Episodes

Rob: You better believe it. It’s Startups for the Rest of Us episode 575, where Derrick Reimer joins me to give a quick update on SavvyCal and what he’s been up to lately. He’s actually thinking through a hiring decision, and then we dive into listener questions. We talk about shipping code as a bootstrapper versus a large team, talk about pivoting and a zoom-in pivot—talk about what that means—and we answer more listener questions. Hope you stick around and join us.

Before we dive in, MicroConf Remote 3.0 is happening November 30th, December 1st, and 2nd. This is our third MicroConf Remote which is a virtual event. It’s the No-Code guide for B2B SaaS founders. We’re going to take a look at the ever-evolving world of No-Code, its implication for SaaS founders, and the best ways you can incorporate No-Code across your stack from marketing, to sales, to SEO automation, and more.

Once again, we will be using a really cool community platform that simulates the hallway track. It’s not just people talking at you. We usually have 20 minute conversations or talks, followed by 10 minutes of Q&A. Then we roll into hallway track time. You can walk around in a virtual world and meet other folks to simulate that.

It’s not a replacement for an in-person event, but we found a lot of folks who attended the remote events were folks who had never attended a MicroConf before because the stakes are so much lower here. The tickets are really inexpensive. It’s a few hours of your time over a couple of days and so it’s a great way to dip your toe in the water if you have enjoyed the previous remotes or if you’ve never been to a MicroConf.

Head to microconfremote.com if you want to get notified when tickets go on sale. With that, let’s dive into my conversation with Derrick Reimer, where I get an update on SavvyCal, and then we dive into listener questions.

Derrick, the last episode you were on was 532. This is episode 575, it’s been 10 months. You were back in January of 2021 and here we are in November. You want to update folks on SavvyCal and what’s been happening? I know that folks probably heard about your product launch back in January and you actually did a talk about that at MicroConf Remote, but you’ve been public about an MRR milestone you hit.

Derrick: Yeah, we’ve just recently crossed $20,000.

Rob: Congratulations, man.

Derrick: Thank you.

Rob: How’s that feel?

Derrick: It feels kind of surreal, honestly, because it’s one of those milestone markers that you always kind of envision in your mind when you’re thinking about building a SaaS. I mean, the first one’s $10,000 and then the second one is naturally $20,000. To me, $10,000 is you can pay yourself a pretty good salary and as long as you keep things pretty tight on other expenses, you can be profitable.

Then $20,000 to me is like okay, I can pay myself probably closer to a full salary and still have revenue to cover growth expenses, it’s really starting to get interesting. It’s pretty surreal to be honest.

Rob: Yeah, and you have no employees so your costs are very low. I know your server costs are relatively low and you have a couple of contractors and stuff, but that’s a nice place to be in. TinySeed salary […] quarter a million. You can ratchet that up as much as you want.

Derrick: Yeah.

Rob: It does bring up an interesting point. For those keeping track at home, $20,833 is a quarter million a year. It’s a quarter million ARR. What’s funny is aside from a million, I’ve rarely thought about ARR multiples. For some reason to me, it was always the MRR, right? The $20,000, $25,000, $30,000, $35,000. Is that your mental model as well? Are you focused on MRR?

Derrick: Yeah, pretty much. Although I’m kind of obsessive about checking my profit graphs and seeing where we are at currently, what’s the projected based on the way churns operating, conversion rates, and everything, and that’s constantly surfacing ARR in front of me. I’m probably a little more aware of it just because my metrics dashboard has it on it, but yeah, I’m always thinking MRR.

Rob: A lot of sales multiples are based on ARR. If you were to exit—I know you’re not planning to do that—it’s good to keep that in mind. It’s a trip because you’ve made it this far with no employees. I referenced this already and you’ve done something, in fact, that if a founder came to me and said, I want to be a sole developer and I want to hire out my marketing strategy to a consultant, contractor, and I want to outsource support as well, I would say, not sure you should do that. These are kind of core competencies of a SaaS app, but you’ve pulled them off. You both have been successful. How did you do it?

Derrick: I was just tweeting about this earlier because admittedly my end is one here. I don’t know how repeatable this is or how generalized this advice is to say this works all the time. On the marketing front, it was sort of serendipity finding someone like Cory Haynes. He’s a unique type of person where he has a lot of experience on this front. He’s ambitious, he’s building his own stuff, but was in a phase of looking for consulting work to bridge the gap.

He’s able to operate at the owner-level thinking and operating, that I think is probably pretty rare to find in a part-time contract person. I’ve been able to benefit from that and I don’t know where you find those types of people.

I’ve been asked before, I want to find a Cory and it’s like I don’t know how to tell you where exactly other than hanging out in MicroConf Connect, in the circles, and spotting someone who’s working on their stuff and looking for something to bridge, I guess.

Rob: People call it a unicorn and not in terms of the billion dollar outcome, in terms of someone who is so unique. A developer who can also market, or product person who’s really good at UX, and also back end development like yourself who can go all the way from front to back, that’s it, unicorn.

There are only a handful of Cory Hayneses that I know, of people at that caliber who can do marketing strategy, which is that owner-level thinking you’re saying, because from my understanding is he came in and you’re like, cool. What should we do? He was like, well, I have all these ideas of things we could do, and you’re like, great. Can you go do them? Which is marketing tactics or marketing implementation.

Those are two different levels and they’re usually two different roles at a company, and to find one person like […] is another one who can do that. Back in the day, that was a role that I did. I wasn’t as nearly as good as the two people I just mentioned, but it was something that I felt like I had to do because I couldn’t find anyone to do it and didn’t have the money to hire two or three people to do it. That’s often why people raise funding. It’s to be able to hire these roles.

Derrick: Yeah. I like to think that I’ve been trying to build up my skills in this area. I have some generalist founder skills in the area of marketing, but still not as specialized as the type of stuff that Cory has been steeped in for so long.

We talked about the product launch and I was like, yeah, we should do that. It may or may not work, we’ll see. Then he proceeded to layout a doc and architect a strategy that’s multiple pages long of, we’ll time emails at this point, we’ll reach out to some people at this point, and send an email to the list like this, and we’ll make sure to focus on this part.

It was just very meticulous and well-planned. I think part of it is luck and part of it is execution on the results that we saw from product time. If I were just my many hats wearing founder person doing the product launch, I probably wouldn’t have put nearly the amount of time into it just because it spread so thin already and maybe wouldn’t have seen the same results. It’s been good to have someone like that on the team.

Rob: I think so. You hear me say it ad nauseum, hard work, luck, and skill. I think you finding Cory, there was some luck involved in that. Also, you put in the hard work of having a podcast and building a personal brand to the point where it’s probably pretty appealing for Cory to work with you and work on SavvyCal because he knows that you’re not a schlub, the products good, the odds of it succeeding are good if he brings his chops.

Derrick: Right, yup.

Rob: Very cool. Anything upcoming that is super interesting or happening right now that you want to mention?

Derrick: Things are feeling like they’re starting to kick in. To summarize the last year, it’s been a lot of investing in different things, podcast sponsorships, PayPerClick ads, affiliate programs, and SEO. We’re trying all the tactics and trying to invest in them appropriately, and it feels like things are starting to really kick in. We just had our best growth month in the month of October since February, since right after the product launch, so that’s been exciting.

I think coming up, I am always flirting with when is the right time to expand my direct team, the product and engineering side of things. I’m still basically doing all of that work. I’m actually having a couple of conversations that I’m pretty excited about with some potential first engineering hires, so that’s pretty exciting. It feels like a big step and one that I’ve been kind of tiptoeing towards because I know it changes things significantly, but hopefully for the better to bring someone in on that side.

Rob: Especially if you’re bringing the right person, right? Someone who really, really elevates it. I feel like a good piece of this is like you’ve already been through this with Drip. It was just you for a while and I know that I did a lot of the initial interviewing and stuff, but then we co-interviewed and kind of went like I don’t know, should we hide this person? Yes. You know what this feels like.

Derrick: Yeah, it’s been demystified a little bit.

Rob: Exactly. While we were still bootstrap before the acquisition, we went from one to what was it, three engineers? I think we were three, then got acquired, and then by the time you and I left, were we 16 engineers, 18 engineers? You’ve seen it grow.

I had joined some companies early, before all of this when I was still working a day job. I had joined maybe a four-person engineering team, I think was the smallest that was ever on, aside from consulting firms where oftentimes it was just two of us, but we’d gone from 4 to 24, and I knew that I didn’t like the larger teams, but I had never been a sole engineer and grown it like that like we did with drip. You kind of know some of the mistakes that we’ve probably made and you’ll do it differently this time, right?

Derrick: I think last time with Drip, we were sort of trying to be very scrappy, we’re kind of funded by HitTail. Like how can we get some help without it hurting the bank account balance too badly. Thankfully, with the help of TinySeed funding right now, we have the resources to go after a more senior level hire, which is going to be pretty exciting. Once we got to the post acquisition phase and we were kind of building the team with senior engineers, it was very nice to bring in someone who could really slot in quickly.

I’m all for hiring juniors and training them. I think there’s a lot of value in doing that, but I feel like at the stage I’m at right now, the company will really benefit from having a senior level person right now. Then we can work on training juniors when we’re a little bit more mature.

Rob: Yup, and why is your first hire an engineer versus any other role you could hire in a SaaS company?

Derrick: Part of it is I see myself holding back on certain opportunities to move the business forward as kind of the founder and business person because I’m so focused on product. I have a very long roadmap. There are lots to build. I can kind of peek into the future when I do some exercises of trying to just set a vision for where we can take things, and I just know there’s a ton to build.

If I’m focusing all my effort on that, then I’m probably missing out on other opportunities to kind of oversee the overall vision of the company. Getting some help on that front so that I can free up some mental headspace is going to be really important.

Rob: It’s interesting we’re on this topic, because our first listener question of the day is pretty much about how should a bootstrapper approach software development tasks differently compared to executing a project at a company.

Derrick: Great segue.

Rob: Yeah, it really is. I apologize to the question asker, Pramad. He sent this back in April, so it’s been a few months. I’m sorry, sir. Haven’t done as many listener question episodes, and also voicemails and video questions go to the top of the stack. If you have a question you want answered on the show, you can email it directly to questions@startupsfortherestofus.com, or head to the website, and you can click a button. There’s ask a question at the top and we use video ask, and you can just click and submit an audio snippet from your phone, or your laptop, or a video as well.

Pramad asks, “It seems to me that the early stages of developing a product as a bootstrapper need a different approach compared to executing a project at a large company. Practices like writing detailed design docs, unit testing, and code quality don’t help as much.” I’m cringing a little bit when I see code quality and unit testing, that matters much but I’m going to get through this, detailed design docs I agree with. “The ambiguity is a lot more and so are the constraints on how you can execute. Have you noticed such differences in how a bootstrapper approaches day-to-day software development compared to executing a project at a larger company?” What do you think, sir?

Derrick: I’ve thought many thoughts around this. It is a tricky balance to strike so I don’t know what stage our asker is at on his particular product. I think things shift a little bit, if you’re building an MVP versus building a product that you’re pretty set on continuing to build out.

I can kind of speak to both phases. The MVP phase is the hardest one to strike this balance, I think, because on the one hand, you risk over engineering things. You spent too much time on bulletproof code and then if you’re using truly as an MVP, and you’re testing in the market, and you determine it’s not actually viable, well, now you’ve wasted all this time building a really good version of something that’s never going to see the light of day.

The flip side is that you end up building something that’s really really brittle, really buggy, and maybe you validate it, and you start to get some traction. Then suddenly you have to grind to a halt because it’s time to rewrite and build the real product from the ground-up and then you miss out on all the momentum that comes from getting it into market.

I’ve seen startups do both. My instinct is to lean on building something like a code base that if the MVP proves to be viable, that you can continue on that code base and not have to stop and rewrite.

For me, I’ve kind of gone through different phases in my feeling very adamant about lots of tests. When I was a newer developer, I was sort of steeped in the Ruby on Rails culture of test, test, test, test everything and it’s definitely really important. I think there is sometimes a tendency to over test.

Sometimes you just write tests around things that don’t really need to be tested like little granular unit tests that don’t necessarily provide much value and even make it harder to build out and mutate your codebase over time.

You do some of those things for important little bits of logic that have to be right, but in general, I would focus more on kind of integration tests like testing the entire system, focusing on your really core functionality, and what tests help you do? Yes, it helps ensure correctness, but they also help you architect better code and that’s kind of the hidden secret about writing tests is your code quality comes out better by nature of running that process.

That’s what I think on testing. I wouldn’t want to skip the test. I’ve definitely probably written fewer tests for SavvyCal than I did for past products in the name of moving fast, but I’m definitely testing that core functionality heavily to make sure it’s correct.

I have other thoughts, too. I say err on the side of writing monolithic code bases. You see larger teams building microservices and separating their front-end from their back-end and building API layers in between. That stuff that teams do in order to kind of have independent teams have to take responsibility for different parts and that’s only going to slow you down and over complicate things when you’re building your product.

I’m a big fan of the monolith code base where everything kind of deploys together, lives together, and you can lean on tooling. Ruby on Rails has fantastic tooling for building server side views that spit out HTML, then you can layer on React if you need that, but I’ve kind of stuck with this sort of hybrid model of if a page can just be server side–rendered HTML, then just do it that way. If it needs something more complex, then you can pull in something like React for that page.

Rob: Yes, that’s my tactic as well. It’s a little old school, but it is just simple. I think Drip, which is quite a complicated app. Most apps people build, not putting as much data through. They don’t have the billions of rows. They don’t have the tens or hundreds of millions of queue jobs that are being processed every day. It was intense.

I think we were doing close to $10 million ARR and it was purely still a monolith. Eventually, they had to break out for performance and because once you get 16–18 engineers, having a monolith is a problem. To your point, you can make it to life-changing levels, especially if your app is even simpler, but you can make it further. This is kind of what I’m saying. Keep going. You’re on a roll there.

Derrick: Yeah, I think it goes without saying, go light on the process. I was thinking back when we were building the drip MVP, we had the spreadsheet. We just made a list of features and we put our estimates on them, which I think helped us to wrap our minds around how much time is this actually going to take? Do we need to cut scope if we want to come in at the time that we were hoping to meet? What’s that function called in Google Sheets? It’s like work days or work hours or something?

Rob: Work days, I think.

Derrick: Yeah. It was kind of a scrappy solution, but it was actually pretty interesting to track that and see are we falling behind on what we’re aiming to achieve? Or do we need to cut some things? Or can we afford to add in some things? I think the most important thing there is that it was very, very lightweight. We didn’t implement JIRA from day one and over process this thing. This is the approach I’ve taken, I’ve gradually layered on more processes.

One thing I have done, though, is I set up continuous integration early from the get go. Every time I push code to GitHub, it’s running through CI, running the test suite even though the test suite is tiny. You have those parts there in place that kind of reinforce your best practices.

I’ve been doing GitHub workflow from day one, even though I’m just one developer, I’m still pushing code on branches, cutting pull requests, I will kind of self-review code and just give it a sanity check before merging it. That’s a good muscle to build up to as opposed to just pushing everything on master all the time and sort of just build bad habits. I think there’s a lot of benefit to still pretending like you have a small team with you so that you’re kind of ready when you bring on your first hire.

Rob: Right, but also not writing a three page Word doc to describe a feature. In fact, if I was writing the code, I wouldn’t write anything about the feature unless I needed to think it out. If I had it in my head, I would build it.

If you need docs, you can write docs later. Nobody will go back and look at the design docs. They’re going to look at the code. The only thing that I would document is if you make a decision and you know this is either counter-intuitive, or it’s something I really want to remember why I decided to do this, then document that somewhere. Is it a gist you do it in GitHub?

Derrick: Yeah, that’s one place you can do it. It’s basically like a lightweight document that lives at a URL. That’s a good way to do it. I feel like that is honestly my guiding principle on when I put code comments in. Code should be pretty self-explanatory, but when there’s an odd decision that was made, or something that’s kind of unique, or special about that decision, that’s the place to drop a comment, in my opinion.

Rob: If you’re working solo, it’s one thing. If you had 20 developers, then you have all this process that Pramad is asking about. Let’s say you had one or two developers. There’s an in-between where you have to have some processes. At that point, Derrick, let’s say you’re running product, in essence, and also coding, then you have two developers. You’d be developer-heavy, but for the sake of argument that’s what you have. You would have to put something into it. It could be a Trello board, it could be Notion board, it could be GitHub issues.

To say build this fee, add this setting on this page, this is what it should do. If it hits this controller, does this thing in the database, you can use an existing field. I’m mixing product and technical design here, but that’s a luxury you have. You can do both. You don’t need two people, right?

Derrick: Yeah. I think it’s knowing you achieve a certain level of understanding and context by onboarding the new engineer. You probably should be spending time with them. Probably a two-ple or something like that, pair programming, and getting them up to speed on the code base. Then at a certain point, it’s like, all right, how much information do I actually have to spell out about this next feature?

Certain things are going to be obvious, and then there are certain non-obvious things. That’s what I always spend my time focusing on, pointing out the parts that are non-obvious and foregoing being complete and comprehensive at that stage, because it’s going to slow you down quite a bit and probably not provide much value if it’s just a couple of you.

Rob: Yup, as little process as possible because it allows you to move faster. Your biggest advantage at this stage is that you can move so fast compared to larger companies because they do have a need for so much more process.

Derrick: Indeed.

Rob: Thanks for the question, Pramad. Hope that helps.

Next question is from Victor, who was just from a month ago. How did that happen? Well, I’m glad we’re able to get to this so soon, Victor. He says, “Hi, Rob. I’m a longtime listener, a huge fan. After listening to the podcast for more than two years, I created my startup six months ago. Now, I’m considering a zoom-in pivot, but there is another startup offering the same service and they have been recently acquired. The market is far from overcrowded, but I wonder would you pivot and enter the market, if there was a startup offering the same service with potential access to a huge amount of money?”

For those following along, zoom-in pivot is where you build a product, then you either realize that there’s a specific vertical that you want to zoom in on, or I believe, you can zoom in on a specific feature. Like, we’re going to get rid of half the app. This one piece is what everyone loves. We’re just going to ditch the rest. I think that’s my interpretation of a zoom-in pivot. What are your thoughts on this, Derrick?

Derrick: I would say, just because there’s a well-funded competitor in the space doesn’t mean that it’s necessarily a bad idea to go in there. That’s what I’m doing myself. I’m entering in the scheduling space. There are 800-pound gorillas galore in that space, and I’ve managed to carve out a little slice that I’m working on building. It’s definitely doable.

I think I would be thinking about, do you have any particular unfair advantages in that space? I think it’s much harder to enter a space like that. If you don’t have a deep context about the market, know the pain points, maybe have connections or a network in that space that you can use to initially get your product launched in the market. Are you insanely skilled in an area where the big competitor is lacking? If customers value UX in that space and the large well-funded come in and just don’t have that in their DNA, that’s your opportunity to seize.

I’ve heard people say, like, well, they can just hire people and get better at UX. But that’s a lot easier said than done. Companies that don’t have something like that in their DNA, as an example, do have a very hard time getting really good at that. Something like that, that you can leverage to your advantage to make you stand apart. I think that the important thing is figuring out what your key differentiator is going to be, then honing in on that really strong. If you’re thinking about zooming in, that sounds like you might have a hypothesis about something that you have a unique take on or will really speak to a burning pain point that maybe a subset of the market has.

I think that’s the other piece. I’m competing with well-funded competitors. By nature, a lot of these competitors have positioned themselves very broadly. Calendly is easily scheduling ahead. That’s their H1. It’s not speaking to any specific pain around scheduling. It’s just like we make it easy, because they’re speaking to a really, really broad market segment. That gives me an opportunity to speak a little bit more narrowly to something more specific that people are experiencing.

Rob: I think that’s really good advice. I think the only thing I have to add is not only are they a well-funded competitor, but they’ve already been acquired. Once a company is acquired, the founders are usually not going to stick around 10 years to drive it like they have. There’s a clock ticking for them to leave. If they had just raised a huge funding round, then it’s like they’re trying to get to exit or that get to the next round.

I’m not saying every founder who sells checks out or anything like that, but some do. Also, the odds of these founders being around in two, three, or four years are small because they got their payday. That’s even more reason that I think that you could probably make up some ground on this startup. I wouldn’t be concerned by this very much at all.

All right. Our next question from Lorenzo is about whether to use a progressive web app—we’re going to abbreviate it as PWA—or a native app for a SaaS startup. He says, “Hey, Rob. This is Lorenzo from Italy. I’m working on a concept for a new SaaS startup and I’m thinking of bootstrapping. My next concern is how to keep costs under control, manage complexity at a reasonable level, and create a platform that is future proof.

Among my doubts, there’s one related to the technology to be chosen upfront to build such service. I would expect it would be used 70% from mobile and 30% from desktop, would you suggest I develop the platform as a progressive web app (PWA), or two native separate apps, one for iOS and other for Android?

I’m inclined to do a PWA but I have doubts, given that only Google seems heavily committed towards this format. It seems to me Apple still prefers native apps on which they can have a cut of the monetization within the app store. What do you think?”

Derrick: I think it’s extremely difficult to pull off implementing multiple platform versions of your same product. We’ve seen many examples of this from the history of startups. Facebook being a big one. Historically, they had native apps only and they pivoted over to being a web app. I think they’ve gone through different iterations.

They have React Native now, which could be an option of taking web code and compiling it down into a form of native code. There’s certainly one way to achieve this on desktop apps, like Slack for example. It’s still an Electron app, still a web app running in a shell.

We’ve also seen another example from the community. Twist (I think) is a Slack alternative. They were for the longest time committed to building native versions of their apps, trying to optimize for a very fast, snappy, and native feeling experience. I think they recently pivoted away from that as well, because the burden of doing that is just extremely high.

Every single feature you add into the one UI, you now have to go and write code to implement it over there. You end up with things naturally drifting apart, synchronizing engineering schedules, not to mention the cost of doing that is pretty immense. I would strongly recommend unifying it under one code base, and just opting for either using a web wrapper technology like Electron, or something like React Native that might let you reuse the same parts and compile it down into native.

Rob: Usually, I have a bunch of things to add on to these answers. But really, I was basically going to say, yeah, don’t do it. These big companies try it and it’s like Napoleon invading Russia. They run in, like it’s cold, it’s cold, and they run out. It’s like that over and over. It’s happening, right? Was that the 1800s? The joke was not a good one, was it? It’s actually a reference to an Eddie Izzard comedy sketch. Go check that out if you haven’t seen it.

Is white labeling an option for getting started? That’s our next question from Devin Tracy. He says, “I’m not technical, and I’ve never owned a SaaS. So when I started listening to your show, everything was just entertainment for me.” That’s funny. Entertainment, this show. “But now, I have white-labeled a SaaS that I’m starting to try and market and sell as my own. Suddenly everything you say has relevance beyond the entertainment.” That’s cool. That’s once you start doing things. That’s usually what happens.

“I’m curious about your thoughts on the white labeling approach I’m taking. I do hope to have my own SaaS one day, perhaps learn coding, more likely be a non-technical founder. I’m hoping this can be a good route to help me get my feet wet, maybe even build some revenue. I love all you do and appreciate the podcast. Much gratitude, Devin” What do you think of this?

Derrick: I was actually trying to understand how the model is working when he’s saying white labeling. It sounds like there’s a product that he has licensed to become a reseller of it sort of thing?

Rob: Pretty much. You can imagine, let’s say that there was an email service provider. Whether he’s paying them X amount per month as a flat fee or per year, or he’s paying 30% of his revenue that he generates to them, but then he has his own website, own domain, own logo. Usually, this is like a white label is to go into a vertical. There’s an ESP selling to everyone and then you want to build this ESP for realtors. You just pre-populate it with content for realtors, you market it to realtors, and you call it realtyesp.com or whatever. That’s a terrible name, don’t use that, but that’s the idea. He didn’t say that, but let’s assume that’s the example.

Derrick: In that case, it seems like this could be a good stair-step. I think especially if you’re looking to level up your chops on the non-technical side of things, on marketing and selling. If you’re looking to experiment with figuring out how to do SEO, do a content strategy, do pay per click or partnerships, sponsorships, all those things, I feel like you could practice those skills and deploy them with this off-the-shelf product that you’re bringing into a new market.

If you’re looking at another big part of operating your own SaaS, is developing the skills on how to interview customers, iterate on product-based on their feedback, set your roadmap, managing development cycles, all those things. It depends on what skills you’re trying to develop. I see no issue with using this. This sounds like his goals are to bring in some revenue, and to level some skills in a particular area that will apply to someday running his own SaaS. To me, it seems like this could fit that bill nicely.

Rob: I feel similarly to this, because the whole point of the stair-step approach is that it’s really hard to learn everything all at once. It’s like there’s product, there’s engineering, and there are all the things around marketing. When marketing itself has 20 different things, you have to learn to be any good at it. Then there’s sales, then there’s support, then there’s operations, on and on and on. Learning all those things at once is really tough. That’s why a step one business eliminates a bunch of that. Usually it’s in a marketplace or something. So you don’t have to learn all the marketing. Maybe you’re just doing the coding, some promotion or whatever, some ranking, but then it’s support.

This approach of white labeling is similar. As you said, he’s trying to limit the number of things he has to know, all at once. Then he can learn other things, the innovation, or the product management, taking in customer requests, and actually going and building stuff. You could learn that later. There are obviously risks here. You have platform risk that is crazy because you are beholden to someone who, I don’t know, can they revoke your license? Could they just shut the whole thing down and stop supporting it? There’s risk there.

For me, I wouldn’t be like, I’m going to build this $5–$10 million business and exit. I would be concerned about trying to do that. But I could see building a cool lifestyle business on this, that $10,000, $20,000, $30,000 a month with just you. You don’t need developers because you know that you’re paying this other company, essentially, to develop it or to maintain it or whatever. You just have to handle support and marketing. Really? I’m intrigued with that, especially as a non-developer founder. I’m curious. I mean, Devin, I hope you update us because I haven’t heard anyone do this before.

My initial take is similar to Derrick’s. I don’t see why not. If I wasn’t a developer and wanted to do a SaaS app, I think it’s an interesting approach. Aside from the platform risk where you just have to go into a vertical, because there’s no innovation happening here.You’re not able to make the decisions of what gets built.

If you go into a space where it’s a constant feature race, you’re going to get out-featured. If you were in the scheduling link field, or if you are an ESP that’s not niched down to a small vertical space, I think you’re going to get crushed because you’re just not going to have anything unique to offer the market. That’s probably a word of caution. I would look ahead into spaces where it’s not that feature race and the constant need for innovation.

Derrick: That’s good advice. Also, a big part of making progress towards having your own software product is making sure that you are tackling a worthwhile problem. I feel like this could be an interesting way to discover. I don’t know if this is a field you would want to continue staying in, but you could potentially build up something here as you build this business that would help you towards your next endeavor. You don’t feel like you’re going to have customers in this space, contacts, partners, whatever.

You may discover this product is not cutting it anymore, this white labeled one, but maybe you have an angle on solving problems for this particular group of people that then you can start head down your path of partnering with a technical founder or whatever. I think it could be a good way to learn some deep insights that will inform what your next product could look like.

Rob: Indeed. Thanks for the question, Devin. I hope that was helpful. Our last question for today is from Nicholas. He says, “Broker or no broker when selling a single-founder business?” Nicholas says, “I was wondering your thoughts on when selling a bootstrapped single founder business with no employees whether to use a reputable broker to facilitate the entire process, someone like Quiet Light Brokerage or to use a marketplace like MicroAcquire or Flippa. When is using a broker worth their cut of the deal?”

Obviously, there are other brokers. There’s FE International. I’m trying to think of who else, like Empire Flippers and such. I believe the commissions on those are usually 10%–15%. You and I both had experiences selling businesses through brokerage, so what are your thoughts on this?

Derrick: I think it depends on the size. I’ve had a few projects that I have sold on my own very, very casually, lightweight. I built a product called StaticKit. It had just a little bit of MRR, but wasn’t really in growth mode at all. I wanted to rehome that app and find a place for those customers who were using it to find safe ground somewhere else. I managed to reach out to a competitor and said, hey, I’m looking to exit the industry. We just lightweight negotiated a price and sold that. I also sold the IP for the level.app domain when I shut that project down. I didn’t use a broker for those.

I have had a SaaS app called Codetree that was around $4000 MRR, sort of flat on growth. At that time, it was a side project and I was building Drip. I couldn’t imagine trying to shop that around, find potential buyers, then go through the negotiations. It just would have been an immense distraction. At that phase, it made perfect sense to do it. I think even with our Drip experience, we obviously had professional help on that front.

That deal took a year to close. We needed to focus on continuing to grow and run the business. The guy who was helping us did so much legwork. It’s a full-time job for a deal of that scale. I definitely wouldn’t have tried to do that on my own.

Rob: And that’s the thing. I do think it depends on how comfortable you feel with your own skill set. Some people are good at negotiating and are naturals or they’re comfortable, and other people really don’t want to. In which case a broker is going to help you and advise you. Some people feel like they can put their business up on a MicroAcquire or Flippa.

These days, I think certainly if you have a SaaS app or a software product, I would be on MicroAcquire if I was going to pick a marketplace. They’re the leading one. I had the founder here a few months ago.

It depends a bit on your skill set and experience. The tricky part is, you say, well, I’m going to give a broker 10%. That’s a lot of money. You can also make a single mistake that costs you 20%. It’s not hard to do that, so that’s that balance. I would say if you’re running a SaaS app that’s doing north of a million dollars, I can’t imagine trying to sell that or really any business. It would be a challenge.

Now, you and I have a mutual friend. We’re in a Slack group with a small founder group. He sold his business on MicroAcquire for a good chunk of money. He did it all himself. He has a ton of experience doing that related stuff, not in software, but negotiating, cutting deals, figuring things out. Deals are a thing he’s done a lot of.

A lot of us, especially software developers, have not. We’ll do a handful of deals in our whole life. I would say again, if you’re north of a million dollars of SaaS, not only what I want to a broker I would talk to so there are people who specialize in this. Discretion Capital is a sell-side, M&A advisory, and they help SaaS companies who are north of a million dollars sell their companies and run a whole process. That’s one. Quiet Light, for sure. It has just been around and helped a lot of folks doing that.

I think you have to think about what value does the broker bring? What gaps do they fill especially the higher it gets? The other interesting thing is the higher the purchase price, the commission’s usually come down. Broker isn’t going to come and consult on a $20 million sale and take 10%. They don’t take $2 million in commission. The number actually comes down the bigger your sale gets. I think your point of the size is important to consider your experience.

I don’t know. The marketplace versus the broker thing, I guess that it’s similar. It’s like if you’re in these marketplaces, it’s a lot more. You’re on your own. They don’t have advisors. Are you willing to take the risk and make the mistake, potentially, maybe not having an optimal exit because you don’t know what standard or what you should ask for when you’re doing it for the first time?

Derrick: Yeah. I recall when I was selling Codetree. First of all, the broker had people that he knew that were interested already. He was able to bring potential buyers throughout the listing but also did some direct outreach. The people who ultimately bought it were on that shortlist of people that he knew were already looking. There was a little bit of that shortcutting the process already. He knew how to manage the leverage properly. I think he did a very, very good job.

Actually, the buyers wrote up a very honest blog post about the whole process and talked about how they reached a point where they were sort of stuck. He was just very good at doing the negotiation, definitely not the skills I would have had. As soon as we got a serious offer in the door, he was making sure to continue to look for backup offers and run that rigorous process to make sure that we had the right amount of leverage on our side.

I don’t know how much of that comes baked into some of these marketplaces, or it’s just like you receive offers and you can negotiate with them back and forth, but it’s you to potentially look for a backup and make sure you can use that as leverage.

Rob: That’s the thing, if this is your only business and you have a bunch of time to do it, and you want to get the commission, then to your earlier point, well then do it on your own. I think if you’re onto another thing, like you building Drip, you cannot manage. It was stressful enough as it was. It was enough time because I did the same thing.

I sold HitTail maybe six months before you sold Codetree. I was going through the same thing, obviously went through a broker because we were busy building this incredible business. I wanted to get rid of this. Not to get rid of it, but I want it to be off my books.There was no way I would have managed that process. So that’s the thing.

Here’s what I think, dude. I am so happy that our mostly bootstrap space has evolved to what it is, where it is easier to buy and to sell apps, because the first app I ever bought was in 2006, 15 years ago. It was a […] show. I didn’t know what I was doing. There was no material on it. There were no brokers. No one would touch this stuff. There were domainers at that point. I got taken advantage of and it eventually worked out. It was done. It was hard.

It was my first one that really caught and got $2,000, $3,000, $4,000, $5000 a month, depending on the month. It was not SaaS, so it was really, really spiky. The multiples were crazy low. I used to buy stuff between 12 and 18 months of net profit. I used to buy at Flippa. A lot of the reason I was able to quit the day job was because it was just cheap. On the buyer’s side, that’s great. But these days, the stuff we build to build Codetree to $4000 a month, that’s a great little bootstrap business, lifestyle business. You weren’t going to live off it, but it was nice side income.

To sell it for $120,000—that number is public, I’m not just disclosing anything—that was a great win for you and that kind of multiple. Even these days, I think it’s like four to six. If you’re under a million, usually it’s like SDE net profit is about four to six-ish. If you’re over a million, it’s like four to six of your revenue, not of your profit. These are ballpark numbers, can’t quote me. Yes, of course, some sell for 9 or 10. If you’re declining, you sell for less.

That’s great for us, because we’re makers and builders. It means even if our project doesn’t turn into everything we want, there’s still value there. I think they’re still going up, too, by the way. There are a lot of buyers, there’s a lot of money floating around, and there are only so many of us. There are only so many people making these things, doing a good job and even getting to $5000 even, the funnel narrows.

There is a dearth of those types of businesses, which means the supply and demand is a seller’s market in a sense. That is why these prices keep going up, which I think is good. I think it’s good for the ecosystem. I’m glad it’s made a little more official. It’s like brokers made it a little more official.

Yes, they take a cut and yeah, they have a big buyer list. Are they on the buyer side or the seller side? I hear all these arguments. I hear you but we are better off today than we were 10 years ago. Certainly more than 15 years ago.

Derrick: Well said.

Rob: All right, sir. Folks want to keep up with you. You are @derrickreimer on Twitter and of course, savvycal.com. If they want to see one of the nicest SaaS homepages on the internet, how do you do it? Every time you do it, I’m like this guy is unreal. We’ve known each other a long time and you never cease to amaze me with this whole design stuff, dude.

Derrick: I appreciate it.

Rob: All right, man. Thanks for coming on.

Derrick: Thanks for having me.

Rob: Thanks for listening again this week. Thanks for coming back every week. I’m trying to be really mindful of putting out content that I think is varied. That hopefully keeps you entertained and interested in wanting to hear the next episode. So until I’m back in your ears again next Tuesday morning, hope you have a great week pushing your business forward.

Rob: We’re back with another episode of Startups For the Rest of Us. I’m Rob Walling. This is episode 574. This week, we’re back talking to a founder who just couldn’t get away from software. He’s a software developer-turned-podcaster-turned-marketer, and now he’s a software entrepreneur. He’s the founder of Lasso at getlasso.co, which is affiliate management software for WordPress websites.

The founder is Andrew Fiebert and he co-founded the business with his wife, Laura, back in 2019. I really enjoyed my conversation with Andrew because of the path that he followed. It was so not predictable to watch him be a software developer by day and then to start a podcast about personal finance almost by accident, and then to have such success with that that it rolled him into his next thing, and his next thing, and he just keeps reinventing himself.

Before we dive into my conversation with Andrew, I wanted to let you know that the State of Independent SaaS survey is live once again. This is our third annual survey. We will have the report ready in just a couple of months. We usually present that at the end of January. If you haven’t heard of the State of Independent SaaS, or haven’t participated, or if you have, we’d really love for you to take about 8 minutes, maybe 10, if you sip your coffee while you’re taking the survey, head over to stateofindiesaas.com.

We will have a link there where you can get to the survey. It depends on the path, and the choices you make during the survey, or the answers you give, but it’s about 30–40 questions and it should be things that you know off the top of your head—how many founders do you have, what’s your MRR, that kind of stuff. It’s all anonymous.

We put this survey together to help the community, the mostly bootstrapped SaaS founders that we’re calling independent SaaS or indie SaaS. The idea is for us to have some type of benchmark. Not only that we can look at a point in time, but then look at trends over the years. Now that we’re doing our third survey, I’m super excited to see if the trend continues from last year of more people offering free plans, of more companies offering free trials, and fewer companies asking for a credit card before their trial.

Each of those ticked towards basically moving the free line about 3%–4%, something like that, so I’m curious to see if that’s going to hold solid, if it will reverse, or if it’ll keep going. We need your responses in order to be able to do that. Again, everything’s anonymous. I’d love to have your data be part of that report. With that, let’s dive into my conversation with Andrew Fiebert of Lasso.

Andrew Fiebert, thanks for coming on the show.

Andrew: Absolutely. Thanks for having me.

Rob: It’s not often that I have a podcaster or a former podcast or on this show. I got to be honest. From way back in the day, you started Listen Money Matters in 2012.

Andrew: Yeah, before it was cool. I think we left right when it became cool.

Rob: How long did the show run?

Andrew: I want to say eight years. It was a large part of my life at this point.

Rob: I bet. I had heard of the show before you and I connected. Obviously, you’re a part of batch three of TinySeed with your WordPress plugin, the Lasso. It is interesting how there’s this thread through your story of you start the podcast with your wife, start an affiliate site, and then you need to scratch your own itch and build a WordPress plugin. Those sound disjointed or they sound like they’re all over the place in terms of a podcast, affiliate site, and now software.

There’s a thread that ties them together. That’s what I want to cover today, is how interesting these stories can somehow unfold? When you started the podcast, did you know how you were going to monetize it? Did you plan to make it an affiliate-type product?

Andrew: We knew how we were going to monetize it from day one, and then that didn’t work. Then we knew what would work next, and that didn’t work. I think it took us about three years to actually make money. But we were certain for the whole first three years how we were going to do it wrong, I guess.

Rob: No doubt. I guess to flash forward—I’ll talk about Lasso briefly—from your H1 on your site, it says your affiliate site is losing 30% of its revenue, fix your broken links, find new affiliate opportunities, and create product displays that convert. It’s a WordPress plugin that you charge a monthly or a yearly subscription, which in itself is a relatively unique thing.

I think annual subscriptions are sometimes common with WordPress, but have you—having a WordPress plugin with a monthly subscription—gotten pushback on that? Because so many WordPress plugins are free, and then some of them charge annually, and I think there’s a smaller number that do monthly recurring.

Andrew: I’ll maybe give up my cards a little bit. We’ve only gotten pushback on price for sites that clearly would not be a good fit or are not really bringing in revenue. But maybe the giving up the cards’ pieces, half of our revenue is monthly and half is yearly. I think the existing people out there, being only yearly, they’re just turning away half of their customers, I think.

Rob: That’s super interesting. You have a team of nine people working on Lasso. You yourself are a developer and you co-founded these businesses with your wife. I have some founding teams that I love in terms of the roles. I love a subject matter expert and a developer. That, to me, is what the two of you are.

The subject matter expertise in terms of Lasso is affiliate marketing. Your wife runs an affiliate site. It’s called giftlab.co. Unless I continue to just monologue here, I want to roll back to where this story starts. I feel like it starts with Listen Money Matters, is that right?

Andrew: Yeah.

Rob: It started as a blog. Why did you start podcasting? Because you told me that story offline and it’s hilarious.

Andrew: I started the blog because I want to make passive income. Obviously, I thought it was as easy as it was not going to be. Then someone commented on the blog, his name was Matt Giovanisci. I had maybe two other commenters at the time, so I was really excited. I reached out to him, we chatted, we actually met in person.

I just would Skype with him on building business things. We didn’t know what we were doing. I would talk to him about money. He was living with his brother, he was poor, he wasn’t making money, he quit his job. I kind of berate him for being bad at money or tell him what I would do maybe slightly. I don’t know.

Anyway, my wife would hear it and she was like, you guys should record this. I didn’t even really care to do any audio or use my face. We recorded it. There weren’t really any other personal finance podcasts out there at the time, and it blew up.

Rob: That’s crazy. Do you think it’s because you were early? Was it especially good? Because I’ll just tell you, when I look back at the first 10 episodes of this podcast, they’re not good. We were early, we were in 2010, and we just built over many years. Do you feel like you had a better handle on it? Did you have that performance aspect? Or are they also equally not good?

Andrew: No. We didn’t know what we were doing and it was objectively really bad. I don’t even think we had decent mics. But I think what resonated is that it was off the cuff, honest conversation between two friends. So instead of an elderly man lecturing you on how to do things and you’re doing it wrong, we were just figuring it out, discussing it, and doing research. I think it was very approachable. Then people stuck around enough that we were able to get decent at it.

Rob: Approachability is so huge. I think it’s much more common these days in podcasts. Obviously, radio was never approachable when I used to listen to it. It always seemed far off in the distance, like Hollywood or just being in a movie or TV show. But podcasts, at a certain point, a few of them started creeping out. Tropical MBA was an early one for me where I was like, wait, it’s just two dudes talking about stuff. My guess is Listen Money Matters in the early days, that’s a huge piece of it.

You already mentioned that you had ideas of how to monetize it, but it didn’t work. What were a couple of those experiments that just blew up in your face?

Andrew: Everyone’s like, oh, you just have to use Patreon, and then everyone will come, and they’ll just pay you. I was like, ah, that’s awesome and it’s so easy. So I recorded this video. I don’t know how to do videos. I want to say, I literally took my wife and I like a week to put this together.

I don’t think anyone paid us through it, which was very demotivating. Then it was like, oh, no, no, you create premium content and then they’ll pay you through Patreon or whatever. So we created other peripheral podcasts. We had three podcasts at one point, but that didn’t work. No one wanted to buy ads, we were small. The only way we were able to do it was through affiliate income. Because personal finance payouts are so high, one conversion to personal capital was $100. That was serious revenue for a business that made nothing.

Rob: Affiliate revenue? That’s the thing. Offline, you mentioned that you had listened to Pat Flynn before that. It seemed he made it look easy to make money online. That was a piece of it. People listening, they should know what that is.

Affiliate commissions are if you mention a product, whether in your blog or on the podcast, you then have a link that goes to that site. If someone signs up for a credit card, in your case because of personal finance, or signs-up for a bank account, then you get a fee, like you said, $100 per signup. It’s pretty lucrative if you get enough traffic.

Andrew: I think what people don’t realize is that so much of online and offline business is based on this kind of commission when you make a sale setup. It’s just not as mature online. If you were to buy stuff for your home because you’re doing work, your contractor might make commission on the things that they buy, or life insurance. There used to be insurance salesmen and they made affiliate commissions. I was just the extension of that.

Rob: Right. At a certain point, were you looking to launch other affiliate websites? Once you got good at Listen Money Matters, obviously, there’s a website, and a podcast, and you’re making some decent income from there, then was it like, well, let’s do more affiliate sites? Because at a certain point, like you said, your wife and you started GiftLab. How did that come about?

Andrew: GiftLab, Laura at the time was editing the podcast and she was running our editorial team at Listen Money Matters. Our writers write something, she’d review it, and make sure it fits the research of what we wanted to position articles for, and in digging around Ahrefs. This was years ago. She found gift keywords and the competition was zero.

I think I remember she was showing me quinceañera gifts, which is maybe a 1–3000 visits a month term. There was not a single article in the top 10 results that was a list or any ideas for gifts for quinceañera. There was nothing. So we felt it was wide open pastures, it was like just playing around, and it wound up sticking in a very big way.

Rob: Right. Someone hearing that story might think, oh, you got lucky that your wife stumbled upon this thing in Ahrefs. But there are other components to that, right? Because the two of you probably put in a ton of hard work and had some skills that you’re able to apply. Is that right?

Andrew: I had been building websites before college and during college for people. I was doing contract work and understood a lot of that stuff beforehand. I was a data engineer before we eventually quit our jobs to do this. I was really good at analyzing data and finding outliers. But even still with all of that at our backs, we failed so many times. We own bossypaws.com, a great cat website that no one goes to and homespun.co. We have all these failures, and a few worked.

Rob: That’s the thing, that survivorship bias that so many podcasts, or TechCrunch, or the media looks at, and these outlier things of this big success of GiftLab, or Listen Money Matters, or Startup for the Rest of Us, or whatever, you can say, oh, they did this, therefore, I can do that too. But it’s almost like a lot of things have to come together, and you probably have to fail a bunch to get there. That’s the usual story, right?

Andrew: Yeah.

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Okay. You launched GiftLab. How long did it take to make it into something where you’re like, this really has legs?

Andrew: I distinctly remember GiftLabs like numbers and timeline because it happens so much quicker than Listen Money Matters. I think because we learned a lot of it building and failing with Listen Money Matters, everything is anchored to the Christmas season with GiftLab. We started halfway through the year. So the first 1.5 years, we made $9000 and then the next plus one year was about $30,000-something. It either doubled or tripled every subsequent year.

Rob: Wow, that’s a great business.

Andrew: No one listening should create a business like this. I’m just saying. I’m based on gifts.

Rob: Yeah, totally. Don’t compete with that.

Andrew: Don’t compete with me. You don’t want to.

Rob: When did GiftLab launch? Do you remember what year?

Andrew: I want to say it was like 2015–2016. I think we’re about like three-ish years into Listen Money Matters.

Rob: Got it, okay. GiftLab is still quite successful today, right? Your wife focuses on running that.

Andrew: Yeah. I think of it in terms of multiples of my engineering salary in the past. It is many times of me working a full year for someone else.

Rob: There you go. Then that begs the question. You guys are kind of set, you and your wife, you have kids. You have twins, right?

Andrew: Twins, yeah. Boy and girl.

Rob: Why then go start this? Software is such a pain in the ass, man. It really is.

Andrew: It really is.

Rob: There’s a reason I don’t start SaaS apps anymore. I started enough of them to finally learn. No. Obviously, these companies become worth so much in there. The adventure is amazing and everything. But I’m curious what the motivation was for you to dig into it, even though you had a successful podcast and successful, essentially, a personal brand, you had that affiliate site and then you had GiftLb, but something had to have been burning inside you to decide to build it.

Andrew: I want to say we’re maybe about a year-and-a-half, two years into building Listen Money Matters. We went to our first conference. I think it was a podcaster conference. I forget the name of it. It’s like The Podcaster Conference and it was the first year of it that we went to. We went to the first few years of it.

I remember, I still had my full time job and I was listening to all these speakers talk about how they’re unhireable now because they do their own thing. I literally cried while my wife was there at the conference. I felt so strongly about it and I wanted it so bad, but I was so far away then. I was like, you know what, I’m not going to be able to get there fast enough with the podcast, but I have this really good idea. I registered affiliatetoolkit.com.

I tried. My eyes are red from crying, and I wipe them off, and I’m pitching Laura. I’m pitching Matt on this and I’m like, guys, this is what we have to do. They’re pretty much like, Andrew, stop, no, you’re being stupid. I’ve been mowing on it for a while. Part of it’s been burning in me, but the other part is, I’m a developer. I went through all these years of college and at the highest levels of doing big data stuff. I feel like if I don’t succeed with my core skill at tech, maybe. It’s […] of a podcast, but I’m not a radio guy. I’m an engineer, so it was a lot of that.

Rob: Did you launch Affiliate Toolkit?

Andrew: No. Everyone told me I was really dumb and that I shouldn’t do it.

Rob: Flash forward then to 2019 and you start building Lasso, which is an affiliate. You might say it’s an affiliate toolkit for WordPress sites, right?

Andrew: Yeah.

Rob: How did you convince Laura that it was a good idea at that point? What was the burning desire there? Was it still just to own a software company or is there something else?

Andrew: I didn’t want to build it to sell. At first, I wanted to sell it because I just wanted to make money so badly to quit my job. I almost didn’t care what I had to do to do it. But I’d already quit my job and we were building it to help make our lives easier. GiftLab, I think there are like 15,000 links to Amazon products on the site. We have a lot of people on the team that are replacing broken links and creating new lists.

To be honest, I had no idea if things were monetized, or not monetized, or what was going on. The same became true with Listen Money Matters. I think we peaked at almost 800 articles on the site. For me, I had anxiety thinking about how much money I could be making because I didn’t know what was going on. So I developed this to automate the monetization in GiftLab, make cool displays and comparison tables in Listen Money Matters, and eventually, friends in the space asked if they could use it.

Rob: If someone visits the site, obviously, the ability to have these really nice product displays with, you have an example of the book essentialism. It has the cover image, and then a nice little description, and says buy from Amazon. You can put that together. You can manage all your important links in one place and that’s what you’re talking about, where if you have 1000 affiliate links on a site going into every WordPress post, it’s a disaster. So somehow, you tie into that and allow someone to basically manage it in one place. Is that the idea? Those are the key benefits?

Andrew: Yeah, if these links are monetized to pull it out to the extreme. In Listen Money Matters, we would recommend debt products or investing products. But many of these products are literally the same as other ones, difference by name, perhaps a sign of funnel. Using Lasso, we’re able to test Earnest versus Credible, two debt product companies to find out, oh, we make more money with Earnest literally putting the link in the same as I placed. So we converted everything to Earnest.

It was bringing in unmonetized links, discovering we’d link to a domain that had an affiliate program. All we had to do was monetize the link. After we resolved one issue, we’re like, I want more. Let’s see if we could push it a little further. It grew into this kind of monetization suite.

Rob: That’s the thing. It’s one thing to write software to effectively scratch your own itch, which is the phrase people have used for solving your own problem with software. But to then take it and to productize it is a whole other thing. Not only just to make the code productizable, but to then build the marketing website right on the copy, figure out the positioning, and then drive traffic, and get folks to subscribe. You had the product. I often say, the code itself is maybe 25% of the battle.

Andrew: It’s the easiest part.

Rob: It’s the easiest part.

Andrew: It’s the fun part.

Rob: We’re developers. This is very predictable. There’s no technical challenge in most of the products that we see or use that are that hard. The challenge is in the marketing, the execution, and all that. At a certain point, you must have thought, this is a great idea, I want to sell it because it’s working so well for us.

It sounds like your affiliate, friends, or colleagues were using it. But when did you really decide to take that plunge? I am curious. Was Laura on board with it at that point or was it still, do you really want to go off and do this kind of shiny object thing, or by that point was it not there?

Andrew: The conversation became, Andrew, you can’t invest any more money into developers building this hobby toy thing. It was basically enough. I was like, oh, okay, well, I guess I have to make money to support my hobby. Because you build these businesses and you’re like, but they’re boring now because that’s what I live on. I need a new thing.

It was really to bring in revenue to afford. My thought was still just to subsidize the tech stack of our existing businesses. We have another SaaS tool that was a tack-on to Listen Money Matters, that capped me $1500 a month. It’s fun. I’m playing with code. Pushing Lasso this boulder up the hill is very different from a passively sold toy.

Rob: It was early 2020, right? Covid was hitting that you did launch last. Was it March or April of 2020?

Andrew: Yeah, it was April. We were in beta, or alpha, or whatever since January. We had a few people paying us $49 a month and I am so grateful. We did it, we had a lot of the pieces, the interface was wrong. No one could understand what was going on except for me and I was really frustrated. I couldn’t get that no one else got it. So we redid the interface.

We relaunched at $19 and it was this massive inflection point. I’ve been dreaming of graphs like these my whole life. It was really, I think the price was right, the interface, the marketing side. We just really nailed the launch, and it’s been steady as she goes ever since, just a straight line.

Rob: That’s interesting. You launched it, and not only the product and the pricing were off, which is not uncommon because it’s hard. That’s the thing. So many developers and even when I was, let’s say, building my first software products, I was a developer so I thought I can write code, I can therefore build a product. Those are two different things.

I was always writing a line of business apps for a credit card company I worked for. There was a pet insurance company. These little businesses that would hire us and spend $50,000 on back office automation. That stuff doesn’t need to be that usable because you have a pool of 5 or 10 users. They can click around and do it. But to build a product that is consumed by a lot of people, it’s a very different skill set.

There’s a reason the phrase ‘UX exists.’ It’s different from the code and it’s different from the UI itself. User Interface, obviously, is like, oh, the fonts and the logos, but user experience is what you’re talking about. So it sounds like you took your best guess as a developer and built something that was just not intuitive for other affiliate marketers. Is that right?

Andrew: Yeah, I just took heavy inspiration from the Ahrefs interface, which they’re like a superpower tool. But objectively, it’s a really thick interface. You have to be a nerd to want to go in there.

Rob: Got it. Obviously, people were saying, I’m confused, I don’t know how to use it. That’s not like that was the message, but then how did you fix that? Because that’s the hard part is knowing how to make it usable.

Andrew: At the time, it was Matt and I building this. We just whiteboarded a lot. We had this relationship. Not like we yell at each other or don’t like each other, but just, I think it should be like this. We’re very passionately building.

We figured out, I guess, slowly, and we’re still working out the kinks, like where the sticking points are, why maybe pieces were a bit extra we’re finding, or there’s this quote that I’ll really destroy. But it was like, give me two hours and I’ll write you seven pages. If you want one page, just give me seven days. It takes so much longer to edit it down to less, so really figuring that out took us almost a year on how to make it less.

Rob: Wow, that’s crazy. Okay, you spent a bunch of time on the UX. During that time, you had learned that the pricing was too high for the market.

Andrew: I didn’t even think the pricing was too high. I’m super aggressive, where I would want it to be more. Matt lobbied me almost the whole year to get it down. I literally was so tired of having a conversation. I was like, whatever, we could always raise it again and we cut it.

The funny thing is, no matter what price we’re at, $49, $19, and now $29, people always said it was too expensive and it was too much. So I think we were desensitized to it at $49 or maybe we agreed. Then in $19, it was like, come on, it’s so much more value than that. You convinced me to raise the price and we did. Honestly, the same number of people still complain about it, but the same amount of people also don’t care.

Rob: I like that story because there’s a lot to it. Lowering your prices is hard and it goes against a lot of the advice you might hear out of MicroConf or here on this podcast because most—especially developers—entrepreneurs underprice. They undervalue and underprice how valuable their product actually is.

I spend a lot of time just saying, you need to raise the price, you need to raise the price. But you started arguably too high for your market. Yes, that does exist. People who listen to this podcast, you can overprice your product, of course. If I launch an ESP today to compete with MailChimp, or AWeber, and I just said, oh, the starting price is $500 a month and it’s feature parity, it is too expensive. So you can get there.

I’m always scared to lower my price or I used to be when I run SaaS apps because I didn’t want to crush my MRR. I didn’t want to hamper our growth. I didn’t want to bring in lower-end customers who would need a lot of support. There’s just a lot. I don’t want to increase churn potentially with people who are tire kickers and all that. As you went to $19 and then $29, did you find that the quality of the users and customers changed or did it stay pretty consistent?

Andrew: It absolutely went up. I think it’s almost like explicitly telling people like we’re not for you yet. A lot of our customers and honestly, our ideal customers, people who are perhaps having sites like Listen Money Matters where it’s becoming unruly to manage, are making hundreds of thousands of dollars a month and $19, $59, it doesn’t matter for us.

We wanted everyone to try it because we knew we had bugs. We just wanted a lot of tire kickers. Cloudflare, I love the company. They have this great article they wrote on why they have a free plan. Their bread and butter is their enterprise. But they use the free plan to bring in small sites like mine or whatever to really just test their features. They do rollouts bottom up. So the thought was, if we can get a lot of people, they’ll help us fix our bugs or tell us where they are.

Rob: Oh, my gosh. That’s crazy. You don’t do that anymore, right?

Andrew: No. They’re still fighting bugs, but you know.

Rob: That’s funny. That begs the question because when you and I spoke and we were talking about TinySeed because you had applied for the most recent batch, I don’t remember everything that we talked about, but I can almost guarantee you that I brought up the price. Your average revenue per user at $19 a month, it just isn’t much.

My mental framework for startups that I think have a higher chance of succeeding is the three Ps. It’s the people involved, the founders on whether they have product/market fit and you can just look at numbers from that. Our customers are raving about it, it’s churned low, is it growing, blah-blah-blah. Then price sensitivity or pricing is the third.

Having an average revenue per user of (let’s say) $19 a month, is really, really, really hard to build a seven-figure business with that. I’m guessing that I brought that up in our conversation. How are you thinking about that? In terms of raising that over time or having the enterprise plan—Cloudflare can do it because they have the enterprise and that drives it—what’s your mental model of how to grow Lasso at that scale?

Andrew: I remember in this conversation. I don’t know if you remember, I know you talked to a lot of people. I was actually explaining how it’s $19 a month now and the ideal price would be zero. Then I was going to drive the price down to nothing.

I was explaining all the other components that will add on, and we’ll make money over here and over there, and not not on the plugin. You basically told me, no, that’s ridiculous. You bring in people who have no traffic and they don’t really feed all the other things that you build. I had this thought like, well, if everyone would use it, it would be more valuable, but I think where you helped me refine was everyone that has value, being a customer should need to use it. You don’t need the guy who started yesterday. He may give up and then he was never even worth supporting.

Rob: Yeah. To do Freemium like that at that scale, again, to come back to Cloudflare, they’ve raised a lot of money that often requires more support and more money in the bank just to live out that Freemium, because freemium pushes off revenue. It’s obvious, but if I start a free plan today, I may make more money next year, or three, or four years down the line, but I need cash in the bank then to run my team in the meantime. That’s the struggle.

Andrew: Lasso sits in the spot where there are a lot of people who just started yesterday or they’ve been doing it for years. We pretty much found that people who need the lower price are more needy. The people who just started, or the people who need the lower price versus the bigger people. For us, we’re a small team. We’re spinning our wheels multiple times more on these baby customers. Big customers would come in, sign up, overlook all these annoying things and just pay us.

Rob: Yeah, it’s counterintuitive the first time you hear it, but it’s another data point that lower paying customers, in general, tend to have a little more drag on them.

Obviously, the product is successful, it’s growing, you have a team of nine working on this. But I don’t know that we’ve covered any, aside from some bugs, and some early launches, and UX stuff, and having to change pricing. When was the moment where you just felt kicked in the teeth as you were growing this? What was one or two of the hardest times you’re like, this […] is not going to work or why the […] am I doing this when I don’t need to be?

Andrew: We launched in April, and it was just Matt and I. We had a VA that we used on our other businesses that we brought in to help do little tiny tasks, but it was Matt and I in Intercom, in support. It was Matt and I pushing the bugs. I would push fixes that would have new bugs and people were complaining. It was just a lot of work and we were kind of at each other’s throats.

A year ago, October of last year, it just wasn’t for Matt. Matt wanted a more lackadaisical lifestyle. He wanted to do his things. I don’t think he wanted software as much as I did. To your point, it’s a pretty brutal business. So we split ways.

I bought him out. Then it was one from a team of two that was not enough to a team of one that was super not enough. I really just have my nose to the grindstone. I don’t know how I survived. It was tough.

Rob: I bet, and how long did that last until it started feeling better? A question I often get is, how long should I grind not enjoying it before I either give up, or sell it, or whatever?

Andrew: I will say that it maybe is always a bit grindy. It’s just the grind shifts and maybe it’s interesting like that. But for us, it was December. Actually, I wind up writing Indie Hackers because I was like, oh, maybe I’ll find customers on Indie Hackers. So I wrote a thing. I think I titled it like We Escaped Integration Hell, which was like integrating with the WordPress platform at large. Like many other politicians or leaders, I think I called victory way early. But the worst of it was over in December.

Rob: Of 2020? It sounds like 10 months ago.

Andrew: I want to say maybe January, February was markedly better for me to mess up, which I repeatedly do.

Rob: Right, but you seem okay with that. Some people, when I talk to them on the podcast, if we start to dig into mistakes they made or failures they had, they feel bad about it, like it’s a negative thing, but you almost are wearing it as a badge of honor. Like, yeah, I launched a bunch of businesses, they didn’t work, I tried to monetize the podcast, three times it didn’t work, I eventually found it. You’re basically saying I messed up UX. You’re very open about that. Is that just a character trait or did you have to develop that?

Andrew: Maybe it’s a character trait. My dad is very humble. He would always tell me that everyone puts their pants on one leg at a time. I tell my team humble beginnings, things like that. I think we need to stay humble. It’s easy to let your head get the better of you. But I don’t know, I think we just mess up so much, you kind of just get over it, I guess.

We live in this space. When I have Listen Money Matters, I still own it, but people do income reports like Pat Flynn, everyone’s killing it, they have all these crazy numbers. People are dropping launches, hundreds of thousands of dollars in these launches. I have launched courses, books, other SaaS products, new websites.

I feel like I know what I’m doing. I’ve never had a successful launch. We’ve never blown it up more than maybe $5000. I honestly don’t believe it. I think they’re lying or it’s this lightning struck and it’s oversubscribed. It’s like those Tesla battery fires from a few years ago.

One car blows up, everyone flips out. What about all those gasoline cars that are constantly on fire on the sides of the highway? That’s old news. So I just think that you have to just push through the brick wall. There’s no around.

Rob: That’s a pretty healthy way of thinking about it, to be honest. I think it’s something a lot of people struggle with. Me, as well, sometimes admitting, I really screwed up there. In retrospect, that was just a dumb decision that I should have made better or I will do better next time. I think it’s a healthy attitude that you have.

Andrew: A core character trait of being on the team is you have to be able to tell me when I’m wrong, where I’m wrong, and all the things. We do it to each other, but I need counterbalance. I could just be too headstrong and I’ll get lost in the woods.

Rob: What’s next? Here we sit, entering the holiday season. Is Black Friday, Cyber Monday an uptick for Lasso? Is it seasonal at all or is it not? It’s not like ecommerce.

Andrew: We’re not going to run a deal. We are launching into our beta group that we have, comparison tables in four days, which has been by far the most asked-for product feature pretty much from day one. We started telling everyone no, that they don’t know what they’re talking about, they don’t need it. Eventually, it was like, okay, enough people want it. We just literally have to do it and so I think that will be really good for sales. Then we’re building our space plan things.

Rob: Awesome. If folks want to find out what you’re up to, they can head to getlasso.co. On Twitter, you are @andyfieb. Thanks for joining me on the show.

Andrew: Yeah, absolutely. Thanks for having me.

Rob: Thanks so much for joining me this week. If you haven’t downloaded the secret episodes of Startups For the Rest of Us, we have two of them. One is eight things you should know when you’re starting up and the other one is 10 things you should know as you’re scaling your SaaS. I have gotten a lot of positive feedback about these.

If you sign up for the email list at startupfortherestofus.com, you’ll get both of those episodes as MP3s, and also we turn them into PDF guides so you can read through them if you decide that you just want to read instead of listening. Those are both Rob solo adventures. If you’re not on the list, you should be.

Thank you so much for joining me this week and every week. Hope you’re able to push your business forward. I’ll be back in your ears next Tuesday morning.

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Rob: Welcome back to Startups For the Rest of Us. I’m your host, Rob Walling. This week I sit down with Einar Vollset and Tracy Osborn to talk through some bootstrapper news stories. I’ve received feedback from several listeners that they really enjoy these episodes. Oftentimes, the things we bring up here, it’s the first time that they’ve heard about them. They weren’t paying attention to Twitter, Hacker News, or wherever we might have heard about these.

Hopefully, these are not only educational, but also entertain you and hopefully help drive your business forward. Today we talk about the part-time contractor versus hiring full-time debate. We talk about the acquisition of Sandhills Development, which is one of the largest independent WordPress product companies. We talk about the launch of TinySeed Europe, and we talk about a few other new stores. Hope you enjoy these.

If you recall, Einar Vollset, my co-founder and general partner at TinySeed. He’s been on the podcast many times. He knows enterprise sales, cold outbound outreach. He knows a ton about SaaS, M&A. Then Tracy Osborn is our program director at TinySeed, and she is a former startup founder who has written several books on design and development. Now she keeps the trains running on time internally with TinySeed. Hope you enjoy today’s conversation.

Tracy Osborn, welcome to Startups For the Rest of Us.

Tracy: Yeah, happy to be back.

Rob: Einar Vollset, you as well.

Einar: Thanks for having me.

Rob: All right. I’m excited to dip into some bootstrapper news, as we like to call it. First story is there has been discussion. I’ve seen most of it on Twitter, although we have one Hacker News link as well. It’s a tweet that links out to Hacker News. Yes, it’s all on Twitter.

A founder friend of mine, back in April of this year, had pointed me to a tweet by Josh Pigford that talked about him being curious with his new effort, maybe about hiring everyone as part time contractors, meaning no W-2 and no full-time. I believe Sahil from Gumroad has structured Gumroad maybe like this. Again, we’ll link these tweets up, but in essence, Josh said in his second tweet he was linking to Sahil’s blog post that says we have an anti-overtime rate that once you work past 20 hours a week as a contractor, people can continue to work, but it’s a reduced hourly rate. So it really does discourage full-time work.

The next one is Josh talking about how to give equity to part-time contractors based on how much they work and how much they get paid. These were all in April and July. I remember talking with my friend back in April of I didn’t think it was a good idea.

Just having managed teams of part-time contractors and then having managed teams of full-time folks, there’s a time and a place for both. I think we’ve actually discussed that specific thing on this podcast. But then fast forward to September, it was just less than a month ago, Josh published something saying we ended the experiment, we’re no longer pursuing building maybe around part-time fractional employees. Here’s the note I sent to the team last week. While I’m still bullish on the concept, I no longer believe it can work for new product software companies, at least it didn’t for us.

He wrote kind of a memo about it. What I appreciate about Josh is he experimented with a lot of different things, and some of them, when I see him, I think that’s not going to work and others I think, he has a shot at making it work. But he usually circles back and tells us if it works, and I think that’s helpful for the community. Tracy, what are your thoughts on this approach?

I realize I’ve given my opinion already, but I’m curious if either you think it’s a really good approach based on what we’re going to be funding our 59th company or something here in the next couple of weeks. You have a view into a lot of SaaS companies in TinySeed.

Tracy: Yeah, I looked at some of the threads that Josh did. He went into the reasons why it didn’t work. The thing that stood out to me is the thing I expected to see, which is a part-time contractor is really great for one defined task, designed set task that he’s hitting session after session. Once you finish that, you’re done with your job for the day.

He had planning or long-term thoughts. When you’re hiring someone for your company that needs to not only just hit the things you need to do that week, but you also need to start planning out, how are things going to evolve in the next couple of years? What does that look like? What is that future planning? That’s almost impossible to do, I think, on a part-time cadence because it’s just so set around tasks.

I think Josh also went into the fact that managing people who are part-time was hard to do because he had to really define. I forgot exactly how he phrased it, but he had to define it. That’s one of the tasks they had to do is think about that long-term. It was lots of micromanagement and it turned into a big effort on his end in order to do that. It’s the thing where it’s just like, it’s really good for defined tasks, but you can’t expect without a lot of hand-holding some of that long-term planning.

Rob: Yeah. I often talk about task-level thinkers, project-level thinkers, and owner-level thinkers. I think of contractors, usually, a lot of them are task-level folks. Then you can find a few who may be project level if you seek that and you pay for that, but I haven’t worked with contractors who are owner-level thinkers who, like you said, are doing the long-term vision. Einar, what are your thoughts?

Einar: Yeah, I agree with that. I was always similarly quite suspicious that it wouldn’t work. Because the main thing for me is that if everyone is just part-time and task level, then all the state has to be in Josh’s head by himself. It’s got to be a lot of work. The downside to having employees, there’s plenty. They have drama, family issues, and all that stuff. But the upside is, particularly if you’re full-time, they spend their time thinking about and keeping state in their heads when you don’t have to.

You can delegate in a way that you can’t do if they’re just working 15, 20 hours a week for you and it’s very, very part-time. It’s one of those things. I think Sahil instincts with Gumroad, maybe that’s more in a maintenance mode, in which case, it could work better. But I certainly think if you’re more Greenfield, then it’s going to be very hard.

Rob: Trying to push things forward. I think of the word ownership and I don’t mean equity. Like you’re saying, mental ownership of a task where you go home, you think about it at night, you think about it while you’re doing dishes of like, ah, I can make this better. Because I was a contractor. I was a software developer for eight years on and off.

As much as I cared about some of the jobs, it’s a little bit like being a mercenary. I don’t mean that in a bad way. You get paid to ship products and if I ship code, that is fine. But anything beyond that, there was a little motivation, I think, to leave it better than when I arrived.

I think of these black box tasks. I have videos that I need edited or I have maybe a particular integration that I need built. These are things that are pretty easy to spec out and define them very well. I think that’s where we use part-time contractors. It’s like, I know exactly what I need. But when we get into building new products, the creative thinking, and needing to—I think I can imagine trying to manage five full-time employees who are doing things versus, what do you need, 10, 15 contractors to do it? That just feels like a mess. Then you need middle managers by the time you’re a 15-person company in my head.

Einar: Yeah, and now they’re going to be part-time middle managers. That starts to become really complicated.

Rob: Yeah, exactly.

Tracy: I also wanted to say, I wish it would work out because it’s like the dream. Work for a company for four hours a day. Not necessarily work at another company, but maybe you can support yourself, and then you have the rest of your day to pursue your own personal projects or do other things. I don’t want to say, oh, you can only have employees who are only thinking 24 hours about your company because that’s not what you want. You want to have someone to be able to have that in space. But part-time makes it really hard to have, like you said, that creative thought process.

Einar: Also a question, how part-time do people really want to go? I think a lot of people would be like, yeah, I’d love to have a three-day weekend. But really, do people really just want a five-day weekend, or will they actually end up doing the people who want that are people who have their own project and are actually working much more than full time?

I can’t imagine not working five days a week. I would just be lost. I would just wander around. I would have to come up with a work-like project in order to keep my mind screwed on straight.

Rob: I would think that these folks would have other clients is the idea. It seems like we agree that we’re not generally bullish on this approach. There might be a time and a place for black box tasks and stuff like that, but what’s the positive spin on this? When will this work or what’s cool about this if it works?

I think one thing that came to mind is you, I think, could have interchangeability. I think one of the ideas here is not to have any linchpin person that if they leave, they leave everything on the table. But again, even as I think of these positives, I think, yeah, but then…

Einar: That’s a negative, though.

Rob: It really is.

Einar: In itself, it really is negative. If you’re like, yeah, this guy, whatever. Just put him in front of the computer screen and then he’ll type up more code. I’m like, meh.

Rob: Imagine that codebase—mess.

Einar: Yeah, the code base is going to be a mess and it’s like, then who’s thinking about the state at all? That doesn’t sound fun. No, that sounds terrible, actually.

Rob: Yeah. I have a tough time. If I was a 23-year-old software developer and just wanting to work on projects here and there, that could be great for me. Back when, this is more maybe 12 years ago where I did have just a team, I had 10 different contractors who all did the little things and were all super task-based. It was VAs, there was a designer, and there were a couple of developers.

It was fun. It was a total lifestyle business. That’s the place where I think this works. But I think the moment you become more ambitious and you’re like, I do want to build a bootstrap that’s a seven-, eight-figure business, I really don’t see this working from the start. I think if you make it work, you will be the exception rather than proving it out.

All right, story number two is that Awesome Motive has acquired Sandhills Development’s products and services. If you haven’t heard of these companies, you’ve probably heard of the WordPress plugins that they manage. Sandhills used to own and sold AffiliateWP, Easy Digital Downloads, Sugar Calendar, WP Simple Pay, and the Payouts Service. Awesome Motive was started by Syed Balkhi.

He started WP Beginner, which is a really popular WordPress learning site, then started OptinMonster back in probably 2013, I believe, WP Forms, MonsterInsights. He acquired several others and now he buys sometimes fractional ownership like he’ll buy a certain percentage of a company and sometimes he does entire acquisitions.

This is another (effectively) string of WordPress consolidation that is happening. There aren’t that many seven- and eight-figure WordPress product companies left that have not been gobbled up by WP Engine, Liquid Web, GoDaddy. Awesome Motive is doing a lot of consolidation. I’ll weigh in on my opinion of whether that’s good or bad. But I think to Einar first, what is your take on this? Do you feel like this is an inevitability given any space that operates for this long?

Einar: Yeah, I think it’s almost inevitable. I feel like WordPress, and it still does, had this hacker side project, build a little thing, make enough money to truly lifestyle business it. While at the same time, at least until recently, there wasn’t a lot of push from the financial roll-up people. They usually stayed away from WordPress for whatever reason. They might do roll-ups.

For a while, it seemed more common to do roll-ups in the Shopify space on that platform than going after WordPress, which doesn’t make a ton of sense to me just because WordPress is open source so you don’t have quite the same platform risk. But certainly, I see that on some of the M&A side that it’s still early days in the WordPress space. The price expectations of the buyers and the sellers are quite different from the more open or more generic SaaS, software as a service, software as buyout space.

I think it’s a natural conclusion of this. People are like, oh, […], this could work here too. No problem and prices are low, so why not? The roll-up play should work in WordPress as well, if not better than in Shopify. Because WordPress is 25%, 30% of all the websites. It’s a big market.

Rob: I was trying to think about whether I think this is good or bad for space because whether it’s inevitable or not is one question, but is this better? I think having more things, there’s the power of scale. Awesome Motive knows what they’re doing with WordPress. I think they don’t have a monopoly position on anything. I don’t think they own all the big plugins in any one space.

I could be wrong, but I think they still have competition from WooCommerces and from Delicious Brains. There are a few others that are doing it. Again, there are not that many, but it’s nice that I don’t think there’s been that kind of consolidation. So I don’t know. WordPress, they’re always so opinionated about this stuff. I’m sure there are some hefty opinions, but I don’t think it will negatively impact us as a user.

I still use WordPress with my robwalling.com site. I struggle to see how it would impact that. I guess the ecosystem of consultants and agencies may be impacted by this. But I feel like if Awesome Motive and whoever’s doing the consolidation, the WP Engines, the Liquid Web is back to them. If they’re doing a good job being stewards of these products and these plugins, then it’ll be good. If they’re doing a […] job and they’re rolling up just to roll up and increase valuations, then I think it will be bad. Maybe that’s my ultimate conclusion is it depends on how good of a steward they are of the products.

Einar: Yeah, I agree with that. I actually think WordPress in general is an odd space. I think it may be because of Automattic, it’s an unusual company in itself, like being an open-source company. It’s not like Shopify or any of these companies. So that might be just contributing to the nature of that whole space.

Rob: Tracy, do you have any closing thoughts before we move on to our next topic?

Tracy: Nope. I think Einar said it all.

Rob: Our next story, I bet you two had to do a lot of reading about this. I just sent you a lot of background so you understand it. TinySeed announced TinySeed Europe a week or two ago. We announced it at our European event. It was two weeks ago.

We are raising a fund in Europe to fund European startups to essentially extend, replicate what we’ve done here in the Americas with our Americas fund. Einar, what was the impetus for this? Why are we moving into Europe?

Einar: There are some good reasons and there are some bad reasons. I’ll start off with the good reasons. Good reasons are we have amazing deal flow there. We’re seeing this bootstrap, SaaS, independent SaaS community grow, not just in Europe, but partly in the Middle East and Africa too. We want to invest in more of those companies.

To be honest with you, the requirement to become a US entity became a burden for some of these early-stage firms. Being able to have a dedicated fund that can invest directly into these European opportunities certainly was interesting. Our investors too are like, there’s no real reason why a B2B, SaaS company, whether it’s based in France, South Africa, or New Mexico, what’s the difference? Most of them sell internationally. They have international customers and they operate in English. Really, it’s a global market for most of these things. Those are good reasons.

Originally, the plan was to raise our previous fund, to raise a large fund. This is where the bad reasons come in. It has to do with basically SEC regulations on how many investors we could take. It meant that we were forced to take higher and higher minimums. Splitting the funds up to have our US fund or our Americas fund be mostly US companies, and then this Europe fund is mostly European companies started to make sense. Also, just from the boring investor perspective, some people lived in Europe and wanted exposure only to US companies and vice versa. So it made a lot of sense.

I think there has been a lot of interest, certainly. The European startup environment, it’s interesting. It’s where the US was three or four years ago. There’s now a lot more of the more traditional venture startup stuff. But I think only now people are starting to think like, oh, you can get funding for these kinds of indie SaaS businesses that don’t necessarily aren’t trying to be on the unicorn route.

Rob: Yeah. Just to clarify, I should have said this earlier, but TinySeed Europe will invest in the European time zone. That goes down through Africa, the Middle East, and all that. Tracy, what are your thoughts on this having been on the inside, thoughts on hiring a replacement of sorts, or a replica of yourself? We’re hiring a program manager out in Europe.

Tracy: Einar went over some of the, like I said, administrative aspects of the program. One of the big program benefits to having a dedicated European batch is that we have funded folks who are located in the European time zones, that area through the Americas fund. But because as a team, we’re all US, North America-based. We moved their calls around to make it work for everybody. If anyone who is in Europe, the Middle East, or anything like that were attending calls that were super late at night.

They’ve all been very enthusiastic about it. We have something we set upfront, being like, hey, by the way, we’re happy to fund you, but because we have to schedule the calls for our own time zone, people opted into that. That means that for the European one, the European fund, the European accelerator, as you said with the time zone, the calls and everything will be scheduled in a more reasonable time zone for anyone who is in that accelerator program, which makes me very, very excited.

It also goes for our in-person events. We are just restarting now. We would have our in-person retreats generally in North America unless we attached it to MicroConf Europe. For the last one we did in Portland this past September, we didn’t get to have a lot of European founders come over because of the expense, time, and everything to fly all the way over to Portland. That also means that all of our in-person retreats will be in a more reasonable location for all these founders and make it easier for them to attend these events.

I’m very excited about that aspect of the program. I’m very excited that we can have a dedicated, everything set up. It’s European folks, European, UK, Middle East, make everything just a lot easier for them. I think it’s very exciting that we can do that, finally.

Rob: Yeah, I’m excited about it. Obviously, if you want to learn more, if you’re a bootstrap or mostly the bootstrap founder, tinyseed.com to get on that list because it’s not going to be very long before we’re going to open applications early next year.

Tracy: Yeah, it will probably be in January. I’m confident saying that.

Rob: All right, good. Program manager-wise, tinyseed.com/careers if you might want to come work with three of us.

Tracy: Yeah, I have to jump in here because I’m very excited about that position as well. I came into the program manager position for TinySeed as a former entrepreneur. I had just shut down my startup, WeddingLovely, which was quite sad. You can hear about it on this podcast. But I was at a place where I love the startup fields, looking for something that was still in the entrepreneurial area, but I wasn’t quite ready to start a new project.

TinySeed was a really great place for me to land. I was able to use everything I learned as a startup founder and use that to help out the founders that are in the program. This program manager position was not just for executive assistants or anything like that.

It’s really great for anyone who might be in a place in their life where they’ve done startups and they’re looking for something new, but maybe they don’t want to jump into doing a whole new thing on their own. They want to be part of a team. Just wanted to say that anyone who happens to be in that place, I think this would be a good fit.

Rob: And I would be remiss. As we move on to our next story, if I did not say, tinyseed.com/invest if you’re interested in investing in early-stage B2B SaaS companies located in European time zones.

Tracy: Einar was giving you eyes. Don’t forget.

Rob: Indeed. All right. Our next story is a tweet from DuckDuckGo from October 11. This was maybe two weeks ago. I’m going to read their tweets, so these are their words.

“Google complies with invasive “keyword warrants” that identify anyone who searched for a term. Twitter user @iblametom reports,” and then he links to a forbes.com article. “DuckDuckGo doesn’t have any search histories by design, and because of that, has had zero search warrants of any kind since our founding in 2008.” This tweet has almost 15,000 likes, 308, quote tweets, and 4800 retweets.

I think this fits into the privacy that has already become a thing and is becoming an even more important thing. It felt like it got kicked off with Snowden, the Snowden revelation, that we’re all being monitored in the US. Tracy, you have often on this podcast, especially in the bootstrapper news episodes, talked about the privacy elements of email inboxes, blocking, tracking pixels so they can’t see you opening them. I think you had said that you thought it was going to become a more prominent thing that tech would move in this direction. Talk to me about your thoughts on this whole idea.

Tracy: Yeah. I am only hesitating here because that’s normally my way forward, but then I was reading something about the Google search warrants. This is because it could be hearsay, but it’s something like search warrants or someone who is searching for a person’s name, person’s address, person’s phone number. All three of those things would come up with the fact that that person was doxxing, stalking, or something for that other person.

Basically, it’s hard because there were good reasons to have these privacy violations or this for-warrants that go out for some certain reasons where there is a bad actor who is doing something bad, and they search and we’re able to use that information to find and stop that person from potentially causing any sort of harm.

When I read those things, it’s just like, ugh, that’s such a good reason, but it’s always that slippery slope where it can be used for a lot of good reasons. But there’s a lot of bad reasons where warrants can go out for some dirty cop or whatever. Uses a warrant to go out and pull information on someone, looks at someone’s search history, those kinds of things.

I don’t have a good response to this other than this general. I wish that the world was a place where we could use this information for good. Why Snowden came out with all this stuff, oftentimes the information is used for bad. DuckDuckGo having those search warrants because they don’t track that history, there’s also good and bad there.

For the average person who doesn’t want to have any other random stuff being used for bad by bad actors, then DuckDuckGo is great, but there was response to this tweet which is like, hey, DuckDuckGo, aren’t you saying, hey, sexual predators use our program, use our browser for your thing. It’s going to be using you for a warrant.

Rob: It’s that interesting balance. It’s always that balance between national security, state security, or security of each of us, and privacy. Those two things tend to be in opposition. I will say Einar, before I roll over to you, DuckDuckGo has been giving a masterclass in how to use your 900-pound gorilla competitor. Use their number one thing against them.

In airports for MicroConf, I would see DuckDuckGo billboards that were basically saying, we don’t track you and Google does that kind of stuff. They’ve been stiff stuck to that positioning for 13 years. I think he said they launched in 2008, it’s 2021. That is unusual for a startup to come up with effectively positioning of like, hey, we’re going to be privacy-focused and that’s it. That’s their number one bell that they ring and they’re growing. They have more adoption every month that goes by.

Tracy: I use it, I should say, for all of my screaming into the void. It is my primary browser.

Rob: My question to you Einar is, it’s not only how far do we think this move towards privacy will continue, but will normal people ever care? Will my mom and dad ever care about that? The massive 80%, 90% of the world, will they care about this or do you think this is just going to be continued to be at the edges with those folks like developers and more tech-savvy people?

Einar: I think it’ll be at the edges. That’s what I think. In general, I feel less worried about Google warrants. I feel like if there’s an actual warrant and a process, then I have no faith in the justice system that it’s not going to get abused willy-nilly. My view is I’m going to use DuckDuckGo, but I would prefer the rest of you to use Google so that if there were any warrants that needed to be issued to you guys, then that would be fine.

That’s my view. I’m not quite so privacy-obsessed. The NSA doesn’t need to get warrants to figure out what they need to do, basically. That’s my view on it. But in general, yeah, I think it’s more edge cases, but it’s a big market. So okay, maybe 10% of people care, but that’s 10% of all the people in the world, which is a good chunk of change for DuckDuckGo, for sure.

Rob: That’s going to wrap us up today. Tracy Osborn, folks can find you at @tracymakes on Twitter. Thanks so much for joining me.

Tracy: I know that you almost said Tracy makes first.

Rob: I did,

Tracy: I heard it.

Rob: I often call you Tracy makes, it has your name. I struggle to call Patrick McKenzie Patrick McKenzie. I always say patio11, what’s up? That just becomes a name

Tracy: I’m tracyosborn.com, but it’s @tracymakes on Twitter because I could not get it on Twitter.

Rob: I remember this. Einar Vollset, you are at @einarvollset. People are just going to have to go to the show notes because I’m not going to spell that one, where you rant about the San Francisco Giants.

Einar: Yes, pretty much. They’re out now, so that’s okay. It’s fine, I’m over it.

Tracy: Has Twitter returned to some semblance of normalcy or is it still?

Einar: I’m over it.

Tracy: Okay.

Rob: All right. Thanks so much for joining me.

Einar: Thank you.

Rob: Thank you for joining me once again this week. Whether you’ve been listening for a month, a year, or a decade, it’s always great to have you on board. I’ll be back in your ears again next Tuesday morning.

Rob: It’s Startups for the Rest of Us. I’m your host, Rob Walling. This week, I talk with Peter Suhm. He’s the founder of Reform.app which are clean forms on brand. You might know Peter from the Out of Beta podcast that he co-host with Matt Wensing or you might have seen him at MicroConf. He’s also the founder of WP Pusher and branchci.com. These are two apps that he’s just announced that he has sold. He has an exit under his belt and he was part of the inaugural batch of TinySeed back in 2019.

Today we catch up with Peter to talk through his thought process of moving on, in essence, from WP Pusher and Branch to Reform. When we recorded this, he had not sold them yet so you’ll notice we don’t specifically address that, but we do talk through thinking through moving on and it’s how far do you push something before you decide to move on.

We talk about his involvement with TinySeed and how that has impacted not only his decisions but his progress over the years. Then we talked through Reform, how he came up with the app, started working on it, what the launch was like, and the night and day difference he saw with Reform versus Branch. It’s a great conversation. I hope you stick around for it. Let’s dive in.

Peter Suhm, part of TinySeed’s first batch. The co-host of the Out of Beta podcast with our mutual friend, Matt Wensing, and you are building Reform.app. Welcome to the show.

Peter: Thank you.

Rob: We’re going to talk through some fun things today, sir. What I like is you emailed me a month ago and you said, hey, I’d love to come on the show. It’s a bucket list item for me. I was actually surprised that you hadn’t come on the show before. With 500 something episodes, I often forget if guests have been on.

Peter: I try to stay under the radar, I guess.

Rob: Under the radar, yeah. You’ve just been part of the community, the MicroConf community. I know you are a listener for the show and part of TinySeed. We just have so many mutual friends through that. Good to finally have you on.

Today we’re not only going to talk about what you’re building with Reform. Folks know your h1 is, “Clean forms. On brand. Putting together clean, on-brand forms for your business should be easy. With Reform, it finally is. No code required.” That’s what you’re working on today and it’s still in the early days of that. We’ll talk about what you’ve been up to with it.

I want to start by talking about the prior app that you spent a couple of years working on called Branch. Folks can see your landing page, branchci.com and your h1 there is, “Branch is no longer available to new customers :(” Sad. It says in 2018, I set out to build a better solution for WordPress developers to build, test, and deploy their code. It’s been a fun journey. In summary, we’re not taking new customers.

That’s the project you applied to TinySeed with and got funding from us, and you worked on it hard for three years. You want to talk us through? We don’t need to go through the whole story, but as things progressed over this timeline, what were the signals you started seeing that made you think, I need to consider moving on. I need to consider moving on to my next project.

Peter: Branch was actually the startup where I wanted to do everything right. I feel when you’ve been in this game for a bit you’re like, okay, we’ll start over. I’m going to start a new thing. I’m going to do everything right. I’m going to take pre payments and stuff like that.

Actually, I did all that. When I started working on Branch just for some context, I was working on a similar project before that even in the same space called WP Pusher, which was also in the WordPress space. I guess I kind of wanted to take that to the next level and I had so many ideas for how to do that and basically take it to a broader market.

I built basically a prototype for this and I recorded a video for it and I feel like I’m the Dropbox guy in the early days. I’m recording a video, putting it on Twitter, and people were responding really positively. Using that momentum, I built an early access list and I asked some people if they would pay up front and I got some pre-payments and stuff like that.

I’m really excited about this thing. I don’t think I was much further than that when we started talking because I had some early beta users probably at that time and I guess the first signs were actually pretty early on. A couple of months in, none of the people that paid for the product were using it.

I guess the very short version of that is that we changed our positioning many times. We turned every corner. It’s a very hard problem we were trying to solve like making something that’s very gnarly like WordPress, deployment, database, and stuff like that and make it really easy. When the stars were aligned for the exact right WordPress project, it kind of worked, but we probably never solved the problem as well as we should. Also, people didn’t care enough about the problem, and if I had read a book like The Mom Test, I would have picked up on some of these signs earlier.

I remember in maybe the second half of TinySeed, when I had my check-ins with Einar, he’ll be like, you should be adding a little bit more MRR right now than you are. All of this is documented on the podcast that I do with Matt because we started right after we joined TinySeed. We’ve been doing it for two years now.

One direction I went into was partnerships and I really believed in that actually because all the big hosting companies and stuff like that in the WordPress space were really interested in working with us. They were approaching us and it was easy to convince them to do co-promotion and stuff like that. Even when we worked with the largest hosting companies in the entire space, it didn’t really move any needles.

I guess that was like the hard-to-swallow truth that if you get a partnership with the largest partner, you can potentially get and it doesn’t really work, it’s a problem.

Rob: To be fair, I thought that was your ticket as well. You and I had a bunch of conversations about that in the early days about there are only four or five really big hosts. If you get them all to promote you, this thing becomes almost a no-brainer. The money will roll… profit.

When a couple of them came out in different forms and you were like yeah we got no signups or we got like three signups, whatever the numbers were, I remember myself being quite surprised by that. It goes to show you how much of this is, we have patterns, we have predictions, and we have gut feels and it’s experimental. When you don’t have product/market fit, that overused term, but it’s a phrase that really has deep meaning. When you don’t have it, no amount of new exposure or new customers hitting your website really changes anything.

Peter: Right, and I think if you can’t brute force a customer, just manually basically, just talk to someone and get them to be a customer which was hard for us. We didn’t have that many customers, then no partnership and no marketing channel. Nothing is going to work if you can’t do that.

I guess the problem was that we kept seeing good enough signs. We had people approach us for acquisitions that sounded really exciting. We had interest from investors. At some point, we took a check from one of the largest VC companies in the world. We had a lot of these fake signs that things were going well and everyone loved the idea of Branch. Whenever a WordPress developer saw it they loved it.

I succeeded in creating a lot of buzz around it I guess, but it wasn’t the right problem. I guess I’m learning that now that I’m working on a problem where it’s just a lot easier to get people to become customers. So if you can’t brute force that customer or just talk to someone and make them a customer, no one else can do it for you I think.

Rob: It’s kind of hard. I want to add some context to this too like when you applied to TinySeed, and we were talking about it, you had WP Pusher. It’s the WordPress plugin that was kind of solving a very similar related problem to what Branch was going to and give or take you were default to live with revenue.

When we were talking, we’re basically saying Branch’s very nascent when we backed you, but you had this other thing and that was all part of it. We saw you as someone with a customer list, an app that was already generating a decent chunk of revenue, and someone with (I’ll say) subject matter expertise in this area of WordPress continuous integration, WordPress deployments, WordPress pushing, WP Pusher. It makes for a good package, and you’re a single founder developer who had experience, a customer list, and revenue in this space.

I’ll admit, I was surprised that Branch didn’t work given all the signs that you had and given all the traction you had with WP Pusher. I mean, if I look at it, I was going to say from the outside, but I wasn’t. I was on the inside because you and I were chatting especially during the batch year, we were chatting every week or every month at different intervals.

It felt to me like you’re saying, you were solving a problem, but it wasn’t like a burning pain point and it was almost like the […]. People know they should do continuous integration, but WordPress developers aren’t, and when you ask them to change behavior, that’s a real problem.

That’s one of the hardest things to do is to get a group of people to change behavior and to do something, to take vitamins, to do something they think they should be, but really, if none of the other developers around them are doing it, and they can get by without it, I don’t know. Is that aligned with your take on it?

Peter: Yeah, actually, I think the first pre-paying customer we got was, at the time I was living in Glasgow in Scotland, and they were in Edinburgh, which is like 1 ½ hour by train. I went to their office three times to demo the product, they paid for it, and they were excited about it. They never used it. They never implemented it because they didn’t have to.

The thing is like I was saying, everyone is deploying, right? So everyone needs this tool. The problem is, if everyone is deploying, they’re already deploying. It would be nice for them to have a better way to deploy. But the reality is, it’s not like they haven’t deployed before. Their website is already deployed somewhere.

I think my co-host, Matt, said on a podcast, I ended up with a $50 a month product with a $2000 a month sales process. People were expecting demo calls. They were expecting me to help them convince their boss to buy this tool. It was just horrible, actually. It was really difficult to sell because it was a really expensive problem to solve and implement for them, but it wasn’t that important.

Actually $50, I started to realize that’s actually a really difficult price point to start up at because it’s enough that people really have to think about it, well it depends, but a lot of people don’t just sign up for something at $50. If they expect some sort of sales process, you’re just screwed actually.

Rob: Yeah, you’re right. I mean, $50 for something, at Drip, that was our starting price, but people knew that we were ESP or a marketing automation provider. We fit in an existing category and it was really simple. People know they needed it. They either needed it or didn’t. If it was really good and could do all these fancy automation, it was worth $50 for 2500 subscribers versus you weren’t inventing a new category because continuous integration and deployment already existed as SaaS. There’s CircleCI and the whole gamut of folks there.

You were almost trying to niche it to WordPress, not almost, that essentially was the plan as we said it. It just didn’t seem to be a burning need in that group. Even though, as you said, you had all the signals because you had these people wanting to integrate with you, wanting to co-promote these large companies, you had people wanting to acquire you, you had people you know asking about the product.

As you’re getting, you’re seeing these signals along the way of this two-, three-year journey that kind of keeps you going. The big signal—the MRR and the customer number—was not big. You would get a new one here and there and MRR would tick up a notch, but it was not growing to the point where you’re like I’m going to default alive with just Branch anytime soon.

You were telling me before we hit record that there was this really tough period as you were deciding to essentially step away from Branch where you, your wife, and your newborn were all in one room and you said not a one-bedroom, but a one-room apartment. We call it a studio apartment here in the US and you were doing customer interviews, you had a crying baby, and all this stuff. That sounded terrible. You want to just talk us through that real quick?

Peter: Yeah. We moved to Denmark on a whim during the pandemic because my wife was pregnant and we’re going to have our son. In the spring of 2020, no one knew how long this was going to last. Lockdown over there was very strict so we had no idea when we would see our family the next time if we decided to stay over there and have our son over there.

We had this crazy week where we planned everything and we just threw everything in the car and gave all the stuff away that didn’t fit in the car and basically drove to Denmark from the UK. Then in Denmark, we have a little cabin here that we lived in during the summer and he wasn’t born there, but that’s where we were when he was born. Then we were lucky to be able to get a little studio apartment in Copenhagen where we stayed I guess for four months.

Basically, Branch is clearly not working, but I’m not 100% ready to give up yet. You kind of know it’s not working, but it’s really hard to come to this realization. All I’m doing is I’m turning every stone. I’m talking to all my partners and I’m doing these customer interviews just to try to see if we can pivot or if we can take it in another direction.

Everything was happening in the same room. My wife will be breastfeeding our son in the background while I’m doing six customer interviews in a day. The office I used to work in in Copenhagen was shut down of course because of the pandemic. It was not a fun situation to be in.

I remember it was really hard to find time to think and just figure out what to do. I remember I had some walks where I got on calls with you and talked through some stuff. I think what I needed at the time was actually permission to move on because I think this is a common belief people have when they take investment that now you have to make it work because you took someone’s money, and because of TinySeed, you were my investor.

I had a lot of stuff to figure out at that time and ultimately, we decided to bet on one of our partnerships because one of the partnerships had a little glimmer of hope, basically. small signs that it might work, so we actually decided to ignore everything else and just focus the rest of our energy on that partnership. But then, in a matter of a few weeks, we actually had some stuff happen behind the scenes, I guess, that made us realize that that partnership wasn’t going to be working out and we just decided to move on.

Rob: This seems like that was the last straw of this is the end, in essence. At that point, you had a few choices or you had a choice, you could go in a few directions. You could have shut the company down. You still had an asset. WP Pusher still as a revenue-generating asset so you could have done something with that.

You could have shut the company down, returned investor money (what was left), and got a salary job. Just chill the heck out, not do this entrepreneurial insanity for a year or two or whatever. You could have basically cleared the cap table and then just gone out and started something else and raised a different round.

But instead, what you decided to do was to keep the company as it is with the existing cap table, right? You have TinySeed as investors, advisors, and you have that large VC firm as you said. That’s what you decided to go with. How did you think through those options? And why did you decide to go with the last one?

Peter: Actually, for a few weeks, I thought I was going to get acqui-hired because the problem Branch solves is a problem that basically every WordPress host wants to solve. It would have been very easy for us to get acqui-hired and for me to get a job. They would be the ones paying my investors back and I would just get a job basically is what that means.

I thought about that. Honestly, I was really tired. 2020 was a long year for all of us, I think, and I was especially tired and a little baby. I seriously debated just doing that, but then I just remembered one day, I just realized that I’m definitely not going to do that. I didn’t work hard for many years to have that be the outcome, and it doesn’t have to be forever, but that’s not what I wanted to do. We actually had some runway left enough that at least I could be working for another year on a startup, which is a great opportunity. You can get pretty far in a year if you—

Rob: If you hit the right things. You look at what Derrick Reimer had done with SavvyCal or was doing at that time.

Peter: Yeah, and I did it because I’m in a mastermind with him. We talked basically every day—him, Matt, and I. I called all of my investors and my voice is shaking and I’m telling them this is not going to work. I don’t have money to pay everyone back, but if you’re the only one who wants their money back, I can probably get it to you.

No one wanted their money back. One of them actually said and if he’s listening, thank you. He basically said—he didn’t even care what I used it for—just go have fun. Take a break or something. After doing that, I felt good that okay, I know I have some time now to come up with a new idea. So I read The Mom Test a few times to make up for the times that I didn’t read it.

I mentioned we have a cabin, so I went up there for a day and I had written down some criteria for the type of business that I wanted. I revisited them and I learned a few things. I changed them a little bit and I actually learned later that they were very similar to some of the stuff that Derrick wrote down when he started SavvyCal on his website. I looked at them as well actually.

That just really helped when I was thinking through different ideas. I had a few ideas. Basically, my process was to start talking to people and figuring out, trying to tease out if any of those ideas had any legs. None of the ideas was to build a form builder, by the way. That came more organically.

Rob: Yeah. That brings us to the part of the story where we start digging into Reform. Again, it’s Reform.app. “Clean forms. On brand.” A visual form builder. How did you get there? How did you get from I have a list of requirements? I had a similar list of requirements 10 years ago when I was thinking about Drip. It’s like, I want an app that’s X dollars a month or more expensive. I want an app that a lot of people need. I want an app I can market through this. I want something maybe for me at the time it doesn’t require enterprise sales. I had all these criteria.

Again, derrickreimer.com if you want to see his list, which probably has quite a bit of overlap with ours. Then how did you get there? There are a lot of form builders, right? I can name six off the top of my head. For some of which have been acquired. I’m going to name all of your competitors and tell people to go check them out. No, but there are a lot of them. It’s a big horizontal space. I won’t go far to say it’s a commodity because I do believe that you can differentiate.

Like I always say on this show, you can go into a large market with a lot of competitors if you can figure out how to have a really unique feature set or positioning and you own that in people’s minds. Or if you have really proprietary traffic channels that you can own. An example of that is Ruben with SignWell. We used to formally doc sketch. E-signature is a huge space. He’s one of the best in the world I know at SEO. He gets hundreds of thousands of uniques a month. If you can rank number one for a bunch of terms, great.

SignWell is not a commodity, but you could literally build a commodity rank one in Google and build a great business. Either or, if you have both, even better. Reform, you’re coming into the form space. I guess the first question is how did you get to that idea? The next question is how did you start to prove it out in your head to make it worth building, to not get stung this time.

Peter: At this time I’m talking to my investors all the time because I’m trying to figure out what’s next.

Rob: It’s funny. You say you say investors and people might think, oh, he’s reporting to someone. They’re really advisors who happen to have put money in. That’s how you think of them, right? It’s like mentors, advisors.

Peter: And friends, right. Matt is one of my investors.

Rob: I know some people listen to podcasts when they hear you say investors, they’ll be like that’s a negative connotation. But no, they’re aligned with you. You all want this, we all want this to succeed.

Peter: Yeah. I talk to my people. What I wanted was I wanted a way to make it easy to communicate with, in this case, investors. I had this idea for how to make it easier. I was describing it to a friend that this was one of my ideas. It’s something I’ve been thinking about for a while actually. But now it was more present when I was talking a lot to my investors. I’m describing this idea to a friend and I’m telling him about the idea. I’m describing it as kind of like a Typeform when you do an investor update.

I wanted to be able to do an investor update that’s asking me smart questions and you just get one question at a time. Then he was like, can you just build it in Typeform then? Yeah, I guess I could. I hung up the phone and I basically do like a prototype of this. I asked a couple of founder friends if they would want to actually pay $50 per month for this.

I think three people just from me DM-ing, a few people said yes. I had to kind of like the thesis that I could get them to send more investor updates than they did now—which was the goal—but they didn’t really change anything. But then in the process, I got to play around with some other form builders and got frustrated about a few things and was like that’s interesting. I joked to Matt and Eric in my mastermind that maybe it’s time for a new form builder, hahaha.

And then they’re like, yeah, maybe it’s time for a new form builder. They had some frustrations as well. I’m like, are you serious? Then I started thinking about it. Actually, this has not been shared before, even Out of Beta, but I know someone is going to build it when I mention it, but I’m going to mention it anyway.

The first idea was actually to build a form builder that was markdown-based. The super geeky and developery and we did some mockups of that. Me and my now co-founder Bjorn that I worked on Branch as well as a contractor. Everyone we showed it to loved it, especially developers. No one wanted to pay for it.

Rob: Yeah, I was going to say, I didn’t love it because you showed it to me and I’m like I don’t have time for markdown. If I’m going to do a form builder, I’m going to drag and drop, and then I’m sure developers are like if I’m going to do a form builder, I’m going to build it myself.

Peter: Yeah, but we’re kind of intrigued by the idea of doing a form builder in general. The more people we talked to, we realized that it didn’t have to have markdown, it just had to be better than the form builder they were using right now. Apparently, everyone was frustrated with their form builder and everyone had a form builder of choice. There is something interesting about it.

You’re right, it’s a really crowded market. It’s a horizontal space. I knew it was going to be really challenging. The thing I liked about it compared to Branch was I feel like I actually did a good job in many ways with Branch and I learned a ton of things. I got really good at doing partnerships and we build a really awesome product in many ways. We did some cool integrations and stuff like that. I feel like I was doing a good job, but it’s just the wrong job or the wrong product. I was actually excited to really like try something difficult, but that actually had a chance of working.

Forms, it’s a very proven space. Some of the form builders you probably haven’t heard about, but they’re making millions a year in annual recurring revenue. It’s a kind of product where you can carve out a piece of the market as well in a niche or something. You could go more or less horizontal I think.

Rob: Yeah, what was the validation? I’m not saying validation in the traditional sense of I talked to 17 people and 9 told me yes they would pay this. I don’t mean that. But you had a bunch of conversations and people said I would use that even though there are existing alternatives and then you were like, cool? What was that thought process?

Peter: Yeah, actually when Derrick was thinking about doing SavvyCal, you joined one of our masterminds. So it was you, Derrick, Matt, and I. I remember you told him, if you can match what Calendly is doing, I’ll happily switch to your thing. I remember Justin Jackson saying similar things about podcasts. If all my friends will probably switch. I got the same vibe. At least, my friends sounded like they would use it. You never know for sure, so I wasn’t necessarily trusting that they would because a lot of people said they would use Branch as well, but they never did.

The way we validated it was we didn’t do a ton of validation. I had a bunch of conversations, maybe 20 or something like that with people. I talked to people who worked at form companies. I talked to power users of other form tools. I started to get a great idea. I just felt like we needed to try it at least. What we realized was that it needs to be a very high quality. We couldn’t just build some […] MVP and validate it that way because no one was going to…

Rob: There are already good solutions out there.

Peter: Exactly.

Rob: You had to build something that was at least as good but had something maybe compelling or different about it.

Peter: Yeah. If we wanted to test this in a few weeks we could just keep talking to people. I don’t know if we would learn much more from that and we couldn’t build a great product. We could build maybe a prototype of the markdown idea, but we decided that that’s not what we wanted to do.

Instead, we decided to build a landing page with some mockups and basically a prototype of the form that was actually built on top of Netify’s form API. That really limited the scope. I’ve never spent this much energy on a landing page, but we really sweated every pixel and the copy as well, I’ve never spent that much time on a piece of copy.

I remember going through Obviously Awesome, April Dunford’s book and get the positioning right, then wrote the copy and we built this landing page in Figma. I’m pretty sure I showed it to 30 people at least that gave me feedback and not all at the same time. I showed it to one or two people, got their feedback, iterated, and we did that for two weeks. In the end, we knew that it was pretty good. We could just see people got it more and more. That’s what we kind of put on Twitter one day.

Rob: This is like the age-old smoke test. This goes back to Start Small, Stay Small. I wrote about this 11 years ago about put up a landing page. These days I just saw someone posted in I think it was MicroConf Connect saying, does that still work anymore? Is that even a thing? I mean, I’ve put landing pages up for everything from SaaS apps like Drip to a book like Start Small, Stay Small to a conference like MicroConf. MicroConf started as a landing page for an accelerator. TinySeed was literally just a landing page. It was like, here are some things we’re going to do.

I did the same thing. I took 8 hours to write 12 sentences of copy. It was just a tremendous amount of iteration and going back and forth. This is something that has been around for a while and still works.

Something I do want to point out too is none of this is foolproof. People want the answer. They want 100% validation. That doesn’t exist, it’s a figment of your imagination. But at a certain point, you say I’m going to do an idea, I’m going to build a form builder, and you’re like, yeah. I’m like 10% or 20% sure it’s going to work. So then you talk to 20, 30 people and you’re like, I feel like 30%. That’s all it is, it’s a continuum. Then you put up a landing page. You get people to opt-in, commit, pre-buy, or whatever and maybe that gets you to 50 or 60.

You had that with Branch, right? You had validation, but there’s still room there for it to fail. Just because you’re at 60%. At a certain point at tips and then you people actually do start using it and start paying you. Anyway, I wanted to interject that, but you can keep going with the story.

Peter: We put a month into the landing page two people, and two people that are pretty good developers. Bjorn is a good designer as well. We put a lot of effort into it. I think that works. It’s just slapping something together and just put it up there. It has a much lower chance of working unless it’s a new thing that people really want. But if you’re trying to compete in a very crowded space, why would anyone sign up for a bad MVP or a bad landing page for something? That’s not going to be exciting to anyone.

We put a lot of effort into it. We had a good idea about what we did because we iterated on it. We put it on Twitter. From my point of view, it blew up with my follower amount and stuff like that. It got more attention than my tweets normally get. I got like 100,000 views or something like that and I think we got 500 signups for the early access list on the first day. I think we were at like 1300 or something like that when we actually launched the thing.

But at the time this was one of our experiments. The first thing I tested was the investor idea, then I tested the form idea. But then it blew up a little bit. 500 people signed up. We did a Twitter Spaces event and Andrew Warner from Mixergy showed up and he prepaid. Four people prepaid. They just asked if they could PayPal me money for it because they wanted to be the first customers. It’s really exciting.

The next day we went for a walk, me and Bjorn, and we were like, yeah, I think we have to go forward with this idea. It would be weird to go out and launch another thing in three weeks.

Rob: So you built it. How long did it take to build to get to the point where you could launch? Because today, you can go to Reform and sign up. I can see plans, I can go to the form builder, I can log in, and all that. How long ago did you launch?

Peter: 45 days ago?

Rob: It took a few months to get you to the point.

Peter: But we had customers way before that. It probably took us a month before. We had that prototype of a form that was our sign-up form. That was another thing that we engineered. If you want to see the product, you sign up for the early access list. That’s how you could try the product. It took about a month before we had a product where we could rebuild the early access form for ourselves. Kind of like […] it.

I had a list of people. I talked to everyone who signed up in the early days all the time. Half my time, I was probably just talking to people. I had an idea about who needed what and how many features they needed. I had them ranked and some people did need a lot of features and they were willing to try a new thing so they could try it maybe after five or six weeks. We just slowly started onboarding customers.

Rob: Essentially an early access, right?

Peter: Exactly. I remember actually after we announced the product. My first idea, because I’m in this validation mindset, was actually to manually build forms like the one we had for early access for the 10 first people or something like that. I think that was actually Derrick. He asked me, what are you going to learn from that? People are already paying for form builders. They’re already building forms. They already have use cases. You just need to see how fast you can build something that people can use to put together the same kind of form that you had on your website and that resonated with people.

That’s what we did. That’s kind of what we’re still doing. We’re still trying to catch up to all those baseline features. But we have enough that I think most startups can use us for all their form needs. We have templates for product/market fit, surveys, SaaS onboarding, and stuff like that. All this stuff that we need ourselves, which is fun as well so we get to […] it all the time.

Rob: Right, that’s the cool part is when you get to the point where the product where you can use it yourself. I do like on your home page, you say the problem, what’s wrong with the status quo? Then you go through some reasons. Look, there are a bunch of other form builders, but here’s what we don’t like about them, here’s what we kept hearing people they don’t like about them, and then how Reform is better. We’re faster, we’re brandable or linear and nonlinear.

You really bring it out in a way that would address the inner narrative, the conversation that’s already going on inside the prospect’s mind.

Peter: I remember recently, Bjorn told me, this feels like it’s a lot easier to get a customer for Reform than it is for Branch. And actually, it also feels like it’s a lot easier to get two customers and three customers. It’s so much easier for people to sign up. There’s a much smaller mental barrier to sign up, pick a template, you get a URL, your form is ready, right? You don’t have to convince your boss, all this stuff.

I’m just enjoying that right now, to be honest. I don’t know if we’re going to figure out all the marketing and if we’re going to scale and all that stuff, but right now it’s just fun to have, in a few months, more than 60 customers, usage, feedback, and life in a sense.

Rob: Yeah, I mean you’ve built a self-serve tool that’s quite horizontal. If people find out about it and they do like the look of it, like the feel of it, or do (to your point earlier) have an issue with the current form builder, it’s $20 a month. It’s not that big of a risk and they don’t have to get a whole development team using it. The switching costs, it’s not trivial to switch from old form builder if you have data and such, but it’s certainly possible. We’ve done it with MicroConf and TinySeed, customers in Reform as well. It’s interesting.

I think folks listening to this might be thinking well, should I enter a big horizontal crowded space as well? It’s like, well, maybe. I mean, there’s a bunch of ways to think about this, right? Something similar to you and that you and Derrick have is that you both build really good products. They look really good. They function really well. You are exceptional at building products.

A lot of people think they are, but you look at Reform’s homepage, you look at SavvyCal’s homepage and you compare it to a lot of SaaS apps on the web and yours, they stand out. That’s an advantage unto itself, but it’s not enough, of course. You’re not going to get to half a million or a million just because you can build a great product. That marketing piece has to kick in, which I’m assuming is up next for you guys because you’ve built something people want.

Now you have to get more product-market fit. As I always say, it’s a spectrum. You’re notching that up and eventually, you’ll get to where people are just flocking real quick and then it’s like okay, everyone’s signing up and everyone is converting, but now how do we have 5X, 10X, 20X the sheer volume of people who know about us. That’s the playbook.

Man, congratulations. I was going to say making a pivot but it’s not even a pivot, it’s just like, I’m just going to build a different app. It’s a risky decision, obviously, but there’s a lot more founder gut that has to go in these things than I think we want them to have, especially as engineers. We want there to be a right answer in black and white and numbers that point us to 100%. But you’re off to the races. Now, it’s plug and play, blocking and tackling, and building the business.

Peter: Yeah, I actually thought about if I should do another round of TinySeed just to like…

Rob: Apply again?

Peter: Have more traction and go through all the exercises.

Rob: Yeah, totally. You can go back in there, let a minimum review.

Peter: Maybe I could sneak into some Zooms or something.

Rob: Yeah, totally. Well, sir, it’s been a pleasure having you on the show. If folks want to keep up with you, they should look for the Out of Beta podcast wherever fine podcasts are sold. And of course, Reform.app is your app and you are @petersuhm on Twitter. Thanks again for joining me.

Peter: Thank you so much. It’s fun.

Rob: Thank you for joining me every week on Startups for the Rest of Us. If you’re not already subscribed, love it if you can hit the like and subscribe button as the kids say these days. But no, seriously, it’d be great to have each of these episodes appear in your feed each week if you’re not already doing that. It’s great to have you here. I hope this episode and all the episodes are helpful with your mindset with some strategies, some tactics, some thought process, some inspiration and that help you push your bootstrap or mostly bootstrapped business forward every week. If you keep listening, I’ll keep recording. I’ll be back in your earbuds again next Tuesday morning.

Rob: Welcome back to Startups for the Rest of Us. I’m Rob Walling. If you can believe it, this is Episode 570. I think we’re approaching 100-listener question episodes where me or myself and a guest answer questions from you, listeners. This is another one. We dig into some really interesting topics today.

If you want to get your question answered in a future episode of Startups for the Rest of Us, you have some options. You can go to startupsfortherestofus.com. There’s an Ask a Question link in the header. If you click on that, we use a VideoAsk and that allows you to click a button on your phone, click a button on your laptop, and send in either an audio or a video question, then you can obviously record an audio or video question on your laptop. Just email it to us, send it to Dropbox link or G Drive link.

Those questions go to the top of the stack. We always answer those first, you can just email questions at startupsfortherestofus.com, or submit it via our contact form. If you submit it in text, we will get to it at some point. I think we’ll have time today to dig into a few of those as well. Without further ado, let’s dive into our first question. This is a video question from Hide.

Hide: Hi, Rob. I’m Hide. I’m a software engineer and aspiring bootstrapper. I’m currently looking for problems for customers. I was wondering if some problems were more conducive to bootstrapping than they were to high-growth startups. My other question is, what are some of your ways to create and maintain trust with your potential customers? Thanks. A big fan of the podcast.

Rob: Thanks for those questions, Hide. I will tackle the first one first, which is, are there ideas that are more conducive to bootstrapping? I think the way I’d like to address it is to go through ideas that I would not bootstrap, that I think are too cash-intensive, or just are not conducive to bootstrapping. Pretty much, anything else that’s info-product, course-related, B2B, SaaS is a better option for bootstrapping.

The first one, and it’s one that I see all the time, is a two-sided marketplace. For some reason, a lot of folks—I think it’s because they use Uber, they watched The Social Network, and they use Facebook. They want to start a two-sided marketplace where they have to get consumers and some providers together. That is really complicated and really expensive. It’s very, very rare that you see a two-sided marketplace come out of a bootstrap software company.

There are a few and it’s usually when they have one side of that dialed in. If I already have a big audience of developers, I can start a job board and I can then go find people who want to hire developers because I already have that big audience, or if I already have a big audience of designers, it’s the same thing. But trying to build both sides of the marketplace at once, I just usually say don’t. Unless you’re going to raise buckets of money, don’t do it. It’s a rule of mine.

If you look at how they bootstrapped Uber, they didn’t. I think Travis Kalanick and his co-founder funded it up to a few cars, a few black cars in San Francisco, and then they just had to raise money and expand geographically because raising money, it’s too capital intensive. You have to hire people, you have to get on the ground, you have to then go find both sides of that marketplace in each locale—very, very intense. Same thing with Groupon. Trying to bootstrap Groupon, you and I could have had that idea 10 years ago, and not raising money for that would have been very, very challenging.

Another type of business that is, I say, virtually impossible to bootstrap. It’s possible if you do it on the side. It grows really slow for years and years and years and years is a purely ad-supported one. Obviously, you can build a podcast or something, build an audience, and get that ad support. But I’m talking about trying to build a website, a software product that is ad-supported.

If you recall the scenes in The Social Network, to refer to that movie again, there was Eduardo Saverin, I believe, was Zuckerberg’s co-founder. He wanted to have ads on the site really early on because he was saying, how are we going to pay for the servers? At least the way it’s portrayed in Aaron Sorkin’s rendition of The Social Network, Zuckerberg said, we’re not going to do that. We’re going to raise money to pay for it instead.

I think to grow as quickly as Facebook wanted to and to build a social network that had no ads for a very long time and had no revenue model—the same thing with Twitter, same thing with a lot of these socials like YouTube—they just weren’t monetized for so long. So you have to have some type of money coming in in order to fund that. But in those, it’s often a winner takes all or at least a land grab. Land grab businesses, you shouldn’t bootstrap because you have to move really fast, and so you want to raise huge amounts of money, get there first, and get the mindshare.

When that network effect kicks in, eBay, Facebook, Uber, and Lyft, these network effects are what allows them to now have a really big moat against competitors. But again, these days, I wouldn’t bootstrap that. Hardware is another one. Probably I don’t need to address that here because we don’t really talk much about hardware on Startups for the Rest of Us.

There’s an interesting one that I used to think was not great for bootstrapping, and it was sales-heavy apps. Let’s stick to SaaS for now because that’s normally what we talk about in Startups for the Rest of Us. I used to think that it was low touch, low price point. This is 10, 12 years ago that those were the ones designed for bootstrappers. What I’ll say is, if you’re doing it part-time, and you’re doing it nights and weekends while you’re doing a day job, I do think that’s relatively accurate because doing sales to a Fortune 5000 company is very, very hard if you do have that day job. You want to have credibility, you’re not full time on it.

This is why I talk about stair-stepping. Go build your Shopify add-on, your Heroku add-on, your WordPress plugin, your info-product, your course, and get enough money that you gain the experience, the confidence, and eventually combine at your own time. Then you’re full time, then you can do what you want to do. You could do a sales-heavy, more sales-led organization as the kids are saying these days.

All that to say, I used to think that sales heavy was not a great fit for bootstrapping. But what I think has come down to is it’s not a great fit for part-time. If you can go full time on it, I’ve actually seen the majority of the SaaS companies that I see succeeding. I don’t mean 95%, but I’d say 60%, 70% do have a heavier sales component because they can have a higher purchase price and higher annual contract value, and that leads usually to faster growth for a company.

The last thing I’ll say on this point is if you want to build a software product, you want to build a SaaS company, it is very hard to bootstrap it if one of the founders is not a developer. Because if you have to hire developers, you need money. I view bootstrapping as truly not self-funding. Self-funding is hey, I have $100,000 in the bank. I’m not going to go raise funding. That’s not really strictly bootstrapping, either.

Self-funding is possible or raising funding if you need to go hire someone to build your app. I don’t want to give the impression that without a developer, co-founder, you can’t build […] SaaS product. It just makes it hard. You’re doing it on hard mode.

There are examples, many examples of it actually. I don’t remember what the numbers are, but I think it’s maybe 10% or 15% of companies that make it into TinySeed don’t have a developer co-founder. It’s a super minority—10% to 20%, somewhere in that range. But there are examples like Craig Hewitt from Castos. How did Craig get Castos built?

He started a productized service doing podcast editing. He built that to tens of thousands a month in revenue and then he used that to hire a developer to build a product. When Drip first started, I was a solo founder. Derrick came on as a founder later. He was originally a contractor then he was W-2. Then I got to the point where it just made sense to have him come in and have equity. But in those early days, I wasn’t writing any code on it. How was I able to pay Derrick to write the code for Drip?

I had a prior SaaS app called HitTail and that was throwing off $20,000-$30,000 a month net profit. It was an amazing step two business. I guess now, technically, it’s a step three business. Anyways, it’s on the stair step three, I believe. I self-funded Drip, in essence, until we got to the point where we were at breakeven.

That’s just another thing I’ll throw out is that without a developer, you do have to either raise money early or usually have to figure out a way to have money to pay a developer. I hope that was helpful for you, Hide.

The other question he had was about creating and maintaining trust with potential customers. There are a few ways to do this. It’s commonly done with content. You present yourself. Hopefully, you are an expert in your field, and that you are either blogging about it. You can have a podcast about it, you can create some type of content, you could write a book. I know that Jason Cohen, when he was starting a SmartBear, he wrote a book on the same topic that SmartBear was focused on which was like code. I don’t remember what it was.

What is a SmartBear? Is it code collaboration, code security, or something like that? He wrote a book. And then he would sell it or even give it away to folks, and it would be up on the shelf. Then when he’d go on sales calls, they would pull it down and point at his name and say, you wrote the book on this. How hard is it to make a sale?

I’m not saying you need to write a book, but I will tell you it certainly helped me as well. I’ve written three books now. One of them was co-written with my wife. It definitely lends credibility to us when we’re talking to investors or people who are outside the space. We say, look, I run this podcast that has 570 episodes now and you can go listen in here if I know what I’m talking about, in essence.

Anyway, content is a great way to do that. Also, if you get folks to opt-in to your mailing list or you have a way to contact them, similarly through content, you can send them an email Drip sequence or otherwise engage with them. It’s allowing folks to see who you are as the CEO and founder—the professional side of you—and to acknowledge your expertise and to be able to experience that. I think it’s harder to do if you do it just as the company because people don’t want to follow companies, they want to follow people.

That’s always the challenge. How much of yourself do you want branded on the company versus the company itself? That’s probably a conversation for another day. Thank you for that question. I hope it was helpful.

Zac: Hey, Rob. My name is Zac. I’m wondering what suggestions you have for founders out there who are battling depression and other mental illnesses.

Rob: This is a tough one and it’s not one that I have a great answer other than to get help. It’s to go listen to this and founder podcasts. My wife is a clinical psychologist and has a Ph.D. in psychology. She consults and advises founders, CEOs, and high-functioning individuals. She has dealt with both founders who are just struggling because it’s hard and founders who have an actual diagnosable mental illness.

Usually, the moment you have a diagnosable mental illness, you need a licensed therapist, psychologist, psychiatrist. Whatever it is you’re going to seek, you need someone licensed in your state. That’s usually the difference, but she talks a lot about this and how to deal with it. If you read The Entrepreneurs’ Guide to Keeping Your Sh*t Together, which is the book that Sherry and I collaborated on, we dig into some of these topics.

There are no easy answers other than don’t deal with it without getting help because there is help out there. Whether help means you get on some medication that helps with it, whether you go to therapy, whether you try alternative therapies that you feel like are going to be appropriate for you, whether you figure out you start messing with your sleep. By messing with, I mean trying to improve the quality of that, whether you start an exercise regimen. These are the fundamentals.

If Sherry were on here, she would say, look at your sleep, look at your exercise, less time in front of screens, more time building relationships, and get help—talk to a professional, someone who knows what they’re doing. That is my advice. It’s always the, how do I lose weight? It’s like, exercise a lot and don’t eat […]. Nobody wants to hear that, right? They want to be able to do whatever.

What they mean is, how can I not change anything and get better? Zac, I’m not saying that’s the question you’re asking, but I’m just comparing. The answers are usually stuff that we know, but it’s hard to make that change.

I’ve gone through some tough times as an entrepreneur and I was always resistant to going out and getting help because for me it was like, well, I don’t have time for that. I’m too busy for that. In fact, I went through months and months of feeling like crap because I just wasn’t willing to go make that change. Anyways, I hope that helps. It’s a really good question and one that I’m happy folks are talking about these days.

I think, honestly, Sherry was the one who pioneered that in our space, in the bootstrapping space. There really weren’t many people talking about it in venture funding. I know that given the toll that it takes, there’s been a number of suicides in the venture-funded founder community. I do think that this is becoming a more common topic and one that I think should be addressed, so it’s not so taboo. Thanks for that question, Zac. I hope it was helpful. Our next question is also from Zac.

Zac: Hey, Rob. This is Zac. I’m wondering what advice you have for founders out there who are more introverted and have difficulties going out, getting in front of people, rubbing elbows, and making sales.

Rob: I like this question because I’m introverted. Some people are shocked when I say that. But you’ll notice that if I’m in a room with a lot of people, I tend to talk for a few minutes and then I go sit down somewhere because I need a break. What I did was I built a lot of businesses that didn’t need me to be super outgoing.

An introvert can still be good at sales. I don’t think that you going to a conference and rubbing elbows is necessary in order to build a great business. There are plenty of businesses you can build by becoming a great developer and a great marketer. You don’t need to do a bunch of sales calls.

We can look at Derrick Reimer, founder of SavvyCal. We can look at it frankly when we started Drip. It wasn’t like I was going meeting in person with people. I was marketing the […] out of that app. I was warm emailing people in my network and saying hey, I built this thing. If you’re using Mailchimp, I think the difference is perhaps how it might be a better fit for you, or Infusionsoft or whatever the other competitors were.

I was not doing a big hard sell and I didn’t need to go build a bunch of networky fake relationships to do it. I just showed up, built a great product, and tried to present a better offer to people. We did a lot of inbound too. Inbound marketing, while the sales folks who are listening to this are I’m sure saying, oh, it’s a cop-out. Don’t go create content when in fact, you can do cold email or whatever, which is not untrue. But there are ways that you can be an introvert and still make sales.

That’s why a lot of developers and myself included, especially my earlier businesses, it was a lot of content that I would create presenting what I knew such that I wasn’t trying to prove stuff to anyone when I would meet them or when they would email me. They already knew me because they’ve listened to this podcast. They read my blog, they read my books and then come to a MicroConf. That allows me as an introvert to then be able to build relationships, to build a network.

There’s a lot of ways around it. I think if you’re just going to start like a step one small software product, you really don’t need to be hardcore about making sales. If you do want to build something that’s going to be 5 million, 10 million, 20 million in ARR, then you either have to decide, hey, I am going to do this. It’s self-improvement and I’m going to get better at this, which is totally possible.

I see some really great developers who are introverts learn sales because sales is not what we think it is. Sales, as Einar Vollset says all the time, you’re like a high-priced consultant trying to find the best answer, trying to find the best solution for the person on the other end of the line. You’re a high price, but you’re not getting paid. You’re just super knowledgeable of the space.

There were a number of sales calls. I just call them, these are demos, it’s a conversation where someone would tell me what they needed and I’d be like, you know what, I actually do think Mailchimp might be a better fit for you given that you’re not going to use any of our automation and it’s a little bit cheaper or whatever. That was it. I felt like me becoming a salesperson or needing to do sales was just being pretty honest about things. Knowing that we had a great product helped.

I wasn’t trying to trick anybody. I wasn’t trying to say anything that wasn’t true. When I said, I believe Drip is the best product on the market to do this, it was true. I wasn’t exaggerating. I think that helps to gain confidence and to realize that, look, it’s not black magic. It’s not some mystical art. It really is just having conversations and not selling from your heels, not being, gosh, I’m going to make everybody mad. You got to kind of go with it.

In conclusion, you can either build a business. I think, will you hurt your growth by building a business around solely your desire not to do sales or whatever? Yeah. It’s bootstrapping, it’s a lifestyle business, so you can do whatever you want. Or if you decide, hey, I want to grow really fast, get bigger, and get big quickly, then you either need to get over it and learn those skills.

You can follow folks like Steli Efti. You can look at what Damian Thompson is putting out. There are a lot of pretty good sales folks with some great books on the topic as well, or you can find a co-founder who maybe is better at that side of things. I’ll be honest, I had the idea for TinySeed back in probably 2011, 2012 where I said accelerator for bootstrappers, Y Combinator for bootstrappers. But I didn’t want to raise a fund.

I didn’t want to manage a fund. I didn’t want to deal with all of the headache that goes along with it. It wasn’t until after selling Drip, while I was looking at my next act, that Einer Vollset and I started talking. I knew that he was not only good at that stuff because I can figure it out. I’m enough of an operator. I could figure it all out, but I just wouldn’t enjoy it. So that’s his role in TinySeed.

This is often referred to as your zone of genius. It’s what you’re really, really good at (better than most) and you really, really enjoy, and you can be happy doing. I think it’s just all about knowing yourself. I think we learn so much more about ourselves as entrepreneurs. It’s a great question. Thank you, Zac.

Our last question for the day is from Lou […]. He says, “Hey, Rob, great episodes as usual. I’m curious, why is there not a standard/boilerplate operating agreement for co-founders similar to docs like the SAFE from Y Combinator? Most operating agreements have the same components, ownership structure, capital contributions, budgeting management, and legal decision making, et cetera. The terms can be fill in the blank like X equity invested over Y time. Are there enough nuances to require a lawyer to draw up a new agreement for each startup? Thanks for all you do.”

It’s a good question. I don’t know why YC hasn’t put one out. I do know that effectively, Stripe has done this. That’s Stripe Atlas. I don’t know if they ask you how many founders. I’ve never done Stripe Atlas because once it came out, the next company we started was TinySeed and you can’t use Stripe Atlas for fund formation.

Stripe Atlas, I believe, has that. They do C-corps and LLCs in Delaware. I remember pulling a partnership agreement off a service like Rocket Lawyer or LexGo. They do it in Latin America. They’re a TinySeed company. These do exist. I think that they’re around, but the fact that Y Combinator or an equally large brand hasn’t put them out that maybe we don’t hear about them enough.

I think the SAFE is not popular because the SAFE exists. The SAFE is popular because YC put it out and their brand equity behind it made folks start to adopt it and say, okay, this is how we want to do things. To the question of, why is there not a standard/boilerplate operating agreement? You’d have to find someone where it’s worth doing. I wouldn’t be surprised if YC has their own internal one that they let folks use, and releasing that, how does that benefit?

You have to think of who’s going to put this out, do they want to assume. Is their liability towards publishing this online? What is the benefit? Do they get the brand equity like they got from the safe? To that question, I’m not sure, but I do think there are definitely some reasonable options out there.

If you go to a lawyer, it’s not like they drafted up from scratch. They have their own standard/boilerplate operating agreement that they are going to then ask you a few questions, you’re going to tell them, and then they’re going to go fill it out. That involves a lawyer and is a little more expensive. That is usually the way these things go. Thanks for the question, Lou. I hope that was helpful.

That’s all the questions we have time for today. When this episode comes out, I will actually be on stage at MicroConf Europe Growth in lovely Dubrovnik, Croatia. If you’re there, I hope to connect with you. If not, head to microconf.com and get on our mailing list to hear about upcoming events. We have a virtual event called MicroConf Remote that will be in, I can’t remember. Producer Xander is going to kill me if it’s in November or December.

Our MicroConf Remotes have had great responses because it’s not sitting staring at a Zoom room for five hours a day or whatever. We made the last one super unique. The last two have been really unique. One was filmed basically in a live studio. It was socially distanced but got a lot of great comments on that.

The next one we used gather.town, which is a platform where you can actually wander around and you have an element of the hallway track. You just run into attendees, it opens a little window, and you can chat with folks. There was a scavenger hunt in gather.town, which is like an 8-bit. It reminds me of Legend of Zelda or a game like that. It’s so much fun.

So if you haven’t been to MicroConf Remote, check them out. They’re entry-level. It’s inexpensive, you don’t have much to lose. We do focus more on the earlier stage folks. But then we are looking at MicroConf Growth in Minneapolis next April. It’ll be our in-person event. I’m pretty stoked that we’ve been able to pull off these four events that we have here in September and October—Portland, Austin, Boston, and now Croatia.

To me, just being able to get in the room safely using all the precautions, masked plus vaccine requirement, all these stuff to make sure folks are safe. To be able to do that with other entrepreneurs is such a need for myself. What I keep hearing from attendees is like this is a need that they’re having too. COVID has been rough on everybody and not being able to get together for almost two years is isolating both professionally and personally.

It’s great to see folks who are coming out to MicroConfs. As I said, head to microconf.com if you want to know about upcoming things that we’re working on. The State of Independent SaaS Report is another one. We are going to be doing that for the third year in a row. Gearing that up here pretty soon. Thanks so much again for joining me this week on Startups for the Rest of Us. I’ll be back in your earbuds again next Tuesday morning.

Rob: Welcome back to Startups for the Rest of Us. I’m your host, Rob Walling. This week, I had a conversation with a founder who’s been in the MicroConf community for several years. She actually attended her first MicroConf in 2019 on one of our scholarships, and by that time, she had been building a SaaS business. It’s a two-sided marketplace with a subscription component, and it’s for RVers.

She’d been building that business with her mom for seven years by then, received an offer to sell it—it was a so-so offer—she had come to the conclusion she was going to sell it, came to MicroConf, and got advice that literally changed the course of her and her mother’s life. It’s a great story of an entrepreneur who persevered for (really) nine years before selling her business, and changed the course of her and her mother’s life in the process.

This is entrepreneurship. This is why we talk about this every week on Startups for the Rest of Us. This show is for ambitious startup founders who want freedom, purpose, relationships, and want to change the course of their life through starting their own companies. With that, let’s dive into our conversation.

Anna Maste, welcome to Startups for the Rest of Us.

Anna: Thanks so much for having me, Rob.

Rob: Absolutely. Today, we’re going to be talking about Boondockers Welcome. It’s at boondockerswelcome.com, how you and your mom started it, grew it over the course of nine years, and then sold it for a life-changing amount of money.

I want to start with two questions. The first is, what is a boondocker?

Anna: In the RVing world, a boondocker is usually somebody who camps without hookups—camping in the boondocks, in the boonies—but more often than not, it actually ends up being in somebody’s driveway, or in a Walmart parking lot, or a much less glamorous than actually in the back country boonies. That is boondocker means in the RV industry.

Rob: And it’s a long domain name, and really would only be known by someone in the space because I had seen you in MicroConf Connect, I’d seen the URL, and I never had any idea what it did because I hadn’t visited the site until you and I have really connected deeper. Would you feel that was a benefit that is so niche-specific? It’s like saying build my MRR, everyone in SaaS says that is, and no one outside knows that?

Anna: I wouldn’t say that the term ‘boondocker’ had a great amount of benefit to us in that respect. On the list of things I would change, maybe a shorter domain name would have been at the top of the list, but we definitely did manage to build a brand, and to most RVers they would’ve known what a boondocker was. It became synonymous with staying on people’s properties, so that was pretty cool.

Rob: You and your mom sold Boondockers Welcome earlier this year. As you emailed me and you and I chatted definitely, I think the exact phrase you used in the email was, “It was in the space of the ‘we be crazy to say no’ variety in terms of the multiple.” Do you remember the moment when the deal closed and you were looking at it? Did you look at the bank account? Were you refreshing like I was the day we sold Drip? What was that like for you?

Anna: Actually, the funny story is that the money got lost for a couple of days.

Rob: Oh my gosh.

Anna: It was a couple of days where my lawyer was on the phone because it was going into her trust account, so she was actually on the phone with the bank trying to figure out where the money was. It was a bit of a kerfuffle, so our close actually got pushed out by a couple of days because of that. When the money finally did show up in the account, there was a combination of relief with just shock and happiness, but relief that money had not just disappeared.

Rob: That’s terrible because I remember how stressful any type of acquisition is, really from either side but more from selling, in my experience, and I cannot imagine not knowing where the money was.

Anna: Yeah. I think that some lucky person actually opened up their bank account, saw the money in there, honestly came back to their bank and said, this is not my money, and that’s how we found it.

Rob: Wow, that’s terrible.

Anna: Nobody’s fault. I’m sure there’s just a number, a digit got switched or something somewhere in there.

Rob: That’s unusual. I haven’t heard that before happening with an acquisition of a large sum of money getting set to the wrong account, in essence.

There’s a big chunk of stuff I want to cover around how MicroConf played a role, and how the MicroConf scholarship program played a role in shifting some of your thinking in 2019 that made this all possible. I want to roll back for now and start at the beginning of you starting Boondockers Welcome with your co-founder, your semi-retired mom (who is a former waitress). She had become an RVer, built herself a bit of an audience, and a name in the RV space, having written a couple of ebooks for RVers.

Talk to me about how that unfolds. I haven’t personally started a business with my relatives, much less my mother, so I’m curious. Was this an idea that came from her? Did you bring the idea to her? How did all that get started?

Anna: I was actually on maternity leave with my eldest son. My mother approached me. She had, like you said, these successful travel guides, had a bit of an audience, and she had this idea for what she called sort of a driveway surfing community, like couch surfing but for RVers.

Apparently, it’s quite common in the RVing industry for people to say, oh you should just come park at my place anytime you’re in town. RVers are really easy guests. They bring their own bathroom, they bring their own bed sheets, you don’t have to worry about what your house looks like. She said, I’m thinking about building this. I was going to see if I could contract somebody to develop it for me. Would you help me find someone?

I kind of stepped back and said, whoa, whoa, whoa, mom. Have you vetted this idea? Do you really know it’s going to cost you tens of thousands of dollars to get somebody to build this? I was on maternity leave. I didn’t really have a lot. We live in Canada where we have 12 months of paid maternity leave. I’m not incredibly well-paid but better than nothing paid.

I was happy to take some time. She came and spent time with her new grandson and I started working on developing the website. Web development wasn’t my background. I was a firmware engineer, so there was a big learning curve for me there just to switch gears, but that’s how it all started as a bit of a side project.

We developed it slowly. It wasn’t until my second child was born that we actually ended up launching it. That was the impetus.

Rob: I’m curious. As a firmware engineer building maybe one of your first web apps in 2012, what tech stack did you use?

Anna: I ended up using just a Drupal CMS with a bunch of modules and a little bit of custom PHP code stuck in there. I had some familiarity with PHP and it’s a pretty flexible CMS in general, so I was able to wedge in the payments and the pieces that we needed to make it work. That’s what we started with.

Rob: In retrospect, did you think that was a good decision?

Anna: It was probably a good decision in the minimum viable product sense. It didn’t require a whole lot of custom work to be done. It certainly did not give me the flexibility that I needed to really develop the platform to something larger. It took a long time, so I wouldn’t call it a minimum viable product in that sense, but on the side it was a minimum viable product in the sense that it did what it needed to do to see if it was an idea that was going to fly.

Rob: That’s (I think) the important point because I “built apps.” This is before no-code. These days I would probably use no-code for something like this, but I built them on Drupal and WordPress. Usually, it’s to get something out really quick, and then if it actually works, got to rewrite it. There’s no way I’m going to deal with the constraints and confines of an ecosystem like that.

You launched in 2012. Was it hockey stick rocket ship growth? What did you experience?

Anna: Oh goodness now. I remember we launched to my mother’s newsletter list. She had several hundred people who had bought her guides, and those first people seeded our host space. They were our first 200 hosts. They signed up quite readily at that point. It was lifetime free if you sign up as an initial host.

We’re talking about essentially a two-sided marketplace. The difficulty of building a two-sided marketplace is well-known and talked about often on the show, so I’m sure that most of our listeners are going, oh gosh, how did she ever make this work. That was the thing. But yes, we had the advantage of having a really decent seed list.

We got our first couple of hundred hosts in those first few months, and then we turned on the ‘okay, from now on if you want to join, you have to pay’ switch. I remember kind of sitting there waiting to see if anybody would buy. Within a week we had one person, and it was kind of like one person every week for a little while. It was very slow.

Rob: How did the pricing work at that point and what was the model? Is it a subscription model or a one-time fee? Were you charging the hosts or that RVers? Am I using the right terms there? The hosts or the boondockers?

Anna: Yeah. At that time, our assumption was that anybody who wanted to be a host was probably an RVer as well and would also want to be a guest. We did after those initial 200 free lifetime members. We turned on pricing for everybody. You got a discount if you signed up as a host, but we just assumed that everybody wanted to be a guest, so it’s going to cost you (I think it was) $25 a year. That’s subscription but not even an automatically renewing subscription. There was lots of low hanging fruit there but $25 a year, $20 a year if you were a host.

Rob: That’s crazy low. I marvel at everything you’ve done. Everything I’m about to say you already heard me say in the past. Building a two-sided marketplace is really hard. Don’t do lifetime grandfathering. The first 200–300 are the people that are most interested in using it. Maybe give them a free year. Maybe give them whatever free amount of time, but eventually they’ll convert in. Although billing a two-sided marketplace is a little different because you really do need those folks to dig in. Lastly, $20 or $25 for a year is like ouch.

Anna: You’re selling to consumers, too, which is a very different game. They’re so price-sensitive and RVers in general are. Essentially, we’re marketing to people who are too cheap to stay in the campground for a night. You’re really kind of scraping the bottom, but there’s also some degree on pricing. I mean they’re lovely people. As it grew and matured, it turned out that the savings of $25 or $50 a night on a campground was really not the value proposition that people actually ended up buying for.

Rob: What was it?

Anna: It ended up being community. Most of the hosts did end up being RVers themselves, but a lot of them were former RVers, people that couldn’t RV anymore, and people who ended up going to the effort to put in a couple of parking pads for Boondockers Welcome guests on their properties so that they could have people come and share their travel stories.

The same on the guest side. We had families who were traveling and it was just somewhere different to stop. You meet people on the road, people who know the area, people who are willing to show you around, people who give you eggs from their chickens in their backyard. It really ended up being much more about community than an alternative to spending the night in the Walmart parking lot.

Rob: That’s often what happens. There are a lot of businesses that we think it’s about saving money, and there’s often some other thing. It’s about saving time, efficiency, a hassle, or in this case, community, which maybe wouldn’t have predicted from the start.

By the end then—if we flash forward to 2021—I’m curious what your pricing was like then if it was still an annual subscription, if you’re still charging both sides, if the pricing was higher than $25 a year?

Anna: We did change our business model in late 2017 to allow hosts to sign up for free. Did not include (I guess) subscription, though. If hosts wanted to also be guests, they had to purchase a guest subscription but they got a 50% discount on that.

By the time we sold in 2021—and still great now—our annual price is $50 a year, so up from the $25 a year but still a good deal.

Rob: Yeah, and that makes a lot of sense to charge guests because they’re getting the benefit, whereas hosts, I know they get the community side of it but they don’t get paid, right? It truly is a free thing.

Anna: It truly is. We wouldn’t have existed without the generosity of our hosts, so yes, charging our hosts in the end definitely was not the right play.

Rob: What was that early assumption that every host will also want to be a guest? You often get in that mindset of something owned. I’ve written code where I coupled two classes, or made one class instead of having it be a more generic representation. It’s easy to do and then it’s something you just got to undo later.

You launched in 2012 and you do get one side of that marketplace, the host, in place enough because your mom has the audience, and then it’s growing onesie, twosie payments a week or every week or two, so truly slow growth bootstrap business. When did that change? I get the feeling there’s an inflection point here that happened where growth picked up, revenue started accelerating, and I’m curious what came together to make that happen.

Anna: It was sort of just slow growth. Got picked up by several influencers in the space slowly over time, but I think the big inflection point was in 2017 when I rewrote the tech stack, changed the business model. Honestly, that was when my youngest kid started school so I had a lot more time on my hands, and I was able to really focus on all the things that I knew we were supposed to be doing but we weren’t.

We didn’t even have a blog. We had no content marketing. We sent out newsletters but only to our existing members. We didn’t have a newsletter sign-up on the home page. All those things that you’re supposed to do, we hadn’t done them and we managed.

I think by the time in 2017 when I rewrote the stack, we had about $30,000 in ARR. It’s a pretty high-churn industry so that’s not a guarantee, but it was respectable for what was essentially just a maybe six-hours-a-week while my kids were in preschool or before I walk in evenings when I still had a day job sort of thing.

Rob: That makes sense, and at that point you’re five years into this business doing $30,000 a year. It sounds like you were fine with that, that you thought of it like a side project.

Anna: Absolutely. It was something I dreamed of quitting my day job for. I mean, I did quit my day job before 2017 for family reasons. My husband was traveling a lot and we needed some life balance. It’s not like two young kids at home who aren’t in school yet isn’t pretty much a full-time job. It was a side project and I treated it as such until I found the time to actually double down.

Rob: I am also curious about when you reworked it. You now have more web experience, I’m assuming. What tech stack did you use then in 2017?

Anna: We have a Django back-end. Obviously, Python Django running on NGINX and FreeBSD as our operating system. I happen to have my husband who is a bigwig in the FreeBSD world, so I have a good guy on board to help me with any of those OS server–level details. I didn’t even know Python (really) before I picked that, but it’s incredibly flexible, great from just the ability to implement anything I wanted after coming from trying to build on top of the Drupal CMS. It was a huge step up.

Rob: It sounds like your growth started moving a little more at that point because you did put things in place. Like you said, content marketing and other things that we would just say that most bootstrappers should be doing. Do you think if you had done that earlier, if you had the time do you feel like growth would have been faster in those first five years?

Anna: Maybe. I think the business model change was really imperative. I think we ended up losing hosts quite frequently because they stopped being guests. When we made that change, we were able to stop stagnating on our house count, and our number of hosts just really started to skyrocket. I think at that point we had about 800 hosts and we had sort of been oscillating around that for a couple of years. Today, we have over 3000.

Rob: And that’s the hard part. The hard part of the pricing period is you don’t know what do I feature gate, or what is my value metric often. A two-sided marketplace adds even more complexity than that. It’s who do I charge and for what, who’s getting value out of it. I can imagine that it took you a little while to figure out.

Your business is growing well, and I want to get to the kind of MicroConf part of the story right now. I’m curious. How did you hear about MicroConf? Were you a listener to this podcast?

Anna: Yes. I can’t remember when I started listening to Startups for the Rest of Us, but I’m pretty sure I was still working my day job and listening to it on and off. I knew that that was what I wanted, but I wasn’t sure that the business I had was going to be the business to get me there.

You guys do end up focusing quite a bit on B2B SaaS. We were B2C and not so much SaaS, so two-sided marketplace just didn’t necessarily feel like I was a fit in that I was able to put into place all of the suggestions that you made because there were so many differences. I had a lot of misgivings about whether or not I was really a fit for the MicroConf community.

Rob: Is that because of the B2C and the two-sided marketplace aspect of it?

Anna: A little bit, but also just because I was doing it on the side when my kids were in preschool. I don’t want to generalize what women think, but I know that I had difficulty with calling myself an entrepreneur when I spent my days with stay-at-home moms. It’s a difficult separation to make.

Rob: That’s one of the reasons we started this podcast. Mike and I didn’t fit into the prototypical YC founder. We weren’t the Silicon Valley person, the 24-year-old who could move there. I was already married with a kid and a mortgage, and I didn’t want to do the crazy, non-work-life balance, Silicon Valley 90-hour a week game.

We started the podcast because it’s for the rest of us, and we truly mean for the rest of us. I wish maybe I had said this five or six years ago when you could have heard of it at that point. One of the things I believe so strongly about bootstrapping is that it is this more inclusive or just there’s so much about it being is it a true meritocracy, maybe? Because you just went off and built a website. You built revenue and no one cared. No when asked if you were a man or a woman, or if you are a person of color or not. You just did it.

There are so many folks I think that if you had gone to Silicon Valley to try to raise money 10 years ago, it would’ve been perhaps hard for you. I move for the stories of the gender gap there. There are just all kinds of stuff that goes on with venture. I’m not trying to throw venture under the bus, in particular, but I do believe so hardly in this community, the MicroConf community, Startups for the Rest of Us, and even just the worldwide community of bootstrappers.

I do think there is so much more leeway for folks to just go and get it done because it’s about shipping a business and building a real business for real customers to pay you real money, versus anything else. You’re not putting on a show, you’re not trying to convince people or get permission from anyone to start a business. You’re just doing what you did, which was to hack together Drupal with your mom as basically an adviser, a subject matter expert, and to ship software.

Anna: Yeah, and honestly, at the end of the day there was nothing about Startups for the Rest of Us or MicroConf that put me off, but there’s always that representation piece. It’s like until you hear the story of somebody who you feel like they also did this while their baby was napping on their lap or while their kid was in preschool, and they were around the corner in the library trying to hack together Drupal. Until you feel that and hear it from somebody else, you’re always sort of questioning whether you fit in.

Rob: Absolutely. I should have talked more about that. It’s such a trip. My first child was born in 2006 and the second one in 2010. We started this podcast in 2010 and I used to record it with Mike while he was napping. I don’t know why I didn’t mention that. I never did, but I was in the same boat as you in those early days when I acquired HitTail. The second was less than a year old and I was still watching him almost full-time.

Anna: See? That’s really cool and I did not know that. And I’m sure that that’s true for a lot of bootstrap founders who quit their day job. It’s like, well, somebody’s got to put food on the table and it ends up being the wife. The husband in that case—if this is a man we’re talking about—ends up being that—a stay-at-home caregiver—but it just doesn’t get discussed (I think) as much, so those of us who are female and feel like that is often a role that we’re wedged into, don’t necessarily relate to that if we don’t hear that from the men who were doing that.

Rob: Yeah, I would agree. Again, I’m going to keep harping on, but I believe bootstrapping and just starting companies is so life-changing, building products. One of the reasons that I kept diving into it was because we had young kids. I wanted work that worked around my life. Life came first. My family came first. What can I do? I didn’t want to have a full-time job because that means I’m somewhere 9-to-6 or 8-to-5 or whatever it is, and it sounds like I think so many of us are doing it for that reason. Freedom, purpose, and relationships, right?

Anna: Absolutely. I wouldn’t have quit my day job if my husband was traveling a lot. We needed that balance. Even though Boondockers Welcome wasn’t anywhere near close to bringing in the revenue to replace my full-time engineering salary, it was a decision that was easy to make at the end of the day. We did not need my salary and we needed balance.

Rob: So in 2019, you get a purchase offer. You actually wrote me an email about six or eight weeks ago, and it was about the ultimate acquisition. One piece of that I just want to read here. You said, “In early 2019, I heard about the scholarships for underrepresented people from MicroConf, which I always wanted to attend but had never been able to justify the cost and time away from my family. So I decided to apply. I was surprised and thrilled to find that I’ve been granted one. I can say without hyperbole that receiving the scholarship changed my life.”

That has a lot of meaning to me. You’ve heard me say this. There’s a reason this podcast and MicroConf have gone on for 10 years. We’re essentially side project hobbies until a couple years ago, and it’s because of sentences like that. It’s us finding other people and us all helping one another make progress on this journey.

I want to hear, when you say it changed your life, give folks some background about what was going on coming into MicroConf and then how MicroConf maybe changed your thinking around that.

Anna: I’ve already said that I wasn’t sure that I was a fit for MicroConf based on how we had grown, my business, and my own personal sort of misgivings about my own skills, but I decided to apply for the scholarship and was accepted. At that time, we had actually been courted by another person in the RV space. A company that owns several blogs and forums that are well-known in the RV space, and they have made us an offer.

At that time, we had about $100,000 in ARR, and the offer was reasonable. We were still growing pretty well, so it was 3.9X-ish multiple. We had our accountants sort of look over it and go, yeah this a good offer. We had not yet signed an LOI.

I applied to MicroConf for the scholarship, thinking if I do go it will be an opportunity for me to learn what I will do with my next startup, so that I can really do it the right way. I went, thinking we were going to sell.

I swear to you, within the first hour, that very first night in the first mixer where I was just standing around having drinks, I had a conversation with somebody. I’m sad that I don’t remember his name, but he said, you should go read before the exit by the Dynamite Circle guys—I […] names, I’ve also forget.

Rob: Dan Andrews and Ian, yup.

Anna: That’s it, yes. It’s like thought experiments about other things you might choose to do before you sell your company. I went after that and had lots of other great conversations. I went back to my hotel room that night, and I think it was $4 on Amazon for this short book. It’s just thought experiments. I read the whole thing before I went to sleep. I’m on the East Coast time in Las Vegas, so I’m up until all hours of the morning. And that was. It was like, oh my gosh. What am I doing? Why am I going to sell this business?

Throughout the weekend I had more conversations with more people. They all just sort of said the same thing about, oh that’s really cool and you’ve got traction. A lot of people there were still struggling to find their first idea and here I was with a business that had made $100,000 that year. It’s like maybe this is a business that is worth pursuing and continuing.

That was how MicroConf changed my life. I did not sell my company. I came home and I said to my mom, nope, we’re not going to sell. Part of the reason we were talking about selling was she was looking to retire. She’s in her late sixties by now, and we’re like, okay, we’re going to figure something out. Either I buy you out or I take a salary or something, and we’re just going to keep going. That was how MicroConf changed my life.

Rob: That’s a heck of a story. It’s usually an exit and actually selling that changes her life—which ultimately did happen—but in this case it was not selling too early. At the end of the story, you kept growing. And then?

Anna: The end of the story is that I kept growing and then COVID happened. RVing went crazy and then I saw […].

Rob: Yup, and you could call it luck, you can call it serendipity, but honestly, something happened at that event. Something happened in your hotel room that night before the exit, that maybe it was meant to be or maybe it was just really fortuitous timing.

The sentence in your email to me is, “And now two years after the previous offer, we received a strategic offer from a venture-backed company in the space, that was of the ‘we be crazy to say no’ variety. Life-changing money that I can clearly draw back to a life-changing moment when I was offered the scholarship to MicroConf and accepted it.” It just warms my heart.

Anna: Everybody’s version of life-changing money is going to be different, obviously, but for someone who was planning to really quit my day job just so I could have some work-life balance, and my mother who was a waitress and doesn’t have a lot of retirement savings put away, now I don’t have to worry about that.

We ended up both staying on as full 50% owners. I took a salary so she gets half of our acquisition money. It’s definitely a special kind of exit to know that not only are you taken care of, but you help take care of your family as well.

Rob: I was going to ask you how that part panned out in terms of your mom, because I was imagining as a waitress most of her career, she didn’t have much retirement. That’s pretty incredible to think, like you said, it’s a double win because you get the money and so does she. Wow.

Congratulations. I feel great about the story. Honestly, whether this podcast or MicroConf had been involved or not, this is still a great story. It’s just a great story of building something to fill a need, getting that MVP out, and having the pricing not quite right. You had a little bit of an edge because you’re a developer and your mom is a subject matter expert with a little bit of an audience in the space allowed you to get that leg up. You made some mistakes along the way with structure, pricing, and this and that, but slow growth and you kept doing it. It’s a nine year to overnight success thing, right?

Anna: Exactly.

Rob: We’re good. Thanks so much for joining me on the show and telling your story. I feel like anyone listening to this can take away just the really life-changing nature of bootstrapping startups. I always say on the show, think in terms of years not months, because your story is one of those. It’s a realistic depiction of what most of us go through when we bootstrap.

Us bootstrapping is not the Facebook story. Even the story of ConvertKit or Baremetrics, when you look at it, they’re just growing tens of thousands of dollars. That does happen, that’s the Cinderella story version of it, but what do most of us experience and I feel your story is a lot of that.

Anna: Thanks so much. I’m so happy to have had the opportunity to be here and share the story, and to have obviously been able to attribute so much of that back to the MicroConf and the Startups for the Rest of Us community.

Rob: And if folks want to keep up with you, where can they find you online?

Anna: I am on Twitter @skulegirl.

Rob: Excellent, and MicroConf Connect, of course. You’re an active participant. It’s a free community that has a Slack room, but I don’t know. I think we’re around 2200 participants now. That’s where you and I (I think) really, really connected.

Thanks again for coming on the show, Anna.

Anna: Thanks so much for having me, Rob.

Rob: Thanks again to Anna Maste for coming on the show. Hope you enjoyed it this week. If you and I are not connected on Twitter, look me up. I’m @robwalling. I hope this week’s episode provided you with some inspiration or motivation to keep going, to keep shipping, to make that next sale. I’ll be back in your ear buds again next Tuesday morning.

Rob: Welcome back to Startups For the Rest of Us. I’m Rob Walling. If you read the title of today’s episode and thought that I was getting a little clickbaity, I wasn’t. Today’s literally the story of a developer who got a job at a company. He became CTO over the course of six months and then he bought the company for $1. Later he sold it in 2019. Stick around to hear how he managed to pull that off. It’s a great conversation with Don Pottinger.

The day after this episode airs, I’ll be hosting MicroConf Local in Portland, Oregon. If you’re in the area, I’d love to see you there. Then next week, we’re in Boston, then Austin, Texas, and the week after in Dubrovnik, Croatia. If you’re coming to any of these events, please do come up and say hi. I’d love to meet you.

If you don’t have tickets yet, I believe there are still a few remaining. You can head to microconf.com and click on our events section to figure out how to buy tickets. Again, the MicroConf Locals are one-day events and they’re quite inexpensive. It makes the events really accessible. If you’re in the area, I hope to see you there. With that, let’s dive into my conversation.

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

Don: Thanks for having me, Rob. It’s a great honor.

Rob: You have such a story. Oh, my gosh. Started as a developer, then you became director of engineering, and then the CTO within six months. This is a company you came to work for as an employee, then you later bought the company for $1, and then you grew it and exited a few years later. I don’t think I’ve ever heard a story like this. It’s going to be fun.

Could you give listeners a little bit of background about how you came to work at Kevy? Maybe what attracted you to that. Just get us started on the story because it kind of tells itself from there.

Don: Before I joined Kevy, I was an aspiring developer and aspiring entrepreneur. I had started a company with my younger brother. We both used that as a catalyst for us to learn how to code. He delved into mobile and I went headfirst into web learning Ruby, Rails, and JavaScript. At a certain point, I realized that our growth was stunted because we were self-taught.

I ended up joining a company called Big Nerd Ranch who built apps for clients—both big and small. I was able to learn on the job how to build products. I spent about a couple of years there. I learned a lot through the process. Then I felt like I was ready to make the leap into the startup world, but I wasn’t quite sure how to do it. I wanted to learn from who I considered one of the best in Atlanta at the time.

I interviewed and joined Kevy which was founded by one of the co-founders of Pardot, which was a marketing automation platform that they sold for close to $100 million. When I joined Kevy, my idea was to learn to code, and then eventually hopefully start a company under that same portfolio of companies that Kevy was under. But it went completely different from what I expected.

Rob: Yeah, it’s a good story too. I want to touch on one point that you just made, which was you were self-taught and you wanted to get better, so you got a day job coding 40+ hours a week. I did the exact same thing. I learned to code as a kid on my Apple IIe, BASIC. There was no web at the time. I’m that old, but I graduated from college with a computer engineering degree in electrical engineering and still didn’t know how to code for the web.

It was the late ‘90s and they weren’t teaching that because the academy tends to be (depending on the school) 5, 10, or 15 years behind the actual industry. I graduated and I was an electrician. I was working in construction and I would go to the library and check out books on Perl, PHP, and HTML because I was like, the web is the future, dot-com is happening. I lived in the Bay Area.

I was trying to teach myself. I was doing it nights and weekends, and I just was not making progress. The moment that changed was when I finally applied for a full time job. The same thing, I worked for an agency. We were building websites and web apps. In the first two months, I learned more than I had learned in a year of self-study.

Don: For me, that was a very similar experience. I went to Georgia Tech. I studied electrical and computer engineering there. My favorite classes were the programming classes, but it was C, C++.

Rob: Java, if you’re lucky.

Don: Yeah, Java. There weren’t things that at the time, you could easily take and build for the web. So I initially started with PHP on my own, basically taking what little code I could find on the internet and doing a hatchet job on it to make it do what I wanted it to do. But it wasn’t until I came across Rails and Michael Hartl’s Ruby on Rails course, which I’m sure many people have taken, where I built a Twitter clone.

I had no idea what I was doing at the time, but I learned a lot just by typing in the commands. Eventually, when I started building my own things, going back to that tutorial, and seeing how they recommended to do certain things. Of course, RailsCasts during that period as well were big. That really helped me get in the door at my job because I joined a company that was a Ruby boutique firm.

They were looking for junior developers. They really wanted to learn. I was able to surround myself with very talented and senior engineers that taught me how to take what I’ve been doing on nights and weekends and turn it into—I considered myself a craftsperson at the time.

Rob: That’s a great part of the story (I think) just what the web has done for learning technical skills. Because again, I graduated in 1998 from college and there was one website that had tutorials on how to program. You just couldn’t find them. So when I say I went to the library, no, I literally drove my car. I got a dead tree book. It’s so cool that you had podcasts and videocasts. You can learn incredible amounts. I think it’s done wonders for development and entrepreneurship.

Don: If you’re lucky, you have a mentor. I was lucky that I had a mentor that had been building a company. He told me, hey, stop what you’re doing, go learn Ruby on Rails and see where that takes you from there. To this day, I credit that person for starting me on a journey that I never would have imagined over 10 years ago now.

Rob: So you applied and you got a job at Kevy in December of 2014. At the time, Kevy was competing with Zapier, is that right?

Don: Yeah. These were early days. Zapier and Kevy were competitors in, what I would consider, sending data from point A to point B. I think where Kevy was focused is that they had a lot of ecommerce companies that were trying to send data from their ecommerce platform to a CRM or to their marketing automation platform. At the time, they were getting customers, but they were also losing customers. They were really concerned about the churn. I think after I joined in late 2014, they decided in early 2015 that they wanted to pivot.

Rob: Got it. How big was the team at that time?

Don: The team grew to about (I would say) 20 or 25 at that time.

Rob: And when you joined?

Don: When I joined, it was about that big and we hired several salespeople after me.

Rob: They kind of connected the Zapier approach isn’t working because churn’s too high. Talk me through the pivot, I know that was early 2015. Is the pivot what led you to go from software engineer to director of engineering to CTO within six months?

Don: Yeah. I guess if there’s one thing about startups is that things change very quickly. In this case, the pivot led to the departure of the most senior engineer at Kevy. There were a few other engineers. I was one of them. At the time, I felt very confident that I could build a Greenfield project. I could take something and start from scratch, design it, and build it.

With that opportunity of the pivot where we had to build an entirely new platform, and in this case, we were focused on the ecommerce companies that were our customers, building a platform that allowed them to market directly to their customers in one place. I felt confident that I could do that. With that, I became the director of engineering. I was doing that for a few months before there was a leadership shakeup, and I became the CTO about a few months after that.

Rob: How did that feel as someone who—I mean, you’ve been coding for a couple of years at that time professionally? That feels like a big responsibility to be a CTO to a startup earlier in your career.

Don: Yeah, it was. I made a pivot myself into software development. Coming out of college, I was a consultant. I worked at Accenture and another mid-size consulting firm for a few years. Development wasn’t the first thing I did. I was comfortable talking to teammates, potential customers. I felt like I could do sales. I felt like I was at a point where I had been building on my skills to be multifaceted in a way that really benefits you as an entrepreneur.

It felt really quick. It felt really fast, but I also felt like this is exactly why I joined Kevy in the first place was to get an opportunity to lead a company. Was I ready? Yes and no. I learned a lot through the process. It’s not great when you have to let go of teammates, or when you’re trying to sell or you’re losing new customers, and going through all that pain and trying to raise money. But it really was an experience that I wouldn’t trade for anything in the world.

Rob: The beauty and the curse of startups is that things change so quickly. There’s that upward mobility or just the mobility within an org that can happen. Obviously, those circumstances where it was not good, sometimes it’s layoffs or whatever. But if you go work for a Fortune 1000 company, the odds of you moving from a software engineer to a director to some C-level is never going to happen.

I understand that it’s different to be a C-level at Target or Best Buy than it is at Kevy when it shrinks down. There is a difference. I’m not trying to equate them. But I do recall also working at a small consulting firm that is a small startup myself and feeling like I was given all these amazing tasks instead of being a little cog in a wheel. That I was actually given a lot more responsibility to just go do it because there were five of us or whatever. Then with Kevy, with the product pivot, was there also a round of layoffs? Did it go from 20, 25 down or did you keep everybody, all the employees?

Don: We had two rounds of layoffs, unfortunately. Once we pivoted, we realized we didn’t need a large sales team because there was no product to sell. We kept a very small sales team. We’re building very quickly trying to get something that the remaining sales team could put in front of customers’ demo and get feedback and hopefully sign some deals. But it came to the point where we realized we still needed a little bit more time.

Probably the best salespeople for our product were going to be us, me as the CTO, and my co-founder the CEO as well. Once we had to make that tough decision, it was really hard to let go of teammates and people that you’ve really grown close to. That was a really hard lesson, that not everything is rosy in a startup.

Rob: Was that one of the hardest pieces for you, the interpersonal? I’m just having to let people go who you knew were doing a good job, but it was just crazy startup circumstances.

Don: Yeah. That was a really hard part. I’m grateful that I’ve maintained relationships with the vast majority of them after that experience, and also the interpersonal relationships of the people that stayed. No one really talks about how challenging that could be sometimes. There can be friction sometimes between engineering and sales where sales are wondering, can we sell something like this, and engineering is like, wait a minute, we haven’t built that yet or it’s going to take time to build that.

That friction existed, also trying to keep the people that you did have from looking at other opportunities because, in a startup, it’s hard to see the forest from the trees when your head’s down working. There can be turnover. We were working in a startup incubation space. There are other startups that are vying for really good talent as well. It’s always easy to look and say, oh, it might be better over there at the other company. That seems to be growing very quickly.

Rob: Yeah. When layoffs happen, recruiters start targeting companies for the people who are remaining. It’s a pretty common practice. It sounds like that was brutal. It wasn’t even a pivot. You literally threw out the codebase and you started essentially from scratch and built a different product, which is I think you already set up a marketing automation platform focused on ecommerce. You and I are both pretty familiar with that.

For folks who haven’t followed my story for a long time, I built Drip, which started as an email service provider. Eventually, it became a marketing automation provider, lightweight marketing automation. When I was running it, it was general-purpose really. It was SaaS, bloggers, and people with email lists. We put a lot of people from MailChimp and then Infusionsoft, and then sold the company in 2016 to Leadpages.

It wasn’t even a pivot. It was focused on ecommerce companies as well. Now competing with the likes of Klaviyo and MailChimp, as you said. MailChimp has really done just a slight focus on that. You mentioned offline that the founder moved essentially to a role as an investor advisor and then a new CEO came in. Did it happen at this point as well, the pivot? It was a massive shake-up. It was like a new company with just a handful of people. You were down to like five employees or something, right?

Don: Yeah. The new CEO was someone at the company that had been promoted into the CEO role. She was a young CEO. I was a young CTO. We were both learning on the fly. Although (I would say) we’re very ambitious and had delusions of grandeur in some respects, we were heads down both working very hard because we thought at the time, this is it, this is our opportunity.

We don’t want to let our team down. We don’t want to let our investors down. We were working nonstop. At that point, I was working—I can’t even remember how many hours, but anytime I was in front of a computer, I was probably coding. I have a family. I have one child at that point. I had two more on the way—twin girls on the way, at the time. It was a very busy period.

Rob: I assume that MRR went to zero or approximately. You must have had enough funding in the bank to float you guys for a year or more. Because I think you said you spent the next 18 months building the product, finding customers, and growing MRR again.

Don: Yeah. If I remember clearly, we got a check of about $300,000 from the investor. It’s like…

Rob: Here’s your shot.

Don: Yeah. Honestly, if you think about it, it should have been reincorporated as a new company. The cap table should have been cleared, which we can talk about the cap table later. But it was essentially a new company with the same name.

Rob: Yeah, let’s talk about the cap table because this winds up screwing you guys. You start making progress, you spend the next 18 months, you get to $250,000 ARR. You build this thing back up to $20,000 a month. You want to go raise funding and you can’t. What happened there?

Don: We would walk into investor meetings and they would be very interested in what we’re doing, the space. We get it to due diligence, and they take a look at the cap table and see that the original founder—along with several other people that were brought onto the company that had left had big chunks of the company—while the CEO and CTO (me) had a very small amount of the company. That raised a lot of questions. That caused a lot of trepidation with investors.

Especially where we were in Atlanta, they were less inclined to take a chance on a very messy cap table. We would go in and feel very optimistic. A couple of weeks later, there were crickets or it was a no because of the complexities with our cap table, not necessarily what our product was able to do, the customers, and the revenue that we’ve hit.

That was very challenging and also disheartening because it had gotten to the point where like, we’re not sure what to do. Do we go back to our original investor, ask for more funds, and get further diluted, or what? That led to another big shake-up in the company and around the Fall of 2016.

Rob: Before we get to that, I want to call out, we have had multiple companies apply to TinySeed. We get in conversations with them and we make them an offer or we want to make them an offer, but we discover that the founder or founders own a minority share of their own company. Usually, in the cases we’ve seen, they started the company and there was an investor there who put in a small amount of money. Usually, it’s sad. It’s $25,000 or $50,000 and takes 50, 60—just takes way too much of the company.

When there’s nothing there, you can see how that makes logical sense, but it keeps you from ever raising money again. You can never raise money because investors don’t want someone sitting there with the lion’s share of the equity. They want the people doing the work to have that. This is not to say, never raise investment. It’s to say, be careful about your cap table.

The founders, at an early stage company like this raising really a first or second round, pre-seed and accelerator round, a seed round, the founders should own 80%, 90% of the company, between there. If it’s one, three, five, or whatever, they should own that together. It’s something to keep in mind for folks. Especially listeners of this podcast, if you’re a bootstrapper, you’ve never had to think about cap tables because you just always had 100% of it.

The moment that if you do think about raising a small round, be really aware that most—my rule of thumb and I think the general rule of thumb is, in an investment round, you usually sell between 10% and 20% of your company depending on the amount you decide on evaluation. And then you take 10% of that or (again) 20%. It’s pretty rare. I hear someone selling, unless they’re selling their own shares on a secondary, it’s rare someone sells more than 20%. I see you smiling. Do you have more stories?

Don: No. The experience that I went through with Kevy really left a bad taste in my mouth for raising money. I went firmly into, I am going to fully bootstrap everything I do for the rest of my life for a period of time. Only now, the past couple of years to come out of that and feel like it depends. It really depends on who you are, what your goals are.

In my case with Kevy, I didn’t really stand a chance because I owned so little of the company at the time. I just know that being careful and understanding who you’re bringing on as an investor is equally as important as if you decide not to and you want to just continually have a stable business as a bootstrapper.

Rob: You’ve mentioned there was a shake-up in 2016 because you weren’t able to raise funds. What happened there?

Don: Yeah, my CEO just left. To be honest, she had been talking about it for a little while. So it wasn’t a surprise for me, but it was a surprise to our investor. I think it shocked him to the core because he felt like we were on a positive track. He didn’t see that there were any issues outside of continuing to figure out what product-market fit, being heads down on selling, and also raising money.

However, with the departure of the CEO, it left him in a crisis in terms of what to do with the company. That company had been his baby post his acquisition. But I think at that point he was ready to close up shop, let go of the entire team. Before he did that, he asked me what I wanted to do with the company. Did I want to take over the reins? I had to give it some thought, but I think I realized that I would be in a similar situation to the CEO who just left.

I proposed something completely different. I proposed that I would buy the company, the assets from him if he was going to shut it down or if he didn’t want to find a new CEO. He gave it some thought. He agreed to sell it to me for basically nothing—$1, which was just crazy.

Rob: Did this happen in real time? Were you sitting in a room looking at each other with the conversation, or was it back and forth via email that happened over several days?

Don: It was in real time. You can imagine a scene out of a movie. If it was dramatized, that’s how it felt in my mind. We were sitting across from each other. I was really trying to fight for the life of the company.

I’d said please don’t shut it down, you can find a new CEO. He wasn’t convinced. I was like, well, I want to continue working on it. I think I phrased it in a way that looking back now, I don’t know if it came off the right way. I want to do it without you and he did some kind of back of the napkin calculation in his mind of in terms of the company’s growth, what were the expenses, and trying to (I guess) decide what a good asking price would be for the company.

I think he just came to the conclusion that, hey, this is really nothing to me more than a line item in his portfolio. For me, it was life-changing. It all happened in one conversation. After that, we got the paperwork. I took $1, put it in an envelope, walked over to his desk one day, and dropped it off just to make sure that he did receive the dollar for the company.

Rob: The I’s were dotted. It’s like a scene out of an Aaron Sorkin film, man. That’s crazy. Here’s the other thing too. As an investor, he invested in a lot of companies.

Don: Yeah, he did.

Rob: He also probably (for sure) has capital gains that he could then write that off so he could get at least 30% to 40% of it back from the IRS. I’m not saying that’s a good or a bad motivation, but that is why you’ll hear some VCs write off. If you’re familiar with Baremetrics, Stripe Capital or whatever venture arm they had, they just wrote that investment off to nothing. They don’t get it all back, but you basically don’t pay the taxes on equivalent gains. It’s like having a loss in the stock market and again that offsets it.

That makes sense if you got something out of it. I imagine if he’s trying to think he’s like, how much am I going to sell this company to you for? Are you going to take out a loan to buy it? I don’t know if you’re in a cash position to be able to pay $50,000 or $100,000.

Don: I was not. I was looking for jobs at that point. It was something that I had pretty much decided I was willing to walk away from. But when the opportunity came, I decided to take it and it changed the course of my career.

Rob: Absolutely, the course of your life. What a gutsy move to say, I want to do this, but without you. Was that scary? That scares me because I’m not super confrontational and that feels like a very confrontational thing to say.

Don: I’m not confrontational at all. I work very well with others because there’s usually not anything for me to fight about. In this case, I think I felt strongly enough about the company and more so confident in my own abilities because I built it. Almost every line of code that was there was written by me, reviewed by me, or touched by me. I’d been in plenty of sales conversations. I knew how to support the customers.

Because of the revenue that we had, I felt comfortable. It felt like the most comfortable risk I could take at that point because I dreamed of running my own company myself. I de-risked a lot of that for the past 18 months by building it and having someone fund that discovery. It felt almost like a no-brainer to at least give it a shot.

Rob: It was your company in essence. I think you were calling her your co-founder, the CEO, you guys had started a new company that should have had a new cap table to the point you made earlier. I can imagine you had massive ownership over this, mental ownership of it just like, yeah, this is the thing and I can grow it. I hate it when people use the word, it’s my baby. You had spent a lot of time working on it.

Don: You can imagine too, when you go from being an employee to (on paper) being CEO and getting an agreement that says, hey, you have X amount of shares and trying to do the math on what percentage of the company that is, and then realizing that it’s 5%. You’re like, well, I’m putting all of my blood, sweat, and tears for something that I own 5% of. Using terminology like I’m a co-founder was very difficult for me. I had to have people support me and say, yes, you are a co-founder.

A lot of people don’t understand—especially when you’re young and you’re being employed—the courage and the agency it takes to be able to say, yes, you may have funded this company, but I’m building it. So I deserve to be a co-founder, I deserve to own a large enough share of the company. It took me a long time to realize that. I grew into that after the acquisition, realizing that, hey, this is my company too.

Rob: At this point, you own 100% of it. You had revenue at this point, but were you breakeven? Did you need to raise money? You told me offline that you started doing everything yourself— sales, marketing, support, development. Did you have any other team members or were you solo at this point?

Don: At this point, I was solo.

Rob: Wow.

Don: My initial idea was that I was going to just continue growing the company like we were growing previously. I ran into a wall, I ran into, oh, keeping customers is difficult. Acquiring new customers is difficult when you’re all by yourself, and developing the product simultaneously all at the same time was very difficult. I tried to continue working very hard for the first six months after the acquisition and then I hit a wall where I felt burnt out. I had to take a step back and really evaluate, why am I doing this? I have 100% of this company.

Am I trying to make it the next billion-dollar company? If that’s the case, I can’t do it by myself. Am I trying to have a high quality of life? Am I trying to be able to spend as much time as I can with my family, work from anywhere, and have the ultimate flexibility? Because the revenue was more than enough for a solo founder. The expenses were low enough that I was riding on different credits from cloud providers, so I was able to keep expenses pretty low.

Rob: You have this amazing lifestyle business’s bootstrapper’s dream at this point, except for your burnout. That was a problem. When you took that step back, I know you mentioned that you’ve been a longtime listener of Startups For the Rest of Us. I want to take a moment to talk about virtual mentorship because you said that Mike and I were chatting together, and me talking about burnout and Drip or whatever it was I was talking about somehow helped you on your journey.

Don: Rob, it was cathartic. After spending the entire day working on Kevy, I would fire up the podcast and listen to you and Mike. Mike’s journey with Bluetick felt like I was in therapy with Mike and you, and your journey with Drip and post-acquisition. I was just listening to every single detail, listening to the intonation in your voice trying to read what you couldn’t say sometimes from that. It was inspiring.

It also felt like I wasn’t alone, which as a solo founder if you’re not really into online communities, it can be challenging. Luckily, I had a support system that was local and then also podcasts that I would listen to like Startups For the Rest of Us. That really helped carry me through.

Rob: That’s great to hear. You’ve heard me say it like, we’ve done the podcast for almost 12 years now for free. That’s one of the big reasons we do it is because we wanted to find others like us and we just want to be able to—it’s not even giving back, it’s just helping other people. The amount of good I think that is put into the world is substantial. It’s so good to hear because you and I, before today, have never met.

We haven’t even barely emailed just to schedule this, and yet I was able to have that impact on you. I hope that those who are listening, we can do that in our own ways. It’s awesome, man. It’s great to hear.

Let’s get back to the story. Now you own the company, you burn out, but then you recover. Where do you go from here? Because in 2019 then, which was a couple of years later (two or three years later) you wind up selling the company. What’s the summary of that in between? Was it more of the same but were you lifestyling? Did you start hiring people? When you sold, were you solo? What are the details there?

Don: It’s a mix of, I was lifestyling almost to a fault in some ways. I think things have grown stagnant. I gravitated toward what was interesting for me to work on like products—I love building. I would let things like marketing, I’ll get to that eventually. When inbound sales would come in, I would do demos, I would follow up, close the deals, and things like that. I brought on different people at different points.

I brought on my salesperson that was working on doing demos, cold outreach, and things like that. It didn’t really work out that well. Then around the tail end, probably about a year before I sold the company, a friend of mine who’s a data scientist was working on a startup. He said, well, you’re a data scientist. I’m sitting on a lot of data right now with Kevy—ecommerce behavioral data. Maybe we can build something of value for the Kevy customers using your artificial intelligence machine learning knowledge.

We started collaborating. We started building new, exciting what we called smart features for Kevy. Things like being able to tell you how effective your email will be based on the subject line. Eventually, the plan was to give you the ability to write your entire email without having to do it yourself based on your previous emails, based on emails that have been effective in the past.

We were building and building and building that. Then I think in December of 2018, my wife shared that she’s pregnant and it’s our fourth child. Up until that point, my wife had been working enough as a nurse practitioner. She’d been working enough to provide health insurance for us so that we didn’t have to worry about (at least that part) me being an entrepreneur. It got to the point where she’s like, well, I think we need to make a change because I don’t want to work full-time anymore. I said, okay. Well, I can at least put out some fillers and see what’s out there.

A friend from Google reached out to me, and I ended up getting a job at Google and running Kevy at the same time. That was in April of 2019. There was a period of time where I decided I wanted to sell Kevy, but I was working out at Google. I got a broker and I was talking to potential acquirers. Some were serious about acquiring, but they wanted me to join as well. I had to share with them that I wasn’t on the table as part of the acquisition.

Then eventually, I found a venture studio that had a SaaS product in a similar space. They were really interested in acquiring it. They had the technical chops to be able to take over the project. They had aspirations for their sales and marketing as well. After due diligence, I ended up closing the deal. I literally signed the papers to sell Kevy in the hospital after my wife gave birth. It was a crazy period there.

Rob: Sounds insane, man. I was going to say good timing, but probably terrible timing because I imagine that was stressful coming up. The question that I usually ask here is, there’s life-changing money, which to some people oftentimes that’s a few $100,000. Then there’s, never having to work again money, sunset money, which is usually for most people (depending on where you live) at several million dollars. There are in-betweens. How would you describe your exit?

Don: It was life-changing. It’s not never have to work again. But for me letting go was hard because (like you said) it was my baby. I would work on it for the next several years. It may not go anywhere, it may not grow. In some respects, the competition (at the time) like Klaviyo, MailChimp, and other companies had exploded in growth. They had deep pockets. They’ve been working extremely hard on developing and improving their product.

I didn’t have that in me as a solo founder. It was very difficult. It was great timing, and it was also a life-changing amount of money that I earned by signing a piece of paper. It was a life-changing experience to own and run Kevy, but I think it was great to close that chapter so that I can begin a new chapter with new projects and new endeavors.

Rob: And with a new child who is a new project. Four kids, that’s another level, man. You’re a glutton for punishment like most of us. As we move towards wrapping up, I am intrigued because you’ve launched another startup, but it’s a B2C play. It’s called LanguaTalk at languatalk.com. You mentioned to me before I hit the record that it grew very quickly. You launched in January, maybe eight or nine months ago, and you’re already at mid-six-figure ARR with it. What’s the difference there?

Don: There are so many differences. One, I have a committed co-founder who has grown and built a company in this space before. During some of my lonely periods, I would roam Indie Hackers and look at posts. My co-founder, before he was my co-founder, had a post of, hey, I have a business. It pretty much runs itself, so if any other indie hackers who want some help on some marketing, just reach out. I was like, all right, sure, I’ll reach out.

I reached out. He did some work for Kevy and we stayed connected for the next couple of years. After I sold Kevy and I was bored at the day job, just dreaming about what to build next, we reconnected and I said, you know that platform that you’ve built? You’re a great marketer, you know the space very well, but I think I can help you build something that we could grow to even higher heights.

He thought about it and he’s like, are you serious? Shouldn’t you be comfortable and done? Do you have the capacity and the time to do this? I was like, no, I don’t, but I’ll do it. Let’s do it. We started building last year. It took me longer than I expected. I didn’t expect my building skills to atrophy as much, but we launched in January. Because my co-founder had been in the space before, he knew all of the knobs, the marketing, the timing, the ads, and me from the technology side, we had everything buttoned up.

It’s been really amazing to go from literally $0 in revenue to mid-six figures in ARR. It’s really exciting because it’s very early days and we’ve only launched probably about five languages. We’re planning on launching several more in the coming weeks.

Rob: Good for you guys. You don’t know if it’s being a second-time entrepreneur because that’s got to have something to do with it, all the years of struggle. It’s like the Beatles in the Cavern Club for 4 years playing 10-hour sets and stuff. No wonder they got good. You went through a gauntlet, you came out the other side, you sold your company, and now you’re doing it the second time.

I do find that I can get what used to be a day’s work for me—eight hours a day—I can often get that done in one or two now. I’m more efficient, I’m more effective, I’m better at delegating. I’m just more everything. I feel like that happens with a lot of us. Smart folks like yourself are learning.

Don: It does, and I know when to walk away. I think when I was early on in my career, I would sit there in front of the computer banging my head across like, why can’t I fix this bug or why can’t I solve this problem? Now I know that if I walk away, I go to sleep, you can solve things with a fresher mind or you solve things in your sleep as well. You learn through the pain and that muscle memory is still there iIf you decide to go back to it.

Also, I think going with the tide is important. Building a platform that helps people learn languages over tools like Zoom in the midst of a pandemic, I think that timing is important as well. You have to do the work, but I think you also have to pick the right space and also have the right timing too.

Rob: Do you have a website or Twitter that you’d like me to plug?

Don: Of course if you’re interested in learning a language, languatalk.com. My Twitter is @donpottinger, first name and last name.

Rob: Awesome, sir. Thanks so much for coming on the show. Thanks again to Don for coming on the show. Thank you for being a loyal listener and coming back every week. If you’re not already subscribed, please do hit that subscribe button. If you haven’t checked out the MicroConf YouTube channel, that’s something we continue to invest in.

We just hit 9000 subscribers. I think 300,000 views since we launched it just over a year ago. It’s pretty popular, youtube.com/microconf. Like every week, I’ll be back in your earbuds again next Tuesday morning.

Rob: Welcome back to another episode of Startups for the Rest of Us. I’m Rob Walling. This is episode 566 where I talk with Hana Mohan about her journey as a SaaS founder. She bootstrapped a company called SupportBee, which is a ticketing system for collaborative customer support.

She bootstrapped it over 9 years to 45,000 in MRR and then in 2020, sold her stake to her business partner, then started MagicBell, which is the notification inbox for web and mobile applications. Started that in 2020, went through Y Combinator winter of 2021, and they’re now sending more than a million notifications every month. She raised a seed round of $1.9 million in spring about five or six months ago.

The fun part of the conversation is Hana and I get to compare and contrast bootstrapping and being venture-backed. In fact, we explored the gamut. We started talking about how this isn’t binary. It isn’t funded or not funded, but there are in betweens like TinySeed or raising an angel round without getting on the venture track.

Hana came on our radar when (I believe) producer Xander saw her do an AMA on indie hackers, that was starting a new tech business as a transgender woman in March of 2020. She has a post on her own blog. We’ll link it up in the show notes as well as an AMA on indie hackers if you want to find out more about her journey.

Hana is speaking at MicroConf Europe in Croatia here in just a few weeks. I believe there is still a ticket or two left. There are not very many left at this point, but if you want to be in Dubrovnik, Croatia with a small group of founders this year—it’s smaller than usual due to Covid restrictions—I will be there, Hana will be there as a speaker, Laura Roeder, we have Ed Freyfogle from OpenCage, we have Pierre de Wulf from ScrapingBee, as well as a few others that we are still recruiting.

Come meet the crew. Producer Xander will be there. Tracy and Einar from TinySeed who you’ve heard on the show many times will all be there. With that, let’s dive into my conversation with Hana Mohan.

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

Hana: Thanks for having me again. It’s great to be here.

Rob: Folks heard in the intro about your experience with SupportBee, and then having launched MagicBell. It was MagicBell.io, I almost said, but you got the .com.

Hana: We bought the .com because (I guess) that’s what you do when you raise money. You buy the .com domain.

Rob: Was it after you raised your funding round?

Hana: Yeah, it was after we raised. Honestly, I think it’s better to do it sooner than later, because I think we’ll be successful and we don’t want to up the price.

Rob: Yeah, you increase the price of your own domain. You raised $1.9 million in the spring, which was about five or six months ago. Obviously, you had a lot of experience bootstrapping SupportBee over 9 years to $40,000 a month. There’s a lot to dive into in terms of just the breadth of your experience doing these two things. I think I want to kick it off with you bootstrap SupportBee to this amazing lifestyle business.

On this podcast, that’s a great thing. Lifestyle business is not a pejorative like maybe some venture capitalists would use it. You built this amazing business, you sold your shares to your co-founder, and then you started MagicBell. You’re on this next effort. Why not bootstrap MagicBell? What made you decide to take funding?

Hana: Also, I want to mention that it’s a great business no matter what lifestyle or not. I think it’s a great milestone to achieve for anybody. Even now, when you start your journey, when you move forward, you realize what a great achievement that was. I think it’s given me more appreciation now than before.

I’d say the landscape has changed a lot. The hiring is a lot more competitive, the Google Ad clicks are a lot more competitive. Also, I think as you get older, your ambition moves forward. You know what it takes to run a software business. I think when I started SupportBee, I thought, okay, you build something and the only work is new features, but you realize there’s so much operational stuff to fight spam, to do security.

I think you just understand the cost structure a lot better, that either you invest that money on your own—which I certainly didn’t have access to, like millions of dollars to invest—or you raise some money, or you’re somehow okay facing that challenge all by yourself. I certainly wasn’t and I wanted to build a bigger business, run it better with the right people in the team from the get go, and raising some money upfront. Investing just seemed like the sensible thing to do.

Rob: You and I have talked before. We talked on MicroConf on air, and I’ve also been on both sides of the coin of the bootstrapped versus funded. As I always say, it’s much more of a continuum (I think) than people make out because it used to be raise venture capital and you’re on this venture capital track, or you bootstrap, and now there are all these in-between options. You can raise an angel round of a few hundred thousand dollars and never raise another round. That’s actually more common than people think you can raise from TinySeed and not have to get on the venture track.

There’s a lot of nuance to it, but that was probably the biggest takeaway once I was working at a company with $38 million in funding. I could hire senior people who knew how to do their job, who had massive experience doing it, instead of trying to find junior folks and training them up, or just doing everything myself, which eventually can lead to burnout.

Hana: When I started out in my 20s, I just wanted to learn everything on my own. I wanted to write the code, I wanted to talk to customers—which I still do—but there was a joy in figuring out everything on your own and continuing to do that. Then I think over time, you realize that if you take entrepreneurship like a profession, then your job really is to come up with the original idea, the funding, the vision. But a lot of the execution, you’re actually better off handing off to other people. Actually, more so because it matters a lot that it’s executed upon well.

For example, as a founder, I don’t have the skills to project manage. I have never managed a team of 30 people and run sprints tightly. I’m better off actually hiring a project manager and handing it off to them.

Rob: Who have you hired? I’m curious. You’ve had five or six months with this $2 million in the bank, so to speak. What does your team look like today?

Hana: It’s a little bit bigger. We have a designer on board, a project manager, and a back-end engineer, apart from my co-founder and I. Then we have a couple of people helping us part-time. We have a chief of staff that’s part-time helping us hire and do some of the other things that I need help with. We are still fairly small.

I have to be honest that everybody has money these days. I definitely used to think you raise money and then bam, you post one job, and then everybody will come running to you. It’s certainly not true. I have learned that the hard way now.

Rob: I’m not sure bootstrapped, or funded, or fun strapped, or mostly bootstrapped that really matters to most employees. I think there are folks who want to stay with the Fortune 500 or the Fortune 100, the Targets, and the Best Buys, and the General Mills, the real Blue Chips, so to speak.

Then (I guess) there’s your big tech companies and everyone else. There are a certain number of folks who are looking for that small team where they can have a big impact, and that landscape—for people working from salaried employees—has gotten much larger since Covid. I think it’s tougher than ever to hire. I was going to say for worse for any startup trying to hire who used to be able to use remote and location independent as the big sell. That’s not the case anymore. Have you found that to be true?

Hana: I think you’re absolutely right. Remote used to be such a big thing. It’s lesser so now because it’s almost this basic expectation. I still think that an asynchronous remote is still a rare thing. A lot of companies would only do remote in a certain time zone or would only do hybrid. You can tell they’re not truly okay with letting people manage their own time.

I think for us, talking about that has been helpful, and I believe that would continue to be an advantage for some more time. But I think you have to treat your employees almost like customers with ever rising expectations. I remember when I started out and probably you started, if you ever worked, we were just happy to receive a salary. Now, even as a remote company, you want to do events. I totally understand why. I actually want to be pampered that way. The bar is constantly going higher and higher, I think.

Rob: All right. I’ve got some questions about MagicBell, specifically. You’ve been funded for six months, but you went through Y Combinator before that. You were obviously working on it long before that. These days, what marketing purchases are you finding that are really working for you today?

Hana: What’s working well for us is still this organic content or word of mouth. I think since we only made these hires a couple of months back, I haven’t been able to switch full-time into growth and try a lot of channels. We were trying ads and they’re working, but this area of a notification inbox being the notification experience is still a bit early in the market. People aren’t necessarily searching for that exact thing. You want to have this top-of-the-funnel awareness content where people search for push notifications and that’s working pretty well for us. We obviously have to scale it up a lot more.

We are trying direct sales. We’re trying outbound sales, which is something actually, honestly, I wish I had also tried out for SupportBee. When you find out about it, you realize everybody’s doing it, but then nobody actually wants to talk about it. It’s almost like this thing that maybe it’s just a secret nobody wants to let out. I don’t know what your experience has been.

Rob: It depends on the circles. I think even the more tech developer communities that I’m in or in the tech conversations, it usually is frowned upon. Then when I talk to sales folks and I’m talking to my sales consultants, they’re like, yeah, everybody knows that there’s outbound outreach.

I got six emails yesterday or LinkedIn outreaches from people asking if we need whatever. I get outreaches. It’s like, does TinySeed need to raise venture funding? They’re acting like we’re a startup, like we’re on the wrong list. But it is an interesting point. You brought up that MagicBell is maybe a little ahead of the curve in terms of its functionality.

While I gave a brief intro of it, can you expound on this? Your H1 is the embeddable notification inbox, improve your customer’s workflow with our in-app inbox where all your product notifications live. Talk me through, one to two minutes of what it does, the jobs to be done of MagicBell.

Hana: Sure. It’s funny to hear that out loud because we are working on a new site. In my mind, the messaging has already moved forward, and sometimes I forget that our customers are still seeing the old messaging. The basic value proposition is the same that we think adding an in-app notification inbox in your product is a great way to send workflow notifications, or even announcements, or billing alerts.

I think now we’ve figured out that once it’s installed, people want to send all kinds of notifications. We’re calling it an all-in-one inbox. We’re actually building more functionality so you can send announcements, like we added this new partner or we added this new feature, as well as notifications like somebody added a comment on your post or you have a new friend request.

The jobs that people are using it to do are bringing to a user’s attention what they need to see. It acts as a way to notify users that are not currently online, in which case, we can send them an email or a text message. But also when your users come back to your application, it’s this one place where they can look and say, okay, so this is all that needs my attention.

Depending on the industry, there are different use cases. Like in logistics, it’s alerting the operations team about a delivery that needs to be rerouted or a courier that needs to be reassigned. In the case of a collaboration software, it’s just enabling a frictionless exchange of information.

Depending on the use case, it changes. I think, traditionally, people have relied upon email for all of these things. It’s almost like this kitchen sink approach that’s anything happens, send an email. Really, I think what we are competing with is this trend of email.

You probably remember 10 years back, SendGrid and Mailgun were not an obvious choice. People used to send their own emails. I feel like we’re going through the same cycle that SendGrid and Mailgun went through, just maybe 10 years later with this product.

Rob: I think that makes sense. I was talking to a founder yesterday who has an SMS product for ecommerce shops. One thing that we were chatting about was just how not real time email is anymore. As someone who obviously built an ESP, there’s still a ton of value in email. There’s a purpose for it, but SMS, Facebook Messenger, and in-app notifications, whether it’s a web app or whether it’s a mobile app push, there are all these things that really do different jobs now.

I totally hear you. I feel like this is a really evolving piece, even to the point of Intercom and Drift. Intercom had to come on the scene. They had the chat widget but they were also email. I don’t know if you would need to do that today. I don’t know that that’s a requirement to also have the email piece because I just think the job is so different.

Hana: A lot of our customers don’t use email, but then I think email is here to stay. What we want to do is over time, just send as few emails as possible, like two email deliveries but very smartly. Only for notification hasn’t been seen, or maybe batch them up and then send them out in an email. It’s almost like you want to really lead the way in decluttering your users’ inbox and you want to respect it more. It’s also good for your application just to not rely on it.

Rob: Yeah, because you want to hit them when they’re thinking about it. When they’re in their email inbox, they’re often thinking about other things. I want to get worked on. A lot of people use their inbox as their to-do-list, versus when they log in to MagicBell, they’re thinking, okay, I’m in the MagicBell mindset, oh, here’s some notifications about new updates or about something that happened in MagicBell. It’s like they’re already in that context. I think there’s a lot there.

Hana: Yeah, and also there are these users like insurance agents, customer support agents. They’re already online for eight hours. Right now, a lot of our users come to us because their users have to go back to email to check notifications and then come back again. They can build this themselves, but it takes them months with real time being hard and just multichannel. What we’re eliminating for them is like, your users already are paying you attention, but you just don’t have a way to leverage it. That’s what MagicBell offers you.

Rob: I want to switch it up a little bit and talk about something we were talking about offline right before we hit record, which was this idea of being bootstrapped versus funded. Something you said to me, I think is worth diving into. You said, there’s often this anti-funding mindset or an anti-funding rhetoric that probably came about 15 or 20 years ago when the funding landscape was not that founder-friendly. It was different.

These are my words now. In my opinion, it was Paul Graham that changed it. It was Y Combinator because before that, the docs were opaque. There was an information asymmetry where investors had all the info about terms and we didn’t as founders. Paul Graham really changed that. I know there have been arguments that Paul Graham potentially took it too far or YC has taken it too far. You don’t have to comment on this having just gone through YC.

I’ve heard some investors like Jason Calacanis say, it’s two people in a garage and they have an expected $10 million valuation or an uncapped note or something, which is so not investor-friendly that it cuts the other way. All that said, the landscape today, there is no doubt, is night and day different than 20 years ago. You want to talk me through your thoughts on that?

Hana: Absolutely. I have to be honest, I actually never raised before. Like you said, I always bootstrapped it. I also heard that it made sense to me 10 years back when DHH and all these smart people talked about just how VCs are evil. Maybe there was some truth to it, for sure.

I also hear these stories and other podcasts of some of the early companies in the Bay Area selling for 70% of their equity right off the bat for $500,000 or something. That certainly doesn’t happen anymore. The valuations have been rising. I think YC is maybe partly responsible for it, but I think it would have happened sooner or later anyway. This is so much money to be invested in.

I think Andreessen Horowitz does it and SoftBank does it. The game has changed entirely. People have seen a lot of exits at $10 billion, $40 billion, $50 billion, that I think there’s a prediction that in 10 years, there’d be a lot more $50 billion SaaS startups. I agree with it.

When you look at it from that perspective, venture capital has always been kind of a lottery, but a smart lottery in a way. When you think about just how much bigger the returns are, people are willing to place bigger and bigger bets. If anything, it only benefits the founders (I think) for the most part. The smartest founders anyway never raised at the highest valuation, I think. They always raise at a good valuation with the right folks. But it’s good that the average valuation is higher now.

I think the other big difference is a lot of people think that you raise money and then you give up control of your company. It’s not true, at least in the beginning. Before, you had to do a price round. You raise (let’s say) a million dollar series, and you spend $60,000 on just the legal fee, and you give up a board seat, now people raise $3 million, $5 million on a safe, which is simply a promise of equity. You don’t give up any control of your company. You obviously have to be in touch with the investors and you should be, but they’re not running the company for you.

I also just think that a lot of these misconceptions about what happens after you raise money. Actually, what most people will be surprised with is most of the time, once the money’s in the bank, the investors actually just move on to the next deal. That’s their job is to primarily close deals not to actually babysit you. They’re there if you need them.

To me, it just feels like a very different landscape. It would be good for more people to rethink it, because I see a lot of people working extremely hard, having customers, having tens of thousands of dollars in revenue and just never considering raising money. I just feel like they can just make their product customers and even their life so much easier, and it’s okay to do that I think.

Rob: There’s a reason this podcast is called Startups for the Rest of Us. It’s not called bootstrapping for the rest of us. It’s never been anti-funding. In the preface of my book back in 2010, I said I’m not anti-venture capital, I’m only anti everyone thinking the only way to start a software company is to raise funding. There are different options. That’s it. This podcast is always focused on freedom, purpose, and relationships.

Back in 2005, maybe you couldn’t raise funding without giving up your freedom of controlling your company. Maybe. I don’t know. I wasn’t trying to raise, although I applied to Y Combinator in 2007. I did try to raise an angel round. I just didn’t know anybody. I had no network. I was an outsider like most of us are.

That’s why most of us bootstrap. We don’t know anyone. Friends and family were a joke. I don’t have friends and family with money. I couldn’t raise a couple of $100 or something. That started changing. The moment that I heard about people raising for SaaS companies raising a couple $100,000 from angels who weren’t on the venture track and that you could make your life easier, that’s when I started realizing, oh, there’s this third option that’s building.

Some people call it Alt-VC, some people call it third wave funding. I’m trying to think of the other terms. It’s basically just funding without maybe the expectations or the strings attached that used to come with it. That’s TinySeed, that’s the point because I was writing angel checks out of my own personal net worth into SaaS companies under this model. I enjoyed it, but eventually, you just get overweight. Your asset allocation is out of whack.

That was when I was like, why don’t we just raise a fund to do this? Because there are so many folks who could use this. As to your point, who could benefit from it, and maybe have a little bit easier time growing their company.

It’s not a regret per se, but one of the things that I would have done differently looking back building Drip is I kept toying with the idea of raising a small round. A $250,000–$500,000 one time round just to do what you’re saying, which is hire that chief of staff, just be able to hire more senior people, and have the budget. I never did. I never pulled the trigger on it. I regret it because it made the journey much harder than it needed to be.

I could have raised it and sold 10% of the company. It wouldn’t have been that much. The ultimate outcome, even if we sold for the same amount, it would have just kind of all been a wash anyways. It’s not like I would have given up half the sales proceeds or something. I’m not saying everyone should, or that you should, or whatever, but this is a viable option.

Hana: Absolutely. I think it’s okay to own less of your company if the value of your company is larger. I think that concept is a little bit hard to understand unless you’ve lived through the startup life a little bit. A lot of successful bootstrap startups are unfortunate because they cannot invest and their growth is slowed down. When they do want to exit, they only can exit at 1X or 1.5X of their ARR.

There is actually a cost. This is probably the YC effect for me. I’m a lot more aware of the opportunity cost now. I think once you achieve a certain lifestyle then you start thinking about, okay, I could be doing a lot with my time. Like you said, for a lot of us there was no other way to enter this race or circuit. Sometimes, if you may read on TechCrunch, people are raising $5 million rounds at $100 million valuation pre-revenue, you will not be able to do that. Most of us actually still cannot and that’s fine. I think that’s just the price of admission.

You do what you have to do. But like you said, it’s just good to keep your mind open and know when is that moment to actually switch. That’s actually a hard one to know, especially if you’re surrounded by people who are almost treating it for bootstrapping, almost like I’m reluctant to say but almost like a religion, I would say.

Rob: And then it’s on the other side, too. When we were bootstrapped, I would go to the Bay Area and I would go to an event. We were in Fresno, California. It was like a three-hour drive to San Francisco and I would go to an event. Everyone would be like, oh, what company are you doing? Drip, it’s an email service provider. Oh, how much have you raised? I was like, we haven’t raised any, but that’s the wrong question. We’re doing a million in ARR or something. How much are you doing in revenue?

We were growing faster and had more revenue than any of these companies that I would talk to at these events who had raised more than we had in revenue. It was just this crazy, that there’s that side of it too. It’s like, let’s get away from it, it’s too far left and too far right. It’s like, let’s come back, and be centrist, and think about what is the best option at the stage that I’m at based on the business that I want to build, because I’ve had amazing little businesses that did $20,000 or $30,000 a month that was pretty much all net profit. That was life-changing for me and that was great. I shouldn’t have raised funding for that, because it just was a cool little bootstrap business that provided an amazing lifestyle.

Hana: I think sometimes you just want to take your time and that’s totally okay. I think what you and I are saying is, if you are actually working everybody ambitiously and slogging at it, then why not add some firepower?

Rob: To your point earlier, as long as you can find the right people. It’s not about maximizing valuation. That’s a mistake. That’s a noob mistake. It’s about finding people—meaning investors—who are going to come alongside you, and advise you, and give you the best counsel they can, and they’re not out for themselves, and they don’t have terms that could potentially screw you down the line.

While they’re not co-founders and that they are not working in the business day-to-day, whether they own equity or a promise of future equity, they essentially are shareholders of your business. So you do want to be careful with that.

Hana: They can definitely make your life miserable if they wanted to, let’s put it this way. I’m sure that’s how you invest. If you invest probably once in somebody, you’re hoping that that relationship will last forever and you’ll probably invest in their company subsequently, too. You really want to find such folks, I think.

Rob: I wanted to get into your chief of staff role because this is a role that came on my radar. It was about five years ago now, where there was a venture backed startup buyer, and I heard they had a chief of staff, and the CEO founder actually rolled his eyes. He was a little embarrassed and sheepish when he said, I have his chief of staff, I feel so… because he was just this humble founder who felt like it was overkill. But I started hearing that the chief of staff is the new COO.

What used to happen, for folks who don’t know, it’s 10, 15, 20 years ago, you would get investment and then the CEO is usually a 23-year-old kid out of Harvard or Stanford, and then you would bring in adult supervision as the COO. Originally, the founder would then get fired as CEO, but then with Zuckerberg and Facebook, he retained rights and then he brought in Sheryl Sandberg, who was the COO there.

That became the new pattern. There’s this COO who really knows how to operate a business and the founder continues to do what founders do. These days, I’m seeing a pattern of chief of staff at a startup instead of a COO, that the COO hires pushed way down the line, which should be you should never hire a C-level person. You need to get into a lot of millions (I’ll put) in ARR before someone has a C in front of their title unless they’re a founder, in my opinion.

This chief of staff role, Jordan Gal of CartHook has the chief of staff he’s talked about. There are several folks I know who are doing this and you do it early. Usually, you need funding, whether you’re self-funding or raise funding because it’s an expensive hire that doesn’t push revenue. This person’s not a developer, not building products, not doing sales.

You’ve hired a chief of staff, which I’m envious of, because I want that person who is doing all the things that I don’t want to do. That’s my understanding of the role, but you actually have one. Can you talk us through: (a) why you decided to do that, and (b) what this person does for you?

Hana: Sure. I think the title has come to mean so many different things now. Sometimes, it’s like the assistant to the CEO or sometimes is the chief of staff. I think in our case, I already hinted that I’m good at figuring out what to do, but I’m really terrible at sometimes running processes. Hiring is a big example of that. Hiring today is almost like selling. You actually pretty much have to run an outbound process, source people, and then nurture them. It’s insane.

For me, the primary reason was to bring in somebody who can actually really help me with these processes and hiring being the first one. We’re working on SOC 2 compliance. That’s a very tight process to run. In my case, it’s not necessarily also jobs that I don’t want to do. But even if I wanted to, I would be terrible at them. I’m good at giving directions, but I’m actually not good at running the processes.

That’s what, this woman that I hired, she helps me with. She’s not actually really senior, but she’s extremely smart. She’s very process-oriented. At least if you’re using somebody for this help, they don’t need to be super experienced. Probably if they are, it’s better. It’s almost like you would hire somebody who probably would go on to become a future founder themselves.

Rob: What type of background would you look for? Or is the background important?

Hana: Actually, in this case, it was one of the candidates that we interviewed for our founding product manager role. She has a product management background. That, I think, gives you a lot of these skill sets because running, hiring, or getting you SOC compliant, or figuring out, like she improved our onboarding process for new hires even after people joined a lot. There’s actually project management. You have to get multiple pieces together.

I think that’s worked well for us. In general, I think as long as somebody has attention to details, they can communicate well, and they are okay being with a lot of chaos, I would say, because I think one of the things that can be challenging sometimes is that people don’t realize how clumsy early days in the startup life are. You have a weak sense about everything, but you actually don’t know anything for sure.

That’s a big difference. I had built startups, but to run hiring like this or to get SOC 2 compliance in the first few months, these are the things that you probably only do when you are raising money and you’re building with a certain velocity, so you really have to figure all that out. If they’re okay with a little bit of that chaos and they are willing to put in the time, I think that should work. It worked really well for us.

Rob: As founders, we are up for the chaos. That is building an early stage startup. Most employees are not and they want more stability. It’s a good point. It’s an interesting point to think about that for this hire.

A friend of mine was advising a separate friend that I didn’t know about how to potentially get a job as a chief of staff at a startup. I was like, you know, the folks I’ve seen do it either came up as executive assistants or they came up through operations, like office manager, because this person is a utility player.

In baseball, there are folks who only play for space and they’re outfielders. Then there’s folk and the pitchers. Then there are folks who are utility players and they can just play anywhere on the field. They’re probably not as good at any individual role, but the fact that they can play 6–7 positions is truly unique. That’s how I think about founders often.

That’s how I think about a chief of staff. It’s like a founder’s shadow. Like you said, assistant to the founder, where it’s like, you’re higher level than an executive assistant. You’re not just doing admin tasks. You’re doing things that require business knowledge. There’s an added layer there. I don’t see why it wouldn’t continue to be a thing.

Hana: I think the challenges that you mentioned earlier is that it’s not a revenue role. Sometimes, it’s a little bit hard to justify in a pre product/market fit startup. Also coupled with the fact that there is this idea that, as a founder, you must be constantly under the water and barely able to surface up and breathe. I honestly don’t believe in that.

I feel like I don’t really want to run tired all the time. I think depending on that, the role makes a lot of sense. Sometimes I feel it’s a good role for people who—how there is this community of people—will structure all their research really well. There are things that you don’t often think of as work. Let’s say you want to run sales, and now you want to try out three different sales software. That’s a lot of work.

You can spend your time doing it as a founder or if you can find somebody on whose research you can rely, you can let them run that process. There’s actually a lot of these crucial decisions you are making that arguably aren’t that important. You really want to find somebody who’s research skills you trust a bit as well, I think.

Rob: Hana Mohan, thank you so much for joining me on the show today. You are @unamashana on Twitter. Of course, magicbell.com, if folks want to see what you’re working on. Thanks again for joining me.

Hana: Thank you so much.

Rob: Thank you for joining me again this week. I hope these episodes continue to provide you with strategies, tactics, motivations, new ideas, new experiences that help push your business forward in the coming week. I’ll be back in your ears again next Tuesday morning.