fund anymore. That’s often what happens. 

At one point, with Drip, we had a competitor raise buckets of money. I remember telling my co-founder, well, let’s set an alarm for a calendar reminder for 18 months down the line and see if we can buy their assets when they close up shop. You know what, I was kind of joking and it happened. They ran out of money. They hired a bunch of people. They tried to build what we had plus some stuff, and it just didn’t resonate fast enough. They were trying to artificially accelerate growth.

Again, it’s not all cases. There are cases when someone is actually quite smart. They know a space and they raise money and then they’re really dangerous. Then it’s like you being funded in a space. Let’s say I raised $2 million today to start another ASP. As much as I don’t want to do that, I would be dangerous because I’ve been there. I’m a smart actor in that space.

Ashley: I also think if you raise that kind of money, though you also have different intentions to what the bootstrap solo founder has. I said there are two million freelancers in the market. If you raise the amount of capital that these companies are raising, you’re clearly making a statement to investors. We’re going after the big chunk of that two million.

I have it in my head, I want to get to 10,000 customers. I just feel like that’s a really nice, manageable number. That’s what I need to stay in business. It’s very different to what they need to stay in business. But it’s happened so often now. It always has the same outcome. They either have to sell or have to shut down.

Even today, I noticed that quote come through on my website. You can sometimes tell people just put in false information because they’re playing around with the UX but they use their real email address. I put in their domain name to have a look. It was obviously a new startup that’s moving into my space, and they’re having a little look around, and that’s fine. In the past, I would have freaked out. And I’m just like, cool. Welcome to the space. Good luck.

Rob: I got all the bumps and bruises. I know what it takes to stay alive here, when many have not made it. Ashley, thanks so much for joining me today. Your twitter handle is @iamashley, and of course withjack.co.uk if folks want to see what you’re working on.

Ashley: Thanks so much for having me, Rob. It was really good to chat. I hope that next time we catch up, I figured out what that missing piece of the puzzle is.

Rob: I look forward to the day. It’s going to be awesome. Thanks again to Ashley for coming on the show. And thank you for joining me this week and every week as we continue to produce the show for you. If you keep listening, we will keep shipping these episodes. I look forward to being back in your ears again next Tuesday morning.

Rob: This is Startups For the Rest of Us. I’m Rob Walling. Thanks for joining me again this week. We have a bootstrapper news round up where we look at Google ending doing work from home. We take a look at some founder salary data in North America, the UK, and Europe. And we talked about how to use email, at least, according to a blog post I saw on Hacker News.

We got some interesting insights and ideas that we threw around, as well as we talked a bit about Twitter, how they are now favoring the algorithmic timeline and almost kind of burying the reverse chrono timeline, and how I didn’t even really know that the reverse chrono timeline was still available.

This was a fun episode to record. I had Tracy Osborn—program director from TinySeed—and Einar Vollset—my co-founder at TinySeed—back on the show, as I have for the past many news round ups to hear their thoughts and opinions on the stories today.

Before we dive into that, the third Annual State of Independent SaaS Report comes out next week. We’re doing a live stream straight from MicroConf Growth in Minneapolis. If you have not headed to stateofindiesaas.com and entered your email to be notified, you should do that now because I’m going to be going through all kinds of cool findings from this year’s report. 

We changed up almost a quarter of the questions. We asked some differently, we’re doing some different analyses, so this report is going to have new insights and findings. We also asked a bunch of sentiment questions about, as a founder, how are you feeling about hiring this year versus last? What do you think about no-code? We had five or six like that, some really interesting data to share. I hope you’ll join me for the 30-minute live stream next week. Head to stateofindiesaas.com to make sure you are notified. With that, let’s dive into our bootstrapper news roundup.

My first panelist, the only person I know whose Twitter handle is a complete sentence, Tracy Osborn. Welcome to the show.

Tracy: That completely threw me off. Thanks for having me.

Rob: That was the goal. Do you want to tell folks your Twitter handle?

Tracy: Yeah, @tracymakes.

Rob: Tracy, it does indeed make. My second panelist, that man with the most mispronounced twitter handle on the planet, Einar Vollset.

Einar: That’s right. Hello. Thanks for having me.

Rob: Yes, indeed. Before we dive into these awesome news stories aimed at bootstrap and mostly bootstrap startup founders, I want to do something with you that I think is fun. It’s something I discovered two days ago, I was on a call. I believe it might have been an interview with a TinySeed applicant, and they mentioned Deel. Have you heard of Deel?

Einar: Sure.

Rob: It’s like a payroll, contractor payments and all that stuff. Somebody mentioned it and I was like, oh, I’m going to go to their website. I know they’ve raised a kajillion dollars. They’ve actually raised $629 million. I said, I’m going to deel.com. It’s misspelled, so certainly, they own the dotcom. I want both of you to type in deel.com. It’s not porn. I want to hear your reaction, but don’t tell people what happens because I want every listener after you to go to deel.com.

Tracy: It went to letsdeel.com. It redirected for me.

Rob: It redirected?

Tracy: Yeah. I went from deel.com to letsdeel.com.

Einar: It redirects to letsdeel.com.

Tracy: Did they hear you play about it?

Rob: What a trip. This is fascinating. I typed it in. Because if you go to Google and type in deel URL or just type in deel, it goes with letsdeel.com.

Einar: That’s right, yeah.

Rob: That’s what appears in Google. That’s their canonical homepage. Deel.com, for me, two days ago and now, today, it continues to go to a Rickroll, to YouTube, to Rick Astley singing Never Gonna Give You Up.

Tracy: Are you sure? Wonder if kids did get into your hosts file. It switched out for you.

Rob: It’s so bizarre. I showed my kids last night. I’m actually going to disable my Wi-Fi, come on Wi-Fi, do gown, just to make sure. When I went through the other day, it did it. It may be cached at this point at the router.

Tracy: I can only imagine if it’s on their end. There might have been a bug or something like that. That is so funny. It does go there. Al right, so Rob is showing us his phone and his phone is showing you to Rickroll.

Rob: Is someone trolling? Is someone messing with DNS?

Tracy: World’s weirdest A-B test.

Rob: Yes. What I thought was that a competitor had bought their deel.com and was just Rickrolling it, had private domain registration, and had done it. I wanted the two of you to see it and laugh. I wanted to do the biggest Rickroll I’ve ever done and have every listener go to deel.com.

Now that it’s out, that everyone knows, I am curious for folks to go to deel.com where they are. And it’s like, am I the only person? Did I just hit it? Did they get hacked? And I hit it right at the point where it was a Rickroll and then it’s cached in my DNS now? That might be the thing. It’s so bizarre.

All right, shall we get into some actual news stories? This first one is that Google is ending work from home options for most of its Bay Area workers. In fact, a bunch of the larger tech companies are doing that within the next month or so.

I had a tweet a couple of weeks ago saying that I think this bodes well for bootstrappers that this is happening, because that’s always been one of the big advantages of being a bootstrapper. You tend to do it remote and therefore, you can hire people at reasonable salaries. I know that during Covid, obviously, salaries have gone crazy. I’ll kick it to you first, Tracy. Do you have agreeing or disagreeing thoughts on this whole concept?

Tracy: It’s like nature’s healing and that whole meme. I feel like it’s completely unexpected. It was unexpected to me for it to go back to this because looking in history, pre-Covid, Yahoo, they had this whole thing where they allowed people to be fully remote. Then Marissa Mayer, I believe, became the CEO. She took it away entirely and everyone had to go back to the office.

There’s this huge corporate inertia towards always being in person at the office. Covid was an interesting experiment. There are interesting times to see these companies trying out other ways of working. Just a couple of years of a strange time during a pandemic is not going to change that overall large company corporate feeling of being at the office is where people get work done.

It doesn’t surprise me that these big companies are going back to these policies. It’s not on here, but I want to see data in terms of overall. Somehow, all the companies in the world, if there’s going to be a percentage, the percentage of people who do part-time remote work or fully remote is going to stay higher than it was before. I feel like that is a good thing.

I don’t expect big companies to ever go that direction just because it’s the anti way big companies work, so I’m not surprised by this. But what my hope is, is that overall, Covid has led people to seeing the light in terms of the advantages of having remote work.

Rob: There have to be a lot of companies that were against remote work and then did it because of Covid, shut down offices and are never going back. I think that’s what you’re saying. It’s like, how many are out there?

Tracy: Exactly. But Google, they have their giant campuses, they have all these things that are around being in-person. They probably have some policies for people to work from home. I’m pretty sure that happened with my husband who worked at Google. He had the ability to work from home every now and then. But their inertia towards working in the office is too strong for this to be a permanent effect, the fully remote to be permanent.

Rob: What do you think, Einar? Is TinySeed going to set up headquarters in Minneapolis and everybody’s going to move here?

Tracy: I want that.

Einar: In Minneapolis? Why should it be in Minneapolis?

Rob: I want it there. The cost of living is lower.

Tracy: If I could get a portal so I could work in person two days a week, I would absolutely do that for TinySeed, but I wouldn’t want to do it five days a week.

Rob: Yup.

Einar: I think that’s the thing. I think the idea of what people are saying is they want to do 2–3 days a week in person and then 2 days at home. I think the challenge for big companies is, how are you going to pull that off in terms of now you’re going to have empty office space 50% of the time? I think that’s probably the challenge.

To play devil’s advocate a little bit, on the bootstrap side, we’re always like, it’s the best. Work from home. I’m also curious whether some of these bigger companies have actually started to do some serious analysis of their own productivity and whether they’ve actually found out that this is crap, for whatever the culture that we built before Covid. Whatever happens isn’t as productive when we go remote.

Fundamentally, I don’t think there’s anything inherent with being an in-person company versus a remote company. But I think if you’re built from the start to be in person, then I can totally see how some of these companies found that productivity has gone down. That’s not good for them.

Tracy: It also depends on that team because I feel that developers can probably work better as fully remote because they’re at their home. They’re not in these open office plans, having all these distractions. They have that deep work time to work on code. Whereas folks who are more on the marketing side of things where there maybe have to be more meetings, more in-person time trying to work fast, ask someone a question, that kind of stuff where they would be losing productivity from being separated from their co-workers.

Rob: Yeah, the in-person stuff is designed for collaboration. It’s like if you don’t have self-motivated people or if you need a lot of collaboration. Sometimes, I think you’re on dev teams where you can go and code for weeks and not need to do a bunch of collaboration. And then there are points where you do need to design or architect a new system and that’s when you need to be in front of a whiteboard.

The best work arrangement that I’ve ever had was what we had in Fresno with Drip and it was two or three days a week. We all decided, well, let’s all come in on Monday, Wednesday, and then Friday was optional or something like that. We put all of our collaboration on those two days, and then all of our deep work the other days.

I hired really motivated people who were just super loyal to the company. They weren’t going to go home and screw around. Versus I have worked at a company that had a couple of days, two days a week were remote. There were several hundred employees and there were definitely people who were just taking the company for a ride. I don’t know if that’s inevitable at scale. I don’t know if that’s just always what happens. Some people just can blend into a team and not pull their weight, but kind of.

Einar: Wasn’t there the story about this guy who worked at Verizon or something and basically just outsourced his job? Then the only way they found it was with a security scan because there was an outbound VPN connection to China or somewhere that never went down? In big-enough companies, there’s always going to be that situation.

Tracy: I was going to bring up Silicon Valley, but that’s a real life version, like people sitting on the roof.

Einar: Rob, it sounds like we should all move to Fresno. That’s what you’re proposing here. Have an office in Fresno. You got to live within 20 miles of downtown Fresno.

Rob: The issue is that once you have one day in an office, then everybody needs to live within a 60-minute drive, in essence. As we continued to hire, by the time we hit 10 people, half the team was in Fresno and half was not. They were remote because I couldn’t find great marketers, more great developers or couldn’t afford them at the time. So we did become half remote, half not. That definitely posed some challenges with communication.

Next story is about what startup founders pay themselves. There is a new report from Seedcamp, where they have a relatively small sample size. There are 185 founders from pre-seed to Series A, so pre-seed seed and Series A. Of course, when they say founder salaries, it has to be funded by the founders.

Bootstrappers are not mentioned because that’s not even a thing. This gets my go. When I go to Quora and search for a startup founder or startup questions, they’re all about raising funding. But that aside, I’m intrigued by this.

It’s in British pounds. It’s like the average pre-seed founder salary across the UK, the rest of Europe, and North America. The average salary for a pre-seed company is £49,000. That’s about $65,000 and then seed is just under £70,000. We’re looking at about $90,000 and then Series A, £106,000, which puts us at about $136,000–$140,000.

Einar: I think all those numbers are too high. That’s just because the dollar has been slightly off because of the war.

Rob: It’s like 1.3 right now, I believe. But wait, you think those are high in Europe and UK because down below, it starts breaking it down. When you see the massive disparity, it’s all the same in pounds to not confuse everybody. Pre-seed, Europe average is £36,000. North America average is £73,000 and UK is just under £50,000, so pretty big differences there. Einar, you grew up in Norway and often identify as European. What do you think about this whole discrepancy?

Einar: I’m not surprised in the slightest, to be perfectly honest with you. I think a lot part of this is partly because of the cost of living, probably. It’s probably higher in places like the UK than it is in Poland or other parts of the EU.

Actually, one of the most interesting parts is actually not exactly what the difference is. Also on top of that, I think just generically salaries, particularly for developers, are different. If you’re a senior software engineer who works in the US, you’re probably going to get paid more money than if you’re a senior software engineer working anywhere in Europe. I think that’s true.

The alternative to being a founder, I think, is a higher salary in the US. Naturally, that tends to pull up salaries that people are willing to give themselves. I think of this data, I was looking through it. I think one of the most interesting data points impacted the number of co-founders on salary.

Did you see this piece? It basically says, oh, the really weird thing is a pre-seed. A single founder pays themselves more than two founders, or three founders, or more, but that then reverts that seed. I’m curious what you guys think about that. That is probably the most interesting data point for me. I wasn’t surprised about the US, UK, and Europe discrepancy as much.

Rob: Anything, Tracy?

Tracy: I’m distracted by the fact this graph has one column for five co-founders. Sorry. I can’t stop staring at it. There are so many co-founders. Rob, I’m going to get my brain ordered. You start.

Rob: I wonder if that’s just a data anomaly because it looks like by the time you get to Series A, one founder, two founders…

Einar: It’s about the same. The big difference is pre-seed to seed. My theory is that I think if you just raised a pre-seed round, I think with two founders or more, you’re all like, oh, let’s not spend too. You don’t want to really ask for the salary. You think it’s fair because you’re on the team, versus maybe if you’re just one of you, you’re like, yeah, this is what I need, so I’m going to take it.

Tracy: What about the fact that we know from TinySeed, generally VCs are like, oh, two founders or more. Is there maybe a difference in terms of the amount of money you get at your seed round that would affect how you can pay your two co-founders as compared to how much money a solo founder might get in their seed round?

Rob: I don’t know the valuations. I don’t know if they vary based on founder count.

Tracy: I would like to see how that kind of worked out. Because if companies with more than two co-founders receive more seed money, then it stands to reason that they would be able to pay themselves more as compared to a solo vendor. But I could be wrong, too.

Rob: I agree. I haven’t heard of that. Usually, I think it’s based on market rates and metrics. It’s like, you’re growing this fast, this much MRR, and this kind of a range. Accelerators are the only things I’ve heard of that vary it based on founder count.

Tracy: Maybe when you have another co-founder or when you raise your seed round, you bounce off each other, like, cool, we raise money, we can raise our salaries, and you increased that number, as compared to a solo founder who probably still has some of that anxiety, which I say as a former solo founder. That’s also probably not true, but in my head I can see that situation happening.

Rob: Another element of this is they had some quotes from people basically saying, look, if you’re going to start a company like this, make it sustainable. Don’t pay yourself so little that you’re not having a decent standard of living or that you’re worried about cash.

There’s that famous tweet from Rand Fishkin, where he’s the running Moz. They’ve raised tens of millions in venture and they’re doing $40 million a year as a SaaS company, and he says, my net worth is $15,000 in cash in the bank. I think he had a rented apartment and my car. That’s it.

They were going to raise another round and he was like, should I take some secondary? Kind of like he felt guilty doing it. And people were like, you need to get some money out of this. At least feel comfortable. Even a few $100,000 can make you so much more comfortable.

I don’t mean comfortable, like, I’m going to go spend this lavishly, but if this all goes to […], then at least I’ll walk away with something and I’m not sweating it if I need to buy a new car. The last thing I want a founder worried about is personal expenses, as long as they’re living within reasonable means.

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All right, let’s check out our next story. Title is The Clickbaity: You’re using email wrong. I picked this up on Hacker News. It’s basically a short blog post. It’s a three-minute read that says at the top. It says you probably don’t like email, the author of this post started using Hey and some of their concepts, so he adapted them into his fast mail account.

His inbox is where all the emails sent by humans end up. Then he has a paper trail folder that contains notifications, invoices, and everything that you don’t want to delete but are not really interested in. He said it has about 1600 unread emails right now. They’re not meant to be read, but he will look them up when he needs to. Then there’s a news feed which handles all the email newsletters that come in.

He does it by just being smart and thinking about it in advance. He has separate email addresses because you can say yourname+anything@gmail.com. Google will forward it and then you can easily just filter and label that. But you have to think about that when you sign up for things.

See I’m already signed up under all these accounts. For me, I would have to filter by sender or something just every time I got one looped in. I’m teeing this one up. In volleyball, this is a bump and a set. I am teeing this up to Tracy Osborn.

Tracy: I’m sitting over here bouncing waiting for you to call me. This is not a new concept. This article is so funny because this pops up every year or so and goes higher in Hacker News.

I wrote an article very similar to this for Gmail like 10 years ago. I want to pull that up and compare and contrast it. The clickbaity headline aside, it’s something that I believe really strongly in terms of email process. The point is that your inbox should only be things you don’t expect.

As this article says, it does make your inbox so much more of a joy to experience because you know everything in there is either going to be unexpected emails from other people, which is something that usually you want to click on. It’s not newsletters, it’s not spam. Ideally, all those things are all in a different area and a different filter or something like that.

When you come onto your computer and you see you have, say, 16 or so emails, it’s a different feeling than if you think you come on, and there’s 120 emails, and everything is all mixed up together. I’m a process person. This is something that I don’t think I would get through my day if my email wasn’t organized in one way, shape, or another.

You can do this in Gmail by doing that plus sign. But as Rob said, doing filtering based on the sender is something you can do in hindsight. Honestly, for anyone who has too many emails, I would say just archive all and then start setting all those filters at that point. Because if you have thousands of things in your email, you’re not going to see it anyway.

You might as well just archive it and be like, woohoo, I got to inbox zero. Then you can start setting up those filters for things that have already come in and you can use the plus sign trick for things that are future-focused.

Overall, I want to say, if there’s any point where you’re looking at your email and you have this sense of dread to your email, I think it’s totally worth spending half an hour to an hour just cleaning things up and then setting it up so you don’t have to have that dread anymore. I don’t think it’s worth it.

This article is great. This is why Gmail now has different inboxes too because we’re trying to force this on people without making them go through the effort of setting up those filters. But really, the filter stuff in Gmail is really great. Hey does this well.

You can use these tools that these people work on. If you’re using Gmail, it’s also simple. I don’t understand people who have thousands upon thousands of emails. Just archive them.

Rob: What do you think, Einar? Do you have copious amounts of filters? Inbox zero?

Einar: I actually don’t. I’m very much an inbox-zero-everyday kind of guy. I have a very strong sense of despair when I open my emails in the morning.

Tracy: But then you get more emails than I do. You probably know that most of those are ones you have to react to.

Einar: The weird thing for me is that that’s true to a degree. I’m very harsh on subscribers. I use one of these Unroll.Me or whatever. I’m very quick to unroll. The problem I’ve been having, at least, since TinySeed, I think, mostly because now my email is in various official places, so random people find them.

I’ve been added to a lot more things that I’m like, I never signed up for this. It’s never happened before in my life. I get a lot of pitches that I was like, they’re not spam, but they’re also poorly researched and cold out round. I probably wake up and I probably have 150 or 200 emails in my inbox.

Tracy: Do you respond to those pitches?

Einar: No. In some cases, they’re right. […] of big numbers. Occasionally, there’s a really perfect pitch for me. But most of the time, I just go through and I archive everything without responding.

Actually, one of the things I’ve been wanting for a while is an email that you can use for things where you know it’s going to be compromised, but it’s like a whitelist system. I want to be able to say, okay, I know I have to put my email the Secretary of State data. That’s just kind of has to. But if I could put up a special email address that’s like, yeah, if you’re not on my email list, you’ll get a bounce back that says, you’re not on my whitelist, please apply if you think that’s wrong.

Tracy: I think that’s what Hey does, right?

Rob: Hey doesn’t bounce it but they…

Tracy: It is a whitelist?

Rob: Yeah.

Einar: I want it bouncing. You were telling me, Rob, that this is not possible because it breaks email protocol or something, but that’s what I want. I want to be bounced out of all the cold email automation systems because that’s what happens. If you get a hard bounce or even a soft bounce, you get unsubscribed automatically. That’s what I want for most of my email.

Rob: I think it’s three soft bounces, usually. I don’t know that it breaks email, but it isn’t in the spirit of how email is supposed to work, right?

Einar: I know that. It’s very selfish, but that’s what I want for some of my emails.

Rob: I kind of want that too, actually. I started blogging in 2005. Within a couple of years, I was on dozens of lists I didn’t sign up for. Being on the podcast, just TinySeed. I get probably five new things a day that I didn’t sign up for.

That is not including cold pitches that I’m getting for not even companies. I got a few company stuff, but I got a lot of, I have this product, it’ll be great for you, blah-blah-blah, just cold email outreach. I unsubscribe a lot of it. I do a lot of hand filtering, unfortunately, but the system that I use has two labels in Gmail. One is _this week and one is _updates.

All of the investor updates that I get, I think I get about maybe even north of $80 or $90 a month. They go directly into _updates. Then once a week, I have an hour on my calendar where I sit and I go through as many as I can get through. I just do that every week. I’m never caught up, but it’s fine. I’m never too far behind.

I have the same thing for this _this week, although that is a manual filtering process. Right now in my inbox, anything that’s there is important and I need to respond to it soon. If it can wait until this Thursday, then I have an hour and it is all this week’s email. It’s just a way that I prioritize stuff.

Oftentimes, that’s my family emailing and asking for something or there’s a Kickstarter thing that I need to go fill out or need to figure out which rewards I want to get. Again, it’s just a low priority. It isn’t a blocker for anyone that I’m working with and doesn’t need to get done ASAP like everything else.

Einar: I have something similar, but it’s more generic. One of the main things I have is there are things that you got to do, but it’s just admin. It’s a pain in the ass, and it disrupts flow, and whatever.

I just give myself the permission that I have two hours on a Monday, where I’m just doing admin […] and just blocked out just to do admin crap. I know anything that’s admin, you got to fill in this thing, or pay these taxes, or your 401(k), or something. I’m like, great, let’s not worry about it now. Let’s do admin time, basically.

Tracy: Do you use keyboard shortcuts for going through email or is it a mouse?

Einar: No.

Tracy: God, so good.

Rob: Yeah, I use keyboard shortcuts. Absolutely.

Tracy: It’s just like, boom, archive, archive, archive.

Einar: I’ve never used keyboard shortcuts ever. No. I don’t use it for anything. I don’t use it for coding when I was coding.

Tracy: As a designer, I remember being in my beginning design classes using Photoshop and the people who are teaching Photoshop learned the keyboard shortcuts. I remember being like, no, I don’t want to use keyboard shortcuts. And here I am so many years later from university. Keyboard shortcuts for Photoshop, keyboard shortcuts especially for Gmail, just knowing the archive one, and the next email one means it’s so much easier to fly through that initial trunk of emails that are in your inbox.

Einar: I do all my email processing on my phone. That’s my problem.

Rob: It’s fast on the phone. I will open it up first. First run through is it because it’s just left, swipe left, swipe left. I delete a lot of emails.

Einar: I don’t need to delete anything.

Rob: When I search, I just don’t want much. There are things that just should be deleted. I don’t delete email threads, but it’s like a notification from Airtable that the editor finished the podcast. But then when I search for a thing, then I get like thousands of results and that’s a pain in the butt.

Einar: If only someone would build me the product that I really want, which is a SQL connector so I can do SQL queries across my most important database, which is my email, but nobody seems to be doing that.

Tracy: You want that everywhere, yes. You want it in email, you want it in every table we’ve ever used at TinySeed.

Rob: They would sell one license. You’d be the one customer […] have to build a whole business on you.

Einar: I don’t believe that. Come on.

Rob: No one else would do that.

Einar: Are you telling me people don’t write SQL queries against their email? That’s ludicrous, Rob. Come on.

Rob: Nope.

Einar: I will fund this startup.

Rob: Oh, boy. Out of your own? I will veto that. You do that out of your own pocket. No TinySeed funds will go towards that. But if someone wants to build a submittable competitor, that’s a whole tangent.

Einar: That’s totally fine.

Rob: Yeah, I mean submittable is not great. We have looked at every alternative that does all the things we need and we have not found anything that works.

Einar: It’s turning into a request for startup. What else do we want to build in this world? I just want more startups, actually. It goes completely against TinySeed, but there are these accelerators now, which you can apply without an idea.

Tracy: Just back the founder?

Einar: Yeah. It’s just like, you seem smart, do one of these things. I don’t know. It’s interesting.

Tracy: It’s kind of like an entrepreneur in residence, right?

Einar: Yeah, the VC funds one, but that’s typically like, I already succeeded in some way, shape, or form, and now I get setup […].

Tracy: I’m already a success. I’m obviously going to be a success again.

Rob: All right, let’s head to our next story. Twitter makes it hard to choose the old reverse chronological feed. This is on theverge.com and subheading, you won’t be able to default to the chronological timeline. I just got sucked into the algorithm. I didn’t even know you could go back to the reverse chrono. Do you go?

Einar: Reverse chrono is the only way that I rush.

Tracy: Twitter doesn’t know why you use it.

Einar: They put on the Twitter on the Twitter iPhone app now. They put these two tabs, which is bad enough in itself. For me, the latest, the one that I use doesn’t even load any tweets. So I’m forced to look at whatever optimized algorithm thing they’re doing.

On top of that, whoever did the design didn’t manage to figure out that they’ve added a navbar, but it now hides part of the topmost tweet. I’m like, does nobody use this app? Where do you spend all your money?

Tracy: The team that is implementing the KPIs of trying to get people sucked into Twitter, and clicking on their ads, and whatnot is definitely a different team than the people who work on a user experience stat. It sucks. Twitter is dead to me. I don’t want to say that. I’m completely over at this point. It’s just really annoying because I know.

Einar: Wow, I’m not crazy here. I still spend hours a day on it arguing and things. Come on. What else would I do with it tonight? Oh, baseball’s back. Did you hear that the lockout ended yesterday? Good times, April 8th […].

Rob: This is where we stop following Einar Vollset on Twitter.

Einar: April 8th, baby. Come on.

Tracy: In my opinion, the dream of Twitter is over, at least the dream of people who used it more than five or so years ago back in its previous iteration.

Einar: In the old days.

Tracy: In the old days. It is a different product now. When I see things like this on The Verge where it’s like, ah, they keep moving forward into this other direction. This other direction is where Twitter is, and will be, and will never change.

People being loud about losing chronological tweets is why Twitter has been forced to continue to have some way for people to access that list. But obviously, they’re trying to make it harder, and harder, and harder until people just give up like I am and then move on to a different product.

I’m not being very negative here, but this is something. In the last month or so ago, it’s just like the dream of Twitter is over. I want another thing. If you wanted to use it to see your friends’ updates, this is not the product for it anymore. Twitter has evolved to a different product.

Einar: That’s not what Twitter is for. That’s never what Twitter has been, for me. Twitter has always been where I pick random fights with people like me, like to argue on the Internet. What are you talking about?

Tracy: Twitter loves that. Look at all the engagement you’re giving them.

Rob: I don’t know. What is the tool then, Tracy?

Einar: FriendFeed.

Tracy: No, there needs to be another thing.

Einar: That was FriendFeed. That’s what it was before they got acquired by Facebook.

Rob: The next thing came out, it’s TikTok. It’s not going in the direction that you’re thinking.

Tracy: I agree. Tiktok has kind of replaced that early Twitter. Talking to other people, I have refused to download TikTok. But I use Instagram instead for friends stuff.

Einar: We should just start doing TinySeed marketing on TikTok and make Tracy head of it, I think, maybe.

Rob: Yes, that would be great.

Tracy: And I can do the little dances I see, like cross post it over to Instagram. Yeah, that’d be great.

Rob: I’m going to confess here something I’ve never told the two of you.

Tracy: You’ve never actually followed us.

Rob: No, I’m definitely following you. It is probably once a week at most that I actually hit my feed on Twitter.

Tracy: Oh, same.

Rob: I look at mentions and the notifications of people liking things and then reply. And then I tweet things out that I’m thinking about or whatever. Today, I was asking about aside from Steli Efti or in addition to Steli Efti, like who’s someone that’s creating great sales content? I do stuff like that. The news feed—that’s what they call it on Facebook—I just don’t find anything there I like ever. It’s not interesting.

Tracy: Yeah.

Einar: How many people do you follow on Twitter? I’m curious.

Rob: 300? 200?

Einar: I see. I follow a thousand people and I think it’s too much. I’m thinking about maybe declaring Twitter bankruptcy, deleting all my followers, and start again.

Tracy: I’m actually in the process of doing that. Ever since I came back from vacation, I’ve been slowly deleting people because I would jump on and I’d be like, oh, and I realized I was following way too many VC people.

Einar: These are robbing our guys. Such […].

Tracy: It’s like constantly doing these thought leadership kind of performative tweets. I would go onto it and I’m just like, […].

Einar: That’s why you got to mute the word, a thread, or the thread symbol. That will make your Twitter experience much better.

Tracy: No wonder you don’t see anything I do on Twitter for TinySeed.

Einar: Wait, we do threads?

Tracy: We do threads, yes. For every article we’ve ever released, we have a thread version of it.

Rob: And that’s why he doesn’t see it.

Einar: We tweet them?

Tracy: That’s the thing. I use Twitter for TinySeed and that thought leadership thing is what works for TinySeed and we have a lot of, I think, clouts on Twitter through the TinySeed fund account. My personal account, though, before you say anything about me losing the fact that I was verified before and now I’m not. This is not related to that.

Einar: Hey, were you verified, Tracy?

Tracy: It’s a different product now. I see things like this in The Verge, where it’s like, oh, wow, Twitter is really focusing on these other KPIs and like, yeah, no duh.

Rob: They’ve been doing that and breaking the product ever since. But at least you didn’t delete all your tweets by accident, right?

Tracy: You have a lot of tweets. I went on it. I don’t know if those are cached, but I found ones that are quite old. I was wondering if you got some of them back.

Rob: No, Einar doesn’t listen to podcasts about this. I told him on a podcast a couple of weeks ago.

Einar: I don’t listen to your podcast? You release a podcast every week.

Rob: That’s right, every week.

Einar: I don’t have time.

Rob: Yes, you do.

Einar: I don’t have time for that because I have to go into my inbox, and get the inbox zero, and need to check Twitter for who to argue with.

Tracy: He’s too busy fighting people on Twitter and doesn’t listen to your podcast.

Rob: I have better systems. This episode is off the rails. Everyone has to adapt.

Einar: This is the best episode so far.

Rob: We will lose all our listeners if we have more episodes like this.

Tracy: Get to know how it is like at TinySeed by listening to this episode.

Einar: This is what it’s like, yeah.

Rob: This is like a weekly update meeting, except we’re missing Alex and Xander. With that, I think we will wrap up for the day. I think we’ve hopefully given the people what they want. Do you guys have stuff you want to chat about? Let’s do it.

Tracy: No, sorry.

Einar: Let’s see, baseball, Ukraine war maybe? Although, there is something interesting there because that is actually, I think, applicable to a lot of the TinySeed-type startups, bootstrappers, and stuff is the challenge now because so many people have developers in the Ukraine and particularly in Russia. How do you get those people money?

Obviously, there are people in the actual warzone and things. But even people far away from the front line, how do you get them? Upwork is closing. They’re terminating old Belarus and Russian contracts by the end of this month or sometime next month. How do you get money to people? I think across the board, that’s going to be a problem, particularly as sanctions tighten further.

Rob: Crypto.

Einar: That doesn’t work either because the problem is, how do you get money to them? Coinbase shut down all the crypto wallets out of Russia, so people can’t cash out.

Rob: They can have a bunch of crypto, but no money.

Einar: The only thing I’ve seen that still works, I think, is Deel, which is interesting because that’s the one with Rickroll at the start of the show. Other than that, I think if that starts to become a problem, I don’t know what’s going to happen. There are so many startups. I have teams in Russia or Ukraine, at least partially.

Rob: Yeah, and we have a few TinySeed founders in Russia and Ukraine. Obviously, our hearts go out to everyone there.

Tracy: Yeah. Reading our updates recently has been really rough because it seems like every update we’ve been getting for all the company, they have people in Ukraine or Russia, or they are developer teams and developed people on their team in those areas. It’s been rough.

Rob: Yeah. Our thoughts go out to all the folks there, obviously. No easy answers on the payment. I don’t know what’s going to happen. This is why this is such a mess. Yeah, so deel.com, I guess, if you want to check out the potential Rickroll.

If you want to hear about arguing and the San Francisco Giants, follow Einar Vollset on Twitter. We’ll put his Twitter handle in the show notes. And of course, @tracymakes is Tracy Osborn’s handle. Thanks to the two of you for joining me today.

Tracy: Yeah, thanks for having me.

Einar: Thanks for having me.

Rob: Thanks for joining me again today. I am @robwalling on Twitter. If you want to connect and obviously if you’re not subscribed to this show and you enjoy this episode, you should subscribe. Check us out every week. We’ve been shipping episodes since 2010 and hope to continue doing it for at least another decade or two. I’ll be back in your ears again next Tuesday morning.