Episodes

Rob Walling:
Welcome back to season four, episode seven of TinySeed Tales, where we continue hearing Colleen Sch Nestler’s startup journey as she ventures on now as a solo founder. Before we get into the episode, if you are a SaaS founder, doing at least 1 million in a RR are going to be there soon. You should check out SaaS institute.com. That’s our premium coaching program for founders doing seven and eight figures. We have our first two coaches in place, Jordan Gaul, who many of you know from bootstrapped web, founder of Cart Hook, founder of Rosie, as well as Mark Thomas, who runs growth at Podia and formally worked at Powered by Search. Both have been TinySeed mentors for many years, and both are exceptional at helping SaaS founders figure out their roadblocks, figure out those bottlenecks and get things going. So SaaS institute.com, if you are looking to be in a mastermind group with four other ambitious seven and eight figure founders, if you’re looking for amazing one-on-one coaching community, a couple in-person events per year, there’s a lot going on and we’re putting together an incredible group of folks. And with that, let’s dive into the episode.  

Colleen Schnettler:
There were like hundreds of competitors and I was like, who are these people? And so it’s a little bit of a rant and it’s good for capitalism, but it’s bad for me in that these products are really good. And no matter what you think is unique, it’s probably not. Someone’s probably doing it with more money and better ui. So you really just have to put the work in to make the product better. The product development has to be a continuous cycle.  

Rob Walling:
Welcome back to TinySeed Tales, a series where I follow a founder through the rollercoaster of building their startup. I’m your host, Rob Walling, a serial entrepreneur and co-founder of TinySeed, the first startup accelerator designed for Bootstrappers. Today in episode seven, we’re back with Colleen after almost four months since our last conversation in the world of startups, four months can feel like an eternity. I was eager to hear how things are going. So Colleen, when we last left your story, you were building a tool aimed at directors of engineering. How did all that play out? Where do you stand today?  

Colleen Schnettler:
Well, yes, it’s been a few months and it has been quite a wild ride. I’m going to be honest. So my first vision last time we talked was going to be this product, and I was targeting engineering managers in the hopes that it would help their developers save time by allowing other teammates, like non-technical teammates to build their own reports. And so the first I got some kind of initial, which when you’re trying to go zero one is really fun, and it kind of felt like there was a lot of energy and momentum around the initial product, but truthfully, that fizzled out pretty quickly. So at that time, it kind of felt like I had more of a, oh gee whiz, this is cool and not a wow, this is actually a useful product. I’m going to integrate into my workflow. So at the time, there were maybe three or four people who were actually interested in using the product to build reports. 

So I worked really closely with them to say, how do we decrease the kind of cognitive overload for the person using the product? So you’d come into the product and it’s AI on top of your database to build reports, and you say, but what do I want to know from my database? I don’t even know what I can ask. So I built in suggested questions based on your schema, and then I shortened the time from, someone has this book, I forget her name, but it’s called First Time to Wow. And it’s this idea of you get something in front of your customers, how do you wow them quickly? So now I have it set up in a way where you come in, it shows you a sample question customized to your database, you click it and you immediately get a chart so you can immediately see a visual that represents the data, you can add it to dashboards, all of that to say there was a lot of early development working tightly with potential customers. 

But as I continued to go down that path, I just wasn’t getting the engagement I thought I would get from developers and engineering managers. When push came to shove, it just felt like they were casually interested, but this product was not really solving a pain point. And I think part of that was because you can’t put it in front of completely non-technical people yet the AI is just not good enough. So a lot of development work, talking to a lot of developers, talking to a lot of engineering managers, but ultimately I don’t think they’re my target market.  

Rob Walling:
Early stage founders are often faced with this dilemma. When is the right time to move on from an idea and how do you know when that’s the right direction?  

Colleen Schnettler:
That is such a hard question because I feel like for every successful bootstrap business out there, you’ll hear both sides of the story. You’ll be like, this person was successful. They pivoted so quickly, this person was successful, they stuck with it for three years. So I was really just going on what I felt was the right decision. And for me, the reporting that I was looking at targeting engineering managers and developers that was going towards embedding reporting for customers and looking deeply at that space, I just didn’t think I had any unique angle. I mean, there’s a lot of products out there that’s embedded reporting for customers, and they’re really pretty good. And I didn’t have any kind of unique takes. So at one point I even almost took a consulting job building embedded reports for a potential customer in order to learn more about that space and the limitation of that space. But I decided not to do that because talking to a couple different people, it seemed like the requirements were so disparate. And I didn’t want to get myself back in that situation where I was a consultant who thought I was building a product, but I was really just consulting.  

Rob Walling:
And so you find yourself at a decision point. You decide, well, this isn’t the right idea for me, or this is not how I’m going to proceed. What next? Are there fallback ideas that you’ve fall back to or is it searching for the next thing?  

Colleen Schnettler:
So actually, to be completely honest, I went and spent a week in the woods, and that gave me some time to really think about, do I want to pursue this embedded reporting idea? Do I want to stick with this idea and try another take on it? Do I want to shut the business down? Obviously a huge opportunity cost to continue to pursue this idea. And what I landed on is I’m not done with this idea yet. I want to take another swing at it, come approach it from a different direction.  

Rob Walling:
I’ve talked for years about the value of founder retreats, taking a break and spending some time away from the computer can give you the space to find some clarity. Colleen’s time in the woods seemed to reinvigorate her interest in a previous idea, a report builder for marketers. So I was wondering what led her back to this idea.  

Colleen Schnettler:
I actually hired a marketing coach to help me figure out an ICP, and I sat down with him and there was this immediate thing that happened where before he was a marketing coach. He was a marketing analyst, and he was like, oh, I literally would’ve bought this tool. This was a problem I ran into all the time where I needed data from my database. I think you can really reach these people by teaching marketers sql. So teach marketer sequel and see if it resonates. And so I said, all right, let’s try it. And marketing I think is really good for me because I’m a developer and I’m really, really interested in the marketing space. It’s something I really want to learn. And one of the things I do well is kind of learn in public. And so learning about the space and talking about the space is something that comes very naturally to me. And like I said, it’s something I’ve wanted to do anyway. It felt like a good alignment of things I wanted to do and potential customers.  

Rob Walling:
And so where do you stand today? Do we have a product in the market? Do we have folks using it?  

Colleen Schnettler:
Yeah, so I am all in on this new idea. And the new idea is I help marketers build better reports. I’m targeting marketing data analysts, people who are marketers. So there’s actually, I’ve been in this space for a while now. There’s a big difference between data analysts who are pure data people. They’re with Python and R and whatever. And then the marketing data analysts and marketing, those people are marketing first. So they’re trying to take their existing data and figure out how to use that data to do better marketing, to sell more product. And so I’m all in on those people. I started a newsletter. I am on LinkedIn. I’m sending thousands of cold dms on LinkedIn. I have a whole strategy behind helping them get data out of their database using sql. So that’s kind of what my newsletter’s about. I have a couple users and I have my first paying customer, which is pretty exciting.  

Rob Walling:
Wow, that’s amazing. How long ago did that happen?  

Colleen Schnettler:
Two weeks.  

Rob Walling:
Okay.  

Colleen Schnettler:
Just happened.  

Rob Walling:
So they’re paying, are they using it as well?  

Colleen Schnettler:
Yeah. What’s interesting about this person is I got on a call with them and they hate my ui. I don’t know how else to say it, but they’re like, this product isn’t even very good. And I was like, oh, okay. But I do think it’s interesting that this person was like, this product isn’t very good. So I didn’t think they were going to convert. And then it was kind of fun. I was in the woods having my soul searching, and I didn’t have Stripe notifications set up. So it was two days later I realized they had converted and I sent them a message and they were like, yeah, well, I needed to run more queries. I was like, awesome. But I mean, this is still the wild west. This is still my plan is focus in on these marketing data analyst people with everything I have. I think what I’m going to find is their data is in many different data sources, but try to find, I’m just really, really trying to find that one pain point, one little niche where I can just grab a foothold while simultaneously, I’m a one woman shop now because budget is tight. So simultaneously making the product something that these people want to use. And so it’s crazy.  

Rob Walling:
This is early stage where everything’s cloudy and you wish you had 10 times more hours to get there faster. Makes a lot of sense. Yeah. So what is the product today? Is it I can type out an English sentence and AI turns that into a SQL query and then pulls data out? Or is there more than that?  

Colleen Schnettler:
Yeah, so the product today is, it’s a chat with your database, but you ask, it’s fine tuned to you ask a question, it returns to SQL Query. You can edit the sql, which was funny, that was a heavily feature, but no one actually does it. It’s like people just want to know that they can, they want to see it. 

They want to see it. You can edit the sequel, you run the sequel. It gives you charts. It gives you tables that you can export or add to a dashboard. So the dashboard seems to be kind of an interesting thing. Right now, the marketers so far, and again, it’s a very small sample size I’m working with right now, they seem to really be leaning into what can I do? What reports can I build with this? And you also have a live shareable link. And so one of the things I’ve thought about is you can do triggers, you could do triggers off your database, which is actually something I’m really excited about. My one paying customer really wants me to do that and I need to talk to more people. But I don’t know, I think there’s something there. I think there’s possibility there. The goal is to have something, they come in, they set up, and they don’t have to log into Hello Query. So if you look at product analytics tools or some other tools, even like a Google, they send you emails once a week, here’s what you need to know. And you’re like, sweet, I’m happy with that. So that’s kind of where I want to go with this.  

Rob Walling:
I’m just curious how much your first customer is paying you.  

Colleen Schnettler:
$59 a month,  

Rob Walling:
You decide on that amount.  

Colleen Schnettler:
I literally made it up.  

Rob Walling:
Usually how it goes. Yeah, we have TinySeed companies come in and they’ll be like, our pricing is 499 and 1,002 thousand or whatever, high end tools. And we will look at their data and I’ll say, why are these people paying you $29? And they’re like, well, so when we launched, we launched at 20. You know what I mean? And it’s like it just shows you that’s what happens. 59 will become 99, we’ll become, when you build something people really, really want, that number goes up fast. There’s one interesting comment you made to me via email. I want to surface because so many people listening to this episode will have felt this or might be feeling this now, but to quote you said, the bar for product is so high in today’s market, or at least my solution is not compelling enough to have a low bar. 

There’s this prevailing wisdom that if someone wants something bad enough, they’ll put up with a mediocre ui. But it seems every category is crowded. And I hear this, I hear this from folks getting started of the days of a crappy MVP may be gone, and I can either confirm nor deny because I do know that there are some folks, there are some areas where you can still build crappy MVPs and they work, but there are also places where it’s not. And the more technical your audience, the more design focused, whatever, they pick up on products that are really and not poorly built, but that don’t look amazing, don’t have amazing UX and don’t feel finished. We can tell you and I can tell as builders when a product is finished. So what does that mean for you then as someone who is building a product and has what we might call an MVP now with one customer? What is that sentiment that you sent me imply for your journey?  

Colleen Schnettler:
Honestly, I think it just seems that the products are so good and it seems like every niche that you can think of, that’s what it feels like to me has five or six products. There’s no world of like, oh, there’s one competitor and they have a crappy product. People are just building better stuff than they were 10 years ago, right? 10 years ago. You’re like, oh, this thing, it looks crappy, but it does exactly what I say it’s going to do. And that kind of worked for some people, but I just feel like the level of polish you need in a product is so much higher now. And it’s funny because I think of it because the very first version of my product, I thought it looked pretty good, and then I put it in front of people, like five people, and I was like, oh. And they were like, Ooh, where do I change the name? And I expect to be able to do that in line, and this font looks weird and it’s too big. And I was like, but it does what I said it was going to do. Okay.  

Rob Walling:
Yeah. When you’re talking to engineering managers or even marketers who have this high bar for the tools they use now, right? Because things are polished. Makes  

Colleen Schnettler:
Sense. Yeah, things are polished and I don’t know, it feels like this whole revolution of everyone, shipping product is great, but everyone is shipping a product. So there is a ton of competition even in, so when I was thinking if I wanted to do other ideas, I was talking to friends that work in other industries. I talk to someone in insurance. I talked to someone who’s in this really niche, really niche industry you’ve probably never heard of. And I was like, definitely they don’t have tools because no one even knows what they do, but they do. She was like, yeah, we have five competitors. I looked at the schools I looked at, I was looked across anything where I knew someone, environmental survey companies. I was like, all of these sectors have products. I think I even told you I filled out, they call ’em request for proposal for this really niche thing. 

I was like, no one’s going to apply for this or submit a proposal to this because no one has ever heard of this. I didn’t get it. But that was another example of there were hundreds of competitors and I was like, who are these people? And so it’s a little bit of a rant and it’s good for capitalism, but it’s bad for me in that these products are really good. And no matter what you think is unique, it’s probably not. Someone’s probably doing it with more money and better ui. So you really just have to put the work in to make the product better. The product development has to be a continuous cycle. If  

Rob Walling:
I ever prediction for where you’re headed, and this is just none of us can predict where you’re headed with the product, but I feel like it won’t be inventing a new category or it won’t be building something that has no competition. It will be figuring out, as you get into this, now you have your ICP. What tools do they use today that they’re already paying for that are not good, that are either way overpriced? And I don’t mean 20% overpriced. I mean five x what you could charge half or a quarter and still mint money or that are really, they’re polished and you can do a lot of things, but they still don’t work. And there’s either a major deficit in a big competitor or there’s a corner of the market that isn’t being handled. And I think it’s kind of being in the game, increasing your luck surface area by just being there, having the conversations, building something. And I think the difference between success or failure will be if you can find that spot where you fit in the market.  

Colleen Schnettler:
I agree. I think one of the things with what I have now, if you look at it as chat with your database, build reports, that’s not really solving a problem. What is that? That’s cool, but what is it? What is the problem you are solving? What can you do with that? I think general, some people, so chat with your database is not and any way unique. Everyone’s doing that and a lot of the companies doing it are trying to position it as the data analyst for your company. I don’t think that’s right. I think that is still too vague. People are still, the whole point of hiring a real data analyst is they tell you what you don’t know that you don’t know. So I think you’re right. I think this is all about exploration. This is about finding out what tools they’re using that maybe aren’t good enough. It might be an aggregation of tools. I can see a world where it’s dump everything in Big query. I do it for you, dump everything in Big Query. And I sit on top of Big Query because Looker gets really expensive really quickly. Yeah. But again, this is the beginning still. I’m still in the beginning.  

Rob Walling:
In the last episode, Colleen was frustrated at her lack of progress. And now that she’s 22 months in, it feels like she’s just getting started again. And you know what? Sometimes that’s just how it goes. Sometimes you have to pivot your idea. Sometimes you lose a co-founder. Sometimes it takes a while to find a problem worth solving. That’s being a founder. In talking with Colleen after this interview, she has about six months of runway to find some traction. Six months to find a signal in all the noise that indicates she’s working in the right direction. That’s next time on TinySeed Tails.

Rob Walling:
But it was just that long list of the same mistakes that I see founders and aspiring founders making thinking they can sell everything on Twitter and they don’t have to do any hard work. It’s common, and it’s unfortunate that so many people kind of fall into that trap as well as the build it and they will come thing or just the, okay, so I built this product, now how do I market it? I see this question on Reddit and it’s like, geez, dude, are you kidding me? It is startups For the Rest Of Us. I’m your host, Rob Wallen. Each week on this show, I cover topics related to building ambitious, yet sustainable B2B SaaS companies. So you could be bootstrapped, mostly bootstrapped, maybe you’ve raised buckets of funding as some of the listeners do. Historically, the show has focused on bootstrapping, but really it’s about building independent, self-sustaining startups that aren’t tied to this need for fast, fast, fast growth, billion dollar outcomes, and the constant influx of additional capital. 

In today’s episode, I answer listener questions. It’s a good mix of some voice questions, some intermediate questions, and I think I even have an earlier stage question to answer as well before I dive in to the questions. If you have not checked out SaaS launchpad, that is the best course that I know for early, early stage SaaS founders. So it’s all about finding ideas, vetting ideas, trying to do some validation, building your product, getting to launch, doing marketing before you start coding, doing marketing before you launch the product, and finding those early adopters and early users. That’s at SaaS launchpad.co if you want to check it out, is by far the best course I have ever built has almost 10 hours of in-depth video content that is just packed with tactics and strategies and all the stuff that I espouse. This is stuff that I don’t have in any other books. It’s things that I touch on here and there on the podcast, but have definitely not gone into this depth ever in anything that I’ve released. So SaaS launchpad.co if you’re just getting started. And with that, let’s dive in to our first listener question.  

Craig:
Hey Rob, a longtime listener, first time caller. Thanks so much for the podcast and for the SaaS playbook. I listen to the podcast every week and I’ve read the SaaS playbook five or six different times, and each time I extract new information and insight from it, it’s just such an incredible resource for bootstrap founders. So first of all, thanks so much for all you do. A little context, I’ve built a B2B SaaS company, which provides an analytics platform to HR teams to help them make data informed decisions about their talent. So think about things like collaboration, insights, employee engagement, drivers, predictive attrition. And for this we use a variety of different data sources such as HR systems, business systems, and employee surveys. For MVP, we built many components such as our data Mars and pipelines, but for others, we decided to white label other SaaS solutions. 

For example, for the surveys, there’s so many great survey platforms out there, we just couldn’t justify custom building something given the relatively low expense we would incur by white labeling an existing solution. Ideally though, we would prefer not to have these dependencies on other SaaS companies because we would like to flexibility and control over the cost and features within our platform. Since we are a bootstrap startup, however, we found white label components to be a quick and low cost method of achieving product-market fit and launching our MVP. So I’ve got a few questions around this. Number one, how would you advise thinking about the mix of custom-built versus white label components, does the optimal mix vary based on growth stage? And number two, is there an inflection point at which we should consider prioritizing a migration away from these white label components? And then lastly, if we were to sell the company one day, does the reliance on other SaaS for specific capabilities impact our valuation versus a fully custom solution? Thanks for your time,  

Rob Walling:
Greg. Thanks for calling in and for the kind words at the top of your voicemail, if you’ve read the SaaS playbook five or six times, I take that as a real compliment and I take it as a sign that it’s probably providing some value to you. So thank you for that. I really do like this question because it’s not super common that people will completely white label big areas of their app. I guess I’ve seen folks like they’ll do an integration with an electronic signature app if they don’t want to build that functionality. So I’ve seen it done here and there, but it sounds like you’ve done this with multiple white labeled vendors, which is obviously a good way to, as you said, get to market faster, not to have to build all this functionality. I will admit I do see white labeled integrations like this as a form of technical debt, and it’s one of those that it may never come back to bite you, and that’s great, and I think that’d be a big part of my thought process here is if it’s not broken, I would probably not prioritize fixing it very highly unless I felt like the white label vendor or that part of the app was existential to my existence as a company. 

And so if I was doing half a million dollars a year, unless one of the vendors is jacking up their prices or they’re not reliable or there are bugs or there’s downtime, obviously then it’s broken and I would consider prioritizing fixing it. But with none of those things in place, if there’s not anything going wrong with any of them, I could see getting to a million a RR before really considering swapping them out. And the way I would think about it is which of these is the biggest platform risk? Really what this is, it’s a form of platform risk. Now it’s lower risk than something like building on X Twitter or making a Facebook app or making a Shopify app. Certainly lower risk. And if you go back to the episode where I talked about platform risk, I talked about how there were eight levels and three different factors that contribute to those. 

And I believe what you have only has one of the factors, which is a technical reliance on a third party, you are relying on their white labeled solution and the API for your product to properly function. So one of Craig’s questions is how would you advise thinking about the mix of custom built versus white label components? And for me, white label is a risk. There’s platform risk and it’s a form of I guess technical debt, something that long-term. I mean, if I’m going to become a 10 million a RRR 20 million a RR SaaS company, I have to undo this at some point. Much like if I’m going to become a 10 or 20 million a RR SaaS company, at a certain point I have to go back and fix some of the crappy code that I wrote in the early days when I was trying to get to an MVP. 

These are different, but they’re similarities. And so the mix and the way I would think about it is I want as much of my custom code that I own, that is my custom IP as possible as makes sense. But of course there’s a balance here. If I can get to 250,000 or 500,000 annual recurring revenue much faster by using white label, I want to probably consider that. Then Craig asks, does the optimal mix vary based on growth stage? And I think it does. I mean, there are people that are building a hundred percent in no code trying to get to 10 KA month so they can quit the day job so they can then rebuild it with code. And I would never want to be running a million dollar SaaS company that was in no code personally, I’d be so worried about the brittleness and the scalability and platform risk and just all those things. 

So it really does to me, depend on the growth stage. One of the reasons is the further along you get, the more valuable it is. And if I have an asset, let’s just say you’re at a million or 2 million a RR and throw out a five XARR, multiple growing fast, checking five to 10 million business, that’s when I mean stuff’s real at that point. So that’s when I start getting nervous around these kinds of dependencies. The technical debt, the platform risk that I’m talking about when I’m supporting myself and team members, I’m paying people’s mortgages. I have something worth millions of dollars, makes me more and more nervous. Then Craig asks, is there an inflection point at which we should consider prioritizing migration away from these white label components? I mean, I would do it one at a time over time, and maybe you never replace all of them. 

You go with the least risky one last and the one that is performing really well for you and it’s inexpensive and it’s easy street, what are the factors there? Jacking the price up, there’s bugs, there’s reliability issues. These are all the things that can contribute to that. And so I would probably start thinking about it around a half a million a RR, maybe a million, and I would have a list probably in priority order of what I thought we should do. And then you put that into your roadmap at a certain point. Do you do one every quarter or one every six months? Depends on what else you’re trying to ship. And then lastly, Craig’s question is, if we were to sell the company one day, does a reliance on other SaaS for specific capabilities impact our valuation versus a fully custom solution? It depends. 

It depends on is it 10% of your functionality? Is it 80% of your functionality? There’s a big difference, and are they causing you any problems? Right? That platform risk will probably be factored in, but only if it is, again, more than just a small bit of your functionality. And if you have 10 modules in your web app and one or two of them are white labeled, I could see someone probably saying, well, I’m going to buy it and rewrite those custom, right? But if five of your 10 are white labeled and it’s some pretty complicated piece of functionality, then someone thinks, well, I want to want to buy it and rewrite those, but that’s a ton of work. So they would probably factor that in. So the answer there is kind of maybe it really depends on the extent of it, how hard it would be to recreate that functionality and whether there have been any issues at all with the white labeled components to date. So thanks for that question, Craig. I really do appreciate you writing in with it because one that we haven’t heard on the show before. My next question is from Ian, and Ian was kind enough to send in a question and then they kind of answered their own question a couple of weeks later. So let’s listen to his first voicemail, which was a question about a VoIP system as well as a way to get to his SaaS metrics.  

Ian:
Hi, Rob, longtime listener, first time caller. First off, I wanted to thank you for all the great work you’ve done to help bootstrapped founders and co-founders like myself. Startups For the Rest Of Us has been helping us and encouraging us since we started our business back in 2016. My name is Y Han and I’m the co-founder of Wash Dry Fold, POS. We’re a bootstrapped B2B SaaS company that offers point of sale and management software exclusively to laundromats that offer wash dry fold. We built this very niche software because we needed it in our own laundromats located in Tulsa, Oklahoma. We’ve recently sold our thousandth point of sale system and hit the 1 million a RR milestone. We just hired a full-time employee and I need help finding the right tools to help us scale. For several years now, I’ve been searching for a software that would centralize virtual phone lines for all employees while also providing a way to centralize our inbox for tech support, customer service sales, et cetera. Beyond this kind of VoIP slash CRM functionality, I also really need in-depth SaaS metrics like LTV based on custom cohorts. We already use ActiveCampaign, slack, Calendly, WooCommerce, and all the Google tools, but I’m really struggling to find a solution that pulls everything together and adds all the functionality without adding multiple new subscriptions that then everyone on the team has to learn. It’s something I’ve researched, but I’d love to hear from a B2B SaaS veteran or from somebody who has deep experience in the space. Thanks so much again for all you do.  

Rob Walling:
So when I heard this question, I thought to myself, Hey, that’s a pretty cool niche and congrats on getting to a million ARR in such a small, what I would consider a small market. It’s not huge, but that’s great. The things that came to mind when Ian asked this question, and then I’ll let Ian answer his own question with the solutions he went with. When I think of a VoIP solution to centralize all the phone numbers, I think of open phone or Grasshopper and Grasshopper’s older school, it’s been around for what, 10, 15 years, but open phone. I know a lot of startups that use it. And then for in-depth SaaS metrics, if you’re using Stripe, I would be using one of three ProfitWell chart Mogul or Bare Metrics. Those are the most popular. We see it across TinySeed and MicroConf companies, but those were the things that came to mind. 

And then for crm, I don’t know, I think of close.com that integrates outbound VoIP with CRM functionality, but I don’t know. I don’t know if they do inbound. I would guess not. And so I was thinking that these are three different tools. These are not, there’s no one tool that does all of what Ian has asked for, but to have Inbound VoIP to have CRM separately, well, I’m like, okay, well pipe drive and close and active campaign. Since you’re already using Active Campaign, I’ve heard their CRM functionality is not the worst. And so maybe that’s a piece I would use. And then of course, SaaS metrics already weighed in on. So with that, let’s cut to the chase and hear what Ian decided to go with.  

Ian:
Hey Rob, it’s Ian. I sent in a question a few weeks ago and I just wanted to give you an update because I think I have a few answers for one for VoIP. I ended up going with Zoom, and it turns out you can bundle a lot of their stuff to get really good values, and they’re still, even with a Zoom Pro license, it was still half the cost of RingCentral and some of the other more VoIP central services. So I think that’s a really nice resource for someone looking for something similar. For the CRM piece of it, I think we’re just going to go with active campaign CRM functionality because it’s got the basic stuff that we need. And then the third thing I was really looking for was SaaS metrics, and I’ve kind of dove in deeper on that. And there’s certain things like net revenue retention where I haven’t really been tracking all the metrics that I should have been tracking or the way that I should have been tracking them specifically because with certain customers, I guess if they add a seat, which for us would be adding a store, that’s an increase in that customer’s spend, but we just track it by store and not by actual customer. 

And so there’s a lot of kind of funny things that I probably need to go back and recategorize go find when they first started with us and calculate their LTV and all that kind of stuff. And so it would be nice to still know a really good SaaS metrics software that somebody’s used and liked, but at the same time, I’m realizing that I don’t really even have all the right data to get the right metrics out of the SaaS software, at least in the past. So anyway, just wanted to give you an update on everything. Appreciate what you’re doing, always listen to new episodes, so keep doing what you’re doing and thanks. Bye.  

Rob Walling:
So obviously, thanks for weighing in on that, Ian. I didn’t know that Zoom had any type of VoIP functionality, so that’s really interesting. And it’s less than RingCentral, which is yet another one of these phone centralization platforms. And then Ian did wind up going with ActiveCampaign, which is cool, and I’m not sure if they’re using Stripe. And so the solutions that I suggested may be a little trickier to get to. But with that, you’ve heard both my and Ian’s take on this question. So thanks for writing in Ian. If you want to invest in founders, 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 hand picked 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 and invest. 

My next question comes from X Twitter where a listener named or Lee, he’s at sunglasses face on X Twitter, and he asks, what change in mindset do you notice between founders doing $100 MRRA thousand dollars, 10,000 MRR and a hundred thousand MRR? It’s an interesting question. It’s worded in a way where I’m not sure I accept the premise of it. It implies that if you’re doing a hundred or a thousand dollars a month, that you have a different mindset than someone doing 10,000 or a hundred thousand. And if you think about it, the founder doing a hundred thousand MRR was probably at 10,000 a year or two ago and a thousand a few months before that and a hundred a few months before that. And so it’s the same founder, and I just don’t know that your mindset shifts that much, but I kind of want to answer a related but a different question or just reshape the question. 

I feel like orally might be asking, what mindset do you need to be successful? What mindset shifts do you need to have internally to get to a hundred thousand MRR? And the interesting thing is I think there are three components to success, hard work, luck and skill. So if you have a lot of luck, I actually don’t know that you need any mindset shifts. You just get lucky and that happens. But that is by far that the minority of founders that I see being successful. So let’s take a look at hard work and skill. I think the mindset of those two things is you put it in the hard work and you do the grind, and you do the things that sometimes you don’t want to do, and you build your own skills and you don’t shy away from saying, well, that sounds hard, that sounds uncomfortable. 

I don’t think I want to go do SEO or figure out how to do pay-per-click ads. I just want to go eat ice cream instead of eating spinach and working out, and yet I want to lose weight. So that to me is just a big mindset for success, is someone who is willing for a time to grind, to put in the time and to do the things it takes to grow the company rather than the things that they want to do. Your desire of what you want to do to grow a company has very little with the optimal approach to growing that company. Another thing that Einar and I talk a lot about is that the successful founders that we see within TinySeed, and the number is right around 15% of companies that we have backed are above a million a RR. They’re seven or eight figure annual recurring revenue SaaS companies. 

So I mean, it’s a big chunk. The industry average, and I don’t actually know where a R got this number, but the industry average is 4%. And so we obviously have picked some good companies and hopefully have also helped them with the mentorship in the community and the advice and the money help them accelerate. But something we see with our TinySeed founders is the ones who succeed, they get a lot of stuff done quickly, they ship a lot of things, and they’re right enough of the time, and they’re not always right the first time, but if they take a marketing approach and they roll it out, or if they build a set of features or whatever it is they’re trying, they just figure out how to make it work 55 60, 65, 70% of the time, there’s some percentage that’s above 50 that they’re generally right and their gut is pretty good. 

So the mindset of shipping quickly and not being in analysis paralysis is important, but also the mindset of generally weighing options and picking the most likely to succeed and having a pretty good founder gut, but also just a good rubric in their head of what’s the next thing that is going to move the needle? What’s the biggest bottleneck in my business? And how can I relieve that? How can I eliminate that bottleneck such that I then discovered the next and the next one? And to me, growing a company is almost entirely about identifying the next bottleneck and eliminating it and then discovering the next one. It’s this never ending. Yeah, it is a never ending hamster wheel. Now that I think about how depressing and this week on depressing startup stories For the Rest Of Us, let’s talk about the never ending hamster wheel that you’re on as a SaaS founder. 

It is, and that’s why the payoff in the end of being able to sell it for millions of dollars makes it worth it, in my opinion. But it is sometimes, I don’t want to say sad truth, just the uncomfortable truth I guess of this is going to be hard. I don’t see many people building SaaS companies who are like, this is so much fun, this is great. It’s like once you get in it, you’re like, woo, this is hard. But it’s worth it because either it becomes extremely profitable or you can’t exit for that, that never have to work again, money. I’ll even take or Lee’s question in a different way. What do I see in founders? What mindset do I see in founders who get stuck at a hundred or a thousand or 10 KMRR and never make it past it? They make the same mistakes over and over. 

They don’t get out of their own way. They move slowly. They only do things they want to do. They launch multiple products at once because they can’t just focus on something and grind. They think they want to build a media company or an audience and then try to sell it to them. Don’t do that. If you’re building SaaS, build your network, not your audience. It really is. It goes back to the don’ts. What was it? A year ago, 18 months ago, I had an episode of Seven Things You Should Never Do As a SaaS Founder. Go listen to that episode. And then I added an eighth a couple episodes later, but it was just that long list of the same mistakes that I see founders and aspiring founders making thinking they can sell everything on Twitter and they don’t have to do any hard work. 

It’s common, and it’s unfortunate that so many people kind of fall into that trap as well as the build it, and they will come thing or just say, okay, so I built this product. Now how do I market it? I see this question on Reddit. I built it. Now how do I market it? The reason I come across it is then someone will mention me my name or SaaS Playbook or TinySeed MicroConf. So then I get an alert and I go out and check it out and it’s like, geez, dude, are you kidding me? All this information that’s out there. I mean, I guess that’s the mindset is the mindset is you should have sought out someone who’s done this before and who is trying to give advice. Hell, I give 30 minutes of free advice on this podcast every week and every other week, 15 minutes of free advice on YouTube. 

Or you can spend $10 and buy one of my books. Or you can spend $500 and buy the SaaS launchpad course. So you can go from free all the way up, but realize I’m saying the things that can help you not make those mistakes. And of course, if you’re listening to this, you already know that, but the mindset of there’s no one else out there who has done it before me, or I’m not going to spend the time to go seek out advice and learn about this stuff. I’m just going to go build something that’s a dangerous mindset. I left that mindset long ago. I did used to have the mindset of, well, I need to figure all this out. I’m going to figure out a new path. No one else is doing the path that I want to do, which of course was bootstrapping. 

And really there it was almost no one else doing it, and it was like base camp and Joel Poll skate at the time when oh five when I was blogging about this. But I’ve let that go. And now when I go to do anything, when we launched on YouTube, we hired a consultant and a content producer. When we launched on LinkedIn, we hired a consultant. Someone knows this better than I do, and they’re ahead of me, and I’m willing to pay both in time and in money to learn that very quickly. Now, if I didn’t have as much budget as I do these days, running a tiny seat of MicroConf, in the old days, I would have educated myself. I would’ve gone to the subreddits, to YouTube, to audio books, to podcasts to try to figure out what do other people know about this topic that I don’t? 

And that mindset of learning from others and taking advice and not just listening and being like, eh, that doesn’t fit with how I want to grow a business. And so I’m going to say in my head that it just doesn’t work, or I’m going to do this other thing anyways, even though people are saying, don’t go B2C and build a two-sided marketplace and don’t build a media company and don’t price your product at 10 or $20 a month and don’t try to go with one time sales or whatever the advice is, but that doesn’t work anymore or that makes me uncomfortable, or it makes me think I’m going to have to do stuff that I don’t want to do, like market and talk to customers and actually do sales calls. Whatever it is, it’s that mindset of I am going to actually learn from others and I don’t have to do exactly what someone else prescribes, but I’m at least going to factor that in when I ask for other opinions and when I go out and read a book or listen to someone talk about this on a podcast, that I’m going to not dismiss them and I’m going to be open to learning. 

I think that that desire to learn and the openness to learning from the right people, I think is a mindset for founder success. So thanks for that question orally. I hope it was helpful. My next question is from Timo from Germany. Timo writes, I run a two-sided marketplace for German speaking talent living overseas. We monetize by offering a paid subscription to employers. I’ve hired a salesperson to call free signups to sell them to the paid plan, which has positively impacted our free to paid conversion. However, we don’t reach everyone and some people simply don’t want to take the call. When we offer people the chance to voluntarily book a call by email, we get very few bookings. But since I know the calls work, I’ve considered making them mandatory to unlock certain features. I’ve never seen anyone do this after signup, which makes me wonder if it’s a bad idea. 

What are your thoughts on making calls mandatory? We are B2B only, and the subscription costs 90 euro per month. So the cost for one quick call shouldn’t be an issue. Yeah, I would agree with that. I know you generally do not recommend free plans, but in our case, the free plan lacks the ability to contact candidates. So there is no value in the free plan other than testing. Thanks for the work and the podcast. This is a great question. I would try it. I would just try it. I don’t know if I’ve ever seen anyone do this, but that doesn’t mean you shouldn’t try it. And I love stuff like this where you’re getting creative with it and you know that something moves the needle and you want to, how do you incentivize someone to do the thing that moves the needle where you can either offer ’em a carrot or a stick, you either penalize them for not doing it, or you offer them a gift or a reward for doing it. 

And in this case, I guess you’re kind of doing both. You’re penalizing ’em and saying, well, that part of the app isn’t available, but also you’re rewarding them right by saying, Hey, you get this feature or this upgrade or this whatever, by doing a call with us, I think I would try it. I just don’t know what else to say other than it might work. And just build it in a way that you can roll it back easily. You get it all in one commit and try it for two weeks, four weeks, whatever makes you comfortable. And my guess is you’ll know pretty clearly within a few weeks of rolling this out, I like the creativity Timo, and thanks for writing in. My last question for the day comes from James M. James appeared on this very podcast several months ago. He is the co-founder of talti and is also now a TinySeed mentor. 

So James asks, I have plenty of questions around hiring at the senior level. How do you balance cashflow with high salaries? At what point is a head of engineering more valuable than a senior engineer? And for product-led startups, what should team composition look like? So I’ll start with the last one actually. For product-led startups, that means not sales led, right? So this is low touch funnel, or you may have sales calls, but low touch funnel, what your team composition look like. So the answer is it depends on your competition. If you’re the only app in the space, you need fewer engineers because you need fewer features to stay competitive. But if you’re an email service provider or a CRM, you need a lot more engineers because you just need to keep pace or you will lose product-market fit. So it does depend, but usually whatever the founders can’t do, meaning if you don’t have any engineering founders, then your first hire has to be an engineer to build, to write the code, build the product. 

Your second hire and product led is almost always customer support because you will be a higher volume, probably a higher volume app with a lot of customers. And so you’re going to have a lot of emails and live chat if you offer it. And then after that, it just depends. That’s where you look at what’s your bottleneck, because I don’t, I don’t believe that there is a great rule of thumb. If there was, I would’ve tried to come up with it, but I don’t believe there’s a great rule of thumb around team composition with a startup because it really is what’s your next bottleneck? And that depends on so many factors like you’re pricing your market, your competition, on and on and on. To me, it’s that decision point. Every time you have enough money to hire that next person, you ask, what’s the biggest bottleneck in the company? 

Oh, we have too many sales demos. Great. I need to hire a salesperson. Or we don’t have enough leads. It’s like, great, I need to either hire a marketer or I need to replace myself, hire someone to take stuff off my plate. So me as a founder can approach marketing and sales. So that’s where I’ll leave the team composition. The answer is, it kind of depends, but that’s the framework of how I would build my team up. The previous question was, at what point is a head of engineering more valuable than a senior engineer? And I think, I know James is technical. I think to me as the founder, if I don’t want to be managing engineers, or at least technically leading them, meaning with the technical decisions, probably by the time I’m at three engineers or four engineers, I’m looking to either hire from outside or promote from within and ahead of engineering. 

Could be like Derek was at Drip, which was, you are the team lead and you’re technically leading them, but I was still managing all the team members at the time. But if you find a head of engineering who has management experience or you are willing to train them up, I mean, again, around three or four engineers, if I didn’t want to be managing engineering myself, I’d be looking for someone to take that off my plate because it is work and it’s one-on-one meetings, and it’s all the overhead of being a manager that you don’t necessarily want to have for the rest of the duration of running the company. And then James’s first question was how do you balance cashflow with high salaries? And I guess my answer is the same way you do with low salaries. If I’m hiring someone for two or $3,000 a month versus 10 or $12,000 a month, it’s similar math. 

It’s just different. It’s just a different amount. I tended to run my companies at about break even because that maximized growth. If I had raised funding, I would’ve started burning cash. I believe Asalt is self-funded, so they can’t burn. But for me, since the beauty of SaaS is that it is MRR and it’s recurring and it’s subscription, I kind of looked at if we grew five grand or 10 grand a month, that was enough for that next person because it wasn’t spiky. Now, if you are in a spiky business where maybe you’re taking a lot of annual payments or you have a usage-based component to your pricing, you just do the best you can. I mean, you can always bring in a fractional CFO to help you model stuff out. You could talk to AI about modeling stuff out. And to be honest, I’m guessing there’s a tool out there that could potentially be built for this. 

But usually what I see companies do, TinySeed companies say when they’re growing quickly and they’re trying to balance cashflow salaries, they get in a Google sheet, they project stuff out, and they do the best they can. It’s always scary hiring more senior level talent. This is why a lot of us resist doing it because it’s a big bet, and cashflow is a big concern. But oftentimes I find if you make the right choice on one of these risky bets, the upside is so asymmetrically in your favor that it can definitely be worth doing. So thanks for those questions, James. I hope that was helpful. That’s my final question for today. Thanks so much for joining me this week and every week. This is Rob Walling signing off from episode 760.

Rob Walling:
It’s TinySeed Tales season four, episode six, where we continue hearing Colleen SCH Nestler’s startup journey. And we ask ourselves, does AI plus a pivot equal success before we get into the episode? Applications for a next batch of TinySeed? Companies are open from now until February 23rd. If you want to be part of a world-class accelerator, receive the perfect amount of funding, mentorship, advice, and community. Head to tiny c.com/apply. And now let’s dive into the episode.  

Colleen Schnettler:
It’s just good to remember, for most people that don’t quit, it eventually works out. Most people, if you look at these success stories and you really dig into them, most people that don’t quit, it eventually works out.  

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 six of this season of TinySeed Tales, we’re diving back into Colleen’s journey. It’s been a whirlwind since we last checked in with twists, turns and moments of uncertainty, but that’s what makes her story so captivating. It’s a tale of resilience, ambition, and the pursuit of something bigger. So buckle up and join me as we explore the latest chapter in Colleen’s Adventure. And last week’s episode, Colleen and her co-founder Erin, had decided to go their separate ways and Colleen seemed to be quite stressed  

Colleen Schnettler:
Right after we recorded and we recorded so quickly on the heels of the co-founder breakup. I was pretty upset. You’re absolutely right. There was a lot of stress, there was a lot of anxiety in terms of what to do next. And my immediate gut reaction was, I need to walk away from this idea. I need to walk away from this name. I’m just going to do something else. I have other ideas. I’m going to pursue a different idea. And it had been a while since I had shipped code. And so I really was having a little bit of self doubt about what it takes to get an app from zero to paying authentication, the whole deal. And so I wanted to ship something and I wanted to go in a different direction. And so at that time, I had this idea, I used to be a podcaster, and we always had this problem finding and managing sponsors to the point where we literally stopped taking sponsors. The overhead was just too much of a pain. So I started going down that direction.  

Rob Walling:
Four months have passed since our last conversation, and Colleen dove headfirst into a new project called Get podcast leads.com, seeking to scratch her own niche and solve a familiar pain point in the world of podcasting. But as the dust settled, she faced the harsh reality of market viability. There was certainly a problem there, but would the market actually pay to solve it? So I asked Colleen how she launched it.  

Colleen Schnettler:
Launch would be a strong word. I think I tweeted about it once.  

Rob Walling:
Hey, that’s what we call an Indie hacker launch.  

Colleen Schnettler:
Yeah, well,  

Rob Walling:
Savage,  

Colleen Schnettler:
It  

Rob Walling:
Was brutal. Sick burn.  

Colleen Schnettler:
Yeah, I don’t know. So I launched it, launched on Twitter, so I tweeted about it once and I did start DMing people. I know everyone podcasts. And so I am fortunate too that I actually know a bunch of people that own podcast hosting companies. So it was kind of cool to be able to go right to the source and talk to those guys. And what I found out when I was doing that is podcasting is a tough market. Low margins, podcasters are broke. So the fact that they would shell out additional money seemed unlikely. It could have been, I think it could have been a productized service, but still it’s not like if I’m going to do productized consulting, I should do it in Rails and make real money, not for podcasters who are like, I’ll pay you 20 bucks if you find me a sponsor that’ll pay me 200. The math of the business model just didn’t seem like it was going to work out  

Rob Walling:
And trying to figure out how to ask this question delicately, but could you have found that out before writing the code? And do you feel like you were, do you have a regret about spending the time writing the code or was getting your shipping muscle working again worth it?  

Colleen Schnettler:
First of all, Rob, you crush my soul all the time. It’s fine. You’re used to it like artist history. I’m used to it, so it’s fine. You know what? I think I knew before I built it that this was going to be the outcome, but building it for me was more about getting that muscle of shipping activated again because it had been so long since we had shipped because I hadn’t gone zero to full app in such a long time. I just needed to activate that muscle. And I had really wanted to play with the AI APIs and I hadn’t and was on the sidelines watching everyone, and I was like, I want to get into this. This is the future. And so the podcast thing was cool because there’s this huge podcast, API that I bought data from and then ran it through Deep Graham to transcribe and then ran it through OpenAI to try to extract sponsors. So I got to piece all these different APIs together and I had a lot of fun and it gave me a lot of confidence in my ability to ship something. And so I do not regret it, but I do think I already knew the answer because again, if you’re getting a podcast sponsor for 200 bucks, so what are you going to pay for that? Not much.  

Rob Walling:
Yeah, economics don’t work out. Do you think it is tasteless to say that podcast was your rebound relationship after Hello Query? It was like I knew it wasn’t going to work out, but to regret got you back in the game,  

Colleen Schnettler:
It’s totally appropriate. That is absolutely correct.  

Rob Walling:
Well get podcast leads.com may not have been the runaway success she envisioned. It reignited her so-called shipping muscle. It was a necessary step, a rebound relationship of sorts that ultimately led her to her next endeavor.  

Colleen Schnettler:
So then I was at the bottom of another trough of Sorrow. I was like, oh wow, this was a terrible idea, which I think I knew, but I really just wanted to ship something. So now you’re at the bottom of the curve again and you’re again like, crap, what am I going to do? And so I went back full circle to what is my unfair advantage here? And it’s hard with this. You have to separate sunk cost from Unfair Advantage. And so that was really my struggle is it was another time of a lot of kind of confusion, anxiety, whatever, whereas well as my unfair advantage that I have been immersed in reporting for two years or is that a sunk cost? And I just walk away and I realized that I still think that’s an unfair advantage that I have been immersed in this world of internal reporting. 

And it is a problem. People want to solve it. It is so clear. It is so hard as someone trying to start a business just to come up with a problem that people are willing to pay money to solve. And I was like, okay, if I take all of the complicated emotions around what I have already done going down the Hello Query route, if I separate that from the practical, logical, what is the business opportunity here, I still think there’s a business opportunity there. And I had been playing around with all these APIs, and so I was like, I wonder if there’s a way I can combine what I learned with GET podcast leads and the new tech out there and the original vision. And so what I have now, what I just launched, it’s AI assisted SQL Report builder. So it’s still called Hello Query, but it’s a different product  

Rob Walling:
And describe how it works, who would be a user at a company? And I know that I’ve seen the interface, it’s relatively simple, so describe what it does.  

Colleen Schnettler:
So I just launched it last week, so it’s still very early in terms of ideal customer. So what I am finding is when I first built it, I had thought it would be more for the developers to kind of remind you how to write SQL because we’re not all checking all the time, but everyone I have talked to wants to put it in front of their non-technical teammates.  

Rob Walling:
Internal  

Colleen Schnettler:
And internal  

Rob Walling:
Users.  

Colleen Schnettler:
Yes, internal users. And so what that looks like is that looks like Jim from Accounting asks a natural language question that’s converted to SQL under the hood, it’s run against his database. And the product though is the reports, Jim, if those are the answers that Jim wants, he can then export it to CSV, export it to Google Sheets. He can schedule that report to be sent to him and his team every week rerun and sent. So the product is really all the reporting around the initial query.  

Rob Walling:
This reminds me of a quote that you said in the last episode where you said, looking back, we should have shipped SQL to CSV because we could have done it quickly and you and Aaron conflicted on that viewpoint. This feels like an AI assisted SQL to CSV or at least the vision that you had. You agree with that?  

Colleen Schnettler:
Yeah, a hundred percent agree. And the AI also, I wasn’t even going to ship that. I added that. It was almost going to be more of a marketing gimmick to be like, oh, ai. And then people were so excited about it and I was like, oh, right, okay, people are so excited about this, so this should be part of the offering. But yeah, that’s exactly what this is, is this went back to, I was like, you know what? Let’s go back. Let’s think about what I wanted to do. And I wanted to do little take off little bites of this problem, little bites at a time, put it in front of people, let the vision change as needed.  

Rob Walling:
And that’s something you and I have been talking periodically about how do you get just a little more data or a little more information so you’re not guessing and you’re not just thinking and ruminating because you and I can sit for two hours and guess what people are going to do. And in fact, I think it was three weeks ago, you and I had a chat and you were asking the question of, I’m concerned no one’s using it, it wasn’t launched yet and I’m concerned, are people going to be willing to hook up production databases? And on that call I said, well go ask them. Right? Should you just launch? It was a question, should you just launch? Go tweet it, I’ll retweet it, see if people do it. And what was that experience like for you?  

Colleen Schnettler:
First of all, amazing and amazing because for whatever reason, and I think it’s just the way that the speed at which we were working in terms of shipping product last year, there was a lot of thinking. It was like we have to ship the right thing the first time. So we have to have figured all of this out, which is terrible. But I do think it’s important to remember we got into that mindset because have you heard that thing? All advice is true. I dunno, it’s some famous article. It’s kind of like all advice is true because it worked for the person giving you the advice. So you’re always going to have people in the business building community who have both sides of this. You have the people who ship frequently and iterate. Then you have the people who are like, oh, we spent two years building this thing by talking to our customers and this thing is amazing and successful. 

And so I say all of that to kind of explain why we were in such this. We’re going to think the perfect product the first time. And so going back to this whole, one of the biggest reasons I think this particular product could fail will be because people won’t connect their production databases. And you’re like, well, you can just find out. I was like, yes. I can literally just find out. It doesn’t have to be. Maybe they will, maybe they won’t. Maybe this group will, maybe this group, I can just ship the thing that I’ve built and then see if people hook up their production databases.  

Rob Walling:
And this is a luxury, there’s this often this debate of should I build an audience? And you’ll see Laura Rotor and Jason Cohen and I on Twitter the other day saying, not for SaaS. If you’re going to sell info products, build an audience. Not for SaaS, not worth it. There’s other things you should do, but there are exceptions to it. And I’m not saying exceptions that you should build an audience, but where it is nice to have a group of people who know who you are and whether that’s a thousand followers on Twitter or 2000 or whatever, you tweeted it out, here’s this thing, here’s a GIF of the screen, click here to try it out. And that is a really nice luxury. If you had no social media following and you had no network, no community, you could still do it. Hell, we’ve all been there. I did it 15, 20 years ago and you’ve done it yourself, but this sped up the process is what it did.  

Colleen Schnettler:
That’s what I was thinking as you were saying that this just makes the feedback cycle faster because I can access people who are my target audience faster,  

Rob Walling:
And I feel like it’s a virtuous cycle because it ties back into the shipping muscle comment you made earlier of you shipped and then you get really quick feedback and that feedback is the dopamine rush of good or bad, I’m doing something. And that’s where the build in public hashtag, I could take it or leave it. I think the biggest benefit of building public is not, Ooh, look at me and I’m going to get customers from this. I think it’s the feedback loop of really quickly, especially, well, if you’re building in public and you’re targeting the people who are actually listening, because the problem is if you make anything that’s not for indie hackers or developers and you put it on Twitter, you get indie hacker developer feedback and not, and usually, which is the opposite of what you actually want, but in this case, developers could feasibly bring it inside a company. Maybe they’re not the target user, but they at least know how it works.  

Colleen Schnettler:
And again, I think in the end, not that there’s ever an end, but I don’t know if I’ll be targeting developers or finance teams or C-Suites. But yes, the developers will have to touch it at some point and they can be the people, often the people being asked to pull these reports, so many people were like, oh yeah, I get asked to do this all the time. It’s such a pain, not my job. So they are for me, for them to pull it into their company.  

Rob Walling:
And so where do you stand today? Then you launched this thing three weeks ago, you got feedback, people hooked it up to their production database. Do you have more learnings and you know what features they’re going to build next? Is there more research thinking, data gathering to be done?  

Colleen Schnettler:
It’s tough. I mean, this whole thing is tough. If we all knew what to do, we’d just do it. I think I learned enough with a very small group of initial people who are interested to know what needs to happen next in terms of feature sets. So I am trying to, I don’t dunno if I’m going to go the whole week, marketing week, coding week thing, I don’t know if I’ll do that, but I am trying to make sure I stay in a cadence where I’m talking to people and I’m building and what I have learned. So I feel like there’s this whole concept with building a business, especially as a solo founder of Emotional Runway. I don’t know if we’ve talked about this, but it’s like this concept of, okay, so it’s this concept of emotional runway where this is a ultra marathon. This isn’t going to be done despite what people on the internet tell you, you’re not going to shift something in a weekend that’s going to make you a million dollars. 

It’s like highly unlikely. And so what I have found for me is I really, really enjoy being in the code. I like talking to people, but it’s very draining. So I’m trying to balance the talking to people and especially when you talk to people and you think your idea is so brilliant and they’re like, I can’t use it because of this or I can’t use it. I mean that’s demoralizing. That’s hard to come back from and come back from and come back from. And so what I’m trying to do is I’m trying to spend a week, maybe 10 days shipping a new feature that I know I need and then following up with these people who are trying it to see how it’s working for them. So kind of getting that cadence as I go forward.  

Rob Walling:
It sounds like a good plan. Shipping, often, shipping early shipping, often small pieces to piggyback on your emotional runway, I have this thing that I tweeted once and now I say it now and again and it’s funded. Companies fail when they run out of money. Bootstrapped companies fail when the founder runs out of motivation, and I would count, you’re a mostly bootstrap company, and what I see, what we see with TinySeed and outside of it is some people will have some traction after a year or 2, 3, 4 years. They’re at 4K, MR, 5K, but you just get so tired of doing it and you watch other of the success stories come out and you feel like, can I just, so that’s where bias towards action mostly working on the right things and getting enough of them correct that you have momentum because once you lose momentum, it’s demoralizing and you can only beat demoralized for so long. And so that’s where you’re shipping your shipping muscle that you’re rebuilding right now as well as the fast feedback cycle, I think is going to help with that motivation. It helps refill, it helps shorten your runway. No, the opposite. It helps lengthen your runway or helps kind of refill your motivation, your bucket so that you can keep going.  

Colleen Schnettler:
Yeah, absolutely. And whenever I start to panic a little like, oh my gosh, this isn’t working. Okay, I only shipped it two weeks ago, so it’s a little early for that, but I try to think about that, right? I’m like, okay, this goes on as long as I want this to go on, right? In a positive way in that yes, this needs to work on a relatively quick timeline because got to pay the bills, but also I can spend a year, I can spend five years, this can be my, I want this to be my future. I don’t want to go get a job and I want that so badly. I think it’s just good to remember for most people that don’t quit, it eventually works out. Most people, if you look at these success stories and you really dig into them, most people that don’t quit, it eventually works out  

Rob Walling:
One decision that I think you’re facing that still feels very muddy, and I want to bring it up because it is muddy. I want to show people listening to this that in hindsight, after this season airs and they’re like, well, Colleen was wildly successful with Hello Query. She always knew she would be. She knew exactly what to build. Everything’s great and up into the right, but looking back in the midst of it, you usually really are uncertain as to what you’re building, who you’re building it for. It’s very muddy, right? And one good example of that is right now you’re building this AI assisted SQL to CSV reporting engine for internal BI users, for people to query stuff. And that’s kind of where you have interest and that’s kind of what the product is today and you’re adding features on. But there’s been this other request, a few of them around, well, could this just tie into all of our marketing tools and allow us to query what Google Analytics plus Mixpanel plus Heap plus just whatever marketing stack to, I would love to just ask my marketing stack questions. How many trials do we have last month? How are they converting? Are they up? Just whatever people can imagine that. Maybe it’s a dashboard, maybe it’s not, but that is a different direction. Those two are not the same thing. The marketing query engine or the marketing versus an internal BI tool. What are your thoughts on that decision, and is it weighing on you? Are you uncertain about it? How is that going for you?  

Colleen Schnettler:
You’re right, they’re not the same thing. They’re two totally different directions, and I find both of them to be really appealing.  

Rob Walling:
In the world of startups, decisions are seldom clear cut. Colleen finds herself at a crossroads torn between two compelling directions for her product catering to internal BI teams or tapping into the excitement surrounding marketing analytics. It’s a classic case of the curse of the audience, a dilemma that highlights the challenges of navigating the murky waters of finding product-market fit.  

Colleen Schnettler:
On one hand, I think if I went the marketing route, people would just be, I think people in my network, this goes back to is it worth having a social media following? My people would be so excited if I put AI on top of your Google Analytics. They would be so excited. That is one direction and people have asked me for that. And then you have this other thing, internal BI tool, and honestly, I don’t really know. I am just taking my best guess. And my best guess is that one company in particular that has approached me about the internal BI tools, like a pretty big company. And I realize there is a demand for this inside big, bigger established businesses on the BI side, and that’s a customer that would probably pay a premium price for it. Whereas marketing data marketers have a lot of money, but I also think they have so many tools, so many tools that their disposal already, and they probably already kind of understand Google Analytics. So I don’t know if that AI on top of Google Analytics is as valuable. So that’s why I’m going BI tools, but I think this is a false, there could be a false demand signal. If I launched the Google Analytics thing, my people would be so excited. So that’s why I’m really torn on the decision, to be honest with you. I think I could go either way.  

Rob Walling:
I call that false demand, the curse of the audience. And if there’s two curses to it, one, you tweet it out or you email your list and everyone’s like, oh, I want to check out what they’re doing. And everybody’s really interested and then they’re not actually that interested to solve a problem, but they just want to interact with you. And then the other curse of the audience is when you burn through your entire audience, I did in the early days of Drip where it was like I have whatever, 10, 15,000 people on an email list and Twitter following and everything, and we launched this product that was kind of half baked. It was like MVP, and people looked at it and said, it just doesn’t do enough. And so a lot of churn and then we rebuilt. We had Drip 2.0, it was actually really good automation, all this stuff, and when I went back to my audience, they were like, yeah, we already took a look at that, and people didn’t want to try it again. 

Yeah, it was crazy. Multiple people said, oh, I didn’t, that’s what it did. Because they had all given me the benefit of the doubt the first time. So that’s why one of the reasons I wanted to call this out is A, it is a very fuzzy and cloudy decision, and neither you nor I know what the right answer is, but the right answer is to keep pushing forward and to try to get more data on both fronts and to make the best decision you can. Being a founder is making hard decisions with incomplete information, and you’re the perfect example of that right now with just incomplete information on all the fronts, and actually I posit that it doesn’t get any worse than when you are pre-product market fit. That is when you have the least amount of information and the most cloudiness, and that’s why it’s harder to save, write blog posts or build frameworks or write books around the pre product-market fit phase that you’re in, because it is just so kind of, it depends. 

You have to get more data, you have to make a decision. There is no, if you were like, Hey, I’m at 10 KMRR, I have 10 customers each paying me a thousand dollars a month, they are all either healthcare startups or IT departments of law. I’d be like, great, I can rock and fuel that. We can get that going. There’s an engine there, but until you get there, it can feel a bit like wandering in the desert and it’s just you got to keep going, got to keep shipping, and you got to keep gathering data, which is exactly what you’re doing at this point. We move towards wrapping up the episode, but I left the recording going, Colleen and I have been recording this podcast over the course of almost eight months, and I asked her how she was really doing  

Colleen Schnettler:
Fine. It’s more just like I’m still in the phase where I don’t know if this is going to work or not, and it’s like, so it can be a little bit hard to get on here and be like, yeah, this is totally going to work. I know I’m making all these decisions. All of that is true. But you don’t  

Rob Walling:
Have to say it’s going to work though. Don’t feel like you have to say, don’t even feel like you have to be upbeat. Say that. Yeah, you didn’t have to say that. You don’t have to fake it. You don’t have to even be upbeat. You could come on and I could intervene and you could be like, I feel terrible about this, and I’m super doubtful and I’m thinking about shutting it down. If you wanted to say that, say that. Be authentic to yourself. You’re not there. I don’t feel  

Colleen Schnettler:
Like you’re there. I’m not there. No, but it is talking about it. I’m like, all of the things I said are true, and I do feel good about it, but also, man, I guess it’s just we’ve been recording this podcast for so long and it’s like, what do I have to show for it? Right? I’ve been doing this for so long, it feels like, and it’s like, man, here I am again, not making any money.  

Rob Walling:
It  

Colleen Schnettler:
Just a little, it’s fine, but it’s just a little like, oh, you think after doing this for a year, I’d be a little further along  

Rob Walling:
At this point. I stopped the recording. I think most founders have experienced this feeling, wanting to be further along, wishing they had a clear direction to work toward. One thing is certain Colleen’s journey is far from over with each twist and turn. She learns, adapts, and keeps shipping even when it’s really freaking hard. Colleen stands at a crossroads torn between a couple of promising options. What decision will she make and will she find traction? That’s next time on TinySeed Tails.

Rob Walling:
This is Startup For the Rest Of Us. I’m your host, Rob Walling. This week I’m joined by fan favorite Derek Rimer, and we answer listener questions ranging from do free trials suck, how do you decide what moves the needle in your business? And two or three other listener questions before we dive into the questions. TinySeed, the accelerator I run for Bootstrap SaaS Companies is open for applications until February 23rd. Head to TinySeed dot com slash apply to find out more. And if you’re interested in the right amount of funding, amazing world-class mentorship advice and community, that’s c.com/apply. And with that, let’s dive into listener questions. Eric Rimer, welcome  

Derrick Reimer:
Back to the show. It’s good to be back. It’s been a couple of months, I  

Rob Walling:
Think it has indeed. I’m stoked to get into some listener questions with you today. I always hear after our episodes go live that people really enjoy our conversations and our rapport, so  

Derrick Reimer:
Awesome. Well, I enjoy having them.  

Rob Walling:
It’s good to have you back, man. So I’m going to dive into this first question from anonymous about entering a market with an established competitor and anonymous writes, Hey Rob, I wanted to first thank you for all you’ve done for the bootstrapped and mostly bootstrapped community. You’re an inspiration to me and countless others. My wife and I love listening to your podcast Every chance we get, and you have inspired us to take this next step in starting a bootstrap SaaS business. So I need to pause there. There’s a couple things. Number one, I’ve been called Chief Instigator. Chief troublemaker. People will say, my spouse is mad at you. And I’m like, why? And they’re like, because you convinced me to start assessment. So I get the feeling that when Anonymous writes this, they’re both thanking me and also kind of punching me in the ribs, like, I will never forgive you for convincing me to go down this path.  

Derrick Reimer:
It cuts both ways.  

Rob Walling:
It really does, right? Yeah. Certain times. And then the fact that anonymous listens with his wife, I think is hilarious. This isn’t you, right? You didn’t write this question in.  

Derrick Reimer:
No, but my wife does listen to at least our episodes, and then I think she’s listening to Colleen’s episodes right now. We hung with Colleen  

Rob Walling:
Tiny tails. Oh yeah, yeah. It’s always fun when you know the person, right?  

Derrick Reimer:
Yeah.  

Rob Walling:
Cool. Oh, so we’ll continue. I hear this every once in a while that what he says is, my wife and I love listening to your podcasts, and I think they’re forcing their wife to listen. Do you love? And she’s humoring you. That’s kind of how I questioned it. But no, thanks for the comment there. So back to the email. My question is about how to launch a SaaS product in an established market. The market I’m entering is led by a company that has existed for five years in a relatively immature space. Although they have been successful, their business has not adequately invested in their software, which sounds familiar and often uses deceitful tactics to make the sale, which also sounds familiar. I believe I can catch the company flatfooted and lean on many of the strengths smaller startups have at their disposal, such as speed, design improvement, listening to my customers, et cetera. 

If I’m a new player entering the market, how do I properly address my competitor to prospective clients while being professional? Do you stay above the grain and focus on how my service and customer experience is superior? Or do I explicitly point out the limitations of the competitor, the outdated product design, deceitful tactics, high turnover? Are there legal risks I should be aware of? Thank you, Rob. I look forward to hearing your insightful insights. And before I toss it to you, Derek, to take the first crack, I want to read a brief poem, a brief disclaimer. I love to chat. I love to share. This is an original composition between me and chat, GPT. By the way, I love to chat. I love to share about startup’s growth and how to prepare. I’m not a lawyer, I don’t advise on contracts, filings, or legal ties for lawsuits, trademarks, taxes, to find a pro. That’s what they do. So take my thoughts, our thoughts, use them, right, but for the law, get legal insight.  

Derrick Reimer:
That’s the best legal disclaimer I’ve ever heard.  

Rob Walling:
There it is. Alright, so we’re not lawyers. We can’t give legal advice, but we are two guys on the internet who have opinions. So you want to weigh in on this one  

Derrick Reimer:
First? Yeah, yeah. So I don’t know if there’s a right or wrong here. I mean, you see a whole spectrum of approaches around this. My approach has generally been to try to craft the narrative around how you’re a better choice for your target market than the competition. So keeping it kind of framed positively on what you bring to the table and drawing helpful comparisons that speak to the customer’s underlying motivations. So with Savvy Cal for example, we tout ourselves as more thoughtful and more collaborative than most of the other players in the market, specifically our largest competitor. We have a comparison page where this narrative is sort of fleshed out a bit, and we claim that and we back that up with features that support that and things that are kind of unique to our product. So we’re really focusing on this is what we have to offer and we’re telling this narrative that hopefully resonates with you and it’s not necessarily a narrative that the other competitor could tell because they’re doing different things. 

So instead of saying, this competitor uses deceitful tactics, you could say, we will never lock you into X, Y, and Z, or we have a transparent cancellation policy. And if you’re talking to someone who has experienced those deceitful tactics with that other competitor, that’ll resonate in a particular way. But worst case, you’re just expressing something positive and noteworthy about yourself. So that’s how I think of it. I usually avoid those stupid checklists are skewed and biased where you get all the green check marks and everyone else gets all the red Xs. I think people see through those pretty easily. So I usually try to stick to more of a narrative around what’s the story of why your product’s better and keep it mostly focused on yourself, but obviously identifying those areas where clearly you’re casting yourself as separate from the others.  

Rob Walling:
I like that. I think there’s three. There’s a continuum of what you do here. Do I name ’em by name and put a bunch of negative press out about them? Or do I say nothing that maybe the two ends of the continuum? But let’s just take three points on that continuum. You’ve just named one, which is you’re not mentioning a competitor, you’re just calling out your pros. And I think that’s the most kind of chill, relaxed, non-confrontational way to do it. And if that’s, it’s totally viable and reasonable, I think it’s a good way. If that’s your personality, that’s how you do it. Let’s take a middle ground, which is, are you tired of deceitful sales tactic? You know what I mean? You are a little bit all up, but you’re not naming ’em by name. That might be in the middle. And that’s what we did. 

Well, no, the drip, remember when the drip homepage was just a long form sales letter and it did call out a few companies by name and it was like Marketo part, Infusionsoft. I think it was never MailChimp and HubSpot by the way, because I just always respected those founders. I respected the companies when I was write that marketing copy and get all angry, it wasn’t at them. We did name some folks by name on that homepage. And that of course is the third one is to come out and name people, not people I guess, but competitors, company names anonymous, asks, are there legal risks? There’s legal risks with anything. What’s going to happen? We’re not, lawyers can’t give advice, but what’s going to happen is if you put the company’s name on your website, they’ll either completely ignore it and not care, or they will come and write you a cease and desist or a huffy worded email. 

The odds of someone suing you without ever giving you any notice is really, really low. And we do see TinySeed companies from time to time get cease and desist of this manner. Or again, a huffy email from a CEO demanding, it’s a legal threat, but it’s just some CEO pound on the table. So we did it, we named companies by name, but the thing was they were so big we were nas just little gnats compared to them. And I think if we’d gotten big enough, they probably would’ve said something, but it was literally on our homepage. So it’s a risk tolerance thing, but I don’t think there’s a ton of risk. I agree with you. Having no, having a comparison page like us versus them to me is fair game. And that’s pretty common alternative to them. You’re trying to rank for stuff at that point in Google, and so people can compare. 

I agree with you about the check boxes. You can do the checkbox thing or not, but I think there’s a continuum here and a little bit of it comes down to your personality as a founder. You and I both know people who are just, they just give fewer s than you and I do is how I would phrase it. Or they’re just a little more aggressive or they like getting into arguments. They like sparring, they like to kind of have conflict. A friend of yours and mine, Matt Sing does not give a shit if someone’s mad at him. You know what I mean? And to his credit, that’s his personality. So him as a founder would probably go all the way to that third stage that I talked about, which is just name him and fight it and it brings him energy. For me personally, conflict and arguing or being called out. I can do it and I can handle it. I have the thick skin, but it is exhausting for me. And so I have to pick as I’m doing marketing or as I’m doing sales or thinking about this, I do have to think long-term, what problems do I want to create for myself? Starting a company, trying to get something off the ground, you’re building it, you’re creating a lot of problems for yourself just in doing that and which other ones do you potentially want to stir up is kind of the way I think about it.  

Derrick Reimer:
Yeah, and I think that the other thing to consider is what is the brand you want to create, which is a little hand wave, but are you entering a space where you’re going to be the bulldog fighting everyone and you’re going to attract a certain type of customer who that resonates with? And other people will be totally turned off by that. If you’re just super negative and you’re just going after another company, then you’re sort of painting yourself. You risk painting yourself as a company who is just a response, a negative response to somebody else versus something that’s positive. And I think that that can paint you into a bit of a corner with your market as well. And certain people will just be grossed out by your marketing if it’s all kind of point finger pointing at someone else. So I think it’s like who do you want to attract? And it just comes down to strategy, I guess. Where do you think the opportunity is? Is it with and the industry too? I think there’s certain product spaces where it’s just inherently more combative and then others where it’s not. So it’s knowing your space, I think too,  

Rob Walling:
And knowing how your customers and potential customers view this competitor. There are some companies that are just despised, they’re just widely hated and it’s like they charge too much, they gouge us, their support sucks. I mean, let’s name a few names. Most people I know who interact with Salesforce in any way as a customer, do not like them. I’ve never actually been a customer. No, I have. Because we were paying six figures a year for Slack, for MicroComp Connect. It was outrageous. They were so hard to deal with and they were a pain in the ass. So if I was competing with Salesforce, would I throw shade at them? I would because I know that people don’t like them. I mean, Infusionsoft back in the day was the classic example. Anyone who used Infusionsoft, which is now called Keep, and they just sold the private equity for a one x less than one X error multiple, if I’m being honest. 

No one liked their software. It was just old and clunky. And so it was easy, it was an easy target and I never felt like I was being so aggressive in the copy. I keep saying it was you’re in my company. But I wrote the copy. I remember I writing those, the homepage in that and being almost angry for our customers. Customers would come over to Drip and they would just tell us horror stories. And I was like, that sucks. And that was kind of the motivation of like, ah, that how I justified it to myself. And I don’t know that it ever came off. I don’t know if it came off aggressive to people, but it felt justified. Now if let’s say I did that to Stripe, I think Stripe is pretty widely loved. I know some people have complaints on my Stripe account, whatever. There are some things on the edges, but compare Stripe versus PayPal. Most people don’t like PayPal. And I would say most people like Stripe. I like Stripe. Punching at Stripe in this way I don’t think would go over that well.  

Derrick Reimer:
Yeah, it’s just bad strategy. I think that is a good point. If I were competing with Salesforce in some dimension, I mean whether you’re attacking them by name specifically or you’re attacking kind of the notion of the Salesforce type product where it’s like they’re going to try to aggressively gouge you and they’ve gone so far at market that they have highly optimized pricing, you will pay through the nose just sort of what they stand for. And they don’t have total control over that. It’s the reputation they’ve gained from the decisions they’ve made in the market. And so you’re putting yourself in the position of you’re an advocate for your customer and you’re telling the story that resonates most with your customer is the most important thing,  

Rob Walling:
Right? Anonymous asked several questions, but one of them is, do you stay above the grain and focus on how my service and customer experience is superior or do I explicitly point out the limitations of the competitor, outdated product, blah, blah, blah. And for me, we’re talking marketing website right now, but what if you get on a sales call? What would you do? So for me, I would want to find out if you’re currently a customer of that competitor, that’s what they’re comparing you against. You have to point out the differences. To me. Usually I would say something like, oh, you’re comparing us to X, Y, Z competitor, or you are currently a customer of X, Y, Z competitor. Would you like to hear how we’re different? That’s how I would phrase it. Would you like to hear how we’re different people tell us that we are much easier to use? 

Obviously our sales process is different. We’re month to month, not a year, whatever you point stuff out. I think if I was on a sales call and the prospect started leaning into, yeah, I feel like I really got hornswoggled in this hole. That’s a good one. Horn Sled 1887 called it once it phrased back, I dunno why you that I feel like I got really tricked on this thing that yeah, we hear that quite a bit. It’s a bummer. We definitely don’t do that. You know what I mean? Yeah. I would kind of almost go with the vibe of the person I’m talking to a little bit and that’s different. You can talk as much smack as you want on a sales call versus putting it in public on a marketing site. So I think those two things are different. So thanks for the question anonymous. 

I hope that was helpful. Our next question comes to us from X Twitter. This is Sander Fish at Sander Fish who asks often it feels like SaaS success is an accumulation of many small decisions and improvements over time. And me jumping in, I think any success, anything you build is you build a brand, you build a reputation, you build an audience, you write a book, you build. Yeah, I think you build any company. I think most things in life to get good at running or lifting, I think it’s all that small decisions and improvements over time. So I like this Sander fish’s question is how do you identify what really moves the needle? And I think we should limit this one to SaaS and not talk about all the other things I just mentioned because is really how do you identify Derek Rimer as founder of Sical? How do you identify what moves the needle in your business?  

Derrick Reimer:
Yeah, it’s a great question. It’s a very broad question, but I guess I’ll start by riffing on the high level of this, which I think it comes down to, comes down to having a strategy, which is just the most simply put, how do you win at the game you’re trying to play? So this implies that what game you’re playing, are you trying to build a rocket ship unicorn? Are you building a TinySeed type scale business? Are you building a true lifestyle business? So it’s like what game are you playing to orient yourself around the kind of success you’re trying to achieve? And then once you have that set, then you can start working with a strategy of how do we get to the goal that I want? Do you want to work four days a week and spend a bunch of time with family? Like okay, that’s going to mean different decisions on moving the needle towards the success you’re trying to achieve. 

And then once you have the strategy, then you can tactical decisions in support of what you’re trying to achieve. So if you’re trying to grow really, really fast, then making some endeavoring down a path towards a channel that’s only going to send you a trickle of prospects a month, probably not a great decision. You need to orient your sites higher. Maybe that means you need to raise a little investment to be able to take a bigger swing at something. So I think it’s orienting what constitutes moving the needle for what you’re trying to achieve. And that’s something you have to define first. So sort of a non-answer, I’m not really answering specifically, but that’s how I think about figuring out what even constitutes moving the needle.  

Rob Walling:
And it really depends on the stage of the business obviously. I mean we can say it depends, but I do think there are certain founders I know who are better at identifying what moves the needle. And there are certain folks who are not as good, and this is that thing that a R and I talk about a lot about the TinySeed founders we see succeeding, they do a lot of things, they ship a lot of things relatively quickly and they’re right the majority of the time. And by majority, I say it on this podcast over and over, it is not 90%, it’s some number, it’s 60%, 65 set. I don’t know, you’re right, just enough, but you’re doing a lot of stuff. You’re not flailing, but you’re shipping high quality things quickly, whether that’s features or marketing or whatever it is you need to ship. 

The biggest question that I ask myself as any business I’m doing, whether it’s SaaS or whether it’s MicroConf or TinySeed, there’s always one and only one bottleneck is how I see it. And now I’ll take that back. There are usually, there’s one that is the most critical at the time, and then there’s five that are below that. But oftentimes you don’t even know what those five are until you fix that first one. And you don’t know if fixing that bottleneck will get you another 50 KMRR before you see another bottleneck or if it’ll get you $500 of MRR before that next bottleneck. It’s really hard, at least for me, I can’t see the second one, but in almost every business, every tiny C call or even when we’re doing strategy and r and I talking about how to grow TinySeed itself, how to grow MicroComp, how to whatever, make more revenue, get more people in the audience, it’s like what’s the next step? 

What’s the one thing? And if I’m thinking about SaaS in early stage, it’s like I have no one interested in buying this thing that I’m thinking about building that is the actual bottleneck. It’s not the product, right? It’s interested people, it’s sales, it’s marketing, it’s interest. And if I’m doing 10 KA month and maybe I’m not growing, usually you can look and be like, oh, it’s because churn is high. That is my single biggest buy, 11% churn. This is business on fire. I have to fix that before anything. And if I’m at 10 KMR, that’s probably lack of product-market fit. If I’m at a hundred KMRR and it’s 11% churn, that’s a whole different conversation. That’s my short answer is what is the bottleneck? I mean, we are right now with TinySeed, we’re launching a premium coaching plus masterminds and stuff. So it’s similar to the tiny seat accelerator, but it’s paid and it’s for 1 million a RR founders between what’s 1 million end up. 

That itself is something that we’re working hard on. And how do we decide what moves the needle? Well, we look and we’re like, well, right now we have no one committed to paying for this, so how do we get that? And then it’s like, and we need a coach or two and we need the program itself, which we know a lot from TinySeed. So those are the only two things we should be working on is finding more people and finding coaches. Once we have those, we can do anything else. And I think the biggest problem that developers especially and makers and builders do is they either don’t know or they kid themselves. They convince themselves that the bottleneck is actually the product and features. So fun. It’s the fun part and it’s easy to just be like, well, I’m going to tell myself that’s the bottleneck. But it’s like that usually it’s usually not the product.  

Derrick Reimer:
And I think it’s a good point that there’s usually one thing, but that one thing may set off a cascade of different sub things that need to happen. And so I think to take the example of fixing churn, it’s like that one comes up all the time where it’s like, well easy, just fix your churn. It’s like, okay, well that is much easier said than done. So then it means maybe you’re attracting the wrong type of customer. You have problems in the product where you’re not meeting their needs and so they’re churning out maybe you’re, so it could be prequalification, could be product problems, could be on and on and on, positioning, marketing, all this kind of stuff. So then you start breaking the problem down and you start busting this up into small little things. But I think the hard part can be you get lost sometimes in the forest when you do this and then you find yourself five months later you’re working on something and you’re like, wait, is this in service of the thing that is still the biggest problem? 

Are we still trying to reduce churn? Do we feel like churn’s in a good place? So I feel like the game is having that step back to reflect on what’s really bottlenecking the business, and then oftentimes it means six months to a year of work that is in service of that, but you’re going to kind of lose sight of that. You have to get down into the weeds on actually working the process. So I think that probably takes regular check-ins and reflections on what’s the state of the business? Is this still the biggest problem? Are we still prioritizing our day-to-day tasks in service of that thing? And that’s the challenge I think  

Rob Walling:
I agree with you. Yeah, it’s easy to lose it when it’s over a long-term like that. This is where, as much as I don’t like process long-term planning, any of that, this is where it makes sense to be like, Hey, what’s our plan for this week, this month, and this quarter, maybe this year? It depends on the maturity of the business. If you’re early stage, it does not make sense to do that, but with my businesses Micrograph TinySeed, they’re six years and 15 years old and they’re multimillion dollars and there’s multiple employees, it actually does make sense for us to sit down and be like, loosely, what do we want to do in 2025? What is that? We don’t have a strict annual plan of every week this happens, but during the year, I think we’ll do this. And then we start looking at quarters and breaking it down, and we do look at what’s going to move the needle. 

And if you’re a SaaS company and you’re early stage or even middle stage, it’s like I could see this is where you do say, well, 2025 is the year I conquer churn, and Q1 is going to be these things and month one is going to be these things. And that I think having some type of plan that’s written down somewhere could be a Google Doc with a few bullets or a spreadsheet or something that you refer back to, can be helpful to keep, as you said, forest for the trees, right? So thanks for that question, sander. I hope it was helpful. 

Most marketing agencies promise growth, but never move the needle. But Cory Haynes and the team at Conversion Factory, they know how to deliver results. Derek Rimer said that under Cory’s marketing leadership savvy cow broke into the market with a successful launch and steadily grew to several thousand customers. And Eunice coup of less annoying CRM said that their first a b test with conversion factory delivered a 20% increase in visitor to trial conversions within the first two months. Imagine having a senior copywriter, a designer, and a web developer at your disposal to turn every marketing idea into a reality. Head to conversion factory.co and mention this podcast when you book a call to get $1,000 off your first month. That’s conversion factory.co. Our next question is from Austin on how to sell slash market a SaaS before it’s built. So you can tell I did take a few early stage questions. This time I’ve been doing only the later stages, but I forget I’d bounce around considering this question is from August of 2023. Sorry, Austin, Austin’s like, we just hit a millionaire r bro, I don’t need you. We’ve  

Derrick Reimer:
Pivoted five times and we’re not even doing that.  

Rob Walling:
Totally. It’s not relevant at all. I still like the sentiment question. Hey Rob, thanks for all the great advice you put out. I hear from advisors that you need to start working on the marketing already before or while building the product. Download my free ebook, start marketing the day You start coding Rob Walling dot com and your email address back to Austin’s email. I’m working on a SaaS product together with a co-founder. He does the programming and design while I do marketing, product development and sales. My question is how do I sell the SaaS that hasn’t even been built yet? How can I build an email list when I don’t even have a product? Should I do marketing already? Now before the product is launched, we work on a talent management SaaS where businesses can put milestones that need to be satisfied in order to get to the next level. Example to go from programmer to senior programmer. This SaaS is pretty general to general. Any ideas for marketing this before it’s built? That would be very much appreciated. Thanks and best wishes. Austin, what do you think Derek? Rimer?  

Derrick Reimer:
Well, I consider taking the opposite and saying arguing that you should not market before you start coding, but I didn’t. The conflict, I didn’t think I could steal that. That’d be  

Rob Walling:
Great. Radio. Yeah, the April Fools, I’ll bring it back for April  

Derrick Reimer:
One. Yeah, so yes, you should market, you launch your product. I guess to be more specific though, I was thinking about what does this look like at the earliest stages and trying to think about what do I see working right now in the year 2025? I mean, historically it was like build a landing page, drive traffic to the landing page, and I think a lot of that stuff fundamentally still kind of works. I mean, I think there’s more noise than ever out there with so many different startups trying to get attention all the time. So I think just strategically, I would be thinking focusing initially on your network. I mean, presumably you have people that kind of fit this target market in your circles where you can, they have some kind of warm connection to you, even if it’s just like a LinkedIn connection or something. 

So people you can have conversations with to get their buy-in directly and then try to amplify this messaging in places where other people who aren’t in your direct network will be able to see it. Your casting vision about the change you want to see in the world, maybe you have a manifesto or something, and it’s like this is enough to gain someone’s a couple seconds of engagement as they’re scrolling by in a feed to catch their attention. And so you’re just trying to build some anticipation around the product you’re building. And then while you’re doing that, you’re testing positioning, you’re writing a landing page with the headline and maybe you’re driving some traffic to it. I think a lot of those tried and true techniques for testing out positioning still work.  

Rob Walling:
Yeah, I think so. And you don’t have to sell it before built, but I do think you want to market it.  

Derrick Reimer:
Yeah,  

Rob Walling:
Right. I mean, selling is be like, all right, so give me money. Well, I don’t mean some people talk about pre-sales. I’ve never ever pre-sold anything. I have pre-market everything. And yeah, it is more competitive every year. It always is. And frankly, the tactics that I outlined in start small, stay small are 15 years old now. And so a lot of people know them. I mean, they came from other places too. I think a four hour workweek outlined that the smoke test and all that. I still put up a landing page for anything that I launch, including a new book with SaaS institute.com. As of today, as you and I are recording, this is a headline, an H two a sentence and an email capture form. And I get it that at this point I have an audience. I can just say, talk on this podcast and talk on Twitter and such. 

If I did not, I would still do exactly that, and I would still be talking on Twitter. I would be in founder Slack groups and on, I was going to say Facebook, but founders, it’s like where do founders hang out? That’s the real question that you hang out there. You have conversations, you do what you said, which is you get a landing pitch up, and then if you’re selling something that’s quite expensive, well, you actually want to get conversations. You want to get into conversations with potential prospects. You’re not trying to sell it. You are trying to find out are we solving a problem that they have? That’s usually the big early thing. If you know that they already have this problem and they are already paying for other software to do it, then the next thing you’re trying to figure out is, well, how are we going to be different? 

I don’t want to be a commodity. So that’s what you’re trying to assess out. We did this with Drip as we were launching. It’s like, well, we know people need to send email. There’s 300 other competitors that do it, so how are we going to be different than MailChimp infusions stuff to all these, right? And you did it with Avial where it’s like, well, we know that there are other scheduling links that exists. So I know that it’s a pain, but if I launch an exact clone of a competitor, I’m not. I mean, my little, I’ll get to three KMRR we, but you’re not going to build a great business if you build a commodity. So it’s as much, it’s customer development, it’s customer conversations, and it is, I think there’s a lot of learning that can happen here, not just marketing and selling  

Derrick Reimer:
When it’s in the vaporware stage, the goal is different. You’re still trying to inform the building process very much with reading what the market needs. And maybe hopefully you’ve gotten to the point where you feel confident enough to start investing in product that there is something here, but that’s not a place to stop. You need to continue the refinement of what exactly we’re building and who’s it for and how are we going to get these people. So as you’re proving out the product hypothesis with building, you’re also proving out the marketing hypothesis and the sales hypothesis with trying to read the sentiment as you’re putting this messaging forward.  

Rob Walling:
Last thing I want to throw in is if you put up a landing page, but I don’t have a product, what do you put on it? You put a headline that addresses the problem or the pain point that you’re fixing, and you put a sentence of text. My first book Start Small Stay Small, was a headline that said A developer’s Guide to launching a startup. And then I think it had one or two sentences of copy that was it, email capture, and it said something like, finally a book written for someone who wants to launch a product or someone who wants to start a company without 5 million of venture capital in your bank account. It was something that was it, and it was an email capture. Now it’s a book, it’s not a SaaS, but if I was doing a SaaS, that’s what it would be. The same thing of I’m solving a problem, this is it. Opt in if you want to fix that problem. And again, if there’s already existing solutions, then you can’t just say, I’m going to help you send email to your marketing list because a solved problem. It’s like, how am I going to be different? Why are the other solutions failing? So thank you for that question. Hope it was helpful. Our next question is an audio question from Noah Tucker.  

Noah:
Hey, what’s up Rob? This is Noah. I’ve been listening to your podcast weekly for years now. I’m the founder of a company called Social Snowball, which is an affiliate marketing platform for Shopify brands. And we are mid seven figures of a RR. And my question for you today is about free trials. We have always been very generous with free trials. We offer a standard 30 day free trial, and we’ll sometimes extend that if a brand asks or if we’re working with a partner and they want an exclusive deal, we’ll do a 45 day free trial occasionally, for example, and obviously this is great for the sales team, it helps get deals over the finish line that maybe are dragging their feet a little bit because it’s just an incentivizing offer, but it comes with downsides. And what we’ve realized is that a lot of brands during their trial period aren’t really taking onboarding that seriously and are kind of slacking off and losing excitement to launch. 

And they don’t have as much urgency to launch their affiliate program with us because my theory is that since they’re not paying, they just don’t really have that sense of urgency and they’re just kind of like, oh, we’ll get to it later, and then their 30 day trial completes and they’ll ask for us to extend it. And then sometimes it just continues to drag out until the brand just forgets about it or loses interest. And this has been a little bit of a challenge for us to work through. So I’m curious to what your thoughts are on considering just chopping the free trial altogether for a few months and seeing what happens and just kind of adjusting accordingly. Another idea I had is basically offering a refund for the first month. If the merchant, our customer completes all of onboarding. So if they finish the steps and then they won’t ask for a refund for the first month, we’ll give it to them. So there’s an incentive for them to actually set everything up or they won’t be eligible to get a refund on that month. But that’s just one idea I have. I’m super open-minded to anything you could suggest. And yeah, thank you so much for taking the time. I appreciate you.  

Rob Walling:
So I’ll start by saying I actually really like that idea of that Noah threw out of if they finish their onboarding, then their first month gets refunded. I think that’s pretty clever just to start. I hadn’t thought of it, and when he said it, I was like, that’s not the worst idea. But beyond what are your thoughts?  

Derrick Reimer:
Yeah, so I think, I don’t know, free trials are tricky because it comes down to what is the goal of the free trial? So is it to give the customer time to set up, do they have resistance to pay for this until they make it through some kind of long setup process, or are you letting them kick the tires and learn about the product to themselves before they make a decision about going forward with your product? So they, in that preliminary buying phase, we’re still sussing out the options, or are you trying to actually give them a certain amount of tangible value before they pay? So you’re trying to say your customers refer a certain number of people before you’re obligated to pay us just to give away some value for free. Based on what you’re describing, it sounds like you have people coming in who are, you said not taking onboarding seriously or they’re losing excitement. 

So it sounds like they might be more of the aspirational type of customer where maybe they’re looking around at options, but they’re not ready yet to move forward with this. So I would be thinking like, well, is there value in letting them explore around or is that better that you control that process and just like, well, let’s watch a demo or have a live demo with us to explore this first before we get you into the product. I don’t know if it’s worthwhile to try to force them to have a stronger sense of urgency about the project. I mean, maybe it’s just not the top priority right now, but they’re doing a little preliminary research, so I dunno about arm twisting tactics to try to get them to do this right now. Although maybe they’re encountering something in the product where, oh, this is looking like it’s going to take longer to set up. So yep, this is maybe a for later type of thing. So that also could be something to look at. Are they getting tripped up at a certain point where like, oh man, I have these 10 different settings forms to fill out and there’s way too many decisions. Can you shortcut that? Can you make it easier to that minimum viable activation path? So there could be something in the product to look at too. It’s hard to know exactly what’s going on with these trials, but these are some things I would think about.  

Rob Walling:
Yeah, I like that. I think you’re right on the money. I would give you a bullseye emoji. If we were on Blue sky, did you just invent an acronym? An MA minimum viable activation Path? Derek Remer, just coming up with the great thing. We might want to workshop that a little bit with chat GBT to get a better acronym.  

Derrick Reimer:
Yeah, probably. Yeah.  

Rob Walling:
So yeah, you’re right. I mean social snowball is the H one is scale your affiliate revenue with creators and ambassadors. And so if you are trying to get an affiliate program set up, you can imagine you got to install some tracking snippet on a website. There’s stuff, and if you’re at a big bigger company, it’s like, well, I got to get engineering involved, I got to get it involved. When they say it, you’re like, this is only going to take six months. But having known the founder of ambassador get ambassador.com, Jeff, and seen him just deal with exactly this where it’s like, well, they’re not installing it. He was working with a big Fortune 500 company. He’s like, it takes them 90 days to install this line of JavaScript on a website of all the security and all the other stuff. So I’m not opposed to Noah’s idea of refund that first month. 

Some motivation if they get it installed or I’m sorry if they get onboarded. The real thing I would ask though is, is that motivating for them? If you’re dealing with a Fortune 500 company, let Target, they’re here in town and I was going to do affiliate tracking for Target. Do they care? Does the person buying care if they get the first month free? No, they don’t. But I don’t know what social snowballs customers are motivated by. So that’s the first question I’d ask. The other thing is, it is so common, especially if you’re selling to enterprise, and I’m not trying to make that assumption here, but let’s just dip into that real quick. Paid pilots, there’s a reason there are paid pilots and it’s like, you know what? Let’s do a 60 day paid pilot or a 90 day paid trial you could call it. 

And they do pay and then they have some type of motivation. It’s that time pressure. And this is always the thing where people say, well, I’m going to remove the trial or I’m going to remove, it’s not going to be a 14 day free trial. It’s going to be you log in and you can send X emails or you can book X amount of meetings. Well then there’s no time pressure and time pressure can be a good thing to get people motivated. And that’s kind of what Noah, I think what Noah is struggling with here.  

Derrick Reimer:
If it is a larger company and you’re like, okay, we need to get approval to pay for starting to do this thing, the question becomes, well, how far can we get without paying, without getting finance involved? So it could be a function of once you get the finance ball rolling, if you make that happen sooner, then that unblocks the project almost. So there could be some, when you’re selling to larger companies, these interesting dynamics start to emerge where I’ve heard Jordan Gaal talk about this too, how some have seen more success like asking for a large sum upfront from a larger organization because that means it’s taken more seriously or it’s viewed as a more legitimate. So  

Rob Walling:
Yeah, what’s funny is Jeff who started ambassador, which was affiliate management, I’m not going to say it’s similar to it, but it it’s the same category of this. After he sold Ambassador started his next company, and you know what it is, it’s onboard.io and the H one is onboard better and reduce customer churn. It was such a problem getting people onboarded. That was his number one thing. He could close these, he would close these big enterprise deals. And exactly the problem Noah’s running into is he was like, they’re just not getting onboarded and it’s a team. It’s like I got to get eight people at Target Best Buy, Verizon, whatever on the same page, and they’re all from different departments. And it’s like, how do you do that? His next SaaS was a tool just to do that because it was such a pain point for them. And it just shows you that this is probably not an easily solved problem, but it really does come down to what are the incentives and if you need to keep a time constraint and make ’em pay, I love coming back to the very first thing you said, which is what’s the purpose of a free trial? Because when you’re starting out in a new category or not a new category, but when you’re entering an existing category that’s competitive. People might want to poke around and see your product, and that’s what the trial’s for. 

But if you’re MailChimp, do you need a free trial? Everyone know how you send email, you don’t need a free trial. You just get in and you do your stuff. There’s just certain times where I just don’t think a trial is warranted at all, and I like that. Cool. So thanks for that question, Noah. I hope it was helpful. Our last question for today is from Xavier from France.  

Xavier:
Hi Rob. This is Xavier from France. I am working on this niche that I will qualify as a B2B C ish kind of niche, and I would love to have your feedback, your feelings about it and to know if it rings any bells to you. First of all, this niche has some good qualities that you mentioned. It’s small enough for big player to not care about it. It’s targeting to help people in their main job in the job with which they make a living. But my concern is it’s this kind of job fueled by patient in which the salary are very low. And for sure, my product won’t help them to make more money. It’ll just help them to execute better the job to make them win a bit of time, but at the end of the month, they won’t win more money because of my products in any kind of way. 

Because of this, I think the price that I can target for my project can be more than between the five or 15 USD per month as another B2C solution. And this is where my concern is because as you said over time is not that good price range for any people who wants to bootstrap a company. So yes. So this is a bit my wonder about this and I would love to have your feedback about it. Just keep up the good job. Your show is amazing and your content helps me a lot. So see you soon and thanks a lot.  

Rob Walling:
So to recap, he said this is for people to help them at their day job, but that the day job has a low salary and it won’t help them make more money. It will just help them execute a better job of what they’re doing to win a bit of time back to be more efficient. And then he says, I think I can charge between five and $15 per month. So he’s asking for feedback. What do you think?  

Derrick Reimer:
Sounds like a really hard road. 

I’m gathering that this is sort of, he’s describing this as B2C, but in a business context. So they’re using it for work. It’s not just for personal life stuff, it’s for work life stuff, but it’s sold. He’s imagining selling directly to the worker so that they can improve their productivity. I’m assuming it’s probably some kind of productivity thing, which I would say this sounds like almost zero willingness to pay. This sounds like a free, something you would install for free on your phone, free mobile app or something. I don’t know. I mean, one thought that just occurred to me is if this does benefit the business, is there a way to sell this to the companies that are employing these people? Because now you’re improving the productivity of their workforce and it’s not an expense that’s on their dime. But again, not knowing what it is, I’m not sure if that’s at all feasible for this, but I would be thinking how to make this more B2B, because trying to sell directly to the consumer sounds like a really, really tough road.  

Rob Walling:
Yeah, me as well. I mean, this breaks pretty much every rule of anything I would launch ever again in my life. It’s just a low price point B2B two B2C ish. So I agree. Can you sell to the business? The other question that I had about this is, do these workers even care if they’re more efficient? Because a lot of people just don’t in their day job. 

Some people care and want to get better, especially if you are a sole proprietor, you run the business. But then that’s back to being a business owner. And that’s not what he’s saying here. If I’m an auto mechanic or I am a dental assistant or a nurse’s assistant or a construction worker, and do I care if I’m, I, of course always cared if we’re more efficient, but we are entrepreneurs. That’s why we we’re kind of built a little bit different. But most of those people in those roles really think, man, I wish I could get more done in this day. I don’t know. I genuinely don’t know. And so are you solving a problem no one has or no one cares about?  

Derrick Reimer:
Yeah, I mean if he says it doesn’t lead to them making more money at all, and I’m like, well, that’s the problem. That sounds suspicious. I mean, even if there was some kind of vague tie of if they can prove to their employer that they are this much more efficient, then they have become more valuable and therefore should be ultimately compensated more in some fashion. But he made it very clear, this probably won’t have any link to their compensation, which is a good tell that the business won’t really value this. They won’t necessarily value  

Rob Walling:
This. Yeah, it’s hard to weigh in further without some specifics because it’s not detailed enough, I think, to really offer strong opinion. But that was it from Xavier. I hope that was helpful for you. Derek Rimer, people want to keep up with you. You are at Derek Rimer on X Twitter. And are you derek rimer.com on Blue Sky?  

Derrick Reimer:
Yes. Yep.  

Rob Walling:
Alright.  

Derrick Reimer:
Set up a profile there as well.  

Rob Walling:
Amazing. And of course, if people want to use the best scheduling link on the internet, they can head to savvy cal.com. Indeed. Thanks for joining me, man. Thanks for having me. Thanks again to Derek for joining me on the show. Once again, I’ve enjoyed having him on every month or two to answer your questions. If you have a question for the show, you can email it to Questions at startups For the Rest Of Us dot com or click ask a question in the top nav of our website, startups For the Rest Of Us dot com. You can send audio, video, later stage questions and audio video. Go to the top of the stack text questions I answer eventually, and all questions are welcome. This is Rob Walling signing off from episode 758.

Rob Walling:
Welcome to season four, episode five of TinySeed Tales where we continue hearing Colleen SCH nestler’s startup journey. Before we get into the episode, applications for my SaaS accelerator. TinySeed are open from now until February 23rd. If you are bootstrapped or mostly bootstrapped SaaS founder and you’re interested in the perfect amount of funding, mentorship, advice, and community, head to TinySeed dot com slash apply  

Colleen Schnettler:
And I know what I want even though I have failed at it over and over and over.  

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. We’re back with Colleen Schettler for episode five. Colleen is a developer, entrepreneur and co-founder of Hello Query. Last time we spoke, Colleen and her business partner Erin, were at a turning point in their business relationship and since then, Colleen and Erin made a tough decision about the future of the business. I’ll hand it over to Colleen to explain.  

Colleen Schnettler:
So what we had done in the past two weeks is we had actually hired a contract Laravel developer to help Aaron to speed up the development process. We had agreed that we would have an MVP of Hello Query to put in my side project, simplify upload on Monday. I had expected it to be done and he told me it wasn’t, which is okay. Estimating software timeline requirements is very, very hard. But then he told me that when he sat down to code on Hello Query, he just could not summon the energy for it. He said he was burned out and he would just sit down at his desk and he would just feel an overwhelming sense of dread and burnout’s tough. So many people in our community have experienced it, and so I said maybe if you came to some customer calls, because I get a lot of the positive dopamine endorphins, the one doing all the customer calls, and so I asked him if he wanted to join me on these customer calls and he said no because he was concerned that would just increase the pressure. 

Now, it’s not only do I have Colleen to answer to, but I have all these customers, so I took a beat too because my question is do I beg him to stay or do I let him go? Right? And so I had to decide because here he is on the phone telling me he’s totally burned out. He has no excitement for the product and he just can’t bring himself to work on it. So what we landed on that day was we landed on why don’t we both take a break, think about what we want and come back and talk again in a couple days.  

Rob Walling:
During that time, in the back of your mind, did it feel to you like it was going to end or did you still have that maybe Aaron will reconsider and decide, oh, I really do want to be part of this.  

Colleen Schnettler:
I knew he was going to leave. Have you ever heard that vending machine breakup analogy like breakups are shaking a vending machine, knocking over a vending machine. You have to shake it a few times before it falls over, and I was like, oh man, we’ve already had this conversation once. There’s a disconnect in terms of the speed at which we want to work and what we are trying to do. So maybe if I was just more chill, maybe if I wasn’t trying so hard and I was just like, it’s fine. Let’s just hang out and we’ll just do this at whatever speed we do it. Maybe we could have made it work, but  

Rob Walling:
Sounds like a recipe for a really successful startup. I’ll just chill out and I’m sure things will take care of themselves.  

Colleen Schnettler:
So I think that I knew we were going to part ways, but also, I mean it was ultimately his decision, but I didn’t beg him to stay.  

Rob Walling:
So now Colleen is left without a co-founder, a difficult spot to be in during this time. She recorded a voice memo titled it Crushing Failure and sent it to me.  

Colleen’s Voice Memo:
I don’t really know what to say. I’m in a position where it feels like I have no options for this business, and it feels awful, especially after taking funding and having people bet on me and for me to be in this position where I can’t execute and it doesn’t even feel like I did anything wrong. It just feels like my partner and I fundamentally wanted different things and we thought we wanted the same thing. We’ve been in TinySeed for almost a year now, I guess 10 months, and we’ve come so far in this space. So to walk away from it right now, gosh, the failure level feels massive. I don’t know what to do. I don’t know if I should do this alone, but if I’m not going to have my business partner, it’s his tech stack. So it’s almost like, no, it’s definitely I need to have a product and a tech stack. I understand, and I’m a senior developer, so should I spend the next three to four months learning or should I rebuild the whole thing in Ruby on Rails? Should I shut this product down? Because reporting, I actually don’t care that much about reporting or should I recognize that I have put so much time and energy into this space and I have people that are interested. I don’t know what to do, but it feels like crushing failure  

Rob Walling:
In that amazing crushing failure. M four A. You mentioned the word failure. Why did you use that word?  

Colleen Schnettler:
Well, is that not exactly what this is? I mean, what have we been doing for a year, Rob? We’re getting to the end of our TinySeed year. Everyone’s like, what did you do all year? And I’m like, I don’t. No. What did we do all year? Sorry.  

Rob Walling:
No, no, this. That’s how it feels. Yeah,  

Colleen Schnettler:
I have been working. It feels like we’ve, both Aaron and I, because he’s been putting in a ton of time working so hard and we have nothing. I even walked away from 20 KA month when we were consulting. I shut that down.  

Rob Walling:
I was going to ask about that. If you regretted that at this point,  

Colleen Schnettler:
I mean, if I hadn’t shut that down, that wasn’t just 20 KA month, that was infinite KA month, I could just keep scaling that up indefinitely. I could have a whole freaking consultancy right now. When we raised the TinySeed money, I made the decision to walk away from the product ties consulting and that, like I said, that was a significant amount of money. I cut my legs out from under me, but you know what? I do not regret it. I do not regret it. I would rather fail this way than still be doing that stuck in limbo forever.  

Rob Walling:
That’s really good to know about your own decision.  

Colleen Schnettler:
Yeah,  

Rob Walling:
It would be terrible to feel like huge waves of regret of like, oh, can I go get that back?  

Colleen Schnettler:
Yeah.  

Rob Walling:
It doesn’t sound like you want it.  

Colleen Schnettler:
I think that this is the most important thing and we get wiser as we get older and all that stuff, but to get what you want, you have to know what you want and I know what I want even though I have failed at it over and over and over.  

Rob Walling:
Now, hypothetically, let’s say you had not raised money. Given where you are now, what do you think you would do? Would you keep going with this or would you shut it down and look to get a job or do something else?  

Colleen Schnettler:
The problem with this idea, hello Query is this is really Aaron’s idea. It’s his baby. He’s the one who experienced the problem and he’s the one who has a vision on how to solve it. And so to take his vision and run with it, I don’t know if that is something I want to do. I don’t know if it is the right product for me. So if we didn’t raise money and he decided not to be involved, I can almost say I would not do this without him. For sure.  

Rob Walling:
I feel like, tell me if I’m wrong on this. I feel like you have a particular gifting and or desire to solve problems for developers and or product people. Would you say that’s accurate?  

Colleen Schnettler:
I think that is an audience I know, so that is probably why I have gravitated to that particular audience.  

Rob Walling:
But it’s not necessarily something that you would pigeonhole yourself into?  

Colleen Schnettler:
I wouldn’t because we spent a first year before we hooked up with TinySeed, we spent a year trying to sell this as a Ruby gem to developers, but they’re a hard market to sell to  

Rob Walling:
Because you mentioned several things. You mentioned it was Aaron’s idea you were going to work on it with him and also you’ve done it. So have you been there, done that kind of bored, not interested in it? What are the factors?  

Colleen Schnettler:
The problem is deep and complex, and there’s a lot of data, not only data privacy, but data authentication issues in this space. And one of the things I realized rewatching the customer interviews is people don’t want reporting off of a single table. They want their users to be able to go in, see what data they can access and work through these tables to get that other data. And that’s a hard problem to solve. I have no idea how to solve it. And then you’re in this kind of scary, not even regulatory but scary space where if you screw it up, you can really screw it up. And so I think my concern isn’t that I can’t do it, it’s that the product Erin and I had envisioned, it’s not the right solution. I can already tell you from the customer interviews what we have 50% done, that is not the right solution right now. 

It’s this iframe that loads in your site that your customers can build queries in. But I know the first thing people are going to say is, this is customer facing. I don’t like the way it looks. What? It loads an iframe. So now, I mean, it’s not actually that easy. There’s technical problems that I think, I mean, I’m sure I can solve them, right? All technical problems are solvable. I just think the layers of this problem and our solution do not match. And so unless you really, really care about it, I think it’s a hard sell to figure out what the right product is in this space. I don’t think we have it.  

Rob Walling:
That’s interesting. So not only have you lost your co-founder, but what you’ve built to date you don’t have confidence in and you feel like you need to start over without a  

Colleen Schnettler:
Co-founder. That’s why.  

Rob Walling:
Yeah,  

Colleen Schnettler:
And I feel like if we had still been together, we would’ve figured it out. It’s a hard problem to solve. I don’t know how to solve. It feels like the reasons not to do it are stacking up  

Rob Walling:
A lot of headwinds. Yeah. The way I see it, she has three options. Colleen could go it alone or find a new business partner, rethink the approach and bring Hello Query to life, or she could pivot within TinySeed. We’ve certainly seen our share of entrepreneurs who pivot their business. It’s not the most common thing, but it’s also not unheard of. So I pose these options to Colleen. Where are you with that decision? What are you thinking?  

Colleen Schnettler:
I don’t know. Robert is so hard to decide because I watched the customer interviews and I’m like, clearly there is a problem here. So there’s something we’ve hit a nerve somehow. Can I solve that without Aaron? But then another part of me is like, man, it’d be nice to walk away from filters and sequel. I have been doing that for years and years and years, and I cannot make it work.  

Rob Walling:
I’m kind of sick of it.  

Colleen Schnettler:
I’m kind of sick of it. Maybe I should do something else. Why not? These past eight months, I mean, my skillset has just exploded, so I just need an idea and a little bit of luck and maybe I can do something else. It’s an interesting position to be in because when you see other people in this position, you want to play your tiny violin for them. You’re like, oh, you have funding and no idea how hard for you, and now I’m in this position and I’m super stressed.  

Rob Walling:
As you think back over the past six months, 12 months, is there something that you wish you’d done differently?  

Colleen Schnettler:
Yeah, I think originally when we had talked about this idea once we got rid of our consulting arm, we had talked about starting, which is SQL to CSV and Iteratively building. And for reasons that I’m still kind of unclear, I couldn’t get Aaron to do that, and I think part of it was he felt, I don’t want to put words in his mouth, but he felt like that wasn’t well aligned with his vision, and so I feel like we should have shipped something faster. It should have been SQL to CSV instead of going with this huge vision where we’re going to solve all your problems. Well, gosh, it’s so cliche to say this out loud now, but we should have shipped SQL to CSV and because Aaron and I, we maybe didn’t, I don’t want to say we’re conflict, but when you have a personal relationship with your co-founder, you don’t. 

I was always really worried about pushing him too hard and we broke up anyway, so I should have pushed him harder eight months ago. We should have broke up eight months ago. I learned a lot about communicating from him, which was great. Lessons I will take, if I ever take a co-founder again, lessons I will take forward with me. Business relationships are hard, and it’s not awesome the way this turned out, but also people have real lives and we like to pretend that’s not true, but we’re not 22 living in a van by the ocean, right? We’ve got kids and lives and sometimes people’s priorities change and I’d like to believe that he and I handled this maturely and we separated with class and we are still friends, so I do not regret it.  

Rob Walling:
There’s a reason entrepreneurship is often equated with a rollercoaster ride, and while it may seem like Colleen is at a standstill dips, this are all part of the journey. Next week we’ll follow up with Colleen and see where she’s taking Hello Query.

Rob Walling:
Welcome back to Startups For the Rest Of Us. I’m your host, Rob Walling, and today I have the pleasure of talking with a good friend of mine, Brendan Fortune, about how to be a great product manager. And you might be thinking to yourself, well, I’m a founder. I don’t want to be a cog in a wheel at some large organization, product manager. That sounds like a title of someone managing things that doesn’t matter, what being a product manager is about, making decisions of what to build, how to build it, how to market those, how to frame them, how to explain them to the rest of your team, and how to explain it to the world at large in a way that gets people interested. Product management is a skill that any SaaS founder needs to be aware of, and I think all of us can improve on that. 

Brendan Fortune was the first person aside from the two founders of Drip, to make any product decisions about what went into Drip, what was built and how it was built. Brendan has been a product manager at several companies. You’ll hear us kind of talk about it in his intro, but we have a great conversation not only defining product management, and you can hear me at the beginning, kind of prod him like what is product management and how should someone think about that if they’re a founder? But then we get into a framework that Brendan introduced me to that involves building a flywheel and helping that decide how to make your users more successful and how to make your product more successful. If you listen to this episode and you decide you have product questions, things about how do I decide what to build? How would I think about being a product manager, how can I hire a product manager, how can I become a product manager? 

Anything around product management, any of this stuff. If you want to send those in to Questions at startups For the Rest Of Us dot com or you want to click the ask a question and put product question in the subject line, I will invite Brendan back on if we have enough questions to do a full show before we dive into our conversation applications for my SaaS accelerator, TinySeed are currently open. We will be having a live q and a if you’re interested in applying or just have questions for us on February 13th at 10:00 AM Eastern time. For more information, head to TinySeed dot com slash apply. And if you’re ready to apply, same url, tiny c.com/apply. If in doubt, fill it out. If you have at least $500 of MRR, you’re a B2B SaaS company and you’re interested in exactly the right amount of funding, mentorship advice and community tiny c.com/apply. Brendan Fortune, welcome to Startup For the Rest Of Us. Hey,  

Brendan Fortune:
How’s it going?  

Rob Walling:
Great, man. It’s good to have you on the show.  

Brendan Fortune:
Yeah, I’m excited to be here. I’ve listened for so long. We’ve worked together. We played DD for so long together and now finally on the show, the pressure’s have,  

Rob Walling:
He’s been waiting. Were you checking your mail every week? Where’s  

Brendan Fortune:
The invite  

Rob Walling:
To come on startup  

Brendan Fortune:
Service? I was about to rage Quit this friendship and move Right on.  

Rob Walling:
I know, I get that a lot. Yeah, I get from a lot of people. So as folks probably heard in your intro, you and I worked together at Drip after the acquisition, after we sold the lead pages and became the company. You were the first person aside from Derek or I to ever make product level decisions about Drip. That’s the honor. That’s tombstone level. Yeah, that’s what you’re printing.  

Brendan Fortune:
Yeah, I’ll drop that right on my tombstone. I mean, it is kind of cool when you phrase it that way. Yeah, I’ll take it.  

Rob Walling:
And your role today is your title?  

Brendan Fortune:
I’m a director of product over@customer.io.  

Rob Walling:
All right. And most people listen to this podcast will know customer.io. I wanted to start us off though with a brief kind of discussion definition of product, that role, that department, because back in the day when I was bootstrapping early, let’s say 2005 to 10, I’m a developer. I’m trying to build stuff people want and just trying to make enough money to pay my house payment product. That role, that department didn’t, I don’t know if it didn’t exist or I just didn’t know what the hell it was. It probably existed at Proctor and Gamble, right? For toothpaste, there’s some product owner or product leader or QuickBooks, maybe Intuit, they would have a QuickBooks product leader. I’m sure back in the day Microsoft, there were program manager program, maybe they were product. Yeah, there were product managers. Yeah, of course there were in the nineties for Excel and Word and all that.  

Brendan Fortune:
There were even as far back in HP I think in the nineties. But of course product doesn’t mean the same thing.  

Rob Walling:
And so my question then I remember starting to hear this term as I was building more SaaS companies and it just became much customer success kind of sprang out from nothing to being a role. Now in a department, I feel like Product did that with SaaS and I don’t know the history of it that well, but what I want to do is for the 25% of the audience, it’s like of course we know what product is, we know what project manager, product owner, all that, but there’s a good chunk of this audience. I think that’s kind of like whether they’re a solo developer, whether they’ve only worked at small companies, whether just the founders, they are by default the product managers and they don’t call themselves that. It’s like, oh yeah, the CEO and the CTO of our five person company. They make all the product decisions. What does that mean? What does product do and what are product decisions? Talk us through this as someone who’s been in it for what, 15, 20 years?  

Brendan Fortune:
Yeah, I think the segue from a founder is probably the simplest way to understand it because what’s one of the things the founder does? Well, a founder has to understand their market, they’ve got to understand their product area, they’ve got to understand their customers. They’ve got to be thinking about pricing and packaging and how they’re going to make money at the end of the day. And that’s very much what product managers do once a company or product has scaled to the size where one person just can’t do it all. There’s just too much going on and not even that they can’t do it all, but they’re just not going to do it as well. There’s a limit to the capacity of details that we can ingest as companies grow and products grow. so@customer.io for example, we’ve got eight product managers now I think actually we’re about to be up to 10 writing two more later this month.  

Rob Walling:
And I often describe product as this is my very how I always, it’s like I have a lot of gut feel and I have a lot of very shorthand things that are not necessarily official, but I’ll say product decides what gets built next, what features often in what order, often how they’re built, meaning what do they look like, how do they operate, how do they interact with other areas of the business, how are they going to impact pricing, which tiers do they go in? And then there’s even beyond that, there’s product marketing, which I had never heard that term before. You came on with Drip and then you and Tedesco and the execs were telling me these things and it’s like, oh, is this how they do it at big companies? It’s like, yeah, that is. And so that was the merging of me being in the small companies, the small SaaS and hitting that. So that’s my loosey goosey run on sentence definition of it. How do you think about it?  

Brendan Fortune:
I think that’s right. And the reason I pause is because there’s a lot of debate in nerdy product circles about whether it is the product manager who makes certain decisions versus kind of guides certain decisions. And that weasels is part of why don’t want to, I’m not sure the details are actually useful, but at the end of the day, the product manager is accountable for the features that ship and whether they are actually adding value both to customers and to the company. And so that does involve what are we going to do first? What are we not going to do? Which are, it’s like 95% maybe more of the decisions that have to get made. So I think I’d agree with that. Product marketing, I don’t know if you want to go deep on that, that’s just really splitting hairs, but product marketing is kind of a fascinating dual head of product management and the most concise way I’ve heard it described is product management is listening to the market and reacting and building and product marketers are speaking to the market. So both of them need to understand what customers very, very at a detailed level, they need to understand, have an opinion on strategy and personas, but one builds stuff and the other one tells stories.  

Rob Walling:
And this is the thing, this is why it’s hard is because again, there’s a chunk of people listening to this podcast that either do work at big SaaS companies or have seven or eight figure SaaS companies. So I don’t want to act like everybody here is doing 10 KMR mri. That’s not true. But a lot of folks, if you are a founder or two co-founders of an early stage company, I think of Derek and I with Drip when we were doing 20 KA month product management and all the decision making he and I made together, that was actually a huge chunk of our job. What do we build next? How do we build it? Let’s collaborate. We got an architect, we’ve got to get the naming right, blah, blah, blah. And then as we were getting close to say, launching that feature, the automations or workflows or whatever, we’d get together and I was like, alright, we’re going and this is when product marketing happened. 

But I didn’t know that what it was called, but it was like we got to communicate this to everybody, to all the prospects in our pipeline. I want to communicate it to the world. I’m going to tweet the shit out of this. We’re going to email everybody. I want to try to get on podcasts and talk about workflows. Now we didn’t have a later on, you have a sales team, a customer success team, a customer support team, and you have to keep all of them appraised. There’s some internal product marketing happening right now to me was we had one email support guy. I was like, Andy, here’s a feature. Try it out. Here’s a loom. Tell me if you have questions. That was literally our internal communication and the sales, the customer success. We would circle up in a room, we’d walk it through, Derek would walk us through for 10 minutes. Any questions? No. Start integrating that in your thing, right? It’s easy when there’s seven of you, but you imagine again as a listener, if you’re a hundred person or a 500 person or a thousand person org, someone has to be like, Hey, this is what’s happening and how do we communicate this to everybody? And that’s again how I think of product marketing. Is that right? That’s just my image of what it is.  

Brendan Fortune:
Yeah, I think product marketing, like product management, it depends a little bit company by company, but when I was at GoDaddy before, which is a much larger company, product marketing was responsible both for the internal training and communications and the external. And again, the more people you’ve got, the more time and energy needs to go into helping others help you. They’re going to support the feature that you’ve shipped. So if they don’t know what it does or how it works or some of the details, they’re not going to do a good job. And that’s going to translate to the customer experience. Of course, if you are building features that are intuitive for enough customers, then there won’t tend to be as many support requests. But yeah, I mean the way you’ve described it I think is exactly right.  

Rob Walling:
Now we’re going to play a little game. You and I are each going to answer a question, but you’re going to answer first so that I can answer with mine second and I can say, that’s why you’re wrong. No, I’m not going to do that. Just so people know, you and I have known each other now for 10, eight years and we play d and d every two weeks. So there is a lot of rapport, so I’m going to be jokey and stuff. Don’t let it make you uncomfortable if you’re listening to this and being like, why is Rob being such a jerk to this guy? Question is though, before we get in, because I want to get it, we’re going to get into pricing and flywheel and how I often say on this podcast, pricing is the number one lever in SaaS. And if you it up, you can have an amazing business that should be a million dollar business. That is actually a $200,000 business. I’ve seen companies do that. And you can do the math, it could be a 10 million versus a 2 million. It’s pretty easy. So we are going to dig in to how product and product management and all the decisions around that integrate with pricing and flywheel. But before we do that, I want to ask you, when do you feel like a SaaS company should have its first product manager that isn’t the founder?  

Brendan Fortune:
There’s a rule of thumb that I use to answer this question. I’ve gotten it from a few founders. Customer io works with many founders, drift did to, and it is, when can you afford to pay an employee 120, 130,000 a year? Now I’m assuming USD, and it kind of depends on where in the world you’re hiring, but when can you afford? And that’s not the only question, but it’s a pretty good indicator. If you’re not at that point, then you don’t need someone else trying to get close to details. You need to be closer to the details yourself. Because as we’ve been talking about, a lot of what founders do is what product folks do. Product managers are going to come in and do for you. So that’s the usual rule of thumb. And then you can kind of take that deeper depending on, well, okay, but what if I got these projections or what if I have this specific problem that I want to offload to someone else like project management or something. Is that okay? So you can go more detailed, but product managers, the way that I have experienced it across my career, you don’t need them until you’re doing, you’re doing pretty well.  

Rob Walling:
My rule of thumb across kind of TinySeed companies, they will ask me or even just I’ll get a question on this show, and it’s a rule of thumb can be broken, is that you don’t need a product person before a million a RR. And usually I see it between one and 2 million somewhere in there. And it depends a lot on the product. Look, there are some very simple products out there that are kind of a feature or a collection of a handful of features. And do you need a product manager? No. And then there’s customer.io and Drip and HubSpot and Salesforce and these very complicated. It’s like, yeah, you probably need one earlier, earlier than not. Similarly, my rule of thumb for when do you need kind of a head of marketing or someone to run marketing that’s not the founder, usually it’s between one and 2 million. 

That’s also my thing. And part of that is what you’re saying, which is well then you should have the budget to do that to hire someone good. They are going to be 120, 150 K or more. And usually you just are at a point where you can bring someone in from the outside because the product’s mature enough. It’s not that mature, but it’s way more mature than when you were at 240 KA year doing 20 KA month products. Still we need some founder level decisions at that point. It’s really, really hard. There’s still so much fuzziness around the decisions. And to piggyback on that, one of the things that I see non-technical founders struggle with is you get someone who’s a subject matter expert in the construction industry or in brick and mortar or in just whatever, we could name any industry legal. They don’t have a developer founder. 

So then they go hire either an agency or a developer and they hire the developer and they say, I have an idea for a thing that’s going to help legal people do this. And it’s like, great, what should I build? And it’s like, well build the thing that helps legal assistants do that. And it’s like, okay, let’s take a step back. Where will every checkbox, where will every setting, what will the top nav look like? I mean I’m preaching to the choir here to you and to everyone. Listen to the podcast of like you can’t just hire a developer and expect them to build an incredible product. Not unless they’re Derek Rimer. I know three in my life, you know what I mean? Who are developers plus really good product people? I’m exaggerating, they’re more than that. But you get the idea is that’s where as developer I think we often get that intuitively of like, oh, we’ve learned to build software, therefore it’s just a thing. You make decisions. And that’s why I never called it product in my head. It was just what to build. But when you don’t have that, you’re missing an entire skillset, right?  

Brendan Fortune:
And that’s how my career in product started. I was not an engineer, I was technical, I was more of like a cis admin. But it started because there was a really large gnarly project that required a lot of alignment building and coordin. It was a people problem first, I guess is my point. And when you get into product, there are lots of different paths, but if you’re coming in non-technical, it’s substantially different.  

Rob Walling:
So let’s dig into pricing and flywheel. When I asked you what you wanted to talk about on the show, a bunch of stuff we could go down. You mentioned how much pricing ties into product and I was kind of like, yeah, I guess it does. It is not something I would think of every day. But the moment you said, I was like, well of course it does. And I want to hear your thoughts on this whole concept because everybody struggles with pricing and everybody wants their pricing to be optimal, net negative churn, all the things I talk about, the cheat codes I talk about on the show. So why don’t you kick us off?  

Brendan Fortune:
Yeah, I’m really passionate about this topic or this framework that I’m going to run through because it’s something that helps not only with pricing but also with decisions about how you prioritize and even how you organize as the company grows. It’s this really amazing tool that you can do early on and it grows with you kind of just keeps on giving the foundation of it is this concept of a flywheel and that concept, I was using that word for maybe two or three years before I actually stopped and looked up exactly what it meant. So if there’s anyone else in the audience like that, you imagine a crank on a wall that you’re cranking with your hand and you crank it faster and faster and faster and at some point you let it go and it’s a self-sustaining crank at that point. You don’t have to put any more pressure on it, it’s just going to keep on rotating. 

So that concept is what the flywheel tries to embody. And the reason it ties into pricing is because if you can find a pattern of customer behavior that works like that flywheel where customers will do it over and over and over again and you can find a way to price based on that behavior, that’s how you can get some of the expansion revenue and the cheat code you were talking about with a net negative churn. That’s how you achieve that. And not all companies can pull it off, but particularly in SaaS, there’s a very good chance that you can, I think a lot can, and we, anytime you see usage-based pricing, that’s someone who’s trying to take advantage either of a flywheel or maybe it’s just a cost plus model where you’re like, well, I pay for these text messages to go out to Twilio, so I’m going to charge you for that. Now, I dunno, we could go into some examples flywheels sometimes that really helps. Why don’t we start with Drip because that’s a fun one we can both relate to and it’s very similar to customer io.  

Rob Walling:
Yeah, I know you have a diagram for this one, and what we’ll do is we’ll probably have it in the X Twitter snippet that we put out, but we will definitely take a still screenshot of it and put it in the show notes. If folks want to add to start up For the Rest Of Us dot com and look for, I believe this will be episode 752, possible it’ll be 51, but they can peep in if they want to see the diagram you have. But describe to us what you got. We’ll first share it and then describe to it.  

Brendan Fortune:
Alright, perfect. So I’ve got it shared here. Let’s zoom into our drip example. So it starts at the top with integrating customer data and anyone who’s used a marketing automation product, we’ll be familiar with this. So maybe you’re putting in an email address or the person’s name or their plan. If you’re a SaaS business, B2B SaaS, you put some sort of data in. And then with that data you craft messages that are personalized. So that could be personalized off a trigger really. A simple example is an onboarding campaign. So someone signs up that triggers a message to that person telling them, thanks for signing up and here’s some features you should try and et cetera. That’s at its most simplest. That’s stage two. Stage one, integrate customer data. Stage two send messages that’s personalized with this data. And then the last stage, stage three is you want to influence the recipient of that message. 

So you send the message out to them and there is a behavior that you’re hoping the recipient will take. So an onboarding campaign, maybe it’s that they log back in two days later, maybe a feature catches their eye and they’re like, oh, okay, that maybe that’s worth me reengaging with. Maybe it’s like a case study or a customer quote that they resonate with that’s going to push them back into your product and make it more likely that they’re going to convert. So that’s step three. And at that point you’ve completed the drip flywheel because you’re like, oh wow, I can put data in this system and set up this message automation once and it’s going to continuously impact the behavior of new customers as they sign up, which is great for my business. That’s amazing. So maybe I’ll put more data into Drip or I’ll use more of the data that I’ve already put in to send more and different kinds of messages that are going to influence more and different types of behavior. And for Drip and many marketing automation products, we price on profiles or people or contacts,  

Rob Walling:
Subscribers,  

Brendan Fortune:
Whatever subscribers. Yeah. See this is how I’ve been at customer for five years.  

Rob Walling:
We have five names for the same thing.  

Brendan Fortune:
Yeah, exactly. And again, the more you put in, the more you pay. So there’s some sort of starting fee, but the expansion revenue comes in with companies like Drip and certainly customer. What this results in is enough companies are expanding their profile count enough companies are running around this flywheel successfully to offset the companies are not and end up churning. And that’s why you can sometimes have early cohorts of customers, I know customer IO does that are still paying the same amount of MRR as they were like 10 years ago, even though maybe like 20% of the companies have stayed with the product. So that’s kind of the power of attaching your pricing to this flywheel. If you have that pattern of customer behavior that you can identify that makes your customers successful and that you can fairly charge on. And that last part about fairly charge on is where the rubber meets the road and that’s where this can fall apart for some businesses, but most that I’ve gone through, you’ve been able to get something pretty good.  

Rob Walling:
If you want to invest in founders, 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 in. So I want to pop in here. The reason that drip charged per person contact subscriber, well, I’m going to say subscriber, that’s that’s what we called it when I left and then they renamed it when they went to e-comm. It’s person now or something. But the reason we did is because I saw the ESP market and I was like MailChimp and HubSpot and whoever else, Infusionsoft and everybody charged per contact or subscriber, that’s probably the way to do it. And I was aware of net negative churn and all that or of expansion revenue and negative churn, but I wasn’t fully aware about how powerful that would actually be. That’s why we did it. There was no more thought to it and it worked. 

Hey, I got a little lucky, I was smart a little bit and got a little lucky is really what happened. Could an argument be made based on what you’re saying here, which is it’s about customer data, not about, I mean you have this flywheel of integrate customer data, send the message and then influence the behavior. So should I have charged based on customer data, not number of subscribers? How do you know? Is it so clear from discussion that it should have been per person rather than what if a person, a subscriber has 50 data points, 50 attributes or a hundred attributes or a thousand? Can we describe charge on that? How do you think? Is that where fairly comes in?  

Brendan Fortune:
That’s where comes in, but actually it adds another dimension and that question’s kind of awesome because at least in marketing automation folks have tried it different ways. So we actually have some results of the impact of that. So Segment is one example. They started, and they’re a CDP, but they’ve added marketing automation to their suite. segment.com is a customer data platform. I’m again not sure if the whole audience is familiar with that, but it’s about aggregating all of your data in one place that you might want to send out to one or more marketing tools like Google Analytics or Drip. And they charge by API call because that’s what they do. They’re like, okay, well how many API calls?  

Rob Walling:
That’s how they started.  

Brendan Fortune:
Yeah, exactly. And they were an engineer first company. And so they were like, yeah, a I calls they get that. And they went along for a while and I actually got to talk with one of the pricing folks who was involved in what I’m about to describe this pivot. And it was okay, but they weren’t growing that fast. So they started doing some pricing work and the insight they got out of it is a lot of the buyers of their product were marketers at this point who were like, oh yeah, my engineers are a pain to work with. They’d never want to work on my stuff. I want to get stuff into Drip or wherever else into Google Analytics, and they’re always kind of bothered by it. And so can you sell me this product that my engineers will like and they’ll integrate with once and then I can take it and connect it to the various different tools that I want. 

I don’t even have to bother engineering. And that message resonated. But then when they were asked, all right, great, yeah, totally. So how many API calls do you need? The blank stair comes and they have no idea it’s not, and then they lose the deal. So the insight was charged by person or they called it Monthly tracked user or MTU, because Google Analytics has that concept. Yeah, it’s not a good name, but it’s the one that Google Analytics has. And so they were like, well, that’s something that’s familiar to them. So that’s where some of the art over the science comes in where you want to figure out what is going to make sense to your buyer and then price based on  

Rob Walling:
That. Yeah. Okay. That’s super helpful.  

Brendan Fortune:
I can jump into theory a little bit more because oftentimes when I’m sharing this kind of concept, it’s like, well, okay, this sounds like it’s going to be interesting, but how am I going to apply this practically to my business? And there is a pretty straightforward method that I’ve seen work for several folks, which I can walk through.  

Rob Walling:
Yeah, let’s do it.  

Brendan Fortune:
So first thing you want to do is find your best customers, and maybe that’s your highest paying or your highest growing customers. And you can start with just one from that one customer. You want to ask yourself, what are the actions that they do in my every week? Or for some products it’s like every month marketing automation. It doesn’t always have as close of a login cycle, but what are the things that they’re doing over and over and over again? That’s the key. And once you’ve identified that, then you want to try and distill that into this pattern, the cyclical pattern of behavior. So going back to the simpler drip example, they put data in, they send a message off that data, that data actually influences behavior, and they can measure that. So whether it’s by a conversion or some other thing that’s measured in the product that says, yeah, someone clicked on this thing. 

And then that’s the movement that puts them back into the data part of the flywheel. So pick one of your highest paying customers, look at what they’re doing on a recurring basis and then figure out what the pattern of behavior is. Less than five steps, ideally just three, even if it means cutting some stuff out and cutting some corners. And the one requirement when you’re doing that is to make sure that each step naturally leads to the next. When you’re telling a story about it, it makes sense to you take some thinking. A lot of times I see people kind of come in and just jump straight to a flywheel and they’re like, yeah, they log into my page and then they search for a document and then they click to open the document or something. There’s some fairly simple pattern of behavior, and that’s where the last part of this flywheel exercise comes in, which is once you’ve identified this recurring pattern of behavior that you think represents how your customers get value out of your product, then you have to ask yourself, could I charge based on that behavior? 

And if it sounds totally insane, I mean Google Docs for example, like, oh, we’re going to charge you for every search that you run. Well, that seems kind of insane. Who’s going to accept that sort of pricing it? I don’t get value every single time that I can quantify off of that. That’s where you might need to pivot your flywheel a little bit and say, okay, well that behavior is not price worthy, so what else could I potentially try? And that’s where if you can get that nailed down, that’s where you can answer that question. Can I turn this into an expansion revenue engine? Which is really what the flywheel is meant to materialize for your business. And if you can do that, then all you got to do for your product strategy is be like, why aren’t people going between each step of this flywheel? Why aren’t they, oh, it’s because this is too hard. Okay, what are we going to prioritize making that easier? Great. And then that’s going to accelerate your flywheel, which is going to accelerate your expansion revenue and that’s going to grow your business.  

Rob Walling:
That’s the key. The two are linked. Yeah. Yeah. If they’re disparate, if they’re two different things, if you’re charging not for anything in the flywheel, then you now have to optimize the flywheel to get people onboarded and to improve retention. And then pricing is separate. And what you’re saying is if you can tie the two together, your job is so much easier.  

Brendan Fortune:
Yeah, it’s so much easier. Then you have to not mess it up. But a lot of times it’s one of the problems with user-based pricing is you buy it, you’re one person, you’re always going to be one person. Maybe a company’s going to come in or your company’s going to grow and you’ll want to add more people to it, that’s fine, but it’s not tied to any pattern of behavior and you’re going to grow slower.  

Rob Walling:
Yeah, that’s interesting. When I talk to founders and I’m trying to help them with their pricing, sometimes it’s a first crack of like, well, we kind of got to go with our gut on this and let’s make it up a little bit. Or if they know something’s off, which is very common with new TinySeed batches, there’s usually like 60, 70% of the batch is like something’s off. We might either need to raise or our value metric is off or there’s something, or I have too many value metrics. There was someone with five value metrics and I was like, Nope, nope, nope. There’s no way you need all these. And he was like, oh, well this one’s for resellers. And I was like, then have a completely separate pricing page for resellers and move all that over there because you do not want all that cumbersome here. 

And I think we get from five down to either one or maybe two. And the second one was more of with an asterisk of within fair use, it was kind of really simplified. And I think, do we know it’s right? No. Do I think it’s better? I do. And now he gets to experiment with it and see over the next 3, 4, 5 months it feels right. And I think that’s a big deal. I used to say this was back in the hit tail days, 20 12, 20 13, so was that almost 13, 12, 13 years ago. I remember doing a talk and saying what I’m about to say is going to be so obvious, but it was not obvious, but no one was saying this. It was not obvious 13 years ago of you should be making more money, you should be charging more money, the more value your customer gets from your product. 

And it’s like, okay, that’s cool. And again, I say that today and it’s like, well, obviously it was like I’ve never heard that sentence ever. And then it’s like, okay, so what value do they get? What is the value? What is the value of an email service provider? Right? Email marketing like Drip, is it number of, because you and I consider and brainstorm and be like, well, it’s the dollar amount they make off of the emails they send maybe can you track that? This is where it comes back to, can I track that and can I charge based on that if I’m not doing the payment processing? Probably not. Probably can’t charge on that. And then it’s like, so is it the revenue? What if someone has an email list and they’re a blogger and they don’t sell anything really? They sell some courses maybe, but a lot of it is ad revenue, for instance. 

Well then that doesn’t make sense either. So then it’s like, well, is it number of emails sent? Well, maybe. And actually that’s what SendGrid does, right? But they’re more of an API. There’s something about, and I don’t know why the whole industry landed on people subscribers or whatever, but that does, the beauty of subscribers versus emails sent is I don’t know how much emails sent goes up every month, every month, every month for different accounts. But I do know that the ones that are succeeding, the customers that are succeeding, they do add subscribers every month. You know what I mean? Not every business can have the amazing, it’s good for the customer and it’s good for the business. It’s actually really hard. You can often find pricing that’s like, Ooh, this is optimal for the business and no customer is willing to pay it. That comes back to the, I think you said fairness, is it right?  

Brendan Fortune:
Yes.  

Rob Walling:
Or what’s so great? I have founders who come to me usually not TinySeed founders unless I’m telling ’em to change their pricing, but they’ll say, well, the reason that I’m a project management solution, all the other project management solutions charge based on either seats or projects or something like that. And the reason that people come to us is because unlimited all that stuff. And that’s why I have customers. So I can’t stop doing that. And I’m like, you are building a terrible business. You are not increasing. They’re getting more value and they’re not paying you. You’re going to cap at 5K MRR or 10 KMR. You’re never going to make it to seven or eight figures because it’s too in favor of the customer. Your pricing is too generous. So threading that needle as they say is harder than it sounds.  

Brendan Fortune:
Yeah, it is. And that’s also when thinking about different businesses to start, this is an interesting exercise to play around with. There’s a session recording is an interesting one, like full Story or Log Rocket, and I think there are a couple startups starting there. One of the best things about that model is it’s usage based on sessions, and that makes a lot of sense to customers. For the most part. They’re willing to do it, so you’re going to be able to get some of that expansion revenue. Another interesting one, and I shared only in case it sparks something, Intercom has their AI powered chatbot and they’ve got an interesting pricing model for that, which is they charge based on successfully resolved chats as marked by the user. Okay, did we solve your problem? Yes. Which is interesting because that system feels like it could be kind of gamed, but it is something that can be measured and it’s something that the company itself isn’t selecting and perhaps it could influence. That’s on the spectrum of not fair at all to super fair. That’s on the super fair front. I actually am curious to see if they’re, see how it works, how their expansion revenue, it’s working. Yeah, it’s a fun story, but  

Rob Walling:
I saw a screenshot of a customer support tool, I think it might’ve been HelpScout Scout, which we use back in the day Drip. And they were moving their pricing from seat based, which they’ve been forever to number of tickets responded to or something like that. And that people were rage quit. And this was within the last few months, and I hope it’s Help Scout, I hope I’m not throwing ’em under the bus, but it was one of those kind of startupy ones that has become much more prominent. And I was like, oh, I wouldn’t, no, that’s too far. That is not fair anymore to me. Unless you, now if you start that way and everybody knows that going in maybe, but to change now from seed after having to begin seed base for 15 years to suddenly that it’s like, oh, that’s a real, that’s tough.  

Brendan Fortune:
It’s a hard sell, especially if you are raising your prices by doing that. And that’s the one way I could see it potentially working. If you’re like, Hey, we’ve got this a new model and it’s actually going to save you money, then you just hope that you’re not again, screwing your business because that is then a heavy risk 

Mix panel for anyone who uses that. They may have experienced their kind of pricing back and forth, which is just unusual. I haven’t seen that very much. But they started charging by events and then they were like, you know what? That’s not fair. We’re going to charge by Mtus segment or by people, unique people, and then we’ll put a very generous cap on the number of events you can log against a person. And they did that for two years and then the founder updated or the CEO was like, Hey, just kidding. We’re going to go back to event-based stuff. And the short version is because they had to make more money than they were able to make off empty use. So it’s a risky thing, but also, I mean, like you were saying at the beginning, if you can get the pricing and packaging, I dunno, sometimes it’s like 80 or 90% of the money challenge. And even as you’re constructing the business just thinking about, am I actually going to be able to charge for this thing? That’s almost all that matters at the end of the day, if it’s a business that you’re creating.  

Rob Walling:
Brandon Fortune, thanks so much for joining me on the show. If folks want to keep up with you or get in touch with you, they can hit you up on LinkedIn. You are Brendan Fortune and you were telling me offline if people have thoughts, comments, if they think fly pricing and Flywheel is bs, right, or if they think it’s great or have questions, they can reach out to you.  

Brendan Fortune:
Yeah. Yep. Absolutely. I love to discuss it and there’s always room to improve some of the process of pulling this thing together.  

Rob Walling:
All right, thanks again for joining me man.  

Brendan Fortune:
Alright, thank you.  

Rob Walling:
Thanks so much to Brendan for coming on the show. He shared a link to his Miro template and an image. We’ll be in the show notes. It’s all the stuff we were kind of talking about during the episode. He was very generous with his time. In addition, a reminder that if you have any type of product questions, product management, deciding what to build, when to build, how to market it, how to communicate it to your team, just anything around product management. Brendan is an expert and if we get enough questions, I will have him back on the show To answer those, you can send ’em to questions at startups For the Rest Of Us dot com or head to startups For the Rest Of Us dot com. Click ask a question in the top nav and of course put product question in the subject and I’ll get ’em back on the show. Thank you for listening this week and every week. This is Rob Walling signing off from episode 756. Hello, dear listener, you found the hidden track on startups For the Rest Of Us, episode 750, something in this track. I’m going to ask Brendan Fortune five trivia questions about Fifth Edition, DUNS and Dragons for those in case I didn’t already say it in the episode. Brendan has played in my DD game with Derek Rimer, who listeners of the show know as well as a couple other founders here in the Minneapolis area and Brendan knows the rules pretty good. You know why  

Brendan Fortune:
I know the rules pretty  

Rob Walling:
Good. Don’t say it. Why do you know the rules? Pretty good. Balder’s Gate three. Balder’s Gate three. So whenever Brendan references Balders Gate three at my table, I force him to drink something. And it’s not always alcoholic because we need to be responsible kids. But BG three, it touched the rules. It did. It’s a good game. Yeah, it is. Actually. I’ve seen it. I’ve never played it. Alright, so let’s dive in. We’re going to go from easiest to hardest and obviously if you’ve never played Fifth Edition, DED, you don’t give a crap about it. Just skip to the next podcast. This is just fun people we’re chilling. The first question, what ability score is used for range attack  

Brendan Fortune:
Roles? Dexterity all day?  

Rob Walling:
Yes. Final answer.  

Brendan Fortune:
Final answer. Do you need to phone a friend? Not yet. Although I have Chet GPT up. I’m going to try not to. Don’t dare it, Don. Don’t you dare  

Rob Walling:
Use it. It’ll make me sound so  

Brendan Fortune:
Smart. Alright, fine.  

Rob Walling:
You got one out of one so far. Ding ding. Yes. Second question. Getting slightly harder. What saving throw is required to resist the fireball spell constitution? Incorrect. It is dexterity. It was a trick because the first and the second answers were the same.  

Brendan Fortune:
Boo  

Rob Walling:
Fireball,  

Brendan Fortune:
Correct? Not representing three. Well,  

Rob Walling:
The best you can do now is 80%. B minus. Nice. Next question. Getting slightly harder. What is the maximum level a character can reach in a single class?  

Brendan Fortune:
I should know this, but we’re so far away. I’m going to say I’m watching your face. 1220. The answer is  

Rob Walling:
20. Yes, that’s what I said. Got it. 67% right. Now you have a D plus, which I’m sure was your GPA and I got to be Derek though in high school. What did he get? I don’t remember. Actually we need to look back at that episode. The fourth question. How far can a character typically jump with a strength score of 15 long jumps?  

Brendan Fortune:
15 feet? That is correct. Oh wow. Okay. This is, I’ve never jumped in our game.  

Rob Walling:
Not once. GBTA character can long jump 15 feet equal to their strength score. If they have a 10 foot running start,  

Brendan Fortune:
Look at that.  

Rob Walling:
Okay, the fifth and final question. Oh, this is brutal. This is really detailed. How many spell slots does a fifth level wizard have for third level spells? I think just one. Two. Yeah, one. So here’s the thing, I’m not going to hold you to this one because that’s just not fair. It’s two. But why would you Who memorizes that? No. So how about this is your fifth, which condition prevents a creature from taking actions or reactions?  

Brendan Fortune:
Incapacitated.  

Rob Walling:
So here’s the thing  

Brendan Fortune:
And paralyzed, but that’s incapacitated.  

Rob Walling:
I think you’re right is in, because the answer that GPT has is stunned, but I think paralyzed but I think wouldn’t paralyzed do the same thing. I’m going to give that to you.  

Brendan Fortune:
Okay,  

Rob Walling:
Good. I think there are multiple answers is my gut.  

Brendan Fortune:
Yeah, because a lot of things could cause stunning  

Rob Walling:
As everyone know. Well, stunned is also a condition, but as everyone knows who plays at my table, I’m the dungeon master and I barely know the rules of dungeons and  

Brendan Fortune:
Dragons. That’s where to play.  

Rob Walling:
That is the best. So you got an 80% solid B minus way to show up. Thanks for playing.  

Brendan Fortune:
Thanks for having me. And I’m going to rub this in Derek’s face. I don’t even care what he got. I’m just going to say that I did better just be like, I beat you. I did better than you. Yeah, exactly.

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.