Episodes

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Rob Walling:
The  

Laura Roeder:
Fourth time,  

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

Laura Roeder:
Yeah,  

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

Laura Roeder:
Sounds like Edgar. All the  

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

Laura Roeder:
Yeah.  

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

Laura Roeder:
Yes.  

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

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

Rob Walling:
And how big is your team?  

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

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

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

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

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

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

Rob Walling:
Back in the day. Yep.  

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

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

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

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

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

Rob Walling:
Oh, for sure.  

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

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

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

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

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

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

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

Laura Roeder:
I’m very skeptical.  

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

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

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

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

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

Laura Roeder:
Patrick Campbell. Yeah,  

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

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

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

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

Laura Roeder:
Oh yeah.  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Rob Walling:
Dream 100,  

Laura Roeder:
100. I  

Rob Walling:
Memorize that whole chapter,  

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

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

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

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

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

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

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

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

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

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

Laura Roeder:
Thank you.  

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

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

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

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

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

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

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

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

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

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

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

Colleen Schnettler:
Yes.  

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

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

Rob Walling:
How’d you get into it?  

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

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

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

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

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

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

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

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

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

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

Colleen Schnettler:
Yes.  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Rob Walling:
That’s amazing.  

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

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

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

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

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

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

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

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

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

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

Einar Vollset:
Thanks for having me.  

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

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

Rob Walling:
Seriously, our open source communist  

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

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

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

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

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

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

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

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

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

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

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

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

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

Einar Vollset:
Up to 10 years,  

Rob Walling:
Unreal.  

Einar Vollset:
That’s a tough quartile fund. 

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

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

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

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

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

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

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

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

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

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

Einar Vollset:
Yeah,  

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

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

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

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

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

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

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

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

Rob Walling:
It is.  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Rob Walling:
Sell for?  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Einar Vollset:
Thanks for having me.  

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

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

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

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

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

Jane Portman:
Still fighting,  

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

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

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

Jane Portman:
Yeah.  

Rob Walling:
Spring  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Jane Portman:
We haven’t  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Jane Portman:
Yep. Just joined lately.  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Rob Walling:
Welcome back to another episode of Startups. For the Rest Of Us, I am Rob Walling, and in this solo adventure, I’m going to look back at 2024. I’m going to reflect on some key concepts that I discovered slash introduced on this podcast in the last 12 months. I’m going to reflect on accomplishments, things I was able to ship this year, as well as look back at my top four favorite episodes from the year. And then I’m going to revisit the predictions that I made for 2024 because with only, I’m recording this a few weeks in advance of it going live, but there’s only a couple of weeks left in 2024, and some of these have come to pass and some have not. Before I dive into the episode, I want to let you know about my course that’s SaaS Launchpad, but not just the course because I’ve talked about it on this show before, but the fact that we have added a free sample, a free trial of the course, it’s one of the 27 26 videos that are included in this course. 

Total course is about nine and a half hours of content, and this is 28 minutes long. It’s called the DNA of a great SaaS idea. It’s kind of my response to the question, if you could design the ideal SaaS product for a bootstrapper, what would be all the aspects that you would want from it? What elements would it have? And I think I came up with 17 or 18 different factors, and realistically, I don’t know that if there’s a single idea that has all 18, but it’s things to think about as you are evaluating your SaaS ideas. So SaaS launchpad.co, if you click the start free button, you will be able to download that video and check out what the course is all about, SaaS launchpad.co. 

As I’ve recorded this podcast over the years up to almost episode 750 in the course of almost 15 years, I like to reflect every so often, and sometimes it’s in episodes where the episode number ends in two zeros or maybe ends in 50, and other times it’s at the start or the end of a year. So in this episode, I did a quick, it was frankly a cursory look back through the past 12 months, so almost 52 episodes as well as I skimmed through the YouTube channel, although that was even more cursory. And I came up with four concepts that I introduced in 2024 frameworks or concepts. Now, obviously there’s a lot more in the solo episodes where I talk about a herd of bison walking into a storm or normalizing doing hard things. I don’t consider those concepts. Those are just maybe motivational things that come along now and again to give you some inspiration. 

But when I talk about frameworks or concepts, I mean things like in episode 706 where I introduced the 2 2200 validation framework, and that’s a novel approach to thinking about ways to validate an idea where the two is two hours, that’s where you do some keyword research and go online and look at forums, do whatever else you can do online. The 20 is 20 hours, that’s when you start talking to customers or building a landing page and sending traffic. And the 200 is usually where you get in and build some type of MVP. So the 2 2200 validation framework was introduced just 39 short episodes ago in episode 7 0 6. Another concept that I stumbled upon. And usually what happens is I’m observing all these companies that I’m either advising or invested in or just in the broader MicroConf startup For the Rest Of Us TinySeed community. And I start to see patterns and I’m trying to figure out a way to describe those. 

And oftentimes it comes when I’m coming to a conclusion and I realize there’s an edge case that isn’t defined. So the second concept of the four that I’ll mention today was when I was looking at horizontal and vertical SaaS, I was trying to evaluate the growth and the difference in growth between the two categories across the tiny C portfolio of now I believe it’s 192 companies. And I realized there was a third type that kind of didn’t fit into either or. It kind of fits into both. And I was trying to think of a good name for it. And I came up with orthogonal SaaS. And so this is where you have a horizontal product, meaning it can be used across any type of business. So it’s not vertical, right? It’s not in a specific niche, but it is aimed at a single job title or a single role at a company. 

And so I went with all the clunky things like role-based SaaS and title Focus, all these dumb names, and talked about the chat GPT for way too long. And eventually I liked horizontal, vertical and orthogonal. It matches up. And actually, if I drew a diagram, we’re at a whiteboard right now. I could point out to you why it makes sense that it’s orthogonal, but realistically trying to do that a podcast would be terrible radio. So Orthogonal SaaS was the second concept I introduced in 2024. The third one was in episode 735 where I got really fired up about this eight levels of platform risk. And this is absolutely one of my favorite episodes of this year. I was reading X Twitter and I was listening to a podcast, and I get so fucking tired of people saying, well, every business has platform risk because that acts like platform Risk exists or it doesn’t, that it’s a one or a zero that much people think product-market fit is a one or a zero, that it’s on or off. 

People think platform risk is on or off. And usually this is from someone who’s, it’s often like a no-code proponent, and I’m totally cool with no-code, but realize the pros and cons of no-code. And one of the big cons is platform risk. So when people point that out, the no-code folks bristle and say, well, everything has platform risk because built on AWS, and that’s platform too. But no, no, no, it’s definitely a gradient. It is a spectrum. It is a continuum. And so I sat down and came up with a whole framework around this, and I got seven levels of platform risk. And then WordPress and Matt Mullenweg started to implode and I realized, aha, I think there’s an eighth level of platform risk. So it was a last minute I called an audible and for those familiar with American football terms, and I added an eighth level right before recording it. 

So I really enjoyed this episode because it was something that seemed to really resonate with people. And I’ve already used it in a few conversations, especially on X Twitter, letting people know that, hey, it’s not binary and trying to put some shape to this because if we don’t talk about it in these detailed terms and isn’t platform risk just this amorphous kind of cloud that you can float through and it’s like, ah, maybe I platform is maybe an owner. Everyone does. So why even think about it? And it’s like because it can kill your business. And I think thinking about it at a deeper level than just saying, oh, it exists or it doesn’t. Really, really helpful for all entrepreneurs and frankly, especially for SaaS founders, as you’ve probably heard me say, my mission in life, the legacy that I will leave behind when I’m no longer here is to multiply the world’s population of independent self-sustaining startups and things like the eight levels of platform risk and the three factors, I think I had three axes that I use to kind of frame that conversation and framework. 

This is one of those that I think will stick around for years to come because guaranteed to put it into a future book. And then the fourth concept that I introduced in 2024, this one has a question mark. I may have introduced it. 2023 is the 1 9 90 rule. And this is the idea that not everyone should raise venture. Not only should not everyone raise it, but I only think about 1% of venture eligible tech startups should raise venture. I think 1% approximately should consider raising venture. I think 9% should consider raising some type of funding, whether that’s angel investment, something independent funding like TinySeed or Indie vc. And then I think about 90% of those companies should bootstrap. So the 1 9 90 rule is something, again, I may have coined it in 2023, but I know I presented on the podcast in 2024, and it’s something that I similarly think will stick around for years to come. 

I have a feeling there are a few more concepts I did after I wrote the SaaS playbook, a lot of kind of got my juices flown, and I started discovering slash noticing more frameworks and concepts in late 2023. And then throughout this year, I can almost guarantee you there are more that I have missed. If you think of one, email me questions at startup For the Rest Of Us dot com, I’d love to include it in a future episode. Next, I want to talk about my four favorite episodes, actually five favorite because one of them already mentioned, which was the eight levels of platform risk. That was episode 7 35. Another one of my favorites was 7 28, which is where I talked to Iran Galper and the founder of Gym Desk about his exit. He exited, bootstrapped, took very small amount of money from TinySeed and then exited for more than $32.5 million. 

An incredible, incredible success story for both Iran and frankly for TinySeed. Next episode is 7 0 6 0.5, where I rethought my most common startup advice. So that was the April Fool’s episode. And decide from you grumpy curmudgeons out there who hate fun and don’t like April Fools. Actually don’t like April Fools either. So I’m trolling you. That episode received the most feedback. I believe of any episode ever in the history of this podcast. Absolutely received the most feedback of any episode last year, but I’m pretty sure of all times. So let’s just plan on doing an April Fool’s episode every year, shall I don’t think I’m going to do that, but I’ll keep you guessing. Next episode, one of my favorites of the year, 729, 9 things I learned investing in more than 190 SaaS companies. I just episodes like this that can present findings or thoughts or patterns that are based on, I guess a unique viewpoint, right? 

It’s like how many people, I’m actually up to 212 SaaS companies bootstrap, mostly bootstrap SaaS companies that I’m invested in, and there just aren’t that many folks thinking about it like that. And certainly not folks thinking about it in terms of being capital efficient and independent SaaS or being mostly bootstrapped. And so I have more than nine patterns, actually. Yeah, nine things I learned. I think I had another six or seven over on the YouTube channel, so there were probably 15 or 16 that I presented, and of course the list goes on, but I enjoyed that episode. It gave me a chance to sit and reflect on those findings and to try to pull things out that you can’t get out of chat GPT, you can’t get off the internet, you can’t Google this to learn it, right? It’s like things that I’m learning, being in the trenches, doing something that’s a relatively unique experience and a unique viewpoint. 

And I think that episode turned out great. I actually got a lot of positive feedback about that. And then the fifth and final episode of my favorites of the year is 7 0 9, the seven greatest investments of my life where I talked about from top to bottom, top being the most money I’ve made from any investment, which is selling startups all the way down the list, including crypto, investing in startups, et cetera, et cetera. And kind of took some lessons away from that, but it was something that people said resonated with them so they could hear and get a sanity check because salaried employment was number, I don’t even remember, number six maybe, and running and operating profitable companies was in there, number five, maybe it was a fun episode for me to walk down memory lane, but also something that I think could potentially be helpful to people. 

So it was one of my top fives of the year. So now I want to reflect a bit on 2024, and then I’m going to look at those predictions that I made. I don’t think I did very well with these predictions. I’m going to look at ’em on the spot. I have not prepared, not prepared. So I better be prepared to probably get two out of seven or something. I dunno how many I made in total, but I want to look back in 2024. And the first thing I want to talk about is how entering 2024, I recorded an episode about how I was basically experiencing burnout, and I took three weeks off at the start of the year, something like that. It was like two to four weeks off to get around the burnout. And also we decided not to do any MicroConf locals. 

So my travel schedule was cut in half, and I was basically kind of at the edge of I don’t know that I can keep doing any of this. At the end of 2024, it was really fall through, it was through December, and you’re burning out when you start questioning everything you’re doing, and do I even want to be a startup founder anymore? Do I even want to do any of this entrepreneur stuff anymore? And that’s when I know I need to take a step back and recharge and take some time off and kind of clear the head. So that’s where I found myself. I adjusted my travel schedule and the amount of travel reduced it dramatically, probably cut out 75% of my travel. And then I asked myself, what are the things that give me life during the year? And all of this worked. I got through burnout when I came back in January from that four weeks off, two to three weeks, I actually don’t remember how long it was, but I did feel recharged and then I didn’t go back to the grind. 

I think within a few months of that actually, we went down from one YouTube video per week to one every other week, so it cut that delivery in half, and that was also more of the grindy part of my job. So releasing this podcast, it rarely, rarely feels like work. It’s something I thoroughly enjoy. It’s a creative outlet for me, and I’ve been doing it for almost 15 years now. YouTube is a little bit different. It’s more of a grind, not all the time, but it’s definitely, it feels like work a lot of the time. And so a video every week was taxing. In addition, the channel, the growth really slowed down. We kind of tapped out most of the market, not all of it. We’re at about 91,000 subscribers now, but we plateaued around 80,000, I think it was within a month or two of that January sabbatical, in essence, sabbatical, two to three weeks, no sabbatical, but two to three weeks off that we did decide, Hey, shipping one a week, just it isn’t worth the effort, the time and the money. 

And so we backed off on that and I think that also thoroughly contributed to helping me get through burnout in 2024. A couple things we shipped from MicroConf this year were MicroConf US in Atlanta. We had Ben Chestnut and Rand Fishkin were there. It was a great, great event. We did MicroConf Europe and Dubrovnik. Both of those events sold out. Europe sold out relatively quickly and was, I believe it was either the best or definitely top two or three best MicroConf Europes that we’ve produced for a number of reasons. The attendees were amazing. The talks just everything came together. The execution was outstanding. So I’m thoroughly looking forward to those two events this year. Well, I guess in 2025, we have New Orleans happening in March. You want to get tickets that it’s approaching sellout at this point, and that is microcomp.com/us and then Europe is yet to be announced also with MicroConf, we launched the State of Independence SaaS report in, I believe it was May or June, and we launched my course, the SaaS Launchpad. 

I talked about it in episode 730, but I just talked about it at the top of the episode as well. But what an effort. You figure you can record a course in a couple months and get it out, and it was like nine months of a lot of work, and as a result, the quality of that product is outstanding. So it is by far the best course I have ever produced. I’m super proud of it and I’m glad we were able to get it out. A couple more things, the SaaS Playbook, which I did a Kickstarter for, and then shipped the book and started selling it widely in, what was that, June or July of 2023. It has continued to sell very briskly and it caught in past to start small, stay small within a year, something like that. Start small, stay small, has been around for 14 years and sold about. 

My best approximation is 30,000 copies and the SaaS Playbook hit 30,000 copies in about a year, and it still continues to sell. I haven’t run the numbers in a few months, but it’s got to be at 32,000, 33,000 copies for a self-published book. That’s not bad, given that I keep so much of the revenue. If you buy directly, I keep 97% because Stripe takes some. Amazon is, I think a 70 30 split. Is that right? And then Audible takes 75%. Don’t get me started on Audible, but all that said, yeah, if you’re going to buy the audit book, buy from me directly and get the DRM free MP threes. But anyway, the SaaS playbook has continued to sell well and was a highlight of my 2024 to hit those milestones. And again, to see it hit the hands of so many people. The podcast on YouTube are free. 

Things that I’m able to put in the world, obviously funded by all the other stuff I’m doing. The Things we sell at MicroConf, the book is very close to free like Kindle or PDF. Go to SaaS playbook.com. You get a DM free pdf. It is 10 bucks and the paperback copy, I think it’s 25 or 30 on Amazon, the audio book is 12 or $13 on Audible, so it is not totally free, but it is approximately free. And given my mission to multiply the world’s population of independent self-sustaining startups, it feels to me and kind of always has felt this way to me, that writing books is one of the best ways to do that. And that getting a book in someone’s hand, even if it contains some information I’ve already talked about, even if people don’t read the entire book, it just codifies things in a different way than a podcast or a YouTube channel can or pontificating things on social media. 

I really do see and think books Move the Needle. I know that books have moved the needle for me in my entrepreneurial journey, and I hope that they do for you as well. If you did buy SaaS Playbook or Start Small, stay Small. Speaking of books, my Kickstarter for Exit Strategy, the Entrepreneur’s Guide to Selling Your Business Without Regret ended just a couple weeks ago. As of this episode going live, it successfully funded. I’m recording it before the end of the Kickstarter, but I do know that we have hit the goal. My best estimate, you can go check this because you’re living in the future. My best estimate is it did in maybe to 30,000, 35,000 in that range, which is a third, about a third of what the SaaS Playbook did, which I think I’m both surprised by and not surprised by it. I thought it would do a bit more, but I knew it wouldn’t do as much as the SaaS Playbook. 

SaaS Playbook is obviously just so much more broadly applicable. SaaS playbook’s also the first book that I have written and released in more than a decade with exit strategy coming basically 18 months later, I figure people are like, Ooh, man, can I really do I really want to read another book by Rob Walling? But anyways, exit Strategy Kickstarter, I am very excited about that book. We’re doing a hardcover print run that’ll be out launching to the broader world here in February, I think, or maybe March at the latest of 2025. And I am excited to see what that book does in the long run. It is an evergreen book, the Can Sell for years and years and years, and I do think it’s going to be one of those like start small, stay small and SaaS playbook that has staying power. As I already said, in 2024, I invested in my 212th SaaS company and looking ahead to 2025 TinySeed tails. 

People have been asking me, is Tiny Sea Tales coming back? Season five and six are both being recorded, five is almost done. There was a reset. Someone had to start over completely. They lost a co-founder. They had to start over with a brand new idea, and so it just reset the clock. So there was no story arc and I didn’t want to end it with a question mark. And so we’ve just kind of waited and waited and recorded less frequently in order to make, I believe we’ll have nine episodes in Tiny Sea Tale Season five, but we are recording episode nine. Well, it may already be recorded by the time you hear this, and I think we will be pushing that out weekly on this podcast feed as we typically do on Thursday. So you get a bonus episode each week. And it’s cool because it’s heavily edited. 

It’s got voiceovers for me and it has the music telling the story, and it’s, I think in this case it might be an 18 month journey told over the course of 9 25 minute episodes. It’s a neat kind of NPR Gimlet media type production. At least that’s what we aspire to within time constraints and budget constraints. And that will be coming out here in probably January or February of 2025. And then season six is in the works. And so who knows? I don’t like to promise that, but maybe the fall of 25 if we get it done. Alright, so last thing for this episode, and I’m going to say stick around till next week because I’m going to talk about my predictions for 2025, but as we wrap this episode, I want to revisit the predictions I made for 2024. The first is I commented that there would be opportunity in vertical SaaS and I would say, ding, ding, ding. 

Heck yes. I’m still seeing that the companies were funding with TinySeed, the folks I’m seeing in Microcom succeeding. Obviously you can still succeed with horizontal and orthogonal SaaS. Vertical SaaS is a great place to be if you are a bootstrapped or mostly bootstrap founder. The second prediction was that SaaS will continue to grow in emerging markets. I’m going to give myself a win on that. Similar, the application volume at TinySeed of emerging Markets SaaS and seeing the ones that we have funded in Latin America that are focused on the Latin American market or other emerging markets like India, et cetera. They have some unique headwinds in terms of pricing. They have unique advantages in terms of how cheap it is to market in those spaces. So giving myself a win here, SaaS will continue to grow in emerging markets, and I’m seeing it this year and probably just predict it for 2025. 

It doesn’t count. I can’t keep predicting it if it already happened. My third prediction was that Twitter would change hands in 2024. Obviously not. That’s a fail unless it happens in the next two weeks before this episode goes live. My prediction is a big fat zero goose egg. I’m going to roll this one forward. Usually I predict things about two, three or four years before they actually happened. When I ran back through all the predictions since we started, which I think was 2012 or 13, which was the first year we did them, a lot of times the prediction that I made would come true two or three years later. So it was early, and I think that’s the case here. Twitter changes hands in 2024. No, it did not. That is a fail, but I think it will be true here coming up. My fourth prediction was that subscription fatigue will have little impact on the adoption of B2B SaaS. 

I’m going to give myself a half point on this one. B2B SaaS is starting to see headwinds. I think it’s because of the economy, the uncertainty of the recent election of the fears of a recession. I think subscription fatigue maybe. So that’s why I’m giving myself a half. I guess I am kind of inconclusive on this one. So half point, my fifth prediction was that no code and low code will undergo professionalization, meaning things like source control, version control. We could roll things back and forward better debugging unit tests, and that is a fail. This is something that I do think is going to happen eventually. I just think I’m early. I want this to happen. I want no-code and low-code to be more manageable. And back in the day, 20 years ago when we were writing code code and we didn’t, a lot of us didn’t use version control and we didn’t write unit tests. 

It’s just we still got it done, but it makes it brittle. It makes it harder to maintain. That’s where I think no code and low code are heading. And I think there are some very interesting opportunities in the professionalization of no-code and low-code. My fifth prediction was about AI and about whether it was just hype or not, because people were saying, do you even still use chat GPT anymore? AI is going to take all the developer jobs and folks even saying it was kind of a fad. So I said, no, it’s going to stick around. It is going to become ubiquitous. It’s going to continue to improve productivity. I said, AI is not going to take a bunch of developer jobs, and I don’t think that it has. I said, AI is going to continue to help devs build faster. And this was before Cursor came out, ding ding, like yes, yes, I talked about there would be real productivity gains from ai, not just for devs. 

I think that’s certainly been true on my team and word on the street is other folks are experiencing that. So I would say it was right on this one, although I kind of baked a bunch of predictions into this one just about AI in general. I just gave my thoughts of where it was headed. And so there wasn’t a concrete thing aside from things I’ve just read off to you. One of the things I said is that non-obvious AI apps will start to come out. The obvious AI things are, hey, describe something in habit, create an image or a video. And I was figuring that more non-obvious, less obvious AI apps would start to get built as the obvious ones all kind of got scooped up. And if I’m being honest, I don’t think that that happened. So this is where I kind of like, I don’t know. 

Do I get three quarters of a point? I think I was mostly right on this prediction that I am bullish on AI on the fact that it’s going to help us all be more productive, that I think it’s going to stick around and is not a fad, and that I think it will help devs build faster, which won’t necessarily remove dev jobs. It’ll just help us build more software because man, we have a need to build software faster. Or what my last prediction was, I think Stripe will go public in 2024, and that did not happen. That is a goose egg. This is one of those I’m going to roll in 2025. It’s inevitable. And eventually, you know what a stopped clock is, right? Twice a day, and I think stripe’s going to go public soon. And so I will take a goose egg for 2024, and likely you’ll hear this again In next week’s episode. I want to give you my predictions, my bootstrapper slash related predictions for 2025. So thanks for joining me again this week for a look back at 2024, revisiting some key concepts, my favorite episodes, some other happenings, and revisiting those predictions. It’s great to have you here this week, every week. This is Rob Walling signing off from episode 745.

Rob Walling:
Welcome back to Startups. For the Rest Of Us, I’m Rob Walling. This is Hot Take Tuesday. In this episode, we talk about the rise of Blue Sky and a r and Tracy wind up making a four figure cash bet about where they think Blue Sky’s going to be three years from now. Talk a little bit about TinySeed and how we are raising our next fund, how Y Combinator backs competitors and more hot take Tuesday topics. Before we dive into that, the SaaS Launchpad course, this is the most comprehensive and best course I’ve ever released on early stages, the very early stages of just getting started. Idea validation, launching, building a launch list, getting to your first revenue. The course is live and we now have a free sample module called the DNA of a great SaaS idea. It’s a 28 minute video. This is 28 minutes of about, I think we have nine and a half, maybe 10 hours total of instructional material as well as dozens of worksheets, checklists, forum where people are discussing the ideas and throwing ’em back and forth. 

It’s at SaaS launchpad.co if you want to check it out. This is the first and only trial that we’ve offered for this course to give you an idea of the level and the quality of the content because the quality of the content is far, far superior than stuff I’m putting out on YouTube. It is far more in depth and it is a book level depth in a video course with full transcript summaries and all that. So SaaS launchpad.co, click the start free button to download the free sample, the DNA of a great SaaS idea. And with that, let’s dive into Hot Take Tuesday. This week I’m joined once again by Tracy makes on Twitter,  

Tracy Osborn:
Well, I’m there, but or tracy osborne.com on Blue Sky.  

Rob Walling:
Ooh, blue Sky. We’re going to get into that in just a moment. And Mr. And our set on Twitter.  

Einar Vollset:
Absolutely. How you doing  

Rob Walling:
As well as your real name? Are you on Blue Sky?  

Einar Vollset:
No.  

Rob Walling:
All right. Are you going to get on Blue Sky?  

Einar Vollset:
No.  

Rob Walling:
All right, so let’s talk about  

Tracy Osborn:
This. I would bet money you are.  

Rob Walling:
First topic of the day, is Blue Sky going to do it? Meaning do we think Blue Sky is going to survive and thrive? Tracy, I’d like you do. I need you to steal, man, this argument of Blue Sky because it sounds like you are leaving Twitter in favor of Blue Sky. Talk us through what’s going on.  

Tracy Osborn:
I am a Twitter OG whenever that year. That was way back in the day and I freaking loved Twitter seven, and it was one of the things that really catapulted my career in tech and I thought I was all in. But I got to say the vibe has changed and the vibe has changed pretty significantly in, it’s been changing for a little bit of time due to certain events with the selling of Twitter and whatnot. But I feel like it’s very different in the last few months. And for me personally, it doesn’t suit my purpose anymore and it’s not a place that I find very fun. It’s not useful for me for my career stuff, and Blue Sky seems to be taking hold. It’s like Twitter in 2007, 2008, and that’s really fun. So I am over on Blue Sky enjoying those early days where people are doing a bunch of little apps and creating analytics and doing little silly things. All the things that you go to be able to do on Twitter with the API stuff, I’m sure it’s going to change and evolve over time, but it just, it’s the kind of thing that I want to be a part of rather than what Twitter has turned into now.  

Rob Walling:
Got it. So for you it’s a personal preference of the type of social media that you’d like to be part of  

Tracy Osborn:
And I also feel like there’s an opportunity, might as well make an account. I did one for TinySeed, just I’m going to cross post between TinySeed and Twitter and Blue Sky for the time being because I feel like might as well. And if it does take off then it’s already there and it’s pretty nice to have that in there because Blue Sky, you can verify using your domains, so it’s really easy for people to find TinySeed. It’s just TinySeed dot com. So I feel like there’s some business reasons to do it, jumping on a network when it’s early, but largely for me it is personal preference in terms of the way I want to experience a social media network  

Rob Walling:
And our V set, what’s the counterpoint?  

Einar Vollset:
These are all good points. I think I just can’t be bothered to join another thing. I’m like, why do I care? I mean honestly, I’ve been on Twitter since 2007. I think I am on there all the time. You see, it’s changed radically. It hasn’t changed all that much for me. It’s always kind of been a show for years now. That’s what I’m used to. It is what it is.  

Tracy Osborn:
I mean, you’re in good hands with your posting, so it is. That’s true.  

Einar Vollset:
And 

I think certainly it used to be a certain kind of place I think before and it was pretty left wing, it was pretty progressive, it was pretty of a type and I think it’s become more balanced let’s say now than before. And so I think you’re more likely to see things that maybe you don’t agree with than you used to. I feel like it used to be very, if you were a San Francisco type liberal, you get a lot of reinforcement of the things that you believe on the old Twitter versus now you definitely get some of the other stuff. And I don’t know some of the stuff, there’s no doubt that I see full on. I see both communists and Extreme right wing white nationalists on Twitter more than I used to, but I mean it’s always been for me, I just don’t think it’s changed all that much I think.  

Rob Walling:
And how about Blue Sky? Do you think Blue Sky will gain traction and be around in three years and be bigger than it is today?  

Einar Vollset:
No, I think it’s just a hissy fit to a degree. And I feel like it’s been that there’s been Threads was kind of the same. What was the other one before that? Wasn’t there another one? Not this Macon Bason. There you go. That was the new thing that was supposed to be a thing, and I’m like, yeah, okay, great. If it becomes a thing, then it’ll be a thing. And I am not saying I’m not going to wander over there, but right now I’m like, look, I only need so much screen addiction. Twitter gives me plenty of that.  

Rob Walling:
And for me, I think we’ve kind of heard two viewpoints here pro and con, and I’m genuinely the middle. I do have an account on Blue Sky, I’m Rob Walling dot com if folks want to hook up with me there, and I’m more doing it to keep an eye on what’s going on. I am posting some of my Twitter posts over on Blue Sky. I find that the community is much smaller. I know everyone that I’ve followed in essence, which is interesting for now, but the volume over there, it’s just very light. If I open Blue Sky a couple times a day tops, I’m like, oh, I’m all caught up because I’m just looking at the people you follow tab and I only follow hundreds of people. So it’s not just this constant free flowing flow of stuff that I don’t necessarily care about Twitter for me, I don’t care about the political stuff. 

It just doesn’t bother me either way, left or right. I’m just kind of like whatever. I mean, if something’s offensive, obviously it bothers me, but I’m not seeing an inordinate amount of left wing or right wing or whatever. I’m just seeing. I don’t care about, I’m seeing stuff from whether it’s Elon Musk or some celebrity who posts something or blah and it’s just like, I didn’t follow this person. I don’t give a fuck about this topic at all. So that’s the thing that I’m a little fed up with. So I’m going that there’s the what is there, the four U tab, and then there’s people you follow tab, but then I go to people you follow, there’s a reason. There’s an algorithm that is boring. There’s a lot of people I follow that’s like, man, I really don’t care about what’s going on with you.  

Einar Vollset:
I’ll say that one thing I have started doing with the following that I had to do when you guys sort of forced onto the four U tab is when you see things that you’re like, it’s stupid, tell it. It does work pretty well. I feel like if you’re just like, I don’t seeing what I see on Twitter, I’m like, whoa. Or X, sorry. Then I think like, well, you’re just not telling it what you don’t like, because it pretty quickly shapes into if you spend half a day looking through and being not interested, not interested, not interested, it does update pretty quickly I would think.  

Tracy Osborn:
So I have one more point before we kind of evolve the conversation, but I just wanted to bring it back for folks who might be thinking about should I move over and the vibes of blues for folks who are indie hackers, makers trying to share what you’re doing in public. So if that’s something that you look forward to being part of a community of folks, sharing what you’re working on, how you’re building your next indie project and whatnot, then I would say check out Blue Sky. I think that in particular, that area has been really taking off.  

Rob Walling:
And Tracy, your prediction, do you think Blue Sky will be around in three years and bigger and have more traction than it is today?  

Tracy Osborn:
I would bet so. I could be wrong, but it feels like it terms of the herd instinct of folks and the herd instinct of tech press and whatnot. There’s more now than there was when Macon and Threads and everything else launched a few years ago, including Blue Sky, which was the two years, I guess Blue Sky has been around for a few years and nothing was really happening. And then finally this magical moment happened where people all of a sudden moved over and they had that inflection point. I think that now makes the service more useful.  

Rob Walling:
And so just because we want to keep things interesting. Tracy Einar, what are you going to bet? What kind of cash are we going to put on this bet of It’s a three years out, so someone’s going to have to remind us. Reach out. Listen to this episode.  

Einar Vollset:
I think it should be a hundred bucks.  

Rob Walling:
Oh, I was going to say a  

Tracy Osborn:
Thousand.  

Rob Walling:
Wow. Whoa. Now we’re talking. Yeah. All right. You heard it here first. Tracy Osborn. Thanks. Three years. Wait, AER has to agree to  

Tracy Osborn:
1,002.  

Einar Vollset:
Whoa, whoa. What’s the definition of being around here? Because I can see Tracy buying bluesky.com and just spinning up her own little thing three years from now just to get a,  

Tracy Osborn:
Which bluesky.com is not the network,  

Einar Vollset:
Isn’t it?  

Tracy Osborn:
That’s someone else. So I’m sure they’re just  

Einar Vollset:
Wait minute, wait a minute. Why do they name it bluesky if they don’t own blues sky.com? What is the domain then?  

Tracy Osborn:
It’s like B sky.  

Einar Vollset:
What? Actually let’s make it $10,000. This isn’t going to last you into the fucking next year. Forget it.  

Tracy Osborn:
No, I’m capping out a thousand here.  

Rob Walling:
So a thousand dollars and yeah, not that it’s around in three years, but that it has significantly more traction. Do you know what’s the daily active users right now? Anyone?  

Einar Vollset:
I mean it’s Tracy and you guys. That’s two.  

Rob Walling:
So I just did a quick Google and it says that Blue Sky has 20 million users. That’s not daily active. That’s not monthly active. It says user. So I’m thinking that’s registered account. So what is the definition of in three years, this being around and having significantly more traction,  

Einar Vollset:
Significantly more, a hundred million.  

Rob Walling:
I was going to say 50 or a hundred. It’s got to be somewhere in there. If it’s 30 is not it. This is a dying social network. If it adds 10 million in three years, so let’s say a hundred, I like that.  

Tracy Osborn:
I would also say if Rob Walling posts more on Blue Sky than Twitter, at that point, I would consider it a live network at that point. Wow.  

Einar Vollset:
Okay. So all I have to do is convince Rob not to post more on there and make a thousand bucks. Hey  

Tracy Osborn:
Rob, you want to make 500 bucks? Sure deal. Do that to your detriment,  

Rob Walling:
Moving on. And where is Threads and all this threads? What are you doing, man?  

Tracy Osborn:
Threads just engage. Every time I open Instagram, it’s like, Hey, let’s look at the thing that make people pissed off so they’re all responding to this. So for me, it’s threat. I mean, I clicked on it a few times. It is interesting. People are like, oh, I was at the airport and Delta screwed me over and I talked to this person and I clicked on those a few times because like, Ooh, I want to know what happens next. And then I realized, wait, it’s just pulling me in by making me pissed  

Rob Walling:
Off. Exactly. It’s the worst of  

Tracy Osborn:
Social media. And so Zuckerberg, he just announced, he finally put in, because Blue Sky is taking off, they added an option. So you can just see the folks you’re following on threads. They’re feeling some pressure from Blue Sky and they’re changing threads in response. I think folks are so fed up with threads that I feel like they’ve kind of missed the boat, so to speak.  

Einar Vollset:
I don’t get it. So the reason I think I didn’t sign up for threads was I have a private Instagram, just family things and you have to use this account. And I’m like, no, I’m not doing that. This is a private, this is why I never signed up for Threads. I just didn’t want to open that Pandora’s box. So why aren’t people pissed off with threats?  

Rob Walling:
It’s just too algorithmically driven. Everything is engagement based. All the posts you see is people being angry or people doing When I post A, so what are the most underrated guitar solos of all bands from the seventies? And then you want to weigh in, right? You’re like, oh my gosh. Well, obviously Jimmy Page is solo on StarWay to Heaven is just underrated, dah dah, dah.  

Einar Vollset:
You’re so old. Dude,  

Rob Walling:
That’s seventies. Are you nearly 60? No, not even close. And so that feels just rude. I wonder.  

Einar Vollset:
Played rude. There we go. Perfect.  

Rob Walling:
For listeners who don’t know, I just held up my a RP card. Someone thought it was funny to sign me up for the American Association of Retired People here  

Einar Vollset:
In the United States. It wasn’t a problem.  

Rob Walling:
Anyways, it’s engagement bait. It’s just vapid content. It almost feels like just listical type stuff. So I go there, I don’t go there anymore. I’m just like, I don’t need this in my life. It’s not interesting. So let’s move on to our second topic. I hear rumor that TinySeed is raising their third fund, a r vol set TinySeed dot com slash invest. If you are an accredited investor and you want to invest in US companies or UK entities, you want to talk people through what’s going on. We’re just kicking this off.  

Einar Vollset:
I mean, I guess most people know TinySeed and what it is and why we’re doing it and all that stuff. We’ve been doing it now since 2019, so it’s been half a decade. Unbelievably  

Rob Walling:
First startup accelerator for SaaS.  

Einar Vollset:
Yeah, and it’s worth thinking about 2019, what was going on at the time. It was right around the time actually it was Sam Altman now of OpenAI who wrote an article, I think he was YC president at the time or maybe he just left or just starting. He wrote this article saying how to invest in startups. And his main point was don’t invest in anything unless it can be 20 billion. And really TinySeed was sort of a response to that. It was like, look, there’s got to be a different way to help founders who wear successes selling to private equity or strategic for 50 or a hundred or a couple million dollars. That sounds like success I think to most people. And so really that’s what we’ve been trying to do with TinySeed and we’ve been doing it, like I said, we did our first fund 2019 deployed. 

That was kind of at the time I actually got some advice saying, you should call this your fund zero prototype fund. And I kind of wish I had done, but I didn’t. So it is our fund one. We raised about $5 million. I’m sure our compliance person is going to shoot me now, but our sort of mark on there is we’re at about two two and a half x markup on that fund, which it’s not quite apples to apples, but certainly Carta came out with a venture benchmark report here earlier this year and we’re basically in the top five to 15% of most metrics of venture funds. We’ve started returning capital from that fund. And then we raised our second fund in, well, two funds really. One US focused and one European EMEA focused in 2021 in 2022. And those are also starting to sort of trend the same way. 

And really this fund, the strategy here is like, look, we think this seems to be working and we’re sort of just looking to keep executing on that strategy. So if this is interesting to people get in touch through that invest page, you’ll eventually end up in my inbox and I’ll reach out and I can share some more information. And like I said, you have to be accredited or a sophisticated investor depending a little bit on the fund and there’s some minimums and some things there, but certainly get in touch and I can describe what we got going on.  

Rob Walling:
And we’ve invested in a lot of companies approaching 200 B, two B SaaS companies, and so that we’re going to continue investing hopefully at that pace over the next several years. So it’s a really nice way to index in quotes into a lot of early stage B2B SaaS companies. I don’t know of any other place that you can do it. We do it just the ecosystem of MicroConf TinySeed, this podcast and my books and all that. It really has, if you’ve ever been to a MicroConf event in person or online, it’s a unique group of folks and a good chunk of the TinySeed companies come out of folks who are in this community.  

Tracy Osborn:
I mean, it’s the REDDEST community, the best community out there.  

Einar Vollset:
Yeah, it is. I think it’s one of those things where it’s like, look, if you believe that sort of B2B SaaS, the mostly bootstrap, there’s value creation there. It is one of the better ways to access that market. It’s hard to do as an individual investor just because it’s so early. You really need to be making enough bets that you have the chance of finding the ones that do really quite well and getting access to that deal flow. And that’s very, very hard to do as an individual investor and probably only a handful of people worldwide could do it in sort of the same way that we do.  

Rob Walling:
Our third story of the day is TechCrunch article about Y Combinator. It says Y Combinator often backs startups that duplicate other YC companies. Their data shows it’s not just AI code editors. And to give folks background, if you’re an accelerator and you’re investing in a lot of companies, you inevitably will back competitors over time. And at TinySeed, we have also had to face this because you can’t invest in 200 B2B SaaS startups and expect to never invest in two companies that compete, right? So 500 startups has this Techstars yc, they’re all going to have it, but this TechCrunch article where they analyzed the data was interesting. I have kind of mixed feelings about it. I think I’ll probably kick it over to Tracy for first thoughts.  

Tracy Osborn:
The thing that really resonated with me, particularly because I’m part of the TinySeed applications process and going through interviews and picking folks and sending over offers, is that they specifically called out that they are backing the founders, not necessarily the idea, which is very similar, pretty much what we are doing as well because things change over time. People pivot, they find new ideas, they change their positioning, and folks can already, even if we try to do it based on the companies themselves and try not to back competitors, then eventually they’re going to be competing At some point people are going to, they might pivot, move around, might. Yeah, totally over time. So I thought I really resonated with that part and I was like, okay, good. I mean that we won’t really compete with yc, but it does show how the right person, the right driven person who is all in just executing super fast and doing really good stuff. It’s something we do at TinySeed and YC is doing that as well. But also yc, what are they doing per batch? I guess they’re doing four batches per year now and hundreds per season.  

Rob Walling:
I think it’s 150 to 200.  

Tracy Osborn:
Yeah. Well at TinySeed we have some competition, but then you step back at yc and then of course they specifically say in the article that even within batches and even within, I forget what they call it, but a cohort with their one partner, they’ve had competitors within that. And I’m like, that’s a little bit too close for me for my comfort with TinySeed. I want people to feel comfortable. This is something I did I had to deal with in 500 startups because I was with another startup doing wedding stuff, and that’s a whole podcast on its own, how awful that was. So I’m always cognizant of that at TinySeed. I’m surprised at YC doing that, but they’re kicking butt, so they must be doing something right.  

Einar Vollset:
I think it’s hard. One of the points that we make at TinySeed founders too is like, look, even if we had a strict, which we don’t, a strict policy, we would never back somebody who’s competing to anybody, not possible, but companies pivot all the time. It’s almost like a religion just to be like, it’s not working. Let’s do something completely different. And what are you going to do? Say people like, sorry, you can’t pivot into what you want to pivot to because we’re already backed someone doing that. That’s not going to work particularly as a minority investor, but just in general, it’s just like you can’t stop people doing that. Like I said, and the batch sizes are now, I think it’s more than 150 now. I think it is probably a couple of hundred. It used to be for the longer. I think 2020 or 2021 was the high point. It was like 300 or 400 per batch,  

Rob Walling:
But they were doing two batches a year. Now if they’re doing four, it’s got to be a little smaller. Yeah.  

Einar Vollset:
Oh, that’s right. Oh, then it might be a hundred or 150. I don’t know.  

Rob Walling:
So folks have an idea. We back across Americas and emea, we do two rounds per year every six months, and we get about 22 to 30 companies between both of those. So still a good pace, but it allows us to be a lot more hands-on and ideally not back direct competitors within the same batch. That’s kind of something we have been able to avoid to date because that feels like it could be a little bit awkward.  

Tracy Osborn:
I should mention that if there’s anyone who’s like TinySeed or yc do both. We have a few folks that have gone into TinySeed and then gone to yc. There’s advantages. I say obviously as someone who’s running a TinySeed accelerator program and being very biased towards it, but also my husband went through Y Combinator for different programs like YC is what they do, they kick butt at. And what we do, I think we kick butt at it too, but they don’t necessarily conflict. So if there’s anyone who is like, you know what, I’m looking for an accelerator program in B2B SaaS, we are fans of yc and we do encourage folks who are in TinySeed that feel like that’s the place where they want to go to jump into that, but you’re going to have a very different experience in terms of that. We have a lot fewer founders, a lot of you companies, whereas in YC, you’re going to be one of thousand. But they have other advantages that make up for it.  

Rob Walling:
And we focus on B2B SaaS. We are some of the best in the world at this. And so if you are B2B SaaS, you’re going to get more direct help. But man, if you want to raise buckets of money, this is going to play a better place than yc easy to raise. Our next story is an article on Swapnil Han’s blog. Sorry about the pronunciation there. We will certainly link this up. Title is procrastination and the fear of not being good enough, and it’s actually a short article. There’s some headings, am I just not good enough? Do I care too much about what others think? Pushing through to be able to ship stuff. The reason I bring this up is imposter syndrome is often talked about in startup space and we see mindset being such a critical element to founder success that we actually retroactively went back. 

We have our tiny C Playbook, which is seven different modules. We added playbook zero that is all about mindset. And this is a big part of it is getting over imposter syndrome. It’s not fake until you make it because faking it, I have such issues with this online of people faking stuff that’s not real, but it is internally maybe having more confidence than you think you, you should. But people get hung up and they get analysis paralysis and they don’t take action. They don’t know if what they’re doing is right and blah, blah, blah. And that is really what I wanted to call out because I know a lot of founders feel this and I know a lot of founders deal with this as they’re starting their company of not knowing what to do next, not knowing if they’re going to succeed, wondering when everybody’s going to find out they don’t know what they’re doing. So to kick us off and our ep, have you seen this trait in founders and what is your take on getting over it?  

Einar Vollset:
Yeah, I think it’s actually one of the biggest mistakes you can do as a founder. That’s sort of what I think. And I think not like fear not being good enough. That’s hard. Just get over your fear not being good enough. But I think what it materializes into a lot of the time is like you say, analysis paralysis, needing more and more and more data and favoring analysis over just action. And it’s one of the things that we tell our founders pretty early on and just try to hammer into them. And if I could filter it for this at the interview stage, I would just because I think it’s so important just as having a bias for action and being okay with operating under uncertainty. We had to kick off in Barcelona here a couple of weeks ago and I told this piece then I was like, look, a lot of the time this analysis paralysis or not moving fast enough, not moving stuff tends to be because founders, they really want to reduce uncertainty. 

They kind of don’t want to spend resources or time worrying that it’s the wrong thing. It’s uncertain whether they’re going to get a payback, particularly if you’re sort of bootstrapped, you don’t have a lot of resources, you don’t want to waste it. But my point that I was making these guys is like, look, you want to embrace uncertainty. That’s what you need. If you didn’t have uncertainty, you’d be dead in the water. As a startup, if you don’t have uncertainty on something, there’s nothing for you to exploit. If there was an market opportunity that had zero uncertainty about it, how to do it or whether it was worth doing, then someone more better resource than you would’ve already done it. And so a startup person as even as a bootstrapper, you want to operate in environments that have reasonably high uncertainty and you don’t want to wish it away. 

And I think your superpower as a startup founder tends to be tolerating operating uncertainty and making mistakes and still being able to move fast and do things under those kind of conditions. And I think sometimes around founders who sort of wish there was less uncertainty, but I actually think that would be a mistake. I don’t think there is put a gold at the end of the rainbow if there is no uncertainty. I just don’t think it’s a thing. You have to embrace the fact that, look, if you want no uncertainty, you should go get a job. And even that’s not completely uncertain, but you shouldn’t want to be a startup guy if you can’t oral, if you can’t handle that uncertainty and sort of embrace it.  

Rob Walling:
How about you Tracy? What are your thoughts?  

Tracy Osborn:
I definitely drink the TinySeed slash Einar.  

Einar Vollset:
There’s  

Tracy Osborn:
Another place where I see there’s a side to this. I see in myself I, I’m an information gatherer and I love reading things, everything I can about B2B SaaS and sales and churn and all that kind of stuff. And there’s a paralysis of then knowing what the right way of doing things and being aware of how much work it is to do it the right way. And then I kind of procrastinate because I’m aware of how much work it is. Whereas before when I was just getting into startups, I kind of just flung myself into things. I got things done because I didn’t actually have an awareness of how much work it actually would be. And I was blissfully unaware about of what it could be like to be a founder. And so I was just executing fast and doing the 80 20 and all that kind of stuff. And now it’s a little bit intimidating when the full sales process and all that kind of stuff, rather than just being, getting on the phone with someone. It’s easy to procrastinate when you have too much information.  

Einar Vollset:
I think sometimes it’s just a matter of I didn’t realize that we couldn’t do it, so I just did it. Actually. 

It’s like General Patton during World War II famously, or maybe if you’re just a nerd, he got an order not to take to bypass this German city because he was going to take four divisions and they didn’t think it was worth it. And he radio back and says, I took it with two, should I give it back? Kind of thing. So I think there’s a certain amount of that. The ignorance is blissing, but I also think one thing to internalize also is that most doors are two eight doors. There’s very, very, very few things in the startup world that can’t be undone if it turned on out to be the right thing. And it’s just to a degree just kind of try it and see it tends to be the best approach.  

Rob Walling:
Our last story of the day is about Australia proposing their quote, world leading ban on social media for children under 16 from Reuters. We will link it up in the show notes. Tracy Osborne is someone who has been on social media since you were 16. No, I’m just kidding. But  

Tracy Osborn:
I mean kind of. I was 11 years old. Was  

Rob Walling:
It Tumblr?  

Tracy Osborn:
No, this is before Tumblr. I had  

Rob Walling:
TI  

Tracy Osborn:
Had, yes, I owed bed a chat into my website. I had a Terry Brooks fan website and I had a chat on there and Terry Brooks, the author, fans around the world would use my chat and my dad would be like, what are you doing? Are you in a chat room? And I’d be like, no. And I go back to talking to all my friends on the internet. So technically yes, there was some sort of social network that I was probably not supposed to do it that time, but as an adult, as someone who is in her forties, I feel like the internet has kind of updated. I’m curious, Rob, you have kids and I’m curious what you think about this. I don’t have kids myself. I just have my own experience of,  

Rob Walling:
Yeah, it’s interesting and then I’ll pass it to a R as well, because a R has kids under 16. I don’t think social media is good for anybody. I especially don’t think it’s good for kids who are just so much more addictable, which is not a word, but it’s just easier for them to just get hooked on stuff. As you can tell by you, give a 10-year-old an iPad and they’ll play it for 24 hours straight and not eat and not sleep and all that. Not saying adults don’t do that, but it’s definitely the brains are still forming. So I don’t think social media is good. I also don’t think kids having cell phones carrying around all the time is good. And yet I have a 14-year-old with a cell phone and I have an 18-year-old with a cell phone. The question for me is, do I want the state legislating that? 

I guess if the state does, then that makes it easy across the board because then when my 14-year-old says, but you won’t let me on insert name of Snapchat, it’s like, oh man. But all the other kids do, and if the country bans it, then it’s not an issue for me. Now, do I like the country or my government overreaching and telling me what kids can and can’t do? Well, I mean I guess they do it for alcohol, right, and smoking. And is social media as bad for them as that? It could be debatable, right? They’ve done studies of the high suicide rates. So I overall am probably just fine with governments limiting children’s use of social media. I do think it should be the responsibility of the parents, but I just know so many parents that don’t it much be like, let’s say there was no drinking age minimum and there was no smoking age minimum, that would be a problem. 

There would be parents that wouldn’t care, wouldn’t enforce, and we’d have 13 year olds, not that we already don’t, but we’d have 13 year olds smoking a pack a day and drinking a bunch. So I do think having the laws and some barriers is not a bad thing for the government to impose. My kids are barely on social media. They’re more like in Discord and they’re in messaging apps where they message friends, but they’re not in public places where they’re posting. They’re not doing Twitter, Instagram to public audiences. Einar Vollset, you have kids under 16. Are they on social media? And what do you think of policy like this?  

Einar Vollset:
Well, it sort of depends. I define social media, but no, they’re not on social media that I’m aware of anyway.  

Rob Walling:
That’s the thing.  

Einar Vollset:
They’re on discord with their friends and YouTube is a constant in my household. So that’s the thing. Yeah, I guess I don’t more the libertarian side when it comes to this. I don’t trust the government to tell me what to do with my kids fuck yourself kind of thing. This tends to be my standard MO when it comes to, I’m like, really? You’re going to regulate this? And this is me having been in academia. Anytime there’s a newspaper piece about what experts found, I’m like, did they now? Okay, I don’t believe you. So that tends to be the thing too. So I’m like, look, good for you Australia. You do what you need to do. But do I think, would I be excited if Gavin Newsom decides to this apply to California? No, I wouldn’t. I would almost be like kids that sign up for social media. But that’s probably more my personality, more anything else.  

Tracy Osborn:
I mean, I look also back at my 11-year-old self clicking through all the, are you 13 messages on the internet? And I was like, yep. Even though I was 11. So it’s not like it’s hard to get around.  

Einar Vollset:
No. So I actually only peripherally paid attention to this thing. And the Australia thing is, look, the more concerning thing, and this is again, the more libertarian side of my personality is like, how are they going to enforce this? And the answer is apparently that they’re going to require all Australians to provide identification to access the internet. And at that point I’m like, no, no, you don’t get to do  

Rob Walling:
It. That’s the problem is these things infringe, right? They start getting real up in your face. Yeah,  

Tracy Osborn:
They have good intentions, but the outcomes are terrible. Yeah.  

Einar Vollset:
Yeah. So that’s my view. I’m like, I don’t think so. My personal view,  

Rob Walling:
Tracy Osborn, if folks want to keep up with you, you are. Tracy makes on Blue Sky.  

Tracy Osborn:
I mean it is. In my title it says Tracy Osborne parentheses. Tracy makes literally for you, Rob. I put it in there.  

Rob Walling:
I’m going to say this is not going to die with you. You know that Tracy Osborn dot com on Blue Sky and our vol set while you are in our set on X Twitter, if folks want to keep up with you, they should head to TinySeed dot com slash invest.  

Einar Vollset:
That’s right.  

Tracy Osborn:
He’ll be our best friend. If you come with a bucket of money,  

Einar Vollset:
Buck I money. I’m only accepting pockets of money these days. No small change. A hundred dollars bills only. Yo,  

Rob Walling:
Thanks for joining me. You too.  

Einar Vollset:
Thank you.  

Rob Walling:
Thanks to tracy osborne.com and a r vol set for joining me this week on the show. And thank you to listening to this episode and with you’ve been listening for five or 500 episodes, I appreciate you being around. If you keep listening, I’ll keep recording. This is Rob Walling signing off from episode 744.

Rob Walling:
I’m Rob Walling and in this episode of Startups For, the Rest, Of Us, my wife, Dr. Sherry Walling and I read chapter one of our new book called Exit Strategy, the Entrepreneur’s Guide to Selling Your Company Without Regret. This effectively will become the intro and first chapter of the audio book, so you get a free preview of the audio book to see if you might like it. The Kickstarter for this book closes this week on December 12th. You can of course go to kickstarter.com and search for exit strategy or you can follow the link in the show notes. It would be amazing to have your support. This campaign is not doing as well as the SaaS Playbook did, and so every bit helps, every pledge helps, and even if you are not thinking about selling your business today, I believe it is never too early to set yourself up for success, even if it’s months or years down the line when you decide to sell. 

And this book talks about all this stuff to think about before, during, and after. And the before section is super helpful even if you aren’t thinking about selling today. In addition, applications for the all new MicroConf Connect are closing today. December 10th. MicroConf Connect is our application only membership and we only open applications once per month to ensure everyone who’s accepted is onboarded together in a cohort and that we can give them the support they need. All members who sign up will have access to an Ask Me Anything with me on December 12th. If you miss the application date though, you can make sure to sign up for the wait list. We’re going to reopen applications after the new year. That’s MicroConf connect.com and with that, let’s dive into the intro and first chapter of Exit Strategy. You’re listening to Exit Strategy, the Entrepreneur’s Guide to Selling Your Business Without Regret. Written and narrated by Sherry Walling, PhD and Rob Walling,  

Dr. Sherry Walling:
Not PhD.  

Rob Walling:
Well done  

Dr. Sherry Walling:
Rob Walling Odd Blank Space.  

Rob Walling:
Thanks for pointing that out. This book has a forward by John Warlow, the author of Built to Sell and several other books about selling your company.  

Dr. Sherry Walling:
He’s a pretty smart person,  

Rob Walling:
Very smart. It was awesome to get his forward book is Copyright 2024 by Rob and Sherry Walling. There’s a lot of praise in here. John Warlow, Jason Cohen, Derek Sivers, JJ Virgin, Sam Parr. Ben Chestnut. I think we did good. I really appreciate everyone who wrote us a testimonial.  

Dr. Sherry Walling:
How much did you have to pay those people to say nice things about this book?  

Rob Walling:
Exactly. $0 and 0 cents. Did send an email to them though. Really appreciate  

Dr. Sherry Walling:
That. Thanks y’all for saying nice things about the book and reviewing the book. I mean, a bunch of them actually read the book.  

Rob Walling:
That’s the dirty little secret right of author blurb. Testimonials is most of those are just because someone and they don’t actually endorse the book, they don’t read it, but I get the sense that most or all,  

Dr. Sherry Walling:
Most of our people, this book,  

Rob Walling:
Yeah,  

Dr. Sherry Walling:
This book is dedicated to Genesis Riley Cook being her guardian parents taught us a great deal about going all in on love and letting go with grace. So let’s jump in. This is the introduction. The last days exiting your business with intention. It feels like I’m going through a divorce. This is the most stressful thing that’s happened to me outside of my wife getting cancer. Is it reasonable to feel like this is one of the most difficult parts of my life? These thoughts are not what you would expect to hear from someone in the midst of an event that will leave them millions of dollars richer, but we hear them all the time. Different wording, different dollar amounts, the same sentiment I’ve been working my whole life for this moment. Why is it so painful? Selling your company is one of the most fragile points in the life of an entrepreneur. 

It is a messy psychological process, often accompanied by an implosion of identity and emotional stability. It requires an extraordinary amount of focus over a long period of time. It disrupts your sense of meaning, your sense of accomplishment and your vision for the future. It’s extremely challenging for your personal and professional relationships. Exiting a business is a transformational experience that few people have Beyond the headlines and highlight reels, there’s sparse conversation about how to do it well. We have a few models to describe the nuts and bolts of the process, but none to guide the deeply personal aspects of a monumental deconstruction and reconstruction of one’s life. We call an exit transformational because it involves change at every layer of life. From the way you introduce yourself to how you begin each morning, what your bank account looks like and the fears that keep you up at night building and then leaving a business is emotionally similar to raising a child who heads off to adulthood and inadvertently fires you from the day-to-day tasks of parenting. 

You can do everything right and have a wonderful outcome for all your labor and still feel deep emptiness and disorientation. Like any good story, your business has a beginning, a middle, and an end. There’s the seed of a dream that kicks off the adventure. There’s the arc of the story complete with try fail cycles, emotional peaks and valleys and plenty of high stakes, and then there’s the big finale, the exit. You will exit your business. You might sell it. You might go public and get voted out by the board. When you don’t hit your quarterly targets, you might shut it down either by choice or because you feel the story arc has finished or because you run out of money. You might choose to step into retirement and hire someone to take over day-to-day operations. You might die and leave the spreadsheets and shipping deadlines to be decoded by your co-founder, COO or spouse. 

One way or another, your relationship with your business will end and although there are several ways this relationship can end, this book focuses on exiting via a sale. This is the exit most entrepreneurs aspire to achieve, one that warrants significant preparation and planning. Every founder knows this intellectually, but if you think about their exit until it’s too late and no one is prepared for how hard it’s going to be, the good news is that you get to shape the story arc of your company. You get to participate. Are you writing the story or is this story writing you? There are plenty of books about major life transitions from aging to divorce to empty nest. The sheer volume of self-help and practical guidebook speaks to how difficult and momentous these major midlife shifts are for the human psyche. However, few books prepare you for selling your company. 

Of course, exits are not nearly as universal as kids leaving home or the slow transitions of aging, but for the millions of people who identify as entrepreneurs, some kind of exit is inevitable. This significant and disruptive experience in the life of the business owner is not given the thought or attention that it deserves. Exits are complicated. They are financially and legally intricate. They are incredibly stressful. There are many relational implications. They also rearrange a founder’s identity in deeply felt and widely sweeping ways. No matter where you are in the process, it’s important to prepare yourself for your exit to achieve your optimal outcome. You must be mindful about setting yourself up for the exit trajectory most congruent with your goals. Exits are not magic. They don’t just happen one day when the money wizards stops off at your office with a wheelbarrow full of cash. They are usually the result of careful planning and thoughtful decision-making. Failing to prepare can result in many complications even if you do achieve your optimal outcome and sell to someone you trust. For buckets and buckets of money. A simple truth remains. Selling is one of the hardest experiences of a founder’s life.  

Rob Walling:
When we tell this to entrepreneurs, they rarely listen. They nod and they smile politely. They hear what we’re saying, but they don’t really listen. After all, every part of entrepreneurship has been challenging and if they’re going to sell anyway, what does it matter that it will also be hard. We’re not telling you this to scare you off. You already know selling will be hard even if you don’t yet know how hard and who better to prepare you for this difficult journey than a clinical psychologist specializing in entrepreneur mental health and a serial entrepreneur with 20 years in the trenches supporting founders through the full scope of the entrepreneurial journey.  

Dr. Sherry Walling:
Hey, that’s us.  

Rob Walling:
That is us. Between the two of us, we’ve seen hundreds of founders through their exits. Dr. Sherry has been helping entrepreneurs with their mental health relationships and big decisions since 2016. Prior to this, she spent 10 years helping people put their lives back together after trauma loss and major disruption. She has deep expertise in grief along with personal experience coming back to life after a significant loss. For more on this, check out her book Touching Two Worlds.  

Dr. Sherry Walling:
As the co-founder of MicroConf for TinySeed, Rob has worked with thousands of founders across all stages of business. He has also started six yes, six companies and gone through multiple exits including his successful and wildly stressful exit from Drip.  

Rob Walling:
Did you roll your eyes when you said six companies? Like each one of those took years off your life?  

Dr. Sherry Walling:
Yeah. I can name all of my gray hairs and wrinkles after the companies that  

Rob Walling:
After each of the companies, our first book for startup founders, the Entrepreneur’s Guide to Keeping Your Shit Together, how to run your Business without letting it run You helps you navigate the beginning and middle of your business’s story arc. This book is about nailing the big finale. In writing this book, we aim to shine a light on the path before you so you can see the challenges and pitfalls ahead. We can’t make those challenges and pitfalls easier, but we can prepare you to face them. Our goal is this to help you protect your family, your relationships, and your mental health while working toward the best possible exit for you and everyone in your company. This book offers frameworks to simplify the complex mental, emotional, and relational challenges of exiting. It draws on the combined wisdom of thousands of founders we’ve coached, talked to, laughed with, cried with, and advised over the years.  

Dr. Sherry Walling:
You’ll also hear firsthand lessons from Rob’s own experiences selling his companies and my experience during him on as well as insights gleaned from interviews with other entrepreneurs about their exits.  

Rob Walling:
Finally, we provide practical strategies to help you exit well. We will touch on the elements of a deal and some basics of negotiation, but this book focuses more on the space between your ears than the line items in the contract. For detailed guidance on deal structure and company preparation, see our resources at the end of this book for well-crafted, practical content about preparing your business for your departure. Whether you’re selling an e-commerce company, a children’s brand, a trapeze franchise, a consulting agency, or a software as a service or SaaS business, we’re here to help you prepare. Every exit is unique and there’s no such thing as a game plan that will lead you through all the steps. As the Spanish poet Antonio Machado wrote by Walking the path is made and when you look back, you’ll see a road never to be trodden again. No one can tell you how to walk the path, but we can equip you for the journey. Let’s get started.  

Dr. Sherry Walling:
Let’s get started. Section one of the hardest things you’ll ever do. Chapter one. Why is this so difficult? Julie Ellis and her three co-founders hadn’t intended to sell their beloved children’s label company Mabel’s labels, but when one of the largest companies in their space made a $12 million offer, the four co CEOs decided it was time the business structure of four co-founders with equal decision making power was starting to feel too slow for the rapidly growing company Julie told us in an interview, yeah, that makes total sense to me. For people making decisions is a lot. Plus, after 13 years of pouring all their resources into building the business, the sale would provide each of them with a nice nest egg for retirement. There comes a time when getting your money off the table starts to look pretty appealing. She said the timeline was aggressive less than six months from the first talks to the closing date, but the acquirer checked the boxes. 

Julie and her co-founders wanted checked. They were Canadian owned and would let Mabel’s labels keep running on its own rather than dismantling and absorbing it. It seemed like the perfect situation, but Julie quickly learned how exhausting selling a business could be. The exhaustion only grew as she went to work for the acquirer immediately after the sale and realized that the marathon finish of the acquisition was actually the starting line for a new kind of race. Six months after the sale closed, she left the business. She thought she would never leave exhausted and uncertain about her next direction. As entrepreneurs we’re always climbing for a pinnacle, Julie said, but there’s always another pinnacle after the first one and another one after that, and many entrepreneurs fall into the trap of dismissing or diminishing their accomplishments. We have an inability to find a plateau and rest on it. 

For a little while, said Julie. For Julie, the exit was a vast plateau. It should have felt like a victory, an opportunity to rest, but her entrepreneurial mindset was trained to keep pushing for the next accomplishment. Sitting on that plateau sparked an avalanche of new questions. Is this the best I will ever do? What will happen next? Was it a mistake? Even when an exit is going smoothly? The untold story is that many founders experience a significant mental implosion during and after the process. It’s possible for something very good to happen while still feeling a lot of emotional turmoil or conflict. These emotions can coexist. Talk to anyone who’s had a baby gotten married or started their dream job, and you’ll often hear that the joy was accompanied by a sense of inner disorientation. Exiting is an emotionally tumultuous event and it’s worth taking the time to prepare your mind as well as your business. We are not trying to scare you, but time and time again entrepreneurs have said how surprised they are that selling their company is so hard. If you go into it with eyes wide open to the challenges and armed with strategies to get through them, you’ll be miles ahead of someone who’s going into it with the magical thinking of signing some documents that yield a personal bucket of money and a room full of elated employees, friends and family members. So let’s start by digging deeper into the psychology of what makes this process so difficult.  

Rob Walling:
Hiring senior developers can really move the needle in your business, but if you bring on the wrong person, you can quickly burn through your runway. If you need help finding a vetted senior results oriented developer, you should reach out to today’s sponsor lemon.io. For years, they’ve been helping our audience find high quality global talent at competitive rates, and they can help you too. Don’t just take my word for it. Listener. Dylan Pierce had this to say about working with lemon.io. The machine learning engineer they helped me hire was very professional and even learned a new tech stack to set up an environment to train and deploy machine learning models. He documented his work clearly so I could train it in the future with additional data. I’m super happy with the results and longtime listener. Chaz Yun hired a senior developer from lemon.io and said his higher quote, definitely knew his stuff, provided appropriate feedback and pushback and had great communication including very fluent English. He really exceeded my expectations. Chaz said he definitely used Lemon IO again when he’s looking for a senior level engineer to learn more and get a 15% discount on your first four weeks of working with a developer head to lemon.io/startups. That’s lemon.io/startups. 

Your business is your baby. Entrepreneurs are deeply connected to their businesses and a study of entrepreneurs, emotional experiences and neurological activation. Scientists used functional MRIs while asking entrepreneurs to think about an image of their business. They conducted the same experiment with parents asking them to think of an image of their child. When comparing the brain activity of both groups, they found remarkably similar activation patterns. Specifically the study showed that activity was suppressed in regions of the brain involved in critical assessment. Specifically, the study showed that activity was suppressed in regions of the brain involved in critical assessment, while it heightened in areas associated with the brain’s reward center. In real world terms, this means that entrepreneurs and parents experience a similar sense of delight and satisfaction when thinking about their beautiful, perfect, above average children or businesses. Whether we’re thinking about our children or our businesses, our perceptions are not entirely objective. Both entrepreneurs and parents tend to view their subjects with a positive bias rather than objective clarity. Running with the parent analogy, you may rationally understand that your relationship with your children will change as they mature. You may also know that the goal of parenting is to raise autonomous independent individuals who do not live in your basement. 

Our 8-year-old moved out, went to college and currently lives in our basement, so this one hits a little close to home.  

Dr. Sherry Walling:
Whoops, we might not be very good at this.  

Rob Walling:
You may even be emotionally ready for your 18-year-old to leave home to preserve everyone’s sanity. However, understanding this doesn’t make the transition any less emotional or challenging. It’s not so different with a business. If you’ve built it well, there will come a time when the business outgrows you, but neurologically speaking, entrepreneurs often don’t perceive a clear separation between themselves and their businesses. This means that no matter how you pride yourself on being, it’s incredibly difficult to see yourself and your business objectively during and after your exit. When you commit so much of your time and energy to the formation and growth of a business, it is perfectly natural for the business to become an extension of your identity. You intertwine yourself and the business and other people may see you and the business as intertwined. Those years of intertwining get unraveled in an exit, A topic we’ll explore in the latter half of this book, there are psychological pros and cons to thinking of your business as your baby. Generally speaking, it isn’t a great idea to tie your wellbeing to an external entity that is highly vulnerable. Just social media algorithms or the supply chain from China. Too much of your identity is wrapped up in things you can’t control, but regardless of whether or not it is optimal, the neural imprinting between a person and their business is substantial and consistent.  

Dr. Sherry Walling:
Another reason it’s difficult, you’re entering the unknown. Businesses tend to grow slowly. You have the seed of an idea and then spend months or years on your own building it into something people want. You create your team slowly refining your product and growing your company until you suddenly look around and realize you have 20 people working for you. And then in a move that can feel like it happens overnight, you begin an exit process. You find yourself in a new location, a new world. The sudden shift is disorienting to say the least.  

Rob Walling:
Here’s a quote from a post exit founder. As a first time founder, it’s scary. Giving up a business is going well and recognizing whatever good fortune that allowed you to thrive might not be repeatable.  

Dr. Sherry Walling:
It’s not just the suddenness of an exit that’s disorienting. It’s also the potential loss of your identity, direction, and purpose. Returning to psychology, if you consider the typical progression of human development, we see rapid changes in our early lives. We try on adolescent identities, a jock, a punk, a goth. Oh yeah, I like the breakfast club. We leave home for college, perhaps switch our career paths a few times. We enter into and leave intimate relationships. We establish ourselves professionally. We purchase homes and couches to cats in a fish tank. We might have children. We start companies. As we age, the rate of these life-changing events slows down. We can no longer move apartments in one afternoon with our cousin’s pickup truck. We grow comfortable with our stable lives and identities. Mature adulthood means that generally we know who we are and how our life operates, and then we face an exit and we’re thrown into the unknown once more because of the depth of the relationship between the entrepreneur and the business. This is not a casual unknown. It is a deep unknown, a fairly comprehensive recalibration of who we are and how our life works. Most dramatic life-changing events that happen in the middle of adulthood are traumatic, like a car accident, a divorce, the death of a parent. What comes after the can be daunting. The exit creates instability and unpredictability, and after years of leading and directing the path of your business, it requires you to surrender control. It can feel like going backwards.  

Rob Walling:
Here’s another quote from a post exit founder. It’s not often as a 43-year-old, I have a major life decision. Most of what we want at this point is predictability, and the uncertainty of what comes after this is daunting.  

Dr. Sherry Walling:
It can feel like you’re 18 again and wondering what the hell you’re going to do with the rest of your life.  

Rob Walling:
On top of all that, going through an exit is incredibly isolating. Think of it like an iceberg. The tip of the iceberg is the public perception of what you’re going through. Everything below the water is what you’re actually experiencing from the perspective of your employees. Team members and the public exits are seen as times of celebration. Pop out the champagne and the celebration emojis because now you’re a millionaire, right?  

Dr. Sherry Walling:
Which is the celebration emoji.  

Rob Walling:
There’s a confetti one, and then there’s one that looks like a bullhorn with confetti around it. I think if you type in colon confetti, oh, that’s in slack anyways,  

Dr. Sherry Walling:
Alright,  

Rob Walling:
And while that’s partially true because getting millions or tens of millions of dollars wired to your bank account is a pretty incredible moment, that’s only the tip of the iceberg. The rest is an incredibly nuanced experience that the founder goes through alone. You’re trying to make the best decision for yourself and your business processing a complicated multivariate analysis in your head, and often you might be legally barred from talking about what you’re working on. When I sold Drip, I experienced a barrage of congratulations. While mentally I was almost at my breaking point. This created a deep sense of disconnection because it was nearly impossible to talk about the realities of the exit due to non-disclosure agreements or NDAs and the dearth of people who could relate to my experience. Exiting is a low frequency event. There just aren’t that many people who’ve done it. Many other major life transitions are universal puberty, completing high school, choosing a life partner, pregnancy, the death of a family member, a child departing home and aging. They’re challenging shifts, but almost everyone has experienced them. There’s plenty of collective wisdom and guidance available to help you navigate these difficult transitions, not so with an exit. It’s a pretty small club and you have to work hard to find commiseration guidance and support as you enter this unknown territory  

Dr. Sherry Walling:
And there’s no blueprint. Another factor that adds to the feeling of isolation is that there’s no blueprint. Exiting is like a fingerprint. No two look exactly the same. As we mentioned, exiting is a low frequency event. It’s also a high variability event, which means that even the few other people in the world who have gone through an exit haven’t gone through your exit. If you and I both decide to sell our houses today, there’s a relatively standard process to follow. It’s a high frequency, low variability event. Sure each home is unique, but millions of homes are sold around the world each year. Even if you haven’t sold a house before, you probably know a dozen people who’ve been through the process and there are standard templates you can follow selling a business. On the other hand, each experience is unique. Maybe you’re part of a mastermind or run in entrepreneurial circles and even have other friends who are founders, even if that’s the case, and even if some of them had gone through their own exits, the chances that someone has gone through your exact scenario are very low. No one can hand you a blueprint for exiting your business. The number of variables is just too great and there’s never one right answer. When selling your company, your hand sketching your blueprint while the backhoe digs the foundation  

Rob Walling:
And all that got you here, won’t get you farther exiting well requires a new set of skills. During the course of running your business, you’ve learned how to build, how to sell your product, how to market, how to lead your team, how to build a profitable company. None of those skills apply to what you’re about to do. In fact, the main drivers that got you to this point, your passion for your product, your commitment to your team, your dedication to your business can stand in the way of a successful exit. Many entrepreneurs have difficulty making clear decisions during a sale because they care so much about their team and their business. You’ve spent years or decades building something incredible and developing the passion to run it. After all, everyone’s got the cutest baby right now. Not only do you have to go through one of the most difficult and isolating times of your life without a blueprint, but you also have to unlearn old habits and teach yourself a brand new set of skills  

Dr. Sherry Walling:
And it’s irreversible. If you hire the wrong engineer, you can fire them and find a better fit. If you develop a feature that turns out to be a dud, you can always scrap it and try something new. If you invest in a marketing approach that turns out to be a waste of money, you can also change course. Those are reversible decisions. You can make them relatively quickly without too much stress. Exiting your company though is irreversible. Sure, we’ve all heard of people who repurchased a company after they sold it, just like we’ve heard of couples who got back together after a divorce. But both situations are pretty rare. Because of this, it’s not a decision you should make quickly. It should stress you out. You should spend a lot more time thinking about it than you did thinking about who to hire for that engineering role. The decision is irreversible, so you should make damn sure it’s the right decision, except  

Rob Walling:
You can’t see the future, which means there’s absolutely no way to know if you’re making the right decision. All you can know is that you’re making a decision, which is hopefully the best decision you could make with the data you have. You can run various calculations and imagine what life might look like if you continue to grow the business for another 20 years versus selling it now and walking away with a specific dollar amount. However, you can’t actually know how any of these scenarios will ultimately turn out. We know founders who wish they hadn’t sold, founders who felt like they sold for too little, and founders who declined an offer that in retrospect was a once in a lifetime deal. There are many potential scenarios for regret. With the benefit of hindsight, they might have made a different decision. None of us can see the future though. The only thing you can do is make the best decision you can with the information you have right now.  

Dr. Sherry Walling:
So now let’s shift to six factors that shape how you feel about an exit and our experience working with entrepreneurs. Six factors strongly predict the emotional process of an exit. So we’ll discuss these factors throughout the book. The first one we want to talk about is motivations. The reasons behind your decision to sell the company significantly impact how the process will affect you mentally. Are your motivations purely financial? Are you seizing of lucrative market opportunity or strategic acquisition? Are you feeling called to shift into different or more meaningful work? Are you selling off one product to concentrate on the success of another, or are you selling somewhat reluctantly due to unexpected life changes, burnout, fatigue, or depression? When you understand your motivations, it helps clarify what a successful exit looks like for you regardless of your situation. It also helps you gauge the emotional reserves you have available for the exit process. Beginning an acquisition process while experiencing burnout is like running back-to-back marathons. It’ll be highly emotionally challenging. It’s crucial to be aware of your energy levels and core needs as you navigate the process.  

Rob Walling:
The second factor is tolerance for uncertainty. If you started a business, then tolerance for uncertainty is your bread and butter. But as we’ve mentioned, the level of stress and uncertainty during the exit process is a whole new ball game. Founders who have a high tolerance for uncertainty will have an easier time during their exit, but even if that’s you, it will require all of your coping skills to rise to the challenge. It’s worth assessing those coping skills. Now, take stock of the ways you tend to deal with uncertainty, both positive and negative, and create a plan for implementing or mitigating them during your exit.  

Dr. Sherry Walling:
The third factor is good old fashioned stamina. Exits take longer and are more complicated than anyone imagines at the outset. Even if you have a fantastic strategic buyer and the purchase price is agreeable and the details seem to be lining up, it always takes longer than it should. There’s a lot of paperwork. There are many people, employees or customers who need to be brought along strategically with thoughtfully crafted information. Pace yourself and prepare yourself mentally to run a marathon.  

Rob Walling:
The fourth factor is team psychology. The way an entrepreneur views their team is another critical factor. What is your relationship like with your team? Do you see them as family? Are they literally members of your family, friends from high school? Are they a curated workforce that you’re paying to do their jobs? How do you see responsibility to them when you’re setting yourself up to exit? Hopefully with a nice pile of money, your existing relationship with your team will significantly impact how you feel about exiting.  

Dr. Sherry Walling:
Number five, identification with the business. How closely do you identify with your business? Whether you built it from scratch over decades or have been running it only a few years? At least part of your identity is probably closely tied to your company. As you consider your exits important to find meaning and engagement in other areas of your life, your hobbies, family, community, and other passions. Exiting a company can feel like cutting off a limb, but founders who have found a meaning in other parts of their lives tend to have an easier time. The earlier in your business journey that you begin to separate yourself from your business, the better for you and for your business. You may want to ask, how well can this business run without me? The business may be more valuable. It almost certainly will be more valuable if it isn’t tied to you and you are healthier pre, mid, and post exit. If your sense of worth as a human being isn’t intertwined with your business.  

Rob Walling:
The six factor is a sense of what’s next. It’s easy for a founder to get so wrapped up in the exit process that they’re not thinking about what comes after. However, it’s healthier to start thinking about future plans and gently engage with those plans as early as possible. We use the word gently because rushing into a plan to offset the uncertainty can be problematic. Instead, approach it with a sense of exploration. Gently noodle through ideas. Don’t solidify them by pouring concrete. The question of what’s next can either haunt you throughout the exit process or serve as a north star that guides you into the next phase of your life.  

Dr. Sherry Walling:
So at the end of each chapter, we decided to make these little sections called making it real, and in ’em they’re kind of like practice assignments. These parts of the book where we want to translate the content of the book to something that you can actually use and apply to your life. So for this first chapter, the Making it Real section says, start your exit journal. Grab a notebook or open a password protected document and write down what a good exit would look like for you in this exercise. Practice active imagination. Close your eyes and imagine your last day at your company. Imagine some last act like locking your office door, closing your laptop, offering a goodbye hug to one of your team members. In your imagination, examine yourself. How old are you? What is your emotional state? How do you feel about this ending, this last act? And now let’s jump scenes. Imagine you are telling an old friend about the last day at your company. Imagine that you are happy, proud, satisfied that your exit went exactly as you’d hoped. What’s the story that you tell them? Who was the acquirer? What was the sale price? Where are you taking your loved ones for a celebration? Now, begin to imagine yourself in this scenario. It is one way to practice a not yet experienced reality,  

Rob Walling:
And we wrap up chapter one with a sidebar titled, think About Your Exit Before You Get Started. Ideally, you’ve been thinking about your exit since day one. A good exit strategy is like a prenup in a marriage, especially if you have a co-founder,  

Dr. Sherry Walling:
Hey, do we have a prenup?  

Rob Walling:
No, our net worth was like $8,  

Dr. Sherry Walling:
But I had a guitar.  

Rob Walling:
That’s true. $8 plus a guitar. Entrepreneurs who have never thought about it usually find themselves blindsided three, five or 10 years into a business when life circumstances change, they get tired of the business or they get an offer with a shocking number of zeros. Everyone exits. If you don’t plan for it early enough, you’ll find that your business isn’t prepared to go on without you once the day comes. And if you don’t think about yourself exiting, you’ll be emotionally jarred when you find yourself pondering. Now, what do I do with myself? In your mind? Begin to see an exit as a universal stage in the lifecycle of any entrepreneur. Make it the assumption, the default setting, not to get too dark about it, but a helpful analogy is thinking about exiting your business, like making sure your affairs are in order for the end of your life.  

Dr. Sherry Walling:
That is dark, dude. Nobody’s going to die.  

Rob Walling:
Nobody’s going to die.  

Dr. Sherry Walling:
Oh wait, whoops.  

Rob Walling:
People are depending on you to leave your business in good shape. If you suddenly need to leave, there’s no way around death. Taxes and exits. Have an ongoing open dialogue with yourself and the relevant people, even if it’s just a password protected document where you can jot down thoughts and explore your exit ideas from time to time. Whether or not you can visualize the end of your relationship with your company, start having that conversation with yourself today. Don’t wait until you’re forced into it without having enough time to think and plan. You might miss an opportunity because you were unprepared to seize it, and definitely don’t wait until you’re in the middle of stress and burnout to make some of the most important decisions of your business life. Though, if that’s you, we’ll walk you through that process too.  

Dr. Sherry Walling:
Hey, good job reading.  

Rob Walling:
Yeah, you too.  

Dr. Sherry Walling:
You read. Good.  

Rob Walling:
Thanks for joining me on the show. I know I grew up reading and writing and arithmetic and  

Dr. Sherry Walling:
Speaking English.  

Rob Walling:
Speaking English. Well, thanks for joining me on the pod here.  

Dr. Sherry Walling:
My pleasure. Thanks for writing a book with me.  

Rob Walling:
How’d it feel reading that first chapter? We have not read the book out loud. It really well.  

Dr. Sherry Walling:
I just gave a talk about the content of the first chapter, so I didn’t read the book, but I actually used some of the language verbatim, so I felt like, oh, I’ve have actually read this out loud before.  

Rob Walling:
Did you just say I haven’t read the book, the book that we wrote?  

Dr. Sherry Walling:
No, I haven’t read it out loud.  

Rob Walling:
Oh, got it.  

Dr. Sherry Walling:
I’ve read it multiple times.  

Rob Walling:
Like proofreading. Yeah,  

Dr. Sherry Walling:
Yeah. But I have not read it out loud. It’s not been the book that our children have requested for their night night pre-B bedtime story being as they’re 18 and 14.  

Rob Walling:
I think it felt good. It holds up. It’s always a different experience reading something out loud.  

Dr. Sherry Walling:
Yeah, I mean, other times that I’ve done this, I’ve really wanted edit things as I’m reading it, it feels clunky or like, no, that’s not how I want to say that. But I made a few little wording adjustments as I was reading, but generally speaking, I think the writing is quite good.  

Rob Walling:
Yeah, I’m the same. Every audiobook I’ve ever read, I have made edits to the manuscript as I’ve been making it because there’s just certain things that you find are clunky or I believe in the very read through the SaaS playbook, there was one sentence where it was missing the word not, and so I said the exact opposite. It was probably something like, you should definitely do B2C or something like that, and I was like, what has to be not, I cannot print this book. People think it’s an April Fool’s joke. So anyways, thanks for joining me on the show. Folks want to learn more about the book, where do they go?  

Dr. Sherry Walling:
Exit strategy book.com.com.  

Rob Walling:
See you next time.  

Dr. Sherry Walling:
Peace.  

Rob Walling:
Thanks to Sherry for joining me on the show today, and thank you for joining me this week in every week. This is Rob Walling signing off from episode 743.

Rob Walling:
Welcome back to Startups For, the Rest, Of Us. I’m Rob Walling. I’m on a solo adventure today and I’m going to be covering topics ranging from normalizing, doing hard things about just getting used to doing hard things about how bisons walk into storms. Not sure if you’ve heard about this, but it’s an interesting adaptation they’ve developed over hundreds or thousands of years, and then about making it work, making it right, and making it fast. Before I dive into that, the Kickstarter for my new book Exit Strategy, the Entrepreneur’s Guide to Selling Your Business Without Regret is Live and it closes next week on December 12th. You can head to the link in the show notes or you can go to kickstarter.com and search for exit strategy. The book is 260 70 pages of all the knowledge that my wife, Dr. Sherry Walling, who is a founder and executive coaching consultant and myself have gathered over the past couple decades of working with entrepreneurs, advising them, investing in them and having had an exit or two ourselves. 

So you can head to exit strategy book.com and also get a link to the Kickstarter there. It would mean the world to me if you’d back it. And also I think that everyone, whether you’re just starting out or whether you’re thinking about exiting or in the middle of exiting, can use some mental support, psychological support and really learn from not only Dr. Sherry and I, but the 15 or 20 entrepreneurs who have exited that we interviewed for this book. So I’m really proud of what we put together and I think for $30 it’s quite this steal in terms of the amount and the quality of the information that you’ll gather from it. In addition, MicroConf mastermind applications close on December 4th. You’ve heard me talk about Mastermind’s ad nauseum on this podcast about the tremendous impact that they’ve had on my entrepreneurial career, not only in the moment, but just keeping me going for the past couple decades. MicroConf masterminds.com if you want to get matched with like-minded founders who are bootstrapped and mostly bootstrapped but ambitious and looking for accountability, friendship, comradery, and frankly just looking to not feel so alone. So that’s microcom masterminds.com. 

Let’s dive into my first topic of the day. I want to tell you a story about a trip that my track team took to Hawaii in high school. I think I was a junior and this was a big deal. None of us had ever been to Hawaii and we went out there to compete in an invitational type thing, but we had to do fundraisers and such to afford the tickets and all that. And while we were out there one day, my coach was driving the rental car back to the hotel and the hotel was surrounded by, I think it was all sugar cane if I recall correctly. And there was this long road, of course it’s Hawaii, so there’s a mountains on this side and a beach on this side and just this amazing vista. But he’s driving back to the place that we were staying at and he sees one of the distance runners running the other direction running away from the hotel, and he’s just kind of trotting along and his name’s Brian. 

And so coach pulls up and he says, Brian, where are you going? And he says, I’m running down to this convenience store to get ice cream. And the coach says they have ice cream back at the hotel. There’s a refrigerator thing where you can buy it in the lobby. And Brian says, yeah, but they don’t have chocolate chip. And my coach told that at the end of year event, the reception where parents get together and talk about track and give people awards and all that, and I got a huge laugh from all the parents because the convenience store was a couple miles from the hotel and us track athletes. We looked around. I don’t get why that’s funny, and I get the joke now. It’s that wow, as an adult would you run two miles in order to get a thing of ice cream that is the flavor that you want? 

And most of the time, no you wouldn’t. But the thing was is when you’re running at that level, we were competing at a pretty intense level. I’ll say I wound up, I’ve talked about this, but I wound up breaking the school record in the hurdles and that record lasted 31 years. It just got broken this year about four months ago. So we were not dabbling in track. We were very, very intense about it, and as such, we had normalized doing hard things. There was such second nature that most of us didn’t get the joke when the coach told that story at the end of your reception. And the thing about it was our workouts were a mile warmup. Then you do some stretching and then you do a pretty intense workout of sprints and intervals and you’re dying at the end and then you do another mile cool down, you stretch and you leave. 

And that’s just what we did five days a week, sometimes six days a week. There were obviously days when I threw up once a week during the fall for a few months As you’re getting into shape, it’s just so intense and that was just what we did. We would groan when they would name a particularly hard workout, but we all showed up and we all did it, and the people that performed it was just expected that if we wanted to do great things, we had to do hard things and usually we had to do the hard things first. It was getting in shape and it was working on our technique and it was sometimes running ourselves to the point of throwing up, unfortunately, but in the end of the season when you’re trying to qualify for regionals and the state meet, you were thankful that you did the hard things in the early days, and there were some folks that came to the first month or two of track and it was hard and they said, you know what? 

This isn’t for me and that’s fine. It was a way of I guess weeding folks out and really only having those that cared enough to do the hard things that were really committed to the long-term vision because talk about delayed gratification, and I guess I should clarify, in high school it was only about, was it maybe five months? So it was probably from January to June you started working out and then you had the state meet in June in college was when there was fall workouts, and that went all the way through June, so it really was a full nine months or so of doing hard things, so to speak, and you kind of did it every day and got used to it. The reason I’m bringing this up, of course, in the context of startups is a lot of the founders that I see succeeding if they’re not relying on luck and they are the ones who are executing and building skills and putting in hard work, it’s just expected that you’re going to have to do some hard things. 

And sometimes that hard thing is digging into marketing approaches that don’t work right away or maybe that you’re like, I don’t really want to do that. Do I have to do SEO? I don’t really want to do the ground. I don’t want to do sales demos. I don’t want to focus on one product and push that boulder up the hill. I don’t want to try to run ads. That doesn’t sound interesting. The way my mind works is I really want to build a media company. Well, I just start a YouTube channel and be on Twitter and tweet about things and have that build my business. I don’t want to hire people. I don’t want to have to fire people. I don’t want to make the hard decision of having to focus on one thing. I don’t want to do b2b. That sounds boring. I want to build a two-sided marketplace. 

I’m not saying that’s not hard, that’s actually doing it on hard mode, but you get the idea. I get emails to this podcast about I have a good day job and I’m making good money, but I really want to be an entrepreneur, but I just have a tough time getting motivated. And I think to myself, then you don’t really want to be an entrepreneur and that’s okay. That’s okay. Just know that if you’re going to do this, you have to do hard things. I was in conversation with someone who had sold their company for nine figures, so that’s hundreds of millions of dollars. And one of the things that he does is talk to other founders who have exited for never have to Work again, money. I call it sunset Money. You can ride off into the sunset. Some people call it FU money, and that’s fine too. 

It’s all the same. And he said one of the big things he encounters, and this is similar when I have these conversations with folks, one of the hard things is if you sell your company for whatever that number is for you, maybe it’s 5 million for you, maybe it’s 10 million, maybe it’s 50 million. You sell your company, you’ve been grinding, you’ve been creating, you’ve been building, and you have all this money in the bank, and it’s really hard to figure out what to do next. That’s meaningful, but not so hard that you’ll just give up because when you have that much money in the bank, why do hard things? What’s the motivation anymore? So many of us had the motivation to build these companies of I want to build interesting things. I want freedom. I want to be in charge of my own time, and basically that means I have to get rich in order to do it. 

But that becomes a motivation for a lot of people. It’s not to get rich. It’s the freedom, right? It’s the ability to build and work on and do whatever you want for the rest of your life, and that is an amazing place to be in. Now the challenge is your motivation to stick through the hard times and to do really hard things like the mile warmup, the mile cool down, and the really hard workout in between or to grind for months and months on SEO or ads or focusing on a product, trying to find product-market fit, and staying up at night thinking, am I ever going to find product-market fit, dealing with an employee who doesn’t work out and you have to fire and rehire. There’s all these things that are difficult, that are challenging and finding that motivation, whether you have enough money to make to never work again, or whether you don’t and you just want to be an entrepreneur, but you don’t feel that drive enough to push you to want to do really hard things. 

It’s a challenge. And so I tell this story about Brian running two miles to a convenience store to grab chocolate chip ice cream. He did return with chocolate chip, by the way, and there were a couple people that wasn’t just Brian who wanted it. There were some parents or something that wanted chocolate chip, and when he went, he walked out in the lobby and they didn’t have it. He just took off. He didn’t even go back and ask him. He just left and ran a four mile round trip to get chocolate chip ice cream for these other people. So I hope that anecdote has you thinking about the hard things that perhaps should be normalized in your day today. My second topic for today is a fun fact. I heard the other day, and then I confirmed it with not only chat GPT, but with Google as well. 

And it’s about how a pack or a herd, technically speaking of bisons, if they see a blizzard coming or a storm, they will walk into the storm because they know that whatever direction the storm is headed, it will go by faster if they are moving into that storm. And think about that, there’s some type of really deep adaptation that has gone on there because I think for most of us, we don’t want to walk into the storm and most animals will run away from a storm or from danger or from something that is perceived as uncomfortable, but the bison knows that if they take this big challenge head on, it will be over faster. Hopefully. The parallel to running a startup is really obvious. What are the storms? What are the blizzards that are coming at you? The lack of product-market fit, the lack of growth, impending competitors that are going to eat your lunch. 

Ai, a rapidly changing landscape. Folks who can spin up a similar app to you in a week now because of copilot or cursor AI or all these coding tools, people building stuff with no code that is purpose built and perhaps solves a need better than your custom app that you spent years building can. So what do bison know that we don’t? Well, they know that if you ignore a threat or if you walk sideways or away from it, you’re just going to experience it longer. It doesn’t actually fix anything. And you as the startup founder or an aspiring startup founder, I think would be well-served to figure out what are the big things that make you uncomfortable, the things that stress you out, the things that keep you up at night. And instead of trying to ignore them, trying to run away from them, trying to hide from them, think about how can I attack this head on? 

Whether this is someone working for you who just isn’t quite working out and you let it go way too long. That’s a very common thing. The startup founders do. All of us do it at one point or another in our careers and all of us come to regret that decision of ignoring it is not a threat in this case, but I mean it’s a threat to our growth. It’s a threat to our business. It is just a hard thing that’s easy to ignore. Another hard thing is lack of growth, and your R is not going up into the right. Do you make excuses? Do you blame the internet? Do you say, oh, startup advice doesn’t work anymore? Well, in 2024, it doesn’t work the way it used. You used to just be able to do SEO content and AdWords and everything would just work out, and it was so easy, which in fact it wasn’t. 

But you convince yourself of this because you’re not having success, or is it hard and you need to figure out which direction to head and you need to persevere long enough and normalize doing hard things. Ooh, see the way I integrated those two but normalize running the four mile round trip to get the chocolate chip ice cream in order to face these things that are difficult. If you’re always running away or ignoring or making excuses or acting like these hard things don’t exist, you’re not going to find success. I can’t think. Now, maybe there’s an exception, but I can’t think of a single entrepreneur that I have worked with, advised, been around, invested in, and I’m invested now in, I think it’s 212 B2B, SaaS companies can’t think of a single one that has achieved success. And we can just say, what is that? I dunno. 

Seven figure and up a R seven figure eight, figure a RR. Can’t think of one that ignored these hard things that didn’t accept their current reality, even if that reality was not what they wanted to hear and didn’t make a game plan a, plan a, plan B, a plan C of how to deal with and address it. I’ve known founders, multiple founders that have received cease and desist letters. I know multiple that have been sued. I know many that have been threatened to be sued. I know several that have been hacked where their app has been hacked. There has been ransom situations where I’m going to release this on the dark web if you don’t pay us X amount of Bitcoin. I’ve seen embezzlement, I’ve seen employees rogue. The list goes on and on, and whether it’s any of those or whether it’s something as simple as, oh, hey, we’re not growing, and that’s the storm, that’s the coming storm is that if we don’t grow for too much longer, we’re done. 

We either have to lay everybody off or the app itself. We just need to shut down the company. That has to be the hard reality that you face on a day-to-day basis. And I am not trying to paint entrepreneurship as this terrible hard thing. You have to work 60 hour weeks all the time and be stressed. That’s not how it should be either. If it’s that hard, either you’re trying to build a billion dollar company or maybe your approach isn’t quite right, or frankly, maybe you’re running into some bad luck, but it doesn’t have to be hard all the time. I just want to level set for you listening that there will be ups and downs and when the ups are here, celebrate them. And when the downs are here and the difficult times are present for you, realize that that is part of this game. 

That is part of being an entrepreneur and learning and being willing to face those hard things head on is something that I wished I had learned sooner, and if only I had learned this tidy fact about bisons walking into storms years ago, perhaps I would’ve been better equipped. And that’s what I hope to convey to you here today. So I hope you continue your entrepreneurial journey a little better equipped to do so. My last topic for today is about first making it work, then making it right, then making it fast. And this is a quote or a paraphrase from the Comic Lab podcast that I have quoted in or paraphrased several times in the past. You can go check it out if you’re interested. But the co-hosts I find are very practical and pragmatic and the number of parallels between being an independent comic artist, which is essentially being an entrepreneur and making money from your art. 

Now it is B2C, so it doesn’t necessarily fit in the focus of this podcast, but a lot of what they talk about I find has parallels in the startup space and specifically in the bootstrapped and mostly bootstrapped SaaS space. So one of the hosts, Brad had this quote. He said, first, make it work, then make it right and then make it fast. And the context he was using was about art, was about drawing or writing frankly, anything that you would do to produce a comic strip or a comic book or a web comic and about how when you’re just starting out, just learning to draw or learning to write and be funny is hard. And so it might take you, it probably will take you years just to make it work, but you’re going to be really slow at it and it’s not going to be that good. 

So then the next step is you’re not that good at it, but make it good. That’s the making it right step. So I think it’s like make it work, then make it good and then make it fast. But he says make it right. And I can say that, look, it’s his phrase. He can name it whatever he wants. So first step is to make it work, then you make it right and then over repetition, you make it fast basically. And I actually like thoughts or frameworks or statements like this that make me think, oh yeah, that’s totally obvious, but I didn’t say it. I haven’t heard it phrased this way this succinctly before, but I think the parallels run deep. I think this podcast, if you go back and listen, the first 20 or 30 episodes, maybe 40 or 50, we’re just trying to make it work. 

And we did shipped every week. There were a couple months where we shipped every other week, but you get the idea over the 14 year lifespan of this podcast and the 742 episodes, the first 20 to 40 were making it work the next, I don’t know how many were making it right? And then eventually we got to the point and later me on my own got to the point where I can record these really fast. That took repetition. That didn’t happen in the first a hundred episodes. The fast part was probably in the second hundred or maybe the third a hundred, frankly, these solo episodes. I didn’t start doing these until several hundred in, and those were excruciating and painful at first, and then through repetition, I made them write and made them fast. Same thing. If you’re writing and giving conference talks, your first one’s not going to be that good. 

You got to make it right. And then over time you get better. To the point where I’ve given talks that I have literally built the slides four days in advance and run through the talk once, and then I get up on stage. And that’s just pure repetition because the first talk I gave, I was working on weeks and weeks in advance, and I was practicing over and over because I didn’t know how to do it well, and I didn’t know how to do it fast. It’s the same thing with sales demos. First time you do it, it’s not going to be very good. You’re going to be super nervous and you’re going to potentially over prepare, spend a lot of time on it, and then over time, over repetition, you make it so it’s good. The making it fast maybe doesn’t apply here, but I do think maybe making the deck for your sales demo applies, right? 

That you would get better a second time building a deck for it. Marketing approaches similar. First you just kind of stumble through and you don’t know what’s going to work, and eventually you make something work just enough that it keeps you alive for another month and then you start getting better at thinking strategically and about thinking like a marketer. And then eventually you get to the point where you can spin up new marketing approaches. I’ll say quickly, right? That’s the fast part. Now the analogy doesn’t necessarily hold up. It’s not a piece of art. And so thinking that you can spin up five or six marketing approaches just because you’re good at it isn’t reality in most situations. Most companies don’t have that many, but you get the idea. You do get better at moving fast and doing a lot of things. A r and I talk about the most successful founders across the tiny C portfolio of 192 companies are those founders that do a lot of things relatively quickly. 

They put a lot of things into the world, and they’re right enough of the time. And Ruben, the founder of Sewell, mentioned to me that he liked that analogy, but he felt like I was leaving something out. When I say that the founders who do a lot of things and are right enough of the time, and I think enough is 50, 60, 70%, it’s somewhere in there and there’s asymmetric upside when they are right? But Ruben was saying, yeah, but even those founders, one of ’em for sure, even those founders that do it, they’re not necessarily right immediately out of the gate when they try a new thing. Usually it’s off a bit. And every approach needs to be honed unless you get really lucky, you launch a new sales effort, a new marketing effort, a new landing page, a new feature, a new product. 

You hire someone new, there’s a certain level of refinement, maybe some experimentation, but of putting something into the wild and realizing, oh, that’s not quite right, and I need to tweak it according to my founder gut and according to the taste that I have in my mind of what a landing page should look like or what a feature launch should be or how a marketing approach should be executed, I’m going to take the signals that I’m getting back and there’s a feedback loop and I’m going to iterate, I’m going to tweak. And then eventually, you’re right enough of the time. So don’t think that right out of the gate, founders who are doing exceptionally well are just right all the time, but you do build your founder gut. I use this phrase all the time, and the editor for the SaaS Playbook was like, that’s not a real thing, and it has to be founder’s Gut, right? 

It’s a possessive that the founder possesses this gut instinct. And I was like, I guess, but almost it’s like capital F, capital G, it’s like founder gut. It’s a thing that I name of over time, you can develop this. Some people probably have it from the start. I think like Jason Cohen Heat and Shaw probably Dharmesh. There’s some people that I know David cancel that at least as I saw them going on their journey, they just seemed from the start to kind of know what they were doing and to generally work on the right things with asymmetric upside ship, a lot of things really smart people. I was not that I was stumbling around blindly for years and years in my twenties and early thirties, not really knowing what I should be working on. And my founder gut was not great. And the way that I developed it was through people giving me advice. 

People that were ahead of me, watching people who have really strong founder guts and seeing how they made decisions. It’s just a refinement and a learning and an iteration of myself, a constant search for self-improvement. And part of that I’ve talked about on the show in the past, which is knowing yourself not having blind spots. We all have weaknesses, but a blind spot is a weakness that we’re not aware of. And so even taking the personality tests, the Enneagram and the StrengthsFinder and the Kolby A and there’s a few others, do those unlock everything and all the magic to make you a high performer? No, but they give you one more data point, and if you can read through the descriptions and say, oh, yeah, the strength side of this certain attribute is that I really focus on things and I really focus and get it done. 

And the shadow side of that is I focus too long and I spend years working on stuff that isn’t working. And knowing that about yourself goes a long way towards helping you improve as a founder and improving your founder gut. Now back to first making it work, then making it right, and they’re making it fast. I do see people try to skip this and they see much like in the stair step method, I often say, Hey, if you see folks that are playing in the major leagues and you haven’t played T-ball yet, you don’t want to go try to play in the major leagues right away. You want to play T-ball and then little league and then junior high ball and high school ball, college ball, minor leagues, major leagues, right? There’s a bunch of steps along the way, and I see folks, I guess it’s on Twitter, I hear ’em on podcasts, whatever, who see an entrepreneur that is 5, 10, 15 years ahead of them or someone who has assets that they do not such as, well, you have half a million Twitter followers and I have 500, but I’m going to try the same approach because that surely that will work. 

It’s like trying to jump to the end without putting in all the time to first make it work, then make it right, and then make it fast. I mean, what’s interesting about this phrase is just how much it does align with the stair-step method. It hadn’t occurred to me until right now as I’m saying this, it’s crawl, walk, run. Don’t try to run from the start. Don’t try to play major league baseball from the start. Don’t try to quit your day job and have a burn down of all your money. I had six months to launch a standalone SaaS and get traction. I’ve never done this before. It’s like, well, hold on. How about you make it work by just launching anything? And whether that’s a plugin in an app marketplace or an ecosystem, whether it’s an ebook or a course or whatever, just build enough of an audience or learn to market well enough or build enough of a network that you just get something out there and then get better at it, right? 

That’s the make it right. And look, that might take a few years. This is why I say think in years, not months. As an entrepreneur, as a bootstrap founder, especially think in years, not months, don’t be in such a hurry to get to the end result because then you’re trying to jump to the make it fast. And that’s where this ridiculous idea that I should spray and pray one thing every week. I’m going to launch 50 apps this year and just see what sticks. I’m going to see what’s going to make it work that’s wanting to get to make it fast and take a shortcut to get there and not do the learning and not put in the hard work and not face the hardest things that are the blizzard that is marching toward you. And I think people that are trying to skip the line and get there are doing themselves a disservice and are much less likely to be able to repeat it again in the future, are much more likely to need to rely on luck and are much less likely to succeed in the longterm and to be able to do it again, even if they do. 

Now, am I saying you have to grind it out and put in years. It’s like you got to go through high school and then you got to go through university, and then you got to go through, get your master’s and then your PhD, and then you got to work 10 years before you have seniority. So that’s just what we all did. And so you got to put in 20 years. No, that’s not what I’m saying. Obviously the beauty of entrepreneurship and what we’re all doing is you don’t have to take the same path that anyone else did. But I do see early stage folks making the mistake of thinking that they can just jump to the make it fast. They can just jump to that end. But if you can’t make it work and make it right, it doesn’t matter if it’s fast because you’re shipping something crappy, and whether that thing that’s crappy is a product or ebook or whatever it is, if it doesn’t work and it’s not right, what’s the point of trying to make it fast? 

I gave a talk after I sold Drip, and it was called 11 Years to Overnight Success, and it measured the time from launching my first little micro product wound up doing a thousand, 2000, 3000 a month until Sunset Money, right until selling Drip and never having to work again. And the title was Tongue in Cheek, obviously 11 years to Overnight success because people think this stuff happens overnight and almost without exception, or maybe without exception, it doesn’t, doesn’t happen overnight, crawl, walk, run. You stair step your way up, you first make it work, then you make it right, and then you make it fast. Thanks so much for joining me this week and every week on the show. If you keep listening, I’ll keep recording. This is Rob Walling signing off from episode 742.