Episodes

Rob: It’s another episode of Startups for the Rest of Us. I’m your host, Rob Walling. I’m fired up to be here today. Thanks for joining me. A lot of interesting listener emails I’ve received over the last couple of weeks, couple of months, that we will be walking through. Some of these are questions. There is some feedback, there’s a critique of my episode 581 on Inflation for Founders that I think is really well written and well reasoned, some feedback on some statements I made about certain things being an inflation hedge or not, thoughts on renaming a podcast.

A funny story about our listener, Matt Paulson, who we’ve heard from before. He heard me on My First Million where we talked about potentially renaming podcasts and there’s a funny story there. We do have a couple of listener questions that I will dive into.

Before we dive into that tasty goodness, I wanted to let you know that as of yesterday, applications for two new TinySeed batches are once again open. We have our Americas batch and this will be a Spring 2022 batch that’ll start in just a few months, and then we have our EMEA or Europe, Middle East, and Africa time zones batch.

As you may have heard on this podcast, we raised a $10 million fund to invest in companies in Europe, the Middle East, and Africa time zones, that allow us to have a dedicated program manager there. It allows us to have calls at times that work for those time zones, so we are running a simultaneous application process.

Obviously head to tinyseed.com and there’s an apply button if you’re interested, or if you know a great bootstrapped founder who has some traction with their SaaS app. We would love for you to refer them to tinyseed.com. Those applications will run for about two weeks. I love the announcement when we get to pick the companies and then we do our live stream of talking about them.

With that, I’m going to dive into my first email. The sender asked to remain anonymous. He said, “Hey, Rob, I just wanted to say THANK YOU for everything you do on Startups for the Rest of Us. Biggest fan. I could listen to you all day long. On your podcast is how I heard about MicroAcquire, where I just sold one of my side projects. Granted, I’m on a much smaller scale but that never would have happened without you. If you ever need anything at all, I’m excited to help. Beta tester, feedback, development, help, conference. You name it, I’ll be there. I live within driving distance in Minneapolis, if you’re ever looking for someone to compare with, give me a shout.”

Thank you for sending that in. I have said this on the show many times, but I have a folder in Gmail that is just labeled thanks and it’s where I collect emails like this. These have a very deep meaning for me. They have a very deep impact and this more than anything, is why I still do what I do. This is my legacy.
I could walk away from all of this. In fact, at certain times in my career, I have evaluated what if I didn’t podcast anymore? What if I didn’t do events? What if we didn’t do MicroConf or whatever it was. This was years ago and there have been turning points in my career where I’ve doubled down on it. I’m at the point now where this is what I’m going to do for the rest of my life. I have made that decision.

I don’t need to do it for the money. The money’s nice. The money shows that there’s value to society. There’s the whole conversation around that, but honestly, that’s not why I do it these days. I do it for the impact, I do it to help founders, I do it to match the mission of Startups for the Rest of Us, MicroConf, and TinySeed, which is to multiply the world’s population of independent self-sustaining startups.

That’s why it’s so amazing to receive emails like this. Thank you so much for sending it. Obviously, if you have a success story, write in, let me know. I don’t even need to read it on the show. It means a lot.
I’m approaching episode 600 here on this podcast and working on my fourth book. In fact, my wife, Sherry, has already thought up a topic for a fifth book that she and I can collaborate on. I’m fired up about the next six months, about the next six years to keep doing this, so thank you to the person who wrote that email and thank you as a listener for showing up every week.

Piggybacking on that, we received another review, five-star review for Startups for the Rest of Us. It says, “Finally, a good podcast by and for SaaS founders.” It’s from Alex J. Sanfilippo from the US. He says, “I didn’t realize how difficult finding a good SaaS podcast would be. Most just cover theory or only want to talk about MRR, ARR. Also, they ramble on for a long time. Here’s a show with shorter episodes with a host who knows SaaS and asks the right questions while providing actionable value. A+, keep it up.”

Thank you so much, Alex. Wherever you listen to your podcast if you could drop a five-star rating, whether it’s Spotify, whether it’s Apple podcast, whether it’s the Google podcasts shop, what’s it called these days? I think they renamed it four times, it would be awesome. That’s just a small way to give back.

Next up is an email from a longtime listener, Matt Paulson. He’s the founder of marketbeat.com, who was having amazing success with his startup. He said, “Hey, Rob. I just listened to your podcast interview on My First Million. I thought that discussion on potentially renaming your podcast was fascinating. It reminded me of my experience renaming Analyst Ratings Network to MarketBeat after attending MicroConf in 2015. I told everyone the name of the business at the conference and nobody could repeat it back correctly after I told them the name. Everyone mangled it, which persuaded me I needed a simpler name.

I found marketbeat.com on Sedo for $9500 and the rest is history. When I made the change, I assume there would be a lot of confusion with our advertisers and subscribers, but really, nobody missed a beat. Everyone figured out the new name just fine. All our advertisers renewed, nobody emailed us and asked us what happened to the old name. The only thing we really couldn’t change is our sending email domain. We were never able to build up marketbeat.com’s email reputation in the way that we had with analystrating.net, so we’re still sending email from our old domain name.”

Thought you’d enjoyed the short trip down memory lane. Analyst Ratings Network, that is rough. That’s how I felt when I was talking to Sam on My First Million. I said, I avoided your show because I thought it was kind of a get-rich-quick or wannapreneur show, but it’s not. It’s actually the show talking about going deep on business ideas and business philosophy hosted by two smart dudes.

I was just talking about how hard it would actually be to change the name. I think that given the fact that you have subscribers and an RSS feed, that’s not going to change. You can just change that name, and essentially Apple podcasts and Spotify (I think) it will propagate. The harder part is do you have brand equity with people who maybe don’t make the transition? Or who looks different in their podcatcher and they get confused in the short term?

I think the bigger challenge—and I brought this up on the show—is (I said) what name do you pick? Because naming is hard. I’ve thought about it over the years. Startups for the Rest of Us, I love the name that starts with startups. It’s startups for us, for those of us who aren’t in the know, who don’t have friends and family—I always chuckle at that term—I remember the raise from friends and family ramble, […] good for you because I didn’t have rich friends or a rich family. It was never an option for me or for a lot of us.
Those of us who can’t move to Silicon Valley for three months to do an accelerator—that’s why we started TinySeed—those of us who didn’t fit in when we went to all the startup events that basically are about pitching investors, asking for permission to start your company—I never wanted to do that; that never felt right to me, and that’s why we started MicroConf—to the podcasts, the books, and the blog where all they talked about was raising funding and how to do a pitch deck and nothing about actually growing your company, that was all just this. It was like funding was the goal and that’s why we started Startups for the Rest of Us. That’s why I wrote Start Small, Stay Small was a reaction against this narrative in this script.
I think that name does still apply. The name is also long. I’ve often thought about is there a shorter, more succinct way to say, is there a better name given what the podcast has evolved into? But given that it still applies, I honestly struggle to change the name from Startups for the Rest of Us. The logo, on the other hand, that appears in Apple podcasts, that’s something that I revisit every few months about potentially redesigning that.

Onto our next email. This is from Pawel Brzeminski, founder and CEO of snapprojections.com. He has some feedback about episode 581, where I talked about inflation for founders. He says, “Rob, I tuned in to Episode 581 and I’ve got a few comments. I mostly agree with everything you said—a nice episode, by the way—but thought to comment on a few things as it may be valuable.

By the way, I was a personal finance nerd before starting a financial planning SaaS, but I learned a ton more about this when I was building and running Snap Projections. Then I learned even more about it when I started investing after I got acquired (I sold Snap to a public company, although I still run it for them). First off, gold is not an inflation hedge,” and now I’m going to flip back to me. This is news to me. I’m sure there are 10 or 20 people out there doing a facepalm, but I’ve just heard this narrative over and over and over and I never researched it, I just believed that we are holding on to gold as a hedge against inflation.

Back to his email. He said, “There is scientific research and empirical evidence that confirms this not unless you have centuries of an investing horizon. I got the papers, the long term returns to durable assets, the golden dilemma, and the gold constant with conclusions about gold pricing.”

That’s interesting. I don’t know. Do we have 2%, 3%-ish of our portfolio in metals? It’s for diversification but this is one of those things that I look at. It’s not generating any return, it’s not generating any income, and I’m always frustrated by assets like that, so not inflation hedge.

All right, next. “Successful investing relies on keeping costs low at broad diversification,” which I said and he agrees, “and reducing deferring taxes. The last bit is actually very important and usually underappreciated and worth mentioning. I spent seven years talking to financial planners and running the numbers. REITs,” which are real estate investment trusts, if you remember, “especially commercial ones could have issues not because of inflation but because of the remote work aspect. Granted, most leases are long-term, we may not see it immediately but I’d be very careful.” I do think that’s good advice. It’s not an inflation issue, but it’s just economic/changing the way we work. It’s a market force that could do damage to reach long-term.

Back to his email. “If you want to park cash, short-term bonds aren’t a bad place even if the rates are going to be increasing. VSP has a 2% payout ratio, which is a lot more than a standard checking account these days. HISA would be best, but the amounts are usually limited.” By the way, neither Pawel or I are financial advisors. This is not financial advice. For entertainment purposes only. We’re just talking about things right.

Lastly, back to his email, he says, “I was very surprised you didn’t include TinySeed in your discussion here. Angel investing like private equity or VC is another asset class and that episode gave you a perfect opportunity to talk about TinySeed. For example, I completed my first angel investment a few months ago and I totally include it as part of my overall asset allocation. There’s no perfect inflation hedge but investing in businesses, especially good SaaS, meets a lot of criteria of a good inflation hedge. Cheers, Pawel.”
Well, thank you so much for writing in. It is interesting. I didn’t want to show my own stuff, but frankly, it didn’t occur to me. What’s funny is, if you go to tinyseed.com/thesis, we talk about trying to broadly index across hundreds and hundreds of early stage SaaS companies. It’s not technically an index fund like a Vanguard fund.

We are diversifying risk right across a lot of companies. And I have thought about SaaS as a different asset class. I do include that in our family balance sheet. Since I made our very first angel investment in WP Engine in 2011, those sit off to the side. I don’t count them as such. I usually say, once I write the check, it goes to zero, but then as the company becomes worth more, we do some marking to market, as they say. Absolutely, B2B SaaS (I think) is an amazing inflation hedge.

In fact, a few years ago, we invested $22,500 I believe was the amount, and it was probably 2014, so this is 7–8 years ago. It’s one of those things where we write an angel check, I write it off. I assume that I’m going to 10X, 100X, or it’s going to go to zero, maybe something in between, but it’s not something that we’re banking on. It’s illiquid for a long period of time. That company has become quite profitable. It’s a SaaS company that’s doing single digit millions a year, but the profit margins are insane. I think their net margin is 50% or maybe it might even be 60% and they’ve started to kick off dividends.

They’re one of the handful of private angel investments we made that are LLC. Now every quarter, we get this check, this direct deposit into our bank account. The last one was a third of the initial investment. It was like $7500 and we get these every quarter. It’s super interesting that that is now an income stream and if they decided to sell that company, it would obviously give a lot back.

We actually had the opportunity to sell our stake in this company for a great markup. It would have been I think more than a 10x return on the money and I looked at it and said, but then what would I do with that cash?

That cash would come into the account, we already have an emergency fund, we have the cash we need to live on. I would then need to turn around and find an investment. What investment do I think is going to beat this company or B2B SaaS in general? And I couldn’t think of one. So we left it in there because I think it’s a great investment. All that said, yes, TinySeed is broadly indexing across B2B SaaS companies, and so far the results are looking really good. They’re definitely in line with all the projections we made.
We are closing our EMEA fund here soon, but frankly, we launched the TinySeed Syndicate, which is always open to new investors. The nice part about a syndicate is if you’re an accredited investor, you can say yes to each individual deal. Let’s say, we launch a syndicate deal every month or two deals each month, it’s going to be early stage, or even later stage B2B SaaS company that has a really low minimum investment, usually $2500 up to (say) $10,000 per investor, and you can decide to go in on it or not based on the terms.

I believe our first deal that we ran is about to fill up, which is great because this is all an experiment. We’re trying to find product/market fit ourselves. It’s like launching a new feature of your app, not knowing if anyone’s going to use it. So far, that’s great. Obviously, we’ll be raising more funds in the future but if you’re an accredited investor and if you are interested in potential inflation hedge or just having exposure to a different asset class, early stage SaaS is great.

From my own experience, we are 11 years from our first check and things have gone very, very well. Anyways, tinyseed.com/syndicate, if you’re interested in that. Of course, the syndicate folks will be the first to hear when we launch our next fund that invests through TinySeed accelerator.

My next email is a question from Matt on micropreneurship. He says, “I’m a C-level tech executive, and I’m very happy about where I am career-wise and professionally. In other words, not really interested in creating a large-scale technical B2B SaaS. When I look at investment opportunities, I’m intrigued by tech micropreneurship, as Rob laid out in Start Small, Stay Small. I viewed it as a better opportunity versus something like real estate or franchise ownership, both of which I have considered.”

I want to break in here. Before I started doing software products, I was in real estate. We were buying homes. We owned four homes in LA that we rented out, a total of seven units. I thought that was the path to early retirement—software developer by day, doing real estate by night. It was a pain and I had no advantage over anyone else. That was when I realized that as a software developer, you have an advantage in startups because non software developers don’t know the tech side of it. I different looked at franchises in real estate that any way to basically be in control of my own destiny. That was always the goal.

Back to Matt’s email. He said, “What is the state of micropreneurship? Is it dead? Or do opportunities exist for someone like myself looking to either start up or buy a smaller product with around 20%–30% return on investment? I would love to see an episode dedicated to micropreneurship. What are some markets to buy small SaaS products for example? I don’t see a whole lot on sites like Flippa. How do valuations on smaller SaaS or products work? Thank you and love the podcast.”

It’s such a great question. Micropreneurship, as laid out in Start Small, Stay Small, is truly that lifestyle bootstrapper where I want a business that’s going to do $5000 a month up to $100,000 a month. Some get bigger, but that’s usually the range. You don’t really care that much about growth. You care about cash flow. You go for net profit margins. I had apps doing 90% net profit margins. You’re doing tens of thousands a month with 90% net profit margin, absolutely life-changing. That’s what Start Small, Stay Small looks.

It doesn’t look at the more (say) ambitious bootstrappers. That’s actually my next book that I’ve now circled back on and I’m starting to focus on energy again. That’s what that focuses on. It’s more of I think that MicroConf growth, or the the TinySeed companies, the folks that say hey, I want to get to seven or eight figures in annual revenue and I either want to then become quite profitable, throw off a lot of cash, or I want to have a really nice $10 million, $20 million, or $30 million exit. Micropreneurship is definitely something you can and should do on the side. I think that’s certainly how the stair-step approach talks about it.

The state of micropreneurship is it’s absolutely alive and well. There are still a lot of folks doing that. If I were to do it today and try to launch from scratch, I would look at the ecosystem, the plugin, add-on, and extension ecosystems where you can build a product and get it into that app store. There’s the Chrome App Store, WordPress, there’s Shopify, Heroku, Jira, Slack, Figma, Jenkins, Amazon, AWS, Netlify, Grafana, and there are others. It’s not an exhaustive list.

We’re actually going to link up an article on code with wolf.com that talks about where to publish plugins, add-ons and extensions, and they have 12 on that list. I think there are at least 20 or 30 more that I would consider. You have Notion, Airtable. These are off the top of my head. A nice part about these ecosystems is you don’t need to do everything. You don’t need to do all the marketing. You kind of have this channel that’s already available to you, just to be found. It’s organic search. These are great step one businesses, which I think micropreneurship is really designed for, and that’s where I would start first.

I’m going to start today if I was going to acquire and I had the means to do it, which is what personally I would do. I had a mix of this as I was coming up. I acquired some and I built some, but I would be looking to Quiet Light Brokerage; I would get on their email list. I would look at FE International. I would look at Empire Flippers. I would look at MicroAcquire. I’ve had folks from I believe all of those companies except maybe Empire Flippers on this podcast in the past, talking about valuations.

If you go to Startups for the Rest of Us, you click that the magnifying glass at the top and you search for acquiring or acquisitions, you can get an idea of multiples, but frankly, content sites are 2–4, 3–5 times annual seller discretionary earnings, which is kind of equivalent to net profit. SaaS is a little higher now. It’s probably 4–6, I believe. This is for smaller apps. That’s kind of the going rate.

I’m going to be honest. When I was buying and selling these apps in 2006 to (I guess I acquired my last one in) 2011, it was 12–18 months of net profit. That was what we saw on Flippa. Flippa was a bit rough, as Matt pointed out, but that’s where the multiples are. Can you absolutely get 20%–30% return on investment? I think so. I guess I did it back in the day.

I know folks who are still acquiring you these micro private equity funds that are building these big portfolios of these profit-generating apps. They’re shockingly efficient and they’re capital efficient. That’s one of the reasons that SaaS and software are such a sought-after asset class. Is it alive and well? Absolutely. I think that if you haven’t taken the plunge, it’s a fun adventure.

My last email for today is from Luke. He’s the founder of bakup.io. He has a couple of questions he submitted. I actually answered one of them on an episode a while back about giving a SaaS demo, but his other question is, “If you know you have a potential $10,000 MRR product but don’t have the capital spend on advertising, where would you start with user growth? Starting a blog is easy with all the software we have access to, but what is the best way to attract readers and get them to click on your startup?”
We get this question every now and again. This is the fundamental question, isn’t it? This is what almost every article I’ve ever written or every podcast that we’ve recorded winds up being about. You could literally write a book on this. Advertising is usually, in most cases, not the way that startups—especially bootstrap startups—make it work. There are exceptions, you need a pretty high lifetime value to make it work. Starting a blog is not it either. You could start a blog and just publish articles, and no one’s going to come. You have to be strategic about it and think of it as content marketing.

I would start with SaaS Marketing Essentials—it’s a book—and Traction by Gabriel Weinberg. I would look through those marketing purchases and think where does this audience live? Is this audience online? Because if they’re not online, none of this is going to work and you have to try other things, in which case you have to charge more because you need a lifetime value or an annual contract value that can justify you spending the money to go offline.

If they are online, where do they hang out? Are they in Facebook groups? Are they on Hacker News? Are they on Indie Hackers? Or do they have their own forums or own closed communities? You can go hang out there and be part of those communities and just be helpful.

That gives you a start of seeing how those folks think about stuff. You don’t go in there and get and pitch your stuff, but you start to become part of the community where potential users are. Are they already looking in a certain place for the thing you’ve built? Are they looking in Google?

Then maybe you do need to pony up some Google ads just to see if it works, figure out which terms work for you, and convert, and then do hardcore SEO to rank for those terms. Maybe they’re searching in a marketplace because this is an add on. Maybe they’re looking at Heroku or wordpress.org. Then you build something, you put it in there, and you figure out how to do search engine optimization and rank there.
Are they on social media talking about this looking for solutions? It’s just a matter of getting in the headspace of those consumers. Even if they’re businesses, they’re still going to pay for and subscribe to your service. And they’re going to look for it somewhere. That’s how I would think about it.

To add a little more context, there are really five main B2B SaaS marketing approaches. These are the five that I think everyone should at least consider, if you think they’re going to work. There’s content, there’s SEO, there’s cold outreach, there’s business development/integration marketing partnerships, and there are ads. I’ll run through those again.

I’ve separated content and SEO, because sometimes people write content purely for SEO. They don’t care at all about the kind of social pop, or getting on Hacker News, or getting into these social news sites. Other times people do the content marketing, they don’t care about SEO at all, and they really just care about the social pop, or the initial sharing on the LinkedIn and the social media sites. Those are two ways that I’ve seen dozens, if not hundreds of startups, SaaS founders, grow amazing six, seven, eight figure companies almost solely on the back of those two.

Cold outreach, it’s a little saturated these days, but it still works in certain spaces. That can be email, that can be LinkedIn, however you do it. Certain people have opinions on that, they’ll never do it, that’s fine, too. Then don’t go into a space where that’s what you need to survive.

Then there’s business development, which is integrations. I think of that as affiliates and partnerships, where sometimes you do a full integration, sometimes you can just do a joint venture partnership quickly, and you just recommend the tool to each other’s audiences. Other times, you are trying to find affiliates who already have audiences in the space to do a webinar with or you give them a cut, 30%, 20% of the annual fees that the customers who they send you pay and now you have this amazing revenue stream from an influencer.

Then lastly, it’s ads. That could be Google ads, that can be Facebook, LinkedIn. There are all types of ad networks. These are high-level things, those are only five. There are also the caveats of well, then there are free tools, which are like engineering as marketing, there are in-person events, podcast tours, and on and on. Traction is a good book. I actually have, (I think) five or six marketing approaches that are not in Traction that work for some companies. I’m planning to mention them in this book that I’m writing. I’ve kind of put them in a chapter of it.

If you’re intrigued by the thought that I’m writing another book and want to hear when it comes out, you can head to robwalling.com, sign up for my email list or head to startupsfortherestofus.com. Sign up for the email list there.

The cool part about Startups for the Rest of Us is you receive two never released episodes that we have both an audio format and then a written guide so you can read through it—a nice-looking PDF guide. Those are called Eight Things You Must Know When Launching Your SaaS and 10 Things You Should Know as You Scale Your SaaS.

There are evergreen episodes that are fundamentals that I don’t believe will change this year or in five years but things that some of which I haven’t mentioned on the show. So startupsfortherestofus.com. You sign up for that email list, and then obviously, I’ll be notifying you when the book comes out.

Good question, Luke. I will say it’s a very broad question. There’s no super easy answer. This is the hard part of being a founder, is making hard decisions with incomplete information, because that’s usually what it is. You don’t have the complete information of what’s going to work. You have to take your best guess, you have to run experiments, you have to just see what works.

That wraps us up for today. Thanks so much again for joining me for this episode 587. Thanks for coming back every week. If you’re not subscribed, obviously hit that subscribe button and I will be back in your ears again next Tuesday morning.

Rob: In this week’s episode of Startups For the Rest of Us, I talk with Michele Hansen. She’s the co-host of the podcast, Software Social, a bootstrapped entrepreneur who has grown her SaaS to north of $1 million with her co-founder, and she’s written a book about mastering customer interviews. It’s called Deploy Empathy: A Practical Guide to Interviewing Customers. Simply a good book.
I’m going to be honest. Her experience, learning, and then practicing customer interviews is pretty unique, and you can tell in the book that this is not just another book about doing jobs-to-be-done, customer development interviews. She has a very unique take on it and you’re going to enjoy it, even if you’re concerned or scared about doing customer interviews. You don’t have much interest in them, this conversation’s going to be enlightening.
You can go to deployempathy.com if you want to check out all the ways you can buy the book and learn more about Michele. Of course, you can check out her podcast, Software Social. Without further ado, let’s dive right into my conversation with Michele.
Michele Hansen, thanks for joining me on the show again.

Michele: Thank you for having me back.

Rob: Folks might recall episode 524 of this very podcast. It was called Bootstrapping a Commodity SaaS, where you and your husband, Mathias, came on and talked about your trials, tribulations, and victories with Geocodio.

Michele: Yeah, that was about a year ago or two.

Rob: This is 586, that’s 60-some episodes, so yeah, a year-and-a-half. And I would like to note that in the book that we’re going to talk about today, your book is Deploy Empathy: A Practical Guide to Interviewing Customers. You revealed that the two of you have bootstrapped Geocodio to north of a million dollars ARR. That is awesome. Congratulations.

Michele: Yeah. Geocodio turns eight in January, which is pretty wild.

Rob: Yeah, and when you started it, didn’t it do $31 in the first month or something like that?

Michele: Yes.

Rob: You were like, hey baby build this little fun tool, and now that is an amazing, life-changing startup for you guys. Amazing, life-changing product.

Michele: Absolutely. When we started, it was actually a side project to keep another side project going. It never even crossed our minds that it could be our full-time job, and here we are now. I have actually worked on Geocodio longer than I ever worked for anybody else at this point.

Rob: Yup, and it’s a […] SaaS it’s that the flywheel that just gets going in the first year. It does X thousand, then the next one it does 2X, and then 3X. Pretty soon, you’ve built this amazing two-person SaaS company that makes seven figures and is the envy of so many people that we know. It’s like more people do it than you think but also not as many. A lot try and don’t get there.
What do you think that you and Mathias have done right? What are two or three things you might say that this is what created the success for us?

Michele: Do what you said about people wanting to get to this point. That’s something that drove me to write the book because having built a company I feel a responsibility to help others do the same. Whether that is investing to help them, we’re excited to be investing in kinds of […] or just helping them where we didn’t have help or we didn’t really have mentors throughout this whole process.
The one thing that we do is we listen to our customers and we let that guide us. That was a huge motivation for me, and getting all of this stuff about how to understand your customers and how to talk to them out of my head and on paper as a way to help other people do what we’ve done and then some.

Rob: Yeah, and I think that’s a good way to think about it or I like that way that you’re thinking about it because you have this information in your head. My guess is you’ve probably heard other people talk about customer interviews or you’ve read other books on it, and they just didn’t quite sync up with your experience.
I’ll put it this way; I’ll speak for myself. I wrote Start Small, Stay Small in 2009, published 2010 because I was pissed off at all the […] books about starting up and how none of them were for us, none of them were for bootstrappers, none of them talked about being a one- or two-person company. Everyone expected you had venture capital. I was so angry and I was like, well I’ve done this. I just need to get this out.
I’m not saying you’re as angry as I was, but I am curious if you looked around you’re like, you know? My take I think would be really helpful and it isn’t out there yet.

Michele: Yeah, there are a lot of great books on user experience research but basically—with the exception of The Mom Test—a lot of them are not written for people who are trying to start their own companies without funding, and as you said, there are those assumptions of like, oh, will it bring this to your team of people? And like, you know? You want to get some budget for this. Or like, think about budgeting for travel to visit them.
I started out doing user research as a product manager in a bigger company, and those things were not off-putting to me at the time, but throughout the years and throughout having this experience of jumping on a call with a founder and just helping them figure out how to interview customers and I would recommend the books that I had used when I was learning how to do this, people would be off-put by it because they’d be like, oh, I don’t have a budget. I don’t have a dedicated researcher. I don’t have a dedicated UX person to prototype with them. I don’t have all these things that this book is assuming I have. Is this still for me? It made people feel like this was not something that was for them or that they weren’t welcome, and something that they had already built up some fear around of talking to people and understanding it.
There was already a large amount of fear built up around just the interaction itself of interviewing someone, and then adding on this additional layer of insecurity around, oh my God. This is only for people who have funding. It’s only for big companies. What am I doing here? I don’t belong here.
The goal is to make it approachable to everyone, but also think about how The Mom Test is on a lot of people’s shelves and it does such a great job of talking about that stage when you’re figuring out what you should build, whether you should build it, and how do you get that really early feedback from people.
You also need to get feedback if you’ve been running a company for 5 years or 10 years, or once you’ve got it going how do you stop churn, or how do you figure out why people are bouncing off of something, or how do you figure out why people are happy so you can get more people who would be happy. There are all these other things that you can use research for, and there just wasn’t really a book geared towards the indie software experience.

Rob: That’s why it’s so helpful and why it resonated with me. As I read through the book, your examples all feel very much in line with my experience and the experience of the founders around me, and it’s because you are a practitioner both of customer interviews and of being a bootstrap founder. If folks check out your podcast (Software Social), they’ll hear you and your co-host (Colleen) talking about this kind of stuff.
It was probably six or eight months ago, but you either did a sample interview on air, where you interviewed her. I don’t remember what it was, but that episode struck me as really interesting because hearing the insights, and you have at least one transcript, maybe a couple in this book of sample interviews.
That’s what I like about this book and that’s why folks listening should pick it up. It’s for $10 on Kindle and $25 on paperback. It is crazy practical. There’s a tiny bit of theory—just enough—there’s a framework, but then it’s like, when should you do interviews, recruiting participants, how to talk so people will talk, sample interviews, sample scripts, and if you really want to hit the ground running you flip through this. And you also give either the justification of when to do it and why.

Michele: Yeah, I wanted to make it really practical for people, bearing in mind that they may already be feeling overwhelmed by this. I don’t want to bog them down with theory. There needs to be enough that it needs to be woven into it, and ideally you could sit down, skim the book. There’s even a section at the back of the book that’s like, if you just want to skim this here’s your little cheat sheets for the stuff you need and you can just get running and go on it.
Actually, being a practitioner, that was something that I didn’t realize until the book had been out for a couple of months at that point, when someone pointed out that most of the books on user research are written by consultants, which makes sense because the book is written for them in a way.
And there are very few books that are written by practitioners, like Cindy Alvarez’s Lean Customer Development comes to mind, for example. Never mind a small SaaS practitioner, so yeah. The ideas you can just pick it up, run and get started, and have what you need there as reference if you need it later.

Rob: I’ll quote you from your book. People sometimes quote me what I’ve said on a podcast or in a book and I’m always often like, did I say that? Because either it’s like, huh, that’s actually really insightful. I’m happy that I said that. Or I don’t remember saying that and that sounds kind of dumb, or I don’t agree with it anymore.
Anyway, I want to read this quote from the book because I was struck by the title. It’s Deploy Empathy, and I had to think of deploy as a code, but if you’re deploying code… Then I was like, no, it’s not that. I think it’s bringing empathy to the customer. Actually, a piece of this you took from a different definition.
There are embedded quotes in here, but the bottom line is it says, “Empathy is about understanding how another person thinks and acknowledging their reasoning and emotions as valid even if they differ from your own understanding. In this context, in the context of this book, empathy means entering the other person’s world and understanding that their decisions and actions make sense from their perspective.”
The subtitle is, A practical guide to interviewing customers, but the title is, Deploy Empathy. It’s an unusual title, I’ll say. What brought you to Deploy Empathy?

Michele: I wanted to have a title that was sort of a wink to developers, so that they knew that this was a book for them. When I initially started writing the newsletter which became the book, it was very much geared towards indie developers and makers.
The audience has since expanded significantly beyond that, but that was really the core group of people. I thought by using the word ‘deploy’ in it, it’s like you’re deploying code and what you are deploying has empathy for your customer embedded into it, but you’re also using empathy.
What I didn’t realize until well after I had launched the book, which I wish I had done more research on, was that apparently deploy empathy is also a Gary V phrase and I had no idea about that. It’s basically really hard to search for on Twitter because you get all these Gary V people in there.
I seem to have a talent for picking ungoogleable titles because Software Social you get all this stuff about social software, and it’s like ugh. Don’t ask me for naming advice, but yeah, it’s a very subtle wink to developers but also that a non-developer would also understand the title at the same time.

Rob: Got it. I totally picked up on the ‘deploy,’ and I thought to myself, am I reading too far into this? Is there […] symbolism?

Michele: Do you have it? Flip over to the back cover. Do you have a copy on you right now?

Rob: Yup. I have a PDF you sent me when we hooked up.

Michele: Okay. On the actual book—I’ll have to send you a picture of this—there’s a little code block that says, “Empathy deploy, Initializing mental models… Building interview skills… Softening tone of voice… Configuring recruitment template… Preparing tools… Loading scripts… Installing debug protocols… Processing results… I thought it was very clever by doing that.
Rob: That’s the tell. That’s the confirmation. It’s funny. Let’s talk about feature requests as customer research. Your book is nice and concise, about 200 pages, and then there are 100 pages of extra stuff. There are transcripts, sample interviews, and appendices. When I looked at the appendices, I was like, oh yeah. There’s a whole appendix aimed at single founders or people without teams and all that. One piece of this, Chapter 56, is Feature Requests As Customer Research. Want to talk to us a little bit about that?

Michele: Yeah. This chapter came out of a lot of the conversations I had with readers of the book. I very much did a build-in-public, write-in-public process for writing the book, and started writing it out as a newsletter. When I got to where I was, I had a full draft. I interviewed 30 early readers of the newsletter for those early drafts, understanding why they want to learn about this in the first place, but also what are their fears around this, what have they already tried, what other practical business books they liked and what did they like about them.
One hesitation and fear that came out of those was people feeling they didn’t have time for this on top of everything else you’re doing. Great. I know this myself. If you’re running a company, you’re doing everything from building new features to security issues, to negotiating a contract, to dealing with your account, and to answering customer support, you’re doing everything. The idea of adding something else on top of it, even if people get the point of it, they see the value of it, and they want to do it, it’s like how the heck do I fit this in?
I don’t have time to just stop what I’m doing and just research for a month, which is something Colleen and I had talked about on the podcast. I was always like, no. Integrate it into what you’re already doing. You don’t have to go into a research cave for a month and stop building features.
Feature requests are a really helpful springboard for understanding what people are trying to do without necessarily having to chunk off all this time to do interviews or recruit people for them because people are coming to you. There is a whole chapter on how do you take a feature request and turn it into something that helps you understand what that person is trying to do and why.
A lot of people, when they get a feature request, their first thought is, is this even possible? How would I make that work? What else do I have going on? What is the time? It feels like someone handing you a project, especially if you’re a developer.
Instead, reframing that as, let’s just pump the brakes on figuring out if we can build this, or should we, or where it fits in. Then let’s pull back and say, thank you for the suggestion. I’m really curious, can you tell me what leads you to want that? What are you currently using to get that done? You can understand what someone’s process is and understand how valuable it is to them.
If they’re currently patching together four different tools for that and they would rather use your product, that’s a really great sign. There’s a lot of frustration, hassle, and probably money spent there for just a random passing idea they had, and that’s something they do once a year, then probably not so much. It’s really important to get that context first. You can always make it become a phone call so you can really understand what they’re trying to do and use some of the interview techniques from that method.
If you do use feature requests as a springboard, then you don’t have to do that recruiting process. I imagine after you do a couple of calls with people requesting feature requests, you will want to go, then recruit people, understand better, and you’ll really see the value of it.

Rob: And you have a list of questions that if the feature request happens to come while you’re on a phone call, here are some sample questions you can use. I won’t read all of them, but you have questions like, can you walk me through the context on when you might use this? How did this project come about? What do you currently use for this? What did you use for this in the past? Do you pay anything for those other tools? Can you walk me through which one to consider?
It’s really about getting more context and about getting a deeper, more complete understanding of what they’re actually trying to do and what they’ve tried in the past. With any app I built—Drip is the most recent one—I remember getting feature requests, like for the campaign builder, I want an ‘if,’ so I can say if they have this tag, then send them this email. Otherwise send them that email.
It was always like, okay, why do you want to do that? What are you trying to do? Show me the actual emails you’re trying to send, and (a) we can probably do it with two campaigns, but (b) that would be a really clunky way to do it the way you’ve described. I don’t want to do it the way you’ve done it, but we are trying to get to the problem, not their solution.
Oftentimes, customers are not software people. They just think, what’s the simplest? I need a check box here but that will actually ruin your app over time because then you’ll have a gajillion check boxes everywhere. And it turns out that particular one we kept getting variations of, eventually we just need a visual workflow builder.
That’s a better way to express an if, rather than attach or bolted on to the campaign builder like the customers were suggesting. But we never would have understood (maybe) the depth of their request or what they’re actually trying to do without asking questions like you have here.

Michele: Yeah, and very often people express problems as solutions. That can be a little bit frustrating as a product builder. I remember being a product manager. You very often get that from executives too. That’s like, oh we need to add this feature. Okay, but could you walk me through what’s leading you to say it? You can deliver on their problem but maybe in a way that’s more coherent, cohesive, or fits in better with the product vision, but that the problem they’re expressing through that solution is still valid.
That’s where the role of empathy comes into this. The perspective this person’s coming from is valid. The way they’re expressing it to me may not be the most optimal way. Let’s put that aside, let’s try to figure out. What is the problem beneath all of this? What are they really trying to do? What is the context that has made them think about this so much that they are now proposing a solution to me? They put a lot of thought into this. Why have they put so much thought into this? What is going on here?
Then when (as you said) you get multiple people coming to you with these features that have similarities in them, then it’s like, okay there’s some underlying context here, and the fact that we’re getting them so frequently means that this is a shared problem among people. This isn’t just this one particular person with this very particular problem.

Rob: Right, and the interesting part about interviews, usually when I hear someone do a talk about interviews, or I see a book or a podcast episode, I cringe a little bit for two reasons. One to your point earlier, who has time for this? The other one is it’s a little intimidating if you’ve never done them. It’s like a developer thinking about doing sales, where it’s like, oh I really don’t want to do that.
You seem to be a natural at these interviews because, again, I never heard your sample and then when I see the transcript in the book, it seems to just come to you without a lot of effort. Was it always like that, or were the early ones pretty rough and you had to get better, and now you’re really good because you’ve practiced?

Michele: It’s definitely not a natural for me. A lot of the tactics I talk about and how to talk so people will talk, mirroring someone and leaving space for them to talk, how to phrase follow up questions and show that you’re listening, all those things I had to learn. I write this book about empathy from the perspective of someone who had to learn empathy both for other people and for themselves.
I was fortunate enough to learn interviewing under the tutelage of a PhD user-researcher and an experienced design leader. I was basically a silent participant in their interviews for several months, handed books and papers from them about how to do interviews, had them sitting with me, partnering with me as I was doing them for several years.
I really got that kind of experience and I feel very grateful for that. Most people can’t get that kind of experience, especially if you’re a solo dev running your own company. The idea is how do I teach this to people in a gentle way, that if they’re coming at this from the perspective of, this is overwhelming, this is scary, I don’t like regular social conversations, and now you want me to talk to these complete strangers who pay me money. What if I what if I offend them and they don’t want to pay me anymore? There’s a spiral of anxieties that come up, so it was really important to me that the book exhibited an empathy for the reader so that they would understand what empathy feels like on the receiving end through the process of reading the book.
That was something I really focused on as I was writing it, to almost be a bit repetitive about, it’s okay if you’re worried that this is going to be a waste of time. It’s okay if you’re worried you’re going to say the wrong thing. It’s okay. The fact that you’re worried about it means that you care, and that’s a good thing.
You don’t have to push that feeling away. You don’t have to just tell yourself not to worry about it. Anyone who has tried to tell themselves not to be worried about something, knows that you end up just more worried about it. It’s, how do we exhibit that empathy and gentleness to the reader so that they feel confident in doing this.

Rob: And that’s somewhat a unique take. I think because you experienced both the academic side of it and reading all these papers and books, you received an apprenticeship in this by watching the PhD, and then you are now a practitioner in your own company, that there are a handful of people on this earth who have done those three things in this field.
You have such a unique experience that I think that’s why this book will resonate or who resonates with me and I will resonate with founders is because doing any one of those things is great and you could have written a book. It would not be this book. It would have a different feel to it or a different focus.
A piece of the book says this book will help you, and it lists a bunch of things. It’s, launch a product, see if people would pay for something, understand why people are canceling, know why people are buying so you can find more customers, determine which features to add next, figure out how to keep customers and why people buy again. It’s not just, here’s interviewing for academic’s sake. This is what a perfect interview looks like. This is how you accomplish all these things.
As I look down this list, actually it feels a lot, it reminds me a lot of jobs-to-be-done. Most people would have heard of that by now, and there’s interviews. How would you compare and contrast your approach or your mental framework of it to jobs-to-be-done?
Michele: It was very much a jobs-to-be-done book. I am hugely influenced by Clayton Christensen and Bob Moesta. By the way his book, Demand-Side Sales, also has three sample interviews in it, so if that is your favorite part of my book, go get Demand-Side Sales. So good. Very, very influenced by jobs-to-be-done.
I only namecheck it a couple of times because I don’t want to introduce too much jargon into the book. There are references throughout it to a lot of jobs-to-be-done books and at the end of it, but it’s very much a jobs-to-be-done book. It’s, what are people trying to accomplish overall? What is the process they’re going through to do that? And then the idea from a business perspective is if you solve steps of that process and make it easier or faster or cheaper for people to do the things they’re already trying to do, then you will have a better chance of having a successful business because you are solving a real problem that they are already trying to solve.

Rob: Right. I realize I should have said this at the top but folks want to buy the book, it’s on Amazon. You can search for Deploy Empathy. We’ll obviously link it up in the show notes as well. You both have a Kindle and a print version. Have you considered doing an audio version?

Michele: Oh yeah. I did a private podcast presale last fall. I was just recording every chapter, basically, so I release one chapter a week from the end of August to the end of December. I actually just hired an audio editor today to do the post production work, to get the audio book out there.

Rob: Awesome. Are you going to put it on Audible?

Michele: Unclear. I thought I was going to do Audible. I’ve been reading a lot about Audible lately, and it doesn’t seem super great for authors. I might find a way to distribute it instead, but it seems there might be some hijinks going on with how Audible calculates when they pay an author.

Rob: Well that’s a bummer because I have two books on Audible.

Michele: Yeah, but it would find a way. It’ll be available through public libraries.

Rob: Awesome. You have testimonials. You have a testimonial from Patrick McKenzie, says, “Deploy Empathy is far and away the best book ever read on user interviews.” You have a testimonial from my friend and yours, Adam McCrea, founder of Rails Autoscale.
If folks are listening in here at all, interested in learning about interviews, you should go check it out. It’s Deploy Empathy: A Practical Guide to Interviewing Customers Of course, if they want to hear you chat about this stuff as well as running your own bootstrapped company, they can check out Software Social. It’s the podcast you’ve been running for a couple years. Thanks so much for coming on the show.

Michele: Thank you for having me.

Rob: Hope you enjoyed this week’s episode. I’ve been trying to mix up formats with some conversations with founders, some solo episodes, some Q&A episodes, bootstrapper news, conversations with authors and people who are going maybe a little deep, because sometimes you hear a 30-minute conversation about a topic and you realize, I would love to listen to a 10-hour audiobook or read a physical copy on that topic.
Hope you enjoyed the variety of content that I’m putting out for you, and hope to see you back here again next week. I’ll be back in your ears again, as always, next Tuesday morning.

Rob: It’s Startups for the Rest of Us episode 585. Where I welcome Dr. Sherry Walling, my wife, back on the show. We talk about a few things. We talk about moving outside your comfort zone. We talk about the power of relationships with some very specific examples of how having strong relationships, having a solid network helped Sherry with some recent things that she’s working on. We also talk about her book that is coming out in June or July of this year, a book about grief. And we talk about her interest in psychedelic-assisted therapy.
I always enjoy the episodes when she comes on the show because surprise, surprise, we have rapport. We’ve known each other for 26 years, been married for 21. I think this conversation turned out pretty good. The MicroConf State of Independent SaaS Report is in the works, and just three to four weeks from now, we’ll be releasing that report as well as doing a live stream of some key findings.
Producer Xander did a bang-up job this year on mixing things up. I believe 20–25% of the questions were different. We have sentiment about how people felt about the last year, what hiring is like, asked about no code, and asked about just a bunch of topics that go beyond just the numbers and the nuts and bolts. I’ll make sure to mention that once we have the date set. With that, let’s dive in to my conversation with Dr. Sherry Walling.
You know how I don’t drink coffee anymore?
Sherry: Oh God, really? Are you buzzy?
Rob: I drank a latte and I added a shot. I had a three-shot latte today.
Sherry: Why did you do that?
Rob: I feel so alive. This afternoon is going to be a little rough.
Sherry: Says every addict ever.
Rob: Since I don’t drink coffee anymore, I’ve talked about it on the show before, but it makes me anxious like I feel my heart pounding. It really impacts me.
Sherry: I thought that was just you hanging out with me.
Rob: I stopped, but now, I started tea in the mornings, as people know. But what I found is that every once in a while when I have a latte now, it’s great. I’m so focused and productive. Caffeine, highly recommended.
Sherry: Are you going to have a really focused and productive day today?
Rob: At least for the next hour or two until I crash so hard I fall asleep. Thanks for coming on the show.
Sherry: My pleasure.
Rob: Dr. Walling, back again.
Sherry: You had to book me quite a lot of it in advance.
Rob: I really do.
Sherry: My people had to call your people.
Rob: Yes, they did. I’m glad we’re able to make it work. I have so many questions for you. You’re doing so many things right now. I don’t mean literally right now, but you are working on a book. In fact, the book is done. Here’s the thing. You wrote a book like two years ago, I read it, and it’s amazing. It’s a book about grief. It’s called Touching Two Worlds. The title has changed.
Sherry: That is the title we’re going with.
Rob: Awesome. Instead of self-publishing, which you had done for The Entrepreneur’s Guide to Keeping Your Sh*t Together, you decided to go through a publisher. I’d love to just kick us off. I have like four topics to cover today. All things that you’re doing that I think are interesting and at least tangentially related to folks who listen to this show. But I want to find out why not self-publish this book?
Sherry: I was lucky to have the choice. I worked really hard to write a proposal and to work my network and work connections to try to do the traditional publishing route. I just want to, of course, honor that I had the choice, which not everybody does. The reason for me that I decided to try to work with a traditional publisher on this particular project is because it is an expansion of the audience that I normally speak to. While I have lots of wonderful connections in the community that we share in working with entrepreneurs, this book is really written for a much broader audience and more general audience. It’s an audience that I haven’t cultivated per se.
I was hoping that working with a traditional publisher would help me to think about how to better launch a book into a general audience. I also did get it in advance, which isn’t a game-changer in our world in the sense that we can put some funds and resources towards the cost of publishing a book. But I think the advance does help feel like there are resources behind launching the book. Like the book is sort of paying for itself. The book is funding itself in some ways, which I think is really helpful.
Rob: Right. You said that the advance doesn’t make a difference to us, but even 7, 8 years ago, it was a substantial amount of money. It’s not nothing that they’re investing in, which is really cool.
Sherry: Yeah, specifically, I’m working with a publisher called Sounds True, which is a really cool publisher for me to work with. They are kind of like the publisher that does really scientifically informed wellness and personal development. They’ve published authors like Brené Brown, Wim Hof, people who many of your listeners will recognize. To be in that community of authors feels like a really big deal. I’m not sure if it’s going to pan out, but I’m hoping that being published by this particular publisher will help me to get in the room and get some connections with people who I think could really be advocates for this book.
Rob: Yeah, there is an aspect of being part of a club, of being able to reach out to someone like Brené Brown or Wim Hof and say, hey, we’ve been published by the same publisher. That instantly separates you from someone like me. If I reached out where it’s just like a cold email random guy on the internet. I can see there being a lot of value with that.
To get the book deal though, you had to go outside your comfort zone. I remember you contacting 30 agents, right? You kind of need an agent? I don’t know how it all goes, but you were cold emailing, trying to get intros, and just working it. I remember that feeling frustrating/you felt like it was a bit of a waste of time because it wasn’t yielding for like months.
Sherry: Oh sure. Someone told me to prepare for 100 rejections. That’s just to get an agent. That’s not to get a book deal. Ultimately, none of that cold emailing mattered at all. The agent that I eventually got connected to was a connection of a connection of a connection. There was a direct trail of someone that I knew and had spent time with to someone who read the book, loved the book, and passed it on to their agent. Ultimately, of course, it was the network and it was the connections that helped get the deal.
Rob: The person whom you met who made the intro you met at an in-person event, right?
Sherry: Yeah. It was Tucker Max, who your audience may be somewhat familiar with. But yeah, we met at an in-person event. He runs a company called Scribe Media, which helps people write books. I went to a workshop that they were doing about writing memoirs. The dominos felt that way.
Rob: I often say doing things in public creates opportunity. By that, I both mean shipping things like writing, podcasts, video, social media, or whatever, just being out there, shipping apps, shipping products. But also going to an event. For someone like me, I actually…
Sherry: You really don’t enjoy it for a guy who runs a lot of events.
Rob: I enjoy my events, but I don’t enjoy a lot of other events, to be honest.
Sherry: Do you go to any events that aren’t your events?
Rob: Certainly not since COVID. I can’t remember the last event I went to that wasn’t one of my events. But which is part of COVID and just part of the last couple of years of me realizing where I’m at, where I want to go. I actually think that once things settle down a bit, I do think I will go to some other events that I have not attended before. It’s outside my comfort zone. I bring that up because you’ve gone to a bunch of events and I’m sure some of those were outside your comfort zone. But dominoes fall and eventually, you get a book deal almost exclusively because you did that. You took yourself outside your comfort zone.
Another thing you’ve been doing outside your comfort zone recently is asking people for essentially, I call them testimonials. It’s like recommendations or just someone’s name below a quote about your book, right?
Sherry: Yup.
Rob: That’s been a lot of cold and warm emails as well. You’re hammering away at it. You’re doing a good job, but I can tell that you don’t love it.
Sherry: Yeah. I’m getting ready to put together the landing page for the book and then we are also finalizing the print version of the book. Any testimonials that will go on the back cover or to the book jacket have to be in basically this week, even though the book is not coming out until this summer, but those things have to be in and will be on the website.
Yes, once again, I’ve been cold emailing lots of people who would be great to have their name on the book. This worked really well for me before. I actually reached out to Seth Godin. It wasn’t a cold email because he and I had spoken at the same event. I had handshake met him. We weren’t like buds, but I had at least this point of like, hey, remember business of software? He did an endorsement for my first book which appears on the back cover and that was a really big deal.
I’m doing it again. I’ve reached back out to Seth Godin. He was like no, I’m not really doing a lot of blurbs. I was sad. A lot of the people that I reached out to either did not respond or some of them responded with very kind no’s like Seth. Once again, I’m working with the network. It’s people that I know, have met, or have been in their room with in some capacity who have responded.
It’s been so interesting because a lot of very busy people will say, I’ll glance through the book, why don’t you write me a few sample endorsements and I’ll tailor it to make it my own or I’ll sign off on it. I actually really value that. Someone is lending you their credibility. Whether or not they have read the whole book or whether or not they have written all of the words of the endorsement themselves, they’re still lending you their credibility and I hold that in high regard. That matters to me. I don’t want to diminish that.
But then there are some people who have read the book like my mentors, people who I have worked with, and people who are my professional contacts. They’ve read the book and they’ve written long emails that have been so, so meaningful to me in terms of giving me a lot of personal feedback about what the book has meant to them and then writing these wonderful statements of support for the book.
Even though it’s this long arduous process and a lot of the email and a lot of the work that I’ve done has yielded nothing, the people who have responded, oh, it’s been really, really meaningful and encouraging. It makes me really excited to launch the book out into the world because I already have a little circle of fans who are people who are really important to me.
Rob: It’s so interesting. I mean, there are two points on that. One is, it’s hard work and you don’t particularly love it. You are very gifted in a room and you’re very gifted speaking on the mic, in front of a camera. But sending cold email, I would say, is perhaps not high on the list of things that you are best at.
Sherry: Email in general, not my strength.
Rob: But you’re grinding it out. You’re doing what needs to get done to do it. I think the second point is, I know that there’s someone listening to this thinking well, it’s easy for Sherry because she knows everybody and she has this tremendous network, or it’s easy for Rob to do it, similarly when I talk on this podcast. Do you remember 10 years ago when we knew no one and no one knew us in the entrepreneurial space.
Sherry: I still feel like that. I almost didn’t get a book deal because my social media following is so small. They were like, you have 2000 or 3000 Twitter followers? We don’t talk to people like you. They didn’t give a crap about my Ph.D., but they’re really worried that I don’t have enough followers, that I don’t know enough people. I guess knowing people is also very relative because there’s always someone with more celebrity and more connections. It is like you got to start somewhere. You have to start somewhere.
Rob: You’re talking about audience, I was talking about network. The two are different, right? It’s like who knows you is your audience and who you know is your network, that’s how I think about it. I think that you have a pretty strong network. You have an audience, but we’re all still building it. But you’re right, your audience is not as big as some others.
I just want someone listening to this to say, this didn’t happen magically nor overnight. It’s been a decade. I started blogging in 2005, that’s 17 years ago. I started podcasting 11 or 12 years ago. You started podcasting 10 years ago. We started speaking and it’s like how many conferences did I pitch and crickets? No one would take my calls, so to speak. This podcast had 200 subscribers after 12 months of doing it weekly, it was incredible. It’s like tens of thousands now, but you work up to these things.
You getting a book deal and you being able to get these testimonials, it doesn’t happen overnight and it doesn’t happen by accident. Hard work, luck, and skill, right?
Sherry: And risk. My network has come from me speaking. It’s speakers, it’s the other speakers. That’s how I got access to Seth Godin. That’s how I had an afternoon chat with Sam Power. Anybody that I know is almost always because I pitched a conference, got up there, and did it. I’m not the most gifted speaker. It’s not easy for me. It’s still hard and stressful, but that’s been the investment that is now yielding. Any network connections that I have are through that.
Rob: I have a couple of other topics that I want to chat through. I hope we have time for all of them, but the last one that I will get to is you talked to so many founders and you put out so much content about founders. It’s fundamental help, but it’s just like being a high-functioning individual. I want to find us some common things that solo founders struggle with, small teams, et cetera.
But before we do that, you put out a tweet two days ago, a couple of days ago, as of this recording, you said, “100 hours of training crammed into an already full life. I’m glad for the chance to learn and to cultivate a thoughtful, informed voice about psychedelic treatments. Thanks to the team at @mindcurehealth for allowing me to partner with them. And to @MAPS for a great training.”
MAPS is MDMA Therapy Training Program. You have a certificate of completion. Folks have been following your social media or your podcast, Zen Founder, you’ve been talking about psychedelic-assisted therapy for I don’t know, six months, nine months now.
Sherry: A couple of years actually.
Rob: Yeah, I just don’t know when you start talking about it in public. You and I certainly talked about it for several years. I’ll admit, let’s say, five years ago I heard Tim Ferriss talking about this on his podcast. So much of the stuff he talks about to me, it’s just eye roll. It’s like oh, here it goes, off on this thing that’s like nobody else cares about or he’s trying to do it for attention or whatever it is. And then I heard Joe Rogan talk about it. That’s instantly like Joe Rogan’s entertaining, but let’s just say I’m not a big supporter or a fan. A lot of stuff he talks about just feels way fringe or just out there in a way that I’m like yeah, whatever.
But when you started talking about it, you were, like, yeah, this is a thing.
Sherry: You started rolling your eyes, didn’t you? Like oh, here she goes.
Rob: There’s a book by Michael Pollan, is that his name? Michael Pollan. The book is called How To Change Your Mind. He had written really good books about dietary.
Sherry: The Omnivore’s Dilemma.
Rob: There you go, Omnivore’s Dilemma. This is three or four years ago, you had me read How To Change Your Mind. It’s like, oh, okay, this isn’t something people are making up. There are clinical trials and the FDA is involved. There are dozens of tier-one universities that are using psychedelics in therapy.
Sherry: About 70—Yale, Harvard, UC San Francisco, UC Berkeley.
Rob: It’s not a joke. It feels more like a coming wave of something. It’s really helping people. I guess there are a couple of questions. Like any innovation, it’s like people roll their eyes at Web3, which is crypto and NFTs, and like, oh, this is about the people roll their eyes at the dot-com boom, people roll their eyes at whatever other innovations.
When you mentioned psychedelics, your mom might be like, oh my gosh, do you mean drugs?
Sherry: My mom is very worried that I’m a drug addict, by the way.
Rob: What should people know? What is happening in a nutshell? Who will this ultimately help? What’s the benefit beyond traditional therapy and timelines? Give us a five-minute primer on what’s happening?
Sherry: Yeah. We will see in the next five years that psychedelic-assisted psychotherapy will become much, much more common than it is now. And that it will be used to treat a variety of concerns. The common ones like anxiety, depression, post-traumatic stress disorder. There’s also some really promising research related to eating disorders, obsessive-compulsive disorder.
Psychedelics, of course, are a class of medication. Psilocybin is the active ingredient in magic mushrooms, LSD. There’s a lot of work happening with MDMA, which is also the street drug ecstasy. MDMA is not a classical psychedelic, but it’s sort of grouped into this whole movement.
What’s happening is that people are pairing psychedelic experiences, which is usually sort of a fold day under a medicine. They are combining that with psychotherapy, usually 12–15 sessions of psychotherapy and maybe 3 sessions of medicine. And have developed some treatment protocols that the FDA is currently reviewing and they’re in the last phase of that review. Phase III or Stage III, which is the final phase. Very likely we will see the FDA approve MDMA for use as a treatment for PTSD. Psilocybin for use as a treatment for depression will probably be approved in 2023.
I think these are super interesting interventions. It’s the only protocol that involves both therapy and medication that the FDA is approving as a package deal. We’ve long known that the best way to treat mental health concerns is a combination of a biological or biochemical intervention and therapy. But they’ve never been approved in a package before. I think just as an innovation that’s probably really important.
There also is some really interesting promising research that looks at the ways that these medicines impact the brain differently than our traditional psychiatric medicines like SSRIs— selective serotonin reuptake inhibitors—I mean, other medicines that are sort of commonly prescribed for mental health. Psychedelics work a little bit differently. Well, they work a lot differently. They work probably more comprehensively. They work in different parts of the brain all at once.
One other sort of quick thing that I think is really interesting, The New England Journal of Medicine just published an article looking at a comparison between psilocybin—mushrooms—and SSRIs like your Prozac and found that psilocybin was as effective at alleviating depression as SSRIs were. But one of the significant differences that I think is really important is that SSRIs tend to numb emotion on both ends of the spectrum or diminish emotion. Numb probably isn’t the best word.
For example, it makes your depression less, which is wonderful for folks who are really experiencing depression. But it can also make you joyless. It can turn down your capacity for positive affect.
Psilocybin doesn’t seem to do that. The research is still pretty new, but The New England Journal of Medicine found that it was a strong enough study to go ahead and publish it. They only saw that diminished emotional capacity in the negative end of the spectrum, in the depression side. People could still retain their level of joy and enthusiasm even when using this kind of biomedical intervention for depression.
I could obviously lecture about this a lot. I’ve been thinking about it a lot. I think the science is really interesting. Actually, last year, I worked with a company called Mind Cure to do a podcast all about psychedelics called Mind Curious, which folks are welcome to check out. But I think this is something that you just want to have your eye on. You want to be aware of folks who are informed consumers in mental health care.
I think these medicines have tremendous promise. But like all new interventions, there are going to be some bumps in the ways that they’re rolled out. There’ll probably be some folks hanging shingles who aren’t necessarily that qualified who don’t totally understand the science. I’m really wanting to position myself as somebody who can speak the science, but also talk about the practical applications of these interventions and help people really be informed about what’s coming and what might be accessible to them.
Rob: That’s the voice that I think a lot of folks need to hear. I’m guessing, many people may be hearing this for the first time, that this is a legitimate thing on this podcast. That’s why I wanted to talk even briefly with you about it is that this is happening. It’s in fact, psilocybin—mushrooms—are already legal in the state of Oregon for this treatment. They got legalized in the past six or eight months. This is happening. To your point, misinformation may be strong, but there will be people who say they know what they’re talking about, but they don’t. There’s certainly an underground version of this that’s not FDA-approved that’s happening.
Again, Tim Ferriss and Joe Rogan talking about doing mushrooms a few times a year is something they do. To hear how legitimate this is becoming and how effective it is without so many of the downsides of SSRIs have a lot of side effects from my understanding. You take them for a long time versus these are kind of, like you said, more focused treatments that they kind of re-cut the trenches in your brain. Re-cut is a weird way to say it.
Sherry: We talk about resetting the default mode network is the language that will be used. It’s just a good thing to be aware of. There’s a difference between recreational use, there’s a difference between spiritual use, and the sort of area that I’m most curious about is the clinical application. The treatment uses of these medicines.
Rob: We published The Entrepreneur’s Guide to Keeping Your Sh*t Together three years ago. To date, I still see that book getting recommended a lot. I see people talking about it on Twitter. It really has had an impact on a lot of people because it covers all these aspects of a founder’s journey. I’m curious, since then, if you could add a couple of chapters to that book, is there anything that you feel like you’ve learned, come across, or experienced in the past couple of years that you would be like, you know what, that would make it a cool addition to an updated version of that book?
Sherry: To return to where we began the conversation today, I think one of the things that I would want to emphasize more in the book is the power and importance of network. We talked a lot in that book about the internal life of the entrepreneur. We did talk some about relationships, but I think that network is of paramount importance in a way that I didn’t even quite understand then. Network, friendships, we did talk about it, but I think the isolation that has come with the pandemic and the isolation that a lot of solo founders or small team founders already feel is really the biggest mental health vulnerability of the day-to-day founder.
The ability to have a really strong network, to be in a mastermind, to have deep, connected relationships with people who understand the ins and outs of the business and your life, I just can’t emphasize it enough. It’s like the song that I want to sing all the time every day to everybody that I talk to.
Rob: I want to emphasize that you’re using the word network, but I think it’s the word relationships. Let’s say five years ago when I heard network, I was like, oh boy, it’s the person who walks in, hey, I know that person and had this whole I’m playing chess with people and I’m matching them up. But you’re not talking about that, you’re talking about having relationships. Sure there are professional relationships that help intro you to a book agent and then write a recommendation for your book—those are great to have. But you’re also talking about having friends and having both founder and non-founder friends.
Because the founder friends understand you, but you also don’t want to talk about business all the time. It’s like having those people to backstop you and to be like, hey, when we were trapped in the house for six months in a pandemic shutdown, who will do a Zoom happy hour with me? That really brings me joy.
Sherry: Yeah, network maybe has a bad rap. But it’s all the web of connections that support you. Some are much closer to you. The people you live with, the people you’ve known for a long time. Some are getting farther and farther out away from your day-to-today life. But they’re still important connections. People that you can ask a favor for or offer a favor to. It’s those human relationships that are hard to build. Let’s not oversell it. It requires a lot of work. It’s a lot of awkwardness.
I’m not great at developing relationships, certainly not over emails, certainly not virtually. But the importance of figuring out those skills is as important as a lot of the hard skills that go into building the business and promoting the business.
Rob: Yeah. This is something that I learned that I’ve talked about before, but you recall in the 2000s when I was still working full time jobs, I kept saying, I don’t like working with people. I don’t want to work with anyone. I don’t like coworkers.
Sherry: I thought you said that like last week, honey.
Rob: No, that’s not true. Tracy, Xander, Einar, Alex—I like you guys. That’s when I was like I’m going to be a solopreneur. I’ll have no employees and I’m just going to do it myself. What I realized is not that I didn’t like coworkers. It’s that I didn’t like coworkers who weren’t very good, who I couldn’t handpick, who didn’t care about the job, and who weren’t really good at what they did.
I did the solopreneur thing for a few years. And then as Drip started taking off, it was like, I can’t do this as a single founder with no employees or no support. I started building a team around that and learned that lesson of like, oh, I actually really enjoyed being on a team, but a team of high-performing individuals. I thought I could do it all on my own.
To come back to your thoughts and idea of network, it’s like what would starting TinySeed have been like if I couldn’t have just reached out and emailed Hiten Shah, Laura Roeder, and Rand Fishkin, all the people that are mentors. That instantly made TinySeed stand out.
Sherry: It wouldn’t have happened.
Rob: No.
Sherry: You’re really smart and I like you, but I don’t know how in the world it would have happened because you didn’t have that social credibility and you wouldn’t have had access to the people who knew you and believed in you.
Rob: That comes from, like I said earlier, it doesn’t happen overnight and it doesn’t happen by accident. It comes from doing things in public. Doing things in public creates opportunity. It builds relationships and puts you on people’s radars. It puts you in people’s minds as someone who does interesting things, and therefore, it’s like we want to be around those folks.
To bring it back to your earlier comment, it’s not just about business networks and being able to reach out and get a testimonial or have someone be a mentor. It’s also about some deep relationships and having someone to rely on and to help support you.
Sherry: Yeah. I think it’s about realizing that you’re on the journey with other people. You’re not exactly on the same path, but you can sort of see where they are and they can see where you are. You’re watching their progress and legitimately celebrating it. Caring about how they’re growing and developing in their personal and professional lives. Then watching them or letting them care about you. Letting them know like here’s what I’m struggling with. Here’s where my successes are. Here’s this book that I wrote about my family and our losses. You’re invited into my life, into my world. I’ll show up for you as well. That happens, of course, in all these different levels of intimacy. But it happens because you give it attention.
Rob: With that, I think we should wrap up. I know, this is good stuff. But I literally hear the dog barking because I think the cleaners are arriving right now. It’s about to get really loud in the house and we’re at a nice transition point. If folks want to keep up with you on Twitter, you are @zenfounder. You, of course, host the weekly Zen Founder podcast. Your book comes out in June or July. If someone is interested in reading this book, it started as a memoir. You wrote the whole thing as a memoir and then the publisher said put in more, I don’t know what, actionable kind of—
Sherry: Be helpful. Be helpful to people.
Rob: For what it’s worth, I think it improved the book.
Sherry: Yeah, totally.
Rob: If folks are interested in that, they should go to zenfounder.com, sign up for your email list, and you’ll reach out when the book is in pre-order.
Sherry: Absolutely. Thanks so much for having me.
Rob: Absolutely. It’s great to have you. Thanks again to Sherry for coming on the show and thank you for coming back every week and listening and subscribing. If you haven’t given a five star review in whatever podcaster you use, I would appreciate it. If we’re not connected on Twitter, hit me up @robwalling. That’s it for this week. I’ll be back in your ears again next Tuesday morning.

Rob: Welcome back to this Happy New Year edition of Startups for the Rest of Us. I’m Rob Walling and this is the first episode of the new year. I recorded a version of this episode two days ago while my family and I were at a resort in Jamaica. I was actually looking out over an infinity pool, looking at the Caribbean Sea, and it was an amazing respite from the cold of Minneapolis, but also just the day-to-day of life.
We were in a place where we couldn’t decide to get distracted by doing laundry, being bothered by how dirty the kitchen is, or going into the basement seeing all the clutter. We were away from it for about eight days. That episode I recorded was just not good. It was really bad. It’s funny. First I thought there would be a bunch of background noise and there wasn’t. As I listened back to it, I thought to myself, this is not helpful, it’s not generalizable to people, and it was quite rambly. I’m re-recording it today with a new kind of tighter focus on a few key points that I had covered in that version of this episode.
This is a prior year reflection on 2021. This is the point where I look back at the prior year and think about what went well? What didn’t go well? What did I not enjoy? What do I want to do less of? What do I want to do more of? Then I look ahead to 2022 and whether you are the type of person who plans, who has goals, or who just wants some high-level ideas and thoughts of what they’re going to do over the next 12 months. That was my process during this time away.
It wasn’t a typical founder retreat. If you listen to this podcast, for any length of time, we call them founder retreats. I actually took this practice from my wife, Sherry Walling, also known as Zen Founder, who has actually written an ebook called The Zen Founder Guide to Founder Retreats. You can buy it, I don’t remember if it’s $20 or $25. It’s so worth the money if you’re going to take a couple of days away and do this kind of deliberate ritual.
Whether you do it twice a year or you do it once a year, it is something that can really help shape where you’re headed long term. It pulls you out of the day-to-day so that you’re not thinking what am I going to do this week? What am I going to do next week? You start thinking, what am I going to do next quarter, next half of the year, and next year?
I know that for myself, I tend to get heads down and relentlessly execute on whatever’s in front of me. Oftentimes, I don’t pull my head up and look and say, where do I want to be one, three, and five years from now? That’s what a founder retreat can do for you. If you’ve never taken one, I highly encourage you to do it.
This one that I did in Jamaica was with my family. It wasn’t a typical I have 48 hours completely unplugged from everything where I’m just thinking through, making goals, and making plans. This was more of an intermittent hour here, two hours there sitting, looking out over the ocean with my feet in the sand with a notebook and a pen, and giving some thoughts to all the things I just said. What was good, what was bad about last year, what do I want to be doing more of, and what are some high-level things that maybe I haven’t given enough deliberate thought to as I look out over 2022?
During that process, I also asked my two kids, just briefly off the cuff, what they were looking forward to either hopes or goals that they have for 2022? I’m going to roll some of that tape here in a minute. Before I do that, I know that some folks like goals and some folks don’t. I get it.
There’s a time and a place for goals given how specific you want to make them. Sometimes they’re like, I want to be at $20,000 MRR by the end of the year. Other times it’s like I want to have written 1000 words a day by the end of the month or I want something maybe more amorphous. I want to be enjoying what I’m doing in my day-to-day work by the end of the year. All of these things have a time and a place. Sometimes you just have a year where you can’t be as specific as you want to be, or you’re going to set some goals where you just don’t know if you’re going to be able to achieve them.
What I will say is that if you’re running a startup, if you can’t estimate your growth over the next year and make that some type of goal, then either you’re too early meaning you don’t have a product-market fit. Before you have product-market fit, before you ever product, it’s so hard to estimate how long something is going to take to get there. Either you’re too early or if you’re past product-market fit and you still can’t have some type of estimate of where you want to be at the end of the year, then it’s likely you’re getting lucky and that you’re going to plateau at some point and not be able to fix it or not know how to fix it right off the bat.
Maybe you’ll figure it out. You’ll probably figure out how to fix it because you’re a smart founder, but you might stay plateaued for potentially a very long time because what I see in startups that work post-product-market fit, as you have escape velocity, is that there really is a predictability to a lot of your numbers.
A lot of your funnel is coming in, you can tell visitors to trial, you can tell trial to paid, you can tell churn, you can see how many new trials or visitors you can get over the next 12 months, blah, blah, blah. Even if you don’t dig super hard into the numbers, it’s more science than it is an art to be able to project out a quarter or a year of where you’re going to be, and you’re not always going to be accurate.
This is not the time to say we’re going to 10X in the next year and to set goals that maybe you’re not going to be able to achieve. What I’ve found is that folks who do look at it pretty realistically and say, look, at our current course, we’re going to go from 1 million to 2 million this year. At our current course, doing what we’re doing today. Who can then say, well, what would we need to do to triple, to get to 3 million? Assuming that’s something we want to do.
I’ve talked about lifestyle entrepreneurs, and if you do want to be a lifestyle bootstrapper, awesome. You do want to put it on autopilot maybe or just back off and just do the minimum amount of work and get from one to two million, that’s amazing. Power to you. That’s a great business.
If you are looking to be more ambitious with your startup and with your growth, to ask yourself this question of, well, we can get from one to two, given our current trajectory, what does it look like to get to three or four? What would we have to do?
We’d have to hire ahead. We’d have to have two marketing efforts that really clicked or one that clicked really well. There’s just all these answers and all these questions that come about if you look at this as something that you’re aspiring to do, and some people are motivated by that. In fact, as much as I don’t really love the process, planning, looking ahead, and doing a lot of stuff that’s not just working in and on the business, this high-level stuff I found to be a necessity for me over the years growing as these companies get larger.
When I look around at the founders who I see who are doing really well and getting that fast growth, some are lucky and a lot of others are planning, they’re looking at these goals, looking at these the projections, or they’re looking at the goal and then saying how can I get there? Whether they hit it or not, it matters less than if they set that, they execute on their plan, and they do their best to achieve it. With all that said, I’d love to roll the tape of my 11-year old. I asked him what are some goals or hopes that you have for 2022.
Son 1: I’m working hard in school, but I want to work harder. I want to take care of the animals we have in our home because that’s important. I want to live with screens, but in a controlled amount be healthy. I want to have fun with the family. I also want to work hard on the violin and maybe improve on that. I want to help people when they need help. I want to live a good life. I guess that’s broad, but yeah.
Rob: I asked my 15-year-old the same question. I’ll roll that tape in just a couple of minutes because something that I was quite pleased with during these moments that I was thinking about or reflecting on in 2021 was just how much that my team and I have been able to accomplish in the last year.
It gave me the sense of I think gratitude, but also pride. Just pride in the fact that we closed TinySeed Fund 2 and are on our way to closing our EMEA Fund—Europe, Middle East, and Africa that we funded two more batches. We’re almost to our 60th company, and we ran six MicroConfs, two were remote and four were in person. Just to run in-person events this year. We hadn’t run them in so long. Shipping 52 podcast episodes, doing 20-something live streams.
There’s all this stuff that you forget in the day-to-day. Until I wrote it out, it just hadn’t sunk in how much we’re actually able to accomplish in 2021. Even though the first half we didn’t have vaccines. I got my second dose in May of 2021. Before that, it was still mostly lockdown-ish depending on which state I was in. We’re back and forth between California and Minnesota.
It was just 2020 and the early part of 2021 kind of all blended together for me and I think for a lot of us because it was kind of like pre-vaccine and post-vaccine. That’s when things started to change. As I looked at this list of what we were able to accomplish as a very small team, it made me realize the potential that we have to accomplish in 2022 in terms of running even more events and being able to fund another 40–60 companies across multiple batches. We’ll have two in the Americas and one across EMEA.
I was able to celebrate those wins and get excited about the year ahead. I was also able to reflect on probably some things that I should have realized earlier—mistakes or at least miscalculations, things I could have done better. One thing that I’ve been mulling over and trying to kind of hire for five, six months is to hire a podcast and YouTube producer who can help with this podcast, the MicroConf podcast, potentially TinySeed Tales, although I do have a good producer on that already, and our MicroConf YouTube channel.
I realized over this break and upon reflection that I should have gone after this more aggressively. I probably from the start should have made it a full-time hire. First, I was trying to do freelance, part-time, and then I was like, well, I could do full-time freelance, or maybe I could get multiple people. It’s just this dilly dally. I talked to some agencies and I see that as a process that didn’t go fast enough upon reflection.
I realized now that it has been slowing producer Xander and I down to still have too much going on in the day-to-day of these things. There are people out there who can produce this content really well. When I say produce, I mean, I’m still the host of Startups for the Rest of Us and the emcee of MicroConf. There’s all of that, but there’s all the behind-the-scenes stuff that needs to get done.
I am going to be looking at hiring someone full-time to help with all the things I just mentioned—podcasts and YouTube. It’s time to do it. We put out so much content kind of on the side. It’s on the “side” and I don’t mean our main events that producer Xander is putting out, all the MicroConf stuff, but everything else has just always been a side project. I wished I had realized that sooner.
If you are someone who listens to the show, you’d probably be a perfect fit. If you are either audio or a video editor/producer, someone who can weigh in on content decisions and help us ship more stuff, I’m going to be putting a job description together. Please do reach out to me at rob@microconf.com because I’d love to have a conversation.
One of the other things that I reflected on that I would have done differently in 2021 is when we decided to schedule the MicroConfs, we clustered them together and kind of a roadshow. There are going to be four of them in four weeks. Then we had to relocate to London, so it’s going to be five in five weeks. We couldn’t have London because of Delta, so we wound up doing four in four weeks. It was a ton of work and it wasn’t something that I think we’ll do again because spacing them out is fine. No one else cares.
Attendees coming to one event don’t really care that there’s another event the next week, but it did put a ton of pressure on producer Xander, who’s trying to basically plan all these events all at one time, and then it was a lot of travel in a short time span, which is obviously hard on some of us and hard on me because of the family back home.
This wasn’t one that I feel like is—I wouldn’t say, oh, it’s a mistake. It was an experiment. So many of these things in startups are experiments. We just made the call, we got excited about it, and then when we did it, it was like, huh. Xander and I looked at each other, let’s not do that again.
What we’re looking at in 2022 is making a change and it actually gets me excited to look out and think, okay, well what if we had one event almost every month in 2022? There’ll obviously be our flagship growth events, then we’d be looking at some local, which are the one-day events, and then a couple of remote events as well. I have a couple more thoughts for you, but I want to roll the tape of my 15-year-old when I asked him what are some of your hopes or goals for 2022.
Son 2: I’m hoping 2022 is finally going to be the year that COVID ends. We drop the mask mandate and I can walk around the school again without masks, social distancing, and stuff. That’ll be nice. It’s also going to be the year that I turned 16 so I’m hoping to get my driver’s license. If I finally stop procrastinating, finish my book.
I’m also hoping to get a good gaming computer, not the one that I have now, so I can run stuff on high graphics without my CPU spontaneously combusting. I’m also going to try and expand my Warhammer 40,000 collection. I own a decent amount of stuff, but no complete armies yet. I’d like to fill those out.
Rob: By the way, if this format feels familiar, you’ve probably heard it on Zen Founder. Sherry’s the one who has actually done a lot of interviews with our kids and bringing them into the podcast episodes. I’ve never done it on Startups for the Rest of Us, and it was just so easy to do. These interviews or these short clips of the boys were actually recorded while we were in Jamaica, and that was one of the advantages of being there with a family with a microphone in hand.
I want to leave you with one final thought about the power of focus and the idea that most of us have shiny object syndrome. Most of us take on too many things and continue to work on things that aren’t working. Maybe we don’t know they aren’t working because we’re not measuring the right things. We’re not evaluating the data, or maybe we do know that they’re not working but we do them anyways out of a sense of obligation because we just don’t take the initiative to stop doing them or because there’s some kind of emotional attachment to doing these things that we feel like if we don’t ship one blog posts a week, even if we’re getting no traffic to our blog, that somehow we are failing as a founder.
In my experience, the things that we decide to stop doing or the things we decide not to do are as important as the things we decide to do. As you reflect on 2021 and 2022, or even if you’re listening to this a year or five years from now, I encourage you to think hard about what’s working, what’s not, what do you want to do more of, what do you want to do less of, and what do you want to stop doing in the new year?
Thanks so much for joining me, not only this week but this year. I know this is going live shortly after the new year, but it is technically the last episode of this show recorded in 2021. I look forward to being a part of your journey throughout this new year, whether that’s through strategies and tactics that I’m able to pull from guests or share from my own experience, from the experience of the founders that I work with, inspiration from the stories told on this show, or through the mental frameworks and almost the more philosophical topics that I sometimes cover in my solo adventures.
I just look forward to being on this journey with you. My hope is that you enter a prosperous and happy new year with you and your family and with you and your startup. It’s great to be along on your journey. As always, I’ll be back in your ears again next Tuesday morning.

Rob: It’s not just any show, it’s Startups For the Rest of Us. It’s episode 583. I’m your host, Rob Walling, and I catch up with Sam Parr. He’s the founder of The Hustle, a wildly popular email newsletter. He grew to several million subscribers, eight figures of annual revenue, and he sold it to HubSpot earlier this year. Sam is also the co-host of My First Million, which is a podcast that really dissects business ideas and looks with a pretty unique lens about areas in our economy, in specific industries, or just in the world where new business ideas and new startup ideas can take shape.
I really enjoyed today’s conversation with Sam because he’s just an interesting person to talk to. He’s thinking about so many things. He’s educating himself by reading books. He goes off on research tangents, I can tell.
I’ve heard some episodes of their podcast and you can tell that he’s just constantly thinking about how do these things work. Why do they work? Why are they maybe broken on the edges? Where are their opportunities to be found? As a result, I felt like the conversation he and I had was super interesting, and I hope you do as well. Let’s dive in.
Sam Parr, thanks for joining me on the show.
Sam: What’s up, man?
Rob: It’s good to have you on here.
Sam: I was reading your blog. I couldn’t afford to go to your event when I first started out, but I read your blog. You’ve been doing it for 10 years maybe, right? I feel like it’s been since 2012-ish.
Rob: Yeah, I started the blog in 2006, then wrote the book in 2010, and then this podcast started in 2011.
Sam: Yeah, I was reading your blog for a very long time. I’ve always wanted to go to your event and I modeled some of our events after your event. But when I first got going, I couldn’t fly somewhere. It was a big deal.
Rob: That’s so funny because you and I have never met and it’s cool to meet you for the first time. I was googling for a calendar event last night. I’m in my Gmail and I typed in your name. There’s an email from 2014 from you when I lived in Fresno. I actually want to read it.
It’s funny. You say, “Hey, Rob. I followed Justin Jackson on Twitter and he recently retweeted one of your tweets, and since then, I’ve been reading your blog a ton. Anyway, I saw that you’re into bootstrapping and live in Fresno. I’m throwing an event about bootstrapping in San Francisco on January 22nd and wanted to give you a free ticket. I would love to be able to say hi. Password for the ticket was Sam is cool,” which I thought was so great.
Then you’re like, “P.S. The pre-launch strategy case studies have really helped me for launching my own blog.” It’s a good cold email, right? I get a lot of these.
Sam: That’s awesome.
Rob: Yeah, and I replied. I was like, hey, I would love to, but it’s like a six-hour round trip and blah, blah, blah. I’m running MicroConf and all this stuff. Then we got into a thread about I was about to go on Mixergy again and we started talking about that. Then you asked me a question about time management. It’s so funny, man, how you and I run not parallel lives, but parallel industries or parallel tracks.
We do a lot of similar things with events and email marketing. It has been a big impact for both of us. My last SaaS app obviously was Drip. It is fascinating to me that we haven’t run across each other before this.
Sam: I’m happy that that email that I wrote to you was good. It’s 2014 so I was probably 24, 25 years old. I’m happy that I was professional sounding and not like a douche.
Rob: Yeah, totally. That could definitely happen. I have met a few people in person who I will find emails from years ago and I’m like, what were you thinking doing that email? But this one was definitely not like that.
Sam: That’s why you know it’s real. People say I’ve been a fan of you for a long time, you have proof.
Rob: Yeah. No, that’s so cool. But I want to talk about The Hustle. I want to talk about a lot of things today—hotdog stand, The Hustle, and selling the HubSpot. These are really interesting topics to me. You build, correct me if I’m wrong, but it’s thehustle.co. It’s a new site, but it’s an email newsletter. You build it to eight figures in revenue, is that right?
Sam: Yeah. I mean, how do we not sell? I kept working on it for a long time. There’s clearly a path to $100 million revenue, I think, with these styles of businesses.
Rob: How is that? Because I think a media company is just sponsorships and this and that. Yeah, I just love to hear how you did this.
Sam: When we first launched, I always wanted to start a media company. I admired Ted Turner. You can’t really see it, but I’ve got this wall with pictures behind me and Ted Turner’s on there and so is Felix Dennis, two guys who had media companies. One’s British, one’s American.
I always wanted to do media because I like content. I love sharing ideas. Even in 2012 and 2013, if you looked at the math, you’re like damn, to build a media company to be huge, it’s really, really challenging. This page view model sucks. Upworthy and all that stuff got a lot of traffic at the time, but it was very clear like, oh, man, this is […] content and this is not going to stand the test of time. This sucks. But good content—at least what I describe as good content is […] I liked—was hard to share and get the page views.
I’m like this model stinks, so I got to figure out how to do this. I read Mixergy. Andrew had an interview with Ben Lerer, the founder of Thrillist, and two or three other people who had email lists, and I’m like, oh, that math is pretty crazy. One writer can reach as many people in the world. I just type in an email, and if I have your email address, the likelihood that I can get you to read it is pretty good, at least higher than writing an article.
I just thought, what niche that I care about is big enough to reach millions of people? I picked business and technology and it worked. In order to build a $100 million business, you easily can get—when I say easy, I mean simple. So it’s simple but hard. You easily can get to like $40, $50 million a year in sales, through advertising sales. The way that you do that is you charge $35 to $40 per 1000 sends, you have one major list that has 3 million people, and then you have a handful of smaller lists that are in similar but different targets.
Collectively, your list should be like five million people that will get you to around 50 million in revenue. Then you have a subscription service, which we did, trends.co. When we sold, it was going to do close to eight figures in revenue. If you just did trends, but for different niches, that can get you to another $30 or $40 million in subscription revenue. Then our events were pretty thrown together. They weren’t the best thing, but they made seven figures, and that definitely could have gotten to like $10 million in revenue.
Rob: That’s incredible. A 5 million person email list is anomalous. That is not something that exists everywhere.
Sam: I think it’d be incredibly challenging to get five million on one list, but we had nearly two million on one list. It’s easy, in my opinion, to be like, well, if you give it two or three years, it definitely could get to three million, and then you could launch like 8 or 10 offshoots that could get hundreds of thousands and collectively add up to five million.
Rob: Got it. That’s how you do it. How did you grow an email list to two million?
Sam: We got between 90,000 and 150,000—I don’t remember the exact number in the first year—just through me blogging. I would blog a lot. In the first six weeks, we had maybe a million people come to the website, and of that number, 3% or 5% entered their email. I just continued doing that for a year and that added up to 100,000 people. I would just post content like crazy. Then eventually, from around 200,000 or 300,000, I forget the exact number, we started buying ads. We could buy ads on Facebook and do an arbitrage.
Rob: That’s what I was going to ask about. It sounds like it’s anything else. It’s driving a ton of traffic and having a funnel. You obviously had email capture and a certain percentage signed up.
Content marketing is something obviously a lot of SaaS founders who listen to this podcast use. But the biggest lists that I know of like the AppSumo list and The Hustle figured out a way to pay for subscribers. That’s fascinating. How did the economics of that work? Is it because we were able to charge such a high CPM or cost percent?
Sam: It’s a SaaS business. It’s not literally SaaS, but it’s the same. If you get a SaaS calculator on churn and LTV and just use our numbers. We email every day, but Saturday.
If we’re emailing every day but Saturday, that’s 26 sends a month-ish. Then you say, so it’s 26 sends a month, your churn is 4% or 3% a month, you’re charging $35-ish per 1000 sends, therefore, if you want your payback value to be like—I forget what we wanted ours to be—it was pretty tight payback time because we didn’t have a lot of money. Basically, if you could spend $3 to acquire a person, we knew for a fact that we could make like $18 off of them. So it was like, all right, just spend.
Rob: Right, so there was a lifetime value.
Sam: Yeah. It was incredibly sophisticated. We had a team of maybe six people dedicated to this, we use Periscope, and we had all these dashboards every day. We check them and we would say, we had all these sources. Let’s say it’s Facebook and then a subset of different ad sets and audiences, then Instagram and then a subset of different, and then podcasts and then which podcasts and everything and which creative.
Then we would say, all right, within eight days of that sample size, what’s their open rate? We’d categorize them as gold, silver, and bronze. We do the LTV of gold, we do the LTV of silver and bronze, and then we’d say, all right, spend more there. It was quite sophisticated.
Rob: That’s something that really high end SaaS companies—I say high end or […] sophisticated SaaS companies do as well—is they get into their funnel and they look at their retention grid. We used to look at in Drip and I could see it was, oh, by month 10, we’ve only retained 84% of people. A lot of folks shy—especially in the bootstrapping community—away from that stuff. They shy away from getting into the metrics, getting into the weeds, and they just kind of want to handwave it and build a great product.
Sam: Because it’s really hard. Technically, I don’t know how to do it. I can look at it and feel it out. But I had to hire guys who could really properly do it like scientifically do it.
Rob: You had a subscription business. You had effectively a SaaS business without the software, and then that’s where you say it’s simple but hard because SaaS is really complicated. SaaS is complicated and hard because building a product and then doing everything you’ve done—doing the marketing, doing the funnel, making the sales—is, I would say, a more complex business than a newsletter. Do you think that’s accurate?
Sam: Yeah, I think so. I think maybe there are more people who could build a SaaS business than build a business I did, maybe. But I didn’t find my business to be intellectually challenging at all. To me, it was like getting big muscles. It’s like, well, if I just lift weights, increase those weights every week, and then eat a lot, you’re going to get big muscles. It’s just going to take like four or five years.
That’s how I felt about my business. I was like, look, I’m just going to create good […], which I’m very talented at and I’m skilled at. I’m going to hire good people to do it, and I’m going to do it for five years. It was pretty straightforward on how to do that. I would say that my business was simpler, but SaaS is way more valuable for a reason.
Rob: Right, the exit multiples. You sold to HubSpot, which is really interesting to me when I heard that because I would expect you to sell to a media company being a media brand. You had a tweet about this recently. I was reading a tweet thread. But what was behind that decision to sell to a SaaS company?
Sam: When we launched, I always thought like a Salesforce or at the time, when we all thought WeWork was legit, I thought WeWork should buy us because I’m like, man, look at the math. I knew how much sales we’re driving to some of our advertisers. I’m like, if one of them just bought us, it’s far better to drive 5000 customers over the course of a year to a thing that spends $40,000 a year in subscription revenue than it is to just ad arbitrage this. It’s far better.
The issue was I didn’t think that Salesforce or another company like that would be bold enough to believe that that could be true. HubSpot hollered at us, and I was like, finally, someone is brave enough to do this. When HubSpot bought us, they were worth $16 billion. I looked at their numbers, their quarterly earnings report, and I was like, these […] guys are growing 45% a year or whatever it was, whatever they reported. They only have like 100,000 customers. I’m pretty sure literally every business in America could potentially be a HubSpot customer.
I think this has legs. So I was like, I think this could be a $100 billion company inside five years. This is a no-brainer. We have to do this because it could take off. At its peak so far—a couple of weeks ago before the sell-off—it was like $40 billion. It’s proven to be not all the way true, but close to true.
I look at a lot of the media companies’ stocks and it’s like, […], I don’t want to own BuzzFeed. I don’t want to own Vice. I don’t want that. It’s also a really crappy life. Making money off of ads, it’s kind of addicting and it’s kind of exciting, but for the employees, it’s pretty […]. For someone who wants to be a purist and a writer, it sucks that you have to—sometimes, even if you say you don’t, in the back of your mind, you don’t say certain things because of your advertisers.
I didn’t care because I’m like, I own the company. It’s not like I can get fired. But I was like, this woman, Katie, just sold all these ads. If I act like a douchebag, this advertiser is going to get canceled and she’s going to lose money. In the back of my mind, I was like, I don’t want to hurt her, therefore, I’m going to tone it down. I think that sucks. I don’t like that.
Rob: Is your model still the same or is it funded by HubSpot now and there are no ads anymore?
Sam: The way it works, we went into the year with a bunch of ads booked. This year we probably would have crushed on ads because of what’s happening. We gave it all back. We canceled all of our contracts. HubSpot’s the only advertiser.
We make money through trends. Trends is a good business, and that potentially could pay for a lot of the HubSpot media budget. The math is simple. It says, let’s just say that they have 100,000 customers, they have X amount of leads that they’re getting per year, and Y percent of those leads become customers. Their line of thinking is if we acquire The Hustle, that just gives us more leads and more customers, and they can track all of that.
Rob: Absolutely. It’s top of the funnel for them. With MicroConf or TinySeed, would I acquire an email newsletter that was aimed at SaaS people? Absolutely because I know the numbers. It doesn’t make sense, and for HubSpot at that scale, to me, when it was announced, at first I was like, wow, that’s a really interesting acquisition. Then I dug into it and I was like, oh, this is a seven-figure email list, which like I said, is an anomaly.
HubSpot knows their numbers. They’re really smart marketers. They know their funnel. I know Dharmesh. I’ve known him for years. I know how that culture must be. It makes a ton of sense why they would do it.
Sam: Also, just a few other things. For example, a lot of people in the SaaS industry are really good at just content marketing. Content marketing, if you’re a journalist—which I’m not but I hired a lot of those folks—that word content marketing is like the worst word on earth. Because they say, no, I’m not a marketer. I’m out looking for the truth, and I’m creating cool […] that people love, but I’m not marketing.
Anyway, HubSpot, I imagine they were like, we already reached this amount of people based on search, but how many people share HubSpot content just because it’s badass? Maybe they’re like, not as much as we hope. With The Hustle, we didn’t know anything about SEO. We only wrote stuff that we thought was cool and we grew entirely from people sharing. They’re like, man, if we bought this, maybe we can get some of this DNA in our company. I imagine that’s how they felt.
Rob: Yeah. When I talked to SaaS founders about B2B marketing approaches, I mentioned content and SEO separately. They’re related, but they can be done separately. You can do content marketing that is truly driven just on the virality and the pop of getting on high on Reddit, high on The Hacker News, and all these things that have no SEO value; or you can create stuff that doesn’t do any of that and is solely focused on SEO or you can create content that does both. I’ve seen all three succeed. It sounds like The Hustle originally was just the content side, and now HubSpot’s bringing that SEO expertise.
Sam: Yeah. To me, when people say content, they’re like, how do I do good content? I’m like, I don’t know, man. That’s like asking me, how do you do good art? Are we talking painting? Are we talking to make you rich? Are we talking about how to make you happy? Are we talking about music? There are a thousand different things here so we got to be more specific.
Do you just want to rank on search? Okay, let’s talk about that. Do you want to go viral through sharing through just emotions? That’s another thing. I think you can do both, but they serve different purposes and they are both important.
Rob: Right. Lars Lofgren who ran SEO for KISSmetrics, then I Will Teach You To Be Rich, and now he’s on doing his own thing focuses on—it’s all about SEO, but he needs the viral pop in the early days or wants some type of pop in the early days to build the links to then get the long tail SEO. For him, he’s like, all my content, if I’m not getting organic traffic, 6, 12, 18 months down the line, I have failed. His focus is to get that recurring flywheel going.
Sam: Yeah, and that’s really hard. It’s kind of hard, but it’s not that hard. You start seeing patterns. With content, I can tell you which type of emotion will get shared more often. I can read a headline and be like, oh, that’s going to take off. You’re not right 100% of the time at all, but it’s like a batting average. I could be right like 30% of the time and that’s really good.
Rob: Right, and you get better. It’s a skill. It’s a learned skill. So you work at HubSpot now.
Sam: Yeah, kind of. Right before we sold the company, I had recruited a guy who ran—I think I could actually say this now—Motley Fool. He was an executive there who was the head of growth. His name is Jordan, and I wanted him to be CEO of The Hustle.
We got this deal worked out and everything. Then HubSpot hollered at me and said, we want to buy you. I said, this is a good deal, I’ll take this. So I had to go to Jordan, man, I’m sorry, I have to do this. I told HubSpot, look, I had a CEO lined up because this company’s gotten too big for me. I can’t be a CEO of it. They go, all right, fine. We’ll replace you and you only do the podcasts. I go, great. Deal and they hired Jordan.
Jordan is now the boss. Jordan previously was an executive at Motley Fool. He is now the boss and my only focus is on our podcast. It’s working pretty well. I think in December we’ll hit 1.5 million downloads.
Rob: Wow, good for you guys. The podcast My First Million?
Sam: My First Million, yeah.
Rob: Which is a trip because My First Million was on my radar. I had heard about it, but I thought it was different than it is. When I listened to it I was like, oh, this is really good. But I thought it was kind of a start your business type thing, and it’s like, I’m not there anymore. I used to listen to those. But then Courtland Allen, you guys did an episode swap, I believe. Courtland and I are good friends. We go back years. I was like, all right, I’m going to listen to his episode. I was like, I really liked the show. Your format is so dynamic. Do you have a fixed format, even? I probably listened to 10 episodes and I feel like it’s just whatever you guys want to talk about?
Sam: It is. The name is really bad. Of course, my first company was called The Hustle., so clearly, I’m not good at naming things. It was called My first million because—so the hustle owned the podcast the whole time, and Sean was one of my closest buddies. He goes, I want to launch a podcast where I’m talking about people getting the first million users, the first million revenue, or whatever. That’s what he did.
For years leading up to that, every week, me and Shawn and a couple of their buddies would meet and just brainstorm. For some reason, we started doing this. Someone didn’t show up for his interview. and he goes, hey, I booked the studio but no one showed up. You guys want to come riff and just do our thing what we do? I go, yeah, all right, whatever. I showed up, we did it, and then it hit. Then it was like, all right, well, let’s just brainstorm.
We started brainstorming, and that took off. But then we’re like, let’s just talk about whatever we want to talk about and maybe people will find it interesting. That’s what we do now. When we log in, basically, we log in at 1:00 PM, we both pop up on our screen just like you and I just did before this, but we purposely don’t say a word to each other. We won’t talk to one another or if someone says, how was your weekend? We say, shut up, don’t say anything. We hit record then we have the conversation that we want to have so that way it’s far more organic. Then we don’t really edit it and we just put it out there.
This past November, so a month ago, we just started doing some growth stuff. But prior to that, if you asked me how it grew, I would be like, I don’t know, man. It just did. I have no idea. It still shocks me that people listen to it.
Rob: I guess on growth, it’s like no one I know has been able to growth hack podcasts, so I do want to ask you about that one.
Sam: No one.
Rob: Yeah, it’s always—
Sam: I know one person. Jordan Harbinger.
Rob: Okay. What did he do? What was his approach?
Sam: I’ve talked to him. Jordan has been my homie for a while, and I was like, you know, Jordan has I think 10 or 15—I forget the number, but I believe on the high end it’s like 15 million monthly downloads. I was like, Jordan, are you 15 times better than my podcast? Let’s say we’re at a million. He goes, no, if anything, I could be a little worse or even just slightly better. But I’m probably 15 times better than you at marketing. I go, what are you doing? He goes, all I do is I buy ads on podcasts. That’s all he does. He goes, that’s the only thing I’ve ever found.
So I guest on other podcasts, I buy ads on those podcasts, and that’s all I do.
Rob: You said you were going to start doing some growth stuff for your podcast, is that what you’re going to do?
Sam: Yeah. We bought a bunch in November, December, but they don’t go live until after the new year.
Rob: Wow. I guest on a lot of podcasts, I’ve never bought an ad. It’s something I need to think about. Something that I did for this show last—when was it? It was probably pre-pandemic. So I did some tests because I’m an old school marketer, right? I used to do direct response stuff. I grew HitTail on Facebook ads. I tried Facebook ads, and of course, getting someone to switch mediums doesn’t work. It’s like they’re on Facebook, they don’t want to click over and subscribe to anything. So then I started buying ads inside podcast players.
Sam: That’s what he does as well.
Rob: Yeah, Pocket Casts and there’s Downcast. I mean, there’s more than most people think there are.
Sam: Yeah, there’s Castbox, there’s Stitcher. Maybe there are 30 or 50 that could do it.
Rob: Yup. I tried a bunch of them and I actually had some luck at it, and then they got really expensive when the COVID hit. I mean, that price quintupled, I think, overnight. I don’t remember what the price went to, but it was like $4 per new user. Of a podcast, I don’t know. That’s a pretty long funnel.
Sam: You have to do the math, so it’s the same exact thing. So Jordan’s math, his show is like every day. It’s like, well, if my show is every day and I have three or four ad spots every day, it makes sense.
Rob: He directly monetizes it. This show is not directly monetized, obviously. It’s always just been the podcast of MicroConf really. That’s how MicroConf pays the bills, you know? It’s like, can I even equate a listener of this podcast to tickets sold or whatever? It’d be pretty hand-wavy.
Sam: Also, it depends on how big your target market is. We slowly got into a little bit more pop culture stuff, not entirely, but we’ll kind of go on that. People, shockingly, will say that they listen because they find it to be funny and entertaining. That’s weird to me. I can’t believe people are laughing at those stuff. But anyway, because of that, our total addressable market I think has gotten a lot larger so we can do that. Jordan, his addressable market is just anyone so it’s a little different.
Rob: I’m envious of businesses like that. I think it’s a genius to just have a wider focus. I’ve always been focused on software. First, it was software startups and now it’s SaaS. It’s just a small world. It’s not as big as a lot of people think. You had a luxury with The Hustle and now with My First Million that you have broadened that scope. I think it’s a really smart thing to do.
Sam: Yeah. Do you use TikTok?
Rob: I don’t.
Sam: You should. It’s pretty fascinating. When I was 18 and I was into business, I was considered a freak. Not a freak, but people were like, what the hell? So when I was 21 years old, I got a job offer at Airbnb. They had like 200 employees and my mom was like, what the hell is a startup? That sounds like a Ponzi scheme. This is not real.
Now it’s way more common. There are 18-year-olds on TikTok who have millions of views and all they do is talk about startups. The target market is quite huge. We did something really cool. Last week, we said on our podcast we’re going to get $5000 to maybe two or three people who take our YouTube videos, chop them up into clips, post them on whatever social media channel, and use our hashtag. We’ll give you $5000 based on some combination of do we think it’s cool, creative and does it have a lot of views.
There’s a handful of guys that have channels now on TikTok that have gotten roughly 10 million views in a week. It is crazy. The target market for business content, particularly amongst young people, is significantly larger than I thought.
Rob: All right. Well, I got to turn into TikTok now. I’ve been around long enough that each of these is like, really, another one? But I hear it. You’re not the first person to tell me this, I’ll put it that way.
Sam: I’ll share this with you. Check this out. Can I send a link here?
Rob: Yeah.
Sam: Here it is, chat. So if you click that thing I sent you, and you’ll see that #MFMclip currently has 8.6 million views. These guys are making videos based on our stuff. I don’t think you could see the view count on your computer, but if you look on your phone you’ll be able to see the view count. Some of these videos have over a million views.
Rob: Is it because they have channels?
Sam: No. They just launched these. Their channels are named after us. There are channels like MSMsnips or MFMclips.
Rob: Got it.
Sam: They just made them.
Rob: We’re doing this on YouTube and not seeing anywhere near this reach. It sounds like the blue water is TikTok. That’s what it seems like.
Sam: Yeah, but I didn’t know that. It’s all like these 18-year-olds making these clips, and it boggles my mind how they’re able to do this. It’s huge. Collectively, we’ve just reached. We’ve just gotten an additional 8.6 million. This contest, by the way, is seven days old.
Rob: Right, and it’s not costing you that much.
Sam: It’s going to cost us $15,000.
Rob: Yeah, it’s a great hack, man. One thing you guys do on your show is you bring business ideas. You’ll brainstorm business ideas and you’ll also analyze existing businesses. There were some trucking companies and you went down a rabbit hole of like, I saw this name, then I Googled it, and I found out they’re a big conglomerate.
The business idea side is fascinating to me. I think folks listening to this are always trying to come up with bootstrappable ideas that put you on the spot. What have been some recent bootstrappable business ideas that maybe you and your cohosts have discussed, have thought about, or just anything that’s on your radar that’s pretty fascinating? If it’s software, that’s cool, but if it’s not, that’s fine too.
Sam: Is that okay if I change software to internet?
Rob: Yeah.
Sam: The thing about our show is basically I am not an expert in, let’s say, email marketing software. I’ve used a lot, but I wouldn’t say I’m an expert like you. Let’s just say that that industry interested me. I would have to go and work at Drip, ConvertKit or MailChimp in order to kind of master and spot problems. It’s really hard to spot problems to solve.
With our show, what we try to do is make it so you don’t have to go work somewhere. We just show you interesting problems. One of the most fascinating problems that I’m obsessed with at the moment, I’ll tell you a couple. But the first one is the trucking industry. A lot of people say autonomous trucks. You just said I talk about trucks. That’s because I’m a little obsessed with it.
But right now, in America, there’s a huge shortage of truckers. A lot of people who work in the startup Silicon Valley-ish industry like we do, we don’t really give a […] about that because we don’t know many truckers and we don’t really think about it. We just think, oh, it’s this other group of people who just gets it done. Well, I have a legitimate fear that in the next 5 or 10 years, how are we going to be able to get […] to our house? How are we going to buy stuff without trucks?
A lot of people say like, well, driverless trucks are going to be a thing. I’m like, probably not. I don’t think it’s going to be as popular as you think and as soon as you think. A huge thing that interests me at the moment is basically just lead gen for trucking companies. I spun up a website just to see if I could do this, and I made $1000 in two days off of it. I’m very fascinated by it. Lead gen for truckers, I think that a lot of the people in the space—so basically, you get paid $50 to $100 per person who applies for a job with a commercial driver’s license.
Rob: I was thinking it was lead gen of people hiring them to haul stuff, but you’re saying it’s employees. It’s just finding new drivers? Because of the shortage.
Sam: Yeah, there’s a massive shortage and they are really struggling. What I would like to do is start with that business. I think I could scale that to seven figures in revenue and make it relatively profitable, then use that money to actually create a proper company where I could make the environment better for these guys because I think it’s messed up. I’m an investor in this company called CloudTrucks, which is doing the same thing, so I’m very fascinated by that business.
What else am I interested in? Okay, I have an interesting one. Here’s one that we just talked about. It’s so fascinating to me. There’s this company called Storyworth. Have you heard of Storyworth?
Rob: Yeah, and I had in my Trello board forever to send it to my parents. It […] an email once a week.
Sam: Dude, it’s so cool and it’s so simple. I’m a customer of theirs. and the guy who started it, I shared an office with him. It’s called Storyworth, storyworth.com. It’s the simplest […] on earth. It’s one guy running it, and it’s very easy. You spend $25 or $50 a month (I don’t remember) and it automatically sends email prompts to family members and asks them questions about when they grew up. What was your favorite memory about your father? Eventually, they write. Then after 30 weeks or something, you’ve got this practically a book, and then you could upload pictures.
Now you got this book, and you could pay an additional fee in order to get this book. I think it’s amazing, and it’s the simplest business. I think that you could launch this in a weekend. I know it’s working because these guys, Storyworth, I see them buying ads on YouTube, and I think I even saw them buying ads on TV. I’m almost positive that the company only has two or three employees. On LinkedIn, they’ve only got two or three people. I knew the guy who started it, Nick, and it was just him for a long time.
That business is incredibly fascinating. I think there’s actually space in the market for more people, and they could do it slightly differently.
Rob: Right angle it differently. Yeah. I’ve seen them advertising. I’ve seen their ads on Instagram, and I used to hear it on some personal finance podcasts I listen to. That’s super interesting. You have a recent podcast episode that it’s the company you would build if you have the energy and the time, and then starting a company based on who you want to employ. What did you dig into that?
Sam: It was energy, time, and money because that’s an interesting question. One thing that I think is kind of crazy, have you ever studied recycling?
Rob: No.
Sam: Okay. Do you have a blue bin at your house?
Rob: Yeah, two of them.
Sam: That blue bin, that’s […]. That gets thrown away in the trash and burned.
Rob: Really?
Sam: Yes. It’s a complete lie. The energy that it takes to recycle—you live in Minneapolis, right? So they’re pretty green. I bet that they have these areas that have these huge bins where you throw plastic ones, this bin plastic too, and this bin is green glass, blue, or whatever. It doesn’t work in such a way where you can just give a bucket of tons of different plastics to a company, they sort it out, and turn that and reuse it. It’s all dirty and it’s got styrofoam in it. It doesn’t really work that way.
The majority of stuff that we’re throwing away in our blue bin just goes to the trash. We created this system so we feel good about consuming more […]. It’s like, oh, I’m recycling. It’s okay. It’s not a big deal that I just bought 24 cans. It’s no big deal. It kind of is a big deal. I’ve talked to a lot of waste management companies and they’re like, we try, but it’s just impossible.
It costs more money than we make from it. It takes actually more energy than we’re actually saving. What I’m incredibly fascinated about is recycling and how we can solve that problem because I think it’s like a sin—I don’t believe in God—against humanity where I order something from Amazon and they send me all of this packaging. I’m just going to throw it away and it gets burnt. I feel horrible that I just used that much energy to get the stupid book.
I’m incredibly fascinated by what’s going to happen with different recycling businesses. I think there’s a world where you could create a better recycling business. There’s actually been a lot of people. The company Waste Management was started by a guy named Wayne Huizenga. Wayne Huizenga launched Waste Management and he bootstrapped it. I think there’s a world where you can do that. Additionally, Wayne Huizenga started Waste Management. Then from there, he started AutoNation, the world’s largest car dealership. After that, he started Blockbuster
Rob: Wow, unreal.
Sam: And then he bought the Miami Dolphins. I believe he bought the Miami Dolphins and then one more sports team. I could be getting the sports team wrong, but it’s Florida football and maybe a baseball team. This guy is amazing. I read his biography because I’m so interested in waste, and I’m like, how do we solve this problem? Recycling is a huge industry that I think is under-talked about. I think this problem is not discussed enough about the amount of waste that we have. I’m like, what do you do?
How do you rally around this? There are a few interesting things. There’s this company called the Buy Nothing Project. It’s basically started by two friends in Washington. They’re now in 44 different countries. They create a website with local groups, and they form these gift economies. It’s basically a ton of different Facebook groups where people lend stuff for free or they give stuff away for free—just stuff that they don’t want. This company now has 4.2 million participants, 44 countries, 6500 communities, and 13,000 volunteers.
It should just be like, reduce reuse, not reduce, reuse, and recycle. Just say, reduce reuse, and then just cross out that recycle. Anyway, that’s an interesting way of solving this problem. I’m kind of obsessed with that at the moment.
Rob: That’s interesting. It’s fascinating how deep you go on these things. I mean, that’s what makes your podcast, your show so interesting. It’s not surface-level cursory thinking about recycling. It’s like you’ve just told me I knew 5% of what you just […], 20 times more about it. You obviously did a bunch of research. You must have read books on that. I mean, what drives you to do that? Is it just natural curiosity, the desire to learn about these things?
Sam: I’d make a joke, I’m a manifest cowboy. I remember being a little kid and walking around a city and seeing skyscrapers. I’m like, holy […], a guy or a woman just came up with this idea and convinced all these people that we should build buildings that are 50 stories high, and they built it. That’s amazing. I cannot believe that you could do that. But I was like, but I can’t do that. Others could do that and super few heroes can do that, but not me.
Once I got a little success in business and when I had the Hustle Con and I met the founders of WeWork, the founders of Casper, folks like you and your wife, and people who are doing interesting […] I was like, oh, they’re smart. Maybe they’re smarter than me, but they’re not billions of dollars times smarter than I am. We’re in the same ballpark. We can shape the world any way we want. I’ve always been obsessed with the idea that I can bend the world to my reality.
So I loved figuring out how things work. If you read his biography about Wayne Huizenga with Waste Management, I’m like, oh, that was super easy what he did. It took a lot of work, but it was very straightforward. I could totally do that, but that’s how I wanted to spend my time.
Rob: I think that’s such a good lesson or just a way of thinking about things that I think some entrepreneurs have naturally and I think some entrepreneurs learn along the way. I think folks who are listening to this today, that’s something that you should take away from this conversation is the idea that there aren’t many outliers. Like you said, the people who sell a company for a billion dollars are just not that different from us. They’re probably about as smart as most of us. Maybe they had a leg up.
I mean, I always talk about it as hard work, luck, and skill. Maybe they got a little lucky. Maybe they worked a little harder, but we can all work hard. Developing skills is something any of us can do now. It’s not like 50 years ago where there’s no internet and you have to go to university to learn anything and maybe you don’t have the money to do it. I often say, we live in the best time in history to be an entrepreneur because I truly believe that you can build the skill, put in the hard work, and be successful almost on your own merit.
It depends. I know that if you want funding, but bootstrapping especially, I bootstrapped 10 businesses or whatever and no one knew who the hell I was. It was just me working hard and shipping stuff.
Sam: How much in revenue was your biggest company, like your run rate?
Rob: A few million. That was Drip. It’s much more than that now. But, yeah, when we exited.
Sam: I don’t know if you talked about it or not, but I imagine a $3 million SaaS business is definitely eight figures in personal wealth, or at least in that ballpark, I would imagine. I believe in luck, luck’s a thing. I’m not like this guy that says, well, I just worked really hard. Luck is real. You could say it’s just lucky that I was born at this time in America, but then you could also say it’s lucky that I was healthy.
It’s lucky that I came from a family that was emotionally supportive. I came from a family that could put me through a good high school and things like that. Luck is real, but I think that if you give yourself 15 years, you can create eight figures in wealth. Now, I do think that there are some people—like Elon or Bezos—I think that when we talk about people who are or are not better…
Rob: They’re outliers.
Sam: Yeah, they just have more horsepower. Their brains are just better than mine. Would I want to trade spots with Elon Musk? No. I’m super happy and I don’t think he’s happy. But I will acknowledge that I think he’s just smarter than me. It’s amazing that we’re both considered humans. That said, there are a significant amount of people who I’ve met or who I’ve read about that are worth hundreds of millions or billions of dollars and I say, you’re not better than me even at all. Or sometimes I’m better than you, but you stuck with it for 20, 30, 40 years. Bravo to you.
The only thing that you’re better than me is that you did it and didn’t sell.
Rob: Well said, sir. Well, thank you for joining me on the show today. If folks want to keep up with you, you are @theSamParr on Twitter. And of course, My First Million. It’s a good show.
Sam: That’s awesome, man. Thank you. This is cool. I’m happy we got to finally talk. I’ve been listening and reading forever.
Rob: Yeah. It’s great to finally meet you, man. Thanks for coming on. Thanks again to Sam for taking the time to join me on today’s episode. I hope you’re having a great end of your year. We’re almost to 2022. I know I’m excited about what the new year is going to bring and looking forward to what we can accomplish with our next 365 days. With that, I’ll be back in your ears again next Tuesday morning.

Rob: You guessed it, it’s Startups For the Rest of Us episode 582, where I answer listener questions about enterprise sales, crowdfunding, replacing yourself, and things that every B2B SaaS founder should know. Today, Einar Vollset joins me. He’s my co-founder with TinySeed. He joins me because there’s a question specifically about TinySeed and he knows a lot about enterprise sales. I was just a good fit to bring him on the show today.
I hope you’re enjoying yourself on this festive time of year and that you are able to take a little bit of time away from your business, not because we don’t love our businesses and enjoy what we do, but I think this is a good time of year to take a couple days and be with friends and family. Take that little break, that mental break that can help bring you back recharged with renewed energy wanting to invest in your business as we enter the new year. I hope you enjoy today’s episode. Thanks for joining me as always.
Einar Vollset, thanks for joining me back on the show. We got some good questions that I think are right up your alley today.
Einar: Glad to be here.
Rob: Let’s dive into our first question from Stuart at Growth Method.
Stuart: Hey, Rob. Stuart here calling from a wet and windy UK. Hope you’re well. I’ve been a listener for many years. Thanks so much for the podcast. I actually have a question about TinySeed. I recently invested a relatively small amount, $5000 in a couple of startups by Republic for the first time through the Reg CF crowdfunding offering.
I’m not an accredited investor, but obviously can invest under Reg CF. I wondered whether you’d ever considered or would consider enabling people within your community network and Startups For the Rest of Us listeners, the ability to invest in a future TinySeed fund under Reg CF. I thought it’d be a really nice way of bringing together people with very similar attitudes to bootstrapping, self-funded businesses, and sustainable profitable businesses, and enable them to invest $1000, $5000, $10,000 into a TinySeed fund. I’m really interested to get your thoughts. Thanks so much.
Rob: That’s a good question, Stuart. Einar, what are your thoughts?
Einar: Honestly, I’ve been thinking about this for a long time. There were recent regulations and the CF thing that changed. We’re still doing a million max crowdfunding campaigns. You could do $5 million max. This is all good.
As far as I’m concerned, there are some new requirements around the financials you need to release and things prior to doing a crowdfunding round. But we were originally quite excited about it, particularly when we started to see funds starting to raise in this way. The problem is—in the US, at least—you’re not actually allowed to raise crowdfunding for a fund. That’s actually illegal, which most people don’t know.
Rob: Such a bummer.
Einar: It is. It doesn’t make any sense to me, but you can do crowdfunding for an individual business. What some people have done, and I think probably most famously, is like backstage capital. They did a big crowdfunding round. They raised (I want to say) $5 million or something like that.
Rob: I believe it was that, yup.
Einar: Yeah, but that went into the actual partnership itself. They sold a piece of the whatever partnership that’s behind that. Legally, they aren’t allowed to go in and take that $5 million, put it in a fund as investment money, and invest that money. That’s actually not legal. I wish it was, but it isn’t. That’s where we are with that. Unfortunately, we can’t do it.
One of the things we’ve thought about is do we do some sort of a parallel vehicle where we come in and our fund, TinySeed invest in this company, and then alongside that the crowdfunding whatever can come in alongside into that business. Candidly, it became too much of a gray area legally, and honestly the ball ache and the compliance stuff just meant that we wouldn’t do. I think if we were to do a crowdfunding-type play, it would need to be us selling part of TinySeed, the partnership, which we haven’t actually discussed. Maybe we should do that, I don’t know.
Rob: And it’s such a bummer that regulation tends to be a real hampering to fundraising. We’ve talked about the 99 investor rule being a big pain that we’re literally lobbying congress with a bunch of other folks who run funds, and who run into this same problem in the US, and then there’s this one. There’s often tax implications of just trying to set up funds, like we’re setting up our EEMEA fund right now in Europe, Middle East, and Africa. That’s been like a month or two of your time. I forgot how to even set this up and it’s like, if this was all simpler, if this was Stripified or if it was AngelListified, but none of it is, and it’s a lot of money.
Einar: None of it is. There’s so much stuff in compliance and there’s different percentages. The cost and compliance are domicile and say TinySeed, EEMEA in Europe are just out of control compared to the US or even the Caymans. We were like, oh, let’s set up in the Caymans. But then you go to the Caymans, then you talk to European investors, and they’re like, oh, Cayman Islands, I don’t know. So there’s compliance and then this perception of it, too.
Actually, one of the things that I just started paying strong attention to, even beyond the whole investment side of things is this. Have you heard about the Platform Competition and Opportunity Act that’s making its way through?
Rob: No.
Einar: It’s got nothing to do actually what was asked, but it shows and tells you that kind of thing. There’s now a new piece of regulation coming through or going through Congress, where basically they’re trying to almost ban big companies from buying smaller competitors, which could have a pretty devastating effect on entrepreneurship in the US in general.
It showcases like, is it good that you can crowdfund into a fund? I don’t personally think so. Obviously, this is a selfish view, but is it good that apparently we’re going to ban large companies from buying smaller ones? I also don’t think that’s a good idea, so I don’t know.
Rob: It’s tough. Thanks for the question. It’s super interesting. Obviously, it’s something we can’t do.
Einar: I wish we could.
Rob: Yeah, wish we could is the answer. Our next question is from Simon Thompson.
Simon: Hi, Rob. My name is Simon. I’m the founder of podseeker.co. My question is around enterprise plans and pricing. If I have a standard SaaS product that I’m charging a monthly subscription for, approaching small to medium businesses who buy the product in a fairly standard way with a credit card, but now I’d like to offer that same product to enterprise-level companies. What are some of the things that I need to start thinking about in order to approach those companies?
For example, I know that deal breakers sometimes can be things like a single sign-on capability or the ability to buy with a purchase order. I’m wondering if you could expand on what some of those other deal breakers might be and if there’s anything else I just need to be aware of before I start to approach enterprise companies with this product.
The second part of the question is around pricing. How would you price the enterprise product differently to the standard plan, assuming it’s more or less the same product but with some of these potential deal breaker features like single sign-on, for example? Thanks very much.
Rob: Enterprise sales, sir. This is why I have you on this episode. Do you want to roll with this one? And I’ll say what he said when you’re done.
Einar: That actually often comes up in TinySeed companies. Often, people come along and they say, oh, I have this big contract and they’re stoked to have the logo or whatever. But now they’re asking for redlining my terms of service, or they’re asking for custom contracts, or all this stuff. They’re sending me a security questionnaire, what do I do? My standard answer is, you get them on the enterprise plan, you make them pay a ton more.
My rule of thumb is almost like—and it shocks people—if you have a public pricing, you should probably 20X it as your base price for the, we’ll call this enterprise-type plan. My general view also on enterprise planning is like a binary search to try to find the trade-off in terms of pain points and value and it’s probably higher than you think. The kind of things that we often see for enterprise type triggers, where basically what it boils down to is, if you want this, then you need to be on our enterprise plan.
Like I said, any kind of custom contract, if you have $100 a month SaaS business and people start sending you (like) Word docs of your terms of service, redlined by their legal, definitely this is an enterprise plan. You’re not going to want to do that. If your lawyer’s cheap, he’s $300–$400 an hour, you’re going to burn through (like) two years worth of SaaS income just having him review the red lines. So that’s a definite one for me.
Also, there’s some random stuff in there you want to be quite careful. If you don’t want to just say like, okay, fair enough, yeah, sure, redline, done, I want the big contract or in some cases, the medium-sized contract, because you end up in some scenarios where they’re putting in identification clauses, where if they get sued using your software, you’ll cover all expenses. You definitely want to avoid that.
Other things are common like payment methods. A lot of the time, people, big contracts, want to run it through procurement and then once it goes through procurement, it’ll be negotiated again because that’s what procurement does. They get paid, basically, to negotiate contracts. Any kind of like, we need to go through a different kind of payment system or you sign up for this service that we use to handle invoicing, that to me, is an enterprise trigger.
Like I said, very often, you get security questionnaires, and that’s less of a trigger. It suggests that the business is quite large. I guess it could be a trigger. Those kinds of things, I would say, I wouldn’t fill out a 300 security questionnaire if you’re selling something for $29 a month. But I think what you’ll end up with if you’re wanting to do enterprise sales, you need to come up with some sort of a solution for that. We see that over and over again. It just becomes a must-have part of enterprise customers.
You can get away around that or bypass most of the pain that comes from that with something like an SOC 2 certification or there was one in Europe they prefer as an ISO or something, but it’s basically a variation on SOC 2.
Or there are certifications like HIPAA compliance stuff. You might actually be asked to basically become “HIPAA compliant” just by saying, hey, sign this. It’s part of the HIPAA process. You have to have all your providers sign a certain agreement. Often, people won’t even ask like, hey, are you HIPAA compliant? I just say, hey, just sign this agreement. HIPAA is another one that’s common.
Some of the more esoteric stuff that you’ll see, particularly for very large clients and very large things is they want the code in escrow. It’s not unusual. They’re like, you’re a small company, most likely. They’re an enormous company. If they’re going to use you in some kind of mission-critical way, if you go under, they want to be able to get to the software and you do that stuff. The key thing there is to make sure they pay for it. If they want to pay to put your code in escrow with a third-party, then that costs money, so they should pay for it.
Then some of the other stuff that comes in is custom development work, which can be triggers for enterprise, but also can be a good way to subsidize future app development, basically. Just make sure that you get the IP and the right to resell and things that are in the changes. Then there’s some stuff that I would almost never do. In some cases, you get like, yeah, we want to do a big contract, but as part of this contract, we get a right of first refusal if you get acquired so we can buy you.
There are certain things that they might put in enterprise-type contracts, where basically you’re snickering yourself at future acquisitions that you don’t want to do almost no matter what. That’s the high-level view of that.
Rob: I’ll add a few of those. I think you may have mentioned single sign-on custom contracts, for sure. The other one, I remember back in the Drip days, is the moment someone said, all right, we want to use Drip, but we want to integrate it with Salesforce. I was like, ding. If you’re paying for Salesforce or any big expensive piece of software, that’s a trigger. Then an export or an integration with a data lake, I guess that’s just expensive software, but is it Redshift to the Amazon equivalent?
Einar: Redshift, yeah. Segment face is famous for this. Segment, we used to be like, it’s $9 a month, except if you want to hook up your data to Redshift, in which case it’s $150,000.
Rob: Right. That’s the thing. If I were a SaaS app and most of my plans were $100 a month or $200 a month, if one of these triggers happens, one or more of them, you want to learn them early when it comes about, suddenly, the price has to be $20,000, $25,000 a year or it’s not worth doing this. It’s not worth doing the process.
The moment I hear procurement, figure dozens and dozens of your hours to get through it, and a huge hassle in months potentially. We had this expression in electrical contracting when we’d bid on a job. There are no bad jobs, there are just jobs without enough money in them. There’s no procurement process is bad. There’s just procurement process where you didn’t charge enough money to make it worth your while. Or the SSL, or the redline, POS, or whatever. All that back and forth, you just have to.
That’s why enterprise software is so expensive because it’s not the software. The software’s pretty much the same as the one you charge $50 for, but it’s this. So excellent. It’s a good question. I hope that was a helpful answer, Simon.
All right, I had a tweet from Amar Ghose. It’s @itsjustamar on Twitter. He said, “If you had a company making $1–$1.5 million annually and you want to step away for your business,” then he has a few questions, “how would you go about finding a replacement? Where would you search? How would you structure an offer? What questions would you ask?”
I don’t recall specifically if he was saying it was like a SaaS company, but let’s assume it’s a startup. It’s a tech company. This is not a dry cleaner. Maybe he sells info products or maybe it’s SaaS, but I actually chimed in and responded with some tweets about it. I did like 280 characters and this deserves way more than that because it’s a complicated question.
Let’s start with the first one. Where would you look? How would you go about finding someone? I guess how would you structure and how would you evaluate them?
Einar: I’m really about structure more than anything else, like where are you fine, because I’m not a hiring genius exactly, which is effectively what you’re trying to do in many ways, shapes, or forms. The way that I think about it is, there are basically three different variations in this. One of them is just trying to find someone to hire, someone to replace you like a CEO type.
The problem with just saying, I’m going to pay this guy or girl like $150,000–$180,000 a year, is that you might not actually find anyone very good, just for the base salary. You have to figure out some way to incentivize them in some way, shape, or form. I think you could obviously do the whole standard stock options nature. For something like this, you’d probably have to give the person 10% or 15% of the company if they’re going to run it full time and you’re truly going to step back.
I think the very minimum for someone good would be that kind of equity option. Then the problem comes like, okay, what happens if this doesn’t work out, if this person is not very good at what they do? These are clawbacks, like how do you get them off the cap table if that doesn’t make sense.
Actually, one of the things to look at is how they do it with search funds. Do you know the structure that these guys use? Basically, a search fund is like, okay, if someone goes out, they look to acquire a business, they don’t have any money but they have some investors, and then they go out, they acquire the business, the investors bring in the money, and then the operator or whatever goes along. The way that that works is because obviously the operator who’s buying the business doesn’t have any capital most of the time. They can’t technically help buy the business.
The way that works usually is that there’s some sort of a preferred return to the investors, 4% 6%, 10%, whatever. Then after that, when the company sells or some sort of liquidity event, then there’s a profit split between the investors and the founder. The nice thing about that structure is basically what it says is, if you’re a terrible operator, you’re not able to grow the business, you don’t really get anything because you got a salary and that was it, but the investors get most of the return because of the preferred return hurdle.
If you’re amazing at it and you triple this business, then as the operator, you get rewarded quite handsomely because you get a good chunk of the profit at the end. That’s one way to do it. Honestly, it’s hard, particularly in this size, 1–1½ . It’s valuable enough, but is it really a big-enough opportunity for somebody? Someone who can come in and run a $1–$1½ million ARR business can also probably come in and run a $5–$10 million ARR business where the upside is much bigger. It’s a very tricky question.
Honestly, one of the things you should ask yourself if you want to step back is, why not just sell it? You could sell it and roll some equity. That means basically keeping a piece of the equity still, so you get some upside if things go well, but you get some chips off the table. I think it’s very hard, almost impossible to just base just on salary alone, find someone super competent to just take over the reins and run it because the incentives aren’t quite aligned there. I’m a great believer in incentives.
Rob: That’s how I think about it too, is incentives. I think that if someone’s going to run this business, I was thinking along the lines of, if it’s already growing at X dollars per month, then if someone does nothing that will continue—it’ll eventually plateau and go down—if someone doesn’t improve the business, it’ll keep doing that. That was going to be my mental baseline of looking back six months and saying, what’s been the average new MRR added each month? That’s the baseline.
If it does that, there’s no bonus for this person. I think they should still get equity in case of an exit, but there’s no annual or quarterly payout to them. Then I think they should get a salary and then some type of performance bonus based on how much they’re able to grow it.
Einar: I think one of the interesting things, I know that one of the people that do this actually from what I hear, they’re pretty secretive, is Constellation Software. This is a big firm out of Canada that buys a lot of businesses. They have operators in-house, they take it over. The way they do it is, I think, they do something like set very aggressive goals for growth or for top-line revenue. If you get to those top line revenues, you get a hefty chunk of that payout like, I think, 30%–40% of whatever comes in or something like that.
Rob: That makes sense. Then I think about what questions I would ask—back to your point—it’s going to be really hard to find someone to do this because the questions you want to ask are, have you done exactly this before? Almost, no one’s going to say yes because if they have, why are they working for you? It’s like an unusual size.
You’re going to have to have someone who is like, is it software that’s mostly built? Is it a SaaS that’s just one feature and you don’t need a bunch of product management, and it’s really just a growth exercise? Well, then you need to find someone who’s a good strategist and implementer there. Or does it need to be truly like a SaaS CEO? Again, I don’t know if this is a SaaS company. Yeah, so there’s a challenge there. When I heard it, I was like, I don’t know, man, take your millions off the table. I like the idea you had, though, that I wouldn’t have thought of, which is to keep a piece of it. You keep 10%–20% so that you could feasibly have some of the upside.
Awesome. Thanks for the question. Amar just asked it on Twitter, so it wasn’t like he sent it into the show. He did note at the end, he said he was asking for a friend, winky face, so I thought that was kind of fun.
Next question is from Luke Embrey. He’s the founder and CEO of bakup.io. He has a couple questions that I think I’ll just jump to his question about software demos. “What is the best way to give a demo for a SaaS product?” He gives two options, “Present a 10–15 minute PowerPoint, or go straight in with a shared screen demo of the actual product?” What do you think?
Einar: I have an opinion on what you shouldn’t be doing.
Rob: You shouldn’t be showing every feature?
Einar: Yeah. Don’t confuse a sales call or a sales demo with the training session. That’s my number one mistake I see people make. Deep in their software, they know all the stuff. They may have even done research on all the potential things that the buyer could possibly want to do with this based on their particular scenario and things, and that’s great. But if you spend half an hour, 45 minutes, an hour, just training on every possible thing the software could ever possibly do, a lot of the time, what you end up is just overwhelming the buyer who’s going to be like, you know what, I had pain that I thought this software might help me solve. Given how complicated this software is, I think this might be more painful, so maybe I don’t buy at all. That’s probably my main piece of advice there.
Rob: Yeah, and I’ve seen demos done both ways with presentations or with demos of the actual product. I think the way to make a demo, the actual product really well is it should obviously be populated with data, you should be touching on just a couple of pain points, and you should be listening more than you talk. You want to find out what the prospect’s goals are. Especially if you have a software that’s a lot of features, they may only want to use one quarter of it, and then you don’t really need to go through all of it.
You ask them, what’s your use case? What’s your job to be done? What do you need this software to do? Then answer that question throughout the demo and pause to let them ask questions. There’s some really good information on close.com’s blog. Steli Efti, he and his staff have written several ebooks on giving demos to do really well.
Also, frankly, youtube.com/microconf. We have a sales playlist. You can go through there and it is videos of talks, MicroConf talks from Steli and a few other folks who have talked about exactly this. These are literally world experts on this topic of how to do a demo.
Personally, I like to see software demoed because I’m a product person. If you show me PowerPoints, I have the thing of, well, if the product was good, you would probably show me the product, but everyone doesn’t feel that way. Everyone doesn’t feel that way. I don’t want to make my opinion the gold standard of it because I do know folks who run successful sales processes with PowerPoint demos.
All right, for our last question of the day, I actually went to Quora. We still have a couple of questions in the queue, but I don’t feel like we’re going to have a lot of back and forth on it, so I might do it solo at some time in the future. You know what’s super annoying to me, is that I typed in startups in Quora and the first 8 or 10 results are all about, how do I raise funding? What does an angel investor need to know in order to invest in me? Should I raise angel?
Why isn’t anyone talking about building businesses? This is my annoyance with the whole narrative. People want to build a slide deck instead of building a damn business. Seriously, this pisses me off. I invest in startups and this pisses me off.
Einar: And now is a good time to mention the TinySeed syndicate, Rob. New ways for bootstrap founders at a later stage to get funding.
Rob: There it is, tinyseed.com/syndicate if you want to know more. But also, tune into this podcast, and everything around MicroConf and all of our education about how to actually build a real business that sells real products to real customers for real money instead of sitting there flapping your gums all the time like these people do. It’s just like, go build a business, seriously.
Einar: I know for a fact like having a real business launch some things and then going out to raise money sometimes can be hard because then you have actual metrics to show and things.
Rob: That’s only in the Bay Area. That’s in Silicon Valley.
Einar: I think a lot of the time, people are better off just hiding their numbers or certainly don’t do projections. Like, here’s my thing about projections. I don’t know how we ended up in fundraising talk, but if you’re going to have to put a deck together and do fundraising, don’t put future pro forma financials, like future financial projections in there, because the only thing you’re going to do is disappoint your most optimistic investors.
Most people will think you’re full of […] and won’t hit it, and some people—a small number—will think you’re going to be much bigger than this and when you tell them the number, they’re just going to be disappointed on the downside.
Rob: Yeah, I still think outside the Bay Area like revenue. Is revenue traction? Especially in SaaS B2B. Here’s this question. It’s an interesting, philosophical one maybe, but what one or two things should every entrepreneur working on a B2B SaaS startup know? Maybe it’s three, maybe it’s four. Let’s not put a limit on it, but what are some fundamental things that you feel like startup founders should know and some folks who we talked to in MicroConf, TinySeed to this podcast know most of these things and other people I think don’t?
Einar: It depends. What kind of thing or how do you frame it? Like, should know. If I ask them about their business, there are certain things that I think they should know.
Rob: Right, their numbers. Know your numbers, like your MRR, your RFC.
Einar: Their number is the key. That’s what I care about. You should know your revenue churn, you should know your […] churn, you should know your ACV, you should know for different cohorts. You should know that my bigger customers churn at this rate, my smaller customers turn at that rate like that. That thing, I think you just should know that I’m not sure that’s what they meant.
Rob: No, that’s a great answer, though. I think another one for me is that thinking years, not months. Know that this can take a really long time because SaaS takes long. There’s a reason that TinySeed is a year long accelerator and no one else is. Every other accelerator I know of, there’s 90 days. We do that for a reason because SaaS is just this very long ramp in almost all cases, right?
Einar: That’s true. One of the flip sides of that, too, one of the things, I think, particularly B2B SaaS founders should know is that their businesses are sellable and valuable at an earlier stage than most other startups. I feel like sometimes I’m frustrated talking to ex-founders who have sold their business and I’m like, woah, you left 3X on the table by selling to somebody who did not take advantage of you exactly, but you didn’t fully understand the value of what you had. The fact is, you get a B2B SaaS business north of say, a million a year, it’s a super valuable asset that you shouldn’t just flip for seller discretionary earnings, multiples, or anything like that.
Rob: Yeah, that is an interesting point. I think another one is that for most SaaS companies, as you grow, if you’re growing really fast, then money will be a problem. It’s hard. I’ve been in that position where we’re growing fast and the growth didn’t backfill. We needed money, we either needed to raise money, or sell, or I needed to pull more money out of my personal growth cost money. But the second thing is that the other biggest problem for most companies—not all—is going to be finding good people and keeping them around.
I know that for developers, we don’t want to hear that because we want to build SaaS’s software. It should be automated, but building a team is crucial. Having some people you can rely on, even in the lifestyle. I often talk about this lifestyle SaaS or lifestyle startups, where truly, you’re just building an income stream and it’s a $10,000, $20,000, $30,000 a month, 90% net profit.
Then there’s the more ambitious, whatever you want to call it. It’s like the growth bootstrappers that I think about. Either of those paths, you still need a person or 10 to back you up so that you’re not constantly on support and you’re not bringing your laptop with you on vacation in case the servers go down, that you have somebody that can back you up.
Einar: I actually think this relates to what I was talking to before, in the sense that, I think sometimes the mindset needs to change a little bit once you get to a certain size. I think a lot of people think, the more I can do on the fewer people, the more valuable it is. I guess, technically speaking, it leaves you with a higher profit margin or wherever you are.
The fact of the matter is that your business isn’t more valuable if you’re doing the same level of revenue, but there’s just you and you do everything. Versus you have a team of two or three, or maybe four people in place. You’re just a lot more valuable business to most people than if you’re the key person who feels like you need to do everything and keep it on a super low budget, that sort of thing. That’s the flip side to the cash side.
Rob: Yeah, that’s a good point.
Einar: Yeah, like having a team, having someone other than just you or maybe just you and your co-founder isn’t a bad thing. It’s inevitable at a certain point. I do see some particularly bootstrap founders fall into the trap of waiting too long to start that process of trying to build out a team.
Rob: You bring up a really good point. I had this epiphany, not an epiphany. I knew it in the past, but it just hit me like, I should say this out loud at some point and it was exactly that. If you have a $2 million ARR SaaS company and it’s just you, I would pause it. It is actually harder to sell than if you had a team of 5 or 10, but made a lot less profit. Because it’s not sold on the profit, it’s that the team goes with it. That’s, I think, counterintuitive.
Einar: Yeah, and it’s a much more scalable business, some bigger business, more potential, not so dependent upon you and whatever’s in your head. It’s just an easier business to acquire. It’s an easier business to imagine how you’re going to scale further.
I actually don’t know where the cutoff is. But certainly, once you’re getting within striking distance of a million or maybe even at $500,000, I’d be like, okay, if it’s just you at that point, I’d be like, why, what’s wrong? What is wrong with your business or you? That means you can’t keep people around.
Rob: Yeah, I would be thinking about, at a minimum, hiring. The early hires are usually someone in support because just tier one support can grind a developer. Because usually, if it’s just you, then you’re the developer. So you have a backup, and can go on vacation, and they can whatever. They can do all the stuff so you’re not grinding it out.
Then of course, if you’re doing all the sales, it depends on the type of business. Some SaaS leads heavy sales and others don’t. Certainly, as a founder personally, I did some sales until the moment I could hire someone to do it because I didn’t like it. If that’s not your gifting or whatever, these are all things you could hire out.
Einar: You definitely should. By the time you go to a million, there are very few or few 2 million era businesses that sanely can be run by a single person.
Rob: I’m sure there’s one or two out there. I’m sure there’s a listener right now thinking, well, I’m doing that, but most companies are not. They can’t do that.
I think the last one that comes to mind—there’s a bunch obviously; we could throw out 10–100 different things—I feel like finding predictable repeatable growth channel requires a lot of effort, and it requires a lot more time than you probably think it will, and you’re going to be wrong a lot of the time, either with the approach itself that it’s not in alignment or that you’re not doing it right.
I think it’s harder than most people think because they see the case studies. You see a SaaS app launch, and then they do the case studies of the five things they did, and three of them caught on. It’s just not like that for most founders.
Even founders who are having success and are growing, they often (a) either don’t know what’s working, or (b) if they know what’s working, it can be a bunch of different things or it can be one. It’s often like, even when it’s working, I remember always thinking, how long is this going to work? It was fleeting to me.
I never felt like I was in the middle of a growth thing and I’m like, this is going to take us to $5 or $10 million, and I’m super confident in that, and it’s going to work the whole time. The whole time, you’re still looking for the next thing to get you to that next level.
Einar: I think it’s true. That is something that I talked to TinySeed portfolio company founders about reasonably often. It’s a mistake a lot of people make, because in some cases, they have sort of half understand where business is coming from, kind of, maybe. Or they have like one channel that works, and then they’re like, yeah, I’m probably going to put $500 on Google ads next month, and then I might go to a conference next year. I’m like, no, you’re not moving anywhere near fast enough to do this.
You should have a very strong preference for action when it comes to just iterating through these growth channels because most of the time, you won’t have a clue about what works, and you’re just going to have to do it, and you’re going to have to spend enough time and money to really explore each one. Then if it doesn’t work, move on.
I see people sticking to their hobby horses. This is obviously true for features and things, too, where founders are like, well, this is what I want to build, and their market is telling them, that’s not what I want, I want this other thing, and you just refuse to build it. It’s like, all right, well, then you’ve left money on the table for sure.
The same thing is also true for channels. People are like, I want it to be self-serve. I want it to be content market–driven. I don’t want it to be cold email, or impressive events, or sponsorships, or Google ads, or integration marketing, whatever it is. It’s hard to know, but once you do find it, it tends to be disproportionate.
It’s not like, oh, one thing is 50% better, 30% better. It’s like, one channel is holy crap, this is 20 times better than anything else. If you don’t move fast enough, you’ll probably die before you figure out which one isn’t so good.
Rob: Very good, sir. If folks want to keep up with you on Twitter, you are @einarvollset. Awesome. Thanks again, sir.
Einar: Thank you.
Rob: Thanks for joining me again today. That was actually a fun and unexpected rant that I had. I was so angry at Quora. I’m just angry at the tech press in the narrative around just funding, funding, funding. It’s like, no, we can actually spend time investing and growing our businesses and not just concentrating on this lottery ticket mentality. With all that said, I enjoyed the episode. I hope you did as well. I will be back in your ears again next Tuesday morning.

Welcome back to Startups For the Rest of Us. I’m Rob Walling. This is a show where we talk about building ambitious startups without sacrificing our freedom, our purpose, or our relationships, and where we realize that being a founder is about making hard decisions with incomplete information. Thanks so much for coming back and joining me again this week.

In just a few hours after this episode goes live, MicroConf Remote 3.0 is starting where we do a focus on No Code for SaaS founders. Whether it’s using no code with marketing, sales, or any other application that a SaaS founder might think of. If you don’t yet have your ticket, you can still register, and anything that you’ve missed we are recording. You can obviously watch those videos. If you’re like me, you’ll watch them back at 1.5 or 2x speed, and then you can catch the live stuff and all the interactions.

We have an amazing hallway track. As always, we have figured out through the magic of producer Xander and tech that became popular during COVID, a way to kind of replicate the hallway track of a real MicroConf. Check it out, microconfremote.com if you haven’t already.

Today, I’m going to be talking about a prescient topic given that the state of the economy and the state of I guess how monetary policy is impacting things, but today is about inflation for founders. I like to kick all of these off by saying, look, this is not personal finance or investment advice. I often share what I am doing and how I’m thinking about it, but no one really knows where things are going.

I believe that inflation is here. It appears that the numbers are showing we have higher inflation than we’ve had in 40 years is the headline. I think that’s a bit dramatic. I do think that inflation is unnaturally high because of all the backups at the ports and a bunch of other factors that are in play.

One of the hard parts about inflation is that the more people think there will be inflation, the more likely it is to happen because then people essentially go out and spend money instead of keeping it because they think it will be worth less in the coming weeks or months. The more people spend, the higher prices go up, the more demand there is for things.

If you can’t get a specific good, for example, I went to order an iPad Mini for one of my kids, and the delay on the Apple site to get an iPad—this was for Christmas—is over a month. It’s almost six, seven weeks, which is highly unusual. I’m ordering a very standard color and a standard storage amount. I wound up getting it on Amazon and the wait is still, I believe, three weeks for that which is again, unusual. I’m just one signal of the supply chain.

I was actually at a TinySeed retreat last week in Arizona and I went to order a medium cup of tea basically, and she said I’m going to have to give you a large because we can’t get medium cups here or straws due to supply chain stuff. It’s kind of crazy. We’ll survive, things will be okay, but we do have to realize that this is having an impact, and it may continue to have an impact moving forward.

This has been building for a little while in terms of inflation creeping up from two to three to four to six. Obviously, inflation can come from a lot of things, monetary policy, but also money creation if the government just prints a lot of money. We’ve seen countries without a strong central bank, print themselves into hyperinflation where they just devalue the currency to the point where it’s not worth anything.

Luckily, the US has never gone down that road, but obviously, there’s been a lot of printing of money during COVID to stimulate the economy. I’m not going to get into the debate of whether it’s right or wrong, or whether who’s making a good choice and who isn’t in terms of our government because this is not about politics. It’s about the realities of if inflation continues at 4% to 6% clip, how should we be thinking about both our personal finances and also a little bit about the business.

We’re in a really unique position with SaaS and our gross margins are so high—85%, 95%. That puts us in a great position to where we’re not squeezed for, let’s say, a 10% margin. I have relatives who work in the construction industry and you go and you bid on this $10 million project to do all the electrical work or all the HVAC work. You might have $1–$1.5 million in essentially net profit built into that job, which sounds like a lot except for a $10 million construction project is really big.

It’s really hard to manage. It requires a lot of office staff, it requires a lot of electricians or HVAC workers, and there’s a huge amount of risk. For that razor-thin margin, there’s a tremendous amount of risk that you’re putting on the table.

Similar if you run a grocery store. A friend of mine’s parents run a grocery store and the margins are paper-thin. In that kind of business, as inflation happens and the cost of your goods goes up, you need to raise prices because, with a 5% or 10% margin, you don’t have room to just absorb that.

In SaaS, we tend to have room to absorb that. If AWS has to raise costs because servers get a little more expensive or power gets a little more expensive and they raise prices on you, the odds of that having a huge impact on your business are pretty small because of this tremendous margin.

The businesses that do well in inflationary times, and I’m not talking about public stock valuations, but just private businesses with a profit and loss statement. The ones that survive and do well are the ones that do have the flexibility to raise prices if needed, or they have massive margins like SaaS to where they can just absorb a 5%, 10% increase.

Imagine, let’s say inflation is 6%, and if you’re a SaaS founder, can you absorb a 6% increase in your costs and still make a complete boatload of money? You can because your net margins, your gross margins, or whatever are 90% and your net margins are 50% to 70%, depending on your scale and all that. The 6% hit just doesn’t make that much of a difference. Again, back to the example of a grocery store, if you had a 5% net margin or a 7% net margin and costs are going up by 6%, that’s a real hit for you.

In terms of being a founder, there are worse things to be running than SaaS companies, but I’d also say that if for some reason you do find that your costs are going up tremendously. Most SaaS audiences, at least the B2B SaaS that we talked about on this show, have some pricing flexibility even if you have other competitors in the space.

Some spaces like you start an email service provider and there are 300, 400, 500 competitors, you have less pricing flexibility. Although, of course, if you niche down, you can get that premium to be able to charge more. In most spaces, you need to raise your rates by 5%, 10% over the course of the next year, it’s probably going to have almost zero impact.

In fact, most of you probably should be. If you’re listening to this podcast, you probably haven’t raised your prices frequently enough or raised them as high as they should be. Isn’t that the Startups for the Rest of Us and the MicroConf mantra. At almost every MicroConf someone says, raise your prices.

I don’t feel, for the most part, SaaS is going to be hugely impacted. The other thing is this inflation is also potentially caused by lack of goods, so demand is outstripping supply because of all the boats that are backed up at these ports.

My wife went to Los Angeles a couple of weeks ago and she said the stream of boats that we were outside the ports was just incredible. You can see him lined up along the coast. We have the luxury of not being tied to the supply chain, usually. If your software, you’re reliant on maybe Amazon, SendGrid, Twilio. There are definitely companies we rely on, but we usually aren’t relying on physical goods being delivered somewhere in order for us to have a business.

Unlike our friends in ecommerce, our friends in manufacturing, it would be a nightmare. I have a friend who runs a great business manufacturing games and he said that the cost of a shipping container from China to the US went from X amount to 10x. It literally 10x’d over the course of a month or two while they were doing a Kickstarter and that’s obviously a real problem. It’s a real headache. All that to say, with SaaS, we do have the luxury of being able to roll with this and watch how things unfold.

Now on the personal side, which of course is something I’m interested in. I think if you’ve listened to this podcast for long enough, you know I’m a personal finance and investing nerd. I’ve just always been into it. I think I bought my first stock when I was 14 on my dad’s account. It’s just fascinating to me the way that companies work, the economy, and owning stocks, real estate, bonds, and all that has always kind of made my mind bend. There are some high-level rules of this kind of usuals. What are the usual things, the usual moves that you make as inflation increases?

These are some things that I’ve been thinking about over the past couple of months about making some changes to our portfolio—mine and my wife’s portfolio. As inflation goes up, usually commodities are going to also go up in price because those are part of the inflation index. I guess I should stop here and say, obviously, I’m talking about the US because it’s what I’m familiar with.

I think we realized in 2008, 2009 that our economies are so tied together that when one collapses or when one has inflation, it’s going to ripple throughout. The demand will spread. That’s the effects of globalization, for better or for worse. Even if you’re not in the US, my guess is if we have inflation, you’re going to start to see that trickle out.

Anyway, I was talking about commodities and commodities increasing in price because they’re part of the Consumer Price Index. I don’t own commodities, except for metals, the precious metals—gold, silver, platinum. I’ve never been a big gold bug, they call them, someone who’s really into metals, but I have had a very small single-digit percentage of our net worth in metals because it is a good portfolio diversifier. When there’s inflation, it goes up.

There are ways you can physically own gold. You can buy it from websites and have it shipped to you. You can buy it and have it stored somewhere, or you can buy paper gold. There are ETFs that essentially will track gold, platinum, and other metals and such. That is the only one that I personally own. I’m not really into commodities.

Commodities have these really long bear and bull market cycles where you can go 20 years in a commodity bear market and it’s just awful. It’s not something that I’ve experimented with. There are commodity index funds you can buy, but they use futures. They don’t actually own the commodities, and so there’s this drag on their earnings that makes them not something that I’ve invested in. Again, not financial advice to not do it. Obviously, you can look into it, but personally, we own some precious metals, mostly paper precious metals, and have not gotten into commodities.

A big thing during inflation is to own real property and have less cash. That’s kind of the idea that your cash is being devalued and real property like real estate, whether it’s a home or whether it is commercial real estate, even owning REITs, which are Real Estate Investment Trusts. They’re like index funds in real estate. Art, collectibles, stamps, wine, I know some people who do that, or owning bare land. These are real properties and they tend to go up with inflation.

Now I did hear a podcast. I really liked the podcast Money for the Rest of Us and coincidentally named. It came after Startups for the Rest of Us, but I’ve actually talked to the host of that and he’s a really good dude.

He was saying that he looked back over those several inflationary times and that real estate actually lost value in inflationary times, which was counterintuitive to what I have understood and what I have been told. I’m not sure, to be honest, what to do with that. I think the fact that we own our home, and we own a chunk of REITs in our portfolio.

I’m certainly not going to be pulling back on those, but I’m not going to be also leaning in and increasing exposure to those at this time. My gut says that I think REITs are probably going to do okay, but it’s just it’s hard to know. We have been increasing our exposure to things like physical goods like collectibles.

The other one, which is a new one and 10 years ago wouldn’t even have been a thought, is crypto. There’s no historical data on what crypto is going to do during inflationary times, but I have been a fan for years of having a small single-digit percentage of our portfolio in all these assets so that we don’t have it all based on stocks and bonds. Having these small pockets of independence is, as David Stein from Money For the Rest of Us says, I want these pockets of independence that don’t just rely on public markets.

My gut is that crypto, if inflation happens, people are going to be putting money into that. I think we’re already seeing that. There’s been quite a boom recently in crypto. I can imagine if you’re listening to this in six months, it’ll be busting again, but that’s another place that I think is feasibly a decent hedge against inflation.

Here’s another interesting thing to think about. When we bought this home. We didn’t have jobs. It was after I left Drip and we couldn’t get a home loan, so we paid cash for the house and we didn’t have a mortgage. Rates got super, super low to the point where I don’t like having cash tied up in real estate, and I never really wanted to own real estate again, but there was a whole conversation Matt Wensing and I had on Twitter Spaces the other day about owning versus renting and how I actually believe that renting is a better thing for entrepreneurs.

I think that we don’t factor in the costs of owning a home and all of the extraneous stuff. In fact, I think we’d be better off keeping that money liquid investing in ourselves, our businesses, and other things than owning a home. Yet two years after selling our home in Fresno, we bought a home in Minneapolis. Why did we do that? Well, I don’t believe it’s the best financial decision, but we were having trouble finding really nice homes to rent. We’re having trouble finding homes that fit our family, then we could remodel or we could work on, and make our own, and that was the trade-off for us.

While I am not a gung ho proponent of owning homes from a pure financial position, I definitely have seen firsthand that it can be hard to meet your own personal life goals if you don’t own your home. If you want that feeling of not being able to be kicked out with 30 days notice, being able to paint, remodel, own it, and being able to pick whatever house you want, in essence, that you can afford rather than having to stick to certain areas, certain neighborhoods, or even just certain homes that happen to be for rent at that time.

For me, it’s kind of the personal side, personal desires, and happiness to the family versus purely a financial decision. All that said, we didn’t have a mortgage on the house and we took one out. We borrowed money against a home that we owned fully. One, to get liquidity because I hated having that money tied up that I could be investing in anything else. All the stuff I have going on and I have it sitting in residential real estate is not exciting to me.

The other reason is because during inflationary times, if you take out a loan that you’re going to pay back over 20, 30 years, you’re paying that back in the future with inflated currency. If your money’s worth X% less each year and your house payment stay the same, you’re actually paying less and less and less over time for that.

It’s kind of an interesting hack that if you haven’t thought about, it is really a benefit, I’ll say of inflation. There are a lot of drawbacks to inflation, but one of the benefits is if you take out a loan and the loan payment is fixed that you’re actually taking advantage of the other side of it.

A couple of final things, obviously, I believe in having an emergency fund of cash that you can access quickly. In inflationary times, it’s not ideal to have a big bucket of cash sitting around because that’s going deflate, but I keep it within reason. It’s not like I’m going to go down to zero cash or something like that because that’s just not a prudent financial decision.

Certainly, we’ve decided to have less cash sitting around than maybe would have six months or a year ago. I’ve often believed in having dry powder, having cash in an account to take advantage of opportunities that come along, whether it’s oh, this business is for sale, this amazing piece of art, or this silver age, golden age comic book has come up. It only comes up once every few years. It’s expensive and cash is king and queen, basically.

Cash allows people to move quickly and get things done. We tend to keep more cash than I think just an emergency fund would dictate so that we can take advantage of financial opportunities that come along. There’s a big dip in crypto, there’s a big dip in something else and we can kind of swoop in and buy the dip, so to speak. If you don’t have any cash, you can’t do that, but in these times, we definitely are keeping it a little less.

Then there are bonds. There are bonds and stocks, which I think I’m going to round us out with. Bonds are tough because bonds don’t do well and inflationary times. We do own some bonds, I have a lot less bonds than I think some advisors would have you do an 80–20 split. For me, given us as young as we are in our investment timeline is so far out, I cannot imagine having 20% of our net worth tied up in bonds. All that said, I am nearing the trigger to basically sell most of our bonds. I haven’t made up my mind on it yet and I do need to look at it.

It’s December right now and I need to look at if we sell, do we have capital gains? Can we offset it with other losses, or should we just wait another basically three weeks to get us to January one meaning that we won’t have that gain until the following April? It buys us 16 months before we have to pay any tax on that. I’m noodling on it.

I know there are some folks who I’ve talked to and I’ve written in saying absolutely basically liquidating all my bonds because I believe inflation is going to do this and get worse. I’ve honestly talked to a few friends who I think are pretty smart, who have said no, I’m not selling my bonds, and here’s why. I’m on the fence on it still, but definitely thinking about it. That’s something that you may want to research yourself.

Lastly, on the stock front, certainly, dividend stocks and stocks that can raise prices that do have pricing power, those companies tend to do well during inflationary times. What’s a trip is that growth stocks do not. Growth stocks are tech stocks where they’re probably not generating as much cash or net profit today as they are betting on. They’re priced for future earnings. They’re priced at 50x or 100x earnings when realistically, maybe the stock market is priced on average at what 5, 10 times earnings and it depends on the type of stock and all that.

If something is priced at 50x or 100x earnings, people are saying, oh, in the future, this company is going to get really big. When Facebook first went public, its valuation was astronomical and people were betting that Facebook would grow into that valuation. Well, that’s not great when inflation is happening because those companies are betting on future profits, future revenue, future profits, and so growth stocks tend to get hit because of the sell-off as people move to stocks that are paying dividends or stocks that have large profit pools today because today’s money is worth more than tomorrow’s or next year’s money.

For me, our portfolio is not the majority in public stocks, and we don’t own individual stocks. We own a lot of index funds and we are balanced pretty far across all the metrics that you could imagine in terms of the US markets and non-US markets, emerging markets, and established ones.

There’s growth and there’s value, and we have a slight bent towards value. Realistically, I am not personally going to be messing with our stock allocations because we don’t have a bunch of fiddly bits in our stock portfolio. If you do and you have growth stocks individually, you have some dividend, and just revenue-generating stocks, it’s probably time to at least think about maybe making an adjustment.

Now here’s the thing, this is not timing the market, and I don’t believe that we can time the market. I don’t believe I’m smart enough to time the market because you have to be right twice. You have to be right when you sell and you have to be right when you buy, otherwise, you miss it. Often the market is so unpredictable that trying to time it, to me, is a fool’s errand and I wouldn’t do it.

I’m talking about any of these changes that we are making in our portfolios, I’m doing them very gently. It’s moving assets from here to there. Maybe it’s moving a chunk of them, maybe if I want to move 10% from one thing to the other, I do it 2% at a time over a few weeks. It’s like dollar-cost averaging across. Sometimes I do rip the band-aid off, I’m going to be honest, but I like to kind of lean into it, get a feel for it, and not make quick decisions that feel like I’m trying to time some big thing. Stocks are overvalued, I’m going to sell all my stocks. I’ve never done that and I don’t think we ever will.

Even in 2008, 2009, we sold some because it got a little scary, which was a mistake because we should have rode it down and rode it back up, but I think a lot of people did the same thing. I don’t believe in market timing, and I don’t believe in selling all your stocks and buying all commodities, gold, real estate, and crypto. That to me is you’ve under diversified yourself for the case where the stock market, especially in the US, but everywhere has just continued to increase in value for years and years and years.

I know a person who said the market’s way overvalued—this is like five years ago—sold all their stock and were waiting for the downturn. Well, they’ve missed out on tremendous amounts of money, tremendous amounts of portfolio growth. Anyway, that’s my take on it. I believe that, as James Altucher says, there are three skills in terms of money. There’s making money, keeping money, and growing money.

Making money is you’re working your salary job or you have companies/businesses that are generating money or you sell them and you make big buckets of money. Keeping money is then not pissing that money away, not making stupid decisions, buying penny stocks, betting it all on something that goes to zero, or just wasting it on Lamborghinis and expensive bottles of champagne.

Then growing money is how to guard that asset that you’ve created. You sell your company for millions of dollars, you don’t put it in cash, you don’t put it under a mattress because inflation will kill that fortune that you’ve created. How do you grow money sensibly while protecting the principal? That’s really what I’m talking about here is not making these big bets. I’m talking about inflation for founders and obviously a little bit of personal finance and investing stuff.

What I’m not talking about is speculation. I can talk about speculation all day. If you want to talk to me about betting on crypto, betting on collectibles, and betting on high risk things, I’m into that and I actually really enjoy it, but that’s not what I’m talking about here today.

I’m talking about being sensible and making sensible adjustments as inflation and other economic changes occur. I hope my discussion of it today maybe have given you some thoughts or ideas, whether you want to stay the course or whether you want to make some small adjustments as things move forward.

I got good feedback on the investing for founders episode I did a couple of months ago, and given the fact that I just got back from a TinySeed retreat and it’s basically three days before the episode goes live. I knew I was doing a solo episode because I couldn’t get someone to record with me over a weekend. This idea of inflation and just given how much I’m hearing about it, both in the news and in the podcast I listened to, I felt like I wanted to lay down some thoughts.

Thank you so much again for joining me this week. I really appreciate you coming back every week. If you’re not subscribed, obviously, hit that subscribe button. As a reminder, MicroConf Remote 3.0 started this morning, but if you head to microconfremote.com, you can still get tickets and we’ll have the videos recorded that you can listen to and then you can do the live attendance and be part of the hallway track.

Thanks again for joining me this week and I’ll be back in your ears again next Tuesday morning.

Rob: It’s Startups For the Rest of Us. I’m Rob Walling. So good to have you back. This week, we do almost a throwback education episode where I have Ross Hudgens, who’s an SEO expert and been doing it for a very long time, and runs an SEO and content agency with 110 employees.

He comes on and we talk through, essentially, seven of the most common do’s and don’ts, common mistakes, common things you should be doing as a SaaS founder. It’s not a 101 look at setting your H1, then build links, and blah blah blah. But it’s things that he sees people messing up or doing really well with, and we run through him.

Before we dive into that, I want to remind you that if you haven’t subscribed to receive the two exclusive hidden episodes, you should head to startupsfortherestofus.com. I have two never publicly released podcast episodes and accompanying PDF guides. First one is called 8 Things You Must Know When Launching Your SaaS. It’s pretty prescriptive.

The second one is 10 Things You Should Know As You Scale Your SaaS. Less prescriptive, of course, because as you get further in, maybe there are different paths. So enter your name and email, and you’ll get both those delivered to your inbox. We don’t send a ton of email to the Startups For the Rest of Us list, but we actually do send a really good email that our assistant producer Aaron puts together, which is show notes. It’s some additional information about each episode every week, and just a deeper dive into these episodes.

If you haven’t checked that out, if you’re not on the mailing list—honestly, there’s some mailing list you sign up to and you’re like, I need to get off this thing. Of course, if you decide that that’s us, it’s an easy one-click unsubscribe. But what I find is that our retention rate is very high once people do start getting the emails. I get them myself, I look through them, and I enjoy the walk-through of these episodes. With that, let’s dig into seven SEO tips every SaaS can use with Ross Hudgens.

Ross Hudgens, thanks so much for joining me on the show.

Ross: Thanks for having me, Rob. Glad to be here.

Rob: For folks who don’t know you, you’re the founder and CEO of Siege Media, a 110-person SEO-focused content marketing agency. You have clients like Asana, QuickBooks, and Norton. I chuckled when I said 110 people because that’s a big ass agency, man. Congratulations.

Ross: Yeah, thanks. Thankfully, we’ve done it slowly over nine years so you don’t feel the anxiety, but randomly, I’m on a walk and I’m like, wow, there’s 110 people in this company. It gives you a little nervous breakdown on occasion.

Rob: Yeah, because I know a bunch of agency owners wherever because of MicroConf, the podcasts, or whatever. I feel like a lot of agencies are in that 10- to 25-person range, but it’s pretty rare I meet someone in triple-digit employees. I will say, in my experience, there are a lot more SaaS companies that make it there sometimes just because they’re funded and they hire like crazy, but also because the recurring revenue allows them to last that long. Whereas agencies can be more spiky, right?

Ross: Yeah, we’re lucky. We’re in a space where our space makes sense for predictability like reoccurring content marketing, search, this is something you don’t really stop. I think that has helped with retention and predictability. We have one service line, effectively. That helps scalability a little bit better.

Rob: I also imagine results have something to do with it. You don’t make 110-person by delivering a crappy quality.

Ross: You’d be surprised, but most of the time, yeah.

Rob: Fair enough. Awesome, man. Thanks for coming on the show. You and I have known each other for a couple of years now, I believe, since TinySeed kicked off. You’ve been one of the most helpful mentors in terms of just practical, tactical tips and advice directly to founders.

There’s a handful of mentors who just provide an outsized amount of give back or value, I would say. You and I started talking about you coming to the show and what to cover. Do we cover your startup story? There are all these different options we could do. But really, seven SEO tips for every SaaS company, I think, is a pretty cool way to kick it off.

This goes back to more of the old-school Startups For the Rest of Us. We used to do more tactical teaching stuff, we haven’t in a long time. Whether you’re thinking about SEO or not, most of your tips are not very time-consuming. I get the feeling that you pulled some of these from—it could almost be renamed like seven SEO Mistakes most SaaS companies make if they don’t know what they’re doing.

Ross: That’s a good point.

Rob: That’s how I think about it. It’s almost like, if you’re going to go on a big SEO campaign, these are absolutely critical. If you’re not, these are still good things to look at and be like, oh, if I move that from a subdomain to a subfolder, I can get a bunch of benefits. Let’s dive in. That actually kicks us off. The first SEO tip you have is to put your blog in a subfolder, not a subdomain.

Ross: Yeah. That’s one of the ones, to your point, I see most commonly as a mistake. People will put their site or blog on a subdomain, most often for security issues or maybe just convenience. You’re more technical than I am. You probably know that answer better than I do, but you see that a lot.

Unfortunately, Google is not so great at breaking out that that’s the same website. The mistake is that they differentiate it. So you have all these links and authority that go to your main site, and all the content that’s hosted on those subdomains effectively doesn’t get valued the same.

In our results and what we’ve seen, you can see up to 20–30% lift simply by moving a subdomain to a subfolder. Ideally, it would be website.com/blog/learn, as compared to blog.website.com. That’s mainly so Google can see that these are the same thing very clearly. Because it goes back to the days of Blogspot and things like that where you would have your own subdomain. I think that’s one reason Google did it that way.

We’ve seen that. I would also suggest looking on Twitter. Ran has a great thread, which maybe we can put in the show notes, of just tons of different case studies. If you search subfolder versus subdomain, all the math is just very clearly subfolder.

Rob: This one was surprising to me because I know that this used to be the case. If I went back 10 years, 2011, I knew for sure that subdomain was not good. I thought that around five or six-ish years ago, people were saying that Google was smarter than that now and that they could figure it out. It sounds like Google’s not quite as smart as we thought they were.

Ross: Yeah, effectively. It’s been as recent as a year or two. Consistently, I have never really seen anything saying the opposite. I think you can be okay on a subdomain. It’s not a critical error, but if it’s somehow feasible for you and it’s not a major, major headache, it’s worth doing.

HubSpot is the cautionary tale where you look at their site and they’re so prominent. They’re on blog.hubspot.com. They do quite fine, but that might be the exception rather than the rule. You can still be successful, but everything we see seems to point to subfolders doing better.

Rob: Got it, and that is the reverse proxy maneuver we used to do because certainly, a lot of blogs are going to be on WordPress, not all. But if you put it on WordPress, you don’t want to go on your production rails server or whatever. So you have to then do a reverse proxy and loop it through. Google that, folks, if you haven’t seen it.

Second SEO tip is when creating keyword-focused content, make the URL exactly the main keyword. You want to talk us through that?

Ross: Yeah. Just to give Google confidence that the article is about something, the more you focus on that thing in the URL structure, the more optimized and clear it’ll be to Google. An example of how someone could go a different direction is, say, you’re trying to rank for podcasting tips. You would want to make that exactly the URL with a hyphen in between those two words.

What people commonly would do is say, podcasting-tips-for-SaaS-companies or something like that. Every single thing you add after the keyword could potentially dilute the meaning to Google. It focuses on the topic. So by really making exactly that main keyword, you uber focus it. From our experience, I’ve just seen better results doing that on a consistent basis.

Rob: Got it. If I was trying to rank for podcasting tips but my article title was a lot longer than that, you’re saying make the slug, that’s a URL slug, make that the keyword.

Ross: Exactly. The title itself can be a little more fluffy, definitely add, click-through rate elements and brand voice. You can even put something in front of the keyword. I generally would suggest putting the keyword as close to the front as possible, which is a more obvious tip. The URL just doesn’t need that in the same way. So that’s a place where you can just get exact, and then do the brand voice and click-through rate type stuff in the title itself.

Rob: It’s funny you say putting it towards the front of the title. A little-known fact. You may have heard this on this podcast or may not have, but when Mike and I originally started this podcast, we were wondering, what do we name this thing? Because we’re not going to talk about venture capital.

SaaS wasn’t as prominent as it was today. It really wasn’t a big thing, and so we weren’t going to call it the SaaS podcast or anything. What we’re saying is we want people to find it in search, in iTunes search, what’s now Apple Podcasts. The search algorithm is not very sophisticated. It wasn’t sophisticated then and it’s probably not much more today.

So we wanted startups in the title and we realized, I think we want startups right at the start. We were racking our brains for what do we call it. Startups what? Startups today? Startups this week? Normally, if you have startups, a lot of the startup podcasts have startup later in the title, but we wanted it earlier on.

It turns out, Mike owned this domain already. It was in his GoDaddy account, Startups For the Rest of Us. He registered it. It just stumbled in. I don’t know. I don’t have much evidence on whether that helped us in search or not because there’s no analytics. But I do know if you type in startups, we used to rank at the top three for years in iTunes. I don’t know if that was from reviews or from the title.

Ross: Probably a combination.

Rob: A little of both? It always is, the on-page and the off-page. Tip number three is that almost every feature page that you have on your SaaS marketing site should aim to target keyword software, even if it has certainly low search volume. Talk us through this and maybe give some examples so people will understand what you’re saying.

Ross: Something I’ve seen in some SaaS companies, especially just starting out, is a common architecture. You have your homepage as the generalized view of what your software does, and then you have the sub-feature pages. I don’t always see the sub-feature pages targeting keywords, but there’s an opportunity there even if the search volume is relatively low to do that. Also, it speaks to should that even be a feature page because someone has enough want to demand for this that they’ve done a search for it.

An example of that might be podcasting software. It might be the homepage, and then you’d have a sub-feature page on podcast analytics. That could hypothetically be podcast analytics software. Some mistakes I see is someone might just say, podcast analytics when a lot of time, people do add software as a refining term.

So by having that maybe in your main H1 and also your title tag closer to the front, as we talked about, and always searching that for each feature page, you should be able to at least optimize for potentially some long-tail search volume. If you’re going upmarket and enterprise, that could be a very valuable longtail search that gets you a qualified audience.

Rob: I’m going to be honest, this might be my favorite tip of the seven. That if I were a SaaS founder today and didn’t have this, this would add a minimum go on my to-research and think about more to figure out what level of effort this would require to do. Because I am super intrigued by this idea of just having a few more elements of content. What you’re saying is even if the keyword volume is crazy low, you just have this really high likelihood of ranking very high for them, is that right?

Ross: Correct. There’s product research in there too. If you’re doing long tail on podcast analytics, they might add refining terms that should give you some hints about maybe what your product should have or hypothetically, at least they want, that could be elements you include on the landing page that drive conversion, all good things that can help you rank. The lower competition they are, often, the easier you’ll rank for it.

Rob: Yeah, and I’ve seen some sites do this. I believe veed.io. One of the co-founders spoke at MicroConf Europe a few weeks ago. I had gone to their site just to check it out as I do because I wasn’t familiar with the tool. They have a bunch in their top nav. They have basically what you’re saying, or at least similar. They have a lot of actions like add image to video, add music to video.

I guess they don’t have the software element of it, but, yeah—screen recorder, software, webcam recorder, right.  Okay. They have it in there pretty well. Do you think veed.io is doing what you’re saying? I suppose it is a question for you.

Ross: Yes. That’s a good refinement, probably a qualifier. Maybe the better way to phrase it is that everything should have some search volume thoughtfulness to it. Not everything might actually make sense to include software, but everything should have some kind of significance.

They have transcription services. That might not make sense like convert audio to text just because of what they do. Probably it doesn’t make sense to add software at the end, but a lot of their pages do, to your point. Maybe that’s the clarity on it. Just look up what makes sense for each of those.

Rob: Your fourth tip is it’s really hard to rank for “best X software”. Try to do that indirectly instead of ranking directly. What do you mean by ranking? Let’s say I’m a podcasting software like best podcasting software. If I try to rank number one for that, very difficult. So how do I rank indirectly for that?

Ross: Yeah, the indirect fashion is thinking, not that I’m trying to get my own website to show up for that, but rather, how do I get on all the sites already showing up for that? So open up that query, look at all the sites that are ranking, and reach out to each of them, set up a profile, and then go and get reviews on those sites.

How those best queries operate is users most often want an unbiased third-party to tell them what the best software is. That’s where being a first party actual provider of the software technically invalidates what people are trying to find with that search. It still happens. The very authoritative sites occasionally pull it off where they rank for that.

My general suggestion would be to try to rank for, say, podcasting software without best. They’re not necessarily looking for that third-party validation always with that search. Then, on the best terms, get that review site listing and try to build on the ones that you think will be there for the long-term. Very often, Capterra, Software Advice, those sites stood the test of time and probably are showing up on your results as well.

Rob: Which is interesting. You say they stood the test of time. It’s interesting because usually, I’ve seen Google in its vast knowledge and constant evolution. Every two or three years, it decides to de-emphasize something and re-emphasize something else, and an entire site like Capterra just gets wiped out. I think of Mahalo with Jason Calacanis. What was that one, it was the do it?

Ross: EHow?

Rob: EHow, eHow was one, wikiHow, there were a bunch that used to rank all and they’re just gone from the SERPs. I have to imagine, they lost 80%, 90% of their traffic, but that has not happened to Capterra. Do you know why that is?

Ross: That’s a good point. You made me google this to reconfirm that. I actually think they have lost a decent amount of headway, not a huge amount, but they’re not ranking as dominantly as they had before. To your point, I think it’s all about what value you’re bringing. Like eHow, they’re not truly a credible source for a lot of things like how to plan a wedding. You’d rather go to The Knot, brides.com, or something compared to eHow.

Software Advice was good, but I think there’s also, for sure, it was pay to play there. It still is, I think, on both of those, so that’s probably something Google does not like. That’s effectively an arbitrage sale and maybe trying to find a solve for that.

Rob: Tip number five is use on-page content marketing best practices and you link out to a blog post. You want to talk us through a couple of those? We’ll obviously link this blog post up in the show notes. Let me know what are the four or five sub-points there.

Ross: These are definitely good to visualize, but at a high level, have large fonts. So 16 pixels plus is ideal. I generally recommend 18 pixels plus. That just makes it very readable and easy to track to each line. I see gray on white fonts a lot. You want black on white, most often. It should be easy, again, to read. It shouldn’t be difficult to do that.

Rob: Why does Google care? Why would Google care if it’s gray?

Ross: Because they care what users think. That’s user. This is more user experience that backs into rankings kind of thing. So we’re trying to build pleasurable experiences, and these are just the surface level characteristics of that.

Rob: Got it. Cool. So that was the second one, black on white, not gray and white.

Ross: Or otherwise stated, very easy to read text. Sometimes designers will do gray on white because it maybe looks okay, but then you can’t actually functionally read that very well. Another example is some people will have very wide column widths. So it’s hard to track as a reader to the next line consistently if it’s a wide column width.

If you’re around 50–60 characters per line, if your font size is larger, it makes it easier to do that tracking, maybe even thinking about that with your own column width. But this sometimes happens on feature pages. I’ll see, on these pages, people will put the text completely full width and it’s just not a great reading experience. But even on blogs, it’s hard to do that tracking. It causes people to bounce, lower engagement signals, which costs you rankings.

Other things are just generally low file size on images. Increasingly, Google is getting smarter and trying to surface sites with really fast site speed. So getting all images under 200 kilobytes, I think, makes sense. You can get even lower than that. Whatever the lowest file size is that still retains the image quality, would be a suggestion for your site, and then just make it scannable. So you should have line breaks, don’t have huge paragraphs, make it easy to read, bullet points, call out sections, blockquotes that look nice. All those things should connect to a nice-to-read experience.

Rob: I like what you’re saying about the images being under 200 KB. It reminds me of our site that we host on Squarespace where the page speed is like 18% or 10%. When I go and I look at all the Squarespace sites that we know of, their loading speed is garbage.

I was asking on Twitter, is this a Squarespace thing or is this fixable? Can I hire someone? I’m willing to throw money at this because migrating off of Squarespace, I think we have five sites and they’re all well designed and there’s tons of content. Migrating is literally tens of thousands of dollars and months of work.

In asking around, most of the responses were, yes, come move to my platform or move to this other platform. That’s an answer, but that’s not really an answer. That’s not the question I was asking. This ties into page speed. That’s what you’re saying with the image size.

Ross: Exactly. For content marketing, especially making content visual is another side of product recommendation. By nature, you should have images. One way people mess that up is bigger images and then you have a slow, unwieldy website as you spoke too.

Rob: It’s hard to quantify these things. I realize a big black box with hundreds of signals that Google’s looking at, but do you have an idea of how much page speed matters? Is it a lot or a little?

Ross: It’s in the context of the users you have. If you have an audience who might be in the middle of nowhere with the worst internet speeds, that could be a bigger factor. Also, we were speaking to the wedding market. If you’re in a space that maybe is very highly visual, you might have to, by nature, build a very heavy page to give people inspiration for wedding ideas.

You would probably have a much worse experience if you weren’t thoughtful about that than someone who was. But if you’re just doing a text-based page on podcast listening numbers, maybe it’s not the make or break of a great experience in the same way. I don’t think they necessarily say, this site is fast and this one’s slow, so rank it worse. But that thoughtfulness of what makes sense doesn’t make sense for this topic, and where and who our users are and their internet speeds probably is where it can be bigger or larger depending.

Rob: Your sixth tip is to build passive link assets around keyword sets like “keywords statistics” and “keyword trends”. You want to talk us through that with an example?

Ross: Yeah. Link building is still a very important piece of the SEO equation. I’m guessing it’s hard for people that are listening to this to do that. So some low hanging fruit I’d recommend for most people is to think about these passive link assets. What are the things that people will naturally Google just to link to on their own websites?

This is a very low lift way to generate links to your website, and some common frameworks where people do that are statistics, trends, or pretty much any specific data point that someone would Google to grab and reference in your industry. We’re using podcasting consistently, that could be podcasting statistics, podcasting trends. Also, specific refinements of that are podcast listening numbers.

Those data points are things that bloggers, reporters, will just Google and then go to that top result, grab that, or just link to that page, and that will build authority and rankings for you. Sometimes thousands of links to these pages that can power the rest of your software page rankings and traction without necessarily having to do that manual outreach each time.

Rob: This feels like one of those that’s like reverse engineering, something someone stumbled upon accidentally. Some site somewhere, whether it’s Time Magazine, whether it’s TechCrunch, or whoever had some statistics and some trends. I bet you, as an SEO, have seen enough ahrefs and were like, how did they get this much domain authority? How is there so much page authority on this page? It’s like, wait a minute, these are ranking high. Is that effectively what happens?

Ross: Exactly. It’s just pattern matching that all these look this way and you dig into it. They’re generally low search volume, so that’s the good news. More podcasts and things like this that people talk about is getting more competitive. But if it’s relevant for you, I would suggest that very cautiously.

Make it make sense for you. Don’t do every statistics post under the sun. But if you’re a podcasting software, yeah, you should have these podcasting topics on your site.

Rob: Our seventh and final tip is, to answer keyword questions immediately right after the H1 with things like keyword is or answer in a way that is super visible to readers. You’re definitely going to need an example for this one and then let’s explain why this works.

Ross: Yeah. A kind of thematic thing to think about with search is low time to value. You want to have the lowest time to value possible with your content. Most times when someone is asking a question such as, what is UX research or what is the Amazon affiliate commission rate, they want to get that specific answer immediately.

A mistake people make, they’ll make to post that, and then they’ll decide they need this multi-thousand-word guide when most often, someone just wants that definition. This is one reason why you see now those answer boxes when you Google things, most often definitions, where Google is showing text above the fold. That I think is the hint that they know users want these things.

In a perfect world, you’d love someone to read all 3000 words, but the reality is we just have to deal with what we have and what users want. I think that’s solving the answer immediately. An example here is if your post title was what is UX research, most often, our recommendation would be to answer that immediately.

You would say right after the post title, UX research is blank. That will help Google understand. If you think about how a robot would think about this, that would give them confidence that this is a definition for that term. It’s very visible even better because that’s good for users also.

I’ve seen people do this in subheaders where the post title might be, what is UX research, the complete guide, and then a subheader, they’ll define it, then they’ll go into more depth under that. So make it visible, immediately answer it, structure it in a way that a robot could understand it, and you’ll benefit both in rankings and potentially getting those quick answers as well.

Rob: The quick answers are when they embed the answer at the top of the page, above the first SERP.

Ross: Correct. Us as SEOs and site owners never were huge fans of that, but it’s kind of nature of the beast and got to play to win. So we got to do what they are telling us to do.

Rob: As we wrap up, I’m curious, you’ve obviously been doing SEO for a long time. You see a big swath of companies of all types. SaaS is just one of the many types of companies that are trying to do this. You’ve worked with our first three batches of TinySeed—I’m always trying to do mental math—the 59th company, 40 plus TinySeed companies you’ve, in essence, talk through because you do some mentor calls and then I know you do some one-on-one stuff.

Are there things specific to SaaS that, I guess, they’re different than maybe for doing a D2C or whatever else? I think you’ve called out a couple of those already here for having all the feature pages. That would really only be SaaS, but any other stuff that you see commonly come up for those companies?

Ross: Yeah. Some of these are definitely those things with the software queries trying to rank for the first-party versions. Some things are on the blogs I see consistently. You probably know some of this as well. It might be more of a content marketing, best practice, but say, having a sticky NAV that follows you on the blog with a contrasting button in the top right that’s like sign up or get a demo, et cetera, that is generally conversion rate best practice to have that there.

That’s something we increasingly are recommending to specifically our SaaS clients, although sometimes worse than D2C as well. Versus topics, alternative topics are huge for search and SaaS. Search volume will be low, but we have clients who have 200 searches over three months and generate $200,000 in sales from a versus article. Those you should do every day, every time.

Rob: Yeah, we do see a lot of our companies come in without them, and that’s the recommendation folks make and I think there is value. It’s that weird low volume, super high converting stuff that I think people sometimes ignore, right?

Ross: Exactly.

Rob: Cool. Ross, thanks so much for coming on the show today. If folks want to keep up with you on Twitter, you’re @rosshudgens. You’re also on LinkedIn. Of course, Siege Media is the agency you run and siegemedia.com. Pretty easy to reach you there. Thanks again for joining us.

Ross: Yeah, thanks for having me, Rob. It’s been great.

Rob: Thanks again for joining me this week. It’s great to be in your earbuds. I’m so enjoying this podcast, putting the content together, and having varied episode types and varied content types. I’m glad you’re joining me every week. If you’re not already subscribed, please do.

If you haven’t mentioned @startupspod, thank @startupspod on Twitter, I’d really appreciate it. It helps spread the word. Me and my team here are spending a lot of time and effort to put these episodes together, and to try to provide value for you, all the other bootstrapped, and mostly bootstrap founders in the world.

So anything you could do to get back, I’d really appreciate it. With that, I’ll let you go this week. I’ll be back in your ears again next Tuesday morning.

Rob: Welcome back to Startups For the Rest of Us. I’m your host, Rob Walling. Every week on the show since 2010, we’ve covered topics related to building and growing startups using an ambitious yet a sustainable approach. We’re not willing to sacrifice our health, relationships to grow our company. We want to build real businesses with real customers who pay us real money. Actually, it’s kind of surprising that most of the world doesn’t think of startups that way.

Today, I have my co-founder of TinySeed, Einar Vollset, joining me on the show. We’re going to talk through not only the announcement of the TinySeed Investment Syndicate—if you don’t know what that is, we’ll define that in a bit—but we’re also going to talk a bit about the investment landscape for B2B SaaS, because frankly, it’s kind of opaque to most bootstrap founders.

We think that whether you’re raising money or not, if you ever plan to sell your company, or even sell a minority stake in your company, or there’s a chance that longer term you might want to raise a small amount of money (or might want to raise a large amount of money), knowing some of these details, is just good hygiene. I think it’s good hygiene as a founder to understand the dynamics of a market. What do you think, Einar?

Einar: I think that makes total sense and thanks for having me on.

Rob: Absolutely. Thanks for joining me. Before we define what a syndicate is and talk about the TinySeed syndicate—why we’re launching it, what it looks like, how it applies if you’re an investor and you want to invest in companies, if you are a founder and you potentially might want to get funding—let’s dive into this investment landscape for B2B SaaS.

Einar: Sure. Before we even get into the bootstrapped, what I think most of the audience here is doing, I’m just being very specific about the fact that here I’m excluding the VC track. This is a whole different Series—Series A, B, C, D, E, whatever IPO. This is the kind of thing where you need to have certain metrics like if you’re sub–$10 million in ARR, you probably need to be doing 200%–300% year over year growth.

Actually, there are a bunch of metrics. An interesting report that came out from Bessemer actually, it’s called scaling to $100 million like this and it basically has benchmarks for where you need to be growth-wise to be on the venture track. It means 110% net retention, 3X every year, and keep going in order to get there. This is more like what it is for bootstrapped or mostly bootstrapped B2B SaaS founders.

This is part of the reason why we started TinySeed. There was a hole in the market at the earlier stages. For TinySeed, what we do is typically invest in companies that are super early. They’re doing $3000–$15,000 typically MRR, although the range is much wider than that.

Rob: We’ve invested as low as $500–$1000 and upwards of $100,000 MRR. Obviously, we don’t exclude people, but I think you’re right. I think the cluster is in that $3000–$20,000 is kind of what I would ballpark.

Einar: Pretty much. We started TinySeed because there was definitely a hole in the market there. It’s a very specific niche that we operate in. We do a 12-month accelerator, we’d run them in batches, we invest in $1–$3 million pre-valuation. However, there’s obviously in the space of bootstrap SaaS or mostly bootstrap SaaS, or other sized companies that look for different kinds of funding.

I think it’s worth mentioning and this is partly because I think if you’ve run a B2B SaaS business, even quite a small one for more than six months, and certainly once you start listing on Capterra, you get nonstop email from people who want to get to know you. They’re from XYZ Capital or so-and-so investors.

I think it’s worth understanding who these are (the people who are reaching out to you) and what kind of funding options are available at the stage. Just to be clear, I think most of the time, what we’re talking about here revenue-wise, once you’re at least $500,000 ARR, but more likely north of a million ARR.

Just to summarize real quick about what kinds of funding options are out there, there are basically two different kinds. The first one is the traditional primary investments, and these are typically what a VC investment is. This would be money that goes into the company for future growth, or hiring, or whatever. They usually issue new stock, it dilutes everybody, and the founder who raises $10 million doesn’t get to put $10 million in his back pocket, probably unfortunately.

That being said, once you get into this north of a million ARR, there is this other concept and this does happen a little bit more now in traditional VC, but it’s this notion of secondary. What secondary is it’s basically a way for a founder who’s gotten to a certain state to de-risk their personal finances, so take some money off the table.

This would be, okay, I’m a founder, I got a business that’s doing a million or $2 million. I’m going to sell some of my own stock to another investor and that money then does go into the founder’s pocket.

Traditionally, that’s almost been the difference between VC funding and more like private equity kind of funding. VCs historically have been very negative to secondary. They feel like you’re not all in unless you need to get to become a unicorn. Why would you take any money off the table? This will be worth 10X in five months versus private equity has often been a little bit more flexible in that regard.

Rob: And it derisks it for the founder. I am pro secondary and if you’re super, super early, it doesn’t make sense. You’re raising $10,000 ARR or something. You haven’t built enough of a business, but if you’re doing seven figures of ARR and your business is literally worth $5 million, $10 million, $20 million and you have zero diversification as a founder, that was a huge concern of mine when we were running Drip. It’s just like I’m a multimillionaire, but I can’t sell any of this. I didn’t know that secondary existed or it would be available to me back in the 2015 timeframe.

Einar: I don’t think times have changed a little bit, too. I think it’s more common now than it used to be and is less stigmatized, but it’s definitely a thing. The way to think about it for me is, secondary is not a bad thing for an investor because I think a lot of the time a founder will come along and they’ll be worried. They might even sell a little bit too soon or go for a smaller subscale exit if they have all their eggs in that one particular basket.

If they can take some money off the table, $500,000, something like that, then they’re much more able to say, okay, screw it. Let’s just go for a $50 million or $100 million exit, or $20 million, or whatever. I think it’s a good thing. It’s actually now more common to see sort of a combination of it. If you’re raising this sort of type from these kinds of people, then typically, there are some primary and some secondary.

The other piece of it is, typically, who are the people reaching out to you on email? I’m sure a lot of you know what I’m talking about. You’re getting an email from Slocum Capital, from so and so, who says he’s an associate or an investor. It’s like hey, we’ve done a little bit of research on you, fascinating space, would love to connect to give you our view of the market or see whether we can help blah-blah-blah.

The one thing to realize is these are typically not venture capitalists. They are typically software-focused private equity funds. There are a number of different kinds of these. Some of these people are looking for companies to buy, either sort of standalone investments or tuck-ins to their portfolio, but the ones that we’re talking about mostly now in terms of people wanting to do investments are what you would call growth investors. These are private equity, people who are out there looking to buy a minority or a majority of your company once you get to a certain size.

Typically, these kinds of investors, these kinds of funds are a bit quite large. Some of the software-focused private equity funds have billions of dollars under management, but they’re also several hundred funds that have tens and hundreds of millions of dollars to spend. Usually, they’re looking to write checks of $2–$3 million up to over $100 million per investment. The thing to be aware of—and this is why I’m saying it’s not VC, it’s a different model—typically the way these guys think about things is like they’re looking to 3X–5X their investment in 3–5 years.

If you take investments—definitely majority—then these kinds of investors often in some cases are very hands-off, but quite often are pretty hands-on in terms of they have a playbook, in some cases they have a certain set of expertise they bring to the table. That can be good or bad.

In some cases, I talked to founders and they’re actually looking for that. They’re looking for either a CEO type to take it to the next level, or somebody who has a fund, that has expertise in scaling sales or any kind of go-to market–type strategy.

Those are the kinds of investors that we’re often dealing with when we’re looking at B2B SaaS investments north of a million ARR.

Rob: That’s what the founders like you said, if you’ve built a SaaS company to even half a million in ARR, you’ve been running it for more than a year, and you aren’t on any list of any kind, you’re going to start getting emails from these types of folks. Some of them will be junior partners or not even partners, just junior associates at venture firms. Some of them will be private equity. There’s a difference between those two, as you’ve already defined. The venture is investing in the company for growth and they invest at higher valuations typically, whereas private equity will want to buy some of the company but are also more open to secondary.

Einar: I think also there are funds that do both. They have a venture arm, they have a […] arm. It’s not that clear cut, but that’s a useful rule of thumb.

Rob: Right. That’s kind of the SaaS funding landscape. Then TinySeed, we launched it because there was really no option for people who kind of didn’t want to go down one of those routes. We’ve run four batches. We’re in the middle of our fourth batch. We’ve raised two funds and are raising our third, funded 59 founders. We are perhaps in-between or the third option between truly bootstrapping and going after venture, or selling a piece to private equity.

I think that begs the question. We’re launching a syndicate. What is that? Why should it be interesting if someone is an accredited investor listening to this, or if they’re founder where maybe the accelerator model that TinySeed offers isn’t a fit?

Einar: Basically, the goal with the TinySeed Syndicate, and we promise, we’ll get to the point where we explain what a syndicate is if you don’t know, because we’re TinySeed, we’re knee-deep into B2B SaaS every day. We do see a lot of founders who reach out and say, we want the kind of investors TinySeed likes, and we definitely hear from investors who are into that’s the kind of investments we want to be making. Typically, they’re angel investors. They’re not looking to write $50 million checks into a single company. They’re looking to write smaller checks and get more exposure later on.

Rob: If you’re listening to this, you may or may not have heard of what a syndicate is because it’s definitely a more well-known term in the venture space. You go to AngelList, type in AngelList Syndicate, it’s a vehicle that allows accredited investors—unfortunately, I would love it if it allowed non accredited investors—to essentially invest as a group.

The syndicate is led by someone. Usually, you have a syndicate lead who is essentially getting deals selecting deals. A company would approach us, we would select, vet that deal, and then offer it to this list of pre-vetted, pre-verified accredited investors. It’s an email list of investors, in essence. Then they are allowed to invest all in a single entity.

I don’t wanna get too technical, but it’s a Special Purpose Vehicle or an SPV. It’s a single little one-time use fund (almost) that puts the investors in the syndicate who want to opt-in, put their money into it. It is a one line item on the founders cap table. If you have 50 investors in a syndicate, each putting in $5000, that’s $250,000. You don’t have 50 line items on your cap table because that becomes a mess. That’s the idea.

Syndicates are like just-in-time funds, is almost how I think about them. They spring up, the accredited investors in the syndicate are notified about a deal, and they can opt-in or opt-out. There’s no money upfront and then they can say, I want to put a couple of thousand dollars into this one or I want to put $20,000, depending on how much is available. This SPV, the syndicate springs up, money goes in, money goes to the company, a single item on the cap table and that allows you to have these lower minimums.

Typical Angel raises are $25,000 minimum. Typical venture fund raises are $100,000–$250,000 and up. They go way up because of this stupid 99 investor rule we’ve talked about on this show before.

Einar: That’s true. The only question that remains is why are we doing this syndicate if you already have funds? Really the answer is that our TinySeed funds are only for a certain kind of investment. That’s what it does. It just does very early-stage B2B SaaS and we keep hearing from people that they want exposure to this kind of deal flow. We keep hearing from founders that yeah, I’m doing $500,000, I’m doing a million, I want to get access to this. This is effectively our vehicle to make that happen.

Rob: To clarify, the TinySeed accelerator and the funds that we are raising for that, we’re going to continue to do those and we’re full steam ahead on those. But the syndicate is an additional arm of TinySeed, in essence, and it’s an additional way that we can bring some deals to investors who may not currently be TinySeed LPs, TinySeed investors in our funds. It’s also a way for (like you said) some founders, some companies who may not exactly fit the accelerator model to come through the syndicate and be able to get TinySeed to ask funding from a group of MicroConf-friendly, Startups For the Rest of Us–friendly, TinySeed-friendly investors.

In addition to that, a non-trivial number of TinySeed accelerator companies, portfolio companies who have been funded by us—we funded almost 60 by now—about 20%-ish have gone on to raise additional funding rounds. Usually it’s an angel round or preseed round, and that’s been up to them. That’s totally their choice of whether to do it, but we support and assist them in that process if they want to. Usually they have a bit of their own network bring in some funding, and then we communicate their raise to our investors (our LPS as I keep saying, the limited partners), and they can decide to invest in the round or not.

This syndicate is now another layer. It’s another group of investors that could potentially write small checks into TinySeed accelerator companies who want to go on to raise a subsequent round or two. It’s a nice bonus if you think about an extra option for any company that goes through the TinySeed accelerator.

Obviously, just like a venture fund, there are two sides to a syndicate. There are the investors who essentially opt-in to hear about it and opt-in to hear about deals as they come, and then there are the founders. Let’s start with how this might work for an accredited investor who’s listening to this who might want to apply to be a part of the TinySeed syndicate?

Einar: It’s reasonably straightforward. Basically, you just apply to be part of the syndicate and we’ll run it through AngelList. There’ll be a bunch of accredited investor things, KYC, AML-type things. Once you’re approved, you basically get on the list. Whenever there’s a deal that we’ve selected, vetted, and done our diligence on that we think is a deal that fits in sort of the TinySeed mold, then you will get an email that says, here’s the deal, here are the terms, this is the valuation and how much is available, and the minimum.

Like you said, the nice thing about being able to do a syndicate is that you can have a lowish minimum, like $1000–$5000, I don’t think is unreasonable. Then if you decide to invest and if there are enough people and enough interest, we put together what’s called the SPV. We invest through that and we charge pretty minimal fees. There’s a one time $10,000 fee, which is shared pro rata among the investors. TinySeed itself takes a carry, which actually existing TinySeed investors get a pretty hefty discount.

Rob: And that carry is how TinySeed will make money from the syndicate. Basically if a company were to exit, the money first goes to pay the investors back. It’s called a 1X Hurdle and it (in essence) pays the investors back their initial investment. Any profits over that, TinySeed gets 20% of them; that’s called the carry. And as you said, existing TinySeed investors receive a big discount on that carry, as well as getting an early look at deals.  LPs in our funds, those are the folks that kind of get the best deal.

I’d imagine over time, there will be folks who participate in the syndicate who decide that due to the quality of the deals and just the interactions that they will want to become TinySeed LPs. That’s kind of the gist. Anything else to say to folks?

Einar: I think it is worth mentioning. If this is interesting to you either as a founder or as an investor, then just get in touch. If you’re an investor, you should go to tinyseed.com/invest. If you’re a founder and you’re interested in exploring this—I think you’d probably need to be like $500,000 or at least a million in ARR. I think the sweet spot for this kind of funding is anywhere really from about $1–$10 million ARR—then go to tinyseed.com/apply. You can fill in forms there and I probably will be the one who reaches out to sort of clarify. Actually, if you have any questions or you’re uncertain this is a good fit, what does this look like, feel free to just email me at einar@tinyseed.com.

Rob: As we wrap up, here’s what I love about this idea of a syndicate, also just the ability to launch TinySeed in this day and age is that up until now, up until a couple of years ago, there were just so few options. It was bootstrapping, it was venture, and there just weren’t these in-between vehicles. When we launched TinySeed, remember it was a crappy landing page that we threw together in a few weeks. It was a tweet and an email and right away we knew investors are interested, and this is an asset class, but founders are also really interested in.

What I didn’t know was our bootstrapped founders were interested in taking a small amount of money with (I would say) a lot fewer expectations and fewer strings attached is a strong phrase, but just fewer complexities than trying to get on the venture path. I had a hunch. I would have done it and I had a hunch. I could see Jordan Gall doing it. I could see Customer.io did it, Churn Buster did it because I invested in them. I knew there were founders out there, but I didn’t know across the broader landscape of the tens of thousands of those types of founders, how many would be interested. Turns out a lot. We’ve had thousands of applicants at TinySeed.

Einar: Yeah, I think so. I think, actually, there might be more investor interest, too, because there’s a reason why all these software private equity companies and growth investors are hiring all these fresh MBAs to cold email everyone with a heartbeat and the SaaS app. It’s because it’s a very nice investment. Being able to bridge that between investors that aren’t necessarily joined private equity funds and between founders who have built something amazing but maybe want a little bit more for growth and take a little bit off the table, I think that’ll be interesting to see.

Rob: Yeah. I want to be clear, Startups For the Rest of Us and MicroConf have been about building ambitious software companies since the start. And there wasn’t even SaaS. I mean, they existed, but it was not the focus in 2010. I think a bootstrap SaaS, there were a handful of people doing it.

We have evolved with the time, but what we’ve not done is just turned our back on anything. I think SaaS is an amazing business model. I think bootstrapping is an amazing approach. And this podcast and MicroConf will continue to support those folks who are doing that, because 80% plus of the MicroConf community probably won’t raise funding. When we talk about this kind of stuff on the podcast, I don’t want our listener to think oh, my gosh, Startups For the Rest of Us is now all about raising funding, because it’s not. It’s just another option. Startups For the Rest of Us is about giving you the options and the tools to make the best decisions. We’ve done that for 11 years, in 500 and almost 80 episodes. That’s my pledge to you as a listener.

Einar, thanks for joining me. Obviously, if folks want to keep up with you you’re @einarvollset on Twitter and einar@tinyseed.com if they want to email you directly.

Einar: Thank you for having me.

Rob: Absolutely. And thank you so much for joining me again this week. As we said earlier, tinyseed.com/apply or tinyseed.com/invest if you’re interested in learning more about what we’re up to. We’ll be back with another regularly-scheduled program again next Tuesday morning.

Rob: Welcome back to Startups For the Rest of Us. I’m your host, Rob Walling. Every week for more than 11 years, we’ve turned out episodes of this podcast. In fact, for the first 448 episodes, I had a co-host named Mike Taber. Now, every three to six months, Mike makes it back on the show. He comes back. He updates us on his progress with his startup Bluetick.io. It’s been almost 2 ½ years since he stepped back from his co-hosting duties. He’s had several ups and downs during that time, and frankly, has had some challenges making progress with his product.

Recently, in the last couple of episodes where we talked about it, he was looking into merging Bluetick with another company. Today, we find out about the results of that, whether that merger was successful or not. If you’re interested in learning more about Mike, maybe you haven’t heard the prior episodes, just search for Mike Taber on the website and it will show you the last four or five episodes he has appeared on. You can get more background.

The bottom line is Bluetick is a SaaS product that is not supporting Mike full time, and he wants it to. He’s trying to push it forward, but he has struggled to make the progress that he would like to see with Bluetick.

If you listened to last week’s episode, you know that I mentioned that I was excited about an announcement coming this week. It’s actually going to be a special episode that comes out tomorrow where you’ll hear about this thing that I’m so excited about. I said I think it’s the biggest announcement that we have made since we launched TinySeed more than three years ago. I hope you’ll check it out. It’ll be in the feed tomorrow.

With that, let’s dive into my conversation with Mike Taber. Mike, you’re back. It’s been a while.

Mike: Yeah. How are you doing?

Rob: I’m doing all right, man. We saw each other about six weeks ago at MicroConf Europe in Croatia. The last time we spoke before that was on this very podcast. It was episode 552, June 1st of 2021, which is five and a half months ago since people have heard from you.

Mike: It feels like 18 months ago, given the pandemic and everything else. It’s so hard, not just staying in touch, but staying on top of what’s going on, what the calendar looks like, or when was the last time you talked to somebody. It was brutal.

Rob: I agree. There’s kind of a reason for that for the delay and bringing it back on, but also kind of not. I mean, basically, a bunch of stuff happened, right? There were four MicroConfs in four weeks. There were TinySeed applications that I was working on. Then the batch started and all that stuff. I wanted to have you come back on when there was a conclusion to the story that we had been talking about for the past 15 months, which is about your potential merger/partnership. I call it a merger because I think that was the goal.

I know everything was on the table. That was the quote we had many times, but it just felt like something where the two of you wanted to merge your companies or start a company, be co-founders in essence. That resolved itself and in August or September, we talked a little bit about it at MicroConf, and I figured it was a good time to bring you back on to chat through some stuff.

Mike: Yeah, so things worked their way through at the end of the summer. Things ultimately did not work out. You’re right. It was, I think, intentionally or intended to be a merger of sorts between the two companies and businesses because there were a lot of complementary aspects to them, and a fair amount of overlap in terms of use cases between that company’s customers and BlueTick’s customers. At the end of the day, it didn’t work out. I feel like there were probably miscommunications on both sides. Things just went south at the end of the summer.

Rob: Yeah, which is a real bummer. This is something that I was concerned about as we had talked about. I think we had recorded two episodes, maybe three, but I think it was two during this time that it was happening. I had some concerns. In fact, I have some quotes here from the transcript from those episodes. One of my quotes was, and I think this was from five or six months ago.

I said, you’ve been working on stuff for a while now, like you said, eight to ten months, or somewhere in there. Then you’re talking about now, working for another three months. What if you get to a point where either one of you or both is like this isn’t going to work? Do you feel like you’ve wasted that time? It’s kind of wasted last year. How are you thinking about that? I had asked you.

And in a different episode I said, I have concerns about you working on this without something in place. I’m concerned there might be mismatched expectations, if you haven’t gotten down to brass tacks to say, let’s merge these two apps, let’s both focus on one, and here’s the equity split.

Then I talked about how I had in the past merged apps, and we put a partnership agreement together. What’s the delay with that? Because you’ve been working on this for over a year now. So that was the one after that. I guess I want to get your thinking in retrospect. Obviously, I expressed my concerns about, is this wasted time? I think one time I said, I’m concerned you have a day job with no equity, and I don’t think that’s what you want, right? How are you thinking about that now, in hindsight?

Mike: In hindsight, I guess, a day job without equity was probably a more accurate description than I would have expected or thought it would have been. I’m disappointed at how things ended up coming to a conclusion. I think that he is as well, but it’s hard to know those things in advance. There were a lot of things that were going on on his side that were just taking up a huge amount of time and effort. That’s why things dragged along for so long. We didn’t really get to start working together side by side until the last several months of the partnership attempt, the merger attempt.

That’s probably the biggest problem. There was no way for us to really pull that together much sooner than we did, just because of the extenuating circumstances around it. I understood that when I was getting into it. I hadn’t expected it to take nearly as long as it did. Initially, we thought that it would be resolved, basically around June or July of last year. That just never happened. It ended up dragging out for a full year longer than it really should have.

But at the same time, at the end of the day, what am I going to do? We were already on the path. I suppose you could say that, oh, well, it’s sunk cost. Don’t worry about it. At the same time, we were still trying to work towards something and we just didn’t have a resolution yet. It was just a tough situation, I guess.

Rob: Yeah. What could you have done differently? Do you feel like if you had communicated earlier on or made a proposal for equity, or should you have walked away when you got four or five, six months in and nothing was moving forward? Again, with 2020 hindsight, would that have been better to just be like, this is just taking too long, I need to go away, do other stuff, and work on my business. Let’s revisit this once you have the time to dig into it.

Mike: That’s a good question, and I think the answer is complicated because it’s a question of who is better for me, him, or the business itself? The business was in serious trouble at the time when I came in. That was more because of all the technical stack problems. There was just a ton of technical debt that had been gathering up over the course of the last 8 or 10 years. Nobody had ever really been technical enough to dive into that stuff, look at it, try and figure out what was wrong, and get it fixed. I was in the middle of a lot of that stuff.

If I had just basically walked away, my inclination is to believe that the business may not even exist right now if I hadn’t done that. I feel that I would have had a hard time just walking away because of that because I know the person and wanted to maintain a relationship. But would it have been better for me? Probably. Would it have been better for him or his business? No, probably not. I just don’t know what the repercussions would have been had I walked away. My suspicion is they would have been bad.

Rob: That’s the thing, man. The way I think about it—now that we’re here on the other side of it—is you’re back to square one where you were almost. I mean, it’s 2 ½ years ago.

Mike: Eighteen months is really what it is.

Rob: Eighteen months there. You and I had a conversation the first time you came back on the podcast, after stepping away for a few months. It was August 2019. It’s more than two years ago. You and I talked through, hey, you’re doubling down on Bluetick. I think that was the name of the episode, Doubling Down on Bluetick, right? Because I said, go away and figure out, are you going to get a job? Do you just want to shut Bluetick down? I said all these things.

You said, I want to double down on Bluetick. You said, I have some marketing ideas. I want to write some code. I want to do this and that. I guess, as I think about it right now, you’re kind of still in that boat of I want to double down on Bluetick again, like you lost a couple of years.

Mike: Yeah. I won’t say that there were zero benefits to essentially having a job for that time period because a) it was steady income, and b) it was keeping the lights on. I’ve also had some fairly serious health issues that have come up over the past year and a half. I’ve been working through those and trying to make sure that I’m still being productive, and some days are better than others. It’s the basic problem with entrepreneurship. When you’re meandering, you don’t have this hockey stick growth, but things aren’t trending downwards either.

I’ll say that makes it easier to just let things ride for a little while, but the downside of that is that you don’t have a clear resolution on anything either. It makes the decision of, should I shut this down and move on to something else a lot harder just because there’s revenue, there are customers, there are servers, all infrastructure, and all this other stuff. You can just turn it all off, but at the same time, you don’t want to completely screw your customers either. It’s a question of what to do there.

Rob: Yeah. If you were to start something else, I wouldn’t shut Bluetick down. It’s a small revenue service. For folks who don’t recall, it’s never supported you full time and it still isn’t, but there’s revenue there. I don’t get the feeling there’s a tremendous amount of maintenance or anything involved with it. I wouldn’t think you’d have to screw anybody in order to start working on something new. We can get into it later.

I’m not saying you should or shouldn’t do something new because each of us, as entrepreneurs, travels our own path. I guess it’s a bummer for me to be having this conversation that feels reminiscent of the one we had in August 2019, then a few months later, and a few months later. You know what I mean? It’s like you haven’t been able to push the business forward because you were—

Mike: Not working on it.

Rob: You were not working on it, yeah. You were focused on this other business. It’s not like you were working for free. You are not working for your full rate of what you would be able to make as a salaried employee. You were working for enough money that, as you said, it was a steady income, and it made it worth your while at this point. I think that’s something that is one positive thing to take away. It sounds like maybe it didn’t make sense, given personal circumstances to do it. I just hate to see the lost opportunity costs of 18 months-ish.

Mike: Yeah, that’s probably the biggest thing that I see is that lost opportunity costs. Because had I known going into it that it was going to be 18 months, I don’t think that I would have even started. That’s the whole hindsight of 2020. But what am I going to do? You don’t know those things in advance. Sometimes they’re very difficult to even foresee.

I didn’t foresee things ending the way that they did. It was all rather sudden. Like I said, we can chalk it up to miscommunications on both sides. At the end of the day, fast forward 18 months, I’ve basically got nothing to show for. In the meantime, I’ve let those other things slide and just not do anything. They just meandered. Whether it’s Bluetick or FounderCafe, either one, I just put those things on the back burner.

Rob: Right, and you were optimistic when we were talking about it. This is a quote from you, I think something will sort itself out, I have a good feeling about that. You thought that this was going to happen. I don’t think you had the same misgivings that I did about the situation. You were cautiously optimistic, it sounds like that.

Mike: Yeah, I was, right up until the end of the summer. At the end of the day, what do you do? It would have been much more difficult to walk away in that first six months or so just because of how bad things were with the app basically falling over on itself. You fast forward another six to eight months after that, things change quite a bit. Things were relatively stable. They weren’t perfect. They still aren’t. They probably would take another year, year and a half to finish cleaning it up. But at this point, it’s not my problem.

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So that leaves you looking at Bluetick, right? I presume you’re going to continue. You and I didn’t even talk about this offline. Is the plan to double down again on Bluetick and try to build it out? If you’ve lost two years, I remember saying two years ago, how are you going to be differentiated? Why are people signing up? Why are they sticking around? You either need differentiation in the product, or you need these proprietary traffic channels.

You don’t have either of those. I’m concerned you don’t have enough differentiation, basically. It’s hard to grow a business with that. You’re now even further behind because differentiation sometimes you can do with positioning, but usually, it’s with some type of features or feature set, and you haven’t been working on it for the past. Like we’ve said, barely working on it, not pushing it forward for a while. Where does that leave you?

Mike: I had a personal retreat a couple of weeks ago, which was great because it’s the first one I’ve had in probably two years. Probably even before the last time we actually had that first podcast episode where we were talking about it where I was doubling down on or what the intent was to double down on Bluetick. I went down and looked through a bunch of my old notes and started writing down new thoughts and ideas. A lot of the ones that I came up with were evaluating or thinking about, were essentially rehashes of the ones that I’d had back then.

I realized that what had essentially happened is I went on a personal retreat, had a lot of great ideas, wrote them down, and then promptly didn’t do anything with them. There’s a variety of reasons for that. This merger and partnership attempt is probably the biggest one. I look at that and say, well, those are the things that just need to get done. I spent probably about a week or so, a week and a half writing down and consolidating a bunch of my notes from various documents that I put together, and essentially got a marketing plan that I’m going to go through.

My mastermind group is going to be holding me accountable for those things on probably a weekly basis. I’m basically putting together this 90-day plan, and it’s an arbitrary start date, I’ll say, because I haven’t actually pulled the trigger and started the clock on it. It’s got goals associated with it, targets, and concrete things to do and accomplish over the course of those 90 days. We’ll see what happens.

I feel like at the end of that 90 days, if things don’t look like they’re going in the correct direction or they’re still meandering, then maybe I’ll do something else. Maybe I’ll build something else, set this on the back burner, and just set it on autopilot for a while.

Rob: I’m glad you said the 90-day plan because given how long this has been going on, not just the last couple years, but just Bluetick in general, when did you start building it? Do you remember?

Mike: Technically speaking, I had the idea in 2013, but I didn’t do anything with it until probably 2016. I didn’t even pull the sign-up process that you had to go through in order to talk to me. It was still kind of more like in beta until 2017.

Rob: So for four or five years, give or take. If someone wrote into this podcast and told us this story, what would we say? I want you to have a timeline. Look, it’s your life. I’m not even your accountability partner. We’re ex-podcast co-hosts or whatever. I want you to succeed, but it also has to be your choice. From the outside, it’s tough to think of what’s going to be different this time is really the question in my mind. How can you make everything into a speed bump, not a roadblock? No excuses.

I know health has been an issue. There’s a lot of distractions, but that’s always been the case. I think for different people who have those issues, they overcome. I think if you give it a specific timeframe, like a 90-day thing, I think you should start it today or tomorrow. That’s one thing that I think you’ve struggled with in the past is making the decision and going for it. You think about things for a while.

You thought about freemium. You thought about AppSumo for months and months. I think we were four or five months apart on the podcast and you were still thinking about them, two podcasts apart. That’s too long in the startup world.

When I was the CEO of Drip after I sold it, he was my successor. It wasn’t Clay. It was John who took over, but he would say, in the startup world, a week is a month and a month is a quarter. Everything has to move way faster than at larger companies. To think about decisions and deliberate on them even for a month or two is a really long time, and you lose ground. Why not start the 90 days tomorrow?

Mike: There isn’t probably a great reason for it. You’re right. I could easily start it today. I’ve got a mastermind call later today. I can tell them, hey, the clock is starting as of today. Here’s 90 days. This is what it’s going to look like. So, yeah, we’ll see how that shakes out. Maybe we can talk again in 95 days or 99 days or something like that.

I hear what you’re saying and I don’t disagree with you. If somebody were to write in or call the podcast and leave a message and say, hey, this is the situation, this is the product, and this is what it’s been doing. I’m in 100% agreement with you and be like, yeah, pull the plug on this thing, bail, and find something else to do because it’s just not working. Nothing you’ve done so far has really moved the needle.

I did come to that conclusion when I was on my retreat a few weeks ago. The fact is that I have let things go on for too long. I’d say part of the issue is that there isn’t necessarily a forcing function for me. Money is not necessarily a huge driver for me. Everybody has their own internal motivations. Some of them are intrinsic, some of them are extrinsic. I have a hard time sometimes figuring out exactly what mine is.

Rob: Yeah, we talked about that in the past.

Mike: Yeah. If you think about it, just in general, you take a step back from life in general. What is it that gets you out of bed in the morning? What excites you? What is it that you want to do? I have a hard time pointing out anything. I really do.

Rob: I remember we’ve had this conversation in the past, remember? I said, take the ENIAC or something, then we talked through all that stuff. When we talked about it last time, and this is a year and a half, two years ago, I said, maybe you shouldn’t be an entrepreneur then. Maybe you should get a job, and that’s okay.

You’re a super senior engineer, you could get a really well-paid job. Then you don’t need intrinsic motivation because it’s hard. We know this game is hard. That conversation turned into you quoting a Dilbert comic to me about the pointy-haired boss, and I said, did you just justify not getting a job based on a Dilbert comic?

We don’t need to rehash all that, but I think that is something that each of us has to find. Some of us as entrepreneurs are seeking freedom. I was always looking for freedom. That was my big thing. That was my intrinsic motivation was I do not want to work for other people. I want it so bad that I’m willing to work a full-time job during the week and willing to work 20 plus hours nights and weekends to not have to work a full-time job. I actually struggled when I first had enough products that I didn’t need to work a full-time job.

I was like, oh […], what next? I hadn’t thought past that. That’s when the purpose and relationship stuff started. I can go down a whole rabbit hole there. Other people really want to have an impact. Other people really want to work on interesting problems. There are all these other things. I do think without that, you’re right, it’s tough to do the grind every day. Not even the grind because I think the grind can be fun sometimes, but to force yourself to do it on the days you don’t want to do it. If you don’t have that, I’m not sure where you go from there.

Mike: Sure. I think your point about having freedom is probably well placed with me as well. That’s one of the things that I want. You just now said that you basically had that once you got your products and you had them to a certain point. The reality is I don’t have to work a lot. I don’t have to make a lot of money. I’m kind of at that point now.

The challenge at that point is, well, if I don’t have to, if I could get up at 10:00 AM every day, blow off work half the week, and things are still fine, what difference does it make? That’s the position I’m sort of in, but at the same time, would having more money would be nice? Sure. Do I need millions of dollars? No, I absolutely don’t.

That’s something I feel like I’ve struggled with a lot. That was the primary motivation for me to put down, this is a 90-day plan. If not done in that timeframe, then cut bait and move on or find something else that is a little bit more interesting to me, I’ll say. I do have some ideas of other stuff that I can potentially go do, but nothing I want to talk about yet or nothing that I don’t even want to write a single line of code or even make an attempt because it’s just going to be a distraction.

Rob: Yeah. I think there’s a difference between you and I. It’s that I live perpetually in the future. This is actually a strength and a weakness of mine. That I’m always looking ahead, whether it’s a couple of hours or whether it’s a couple of years. Once I quit the day job and once I had products that were bringing in a full-time income ($120,000, $150,00 a year), it was great. I worked 10 hours a week, it was amazing. Some of the best memories of my life.

I got bored then because I don’t have any purpose. I need to actually do something interesting. But I was always thinking, what about next year or the year after? What if these businesses don’t work out? It wasn’t that I wanted more money. It’s that I wanted more stability. I wanted to ensure that the freedom that I had, I never wanted to get a job again because I was perpetually living in the future and a fear of losing what I had worked a […] decade for.

Look, for sure not everyone thinks like I do. It is a weakness in a lot of respects because I have trouble being in the present often. Sherry lives very much more in the present. I think that’s a benefit for certain things and not for others, so different personality types. Some people live in the past, right? I hear that you don’t have to get up, and that’s tough. I definitely struggle with that sometimes. Some days, I don’t feel motivated to do any of this. It just happens naturally.

I either take the day off personally, I do the minimum then take the rest of the time off, or I grind it out. I drink or whatever. I have my things. I drink caffeine, I listen to loud music, and then I just get in the zone and I do it. But for you, I guess you can decide how to do those day-to-day of whether you need to do it, whether you need external pressure, or whether the pressure of hey, I can live like this for a while. But I don’t think you can live like this for 10 years, 5 years, or 3 years.

Mike: No, probably not.

Rob: Right. It’s not like you can retire.

Mike: Sure, but that’s also part of why I put the 90 days on it because that is an external pressure. Another external pressure that I found over the years has not been helpful is coming on the podcast, sharing exactly what I’m working on, and talking about it. Because there are those days, even weeks, or sometimes a month or two goes by where I’m just not making progress or not moving things along. I just sometimes didn’t feel like it. I think that’s been a struggle is that I feel kind of disappointing the listeners, and which in turn disappoints me.

Rob: It feels crappy.

Mike: It does.

Rob: I know how that feels. I just really haven’t been motivated. Yeah, especially coming on every week or every two weeks. I don’t want to keep talking about this because sometimes these things take more time. Sometimes I want to move slower because that’s just where I’m at in my life right now. Maybe that’s just the pace I want to go. We bootstrapped businesses for a reason, right? So that we can dictate if we want to move slower, make an amazing lifestyle business, or move faster and be more ambitious with the growth.

So what is the plan then, man? What is the 90-day thing? I mean, you don’t have to go into all the details. Is it getting your marketing in order? Is it figuring out product differentiation? What is the story there?

Mike: It is probably 95% marketing stuff. There’s a couple of ideas I have for features that would differentiate Bluetick pretty dramatically from other things out there, but they would take time to implement. I don’t think that I could do a lot of those marketing activities and implement the features in such a way that I’d be able to do them within 90 days.

The plan or the intent is to see how those 90 days go and evaluate at the end of it whether or not things are on that upward trajectory that I’m looking for. If they’re not, then that’s when I’m going to have to find something else. I’ll put it on the backburner. I’ll keep it running and keep everything operational. I’m just not going to dedicate a ton of time and effort to it anymore.

Rob: I don’t think anyone will begrudge you that.

Mike: Sure. That said, it’s been largely on autopilot for the last 18 months. It’s not like I get very many support calls, emails, or anything like that for it. It’s a fairly stable product that works great. I really just need more people to see it and use it is really what it comes down to. That’s all marketing. It has nothing to do with features at all.

I’m cautiously optimistic about the fact that putting 95% of my efforts and energy into the marketing side of things, as opposed to building features or anything, is really what’s going to hopefully push the business forward. I’ve got several pages worth of stuff that I’ve written down and various channels and got them essentially ordered. Within each of those channels, what I would do, what needs to be done, how to do it, that kind of stuff.

Rob: Well, I’m excited. How do you feel about it? Are you excited? You don’t seem super excited?

Mike: I don’t know. I think the problem is it’s hard to be excited when it’s dragged on for as long as it has. I guess maybe I should be excited about the fact that I know that there’s a light at the end of the tunnel. At the end of the 90 days, I’ll have an answer one way or the other. I guess maybe that’s something to be excited about, but I don’t know. I mean, I don’t have a good sense of whether or not the things I’m going to do are going to make any difference. I’m not really going to know until after I start doing them.

Rob: Thanks again, man. You’re @singlefounder on Twitter if folks want to keep up with you.

Mike: Sounds good. Well, thanks for having me again. Appreciate it.

Rob: Absolutely. Take it easy, man. Thank you so much for joining me for that conversation. I’d love to hear from you. If you like these episodes when Mike comes back and gives us updates, you can hit me up on Twitter. You can send an email to questions@startupsfortherestofus.com. Those go directly to me.

If you feel that they’re not helpful or not interesting, I’d love to hear that too. Just want to hear your thoughts and opinions. Thanks for joining me again this week. I’ll be back in your ears tomorrow morning with a special bonus episode.

Thanks to our sponsor, SoftwarePromotions. SoftwarePromotions has been managing Google ads and Google SEO for clients for 22 years, if you can believe it. They’ve worked with more than 600 businesses. They’re no-nonsense, lots of transparency, and one of the co-founders Dave Collins has spoken seven times at MicroConf. You’ve likely seen his videos if you’ve checked out our YouTube channel. He’s also spoken at Business of Software and countless other conferences around the world.

If you’re looking for someone to help you with your Google ads, whether you’re just getting started, whether you want an expert eye, whether you want someone to manage that for you, as well as SEO from audits to getting down and dirty with organic search, Dave and Aaron know what they’re talking about. Those are the co-founders of SoftwarePromotions. You can head to bit.ly/tamegoogle to learn more about SoftwarePromotions, or head to softwarepromotions.com and let them know you heard about them at Startups For the Rest of Us. Thanks to Dave and Aaron for sponsoring the show.