Episodes

Rob Walling:
Welcome back to season four, episode four of TinySeed Tales, where we continue hearing Colleen SCH nestler’s startup journey. Before we dive into the episode, if you want to invest in founders like Colleen, you can do so through my world class accelerator and Venture fund TinySeed. We are currently raising our third fund after having raised and mostly deployed almost $42 million across our prior funds. If you’re an accredited investor or the equivalent in your country and you are interested in indexing across dozens, if not hundreds of B2B SaaS companies that are handpicked by myself, a r, and our team at TinySeed to be the companies that we believe will succeed. You can head to TinySeed dot com slash invest. If you enter your info there, it goes straight to a R. You’ve heard him on startups For the Rest Of Us, and you can have a conversation with him if you have any questions or you can receive our deck and our memo and just the thesis of what we’re investing under because we are a unique venture fund and SaaS accelerator. So if you think you might be interested in putting some capital to work in ambitious, mostly bootstrapped B2B SaaS founders, head to TinySeed dot com slash invest. Let’s dive into the episode.  

Colleen Schnettler:
I’m just naturally energetic and enthusiastic and optimistic, right? I was projecting my, oh my gosh, you love this, and they were like, yeah, I guess so.  

Rob Walling:
Welcome back to TinySeed Tales, a series where I follow a founder through the wild rollercoaster of building their startup. I’m your host, Rob Walling, a serial entrepreneur and co-founder of TinySeed, the first startup accelerator designed for Bootstrappers. Today in episode four, we’re back with Colleen Schneller, a developer, entrepreneur, and co-founder of Hello Query, and Colleen’s been busy when we last spoke. She had recently almost broken up with her business partner, completely pivoted her company and changed its name, and through all this unrest, she’s been using customer interviews as a guiding light.  

Colleen Schnettler:
What’s interesting is you hear so much about how important it’s to do customer interviews, but if those are not focused, then it can be hard for those interviews to lead you in the right direction. This is probably our third round, and I’ve probably talked to 20 people since I spoke with you last. As we refine our vision for what this product should be, what we learned was there’s even higher value for our customers customers to get their data. Our customers customers need to build their own reports. These companies are constantly being asked for custom reports from their customers, and so that to us means embedding in your application.  

Rob Walling:
And so this is a change from last time we spoke because we had talked about Hello Query, great name by the way, being a standalone SaaS app that would almost be used by internal teams. But now you’re saying after these interviews, it sounds like you’ve gotten a signal that says, no, we need to embed in other apps. So as an example, if I had an email service provider and I’m a SaaS app and I have a thousand customers and I need them to be able to develop customer reports, you’re saying I would be able to embed Hello Query in my SaaS apps. Is that right?  

Colleen Schnettler:
Exactly. So if you’re an email service provider, maybe your customers want to segment their email list. This is a very common thing, and so you wouldn’t have to build that out. You can drop in a Hello Query, embed, set up some custom base queries for tenancy concerns, and they can then build out and save and segment their own customer lists.  

Rob Walling:
Got it. And when you do interviews like this or you have customer conversations, it’s often very noisy. It’s often not nearly as clear as folks make it out to be. I remember I did a talk seven, eight years ago as we were building Drip, and I was trying to figure out what we actually were building in for who it was early, it was trying to figure out product-market fit, and I had a hundred emails sent into me from people who were canceling, and then I had a bunch of conversations and I remember saying, this was our conclusion, and boy does it seem obvious and brilliant in retrospect, but I had very little confidence. I mean, I was like a 40% out of a hundred of maybe this is the right thing. Question. Do you feel similar to how I’ve just described or do you feel like you have a higher level of certainty than that?  

Colleen Schnettler:
That’s a tough question. I feel like this is 50% confidence, 50% gut, because literally from the beginning, Rob, this is what I have wanted to build, and what was happening when we get on these customer calls is when we asked them about internal reporting and we say, how many times does your C-Suite, for example, request a report maybe once a week? Once a week is not that painful. And then if you move up market, the upmarket companies are using a Power bi. They want all of those additional features that we don’t plan to add. So it feels like a bit of a gut decision, but also it was almost like we’ve always wanted to build this and we now have talked to 20 plus people that confirm that we are probably on the correct path.  

Rob Walling:
In our previous episode, Colleen mentioned a red flag. Her original idea didn’t have any competition. It’s one of the main reasons she made such a big pivot. So I wanted to know this new idea, does it have competitors? Have other companies already tried this idea? And if so, what is Hello Query going to do differently?  

Colleen Schnettler:
Yes, there are definitely competitors in the space. Even on these customer calls, I saw at least two people show me a different embedded solution to solve this exact problem. So we know it exists and we found this with the first iteration of our product giving someone else a different company control over that. People do not like that. That is generally not what we are trying to do. So the companies that seem really excited about this are companies that are data heavy companies. Visual interfaces aren’t what they’re looking for. Their users want to get their data out. Their customers have their own data analysts. So data analysts don’t want the SaaS owner to build charts for them. Data analysts want their hands on their data, and so these are the kind of companies we’re going to target.  

Rob Walling:
And so given that reporting is usually, I will say, not that it’s not important, but I remember that being a big pain in my ass. So it’s like reports are almost a necessary evil have been in my experience. And so I think that’s what you’re saying is that’s why it’s not a core feature in essence, it’s a core feature because customers want it, but it’s not something that as a product team I typically want to be building.  

Colleen Schnettler:
Exactly. Those are the kinds of people we’ve been talking to is my customers want their data out, they want it in Excel, they’re going to put it in a Power BI or they like Excel where they live and building out reporting and filtering and custom export CSVs and scheduling is not core to our product. We don’t really care, but we’ve got to give them this feature, and by the way, we can upcharge them for this feature, and I love that because now we’re closer to the money.  

Rob Walling:
Absolutely. Yeah. I believe we talked either offline or maybe on this podcast about some issues you were running into when this was still an embeddable component, but then it’s like, well, I got to tweak the styles. It has to match the app because they have customers using it. How do you get around that with this?  

Colleen Schnettler:
So here’s what we’ve decided. Right or wrong, we’ve decided that this is what it looks like full. So this last round of interviews have been, they’re not quite sales yet because I’m still trying to fully wrap my hands around people’s problems, but I also show them what we have and it looks very nice. I mean, it looks great, and again, I think for us, we can’t just target everyone in the world. We’re a small team of two. We are going to niche down really, really tight.  

Rob Walling:
That’s a nice attitude to have for a V one,  

Colleen Schnettler:
I hope so,  

Rob Walling:
To know what, to know what you can say yes and no to, because that is often the hardest thing to know is what do we build into this first version? It needs to be not very buggy and it needs to look pretty good. And so folks who need it desperately haven’t had an issue then with the fact that it may not, the fonts and the spacing and the whatever else may not exactly match our UX paradigm.  

Colleen Schnettler:
Yeah, no one has had an issue with that yet.  

Rob Walling:
These customer interviews are key for Hello Query’s future. I asked Colleen for some insight into how she’s preparing for these conversations and if her approach is changing over time.  

Colleen Schnettler:
I am naturally a pretty social person, so I just thought I would be magically good at customer interviews and no, I’m really not magically good at them. You have to go in with understanding your own personality and understanding how to get people to be honest with you and kind of walk that line. When I first started doing them, I heard everyone say yes because I’m just naturally energetic and enthusiastic and optimistic. I was projecting my, oh my gosh, you love this, and they were like, yeah, I guess so. And after doing so many of these, I think I have hit a really nice balance of really being who I am, still being myself, but also not pushing them in a specific direction. When I get on a call with someone and I say, how are you solving this problem now if they haven’t even tried to solve it, it’s not a big problem. I’ve done so many of these. I know what questions to ask, and I can tell pretty quickly by the size of your business, how frequently you have this problem, what you are already paying to solve this problem. So I think that’s just something you learn the more you do it.  

Rob Walling:
I think a question a lot of folks listening will have is, how did you find these 20 people?  

Colleen Schnettler:
So right now, our social networks are still our number one source of traffic. So some of these people came in through cold LinkedIn outreach, but I did a whole LinkedIn outreach cold outreach campaign, and it was great because I learned a lot and I actually got a decent number of responses, which was very exciting. I had a much better success rate with people coming in from Twitter because it’s kind of like a warm intro based on all of these calls and people have reached out. I’ve got a group of what I’m calling founding customers, three to four people depending, and the plan is to give them the V one, see if it solves their problem, work with them, iterate until we can narrow the funnel on who really is our target customer. I think long-term cold outreach is going to be one of our traction channels, but again, I can’t outreach to people if I don’t know who those people are.  

Rob Walling:
I like what you’ve said. It’s something that I think a lot of folks missed. It’s not just what are we building? Who are we building this for? You have to answer those two questions. And oftentimes you can have an amazing product idea like you do now, but if you don’t know who it is you’re focused on and who you’re selling to, it becomes a real problem once you get through your first three or four customers who actually come in. So I just want to call that out for who maybe discount that.  

Colleen Schnettler:
Yeah, the customer thing is really hard.  

Rob Walling:
While these customer calls have been crucial for Colleen, it’s not the only thing she’s been busy with. So I’m curious, you have this validation of where you want to head in the next, what month or two, how much progress have you made technically in terms of implementing features.  

Colleen Schnettler:
We have a working secure embeddable link that shows what your users will see if I were to embed this in my application and they were able to use it. And so it’s been really fun because I have been able to play around with it and see how useful it is and what kind of things do I want to do that I can’t do and what’s important to me. And so it feels like we’ve made a ton of progress on product.  

Rob Walling:
I’m surprised that it’s gone that quickly. Is it because you already had a core from the hammer stone days or refine days that you were able to repurpose?  

Colleen Schnettler:
Yes. So we had a large part of the code already exists because we are using our old product in the new product.  

Rob Walling:
Nice little shortcut. Well, it’s handy to be able to not just throw away all that,  

Colleen Schnettler:
Isn’t  

Rob Walling:
It? Yeah, no kidding. That’s nice. This is where it is a pivot. Sometimes people will say, I was going to build project management for hair salons and now I’m going to pivot into building in a mobile app on Facebook. And it’s like, that’s not a pivot. That’s just a completely different thing.  

Colleen Schnettler:
Absolutely. And I think that data is just such a good place to be. So I have been spending a lot of time in the big data analysts, Tableau, power BI forums, hanging out, seeing what those people are doing, and everyone needs data. Our world is controlled by data, so people are going to want to access their data. I think it really is interesting too. Some people just want to throw their Excel files into chat GPT, and we can enable that. It’s literally at its very, very core, all of this packaging and positioning, we’re still solving the same problem. And the fundamental problem we’re solving is you want your data out of your database so you can actually understand it, play with it, build visualizations, whatever you’re into. And so yeah, it does feel like a true pivot as opposed to it. Let’s scrap all of this. We’ve been working on it for two years and just start from zero.  

Rob Walling:
I’m curious, what are you most looking forward to and what is the thing that will keep you up at night?  

Colleen Schnettler:
I am most looking forward to getting this into customer’s hands because these interviews, Rob, I mean, we are in this position now where it feels like momentum. It feels like it’s going to work. And you know what else is really tricky about this is finding the right balance. To your point, this isn’t an MVP. These people are going to put this in their production software, so we have to be really, really careful when we look at the quality versus minimal features to value figuring that out. And so that’s why on one hand, I’m super excited to get in front of people, but I’m also very nervous that if we do it too early, we will erode trust and lose those potential customers.  

Rob Walling:
If I was in Colleen shoes, I’d feel that exact same mix of excitement and nerves, but with the insights from her customer interviews, I have a good feeling she’s on the ride path. We’ll check back in with her in a month or two. By then, she’ll have had some time to get her product into customer’s hands and she can share some insights into this key moment.

Rob Walling:
Welcome to another episode of Startups. For the Rest Of Us this week, I’m your host. I’m Rob Walling, and this is the podcast for folks who want to build real software businesses, real SaaS companies that sell a real product to real customers for real money, you can be bootstrapped, you can be mostly bootstrapped. Frankly, you can raise a cajillion dollars in venture capital, and I still believe that the content and the thoughts and the ideas and the strategies and the inspiration and the tactics that I present here on this show are applicable to you no matter which of those buckets you fall in. Unless you’re planning to have kid rock at your launch party and you want to stay pre-revenue forever because your valuation is more important to you than actually making money, then this podcast is not for you. But if you want to build real SaaS companies, real software companies, then this podcast is laser focused designed for you. 

Today I’m going to be answering listener questions. It’s been a minute since I’ve taken some listener questions on, and if you have a question for the show, you can email it to questions at startups For the Rest Of Us dot com or head to startups For the Rest Of Us dot com. Go to ask a question in the top nav. As always, video questions go to the top of the stack, although I have been taking text questions that are more intermediate or later stage because I’ve found that the pipeline gets pretty clogged with how do I choose an idea and I’m, what should I do and how do I launch? That’s all interesting, but I think answering question after question after question for pre-revenue folks gives an indication that is not true that this podcast is aimed at beginners, which it is not. So send your intermediate to advance to later stage questions as well as your beginner questions. 

We’ll tackle those in upcoming episodes. But before I dive into listener questions, I want to let you know that MicroConf Connect applications are open today through February 5th to create the best possible experience. We welcome new members in monthly cohorts with applications open for just 72 hours each month. Microcom Connect is our online community. It is the best online community of bootstrapped SaaS founders. Every month we put on a special live call with a new guest, and if you remember this month, you get access to a live call with Harry Lawson where he’s going to break down SaaS copywriting Essentials. Harry has written for companies like Testimonial two Sewell and ve.io, and next month I believe I am the special guest on the live call where I will do live q and a. It’s always a blast. If you’re interested in becoming part of this worldwide year-round online community of MicroConf Connect, head to MicroConf connect.com to apply. Applications are only open until February 5th. If you miss this window, you will have to wait until march MicroConf connect.com. 

So with that, let’s dive into my first question from Edan Maas. This question came to me on X Twitter where I asked about some more intermediate stage questions, and this one’s on the edge, but Idon asks, what do you do if there are many free signups but not many paid conversions, and you have already tried removing the free plan? I’m not sure I fully understand what this question, if you’ve removed the free plan, then you shouldn’t have any more free signups. Or I guess you’re saying you have free users that you haven’t kicked out of the free plan. You’ve only removed the free plan for new people. So I’m a little confused by this. I think I’m going to answer it multiple ways. I’ll start with the idea that freemium, which is of course different than a free trial freemium is often what I call forever free, where you’re only limited by the number of actions that you take, say signing a document or sending emails, or maybe it’s having a certain amount of subscribers and you’re capped. 

And if you go over that number, then it’s not free anymore, but it’s not a time-based free trial. So freemium should have not many paid conversions. That’s kind of how it works. Dropbox brags or bragged back in the day about we get all these signups and 3% convert to paid after a year. So I would call that not many paid conversions for a year. A year, you get 3%. This is why freemium, it’s not a never for bootstrappers. It’s a by default. Don’t do it. What do you do if there are many free signups, not many paid conversions. Don’t do freemium. Listen to this podcast and in general, don’t do freemium. Now, are there bootstrap, mostly bootstrap founders who are making freemium work? There are a few, right? Ruben Gomez is the famous example. When he comes on the show, we talk about Sewell and how he has made freemium work. 

There are tens of others that I couldn’t even name ’em all. There are very, very few. I’m not saying it doesn’t work. I’m saying in general, it is way harder to get it to work than you think. It’s so if you are in doubt, don’t try freemium just you can have a free trial. You don’t need to ask for credit card upfront. You need to find out if you build something people want and are willing to pay for. If you have removed the free plan for new signups and you still have a bunch of people hanging out in a free plan that are not converting, you can end your free plan for current users. They’re not customers because they’re not paying you anything but free users. And I have done this myself with a product I acquired 15 years ago, and several TinySeed companies have done this, and I say TinySeed companies because I have pretty detailed insight into what they’re doing and how they’re doing it and the results of it. 

And any of them that remove their free plan, even for existing users, have never gone back. I didn’t go back either. So usually that’s what I would do is I’d reach out to, if there are power users that are on the free plan, I’d reach out to them directly. I remember when I removed the free plan, there were a few people that had really helped promote the app over the years, and one of them was like a college professor, for example, a university professor and asked if he could get a discount or a comp, and I just comped him because he had recommended it to a bunch of people. And you can make exceptions here, but the idea that you have 500 or 5,000 free users and almost none of them are converting implies that either your yardstick is in the wrong place, meaning you’re giving away too much in your free plan. 

So people never need to convert. So you might need to think about moving that or you just kill the free plan altogether and build a more traditional bootstrap, mostly bootstrap business with a free trial where people have a time constraint to convert, and if you create enough value for them, then they pay you. There are a lot of levers to pull with freemium, and it is one of those, I think it’s harder to make a broad generalization of like, well, here’s how I would design a free plan, right? I can tell you basically with SaaS pricing, some rules of thumb that I have about each one doubles in price, but you give away more in the value metric. There’s all this stuff. I’ve given talks about this. I’ve talked about this on this podcast, but freemium is to me much more a one since it’s so complicated. 

It’s much more kind of a one-off really understanding your customers and really understanding where that line is, where you’re giving away enough in the free plan to get them to use it, but not so much that they never upgrade. Now, if you are talking about, when you say free signups, if you’re talking about free trial signups, but not many paid conversions, that’s a question about the funnel. It’s like, well, is anyone getting onboarded? What does onboarded even mean? Is there 1, 2, 3 steps that people need to take in order to get value from the product? Are they doing that well? If not, you need to reach out to them via email, via in-app message, potentially. If they’re paying you enough or going to pay you enough, you reach out manually. You hire a customer success person who basically is in charge of that because if people don’t get onboarded, then there will be no paid conversions beyond that, even if people do get onboarded, if you still aren’t solving a desperate aspirin pain point for them, the odds of them converting are low. 

And so there’s a bunch of questions to ask throughout your funnel. There’s no one thing of like, oh, you just flip this switch. Obviously you just put a credit card up front and that fixes everything. It’s not like that, right? Funnels are always about which step are the most people dropping off and why? And the first one you can answer with analytics, and the second one you answer usually with conversations, why are they dropping off? That’s often the hard part because you can look at as many screen recordings as you want. You can look at as many heap or mixedpanel dashboards as you want, but you will not know why they’re dropping off till you talk to your customers and potential customers. So thanks for that question. I hope it was helpful. My next question comes from a BOMA and ab BOMA asks, with the exponential advancements in ai, how do you think the world of building SaaS products will be affected, if at all in the next few years? 

It will. And this question was asked what? Six, seven months ago? You can tell the backlog of questions. We have an our role said, and I recorded an entire episode dedicated to AI and how to think about it in terms of your SaaS. The episode is 663 from May of 2023. It’s five insights SaaS founders should know about ai ignore at your peril. That is still as valid today as it was of the day we recorded it. Although AI has changed. We talk in that episode about why you shouldn’t ignore it. The four categories. I put categories to these because you know them. I’m a framework thinker, right? There was sorting in categorization, there was generative ai, of course, that generates things, images, texts, and others, and a couple others. We talk about how AI is not actually a product differentiator. Should bootstrap companies try to build their own LLMs using AI internally in your company? 

Talked about business models, whether they’re ticking time bombs. So that is as valid today as it was a year and a half ago when we recorded it. There are a few changes to answer AB BMO’s question number one, obviously many SaaS companies will integrate it as features into their product. So if there’s any point where your customers need to create some type of content, whether what is it a blog post or a social media post of any kind, obviously AI can help them generate that or improve that. This is obvious, but that’s one place where it’s going to be applied. Second place that you should be thinking about applying is in your own internal operations. So here at MicroConf and TinySeed, although we are not SaaS company, we are certainly serving a lot of customers, a lot of prospects, a big audience. We are creating content. 

We’re doing a lot of things that you would do at a SaaS company, marketing, even some sales, all that kind of stuff. And so we use AI pretty extensively, whether it’s Gemini or Claude or Chat GPT to help us get there faster. We don’t publish AI generated content per se. I just don’t believe the quality is there. But if you’re not using AI to help make you more effective and efficient with your internal operations, your marketing or sales, you will fall behind. And then the third broad place where I really think AI is impacting things, especially with building SaaS products, is how much faster and more productive it makes developers and whether using cursor, copilot any of the other tools of the day that Devon, I think was popular, seemed for like two weeks. No one’s talking about Devon anymore, but you get the point. 

It’s not the tool. It’s the idea that it can make developers move quicker and be more efficient. And what I’ve noticed is I haven’t seen anyone, at least in the SaaS space, fire people or lay them off because, oh, we’re suddenly so much more efficient. I’ve just seen them faster. That’s the thing, it’s an accelerant, not a differentiator. Someone said this, who was it? Maybe it was Patrick Campbell, might be misattributing that, but think of AI as an accelerant. It gets you there faster. If you don’t use it, you’ll be slower than your competition. It doesn’t differentiate you because your competition can and will use it. But if I were a software developer today, as much of a pain in the butt as it would be to integrate AI into my workflow, I would 100% be considering it. I think it’s going to make all of us, it’s like a mech suit. 

It makes all of us a little better, a little stronger, a little faster, a little more effective. If you can get over kind of the learning curve, get over that hump of integrating into your workflow because it is, I know that if you’re used to writing all the code yourself, suddenly you’re using ai. It’s a little cumbersome at first, but I think it will allow us to build more SaaS products faster and build features faster and make every developer that you have more effective. Now, what that means is the pace of development and of feature development and the pace of competition will also accelerate. So do I think AI is going to have impact on SaaS products? Yeah, I think it already has, and I think it will continue to. And really the question, because Boma asked over the next few years, and it kind of depends on is AI going to continue the pace of innovation that it has because it has seemed to plateau recently. 

I know that they’re trying to get, is it chat GPT five oh or 4.5 or something? And their reports, rumor reports are that they’re really struggling to make it that much better. Don’t get me wrong, it’s good. I use chat GPT almost every day, almost every working day, and I know a lot of my team does as well. It’s just getting integrated into all our workflows. But if AI has plateaued for the time being, then that’s one outcome. We’re going to see what we see and we get what we get, and that’s where the pace of innovation stops over the next few years. If it continues to exponentially or starts to exponentially appreciate in value, then I can imagine the impact on all of us is going to be a lot more significant. So what I’m saying is that part of this relies on how fast the underlying AI models advance over the next few years. 

So thanks to that question, OMA. I hope it was helpful. My next question is from Eddie Vink. And Eddie asks, not my product, but notion is launching Notion sites. So this again, is seven months ago. Do you think this is a threat for Notion site builder products, or is it an opportunity? 100%. It’s a threat. Anytime a big player, this is platform risk. Anytime a big player launches a feature that a bunch of step one business builders have built following the stair-step method, it’s detrimental. Inevitably, even if they build kind of a version of it that is feature limited that doesn’t do anywhere near, I have a thing, but my thing is better, my thing has five times the number of features or my thing is way easier to use or look, it does all this other stuff for you. What happens is a bunch of notion people who don’t want to add another product to their chain, they don’t want to add another integration. 

They don’t want to add another 20, 30, $40 subscription. They just put up with it. And if it’s good enough, it will absolutely negatively impact notion site builder products. Now, are there a specialized tool? If you’re a super specific notion site builder for some vertical niche and you are truly not competing with notion sites that, I’m trying to think of an example. You’re for a tight vertical, you’re for notion for gyms or martial arts dojos or notion sites for software teams doing agile development, assuming that the notion sites, capital N, capital S, the product that they put out isn’t able to do the things and you are positioned correctly of like, Hey, thinking of using notes and sites, well, it doesn’t work for X, Y, Z, and we do, then do I think you’ll still be okay? Yeah, probably. But I do think that in general, platform risk is tough, and I’ve faced it myself and relying on, well, multiple platforms over the years, especially Google was always one that really hit me hard. 

And this isn’t a reason not to build step one businesses or businesses that are in these app marketplaces. These are great little businesses that can I say little, I mean, some of them, you can get to five KA month, some of you can get to 40, 50 KA month. These can be great. They can be life-changing. But would I build and would I stake my, let’s say my family’s financial wellbeing on something with a lot of platform risk? I would not expect my app to exist 10 years from now if I was heavily, heavily reliant and built on a platform. And I recorded a podcast episode just three or four months ago back in October. It’s episode 7 35, the eight levels of SaaS Platform Risk. And if you are wondering why platform risk is not just binary like a lot of people think, but that there are actually many, many levels and there are three different elements of platform risk and then eight different levels. 

You got to go listen to the episode to hear it. It was my favorite episode I recorded last year. That episode will 100% categorize this thought around notion launching their own version of sites. So is it a death noll for all third party notion site builder products? No. Will it negatively impact a lot of them? Potentially Most of them, yeah, I do think so, unfortunately. So thanks for that question, Eddie. Hope it was helpful. My next question also from x Twitter is from Tom McGee. Tom asks my app, there’s a lot of things and an unexpected auxiliary vertical that’s fundamentally different from our primary. One is getting a lot more attention than I expected. Should I put it behind a paywall to upsell, spin it out into its own thing? These are questions. I’m reading them without question marks, but spin it out into its own thing. 

The problem with including it as an upgrade is some users only want it, so it would have no use for the base product. Got it. So you have a base product, you have kind of an add-on and somehow a single vertical wants just that. This is, of course, I would really like more specifics, but realistically, spin it out into its own thing. Probably not. Usually the default for me is don’t do that. You need a new website, you need a new domain name, you need a new Stripe account, you need to do marketing and support, and you need email addresses and you need to do SEO and you need to do outbound and a support inbox. And it’s just people think that spinning something out into its own thing is, well, the code, it’s easy to spin the code, just fork the code and it’s, or even I just point to the same repo. 

And that is, I dunno, maybe 10% of the effort, it’s 20% of the effort. It’s all the other spinning something out into its own thing is just don’t underestimate how it’s launching a second product. So my answer is, unless I saw a really, really strong reason, and without all the details, it’s hard for me to know if there’s a strong reason, but unless I saw a very strong reason to do so, I would put it behind a paywall. And you can either make it a different tier of the product. I mean, you could have two products on your website, so it’s the same domain, but then there’s a dropdown and there’s X, Y, Z product for this vertical and X, Y, Z product for this other vertical or X, Y, Z product for everyone. And then if you’re specifically in this education vertical or whatever vertical it is, you can do that. 

Again, it’s hard for me to make specific recommendations without knowing the specifics, but would I put it behind a paywall to upsell? I would, if there’s a bunch of interest now there’s a conversation to be had around, ooh, is it viral? Is it driving new leads? Should it be freemium instead? And again, without info, it’s hard to talk that through. But in general, if I get a bunch of interest, I would look to keep it on the same website with all the same infrastructure I have and kind of inch my way out there to see if there’s enough interest that people will actually pay for it. So thanks for that question, Tom. Hope it was helpful. And my last question of the day also from X Twitter comes from Tony Meer. Tony asks, at certain sizes of the company, it seems to stop growing. What are these ranges and how do you break through to the next range? 

So I appreciate the question, Tony, but I do not accept the premise that at certain sizes of companies, they seem to stop growing. That’s not true. It’s not about company size. What it’s about is the famous formula for plateaus. And that formula is new MRR divided by monthly revenue churn as a percent. So if you are adding $3,000 of new MRR each month and your monthly revenue churn is 5%, that’s 0.05. You will plateau at $60,000 of MRR. And if you cut your churn in half, they’re still adding $3,000 of MRR each month and your churn is only two and a half percent. You will plateau at $120,000 of MRR. That’s it. So realize that how much MRR you’re adding in a given month is affected by your pricing. So pricing has a big impact on this. Your A CV or your average revenue per account per month. 

Churn is a huge part of this, right? So that’s how many people are canceling based on your existing customer base. And so I see companies plateauing at every stage. And frankly, I did a talk at MicroConf Europe about breaking through the seven SaaS growth plateaus, and I identified seven reasons that companies had plateaued. And I went into TinySeed and actually specifically I have all their revenue graphs, right? 192 companies. And then I specifically reached out and said, oh, you plateaued here. What happened? And so one of the causes, for example, is not enough leads and one of ’em is having a leaky funnel, and the third one is having high churn. Fourth is competition. Fifth is you’ve tapped out your market. It’s just not that big of a market. So the reasons behind why folks plateau are one thing, but the ranges, I mean, I see folks plateau at one KMRR, I see them plateau at 5K, 10 K, 15 K, 20 K 25 30, 35, I mean all the way up. 

And then I see people plateau at one or 2 million. There is no certain size of a company where they plateau. The tough part is once you plateau, getting past it is really, really tough. That was actually the kind of sad news as I look through all these graphs is that if you don’t plateau, then you keep going. You have momentum. The moment you plateau, the odds of you getting past that plateau are actually quite low, at least from the analysis that I did. So that’s why you want to always be looking ahead and when things are working, not resting on your laurels because you want to try not to plateau because getting past them and building that momentum from scratch is not quite the cold start problem. But it’s just hard. It’s hard. And it often requires a big strategic shift of like, well, I need to expand into another vertical, or we need to double our pricing, or we need an entirely new lead source because everything we’ve done just isn’t, it isn’t getting us there. 

Or we need to serve an entirely new user base because our churn is just pegged at five or 6%. And although we’ve tried a ton of stuff, nothing has reduced that. And so we are just plateauing at this mark. So what’s interesting is the answer to how do you break through to the next range? There isn’t a range, but how do you break through a plateau is you identify the problem and you fix it, right? So if you don’t have enough leads coming in each month, meaning you’re not adding enough MRR, then you add more leads, well then the question is, well, how do I do that? And that’s a whole other thing than we could write books on that. Or if it’s you have a leaky funnel, meaning your conversion rates are low in your trial to paid or whatever, then you look at that and you optimize that. 

The how do you breakthrough is actually kind of trivial. It’s trivial to know what to do. It’s often hard to know exactly how to do it. And that is why I gave that talk. That is not, I don’t believe it’s up on YouTube and I might actually be giving it in New Orleans. I haven’t decided yet. Kind of want to add a little bit to it if I’m going to do that. But that’s why I did that talk is because plateaus are pretty scary and I’ve never seen an analysis of them that tried to look at the causes, the effects, and potentially how to think about getting around them. So thanks for your question, Tony. I hope that was helpful. Thanks for hanging out with me today, this week and every week. It’s so great to be in your earbuds. I haven’t answered listener questions in quite a while, especially not a solo episode. 

So this felt good. I think I’m going to do another couple here in the next few episodes. There are a lot of questions to work through and I always enjoy hearing from you Questions at startups. For the Rest Of Us dot com, if you want to send in a question, a comment, feedback, something you need help with, and obviously head to the top nav of startups For the Rest Of Us dot com, click ask a question and you can send in a video or an audio clip. This is Rob Walling signing off from episode 754.

Rob Walling:
Welcome back to episode three of Season four of TinySeed Tales. This is where we continue hearing Colleen SCH nestler’s startup journey. Before we dive into the episode, I want to tell you about the SaaS Institute. It’s at SaaS institute.com and it’s our private and premium coaching offering that is going to be launching here in the next month or two. The SaaS Institute is a private coaching community designed for B2B SaaS founders doing at least a million in a RR. We’re going to keep the initial cohort very small and invitations will be going out soon. Head to SaaS institute.com and enter your email address if you’re interested. And now let’s dive into this episode where we hear about co-founder conflicts and renaming a business.  

Colleen Schnettler:
We’re shutting it down. So MRR is at zero, so that’s super fun and we’re building something new.  

Rob Walling:
Welcome back to TinySeed Tales, a series where I follow a founder through the wild rollercoaster of building their startup. I’m your host, Rob Walling, a serial entrepreneur and co-founder of TinySeed, the first startup accelerator designed for Bootstrappers. Today in episode three, we’re back with Colleen Schneller, a developer, entrepreneur, and co-founder of Hammer Stone. It’s been about six weeks since Colleen and I last spoke, and in preparation for our conversation, I decided to listen to the most recent episode of Colleen’s podcast and in it Colleen and her co-founder Erin chat about building their software company. So I put on the most recent episode titled MicroComp Recap, and here’s what I heard.  

Aaron Francis:
So that was last Thursday, then Friday, boy, boy, Friday and Saturday some stuff happened. So we broke up with the client and then you turned around and broke up with me too.  

Colleen Schnettler:
I totally did that.  

Rob Walling:
The second I heard that, all I could think was what I expected, that things may have shifted or changed within the business since our last conversation as they tend to do with a startup, but breaking up with their co-founder, I was not expecting that. Needless to say, I was anxious to speak with Colleen and have her walk me through just what happened.  

Colleen Schnettler:
It’s interesting, Rob, because if you think of the number of people you have conflict with in your life, at least for me it’s not that many. And when you are trying to build a business with another person, especially something that you invest so much of yourself into, there’s bound to be conflict. And Aaron and I are in an odd position as co-founders because I am full-time and he is part-time, and that is just what works for us with our family situation and things like that. But I feel so much pressure to make this work, and to me it seems like, well, if it doesn’t work for him, then he just stays at his job and nothing changes where if it doesn’t work for me, it’s a huge deal. And so I think really what was happening there was I had just stopped consulting that Thursday and on Friday I just freaked out a little bit and I was like, this is it. 

I am no longer making money. I have no source of income anymore. This has to work. We have to make this work, and I am the kind of person where I am going to put all of myself into this to make this work. It felt terribly unfair in that moment that I was equal partners with someone where this was a part-time gig for him. And so it’s just an odd situation to be in. And so we had a really, really serious talk about it. It was very emotional. It spanned several days just about what did we both want. And it’s not even just what do you want with the business, but what do you want with your life? What are your goals? What are we doing here? And those things are really important to be on the same page. And it’s something I had kind of brought up with him before, but we really got into it. 

I mean, it was just all cards on the table, what are we doing? What’s our commitment level? What do you want? And that led us initially to maybe this isn’t going to work as a partnership, but fortunately we worked it out. Like I said, it was both of us thinking a lot about what we wanted. I mean, as I told Erin, I want to make all the decisions all the time, and I don’t get to make all the decisions all the time when I have an equal partner. And again, with my equal partner being part-time on the business, it’s weird, but we worked through it. I think we handled it really well as a pretty significant discussion, fight, whatever you want to call it. I think we handled it really well and we both took some time to think about what’s our level of commitment here? 

What do we really want? What are our life goals? What are we doing? And by that Saturday, so that was a Friday, and then we talked again Saturday morning, I told him, I was like, I’d rather do this with you than without you even given the constraints that we have. We are a great partnership. We have complimentary skill sets and it’s really nice. I mean, I really enjoy having a co-founder. And so the thing that’s a little bit funny is that Sunday we were flying out to MicroConf and my flight landed before his, so I wasn’t a hundred percent sure he was going to get off the airplane, but he did. He showed up, we were able to have it out in person and we kind of came full circle on that one.  

Rob Walling:
Wow, what a story. And this is obviously something that would in a perfect world, would be hashed out before you start a company together. But the second best is before you grow to a company that’s doing millions a year, right? It’s like I have seen multiple companies implode because of this exact dynamic. They get to half a million a year, for example, and one founder wants super profitable lifestyle business, and the other one’s like, I want to raise a series A and go to 50 million or whatever it is. And so the fact that you chose now, which is still very early in your company’s life in terms of where you’re headed, the fact that you chose now to tackle this, I think shows honestly quite a bit of maturity because it is easy to push this type of thing under the rug. It sounds like you were feeling scared, frustrated, anxious, all of the above. Because as you said, you stopped consulting, which the big enterprise client you had was paying, I dunno if we said on the show, but it was like $20,000 a month. It was a lot of money and that paid for you and a bunch of other stuff. And once that stopped, it sounds like that was a real moment of reckoning for you personally.  

Colleen Schnettler:
Yes, I think that’s a good way to describe it because I thought it was fine. I didn’t think I had that subconscious fear of not having money until I actually stopped making money and it brought all these issues that I think had been kind of simmering. It just brought all that anxiety to the surface. And when we were talking, he offered to walk away. He was like, if you don’t want to do this with me, I’ll just walk away. We don’t have to fight about it. We don’t have to get lawyers involved. But he said, we don’t have kids yet. Using the marriage analogy, which is a popular one in co-founder relationships, he’s like, I’ll walk away now. We don’t have kids AKA, we’re not at half a million dollars a year because when we are, that’s going to be a different conversation.  

Rob Walling:
Is there anything you wished you’d done differently around this conversation?  

Colleen Schnettler:
Yes, they say building a business brings out the best and worst in you. And I think many people who know me would tell you that I’m like a very stable person. If I have an issue, I’m really good about bringing that issue to a person. I don’t tend to gossip about people behind their backs. I don’t tend to be frustrated. And this issue with Aaron had been simmering for a long time and I was talking to everyone except for Aaron about it. I’m happy that we had it out, but we could have done that six months earlier.  

Rob Walling:
In my experience, communication is really the only way to establish a relationship built on trust, which is why having these tough conversations early and setting this precedent for communication is absolutely crucial for the long-term success and sustainability of any startup. Needless to say, I’m happy for Colleen that she and Erin were able to hash this out sooner than later, but I couldn’t help but wonder how this difficult conversation affected their relationship moving forward.  

Colleen Schnettler:
I think it has gotten so much better. I think when there was this undercurrent of me not being a hundred percent sure if I wanted to do this with him and I had to ask him some hard questions about his commitment level and him having this undercurrent of not being sure if I was going to turn around and be angry with him for a commitment, we had these very subtle undercurrents in our relationship before we had this conversation. And so I feel like it’s been amazing, so much better since we’ve kind of had it out. Everyone’s cards are on the table, this is where we stand, this is what we’re doing. We have been able to even be more open and honest and communicate even better. Now,  

Rob Walling:
Colleen and Aaron are proof that having those difficult and often uncomfortable conversations can ultimately lead to a more productive path forward. And it’s encouraging to hear that things worked out as well as they did. But as many of us know, there are no shortage of challenges in the early days of a startup. And for Colleen and Aaron, their potential breakup isn’t the only challenge they faced in recent weeks. They’ve also been working through a major pivot in their core business that I was eager to learn more about.  

Colleen Schnettler:
Last time you and I talked, we were talking about reporting, internal reporting for Rails, and Aaron was going to go and learn Ruby on Rails. He was going to be the primary developer. And before we did that, I thought to myself, okay, let’s not invest all this time until we know that this is the right thing to build. And so I talked to many, many, many people. I am fortunate, it’s my community. So I have access to a lot of rails developers that are very senior in positions of buying power. And I talked to them all and I realized after that round of customer interviews that although our pain point is correct, our positioning and our packaging for this product, it’s not there. It’s just not there. And so we’re not going to do that.  

Rob Walling:
And I’m going to quote you back to yourself. You sent me an email. This is easily going to be the best or worst decision we’ve made for the business. So what is the decision? What are you doing from here?  

Colleen Schnettler:
So starting over, we’re shutting down. Well, we actually sold the IP to our enterprise client, but we’re essentially shutting it down, right? We’re people who have purchased it, they have it, but as I’ve communicated to them, we’re not providing support, we’re refunding them. We’re literally refunding them. I mean it’s like, sorry, didn’t work out. They have the source code and now they didn’t spend any money on it. So it’s win-win hopefully for those people. So we’re shutting it down. So MRR is at zero, so that’s super fun and we’re building something new.  

Rob Walling:
Okay, so what indications did you have that the prior route wasn’t working?  

Colleen Schnettler:
So what we were doing I realized is we were building a productized consulting business because what was happening to us is people would come in and they buy refine. I think we were selling it for a thousand dollars a year. We could have charged more, but as part of that, they wanted us hands on the code in their app, making it match their UI perfectly. So I felt a couple things were happening. We were building a productized consulting business. We had to catch them early in their lifecycle. If they really, really needed it, they would’ve already built it. And if they didn’t really need it, then what are we doing? We don’t want to be a product that is kind of sort of nice to have. We want to be a product that this is amazing. We really need this. It was hard to integrate, which is why they wanted us as part of the package. 

And developers aren’t really used. It was almost like we were trying to build a market, which we are do not want to do that, right? There was this red flag that we didn’t have any competitors. And you know how at first you’re like, oh, great, we don’t have any competitors. Then you’re like, oh, there’s a reason. Because developers generally speaking, they aren’t in the mindset that they go and they license, they pay for a Ruby Gem and license that that’s not their workflow. Their workflow is they want an open source package and then maybe you can upcharge them for support. But that is again, not the kind of business we want to build. I am not a big believer in the open source to paid model for a small team. I mean, I think if we had raised a lot of money, it might be a great path, but what we’re trying to build that just isn’t a model that was really working.  

Rob Walling:
Folks listening might be wondering, Rob, you’re an investor. TinySeed invested in this company that whose MRR is now zero. Are you panicked? It’s a pivot. Oh my gosh, it’s resetting. And the answer is no, because this is a lot more common than people realize. And the number of successful companies that go through exactly what you’re doing, the number is high. And so we bet on founders, we bet on you and Aaron not on your idea. And specifically with Hammer Stone, when a r and I got off the interview call with you, we were really like them. Don’t love developer components. It’s not a MRR, it’s not a SaaS app, but we’ll make the bet on them. That was it. Even more so do we think they will figure it out than we invest? And the answer was yes. And so do we still think you’ll figure it out? We do. And so I mean I have the confidence that you are making the right decision. You and I have obviously talked a lot about this offline, but it might come across to people like, oh my gosh, everything’s failing. But I actually think you are closer to success today than perhaps you’ve ever been. Even though your MRR doesn’t indicate that it’s like a local minimum.  

Colleen Schnettler:
That’s amazing to hear. That’s good  

Rob Walling:
News. Perhaps even more exciting is a huge pivot that Colleen and Aaron made with the direction of their company, including a name change.  

Colleen Schnettler:
So we are now hello query com. We’re very proud of that domain name we love Hello Query. We wanted a.com. That was a priority query obviously because our initial value prop is SQL to CSV and I dunno, I like it. Hello Query. It’s friendly. Erin and I are friendly. It feels like it’s a good match for us as people and a good match with the kind of company we want to build. And what we are now building is it’s going to be hosted internal reporting for teams. And what we love about this idea is it’s a proper SaaS. To your point before we were doing licensing of software packages, which is just a tough business model for a small team. So it’s a proper SaaS, which is great. We host it as you would imagine, and it’s actually we’re in the same space. We’re solving a very similar problem to what we initially set out to solve. 

We’re just solving it in what we think is just a cleaner way. We’re so excited. So I just feel like there’s so many great things about this business. I think the first is we’re no longer married to just Rails developers. We can sell this to anyone with a database. So we are opening our aperture so wide in terms of the kinds of companies that can come in and use our product. We have a lot more options now in how we charge. So now we can charge per seat instead of, again, selling a licensed software once it’s out of our hands, it was out of our hands. They had the source code they are supposed to pay every year, but so we can charge per seat. We are hoping further down the road to do partnerships with database companies, these cloud hosted database companies. It feels like something they always say first time founders talk about products, second time founders talk about distribution. And so the opportunities I think for distribution with this, with add-ons, with Heroku, everyone’s on Postgres cloud. There’s just a lot of opportunity there to hook into something that people are already using.  

Rob Walling:
Colleen and Erin are searching for product-market fit and getting to product-market fit is hard. I was curious to find out after they realized that their initial approach missed the mark, how did they decide their next move?  

Colleen Schnettler:
So I have had many, many customer conversations been doing nothing but customer discovery since we decided to pivot again. And it feels really good right now. It feels like I have had inbound people who have spoken to me this exact problem. Like Sally in accounting needs X, y, Z reports and I have to build them for her or I have to set up Aron job to email them to her. But then she wants something slightly different in the report. She wants a different date range or she wants to filter on a different column. And so I’m getting this pain fed to me by people are inbound finding us. So that feels really, really good. To be fair, this is a crowded field. There are several competitors in the space, but what I’m hearing from people, even at the air quotes, easiest ones to use are not easy. They are too complicated. I had someone who works for a relatively large company, tell me just the other day he said, I tried to set up Mease for my finance team. It was too confusing. He was like, you’re supposed to be able to copy queries and put them elsewhere, but no one could quite figure it out. And there’s just still a lot of friction. I think I have a vision for what I want this product to be in the end, but we’re stair stepping to that vision.  

Rob Walling:
And I imagine during these decisions are never clear, they’re never as clear as they always sound in the podcast interviews or the TechCrunch articles. I knew the whole time that I was going to build Facebook. It’s like, no, you didn’t. Let’s be honest about this. And there have to be moments for you in the past month, six weeks where you’re like, it is kind of noisy. There’s some validation you’ve just said, but also is there enough? Do we bet that you’re kind of betting the farm again on a new conclusion? Has there been a moment or moments where you’re like, this is really scary and this might be a huge mistake?  

Colleen Schnettler:
Yes. I think one of the big ones for us is we, Aaron and I come up with this idea. We’re like, this is going to be amazing. This is what it’s going to look like. This is why it’s going to be better. We’re going to have this really cool feature that no one else has. And that’s our one differentiating factor. And then we start doing competitor research and we find this company that has built literally what we just described and they have raised $15 million and we’re like, oh no, how are we going to compete with these guys who have raised $15 million? So yeah, I’ve had those moments.  

Rob Walling:
Yeah, I can imagine. And so how are you going to compete with folks who’ve raised 15 million, or not even them, but it’s a competitive space and for you, is it exciting or is it intimidating? And how are you thinking about outcompeting these folks who have a lot more money and are ahead of you?  

Colleen Schnettler:
It’s exciting. Since I stopped consulting, which was only three weeks ago, I’m just having the best time. This is amazing, right? It feels like freedom and it’s just like, wow, all of these things I have always wanted to do. I can now do them. I’m excited. Honestly, I think early days it’s going to be very, very clear positioning and just so easy to use. In my ideal world, I guess we would pick one industry and start in that industry, so that would be ideal. I haven’t honed in on what industry that will be, but I would love to be the BI tool for everyone in the environmental space or the BI tool for whomever. But yeah, I think it’s fun. I think honestly, just in these early days, it’s just about the personal touch. I am doing cold outreach. I am to literally anyone who will talk to me, and I’m hoping the early people that come in are people who need this. They’re frustrated with a problem and also they like the level of customer support that we are able to provide.  

Rob Walling:
And you’re also trying not to make, I’d say the mistake that you made earlier, which is that curse of the audience where, hey, I have hundreds or thousands of people who know me online. They like me, so when I go to pre-sell something, my friends or people who like me pay me money for this. Right? And I think you’re trying to get around that with this cold outreach.  

Colleen Schnettler:
Yes. It’s interesting because just the other day, Aaron and I were talking about pre-selling and what happened to us the first time is we pre-sold what seemed to be like it was like $5,000 of refined rails. So that’s not terrible. And I was so excited. I had never pre-sold anything in my life and I was like, this is going to work. And so I think what I learned later is I didn’t ask those people a lot of questions. I just was so happy to have their money. And I think what I learned later, actually, just when I did this other round of customer interviews is it came out that people were using it on hobby projects and they thought it was cool and they wanted to support us. But the hobby projects is again, not the kind of business we’re trying to build. And so I think one of the things I’m trying to be very careful with on these customer interviews, and if we do pre-sell, will be what are you using this at work? Is this something you really need? Is this going to solve the problem you have at work?  

Rob Walling:
It sounds to me like Colleen and Aaron are asking the right questions and not only learning from the obstacles they’ve encountered thus far, but they’re also making meaningful pivots that can potentially result in a stronger, more valuable company in the longterm. I can’t wait to hear what Colleen is doing with all her newfound freedom post consulting and to find out how much progress they’ve made building Hello Query. We’ll find out in next week’s episode.

Rob Walling:
It’s another episode of Startups For the Rest Of Us, I’m Rob Walling, and in this episode I speak with Lars Lofgren about the state of SEO In 2025, of all the folks I’ve met in my 20 years of doing startups, Lars Lofgren is got to be in the top two or three SEOs that I know and I love sitting down with him. He really speaks his mind and is not afraid to just talk about the realities of how SEO has changed over the past several years. What’s working, what’s not the dangers he sees ahead as well as at a certain point shrugging his shoulders and saying, I just don’t know. I don’t know the details of how AI is going to impact this particular element of it. It’s a great conversation. I hope you enjoy it. But before we dive into it, MicroConf us ticket prices go up on January 31st. 

They go up by $200, and that’s just two or three days after this episode goes live. We are 84% sold out and every year people are asking about a wait list because they hesitated. So get your ticket before it is too late. We are going to sell this event out. It is a certainty. If you want to hang out with 250 of your closest bootstrapped founder friends, head to MicroConf dot com slash us and grab your ticket either before the price goes up or maybe even after because it’s going to sell out anyway. And that event is March 16th through 18th in New Orleans, Louisiana. And with that, let’s dive into my conversation with Lars. Lars Lofgren, welcome to Startups For the Rest Of Us.  

 Lars Lofgren:
Thank you. It’s great to be here, Rob.  

Rob Walling:
Great to have you, man. So you and I go back, I’m thinking it more than a decade.  

 Lars Lofgren:
Yeah, it’s like 15 years.  

Rob Walling:
Yeah, it’s lot. So you’ve spoken at MicroComp multiple times and you were basically, especially in the early days of MicroConf, just the go-to SEO speaker because you were doing so much SEO with Kissmetrics, you worked with Heaton, then you worked with Ramit Sethi at I Will Teach You to Be Rich, and then you’ve built a whole empire of high traffic. What do you call blogs, affiliate sites? I dunno, what do you call your empire?  

 Lars Lofgren:
Yeah, I work on blogs with affiliate programs, or at least I did. We had a number of B2B blogs that we were working on. Different projects all monetized through affiliate. SEO offers organic a hundred percent organic. That’s all imploded, which we can talk about. But yeah, I got pretty far. We were doing at the height it did 7.2 million of revenue, annual revenue in a single year. That was the high point before it all collapsed on me.  

Rob Walling:
I’d love to just start there because that is fascinating to me. So what type of traffic does it take to generate $7.2 million in affiliate revenue?  

 Lars Lofgren:
So it’s actually a lot less than you think. So if you’re in the right categories, that’s the thing about affiliates and especially SEO organic affiliates, and I assume socials like this too. It’s definitely going to be true on any sort of PPC or Google ads, Google AdWords, if you’re in the right categories, even if you’re only getting a couple thousand visitors on a blog post, if you’re ranking for the right blog post and the right term, you can make an extraordinary amount of money on any given month. There’s definitely power laws. The vast majority of the posts even they can rank really well, generate a ton of traffic. You don’t really make any money, make a little bit, but it all adds up over time. But then you have your few marquee posts that if you rank, you just, I mean, I had one blog posts that was literally just one post was making over a hundred thousand dollars a month off of one post, but  

Rob Walling:
You don’t know which those are going to be, so you just have to throw a bunch out.  

 Lars Lofgren:
You do, if you get into the affiliate space and you talk to any of the affiliate pros that have been doing this for a long, long time, they know. They know the categories, they know the terms, everybody knows the terms, everyone. It’s not even an open secret. It’s just like, oh no, these are the categories, these are the terms. If you’re in this space, go for that one. VPN is huge. Best web hosting is huge. Best credit cards is huge. Everyone knows best credit cards. It’s the golden goose. It’s tons of traffic monetizes really well, the commission rates are through the roof. If you rank number one for best credit cards, you will make so much money. It’s obscene insurance is huge, massive. So there’s a bunch of these and the deeper you’re in the affiliate space you get the more you learn about ’em. And then it’s like, it also doesn’t take, if you’re a little savvy, if you’re just a little aware of how price points in different products and you have a keyword research tool, you just go clicking around and searching around and you find all these product categories, you’re like, wow, I know those products, those price tags are decent, which means the commission rates are probably pretty decent. There’s a lot of traffic. I bet there’s a lot of money over there and there always is.  

Rob Walling:
Yeah. Got it. And then you said you used to do affiliates. Things happen for those who aren’t in the loop, what did Google do this year to  

 Lars Lofgren:
Affiliate? Yeah. Well, it really started in 2022, Google. There’s been a complete phase shift in the Google algorithm. I’ve never seen a transition this big in my entire SEO career. The way I look at SEO now, even from a year ago is completely different. Earlier this year I was banging my head against the wall. I was like, nothing is working. Nothing I do matters anymore. Google doesn’t like anything I’m doing. It’s like a existential crisis with my career. Am I any good at this still? And then I was like, okay, okay, I got to take my entire SEO playbook. I got to throw all of it out because things don’t feel right, so nothing’s working. I don’t have the pulse of Google anymore, what’s going on? So I just threw everything out. I’m like, okay, I’m rebuilding my entire SEO playbook from scratch. I’m taking nothing from granted. 

I’m learning every lesson over again. If I don’t see it work today, then no guarantees it still works. So there’s been this huge shift in Google and I think part of it was driven by ai. Part of it was also really around 2020. I mean it was true before this, but 2020 to 2022, there was this goldmine rush of niche affiliate sites. Word was out. We started our business in 2019, which is kind of funny. So we caught the tail end of it even though me and my co-founder knew about this space for a long time, and we were like, we knew how much money there was and let’s go do it. We like SEO, we like good content, we like helping people and we can get paid. Let’s not to, let’s go do this. But it wasn’t just us. There was this huge wave of niche affiliate sites and it kind of got taken out of control. 

Then on top of it, AI’s coming out, chat, GPT rolls out and content, there’s just explosion of shit content. So Google’s basically freaking out and basically like, oh, they have a real crisis on their hands. How do they actually filter through this endless wave of just trash content that they’re drowning in? So I empathize with their position a little bit, and so they basically, the algorithm has changed radically. It used to be it was to bullet down to one. I like to think in loopholes with SEO, because if you know what the big loophole is, you basically know what the algorithm, the algorithm is working at its core. The big loophole with Google used to be links. If you built enough links to the right page, you could basically rank for whatever you wanted. And that’s how we got going. To be honest, we built a bunch of links to a very few key pages and it was working really, really well. 

And that was true for a decade, right? Links, that’s all that mattered. If you were a better link builder and higher quality link builder than anybody else in your space, you won, period. Full stop. I’m not going to say links don’t matter anymore. They still do, but you can’t abuse the Google algorithm through links anymore. So that era ended and the new era is basically Google being like, okay, we’re not going to spend nearly as much time figuring out what pages are good. We’re just going to trust really, really major brands, really massive sites. And I think there’s a lot of nuance to how Google defines a brand. But basically if you’re a major media site, if you’re a top 100 website on the internet, top 500, something like that, you can basically just post whatever you want and rank for whatever you want. And I think the best example of this is indeed.com. 

I don’t know if everybody’s checked their SEO program lately, and I don’t care. I’ll talk as much about indeed as someone will let me, but their content is trash. It’s so bad. It’s such they’ve basically gone from 2 million visitors a month to I think over 20 million visitors a month. It’s just massive mind boggling growth. I struggled to get my head around it and in SEO and I’ve built a bunch of websites and it’s just a land grab of they’re just publishing endlessly. Publish, publish, publish. I’m not going to accuse them of doing AI content, but it looks like AI content. Or even worse, I think if there are any writers that are working on this program, they should actually just use AI because the content will get better, the end, they’ll save time and everybody will get paid more. The only people that are benefiting from this are like the SEO folks at Indeed and the writers themselves. 

So someone should make some of this money anyway, but that’s the state that we’re in. If you have the right domain that has the right signals that Google is looking for, you basically get a free pass. And if you’re on the opposite end of the spectrum and you don’t have those signals, things can get crazy volatile and really, really dicey. And that era we were doing really, really well in the old era of Google. We were not set up to do well in the new era of Google, the brand era, these monolith website era, this monolith brand. Those are the major players that can basically do whatever they want. So that’s the world we live in right now.  

Rob Walling:
I want to go down two paths and one is talk about big brands being able to do whatever they want, and there’s this term that I’ve heard thrown around called parasite, SEO. All right, let’s put a pin in that. We’ll come back to it in a few minutes. What I want to touch on is the listeners of this show are a lot of entrepreneurs, some early stage, a lot of folks doing 6, 7, 8 figures, a RR their SaaS. So when they hear you saying, oh, you have to have a brand Indeed, or C Nnn have to be a top 500, that might scare someone off who’s like, well, I’m doing 10 grand, 20 grand a month right now. Should I think about SEO and what’s your take on that?  

 Lars Lofgren:
Yeah, so what I used to tell people, I’ve done so many consulting calls with first time SaaS founders or bootstrap folks that are trying to figure out what marketing channels and what I used to tell people is, okay, all the channels work. Pick one that really resonates with you and you really go focus on it. Online channel is essentially power law. All the gangs are at the end focus, don’t get spread too thin. And if you like writing, if blogs resonate with you, if the SEO world resonates with you, go all in and you can get really far. In fact, this is why I spent my whole career in SEO because it’s one of the only marketing channels that’s the full marketing funnel. You get very top of funnel, you get mid funnel, you get bottom funnel. There’s always something to do with Google and SEO and even I’ve played around with every single channel at different points in my career and nothing has ever beaten SEO on the scalability, the ROI, the profit per lead, the volume, it hits all the buckets. 

The downside was it always takes forever. It takes five years to get anywhere interesting with it. So that’s what I used to tell people. If you’re excited by it, go all in. It’ll take you everywhere you need to go. If you’re not excited by it, well then maybe don’t do it because it’s going to take five years these days. I’m like, look, I’m an SEO purist, or at least I want to be. I have to have let that go. I can’t a hundred percent focus on SEO anymore. It’s too volatile. And the way Google is working is yes, the big brands get this free pass. There’s a lot of nuance to what Google is considering a brand, and there are ways to get going as a smaller site, a newer site with a lot less content, with a much smaller brand. But you have to balance whatever you’re doing with SEO with some other channels. 

And if you want a really simple rule that would give any founder or new marketing team that’s trying to balance things out, I’d be like, okay, even on day one, even as a founder, I don’t want, I focus, so it pains me to say this, but it is the truth. I would say you have to go all in. I guess it’s not all in anymore, but you have to go in on it least three channels. One channel is top of funnel. Pick a social channel that matches your audience and brand and what you like. You don’t have too many options. Instagram, TikTok, LinkedIn  

Rob Walling:
X, Twitter,  

 Lars Lofgren:
Yeah, x, Twitter, whatever we’re calling it the butterfly blue sky thing, whatever. So pick one of those and that’s your top of funnel. Do some SEO if you’re really excited by it, and then build your email list from day one and get regular emails out so that they’re warm and that’s building. You basically can’t just devote yourself to one channel like SEO anymore. And there’s two reasons for this. One is the easy one is diversification. SEO is volatile. Stuff bounces around all over the place. I don’t even consider a 30% hit anymore to be like noteworthy. I’m just like, oh, we’re down by 30%. Okay,  

Rob Walling:
Wow.  

 Lars Lofgren:
Earlier in my career, a 40% hit was a six month fire drill and it never happened. 

Now that stuff happens really regularly. If someone’s telling me that they got hit on SEO, I’m like, look, if you didn’t drop by 80%, don’t call me. It’s not even a hit. Things are crazy and volatile. It feels like the volatility of social, but paired with all the long-term nuances of SEO, it’s a much deal and it used to be. So you need that diversification. But on top of that, when Google is looking at things to rank and deciding who ranks for what they do place a lot more emphasis in, okay, is this site, is this brand? Is this entity? Are they on social? Are they doing stuff in other channels? Is the traffic coming to this website, non-search traffic, is there a bunch of branded keywords for this website? All this other stuff. It is definitely not SEO stuff, it’s the full marketing bucket. 

So if you properly diversify, the SEO game is actually going to get a lot easier for you over time. I’m working on a couple different sites right now with various degrees of brands. The site that has, it’s still a pretty big brand. Most people listening to this would be like, that’s a decent brand. And I’d be like, yeah, it is a decent brand, but they’re not, haven’t invested as heavily into other marketing channels. It’s been very SEO and blog dominant, and I have to work my off on that site. Nothing is a given. Yes, Google will give me a shot, but I got to show up and do the real work, working on another website, massive brand, huge brand, tons of social stuff going on, all sorts of crazy brand things. And every time I turn around, the numbers are all up. It is just all the charts look great. 

I’m like, I just have to post publish, keep publishing. Good things happen. So it is a crazy world, but if you diversify your channel a little bit, it’s going to make everything easier. And so don’t get too locked in on one channel is my main advice. And you can get somewhere. You can make progress. My personal blog, lar lre.com, there’s not too many blog posts on it, but I’m doing stuff on LinkedIn. I’m doing these podcasts, I’m getting my name out there and my stuff is ranking pretty fast. I don’t post that much, don’t make any money off this thing, but when I post, it feels healthy and it’s much smaller. So there’s still things you can do. You have plenty of cars to play, but you got to diversify.  

Rob Walling:
Wow. It’s crazy. It makes sense when you say it, but it’s crazy to hear that this is where SEO is. I remember back in the day, do you remember private blog PBNs Large where you had set up a exact match domain with dashes in it? It’s like the dash chiropractor dash in dash fresno where some.com, and then you’d build some links with the PB n. It’s like, look, we rank. And it was just, but that’s what Google just hates that stuff, right? It’s like people gaming the system and it feels like this is a big backlash to that.  

 Lars Lofgren:
Yeah, it is a huge backlash. Basically Google decided to hell with SEOs, and I mean kind if you want a good rule of thumb on tactical SEO level, don’t do any of the SEO stuff that was popular that people have been talking about for a decade. If you join some SEO course and they’re like, yeah, get bold your anchor text and get all this internal, all these formulas and or get a fac at the bottom of the post and optimize it. There was a playbook and all that stuff worked really well. We were doing some of it and it worked great. But all that stuff actually I think is how much is causation versus correlation? But I’m inclined to believe that a lot of it will actually hurt your rankings now because Google basically went to the opposite end of the spectrum and said, look, if this thing even smells like an SEO touched it, we’re going to just nuke it to oblivion. And they certainly 100% do that at a domain level. And then we could argue about how much it happens at a page level. But I’ve thrown out all those old little hacks. I don’t do any of ’em anymore at all  

Rob Walling:
For folks listening to this. I’m invested in over 200 B2B SaaS companies and a huge percentage of them and 60, 70, 80% somewhere in there are doing SEO and are getting some content marketing and SEO and are getting results from it. So what I don’t want to do is paint a picture for everybody of SEO is dead or you shouldn’t do it or anything, but you’re pointing out these pitfalls of following old playbooks and potentially just how volatile it be, especially when you get to scale. And I think that’s another thing is a lot of the SaaS I’m invested in are, they’re in these type verticals that where it’s just not, you’re not getting hundreds of thousands of uniques. It’s like, Ooh, if I can get 8,000 uniques a month from long tail SEO, that’s actually a huge win for these folks because their A CV is high enough that you just don’t need a ton of volume. And I don’t get the feeling that they’re under as much, nearly as much scrutiny as all the stuff that you’re talking about.  

 Lars Lofgren:
As long as there’s, again, you keep that balance on the brand and your other marketing channels, I think that the danger is when your SEO channel, regardless of how small you are or how big you are, you’d be doing a thousand visitors a month. You can be doing a million visitors a month. If your SEO program gets overweighted compared to your other marketing channels, that’s when things can start to get dangerous. And that’s when even a SaaS business can that has a pretty defined niche can run into trouble. So even if SEO is going really well for someone, yeah, go do your niche, go dominate that core, but also be careful. Don’t be really careful about spreading beyond your core focus and your core niche too much. And especially if your niche starts to involve a lot of very similar keywords. Maybe there’s a local element to the keyword law keyword or regulation keyword or something that’s different from every city in every state or there’s something, or celebrity net worth is another classic. 

There’s just thousands and thousands and thousands of these things. And you could create a huge website just going after celebrity net worth keywords, and people have done that and gotten burned. If there’s some keyword type like that where it fragments really fast, and if you just chase all of it, you’ll end up with hundreds and thousands of blog posts. Be really careful about that stuff. If you went after it, you blog could get really overweighted on content and SEO, and if it gets too overweighted from the rest of your brand, that’s where the volatility element starts to come in.  

Rob Walling:
Alright, I want to talk about AI before we get to parasite, SEO. So I have two questions for you around AI specifically involving trying to rank for terms. So number one is AI can write blog posts these days and I can go to, what is it? Claude and Chat, GPD AI can generate it and there’s all these startups in the space of we’ll generate, but whatever. What’s your take? Do you use it? Should people use it?  

 Lars Lofgren:
So I hate ai, at least when it comes to creating content. I can’t stand it. So that’s just my personal, I just have this neurosis around it, get this stuff away from me. So I’m pretty biased, but even if I put that aside, I’m like, okay, does it make sense to do this for a content program? And I am an emphatic 100%, no. Plenty of ways to use ai hats off. People go do it great brainstorming. You want some feedback on your article, whatever. Great. Occasionally if I’m feeling really stuck, I’ll ask it to give me some suggestions on a headline and that usually unblocks me and keeps me moving. So there’s ways to use it as a little bit of a crutch, but use it as a crutch, don’t have it, do the whole thing. And I know a lot of people are doing it for their blog content. 

It is rampant, it is everywhere. If you get pretty good with your prompts, you could have definitely an average level blog post, maybe even slightly above average, and it would certainly meld very well with a bunch of other stuff ranking. It wouldn’t be blatantly problematic if you put in the work on ai. We actually did a ton the first year that AI came out, of course all of our whole business was content, so we freaked out. We were like, oh my God. And one of our teams went all in on just using AI and trying to, does it work? How well does it work? What’s the potential of this thing? And the conclusion we got to was like, look, it can produce the quality that we would accept and be willing to publish. However, you have to put so much work into it that it’s basically a wash. 

Instead of having a number of reasonably paid writers and freelancers doing all the content you need a few really hardworking, very diligent, very highly paid people to run these AI algorithms that really know what they’re doing that can have a great eye for content and also know how to torture the algorithms in order to get what you actually need. Quality level. And when you look at the cost, it’s like it’s not a huge difference. So the time the spend is about the same. I also have the opinion that, look, everyone’s going into AI content and AI is really good at giving you that core middle of the bell curve answer. And if they’re giving you something, they’re going to give the other thousand people in your space something pretty similar, what AI does. And so if you’re using it, you’re just going to be the middle of the bell curve. 

Well, marketing isn’t about the middle of the bell curve. That’s not how you win. You got to stand out, you got to do things differently, unexpected. You got to break a norm of some kind. You got to be your pursue excellence, go way above the curve. AI can’t do any of that stuff, in my opinion, especially when it comes to content. So if I’m trying to get my content to break through the noise, the last thing I want is to build a program or a team that’s completely dependent on just feeding people more of what they’re already getting. We got to do things differently. So I’m running content programs on several sites right now, and I have told all my freelancers, if you use ai, if you copy and paste anything from AI into anything in your post, if I ever find it, we’re done. You can use it for brainstorming, you can use it for outline to get unblocked. That’s fine research, although to check every fact because a lot of it’s wrong, but everything that you hand me in your final post, you need to write it yourself. And that is a hard rule, and I would give that to any serious team going all in on content marketing or whatever they’re doing regardless of the channel. Be really careful how you use it if you want to actually stand out and get somewhere. Interesting.  

Rob Walling:
That’s good advice. And that’s the same advice I’ve heard from other SEOs that I’ve talked to Ruben Gomez being one. He’s like, yeah, we don’t, nah, it’s not it. It’s too vanilla. I think of it as it’s a mayonnaise sandwich. It’s just this bland, even for us, we ship a YouTube video every other week through MicroConf, and it’s usually me talking to a screen about something about churn or about us bootstrapping and ideas and this and that. I have tried to use AI to help me even just outline the videos of like, well, I’m going to talk about three things you can do to improve your a CV this week. So I’m going to ask AI, and I’ll even ask GPT, pretend you’re Rob Walling because it’ll do that now. It’s kind of cool. So then it’ll pull from maybe weight itself a little more to my stuff, and I still find that I’ll look at the outline and be like, this is such a mediocre, it’s like a C  

 Lars Lofgren:
So generic,  

Rob Walling:
It’s a 70%, and that’s not the video that I want to ship.  

 Lars Lofgren:
Yeah, it’s the middle of the bell curve, just enough to get through and look. Again, I’m trying to declare my biases on these. I enjoy writing. Even in my spare time, I’ll go work on a blog or whatever the right, but I also deeply believe that if I think about all my best posts, all my best pieces of content, I had to sit and wrestle with that thing and actually figure out what I was thinking and what I believed in through the process of just writing and the outline or the hook or where that post ended usually at a very different place than when I started. So I see value in that process, and if I actually am willing to do the work on the content, I usually end up someplace way, way, way better. And you’re never going to get that with ai. You’re already hammed in, even if it is an outline. So I don’t use it for any writing at all, but I think I’m a halfway decent writer and I do enjoy it. So someone might have a different opinion.  

Rob Walling:
Second AI topic is when I go to Google today and I type in a search for, it’s at least half of the searches I do in Google. Now, the ai, is that Baird? What is it called out of Claude? I don’t even know. It’s Google’s ai, right?  

 Lars Lofgren:
Gemini. Gemini. That’s what it’s, well, there’s like two different ones. The Gemini is the actual AI chat thing, and then the SEO is called the little snippet, AI overviews overviews. So AI O is usually what it’s truncated to  

Rob Walling:
Shockingly good. I asked it the other day. I mean, I ask it about acronyms all the time, talk to a founder and they’ll say it’s called an acronym, and I just go ask AI what it is. I’m sorry, I go ask Google, but at least half the time now I’m not clicking links. It might be more than that. So there’s blue links somewhere on that page. There’s ads on that page. I’m not clicking any of that. What’s your take on the search engine result pages, and is AI make them irrelevant or do we not have blue links? Where is this headed?  

 Lars Lofgren:
Yeah, that is a great question and I don’t have any answers. I do have plenty of sleepless nights and existential threat about it. So if some other founder is worried about this, I’ll be like, join the club. If you’re in Seattle, we’ll get drunk. 

So I mean, I think it’s another reason for doing content kind of the hard way and finding a reason to stand out. Yeah, if you’re, your content is kind of running the mill content where it can get answered instantly, or it’s a query that’s featured. Snippets did this to a lot of sites over time where someone’s looking for a definition and then boom, it’s right there in the featured snippet, or it’s just one little effect that’s going to be, the bulk of your content is dependent on that. A lot of that traffic’s going to go away. It’s going to go way down. So I’m not too worried about that. Like, okay, I have to win on high quality content that actually helps people and says something that they’re not expecting and gives them genuine value. Great, I’ll compete on that all day long. That’s my sweet spot. 

That’s what I enjoy doing. What I actually worry about is, okay, a lot of these AI answers are actually wrong, but I also know that people, I’m not judging anybody. People like convenience. I’m a maniacal person that just will go to crazy lengths to find the truth, and I’m always digging and searching and anybody tells me anything, and the first thing I think is like, ah, it’s probably what’s the real answer? That’s just my default state of mind. But I know a lot of people, they’re just going to give what AI gives them. So if you’re searching on some topic, you’re getting some best practices. How many people just accept it and bounce, even though all the best practices are trash, right? I’m like, what I’m more worried about is for the content that’s worth digging into, how many people are actually going to want to go look at the real thing from someone that actually knows what they’re talking about? 

Or is Google just going to leave all those folks behind and the SERPs going to get up to the point where you can’t even find that stuff? Then what does that do to a blog over time? What does that do to the marketing funnel over time? Even if you’re doing all the real work and you really have something to say and you really know what you’re talking about, does SEO essentially just wilt because you don’t get any placement at all? That might happen. I’ve got my whole careers in SE and I’m like, ah, where’s this going? I don’t know. So right now, I am praying and crossing my fingers and I am seeing, I have this small little blog on HR called HR advice, HR advice.com, and I did get someone, I have a really, really small email list, and I ask people when they sign up the email, so I have an automated follow-up saying, Hey, how did you find this? 

How’d you find out about this website? It would really help me out, and I got my first response. It was like, Hey, I actually found a lot of your articles on PTO and PTO policies while searching through chat TPT, and I found your articles really, really helpful. So I have the optimistic side of me, or maybe the hopeful or blind or whatever. This is rationally optimistic that doesn’t want to consider this world ending of content marketing. There is a part of me that believes that, okay, traffic’s going to go way down across the board. People are just going to use perplexity or chat GBD or Google, and they’re just going to get that bullshit overview. That doesn’t really tell you anything, and for most people, that’s going to be enough and you’ll never get that traffic. They’ll never even hit your site. But there’ll be a small percentage of those people, the people that actually care about the subject that are like, okay, here’s an overview of how call to actions work, but I need someone that actually knows how call to actions work. 

My boss is breathing down my neck, and I’m not just going to accept the initial bullshit 500 word overview. I’m going to dig and I’m going to click on stuff and I’m going to ask a bunch of other questions and I’m going to try to get to the source. There are those people out there that actually want real information, and I think some of ’em are going to keep clicking and they’re going to keep digging, and we could end up in a world where blog volume, blog traffic is way, way, way down. All the absolute numbers that I started my career on, all those will just go away. But this is the hopeful part. What I’m hoping is that the quality of what’s actually hits your site, those folks are dramatically higher than what you see in aggregate now because they need the real answers and they’re going to dig and they’re going to click on all your stuff and they’re going to find you and keep working in your funnel. So maybe absolute traffic comes way down on a blog or a site or a channel or whatever you’re doing, but the conversion rates go way up. That’s my hopeful coping rationality to get, we will see,  

Rob Walling:
Right? Yeah. None of us know. I want to wrap up by circling back to this topic that I mentioned a couple times already. Parasite, SEO. It’s a term I had never heard before a few months ago. Seems like it came around because of this brand shift, and so if you have this amazing brand, it sounds like you can publish whatever the hell you want.  

 Lars Lofgren:
Is  

Rob Walling:
That it? So define this term and tell us the story behind it.  

 Lars Lofgren:
So just how I talked about indeed, there’s a lot of other sites that hit framework. There’re so big, they have so much traffic. There’s so many people hitting their website through so many different mechanisms, news websites, mass media publications. They’re the classic example of this. They fit that brand preference algorithm perfectly right now, and they have, it started, started around 2022, early 2022 is when it really kicked off, and it just has gone, Google for whatever reason, keeps doubling down on this. I thought they’d shift gears by the end of 2022 or taper things. I was already seeing it and they were like, no, no, let’s just keep going. Let’s give these folks everything. It’s just Reddit. And they’re like, ah, give ’em everything. And a bunch of people in the affiliate space, they figured this out. Everyone’s looking at the rankings, you can see who’s ranking, and they were like, wait, these news publishers rank for everything. 

Why don’t we set up some sort of partnership with them as a separate entity? Like, oh, I have my own holding company. We run all of our SEO content and affiliate monetization and link building programs in-house. Why don’t I go to some news publisher of some kind and basically be like, okay, you’re going to set up a folder on your website, a subsite within your site, something that I can basically piggyback off your entire domain authority and the preference you have in Google. And then we are going to ship thousands and thousands and thousands of SEO optimized posts, and these are all the old school SEO posts. It is just the same framework, same templates, same stuff that SEOs have been doing for a decade,  

Rob Walling:
But it’s not high quality. It’s just average mediocre,  

 Lars Lofgren:
In my opinion. Best case scenario. It’s like it’s okay content. It’s pretty hard to find a post at least I have had a hard time finding posts that are like, this is really good. This post deserves to rank at best. It’s like, okay, it’s fine. A lot of it, I’m like, this is bad. This’s terrible. I don’t know why this ranks, it shouldn’t rank. So Google kind of stopped looking at page level metrics and kind of gave the domain weighting way too much weight. And yeah, the affiliate folks in the industry has figured this out, and there’s a few kind of affiliate companies that ended up brokering deals with every major news publisher out there. I’m not going to name names, but everyone has heard of these, folks have heard of these sites, and you’ve probably seen them everywhere for a while. And the term SEO started calling this a parasite, SEO. 

It’s when a third party sets up shop with the main kind of host domain, and then they run this subsection of the site and they just spew out tons of SEO content. It ranks, they’re abusing the authority of the website, and then of course it’s ranking really well, and they’re making a ton of, we’re talking like tens of millions of dollars a month, hundreds of millions of dollars a year when it’s fully scaled and fully operational. These are just colossal amounts of money. There’s a few companies that kind of specialized in this and got multiple agreements with multiple news orgs and it got rampant, and they’re, well, Google has put out a bunch of new policies and a bunch of manual actions, and a lot of these programs have been hit. So there’s been a lot of volatility in the last couple months. But yeah, I mean, when Google prefers something, SEO folks will figure it out and they’ll figure out how to abuse it. It’s as old as time,  

Rob Walling:
And then Google eventually catches wind. They figure out, they know, and then they do the penalty, and then the race begins again, right?  

 Lars Lofgren:
Yeah. Pendulum goes the other way. Everybody freaks out, and then,  

Rob Walling:
Yeah, it’s a trip. Well, Lars Lofgren, thanks so much for joining me on the show. If folks want to keep up with you, lars lofgren.com, you have an email list there if folks want to hear the real story around SEO, content, marketing, entrepreneurship, whatever else, whatever else you’re up to.  

 Lars Lofgren:
Yeah, whatever marketing rants, whatever’s bothering me at the moment, try to be entertaining.  

Rob Walling:
Awesome. So that’s lars lofgren.com. Thanks again for joining me. Thanks,  

 Lars Lofgren:
Rob.  

Rob Walling:
Thanks again to Lars for coming on the show, and thank you for listening this week and every week. This is Rob Walling signing off from episode 752.

Rob Walling:
Welcome back to season four, episode two of TinySeed Tales where we continue hearing Colleen Sch Nestler’s Startup journey. TinySeed is the gold standard for mentorship, funding, and advice for bootstrapped SaaS founders. We’re a world class accelerator and most people come to us not for the money, but for the community, the masterminds, the playbooks, the mentorship, and the advice We are raising fund three. So if you are an accredited investor or the equivalent in your country and you want to put some money to work and effectively index across dozens, if not hundreds of ambitious, handpicked motivated B2B SaaS companies, you should head to TinySeed dot com slash invest and take a look around. If you fill out the form there expressing your interest, that goes straight to my co-founder Volt, whom you’ve heard on the show, and it’ll provide you with our full fundraising deck and answer any questions you have about investing. Progress on our fundraise is going very well so far, and if you’d love to come on board with TinySeed and join me in empowering and accelerating hundreds of B2B SaaS founders, head to TinySeed dot com slash invest. And with that, let’s dive into season four, episode two of TinySeed Tales.  

Colleen Schnettler:
Oh man. It’s like having both kind of felt like a safety net, and I know that’s a false feeling, but you’re like, oh, well, if it doesn’t work out in Rails, it’s okay because we have Layer Valve. If it doesn’t work out in Layer Valve, it’s okay. We have Rails. It kind of felt like spreading the net wide, like lots of small bets if you will, gave us this safety. It gave me a feeling of safety, and so to go all in on one stack is I absolutely think the smart thing to do, but it’s also scarier because if it doesn’t work, then you’re like, oh, shoot. Now what?  

Rob Walling:
Welcome back to TinySeed Tales, a series where I follow a founder through their struggles, victories, and failures as they build their startup. I’m your host, Rob Walling, a serial entrepreneur and co-founder of TinySeed, the first startup accelerator designed for Bootstrappers. Today on episode two, we’re back with Colleen Schettler, a developer, entrepreneur, and co-founder of Hammer Stone. It’s been about six weeks since Colleen and I last spoke, so I reached out to her via email to find out if anything notable had happened since our last conversation. As many of us know when it comes to building startups, it’s not uncommon to go through periods of time where although you’re grinding, nothing terribly noteworthy has occurred. But when I heard back from Colleen, I was shocked by how many interesting things have been happening with Hammer Stone. One recent development is Colleen and her co-founder Erin, have made the decision to build a reporting dashboard into their product. I was curious to learn more about this additional functionality and what inspired Colleen and Erin to build it.  

Colleen Schnettler:
So the product as it stands right now is a drop in filter builder component. So what that means is you as the developer, or let’s say you’re the product manager and you want to buy this, you then have to have your developer drop it in, but he or she also has to do a lot of customization to hook it up. And one of the hardest technical issues we keep running into is if people are going to pay a large amount of money for a product, they want it to match their UI perfectly. Frontend UI customization for a composable query builder is just a bear. It is so hard and we keep changing things and trying to give people more, make it more customizable, but fundamentally, what keeps happening is the most painful part of this product. It’s not the query building, which you think that’d be the hard part, but that’s not really the hard part. 

It’s the front end UI customization, and what we were finding is people are putting this on index views or whatever, and they’re building reports. Fundamentally, people are using this to build reports, only query builder. No one knows what that is. So even positioning that and trying to sell that is really hard. People are what? Wait, what does it do? Can you explain it again? And so the positioning on it is really tough, and ultimately 85 to 90% of the use case is just reporting anyway. So we, after talking to several customers who have purchased the product that we have, we realized there’s an opportunity here to build out reporting. We own the UI on that, so we don’t have this. It has to fit in perfectly with your existing index views. We own the whole page, we own the ui, and we can build out this functionality we keep telling you you can do. So when we sell QueryBuilder, we say things like, oh, you can use it to schedule background jobs so your customers can get an email every week of who purchased their product. But then you as the purchaser of our product, have to build that out. Reporting gives us the company Hammer, stone, the ability to build all that out for you and just sell you a real true drop in solution.  

Rob Walling:
How did you come to this solution? As you describe it, sounds completely obvious to me. I find that things that look completely obvious in retrospect are not completely obvious when you have 20 different data points. It’s this muddy thing of like, should we do this? Should we build it in a third language? You have PHP, you have Ruby already. Do we expand into a third language? Or you have 20 different options that you could have done and you’re deciding to do this one. How did you get here?  

Colleen Schnettler:
So we want to be focused. I think we’re a small team with limited resources and we are trying to throw our net too wide. Isn’t that always the advice you give to Bootstrappers? You need to niche down, niche down. So we’re trying to focus and just hitting the same pain points over and over with customers who purchase it. I have this on the rail side, people are not using it in production, not yet customizable enough, and they’re like, really? We want to give our customers what we keep hearing over and over. These are reports for our customers. Our customers come in and they want to be able to find X, Y, and Z, so I have to build them the report. And so we had to make a decision. We felt that these multiple products and multiple frameworks was not focused enough, so we needed to make a decision and we feel like this is a focused decision. And honestly, it’s so funny you wouldn’t think this, but this positioning matters. We really, as a tech person, you like to believe that’s not true. You’re like, you’ll just see the beauty of the product, but we can’t sell it. We can’t freaking explain it. So reporting feels very explainable to people.  

Rob Walling:
Colleen is spot on. Reporting is very explainable. This pivot also requires effective positioning. As she mentioned, as builders and makers, we often believe that the product should simply sell itself, but unfortunately products don’t do that. There are a lot of strategies you can use when trying to reposition a product like changing the website or having conversations with customers. I asked Colleen if she’d tried any of these tactics yet and if so, how they’re working out.  

Colleen Schnettler:
So we haven’t done anything on our website, we haven’t repositioned that, but what we’re doing is when people come to us about QueryBuilder, we also are showing them our mockup UI of what reporting dashboard is going to look like. And nine times out of 10, they say that’s what they’re trying to build anyway. I mean, it feels like it’s going to be, the signals are good, I guess.  

Rob Walling:
Yeah, that’s where sometimes you find an avenue that instantly feels like, oh, this works, this works. If you’re saying nine out of 10, that’s an incredible win because I’ve seen folks try to do a pivot like this or an expansion or whatever, and maybe it’s five out of 10 and it’s still the right call because the other five want five different things, but at least if you can get half the people to want the same thing, then you have a market there that’s really cool. So they’re already trying to build this and it’s really just we’re going to take on more of the functionality. I think of it a little bit, think of all these tools that we’ve seen just expand and expand and expand. They’re at a larger scale, but HubSpot, it was a website builder with Google Analytics built into it. It was very simple, and then they’re like, now we’re going to add SEO tools, now we’re going to add a CRM, now we’re going to add whatever. I mean, HubSpot’s just this big, right? And they’re a public company and all that, but in a way, you found that you built something that was worth something but maybe not enough and it got you to where you are today, which is great. It’s almost like, oh, we got to step one. It’s like this is the next piece of functionality around it. Is there something beyond that? Have you even thought about it? Or I guess you’re still thinking, let’s just get slowed down. Let me get this thing shipped before we even think about that.  

Colleen Schnettler:
Well, it’s interesting because our original hypothesis or dream with this company was to build developer components. So yeah, it feels like there is something beyond it. I mean, we’re already starting to think bigger, which is exciting. We’re focusing on Rails and Aaron, my co-founder comes from Laravel where they have this beautiful admin panel and he’s like, what are you using Rails? I was like, nothing. We all use a hodgepodge of open source components that kind of sort of work, and you make ’em work the way you want ’em to, but there feels like there is something beyond this. There’s an opportunity to maybe it’s reporting and we become profitable in that space. Maybe it’s a full admin dashboard, maybe it’s taking some of the things that are missing in our framework and bringing them to the framework as paid add-ons. We feel like there’s a lot of potential here.  

Rob Walling:
I’m really looking forward to seeing what Colleen and Erin do in the coming months with all that potential. Another area they appear to have made a lot of progress in is deciding to focus on one element of the product line that is proven to be more successful, but reaching that decision wasn’t as simple as it sounds.  

Colleen Schnettler:
So in just the last episode we talked about how we are going after both the Laravel and the Rails markets and we have a product in both of those markets. And the interesting thing about this is the product is functionally the same, but practically it’s two completely different products, different code bases, different customers, different go to market strategies, and I perpetually feel like we’re not moving fast enough, and one of the things we were talking about is how do you succeed? You got to run experiments until you figure out what works. So let’s keep running experiments and in the Laravel space, we have run what I would consider three experiments now. We built Aaron, my co-founder, built this beautiful drop in query builder component and we tried to sell it and five people bought it right? There was not a knocking down of the doors for it. 

Then our next experiment was, okay, it’s because it’s not easy enough to integrate. Let’s integrate it in their paid add-on, which is called Laravel Nova, which is the Laravel admin dashboard. So then we built it so it integrates exactly perfectly into Laravel Nova and we’re like, oh, this is it. Now it’s going to be a one click installation. Everyone’s going to buy it. No one it. And then so now we’re on experiment three if you’re counting. Then we said, oh, it’s because the price anchoring in Laravel is so low. It’s way, way, way too expensive. And so we dropped the price and we thought, oh, now we’re going to drop the price. That’s it. This is the gates are going to open, and we sold four. So it feels like to us, we have run three experiments in the Laravel space and we have shown that that market has a low propensity to pay for things, and if you look at the customers we’re getting in rails versus the customers we’re getting in Laravel and Laravel getting a lot of hobbyist in rails. 

We’re getting a lot of companies. And so when you look at the propensity to pay, we think the rails market is just a little more mature and the people are coming to us are more likely to pay for things, and so we’re holding these facts in our hands. This literally, we decided this last week and we’re like, okay, what do we do? And we’re, it feels like we’re working on two different things. We’re like, we’ve got to be rowing in the same direction. We need to be working together, common vision, common goal, and so we think we’re relatively confident we are going to focus both of our efforts on the rail space to test experiments in that space.  

Rob Walling:
How did it feel once you made that decision last week?  

Colleen Schnettler:
I mean, it feels scary because, oh man, it’s having both kind of felt like a safety net, and I know that’s a false feeling, but you’re like, oh, well, if it doesn’t work out in rails, it’s okay. We have layer valve. If it doesn’t work out in rail valve, it’s okay. We have rails. It kind of felt like spreading the net wide, lots of small bets if you will, gave us this safety. It gave me a feeling of safety. And so to go all in on one stack is I absolutely think the smart thing to do, but it’s also scarier because if it doesn’t work, then you’re like, oh, shoot. Now what?  

Rob Walling:
Asking yourself now what is something I’m sure we can all relate to? I see this often from indie hacker types. They launch and they get that quick hit of dopamine from a product hunt launch only to then realize that the project gets little or no traction, or if they did get some uptick, they don’t actually want to market and sell it, which bringing us full circle leaves them asking themselves now. So I see folks try to diversify by having a bunch of irons in the fire, but I think the lack of focus means nothing gets enough momentum to get traction. If you recall from episode one, Aaron is a Laravel developer, while Colleen is a Rails developer and seeing as how their focus has shifted more into Rails, I was curious to find out how this impacts Aaron.  

Colleen Schnettler:
Aaron is a phenomenal developer, a great product designer, and he can churn out code so fast. I am a very, very good developer, but I would say his skills exceed mine in that arena. And so our relationship up until last week has been that he does all the product kind of design development and I do everything that turns that into a business. So I’m the Rails developer, so this is going to be an interesting shift for us to figure out how we both fit. And I think that’s too part of the reason I’m nervous how we both fit into the company with this new vision and we’re still trying to figure that out. He loves Laravel and the community, so hopefully we get to a point where we will be able to work on both products, but right now we’re thinking he’s going to learn Rails, which is kind of fun and I think could be really good marketing content, honestly, because he excels as a developer relations person, so him learning rails and tweeting about it would get a ton of eyeballs on our content. So we feel like that’s probably the path forward. But it’s interesting. It puts us both outside of our comfort zone.  

Rob Walling:
Stepping outside of your comfort zone is never easy, but a senior developer, Aaron shouldn’t have too much trouble picking up a new concept or even a new programming language. I’ve always been shocked by how quickly the senior devs I work with were able to pick up new languages and not just pick ’em up but really understand them. I’ll be sure to get an update on that next time I sit down with Colleen. Let’s shift gears a bit and talk about hiring. In a recent email Colleen sent me, she wrote, I hired a new developer. He’s awesome, but the hiring was terrible. I’ve hired in the past and I have a process I’ve used that didn’t work out, so this time I did it properly and it was a huge pain, but totally worth it. Let’s find out what exactly was so horrible about the hiring process, including what she’s tried in the past and what she did this time around.  

Colleen Schnettler:
So what I’ve done in the past is, this is embarrassing to admit, but it is what it is. I basically said on my podcast, which was relatively popular, that I was hiring people Twitter DMed me or emailed me and I said, that seems great. And we just started working together or someone, a friend of a friend was like, Hey, I’ve worked with this person. He’s great. I said, okay, cool. I just hired them with no thought, rhyme or reason to if they were a good fit for what I was trying to do. It was a good, I mean, you think about this in terms of learning so much of this startup journey For me even I’ve only been full-time on the business for two months and I just feel like I’m learning at this incredibly accelerated rate, and so I try to look at these experiences as learning experiences instead of, holy cow, why did I do that? That was stupid.  

Rob Walling:
Oh yeah. Oh, it’s absolutely a learning experience and that’s one of the reasons we’re on a podcast right now is so that people listening will hopefully not make the same mistakes that you’ve made that I’ve made. What is the old quote? It’s like a wise person learns from the mistakes of others, and I feel like, yeah, learning you’re doing is a greatly accelerated pace once you’re full-time focused on something and you start doing new things that maybe you haven’t done in the past. So what was the new process then? Posting a job description, doing interviews, all that.  

Colleen Schnettler:
Yeah, so I heard about Dan Martel’s book on your podcast actually. So I bought the book, I read it in a weekend. So I was feeling real inspired and then I took a more measured approach to it, and I think the biggest thing that didn’t work out with the early people I hired, they were all wonderful. There was no problem except that I had not set expectations, 

And at some point, I don’t know, I expected ’em to read my mind. I don’t know what I thought they were going to do with no expectations, and so I just hadn’t written down what I really needed when the person didn’t deliver what I really needed, and then I’m talking to him two months later. Of course, it didn’t work out. There’s no way this time I started with a proper job description, here is what I really need. And I posted that job description on a couple rails, job boards, got tons of applicants. It was amazing. That’s good and bad though. Then you have to go through them all.  

Rob Walling:
I know what that feels like. Yeah,  

Colleen Schnettler:
Got tons of applicants. And one of the things I did is I put a really, I don’t want to say easy, but I put a little coding challenge two liner in the form, in the application form just to weed out people who actually were paying attention. And so yeah, I went through all these job applications. I did intro calls with seven people, and then I wrote up a coding challenge and I gave the coding challenge to four people, and then I selected one person based on that. But even things like a coding challenge, you’re like, man, this is kind of a pain. What do I do to come up with what’s relevant to come up with? And just the logistics around that. You got to come up with something, but I didn’t want to just grab something off the shelf. I wanted something that was specific. 

What we do is very specific, and one of the things I was really filtering for was communication, because I work with this person really, really closely. So how do you communicate? How far do you go when you have an issue before you reach out to me? So I made a custom coding challenge, and we do a lot of stimulus and hot wires, so I needed to make sure they actually had stimulus and hot wire knowledge and things like that. So it did work out, but it was like I’ve been color coding my days, energy levels, green, yellow, red. That was a lot of red that week.  

Rob Walling:
Rob, I can imagine. I want to touch on a couple things that we talked about there. One is I don’t want it to come across, it’s not okay to out of your network because it is, I’ve done it. I’ve had it work. Tracy Osborne, TinySeed program manager, was a microcom speaker in 2016 and kind of was in the orbit. I didn’t know her very well, but we had a full job description. We posted it publicly. We got a bunch of applicant. She was one, and I was like, Ooh, I think this could be a winner. But then she went through a full interview process, you know what I mean? She went with an upfront and a second, and then there was an offer letter. Everything was as official as if we did not know her. And so I want a listener, speaking of learning from mistakes or experience for me when we hire today, like producer Ron who helps produce this podcast in our YouTube channel. He has been a tenure listener of startups For the Rest Of Us, for example. So he is in our community in essence, but full hiring process. So I like hiring out of your network. I just think you want the officialness of it because as you said otherwise you don’t exactly know what you’re getting and maybe you’re doing the candidate a disservice a bit.  

Colleen Schnettler:
Well, I totally agree. Well, hopefully I’ll be hiring again someday, and I will go through, I mean, if I’m hiring someone in my network, I’m not going to go through interviewing 35 people or whatever, but I will go through the process of a proper job description, proper expectations of engagement, coding, challenge, the whole thing, because I think you’re right. Even when you hire in your network, it’s good to go through that entire process so everyone knows what’s going on.  

Rob Walling:
So with hiring comes managing, you’re managing a team. Have you managed a team of developers before? What’s that like for you?  

Colleen Schnettler:
I have not. And it’s been interesting because I’m a very likable person, people like me, and I guess I thought that would magically translate into being a good manager, and spoiler alert, it does not. Yeah, I have really struggled with figuring out how to manage people, what the right cadence is.  

Rob Walling:
I find that being nice. I consider myself similar. I’m a very likable person. I’m amicable. I had to get over the fact. I started managing, I’m trying to think. I was probably 29 ish years old, which is for me was young. I took me a while to mature. I was too nice. I didn’t know how to give negative feedback. I feared giving negative feedback. That is something for people who are pretty amicable and get along with everybody to get in a meeting like this and say, I love working with you, but you drop the ball on this, or I need you to do better in this area. Let me help you. It somehow feels like you’re being mean. I think we’re trained not to say bad things about people. I think we’re trained not to tell people they’re not doing a good job, and yet that’s what you have to do as a manager. And that’s one thing that I have as I’ve hired people who haven’t managed, and I mentor them into being managers. This is what I tell them is, you’re going to build great rapport with the folks who work from you. They’re going to, you figure out a way to help them improve, to help them get better, and in order to help them get better, you have to point things out that they’re not doing at the top of their game.  

Colleen Schnettler:
That is a hundred percent my problem. I worked back in the pre 15 years ago, I worked at a Fortune 500 company, and it was the kind of company that had meetings just to plan the next meetings. So I came out of that experience being like, we don’t do anything at this company except have meetings. So I am never having meetings. There will be no meetings. Well, here I am wanting to have meetings with my developers. So yeah, it’s a super learning process. I am trying to figure it out.  

Rob Walling:
So speaking of meetings and how much, I hate meetings as well, I never liked one-on-one meetings. So when I was a developer, we do these one-on-ones with your boss or your supervisor, and I was always like, this is such a bold, can you leave me alone so I can go write I code to write? I don’t want to talk to you about my feelings. And then I had a team of 10 and I was doing no one-on-ones, and I realized, oh, no one’s going to just come and tell me when there’s a grievance or when they feel bad, they’re not going to initiate a lot, especially introverted developers don’t want to rock the boat, don’t want to, whatever. For whatever reason, they don’t have the opportunity for it. And I realized I have to do one-on-ones. And so if you have senior people, I do monthly one-on-ones. 

If you have mid-level, usually it’s every two weeks, whatever the cadence, but that one-on-one then is the time every two weeks or every month for them to talk about their performance, for them to talk about, to make sure that you’re guiding them well, and then for you to talk about their performance and to compliment them like, you did an amazing job here, here, and here. And then to say, Hey, so we shift a bug to production that broke our trial flow. Obviously we need more process to not do that, but talk to me about how that happened. Let’s talk it through. The idea behind them is that it forces you to do it, otherwise you’re never going to do it. You’re not going to think, wake up today and think, man, I should really talk to so-and-so about how they’re dropping the ball. It’s like, I don’t want to do that. How are you thinking about getting better as a manager? Do you have any friends, mentors? Do you have any books that you plan to read?  

Colleen Schnettler:
Well, I am challenging myself to be more, I dunno if assertive is the right word, but as you described, to be more honest, I was socialized or whatever. I am bad at giving negative feedback. It’s funny because I’m always kind of tiptoeing around the issue, and my co-founder is actually great at emotional intelligence. And so Aaron, and I’ll be on the call and he’ll say this thing to me where he’s like, what’s the subtext you’re not saying? And that always makes you be like, oh, what is the thing that I’m not saying? I don’t want to hurt your feelings. And so I’m trying. But honestly, I don’t really know. I mean, I’m just trying to be better. We weren’t having regular check-ins. Now that I have this team of three, I’m trying to do regular check-ins with everyone and give them an opportunity to speak, but also be more assertive, like I said, in terms of being like, Hey, you’ve got to hit this deadline. 

If you’re not going to hit this deadline, I need to know before the day of the deadline. We’ve got to communicate in such a way that I share my expectations with you and you give me feedback on whether or not those expectations can be met. And I do read a lot of books, so I just read Never Split the Difference, which is technically a negotiating book, but just felt kind of like a communications book. So I’m trying to take some of those tactics into place when speaking to my team. It’s hard too, because if you think of the success of a business, the success of a business, I think you’d know better. But it depends on your team. I was reading a bunch of stuff from the Netflix guy, and he talked about how he goes in and fires all the B players, because if you want to build something excellent, you need a team of excellent people that can work together. But also, it’s hard coming in from a tech side like, ah, managing’s not that important. How hard can it be? Do I really need to learn how to do this? So it’s kind of an interesting juxtaposition between being a technical person trying to run a business and appreciating the importance of a good team. And one of the things I was doing in the early days of a team was I was so worried everyone was going to quit 

Because good developers are hard to find and hard to retain. And so instead of unifying people behind a shared vision, I was trying to let everyone do whatever they wanted so they wouldn’t quit. I wasn’t a real fear. No one quit, but it’s just you have all this stuff, these subconscious thoughts about how do I keep these people happy? So they enjoy working here. So they have that intrinsic motivation while also telling them when they’re not performing up to standards.  

Rob Walling:
That is it. That’s the difficult balance. The interesting thing is you don’t need to be a good manager in the near term. You can hire people, you’ll do fine for six months, you’ll be fine for a year, but in the long term, if you want to grow this larger, you will start to lose people if things are poorly managed, frankly, especially as the team gets bigger and especially the longer people stick around, they just get tired of it. As we wrap up, what’s the one thing you’re most looking forward to between now and the next time we chat?  

Colleen Schnettler:
I am super excited about this whole reporting MVP pivot. Like Aaron has all these cool ideas about what it’s going to look like, and by the time I talk to you next, we should have this. I mean, it won’t be done done, but we will have a solid functional MVP that we can start really picking up and showing to potential customers. So that is definitely what I’m most excited about.  

Rob Walling:
Love it. That’s awesome. That’s the next milestone. I’m excited for you too. Thanks. I am excited to see where Colleen, Aaron and Hammer Stone are. The next time we talk, we’ll learn more about their progress on the reporting MVP pivot. Find out how Aaron’s Rails skills are developing and dive even deeper into Colleen and Aaron’s ongoing journey with Hammer.

Rob Walling:
You’re listening to Startups. For the Rest Of Us, I’m Rob Walling. In this episode, I have a Laura Rotor founder of Paper Bell. Join me on the show to answer listener questions. We talk about making your first hire, testing prices, and a bunch of other questions related to mid to later stage bootstrapped and mostly bootstrapped SaaS founders. Before we dive in to today’s questions, wanted to let you know about something that my team and I at TinySeed have been working on for at least six months in the background. And it’s a premium private coaching community designed for B2B SaaS founders making at least 1 million in a RR or more. It’s called the SaaS Institute. And if you want to find out more, head to SaaS institute.com, enter your email address. We’ll be trickling out more information in the coming weeks and over the next few months, we are keeping the initial group very small. So if you’re interested in applying to potentially be part of the first cohort to get expert coaching, mentorship and community for high level SaaS founders, head to SaaS institute.com. If you’ve been watching what we’ve done with TinySeed over the past five or six years and thought to yourself, I could really use some community and mentorship and advice, but I don’t necessarily want to raise funding and or give up equity. That’s why we’re launching the SaaS Institute. And with that, let’s dive into listener questions with Laura Rotor. 

Laura Rotor, thanks for joining me on Startups For the Rest Of Us.  

Laura Roeder:
Yes, for the third time apparently fourth time.  

Rob Walling:
The  

Laura Roeder:
Fourth time,  

Rob Walling:
Yeah, so back in 2013, episode 1 43, how to hire like a Bootstrapper with special Guest Laura Rotor. And then two episodes in 2019 where I interviewed you about it must’ve been Edgar.  

Laura Roeder:
Yeah,  

Rob Walling:
It was about Edgar, it’s seller growth platform risk layoffs and powering through roadblocks. That sounds like the summary. That  

Laura Roeder:
Sounds like Edgar. All the  

Rob Walling:
Things. All the things. And then you sold Edgar in 22, I believe, right? A couple years ago.  

Laura Roeder:
Yeah.  

Rob Walling:
You have a good blog post about, that’ll link up in the show notes. And then December of 2019 you came on to answer listener questions. So today you are working on Paper Bell. Is that paper bell.com? Do you have the.com?  

Laura Roeder:
Yes.  

Rob Walling:
Very nice. You want to tell folks what it is, how long, the history of that, how long have you been working on it?  

Laura Roeder:
Yeah, so Paper Bell is a bootstrap sauce that’s been around for four years. We’re in the seven figure annual reoccurring revenue range and it’s a tool for coaches like life coaches to run their business. So it has their website, their scheduling, their payments, client comms, all that stuff.  

Rob Walling:
And how big is your team?  

Laura Roeder:
Very small. So we operate on all mostly freelancers and part-timers. So we basically have two developers, two customer service people. I have a project manager that works with me in marketing and freelancers.  

Rob Walling:
Very nice. So you have a lot of experience across the board, bootstrapping, hiring, all the things. We have some good questions for you and I to bat around today. First one is from Ryan King and Ryan says, Hey Rob, thanks for your advice on selling my company at the end of 2022. The sale didn’t happen in the end, but I found my feet and I’m working on trying to grow again. I have an intermediate startup question for you. I’m trying to transition from a one person company where I do everything to having a team. Your book, I think it means a SaaS playbook, explores the idea of who should be your first hire, but I’m interested in that in-between phase where you have some excess profit but not enough to make a full-time hire. My SaaS produces an excess of about $2,000 a month. At the moment, it’s not much, but I’ve been trying to use it to hire freelancers to work on the project, expecting it to buy me time to work more on marketing and sales. But it’s been a very frustrating experience and I’m not sure I can find someone reliable at that price point. I’m looking to try something new and I’m interested in hearing how you would utilize a small amount of funds to help grow the company if you were in a similar situation. Well, Laura, I think both you and I have been in this situation, so what’s your advice for Ryan?  

Laura Roeder:
Customer service is just the first thing that instantly comes to mind for most businesses. Customer service is either takes up a lot of time or even if it doesn’t take up a ton of time, it’s a constant distraction, which I don’t know Ryan’s business, but the fact that he’s not immediately running to customer service makes me wonder if he has one of those businesses that doesn’t have a huge support load. So maybe he’s thinking, ah, I don’t have to do that much customer service. It’s no big deal. But the problem with customer service is that it’s 24 7 and if you are a solo founder, you’re usually kind of having it on in the background all the time is kind of how I’ve seen most people operate. So you can get a customer service person or full-time depending on where in the world. For 2000 for sure. 

Obviously you can scale up the pay and scale down the time. You can get someone more experienced and have them in less hours. So that’s just kind of my immediate thing that for most businesses would save them a lot of time. The other one that I would think to look to is just kind of a general virtual assistant can be a really, really good hire at this stage. Lots of great people for around 10 to 15 an hour USD. You can find someone really good who knows what they’re doing from various parts of the world. And yeah, maybe they’re helping with stuff like customer service, maybe they’re helping with, it’s just kind of the admin grunt work stuff. It could be marketing stuff, customer service stuff. It could be techier stuff that’s more just grunt work instead of requiring deep knowledge. There’s usually a lot of that that can be taken off a founder’s plate.  

Rob Walling:
Yeah, I like that. The virtual assistant thing, if you want to read more about that, buy Back Your Time by Dan Martel I think was a really good book talking about how to think through that. Where do you hire? Are you an Upwork person? Where would you look for someone like this?  

Laura Roeder:
Yeah, good question. So I have a virtual assistant type of person. I have found before on platforms like Upwork or Fiverr. If you look for the more expensive people on those platforms, especially Fiverr, if you’re looking at the most expensive person on Fiverr, that can be a good way to do it. And especially if you have some kind of specialty that you’re starting with. Let’s say you do a lot of video editing. You’re like, okay, I’m going to look for someone who has that skill listed on those sites and then they can do other VA stuff. For me, for customer service, I would probably look more towards, a lot of it is regional. So if you’re looking in the Philippines online jobs.ph, like oldie, but a goodie still kicking  

Rob Walling:
Back in the day. Yep.  

Laura Roeder:
Yeah, it’s still around. There’s a site called Job Rack that’s really good for Eastern Europe. Obviously there’s tons of those now services that will hire for you and do the placement, but you’re usually paying a huge fee to them. So if you only have 2000 a month, you’ll probably be better off spending your time to source the person directly.  

Rob Walling:
If I’m doing a full-time W2 employee hire, we go through Dynamite Jobs, remote first recruiting just because finding full-time people is so time consuming, but if we’re hiring, we tend being TinySeed and even Drip. Back in the day we tended to go to Upwork and just we had a process, so we filter ruthlessly and we have a pretty good hit rate. It depends on the role, but we’ve had to hire a lot of part-timers, freelancers in the past few years and I think that’s the big, probably my advice for Ryan Echoes yours, customer support, customer success. Well, customer, if you have a low touch funnel where everyone’s just self sign up, I think it’s customer support, it’s email and live chat usually if you have a higher touch funnel, I think a VA or an EA or even customer success for onboarding, if that’s taken a lot of your time, obviously you have to hire part-time at two grand a month, but I’ve done this over and over and over. 

I’ve hired a lot of part-time people and eventually if they’re good I just move ’em to full-time. I hired a book project manager, which I think of the specialization of that role when I was launching the SaaS playbook of there’s so many specialized things you need to know. And I went on Upwork and I said, project manager bonus if you have experience in the publishing industry, and I happen to find someone in South America, she’s amazing. And she totally rocked the launch of SaaS Playbook and then Sherry hired her as her chief of staff, so she now works full-time for Sherry. You know what I mean? It’s just these things, if you find good people, you keep ’em around. The editor of this podcast, I believe has been editing it for 10 years. Andy who did email and live chat support for us at Drip worked the full, he probably worked there. 

He started as a part-timer doing five, 10 hours a week. He was through the whole and was with Drip for six, seven years. Then he worked for squad cast, a TinySeed company for five or six years and now he’s working for another TinySeed company. It’s like they stay in there because he’s so amazing. He’s so good. Anytime I’m like, if you look for a job, reach out to me. I want to place you with a company that I trust. So I think that’s part of it too, is your first freelance hire is always like, Ooh, you don’t have the experience and you don’t have any type of network. But once you start finding good freelancers, it’s almost like keep ’em in your orbit because you may need ’em over your career.  

Laura Roeder:
And I found when you’re looking on platforms like Fiverr and Upwork, my tip would be to pay a bit more, do not look for the lowest hourly cost.  

Rob Walling:
Oh, for sure.  

Laura Roeder:
I have a guy I’m working with through Upwork right now that’s doing, we use Divvy on WordPress, so we kind of needed someone who’s familiar with that system and he’s in Pakistan and he charges 15 an hour. So there’s people in Pakistan who charge four an hour and I’m like, I want the 15 guy. So I think just doing that, if you have 2000, it’s like, yeah, you have some hours at 15 an hour, so don’t feel like you have to just absolutely scrounge and do just the absolutely cheapest person you can find. I found it’s well worth it to work with people that are still very affordable from A USD perspective, but not that bargain basement rate.  

Rob Walling:
Yeah, totally. The other thing that I look for too when I’m hiring someone like this is usually it’s for a focused task or role, like we’ve said, customers service. But once I get to know if they’re good, I’ll say, Hey, what else do you do? What else do you dabble in? And you’ll often find it’s like, well, I do web design on the side, or I used to be a help desk person so I know what FTP is and basic computer troubleshoot. And you just kind of find out what else they know and you can start passing other things off to them that are hopefully within their comfort zone. I don’t look for a unicorn of like, I need a customer support slash marketer slash developer. It’s like, come on, that doesn’t exist except for Derek Rimer. But realistically, if you find someone good, they usually are good at other things too. 

And if you are a limited team, you don’t want to hire someone for each role if you can possibly have someone serve as two. So thanks for that question, Ryan. I hope it was helpful. My next question comes from Mark Krug. He’s the founder of Beta List and Startup jobs and wp.co. And this question comes to us from Twitter X, Twitter. I actually asked this question back in June. I said, what are some more advanced, intermediate and advanced questions? And he responded with, how can I do price discovery for a product where customers know what the others are paying? In my case, it’s a community product, but the same applies to certain markets. And I made a clarification. I said to clarify, do you mean how to raise lower test pricing when new customers know what your existing customers are paying? And he said, yes, specifically how to test different pricing models once you already have a customer base. Laura Rotor, have you tested pricing?  

Laura Roeder:
I have. And I will say people always say, oh, just test your price. And it’s definitely not that easy for lots of reasons, right? I’ve definitely been in that position where we have now 40 different things in Stripe because we followed the advice to test our, and now our tracking’s almost up and we have a million edge cases. It’s never as easy as people make it sound. And he’s bringing up a common concern in price testing, which is like, oh, my customers are going to see that someone else is paying a lower price. Now, I will say that’s usually less of a concern than you think it is. This person mentioned they have a community that their customers are active in. 

So even in that situation, let’s say you have a really active discord that all your customers are on, they’re not spending their time on your pricing page usually because already customers, but sometimes you get, it can happen where you get the one person and they’re like, Hey everybody, did you know that this company now is, we paid 50 and it’s just 40. But if you have that type of community, you’re usually very tightly involved with it as the founder and just be transparent. It’s like, yeah, we’re running a business. This is a test that we’re doing. If it rolls out, we’ll see if we might change pricing for existing customers as well. I think don’t announce it, don’t go into your community and be like, Hey everybody, we’re going to test out a lower price. But it’s very, very rare that you will get any kind of backlash from existing customers. And if it’s one-on-one, we’ll just offer it. So if we’re running some sort of promotion and one of our existing customers sees it, we’ll either offer them that promotion just in an email or we’ll be like, oh, we can give you this. That was just for new customers, but we’ll give you this other discount instead. Something like that. You can just handle it on a case by case one-on-one basis.  

Rob Walling:
I echo all of that. I have tested in quotes because the only company only SaaS company I ever have seen that actually split tested pricing was Zapier. And I’m sure someone else has done it, my HubSpot maybe. I mean there’s a few, but as a rule, you don’t test pricing. You take your best guess and you make the switch and then you roll it back if it doesn’t work. And I have had to do that and it’s not great, but you don’t even mess with existing customers at that point. You just change the pricing page and you say, fingers crossed that this is going to work, and you stare longingly at your numbers for the next seven to 14 days and you’re like, gritting your teeth. Did I just ruin my whole funnel? Terrifying. And if it works, you’re like, okay, now let’s talk about grandfathering versus not. 

Do we raise on existing? Let’s give it a couple months to iron out. Let’s look at our churn. That’s type of thing. And if it doesn’t work and early on, then yeah, you roll it back. That’s the only testing that I’ve ever done. So from the time we started Drip until we sold it, I think it was three and a half years and we three or four different versions of our pricing, I remember there was the V one billing engine and then the V two, V three V four, and one of them switched the pricing model, so it switched from new subscribers per month. We originally, that was our value metric, and then we switched to just subscribers in your account per month once we became an ESP. And then after that, the next two I think were just increasing prices basically. Or it was reducing the number of subscribers, keeping the price points the same, so effectively increasing pricing. And I do remember being nervous each time we did it. I viewed them as a test, but we just did it. And I think pricing, there’s so much to gut feel, and this is where hard decisions with incomplete information. I mean, I know that Patrick Campbell at ProfitWell talks about if you’ve ever seen him do a talk on pricing, it’s like, and we do this survey and you get these lines that  

Laura Roeder:
I’m very skeptical.  

Rob Walling:
Yeah, I’ve never done, I’ve never known anyone to do that except for ProfitWell. And they’re like pricing consultants, everyone else. I know it’s gut feel. It’s knowing your customer. It’s knowing the competitive landscape and it’s being like, well, am I losing some of my, if you’re doing enterprise sales or even just high touch sales, am I getting 10 to 20% that are complaining about my price good, then I’m probably priced accurately. If no one’s complaining about my price, I’m probably underpriced. And if people are saying, oh, you’re so cheap, or I’m way less than competitors, I’m probably underpriced. So  

Laura Roeder:
Yeah, I think he was asking about testing different pricing models. And it brings up one of just the hard things about being a bootstrap business is you don’t have enough volume to test something like pricing model. Your pricing model usually means a completely different backend, right? Testing something usage versus flat rate plans. There’s a huge amount of technical work involved. And for you to be able to maintain both those versions and then actually test ’em against each other, you’re just not going to have to have enough volume to do that. And you don’t have enough volume to test a lot of things. I mean, most things as a bootstrap company. So I think it is really important that you don’t approach this thinking, oh, I have no idea what’s going to work. So we’ll just test different things and we’ll see. You really have to go in with a strong hypothesis of this makes sense. This is what the industry is telling me, this is what customers are telling me. If you have strong evidence that something else makes more sense, sometimes we make the wrong choice. Sometimes we start one way and it becomes apparent like, oh shit, we really should be a usage based company. Then sometimes it makes sense to make that hard switch, but Rob’s saying it really can’t be a test. It needs to be more a pivot to that direction and then throw it all back if you absolutely have to.  

Rob Walling:
Yeah. And before I’ve changed pricing, usually it starts to just feel wrong in my gut of something’s off, what’s off, and then I start noodling in a notebook and then I talk to my co-founder, and then I’ve talked to folks in my mastermind. And these days I would probably go to Patrick Campbell, or he’s busy these days, but marco@pricing.io, pricing io.com. There’s certain folks that I would go to for some advice, and I do think it’s not like, what should I do? But it’s like, Hey, I have these two or three different ideas and I have a leaning, what do you think? And then the person would ask me questions of like, well, I don’t know your competitive landscape. How are your competitors priced? And that’s the kind of stuff with TinySeed companies that I do all the time. The majority of my calls with them are around some type of strategic decision, a pivot or something. And pricing is a big one, and there are rules of thumb.  

Laura Roeder:
So if you’re not in TinySeed, just chat with ai.  

Rob Walling:
Chat with ai. Yeah, say pretend you’re Rob Walling, you can do that now and chat GPT. There you go. And it’s like, okay,  

Laura Roeder:
Patrick Campbell. Yeah,  

Rob Walling:
What’s wrong with, yeah, what’s wrong with my pricing? This is my pricing page. Tell me what’s wrong. Yeah, changing the value metric is a big one. Simplifying. I mean, we do pricing tear downs at the kickoffs for TinySeed, and one of the biggest repeated things we see is too much. There’s too many value. You don’t need three value metrics usually is like, try, let’s try. Why do we have that one? Oh, that’s because a competitor. Nope. Get rid of it. Just make it either unlimited or within reason, within terms of service. Let’s get down to the one thing that really provides the value. So thanks for that question Mark. Hope it was helpful. Our next question is from Daniel Tanner and he asks content, what type of content should you be doing and how do you decide if it’s working? Laura, a tiny small question. What type of content  

Laura Roeder:
I have answer? I have an answer. The content you should be doing first is definitely the content that’s closest to your sale. So what they call bottom of the funnel content. The first thing you want to do with your content is have content for people who are actively looking to buy your thing. When people are typing in, I need a podcast hosting tool, you want content letting people know that you are a podcast hosting tool, let you do all the things. So this sounds kind of basic, but that is actually I think the best place to start with your content, making sure that you’re covering, of course, you said the word content. I don’t really know if you mean are these videos, are these blog posts? Are these LinkedIn updates? But whatever it is, you have to make sure it’s really clear that people know which problems that your tool solve. 

I mean, this could be support docs, right? It’s like you need stuff on the internet that answers people’s questions and tells them what your tool does. How do you know if it’s working? That’s a much harder question. How do you know if it’s working? I think something that’s really tricky about looking at content and broad strokes is we kind of like to do things, look at which content converts. This is something that we will look at on my team. We’re like, oh, which blog posts lead to a free trial signup or an opt-in signup? And I think it’s a little bit of a BSE kind of metric because it’s like, well, is it really that blog post that caused them to convert or is that the blog post they happen to be reading right before they convert. So I would actually advise that you not get too deep in the weeds of trying to pinpoint, oh, this specific piece of content caused this action, but it might be more if you are talking about video LinkedIn blog. Yeah, of course you’re looking at are those driving traffic for us? How are those performing? But to look at it in a more sort of broad strokes, holistic type of way.  

Rob Walling:
Yeah. I’ll start with the attribution. How do you know if it’s working? You do your best. You do the best you can is what it is. And there’s different types of attribution. There’s like first touch, well, how did you first hear about us? There’s last touch. Well, that caused them to convert, which is what you were saying. And then there’s this blended attribution of we’ve had six touch points with them, so each of them gets 15% of the conversion. You’ve seen this in Google Analytics.  

Laura Roeder:
Oh yeah.  

Rob Walling:
And I never used, I would look at First Touch and Last Touch only are the only things I ever looked at. And you do the best you can. Attribution is not as good as it was five or 10 years ago, and it’s probably not going to be as good five or 10 years from now because of privacy and because of Google wanting to sell more ads. So we don’t get keywords provided to us anymore as we did back in the Halon days of SEO. But realistically, even if attribution is only 70% good, 60% accurate, at least it’s something, at least you have some data. The other thing I like to look at is having a, how did you hear about us when people get in the app? Is that foolproof? Of course, not every time we do this with TinySeed applications because I like to see what’s actually driving applicants. And then I can even look at, ooh, these were our 30 best applicants based on our ratings, what drove those the best applicants? And it’s super helpful for us, but inevitably we get people saying, oh, your email list. And it’s like, that’s not helpful to me. How did you get on the email list?  

Laura Roeder:
They’re like, I went to your website.  

Rob Walling:
It’s like, great, but how did you find the website? So it’s not perfect, but it’s better than nothing. That is how I know it’s working. And usually, I mean, I’ll tell you, if you truly are doing an SEO and creating a lot of content, whether that’s written content or videos or tools, I think of building a tool like Ruben does, the free tools, usually it is like 80 20 or even worse. It’s like 95, 5 or 5% of your content catches, and that drives a lot of traffic and well, a lot of conversions, at least in my experience. The other thing to think about is you said what is content? Because I think of it in two buckets, right? There’s onsite, which is like I’m going to create stuff on my website usually to try to draw search engine traffic or to point people to from social media. 

So I go out it’s hub and spoke. The hub is my website. I want people to get there. I want ’em to convert to the email list or convert to a trial. And the spokes are Twitter, Instagram, maybe even YouTube videos, a podcast and whatever, social media. So all of that is content, and that’s why this is a complicated question, is onsite. You totally answered that of look at the five stages of awareness. You can just Google that. I also did a, there’s a talk on YouTube. It’s something like, this is the best content marketing strategy I’ve ever seen. It’s on the Microcom channel. It’s a talk I gave, and I talk about creating content from unaware to problem aware, solution aware, product aware, and most aware. And you started this answer by saying, start with product aware and most aware, which is exactly what I say in that talk, and then work your way up. So onsite. I think that’s correct, offsite. Should I go on Pinterest? Should MicroConf and TinySeed be marketing on TikTok? No, because our people aren’t there and they’re not being, but our  

Laura Roeder:
People are on Pinterest. We direct traffic from Pinterest. Yeah,  

Rob Walling:
Exactly. So then the question is, should you be creating Pinterest? Well, of course, because where your customers are. So that’s the question I would throw back to Daniel, is figure out where your customer, are they on X Twitter? Are they on Instagram? Are they on YouTube? That’s how I think about it.  

Laura Roeder:
And I would say keep it obvious. I think people often overthink this and over this, our customers are on Instagram is the main place because Instagram has a massive user base. Don’t try to get cute and clever with these little niche. I mean, sometimes there’s a niche community that’s super relevant to you. If you’re only for Ruby on Rails developers, be on those forums and lists and whatever, but don’t mark it on Blue Sky. It just launched. Hang out there for fun. If you want to mark it on LinkedIn, on Instagram, on Reddit, if that’s where people are, YouTube, lots of people on YouTube. Just don’t overthink it. Go for the most obvious ones where your customers obviously are.  

Rob Walling:
The biggest ones are usually the ones where there are the most people by definition. So I was skeptical two or three years ago. We were talking, what’s the next thing we’re going to attack for MicroConf audience building. We have the podcast, it grows, it grows really slow as podcast do. And I was like, YouTube, I think it’s going to be a bunch of 20 year olds. I see my 18-year-old just sipping through Minecraft videos and I was pretty skeptical. But then we did see other channels. Dan Martel had a channel and a few others that were talking about SaaS and had some reach. And so we were convinced of that. We were deciding between YouTube and TikTok at the time, and I went on TikTok and I was like, no, no, no. I don’t know that TikTok will ever, ever be for MicroConf TinySeed, but YouTube turned out to be really good. So thanks for that question, Daniel. I hope it was helpful. Next question is from Noel Gomez. He is a TinySeed founder. He asked on Twitter, given limited time and resources, Hey, that’s bootstrapping. How do you prioritize where to focus and invest to grow your pipeline? So specifically to generate new leads? How do you do it, Laura?  

Laura Roeder:
Yeah, this one is interesting. He uses the word pipeline. So this makes me think it’s a sales situation.  

Rob Walling:
Enterprise sales, he has a really big, big ticket.  

Laura Roeder:
So I mean the obvious one is just LinkedIn. I mean, that’s where the vast majority of people are doing it. I know LinkedIn are the big thing right now that are apparently getting a lot of eyeballs and a lot of awareness. So we talked about being on the biggest platforms, LinkedIn, Instagram, YouTube, depending on where your people are. And then I think if you’re kind of breaking down those platforms, you want to do what the platform wants you to do. And so usually they will have these new things that they’ll give a lot of visibility to. Newsletters are a new product from LinkedIn, so they are giving a lot of visibility to newsletters. The reason so many people are succeeding on LinkedIn right now in general is because LinkedIn’s trying to get more active users hanging out on LinkedIn. So they’re actually showing people what you post in the feed. 

Like 15 years ago, you could post things on a Facebook page and that would show in people’s feed because they were promoting that, but that time is long gone. So it’s kind of a tricky balance. It’s like you want to be on the mainstream trends. You don’t want to be on something before. No one else is there yet, but if it’s a big platform, it is good to be on whatever that platform is pushing, which is why on Instagram and TikTok, people are often jumping around between stories and reels and whatever the latest thing is, but it actually kind of does make sense to be on whatever the latest thing is because you want to be buddies with, don’t go against Instagram, do whatever Instagram wants you to do.  

Rob Walling:
And I think the overarching thing that I think about is as a bootstrapper with limited time and resources, I would make a list of all of the marketing approaches that I wanted to try, and then I would pick the one I thought was going to work and I would work on it and focus the thing. I think if you try to do content, SEO, LinkedIn, Twitter, Instagram, Pinterest, try to do all these things, you’re just not good at any of them and you don’t learn how to do them well. You’re just throwing stuff into the ether. Even with MicroConf TinySeed where we have budget and we have a team, we pick one new thing to attack, and we did YouTube for two and a half years and then until it plateaued around 90,000. And then we are looking at LinkedIn next and we’re going all in. 

We hired a LinkedIn consultant. We are spending thousands of dollars a month, many thousands to edit video and to create carousels and to do this stuff and to do, there is a LinkedIn playbook and kind of all the LinkedIn consultants say the same thing. This is what’s working right now. So that’s what we are going to do in the new year. For us. Audience building is a thing. What Microcom and 10 C Thrive on, it’s built around the audience. If you’re doing enterprise sales, I don’t think you should build an audience at all. It should be all about it’s selling. I think of the big, I call ’em the big five marketing approaches, which is the ones that B2B SaaS companies, especially Bootstrappers use the most, which is like content, SEO, cold outreach in-person events. Number six, actually pay-per-click and integrations and partnerships and then in-person events is in there as well. 

All of those depend on your annual contract value. Are you high touch or low touch, right? So with Paper Bell, you would never do, I shouldn’t say never do in-person events, but it would be a stretch. Your A CV is too low. It would have to be a really a big event with a lot of people for you to be like, I’m going to make this five grand back in signups. Versus Noel, since he’s a tint company, I know that they could literally get one customer from an in-person event and it would totally pay back whatever sponsorship they paid. So that’s how I do it is I take a guess and usually I want to do one that’s slow and one that’s fast, meaning s content and SEO is usually slow. It’s going to take months and months and months to pay off. And so what’s the fast thing I can do? 

What’s the thing I can do to get a new customer tomorrow? It’s like cold outreach. Either AdWords or Facebook are the two big ones, or Capterra, Capterra G two. So it’s like, can I run some ads and spend some money, a high A CV and also be doing content SEO, or am I gifted on the microphone and there’s a bunch of podcasts and YouTube channels in my space? Do I want to go on a podcast tour or a YouTube tour and try to get on all those things? Maybe in your space there is, and maybe it isn’t. If it’s enterprise sales, it might not be, but that’s always the question is how do people market and sell in your space? How can you do it well? Where are your customers and how do you find them is really the fundamental way I think about it.  

Laura Roeder:
The other thing that comes to mind is the book Ultimate Sales Machine by Chet Holmes. I think it’s called the Dream 500  

Rob Walling:
Dream 100,  

Laura Roeder:
100. I  

Rob Walling:
Memorize that whole chapter,  

Laura Roeder:
And it’s just like, what would be your best a hundred customers? Write ’em down and call ’em. And it’s like, oh yeah, that is the most, and it’s like you’re saying, I do see a lot of founders that should be doing one-on-one sales trying to do more broader marketing stuff because it’s more comfortable. For a lot of people, they would rather be a guest on a podcast than they would go walk the floor of a sales convention and talk to a bunch of people, but the podcast is not going to get them customers. And the convention is, so the beautiful thing about the Dream 100 is it just cuts straight to the point. It’s like, who are your best customers? Have you call those people?  

Rob Walling:
And what I like about that book, if you’re listening to this and haven’t read the Ultimate Sales Machine, that chapter specifically talking about the Dream 100, it’s like make the list. And of course this is for selling. I think it’s selling stuff that’s like hundreds of thousands or millions a year. It’s really high ticket sales. So maybe for you it is Dream 500, but it’s make the list and then you call them and then you follow up, send them something in the mail. And these days, then you’d ping them on LinkedIn and then you’d send ’em an email and then you’d send them a physical thing. Do you remember this? It’s Lumpy Mail. It’s a lumpy mail where the physical object in an envelope, those don’t get thrown away. They open it up and they’re like, oh, it’s a tape measure that says, look how Data Coves helps you measure your result or whatever. 

It’s like a goofy cheesy thing. Data Coves is Noel’s startup. And so does this take time, attention, money, focus? It does. But if you’re selling big ticket items, this is how when you do run into that person at a conference, they’re like, I’ve heard of you guys. How have I heard of you? And it’s like, I’ve just been around. Retargeting is the other thing actually I want to throw in. If you are not doing retargeting, it is the cheapest advertising. And you can retarget what? You can do it on Facebook, you can do it on the Google network, and you can do it on YouTube. And a friend of mine had the YouTube tracking pixel, which I guess is just the Google tracking pixel and had this 32nd ad spot that was highly produced. And their customers or their prospects that they would talk to are, you guys are everywhere. You must be huge. You’re advertising all over YouTube. I see you all the time. And he was like, oh dude, we’re retargeting you. And so each of these takes time and money. Are you doing retargeting with Paper Bell?  

Laura Roeder:
Well, you know what I recently learned, this is kind of a new thing, is that on Meta, so if people listening haven’t used Meta Ads slightly, you don’t choose any targets anymore. You just do. The way that all the biggest spenders on Meta do It now is just to use Advantage, what they call Advantage Plus, which is just like Meta Do your thing. And what I recently learned is they also do retargeting automatically. So you actually, I mean you still can if you want to, but you no longer need to set up retargeting campaigns because obviously you have your website pixeled, and obviously those are smart people to show your ads to. So Meta just does it for you now. So we do.  

Rob Walling:
That’s interesting, man, how far this all has come. I remember spending so much time to figure out retargeting on the, and is it do on Google? And then is it working on Facebook? And then yeah, I feel like this question is like, how do you grow your pipeline? We could do an entire course on it. We could do an entire book on it. And a lot of the answer is, well, it depends on are your high touch or low touch? Where do your customers reside? I mean, I think these are the exercises that I would be going through. I would also, I like spying on competitors. Where are competitors running ads? What ads are they running? Go into HRES and say, what are they targeting with SEO? Can I do that better? Are they on Capterra? Are they doing integrations in partnerships? Who have they integrated with who’s promoted them? 

Each of these marketing approaches, I list 20 of them in the SaaS playbook. And you can go down and one by one Look, are competitors at events? Are they sponsoring events? It’s like asking that question. Now. I’m not saying just because they’re doing it, it’s working, but at least it should be on your radar that it’s a possibility in your space. So thank you for that question, Noelle. I hope that was helpful. Laura Rotor, thanks for joining me on the show. If folks want to keep up with you, laura rotor.com and of course Laura Rotor dot B Sky Social on the socials.  

Laura Roeder:
I’m making blue sky happen. Come, I want everybody to join me. Come join me. Indie SaaS people. We are hanging out on Blue Sky now.  

Rob Walling:
You’re a fan. Yeah. I don’t know if you listened to the episode of this podcast that went live today just a few hours ago, was Hot, take Tuesday, and it was Tracy a r. And really it was the two of them debating whether Blue Sky has legs, and so a R’s like, Nope, not doing another social media. And Tracy’s in your boat of Blue Sky all the way. I’m making it happen.  

Laura Roeder:
So is this, every Tracy’s positive, a ans grumpy, but every debate,  

Rob Walling:
That’s pretty much every conversation. Yep. So thanks again for joining me, Laura. It was great.  

Laura Roeder:
Thank you.  

Rob Walling:
Thanks again to Laura for joining me on the show. Hope you enjoyed as she and I dug into some really good listener questions today. Thank you for coming back and listening this week and every week. This is Rob Walling signing off.

Rob Walling:
What’s that? You say? Startups For the Rest Of Us on a Thursday? Well, starting this week and for the next eight weeks, we’re going to have episodes of TinySeed Tales Season four in Your Feed every Thursday morning. If you’re not familiar with TinySeed Tales, it’s a narrative style season based show where I interview a founder as they try to find and optimize their product, finding product-market fit, scaling, finding escape velocity, et cetera. These nine episodes have been recorded over the past two years, so I want you to think about that. Entering into this adventure, you’re going to see a startup founder’s journey over two years, but you get to hear it in about nine weeks. The idea is to give you some insights into the ups and the downs, the struggles, the victories, and the failures of a real startup founder growing a real SaaS company that was bootstrapped until they took some money from TinySeed, so they’re still mostly bootstrapped in my parlance in season one of TinySeed Tales, I interviewed Craig Hewitt, the founder of Casto, who you’re probably familiar with at this point. 

He’s been a recurring guest on this show. In season two. It was Brian and Scotty, the husband and wife, pear founders of Gather, and season three was Tony Chan from Cloud Forecast. In this season, we’re following Colleen Schneller, founder of Hammer Stone Dev, which in the middle of the season, rebrands to Hello Query. It really is a wild ride. It’s a testament to the fight that it takes to make it down the hard road of starting a SaaS. If you’re not familiar with TinySeed, it’s the startup accelerator that I run for ambitious bootstrapped SaaS companies, the first accelerator of its kind. We run applications twice a year for folks who are bootstrapped and want the perfect amount of funding. A community of like-minded, ambitious, bootstrapped founders, advice, mentorship, and everything else you’d imagine would come from a world-class accelerator. Our next application period opens on February 10th and closes on February 23rd. Head over to tiny c.com/apply for more info. So with that, let’s dive into season four episode one of TinySeed Tails.  

Colleen Schnettler:
I was ready to go back to work and I wanted remote work. I didn’t know anybody who was doing this. It felt like this pipe dream, like this unobtainable pipe dream. There is a world where you can make six figures working from home, it seemed impossible.  

Rob Walling:
Welcome back to TinySeed Tales, a series where I follow a founder through their struggles, victories, and failures as they build their startup. I’m your host, Rob Walling, a serial entrepreneur and co-founder of TinySeed, the first startup accelerator designed for Bootstrappers. Today we’re kicking off the first episode of season four of TinySeed Tails with developer and entrepreneur, Colleen Schneller.  

Colleen Schnettler:
My name Colleen Schettler and I am the co-founder of Hammer stone.dev.  

Rob Walling:
To give you context, hammer Stone is the name of the company, started by Colleen, a skilled Ruby on Rails developer and her co-founder Erin Francis, an expert in Laravel development. The idea behind Hammer Stone was to build a company that specializes in creating developer tools with small, easy to use components that simplify the process of building software. What sets this company apart is that while both Colleen and Aaron are technical co-founders, they each have different coding stacks. Something that becomes particularly relevant when discussing their flagship product Refine. Refine is sold as a single product that exists as a drop in Visual Query builder, but REFINE is actually two completely separate products due to the fact that they offer a version for Laravel and a version for Ruby on Rails. This relatively unique approach allows Hammer Stone to cater to a wider audience of developers. How did we get here where you have two separate products under the same name?  

Colleen Schnettler:
So this is kind of a good story. My co-founder, Aaron, he was working for a tax property company and they kept getting asked for custom reports and so he built out this custom component, this Laravel and View query builder and kept the IP in his contract and decided he was going to start selling it in the Laravel space and then a huge company in the rail space. So we’re talking hundreds of millions of dollars a year. A RR came in and said, we want this for Rails, and he’s not a Rails developer, so he hired me as a consultant. So I joined, I didn’t join him, I worked as a contractor for him for this big enterprise client. I did that for about eight months. I built out the product, then I thought our contract was over, so I went and got a full-time job and then two months after that, the original enterprise client said, no, we need full-time support on this product. And so I quit my full-time job after three months and became a full partner in Hammer Stone.  

Rob Walling:
That’s super interesting, not only the way that you were brought on as a consultant and are now a co-founder, but in the way that you’ve been able to keep the ip, both Aaron in his initial and then you with the Rails version, that’s atypical. How did that come about? Was it just we want to keep the ip, okay, here’s a contract or was there negotiation around that? Because I would imagine if I ran a company and I was hiring you to build something for me, I would tend to want to own that code if I was paying for it.  

Colleen Schnettler:
So this company was doing a complete rebuild, so the timing was excellent for us. They were doing a complete rebuild of their product and they’re also using a Ruby on Rails framework bullet train. That’s an open source framework. So their philosophy is keep their team lean and small. I mean, they have 50 engineers, so I don’t know that it’s that small, but keep their team lean and basically use off the shelf components for everything they can. And honestly, rabbi, I kind of think that they’re doing hundreds of millions of dollars in business. They don’t care if we do 5 million a year. They don’t care. It’s critical to their app, but it’s also kind of like a boilerplate thing that is not a distinguishing feature.  

Rob Walling:
I’m fascinated by the fact that Colleen’s enterprise client is disciplined enough to focus their attention on what they do best. It’s not often you see a company with that kind of mindset. Usually large companies try to make everything themselves believing that it’ll be faster or more cost-effective than buying an existing solution. In reality, that’s not usually the case. It takes months or in some cases years to develop software in-house and the results are often pretty mediocre, which is why this enterprise client’s approach is probably the right way to do it. It sounds like they’re focusing on their strengths. There’s another inspiring example in Colleen’s story about how she became what she likes to call an atypical founder. You’re a Rails developer.  

Colleen Schnettler:
Yes.  

Rob Walling:
Did you go to school to learn how to code?  

Colleen Schnettler:
I did not. I am a self-taught Rails developer.  

Rob Walling:
How’d you get into it?  

Colleen Schnettler:
Well, I was a stay-at-home mom. I had three kids under five or something, so I’m dripping with children and I wanted flexible remote work, and this is back in 2014 before covid. Before that was easy to find and honestly at the time I didn’t know anyone that had flexible remote work except this idea of software developers. And so that’s what I decided I wanted to do. So back in, gosh, 2011, I think I published an app to the iOS app store. That was my very first foray into software development and I made $60, but you have to pay a hundred dollars to be in the app store  

Rob Walling:
Net loss on your first product. That’s  

Colleen Schnettler:
Great. Net loss on my first product, and again, this was crazy time, my husband’s in the service, so he’s gone a lot. He deploys a lot. Little kids were, I was home with little kids, and so I thought, not everyone needs an iOS app, but everyone needs a website, so I am going to learn how to make websites and Rails was the hotness. Even though Rails maybe isn’t the hotness anymore, I still think it’s the right place to start. It’s a very descriptive framework. I don’t want to say it’s easy to learn. It’s not, but you can learn. There’s enough in there that you can learn following a lot of tutorials and publish stuff to the web. And so I just started doing that and then I worked for free. I mean, I did all the things they say you aren’t supposed to do. I worked for free for a year until eventually I got my first consulting job,  

Rob Walling:
Self-taught Rails developer and a military spouse with three kids at home. That’s almost the definition of an atypical founder, which is a term that you’ve discussed at length with your co-host on your podcast. Colleen’s path to building a startup is perhaps a bit non-traditional. Dig deeper into her story and find out what led her into tech.  

Colleen Schnettler:
Well, desperation breeds discipline. I think that, I mean wasn’t desperate. It’s not like we couldn’t put food on the table, but I was ready to go back to work and I wanted remote work, and that is what is so interesting to me too, is I didn’t know anybody. I didn’t know anybody who was doing this, so it seemed like I can still remember what it felt like. It felt like this pipe dream, like this unobtainable pipe dream. There is a world where you can make six figures working from home. It seemed impossible. And so for me it was a grind. I mean, I just would grind. I would listen to, I’d do the dishes and listen to the Code Newbie podcast, which was very popular at the time, excellent podcast. And then I’d work every night trying to teach myself Ruby on Rails from eight to 10:00 PM and I just did that for years. 

The thing that I would like to tell people is it’s not easy. I hate when you go on the internet, and I think we could probably make a lot of these same analogies with business building. You go on the internet and you read. If you Google Learn to code, you’ll see all these articles where people are like, oh, I spent four months and now I’m making $120,000 working from home, and that just doesn’t feel like reality for most of us. And so I kind of had to learn that, but I am the most persistent person on the face of the planet. But it was a grind. But one more thing I want to say about it. It was a grind, but it changed my life. I would do it again in a heartbeat, a hundred percent worth it.  

Rob Walling:
I feel the same way about software development. I’m also, I was a kid. I had the luxury of my parents were able to afford an Apple two E in the 1980s and I wrote code because we couldn’t afford to buy any games for it, and so it came with a book. I speak basic to my Apple and I learned basic programming, and then we started, I know it’s sad, but it’s a history. I was eight years old and it was the first code I ever wrote and it absolutely changed my life. The entire trajectory of what and what I’ve built today is based on that got me into tech. That is what got me into tech. After I graduated from college, I worked construction, but I had this coding knowledge from 15 years prior and all those nights and weekends of doing it then. And then I had to reteach everything because Basic didn’t do anything 

In the late nineties. So I went to the library and HTML and Pearl and basically had to teach myself how to do it again. I would say the same thing about entrepreneurship. I like and want to underscore what you said, which is the internet or social media somehow glorifies the easy path or that it’s easy, and maybe it’s someone trying to sell a course, maybe it’s someone trying to sell their point of view. It’s weird. It’s easy and it’s hard. I think I remember it being a lot of hard work and just a lot of hours, that 10,000 hours to get good at something. But I also remember thinking this is easier than my day job where I would literally sit next to a backhoe. I was with a shovel and in the mud and it would rain, and we were digging ditches to lay, to lay electrical cable next to a building that you couldn’t get things into. And I thought that sucks. That was actual hard work. This is a lot of hours, but it stimulates your mind and you see that there’s a light at the end of a tunnel of this could feasibly change the trajectory of my life. And it sounds like it did that for you, just learning to develop, and I think that being an entrepreneur is that next stage for you. You know what I mean? It’s the next thing that’s going to change your life in the same way  

Colleen Schnettler:
I do too. And this was always the end goal, but when you’re looking, again, when you’re so far from it, it was like, okay, first I’ve got to learn to code. I feel the same way. It’s kind of neat to have had that experience because before you have reached a goal, sometimes they can feel somewhat unobtainable. And so having already lived that once, I think you’re right. I think this for me a hundred percent, this is the next thing that’s going to change my life.  

Rob Walling:
I often use the phrase, think in terms of years, not months. As a founder, especially as someone who has bootstrapped or mostly bootstrapping a company, you’ve already done that. You’ve already been thinking in years. You started 2011, is that right?  

Colleen Schnettler:
Yes.  

Rob Walling:
Learning the code, which we’re recording this in 2023. So what a journey. How do you think being a military spouse impacted this journey? I imagine I’m making guesses. I’m not in the military, never had a family in the military. I’m imagining you moved a lot and you probably, as you were learning the code, did not have many peers around you as you said. So how does that shape your story?  

Colleen Schnettler:
Yes, both of those things are true. I think the thing I said a little earlier about desperation, we move a lot. Before I had kids, I had had a job that I had to go into every day. It was an hour commute each way, eight hours come back, and military spouses are traditionally underemployed for this reason. When you’re moving a lot, it is hard to build a career. So the remote was so important to me. And there’s another thing that I think has influenced me. People look at me and they seem to be really worried that I’m going to burn out because I work a lot and I love what I do, but I have this context of being a military spouse. And let me tell you, Rob, nothing in the world is harder than single parenting. Three little kids. If I survive that I’ve kind of lived through. 

I just feel like my life experience, and also this is a little bit darker, but also true, we have friends that die. It happens. We went through a really hard period in 2013 to 2015 where there were a lot of bad things happening in the world, and we lost a couple really close friends. I feel like I have been through some really hard things when people complain about having to work too much or they’re worried that I’m going to burn out. I don’t know how to take care of myself. I’m like, that’s not accurate, because I’ve had these really challenging life experiences and I was in my twenties. I got married young. So I’ve had these really challenging life experiences that I think have kind of changed who I am and how I approach the world and how I approach life. And I think now at this point in my career, that’s going to help me get over the challenges of trying to start a business.  

Rob Walling:
Can you give us an idea of where Hammer stone slash REFINE stands today in terms of the progress that you’re making as a company?  

Colleen Schnettler:
Well, we’re very early, so we are kind of in that position right now where it’s kind of sort of working, but we don’t feel like we have landed on real product-market fit. So it feels like anything could happen, which is both exciting and terrifying.  

Rob Walling:
Absolutely. Essentially, you’re not at that point where this is a certainty and you’re still changing a lot about the business. Which brings me to my next question. Why join TinySeed?  

Colleen Schnettler:
It’s funny, joining TinySeed, you go to the retreat and meet the other TinySeed founders and they all say, we don’t need the money, and we joined TinySeed. We need the money. So I guess technically we didn’t need the money because this enterprise client is paying my salary as I develop for them, but the money is going to make a huge difference for us. It is going to enable me to free myself up as a consultant and work on the business. And the other reason is, it’s funny, Rob listening to this podcast years ago and you would talk about your mastermind, your secret mastermind, and this is before I knew anyone in this space, and I was like, how do I get in a secret mastermind? I want to be in the club. And so TinySeed is giving that to us. We’re in a mastermind. I have access to you. I mean, it’s really expanding our network. We have people who have reached out offered to help people offer to share contacts, and the more I get into this, the more I really think your network makes a tremendous difference, especially when you’re first trying to get off the ground.  

Rob Walling:
It absolutely does. That was a hard pill for me to swallow as I came up as an entrepreneur. And it sounds like for you as well, I’m working construction and I look around and I say, oh, it’s not what? It’s who. And that pissed me off. I felt like an outsider and and you just have to figure it out, and sometimes it’s a decade of grinding to figure that out or to build a network from scratch on your own and other times you can come alongside and join a network, which it sounds like what you’ve done with TinySeed is joining the network there. That already exists.  

Colleen Schnettler:
Yes, and the thing about TinySeed two is the whole not crazy, not hustle, bro, has been very nice because again, military spouse, I have three kids, I’m still mostly the primary caregiver. So it’s not only a network, it’s a network of like-minded founders, and that’s really important  

Rob Walling:
At TinySeed. We’ve worked hard to build a supportive culture for all types of founders. So this comment really made me smile. I’m curious, over the past month or two, what has been a low point or something where you think back, this kind of sucks, this makes me think, do I really want to do this?  

Colleen Schnettler:
Yes. So our product, as I said, it’s a visual drop in query builder. When I say that, people don’t know what I’m talking about. So we have really struggled with positioning this product, and one of the ideas we had, we already have it made in Laravel, is Laravel has a admin panel that you can purchase that I guess everyone in the Laravel space uses. So we thought we’ll drop our price from a thousand dollars a year to $250 a year and sell it kind of as an add-on,  

Rob Walling:
Like a step one business. It’s a marketplace.  

Colleen Schnettler:
Exactly. So we announced it, we emailed our list the day before we dropped the price, someone bought the Laravel package for a thousand dollars. The next day we drop the price, one person buys it from our list, so now we have to refund the guy who spent a thousand dollars the difference, and we only have the one other sale. So we’re net negative on that, so that was not awesome. Those are fun.  

Rob Walling:
Yeah. Oh, that sucks. At least to look on the bright side of that. It does sting, but it’s a $500 issue. It’s a $500, whether it’s a mistake or just a $500 road bump, there are times when there are $50,000 road bumps. It’s probably less of the 500 and more about your aspiration for this to work. I mean, you wanted it to work. You wanted to sell five copies, 10 copies, whatever the number. You had a number in your head probably and it wasn’t one sale.  

Colleen Schnettler:
We are confused, I think as to, right, so basically let’s just say it was one sale because the other guy bought it at full price and we just don’t get it quite why people aren’t buying it. I mean, we don’t have a huge mailing list, but we got 500 people on our mailing list. All of those people at one point expressed an interest, so to have one sale feels just like, are we just totally wrong?  

Rob Walling:
Well, if I can pause it, I think price wasn’t the issue. Yeah, clearly price wasn’t the issue because dropping it by 75% sold one copy. It’s obvious people were not buying because it was expensive. Such a good lesson to learn.  

Colleen Schnettler:
Oh, it’s painful. But yeah, we thought price was the issue. And you’re right, clearly price is not the issue.  

Rob Walling:
How about a high point over the past month or two?  

Colleen Schnettler:
A high point. Okay, I like this. So we have been talking to product managers because we are repositioning, we think away from selling directly to developers and talking to product managers, and something that keeps coming up is custom reports for customers. So we’ve talked to analytics companies, we’ve talked to healthcare companies. They want their customers to be able to come in and get custom reports that they can save, that they can email to choose to email to themselves. Well, we’ve built out 85% of that. We’ve built out the hard work of that with this query builder. So to build the scaffolding around custom reports, which is literally just like an index view. You download the CSV and you set up a background job to send you an email once a week. We’ve done the hard part. So Aaron and I have been talking about kind of fleshing out the rest of that and providing custom reports for customers, and because we’ve done the hard part, he’s just kind of been hacking away on that this week, and he’s almost done 10 hours and we’re so close. So we think from these product manager conversations we’re going to lean into instead of visual query builder, whatever that means to custom reports.  

Rob Walling:
That’s amazing.  

Colleen Schnettler:
Yeah, we’re super excited. Not an admin dashboard, but it’s for your customers.  

Rob Walling:
I love it when that comes together because it rarely does, right? There’s always almost always a bunch of different signals and it’s muddy and it’s like, ooh, incomplete information, hard decisions. It sounds like this one’s pretty clear so far. It’s exciting.  

Colleen Schnettler:
Yeah, it feels clear. Now. I talked to some founders who talk to 15 customers a week, and we do not have that volume of customer interviews, so our sample size is smaller, but we do keep hearing it and every customer we have that we’ve talked to, I mean we just keep hearing it, so it feels like a really enticing kind of pivot, although it’s not really like a pivot. It’s kind of just like a gentle correction.  

Rob Walling:
Well, it’s an expansion of the software’s capabilities. You’re adding features, but then it all sounds like a repositioning in that you’re going to call it something different. Hey, those are the best when you can change an H one on your homepage and not have to, because a real pivot, it’s like well throw half the code base out and we’re doing a whole different thing. I mean, it depends on if there’s zoom ins and zoom outs and all that.  

Colleen Schnettler:
Yes, I would say that is what I’m most excited about. On the rail side, we are also responding to a lot of early customer feedback and building out essentially a V two of our product a lot. I mean, we’re going to do a lot this month. I’m hoping next time we talk, both of these things are done, and I am really excited to get over that hump because the current product, it’s an NVP running in an enterprise client’s application, so it’s a lot of work, I guess is the best way to say it. Like we’re making changes quickly, and so I think this kind of rewrite that we’re working on behind the scenes is going to make working with the products so much easier for the Rails customers.  

Rob Walling:
Given that we’re recording this in January of 2023, I find it so fitting that you are quoted by my producer in this document saying on software social, I have some big plans, big moves that are risky. 2023 is all about risk taking, and I feel like that’s the perfect way to end the first episode of this series is because this will almost follow a calendar year, and I know that I’m super interested to see how the year is going to pan  

Colleen Schnettler:
Out for you. Yeah, we’re super excited.  

Rob Walling:
I’m really excited to see Colleen and Hammer Stone are the next time we talk. It sounds like she and her co-founder have done a lot of reflecting and developed a healthy amount of self-awareness along their journey. Be sure to tune in next week to see how customer port and the overall repositioning of the product turnout. Plus, we’ll talk about other big moves that Colleen and Aaron plan on making with Hammer Stone in the coming year.

Rob Walling:
Welcome back to Startups. For the Rest Of Us, I’m Rob Walling, and in this episode I sit down with Einar Vollset, co-founder of TinySeed, and we take it in a little different direction than we normally do. Oftentimes when we talk about TinySeed, we will talk about things that we’ve learned investing across all these SaaS companies that could help you as a B2B SaaS founder, or maybe I’ll interview a TinySeed founder so we can take learnings and apply them to the broader community and the broader audience. But in this episode, Einar and I talked through something that he actually knew quite a bit about when we started TinySeed and I knew very, very little about, and that is startup investing and venture investing and why people would invest in a fund versus investing individually. We talk a little bit about the math of Venture and how and why TinySeed is so different, but we also talk about the fact that the venture industrial complex has really left behind thousands and thousands of startup founders, and that really was and still is the goal of TinySeed. 

As you know, my mission is to multiply the world’s population of independent self-sustaining startups. TinySeed is part of that because no one else was serving that market when we stepped in. And so this episode is a bit of inside baseball. It’s a look behind the curtain of running a venture fund and TinySeed even a bit about the broader venture space. I find this stuff super interesting because it’s not something that I have ever been exposed to before running this fund. And who better to explain it than TinySeed co-founder a r Ette? Before we dive into our conversation, MicroConf Connect applications are open until tomorrow, January 15th. MicroConf Connect is an application only paid community. If you sign up in the next couple of days, you get access to our upcoming workshop with Kate Summa on January 23rd, 2025. You’re going to join Kate live as she delivers SaaS onboarding best practices and tips. Plus does a live teardown of a Connect members onboarding experience. We do a live workshop or event or sometimes it’s a q and a with me once a month every month for paid MicroConf Connect members. Head to MicroConf connect.com in the next 48 hours to apply and get in our January batch. And with that, let’s dive into my conversation with a R in our set. Welcome back to Startup For the Rest Of Us.  

Einar Vollset:
Thanks for having me.  

Rob Walling:
It is good to have you on the show, man. Folks know you from Hot Take Tuesday. They also might know you as the managing partner of Discretion Capital that helps seven and eight figure SaaS companies sell for amazing outcomes as well as co-founder of TinySeed. There  

Einar Vollset:
You go. It’s nice to have you all to myself without Tracy interjecting with her blue sky nonsense.  

Rob Walling:
Seriously, our open source communist  

Einar Vollset:
Blue sky. Yeah, yeah, that’s right.  

Rob Walling:
This is great. Hey Tracy. Hi Tracy. So today we’re going to go a little off the startups For the Rest Of Us beaten path, so to speak. And I have had a crash course over the past four or five years in not only just investing in startups, but then venture investing and what that looks like and how if you are a venture fund and you don’t return what the s and p 500 does, then you crash and burn. And I didn’t even realize that was possible. How valuations are created and frankly, we’re going to talk about TinySeed, the stuff we’ve learned. This is not just a big sales pitch of TinySeed. We are fundraising right now and folks can reach out to you TinySeed dot com slash invest if they want to get in touch if they’re an accredited investor. But the idea here is to share a bunch of the learnings that you and I have had. I think you had a lot more back in 2018 when we started this, but to talk about investing in startups, potential outcomes, and frankly, I also want to talk about TinySeed and really dig into why it’s different from say someone going through yc because we have folks who get into both and who have gone with TinySeed and that blew my mind to me. YC has been the gold standard of gold standards since I was a wheel ad and there really are some differences that cause folks to want to go the TinySeed path.  

Einar Vollset:
Yeah, that sounds good. And also I think it’s just even if you’re not going to go for TinySeed, you’re not investing in VC funds, I think it’s helpful to understand if you are thinking about funding, whether from TinySeed or other people, I think it’s worth understanding what are the incentives, how does this work on that end so that you understand what you’re signing up for.  

Rob Walling:
Yeah, it’s interesting. In bootstrapping, let’s say 10 years ago, gosh, when I did my talk, no, it must’ve been 20, I guess I did a talk 2017 or 18 at MicroConf four. I said, I think bootstrappers are going to start raising funding. And I hinted at it in a five minutes section in one thing and kind of got some pushback. And then the next one, half the talk was about it and it was right as we were starting TinySeed. And some people were like seriously pissed. They’re like, what? 

Pushing your book, since you’re doing that, you’re saying people should do it. And I was like, no, people are already doing it. That’s why we’re starting TinySeed is because there’s opportunity here. I had already invested in, I don’t know, eight maybe eight or nine, about eight kind of bootstrapped SaaS, mostly bootstrapped SaaS that I just put my own cash into. And so the openness and frankly the stigma of raising funding as I won’t say it’s gone because every once in a while I’ll see an any hacker post on Twitter about this is why I don’t raise funding, quoting some anomaly somebody sells for, what was it? Was it FanDuel or something sold for 500 million and the founder got nothing, but it’s like, yeah,  

Einar Vollset:
A lot more to that story, I’m  

Rob Walling:
Pretty sure. Yeah, there’s more to a story than that. So there’s always these exceptions, and when we surveyed folks for the state of independent SaaS, it’s somewhere around one in four or almost one in three, around 30% of bootstrap founders say they would at least consider raising funding.  

Einar Vollset:
Well, I think it makes sense. And also this has always been my thing. A little bit of a pet peeve thing is like, look, some of these purists on the never raise any funding part is they never raised any funding. Oh, is that because your wife works full time at Morgan Stanley and so basically can support you or you have rich parents or you’re basically wealthy. So it actually sort of democratizes starting your own SaaS business a fair bit for those that don’t necessarily sit on a bunch of cash.  

Rob Walling:
And it certainly makes it possible for less technical folks to do it as well because such a big cost. I was never anti funding. And even in the days of Drip considered like, man, it would be so much easier if I could raise four or $500,000, but I didn’t know anybody didn’t know how to do it. It was 2014. It is like all the stuff that’s available today wasn’t out there. So with all that said, with that preamble, let’s talk a little bit about venture investing, what success looks like and frankly, how many venture funds just miss the mark and don’t even beat an index fund that I could buy a Vanguard index fund?  

Einar Vollset:
Oh yeah, for sure. I mean, yeah, I think it’s just worth for people to think about. I think sometimes people think, oh, investing in VC funds think Sequoia Andrees and whatever, and it’s just like, oh, it’s how you get a hundred x. You read about these outcomes and you think they’re going to a hundred x. The fact of the matter is if you look at one of the golden decades for venture investing in the US was the decade between 2004 and 2014. It includes a bunch of, now well-known names came through that decade. And so you might think to yourself like to be in the top quarter of performance of venture funds in terms of return capital in that quartile, you probably returned, what do you think, like five x, six x, some of that, in fact, the actual math is more like two x, I think it’s 2.16 or something. If you as a venture fund in that decade, which was a good decade for venture funds return 2.1 x, then you were in the top quartile of funds.  

Rob Walling:
So that means if I invested a hundred thousand dollars into that fund, I got my initial a hundred thousand back and then an additional $210,000. Is that  

Einar Vollset:
Right? No, no. You put a hundred thousand dollars in and you got $216,000 back. So it was a 2.1 x  

Rob Walling:
And over the course of what, seven to 10 years?  

Einar Vollset:
Up to 10 years,  

Rob Walling:
Unreal.  

Einar Vollset:
That’s a tough quartile fund. 

And really the reason is because a lot of funds, and also look, I think the median fund still returns at least one x, but there is a good number that returned less than one X. It’s probably 40% of funds, you don’t even get your money back. That’s pretty common. And so then you look further is like, okay, well what’s great performance in venture? Clearly two x over in that same timeframe, the s and p 500 probably went way up. I mean it had the housing crash in 2008, but nonetheless, what is amazing world-class looked like? And that’s actually in that quartile, it was just over five x. So if you five x, if you’re a venture fund, that five xd, then you were in the top 5% of funds in that timeframe. And I think the reason why people sort of misunderstand this, they think venture and then they think like, oh, what do I think about when I think about venture? 

Well, it’s like Airbnb type returns. You hear about yc, they invested at whatever, probably put same. I was in the same batch, so I know what they put in probably 40,000, $20,000 and a thousand x or something like that. And so I think that sometimes translates into, oh, at the fund level, that’s the kind of return. So maybe not a thousand, but you’re getting a hundred times your money. But that’s an extreme outlier for venture funds. And really if you’re looking for a thousand X, you shouldn’t be in venture, you shouldn’t be in venture funds. That doesn’t make any sense. It’s almost impossible to get a thousand. It is impossible to get a thousand X in a venture fund or even a hundred x. If you’re wanting to do that, then you should put all your money into single bets. You should be investing in individual companies and concentrate your position as much as you can into your extreme high conviction bets and just go for that. 

And that’s the way to do that. But a lot of investors, they don’t want to do that. So the question then is why would you invest in a venture fund instead of doing that? The reason is you’re reducing risk. That’s what you care about. You’re basically trading off. You’re saying, look, okay, I’m willing to forego this notion that I’m going to a hundred x my money, but the flip side is I’m less likely to lose it all. The standard outcome if you invest all your money into a single company is you’re going to lose it. At least an early stage company, you’re going to lose all the money. And if that’s not something that you want to do that’s not part of your investment strategy, then investing in a fund makes sense and you’re making that trade off then,  

Rob Walling:
And that makes sense to me. So I entertained, after I sold Drip, I had a little bit of cash on my hands and I entertained the idea of investing in a couple of different venture funds and I never did, but it wasn’t because I didn’t think the returns would be there. It was because I had enough people approaching me through MicroConf and this podcast where I was like, that’s a legit business. Like Jordan Gall, right? With Card Hook at the time, and Justin McGill with lead views and there were just these great little B2B businesses. I was like, I kind of had enough people coming my way at reasonable valuations. To be honest, when I went on AngelList, here was the problem. I went to AngelList. I was like, oh, I’m going to make a few bets. And holy mother of, I mean the valuations for almost no revenue were like 10 million. And I did, I put five grand into one of those and I put 10 grand into another, and all of them either went to zero or returned one return to me, 11 grand from my 10 grand investment. I was like, all right. I consider that’s good,  

Einar Vollset:
Mean it’s probably above way above average return. So good job, yo.  

Rob Walling:
It really is. So I’m in a little bit of a unique position. I mean the whole thing is the deal flow is kind of coming to me.  

Einar Vollset:
Well, I think that’s the key thing. I tell people this and I’m not being unusually humble about this. And the fact is tiny C wouldn’t work if you weren’t there at least the early days. I don’t have the deal flow, I just don’t. And I think because of your background with MicroConf and startup For the Rest Of Us and all this stuff that people know about you, and there’s probably you and I’ve been saying there’s less than half a dozen people worldwide that naturally has that kind of deal flow, quality, deal flow, pricing power that’s coming your way. And I think really that’s part of the reason why you would invest in a fund. Because if you look at it, say you have an amount to invest, whatever that is, a hundred thousand, 250,000, 500,000, whatever, it’s okay. Well, if you do your research and look, you realize you probably shouldn’t just pile into just a single bet. 

You put it all on black as it were. So instead what you want to do is you want to go out and you want to make a lot of bets. Ideally, you probably, I think the math pretty much says if you’re going to have a better than 50% chance of at least breaking even, you should be making at least, I think it’s somewhere like 15 and 20 bets, like investments rather than bets. I shouldn’t call it bets 20 investments. But if you think about, okay, how do you do that? If you have a hundred thousand dollars, you say, okay, I believe the math, I want want to put a hundred thousand dollars in, now you have to write 20 checks of $5,000 each. Now you have more problems than when you started because do you have the deal flow to find 20 quality investments? Are you going to see enough good deals just from your networks and friends and connections and whatever on AngelList or whatever in order to make those investments? 

And I would argue that most of the time you don’t get to access the deal flow, you just don’t have it. But even if you did, so say you were uniquely well connected, now it’s like, okay, now you need to convince people to take a small check from you individually. So now most people aren’t going to take most people who invest, an individual investor that goes along and says, all right, well I want to put $5,000 in. It actually can be quite hard to, even if people are raising money, it can be quite hard to get people to accept $5,000 because it’s such a small check. So there’s usually a minimum before you have to get in.  

Rob Walling:
Absolutely. The minimum, in my experience, I believe every company I invested in was 25,000.  

Einar Vollset:
Yeah,  

Rob Walling:
Yeah. I mean I’m sure friends, you can get a friend who can cut you a deal or whatever, but if you are trying to make that many investments  

Einar Vollset:
And quality investments, a friend will do it. That’s great. But how many friends do you have? Do you have 20 friends that are really truly rigorously is high quality and that you can put $5,000 in? It starts to get difficult. And then on top of that, even if you get past, can I even get my check in? Can I get the deal flow? Then it’s like, okay, well who’s setting the price here? Are you going to be able to get it? Because whatever VCs tell you the name of the game in VC is entry price, exit price. If you overpay for your investments, then you’re not going to make any money If you invested 50 million pre for pre-product, pre-revenue business, it’s a really big hurdle for you to make a reasonable return obviously because you overpaid for it. And so that’s sort of the third thing that comes into it. It’s like, do you have the pricing power? So can you get the deal flow? Do you have the pricing power to get a reasonable valuation and can you even put your money in? And that’s alongside, okay, well you probably have a full-time job. How often are you doing these investments? Are you learning fast enough to stop doing stupid and start doing good investments? And that’s really the reason why along with spreading a risk, why people invest in venture funds as opposed to just being individual angel investors.  

Rob Walling:
And this is one reason that venture funds became content marketing machines and built brands. Do you remember, this is a recent phenomenon. I mean maybe at best it was between 2005 and 10 is my memory when they started really coming out. Because in the nineties, I grew up in the Bay Area, lived there, I worked construction there. I didn’t work in startups, but there was nothing published by venture funds. It was very, what do you call it, information asymmetry is my memory of the whole thing. It was very opaque. You didn’t know what term sheets, what even, I didn’t even know what terms meant and everybody was hiding everything. And it felt like in their early 2000, mid two thousands, probably around the time yc like Paul Graham and YC started coming up. The VC started marketing themselves as the Andreessen Horowitz and the Sequoias where they were putting out stuff first  

Einar Vollset:
Round, first round first was one of the main ones that did the early days and  

Rob Walling:
Then came 500 startups and Techstars where it’s like, here’s content to help founders. Here’s what a VC term sheet looks like. Here’s what all these terms mean. Here’s how you can get screwed by liquidation. And there’s the preferred and then participating. And there’s all these things that you didn’t even know what they meant. Brad Feld, right? He wrote a bunch of books about it. That was a big thing was for them to start a generating deal flow, but B, to get the trust I think from people so weren’t because you were a commodity before, it’s kind of like if I’m going to go borrow money for my house, who’s going to give me the lowest rate we know with no prepayment penalty? That’s it. It’s commodity, it’s numbers and it’s pricing. And that’s what I think veg was a little, at least from my perspective, was a little more like that at one point. And then it became not right, it became how do I get people to know me such that I do have some type of pricing power and also a lot of inbound interest.  

Einar Vollset:
And I think I know for a fact that’s sort of what YC partly y YC started is because it used to be kind like, how do you get access to this? And it was like, oh, my dad plays golf with this lawyer who can get you an intro and then you could get, but I think in part that’s why VC started out so geograph and remained to this day, so geographically concentrated because sort of what it was, everyone was sort of there and you had to be there. You had to be in Silicon Valley in order to get money and you had to have those connections and be able to work a warm intro. I mean, that’s still the case for the cases. People are figure out a way to get an intro. To me that’s turtle number one kind of thing. So for sure that’s been part of it.  

Rob Walling:
So let’s talk about valuations, how these valuations happen. And there was a big realization at one point where you and I were talking because I had always heard, boy, you need billion dollar exits in order for a venture fund to make money. So TinySeed is this question I think I asked, I think everyone asks, so how does TinySeed make this work without a billion dollar exit? How does all that work?  

Einar Vollset:
Well, I mean there’s a couple of different things here. And actually a billion to a degree, a billion dollar is apparently too small even in some cases. There was actually, I think it was Sam Altman who wrote a piece, not Mr. OpenAI, but used to be president of yc. He wrote a piece How to Invest in Startups, and I think that was like 2018, 2016, something like that. And his main point in that article, which I still think is up, was you shouldn’t invest in anything unless it can be 20 billion or more. Just don’t even waste your time unless you think it can be a 20 billion exit. I mean that article was in part the reason why TinySeed became a thing, because crazy  

Rob Walling:
It is.  

Einar Vollset:
I get it. He’s talking his own book at the time. That totally makes sense. If you have a lot of aum, a lot of money to put on, and you’re writing big checks and big outcomes and this is what you’re doing to a degree, it doesn’t matter. Entry price doesn’t matter, valuation doesn’t matter. You just got to find that thing that goes to 20 billion, that’s the whole game. And while that’s true, if you’re playing that game, then that’s how you should be playing that game effectively. Our argument was like, look, there’s got to be a way in which founders and investors can both succeed, where outcomes are not quite 20 billion. I think most of the people listening to this would agree that a 75 million or a hundred million dollars exit, even if it’s selling to some lowly private equity fund, that’s pretty good. I think a lot of people listening to this would think to themselves, if I owned 80, 90% of a company and sold for 75 million, I’d be having a pretty good Christmas right about now if that’s what was happening. 

And so effectively what we were thinking with TinySeed is like, look, there’s got to be a way where you can have that be success and everybody makes out well. And that’s sort of the ground thinking on the investing side for TinySeed is like, how do we make that happen? And really what that boils down to is a couple of different things. One is I don’t think it works for every single industry, every kind of product, every kind of service. There’s just some things that are just requires a lot of capital is extremely capital intensive. It makes total sense to keep raising money. And if you keep raising money and burning money, then the sort of winner take all stuff makes total sense here. Your Airbnbs, your hell, your new open AI stuff, it makes total, I’m not reasonable, gazillion a trillion dollars and this whatever. 

And even some of the smaller stuff is like, look, my standard thing is like look, if you’re going to be doing a home grooming startup service type thing that it’s going to be capital intensive. It’s like a Uber, you got to spend money on it and you’re going to get diluted up to wazoo and you have to gun for an enormous outfit to make any money. But what we realized is like, okay, but there is this subset of specifically B2B SaaS where it can work because for a couple of different reasons. One is it’s so capital efficient. A lot of the time the gross margins are like 95%. That’s not unusual. And quite often on the discretion side, I talk to founders and they’re like, yeah, do you think I’m profitable enough? I got 65% free cash flow. I’m like, okay, yeah, I think you’re profitable.  

Rob Walling:
This is great on recurring revenue, on millions in recurring  

Einar Vollset:
Revenue, you expanding revenue. And it’s like, it’s crazy. I mean you even see this and some of the go public companies like Zoom, and I think Zoom actually is the sort of poster boy for this, the Zoom, I think they went public with more money in the bank than they raised  

Rob Walling:
Something like that. It’s just incredible once they hit escape ity.  

Einar Vollset:
Yeah, and that’s sort of what B2B SaaS is like. And so I think it works for that and in a sense that there is this notion that basically if you take a little bit of money once and then you don’t need to raise anymore. You can if you want to, but you don’t need to. And so that’s what works for TinySeed or mostly Bootstrap or TinySeed like companies. And if you combine that then with what we consider to be reasonable valuation. So I think if you’re playing the classic VC game, 20 billion a bust, yeah, you’re right. It doesn’t matter that you’re paying 25 million for a pre-revenue product at YC demo day as a seed investor, it’s fine. Who cares if you could invest 25 at 25 million valuation into open AI or Airbnb, then great investment, go do it, but 25 million say and then it goes to a billion dollars. 

Let’s just say that rather than 20, let’s be a little less ambitious than Mr. Altman was. That’s a 40 x return on your money. That’s a good return. That’s a great return, sadly. And we can get in the math area, you might not be good enough for an investor like a fund investor, but the flip side of that is a billion dollars is still a billion dollars. It’s still kind of an unusual outcome. And I’m not saying valuation here. I’m saying actually cash like IPO or selling or whatever, not just make-believe valuations actual money in the bank. And I think that’s pretty rare. And the fact of the matter is if you come in, the kind of valuations that we do at, and it’s capital efficient enough that these companies aren’t raising money all the time. So say if we come in at a couple of million and 1.8 I think is our average, and then you 40 x that, that’s 70, 72 million. 

72 million is still a lot of money, but it happens a lot more frequently than a billion dollars in discretion capital. We’ve done several deals this year that have been sort of in that range, and that’s just us and nobody ever reads about them. We actually did one years ago now we did that iceberg, the measuring the depth of the software iceberg title based on Patty eleven’s quote and observation there around most people don’t know how much money exchanges and so about for these kinds of outcomes and how common the big ones are or the reasonably sized ones. So that’s what it boils down to. Basically what we’re arguing is like, look, if you’re going for that kind of enormous outcome, then yeah, it makes total sense. Raise it 25 million and capital will go for it, become open ai become Airbnb. But there’s also this other class of startups where if you’re B2B SaaS and as an investor you can put money in at a couple of million and then they sell for 50 to a hundred million dollars, that’s as good. It doesn’t matter to you if you get 40 x your money, what do you care whether it 40 x means 75 million as an exit or 40 x means a billion dollars? It doesn’t. I mean other than bragging, right? It doesn’t matter. It just end price. Exit price.  

Rob Walling:
Exactly. And that’s the thing, the epiphany that I think I had at one point, or you kind of explained that to me, and it totally makes sense when you didn’t name the numbers, but the fact that the venture industrial complex is so focused on valuations and so focused on these large exits has almost to a point, like I’ll say brainwash some folks into thinking that’s the only way to do it. And what it does is it leaves out, I talk about my 1 9 90 rule where I say around 1% of startups should go after venture, about 90% should bootstrap. And I think about 9% should raise probably some type of funding. Maybe that’s TinySeed, it’s angels, but it’s not venture track. And the idea there is that going for 10 billion, 20 billion outcomes, it leaves out so many founders, thousands of founders who maybe should or maybe want to raise some type of money and still have a great outcome. 

And there is really no outlet for that. Before that we knew about it. Before us, it was ind BC and us. And then there’s obviously some individual investors. There’s a handful of others, but that’s where it is. And so what’s a trip is every application process for TinySeed, we do run it twice a year. Every six months, we inevitably get one company that we make an offer to and they come back and say, we’d love to take your money. We want to be part of it. But we were looking for a 10 million valuation. Or someone came, remember someone said 20 million and they were doing 30, 40 KMRR, whatever. I mean it was a respectable company, but it’s like, no, we’re like, no, you don’t understand. You don’t get your cake and eat it too. You don’t get TinySeed at that valuation. That’s not how we work.  

Einar Vollset:
And I think also some people, although I think awareness is raising a little bit, what some founders don’t understand is, look, there are trade-offs to this. Obviously if you can raise it a hundred million valuation, billion dollar valuation, there’s really great things about that. But some of the bad things are, there’s a whole universe of outcomes that are not the doors closed for you. If you raise it $25, the chances that you’re going to be able to or be allowed to sell for 50 is very low. In some cases. If you have extreme power and all this stuff and you didn’t give you any rights, that’s fine. But if you push valuations, the highest possible investors are going to put control provisions in there that sort of says, okay, look, the reason why we’re giving you this high valuation is because you’re saying you’re gunning for this enormous outcome. So we’re going to put some barriers in place. I mean, that pushes you, that aligns everyone to that kind of outcome or nothing, not get a high valuation and then sell for a reasonable amount. That door is very often closed.  

Rob Walling:
And that’s the challenge is especially if you’re a first time founder or have never had a big exit, I heartily believe this, and I’ve heard Dharmesh say this as well, so it makes me think it’s a really good idea, is if you haven’t had an outcome yet and you get some type, you get an offer for never have to work again, money. I don’t know man, I’ve the mind to take it and maybe that’s 10, maybe it’s 20, maybe it’s 30, it’s nowhere near what we’re talking about here, but get one, get a win, then you can do whatever you want. And I’m so much more an ascriber to that to kind of tucking that away. So I know of a company, I’ll keep anonymous, that raised, let’s say a prize was under 40 million in venture over a few rounds and due to liquidation preferences and other things, they would’ve had to sell for something like 80 something million for anyone but the VCs to get money, right? 

It’s like two x, I dunno all the details, but that’s the kind of stuff that I’m not sure people are aware of when they’re like, I’m going to raise it 10 or 20 million. It’s like, oh man, you’ve just really cut off a lot of your optionality. And that was such a big thing. I don’t say this as much when I talk about TinySeed these days, but in the beginning it was just optionality. We are optionality you can raise, you cannot do what makes sense for you. And we have had a bunch of people raise series. We’ve had a handful of folks raise several million,  

Einar Vollset:
A handful, but actually just to change track a little bit, not as many as I thought. It is funny, we raised our second fund in 2021 and obviously 2021 was a good time in the markets. And at the time I remember looking, I was like, oh, about 30% of the companies have raised money. That’s what I used to say. About a third, about a third. Then I was coming around to fundraising again. I was like, okay, let’s look at this. Actually it’s 8%, our tiny company less than 10  

Rob Walling:
Because 2022 and 2023 was such a disaster. There’s not that much capital. It’s very expensive now. And so that the number just plummeted. Right?  

Einar Vollset:
Exactly. And so they just haven’t done that. They just haven’t, have you raised any money? Money? And actually that sort of relates back to how the TinySeed different, and it’s like why I think people maybe don’t understand is how do venture measure performance on the way? Because the issue with a venture fund is like, well, good and bad. You don’t know for any good for at least 10 years. So if you’re a charlatan, you can kind of keep going for 10 years and say, oh, I’ll prove you’re right in a couple of years here. But I think it’s understanding how does most VCs, how does that make our life hard? Why is it a problem for a venture fund that only 8% of your companies have raised further funding? And the answer is, as traditional venture fund, it’d be a failure if only 8% of your companies raise money. 

And the reason for that is the way that venture investments work is that you as an investor when you come along or GP like a VC, basically you come along and you’re basically, every quarter or so, you send an update to your investors, to your LPs basically that says, this is what my portfolio is worth. And the way that you do that, obviously they’re not publicly traded. And so what you’re doing is you’re basically doing two things. You either keep the market the same, if they’re just nothing material has changed, IE, they haven’t gone out of business or they haven’t raised money, or if they raise money, then you mark it up to this new valuation because of the length of these funds, most of the time a successful VC can raise several funds without returning any money at all. It could just be like, Hey, I’m raising fund number three and look at my performance on my fund one and my fund two is up three x or whatever, two x five x. 

And it’s all based on markups. It’s all based on how successful are you, are your portfolio and raising subsequent raise more money at higher valuations to a large degree what success is in vc, if you can have a fund that, this is probably why YC is such a great business. They invested one point, whatever they do, and then it’s like the standard valuation markup three months later at demo day is like 25 million. Well, that’s an enormous markup straight there. It blows everyone else out of the water. They capture a lot of that value to be perfectly honest. And so what do we do well? So we have to come up with something different, which is always kind of challenging. And I think the difference for us is what we’re trying to do is to say, look, these companies, this successful companies don’t really need to raise any more money after this because they’re so capital efficient. 

So how do we capture the fact that the successful companies don’t raise any more money so there’s no automatic markups? And actually it is funny guys, in 21 when we had more markups and stuff, I remember doing it this way and I was just like, okay, well we will mark out why not? We’re not going to handicap ourselves. People would ask ’em. There’s really not necessarily quite of a correlation between the success of the company and the valuation markup. Because in 21 in particular, and this is true in all bubbly things, you would have people who raised because they were doing really well, and then people who raised because they were doing really badly and they were running out of money and they were going to go under unless they raised money. And so they were able to do so, and then they got marked up above what even some of the best performing companies that we had. 

And so what we decided to do was basically say, look, we’re going to give you a market price. And so we have a couple of different variants on this, but sort of our sort of base case valuation, which is most of the numbers we share out, it’s basically some sort of a revenue multiple based on growth mostly. And it’s somewhere between two X and somewhere between seven x. And really what that valuation is is different to even a typical VC markup in the sense that, look, if you raise a series A at billion dollars, that does not mean you can sell your company for a billion dollars. That’s just not happening. Obviously if you raise a 200 times a RR, you’re not selling it 200 times a RR. It’s not possible. Our base case valuation though, is more like what is the market price currently? What is the clearing price  

Rob Walling:
Sell for?  

Einar Vollset:
Yeah, what is the liquidation price of the portfolio at the moment? And that’s what we go to market with, which is kind of a handicap, I’ve got to be honest with you.  

Rob Walling:
Oh, big time. Much more conservative.  

Einar Vollset:
Much more conservative. And we provide the optimistic case, which goes up I think to up to 11 x, and we have one which includes the markups whenever they happen and they’re a little bit more, but most of the time we’re referring to the base case. So liquidation type valuation. And the reason for that is mostly that I want to be as conservative as possible. A, I basically want to be able to argue because we’re already doing something different. We’re not your typical what everyone else is expecting and like, oh yeah, this is how you get through an audit at Carta because the markups is from Andreessen and blah, blah blah. So we had to be a little bit more conservative. It can be a challenge. Although I will say, and although it’s not apples to apples, I was pretty stoked when card, which is our fund management platform, they came out in the spring with a performance metrics of 1800 funds, which actually includes us. And we were in the top five to six to 16% based on the venture metrics there, even using our most conservative metric evaluation. So that felt good, but it’s still a challenge because it’s new. People would rather have, in some cases, people are like, look, I believe that this company is worth a billion dollars because Andreesen says so even though they’re only doing 500,000 a RR more than I believe that this company is worth five XARR.  

Rob Walling:
I call it brainwashing or whatever it is. It’s a standard. It’s the safe. It’s nobody gets fired for buying IBM, right? It’s just the way,  

Einar Vollset:
Right? I mean, that’s always the case. I mean venture, I’m going to side ran here about venture and branding and stuff, but venture, I think a lot of the time it’s sort of a self-fulfilling prophecy. If you get lucky very early on in the early fund and you get the brand built, then you sort of like capital comes to you and deal flow comes to you and it’s sort of self-fulfilling prophecy that you do pretty well. So my one piece of advice, if you want to be a classic VC and you want to start a new venture fund, is to be extremely lucky with your investments in your first fund. That’s the way to do it.  

Rob Walling:
That’s all you got to do. Just be lucky.  

Einar Vollset:
Just be lucky. That’s good.  

Rob Walling:
No hard worker or skill. Let’s just go all after luck on this one. Yeah,  

Einar Vollset:
I’m not investing hard luck or skill. I’m just saying given a choice, you would rather have be lucky than good. You’d rather be  

Rob Walling:
Lucky. Yeah. So as we wrap up, if folks are listening to this, if someone is an accredited investor, we are raising our next funds to invest in ambitious B2B SaaS companies. They can hit you up directly, TinySeed dot com slash invest. If they fill out that form that goes directly to your inbox. Anything else you want folks to know?  

Einar Vollset:
No, I mean, I think that’s it. I mean, it’s a little unusual. We’re just sort of like, this is, again, like we were saying, it takes 10 years to know if you’re good in this game. And we’re like, we’re in year five and indications are good.  

Rob Walling:
That’s what it is. The markers, yeah, the arrows are going in the right direction.  

Einar Vollset:
Things are good. We’re not a little bit unusual too. We’re not vastly increasing the size of our fund, which is quite common in the VC world. It’s very often you start with a small fund and you quadruple it and then that works out and you quadruple it again. And we’re not doing that. We’re just sort of like, look, this is what we feel good about. This is the size of this opportunity and we’re keeping the funds sort of the same and just keep executing the way it has been because it seems to be working. We think it will be continued to,  

Rob Walling:
And the reason VCs do that is that’s how you make more management fees is the bigger your fund, the more money you make. And we’re like, you know what? The opportunity that the deal flow we see in a six month period is X. It’s been really consistent, which is great, and we don’t want to raise twice as much money. Then what are we going to do invest in? We’re not going to double our deal flow in the next six months, maybe we’ll over years, but  

Einar Vollset:
We might put more. There’s opportunities we could put more money Dividual companies do. We do all this stuff. But fundamentally, the core strategy of TinySeed sort of remains the same. This is the size of the opportunity. This is what we think believes, and there are numerous venture funds that have done well at say, being a 25 million fund, and because they’ve done so well, lots of people are interested and then they decide, let’s raise $250 million. But if you’re 250 million, all of a sudden you’re doing different kinds of investments, maybe even in different kinds of companies, different stages. Who’s this? You’re good at that. Just because you’re good at writing $250,000 checks does not mean you’re good at writing $5 million checks into later stage companies. And your competition might be different and your deal flow might be different and your pricing power might not be there at that stage and all this stuff.  

Rob Walling:
So we’ve invested in almost 200 companies over four and a half years, and we’re going to stay at that pace. So the indexing across a lot of ambitious B2B SaaS companies seems to be working for us so far.  

Einar Vollset:
It allows us to keep the sort of batches small, right? It’s nice to have that, some of that intimacy. We’re not 150, 200 people in batches. We’re talking 20 people, 25 people, which is nice.  

Rob Walling:
TinySeed dot com slash invest if anyone’s interested. And a R volt on Twitter X Twitter. If folks want to see you posting about these San Francisco Giants  

Einar Vollset:
Or a r volt.com on Blue Sky. No, I’m only  

Rob Walling:
Kidding. Oh my God. Record scratch. I was like, what? You’re on Blue sky. You’re going to lose your bet. You’re going to lose your be to Tracy, thanks again man. Thanks for coming on the show.  

Einar Vollset:
Thanks for having me.  

Rob Walling:
Thanks again and R for joining me this week on the show. Thank you for joining me this week and every week. This is Rob Walling signing off from episode 748.

Rob Walling:
Welcome back to Startups. For the Rest Of Us, I’m Rob Walling, and in this episode I speak with Jane Portman, the co-founder of User List, about how they’ve evolved their SaaS customer success process over the past seven years of running their mostly bootstrap company. In this episode, we cover the four stages that their customer success process has traveled as it’s evolved over this time. Before we dive into the conversation, I wanted to let you know about an effort that the team at TinySeed and I have been working on here in late 2024. It’s premium coaching and community for SaaS founders doing 1 million a RR and up. Right now we have a teaser page up at SaaS institute.com. If you are a founder who is at or in the neighborhood of 1 million a RR, any your email there and we will be reaching out with more information. 

This is going to be an elite and exclusive community application only hand chosen. It’s not intended to be an extremely large group of people, but it’s intended to get those that are at that point where YouTube videos and podcasts and even books are less and less helpful because you need more one-on-one focus and you want to be matched in a mastermind with other ambitious like-minded founders and you want to receive direct advice from handpick mentors and who better to do that than TinySeed. This is separate from our accelerator, right? Our accelerator is where we invest in early stage startups that are doing what between one and 2K MRR on the low end and maybe 40 k, 50 K on the high end. This is a high-end and highly curated premium coaching offering for those that are further along, basically doing seven or eight figures in a RR. So if you’re interested, SaaS institute.com. And with that, let’s dive into my conversation with Jane Portman. Jane Portman, welcome back to  

Jane Portman:
Startup For the Rest Of Us. Super thrilled. Super thrilled. It’s been like five years, right?  

Rob Walling:
It has in fact November 19th, 2019, episode 4 71, fighting to gain traction in a crowded space with Jane Portman of  

Jane Portman:
Still fighting,  

Rob Walling:
Still fighting in a crowded space. That fight never ends. Jane, let’s just be real. So for folks who aren’t aware, user list.com, you’re seven years into building that business with your co-founder Benedict, who many will know you and he from micro comps. The H one is email marketing automation for SaaS growth. User list is more than just an email marketing platform where your partner in successful implementation, you get proven SaaS frameworks, one-on-one onboarding and a dedicated support engineer so you can focus on hitting your growth goals. So tell us, Jane Portman, where does user list stand today? Give us an idea of how big the business is.  

Jane Portman:
Long story short, we a team of six all over the world and roughly profitable,  

Rob Walling:
Roughly profitable is just fine. You are a TinySeed company. You were in batch two, is that right? 2020,  

Jane Portman:
Yeah.  

Rob Walling:
Spring  

Jane Portman:
2020. Covid specifically March, 2020, which was very bright experience.  

Rob Walling:
Hey everybody, let’s meet up for an in-person. Well, we’ll do an in-person in six months. That was basically that year. That was tough for everyone too soon. I won’t drag everyone’s memories back to Covid. But today I wanted to have you on so we could talk about how you and your team have evolved your customer success practices over the last seven years. And before I hit record, you and I walked through and put together an outline of the four stages that you’ve traveled. And I really like this framework of thinking about getting something out that’s good enough. I actually talked about this in an episode just a couple of weeks ago. It’s first making it work, then you make it right and then you make it fast. And I feel like over the last seven years, your four stages have made it work, have made it right, and have made it fast. 

So talk us through before we dive into stage one, which I love that you said, it’s young and naive, that’s what we’re going to call it. Just talk about how customer success works for you in the business. What’s involved in customer success for you? Trying to get people onboarded into a very powerful product because this is a conversation I have when obviously I ran Drip, which is a similar type of company, very complicated. I would say it’s powerful. Drip is powerful, very complicated. And folks who run reen, and I’ve had this conversation, it’s electronic signature Reuben’s like people come in, there’s a button to upload a doc, you drag a signature field there, you’re onboarded. And I was always writer like Derek was, I was like, you create a link, you send the link, people book the link. I know there’s more to it than that, but realistically there are different gradients of complexity with products and not all customer success approaches work for each of them. And so you can be naive if you’re going to build a really complicated slash powerful product and think that, ah, everyone’s just going to self-serve and get on board. So with that preamble, talk us through user list and how that journey has been for you from a high level,  

Jane Portman:
If we knew what it takes for people to integrate and get started, if I knew as much as I know now, we probably just would not start, would not have started so many years ago because it’s insane. Somewhere in the middle we had a consult with a hidden shot and he said, I would not touch a product like this with a 10 foot pole because it’s incredible friction in the start. It’s just insane. I’m not sure it might be even easier for Drip because you can just import your list. User list provides SaaS email marketing automation, which is three times more complex than any other complex automation because you need to continuously update the information about your users in real time through the API integration. And there is no way around it because the users, they come, they go, they change plans, they do something inside their product and you send information about that into useless. 

So we then can use that data to build segments and you can build segments, workflows and do all that jazz that you came there to do. And then you need to come in and think about what you’re going to be sending and write your campaigns and set them up. There is a whole second layer to this. And I think when we were just starting out, we thought that some templates are going to cut it for the creative part and the data part. I dunno, we just didn’t think about how much work it is, which now we know that in order to successfully integrate, people don’t just need to push some events and some properties inside useless, they need a tracking plan first so that the marketer doesn’t have to go back to their engineers every month asking for new things. It needs to be somewhat wholesome to move forward. In the ideal world again, yeah, there’s a lot of steps. The integration, segmentation, creative part, setting everything up and then running day to day is another thing that they probably need to less extent.  

Rob Walling:
And that’s a ton of upfront friction as Heon said. And so you have to be, and then it’s like, well, so then you need to be able to charge a ton of money so that you can spend all this time to get people onboarded and your retention’s going to be high. But the problem is you are one of, if I were to guess 500 different email products one could use now not directly aimed at SaaS and has a functionality you do, but people start, they compare you to MailChimp or Drip or ConvertKit and they’re like, well, why are you four times the price of MailChimp? And it’s like, well, because we have all this stuff. And so it’s this constant push and pull of trying to convince people of how different and how powerful you actually are to justify any type of price discrepancy, but also not be having infinite pricing power because there are so many options that people can kind of hack and get. It’s 50, 70, 80% of the way there and they can justify it to themselves that like, well, I’m not going to pay $300 a month when I can pay 40 to MailChimp, but it’s like, ah, but it’s not going say, you know what I mean? So do you find that this, can you tell I’m speaking out of trauma because I had these conversations over and over?  

Jane Portman:
Well that verbatim, I basically wake up with this. I’m like, how do we niche down? Where is that? Is that inflection point where we finally crack this miracle puzzle of where’s that key of niching down? Because niching down as far as I see the market at the moment is the only way to move forward. It’s insane how folks that are getting billion dollar funding moving forward and they’re just doing some insane things. And that’s slightly depressing for a team of six. There is another angle to this industries that when 20 years email automation came out, it was Infusionsoft, AWeber expensive. You would use a consultant for it for a reason and you would pay much for a reason. These days you can buy whole range of pricing, you can buy a very cheap stool, but you still need to know what to do with it. And the question is, do we just leave people alone or do we really teach them to do this? And this is a very, very interesting niche because there is no university degree for email automation. So it’s not precisely marketing and not precisely engineering. It’s in the mix needs a technical mindset but also needs marketing brains behind it.  

Rob Walling:
Yeah, makes it a double whammy. So let’s dive into this. We have these four stages that you, yourself, your company has traveled on this customer success journey. You dubbed stage one, I hinted at it earlier, young and naive. Talk us through what that stage looked like.  

Jane Portman:
So what we did, we wrote a bunch of email templates, we baked them into the product so it was easy to use. And then we also, because I’m a designer, can design well, I designed a bunch of printable worksheets that people could fill out, print out, fill out and enjoy themselves. So what we did, we distributed those around throughout the channels throughout the website and we were kind of said that, yeah, look how much we’re doing. We’re awesome. We really thought so  

Rob Walling:
And you’re done. That was it. That’s the end. It’s just one stage. I was kidding. So everyone took those and filled them out and used them a hundred percent, right?  

Jane Portman:
Yeah, of course, of course. Yeah. That’s what happened. I guess we just didn’t bother that much because there were other fish to fry at the moment. We were onboarding folks mostly manually I guess at those stages. And we were just somehow stumbling forward, raising angel rounds, doing other things. Well, yeah, just moved forward.  

Rob Walling:
And here’s the way I think about this. There’s an old book by Jeffrey Moore called Crossing the Chasm, and I believe it came out in the early nineties maybe. And the book was more written for large scale adoption of think of palm pilots. Anyways, there’s five key segments that Jeffrey Moore broke this down into where you have, these are groups of customers, there’s the innovators who will use a product and they just love toying around with stuff and they’re willing to put up with a lot of pain and do a lot of work because curious and because it might provide value for them. So innovators then there’s early adopters, early majority, late majority, and the laggards, and I think what you’ve touched on because I’ve experienced this as well, is that your innovators and maybe some early adopters were fine with the young and naive face that they were cool with worksheets and templates. But those segments are very small and if you see this graph, obviously you can Google it if you’re listening to this episode, it’s like a bell curve and the innovators and early adopters are just a tiny, tiny, just not that many people. The masses are in that early majority and late majority. And so as you find that hey, a bunch of people aren’t converting, you entered stage two, which we’ve called Hire Someone. That’s a really good name. So it’s really descriptive. What do you mean hire someone? Who’d you hire? How did it work out?  

Jane Portman:
Entered 2021, I think end of 2021. We just raised our second round a little bit of money from Angels. We hired developers, we were like, we can do more. And we identified that there is this area of proactive customer success that we can tackle. And so we sat on a journey to hire such a proactive person that could be Prince Charming, talk to people, do demos and just overall communicate a bunch. And I think we circled through three candidates that didn’t work out. I’m not going to go in detail, but particularly exciting things like one of them completely lacked empathy. Someone lacked tact about giving advice to people and we are not, I’m not going to go there anyways. It’s interesting. How  

Rob Walling:
Did you hire them and hire them? They started and then you had to fire them.  

Jane Portman:
It wasn’t like a trial training period, but yeah, they were being onboarded when we learned that. And it’s interesting, I think our hiring process has improved since then, but also it was not like we had a board and all that jazz. It’s not like we hired strangers and then Michael Christoph of P GMA started our friend, he was one of the early applicants for the job and we were like, no, Michael, you’re too qualified. No you, you’re not coming in. And then I had a consultation with him and together we figured out that what we first thought should be proactive support is actually about being helpful when they have that momentum to get started during the early days. So we actually needed just plain support, just support. And that was the beginning of 2022 when we put a smart person engineer Michael in the support inbox. And that just changed our lives first because everybody should delegate support even though there is not much, it’s really frees up the hands. And second, it just gave us a whole next level of customer investigations and all these things. There is a bunch of troubleshooting that happens in email automation. So he was taking this off Benedict’s shoulders and that was really tangible. So that was nice and that worked for a while.  

Rob Walling:
So was you went to hire a customer, A CSM, we call him a customer support manager, which is an individual contributor who is going to be frankly mostly a little bit reactive but mostly proactive. And after these failed attempts, you just said, let’s just hire an engineer who can handle the support inbox. Is that the summary of it? And it worked?  

Jane Portman:
It’s not like the first role means the second role, but while we were trying to fill out the first, we learned that we actually need just someone really smart on support. And probably there is still space for going through accounts and reaching out to customers and things like that, but it’s really secondary compared to being there for onboarding.  

Rob Walling:
So that’s the difference is some people, when you say customer success, that is a lot of different things. There’s actually a lot of roles within that, right? There is onboard onboarding is only one part of that. Once people are a customer, there’s retention, there’s even instrumenting and reporting and doing analytics on onboarding. And there the amount of people who are getting onboarded, there’s a lot more to it than just onboarding. I think there’s a drinking game. I think we have six shots. I’ve said the word onboarding now six times. So it sounds like as you looked at customer success as a whole, you realize well maybe we don’t need to cover all of the bases and we should really more focus on getting people connected, getting the APIs connected and getting that early stage done such that they stick around. Am I understanding that right?  

Jane Portman:
That’s correct. And my personal, well that’s because I was kind of supervising this, but my biggest discovery is a person was that I was wrong about the skillset of such person. It’s way less about being charming. Michael is super charming by the way, but it’s less about being charming and great in camera and whatever not, but way more about technical investigation skills and that is related to our product and our niche. So maybe different for your situation. I don’t think it’s the one size fits all answer.  

Rob Walling:
So I want to touch on something you mentioned. You mentioned funding, you said raising rounds, raising angel rounds, and some folks listening to this might be thinking, oh well how much have you raised is probably the question on their mind. So first question is have you talked about it publicly? And if not, let’s give people an idea. I don’t think you’ve raised millions of dollars, right? You’re still mostly bootstrapped.  

Jane Portman:
Our second round was a little bit short of 400 K, something like this. We don’t have this. Yeah, we don’t have this number in public, but we have a nice blog post outlining the list of investors. So it was not sacred.  

Rob Walling:
Good. I just wanted to touch that so people have an idea,  

Jane Portman:
Which is not a lot of money. It is not a lot of money if you’re building something like it  

Rob Walling:
Sounds like a lot of money and it’s totally not. This is the thing, Jane, when we were building Drip, I was about 150 to 200,000 of my own money and that got us to product-market fit and then no other money raised. And this is a hard road. It was doing it on hard mode. I knew it. I was going to say in retrospect, it was doing it on hard mode. I knew it at the time, it was doing it on hard mode, but there was no avenue. This is what 20 13, 20 14, there was no TinySeed and there was no bootstrapper friendly funding. And this is before Iny vc, this is before no angels I knew would invest in a bootstrap company that didn’t want to go the venture route. So it’s nice that that is now an option for so many bootstrappers not only has the stigma, remember when Bootstrappers used to be like never raise funding. Funding is terrible, it’s so black and white. And now that stigma has been largely removed, at least in most of the circles that I run in.  

Jane Portman:
We went through the cycle very properly step by step first being brave to apply to TinySeed then oh there is nothing scary there. And then friends talked me into talking Benedict into getting more and yeah, it was not VC money but maybe with VC money you get different dynamic still to explore this.  

Rob Walling:
Yeah, for sure. Alright, so let’s enter stage three again. Stage two was hire someone stage three done for you, it’s offering done for you services. Talk through what that means and how that’s evolved.  

Jane Portman:
So in stage two, customer success engineer at that time we were really starting to build our expertise because we were onboarding users, learning about automation. We built a fabulous expert blog and then we were getting advanced into we know how it should be done well and we see nobody’s doing it well. You just keep watching people struggle and you know how to do this, but you understand that no, it’s not a way forward to try and educate them from day one. And the way forward is probably to either recommend them to hire a consultant or do it for them. And we went as hard as writing the first email saying, no, you can’t do this yourself because there is five people in the world that are professional and you’re not one of them. So either get a consultant or here’s our done for you page, which was probably a little bit too aggressive. So we don’t have that email now. And that was early 2020. What was last year? 2023 that we started on this direction and these services were surprisingly easy to sell compared to selling software. We were like, we sent an announcement and I got the first customer immediately. I was like good old consulting days when you can actually sell something quickly and make a lot of money. Well  

Rob Walling:
Yep, consulting, it’s a business code, selling dollars for hours. That’s why a lot of us start there.  

Jane Portman:
So I was executing this myself as a consultant also learning a bunch. And honestly it’s more about that joke when it’s like $1 for hitting the hammer and $9 for knowing exactly where to hit the hammer. It’s kind of that kind of work a lot. 

So it was not too bad. I served a few packages and burned out because the reason why we started SaaS was to get out of consulting people and now we are back in this. We have all the SaaS, we have the marketing machine going and services on top of that. That was really painful, but we kept offering this. It was not a huge stream. So it was a nice supplementary income, nice learning customers because when someone purchases a package, they’re pretty much guaranteed to get started and just overall good experience. So yeah, that was a netbook that allowed us to build the expertise even more because now we really did the drill for multiple companies and had feedback and implemented also actually helps to troubleshoot the tool itself quite a bit because you’re using it yourself. You’re dog fooding a bunch. It was good, it was definitely good things to do and it takes a bunch to set this up so you have to write your sales page. We also got a consultation from an email marketing consultant Summer os. She taught us her trade secrets on how to better approach the process with clients and we had these materials developed for intake questionnaires and steps and procedures and stuff. So when that was developed it was just great to have it live and going and available for customers when they need it. I guess that’s the description of this stage.  

Rob Walling:
And is this something that you would recommend to other SaaS founders if they similarly have a complex product or a powerful product that takes a lot to get onboarded? It sounds like that’s why you’re here is that folks would come sign up and then just never, you just wouldn’t retain ’em, they wouldn’t get set up and so you’re just removing one more excuse. Well I don’t have any emails and it’s like go hire a consultant. You could have a page with agency partners who do this for them.  

Jane Portman:
We haven’t  

Rob Walling:
But those agents, but people maybe don’t want to go to ’em or they’re expensive, right? Because what’s the range, the price range that you’re offering the done for you?  

Jane Portman:
Yeah, I can tell you the most popular package is the user onboarding kit includes the user onboarding campaign, like trial expire, expired trials, reactivation. So all the campaigns around activation, it’s $4,000 and consultants typically charge, I dunno, eight 12 K for the same thing up to 20 K sometimes. Depends on how much goes in this,  

Rob Walling:
Right? So you are in essence offering a deeply discounted thing that is highly repeatable for you because you already have infinite client, infinite, it’s not true, but you have a steady flow of incoming new clients. So you’re not out there really marketing it already marketing user list and it’s repeatable for you and you can offer it cheaper because you want them as a customer. You want that a CV. So it’s interesting. Would you recommend that someone else do this?  

Jane Portman:
You just sold it in five different benefits, didn’t you? So yes, of course, but also I guess it depends on what kind of lifestyle you want for yourself and the style of your business. I know some companies that were only made able to make the financials work with the services because otherwise it just didn’t take off. We know some peers who only have let’s say paid guided onboarding, which is a flavor of done for you. They have a thousand bucks set up fee, which is for bootstrap SaaS company who’s our customer, probably overkill to make it the mandatory fee, but that person I am talking about, they made it mandatory for everybody because it was pretty acceptable in the industry and they had a smashing success with it. So it depends. But at this point in my life, after seven years, I’ve really given up on trying to teach people as they get started. There is definitely a segment of bright folks who are willing to learn. It’s not impossible, but a typical busy person is not willing to absorb your information to make really qualified setup. It’s just either let them do their basic things or do it yourself really well. I guess that’s the barbell strategy of Nasim Tale. Either very simple or very complicated and expensive. The mid range is a danger zone.  

Rob Walling:
So before we move on to stage four, I want to ask you about your blog as a marketing channel. And the reason this ties in is you told me offline that as you learned more and more about the thought process and the pieces that need to go into place for all the emails that a SaaS company needs, you started the done for you offering, doing it for all of them. You started realizing, oh there’s same patterns over and over and same ideas, same thoughts. And so you took that knowledge and now you’ve written a bunch of blog posts with that knowledge of here’s how to write this sequence, here’s how to do this and make it work. And so my question for you about that is, is that working? Because it’s a lot of work, right? The done for you, you’re getting paid for, but then to take that and to write up 2000, 3000 word blog post and put it out there on Google in the age of AI where people are getting more and more answers from ai, has that effort been worth it?  

Jane Portman:
Definitely. So because just the niche of SaaS email marketing automation, thankfully with the word SaaS in it is narrow enough for us to be able to plant a footprint there. And then everybody who writes very shallow, very shallow bare bones stuff like lead the users to the aha moment. Nobody talks how to set up the triggers, how to orchestrate the journey, how to segment people really hard and a lot of others there is an endless amount of implementation details you can dive in and different ways to serve them. And going back to SEO, thankfully having the word SaaS is really helping for things like SaaS, email marketing strategy and things like that. And we also, in answering your second part, the effort, we also have two parts to this. One is big expert guides, which I write myself two, three times a year. And then we publish monthly roundups of email examples tailored to specific SaaS situations like I dunno, we just published a post today, invite your team kind of emails. 

And we have a lineup of 20 emails that companies send during their own boarding flows. Very narrow, very niche, very specifically curated and described. If you go to popular platforms like really good emails, you’re going to find 80% emails from E-commerce purely curated. So you’re not going to be able to do that. So with email examples, we kind of really hit our tried. We have a community advocate who goes around collecting examples in the communities, also distributing pieces there. So it’s a content flywheel of sorts because we’re collecting examples in exchange for backlinks from people then using these examples for SEO. And this is great material and it seems obvious maybe for Reuben but not for me. It took a few years to figure out  

Rob Walling:
Someday we all are on our own journeys Jane,  

Jane Portman:
And maybe that’s why we are still so hot on the topic. Me and Benedict, for Benedict, it’s probably never ending technical challenge. We’re never relaxing and I’m never relaxing on the educational side. It’s always how can we better explain this? How can we better teach that? What’s the easier way? You don’t want to be like Big Bang theory complicated about it. Nobody’s going to read. You want to be human about very hard topics. So how do you do that?  

Rob Walling:
And you don’t mean Big Bang theory, the sitcom, you mean the scientific principle as defined by physicists?  

Jane Portman:
Correct. I mean the sitcom, like this type of language they  

Rob Walling:
Use. I got it. The complexity. All right. Alright, so with that I do want to get into stage four, which is developing your own frameworks that you have developed out of the done for You work. Talk us through what it looks like today.  

Jane Portman:
So this year with doing more than for you projects, it was obvious that some patterns are emerging and one of the patterns was the way we use existing materials that every SaaS has and that they’re different for every business. Some startups are heavy on videos, some startups have a great blog, some startups offer 20 types of onboarding calls and just different things people have. And the way we use these materials in the process to craft actual storyboards for the campaigns and the campaigns. And we wrote a guide about it and as I was writing the guide, I knew this was a very good piece of content. I wanted to make it into a framework. I tried to find an acronym and I spent an hour. The example for this is like Pirate metrics, A RR, the company may be dead, we all know the pirate metrics. So we wanted to craft something equally timeless, but I couldn’t find an acronym and I was always stumbling on that moment. When you break down what you have into, you atomize your resources into atomic small emails. And I was like, hmm, maybe there is something about the word atomic that deserves that James Clear really likes that we can also use. 

So nothing revolutionary there and went for the name. And then now that that was done, it was a revelation that actually we also have another system for the first stage where we help our users to segment their journeys and use this as triggers and things like that. So lifecycle segmentation is something that we have been teaching for ages and now we have a framework for the creative side of things. So it’s obvious that we have system for this and system for that. So we thought, no, that’s probably called frameworks and we started using that to promote on the website. Our homepage has a section with fancy images where get started with our frameworks and basically highlights that we can help you at every step of the stage. And now this is another PR thing. We can go around customer success shows and talk about using frameworks. Hey, hey Rob, here’s how we got the placement with you. So it’s like in a rendering cycle of doing things, talking about them, meta talking about them, and then so on and so forth, which is pretty fascinating to be honest.  

Rob Walling:
Yeah, folks want to check out atomic emails. You can go to Google and just type it in. It’s look for user list.com or obviously we’ll link it up in the show notes, but it’s a very thorough and obviously very knowledgeable article written from experience. There’s a difference, you said this earlier of people are publishing content about SaaS emails and what they do is they either go to Jet GPT or Baird or they go to a freelance writer who doesn’t know anything about SaaS emails and then they do some Googling and then they research and then they put something together That is a cursory thing to try to rank. And I mean that’s not what you’ve done here. All the posts on your blog, to be honest, feel like chapters of an ebook or even a short ebook, you know what I mean? They could be combined into a pretty interesting collection challenge of course is it changes so often. 

So don’t do a book Jane, because by next year it’ll all be out of date. But that is an interesting competitive advantage that these days people are like, oh, content is dying. SEO is dying. And I don’t necessarily, everything’s sensational. I don’t necessarily agree or disagree with that. But the idea that you can’t still put out really deep, thoughtful, long form content on the internet, on a topic someone cares about and have them discover it and use it, it’s still viable today if you put in the time. But it’s hard, right? It’s a lot of work and takes a lot of knowledge.  

Jane Portman:
It’s a choice because we don’t publish anything but awesome these days. So when someone says, let’s co-market our integration, all you need is publish a blog post on your blog and we’re like, Nope, we’re not publishing a blog post on our blog for a new integration. We are only doing really cool stuff. And we also said, yeah, it’s a whole separate topic for the podcast because we went through the stage of hiring of trying to hire experts to write for us for 2000 bucks a pop. And we did a few, like 1500, $2,000. And it just, again, we stumbled into the same problem that folks are awesome in theory. And I can tell they’re not practitioners, they’re not working with real claims on this specific, well I don’t want to bring them down. They’re fantastic, but not what we’re looking for. There’s too much technical detail in this. So now we’ve settled on this combination of doing this ourselves and and using community examples for other types of posts.  

Rob Walling:
Jane Portman folks want to find you on X Twitter, you are at UI breakfast and are you on Blue Sky?  

Jane Portman:
Yep. Just joined lately.  

Rob Walling:
Alright, are you UI breakfast as well?  

Jane Portman:
Yeah, ui breakfast.com. That’s my old consulting domain.  

Rob Walling:
Amazing. Well, thanks so much for joining me today, talk about customer success.  

Jane Portman:
Exciting. Thanks for having us. Rob.  

Rob Walling:
Thanks again to Jane for joining me on the show. It’s great to have you here this weekend. Every week throughout 2024, it’s a wrap. This is a wrap on 2024. I wish you and every listener a happy new year, and I hope 2025 is shaping up to treat you really well. This is Rob Walling signing off from episode 747.

Rob Walling:
Welcome to Startups For the Rest Of Us, I’m Rob Walling. In this episode, I talk through my nine startup predictions for 2025. I’m recording this in mid-January of 2024, and I like to take a bit of time each year to think about how I think the landscape might change in the coming year. And frankly, most of these are around SaaS, but there are a few that aren’t directly going to impact SaaS. And so I just said startup predictions in the title and predictions are really tough. If you’re actually looking ahead and trying to forecast things, no one knows what’s going to happen. So take these with a grain of salt. There’s at least one of them that I kind of hope doesn’t happen for the sake of all the startup founders that I am rooting for, but nonetheless, if I think there’s a good chance it’ll happen, I want to include it in this episode. 

Last episode, I went through my predictions for 2024, and you probably noticed, I think maybe I had what a 30 or 40% hit rate 50% at best. So keep that in mind when you hit predictions for me or anyone else that at best we’re going to be as good as maybe a coin toss. Before I dive into the predictions, if you missed backing the Kickstarter for my new book co-written with Dr. Sherry Walling, it’s called Exit Strategy. The Entrepreneur’s Guide to Selling Your Business Without Regret. You can now buy it on pre-order in paperback form. So the Kickstarter was for hardcover, but if you go to exit strategy book.com, you can either order an electronic copy or a paperback copy, and you’ll get that in a few months once everything is ready. So if you missed it, exit strategy book.com. And with that, let’s dive in to my first prediction. 

I’m going to go through three of them as a group because of these three I made for 2024, and I’m just carrying ’em through and I realize that’s kind of cheating. So I’m kind of combining these all into one. My first is that Twitter will change hands in 2025. I think either the debt’s going to be called due, someone’s going to do a hostile takeover. The valuation is so low. I just think it is inevitable that Twitter will change hands here at some point. And so I’m calling my shot like Babe Ruth, and I’m saying 2025. My second prediction is that no code and low code will get unit tests and version control. So in 2024, I predicted it would be professionalized and I put that in quotes, and then I did a text expander on professionalizing kind of defined what I meant by that. 

Realistically, the fact that no code and low code don’t really have unit tests and version control at this point, as far as I know, the tools we use, the airts, the bubbles, the softers, the Zapier stuff gets pretty brittle. And it reminds me of how we coded in say the late nineties or the early two thousands. And I do think it will evolve. So unit test and version control coming for no code and low code, and I do think there’s opportunity there for startup founders. My third prediction carried over from last year is that Stripe will go public in 2025. Not much more to add to that one. So my fourth prediction for 2025 and the first new one is that search volume for Google Organic SEO. And I’m talking about content-based keyword targeting where you’re cranking out an essay, an ultimate guide, a blog post. 

I think they will slide across the board by at least 15% in 2025, specifically as they give way to AI searches. Now, realistically, when I first wrote this down, I put 25% and I thought that might be too much, but I think there’s a real chance it can be between 15 and 25% specifically due to AI searches. And the reason I’ve said specifically due to AI searches three times now is because Google has messed around with their search engine results for what the past decade in terms of making ads at the top look like organic results, and then just bumping the organic results further and further down the page to the point where if you’re searching on a lot of laptops, you don’t even see organic results above the fold. That’s not what I’m talking about. I think Google will continue to pull shenanigans with that, but the number of times now that I do searches in Google and the AI answers it quite accurately and cites sources is just shocking. 

And so this zero click trend that a lot of folks ran Fishkin over at Spark Toro I’ve been talking about, but a lot of other folks as well, it used to be that it was a little box with a summary. What’s the weather like? And it just had the weather at the top instead of linking you to weather.com like it would’ve done 10, 15 years ago. But now AI is doing that. And now AI answers pretty complex questions. In fact, in preparation for this episode, I have a prediction later about self-driving cars, self-driving taxis. And I had remembered that people have projected how many traffic deaths can potentially be avoided around the world if everybody used self-driving cars. But I couldn’t remember what the percentage was. Is it down 90? Is it 95, is it 98? And so I typed that into Google and the AI at the top had excellent results. 

I think it said between 90 and 94% of the projections, and these are the different sources and blah, blah, blah. And it just summarized everything. I didn’t have to click anything. So that’s just one example. But I find that being more and more common and what used to happen is I would Google it, I’d see the AI result, and I would question the AI result. Is this legit? Because AI can hallucinate as we know, but they are citing sources and you can see the sentence from the source. So things are going to get dicey. It’s going to be interesting to watch as search engine clickthroughs drop significantly in the coming years. And if you look back, Ruben Gomez and I had a conversation about this three or four months ago, you can search for his name at startups For the Rest Of Us dot com to listen to that episode where we talk through organic SEO and his company. 

Sewell relies a lot on organic SEO, but you’ll hear his perspective on it. It is very much facing the present reality, but also there are ways around this content-based keyword targeting is only one way to do SEO and Google. What are the other ways that maybe won’t be impacted by ai? And this among all the other predictions is the one that I don’t want it to happen because guess how many startups I’m invested in? I advise or I’m rooting for that rely on content-based keyword targeting. There’s a lot of them, but we do have to face the current reality when we are building our companies. My fifth prediction is that ads in AI chat interfaces like chat GPT or Claude or whatever other chat interface you use will become commonplace because this is the next frontier. As eyeballs move from clicking on the 10 blue links on the Google search engine result page, it’s natural that these free interfaces have to make some type of money. 

They have to start monetizing at some point. And so they’re going to be toying around with different types of ads and I don’t know if they’ll look like AdWords or not. Will they be display ads? Will they be text ads? Will they be a video popup? Will they be just a sentence embedded in the AI’s thing of like, Hey, if you like this, maybe if you searched for this, maybe you want to buy a self-driving taxi. That doesn’t actually make a lot of sense, but you get the idea. It can be interwoven into the message. There’s a lot of creative approaches to this. I think IT companies will overdo it. It’ll be super annoying because marketers ruin everything and monetization ruins everything. But my prediction is that we will, I know we’re already seeing a little bit, I think there’s one company right now that’s testing ads in their AI interface as I’m recording this, but it will become, dare I say, almost ubiquitous one year from now, my sixth prediction, another, there’s two more related to ai. 

And look, I’m sorry, I’m not like a big AI proponent or opponent. I think it is just shifting the landscape of everything and the fact that Google’s 10 blue links are being disrupted shows you what a monumental shift across the entire tech community and the startup community and frankly the world. It reminds you of how big of a shift it is. So my sixth prediction is that Google will see its biggest ever drop in revenue due to the transition from 10 blue links being the prominent way people search into AI ads. And I think Google’s going to have a bit of time that they’re going to need to figure it out because realistically, it’s some astronomical number, and I should probably go to Jet GPT or Claude and ask this, but I think it’s something like 95% of Google. I say Google, it’s Alphabet is the parent company. 

90 to 95% of alphabet’s revenue comes basically from online advertising. And this AI phase shift, this huge transition is going to disrupt that and figure it out eventually, I think. But I don’t think it will happen without some type of drop. And Google really hasn’t seen any major drops in revenue from what I can recall over the past 25 or whatever years. So that is my prediction number six. And I want to just pipe in here. I don’t want to pipe in before my seventh prediction. As you listen to these, think about where the opportunity is going to be for Bootstrap startups and as we see shifts and new tools arise, like let’s say they do have ads in AI chat interfaces, well, they’re going to have to have an ad management tool for that that they will build. They being who chat, GPT, Claude, whoever. 

Usually those are not going to be very good at the start. So if they have an API, is there a way to build a third party tool that can manage the ads better? This is what TinySeed company Link Low has done for LinkedIn ads. It’s link low, do io. If you are using LinkedIn’s built, built-in ad interface, you know how painful it can be, and Link Low helps make that a lot better. So is there an equivalent for these other new ad interfaces that are going to be created? That’s just one idea. One example I think of as I look through these predictions, my seventh prediction is that the term AI will be used in fewer H ones than it is today, especially across startups because AI will just be assumed. It will just be the norm, it will be the default. You will assume AI is in every product that you log into in every SaaS app that you use as it becomes ubiquitous. 

I think back to maybe 2005 on the internet when as SaaS companies, they weren’t called SaaS back then. They were called software, web software, web-based software or a SP application service providers. As those became more prominent, they literally would have statements on their homepage, you don’t need to operate a server to use our software. It’s not client server access from any internet browser and also entering your credit card is safe and secure, all this stuff. That was such a paradigm shift to get people to try to get their head around it. Well, it’s like, well, I don’t need a server. How do I do it? And there would literally be FAQs of, well, you just log in here in the web browser and you use the software and you had to explain that to people. And these days it’s like, well, it’s AI for this and it’s your AI assistant and it’s your AI. 

That I think, I mean I guess if it’s an AI assistant that’ll stick around, but I do think there’s going to be a new term that comes around because AI means too many things right now. And I almost wish the term virtual assistant that came to mean someone who was remote, right? It’s like, oh, back in the four hour workweek days of, I don’t remember when that was, oh eight or oh nine, virtual assistant came to me. Oh, I have someone in the Philippines or in APAC or in just an inexpensive region and really virtual, I don’t know. I wish that term hadn’t already been co-opted for that because AI means too many things and I think there will be terms that splinter off of this to better describe what they actually are. But all that said, my prediction is not that I’m digressing, I am predicting that the term AI will be used in fewer H ones one year from now because it will just be assumed that AI is built into everything. 

Now in the near term, I think the number of applicants two TinySeed and two Y Combinator that include the term AI will stay the same. Hopefully it doesn’t go up. I mean, I think the number of companies or the percentage of companies accepted into Y Combinator that say they use some form of ai, it was like in the most recent batch was 85 or 90%. It was some astronomical number TinySeed that much, but it was definitely, if I were to just ballpark it, maybe 40 or 50% in our most recent batch. I’m not sure it’s that high, but you get the idea, which is very much up from zero. No, we actually had, I think we had maybe 5% two years ago, three years ago before chat GPT, it was kind of one in each batch was using AI to do something. And then it has slowly slash quickly ticked up to where we got a lot of applicants. 

The problem with a lot of the AI tools that applied to TinySeed is they have this super sharp growth curve and crazy high churn. And so you can’t outrun that kind of churn, 15, 20, 20 5% churn. And I just think a lot of them are catching a temporary wave and there’s opportunity there in the short term. But to build a long-term sustainable business to make it that long, most of them will not. And it’s the same thing you see on X Twitter or blue sky folks launching and like, Ooh, ai, look at this growth. And then yeah, a few months later, the Hubbubs died down and you don’t hear from them anymore, and then you see it for sale on a choir for a fraction of what you think it would be worth. And so there are very, very few, I’m not saying there’s zero, there are very few that are AI rappers chat GPT rappers that will be around for years. 

My eighth prediction is one I referenced earlier. It’s about self-driving taxis specifically, and the prediction is that self-driving taxis are legit and anywhere that allows them to operate will quickly see them become the norm. I’m speaking from firsthand experience having been to Scottsdale, Arizona, flying to Phoenix, Scottsdale’s right there butted up against it. And I saw ads for Waymo self-driving taxis in the airport, but of course I have Lyft and Uber, and so I used one of those apps to get to the hotel. But then a friend of mine who lives in Phoenix said, while you’re here, you have to try the Waymo’s. He said, it’s all I take now. So download the app and try it. And I did, and Sherry and I rode around in a car with no driver and the steering wheel moves and it takes up one trip. It took me one trip to get used to. 

It is a super interesting experience to be in there. And you have full control of the climate, so you can make a hotter, colder, you have control of the music, you could feasibly pair your phone, but it was kind of a complicated thing for music. But they had playlists. Of course, it was a bunch of Christmas direct because it was late November. But after doing that, I was struck by just how pleasant the experience was and the fact that self-driving cars are so much safer than human-driven cars is just incredible. And again, referencing earlier in this episode, I went to Google and asked how many traffic deaths, not just accidents but deaths, do we estimate will we reduced by these self-driving cars? And the numbers that quoted were between 90 and 94%. So in the United States for example, there’s somewhere around 50,000 traffic related deaths every year. 

And a lot of those are from people who it’s driver error, it’s humans being tired, being drunk, being high, making mistakes, unable to see in certain conditions where an autonomous car can see through the rain or whatever. And humans might have difficulty or darkness. And so even if we take the low number of 90%, instead of 50,000 people dying each year, you’re going to have 5,000. It’s an estimate, but even if they’re off by factor of two, it’s just shocking. It’s shocking. And I know there’s a whole conversation just like ai, there’s a whole conversation around jobs, and I get it, and I am totally open to having that conversation, not going to have it in this episode. It is much like self-checkout and much like robot manufacturing, instead of humans putting a rivet in something, robots doing it in a Toyota plant, there’s whole societal impacts that we have to deal with. 

But put all that aside for this podcast, talking about startups, self-driving taxis are a thing. And if they came here to where I live in Minneapolis, a hundred percent, I would be willing to take them. And in fact, late nights when sometimes I’m concerned that my driver is super tired or the driver might be drunk, I would want a self-driving taxi. And here’s the other thing, I have two teenagers and at times there’s Uber for teens, where as the parent you kind of monitor what’s happening. And so they can call a car, it tells you your child called a car to this location, and they try to give you the highest rated driver, like only 4.9 and up, and they take a bunch of safety precautions. I think they have background checks or whatever. I’m guessing they get more. It’s the premium drivers, it’s a premium service, and then you can see the car the whole time and then you get notified when they get dropped off. 

But wouldn’t that be even better if it was self-driving? Like the risk of someone doing something that you don’t want to happen goes away because it is a self-driving car that pulls up and they get in and it’s just incredible. Now, do I wish that mass transit was a thing? Yes. Do I wish in more US cities, it was just buses and trains in a lot of European cities that I visited, of course, again, it’s a conversation we can have about how society, how America developed around cars and on and on and on. But self-driving cars are legit. Self-driving taxis specifically are amazing. And then what I’m thinking is my brother lives in the Bay area of California and he has this massive commute traffic’s so bad, and as a result, he bought a Tesla purely for the self-driving because he spends so much time in the car each day, like 90 minute commute each way. 

Think about it like that. And it allows him to be more present with other things rather than sitting there pushing a gas pedal. But when to true self-driving cars change the game, not just taxis, but my brother could drive and not even need to sit behind the wheel anymore because that’s what Sherry and I were doing in Phoenix. We were in the backseat as the car drove itself. And non taxis meaning just commuter cars that people are driving day to day don’t have that yet. And so when that clicks, how many of those are going to be sold and how many cars on the road will become self-driving? It’s going to be a lot. And I don’t know if 2025 is going to be the year of it, but I think regulation is a big part of what holds this back. And of course, there are also driving conditions like all the testing is being done. 

It’s usually in on the west coast or the Southwest. It’s not done in the snow, so it may be a very long time until we see them in rougher climates. My ninth prediction is that platform risk will intensify in 2025. There are more platforms to build on. There are larger, more monopolistic platforms that exist. The Shopifys, the Facebooks, the Reddits, and I think bootstrap founders will face increased challenges with platform dependence. And if you listen back to episode 735 of this very podcast, just not even 15 episodes ago, the eight levels of SaaS platform risk, where I talk about the three key factors within platform risk replacement, customer concentration, and lead flow, you will hear that it’s not just one or zero, it’s not just on or off. But I have eight levels where I talk about almost no platform risk relying on a commoditized platform all the way up to aggressive platforms, few replacements, and you have high customer concentration. 

So what does this mean for entrepreneurs? Well be aware of platform risk, be aware of the types of it, the dangers of it. Know what you are getting into. It’s not to say you should never build on a platform. I think step one and step two businesses can be incredible opportunities for entrepreneurs. As long as you’re aware of what you’re getting into. I would not want to build a 10 year business on any of these platforms. They do not give a shit about you, and they will sooner cut off your API access, say, oops, killed your business. They will build the feature directly into their platform. Oops, killed your business. They don’t care. They’re like Honey badger. They do not care. So know what you’re getting into. If I were starting out trying to get my first app or first couple apps trying to quit the day job, I am all for platforms because I think platforms lend. 

It’s all the reasons the stair-step method exists. But if I were looking to build my next app to seven or eight figures, I would think long and hard about whether or not I wanted to be on a platform that could take over the whole business, could kill it. Now, realistically, the hard part is this changes because WordPress, I feel like has always been a pretty friendly platform until this year when Matt Mullenweg’s slash WordPress made the decision to be very aggressive with WP Engine and apparently take over plugins. I mean, there’s a whole story there that I’m not going to cover here, but realize that platform risk exists in a lot of places, but it doesn’t exist everywhere in the same level. And you will want to educate yourself, know what you’re getting into as we head into 2025. So thanks so much for joining me today to hear my nine startup predictions for 2025. Some of them are positive, some of them are downright gloomy, but I did want to share these with you as I’ve been thinking about ’em. Thanks for joining me this week and every week. This is Rob Walling signing off from episode 746.