Episodes

Rob Walling:
It’s Startup To The Rest Of Us. I’m Rob Walling, and this week I talk to Eran Galperin, the founder of Gymdesk, about how he bootstrapped and frankly mostly bootstrapped Gymdesk to a more than $32.5 million exit. It really is an incredible story of Eran launching this product on the side and working for years, nights, and weekends until it clicked. And this is a good example of if he had launched it and expected it to just work in a month or three months and was launching 10 things, Gymdesk would not be where it is today. It was the sheer focus and the relentless execution and showing up night after night, weekend after weekend until he could quit his day job that got Gymdesk to such an incredible life-changing generational wealth-generating opportunity. 

I sometimes have TinySeed founders on this show, not because they are TinySeed founders, but because they have really interesting stories and most TinySeed founders are also part of the Startup To The Rest Of Us and the MicroConf community and Eran is no exception. I do ask Eran why he applied to TinySeed in this episode and you’ll hear his answer if you feel like TinySeed could be a fit for you as a bootstrapped SaaS founder, head to TinySeed.com/apply. We are opening applications for our fall batch within the next week, and that will run for about two weeks. If you hear this after September of 2024, you can always go to TinySeed.com/apply to get on our email list and learn about our next open enrollment. In addition, if you are an accredited investor and you’re interested in investing in companies like Gymdesk, ambitious B2B, bootstrapped SaaS founders, head to TinySeed.com/invest. And with that, let’s dive into my conversation with Eran. 

Hey, Eran Galperin, welcome to the show.  

Eran Galperin:
Hey Rob, how’s it going?  

Rob Walling:
It’s good, man. It’s been a long time coming. I’m glad to have you on here. So folks have probably noticed from the title of this episode that you had a $32.5 million strategic growth investment from Five Elms Capital. And I want to start the show by asking you what did it feel like that moment where you’ve refreshed your bank balance and you saw more zeros than you probably ever imagined that you would have?  

Eran Galperin:
It’s surprisingly a large feeling of relief. It was the end of a very grueling, even though not long, maybe in competitive terms, but for me, long process of three months where basically every day I doubted that this would actually end up well. And many times as sort of a psychological trick, I would kind of let myself feel, “So what if it falls apart? It’s all good.” When the money hit the bank account. Actually it happened very fast. We closed the deal on a Friday, 30 minutes before the wire cut off time and the funds were in the bank account the same day. I did not expect that before the weekend and I’m just like, “I guess it’s over. I guess it’s done. I can have a real night’s sleep today and maybe the entire weekend.” And I literally slept 14 hours a day for the entire weekend. That mainly just a massive feeling of relief. All this weight just washed down.  

Rob Walling:
That’s incredible. And had you been planning in your head of, “Once I have this money, I’m going to do XYZ with it.” Or did it just come in and you thought to yourself, “Well, this is it, I’m set for life at this point”?  

Eran Galperin:
It’s kind of a mix of both. So I didn’t really have an idea for things to buy, but I already had in my head financial plan of how I’m going to deploy this. I’m a proponent of the FIRE methodology, if you heard of it. Financial independence retire early and it’s basically revolves around investing in fund indexes that return a very stable amount every year and with this amount of money, I’m basically set for life if I follow this approach. So I knew I was going to do that. I ended up upgrading my car to basically the same model but newer and higher trim because I really liked that car. And now we’re in the process of, we bought a piece of land here in Tokyo where I live and we’re building a house on it. So that’s super exciting. Not something that I actually planned, but a month after the sale was completed, it’s like, “You know what? We should start looking into it.” And we’re now in the process. Those are the major things.  

Rob Walling:
What kind of car do you have?  

Eran Galperin:
So now I have an Audi RS3 for people who are into that kind of stuff.  

Rob Walling:
Nice.  

Eran Galperin:
It’s a nice car. It’s still compact, which fits with the very narrow streets of Tokyo, but it’s just a slight upgrade from the previous car, which was an S3. Basically exactly the same car on the inside, but a small upgrade that I felt like was well-deserved.  

Rob Walling:
Yeah, no doubt. And for folks listening, when I say you received a 32.5 million strategic growth investment for your company, Gymdesk, and we’ll get into what Gymdesk is and what it does in a minute, what does that term mean? Because a lot of folks might be thinking, “Oh, a growth investment, that means you raised money that went into the company.”  

Eran Galperin:
So our investor is a private equity firm and they did a majority acquisition of the company. They bought a majority stake of the company. I am left with a minority stake in it, and some of the funds are going to be used to grow the company. The majority of it is for them to acquire the controlling stake of the company. This is what the amount that is on the public statement is for.  

Rob Walling:
And so that means it goes to you and other shareholders and full disclosure, you’re a TinySeed company and so TinySeed obviously received some money as well, but that’s not why you’re on the show. You’re on this program because your story is pretty remarkable in terms of how you executed, how fast you grew and how you went about the sale process. 

So I want to roll us back a few years. Before I do that, I want to let folks know Gymdesk. Gymdesk.com, your H1 is gym management software that frees up your time and helps you grow simplified billing, enrollment, member management and marketing features that help you grow your gym or martial arts school. 

So take me back before you started Gymdesk and I know the inside baseball, Martial Arts on Rails was actually what Gymdesk was called, which is such a cool name for developers. I’m like, “Well of course I know exactly why he named it that.” But such not a cool name for non-developers, right? Because clunky, it’s long. People are like, “What do you mean on rails?” Did you get a lot of that? Is that why? Because you rebranded the company in ’21 or ’22 I think.  

Eran Galperin:
Most of our customers just referred to us as MA on Rails or just MAOR or some reason. I hated that acronym, but a lot of them used it and I just ran with it. So yeah, at the time I just winded down a previous company, a VC-backed company called BinPress that raised a seed round and just didn’t grow enough to raise another round and I was kind of burnt out on the VC model. It’s like I felt that company had potential, but because it didn’t fit the VC timeline, it had to shut down. 

So I wanted to go in a different direction. Me and my co-founder kind of split paths. He moved to the dark side and became a VC partner, and I started a bootstrap company back then that was called Martial Arts on Rails. I wanted to combine my hobby of many years, which was training in Brazilian jiu-jitsu, nine years at the time with my professional skills in software development. 

I did a lot of market research initially, I kind of tried avoiding going into the vertical we ended up going in, which is business management software because there’s some very entrenched players in this space. Now I know that that’s actually an advantage. They do a lot of the customer education for us. There’s obviously a lot of potential revenue to be had because they’re so big, but back then it looked very intimidating. 

Eventually I did decide to go that route just because everybody I talked to in this space said the current incumbents were just so awful. So I don’t want to name any names, but anybody in this space knows exactly who they are and I felt with my experience in user experience and software development, I could bring something better to the market. We launched in 2016 and me being a technical founder in every stop previously I was the CTO, some kind of engineering leader. I quickly realized that I had zero idea on how to acquire customers. And so began this kind of slow trial from zero to a livable wage over the course of three and a half years during which I got a full-time job as initially a software engineer and eventually a CTO of a e-commerce company in L.A. And only in 2019 I started working full-time on the business.  

Rob Walling:
Got it. So you were three years in, three years and nights and weekends on Martial Arts on Rails, which became Gymdesk. So that’s interesting. So it’s not the overnight success that people might paint it out to be, right?  

Eran Galperin:
It actually, it didn’t feel quick to me the last couple of years went in a blur when we were growing pretty fast every year, but the first five were a slog for sure.  

Rob Walling:
This is something I talk a lot about online or on this podcast is folks who don’t stick with an idea long enough and they launch one thing and then one thing and then one thing, “Nothing’s taking off so I’m just going to…” You were three and a half years in before you even had a full-time income, and then there was kind of a, I’d call it like a bootstrap or hockey stick moment where we saw this because you applied to TinySeed, I believe in 2021. You were cranking up, I think you were. Do you remember you were 30, 40K MRR by then?  

Eran Galperin:
Yeah, I was around 35K and by the time the program started already 40 and I remember having chats with some of the founders and the meetup we had in Arizona and they’re like, “You’re at 40K, why did you join TinySeed?” 

And I had a different calculation than them in my mind because I had the same kind of dilemma when I was thinking about applying. It’s like, “We’re doing pretty well. What can I get from TinySeed that I can’t get by myself?” And the framework that I use is if TinySeed helps increase the value of the company by more than the equity that they take, which was 10%, then it’s worth it. And it ended up being way worth it. So I think in that regard, it doesn’t matter that we were at 35 because we came in for maybe different reasons than some of the other companies in the batch.  

Rob Walling:
There are different reasons why some folks come in because they’re super early stage and they really do want guidance help finding product market fit. You didn’t need that. You already had it pretty strong. Some folks come in like I could really use the 120 to 250K investment. You didn’t really. Now I know it was a little bit helpful, but that’s not why you were doing it. Why did you decide, and really I think the question is what did you ultimately get out of TinySeed that makes you say it was worth it?  

Eran Galperin:
A lot of it, well, it started with me following your content on Startups For The Rest Of Us. I’ve talked to many investors and I can tell when somebody actually knows what they’re talking about. They’re not just repeating stuff they read on somebody else’s blog, listened to on a podcast, which is the case with a lot of the investors that I see. And I was coming in to get that kind of advice one-on-one. 

This is my first company that I’m building bootstrap first company that I got to a certain scale that I haven’t been able to at previous companies and I’m going into a lot of uncharted territory. I remember that we had pricing realignment engagement together. Me and you sat together and talked it over. That was a very scary process for me. We had a lot of long-term customers and I’m about to really ramp up the pricing on them and it helps so much that I can do it with somebody that already ran this playbook, also seen it fail at other companies, even your own after acquisition, I guess. That really helped me do this confidently and it went super well and actually kickstarted the next upward strand in our revenue growth and there were multiple such instances. This is the main reason that I joined TinySeed.  

Rob Walling:
I think that makes a lot of sense. Community and mentorship are the two things most people name most often and it sounds like the mentorship and advice was a big piece for you. 

You entered an extremely competitive space. There’s one 900 pound gorilla who as you said, no one likes, but there are dozens. I mean I’ll say every TinySeed batch we get one or two applicants at least that make it into calls that do something similar to this. Why did you succeed?  

Eran Galperin:
I think I can tell pretty accurately why we succeeded and it’s because we went against what everybody else in the market is doing. So we have the 900 pound gorilla like you mentioned, and a lot of the similar competitors kind of copied their playbook. They have a product and I think this is coming in a lot of B2B verticals that is very outdated and difficult to use. I guess the thinking is that business software doesn’t need to be accessible or easy to use and they just have a very strong sales motion and a lot of our other competitors are pretty much the same. I mean their products started at different points in time, so you can kind of tell, “Oh, this one is from ’08, this one is from 2011.” But they never bothered updating it afterwards. 

When I started Gymdesk without any sales knowledge, the only thing I can do was just talk to customers and make the product better. I myself went through a transformation with this company where I used to be that technical person that engineering lead that it would come to with customer complaints and it’s like, “Yeah, they’re using it wrong. They’re not very smart.” I would say mean things like that. And with this product I kind of realized it’s actually the opposite. The dumber, the feedback looks like the more opportunity there is to make the product better, and I really took that to heart and through this endless feedback loop made a product that just makes everything so much easier than our competitors. We might have a similar feature set, but the way those features and flows are implemented is completely different. And this is where I feel we really made our first kind of differentiation in the market. 

The other side of it is with the customer service. So anybody who works with me knows how responsive I am to emails, and it was the same with customers in the going when I was the only one talking to them. And when I started hiring for customer service, I made sure that we stayed with that mentality. Somebody sends a report that something is not working, we have to get back to them as early as possible and resolve it as quickly as possible. Not just issues, but also small feature requests where it seems like it’s a no-brainer. We would roll those out sometimes same day. You can find reviews of us on Capterra and other websites where the guy’s like, “Yeah, I messaged customer service, I talked to the CEO, and on the same day I get a new feature that solves our use case.” And you can’t beat that kind of experience. So this is how we kind of build our brand in this space.  

Rob Walling:
Got it. So you’ve referenced product that you built your product differently. It’s not just great product, but it is actually zigging when others were zagging, sales motion, they were really heavily on sales and you were more allowed self-serve I’m assuming, but.  

Eran Galperin:
I’m 100% optimized for self-serve, so it’s maybe a bit ridiculous, but in the early days, I actually refused doing demos. I just hate getting on video calls with people I don’t know. And people would email in, “I want the demo.” It’s like, “Yeah, we don’t do that. I’ll be happy to answer your questions over email, which is the medium I’m comfortable with.” But for years we just didn’t do any demos. We do do demos now. We have a full team, they help with onboarding, but because we didn’t have any demos and none of that motion at all, I really had to make the product shine in those aspects. So every time people would say, “Oh, I can’t do this in onboarding.” It’s like, “Okay, let me go back to the product and fix it like that instead of getting on a call and explaining to you how to do it.”  

Rob Walling:
And then support, as you’re saying, was exceptional. There’s one other thing you didn’t touch on that I watched firsthand. I watched you execute exceptionally well, like top 10%, top 5% of founders that I work with, and you are a technical founder who in 2016 launched Martial Arts on Rails and you didn’t know how to market. By the time I knew you in 2021, you knew enough about how to market that you were driving consistent, consistent, consistent growth. I say that word three times because it was just every month there were no plateaus. And then it just got better. I mean, the growth got faster. You eventually hired a head of growth and I mean you coming from development to marketing, a lot of people, as much as I say it on this podcast of all the successful TinySeed companies, all the TinySeed companies doing seven figures, pretty much inevitably one of the founders runs marketing from the start. 

Now you can eventually hire someone to do it, blah, blah, blah, but trying to outsource marketing when you’re 10K MRR, you and I both know that’s probably not a good idea. So my question is there’s a long way of asking how did you figure this out? How did you get good at driving tons of leads because everything else you said, building a great product, great support, self-serve people do that, and then they flounder and they plateau at 10K because they don’t know how to drive traffic. So I don’t know how to drive traffic or leads. How did you figure this out?  

Eran Galperin:
Yeah, I mean that’s definitely the part of building this company that took me the longest to figure out. I do have some background in writing, so I’ve written a lot over the years, mostly technical writing, but eventually moved into, I wrote about startups going through accelerators, stuff like that. So I had that in my back pocket. Also, some experience with technical SEO, so I thought for sure with SEO I could drive some leads to the product. Turns out that was also naive. It took me quite a while to figure out the SEO for this company, but now I have such a good handle on it that I advise other SaaS companies on this particular topic. 

I just had a call with one of the TinySeed companies where I analyzed their entire SEO structure and gave them actionable items. This is one of the things, it’s not like this with every marketing channel. Maybe it is, I haven’t figured it out yet, but specifically with organic traffic, you can approach it almost like an engineering challenge and really figure out a plan to attack it. And we built a really structured repeatable process there to expand and also retain the land that we acquire in SEO because to keep your rankings, it’s very difficult in a competitive market. 

It took me, I want to say five years to really figure that out. In 2021, when we hired the first full-time employee that was a content marketing editor, I knew this is our strongest channel and this is our best writer and I want to just keep investing in this channel. And it paid off. We still drive most of our leads through SEO. I think it’s over 60, 70% of our leads come through that channel, and they’re all extremely qualified leads. It’s a channel with a lot of buying intent. So yeah, it’s definitely something I had to work on. But just persistence with everything else, trying and failing, trying and failing and figuring it out, that’s how we did it.  

Rob Walling:
And to give folks an idea from ’21 to ’22 you doubled, from ’22 to ’23 you doubled, from ’23 to ’24 is not over, but you’re on pace to double. So it is like a really interesting growth curve. I like to call this because you started in 2016, it’s eight years to overnight success because all the people on X-Twitter want to know, how many people do you and I know that would stick with something for five years kind of grinding it out to figure it out?  

Eran Galperin:
I follow some people on Twitter that literally what they do is they build a tiny SaaS product and they give it a couple of months and then they sell it for peanuts on microacquire.com, I think it just acquire.com now. And just move on to the next. And they keep hoping that one of those will blow up, but that’s not how it works. If you’re going to only stay with it for a few months, it’s never going to happen.  

Rob Walling:
I want to dive into the acquisition because you received a lot of inbound interest. You told me offline, you said you initially ignored it. So it was what, 2021, you start receiving private equity firms that are reaching out, and this is a very common thing. People hit mid six figures, get into the seven figures, and it just happens. So how are you thinking about and dealing with all that inbound interest?  

Eran Galperin:
When it started initially, first of all, the language that they use in a lot of this inbound, it is very vague. I didn’t think it was about buying the company. I thought it was venture investment basically. They talk about growth equity, like we said at the beginning. At that time, I didn’t know exactly what that meant. It’s like, “Oh, are you interested in growth investment into your company?” I’m like, “No, I’m bootstrapped. Not interested in that.” 

Eventually one of them actually used direct language and I’m like, “Okay, interesting. I think we’re too small, but let’s talk and see where it’s at.” And we were too small at that time, but I started to get a sense of how things might go. And between 2021 and 2023, I must have taken close to 40 calls with different private investors, search funds, all sorts of different constellations. And I really got a pretty good lay of the land as to what a potential outcome might look like and at what revenue numbers it would make sense to sell. And I started having this kind of mental funnel in my head. It’s like, “Okay, if we hit those benchmarks, maybe it’s time to start thinking about running a process.”  

Rob Walling:
Got it. Why not run the company forever and take out profits?  

Eran Galperin:
That’s definitely an option. And some people do this, but I started to feel some burnout even in 2021. I ran the company with a bootstrapper’s mindset, always hiring maybe a couple of steps later than I really should have because I’m optimizing for profits. It’s really hard to disconnect the revenue going into the company from your own finances. At the end of the day, anything that’s left over in the company is your revenue personally, and I was doing a lot, just maybe doing too much was feeling burnout. And at some point it’s like, “You know what? I would be happy to take a step back and let somebody else run the company.” 

There’s also when you’re at a smaller scale and you self-select for the customers, everybody’s nice and it’s a pleasure to work with, but as you hit a certain scale, the small percentage of people that, I can’t think of a better word, just nasty people and you have to deal with them. And it gets to the point those people are above the level of even a full-time customer service person to handle, it leaves a dent in you. It always feels like they’re going to ruin your company’s reputation. We had people like trash us and all the social media channels for the pettiest stuff. I have stories that just make my blood boil when I think about it and I just don’t want to deal with it. Does this emotional connection as a founder, CEO, that maybe a professional CEO would not have because they didn’t build the company, they don’t feel it in their bones and somebody is just saying nasty things about them online and I just wanted to kind of remove myself a little bit from that.  

Rob Walling:
Yeah, I experienced the same thing. We don’t talk about that very much, but that stuff takes a toll on you. I don’t know if you got threatened, but I got threatened multiple times with where I’m like, “Do you mean that? This is becoming a safety issue.” It’s a law of large numbers. It’s like at a few hundred customers you kind of know everybody, at 1000 users, customers, it becomes a lot. And then we eventually had a free plan, so we had 30, 40,000 users at a certain point. It’s like you’re going to get some mentally unstable, demanding, narcissistic folks. And yeah, I can see it. Everyone sells. Like I say this, everyone sells eventually. I never thought MailChimp would sell and they eventually sold. I mean really, I had all these examples and they’ve all sold except for I think Basecamp is probably the one that I think about. 

So then I guess the question then is you start feeling like, all right, I’m burning out. This business is obviously worth a lot of money, but how did you know when it was time to sell? Because you could have sold it at a million ARR or two. It’s like do you just arbitrarily pick a point? What was it like for you?  

Eran Galperin:
So because we received so much inbound interest, I did really have a lot of insight into where an optimal result might happen, and it did seem to really funnel around a few million in ARR. That’s where a lot of the bigger players that can actually pay the big multiples start getting interested. At the lower ARR there’s definitely interest, but people would try for bargain. The multiples are lower, the terms are not as good, and I saw a very direct line to that number. With our growth numbers I was running this kind of projection P&L where if we continue at the same pace that we’ve been growing and add a little bit to it every few months, and it ended up being almost to the dollar accurate all the way up to 3 million. So as long as I was continuing with the trend that I built there, I’m like, “You know what? I’m good. I don’t need to sell now.” 

Unless I see crazy warning signs. And by the way, those crazy customers, those were the warning signs, like, “Is this it? Is this where I’m taking a tumble down death row for the company?” That did make me wonder, maybe it’s time to sell now before I really run into that customers that tries to ruin our business. But as long as we kept on that trend I could see the path. It didn’t seem too long. So if it was like five years into the future, I would not be able to do it. But it was about two years into the future I was like, “I think I can hold on for that and have a life-changing outcome there.”  

Rob Walling:
And let’s talk through the sales process because you’re one of the few people that I can talk to about how painful this is. And here’s the hard part is if you go on social media, if I say on this podcast, “Oh, it was so stressful. It was really stressful. No, trust me, it’s really stressful.” People say, “I’m sure it wasn’t that stressful. And also you walked away with money that you never had to work again. So really just deal with it.” But it drives people, it can drive people to the edge, to the brink, to the point of not sleeping to the point of I started having, hallucinations is not the right word, that would take it too far, but I started making shit up in my head that just wasn’t true. And at a certain point, Sherry, my wife was like, “Hey, do you know that that’s not, you’re in a weird place. You’re really fighting with people in a way that’s not healthy for you.” 

So for you, you worked with Discretion Capital folks on the podcast. No, A&R runs that and helps as a sell side advisory for SaaS doing multi-millions. And what was the process like for you? You can talk maybe a little bit about the mechanics of it, of how it actually panned out, but also personally, emotionally, what that all felt like.  

Eran Galperin:
Yeah, the process was much more stressful that I anticipated, and it’s mostly psychological in its core. First of all, it’s a very technical process. That’s another thing that I didn’t anticipate everybody reads about due diligence. It seems like a very straightforward thing. You just provide the documents for the company, you let them look at your code base, la-da-dee-la-da and you’re done. And it’s so great, but it’s actually so technical and complicated. There were times during due diligence and it’s mostly around stuff like taxes and company structure that the other side’s legal team would just disappear for three, four days a week looking into something. And I’m like, “Is this a big problem? Is this a small problem? Is this taking down the deal?” I just have no idea. And this kind of ambiguity where you have no idea if things are going well or not for weeks at a time, it really gets to you eventually. 

And it’s a lot very minute things written in some contract from few years ago, and it’s like, “Is this a problem? It looks so minor. Is this really a problem?” And they’re like, “We don’t know. We’re going to need more time to find out.” It’s like, “Sounds bad.” But you just stick with it and eventually you get through due diligence and then you have the purchase agreement aspect. I thought once we’re done with due diligence, we’re done. We just need to sign the contracts and get on with our lives. But hell no. That was just half of the process. It was crazy.  

Rob Walling:
You keep spring [inaudible 00:29:21]. Yeah, you just don’t know.  

Eran Galperin:
Yeah, you just don’t know those things. Luckily I had Einar to provide some emotional support. He told me that basically his role once the process starts is to be therapist for the founders. And it pretty much ended that way. Every time I would go to him, it’s like, “How big is this issue?” And it’s like, “Don’t worry. It happens in every sale process.” Like, “Okay, if Einar says it happens every time, it’s fine.”  

Rob Walling:
It’ll be okay.  

Eran Galperin:
So he would calm me down and this would happen a lot. Him and my lawyer, I want to give credit to Kaiser, just did an amazing job, especially during the purchase agreements. Every word in those agreements can have such a long-term effect on your life and you’re like, “I don’t even know what any of this means.” So having a really good lawyer that is patient and kind enough to explain it in a way that you can understand is so important. 

And still, we would get hung up on things where us and the buyer had some sort of disagreement on, and is this solvable? I don’t know. And again, days would go by, weeks would go by from my end, this is the only thing going on in my life other than running the business, but they’re dealing with multiple deals at the same time. So I don’t know if they’re just ghosting me or actually busy. Is this a tactic that they’re using to get me to come to their side? It’s super stressful. I usually consider myself a very even-keeled person, and I was taken aback by how stressed I got near the end of the deal. Even though we had all this inbound interest, I felt like if this deal falls apart and we go back to market, we will be able to get a really good outcome regardless. 

But I just didn’t, once you get too deep into it, you hate so much to go back to the beginning, do the due diligence again, like, “Oh my god, to go for that will be a nightmare.” So yeah, near the end of the process, I literally got insomnia. I would lie down in my bed, refreshing, looking for emails from the lawyer that I felt like, “Okay, I have to get out of bed, respond to this now, otherwise I’m going to stop this deal for the weekend because it’s a Friday.” And it’s got to the point where once I turn the phone off and I’m trying to go to sleep, I just can’t fall asleep. So it’s like, “Okay, it’s eight A.M. I’m just getting up. I didn’t sleep today. I’ll just keep going.” And, “Oh, what do you know? Another email came in from the lawyer. So good thing I didn’t go to sleep.” And it just stayed like that for the last couple of weeks of the process.  

Rob Walling:
Yeah, it’s brutal. It’s brutal on your mental health and on your physical health. Not sleeping is rough too. Then that, just everything else is distorted. You can’t get through that, but you made it to the finish line. We started with this conversation, hearing you refreshing that bank balance and seeing all the zeros, huge sense of relief. You’re still a CEO of Gymdesk, but what are you doing now as you look ahead over the next six months, five years? What’s on your mind and what are you doing with regards to Gymdesk and with other projects?  

Eran Galperin:
Yeah, so as I mentioned, one of the goals, or rather one of the reasons for selling the company was due to burnout. And when I was talking the terms with the buyer, I mentioned that I would like to step down as CEO after the company is sold and probably over the course of maybe a year or two, eventually walk away from the company or at least have the ability to do that. So currently I’m still the CEO. We closed the deal two and a half months ago. We’re in the process of recruiting a professional CEO to come in and take over for me. 

I literally had an interview just before this call, an hour long interview, by the way, it’s been a fascinating process interviewing for the CEO position. I’m talking to really incredible people and I’m super excited to potentially work with those people. With me taking a small role in the company, mainly focusing on product. That’s where I feel I can make the most impact at the company. I’ve been doing well in the other aspects, but those are definitely not my strong suits. So going back to focusing on product and over time, reducing my involvement in the company. I still hold some minority stake in the company, so I want it to do well, but maybe more on a consultancy basis eventually. 

The main thing for me right now, and I already started doing that, is I’m looking to help mentor other B2B SaaS founders from that zero to one and a potential sale process, and also do some angel investing in that same realm. So I’m talking to a few founders already. Those conversations actually are incredibly invigorating for me.  

Rob Walling:
You get to see the other side.  

Eran Galperin:
Yeah, I’m just incredibly happy to talk about those topics. It’s like I have somebody who also understands what I’m talking about and having those conversations kind of like what we’re doing right now.  

Rob Walling:
Yeah, this is the best job I’ve ever had, what I do both on this podcast, but running my heart on a TinySeed, I get to do that every day. And you see the appeal of it. It keeps you in the game, it keeps your head sharp, but you don’t necessarily have to do the grind that you did for so many years where everything’s hanging by a thread. If someone just heard you talk about, “Hey, I am mentoring and potentially angel investing, they wanted to reach out to you, what would be the easiest way for them to reach you?  

Eran Galperin:
So I have my personal website, it’s EranGalperin.com if you just Google my name, you’ll find it. You can contact me through there. Also, I’m on Twitter and LinkedIn, easy to find. Feel free to reach out if you want to talk. I’m super excited to talk to founders about B2B SaaS. It’s kind of my thing right now.  

Rob Walling:
Yeah, and it’s not just, “Hey, talk to me if you want me to invest or something.” But it’s like you’re pretty free with your advice and you have obviously a lot of knowledge and experience having grown this company in extremely competitive space and having an incredible life-changing exit.  

Eran Galperin:
Yeah, it always gets me worked up to talk to a founders in the early stages and hearing about what they’re doing. It’s like, “Wow, that’s so exciting.” So yeah, I love having those calls.  

Rob Walling:
Eran Galperin, thanks so much for joining me on the show today.  

Eran Galperin:
Thank you so much, Rob. Been a pleasure.  

Rob Walling:
It was an absolute pleasure having Eran on the show. I hope you enjoyed this episode and took away some motivation and some lessons and some learnings that will help you grow your business this week. This is Rob Walling signing off from episode 728.

Rob Walling:
I’m back with another episode of, Startups For the Rest of Us. Today’s episode is Hot Take Tuesday. Welcome back, Einar and Tracy, and we talk about topics relating to bootstrapping and growing your company, including how mostly bootstrap company, Gymdesk, sold for more than $32.5 million. In fact, after we recorded this episode, I recorded an interview with the founder of Gymdesk that will air on this very feed in the next couple of weeks, so stay tuned for that. Today we also talk about whether hiring is getting easier for bootstrappers, what changes in mindset might be present between founders at different MRR levels, how to identify what really moves the needle, and more Hot Take Tuesday topics. 

Before we dive into the episode, if you’re not on the email list for this show, you should head to startupsfortherestofus.com, enter your email. What you’ll receive from there is a weekly email with the show notes and a recap of every episode with timestamps. You can of course opt out of that and still receive the less frequent emails we send. But you’ll also receive two never-before-released episodes, Eight Things You Should Know Before Launching Your SaaS, and, 10 Things You Should Know as You Grow Your SaaS, as well as a PDF of the 5 PM Framework. 

In addition, I’m just wrapping up a book about selling your company. My wife, Dr. Sherry Walling and I, are in the final days of locking in that manuscript. If you get on the email list here, you will hear about that book when it goes live. So, with that, let’s dive in to Hot Take Tuesday. Welcome back to this Hot Take Tuesday Roundtable. My first guest is someone you know very well. Tracy Makes on Twitter, our very own Tracy Osborn. Hey, Tracy. Welcome.  

Tracy Osborn:
Excited to be back.  

Rob Walling:
It’s been a while since Hot Take Tuesday. Bit of travel, bit of not a lot of news. I mean even today, I like the docket today, but two or three of them are just questions that I think that-  

Tracy Osborn:
It’s the summer.  

Rob Walling:
Yeah.  

Tracy Osborn:
Yeah, things are chill.  

Rob Walling:
My other panelist is TinySeed’s very own, Einar Vollset. Welcome to the show.  

Einar Vollset:
Thanks for having me.  

Rob Walling:
Let’s dive right into our first story, and we will link this up in the show notes. It’s a PR Newswire article. It says, “Gymdesk announces a $32.5 million dollar strategic growth investment from Five Elms Capital.” Gymdesk of course being a TinySeed company.  

Tracy Osborn:
Yeah.  

Rob Walling:
So, we are stoked about this. I’m very happy for Eran, the founder. I think the question I want to toss to you first, Einar, is, does this prove or at least help to prove our thesis of TinySeed? Which is B2B SaaS companies are worth a lot of money, and even the little ones, even the TinySeeds and the MicroConfs, they don’t have to be unicorns to have enormous valuations. Obviously raising at 32.5 million means this company is extremely valuable now. So, talk us through your thinking.  

Einar Vollset:
Yeah. I mean, they didn’t raise at 32.5 million, they raised 32.5 million. The valuation was even higher than that. I think it’s a great story. As we know, even the majority of our successful companies don’t even necessarily raise any more money after us, but I think what this shows is that some of the TinySeed companies will grow into companies that will take this kind of money from growth private equity, where it’s like, there’s a lot… I actually think a lot of people don’t realize that these software private equity growth capital funds even exist. They think, okay. There’s VC and that’s it. But realistically, once you get past about a million in ARR, there are pretty deep pools of capital that are interested in investing in these kind of companies and taking them further and taking them to the next level. 

So, in that regard, it’s very exciting for us. It’s obviously very exciting for Eran and the team, and I think TinySeed, we sold some of our equity as part of the transaction, but we also rolled a substantial amount forward, and we expect them to just keep growing. The big player, so Gymdesk is obviously in the gym management fitness space. The big player in the space is publicly traded, Mindbody. Everyone in the space hates Mindbody, and I think there’s a path to where Gymdesk basically becomes the better version of Mindbody and potentially is public down the line. So, for us it’s very exciting.  

Rob Walling:
It’s great as a founder to enter a space with a big incumbent that everyone hates, and to be in a vertical. This is something I called back in January, my predictions for this year of vertical SaaS and orthogonal SaaS are the places where we see a lot of opportunity for founders, not only to get in and carve out a space for themselves, but I would argue, I would posit that exiting and evaluations can likely be higher than if you’re building a big horizontal thing.  

Einar Vollset:
I think that’s true. I mean, I think in general too, I see this in the Discretion Capital side. We see the appetite for M&A and outcomes is substantially higher for sticky vertical SaaS, where there’s high recurrence, low churn. Obviously they want growth, but they don’t need to have 500, 600% year-over-year growth to have a business that is backable or acquirable at that size. It’s also, it’s one of those things like, look. Gymdesk, they raised his money at a huge valuation, but the only other money they raised was from us. That was it.  

Rob Walling:
Right. I wonder if this means they’re no longer mostly bootstrapped because that’s a lot of money. It’s a lot of money. Just so people have an idea before I kick it to Tracy, Einar mentioned Discretion Capital, he is the founder of Discretion Capital, which is an M&A advisory for B2B SaaS companies doing two to 25 million ARR, and Discretion represented Eran and Gymdesk in this transaction.  

Einar Vollset:
Yes, indeed.  

Rob Walling:
Tracy, what’s your take on this whole deal?  

Tracy Osborn:
To repeat what Einar said, it was the whole private equity path. When I was a startup founder and when I first started TinySeed, I didn’t even realize that was an option. I’ve been seeing articles, I’ve been hearing Einar talk about this for the last few years, and then I’ve been seeing articles in the last few months about more people talking about the current economic climate when it comes to venture capital, and how private equity is becoming more of an option, or more of something where people want to go for. People are more aware of it and it’s more of a desirable option for a lot of companies that are wanting to exit. 

So, it’s really cool to see an example on this directly from TinySeed. I think this is a great example to other founders out there who might be struggling with traditional VC to look at this direction, because I think there’s some folks who are just like, “Uh, private equity.” I think there’s cases like this where you can see where private equity can position Gymdesk and give them resources they need to grow up against something like Mindbody.  

Einar Vollset:
Yeah. I think it’s true. I think fundamentally a lot of people have a view of private equity is from a Bruce Springsteen song. It’s like they came to town, they bought the factory, shut it down, and now my father’s an alcoholic, type thing. But what this proves, and look. Gymdesk isn’t the first company, TinySeed company that did this. We’ve had at least one or two more. We think, given the number of companies that we’re backing and how they’re growing, we’re expecting more and more companies to decide that they’ll get to a million or two or five or whatever, and decide that whatever got us here won’t get us there. Having more capital and in some cases advice and experience to go from say five to 50 million in ARR, is a viable path. 

I also think that there are more companies that started out on the IPO VC path, and have built substantial businesses that make sense. They’re doing two or five or 10 million or more, and they realized they’re not growing it. I think it was Gary Tan had put out some stat about 2023 as like, the medium growth rate you had to have to be a successful series A VC, raise a series A VC round in 2023, was 600% year-over-year growth, but-  

Rob Walling:
A lot of companies aren’t going to hit that.  

Einar Vollset:
That’s not the only path. Yeah, that’s not the only path. Look, there are companies out there, there are investors, certainly you probably have to be at a reasonable scale. The fundamental thing about private equity is they care more about downside protection than VC does. But the flip side is, if you can provide that downside protection by being at a certain scale, then the kind of outcome that they’re looking for, three to five X in three to five years, might be better and more aligned with what it is that you want to do with your life. It’s like the way that I put it in one of the projects that I’ve got going called, Next Catalyst, is do you want to be rich or do you want to be king? There are some people who basically the thing they care the most about is to be famous. They want to be known as the Elon Musk of the world. They want to be known as an amazing startup founder that succeeded and rang the bell at NASDAQ. Then there’s the rest of us who is like, “You know what? I’d rather just be rich.”  

Rob Walling:
Onto our next topic with layoffs and back to the office, in effect. Is it getting easier for bootstrappers to hire? Tracy, what is the word on the street? We have 171 investments across TinySeed, B2B SaaS, almost 300 founders now. What’s the word that you’re hearing in terms of hiring difficulty or ease compared to the last couple of years?  

Tracy Osborn:
That’s an interesting question. Actually, I’m not sure if I have specific stats on that. I have a lot of gut feelings. I mean, hiring is always hard, right?  

Rob Walling:
Gut feelings are fine.  

Tracy Osborn:
Yeah. Hiring is always going to be hard. With the folks who are used to working from home and they want to have those benefits of working at home, there’s pros and cons in all of this. Where these giant companies want people to go back to the office, and so they could be looking for… Might be easier to find these folks who are wanting to work from home, and might be easier to find those folks that work at those big companies. However, the other thing that I think I’ve heard about is also the mindset of these potential employees and whether they fit within a bootstrap company. 

Because a bootstrap company is not going to pay as well as one of these giant companies. There’s going to be a lot of benefits, like working from home and the flexibility that you would get that people might have got used to in this era of being able to work from home. But bootstrap companies are going to have to work a little bit differently. So, there’s some pros and cons there for the folks who are trying to find these workers. It might be easier to find people, but they might not have the right mindset.  

Rob Walling:
To give you some data, we just released a State of Independent SaaS Report for 2024. Folks can download that at stateofindiesaas.com. In it, let’s see, I’m on page 18, it says, “85% of companies we surveyed,” so we surveyed 700, almost 700 bootstrap, mostly bootstrap SaaS companies, all MicroConf, TinySeed type companies. “85% reported that the difficulty in hiring people is either the same or easier than last year.” That feels about right. Most people are saying it’s same or easier. In addition, this was I think the first year where we saw hiring, maybe it was the first time we surveyed because it was two years ago, but, “We see that 30% fewer companies are hired in 2023 compared to 2021.” 

Again, this is bootstrap companies. We know there was a big VC bubble and there was a lot of hiring and now there’s layoffs, but it certainly happens across our type of bootstrap companies as well. The plan to hire in the next 12 months was down 17%. So, even though it, to me, anecdotally and obviously from these numbers, it appears that it is easier for bootstrappers to hire. I think a lot due to what I already mentioned, which was like, there’s a bunch of layoffs and there’s a lot of back to the office, and that’s all… Being remote has always been a bootstrapper advantage. Einar Vollset, you have anything to add?  

Einar Vollset:
No. I think that’s pretty much it. I mean, I think certainly the return to work is part of it. I also think there’s less competition from the larger firms, who back in the boom days were just hoovering up every talent and not talent in the world. That’s not been happening and layoffs have been happening. So, people aren’t just like, “Why would I ever work for a bootstrap thing? Anyone can get a job paying crazy money at Big Co.” Those days are not there anymore. So, that might be part of it too.  

Rob Walling:
Our next topic is a question from Twitter, and I don’t know if I want to answer the exact question. So, the question is from @SunglassesFace, name is Orly. “What change in mindset do you notice between founders with 100 MRR, 1,000 MRR, 10,000 MRR or 100,000 MRR?” The reason I want to change the question is, we’ve watched dozens of founders hit all of those milestones and they’re the same founder. The mindset doesn’t shift that much. You look at a Ruben Gomez or a Ron Galperin or Gymdesk. It’s like, the mindset from the start was, do things really fast, ship a lot of… Be mostly correct. Be right most of the time, have a good gut feeling. You do that when you’re at 100 and you do that when you’re at 100,000 MRR. But I don’t think that’s what Orly @SunglassesFace is asking. I almost think the question is, how do the challenges that you face differ from 100 to 1,000, to 10,000, to 100,000 MRR?  

Tracy Osborn:
Well, I think it’s a misconception, because some folks, I think, when they’re at the early stage, it’s like, “Is my mindset wrong? Is the reason why I’m not growing, is it because of my mindset?” So, I think that question stems from this misconception and that’s what you’re trying to explain. I just wanted to harp on that thing, is that there’s a lot of things to do. It’s not necessarily just mindset, you have to have a growth mindset, but that growth mindset is going to be there at every stage.  

Rob Walling:
I agree. With that in mind, Einar, what do you think the changes are? We don’t even have to go through all four of these. But when someone’s at 100 MRR versus 10,000 MRR, let’s contrast those to start. What are the different challenges?  

Einar Vollset:
I don’t know. At that stage, I don’t know that there is a difference, because I think it’s not that different. There’s a right, I think, strongly opinionated, there’s a right mindset and it’s just, move fast and just do a lot of… Just when it’s working, keep doing more of the stuff that’s working. I think what I observe, and maybe it’s because of how I operate and what I do, I think there’s more of a break at above even these numbers of what he’s talking about. I think what we very commonly see is, I think a lot of people, whether they’re at 100 or 10,000 or whatever MRR, they have this view that, “Oh, once I get to a million in ARR,” 83.33 whatever it is in MRR, “Then everything will be great. That’s it. I’ve made it. I just need to do more of the thing that I’ve already proved, proven to make it.” 

Actually, Jason Cohen did a great piece on this, talking about, well, I think he called it the Elephant Curves or something like that. It’s basically the myth of continuous exponential growth. What he says is, I think he used the example of HubSpot. He says, “Look. It looks from the outside like it just is up and to the right graph, and that’s how they did it. They just did more of whatever it was that was working. But actually, if you look underneath the covers, it’s one growth curve stacked on top of the other. Where it’s basically, they launched a new product and then they added another channel, and then they launched another product, and another channel.” I think the biggest mindset change that I’ve observed repeatedly is, people, once they get past about a million in ARR, or two or three, they get to the stage they’re like, “Oh, my growth is stalling out now. What I was working, my market is saturated, my niche is saturated.” 

The mindset change becomes, “Okay. I’ve got to do something new again. Not just a thing that was working. I’ve got to go after another thing and another thing and another thing.” That, I think, is the biggest mindset change. The people who fail to do that, quite often they end up in a situation where, because all growth decays over time, they end up in a scenario where they have a great business that’s growing 100%, and then they have a great business growing 40%, and then they have a great business that’s growing 15%, and then they have a business that’s not really growing, and then it starts to decline and now they’re like, “Crap. I should have sold this a couple of years ago.” I think that happens a fair bit.  

Rob Walling:
Tracy, what do you think about these revenue MRR levels? Do you agree with Einar? He was saying 100 to 1,000, or 100 to 10,000 is similar. Because I think there’s a difference at 10,000, but I’m curious to hear what you think between these levels.  

Tracy Osborn:
Yeah. What I have in my notes was, early stage is finding product market fit, middle stage is pouring fuel on those areas at work, and then later stage is broadening out. So, disagreeing with what Einar says, and I’ve seen this as well, is that folks get to that certain level of one million in ARR and they’re like, “No. I don’t want to do it again.” It’s like, yeah. You have to figure out how to do it again, but in a different area. So, I guess that’s a mindset thing, is of just that growth mindset, being aware that you’re going to have this wonderful growth and the mindset of knowing that it will end, and therefore being able to react or prevent it and react appropriately before that down curve happens. That is something that we’ve seen a lot of folks run into that trap.  

Rob Walling:
Right. Looking ahead at your plateaus.  

Tracy Osborn:
Mm-hmm. Don’t wait till the plateau happens.  

Rob Walling:
Yeah. I talk about it in three phases, and there are more than this, but the first phase is building a product. Second phase is building a business, third phase is building a company. Usually I think of product as being zero up to usually about 10K MRR, to be honest. It’s like, “I have a product. I’m trying to figure out, does anybody want this? Can I sell it? What’s the pricing?” You’re just fumbling. You have almost no product market fit, or very weak product market fit. Between 10 and 20, I feel like, “Oh, now I have revenue, I’m probably going to have expenses. I have to start thinking about this as a real business a bit.” Then I think from that point up until somewhere in the 50 to 100K, that’s where you’re building the business. Then 50 to 100K, I think you’re building a company. That’s when it’s like, “I need really good people. I probably need to start thinking about hiring managers and delegating a lot more,” because usually in a SaaS company, you have a lot of folks on your team.  

Tracy Osborn:
Not going to be the first person on the ground anymore, relying on other people. A lot of things are going to change at that point. The mindset to be aware and ready for those changes too.  

Rob Walling:
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Our next topic is how to identify what really moves the needle. This is a question from SanderFish on X Twitter, and it was asked directly of me. I posted, I don’t know, it was about a month ago, and said, “Hey, ask some more intermediate and advanced questions.” I like this one. SanderFish says, “Often it feels like SaaS success is an accumulation of many small decisions and improvements over time.” Which I would 100% agree with. “How do you identify what really moves the needle?” Tracy Makes, how do you identify?  

Tracy Osborn:
I like that Einar brought up earlier in the last question, talking about founders constantly working on new things and getting things done. In that, folks also need to be… They don’t need to lose track of analyzing how well those things do. It doesn’t have to be that hard. As things are going through, make sure that you’re adding the right referral links or whatnot, so that as you’re setting up these marketing campaigns and working on three things at once, that later on you can spend 15 minutes going back and being like, “All right. Cool. I did these three things. Now I can track all these things that are happening.” 

Sometimes people can get into this thing where they’re like, “Got launch, launch, launch. Do things, do things, do things,” and it’s like what actually was working? What was actually worth the amount of time that you were spending on this? You have to remember to do maybe a monthly cadence of looking back at what you have done in that month and then analyze what things are happening. So, you actually can identify what’s moving that needle. That’s hard to do as a founder because you have to be constantly launch, launch, launch, and it’s really easy to forget to do that analyzing process.  

Rob Walling:
What do you think Einar? How do you identify what really moves the needle?  

Einar Vollset:
I think while important, it’s more important just to do more… Then if things are going well, then great. So, I think there’s two hurdles for most founders that I see, that I work with. The main problem isn’t trying to figure out what’s working, it’s doing enough experiments so that something is working. Look, if they do 25 things and then two or three of them are working, but they’re not totally sure which ones are working, but they’re just doing it, that’s much better than what most people do. Which is they overanalyze and do two things and neither of them work, or goes backwards. That being said, I do think it’s important, to Tracy’s point, once you have some stuff that is working, it’s got to be like, “Okay. What do I double down on? What is it that’s really working?” 

Because the other thing that, mistakes I see people make is, they’ll read the Traction book from Gabriel Weinberg, and they’ll try a bunch of things and something’s working, and then they figure out something’s working, but then they won’t really double down on it and try to squeeze everything out of it and really explore how big that success can be. Instead, they wander off and pick something else to do, and then another thing and another thing. It’s the point where, look. This was working, just double down on the thing and just make sure you squeeze the full growth out of it.  

Tracy Osborn:
It’s like shiny object syndrome, because it is really fun to launch a new marketing campaign. So, it’s just like, “Oh, how to set up this thing, how to learn a new thing and do this kind of thing,” and forgetting to really track on and follow up on those things.  

Einar Vollset:
I think sometimes people have this, once they have this working, I know that I do this sometimes, it’s like if they have something that’s working, they’re always like, “Great, it’s working. I always know that I can rely on that and do more of it if it’s working. So, I’m just not going to do that because I have it in my back pocket. Then I’m going to go do these other things and explore more so I have more things in my back pocket.” I think that’s a mistake most of the time. Particularly for growth channels and things like that, it’s like, no. This is working now, but you have no idea, does it work 50% more? Does it work 5,000 times more? You don’t know until you really try. So, I think that’s a mistake people make.  

Rob Walling:
Yeah, it’s funny. Tracy said, launching a new marketing campaign is fun, so is launching a new product. It was just building more, so is writing features. I think there are a lot of rules of thumb and a lot of frameworks and guidelines that I talk about on this show, we talk about in MicroConf and obviously to TinySeed companies that are in my book, whatever. You should probably listen to them in most cases, if you don’t know anything else. It’s like, this is a great start. It’s like, learn the rules, then master the rules so that you know when to break them. But if you never learn the rules, then you don’t know that you shouldn’t start a B2C two-sided marketplace with Freemium and launch seven products and blah, blah, blah, and try to do viral marketing on my social media following. 

I think I’m going to build some incredible business. It’s not impossible what I just said, but the odds are stacked dramatically against you. So, listen to those who have gone before you. When I think about trying to figure out what’s going to move the needle, usually I think, what has moved the needles for others? A million things I could do, but founders who have it working, what are they doing? Then try to generalize that. So, I look at the best, most successful founders. I mean, I was doing this as I was coming up and saying, “What’s Jason Cohen doing? What is Hetan Shah doing? What is these people who are building incredible businesses?” Einar, you have to discount it. They’re not Steve Jobs and they’re not Elon Musk. I am a bootstrapper. I can’t model myself after those people. I can’t even model myself after Basecamp, because I didn’t launch a SaaS in 2004 that gets… What did they say? 10,000 trials a month or something. 

It’s just, I’m not in that situation. They can do stuff, like not market, like not sell, because they’re in a luxurious position, and good for them. The luck and timing were one and two, Jason Fried told me that for their success. Unless I can replicate luck and timing, I can’t, then I need to look at folks who do it and grind it and figure it out, like Eran from Gymdesk, like Ruben from [inaudible 00:25:00]. There’s dozens and dozens of TinySeed founders that I would look at and try to model. That’s why I write the SaaS Playbook. You can buy it for $10 on Kindle, read through that. If I were to try to prioritize stuff, I would start with the stuff in that book, not the stuff that I see people yapping about on Twitter. 

The approach is where it’s like, build an audience. Yeah, great, that’s fun. But it’s not for your SaaS company. Build your network, not your audience. So, I don’t know. I prioritize things by first trying to have some type of framework to limit its infinity, things I could try, down to 20, 50. There’s only that many. Then I would, if I have a gut feel, a strong gut feel, I would do it myself. Otherwise, I would get people involved. I’d say, “Einar, what do you think I should do?” I’d say, “Tracy, Ruben, Eran, what do you think I should do?” People in my mastermind, advisors, whoever, “What do you think? I am down to this list of three now, which should I try first?” Get an outside counsel and then go for it.  

Tracy Osborn:
Yeah. It helps get you out of that tunnel vision and out of that, “Oh, I’m really excited about doing one thing because that’d be more fun,” versus the other thing that’ll actually move the needle.  

Rob Walling:
That’s the thing that… I talk about this all the time, where it’s the ice cream versus spinach. What’s really yummy is ice cream. I want to lose weight, but I want to eat ice cream and not spinach. Those two don’t go together. So, when someone tells me, “I want to grow a SaaS company.” “Great. Here’s my advice,” blah, blah, blah. They’re like, “Oh, but I want to do B2C and I want to launch seven products and see what sticks.” I’m like, “So you want to eat ice cream and think that you’re going to be…” That’s my analogy that I make. Implicit in this question, how do you identify what really moves the needle? 

Honestly, what moves the needle is often not ice cream. What moves the needle is often not what we want to do, unfortunately. There are examples of folks who did exactly what they want. It’s like the one person who built a social media following, and maybe there’s three. Built a social media following and also just writes a lot of code, and that works. We all want to do that as builders, but usually what moves a needle is not that.  

Einar Vollset:
Because I mean, the reason everyone’s heard of them is because it’s noteworthy.  

Rob Walling:
Exceptions.  

Einar Vollset:
It’s like, holy moly. Look at this guy. He’s on the beach in Thailand and he’s got seven products and they’re making $50,000 each, and it’s working really well. Everyone’s like, “Oh, I’ve got to follow this guy. Look at this.” Well, yeah. But for each one of those guys, there’s 500 people who are running a million ARR, or five million ARR, or 100 million ARR businesses that did nothing of that.  

Rob Walling:
Yeah. It’s a trip. It is a survivor bias. I’m not taking anything away from people who’ve made that work, but it really reminds me of a rock star or someone who gets into the NBA. Like there’s 500 NBA players, I believe, approximately. It’s like, how many people each year try to get into the NBA? That’s what this feels like. It’s that hit based, you’re decreasing your odds. Those are not the things you should be working on. The blocking and tackling of what we talk about on this podcast, and what we talk about at MicroConf and what I put in my books is-  

Einar Vollset:
Can you tackle in basketball? Is that allowed?  

Rob Walling:
I switched metaphors to sports ball, to football.  

Einar Vollset:
Sports ball.  

Tracy Osborn:
Nerd.  

Einar Vollset:
Blocking and tackling in basketball would be hilarious. We should do that.  

Rob Walling:
We should have full contact basketball.  

Einar Vollset:
There you go.  

Rob Walling:
On that note, we are going to wrap up today’s Hot Take Tuesday. Tracy Osborn, you Are Tracy Makes on Twitter, and also one of the folks behind the @TinySeedFund Twitter account, X, Twitter. This is what I’m calling it now, but…  

Tracy Osborn:
It actually works out pretty well when you say X Twitter, it’s like-  

Rob Walling:
Like E-X-Twitter.  

Tracy Osborn:
Exactly. Used to be. Company formerly known-  

Rob Walling:
Formally known. Yeah.  

Tracy Osborn:
Because when I say X, it’s like, what are you talking about? So, I keep saying X, Twitter. Einar Vollset, you are Einar Vollset on Twitter, mostly Tweeting about the San Francisco Giants.  

Einar Vollset:
San Francisco Giants. Who are playing really badly at the moment, but will turn it around.  

Rob Walling:
It’s possible. It could happen. Thanks you two. Thanks for joining me.  

Einar Vollset:
Thanks for having me.  

Tracy Osborn:
Thanks for having me.  

Rob Walling:
Thanks again to Tracy and Einar for joining me on the show this week. Thanks to you for listening to, Startups For the Rest of Us. Whether you’ve heard six episodes, 60 episodes, or 600, it’s great to have you back. I enjoy spending every week in your earbuds. This is Rob Walling, signing off from episode 727.

Rob Walling:
You’re listening to Startups for the Rest of Us. As always, I’m your host, Rob Walling. And in this week’s episode I’m flying solo to bring you a handful of topics that I think can provide you with some motivation or a framework or even a tactic or a strategy to help you grow your business faster. Most folks who listen to this podcast are bootstrapped or mostly bootstrapped founders. Many of them are starting SaaS companies, but there are also folks across many industries including info products, construction, legal, folks who just want to hear the stories, the guidance, the advice. Topics for today include an update on the The SaaS Playbook, sales numbers, and I have some interesting findings and takeaways from those. I’m not just going to rattle off a bunch of numbers, but give you percentages of what channel sold the most and some learnings that you might be able to take away from those numbers. 

I’ll be talking about having access to information versus motivation, and I’ll talk about making your first level last. Before I dive into my first topic, I want to encourage you to check out Discretion Capital. So if you’re a SaaS founder and you are approaching seven figures of ARR recurring revenue and you at some point have thought about selling your company, you should reach out to Einar, the founder of Discretion Capital. You’ve heard Einar on this podcast. He is also the co-founder of TinySeed. Discretion Capital is an M&A advisory for B2B, SaaS doing between two and 25 million ARR, and they get amazing multiples. This is what they do for a living is handle this process for you. And the reason I said if you’re approaching a million is usually even if you’re not at two, you want to start thinking about this 6 to 12 months before you sell. 

You want to get things in order and just understand what the process might be like. You can talk to Discretion. Einar is not a sales guy. He’s not going to push you on stuff. He’ll have a conversation. What is your B2B SaaS business worth? If you’re getting inbound offers already to buy your business, do you need someone who can help give you some advice on what you can do with those? And of course, finding the best buyer for your SaaS. This is where we talk about how once you’re doing 1 or 2 million, you switch from net profit multiples to revenue multiples, and that’s what Discretion Capital does. They are the best in the business at what they do. And of course, I wholeheartedly recommend them, discretioncapital.com, if you want to find out more and schedule a call with Einar. 

So to start with, this week as I’m recording this, I posted on X, Twitter. I said, well, SaaS Playbook has just sold its 29000th copy and I give thanks to everybody. And by the way, if you’ve purchased a copy or you’ve gifted or recommended it to a friend or you’ve given it a shout-out online, I’m super grateful because that is the number one reason the book continues to sell. And I totally appreciate any word of mouth. If you really think about it, across my audience of say it’s about 125,000 people across YouTube, podcast, email lists, whatever, and that’s trying to de-do. But if you just added them all together, it’s significantly more than that. But trying to actually get to a real number of folks that I can reach, I would figure that I would sell 6 or 7,000 copies of a book. And realistically, the Kickstarter sold somewhere around 3,500 copies I believe. 

There was another almost a thousand that was there. So it’s like four grand. And then the first month or two after the book was released, it sold another 2,500, 3000 copies. So it is in that range, that 6, 7, 8,000. The reason the book gets to 29,000 copies is because people talk about it. It really is people talking about it on Twitter, on Reddit. Probably a couple of times a week, maybe more I get an alert from all the monitoring that I have set up of someone mentioning it on a podcast again, on Twitter, on Quora, on Reddit, on other platforms. And that’s really what makes a book like this that is self-published and aside from my audience, there is no marketing engine behind it. I guess there’s a few ads on Amazon. You can buy ads there if you have a book or a product you’re selling. 

But realistically, the reason that it’s about to hit 30,000 is very much because of folks like you who read it, who like it, and who share it. And since we’re a bunch of data nerds, I want to give you this breakdown of copies sold by sales channel because a lot of folks who have never written or self-published a book would’ve no idea. So of all the copies of the SaaS Playbook sold 29,000, 35% of those, just over a third have sold through Amazon, and that’s split evenly, almost 50-50 paperback and Kindle. And realize that Kindle sell for 10 bucks and I get $7 from each of those sales. And then the paperback sells for what? 25 and the printing cost is only a few dollars. And then I think they also take 30% of that, so another 7.50. So I think I get maybe $15 per paperback copy sold. 

Next up in terms of sales volume is Audible with 26% of the volume. So keep in mind 35% on Amazon, 26% on Audible. Now Audible is brutal. They’re a monopoly and they keep 75% of each sale. So I get 25% for my audiobook that I wrote, produced, recorded, paid to edit. I own the copyright and they are literally just a marketplace where I’m listing it and they’re taking 75%. People complain about Apple’s 30% cut and nobody’s mentioning Audible’s 75% cut. Audible will only take, only in quotes, 60% if you give them exclusive rights to sell your audiobook. But I sell it directly on SaaSplaybook.com as well so you can have DRM free, MP3s and I also only pay 3% to Stripe. And so if you don’t make it exclusive, then they take 75%, which is again, just never ceases to amaze me, but that is what it is. 

Third in line, Amazon was 35%, Audible was 26, and my Kickstarter was a quarter of the copies, 25%. So I guess at the top of the episode when I said it was only 3, 4,000 copies, it was actually more than that. So you can do the math easily on 25% of 29,000. Next up is 11% have sold directly from SaaSplaybook.com. And if you’re going to buy the electronic version, PDF, EPUB or audio, it helps me out if you go to SaaSplaybook.com. Now, I don’t think of the books as a major revenue stream but it really does make a difference where when I pay Stripe 3% versus paying Audible 75. And finally 1% Apple Books. I question, I think it’s sold 1% of 29,000. So what is that? 250 copies or something? It’s actually less than that. I question if it was even worth the effort to put it up on Apple Books because it did need some specific conversion that I had to pay a designer to do and then posting it, managing it. It’s just kind of an eye roll. 

It’s kind of interesting how little, I guess Kindle just came in and ate their lunch. I guess that makes sense. So top line sales is best as I can estimate, because some of these platforms like Audible make it really difficult to understand how much you’ve actually sold. But top line revenue is just under 400,000, and my best estimate is paid to me as “royalties” or a percentage of the purchase, about 275,000. So again, I haven’t thought traditionally of books as being a revenue source, but obviously that’s a lot. And that’s a year. Yeah, less than a year since it’s been out. It won’t keep doing that every year, but obviously that is not a trivial amount of money. 

And finally, the breakdown across formats is 43% audiobook. That’s between Audible and selling from SaaSplaybook.com. So 43% audio, 29% print, that’s paperback and hardcover. And then 28% just below it, almost 50-50, 28% ebook, which is Kindle, PDF and EPUB. So yeah, some of the learnings here are Amazon, really Amazon and Audible, Amazon owns Audible. I mean they have accounted for 60% of the sales. And obviously some of those are from my audience who bought it once it came out, but realistically, they really have a stranglehold on the book industry. And I understand why now, if I was a publisher why I would be concerned because Amazon can throw their weight around it and they can de-list your book or they can put the rankings down if they don’t like you, or they can pull all types of pricing shenanigans. So that’s one learning. 

Another learning is that if you are going to write a book, obviously having an audience will sell some copies in the early days. And then what leads to recurring sales where every month you’re selling X amount of copies really is having a good book that people want to share. And that’s not something that each of us can snap our finger and make it magically happen, but there is certainly something to be learned about if you’re going to do this, make it really good, don’t half ass this. I see people who hire a ghostwriter to write a book that they pump at the start for a month or two and then it just falls off the face of the earth. And I ask myself, why did you do that? It feels like a huge waste of time. I guess it’s now a resume builder or something to put on LinkedIn or whatever it is. 

But if I were in your shoes, I would certainly give it my best effort to build something that hasn’t been written before and to make it so good that people want to share it. And a little update on my next book. So I know I’ve talked about the SaaS Launchpad a little bit, which is like the precursor to the SaaS Playbook and it’s early stage ideation, validation and all that. I’m putting that book on ice. It was 75, 80% done. And what we decided to do instead is turn it into a course through MicroConf. So there’s going to be a video course coming out called the SaaS Launchpad, and it’s everything that I know about coming up with ideas and validating them and pre-validating them and building a launch list and all that stuff. And it’s like, I don’t know, 26 videos. It’s very intense. We’re in the middle of editing those now and should be launching that in the fall. 

If you’re interested in that, be sure to either sign up for MicroConf.com’s email list or you can obviously go to this podcast website, startupsfortheresofus.com, enter your info there and you’ll get The 5 PM Framework, which is something I’ve talked about here as well as two never-before-released podcast episodes that you can only get by signing up for the Startups For the Rest of Us email list. But I am about to wrap, it’s about two weeks from when I’m recording this and we are basically doing a, I call it a code freeze, it’s a manuscript freeze on my next book, which I’m co-authoring with my wife, Dr. Sherry Walling and it is about the psychology and the mindset of selling your company. And it’s thinking through whether you should, the pros and cons. It’s dealing with a pressure cooker that is the process of selling your company. 

So the before, the during and then the after. I’ve sold, now what? How do I make sure I don’t implode during any of these times? How do I think through the pros and cons of making all these decisions and how do I come out the other side happy and not someone with 5 or 10 million dollars in the bank who is completely miserable? Obviously the content comes from my own experience, my experience counseling and advising founders for years through TinySeed, through MicroConf, and then Sherry’s experience working with hundreds of clients, many of whom have sold or have evaluated selling and have gone through the painful process. And so we have stories and quotes and our own expertise as well. And I hope to be doing some pre-sales for that later this year, maybe November if things work out really well. So stay tuned for more info on that. 

My next topic for today is a quote that I heard from a running coach. So on Netflix, there is a series called Sprint and it follows runners who are going to the Olympics. It’s 100 and 200 meter runners in the U.S. And both Sherry and I ran track. We actually met on the track in college. And so I love the sport, we both do. And Sprint is an awesome… It’s documentary style where they are following them as they go through the trials and the tribulations. And you can lose a race by two hundredths of a second or three hundredths of a second because your start wasn’t as good and you can be at the top of your game and the former Olympic champion and you can get third because you just don’t perform at the peak all the time. Really good show, highly recommended it. Even if you’re not into running, it’s just one of those things about competing and being exceptional and hard work, luck and skill all coming into play. 

But one of the most winningest track coaches of all time had this great quote in an episode and he said, at this level, you don’t teach them how to run fast. You teach them how to run fast better. And I like that as a metaphor because really this coach won’t take folks who don’t have the raw material and the sheer speed to be able to be a world champion or have the potential to be an Olympic champion. And similarly imagine if you are evaluating a founder to invest in them or you’re evaluating a potential team member. In a perfect world, you wouldn’t have to teach them how to do their job. You just want to teach them maybe how to do their job better, if that makes sense. Or have them teach you how they should do their job better at your organization. Because any of us can hire a super junior person, you could hire an intern and train them up, and then you do have to teach them how to run fast. 

And is that okay? Sure it is. But if you’re bootstrapping and you’re hiring your first 10, 15, 20 people and this person doesn’t already know how to do the job and you’re going to train them up from scratch, unless you really, really need to save on budget, that is a case where you are going to spend a lot, lot of time training them unless you have someone on staff who can train them. Again, if you get to 20 people and you have a bunch of senior folks and you hire a junior, yes, one of those senior folks can train them. But if you as a founder are training them on the nuts and bolts of running fast in their role, the basics of customer success, the basics of customer support, if they’re a successful support person, you’re making your job really hard. And this is one of the bigger mistakes that I made in the early days of Drip, is I hired really junior people and it was, I use the excuse that, well, this is all I have money for and I want people to be local. 

And really to be honest, in Fresno, California there weren’t that many people with the experience that I needed. And especially if I was going to be hiring them and they were a senior customer success person or whatever, probably working for a Bay Area company and making a lot of money. And so there just was no budget for it. But realistically it took a tremendous amount of mine and Derek’s time to train these folks up. And it’s like, do I have regrets about it? I don’t think so. But I think if I were to do it differently, I might’ve hired more remote folks or figured out a way. There are just other ways around it. I know that it was a tremendous amount of time investment at the early stages. And look, I actually love mentoring people. I mean, if you take anything away from me and what I do, there’s a reason I put out 52 podcast episodes a year and now 26 YouTube videos a year. 

And I’m writing it seems like a book every 18 months is that I do like teaching people. I like passing on what I know. And so doing that in a startup, it was very fulfilling to me. And so I actually did enjoy it but the problem was had jumped out of an airplane. And like Reid Hoffman said, we were putting the parachute together. We were building it as we were falling to the ground. And in that case, you don’t want to also be teaching the person next to you how to build a parachute. You just don’t really have the time. And so if I were to do it all over again, I would probably try to find people who already knew how to run fast so I could teach them how to run fast better. 

My next topic is having access to information versus the motivation to learn a topic. I think this was a guest on maybe This Week in Startups or it might’ve been the All In Podcast, I am just pretty sure Jason Calacanis was on it. But it was a guest and they were talking about learning to code and how everyone’s going to be able to code because of ChatGPT and developers won’t be needed anymore. And I just don’t believe that’s the case at all. I mean, we’ve seen the same thing with no-code. It’s like you can build some stuff, but we still need developers to build things. And I think for the foreseeable future, when I look out 5 years or 10 years, we will always need builders and makers and I think even beyond that, but of course it’s hard to predict 15, 20 years of what’s going to happen. But the idea here is that learning to code, the hard part used to be it was hard to find information. 

So when I was eight years old, my parents got me an Apple IIe, me and my brother, and there was one book we got with it and it was called How to Speak Basic to My Apple. And I had learned to speak basic to the Apple because I read through that book and it was painful. You typed in the programs, they called them back then and you made syntax errors and you learned from it. And that’s how I learned to code. And if I had lost that book or the book actually got beat up and lost some pages, it was very hard to find other resources to teach you how to code. But now it’s everywhere. It’s all over. I mean, you can go on a YouTube channel or you can go to any of these teaching platforms like Udemy and Skillshare and you can go to boot.dev, you can go anywhere and you can learn to code for free or for a very low cost, really high quality curriculum. 

So why hasn’t everyone learned to code? It’s because it’s not about access to information, it’s about the motivation and desire to learn it. And I’m not saying this to imply that, oh, people who don’t learn to code are somehow lesser or they’re not as smart, it is nothing about that. Or they’re unmotivated, nothing like that. I’m just saying each of us has a proclivity towards doing certain things and my mind has always worked mathematically. I love to read. I love to write. I’ve loved math and programming. And other people, they are built differently and can they learn to code? Of course. But do they really want to if you force them to learn the code? My kids are this great example actually where I’m like, no, learn to code. Really, you should learn to code. And here you can make video games and neither of them want to do it, and they just don’t have the desire or the motivation. 

And we can also say, what about no-code right? Well, no-code you can definitely get more done without grinding. You basically have kind of a prefab house where the walls are all built and the windows are all built and you’re just kind of pushing them in versus when you’re writing code, you’re crafting your own nails and you’re building your own hammer, and then you’re using that to nail in the nails. And when I asked myself, do I think AI is going to make coding so much easier that you don’t have to be motivated to learn? I just don’t think that will happen. I think we will rely on developers who can learn more easily because there’s content out there because AI can teach them. But to maintain the code and to tweak any of the code and to build something really elegant and maintainable, I guess to say that word again, that’s a skill. 

And some folks will want to do that. Some folks will have the motivation and the desire to do that and others will not. So really what I’m saying here is democratization of information or of training across any discipline, whether it’s code or anything else, does not imply that everyone in the world will soon be doing that. And when I hear folks saying it’s usually the hot take on social media, everyone’s going to learn to code. There will be no jobs, no-code’s going to do it. AI’s going to do it, I just don’t buy it. 

My next topic stems around a quote from John Romero who is the co-creator of id Software and co-creator of Doom and Quake, several other games. The best audiobook that you can listen to him or I guess there’s a physical copy of that somewhere I’m sure, there’s dead tree versions is called Masters of Doom, and I would highly recommend it. I think it’s certainly my top five audiobooks of all time and maybe my top three, just an amazing, amazing story. But John Romero also has an autobiography called Doom Guy. And while I like that one less, it’s still cool if you want to dive into the lore. But one quote that John Romero said in chapter 27 of Doom Guy is he said, “I always make my first level last.” I really like the sentiment of that. Basically he learns the aesthetic of the game, the feel of the game over time and it develops. And he wants to put his best foot forward by the time he’s getting towards the end of developing or designing the game, he has that all in his head and he knows what it feels like. 

He knows what the gestalt is, and he can put his best foot forward in that first level. Instead of you imagine building it first and it no longer aligning with things middle of the way down the line. Or you’re kind of rusty, you’re kind of getting the creeks out, and you don’t want that to be your first level because you want the first level to be a banger. And when I heard that, I thought instantly, yeah, this is why we always created our onboarding last when we build SaaS apps is like, I’m going to build the app. What does it need to do? Here are the pages. Even if it’s a very simple MVP or it’s a 1.0. And then we would think, what steps do people need to take to get on board and to get some value? It is a minimum path to awesome within this app. And that’s when we would then go back and architect the onboarding. 

And it’s the same sentiment here is we already knew how everything worked. We knew the gestalt to the product, the core of it, and we wanted to put our best foot forward. We had worked out the kinks and we wanted to put the tour, whatever we were building, kind of a walkthrough, a thing that prodded you to keep going and get your JavaScript installed and get your first email built and all that. And it really made sense once we had a full picture in our heads of the entire layout of what people needed to do. Now, the interesting thing is I was trying to equate this to marketing too, of like, ooh, write your marketing copy last. Build the app, you’re going to launch it, write the headline after that. I think that’s interesting, I think possibly. 

The other thing though that I think is really clever and it’s something I’ve done several times, which is we’re going to launch a product. I’m actually going to write the marketing copy first. I’m going to write the headline. I’m going to write all the features, and I’m going to bake that down into a long-form sales page. And write it first then go build that product. And that product might be code or it might be a MicroConf offering like Mastermind Matching or what have you. Then usually I will come back and revise that marketing copy. So in essence, am I writing the marketing copy last? Maybe not technically, but I’m definitely using the knowledge as I’ve worked the kinks out as I fully understand now the gestalt of the product we’re going to launch and I come back and optimize and refine that marketing and the sales copy. 

Similar to even sales language and sales conversations. If you’re going to be doing demos, obviously you’re going to develop those towards the end of the product development because you have to learn from that. And of course there’s a lot of iteration that has to happen there as well. That’s all we have the time for today. Thank you so much for joining me. If we are not connected on X, Twitter, find me. I’m @Rob Walling. And if you haven’t checked out The SaaS Playbook, head to SaaSplaybook.com. Thanks again for joining me. This is Rob Walling signing off from episode 726.

Rob Walling:
You’re listening to Startups For the Rest of Us. I am your host, Rob Walling, and in this week’s episode, I bring Ruben Gamez back on the show to answer Intermediate and advanced listener questions. I made a call for questions on the show and on X/Twitter a few weeks back and asked for questions that weren’t aimed at beginners, at people validating and pre validating and trying to find ideas, and received great questions about how to think through freemium, when should you start to really, really care about brand, revisiting your sales and marketing funnels, SEO in the age of AI, and I couldn’t think of a better person to bring on the show to hammer through these than Ruben Gamez, founder of SignWell. He’s a super knowledgeable, super successful, bootstrapped, and now mostly bootstrapped founder, and I think this episode turned out great. We dug deep into the questions that we answer today. 

Before we dive in to those questions, I have been hard at work on a video course called the SaaS Launchpad. It’s everything I know today about the early stages. So in contrast to the listener questions we’re going to answer today, this is about coming up with ideas, how to pre validate, how to validate, how to build a launch list, and all types of things that you’ll experience in the early stage. And this video course is going to go live here in the next couple of months, but if you want to get on the list and be the first to hear about it, as well as receive a bonus if you buy the course early, you can head to SaaSLaunchpad.co. 

I’m actually really stoked about this course, it’s everything I know about how to get those things done. And I’ve teased on the podcast a few times that I have a mostly written book on this topic, and basically have sidelined that. And I took all that content and turned it into this video course where I felt it is much more easily consumed and I think it will be more effective for folks. So SaaSLaunchpad.co, if you’re interested. And with that, let’s dive into listener questions. 

Ruben Gamez, welcome back to the show.  

Ruben Gamez:
Thanks for inviting me.  

Rob Walling:
Always great to have you, man. Really good listener questions today. I keep calling them … I’m trying to figure out the name. These are intermediate or later stage questions, because it’s not about idea validation and building an MVP. And the reason I wanted to have you on is there’s a bunch of questions I feel like are right in your wheelhouse, things like freemium, SEO. I don’t know, there’s a few others, so it’s a really good docket today. And our first question is from MicroConf attendee and man about Twitter, Val Sopi.  

Val Sopi:
Hey, Rob. Val Sopi here, founder of Blogstatic. Thanks so much for everything you do for us bootstrappers with your podcast, the MicroConf Conference, and now TinySeed. My question is about freemiums, as Blogstatic is a B2P product and I’m looking for ways to grow faster. After listening to episode 717 with Marie Martens of Tally and how they’ve succeeded with their freemium approach, I started to think about how freemium could work for Blogstatic. 

My biggest concern is fighting spam, as Blogstatic is a front-facing app and not something companies use internally. This means I have to comply with my hosting provider’s rules and having content on my service that doesn’t comply could get me in trouble. Yes, I can use AI, but I currently don’t have the time to re-engineer the sign-up flow as I’m fully focused on sales and outreach. 

The goal is to have a generous free plan, so it’s not just a gimmick, with premium features requiring an upgrade. By now I know which features trigger an upgrade, so I think I can create a useful free plan that doesn’t hinder growth. The purpose of this would not be to convert more free users, as they don’t convert as much, but to use the freemium model so more people talk about Blogstatic and it becomes known as the go-to solution for blogs. 

With all that said, my specific question is this, should I do it? And if so, what’s the best way to tackle this? The only way it would make sense is if it helps Blogstatic grow 10X from here, which means $200,000 ARR. Otherwise, it would be an added burden for me and the business. And when I say 10X growth, I don’t mean the freemium alone doing that, but hoping at least it would assist the other outreach efforts I’m currently undertaking such as social, SEO, paid ads, and direct outreach. 

It’s worth mentioning that Blogstatic is already a super low cost product starting at $19 per year, with a fully featured plan at $49 per year, which most customers buy. At the time of this recording, there are 430 active paid accounts bringing about $20,000 in ARR almost two years in come October. Year-over-year growth is at 200%. Visits to trial are 10%, and trial to pay are whopping 26%. Year-over-year retention is not that great at only 56%. Thanks again, Rob, and I look forward to hearing your thoughts on this.  

Rob Walling:
For those listening, Blogstatic is everything you need to run a professional blog, no code, fully customizable, SEO ready, this is his H1 and H2 obviously fast loading, fully featured, and as he said in the voicemail, it is a very low-priced tool. What do you think?  

Ruben Gamez:
I think we mostly think about this in the same way. Usually if you’re bootstrapping, it’s a tough way to go. I almost default to no freemium unless there’s an opportunity here. So I think … I was recently talking to a friend about this. There’s a side to where your business needs to be the right type of business where freemium can work, and the space, and we’ve talked a little bit about this before, to where if you have a high support app or a high cost app to serve customers, then it’s going to be really tough to do freemium. 

If you have an app to where it has some viral component or not even that, beyond that, if people using it in some way, shape or form make it better or easier for you to convert other people, whether they expose other people to the product or they create content and that content can get you more traffic or whatever it is, there’s something there that Brian Balfour talks a lot about growth loops, it creates a growth loop there. Then that has potential. It has to be big enough, the space needs to be usually big enough, if you’re doing true freemium. 

One of the things that I think a lot of people overlook when it comes to evaluating freemium is whether there’s an opportunity in the space for it. Meaning if everyone in the space or a lot of people in the space are offering freemium already and you’re just going to be one of those, then what makes yours different? What makes yours special? Why are people going to talk about it or promote it or anything, especially if you’re new coming in. So I think that’s one of the underrated things that people don’t look at. If no one is offering freemium and then you see at the low end there’s an opportunity there and there’s some sort of almost demand, then that’s potential, I think, in that situation. 

The other thing is not just creating freemium, you have to promote it too. You have to do something. It’s not just create the free plan and then you put it out there and that’s it, you’re done. It’s not going to get picked up because of it, just because you have something that’s free. So there are multiple things in here that I’d take a look at.  

Rob Walling:
Cool. So you’ve set the stage of freemium, and what I like is you have these criteria and it’s like if most or all of these are not present, it’s probably not worth it. Like you said, you default, I know, with bootstrappers because freemium kicks revenue down the line, and when you’re bootstrapping, revenue is just so critical because you need it to survive, you need it to market. If you had buckets of money in the bank, you raise half a million, $5 million, whatever, you can kick revenue down the line because you have that bucket of money. But when you’re bootstrapping, it’s riskier. 

And I like that you pointed out it’s not just “Go freemium,” and it just markets itself. Even we were talking about how Marie from Tally was on the show a couple of months ago, and how they had a free plan, but she sent thousands of DMs, cold DMs and warm DMs to get people to use it. How did you … I guess your freemium with SignWell, the marketing of it is the SEO engine you’ve built.  

Ruben Gamez:
Yeah, that’s a big part of it, but we’ve also been deliberate with certain segments that we have to where we’ve actually gone into communities and promoted the freemium plan and actually in some cases given a different version of the free plan to where we’re giving away more because we know it works in those communities and it just helps overall. 

So you have to be deliberate about it, you can also just run the math and know, okay, if you’re planning on saying that, “Because we have this powered buy or we have some other thing that’s going to expose people to our product and that’ll help create some of the word of mouth, some visits that will eventually convert,” things like that, then you could just run the math and see, “How many of these websites do we need? How many of those pages need to be out there?” and then “What, roughly speaking, will be the conversion rate? And then from those, how many of those will be free?” And you start to see that you need really big numbers, a lot of times, to make freemium work. It gets tricky in that when you just run the math.  

Rob Walling:
Absolutely. And you have big numbers, Tally had big numbers. It was 100 … I forget. It was a lot. And then the conversion rate was low. And same with Dropbox. Anybody who’s ever talked about this, it’s like 2% every year convert to paid and 3% … It’s some number I typically hear in that range, I’m sure it can be higher or lower. 

But something that Val’s asking about is he’s saying, “I’m not really looking to convert the free users. I’m trying to do this so word spreads so that more people talk about it so that it becomes the de facto.” I’m not sure how I feel about that. What do you think about it?  

Ruben Gamez:
So we did a little bit of that. I’m okay with that approach as long as you understand what you’re looking for. So you can’t say, “Well, in a year we’ll know whether this is working or not.” That’s just way too long. But there are things, especially a lot of times people just look at MRR or the number of people who converted to a paid plan or whatever, something that’s more of almost a lagging indicator in a lot of ways. And you can look at things that are early predictors of whether this is working. 

So one of the things that we looked at a lot the earlier days, for freemium, was our branded searches, “Are those increasing?” And even basics. The basics of, “Are people using the free plan?” If they’re not using the free plan, then it doesn’t matter how many sign-ups you’re getting, if the usage on it is low, if the repeat usage on it is low, then it’s probably not going to work. If you’re seeing … Even if you just have a form, on your sign-up form, if you have a field that says, “How did you hear about us?” and you start to collect a little bit of that and you’re like, “Oh, okay, we’re starting to see it pick up.” 

So something that I saw a long time ago that I really liked from Sean Ellis back in the day, remember when he bought KISS Insights from Heaton? And he renamed it Qualaroo. And it was already freemium, and I had a conversation with Sean at the time because we were from time to time talking about freemium, and he told me that he didn’t think the freemium was aggressive enough, so he wanted to test that. So then he took three months, and I really liked his approach. He said, “The next three months, I’m just going to open it up heavy.” He did that and then he just looked at not the conversion numbers or anything, but at other signals that told him that this is starting to work. Not that it worked, but, “This is actually starting to have the impact that I think.” And he didn’t see the impact that he wanted, and then after three months, he just went the other way. He stopped freemium completely and raised prices, just as I said, the other direction.  

Rob Walling:
I like what you’re saying here, which is, “Hey, you can’t wait a year to see if it’s going to work. You have to have these early signals, and do you know what signals you’re looking for?” Right?  

Ruben Gamez:
Exactly.  

Rob Walling:
And in Val’s case, I think something that’s … I’m a little worried about, is he said, “My goal is to have a generous free plan so it’s not just a gimmick, where any premium features require an upgrade.” So how much is this going to cannibalize … His existing revenue is not a ton. I think he said it’s $20,000 ARR, but if that cuts your MRR in half, this is what we’re talking about, it’s a struggle, with bootstrapping, if you need that revenue. 

What do you think? Separate from freemium, I don’t know, Val. Val and I, I met him at MicroConf Europe in Lisbon, so I feel like I’m talking to him directly, but what do you think of him just 5X-ing his pricing? Because right now it’s $20 a year, $50 a year, $100 a year. And I want to see $100, $250 and $500, or even $100, $500 and $1000, and just figuring out what you have to add to make that work. Just make the pricing change, see what happens to the business. Doesn’t sound like it’s growing like wildfire as it is. I know Val’s working on it, but will anyone sign up? 

If it cuts it to zero for a month or for two weeks, it’s like, “Okay, I did the experiment,” but then also, “What can I build to make this worth it?” And what other options are people using? Do I have to be this cheap because it’s a commodity space and there’s a bunch of other options and I really need some differentiator? But I almost personally … if he wants to kickstart growth, I think of going in that direction rather than freemium. What do you think?  

Ruben Gamez:
Right. If we’re talking about speeding up how quickly he’s growing, then we just know that companies that basically charge more money tend to grow the fastest. And you’ve mentioned this about TinySeed companies and the patterns that we’ve seen in the recent survey about SaaS as well, and just from founders that I know, the ones that charge more tend to grow much faster. So I do like that. But I think you’re right. It’s really easy just to say, “Well just raise prices,” and sometimes that works because so many founders under-price. But if you entered the market as a certain type of product and cost savings is a big part of it, or it being cheaper, it might not be that straightforward to just raise prices because we have a little bit of this problem as far as if we decided to kill freemium and raise our prices, there are a lot of references over on the internet and a lot of different places that basically push us as a really great free e-sign tool, a good alternative at 20% the price of DocuSign or whatever. 

So if we were to do that with SignWell, we’d have to account for that and have a strategy for it. I like how you paired, yes, raising prices, but also changing the product, maybe changing some of the positioning and accounting for some of that stuff, like the expectations of the existing traffic that you have coming in. And it’s easy to say, “Well, the price increases didn’t work,” and it might just be because the people who are coming into your website are expecting something and you’re not matching up with that. And that doesn’t mean you shouldn’t do it. It just means that if you’re going to do it, you’re also going to want to have a way to bring in the people that have the right types of expectation on the pricing side.  

Rob Walling:
Yeah, I think that makes a lot of sense. So to answer his ultimate question, if you were in his shoes, would you try freemium the way he’s proposing it?  

Ruben Gamez:
I would look to see if there was opportunity to feed the freemium engine. If I saw an opportunity and a way to get big numbers, then I would experiment three or six months like Sean did, and really look for some of those signals and then be decisive. If I’m not liking what I’m seeing, shut that down and then go in the other direction that we were just talking about and know that yes, if we position our product to where people that are coming in are expecting really low-priced products, then I’ll raise prices, but it’s also probably going to take time to correct that.  

Rob Walling:
And you were saying if there was a big volume of potential top of funnel, typically SEO, right?  

Ruben Gamez:
Right. Yep.  

Rob Walling:
You heard it here first, folks. That is Ruben’s recommendation for Val Sopi. So I think if you were to ask me, because you just know so much more about freemium than I do, having been doing it for the past several years. I have secondhand exposure to it through you and other TinySeed companies that do it, and other TinySeed companies that have shut it down because it’s not working or have had to adjust it. And my gut … I think I already made my recommendation. If I were in his shoes, I would do the price increase. And as you said, it comes with positioning. There’s a bunch of stuff that comes with that. It’s not just as simple as, “Oh, raise your prices,” and it fixes it magically. But that would be my own personal leaning. So thanks for that question, Val. Hope it was helpful. 

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Next question is from Josh Ho, he’s jlogic on Twitter/X. And I had asked a question. This is … I have a couple dozen really good mid-level, more advanced questions. And Josh responded to that and he says, “When do you start to really, really, really care about brand?” And I like this question because 12, 15 years ago, I would’ve said, “If I’m doing SaaS, I don’t really need to worry about brand because I build a tool that gets in the way of traffic of people who need the tool. And if the tool does the thing they need, like the long tail keyword tool or the invoicing tool or whatever, I have SEO, I have ads, I have whatever else, and that’s it. No one’s buying it because of my brand.” 

That was when I was a young wide-eyed early stage … it was someone who had a bunch of little six-figure businesses, some five-figure, and I didn’t really need brand. And then I started realizing, “Oh, Startups For the Rest of Us is a brand, MicroConf is a brand, Drip became a brand, TinySeed obviously is a brand. There’s the books, SaaS Playbook becomes a brand.” And I realized the power of that. And branding always turned me off because every book you read about branding, every example, it’s Colgate toothpaste and it’s Intuit. And I was just like, “Well, I’m not that. I don’t give a (beep) about this.” 

But what I’ve realized is that, even people in our space, is the bootstrappers that get to that, I don’t know where, sometimes it’s mid to high six-figures, sometimes it’s at low millions or whatever. But you do start to get a concept you introduced me to where Jason Lemkin calls it a mini brand, where you’re not a brand like Target or Colgate, I guess, but people know your name and people are talking about you on the internet, on Reddit, on Quora, in private Slack groups. 

And the moment that your product is being referenced by name, that’s when you start having a brand, because what are they saying about you? That is your brand. I like to think of brand being what people say about you when you’re not in the room. And by you, I mean your product. Like you were saying earlier, SignWell, in some forums, in certain spaces, it’s, “Oh, it’s a really great alternative and it’s a fifth of the price.” Well, that’s part of the brand. And whether you controlled that and did it intentionally or not, that just becomes part of the brand. 

So with that preamble, what are your thoughts on when should you really, really, really start caring about brand?  

Ruben Gamez:
Yeah, this super interesting topic, I think a lot of it depends on how you interpret the question and how you even interpret brand, really. I would normally … in the way that a lot of people talk about brand and interpreting the question to mean, “When do you spend a significant amount of money, time, energy on things that are not meant to directly convert customers?” I would in the past, a lot of times just say, “When you have no idea on how to spend your money.” More of a hot take, when you don’t know what you’re doing.  

Rob Walling:
Zing.  

Ruben Gamez:
Yeah. I like the examples that you brought up with TinySeed and MicroConf and things like that. I think those are way more practical, and I would really ask you, because I think of these as very significant brands, the brands in the spaces in which they’re operating in, but you didn’t do this with VC funding or anything like that. So from a very practical point of view, how much time, energy, and money did you spend on activities that had to do with the brand versus other things that got you in front of audiences, got you customers or the people that you were intending to get?  

Rob Walling:
It’s an interesting question because since it’s not SaaS … If I was running a SaaS company, you are focused on generating leads, closing deals, marketing funnels, and this and that. So the majority of your time, for me, it was always product or marketing, sales. MicroConf is a brand because we have 724 episodes of this podcast. And if you say, “Oh, it only took me an hour per episode,” so that’s 724 hours over the last 10 years. It’s been a lot more than that. I think it’s like building the audience built the brand, and this is what I recommend people don’t do. If you’re going to build a SaaS company, don’t build an audience, build your network and build marketing channels, not a brand.  

Ruben Gamez:
In a very similar way, I’ve talked about it before as far as brand, you build the brand as you build the business, as you build your customer base, as you get your email list and all this stuff, your brand is built. But that’s a very different thing than what some people refer to or think about when they’re thinking about investing in the brand.  

Rob Walling:
Like hiring an expensive designer and redoing the positioning and the copy and-  

Ruben Gamez:
And spending a whole bunch of time on that sort of thing.  

Rob Walling:
… media company, “I’m going to start a YouTube channel and a podcast because that’s what brands do,” that type of stuff? That’s not a good use of your time in the early days, there’s no chance. So I like what you just said. You build the business and the business builds the brand, and that is exactly what happened with MicroConf and with Drip and, well, TinySeed was able to piggyback on my existing brands, but think about each of these. MicroConf, the entire focus … MicroConf was just a landing page. Take a step back. You said earlier, is it brand building or is it direct response in it, direct conversion? Those are the two types of marketing most people throw around. 

MicroConf started as a landing page. I have a screenshot of this black background. Dark mode before dark mode was a thing, because it was 14 years ago, and it had some headshots of Heaton Shaw and Noah Kagan and myself and Mike Tabor, and it was an email capture form. And it said, “Come to this play in Vegas on this date,” that’s all it was. It was direct response. And then we tried to sell tickets to that email list and tried to sell enough tickets that we could then afford to pay for the venue. There was no brand building and in fact there was no logo. The MicroConf was some font and we just typed “Microconf” on a thing. 

We sold tickets to the event first. To me, that’s building the business. We ran an event, we showed up, we executed, we operated. None of that was brand building. You know what built the brand the most? Was running a really (bleep) good event. And we got lucky with that. We didn’t know what we were doing, but we just put … You remember. You remember how stressed I was, and I was putting … I was like, “This has to be the best event I’ve ever attended.” So I was stressed about it and it turns out it was a really good event. And I think that alone, that created word of mouth and that created the brand of, “Oh, Microconf is a new thing and it’s different than anything else.” 

So what does that mean for SaaS founders? What does that mean for them?  

Ruben Gamez:
Yeah. Well, I think there are a couple of times when you start to invest more in things that are less related to directly building the business and directly converting customers and things like that. And you might spend in areas to where it’s thought of as brand building or enhancing the brand or whatever. If you’re in a really commoditized space and brand is how you get customers, that is it. Or as you get more and more established with the brand, you went back and you redesigned things and all … Right? Once-  

Rob Walling:
Oh, yeah. Like MicroConf, all that stuff. But that was when we were doing almost a million dollars in revenue through the business and had tens of thousands of people on an email list. And to your point, we built the business and then went back and designed a logo. The videographer every year would say, “Oh, can you send me your logo so I can put it in the videos?” And we were like, “We don’t have a logo.” It is weird in retrospect. I probably should have gotten a logo design before-  

Ruben Gamez:
A little bit earlier than that?  

Rob Walling:
Six years, seven years in. But to our point, you can build a business. We didn’t spend time building Drip’s brand. We didn’t spend time. We had a Derek who’s a full stack developer who designed the first logo, and I did hire a designer to put the colors together, but it was nothing … It was just, “Let’s make it look neat. Let’s make it look nice and attractive and make the UX great.” And my whole goal was to get people into it because I guess reinforcing once again that … What I found is the more customers we had, the wider our brand got by default. Because again, I define it as, “Hey, people talking about you when you’re not in the room.” That’s not the definitive version of brand, but it’s a big part of it, I think. And the more people who used it who said, “Oh, this is so much better than the other tools,” “Oh and it’s less expensive and it’s better? Whoa!” That became part of the brand. 

Is that how you think about it too with SignWell? Because obviously you have tens of thousands of users.  

Ruben Gamez:
Yes, that’s exactly how I think about it. Building the brand is just getting known in a space, and the amount of time that we put into the brand is not that much, really. It’s really mostly because there’s just so much room. If you’re in a space where you have a lot of room to grow still in the market, there’s so many other things that we could spend that time, money, and energy on than brand, still. And I think a lot of SaaS products are in that space. 

Even Josh, he’s got a significant business, he’s super sharp, he’s in a space to where he’s at a good level of revenue and growth and all that, but there’s probably still a lot of space ahead of them to go. So the thing that we do, it’s always about, how are we best going to use the resources that we have, the money, time and energy? And mostly for most companies, it just makes more sense to invest on growing the business and building the brand that way, I feel like.  

Rob Walling:
I would agree, especially with SaaS. I can make not even a counter argument, but an auxiliary to that, of, but if you’re building a conference or a creator-type business where you’re creating video and you’re more, “We really are information marketer,” and you are more of a Rob Walling or a MicroConf or a TinySeed, none of those are SaaS companies, I would say the brand can be important. I think it’s more important, probably, for those, because people have to know and trust you to buy in, but SaaS is a tool solving a problem. And yes, brand can have an impact on that, but as you said, where do you rank that in terms of priority? And usually it’s going to be pretty low for me until I really feel the need. I think people use it as an excuse to start a “media company,” because brand is fun. I like printing T-shirts with my logo and witty slogans, and I want to be … It’s fun, but that doesn’t move the needle.  

Ruben Gamez:
And it’s not measurable, it’s not a lot of times. So it’s easy for people to spend time there and effort and just be like, “Oh, I’m doing something, you can’t measure everything.” They tend to have this attitude of, “It’s all or nothing,” but it’s not really all or nothing. And just because you’re building the business doesn’t mean you’re completely ignoring the brand, right?  

Rob Walling:
Right. And that’s the thing. And I’m the person who, the moment I start a new thing, I print T-shirts with logos on them, but I will 100% say to anyone I’m talking to, “This is not the best use of this energy right now, but it’s a luxury that I have and a thing I want to do”. And to me it’s like eating ice cream, and I’m going to eat ice cream sometimes. It is not necessarily that … I should eat spinach all the time, but sometimes I’m going to eat ice cream. To me, some branding is really fun for me. And I do remember, I will say when we launched TinySeed, the first website, not … there was a landing page that I threw together in a couple of weeks, but the first website, I invested some money into it because I wanted it to be really, really sharp. I want it to look really good and feel very professional and right in line. 

Now is your visual identity your brand? No, but it is a component of that. It’s a component of how people view it. Anything I would launch these days, I would want to look really, really good. And again, it’s not identical with brand, but the brand of the SaaS Playbook, the yellow cover with that design, it stands out. So I don’t want people to listen to this thinking that you and I don’t care about brand or think brand is unimportant because we both know that it is, but it’s that caution of, “Don’t get too stuck in it. Don’t do it too early.” It’s not the best use of most entrepreneurs’ time. So thanks for that question, Josh. Hope it was helpful. 

Next question is from Lane at Boot.dev. He is wagslane on X/Twitter. He says, “Which parts of your sales and marketing funnels do you revisit most often, and on what frequencies? For example, only myself and one other team member work on marketing stuff and we can only get around to landing pages, drip campaigns, onboarding, sequence copy, et cetera, every so often.” How do you think about this?  

Ruben Gamez:
So I guess I think about it in a different way. If I’m thinking about growth, I don’t tend to think about, “Okay, what are the parts of my sales funnels and marketing funnels, and is it time to revisit those?” I think about it more in terms of, “What type of growth are we looking to get? What are the bottlenecks? Where are the opportunities for that growth?” and then focus in those areas. So that could mean that there are certain parts of funnel that we just don’t look at very often or almost ever, because they’re not the bottleneck, they’re working really well in other areas. Again, it’s really about efficiently using the limited time and money that we have. And usually that means just going after the biggest opportunities and focusing there.  

Rob Walling:
I think of it the same way you do. I remember I would launch … We’re going to launch SaaS app and I’m like, “I’m going to do some stuff manually and then I know I need at least an email sequence for onboarding and I need a landing page and some copy,” and I would just crank out in a day all of that stuff. And it was very much V0.9. It was not great, but it was 75% of what it needed to be, and we would launch with that. Then I would at some point make the time to circle back. I would either see conversions were really low or I would see a flag in my funnel where I’m like, “I’m off here, so what’s happening?” And I would go back and I’d reinvest in it. But then I remember leaving the onboarding sequence alone for a year or 18 months, the email onboarding, and I’m sure it could … needed an update. I’m sure it was crafty by the time I got back to it, but it wasn’t the most pressing thing. It wasn’t a bottleneck. 

And conversion from onboarding and trial to paid were also high for us, that I just didn’t circle back to it even though it wasn’t the best and it got outdated and all this. So I think you and I think about it the same way where I’m trying to do the most pressing thing and rather than it being, “Oh, in a perfect world every three months I would revisit all this stuff and I would optimize it.” I don’t know that that’s the best way to do it, or at least in the way I work on things. I’m always thinking, “What’s the biggest bottleneck? What’s the most broken or will provide the most results?” And sometimes that’s revamping an old thing and sometimes it’s doing a new thing. Often it feels like it’s doing a new thing if I think it can work.  

Ruben Gamez:
Yeah. Especially the earlier you are, and the more you have to increase numbers, usually it’s not about optimizing existing things, it’s about just getting more into the funnel and often that means doing new stuff.  

Rob Walling:
So thanks for that question, Lane. I feel pretty good about that answer. We’ll move on to the next question from Anders.  

Anders:
Hi, Rob. My name is Anders and I’m the co-founder of ShopLevers, a data analysis and aggregation tool for business coaches who work with auto repair shop owners. Until now, we’ve grown primarily through outbound efforts and word of mouth. We are looking to expand our offering beyond coaches and sell directly to shop owners. As that market is much larger, I’ve thought about basing the top of my funnel around SEO and content. I don’t have much experience in digital marketing and I found myself hesitant to get started. It seems like AI could be changing the playbook that has worked well for others. Am I overthinking this? Do you foresee a moment in the not too distant future where people abandon their search habits? Are you adjusting any of your own marketing strategies for this new reality? Thanks for all you do, listening to your podcast is a highlight of my week.  

Rob Walling:
So this is another question where I really wanted to get your take on it. How are you thinking about it? Because you are one of the founders in the world I know who knows the most about SEO and who also has a lot to lose if SEO goes away, because it’s such a big component of SignWell’s success. So how are you thinking about this?  

Ruben Gamez:
It’s funny, I don’t think we’ve ever really talked about it, so I’m interested to hear your take as well. So I think in the near term future, yeah, it’s worth doing. SEO takes time, so it’ll take a few months, but I don’t see this going away in a few months, so there’s no real danger there. 

I think there was something that I saw recently on Twitter, this founder of an SEO agency that … I think Will Reynolds is his name. And he talked about … he said something like, he won’t write content nowadays. He won’t write content. And I think this is a little extreme, but the thinking is interesting and I think it’s in the right direction in some cases as far as where to put your time and energy when it comes to SEO and how to think about the future. 

It’s going to have an impact, it already is starting to have an impact, but the way that he put it was, if AI can write it, he won’t write it, basically is what he said. Which is, if you think about that, there are already a lot of things that you could just type in, “Write me this,” into an AI and it can create an article that just … the feel might be a little bit like, “Oh, this is written by AI,” in some cases or whatever, but it’s essentially the same information. It’s very close to what a lot of people are already putting out there. 

So if that’s the majority of your content, or somebody else, Ian Howells as well, he does a lot of stuff in the SEO space, Traffic Think Tank, he’s one of the founders there. I like the way that he’s put it in the past and it’s just more of the same, which is, if you can just hire writers, like an agency, like a generic writer, an SEO writer, a writer to create and just list out a bunch of topics and then have them without knowing anything about your space or without knowing anything about your business, just create those articles, shoot them out really quick, then you don’t really have anything that’s defensible or really that valuable there. 

The more you can move away from just content like that and tools, that’s why engineering as marketing, you still have to promote it, you still have to build tools, but things that people are searching for that are not just basic, especially “How to this,” or whatever, more and more of that stuff’s going to be answered by AI. It doesn’t mean you shouldn’t do it initially, just know maybe you invest less time on that sort of stuff if there’s an opportunity there and you can rank and you can get traffic in the near future, but then devote more of your time towards other more unique content or tools or resources.  

Rob Walling:
Yeah. I like that advice a lot. And I agree with you. In the near term, AI is not going to kill SEO, but if we look out years, is it going to have a major impact? It’s obviously going to have an impact. 

There’s another potential impact of AI on SEO, and it’s the thought that Google, when you go type a search term into it now, above the fold is an AI answer. There are not 10 blue links anymore. It’s a big wall of text for most things, then it’s all you’re sponsored … your AdWords, and then it’s organic. And I wonder if Anders is not referencing that, of, what if all the 10 blue links, what if you went to Google homepage and you type in a search and all it is an AI answer? There are no 10 blue links anymore, they’re completely gone.  

Ruben Gamez:
I think for some terms, it’s already … there are few terms that are basically like that already.  

Rob Walling:
So what does that do, then? So how do you survive in that case if you’re so reliant on being one of those links that people click through? My impression was that, how does Google create the answers? Well, they do it by scanning the top 10 blue links, probably. They do the whole internet, but you get the idea, and they’re giving answers from that material, but then you don’t get the click through. So is it stealing clicks from your site that could potentially convert? What do you think about it?  

Ruben Gamez:
I think this has already been going on. Really, they’ve had that. It wasn’t AI, but they’ve basically given you the answers, and they had-  

Rob Walling:
The zero click box at the top, right?  

Ruben Gamez:
Right. So for some content, that game’s been over for a while, for certain types of content. More and more, there are just a higher percentage of zero click searches that have been happening. 

But there are other types of content where that’s not enough. Just going back to where you focus your time, and I’m going to focus more of my time on those types of things. And that’s if we’re talking about things that people are searching for. So you still have paid, you can do AdWords still, and they need to make money. So in the short term, at least in the next couple of years, I don’t think they’re going to just instantly … they need a replacement for that. In some way, shape or form, they’re making a ton of money off of a lot of companies and people, and what would they be as a business if they just got rid of that? They give that ability for people to get in front of searchers by paying.  

Rob Walling:
Right, 78% of Google’s revenue is AdWords. That’s the whole company, basically. To your point that they’ll … So you were saying that SEO is going to change, but people will still search for stuff. This is what I was saying the other day. They’ll still search, so there’s still ads. You know what else? People are also going to search … they’re either going to search on Reddit or get redirected to Reddit. They’re going to search on Quora if that’s even still a thing. I always mention it, but it’s less important these days. They’re going to search in whatever private Slack groups, so that’s where word of mouth is a little more important. They’re going to find stuff in Stack Overflow or Stack Exchange type sites. 

It’s spreading, it’s getting towards maybe not so concentrated in Google. I know that when I search a lot of stuff that I search, the top result are Reddit threads, especially when I’m looking for … if I’m not using AI and I’m looking for answers around any type of hobby thing that I do, like tabletop games, Dungeons & Dragons, playing the guitar and that kind of stuff, Reddit’s up there. And there are Reddit ads and there are … whatever, there’s a bunch of approaches. 

So I think that piggybacks maybe on what you’re saying in that SEO is going to change, but there are still … it’s not like it’s going to go away overnight and AdWords, specifically, is still going to be around for quite some time and that there are other options there for you.  

Ruben Gamez:
Yeah. And showing up in those places, finding a way to show up in all those places that you mentioned is a good approach. Even if you’re creating … a lot of people treat SEO as like, “I have to create all the content myself, and I have to rank that content.” But a lot of times you get really good results by showing up in content, in places, communities, forums, other articles, whatever, that you didn’t create. And I think the more you can do that, the more likely it is also that you’ll show up in some of the AI-written answers because they’re picking it up from more references they see. You’re obviously meaningful in some way, so you’re worth mentioning as well.  

Rob Walling:
Right. If I would’ve typed, “Best email marketing tool for realtors,” and there’s probably going to be a bunch of top 5, top 10, top 20 posts, or it’ll be a Reddit thread or a Quora thread of what’s the best. And it’s like, “Well, how do I get in those?” That’s exactly what I was going to say, was AI is scraping those and using them for answers. So if you go to ChatGPT or Google’s equivalent, is it Gemini? Is that what Google’s-  

Ruben Gamez:
Gemini, yep.  

Rob Walling:
… AI thing is? And Baird is someone else’s? I haven’t kept up-  

Ruben Gamez:
Plexity, just the other day I looked up and in the last 30 days, we’ve gotten … not a ton, it was 40 or something like that, unique visitors from Perplexity, which was interesting.  

Rob Walling:
So that’s it, it’s what we’re saying. It’s crawling those, and then if I go into ChatGPT or any of these tools and say, “What is the best email service provider for realtors?” that’s where they’re getting the info. So it’s changing, and that means for incumbents who are getting a lot of traffic from it, they might see their business slowly get squeezed out. And for upstarts, there’s probably opportunity here because it’s shifting. When you have this type of paradigm shift, this is when you can figure out, you can be at the bleeding edge of it, of, “Well, how do you get mentioned in all these AI answers?”  

Ruben Gamez:
Yeah. I think it’s also harder to make SEO, and this game has also been over for a little while, making it the only way in which you grow your business. Not just your primary, it should be thought of more as supplementary. So in the affiliate space, they’re freaking out right now because a lot of sites have been hit and are doing poorly because they don’t really have a business model. There are no products. So it’s funny in a way, they’re going about it almost in the reverse way. They’re like, “Okay, now we have these sites that are content, they’re getting traffic. We need a product on here so that Google likes it so that it’s not just a content site or whatever.” 

So they’re trying to come up with products, but in what we do inherently, we sell products, and we have content tools or resources or whatever that help us get traffic. So we already have that problem solved, but it speaks to just that thinking about, it’s more of a supplementary thing and it’s not a bad idea to diversify a little bit. Not a ton, because in reality it’s going to be one channel or two channels that are going to work really best for you, and you can’t spread yourself out too thin. But it does pay to invest some time and money into something else and experiment with other stuff.  

Rob Walling:
So thanks for that question, Anders. I hope our answer was helpful. Ruben Gamez, it is always the utmost of pleasure to have you here on the show. If folks want to keep up with you on X/Twitter, you are earthlingworks, and of course SignWell if they want to use the best electronic signature app on the internet. Thanks again for joining me, man.  

Ruben Gamez:
Thank you.  

Rob Walling:
Thanks again to Ruben for joining me on the show today. I hope you enjoyed this episode. If you have a beginner, an intermediate, or an advanced question for me or for a guest, send it in to questions@startupsfortherestofus.com, or click Ask a Question at the top of our website. Thank you for joining me this week and every week. This is Rob Walling signing off from episode 725.

Rob Walling:
And so when you plateau, you’re not going to know why you plateaued because you got lucky because you threw 10, 6-sided dice against a wall. One landed as a six, you picked that one up and said, “Well, this is my thing,” and you don’t know why it worked. And that is the biggest issue is if you don’t gain the experience and the skill to actually build the business and grind through the hard parts to get to the good parts, then you don’t necessarily have that knowledge on how to fix the things that break. 

Welcome back to Startups For the Rest of Us. I’m your host, Rob Walling, and this is the podcast that is shipped every week since 2010 for 720 something episodes focused on helping folks who want to bootstrap and mostly bootstrap amazing companies. 

If you’re listening to this podcast, you probably want to change your life or the life of those around you, but you are not hell-bent on begging venture capitalists for money and trying to make a dent in the universe or change the world, at least not with your first effort and the effort that you’re probably focused on, if you’re listening to this podcast. 

Do the lessons on this podcast apply to folks building SaaS companies? Absolutely, and that is the main focus. Do they also apply to folks building media companies, content companies, info product, course companies, frankly construction companies, all types of businesses? Yeah, a lot of them do and I have folks who I meet in person or who write in and let me know that they have no plans of ever launching a SaaS startup, and yet, they listen to this podcast to get learnings and the thought process from myself and other successful entrepreneurs. So if you are here, you belong here. Thanks for joining me. 

This week, I am diving into listener questions. I made a request on X/Twitter for more advanced questions, and so I don’t want to call these late stage questions because they’re certainly not all focused on seven or eight-figure businesses, but I wanted to get away from just answering a lot of questions about validation, and how do I find an idea, and how do I pick an idea, and how do I build an MVP, and those are fine questions, but when that’s all that’s coming in, it gets a little tiring and it’s less helpful for folks who are further along. 

I really do want this podcast and all the content that I put out to help folks who are in early stages, but also in the medium and late stages, seven and eight-figure companies and it’s easy to get pulled in the direction of focusing on early stage because that is the majority of the audience in any entrepreneurial audience, 80%, 90% of the people are early stage. It’s just the way the numbers work out, but I want to continue to have this podcast focus across the lifecycle of building your company. 

So today, I’m answering some more, I don’t know, intermediate questions, I don’t know, intermediate, late stage, whatever we want to call them, from a handful of folks who sent in audio, video and then a couple written questions, and I still have a backlog after this of another, I think, 25 more advanced questions. And so, I’m really excited to dig into those in the coming months. 

Before we get into questions, I wanted to let you know that MicroConf Europe is almost sold out. This year, MicroConf Europe is in lovely and amazing Dubrovnik, Croatia, it’s October 6th through the 8th, and our pricing for tickets goes up again on August 15th. So get your ticket today to save $200. And with that, let’s dive into my first question. As a reminder, audio and video questions go to the top of the stack.  

Speaker 2:
Hey Rob, big fan of the show and also the Slack community. My question is about managing managers. I run a software company in Germany and we’re around 25 people now and just hired the first two managers. One person in marketing that has three to four people under her and another leader running a product line with two people under her, and I am no newbie to managing ICs, but managing managers or leadership team is new to me. 

So what’s something that you focus on to A, not undermine their authority, but B, still be on the pulse of what’s going on because especially in marketing and in product, I, of course, don’t want to lose touch with what’s happening and want to make sure that results are still being achieved? Would love your insights and thanks a ton.  

Rob Walling:
I really like this question because we are often taught how to supervise, how to manage people. I even talk a little bit about it in the SaaS playbook. It’s not focused on that, but talking about how to manage managers is a whole other experience, and there’s a couple things that I have kept in mind during my career as I have done this because I did it both at full-time jobs and of course, I do it today where with MicroConf and TinySeed, I manage people who manage other people. 

And the couple things that I like to keep in mind are number one, try to find a couple good go-to resources, even simple things like what are the top two or three books you know about management and leadership? And if you have to ask on X/Twitter or if you know what you read coming up that really set you straight and provided a lot of value and education for you, have those as easy references, A, when you hire someone or B, if you promote someone to start managing people, so that you can give them those resources and you may need to consume them again and talk them through the thought process. So that’s number one. 

Number two is I try to model how I manage and communicate that to my managers. We tend to hire nice people who get along with others. I tell them the hardest part you’re going to experience as a manager is you really have to give negative feedback at a certain point or constructive feedback, however we want to talk about it, and now is the hardest thing for a lot of folks that I know. It’s easy to tell everyone they’re doing a good job. It’s easy to post the confetti emoji in Slack and thank everybody for their hard work. It’s hard to give someone pointed constructive feedback and not feel bad about it. 

Some people do this really well, some people are jerks and do it all the time, and those are the folks you probably tend to not hire, right? They take it too far. They “tell it like it is,” which usually means they’re an asshole, but folks who are nice and get along and view harmony as a positive thing and they want to get it done and they love working with their teammates, can often find it hard to give negative feedback. 

So that is one thing that I try to really address early on about you are going to want to get into the habit of giving constructive feedback because if you don’t, it’ll come as this huge surprise six months down the line. If you have five direct reports and you just never do it and then all of a sudden you do, it’s a big deal, but look at it as something that your team members, your direct reports really want. You’re actually helping them improve. 

That’s the thing that I started learning about myself was that that’s how I learned to couch it in my own head of I’m helping someone improve by telling them, “Hey, I think you could do better on this,” or “Hey, I think we messed up on this. How can we do better next time?” Usually, the best people, already know they messed up on things and you barely need to tell them, but that’s the second thing that I think about. 

The third thing that I think about is I do implement some light key performance indicators, KPIs. I hate the acronym stuff and the rocks and that I’m just not a big process person, but I do find it helpful to define pretty concretely some numbers that should move in a direction and sometimes this is as lame as NPS. Other times, you can just make up your own satisfaction score. How satisfied are X users? Oftentimes, it’s if they’re in charge of marketing, how many leads are coming through, how fast is growth. If they’re in charge of sales, how many deals are closing, their, customer success, how low is churn? 

There’s some other things you can add in there, customer support, how fast are we responding and what are the ratings, do we have high ratings of our responses. So getting something in place that’s pretty concrete so that your managers know what they’re managing too can be helpful and it doesn’t have to be super complicated. 

You can have one, two, three numbers that you agree with, that you collaborate with to decide which are the priorities for the business, and having that means you can talk about those week to week, month to month, and you may need to change them. What you may do is set two or three key performance indicators that you want to go up into [inaudible 00:08:38] and realize, “You know what, these aren’t quite right and we need to adjust them.” 

But the last thing that I’ll touch on is I do what’s called skip level meetings, and this is where you do maybe a quarterly meeting with the folks who report to your managers to have a conversation, ask them how it’s going, try to suss out, “Hey, is everything good? How are you feeling about things? How is it working with so-and-so?” You may not be able to ask them directly, but you’re just trying to get a sense of how things are going. 

And I often will ask about what do you want to do next? Where are you headed in terms of self-improvement, professional development? What things excite you about this job? What things do you like the least? What do you want to get better at? What do you want to do next year that you aren’t doing now? What will make you better? And I will ask them, “Have you talked to your manager about this?” I won’t say your manager. I’ll name him by name, but obviously, I would say, “Have you talked to Tracy about this at TinySeed?” 

And if they haven’t, then I will make it a point. I’ll either say, “Well, do you feel comfortable talking to her about it,” or “I will have a conversation with Tracy and let’s make sure we get you what you need. So it’s obviously more to be said on this topic, but that hopefully gives you a few recommendations for how I would approach it. My next question comes from Sean about attending conferences without overselling.  

Sean Matthews:
Hey, Sean Matthews from Left Hook here. We currently work as a services company trying to bootstrap our way into a software product. We also have built a open source framework to help develop and deliver user-facing B2B software integrations, so that would be anything you find inside your integrations page. We’ve built a framework that helps build those quickly and has all the infrastructure in place, so leverages a lot of the best of breeded or new packages and concepts architecturally out there. 

Long story short, our target market, our ideal customer profile are typically partner leaders, product people, sometimes the developers that are being asked to go build those things, CEOs, C-suite, oftentimes startup, but sometimes all the way up to enterprise SaaS. We find ourselves often going to events and thinking about attending events where we, as our own aspiring B2B SaaS founders, attend and actually be part of the conference because we have questions about how do you set up your marketing and what’s the right pricing strategy, et cetera. 

At the same time, we are around a target rich environment. Everyone is potential customer for us. Aside from, and we’ve done this before is sponsoring, so we’ve sponsored some conferences and that kind of fits fairly nicely, but when we’re not sponsoring, if we go to MicroConf, how do we approach people and just show up while actually being able to sell to them and not feel like we’re selling? 

And that’s maybe a question of just be yourself, but figured I would ask that because you probably get people that lurk around conferences that really they’re just there to sell as opposed to be a part of the conference. So just curious as your thoughts on that.  

Rob Walling:
Thanks for that question, Sean. I appreciate it. Yeah, so with MicroConf, some folks attend MicroConf where their audience or their customer, their ICP, ideal customer profile, are the attendees, and usually, it’s pretty obvious the ones that are selling and overselling and they’re annoying. People don’t like them, people avoid them, they pretty quickly find themselves not in the good graces of most of the people there. 

I think that if you are mindful of this, it’s easy not to oversell. Does that make sense? It’s easy to just be cool, just be cool. Like Samuel Jackson said in Pulp Fiction, “Just hang out.” Wow, quite the reference there, but the idea is people are going to ask you what you do, what company you’re with. You’re going to say, “Oh, I’m with Left Hook and we build software that helps B2B software integrations,” and see if they ask more. They might say, “I don’t have any interest,” and they change the subject or they might say, “Oh, so are you like Zapier?” And you’re like, “Well no, we allow you,” da-da-da-da. 

It’s a question and you play the conversation, but you don’t go around pitching. You don’t hand people business cards for crying out loud, not at a MicroConf especially, unless I ask for it, right? But the idea is you’re just having a conversation with another founder and you’re a founder and that’s it, and at a certain point, if they show enough interest, you might ask, “Hey, do you want something,” whatever it is. Do you want to try out the software? You have interest in it. You can ask them, but don’t make it high pressure, because it’s not a sales demo that they opted into. 

The other thing to think about, obviously sponsoring is a great one because if you’re sponsoring, you have a little sponsor tag on your badge, then of course, people are coming up to you because they know what you do and they want to hear that. So it’s kind of an open door for you to communicate that and for you to talk about what you’re doing. 

The other thing to think about is to apply for attendee talks or lightning talks. A lot of conferences have the opportunity that if you’re already an attendee with a ticket, you can name a topic that you want to talk about that gets you up on stage like at a MicroConf, say it’s 10 or 12 minutes and you don’t want to sell your product, but you might say things we’ve learned integrating with 100 different APIs. And then you say, “I’m the founder of this and this is what we’ve learned and [inaudible 00:14:02] if you’re interested in what we’re doing, it’s very light on sales and very heavy on actionable tactical advice. 

If you do come to MicroConf for another conference and you are not a sponsor and you start selling pretty heavily, it will get back to the organizers and they will remember your name because we have had folks do that. So I think you’re asking yourself the right question here, how do I do this well. 

The other thing is to gauge. If you go to SaaStr, everyone’s there to sell their stuff to everyone else. It just is. Everyone’s trying to put deals together, everyone’s trying to put meetings together. That is kind of the point of SaaStr. A lot of people ignore the content because trying to sell. If you go to MicroConf, it’s not like that. 

And so, you also want to know the audience and know the type of event that it is, and if you don’t know, ask a prior attendee and ask them what the vibe is or you can frankly ask on X/Twitter, I’m really going to struggle to call it X because when I say X, I know that you kind of know what I mean, but it’s tough. So thanks for that question, Sean. Hope it was helpful. 

My next question comes from the post I made on X and Bankster Life asks, “There are a lot of SaaS companies stuck in the 20 to 30 KMRR range. How do you break out or is it not possible due to market size?” So here’s the thing, I don’t necessarily disagree with there are a lot of SaaS companies stuck in the 20 to 30K market size. I know. I don’t disagree with that, but it’s not as if that’s some magical place where a bunch of SaaS plateaus. 

If you look at the State of Independent SaaS report, which stateofindiesaas.com, you can download the 2024 report. It just came out a couple of weeks ago. You’ll see we asked what’s your MRR? We surveyed almost 700 B2B SaaS companies. And you’ll see, if you imagine on the left-hand side, it’s like one KMRR and on the right-hand side, it’s, I don’t know, more than 5 million or more than 10 million or whatever, and the left-hand side is the tallest and it’s almost, it’s just a curve down and to the right. 

It’s just the way these funnels work. It’s the 80/20 rule. It’s like a sales funnel. If you think about, well, 100 people come to my website and 80 people stay longer than five seconds and 50 people click this button and get to the pricing page, it just decreases and decrease. It’s the same thing with MRR. The fact that a bunch of people churn at 20 to 30K is like, “Yeah, but a bunch of people churn at 1K as well and 5K and 10K, and it’s just fewer and fewer make it further and further.” 

So I want to kind of dispel the notion that there’s some magical 20 to 30K plateau point that is any more magical than any of the other revenue markers, but what I will say is I was going to write a talk about plateaus and it turns out, it just wasn’t going to be a very good talk, but I have this, it’s not even an outline, it’s just a list. I’ve tried to think of every possible reason that a SaaS company would plateau and I came up with 10 of them, okay? 

So there’s three that are weak product market fit. I don’t like to say pre-product market fit, that implies you suddenly cross this finish line and you have product market fit, but let’s say early or weak product market fit and there’s three of them. Cause number one is churn is too high because you haven’t built something people want. Cause number two is churn is decent so far, but you’re not driving enough traffic. Cause number three is you’ve built a one-time use product rather than building something people want to subscribe to, which is not a recurring product. 

And then, there are seven when you have stronger product market fit later plateaus. So there are reasons like number one, top of funnel is too small. Cause number two, subpar funnel conversion rates. Cause number three, your churn is too high. Cause number four, a competitor starts eating your lunch, whether on the product or on the marketing front. Cause number five, you’ve tapped out the market, et cetera, et cetera. 

So you get the idea that you can’t just ask, how do I break through a plateau if you don’t know why you’re in that plateau and someday, obviously, I’m going to put these in something, I don’t know if I’ll do a podcast episode about all of them and talk them through or if I’ll put them in a talk or what have you, but that’s not really the point of this. 

The idea is, like Bankster Life said in the tweet, how do you work out or is it not possible due to market size? Well, it just depends on your market. If you built an ESP and the market is tens of billions of dollars for sure, it might be larger than that, then no, it’s not due to market size, but if you have targeted an incredibly small niche, then yeah, that’s the reason. And then, you have to decide, do I expand into other verticals? Do I build a second product? That’s the thing, the thinking. 

This is why general advice when you ask on Twitter, someone will say, “I plateaued and people are telling me that you need to do this or that.” It’s like, well, if they don’t understand or you don’t understand why you’ve plateaued, then how are you going to fix it? And this is my biggest issue, I think, with the whole launch one thing a month and see what sticks because you are not going to know why you’re growing. 

And so, when you plateau, you’re not going to know why you plateaued because you kind of got lucky because you threw 10, six-sided dice against a wall, one landed as a six, you picked that one up and said, “Well, this is my thing,” and you don’t know why it worked, and that is the biggest issue is if you don’t gain the experience and the skill to actually build the business and grind through the hard parts to get to the good parts, then you don’t necessarily have that knowledge on how to fix the things that break. 

So thanks for that question, Bankster. I hope my answer was helpful. I know it wasn’t a direct, I mean, it wasn’t a direct answer. The answer is it depends, but hopefully, I’ve given you the full framework of what it depends on or at least a taste of the full list, which again, at some point, I will publish in some form or fashion. It’s just not there yet. It’s not publication ready. Trust me. 

I know someone’s going to email me and ask me for it, and it’s just a bunch of bullets and then it’s like how to fix it and it’s things like the causes, you don’t have enough top of funnel traffic and it says how to fix, drive more traffic. It’s not. It’s not a tactic of how to do it, it’s just the obvious answer to these things. So I’m just not sure how helpful it actually is in the form that it currently is. 

My next question is from Adam Denver Co is the username, but it’s Adam Wright on X, “What happens when you’re building a SaaS machine, which is what you want, but it becomes an agency or a more hands-on business?” And so, I responded to Adam and said, “Is your question exactly as you’ve asked it or is it more of a question of how do you not let it become that?” And he responded, “It’s more of a whoops, this happened. What now? I started a job board, jschimp.com, but it’s turning into a hands-on recruiting agency for immediate money. How do I balance the lucrative agency work with my original self-serve vision?” 

I think for me the answer is if you really don’t want to do the consulting, just don’t do it in the first place or if you’re doing it now and you don’t want to do it, just stop. The downside of that is, oh no, I have this very lucrative agency work that is actually funding the self-serve vision. 

Then, you need to balance the two, and this is the classic agency trying to turn into a SaaS conundrum and frankly, most agencies don’t make that pivot, because they are so addicted to the amazing money to the 150, $250 an hour that they can bill versus how do I justify building this thing that’s doing a few hundred dollars a month and may never make more than a few hundred dollars a month? It’s risk versus reward, right? 

You have to think about it as asymmetric upside. If JS Chimp actually succeeds wildly, what is the upside of that versus continuing to do the agency work? I think funding your SaaS, or in this case, it’s a job board, with agency work or freelance work is a great way to do it. I mean, I did that. I did it on the side where Craig Hewitt had a productized service. We have seen some folks do it, but the adjustment to productizing or to getting the product built, can be a difficult one. 

The way I think about it is either do the lucrative agency work 40 hours a week and then focus on the job board nights and weekends, a self-serve aspect, or set aside one day a week where you do not, or two days or three days, whatever makes sense, set aside a certain amount of time where you absolutely do not let agency work interfere. Maybe that’s two hours a day, maybe it’s one day a week, but be super disciplined about it. 

The other thing you can do is depending on what has to happen to push JS Chimp forward, can you hire that out to someone who is less expensive than you with the money you get from the lucrative agency work? I used to do this where I was billing 100 to $150 an hour as a software engineer. 

I was a freelancer contractor and I was billing 40 to 50 hours a week doing that, so I was banking the extra money that I could because we didn’t need all that to live on, and then, I would hire folks at the time, it was in the Philippines, sometimes in India, but these days, depending on your time zone, you can, I don’t necessarily want to recommend those countries at this point, but the idea is that you can hire someone, whether it’s a developer, whether it’s a marketer, whether it’s a whatever needs to get done and do this geo arbitrage, you’ve been hearing about this for years, so then you’re kind of managing one or two individuals to get stuff done and push it forward while you do the more lucrative work. 

It’s a hard road and most aren’t able to make the shift, and I do think, I mean, I hate to say it’s a lack of discipline, but I kind of think that’s what it is. It’s that you have this thing that is just so much a bird in the hand and it’s hard. It takes real fortitude to not just do more and more and more of that and look, maybe you should just do more and more and more of that. It’s really making you a ton of money and maybe the long-term, self-serve vision isn’t worth it if you can make boatloads of money and hire a team and build a small agency to do the recruiting. 

We’ve seen remote first recruiting do an amazing job and build incredible seven-figure business on that, and they still have the job board, but I don’t think they regret building the agency around that job board. So I appreciate this question, Adam. I hope my thoughts were helpful. 

My last question for today is from podcast guest and longtime listener and MicroConf speaker Christopher Gimmer. He’s @cgimmer on Twitter. Give him a follow, “While you are running Drip, I’m curious as to how you structured team meetings and whether you followed any sort of management framework like Traction or EOS,” and he doesn’t say it here, but there’s scaling up, which I think is for later stage folks, “Specifically, I’d love to hear what things looked like when it was just you, Derrick, and a handful of employees versus how you ran things at the point Drip was acquired?” 

This is a good question and what I will say is I lead and manage a certain way and other folks have different opinions. If you go back and listen to old episodes of Craig Hewitt and Andy Baldacci’s podcast called Seeking Scale, you’ll hear a lot of talk about frameworks and management, and that’s probably if you want to go down that road, I would start there. Craig is very knowledgeable about this stuff. 

I am not. I know a bit about it. I know the basics, the rocks and the KPIs and this and that, and that’s about all I use. I’m a pretty light framework or light process person in general, and that includes, that extends to when I’m managing people and managing a team. So I did not use any sort of management framework and really have never done that aside from having numbers that we’re shooting for these. 

Again, I’ll say KPIs, because everyone knows what that means. It just kind of pains me, but it’s just goals for certain things. It’s like I want MRR to go up by this. We need this many leads to do it. This many, we should have a sales conversion rate to demo to close of X, Y, Z percent or above. And so, team meetings were a lot of me leading them and saying, “This is where we’re going. How does everyone feel about it? What are the status updates? What’s working and what’s not? Here are the new things we’re going to try. Here’s a new person we’re going to hire and what’s breaking where so we can figure out how to not let it break?” 

After we got acquired, we expanded pretty significantly. So the Drip team itself, by the time I left, was 125 people. I was no longer CEO though. I wasn’t running all of that. I was running maybe it was about 20 people between engineering and product that were under me and it was two teams plus products. It was kind of like three different teams. We had two different engineering teams for infrastructure and more like app features and stuff, and then, product folks. 

I still ran those without rigorous frameworks, although product meetings, once I hired a product manager, he used some, I don’t know, it wasn’t Traction or EOS because it wasn’t about rocks, but there were definitely prioritization frameworks that he brought into it as a more academic and experienced product person, but for better or worse, I do tend to go about this stuff pretty intuitively. 

I have found that some folks who lean so far into the frameworks do so to their detriment, that the frameworks are a bit like having exact detailed instructions on how to cook a hamburger or a steak that don’t always take into account all the details or all the nuances of cooking a hamburger or a steak, and I feel like if you have some natural inclination of how to borrow just some really minor pieces of Traction, EOS, Scaling Up whatever you want to borrow, but that it fits with your personality to manage in a more intuitive way, I guess what I’ll say is it works for me. 

It worked at Drip, it was 10. It worked once I was managing 20 and it works at TinySeed MicroConf today. No one could argue that I don’t manage a huge org. I wasn’t running or I don’t run an org that’s say 125 people where I have managers who manage managers, who manage individual contributors. And so, maybe at that point I would need more of a framework. 

I do know that the CEO who took over, so Clay Collins was CEO when they bought us, and then, another CEO who’s very much more kind of an MBA spreadsheet thinker, and I don’t mean that in a detrimental way. He’s a great operator. He had frameworks, but they were not Traction or EOS. It was kind of his stuff. He learned it in business school and he had seen it in other SaaS companies he’d been involved in and the venture capitalist kind of lean on stuff. 

So he had his own just self homebrew framework that I think works well for him. It’s a certain style of pushing things forward. It’s a very operational focused versus I tend to be more creative and product focus, so less operational, but all that said, I think there’s a lot of different approaches that can work, and I think as long as you’re not strapped to the dogma, and you don’t get hung up too much on the details of a framework, and be really careful about taking one of these frameworks and just implementing it too early. 

I like to have the absolute minimum amount of process as long as possible until we need more process, and then I don’t go from 1 to 10, I go from 1 to 2, add a little bit more just sprinkle a little bit on, and then you sprinkle a little bit on as things start to break or as you’re like, “Yeah, we do need more process.” Things are getting complicated, communications, breaking down and we’re not getting stuff done. People don’t know what they should be doing. 

Then, I’m ratcheted up from two to two and a half, two to three. You get the idea? That is my personality, that’s how I work, and it works for me, and I think the idea is it’s best for you to know yourself and develop your skills that lean into your personal giftings. And so, if frameworks, and I’ll say just more left brain thinking about it works for you, then think about how can I adapt this framework to the size of my team because again, I don’t think EOS is great at five people. 

I think there’s too much process and I don’t know exactly the number where it’s a perfect fit, but I personally would be concerned. I would really strip it down and I guess these days, I kind of do run an extremely stripped down version of one of these. It’s basically just, “Here are the goals. Let’s go. Let’s update and work great as a team.” And there’s a bit more to it than that, but you get the idea. I feel like I’ve covered this point. I really do appreciate your question on this, Christopher. I hope that was helpful. 

If you have a question for this show, I’m going to be moving even text questions as you heard in this episode, that are a bit more advanced, intermediate to advanced. Later stage text questions are going to go to the top of the stack along with audio and video questions. I hope you enjoy this focus of thinking more about what do folks who are already managing managers think about and other topics that’ll be more applicable to that stage. Thanks for joining me this week and every week. This is Rob Walling, signing off from episode 724.

Rob Walling:
Welcome back to Startups For The Rest of Us. I’m your host, Rob Walling, and this week I speak with Pulitzer Prize winning journalist, Charles Duhigg. Charles writes for the New York Times and New Yorker magazine and has written three books including The Power of Habit, Smarter Faster Better, and most recently, Super Communicators. I wanted to have Charles on the show not to cover material from the book per se, but to figure out how to translate that into why being a better communicator should matter to you as a bootstrapper. Whether you’re having conversations at your day job, while you’re doing your side hustle, whether you’re doing sales demos, whether you are talking to folks that you have hired, contractors or full-time employees, or even communicating with your spouse or significant other as you try to navigate the frothy waters of building your company. Charles is extremely well-spoken and has a deep, deep understanding of this topic, so it was a pleasure to have him on the show. Let’s dive into our conversation. 

Charles Duhigg, thanks for joining me on the show.  

Charles Duhigg:
Thanks for having me on.  

Rob Walling:
It’s great to find to meet you. We were talking offline and I realized I’ve read at least two, maybe three of your books, but I hadn’t put together … Sometimes you just don’t put together that the author has written all these books. So Power of Habit, a lot of folks have probably heard of, as well as Smarter Faster Better, and most recently Super Communicators, and that’s what we’re here to talk about today. How to unlock the secret language of connection. And I know there’s a lot of listeners probably listening to this thinking, “You know what? I’m a software developer. I’m going to go indie hack my way and build a solo empire.” But you always need to know how to communicate with people, and that’s why I wanted to have you on the show today.  

Charles Duhigg:
Yes. Even if you are building a solo empire, you probably have a spouse or a significant other at home, and if you’re not communicating well with them, it does not matter how big your solo empire becomes. Communication is at the heart of what humans do, and it’s critical.  

Rob Walling:
Yep. And I used to be a not great communicator, and I’ve had to develop that over the past 10 or 15 years. I grew up left brain, introvert, developer, and so I would almost gravitate towards roles where it’s like, well, I just don’t need to communicate with people. Again, I’m going to be that solo person just doing my thing. And I’ve learned that the better I’ve got at communication … Partially through doing this podcast, to be honest. You talk for 720 episodes, you get a little better at it. But also dealing with the hard things of life, starting companies. As you said, working with my spouse on those. I think to get us started, there are super communicators, which the book is about, which are folks that are much, much better at communicating than what normies, we might call Muggles, as they call them in Harry Potter. But just define the term for us to set the stage.  

Charles Duhigg:
Sure. Absolutely. And it’s worth noting that all of us are super communicators at one time or another. So here’s a great way of demonstrating it. If you were having a bad day and you came home after this long day and you’re feeling lousy and you’re like, “You know what, I’m going to call someone I know calling this person will make me feel better.” Do you know who you would call? Does that person pop into your mind?  

Rob Walling:
Yep.  

Charles Duhigg:
Who is that?  

Rob Walling:
It’s a friend of mine named Brendan.  

Charles Duhigg:
Okay, Brendan. So for you, Brendan is a super communicator and you’re probably a super communicator back to him. And I’m guessing … And tell me if I’m getting this wrong, I’m guessing that one of the reasons why you love talking to Brendan is he knows what questions to ask you, and he proves to you that he’s listening and he shares things about himself. He doesn’t try and steal the spotlight, but he’ll share things about himself. And so it just feels really good to talk to him. So there are some people who can do this with anyone. There are some people who can be consistent super communicators. And the reason why is because they’ve recognized the skills that Brendan brings to his conversation with you and the skills that you almost unconsciously use in talking to Brendan, those are fungible skills. Those are skills that you can use with anyone once you recognize it’s a skill. It’s just like learning how to read. If you learn to read on nonfiction, that doesn’t mean you can’t read fiction or you can’t read a cookbook. It’s a completely fungible skill. Communication we’ve discovered is exactly the same, and so anyone can become a super communicator. It’s just a matter of understanding that there’s this handful of skills that you need to recognize the skills, and once you do, you can practice them until they become habits and use them with anyone.  

Rob Walling:
Got it. Well, let’s dive right in then. What are the skills? If someone’s thinking to themselves, I want to be able to communicate better, have hard conversations. And maybe it’s having hard conversations about firing someone. Maybe it’s having hard conversations about saying, “Hey, you’re not cutting it. I want to try to train you up, but I have to give you hard feedback.” Right?  

Charles Duhigg:
Totally.  

Rob Walling:
You can be an employee and have these conversations. You can be in your own company and have employees, but how do you get better at being a communicator?  

Charles Duhigg:
Yeah. There’s a handful of them. The first one is to understand what kind of conversation you’re having. This book really started when I fell into this bad pattern with my wife, which literally anyone in a relationship will recognize, which is I would come home from work after a long day, I’d start complaining about my day, and my wife very reasonably would suggest some practical solutions. She’d be like, “Oh, you should just take your boss out to lunch and you guys will get to know each other a little bit better.” And instead of being able to hear what she was saying, I would get even more upset. And I’d be like, “Why aren’t you supporting me? You’re supposed to be on my side. You’re supposed to be outraged on my behalf.” She would get upset because I was attacking her for giving me good advice. 

And so I went to these researchers and I was like, “What’s going on here? I’m a professional communicator. Why do I, and everyone I know fall into this pattern?” And they were like, “Well, actually, we’re living through a golden age of understanding communication because of advances in neuroimaging and data collection. We really know what’s happening inside people’s brains for the first time.” And they said, “One of the things that we’ve learned is that when you have a discussion, you assume that discussion is about one thing. You’re talking about your day or you’re talking about your kid’s grades, or where to go on vacation. But actually every discussion is made up of different kinds of conversations.” And in general, these conversations, they tend to fall into one of three buckets. There’s practical conversations where we’re solving problems together or we’re making plans, but then there’s also emotional conversations where I might tell you what I’m feeling and I don’t want you to solve my feelings, I want you to empathize. 

And then there’s social conversations, which is about how we relate to each other and to society. And they said, “What we’ve learned is if you’re having different kinds of conversations at the same moment, it’s really hard to hear each other. It’s really hard to connect.” Which is of course what was happening with me. I was coming home and having an emotional conversation. My wife was responding with a practical conversation, and as a result, we really couldn’t hear each other. And so the first thing that super communicators do really well is they just take a step back and they just asked themselves what kind of conversation does it seem like we’re having right now? Are we having an emotional conversation, a practical conversation, a social conversation? And there’s ways to flush that out and help you figure out what kind of conversation you’re having. But once they know, then they lean into it. They try and match the other person or invite them to match themselves. And within psychology, that’s known as the matching principle, that successful communication requires having the same kind of conversation at the same moment.  

Rob Walling:
As you’re saying this, I know a super communicator. It’s my wife, Dr. Sherry Walling. Folks who listens to the podcast will know. A, she’s a psychologist, so she’s trained, but B, she has empathy, and also she’s now a professional. She’s a CEO and founder coach. She’s an entrepreneur herself and just deals with a lot of entrepreneurs. Anyone who’s talked to her, who’s listening to this knows that she picks up on where you are and then goes with it. So that’s fascinating. I think that’s helpful for listeners who are listening right now, think of the person … There’s got to be someone in your life who is just amazing at this. And what is it? Is it that they pick up on the speaker, the other person where they are and meets them there? Do they also sometimes transition? You said there are three types but-  

Charles Duhigg:
Yeah. Absolutely. Absolutely. It’s both of it. So let’s talk about how we figure out what kind of conversation we’re having. One thing we know about consistent super communicators is that they ask more questions than the average person. They ask 10 to 20 times as many questions as the average person. And some of those questions are very special questions that are known as deep questions. And a deep question is something that asks me about my values or my beliefs or my experiences. And that can sound intimidating. It sounds like that’s a big question, but it’s actually as simple as if you meet someone and you’re like, “What do you do for a living?”, and they say, “I’m a doctor.”, it’s natural to say like, “Oh, where do you practice medicine?” But a better question, a deep question is to say like, “Oh, what made you decide to go to medical school?” Because when I’m asking that question, what I’m really asking you is tell me about who you are. Tell me about your experiences, your values, the things that shaped you. 

And it’s an invitation. It’s not a mandate, it’s an invitation. But what tends to happen is that when you ask a deep question, when you ask someone how they feel about their life, instead of the facts of their life, they tend to tell you what kind of mindset they’re in. So the same person, that doctor, depending on the situation, depending on how they’re feeling that day, they may answer that question one of two ways. They might say something like, “Oh, I wanted a steady job, and I knew that medicine would always be a steady job.” Okay. They’re in a practical mindset right now. But that same person, if they’re feeling more vulnerable, they might say something like, “When I was a kid, I saw my dad get sick, and I saw the doctors and the nurses help him, and I wanted to be one of those people.” That person’s in a much more emotional mindset. 

And so once I know what kind of mindset you’re in, then I can match you. And I can say, “Oh, it’s so interesting you mentioned that. I’m a lawyer and I became a lawyer because I saw my uncle get arrested when I was a kid.” And I can also invite you to match me. For instance, when I come home and I’m talking to my wife and she listens to me complain and she emotes with me, at some point she can say, “I understand how you’re feeling. Do you want to talk about solutions? Because I think that there’s a way to solve this problem.” So what super communicators do is they ask deep questions to try and figure out what kind of conversation is happening, and then they match the other person and invite them to match themselves. And that can sound hard, but it’s actually very, very easy and very natural and graceful because our brain makes asking deep questions and matching into a habit very quickly.  

Rob Walling:
You’re so on point, and it reminds me of … I don’t know if you’ve seen it on Instagram, but there’s a text where a guy’s girlfriend texts him and says, “I just bought an ice cream cone, and the scoop fell off onto the sidewalk.” And he says, “Are we in a feeling and empathy mode, or would you like to hear solutions?” Total tone-deaf, but it totally links into what you’re saying, right?  

Charles Duhigg:
And yet what’s interesting is from the outside that seems totally tone-deaf, but when I come home and I’m having a bad day and my wife says to me, “Okay. Do you want to talk about solutions or do you just need to complain and get this off your chest?”, I actually really appreciate it. Because I’m like, “No, no, no. This isn’t a big deal. I just want to vent for a couple of minutes.” So asking maybe over a text is not the best way of doing it. There might be a little slightly more graceful way. But when you’re in that conversation, it actually feels good to have someone ask you, “What can I do to help you? What are you looking for in this conversation?” That’s not something that feels ungraceful, that feels actually very welcoming.  

Rob Walling:
Do you have any advice on how to transition from one type of conversation to another? And I want to give you a specific examples, so let’s say that I’m in a weekly or monthly one-on-one with someone who reports to me. And there’s often … Well, early, there’s chitchat, and then we get in like, “How are you doing?” There’s the emotional like, “How are things going over the past month? Is there anything we need to address in terms of your happiness here at the company?” And at a certain point, maybe you do need to transition that to being more practical, maybe giving feedback or whatever. But how does one do that elegantly?  

Charles Duhigg:
Honestly, the best way to do it … And there’s two things to do here. Let’s talk about a conflict situation and a non-conflict situation. In a non-conflict situation, if you’re like, “How are you doing here?”, and they’re saying, “Oh, I’m frustrated with this one thing, and my wife thinks I’m not home enough.” Listen. Say, “I’ve had that similar experience myself.” And at some point you can literally just say, “Look, we’ve been talking about how we feel. Is it okay if I propose a solution to you, if I make a suggestion?” What you’re really saying is, can I move this conversation from an emotional conversation to a practical conversation? Now, the fact that you’re asking permission to do it, almost inevitably the other person says yes, but it also feels like instead of you mandating that they have to have a different kind of conversation, you’re inviting them to match you in return. So that’s very elegant, it’s very graceful. It doesn’t feel weird. 

But let’s talk about a conflict situation where it’s hard to do that. So in a conflict situation, what’s really important is that we prove that we’re listening to the other person. And by conflict situation, I mean even if we just disagree about something. We’re talking about something where we just see things a little bit differently. So maybe it’s not a fight, maybe it’s not that hard a conversation, but it’s something where there’s a little bit of a difference. It’s really important to prove that we’re listening. And there’s actually a technique for doing this that they teach at Harvard and Stanford and all these other fancy schools that’s known as looping for understanding. And the reason it’s important to prove that we’re listening is because in many conversations in the back of our mind, we suspect that the other person is not listening, they’re just waiting their turn to speak. 

So that situation you described before where they’re complaining and you want to get a practical, if you just jump in with a practical, it seems to the other person, they’re like, “Oh, he basically sat there while I complained but now we’re talking about the thing he wants to talk about.” But if we prove that we’re listening, we overcome that suspicion that the other person’s just waiting their turn to speak. And what looping for understanding does is it has these three steps. Step one is ask a question, preferably a deep question. Step two is after the person has answered the question, repeat back what they said to you in your own words. And the key here is not mimicry. It’s to prove to them you’re paying attention. And more importantly, to prove to them that you’re processing what they’re saying. 

And then step three, and this is the one we usually forget, ask if you got it right. Because one of two things will happen. The first thing is they’ll say like, “No, I don’t think you understood what I was saying.” Which is really useful to know. The second thing is that they’ll say, “Yeah, I think you understood what I was saying.” And what we actually did in that moment is we asked them for permission to acknowledge that we were listening. And when they acknowledge that we were listening, they become more likely to listen to us in return. So when you’re in that conversation and you’re trying to transition to something, or when you’re in a tough conversation and you’re trying to move it from criticism to solution finding, if you prove to the other person that you’re listening to them, they become much, much more willing to match you, to join you in having a more productive conversation.  

Rob Walling:
Got it. You were saying that was more of a conflict approach, so that could be applied with a spouse, significant other, that could be applied at work. Yeah.  

Charles Duhigg:
Yeah. When we go in and we give someone some performance feedback that’s not overwhelmingly positive, when we have a partner and we disagree about how to move forward and we have to come to a consensus, if we prove to each other that we’re listening as our first and primary goal, that conversation is going to go much, much better.  

Rob Walling:
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I want to switch it up a little bit because we’ve been talking about close relationships, people you work with, significant others, life partners and such. There’s another element to communication, and I want to give you another scenario. So we host an event called MicroConf. We host it twice a year where a bunch of entrepreneurs, a couple of hundred entrepreneurs get together. And one of the most valuable parts of the event is what we call the hallway track, which is not the main track, it’s where you go out in the hallway and you’re talking to other entrepreneurs. So there’s a lot of introverted folks who want to connect with other founders, and they maybe are not sure, how do I do this well? How do I not ask the same three questions? How do I not stay on the surface? How do I make connections with those who I want to connect with? Do you have any advice for those folks?  

Charles Duhigg:
Yeah. Absolutely. There’s been a lot of experiments on this. And it’s interesting because I think the people who are introverts, they think that they’re at a disadvantage to being a super communicator, and it’s actually not true at all. In fact, one of the things that we know is it doesn’t matter if you’re an introvert or extrovert. Because these are skills, really, they’re skills that can be learned by anyone. Moreover, what we know is that people who are real super communicators consistently, if you ask them, were you always good at communication, they often say no. They say things like, “I had trouble making friends in high school, and so I really had to study how kids talk to each other.” Or, “My parents got divorced and I had to be the peacemaker between them.” And it’s the act of thinking about communication that makes someone a super communicator. 

This is what super communicators do, is they think a little bit more about just what’s going on here. So here’s the thing that I would say. There was this experiment that was done at Harvard Business School where they brought a bunch of students into a room and they said, “Look, you’re about to have a conversation with a stranger.” Telling someone you have to have a conversation with a stranger is one of the most anxiety producing things you can do for anyone. And they said, “But before you have this conversation, here’s what we want you to do. Take out a piece of paper. Just write down three topics or questions you might want to talk about. Stupid stuff like are you going to the party this weekend? I just saw Dune two and I thought it was terrible. What do you think about it? Just write down three things.” 

And so they did. They stuck them in their pocket, then they went and they had the conversations. And afterwards they asked everyone how’d those conversations go? And the participant said, “Interestingly, the three things I wrote down, they never came up, but I felt so much more confident and calm during that conversation. I felt like I could really focus on the other person so much better because I knew that if there was going to be that awkward silence, I knew what I was going to say. I knew what I had in my back pocket.” And for introverts in particular, but this is true for everyone, the thing that makes conversations hard is not the conversation itself, it’s our anxiety about the conversation. We’re thinking like, “I’m going to go into this hallway. I’m going to have to talk to five people I’ve never talked to before. It’s going to be exhausting. There’s going to be weird, awkward silences.” And so when we can remove that anxiety, it allows us to tap into our natural communication and listening and speaking instincts much more easily. So simply just writing down three things that you might want to talk about, that can change things entirely. And what’s important to realize is that the reason why this is so powerful is because communication is Homo sapiens superpower. It’s the reason our species has been so successful. 

So as a result, our brains have evolved to be really, really good at communication. Like an introvert’s brain and an extrovert’s brain, and someone who’s somewhere on the spectrum, their brain, all of our brains are really good at communication. And oftentimes what we need to do is we need to allow our brains to do what they’re good at. And when we’re anxious or when we’re uptight, or when we’re like, okay, my goal is I have 30 seconds with this person and I want to impress them how smart I am, that’s when we get in the way of our instincts. But the more we allow ourselves to just do what feels natural, the better those conversations are going to go.  

Rob Walling:
It reminds me of the first time you give a talk in front of a bunch of people and you know the material pat. You know it forwards and backwards, and then you get up in front and you freeze, and the blood rushes to your head and the hair stands up on the back of your neck, and you become just a … presenter. And you watch it back later and it’s like, ah, it wasn’t as bad as I thought, but it’s the anxiety. It’s not your ability to communicate because when you gave it to yourself in the bathroom mirror with no anxiety, it was a great … presentation. But when you get up in front of people …  

Charles Duhigg:
And in the 30th time you give that speech when you’re bored by it, so you have zero anxiety because you’re like, I know exactly what I’m doing. When all of a sudden on the stage you start doing these flourishes and these little charismatic things. It’s because you’re not thinking about giving the speech. You’re just giving the speech. And that frees your brain up to let all those instincts come out to be like, oh, here’s a fun joke. It’s never occurred to me before, but I’ll just try this joke out. And that’s why it’s so important that these are skills. Is because our brains are designed that when we identify these skills and we practice them, our brain makes them into habits very, very quickly. And once they’re habits, we don’t have to think about them. We get to just relax and let the habit take over.  

Rob Walling:
I mentioned to you offline that I listened to your book last week as I was driving around Iceland, and it was super enjoyable to hear about it. One thing that struck me … And I don’t know that you phrased it in this way, but I was thinking, man, I can get really good at unquote small talk based on some things you said in the book, even beyond the example we just used at a conference. But if you’re a salesperson, usually you want to build rapport in the first two to three minutes as you’re doing a sales demo. I interview hundreds of startup founders every year or two to get into the accelerator. There’s just a lot of times when I find a meeting someone new for the first time, I have a 20-minute call, I need to get rapport very quickly. And usually small talk is just garbage. It’s like, “Oh, where are you from? What’s the weather?” This and that. But you had examples of, here’s a question that most people ask, here’s how to ask it in a way that is much more effective. Can you talk us through that?  

Charles Duhigg:
Absolutely. Absolutely. So in the book, there’s all these stories. There’s the story of a CIA officer who asked to recruit an overseas agent that’s just terrible at it, or the Big Bang Theory. Why the writers of the Big Bang Theory were able to make it work. And at the core of a lot of those is just a reframing of what’s going on in a conversation. So let’s say it’s small talk. Let’s say you meet someone you’re trying … You don’t know anything about them. You’re trying to get to know them. And you say like, “Oh, what part of town do you live in?” And they say, “I live in the Heights.” That’s a dead end. But if your next question is, “Oh man, the Heights, that’s really interesting. What do you like about it up there? Why did you guys decide to move up there?” That’s a deep question. And what that person is going to say is they’re going to say something like, “Oh, my kids’ schools are near there and so we just wanted to be close to it. And there’s also this great community. We used to live in the valley and we didn’t know any of our neighbors, and now we live up in the Heights and we know all of our neighbors.” 

So at that moment, what you can do is you can reciprocate and you can say … Because what you just told me is you told me you have family, community is important to you. You’ve been in this town for a little while, long enough to at least live in two different places. I’ve learned so much about you just by asking, “What do you like about the Heights?” And at that point, I can reciprocate and I can say, “Oh, it’s so interesting. I have two kids also, and actually, we live over in a different part of town in Midtown. But it’s similarly, the reason I love it is because we just know our neighborhood and it’s such a diverse neighborhood. There’s all these people from different socioeconomic backgrounds. It’s just really interesting.” Now we’re actually communicating with each other. Now we’re actually bonding a little bit. And that doesn’t mean we’re going to be best friends, but it definitely means that we are making a connection. We feel like we know something about each other. And all it took to do that was just to ask you a question about how you feel about something and then to reciprocate what I’m hearing.  

Rob Walling:
And is that something that you yourself do if you go to a dinner party?  

Charles Duhigg:
Oh, I do it all the time.  

Rob Walling:
Yeah.  

Charles Duhigg:
Oh, yeah. Yeah. I do it literally all the time. I mean, there’s this guy named Nick Epley at the University of Chicago. He plays this game where he’ll get on a bus, and his goal within three questions of sitting down next to a stranger is to get them talking about their hopes and dreams. And he says usually it takes two questions because he’ll sit down next to someone and he’ll be like, “Hey, what do you do for a living?” And they’re like, “I’m an accountant.” And he is like, “Oh, did you always want to be an accountant? Was that your dream when you were a kid?” And they’re like, “No, of course not. Who has a dream to be an accountant as a kid? No, I wanted to be an astronaut.” And then they’re off to the races. They’re talking about their dreams when they were young. I do it all the time. Again, once you practice it once or twice, it becomes a habit and it’s so easy. It’s so easy to connect with other people simply by just asking them what seems like a fairly benign question.  

Rob Walling:
Yeah. And that’s fascinating because it’s, when I first read the summary of Super Communicators before I listened to the book, I thought it was going to be about … I don’t know if you’ve read the book Crucial Conversations.  

Charles Duhigg:
Yeah.  

Rob Walling:
It’s about having hard conversations or being able to communicate complex things or whatever. But it really runs the gamut because you and I, just in this 20-minute conversation, have talked about small talk, we’ve talked about dealing with a significant other spouse, a life partner. We’ve talked about dealing with direct reports. We’ve talked about being at a conference, which I guess is small talk, but it’s different. The super communicator moniker that you’re talking about and that you describe in the book really does cover the gamut of person-to-person interactions.  

Charles Duhigg:
Oh, absolutely. And if you think about it, what do we consistently spend most of our time doing? We all eat once or twice a day or three times a day or more. We all sleep every single night. But if you were to actually log most of the minutes, you spend certainly in the top three, if not, the top one would be communicating with other people. It’s like asking your kids, how are you doing, you’re getting to school today, ordering a coffee, talking to the barista to give her your order, calling the person you’re working on some project with. Communication is at the core of what we do. And so you’re exactly right. Being a super communicator, it’s not about hard conversations, it’s about all conversations.  

Rob Walling:
And that actually brings me to an interesting question, and you may have addressed this in the book. I definitely was daydreaming a bit, staring at the volcanoes in the mountains as I was driving through Iceland. So something that occurred to me is a lot of my communication is via email and DM and Slack. It’s not verbal. You and I on this, again, in the last 20 minutes, we talked a lot about verbal. Does it change? Is it different when you’re typing?  

Charles Duhigg:
The same principles apply, but the important thing is to recognize that each form of communication has slightly different rules. So one of my favorite examples of this, just to put it in context, is about a hundred years ago when telephones were first becoming popular, there were all these articles that appeared that said no one will ever have a real conversation over telephone. Because think about it, up to that moment, all conversations that happened basically face-to-face. And they said, “Look, if you can’t see the other person, you’re not going to be able to understand what they’re feeling. You’re going to miss all their facial expressions, their gestures.” What’s interesting is that at the time, they were exactly right. So if you listen to early phone conversations or transcripts of early phone conversations, what you see is that people basically use them as telegrams. They would call up and give someone a grocery list or a stock order, but they didn’t know how to have a back-and-forth. 

Now, by the time you and I were in middle school, we could talk for seven hours a night on the phone, and they were the most meaningful conversations of our lives, and that’s because we learned the rules for talking on phones. One of the rules … And you still live by it, I live by it. We all do it subconscious without even realizing it. When we’re talking to someone on the phone and we can’t see them, we over enunciate our words by about 15 or 20%. We put about a third more emotion into our voice because we know the other person can’t see our facial expressions. We do that without even thinking about it. Now, the thing is that there are slightly different rules for phone conversations than face-to-face conversations. The same thing is true of DMS and texting and sending a messages with emojis and sending an email versus having a Zoom call. 

When we get into trouble is when we forget the rules. Or it’s not even like we forget the rules, we just don’t pay attention to them. So I know that if I’m going to send you something hard, if I can do it over voice, that’d be great, and if I can’t, it’s definitely better to do it over email than it is over text. That’s not a huge discovery. But when we’re moving really fast and we’re just thinking about ourselves and we’re just thinking about getting the information across, we forget to remind ourselves what are the rules of texting versus DMs versus something else? That’s when we suddenly send that text that the other person reads, and they get pissed off because they took it out of context. So the only real difference … All the same principles apply, the difference is that there are slightly different rules and slightly different strengths or weaknesses for each channel of communication and we have to remind ourselves of that.  

Rob Walling:
And if folks want to dig in deeper, they can buy Super Communicators wherever greater books are sold. Amazon. I got mine on Audible, of course. And folks who want to keep up with you. They can head to charlescuhigg.com. That’s D-U-H-I-G-G. Or you’re also C. Duhigg on Twitter/X. Charles, thanks so much for joining me today.  

Charles Duhigg:
Thank you for having me. This has been so much fun.  

Rob Walling:
Thanks again to Charles for joining me on Startups for the Rest of us. Hope you enjoyed this episode. Obviously a little different than some episodes of this podcast, but I like to broaden my own horizons, as you can tell, from … I think I’m at 904 audiobooks in my Audible account, and sometimes I like to share topics that may not be in the direct focused wheelhouse that you might experience week to week on this show. But know that if you come back to this podcast again next week, it will continue to have content, information, insights, and hopefully inspiration to motivate you to continue building your company. My mission is to multiply the world’s population of independent self-sustaining startups, and that’s why I record this podcast each week. That’s why it focuses on building incredible businesses that may not change the world, but they can change your life and the life of those around you. Thanks so much for joining me this week and every week. This is Rob Walling signing off from episode 723.

Rob Walling:
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It is another episode of Startups For the Rest of Us. I am your host, Rob Walling, and today I talk with James Mooring, the co-founder of Astalty. James and his co-founder have a pretty incredible story of bootstrapping a vertical SaaS app to seven figures in ARR in 18 months. A lot of things went right for them, but it’s obvious that James and his co-founder are very smart and executed exceptionally well. I know that sometimes it’s helpful to hear founder stories of people failing, making mistakes, picking themselves back up, and sometimes it’s inspiring and you can learn a lot from the tactics, the strategies, and the approaches that someone used to achieve relatively fast success and quick growth. As James and his co-founder have done, they’ve built an enviable business by all measures. One thing I like about this conversation is it’s not just the headline of how they bootstrapped the seven-figure business in 18 months, but James is very thoughtful about how they did it. 

Sometimes when you talk to folks, they don’t really know how they did it. They lucked into it and they claim it was all word-of-mouth and virality. These things that it’s like, “Well, A, that’s not helpful to me if I want to grow a business and, B, I don’t actually think that’s what happened.” With James, he’s given it a lot of thought. I think directionally, he’s pretty correct with why they were successful, which is even more helpful for you listening to this podcast because, now, you can potentially take some of the learnings from his journey and apply them to yours. With that, let’s dive into my conversation. 

James, welcome to Startups For the Rest of Us.  

James Mooring:
Perfect. Good morning. Thanks for having me.  

Rob Walling:
It’s nice to have you on, sir. So your company is Astalty and your H1 is, “Simplify your NDIS business operations. Ready to take your NDIS business to the next level? Try Astalty, the most straightforward NDIS software with the most advanced features.” 

What is NDIS? I’ve never heard of this. Literally, I had to Google it before this. So if someone does not live in Australia, describe what NDIS is and then what your software does.  

James Mooring:
I think some people that do live in Australia still probably don’t know. The NDIS is the National Disability Insurance Scheme, so it’s essentially a government-funded scheme that provides funding to people that have a disability to go and access supports from service providers for a range of different things. It could be accessing the community, it could be accommodation, it could be assistance at home with self-care, things like that. Our software provides a platform for businesses that provide those supports to those people with a disability to run their business.  

Rob Walling:
Got it. Let’s say Gymdesk is a TinySeed company and their software is like the operating system for a gym. Your entire business runs on it, people check in and out with a key fob to get in the thing and it tracks that they’re there and it does invoicing and billing and subscriptions. Just imagine everything that a gym or a [foreign language 00:03:50] or a yoga studio, a fitness studio needs. So it’s kind of the OS, the operating system of that? Jim, is that what Astalty does for these, they’re not affiliates, NDIS providers?  

James Mooring:
NDIS providers, yeah, NDIS service providers. Yeah. The term CRM is very common here for what we do, but essentially how you’ve described it is exactly what it does. Most businesses will subscribe to Astalty, an accounting software like Xero or similar and then they’ll have their Microsoft or Google to power their email, and ideally that’d be all they need.  

Rob Walling:
And talk to me about where the business stands today.  

James Mooring:
So now, we’re a team of five. We’re doing seven-figures ARR and still growing significantly every month, so it’s in a really good spot.  

Rob Walling:
And this has happened very quickly. It probably doesn’t feel that way. I know your timeline… Timeline always feels really long, but when I actually read through it, because you were very generous to send me the entire timeline which is what we’re going to work off for here, it seems like from actual paid launch until seven-figure ARR was less than two years.  

James Mooring:
I think, around 18 months, we worked it out to be.  

Rob Walling:
Unbelievable. That is so fast.  

James Mooring:
From when we launched our first paid offering to when we hit the seven figures.  

Rob Walling:
Unbelievable. So one thing before we dive in, because… Here’s what I want to cover for someone listening to this, it’s to figure out how you got here this quickly and then to pull out things that you and your co-founder did really well where you were smart and then potentially where there were things where maybe you got lucky, as you and I saw in Atlanta, because you were at MicroConf Atlanta, which is how we met, where potentially… As Ben Chestnut said, they Forrest Gumped their way in. They kind of stumbled. They got a little lucky, and that’s okay too. It’s not 100% luck. It’s that, along the way, sometimes you do things and they turn out really well. Before we dive into that though, Astalty, you told me, stands for a solution that actually listens to you. Is it a dad joke? It’s like it’s not a good acronym. What’s the deal with it?  

James Mooring:
I think when we came up with it, we had much, much worse business ideas. And a lot of businesses in the space had care or health or these types of words in their business name, and we didn’t want to be that. The whole premise behind Astalty was that we felt that software was built by people that have no idea about the actual business problems that they were solving. At the time, we thought, “Why not try an acronym?” and this kind of came out and then it stuck. We don’t put that acronym everywhere, but it’s a very sticky business name and people remember it, but it does actually drive a lot of our, I guess, culture around how we invest time with our customers and build features, I suppose.  

Rob Walling:
And astalty.com.au, if folks want to check out your website. 

You touched on something right there that I want to dig a little deeper into. You talked about how in… Well, let me just say this. In deep verticals, where there’s a lot of subject matter expertise required to build a good tool, we see one of two mistakes usually. We see a software developer who comes into it and doesn’t actually understand the business problems. So then they build, it can be good software, but it doesn’t do the business any justice. It doesn’t actually solve the problem. Or, vice versa… We see subject matter experts who are like, “I’m in roofing construction and I’m going to hire a developer,” but they’re not a product person. So they have the subject matter expertise of what it should do, but the product sucks. 

You and your co-founder are a developer and a subject matter expert, and that combination is in the top three co-founder combos that we see, right? I’ve invested 191 to companies and the top three, in no particular order, it’s kind of all tied for one in my head, is a developer plus a marketer or a developer plus a salesperson, depending on if it’s a hired low touch funnel, and developer plus subject matter experts, as long as that subject matter expert is willing to do the sales or the marketing. So you and your co-founder… You’re the developer, right? And your co-founder was in the NDIS system. Does he have a consultancy or a software company in there?  

James Mooring:
He has an NDIS service provider business. So, he actually is one of… His business uses our software and we’d been talking about the NDIS for early days. My job was to try and decode what he was saying and think, “How can we solve these processes using software?” And I think that kind of unique position is part of the reason why we built such a good product.  

Rob Walling:
Yeah, that makes sense. In a space like this, you would need… I don’t know that you would need a co-founder. It sure help, but you would really want what we call a patient zero, a customer zero who really is on board with being able to advise you, or you’d need an advisor or an advisory board, two or three people, who all had NDIS. You could have done it different ways, but this to me is one of the ideal ways because then he has so much skin in the game, right?  

James Mooring:
Yeah.  

Rob Walling:
And if he was willing to help with sales and marketing as well, something that… If we rolled the calendar back three years to… We’re recording this in June of ’24. We roll back to June of ’21, you talked about development work on Astalty starting slowly and that you were going to try to do everything that a CRM in the space had to do, but then you realized that you would probably do that quite poorly. So, you instead streamlined to just focusing on support coordination. This is, I think, a lesson that a lot of developers screw up is they don’t want to build an MVP with limited functionality or they don’t want to focus the thing down thinking they didn’t solve a big enough problem. So, I guess it sounds like that was the right choice for you. And how did you come to that? How’d you come to that conclusion?  

James Mooring:
Yeah, absolutely. So I think Jona, my co-founder, when he was explaining everything, I was thinking, “This is fine. We can do this.” And then we started and we’re like, “We need this thing, and that means we need this thing.” And then the waterfall just got so big. And then we wanted to get to market quickly. So what we did is we really said, “Well, where’s the gap?” and we focused on that. And then I’m really glad we did it back then because if we came to that realization 12 months later, it would’ve been an absolute mess. It’s kind of funny because through that process of really focusing on a niche, within a niche, you could say, “We actually built 90% of the functionality that we need to serve the whole NDIS space.” It’s just that there’s one kind of scheduling piece, and that’s what we’re working on building now. So it was just interesting that by niching down, we were still able to build functionality that would help us serve the customers that we wanted to serve initially, if that makes sense.  

Rob Walling:
It does. It does. So your co-founder, you and he are talking through NDIS and he’s probably saying, “There’s no good software on the market.” He’s saying, “There’s a huge gap.” What was his company using before you built Astalty?  

James Mooring:
They were using another software that they actually still use because it does the functionality that Astalty doesn’t quite do. So, they use both at the moment. Yeah, there was just no innovation in the space that we felt, so we came out and surprised… You put a really nice easy-to-use interface on something, you speak the language that your customers speak and you make the product easy to use, which sounds so simple, right? But it’s funny how far that could actually go.  

Rob Walling:
How many NDIS providers are there in Australia?  

James Mooring:
I think probably a few, a couple hundred thousand. Yeah, there’s heaps, and they range from sole traders… They could be sole traders up to the top 10, which might have a few thousand employees. There’s a really wide range of sizes of businesses.  

Rob Walling:
That’s a big market to not have a really well-built tool. When I think of any market in the US that has a couple hundred thousand businesses that would be willing to pay, there are a lot of tools available for them. Many of which are decent, some of which are reviled. But I’m kind of surprised by that. Why do you think that that vertical… There are probably listeners right now, salivating, thinking, “Oh, my gosh, I wish I could…” Only two years ago, there was a market this big that didn’t have software. Why is that the case? Why has no one attacked this?  

James Mooring:
I think there’s certainly a software that exists, but it was built 10 years ago, 6 years ago. They got into the space and they probably solved the problem that existed six years ago and thought, “Great. We’ve solved it.” I mean, this is my opinion anyway. And then I think they said, “Great. We’ve solved it. Let’s just stay here,” and that’s fine. But at the pace that the technology moves, at the pace that NDIS itself moves, you need to be able to iterate fast and change and listen and pivot, and I think that is another huge factor to our success. So there’s certainly a software that existed, but just not up to speed, I suppose.  

Rob Walling:
So as you’re building the… You start in June of ’21 writing the code. Six, seven months later, you’re in January 2022 and you launch a free Chrome extension, which… You talk about NDIS has a price guide and the Chrome extension allows you to search the price guide in real time, I guess, in Chrome.  

James Mooring:
Yeah.  

Rob Walling:
My question for this one… I have a note next to it, and it says, “Smart or lucky,” because a lot of engineers want to do engineering as marketing because we are builders. If I can write code instead of marketing or if I can write code as marketing, I’m going to do that, right? So what I wonder is if… Were you pretty calculated about this? Like, “Yeah, I’m all in. I’m in on this. It’s a lead gen. I’m going to build this thing. It’s going to do it,” and you were confident? Or was it kind of like, “Well, might as well throw this thing together. Maybe it’ll work, maybe it won’t.”  

James Mooring:
It came about because Jona and I were actually… Because we had to have some of this price guide functionality in Astalty to kind of get your business set up. I think we were looking at the price guide and we were like, “Man, this sucks. I can’t believe we have to search through this.” And then somehow, we got onto the concept of extensions, and I’ve never built one. I thought, “I wonder how hard it would be just to throw this in the browser,” because we use quite a few extensions and they’re just so handy. 

And then, I guess, we were calculated in the sense that we could use it as a lead gen, get our name out there. We were calculated in that way. Did we think it would have the uptake that it did? No. But when we built it and when other people started using it, everyone was thinking, “Why doesn’t this exist already?” So we were kind of first doing that and then we’ve seen a couple of others come along. But yeah, I would say maybe a combination of, “We know what we wanted to do. Did we know exactly what the pathway would be?” Probably, not. No.  

Rob Walling:
Right, so a combination, a lot of things. And then the next month, February ’22, you launched Astalty Lite, which, as you said, is a free-to-use CRM that would hopefully get customers engaged and on the platform. By August of that year, you had 450 users to the free platform and you specifically said, and I like this data point, “Of those, a few dozen were engaging us and providing feedback about the platform,” because that usually what happens. You get hundreds or thousands of free users and there’s 2%, 3% that are likely to upgrade. So similar with this one, you kind of went freemium or free… I guess the first question is, is that still a free plan on Astalty? Or is that just kind of a preview, so you do still have a free plan?  

James Mooring:
We do. It’s not very utilized because it doesn’t have your invoicing, which is such a core time saver that Astalty gives you. We do still have it.  

Rob Walling:
Similar with that, were you smart there to be like, “Oh, if we get this, we get the buzz and we get people in it”? Or did you kind of get lucky because, I’ll just say, most free offerings don’t work. Most people don’t know how to do it and they kind of backfire and you devalue your product and then you have a bunch of… on and on and on. But it seems like it worked… I guess the question is, did it work for you and was it intentional or was a little lucky in that one?  

James Mooring:
Astalty Lite was very calculated, absolutely. So when we were building, we were thinking… I think, by that time, we were thinking we would have our paid offering out, and that just didn’t happen. I think by the time we got to Astalty Lite being launched, we wanted to have our paid offering out and we wanted to get to the market early and we thought, “The best way to do that is to give people the functionality because we also needed feedback from our potential customers.” So it was a way to provide value, which was good for our engagement, getting a brand awareness, and also good to get people using the product. Did we know that people would actually use it? Probably, not. But even though it wasn’t, I guess, validation, which is something that I didn’t even know at the time or we didn’t know at the time, the fact that people were actually engaging and giving us feedback even though they weren’t buying, for us, was a very good signal that people are enjoying what we’re building. Some of those customers now pay us every month, so it’s great.  

Rob Walling:
What would the signal have been? Let’s say barely anyone signed up for Astalty Lite, because I almost view it as a nice MVP or a validation signal where you were kind of still like, “Well, are people using it?” And when they are, you’re like, “Oh, this raises my motivation,” because that’s what you need as a bootstrap founder is motivation, right? You’re not running out of money, but you’re like, “Ah, should I keep building this?” or, “Is this the right thing?” or whatever. So, it sounds like it was pretty motivating. What would you have done if 10 people signed up and no one used it? Would it have been bail on the idea, “This isn’t going to work”?  

James Mooring:
No, absolutely not. And this is a pretty important point, I guess, for me because I put my whole other software development company on hold and we were going to make Astalty work, period. There was no second option. So if that didn’t work, we would’ve pivoted, we would’ve reached out to people, we would’ve done whatever it took to make that work. I think in your book or on a podcast, you talk about roadblocks versus speed bumps, and this is something that we try and really put into practice that we would’ve just changed. We would’ve pivoted, got more feedback, changed the product, and go from there.  

Rob Walling:
So, that was February of ’22. So then, in August, you essentially launched a paid plan, Astalty Pro, Astalty Professional, 50 bucks a month per user, and you gave a discount at launch. 50 bucks a month per user, that’s decent pricing. Again, a lot of startups when they launch, I’m like, “Oh, they’re 10% of the price. They should be 10x below or 5x below. But at 50 per seat, I’m imagining… You said there are teams of thousands literally. But even if a team of 10, right? You’re talking $500 average revenue per account on that. Did you look at competition? How did you come to that price? Because it seems like you’re pretty smart on it.  

James Mooring:
Lots and lots of hours. People think building software is hard. Pricing is the hardest part of-  

Rob Walling:
Tell me about it.  

James Mooring:
It was extremely, extremely difficult. And I think we did the discount because we thought, “Oh, well, if we launch at a 30% discount and 49 is too expensive, then at least we can kind of revert down to that 30% off.” We did look at some of our competitors and we were cheaper than some and more expensive than some. I guess what was really interesting is the fact that we stayed at 49 and we probably tripled the number, the functionality that you could do through the platform. And our customers, I guess, had that trust in us that we were going to deliver on what we said that we were going to deliver. We got it right, I think, in the end. But yeah, it was lots and lots of time on the phone talking about it.  

Rob Walling:
Obviously, I’ve been thinking about your business for approximately 25 minutes or something. I don’t know it that well, but it feels directionally correct of like, “50 bucks a seat, that’s a pretty good price.” To get a full picture, obviously I’d want to look at all your competition and… There’s a bunch of other stuff, but it certainly doesn’t seem too terribly low. I guess it started paying off, right? Because by December of that year, you launched in August, you’re five months, six months later, is that even… or four or five months later, you’re at almost 9,000 MRR, which is a kind of a Cinderella story, right? I mean, how many people are listening to this podcast thinking, “I’ve been working on this… I’ve been launched for two or three years and I’m not at 9K MRR.” 

Aside from getting the things right that you got that we’ve already covered, was there something else? Are you a good marketer? Is your co-founder doing a lot of marketing? How is there so much interest and fast growth? I mean, you got a couple hundred paying users in that five months. What was the key there?  

James Mooring:
I think the biggest key is that the product was so good, and that’s a combination of Jona, my co-founder, having such a good understanding of the NDIS and being able to translate that into software and the fact that the businesses that use our software essentially charge $100 an hour for their service. So, we only had to save our customers half an hour a month per user to see the value. And our invoicing alone was saving businesses, in some cases, two whole days, a fortnight. So it becomes very easy, I think, for our customers to justify the cost. 

In the early days, we just did everything. We were both doing the demos, we were getting on calls with the smallest users. If it was a five, we would literally be building features to get customers in that it was missing. So, we were just doing everything we had to do to get these customers on board. Like I said, my business partner have such a good understanding of the NDIS. I think we were able to leverage his network and his knowledge of what people are really looking for.  

Rob Walling:
Got it. Yeah, you’ll hear me say is, if you listen to the podcast, “Build your network, not your audience.” So, it sounds like he… You guys didn’t have an audience of NDIS folks, but he did have a network of folks who would be willing to try it to give feedback to potentially spread the word.  

James Mooring:
Yeah, exactly. If you can go to a business and say, “Hey, pay us 50 bucks a month for a sole trader,” for example, “and we’ll save you 10 hours a month,” it’s kind of hard to say no to.  

Rob Walling:
That raises the question, do you feel like you might be underpriced? Could you charge $100 a seat or 150? What is the place where that breaks? Usually, it’s if there’s a replacement, it’s they can either do it with a clipboard, Excel spreadsheet, or there’s other software where they’re just like, “Forget it, I’m not… Even though this is the best tool, there’s an alternative that is good enough.”  

James Mooring:
The pricing scales well for all sizes of businesses we feel. So, we didn’t want to make our pricing complicated, “You have one user, you’d pay this. You have five users, you pay that.” I just wanted the billing to be super straightforward. So I feel like our price point, maybe we could charge more for smaller businesses. But then if you have say 20 users or 30 users, it does start to get quite expensive each month. So we charge the same for all sizes of businesses at the moment, and we’re comfortable with that. Could we charge more? Maybe, but I guess you don’t know until you actually try it, right?  

Rob Walling:
So you end 2022 at just under 9K, you end 2023 at almost 60K MRR, so the story continues. Did anything change? Did you do anything differently during ’23 to get to that? I mean, you’re 6x, you’re approaching a million already. Was it more the same? Or was there anything during that year that just lit a fire under the growth?  

James Mooring:
I think because we had such good word-of-mouth, our reach was kind of exponential. The more users we had, the more people that were talking about our product, the more people that would see that. So, it was kind of like a self-fulfilling hamster wheel in the sense that we just got more people really enjoying using the product and they would tell two people and then they would tell two people each. So that kind of grew, our user base, quite quickly. 

We also did some offers, three months free, we did a Black Friday sale, so that stuff sort of drove our growth. And we always ask ourselves, “Would they have joined even if we didn’t do those offers?” I’m not sure. It doesn’t really matter now. Funnily enough, we only made our first hire in October of that year. I think more people were just talking about the product and, of course, we were adding more and more functionality that we needed as well. So, we were kind of growing the market that we could sell to.  

Rob Walling:
And this is something I want to call out to someone listening. This is the reason that, at the beginning of this year when I made predictions for 2024, I said vertical SaaS and, later added, orthogonal SaaS, which is like role-based or title-based, will continue to be incredible places for bootstrappers. We’ve kind of been seeing that over the past few years but even more, and there’s reasons for this and you’ve pretty much enumerated all of them. One is that word-of-mouth in small verticals is like wildfire, way more than… The examples I always bring about horizontal SaaS are like SignWell and SavvyCal, right? Word-of-mouth can be fine, but it’s not wildfire in those spaces, versus Gymdesk and Astalty where it travels real quick. 

The other thing is the folks in these verticals hang out in the same spaces. They’re in the Slack groups, they’re in the Facebook groups, they’re at the same in-person events. If they have a trade publication, a magazine or something, it goes to 50,000 to 100,000 people. It’s very small in the scheme of things. It’s not so big. In addition, marketing in these spaces usually is either not that expensive or not very well done. You’re not competing against Google, Microsoft, Facebook and Netflix. Netflix [inaudible 00:24:21] an example. But these other companies, if you were building a Google Docs competitor for example, not only does your product have to be incredible because these horizontal products are usually pretty good or have a lot of features at least, but your marketing has to be that. Astalty’s in the NDIS provider space, the space I had never heard of, before looking at your H1. 

And then pricing’s the other one is usually you can just charge a lot more. If I’m buying Microsoft Word or competing against Google Sheets, you know that the price goes to zero. If I build Microsoft Word for academics who write in Hebrew or whatever, I should charge 10, 20 times Microsoft Word at least. You, in this space of like, “Well, couldn’t someone use Basecamp or Salesforce to do their NDIS?” You know what I mean? It’s like, “Aren’t there horizontal tools?” Yeah, probably, but you should be able to charge… For a specialized tool, you have pricing power because you’re not a commodity. Whether you can charge more or not is one part of the question. But the other one is that you do in fact… Your pricing is not going to zero.  

James Mooring:
Yeah, and there’s two really important things that we did that you just mentioned. So the first one is that we actually go to in-person events, which is probably an important piece that I missed. We were aware of these events and, essentially, the person… It’s kind of like a speed dating setup. You sit down, there’s a circle on the other side of the table and they all rotate. You give five minutes to sell your thing. The customers on the other side were kind of like 80% our ideal customer, and we were thinking, hopefully they’re not listening, “Why none of our competitors going to these things?” So we started going and they have been fantastic because we could actually demo the product right in front of them and our product was the best marketing that we had. So, that was another key to our success. 

And the other thing was around Facebook groups. So, a lot of these businesses do hang out in Facebook groups. I really remember in the early days, people would go into these Facebook groups and we’d search for the keyword software and we’d think, “I wonder if anyone’s asking what software to use.” So many people would be, “What CRM are you using? What software are you using? How do you handle your invoicing?” and they’d be saying all these different companies. And Jona and I said, “Wouldn’t it be nice if that was Astalty getting talked about there?” 

This happens fairly frequently now. Three days ago, somebody asked, “What software should we use?” And I think there was 22 comments, and 20 out of the 22 were Astalty. And not just Astalty but, “Astalty is great. I wish I went to Astalty earlier. I talked to Astalty, the support is amazing.” So all of our reviews are actually more… And if you look at Google as well, all the reviews are really in depth. They take the time, and I feel like that’s a very good indicator that people enjoy being here and just being part of the Astalty community and network.  

Rob Walling:
Yeah, and that’s great to have that. Here’s the assessment I asked Jason Fried years ago on MicroConf like, “Why did Basecamp work?” And he said, “Luck and timing were one and two, but we also did a lot of things right.” I don’t think luck and timing were one and two for you actually. I think the fact that you had a co-founder who really was deep in the space and that you’re obviously a gifted product person we’re probably one and two and I think you did a bunch. And there’s luck somewhere in there, and then I think you also did a lot of things right. That’s one of them of you said your support is lightning fast. I think your average response time is 45 minutes or something. You’ve obviously really cared a lot about your customers. 

Someone can listen to this and, any of these things individually, you can’t cherry pick these. You can’t say, “Well, I’m just going to do that one, and I’m just going to do that one and it’s going to succeed.” It’s like you need a lot of these in the same direction. And in yours case, we could pull some of these off and you still would’ve been successful. If your support was not amazing, you’d probably still be winning because I think your incumbents are just not great. I having never used them, I know what type of software that is. So I think some of these you could have left, but I think the combination of all of them is what makes a big difference.  

James Mooring:
I was just going to say on that point, in the early days, these all feel like one percenters and they feel like, “This is making no difference.” When a customer signs up and I call them, that’s not going to make a difference at all. But when you kind of compound that effort over months and years, then you see the payoff, and it’s not that hard to do. While you need to duck out, go to the grocery store, pick up the kids from daycare, jot down a customer’s number and just call them. How many times have you signed up to a software platform and got a phone call, not from a sales person, but just from somebody saying, “Hey, welcome to ABC product. If there’s anything I can do, just sing out.” I honestly can’t remember the last time, if any time, that’s happened to me. And that’s something that we do. 

So a lot of these things, people were just so refreshed because a lot of our competitors don’t have phone support. In the early days, we’re thinking, “This is going to be painful, but let’s do it anyway,” and they are painful in the early days and they feel like they’re not making a difference. But if you stick with it, eventually, if you invest time into your customers, they’ll give it back to you 10x, 100x in some cases.  

Rob Walling:
Before I move on to what I think will be my last question for you, I did want to call back to… You and I were just talking about in-person events and you were mentioning how valuable they were, and that would have been my guess actually. I don’t think it was in the timeline. You and I hadn’t talked about it, but I would’ve guessed for this business, negative churn, which you have, and in-person events. So I have these things, I call them the big five, B2B, SaaS marketing approaches and its content, SEO, cold outreach, integrations, partnerships as one, and ads. So I haven’t written on this thing, I refer to it all the time. But my next five depend on the type of business and it depends on the lifetime value and all this stuff. My next five are in-person events, free tools, so like engineering and marketing, podcast tour, affiliates, and Capterra or G2, and I separate those from ads even though they’re kind of same thing. 

The events one, when it works, it really works and it works usually in tight verticals and you need a high enough annual contract value to make it work. So, it definitely fits my kind of mind map of your type of business, of this vertical with a 50, $60 per seat price point with all that. It’s not surprising to me at all how valuable the in-person events have been for you.  

James Mooring:
Jona, my co-founder, he’s actually working really hard. We’ve just launched a partners and affiliates program as well. So we have a lot of consultants in the space, as you can imagine, being a complicated area. So now, we’re engaging with consultants and other businesses that have similar customer base and trying to partner with them. And we’ve got an affiliate program, refer a friend, we’ve got ongoing commissions where we’re kind of doing all these things now, which is again just kind of compounding on everything else that we’re doing, which is fantastic.  

Rob Walling:
I want to leave us on this high note of you did a very clever price increase, and I don’t even know if you would call it a price increase. The way you described it to me was I was like, “I don’t know that I’ve ever heard anyone do it this way.” I want to bring it up so that someone listening might think about doing it the same way. So we talked about how you had Astalty Pro or Professional, you still do, that is a tier of the software, $49 a month, and that’s how you’ve been for two years. 

So just a couple of months ago, in February of ’24, you launched Astalty Premium that was an early access, new price point, $64 per user per month, and you had built a bunch of functionality. You didn’t just want to throw it in the 49, so you built Premium. So not only did you get a bunch of people upgrading from Astalty Pro, but you said… If you go to the pricing page right now, it’s kind of hidden, it’s that you say, “We kind of hide Professional,” so you must be able to click a link and get to it or something so that actually most people are signing up at $64 a month and getting full functionality. Did I summarize that correctly?  

James Mooring:
Yep. Yeah, exactly. Exactly, and I think when we launched… Within the first week, 30% of our existing customers upgraded straight away.  

Rob Walling:
Interesting. So if you had gone in and just said, “Hey…” This is the hack, this is the cleverness, is you could have put all those features and all that functionality into Pro and then said, “By the way, we’re raising your price to 64 because we launched this stuff,” and guess what? Some people would’ve been cool with it and some people would’ve been really pissed, but you actually launched a separate plan that’s too close. $15 is too close. If you told me I was going to do 49, 64 as my price points, I’ve been like, “No, no, no. Move them far apart,” but you were kind of going for a incognito price increase. This sounds like it was pretty deliberate.  

James Mooring:
Yep, and the price difference was also very deliberate. We wanted it to be a no-brainer and Professional’s actually now $59 a month for new customers, so it’s only $5 extra, and we gave everybody on Professional a four-week trial. The Premium features are pretty sticky. You can generate contracts, you can send things for e-signing, you can track documentation. There’s a lot of things that are built in that are super, super valuable. And we said, “Well, let’s just give everybody four weeks to give this a go.” It’s kind of like once you get a taste of it, you don’t want to not have it. And then we kind of changed our pricing page. I think 98 or 95% of new customers signed up to the $64-a-month plan, which is fantastic. So, yeah, we kind of did a price increase without doing a price increase.  

Rob Walling:
End of this year, are you doing 79, 79 a month for Astalty Gold? Is that where we go next? Astalty Platinum?  

James Mooring:
79 was actually going to be the price point of premium and we thought, “Let’s bring it down and try and go for more volume,” and I’m very glad with did because I think 79 would’ve been a little bit too… Once you kind get up around the 7s, 8s, 9s, those numbers start to look a lot bigger, especially for bigger teams. When we launch the kind of next functionality, which is scheduling and rostering, we will actually have a cheaper price point for that because the user type is different. They’re only going to be on the platform a few hours a week, things like that. But it’s all about for us trying to make Astalty, not just the software, but through our partners, through our resources, through the software itself, through the support, just a place that you want to be. 

I use this analogy of not choosing the least worst option, and I think about tools like Slack as one of those. You choose Slack as the least worst option to solve that problem for you, right? And then, I don’t know if you know a tool called Linear, which is an issue tracking kind of like Jira. Whenever I use Linear, I think, “I enjoy using this software, I want to use this software,” and we want people to feel the same way about our software. And you can’t do that just through product or support or resources. You kind of have to have everything, “Come to us and we’ll look after you, whatever you need. If we can’t do it, we’ll let you know about somebody who can.” So, we’re just about providing value and I think people really appreciate that. It’s quite refreshing as well.  

Rob Walling:
Yeah. James, big congratulations on you and your co-founder’s success. You’ve built a heck of a business. I hope, as listeners have heard this, that they take a bunch of things away that you did a lot of things right and that you and your co-founder made smart choices. There was probably some luck involved in a few of them, but I think you would’ve succeeded with almost minimal luck because of all the things that were in place, like your founding team construction, I already talked about, developer plus subject matter expert. You backed off on building an entire CRM and instead you built just the support coordination piece of it. You limited the scope you marketed before you were coding, right? You built the Chrome extension. You built Astalty Lite as marketing. You picked what sounds like a market with kind of a big hole in it. You built vertical SaaS. You increased your prices multiple times. You priced well from the sell. You did a lot of things right.  

James Mooring:
I just want to kind of point out the other thing about doing things right. If you’re not (beep) things up along the way, you’re not going to get there. It’s more about being able to not be afraid of being wrong. If you get it wrong, change fast. And the speed of being able to iterate is super, super important. The quicker you can eliminate the wrong things to do, the faster you’ll arrive at the right things to do. So I think it’s kind of nice that we get to this point and everyone’s like, “Well, you did all these things right.” Now, sure. But when you’re going through that process, you do do a lot of things wrong, and that’s absolutely fine. If you’re not doing things wrong… That’s where you learn what’s not going to work. So, I think that’s just an important point.  

Rob Walling:
I like that a lot. That’s something Einar and I tell to our TinySeed companies all the time of like, “You got to move fast. You’re going to make some bad decisions, you’re going to make some wrong decisions, but you need to do a lot of things such that you work mostly on the right things.”  

James Mooring:
Like Ben Chestnut says, “Stab in the dark, but stab very fast.”  

Rob Walling:
Exactly. Super impressive, man. It’s a great business you built. If folks want to see what you’re up to, they can go to astalty.com.au. And is there anywhere else online that you hang out, to look for? I don’t think you have a Twitter account, but is there anything that… Is it LinkedIn where people could maybe keep up with you?  

James Mooring:
Yeah, LinkedIn is probably the best place. I’m kind of on Twitter, but not super active there, but certainly on LinkedIn.  

Rob Walling:
So folks who want to find you on LinkedIn, you are James Mooring, M-O-O-R-I-N-G, and you live in Australia. I don’t know how… On LinkedIn, what if there’s 25 James Moorings? How are they going to know it’s you? Oh, Astalty, right? That’s going to be the… You need one more piece. When I search for people’s names in Google and I’m like, “James Mooring Twitter,” and there’s like 20 of them, so then I usually throw in the company name and that gets me there. 

So James, once again, thank you so much for joining me on the show today.  

James Mooring:
Not a problem. Thanks. Really appreciate it.  

Rob Walling:
Thanks again to James for joining me on the show, and thanks to you for joining me this week and every week. I did a call for more advanced questions because obviously a lot of the questions that I get on the show are from folks looking to validate ideas, are just very early stage, and that’s fine. But I know that there are a lot of listeners to the show that are doing 10k, 100k, 300k a month or more. There are folks out there right now thinking, “Yeah, I’m doing a lot more than that.” And I don’t want to give the impression that this show is only for new folks just getting started. There’s so many people doing seven and eight figures in the MicroConf community, in the TinySeed community, and even in the Startups For the Rest of Us audience. 

So if you saw my question on Twitter, thank you for responding. I’ve got 10, 15 really good questions that are for folks who are building great businesses and not just about early stage stuff. And of course, I will continue to accept those and answer them in future episodes. You can always submit questions by going to startupsfortherestofus.com. Hit Ask a Question in the top and ask them there, or you can respond to me on Twitter. Thanks so much. This is Rob Walling signing off from episode 722.

Rob Walling:
Welcome back to another episode of Startups For the Rest of Us, I’m Rob Walling. I’m your host this week and every week. And in this week’s episode, Asia Orangio and I talk through 7 key takeaways from the 2024 State of Independent SaaS Report. There are many more findings or takeaways than just seven, and of course you can download the complete report at stateofindiesaas.com. But here in this episode, Asia and I talk through our thoughts about the report and some key findings. And without further ado, let me welcome Asia to the show. Asia Orangio, great to have you back on Startups For the Rest of Us.  

Asia Orangio:
Yes, thank you so much again for having me. Always a pleasure.  

Rob Walling:
So it’s been awesome working with you this year on the State of Independent SaaS Report. So for folks who aren’t aware, this is our fourth report that we’ve done over the course of five years, and we survey our entire … All the MicroConf, TinySeed, Startups For the Rest of Us audience. And this year we got, I believe you were just telling me it’s just under 700 usable responses, and that’s statistically significant. I’ve seen other reports done with 2 to 300 folks responding, and so these numbers start to have some meaning at that point in my opinion. But this year you helped do some data analysis and had some pretty interesting findings that we’re going to talk about in this show. 

Now, I do want to say one note before we dive in, is we talk a little bit about slides and visuals and such, and it’s because we have used part of this episode on the YouTube channel. And if you go to microconf.com/youtube, you’ll be able to watch this video and see the full slides. But if not, we did talk through the findings so that if it’s audio only, you should be able to follow. So I’m curious, from your perspective, State of Independent SaaS Report, what do you see as the value to something, to putting something together like this? Because you reached out and said, “I know you’ve done three of them, you’re probably going to do another one. Do you want some help with it?” And obviously that means you have an interest in it, and you feel like there’s some benefit to the community to have a report like this. So tell me your thoughts on that.  

Asia Orangio:
Absolutely. So I was just counting the other day, how many founders have I worked with over the last six years that I’ve been running to DemandMaven, and it’s over 100. It’s well over 100 if we count how many people I’ve advised, how many people I’ve just consulted just in a call. And I get so many questions about how am I doing? How am I doing a comparison to my peers? And also there’s tons of just market research data and reports like this about the SaaS industry as a whole. But when it comes to indie SaaS and bootstrapped companies and founders, there just is not nearly as much. And I’ve always looked at the State of Indie SaaS as like this is the report for a lot of my clients and I get so many questions that I just can’t answer because there is no stat, there is no … No one’s dug deep into this. 

And so I was working with a founder more recently and I remember he had really good questions about, “Okay, yeah, I know what the stats are for the average activation rate, for example, of average SaaS companies and PLG, but what about my peers and bootstrappers?” And I remember thinking, I don’t have an answer to that, but I would refer to the State of Indie SaaS a lot. And so I was very motivated by what are some additional questions that we can ask? What are some other data points that we can collect to help support founders? And I think this specific report was we leaned a little bit heavier on the operations side because I was getting lots of questions from founders about how to structure their teams, how to think about their tool set and what they’re using. 

And then also pretty much everyone I talk to is always wondering, “Well, what about my specific context?” So anyway, so that’s a little bit of backstory around the motivation and what I … Me kind of feeling like, well, I can’t answer these questions, but maybe I can. Maybe I can help get answers to this and clear a little bit of the fog and debunk some myths about what this looks like.  

Rob Walling:
And that’s the reason we started doing it actually, was for exactly that reason. I would see the state of SaaS or the state of venture capital or the state of this and the growth rates, if you don’t have 200% year over year every year, blah, blah, blah, you can’t … And it’s just like, well, yeah, that’d be nice, but that’s not the game we’re playing. And so I was talking it over with my team back in, I think it was 2019 when we first started talking about doing this. And it was like, “What would it take to do this? How hard would it be? And what are the questions that we want to ask?” And look, the data in this report is, it’s directionally correct. It is a data point, it is a lighthouse on the … It’s not the exact prescription or 100% infallible. It’s like any other statistic. It can tell a story and it can be made to tell different stories. 

But especially the first report, it was so eye-opening. I just had no idea what percentage of bootstrapped, mostly bootstrapped SaaS companies asked for a credit card upfront. I had a feeling that it was like X%. I remember I used to tell people, “I think based on TinySeed and MicroConf, like my gut is this.” And it turned out to be relatively close, but it was so neat to not just have to save my gut to actually be like, “Oh, here’s a screenshot of that page.” And then recently, it probably happens every four or five months, someone on X, Twitter will say, “What’s the most popular country in the world or city in the world for bootstrappers? Where are all the bootstrappers?” And it’s like, well, we have this data, at least for our bootstrappers, the 700 or so folks who responded. 

The tough part for me has always been naming the report. Originally when I first came up with it, I was like, “I want to call it the State of Bootstrapping.” That was this report. And then I realized, A, is it really bootstrapping or is it bootstrapped SaaS? So then I was like, “Well, it’s State of Bootstrap SaaS.” So then it’s like, okay, so can people who raised funding, let’s say they take a little bit of money from TinySeed, can they no longer respond? Because those are mostly bootstrap companies and I think they should be in the report because they’re in a similar community and a similar economic boat. They’re venture capitalists who will say, “If you’ve raised less than a million dollars, you are effectively bootstrapped.” That’s how they view it. And for me, usually the number is in the 250 to 500K. I think that’s when you start to transition and like, “Oh, you’re pretty well … You’re reasonably well funded.” 

So coming up with Independent SaaS is like, I had to coin a term to basically be like, how do I … Because I can’t say the State of Bootstrapped and Mostly Bootstrap SaaS. It’s too cumbersome. So anyways, but before we go on, if you want to go to stateofindiesaas.com, you can download the report that Asia and I will be talking through today. And we have each brought a handful of findings and I’ll say thought-provoking insights that have some of which are puzzling. And I’m like, I didn’t expect that. And others it’s like, oh, this is totally in line and this supports my view of the world. If you could pick one finding that it most supports your view and one that was completely surprising, do you remember what those might be?  

Asia Orangio:
Yeah, the one that just makes me feel very validated …  

Rob Walling:
I love it.  

Asia Orangio:
Is, it’s got to be the model. So I get tons of questions from founders about, “Okay, but what are the average growth rates?” Ironically enough, I don’t think that we asked … We did ask about activation rate, but we didn’t ask for the specific number, which to be fair, how you define activation rate is its own thing, which is why we didn’t do that. But when it comes to like LTV churn and month-over-month growth, a lot of founders have questions about, “Well, which model is ‘the best?'” And I think the answer at the end of the day is going to be, it depends. It depends on your market, it depends on what your product is, all those things. But the thing that still made me feel like yeah, was when it comes to freemium versus free trial and then within free trial opt in versus opt out or basically credit card required versus credit card not required. 

So when it comes to not requiring a credit card on the free trial, this is actually the model that I recommend the most to bootstrapped founders because you do get more data in, but not so much data like you would in freemium, but not so little like you would with requiring the credit card. And what we found, what was surprising to me was growth rate actually was much higher when you required the credit card. But when you didn’t require the credit card, it wasn’t as high of a growth rate and churn was also okay. But not requiring the credit card gave you two times the LTV, which made me feel like, okay, yeah, so more money in the pocket. But to your point, this is so contextually dependent, it’s possible that the people who responded who don’t require the credit card just simply have better monetization, they’re charging more, maybe they’re targeting an industry that they’re able to charge more. All of those things are certainly contextualized. 

And then I think the thing that also just kind of validated my perspective personally was freemium not being as successful, but I think that’s just because too many founders don’t know how to make it work. There’s not enough education about how to make freemium work and also what are the right contexts that you really should consider freemium, and then what are the resources you need to make freemium work? It’s a much different ballgame than free trial in general. But that’s what definitely made me feel validated. And then also low-key surprised me. I would’ve expected not requiring the credit card on the free trial just would’ve been way better, but it actually technically wasn’t on the month-over-month growth side, but it was on the LTV side.  

Rob Walling:
And so for folks to have context, we are running this State of Independent SaaS survey every two years and we kick out the report a few months later, and as I said earlier, if you go to stateofindiesaas.com, you can view and download the report for yourself. And with that, let’s dive in to some of the findings. You and I are going to go back and forth with findings that we pulled from the report. Let’s dig in to your first finding. We are going to each have four that we’re sharing today, but talk to us about founder count.  

Asia Orangio:
Yeah, okay. I love this topic of conversation because, well, first and foremost, solo founders, of course, you guys out there, you’re already making growth waves, you’re already doing the thing. And on average and also the median, we typically saw on average it was around 17% month-over-month growth. When it came to the median, I think most … So just for context too, median represents more of the, this is what most people are probably experiencing, and the average of course is the number that you get after looking at the entire dataset. Even still month-over-month growth, still looking pretty good. What I think is interesting though is there’s a little bit of a very slight diminishing return on the average when you look at founder duos, meaning there are two founders. 

But what I think is fascinating is once you get to founder trios, meaning there are three co-founders, this is when you start to see around two to three X average growth month-over-month. And I think that this is so interesting because I think the connotation of a trio is that maybe it goes a little bit slower, but actually I think having the third person probably … My hypothesis is that the third person probably breaks a lot of ties, so to speak. However, there are diminishing returns. Once you get to four or more, we start to see a dramatic drop-off when it comes to average month-over-month growth. Not that it’s terrible or poor or anything, it’s just not maybe as efficient as some of the other growth rates month-over-month. But I still think it’s really interesting.  

Rob Walling:
This has been relatively consistent since we started asking this question over the … Because this is the fourth report that we’ve done over five years, I think, and I’ve noticed this pattern in each of them. We could go back through the others, but I believe for some reason, and I’ve never been able to explain it, that why three founders perform significantly better than one, two, and certainly than four. I’ve always been … With bootstrappers, we have the numbers in the report, I forget if it’s like 70% of mostly bootstrapped SaaS are single founders. It’s like a huge chunk. And then another 15+% is 2 founder companies, and that’s just the most common. I mean, that’s the lion’s share, 85%. 

And the more you get, I’ve seen four co-founder bootstrap companies, usually there’s a weak link is what it is. Usually there’s someone who shouldn’t, by my judgment, shouldn’t really be part of it. And you get too many cooks in the kitchen and people can’t, like you said, can’t break the ties, decision by committee. There’s all kinds of stuff. So it makes sense to me that at four, it’s too many. But I’ve always thought like, well, three is probably too many as well, but that’s not what our numbers have shown us each year.  

Asia Orangio:
Yeah, yeah. I would’ve assumed that more than two and you would start to see declines.  

Rob Walling:
Me too.  

Asia Orangio:
No, I was surprised as well. Way back in the day, I actually worked in-house for a company that had three … They had three co-founders. And I never would’ve guessed though that statistically speaking, at least in this dataset, it would imply the opposite. But it makes sense. But I remember the CEO at the time saying three was actually perfect for them because two can sometimes spend a lot of energy trying to make decisions, but not really going anywhere. And so the third person, especially if they were a strong force of nature so to speak, they were able to create momentum by again, tie-breaking, lots of tie-breaking, lots of like, “Okay, what do you think?” And then it’s like, “Okay, well I think it’s this” and so there’s actual momentum that happens. That’s the hypothesis. Of course, we don’t know exactly why, but yeah, I was surprised too, but two to three X is a lot. It’s a pretty big difference. Even on the median, it’s two X, which I think is really interesting. So that just tells me that this is something definitely to pay attention to and to think about.  

Rob Walling:
All right, for my first finding, we asked, “When a potential customer registers for a free trial, does your company request a credit card number to start the trial?” And what we looked at in this case is over the course of the 4 surveys we did from 2020 to this year’s 2024, and the findings are that the asking for a credit card upfront has increased and then decreased again. So the first year it was 73% asked for credit card upfront. Then it went up to 78%. 78% in the next one. And it’s down this year to 71%, so about a 10% drop. So it’s not precipitous, but I am curious, Asia to hear your thoughts on in the space, especially with bootstrap founders that you talk to, do you feel like the goalposts are moving for A, free trials, B, freemium and C, credit card upfront? Maybe start with credit card upfront because that’s what this slide is about, but have you seen that goalpost moving over the past several years?  

Asia Orangio:
Absolutely, absolutely. And there’s actually, we’ll get to this in a second, but I think that there’s some very real proof behind why more and more bootstrap founders are leaving behind requiring the credit card upfront. Yes, with the founders and the companies that I work with, absolutely. I think there’s a little bit of aha moment coming. It feels like there’s a communal aha moment happening around the opt-out credit card requirement or the opt-out free trial, which basically means you’re requiring the credit card. I think there’s a lot more movement towards opt-in free trial, and I think we’ll probably also discuss a little bit about freemium as well, but definitely, I’m absolutely seeing this. I have some hypotheses about why, but we’ll get into that in, I think, in one of the future slides that we’re going to cover.  

Rob Walling:
Yeah, my default has tended to be if I don’t have any other information, I ask for credit card upfront because usually I want to narrow the people who are going to try the software to folks who are actually interested and I think might pay. Now it depends though. It depends on the space. If the person who’s going to use the software is different than who’s going to pay for it, probably not the best idea because they don’t have a credit card. If a software developer at a certain company is going to use it but doesn’t have a credit card, then obviously you might need to allow free trial without a credit card. 

The thing, the mistake that I’ve seen folks do is either enact freemium where they then have the bootstrapping and using freemium where they push revenue down the line and maybe they don’t have the criteria in place to do it. But also then they get a lot of noise, especially in the early days. And similar with removing credit card, you can get more people in, you can get more feedback, and that’s the pro. The con is you get more people in and you get more feedback. And depending on how well you are at dealing with that, if you’re a first timer, that can be completely overwhelming. And so when I say I default to it, I mean it’s like a 60-40 for me. It’s not an always, never, but it’s like with no other information, that’s what I do. However, I think there’s a lot of leeway here for it to go up and down.  

Asia Orangio:
That’s so interesting because I’m the total opposite.  

Rob Walling:
Is it to get more data? What’s the reason that you would go with not having a credit card upfront for a free trial?  

Asia Orangio:
If you already have a really dialed in sense of who your customer is, then I think why put the limits on the free trial? And also I find that when you are able to get a little bit more information, I just feel like assuming that you have help and that you have experience in this, I’m actually very confident in my ability to detect, okay, who’s actually qualified? What do we got to do to activate people? 

I think to your point, if you’re less confident in your ability to do that, then yeah, require credit card upfront. Once you get to 10, 20, 50 paying customers, I think that you can take the credit card requirement off and create more of a pipeline for yourself. But again, the assumption is that you’ve got a pretty dialed in understanding of the customer. Considering that’s literally what I do, I’m pretty confident in like, okay, yeah, we don’t have to require the credit card upfront. Yes, I do think it makes sense though if you’re very, very early, may very new, first time founder, also new to SaaS, then requiring the credit card upfront will be a really good litmus test. So I see a lot of value for sure in that.  

Rob Walling:
Yeah, that’s the key is I was referring to, if you don’t really know your ICP yet and you’re still trying to figure it out, so that’s the difference. Yeah, once you know your ICP, you’re driving traffic, your ideal customer profile for those listening or watching, that makes sense. I think we’re on the same page. All right, Asia, let’s talk about target market.  

Asia Orangio:
Yeah, this might sound really obvious, but I think that this slide just illustrates it and makes it visual for people because the market that you ultimately decide to focus on is going to have a huge impact on your growth rates. This also might not be that surprising when I say, but if you are targeting enterprise companies, traditionally speaking, your average month-over-month growth rate was probably like in the 26 or so percent. That’s pretty high actually for a company. That essentially means that you potentially more than double year over year, but there are some trade-offs depending of course on who you target. So for example, if I look in this chart here, towards the end we see consumers, so on average month-over-month growth rate looked closer to 5% for consumers. Government was pretty slow, 1.75. Now keep in mind this is the average. The medians reflected something very similar. 

But what was also interesting was depending on just how people respond to the survey, if they selected other, which to be honest, I was kind of having a hard time of what would other be? But if you were not really targeting any of these ideal customer types, then you probably saw contractions in growth. This could actually be due to a lack of focus. This could also just be maybe there are some consumer customer categories that just don’t fit within this model. But at the end of the day, who you target from a business perspective is going to have a lot to do with how you grow. That should be both … I think it should be seen a little bit as, I don’t want to say blessing and curse, but almost like setting expectations for yourself. So if you’re targeting, if you’re going B2C, if you’re going consumer, just have an expectation that growth might look a little bit different than if you’re B2B targeting enterprise or even mid-market. 

SMBs fell right in the middle, which probably not surprising. So if you were targeting small businesses, your average growth rate probably looked around like 12% month-over-month. But overall though, something to keep in mind. But yeah, Rob, I’m curious how you see this and how this reflects for you.  

Rob Walling:
Yeah. So for context, the top three fastest growing target markets are enterprise and mid-market, which is slightly smaller than enterprise, and NGOs or non-government organizations. I’m a little surprised the NGOs are there, but it is what it is. So those are the top three, which the first two certainly line up with my experience of at least having a dual funnel with enterprise and mid-market plus SMB. But with the TinySeed companies, we see the ones with the bigger ACVs, the ones with the bigger average revenue per account, per month, or per year do tend to be the ones that grow faster. On the bottom end, the bottom four are totally in line with what I would think. Aspiring entrepreneurs, education, selling into schools and academics, consumers, and then government. And yeah, none of those are really surprising to me.  

Asia Orangio:
Yeah, yeah. NGOs though, that makes me think that those software companies are solving a very big problem for them. That’s what makes me think that NGO is doing so well.  

Rob Walling:
I think the NGOs are probably enterprise or mid-market companies is my guess. We’ve broken them out because people … We used to have, well, we do have other, and people would write in NGOs, that’s our target market, and so we included it. But if you think about it, a lot of non-government organizations are actually large businesses and I think the first three all line up. 

So for our next one, we asked, “Do you plan to seek outside funding for your company within the next 12 months?” And I am glad we started asking this. I think we’ve only asked it for two years, but it was insightful for me the first year to realize this really gets sent out to the MicroConf, TinySeed, Startups For the Rest of Us ecosystem, which frankly, it’s mostly bootstrappers. It’s overwhelmingly folks who want to bootstrap and that’s fine. That’s okay. 

What I was surprised by was in 2022, 30% of respondents said they plan to seek outside funding within the next 12 months, and then in this year’s report it’s down to 23.5%. Now, a couple thoughts on that. 

Number one, it’s interesting that across all the TinySeed companies that we funded, somewhere around a third of them wind up seeking or raising additional funding. So that one third number, it seems to be something. This is even for companies who’ve taken an accelerator round from TinySeed. 

The other takeaways from year to year, if you heard me say 2022 is 30% and 2023 was about just under 24%. So there’s a decrease of 20, 20 something percent. I think that’s due to the funding environment. I’ll say this, the 2022 results were actually surveyed in fall of ’21 when things were still gangbusters. It was so easy to raise funding, everyone was thinking about it, everyone was doing it. The valuations were high, there [inaudible 00:24:14] going on, there was crowdfunding going on, all kinds of stuff. So I do think there was more of an appetite because it was just easier, money was cheaper. And this year’s survey taken, what? A couple of years later because we skipped a year in between is down to about 24%. And I’ll admit that’s just not that surprising. I think with funding being harder to raise kind of makes sense. You bootstrap until the money’s available and if the money’s never available, you just keep bootstrapping.  

Asia Orangio:
Funding being harder to raise, but then also terms not nearly as appealing as maybe they once were.  

Rob Walling:
There you go.  

Asia Orangio:
And then also I think there’s just like a … What was the quote from MicroConf most recently? “The exit strategy is death.”  

Rob Walling:
Yeah.  

Asia Orangio:
I think the culture is culturing when it comes to bootstrap in general. Yeah. But I also think it speaks maybe a little bit to the mental resilience of bootstrappers. I think a lot of people are learning about how to grow sustainably and also being maybe a lot more discerning about when does it make sense to get funding?  

Rob Walling:
And Asia for your next slide, we have a battle of the models. Talk us through this.  

Asia Orangio:
Oh yes, okay. It is one of my absolute favorite debates and it’s just because there isn’t really a right or a wrong answer, but the data is going to show us a couple of really interesting trends. So basically there’s of course offering freemium, then there’s the free trial. You can do opt-in free trial, which basically means that you don’t require a credit card upfront. And then there’s the opt-out free trial, which means that you do require a credit card upfront, you have to opt out of it. So when it comes to growth, churn and LTV, which we’re going to look at in here in a second, when it comes to growth overall, so what we find is free plans and free trials that do require a credit card, we’re going to see on average at least 10%. And for free trial credit card required, it actually is the highest. So 14% month-over-month average growth for companies that do that.  

Rob Walling:
Yes.  

Asia Orangio:
So requiring the credit card upfront does have a pretty big impact when it comes to initial upfront growth. And then not requiring the credit card had the least amount of month-over-month growth. This was about 7.6, we’ll call it 8% on average. And at first blush, that may seem like, oh, CC required for the free trial is the obvious answer and then maybe after that freemium. But not necessarily because now we have to look at churn. So for churn for the free plan, this was absolutely fascinating, but basically your month-over-month growth average, while it might’ve been 10.4 or 5%, churn was the same. It was almost 11% month-over-month average for churn. So basically freemium tended to see if you offered a free plan, you probably saw a little bit higher churn as well. 

When it comes to the free trial credit card required, the average for the month-over-month churn was 5.5%. Now, this was actually shocking to me because traditionally speaking, we tend to see really high churn numbers when you require the credit card upfront because people forget to cancel and they email you and they’re like, “Oh, I forgot to cancel. Can you cancel my thing?” And then ProfitWell and a lot of other subscription metrics will actually count that as churn, even though they might’ve just forgotten. So I was actually shocked to see that the average was about 5.5% on credit card required. 

And then finally not requiring the credit card on the free trial, 6.34, so a little bit higher. Now again, that might make you think, oh wow, not requiring the credit card on the free trial is the worst one. But then we’re going to look at LTV. But first I’ll pause here. I’m so curious, Rob, your gut reactions to this.  

Rob Walling:
It’s tough because it is averages, but my gut feel is typically that folks who are asking for credit card upfront, I would think that the churn for the first 30 or 60 days would be higher. But if they have their stuff dialed in, then beyond that, as long as they’re getting ICP, their ideal customer profile in because they are gating it with a credit card, kind of makes sense. That’s why I say it’s my default. Again, it’s a default. It’s a rule of thumb. It’s just a thing that I lean towards. So it does kind of make sense. It really makes sense to me that free plan, meaning freemium has, I’d say lower growth, but that the churn is high, which I guess this isn’t churn from the free plan. This is churn from the paid plans, which almost tells me the business is broken. 

And that’s the thing. Just bootstrappers using freemium in general usually means they don’t know what the (beep) they’re doing. That’s been my experience. You know what I mean? And I don’t mean that … I use that bad word only to imply that I just see it too often. It’s the same thing. People want to do B2C, they want to bootstrap a two-sided marketplace and they want to have freemium. I don’t know why they’re drawn to this like moths to a bug zapper, but it really is the most common questions that I get. I’ve just stopped taking these questions on the podcast. So the freemium part, kind of being a train wreck and the business being on fire, that makes a little more sense. The fact that free trial with credit card required performs better, at least with these averages, I think is in line with my experience, but it doesn’t … More questions to be asked is how I feel about it.  

Asia Orangio:
This is where I would say the story flips a little bit. So LTV, ultimately what that KPI speaks to is the lifetime value of the customer. So for as long as they spend with you, how much actual money do they spend on average across their entire experience with your product? And what we found was while the free trial credit card not required, certainly did not look as appealing month-over-month growth-wise or even churn-wise, what we found was it actually would have on average two times the LTV versus other plans. So for context, free plans and freemium, we saw an average of three K LTV. When we looked at credit card required on the free trial, it was about 3.6K LTV. Free trial and credit card not required, 6.5K, so easily 2X over freemium or free plans, and then of course a slight bump over the free trial credit card required. 

What this tells me is that while businesses might choose the free trial where the credit card is not required, what they’re basically trading off is faster, maybe upfront, month-over-month growth for basically more money in the pocket, which I don’t think you can be mad about. However, that’s not to say though that requiring the credit card upfront is not a good option. If anything, this makes me think that maybe monetization is a little bit broken for companies that tend to do the credit card required upfront. And then for freemium, it’s exactly what you said before. I think a lot of founders just don’t really understand how to make freemium work. How do you make it do the thing? But it also could speak to lower pricing plans and charging less in general because you’ve got freemium as your starting point. So it could also speak to that as well. So maybe monetization is a little bit broken here as well.  

Rob Walling:
Yeah, this one’s interesting for me because in our last slide we looked at growth rate and free trial with credit card required was growing significantly faster month over month than the others. But free trial credit card not required has significantly higher lifetime value even though the churn is higher. So it implies that without credit card required, that basically they’re charging more. I mean because for the LTV to be higher with higher churn means they have to be charging more.  

Asia Orangio:
Charging more, keeping more, I think, too potentially.  

Rob Walling:
This is where data can be made to tell a story because Asia and I could go on Twitter, X and we could say, “Well obviously based on this slide you should not ask for a credit card and we have data for it.” We could flip to the slide before. We could say, “Obviously by this slide, free trial credit card required allows you to grow faster.” And I won’t say it’s apples and oranges because they’re related, but it’s unclear. And honestly, this is why the answer is it depends. It really does depend on your space. It depends on your customer type, your ICP, it depends on your stage. If you’re $2,000 MRR versus 200,000 MRR, you have to take the data you can and the data you have and you use it to your advantage. 

And for our last slide, this one will be quick. I just like looking at it because the question we ask is, “Please select up to three advertising channels that have most significantly increased your revenue.” And the number one, 65ish% is Google AdWords. Number two with about half that, so around 30ish is Meta or Facebook ads. And then next is other, and fourth is LinkedIn. And every year I’m always like, I think Twitter ads are going to do something at some point and they never do. They’re always so far to the right. It’s like that Twitter ad ecosystem is terrible. Usually though I would expect LinkedIn to be third. Just in broader experience, it’s like it’s Google AdWords, it’s Facebook and it’s LinkedIn would be my top three that I would recommend to founders, B2B SaaS founders. 

The issue though is the LinkedIn ad tools are not great, and that’s what I’ve heard. And so TinySeed has invested in [inaudible 00:33:06], which is a SaaS that sits on top. It helps you manage and deal, basically get around LinkedIn’s crappy ad interface. You heard me say that, that’s not their marketing, that’s me just saying it’s pretty rough. The ad tech of LinkedIn is significantly behind Meta and AdWords. 

The thing that I want to dig into, and I wish I had this data with me today, is other advertising. I don’t exactly know what that is, and I bet we had a text field that people entered stuff. I’m curious if other advertising is advertising on podcasts, advertising or sponsoring events or display advertising. I can imagine those being an other. And so the fact that it’s ahead of LinkedIn might be just that it’s so varied. There’s so many different options that people kind of bucket it all in one.  

Asia Orangio:
Yeah, the LinkedIn thing is also not surprising to me. I think in order for LinkedIn to work, you’ve got to be targeting an audience that just actually lives on LinkedIn. I live on LinkedIn, that’s where I hang out now. So I’m not surprised that Meta, which includes Facebook and Instagram, I’m not surprised that Meta beats LinkedIn. And then of course Google AdWords. I mean this is bottom of the funnel keyword searching. Not shocking at all here. But yeah, LinkedIn, that’s awesome having the thing that sits on top of it. I agree, because it’s trash.  

Rob Walling:
Asia Orangio, if folks want to keep up with you on X, Twitter, you’re Asia Orangio and demandmaven.io if they want to find out what you do on a day-day basis with your growth consultancy. One of the best in the business. Thanks so much for joining me.  

Asia Orangio:
Thanks again for having me.  

Rob Walling:
Thanks again to Asia and DemandMaven for working with MicroConf to help produce this report. Again, stateofindiesaas.com if you want to download and check out the report. And let’s connect on X/Twitter. I’m @RobWalling, once again signing off from Startups For the Rest of Us, this is episode 721.

Rob Walling:
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Welcome back to Startups For the Rest of Us. I am Rob Walling, and today, I’m joined by Craig Hewitt, the founder of Castos and the host of the Rogue Startups Podcast. In this episode, Craig and I talk through several topics. One of which is prioritization, and we went pretty deep on that, both prioritizing things from a marketing or growth perspective, in general when you’re working on a startup, how do you think through what’s a framework for prioritization, and also, we talk how to prioritize balancing work and life. I also talked to Craig a bit about what it’s like to be a founder and to start doing some coaching of other founders, and we also talk about what it’s like to have a podcast with a co-host and then suddenly be a solo host. 

Before we dive into that, you should check out MicroConf Connect at microconfconnect.com. This is our online community and forum. We host it in Slack and we’re approaching 7,000 members. They’re bootstrapped and mostly bootstrapped SaaS founders. Recent conversations in Connect, including a debate about magic sign-in links, how long you should spend diving into a niche before deciding on the product offer, how to safeguard your product from misuse during free trials, at what point in your journey should you invest in a conference booth and more. It’s a vibrant and highly moderated community, very high signal to noise. 

If you’re looking to find and hang out with other misfits like you and I, head to microconfconnect.com. It’s a great episode today. I hope you enjoy the conversation. The Craig Hewitt, thanks for joining me on the show.  

Craig Hewitt:
Yeah, man, thanks for having me.  

Rob Walling:
I hear from a lot of folks that they really enjoy the episodes of Startups For the Rest of Us that you’re on, so it’s good to have you back.  

Craig Hewitt:
Yeah, man. Likewise. It’s not a lot of opportunities to riff and BS on startup stuff, and you’re one of my favorites to do it with. So, this is awesome.  

Rob Walling:
Yeah, thanks. Yeah, it’s nice to go deep with other folks that you have chemistry with. This is what people tell me about these types of episodes. There’s the Derek Grammer and the Rubin, where it’s like you just have a rapport is what they say. You have a common language and you get there real quickly and you go deep really fast on things because there’s not a presupposition of, “Oh, I need to be really polite and walk on eggshells here,” or “I can’t say what I really think.” It’s like, “No, we’ve known each other for a very long time.” Oh, more than a decade. It’s probably like 10, 12 years, I would think.  

Craig Hewitt:
I think so, yeah. Yeah.  

Rob Walling:
So anyways, I came up with a few topics to chat with you about and then I realized that last week I had some success just tweeting out, “Hey, what do you want me to talk about with Derek Grammer?”, who was on the show a couple of weeks ago when this airs. So, I did the same thing for you, and what I thought was funny was you responded with one of my favorite topics. I was like, “Wait, the guest responded with the topic.” So your tweet said, “I want to talk through how you think about prioritization both from a marketing growth perspective, but also work-life balance and stuff outside of work with only so many hours in the day.” You want to give more context around what you’re thinking there.  

Craig Hewitt:
Yeah, I think part of it stems from just being a busy founder, have my own podcast, have content I’m doing, have a family, try to take care of myself and exercise, and try to have a garden. It’s summer and find myself looking at the calendar sometimes just being like, “This doesn’t add up.” So something’s got to give and I sometimes think I’m not doing the “right things”. So, I think that’s more so it’s like there are enough hours in the day if you prioritize the right things, and that’s within the eight hours of a workday and that’s within the whatever, however many hours we’re awake during the week. So, I don’t know. I would be very curious to hear how you think about it and I can share a little bit of what I think too, if that would be helpful.  

Rob Walling:
Yeah, for sure. I think we should both dive in on it. There’s a few things here. There’s a quote that I had in a talk one time that resonated with a lot of people, and I’ve said it a few times, but in your personal life, money saves you hours. In your business, money can save you years. What that means is if you have money in your personal bank account, you can pay someone to mow your lawn, your dishes, do your laundry. We have someone who comes to our house 5 or 10 hours a week and does errands and does basic stuff, $30 an hour, and then they’re local. They handle all kinds of returns and just anything you can imagine that an admin can do in person. It’s a hundred something dollars or 300, whatever it is. 

Sherry and I are two busy working professionals. We both have successful businesses for us at this stage that I’ll just say it’s a rounding error compared to we’ll go out to a really nice dinner with friends and spend that. So, it’s like that’s something that, and I’m getting it. I’m not saying everyone in the audience, you have $300 to waste on an assistant who comes in, but it’s like at a certain point, even early on, I started paying someone to mow my lawn. I remember I had friends who made fun of me for that and said, “You don’t want to put in the hard work,” or like “Oh, you’re a real bougie now, aren’t you?”  

Craig Hewitt:
Sideways.  

Rob Walling:
Yeah, these were the friends that I had to distance myself from to become an entrepreneur because they had this old script. Let’s say I was 25, 26 and I was making $60 an hour as a developer hourly. It was contract. I could work 10, 12, 14 hour days back then and I would get paid for 10, 12, 14 hours a day times 60. So, really the math was there. So, instead of me buying a lawnmower, maintaining it, and doing all this stuff, I would do that. I started hiring more out and I was really guilty about it for a long time of like, “Am I wasting money? Because I could just go do that on the weekend.” Same thing with cleaning my house, that was a tough thing for me to get over. 

So, that’s a very basic first one, but I think people don’t delegate or outsource enough in their personal lives. To be honest, man, is it easier to find someone to come into your business and do support, customer success, and train them on that, or is it easier to find someone who can run errands and do laundry and do a few things and the cost might be similar or less? So that’s a super tactical one to start with, but I want to toss it back to you in the sense of how you think about trying to prioritize these things.  

Craig Hewitt:
Yeah, so totally on the money buys you freedom or time. Dan Martell’s book, really good, Buy Back Your Time. I know he’s been on the show, really, really good book from a business perspective. I’ve been on and off with assistants. Actually yesterday, two days ago, I signed back up with Zirtual. That’s how I had my assistant before, signed back up with them. I think they started like 500 bucks a month for 12 hours a month, so a couple hours a week. For me, it’s just like, “Can you take care of this notice from the State of Virginia that I literally have no idea what to do? Can you just please go take care of this?” They’re pretty senior level folks to where you can say, “I just don’t want to think about it until it’s done please. Here’s the SOP and the documentation, but solve this problem for me.” 

Outside of work, what I have tried to start doing is just less. Instead of just saying, “How can I possibly manage all these things?”, I’m just like, “I’m not doing that.” A good example is I was going to CrossFit for a while and it’s a really great workout at 44 now. It’s maybe a little too much for my old ass, but one of the challenges was it’s at 5:00 or 6:00 in the morning. So, then that’s very fixed and the rest of my day has to fit around that. So, I’m like, “No, because what I need is a thing that can fit around my schedule.” So it’s like let’s break down the rigidity and the barriers to where I can just do my stuff whenever and however I want. 

So, I think that it gets at the same concept is like how can I bend the reality to fit more what I want? That’s been away from work. Something I’ve really tried to do is just optimize for convenience as much as possible. We haven’t gotten someone local, but that’s probably the next step is get somebody a couple hours a week to help with the house or stuff and groceries and things like that.  

Rob Walling:
So I actually contacted Zirtual and four other VA agencies and said, “Do you have anyone? I want someone local and I want an EA level person, but I want them in Minneapolis,” because I want them to be able to do the stuff you’re saying, which is this tax notice. Or I got something from my insurance company the other day, and again, it’s like, “I need you to make a phone call and I need you to figure this out,” or “I need you to change this plane flight. It’s going to be like 30 minutes on the phone with Delta. Can you just do it? But I also want you to be able to run these errands because there’s just enough in a week with us around.” 

We actually found a friend of a friend who’s doing it for us now, but more than that, I like what you said, it’s not just about hiring stuff out. It is about doing less. This is the thing I realized is again, going back to when I was 25, I would sometimes code 12 or 14 hours a day because it was just like, “I’m going to make money because I need to make money to pay the rent and to be self-sufficient.” Sherry and I were married already at that time. Then as I started becoming an entrepreneur, I transitioned into that mode where I’d work all day and then I would entrepreneur all night till 1:00 in the morning or something. So, I would work a lot and then even as I became an entrepreneur, I was like, “Well, I will just grind it out. That’s how I will win.” 

That was perhaps a good choice early on, but there’s a question mark on there because grinding it out and working 12, 14 hour days, which again, I did as both a contractor and then doing products for a while back when I had time, no kids, all this stuff. I worked on a lot of the wrong things. I wasted so much time, so much time. I mean probably half my time was wasted, maybe more where I just didn’t know what I was doing. I wasn’t asking for advice. I wasn’t following rules of thumb, didn’t have a plan. I just flailed around and did the next thing because I was like, “Well, I’m going to keep working. I’m going to keep working. I did stuff.” It took me a very long time to hone that ability to say no to a lot of things and pick. There’s no one right thing to work on.  

Craig Hewitt:
There’s a whole lot of wrong things.  

Rob Walling:
But there’s a whole lot of wrong things. If there’s 100 ideas, there’s probably like three or five that are probably in the 80, 90% correct. It’s in this direction. How do you identify those? How do you do that? Do you think about it?  

Craig Hewitt:
Yeah. So, I have a really good one there. So, this is on the work front. I have several people that I work with, I actually wrote about this in my Founder Insights newsletter last week. It’ll show up as a blog post on craighewitt.me if you want to go check it out. But what I’ve started doing is really leaning into having several different coaches in my life. So, I have a wellness coach from My Body Tutor. Amazing. Check it out if you haven’t. I have a sales coach now and I’m a sales guy, so I should know what I’m doing. But I think it’s a testament to even if you are the subject matter expert, having an objective third party unbiased person to bounce ideas off of and say, “Hey, I want to grow this part of my business. What do you think about this or this or this as an approach?” 

They with probably a whole lot more experience and context and perspective would say, “Well, obvious just do this.” Then I have a founder coach who at a higher level strategically, I’m able to say, “Hey, we want to do this,” or “We want to acquire this company,” or “We want to raise more money or whatever.” He’s able to really give me the same really honest feedback. So, that’s something I’ve really benefited from a lot in the last year or so is just not putting all the pressure back on me because as founders, you got to make so many decisions every day that especially as a solo founder to say, “I got to make this other decision,” and then it’s the next one and the next one and the next one. 

Some of them are really important and you have a mastermind group or you have a mentor or whatever, but you got to have somebody to talk to, I think, is the point. To me, paying someone who has actually done the thing is way more valuable than pretty much any other peer group because that is then the answer. You have a relatively high confidence that that’s right.  

Rob Walling:
If you can find someone that you trust in a domain to give you their best advice, and here’s the thing, if you trust them, it’s likely they will say things like, “I feel very strongly that you should do X” or… I’ll do this all the time with tiny C founders. I’m on the fence. I’m going to be honest. I think you have two viable options. Let’s name the other. There’s five total. I think these three are garbage. I think you have two, and I’m struggling to know what you should do, but it’s pretty obvious it’s one of these two and then I’ll pass it back. What do you think? What’s your gut? Because you know your business better, you know your customers better, you know whatever this space better than I do. I know the best practice is probably better than you do, and we’ll do that. 

I think a good mentor, advisor, or even friend, mastermind, whatever, couches things like that. They’re not so certain of everything, but then sometimes, sometimes it’s really, really obvious what you should do. It’s like, no, I’ve seen exactly this 10 times and 9 out of 10 times that this was the right, that type of thing. You can get to that point of certainty. That’s a huge win. These days. I try to think about how I make decisions. Well, A, I try not to make a ton of decisions all the time, and that might sound weird, but it’s like you have to make a lot fewer decisions than you think. The key phrase, have to. There are a lot of things you just don’t have to decide. 

I think in the early days of a startup, you have to make a lot of decisions quickly of, “What am I building? What are we doing? ICP, I got to move faster.” TinySeed was like that. MicroConf was like that. Drip was like that. But you get to a point where it’s like, “Oh no, we don’t need to decide about that. We’re just going to let it run. What’s working is working. We’re going to keep doing that.” That’s a skill. They often talk about retail investors, just consumers who day trade and they buy this stock and then they buy this index fund and they sell it because they read something in Bloomberg and then they do this and that. It’s flailing. It is tax disadvantaged. Almost no one does that. You have no advantage in that. 

I feel the same way about some founders who are like, “What’s working is right now for you, it’s like SEO and cold outreach or whatever it is, but it’s a grind.” No, shit. It’s always a grind. I don’t care if it’s a grind. Is it working? Yeah, yeah. We’re growing two grand MRR every month. Then why would you make any decision? Just keep doing it. It’s like I know that you want to day trade. You want to do something more exciting. The most exciting thing is new MRR.  

Craig Hewitt:
So I have two things around this because this is really hard. We are at the point in our business where it’s getting a little boring in a good way, to your point, and that the challenge, one, is you as a founder accepting that like, “Hey, just tune out all of that stuff and focus on the stuff that’s working.” You have to get over that. Then what I’ve found is you have to get over this next hump, which is you have to relate to your team that that’s how they need to think too. Because hopefully, your team is like, “Oh, hey, what if we do this? What if we build this feature? What if we support? What if we do this?” I think about this movie, the Yes Day, but in the movie they’re like, “I’m the fun guy, and you’re always the one that’s saying no,” the parents. 

I feel like the parent that always says no to the team because they’re like, “Hey, what if we do this? Hey, what if we do that?” I go, “No, what if we don’t do any of that stuff and just focus on this really narrow thing?” What you’re saying to the team is like, “Hey, we have to focus and prioritize.” If you do it wrong, which I think I might have at the beginning, what you say is let’s just dial back the intensity a little bit. That’s not exactly right, but it is, right? Because what you’re saying is we’re going to do less. We’re going to do it better and it’s going to be better for the company. It’s a very different mindset as a founder for sure. But even I think if you have entrepreneurial team members, they go, “Whoa, I only have to do this one thing. That’s crazy.” I have a little bit of insecurity around that.  

Rob Walling:
Yeah, I could see that. I am guessing that’s where sprints were invented. We’re going to do a sprint. Whether it’s two weeks or three months, you hear marketing sprints are sometimes two or three months and development sprints are two weeks. Lock it in. Can’t change it, pretty much unless there’s a [inaudible 00:16:56].  

Craig Hewitt:
Yeah, put one the blinder.  

Rob Walling:
Yeah, because everyone has ideas and some of those ideas are good. There’s this Steve Jobs quote I mentioned offline, but I think that I quote him in my book, whatever. I don’t like it when people use Steve Jobs as an example, blah, blah, blah. He’s such an outlier. It’s like, “I’m going to use it to justify his really dumb thinking. Oh good.” But Steve Jobs says, “Focusing on stuff and building great things is not about the focus. It’s about saying no to hundreds of really good ideas.” I think about that quote so often of, “What is the one or two things that I should really be focusing on?” And then my next step if I’m going to do something in the business is how can I find someone who knows more about this than I do? 

So when we were going to start YouTube, we futzed around with it for a while, and I realized pretty quickly I have to be able to pay someone who just can get us there faster. We did. We hired a consultant and they were not cheap. They were several grand a month for advice, which I struggle with as a total cheap ass, a guy who grew up without money, but I’m like, “Dude, if I can grow this channel, it’s worth it.” It did, right? We’re at 80,000 subscribers or something. We grew very quickly, and there’s other stuff I’ve looked into. It’s like, “Oh, should we do TikTok? Should we do LinkedIn? Should we do whatever?” These are decisions I have to make, but I make them very slowly until I’m pretty damn sure that it’s the right one.” 

Then I’ll go deep and I’ll go really fast. I will spend a lot of money to have someone tell us exactly how to do it, maybe even to do it for us, depending on what it is that needs to be done. Then I will go all in. YouTube for us was I was shipping 52 videos a year at relatively high quality if you go watch them and 15 grand, 18 grand a month spent it on that, which is a lot. You might say, “Wow, that’s a lot of money.” It is a lot of money, but I deemed that I was either going to do it or I was not. What I wasn’t going to do was take that 18 grand, split it among, well, let’s try three or four things because guess what? Really low probability that any of them would’ve worked.  

Craig Hewitt:
It is what’s a good idea that you can execute on and that’s your skills, the people on your team, the people available is you, the money, all that stuff. This makes me think of is this book, Who Not How, and I’m blanking on the name.  

Rob Walling:
The author.  

Craig Hewitt:
Yeah, but that’s it, right? It’s like when there’s a problem at a point when you have the resources, who can I hire to help me solve this or solve it for me? And then your goal is just to define what good is and let them go.  

Rob Walling:
Dan Sullivan.  

Craig Hewitt:
Dan Sullivan.  

Rob Walling:
Just looked it up.  

Craig Hewitt:
Amazing guy.  

Rob Walling:
You recommended that book to me a couple years ago and I got the Audible version of it.  

Craig Hewitt:
I think that one’s from Rubin.  

Rob Walling:
Is it? This is what happens.  

Craig Hewitt:
Rubin, the press, yeah.  

Rob Walling:
Rubin has the A method for hiring. That one came from Rubin. There’s a few. There’s a few of those. Yeah. So, it’s interesting. A, I make fewer decisions than most people these days. I used to make all the decisions. I’m going to do the stuff and flail around. It’s like that was something that as I matured, I realized, “Oh, that was not the right way to do it.” I should make fewer, more important, more focused decisions. As a result, my decisions are bigger and tend to have bigger consequences, I’ll say. Because when I committed to this money and this recording these videos, which is a lot chunk out of my week every week, and I wasn’t very good at it. It took me a long time when I started. So, I knew I was investing. 

But when I make those decisions, I think I mull it over for a few months usually if I have that luxury. Sometimes you don’t, but several weeks and then I start going to people. What do you think about this whole thing? We have this idea. So, Rubin, what do you think about that? Each of them has a different perspective. So, Sherry, what do you think about this? It’s like I get all these different inputs, mastermind, co-founder, whatever it is. I’m talking to a listener right now of how to make hard decisions. It’s like who do you have in your life? If you don’t have someone, then you might need to hire someone. Like you said, you have coaches. I have a therapist. I’ve been seeing a therapist for years on and off. 

There’s this stigma around it of like, “Well, you’re seeing a therapist, you must have (beep) wrong with you.” A, all of us have (beep) wrong with us, so please don’t kid yourself to think otherwise. For me, it’s self-reflection. She’ll tell me, “Here’s what I’m hearing you say.” I’m like, “Huh, why did I say that?” She’s like, “I don’t know. Let’s figure out why you said that. You obviously are programmed to have this limiting belief maybe.” So sometimes I’ll talk stuff through with her as well. I wouldn’t talk through a YouTube launch, but I would talk through a hard decision that I think has a mental component. Sometimes you know what’s the right decision? But you can’t do it. You won’t do it and you’re avoiding it because it’s making you uncomfortable. That’s when I’m like, “I need to talk through why I’m uncomfortable and figure out-”  

Craig Hewitt:
This is okay.  

Rob Walling:
Is it because the way I was brought up as a kid? Is it because I didn’t have money in my 20s and I’m scared of always going back to that or whatever? Are those the reasons? We’ve talked a lot about decision-making in professional context, which I think is helpful. I know people often like to hear, especially the folks who listen to this podcast that are further along where it’s like, “Oh, I’m doing a million a year, five million a year.” This type of stuff, we all struggle with it, but let’s talk about the work-life piece. In terms of family time, we both have families. When my kids were younger, I definitely struggled. My kids are older now. They’re almost 14 and 18. So, they’re self-sufficient. It’s having a roommate rather than a kid. You know what I mean? 

They put themselves to bed at the time that they should go to bed and they wake up in the morning. If I make breakfast, they eat it. Otherwise, they make it for themselves. So, it’s different with younger kids. That’s one thing I will say is if you have young kids now, realize it won’t be there forever. They will get older and you will be able to leave them alone overnight for multiple days at a certain point. It’s mind-blowing when I say that, right, but we haven’t hired a babysitter in years because it just changes. You can, right? But it’s like realize that this time is only a few years, however that few is. 

So, with that caveat, I will say that much like making fewer decisions and focusing in my professional life, when I’m with my family, well, A, I try to have really interactive, meaningful time with them where it’s like, “Dude, let’s play a game together.” My 17-year-old, he’s almost 18, is home from college for summer. I’m like, “I’m off calls at 3:00 today. You and I are walking somewhere.” We’ll go on a walk for an hour, 90 minutes. We’ll go somewhere. We’ll get ice cream. It’s a great day here in Minneapolis. I’m just very deliberate about that. We don’t need five hours together tonight. That one hour, we will have so much conversation about so many things about our lives, about what I’m thinking about. He asks me about work. What’s going on with this and are you stressed about that?  

Craig Hewitt:
That’s cool.  

Rob Walling:
You know what I mean? It’s not all perfect. It’s not all amazing and it’s harder. If my kids were two and four, it would be a different story. Both of us can weigh in on there because we’ve been there. But I think that’s been my realization is it’s similar of if I’m going to spend time with them, focus it in a way that is very meaningful. 

We watch movies or watch YouTube or play games or do other stuff. I’m not saying it’s all just this intense conversation, but if I start feeling myself distracted or not wanting to be there, then I’m like, “Okay, check yourself. Should you just switch to something else and come back to this? Come hang out with the kid in an hour when you really are able to focus on them, or do you have something going on that you need to deal with?” So how do you think about this? You have younger kids.  

Craig Hewitt:
So I have 11 and 13-year-olds, and they’re getting to this point. We haven’t hired a babysitter in a while, but they can’t stay by themselves overnight. A couple hours, we can go to a dinner or a movie or something. Absolutely. The biggest improvement for me has been this intentionality and separation of there’s work time and then there’s just hanging out together time unstructured. There’s me being more intentional like, “Hey, let’s go play basketball” with my son, or hey, let’s go walk the dog after dinner with my daughter or something. To boot, my wife started working again about four months ago for the first time in 13 years since our daughter was born. That’s an understatement. 

That’s been a really big change in our life and family dynamic is wow, for several days a week now, she’s just gone and I’m the only one. I’m working and responsible for the kids. So, I’ve just had a lot more this is it. At 3:00, I’m at least flexible because the thing is the kids come home and they’re fried because they’ve been at school for six or seven hours. They just want to hang out and play Fortnite or whatever. So, I will mix that time is I’ll just grab my laptop and go downstairs and sit on the couch and futz around. But what that means is the really super important (beep) has to get done in the beginning of the day because I know I got to create this proposal, I got to follow up on this email. That’s just leisure, work time. 

So, that’s how I overlapped the two. Then at 4:00 or 4:00, cool, done, put the computer away. The computer comes back to the office. So, it’s not physically in the space where we are as a family and then we do stuff. We’ve started cooking together a lot more. That’s a really cool thing. Then yeah, same here, we have a garden and my son is in charge of getting the salad every night from the garden. So, there’s just little stuff like that. Empowering them with chores and activities that we can do together are really cool. So, as much as you can extrapolate that out, I think, into your life, it’s positive.  

Rob Walling:
Yeah, that’s really good. Those kids will remember that for probably the rest of their life. Not every moment, but they will remember, “Oh, I remember getting stuff from the garden.” If they do it 20, 50 times, whatever, it’ll just all be an amalgam of a single memory. But for sure, I have a bunch of stuff like that from my childhood. I don’t want to paint this as like, “Oh, if you have a two and a four-year-old or four kids under eight or whatever-”  

Craig Hewitt:
You’re screwed.  

Rob Walling:
It is just a lot more challenging, but it’s even more reason to focus relentlessly and try to figure out the right things to work on. In a business, to me, it’s this dichotomy of risk versus certainty. It’s like what’s the riskiest part of the business that needs founder-level thinking? That’s what I’m focused on. Anything that has certainty in a SaaS company, it’s like if you’re two years into a SaaS, you know that someone can answer support requests. There’s an SOP and most of them can be answered. There’s a knowledge base, whatever. Frankly, writing code, I know it’s a craft. I loved writing code and I was a craft person when I did it, but someone else can build that feature, but most other people can’t design that feature. That’s the thing. 

Designing it or crafting it or saying exactly how it should operate, product-level work is quite hard to find because your knowledge of your customer need there is founder-level need until you can hire. I mean the first product person we hired, we were doing several million in ARR, and his salary was $165,000. I mean it was really expensive. He makes more than that now. It’s like that’s the level of product person who can take stuff off your plate who’s been doing it, but there are always elements of risk and always elements of certainty in a business. I think that the certainty is that’s where your comfort zone is. 

So, unprodded you will slide into the comfort zone because it’s like, “Oh look at so much work I’m getting done” and then you work 12 hours on something that really should have either not gotten done or should have been delegated to someone else.  

Craig Hewitt:
Yeah, I mean the rule of thumb I use there is… This comes from my coach, Mike Del Ponte is like, “Do the work that’s as close to the customer as you can.” Typically, that’s sales that. That’s the best, right? It’s like, “Can I go talk to this person and sell them a thing?” After that, I agree. It’s probably either marketing or UX product design because that’s more of a one-to-many. Then the things that are way down on the scale are like, “How do I grow my falling on Twitter?” Even should I start a podcast? I don’t know, maybe, but only if you think there’s real potential direct impact. I think a lot of the time that we waste as founders are on brand marketing. If you’re at a few million, maybe you can allocate 20% of your marketing budget to brand marketing, but until then you got to be hand-to-hand.  

Rob Walling:
Yeah, yeah. You’re not a media company, right? That’s not what we are as bootstrap SaaS companies and thinking you can do that quickly and it won’t be a waste of time. It’s pretty rough. Same thing with, “Oh, you should build an audience in order to build your…” Oh, that’s a real long way to do it. I built an audience. I built multiple audiences over several years and it’s 15 years or whatever. It’s way more time than sales you will make if it’s for SaaS, but if you want to sell info products or courses, that’s another thing.  

Craig Hewitt:
I say it for all the people who are yelling at their phones right now, I say that because we made that mistake. We thought, “Hey, we’ll do a bunch of brand marketing and it’ll really result in a lot.” It didn’t. Now we’re much more one-to-one and we’re growing faster than we were when we were a team of 15.  

Rob Walling:
So let’s switch it up. This is a great topic and I didn’t want to cut it short because I think there’s a lot to be said about it, but we did have other folks weighing on Twitter about stuff, and I want to get to their questions. Christopher Gimmer asked, “I’d like to hear Craig talk a bit more about the coaching he’s doing, the pros and cons of it. When he felt confident enough to start offering it, would he recommend other founders do it on the side? Does it attract from the main business, et cetera?”  

Craig Hewitt:
That’s like four questions.  

Rob Walling:
It is.  

Craig Hewitt:
How did it come about? A bit of the focus that we talked about is we had just said no to a whole lot of things and I found myself with a little bit of time. I didn’t have that thing where I said, “Ooh, if I had 10 more, I could spend these 10 hours in the week to do something and it would move the needle.” So I said, “Well, I can spend these 10 hours in the week doing this other thing that I really enjoy. I’m pretty uniquely qualified to do and it would be helpful and I can make a little bit of money.” So that’s how it came about, and it was just very, very, very slow. I think I wrote a LinkedIn and a Twitter post about it maybe. I sent an email to the 200 people on my newsletter about it and got a couple of clients, got a couple of referrals from that. 

So, at this point, have a handful of folks that I’m coaching and it is the ICP’s founders, typically SaaS founders who are looking for help growing their business, so sales and marketing. We work together every other week for an hour and I want them to come with the biggest challenges they’re having. That can be anywhere from review my cold email sequence to how do I think about managing this sales rep to here’s my org chart, where do you see the holes to I helped someone go through an acquisition where they were acqui-hired. That was super cool. So, I mean, all the (beep) that I did, that you and I’ve done is I’ve done this for folks who are looking to do it, just like we talked about before. 

It’s like, “How can I pay a little bit of money or how can they pay a little bit of money to get a few years ahead?” Is it a distraction? Actually, I think I’m a much better founder now because of doing this, because part of it is I see a lot more, right? I see in the market how people are doing things, and so you have a lot of visibility through TinySeed of all the companies. I have a much smaller percentage of that, but also, I got to walk the walk when I am talking to a founder and they’re like, “Oh, I was thinking about doing this and I’m thinking about doing that. I’m thinking about doing the other.” I go, “Do the thing that’s as close to the customer as you can,” and then I hang up the phone and I go futz off to do some SEO thing. 

I’m like, “Whoa, Jack, that is not what you just said. So, you got to walk the walk.” So yeah, I think it’s not that much time. It’s definitely not that much mental overhead or stress because it’s just a call and I really, really, really like it. So, there’s that. It’s like sometimes you got to just eat the ice cream and that’s a bit of what it is.  

Rob Walling:
Yeah, I think that makes a lot of sense. I would guess for some founders, it would be a distraction if they were in super grind 10 hour, 12 hours a day, all consumed with their business and they’ve never done coaching, because just because you can do something doesn’t mean you can coach other people on it. I’ve seen some coaches who are so sure of their point of view because they had a success or whatever, and they’re like, “No, everyone should do it.” So then every call, it’s like, “No, you should do this. You should do that.” It’s like that’s not coaching. 

Coaching is more asking questions and figuring out, “Hey, what is really the best option?” Usually, there is no one best option. There’s a couple options that are viable based on criteria, but I do think that you were in a spot, you are in a spot with Castos where you’re five years, six years in, seven years, depending on how far.  

Craig Hewitt:
Seven. Yeah.  

Rob Walling:
At a certain point, as the business matures, it does require I think less. If you’re doing it well, you are delegating and it requires less and less. Even if it requires eight hours a day from you still, less and less founder cycles because it comes back to risk versus certainty is how much risk is left. There’s a few areas of risk, meaning uncertainty, or just founder level thinking, but you’re not making the same number of decisions on a day-to-day basis now than you were four years ago, five years ago, right? It’s that good glucose, as Dan Andrews says, to be able to coach, because I tell you what, coaching is… I don’t know if you find it this way. It’s very tiring. I say that in a good way, but it grinds me down in terms of you’re going to present me… 

The only problems I get, because I obviously do this through TinySeed. The only problems I get are ones that talented, gifted, handpick founders don’t know the answer to. So, it’s all the hardest problems. I consider that an honor and an amazing thing, but damn if it does, it just burn through my brain cells because I’m like, “All right, tell me again and let’s get it all in.” Then I’m like, “Oh, this is hard and it matters.” So I’m not going to half ask this decision, so let’s dive in. I’m taking notes, I’m thinking through. It’s like whiteboarding a new feature where you’re going deep and you have a mental model in your head of ba, ba, ba, right? 

So for me, coaching is exhilarating. It keeps me in the game, exactly what you’re saying. I have 192 companies and I’m like four, five, six, seven conversations a week depending. But those ones I end and I’m like, “I need to go for a walk because I’ve just expelled a lot of good…” Talk about decision making fatigue almost. It’s like I’m in that helping them make hopefully the best decision. So, that comes back to if I was 8 to 10 hours a day on a startup and I didn’t have that energy to do it, I wouldn’t coach, but again, I feel like you’re in a pretty good spot where you were ready for it and you’re highly gifted at it as well.  

Craig Hewitt:
Yeah, it’s interesting. I don’t find it draining at all, which is a really good sign. I think I did a bit of it for free and found I really liked it. I learned a ton about this whole giving advice versus asking questions. I’m like way, way better coach now than I was at the beginning, but yeah, it’s exhilarating in a very healthy, appropriate way. So, to me, that’s a really good sign that it’s probably a pretty good place for me.  

Rob Walling:
Sounds like it. Yeah. Our last question from Twitter comes from Matt Paulson, longtime listener of the show, and I presume of Rogue Startups as well because he says, “The thing that the two of you have in common is you both used to have podcast co-hosts and now you don’t.” I think the implied question there is maybe what was that experience like? I don’t know you need to say better or worse with a co-host or without, but is that maybe hard? Was that a learning curve? What was it like for you to transition?  

Craig Hewitt:
Yeah, so just for context, I have a podcast called Rogue Startups where started as just me, and it was an interview-based show. My third guest I think was Dave Rodenbaugh, who then became my co-host for the next 290 episodes, for the most part, over six or seven years. I mean, we’re a very long time into it. I just published episode 314 this week. Yeah. So, Dave and I largely had just a co-host show where we just provide updates on what’s going on, a lot like you and Mike did, sometimes interviews, all this stuff. Then really through COVID, it was really hard for everybody. A little bit after, Dave was like, “Man, I don’t care to continue anymore,” is I think what he would say. To me, maybe to you, this is super important to me. 

If you want to use the term brand, it is probably my biggest aspect of my personal brand, which has some importance. So, I was like, “Cool, man, I want to continue. Are you okay with that?” He said, “Yeah, this is just not for me, so not for me anymore.” So that’s the context. Yeah, it was super hard. It was super hard. In a way, I was really excited because I was like, “Cool, I get to continue doing this thing that I really like that has been the catalyst for a lot of my business stuff.” But then I was like, “Whoa, when you have a co-host, it is that mirror of energy a lot,” right? Hey, let’s just hop on. I don’t have a lot to talk about, but (beep) Dave just did this thing. Cool. That’s the episode for the week. 

Now, I don’t know what to do. I got to find a guest, I got to find an interesting guest. Because the last thing I want is to get whoever to come on and talk about SEO again. I always say when we’re advising our customers at Castos, like you got to find the person, you got to find Rob Walling, who everyone has heard on podcasts to talk about something you’ve never heard him talk about, which is pretty challenging. Or you got to find the person who no one has ever heard about that’s going to blow their mind. That’s slightly easier, but still pretty challenging. Both those things just require a lot of effort. 

So, I’m fortunate to be networked pretty well in the entrepreneur podcast community, have probably taken a lot of similar steps to you of don’t have as many guests as rotating co-hosts. Then I get the most good feedback from my solo episodes. So, aside from my episode with Jason Cohen that went out two weeks ago, I only get positive responses to my solo episodes, but they are soul sucking and I can only manage about one a month. So, having a co-host to your podcast is by far the easiest way to have a podcast. Not doing it is really hard, but I’m glad the podcast is continuing on. I guess that’s the short version.  

Rob Walling:
I think I feel the same way. I agree fully with you that having someone else on the mic is you can show up with almost nothing to talk about and fill time with pretty intelligent and entertaining things. Doing that solo, like you said, if you don’t plan for it, you’re on your own and what are you doing then? You are either answering questions or you’re just coming up with a topic and then talking to nothing for 20 minutes or 30 minutes or whatever. You’re right, those were really hard for me. They’re less hard now. Now, I have more confidence in my voice or there’s just something that shifted where I was like, “Okay, I am just going to say…” I used to filter a lot more if I’m honest. 

I was like, “Oh, what if I have shown my real personality?” or “Maybe I shouldn’t be so opinionated, but maybe this will make someone mad.” I’m not going out with super scathing hot takes or anything, but you might notice that over the past, probably four years, five years since I went solo, I have just become more opinionated about certain things, about certain anti patterns and certain success patterns that I see over and over. That makes it almost easier because I don’t have to censor myself as much on the solo episodes where I used to start, I would say a whole paragraph. Then I’m like, “Oh, what if that makes someone feel bad? Editor, just cut that whole thing.” So it was just a start, stop, start, stop. It wasn’t that fun. 

I was always worried, “What am I going to talk about? What topic can I possibly talk about?” Now I have this huge Trello board because stuff just hits me. As I consume things, I listen to audiobooks. I hear other podcasts like yours and the other ones I listen to. Oftentimes it’s something completely outside of startups like the Comic Lab Podcast where it’s these two artists that are independent comic guys and they publish their own books, not through publishers. They do Kickstarters and Patreons and all that. They’ll say something and I’m like, “Oh, that totally applies to startups, and I’ve never heard-”  

Craig Hewitt:
Oh, that’s cool.  

Rob Walling:
Yeah, I’ve had three of those probably in the past six months where I brought it on the show. Then there’s even Dungeons and Dragons podcasts or metaphors with games or something. I’m like, “Oh yeah, that is a thing.” The thing I’ve really enjoyed about it, I think, is I definitely wanted to experiment with a lot of formats and just experiment with things. I mean, if you’ve listened to this show for any length of time, you’ve heard me bring in Beatles music and I forget who else I brought on, but different. I’ll talk about a song and then I’ll bring the song on. It’s super cool when you listen to it, but it’s a weird thing to do on a startup podcast for the first time. 

It was something when I had a co-host, I was like, “Oh, do I check with him? Is it weird to do a solo episode if I have a co-host? Is that pulling the spotlight?” There was all this stuff that I was concerned about experimenting with, and I think that was maybe to the detriment of the variety of the show. Because after Mike stepped back, I tried a lot of stuff and actually a bunch of formats that I don’t do anymore, but I tried them. They were forgettable, the formats. People just weren’t that interested. The ones that stick are the ones that people comment on and they say, “Oh, I really like that.” Similarly, the solo episodes always resonate. It resonates with somebody.  

Craig Hewitt:
If I could, I think the thing that brings this full circle to business is nothing’s forever. You won’t do this podcast forever probably, or you won’t be the host of this podcast forever. I don’t know. Maybe I’ll run Castos forever, I don’t know, but you won’t be at your job forever. You won’t have the same co-founder forever. Maybe you’ll stay married forever. That’s cool. I hope I do, but I think to go into most of these things expecting it to be forever is setting yourself up for disappointment. Going into it a little eyes wide open and setting expectations with a co-host or with a co-founder, you talk about, “Hey, if you go into a co-founder agreement, have (beep) in writing.” 

Maybe with a podcast co-host, it doesn’t need to be a legal document, but an email to say, “Hey, this is it. We’re going to check in once a quarter. If anybody wants out, that’s cool. This is the process.” I didn’t have that because Dave and I just started podcasting and backed our way into a partnership. If I did it again, I would be a little more intentional to say, “This is the situation now. It probably will change, and these are the parameters around how it can change.” Just there’s no hard feelings and there weren’t with Dave and I. I don’t think there were with you and Mike. It was just the right time to start doing something different, but it doesn’t always work out that way.  

Rob Walling:
Yeah, I like that. Nothing is forever. Everybody sells eventually. Everybody sells eventually. Never thought Mailchimp would sell. You’re right, podcasts either fade or they change, different co-hosts. Like Calacanis on This Week in Startups had Molly Wood as a co-host. Then Molly Wood disappeared and there was never anything mentioned about… I mean, I shouldn’t say she disappeared. She stopped being co-host suddenly, and there was never a conversation about it. Now I think he has a new co-host, but that’s a thing, but what is he, like 1,200 episodes in or 1,300? I don’t know. He’s a lot of episodes and it’s like that’s just how things happen when you do them for 14 years. They do change, and this podcast is episode 700, whatever, 19. 

It’s 14 years, about 14 years in, similarly. So, just expect that you roll with it or you quit at some point, and that’s okay. There’s a pretty good book called Quit. What’s her name? She’s the poker player, Annie Duke. It just came out. I will admit, I could summarize the book in about a three-minute Loom. There were some key takeaways that I thought these were really good, and there was a lot of stuff that I was just like, “Eh.” But if you can read a summary or listen to the audiobook or whatever, it’s interesting and not a justification, but a defense of like, “Hey, sometimes you should quit.” 

There are times when you should stop doing things, and it’s a good reminder because society somehow has this big stigma around it, but I know some people where them quitting either a business or a relationship or some other effort they’ve done for a long time was actually the kickstart of a whole new chapter in their life. So, it’s always something to keep in mind. Craig Hewitt, thanks so much for joining me, man. You are @TheCraigHewitt on Twitter and craighewitt.me if folks want to check out your email newsletter. Thanks again for coming on.  

Craig Hewitt:
Yeah, man, thanks for having me.  

Rob Walling:
Thanks so much to, Craig Hewitt, for spending a few minutes with me today and providing you with your weekly dose of Startups For the Rest of Us. I hope this is an amazing week for you both on the personal front and also in terms of your business goals. Thanks for listening this week and every week. This is Rob Walling signing off from episode 720.

Rob Walling:
This is in line with that thinking. That really, even if you’re a horizontal product, you still have to make some difficult decisions about who your someones are going to be. Who are you going to have everything for? Because even if you have a horizontal product, there are going to be different use cases and you are going to have to make hard decisions with incomplete information as the founder, or as the product leader, about what to build and what to say no to. 

You’re listening to Startups For the Rest of Us. I’m your host, Rob Walling. Today, I’m going to be covering some solo topics. There’s a listener question or two thrown in here, but they are questions that I think apply to a Rob solo adventure. 

The first topic I’d like to cover today is about testing pricing for your product. This came about when I asked Twitter for questions when Derrick Reimer was going to be on the show and we got more questions than we had time to cover. This question was an overflow that I saved in a questions Trello board. It’s from Kat at buildthekeyword.com. She asks, “How do you test different prices for your product?” The answer is there are several different ways to do this. 

Testing pricing is hard, but the thing to think about is there’s testing pricing for brand new customers who are coming to your website, or doing a demo or sales call. And then, there is changing pricing on existing customers. Notifying them, “You’re currently paying $50. It’s going up to 100,” or 75. Separate those two things in your mind. Because what you don’t want to do is change and test prices on existing customers without being really confident that those price changes are in order. Usually, you test it on new folks coming in. 

I have only known of one SaaS company that ever test prices. Everyone else just does not have the volume, and frankly it is so much work to do this well. It’s truly just split testing. Having people click and the price appeared differently, the standard split test definition that we talk about. It’s not something that I see almost anyone doing. Usually, the way that you test pricing if you have a low touch funnel is you go to your pricing page and you just change the pricing on it. You see how it impacts your conversion rate over the next week or month. I’ve called this a poor person’s split test before, which is it’s not ideal, it’s not scientific. But if you have a real pulse on your business, and you have a decent flow of traffic, and prospects, and people coming across your pricing page frankly, then you can see patterns. When I used to test pricing, it was only when I had a lot of folks hitting that pricing page. Because if it’s a trickle, you can’t see the difference. There’s too much noise. 

Usually, most people don’t look at changing their pricing as a test. They often say, “I’m going all-in and I’m just going to change my pricing. I think I’m priced too low or I think the value metric is off.” They go to the pricing page in the Stripe call, and they just change it. I’ll say hope for the best, but really it’s a calculated risk. It’s a calculated gamble of odds are pretty good I’m under-priced, I feel like I’m under-priced. I am going to solve that by raising all of my tiers. Or by, let’s say, dropping my lowest tier is something people frequently do. Obviously, I’ve seen several TinySeed founders do that. And then, trying to make it work. There were times, when I’ve raised prices, where I was just like, “I’m committed to making this price point work.” It’s called aspirational pricing. I aspire for my product to be worth this much, this is the business I want to build, it has this pricing. Therefore, I’m going to keep building features to where this price is a no-brainer. 

You can say, “I want my price points to be $1000, that’s the minimum.” It’s like yeah, it’ll take you years to get there, or you’re just in the wrong category to have that kind of price point. There’s all kinds of ways I can poke holes in what I just said. But for me, it worked. It allowed me to build a great business. 

If you are demos, and it’s one-call closes, or it’s procurement, or whatever, and it’s a high touch sales environment, you can just unpublish your pricing from your website. You can either say, “Starts at 499 a month. Starts at $1000 a month,” whatever it is. Or you can list some pricing and call us, or you can just not list pricing at all. Have a pricing page. When they click through say, “Hey, click here to talk to our demo team.” You could say our sales team. You could say, “Click here to talk to the founder to learn more about how we structure the product and how this works.” Then you split test it a bit, and you start quoting prices that are higher than what you’re currently changing, basically. You see the reaction. You see if folks choke, or you see if folks … 

Usually, what you’ll do is you’ll double your price and someone will say, “Oh, yeah. Great,” and they still sign up. Then you’ll double it again, and maybe get some pushback from a few but you realize, “Oh, I can still close some deals. This is how I think of testing pricing. Notice I haven’t said test price drops. That does happen, it’s just very, very infrequent. Usually if you’re testing, you are trying to test the price elasticity of your space and of the folks who visit your website. Or the folks who are raising their hands and becoming leads for you. It is an inexact science. It just always is. 

So is attribution. When people are clicking through and converting, where did all these leads come from? You can’t attribute 100%. Can you attribute 60 or 70 percent? Yeah, probably. Is that good enough, is that the best you can do? It probably is. It’s the same with any hard decision where you have incomplete information. You do the best that you can. Part of it is some founder gut. You collect what data you can, and you make observations, and then you make a bit of a gut decision about, “Should I continue with this price increase, or is it not working? Have I killed the business?” Not even killed the business, have I slowed the growth? 

It’s not just testing pricing. It could be I’m going to add a credit card before free trial. I’m going to remove the credit card before a free trial. I want to try freemium. I want to discontinue freemium. I want to keep the pricing the same, but I just want to change the structure. I want to change the value metrics. So my tiers are still 50, 100, 200, but maybe I don’t price based on storage, now it’s priced on emails sent, or whatever. There’s a bunch of different things you can do here. 

Before I did these, I would always have a conversation, well A, with myself. But B, with a couple other trusted folks that I had. Is this a co-founder? Is this an advisor? Is this someone in my mastermind? Is it a mentor, if you’re in a program like TinySeed. I would get the best advice that I knew how to get. I would factor that in with my own gut feeling, and then I would test. For me, most of the time, I was dealing with low, medium touch funnel so I could test on the website and we also had a lot of traffic. It allowed me to quickly … I wasn’t split testing, keep in mind. But I knew historically, in any given week, how many new trials we got. And in any given week, how many new conversions we had. I could see, within a week, I was like, “Okay, we’re still on track but our pricing has increased from there.” Or, “We’re ahead of track.” You could get a gauge for it early. It wasn’t definitive, but it made me feel more comfortable with it. 

Testing pricing is hard, it really is. But I would actually say you have an advantage if you are doing high touch, if you’re doing demos, and that allows you to have conversations with people. It allows you, you double the price, you quote it to them and they say, “Wow, that’s out of our budget.” You say, “Oh, what is the budget? What is your budget?” Or, “We can work with you. For example, if you want to pay annually, I can knock 20% off of that.” I’m not saying sell from your heels. I’m not saying you just back off instantly. But when you are increasing prices, there are ways to back off that increase in realtime on a sales call if you realize that you have potentially over-quoted for this particular prospect. 

Thanks for that question, Kat. I hope it was helpful. 

My next topic is about one-time payments, especially folks talking about them on Twitter. It is usually indie hacker founders, who are now doing, I don’t know if they’re following in the Basecamp steps of doing once. They’re doing lifetime deals on SaaS, which doesn’t quite … Who was it, Ahnar and I were talking on this show? It might have been Derrick. Where I said if you collect one-time lifetime payments for a SaaS, but you now need to keep that SaaS running for years, and years, and years, is it a little bit, I don’t want to say Ponzi scheme, I know you’re not doing that intentionally. 

Basically, if you don’t sell additional lifetimes a year from now, you will be paying server costs, hosting costs, whatever, all the other costs, storage costs, whatever else is there. Even maintenance cost, unless you’re doing everything yourself. You are taking that out of one-time earnings that you got 12-months ago. It’s just an odd model. One time software makes sense if you download it and install it, and there is “no maintenance.” I don’t need to do bug fixes, I don’t need to maintain server infrastructure, and all that. That’s one my struggles with it. 

My other struggle is I almost feel like people don’t understand how different one-time revenue is from recurring revenue. Monthly recurring revenue is the golden standard. This is the cheat code of every other business, where they want to get paid monthly on a predictable schedule. SaaS has that cheat code built in by default. You’ve heard me talk about the cheat codes of SaaS being net negative churn and a handful of others. But even annual revenue, when it’s recurring, can be tricky. It can seem … 

I’m going to give you an example. We’ll get folks who apply for TinySeed. You’ll see their revenue over the past six months, we ask for MRR. You’ll see it going up. It’ll be six months ago, it was 1000. Then it was 2000, 3000, 4000, 5000, 6000. We’re like, “Well, this is an interesting early stage business.” For a business to be growing that quickly over that short a period of time, obviously depending on their customer count and all this, they have some product market fit. Someone is wanting to buy this, they’re sticking around. There’s growth, they know how to market. There’s signals there. It’s early, but you see it. Then we’ll get on a call with them and we’ll realize they are collecting annual payments. All those numbers have to be divided by 12. Because it’s actually $6000 of ARR, of annual recurring revenue they collected. Which, divided by 12, is only $500 a month of MRR. 

Really quickly, we can have a $6000 MRR business, that appeared to be that way but wasn’t actually, suddenly become a $500 MRR business. Which frankly, is at the bottom, bottom end of the threshold at which we would even consider funding a company. So it went from this amazing business to oh this is, I won’t say unfundable, but as a general rule, we don’t fund companies with MRR that low. That’s just going from monthly to annual. 

One-time is another order of magnitude removed from this. To where, this is the old days, where I started the first of every month with DotNetInvoice, which was $300 downloadable software. First of every month, $0 in revenue. It was such an uphill battle to grow that business. It was a step one business, there was a bunch of things around it so I’m not trying to extrapolate my experience with that one thing. But once I went to recurring, I swear, I will never go back. Recurring revenue is where it’s at. Whether you’re doing annual … I’m not saying monthly is better than annual or anything like that. 

I really want to caution you against getting caught up in what feels like zigging when everyone else is zagging, but just doing it for the sake of being a contrarian. It feels like this willful belief in something that … As I’m saying annual and recurring, and doing the math, and then saying one-time is just so, so much less valuable than that, there are folks on Twitter in the indie hacker community who are posting these one-time things and acting like it’s a big deal. It’s something, but you’re selling a lifetime whatever for $50. You’re just competing on price at that point. I guess that’s good, to get your brand out there. There are pros and cons to this. But this is not the kind of business you should aspire to. 

If you’re listening to this podcast and you view it as a step in the direction of trying to get your name out, great. Be really aware what you’re getting into if you’re going to be charging lifetime or one-time deals. It’s not a never from me, but it’s a be very, very cautious of how you think about that revenue. As Ruben Gomez says, he did an App Sumo deal. He views those users, he got paid once, and he made I forget what the number is, 33,000 or something from it. App Sumo takes the lion’s share, they take 70 or 80 percent, I believe. He views them as freemium users. He says, “They don’t even think of them as paid users.” That’s how you need to think about it. They are free users that you happened to get a check at one point to maybe help you develop, to maybe help you build. 

I think that’s a much more healthy way to do it. Personally, I can’t imagine ever doing lifetime deals, actually. Then those customers, if you go to try to sell this app, now they are a liability because you have to service them and there is no ongoing revenue. There are some problems with it. It’s not a never do, but it’s a highly discouraged. If a TinySeed company came to me and said they were going to do a lifetime deal, it’s like forking your code base, it’s like translating it into other languages, it’s like launching a second product. I would be pretty hard against it, unless they convinced me that they have thought through all of the ramifications, both positive and negative, and they could convince me why it’s the right choice. 

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My next topic is one from Des Traynor. I saw a tweet from him. He’s the co-founder of Intercom, which I believe is a unicorn company out there with a few billion. He spoke at MicroConf several years back, he’s a good dude. I invited him actually to speak at a recent MicroConf, but he’s busy. He said he has a hard time getting out and about, and speaking at events. But he tweeted, “Having something for everyone gets you acquisition. Having everything for someone gets you retention. Choose wisely.” What an insightful tweet. I respect Des a lot as a product thinker. If you’ve heard any of his conference talks frankly, he’s done talks at YC, he’s done talks at MicroConf. Search him up on YouTube. 

His thinking, for me, it always lines up with a lot of the things I’m thinking, but it takes them to the next level. He says things that, once he says them, I’m like, “Oh my gosh, that’s brilliant. Oh my gosh, that’s obvious.” But it wasn’t obvious before he said it. That’s the best type of philosophy or thinking that I like, which is something that makes me realize something new, it educates me, but it feels very also intuitive at the same time. 

I love this idea. “Having something for everyone gets you acquisition. Having everything for someone gets you retention.” And, “Choose wisely,” he’s implying you have to choose between those. Because in a perfect world, wouldn’t we have a bunch of stuff for everyone so that we could acquire new customers? And then, we could have everything for just one or two of those ICPs. But what he’s saying is then you lose the others, they all churn out. This is in line with that thinking. That really, even if you’re a horizontal product, you still have to make some difficult decisions about who your someones are going to be. Who are you going to have everything for? Because even if you have a horizontal product, there are going to be different use cases, and you are going to have to make hard decisions with incomplete information, as the founder or as the product leader, about what to build and what to say no to. 

This is where realizing who your ideal customers are, who are your best customers, who are the ones who are least price sensitive, who are the ones that get the most value out of your product that churn that least. That are, I don’t know, the best to work with, and that just love it, and stick around. And they tell their friends. They do all these things that help push the business forward. Those are the folks that you try to build everything for. It can often to be hard to find those people, or to know what their commonalities are. 

It might be as simple for you as it was when I built my last startup, Drip. Originally I was like, “Well it’s going to be SaaS founders, and bloggers are using it, and WordPress plugin developers.” There might have been one other, but I think those were the first three. What I realized quickly was WordPress plugin developers were not actually a great audience for it. There’s a bunch of reasons for it. But it became obvious that really, SaaS founders, because there wasn’t a great ESP for SaaS at the time, and then bloggers because they were trying to move automations, move up from MailChimp or move down from Infusionsoft. Then what we realized is we actually were naturally, organically acquiring ecommerce customers. 15% of our customer base was eComm and we had never marketed to eComm. 

It was surprising to me when we found that out. I didn’t know. We had a few thousand customers. We had a virtual assistant. This is before AI, I’d have AI do this now. But we had a virtual assistant go through and categorize a big sampling of them. It turns out that it was surprising to me that so many eComm folks were using it. There was later a pivot to focus on eComm after I left, or as I was transitioning out. Now, it’s been a pivot back to where it’s more of a general email marketing tool and not going specifically after eComm. But those realizations … Drip is a horizontal play. It is an ESP. It could be used by anyone. We had realtors using it. We had folks building custom, bespoke tailor in London. We had podcasters, we had all this stuff. We had internet marketers, info marketers, course makers, all this stuff. That was actually the third, I was grouping bloggers with course folks. I think today they’re called makers or creators, but that term wasn’t really around back then. 

What that made us realize though, is I could bucket the feature requests into, “Oh, they’re SaaS, so they’re going to want this. I want to build some stuff for SaaS.” We did realize that SaaS wanted to go down a path that was really complicated. At a certain point, we backed of it, I’ll say. Folks like Customer.io and Userlist have done a much better job of catering to SaaS. But the bloggers, the course creators and eComm were folks that we were taking comments, thoughts, and really trying to serve. 

Now what we also realized was that bloggers were high churn. Bloggers really hopped around. They would quickly switch. Or they would stop blogging, that’s what we saw a lot. They were very price sensitive, actually. It became this interesting balance of you can have a few ICPs, especially if you have a larger team. But you can’t have 20. You would need separate products if you were going to do that. You would need a lot of folks working. Can you imagine, one code base that catered towards 20 different ideal customer profiles? It’d be a mess. 

That’s what I like about what Des is saying here. It’s, “Having something for everyone gets you acquisition. Having everything for someone gets you retention.” That idea of having everything for one ICP in the early days, and then two, and then three. Maybe you never even get to three, maybe you do only have a specific vertical where you’re targeting HR representatives that work for construction firms, for example. And that is your vertical, then maybe you really do have one ICP. That makes it even easier. Then you build everything for that someone. At a certain point, you tap out your total reachable market. Then, you get to decide do I build a second product for this same ICP? Or do I expand into an adjacent vertical? Do I move to be more horizontal? Do I raise prices? Whatever else, you figure out how to get past that plateau. 

But having something for everyone, a little bit for everyone, it can get people in the door. But does it create the longterm retention, and net negative churn, and expansion revenue, loyal customers, retention, all that? It’s hard to do that. You have to build a product that your ideal customers love and need, and solves a desperate pain point. Desperate enough that they are willing to stick around through the ups and the downs. It’s easier said than done. But that’s why I liked Des’ relatively succinct yet elegant statement of choosing wisely, which you focus on. 

The last topic is on recommending things to other people. This is a person-to-person recommendation thing I’m thinking about. As an example, when I recommend a biography to someone I will say, “Even if you don’t know this person or know their story, it’s a really good story.” This is Phil Knight with Shoe Dog. I don’t really care about the advent of Nike and the start of the company. In fact, I didn’t even wear Nikes when I was a runner, I love ASICS. The idea of Nike was just, “Okay, is this going to be interesting?” It is so well written. If you’re listening to this and you haven’t read or listened to Shoe Dog, I recommend it. It’s an incredible story. One of the best parts is that it ends right at the startup story because it ends, I believe, right before they go public. It’s like once they go public, I don’t really care. I don’t want to hear the trials and tribulations of being a big company, it’s not something that interests me. That’s one of those books where I’m pretty opinionated. Even if you don’t know the person, it’s good. 

Versus the Sid Meier autobiography. If you don’t know who Sid Meier is, you don’t know the games he made, it’s fine. But it’s really cool if you know Civilization. His book is called Sid Meier: A Memoir, or something like that. If you know some of the games he created and you hear him, the touchpoints are really interesting. 

Another one is Masters of Doom, which is the story of id Software, that made Doom, and Quake, and Wolfenstein 3D. I never played any of those games, didn’t really care about them. Even if you haven’t, it’s incredible. It’s one of my favorite audiobooks of all time. Then there are others where, again, you need to know the person in order to be super interested in it. I actually felt like John Romero, who is one of the id Software guys, has a book. It’s an autobiography called Doom Guy. That one was similar where it’s like, “This is cool.” But if you don’t know him or don’t know the story, I think it’s less interesting, so you have to weigh that. 

The reason I’m bringing this up is I think this is a helpful mindset or a helpful framework to think about why you’re recommending someone and letting someone know that. It’s like having strong tastes about particular elements of it. Because I get recommended, I’ll ask on Twitter or I will just get recommended stuff. I’m often like, “What did you like about it?” Because I want to figure out if our tastes are in line enough that it’s worth my time. It’s not the cost. Buying a book, whether it’s on Audible, or on Kindle, or in dead tree version, the cost is irrelevant for me. It is the time it’s going to take me to get into it and evaluate it. I dig in pretty deep on recommendations. 

I’ve had a lot of recommendations. Like I will ask specifically, “Hey, I’m looking for a book that goes deep on SaaS or startup marketing approaches.” I’ll say tactics, specifically marketing tactics, “I want to know a good one to recommend to people.” People will just recommend just crazy random (beep) like, “Shoe Dog by Phil Knight.” I’m like that’s not startup marketing, what are you talking about? Or someone recommended The Lean Startup. Its talks almost nothing about marketing. There’s nothing about marketing tactics in there. It’s this fundamental misunderstand of what the question asker … it’s like they see a keyword, maybe it was an AI answer. I don’t know, man. It’s like they see a keyword that says startup and the AI writes something. But you didn’t think it through, so usually I have a followup question of if I didn’t know any better, I wouldn’t know those were not good suggestions for what I was looking for. 

That’s why, if I’m going to recommend something to anyone, to a friend or to a startup founder, I will tell them, “I recommend you read this book and here is specifically why.” In fact, I recommended Chet Holmes Ultimate Sales Machine today. What I said is, “I think the book is 20 years old, so it’s a little dated. I also think there’s about a third of it that you don’t need to read, and there’s a third of it that is really focused on the Dream 100 customers. I think that’s what you really need. Then there’s a third that’s about business operations, and you can read that if you want to. But really, the reason I’m recommending it to you is because this whole concept around sales and how we does sales. Even though it’s outdated today, you’ll get the idea and you can adapt it.” 

That recommendation is so much more helpful than me saying, “You should read this book.” Not only does it tell you why, it puts guardrails around which part should you really focus on. “If you really like it, read the whole thing, but in the interest of your time being valuable, you can probably just read the part about the Dream 100.” It allows them to think internally, “Oh, this is why I should or shouldn’t read this.” And it allows them to think, “Maybe I shouldn’t.” Maybe the recommendation is off and I get to make that decision. I think being pretty descriptive when you make recommendations is certainly something that I’m doing and I hope it’s something that you will consider doing as well. 

That’s it for today’s episode. Thank you so much for joining me this week and every week. I’ll be back in your ears again, one week from now. Same time, same place. This is Rob Walling, signing off from episode 719.