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In this episode of Startups For The Rest Of Us, Rob does a Founder Hotseat with David Heller of Reimbi, about dealing with his specific issues with enterprise sales.
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Rob: Welcome to this week’s episode of Startups for the Rest of Us. I’m your host Rob Walling. This week’s show is a founder hot seat with David Heller where we talk through Troubleshooting Enterprise Sales. This is Startups for the Rest of Us episode 463.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups. Whether you’ve built your fifth startup or you’re thinking about your first. I’m Rob. Today, with David Heller, we’re going to share our experiences to help you avoid the mistakes we’ve made. Each week on this show, we cover topics relating to building and growing startups in an ambitious fashion, but in a way where we’re not willing to sacrifice our life or our health to grow a company.
We like to be meticulous, disciplined and have repeatable processes, have things that we could do again if we needed to, maybe we’ll run the same company for 30 years, but maybe we’ll wind up moving on, putting a CEO in place, maybe we’ll sell our company. We want to know that we can do this again with a relatively high level of success and that’s unusual in this world of startups. Because so many of the startups that we see are this one-off unicorn—1 in 100,000, 1 in 10,000 startups—and that’s not what we’re looking for here on this show. Today, I’m excited to speak with a TinySeed founder named David Heller. He is the co-founder of Reimbi, and we’re going to dig into his trials and tribulations in a hot seat format.
We have many formats on the show. Oftentimes, we bring folks on for in-depth interviews, we answer a lot of listener questions, we do some tactics, some teaching, sometimes I just wax philosophical. But founder hot seat is where we bring a founder in and focus on something that he/she is struggling with at that moment and try to think through it as two intelligent founders. Almost like we’re standing in front of a whiteboard, batting ideas back and forth. A lot of times it’s, “Here’s the problem. Here’s a potential solution. Have you tried that? Yes or no? What do you think? What’s your gut feel? Would you feel comfortable trying that?” That’s what I enjoy about these hot seat formats.
Over and over, we’ve gotten only positive feedback about the hot seat formats because they go beyond just teaching. I’ve had this concept I’ve been thinking about for a while, and that a lot of podcasts will teach, they’ll teach information, teach from a topic. But I feel I’ve enjoyed transforming this podcast into more of a mass mentorship. I believe more in mentorship than teaching. I think you get a lot more from being mentored and frankly, from being a mentor than just someone who is reading off instructions or giving blanket advice that you read in a book, or maybe you have experienced it, but that isn’t applicable to any one individual, that’s where mass mentorship has context. It has more context about a founder’s situation.
In the case of listener questions, we have context around when a listener writes in or calls in, they give us a background, and ask a very specific question. It’s not about just some random topic, “Here are 10 ways to do a landing page.” And they ask a question, “What’s an 11th way to do a landing page? How do you do that one right and this one wrong? What does it look like to do that right versus wrong?” They’re actually asking specifically, “Hey, here is my landing page. What have I done right? Here is my pricing. Here’s a conundrum.” Context is that next step towards being more of a mentorship relationship. Obviously, it’s not one-on-one, and that’s why I’m saying it’s a mass-mentorship idea.
The founder hot seat takes it even a step further, where we have a lot of back and forth. I can present an idea, a thought, a solution, proposed solution, and David, in this case, can respond and say, “We’ve already tried that. I’m not willing to try that. Here’s why I think it won’t work. Hey, I think that’s a great idea.” The beauty of it is, it’s not just to help David; it’s to help the tens of thousands of people who listen to this podcast. Both to hear the thought process of two intelligent, successful founders who are thinking through a hard problem, they might be struggling with something similar or something related, and they can take away some ideas from it.
In addition, on the show today, we walk through some issues that I think some listeners out there, you might be listening to this and think, “I’ve solved that already.” Or, “Here’s something I tried, and it worked.” I would love to hear it from you questions@startupsfortherestofus if that’s the case.
Before we dive into the hot seat, I actually had a listener ask me a question. I felt like it was worth addressing on the podcast. He said, “Hey, Mike, well, he took a hiatus and that made sense and now he’s coming on the show only once a month. What actually is going on there?” The answer to that is, Mike has really wanted to focus on Bluetick. As you’ve heard, he is off social media, he is heads down, he’s doing stuff with his friends, with his family, and he is focused on growing Bluetick, and that is his number one goal.
Frankly, I wholeheartedly support him in that. I have been in that heads down mode as well when I’m trying to get something off the ground. It’s not just the hours. It’s just the mental ability to focus on something and only think about that; that’s your one thing, the one metric, the one number you’re trying to drive. With that focus does come not wanting to show up every week, and record a podcast episode on something, and have to come up with an outline, and just do all of that.
Again, it’s not that it’s that much time, but it’s a lack of focus. Mike and I have been talking for a while about how to mix up the podcast because you get 450 episodes into something, we’re almost 10 years into this podcast, and it’s easy to get in a rut, and it’s easy to have a format that doesn’t change, and that can start to feel a little dated frankly. I took the opportunity—while Mike was off for a couple of months on his quick hiatus—to obviously revamp, and to do more hot seats, and do more interviews, and to do more thought pieces, and think about how, if I were starting a podcast today, how would I do it and how can I be different than all the other shows that are out there?
That’s what I’ve been trying to do during this time. For now, Mike is going to be coming on the show periodically. I think following his journey is valuable for me. I enjoy when he and I get on the mike; it’s like putting on a nice pair of slippers. Mike and I have recorded literally hundreds and hundreds of episodes. His are the episodes I prepare for the least, feel the most comfortable, and I think turn out well. All the other ones are outside of my comfort zone, so it’s stretching me, which is a good thing. That’s when I know that I’m learning.
That gives you an idea, hopefully, of what’s really going on behind-the-scenes in the podcast. We honestly don’t know what the future will hold—6 months, 12 months, what does it look like? We’re just taking it month-by-month at this point. Obviously, I think all of us wish Mike the best as he’s doubling down on Bluetick and he’ll be back on again a couple of episodes from now. With that, let’s dive into the hot seat.
I want to give you a little background about David Heller. David and his co-founder Paul Trojanowski founded Reimbi several years ago—and it is at reimbi.com—and it addresses the difficult and lengthy process of reimbursing job candidates for interview expenses. It’s kind of an HR vertical and have really good traction actually. Reimbi is a Tiny Seed company, they’re part of our first batch, one of the 10 companies in that first batch. They launched back in 2017. Paul is the technical co-founder and David—who I’m speaking with today—was a B2B product manager, worked in large organizations, he had eight years in the US army, and he brings a ton of experience. Reimbi has clients, including waste management Bridgewater, Kimberly Clark, and Peloton.
They have traction for a relatively early-stage startup in the space. I and the rest of the Tiny Seed team are impressed with how they’ve been executing on this opportunity. Today, we’re going to dig into just a couple issues that David is feeling with their enterprise sales process. He’s got it dialed in pretty well, and they’re landing big clients. We’ve moved from boulders to rocks to pebbles at this point, but it’s pretty fascinating to hear the things that are still troubling him with their process, and we troubleshoot and try to figure out how to fix those. I hope you enjoy this conversation with David Heller.
David, thank you so much for joining me on the show today.
David: Yeah, it’s good to be here, Rob. Thanks for having me.
Rob: You’re a listener as well.
David: I have been a listener for quite a while.
Rob: That’s cool. It’s a pleasure to have you. I think today’s episode, in digging into some of the challenges you’ve been facing and are currently facing, I think will be helpful to think through and helpful for the listeners. We don’t do that many hot seat episodes, they’re often hard to set up, and it’s hard to find a really good problem to dig into, but I think we have a pretty good one today. Do you want to kind of kick us off and explain the high level of what we’ll be thinking through? I know there are some individual points underneath that umbrella.
David: Sure. With Reimbi, we’re generally selling into larger enterprises. Fortune 1000 and up is our target customer. We aren’t selling where they just sign up with a credit card; we’re going through the contract process, there is usually a PO involved. We sometimes go through security reviews. We’re doing many of the steps that, if it was SAP or Concur or some workday, they would have to go through to sell into these companies, we’re having to do that but as a small startup. That’s the problem that I’ve been thinking through for the last couple of years, and working through, and iterating on to try to make better. That’s what I hope you and I can chat through.
Rob: Yeah. I’ve traditionally called these high touch sales. It’s not face-to-face, but it’s one step away from that. I’ve used this term in the past, I say, low touch sales is pretty much low touch or no touch is typically someone comes, self-sign up. I guess that’s technically no touch. Low touches, well, maybe some people need help to get on. Then I’ve always thought of medium as like what we did with Drip where anybody over a certain dollar amount, let’s say they’re over the $49 or over the $99 plan, it’s like, “Let’s funnel them into a sales or customer success call. Let’s get them on-boarded.” Because the lifetime value is there to be able to do it, but you really have been from the start dealing with Fortune 1000s and that, of course, is going to be high touch. They’re going to demand that, and they deserve it because of the dollar amounts that they pay.
As part of Tiny Seed, I know what your financials look like. Your LTV absolutely justifies the time that you spend doing this. It’s a good problem to have in a sense, it is a problem especially when you’re a small team to be doing high touch for every customer; it’s a good problem in that every customer you land, your MRR goes up by a lot more than most SaaS apps that are selling $20 or $30 a month. To give people an idea of that, on your website, you publish your pricing. What does your pricing plans range from on monthly plans?
David: Posted on the site, we have three prepackaged plans. The lowest one is $75, but we don’t have but a handful of customers on that, and then it goes up to $500 a month, and then we have what’s listed as an enterprise plan with a custom quote, and over half of our customers are on that enterprise custom quote.
Rob: Very good. Let’s dig in. I think this topic will be particularly interesting to those listeners who are also starting in this space. We’ve definitely had some emails about this over the past many years we’ve been doing the show. While I think the dream early on when you start a SaaS, for many of us, especially the developer types are that you build a no touch SaaS solution. But realistically, (a) that’s getting harder and (b) it takes a long time, your churn is high, you tend to peak out it whatever 10,000, 20,000, 30,000 MRR, you can’t get over that, so it depends on what you want to build. But having medium touch and high touch sales I think is relevant to almost any business specially ones where you can get customers at least 100 to 200 bucks a month and up.
Let’s talk about what kind of issues you’re facing and let’s bat them around.
David: Yeah, I think the first one is the long sales cycle. We’ll have customers that will reach out, and it’s usually somebody from recruiting that comes through us because they’re interested in improving candidate experience. They see Reimbi, we talk through it with them, and then they have to go off and talk to accounting or procurement because there are just multiple stakeholders that are involved in the candidate reimbursement process. There’s this circling of wagons inside of our customer—and we’ve got our champion and that’s great and we really foster that relationship.
But it seems like no matter what we do, the sales process is going to be long. Sometimes, we catch lightning in a bottle and it goes really quick, but generally, we’re talking up to six months. Sometimes it’s even longer than that where somebody will reach out to us and then they’ll just disappear, then all of a sudden—even after follow ups—unprompted show up a year later and say, “Hey, okay. We’re ready now.” The sales process and getting through that is probably our number one issue and selling the enterprise is just how long it takes to get from that first contact to a signed order form or contract.
Rob: Yeah. Is there a particular place where this gets held up? Is it often one demo and the stakeholder say, “Thumbs up,” and then it takes months? Or is it repeated demos to multiple groups to on and on and on? Where does the hang up typically happen or is it varied?
David: It’s usually in legal. Sometimes in procurement, so we’ll do the demo and over the last couple years we’ve gotten much better at getting the right people on the call for that first demo, so we don’t have to do a second or third one. Not that we’re perfect on that. We’ve done that and we’ve mostly solved that problem. Once everyone’s like, “Yep, this is what we need. This solves our problem,” and then send over the order form, and then it just sits in legal or whatever that is. This black box that no one can seem to crack of getting it through legal or through procurement. That’s usually the sticking point.
Rob: Right. It’s when there’s essentially a third party involved. I know they’re within the same company, but at companies this large, even if it’s on the same campus it’s like, “Yeah, they’re like a mile walk away because they’re in an entirely different thing, and I don’t know this person so I can’t rush it through legal, and it’s just in some queue somewhere.” That’s interesting. I mean the way I think about it is, is there any motivation for them to process it faster, and it doesn’t sound like there is. I think of like having an external motivator to make someone act. If you think about online marketing as an example, you don’t just say, “Send it from my newsletter.” You say, “Send it from my email list and you get this ebook.” There’s like an opt-in reward.
Oftentimes, to put time pressure on people, info marketers are taking it too far, but they’ll say, “Hey, this price is only available for the next 12 hours or on this webinar,” or whatever. I’m curious how this might pan out, I have heard of there being like, “Hey, this is our pricing if we can get this signed in the next 60 days or the next 30 days.” You don’t have to say in the next five days. You can say, “This price is only good for this long and then it goes up.” Whether the reason is our prices are going up or, “Hey, it’s the end of the quarter and we’re trying to make goals, trying to make a quota,” or whatever their justification is for it.
You could frame it as either a savings of like, “Hey, if you get this done, the real price is $500 but we’ll give it to you for $400. We’ll give you a discount.” Then you just raise your prices just to make that make sense for you or you tell them, “Hey, this has to go up at this point.” The reason that I’m internally able to justify that myself is, the longer it takes, the more headache it is for you, the more follow up; the more money is costing you.
I’m curious (a) have you ever heard of anyone doing that and (b) obviously, it could backfire, but do you feel it could potentially be a motivator for someone to say, “Let’s get this done. Let’s get this on the fast track,” because there has to be a way to fast track these and that’s what we’re trying to figure out as an external party, how can we help your stakeholder figure some type of carrot or stick to it to get it fast tracked?
David: Yeah. We’ve tried—and probably in the last three months—we’ll add a discount on the order form. “If this is signed by this date…” and it’s like you said, it’s not by tomorrow because that’s just not reasonable, “…but in the next 30 days or 15 days, then basically, what we’re doing is giving you this line item on the order form for free.” It’s almost like an upgrade in their minds and then they get that discounted out or lined out and get it for free for the first year if they can sign by this date. It’s hard to tell because no one will come back to you and say, “Yeah, we signed this quickly because you put that discount in.”
They’re not going to give you that feedback that your carrot worked—at least no one has so far. Then if it doesn’t work, no one ‘s come back and had a negative reaction to that, no one said, “That’s unreasonable. I don’t know why you’re doing that.” There hasn’t been any downside to doing it. I think about it from a motivation standpoint because I spent time working in procurement. Procurement people are measured by cost savings. If they can they can say, “Hey, we signed this contract and we were able to save $2,000 because we signed the contract faster,” then that’s motivation for that procurement person.
That was kind of my thought process of putting it in there, but that doesn’t work with legal. I haven’t figured out what that motivation is for legal yet. We have tried that line item and I can’t tell yet whether it’s working. We’ve had contracts that were signed before the date and they were kicked in. We’ve also had it where they were not signed. They ultimately were signed, but after the discount and I removed the discount and no one said, “Can you please still give that to us?” There hasn’t been any downside to doing it yet, so we’re going to keep doing that. Yeah, that’s kind of my experience with that so far.
Rob: Yeah. I like that. I’m glad you got there all on your own. I think it makes sense. I can’t think of a reason that legal would move faster either. I mean that is traditionally a thing. We pay our lawyers directly and they take way too long, you know what I mean? It’s one thing. I’m trying to wrap my brain of like, “Well, could you minimize back and forth by having your contracts extremely Fortune 1000 ready?” But you probably already do. Each lawyer is going to read it differently, each company’s going to have different standards. There’s always going to be some back and forth. I’m not sure if I have any insights there other than what you’re doing, which is I know you’re following up every week or whatever and just saying, “Hey, is it there? Hey, is it there?” I think that’s what I’d be doing too.
The biggest thing that I think about with long sales cycles is how can I get double the leads in the pipeline such that if it takes six months to close, if I only have one of the pipeline then I wait six months, but if I have six in the pipeline then I’m actually closing one every month. That’s the other way I like to flip it on its head, “Is there any way possible to get just purely just more leads to that point?”
David: Right. How about on the follow up emails? Because I don’t have the legal contact I don’t have the name of the attorney or the paralegal or whoever that’s sitting there holding the contract. In the follow up emails to my champion or to whomever that I do have contact with. Maybe even thinking about it like from a Drip marketing standpoint is like motivating those people to follow up or to arm them with how to make progress. I think I’m not doing a good job on that. I do follow up frequently, but it’s like, “Hey, any update? What’s new?” I don’t feel like that’s very successful.
Rob: Two things just came to me. One is, have you ever talked to anyone who you weren’t selling to, who worked at a Fortune 1000 company in either of these roles, either of the legal role or the kind of the champion role? Just to ask, whether it’s like your neighbor you know down the street or whether it’s someone you’ve been at MicroConf who you say, “How does this work? What should we be doing here? There has to be some inside secrets to this.” It’s like knowing the secret menu at In-N-Out or a secret handshake or something.
David: Yeah, I know we did it once. We have a customer, just incredibly long process that we’ve gone through with them, and then in the end there’s the procurement person that was actually on some of the calls, which is also helpful if you can get the procurement person on the call. He had to let me know that he was leaving the company and was handing off, so I kind of took that as an opportunity. Okay, I’m going to go talk to him now that he’s not tied to the company and like, “What could we have done better here to make this move faster?” He was just like, “That’s just the beast” and I don’t think they’re that much different than most companies. It just takes a long time and it is frustrating. The logical thing then is to try to raise prices to account for the lengthy sales cycle, but then you start running into this value equation problem. “How much value am I actually providing? Can I just price more because enterprises make it so difficult?”
Rob: That’s one of the reasons that enterprise apps are so expensive. When you look at $2000, $3000, $4000 a month, and you’re like, “Oh my God, our annual contract is probably $30,000, $40,000, $50,000. How can they justify that?” This is how they justify it—it’s that it just takes so many person hours to close a deal. This is a good one. If you’re listening to this and you are on the inside of a Fortune 1000 and you thought, “Wow, here’s something that David could be doing that you could help speed this up,” specifically with the legal side. Because it sounds like you’ve made some headway with the procurement with the kind of monetary incentive, feel free to write in questions at startupsfortherestofus.com or you can post a comment on this episode which is episode 463.
Back to your question about the emails. You’re saying you’re almost trying to arm them or allow them to do it. I think the two things I would think of—you have to try this to see how it works—but one is make the email summarize everything, so it’s easily just forwardable, so they can just hit F and say, “Hey, legal! What’s up? See below.” You’ve basically summarized the whole thing for them of, “Hey, just reminding you. I know this is in legal. I know it went in on this date. You could even say, “Typically, the turnaround is 14 days, but I haven’t heard from you,” and blah blah blah. They could kind of forward it over there. That arms them with something that they don’t have to create a big case. You create their case for them in the writing.
I think the other thing is as you said, getting them on the phone with procurement is helpful. If you’re not already suggesting that in your later stage, maybe you don’t do that in the first one when you check in, but if you’re on the second, third, or fourth is that part of your ask where you’re like, “Hey, just wanted to check in. Should we all just hop on the phone? I can totally do that.” At a certain point, you don’t want to be too forward, you don’t want to be the salesperson, so who’s stomping on feet, but at a certain point, that maybe worth doing.
David: Yeah, I’m always looking for that magic word or something. The phrase that’s going to unlock things but I haven’t found it yet but that’s good advice.
Rob: What else? I feel we’ve covered that pretty well. You had mentioned like these long forms or checklists or something that you have to fill out?
David: Yeah. It’s not uncommon for us to have to go through some sort of security review or fill out a form that talks about our security that we have with Reimbi. I would say, there’s an 80% overlap from company to company on the questions that they want us to answer. I think one thing we’ve done is we’re building up this library of, “Here’s a regular question and here’s our answer,” to try to make it so it’s that much easier to fill these out and just cut and paste and put that in there. But something that happened recently is one of the questions on the forms usually is, “How many people do you have?” Or, “Do you have like a chief security officer?” We’re really small.
I was on a call with the security person, actually, they’re already a customer, but they’re expanding internationally to use Reimbi outside of the US and that caused some additional scrutiny and reviews. I was on a call with their security person and he asked me, “How many people do you have?” The answer to that is three, but that doesn’t sound, at least to me, I definitely hesitated when I was answering that question. I want to be transparent. I’m not going to say something that’s incorrect, but I mean that’s just a topic for me. It’s always a concern going through those is, “Are we sophisticated enough in answering the security form? What our procedures are and all of this stuff when literally there’s three of us and we’re just grinding every day and just trying to get it done?” That’s been a challenge that we’re continuously trying to get better at.
Rob: Yeah. I can imagine that. With the checklists and forms, that’s also the cost of doing business as I see it and just getting more efficient with having a wiki, or notion, or whatever you’re using to collect that I think is good.
Delegate, that’s the other thin. Right now, I’m sure you’re doing most of it. I could see frankly, a $20 an hour VA able to fill that out. If 80% of it really is similar, and you train someone, and then you show them the repo of questions, you send it off, you pay $15 for three quarters of an hour or a full hour for someone to get 80% of the way there, they send it back and then it’s only 15 minutes of your time. That’s a really good human automation task because it’s something you can’t automate with code and you’re not going to fill them out. I mean, it’s a requirement of it. That probably would be the next step that I would consider taking.
David: I definitely can be delegating some of this. Another thing I’ve been considering—and I’d like to get your thoughts on—is contracting just like on a one-time fixed fee deliverable basis is like a CISO person. Someone that has the certifications, has been through this probably to work in an enterprise as a security person, and have them go through our answers and look at it from the reviewer’s perspective on what’s being looked at. Then also on those areas that we’re completely lacking on or insufficient on, what’s the right answer. What’s the right way to answer this question so that we can get through the security review?
Rob: I think that’s a great idea. I think the cool part about looking for the right answer is what’s the right answer such that we can make that be the truth? If the right answer is something we’re not doing today, how about we start doing that such that the right answer is actually what we’re doing. I love that idea. To be honest, I know a guy who was a chief security officer at about 175-person startup. If you need to connect who may be able to do that. I know a few who probably wouldn’t charge very much to walk through for a few hours and give you their opinions. I love that idea. I think that’s great. That’s the beauty of having the repository of your answers is that then those can be a living breathing document and you can really refine this over time.
Back to your other piece, I was fascinated by what to say when they ask how many employees you have. I mean that that is an issue with a lot of companies, especially a lot of startups folks who would listen to this podcast. I think you’re right. It’s not okay to lie because it’s not okay and whether you get caught or whether you don’t, you don’t want to be running a business like that. The way I think about it is this, your number is your number. I know that that you’re a three full time employees. Typically, I would think, if I had two or three part timers who are significantly—even if they were doing design work or support role or something—I would include them in there.
I would say, “Hey, there’s six people working on the product or whatever,” that gives it a little bit of a bump. But we talked before the call and that’s really not the case in your instance. I think that yeah, I think you’re loud and proud with the number three, but I think the way I would think about […] it is in my head, “Is three important? What’s the most important thing? What are they trying to get out with that question?” They’re trying to figure out, “Have you been around awhile? Are you going to stay around? Are you doing best practices? Are you any good?” It’s that kind of stuff.
The underlying questions they’re asking in that question, without trying to couch it too much, it would be like, “Well, we’re three employees but we’ve been in business now for 3 ½ years. We have 45 clients,” or whatever the number is including waste management. I forget who are your clients. You have some really big names that are already trusting you so that that’s credibility. You can point out that, ‘We’re a focus team, we don’t need a large team. We’re actually a profitable company and we have funding.” There are ways to build—credibility is the wrong word—but it’s build some concrete things for them to hang on to.
This is not the sales prospect; you’ve already sold the deal. It’s like a chief security officer, it’s someone who’s trying to assess it out. They don’t know all of that. They probably haven’t looked at any of your marketing material. They probably don’t know how long you’ve been in business or that Kimberly Clark or whoever are your customers. I think casually pointing those things out, giving them the exact right number, but then couching it with, “Hey, these are these are our other credibility building factors.”
David: Yeah, and that’s good. I didn’t do that and that would have been a good way of supplementing the answer instead of just saying three and then just pausing. It was an awkward pause.
Rob: He caught you off guard too. When you get caught off guard that often happens. You don’t think about the right answer until the next time which is cool because next time you will get asked this again, and you’ll be able to be prepared.
David: Yeah, like you said, its credibility. He’s just assessing risk. He’s just trying to make sure like how much risk are they taking on by handing off this process to Reimbi and is it going to come back to haunt them.
Rob: Right, and that’s the other thing you could land and I mean I know they already have it all laid out, your data architecture and your encryption and all that. I know your co-founder is the technical arm of the company. If he has any relevant experience where it’s like, “Well, my co-founder worked in the banking industry for 10 years as a developer.” Anything like that to imply, “We know what we’re doing,” basically I think is helpful or even yourself frankly. I know you worked in the industry before that and you worked for larger companies. “Yeah, I worked in the Fortune 500 for 15 years before this with my co-founder and we’re a focused team,” and blah blah.
Any time I get caught off guard with a question like that, I’m the same way. I tend to freeze. I’ll say something and then an hour later I’m like, “I did not like that answer.” Everyone can do that. The next step though, the way you get better is you say, “What should I have said? What’s the best answer to that?” Because now, every time it gets asked, you’ll have that answer right at your fingertips. It’ll come off smooth and I bet they’ll be impressed because I’m imagining that not everyone does well on that question.
David: Yeah, and then getting that documented as well. I’m not going to be on that call every time forever. Whether it’s Abbey or Paul, or whoever is going to be on that call that we are all like, “This is the answer to this question.” Every time there will be a new one, and we’ll add it to the library but I think having that, just like building up the team’s knowledge would be really helpful.
Rob: Yeah, I agree. There are several people in the TinySeed batch who are really into finding the right answer and then making sure it’s documented. That is a weakness of mine; it’s not a strength. In terms of process and documentation, I tend to flyby the seat of my pants. I get inspired and then I go do something and I like what happens and I get instant feedback, but I don’t go back and kind of systematize it. That I think is a real strong suit of yours especially when dealing with these big companies because you are going to do the same slog work as we’ve talked about here over and over: long sales cycles, large checklist, odd questions about company size on a call. The more you can do to document that I think the better off you’ll be.
David: Yup.
Rob: Well, thanks so much for coming on the show today, David. I appreciate your time and glad we’re able to chat through this stuff. I think it was helpful for listeners as well. If folks want to keep up with you, aside from going to reimbi.com to check out what you’re up to, what’s the best place for them to keep in touch?
David: Because we do enterprise-y stuff, I’m on LinkedIn a lot. You can find David Heller and Reimbi so that’s one spot to connect with me, and then on Twitter we’re reimbi_app, and I’m @DavidHeller.
Rob: Sounds great. Thanks again.
David: Thanks, Rob.
Rob: If you have any questions for David or you feel like you have a thought or idea on how he could get around some of the issues that he’s facing, please do. Send us an email at questionsatstartupsfortherestofus.com or you can leave us a voicemail at 888-801-9690. Next episode, I’ll be talking with Steli Efti of clothes.com. We will, of course, be digging into sales topics.
Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us on iTunes by searching for Startups and visit startupsfortherestofus.com for a full transcript of each episode with a new Startups for the Rest of Us website. I have resurrected the email list. If you’re not on our email list, you really should be. Head over to startupsfortherestofus.com, enter your email, we don’t email that often, but when we do, it’s good stuff.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups. Whether you’ve built your fifth startup or you’re thinking about your first. I’m Rob. Today, with David Heller, we’re going to share our experiences to help you avoid the mistakes we’ve made. Each week on this show, we cover topics relating to building and growing startups in an ambitious fashion, but in a way where we’re not willing to sacrifice our life or our health to grow a company.
We like to be meticulous, disciplined and have repeatable processes, have things that we could do again if we needed to, maybe we’ll run the same company for 30 years, but maybe we’ll wind up moving on, putting a CEO in place, maybe we’ll sell our company. We want to know that we can do this again with a relatively high level of success and that’s unusual in this world of startups. Because so many of the startups that we see are this one-off unicorn—1 in 100,000, 1 in 10,000 startups—and that’s not what we’re looking for here on this show. Today, I’m excited to speak with a TinySeed founder named David Heller. He is the co-founder of Reimbi, and we’re going to dig into his trials and tribulations in a hot seat format.
We have many formats on the show. Oftentimes, we bring folks on for in-depth interviews, we answer a lot of listener questions, we do some tactics, some teaching, sometimes I just wax philosophical. But founder hot seat is where we bring a founder in and focus on something that he/she is struggling with at that moment and try to think through it as two intelligent founders. Almost like we’re standing in front of a whiteboard, batting ideas back and forth. A lot of times it’s, “Here’s the problem. Here’s a potential solution. Have you tried that? Yes or no? What do you think? What’s your gut feel? Would you feel comfortable trying that?” That’s what I enjoy about these hot seat formats.
Over and over, we’ve gotten only positive feedback about the hot seat formats because they go beyond just teaching. I’ve had this concept I’ve been thinking about for a while, and that a lot of podcasts will teach, they’ll teach information, teach from a topic. But I feel I’ve enjoyed transforming this podcast into more of a mass mentorship. I believe more in mentorship than teaching. I think you get a lot more from being mentored and frankly, from being a mentor than just someone who is reading off instructions or giving blanket advice that you read in a book, or maybe you have experienced it, but that isn’t applicable to any one individual, that’s where mass mentorship has context. It has more context about a founder’s situation.
In the case of listener questions, we have context around when a listener writes in or calls in, they give us a background, and ask a very specific question. It’s not about just some random topic, “Here are 10 ways to do a landing page.” And they ask a question, “What’s an 11th way to do a landing page? How do you do that one right and this one wrong? What does it look like to do that right versus wrong?” They’re actually asking specifically, “Hey, here is my landing page. What have I done right? Here is my pricing. Here’s a conundrum.” Context is that next step towards being more of a mentorship relationship. Obviously, it’s not one-on-one, and that’s why I’m saying it’s a mass-mentorship idea.
The founder hot seat takes it even a step further, where we have a lot of back and forth. I can present an idea, a thought, a solution, proposed solution, and David, in this case, can respond and say, “We’ve already tried that. I’m not willing to try that. Here’s why I think it won’t work. Hey, I think that’s a great idea.” The beauty of it is, it’s not just to help David; it’s to help the tens of thousands of people who listen to this podcast. Both to hear the thought process of two intelligent, successful founders who are thinking through a hard problem, they might be struggling with something similar or something related, and they can take away some ideas from it.
In addition, on the show today, we walk through some issues that I think some listeners out there, you might be listening to this and think, “I’ve solved that already.” Or, “Here’s something I tried, and it worked.” I would love to hear it from you questions@startupsfortherestofus if that’s the case.
Before we dive into the hot seat, I actually had a listener ask me a question. I felt like it was worth addressing on the podcast. He said, “Hey, Mike, well, he took a hiatus and that made sense and now he’s coming on the show only once a month. What actually is going on there?” The answer to that is, Mike has really wanted to focus on Bluetick. As you’ve heard, he is off social media, he is heads down, he’s doing stuff with his friends, with his family, and he is focused on growing Bluetick, and that is his number one goal.
Frankly, I wholeheartedly support him in that. I have been in that heads down mode as well when I’m trying to get something off the ground. It’s not just the hours. It’s just the mental ability to focus on something and only think about that; that’s your one thing, the one metric, the one number you’re trying to drive. With that focus does come not wanting to show up every week, and record a podcast episode on something, and have to come up with an outline, and just do all of that.
Again, it’s not that it’s that much time, but it’s a lack of focus. Mike and I have been talking for a while about how to mix up the podcast because you get 450 episodes into something, we’re almost 10 years into this podcast, and it’s easy to get in a rut, and it’s easy to have a format that doesn’t change, and that can start to feel a little dated frankly. I took the opportunity—while Mike was off for a couple of months on his quick hiatus—to obviously revamp, and to do more hot seats, and do more interviews, and to do more thought pieces, and think about how, if I were starting a podcast today, how would I do it and how can I be different than all the other shows that are out there?
That’s what I’ve been trying to do during this time. For now, Mike is going to be coming on the show periodically. I think following his journey is valuable for me. I enjoy when he and I get on the mike; it’s like putting on a nice pair of slippers. Mike and I have recorded literally hundreds and hundreds of episodes. His are the episodes I prepare for the least, feel the most comfortable, and I think turn out well. All the other ones are outside of my comfort zone, so it’s stretching me, which is a good thing. That’s when I know that I’m learning.
That gives you an idea, hopefully, of what’s really going on behind-the-scenes in the podcast. We honestly don’t know what the future will hold—6 months, 12 months, what does it look like? We’re just taking it month-by-month at this point. Obviously, I think all of us wish Mike the best as he’s doubling down on Bluetick and he’ll be back on again a couple of episodes from now. With that, let’s dive into the hot seat.
I want to give you a little background about David Heller. David and his co-founder Paul Trojanowski founded Reimbi several years ago—and it is at reimbi.com—and it addresses the difficult and lengthy process of reimbursing job candidates for interview expenses. It’s kind of an HR vertical and have really good traction actually. Reimbi is a Tiny Seed company, they’re part of our first batch, one of the 10 companies in that first batch. They launched back in 2017. Paul is the technical co-founder and David—who I’m speaking with today—was a B2B product manager, worked in large organizations, he had eight years in the US army, and he brings a ton of experience. Reimbi has clients, including waste management Bridgewater, Kimberly Clark, and Peloton.
They have traction for a relatively early-stage startup in the space. I and the rest of the Tiny Seed team are impressed with how they’ve been executing on this opportunity. Today, we’re going to dig into just a couple issues that David is feeling with their enterprise sales process. He’s got it dialed in pretty well, and they’re landing big clients. We’ve moved from boulders to rocks to pebbles at this point, but it’s pretty fascinating to hear the things that are still troubling him with their process, and we troubleshoot and try to figure out how to fix those. I hope you enjoy this conversation with David Heller.
David, thank you so much for joining me on the show today.
David: Yeah, it’s good to be here, Rob. Thanks for having me.
Rob: You’re a listener as well.
David: I have been a listener for quite a while.
Rob: That’s cool. It’s a pleasure to have you. I think today’s episode, in digging into some of the challenges you’ve been facing and are currently facing, I think will be helpful to think through and helpful for the listeners. We don’t do that many hot seat episodes, they’re often hard to set up, and it’s hard to find a really good problem to dig into, but I think we have a pretty good one today. Do you want to kind of kick us off and explain the high level of what we’ll be thinking through? I know there are some individual points underneath that umbrella.
David: Sure. With Reimbi, we’re generally selling into larger enterprises. Fortune 1000 and up is our target customer. We aren’t selling where they just sign up with a credit card; we’re going through the contract process, there is usually a PO involved. We sometimes go through security reviews. We’re doing many of the steps that, if it was SAP or Concur or some workday, they would have to go through to sell into these companies, we’re having to do that but as a small startup. That’s the problem that I’ve been thinking through for the last couple of years, and working through, and iterating on to try to make better. That’s what I hope you and I can chat through.
Rob: Yeah. I’ve traditionally called these high touch sales. It’s not face-to-face, but it’s one step away from that. I’ve used this term in the past, I say, low touch sales is pretty much low touch or no touch is typically someone comes, self-sign up. I guess that’s technically no touch. Low touches, well, maybe some people need help to get on. Then I’ve always thought of medium as like what we did with Drip where anybody over a certain dollar amount, let’s say they’re over the $49 or over the $99 plan, it’s like, “Let’s funnel them into a sales or customer success call. Let’s get them on-boarded.” Because the lifetime value is there to be able to do it, but you really have been from the start dealing with Fortune 1000s and that, of course, is going to be high touch. They’re going to demand that, and they deserve it because of the dollar amounts that they pay.
As part of Tiny Seed, I know what your financials look like. Your LTV absolutely justifies the time that you spend doing this. It’s a good problem to have in a sense, it is a problem especially when you’re a small team to be doing high touch for every customer; it’s a good problem in that every customer you land, your MRR goes up by a lot more than most SaaS apps that are selling $20 or $30 a month. To give people an idea of that, on your website, you publish your pricing. What does your pricing plans range from on monthly plans?
David: Posted on the site, we have three prepackaged plans. The lowest one is $75, but we don’t have but a handful of customers on that, and then it goes up to $500 a month, and then we have what’s listed as an enterprise plan with a custom quote, and over half of our customers are on that enterprise custom quote.
Rob: Very good. Let’s dig in. I think this topic will be particularly interesting to those listeners who are also starting in this space. We’ve definitely had some emails about this over the past many years we’ve been doing the show. While I think the dream early on when you start a SaaS, for many of us, especially the developer types are that you build a no touch SaaS solution. But realistically, (a) that’s getting harder and (b) it takes a long time, your churn is high, you tend to peak out it whatever 10,000, 20,000, 30,000 MRR, you can’t get over that, so it depends on what you want to build. But having medium touch and high touch sales I think is relevant to almost any business specially ones where you can get customers at least 100 to 200 bucks a month and up.
Let’s talk about what kind of issues you’re facing and let’s bat them around.
David: Yeah, I think the first one is the long sales cycle. We’ll have customers that will reach out, and it’s usually somebody from recruiting that comes through us because they’re interested in improving candidate experience. They see Reimbi, we talk through it with them, and then they have to go off and talk to accounting or procurement because there are just multiple stakeholders that are involved in the candidate reimbursement process. There’s this circling of wagons inside of our customer—and we’ve got our champion and that’s great and we really foster that relationship.
But it seems like no matter what we do, the sales process is going to be long. Sometimes, we catch lightning in a bottle and it goes really quick, but generally, we’re talking up to six months. Sometimes it’s even longer than that where somebody will reach out to us and then they’ll just disappear, then all of a sudden—even after follow ups—unprompted show up a year later and say, “Hey, okay. We’re ready now.” The sales process and getting through that is probably our number one issue and selling the enterprise is just how long it takes to get from that first contact to a signed order form or contract.
Rob: Yeah. Is there a particular place where this gets held up? Is it often one demo and the stakeholder say, “Thumbs up,” and then it takes months? Or is it repeated demos to multiple groups to on and on and on? Where does the hang up typically happen or is it varied?
David: It’s usually in legal. Sometimes in procurement, so we’ll do the demo and over the last couple years we’ve gotten much better at getting the right people on the call for that first demo, so we don’t have to do a second or third one. Not that we’re perfect on that. We’ve done that and we’ve mostly solved that problem. Once everyone’s like, “Yep, this is what we need. This solves our problem,” and then send over the order form, and then it just sits in legal or whatever that is. This black box that no one can seem to crack of getting it through legal or through procurement. That’s usually the sticking point.
Rob: Right. It’s when there’s essentially a third party involved. I know they’re within the same company, but at companies this large, even if it’s on the same campus it’s like, “Yeah, they’re like a mile walk away because they’re in an entirely different thing, and I don’t know this person so I can’t rush it through legal, and it’s just in some queue somewhere.” That’s interesting. I mean the way I think about it is, is there any motivation for them to process it faster, and it doesn’t sound like there is. I think of like having an external motivator to make someone act. If you think about online marketing as an example, you don’t just say, “Send it from my newsletter.” You say, “Send it from my email list and you get this ebook.” There’s like an opt-in reward.
Oftentimes, to put time pressure on people, info marketers are taking it too far, but they’ll say, “Hey, this price is only available for the next 12 hours or on this webinar,” or whatever. I’m curious how this might pan out, I have heard of there being like, “Hey, this is our pricing if we can get this signed in the next 60 days or the next 30 days.” You don’t have to say in the next five days. You can say, “This price is only good for this long and then it goes up.” Whether the reason is our prices are going up or, “Hey, it’s the end of the quarter and we’re trying to make goals, trying to make a quota,” or whatever their justification is for it.
You could frame it as either a savings of like, “Hey, if you get this done, the real price is $500 but we’ll give it to you for $400. We’ll give you a discount.” Then you just raise your prices just to make that make sense for you or you tell them, “Hey, this has to go up at this point.” The reason that I’m internally able to justify that myself is, the longer it takes, the more headache it is for you, the more follow up; the more money is costing you.
I’m curious (a) have you ever heard of anyone doing that and (b) obviously, it could backfire, but do you feel it could potentially be a motivator for someone to say, “Let’s get this done. Let’s get this on the fast track,” because there has to be a way to fast track these and that’s what we’re trying to figure out as an external party, how can we help your stakeholder figure some type of carrot or stick to it to get it fast tracked?
David: Yeah. We’ve tried—and probably in the last three months—we’ll add a discount on the order form. “If this is signed by this date…” and it’s like you said, it’s not by tomorrow because that’s just not reasonable, “…but in the next 30 days or 15 days, then basically, what we’re doing is giving you this line item on the order form for free.” It’s almost like an upgrade in their minds and then they get that discounted out or lined out and get it for free for the first year if they can sign by this date. It’s hard to tell because no one will come back to you and say, “Yeah, we signed this quickly because you put that discount in.”
They’re not going to give you that feedback that your carrot worked—at least no one has so far. Then if it doesn’t work, no one ‘s come back and had a negative reaction to that, no one said, “That’s unreasonable. I don’t know why you’re doing that.” There hasn’t been any downside to doing it. I think about it from a motivation standpoint because I spent time working in procurement. Procurement people are measured by cost savings. If they can they can say, “Hey, we signed this contract and we were able to save $2,000 because we signed the contract faster,” then that’s motivation for that procurement person.
That was kind of my thought process of putting it in there, but that doesn’t work with legal. I haven’t figured out what that motivation is for legal yet. We have tried that line item and I can’t tell yet whether it’s working. We’ve had contracts that were signed before the date and they were kicked in. We’ve also had it where they were not signed. They ultimately were signed, but after the discount and I removed the discount and no one said, “Can you please still give that to us?” There hasn’t been any downside to doing it yet, so we’re going to keep doing that. Yeah, that’s kind of my experience with that so far.
Rob: Yeah. I like that. I’m glad you got there all on your own. I think it makes sense. I can’t think of a reason that legal would move faster either. I mean that is traditionally a thing. We pay our lawyers directly and they take way too long, you know what I mean? It’s one thing. I’m trying to wrap my brain of like, “Well, could you minimize back and forth by having your contracts extremely Fortune 1000 ready?” But you probably already do. Each lawyer is going to read it differently, each company’s going to have different standards. There’s always going to be some back and forth. I’m not sure if I have any insights there other than what you’re doing, which is I know you’re following up every week or whatever and just saying, “Hey, is it there? Hey, is it there?” I think that’s what I’d be doing too.
The biggest thing that I think about with long sales cycles is how can I get double the leads in the pipeline such that if it takes six months to close, if I only have one of the pipeline then I wait six months, but if I have six in the pipeline then I’m actually closing one every month. That’s the other way I like to flip it on its head, “Is there any way possible to get just purely just more leads to that point?”
David: Right. How about on the follow up emails? Because I don’t have the legal contact I don’t have the name of the attorney or the paralegal or whoever that’s sitting there holding the contract. In the follow up emails to my champion or to whomever that I do have contact with. Maybe even thinking about it like from a Drip marketing standpoint is like motivating those people to follow up or to arm them with how to make progress. I think I’m not doing a good job on that. I do follow up frequently, but it’s like, “Hey, any update? What’s new?” I don’t feel like that’s very successful.
Rob: Two things just came to me. One is, have you ever talked to anyone who you weren’t selling to, who worked at a Fortune 1000 company in either of these roles, either of the legal role or the kind of the champion role? Just to ask, whether it’s like your neighbor you know down the street or whether it’s someone you’ve been at MicroConf who you say, “How does this work? What should we be doing here? There has to be some inside secrets to this.” It’s like knowing the secret menu at In-N-Out or a secret handshake or something.
David: Yeah, I know we did it once. We have a customer, just incredibly long process that we’ve gone through with them, and then in the end there’s the procurement person that was actually on some of the calls, which is also helpful if you can get the procurement person on the call. He had to let me know that he was leaving the company and was handing off, so I kind of took that as an opportunity. Okay, I’m going to go talk to him now that he’s not tied to the company and like, “What could we have done better here to make this move faster?” He was just like, “That’s just the beast” and I don’t think they’re that much different than most companies. It just takes a long time and it is frustrating. The logical thing then is to try to raise prices to account for the lengthy sales cycle, but then you start running into this value equation problem. “How much value am I actually providing? Can I just price more because enterprises make it so difficult?”
Rob: That’s one of the reasons that enterprise apps are so expensive. When you look at $2000, $3000, $4000 a month, and you’re like, “Oh my God, our annual contract is probably $30,000, $40,000, $50,000. How can they justify that?” This is how they justify it—it’s that it just takes so many person hours to close a deal. This is a good one. If you’re listening to this and you are on the inside of a Fortune 1000 and you thought, “Wow, here’s something that David could be doing that you could help speed this up,” specifically with the legal side. Because it sounds like you’ve made some headway with the procurement with the kind of monetary incentive, feel free to write in questions at startupsfortherestofus.com or you can post a comment on this episode which is episode 463.
Back to your question about the emails. You’re saying you’re almost trying to arm them or allow them to do it. I think the two things I would think of—you have to try this to see how it works—but one is make the email summarize everything, so it’s easily just forwardable, so they can just hit F and say, “Hey, legal! What’s up? See below.” You’ve basically summarized the whole thing for them of, “Hey, just reminding you. I know this is in legal. I know it went in on this date. You could even say, “Typically, the turnaround is 14 days, but I haven’t heard from you,” and blah blah blah. They could kind of forward it over there. That arms them with something that they don’t have to create a big case. You create their case for them in the writing.
I think the other thing is as you said, getting them on the phone with procurement is helpful. If you’re not already suggesting that in your later stage, maybe you don’t do that in the first one when you check in, but if you’re on the second, third, or fourth is that part of your ask where you’re like, “Hey, just wanted to check in. Should we all just hop on the phone? I can totally do that.” At a certain point, you don’t want to be too forward, you don’t want to be the salesperson, so who’s stomping on feet, but at a certain point, that maybe worth doing.
David: Yeah, I’m always looking for that magic word or something. The phrase that’s going to unlock things but I haven’t found it yet but that’s good advice.
Rob: What else? I feel we’ve covered that pretty well. You had mentioned like these long forms or checklists or something that you have to fill out?
David: Yeah. It’s not uncommon for us to have to go through some sort of security review or fill out a form that talks about our security that we have with Reimbi. I would say, there’s an 80% overlap from company to company on the questions that they want us to answer. I think one thing we’ve done is we’re building up this library of, “Here’s a regular question and here’s our answer,” to try to make it so it’s that much easier to fill these out and just cut and paste and put that in there. But something that happened recently is one of the questions on the forms usually is, “How many people do you have?” Or, “Do you have like a chief security officer?” We’re really small.
I was on a call with the security person, actually, they’re already a customer, but they’re expanding internationally to use Reimbi outside of the US and that caused some additional scrutiny and reviews. I was on a call with their security person and he asked me, “How many people do you have?” The answer to that is three, but that doesn’t sound, at least to me, I definitely hesitated when I was answering that question. I want to be transparent. I’m not going to say something that’s incorrect, but I mean that’s just a topic for me. It’s always a concern going through those is, “Are we sophisticated enough in answering the security form? What our procedures are and all of this stuff when literally there’s three of us and we’re just grinding every day and just trying to get it done?” That’s been a challenge that we’re continuously trying to get better at.
Rob: Yeah. I can imagine that. With the checklists and forms, that’s also the cost of doing business as I see it and just getting more efficient with having a wiki, or notion, or whatever you’re using to collect that I think is good.
Delegate, that’s the other thin. Right now, I’m sure you’re doing most of it. I could see frankly, a $20 an hour VA able to fill that out. If 80% of it really is similar, and you train someone, and then you show them the repo of questions, you send it off, you pay $15 for three quarters of an hour or a full hour for someone to get 80% of the way there, they send it back and then it’s only 15 minutes of your time. That’s a really good human automation task because it’s something you can’t automate with code and you’re not going to fill them out. I mean, it’s a requirement of it. That probably would be the next step that I would consider taking.
David: I definitely can be delegating some of this. Another thing I’ve been considering—and I’d like to get your thoughts on—is contracting just like on a one-time fixed fee deliverable basis is like a CISO person. Someone that has the certifications, has been through this probably to work in an enterprise as a security person, and have them go through our answers and look at it from the reviewer’s perspective on what’s being looked at. Then also on those areas that we’re completely lacking on or insufficient on, what’s the right answer. What’s the right way to answer this question so that we can get through the security review?
Rob: I think that’s a great idea. I think the cool part about looking for the right answer is what’s the right answer such that we can make that be the truth? If the right answer is something we’re not doing today, how about we start doing that such that the right answer is actually what we’re doing. I love that idea. To be honest, I know a guy who was a chief security officer at about 175-person startup. If you need to connect who may be able to do that. I know a few who probably wouldn’t charge very much to walk through for a few hours and give you their opinions. I love that idea. I think that’s great. That’s the beauty of having the repository of your answers is that then those can be a living breathing document and you can really refine this over time.
Back to your other piece, I was fascinated by what to say when they ask how many employees you have. I mean that that is an issue with a lot of companies, especially a lot of startups folks who would listen to this podcast. I think you’re right. It’s not okay to lie because it’s not okay and whether you get caught or whether you don’t, you don’t want to be running a business like that. The way I think about it is this, your number is your number. I know that that you’re a three full time employees. Typically, I would think, if I had two or three part timers who are significantly—even if they were doing design work or support role or something—I would include them in there.
I would say, “Hey, there’s six people working on the product or whatever,” that gives it a little bit of a bump. But we talked before the call and that’s really not the case in your instance. I think that yeah, I think you’re loud and proud with the number three, but I think the way I would think about […] it is in my head, “Is three important? What’s the most important thing? What are they trying to get out with that question?” They’re trying to figure out, “Have you been around awhile? Are you going to stay around? Are you doing best practices? Are you any good?” It’s that kind of stuff.
The underlying questions they’re asking in that question, without trying to couch it too much, it would be like, “Well, we’re three employees but we’ve been in business now for 3 ½ years. We have 45 clients,” or whatever the number is including waste management. I forget who are your clients. You have some really big names that are already trusting you so that that’s credibility. You can point out that, ‘We’re a focus team, we don’t need a large team. We’re actually a profitable company and we have funding.” There are ways to build—credibility is the wrong word—but it’s build some concrete things for them to hang on to.
This is not the sales prospect; you’ve already sold the deal. It’s like a chief security officer, it’s someone who’s trying to assess it out. They don’t know all of that. They probably haven’t looked at any of your marketing material. They probably don’t know how long you’ve been in business or that Kimberly Clark or whoever are your customers. I think casually pointing those things out, giving them the exact right number, but then couching it with, “Hey, these are these are our other credibility building factors.”
David: Yeah, and that’s good. I didn’t do that and that would have been a good way of supplementing the answer instead of just saying three and then just pausing. It was an awkward pause.
Rob: He caught you off guard too. When you get caught off guard that often happens. You don’t think about the right answer until the next time which is cool because next time you will get asked this again, and you’ll be able to be prepared.
David: Yeah, like you said, its credibility. He’s just assessing risk. He’s just trying to make sure like how much risk are they taking on by handing off this process to Reimbi and is it going to come back to haunt them.
Rob: Right, and that’s the other thing you could land and I mean I know they already have it all laid out, your data architecture and your encryption and all that. I know your co-founder is the technical arm of the company. If he has any relevant experience where it’s like, “Well, my co-founder worked in the banking industry for 10 years as a developer.” Anything like that to imply, “We know what we’re doing,” basically I think is helpful or even yourself frankly. I know you worked in the industry before that and you worked for larger companies. “Yeah, I worked in the Fortune 500 for 15 years before this with my co-founder and we’re a focused team,” and blah blah.
Any time I get caught off guard with a question like that, I’m the same way. I tend to freeze. I’ll say something and then an hour later I’m like, “I did not like that answer.” Everyone can do that. The next step though, the way you get better is you say, “What should I have said? What’s the best answer to that?” Because now, every time it gets asked, you’ll have that answer right at your fingertips. It’ll come off smooth and I bet they’ll be impressed because I’m imagining that not everyone does well on that question.
David: Yeah, and then getting that documented as well. I’m not going to be on that call every time forever. Whether it’s Abbey or Paul, or whoever is going to be on that call that we are all like, “This is the answer to this question.” Every time there will be a new one, and we’ll add it to the library but I think having that, just like building up the team’s knowledge would be really helpful.
Rob: Yeah, I agree. There are several people in the TinySeed batch who are really into finding the right answer and then making sure it’s documented. That is a weakness of mine; it’s not a strength. In terms of process and documentation, I tend to flyby the seat of my pants. I get inspired and then I go do something and I like what happens and I get instant feedback, but I don’t go back and kind of systematize it. That I think is a real strong suit of yours especially when dealing with these big companies because you are going to do the same slog work as we’ve talked about here over and over: long sales cycles, large checklist, odd questions about company size on a call. The more you can do to document that I think the better off you’ll be.
David: Yup.
Rob: Well, thanks so much for coming on the show today, David. I appreciate your time and glad we’re able to chat through this stuff. I think it was helpful for listeners as well. If folks want to keep up with you, aside from going to reimbi.com to check out what you’re up to, what’s the best place for them to keep in touch?
David: Because we do enterprise-y stuff, I’m on LinkedIn a lot. You can find David Heller and Reimbi so that’s one spot to connect with me, and then on Twitter we’re reimbi_app, and I’m @DavidHeller.
Rob: Sounds great. Thanks again.
David: Thanks, Rob.
Rob: If you have any questions for David or you feel like you have a thought or idea on how he could get around some of the issues that he’s facing, please do. Send us an email at questionsatstartupsfortherestofus.com or you can leave us a voicemail at 888-801-9690. Next episode, I’ll be talking with Steli Efti of clothes.com. We will, of course, be digging into sales topics.
Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us on iTunes by searching for Startups and visit startupsfortherestofus.com for a full transcript of each episode with a new Startups for the Rest of Us website. I have resurrected the email list. If you’re not on our email list, you really should be. Head over to startupsfortherestofus.com, enter your email, we don’t email that often, but when we do, it’s good stuff.
Episode 462 | Competing Against an 800 lb. Gorilla, Splitting from Your Co-founder, and More Listener Questions (with Jeff Epstein)
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Show Notes
In this episode of Startups For The Rest Of Us, Rob along with co-host Jeff Epstein, answer a number of listener questions on topics including competing against a giant company, splitting from a co-founder, having enough features and more.
Items mentioned in this episode:
Rob: Welcome to this week’s episode for Startups for the Rest of Us. I’m your host, Rob Walling. On this week’s show, we enter listener questions on topics like competing against a 900-pound gorilla, splitting from your co-founder, and whether there is such a thing as having enough features in your app. I welcome Jeff Epstein back on the show to help me answer your questions. This is Startups for the Rest of Us episode 462.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups. Whether you’ve built your fifth start up or you’re thinking about your first. I’m Rob and today with Jeff Epstein, we’re here to share our experiences to help you avoid the mistakes we’ve made in the past.
Welcome back to Startups for the Rest of Us. Thanks for joining me. You took on the show, we covered topics relating to building and growing startups in order to provide ourselves a better life, improve the world in a small way. We strive to have a positive impact on other people, be it your customers, your team, your family. We’re ambitious founders but we’re not willing to sacrifice our life, our health, or our families to grow a company.
We have several show formats for Startups for the Rest of Us. Every month or two, Mike Taber comes on and updates us on his entrepreneurial journey. We also have some tactic and teaching episodes, I do some interviews now and again, founder hot seats, and today’s episode is all about listener questions. It’s questions from you and folks like you who are listening, they write in or send an audio question and we do our best to think it through. I really think about what I would do in their shoes and then answer the question.
Jeff Epstein comes to join me today. If you remember back to episode 453, we talked through his journey as a non-technical founder, of building a SaaS app to between $5 million and $10 million ARR, and then exiting that. He had a pretty stressful and impactful journey, life-changing journey for him, and he has a lot of experience under his belt. I think you’ll enjoy the questions that we answer today.
Before we dive into the questions, I want to remind you that MicroConf Minneapolis is next April 19th through 23rd, so you’re going to want to block those dates off on your calendar. Also let you know again that the TinySeed application process opens on November 1st. It will run for about a month, so if you are interested in potentially being part of our next batch, enter your email at tinyseed.com.
As well as tease again about my secret podcast project I’ve been working on for about three or four months and I hope you enjoy that. I’ll have more info on that as I get more of that produced. Just want it to be a bit further along before I start putting stuff like that out in public. With that, let’s dive into our listener questions today.
Jeff: thanks so much for coming back on the show.
Jeff: Hey, thanks for having me, Rob. I appreciate it.
Rob: Absolutely. We have some good questions to run through today. The first was from Twitter. I actually did a casual call-for-questions to see—after your episode went live—if anyone had a question for you and Fuego Online sent this question. He said, “Did Jeff Epstein feel way out of his depth? I know I do sometimes and I have a technical partner.”
Jeff: Yes, definitely out of my depth many times. Not necessary as much being technical or not technical, but I think it just depends on the stage of the business. For me, that probably happen pretty regularly where you feel that way.
Rob: I think that’s really common. I feel way out of my depth most of the time I’m doing something interesting, I’m learning, and it’s stretching me. I say I feel out of my depth. He said way out of your depth, which I do think is a differentiation. There’s comfort zone and then there’s almost that breaking point.
I have to imagine there were several moments over your eight- or nine-year journey that you’re on the edge, of like, “Oh my gosh, this might not work,” or, “Oh my gosh, this is the most stress I’ve ever felt.” Is there a time you could take us to?
Jeff: Yes. For me, I certainly felt over my head in many scenarios, and like you said, I’m a first-time founder. So, everything is essentially new for me. As we grow, there are new challenges ahead and there’s so many situations where I felt that way.
Two probably stick out in terms of really a horrible feeling of what did I get myself into. One was when we changed co-founders pretty early on before we even finished fund-raising. The early employee and I didn’t see eye-to-eye and he left the company. I was left with not much in terms of a team. That was one.
Another one was actually much later, maybe five years later and it was when for the first time you realize that there’s a lot of things happening that you are not aware of. This was when we’re about 20 people or so. It was one of those situations where you’re like, “Wow, I really need to step up my game.”
Basically, what happened was there was just a lot of people that weren’t happy with some people in the company or just the way things were. A lot of it was my fault, some of it I frankly didn’t know about and didn’t have the communication structure in place to solve those things or to get the feedback channels filtered up to myself. That was a really eye-opening experience and been pretty painful.
The one thing I would say is, I’m pretty confident in myself being able to learn quickly. I think that’s—for better or worse—kind of my superpower, so to speak, where if I just have the information, I figure I can do something pretty well with it. For me, it’s just a matter of figuring out what the issues are, what the problems are, and what are the available options to start fixing it. When that happens, I think I’ve done pretty well.
Rob: I would agree. I’m going to keep saying on the show more than half of being a successful entrepreneur is managing your own psychology. Part of that is believing that you can get it done, taking things that seem like roadblocks and saying, “How do I turn these into speed bumps? What are the five, six, seven options here?” No matter how bad, no matter how good, lay them all out, look at it, and move ahead. It’s like having confidence in yourself that you can figure this out.
There’s so few things that are actually company-ending. There are obviously a few, but so many of them in our heads. I know I’ve done this. You just catastrophize it. You’re like, “Oh my gosh, this is the worst thing ever. What have I built?” This will be done in three days if you handle it well. If you actually do the right thing, it will smooth over and be done in a week or whenever.
Let’s dive into our next question and it is a voicemail about competing in a space when there’s an 800-pound gorilla, namely Shopify.
Ahmed: Hi, Rob. This is Ahmed from Toronto, Canada. I have a question regarding starting a startup in a very competitive space like, say, ecommerce, specifically competing with a company like Shopify, which is pretty much a company that has been doing everything right in terms of technology, focusing on the low-end market. They also have Shopify Plus targeting more enterprisey customers.
They have a core set of features which are then built upon by app developers. They have a market effect with agencies. They have a very good content marketing strategy on their blog, and they’re dealing with B2B customers who might not be as price-sensitive as the B2C customer. So, concerning all these things, do you think it’s possible to still carve out a niche within the ecommerce space and compete with a company like Shopify? Thanks. Bye.
Rob: What do you think, Jeff? This is a tough question, obviously, but what are your thoughts on it?
Jeff: It’s surely not an area where I would necessarily look to start a company. I think if you have one, if you’re growing and doing well, there’s certainly going to be opportunities. I’m a fundamental believer that companies such as Shopify or Amazon always have blind spots and they have specific areas which don’t make sense for them to focus on, which OS or niche businesses spring up to serve those needs.
If you’re looking to start, it wouldn’t be my top choice, but if you are already building a brand and a company, you have customers. I would say focus on why customers are choosing you or why they’re considering you and make sure that you really hone in on those areas so that you can continue in that niche market for now.
Rob: Yeah. I love the answer of blind spots. That’s the first thing that came to my mind, is where are the disgruntled Shopify customers? Go to the forums. When you get this big, you’ve heard of like quickbookssucks.com where everybody rags on QuickBooks. Is there one of those for Shopify? Where are the disgruntled people who say, “Oh, Shopify doesn’t do this well,” or like you said, it’s not worth their time to go into, whether it’s a vertical niche, or whether it’s to build a certain type of feature, or whether they have just technical debt, or thousands of lines of code, or tens of thousands, tens of thousands of customers, and you just can’t change things overnight.
This is the playbook that we did with Drip. When we launched Drip, it was a mess. Think of not Drip itself, the market. Think of Mailchimp, they’re dominance with their free plan. Free up to 2000 subscribers. How do you and could possibly enter that and charge at that level? We had Infusionsoft, Pardot, Marketo. Those are all but marketing automation providers. We had Constant Contact and AWeber who had their own niches. It’s like the SMB was Constant Contact and AWeber was more into the info marketer space.
No one in their right mind would enter that space and yet we found ourselves competing against them. It was exactly what we talked about here is we looked at people didn’t like Infusionsoft because they charge this $2000 upfront fee, because they’re $300 a month and up, because they’re aggressive with their sales, because the product was not very good, it was hard to use, it was buggy.
Mailchimp, a company I’ve always respected, wasn’t moving fast enough with the automation. People wanted to be able to click a link and move from here to there. There were features that people wanted from Infusionsoft but Mailchimp and AWeber were not building. So, we as a startup, what’s the advantage?
One of your advantages is you move so quickly. We could build and launch automations in months. Where did it took them? Literally, years. That’s, to me, the advantages. It’s not an Achilles heel, it’s not like you’re going to kill them. The metaphor doesn’t quite work, but it’s a vulnerability or, as you said, a blind spot that even if they are moving there, they haven’t gotten there yet, and that’s what I would look at. I don’t know the ecommerce space well enough to know what those are for Shopify, but I do know that, that’s what I’d be looking for.
Jeff: One thing I would add, Rob, and this is where you had a ton of ability to kind of see the future is that you were looking at marketing automation companies for yourself and to leverage them. If you’re going to get into this type of business, it’s more than an intellectual exercise. The person needs to actually know or have their own specific pain. That would be really big here instead of just guessing that they maybe are power users or that they’re selling and they’re looking for another way to do something that they can’t do with Shopify. That would be a really great way to start.
Rob: Yeah, it’s a good point. If you’re going to enter a less competitive space, you don’t always need to be your first user, you don’t always need to build for your own pain. If you’re going to enter a space like competing against Shopify or Mailchimp, I would never say always, but I would say it’s a really good idea. It’s another tool in your toolbelt to have that domain expertise. So, thanks for the question. I hope that was helpful.
Our next question comes from Nick. He’s got a couple of questions. He has some kind words about the podcast. He started with, “I love the refreshed format of the podcast. Insightful and you could really feel a new surge of energy. Well done. Thanks for continuing to make it such a great show.” Then he transitions into talking about his business. He says, “Each stage of my business has brought fresh challenges and right now I have a couple of questions. It would be great to hear your thoughts on. The first question is this, splitting from a co-founder when your business is successful.” Jeff, we know your story, we know that you went through this yourself. I’m curious to hear your take.
He says, “My co-founder and I have been in business together for 12 years. Initially, we ran a successful niche consulting firm before pivoting into a product business in 2016. A product is a B2B app that helps financial companies. It’s growing slowly and steadily. We just hit $1 million in ARR.” Congrats on that, by the way. “While I’m loving the product journey, my co-founder feels differently. He’s 20 years older than I am and he wants to do other things with his time.
Our working relationship has probably run its course, but he feels his best exit is to market the business for sale and I don’t share that view. While I’m open to doing it, I’d like to keep my options open. We’ve been fortunate to find product market fit, and while our addressable market is small, I feel our business has further to run. I’ve looked at options to buy him out, but he would want a market-level multiple evaluation, which is significant. He’s also not keen in acting as a silent partner.
Currently, I hold a majority stake. I am willing to buy more shares but would also appreciate a new strategic partner who can add value in our sector. What would be my best course of action?”
I don’t know that we can recommend the best course of action, but I do think we can bat around a few ideas because I don’t think this is necessarily clear-cut. What are your thoughts, Jeff?
Jeff: In my former life, I’m an attorney, I went to law school, and talked to quite a bit of founders. One thing that is so important, having gone through it myself, is understanding how you can unwind or exit a business from a founder perspective, especially when you’re close to 50/50. It’s not clear here but it sounds like the founders have a pretty large stake each and one of them is obviously the majority. That’s always challenging.
Your best course of action, again, depends on a lot of factors. One is, do you want to retain a good relationship with this person going forward? Also, how much of a hassle do you want to have in terms of managing this process versus running the business? Legally, again, I don’t know your operating limit. You should have one; kind of the rules of what you’re allowed to do or able to do are probably contained in there.
Generally, as a majority owner, you have most of the power. You’re certainly would be able to block or not have a sale of the business happen. A couple of things that I would think of off the top of my head is maybe try to find an independent. Someone who can value the business in a fair way. Everyone loves to sell, even if it’s a house or some other asset. The reality is it’s a lot harder than it seems and it usually sells for a lot less than you expect.
I think that having on through a business sale is not at all you would expect and I’m sure Rob can say the same thing. Just putting a number on it from the minority perspective, that’s probably not the best outcome. Ultimately, hopefully you guys could sit down and come to a conclusion. You might have to get creative in terms of an earn-out or payments over a period of years, and/or maybe phasing out the hours worked. My recommended course of action is come to the table and figure something out as partners instead of trying to go the legal route.
Again, as a majority partner, you should know that you probably do have the upper hand in some way based on you are the majority and you probably have the voting ability to do things that might not be favorable for your co-founder.
Rob: Yeah, I think you’re dead on with that. Look at the operating agreement. Typically, it says other founders have the first right of refusal. If you get an offer, they have to match that, that kind of stuff. To me, there’s a lot of ways you could go, but I feel there’s three options. One, you could just sell the whole business and, as you said Jeff, that might take six months or a year to do. You lose the asset, but you get cash and then you know what fair market value is. There’s no quibbling over it. You’d run a profitable process. By the way, Nick, if you want to do that, ping me back. I know some people who do things like that for $1 million ARR SaaS companies. They run a full process and get good revenue multiples for them.
The other option that I think about is like you said, Jeff, an earn-out. Have someone assess it or try to get some offers and then use that as the assessed value, in essence, and then try to buy him out over time. Let’s just say, $2 million is what we value the business at. You owe him $1 million. You’re not going to pay him that today unless you have that in the bank, but can you pay him $100,000 a quarter for the next 10 quarters or something? I have seen that done not often, but I have seen it done with some tech businesses in the past.
The other option I think about is—it may sound complicated—finding someone to just buy his share. Again, you need to try to look for market or assessed value, he owns X percent, then you try to find someone that you would be willing to work with, whether they are a silent partner (or not) but they buy in and then as you take dividends out, they also are able to participate in that.
I think off the top of my head, those are the three options I’d be looking at. Of course, each of them comes with different timelines and different complexities. Do you have any other thoughts?
Jeff: I think those are great, great options and a really good summary of what Nick can probably do, to be honest.
Rob: Nick has another question about the app. “Obviously, it’s a three-year old B2B app, it’s generating $1 million in ARR with 15 enterprise customers. It’s a small customer base. It’s also a simple but important problem for insurance companies. With 12–18 months sales cycles, we are growing slowly but steadily in our niche market and have three developers. Thus far, we have been customer-led, relying on customer development to identify and prioritize features.
However, with our 10th release, things have slowed down. The app is stabilizing, support tickets have dropped off, feature request are drying up. We hold a user forum twice a year and then deliver the most requested items in our last release. We tried tabling some more radical ideas at our last meet-up, but the feedback from several power users was that we shouldn’t mess with it and to keep things simple. Is there such a state as having enough features? How do we know what to build next? Should we refocus on technical debt? As ever, your thoughts are appreciated.” What do you think?
Jeff: I do thing there are probably times when it makes sense to focus on technical debt. Then, it may not be time to just add more features. I think that makes sense. I don’t know if that’s a constancy. I think there can be points in time. Saying that the business is, tickets are slow, or things like that. To me, running a business is a fluid situation and it’s always changing.
I wouldn’t suggest a full stop. Perhaps it’s time to think about some ways that you can grow the business, but it also comes down to what you want to do from a business perspective. You could add features that allow you to find a new customer segment or you can say, “Hey, we just want to deliver the product faster and essentially get rid of some of this technical debt.” I think that’s a decision that, as a business owner, you have to make.
There’s no right or wrong answer. It really just depends on what your goals are. Having no more requirements, so to speak, from customers is typically a pretty good thing, but again, I don’t know your background and how you started the business. There are many cases where businesses are started or features are added that not suggest by the users per se. There are some things that the users don’t know can exist, or should exist, or does exist. I think it’s a good position to be in and I congratulate you on getting to that point. That’s pretty rare even for a brief time.
Rob: Yeah, I would agree with that. It feels to me every software product, every tech product has a life cycle. When you first build it, there’s not enough features, it’s clunky, then it gets to product maturity, and then eventually it gets to where it sunsets, where it’s just too old, 20-, 30-, 40-year old code bases, while I know they still run—a lot of the IRS and our social security system here in the US and probably in many countries around the world.
I’m guessing most SaaS apps aren’t going to make it that long. The code base is either going to go clunk, or the market’s going to change so dramatically, or there will be an entirely new form of servicing those needs.
With that in mind, it sounds like there is a chance. Three years is fast. Typically, I would expect it to be 10 or 15 years. I think of a tool like FogBugz or Basecamp. When you’re around a SaaS app that’s around 10 or 15 years, you do eventually hit a point where, “Huh, we don’t necessarily need new features, but our UX paradigms are 5 or 10 years old.” So, you need to revamp that. You have UX technical debt, in essence, or UX debt, or just technical debt. If it were built in classical ASP or PHP 1.0 or something, you would want to go back and refactor those. Given the code base is only three years old, it’s unusual but it’s not out of the realm of possibility.
I think I’m in the same boat as you, Jeff. There’s a couple of things I would think about. One, you could focus on technical debt now while you figure out what you vision for the product is. What is it that you can build that they’re not asking for? Oftentimes, it’s a mix of customer requests, internal employee requests, and founder vision or CEO vision. Those are the three things that I have most often built into a product.
Do you have a vision for something else? If not, then yeah, why not technical debt? Or why not put more funds into either marketing or sales? I know there’s long sales cycles, but can you double or triple the number of conversations you’re having such that someone’s closing every three months instead of every six months if you double that?
I don’t think it’s a bad thing to take a little break and maybe give the team time to go back and circle up. It will become obvious when you need to add more features because customers will be asking for it or there will be a competitor that you see doing something this is starting to take your customers or at least a competitor that’s getting ahead of you. That’s the time where you start thinking about heading back to features.
Jeff: I actually have one more thing that I was thinking about. I think you do have an opportunity to also ask your customers and it depends on the question you’re asking, If it’s, “What else do you want, maybe?” They say nothing. But if you ask it or you frame it as, “What else are you paying for?” or, “What else are you doing?” or, “Why else would you pay for, perhaps?” Maybe there are some different answers there or maybe it’s the way that you’re gathering feedback that you can just tweak it a little bit. Maybe get some insights from customers, of things that are maybe closely related, things that you could build that would immediately paid for so that they could pay for the development itself.
Rob: Nice. Thanks again for those questions, Nick. Our next question comes from Evan and he’s asking about a single-use niche product. He says, “First time caller, long-time listener. Honestly, I love listening to you, guys. Here’s my question. I built a script for a company I worked for, realized how much other people could use it, and then in my spare time, I refactored the idea and turned it into an enterprise product. I’ve been officially launched for almost two months. I’ve done just under $6000 in revenue, and 98% of that is profit,” which I would expect you probably have no expenses aside from hosting or something.
“The problem is that this is a single-use product that I’ve essentially built to use when people are migrating to another software package. It’s really not worth the plug because it’s so niche,” he says. “Anyway, I’m really trying to figure out how much time I should be putting into this thing.” So, is a migration tool to software company X. “Software company X could just roll out their own migration tool and kill my revenue overnight. However, they played pretty nice, thus far, and they featured my product in quite a few support articles and have started to build it into their support flow for when they get tickets regarding the problem.
Would you recommend continuing to make this product better and attempt to figure out how I could possibly get recurring revenue? Or just take it for what it is, single-use product that does what it does, and that is right now the only tool out there that does this? $6000 in almost two months isn’t a ton of money. I make decent money at my full-time job as a software developer, but it is a pretty nice supplemental income.” That’s our question, Jeff. What do you think?
Jeff: To me it seems like this is great. Sometimes, people may overanalyze what’s going on. To me, this sounds pretty straightforward. It seems like he solved a really great problem with something that was pretty simple, and it’s a single-use product that probably is a problem that this company is facing, and it doesn’t make sense for them to really spend any time or money on it, so they’re more than happy to find a solution that does the job for their customers. As long as you’re not bragging about how much money you’re making to the world and it doesn’t seem like it’s enough for the company would want to build this, to me it seems like a really awesome revenue stream that you have for the foreseeable future.
That being said, there’s very little context in terms of what it can do or how you could turn this into a recurring business. I would say that I wouldn’t over-engineer it or overthink it. I would just capitalize on what you can earn. Throw a little bit of money in the marketing and see if you can attract more people to want to use this. I think this is awesome. I don’t know what you think, Rob, but to me I think it’s pretty straightforward. It doesn’t seem there’s much there to do a company unless you want a really start building other features and tools around that. I don’t know what it is, to be honest, without all the context.
Rob: I agree with you. What a fortuitous thing you stumbled into. That’s cool. $3000 a month, while you say it’s not a lot of money, if you’re working full-time it sure wouldn’t be, but that makes most people’s house payment. It’s step one of the stairstep approach, to be honest.
For those who aren’t familiar with the Stairstep Approach to Bootstrapping, it’s something I laid out in a talk at Dynamite Circle five years ago now and then I blogged about it. Basically, don’t go for SaaS right away. Don’t go for recurring revenue. It’s too hard, too complicated, takes a long time, just all these things are against you. But, if you find a niche and you can build a WordPress plugin or another one-time use thing like this import tool, or a Shopify app, or whatever it is, find something where there’s a single sales channel and it’s going to plateau.
I did this with DotNetInvoice where it was like, “Hey, it’s a downloadable software, I’ve got $300 a pop for it.” Really, there were some SEO and AdWords, but that was about it. The market was not huge for it and this sounds very similar. So, now you have this opportunity to then take that and parlay it up into something bigger, if you want. You could potentially build on this. It doesn’t sound like you have direct ideas on how to do that, but I don’t think this needs to become your big thing. This can become $36,000 a year going into a bank account that you then use to buy a bigger app. Or, this becomes learning.
Have you learned how to do copywriting, toyed around with LinkedIn and Google AdWords? Have you ever done that before? Because now’s your chance to learn on a real product that has enough budget you could play with and not worry about chewing through your paycheck. I see this as an opportunity to stairstep if you do eventually want to get to recurring. I keep saying, doing things in public creates opportunity. This is something you’ve done in public and you never know what the next customer’s going to ask for, that brings a life of like, “Oh wow, that would be a crazy thing I could add to this that would double the value or that would make it recurring.”
I think this is all upside, personally, and frankly longer term, maybe wind up selling it to company X. It’s a migration tool for them, so why wouldn’t they? If you were like, “Hey, I’m just going to shut this thing down.” In their shoes, I would buy the thing from you. If it’s only doing $36,000 a year, maybe your exit is for $100,000 or $150,000 or something. Still, it’s worth something.
I feel like you’ve gotten further than so many software entrepreneurs or aspirin entrepreneurs ever get. So, I think you’re in a great place and have a really pretty cool resource that you can now use to parlay up that stairstep and maybe eventually buy out your own time and then get into recurring revenue as well.
Jeff: Love it. It’s all profit, almost. It really is amazing. I wouldn’t sell yourself short at all. It might not be the idea but like what was said, parlay that into something bigger if you want. I think having flexibility and optionality is huge. Reading the question again, I don’t know if it’s something that you don’t quit your job over, but keep milking it and see where it goes.
Rob: Yeah. Me from 20 years ago, I would have killed to own a software product that did $3000 a month in net profit. That was my goal. First, it was like, “I just want to make my car payment, making money on the Internet.” Then it was like, “I just want to make my house payment.” And then it was like, “I just want to cover my salary so I could quit my job.” This is an envious position, so hope these thoughts are helpful.
Our last question of the day comes from Will and he says, “Hey, guys. I’ve been mowing some stuff over for a bit and I’ve noticed something. The more I do my own projects on the side for money, the more I feel like I’m not as good of an employee. That doesn’t mean I don’t work hard and deliver, but I’ve noticed that after a certain point, I really had to fight the desire to rock the boat at my day job. For instance, I notice stuff like the following,” and he has a list.
“Companies using large numbers of developer hours to avoid having to pay $20 a month for a tool. Companies building their own internal tools when extremely cheap options exists like time trackers. Companies having really broken internal processes that would completely destroy a startup but they chug along on momentum.” This must be a non-startup like bigger companies. “Companies having highly technical products that are sold by people who don’t understand what the technology does. Companies having no idea what their sales funnel looks like. What the customer lifetime value is, et cetera.
I guess what I’m saying is that the process of going entrepreneurial has forced me to re-examine the things that made me a good employee, only to find that a lot of them don’t really suit where I’m headed. I usually don’t mention these things when I notice them as a developer, because people don’t really like devs jumping in on this stuff, but they bug me a lot.
Did either of you undergo a similar epiphany at some point? If you did, what were the main things you had to unlearn as part of making the transition to your own products? I think it’s easy to become a little too domesticated inside the walls of a cubicle and I’m wondering what else I should be doing to try to avoid that?” That is an interesting question. What do you think, Jeff?
Jeff: I love this question because it’s something that I’ve seen quite a bit. I’m going to get on my soapbox for a minute. There’s a couple of things to unpack here. I love the self-awareness and I think for many companies—it obviously depends—culturally, you should find yourself and hope to find yourself a company that wants to improve, first and foremost. If that’s the case, then pointing out things that can be better isn’t rocking the boat. It’s doing your job and the mindset that you’re “rocking the boat” hopefully isn’t correct.
That said, there’s a way to do these things. Even just reading this, it looks like a lot of things are black and white, and what I always used to say to the engineering team is I know a lot of time writing code in an engineering mindset tends to be black and white, but business is really shades of gray. There are probably dozens of factors you’re not considering from a sales funnel perspective, especially not being in the sales team or the way the company spends money.
What I would suggest is I would find an outlet to say, “Hey, I have some things that I’ve noticed that could help the business.” Someone in the company should say that’s important enough to listen to, but I wouldn’t just assume that you’re right or that you have all the information.
A lot of times, there are plenty of things that we did from a business perspective—again, we’re much smaller—that many people thought was the absolute opposite thing that you should be doing, but many times, if you explain to them why—one of our cultural values was understand why—then they’re like, “Oh, I never ever thought about that,” and, “Yeah, that’s okay. I didn’t expect you to think about it, but that’s why we’re doing this.”
I think it creates a lot of challenges inside companies when we use to say we don’t want know-it-alls in the organization. Be curious to understand why and then be helpful. Anyone in the company is going to want to save money or know that things can be done differently, but sometimes again there’s red tape and other reasons why things can’t get done the minute that it makes sense for someone.
Rob: I think your advice is better than what I was going to say. I was going to go from my own experience. Yours is from your own experiences as well but…
Jeff: Mine must be right.
Rob: Yeah, but yours is from the company side and I think that’s a really good point. Don’t assume that you’re right; that’s really good advice. I was going to say, as an employee, as I became entrepreneurial, I absolutely had the exact same thing. It wasn’t with sales and everything, but I became more and more disgruntled and frustrated with development, them hiring crappy developers we had to work with, the code was buggy, they wouldn’t let us go refactor. This was, let’s say, 2003–2006.
I got so annoyed that I would quit jobs over not feeling fulfilled. It wasn’t just like, “Oh, I’m building dumb software,” because I was fine to build this software I didn’t care about, but the processes were broken and no one would fix them.
What I did was left and I started consulting because then I get to control and processes or I would go find another job where the processes weren’t broken. I am a little bit broad here, but if you don’t like to see those things you’re seeing, then don’t work it like a Fortune 5000 company. Go work for a startup, go work for a small company. They all haven’t figured it out, but smaller teams have less dysfunction, in general. There’s less politics, there’s less of all the broken stuff, and frankly there’s more of a mindset of, “Let’s fix this stuff.” There’s less inertia and there’s less, “We do it this way because we’ve always done it this way,” and there’s more, “Let’s try to get better.”
Again, I’m generalizing, but that’s if I were in your shoes and you can Jeff’s advice, which I think is great, or you could take mine, or you could take Jeff’s and then take mine if it doesn’t turn out well. This is what we’re doing, Jeff. We’re getting people to quit their jobs.
Jeff: No, I actually think the advice is complementary, too. I think that makes a lot of sense. Really, the first part of what I said is you should find a cultural fit and that’s the challenge. And you also should remember the trade-offs. A stodgy, slow-moving company probably is just inherently more stable, if you look out 5 years and maybe not 50 years. You may make more money there or may have more benefits there. Those are personal trade-offs that you have to make.
Listen, if you want everything done exactly your way, there’s only one way to do that and that’s to start a company. But let me tell you, very soon after you start it, it won’t be your way anymore once you have other people to answer to, whether it’s investors and employees. That’s just the reality. If you want something on your own, you are going to have to do a side project.
But I totally agree with Rob. Set yourself up for success in terms of aligning with how the company’s going to work. Again, these are questions that ideally you’re finding out in the interview process so don’t want to be surprised when you start. So, do your diligence and find out, especially if you’re a developer, you have a lot of options for places to work. The lowest employment in a long time and everyone’s looking for technical talent, so you’re in a good position.
Again, I wouldn’t shy away from or train yourself away from speaking up, but I think there’s a time and a place. Don’t complain in front of the whole team. That’s not the way to get it done. Privately message someone who can help or say, “Who can I speak to about these things? I love to make some things better.” At some point in your organization, someone is going to raise their hand and say, “We should listen or we should take this into consideration.” Again, that’s my two cents.
Rob: That’s good. I had this personal adage, I don’t know if I ever written about it or said it. I’m sure I swiped it from a business book or something. It’s to say or do positive things in public and negative things in private. If you’re going to reward or congratulate someone on a good job, do that in public so that everyone knows. If you’re going to tell someone that they’re screwing up on the job, do that in private.
That’s actually one of the reasons I have such an issue with Twitter, to be honest, is there is so much open public negativity and it’s like, “Why didn’t you just email me?” in a lot of times. They’ll be someone you know and they’re complaining about you, or your company, or something you did, and you’re just like, “Dude, just email me. We can talk about this. (a) I would fix it, (b) I didn’t know what was going on. Why do you have to yell at the top of your lungs from your rooftop, telling everyone I screwed up?”
I think this is a good case of that and the reason I started saying that is because you brought up, don’t braze these things in a big public meeting with 8 or 10 people. It’s bad form, it’s rude, and I would not be happy with that. So, set up a one-on-one or a one-on-two with supervisors who are mature and can handle this kind of stuff.
Jeff: One thing to add—I don’t know if it’s helpful—I found the people that wanted to help the business in a positive way are the best employees, but on the flip side, the people that complain publicly are always the worst employees. It’s a really fine line. They both arguably wanted to help, but the people that are like, “This is wrong,” or, “This is bad.”
Again, it’s so frustrating just to think about some of those situations where people are like, even after they left they would maybe blast or post something like, “Hey, you can’t do these things. You can’t do this.” You don’t need to talk at 40 people publicly at lunch how something’s wrong when it’s a minor thing that can be addressed in five minutes.
Rob: Yeah. Negativity is toxic and it spreads, right?
Jeff: For sure.
Rob: Well, thanks again, man. Thanks so much for coming on the show.
Jeff: Of course, yeah. My pleasure.
Rob: And if folks want to catch up with you, you’re @jeff_epstein on Twitter.
Jeff: Awesome. Thanks, Rob.
Rob: And if you have a question for the show, leave us a voicemail at (888) 801-9690 or you can email us an MP3, or a Dropbox link to a WAV file, or even a text question to questions@startupsfortherestofus.com. If you’re not already subscribed to us, you should search for “startups” in whatever podcatcher you use and subscribe. You can visit startupsfortherestofus.com to get into our mailing list. We don’t email that often, but when we do, it’s tasty, yummy goodness. You can also get transcripts of each episode. I think they’re about an episode or two behind right now, but some folks really like transcripts and actually have used a hack to search our website using the site: in Google just to figure out if we’ve talked about a topic. With 462 episodes, we’ve covered a lot of ground on this show. Our theme music is an excerpt from We’re Outta Control by MoOt, used under Creative Commons. Thanks for listening. I’ll see you next time.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups. Whether you’ve built your fifth start up or you’re thinking about your first. I’m Rob and today with Jeff Epstein, we’re here to share our experiences to help you avoid the mistakes we’ve made in the past.
Welcome back to Startups for the Rest of Us. Thanks for joining me. You took on the show, we covered topics relating to building and growing startups in order to provide ourselves a better life, improve the world in a small way. We strive to have a positive impact on other people, be it your customers, your team, your family. We’re ambitious founders but we’re not willing to sacrifice our life, our health, or our families to grow a company.
We have several show formats for Startups for the Rest of Us. Every month or two, Mike Taber comes on and updates us on his entrepreneurial journey. We also have some tactic and teaching episodes, I do some interviews now and again, founder hot seats, and today’s episode is all about listener questions. It’s questions from you and folks like you who are listening, they write in or send an audio question and we do our best to think it through. I really think about what I would do in their shoes and then answer the question.
Jeff Epstein comes to join me today. If you remember back to episode 453, we talked through his journey as a non-technical founder, of building a SaaS app to between $5 million and $10 million ARR, and then exiting that. He had a pretty stressful and impactful journey, life-changing journey for him, and he has a lot of experience under his belt. I think you’ll enjoy the questions that we answer today.
Before we dive into the questions, I want to remind you that MicroConf Minneapolis is next April 19th through 23rd, so you’re going to want to block those dates off on your calendar. Also let you know again that the TinySeed application process opens on November 1st. It will run for about a month, so if you are interested in potentially being part of our next batch, enter your email at tinyseed.com.
As well as tease again about my secret podcast project I’ve been working on for about three or four months and I hope you enjoy that. I’ll have more info on that as I get more of that produced. Just want it to be a bit further along before I start putting stuff like that out in public. With that, let’s dive into our listener questions today.
Jeff: thanks so much for coming back on the show.
Jeff: Hey, thanks for having me, Rob. I appreciate it.
Rob: Absolutely. We have some good questions to run through today. The first was from Twitter. I actually did a casual call-for-questions to see—after your episode went live—if anyone had a question for you and Fuego Online sent this question. He said, “Did Jeff Epstein feel way out of his depth? I know I do sometimes and I have a technical partner.”
Jeff: Yes, definitely out of my depth many times. Not necessary as much being technical or not technical, but I think it just depends on the stage of the business. For me, that probably happen pretty regularly where you feel that way.
Rob: I think that’s really common. I feel way out of my depth most of the time I’m doing something interesting, I’m learning, and it’s stretching me. I say I feel out of my depth. He said way out of your depth, which I do think is a differentiation. There’s comfort zone and then there’s almost that breaking point.
I have to imagine there were several moments over your eight- or nine-year journey that you’re on the edge, of like, “Oh my gosh, this might not work,” or, “Oh my gosh, this is the most stress I’ve ever felt.” Is there a time you could take us to?
Jeff: Yes. For me, I certainly felt over my head in many scenarios, and like you said, I’m a first-time founder. So, everything is essentially new for me. As we grow, there are new challenges ahead and there’s so many situations where I felt that way.
Two probably stick out in terms of really a horrible feeling of what did I get myself into. One was when we changed co-founders pretty early on before we even finished fund-raising. The early employee and I didn’t see eye-to-eye and he left the company. I was left with not much in terms of a team. That was one.
Another one was actually much later, maybe five years later and it was when for the first time you realize that there’s a lot of things happening that you are not aware of. This was when we’re about 20 people or so. It was one of those situations where you’re like, “Wow, I really need to step up my game.”
Basically, what happened was there was just a lot of people that weren’t happy with some people in the company or just the way things were. A lot of it was my fault, some of it I frankly didn’t know about and didn’t have the communication structure in place to solve those things or to get the feedback channels filtered up to myself. That was a really eye-opening experience and been pretty painful.
The one thing I would say is, I’m pretty confident in myself being able to learn quickly. I think that’s—for better or worse—kind of my superpower, so to speak, where if I just have the information, I figure I can do something pretty well with it. For me, it’s just a matter of figuring out what the issues are, what the problems are, and what are the available options to start fixing it. When that happens, I think I’ve done pretty well.
Rob: I would agree. I’m going to keep saying on the show more than half of being a successful entrepreneur is managing your own psychology. Part of that is believing that you can get it done, taking things that seem like roadblocks and saying, “How do I turn these into speed bumps? What are the five, six, seven options here?” No matter how bad, no matter how good, lay them all out, look at it, and move ahead. It’s like having confidence in yourself that you can figure this out.
There’s so few things that are actually company-ending. There are obviously a few, but so many of them in our heads. I know I’ve done this. You just catastrophize it. You’re like, “Oh my gosh, this is the worst thing ever. What have I built?” This will be done in three days if you handle it well. If you actually do the right thing, it will smooth over and be done in a week or whenever.
Let’s dive into our next question and it is a voicemail about competing in a space when there’s an 800-pound gorilla, namely Shopify.
Ahmed: Hi, Rob. This is Ahmed from Toronto, Canada. I have a question regarding starting a startup in a very competitive space like, say, ecommerce, specifically competing with a company like Shopify, which is pretty much a company that has been doing everything right in terms of technology, focusing on the low-end market. They also have Shopify Plus targeting more enterprisey customers.
They have a core set of features which are then built upon by app developers. They have a market effect with agencies. They have a very good content marketing strategy on their blog, and they’re dealing with B2B customers who might not be as price-sensitive as the B2C customer. So, concerning all these things, do you think it’s possible to still carve out a niche within the ecommerce space and compete with a company like Shopify? Thanks. Bye.
Rob: What do you think, Jeff? This is a tough question, obviously, but what are your thoughts on it?
Jeff: It’s surely not an area where I would necessarily look to start a company. I think if you have one, if you’re growing and doing well, there’s certainly going to be opportunities. I’m a fundamental believer that companies such as Shopify or Amazon always have blind spots and they have specific areas which don’t make sense for them to focus on, which OS or niche businesses spring up to serve those needs.
If you’re looking to start, it wouldn’t be my top choice, but if you are already building a brand and a company, you have customers. I would say focus on why customers are choosing you or why they’re considering you and make sure that you really hone in on those areas so that you can continue in that niche market for now.
Rob: Yeah. I love the answer of blind spots. That’s the first thing that came to my mind, is where are the disgruntled Shopify customers? Go to the forums. When you get this big, you’ve heard of like quickbookssucks.com where everybody rags on QuickBooks. Is there one of those for Shopify? Where are the disgruntled people who say, “Oh, Shopify doesn’t do this well,” or like you said, it’s not worth their time to go into, whether it’s a vertical niche, or whether it’s to build a certain type of feature, or whether they have just technical debt, or thousands of lines of code, or tens of thousands, tens of thousands of customers, and you just can’t change things overnight.
This is the playbook that we did with Drip. When we launched Drip, it was a mess. Think of not Drip itself, the market. Think of Mailchimp, they’re dominance with their free plan. Free up to 2000 subscribers. How do you and could possibly enter that and charge at that level? We had Infusionsoft, Pardot, Marketo. Those are all but marketing automation providers. We had Constant Contact and AWeber who had their own niches. It’s like the SMB was Constant Contact and AWeber was more into the info marketer space.
No one in their right mind would enter that space and yet we found ourselves competing against them. It was exactly what we talked about here is we looked at people didn’t like Infusionsoft because they charge this $2000 upfront fee, because they’re $300 a month and up, because they’re aggressive with their sales, because the product was not very good, it was hard to use, it was buggy.
Mailchimp, a company I’ve always respected, wasn’t moving fast enough with the automation. People wanted to be able to click a link and move from here to there. There were features that people wanted from Infusionsoft but Mailchimp and AWeber were not building. So, we as a startup, what’s the advantage?
One of your advantages is you move so quickly. We could build and launch automations in months. Where did it took them? Literally, years. That’s, to me, the advantages. It’s not an Achilles heel, it’s not like you’re going to kill them. The metaphor doesn’t quite work, but it’s a vulnerability or, as you said, a blind spot that even if they are moving there, they haven’t gotten there yet, and that’s what I would look at. I don’t know the ecommerce space well enough to know what those are for Shopify, but I do know that, that’s what I’d be looking for.
Jeff: One thing I would add, Rob, and this is where you had a ton of ability to kind of see the future is that you were looking at marketing automation companies for yourself and to leverage them. If you’re going to get into this type of business, it’s more than an intellectual exercise. The person needs to actually know or have their own specific pain. That would be really big here instead of just guessing that they maybe are power users or that they’re selling and they’re looking for another way to do something that they can’t do with Shopify. That would be a really great way to start.
Rob: Yeah, it’s a good point. If you’re going to enter a less competitive space, you don’t always need to be your first user, you don’t always need to build for your own pain. If you’re going to enter a space like competing against Shopify or Mailchimp, I would never say always, but I would say it’s a really good idea. It’s another tool in your toolbelt to have that domain expertise. So, thanks for the question. I hope that was helpful.
Our next question comes from Nick. He’s got a couple of questions. He has some kind words about the podcast. He started with, “I love the refreshed format of the podcast. Insightful and you could really feel a new surge of energy. Well done. Thanks for continuing to make it such a great show.” Then he transitions into talking about his business. He says, “Each stage of my business has brought fresh challenges and right now I have a couple of questions. It would be great to hear your thoughts on. The first question is this, splitting from a co-founder when your business is successful.” Jeff, we know your story, we know that you went through this yourself. I’m curious to hear your take.
He says, “My co-founder and I have been in business together for 12 years. Initially, we ran a successful niche consulting firm before pivoting into a product business in 2016. A product is a B2B app that helps financial companies. It’s growing slowly and steadily. We just hit $1 million in ARR.” Congrats on that, by the way. “While I’m loving the product journey, my co-founder feels differently. He’s 20 years older than I am and he wants to do other things with his time.
Our working relationship has probably run its course, but he feels his best exit is to market the business for sale and I don’t share that view. While I’m open to doing it, I’d like to keep my options open. We’ve been fortunate to find product market fit, and while our addressable market is small, I feel our business has further to run. I’ve looked at options to buy him out, but he would want a market-level multiple evaluation, which is significant. He’s also not keen in acting as a silent partner.
Currently, I hold a majority stake. I am willing to buy more shares but would also appreciate a new strategic partner who can add value in our sector. What would be my best course of action?”
I don’t know that we can recommend the best course of action, but I do think we can bat around a few ideas because I don’t think this is necessarily clear-cut. What are your thoughts, Jeff?
Jeff: In my former life, I’m an attorney, I went to law school, and talked to quite a bit of founders. One thing that is so important, having gone through it myself, is understanding how you can unwind or exit a business from a founder perspective, especially when you’re close to 50/50. It’s not clear here but it sounds like the founders have a pretty large stake each and one of them is obviously the majority. That’s always challenging.
Your best course of action, again, depends on a lot of factors. One is, do you want to retain a good relationship with this person going forward? Also, how much of a hassle do you want to have in terms of managing this process versus running the business? Legally, again, I don’t know your operating limit. You should have one; kind of the rules of what you’re allowed to do or able to do are probably contained in there.
Generally, as a majority owner, you have most of the power. You’re certainly would be able to block or not have a sale of the business happen. A couple of things that I would think of off the top of my head is maybe try to find an independent. Someone who can value the business in a fair way. Everyone loves to sell, even if it’s a house or some other asset. The reality is it’s a lot harder than it seems and it usually sells for a lot less than you expect.
I think that having on through a business sale is not at all you would expect and I’m sure Rob can say the same thing. Just putting a number on it from the minority perspective, that’s probably not the best outcome. Ultimately, hopefully you guys could sit down and come to a conclusion. You might have to get creative in terms of an earn-out or payments over a period of years, and/or maybe phasing out the hours worked. My recommended course of action is come to the table and figure something out as partners instead of trying to go the legal route.
Again, as a majority partner, you should know that you probably do have the upper hand in some way based on you are the majority and you probably have the voting ability to do things that might not be favorable for your co-founder.
Rob: Yeah, I think you’re dead on with that. Look at the operating agreement. Typically, it says other founders have the first right of refusal. If you get an offer, they have to match that, that kind of stuff. To me, there’s a lot of ways you could go, but I feel there’s three options. One, you could just sell the whole business and, as you said Jeff, that might take six months or a year to do. You lose the asset, but you get cash and then you know what fair market value is. There’s no quibbling over it. You’d run a profitable process. By the way, Nick, if you want to do that, ping me back. I know some people who do things like that for $1 million ARR SaaS companies. They run a full process and get good revenue multiples for them.
The other option that I think about is like you said, Jeff, an earn-out. Have someone assess it or try to get some offers and then use that as the assessed value, in essence, and then try to buy him out over time. Let’s just say, $2 million is what we value the business at. You owe him $1 million. You’re not going to pay him that today unless you have that in the bank, but can you pay him $100,000 a quarter for the next 10 quarters or something? I have seen that done not often, but I have seen it done with some tech businesses in the past.
The other option I think about is—it may sound complicated—finding someone to just buy his share. Again, you need to try to look for market or assessed value, he owns X percent, then you try to find someone that you would be willing to work with, whether they are a silent partner (or not) but they buy in and then as you take dividends out, they also are able to participate in that.
I think off the top of my head, those are the three options I’d be looking at. Of course, each of them comes with different timelines and different complexities. Do you have any other thoughts?
Jeff: I think those are great, great options and a really good summary of what Nick can probably do, to be honest.
Rob: Nick has another question about the app. “Obviously, it’s a three-year old B2B app, it’s generating $1 million in ARR with 15 enterprise customers. It’s a small customer base. It’s also a simple but important problem for insurance companies. With 12–18 months sales cycles, we are growing slowly but steadily in our niche market and have three developers. Thus far, we have been customer-led, relying on customer development to identify and prioritize features.
However, with our 10th release, things have slowed down. The app is stabilizing, support tickets have dropped off, feature request are drying up. We hold a user forum twice a year and then deliver the most requested items in our last release. We tried tabling some more radical ideas at our last meet-up, but the feedback from several power users was that we shouldn’t mess with it and to keep things simple. Is there such a state as having enough features? How do we know what to build next? Should we refocus on technical debt? As ever, your thoughts are appreciated.” What do you think?
Jeff: I do thing there are probably times when it makes sense to focus on technical debt. Then, it may not be time to just add more features. I think that makes sense. I don’t know if that’s a constancy. I think there can be points in time. Saying that the business is, tickets are slow, or things like that. To me, running a business is a fluid situation and it’s always changing.
I wouldn’t suggest a full stop. Perhaps it’s time to think about some ways that you can grow the business, but it also comes down to what you want to do from a business perspective. You could add features that allow you to find a new customer segment or you can say, “Hey, we just want to deliver the product faster and essentially get rid of some of this technical debt.” I think that’s a decision that, as a business owner, you have to make.
There’s no right or wrong answer. It really just depends on what your goals are. Having no more requirements, so to speak, from customers is typically a pretty good thing, but again, I don’t know your background and how you started the business. There are many cases where businesses are started or features are added that not suggest by the users per se. There are some things that the users don’t know can exist, or should exist, or does exist. I think it’s a good position to be in and I congratulate you on getting to that point. That’s pretty rare even for a brief time.
Rob: Yeah, I would agree with that. It feels to me every software product, every tech product has a life cycle. When you first build it, there’s not enough features, it’s clunky, then it gets to product maturity, and then eventually it gets to where it sunsets, where it’s just too old, 20-, 30-, 40-year old code bases, while I know they still run—a lot of the IRS and our social security system here in the US and probably in many countries around the world.
I’m guessing most SaaS apps aren’t going to make it that long. The code base is either going to go clunk, or the market’s going to change so dramatically, or there will be an entirely new form of servicing those needs.
With that in mind, it sounds like there is a chance. Three years is fast. Typically, I would expect it to be 10 or 15 years. I think of a tool like FogBugz or Basecamp. When you’re around a SaaS app that’s around 10 or 15 years, you do eventually hit a point where, “Huh, we don’t necessarily need new features, but our UX paradigms are 5 or 10 years old.” So, you need to revamp that. You have UX technical debt, in essence, or UX debt, or just technical debt. If it were built in classical ASP or PHP 1.0 or something, you would want to go back and refactor those. Given the code base is only three years old, it’s unusual but it’s not out of the realm of possibility.
I think I’m in the same boat as you, Jeff. There’s a couple of things I would think about. One, you could focus on technical debt now while you figure out what you vision for the product is. What is it that you can build that they’re not asking for? Oftentimes, it’s a mix of customer requests, internal employee requests, and founder vision or CEO vision. Those are the three things that I have most often built into a product.
Do you have a vision for something else? If not, then yeah, why not technical debt? Or why not put more funds into either marketing or sales? I know there’s long sales cycles, but can you double or triple the number of conversations you’re having such that someone’s closing every three months instead of every six months if you double that?
I don’t think it’s a bad thing to take a little break and maybe give the team time to go back and circle up. It will become obvious when you need to add more features because customers will be asking for it or there will be a competitor that you see doing something this is starting to take your customers or at least a competitor that’s getting ahead of you. That’s the time where you start thinking about heading back to features.
Jeff: I actually have one more thing that I was thinking about. I think you do have an opportunity to also ask your customers and it depends on the question you’re asking, If it’s, “What else do you want, maybe?” They say nothing. But if you ask it or you frame it as, “What else are you paying for?” or, “What else are you doing?” or, “Why else would you pay for, perhaps?” Maybe there are some different answers there or maybe it’s the way that you’re gathering feedback that you can just tweak it a little bit. Maybe get some insights from customers, of things that are maybe closely related, things that you could build that would immediately paid for so that they could pay for the development itself.
Rob: Nice. Thanks again for those questions, Nick. Our next question comes from Evan and he’s asking about a single-use niche product. He says, “First time caller, long-time listener. Honestly, I love listening to you, guys. Here’s my question. I built a script for a company I worked for, realized how much other people could use it, and then in my spare time, I refactored the idea and turned it into an enterprise product. I’ve been officially launched for almost two months. I’ve done just under $6000 in revenue, and 98% of that is profit,” which I would expect you probably have no expenses aside from hosting or something.
“The problem is that this is a single-use product that I’ve essentially built to use when people are migrating to another software package. It’s really not worth the plug because it’s so niche,” he says. “Anyway, I’m really trying to figure out how much time I should be putting into this thing.” So, is a migration tool to software company X. “Software company X could just roll out their own migration tool and kill my revenue overnight. However, they played pretty nice, thus far, and they featured my product in quite a few support articles and have started to build it into their support flow for when they get tickets regarding the problem.
Would you recommend continuing to make this product better and attempt to figure out how I could possibly get recurring revenue? Or just take it for what it is, single-use product that does what it does, and that is right now the only tool out there that does this? $6000 in almost two months isn’t a ton of money. I make decent money at my full-time job as a software developer, but it is a pretty nice supplemental income.” That’s our question, Jeff. What do you think?
Jeff: To me it seems like this is great. Sometimes, people may overanalyze what’s going on. To me, this sounds pretty straightforward. It seems like he solved a really great problem with something that was pretty simple, and it’s a single-use product that probably is a problem that this company is facing, and it doesn’t make sense for them to really spend any time or money on it, so they’re more than happy to find a solution that does the job for their customers. As long as you’re not bragging about how much money you’re making to the world and it doesn’t seem like it’s enough for the company would want to build this, to me it seems like a really awesome revenue stream that you have for the foreseeable future.
That being said, there’s very little context in terms of what it can do or how you could turn this into a recurring business. I would say that I wouldn’t over-engineer it or overthink it. I would just capitalize on what you can earn. Throw a little bit of money in the marketing and see if you can attract more people to want to use this. I think this is awesome. I don’t know what you think, Rob, but to me I think it’s pretty straightforward. It doesn’t seem there’s much there to do a company unless you want a really start building other features and tools around that. I don’t know what it is, to be honest, without all the context.
Rob: I agree with you. What a fortuitous thing you stumbled into. That’s cool. $3000 a month, while you say it’s not a lot of money, if you’re working full-time it sure wouldn’t be, but that makes most people’s house payment. It’s step one of the stairstep approach, to be honest.
For those who aren’t familiar with the Stairstep Approach to Bootstrapping, it’s something I laid out in a talk at Dynamite Circle five years ago now and then I blogged about it. Basically, don’t go for SaaS right away. Don’t go for recurring revenue. It’s too hard, too complicated, takes a long time, just all these things are against you. But, if you find a niche and you can build a WordPress plugin or another one-time use thing like this import tool, or a Shopify app, or whatever it is, find something where there’s a single sales channel and it’s going to plateau.
I did this with DotNetInvoice where it was like, “Hey, it’s a downloadable software, I’ve got $300 a pop for it.” Really, there were some SEO and AdWords, but that was about it. The market was not huge for it and this sounds very similar. So, now you have this opportunity to then take that and parlay it up into something bigger, if you want. You could potentially build on this. It doesn’t sound like you have direct ideas on how to do that, but I don’t think this needs to become your big thing. This can become $36,000 a year going into a bank account that you then use to buy a bigger app. Or, this becomes learning.
Have you learned how to do copywriting, toyed around with LinkedIn and Google AdWords? Have you ever done that before? Because now’s your chance to learn on a real product that has enough budget you could play with and not worry about chewing through your paycheck. I see this as an opportunity to stairstep if you do eventually want to get to recurring. I keep saying, doing things in public creates opportunity. This is something you’ve done in public and you never know what the next customer’s going to ask for, that brings a life of like, “Oh wow, that would be a crazy thing I could add to this that would double the value or that would make it recurring.”
I think this is all upside, personally, and frankly longer term, maybe wind up selling it to company X. It’s a migration tool for them, so why wouldn’t they? If you were like, “Hey, I’m just going to shut this thing down.” In their shoes, I would buy the thing from you. If it’s only doing $36,000 a year, maybe your exit is for $100,000 or $150,000 or something. Still, it’s worth something.
I feel like you’ve gotten further than so many software entrepreneurs or aspirin entrepreneurs ever get. So, I think you’re in a great place and have a really pretty cool resource that you can now use to parlay up that stairstep and maybe eventually buy out your own time and then get into recurring revenue as well.
Jeff: Love it. It’s all profit, almost. It really is amazing. I wouldn’t sell yourself short at all. It might not be the idea but like what was said, parlay that into something bigger if you want. I think having flexibility and optionality is huge. Reading the question again, I don’t know if it’s something that you don’t quit your job over, but keep milking it and see where it goes.
Rob: Yeah. Me from 20 years ago, I would have killed to own a software product that did $3000 a month in net profit. That was my goal. First, it was like, “I just want to make my car payment, making money on the Internet.” Then it was like, “I just want to make my house payment.” And then it was like, “I just want to cover my salary so I could quit my job.” This is an envious position, so hope these thoughts are helpful.
Our last question of the day comes from Will and he says, “Hey, guys. I’ve been mowing some stuff over for a bit and I’ve noticed something. The more I do my own projects on the side for money, the more I feel like I’m not as good of an employee. That doesn’t mean I don’t work hard and deliver, but I’ve noticed that after a certain point, I really had to fight the desire to rock the boat at my day job. For instance, I notice stuff like the following,” and he has a list.
“Companies using large numbers of developer hours to avoid having to pay $20 a month for a tool. Companies building their own internal tools when extremely cheap options exists like time trackers. Companies having really broken internal processes that would completely destroy a startup but they chug along on momentum.” This must be a non-startup like bigger companies. “Companies having highly technical products that are sold by people who don’t understand what the technology does. Companies having no idea what their sales funnel looks like. What the customer lifetime value is, et cetera.
I guess what I’m saying is that the process of going entrepreneurial has forced me to re-examine the things that made me a good employee, only to find that a lot of them don’t really suit where I’m headed. I usually don’t mention these things when I notice them as a developer, because people don’t really like devs jumping in on this stuff, but they bug me a lot.
Did either of you undergo a similar epiphany at some point? If you did, what were the main things you had to unlearn as part of making the transition to your own products? I think it’s easy to become a little too domesticated inside the walls of a cubicle and I’m wondering what else I should be doing to try to avoid that?” That is an interesting question. What do you think, Jeff?
Jeff: I love this question because it’s something that I’ve seen quite a bit. I’m going to get on my soapbox for a minute. There’s a couple of things to unpack here. I love the self-awareness and I think for many companies—it obviously depends—culturally, you should find yourself and hope to find yourself a company that wants to improve, first and foremost. If that’s the case, then pointing out things that can be better isn’t rocking the boat. It’s doing your job and the mindset that you’re “rocking the boat” hopefully isn’t correct.
That said, there’s a way to do these things. Even just reading this, it looks like a lot of things are black and white, and what I always used to say to the engineering team is I know a lot of time writing code in an engineering mindset tends to be black and white, but business is really shades of gray. There are probably dozens of factors you’re not considering from a sales funnel perspective, especially not being in the sales team or the way the company spends money.
What I would suggest is I would find an outlet to say, “Hey, I have some things that I’ve noticed that could help the business.” Someone in the company should say that’s important enough to listen to, but I wouldn’t just assume that you’re right or that you have all the information.
A lot of times, there are plenty of things that we did from a business perspective—again, we’re much smaller—that many people thought was the absolute opposite thing that you should be doing, but many times, if you explain to them why—one of our cultural values was understand why—then they’re like, “Oh, I never ever thought about that,” and, “Yeah, that’s okay. I didn’t expect you to think about it, but that’s why we’re doing this.”
I think it creates a lot of challenges inside companies when we use to say we don’t want know-it-alls in the organization. Be curious to understand why and then be helpful. Anyone in the company is going to want to save money or know that things can be done differently, but sometimes again there’s red tape and other reasons why things can’t get done the minute that it makes sense for someone.
Rob: I think your advice is better than what I was going to say. I was going to go from my own experience. Yours is from your own experiences as well but…
Jeff: Mine must be right.
Rob: Yeah, but yours is from the company side and I think that’s a really good point. Don’t assume that you’re right; that’s really good advice. I was going to say, as an employee, as I became entrepreneurial, I absolutely had the exact same thing. It wasn’t with sales and everything, but I became more and more disgruntled and frustrated with development, them hiring crappy developers we had to work with, the code was buggy, they wouldn’t let us go refactor. This was, let’s say, 2003–2006.
I got so annoyed that I would quit jobs over not feeling fulfilled. It wasn’t just like, “Oh, I’m building dumb software,” because I was fine to build this software I didn’t care about, but the processes were broken and no one would fix them.
What I did was left and I started consulting because then I get to control and processes or I would go find another job where the processes weren’t broken. I am a little bit broad here, but if you don’t like to see those things you’re seeing, then don’t work it like a Fortune 5000 company. Go work for a startup, go work for a small company. They all haven’t figured it out, but smaller teams have less dysfunction, in general. There’s less politics, there’s less of all the broken stuff, and frankly there’s more of a mindset of, “Let’s fix this stuff.” There’s less inertia and there’s less, “We do it this way because we’ve always done it this way,” and there’s more, “Let’s try to get better.”
Again, I’m generalizing, but that’s if I were in your shoes and you can Jeff’s advice, which I think is great, or you could take mine, or you could take Jeff’s and then take mine if it doesn’t turn out well. This is what we’re doing, Jeff. We’re getting people to quit their jobs.
Jeff: No, I actually think the advice is complementary, too. I think that makes a lot of sense. Really, the first part of what I said is you should find a cultural fit and that’s the challenge. And you also should remember the trade-offs. A stodgy, slow-moving company probably is just inherently more stable, if you look out 5 years and maybe not 50 years. You may make more money there or may have more benefits there. Those are personal trade-offs that you have to make.
Listen, if you want everything done exactly your way, there’s only one way to do that and that’s to start a company. But let me tell you, very soon after you start it, it won’t be your way anymore once you have other people to answer to, whether it’s investors and employees. That’s just the reality. If you want something on your own, you are going to have to do a side project.
But I totally agree with Rob. Set yourself up for success in terms of aligning with how the company’s going to work. Again, these are questions that ideally you’re finding out in the interview process so don’t want to be surprised when you start. So, do your diligence and find out, especially if you’re a developer, you have a lot of options for places to work. The lowest employment in a long time and everyone’s looking for technical talent, so you’re in a good position.
Again, I wouldn’t shy away from or train yourself away from speaking up, but I think there’s a time and a place. Don’t complain in front of the whole team. That’s not the way to get it done. Privately message someone who can help or say, “Who can I speak to about these things? I love to make some things better.” At some point in your organization, someone is going to raise their hand and say, “We should listen or we should take this into consideration.” Again, that’s my two cents.
Rob: That’s good. I had this personal adage, I don’t know if I ever written about it or said it. I’m sure I swiped it from a business book or something. It’s to say or do positive things in public and negative things in private. If you’re going to reward or congratulate someone on a good job, do that in public so that everyone knows. If you’re going to tell someone that they’re screwing up on the job, do that in private.
That’s actually one of the reasons I have such an issue with Twitter, to be honest, is there is so much open public negativity and it’s like, “Why didn’t you just email me?” in a lot of times. They’ll be someone you know and they’re complaining about you, or your company, or something you did, and you’re just like, “Dude, just email me. We can talk about this. (a) I would fix it, (b) I didn’t know what was going on. Why do you have to yell at the top of your lungs from your rooftop, telling everyone I screwed up?”
I think this is a good case of that and the reason I started saying that is because you brought up, don’t braze these things in a big public meeting with 8 or 10 people. It’s bad form, it’s rude, and I would not be happy with that. So, set up a one-on-one or a one-on-two with supervisors who are mature and can handle this kind of stuff.
Jeff: One thing to add—I don’t know if it’s helpful—I found the people that wanted to help the business in a positive way are the best employees, but on the flip side, the people that complain publicly are always the worst employees. It’s a really fine line. They both arguably wanted to help, but the people that are like, “This is wrong,” or, “This is bad.”
Again, it’s so frustrating just to think about some of those situations where people are like, even after they left they would maybe blast or post something like, “Hey, you can’t do these things. You can’t do this.” You don’t need to talk at 40 people publicly at lunch how something’s wrong when it’s a minor thing that can be addressed in five minutes.
Rob: Yeah. Negativity is toxic and it spreads, right?
Jeff: For sure.
Rob: Well, thanks again, man. Thanks so much for coming on the show.
Jeff: Of course, yeah. My pleasure.
Rob: And if folks want to catch up with you, you’re @jeff_epstein on Twitter.
Jeff: Awesome. Thanks, Rob.
Rob: And if you have a question for the show, leave us a voicemail at (888) 801-9690 or you can email us an MP3, or a Dropbox link to a WAV file, or even a text question to questions@startupsfortherestofus.com. If you’re not already subscribed to us, you should search for “startups” in whatever podcatcher you use and subscribe. You can visit startupsfortherestofus.com to get into our mailing list. We don’t email that often, but when we do, it’s tasty, yummy goodness. You can also get transcripts of each episode. I think they’re about an episode or two behind right now, but some folks really like transcripts and actually have used a hack to search our website using the site: in Google just to figure out if we’ve talked about a topic. With 462 episodes, we’ve covered a lot of ground on this show. Our theme music is an excerpt from We’re Outta Control by MoOt, used under Creative Commons. Thanks for listening. I’ll see you next time.
Episode 461 | Doubling Down on Bluetick
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Show Notes
In this episode of Startups For The Rest Of Us, Rob checks in with Mike Taber’s progress on Bluetick. They revisit some topics that were brought up from their last episode together including motivation, personal retreat, accountability, the Google audit and more.
Items mentioned in this episode:
Rob: Welcome to this week’s episode of Startups for the Rest of Us. I’m your host, Rob Walling. Each week on the show, we cover topics related to building and growing startups in a way that’s designed for the rest of us, for the folks who can’t move to the big city, can’t move to the Silicon Valley, don’t want to sacrifice their life or their family to grow a company. We value relentless execution and we have a long-term mindset so we think in terms of years, not months, maybe even decades. As such, we don’t burn ourselves out by working crazy hours, sacrificing our health, sacrificing our relationships. This week, I circle back and catch up with Mike Taber, again, on his progress and learn about how he’s doubling down on Bluetick. This is Startups for the Rest of Us episode 461.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups, whether you’ve built your fifth startup or you’re thinking about your first. I’m Rob, and today with Mike Taber. We’re here to share our experiences to help you avoid the mistakes we’ve made.
Welcome to the show, thanks for joining me. Today’s a bit of a longer episode because I find when Mike and I catch up, he just has a lot going on. The feedback I’ve heard is not to cut it short. Typically, our Startups for the Rest of Us episodes have been 25 to 35 minutes over the years, some of the interviews run a little long and the conversations with Mike, often, they’re just pretty fun. Frankly, I feel the conversation is valuable. We touch on a lot of interesting things today that I know a lot of people are struggling with based on the emails, tweets, and reaches out that he and I have been receiving. I did allow this one to go a little long and I’ll see what I can do in the future to keep them a little shorter.
I plan to do this about every month to touch-base with Mike, to keep up on his progress. It gives him enough time to execute on things, for things to change, and I really love following the thread of any founder and that’s what the show has been for 460 episodes. We’ve always had the teaching aspect, we’ve had interviews, we’ve had hot seats, but I think the most compelling thing that keeps people coming back over these years is our stories. It’s following the journeys that we’ve traveled as entrepreneurs and it’s interesting.
While I’m going to continue doing Q&A episodes, hot seats, some interviews sprinkled here and there, I do want to touch base with Mike every three or four episodes depending on what’s going on to hear what he’s up to and try to dig-in to both the good and the bad that he’s experiencing. With that in mind, I’m working on a super secret podcast project that I’m not quite ready to talk about yet but I’ve been working on for several months now and just stay tuned to Startups for the Rest of Us because I’ll be talking about it on the show once that’s ready to go live.
In addition, I want to circle back on a topic that we brought up, probably 10 or 15 episodes ago. It was a desktop Gmail client and switching to that. I had switched to Mailplane and then switched back to Gmail. But due to some recent changes with how G Suite—forwarding, groups, interacts, and those aren’t changes actually, Google’s been doing it for years—I hadn’t realized that I wasn’t getting things that were forwarded. They were sent to Google groups which is how they do email list.
I won’t go into details. It’s all frankly boring, but it’s irritating. I’ve always just funneled everything into a single Gmail account and then did send as in order to appear as if I had a bunch of email inboxes, but that no longer works. It’s broken based on how Google has implemented some stuff in G Suite. I needed a way to have a unified inbox where I can be in a single inbox and I can funnel everything in there even though it’s multiple inboxes that I’m checking. I went through several providers that do that and I’ve landed on the Airmail which is a desktop client and I believe it was $20, maybe $30 through the Mac App Store. I did try out Kiwi per Adrian Rosebrock’s recommendation but it did not have a unified inbox on, it was just a hard requirement for me given this current situation.
Just to close that loop, I’ve been using it for a couple of weeks and it’s good. I’m probably going to keep using it. I do like that it has dark mode and it has a lot of keyboard shortcuts. It’s actually got me a little spoiled already with command delete going through the inbox. It’s almost like a touch interface where I can just swipe, swipe, swipe, and get rid of emails. So far so good on Airmail.
Lastly, I wanted to announce, you heard it here first, that applications for the next TinySeed batch are going to open up on November 1st. It’s just a couple of months out, we’ll be following up with more information. If you’re on the TinySeed email list, you’ll hear about that. Go to tinyseed.com and look for the place to subscribe to our email list. We’ll be updating folks once we have more info on how that is going to go down. If you’re interested in potentially becoming part of batch two of TinySeed, be sure your email is on that list.
I enjoyed the conversation that I had today with Mike and we cover all kinds of stuff. He went on a personal retreat and really sorted some things out, it sounds like, and it feels like his trajectory has really adjusted from the conversation we had back in episode 448. If you haven’t listened to episode 448 and 458, there’s a lead up that’s the start of the story that we’re really following today. I recommend you go back and check it out. I hope you enjoy this conversation with Mike Taber.
Mike: thanks for coming back on the show.
Mike: Thanks for having me back.
Rob: It’s been a few weeks since we caught up and I know, you and I, we’re just talking offline trying to put that line […] episode. It sounds like a lot’s been going on, a lot of progress, a lot of interesting things.
Mike: Definitely.
Rob: I think the first question is, I’m curious, are you still on your social media, Twitter, podcast hiatus?
Mike: I am. I still haven’t logged in to either Twitter or Facebook. I’m sure that I will in the near future if only to get Facebook Ads up and running and probably experiment a little bit with Twitter ads some more, because I’ve done that in the past and it can work out well, it’s just you have to actually dedicate the time to it and you have to log in. I haven’t bit the bullet and gone back in them.
Rob: Yeah, that’s the thing. I know that people build their entire funnel around being on social media and being a personality and typically, if you’re selling info products that works well and if you’re selling SaaS, it doesn’t as much. I’m sure there’s a counter example, but really, if you get to SaaS app to mid six or seven figures, you’re not going to do that on Twitter in essence. It can be a part of it, but it is such a trip to try to wade the value, the ROI of time and distraction, and frankly, sometimes, the stress that it can cause on you.
Mike: Yeah. I have all of the notifications turned off, whether it’s push notifications or email notifications. Literally, everything is turned off for both of them. I turned off my iPad the other day and I realized that apparently, I didn’t turn it off there so it’s telling me, “Oh, you’ve got a couple of hundred notifications here,” and I’m just like, “Nope, not looking at it.”
Rob: Uninstall, that’s cool. Good. I’m curious to see how that feels if and when you decide to re-enter that world. I know some folks that just go off permanently. I think like Marc Andreessen’s just done. He was known for having the big tweetstorms. There’s a rumor that he invented it or something, I don’t know if he did or didn’t, but he would write entire essays on it and then he just started doing likes only and that’s how people were tracking him, and now he said, “Nope, I’m just completely off,” it’s a trip to see that.
Mike: On my Facebook feed for people who I’m friends with, I have the Taber Household Conversations which is usually various conversations. They happen around the house with the kids and wife and they’re fairly entertaining. I’ve been told by a number of people that’s their most favorite thing to see on Facebook and they love watching that but I’ve been keeping track of them separately in a notepad document on my phone so that if I ever go back, I have probably 40 or 50 of them that I could post, I just haven’t logged in.
Rob: That’s cool. Talk to me about your personal retreat. When we last left you, there were some open questions that I had posed in episode 458, things like thinking about what challenges you wanted to tackle, whether you’re going to keep going with Bluetick. There’s a lot of stuff and we’ll cover that today. Part of that, I threw out an off-hand suggestion of, “Hey, maybe you should do a personal retreat to think through some of these things,” and it sounds like you wound up doing that.
Mike: Yeah, I did. It was more of a last-minute thing just because my wife had had time on her calendar when she wasn’t going to be teaching over the weekend, so she’s like, “Hey, you should go ahead and take one,” so I did. It was last minute like I said and it was really good because I sat down and started looking through my notes and stuff. I brought my notebooks that I had written in from previous retreats that I had gone on dating back to 2014.
Before I did anything else, I really just started looking through what I had previously written down as things to think about, goals, observations, and things like that. I realized that dating back all the way to 2014, one of the biggest things that came out every single one of them was I’m not sleeping well. I need to be able to figure out what’s going on and it was a continuing theme every single time. I have been taking retreat since before I was diagnosed with sleep apnea. It was eye-opening to go back and read those things and say, “Huh, that thing is basically taken care of at this point,” but it was eye-opening to see that, that was just a huge recurring theme over and over again and I couldn’t get over to figure out what was going on.
Rob: Yeah, that is such a trip, man. I think it is one of the benefits of doing the founder retreats, as we like to call them, is that if you do them year after year and you keep the notes and refer back, you can see patterns. A lot of us get so caught up in the day-to-day or looking ahead to the future—I speak for myself—I don’t frequently look back and try to see patterns, why am I feeling this way? What’s causing that? It sounds like knowing how much that’s impacted your motivation and your ability to execute over the past five or more years is a really good thing to know.
Mike: Yeah. I think what was eye-opening to me was just the fact that I recognize even then how detrimental it was to me, but because I couldn’t figure out a way to deal with it or figure out what was going on, it just kept continuing to be a problem. What I realized was that most of the time, it just snowballs. I’m not getting enough sleep, so I’m not as productive and I’m not thinking straight that I ended up on various medications for different things that are treating the symptoms, but nothing is really addressing the underlying problems, which just doesn’t go away. So then, somehow it just masks the problem. It just makes it so hard to move things forward.
It did make me realize that I’ve been beating myself up over the past 6–8 months or so just because I felt things weren’t moving forward and I was projecting past Mike to present-day Mike because I couldn’t get past those sleep issues. It’s like, “Wait a second, these things are actually mostly resolved at this point, so I shouldn’t be beating myself up over the problems that I used to have and project them on myself and continue to have motivation problems or anything like that. Each day is a new start, so just use it as that. Since I went on that retreat, actually things have really, really turned around for me.
Rob: That’s really good to hear, man. It really is. I think that’s another big benefit of founder retreats is the clarity it can bring you about big decisions or even it sounds like it was like a cleanse in a new start in a way. I’m curious how Sherry wrote The Zen Founder Guide, the Founder Retreats. Did you use something like that to help you or do you have your own system now that you’ve been doing it for so many years?
Mike: Usually, I have enough time in advance of going to be able to write things down and go through some old notes and stuff I have including stuff that Sherry had put together, but this time I didn’t. What I did was when I got there on Friday night, I started going through my old notes and I was going to put some stuff together. Then on Saturday and Sunday, I was basically going to go through it. I feel like I started going through my previous notes first and then realized that probably wasn’t necessary and it was vicious because things just popped out of me, it’s glaringly obvious in retrospect but not while I’m sitting at my desk every day.
Rob: Yeah, I think that makes sense. It sounds like you had a lot of long-term things to think about and didn’t necessarily need the search for topics to consider. You had an ample number of topics to consider just going into the retreat.
Mike: Right. I didn’t really find that it was an issue. The personal retreat was a pretty […] story, it prefers few hours to be perfectly honest. It didn’t take long for me to start to see what things have been holding me back and why and what my path forward was going to look like. Most of the time I spent was probably personal reflection on different things but not necessarily trying to answer those questions. It was just more thinking about the things that had already come up and that I’d already given thought and consideration to, that I thought I was going to need to spend a lot more time on during the personal retreat. It turned out that I just really didn’t need to. I spent most of the time just doing personal reflection more than anything else.
Rob: I have a few questions for you but I am curious to hear if there are other things that you made decisions on or thought through that I don’t ask you. These are questions that we had posed or I had posed the last couple of times we spoke and said if you want to retreat, you should probably consider this. One of them is, do you want to continue working on Bluetick?
Mike: Yeah, and the answer to that was yes, absolutely.
Rob: Was that a hard decision to make? Did you think through a lot of factors or was it like, “No, this is my gut feel and now I’m going to move on”?
Mike: I did think about it. It wasn’t just a gut feel. This is the answer that I want to have because I’m thinking that other people have expectations on me for that. What I really looked at was where is Bluetick today versus where it needs to be, and if I were to just toss the whole thing and go on to something else, would it take as long as it Bluetick has taken or would there be other risks? The reality is I know that there’d be a lot more risk if I went with something else and it would probably take me just as long because I still have to do all the customer development stuff.
The reality is, it’s a solid product that’s got a lot of things going for it. I just haven’t really put the time and effort needed in focus into the marketing side of things, and I haven’t talked to several customers. They like the product, it’s just that I need to get more of those customers.
I think that if I were to move on and try to do something else, could I sell the products ‘as is’ to somebody? Absolutely, I’ve had those conversations with people and I’m sure that I could sell Bluetick ‘as is’ to somebody if I wanted to, but do I want to start over? The answer is no.
The one thing that came to mind was is this a sunk cost thing that I’m thinking about? Is that why I’m leaning in the structure? I don’t think it is because I thought about that as well. It was actually something that […] probably thought about that more than I thought of do I want to continue on this.
Rob: I could see that because that would be the risk and that was going to be what I brought up was do you feel like you have sunk cost that was going on here and are chasing after something just because you’ve spent so many years building it.
Mike: Yeah, and that’s why I spent so much time thinking about that particular question and I don’t think that’s it. I think that there’s probably a little bit of contribution there for that particular thought but it’s certainly not the only thing. I definitely think there’s a lot more that could be done with Bluetick and there’s a lot more value there than I’ve uncovered, I just haven’t gotten in there yet.
Rob: There was another thing I had noted down and it was around, you raised this challenge, this struggle of motivation and the question I think you posted is like, “I’m not super motivated by money right now. It’s hard for me to be motivated to work on this tool and get up every day and do it. What should motivate me?” That was the question. I threw out, “Oh, you should go take the Enneagram.” That kind of was a joke but it was also helpful for me personally when I took it to have a little bit more insight into who I am and what drives you, and that’s part of what it does. It’s nice that it’s free and it takes 15 minutes to take.
I’m curious if you: (a) took the Enneagram, (b) whether that helped or not, and (c) did you also think about this question of what challenge do you want to tackle and what is going to keep you motivated this week, next week, and next month?
Mike: There’s a bunch of things packed into there. Keep me on track if I forget any of those things. I did take it, I didn’t realize that there was a free version of it. I paid $10 from the website and I took it. In my opinion, it was kind of BS, to be perfectly honest.
Rob: That’s totally fair. I’m not trying to force the Enneagram on anyone and I feel like it is. I liked it but I’m curious to hear why you didn’t like it or why you think it’s BS.
Mike: I think it could be helpful for certain people. The problem is that when I went through it, there are three different steps. The first one is to read these nine paragraphs and then you select how much do you think the whole thing describes you or not. The second step is to go through the ones that described you the most and select the ones that you affiliate the most with. I think there were three of them that you had to pick there.
In the first step, I think there were nine different paragraphs and eight of them were ranked exactly the same. In the second step, I basically completely self-classified myself. I’m like, “That’s not real helpful. I could have just read online paragraphs and then said which one do I want.” It was like throwing a dart at the dartboard, you have an equal chance of it in any of them.
Rob: The Enneagram should have been 40 or 51-sentence questions, is that what you saw? There were no paragraphs when I took it. One sentence, it would describe like, “When I’m in a situation like this, this is what I do,” but it’s just one sentence and I don’t even remember if you’ve ranked it on a one to five or if it’s just this is me or this isn’t, maybe that’s what it is. I think that’s all it was but yours is different, I wonder if you took a different test.
Mike: I think mine was different. Maybe it was the wrong one. I don’t know, let me go back and take a look at that.
Rob: Yeah. Let me see if I can find that link to the one I took because that would make more sense, I think.
Mike: Anyway, out of the three steps, there was only one of them, those nine was eliminated after the first step. Then on the second one, I had to pick out of the eight which one…
Rob: That’s not helpful at all. Dude, okay, I need to go and look. I bet I still have the link. Forget the Enneagram, it’s a tangent and we’ll try to revisit it at some point, but the other two things where have you thought about the challenge you want to tackle, really it’s what’s going to keep you motivated.
Mike: I think that it’s looking outside of what the thing is that I’m working on because I have a tendency to get so engrossed in what I’m working on that I will not look at other things in terms of what my social life, or health, or anything like that. I realized that when I get down the rabbit hole on certain projects, AuditShark being one of them, Bluetick being another, there’s a point at which I probably cross a threshold where I continue to become all consumed by that. I wouldn’t say that’s necessarily a bad thing in certain situations, but I think that I let it get the best of me and go too far.
What I really need to do is step back and say, “This is a means to an end, not the end for me. This shouldn’t be my all-consuming life purpose because essentially, it’s work. It is something I’m working on and I do enjoy it, but I can’t let it be the only thing that defines me.” I think that, that’s something else that I’ve struggled with to some extent where I look at the product itself and if the product is struggling, then I personally struggle because I see it as a reflection of myself, and that really shouldn’t be the case. It’s more of being able to step back and separate myself and my own self-value, or self-worth, or whatever form the product itself and how well it’s doing versus how well I am doing.
Rob: Yeah, I think that’s super important, it’s very hard to do. I personally drifted in and out of that over the years of having my entire, like you said, it’s like self-worth, self-confidence, happiness tied to my MRR at times. That can be tough. You said that’s outside of that. I think that’s a great realization. Easier said than done, but a great realization. What is it outside of the app that is going to motivate you?
Mike: Honestly, socializing with the people that I know that are in the area. I mentioned this several times in the past where I have a weekly meet up with a couple of guys that I played D&D with. It’s a great way for me to get out of the house, away from my desk, and away from my computer, away from technology. I find that it’s a very helpful and therapeutic for me to be looking forward to that as opposed to looking forward to getting up at five o’clock in the morning and going to work because I really want to work on something and then distracts my sleep because I’m so excited about it the night before. Being able to back off a little bit from that stuff and look at it and say, “Look, this is just a means to an end and it’s means to make a living, not an expression of me.”
Rob: Yeah. I think that’s good. I think the thing I’m missing though, because I also play D&D and I read stuff now, for the first time in a long time within the past year or two, I’ve started to read fiction again. A lot of it is graphic novels, but I’m doing hobby stuff again. I’m giving myself permission to do that, but that’s how I distract myself so that I don’t think about work all the time. Me personally, that’s my personality.
I’m missing how going and hanging out with friends, or playing games, or having a hobby is going to motivate you to stick with Bluetick everyday when it gets hard? Or does it? Or am I misunderstanding that? Because that’s what I’m trying to get at is you’ve talked about getting up and like, “I’m not motivated to do this. I don’t know why I’m doing this,” or you do know why, but it’s like, “I’m just not that motivated to sit here and work six or eight-hour days and crank away on this stuff.”
Mike: I think it’s a very subtle thing and that, as I said, Bluetick is essentially, if I view it as a means to an end, and that end being I get to go socialize with my friends and do these other things, I can’t neglect that and I can’t just let things go because if I do, then I won’t be able to do those other things. It becomes a way for me to create a balancing act that, can I let things slide sometimes? Sure. I absolutely can. Can I let them slide forever? Absolutely not because then, it puts me in a bad financial position, that I’m then stressed out and anxious, and I can’t focus on what needs to get done. But if I make myself balance those things a little bit more so that I’m not so single-handedly focused just on Bluetick or single-handedly focused on socializing with friends, if I force that balance, then it helps me to concentrate. Does that make sense?
Rob: I think so. Is it taking a break gives your mind a break and that when you come back, you’re re-energized rather than basically burning your mind out?
Mike: Yes.
Rob: That’s what it is?
Mike: Mm-hmm.
Rob: Fascinating. I get that. I definitely understand the link there, but I wonder if this answers the question that I posed earlier of everyday you’re going to have to get up and there are going to be things you don’t want to do dealing with the Google audit and whatever, firing a contract or hiring a contract, or maybe it’s writing code, maybe it’s marketing, maybe it’s whatever. You’re going to have to do some things you don’t want to do, some things you are excited about, but how are you going to push yourself to not sit there, stare at your screen, and churn away the time? Or whether it’s being unproductive because you are churning or whether it’s being unproductive because you are unmotivated to work on it?
Mike: I feel like that’s just more a matter of putting certain systems in place. One of the things I recognized is that systems are what really helped me stay focused, stay on track. and get things done, but at the same time, my personality is such that I hate being a cog in a wheel. In some ways, it’s demotivational to me to have a system but it’s motivational when it works. Like I said, it’s that balancing act.
One of the issues I had with me taking in the Enneagram is that by definition, I think that I’m very well-balanced in very many ways. I forget what it was called, it was a test that was given that business software like 8 or 10 years ago or something like that and afterwards, I showed it to the person who has given it, I think it was Paul Kenny, he looked at it and he’s like, “Wow, that’s extremely balanced in every direction.”
He said he hadn’t really ever seen that before which is, I don’t know whether that just speaks to how weird I am or not, but it was interesting to see. I have a lot of empathy and ability to see things in multiple ways and multiple directions and I think that’s a strength, but at the same time, it could be a downfall because I can easily find myself in a situation where I’m paralyzed because I’m like, “If I do it this way, then this will happen. If I do it this other way, then this other thing will happen.” It’s difficult to deal with that but at the same time, I also have to recognize, “Hey, you just need to move things forward. You need to make a decision and move on because you can’t stay here looking at this forever.” By timeboxing and things like that, that helps me to move things forward when I need to, but at the same time, it forces that structure which, again, I hate the structure but I do like the results of it.
Rob: Yeah, there you go. The hating structure and liking results means that you hopefully can plow through it. It sounds like the motivation will be the results that you see and I think the other side of that sword or the sharp edge of that is that if you are not seeing results, will you become demotivated? Again, last time I talked about some people are motivated by money. It’s like, “I want to make enough money so that I can support my family or that I never have to work again.” That, whether you’re seeing results or not, you’re still motivated by that.
If some people are motivated by this achievement, it’s the Jeff Bezos, “I want to start a billion-dollar company,” and that you’re just motivated to achieve. Whether you’re seeing results or not, you do still have that goal that you’re hungry for. Last time, we talked about how you’re not hungry for anything right now. I think probably my main concern is that if you’re not hungry for it, if you are not seeing results, are you going to get demotivated?
Mike: You bring up something that sparked my memory of something that came up during my personal retreat is like, “Am I running towards something or away from something?”
Rob: Yeah, because that is away from having to work full time. The last time you talked about that you had the Dilbert comic and you said, “I don’t want to go back because bosses are […].” It’s a pain in the ass to work for other people. There’s a commute, and this and that. We talked through some things about you should get a job with no commute, you should get a job where the boss is not dumb. I can remove all of those.
Mike: I’m screwed working for myself.
Rob: Yeah, but we can remove that. Are you just running away from working for other people? That’s what you’re referring to? Are you actually running towards, “I wanted to keep this,” or just running away from, “I don’t want a full-time job”?
Mike: Yeah. The sad part is I think it’s a mix of both and that’s part of what makes it a hard question for me to answer. I don’t have a specific answer for that. That’s one thing that I did come out of my retreat. One […] about is like, “What is it that I really want to achieve?” and I still don’t have a specific answer for that, but I do know that I want to have a successful SaaS application that is going to support me and my family, at least do reasonably well. If that means that I can take some time off in the middle of the week if I want to, then great.
Kids started school last week on Thursday and on Thursday, we were actually out looking for a new car for her because her Toyota Corolla from 2004 is about to die. It was nice to be able to just take the time and go do that and get it taken care of that day because I have that flexibility in my schedule. If I were working for somebody else, I wouldn’t have that. If I didn’t have an app that was doing at least reasonably well, I wouldn’t be able to do that.
Things do come up. There are bugs and stuff that will come up on occasion that I have to get those fixed and I have those come up as well last week. It’s nice to be able to rearrange my schedule, have the flexibility to move things around and work on it. That’s really what I want out of my future is to be able to have that flexibility.
Rob: Sounds like that’s the thing. That is the one thing that you have referred back to the most is flexibility, is like owning your own time. I wonder if that’s your number one motivator.
Mike: It’s funny because I think that it is, but at the same time, I also know that, as I said, those systems that I have to put in place sometimes to get things done and move things forward, those are restrictive. This weird dichotomy between them that sometimes I have to go in one direction and sometimes I have to go in the other.
Rob: Cool, that’s actually helpful for me and I want to revisit that at some point in the future, but I just want to hear how that how well that’s panning out. We can circle back in a future conversation such that I want to see what the motivation is and if you’re not seeing results, if it’s still working and if just the drive for flexibility is enough. I also updated the Enneagram link, it’s tests.enneagraminstitute.com is the official one, it’s $12 to take the test. I will Venmo you $12, Mike, Go take the test because you didn’t pay for the other one, did you?
Mike: I did. It was enneagramworldwide.com.
Rob: Oh, interesting. When I typed in like take Enneagram online, there’s a bunch of places doing it, and you paid for it and that’s what it gave you? I think go to enneagraminstitute.com, I believe those are the folks that developed it. That’s at least my rudimentary understanding right now.
Mike: Oh, well.
Rob: Anyway, it’s $12. Give it a shot. It should be a bunch of either-or questions. It will make a statement like, “I would prefer to be viewed as successful or happy,” or “I prefer to be successful or happy,” and then you can say, “Yes, this is me,” “No, this is me,” and some of them have partials, I don’t know. That’s what you should see. You should not have to read paragraphs to do this.
Cool. There’s a couple of other points we’re talking about last time that I want to revisit. One is the Google audit thing, the chaos that has been the ongoing Google going to block you if you don’t get this audit and go through their security process, update us on that status.
Mike: I’ve talked to two companies that do that. I had two discussions with each of them, worked with both of them. I’ve selected one that I will be going to. Basically, I was able to work with them on the price a little bit, so it falls at the lower end of the range of $15,000–$75,000 it was originally given. Fortunately, it’s not closer to $75,000 but it is still 5 figures. It’s a difficult pill to swallow but at the same time, it’s also, I would say, a motivational factor for me. One thing I have recognized about myself is that I’m a completionist to some extent. If I were to pay for that, it would be hard for me to not follow through afterwards because that’s a huge chunk of money that needs to be paid every year.
But the other side of it is that it also gives me a defensible moat around Bluetick as well. I probably don’t have a whole lot to worry about from competitors coming in underneath me, which is a weird situation to be in. I still have those bigger fish that are above me but I probably don’t need to worry nearly as much about anybody coming in on our niche and stealing customers or what have you. Not that I really think that would happen for a while. Even if it did, it wouldn’t make that much of a difference, but it does create a barrier to entry for anybody else who’s trying to do similar things.
Rob: I would totally agree with that. Anyone who’s thinking about just dabbling in and they’re starting a little side project to do it or wanting to start just a small lifestyle business and doesn’t really want to go after, it’s going to be deterred. I would be deterred from doing that, it would discourage me from one drop, however much it is, $20,000–$30,000 to get in and just to get started. That’s a trip.
Was it a hard decision then to decide whether to do it or not? Because, again, if they quoted you $75,000, it would have been a reason to shut the company down. We know it’s a lesson in that boat. As you’ve gotten towards it, was it a hard decision or was it like, “No, this is once I’ve decided to do it, I’m also going to suck it up and do this”?
Mike: I think when the initial pricing came in, it was like, “Gee, I don’t know if that’s actually going to fly. I’m not sure if I really want to go through and do that because it would have been really hard to swing it.” Then after going back and renegotiate with them, it was much more doable. Yeah, it’s probably going to be something that needs to be […] each year, but at the same time, it’s a SaaS application. There’s only going to be so many changes that are between them. They didn’t specifically say that was a differential they would do from one year to the next, but that certainly does factor into it if you’d go with the same company for one year to the next.
Google could easily change their policies moving forward. I’ve had this discussion with other people in my mastermind group, where I think that they are just laying down the law, drawing a line in the sand and saying, “Okay, this is what it is, and screw anyone that has to deal with this in the next 18–24 months. We’ll figure it out before then. There’s going to be small players that gets screwed in that meantime, but oh, well, we need to protect our company and our users’ data. In two years out, things will be fine.” I think that’s the decision they’ve made and things will change in a couple of years but probably not dramatically.
Rob: Yeah, and I like the way you couched it as a motivating factor. There were two times that I really recall having my back to the wall and talk about sunk cost, you are talking quite a chunk of money. I bought DotNetInvoice for $11,000 and I bought HitTail for $30,000. Those were 4–5 years apart, but those were very difficult pills for me to swallow. It was a lot of money. It was all the money that I had saved up from doing all this consulting on the side.
I had an incredibly productive two or three months stretches right after that because my back was to the wall. I worked for longer hours. That was one of the seasons where I work long hours and a big part of it was I can’t have written that check-in vain. I have to make this work. I keep saying my back was to the wall, but that’s how I feel about it. I wonder if you can use this at least in the short term as motivation of, “I have to be a good steward of that money and make this worth it.”
Mike: Yeah. I’m definitely that type of person as well. Some people crack under pressure and I do extremely well under pressure, which is a double-edged sword because sometimes, I’m a procrastinator to some extent. In some ways, that helps me because I procrastinate and then I get to this part where it’s do or die and I’m willing to put in the time and effort to make sure that things happen and that things work.
I probably haven’t experienced that in a while but there are certainly things that I can point back to in my history where I […] my masters degree, for example. I was coming up to the wire in terms of being able to finish my masters thesis and they’re like, “Okay, you need to have this done by the end of August.” So, I buckled down and I wrote the entire thing in a month-and-a-half, or two months, or something like that and I went back to them and basically got it all done, but it needed to get done and it needed to get done fast. There was really no other option, otherwise, I was blowing $20,000–$25,000 down the train and I would walk away without anything to show for. Still, having taken those classes, I don’t have the degree, not that it means a whole lot if I’m self-employed but it was one of those personal accomplishments or achievements that I wanted to have.
Rob: Yeah. It comes back to that extrinsic motivation. It’s really an optimist scenario for you. Cool. A couple more things before we wrap up, I wanted to ask about that untestable seal.net component. You had made the decision to replace it with a different component, but you were saying while you get slotted in among things and I was like, “Look, you made the decision. Just go ahead and do it because it’s keeping your back. It’s technical debt, right now, it’s a liability that keeps you from making changes to things.” Where does that sit?
Mike: I still have not touched that. Most of my time has been spent going back and forth with the vendors on the security audit because just even scheduling a meeting with them takes a week. It’s a week before it happens but it’s several days of back and forth and trying to get an answer because they’re just busy and they have to slot in conversations when they get a chance. It’s a pain in the neck.
I’ve been stalling on other things to see how that works out because obviously, it did hold it back to some extent because of the final numbers for the quotes came back in $75,000, I was just going to walk away, but since it didn’t, it made things a lot easier to get working on other stuff. At this point, I do recognize that needs to get done. It’s a matter of looking at schedule and seeing, “Where can I slot that in between marketing activities?” because I feel like that’s probably more important, but I go back and forth on that.
Rob: When do you feel you’re going to pull out that component?
Mike: I think if I get a more detailed information from the security company about what I can and can’t store, that’s probably going to dictate that to some extent because I don’t want to get in the position where I spend all this time and effort replacing that component so that I can download all the data in the way that I want to only to find out that they come back and say, “You really shouldn’t be storing that,” or those other things that go into. It’s just I’m holding off and maybe that’s a bad decision.
Rob: I don’t think it is. That’s what I would do as well. It sounds like there’s a bunch of unanswered questions and you are right with the security audit. They can come back and say anything. I would personally also wait on that but I wouldn’t wait on other development on marketing because you can do that stuff before then.
Your mastermind group is meeting weekly and you have a pseudo business coach. Both those things still going on and do you feel like they’re working for you?
Mike: I do. I actually have an email in my inbox right now from the coach that I have to reply to today and then the meetings have been going on every week and we talk about all kinds of different things from conversion rates to where marketing should be focused or conversations to customers, but I find that the weekly accountability has been pretty helpful because it forces me to make progress on everything and part of it is schedule-related because I have to make sure that I slot time for those things but it’s also what am I looking at next and then making sure that’s getting done because I’m basically committing to each of those things.
Rob: That makes a lot of sense. Glad to hear that’s still working out. I do want to touch base periodically and hear more about that. I’m curious. We had a conversation, it was episode 448 where we really dug into this stuff for the first time. You raised a concern that you didn’t really want do the spammy-cold email and I threw out an idea of a warm and ethical code email or you can just focus on warm email, is that still your thinking that you want to focus on something that you feel better about personally and have you made any strides to make that part of reality?
Mike: I have thought about it quite a bit more and I had a conversation with a customer that I onboarded a couple of weeks ago where he’s like, “I definitely want to use Bluetick, and this is what we are doing right now and it looked automated and we’re using it for cold email.” After going through and talking to them about how he was doing it, I realized like, “Hey, you’re actually doing warm email, not cold email,” because they’re sending physical mailers and things like that. It reminded me of one of the original thoughts that I’d had behind Bluetick was using it as something of a multi-channel marketing campaign because if you send somebody something in the physical mail and then send them emails or you send them tweets and things like that, this is a functionality that really hasn’t made it into Bluetick yet, but the conversation did remind me to like, “Hey, that was the original idea here.”
It turns cold contacts into warm contacts because they’ve at least seen your name before and they’ve heard of you because you’ve reached them through other channels. Some of them can be automated. I think Postable probably has an API where you can send direct mailers to people “handwritten notes.” They’re not actually handwritten, but they look like they are. Things like that are ones that would probably do well in that type of multichannel campaign. There is not a lot of people who are doing that right now, most of the people that I’ve seen who were doing that, they do it by hand and it sucks.
Rob: Yeah, no doubt. Cool. It sounds like you’ve made a decision because I have talked about life-changing your website copy, changing your onboarding, and even considered potentially doing a setup, doing a setup fee and then verifying upfront that they are doing stuff that’s in line with what you want Bluetick to do. It sounds like you haven’t moved forward on that but are those still things that you want to put in place?
Mike: Those are still on my radar. I think the larger challenge or problem that I have is just that I don’t have enough traffic. That’s the biggest thing. I don’t think that adding in a setup fee or something like that, that’s not really going to move the needle for me, at least not right now, but if I were to triple traffic, for example, that type of thing is I’m won’t say easily attainable, it’s probably something that would move the needle for me a lot more than adding in a setup fee.
Rob: Right. I think as we wrap up, there are still this open question of how to differentiate Bluetick, how are you going to make it different from the other tools that I could go out and essentially do the same thing with? Have you given that more thought?
Mike: I’ve given it some thought. I wouldn’t say that I have any concrete conclusions on that. One of the things I have seen is that people who are most successful with Bluetick are the ones that integrated it into their marketing and sales pipelines. I think that integrating Bluetick into other products directly would allow it to have a tighter integration into other people’s marketing and sales funnels. Integrating into other tools directly is probably the most straightforward way to do that. Most of these tools that are like Bluetick have an API of some kind where you can upload stuff but it’s really those integrations that are going to basically keep people around and keep churn low. If I can keep churn really low, then I don’t have to worry about growing the product as quickly to counter that churn.
Rob: That’s true. I agree with all that actually.
Mike: But it doesn’t directly answer the question.
Rob: Yeah, which was differentiation. Do those integrations differentiate you or do your competitors have some or all of those?
Mike: I think most of them have a Zapier integration of some kind. I haven’t looked in-depth enough at them. I do have somebody that I hired to help me out with marketing. They’ll probably start later this week or next week, but that’s something I’ll probably look at a little bit more to do more in-depth competitive analysis and say, “What markets do these people serve, and why?” and, “Is there a place where Bluetick can fit into those and really shine as opposed to where it currently is?”
You’re absolutely right. It doesn’t really have any major differentiating feature other than I can offer direct support and you’re going to talk to the developer if you’ve got a problem. There’s some value to that but I don’t think that it’s enough to overcome the challenges that it has by not being able to be differentiated easily.
Rob: Yeah, I would agree with that. I think I’ve used the phrase picking up crumbs a few times where if you really are similar to most of the other tools in the space, you will get some customers, you are just picking up crumbs as you get lucky, you’re not going to have that key differentiator that people are like, “Oh, my gosh, Bluetick is the only want to do this or Bluetick does this the best.” What are you really known for? It’s positioning.
In your shoes, I would try to get an idea of the entire landscape for all the competitors, the big ones, the small ones, the funded, the unfunded, whether you have a mental model of it, a mind map, or notes on a whiteboard, whatever it is, try to sketch out how are they positioned and how can you try to find feature differentiation.
Mike: Yeah. I definitely have some thoughts on those. The issue that I think I struggle with there is that most of the things that I think would be great to be able to include are packaged into Bluetick that would beat those differentiators, are things that are going to require technical heavy lifting in order to implement. It’s hard to justify spending the time and effort there without solid data to back it up and that data is hard to come by without doing it and then seeing if it works, so to speak.
Rob: I would agree with that.
Mike: It’s exploration, I guess. I definitely think I have to talk to some of my customers a little bit more, though.
Rob: Yeah, that’s what it sounds like. More research to be continued. I’d love to talk about your marketing hire because that sounds cool, but I have another call I have to jump on. I got it, I have to end it here to the groans of both me and the listeners. But there’s one other thing I actually want to ask about. What was your low point over the past month? It sounds like everything is going up into the right in general. Things have been good, you’re in good spirits, you have good answers, you’re thinking about this stuff, but what was the hardest moment or the lowest point in the past since we spoke last, which I think was about three or four weeks ago?
Mike: I would say just making the decision to make certain changes. I think that it’s the inertia of not moving just yet. When you have an idea of, “Oh, this is how I want to solve this problem or these are the things that I need to do,” where do you even start? In terms of inertia, in the past couple of weeks, I’ve been getting up at five o’clock in the morning on average and going to the gym. That’s usually the first thing I’ve done. I’ve exercised three times today. If that gives you any indication, I was at the gym before five o’clock, then I went for a one-mile walk, and after that later on, I went for a two-mile walk.
I’m making some pretty dramatic changes and I feel like they’re going well, they’re giving me energy, and I’m able to get those things done which I’ve never really put a lot of emphasis on my own personal health from the past, but those first four or five days of doing that was just brutally hard. It was really, really hard to just get started. Now that I’ve been doing it for a little while, it’s not a habit yet, by no means are no stretch of the imagination, but I think it’s on its way there. I’d really like to keep seeing that continue.
Rob: Awesome, man. Thanks again for taking the time to come and update us and I’ll talk to you again in a few weeks.
Mike: All right, sounds great.
Rob: Thanks again to Mike for coming back on the show. It’s fun to have him pop in almost like a guest now and again. I wanted to remind you if you’ve been considering potentially becoming a part of TinySeed’s second batch which will start in early 2021, head over to tinyseed.com and enter your email address or if you just want to keep up with what we’re doing, it’s a nice way to do it. We don’t email very often and we will be emailing about news like this when the batch opens, November 1st of this year.
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Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups, whether you’ve built your fifth startup or you’re thinking about your first. I’m Rob, and today with Mike Taber. We’re here to share our experiences to help you avoid the mistakes we’ve made.
Welcome to the show, thanks for joining me. Today’s a bit of a longer episode because I find when Mike and I catch up, he just has a lot going on. The feedback I’ve heard is not to cut it short. Typically, our Startups for the Rest of Us episodes have been 25 to 35 minutes over the years, some of the interviews run a little long and the conversations with Mike, often, they’re just pretty fun. Frankly, I feel the conversation is valuable. We touch on a lot of interesting things today that I know a lot of people are struggling with based on the emails, tweets, and reaches out that he and I have been receiving. I did allow this one to go a little long and I’ll see what I can do in the future to keep them a little shorter.
I plan to do this about every month to touch-base with Mike, to keep up on his progress. It gives him enough time to execute on things, for things to change, and I really love following the thread of any founder and that’s what the show has been for 460 episodes. We’ve always had the teaching aspect, we’ve had interviews, we’ve had hot seats, but I think the most compelling thing that keeps people coming back over these years is our stories. It’s following the journeys that we’ve traveled as entrepreneurs and it’s interesting.
While I’m going to continue doing Q&A episodes, hot seats, some interviews sprinkled here and there, I do want to touch base with Mike every three or four episodes depending on what’s going on to hear what he’s up to and try to dig-in to both the good and the bad that he’s experiencing. With that in mind, I’m working on a super secret podcast project that I’m not quite ready to talk about yet but I’ve been working on for several months now and just stay tuned to Startups for the Rest of Us because I’ll be talking about it on the show once that’s ready to go live.
In addition, I want to circle back on a topic that we brought up, probably 10 or 15 episodes ago. It was a desktop Gmail client and switching to that. I had switched to Mailplane and then switched back to Gmail. But due to some recent changes with how G Suite—forwarding, groups, interacts, and those aren’t changes actually, Google’s been doing it for years—I hadn’t realized that I wasn’t getting things that were forwarded. They were sent to Google groups which is how they do email list.
I won’t go into details. It’s all frankly boring, but it’s irritating. I’ve always just funneled everything into a single Gmail account and then did send as in order to appear as if I had a bunch of email inboxes, but that no longer works. It’s broken based on how Google has implemented some stuff in G Suite. I needed a way to have a unified inbox where I can be in a single inbox and I can funnel everything in there even though it’s multiple inboxes that I’m checking. I went through several providers that do that and I’ve landed on the Airmail which is a desktop client and I believe it was $20, maybe $30 through the Mac App Store. I did try out Kiwi per Adrian Rosebrock’s recommendation but it did not have a unified inbox on, it was just a hard requirement for me given this current situation.
Just to close that loop, I’ve been using it for a couple of weeks and it’s good. I’m probably going to keep using it. I do like that it has dark mode and it has a lot of keyboard shortcuts. It’s actually got me a little spoiled already with command delete going through the inbox. It’s almost like a touch interface where I can just swipe, swipe, swipe, and get rid of emails. So far so good on Airmail.
Lastly, I wanted to announce, you heard it here first, that applications for the next TinySeed batch are going to open up on November 1st. It’s just a couple of months out, we’ll be following up with more information. If you’re on the TinySeed email list, you’ll hear about that. Go to tinyseed.com and look for the place to subscribe to our email list. We’ll be updating folks once we have more info on how that is going to go down. If you’re interested in potentially becoming part of batch two of TinySeed, be sure your email is on that list.
I enjoyed the conversation that I had today with Mike and we cover all kinds of stuff. He went on a personal retreat and really sorted some things out, it sounds like, and it feels like his trajectory has really adjusted from the conversation we had back in episode 448. If you haven’t listened to episode 448 and 458, there’s a lead up that’s the start of the story that we’re really following today. I recommend you go back and check it out. I hope you enjoy this conversation with Mike Taber.
Mike: thanks for coming back on the show.
Mike: Thanks for having me back.
Rob: It’s been a few weeks since we caught up and I know, you and I, we’re just talking offline trying to put that line […] episode. It sounds like a lot’s been going on, a lot of progress, a lot of interesting things.
Mike: Definitely.
Rob: I think the first question is, I’m curious, are you still on your social media, Twitter, podcast hiatus?
Mike: I am. I still haven’t logged in to either Twitter or Facebook. I’m sure that I will in the near future if only to get Facebook Ads up and running and probably experiment a little bit with Twitter ads some more, because I’ve done that in the past and it can work out well, it’s just you have to actually dedicate the time to it and you have to log in. I haven’t bit the bullet and gone back in them.
Rob: Yeah, that’s the thing. I know that people build their entire funnel around being on social media and being a personality and typically, if you’re selling info products that works well and if you’re selling SaaS, it doesn’t as much. I’m sure there’s a counter example, but really, if you get to SaaS app to mid six or seven figures, you’re not going to do that on Twitter in essence. It can be a part of it, but it is such a trip to try to wade the value, the ROI of time and distraction, and frankly, sometimes, the stress that it can cause on you.
Mike: Yeah. I have all of the notifications turned off, whether it’s push notifications or email notifications. Literally, everything is turned off for both of them. I turned off my iPad the other day and I realized that apparently, I didn’t turn it off there so it’s telling me, “Oh, you’ve got a couple of hundred notifications here,” and I’m just like, “Nope, not looking at it.”
Rob: Uninstall, that’s cool. Good. I’m curious to see how that feels if and when you decide to re-enter that world. I know some folks that just go off permanently. I think like Marc Andreessen’s just done. He was known for having the big tweetstorms. There’s a rumor that he invented it or something, I don’t know if he did or didn’t, but he would write entire essays on it and then he just started doing likes only and that’s how people were tracking him, and now he said, “Nope, I’m just completely off,” it’s a trip to see that.
Mike: On my Facebook feed for people who I’m friends with, I have the Taber Household Conversations which is usually various conversations. They happen around the house with the kids and wife and they’re fairly entertaining. I’ve been told by a number of people that’s their most favorite thing to see on Facebook and they love watching that but I’ve been keeping track of them separately in a notepad document on my phone so that if I ever go back, I have probably 40 or 50 of them that I could post, I just haven’t logged in.
Rob: That’s cool. Talk to me about your personal retreat. When we last left you, there were some open questions that I had posed in episode 458, things like thinking about what challenges you wanted to tackle, whether you’re going to keep going with Bluetick. There’s a lot of stuff and we’ll cover that today. Part of that, I threw out an off-hand suggestion of, “Hey, maybe you should do a personal retreat to think through some of these things,” and it sounds like you wound up doing that.
Mike: Yeah, I did. It was more of a last-minute thing just because my wife had had time on her calendar when she wasn’t going to be teaching over the weekend, so she’s like, “Hey, you should go ahead and take one,” so I did. It was last minute like I said and it was really good because I sat down and started looking through my notes and stuff. I brought my notebooks that I had written in from previous retreats that I had gone on dating back to 2014.
Before I did anything else, I really just started looking through what I had previously written down as things to think about, goals, observations, and things like that. I realized that dating back all the way to 2014, one of the biggest things that came out every single one of them was I’m not sleeping well. I need to be able to figure out what’s going on and it was a continuing theme every single time. I have been taking retreat since before I was diagnosed with sleep apnea. It was eye-opening to go back and read those things and say, “Huh, that thing is basically taken care of at this point,” but it was eye-opening to see that, that was just a huge recurring theme over and over again and I couldn’t get over to figure out what was going on.
Rob: Yeah, that is such a trip, man. I think it is one of the benefits of doing the founder retreats, as we like to call them, is that if you do them year after year and you keep the notes and refer back, you can see patterns. A lot of us get so caught up in the day-to-day or looking ahead to the future—I speak for myself—I don’t frequently look back and try to see patterns, why am I feeling this way? What’s causing that? It sounds like knowing how much that’s impacted your motivation and your ability to execute over the past five or more years is a really good thing to know.
Mike: Yeah. I think what was eye-opening to me was just the fact that I recognize even then how detrimental it was to me, but because I couldn’t figure out a way to deal with it or figure out what was going on, it just kept continuing to be a problem. What I realized was that most of the time, it just snowballs. I’m not getting enough sleep, so I’m not as productive and I’m not thinking straight that I ended up on various medications for different things that are treating the symptoms, but nothing is really addressing the underlying problems, which just doesn’t go away. So then, somehow it just masks the problem. It just makes it so hard to move things forward.
It did make me realize that I’ve been beating myself up over the past 6–8 months or so just because I felt things weren’t moving forward and I was projecting past Mike to present-day Mike because I couldn’t get past those sleep issues. It’s like, “Wait a second, these things are actually mostly resolved at this point, so I shouldn’t be beating myself up over the problems that I used to have and project them on myself and continue to have motivation problems or anything like that. Each day is a new start, so just use it as that. Since I went on that retreat, actually things have really, really turned around for me.
Rob: That’s really good to hear, man. It really is. I think that’s another big benefit of founder retreats is the clarity it can bring you about big decisions or even it sounds like it was like a cleanse in a new start in a way. I’m curious how Sherry wrote The Zen Founder Guide, the Founder Retreats. Did you use something like that to help you or do you have your own system now that you’ve been doing it for so many years?
Mike: Usually, I have enough time in advance of going to be able to write things down and go through some old notes and stuff I have including stuff that Sherry had put together, but this time I didn’t. What I did was when I got there on Friday night, I started going through my old notes and I was going to put some stuff together. Then on Saturday and Sunday, I was basically going to go through it. I feel like I started going through my previous notes first and then realized that probably wasn’t necessary and it was vicious because things just popped out of me, it’s glaringly obvious in retrospect but not while I’m sitting at my desk every day.
Rob: Yeah, I think that makes sense. It sounds like you had a lot of long-term things to think about and didn’t necessarily need the search for topics to consider. You had an ample number of topics to consider just going into the retreat.
Mike: Right. I didn’t really find that it was an issue. The personal retreat was a pretty […] story, it prefers few hours to be perfectly honest. It didn’t take long for me to start to see what things have been holding me back and why and what my path forward was going to look like. Most of the time I spent was probably personal reflection on different things but not necessarily trying to answer those questions. It was just more thinking about the things that had already come up and that I’d already given thought and consideration to, that I thought I was going to need to spend a lot more time on during the personal retreat. It turned out that I just really didn’t need to. I spent most of the time just doing personal reflection more than anything else.
Rob: I have a few questions for you but I am curious to hear if there are other things that you made decisions on or thought through that I don’t ask you. These are questions that we had posed or I had posed the last couple of times we spoke and said if you want to retreat, you should probably consider this. One of them is, do you want to continue working on Bluetick?
Mike: Yeah, and the answer to that was yes, absolutely.
Rob: Was that a hard decision to make? Did you think through a lot of factors or was it like, “No, this is my gut feel and now I’m going to move on”?
Mike: I did think about it. It wasn’t just a gut feel. This is the answer that I want to have because I’m thinking that other people have expectations on me for that. What I really looked at was where is Bluetick today versus where it needs to be, and if I were to just toss the whole thing and go on to something else, would it take as long as it Bluetick has taken or would there be other risks? The reality is I know that there’d be a lot more risk if I went with something else and it would probably take me just as long because I still have to do all the customer development stuff.
The reality is, it’s a solid product that’s got a lot of things going for it. I just haven’t really put the time and effort needed in focus into the marketing side of things, and I haven’t talked to several customers. They like the product, it’s just that I need to get more of those customers.
I think that if I were to move on and try to do something else, could I sell the products ‘as is’ to somebody? Absolutely, I’ve had those conversations with people and I’m sure that I could sell Bluetick ‘as is’ to somebody if I wanted to, but do I want to start over? The answer is no.
The one thing that came to mind was is this a sunk cost thing that I’m thinking about? Is that why I’m leaning in the structure? I don’t think it is because I thought about that as well. It was actually something that […] probably thought about that more than I thought of do I want to continue on this.
Rob: I could see that because that would be the risk and that was going to be what I brought up was do you feel like you have sunk cost that was going on here and are chasing after something just because you’ve spent so many years building it.
Mike: Yeah, and that’s why I spent so much time thinking about that particular question and I don’t think that’s it. I think that there’s probably a little bit of contribution there for that particular thought but it’s certainly not the only thing. I definitely think there’s a lot more that could be done with Bluetick and there’s a lot more value there than I’ve uncovered, I just haven’t gotten in there yet.
Rob: There was another thing I had noted down and it was around, you raised this challenge, this struggle of motivation and the question I think you posted is like, “I’m not super motivated by money right now. It’s hard for me to be motivated to work on this tool and get up every day and do it. What should motivate me?” That was the question. I threw out, “Oh, you should go take the Enneagram.” That kind of was a joke but it was also helpful for me personally when I took it to have a little bit more insight into who I am and what drives you, and that’s part of what it does. It’s nice that it’s free and it takes 15 minutes to take.
I’m curious if you: (a) took the Enneagram, (b) whether that helped or not, and (c) did you also think about this question of what challenge do you want to tackle and what is going to keep you motivated this week, next week, and next month?
Mike: There’s a bunch of things packed into there. Keep me on track if I forget any of those things. I did take it, I didn’t realize that there was a free version of it. I paid $10 from the website and I took it. In my opinion, it was kind of BS, to be perfectly honest.
Rob: That’s totally fair. I’m not trying to force the Enneagram on anyone and I feel like it is. I liked it but I’m curious to hear why you didn’t like it or why you think it’s BS.
Mike: I think it could be helpful for certain people. The problem is that when I went through it, there are three different steps. The first one is to read these nine paragraphs and then you select how much do you think the whole thing describes you or not. The second step is to go through the ones that described you the most and select the ones that you affiliate the most with. I think there were three of them that you had to pick there.
In the first step, I think there were nine different paragraphs and eight of them were ranked exactly the same. In the second step, I basically completely self-classified myself. I’m like, “That’s not real helpful. I could have just read online paragraphs and then said which one do I want.” It was like throwing a dart at the dartboard, you have an equal chance of it in any of them.
Rob: The Enneagram should have been 40 or 51-sentence questions, is that what you saw? There were no paragraphs when I took it. One sentence, it would describe like, “When I’m in a situation like this, this is what I do,” but it’s just one sentence and I don’t even remember if you’ve ranked it on a one to five or if it’s just this is me or this isn’t, maybe that’s what it is. I think that’s all it was but yours is different, I wonder if you took a different test.
Mike: I think mine was different. Maybe it was the wrong one. I don’t know, let me go back and take a look at that.
Rob: Yeah. Let me see if I can find that link to the one I took because that would make more sense, I think.
Mike: Anyway, out of the three steps, there was only one of them, those nine was eliminated after the first step. Then on the second one, I had to pick out of the eight which one…
Rob: That’s not helpful at all. Dude, okay, I need to go and look. I bet I still have the link. Forget the Enneagram, it’s a tangent and we’ll try to revisit it at some point, but the other two things where have you thought about the challenge you want to tackle, really it’s what’s going to keep you motivated.
Mike: I think that it’s looking outside of what the thing is that I’m working on because I have a tendency to get so engrossed in what I’m working on that I will not look at other things in terms of what my social life, or health, or anything like that. I realized that when I get down the rabbit hole on certain projects, AuditShark being one of them, Bluetick being another, there’s a point at which I probably cross a threshold where I continue to become all consumed by that. I wouldn’t say that’s necessarily a bad thing in certain situations, but I think that I let it get the best of me and go too far.
What I really need to do is step back and say, “This is a means to an end, not the end for me. This shouldn’t be my all-consuming life purpose because essentially, it’s work. It is something I’m working on and I do enjoy it, but I can’t let it be the only thing that defines me.” I think that, that’s something else that I’ve struggled with to some extent where I look at the product itself and if the product is struggling, then I personally struggle because I see it as a reflection of myself, and that really shouldn’t be the case. It’s more of being able to step back and separate myself and my own self-value, or self-worth, or whatever form the product itself and how well it’s doing versus how well I am doing.
Rob: Yeah, I think that’s super important, it’s very hard to do. I personally drifted in and out of that over the years of having my entire, like you said, it’s like self-worth, self-confidence, happiness tied to my MRR at times. That can be tough. You said that’s outside of that. I think that’s a great realization. Easier said than done, but a great realization. What is it outside of the app that is going to motivate you?
Mike: Honestly, socializing with the people that I know that are in the area. I mentioned this several times in the past where I have a weekly meet up with a couple of guys that I played D&D with. It’s a great way for me to get out of the house, away from my desk, and away from my computer, away from technology. I find that it’s a very helpful and therapeutic for me to be looking forward to that as opposed to looking forward to getting up at five o’clock in the morning and going to work because I really want to work on something and then distracts my sleep because I’m so excited about it the night before. Being able to back off a little bit from that stuff and look at it and say, “Look, this is just a means to an end and it’s means to make a living, not an expression of me.”
Rob: Yeah. I think that’s good. I think the thing I’m missing though, because I also play D&D and I read stuff now, for the first time in a long time within the past year or two, I’ve started to read fiction again. A lot of it is graphic novels, but I’m doing hobby stuff again. I’m giving myself permission to do that, but that’s how I distract myself so that I don’t think about work all the time. Me personally, that’s my personality.
I’m missing how going and hanging out with friends, or playing games, or having a hobby is going to motivate you to stick with Bluetick everyday when it gets hard? Or does it? Or am I misunderstanding that? Because that’s what I’m trying to get at is you’ve talked about getting up and like, “I’m not motivated to do this. I don’t know why I’m doing this,” or you do know why, but it’s like, “I’m just not that motivated to sit here and work six or eight-hour days and crank away on this stuff.”
Mike: I think it’s a very subtle thing and that, as I said, Bluetick is essentially, if I view it as a means to an end, and that end being I get to go socialize with my friends and do these other things, I can’t neglect that and I can’t just let things go because if I do, then I won’t be able to do those other things. It becomes a way for me to create a balancing act that, can I let things slide sometimes? Sure. I absolutely can. Can I let them slide forever? Absolutely not because then, it puts me in a bad financial position, that I’m then stressed out and anxious, and I can’t focus on what needs to get done. But if I make myself balance those things a little bit more so that I’m not so single-handedly focused just on Bluetick or single-handedly focused on socializing with friends, if I force that balance, then it helps me to concentrate. Does that make sense?
Rob: I think so. Is it taking a break gives your mind a break and that when you come back, you’re re-energized rather than basically burning your mind out?
Mike: Yes.
Rob: That’s what it is?
Mike: Mm-hmm.
Rob: Fascinating. I get that. I definitely understand the link there, but I wonder if this answers the question that I posed earlier of everyday you’re going to have to get up and there are going to be things you don’t want to do dealing with the Google audit and whatever, firing a contract or hiring a contract, or maybe it’s writing code, maybe it’s marketing, maybe it’s whatever. You’re going to have to do some things you don’t want to do, some things you are excited about, but how are you going to push yourself to not sit there, stare at your screen, and churn away the time? Or whether it’s being unproductive because you are churning or whether it’s being unproductive because you are unmotivated to work on it?
Mike: I feel like that’s just more a matter of putting certain systems in place. One of the things I recognized is that systems are what really helped me stay focused, stay on track. and get things done, but at the same time, my personality is such that I hate being a cog in a wheel. In some ways, it’s demotivational to me to have a system but it’s motivational when it works. Like I said, it’s that balancing act.
One of the issues I had with me taking in the Enneagram is that by definition, I think that I’m very well-balanced in very many ways. I forget what it was called, it was a test that was given that business software like 8 or 10 years ago or something like that and afterwards, I showed it to the person who has given it, I think it was Paul Kenny, he looked at it and he’s like, “Wow, that’s extremely balanced in every direction.”
He said he hadn’t really ever seen that before which is, I don’t know whether that just speaks to how weird I am or not, but it was interesting to see. I have a lot of empathy and ability to see things in multiple ways and multiple directions and I think that’s a strength, but at the same time, it could be a downfall because I can easily find myself in a situation where I’m paralyzed because I’m like, “If I do it this way, then this will happen. If I do it this other way, then this other thing will happen.” It’s difficult to deal with that but at the same time, I also have to recognize, “Hey, you just need to move things forward. You need to make a decision and move on because you can’t stay here looking at this forever.” By timeboxing and things like that, that helps me to move things forward when I need to, but at the same time, it forces that structure which, again, I hate the structure but I do like the results of it.
Rob: Yeah, there you go. The hating structure and liking results means that you hopefully can plow through it. It sounds like the motivation will be the results that you see and I think the other side of that sword or the sharp edge of that is that if you are not seeing results, will you become demotivated? Again, last time I talked about some people are motivated by money. It’s like, “I want to make enough money so that I can support my family or that I never have to work again.” That, whether you’re seeing results or not, you’re still motivated by that.
If some people are motivated by this achievement, it’s the Jeff Bezos, “I want to start a billion-dollar company,” and that you’re just motivated to achieve. Whether you’re seeing results or not, you do still have that goal that you’re hungry for. Last time, we talked about how you’re not hungry for anything right now. I think probably my main concern is that if you’re not hungry for it, if you are not seeing results, are you going to get demotivated?
Mike: You bring up something that sparked my memory of something that came up during my personal retreat is like, “Am I running towards something or away from something?”
Rob: Yeah, because that is away from having to work full time. The last time you talked about that you had the Dilbert comic and you said, “I don’t want to go back because bosses are […].” It’s a pain in the ass to work for other people. There’s a commute, and this and that. We talked through some things about you should get a job with no commute, you should get a job where the boss is not dumb. I can remove all of those.
Mike: I’m screwed working for myself.
Rob: Yeah, but we can remove that. Are you just running away from working for other people? That’s what you’re referring to? Are you actually running towards, “I wanted to keep this,” or just running away from, “I don’t want a full-time job”?
Mike: Yeah. The sad part is I think it’s a mix of both and that’s part of what makes it a hard question for me to answer. I don’t have a specific answer for that. That’s one thing that I did come out of my retreat. One […] about is like, “What is it that I really want to achieve?” and I still don’t have a specific answer for that, but I do know that I want to have a successful SaaS application that is going to support me and my family, at least do reasonably well. If that means that I can take some time off in the middle of the week if I want to, then great.
Kids started school last week on Thursday and on Thursday, we were actually out looking for a new car for her because her Toyota Corolla from 2004 is about to die. It was nice to be able to just take the time and go do that and get it taken care of that day because I have that flexibility in my schedule. If I were working for somebody else, I wouldn’t have that. If I didn’t have an app that was doing at least reasonably well, I wouldn’t be able to do that.
Things do come up. There are bugs and stuff that will come up on occasion that I have to get those fixed and I have those come up as well last week. It’s nice to be able to rearrange my schedule, have the flexibility to move things around and work on it. That’s really what I want out of my future is to be able to have that flexibility.
Rob: Sounds like that’s the thing. That is the one thing that you have referred back to the most is flexibility, is like owning your own time. I wonder if that’s your number one motivator.
Mike: It’s funny because I think that it is, but at the same time, I also know that, as I said, those systems that I have to put in place sometimes to get things done and move things forward, those are restrictive. This weird dichotomy between them that sometimes I have to go in one direction and sometimes I have to go in the other.
Rob: Cool, that’s actually helpful for me and I want to revisit that at some point in the future, but I just want to hear how that how well that’s panning out. We can circle back in a future conversation such that I want to see what the motivation is and if you’re not seeing results, if it’s still working and if just the drive for flexibility is enough. I also updated the Enneagram link, it’s tests.enneagraminstitute.com is the official one, it’s $12 to take the test. I will Venmo you $12, Mike, Go take the test because you didn’t pay for the other one, did you?
Mike: I did. It was enneagramworldwide.com.
Rob: Oh, interesting. When I typed in like take Enneagram online, there’s a bunch of places doing it, and you paid for it and that’s what it gave you? I think go to enneagraminstitute.com, I believe those are the folks that developed it. That’s at least my rudimentary understanding right now.
Mike: Oh, well.
Rob: Anyway, it’s $12. Give it a shot. It should be a bunch of either-or questions. It will make a statement like, “I would prefer to be viewed as successful or happy,” or “I prefer to be successful or happy,” and then you can say, “Yes, this is me,” “No, this is me,” and some of them have partials, I don’t know. That’s what you should see. You should not have to read paragraphs to do this.
Cool. There’s a couple of other points we’re talking about last time that I want to revisit. One is the Google audit thing, the chaos that has been the ongoing Google going to block you if you don’t get this audit and go through their security process, update us on that status.
Mike: I’ve talked to two companies that do that. I had two discussions with each of them, worked with both of them. I’ve selected one that I will be going to. Basically, I was able to work with them on the price a little bit, so it falls at the lower end of the range of $15,000–$75,000 it was originally given. Fortunately, it’s not closer to $75,000 but it is still 5 figures. It’s a difficult pill to swallow but at the same time, it’s also, I would say, a motivational factor for me. One thing I have recognized about myself is that I’m a completionist to some extent. If I were to pay for that, it would be hard for me to not follow through afterwards because that’s a huge chunk of money that needs to be paid every year.
But the other side of it is that it also gives me a defensible moat around Bluetick as well. I probably don’t have a whole lot to worry about from competitors coming in underneath me, which is a weird situation to be in. I still have those bigger fish that are above me but I probably don’t need to worry nearly as much about anybody coming in on our niche and stealing customers or what have you. Not that I really think that would happen for a while. Even if it did, it wouldn’t make that much of a difference, but it does create a barrier to entry for anybody else who’s trying to do similar things.
Rob: I would totally agree with that. Anyone who’s thinking about just dabbling in and they’re starting a little side project to do it or wanting to start just a small lifestyle business and doesn’t really want to go after, it’s going to be deterred. I would be deterred from doing that, it would discourage me from one drop, however much it is, $20,000–$30,000 to get in and just to get started. That’s a trip.
Was it a hard decision then to decide whether to do it or not? Because, again, if they quoted you $75,000, it would have been a reason to shut the company down. We know it’s a lesson in that boat. As you’ve gotten towards it, was it a hard decision or was it like, “No, this is once I’ve decided to do it, I’m also going to suck it up and do this”?
Mike: I think when the initial pricing came in, it was like, “Gee, I don’t know if that’s actually going to fly. I’m not sure if I really want to go through and do that because it would have been really hard to swing it.” Then after going back and renegotiate with them, it was much more doable. Yeah, it’s probably going to be something that needs to be […] each year, but at the same time, it’s a SaaS application. There’s only going to be so many changes that are between them. They didn’t specifically say that was a differential they would do from one year to the next, but that certainly does factor into it if you’d go with the same company for one year to the next.
Google could easily change their policies moving forward. I’ve had this discussion with other people in my mastermind group, where I think that they are just laying down the law, drawing a line in the sand and saying, “Okay, this is what it is, and screw anyone that has to deal with this in the next 18–24 months. We’ll figure it out before then. There’s going to be small players that gets screwed in that meantime, but oh, well, we need to protect our company and our users’ data. In two years out, things will be fine.” I think that’s the decision they’ve made and things will change in a couple of years but probably not dramatically.
Rob: Yeah, and I like the way you couched it as a motivating factor. There were two times that I really recall having my back to the wall and talk about sunk cost, you are talking quite a chunk of money. I bought DotNetInvoice for $11,000 and I bought HitTail for $30,000. Those were 4–5 years apart, but those were very difficult pills for me to swallow. It was a lot of money. It was all the money that I had saved up from doing all this consulting on the side.
I had an incredibly productive two or three months stretches right after that because my back was to the wall. I worked for longer hours. That was one of the seasons where I work long hours and a big part of it was I can’t have written that check-in vain. I have to make this work. I keep saying my back was to the wall, but that’s how I feel about it. I wonder if you can use this at least in the short term as motivation of, “I have to be a good steward of that money and make this worth it.”
Mike: Yeah. I’m definitely that type of person as well. Some people crack under pressure and I do extremely well under pressure, which is a double-edged sword because sometimes, I’m a procrastinator to some extent. In some ways, that helps me because I procrastinate and then I get to this part where it’s do or die and I’m willing to put in the time and effort to make sure that things happen and that things work.
I probably haven’t experienced that in a while but there are certainly things that I can point back to in my history where I […] my masters degree, for example. I was coming up to the wire in terms of being able to finish my masters thesis and they’re like, “Okay, you need to have this done by the end of August.” So, I buckled down and I wrote the entire thing in a month-and-a-half, or two months, or something like that and I went back to them and basically got it all done, but it needed to get done and it needed to get done fast. There was really no other option, otherwise, I was blowing $20,000–$25,000 down the train and I would walk away without anything to show for. Still, having taken those classes, I don’t have the degree, not that it means a whole lot if I’m self-employed but it was one of those personal accomplishments or achievements that I wanted to have.
Rob: Yeah. It comes back to that extrinsic motivation. It’s really an optimist scenario for you. Cool. A couple more things before we wrap up, I wanted to ask about that untestable seal.net component. You had made the decision to replace it with a different component, but you were saying while you get slotted in among things and I was like, “Look, you made the decision. Just go ahead and do it because it’s keeping your back. It’s technical debt, right now, it’s a liability that keeps you from making changes to things.” Where does that sit?
Mike: I still have not touched that. Most of my time has been spent going back and forth with the vendors on the security audit because just even scheduling a meeting with them takes a week. It’s a week before it happens but it’s several days of back and forth and trying to get an answer because they’re just busy and they have to slot in conversations when they get a chance. It’s a pain in the neck.
I’ve been stalling on other things to see how that works out because obviously, it did hold it back to some extent because of the final numbers for the quotes came back in $75,000, I was just going to walk away, but since it didn’t, it made things a lot easier to get working on other stuff. At this point, I do recognize that needs to get done. It’s a matter of looking at schedule and seeing, “Where can I slot that in between marketing activities?” because I feel like that’s probably more important, but I go back and forth on that.
Rob: When do you feel you’re going to pull out that component?
Mike: I think if I get a more detailed information from the security company about what I can and can’t store, that’s probably going to dictate that to some extent because I don’t want to get in the position where I spend all this time and effort replacing that component so that I can download all the data in the way that I want to only to find out that they come back and say, “You really shouldn’t be storing that,” or those other things that go into. It’s just I’m holding off and maybe that’s a bad decision.
Rob: I don’t think it is. That’s what I would do as well. It sounds like there’s a bunch of unanswered questions and you are right with the security audit. They can come back and say anything. I would personally also wait on that but I wouldn’t wait on other development on marketing because you can do that stuff before then.
Your mastermind group is meeting weekly and you have a pseudo business coach. Both those things still going on and do you feel like they’re working for you?
Mike: I do. I actually have an email in my inbox right now from the coach that I have to reply to today and then the meetings have been going on every week and we talk about all kinds of different things from conversion rates to where marketing should be focused or conversations to customers, but I find that the weekly accountability has been pretty helpful because it forces me to make progress on everything and part of it is schedule-related because I have to make sure that I slot time for those things but it’s also what am I looking at next and then making sure that’s getting done because I’m basically committing to each of those things.
Rob: That makes a lot of sense. Glad to hear that’s still working out. I do want to touch base periodically and hear more about that. I’m curious. We had a conversation, it was episode 448 where we really dug into this stuff for the first time. You raised a concern that you didn’t really want do the spammy-cold email and I threw out an idea of a warm and ethical code email or you can just focus on warm email, is that still your thinking that you want to focus on something that you feel better about personally and have you made any strides to make that part of reality?
Mike: I have thought about it quite a bit more and I had a conversation with a customer that I onboarded a couple of weeks ago where he’s like, “I definitely want to use Bluetick, and this is what we are doing right now and it looked automated and we’re using it for cold email.” After going through and talking to them about how he was doing it, I realized like, “Hey, you’re actually doing warm email, not cold email,” because they’re sending physical mailers and things like that. It reminded me of one of the original thoughts that I’d had behind Bluetick was using it as something of a multi-channel marketing campaign because if you send somebody something in the physical mail and then send them emails or you send them tweets and things like that, this is a functionality that really hasn’t made it into Bluetick yet, but the conversation did remind me to like, “Hey, that was the original idea here.”
It turns cold contacts into warm contacts because they’ve at least seen your name before and they’ve heard of you because you’ve reached them through other channels. Some of them can be automated. I think Postable probably has an API where you can send direct mailers to people “handwritten notes.” They’re not actually handwritten, but they look like they are. Things like that are ones that would probably do well in that type of multichannel campaign. There is not a lot of people who are doing that right now, most of the people that I’ve seen who were doing that, they do it by hand and it sucks.
Rob: Yeah, no doubt. Cool. It sounds like you’ve made a decision because I have talked about life-changing your website copy, changing your onboarding, and even considered potentially doing a setup, doing a setup fee and then verifying upfront that they are doing stuff that’s in line with what you want Bluetick to do. It sounds like you haven’t moved forward on that but are those still things that you want to put in place?
Mike: Those are still on my radar. I think the larger challenge or problem that I have is just that I don’t have enough traffic. That’s the biggest thing. I don’t think that adding in a setup fee or something like that, that’s not really going to move the needle for me, at least not right now, but if I were to triple traffic, for example, that type of thing is I’m won’t say easily attainable, it’s probably something that would move the needle for me a lot more than adding in a setup fee.
Rob: Right. I think as we wrap up, there are still this open question of how to differentiate Bluetick, how are you going to make it different from the other tools that I could go out and essentially do the same thing with? Have you given that more thought?
Mike: I’ve given it some thought. I wouldn’t say that I have any concrete conclusions on that. One of the things I have seen is that people who are most successful with Bluetick are the ones that integrated it into their marketing and sales pipelines. I think that integrating Bluetick into other products directly would allow it to have a tighter integration into other people’s marketing and sales funnels. Integrating into other tools directly is probably the most straightforward way to do that. Most of these tools that are like Bluetick have an API of some kind where you can upload stuff but it’s really those integrations that are going to basically keep people around and keep churn low. If I can keep churn really low, then I don’t have to worry about growing the product as quickly to counter that churn.
Rob: That’s true. I agree with all that actually.
Mike: But it doesn’t directly answer the question.
Rob: Yeah, which was differentiation. Do those integrations differentiate you or do your competitors have some or all of those?
Mike: I think most of them have a Zapier integration of some kind. I haven’t looked in-depth enough at them. I do have somebody that I hired to help me out with marketing. They’ll probably start later this week or next week, but that’s something I’ll probably look at a little bit more to do more in-depth competitive analysis and say, “What markets do these people serve, and why?” and, “Is there a place where Bluetick can fit into those and really shine as opposed to where it currently is?”
You’re absolutely right. It doesn’t really have any major differentiating feature other than I can offer direct support and you’re going to talk to the developer if you’ve got a problem. There’s some value to that but I don’t think that it’s enough to overcome the challenges that it has by not being able to be differentiated easily.
Rob: Yeah, I would agree with that. I think I’ve used the phrase picking up crumbs a few times where if you really are similar to most of the other tools in the space, you will get some customers, you are just picking up crumbs as you get lucky, you’re not going to have that key differentiator that people are like, “Oh, my gosh, Bluetick is the only want to do this or Bluetick does this the best.” What are you really known for? It’s positioning.
In your shoes, I would try to get an idea of the entire landscape for all the competitors, the big ones, the small ones, the funded, the unfunded, whether you have a mental model of it, a mind map, or notes on a whiteboard, whatever it is, try to sketch out how are they positioned and how can you try to find feature differentiation.
Mike: Yeah. I definitely have some thoughts on those. The issue that I think I struggle with there is that most of the things that I think would be great to be able to include are packaged into Bluetick that would beat those differentiators, are things that are going to require technical heavy lifting in order to implement. It’s hard to justify spending the time and effort there without solid data to back it up and that data is hard to come by without doing it and then seeing if it works, so to speak.
Rob: I would agree with that.
Mike: It’s exploration, I guess. I definitely think I have to talk to some of my customers a little bit more, though.
Rob: Yeah, that’s what it sounds like. More research to be continued. I’d love to talk about your marketing hire because that sounds cool, but I have another call I have to jump on. I got it, I have to end it here to the groans of both me and the listeners. But there’s one other thing I actually want to ask about. What was your low point over the past month? It sounds like everything is going up into the right in general. Things have been good, you’re in good spirits, you have good answers, you’re thinking about this stuff, but what was the hardest moment or the lowest point in the past since we spoke last, which I think was about three or four weeks ago?
Mike: I would say just making the decision to make certain changes. I think that it’s the inertia of not moving just yet. When you have an idea of, “Oh, this is how I want to solve this problem or these are the things that I need to do,” where do you even start? In terms of inertia, in the past couple of weeks, I’ve been getting up at five o’clock in the morning on average and going to the gym. That’s usually the first thing I’ve done. I’ve exercised three times today. If that gives you any indication, I was at the gym before five o’clock, then I went for a one-mile walk, and after that later on, I went for a two-mile walk.
I’m making some pretty dramatic changes and I feel like they’re going well, they’re giving me energy, and I’m able to get those things done which I’ve never really put a lot of emphasis on my own personal health from the past, but those first four or five days of doing that was just brutally hard. It was really, really hard to just get started. Now that I’ve been doing it for a little while, it’s not a habit yet, by no means are no stretch of the imagination, but I think it’s on its way there. I’d really like to keep seeing that continue.
Rob: Awesome, man. Thanks again for taking the time to come and update us and I’ll talk to you again in a few weeks.
Mike: All right, sounds great.
Rob: Thanks again to Mike for coming back on the show. It’s fun to have him pop in almost like a guest now and again. I wanted to remind you if you’ve been considering potentially becoming a part of TinySeed’s second batch which will start in early 2021, head over to tinyseed.com and enter your email address or if you just want to keep up with what we’re doing, it’s a nice way to do it. We don’t email very often and we will be emailing about news like this when the batch opens, November 1st of this year.
Again, if you have a question for this show that you’d like to hear answered on air, you can leave us a voicemail at (888) 801-9690 or you can email questions@startupsfortherestofus.com. You can enter that as text or attach an MP3.
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Episode 460 | Funded Competition, Growing an Email Newsletter Audience, White-Labeling and More Listener Questions
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and co-host Tracy Osborn answer a number of listener questions on topics including funded competition, growing an email newsletter audience, white-labeling and more.
Items mentioned in this episode:
Rob: Welcome to this week’s episode of Startups for the Rest of Us. I’m your host, Rob Walling. Each week on the show, we cover topics relating to building and growing startups in an ambitious and repeatable fashion. These are not your typical Silicon Valley startups where fundraising can be a goal in itself and where people build slide decks instead of building businesses. The things we’ve espoused for the past 460 episodes, things like freedom, purpose, and relationships, much of being a founder is making decisions with incomplete information, where the right answer is impossible to find through math or data.
On the show we have several different formats. Oftentimes we have tactics we discuss, we do interviews, founder hot seats, and this week we have listener questions. Questions sent by you, the listeners, over the past couple of months. I’ve been mixing up the formats as you’ve noticed and the feedback I’ve heard is that the tactical interviews and the interviews of the agony of defeat have been really well-received in addition that the listener question episodes tend to be listener favorites.
I want to get back in the groove of doing those and today, I welcome a co-host, Tracy Osborn, to come back and answer questions again. She joined me about six or eight episodes ago answer a few questions. Before we dive into those, there’s been a few comments on startupsfortherestofus.com website. Go to startupsfortherestofus.com, we have a new design, you can check it out.
On episode 456, we had a comment from Karen that said, “Just popping in after listening to this episode to say how much I value your podcast. I’ve been listening for quite a few years. As other shows have come and gone, Startups for the Rest of Us continues to be a staple for me. I’ve really enjoyed the mixing up of the format lately. It’s been good to hear from different people. In saying that and as much as I’ve enjoyed and got something out of each episode, I would not really be keen on having the podcast moved to an interview format every week.” I actually agree with that.
“I always enjoy the listener question episodes and get a lot of value out of those. The episode that really left a lasting impression on me was the one with Mike just before he started his hiatus. The way you skillfully weaved your questions in and around Mike’s comments and your observations were very eye-opening and I’m sure it resonated with a lot of listeners, too. I would love to see more of that format, like a one-off mastermind session with the SaaS founder, where it explores a specific challenge that they are currently experiencing.
No matter the format of this podcast is, it continues to be a cut above the rest and a big thank you from this listener for everything.” Thank you so much, Karen, and another listener chimed in and said, “Plus one on that.” I appreciate the feedback on that. It’s super helpful just to help guide things, to look at doing some more hot seats in the future.
In episode 457, I answered a few questions. One was about starting a market place and TJ wrote in and asked about two-sided marketplaces and how he should start it. Shawn the Wolf chimed in and said, “Great show. For two-sided marketplaces, I would suggest, number one, populate the list with the basics for free to satisfy your consumer funnel. Number two, give all artisans a basic free listing with an option to be removed. Number three, find sweeteners to sell to the artisans, to give the individual listings a competitive edge.” The sweeteners he lists are enhanced listings, ads at the top of a given page in their category, subsites inside of your website, and prospect information volunteered from consumers can go the artist for a fee.
Thank you so much for that Shawn. TJ, thank you in the comments and I appreciate everybody coming in. As a community, we obviously have so much more brain power and experience than just a podcast host or two, sitting on the microphone each week.
Also, if you haven’t got your ticket to MicroConf Europe, it’s in late October this year, head to microconfeurope.com. We still have some tickets left. It’s in Croatia and it looks over the Adriatic Sea. Every hotel room has a view of the Adriatic, it’s very nice. Consider doing that, hanging out with 120 or 130 of your closest founder friends. If you didn’t hear the save the date, MicroConf US next year is in Minneapolis and it’s April 19th through the 23rd. We’re pulling it out of Las Vegas this year.
We’ve actually been trying to do that for the last several years, in the overwhelming feedback from both folks who attended folks who don’t, that they would prefer seeing it in a different city. It happens to be in Minneapolis, this year, April 19th through the 23rd, that’s growth and then starter. Check out microconf.com. Enter your email address to hear about when tickets go on sale. We do expect the conference is to sell out, so you want to get on the email list, if you’re at all interested in joining us. I believe we’re expecting to sell tickets here in September. With that let’s dive into some listener questions.
Tracy, thanks for being a glutton for punishment and joining me on the show again.
Tracy: Happy to be back.
Rob: I’m stoked to answer some listener questions with you again today. Our first question is a voicemail. As always voicemails go to the top of the stack. This question is from a founder who has an idea or is working on a product and a funded startup with the same idea shut down in 2016 and he’s curious how to process that.
Ryan: Okay, question about a strange experience and what you think would be a good way to go forward. I’ve been working on an app for about a year. It’s a search engine your personal computing history, it’s at apse.io. The acronym is short for A Personal Search Engine.
Last week I found out about another company building almost exactly what I’ve been working on. The thing is, it is a $20 million round at 2016 and also shut down later in 2016. If I were reading the press coverage of marketing materials, they might as well be talking about my app. I can’t find any reason for the shutdown, and attempts to contact people who worked on it have been unsuccessful.
I’ve been working on the project solo for about a year. I have no idea they have existed until a few days ago. I’m bootstrapped and never released a working product so I’m not at danger of going under myself. My focus right now is I’m growing the customer base. What do you think I should do now that I know all this? Any thoughts would be appreciated. Thanks, Ryan Fox.
Rob: Interesting question. What do you think, Tracy? What are your thoughts on this?
Tracy: Super interesting, especially since $20 million is not pocket change and the fact that it shut down within the same year. Then he said he tried to contact the people running it and hasn’t heard back. There’s a lot of very suspicious things going on that lead me to think that the company shutting down was not due to the product, but probably due to something internal. I don’t know if you have the same impression that I do.
Rob: I don’t. It does sound a little weird, but frankly, if you’re going to raise that much money, then you raise it at probably $100 million valuation. It tends to be $80 million or $100 million because you typically sell 15%-25% of your company. If it’s a standard round and they were definitely go big or go home, and go big or go home is basically spend all your money in 18 months.
The fact that they spend it all, they probably hired all the way up and try to do a big marketing push, so I don’t know that it sounds suspicious, but it definitely sounds like a typical Silicon Valley play, I guess.
Tracy: I wish that they were able to contact the founders. I’ve done that for my apps, where like my old WeddingLovely app, I was able to talk to a few other founders who did something very similar, but shut down the company. In those cases, I was lucky that I was able to get a hold of them and they’re excited to tell me all the things that went wrong because there are done and over it and moved on.
He said he only heard about it a few days ago, so maybe there could be some contact. There could be valuable information if he’s able to contact those founders and be like, “Hey, above board, what happened? Is there anything to be worried about?” If that doesn’t happen, in general, I feel like it’s not something that should stop the caller from starting a company.
Rob: No, not at all. I wouldn’t be discouraged in the least. Just because a venture-funded company couldn’t make it, that can almost be a good sign at times. If they were burning through $1 million a month, hired a team of 50 people or whatever it was they were doing, a lot of ideas don’t work that way. A lot of ideas maybe they take years to do or maybe it’ll never make more than $1 million a year, but that’s a great full-time living for an individual. I don’t want to speak to this particular idea. I haven’t looked into personal search engines or really what’s it about, but just the question is really about a venture-funded company went out of business, how should I feel about that? I wouldn’t feel bad about it all.
I would feel the exact same way I do today as I did yesterday before knowing it. The other thing I would say is I wholeheartedly agree with you that getting in contact with someone from that company no matter what, if it’s the founders or if it’s an old salesperson or whatever, I have done this multiple times. Oftentimes you need to send a lot of cold email, LinkedIn outreach, Twitter DM’s, all the things to get a hold of someone, but once you get a hold of one person, they will often refer you to other folks. I would spend more time on that than you probably think, a judicious use of your time.
If they raised that much money, they had to have had, at some point, quite a few employees. I would head to LinkedIn, Twitter, and Google and try to figure out, “Hey, who was a former employee of this company,” and reach out as like, “Hey, I’m a founder of this thing, you worked on it, and I wondered if 30 minutes your time just to talk to me about something.” It works pretty well. Again, I wouldn’t stick just to the founders, although that would be ideal, but that conversation could be super valuable.
Tracy: Yeah, very valuable. I’ve used in the past myself. It’s so great because there’s some things that you probably could learn that you didn’t know about just from looking at from the outside. Try to do the internal investigation, try to talk to someone in the company. Also, just investigate everything that’s public, see what they did, see the things that they released and see what you can learn from what they did that apparently didn’t work, to see what you can learn from that.
Rob: Thanks for the question. I hope that was helpful. Our next question is another voicemail. It’s about growing an email newsletter audience.
Ben: Hey Rob and Mike. My name is Ben DeFrancisco and I run a small consultancy here in Philadelphia doing mobile web and increasingly crypto- and Blockchain-related work. I fell down the crypto rabbit hole many years ago, so it’s been awhile for me to watch you enter the mainstream consciousness so much over the last couple of years.
About a year ago, I started running a weekly newsletter covering technical topics in the crypto world. It’s called The Blockchain and you can check it out by going to newsletter.buildblockchain.tech. I post about it on Twitter and sometimes on LinkedIn and it has grown steadily but slowly over the past year. I have excellent open rates at 50% and I often get people writing back to me with a positive feedback. I think generally I’m doing something right in terms of the content. Still, the list size itself is rather modest.
My question is, how do I grow a newsletter audience? I often hear about people talking about building a list, but there’s no viral component to a newsletter and at a certain point, it seems like posting to social media has diminishing returns. Are there some tactics and strategies that I could be employing?
For context, I don’t have anything I’m trying to sell to this list right now, though in the back of my head, I can imagine launching a book, a course, or even a software product down the road. For the moment, I’m just focused on finding and growing my audience. An audience that has interests and aspirations that align with my knowledge and skills. Thanks in advance for any insights you can offer on how to do this.
Rob: What are your thoughts on this Tracy?
Tracy: This is a really good question and it’s funny when watching the last few years as newsletters have become more and more of a thing as compared to blogs. It does have that difficulty in sharing something that’s over email, and after I read this question beforehand, I went through all of my favorite newsletters that I personally subscribe to and be like, “Okay, how do other people do it?”
I feel like number one, the way I’ve found newsletters and the way all the ones I’ve been reading or have been doing it, in the newsletters, they’ll have asks, saying, “Okay, if you want to support this newsletter, please share this newsletter on social media. You can sponsor the newsletter,” and the other ways of helping out. It’s just being really clear in the newsletter, may be at the top and maybe at the bottom. Just give people an opportunity and remind them that, “Hey, if you’re enjoying this content, here’s a way to share it.”
Rob: Yeah, that’s a good approach. There’s a lot you can do with this and it depends a lot on your constraints. Do you have more time or do you have more money? Something that I would think about if you have this newsletter, you’re providing valuable content and with 50% open rates, that tells me that you’re writing engaging content, people are getting value out of it because they’re continuing to open it. What I would look for is opportunities to get your newsletter or your brand out to a broader audience.
You’re right, sharing on social is getting it out to your audience and maybe get lucky and three people will retweet and then you get it out to their audience, but that is not a predictable way to grow a subscriber base. I would think about approaches like this to reach larger audiences or audiences you currently don’t have reach into.
One is you’re already creating content. Is there a way to either repurpose some of that or create new content as guest posts? Whether you approach Inc Magazine, Entrepreneur Magazine, any of the crypto, there’s tons of crypto sites, take the top five or the top 10 and pitch them on, “Hey, I’m a writer. Here’s the quality of my writing. I want to write for you,” and you get a byline or a mention of your site within the article itself. This is a tried and true tactic. It takes time, but that’s one way to get in front of 100,000 crypto enthusiast, by being on the number one crypto news site.
A second one would be to do a podcast tour. If you’re an expert and you have all this experience and you can say, “I’m an expert because of this,” or, “I’m an expert because I’ve interviewed a bunch of experts,” and going to a podcast tour and of course you mention your brand while you’re doing that, expose it to new people.
Doing interviews. It looks like you might already be doing some interviews. I’m wondering if you are gently asking for the interviewees to social share when the post goes live. That is something I would consider. I wouldn’t do it heavy handed, but if one out of three shares it, that exposes you to a new audience. People say, “Wow, this content was really good. I want to find more like that,” and on and on. It’s the same playbook that I would say for any startup.
You’re building the list to some end, what are the marketing approaches you could go down? SEO is another one if you have a larger footprint on your website, you ought to value it. Is SEO too hard in the crypto space? Do you have the time, the money to do it? Maybe or maybe not, but that’s something I would personally value as it has such a nice fly wheel of traffic if you’re giving something away like an open source library or something else that folks aren’t able to get anywhere else. Everybody links there, then you get the SEO juice and then suddenly you triple your newsletter subscribers.
Another way that I would think about and this comes back to that time versus money thing. If I had more money than time to devote to this, I would have absolutely seen people grow email newsletters with ads. With Facebook ads, Instagram ads, Google ads may be a stretch, but ads in other email newsletters.
That depends. If you’re not monetizing at all, then that’s probably a tough justification, but that would then lead me to think about longer term, “How am I going to monetize this?” whether it’s with affiliate stuff or ads or whatever. That allows you to then know, “Oh, per subscriber, I make X dollars per month or X cents per month, that means I can pay this much for a new subscriber.” That’s where you’re going to get to if you’re going to grow it in a sustainable fashion.
The last thing I’d say is you mentioned that your URL is newsletter.buildblockchain.tech to sign up, I would just move it to the homepage. You actually have it, you have a drip put just there on the homepage, it’s buildblockchain.tech. Go there to sign up and it’s just less for people to remember.
Tracy: Yeah, it all makes sense. It basically comes down to, make it easy for people to sign up, make it easy for people to share, and put yourself out there so that more people will know about you, so they have opportunities to share what you’re doing. If you can, then you can try using ads, that’s the step-by-step process.
Rob: That’s right. Using ads is dangerous to do early on. It’ll help you move faster, but you need some budget to do it and you can churn through money if you don’t have any way to monetize or any idea of how you’re monetizing. Again, if you know the lifetime value of a subscriber, then this becomes a no brainer.
This is how Noah Kagan built the AppSumo less up to three quarters to a million or a million people was by running ads because he knew what the value of a subscriber was. This is one way that Brennan Dunn grew his Double Your Freelancing list, was using ads. It’s doable, it’s just a matter of what are your constraints, do you have the time, do you have the interest, and how big do you want to grow it?
Tracy: Yeah. Try doing step one to three first and see what success you can do for these “free ways” of growing your list and then using that as a cherry on top.
Rob: I hope that was helpful Ben. Thanks for the question.
Tracy: Our next question, by James Barnhartus, says, “Hi Rob and Mike. Thanks for all the great insights you share on the podcast. I came across your podcast about a month ago after starting my own startup journey. I’ve already learned so much from you guys. The knowledge and experience you share is amazing and has really stoked my excitement for entrepreneurship.
My question has to do with the process of transitioning from a consulting-based model to a true SaaS model. My co-founder is a consultant who helps small businesses better manage their operations. One of the tools he uses in his consulting is an app that he put together in Microsoft Access to help his clients find and track their operations. I’ve been brought on as a technical co-founder to turn this Access app into a SaaS product.
The SaaS app would initially continue to be used as a tool for my co-founder’s consulting work with the goal of eventually moving towards offering it as a standalone product. I was wondering, what is your take on this approach? Are there any benefits we should be sure to take advantage of or pitfalls we should try to avoid?
On the one hand, I see a potential advantage in the fact that we already have an initial user base in his current customers, but on the other hand, I am wondering if the fact that our initial users are using the app and a consulting context might lead to unanticipated headaches when we try to scale. Thanks again for the great podcast, James Barnhartus.
Rob: That’s a good question. I’ve seen folks do this well and I’ve seen them do it poorly. The first thing that I would make sure is that you have the IP, that your partner owns the intellectual property to the thing and that the Access app was not built under a contract that if you forked a SaaS app out off of it, that somehow that comes back to bite you in the future. That is just something that you have to clear up and make sure you have. The pitfalls I would avoid or the big one is assuming that because he has had to build this for a number of clients, that everyone needs it, or that there is a market need for this.
I would validate that other people need it, that it is sellable at a purchase price that you want to sell it at, and that you can reach them somehow in some type of scalable fashion. Obviously, there are companies that want to pay for this, but if each sale cycle is 6-12 months long and people are only willing to pay $100 a month for it, it becomes a less viable business. I would be having a lot of conversations before I went off and build a SaaS app with his existing clients.
Also then, where is a list of another hundred clients that are your potential clients that are like these other ones? How do I get in conversation with them? It’s easy, you’re not selling anything. You say, “Hey, we are building this thing,” you just tell the story of what you’re doing, “Would you be willing to have a 30-minute phone call with me?”
If you send 100 emails, maybe get 10 yeses and that will be tremendously educational for you to ask the questions of, “What are you using today? How much would you be willing to pay for this?” You pitch it, “Hey, would you be willing to pay $1000 a month?” or whatever the numbers are. There’s a lot more that I would do before I wrote a line of code on that SaaS app.
I do think that there’s a big benefit to doing this and that your partner or co-founder obviously has a lot of knowledge, institutional knowledge in his head about how this works; that’s good. You guys have built-in testimonials from the start. You could even ask the consulting clients if you can use their logo from day one, even though you don’t technically have product customers, you do have consulting customers or clients and you have logos and testimonials which is a nice thing to have from the start. You can also get their input of course to help shape the direction of the product. That’s my hot take, my initial thoughts on it. What do you think Tracy?
Tracy: I love the fact that there are existing customers that you can ask for help for building this product. I agree with you. This is a place where you can get more information, talk to other customers, and make sure there’s a market before you do any writing of code. As you start building a product, you can go to these existing customers with the MVP and start getting that feedback with people who are already hopefully fans of your co-founder because they’re working with them in that consulting context, and these people can help inform how the standalone product can grow.
Having that little bit of help helps an app grow and help the app launch, especially if you can get to a point where it’s just good enough that then you can start taking that elsewhere. Not building a full-on product, but getting just to that MVP, so then you can start talking with other people outside of this consulting contact. I think it’s going to be a huge help and it’s a really good sign to have those extra customers, but I completely agree with you that there are some pitfalls, as you mentioned, and just to be aware of what you said.
Rob: Yeah, and I was trying to think of the dangers of it being consulting today and how that can impact your mindset. Let’s say you built 10 or 15 existing consulting clients. Is there a danger that they really have a lot of input on shaping the product and they do it in such a way that it makes it less useful to the rest of the industry, or do they want undue influence on it or whatever? These are things you have to navigate. I definitely think this is more of an advantage than a disadvantage for a lot of developers go and built products and then you can’t get anybody to buy and no one will tell you why they want it or won’t pay for it. You’re not going to be in that situation, but they are definitely some things I’d be thinking about as I build this out.
Tracy: This is a process that people have done before. A lot of SaaS apps have come from consultants who realize that there is a need and that they can build something off that need. Of course, there is probably a lot that have failed as well, but this has been done before and some people have had success in it.
Rob: Yeah, and I would consider tweeting out and saying, “Hey, we’re looking to do this. Has anyone done it before so I could ask you some questions?” My guess is typically when we get a question that is this specific, we often the next week get an email from someone saying, “Hey, I did that,” connect me with him.
Tracy: Awesome.
Rob: Yeah, it’s been cool. It’s like the Startups for the Rest of Us community coming to the aid of one another, which is really, really cool.
Tracy: Yeah, using the community. One of the big secrets for this community is the fact that we can use each other, learn from each other, and help each other out.
All right. We’ll move on to the next one. This has been submitted by Casio. He says, “Hi Mike and Rob. Thanks for providing such a valuable podcast. We have a bootstrap SaaS making low seven figures and ARR. As the founder, I constantly get emails from people interested in white little partnerships. These emails typically come from bigger businesses that are in the industry but don’t offer the feature we are most known for. Other times they come from random people who want to build a similar product but don’t have anything to offer.
Our product is somewhat complex, not rocket science but large like an ERP, HER, et cetera, and we have a brand that is trying to get some recognition in the industry. White labeling on our product would be nontrivial from a technical perspective and I believe it would distract us from building our own brand. I want to know what your general thoughts are about white labeling. These emails are so frequent, I think I’m leaving money on the table. Thank you.”
Rob: This is a good one and it’s common. If you start something that gets traction you will get these emails. My default response to these is very much like the default response to the junior partner in a venture capital firm. You’ll get two or three of those a month as well asking if you want funding and in general the answer is, “Now is not a good time.” These white labeling in general is quite distracting. It is way more technically challenging than most developers or most people think it is. It’s not just tweaking a product and swapping out someone’s logo in the upper left. There’s billing and there is provisioning. I won’t even go into it.
We evaluated that at one point and it is months and months of development work. What’s cool is that if you’re getting these interests, it shows that this industry has interest in this tool. It’s almost like you’re going to get out ahead of these bigger players, they’re trying to hedge their bet, and they’re trying to have the features that you have. To me, white labeling basically devalues your brand and creates a brand for someone else. There are cases in which to do this, but I don’t think that’s a real, kind of MicroConf, Startups for the Rest of Us self-funded move. To me, you are trying to build a brand for the long-term. You’re an ambitious founder. You’re doing low seven figures, huge congrats on that. Most people do not make it that far.
If I were in your shoes, I would not be having these conversations. If you’re curious, maybe respond to one or two of them, and do a call or two, and cap your time at five hours of exploration for two different deals or for two different conversations and see where it goes. I’ve done that, I’ve gone down the road. This is with multiple products, not just Drip and HitTail, but back before there were DotNetInvoice and a couple of others. I would say, for me it was without fail. That doesn’t mean it’s without fail, but it’s going to be a waste of time because you are trying to build a brand that you want to last. To give someone else that brand equity and have to write a bunch of code on top of it, if you already have some figures, you feel like you’re growing, and things are doing relatively well for you, I don’t see why you would entertain this at all.
Tracy: I would agree with you and I’ve done the same thing with WeddingLovely. We had a bunch of white label requests from other companies and I didn’t do that process that you mentioned. I did a few calls with them, with the folks just to see what they wanted, what they are thinking, and what kind of money was involved. Every single time at the end I was like, “That was a waste of time.”
Again, I could be wrong. There’s probably instances out there where this is a good idea, but it’s one of those things, whereas in general, I guess for this audience, it’s going to be more pain than it’s worth, especially if you’re already doing that much in ARR.
Rob, I have a question for you. Is there any situation in which you would think that, that would make it worth it for you? Would it be an upfront contract? What would you think would be the only situation where it would be worth it?
Rob: I was just asking myself the same question in my head. It’s not a blanket “no,” it’s a 99% “no.” What is that 1% or the 5% time you should do it? I’ll go on a little tangent here. There’s a SaaS app that I know of that was in the ESP space. Originally, they were a downloadable software that you installed on your own server. They white labeled for years and no one knew who they were. They grew into the seven figures and then they had to pivot out of that. They decided to pivot out of that and build their own brand. Their software was mature, but they had to build brand equity from scratch. I sat and watched and I thought to myself, how would they have been because their competitors were doing so much better by that time. I thought to myself, how would they have been if they had never done that.
The thing that comes to mind, there was one time that I almost went forth with white labeling. It was in the very early days of Drip and it was with a colleague I knew or a guy I knew who was in a completely separate, very tight vertical. It was a vertical we were not going to sell into. It wasn’t a ton of dev work. It was weeks’ worth of dev work and he was willing to commit to—I don’t remember the numbers—a non-trivial amount of MRR. He had a big email list, it’s a prosumer niche, so it was a really large list and he had a large number of paying customers doing seven figures of ARR with a relatively low-priced product. He was going to email a list and promote it over the course of a year and do webinars.
He was going to really push it in and it seemed like it could add 5K, 10K, or 15K of MRR a few times throughout the year and that was back where that was a substantial amount of money to a company. That was one time where we needed the money. We almost went through with it. I honestly don’t remember. I think it petered off and we were going to do some research.
Eventually, we mutually decided this is not going to work and I don’t regret that. I actually think that would have been a burden. It would have been essentially legacy cruft that we would have had to maintain because within 6-12 months of that, we were growing by 10K MRR a month and it would have been this thing that we had committed to, that we have to maintain, and would have always been like, “What were we thinking?” but at that time, it may have made sense and helped us move faster. That’s the one time I can think of it perhaps working for more of the self-funded indie funded types.
Tracy: The only other thing I can think of—this might not be the self-funded, indie-funded type of people—was when I was evaluating white label partnerships, just one other variable was if that company that wanted me to white label was an acquisition possibility. I have heard stories and some friends where they’ve built a product, they white labeled it for that company, but in the process of white labeling and working with that company, it comes out that it’s just easier if they just get acquired. If you wanted to be acquired, it can be and this can be very risky. This is a very risky way of trying to get an acquisition because things could fall through the white labeling, it could just suck up all your time getting it to work. I have heard instances where people start working the company under a white label product and ended up acquired at the end. If that’s something you might be interested in, that could be a path.
Rob: That’s a good point. It’s with the words that is strategic partnership. You’ll see that with a strategic investment of like, “Hey, big competitor. Number three wants to invest by 10% of the company,” and maybe they’re an acquisition partner long-term. White labeling will be another one, a really tight integration where everything goes back and forth. Before white labeling I would almost vote for a really tight-coupled integration, but you’re right. It’s risky, but I could see that as a play or a reason to do it.
Tracy: All right. Moving on to question from Lee B. Lee says, “Hey Rob and Mike,” had some really nice things to say about you and the podcast. A couple of paragraphs. I’m going to skip that and jump over to the question. Lee, thanks for the wonderful compliments.
Lee says, “Here, to contribute my own question. Is it not uncommon for developers to start at a small company with a reduced salary in exchange for a share of the company? This is what I proposed to two founders of the company where I am now writing software and they’re onboard. They feel reassured I’m in it for the long haul and will feel more confident taking ownership and business decisions along the way. Now, I take it for granted that I will want a lawyer to review any offer before it signed. How does one go about selecting a lawyer who will represent me without being overly aggressive? Googling business lawyers near me is easy enough, but I would like some advice about what questions to ask and what to look for when dealing with a master of the dark arts of law. Thank you again for providing a back catalog of knowledge and advice.”
Rob: Dark arts of law. I like that phrase. That’s a good question and good on you for having a lawyer review it; that’s a good call. The blanket advice I have is upcounsel.com. You start there, you look at the reviews. It’s like Upwork for legal. I have had generally good luck when I try to find someone with an expertise there. The way about it is I don’t want a small-town lawyer who specializes in tax, accounting, to review my startup equity grants, my stock option offer, my employment letter offer. I want someone who is familiar with the startup space so that they know.
Any lawyer can read a document and say, “Yes, legally this is saying this and this means that,” but do they know what the standards are? Do they know how the Silicon Valley treats it? Do they know how people treat it outside of the Silicon Valley? Have they dealt with startups that may have raised funding? Have they dealt with equity grants before, stock options, vesting cliffs? All of this stuff is more than academic.
It’s something that the more experience you have with it, the more you know, “That’s a common clause to be in there,” or “That’s not a common clause and this is unusual where I would push back.” What I found is when you’re dealing with lawyers who are out of their depth or out of their expertise, that’s when they get overly aggressive because they’re uncertain and they’re trying to mitigate risk, but when they’re in their comfort zone of like, “Yeah, I’ve reviewed 10 of these in the past year,” they tend to feel much more comfortable with it.
The last thing I’ll say is I’ve dealt with a lot of lawyers, way too many, actually, just over the years of forming companies and doing all this stuff. It’s only been about 10% or 15% of them that I really enjoyed talking to and having conversations with, that I feel like actually have my business at heart, my well-being, and the company’s well-being at heart rather than just logging time, and that’s super unfortunate. That’s just my experience.
I’m not saying that’s how the whole industry is, but once I found a couple of attorneys with a couple of different areas of focus of expertise, I hold on to them for dear life. I refer people to them and I use them for everything. There’s one guy who doesn’t do anything with tax accounting, but I’ll even ask him tax accounting questions just because even his almost inexperienced answer is often better than the tax accounting attorney who is just stiff and giving me some boilerplate ECYA answer.
Now, it this attorney is just going to review one document, do you need a long-term relationship with them? Probably not, so you don’t need to take it so far. I bet if you go to UpCounsel and look for folks who are experts in startup loan and equity grants, I bet you’ll be fine with it. Those are my initial thoughts. What do you think Tracy?
Tracy: The best lawyers I’ve ever worked with have been referrals from friends. There’s so many out there. You don’t want to spend the time chatting with a bunch of different lawyers and then seeing if they’re the right one for you. That’s like Googling for random lawyers near you. You can follow this trap or it takes way too long and you’re talking to these lawyers and then you’re not getting your contract reviewed.
If it is at all possible, asking people near me, other startups, other friends, people or anything for a referral to their lawyers and getting their recommendations and their thoughts about how that lawyer works upfront saves a lot of time. I’ve worked with some, like you said, terrible lawyers that never respond, or respond cryptically, or respond with one liner and then charge me a lot of money for that one liner, and I’ve worked with some really amazing lawyers. The amazing lawyers have always come from referrals from other people who used them for the same situation that I did.
Rob: That’s great advice, and asking your personal network. Going to Twitter and asking other startup founders, if you’re in a founder Slack group, if you’re in the MicroConf crowd, if you’re in FounderCafe. There’s all these resources you can go in and say, “Hey, who knows a good lawyer,” and we don’t know the jurisdiction of your law so I don’t know if you’re in the UK or the US. If it is a law, that would be state-dependent. Or you can get a lawyer in any of the 50 states and employment law tends to be state whereas tax law is IRS and on and on. You ought to look at the nuances of that, but I wholeheartedly agree with you that the best attorneys you’re going to find are going to be referrals from other folks.
Tracy: That’s a good point about different states. I wasn’t thinking about that before. Probably about 90% of the lawyers I have worked with, I haven’t met in person. I’ve always just worked with them remotely. You don’t necessarily have to have someone who can go to the office and sit down and show them the contract. If you can find the right person to work with you where you can just send over that the contract over email and get their thoughts and pay without having to meet them.
Rob: For me, I prefer solo attorneys who work out of a home office, use Dropbox and DocuSign, aren’t working for some huge firm with a big office downtown and still using paper documents, that everything needs to be a phone call, and they won’t email. There’s this real dichotomy and the attorneys I enjoy working with the most are more like us. They’re more like startup founders. They’re agile, they use the tech, the cool hip stuff these days, and that’s what I personally would look for. Again, to review one stock option doc, you don’t need to look for all of this, but if you’re going to have an ongoing relationship, that’s what I would be looking for.
Cost is part of it. A solo attorney working out of a home office tend to be less expensive. They’re also not going to delegate a bunch of stuff. That’s what I hate when I work at big firms, you talk to the attorney, great. You charge $700 an hour and your law students, paralegals, and such are charging $350 an hour, but everything is delegated to them, and they don’t tend to know what they’re doing. They tend to have to loop the attorney in to make the hard decisions anyways and you’re the whole time dealing with a junior associate. I guess that’s where I get super frustrated.
It’s like, no. I want to work with someone super knowledgeable and I am willing to pay for it actually. I’m willing to pay the rate, but please answer my questions and don’t funnel me through an intermediary and when I have a solo attorney, they’re answering your questions and you know that they’re the expert in what they do.
Some good questions today. Thanks so much for coming on the show again with me, Tracy.
Tracy: Yeah. Again, super happy to be here. Thanks for having me on.
Rob: Absolutely. As a listener, if you have questions that you’d love to hear right on the show or you want to send us a voicemail, make it to the top of the stack, please email us questions@startupsfortherestofus.com or you can always call our voicemail number if you’re on the road. It’s (888) 801-9690. Tracy, if folks want to keep up with you, they can go to tracyosborn.com or you are @tracymakes on Twitter.
Thanks again to Tracy for joining me on the show. I had a good time answering some listener questions. Seriously, send in your questions. We have bandwidth for even more listener questions over the course of the next few months. If you haven’t subscribed to this podcast, I encourage you to head to iTunes, Stitcher, Spotify or wherever greater podcasts are sold and enter Startups for the Rest of Us, subscribe, or head to our website, startupsfortherestofus.com.
We have an email list. We almost never talk about this, it’s a mistake. There are several thousand people on the list, but if you really want to be in the know, you want to hear about inside baseball, and hear about when formats change and new designs, we don’t email very much, but it’s being within the Startups for the Rest of Us community. Go there, enter your email. Again, we don’t have very many emails and you can unsubscribe at any time. Thanks again for listening and we’ll talk to you next time.
On the show we have several different formats. Oftentimes we have tactics we discuss, we do interviews, founder hot seats, and this week we have listener questions. Questions sent by you, the listeners, over the past couple of months. I’ve been mixing up the formats as you’ve noticed and the feedback I’ve heard is that the tactical interviews and the interviews of the agony of defeat have been really well-received in addition that the listener question episodes tend to be listener favorites.
I want to get back in the groove of doing those and today, I welcome a co-host, Tracy Osborn, to come back and answer questions again. She joined me about six or eight episodes ago answer a few questions. Before we dive into those, there’s been a few comments on startupsfortherestofus.com website. Go to startupsfortherestofus.com, we have a new design, you can check it out.
On episode 456, we had a comment from Karen that said, “Just popping in after listening to this episode to say how much I value your podcast. I’ve been listening for quite a few years. As other shows have come and gone, Startups for the Rest of Us continues to be a staple for me. I’ve really enjoyed the mixing up of the format lately. It’s been good to hear from different people. In saying that and as much as I’ve enjoyed and got something out of each episode, I would not really be keen on having the podcast moved to an interview format every week.” I actually agree with that.
“I always enjoy the listener question episodes and get a lot of value out of those. The episode that really left a lasting impression on me was the one with Mike just before he started his hiatus. The way you skillfully weaved your questions in and around Mike’s comments and your observations were very eye-opening and I’m sure it resonated with a lot of listeners, too. I would love to see more of that format, like a one-off mastermind session with the SaaS founder, where it explores a specific challenge that they are currently experiencing.
No matter the format of this podcast is, it continues to be a cut above the rest and a big thank you from this listener for everything.” Thank you so much, Karen, and another listener chimed in and said, “Plus one on that.” I appreciate the feedback on that. It’s super helpful just to help guide things, to look at doing some more hot seats in the future.
In episode 457, I answered a few questions. One was about starting a market place and TJ wrote in and asked about two-sided marketplaces and how he should start it. Shawn the Wolf chimed in and said, “Great show. For two-sided marketplaces, I would suggest, number one, populate the list with the basics for free to satisfy your consumer funnel. Number two, give all artisans a basic free listing with an option to be removed. Number three, find sweeteners to sell to the artisans, to give the individual listings a competitive edge.” The sweeteners he lists are enhanced listings, ads at the top of a given page in their category, subsites inside of your website, and prospect information volunteered from consumers can go the artist for a fee.
Thank you so much for that Shawn. TJ, thank you in the comments and I appreciate everybody coming in. As a community, we obviously have so much more brain power and experience than just a podcast host or two, sitting on the microphone each week.
Also, if you haven’t got your ticket to MicroConf Europe, it’s in late October this year, head to microconfeurope.com. We still have some tickets left. It’s in Croatia and it looks over the Adriatic Sea. Every hotel room has a view of the Adriatic, it’s very nice. Consider doing that, hanging out with 120 or 130 of your closest founder friends. If you didn’t hear the save the date, MicroConf US next year is in Minneapolis and it’s April 19th through the 23rd. We’re pulling it out of Las Vegas this year.
We’ve actually been trying to do that for the last several years, in the overwhelming feedback from both folks who attended folks who don’t, that they would prefer seeing it in a different city. It happens to be in Minneapolis, this year, April 19th through the 23rd, that’s growth and then starter. Check out microconf.com. Enter your email address to hear about when tickets go on sale. We do expect the conference is to sell out, so you want to get on the email list, if you’re at all interested in joining us. I believe we’re expecting to sell tickets here in September. With that let’s dive into some listener questions.
Tracy, thanks for being a glutton for punishment and joining me on the show again.
Tracy: Happy to be back.
Rob: I’m stoked to answer some listener questions with you again today. Our first question is a voicemail. As always voicemails go to the top of the stack. This question is from a founder who has an idea or is working on a product and a funded startup with the same idea shut down in 2016 and he’s curious how to process that.
Ryan: Okay, question about a strange experience and what you think would be a good way to go forward. I’ve been working on an app for about a year. It’s a search engine your personal computing history, it’s at apse.io. The acronym is short for A Personal Search Engine.
Last week I found out about another company building almost exactly what I’ve been working on. The thing is, it is a $20 million round at 2016 and also shut down later in 2016. If I were reading the press coverage of marketing materials, they might as well be talking about my app. I can’t find any reason for the shutdown, and attempts to contact people who worked on it have been unsuccessful.
I’ve been working on the project solo for about a year. I have no idea they have existed until a few days ago. I’m bootstrapped and never released a working product so I’m not at danger of going under myself. My focus right now is I’m growing the customer base. What do you think I should do now that I know all this? Any thoughts would be appreciated. Thanks, Ryan Fox.
Rob: Interesting question. What do you think, Tracy? What are your thoughts on this?
Tracy: Super interesting, especially since $20 million is not pocket change and the fact that it shut down within the same year. Then he said he tried to contact the people running it and hasn’t heard back. There’s a lot of very suspicious things going on that lead me to think that the company shutting down was not due to the product, but probably due to something internal. I don’t know if you have the same impression that I do.
Rob: I don’t. It does sound a little weird, but frankly, if you’re going to raise that much money, then you raise it at probably $100 million valuation. It tends to be $80 million or $100 million because you typically sell 15%-25% of your company. If it’s a standard round and they were definitely go big or go home, and go big or go home is basically spend all your money in 18 months.
The fact that they spend it all, they probably hired all the way up and try to do a big marketing push, so I don’t know that it sounds suspicious, but it definitely sounds like a typical Silicon Valley play, I guess.
Tracy: I wish that they were able to contact the founders. I’ve done that for my apps, where like my old WeddingLovely app, I was able to talk to a few other founders who did something very similar, but shut down the company. In those cases, I was lucky that I was able to get a hold of them and they’re excited to tell me all the things that went wrong because there are done and over it and moved on.
He said he only heard about it a few days ago, so maybe there could be some contact. There could be valuable information if he’s able to contact those founders and be like, “Hey, above board, what happened? Is there anything to be worried about?” If that doesn’t happen, in general, I feel like it’s not something that should stop the caller from starting a company.
Rob: No, not at all. I wouldn’t be discouraged in the least. Just because a venture-funded company couldn’t make it, that can almost be a good sign at times. If they were burning through $1 million a month, hired a team of 50 people or whatever it was they were doing, a lot of ideas don’t work that way. A lot of ideas maybe they take years to do or maybe it’ll never make more than $1 million a year, but that’s a great full-time living for an individual. I don’t want to speak to this particular idea. I haven’t looked into personal search engines or really what’s it about, but just the question is really about a venture-funded company went out of business, how should I feel about that? I wouldn’t feel bad about it all.
I would feel the exact same way I do today as I did yesterday before knowing it. The other thing I would say is I wholeheartedly agree with you that getting in contact with someone from that company no matter what, if it’s the founders or if it’s an old salesperson or whatever, I have done this multiple times. Oftentimes you need to send a lot of cold email, LinkedIn outreach, Twitter DM’s, all the things to get a hold of someone, but once you get a hold of one person, they will often refer you to other folks. I would spend more time on that than you probably think, a judicious use of your time.
If they raised that much money, they had to have had, at some point, quite a few employees. I would head to LinkedIn, Twitter, and Google and try to figure out, “Hey, who was a former employee of this company,” and reach out as like, “Hey, I’m a founder of this thing, you worked on it, and I wondered if 30 minutes your time just to talk to me about something.” It works pretty well. Again, I wouldn’t stick just to the founders, although that would be ideal, but that conversation could be super valuable.
Tracy: Yeah, very valuable. I’ve used in the past myself. It’s so great because there’s some things that you probably could learn that you didn’t know about just from looking at from the outside. Try to do the internal investigation, try to talk to someone in the company. Also, just investigate everything that’s public, see what they did, see the things that they released and see what you can learn from what they did that apparently didn’t work, to see what you can learn from that.
Rob: Thanks for the question. I hope that was helpful. Our next question is another voicemail. It’s about growing an email newsletter audience.
Ben: Hey Rob and Mike. My name is Ben DeFrancisco and I run a small consultancy here in Philadelphia doing mobile web and increasingly crypto- and Blockchain-related work. I fell down the crypto rabbit hole many years ago, so it’s been awhile for me to watch you enter the mainstream consciousness so much over the last couple of years.
About a year ago, I started running a weekly newsletter covering technical topics in the crypto world. It’s called The Blockchain and you can check it out by going to newsletter.buildblockchain.tech. I post about it on Twitter and sometimes on LinkedIn and it has grown steadily but slowly over the past year. I have excellent open rates at 50% and I often get people writing back to me with a positive feedback. I think generally I’m doing something right in terms of the content. Still, the list size itself is rather modest.
My question is, how do I grow a newsletter audience? I often hear about people talking about building a list, but there’s no viral component to a newsletter and at a certain point, it seems like posting to social media has diminishing returns. Are there some tactics and strategies that I could be employing?
For context, I don’t have anything I’m trying to sell to this list right now, though in the back of my head, I can imagine launching a book, a course, or even a software product down the road. For the moment, I’m just focused on finding and growing my audience. An audience that has interests and aspirations that align with my knowledge and skills. Thanks in advance for any insights you can offer on how to do this.
Rob: What are your thoughts on this Tracy?
Tracy: This is a really good question and it’s funny when watching the last few years as newsletters have become more and more of a thing as compared to blogs. It does have that difficulty in sharing something that’s over email, and after I read this question beforehand, I went through all of my favorite newsletters that I personally subscribe to and be like, “Okay, how do other people do it?”
I feel like number one, the way I’ve found newsletters and the way all the ones I’ve been reading or have been doing it, in the newsletters, they’ll have asks, saying, “Okay, if you want to support this newsletter, please share this newsletter on social media. You can sponsor the newsletter,” and the other ways of helping out. It’s just being really clear in the newsletter, may be at the top and maybe at the bottom. Just give people an opportunity and remind them that, “Hey, if you’re enjoying this content, here’s a way to share it.”
Rob: Yeah, that’s a good approach. There’s a lot you can do with this and it depends a lot on your constraints. Do you have more time or do you have more money? Something that I would think about if you have this newsletter, you’re providing valuable content and with 50% open rates, that tells me that you’re writing engaging content, people are getting value out of it because they’re continuing to open it. What I would look for is opportunities to get your newsletter or your brand out to a broader audience.
You’re right, sharing on social is getting it out to your audience and maybe get lucky and three people will retweet and then you get it out to their audience, but that is not a predictable way to grow a subscriber base. I would think about approaches like this to reach larger audiences or audiences you currently don’t have reach into.
One is you’re already creating content. Is there a way to either repurpose some of that or create new content as guest posts? Whether you approach Inc Magazine, Entrepreneur Magazine, any of the crypto, there’s tons of crypto sites, take the top five or the top 10 and pitch them on, “Hey, I’m a writer. Here’s the quality of my writing. I want to write for you,” and you get a byline or a mention of your site within the article itself. This is a tried and true tactic. It takes time, but that’s one way to get in front of 100,000 crypto enthusiast, by being on the number one crypto news site.
A second one would be to do a podcast tour. If you’re an expert and you have all this experience and you can say, “I’m an expert because of this,” or, “I’m an expert because I’ve interviewed a bunch of experts,” and going to a podcast tour and of course you mention your brand while you’re doing that, expose it to new people.
Doing interviews. It looks like you might already be doing some interviews. I’m wondering if you are gently asking for the interviewees to social share when the post goes live. That is something I would consider. I wouldn’t do it heavy handed, but if one out of three shares it, that exposes you to a new audience. People say, “Wow, this content was really good. I want to find more like that,” and on and on. It’s the same playbook that I would say for any startup.
You’re building the list to some end, what are the marketing approaches you could go down? SEO is another one if you have a larger footprint on your website, you ought to value it. Is SEO too hard in the crypto space? Do you have the time, the money to do it? Maybe or maybe not, but that’s something I would personally value as it has such a nice fly wheel of traffic if you’re giving something away like an open source library or something else that folks aren’t able to get anywhere else. Everybody links there, then you get the SEO juice and then suddenly you triple your newsletter subscribers.
Another way that I would think about and this comes back to that time versus money thing. If I had more money than time to devote to this, I would have absolutely seen people grow email newsletters with ads. With Facebook ads, Instagram ads, Google ads may be a stretch, but ads in other email newsletters.
That depends. If you’re not monetizing at all, then that’s probably a tough justification, but that would then lead me to think about longer term, “How am I going to monetize this?” whether it’s with affiliate stuff or ads or whatever. That allows you to then know, “Oh, per subscriber, I make X dollars per month or X cents per month, that means I can pay this much for a new subscriber.” That’s where you’re going to get to if you’re going to grow it in a sustainable fashion.
The last thing I’d say is you mentioned that your URL is newsletter.buildblockchain.tech to sign up, I would just move it to the homepage. You actually have it, you have a drip put just there on the homepage, it’s buildblockchain.tech. Go there to sign up and it’s just less for people to remember.
Tracy: Yeah, it all makes sense. It basically comes down to, make it easy for people to sign up, make it easy for people to share, and put yourself out there so that more people will know about you, so they have opportunities to share what you’re doing. If you can, then you can try using ads, that’s the step-by-step process.
Rob: That’s right. Using ads is dangerous to do early on. It’ll help you move faster, but you need some budget to do it and you can churn through money if you don’t have any way to monetize or any idea of how you’re monetizing. Again, if you know the lifetime value of a subscriber, then this becomes a no brainer.
This is how Noah Kagan built the AppSumo less up to three quarters to a million or a million people was by running ads because he knew what the value of a subscriber was. This is one way that Brennan Dunn grew his Double Your Freelancing list, was using ads. It’s doable, it’s just a matter of what are your constraints, do you have the time, do you have the interest, and how big do you want to grow it?
Tracy: Yeah. Try doing step one to three first and see what success you can do for these “free ways” of growing your list and then using that as a cherry on top.
Rob: I hope that was helpful Ben. Thanks for the question.
Tracy: Our next question, by James Barnhartus, says, “Hi Rob and Mike. Thanks for all the great insights you share on the podcast. I came across your podcast about a month ago after starting my own startup journey. I’ve already learned so much from you guys. The knowledge and experience you share is amazing and has really stoked my excitement for entrepreneurship.
My question has to do with the process of transitioning from a consulting-based model to a true SaaS model. My co-founder is a consultant who helps small businesses better manage their operations. One of the tools he uses in his consulting is an app that he put together in Microsoft Access to help his clients find and track their operations. I’ve been brought on as a technical co-founder to turn this Access app into a SaaS product.
The SaaS app would initially continue to be used as a tool for my co-founder’s consulting work with the goal of eventually moving towards offering it as a standalone product. I was wondering, what is your take on this approach? Are there any benefits we should be sure to take advantage of or pitfalls we should try to avoid?
On the one hand, I see a potential advantage in the fact that we already have an initial user base in his current customers, but on the other hand, I am wondering if the fact that our initial users are using the app and a consulting context might lead to unanticipated headaches when we try to scale. Thanks again for the great podcast, James Barnhartus.
Rob: That’s a good question. I’ve seen folks do this well and I’ve seen them do it poorly. The first thing that I would make sure is that you have the IP, that your partner owns the intellectual property to the thing and that the Access app was not built under a contract that if you forked a SaaS app out off of it, that somehow that comes back to bite you in the future. That is just something that you have to clear up and make sure you have. The pitfalls I would avoid or the big one is assuming that because he has had to build this for a number of clients, that everyone needs it, or that there is a market need for this.
I would validate that other people need it, that it is sellable at a purchase price that you want to sell it at, and that you can reach them somehow in some type of scalable fashion. Obviously, there are companies that want to pay for this, but if each sale cycle is 6-12 months long and people are only willing to pay $100 a month for it, it becomes a less viable business. I would be having a lot of conversations before I went off and build a SaaS app with his existing clients.
Also then, where is a list of another hundred clients that are your potential clients that are like these other ones? How do I get in conversation with them? It’s easy, you’re not selling anything. You say, “Hey, we are building this thing,” you just tell the story of what you’re doing, “Would you be willing to have a 30-minute phone call with me?”
If you send 100 emails, maybe get 10 yeses and that will be tremendously educational for you to ask the questions of, “What are you using today? How much would you be willing to pay for this?” You pitch it, “Hey, would you be willing to pay $1000 a month?” or whatever the numbers are. There’s a lot more that I would do before I wrote a line of code on that SaaS app.
I do think that there’s a big benefit to doing this and that your partner or co-founder obviously has a lot of knowledge, institutional knowledge in his head about how this works; that’s good. You guys have built-in testimonials from the start. You could even ask the consulting clients if you can use their logo from day one, even though you don’t technically have product customers, you do have consulting customers or clients and you have logos and testimonials which is a nice thing to have from the start. You can also get their input of course to help shape the direction of the product. That’s my hot take, my initial thoughts on it. What do you think Tracy?
Tracy: I love the fact that there are existing customers that you can ask for help for building this product. I agree with you. This is a place where you can get more information, talk to other customers, and make sure there’s a market before you do any writing of code. As you start building a product, you can go to these existing customers with the MVP and start getting that feedback with people who are already hopefully fans of your co-founder because they’re working with them in that consulting context, and these people can help inform how the standalone product can grow.
Having that little bit of help helps an app grow and help the app launch, especially if you can get to a point where it’s just good enough that then you can start taking that elsewhere. Not building a full-on product, but getting just to that MVP, so then you can start talking with other people outside of this consulting contact. I think it’s going to be a huge help and it’s a really good sign to have those extra customers, but I completely agree with you that there are some pitfalls, as you mentioned, and just to be aware of what you said.
Rob: Yeah, and I was trying to think of the dangers of it being consulting today and how that can impact your mindset. Let’s say you built 10 or 15 existing consulting clients. Is there a danger that they really have a lot of input on shaping the product and they do it in such a way that it makes it less useful to the rest of the industry, or do they want undue influence on it or whatever? These are things you have to navigate. I definitely think this is more of an advantage than a disadvantage for a lot of developers go and built products and then you can’t get anybody to buy and no one will tell you why they want it or won’t pay for it. You’re not going to be in that situation, but they are definitely some things I’d be thinking about as I build this out.
Tracy: This is a process that people have done before. A lot of SaaS apps have come from consultants who realize that there is a need and that they can build something off that need. Of course, there is probably a lot that have failed as well, but this has been done before and some people have had success in it.
Rob: Yeah, and I would consider tweeting out and saying, “Hey, we’re looking to do this. Has anyone done it before so I could ask you some questions?” My guess is typically when we get a question that is this specific, we often the next week get an email from someone saying, “Hey, I did that,” connect me with him.
Tracy: Awesome.
Rob: Yeah, it’s been cool. It’s like the Startups for the Rest of Us community coming to the aid of one another, which is really, really cool.
Tracy: Yeah, using the community. One of the big secrets for this community is the fact that we can use each other, learn from each other, and help each other out.
All right. We’ll move on to the next one. This has been submitted by Casio. He says, “Hi Mike and Rob. Thanks for providing such a valuable podcast. We have a bootstrap SaaS making low seven figures and ARR. As the founder, I constantly get emails from people interested in white little partnerships. These emails typically come from bigger businesses that are in the industry but don’t offer the feature we are most known for. Other times they come from random people who want to build a similar product but don’t have anything to offer.
Our product is somewhat complex, not rocket science but large like an ERP, HER, et cetera, and we have a brand that is trying to get some recognition in the industry. White labeling on our product would be nontrivial from a technical perspective and I believe it would distract us from building our own brand. I want to know what your general thoughts are about white labeling. These emails are so frequent, I think I’m leaving money on the table. Thank you.”
Rob: This is a good one and it’s common. If you start something that gets traction you will get these emails. My default response to these is very much like the default response to the junior partner in a venture capital firm. You’ll get two or three of those a month as well asking if you want funding and in general the answer is, “Now is not a good time.” These white labeling in general is quite distracting. It is way more technically challenging than most developers or most people think it is. It’s not just tweaking a product and swapping out someone’s logo in the upper left. There’s billing and there is provisioning. I won’t even go into it.
We evaluated that at one point and it is months and months of development work. What’s cool is that if you’re getting these interests, it shows that this industry has interest in this tool. It’s almost like you’re going to get out ahead of these bigger players, they’re trying to hedge their bet, and they’re trying to have the features that you have. To me, white labeling basically devalues your brand and creates a brand for someone else. There are cases in which to do this, but I don’t think that’s a real, kind of MicroConf, Startups for the Rest of Us self-funded move. To me, you are trying to build a brand for the long-term. You’re an ambitious founder. You’re doing low seven figures, huge congrats on that. Most people do not make it that far.
If I were in your shoes, I would not be having these conversations. If you’re curious, maybe respond to one or two of them, and do a call or two, and cap your time at five hours of exploration for two different deals or for two different conversations and see where it goes. I’ve done that, I’ve gone down the road. This is with multiple products, not just Drip and HitTail, but back before there were DotNetInvoice and a couple of others. I would say, for me it was without fail. That doesn’t mean it’s without fail, but it’s going to be a waste of time because you are trying to build a brand that you want to last. To give someone else that brand equity and have to write a bunch of code on top of it, if you already have some figures, you feel like you’re growing, and things are doing relatively well for you, I don’t see why you would entertain this at all.
Tracy: I would agree with you and I’ve done the same thing with WeddingLovely. We had a bunch of white label requests from other companies and I didn’t do that process that you mentioned. I did a few calls with them, with the folks just to see what they wanted, what they are thinking, and what kind of money was involved. Every single time at the end I was like, “That was a waste of time.”
Again, I could be wrong. There’s probably instances out there where this is a good idea, but it’s one of those things, whereas in general, I guess for this audience, it’s going to be more pain than it’s worth, especially if you’re already doing that much in ARR.
Rob, I have a question for you. Is there any situation in which you would think that, that would make it worth it for you? Would it be an upfront contract? What would you think would be the only situation where it would be worth it?
Rob: I was just asking myself the same question in my head. It’s not a blanket “no,” it’s a 99% “no.” What is that 1% or the 5% time you should do it? I’ll go on a little tangent here. There’s a SaaS app that I know of that was in the ESP space. Originally, they were a downloadable software that you installed on your own server. They white labeled for years and no one knew who they were. They grew into the seven figures and then they had to pivot out of that. They decided to pivot out of that and build their own brand. Their software was mature, but they had to build brand equity from scratch. I sat and watched and I thought to myself, how would they have been because their competitors were doing so much better by that time. I thought to myself, how would they have been if they had never done that.
The thing that comes to mind, there was one time that I almost went forth with white labeling. It was in the very early days of Drip and it was with a colleague I knew or a guy I knew who was in a completely separate, very tight vertical. It was a vertical we were not going to sell into. It wasn’t a ton of dev work. It was weeks’ worth of dev work and he was willing to commit to—I don’t remember the numbers—a non-trivial amount of MRR. He had a big email list, it’s a prosumer niche, so it was a really large list and he had a large number of paying customers doing seven figures of ARR with a relatively low-priced product. He was going to email a list and promote it over the course of a year and do webinars.
He was going to really push it in and it seemed like it could add 5K, 10K, or 15K of MRR a few times throughout the year and that was back where that was a substantial amount of money to a company. That was one time where we needed the money. We almost went through with it. I honestly don’t remember. I think it petered off and we were going to do some research.
Eventually, we mutually decided this is not going to work and I don’t regret that. I actually think that would have been a burden. It would have been essentially legacy cruft that we would have had to maintain because within 6-12 months of that, we were growing by 10K MRR a month and it would have been this thing that we had committed to, that we have to maintain, and would have always been like, “What were we thinking?” but at that time, it may have made sense and helped us move faster. That’s the one time I can think of it perhaps working for more of the self-funded indie funded types.
Tracy: The only other thing I can think of—this might not be the self-funded, indie-funded type of people—was when I was evaluating white label partnerships, just one other variable was if that company that wanted me to white label was an acquisition possibility. I have heard stories and some friends where they’ve built a product, they white labeled it for that company, but in the process of white labeling and working with that company, it comes out that it’s just easier if they just get acquired. If you wanted to be acquired, it can be and this can be very risky. This is a very risky way of trying to get an acquisition because things could fall through the white labeling, it could just suck up all your time getting it to work. I have heard instances where people start working the company under a white label product and ended up acquired at the end. If that’s something you might be interested in, that could be a path.
Rob: That’s a good point. It’s with the words that is strategic partnership. You’ll see that with a strategic investment of like, “Hey, big competitor. Number three wants to invest by 10% of the company,” and maybe they’re an acquisition partner long-term. White labeling will be another one, a really tight integration where everything goes back and forth. Before white labeling I would almost vote for a really tight-coupled integration, but you’re right. It’s risky, but I could see that as a play or a reason to do it.
Tracy: All right. Moving on to question from Lee B. Lee says, “Hey Rob and Mike,” had some really nice things to say about you and the podcast. A couple of paragraphs. I’m going to skip that and jump over to the question. Lee, thanks for the wonderful compliments.
Lee says, “Here, to contribute my own question. Is it not uncommon for developers to start at a small company with a reduced salary in exchange for a share of the company? This is what I proposed to two founders of the company where I am now writing software and they’re onboard. They feel reassured I’m in it for the long haul and will feel more confident taking ownership and business decisions along the way. Now, I take it for granted that I will want a lawyer to review any offer before it signed. How does one go about selecting a lawyer who will represent me without being overly aggressive? Googling business lawyers near me is easy enough, but I would like some advice about what questions to ask and what to look for when dealing with a master of the dark arts of law. Thank you again for providing a back catalog of knowledge and advice.”
Rob: Dark arts of law. I like that phrase. That’s a good question and good on you for having a lawyer review it; that’s a good call. The blanket advice I have is upcounsel.com. You start there, you look at the reviews. It’s like Upwork for legal. I have had generally good luck when I try to find someone with an expertise there. The way about it is I don’t want a small-town lawyer who specializes in tax, accounting, to review my startup equity grants, my stock option offer, my employment letter offer. I want someone who is familiar with the startup space so that they know.
Any lawyer can read a document and say, “Yes, legally this is saying this and this means that,” but do they know what the standards are? Do they know how the Silicon Valley treats it? Do they know how people treat it outside of the Silicon Valley? Have they dealt with startups that may have raised funding? Have they dealt with equity grants before, stock options, vesting cliffs? All of this stuff is more than academic.
It’s something that the more experience you have with it, the more you know, “That’s a common clause to be in there,” or “That’s not a common clause and this is unusual where I would push back.” What I found is when you’re dealing with lawyers who are out of their depth or out of their expertise, that’s when they get overly aggressive because they’re uncertain and they’re trying to mitigate risk, but when they’re in their comfort zone of like, “Yeah, I’ve reviewed 10 of these in the past year,” they tend to feel much more comfortable with it.
The last thing I’ll say is I’ve dealt with a lot of lawyers, way too many, actually, just over the years of forming companies and doing all this stuff. It’s only been about 10% or 15% of them that I really enjoyed talking to and having conversations with, that I feel like actually have my business at heart, my well-being, and the company’s well-being at heart rather than just logging time, and that’s super unfortunate. That’s just my experience.
I’m not saying that’s how the whole industry is, but once I found a couple of attorneys with a couple of different areas of focus of expertise, I hold on to them for dear life. I refer people to them and I use them for everything. There’s one guy who doesn’t do anything with tax accounting, but I’ll even ask him tax accounting questions just because even his almost inexperienced answer is often better than the tax accounting attorney who is just stiff and giving me some boilerplate ECYA answer.
Now, it this attorney is just going to review one document, do you need a long-term relationship with them? Probably not, so you don’t need to take it so far. I bet if you go to UpCounsel and look for folks who are experts in startup loan and equity grants, I bet you’ll be fine with it. Those are my initial thoughts. What do you think Tracy?
Tracy: The best lawyers I’ve ever worked with have been referrals from friends. There’s so many out there. You don’t want to spend the time chatting with a bunch of different lawyers and then seeing if they’re the right one for you. That’s like Googling for random lawyers near you. You can follow this trap or it takes way too long and you’re talking to these lawyers and then you’re not getting your contract reviewed.
If it is at all possible, asking people near me, other startups, other friends, people or anything for a referral to their lawyers and getting their recommendations and their thoughts about how that lawyer works upfront saves a lot of time. I’ve worked with some, like you said, terrible lawyers that never respond, or respond cryptically, or respond with one liner and then charge me a lot of money for that one liner, and I’ve worked with some really amazing lawyers. The amazing lawyers have always come from referrals from other people who used them for the same situation that I did.
Rob: That’s great advice, and asking your personal network. Going to Twitter and asking other startup founders, if you’re in a founder Slack group, if you’re in the MicroConf crowd, if you’re in FounderCafe. There’s all these resources you can go in and say, “Hey, who knows a good lawyer,” and we don’t know the jurisdiction of your law so I don’t know if you’re in the UK or the US. If it is a law, that would be state-dependent. Or you can get a lawyer in any of the 50 states and employment law tends to be state whereas tax law is IRS and on and on. You ought to look at the nuances of that, but I wholeheartedly agree with you that the best attorneys you’re going to find are going to be referrals from other folks.
Tracy: That’s a good point about different states. I wasn’t thinking about that before. Probably about 90% of the lawyers I have worked with, I haven’t met in person. I’ve always just worked with them remotely. You don’t necessarily have to have someone who can go to the office and sit down and show them the contract. If you can find the right person to work with you where you can just send over that the contract over email and get their thoughts and pay without having to meet them.
Rob: For me, I prefer solo attorneys who work out of a home office, use Dropbox and DocuSign, aren’t working for some huge firm with a big office downtown and still using paper documents, that everything needs to be a phone call, and they won’t email. There’s this real dichotomy and the attorneys I enjoy working with the most are more like us. They’re more like startup founders. They’re agile, they use the tech, the cool hip stuff these days, and that’s what I personally would look for. Again, to review one stock option doc, you don’t need to look for all of this, but if you’re going to have an ongoing relationship, that’s what I would be looking for.
Cost is part of it. A solo attorney working out of a home office tend to be less expensive. They’re also not going to delegate a bunch of stuff. That’s what I hate when I work at big firms, you talk to the attorney, great. You charge $700 an hour and your law students, paralegals, and such are charging $350 an hour, but everything is delegated to them, and they don’t tend to know what they’re doing. They tend to have to loop the attorney in to make the hard decisions anyways and you’re the whole time dealing with a junior associate. I guess that’s where I get super frustrated.
It’s like, no. I want to work with someone super knowledgeable and I am willing to pay for it actually. I’m willing to pay the rate, but please answer my questions and don’t funnel me through an intermediary and when I have a solo attorney, they’re answering your questions and you know that they’re the expert in what they do.
Some good questions today. Thanks so much for coming on the show again with me, Tracy.
Tracy: Yeah. Again, super happy to be here. Thanks for having me on.
Rob: Absolutely. As a listener, if you have questions that you’d love to hear right on the show or you want to send us a voicemail, make it to the top of the stack, please email us questions@startupsfortherestofus.com or you can always call our voicemail number if you’re on the road. It’s (888) 801-9690. Tracy, if folks want to keep up with you, they can go to tracyosborn.com or you are @tracymakes on Twitter.
Thanks again to Tracy for joining me on the show. I had a good time answering some listener questions. Seriously, send in your questions. We have bandwidth for even more listener questions over the course of the next few months. If you haven’t subscribed to this podcast, I encourage you to head to iTunes, Stitcher, Spotify or wherever greater podcasts are sold and enter Startups for the Rest of Us, subscribe, or head to our website, startupsfortherestofus.com.
We have an email list. We almost never talk about this, it’s a mistake. There are several thousand people on the list, but if you really want to be in the know, you want to hear about inside baseball, and hear about when formats change and new designs, we don’t email very much, but it’s being within the Startups for the Rest of Us community. Go there, enter your email. Again, we don’t have very many emails and you can unsubscribe at any time. Thanks again for listening and we’ll talk to you next time.
Episode 459 | From Day Job to Productized Service to Fast-Growing SaaS as a Non-Technical Founder
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Show Notes
In this episode of Startups For The Rest Of Us, Rob interviews Craig Hewitt of Castos, about the unique set of challenges to starting and growing a SaaS product as a non-technical founder.
Items mentioned in this episode:
Rob: Welcome to this week’s episode of Startups for the Rest of Us. I’m your host, Rob Walling. Each week on the show, we cover topics relating to building and growing startups in an ambitious, but in a sustainable and repeatable fashion. These are not the typical Silicon Valley startups, where fundraising can be a goal in itself, and where people build slide decks instead of building businesses. We want to be meticulous, disciplined, and have a way to repeat our success instead of relying on so much luck and so many things to come together that it’s a one in a thousand chance. We want to build real businesses with real customers who pays real money.
In this week’s episode, I speak with Craig Hewitt about how he went from his day job, to running a product-type service, to running a fast growing SaaS application called Castos; all this as a non-technical founder. This is Startups for the Rest of Us episode 459.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups. Whether you’ve built your fifth start up or you’re working on your first. I’m Rob and today with Craig Hewitt, we’re going to share our experiences to help you avoid the mistakes we’ve made on our journeys.
Thanks for joining me this week. I’m excited to talk to Craig Hewitt. You may know him from his podcast, RogueStartups, where he has chronicled his journey over the past several years. If I recall correctly, that’s where I first heard about Craig. What I like about Craig is he has been doing this for years, 4½ years ago, he started a productized consulting service.
Two years later, he quit his day job. He acquired a WordPress plugin, he started Castos, which SaaS app for podcasts hosting. He’s built it up to the point where he has four full time employees, two part time employees and he’s part of our inaugural TinySeed batch.
You’re going to enjoy the conversation with Craig. We dive into a lot of stuff that he hasn’t talked about on his podcast and per the interviews I’ve been doing recently, I try to dig into some points in particular and not just cover a broad story, but really look at the important points along his journey, things he learned, advice that you can take away to help you build and grow your startup as well.
I want to do a little experiment this week, it’s something I haven’t done before. I talked to Craig offline and said, “You know? I bet folks will listen to this episode and they might have questions for you.” Whether it’s a question about how you did it, about your journey, about podcasting, about startups in general, just anything that you would like to hear Craig and I riff on and talk about, or frankly if it’s just for Craig, that’s okay too. I want to invite him back in probably two, maybe three weeks, and any questions that have been submitted, he and I can run through on the show. It’s a Q&A episode, but it’s a Q&A episode with a guest host and you have context about his experience.
As you listen to this episode, please try to think of a question or two for Craig and then email it to questions@startupsfortherestofus.com and you can send that as a text question or attach it, Dropbox link to an MP3, or you can just call our voicemail number if you’re on your phone right now. It’s (888) 801-9690 and I’d love to have Craig back on the show, assuming we get questions, and we can run through those.
It could be an interesting and fun experiment to have these guests to come on the show, not just tell their story but also offer practical advice and tips. This is something I’ve been talking about for quite some time about how I’ve enjoyed a Q&A episodes because it allows all of us to be smarter.
The fact that I’m here on the microphone, talking in answering questions is good and I’ve been able to share knowledge along with Mike Taber for the past nine plus years. The community and everyone out there, collectively, we are all smarter if more of us can weigh in on these topics. I love to pull guests back on the show and do questions, so please do send any in, questions@startupsfortherestofus.com, if you have any questions for Craig. Maybe put “Question for Craig” in the subject line, that’ll help me catalog them. Let’s dive into the interview with Craig, I hope you enjoy it as much as I did.
Craig: thanks so much for joining me on the podcast today.
Craig: My pleasure. Thanks from me on, Rob.
Rob: I bet a lot of folks know who you are from your RogueStartups podcast. You’ve been known for several years—congrats on that, by the way—so many podcasts don’t even make it 20 or 30 episodes and you guys are at 170 something?
Craig: Yeah we’ll be at 200 around the end of the year.
Rob: Good for you. On these milestone episodes, everyone always tries to do something cool and interesting and I always find it hard to come up with new things. Have you been given thought to what you might do on that episode?
Craig: We have thought about it. We did a really cool episode at 100. It was a mash up of a bunch of little interviews that Dave did at MicroConf two years ago. We might do something similar to that, just talking about a little bit of everything, founder stories, lessons learned, stuff like that. I think those are really neat.
Rob: That’s cool. I was asking you because our 500th episode is coming up and I wanted to steal your idea and do it before you even do it. Of course I wouldn’t do that.
Craig: You’re welcome.
Rob: Yeah, exactly. The reason I wanted to have you on the show today well, there are many reasons, but one is you’re a non-technical founder who has built a successful SaaS app. Successful to the point that you have four full-time employees, two part-time, TinySeed, we backed you, you’re part of our inaugural TinySeed batch. Stuff’s really been going up into the right for you for a couple years now with Castos.
I wanted to walk through that story because starting a SaaS app is hard enough. Starting a SaaS app as a non developer, there are unique challenges with it. I want to take people back to where you started.
Now, you live in Annecy, France with your family, but you’re from the States. You were living in New Orleans, if I recall, and you were working a day job as a sales guy. Is that right?
Craig: Yes. I’m the dreaded sales guy at heart, which is actually a really nice thing. If you’re not a developer, you have to be a salesperson or a marketer. That’s what I bring to the table I guess, but yeah, I was in enterprise-level medical sales, so selling stuff the hospitals and doctors.
I started the podcast, started RougeStartups just really as a fan of entrepreneurship, software, SaaS, and stuff like that, online business. Ironically, that’s what led to my first business that was any kind of success. It’s called PodcastMotor, we do podcast editing and production, we’re a productized service. That’s what led me to quit my day job. We traveled the world for a little bit and ended up living in France. Then all the opportunities with Castos came along as a result of that. Podcasting has been the door through which all of this stuff has opened up to me.
Rob: Podcasting has been a great thread for you. Obviously, you’ve listened to podcasts for years, then you started your own, then you started a productized service that does podcast editing, and you have a quite a client list. As you said, PodcastMotor allowed you to quit your day job. Then, you have acquired a WordPress plugin that will get to podcasting and then turn that into a SaaS. It’s not often you actually see a thread like that where there are 4-5 different levels in the same space.
I do think that’s been one of your super powers is you haven’t wandered all over the place. You had invoicing software, then an SEO tool, then email service provider, and started a conference. You’d be an idiot to do something like that and wander all over the place. You have just been focused, but you’ve been able to do it in a much more succinct timeline. When did PodcastMotor start?
Craig: PodcastMotor started 4½ years ago. The very beginning of 2015.
Rob: You were working at a day job and you’re good at sales, presumably, that’s what you’re doing at 40-50 hours a week. The PodcastMotor process involved that super power, I’m guessing. There was a lot of demos in sales because it’s several hundred dollars a month for you to produce episodes for folks. I’m imagining, everybody wanted to get on a phone call. Did you find that that asset of being a salesperson and being comfortable with demos helped you a lot getting PodcastMotor off the ground?
Craig: Absolutely. At first, I was doing the sales calls, doing the editing, doing the writing, publishing to the hosting platforms and stuff, and then we built a team around it. For a very long time, actually up until just about a month ago, I’ve been doing all the sales calls. Just because I’m really good at it, we close a lot of customers, and like you said, we’re really fortunate to be able to work with a lot of the podcast that people that listen to the show probably have heard of.
It’s really cool. It’s been a really nice experience to be able to have relationships with folks like that, too, that we’re on a first name basis and able to email up a whole lot of these power players especially in our space.
Rob: PodcastMotor grew to the point where you were able to quit your day job and then fund other stuff you’re doing. Was there a point in the first, let’s say, 12-18 months where you were like, “Oh, […]. This isn’t going to work,” or, “Man, this is really hard right now,” or was it one of those Cinderella stories that I often say don’t exist?
My famous quote is, “Even in the Cinderella stories, blah, blah, blah, and there are no Cinderella stories.” I’ve been saying that. I don’t recall PodcastMotor being that hard for you to get off the ground. I guess, to summarize, what was the hardest part or the lowest point as you were building that?
Craig: It was both. It was really successful really quickly, which in a service business is really hard, because in a SaaS business, if you make it and a bunch of people sign up, there’s no more work for you other than maybe support. PodcastMotor is a relatively complex one to scale the team up, create all these processes, documentation, workflows and stuff to be able to handle to go from 5 customers to 30 is really hard. It was not hard in the fact that the business floundered, but that the business was successful, which is its own problems. That was the challenge. For a long time, I loathe the business because it was just a constant game of catch-up.
Now, I have a lot more respect for it because productized service model is absolutely fantastic for folks who are out there and they’re consulting or they have a day job and they want to quit their day job and go out on their own. There’s no faster, more clear way to do it than a productized service. There are some downsides, like scalability is a lot harder, but for folks who just want to quit their day job, there’s nothing better because it’s pretty simple.
Rob: I’ve never run a productized consulting… actually that’s not true. CMSthemer was that and that was a constant pain in my ass. I had a bunch of other stuff for products and CMSthemer was bringing in more revenue than a lot of them, but it was this constant back-and-forth with clients and I didn’t have enough volume to hire the staff to do it, so I was doing it a lot of it myself. Were you working the day job, then you’d come home and then you just work four, five, or six hours at night to keep up before you had the bandwidth to hire someone to replace yourself?
Craig: Absolutely, and that’s the hardest part in any business. Whether it’s a productized service or it’s a SaaS business, that time when you’re making a few thousand bucks to even $10,000 MRR is just really hard because you don’t have the time or the money to really do anything. That’s why stuff like TinySeed is really cool because your sweet spot with TinySeed is to take these folks that are that $5000 or even $10,000 and say, “Okay, stop messing around with your day job, go all in on this, and really dedicate yourself to marketing, or hire someone from marketing, or hire a developer, so you can go do marketing or something.”
That is the point that probably a lot of folks get burnt out on is, “I have all of these demands on my time and my mental energy and my stress is through the roof,” because yeah, you’re working a day job and you have family or whatever, then you come home, work on this, and there’s a fire to put out every day. If there’s no light at the end of the tunnel in some way, then it’s just really depressing sometimes, which is weird because then, you have this growing business that is making you depressed. It’s a strange thing, but that’s how it was.
Rob: Yeah, there’s so much to be said for the power of focus. The ability to just focus on one thing and not have a day job and side projects in addition to whatever it is you’re doing, and to your point about folks who have $5000 MRR or sub-$10,000 MRR and are depressed, shutting business down. I’ve seen that over and over and I’ve seen folks trying to do it nights and weekends for years, unable to get it past that point where they are able to quit the day job. It’s a real shame.
There are businesses that could have succeeded or could succeed faster if they just had a little more time and a little more of their best energy, the good glucose. Not the, “I just worked in an eight- or nine-hour day from my day job. Now, I commute home and I have three or four hours.” Even if I’m a developer and I can write the code, you’re just so tired, you’re not as productive, and you don’t get in the flow. There’s a lot to be said there.
Can you give us an idea of how large PodcastMotor is? I know you don’t talk about your top line revenue. Have you ever talked about number of clients or any idea, maybe even employee headcount? Something to give us an idea of the scope of the business?
Craig: We do about $30,000 a month and most of it is recurring.
Rob: That’s cool. How long after you started PodcastMotor were you able to basically quit the day job?
Craig: About two years.
Rob: Did it take that long to get to the point where it could provide a full-time income for you or were you working a job and also banking extra money in preparation for that event?
Craig: It was a little bit of both, it was more that we had wished we had a day in mind. We had a day in mind for a really long time, almost a year. My wife and I agreed, with some stuff with the kids and them finishing preschool, we wanted to quit around the summer so we could travel to Europe for three months. We just had a day in mind and the day included some personal stuff. It included PodcastMotor getting to a certain size so it could provide for us. I was in sales, so you’re making pretty good money which was allowing us to save up for this transition time, too.
Rob: I know it grew pretty well from the start. I almost would have thought the productized consulting given how quickly it can scale up, would’ve allow you to quit your day job before two years. It sounds like it would have if you really were desperate.
Back in 2008, I was just clawing and scratching to get out of the day job. The moment that I was able to, I quit If you had done it at the moment, that you had enough income to do it, it sounds like it would have been a lot sooner.
Craig: Totally. I mean, I’m always been reinvesting more back into the business than maybe I have to, and it’s venture for both Castos and PodcastMotor where the businesses don’t throw off as much profit as they could certainly, but I’m just always oriented towards growth. We were hiring team members, getting people in place, and doing all these things to where I didn’t get as much money. When I had a day job, I didn’t “need it,” but if I had to quit my day job or if I’d gotten fired, we could have lived off PodcastMotor pretty early on.
Rob: The next thing I want to touch on is your acquisition of a WordPress plugin called Seriously Simple Podcasting. This is a plugin that folks who run WordPress or want to run a podcast, they install the plugin and then when they do a new post, it allows them to upload an MP3 file and have that go into an RSS feed in iTunes, settings and all that stuff.
To the listeners, we on Startups for the Rest of Us were on PodPress for ages and it was abandoned. It did the similar functionality and it was abandoned six years ago. We just never upgraded because you just don’t do these things. You came in and generously offered to migrate us to Seriously Simple Podcasting. We’ve been on it now for about a month or two and really enjoying the more modern interface, the maintained code base, and all the things that we were lacking with PodPress.
This very podcast that runs on that plugin, but you didn’t build that, you acquired it. I wanted to dig in a little bit on that story. Namely, when did it happen in this timeline? Right now, we’re at two years after starting PodcastMotor, you’ve quit your day job. Did the acquisition happen before or after that? How did it come about? Just talk us through that process.
Craig: I had already quit my day job, we’re already in France, and it came about just an email from actually one of our PodcastMotor customers who is also in the WordPress space, emailed me and said, “Hey, the guy who’s the original creator of this plugin is selling it because he’s going to work at Automatic, the parent company of WordPress. I think you should talk to him. This sounds like a pretty interesting fit for what you’re already doing with PodcastMotor.”
I talked to Hugh Lashbrooke, the guy that wrote the plugin. Pretty quickly he was like, “Yep, this is a good fit because you’re a reasonable person, already in the space, you’ll probably take good care of it,” and we saw it as a way to expand what we’re already doing with PodcastMotor as a service business getting into a product business and SaaS, and the idea was always to build a hosting platform to connect to the plugin. The plugin, like all plugins in the WordPress repository, is entirely free and will always be entirely free. Now, the Castos hosting platform is an optional add-on to the plugin and we use the traffic flow and the lead gen from WordPress like our main source of business.
Rob: Did you think from the start, when you are evaluating the purchase of the plugin, was it in the back of your mind like this is going to be good traffic and lead gen flow to a SaaS app someday?
Craig: No, it was dumb luck. Very fortunately, but it turns out to be one of the best decisions I’ve made in a long time.
Rob: That’s the thing. If I’ve learned anything doing all the entrepreneurship stuff, the podcasting, and being in public is doing things in public creates opportunity. I don’t care whether you’re blogging about things, whether you’re podcasting, whether you’re actually have a productized business, a productized consulting business like you do where you have a SaaS app, if you had not started a podcast then decided to do PodcastMotor, you would never have gotten that email. No one would pick you out of the blue and it happened to be, “Oh, this guy’s already in the podcast.” There was some warm relationships there, there was a recommendation by someone saying, “Hey, he’ll take good care of it because we already know he’s proven this and that.”
I often give this advice to folks who can’t ship, or who are either have been working on something for years, or thinking about it or, “I just don’t know what to do to start,” I often say, “Just start podcasting or start writing. Even if you want to ultimately do software products just get out in the world, build a small tool and ship it. Help bloggers, help podcasters, help developers, something that gets you out in the world and has your name in the footer.” You’ll be shocked at how many of these little things come along just from being out there.
Craig: One of the things we all discount too much is just the value of your relationships with human beings, talking to them on the phone, and meeting them in person and stuff. We go to conferences, like MicroConf, or like […] Conf, or whatever maybe once a year and you meet up with all of your online friends. That’s really great, but I think that, especially if you’re talking about developing business acumen and a real network, that we should all take this a lot more seriously than most of us do. I was definitely on that boat. I was like, “I have my computer and run a business.” Now, I could run a really good business without a computer and just talk to people and work it like a regular business, where it’s all the relationships and the people that operate in the business and that I know in the industry and stuff. It’s an interesting flip that that’s taken.
Rob: I’ve totally seen that in my career as well. A lot of it starts with nuts and bolts, providing a service in marketing in a funnel, split testing, and then at a certain point there’s a lower leverage activities for you now because now it’s working relationships, it’s building partnerships, it’s shaking hands, and like you said, at an event that can get you hundreds of customers right off the bat rather than grinding it out with AdWords as the case may be.
To give listeners an idea of maybe the magnitude of the plugin, I know you haven’t talked about purchase price, you don’t have to name an exact number but to give listeners just some context what realm of numbers did you pay for Seriously Simple Podcasting.
Craig: I paid mid-four figures for the plugin, and at the time it was an entirely free plugin with some add-on modules which are also free and had about between 10,000 and 20,000 active installs in WordPress.
Rob: That sounds like a good deal to me.
Craig: Yeah, it was a great deal.
Rob: Long term, knowing what it turned into, obviously was a genius maneuver that I know you architected from the start.
Craig: Oh yeah.
Rob: From day one, I knew it. But even then, it sounds like that was a good exchange. You acquire this plugin, this is your first exposure to WordPress. I know you’ve used it as a podcast host or whatever, but you first time owning and operating a plugin, how long after the acquisition did you think we should build a SaaS app to back this thing?
Craig: That was always the idea, was to buy the plugin, to build a hosting platform on top of it because the model had already been proven. There’s another player in the space that does a very similar thing. I think we do it better, but there’s someone else that already does the exact same thing, basically. Our idea was, “If there’s already a player doing this in a certain way, I think we can do it better, because there are some things about that tool that I don’t like and a lot of other people don’t like.” That was the idea from the beginning.
Rob: And the rest is history, to be honest. You build Castos, it’s a SaaS app, a big channel has been your WordPress stuff. I know you have a lot of other channels at this point growing the company. Castos is about 2½ years old, four full-time, two-part time folks. Successful SaaS app on all metrics and I know your MRR—we won’t announce it here on the show—but it’s successful by any measure.
I’m curious, there’s a couple questions I have for you. The first is, podcast hosting is a very competitive and almost I say quasi-commoditized space, there are a lot of them. It’s commoditized in the way that email service providers are. There’s differentiation. It’s not truly a commodity, but there are just so many that you could go out and throw a rock and hit three. What made you think that you could enter that space just 2½ years ago after there are already as many as there were and gain enough traction to build a real business on it?
Craig: Even now and for sure back then, the thing that sets us apart from most all other players is the plugin and our WordPress integration. It makes managing your podcast content just so easy. It is Seriously Simple Podcasting. All joking aside, you just go into WordPress, you create a post, you upload the file, and your podcast is live as opposed to, “I’m going to log into Libsyn, I’m going to go over here, upload the file, then I get this iframe code which is all janky, then take it back to my WordPress site, make sure the post is published at the same time and all this kind of stuff.” There’s none of that. You just manage all your content wherever you’re managing all of your content already, which for a lot of people is WordPress.
I still believe that if I wasn’t the owner of Castos, I would still use it because it’s the best tool for my workflow, because I use WordPress for all of my sites. I manage all of my content in WordPress, so it’s the obvious tool and I would tell anyone else that. If you have a site on WordPress and you want to start a podcast, it’s just the clear, easy, good way to go.
That’s our competitive advantage. I think we have a pretty good moat around that. It would be hard for somebody to create a plugin that does as much as we do, get the traction, the name recognition and everything. I’m sure somebody could and maybe somebody will after hearing this, and that’s cool. Competition is healthy, it validates the space a lot, but that at this point, we’re a long way down that road, so it’s a pretty defendable competitive advantage for us.
Rob: Early mover advantage with stuff like WordPress plugins, SEO. I often think of WordPress plugins just as another form of SEO. If you get a plugin with a bunch of five-star reviews in the WordPress plugin repository, then you appear at or near the top of the search results when people search for podcast plugin. It just dumps hundreds or thousands of people through your funnel. And it’s a free funnel, so it’s not like they’re eating your website, but they’re downloading the plugin and then from there, you nurture them. This is a playbook where we’re seeing folks do, whether they’re moving them towards the premium plugin add-ons to a free one or towards a SaaS app as you’ve done.
Craig: Free like a puppy Rob. WordPress and WordPress plugins are not free.
Rob: Indeed.
Craig: It’s an expensive channel to maintain, but a very high-quality one.
Rob: Yeah, no doubt. Again, coming back to non-technical founder, you don’t write code, but you’re a more technical person than most salespeople that I’ve met. It probably comes from you selling medical devices. You have that left-brain edge and I know that you’re savvy with some of the tech stuff, just not a coder yourself. I’m curious what the hardest thing has been for you as a non-technical founder building and maintaining a SaaS app?
Craig: I know that Jonathan, our early developer for Castos, listens to this podcast so he’s going to laugh when he hears this. At the beginning, it was just him and I. He’s been our developer since day one. He started about two weeks after we acquired the plugin. We have had quite the journey of how we communicate, how we plan, how we work together, and it’s just been really challenging. It’s not anything to do with him because he’s actually been really great and gracious and forgiving of me.
For most non-technical folks, learning how to communicate effectively, and maybe efficiently is the right word, with developers is the hardest part. They speak a different language, but just being really, really clear the first time about what you want to build and why, what the user experience is going to be and all of these things.
Even to a developer that is a western person, that native English is their first language—Jonathan is both of those, he’s from South Africa—even though I would consider him a really, really good senior developer, I would come and say, “Hey, I want to go build this thing,” and he would go build it. I would come back and say, “This is not what I meant,” and he would say, “Yeah, that’s what you said.” So, just some of those things. It’s not even just scoping a feature. It’s how we track, report, decide which bugs to fix, in what order, prioritize the workload and stuff. All of this project management stuff is just really challenging. At this point, we do a pretty good job of it, but for the first year at least, it was just fires every day.
Rob: Can you give me an example of one time that you remember where you feel like you really struggled and basically did an example of what you’re talking about?
Craig: I can’t think of an example, but the classic thing, actually I’ve heard Hiten Shah talk about this recently. He calls it dropping Hiten bombs. He’ll just come in and say, “Hey, we should do this thing sometime,” and then the person that “works” for you says “Wow, Hiten or Craig, thinks that’s a really important thing. I should go do that.” That’s the biggest specific challenge for me, is organizing my thoughts and my product road map into something that’s really predictable and clear, and that we can all follow in the same way, not just scattered message and Slack every day, and changing directions on a whim. That’s just an impossible way to work. Getting over that has been huge.
Rob: I can see that. It’s amazing that if you’re like me—you and I are similar in personality—you view yourself as a scrappy founder who just wants to get stuff done, worked a day job, you built something, you’re the same person you were 10 years ago, but you’re not viewed that way by the people you hire. When you have a team and whether it’s 4 or 40 people, you still feel like you can just brainstorm like you did back in the day with a co-founder or with a mastermind group, “Yeah, I’m thinking about doing this, this, and that.”
You’re right. The Hiten bomb concept, I’ve seen it over and over with founders of you throw out an idea and it just train wrecks everybody or your thought process is really anxiety-provoking. It can be really anxiety provoking. If you say something one day and then change your mind the next day and you’re like, “No, it was just a brainstorm. It was just something I was thinking.” Folks don’t know that, and they’re trying to get a job done. I wonder, is that just learning to be a manager? A boss? Or is it learning to be communicating with developers? Maybe both.
Craig: It’s definitely more of the former. Also being more mature. I hate to say that because I’m going to be 40 next year. I need to chill out a little bit about some of these stuff and say, “Okay, the house is not on fire. We have a really great product and plugin, and everything is super stable. If I can just keep my mouth shut for another two weeks until the sprint is over, then we can talk about this.” That’s where I am these days.
Rob: As we move towards wrapping up, it seems like a tangent question or whatever, but I know that especially folks who listen to RougeStartups or maybe who have their own podcast and are building their own product on the side might be wondering, do you feel RougeStartups as your podcast you’ve been hosting for many years, do you feel like that’s had an impact on your ability to launch and grow Castos.
Craig: Totally, and I think in two ways. One is that, it is what first got me into PodcastMotor which is the door that got me into running my own businesses and was the introduction that got us into Seriously Simple Podcasting. The other reason probably is the more applicable to everybody, is that it really is honed to my niche expertise. I am pretty knowledgeable about podcasting because I run a podcast and I run a productized service around podcasting where we help a lot of really good podcasters run their podcast. Now, I run a SaaS app and a WordPress plugin around podcasting.
I just have a lot of domain expertise around this. The show itself, probably like Startups for the Rest of Us, is a really good channel to get your name out and build brand equity and stuff like that directly. Our show has helped grow Castos directly some, but more so, it has allowed us to make a lot of really good product and marketing decisions. The vast majority of our thousands of customers, I don’t know and don’t come from our listener base. That tells me that the podcast probably has helped us a little bit, but more than anything, we’ve built something that people really like.
Rob: And I would guess that the podcast has helped you more with a couple things. One, knowing what to build and knowing how to support people who are editing and posting podcast because you run a company that does it, know how to help folks who are creating podcasts, because you create one. You do have an expertise that most people even building podcast hosting SaaS apps don’t have. You have the whole gambit of being a listener, creator, and running a company that edits and produces them.
That’s one thing, but the other thing is I’m guessing that RougeStartups probably helped you more with credibility, perhaps with potential affiliates or partners like in space in the MicroConf world, they’d probably know you from RougeStartups. I’m guessing even PodcastMotor clients.
Those would be the folks that would email. I’ll admit, I’ve received at least—just over the years—probably two or three emails asking about, “Do you know Craig? Do you know about PodcastMotor? Are they legit?” that kind of stuff.
Early on, the way I first heard about you was RougeStartups. You spoke at MicroConf Europe a couple of years ago, you’re speaking again in two months, and the first time I invited you was because I had listened to you talk on this podcast for months and I was like, “This guy is sharp. He knows what he’s talking about. I think he’ll do well on stage.”
You would come to MicroConf and I believe we had met, but I meet a lot of people at MicroConf. It’s like you were in my ear buds literally six months or nine months and that was a piece of it. I’m not saying you speaking at MicroConf Europe, but you and I knowing each other has changed the course of anything, but that’s probably one of 50 examples that’s come out of it.
Craig: Yeah. Podcasting even here, getting into the fourth quarter of 2019 is probably the best use of time that anybody can put into personal branding. It’s wonderful. It’s really efficient from a time perspective. You just spend 45 minutes recording a show, edit it a little bit, or send it to somebody like PodcastMotor, or find a guy on Upwork to edit it for you, and then you get 45 minutes and a bunch of people’s ears every week. It’s just really impactful as a medium for building brand awareness, and getting your name out there.
Rob: You’re not just saying that because you run an editing service.
Craig: I’m hugely biased. Yeah.
Rob: Totally. Take it from someone like me who doesn’t run an editing and hosting service. I’ve been talking about this for years. Mike and I show up every week. We shoot a show every week and I stopped blogging years ago. I really want to blog, I just don’t have/make the time to do it, but I do make the time to podcast because it is so much less of an effort.
We need to talk offline about getting Startups for the Rest of Us moved over to Castos in the next couple weeks. Let’s figure out a good time for that to happen. We’re already on Seriously Simple Podcasting and my understanding is the move to get all of our files. Right now, for listeners, we set it up in 2010, so we literally have flat files, MP3, flat files, just sitting on a shared hosting account and a CDN over that.
We could have done Libsyn in 2010, they were the only host that I know of and they were so janky, and a lot more expensive than what we have because I have somewhat a limited shared hosting account. We’ve done that for nine years and frankly, there’s just a lot of challenges with that approach, I’ll leave it at that, and we’ve been looking at getting a legit podcast host for several years for the metrics and all that stuff, but it’s probably time we do it.
Craig: We’d love to.
Rob: Sounds great. Thanks again for coming on the show. I know folks want to keep up with Castos, they can go to castos.com. If they want to follow you, if they’re into podcasts of course, check out RougeStartups on iTunes, Stitcher, and all the other places. Where else might they keep up with what you’re up to?
Craig: The best place is probably on Twitter. I’m @TheCraigHewitt on Twitter and I tweet less often than I should, but that’s probably the easiest place to reach out and say, “Hey.”
Rob: Sounds great man. Thanks again for coming on the show.
Craig: My pleasure. Thanks.
Rob: I hope you enjoyed my interview with Craig. Again, if you have any questions that you’d like to hear Craig and I talk through on the show, please email questions@startupsfortherestofus.com or call our voicemail number at (888) 801-9690. Thanks for listening. We’ll see you next time.
In this week’s episode, I speak with Craig Hewitt about how he went from his day job, to running a product-type service, to running a fast growing SaaS application called Castos; all this as a non-technical founder. This is Startups for the Rest of Us episode 459.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups. Whether you’ve built your fifth start up or you’re working on your first. I’m Rob and today with Craig Hewitt, we’re going to share our experiences to help you avoid the mistakes we’ve made on our journeys.
Thanks for joining me this week. I’m excited to talk to Craig Hewitt. You may know him from his podcast, RogueStartups, where he has chronicled his journey over the past several years. If I recall correctly, that’s where I first heard about Craig. What I like about Craig is he has been doing this for years, 4½ years ago, he started a productized consulting service.
Two years later, he quit his day job. He acquired a WordPress plugin, he started Castos, which SaaS app for podcasts hosting. He’s built it up to the point where he has four full time employees, two part time employees and he’s part of our inaugural TinySeed batch.
You’re going to enjoy the conversation with Craig. We dive into a lot of stuff that he hasn’t talked about on his podcast and per the interviews I’ve been doing recently, I try to dig into some points in particular and not just cover a broad story, but really look at the important points along his journey, things he learned, advice that you can take away to help you build and grow your startup as well.
I want to do a little experiment this week, it’s something I haven’t done before. I talked to Craig offline and said, “You know? I bet folks will listen to this episode and they might have questions for you.” Whether it’s a question about how you did it, about your journey, about podcasting, about startups in general, just anything that you would like to hear Craig and I riff on and talk about, or frankly if it’s just for Craig, that’s okay too. I want to invite him back in probably two, maybe three weeks, and any questions that have been submitted, he and I can run through on the show. It’s a Q&A episode, but it’s a Q&A episode with a guest host and you have context about his experience.
As you listen to this episode, please try to think of a question or two for Craig and then email it to questions@startupsfortherestofus.com and you can send that as a text question or attach it, Dropbox link to an MP3, or you can just call our voicemail number if you’re on your phone right now. It’s (888) 801-9690 and I’d love to have Craig back on the show, assuming we get questions, and we can run through those.
It could be an interesting and fun experiment to have these guests to come on the show, not just tell their story but also offer practical advice and tips. This is something I’ve been talking about for quite some time about how I’ve enjoyed a Q&A episodes because it allows all of us to be smarter.
The fact that I’m here on the microphone, talking in answering questions is good and I’ve been able to share knowledge along with Mike Taber for the past nine plus years. The community and everyone out there, collectively, we are all smarter if more of us can weigh in on these topics. I love to pull guests back on the show and do questions, so please do send any in, questions@startupsfortherestofus.com, if you have any questions for Craig. Maybe put “Question for Craig” in the subject line, that’ll help me catalog them. Let’s dive into the interview with Craig, I hope you enjoy it as much as I did.
Craig: thanks so much for joining me on the podcast today.
Craig: My pleasure. Thanks from me on, Rob.
Rob: I bet a lot of folks know who you are from your RogueStartups podcast. You’ve been known for several years—congrats on that, by the way—so many podcasts don’t even make it 20 or 30 episodes and you guys are at 170 something?
Craig: Yeah we’ll be at 200 around the end of the year.
Rob: Good for you. On these milestone episodes, everyone always tries to do something cool and interesting and I always find it hard to come up with new things. Have you been given thought to what you might do on that episode?
Craig: We have thought about it. We did a really cool episode at 100. It was a mash up of a bunch of little interviews that Dave did at MicroConf two years ago. We might do something similar to that, just talking about a little bit of everything, founder stories, lessons learned, stuff like that. I think those are really neat.
Rob: That’s cool. I was asking you because our 500th episode is coming up and I wanted to steal your idea and do it before you even do it. Of course I wouldn’t do that.
Craig: You’re welcome.
Rob: Yeah, exactly. The reason I wanted to have you on the show today well, there are many reasons, but one is you’re a non-technical founder who has built a successful SaaS app. Successful to the point that you have four full-time employees, two part-time, TinySeed, we backed you, you’re part of our inaugural TinySeed batch. Stuff’s really been going up into the right for you for a couple years now with Castos.
I wanted to walk through that story because starting a SaaS app is hard enough. Starting a SaaS app as a non developer, there are unique challenges with it. I want to take people back to where you started.
Now, you live in Annecy, France with your family, but you’re from the States. You were living in New Orleans, if I recall, and you were working a day job as a sales guy. Is that right?
Craig: Yes. I’m the dreaded sales guy at heart, which is actually a really nice thing. If you’re not a developer, you have to be a salesperson or a marketer. That’s what I bring to the table I guess, but yeah, I was in enterprise-level medical sales, so selling stuff the hospitals and doctors.
I started the podcast, started RougeStartups just really as a fan of entrepreneurship, software, SaaS, and stuff like that, online business. Ironically, that’s what led to my first business that was any kind of success. It’s called PodcastMotor, we do podcast editing and production, we’re a productized service. That’s what led me to quit my day job. We traveled the world for a little bit and ended up living in France. Then all the opportunities with Castos came along as a result of that. Podcasting has been the door through which all of this stuff has opened up to me.
Rob: Podcasting has been a great thread for you. Obviously, you’ve listened to podcasts for years, then you started your own, then you started a productized service that does podcast editing, and you have a quite a client list. As you said, PodcastMotor allowed you to quit your day job. Then, you have acquired a WordPress plugin that will get to podcasting and then turn that into a SaaS. It’s not often you actually see a thread like that where there are 4-5 different levels in the same space.
I do think that’s been one of your super powers is you haven’t wandered all over the place. You had invoicing software, then an SEO tool, then email service provider, and started a conference. You’d be an idiot to do something like that and wander all over the place. You have just been focused, but you’ve been able to do it in a much more succinct timeline. When did PodcastMotor start?
Craig: PodcastMotor started 4½ years ago. The very beginning of 2015.
Rob: You were working at a day job and you’re good at sales, presumably, that’s what you’re doing at 40-50 hours a week. The PodcastMotor process involved that super power, I’m guessing. There was a lot of demos in sales because it’s several hundred dollars a month for you to produce episodes for folks. I’m imagining, everybody wanted to get on a phone call. Did you find that that asset of being a salesperson and being comfortable with demos helped you a lot getting PodcastMotor off the ground?
Craig: Absolutely. At first, I was doing the sales calls, doing the editing, doing the writing, publishing to the hosting platforms and stuff, and then we built a team around it. For a very long time, actually up until just about a month ago, I’ve been doing all the sales calls. Just because I’m really good at it, we close a lot of customers, and like you said, we’re really fortunate to be able to work with a lot of the podcast that people that listen to the show probably have heard of.
It’s really cool. It’s been a really nice experience to be able to have relationships with folks like that, too, that we’re on a first name basis and able to email up a whole lot of these power players especially in our space.
Rob: PodcastMotor grew to the point where you were able to quit your day job and then fund other stuff you’re doing. Was there a point in the first, let’s say, 12-18 months where you were like, “Oh, […]. This isn’t going to work,” or, “Man, this is really hard right now,” or was it one of those Cinderella stories that I often say don’t exist?
My famous quote is, “Even in the Cinderella stories, blah, blah, blah, and there are no Cinderella stories.” I’ve been saying that. I don’t recall PodcastMotor being that hard for you to get off the ground. I guess, to summarize, what was the hardest part or the lowest point as you were building that?
Craig: It was both. It was really successful really quickly, which in a service business is really hard, because in a SaaS business, if you make it and a bunch of people sign up, there’s no more work for you other than maybe support. PodcastMotor is a relatively complex one to scale the team up, create all these processes, documentation, workflows and stuff to be able to handle to go from 5 customers to 30 is really hard. It was not hard in the fact that the business floundered, but that the business was successful, which is its own problems. That was the challenge. For a long time, I loathe the business because it was just a constant game of catch-up.
Now, I have a lot more respect for it because productized service model is absolutely fantastic for folks who are out there and they’re consulting or they have a day job and they want to quit their day job and go out on their own. There’s no faster, more clear way to do it than a productized service. There are some downsides, like scalability is a lot harder, but for folks who just want to quit their day job, there’s nothing better because it’s pretty simple.
Rob: I’ve never run a productized consulting… actually that’s not true. CMSthemer was that and that was a constant pain in my ass. I had a bunch of other stuff for products and CMSthemer was bringing in more revenue than a lot of them, but it was this constant back-and-forth with clients and I didn’t have enough volume to hire the staff to do it, so I was doing it a lot of it myself. Were you working the day job, then you’d come home and then you just work four, five, or six hours at night to keep up before you had the bandwidth to hire someone to replace yourself?
Craig: Absolutely, and that’s the hardest part in any business. Whether it’s a productized service or it’s a SaaS business, that time when you’re making a few thousand bucks to even $10,000 MRR is just really hard because you don’t have the time or the money to really do anything. That’s why stuff like TinySeed is really cool because your sweet spot with TinySeed is to take these folks that are that $5000 or even $10,000 and say, “Okay, stop messing around with your day job, go all in on this, and really dedicate yourself to marketing, or hire someone from marketing, or hire a developer, so you can go do marketing or something.”
That is the point that probably a lot of folks get burnt out on is, “I have all of these demands on my time and my mental energy and my stress is through the roof,” because yeah, you’re working a day job and you have family or whatever, then you come home, work on this, and there’s a fire to put out every day. If there’s no light at the end of the tunnel in some way, then it’s just really depressing sometimes, which is weird because then, you have this growing business that is making you depressed. It’s a strange thing, but that’s how it was.
Rob: Yeah, there’s so much to be said for the power of focus. The ability to just focus on one thing and not have a day job and side projects in addition to whatever it is you’re doing, and to your point about folks who have $5000 MRR or sub-$10,000 MRR and are depressed, shutting business down. I’ve seen that over and over and I’ve seen folks trying to do it nights and weekends for years, unable to get it past that point where they are able to quit the day job. It’s a real shame.
There are businesses that could have succeeded or could succeed faster if they just had a little more time and a little more of their best energy, the good glucose. Not the, “I just worked in an eight- or nine-hour day from my day job. Now, I commute home and I have three or four hours.” Even if I’m a developer and I can write the code, you’re just so tired, you’re not as productive, and you don’t get in the flow. There’s a lot to be said there.
Can you give us an idea of how large PodcastMotor is? I know you don’t talk about your top line revenue. Have you ever talked about number of clients or any idea, maybe even employee headcount? Something to give us an idea of the scope of the business?
Craig: We do about $30,000 a month and most of it is recurring.
Rob: That’s cool. How long after you started PodcastMotor were you able to basically quit the day job?
Craig: About two years.
Rob: Did it take that long to get to the point where it could provide a full-time income for you or were you working a job and also banking extra money in preparation for that event?
Craig: It was a little bit of both, it was more that we had wished we had a day in mind. We had a day in mind for a really long time, almost a year. My wife and I agreed, with some stuff with the kids and them finishing preschool, we wanted to quit around the summer so we could travel to Europe for three months. We just had a day in mind and the day included some personal stuff. It included PodcastMotor getting to a certain size so it could provide for us. I was in sales, so you’re making pretty good money which was allowing us to save up for this transition time, too.
Rob: I know it grew pretty well from the start. I almost would have thought the productized consulting given how quickly it can scale up, would’ve allow you to quit your day job before two years. It sounds like it would have if you really were desperate.
Back in 2008, I was just clawing and scratching to get out of the day job. The moment that I was able to, I quit If you had done it at the moment, that you had enough income to do it, it sounds like it would have been a lot sooner.
Craig: Totally. I mean, I’m always been reinvesting more back into the business than maybe I have to, and it’s venture for both Castos and PodcastMotor where the businesses don’t throw off as much profit as they could certainly, but I’m just always oriented towards growth. We were hiring team members, getting people in place, and doing all these things to where I didn’t get as much money. When I had a day job, I didn’t “need it,” but if I had to quit my day job or if I’d gotten fired, we could have lived off PodcastMotor pretty early on.
Rob: The next thing I want to touch on is your acquisition of a WordPress plugin called Seriously Simple Podcasting. This is a plugin that folks who run WordPress or want to run a podcast, they install the plugin and then when they do a new post, it allows them to upload an MP3 file and have that go into an RSS feed in iTunes, settings and all that stuff.
To the listeners, we on Startups for the Rest of Us were on PodPress for ages and it was abandoned. It did the similar functionality and it was abandoned six years ago. We just never upgraded because you just don’t do these things. You came in and generously offered to migrate us to Seriously Simple Podcasting. We’ve been on it now for about a month or two and really enjoying the more modern interface, the maintained code base, and all the things that we were lacking with PodPress.
This very podcast that runs on that plugin, but you didn’t build that, you acquired it. I wanted to dig in a little bit on that story. Namely, when did it happen in this timeline? Right now, we’re at two years after starting PodcastMotor, you’ve quit your day job. Did the acquisition happen before or after that? How did it come about? Just talk us through that process.
Craig: I had already quit my day job, we’re already in France, and it came about just an email from actually one of our PodcastMotor customers who is also in the WordPress space, emailed me and said, “Hey, the guy who’s the original creator of this plugin is selling it because he’s going to work at Automatic, the parent company of WordPress. I think you should talk to him. This sounds like a pretty interesting fit for what you’re already doing with PodcastMotor.”
I talked to Hugh Lashbrooke, the guy that wrote the plugin. Pretty quickly he was like, “Yep, this is a good fit because you’re a reasonable person, already in the space, you’ll probably take good care of it,” and we saw it as a way to expand what we’re already doing with PodcastMotor as a service business getting into a product business and SaaS, and the idea was always to build a hosting platform to connect to the plugin. The plugin, like all plugins in the WordPress repository, is entirely free and will always be entirely free. Now, the Castos hosting platform is an optional add-on to the plugin and we use the traffic flow and the lead gen from WordPress like our main source of business.
Rob: Did you think from the start, when you are evaluating the purchase of the plugin, was it in the back of your mind like this is going to be good traffic and lead gen flow to a SaaS app someday?
Craig: No, it was dumb luck. Very fortunately, but it turns out to be one of the best decisions I’ve made in a long time.
Rob: That’s the thing. If I’ve learned anything doing all the entrepreneurship stuff, the podcasting, and being in public is doing things in public creates opportunity. I don’t care whether you’re blogging about things, whether you’re podcasting, whether you’re actually have a productized business, a productized consulting business like you do where you have a SaaS app, if you had not started a podcast then decided to do PodcastMotor, you would never have gotten that email. No one would pick you out of the blue and it happened to be, “Oh, this guy’s already in the podcast.” There was some warm relationships there, there was a recommendation by someone saying, “Hey, he’ll take good care of it because we already know he’s proven this and that.”
I often give this advice to folks who can’t ship, or who are either have been working on something for years, or thinking about it or, “I just don’t know what to do to start,” I often say, “Just start podcasting or start writing. Even if you want to ultimately do software products just get out in the world, build a small tool and ship it. Help bloggers, help podcasters, help developers, something that gets you out in the world and has your name in the footer.” You’ll be shocked at how many of these little things come along just from being out there.
Craig: One of the things we all discount too much is just the value of your relationships with human beings, talking to them on the phone, and meeting them in person and stuff. We go to conferences, like MicroConf, or like […] Conf, or whatever maybe once a year and you meet up with all of your online friends. That’s really great, but I think that, especially if you’re talking about developing business acumen and a real network, that we should all take this a lot more seriously than most of us do. I was definitely on that boat. I was like, “I have my computer and run a business.” Now, I could run a really good business without a computer and just talk to people and work it like a regular business, where it’s all the relationships and the people that operate in the business and that I know in the industry and stuff. It’s an interesting flip that that’s taken.
Rob: I’ve totally seen that in my career as well. A lot of it starts with nuts and bolts, providing a service in marketing in a funnel, split testing, and then at a certain point there’s a lower leverage activities for you now because now it’s working relationships, it’s building partnerships, it’s shaking hands, and like you said, at an event that can get you hundreds of customers right off the bat rather than grinding it out with AdWords as the case may be.
To give listeners an idea of maybe the magnitude of the plugin, I know you haven’t talked about purchase price, you don’t have to name an exact number but to give listeners just some context what realm of numbers did you pay for Seriously Simple Podcasting.
Craig: I paid mid-four figures for the plugin, and at the time it was an entirely free plugin with some add-on modules which are also free and had about between 10,000 and 20,000 active installs in WordPress.
Rob: That sounds like a good deal to me.
Craig: Yeah, it was a great deal.
Rob: Long term, knowing what it turned into, obviously was a genius maneuver that I know you architected from the start.
Craig: Oh yeah.
Rob: From day one, I knew it. But even then, it sounds like that was a good exchange. You acquire this plugin, this is your first exposure to WordPress. I know you’ve used it as a podcast host or whatever, but you first time owning and operating a plugin, how long after the acquisition did you think we should build a SaaS app to back this thing?
Craig: That was always the idea, was to buy the plugin, to build a hosting platform on top of it because the model had already been proven. There’s another player in the space that does a very similar thing. I think we do it better, but there’s someone else that already does the exact same thing, basically. Our idea was, “If there’s already a player doing this in a certain way, I think we can do it better, because there are some things about that tool that I don’t like and a lot of other people don’t like.” That was the idea from the beginning.
Rob: And the rest is history, to be honest. You build Castos, it’s a SaaS app, a big channel has been your WordPress stuff. I know you have a lot of other channels at this point growing the company. Castos is about 2½ years old, four full-time, two-part time folks. Successful SaaS app on all metrics and I know your MRR—we won’t announce it here on the show—but it’s successful by any measure.
I’m curious, there’s a couple questions I have for you. The first is, podcast hosting is a very competitive and almost I say quasi-commoditized space, there are a lot of them. It’s commoditized in the way that email service providers are. There’s differentiation. It’s not truly a commodity, but there are just so many that you could go out and throw a rock and hit three. What made you think that you could enter that space just 2½ years ago after there are already as many as there were and gain enough traction to build a real business on it?
Craig: Even now and for sure back then, the thing that sets us apart from most all other players is the plugin and our WordPress integration. It makes managing your podcast content just so easy. It is Seriously Simple Podcasting. All joking aside, you just go into WordPress, you create a post, you upload the file, and your podcast is live as opposed to, “I’m going to log into Libsyn, I’m going to go over here, upload the file, then I get this iframe code which is all janky, then take it back to my WordPress site, make sure the post is published at the same time and all this kind of stuff.” There’s none of that. You just manage all your content wherever you’re managing all of your content already, which for a lot of people is WordPress.
I still believe that if I wasn’t the owner of Castos, I would still use it because it’s the best tool for my workflow, because I use WordPress for all of my sites. I manage all of my content in WordPress, so it’s the obvious tool and I would tell anyone else that. If you have a site on WordPress and you want to start a podcast, it’s just the clear, easy, good way to go.
That’s our competitive advantage. I think we have a pretty good moat around that. It would be hard for somebody to create a plugin that does as much as we do, get the traction, the name recognition and everything. I’m sure somebody could and maybe somebody will after hearing this, and that’s cool. Competition is healthy, it validates the space a lot, but that at this point, we’re a long way down that road, so it’s a pretty defendable competitive advantage for us.
Rob: Early mover advantage with stuff like WordPress plugins, SEO. I often think of WordPress plugins just as another form of SEO. If you get a plugin with a bunch of five-star reviews in the WordPress plugin repository, then you appear at or near the top of the search results when people search for podcast plugin. It just dumps hundreds or thousands of people through your funnel. And it’s a free funnel, so it’s not like they’re eating your website, but they’re downloading the plugin and then from there, you nurture them. This is a playbook where we’re seeing folks do, whether they’re moving them towards the premium plugin add-ons to a free one or towards a SaaS app as you’ve done.
Craig: Free like a puppy Rob. WordPress and WordPress plugins are not free.
Rob: Indeed.
Craig: It’s an expensive channel to maintain, but a very high-quality one.
Rob: Yeah, no doubt. Again, coming back to non-technical founder, you don’t write code, but you’re a more technical person than most salespeople that I’ve met. It probably comes from you selling medical devices. You have that left-brain edge and I know that you’re savvy with some of the tech stuff, just not a coder yourself. I’m curious what the hardest thing has been for you as a non-technical founder building and maintaining a SaaS app?
Craig: I know that Jonathan, our early developer for Castos, listens to this podcast so he’s going to laugh when he hears this. At the beginning, it was just him and I. He’s been our developer since day one. He started about two weeks after we acquired the plugin. We have had quite the journey of how we communicate, how we plan, how we work together, and it’s just been really challenging. It’s not anything to do with him because he’s actually been really great and gracious and forgiving of me.
For most non-technical folks, learning how to communicate effectively, and maybe efficiently is the right word, with developers is the hardest part. They speak a different language, but just being really, really clear the first time about what you want to build and why, what the user experience is going to be and all of these things.
Even to a developer that is a western person, that native English is their first language—Jonathan is both of those, he’s from South Africa—even though I would consider him a really, really good senior developer, I would come and say, “Hey, I want to go build this thing,” and he would go build it. I would come back and say, “This is not what I meant,” and he would say, “Yeah, that’s what you said.” So, just some of those things. It’s not even just scoping a feature. It’s how we track, report, decide which bugs to fix, in what order, prioritize the workload and stuff. All of this project management stuff is just really challenging. At this point, we do a pretty good job of it, but for the first year at least, it was just fires every day.
Rob: Can you give me an example of one time that you remember where you feel like you really struggled and basically did an example of what you’re talking about?
Craig: I can’t think of an example, but the classic thing, actually I’ve heard Hiten Shah talk about this recently. He calls it dropping Hiten bombs. He’ll just come in and say, “Hey, we should do this thing sometime,” and then the person that “works” for you says “Wow, Hiten or Craig, thinks that’s a really important thing. I should go do that.” That’s the biggest specific challenge for me, is organizing my thoughts and my product road map into something that’s really predictable and clear, and that we can all follow in the same way, not just scattered message and Slack every day, and changing directions on a whim. That’s just an impossible way to work. Getting over that has been huge.
Rob: I can see that. It’s amazing that if you’re like me—you and I are similar in personality—you view yourself as a scrappy founder who just wants to get stuff done, worked a day job, you built something, you’re the same person you were 10 years ago, but you’re not viewed that way by the people you hire. When you have a team and whether it’s 4 or 40 people, you still feel like you can just brainstorm like you did back in the day with a co-founder or with a mastermind group, “Yeah, I’m thinking about doing this, this, and that.”
You’re right. The Hiten bomb concept, I’ve seen it over and over with founders of you throw out an idea and it just train wrecks everybody or your thought process is really anxiety-provoking. It can be really anxiety provoking. If you say something one day and then change your mind the next day and you’re like, “No, it was just a brainstorm. It was just something I was thinking.” Folks don’t know that, and they’re trying to get a job done. I wonder, is that just learning to be a manager? A boss? Or is it learning to be communicating with developers? Maybe both.
Craig: It’s definitely more of the former. Also being more mature. I hate to say that because I’m going to be 40 next year. I need to chill out a little bit about some of these stuff and say, “Okay, the house is not on fire. We have a really great product and plugin, and everything is super stable. If I can just keep my mouth shut for another two weeks until the sprint is over, then we can talk about this.” That’s where I am these days.
Rob: As we move towards wrapping up, it seems like a tangent question or whatever, but I know that especially folks who listen to RougeStartups or maybe who have their own podcast and are building their own product on the side might be wondering, do you feel RougeStartups as your podcast you’ve been hosting for many years, do you feel like that’s had an impact on your ability to launch and grow Castos.
Craig: Totally, and I think in two ways. One is that, it is what first got me into PodcastMotor which is the door that got me into running my own businesses and was the introduction that got us into Seriously Simple Podcasting. The other reason probably is the more applicable to everybody, is that it really is honed to my niche expertise. I am pretty knowledgeable about podcasting because I run a podcast and I run a productized service around podcasting where we help a lot of really good podcasters run their podcast. Now, I run a SaaS app and a WordPress plugin around podcasting.
I just have a lot of domain expertise around this. The show itself, probably like Startups for the Rest of Us, is a really good channel to get your name out and build brand equity and stuff like that directly. Our show has helped grow Castos directly some, but more so, it has allowed us to make a lot of really good product and marketing decisions. The vast majority of our thousands of customers, I don’t know and don’t come from our listener base. That tells me that the podcast probably has helped us a little bit, but more than anything, we’ve built something that people really like.
Rob: And I would guess that the podcast has helped you more with a couple things. One, knowing what to build and knowing how to support people who are editing and posting podcast because you run a company that does it, know how to help folks who are creating podcasts, because you create one. You do have an expertise that most people even building podcast hosting SaaS apps don’t have. You have the whole gambit of being a listener, creator, and running a company that edits and produces them.
That’s one thing, but the other thing is I’m guessing that RougeStartups probably helped you more with credibility, perhaps with potential affiliates or partners like in space in the MicroConf world, they’d probably know you from RougeStartups. I’m guessing even PodcastMotor clients.
Those would be the folks that would email. I’ll admit, I’ve received at least—just over the years—probably two or three emails asking about, “Do you know Craig? Do you know about PodcastMotor? Are they legit?” that kind of stuff.
Early on, the way I first heard about you was RougeStartups. You spoke at MicroConf Europe a couple of years ago, you’re speaking again in two months, and the first time I invited you was because I had listened to you talk on this podcast for months and I was like, “This guy is sharp. He knows what he’s talking about. I think he’ll do well on stage.”
You would come to MicroConf and I believe we had met, but I meet a lot of people at MicroConf. It’s like you were in my ear buds literally six months or nine months and that was a piece of it. I’m not saying you speaking at MicroConf Europe, but you and I knowing each other has changed the course of anything, but that’s probably one of 50 examples that’s come out of it.
Craig: Yeah. Podcasting even here, getting into the fourth quarter of 2019 is probably the best use of time that anybody can put into personal branding. It’s wonderful. It’s really efficient from a time perspective. You just spend 45 minutes recording a show, edit it a little bit, or send it to somebody like PodcastMotor, or find a guy on Upwork to edit it for you, and then you get 45 minutes and a bunch of people’s ears every week. It’s just really impactful as a medium for building brand awareness, and getting your name out there.
Rob: You’re not just saying that because you run an editing service.
Craig: I’m hugely biased. Yeah.
Rob: Totally. Take it from someone like me who doesn’t run an editing and hosting service. I’ve been talking about this for years. Mike and I show up every week. We shoot a show every week and I stopped blogging years ago. I really want to blog, I just don’t have/make the time to do it, but I do make the time to podcast because it is so much less of an effort.
We need to talk offline about getting Startups for the Rest of Us moved over to Castos in the next couple weeks. Let’s figure out a good time for that to happen. We’re already on Seriously Simple Podcasting and my understanding is the move to get all of our files. Right now, for listeners, we set it up in 2010, so we literally have flat files, MP3, flat files, just sitting on a shared hosting account and a CDN over that.
We could have done Libsyn in 2010, they were the only host that I know of and they were so janky, and a lot more expensive than what we have because I have somewhat a limited shared hosting account. We’ve done that for nine years and frankly, there’s just a lot of challenges with that approach, I’ll leave it at that, and we’ve been looking at getting a legit podcast host for several years for the metrics and all that stuff, but it’s probably time we do it.
Craig: We’d love to.
Rob: Sounds great. Thanks again for coming on the show. I know folks want to keep up with Castos, they can go to castos.com. If they want to follow you, if they’re into podcasts of course, check out RougeStartups on iTunes, Stitcher, and all the other places. Where else might they keep up with what you’re up to?
Craig: The best place is probably on Twitter. I’m @TheCraigHewitt on Twitter and I tweet less often than I should, but that’s probably the easiest place to reach out and say, “Hey.”
Rob: Sounds great man. Thanks again for coming on the show.
Craig: My pleasure. Thanks.
Rob: I hope you enjoyed my interview with Craig. Again, if you have any questions that you’d like to hear Craig and I talk through on the show, please email questions@startupsfortherestofus.com or call our voicemail number at (888) 801-9690. Thanks for listening. We’ll see you next time.
Episode 458 | The Return of Mike Taber
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Show Notes
In this episode of Startups For The Rest Of Us, Mike returns to the podcast to give updates on the fate of Bluetick as well as progress updates on his motivation and health.
Items mentioned in this episode:
Rob: In this Taberrific episode of Startups for the Rest of Us, Mike returns to the show. This is Startups for the Rest of Us episode 458.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups, whether you’ve built your fifth startup or you’re working on your first. I’m Rob.
Mike: And I’m Mike.
Rob: And we’re here to share our experiences to help you avoid the mistakes we’ve made on our journeys. Mike, it’s been a long time.
Mike: Hi. Yeah, it has. What? 10 episodes?
Rob: Ten episodes. I don’t think either of us realized that it would be that long. Just so listeners know, you and I had literally not spoken verbally. We’ve texted since that episode, but we have not spoken since episode 448.
Mike: That’s true.
Rob: We’re not talking that much. We tend to text and email a lot.
Mike: I hear that from people when I talk to them at MicroConf. They have the expectation or the inclination to believe that you and I talk either everyday or at least a couple of times a week. That’s totally not true. We’ll email back and forth. We will sometimes go for a couple of weeks without talking at all.
Rob: Yeah, if we don’t record the podcast. Ten episodes. What have you been doing with the enormous amount of free time you had not had? Showing up every week to record this and all that.
Mike: I’ve come to the realization that I was probably recovering from a pretty massive dose of burnout. I feel like I’m at the tail end of getting over that. How do I put this? There were times where I would just take an entire day off just because I felt like I needed it. Then, there are other times where I would just sit at my desk. I really wouldn’t feel like I was getting any work done. I would say that was the early stage when I started to take the time off.
I got to the point where I realize just sitting at my desk wasn’t actually doing anything. If I wasn’t actually being productive in any ways to perform, I’ll just get up and go do something else. What’s the point of sitting there if it’s not doing me any good? Because then, I’m just going to feel bad about it later and that’s not good for me either. It was rough to get through, but it was probably necessary, too.
Rob: It’s nice to have the luxury to be able to take that time and did not have to show up everyday for a season. It’s like over the course of years, you need to show up everyday in general, but when you’re burned out, you have to take time off. There’s really no other way to get around that. You have to get away from it. It’s hard to show up even once a week and be like, “All right. I’ve got to sit there and talk on the mic about stuff that I don’t really feel great about.” I’ve gone through months of time when I felt that way. When I listen back to the show, I can hear that in either one of us at a given time when they’re burned out.
It’s great you have that time to step away. You just got to give yourself permission to do that. That’s the thing. I often feel guilty when I do it, but you come back the next day or the next week assuming it’s not a long term depression or a chemical imbalance, which is totally very valid and real thing. But assuming it’s not that and you are just burned out because of the work or whatever it is, it’s super valuable. Each of us should give ourselves permission to do that.
Mike: Yeah. That was a good realization for me is just giving myself permission to walk away then come back later either when I felt like it or maybe the next day if I didn’t feel like it. Sometimes, there were definitely a couple of periods where I would take two or three days just because I didn’t feel like doing anything and I wasn’t being productive. You can’t beat yourself up all the time because that’s really what was happening to me. I don’t know how long it was going on, either.
When you’re sitting there trying to get work done, it’s like you’re concentrating more on beating yourself up about why you’re not getting things done, not focused, and not moving at all forward. Then, you are about taking a larger view of things saying, “How long does this been going on?” I try to forgive myself, I guess, for those periods of not being able to get stuff done. Like I said, things just has gotten a lot better over the past month or so.
Rob: We’ll dive into that. That’s the whole point of this episode. I have a couple of questions for you before we get into what you’ve been thinking about, how things have been with your health, your progress, and what’s going on. Have you been listening to the podcast?
Mike: I’ve not. I’ve gone into hermit mode.
Rob: Yes. You haven’t been on Twitter at all, right?
Mike: Aside from logging in very briefly on Twitter and Facebook just for authentication purposes for a couple of different things, I haven’t gone on either one of them. Nothing. No social media. I don’t even really watch the news or anything like that. There’s stuff going on. I’m just like, “I have no idea what’s happening in the world.” It’s just hermit mode.
Rob: Mike, do you miss it desperately and feel like there’s a huge Twitter-shaped hole in your heart?
Mike: No, not really.
Rob: Not at all?
Mike: I do miss some of the playful interactions and stuff like that. At the same time, I know they’re also distracting for me. I miss reconnecting with people just to shoot them a message here and there, and just make a comment on different things that are going on. At the same time, a lot of those doesn’t necessarily add any real value for me. I guess there’s a social contact, but I’ve tried to find personal social contacts outside of the internet.
Rob: That makes a lot of sense. I find it fascinating you have been listening to the podcast at all. The listeners who’ve been listening, they know the format. I’ve changed the format. I’ve been doing a lot of interviews, really trying to dig in and not just do the same old. We never wanted an interview show. There were enough interview shows. I’ve been trying to dig into people’s stories and the struggles. Done several Q&A episodes. I did a Q&A episode where Tracy Osborn came on and co-hosted with me. Jordan Gal came on for one.
That’s been actually the cool part for me. It was almost an excuse/motivation/force to me to figure out how I run the show on my own. It forced me to innovate. It’s the mother of invention to sit here, stare at the mic, and be like, I don’t just want to do what a lot of solo hosts do which is interviews. I don’t just want to monologue on the mic. Heaven knows I can sit and talk for 30 minutes. How do I try to up the game?
I’ve been spending a lot more time on the podcast than I used to. Over the course of the last several years, we show up and we talked about on the mic, but I’ve been trying to be really deliberate about trying to craft stories, just experimenting with new ideas, and new formats. It’s been cool. You can go back and listen to them now, I think your hermit mode is great, and it’s probably what you needed at this point. Someday, go back and listen, and let me know what you think.
The response I have asked in some of the episodes for folks to write in, or write me personally, or tweet, or somehow give their thoughts on the new format are overwhelmingly positive. I probably got 20-25 responses saying, “Yup, this is great.” “Keep being creative.” “Keep changing it up.” Some folks have mentioned that they missed the Q&A episodes probably the most. We used to do it every other episode, this Q&A.
That’s easy enough. I did one that went live today when we’re recording this. It was just me doing Q&A. I listen through it and it’s good. I think that works. I also like bringing experienced folks like Jordan Gal or Tracy to co-host with me on the Q&A. I think I’m finding my groove here in a way to keep it going.
Mike: Yeah. It’s interesting that you bring up the forced innovation. There’s a couple of things that come to mind in terms of just the podcast in general. I call it a general success and general longevity. The fact that we show up all the time, I guess until 10 episodes, we show up every week. Then, the past 10 has just been you showing up every week. The fact that it’s there and people can rely on it is not just a testament to the show, but it’s one of the reasons why it has been successful.
The other thing that you look at is you can continue to do the same thing over and over again, but eventually, maybe it gets boring. Maybe you decided that there’s other things that you want to do or there’s other ways to innovate on this show or whatever it is you’re working on. Those things don’t get done sometimes unless you force it because you’re either afraid to make changes or you decide, “I’m comfortable now. I don’t want to go through the…” I don’t want to call it pain but the uncomfortable mess of trying to change something that is already working. That applies in not just the podcast but in a lot of other places, too.
Rob: I would agree. I actually have a snippet from one email that we received from […]. He had a couple of comments, but one thing he said, it was indicative of what a lot of folks said. He said, “You asked for feedback about the new format. I’m really enjoying the in-depth nitty-gritty interviews with entrepreneurs who are in the trenches and openly talk about their successes, failures, and what they’re currently working on. It’s so valuable to hear what people think through the challenges, problems, and decisions. You’re a great interviewer because it doesn’t feel like you’re an interviewer, if that makes sense.”
I really appreciate that piece because I’m trying to deliberately do that. I’m not trying to be an investigative journalist. I’m trying to be a founder who’s just having a conversation with another founder much likely we would have whatever, at a bar, or at a conference in hallway track or something.
Back to his email, he says, “I also appreciate how you introduce the guest’s background yourself so you can go right into the good stuff with your guest.” That’s been very deliberate. The first 2-3 minutes, I hammer through their history so that we don’t have to sit there for 20 minutes talking through, “So, when did you become an entrepreneur?” Nobody really cares about that, in general. We really want to know what’s this pivotal piece of your story and let’s dig into that; that element of it.
His emails continues. He says, “I’ve learned so much from the topic-focused/listener-questions episodes as well.” That’s some more of the older format. “There’s so many concepts I’ve incorporated into my own thinking that have made me vastly more productive and effective.” It’s cool he rattles up a bunch. He said off the top of my head, relentless execution, road blocks versus speed bumps, almost all decisions are reversible, good glucose, moving a business forward, I could go on. He says, “I like the new format. I like the new voices, I like the stories, but the previous format is also great and it has taught me a lot.”
I appreciate that email. That was in general, indicative of the feedback that I saw. There was one person who wrote in and said, “I like the old format better.” That’s not super helpful without more description, but yeah, in general, it’s been a fun adventure.
Mike: That was cool.
Rob: How about the website? Have you been to the website? I’m about to announce it today, but about a week-and-a-half ago, brand new, Startups for the Rest of Us website went live.
Mike: I did see that.
Rob: It’s a new WordPress design. I’m sorry that I had to deprecate our 9½ year old WooTheme that we customized. Oh Mike, the humanity.
Mike: That was so hard to work with.
Rob: It’s not because it’s a WooTheme, it’s because it’s 9 years old. It was so crafty. Everything was breaking. We have plugins that were deprecated six years ago. Thanks again to Rich Staats at the Secret Stache who jumped in. The podcast feed would have died three months ago. We weren’t able to get new episodes in. He jumped in a day’s notice and hacked something in a plugin to get that going. That was cool. It keeps us going.
I don’t know if you know, but we’re now on Seriously Simple Podcast hosting which is Craig Hewitt’s WordPress plugin. We were in ProdPress and it hadn’t been touched in six years. Craig did us a favor, jumped in, and spent several hours migrating us over. We were just bailing the water out of the boat, in essence, to keep the podcast going. That’s cool. Now, we have a new theme. My hope is that we’re in a much better situation now.
Mike: Yup. In 2027, we can update it again.
Rob: It’s the thing I was thinking. It was like, “Oh my. We need to do this a little more often.”
Mike: It might be a good idea, but I think we both just got busy doing other things. It’s still work and it’s functional, it’s a little along the priority list.
Rob: Yup, that’s right.
Mike: That happens.
Rob: I was motivated by the fact that the momentum carried through were I was like, “Okay, here I am doing this show on my own, setting up interviews.” I kept going to the site and being just like, “I’m so bothered by this website.” The copy’s out of date. The greatest hits ends at 220, it’s like half of our podcast feed had been analyzed for greatest hit, and just the design and everything. It’s never fun to redesign a site, but it’s fun to have redesigned it. Now that it’s done, I’m glad that it’s all taken care of.
Mike: Now that it’s over and it looks nice, then it’s much better off.
Rob: Yeah. Episode 448 really struck a nerve. We received north of three dozen comments on that episode, tweets, emails to myself, emails to questions@startupsfortherestofus.com. It is the episode that received the most feedback, perhaps, of any episode in our 450 episode run.
Mike: Yeah. You can probably at least add 50%-75% to that. I’ve got a ton of things that came directly to me through email as well. I don’t know if anybody has tweeted at me. If they did, I apologize because I have not logged into Twitter since 2½ months ago. On top of that, I’ve got a ton of personal direct emails to me, as well.
Rob: That’s cool. Thank you to everyone who reached out, honestly. I’ve responded to a lot of them, but I read every single one of them. I know you did as well, the stuff that came to you, Mike. In general, it was just super encouraging. There was a voicemail last episode that I felt like it had a couple of questions. He had a piece that I felt summed it up nicely. He said, “I wanted to take Mike for his immense courage in being so open and vulnerable in sharing his Bluetick blues with the podcast community. As a fellow, still struggling in Boston area, B2B SaaS founder, I empathize with him in the challenge he’s facing and I deeply appreciate his willingness to share them in public. I wish him the best in deciding what’s next.”
I felt that was, in general, like, “Thanks for coming in the mic and doing this, both of you.” “Thanks for diving into this difficult topic in front of 20,000 listeners,” and, “This is helpful.” That’s what I keep hearing is, “This is helpful for me to hear as a founder to know that I’ve gone through this, I am going through this.” It really humanizes it and a lot resonated with a lot of people that we were able to dig into that for 40 minutes, 10 episodes ago.
Mike: Yeah. When that episode went live, I got inundated with a ton of emails upfront. Then, they just kept trickling in. They tapered off after three or four weeks. It was hard for me because I wanted to respond to every single one of them, but I just really wasn’t in a place where I could. I apologize to anyone who I didn’t respond to. I started replying to them and I got to a point where I just couldn’t. It was like I was seeing the same things over and over again to people which is continuing to beat me down, I guess. Apologies to anyone, but I do want to say, definitely, I want to thank anyone who did email me. I did appreciate it.
Rob: Mike, when we last left our hero, we were talking about […] of things. I have seven or eight bullet points here to cover and revisit. You don’t need an answer to all of them. Some of the answers maybe. I don’t know. I haven’t figured that out yet. To take 2½ months off and expect that everything is thought through, everything is fixed, I don’t think is realistic. I am curious and I’m sure the listeners are, too. Did you give this particular bullet a thought? What’s your conclusion? Where do you stand now? Where do you see it heading over the next months and years?
To start high level, a question I brought up a couple of times in that episode was, “Do you still want to be an entrepreneur?” and you said, “The answer is absolutely yes.” That’s cool. The other question towards the end, “Should you be an entrepreneur? Do you feel like this is what you should be doing? Or do you feel like you should—not want to, but should—take a step back? Do some consulting? Build up the bankroll? Take a salary job?” because healthcare is so expensive. I know salary jobs make both of us sad. They make me depressed, but they are so stable, they’re so much less stressful, and there’s less need for that intrinsic motivation. Did you have a chance to think through that stuff?
Mike: I did think about it. Coincidentally, it was maybe four or five days ago, I got an email from a recruiter who was asking me. He’s like, “Hey, I saw your job experiences and stuff on LinkedIn. There’s a position over here at Amazon that you’d be really good for.” I looked at it and I thought for eight or ten seconds, “Oh my God, No. I just can’t do that.” Not just the fact that it would be all the way up for in Summerville. It’s taken me an hour to get there, so no. Absolutely not. That’s part of why I went out on my own anyway.
The thought of going back to a full time employment, there is an attraction from just the healthcare standpoint, but at the same time the lack of flexibility. The past couple of months, we’ve been able to make things work because I’m working at home. My wife’s got her business. She’s in and out. We just tag team on all the stuff with the kids during the summer. It’ll be so much harder if I had a fulltime job. Yeah, I could probably make it work if I were working remotely, but it’s still just the hassle of working for somebody else.
I saw this Dilbert comic. My wife and I actually talked about this, me going back and working for somebody else. I remember coming across this Dilbert comic very recently that really summed it up. The boss comes in and he says to Dilbert, “Hey, good news. We just won this nationwide contracts to roll out a wireless network.” Dilbert says, “Newsflash: We don’t know how to roll out a wireless network nationwide.” The boss says, “How hard could it be to not roll out wires?” That completely sums up exactly why.
Don’t get me wrong. Not every company is like that. But there are some things that I see that companies done where you’re just like, “This is the dumbest thing ever.” Yet, it’s hard to say something in those situations. Then you come off as an adversarial employee, you’re not working with the team, it’s just like, “Come on. This is a dumb idea. I can’t believe you don’t see it.”
Rob: Did you just quote a Dilbert comic as a reason not to get a full-time job?
Mike: I think so.
Rob: I hear what you’re saying. Honestly, if you were to get a job, it should be for a startup. It should be for 10, 20, 30, person company. Probably, with funding so they have good benefits and it should be remote.
I get it. I’m not saying you should do this, but I think that not wanting to go back to the cubicle form or the hour commute, I get that. Neither of us should do that. But I don’t think you need to in this day and age.
Mike: Yeah, I totally agree. I could probably find something that’s remote. I thought a lot about it. Even if I had all the money in the world, I would still build stuff. The problem with that is that money isn’t necessarily a main driver for me. That’s the problem that I’ve run into. I have enough money in the bank and I have enough income coming in where I don’t have to work my ass off in order to have the things in life that make me happy. The problem is I’m not really making a ton of forward progress on a lot of things.
It really comes down to an existential question of, “What is it that actually drives me if it’s not money?” It used to be money because I was the only one in my household who was working and now I’m not. My wife is able to help out with the income side of things. It’s great because now I don’t have to push myself nearly as hard. But as a direct result of that, the question is, if I don’t have to work nearly as hard, why am I doing this? What’s the point?
It’s something I definitely struggled with, to be perfectly honest. I don’t have a great answer for it yet. I’m still working on that, but the reality is, that is what stopped me or prevented me for going full speed on a lot of stuff because I haven’t needed the money, so what’s the point?
Rob: That makes sense, although you’re not independently wealthy. You do have to work. If you stopped working altogether, it’s not like you can take five years off. When I was in your shoes, that was my motivation. It was to get to a point where I could take years off or the rest of my life to achieve financial freedom. It’s an overused term and it’s almost devoid of meaning at this point, but I wanted the ability to never have to work again. That was a big motivation for me. Does that not motivate you?
Mike: I feel like the runway’s long enough. It’s not like a hardcore motivator for me, if that makes sense. I’m not under the gun. I don’t have two months or whatever to make ends meet or I’m done and I have to go find a full time job because that’s not the position I’m in. I’m fine for probably several years. That’s not a big deal. The problem is that there are going to be points along the way.
Let’s say Bluetick completely went away, for example, I lose that income. Yeah, I would probably be in a little bit of trouble, but I would still have plenty of runway left to figure out what I was doing at that point. The question is how do I address that? What do I really want? What am I really looking for?
I don’t necessarily have specific answers for that. I’m still working on those. I agree that the financial freedom aspect of it is a good and worthy goal. The question is, what is it that I’m really looking for above and beyond that? If I have that, what am I going to do? What’s going to drive me and motivate me? Even if I achieved that, then what’s next? What’s going to prevent me from just saying, “Okay, now what?”
Rob: That’s so interesting. I hear you, but I would get to that point then say, now what? I have gotten to that point a number of times. For me, quitting a salary job was this huge goal of mine. I quit it and went full time contracting, remote, consulting, in, let’s say, 2002 or 2003. I remembered being like, “Oh my gosh! This is it. I’ve dreamed of this for 20 years since I was in high school. I wanted to have this remote job.” And I did. Six months later, I said, “Now what?”
You know what “now what?” for me was? It was, “Huh, I’m bored of working dollars for hours. I want a product. I want a product to support me.” Then, in 2008, I’ve got a full time income from products. I remember loving it for about a year. Then, I said, “Now what? I’m bored. I needed to do something bigger.” That was podcast, conference book, Micropreneur Academy. Then, it was HitTail. It was like, “I need to level up.” Then, after that it was Drip. After Drip, it was, “Now what?” Now, I spend more time in the podcast than I do in TinySeed.
Your and my motivations do not have to be the same thing. That’s not what I’m saying. I do think that the best entrepreneurs I know have a driving motivating factor. It is either to create—to build stuff that people use—or to achieve. There are a bunch of folks who just want to build a big company. They want to build the Amazon, or Google, or the Uber. That’s not my motivation. My motivation has always been to create interesting things that other people can use. I’m sure there are other motivations.
The thing that I’ve seen, if you ever heard of the Enneagram, it’s a personality test. It’s like the Myers-Briggs or whatever. It’ll tell you, “This is what motivates you and this is what doesn’t.” I’d be fascinated for you to take that. Whether you talk about it on the show or you just take it for yourself to get some insight into your likes, dislikes, your pros and cons, strengths and weaknesses, and your motivations.
I think that until you know that, it’s going to be a challenge for you to really be motivated to launch products because this […] is hard. That’s what we’ve experienced. It is hard to do this. Without a real drive of, “Man, I need financial freedom,” or, “I need to create stuff that a bunch of people can use,” or, “I just need to escape this inner voice in my head that probably my dad or my mom put in me.”
These are the motivations that I’ve seen drive entrepreneurs to do really interesting things. I don’t even mean great things, you don’t have to build a multimillion dollar business. That’s not what Startups for the Rest of Us is about. It can just be about shipping cool things into the world that people use and showing up everyday to do it.
Mike: Yeah. Part of my question that I’m kicking around in my head is, what is it that I want? All of the things you talked about are like, different people have different goals. Some may want to build the next Amazon and for you personally, that doesn’t resonate. It’s not what you want. But when you’re talking about your journey from going to self employment to building a product then to HitTail, Drip, and TinySeed, that whole journey is a series of challenges that you’re undertaking.
In my mind, what I’m really struggling with is what is the challenge that I actually want to tackle? What is it that I personally want to do. That’s not something that comes over night. Especially, if you have the time to figure out what it is you want to do rather to be in having some forcing function that makes you decide within a week. Within a week, that’s a time constraint. You have to deal with the constraints right there and then versus I’m in a position where I can take some time to figure out what it is I actually want, reflect on exactly why that is, and why it’s going to make me happy. If it’s not going to make me happy, I don’t want to do it.
Rob: You’re right. Until you’ve been there, it’s hard to understand how saying, “I can move and live anywhere,” actually makes it a lot harder. It’s tough to say, “I can build or do anything. I have a few years of runway,” makes the choice a lot harder because there is no forcing function for you to make a decision. There’s not a ton of things pressing on you to do it. I hear what you’re saying.
It sounds like, “Here’s what I’d like to do with this because this is really an interesting topic.” I noted, “What is the challenge that Mike wants to tackle? Why is he doing this?” I want to revisit this. I think that you should give a thought, do a retreat, do whatever it is that you’re going to do to figure that out. Take the Enneagram. I’ll just put the link. It’s not a silver bullet. Take it. Take some personality test and do some thinking and stuff. Think about what it is you want to do. This is a time to be deliberate about these things.
The mistakes that I’ve seen some founders make, it’s a founder I have in mind in particular, he sold a company and sold it for several hundred thousand dollars and didn’t have enough to retire, but he could take time off. He didn’t take time off. He made a quick decision that said, “I got to get right back on.” He launched this next thing within a few weeks. It was a mistake because it was almost like a rebound, like a rebound startup or like a rebound idea.
You’re not in a position to where you’re shutting Bluetick down and looking for another thing. You are in a place where you have the luxury of taking a month or two, set a timeline so you don’t take a year or two, but figure it out. That’d be my advice. What do you think? Do you think I’m full of BS?
Mike: Well yeah, but no. That’s a great way to phrase that question. I like that. An excellent point about the fact that when you got a blank slate, you can live anywhere, and you can do anything, what is it that you’re going to do? When you’re facing the problem, there’s all those constraints. It helps guide you in the right direction. But when you have no constraints or very, very few that makes it a lot harder. That’s the position I’m in. I have much fewer constraints on me now than I probably did five or six years ago.
Rob: The paradox of choice.
Mike: Yeah. I’m just trying to make sure that I make the right choice for myself, go in a direction that is going to make me happy, and that’s actually what I want to do. I remember a time when I was a kid. I was like, “I want to do this. I want to do this. I want to do this.”
Fast forward 30 years and you don’t have time in your life to do all of those things. The question I’m trying to answer for myself is, in 10 years, or 15, or 20 years, when I look back on my life, what is it that I want to have achieved? What would make me happy? Or what do I believe would make me happy? That’s what I’m trying to figure out right now.
Rob: And you’ve taken a couple of months off of the podcast. I know you took some time off of work to think about it and this is not something that could come overnight. Let’s revisit that in future episodes. I feel like you should come back in three or four episodes and cover all this stuff again—anything that is an open question.
Whether you have an answer then or not, I’d love to hear updates on your progress and I think the listeners would as well. It’s been an ongoing story for nine years and continuing that thread is going to be good for all of us to hear the decision you make.
If we come back in seven days and I ask you the same question, you don’t have progress because it’s like, “I can’t figure these things out in a week.” But if we give it time to breathe, I feel like we can potentially follow the story in a way that’s helpful and doesn’t put pressure on you to force you to have answers to things that you probably don’t have.
Mike: That’s a double edged sword because there are times where having a forcing function like that makes you make decisions. It is not to say that it makes the decisions for better or worse. It’s just that it forces you into making a decision.
It could go either way. I’m not saying it should. I’m just saying that it could go either way where it’s like if it’s seven days versus three or four weeks or whatever. Sometimes, having to make the decisions earlier is better. Sometimes it’s not. I don’t know if that’s a good answer either way. That’s why the classic answer from my consultant is, “Well, it depends.”
Rob: Yup. When we last left you, there were some speed bumps that we were talking about, like roadblocks. Then there were some health stuff, there were sleep stuff, there were coaching and failures, a bunch of stuff I have bullets about that I want to run through.
The first thing is there was Google drama. Google needing an inspection certification that could cost tens of thousands of dollars. Potentially, no one was getting back to you. That was two months ago. That was a weekly thing that was going on. Is Bluetick going to get shut down because of Google? What’s going to happen? Update us on that. What does it look like today?
Mike: I’m past 95%, it’s probably 80% because of the 80/20 rule. Then, I’ve got another 80% to go. Everything is done with Google except for the security review. Actually, I reached out to the companies that are doing the security reviews before and I dropped it. I didn’t get back to them because I was just not in a place where it was worth my mental energy to continue pursuing it.
I’ve gone back to them recently. One of them had a survey that I needed to fill out and give them a bunch of technical stuff. I gave that to them and scheduled a follow-up call with them. The other one I’m trying to get us a meeting schedule with them. I’m basically trying to get the price quotes hammering out and seeing how much is this going to cost me. In some way, that probably impacts what I’m going to do with Bluetick moving forward, but maybe not.
Maybe I just made a decision that’s like, this is going to be the path forward for me. Regardless of how much that cost, I’m just going to do it. Whereas before it was much more on the mindset of, “How much is this going to cost?” “What’s my growth trajectory?” “Is it even worth me going in that direction?” Part of the factor of that was how much is it going to cost to have that review done. Right now I’m just in the process of figuring out what the cost is.
It’s hard to say that I’m not less focused on the growth trajectory because I still think that that’s very important, but is it something I want to do? Probably the bigger question that I need to answer is do I want to continue working on Bluetick and moving it forward? I definitely think that some of the recent conversations I’ve had with existing customers has really added to my motivation to do that. I got away from talking to my customers nearly as much as I probably should’ve been. That has dramatically helped that motivation.
Rob: Fascinating. To summarize then, Google stuff is moving forward. You don’t have exact data yet, but you’re waiting to hear back. Bluetick shutdown is not imminent based on Google doing anything. You’re in the process of answering this question of, “Is this something I want to continue working on?” probably based on customer interactions.
Mike: Yes.
Rob: Related to that, there was a technical issue that you brought up which was this sealed .NET component you’re using, untestatable because it’s hard to get into all of this stuff. Have you done anything with that? Have you made progress? Or are you just saying, “Forget it. I’m just going to deal with it the way it is”?
Mike: Do we have a 20 minute profanity filter or a beep that we can put in here?
Rob: We do.
Mike: I went back and forth with the support people on that. I’ve made the decision that I’m going to need to rip that out and replace it. I’ve already got something I could replace it with. I’ve already started going through the process of replacing it. Their support basically came back and said, “Yeah. This isn’t a priority for us. We’re not going to make any changes with that.” “Too bad,” is really what the bottom line was. That’s a nice way of phrasing what they said, but yeah, I’m really, terribly, unhappy with the response I got from them.
Rob: But it’s no longer a roadblock because you’re going to fix it and you can move on. It was something you brought up multiple shows in a row as well. It seemed to be really hanging you up. This was one of the options we threw out, remember? I was like, “You can shut down the whole company. You can write the component yourself.” You brought up, you could switch components or I said, “You could just deal with it and not have great test or whatever.” This is one of the options. At least it’s one of them and you’re moving forward with it.
Mike: Yup, and I’ve already started that process. The problem with ripping it out completely and switching over is that it’s a process is going to take probably several days for my servers to turn on. It’s a little terrifying to have to pull the trigger and actually make that complete switch. There’s the architectural changes that needed to be made as well. I’m trying to push it off or make it so that I can do one mailbox at a time or something like that. I haven’t dedicated a huge amount of time to that beyond the initial prototype and stuff.
Rob: Don’t let it hang around. If I have one piece of advice, it’s get past this. It’s easy to put this off and be like, “Oh, I don’t really want to. It is a headache,” or, “It’s hard to pull the bandaid off.” If you’re going to do it, do it, and get past it.
Mike: The question in my mind that I’m struggling a little with is, does this add anything for the customers?
Rob: No, of course not.
Mike: You’re right. It doesn’t, but at the same time, there are places where it’s a detriment to me to be working in that code because I have to be super careful about things breaking because of that code. My time is better spent on doing marketing stuff anyway. Should I be focusing my time on that even though this thing is hanging out around up there?
What I struggle with is the fact that it’s mental overhead. I know it’s there, I know that it’s a problem, I know it needs to be dealt with, but if it weren’t there, I wouldn’t think about it at all. I have a hard time just pushing it out of my mind because I know that it’s there, but at the same time, I need to be working on other things. I don’t have a great answer for that.
Rob: It sounds to me, you know that there are four or five options. We ran through those. Shut the business down, replace it, rewrite it, whatever. It sounds to me like you made a choice to replace it. If you’ve made that choice, just do it and get past it. What is it? A week’s worth of work? Two weeks’ worth of work? You have the luxury. If you haven’t made the decision, then that’s fine. If you made the decision but then are half doing the work on a decision because you feel like you need to do other stuff, then it sounds like you really haven’t made the decision.
Mike: No. I have made the decision. It’s just a question of trying to slot it in when I’ve got other things that are also relatively high priority to get done. I’ve got a challenge around prioritization as well because I’ve got so many things that need to get done. We can come back to that. There’s other stuff of it.
Rob: Exactly. We don’t want to run two hours. I have an open questions for future episode where we revisit all these. This is one of them.
Another thing was during the last episode, listeners know you’ve had issues with low testosterone and your doctor taking you off this patch. You felt like you’re unmotivated, that you are having trouble sleeping which is related, but not the same thing. You were not doing great in that last episode, to be honest. I could tell and we talked a little bit after we closed that episode. What has happened since then?
Mike: To be blunt about it, I was a total mess when we recorded that last episode. The very next day I went back on my medication which is just a dramatic difference between them. I basically told my doctor I was never going to do that again which he wasn’t happy about. I’m like, “I’m sorry you’re going to have to deal with this.” Things have been a lot better in that regard.
I’m actually off two other medications. That was really tough. That took probably six or eight weeks to get through and get over. There’s withdrawal effects and things like that. I had to deal with them. It was just low energy, low motivation, hard time sleeping. Things have gotten dramatically better in the past three or four weeks, I’d say. But it was hard getting through that period, to get off those medications.
It has done a lot of good for me. I’m no longer suffering from a lot of those side effects. That’s part of the reason why I was on some of those medications because I wasn’t sleeping very well. It created this vicious cycle. To be more specific, I was on Adderall because I couldn’t focus during the day. Then, I was on sleep meds at night to try and get me to sleep. It’s just like they’re basically fighting against each other. The reality is I couldn’t sleep at night because of the sleep apnea. I ended up on these other meds that have addictive qualities and things that go really sideways in your body when you’re trying to come off of them.
Those things are a lot better. I’ve noticed in the past few weeks that things have gotten dramatically better in terms of my energy, my ability to focus, and my ability to be productive. Productivity is, I don’t want to say it’s a choice, but you have to focus on being productive. If you don’t focus on that, then you’re just going to sit there and not get anything done. At least I found that way for me. I don’t want to overgeneralize that.
Rob: Yeah. That sounds like a rough couple of months. I’m glad to hear that you’re feeling better.
Mike: I’m only at one medication now. Well, actually two. It’s like for testosterone and I’m on blood pressure meds. My doctor’s done all kinds of test. I actually have a doctor’s appointment this afternoon. As far as I know, I also don’t have cancer. I guess that got back down going for me.
Rob: Yay, that’s good news. Great! That sounds like a tough couple of months. Taking time off was probably the right choice to deal with that because that’s not something you necessarily wanted to be working through. I’m glad to hear it and I really hope that that continues. You don’t know what you’ll feel like in three months, or six months, or nine months. Things come and go.
You sound more awake and alive than you have been for a long time. I don’t know if it’s just because you’re fresh, because you’re like, “Oh boy!” I don’t know if you ever lifted weights all the time, but if you lift seven days a week, your body gets tired. If you take two or three days off, you come back, you can just lift crazy amounts of weight. You just feel amazing because your body has had time to recover. I feel like there’s been a bit of that. You just sound better.
Mike: For sure. I’ve been doing a lot of little things. I’ve been tracking when I sleep well, when I don’t. What was I doing the day before. I’ve been tracking what I eat a lot. I’m trying to lose weight, but that’s only going marginally well. Coming off of the Adderall was really hard because I added 10 or 15 pounds really quick. I’m back down to only about five pounds over what I was, but still, I wanted to lose weight on that point anyway. There’s that.
Then, I found that there’s certain types of music that I can listen to. If I listen to it first thing in the morning versus I sit down and I start working without listening to music, then, I’m way less productive and I’m way less energetic. I’ve also realized that I need to have a routine as much as I hate it. I can’t stand going through the same routine all the time. It’s boring to me. My brain just doesn’t deal with it well. At the same time, I need that structure.
Those are the kinds of things that I’ve found to be very helpful over the past month or two. It’s been a learning process because I’ve been on my own. I’ve been able to do whatever I want and still make it through, still be productive, but things have changed. I don’t know if it’s just because of burnout or because I’ve gotten older and things like that. Drawing lines between work and playtime, the exercise has obviously made a little bit of a difference. I’ve gotten back to that.
Then other little stuff like getting rid of small annoyances. We were talking before the podcast started. You’re like, “Wow, your keyboard’s really loud.” I was like, “Yeah, I bought a new one.” It’s a total of really little thing, but it’s got a volume control built into it with little roll bar. I can put the volume up or down on my music while I’m sitting there as opposed to banging on a button or having to go use the mouse and change the song that are on. It’s all the little stuff, but I made a conscious effort to identify those little things that were annoyances that are now smoothed out. They’re no longer impact my day and they no longer cause me to either get out of a rhythm or get angry about stuff that’s going sideways.
Rob: Yeah, that’s good to do. that’s good to recognize. To summarize all that, it’s like you took a step back. You took a step back and you look at your life, your worklife, your day to day progress, and you got over some off medications which is always hard to do. You took a step back and you said, “Hey, what can I improve in my life?” At least one listener is thinking to himself, “Mike, welcome to 2015 with the volume control on you.” But I’m definitely not thinking that.
How was your sleep? We have a couple more bullets to cover. We’re just going to have run long today. How was your sleep? That has been such a big issue, frankly, for years.
Mike: It’s a lot better. I definitely noticed that there’s days of the week where that I don’t get as much sleep as I would like, but then, there’s other ones where I would just wake up feeling completely refreshed and ready to get to work. That’s what I was just talking about where I’m trying to be more deliberate about tracking what happened the day before, how the day went before, and what specific things may have caused that. I don’t have a lot of information on that yet, but I’m definitely keeping a close eye on that, being very deliberate about looking at that, and examining it because that’s going to be important for me.
Rob: I’m making a note here to check back on this as well just because it’s something that’s important and it’s important to be honest about it. Everytime doesn’t have to be, “Oh, everything’s great. My health and my sleep are great.” You got to be able to talk about when it’s impacting you, like in episode 448, talk about when it’s negatively impacting your progress. Something you mentioned on that episode and prior was like, “I think I need to be in a mastermind.” “I need more accountability.” “I’m thinking about hiring a coach.” There was stuff bubbling around that. What’s the update on that status?
Mike: I have a new mastermind group. We’ve been meeting at least once or twice a week, more on a Monday or a Friday, just because of the scheduling and stuff like that. That’s been going really, really well. I’m really glad that I picked that up and thanks to the listener. I won’t call out the specific name of who it is, but know that the person who introduced this probably listens to the podcast, so I just want to say thanks for that.
In terms of a coach, I’ll say a pseudo business coach, more or less who’s holding me accountable on a weekly basis saying, “What did you do these past weeks? What do you plan on doing this week?” Then, we’ve had a couple of calls here and there not just for accountability. We have a call just yesterday or within the past three days about going through my marketing plan, picking it apart, and saying, “Are these things really important? Are they not? How are these things ranked and weighted against each other? And what should you be focusing on next?” Those are the things that are going to end up on the shortlist of stuff that I implement moving forward. He’s just going to hold me accountable to it and get me a sanity check.
Rob: So far so good?
Mike: So far so good. Yeah.
Rob: I have a bullet here to ask about you. Your motivation, your effectiveness. Have you developed a system because we covered that as well. You already talked about that. It sounds like for the past three or four weeks, things have been feeling a lot better?
Mike: Yeah. I would say things started to turn a corner about three or four weeks ago. The past week-and-a-half to two weeks, things have really started amped up a little bit. It’s a combination of no longer really suffering from the withdrawal symptoms of the medication and then also getting to the tail end of burnout, which maybe I’m still working through that. I’m not really sure. It’s really important for me to figure out not just what it is that motivates me, but what it is that I want to achieve.
Rob: As we start to wrap up, something that we talked a lot about that I brought up multiple times in the prior episode is about making progress on Bluetick or making progress to your day to day work, figuring out how to differentiate Bluetick, how to make it different from the other offerings such that it’s a product that you can sell, and you’re not just picking up crumbs. Do you have clarity about how to do that? That’s the first part of the question, and have you started making progress towards that end?
Mike: I wouldn’t say that I have absolute clarity on it, but I would say that I have some ideas about what the direction of it it should be. It’s more or less, I believe, doubling down on the warm email follow ups because I’ve been talking to a couple of customers here and there about what it is that they used Bluetick for, why they use it, and asking questions to help me figure out what the direction for it is, what it should be, what are they unhappy about, what are they using it to begin with, and consolidate that information.
One of the customers that I talked to, interestingly enough, he said that he started out using it for cold email. Then, when he switched over and started using it for warm email for other things, he’s like, “Oh, I’ve got this tool. I might as well use it.” Then a lightbulb went on for him. I was just like, “Oh, that’s interesting. Why?” Then, he started talking about the fact that it’s really built well for those types of scenarios. He was talking about why he was using it and how if there were some minor changes to it, it would be more helpful to him and just easier to use.
It gave me some ideas about how to go in that direction a little bit more. The problem I see is that when I ask him if he were talking about it to somebody that he knew or another entrepreneur or something like that, how would he pitch it to them? He’s like, “I really don’t know.” That’s something I struggle with is how to present it to people that in a context outside of use cases, maybe I just have to go on to that direction, and talk about it in terms of specific use cases.
Rob: How would you summarize that?
Mike: How would I summarize what? How it’s used?
Rob: No. Just the whole thing. If I were to say, do you know how it should be differentiated? I think I do. It’s the warm email context. Then, making progress towards that, not yet? Still in the thinking phase? When I say progress, have you shipped code or marketing material or different copy? Updated the website? Anything to that, and yet.
Mike: Yeah, I haven’t done any of that stuff yet. I’ve just been consolidating the information, kind of thinking about it. I’m not sure what the best ways for me to present that to other people are. I’m not sure if that’s the absolute direction I should go. Should I niche it down a little bit so that it is much more like a pipe drive plugin or should I integrate with a bunch of different products that are similar to that?
I have some open questions about that stuff and I don’t have the answers yet, but they are things I’m trying to actually figure out. Like how should this be pitched to people? Who are the exact people that I should be solving this specific problem for? When I first started on Bluetick, it was much more open-ended. It still is open-ended and it can do a lot of things, but if I were to niche down and only solve a very small sub-segment of the bigger problems that it can solve, I feel like it could probably get a lot more traction, and the question is, what exactly are those?
One example might be to reschedule meetings that have been cancelled. Those people are probably high profile prospects or high value prospects. If somebody cancel the meeting they scheduled, that’s probably a good situation where Bluetick could help you get those people back to a meeting. But is that the place where I want to niche down into? I don’t know the answer to that yet.
Rob: How are you going to answer those questions? You said you had several open questions. Do you have a plan to figure out how to answer them?
Mike: I’m going to be going through in talking to the rest of the customers that I have and seeing if that is something that they generally use it for. If so, then, I can at least generally answer that. At least try it out as a direction. I don’t know. Let’s say I decided to do that today. It may take another month or two to figure out, is this a reasonable direction? Am I going to get any attraction with it? I don’t know that.
Even if I made the decision, I’m still going to have to test it out. I’m still going to have to try it, see if I can get enough customers, and get some sort of traction. If I’m not getting that, then I have to probably go back to the drawing board and try and figure it out.
There’s going to be a decision point activity and then wait to see what the results of the tests are. If I don’t go through all three of those things, I can decide what the direction that is all I want. It doesn’t mean it’s going to be successful and there’s no way to verify it.
Rob: Makes sense. To be continued in a future episode of Startups for the Rest of Us. Stay tuned to hear the stunning conclusion of Mike’s journey with Bluetick in a few episodes. Mike, I have the next three episodes mapped out or recorded already. What we’ll do is…
Mike: I’m totally screwing up your […] system.
Rob: Yeah, you are. No, this one slides perfectly in place. I have all that dialed in, but what I’d like to do in the interest of both keeping the story going is also giving you time to get stuff together and make progress on these things is record with you again in a few weeks. I don’t know if it’ll be 461 or 462, somewhere in that range, and to hear what else is going on, hear updates on your thinking.
There’s a lot of open questions. I have six or seven bullets here that I have taken about differentiation, accountability, health and sleep, to what challenge do you want to tackle, and what it is you really want to do. I’m glad that you’ve made the progress that you have. It sounds like you’re out of the fog. It seems to me like what you have been doing for the past two months is working. Keep doing that.
I feel good just talking to you about it. It makes me feel good to hear you, the old Mike. It’s the Mike that I remember. You and I have gone in and out of these things. There’s an old Rob and a new Rob where I was super depressed for six months doing stuff. It’s not just about you. It’s cool to hear that. Do you feel that in yourself as well?
Mike: I do. It’s hard for me to look back on it. It’s one of those painful things to look back on. It’s like, “Oh man, I wish I hadn’t felt that way,” but it is what it is. I’d rather take the time and do the right things for myself, what I want, what I’m trying to do, and make the right healthy choices, I’ll say, but it doesn’t necessarily mean that going through those periods is easy either. I definitely agree that I feel alot better today than I did two months ago, or three months ago, or even six or eight months ago. The word you used earlier, coming out of a fog, that was woefully accurate. It’s the way I’d put it.
Rob: Well, thanks for coming back on and digging into these stuff. If folks want to keep up with you—no, I’m just kidding. You know I always do at the end of the interview. “If folks want to keep up with you, Mike, where would they go?”
Mike: I would say Twitter, but I don’t use Twitter.
Rob: Very good. I feel that wraps us up for today.
Listener, if you have a question for us, call our voicemail number at (888) 801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt of We’re Outta Control by MoOt, it’s used under Creative Commons. Subscribe to us on iTunes by searching for startups and visit stratupsfortherestofus.com for a sexy new website and the full transcript of each episode. Thanks for listening and we’ll see you next time.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups, whether you’ve built your fifth startup or you’re working on your first. I’m Rob.
Mike: And I’m Mike.
Rob: And we’re here to share our experiences to help you avoid the mistakes we’ve made on our journeys. Mike, it’s been a long time.
Mike: Hi. Yeah, it has. What? 10 episodes?
Rob: Ten episodes. I don’t think either of us realized that it would be that long. Just so listeners know, you and I had literally not spoken verbally. We’ve texted since that episode, but we have not spoken since episode 448.
Mike: That’s true.
Rob: We’re not talking that much. We tend to text and email a lot.
Mike: I hear that from people when I talk to them at MicroConf. They have the expectation or the inclination to believe that you and I talk either everyday or at least a couple of times a week. That’s totally not true. We’ll email back and forth. We will sometimes go for a couple of weeks without talking at all.
Rob: Yeah, if we don’t record the podcast. Ten episodes. What have you been doing with the enormous amount of free time you had not had? Showing up every week to record this and all that.
Mike: I’ve come to the realization that I was probably recovering from a pretty massive dose of burnout. I feel like I’m at the tail end of getting over that. How do I put this? There were times where I would just take an entire day off just because I felt like I needed it. Then, there are other times where I would just sit at my desk. I really wouldn’t feel like I was getting any work done. I would say that was the early stage when I started to take the time off.
I got to the point where I realize just sitting at my desk wasn’t actually doing anything. If I wasn’t actually being productive in any ways to perform, I’ll just get up and go do something else. What’s the point of sitting there if it’s not doing me any good? Because then, I’m just going to feel bad about it later and that’s not good for me either. It was rough to get through, but it was probably necessary, too.
Rob: It’s nice to have the luxury to be able to take that time and did not have to show up everyday for a season. It’s like over the course of years, you need to show up everyday in general, but when you’re burned out, you have to take time off. There’s really no other way to get around that. You have to get away from it. It’s hard to show up even once a week and be like, “All right. I’ve got to sit there and talk on the mic about stuff that I don’t really feel great about.” I’ve gone through months of time when I felt that way. When I listen back to the show, I can hear that in either one of us at a given time when they’re burned out.
It’s great you have that time to step away. You just got to give yourself permission to do that. That’s the thing. I often feel guilty when I do it, but you come back the next day or the next week assuming it’s not a long term depression or a chemical imbalance, which is totally very valid and real thing. But assuming it’s not that and you are just burned out because of the work or whatever it is, it’s super valuable. Each of us should give ourselves permission to do that.
Mike: Yeah. That was a good realization for me is just giving myself permission to walk away then come back later either when I felt like it or maybe the next day if I didn’t feel like it. Sometimes, there were definitely a couple of periods where I would take two or three days just because I didn’t feel like doing anything and I wasn’t being productive. You can’t beat yourself up all the time because that’s really what was happening to me. I don’t know how long it was going on, either.
When you’re sitting there trying to get work done, it’s like you’re concentrating more on beating yourself up about why you’re not getting things done, not focused, and not moving at all forward. Then, you are about taking a larger view of things saying, “How long does this been going on?” I try to forgive myself, I guess, for those periods of not being able to get stuff done. Like I said, things just has gotten a lot better over the past month or so.
Rob: We’ll dive into that. That’s the whole point of this episode. I have a couple of questions for you before we get into what you’ve been thinking about, how things have been with your health, your progress, and what’s going on. Have you been listening to the podcast?
Mike: I’ve not. I’ve gone into hermit mode.
Rob: Yes. You haven’t been on Twitter at all, right?
Mike: Aside from logging in very briefly on Twitter and Facebook just for authentication purposes for a couple of different things, I haven’t gone on either one of them. Nothing. No social media. I don’t even really watch the news or anything like that. There’s stuff going on. I’m just like, “I have no idea what’s happening in the world.” It’s just hermit mode.
Rob: Mike, do you miss it desperately and feel like there’s a huge Twitter-shaped hole in your heart?
Mike: No, not really.
Rob: Not at all?
Mike: I do miss some of the playful interactions and stuff like that. At the same time, I know they’re also distracting for me. I miss reconnecting with people just to shoot them a message here and there, and just make a comment on different things that are going on. At the same time, a lot of those doesn’t necessarily add any real value for me. I guess there’s a social contact, but I’ve tried to find personal social contacts outside of the internet.
Rob: That makes a lot of sense. I find it fascinating you have been listening to the podcast at all. The listeners who’ve been listening, they know the format. I’ve changed the format. I’ve been doing a lot of interviews, really trying to dig in and not just do the same old. We never wanted an interview show. There were enough interview shows. I’ve been trying to dig into people’s stories and the struggles. Done several Q&A episodes. I did a Q&A episode where Tracy Osborn came on and co-hosted with me. Jordan Gal came on for one.
That’s been actually the cool part for me. It was almost an excuse/motivation/force to me to figure out how I run the show on my own. It forced me to innovate. It’s the mother of invention to sit here, stare at the mic, and be like, I don’t just want to do what a lot of solo hosts do which is interviews. I don’t just want to monologue on the mic. Heaven knows I can sit and talk for 30 minutes. How do I try to up the game?
I’ve been spending a lot more time on the podcast than I used to. Over the course of the last several years, we show up and we talked about on the mic, but I’ve been trying to be really deliberate about trying to craft stories, just experimenting with new ideas, and new formats. It’s been cool. You can go back and listen to them now, I think your hermit mode is great, and it’s probably what you needed at this point. Someday, go back and listen, and let me know what you think.
The response I have asked in some of the episodes for folks to write in, or write me personally, or tweet, or somehow give their thoughts on the new format are overwhelmingly positive. I probably got 20-25 responses saying, “Yup, this is great.” “Keep being creative.” “Keep changing it up.” Some folks have mentioned that they missed the Q&A episodes probably the most. We used to do it every other episode, this Q&A.
That’s easy enough. I did one that went live today when we’re recording this. It was just me doing Q&A. I listen through it and it’s good. I think that works. I also like bringing experienced folks like Jordan Gal or Tracy to co-host with me on the Q&A. I think I’m finding my groove here in a way to keep it going.
Mike: Yeah. It’s interesting that you bring up the forced innovation. There’s a couple of things that come to mind in terms of just the podcast in general. I call it a general success and general longevity. The fact that we show up all the time, I guess until 10 episodes, we show up every week. Then, the past 10 has just been you showing up every week. The fact that it’s there and people can rely on it is not just a testament to the show, but it’s one of the reasons why it has been successful.
The other thing that you look at is you can continue to do the same thing over and over again, but eventually, maybe it gets boring. Maybe you decided that there’s other things that you want to do or there’s other ways to innovate on this show or whatever it is you’re working on. Those things don’t get done sometimes unless you force it because you’re either afraid to make changes or you decide, “I’m comfortable now. I don’t want to go through the…” I don’t want to call it pain but the uncomfortable mess of trying to change something that is already working. That applies in not just the podcast but in a lot of other places, too.
Rob: I would agree. I actually have a snippet from one email that we received from […]. He had a couple of comments, but one thing he said, it was indicative of what a lot of folks said. He said, “You asked for feedback about the new format. I’m really enjoying the in-depth nitty-gritty interviews with entrepreneurs who are in the trenches and openly talk about their successes, failures, and what they’re currently working on. It’s so valuable to hear what people think through the challenges, problems, and decisions. You’re a great interviewer because it doesn’t feel like you’re an interviewer, if that makes sense.”
I really appreciate that piece because I’m trying to deliberately do that. I’m not trying to be an investigative journalist. I’m trying to be a founder who’s just having a conversation with another founder much likely we would have whatever, at a bar, or at a conference in hallway track or something.
Back to his email, he says, “I also appreciate how you introduce the guest’s background yourself so you can go right into the good stuff with your guest.” That’s been very deliberate. The first 2-3 minutes, I hammer through their history so that we don’t have to sit there for 20 minutes talking through, “So, when did you become an entrepreneur?” Nobody really cares about that, in general. We really want to know what’s this pivotal piece of your story and let’s dig into that; that element of it.
His emails continues. He says, “I’ve learned so much from the topic-focused/listener-questions episodes as well.” That’s some more of the older format. “There’s so many concepts I’ve incorporated into my own thinking that have made me vastly more productive and effective.” It’s cool he rattles up a bunch. He said off the top of my head, relentless execution, road blocks versus speed bumps, almost all decisions are reversible, good glucose, moving a business forward, I could go on. He says, “I like the new format. I like the new voices, I like the stories, but the previous format is also great and it has taught me a lot.”
I appreciate that email. That was in general, indicative of the feedback that I saw. There was one person who wrote in and said, “I like the old format better.” That’s not super helpful without more description, but yeah, in general, it’s been a fun adventure.
Mike: That was cool.
Rob: How about the website? Have you been to the website? I’m about to announce it today, but about a week-and-a-half ago, brand new, Startups for the Rest of Us website went live.
Mike: I did see that.
Rob: It’s a new WordPress design. I’m sorry that I had to deprecate our 9½ year old WooTheme that we customized. Oh Mike, the humanity.
Mike: That was so hard to work with.
Rob: It’s not because it’s a WooTheme, it’s because it’s 9 years old. It was so crafty. Everything was breaking. We have plugins that were deprecated six years ago. Thanks again to Rich Staats at the Secret Stache who jumped in. The podcast feed would have died three months ago. We weren’t able to get new episodes in. He jumped in a day’s notice and hacked something in a plugin to get that going. That was cool. It keeps us going.
I don’t know if you know, but we’re now on Seriously Simple Podcast hosting which is Craig Hewitt’s WordPress plugin. We were in ProdPress and it hadn’t been touched in six years. Craig did us a favor, jumped in, and spent several hours migrating us over. We were just bailing the water out of the boat, in essence, to keep the podcast going. That’s cool. Now, we have a new theme. My hope is that we’re in a much better situation now.
Mike: Yup. In 2027, we can update it again.
Rob: It’s the thing I was thinking. It was like, “Oh my. We need to do this a little more often.”
Mike: It might be a good idea, but I think we both just got busy doing other things. It’s still work and it’s functional, it’s a little along the priority list.
Rob: Yup, that’s right.
Mike: That happens.
Rob: I was motivated by the fact that the momentum carried through were I was like, “Okay, here I am doing this show on my own, setting up interviews.” I kept going to the site and being just like, “I’m so bothered by this website.” The copy’s out of date. The greatest hits ends at 220, it’s like half of our podcast feed had been analyzed for greatest hit, and just the design and everything. It’s never fun to redesign a site, but it’s fun to have redesigned it. Now that it’s done, I’m glad that it’s all taken care of.
Mike: Now that it’s over and it looks nice, then it’s much better off.
Rob: Yeah. Episode 448 really struck a nerve. We received north of three dozen comments on that episode, tweets, emails to myself, emails to questions@startupsfortherestofus.com. It is the episode that received the most feedback, perhaps, of any episode in our 450 episode run.
Mike: Yeah. You can probably at least add 50%-75% to that. I’ve got a ton of things that came directly to me through email as well. I don’t know if anybody has tweeted at me. If they did, I apologize because I have not logged into Twitter since 2½ months ago. On top of that, I’ve got a ton of personal direct emails to me, as well.
Rob: That’s cool. Thank you to everyone who reached out, honestly. I’ve responded to a lot of them, but I read every single one of them. I know you did as well, the stuff that came to you, Mike. In general, it was just super encouraging. There was a voicemail last episode that I felt like it had a couple of questions. He had a piece that I felt summed it up nicely. He said, “I wanted to take Mike for his immense courage in being so open and vulnerable in sharing his Bluetick blues with the podcast community. As a fellow, still struggling in Boston area, B2B SaaS founder, I empathize with him in the challenge he’s facing and I deeply appreciate his willingness to share them in public. I wish him the best in deciding what’s next.”
I felt that was, in general, like, “Thanks for coming in the mic and doing this, both of you.” “Thanks for diving into this difficult topic in front of 20,000 listeners,” and, “This is helpful.” That’s what I keep hearing is, “This is helpful for me to hear as a founder to know that I’ve gone through this, I am going through this.” It really humanizes it and a lot resonated with a lot of people that we were able to dig into that for 40 minutes, 10 episodes ago.
Mike: Yeah. When that episode went live, I got inundated with a ton of emails upfront. Then, they just kept trickling in. They tapered off after three or four weeks. It was hard for me because I wanted to respond to every single one of them, but I just really wasn’t in a place where I could. I apologize to anyone who I didn’t respond to. I started replying to them and I got to a point where I just couldn’t. It was like I was seeing the same things over and over again to people which is continuing to beat me down, I guess. Apologies to anyone, but I do want to say, definitely, I want to thank anyone who did email me. I did appreciate it.
Rob: Mike, when we last left our hero, we were talking about […] of things. I have seven or eight bullet points here to cover and revisit. You don’t need an answer to all of them. Some of the answers maybe. I don’t know. I haven’t figured that out yet. To take 2½ months off and expect that everything is thought through, everything is fixed, I don’t think is realistic. I am curious and I’m sure the listeners are, too. Did you give this particular bullet a thought? What’s your conclusion? Where do you stand now? Where do you see it heading over the next months and years?
To start high level, a question I brought up a couple of times in that episode was, “Do you still want to be an entrepreneur?” and you said, “The answer is absolutely yes.” That’s cool. The other question towards the end, “Should you be an entrepreneur? Do you feel like this is what you should be doing? Or do you feel like you should—not want to, but should—take a step back? Do some consulting? Build up the bankroll? Take a salary job?” because healthcare is so expensive. I know salary jobs make both of us sad. They make me depressed, but they are so stable, they’re so much less stressful, and there’s less need for that intrinsic motivation. Did you have a chance to think through that stuff?
Mike: I did think about it. Coincidentally, it was maybe four or five days ago, I got an email from a recruiter who was asking me. He’s like, “Hey, I saw your job experiences and stuff on LinkedIn. There’s a position over here at Amazon that you’d be really good for.” I looked at it and I thought for eight or ten seconds, “Oh my God, No. I just can’t do that.” Not just the fact that it would be all the way up for in Summerville. It’s taken me an hour to get there, so no. Absolutely not. That’s part of why I went out on my own anyway.
The thought of going back to a full time employment, there is an attraction from just the healthcare standpoint, but at the same time the lack of flexibility. The past couple of months, we’ve been able to make things work because I’m working at home. My wife’s got her business. She’s in and out. We just tag team on all the stuff with the kids during the summer. It’ll be so much harder if I had a fulltime job. Yeah, I could probably make it work if I were working remotely, but it’s still just the hassle of working for somebody else.
I saw this Dilbert comic. My wife and I actually talked about this, me going back and working for somebody else. I remember coming across this Dilbert comic very recently that really summed it up. The boss comes in and he says to Dilbert, “Hey, good news. We just won this nationwide contracts to roll out a wireless network.” Dilbert says, “Newsflash: We don’t know how to roll out a wireless network nationwide.” The boss says, “How hard could it be to not roll out wires?” That completely sums up exactly why.
Don’t get me wrong. Not every company is like that. But there are some things that I see that companies done where you’re just like, “This is the dumbest thing ever.” Yet, it’s hard to say something in those situations. Then you come off as an adversarial employee, you’re not working with the team, it’s just like, “Come on. This is a dumb idea. I can’t believe you don’t see it.”
Rob: Did you just quote a Dilbert comic as a reason not to get a full-time job?
Mike: I think so.
Rob: I hear what you’re saying. Honestly, if you were to get a job, it should be for a startup. It should be for 10, 20, 30, person company. Probably, with funding so they have good benefits and it should be remote.
I get it. I’m not saying you should do this, but I think that not wanting to go back to the cubicle form or the hour commute, I get that. Neither of us should do that. But I don’t think you need to in this day and age.
Mike: Yeah, I totally agree. I could probably find something that’s remote. I thought a lot about it. Even if I had all the money in the world, I would still build stuff. The problem with that is that money isn’t necessarily a main driver for me. That’s the problem that I’ve run into. I have enough money in the bank and I have enough income coming in where I don’t have to work my ass off in order to have the things in life that make me happy. The problem is I’m not really making a ton of forward progress on a lot of things.
It really comes down to an existential question of, “What is it that actually drives me if it’s not money?” It used to be money because I was the only one in my household who was working and now I’m not. My wife is able to help out with the income side of things. It’s great because now I don’t have to push myself nearly as hard. But as a direct result of that, the question is, if I don’t have to work nearly as hard, why am I doing this? What’s the point?
It’s something I definitely struggled with, to be perfectly honest. I don’t have a great answer for it yet. I’m still working on that, but the reality is, that is what stopped me or prevented me for going full speed on a lot of stuff because I haven’t needed the money, so what’s the point?
Rob: That makes sense, although you’re not independently wealthy. You do have to work. If you stopped working altogether, it’s not like you can take five years off. When I was in your shoes, that was my motivation. It was to get to a point where I could take years off or the rest of my life to achieve financial freedom. It’s an overused term and it’s almost devoid of meaning at this point, but I wanted the ability to never have to work again. That was a big motivation for me. Does that not motivate you?
Mike: I feel like the runway’s long enough. It’s not like a hardcore motivator for me, if that makes sense. I’m not under the gun. I don’t have two months or whatever to make ends meet or I’m done and I have to go find a full time job because that’s not the position I’m in. I’m fine for probably several years. That’s not a big deal. The problem is that there are going to be points along the way.
Let’s say Bluetick completely went away, for example, I lose that income. Yeah, I would probably be in a little bit of trouble, but I would still have plenty of runway left to figure out what I was doing at that point. The question is how do I address that? What do I really want? What am I really looking for?
I don’t necessarily have specific answers for that. I’m still working on those. I agree that the financial freedom aspect of it is a good and worthy goal. The question is, what is it that I’m really looking for above and beyond that? If I have that, what am I going to do? What’s going to drive me and motivate me? Even if I achieved that, then what’s next? What’s going to prevent me from just saying, “Okay, now what?”
Rob: That’s so interesting. I hear you, but I would get to that point then say, now what? I have gotten to that point a number of times. For me, quitting a salary job was this huge goal of mine. I quit it and went full time contracting, remote, consulting, in, let’s say, 2002 or 2003. I remembered being like, “Oh my gosh! This is it. I’ve dreamed of this for 20 years since I was in high school. I wanted to have this remote job.” And I did. Six months later, I said, “Now what?”
You know what “now what?” for me was? It was, “Huh, I’m bored of working dollars for hours. I want a product. I want a product to support me.” Then, in 2008, I’ve got a full time income from products. I remember loving it for about a year. Then, I said, “Now what? I’m bored. I needed to do something bigger.” That was podcast, conference book, Micropreneur Academy. Then, it was HitTail. It was like, “I need to level up.” Then, after that it was Drip. After Drip, it was, “Now what?” Now, I spend more time in the podcast than I do in TinySeed.
Your and my motivations do not have to be the same thing. That’s not what I’m saying. I do think that the best entrepreneurs I know have a driving motivating factor. It is either to create—to build stuff that people use—or to achieve. There are a bunch of folks who just want to build a big company. They want to build the Amazon, or Google, or the Uber. That’s not my motivation. My motivation has always been to create interesting things that other people can use. I’m sure there are other motivations.
The thing that I’ve seen, if you ever heard of the Enneagram, it’s a personality test. It’s like the Myers-Briggs or whatever. It’ll tell you, “This is what motivates you and this is what doesn’t.” I’d be fascinated for you to take that. Whether you talk about it on the show or you just take it for yourself to get some insight into your likes, dislikes, your pros and cons, strengths and weaknesses, and your motivations.
I think that until you know that, it’s going to be a challenge for you to really be motivated to launch products because this […] is hard. That’s what we’ve experienced. It is hard to do this. Without a real drive of, “Man, I need financial freedom,” or, “I need to create stuff that a bunch of people can use,” or, “I just need to escape this inner voice in my head that probably my dad or my mom put in me.”
These are the motivations that I’ve seen drive entrepreneurs to do really interesting things. I don’t even mean great things, you don’t have to build a multimillion dollar business. That’s not what Startups for the Rest of Us is about. It can just be about shipping cool things into the world that people use and showing up everyday to do it.
Mike: Yeah. Part of my question that I’m kicking around in my head is, what is it that I want? All of the things you talked about are like, different people have different goals. Some may want to build the next Amazon and for you personally, that doesn’t resonate. It’s not what you want. But when you’re talking about your journey from going to self employment to building a product then to HitTail, Drip, and TinySeed, that whole journey is a series of challenges that you’re undertaking.
In my mind, what I’m really struggling with is what is the challenge that I actually want to tackle? What is it that I personally want to do. That’s not something that comes over night. Especially, if you have the time to figure out what it is you want to do rather to be in having some forcing function that makes you decide within a week. Within a week, that’s a time constraint. You have to deal with the constraints right there and then versus I’m in a position where I can take some time to figure out what it is I actually want, reflect on exactly why that is, and why it’s going to make me happy. If it’s not going to make me happy, I don’t want to do it.
Rob: You’re right. Until you’ve been there, it’s hard to understand how saying, “I can move and live anywhere,” actually makes it a lot harder. It’s tough to say, “I can build or do anything. I have a few years of runway,” makes the choice a lot harder because there is no forcing function for you to make a decision. There’s not a ton of things pressing on you to do it. I hear what you’re saying.
It sounds like, “Here’s what I’d like to do with this because this is really an interesting topic.” I noted, “What is the challenge that Mike wants to tackle? Why is he doing this?” I want to revisit this. I think that you should give a thought, do a retreat, do whatever it is that you’re going to do to figure that out. Take the Enneagram. I’ll just put the link. It’s not a silver bullet. Take it. Take some personality test and do some thinking and stuff. Think about what it is you want to do. This is a time to be deliberate about these things.
The mistakes that I’ve seen some founders make, it’s a founder I have in mind in particular, he sold a company and sold it for several hundred thousand dollars and didn’t have enough to retire, but he could take time off. He didn’t take time off. He made a quick decision that said, “I got to get right back on.” He launched this next thing within a few weeks. It was a mistake because it was almost like a rebound, like a rebound startup or like a rebound idea.
You’re not in a position to where you’re shutting Bluetick down and looking for another thing. You are in a place where you have the luxury of taking a month or two, set a timeline so you don’t take a year or two, but figure it out. That’d be my advice. What do you think? Do you think I’m full of BS?
Mike: Well yeah, but no. That’s a great way to phrase that question. I like that. An excellent point about the fact that when you got a blank slate, you can live anywhere, and you can do anything, what is it that you’re going to do? When you’re facing the problem, there’s all those constraints. It helps guide you in the right direction. But when you have no constraints or very, very few that makes it a lot harder. That’s the position I’m in. I have much fewer constraints on me now than I probably did five or six years ago.
Rob: The paradox of choice.
Mike: Yeah. I’m just trying to make sure that I make the right choice for myself, go in a direction that is going to make me happy, and that’s actually what I want to do. I remember a time when I was a kid. I was like, “I want to do this. I want to do this. I want to do this.”
Fast forward 30 years and you don’t have time in your life to do all of those things. The question I’m trying to answer for myself is, in 10 years, or 15, or 20 years, when I look back on my life, what is it that I want to have achieved? What would make me happy? Or what do I believe would make me happy? That’s what I’m trying to figure out right now.
Rob: And you’ve taken a couple of months off of the podcast. I know you took some time off of work to think about it and this is not something that could come overnight. Let’s revisit that in future episodes. I feel like you should come back in three or four episodes and cover all this stuff again—anything that is an open question.
Whether you have an answer then or not, I’d love to hear updates on your progress and I think the listeners would as well. It’s been an ongoing story for nine years and continuing that thread is going to be good for all of us to hear the decision you make.
If we come back in seven days and I ask you the same question, you don’t have progress because it’s like, “I can’t figure these things out in a week.” But if we give it time to breathe, I feel like we can potentially follow the story in a way that’s helpful and doesn’t put pressure on you to force you to have answers to things that you probably don’t have.
Mike: That’s a double edged sword because there are times where having a forcing function like that makes you make decisions. It is not to say that it makes the decisions for better or worse. It’s just that it forces you into making a decision.
It could go either way. I’m not saying it should. I’m just saying that it could go either way where it’s like if it’s seven days versus three or four weeks or whatever. Sometimes, having to make the decisions earlier is better. Sometimes it’s not. I don’t know if that’s a good answer either way. That’s why the classic answer from my consultant is, “Well, it depends.”
Rob: Yup. When we last left you, there were some speed bumps that we were talking about, like roadblocks. Then there were some health stuff, there were sleep stuff, there were coaching and failures, a bunch of stuff I have bullets about that I want to run through.
The first thing is there was Google drama. Google needing an inspection certification that could cost tens of thousands of dollars. Potentially, no one was getting back to you. That was two months ago. That was a weekly thing that was going on. Is Bluetick going to get shut down because of Google? What’s going to happen? Update us on that. What does it look like today?
Mike: I’m past 95%, it’s probably 80% because of the 80/20 rule. Then, I’ve got another 80% to go. Everything is done with Google except for the security review. Actually, I reached out to the companies that are doing the security reviews before and I dropped it. I didn’t get back to them because I was just not in a place where it was worth my mental energy to continue pursuing it.
I’ve gone back to them recently. One of them had a survey that I needed to fill out and give them a bunch of technical stuff. I gave that to them and scheduled a follow-up call with them. The other one I’m trying to get us a meeting schedule with them. I’m basically trying to get the price quotes hammering out and seeing how much is this going to cost me. In some way, that probably impacts what I’m going to do with Bluetick moving forward, but maybe not.
Maybe I just made a decision that’s like, this is going to be the path forward for me. Regardless of how much that cost, I’m just going to do it. Whereas before it was much more on the mindset of, “How much is this going to cost?” “What’s my growth trajectory?” “Is it even worth me going in that direction?” Part of the factor of that was how much is it going to cost to have that review done. Right now I’m just in the process of figuring out what the cost is.
It’s hard to say that I’m not less focused on the growth trajectory because I still think that that’s very important, but is it something I want to do? Probably the bigger question that I need to answer is do I want to continue working on Bluetick and moving it forward? I definitely think that some of the recent conversations I’ve had with existing customers has really added to my motivation to do that. I got away from talking to my customers nearly as much as I probably should’ve been. That has dramatically helped that motivation.
Rob: Fascinating. To summarize then, Google stuff is moving forward. You don’t have exact data yet, but you’re waiting to hear back. Bluetick shutdown is not imminent based on Google doing anything. You’re in the process of answering this question of, “Is this something I want to continue working on?” probably based on customer interactions.
Mike: Yes.
Rob: Related to that, there was a technical issue that you brought up which was this sealed .NET component you’re using, untestatable because it’s hard to get into all of this stuff. Have you done anything with that? Have you made progress? Or are you just saying, “Forget it. I’m just going to deal with it the way it is”?
Mike: Do we have a 20 minute profanity filter or a beep that we can put in here?
Rob: We do.
Mike: I went back and forth with the support people on that. I’ve made the decision that I’m going to need to rip that out and replace it. I’ve already got something I could replace it with. I’ve already started going through the process of replacing it. Their support basically came back and said, “Yeah. This isn’t a priority for us. We’re not going to make any changes with that.” “Too bad,” is really what the bottom line was. That’s a nice way of phrasing what they said, but yeah, I’m really, terribly, unhappy with the response I got from them.
Rob: But it’s no longer a roadblock because you’re going to fix it and you can move on. It was something you brought up multiple shows in a row as well. It seemed to be really hanging you up. This was one of the options we threw out, remember? I was like, “You can shut down the whole company. You can write the component yourself.” You brought up, you could switch components or I said, “You could just deal with it and not have great test or whatever.” This is one of the options. At least it’s one of them and you’re moving forward with it.
Mike: Yup, and I’ve already started that process. The problem with ripping it out completely and switching over is that it’s a process is going to take probably several days for my servers to turn on. It’s a little terrifying to have to pull the trigger and actually make that complete switch. There’s the architectural changes that needed to be made as well. I’m trying to push it off or make it so that I can do one mailbox at a time or something like that. I haven’t dedicated a huge amount of time to that beyond the initial prototype and stuff.
Rob: Don’t let it hang around. If I have one piece of advice, it’s get past this. It’s easy to put this off and be like, “Oh, I don’t really want to. It is a headache,” or, “It’s hard to pull the bandaid off.” If you’re going to do it, do it, and get past it.
Mike: The question in my mind that I’m struggling a little with is, does this add anything for the customers?
Rob: No, of course not.
Mike: You’re right. It doesn’t, but at the same time, there are places where it’s a detriment to me to be working in that code because I have to be super careful about things breaking because of that code. My time is better spent on doing marketing stuff anyway. Should I be focusing my time on that even though this thing is hanging out around up there?
What I struggle with is the fact that it’s mental overhead. I know it’s there, I know that it’s a problem, I know it needs to be dealt with, but if it weren’t there, I wouldn’t think about it at all. I have a hard time just pushing it out of my mind because I know that it’s there, but at the same time, I need to be working on other things. I don’t have a great answer for that.
Rob: It sounds to me, you know that there are four or five options. We ran through those. Shut the business down, replace it, rewrite it, whatever. It sounds to me like you made a choice to replace it. If you’ve made that choice, just do it and get past it. What is it? A week’s worth of work? Two weeks’ worth of work? You have the luxury. If you haven’t made the decision, then that’s fine. If you made the decision but then are half doing the work on a decision because you feel like you need to do other stuff, then it sounds like you really haven’t made the decision.
Mike: No. I have made the decision. It’s just a question of trying to slot it in when I’ve got other things that are also relatively high priority to get done. I’ve got a challenge around prioritization as well because I’ve got so many things that need to get done. We can come back to that. There’s other stuff of it.
Rob: Exactly. We don’t want to run two hours. I have an open questions for future episode where we revisit all these. This is one of them.
Another thing was during the last episode, listeners know you’ve had issues with low testosterone and your doctor taking you off this patch. You felt like you’re unmotivated, that you are having trouble sleeping which is related, but not the same thing. You were not doing great in that last episode, to be honest. I could tell and we talked a little bit after we closed that episode. What has happened since then?
Mike: To be blunt about it, I was a total mess when we recorded that last episode. The very next day I went back on my medication which is just a dramatic difference between them. I basically told my doctor I was never going to do that again which he wasn’t happy about. I’m like, “I’m sorry you’re going to have to deal with this.” Things have been a lot better in that regard.
I’m actually off two other medications. That was really tough. That took probably six or eight weeks to get through and get over. There’s withdrawal effects and things like that. I had to deal with them. It was just low energy, low motivation, hard time sleeping. Things have gotten dramatically better in the past three or four weeks, I’d say. But it was hard getting through that period, to get off those medications.
It has done a lot of good for me. I’m no longer suffering from a lot of those side effects. That’s part of the reason why I was on some of those medications because I wasn’t sleeping very well. It created this vicious cycle. To be more specific, I was on Adderall because I couldn’t focus during the day. Then, I was on sleep meds at night to try and get me to sleep. It’s just like they’re basically fighting against each other. The reality is I couldn’t sleep at night because of the sleep apnea. I ended up on these other meds that have addictive qualities and things that go really sideways in your body when you’re trying to come off of them.
Those things are a lot better. I’ve noticed in the past few weeks that things have gotten dramatically better in terms of my energy, my ability to focus, and my ability to be productive. Productivity is, I don’t want to say it’s a choice, but you have to focus on being productive. If you don’t focus on that, then you’re just going to sit there and not get anything done. At least I found that way for me. I don’t want to overgeneralize that.
Rob: Yeah. That sounds like a rough couple of months. I’m glad to hear that you’re feeling better.
Mike: I’m only at one medication now. Well, actually two. It’s like for testosterone and I’m on blood pressure meds. My doctor’s done all kinds of test. I actually have a doctor’s appointment this afternoon. As far as I know, I also don’t have cancer. I guess that got back down going for me.
Rob: Yay, that’s good news. Great! That sounds like a tough couple of months. Taking time off was probably the right choice to deal with that because that’s not something you necessarily wanted to be working through. I’m glad to hear it and I really hope that that continues. You don’t know what you’ll feel like in three months, or six months, or nine months. Things come and go.
You sound more awake and alive than you have been for a long time. I don’t know if it’s just because you’re fresh, because you’re like, “Oh boy!” I don’t know if you ever lifted weights all the time, but if you lift seven days a week, your body gets tired. If you take two or three days off, you come back, you can just lift crazy amounts of weight. You just feel amazing because your body has had time to recover. I feel like there’s been a bit of that. You just sound better.
Mike: For sure. I’ve been doing a lot of little things. I’ve been tracking when I sleep well, when I don’t. What was I doing the day before. I’ve been tracking what I eat a lot. I’m trying to lose weight, but that’s only going marginally well. Coming off of the Adderall was really hard because I added 10 or 15 pounds really quick. I’m back down to only about five pounds over what I was, but still, I wanted to lose weight on that point anyway. There’s that.
Then, I found that there’s certain types of music that I can listen to. If I listen to it first thing in the morning versus I sit down and I start working without listening to music, then, I’m way less productive and I’m way less energetic. I’ve also realized that I need to have a routine as much as I hate it. I can’t stand going through the same routine all the time. It’s boring to me. My brain just doesn’t deal with it well. At the same time, I need that structure.
Those are the kinds of things that I’ve found to be very helpful over the past month or two. It’s been a learning process because I’ve been on my own. I’ve been able to do whatever I want and still make it through, still be productive, but things have changed. I don’t know if it’s just because of burnout or because I’ve gotten older and things like that. Drawing lines between work and playtime, the exercise has obviously made a little bit of a difference. I’ve gotten back to that.
Then other little stuff like getting rid of small annoyances. We were talking before the podcast started. You’re like, “Wow, your keyboard’s really loud.” I was like, “Yeah, I bought a new one.” It’s a total of really little thing, but it’s got a volume control built into it with little roll bar. I can put the volume up or down on my music while I’m sitting there as opposed to banging on a button or having to go use the mouse and change the song that are on. It’s all the little stuff, but I made a conscious effort to identify those little things that were annoyances that are now smoothed out. They’re no longer impact my day and they no longer cause me to either get out of a rhythm or get angry about stuff that’s going sideways.
Rob: Yeah, that’s good to do. that’s good to recognize. To summarize all that, it’s like you took a step back. You took a step back and you look at your life, your worklife, your day to day progress, and you got over some off medications which is always hard to do. You took a step back and you said, “Hey, what can I improve in my life?” At least one listener is thinking to himself, “Mike, welcome to 2015 with the volume control on you.” But I’m definitely not thinking that.
How was your sleep? We have a couple more bullets to cover. We’re just going to have run long today. How was your sleep? That has been such a big issue, frankly, for years.
Mike: It’s a lot better. I definitely noticed that there’s days of the week where that I don’t get as much sleep as I would like, but then, there’s other ones where I would just wake up feeling completely refreshed and ready to get to work. That’s what I was just talking about where I’m trying to be more deliberate about tracking what happened the day before, how the day went before, and what specific things may have caused that. I don’t have a lot of information on that yet, but I’m definitely keeping a close eye on that, being very deliberate about looking at that, and examining it because that’s going to be important for me.
Rob: I’m making a note here to check back on this as well just because it’s something that’s important and it’s important to be honest about it. Everytime doesn’t have to be, “Oh, everything’s great. My health and my sleep are great.” You got to be able to talk about when it’s impacting you, like in episode 448, talk about when it’s negatively impacting your progress. Something you mentioned on that episode and prior was like, “I think I need to be in a mastermind.” “I need more accountability.” “I’m thinking about hiring a coach.” There was stuff bubbling around that. What’s the update on that status?
Mike: I have a new mastermind group. We’ve been meeting at least once or twice a week, more on a Monday or a Friday, just because of the scheduling and stuff like that. That’s been going really, really well. I’m really glad that I picked that up and thanks to the listener. I won’t call out the specific name of who it is, but know that the person who introduced this probably listens to the podcast, so I just want to say thanks for that.
In terms of a coach, I’ll say a pseudo business coach, more or less who’s holding me accountable on a weekly basis saying, “What did you do these past weeks? What do you plan on doing this week?” Then, we’ve had a couple of calls here and there not just for accountability. We have a call just yesterday or within the past three days about going through my marketing plan, picking it apart, and saying, “Are these things really important? Are they not? How are these things ranked and weighted against each other? And what should you be focusing on next?” Those are the things that are going to end up on the shortlist of stuff that I implement moving forward. He’s just going to hold me accountable to it and get me a sanity check.
Rob: So far so good?
Mike: So far so good. Yeah.
Rob: I have a bullet here to ask about you. Your motivation, your effectiveness. Have you developed a system because we covered that as well. You already talked about that. It sounds like for the past three or four weeks, things have been feeling a lot better?
Mike: Yeah. I would say things started to turn a corner about three or four weeks ago. The past week-and-a-half to two weeks, things have really started amped up a little bit. It’s a combination of no longer really suffering from the withdrawal symptoms of the medication and then also getting to the tail end of burnout, which maybe I’m still working through that. I’m not really sure. It’s really important for me to figure out not just what it is that motivates me, but what it is that I want to achieve.
Rob: As we start to wrap up, something that we talked a lot about that I brought up multiple times in the prior episode is about making progress on Bluetick or making progress to your day to day work, figuring out how to differentiate Bluetick, how to make it different from the other offerings such that it’s a product that you can sell, and you’re not just picking up crumbs. Do you have clarity about how to do that? That’s the first part of the question, and have you started making progress towards that end?
Mike: I wouldn’t say that I have absolute clarity on it, but I would say that I have some ideas about what the direction of it it should be. It’s more or less, I believe, doubling down on the warm email follow ups because I’ve been talking to a couple of customers here and there about what it is that they used Bluetick for, why they use it, and asking questions to help me figure out what the direction for it is, what it should be, what are they unhappy about, what are they using it to begin with, and consolidate that information.
One of the customers that I talked to, interestingly enough, he said that he started out using it for cold email. Then, when he switched over and started using it for warm email for other things, he’s like, “Oh, I’ve got this tool. I might as well use it.” Then a lightbulb went on for him. I was just like, “Oh, that’s interesting. Why?” Then, he started talking about the fact that it’s really built well for those types of scenarios. He was talking about why he was using it and how if there were some minor changes to it, it would be more helpful to him and just easier to use.
It gave me some ideas about how to go in that direction a little bit more. The problem I see is that when I ask him if he were talking about it to somebody that he knew or another entrepreneur or something like that, how would he pitch it to them? He’s like, “I really don’t know.” That’s something I struggle with is how to present it to people that in a context outside of use cases, maybe I just have to go on to that direction, and talk about it in terms of specific use cases.
Rob: How would you summarize that?
Mike: How would I summarize what? How it’s used?
Rob: No. Just the whole thing. If I were to say, do you know how it should be differentiated? I think I do. It’s the warm email context. Then, making progress towards that, not yet? Still in the thinking phase? When I say progress, have you shipped code or marketing material or different copy? Updated the website? Anything to that, and yet.
Mike: Yeah, I haven’t done any of that stuff yet. I’ve just been consolidating the information, kind of thinking about it. I’m not sure what the best ways for me to present that to other people are. I’m not sure if that’s the absolute direction I should go. Should I niche it down a little bit so that it is much more like a pipe drive plugin or should I integrate with a bunch of different products that are similar to that?
I have some open questions about that stuff and I don’t have the answers yet, but they are things I’m trying to actually figure out. Like how should this be pitched to people? Who are the exact people that I should be solving this specific problem for? When I first started on Bluetick, it was much more open-ended. It still is open-ended and it can do a lot of things, but if I were to niche down and only solve a very small sub-segment of the bigger problems that it can solve, I feel like it could probably get a lot more traction, and the question is, what exactly are those?
One example might be to reschedule meetings that have been cancelled. Those people are probably high profile prospects or high value prospects. If somebody cancel the meeting they scheduled, that’s probably a good situation where Bluetick could help you get those people back to a meeting. But is that the place where I want to niche down into? I don’t know the answer to that yet.
Rob: How are you going to answer those questions? You said you had several open questions. Do you have a plan to figure out how to answer them?
Mike: I’m going to be going through in talking to the rest of the customers that I have and seeing if that is something that they generally use it for. If so, then, I can at least generally answer that. At least try it out as a direction. I don’t know. Let’s say I decided to do that today. It may take another month or two to figure out, is this a reasonable direction? Am I going to get any attraction with it? I don’t know that.
Even if I made the decision, I’m still going to have to test it out. I’m still going to have to try it, see if I can get enough customers, and get some sort of traction. If I’m not getting that, then I have to probably go back to the drawing board and try and figure it out.
There’s going to be a decision point activity and then wait to see what the results of the tests are. If I don’t go through all three of those things, I can decide what the direction that is all I want. It doesn’t mean it’s going to be successful and there’s no way to verify it.
Rob: Makes sense. To be continued in a future episode of Startups for the Rest of Us. Stay tuned to hear the stunning conclusion of Mike’s journey with Bluetick in a few episodes. Mike, I have the next three episodes mapped out or recorded already. What we’ll do is…
Mike: I’m totally screwing up your […] system.
Rob: Yeah, you are. No, this one slides perfectly in place. I have all that dialed in, but what I’d like to do in the interest of both keeping the story going is also giving you time to get stuff together and make progress on these things is record with you again in a few weeks. I don’t know if it’ll be 461 or 462, somewhere in that range, and to hear what else is going on, hear updates on your thinking.
There’s a lot of open questions. I have six or seven bullets here that I have taken about differentiation, accountability, health and sleep, to what challenge do you want to tackle, and what it is you really want to do. I’m glad that you’ve made the progress that you have. It sounds like you’re out of the fog. It seems to me like what you have been doing for the past two months is working. Keep doing that.
I feel good just talking to you about it. It makes me feel good to hear you, the old Mike. It’s the Mike that I remember. You and I have gone in and out of these things. There’s an old Rob and a new Rob where I was super depressed for six months doing stuff. It’s not just about you. It’s cool to hear that. Do you feel that in yourself as well?
Mike: I do. It’s hard for me to look back on it. It’s one of those painful things to look back on. It’s like, “Oh man, I wish I hadn’t felt that way,” but it is what it is. I’d rather take the time and do the right things for myself, what I want, what I’m trying to do, and make the right healthy choices, I’ll say, but it doesn’t necessarily mean that going through those periods is easy either. I definitely agree that I feel alot better today than I did two months ago, or three months ago, or even six or eight months ago. The word you used earlier, coming out of a fog, that was woefully accurate. It’s the way I’d put it.
Rob: Well, thanks for coming back on and digging into these stuff. If folks want to keep up with you—no, I’m just kidding. You know I always do at the end of the interview. “If folks want to keep up with you, Mike, where would they go?”
Mike: I would say Twitter, but I don’t use Twitter.
Rob: Very good. I feel that wraps us up for today.
Listener, if you have a question for us, call our voicemail number at (888) 801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt of We’re Outta Control by MoOt, it’s used under Creative Commons. Subscribe to us on iTunes by searching for startups and visit stratupsfortherestofus.com for a sexy new website and the full transcript of each episode. Thanks for listening and we’ll see you next time.
Episode 457 | Starting a Marketplace, Marketing Channels, Resellers, and More Listener Questions
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In this episode of Startups For The Rest Of Us, Rob answers a number of listener questions on topics including starting a marketplace, marketing channels, resellers and more.
Items mentioned in this episode:
Rob: Welcome to this week’s episode of Startups for the Rest of Us. I’m your host, Rob Walling. This week I’ll be covering a few listener questions about starting a marketplace, which marketing channels to pursue with the new app, evaluating re-sellers, and why the path from the agency work to SaaS is so hard. This is Startups for the Rest of Us episode 457.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups, whether you’ve built your fifth startup or you’re working on your first. I’m Rob and today I’m going to share my experiences to help you avoid the mistakes I’ve made in the past.
I’ve tweaked the intro a little bit today based on suggestion from my 13-year old. He said, “Built your first product or just thinking about it” is too narrow. He says, “Aren’t there people who’ve started their first, second, third, fourth that are still listening?” and I said, “Yeah.” So, tweaked it there. Each week on the show I talk about topics relating to building and growing startups, in order to better your life and improve the world in a small way.
In our world of startups, we strive to have a positive impact on other people, be it your customers, your team, your family, yourself. We are ambitious founders, but we’re not willing to sacrifice our life or our health to grow our company. We have many different show formats. Sometimes, we come on and we teach a tactic, talk about philosophies and thoughts of starting startups and growing them. Other times we do interviews, then several of those over the past weeks. We have listener questions which is what we’ll be doing today, founder hot seats, and other things like that.
My co-host Mike Taber is on a brief hiatus. I do think he’ll be back in the next few weeks, and we can catch up with him, find out what he’s been doing with the enormous amount of free time he’s had not doing this podcast. Listener questions have been piling up, including a couple of voicemails. Today, I’m going to run through a few of those and give you my thoughts and insights on them.
First one is a comment from Adrian Rose Brock, fan of the show a long time, many times a MicroConf attendee, and his comment is about our Gmail clients, and even paste and match style which I was complaining that Mailplane didn’t support.
He says, “In the last Startups for the Rest of Us, you were discussing Gmail clients two tips. Number one use Kiwi for your desktop client for Gmail. Amazing client, works really well, has good integration with other G products. Number two, if you need to paste and match style, you do Command+Shift+V on a Mac. It will work in the majority of applications and saves a right click.”
Good tips. Thank you, sir. I have not checked out Kiwi yet, but it is definitely on my list. I’ve actually ceased the exploration for a desktop Gmail client for now. I have enough going on and somehow flipping back to doing it in Chrome it’s not bothering me anymore. There was some real performances which I was experiencing and I’m not seeing those any longer.
Our next question involves starting a two-sided marketplace and TJ’s asking whether he should charge from day one.
TJ: Hey, guys. This is TJ Astro calling. I’m focusing on a startup for artisan makers to get them more exposure. You guys have been a tremendous help to me, and I’m just trying to figure out if I can launch with a charging right away or what I should be doing. My gut instinct is to onboard them for few months. It’s a double-sided marketplace, so the synergy of all of them together as a collective community is where the value will be coming from eventually.
My instinct is onboard them, show them I’m active in the pro-members chat only in those forums, and that I’m committed to helping get more exposure and sales by offering strategies, advice, and such, then maintaining transparency with my site analytics as it modestly grows. I’m hoping that I’ll be able to get it quite grassrootsy and the way that I’m providing them these services and such, and they’ll be able to share the site because I don’t really have a marketing budget. Let me know what your thoughts are. Thank you so much.
Rob: TJ also wrote in and he said, “Hey, I just recorded a voicemail, it wasn’t very clear or well-spoken.” TJ’s launching a two-sided marketplace, no marketing budget, and it is a membership site. Primary focus is to aggregate the Instagram post of artisan brands. He has an email list of 2000 artists who he’d like to curate on the site, but they’re mostly cold contacts.
He’s going to have both free and paid monthly memberships. He says he has no market validation, everything he’s heard or read says, “Charge. Don’t give away your product or you won’t know if you have real product market fit. But since it’s a double-sided marketplace, both shoppers and artisans, I need to be able to demonstrate value to the artisans by attracting shoppers to the site.”
TJ talks about the different pricing tiers. There will be a free plan for artisans and also a paid plan. He says, “My gut instinct is I should onboard the artisans for a few months, a free trial of the paid pro member level but not collect credit cards on sign up. Show them I’m active in the pro-member only chat forums, that I’m committed to helping them get more exposure in sales by offering strategies and advice, maintain transparency with my site analytics as they modestly grow, encourage them to share my site with their list as it play to help them and other members gets more exposure. See where the analytics are in a few months, emphasize to them a growth trajectory. I’m hoping I’ll see and try collecting a card to charge them to stay on as pro members.”
Obviously a complicated question TJ. There’s a lot here. We’ve talked about two-sided marketplaces before, and my advice tends to be for bootstrap or indie-funded companies, is to not do it because they’re just so hard to get started. You even heard Tracy Osborn a couple of weeks ago, talking about WeddingLovely.
While we didn’t delve into the difficulties of two-sided marketplaces, she definitely has had some thoughts on that. It’s very hard, it’s hard enough just to get one funnel working, but you literally have to get two separate funnels working, and you have to have them at scale before things will work. You are definitely pushing a boulder uphill with this one. The way I always think about this is thinking back to how Uber did it. With Uber they needed at least a couple drivers in the field before they could release the app and have it provide any value.
If my memory serves me correctly, Travis Kalanick and his co-founder literally were driving the black cars just as a test. Obviously this doesn’t scale, it’s not what you’re doing, you’re just testing. If people have this app, will they call a car in Downtown, San Francisco? That was the hypothesis.
Once they started getting people calling them, then they had some data, enough metrics that they could go to black car drivers either cold-call them, or just approach them at the airport, or whatever and say, “Hey we have this app. Do you want to be on the receiving side of it? Right now we’re getting two calls, three calls a day, but it basically takes you right to them, and then you get paid directly, and you have to go through your dispatch basically.” That’s how they built it up.
Now it’s an incredibly long and painful way to build an app until the two-sided marketplace has a network effect. Then it’s amazing and it grows super fast. But almost knowing gets there. That’s the hard part. The challenge is getting past those early days. In the early days that you’re in, with zero marketing budget, the odds are even less in your favor. They’re very very difficult what you’re trying to do, but granted that this is what you want to do, you have to be super scrappy and it sounds like you’re thinking in those terms.
All the stuff you’ve read about […] charge, don’t give away product, if you have a SaaS app that provides value, people only pay for something that is providing them value. If I build an email service provider, or a long-tail keyword tool, or invoicing app, or whatever, when someone puts a credit card in, they pay, the next day they can get value out of it, or that same day they can get value out of it. That’s not the case with the two-sided marketplace with a no consumer, no demand side so to speak.
Getting suppliers on to your marketplace without the supply side, you’re going to have to have it be free to some extent. Whether you just have the free plan the whole time, whether you tell them, “You’re on a paid plan, this is the difference and in three or four months, by the time we have demands, I will be charging you $49 a month, is this interesting?” That’s the conversation to have.
I don’t see major problems with the plan aside from two-sided marketplaces are really hard especially when you have no money. But aside from that, I don’t see how you can possibly charge suppliers when there is no value being provided. I don’t know anyone who would pay for that without that supply side. The one thing I would say is if you haven’t already started building up the supply side, because you have the artist list, is there a way to get an email list, a blog following, an Instagram following, a podcast following, just some demand side built up so that you’re not starting at a standing stop?
You said you’re relying on defenders or the suppliers to promote it and while that’s fine, it’s not going to be enough, I’m guessing. I think that you are doing some type of marketing, you’re going to have to get creative. It sounds like a pretty creative having again, no budget and you’ve thought through pretty well. I would be looking at ways to have enough interested consumers.
Think about it this way, Groupon is also a two-sided marketplace. When Groupon went to a new city, they would cold-call the stores, the retailers, the supply side, and then they would post a landing page for the demand side. Getting the demand side is the consumers, and that landing page would then, they would advertise it, they would promote it in any way they can.
Obviously you’re saying you have no budget, so it’s hard to do this, but that’s how I would approach it. I would have a landing page up of like, “We’re coming here soon,” or “This is something were going to have soon,” and then I would have whether it’s Facebook ads, Instagram ads, or if you need to do it for free, then you’re going to have to put it in sweat.
It’s going to be a blog post or many of them, it’s going to be interviews, it’s going to be viral content, whatever it is that you can get. Guerrilla marketing style essentially with no cost. That’s one way to build up that demand side, and then you can point to the artist and say, “Hey, I do have 5000 or 10,000 people on an email list that are interested in hearing about it.
I still think your approach of going with no credit card, not charging them but giving in the expectation upfront, is fine, but then you don’t have to start from a standing stop. That’s how I would think about it, I hope that’s helpful.
My next question is another voicemail. Voicemails always go to the top of the stack. This one’s a bit long, but I will have our editor clean it up a bit and it is from Keith Gillette with tasktrain.app.
Keith: Hi Rob, my name is Keith Gillette, My founder-funded B2B SaaS startup tasktrain.app is in private beta right now. TaskTrain is lightweight process management platform that allows service managers to integrate standard operating procedures, and just-in-time training into everyday workflow, enabling teams to deliver service quickly and correctly.
Based on our expertise and our early customer development feedback, we’re targeting IT operations directors and digital marketing agency COOs as our initial customer segment. Our launch plan has been to market and sell per user subscriptions directly to customers via the web. I have two questions. One, what marketing channels would you recommend pursuing? We have a PR plan when we’re ready for a full public launch, but are not sure how aggressively to invest in building a social media presence and/or in paid advertising, neither which we have yet tried as we’ve been too focused on getting a functional product.
Rob: We’re going to cut the voicemail there and I’ll answer this question and then we’ll roll in to his second question. Congrats Keith on getting to launch. It’s sounds like, you’ve been too focused. You’ve made a traditional mistake of heads down basement coating. I know you’ve been having customer development feedback, but you haven’t done any marketing. I guess the first thing I would say is go to robwalling.com and enter your email address and you’ll get a book that I wrote called Start Marketing the Day You Start Coding. Whether you read the book or not, just having the title is really what I would say.
It’s typically before I have anyone break ground, I will validate the idea and then put up a landing page, such that even if you only have 50 people on an email list at that point, that’s your starting ground. That’s where you begin when you launch. Talk about having a PR plan in place, which is fine. I haven’t seen PR work for apps like this that are just line of business apps. They aren’t that interesting and PR likes to tell a good story. If you happen to have a good story, that’s fine. I don’t think you need a social media presence at this point.
Reserve your twitter handle or whatever. That’s not going to bring you customers yet, especially if you don’t have an audience, if that’s not your thing. Obviously, if you have a podcast, or an audience, or a blog, or something and you are on Twitter talking to people, you’re taking the Ben Orenstein, the Derrick Reimer, the Brian Castle approach, then that would be one thing. But you’re not doing that yet, so I would not spend any time really in building that out.
What I would do is, there’s an endless number of traction channels you can go after. Obviously SEO and paid advertising are two nice ways to get traffic. But whether that traffic converts is a real question. An outbound sales is the third and those are the three avenues that really scale well.
Which of these do you have experience with? If the answer is none, pick one and dive in. That’s how it is when you’re starting out. One reason why I espouse the stair-step approach to bootstrapping is that which your first product from the standing stop, trying to manage all the complexities of building and launching a SaaS app and then looking at the massive array of marketing options available, it’s hard and it’s overwhelming. Without the experience, the confidence, the budget, it’s not an easy question to answer in essence.
I’d say, of all the episodes of Startups for the Rest of Us—what is this? 457?—more than half, I would guess 2/3 maybe ¾ deal with this question of how do I market? How do I get more customers? How do I get more leads? What do I do? Literally, books have been written on this topic. Two books I would recommend, number one is Traction by Gabriel Weinberg and Justin Mares, they go through 20–22 traction channels. You can look at those as starting point for zeroing on each of those areas. It includes paid acquisition and SEO, running events, and all kinds of stuff. The other book is SaaS Marketing Essentials by Ryan Battles. That’ll be a pretty good start for you because this question of, “What marketing channels would you recommend?” really depends. For me, just looking at it I would do some content and I would do some LinkedIn ads. That’s probably where I would start. That’s not to say they’re going to work. It’s just the two things I would start with—Facebook ads and Google AdWords—just to see, are they going to work? I don’t know.
Audience building, is that a skill of yours? If it is, build an audience. If it’s not, then don’t. There’s a lot of variables in terms of how much budget do you have, how quickly do you want to need to grow, what is you skill set? Do you have experience with any of these? Any desire to try any of them? It’s a pretty broad question, but that’s where it comes down to doing your own research, making that list. Basically, your marketing gameplan.
I’ve talked about them on the podcast in the past about how with each app I would build or acquire, I would make this marketing gameplan. The HitTail marketing gameplan, the Drip marketing gameplan, it was a huge bulleted list. That was seven pages, single spaced, bulleted list with some headings of, “These are the types of things we want to do right at launch,” and, “These are the people I’m going to talk to who’ve agreed to perhaps promote it.”
Then, I want to try Facebook Ads here in the market segments. I wanted to try AdWords in these segments. Then, you’re going to a spreadsheet and you put out the ones that you think are going to work at this stage. You take a guess at how much traffic you can generate, how much cost you think, time you think it’ll take, and figure out, do you do it yourself? Do you hire it out? Do you hire someone internally to do it? There’s so much to think about it here. You have a little bit of research and thinking to do. Good luck with that, Keith.
Now, let’s dive into Keith’s second question.
Keith: Second question, one of our beta users has expressed interest in becoming a reseller of our platform as a value-added offering in his virtual CIO consulting service portfolio. I had the potential for bars in mind when designing TaskTrain. I had not expected to pursue the channel until we were bit further along. Now, we have zero paying customers at this point, no data on margins, customer acquisition cost, or lifetime value of a customer, on which to base sales commission or revenue sharing. How would you recommend we think about structuring a potential reseller contract? Thanks for any guidance on those early stage marketing and sales questions.
Rob: Every product that I have launched typically gets interest from resellers and whitelabelers. This is very common for you to get reached out to by folks who want to resell or whitelabel your software. When we launched Drip even really early, we were getting two emails a week from people. “I want to do this but for realtors.” “I want to do this but for mortgage brokers,” “or for the hair salon,” or whatever. “Can I whitelabel it?” It’s just a totally different market. Whitelabelling is one.
I realized you’re asking about reselling here. Whitelabelling is one thing that I discourage people from exploring in the early days. It dilutes your brand equity to huge distraction. It’s almost a completely separate product. It’s very rare that people make it work. It, of course, can work, but it’s not something I would encourage you to do unless that’s really what your heart is set on. Don’t let it be a distraction.
Resellers are different because it’s not a product distraction. It’s going to be more of a, I would say, almost a founder distraction in terms of having to come up with the model, sign a contract, work with them to help promote, and make sure they’re not reselling it to people who don’t want to be part of your customer base, I guess. That’s the thing. With the SaaS app, are they just an affiliate? Are they reselling it? I guess the difference with affiliates is affiliate would just sell it based on your pricing and they would keep a commission to pay them 10%, 20%, or 30% of the recruitment revenue. Whereas a reseller, maybe they have an account that they can put a bunch of people in and they’ll pay you a certain amount. Then, they just sell it for more. That’s probably the difference I would think about.
I know in the IT, since you are targeting IT operations directors, marketing agencies, COOs, maybe resellers would be helpful. I would only consider it if this reseller already has a huge network, already has leads. If this person’s just going to go out, run ads, and do cold outbound, you can do that. You don’t need them. If they have a list, if they already have an audience that they essentially want to pitch it to or market to, it’s worth considering.
Personally, I don’t have enough experience with it to do it. I would get offers like these and I would basically say, “Nope, not right now,” or “Not until we know our customer acquisition costs, our margins, our LTV,” all those things that you’re saying you don’t have. My advice would be to kick it down the line a bit. Once you get some customers, you know what your churn is and your revenue share. You want to be in your sales commissions and all these stuff. It’ll be a lot easier to get something like these done. It’s just there’s so many things flying in so many directions right now that having yet another distraction is not something I’d be super stoked about unless this really is a golden opportunity.
In my experience, people who want to resell a product that has zero customers, it doesn’t tend to be a golden opportunity. I’d be pretty surprised if they did actually have an audience that they had a lot of reach into. I would kick it down the line, three months, six months, and just say, “Hey, we need to revisit this. There’s so much going on right now with the launch.” It’s easy to say that you’re busy because you are and you have competing priorities. I would try to revisit that later.
Keith: A final postscript. I want to take Mike for his immense courage in being so open and vulnerable in sharing his Bluetick blues with the Startups for the Rest of Us community. As a fellow still struggling in Boston area, B2B SaaS founder, I empathize with him in the challenges he’s facing and deeply appreciate his willingness to share them in public. I wish him the best in deciding what’s next. Gratitude for you both for your Startups for the Rest of Us work.
Rob: Thanks for that, Keith. I appreciate it. I hope my discussion was helpful.
My next question is from Ash and it’s about agency to product journey. He says, “Hi, Rob and Mike. I’m a big fan and listen to almost all episodes over the past five years. In the past episode, Rob mentioned the path from agency to product especially Saas, is a hard path which I understand. Could you please dive a bit deeper into why? If one is on that path, how to run that transformation successfully? Thanks a lot. Keep up the great podcasts.”
Good question, Ash. So many of us have done this. I didn’t run an agency per se, I’m more of a consultant. I did have some contractors working for me, so I was a micro agency. It was a handful of us. I was doing sales, doing some of the codings, and such. The reason it’s hard is because when you’re an agency or a consultant, you can bill $150 an hour. Whatever it is you’re billing, it’s really hard to not just book more hours and to make that $250,000 a year or $300,000 a year just by coding for someone else with frankly very little risk.
You have some headache dealing with clients, of course, but there’s not a ton of risk in it versus turning down work to block out a day or two, a week, to work less, to get paid less, to build something that you don’t know if it’s ever going to work. You don’t know if you’re ever going to get it launched, if it’s going to have a product market fit, if it’s going to make enough money to ever pay it back.
There was a good MicroConf talk a few years ago. It was one of our attendee talks and it was by Ted Pitts from Moraware software. He talked about how he and his co-founder launched good jobs and then they launched the software. When he traced it forward, they were doing millions a year and pulling out quite a bit of profit before he felt like they hit the breakeven line of how much money they could have made if they just kept working their jobs, if they have just stuck at day jobs with promotions and bonuses. Just a steady pitch the whole time versus the ups and downs of some years they make more and some years barely make any in their early days, and not paying much. But they wouldn’t have any other way. They didn’t do it for the money. That’s part of it, obviously, but they did it for the freedom and satisfaction. The freedom, the purpose, and the relationships.
It’s hard to see that. It’s hard to look ahead. It’s especially hard to convince a significant other that instead of making $300,000 a year like you could as a consultant, or $250,000, or whatever it is, I want to make $125,000 and I want to launch this app. It’s going to take me six months or a year to launch. Then, maybe two or three years to get to the point where it’s even making as much money as I could be making if I just work full-time on this consulting work, and then the payback period of the money I lost is even years out from there. That’s the hard part. That’s a big part of why moving from agency work which pays well to starting a SaaS app which doesn’t pay anything for a very long time, takes a really long time to get going, and here’s a bunch of risk that’s why most people don’t make the transformation.
If you were in college or if you were like me when I first started launching products, I was working construction. I was an electrician. There really wasn’t much downside to me. I did it all nights and weekends, obviously, because I was out on a construction site. I had learned to code when I was 8 years old. I’ve been coding for years, but I didn’t know a lot in the modern web languages. I literally went to the public library. I got books on PHP, HTML, a little bit of Perl—this was obviously years ago—and I started to hack in the way of stuff on nights and weekends. That’s how I learned.
I eventually did make the shift into full time employment as a developer. That helped increased my […] really fast. Then, when I went to build stuff on the site, I was way, way, faster at it. But it still was a 9-5 and it was helpful for me that I could go in 9-5 and when I left, my time as my own.
Once I transition to consultant and I was billing hourly, I was obviously making a lot more money, but it became hard for me not to just do consulting work all the time because to consult 50-60 hours a week, I can make more money than I had ever seen or ever heard of anyone making. It was crazy to bill $125 an hour and works 60 hour weeks. This is 15 or 20 years ago. That money really went a long way. It’s tough. It’s a long term view. It’s having a confidence in yourself. It’s being able to look in five years and say, “It’s going to hurt for now, but long term, I think this is the better path.”
In addition, this is why either stair stepping your way up is better because you can get some small wins along the way. It builds confidence in yourself, builds a little bit of recurring revenue, build confidence from your spouse or your significant other if you have one. But also, acquiring. Acquiring small products or even large products is a nice way to do it. If you are running an agency and you have money—you should be making a decent chunk of money—acquiring a product gets you past that product market fit, that wall. It puts you forward, hopefully, in 18 months, maybe 24 months depending on the space that you’re in. That’s one reason why I acquired products early on. I did have more money than I had time. Once I was at that level where I could build $125 an hour and stay busy full time.
Not everyone has that. Maybe you’re scraping by to get agency work. Maybe you do have downtime during the week or during the month. That’s nice because then, you can use that to focus on the product. I always felt guilty just focusing on the SaaS product, not going out and finding more work. I thought to myself, if I ran out of work and I don’t have any in three months, am I going to look back on this and regret it? You get over that guilt if you’re going to do it.
I’m guessing a lot of folks listening are experiencing this or thinking. It’s the conundrum of nights and weekends are hard. This is one reason why people raise funding so they don’t have to do that. It really is interesting to see someone raise around $150,000– $300,000, with the sole purpose of they don’t have to make this decision. They don’t have to scatter their focus. They don’t have to worry about agency work or doing it nights and weekends. They can just focus for a year or two on getting something to the point where it’s viable, where it’s making enough money, that it’s sustainable, that’s it’s default alive, as Paul Graham would say.
I’m not saying you should raise funding or shouldn’t. Obviously, I never did. Building my stuff up, it also took me a really long time to get there because I did it this way. It was nights and weekends for me. It was building an app, acquiring an app, parlaying one, stair-stepping from one to the next, and that’s why it took me so long to get to Drip. If I had raised funding 5–10 years earlier, I would have built a larger SaaS app like Drip. But I just didn’t have the resources, the experience, perhaps the confidence to do it at that point.
It’s a good question, Ash. I appreciate you asking that. That was helpful.
That about wraps us up for the day. If you have a question for the show, call our voicemail at (888) 801-9690. Voicemails go to the top of the stack. Or you can email us at questions@startupsfortherestofus.com. Our theme music is an excerpt of We’re Outta Control by MoOt used under Creative Commons. Subscribe to us by searching for startups and visit stratupsfortherestofus.com for a full transcript of each episode. Thanks for listening and we’ll see you next time.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups, whether you’ve built your fifth startup or you’re working on your first. I’m Rob and today I’m going to share my experiences to help you avoid the mistakes I’ve made in the past.
I’ve tweaked the intro a little bit today based on suggestion from my 13-year old. He said, “Built your first product or just thinking about it” is too narrow. He says, “Aren’t there people who’ve started their first, second, third, fourth that are still listening?” and I said, “Yeah.” So, tweaked it there. Each week on the show I talk about topics relating to building and growing startups, in order to better your life and improve the world in a small way.
In our world of startups, we strive to have a positive impact on other people, be it your customers, your team, your family, yourself. We are ambitious founders, but we’re not willing to sacrifice our life or our health to grow our company. We have many different show formats. Sometimes, we come on and we teach a tactic, talk about philosophies and thoughts of starting startups and growing them. Other times we do interviews, then several of those over the past weeks. We have listener questions which is what we’ll be doing today, founder hot seats, and other things like that.
My co-host Mike Taber is on a brief hiatus. I do think he’ll be back in the next few weeks, and we can catch up with him, find out what he’s been doing with the enormous amount of free time he’s had not doing this podcast. Listener questions have been piling up, including a couple of voicemails. Today, I’m going to run through a few of those and give you my thoughts and insights on them.
First one is a comment from Adrian Rose Brock, fan of the show a long time, many times a MicroConf attendee, and his comment is about our Gmail clients, and even paste and match style which I was complaining that Mailplane didn’t support.
He says, “In the last Startups for the Rest of Us, you were discussing Gmail clients two tips. Number one use Kiwi for your desktop client for Gmail. Amazing client, works really well, has good integration with other G products. Number two, if you need to paste and match style, you do Command+Shift+V on a Mac. It will work in the majority of applications and saves a right click.”
Good tips. Thank you, sir. I have not checked out Kiwi yet, but it is definitely on my list. I’ve actually ceased the exploration for a desktop Gmail client for now. I have enough going on and somehow flipping back to doing it in Chrome it’s not bothering me anymore. There was some real performances which I was experiencing and I’m not seeing those any longer.
Our next question involves starting a two-sided marketplace and TJ’s asking whether he should charge from day one.
TJ: Hey, guys. This is TJ Astro calling. I’m focusing on a startup for artisan makers to get them more exposure. You guys have been a tremendous help to me, and I’m just trying to figure out if I can launch with a charging right away or what I should be doing. My gut instinct is to onboard them for few months. It’s a double-sided marketplace, so the synergy of all of them together as a collective community is where the value will be coming from eventually.
My instinct is onboard them, show them I’m active in the pro-members chat only in those forums, and that I’m committed to helping get more exposure and sales by offering strategies, advice, and such, then maintaining transparency with my site analytics as it modestly grows. I’m hoping that I’ll be able to get it quite grassrootsy and the way that I’m providing them these services and such, and they’ll be able to share the site because I don’t really have a marketing budget. Let me know what your thoughts are. Thank you so much.
Rob: TJ also wrote in and he said, “Hey, I just recorded a voicemail, it wasn’t very clear or well-spoken.” TJ’s launching a two-sided marketplace, no marketing budget, and it is a membership site. Primary focus is to aggregate the Instagram post of artisan brands. He has an email list of 2000 artists who he’d like to curate on the site, but they’re mostly cold contacts.
He’s going to have both free and paid monthly memberships. He says he has no market validation, everything he’s heard or read says, “Charge. Don’t give away your product or you won’t know if you have real product market fit. But since it’s a double-sided marketplace, both shoppers and artisans, I need to be able to demonstrate value to the artisans by attracting shoppers to the site.”
TJ talks about the different pricing tiers. There will be a free plan for artisans and also a paid plan. He says, “My gut instinct is I should onboard the artisans for a few months, a free trial of the paid pro member level but not collect credit cards on sign up. Show them I’m active in the pro-member only chat forums, that I’m committed to helping them get more exposure in sales by offering strategies and advice, maintain transparency with my site analytics as they modestly grow, encourage them to share my site with their list as it play to help them and other members gets more exposure. See where the analytics are in a few months, emphasize to them a growth trajectory. I’m hoping I’ll see and try collecting a card to charge them to stay on as pro members.”
Obviously a complicated question TJ. There’s a lot here. We’ve talked about two-sided marketplaces before, and my advice tends to be for bootstrap or indie-funded companies, is to not do it because they’re just so hard to get started. You even heard Tracy Osborn a couple of weeks ago, talking about WeddingLovely.
While we didn’t delve into the difficulties of two-sided marketplaces, she definitely has had some thoughts on that. It’s very hard, it’s hard enough just to get one funnel working, but you literally have to get two separate funnels working, and you have to have them at scale before things will work. You are definitely pushing a boulder uphill with this one. The way I always think about this is thinking back to how Uber did it. With Uber they needed at least a couple drivers in the field before they could release the app and have it provide any value.
If my memory serves me correctly, Travis Kalanick and his co-founder literally were driving the black cars just as a test. Obviously this doesn’t scale, it’s not what you’re doing, you’re just testing. If people have this app, will they call a car in Downtown, San Francisco? That was the hypothesis.
Once they started getting people calling them, then they had some data, enough metrics that they could go to black car drivers either cold-call them, or just approach them at the airport, or whatever and say, “Hey we have this app. Do you want to be on the receiving side of it? Right now we’re getting two calls, three calls a day, but it basically takes you right to them, and then you get paid directly, and you have to go through your dispatch basically.” That’s how they built it up.
Now it’s an incredibly long and painful way to build an app until the two-sided marketplace has a network effect. Then it’s amazing and it grows super fast. But almost knowing gets there. That’s the hard part. The challenge is getting past those early days. In the early days that you’re in, with zero marketing budget, the odds are even less in your favor. They’re very very difficult what you’re trying to do, but granted that this is what you want to do, you have to be super scrappy and it sounds like you’re thinking in those terms.
All the stuff you’ve read about […] charge, don’t give away product, if you have a SaaS app that provides value, people only pay for something that is providing them value. If I build an email service provider, or a long-tail keyword tool, or invoicing app, or whatever, when someone puts a credit card in, they pay, the next day they can get value out of it, or that same day they can get value out of it. That’s not the case with the two-sided marketplace with a no consumer, no demand side so to speak.
Getting suppliers on to your marketplace without the supply side, you’re going to have to have it be free to some extent. Whether you just have the free plan the whole time, whether you tell them, “You’re on a paid plan, this is the difference and in three or four months, by the time we have demands, I will be charging you $49 a month, is this interesting?” That’s the conversation to have.
I don’t see major problems with the plan aside from two-sided marketplaces are really hard especially when you have no money. But aside from that, I don’t see how you can possibly charge suppliers when there is no value being provided. I don’t know anyone who would pay for that without that supply side. The one thing I would say is if you haven’t already started building up the supply side, because you have the artist list, is there a way to get an email list, a blog following, an Instagram following, a podcast following, just some demand side built up so that you’re not starting at a standing stop?
You said you’re relying on defenders or the suppliers to promote it and while that’s fine, it’s not going to be enough, I’m guessing. I think that you are doing some type of marketing, you’re going to have to get creative. It sounds like a pretty creative having again, no budget and you’ve thought through pretty well. I would be looking at ways to have enough interested consumers.
Think about it this way, Groupon is also a two-sided marketplace. When Groupon went to a new city, they would cold-call the stores, the retailers, the supply side, and then they would post a landing page for the demand side. Getting the demand side is the consumers, and that landing page would then, they would advertise it, they would promote it in any way they can.
Obviously you’re saying you have no budget, so it’s hard to do this, but that’s how I would approach it. I would have a landing page up of like, “We’re coming here soon,” or “This is something were going to have soon,” and then I would have whether it’s Facebook ads, Instagram ads, or if you need to do it for free, then you’re going to have to put it in sweat.
It’s going to be a blog post or many of them, it’s going to be interviews, it’s going to be viral content, whatever it is that you can get. Guerrilla marketing style essentially with no cost. That’s one way to build up that demand side, and then you can point to the artist and say, “Hey, I do have 5000 or 10,000 people on an email list that are interested in hearing about it.
I still think your approach of going with no credit card, not charging them but giving in the expectation upfront, is fine, but then you don’t have to start from a standing stop. That’s how I would think about it, I hope that’s helpful.
My next question is another voicemail. Voicemails always go to the top of the stack. This one’s a bit long, but I will have our editor clean it up a bit and it is from Keith Gillette with tasktrain.app.
Keith: Hi Rob, my name is Keith Gillette, My founder-funded B2B SaaS startup tasktrain.app is in private beta right now. TaskTrain is lightweight process management platform that allows service managers to integrate standard operating procedures, and just-in-time training into everyday workflow, enabling teams to deliver service quickly and correctly.
Based on our expertise and our early customer development feedback, we’re targeting IT operations directors and digital marketing agency COOs as our initial customer segment. Our launch plan has been to market and sell per user subscriptions directly to customers via the web. I have two questions. One, what marketing channels would you recommend pursuing? We have a PR plan when we’re ready for a full public launch, but are not sure how aggressively to invest in building a social media presence and/or in paid advertising, neither which we have yet tried as we’ve been too focused on getting a functional product.
Rob: We’re going to cut the voicemail there and I’ll answer this question and then we’ll roll in to his second question. Congrats Keith on getting to launch. It’s sounds like, you’ve been too focused. You’ve made a traditional mistake of heads down basement coating. I know you’ve been having customer development feedback, but you haven’t done any marketing. I guess the first thing I would say is go to robwalling.com and enter your email address and you’ll get a book that I wrote called Start Marketing the Day You Start Coding. Whether you read the book or not, just having the title is really what I would say.
It’s typically before I have anyone break ground, I will validate the idea and then put up a landing page, such that even if you only have 50 people on an email list at that point, that’s your starting ground. That’s where you begin when you launch. Talk about having a PR plan in place, which is fine. I haven’t seen PR work for apps like this that are just line of business apps. They aren’t that interesting and PR likes to tell a good story. If you happen to have a good story, that’s fine. I don’t think you need a social media presence at this point.
Reserve your twitter handle or whatever. That’s not going to bring you customers yet, especially if you don’t have an audience, if that’s not your thing. Obviously, if you have a podcast, or an audience, or a blog, or something and you are on Twitter talking to people, you’re taking the Ben Orenstein, the Derrick Reimer, the Brian Castle approach, then that would be one thing. But you’re not doing that yet, so I would not spend any time really in building that out.
What I would do is, there’s an endless number of traction channels you can go after. Obviously SEO and paid advertising are two nice ways to get traffic. But whether that traffic converts is a real question. An outbound sales is the third and those are the three avenues that really scale well.
Which of these do you have experience with? If the answer is none, pick one and dive in. That’s how it is when you’re starting out. One reason why I espouse the stair-step approach to bootstrapping is that which your first product from the standing stop, trying to manage all the complexities of building and launching a SaaS app and then looking at the massive array of marketing options available, it’s hard and it’s overwhelming. Without the experience, the confidence, the budget, it’s not an easy question to answer in essence.
I’d say, of all the episodes of Startups for the Rest of Us—what is this? 457?—more than half, I would guess 2/3 maybe ¾ deal with this question of how do I market? How do I get more customers? How do I get more leads? What do I do? Literally, books have been written on this topic. Two books I would recommend, number one is Traction by Gabriel Weinberg and Justin Mares, they go through 20–22 traction channels. You can look at those as starting point for zeroing on each of those areas. It includes paid acquisition and SEO, running events, and all kinds of stuff. The other book is SaaS Marketing Essentials by Ryan Battles. That’ll be a pretty good start for you because this question of, “What marketing channels would you recommend?” really depends. For me, just looking at it I would do some content and I would do some LinkedIn ads. That’s probably where I would start. That’s not to say they’re going to work. It’s just the two things I would start with—Facebook ads and Google AdWords—just to see, are they going to work? I don’t know.
Audience building, is that a skill of yours? If it is, build an audience. If it’s not, then don’t. There’s a lot of variables in terms of how much budget do you have, how quickly do you want to need to grow, what is you skill set? Do you have experience with any of these? Any desire to try any of them? It’s a pretty broad question, but that’s where it comes down to doing your own research, making that list. Basically, your marketing gameplan.
I’ve talked about them on the podcast in the past about how with each app I would build or acquire, I would make this marketing gameplan. The HitTail marketing gameplan, the Drip marketing gameplan, it was a huge bulleted list. That was seven pages, single spaced, bulleted list with some headings of, “These are the types of things we want to do right at launch,” and, “These are the people I’m going to talk to who’ve agreed to perhaps promote it.”
Then, I want to try Facebook Ads here in the market segments. I wanted to try AdWords in these segments. Then, you’re going to a spreadsheet and you put out the ones that you think are going to work at this stage. You take a guess at how much traffic you can generate, how much cost you think, time you think it’ll take, and figure out, do you do it yourself? Do you hire it out? Do you hire someone internally to do it? There’s so much to think about it here. You have a little bit of research and thinking to do. Good luck with that, Keith.
Now, let’s dive into Keith’s second question.
Keith: Second question, one of our beta users has expressed interest in becoming a reseller of our platform as a value-added offering in his virtual CIO consulting service portfolio. I had the potential for bars in mind when designing TaskTrain. I had not expected to pursue the channel until we were bit further along. Now, we have zero paying customers at this point, no data on margins, customer acquisition cost, or lifetime value of a customer, on which to base sales commission or revenue sharing. How would you recommend we think about structuring a potential reseller contract? Thanks for any guidance on those early stage marketing and sales questions.
Rob: Every product that I have launched typically gets interest from resellers and whitelabelers. This is very common for you to get reached out to by folks who want to resell or whitelabel your software. When we launched Drip even really early, we were getting two emails a week from people. “I want to do this but for realtors.” “I want to do this but for mortgage brokers,” “or for the hair salon,” or whatever. “Can I whitelabel it?” It’s just a totally different market. Whitelabelling is one.
I realized you’re asking about reselling here. Whitelabelling is one thing that I discourage people from exploring in the early days. It dilutes your brand equity to huge distraction. It’s almost a completely separate product. It’s very rare that people make it work. It, of course, can work, but it’s not something I would encourage you to do unless that’s really what your heart is set on. Don’t let it be a distraction.
Resellers are different because it’s not a product distraction. It’s going to be more of a, I would say, almost a founder distraction in terms of having to come up with the model, sign a contract, work with them to help promote, and make sure they’re not reselling it to people who don’t want to be part of your customer base, I guess. That’s the thing. With the SaaS app, are they just an affiliate? Are they reselling it? I guess the difference with affiliates is affiliate would just sell it based on your pricing and they would keep a commission to pay them 10%, 20%, or 30% of the recruitment revenue. Whereas a reseller, maybe they have an account that they can put a bunch of people in and they’ll pay you a certain amount. Then, they just sell it for more. That’s probably the difference I would think about.
I know in the IT, since you are targeting IT operations directors, marketing agencies, COOs, maybe resellers would be helpful. I would only consider it if this reseller already has a huge network, already has leads. If this person’s just going to go out, run ads, and do cold outbound, you can do that. You don’t need them. If they have a list, if they already have an audience that they essentially want to pitch it to or market to, it’s worth considering.
Personally, I don’t have enough experience with it to do it. I would get offers like these and I would basically say, “Nope, not right now,” or “Not until we know our customer acquisition costs, our margins, our LTV,” all those things that you’re saying you don’t have. My advice would be to kick it down the line a bit. Once you get some customers, you know what your churn is and your revenue share. You want to be in your sales commissions and all these stuff. It’ll be a lot easier to get something like these done. It’s just there’s so many things flying in so many directions right now that having yet another distraction is not something I’d be super stoked about unless this really is a golden opportunity.
In my experience, people who want to resell a product that has zero customers, it doesn’t tend to be a golden opportunity. I’d be pretty surprised if they did actually have an audience that they had a lot of reach into. I would kick it down the line, three months, six months, and just say, “Hey, we need to revisit this. There’s so much going on right now with the launch.” It’s easy to say that you’re busy because you are and you have competing priorities. I would try to revisit that later.
Keith: A final postscript. I want to take Mike for his immense courage in being so open and vulnerable in sharing his Bluetick blues with the Startups for the Rest of Us community. As a fellow still struggling in Boston area, B2B SaaS founder, I empathize with him in the challenges he’s facing and deeply appreciate his willingness to share them in public. I wish him the best in deciding what’s next. Gratitude for you both for your Startups for the Rest of Us work.
Rob: Thanks for that, Keith. I appreciate it. I hope my discussion was helpful.
My next question is from Ash and it’s about agency to product journey. He says, “Hi, Rob and Mike. I’m a big fan and listen to almost all episodes over the past five years. In the past episode, Rob mentioned the path from agency to product especially Saas, is a hard path which I understand. Could you please dive a bit deeper into why? If one is on that path, how to run that transformation successfully? Thanks a lot. Keep up the great podcasts.”
Good question, Ash. So many of us have done this. I didn’t run an agency per se, I’m more of a consultant. I did have some contractors working for me, so I was a micro agency. It was a handful of us. I was doing sales, doing some of the codings, and such. The reason it’s hard is because when you’re an agency or a consultant, you can bill $150 an hour. Whatever it is you’re billing, it’s really hard to not just book more hours and to make that $250,000 a year or $300,000 a year just by coding for someone else with frankly very little risk.
You have some headache dealing with clients, of course, but there’s not a ton of risk in it versus turning down work to block out a day or two, a week, to work less, to get paid less, to build something that you don’t know if it’s ever going to work. You don’t know if you’re ever going to get it launched, if it’s going to have a product market fit, if it’s going to make enough money to ever pay it back.
There was a good MicroConf talk a few years ago. It was one of our attendee talks and it was by Ted Pitts from Moraware software. He talked about how he and his co-founder launched good jobs and then they launched the software. When he traced it forward, they were doing millions a year and pulling out quite a bit of profit before he felt like they hit the breakeven line of how much money they could have made if they just kept working their jobs, if they have just stuck at day jobs with promotions and bonuses. Just a steady pitch the whole time versus the ups and downs of some years they make more and some years barely make any in their early days, and not paying much. But they wouldn’t have any other way. They didn’t do it for the money. That’s part of it, obviously, but they did it for the freedom and satisfaction. The freedom, the purpose, and the relationships.
It’s hard to see that. It’s hard to look ahead. It’s especially hard to convince a significant other that instead of making $300,000 a year like you could as a consultant, or $250,000, or whatever it is, I want to make $125,000 and I want to launch this app. It’s going to take me six months or a year to launch. Then, maybe two or three years to get to the point where it’s even making as much money as I could be making if I just work full-time on this consulting work, and then the payback period of the money I lost is even years out from there. That’s the hard part. That’s a big part of why moving from agency work which pays well to starting a SaaS app which doesn’t pay anything for a very long time, takes a really long time to get going, and here’s a bunch of risk that’s why most people don’t make the transformation.
If you were in college or if you were like me when I first started launching products, I was working construction. I was an electrician. There really wasn’t much downside to me. I did it all nights and weekends, obviously, because I was out on a construction site. I had learned to code when I was 8 years old. I’ve been coding for years, but I didn’t know a lot in the modern web languages. I literally went to the public library. I got books on PHP, HTML, a little bit of Perl—this was obviously years ago—and I started to hack in the way of stuff on nights and weekends. That’s how I learned.
I eventually did make the shift into full time employment as a developer. That helped increased my […] really fast. Then, when I went to build stuff on the site, I was way, way, faster at it. But it still was a 9-5 and it was helpful for me that I could go in 9-5 and when I left, my time as my own.
Once I transition to consultant and I was billing hourly, I was obviously making a lot more money, but it became hard for me not to just do consulting work all the time because to consult 50-60 hours a week, I can make more money than I had ever seen or ever heard of anyone making. It was crazy to bill $125 an hour and works 60 hour weeks. This is 15 or 20 years ago. That money really went a long way. It’s tough. It’s a long term view. It’s having a confidence in yourself. It’s being able to look in five years and say, “It’s going to hurt for now, but long term, I think this is the better path.”
In addition, this is why either stair stepping your way up is better because you can get some small wins along the way. It builds confidence in yourself, builds a little bit of recurring revenue, build confidence from your spouse or your significant other if you have one. But also, acquiring. Acquiring small products or even large products is a nice way to do it. If you are running an agency and you have money—you should be making a decent chunk of money—acquiring a product gets you past that product market fit, that wall. It puts you forward, hopefully, in 18 months, maybe 24 months depending on the space that you’re in. That’s one reason why I acquired products early on. I did have more money than I had time. Once I was at that level where I could build $125 an hour and stay busy full time.
Not everyone has that. Maybe you’re scraping by to get agency work. Maybe you do have downtime during the week or during the month. That’s nice because then, you can use that to focus on the product. I always felt guilty just focusing on the SaaS product, not going out and finding more work. I thought to myself, if I ran out of work and I don’t have any in three months, am I going to look back on this and regret it? You get over that guilt if you’re going to do it.
I’m guessing a lot of folks listening are experiencing this or thinking. It’s the conundrum of nights and weekends are hard. This is one reason why people raise funding so they don’t have to do that. It really is interesting to see someone raise around $150,000– $300,000, with the sole purpose of they don’t have to make this decision. They don’t have to scatter their focus. They don’t have to worry about agency work or doing it nights and weekends. They can just focus for a year or two on getting something to the point where it’s viable, where it’s making enough money, that it’s sustainable, that’s it’s default alive, as Paul Graham would say.
I’m not saying you should raise funding or shouldn’t. Obviously, I never did. Building my stuff up, it also took me a really long time to get there because I did it this way. It was nights and weekends for me. It was building an app, acquiring an app, parlaying one, stair-stepping from one to the next, and that’s why it took me so long to get to Drip. If I had raised funding 5–10 years earlier, I would have built a larger SaaS app like Drip. But I just didn’t have the resources, the experience, perhaps the confidence to do it at that point.
It’s a good question, Ash. I appreciate you asking that. That was helpful.
That about wraps us up for the day. If you have a question for the show, call our voicemail at (888) 801-9690. Voicemails go to the top of the stack. Or you can email us at questions@startupsfortherestofus.com. Our theme music is an excerpt of We’re Outta Control by MoOt used under Creative Commons. Subscribe to us by searching for startups and visit stratupsfortherestofus.com for a full transcript of each episode. Thanks for listening and we’ll see you next time.
Episode 456 | Launching a 2nd Product + Revisiting Freemium with Ruben Gamez
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Show Notes
In this episode of Startups For The Rest Of Us, Rob interviews Ruben Gamez of Bidsketch, about his 10 plus years of bootstrapping, lessons learned, improved decision making, and his new product.
Items mentioned in this episode:
Rob: Welcome to this week’s episode of Startups For the Rest of Us. I’m your host, Rob Walling. Each week on the show we cover topics relating to building and growing startups in a way that’s organic and sustainable and that works around your life. We’re ambitious founders, but we don’t sacrifice a life in order to build our startups. These are not the typical Silicon Valley Startups where fundraising can be a goal in itself and where people build slide decks instead of building businesses.
In this week’s episode, I have an in depth conversation with Ruben Gamez. We talk about the new app he’s building, Docsketch, in the electronic signature space. But more importantly, we look back at the 10 plus years that he’s been bootstrapping. We look at lessons learned, how he’s learned to make better decisions, how he’s meticulous and disciplined, and how that leads to him being able to make repeatable progress and being able to have repeatable successes. This is Startups For the Rest of Us Episode 456.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups, whether you’ve built your fifth startup or you’re working on your first. I’m Rob. I’m with Ruben Gamez. We’re here to share our experiences to help you avoid the same mistakes we’ve made.
The first email I received from Ruben was in January of 2009, which is more than 10 years ago, and he was asking about something I had written up, a few essays about acquiring software products. From there, he and I struck up a friendship. He had been reading my stuff for a while and wound up being one of the first four or five members of the membership website that I launched called The Micropreneur Academy that was teaching software developers, really teaching engineers how to market.
This is back in the day just as SaaS was starting to become a thing and Ruben was an early success story. He hustled and as I said in the intro, he was meticulous, disciplined, and just shipped stuff every week, even though he was working a full-time job in “managing managers who manage developers,” as he used to say. What I’ve always respected about Ruben is his analytical nature, but he has the gut instincts of a founder, and he’s someone who you know that no matter what the chips deal him, he is going to succeed at what he’s doing.
Today, in the interview, we talk about both his first product which is called Bidsketch and it started as proposal software made for designers, and he later expanded it to creating professional proposals as a horizontal play. We talk about trying to upgrade that from Rails 2.0 to Rails 3.0 and all the technical headaches that went with that in the six months of essentially wasted engineering time. And we talk about his new app that he’s running in tandem and building that in tandem with Bidsketch. It’s called Docsketch and it’s an electronic signature app. We talk about his AppSumo deal and why he decided to do that and his whole thought process of whether to do that or not. We dig into free plans at marketing first before building a whole bunch of stuff.
Ruben doesn’t do a ton of interviews. He doesn’t do conference talks, even though I ask him every year to speak at MicroConf. Every time you hear him talk, you will hear someone who’s been doing this a long time, someone who’s had substantial amount of success, and someone who’s really thought through these issues. I thoroughly enjoyed talking to Ruben today about the ups and the downs and the sidewayses of being a bootstrapper for more than 10 years, and I hope you enjoy this interview as much as I did. So, let’s dive in.
Thanks so much joining me on the show today, Ruben.
Ruben: Thanks for inviting me.
Rob: You and I talk every few weeks and have for several years, so it’s fun to get on the mic every once in a while. You have several popular Startups For the Rest of Us episodes, actually. You have the one about beating plateaus. There was one where you and I just talked about metrics. Remember where you’re doing trial-to-pay and all that? To the listener, if you go startupsfortherestofus.com, search for Ruben Gamez.
He has been on the show several times, but today I wanted to dig into stuff you’ve been working on for quite a while, Ruben, both in terms of your new app, Docsketch, but also the decision process. You run a bootstrap SaaS app for 10 years which very few people have done that. Most people sell, or they shut down, or they move on, or they find a CEO to run it or whatever, and you’ve been through a very long journey in it in a short amount of time. Ten years running a SaaS app is like 50 years in a lot of other business.
Ruben: Yeah. It’s funny you say 10 years. In some ways it doesn’t feel that way and in other ways it does.
Rob: I know because so much has changed when you think back to your very first homepage and what that looks like, or your early demo videos, or what pricing felt like back then. There’s so many things have changed and yet, you have Bidsketch. Folks who want to check it out, it’s bidsketch.com, and it’s a successful SaaS app that has employed you and your whole team. You have a team of four or five people?
Ruben: Yes. We’re hiring more people right now, so rebuilding in that process. We could talk about that a little bit later.
Rob: The first thing I want to ask you about that’s interesting is when you first launched Bidsketch, it was proposal software made for designers and you targeted the design space. It was a vertical proposal app and it caught on really well. Then a few years later, I don’t remember how long it was, you went horizontal. The headline stay as, “Create professional proposals in minutes.” You’re going after anyone who would send a proposal, any type of freelancer, contractor, agency or whatever. What led to that decision? You really did the land and expand which is a playbook in MBA speak or whatever, but you came across that organically and made that decision to expand.
Ruben: I’m trying to even think about why I chose designers to start with. I think it had to do with the amount of keywords for people searching for proposals related to web design or just graphic design. That helped me make that decision. Later on, we’re just getting customers that weren’t that, and we were getting people asking us, “Does it work for my business?” There was nothing in there that would prevent them from using it successfully for the business.
There were a lot of different signs that made it clear that we should move beyond designers. Plus, the market just for designers was too small. It was maybe a good starting point, still not sure about that. We could have just started where we ended up later, but I didn’t know back then if that was a good idea.
Rob: I was going to ask if there was any regret or if you feel like it was a mistake to start small and then go horizontal, or if you should have just started horizontal, or do you think really matters?
Ruben: At least for the app that I had at the time, there weren’t any proposal apps. So, we were creating that category. It probably didn’t matter as much for our product at that time.
Rob: Since you’ve built Bidsketch back in 2008–2009, it was written in Rails 2 and then you upgraded to 3 or you built it in 3, if I recall. You went through a painful year or so of trying to rewrite it in Rails 4. If I recall, you had a tough time finding Rails 3 developers and maybe patches weren’t coming out for it anymore. This was just 2–3 years ago, you were doing this. It’s a real struggle, I remember. Can you talk us through that? Why did you make the decision and what was the process there to try to get it rewritten?
Ruben: We actually started in Rails 2 and it’s still in Rails 2 now, which is crazy.
Rob: Oh, that’s what I forget. I say 3 because that sounds old enough, but you’re right.
Ruben: 3 is the thing we wanted. We were eventually trying to get to 4 at the time. We were like, “Okay. We can’t jump straight to 4. We need to go to 3.” From what I understand, going from 3 to 4 takes some work, but it’s not the end of the world. Going from 2 to 3 is, if you have a really mature app with a lot of code that’s been around for a while, that’s a beast and that’s what we were trying to do.
Rob: You had the bulk of your team working on that for, was it a year? Is my memory correct?
Ruben: It was maybe like eight months or so. A lot of developers working on just that and at the same time I was working on the design side. Just going back a little bit, the decision to upgrade had to do with us hitting plateaus and like you mentioned, there’s that episode that we did about plateaus and stuff. We hit three or four plateaus at different stages of growth. I don’t remember exactly what they were, but we did things like change pricing, 10X our content strategy, just different things to break out of each plateau at each time.
I got pretty good at breaking out of plateaus, but now what I know or what I feel is that if you’re hitting that many plateaus, fundamentally, there’s a problem there that needs to be fixed. We were hacking out of the plateaus for a year or two of more growth, but there was a bigger issue. Part of it was just going back and trying to figure out, “What’s going on here, how can we just stop doing this, and fundamentally fix what’s wrong?”
We did a lot of customer interviews, a lot of analysis of the data that we had, did over 100 jobs-to-be-done interviews and using the Switch framework. Switch framework has to do with when somebody switches away from a product to your product or when somebody switches away from your product to something else, during onboarding and people that canceled. You can imagine people getting people on the phone to do 30–45 minute interviews. Once they’ve canceled, it isn’t that easy, so we bribe them with Amazon gift cards, like $100. In theory, you don’t need that many, but we were interviewing a lot different segments and trying to find patterns and stuff.
After all that, we came up with three things that we could do. One of them was go upmarket enterprise, which the majority of the funded startups that were going into the proposal space were doing. They start off like we would and then just wasn’t big enough and they would go upmarket. The other one was just better served as a couple of specific segments within our market, build out better team features, agency features, go deeper in that direction. Then the third was just sell more to our existing customers. They were using products that were related. That’s why we built up Docsketch later.
The first thing that I decided to do was basically build out version 2 of Bidsketch and go with option one—better serve a segment of our market that would pay more money, that would stick around and all that stuff. But out existing product was lacking some features and to add these features and to change how it did the main thing that it did which is create proposals, we had to use new technology and hiring developers that could work with that was really hard.At the time also, Rails 2 was really old and everything was just hard because of that. We had a bunch of technical bet and we were in a bunch of code. If we were going to rebuild core parts of the application, that was a big project and we just needed to add a whole bunch of unit tests and all this stuff. We spent six months going in that direction, adding unit tests.
About that time, I saw a talk, it was DHH from Basecamp. This had already been out for a while, but I had just caught onto it, just watched it, and he was talking about how they made a mistake by trying to do the same thing that we were doing. It really gotten my interest. I watched the whole thing and basically what he was saying was that they had a very hard time. He spent six months to a year trying to make Basecamp into the next version of Basecamp. He just talked about it in terms of trying to make a chair into a desk or something like that. It was really hard. It just didn’t work and they abandoned it and started from scratch.
I watched that night and I thought, “Hmm, I think we can do it.” Of course. We kept going for a little bit longer, but I kept just thinking about that. So, I went back and I was looking at how much progress are we making. I started doing some forecasting and estimating, given our pace, that the entire team is working on this. It would have just taken way too long. We made very little progress, so then I just decided to abandon that effort.
Rob: How was that, when you decided to abandon? That must have been a really tough choice for you. What was your emotional state like once you made that decision or as you were making it?
Ruben: It’s always tough because you spend so much money with so many people working. It’s tough on several different levels. You don’t want to fail at something and just be like, “Oh, this was a really big mistake.” A couple hundred thousand dollars maybe in salaries. I didn’t calculate it out still to this day. It’s probably pretty expensive.
Rob: Too painful.
Ruben: Yes. Just a lot of developers working on it for eight months or whatever it was exactly. That’s a ton of money to just say, “Nope. This didn’t work out. Let’s do something else.” It’s tough from that perspective but also for the team. You have the team working on just this one thing and you really sell them on, “This is the direction. This is what we need to do.” Then, having to tell them, “No, this is not going to work. You should do something else.”
Rob: That’s got to be hard. When you talked to the team, did you do it on a group call? What was their reaction?
Ruben: It was on a group call. I don’t remember the specifics, but I remember that they took it much better that I thought they would. I think they were burnt out.
Rob: They were probably relieved.
Ruben: Yes. There was a little bit of relief, basically.
Rob: That’s crazy. Probably some relief for you, too, to make the decision as hard as it is. You let go of the sunk cost, right? The sunk cost was all the time, the money, and your ego of like, “Well, I made a bad call here.”
Ruben: Exactly. Before I actually had that call, it was tough just thinking about a lot. Then after the call, it was just a relief. It’s like, “Okay.” Once you make the decision, once you know you’re starting over, it’s different.”
Rob: Yeah. Wipe your hands together and say, “What’s next?” you turn your sights. That brings the question, now you are building Docsktech. Was it an immediate realization of, “I want to build an electronic signature app”? Or was it, “We’re going to build like how they do Basecamp, 1.0, 2.0, 3.0. They are all project management. They are all just approached differently. Did you think of doing Bidsketch 2.0 that would essentially be proposal software as well and complete with yourself in the sense that Basecamp did?
Ruben: Yeah. That was the next thing. It’s like, “Okay, maybe we should just build this from scratch.” We actually started doing that and spent about six months doing that and realizing that we had to make it backwards compatible and all the stuff. That’s years of work-arounds, codes and all these stuff. This is crazy. This is a lot of stuff.
Rob: So it’s a new code base, but what was the backwards compatibility? Was is like the data model or something? To import in one direction, you needed to adhere to certain standards?
Ruben: We have a feature that allows people to create proposals from scratch using HTML and CSS, so there was a lot of that, just making that old templating system work with whatever we were building, trying to make everything fit. There were just many, many examples of this. This one was a little bit shorter, it was maybe four to six months where it just felt like, “This was going to take years. I think we should go with option three,” which was basically sell more to our existing customers and better serve them.
This was the creation of the electronic signature tool, our new app, Docsketch. It felt like this one’s way easier, this one’s much smaller, doesn’t have that many features. We’re not doing a bunch of what-you-see-is-what-you-get design, development and all that stuff. You are uploading files, your over link fills, sending them out, getting documents signed. Let’s go in this direction.
We stopped again. There were a couple other reasons. Our progress was super slow with the new rebuild of Bitsketch because the team had a Rails background but not a React background. We decided to build this version 2 in React and we started to do that, but they we’re so inexperienced that as they we’re learning more, they were like, “Oh, let’s rewrite this or restart this. Oh, this is the wrong way to do that.” That was not good. They just slowed everything down even more.
Rob: Do you wish you hadn’t built in React or if you were going to do it, you need developers who were verse to it.
Ruben: Going back to that point, the better decision on my end would have been, we either build it with what we know and what we are good at, which was Rails, or we need a new team that is very experienced in React and what the direction that we’re going in.
Rob: That would be a really hard call to make, to fire most of your development team or I guess you would keep someone around maintain Bidsketch, but that would have been a tough call.
Ruben: It would have, but we wasted a lot of money because I didn’t make that call back at that point. Even when we started with Docsketch, it was also like, ” Okay, let’s do this in React. We know way more. We have six months of experience,” which is not a lot. Having a background and managing what development department a lot of developers. This is all the stuff that I’ve come across and had known. For some reason, I just made decisions that, now thinking about it, don’t really make a lot of sense.
I’ve gone back and really thought about that a lot and worked on improving both my decision-making and my ability to change and switch earlier once I recognize that we’re going in the wrong direction.
Rob: Here’s the thing that I have respected about this journey that you have taken, is that you shoot through let’s say 14 months, 16 months, 18 months, whatever of two false starts. It was to upgrade the app and then to rewrite it from scratch. It was super brutal, painful, irritating, but you did it anyway.
During that time, I remember asking you, “Are you impatient? Do you feel stressed?” And you kept saying, “No, I’m not stressed. I just want it to move faster.” But it didn’t seem to bother you the way it would bother me. I would have been super stressed and anxious. There’s just so much. I have such a tough time standing still like that. You’ve said you do, too, that you have a tough time standing still, but what does that feel to you and how did you deal with it? Most of us in our product ownership career, we’ll never stand still for 18 months or however long you did. It’s a real anomaly like how did you manage your own emotions around that?
Ruben: I think part of it has to do with me just being optimistic about my ability to do things successfully, number one. Number two, having spent so much time doing things like SEO, where you have to make these bets. It’s not like ads. You can run ads and immediately as soon as you put money into it you know that it’s working or not.
With SEO, you’re going months without any sign that it’s working a lot of times. Then eventually it starts working and I’ve done that so many times where I’m used to grinding for long periods of time. I was really thinking about this the other day, which is probably a bad thing where having grown up just feeling uncomfortable for a lot of my childhood because of being in bad situations, bad neighborhoods, bad everything, and just having this constant feeling like I’m working towards something and it’s really […] right now, but I know I’m going to eventually get out of it, so it makes it so I can deal with that a little bit better nowadays, but maybe it’s a bad thing.
Now I’m focusing on setting up these trip wires beforehand. Before a big effort, I set an expectation or a deadline or something that lets me know, “Okay, if we are not here at this stage, then either I’m going to take a really close look at stopping, or changing what we’re doing, or something, instead of enduring and grinding.”
You said many times that if I have a lot of patience and a lot of people say that about me, but I don’t feel that. I feel very impatient a lot of times and I don’t remember where I heard this, but that when there’s this mismatch of what you feel about yourself and what other people think about you, that has to do with the mismatch between your internal dialogue—which makes a lot of sense—and your actions.
Internally, I maybe saying something like, “We need to move faster. This sucks.” But externally, I’m projecting maybe something else and just continuing.
Rob: Show up everyday, shipping, getting it done.
Ruben: Right. Getting it done. There are a lot of things that just take a lot of time. I’m good with making progress when it comes to things like that.
Rob: Yeah, it makes sense. Folks want to hear more about your background. You mentioned it earlier, there’s a cluster of episodes that are really popular of the Zen founder popular podcast where Sherry interviewed several founders of their origin story. Yours is episode 25 and you go through a pretty in-depth story of your upbringing which is shocking to a lot of people and is just super interesting tale to hear, how you grew up, and how you came to start your own company.
I want to get into Docsketch, but I have one more question before we do that. Did it ever cross your mind to sell Bidsketch and just start fresh with a new app or was your plan C was to sell more things to the Bidsketch audience? Was that too compelling to make you consider selling it?
Ruben: I don’t think I ever seriously thought about selling Bidsketch because even if you think about how I started Bidsketch, I started Bidsketch when I had a full time job. I just like the approach a lot better of not starting from scratch like some people who quit their jobs and they do their new thing.
I think I would be stressed if I sold it and I had a bunch of money in the bank, but that money was going down and nothing was coming in. For me that’s different and I’m not sure why.
Rob: I’ve been there and I did the same thing. I had HitTail, I didn’t sell it, and then started Drip because I didn’t want the bank account going down every month. I was trying to run it on the side and have it throw off cash and […] the asset because then you can have your foot on two islands. You don’t have to swim to the other one and you can do it. That makes sense.
I’ve been impressed with how you approach the process of building Docsketch, not from a technical point of view, but just the thought process you went through. You started with the marketing and in this day and age, obviously you want distribution first and you want a channel, but you were way ahead of it. Before you had mock ups, before you guys had really started digging under the code, you had this whole plan of how you were going to build up this momentum and this marketing engine. Can you talk about how you were thinking that through?
I’m specifically thinking, obviously about the organic, like you are really good with SEO, but also there’s this whole thing about free plan and getting people to use something, any type of tool first and then turning that later into a Docsketch customer. I really think that, that would be interesting for folks to hear about.
Ruben: Building an electronic signature tool was basically starting from scratch. Before building it out, I just spent some time figuring it out how am I going to get customers because I’m not sure how much I’m going to be able to leverage the Bidsketch audience and I don’t want it to completely depend on that either. This is a much bigger market. Much bigger market like DocuSign is the biggest company in the market and they are at $600 million a year maybe more. They’re way more signature electronic apps in that category. There were a lot of things that appeal to me.
Freemium is being done by a couple of them, so I also wanted to play around with freemium and add some viral traffic and stuff. The first thing that I did was just look at, okay if we are starting from scratch, do some analysis in the organic traffic side, what are people searching for, what’s there?
Okay there’s a lot of traffic that we can get. A lot more than the proposal category. Then look at what the competitors are doing, not just look at what where they’re getting traffic, where’s it coming from, but I also did interviews with a bunch of DocuSign and HelloSign customers and this was targeting them with Twitter ads, sending them to a survey. If they were a recent paying customer, bribing them with an Amazon gift card.
Also, going to review sites and just analyzing everything that people liked and didn’t like about each of the competitors, creating a document with all that information, trying to figure out where are the gaps, what type of product would we need to build to position ourselves favorably in this market, and how can we do it in a way where some of the traffic that opportunities that I see, we can flow into a product. That was the high level of the whole process.
Rob: A couple things that you touched there. I find it fascinating that you’re going on a free plan especially with one of the very popular essays on my website from August 2010, was a guest post from you called Why Free Plans Don’t Work. I just think it’s hilarious that nine years later, you are actually going all in on a free plan. You want to talk about how your thinking changed?
Ruben: Back then, I did freemium with Bidsketch for about a month. It was a very short amount of time and with freemium, that’s just too short to know whether it’s working. It wasn’t until later that I realized a bunch of these things. Then, I didn’t know how freemium worked and what types of products would be best for freemium products.
Looking back, some of the reasons why it didn’t work for Bidsketch and for many of the proposal apps that I’ve tried—it hasn’t worked until this day—is because the markets is okay, but it’s not that big. The time-to-value is too long. People have to create documents, set them up, design them, and copying content. That just takes way too long. Ideally, you would have a much shorter time-to-value, like with Docsketch, you upload people’s documents, add some fills, send them off, that’s it, you’re done. Big difference.
The market is really big with Docsketch. It’s perfect for that. You did have a bit some of the viral stuff going on with the proposals, but given that the market is small, that you would need a lot more volume for it that work, it didn’t make sense.
But looking at Docsketch, the electronic signature space just has a lot of the things that will help a freemium approach work. In the early days, really you will make more money not doing freemium. That’s another thing about Freemium. It’s oftentimes a longer-term bet and like content marketing, a lot of things build that up.
Rob: That makes a lot of sense. It’s an advanced distribution tool. It’s not a pricing strategy, it’s a marketing strategy as people say. It’s something that, in your early days, when you’re trying to bootstrap and get to $8000–$10,000 a month, you can quit your job. I do think freemium is detrimental. It’s a long-term play and you have the luxury now with having this other app that is funding you and your whole team, that you have a long-term horizon to play with.
Ruben: That makes a big difference. The situation I was in was totally different. That time, I needed revenue as fast as possible. Now, the strategy that I ended up going with free trials or getting people to pay up front first is really good; worth well for that. Being in that situation is not […] for trying out freemium.
Rob: Yeah, and you spent quite a bit of time getting pages out there with organic traffic to it and the product is quasi-launched now. I feel like you’re soft-launched, but you’re not doing heavy marketing.
Ruben: Yeah. Officially, it’s open now. This was the deal, a couple months back we did an AppSumo deal. I wanted to leave it in early access when we did the deal, but they required that we open it up and let people sign-up and pay before we do the apps, which makes sense. They don’t want to be selling something that’s an early access. We did the deal. Lasted a long time, it was very different from when I’ve done it in the past. It was like three weeks.
Then I put it back into early access up until a couple of weeks ago to where I opened it back up. I felt like we have enough features at this point and we’re getting a lot more traffic. It’s just ridiculous to be an early access with the amount of traffic that we’re getting and not trying to take advantage of some of that. Last month, it’s getting more traffic than BitSketch. In a few more months, at that pace, it’ll double what we’re getting there. The strategy is different.
Rob: It’s such a larger market, right? That’s how I view it.
Ruben: It’s a much bigger market. There’s just a lot more opportunity there. I just know more now than I did back then. I’m having an easier time executing on that part.
Rob: Stair-step approach. Small SaaS up to a big one. I like it. Talk about the AppSumo deal. I actually get asked relatively frequently from folks who run a SaaS app and are considering an AppSumo deal but don’t know how to think about it and don’t know if they should do it or not. The revenue share is not huge. I believe it’s 70-30 or 80-20, where you as the founder get 30%; you get the smaller of the two. It’s really quite a cut that they take. How did you think through that because it sounds like from what you’ve told me it was the right choice for you. Why was that?
Ruben: I feel like it was a really good choice for me. Given my context of doing freemium right now and still being from a positioning standpoint, we’re not focusing on any one segment yet, even for marketing. Leaving it open, trying to learn, and see where are the most valuable customers, so that we can focus on that. The more volume we get, the more different types of companies we can get using the products, the more learning we can do the better. Then we’ll just figure out who the best types of customers we should go after are, and maybe chain positioning or maybe just put our marketing efforts in there.
AppSumo, I just saw it as a way to get a lot of different companies using the product and a lot of them that were using existing products, like DocuSign in getting a lot of feedback from them. There’s a tricky part to it when it comes to getting customers from these deal sites because a lot of the feedback that you get is just not good. You have to be very selective as far as who you’re listening to.
The framework that I use for this was anybody who’s seriously using another product and is paying a decent amount of money for the other product—they have a team of 10 people and they’re paying a couple of hundred dollars a month to use an existing product, and they’re very motivated to switch—those are the people that I’m going to listen to a lot more.
We found out that there’s some really very valuable segments that we hadn’t encountered yet through the deals. That was helpful. We got some very good feedback. Since they were highly motivated to switch because they got such a good deal and they were spending a lot of money with the existing tools, they were willing to tell us what’s really important to them before they switch, like, “Okay. We want this snap. This one thing as the thing that we really need to switch.” That helped.
Rob: Super important to have that. Those learnings are valuable and they’re hard to get in the early days of the product.
Ruben: They are very, very hard to get. Also, I almost think of them as freemium users because just looking at the stats for the amount of documents that they’re sending. They’re sending a lot of documents a month because people who get documents see that they’re sent through Docsketch, there’s some of that viral stuff going on that helps us. That helps us with word of mouth, that helps us in a lot of different ways.
It doesn’t work too well with companies that have really high support per customer. That was another thing. With Docsketch, it’s just a low support app. We can get a bunch of people here, that’s another reason why we could do freemium and it’s not that big of a deal. I know a lot of other SaaS founders that they’re in the hundreds of customers and they need a full team of support people. Between Docsketch and BitSketch, we’re serving thousands each. One person’s fine when support person, not a problem for everybody.
Rob: I’m envious of that. Certainly with Drip, we were one of those where we need a lot of support people because it’s a big complicated product. It can do a lot, but as a result, people have a lot of questions.
Ruben: Right, and Drip is a really good example. I’m not sure I would do an app […] for that. I would have to design it very carefully, but I probably wouldn’t do it because you have expenses of how much it costs each email to get sent out there. It’s just not the right type of product for that.
Rob: Yeah, and that’s the thing. Just like with freemium, AppSumo is something that can work for you, but you need to know the criteria and you need to be smarter about making the decision. It’s not an always yes or an always no. It sounds like you got a lot of learnings from it, you got good feedback, certainly there’s some SEO help there because you’re going to link to from some places.
Ruben: Yeah. You get branded searches, they shoot up a lot, and that helps on the SEO front.
Rob: And some cash out of it. Typically, if you have a successful AppSumo deal, you can make tens of thousands of dollars that comes to you and that can be a game changer that allows you to hire that next developer or put more money into some type of spend.
Ruben: The average they said was somewhere like 2500 buys. Given the average payments and all that stuff that they do, that’s more likely above $30,000–$35,000 somewhere in there.
Rob: Dollars for a company that’s running the deal.
Ruben: Yeah, after AppSumo gets their cut and all that stuff. So, that helps. You can’t count on that. It’s just a one time thing. In my mind, there has to be a lot of other benefits besides the cash.
Rob: That’s right. To start closing us out here, someone might be listening to this thinking, “Wow, you’re nuts to go after such a competitive space.” It’s huge, but in terms of a lot of potential customers, I can throw a rock in hit an electronic signature app. One of the advantages that you have is you’re good at organic. Frankly, you’re just good at marketing. You’re good at copywriting, you’re good at testing and looking at all the things.
Let’s assume you can out market some of them, or all of them to a certain extent in different areas. You know you can get channelling, get people in. But there’s this other thing that you really looked at pretty carefully and I feel like you’ve been very deliberate about it and it’s figuring out a point or two of differentiation.
It’s something I find a lot of founders don’t think about enough, they either want to build something completely novel, in a completely new category which is very, very hard or they will exactly replicate another tool. I find that both of those are very hard ways to go. And if I were a beginner, for SaaS app, I would try to build a tool and figure out one or two key points of differentiation. Bill in an existing category in a sense like email marketing software or electronic signature which is what you’ve done.
How did you think through the differentiation? What are your one or two points where you think you’re really differentiated from HelloSign, DocuSign, and all the other myriad of tools?
Ruben: This evolved over time. We had a couple of pretty good ideas and things that some people are excited about, but then either the technical side just wasn’t going to work out and wasn’t going to be as smooth as we thought it was going to be. I had to look at building out features that wouldn’t help us stand out and change that about three times for different reasons. But we didn’t go too far into it. It was just like, “Okay, I think I found something. Let me run some screenshots, get some feedback, or things like that and then see if this is something we want to move forward to.” And then after just getting some feedback, doing a little bit of testing, realizing that, “Hmm. This is probably not the way to go.”
One of the ideas had to do with giving better guidance to people who are filling out the documents on the other side. It was fresh, new, and people got excited about it. Everything looked good about that, but then, when it came down to the sender would have to do a little bit of extra work, nobody wanted to do a little bit of extra work. The thing was just not going to work, that type of positioning.
Really, it just came from looking at all the products that are out there, the ones that people most know about and then finding out what don’t people like about these products. Some of that research took place in T-2 Crowd and all the other review sites that are out there where you can find just tons and tons of reviews. This is going through hundreds of reviews, putting them all on the spreadsheet, categorizing them, figuring out what the patterns are there, and beyond that interviews with people that are paying for these products.
Like I said, there are a lot of different ways of doing that. We leveraged the BitSketch email list a little bit for that, but then we also just did add some call to people that we didn’t know, bribed them with some Amazon gift cards and all that stuff, and just finding out where the opportunities were.
We found a few areas and the next step was, “Okay, what could a few solutions that are positioned a little bit differently, what could they look like?” Nowadays, our positioning is more focused. We’re not completely there, but we continue to move in that direction. A lot of attention is paid on the uploading and setting up document side for these electronic signature tools. Our focus, and where we continue to add features and make it better is on the recipient side, on the people that are receiving the documents, making sure that they are able to fill them out faster, and making sure that they have a better experience that what’s out there.
Rob: Yeah. Your headline is ‘Sales documents signing that cuts turnaround time in half.’
Ruben: Right. From a position […] standpoint, the benefit going back to the user is that because we’re focusing more on the recipient side, they’re going to get their documents back faster.
Rob: That’s good. When people are zigging, everyone’s zigging, and you’re going to zag. That is such a nice differentiator where it’s just not a single feature. We have this one feature that […], our whole focus is this other thing and as long as that resonates with enough people, you’ll own that positioning, you chew away at that corner of the market.
Ruben: Yeah, but at the same time we may learn that there’s something that’s more valuable for us to focus on and build out and position ourselves in a different way and if we learn that, we’ll change again.
You did a really good job of this with Drip. I remember when you start off with little widgets and you changed from that to just marketing automation which was way more valuable. This is a mistake I see a lot of people make is that they’ll get stuck on their initial thing. Right now, we’re positioning that way, but we’re losing the position that way. We’re open to seeing what’s more valuable.
I feel like a lot of people just stop listening. They just feel like, “Okay, this is what we are, this is what we do, and that’s it. If it doesn’t work, what’s wrong?” and they don’t revisit some of that fundamental stuff, some of the core stuff.
Rob: Something I really like and I’m impressed with as I watched your entrepreneurial journey in the past 10 or 11 years is you’re super meticulous and you’re disciplined. That’s what this whole story as we talk through it with the transition to Docsketch. You made hard decisions, but you did them with a bunch of research and you’re meticulous in figuring out that it was the right choice. Then, when it was the right choice, you had the discipline to make the hard call.
This is the same thing, this positioning. You have been meticulous about figuring out this is the right way, you’re going to be disciplined to stick with it until you get another answer and when you make that choice to change it, it would be the right call, at least given the information you have.
What that all leads to is, there are certain founders that I’ve watched become successful, that I question if they could do it again. Maybe they got a little lucky with something. You’re not one of them. You’re going to do it twice and you could do it five times if you wanted.
You look at David […], Jason Cohen, Heathen Shaw, Dharma, we could list the people who have done it over and over again and there is something about them. Maybe they’re not specifically meticulous and disciplined—that happened to be your trait—but those are the traits that mean that you could do this at will, you just figure out the space, you would experiment, you put in the time, you don’t look for trails, whether […], you use the data to make the best decision you can, and then you push forward. It means it’s just repeatable and you could do it over and over.
That’s what I hope folks listening to this interview take away.
Ruben: Thanks. That’s a big compliment. I do respect people a lot, that are able to do it multiple times. That’s one of my goals, is just to basically learn how to do that for myself. It’s important, or maybe not. Maybe if you get lucky and it’s a really big hit, who cares? You can make a lot of money and sell it, it’s not that big of a deal.
Rob: Yeah. Funny, when I say getting lucky, I’m not thinking of anyone in particular, honestly. I just know that there are folks where it’s like, yeah, I got really early to a space and then they struggle after that or whatever. In any case, we’re at about time. If folks want to keep up with you, aside from hitting docsketch.com to check out what you’re up to today, where they can keep up with you online?
Ruben: Probably Twitter. I know you love Twitter.
Rob: That’s my favorite.
Ruben: @earthlingworks on Twitter, just Ruben Gamez. That’s probably the other place to keep up with me.
Rob: Sounds great, man. Thanks again for coming on the show.
Ruben: Thanks for the invite.
Rob: It’s always a pleasure to talk with Ruben. He’s been on the show a few times. If you Google his name at our website, you’ll find those episodes. If you have any feedback for me, I’d appreciate if you leave a comment, send an email, the questions@stratupsfortherestofus.com or tweet it out because I’m investing more time into the podcast at this point, and I’m being very deliberate about trying to change things up a bit while Mike is on hiatus. I’m just curious to know if it’s working, if it’s impacting you, if it matters, if it makes a difference, because obviously, we’ve had a format for 449-ish episodes and that is something that we can go back to really easily and it takes a lot less time, but I’m curious if there is more value in the new approach that I’ve been taking with it.
If you have a question for the show, call our voicemail number at 1-888-801-9690 or email us at questions@stratupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us by searching for startups and visit stratupsfortherestofus.com for a full transcript of each episode. Thanks for listening and we’ll see you next time.
In this week’s episode, I have an in depth conversation with Ruben Gamez. We talk about the new app he’s building, Docsketch, in the electronic signature space. But more importantly, we look back at the 10 plus years that he’s been bootstrapping. We look at lessons learned, how he’s learned to make better decisions, how he’s meticulous and disciplined, and how that leads to him being able to make repeatable progress and being able to have repeatable successes. This is Startups For the Rest of Us Episode 456.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups, whether you’ve built your fifth startup or you’re working on your first. I’m Rob. I’m with Ruben Gamez. We’re here to share our experiences to help you avoid the same mistakes we’ve made.
The first email I received from Ruben was in January of 2009, which is more than 10 years ago, and he was asking about something I had written up, a few essays about acquiring software products. From there, he and I struck up a friendship. He had been reading my stuff for a while and wound up being one of the first four or five members of the membership website that I launched called The Micropreneur Academy that was teaching software developers, really teaching engineers how to market.
This is back in the day just as SaaS was starting to become a thing and Ruben was an early success story. He hustled and as I said in the intro, he was meticulous, disciplined, and just shipped stuff every week, even though he was working a full-time job in “managing managers who manage developers,” as he used to say. What I’ve always respected about Ruben is his analytical nature, but he has the gut instincts of a founder, and he’s someone who you know that no matter what the chips deal him, he is going to succeed at what he’s doing.
Today, in the interview, we talk about both his first product which is called Bidsketch and it started as proposal software made for designers, and he later expanded it to creating professional proposals as a horizontal play. We talk about trying to upgrade that from Rails 2.0 to Rails 3.0 and all the technical headaches that went with that in the six months of essentially wasted engineering time. And we talk about his new app that he’s running in tandem and building that in tandem with Bidsketch. It’s called Docsketch and it’s an electronic signature app. We talk about his AppSumo deal and why he decided to do that and his whole thought process of whether to do that or not. We dig into free plans at marketing first before building a whole bunch of stuff.
Ruben doesn’t do a ton of interviews. He doesn’t do conference talks, even though I ask him every year to speak at MicroConf. Every time you hear him talk, you will hear someone who’s been doing this a long time, someone who’s had substantial amount of success, and someone who’s really thought through these issues. I thoroughly enjoyed talking to Ruben today about the ups and the downs and the sidewayses of being a bootstrapper for more than 10 years, and I hope you enjoy this interview as much as I did. So, let’s dive in.
Thanks so much joining me on the show today, Ruben.
Ruben: Thanks for inviting me.
Rob: You and I talk every few weeks and have for several years, so it’s fun to get on the mic every once in a while. You have several popular Startups For the Rest of Us episodes, actually. You have the one about beating plateaus. There was one where you and I just talked about metrics. Remember where you’re doing trial-to-pay and all that? To the listener, if you go startupsfortherestofus.com, search for Ruben Gamez.
He has been on the show several times, but today I wanted to dig into stuff you’ve been working on for quite a while, Ruben, both in terms of your new app, Docsketch, but also the decision process. You run a bootstrap SaaS app for 10 years which very few people have done that. Most people sell, or they shut down, or they move on, or they find a CEO to run it or whatever, and you’ve been through a very long journey in it in a short amount of time. Ten years running a SaaS app is like 50 years in a lot of other business.
Ruben: Yeah. It’s funny you say 10 years. In some ways it doesn’t feel that way and in other ways it does.
Rob: I know because so much has changed when you think back to your very first homepage and what that looks like, or your early demo videos, or what pricing felt like back then. There’s so many things have changed and yet, you have Bidsketch. Folks who want to check it out, it’s bidsketch.com, and it’s a successful SaaS app that has employed you and your whole team. You have a team of four or five people?
Ruben: Yes. We’re hiring more people right now, so rebuilding in that process. We could talk about that a little bit later.
Rob: The first thing I want to ask you about that’s interesting is when you first launched Bidsketch, it was proposal software made for designers and you targeted the design space. It was a vertical proposal app and it caught on really well. Then a few years later, I don’t remember how long it was, you went horizontal. The headline stay as, “Create professional proposals in minutes.” You’re going after anyone who would send a proposal, any type of freelancer, contractor, agency or whatever. What led to that decision? You really did the land and expand which is a playbook in MBA speak or whatever, but you came across that organically and made that decision to expand.
Ruben: I’m trying to even think about why I chose designers to start with. I think it had to do with the amount of keywords for people searching for proposals related to web design or just graphic design. That helped me make that decision. Later on, we’re just getting customers that weren’t that, and we were getting people asking us, “Does it work for my business?” There was nothing in there that would prevent them from using it successfully for the business.
There were a lot of different signs that made it clear that we should move beyond designers. Plus, the market just for designers was too small. It was maybe a good starting point, still not sure about that. We could have just started where we ended up later, but I didn’t know back then if that was a good idea.
Rob: I was going to ask if there was any regret or if you feel like it was a mistake to start small and then go horizontal, or if you should have just started horizontal, or do you think really matters?
Ruben: At least for the app that I had at the time, there weren’t any proposal apps. So, we were creating that category. It probably didn’t matter as much for our product at that time.
Rob: Since you’ve built Bidsketch back in 2008–2009, it was written in Rails 2 and then you upgraded to 3 or you built it in 3, if I recall. You went through a painful year or so of trying to rewrite it in Rails 4. If I recall, you had a tough time finding Rails 3 developers and maybe patches weren’t coming out for it anymore. This was just 2–3 years ago, you were doing this. It’s a real struggle, I remember. Can you talk us through that? Why did you make the decision and what was the process there to try to get it rewritten?
Ruben: We actually started in Rails 2 and it’s still in Rails 2 now, which is crazy.
Rob: Oh, that’s what I forget. I say 3 because that sounds old enough, but you’re right.
Ruben: 3 is the thing we wanted. We were eventually trying to get to 4 at the time. We were like, “Okay. We can’t jump straight to 4. We need to go to 3.” From what I understand, going from 3 to 4 takes some work, but it’s not the end of the world. Going from 2 to 3 is, if you have a really mature app with a lot of code that’s been around for a while, that’s a beast and that’s what we were trying to do.
Rob: You had the bulk of your team working on that for, was it a year? Is my memory correct?
Ruben: It was maybe like eight months or so. A lot of developers working on just that and at the same time I was working on the design side. Just going back a little bit, the decision to upgrade had to do with us hitting plateaus and like you mentioned, there’s that episode that we did about plateaus and stuff. We hit three or four plateaus at different stages of growth. I don’t remember exactly what they were, but we did things like change pricing, 10X our content strategy, just different things to break out of each plateau at each time.
I got pretty good at breaking out of plateaus, but now what I know or what I feel is that if you’re hitting that many plateaus, fundamentally, there’s a problem there that needs to be fixed. We were hacking out of the plateaus for a year or two of more growth, but there was a bigger issue. Part of it was just going back and trying to figure out, “What’s going on here, how can we just stop doing this, and fundamentally fix what’s wrong?”
We did a lot of customer interviews, a lot of analysis of the data that we had, did over 100 jobs-to-be-done interviews and using the Switch framework. Switch framework has to do with when somebody switches away from a product to your product or when somebody switches away from your product to something else, during onboarding and people that canceled. You can imagine people getting people on the phone to do 30–45 minute interviews. Once they’ve canceled, it isn’t that easy, so we bribe them with Amazon gift cards, like $100. In theory, you don’t need that many, but we were interviewing a lot different segments and trying to find patterns and stuff.
After all that, we came up with three things that we could do. One of them was go upmarket enterprise, which the majority of the funded startups that were going into the proposal space were doing. They start off like we would and then just wasn’t big enough and they would go upmarket. The other one was just better served as a couple of specific segments within our market, build out better team features, agency features, go deeper in that direction. Then the third was just sell more to our existing customers. They were using products that were related. That’s why we built up Docsketch later.
The first thing that I decided to do was basically build out version 2 of Bidsketch and go with option one—better serve a segment of our market that would pay more money, that would stick around and all that stuff. But out existing product was lacking some features and to add these features and to change how it did the main thing that it did which is create proposals, we had to use new technology and hiring developers that could work with that was really hard.At the time also, Rails 2 was really old and everything was just hard because of that. We had a bunch of technical bet and we were in a bunch of code. If we were going to rebuild core parts of the application, that was a big project and we just needed to add a whole bunch of unit tests and all this stuff. We spent six months going in that direction, adding unit tests.
About that time, I saw a talk, it was DHH from Basecamp. This had already been out for a while, but I had just caught onto it, just watched it, and he was talking about how they made a mistake by trying to do the same thing that we were doing. It really gotten my interest. I watched the whole thing and basically what he was saying was that they had a very hard time. He spent six months to a year trying to make Basecamp into the next version of Basecamp. He just talked about it in terms of trying to make a chair into a desk or something like that. It was really hard. It just didn’t work and they abandoned it and started from scratch.
I watched that night and I thought, “Hmm, I think we can do it.” Of course. We kept going for a little bit longer, but I kept just thinking about that. So, I went back and I was looking at how much progress are we making. I started doing some forecasting and estimating, given our pace, that the entire team is working on this. It would have just taken way too long. We made very little progress, so then I just decided to abandon that effort.
Rob: How was that, when you decided to abandon? That must have been a really tough choice for you. What was your emotional state like once you made that decision or as you were making it?
Ruben: It’s always tough because you spend so much money with so many people working. It’s tough on several different levels. You don’t want to fail at something and just be like, “Oh, this was a really big mistake.” A couple hundred thousand dollars maybe in salaries. I didn’t calculate it out still to this day. It’s probably pretty expensive.
Rob: Too painful.
Ruben: Yes. Just a lot of developers working on it for eight months or whatever it was exactly. That’s a ton of money to just say, “Nope. This didn’t work out. Let’s do something else.” It’s tough from that perspective but also for the team. You have the team working on just this one thing and you really sell them on, “This is the direction. This is what we need to do.” Then, having to tell them, “No, this is not going to work. You should do something else.”
Rob: That’s got to be hard. When you talked to the team, did you do it on a group call? What was their reaction?
Ruben: It was on a group call. I don’t remember the specifics, but I remember that they took it much better that I thought they would. I think they were burnt out.
Rob: They were probably relieved.
Ruben: Yes. There was a little bit of relief, basically.
Rob: That’s crazy. Probably some relief for you, too, to make the decision as hard as it is. You let go of the sunk cost, right? The sunk cost was all the time, the money, and your ego of like, “Well, I made a bad call here.”
Ruben: Exactly. Before I actually had that call, it was tough just thinking about a lot. Then after the call, it was just a relief. It’s like, “Okay.” Once you make the decision, once you know you’re starting over, it’s different.”
Rob: Yeah. Wipe your hands together and say, “What’s next?” you turn your sights. That brings the question, now you are building Docsktech. Was it an immediate realization of, “I want to build an electronic signature app”? Or was it, “We’re going to build like how they do Basecamp, 1.0, 2.0, 3.0. They are all project management. They are all just approached differently. Did you think of doing Bidsketch 2.0 that would essentially be proposal software as well and complete with yourself in the sense that Basecamp did?
Ruben: Yeah. That was the next thing. It’s like, “Okay, maybe we should just build this from scratch.” We actually started doing that and spent about six months doing that and realizing that we had to make it backwards compatible and all the stuff. That’s years of work-arounds, codes and all these stuff. This is crazy. This is a lot of stuff.
Rob: So it’s a new code base, but what was the backwards compatibility? Was is like the data model or something? To import in one direction, you needed to adhere to certain standards?
Ruben: We have a feature that allows people to create proposals from scratch using HTML and CSS, so there was a lot of that, just making that old templating system work with whatever we were building, trying to make everything fit. There were just many, many examples of this. This one was a little bit shorter, it was maybe four to six months where it just felt like, “This was going to take years. I think we should go with option three,” which was basically sell more to our existing customers and better serve them.
This was the creation of the electronic signature tool, our new app, Docsketch. It felt like this one’s way easier, this one’s much smaller, doesn’t have that many features. We’re not doing a bunch of what-you-see-is-what-you-get design, development and all that stuff. You are uploading files, your over link fills, sending them out, getting documents signed. Let’s go in this direction.
We stopped again. There were a couple other reasons. Our progress was super slow with the new rebuild of Bitsketch because the team had a Rails background but not a React background. We decided to build this version 2 in React and we started to do that, but they we’re so inexperienced that as they we’re learning more, they were like, “Oh, let’s rewrite this or restart this. Oh, this is the wrong way to do that.” That was not good. They just slowed everything down even more.
Rob: Do you wish you hadn’t built in React or if you were going to do it, you need developers who were verse to it.
Ruben: Going back to that point, the better decision on my end would have been, we either build it with what we know and what we are good at, which was Rails, or we need a new team that is very experienced in React and what the direction that we’re going in.
Rob: That would be a really hard call to make, to fire most of your development team or I guess you would keep someone around maintain Bidsketch, but that would have been a tough call.
Ruben: It would have, but we wasted a lot of money because I didn’t make that call back at that point. Even when we started with Docsketch, it was also like, ” Okay, let’s do this in React. We know way more. We have six months of experience,” which is not a lot. Having a background and managing what development department a lot of developers. This is all the stuff that I’ve come across and had known. For some reason, I just made decisions that, now thinking about it, don’t really make a lot of sense.
I’ve gone back and really thought about that a lot and worked on improving both my decision-making and my ability to change and switch earlier once I recognize that we’re going in the wrong direction.
Rob: Here’s the thing that I have respected about this journey that you have taken, is that you shoot through let’s say 14 months, 16 months, 18 months, whatever of two false starts. It was to upgrade the app and then to rewrite it from scratch. It was super brutal, painful, irritating, but you did it anyway.
During that time, I remember asking you, “Are you impatient? Do you feel stressed?” And you kept saying, “No, I’m not stressed. I just want it to move faster.” But it didn’t seem to bother you the way it would bother me. I would have been super stressed and anxious. There’s just so much. I have such a tough time standing still like that. You’ve said you do, too, that you have a tough time standing still, but what does that feel to you and how did you deal with it? Most of us in our product ownership career, we’ll never stand still for 18 months or however long you did. It’s a real anomaly like how did you manage your own emotions around that?
Ruben: I think part of it has to do with me just being optimistic about my ability to do things successfully, number one. Number two, having spent so much time doing things like SEO, where you have to make these bets. It’s not like ads. You can run ads and immediately as soon as you put money into it you know that it’s working or not.
With SEO, you’re going months without any sign that it’s working a lot of times. Then eventually it starts working and I’ve done that so many times where I’m used to grinding for long periods of time. I was really thinking about this the other day, which is probably a bad thing where having grown up just feeling uncomfortable for a lot of my childhood because of being in bad situations, bad neighborhoods, bad everything, and just having this constant feeling like I’m working towards something and it’s really […] right now, but I know I’m going to eventually get out of it, so it makes it so I can deal with that a little bit better nowadays, but maybe it’s a bad thing.
Now I’m focusing on setting up these trip wires beforehand. Before a big effort, I set an expectation or a deadline or something that lets me know, “Okay, if we are not here at this stage, then either I’m going to take a really close look at stopping, or changing what we’re doing, or something, instead of enduring and grinding.”
You said many times that if I have a lot of patience and a lot of people say that about me, but I don’t feel that. I feel very impatient a lot of times and I don’t remember where I heard this, but that when there’s this mismatch of what you feel about yourself and what other people think about you, that has to do with the mismatch between your internal dialogue—which makes a lot of sense—and your actions.
Internally, I maybe saying something like, “We need to move faster. This sucks.” But externally, I’m projecting maybe something else and just continuing.
Rob: Show up everyday, shipping, getting it done.
Ruben: Right. Getting it done. There are a lot of things that just take a lot of time. I’m good with making progress when it comes to things like that.
Rob: Yeah, it makes sense. Folks want to hear more about your background. You mentioned it earlier, there’s a cluster of episodes that are really popular of the Zen founder popular podcast where Sherry interviewed several founders of their origin story. Yours is episode 25 and you go through a pretty in-depth story of your upbringing which is shocking to a lot of people and is just super interesting tale to hear, how you grew up, and how you came to start your own company.
I want to get into Docsketch, but I have one more question before we do that. Did it ever cross your mind to sell Bidsketch and just start fresh with a new app or was your plan C was to sell more things to the Bidsketch audience? Was that too compelling to make you consider selling it?
Ruben: I don’t think I ever seriously thought about selling Bidsketch because even if you think about how I started Bidsketch, I started Bidsketch when I had a full time job. I just like the approach a lot better of not starting from scratch like some people who quit their jobs and they do their new thing.
I think I would be stressed if I sold it and I had a bunch of money in the bank, but that money was going down and nothing was coming in. For me that’s different and I’m not sure why.
Rob: I’ve been there and I did the same thing. I had HitTail, I didn’t sell it, and then started Drip because I didn’t want the bank account going down every month. I was trying to run it on the side and have it throw off cash and […] the asset because then you can have your foot on two islands. You don’t have to swim to the other one and you can do it. That makes sense.
I’ve been impressed with how you approach the process of building Docsketch, not from a technical point of view, but just the thought process you went through. You started with the marketing and in this day and age, obviously you want distribution first and you want a channel, but you were way ahead of it. Before you had mock ups, before you guys had really started digging under the code, you had this whole plan of how you were going to build up this momentum and this marketing engine. Can you talk about how you were thinking that through?
I’m specifically thinking, obviously about the organic, like you are really good with SEO, but also there’s this whole thing about free plan and getting people to use something, any type of tool first and then turning that later into a Docsketch customer. I really think that, that would be interesting for folks to hear about.
Ruben: Building an electronic signature tool was basically starting from scratch. Before building it out, I just spent some time figuring it out how am I going to get customers because I’m not sure how much I’m going to be able to leverage the Bidsketch audience and I don’t want it to completely depend on that either. This is a much bigger market. Much bigger market like DocuSign is the biggest company in the market and they are at $600 million a year maybe more. They’re way more signature electronic apps in that category. There were a lot of things that appeal to me.
Freemium is being done by a couple of them, so I also wanted to play around with freemium and add some viral traffic and stuff. The first thing that I did was just look at, okay if we are starting from scratch, do some analysis in the organic traffic side, what are people searching for, what’s there?
Okay there’s a lot of traffic that we can get. A lot more than the proposal category. Then look at what the competitors are doing, not just look at what where they’re getting traffic, where’s it coming from, but I also did interviews with a bunch of DocuSign and HelloSign customers and this was targeting them with Twitter ads, sending them to a survey. If they were a recent paying customer, bribing them with an Amazon gift card.
Also, going to review sites and just analyzing everything that people liked and didn’t like about each of the competitors, creating a document with all that information, trying to figure out where are the gaps, what type of product would we need to build to position ourselves favorably in this market, and how can we do it in a way where some of the traffic that opportunities that I see, we can flow into a product. That was the high level of the whole process.
Rob: A couple things that you touched there. I find it fascinating that you’re going on a free plan especially with one of the very popular essays on my website from August 2010, was a guest post from you called Why Free Plans Don’t Work. I just think it’s hilarious that nine years later, you are actually going all in on a free plan. You want to talk about how your thinking changed?
Ruben: Back then, I did freemium with Bidsketch for about a month. It was a very short amount of time and with freemium, that’s just too short to know whether it’s working. It wasn’t until later that I realized a bunch of these things. Then, I didn’t know how freemium worked and what types of products would be best for freemium products.
Looking back, some of the reasons why it didn’t work for Bidsketch and for many of the proposal apps that I’ve tried—it hasn’t worked until this day—is because the markets is okay, but it’s not that big. The time-to-value is too long. People have to create documents, set them up, design them, and copying content. That just takes way too long. Ideally, you would have a much shorter time-to-value, like with Docsketch, you upload people’s documents, add some fills, send them off, that’s it, you’re done. Big difference.
The market is really big with Docsketch. It’s perfect for that. You did have a bit some of the viral stuff going on with the proposals, but given that the market is small, that you would need a lot more volume for it that work, it didn’t make sense.
But looking at Docsketch, the electronic signature space just has a lot of the things that will help a freemium approach work. In the early days, really you will make more money not doing freemium. That’s another thing about Freemium. It’s oftentimes a longer-term bet and like content marketing, a lot of things build that up.
Rob: That makes a lot of sense. It’s an advanced distribution tool. It’s not a pricing strategy, it’s a marketing strategy as people say. It’s something that, in your early days, when you’re trying to bootstrap and get to $8000–$10,000 a month, you can quit your job. I do think freemium is detrimental. It’s a long-term play and you have the luxury now with having this other app that is funding you and your whole team, that you have a long-term horizon to play with.
Ruben: That makes a big difference. The situation I was in was totally different. That time, I needed revenue as fast as possible. Now, the strategy that I ended up going with free trials or getting people to pay up front first is really good; worth well for that. Being in that situation is not […] for trying out freemium.
Rob: Yeah, and you spent quite a bit of time getting pages out there with organic traffic to it and the product is quasi-launched now. I feel like you’re soft-launched, but you’re not doing heavy marketing.
Ruben: Yeah. Officially, it’s open now. This was the deal, a couple months back we did an AppSumo deal. I wanted to leave it in early access when we did the deal, but they required that we open it up and let people sign-up and pay before we do the apps, which makes sense. They don’t want to be selling something that’s an early access. We did the deal. Lasted a long time, it was very different from when I’ve done it in the past. It was like three weeks.
Then I put it back into early access up until a couple of weeks ago to where I opened it back up. I felt like we have enough features at this point and we’re getting a lot more traffic. It’s just ridiculous to be an early access with the amount of traffic that we’re getting and not trying to take advantage of some of that. Last month, it’s getting more traffic than BitSketch. In a few more months, at that pace, it’ll double what we’re getting there. The strategy is different.
Rob: It’s such a larger market, right? That’s how I view it.
Ruben: It’s a much bigger market. There’s just a lot more opportunity there. I just know more now than I did back then. I’m having an easier time executing on that part.
Rob: Stair-step approach. Small SaaS up to a big one. I like it. Talk about the AppSumo deal. I actually get asked relatively frequently from folks who run a SaaS app and are considering an AppSumo deal but don’t know how to think about it and don’t know if they should do it or not. The revenue share is not huge. I believe it’s 70-30 or 80-20, where you as the founder get 30%; you get the smaller of the two. It’s really quite a cut that they take. How did you think through that because it sounds like from what you’ve told me it was the right choice for you. Why was that?
Ruben: I feel like it was a really good choice for me. Given my context of doing freemium right now and still being from a positioning standpoint, we’re not focusing on any one segment yet, even for marketing. Leaving it open, trying to learn, and see where are the most valuable customers, so that we can focus on that. The more volume we get, the more different types of companies we can get using the products, the more learning we can do the better. Then we’ll just figure out who the best types of customers we should go after are, and maybe chain positioning or maybe just put our marketing efforts in there.
AppSumo, I just saw it as a way to get a lot of different companies using the product and a lot of them that were using existing products, like DocuSign in getting a lot of feedback from them. There’s a tricky part to it when it comes to getting customers from these deal sites because a lot of the feedback that you get is just not good. You have to be very selective as far as who you’re listening to.
The framework that I use for this was anybody who’s seriously using another product and is paying a decent amount of money for the other product—they have a team of 10 people and they’re paying a couple of hundred dollars a month to use an existing product, and they’re very motivated to switch—those are the people that I’m going to listen to a lot more.
We found out that there’s some really very valuable segments that we hadn’t encountered yet through the deals. That was helpful. We got some very good feedback. Since they were highly motivated to switch because they got such a good deal and they were spending a lot of money with the existing tools, they were willing to tell us what’s really important to them before they switch, like, “Okay. We want this snap. This one thing as the thing that we really need to switch.” That helped.
Rob: Super important to have that. Those learnings are valuable and they’re hard to get in the early days of the product.
Ruben: They are very, very hard to get. Also, I almost think of them as freemium users because just looking at the stats for the amount of documents that they’re sending. They’re sending a lot of documents a month because people who get documents see that they’re sent through Docsketch, there’s some of that viral stuff going on that helps us. That helps us with word of mouth, that helps us in a lot of different ways.
It doesn’t work too well with companies that have really high support per customer. That was another thing. With Docsketch, it’s just a low support app. We can get a bunch of people here, that’s another reason why we could do freemium and it’s not that big of a deal. I know a lot of other SaaS founders that they’re in the hundreds of customers and they need a full team of support people. Between Docsketch and BitSketch, we’re serving thousands each. One person’s fine when support person, not a problem for everybody.
Rob: I’m envious of that. Certainly with Drip, we were one of those where we need a lot of support people because it’s a big complicated product. It can do a lot, but as a result, people have a lot of questions.
Ruben: Right, and Drip is a really good example. I’m not sure I would do an app […] for that. I would have to design it very carefully, but I probably wouldn’t do it because you have expenses of how much it costs each email to get sent out there. It’s just not the right type of product for that.
Rob: Yeah, and that’s the thing. Just like with freemium, AppSumo is something that can work for you, but you need to know the criteria and you need to be smarter about making the decision. It’s not an always yes or an always no. It sounds like you got a lot of learnings from it, you got good feedback, certainly there’s some SEO help there because you’re going to link to from some places.
Ruben: Yeah. You get branded searches, they shoot up a lot, and that helps on the SEO front.
Rob: And some cash out of it. Typically, if you have a successful AppSumo deal, you can make tens of thousands of dollars that comes to you and that can be a game changer that allows you to hire that next developer or put more money into some type of spend.
Ruben: The average they said was somewhere like 2500 buys. Given the average payments and all that stuff that they do, that’s more likely above $30,000–$35,000 somewhere in there.
Rob: Dollars for a company that’s running the deal.
Ruben: Yeah, after AppSumo gets their cut and all that stuff. So, that helps. You can’t count on that. It’s just a one time thing. In my mind, there has to be a lot of other benefits besides the cash.
Rob: That’s right. To start closing us out here, someone might be listening to this thinking, “Wow, you’re nuts to go after such a competitive space.” It’s huge, but in terms of a lot of potential customers, I can throw a rock in hit an electronic signature app. One of the advantages that you have is you’re good at organic. Frankly, you’re just good at marketing. You’re good at copywriting, you’re good at testing and looking at all the things.
Let’s assume you can out market some of them, or all of them to a certain extent in different areas. You know you can get channelling, get people in. But there’s this other thing that you really looked at pretty carefully and I feel like you’ve been very deliberate about it and it’s figuring out a point or two of differentiation.
It’s something I find a lot of founders don’t think about enough, they either want to build something completely novel, in a completely new category which is very, very hard or they will exactly replicate another tool. I find that both of those are very hard ways to go. And if I were a beginner, for SaaS app, I would try to build a tool and figure out one or two key points of differentiation. Bill in an existing category in a sense like email marketing software or electronic signature which is what you’ve done.
How did you think through the differentiation? What are your one or two points where you think you’re really differentiated from HelloSign, DocuSign, and all the other myriad of tools?
Ruben: This evolved over time. We had a couple of pretty good ideas and things that some people are excited about, but then either the technical side just wasn’t going to work out and wasn’t going to be as smooth as we thought it was going to be. I had to look at building out features that wouldn’t help us stand out and change that about three times for different reasons. But we didn’t go too far into it. It was just like, “Okay, I think I found something. Let me run some screenshots, get some feedback, or things like that and then see if this is something we want to move forward to.” And then after just getting some feedback, doing a little bit of testing, realizing that, “Hmm. This is probably not the way to go.”
One of the ideas had to do with giving better guidance to people who are filling out the documents on the other side. It was fresh, new, and people got excited about it. Everything looked good about that, but then, when it came down to the sender would have to do a little bit of extra work, nobody wanted to do a little bit of extra work. The thing was just not going to work, that type of positioning.
Really, it just came from looking at all the products that are out there, the ones that people most know about and then finding out what don’t people like about these products. Some of that research took place in T-2 Crowd and all the other review sites that are out there where you can find just tons and tons of reviews. This is going through hundreds of reviews, putting them all on the spreadsheet, categorizing them, figuring out what the patterns are there, and beyond that interviews with people that are paying for these products.
Like I said, there are a lot of different ways of doing that. We leveraged the BitSketch email list a little bit for that, but then we also just did add some call to people that we didn’t know, bribed them with some Amazon gift cards and all that stuff, and just finding out where the opportunities were.
We found a few areas and the next step was, “Okay, what could a few solutions that are positioned a little bit differently, what could they look like?” Nowadays, our positioning is more focused. We’re not completely there, but we continue to move in that direction. A lot of attention is paid on the uploading and setting up document side for these electronic signature tools. Our focus, and where we continue to add features and make it better is on the recipient side, on the people that are receiving the documents, making sure that they are able to fill them out faster, and making sure that they have a better experience that what’s out there.
Rob: Yeah. Your headline is ‘Sales documents signing that cuts turnaround time in half.’
Ruben: Right. From a position […] standpoint, the benefit going back to the user is that because we’re focusing more on the recipient side, they’re going to get their documents back faster.
Rob: That’s good. When people are zigging, everyone’s zigging, and you’re going to zag. That is such a nice differentiator where it’s just not a single feature. We have this one feature that […], our whole focus is this other thing and as long as that resonates with enough people, you’ll own that positioning, you chew away at that corner of the market.
Ruben: Yeah, but at the same time we may learn that there’s something that’s more valuable for us to focus on and build out and position ourselves in a different way and if we learn that, we’ll change again.
You did a really good job of this with Drip. I remember when you start off with little widgets and you changed from that to just marketing automation which was way more valuable. This is a mistake I see a lot of people make is that they’ll get stuck on their initial thing. Right now, we’re positioning that way, but we’re losing the position that way. We’re open to seeing what’s more valuable.
I feel like a lot of people just stop listening. They just feel like, “Okay, this is what we are, this is what we do, and that’s it. If it doesn’t work, what’s wrong?” and they don’t revisit some of that fundamental stuff, some of the core stuff.
Rob: Something I really like and I’m impressed with as I watched your entrepreneurial journey in the past 10 or 11 years is you’re super meticulous and you’re disciplined. That’s what this whole story as we talk through it with the transition to Docsketch. You made hard decisions, but you did them with a bunch of research and you’re meticulous in figuring out that it was the right choice. Then, when it was the right choice, you had the discipline to make the hard call.
This is the same thing, this positioning. You have been meticulous about figuring out this is the right way, you’re going to be disciplined to stick with it until you get another answer and when you make that choice to change it, it would be the right call, at least given the information you have.
What that all leads to is, there are certain founders that I’ve watched become successful, that I question if they could do it again. Maybe they got a little lucky with something. You’re not one of them. You’re going to do it twice and you could do it five times if you wanted.
You look at David […], Jason Cohen, Heathen Shaw, Dharma, we could list the people who have done it over and over again and there is something about them. Maybe they’re not specifically meticulous and disciplined—that happened to be your trait—but those are the traits that mean that you could do this at will, you just figure out the space, you would experiment, you put in the time, you don’t look for trails, whether […], you use the data to make the best decision you can, and then you push forward. It means it’s just repeatable and you could do it over and over.
That’s what I hope folks listening to this interview take away.
Ruben: Thanks. That’s a big compliment. I do respect people a lot, that are able to do it multiple times. That’s one of my goals, is just to basically learn how to do that for myself. It’s important, or maybe not. Maybe if you get lucky and it’s a really big hit, who cares? You can make a lot of money and sell it, it’s not that big of a deal.
Rob: Yeah. Funny, when I say getting lucky, I’m not thinking of anyone in particular, honestly. I just know that there are folks where it’s like, yeah, I got really early to a space and then they struggle after that or whatever. In any case, we’re at about time. If folks want to keep up with you, aside from hitting docsketch.com to check out what you’re up to today, where they can keep up with you online?
Ruben: Probably Twitter. I know you love Twitter.
Rob: That’s my favorite.
Ruben: @earthlingworks on Twitter, just Ruben Gamez. That’s probably the other place to keep up with me.
Rob: Sounds great, man. Thanks again for coming on the show.
Ruben: Thanks for the invite.
Rob: It’s always a pleasure to talk with Ruben. He’s been on the show a few times. If you Google his name at our website, you’ll find those episodes. If you have any feedback for me, I’d appreciate if you leave a comment, send an email, the questions@stratupsfortherestofus.com or tweet it out because I’m investing more time into the podcast at this point, and I’m being very deliberate about trying to change things up a bit while Mike is on hiatus. I’m just curious to know if it’s working, if it’s impacting you, if it matters, if it makes a difference, because obviously, we’ve had a format for 449-ish episodes and that is something that we can go back to really easily and it takes a lot less time, but I’m curious if there is more value in the new approach that I’ve been taking with it.
If you have a question for the show, call our voicemail number at 1-888-801-9690 or email us at questions@stratupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us by searching for startups and visit stratupsfortherestofus.com for a full transcript of each episode. Thanks for listening and we’ll see you next time.
Episode 455 | “Things I Would Have Done Differently” with Tracy Osborn of WeddingLovely
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In this episode of Startups For The Rest Of Us, Rob talks with Tracy Osborn about things she would of done differently during the 9 years she ran WeddingLovely.
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Rob: In this episode of Startups for the Rest of Us, I talk with Tracy Osborn of WeddingLovely about things she would have done differently during the nine years she ran WeddingLovely. This is Startups for the Rest of Us Episode 455.
Welcome to Startups for the Rest of Us, a podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob, and today with Tracy Osborn, we’re going to share our experiences to help you avoid the same mistakes we’ve made.
Welcome to this week’s episode of Startups for the Rest of Us. On the show, we talk about building startups in an organic sustainable fashion and while we are ambitious founders who want to grow our companies, we don’t do it at the expense of our life.
We have many different show formats. Oftentimes, we will talk about tactics and teach things. We answer listener questions. We have some founder hot seats. Today, I’m doing an interview, but it’s more of a conversation with Tracy Osborn, founder of WeddingLovely which she ran from 2010 until late 2018. I believe she actually shut it down technically in early 2019.
Tracy and I now work together at TinySeed. She’s the program manager for the accelerator. We’ve known each other for several years now. She spoke at MicroConf in 2016, and I believe that was the first time we met in person. Obviously, we’ve gotten to know each other much better over the past three or four months as we’ve worked together on TinySeed.
What I like about Tracy’s story is that it really is a story of high highs and low lows, from teaching herself to code to bootstrapping the company in 2010 and then going through two accelerators—although one of them really didn’t put much money in—winding up going through 500 Startups. WeddingLovely was really hitting on all cylinders and then catastrophic stuff happens. It’s fascinating to hear her thought process of some regrets, things she would have done differently, and other things that didn’t turn out, but she made the best decision she could at the time.
I really appreciated Tracy’s honesty and transparency in the interview today. It makes for an interesting story, like several of the guests we’ve had on recently who were able to dig into decisions they made, things they might have done differently, as well as things that they did do right, and the learnings that they took away from running a startup.
As a quick background, WeddingLovely was a blog and a wedding marketplace that matched up wedding vendors with couples who were going to be married—the engaged couples. With that bit of background, we’ll take you right into the story. Thank you so much for listening. If you enjoy this interview, I’d really appreciate it if you’d reach out on Twitter. I’m @robwalling and Tracy is @tracymakes. Let’s dive in.
Tracy, thanks so much for joining me on the show this week.
Tracy: Thanks for having me.
Rob: Listeners already have some context about WeddingLovely and how you started it. I want to start by looking at the decision you made to move from bootstrapped to taking $50,000 in funding from 500 Startups. What led to that happening and how did you make that decision?
Tracy: That was a really tough decision because before 500 Startups happened, I was fully in the bootstrapped camp. This is 2011 so TinySeed didn’t exist. All these other alternate funding or different paths, they didn’t exist. It was like, “Are you going to do a full funding route or are you going to go bootstrapping?” That was it. There was no middle ground.
I was fully in the bootstrap camp. I was already following Patrick McKenzie’s (patio11) writings about this at the time. I joined the Designer Fund in San Francisco, which is totally different than how they are now, but at the time, it was a small accelerator-ish thing where we got a really small chunk of money and we just worked together for three months meeting up every week just to work on our projects together.
One of the Designer Fund founders was a mentor at 500 and he decided to set up interviews with 500 just in case for everyone who was in Designer Fund. For me, I was like, “Okay, this is a good practice. This is great for me to go in and practice pitching and whatnot.”
It was a really interesting experience because I met with Dave McClure and Paul Singh, who I don’t think is involved with 500 anymore, but I met with Paul first. Paul was like, “I’ve seen your articles. I’ve seen you talk about WeddingLovely and why you’re building. I think you’re awesome.” He called me a cockroach which I thought was awesome. He’s like, “You’ll never die, you’re persistent, you’re in there. You’re in.” I was like, “Wow, that was easy.”
Then I sat down with Dave McClure and I gave my presentation. He said, “All right, we’ll get back to you soon.” I was like, “Oh, Paul already said I’m in,” and that totally threw Dave McClure off because I didn’t talk about this. I totally threw everything off for Dave McClure and probably what they were planning.
At that time, I wasn’t sure I was going to take it yet, but it was a thing where it’s like, “Okay, cool. I have this opportunity to go through 500.” My husband had just gone through YC. I knew I was really into bootstrapping beforehand, but it was like, “Okay, I have this offer on the table. Let’s see what happens.” That was the thought process about it.
Not everyone gets this offer, this chunk of money. I wasn’t ready. Hindsight being 20/20, that’s where I hesitate right now because I look back at the decision and be like, “I should have thought more about this. I should know more about what goes into a funded company, the growth that’s required when you’re a funded company, when you have investors, what’s involved with raising a full series A,” that kind of stuff. But it was, “Okay, this is going to be a learning experience. I have this opportunity here. I watched my husband go through YC. Let’s do it.”
Rob: Yeah, the hard part that I see with the 500 Startups investment was that they only gave you $50,000, but it came with the expectation of, “Now, you’re on venture track.” It’s not enough money to act like a funded startup in my opinion, but it sounds like you wanted to, or felt the pressure to start acting like a funded startup.
Tracy: Yeah, for sure. There are so many other complicating factors. My time in 500 was I did not utilize it as well as I should have. I’m taking a lot of stuff I’ve learned, actually, from being in 500 to what we’re building at TinySeed. Some of it was, I was a solo founder and complicating factors, I funded another wedding company the same time in my batch. They also required you to get desks at their space and they’ve set us across from each other and we were not friends. I want to be friends with them, but the other people were very aggressive. That’s like a stereotypical startup, that bad stereotype you might think of a start-up founder. That’s how they were.
Rob: Something from HBO show Silicon Valley or something.
Tracy: Exactly. We are not friends. I just felt so awkward being there with a competitor and they actually pivoted more into my space during the batch. I didn’t show up to any of the networking stuff. I didn’t do anything like the evening stuff. I didn’t really connect with the other founders. I just decided to stay in my own little world, heads down, work on things, hired someone at that time, brought her on.
This is a time that I found a co-founder, which we can talk about later, but in terms of 500, I didn’t really involve myself in the program. I didn’t really utilize the mentors that were there. I didn’t use any of the help that 500 gave me and I look back at that time being like, “Wow, I wish I could redo that,” because my social anxiety just came into play there and I didn’t use it as well as I should have.
Rob: Right, because as we’ve heard from so many people in the TinySeed batch, the community and the mentorship is at least as valuable, if not more valuable than the money they invest. It sounds like you feel you squandered that opportunity a bit.
Tracy: Absolutely. That working is so important to one’s career and the connections I could’ve made during that time. Who knows where I could be right now? Maybe the same, but if I use those connections… There are some people in my batch that have gone up on to really big startups, really amazing things. Those are the kind of connections that would have been really awesome if I was trying to find a job somewhere, but I’ve completely lost contact with them. I wasn’t friends with them during the batch. Who knows what would have happened? I look back at that time. If I could have redone the accelerator program, absolutely being involved in using the opportunities that are available, it’s something I didn’t do and I regret that.
Rob: Do you regret the decision to take the funding?
Tracy: I would say no. We can do a whole podcast on how insane the wedding industry is. I talked to a lot of people who are jumping into the wedding industry because they look at it as this industry where a lot of people are spending a lot of money and therefore is going to be really easy for someone to build a startup and just take some of that money. If you’re spending $30,000 on a wedding, of course, they’ll pay $10 for an app. It gets way more complicated than that.
With wedding history, because there’s so much competition, there are so many startups, so many people are trying to compete for people’s attention, and you have a 100% churn after a year because all these people are dropping all of your platforms, it means that advertising is a really big thing. Advertising is really expensive and that chunk of money did help. I could apply it to things to help boost the business as absolutely necessary in the wedding industry if you’re targeting people who are getting married.
That money was used. I also used that to hire someone; that was great. I did learn a lot from being in the program. I look back on it being like, “Okay, that was a really good learning experience and I wish I could redo it, but I don’t wish I did something differently,” I guess is what I would say. It wasn’t perfect. It wasn’t a perfect experience, but I learned from it. For better or worse, that’s how I got to where I am right now.
Rob: At the end of the program, there’s a demo day and that’s where folks essentially raise their seed round or preseed round these days, I guess. You decided not to raise a round. I believe you had a co-founder by that point. Do you want to talk a little bit about the co-founder and then a decision you made to pause funding right as demo day approached?
Tracy: The roller coaster of WeddingLovely; this is the peak. I was in 500. Again, I wasn’t using the program as much as I could have, but at the time, I was like, “Cool, I’m doing everything right.” There’s this absolutely amazing awesome person, Julia Grace. I believe she’s the Director of Infrastructure at Slack now. She reached out to me asking me if she can become a co-founder. I was like, “This person is amazing. She’s an amazing engineer. She would be a great CTO,” I was like, “Absolutely, come join WeddingLovely.”
Julia joined, I was in 500, and at the time, I was traveling in New York and Kellan Elliott-McCrea was the CTO of Etsy and he invited me to come into Etsy for lunch. I was again, cloud nine. I’m kicking ass, everything’s going awesomely, CTOs of Etsy are inviting me to lunch. I go over to Etsy for lunch and he drops the bomb on me saying, “Hey, let’s talk about acquiring WeddingLovely,” and I was just like, again, cloud nine, “Oh, my God, I’m doing everything right.”
The demo day was right around the corner and Julia and I decided not to really pursue it because we wanted to focus on being acquired by Etsy because I loved Etsy. Etsy would be a great fit for WeddingLovely. What they were doing at the time were switching some focus into wedding so it would have been a really awesome fit for both of us.
I did do demo day through 500 and I got to say, I bombed the first two ones. I’m much better at presenting now, but I look back on my first two pitches at demo day. They gave us two minutes to be on stage. It’s really stressful, there’s an audience of people, and I did not do well for the first two. By the third one that we did in New York, I finally got my stride. But I was like, “Oh, it doesn’t matter because I’m going to get acquired by Etsy.” Long story short, that didn’t fall. That fell through, we can explore that in a second.
Rob: I was going to ask, you didn’t do well because you weren’t preparing, you weren’t focused on it because you were counting on Etsy acquiring you, is that right?
Tracy: Yeah.
Rob: Do you have a regret around that of just knowing most acquisitions fall through? But it doesn’t feel like that when you’re in conversations with them. It feels like it’s going to happen. Do you feel like your judgment was clouded there or do you feel like you made the right call?
Tracy: Again, hindsight being 20/20, definitely judgment is clouded. I’m just not as good as a public speaker as I am now and I know that I didn’t prepare enough. It’s a silly thing to think about, but I was like, “Oh, just roll up,” and I just gave my little two-minute presentation.
Speaking of, two-minute presentations are the hardest thing in the world. It’s really hard to give a proper presentation in such a small amount of time. It’s really hard to hit all your marks and stress about making sure you remember every single moment in that presentation because you have such a small amount of time. There’s a lot of regrets for that.
Again, that’s also an opportunity. If I kicked it out of the park, even though I didn’t decide to raise money then, but the connections I could have made in that audience, of the VCs who were there, the people I could have met, the people I could have connected with is another thing that I regret not doing. I’m a huge fan of networking and meeting as many people as possible and becoming friends with as many people as possible because those are the things that are going to transform one’s career down the line.
A lot of the things that where I am right now is just because of connections I made beforehand. Like this TinySeed thing is probably because I met you at MicroConf and I spoke at MicroConf. Who knows what’s going to happen down the line? I regret not trying to pay attention during those demo days, making those friends, making those connections, and just being consumed by anxiety, making my presentation, and then running out.
Rob: I’ve done very similar things, especially early on. This is probably 10 years ago, but I would go to conferences. I’m an introvert and I don’t like meeting new people. I get stressed about it, I wouldn’t meet the other speakers, and I was anxious to go talk to people. I know how that feels.
I learned from that pretty quickly because I saw other people having those relationships and I saw what they did both for their sanity and well-being, but also for their businesses and just the opportunities that it affords. Saying yes to things that scare the […] out of you often will lead to things years down the line, as you’re saying, that you never could have predicted but that they changed the game for you.
I literally look back at my history. Not to go off on a tangent here, but I had a very similar experience where I had never met Jeff Atwood of Coding Horror. He and I blogged, we used to email back and forth, and we’d link to each other’s blog post. This was 2005–2007. I never met him in person.
He was running an event and I was super terrified, but I went up and I was just like, “Hey, man. I’m Rob Walling.” He’s like, “Hey, I love your blog,” and we were talking and he’s like, “You go into business of software?” I was like, “No, I’m not really good. It’s not my thing.” He’s like, “You should go. Let me just link you over to Joel Spolsky.” Just that step moving forward, these are the things of overcoming fears and taking risks is really what this is about, even though it’s hard.
Tracy: I have something similar. If we’re going to go even farther back in time, I feel like my career directly leads from my university graduation. I was graduating with an art degree, I was really into web design. All my classmates were into product design or physical mediums. Our keynote speaker at our commencement was a designer from Apple, came in and speak. I was like, “Whoa, a web person,” she’s talking about web and stuff. I talked to her afterwards—this was 2007—and she said, “If you want to get into the web industry, you need to go South by Southwest,” and again, I have so much anxiety. I could tell in our podcasts about how much social anxiety I have.
I did a keynote at DjangoCon US about it and it was the most terrifying thing. I took her advice and I booked myself a hotel room. I went to South by Southwest alone, didn’t know anyone there, and it’s so overwhelming. Most of the parties, I just walked in, panicked, and walked out, but on the flight back, I happened to be sitting near some attendees. Those people became my friends in the Bay Area, that introduced me to more people that I went to conferences with, and that’s a direct line to where I am right now.
Rob: There’s a concept that Jason Roberts on TekZing talks about what’s called your Luck Surface Area, increasing your luck surface area by doing a lot of things. I love the little quote from Thomas Jefferson, “The harder I work, the luckier I get,” but this is different. It’s not necessarily hard work unless you consider just getting over your own fears is hard work, which I guess I probably do, but it’s like taking risks often equates eventually. You take enough of them and it gets you to some “lucky outcomes” but they really aren’t luck.
Tracy: Right. On the anxiety topic, it still rears its head now, but 10 years of actively working on reducing it and making sure that I’m going out there and being open to these opportunities has been hard, but it’s been worth it. I’m glad that I’m a lot better now.
Rob: To resume this story, you were talking to Etsy. You weren’t putting much effort into the fundraising, into preparing for demo day, counting on that Etsy thing working out. They did ultimately make you an offer. What was that like when you received the offer? Was it via email? was it a phone conversation? Talk me through the emotion of that.
Tracy: They stepped back one step. It was funny because I had the final meeting in New York, and again, cloud nine, we’ve got flown into New York, put up in a really fancy hotel. I’d offered a non-fancy hotel and they’re like, “No, we’re going to put you up in a fancy hotel.” We had the whole day’s meetings, met with Chad Dickerson, went out to a fancy dinner afterwards with me and Julia and all the top level team. Again, I’m just like, “I am kicking butt.”
Throughout this time, I’m talking with 500, Dave McClure helped me out, getting me prepped for what happens in an acquisition, how to compose everything, and how to compose myself. I had other advisors in the Bay Area, they’re helping me figure out valuation, didn’t want to give the first number ourselves, but I wanted to have a good range of what a good valuation for my business would be so I don’t make bad decisions. I thought the prep work was great. I did everything right for that.
But it came in a call and it was the financial person. It’s not the CFO. It was actually a financial analyst or someone at Etsy. It was a call, sat down with me and Julia, and they gave us a number. The number was one-fourth of what the lowest valuation all of my advisors said that WeddingLovely was worth, especially considering that Etsy had told me that they were going to keep the website up. So, it wasn’t just going to be an acquire-hire or they were going to use the properties. I was like, “Okay, thank you.” Don’t say anything on the call, hung up. Julie and I are like, “Oh, crap.”
We went back and forth and like, “Okay, it’s a negotiation so we’ll just give another number and see if we can meet somewhere in the middle. We sent them back an email saying, “Thanks, that was not what we’re looking for. Here’s what we actually think the business is worth,” they responded with—completely unexpected; I did not expect this— “Okay, it does not look like a fit. Goodbye,” which is devastating because I expected this whole negotiation process and it was so weird. It’s so weird to me today that’s how it happened and all of my advisers in the Bay Area were like, “What is Etsy doing? This is not how an acquisition process is supposed to go.” We just went through all that effort and it just went away. It wasn’t my counter was outrageous.
So, that was weird and really devastating. Like I said, we didn’t do the full fundraising process when we had the best time for it, which was demo day, we didn’t follow up any of those meetings.
Now, this is two or three months afterwards. Our momentum has stalled. There’s no big 500 Startups demo day anymore. It was like, “Okay, what do we do? Do we launch a new product? At launch of that, do we then raise money?” Then it got really confusing, really weird, very depressing, and very crazy. That was around the time that Julia decided that she wanted to move on to other opportunities. This high that was on before just free-fell. It was horrible. It was the worst part of the business.
Rob: Just a couple months, it just went from the top top to the bottom bottom. Looking back, do you wish you’d taken Etsy’s offer? Have you ever thought about that? Even though it was low, it wouldn’t have made sense at the time. If you had, everyone would have been like, “You’re nuts.” But what if you had? Do you think that would have been a good thing?
Tracy: Oh, I go back and forth on that all the time. I can’t say numbers, it came out to being a hiring bonus essentially. If I’m going to be a proper startup founder, I’m glad I did not take it because that was a ridiculous number. Everyone agreed that was a ridiculous number and I shouldn’t take it. But having that stamp of approval, that, “Oh, I got acquired by Etsy,” on my resume, what doors would that have opened? Because people just look at those titles, that achievement, and then assume you’re so much more awesome than you actually are, which I wish I had that. I wish I had an acquisition on my record.
Working at Etsy probably would have been really great fun. I would have avoided that devastating drop of what happened afterwards with Julia leaving, I had to layoff someone. That’s when I switched the business back to bootstrapping because there was no way I was going to be fundraising at that point. I just gave up on it.
The way that WeddingLovely was built, I could just put it on autopilot. It’s at that point I was just like, “Okay, business, go do your thing and I’m just going to go over here in a corner, curl up, and be really sad.”
Rob: You’re at the highest point and within a couple of months, you have lost this acquisition offer that you really thought was going to come through. Etsy essentially walked away from the table which is surprising. In different acquisition talks that I’ve had, companies have walked away from the table, but they’ll come back a couple of weeks later. Did you expect them to do that or when they said they were gone, you were like, “This thing’s done”?
Tracy: It was a while ago. I’m trying to member exactly what happened, but I know that the feeling was this thing is done. We had an advocate at the company and we reached out to the advocate. He was like, “This is weird. I’ll get back to you.”
What happened in the end is it sounds like there was some weird miscommunication. Something happened on Etsy’s side that I am not privy to, but something happened on Etsy side where they’re like, “Wait, this is a bad decision. We’re not going to do it,” and it wasn’t how you do with WeddingLovely. Something with financials or something, but it’s just like, “No, we can’t do this right now.”
Rob: Wow. That falls apart and then Julia leaves shortly thereafter. What is that like? When Julia calls, or emails, or however that happened, how does that make you feel? Obviously, there’s got to be some despair and stress, but were you at that point thinking like, “This isn’t going to work, I should just shut this down, everything’s falling apart”?
Tracy: The day Julia sent me an email and saying, “I’m going to come to your house to work.” We didn’t have an office. We had an office for a little bit in Mountain View, but at the time, we shut it down also because everything was free-falling and she asked to come over to my house.
We sat down at my house and she was like, “Okay, I’m just going to open up with this.” I figured the exact words she said, but essentially it was like, “This has been a really interesting experience, but I’m going to move on to something else.” I was […] back, I did not expect that, and I think, “Okay, maybe you should go home now. I need time to process this. Thanks for driving all the way down to my house.” She left and I walked around the neighborhood with my dog just dying, just like, “Oh, my God, what just happened? I can’t believe this happened.”
I was really bad at Julia for a long time and I’m not mad at her now. But at the time, it felt very personal. It was very much she didn’t believe in me. A lot of it, a lot of the business, a lot of WeddingLovely, a lot of it’s my personal mistakes I’ve made as being the founder, the person who started as “CEO,” and that was never my title, which is weird. There’s a lot of mistakes I made, but I took it so personally and I did not like her, I was so mad at her for so long, but we’re friends now.
It was hard not to take it personally. It’s hard not to take the company failing personally. That’s a lot of the reason why I didn’t shut it down because I was clinging to this idea that I’m not a failure. If I shut down the business right now, then it’s me admitting that I’m a failure, that everything fell apart, and it’s all my fault. By keeping the business up, it was just like, “No, I’ll keep growing. I’ll keep building the business.” It’s still going on and it’s still making me money. I’m glad I built it in a way that I don’t have to continually spend marketing money on it because it was a marketplace. The marketplace part was pretty active at that point, so I had these businesses working with me. It was just me just trying to prove to the world that I can still make WeddingLovely a success.
Rob: I guess the question that comes to mind is, Julia was with you for eight months and she was a co-founder who came on two years after you started the company, It’s all hindsight again because you thought it would work out, but do you regret that decision of bringing a co-founder on? Not Julia. I mean, you’re friends with Julia, she’s a rock star so not for her in particular, but do you think this would have been better, easier, different if you had just not evaluated the idea of taking a co-founder on?
Tracy: Hindsight being 20/20, I wish that I was like, “Okay, I’m going to stay the founder, but you can be the CTO,” because that would have switched something in my brain. A lot of my being so offended about her quitting was like, “But you’re a founder. This is supposed to be your baby,” but no.
Because she started so late, it’s not her baby. It’s my baby. I built the first version of all the websites. I built everything from scratch myself. Of course, it’s my baby and she came in and she updated some things, she built some things herself, but she didn’t have that personal feeling like I did.
It was a disservice to everyone to call her a co-founder when it’s CTO or some of these other titles would have been a better fit. Then when she left, mentally, just like a weird logic thing, it would have felt a little better, I don’t know. That’s how I feel about it. You can’t bring a co-founder a couple years in. They’re no longer a “founder.”
Rob: I agree with that. The title is the issue here and I don’t think bringing Julia on was a mistake at all, especially at the time, it was a good move and even in retrospect, you made the best decision you could at the time. But it rings true to me that that title maybe wasn’t right because a co-founder wouldn’t have left. I shouldn’t say wouldn’t have, but there would have been more conversation and more consideration, because you’re right, having only been there eight months, she was less tied to it than you.
Tracy: Yeah. We didn’t have a lot of good conversations back and forth. I didn’t actually treat her like a co-founder and that’s my fault. I was running all the administration of the business. I was running all the vision for the business like where we’re going, what we’re doing, whatnot. I wasn’t really involving her in those conversations, which is absolutely a huge mistake because I wasn’t allowing her also to make it her baby as well.
When she left, I remember being gobsmacked. I had no idea she was unhappy, or that she wanted to leave, or if she was looking for other things. I had wished that she had told me that she was out there looking for another job because she told me she had another job lined up.
Years later, I looked back in that being like, I wasn’t involving her either and we should have had that personal connection if we’re going to be founders together of talking to each other, talking about things are going right or what’s wrong, involving her in how the business is going, and letting her be part of that planning. In those processes, I probably would’ve found out from her earlier on that she was unhappy, but I didn’t know that and that was a big failure on my part as being a founder of WeddingLovely.
Rob: You mentioned earlier that after Julia left, you went back to bootstrapping. Was that the point where you put it on autopilot? I have a blog post from you in 2016 where you talked about putting it on autopilot, but what was the timeline like there?
Tracy: This is where things get a little bit wavy. It was 2016 to now. There are points where I was like, “Okay, WeddingLovely’s running itself. I’m just going to spend a little bit of time on it.” I started working on my book business around then. It wasn’t really a business, it was like on my side, I’m going to start writing a book because I need something to bring me joy in my life and right now, WeddingLovely is not it.
Rob: This was 2016 or this was 2012?
Tracy: It’s been so long that some of these dates get mixed up, but after Julia left, I just started ignoring the business for a little bit, not really working on it. I don’t remember what I was doing, I spent a lot of time just in a depressed state.
Rob: How did that manifest itself with you? Were you just sitting at your computer, responding to email, and not actually working, but feeling like you were trying to work? Or were you just avoiding work altogether?
Tracy: I did the bare minimum to feel like, “Oh, I’m still running WeddingLovely.” I was still responding to support emails. I was still running the blog. That was a big part of WeddingLovely is that there was a weddings blog. A lot of WeddingLovely’s income came through that because we had affiliate revenue. I was so dedicated to at least doing a daily post everyday because one of my things I did well with WeddingLovely was by having this big group of businesses that WeddingLovely is representing and I tied them into our blogs. We got free content from them by sharing what the businesses were doing. It would be like photo post from our photographers, real wedding posts from our planners, or looking at invitation designs from our designers.
This allowed me to work with the companies that were on WeddingLovely and give them something of value and also encourage them to move to paid accounts by running this weddings blog. That was probably the largest piece of involvement I had was I continued to run this blog, grabbing the content from these people. I had a contractor I was working with so I didn’t actually have to move things to WordPress. I just took what the email said to her, she put onto WordPress for me, and then I came back in and set up on social media, set up the scheduled posts and stuff.
I ran all of that and it was like, “Oh, I’m still running a business.” I still told myself I was running a business, but I wasn’t looking at the numbers. I wasn’t looking at how many businesses were joining over time, was that number going up or down? What was my traffic like? It was complicated because I had 11 different properties I was running so looking at traffic for all 11 properties was terrible. That’s why I never looked at my analytics and I didn’t pay attention to any of the data that’s going on. I just ran the blog and accepted the money that came in that went straight to my bank account.
Rob: Ran it almost as a side business or like a true lifestyle business, that definition of it, it literally just is a salary and you weren’t more ambitious with it, it sounds like. At that point, you have a blog post from 2016 and I’ll quote yourself back to you, but you say, “The planning and marketplace sides of WeddingLovely would probably grow faster with dedicated marketing and sales work, but will grow naturally, slowly, but surely on their own. 2016 is already shaping up to be the biggest year yet even though I haven’t had much time to work on WeddingLovely. I’m not going to shut WeddingLovely down even though I’m looking for a full-time job since it does largely run and grow by itself. Ideally, I’ll be able to keep feature growth as well by eventually hiring a remote developer, that’s my baby WeddingLovely.” How does it feel to hear that?
Tracy: Oh, my God. I haven’t read those in a long time. I really should reread them because I have almost no memory of that. It’s so funny. Who is that person? WeddingLovely had this little peak. The marketplace was growing, like I said. It was growing and that was great because I didn’t have to worry about it.
Then the affiliate sales on the other side was growing pretty steadily. It’s one of those things I knew that would go away, but Google’s magic SEO turned in our favor and one of our blog posts got to the top of the results for a very big listing, and therefore there’s tons of money was coming in through affiliate revenue. At that time, I was like, “Oh, wow, I’m doing this lifestyle business right. Our income has doubled overnight. I can use this income.”
Around this time is when I decided to hire someone full-time to run everything for me, like a marketing person, but she also helped do emails. Ideally, it was supposed to be like she was going to help do vision and run the company and that ended up not happening which is fine. But I hired someone in Florida. I had a contractor, the same person doing WordPress, but she grew into more social media stuff in Washington, I also hired a full-time virtual assistant in the Philippines and she did all the nitty-gritty stuff. I was able to train her to help out with the social media stuff and do all the support emails and release me from doing a lot of those day-to-day things. So then I was only doing salary, taxes, bookkeeping, that kind of stuff.
That was like going back into, “Hey, I’m doing this right.” I’m doing it like a different way than when I was doing the whole Etsy stuff, but I was like, “Cool, I’m doing this lifestyle business the right way. I have people employed, the business is growing, I can start paying myself again at some point.” At that time I started paying myself, a $1000 a month was just peanuts, but it was cool to be able to employ all these people and pay myself.
Rob: Was that the right call?
Tracy: It was fun. I don’t know if it’s the right call. It’s so hard looking back on that, because…
Rob: You don’t know what’s going to happen, right?
Tracy: Yeah, but in terms of what I’ve learned in that time of having employees and running a remote business, I brought me so much joy, honestly, to have these employees and be able to, especially, Jenny, my marketing person, I reveled in being a good boss. I did everything correctly. She was engaged, she was working on things, I was hands-off, I directed her, I was able to pay for online classes to help improve what she was working on, and hopefully, now I hope she takes it to her current jobs. It was really fun.
I loved being like, “Okay, cool, I’m working on this book business that’s bringing enough money to run myself,” so I’m happy taking majority of the income of WeddingLovely and putting it towards these other people and giving them an okay lifestyle. They seem to be pretty happy. It was fun.
Rob: What happened between then and 2018? Because in October 2018, you wound up shutting it down.
Tracy: This whole time, for the last five or so years, it could be like, “I’d like to sell this business someday.” I’m just waiting for the right moment and that ended up not ever panning out and 2018 is when that Google magicalness just reversed itself. I knew that was going to happen. Google giveth, Google taketh away. One day you’re the number one on search results and then one day you’re not. I rescued this post a few times already by switching things around and returning the SEO juice back to where it was and this time, I wasn’t able to do it.
I knew that to fix the post or fix the affiliate income that was coming in, I would have to spend a lot of time on it, write a new post, or do something because instead of our income increasing by half overnight, it drops by two-thirds overnight and I was like the big panic moment. It was that moment where I was like, “Finally, I have to make a decision about this, because now it’s just not easy money anymore.”
Rob: It forced your hand. Was the majority of the income of the business coming from this one post?
Tracy: I leaned into it and that might be a regret. Because it started happening and I was like, “This is going really well. I’m going to start more posts. I’m going to do more things for affiliate revenue,” and that helped buffer everything and maybe worried less about the income that was coming on the business side, worried less about income that’s coming from other sources. When it dropped, I was not bad, I was just like, “Oh, look, it happened.” I was expecting this to happen someday.
If I wanted to continue working on WeddingLovely, at that point I could be like, “Okay, cool. Let’s switch our focus really quickly back over the business side,” because our metrics on the business was not great. The people we had almost 9000 businesses and maybe 100 paying customers—this is embarrassing to say—but I wasn’t really worried about it because I had those income coming from those sources and I wasn’t really looking for 10% month-over-month growth, I was just looking for just enough to keep things running and so when it drops, it’s like, “Okay, I can go back and spend time and work on the other side of this business or I can finally face the music and be like this is the time that it needs to go away.”
Rob: This is something that I hear people talk about and I don’t think that they totally understand how hard it is to “autopilot” a website, or a software company, or a start-up. I’ve heard people talk about a SaaS app should just be built to be profitable just like a dry cleaner or a car wash. The thing is, is (a) most dry cleaners and car washes don’t last 10, 20, 30 years, they do go out of business, and (b) it’s way more volatile with these types of businesses because as you said, Google can change overnight, another competitor can spring up.
Just the online marketing stuff changes so fast that truly having a business that is profitable and lasts for 10 years online without quite a bit of concerted effort every 12–18 months to just fight the fires, I’ve done it. I’ve owned at least 15 different software products and another probably 10–15 different websites that made money from every conceivable thing, from ecommerce to content, to Adwords, to selling software one time, to selling multiple software or subscription software, to info products. I’ve done them all and in the end, putting something on autopilot is so, so hard to actually last anything more than one, two, or three years.
That is why the multiples on a lot of these companies are so low. You’ll see a content site sell for two years of its net profit, it’s like, “That’s preposterous, that’s just crazy, that’s such a deal,” but then you get into it and you realize, “Oh, Google smacks it around every six months,” and you experience that in full force. It sounds like if you had been focused on WeddingLovely, you probably would have diversified the revenue streams, you would have had used the SEO because getting money from SEO is great from affiliate stuff. It’s a great way to do it, but to rely on it as a core focus and to build most of the company on it, it obviously isn’t going to last forever.
Tracy: Yeah, and ike I said, I was not mad when I went away. I knew that day was going to happen. It happened earlier than I thought it would. It’s funny listening to this time because I just like, “Ah, that was a lot of effort.” It was never like you said, it never was completely hands-off. My brain power, even when I hire people, I was playing so much brain power on it. After I shut it down, it was this whole process of laying off people I hired and shutting it down. After I shut down, any hackers article that I wrote at the peak which was great at the time, but now it’s like, “Oh, no,” because it’s talking about how amazing things are, like that blog post, it talked about how amazing things are and people are like, “Why don’t you just keep running it? Why don’t you just keep it off the background? Why don’t you put it back to its autopilot?”
I get this email pretty often and it’s because the brain power required just to even have something there and knowing it’s there, getting even a few emails every day or every week about it, having the deal when something changes in your server and you have to upgrade the server because everything broke or something like that, it takes a lot of time. It’s really hard to focus on doing something else appropriately when you’re split focus like that.
Rob: Yeah, focus. It’s such a huge thing and it’s undervalued in our space. In a blog post that you published in, I believe it was October 2018, about shutting it down, you look back and you talk about your decision to put it on autopilot and you said, “My passion has largely moved elsewhere to Hello Web Books, it’s been my focus for the last couple of years, but WeddingLovely largely ran itself and is making a good amount of revenue through affiliate and subscription accounts so I hired a team to keep it running a few years ago and stayed on as an advisor. It was the lazy way out. The business wasn’t evolving significantly, no new features were being launched, but the businesses and engaged couples that used our services seemed happy. I was able to employ a few folks who seemed happy as well so why not continue with it?”
It sounds like you still feel that putting it on autopilot probably wasn’t the best idea, but it was working for people. People were using it, you were employing people, and it was just the decision you made at the time.
Tracy: Yeah. The theme of this episode is always hindsight is 20/20, now that I’m working at TinySeed or just having a job. At the time, I was so hesitant to shut things down because I knew that I’d have to go in the process of actually finding something else. The book stuff wasn’t supporting me full-time and I had this decision whether I wanted to launch a new book, turn my book thing into a publishing platform, go all in on this other project that I was working on, or find an actual job. I was so scared of finding a job after working largely for myself for the last 10 years. The only other two places I’ve been employed were terrible, terrible experiences. I was dedicated working for myself because I thought that I could not have a boss.
Now that I have a job that I really enjoy, it could’ve been four years ago when I just run this business and I had employed people and it wasn’t really something I was interested in, but I was working on these other things. What if I made a decision four years ago to shut it down? Where would I be now? I don’t know what the answer is. I’m really happy again with the path that I had taken, but it is interesting to look back on that with the knowledge I have now and looking at my previous decisions and being like, “Oh, interesting.” It’s funny having those blog posts because I could see my thought process back then for better or for worse.
Rob: That’s the hard part. You said you had two jobs, you didn’t like them and therefore in your head jobs are bad. You’ll hear the same thing. You’ll hear people talk about venture capital, “Oh, I read two TechCrunch articles of a founder getting screwed by his VC, therefore venture capital is bad.” Or you’ll hear “Oh, a business built their revenue on organic search SEO and then Google smacked them around and now they went out of business.” It’s a common story. “I’ve had entire products just go under because of Google. Therefore, I’m never going to do organic search.” But no, these conclusions are too broad and they can shift, they frame your mindset in a way that you don’t even realize.
Often times, if you found the right job, then it would be good. If you find the right money under the right terms, it would be good. If you use Google for the right purposes, which is to get you enough money so that you can hire people to have other revenue streams so you’re diversified, then it’s a good thing. But it’s thinking about it in that way.
We’re all guilty of this and it’s not something that’s easy to do, but I think about some roles that I’ve hired for where I remember thinking there’s no way I can find someone to do this. We just can’t hire for this role, so I’m going to have to do it. Even program manager of TinySeed, it’s like, “This is my accelerator. Einar and I started this. Who can possibly run it in a way that it will work?”
I remember I kept telling myself, “But if we find the right person, then it’ll work.” That was what I had to tell myself to take that risk and of course, we found you and you’re the right person. It makes sense and I’m so glad that you have taken over so much of the role that I would be just bogged down with day-to-day and not able to do the other things that I need to do.
Tracy: Yeah. It’s funny about momentum, or maybe not momentum, but it’s just feeling I come on a certain path and it’s so hard to change that path. It’s so hard to consider the other paths that are available when you’re currently in a rut. I was in that rut for a really long time and it’s really hard for me to see over the edges of that rut to see what else was out there or to conceive of the work that would be required to jump out of the path I was on.
I just kept pushing it year over year over year and telling myself, “Okay, it’s great that I’m only making $30,000 or $40,000 a year because of this place that I’m working for myself. I got to travel a lot. I’ve got to work abroad for a long time. I got to do a lot of really great things. It allowed me to launch this book thing which also led to a whole other interesting set of experiences and learnings. But a lot of it is just I got into this rut and it was so hard to move myself out of it.
Now that I’m out of it, it’s interesting to look back on this experience. I’m glad I had that experience. I learned so much from it, I’ve done so much with it, but I wish that I shut down sooner. I wish I looked at the metrics. I wish I looked at how things were going. I wish that I considered that there are other things out there that could fulfill me the same way it would. I know that I’ll take those learnings to whatever I’m doing in the future. It’s all a really great learning experience. I learned so much from it. I wish I did some things differently, but I’m glad that I did it.
Rob: Final question as we wrap up. WeddingLovely could have worked. As an idea, it provided value and it could have provided you with a full-time income and employed people. Why didn’t it work?
Tracy: Wedding industry. I could talk for ages about this; I’ll try to keep it short. I actually don’t like the wedding industry myself, which is funny running a startup on the wedding industry, but I jumped into the wedding industry because I wanted to switch how it was done. I didn’t really like this focus on consumerism in the weddings and I wanted to have a place where instead of worrying about building this event where you have a to-do list of 500 to-dos long, what if you had a website that was more like a friend helping through the process, telling you the big things you have done like getting a photographer, why should you get a photographer, and what’s going on. I thought that was a good idea. I want to lead into this even better ideas.
In the wedding industry, I wish there was a place with an all-in-one booking platform like Airbnb. How great would it be if you’re getting married and you had this one platform to find people, read reviews, talk with them, do some messaging, and then do the payments and have everything under one area rather than juggling all these different vendors? That’s one of the reasons why weddings are really crazy. There’s such an opportunity here for that, but because it’s such an insanely high churn business where if you’re going to work with people who are getting married and these people are going to leave the platform in a year, you have to find a whole new set of customers that kills anyone jumping into this industry.
I did the best I could by working on the business side of things, but combining the fact that the wedding industry is really hard, it’s really hard to have repeat customers, it’s really hard to build a sustainable business on it, and then the fact that I am not interested in going to wedding fairs. I eloped in Vegas. I was not even going to touch a full wedding myself. It’s not something I’m really passionate about. I’m passionate about changing it and I always able to use that passion in that way. But a lot of that also went into why it was not good for me to run WeddingLovely as long as I did and also why WeddingLovely itself didn’t work.
Rob: Tough business, tough industry, and a little lack of product founder fit, it sounds like.
Tracy: Exactly. Again, fun process. I taught myself how to program. By building WeddingLovely, my design skills improved. I learned how to do all is crazy back-end stuff, build this crazy marketplace. I learned marketing and sales to an extent. It was a huge learning process and it was fun working in the industry. I made many amazing connections.
Would I ever do a wedding startup again? No. I liked advising wedding startups and telling them all the terrible stories I have. I won’t ever tell someone to change, but I try to tell all the problems that happens in the wedding industry when you’re building an app and why it’s not as easy as you might think. A lot of people I find think it’s easy, but I tried to be the person who is very clear about the problems I’ve had so other people can learn from it.
Rob: Thanks so much for coming on the show, Tracy. If folks want to keep up with you online, where would they do that?
Tracy: Personal website is tracyosborn.com. I’m also on Twitter as @tracymakes, Instagram, and other social media.
Rob: Sounds great. Thanks again.
Tracy: Thank you.
Rob: I want to thank Tracy again for coming on the show. I like her story because it’s not very often that someone runs a startup for nine years, puts it on autopilot, hires a team to run it, and just has these ups and downs. The experience she did and her willingness to relive that with me today is much appreciated.
That wraps us up for today. If you have a question for us, call our voicemail number at 888-801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt. It’s used under Creative Commons. Subscribe to us on iTunes by searching for startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
Welcome to Startups for the Rest of Us, a podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob, and today with Tracy Osborn, we’re going to share our experiences to help you avoid the same mistakes we’ve made.
Welcome to this week’s episode of Startups for the Rest of Us. On the show, we talk about building startups in an organic sustainable fashion and while we are ambitious founders who want to grow our companies, we don’t do it at the expense of our life.
We have many different show formats. Oftentimes, we will talk about tactics and teach things. We answer listener questions. We have some founder hot seats. Today, I’m doing an interview, but it’s more of a conversation with Tracy Osborn, founder of WeddingLovely which she ran from 2010 until late 2018. I believe she actually shut it down technically in early 2019.
Tracy and I now work together at TinySeed. She’s the program manager for the accelerator. We’ve known each other for several years now. She spoke at MicroConf in 2016, and I believe that was the first time we met in person. Obviously, we’ve gotten to know each other much better over the past three or four months as we’ve worked together on TinySeed.
What I like about Tracy’s story is that it really is a story of high highs and low lows, from teaching herself to code to bootstrapping the company in 2010 and then going through two accelerators—although one of them really didn’t put much money in—winding up going through 500 Startups. WeddingLovely was really hitting on all cylinders and then catastrophic stuff happens. It’s fascinating to hear her thought process of some regrets, things she would have done differently, and other things that didn’t turn out, but she made the best decision she could at the time.
I really appreciated Tracy’s honesty and transparency in the interview today. It makes for an interesting story, like several of the guests we’ve had on recently who were able to dig into decisions they made, things they might have done differently, as well as things that they did do right, and the learnings that they took away from running a startup.
As a quick background, WeddingLovely was a blog and a wedding marketplace that matched up wedding vendors with couples who were going to be married—the engaged couples. With that bit of background, we’ll take you right into the story. Thank you so much for listening. If you enjoy this interview, I’d really appreciate it if you’d reach out on Twitter. I’m @robwalling and Tracy is @tracymakes. Let’s dive in.
Tracy, thanks so much for joining me on the show this week.
Tracy: Thanks for having me.
Rob: Listeners already have some context about WeddingLovely and how you started it. I want to start by looking at the decision you made to move from bootstrapped to taking $50,000 in funding from 500 Startups. What led to that happening and how did you make that decision?
Tracy: That was a really tough decision because before 500 Startups happened, I was fully in the bootstrapped camp. This is 2011 so TinySeed didn’t exist. All these other alternate funding or different paths, they didn’t exist. It was like, “Are you going to do a full funding route or are you going to go bootstrapping?” That was it. There was no middle ground.
I was fully in the bootstrap camp. I was already following Patrick McKenzie’s (patio11) writings about this at the time. I joined the Designer Fund in San Francisco, which is totally different than how they are now, but at the time, it was a small accelerator-ish thing where we got a really small chunk of money and we just worked together for three months meeting up every week just to work on our projects together.
One of the Designer Fund founders was a mentor at 500 and he decided to set up interviews with 500 just in case for everyone who was in Designer Fund. For me, I was like, “Okay, this is a good practice. This is great for me to go in and practice pitching and whatnot.”
It was a really interesting experience because I met with Dave McClure and Paul Singh, who I don’t think is involved with 500 anymore, but I met with Paul first. Paul was like, “I’ve seen your articles. I’ve seen you talk about WeddingLovely and why you’re building. I think you’re awesome.” He called me a cockroach which I thought was awesome. He’s like, “You’ll never die, you’re persistent, you’re in there. You’re in.” I was like, “Wow, that was easy.”
Then I sat down with Dave McClure and I gave my presentation. He said, “All right, we’ll get back to you soon.” I was like, “Oh, Paul already said I’m in,” and that totally threw Dave McClure off because I didn’t talk about this. I totally threw everything off for Dave McClure and probably what they were planning.
At that time, I wasn’t sure I was going to take it yet, but it was a thing where it’s like, “Okay, cool. I have this opportunity to go through 500.” My husband had just gone through YC. I knew I was really into bootstrapping beforehand, but it was like, “Okay, I have this offer on the table. Let’s see what happens.” That was the thought process about it.
Not everyone gets this offer, this chunk of money. I wasn’t ready. Hindsight being 20/20, that’s where I hesitate right now because I look back at the decision and be like, “I should have thought more about this. I should know more about what goes into a funded company, the growth that’s required when you’re a funded company, when you have investors, what’s involved with raising a full series A,” that kind of stuff. But it was, “Okay, this is going to be a learning experience. I have this opportunity here. I watched my husband go through YC. Let’s do it.”
Rob: Yeah, the hard part that I see with the 500 Startups investment was that they only gave you $50,000, but it came with the expectation of, “Now, you’re on venture track.” It’s not enough money to act like a funded startup in my opinion, but it sounds like you wanted to, or felt the pressure to start acting like a funded startup.
Tracy: Yeah, for sure. There are so many other complicating factors. My time in 500 was I did not utilize it as well as I should have. I’m taking a lot of stuff I’ve learned, actually, from being in 500 to what we’re building at TinySeed. Some of it was, I was a solo founder and complicating factors, I funded another wedding company the same time in my batch. They also required you to get desks at their space and they’ve set us across from each other and we were not friends. I want to be friends with them, but the other people were very aggressive. That’s like a stereotypical startup, that bad stereotype you might think of a start-up founder. That’s how they were.
Rob: Something from HBO show Silicon Valley or something.
Tracy: Exactly. We are not friends. I just felt so awkward being there with a competitor and they actually pivoted more into my space during the batch. I didn’t show up to any of the networking stuff. I didn’t do anything like the evening stuff. I didn’t really connect with the other founders. I just decided to stay in my own little world, heads down, work on things, hired someone at that time, brought her on.
This is a time that I found a co-founder, which we can talk about later, but in terms of 500, I didn’t really involve myself in the program. I didn’t really utilize the mentors that were there. I didn’t use any of the help that 500 gave me and I look back at that time being like, “Wow, I wish I could redo that,” because my social anxiety just came into play there and I didn’t use it as well as I should have.
Rob: Right, because as we’ve heard from so many people in the TinySeed batch, the community and the mentorship is at least as valuable, if not more valuable than the money they invest. It sounds like you feel you squandered that opportunity a bit.
Tracy: Absolutely. That working is so important to one’s career and the connections I could’ve made during that time. Who knows where I could be right now? Maybe the same, but if I use those connections… There are some people in my batch that have gone up on to really big startups, really amazing things. Those are the kind of connections that would have been really awesome if I was trying to find a job somewhere, but I’ve completely lost contact with them. I wasn’t friends with them during the batch. Who knows what would have happened? I look back at that time. If I could have redone the accelerator program, absolutely being involved in using the opportunities that are available, it’s something I didn’t do and I regret that.
Rob: Do you regret the decision to take the funding?
Tracy: I would say no. We can do a whole podcast on how insane the wedding industry is. I talked to a lot of people who are jumping into the wedding industry because they look at it as this industry where a lot of people are spending a lot of money and therefore is going to be really easy for someone to build a startup and just take some of that money. If you’re spending $30,000 on a wedding, of course, they’ll pay $10 for an app. It gets way more complicated than that.
With wedding history, because there’s so much competition, there are so many startups, so many people are trying to compete for people’s attention, and you have a 100% churn after a year because all these people are dropping all of your platforms, it means that advertising is a really big thing. Advertising is really expensive and that chunk of money did help. I could apply it to things to help boost the business as absolutely necessary in the wedding industry if you’re targeting people who are getting married.
That money was used. I also used that to hire someone; that was great. I did learn a lot from being in the program. I look back on it being like, “Okay, that was a really good learning experience and I wish I could redo it, but I don’t wish I did something differently,” I guess is what I would say. It wasn’t perfect. It wasn’t a perfect experience, but I learned from it. For better or worse, that’s how I got to where I am right now.
Rob: At the end of the program, there’s a demo day and that’s where folks essentially raise their seed round or preseed round these days, I guess. You decided not to raise a round. I believe you had a co-founder by that point. Do you want to talk a little bit about the co-founder and then a decision you made to pause funding right as demo day approached?
Tracy: The roller coaster of WeddingLovely; this is the peak. I was in 500. Again, I wasn’t using the program as much as I could have, but at the time, I was like, “Cool, I’m doing everything right.” There’s this absolutely amazing awesome person, Julia Grace. I believe she’s the Director of Infrastructure at Slack now. She reached out to me asking me if she can become a co-founder. I was like, “This person is amazing. She’s an amazing engineer. She would be a great CTO,” I was like, “Absolutely, come join WeddingLovely.”
Julia joined, I was in 500, and at the time, I was traveling in New York and Kellan Elliott-McCrea was the CTO of Etsy and he invited me to come into Etsy for lunch. I was again, cloud nine. I’m kicking ass, everything’s going awesomely, CTOs of Etsy are inviting me to lunch. I go over to Etsy for lunch and he drops the bomb on me saying, “Hey, let’s talk about acquiring WeddingLovely,” and I was just like, again, cloud nine, “Oh, my God, I’m doing everything right.”
The demo day was right around the corner and Julia and I decided not to really pursue it because we wanted to focus on being acquired by Etsy because I loved Etsy. Etsy would be a great fit for WeddingLovely. What they were doing at the time were switching some focus into wedding so it would have been a really awesome fit for both of us.
I did do demo day through 500 and I got to say, I bombed the first two ones. I’m much better at presenting now, but I look back on my first two pitches at demo day. They gave us two minutes to be on stage. It’s really stressful, there’s an audience of people, and I did not do well for the first two. By the third one that we did in New York, I finally got my stride. But I was like, “Oh, it doesn’t matter because I’m going to get acquired by Etsy.” Long story short, that didn’t fall. That fell through, we can explore that in a second.
Rob: I was going to ask, you didn’t do well because you weren’t preparing, you weren’t focused on it because you were counting on Etsy acquiring you, is that right?
Tracy: Yeah.
Rob: Do you have a regret around that of just knowing most acquisitions fall through? But it doesn’t feel like that when you’re in conversations with them. It feels like it’s going to happen. Do you feel like your judgment was clouded there or do you feel like you made the right call?
Tracy: Again, hindsight being 20/20, definitely judgment is clouded. I’m just not as good as a public speaker as I am now and I know that I didn’t prepare enough. It’s a silly thing to think about, but I was like, “Oh, just roll up,” and I just gave my little two-minute presentation.
Speaking of, two-minute presentations are the hardest thing in the world. It’s really hard to give a proper presentation in such a small amount of time. It’s really hard to hit all your marks and stress about making sure you remember every single moment in that presentation because you have such a small amount of time. There’s a lot of regrets for that.
Again, that’s also an opportunity. If I kicked it out of the park, even though I didn’t decide to raise money then, but the connections I could have made in that audience, of the VCs who were there, the people I could have met, the people I could have connected with is another thing that I regret not doing. I’m a huge fan of networking and meeting as many people as possible and becoming friends with as many people as possible because those are the things that are going to transform one’s career down the line.
A lot of the things that where I am right now is just because of connections I made beforehand. Like this TinySeed thing is probably because I met you at MicroConf and I spoke at MicroConf. Who knows what’s going to happen down the line? I regret not trying to pay attention during those demo days, making those friends, making those connections, and just being consumed by anxiety, making my presentation, and then running out.
Rob: I’ve done very similar things, especially early on. This is probably 10 years ago, but I would go to conferences. I’m an introvert and I don’t like meeting new people. I get stressed about it, I wouldn’t meet the other speakers, and I was anxious to go talk to people. I know how that feels.
I learned from that pretty quickly because I saw other people having those relationships and I saw what they did both for their sanity and well-being, but also for their businesses and just the opportunities that it affords. Saying yes to things that scare the […] out of you often will lead to things years down the line, as you’re saying, that you never could have predicted but that they changed the game for you.
I literally look back at my history. Not to go off on a tangent here, but I had a very similar experience where I had never met Jeff Atwood of Coding Horror. He and I blogged, we used to email back and forth, and we’d link to each other’s blog post. This was 2005–2007. I never met him in person.
He was running an event and I was super terrified, but I went up and I was just like, “Hey, man. I’m Rob Walling.” He’s like, “Hey, I love your blog,” and we were talking and he’s like, “You go into business of software?” I was like, “No, I’m not really good. It’s not my thing.” He’s like, “You should go. Let me just link you over to Joel Spolsky.” Just that step moving forward, these are the things of overcoming fears and taking risks is really what this is about, even though it’s hard.
Tracy: I have something similar. If we’re going to go even farther back in time, I feel like my career directly leads from my university graduation. I was graduating with an art degree, I was really into web design. All my classmates were into product design or physical mediums. Our keynote speaker at our commencement was a designer from Apple, came in and speak. I was like, “Whoa, a web person,” she’s talking about web and stuff. I talked to her afterwards—this was 2007—and she said, “If you want to get into the web industry, you need to go South by Southwest,” and again, I have so much anxiety. I could tell in our podcasts about how much social anxiety I have.
I did a keynote at DjangoCon US about it and it was the most terrifying thing. I took her advice and I booked myself a hotel room. I went to South by Southwest alone, didn’t know anyone there, and it’s so overwhelming. Most of the parties, I just walked in, panicked, and walked out, but on the flight back, I happened to be sitting near some attendees. Those people became my friends in the Bay Area, that introduced me to more people that I went to conferences with, and that’s a direct line to where I am right now.
Rob: There’s a concept that Jason Roberts on TekZing talks about what’s called your Luck Surface Area, increasing your luck surface area by doing a lot of things. I love the little quote from Thomas Jefferson, “The harder I work, the luckier I get,” but this is different. It’s not necessarily hard work unless you consider just getting over your own fears is hard work, which I guess I probably do, but it’s like taking risks often equates eventually. You take enough of them and it gets you to some “lucky outcomes” but they really aren’t luck.
Tracy: Right. On the anxiety topic, it still rears its head now, but 10 years of actively working on reducing it and making sure that I’m going out there and being open to these opportunities has been hard, but it’s been worth it. I’m glad that I’m a lot better now.
Rob: To resume this story, you were talking to Etsy. You weren’t putting much effort into the fundraising, into preparing for demo day, counting on that Etsy thing working out. They did ultimately make you an offer. What was that like when you received the offer? Was it via email? was it a phone conversation? Talk me through the emotion of that.
Tracy: They stepped back one step. It was funny because I had the final meeting in New York, and again, cloud nine, we’ve got flown into New York, put up in a really fancy hotel. I’d offered a non-fancy hotel and they’re like, “No, we’re going to put you up in a fancy hotel.” We had the whole day’s meetings, met with Chad Dickerson, went out to a fancy dinner afterwards with me and Julia and all the top level team. Again, I’m just like, “I am kicking butt.”
Throughout this time, I’m talking with 500, Dave McClure helped me out, getting me prepped for what happens in an acquisition, how to compose everything, and how to compose myself. I had other advisors in the Bay Area, they’re helping me figure out valuation, didn’t want to give the first number ourselves, but I wanted to have a good range of what a good valuation for my business would be so I don’t make bad decisions. I thought the prep work was great. I did everything right for that.
But it came in a call and it was the financial person. It’s not the CFO. It was actually a financial analyst or someone at Etsy. It was a call, sat down with me and Julia, and they gave us a number. The number was one-fourth of what the lowest valuation all of my advisors said that WeddingLovely was worth, especially considering that Etsy had told me that they were going to keep the website up. So, it wasn’t just going to be an acquire-hire or they were going to use the properties. I was like, “Okay, thank you.” Don’t say anything on the call, hung up. Julie and I are like, “Oh, crap.”
We went back and forth and like, “Okay, it’s a negotiation so we’ll just give another number and see if we can meet somewhere in the middle. We sent them back an email saying, “Thanks, that was not what we’re looking for. Here’s what we actually think the business is worth,” they responded with—completely unexpected; I did not expect this— “Okay, it does not look like a fit. Goodbye,” which is devastating because I expected this whole negotiation process and it was so weird. It’s so weird to me today that’s how it happened and all of my advisers in the Bay Area were like, “What is Etsy doing? This is not how an acquisition process is supposed to go.” We just went through all that effort and it just went away. It wasn’t my counter was outrageous.
So, that was weird and really devastating. Like I said, we didn’t do the full fundraising process when we had the best time for it, which was demo day, we didn’t follow up any of those meetings.
Now, this is two or three months afterwards. Our momentum has stalled. There’s no big 500 Startups demo day anymore. It was like, “Okay, what do we do? Do we launch a new product? At launch of that, do we then raise money?” Then it got really confusing, really weird, very depressing, and very crazy. That was around the time that Julia decided that she wanted to move on to other opportunities. This high that was on before just free-fell. It was horrible. It was the worst part of the business.
Rob: Just a couple months, it just went from the top top to the bottom bottom. Looking back, do you wish you’d taken Etsy’s offer? Have you ever thought about that? Even though it was low, it wouldn’t have made sense at the time. If you had, everyone would have been like, “You’re nuts.” But what if you had? Do you think that would have been a good thing?
Tracy: Oh, I go back and forth on that all the time. I can’t say numbers, it came out to being a hiring bonus essentially. If I’m going to be a proper startup founder, I’m glad I did not take it because that was a ridiculous number. Everyone agreed that was a ridiculous number and I shouldn’t take it. But having that stamp of approval, that, “Oh, I got acquired by Etsy,” on my resume, what doors would that have opened? Because people just look at those titles, that achievement, and then assume you’re so much more awesome than you actually are, which I wish I had that. I wish I had an acquisition on my record.
Working at Etsy probably would have been really great fun. I would have avoided that devastating drop of what happened afterwards with Julia leaving, I had to layoff someone. That’s when I switched the business back to bootstrapping because there was no way I was going to be fundraising at that point. I just gave up on it.
The way that WeddingLovely was built, I could just put it on autopilot. It’s at that point I was just like, “Okay, business, go do your thing and I’m just going to go over here in a corner, curl up, and be really sad.”
Rob: You’re at the highest point and within a couple of months, you have lost this acquisition offer that you really thought was going to come through. Etsy essentially walked away from the table which is surprising. In different acquisition talks that I’ve had, companies have walked away from the table, but they’ll come back a couple of weeks later. Did you expect them to do that or when they said they were gone, you were like, “This thing’s done”?
Tracy: It was a while ago. I’m trying to member exactly what happened, but I know that the feeling was this thing is done. We had an advocate at the company and we reached out to the advocate. He was like, “This is weird. I’ll get back to you.”
What happened in the end is it sounds like there was some weird miscommunication. Something happened on Etsy’s side that I am not privy to, but something happened on Etsy side where they’re like, “Wait, this is a bad decision. We’re not going to do it,” and it wasn’t how you do with WeddingLovely. Something with financials or something, but it’s just like, “No, we can’t do this right now.”
Rob: Wow. That falls apart and then Julia leaves shortly thereafter. What is that like? When Julia calls, or emails, or however that happened, how does that make you feel? Obviously, there’s got to be some despair and stress, but were you at that point thinking like, “This isn’t going to work, I should just shut this down, everything’s falling apart”?
Tracy: The day Julia sent me an email and saying, “I’m going to come to your house to work.” We didn’t have an office. We had an office for a little bit in Mountain View, but at the time, we shut it down also because everything was free-falling and she asked to come over to my house.
We sat down at my house and she was like, “Okay, I’m just going to open up with this.” I figured the exact words she said, but essentially it was like, “This has been a really interesting experience, but I’m going to move on to something else.” I was […] back, I did not expect that, and I think, “Okay, maybe you should go home now. I need time to process this. Thanks for driving all the way down to my house.” She left and I walked around the neighborhood with my dog just dying, just like, “Oh, my God, what just happened? I can’t believe this happened.”
I was really bad at Julia for a long time and I’m not mad at her now. But at the time, it felt very personal. It was very much she didn’t believe in me. A lot of it, a lot of the business, a lot of WeddingLovely, a lot of it’s my personal mistakes I’ve made as being the founder, the person who started as “CEO,” and that was never my title, which is weird. There’s a lot of mistakes I made, but I took it so personally and I did not like her, I was so mad at her for so long, but we’re friends now.
It was hard not to take it personally. It’s hard not to take the company failing personally. That’s a lot of the reason why I didn’t shut it down because I was clinging to this idea that I’m not a failure. If I shut down the business right now, then it’s me admitting that I’m a failure, that everything fell apart, and it’s all my fault. By keeping the business up, it was just like, “No, I’ll keep growing. I’ll keep building the business.” It’s still going on and it’s still making me money. I’m glad I built it in a way that I don’t have to continually spend marketing money on it because it was a marketplace. The marketplace part was pretty active at that point, so I had these businesses working with me. It was just me just trying to prove to the world that I can still make WeddingLovely a success.
Rob: I guess the question that comes to mind is, Julia was with you for eight months and she was a co-founder who came on two years after you started the company, It’s all hindsight again because you thought it would work out, but do you regret that decision of bringing a co-founder on? Not Julia. I mean, you’re friends with Julia, she’s a rock star so not for her in particular, but do you think this would have been better, easier, different if you had just not evaluated the idea of taking a co-founder on?
Tracy: Hindsight being 20/20, I wish that I was like, “Okay, I’m going to stay the founder, but you can be the CTO,” because that would have switched something in my brain. A lot of my being so offended about her quitting was like, “But you’re a founder. This is supposed to be your baby,” but no.
Because she started so late, it’s not her baby. It’s my baby. I built the first version of all the websites. I built everything from scratch myself. Of course, it’s my baby and she came in and she updated some things, she built some things herself, but she didn’t have that personal feeling like I did.
It was a disservice to everyone to call her a co-founder when it’s CTO or some of these other titles would have been a better fit. Then when she left, mentally, just like a weird logic thing, it would have felt a little better, I don’t know. That’s how I feel about it. You can’t bring a co-founder a couple years in. They’re no longer a “founder.”
Rob: I agree with that. The title is the issue here and I don’t think bringing Julia on was a mistake at all, especially at the time, it was a good move and even in retrospect, you made the best decision you could at the time. But it rings true to me that that title maybe wasn’t right because a co-founder wouldn’t have left. I shouldn’t say wouldn’t have, but there would have been more conversation and more consideration, because you’re right, having only been there eight months, she was less tied to it than you.
Tracy: Yeah. We didn’t have a lot of good conversations back and forth. I didn’t actually treat her like a co-founder and that’s my fault. I was running all the administration of the business. I was running all the vision for the business like where we’re going, what we’re doing, whatnot. I wasn’t really involving her in those conversations, which is absolutely a huge mistake because I wasn’t allowing her also to make it her baby as well.
When she left, I remember being gobsmacked. I had no idea she was unhappy, or that she wanted to leave, or if she was looking for other things. I had wished that she had told me that she was out there looking for another job because she told me she had another job lined up.
Years later, I looked back in that being like, I wasn’t involving her either and we should have had that personal connection if we’re going to be founders together of talking to each other, talking about things are going right or what’s wrong, involving her in how the business is going, and letting her be part of that planning. In those processes, I probably would’ve found out from her earlier on that she was unhappy, but I didn’t know that and that was a big failure on my part as being a founder of WeddingLovely.
Rob: You mentioned earlier that after Julia left, you went back to bootstrapping. Was that the point where you put it on autopilot? I have a blog post from you in 2016 where you talked about putting it on autopilot, but what was the timeline like there?
Tracy: This is where things get a little bit wavy. It was 2016 to now. There are points where I was like, “Okay, WeddingLovely’s running itself. I’m just going to spend a little bit of time on it.” I started working on my book business around then. It wasn’t really a business, it was like on my side, I’m going to start writing a book because I need something to bring me joy in my life and right now, WeddingLovely is not it.
Rob: This was 2016 or this was 2012?
Tracy: It’s been so long that some of these dates get mixed up, but after Julia left, I just started ignoring the business for a little bit, not really working on it. I don’t remember what I was doing, I spent a lot of time just in a depressed state.
Rob: How did that manifest itself with you? Were you just sitting at your computer, responding to email, and not actually working, but feeling like you were trying to work? Or were you just avoiding work altogether?
Tracy: I did the bare minimum to feel like, “Oh, I’m still running WeddingLovely.” I was still responding to support emails. I was still running the blog. That was a big part of WeddingLovely is that there was a weddings blog. A lot of WeddingLovely’s income came through that because we had affiliate revenue. I was so dedicated to at least doing a daily post everyday because one of my things I did well with WeddingLovely was by having this big group of businesses that WeddingLovely is representing and I tied them into our blogs. We got free content from them by sharing what the businesses were doing. It would be like photo post from our photographers, real wedding posts from our planners, or looking at invitation designs from our designers.
This allowed me to work with the companies that were on WeddingLovely and give them something of value and also encourage them to move to paid accounts by running this weddings blog. That was probably the largest piece of involvement I had was I continued to run this blog, grabbing the content from these people. I had a contractor I was working with so I didn’t actually have to move things to WordPress. I just took what the email said to her, she put onto WordPress for me, and then I came back in and set up on social media, set up the scheduled posts and stuff.
I ran all of that and it was like, “Oh, I’m still running a business.” I still told myself I was running a business, but I wasn’t looking at the numbers. I wasn’t looking at how many businesses were joining over time, was that number going up or down? What was my traffic like? It was complicated because I had 11 different properties I was running so looking at traffic for all 11 properties was terrible. That’s why I never looked at my analytics and I didn’t pay attention to any of the data that’s going on. I just ran the blog and accepted the money that came in that went straight to my bank account.
Rob: Ran it almost as a side business or like a true lifestyle business, that definition of it, it literally just is a salary and you weren’t more ambitious with it, it sounds like. At that point, you have a blog post from 2016 and I’ll quote yourself back to you, but you say, “The planning and marketplace sides of WeddingLovely would probably grow faster with dedicated marketing and sales work, but will grow naturally, slowly, but surely on their own. 2016 is already shaping up to be the biggest year yet even though I haven’t had much time to work on WeddingLovely. I’m not going to shut WeddingLovely down even though I’m looking for a full-time job since it does largely run and grow by itself. Ideally, I’ll be able to keep feature growth as well by eventually hiring a remote developer, that’s my baby WeddingLovely.” How does it feel to hear that?
Tracy: Oh, my God. I haven’t read those in a long time. I really should reread them because I have almost no memory of that. It’s so funny. Who is that person? WeddingLovely had this little peak. The marketplace was growing, like I said. It was growing and that was great because I didn’t have to worry about it.
Then the affiliate sales on the other side was growing pretty steadily. It’s one of those things I knew that would go away, but Google’s magic SEO turned in our favor and one of our blog posts got to the top of the results for a very big listing, and therefore there’s tons of money was coming in through affiliate revenue. At that time, I was like, “Oh, wow, I’m doing this lifestyle business right. Our income has doubled overnight. I can use this income.”
Around this time is when I decided to hire someone full-time to run everything for me, like a marketing person, but she also helped do emails. Ideally, it was supposed to be like she was going to help do vision and run the company and that ended up not happening which is fine. But I hired someone in Florida. I had a contractor, the same person doing WordPress, but she grew into more social media stuff in Washington, I also hired a full-time virtual assistant in the Philippines and she did all the nitty-gritty stuff. I was able to train her to help out with the social media stuff and do all the support emails and release me from doing a lot of those day-to-day things. So then I was only doing salary, taxes, bookkeeping, that kind of stuff.
That was like going back into, “Hey, I’m doing this right.” I’m doing it like a different way than when I was doing the whole Etsy stuff, but I was like, “Cool, I’m doing this lifestyle business the right way. I have people employed, the business is growing, I can start paying myself again at some point.” At that time I started paying myself, a $1000 a month was just peanuts, but it was cool to be able to employ all these people and pay myself.
Rob: Was that the right call?
Tracy: It was fun. I don’t know if it’s the right call. It’s so hard looking back on that, because…
Rob: You don’t know what’s going to happen, right?
Tracy: Yeah, but in terms of what I’ve learned in that time of having employees and running a remote business, I brought me so much joy, honestly, to have these employees and be able to, especially, Jenny, my marketing person, I reveled in being a good boss. I did everything correctly. She was engaged, she was working on things, I was hands-off, I directed her, I was able to pay for online classes to help improve what she was working on, and hopefully, now I hope she takes it to her current jobs. It was really fun.
I loved being like, “Okay, cool, I’m working on this book business that’s bringing enough money to run myself,” so I’m happy taking majority of the income of WeddingLovely and putting it towards these other people and giving them an okay lifestyle. They seem to be pretty happy. It was fun.
Rob: What happened between then and 2018? Because in October 2018, you wound up shutting it down.
Tracy: This whole time, for the last five or so years, it could be like, “I’d like to sell this business someday.” I’m just waiting for the right moment and that ended up not ever panning out and 2018 is when that Google magicalness just reversed itself. I knew that was going to happen. Google giveth, Google taketh away. One day you’re the number one on search results and then one day you’re not. I rescued this post a few times already by switching things around and returning the SEO juice back to where it was and this time, I wasn’t able to do it.
I knew that to fix the post or fix the affiliate income that was coming in, I would have to spend a lot of time on it, write a new post, or do something because instead of our income increasing by half overnight, it drops by two-thirds overnight and I was like the big panic moment. It was that moment where I was like, “Finally, I have to make a decision about this, because now it’s just not easy money anymore.”
Rob: It forced your hand. Was the majority of the income of the business coming from this one post?
Tracy: I leaned into it and that might be a regret. Because it started happening and I was like, “This is going really well. I’m going to start more posts. I’m going to do more things for affiliate revenue,” and that helped buffer everything and maybe worried less about the income that was coming on the business side, worried less about income that’s coming from other sources. When it dropped, I was not bad, I was just like, “Oh, look, it happened.” I was expecting this to happen someday.
If I wanted to continue working on WeddingLovely, at that point I could be like, “Okay, cool. Let’s switch our focus really quickly back over the business side,” because our metrics on the business was not great. The people we had almost 9000 businesses and maybe 100 paying customers—this is embarrassing to say—but I wasn’t really worried about it because I had those income coming from those sources and I wasn’t really looking for 10% month-over-month growth, I was just looking for just enough to keep things running and so when it drops, it’s like, “Okay, I can go back and spend time and work on the other side of this business or I can finally face the music and be like this is the time that it needs to go away.”
Rob: This is something that I hear people talk about and I don’t think that they totally understand how hard it is to “autopilot” a website, or a software company, or a start-up. I’ve heard people talk about a SaaS app should just be built to be profitable just like a dry cleaner or a car wash. The thing is, is (a) most dry cleaners and car washes don’t last 10, 20, 30 years, they do go out of business, and (b) it’s way more volatile with these types of businesses because as you said, Google can change overnight, another competitor can spring up.
Just the online marketing stuff changes so fast that truly having a business that is profitable and lasts for 10 years online without quite a bit of concerted effort every 12–18 months to just fight the fires, I’ve done it. I’ve owned at least 15 different software products and another probably 10–15 different websites that made money from every conceivable thing, from ecommerce to content, to Adwords, to selling software one time, to selling multiple software or subscription software, to info products. I’ve done them all and in the end, putting something on autopilot is so, so hard to actually last anything more than one, two, or three years.
That is why the multiples on a lot of these companies are so low. You’ll see a content site sell for two years of its net profit, it’s like, “That’s preposterous, that’s just crazy, that’s such a deal,” but then you get into it and you realize, “Oh, Google smacks it around every six months,” and you experience that in full force. It sounds like if you had been focused on WeddingLovely, you probably would have diversified the revenue streams, you would have had used the SEO because getting money from SEO is great from affiliate stuff. It’s a great way to do it, but to rely on it as a core focus and to build most of the company on it, it obviously isn’t going to last forever.
Tracy: Yeah, and ike I said, I was not mad when I went away. I knew that day was going to happen. It happened earlier than I thought it would. It’s funny listening to this time because I just like, “Ah, that was a lot of effort.” It was never like you said, it never was completely hands-off. My brain power, even when I hire people, I was playing so much brain power on it. After I shut it down, it was this whole process of laying off people I hired and shutting it down. After I shut down, any hackers article that I wrote at the peak which was great at the time, but now it’s like, “Oh, no,” because it’s talking about how amazing things are, like that blog post, it talked about how amazing things are and people are like, “Why don’t you just keep running it? Why don’t you just keep it off the background? Why don’t you put it back to its autopilot?”
I get this email pretty often and it’s because the brain power required just to even have something there and knowing it’s there, getting even a few emails every day or every week about it, having the deal when something changes in your server and you have to upgrade the server because everything broke or something like that, it takes a lot of time. It’s really hard to focus on doing something else appropriately when you’re split focus like that.
Rob: Yeah, focus. It’s such a huge thing and it’s undervalued in our space. In a blog post that you published in, I believe it was October 2018, about shutting it down, you look back and you talk about your decision to put it on autopilot and you said, “My passion has largely moved elsewhere to Hello Web Books, it’s been my focus for the last couple of years, but WeddingLovely largely ran itself and is making a good amount of revenue through affiliate and subscription accounts so I hired a team to keep it running a few years ago and stayed on as an advisor. It was the lazy way out. The business wasn’t evolving significantly, no new features were being launched, but the businesses and engaged couples that used our services seemed happy. I was able to employ a few folks who seemed happy as well so why not continue with it?”
It sounds like you still feel that putting it on autopilot probably wasn’t the best idea, but it was working for people. People were using it, you were employing people, and it was just the decision you made at the time.
Tracy: Yeah. The theme of this episode is always hindsight is 20/20, now that I’m working at TinySeed or just having a job. At the time, I was so hesitant to shut things down because I knew that I’d have to go in the process of actually finding something else. The book stuff wasn’t supporting me full-time and I had this decision whether I wanted to launch a new book, turn my book thing into a publishing platform, go all in on this other project that I was working on, or find an actual job. I was so scared of finding a job after working largely for myself for the last 10 years. The only other two places I’ve been employed were terrible, terrible experiences. I was dedicated working for myself because I thought that I could not have a boss.
Now that I have a job that I really enjoy, it could’ve been four years ago when I just run this business and I had employed people and it wasn’t really something I was interested in, but I was working on these other things. What if I made a decision four years ago to shut it down? Where would I be now? I don’t know what the answer is. I’m really happy again with the path that I had taken, but it is interesting to look back on that with the knowledge I have now and looking at my previous decisions and being like, “Oh, interesting.” It’s funny having those blog posts because I could see my thought process back then for better or for worse.
Rob: That’s the hard part. You said you had two jobs, you didn’t like them and therefore in your head jobs are bad. You’ll hear the same thing. You’ll hear people talk about venture capital, “Oh, I read two TechCrunch articles of a founder getting screwed by his VC, therefore venture capital is bad.” Or you’ll hear “Oh, a business built their revenue on organic search SEO and then Google smacked them around and now they went out of business.” It’s a common story. “I’ve had entire products just go under because of Google. Therefore, I’m never going to do organic search.” But no, these conclusions are too broad and they can shift, they frame your mindset in a way that you don’t even realize.
Often times, if you found the right job, then it would be good. If you find the right money under the right terms, it would be good. If you use Google for the right purposes, which is to get you enough money so that you can hire people to have other revenue streams so you’re diversified, then it’s a good thing. But it’s thinking about it in that way.
We’re all guilty of this and it’s not something that’s easy to do, but I think about some roles that I’ve hired for where I remember thinking there’s no way I can find someone to do this. We just can’t hire for this role, so I’m going to have to do it. Even program manager of TinySeed, it’s like, “This is my accelerator. Einar and I started this. Who can possibly run it in a way that it will work?”
I remember I kept telling myself, “But if we find the right person, then it’ll work.” That was what I had to tell myself to take that risk and of course, we found you and you’re the right person. It makes sense and I’m so glad that you have taken over so much of the role that I would be just bogged down with day-to-day and not able to do the other things that I need to do.
Tracy: Yeah. It’s funny about momentum, or maybe not momentum, but it’s just feeling I come on a certain path and it’s so hard to change that path. It’s so hard to consider the other paths that are available when you’re currently in a rut. I was in that rut for a really long time and it’s really hard for me to see over the edges of that rut to see what else was out there or to conceive of the work that would be required to jump out of the path I was on.
I just kept pushing it year over year over year and telling myself, “Okay, it’s great that I’m only making $30,000 or $40,000 a year because of this place that I’m working for myself. I got to travel a lot. I’ve got to work abroad for a long time. I got to do a lot of really great things. It allowed me to launch this book thing which also led to a whole other interesting set of experiences and learnings. But a lot of it is just I got into this rut and it was so hard to move myself out of it.
Now that I’m out of it, it’s interesting to look back on this experience. I’m glad I had that experience. I learned so much from it, I’ve done so much with it, but I wish that I shut down sooner. I wish I looked at the metrics. I wish I looked at how things were going. I wish that I considered that there are other things out there that could fulfill me the same way it would. I know that I’ll take those learnings to whatever I’m doing in the future. It’s all a really great learning experience. I learned so much from it. I wish I did some things differently, but I’m glad that I did it.
Rob: Final question as we wrap up. WeddingLovely could have worked. As an idea, it provided value and it could have provided you with a full-time income and employed people. Why didn’t it work?
Tracy: Wedding industry. I could talk for ages about this; I’ll try to keep it short. I actually don’t like the wedding industry myself, which is funny running a startup on the wedding industry, but I jumped into the wedding industry because I wanted to switch how it was done. I didn’t really like this focus on consumerism in the weddings and I wanted to have a place where instead of worrying about building this event where you have a to-do list of 500 to-dos long, what if you had a website that was more like a friend helping through the process, telling you the big things you have done like getting a photographer, why should you get a photographer, and what’s going on. I thought that was a good idea. I want to lead into this even better ideas.
In the wedding industry, I wish there was a place with an all-in-one booking platform like Airbnb. How great would it be if you’re getting married and you had this one platform to find people, read reviews, talk with them, do some messaging, and then do the payments and have everything under one area rather than juggling all these different vendors? That’s one of the reasons why weddings are really crazy. There’s such an opportunity here for that, but because it’s such an insanely high churn business where if you’re going to work with people who are getting married and these people are going to leave the platform in a year, you have to find a whole new set of customers that kills anyone jumping into this industry.
I did the best I could by working on the business side of things, but combining the fact that the wedding industry is really hard, it’s really hard to have repeat customers, it’s really hard to build a sustainable business on it, and then the fact that I am not interested in going to wedding fairs. I eloped in Vegas. I was not even going to touch a full wedding myself. It’s not something I’m really passionate about. I’m passionate about changing it and I always able to use that passion in that way. But a lot of that also went into why it was not good for me to run WeddingLovely as long as I did and also why WeddingLovely itself didn’t work.
Rob: Tough business, tough industry, and a little lack of product founder fit, it sounds like.
Tracy: Exactly. Again, fun process. I taught myself how to program. By building WeddingLovely, my design skills improved. I learned how to do all is crazy back-end stuff, build this crazy marketplace. I learned marketing and sales to an extent. It was a huge learning process and it was fun working in the industry. I made many amazing connections.
Would I ever do a wedding startup again? No. I liked advising wedding startups and telling them all the terrible stories I have. I won’t ever tell someone to change, but I try to tell all the problems that happens in the wedding industry when you’re building an app and why it’s not as easy as you might think. A lot of people I find think it’s easy, but I tried to be the person who is very clear about the problems I’ve had so other people can learn from it.
Rob: Thanks so much for coming on the show, Tracy. If folks want to keep up with you online, where would they do that?
Tracy: Personal website is tracyosborn.com. I’m also on Twitter as @tracymakes, Instagram, and other social media.
Rob: Sounds great. Thanks again.
Tracy: Thank you.
Rob: I want to thank Tracy again for coming on the show. I like her story because it’s not very often that someone runs a startup for nine years, puts it on autopilot, hires a team to run it, and just has these ups and downs. The experience she did and her willingness to relive that with me today is much appreciated.
That wraps us up for today. If you have a question for us, call our voicemail number at 888-801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt. It’s used under Creative Commons. Subscribe to us on iTunes by searching for startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 454 | Overcoming Fear (Throwback Episode)
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In this episode of Startups For The Rest Of Us, Rob does a throwback episode. Almost 9 years to the day Rob and Mike published episode 14 about overcoming fear and taking risks which is a message that is still applicable today.
Rob: Welcome to this week’s episode of Startups for the Rest of Us. I’m your host, Rob Walling. On this show, we talk about building startups in an organic, sustainable fashion, in a way that focuses more on your personal life and your lifestyle rather than focusing on building a billion dollar business.
We like to value freedom, purpose, and relationships on the show. You’ll notice that, while my co-host, Mike Taber, is on hiatus, I’ve been experimenting and dabbling in a few different show formats. If you’ve enjoyed the change-up and the focus on improving the podcast quality, including the recent interviews with Laura Roeder and Jeff Epstein, the Q&A sessions I’ve had with Tracy Osborn, Jordan Gal, as well as the hot seat with Matt Wensing, let me know. Reach out questions@startupsfortherestofus.com or you can tweet it out. I appreciate any feedback you can provide. Of course, if you’re able to give a five-star rating in any of the podcast apps you use, it’s much appreciated.
Today on the show, I’m doing a different intro because I’m trying something I don’t know we’ve ever done before. It’s to do a throwback episode. What I did is I went back through the archive and I picked out one of the all-time most popular episodes of this podcast. It’s episode 14. It was published July 13th, 2010. It’s almost to the day. It was nine years ago. What’s also interesting is that when this episode went live, my second son was five days old. That’s just an interesting coincidence.
Now and again, I go back and listen to old shows. Typically, I don’t go back prior to where they are […] just because it’s so hard to do, but this episode sparked a lot of conversation when it happened and it’s one of those where the content itself holds up pretty well even nine years later.
Some funny things I’ve noticed relistening to this episode is we just sound so young and so naive. It’s so impressionable. The intro’s slightly different. I’m going to play the whole episode. There’s a Q&A section at the end. We did a whole episode of content and then two questions that I find are not that interesting, so I’m going to cut those out, but the intro and the outro is slightly different, which I think is funny.
The audio quality is not great, but for a 14th episode, for it being 2010, and for use just figuring this out, it’s not so bad, but it’s definitely a lot fuzzier than it is today. As well as the editing. You can hear the editing is really choppy because we didn’t really know what we were doing back then. Now we have a professional editor. And it’s hilarious. My book launch. I talk about my book about to come out. I think I threw out a URL, but this is pre-Start Small Stay Small.
Again, I wouldn’t go back to an episode if I didn’t really think the content is still so applicable. This is one of those evergreen timeless episodes that I listen to and still get something out of, and I think that you will, too, because this is about overcoming fear in your own head, whether it’s to launch that first blog post, launch that first podcast episode, launch an app, take a risk, and it just always applies. I find that the conversation is as applicable today as it was then. Even the examples we used are still strong even here in 2019. So, I hope you enjoy revisiting this topic, especially if you weren’t a listener back nine years ago.
This is Startups for the Rest of Us episode 14. Welcome to Startups for the Rest of Us, a podcast that helps developers be awesome at launching software products, whether you built your first product or just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: And we’re here to share our experience to help you avoid the same mistakes we’ve made. What’s new this week, Mike?
Mike: I am having tons of fun getting a development box set up for a website. For those of you who don’t know, Rob and I run the Micropreneur Academy. It’s more or less to help developers learn how to do sales and marketing for their products. We’ve got tons and tons of content out there, but the problem that we have whenever we’re doing changes to the site, because it’s all built in WordPress, it’s very difficult.
One of the problems we have is being able to do development work on that box without bringing it down or crashing it because we’re making some changes and trying to see if they work. What I’ve been doing lately is we’re using a product called JumpBox to essentially bring up a development server very quickly so that I could dump all the content onto that JumpBox.
Essentially, what it is is if you go to jumpbox.com, they’ve got a couple of different pricing plans, but the one that I’m using is basically a LAMP stack. It allows you to download a virtual machine and it’s pre-configured with an OS and everything you need to just run a LAMP stack. All you do is you fire it up, it grabs an IP address, you specify a password for it, you can just log in, and you’re up and running in literally three minutes after you’ve downloaded this JumpBox. It’s really, really cool.
Rob: That’s awesome. How much time did you spend getting that going?
Mike: It probably took me more time to download it than anything else. The download really wasn’t very large. It was like 100–150 megs, something like that for the JumpBox itself that I downloaded. Like I said, they’ve got a couple of different pricing plans. The first one’s free, but then they’ve got a pro version and a business version. You can get a 15-day trial for free. It’s pretty cool.
Rob: It’s nice to have a dev environment. I know that’s something we’ve talked about for a long time. Good. Anything else?
Mike: No. That’s about it. What about you?
Rob: The hell I have been doing. Good grief.
Mike: Nothing. You slacker.
Rob: Yeah. I’ve been amazed at how much extra time this book has taken. The book’s done, the final proof arrived, I ordered copies, go to the printer, that whole thing. But like starting a company, you think that writing the actual code is going to be the bulk of that work? That’s 50%–60% tops.
The same thing with the book. I thought that putting together all the material and writing everything would be the bulk, but I had such a number of tasks to take care of, like building the website, getting the emails out to the list, and a number of other things. Getting an ISBN number and working with formatting. Of course, I’m not a designer, so it takes me a long time to do that stuff. It’s not as easy to outsource as, say, HTML work, or maybe it is. I just don’t have the right contacts. I’m out of my element with it. I chewed up a lot of time over the past week.
I actually made, what I consider in retrospect, an error in judgment. I basically had a four hour estimate to create the sales website, which is just a one-page thing—click here to buy the PDF, click here to buy the paperback. By the time I integrated with two payment processors, it took me 16 hours, which was just painful, and the integration is not an integration. It’s just a click an Amazon button and click a Google Pay button. That’s not even some fancy form that does it all. I was amazed at how long it took, so disappointed with it.
I wasn’t going to outsource it just because I literally thought it would take me two, I had estimated four just to be on the high side, and by the time I got everything the way I wanted, it was way high. In retrospect, definitely should have outsourced that.
Mike: I can think of two other mistakes off the top of my head that you have made. The first is, I don’t think we actually talked about the fact that you were writing a book on this podcast.
Rob: No, we did on episode 11.
Mike: Did we? All right.
Rob: Yeah. I edited it today.
Mike: My bad. All right. We’ll score that a point for you today, then. The other one, though, is that if you just asked me, my wife used to do print layout for a magazine.
Rob: That’s right. You’ve told me that like 10 times. How did I not do that. Yeah, it’s not going to look nearly as good if she give it 30 seconds of look, I’m sure. Well, that’s been my week. If you’re interested in the book, if you’re listening to this, startupbook.net. It will definitely be out and available in PDF and paperback format by the time this podcast goes live.
The other thing I wanted to mention this week is, I was talking to someone about a week ago and they listened to the podcast. I was like, “Yeah, you can stay up and tune in to what Mike and I do in our blogs.” He’s like, “Oh, you guys blog?” and I was like, “That’s it. We were doing this podcast for two months and we’ve been blogging for five years each.” I was like, “Oh, I thought the blog was our deal.”
Anyway, I realized we never mentioned our blog URLs, or maybe in passing we have, but if people are interested in hearing more about this type of micropreneur stuff, my blog is softwarebyrob.com and Mike’s blog is singlefounder.com. This is where we actually write original articles and new posts on starting a software company, launching products, being a micropreneur and such.
Mike: What are we discussing today? I think we actually had a listener comment from somebody on the startupsfortherestofus.com website, right?
Rob: That’s right. At startupsfortherestofus.com, that’s where you can download and listen to all of these episodes. In episode one, a guy named Scott Herbert made a text comment at the bottom and he said, “First, thanks for a podcast that doesn’t think I have $10 million of VC funding and want to tell me how to spend it. Secondly, I’d love to hear a cast on fear. Someone has offered to review my application for their blog—I’m scared by this—I said yes, of course, but does it get any easier?” That’s what we are going to be talking about today.
Mike: Cool. The short answer to that is you did the right thing and yes, it does get easier. The key to making it easier faster is to do it more often. We’ll obviously talk about that a little bit more. I think when it comes to fear, there are a couple of different options that you have and I boiled it down to four basic options.
When you’re faced with fear, these are your choices. You can either cave, which basically you give up. You can struggle with it and challenge it head on. Number three is you can accept it and do nothing about it, but you’ve accept it. You’re fearful of that and there’s just nothing you can do. The fourth one is you can try and work around the fear, try to avoid it. If you’re afraid of heights, you just never go into tall buildings or something like that. Some of those wok better than others, but obviously challenging your fear head on is going to help you get over those fears a lot quicker.
Rob, why don’t you talk a little bit about what sort of things people are typically afraid of? I think this pertains specifically to business. We could talk about arachnophobia and fear of all sorts of weird other things like short people, but I think this question relates more specifically to building your own business.
Rob: The things that I most commonly see software developers and people starting startups dealing with are thoughts like what if nobody likes my software? What if nobody buys my software? What if I fail and I invest all this time and it’s just wasted time? What if I can’t get any traffic to my site? What if I don’t get this right the first time? And what would other people think of me? Even if this does or doesn’t work out, what will people think of me while this is going on?
I think that’s a big part of fear is dealing with how other people view you. It almost takes me back to junior high in high school. I think it takes all of us back. Someone’s going to laugh at us or make fun of us or point something out publicly that is just going to really embarrass us. Those are the most common fears. I think everything stems from the fear of failure and the fear of other people seeing you fail.
Mike: I think that’s the biggest thing is people seem to think that whatever they do or say, people think of that as a reflection of themselves, especially when they’re writing software and they want to put it out there. I see people pushing off their software releases because they’re afraid of what people are going to think of their software. They always say, “I want to get it right. I want it to be perfect.” You know what? It’s not going to be perfect. You have to get over that.
Honestly, some people probably have a fear of launching a product. “What do I do when those support calls come in? What do I do when a customer’s irritated that this bug crashed and they lost all this data?” You know what? Those things can happen. Nobody’s perfect. That stuff is going to happen sooner or later and the only thing you can do is deal with it head on, accept that you made a mistake and move on.
If you sit there and try and live in the past or in the future, you’re not going to get anywhere. You can’t sit there and just worry all the time about, “What happens if this?” You know what? Why are you thinking about that now? Why don’t you continue living your life, moving on, doing your development, get past your launch? Then if that happens, then you worry about it.
I think maybe there’s a difference between doing that versus if you have critical bugs in your software that you know is going to cause somebody’s machine to crash and burn, yeah, you have to fix those before launch, but you can’t just let the fear of having bugs in your code or the fear of people running into problems with your code take that as a reflection upon you because it’s not a reflection on you.
Everybody is human, everybody makes mistakes, and when you create bugs in your software, those are mistakes and they’ve got to be fixed. Getting over those fears is just a matter of accepting that that’s going to happen and you can fix those bugs, you can move on, and version 2.0 is going to be better than version 1.0.
Rob: The two things that I think about when encountering fear like this is that the first time you do anything, you’re going to be scared. The first time you publish a single blog post, you’re going to be scared. The first time I did it, the first time I published an essay, a bunch of people read it, and people started ragging on it, I had anxiety about this. This is just natural. The first time you record a podcast, you’re going to have anxiety. The first time you speak at a user group, the first time you speak at a conference, anytime you do something publicly, you’re going to have some type of fear.
There’s some natural inclination in all of us that we feel like we’re going to be judged by everyone, and whether it’s realistic or not, knowing that the first time you do something, you are going to feel this anxiety and this fear, is really helpful because then you can identify very quickly and say, “Oh, this is that feeling again. It’s that same old thing that comes very naturally. I shouldn’t be scared of it and I shouldn’t let it talk me out of doing this thing.”
I’ve actually started following that fear, just a little bit like Seth Godin with a linchpin where he kept saying, “The lizard brain has its negative talk. If go towards the lizard brain, when the lizard brain talks to you and says, ‘Don’t do this thing,’ you typically stretching yourself and you’re actually doing something good. You’re actually moving in a direction that will grow who you are.”
The second thing is that as software developers, most of us have this natural anxiety of wanting to be perfectionists. I was talking to a developer today and he said, “I want my software to be perfect. I know it’s not going to be, but what if I launch it and there’s a bunch of bugs in it?”
There are two different types of people. There are the people who don’t care enough and those people don’t tend to be really good software developers they don’t tend to want to launch a software product. The ones who are doing this tend to be more of the perfectionists, tend to be more of the people who are stressing out about it, and that’s us. We have this anxiety that actually provides productivity.
If you’ve ever heard about Yerkes-Dodson curve, it’s a psychology theory that anxiety helps you—to a point—be productive. If you’re not anxious at all about a deadline, it’s very likely you’re going to miss that deadline and that you’re not going to be productive. Anxiety which translates into fear is actually a good thing to a certain extent and it actually will make you perform better and do more work quicker, to be more productive.
Mike: I know what you’re saying about being able to have a healthy dose of anxiety because I remember back in college, I used to feed off of deadlines. It was my job, it kind of just was. The fact is, if I had a deadline for a paper coming up or a project or something like that, as that deadline got closer and closer, I would just use it to energize myself and really focus in on what it was that I had to do and what I had to get done. Somehow it just helps me to meet a lot of the deadlines.
Don’t get me wrong. There was a certain amount of procrastination in there, but I’ve also seen studies where if you take three groups of people and you give one a deadline at the end of the quarter or semester, then you give another group of people regular deadlines throughout that time period, and then you tell the third group of people they can create any deadlines they want, people will tend to procrastinate until the end. I would just feed off that natural energy for those deadlines.
For me, the anxiety helped a little bit, but you also have to be a little bit realistic about in keeping in your head, “Am I actually going to meet this deadline or is it just a completely lost cause?”
Rob: That’s the thing with fear. I’m kind of equating fear with anxiety because when you say fear, you think a lion is attacking us. An anxiety is more of a realistic explanation or a realistic description of what we really feel when you’re going to go up and speak in front of people or we’re going to release a software product and maybe have someone say something bad about it or something. I think anxiety might be a better word for it.
There was a study—I wish I could quote it—done at UC Berkeley. It compared the anxiety levels, the stress levels of cops who were working in East Oakland versus students during finals week. The anxiety levels were actually higher in the students during finals week. What that shows is that anxiety, a lot of it if not all of it, is in your head. Some of it can be a chemical as well, it can be prone to be an anxious person, but a lot of it is in your head.
Ever since then, I have really learned to focus in on my anxiety and realize when it’s coming, identify it, then do something more productive with it, and allow it to motivate me rather than cause me to cave.
Mike: You bring up an interesting point about the difference in fear and anxiety, though. Personally, I have my own fears and my fears tend to be more long-term things that I’m afraid of happening. There are certain anxieties that I’ll go through. I’m a pretty good public speaker, but I think everybody gets at least a little bit nervous when they’re about to go up and do some big presentation.
In terms of fears and stuff, one of my own fears is, as the sole breadwinner of my family—my wife stays home with the kids so that I can go out and work—what if my income stream comes crashing to a halt and I’m not able to support my family? What if I’m on the road and something happens to me? Will my family be taken care of? How will that happen? How are they going to deal with that?
Honestly, I generally don’t worry about myself in terms of my health, but it doesn’t mean that I didn’t go out and buy a life insurance policy just to make sure that that sort of thing is taken cared of.
In terms of my income streams, I know that if it came down to it, I would do whatever needed to be done in order to make ends meet. If I had to go to Barnes & Noble and get a job stacking books or something like that, so be it. I’ll do what it takes to take care of my family. That’s one of the long-term fears that I have. I don’t really get anxious about those. I think about them, but I also think about how to deal with them and how to alleviate those things as concerns.
What about you?
Rob: The long-term fear that I have is the same thing. Being that we’re both self-employed, it’s a reality that our income could be majorly impacted very quickly. In fact, these last few months I talked about it, due to the recession there are several different income streams that I have that have substantially decreased 50% or more. I’ve been staring at it in the face, realizing if it continues like this, there’s going to be some issues down the line over the next few months. So, this is all happening. I’m about to have my second child. So, absolutely, any entrepreneur, the fear of just making ends meet and continuing to have a solvent business is a valid fear. It is for me as well.
Mike: That’s one of the things I’ve heard from people as well and I get to ask that question, “Aren’t you afraid of going out of business or this or that?” The way I see it, being self-employed actually gives me a certain amount of control over it because I am in control of my own destiny. I get to make the decisions that ultimately affect how I do in life. If I were working for some corporate employer someplace, they could decide to let everybody go on any given day and there’s literally nothing you can do about it.
You think about it in terms of job security, most people think of it that way, but you can also think of it in terms of financial security. You go to work for somebody, you’re complete at their mercy in terms of your income. Sure, they let you go and then you can go find another job, but right now, it’s hard to find jobs for most people. There’s tons of people out of work and the unemployment rate is really high.
I look at that and say, “Well, you know what? I could either work for somebody else where I’m completely at their mercy or I can work for myself where I’m at the mercy of my own bad decisions, so to speak.” Honestly, to make the choice between those two, I’d rather work for myself any day of the week. Now, granted that you have to be making money in order to be able to do that sort of thing, but it’s certainly an interesting way to look at it.
Rob: You make a good point there. No matter which avenue you choose, whether you work for an employer or start your own company, you’re going to have fear about something. You should have some fear that maybe you’ll get laid off, maybe the company will go out of business. You should have fear if you’re an entrepreneur that maybe you won’t make ends meet.
It’s not like you can escape it by choosing one route over the other. People can talk themselves into not having fear if they work for an employer. I think you’re kidding yourself by saying, “Oh, I’m not going to get laid off. This company’s never going out of business,” those kinds of things. There are fears in really any choice that you make. There’s no way to escape the realities of what might happen.
Mike: Right. One of the quotes that I keep, and it’s actually related to fear, this quote I keep actually on a Post-It note right next to my monitor and it reads, “It is possible to commit no mistakes and still lose.” It was actually in a Star Trek: The Next Generation episode from Patrick Stewart. It was in reference to Data was playing this game against somebody else and he ended up losing to this other person. He couldn’t figure it out how it was that he lost. That’s what Captain Picard told him. It’s like, “It’s possible to commit no mistakes and still lose.”
That true in life as well. You can do all the right things and still come out at the end of the pack. There are times when there’s absolutely nothing you can do and you’re going to lose. That’s just a fact.
I don’t want people to think that you’re going to lose every time, but there’s always a chance that you could lose and there’s always a chance that you could fail at whatever it is that you’re doing. But if you’re in control, you’re making those decisions.
Most people generally think they’re smart people. They’re going to make reasonably decent decisions and you have to keep that in mind when you’re going through those motions. You’re going to make the right decision with the information that you have at the time. If at the end of the day, you came out at the end of the pack, you have to accept that, move on, and say, “Okay, well that was a learning experience.” Take that forward and go on with the next task. You can’t let those things bother you.
I know people who let things bother them for years. I can think of one person in particular who let things bother him for years and years and years. And you know what? He’s never going to make it past it. It hasn’t happened yet. You can either let it get in your way of life or you can put it behind you and keep going.
Rob: The other thing I like about that quote is that it’s a good reminder that you have to take risks in order to do something worthwhile. You have to take risks in order to start a company or even to have a child or buy a house. Any of these things that I personally hold dear and that other people may as well. You can’t just stay in your safe zone all the time.
That’s what I really take away from that quote is you can make no mistakes and never do anything and still fail. If you decide, “Oh, I’ll never going to get married because I might get hurt, never going to have a child because it’s too hard, never going to buy a house because I don’t want to take on the risk, and never going to start a company.” In my life and my goals, I would consider myself that I would not have succeeded if I hadn’t done these things.
What I take away from that quote is that taking risks is a necessity if you are an ambitious person and if you have goals. You’re going to have to risk something to achieve those goals. And if you sit back and don’t do it, that I would consider that failure, not taking the risks.
Mike: And taking the risks doesn’t mean you’re guaranteed failure or success. It just means that you’re taking those risks. You’re gambling either way, but honestly, it’s not like the odds are in Vegas. I mean, your odds are a lot better when you’re putting that faith in yourself and your own decision-making powers as opposed to the dice or the roulette table in Vegas. It’s a completely different type of gambling, I’ll say. Calculated risk is what I’ll call it.
With that, why don’t we talk about six steps to dealing with that fear or anxiety?
Rob: Step number one is to take small steps. If you try to leap out too far, if you try to start a huge company or try to start two companies at once, it can be just too much and it can overwhelm you pretty easily. If you’re the type of person that fear tends to hold you back, take a small step.
Maybe instead of putting up a bunch of money or putting in a bunch of time in order to start a company, try to either start a smaller version of that or just do a little baby step of it, try to get that minimum viable product out, do some traffic testing, and see what’s going to happen. It’s a much smaller step but it can still help move you in the direction of, say, starting a company.
Mike: The other thing you can do is if you’re trying to get into, for example, product marketing. You don’t necessarily have a product yet. You can sign up for any number of affiliate programs. amazon.com’s got one where you can become an affiliate to sell their books and by referring traffic back to them, if those people buy things from Amazon, you get credits for those.
That’s a very small thing and I’ll be perfectly honest to say that I don’t think that you’re going to make a lot of money from it, but you will probably learn quite a bit from it. You can use that to help yourself as a baby step to become a better marketer, for example.
Step number two is to get some concrete motivation in the right direction. What this really means is that if you’re trying to do something, find somebody else who’s done that and pick their brain. Get some help from them. Ask them how they did it. Ask them how they dealt with their fear or their anxiety about it.
For example, public speaking, you can go talk to somebody who does public speaking for a living or join Toastmasters or something along those lines. You really need to find somebody else who can talk to you about it or you can talk to them about it, ask them questions, really get down to the bottom of what it is that you’re afraid of, and have them help motivate you in the right direction.
Rob: Step three is to look at failure and rejection in a new light. What we mean by that is instead of taking failure and rejection as a negative thing, realize that it does tend to be a valuable learning experience.
Mike and I already talked in a previous episode about whether failure is a learning experience or not, or you should only have successes, the whole discussion of that. Both of us believe pretty firmly that you will learn from your failures and that rejections will ultimately teach you to overcome these hurdles that you’re facing. I know that every time I faced rejection, it’s impacted me, but the more that I faced, the less each of them impact me.
Becoming aware of that, failure and rejection, are going to be inevitable as you do anything that has risk in it, but becoming aware of that is a big part of it because once it comes, you’re much less surprised by it.
Mike: And there’s obviously different levels of that failure and rejection. Rob and I have also talked about when we first started getting into AdWords and we blew an excess of $1000 apiece in the first month of doing our AdWords campaigns. Don’t get me wrong, $1000 is not pocket money or anything to be blowing out on AdWords, but I’ve made some much, much greater financial mistakes on that in the past. You just take them with a grain of salt and say, “Look. You know what? I understand what happened and it’s not something I would repeat,” but you learn from those things.
Number four is to not get too caught up in the past or in the future. You really need to keep your mind working in the here and now. What I mean by that is, if you’ve made mistakes in the past, don’t dwell on them because it’s certainly not going to help you. It’s just going to drag you down, it’s going to drag your morale down, and you’re going to be constantly thinking about them.
What that will do as a byproduct is basically distract you from the things that you have going on today. While you’re doing that, your basically dividing your mind with half of it saying, “Oh, my God. I can’t believe that thing that I did last Thursday or three years ago and it still haunts me to this day.” Everybody makes mistakes and how you deal with them is just as important as the things that you take from them.
Similarly, you can’t worry too much about what’s going on in the future. I’ll go back to the one I mentioned before. I travel a fair amount for my job. What happens if I’m on a flight and the plane goes down? Now, granted the chances of that happening is pretty slim to none, but it could happen. What do I do? I went out and I got a hefty life insurance policy. If something does happen to me, at least I know that my family is going to be taken care of. It’s all about mitigating those risks so that you can take your mind off of those fears, put them together, and focus on what it is that you’re doing today.
Rob: Step five is that things don’t happen overnight and that you need to keep working on it. The bottom line is that fear goes away the more times you do something. If you have a fear of public speaking, the more times you do it, it’s going to get better. If you have a fear of publishing a blog post, if it takes you 10 hours and 20 edits to get a 500-word post out, you need to do it more. You’ll get a little better at it, but you’ll get over the fear that it has to be perfect.
The bottom line is it’s not very complex. you’re going to be scared the first time you do something and you need to do it over and over if it’s worth it to you to actually get good at something.
Mike: And the sixth step to dealing with fear is to get a sanity check from someone else. Whenever you’re working on something, whether it’s software, a blog post, a piece of marketing collateral, or a press release, anything along those lines, anything related to your business, or even in your personal life, just get a sanity check from someone else. That can be a close friend, that can be someone who barely knows you.
I had somebody contact me who said, “Hey, I’d like to get your input on something because I don’t talk to you very much and you don’t know anybody that I know. It would be great to hear from you about what you think of this.” That’s a perfect scenario where you can get that sanity check from someone else with virtually no fear of anyone else being informed about what your fears are.
One of the things that Rob and I actually used to do probably 5–6 years ago, something like that, when we were first getting our blogs started, we actually started sending some of our blog post back and forth just to get a sanity check on it, to say, “Hey, what do you think of this article? What do you think of the wording of this? Does this strike a chord or is it just too bland?” et cetera.
We did that for—what was it—six months or something like that and we just went our separate ways. By that time, we have gotten over our fears about doing any sort of blog post and publicly voicin what our thoughts and opinions were.
Rob: I think we did it for a closer to a year, actually. It was certainly helpful for me. It improved the work that both of us produced as well as—at least from my perspective—reduced the anxiety I had when I went to publish something because I knew that someone had already looked at it pretty critically. If I sent over a new… kind of said, “No, this is not very good,” or there’s a big flaw in this logic, then I would rewrite that piece and then when I posted it, I knew that it essentially had a sanity check done to it and it really reduce the fear that I was going to get slammed online.
To recap, the six steps when dealing with fear are: (1) take small steps, (2) get some concrete motivation in the right direction, (3) see failure and rejection in a new light, (4) don’t get caught up in the past of the future; work in the here and now, (5) keep working at it; things don’t happen overnight, and (6) get a sanity check from someone else.
Mike: Thanks to both Jonna and Trey. If you have a question or comment, please call it in to our voicemail number at 1-888-801-9690 or you can email an MP3 or text format to questions@startupsfortherestofus.com. If you enjoyed this podcast, please consider writing a review in iTunes by searching for startups. You can subscribe to this podcast in iTunes or via RSS at startupsfortherestofus.com. Our theme music is an excerpt of We’re Outta Control by MoOt used under Creative Commons. A full transcript to this podcast is available at our website at startupsfortherestofus.com. We’ll see you next time.
We like to value freedom, purpose, and relationships on the show. You’ll notice that, while my co-host, Mike Taber, is on hiatus, I’ve been experimenting and dabbling in a few different show formats. If you’ve enjoyed the change-up and the focus on improving the podcast quality, including the recent interviews with Laura Roeder and Jeff Epstein, the Q&A sessions I’ve had with Tracy Osborn, Jordan Gal, as well as the hot seat with Matt Wensing, let me know. Reach out questions@startupsfortherestofus.com or you can tweet it out. I appreciate any feedback you can provide. Of course, if you’re able to give a five-star rating in any of the podcast apps you use, it’s much appreciated.
Today on the show, I’m doing a different intro because I’m trying something I don’t know we’ve ever done before. It’s to do a throwback episode. What I did is I went back through the archive and I picked out one of the all-time most popular episodes of this podcast. It’s episode 14. It was published July 13th, 2010. It’s almost to the day. It was nine years ago. What’s also interesting is that when this episode went live, my second son was five days old. That’s just an interesting coincidence.
Now and again, I go back and listen to old shows. Typically, I don’t go back prior to where they are […] just because it’s so hard to do, but this episode sparked a lot of conversation when it happened and it’s one of those where the content itself holds up pretty well even nine years later.
Some funny things I’ve noticed relistening to this episode is we just sound so young and so naive. It’s so impressionable. The intro’s slightly different. I’m going to play the whole episode. There’s a Q&A section at the end. We did a whole episode of content and then two questions that I find are not that interesting, so I’m going to cut those out, but the intro and the outro is slightly different, which I think is funny.
The audio quality is not great, but for a 14th episode, for it being 2010, and for use just figuring this out, it’s not so bad, but it’s definitely a lot fuzzier than it is today. As well as the editing. You can hear the editing is really choppy because we didn’t really know what we were doing back then. Now we have a professional editor. And it’s hilarious. My book launch. I talk about my book about to come out. I think I threw out a URL, but this is pre-Start Small Stay Small.
Again, I wouldn’t go back to an episode if I didn’t really think the content is still so applicable. This is one of those evergreen timeless episodes that I listen to and still get something out of, and I think that you will, too, because this is about overcoming fear in your own head, whether it’s to launch that first blog post, launch that first podcast episode, launch an app, take a risk, and it just always applies. I find that the conversation is as applicable today as it was then. Even the examples we used are still strong even here in 2019. So, I hope you enjoy revisiting this topic, especially if you weren’t a listener back nine years ago.
This is Startups for the Rest of Us episode 14. Welcome to Startups for the Rest of Us, a podcast that helps developers be awesome at launching software products, whether you built your first product or just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: And we’re here to share our experience to help you avoid the same mistakes we’ve made. What’s new this week, Mike?
Mike: I am having tons of fun getting a development box set up for a website. For those of you who don’t know, Rob and I run the Micropreneur Academy. It’s more or less to help developers learn how to do sales and marketing for their products. We’ve got tons and tons of content out there, but the problem that we have whenever we’re doing changes to the site, because it’s all built in WordPress, it’s very difficult.
One of the problems we have is being able to do development work on that box without bringing it down or crashing it because we’re making some changes and trying to see if they work. What I’ve been doing lately is we’re using a product called JumpBox to essentially bring up a development server very quickly so that I could dump all the content onto that JumpBox.
Essentially, what it is is if you go to jumpbox.com, they’ve got a couple of different pricing plans, but the one that I’m using is basically a LAMP stack. It allows you to download a virtual machine and it’s pre-configured with an OS and everything you need to just run a LAMP stack. All you do is you fire it up, it grabs an IP address, you specify a password for it, you can just log in, and you’re up and running in literally three minutes after you’ve downloaded this JumpBox. It’s really, really cool.
Rob: That’s awesome. How much time did you spend getting that going?
Mike: It probably took me more time to download it than anything else. The download really wasn’t very large. It was like 100–150 megs, something like that for the JumpBox itself that I downloaded. Like I said, they’ve got a couple of different pricing plans. The first one’s free, but then they’ve got a pro version and a business version. You can get a 15-day trial for free. It’s pretty cool.
Rob: It’s nice to have a dev environment. I know that’s something we’ve talked about for a long time. Good. Anything else?
Mike: No. That’s about it. What about you?
Rob: The hell I have been doing. Good grief.
Mike: Nothing. You slacker.
Rob: Yeah. I’ve been amazed at how much extra time this book has taken. The book’s done, the final proof arrived, I ordered copies, go to the printer, that whole thing. But like starting a company, you think that writing the actual code is going to be the bulk of that work? That’s 50%–60% tops.
The same thing with the book. I thought that putting together all the material and writing everything would be the bulk, but I had such a number of tasks to take care of, like building the website, getting the emails out to the list, and a number of other things. Getting an ISBN number and working with formatting. Of course, I’m not a designer, so it takes me a long time to do that stuff. It’s not as easy to outsource as, say, HTML work, or maybe it is. I just don’t have the right contacts. I’m out of my element with it. I chewed up a lot of time over the past week.
I actually made, what I consider in retrospect, an error in judgment. I basically had a four hour estimate to create the sales website, which is just a one-page thing—click here to buy the PDF, click here to buy the paperback. By the time I integrated with two payment processors, it took me 16 hours, which was just painful, and the integration is not an integration. It’s just a click an Amazon button and click a Google Pay button. That’s not even some fancy form that does it all. I was amazed at how long it took, so disappointed with it.
I wasn’t going to outsource it just because I literally thought it would take me two, I had estimated four just to be on the high side, and by the time I got everything the way I wanted, it was way high. In retrospect, definitely should have outsourced that.
Mike: I can think of two other mistakes off the top of my head that you have made. The first is, I don’t think we actually talked about the fact that you were writing a book on this podcast.
Rob: No, we did on episode 11.
Mike: Did we? All right.
Rob: Yeah. I edited it today.
Mike: My bad. All right. We’ll score that a point for you today, then. The other one, though, is that if you just asked me, my wife used to do print layout for a magazine.
Rob: That’s right. You’ve told me that like 10 times. How did I not do that. Yeah, it’s not going to look nearly as good if she give it 30 seconds of look, I’m sure. Well, that’s been my week. If you’re interested in the book, if you’re listening to this, startupbook.net. It will definitely be out and available in PDF and paperback format by the time this podcast goes live.
The other thing I wanted to mention this week is, I was talking to someone about a week ago and they listened to the podcast. I was like, “Yeah, you can stay up and tune in to what Mike and I do in our blogs.” He’s like, “Oh, you guys blog?” and I was like, “That’s it. We were doing this podcast for two months and we’ve been blogging for five years each.” I was like, “Oh, I thought the blog was our deal.”
Anyway, I realized we never mentioned our blog URLs, or maybe in passing we have, but if people are interested in hearing more about this type of micropreneur stuff, my blog is softwarebyrob.com and Mike’s blog is singlefounder.com. This is where we actually write original articles and new posts on starting a software company, launching products, being a micropreneur and such.
Mike: What are we discussing today? I think we actually had a listener comment from somebody on the startupsfortherestofus.com website, right?
Rob: That’s right. At startupsfortherestofus.com, that’s where you can download and listen to all of these episodes. In episode one, a guy named Scott Herbert made a text comment at the bottom and he said, “First, thanks for a podcast that doesn’t think I have $10 million of VC funding and want to tell me how to spend it. Secondly, I’d love to hear a cast on fear. Someone has offered to review my application for their blog—I’m scared by this—I said yes, of course, but does it get any easier?” That’s what we are going to be talking about today.
Mike: Cool. The short answer to that is you did the right thing and yes, it does get easier. The key to making it easier faster is to do it more often. We’ll obviously talk about that a little bit more. I think when it comes to fear, there are a couple of different options that you have and I boiled it down to four basic options.
When you’re faced with fear, these are your choices. You can either cave, which basically you give up. You can struggle with it and challenge it head on. Number three is you can accept it and do nothing about it, but you’ve accept it. You’re fearful of that and there’s just nothing you can do. The fourth one is you can try and work around the fear, try to avoid it. If you’re afraid of heights, you just never go into tall buildings or something like that. Some of those wok better than others, but obviously challenging your fear head on is going to help you get over those fears a lot quicker.
Rob, why don’t you talk a little bit about what sort of things people are typically afraid of? I think this pertains specifically to business. We could talk about arachnophobia and fear of all sorts of weird other things like short people, but I think this question relates more specifically to building your own business.
Rob: The things that I most commonly see software developers and people starting startups dealing with are thoughts like what if nobody likes my software? What if nobody buys my software? What if I fail and I invest all this time and it’s just wasted time? What if I can’t get any traffic to my site? What if I don’t get this right the first time? And what would other people think of me? Even if this does or doesn’t work out, what will people think of me while this is going on?
I think that’s a big part of fear is dealing with how other people view you. It almost takes me back to junior high in high school. I think it takes all of us back. Someone’s going to laugh at us or make fun of us or point something out publicly that is just going to really embarrass us. Those are the most common fears. I think everything stems from the fear of failure and the fear of other people seeing you fail.
Mike: I think that’s the biggest thing is people seem to think that whatever they do or say, people think of that as a reflection of themselves, especially when they’re writing software and they want to put it out there. I see people pushing off their software releases because they’re afraid of what people are going to think of their software. They always say, “I want to get it right. I want it to be perfect.” You know what? It’s not going to be perfect. You have to get over that.
Honestly, some people probably have a fear of launching a product. “What do I do when those support calls come in? What do I do when a customer’s irritated that this bug crashed and they lost all this data?” You know what? Those things can happen. Nobody’s perfect. That stuff is going to happen sooner or later and the only thing you can do is deal with it head on, accept that you made a mistake and move on.
If you sit there and try and live in the past or in the future, you’re not going to get anywhere. You can’t sit there and just worry all the time about, “What happens if this?” You know what? Why are you thinking about that now? Why don’t you continue living your life, moving on, doing your development, get past your launch? Then if that happens, then you worry about it.
I think maybe there’s a difference between doing that versus if you have critical bugs in your software that you know is going to cause somebody’s machine to crash and burn, yeah, you have to fix those before launch, but you can’t just let the fear of having bugs in your code or the fear of people running into problems with your code take that as a reflection upon you because it’s not a reflection on you.
Everybody is human, everybody makes mistakes, and when you create bugs in your software, those are mistakes and they’ve got to be fixed. Getting over those fears is just a matter of accepting that that’s going to happen and you can fix those bugs, you can move on, and version 2.0 is going to be better than version 1.0.
Rob: The two things that I think about when encountering fear like this is that the first time you do anything, you’re going to be scared. The first time you publish a single blog post, you’re going to be scared. The first time I did it, the first time I published an essay, a bunch of people read it, and people started ragging on it, I had anxiety about this. This is just natural. The first time you record a podcast, you’re going to have anxiety. The first time you speak at a user group, the first time you speak at a conference, anytime you do something publicly, you’re going to have some type of fear.
There’s some natural inclination in all of us that we feel like we’re going to be judged by everyone, and whether it’s realistic or not, knowing that the first time you do something, you are going to feel this anxiety and this fear, is really helpful because then you can identify very quickly and say, “Oh, this is that feeling again. It’s that same old thing that comes very naturally. I shouldn’t be scared of it and I shouldn’t let it talk me out of doing this thing.”
I’ve actually started following that fear, just a little bit like Seth Godin with a linchpin where he kept saying, “The lizard brain has its negative talk. If go towards the lizard brain, when the lizard brain talks to you and says, ‘Don’t do this thing,’ you typically stretching yourself and you’re actually doing something good. You’re actually moving in a direction that will grow who you are.”
The second thing is that as software developers, most of us have this natural anxiety of wanting to be perfectionists. I was talking to a developer today and he said, “I want my software to be perfect. I know it’s not going to be, but what if I launch it and there’s a bunch of bugs in it?”
There are two different types of people. There are the people who don’t care enough and those people don’t tend to be really good software developers they don’t tend to want to launch a software product. The ones who are doing this tend to be more of the perfectionists, tend to be more of the people who are stressing out about it, and that’s us. We have this anxiety that actually provides productivity.
If you’ve ever heard about Yerkes-Dodson curve, it’s a psychology theory that anxiety helps you—to a point—be productive. If you’re not anxious at all about a deadline, it’s very likely you’re going to miss that deadline and that you’re not going to be productive. Anxiety which translates into fear is actually a good thing to a certain extent and it actually will make you perform better and do more work quicker, to be more productive.
Mike: I know what you’re saying about being able to have a healthy dose of anxiety because I remember back in college, I used to feed off of deadlines. It was my job, it kind of just was. The fact is, if I had a deadline for a paper coming up or a project or something like that, as that deadline got closer and closer, I would just use it to energize myself and really focus in on what it was that I had to do and what I had to get done. Somehow it just helps me to meet a lot of the deadlines.
Don’t get me wrong. There was a certain amount of procrastination in there, but I’ve also seen studies where if you take three groups of people and you give one a deadline at the end of the quarter or semester, then you give another group of people regular deadlines throughout that time period, and then you tell the third group of people they can create any deadlines they want, people will tend to procrastinate until the end. I would just feed off that natural energy for those deadlines.
For me, the anxiety helped a little bit, but you also have to be a little bit realistic about in keeping in your head, “Am I actually going to meet this deadline or is it just a completely lost cause?”
Rob: That’s the thing with fear. I’m kind of equating fear with anxiety because when you say fear, you think a lion is attacking us. An anxiety is more of a realistic explanation or a realistic description of what we really feel when you’re going to go up and speak in front of people or we’re going to release a software product and maybe have someone say something bad about it or something. I think anxiety might be a better word for it.
There was a study—I wish I could quote it—done at UC Berkeley. It compared the anxiety levels, the stress levels of cops who were working in East Oakland versus students during finals week. The anxiety levels were actually higher in the students during finals week. What that shows is that anxiety, a lot of it if not all of it, is in your head. Some of it can be a chemical as well, it can be prone to be an anxious person, but a lot of it is in your head.
Ever since then, I have really learned to focus in on my anxiety and realize when it’s coming, identify it, then do something more productive with it, and allow it to motivate me rather than cause me to cave.
Mike: You bring up an interesting point about the difference in fear and anxiety, though. Personally, I have my own fears and my fears tend to be more long-term things that I’m afraid of happening. There are certain anxieties that I’ll go through. I’m a pretty good public speaker, but I think everybody gets at least a little bit nervous when they’re about to go up and do some big presentation.
In terms of fears and stuff, one of my own fears is, as the sole breadwinner of my family—my wife stays home with the kids so that I can go out and work—what if my income stream comes crashing to a halt and I’m not able to support my family? What if I’m on the road and something happens to me? Will my family be taken care of? How will that happen? How are they going to deal with that?
Honestly, I generally don’t worry about myself in terms of my health, but it doesn’t mean that I didn’t go out and buy a life insurance policy just to make sure that that sort of thing is taken cared of.
In terms of my income streams, I know that if it came down to it, I would do whatever needed to be done in order to make ends meet. If I had to go to Barnes & Noble and get a job stacking books or something like that, so be it. I’ll do what it takes to take care of my family. That’s one of the long-term fears that I have. I don’t really get anxious about those. I think about them, but I also think about how to deal with them and how to alleviate those things as concerns.
What about you?
Rob: The long-term fear that I have is the same thing. Being that we’re both self-employed, it’s a reality that our income could be majorly impacted very quickly. In fact, these last few months I talked about it, due to the recession there are several different income streams that I have that have substantially decreased 50% or more. I’ve been staring at it in the face, realizing if it continues like this, there’s going to be some issues down the line over the next few months. So, this is all happening. I’m about to have my second child. So, absolutely, any entrepreneur, the fear of just making ends meet and continuing to have a solvent business is a valid fear. It is for me as well.
Mike: That’s one of the things I’ve heard from people as well and I get to ask that question, “Aren’t you afraid of going out of business or this or that?” The way I see it, being self-employed actually gives me a certain amount of control over it because I am in control of my own destiny. I get to make the decisions that ultimately affect how I do in life. If I were working for some corporate employer someplace, they could decide to let everybody go on any given day and there’s literally nothing you can do about it.
You think about it in terms of job security, most people think of it that way, but you can also think of it in terms of financial security. You go to work for somebody, you’re complete at their mercy in terms of your income. Sure, they let you go and then you can go find another job, but right now, it’s hard to find jobs for most people. There’s tons of people out of work and the unemployment rate is really high.
I look at that and say, “Well, you know what? I could either work for somebody else where I’m completely at their mercy or I can work for myself where I’m at the mercy of my own bad decisions, so to speak.” Honestly, to make the choice between those two, I’d rather work for myself any day of the week. Now, granted that you have to be making money in order to be able to do that sort of thing, but it’s certainly an interesting way to look at it.
Rob: You make a good point there. No matter which avenue you choose, whether you work for an employer or start your own company, you’re going to have fear about something. You should have some fear that maybe you’ll get laid off, maybe the company will go out of business. You should have fear if you’re an entrepreneur that maybe you won’t make ends meet.
It’s not like you can escape it by choosing one route over the other. People can talk themselves into not having fear if they work for an employer. I think you’re kidding yourself by saying, “Oh, I’m not going to get laid off. This company’s never going out of business,” those kinds of things. There are fears in really any choice that you make. There’s no way to escape the realities of what might happen.
Mike: Right. One of the quotes that I keep, and it’s actually related to fear, this quote I keep actually on a Post-It note right next to my monitor and it reads, “It is possible to commit no mistakes and still lose.” It was actually in a Star Trek: The Next Generation episode from Patrick Stewart. It was in reference to Data was playing this game against somebody else and he ended up losing to this other person. He couldn’t figure it out how it was that he lost. That’s what Captain Picard told him. It’s like, “It’s possible to commit no mistakes and still lose.”
That true in life as well. You can do all the right things and still come out at the end of the pack. There are times when there’s absolutely nothing you can do and you’re going to lose. That’s just a fact.
I don’t want people to think that you’re going to lose every time, but there’s always a chance that you could lose and there’s always a chance that you could fail at whatever it is that you’re doing. But if you’re in control, you’re making those decisions.
Most people generally think they’re smart people. They’re going to make reasonably decent decisions and you have to keep that in mind when you’re going through those motions. You’re going to make the right decision with the information that you have at the time. If at the end of the day, you came out at the end of the pack, you have to accept that, move on, and say, “Okay, well that was a learning experience.” Take that forward and go on with the next task. You can’t let those things bother you.
I know people who let things bother them for years. I can think of one person in particular who let things bother him for years and years and years. And you know what? He’s never going to make it past it. It hasn’t happened yet. You can either let it get in your way of life or you can put it behind you and keep going.
Rob: The other thing I like about that quote is that it’s a good reminder that you have to take risks in order to do something worthwhile. You have to take risks in order to start a company or even to have a child or buy a house. Any of these things that I personally hold dear and that other people may as well. You can’t just stay in your safe zone all the time.
That’s what I really take away from that quote is you can make no mistakes and never do anything and still fail. If you decide, “Oh, I’ll never going to get married because I might get hurt, never going to have a child because it’s too hard, never going to buy a house because I don’t want to take on the risk, and never going to start a company.” In my life and my goals, I would consider myself that I would not have succeeded if I hadn’t done these things.
What I take away from that quote is that taking risks is a necessity if you are an ambitious person and if you have goals. You’re going to have to risk something to achieve those goals. And if you sit back and don’t do it, that I would consider that failure, not taking the risks.
Mike: And taking the risks doesn’t mean you’re guaranteed failure or success. It just means that you’re taking those risks. You’re gambling either way, but honestly, it’s not like the odds are in Vegas. I mean, your odds are a lot better when you’re putting that faith in yourself and your own decision-making powers as opposed to the dice or the roulette table in Vegas. It’s a completely different type of gambling, I’ll say. Calculated risk is what I’ll call it.
With that, why don’t we talk about six steps to dealing with that fear or anxiety?
Rob: Step number one is to take small steps. If you try to leap out too far, if you try to start a huge company or try to start two companies at once, it can be just too much and it can overwhelm you pretty easily. If you’re the type of person that fear tends to hold you back, take a small step.
Maybe instead of putting up a bunch of money or putting in a bunch of time in order to start a company, try to either start a smaller version of that or just do a little baby step of it, try to get that minimum viable product out, do some traffic testing, and see what’s going to happen. It’s a much smaller step but it can still help move you in the direction of, say, starting a company.
Mike: The other thing you can do is if you’re trying to get into, for example, product marketing. You don’t necessarily have a product yet. You can sign up for any number of affiliate programs. amazon.com’s got one where you can become an affiliate to sell their books and by referring traffic back to them, if those people buy things from Amazon, you get credits for those.
That’s a very small thing and I’ll be perfectly honest to say that I don’t think that you’re going to make a lot of money from it, but you will probably learn quite a bit from it. You can use that to help yourself as a baby step to become a better marketer, for example.
Step number two is to get some concrete motivation in the right direction. What this really means is that if you’re trying to do something, find somebody else who’s done that and pick their brain. Get some help from them. Ask them how they did it. Ask them how they dealt with their fear or their anxiety about it.
For example, public speaking, you can go talk to somebody who does public speaking for a living or join Toastmasters or something along those lines. You really need to find somebody else who can talk to you about it or you can talk to them about it, ask them questions, really get down to the bottom of what it is that you’re afraid of, and have them help motivate you in the right direction.
Rob: Step three is to look at failure and rejection in a new light. What we mean by that is instead of taking failure and rejection as a negative thing, realize that it does tend to be a valuable learning experience.
Mike and I already talked in a previous episode about whether failure is a learning experience or not, or you should only have successes, the whole discussion of that. Both of us believe pretty firmly that you will learn from your failures and that rejections will ultimately teach you to overcome these hurdles that you’re facing. I know that every time I faced rejection, it’s impacted me, but the more that I faced, the less each of them impact me.
Becoming aware of that, failure and rejection, are going to be inevitable as you do anything that has risk in it, but becoming aware of that is a big part of it because once it comes, you’re much less surprised by it.
Mike: And there’s obviously different levels of that failure and rejection. Rob and I have also talked about when we first started getting into AdWords and we blew an excess of $1000 apiece in the first month of doing our AdWords campaigns. Don’t get me wrong, $1000 is not pocket money or anything to be blowing out on AdWords, but I’ve made some much, much greater financial mistakes on that in the past. You just take them with a grain of salt and say, “Look. You know what? I understand what happened and it’s not something I would repeat,” but you learn from those things.
Number four is to not get too caught up in the past or in the future. You really need to keep your mind working in the here and now. What I mean by that is, if you’ve made mistakes in the past, don’t dwell on them because it’s certainly not going to help you. It’s just going to drag you down, it’s going to drag your morale down, and you’re going to be constantly thinking about them.
What that will do as a byproduct is basically distract you from the things that you have going on today. While you’re doing that, your basically dividing your mind with half of it saying, “Oh, my God. I can’t believe that thing that I did last Thursday or three years ago and it still haunts me to this day.” Everybody makes mistakes and how you deal with them is just as important as the things that you take from them.
Similarly, you can’t worry too much about what’s going on in the future. I’ll go back to the one I mentioned before. I travel a fair amount for my job. What happens if I’m on a flight and the plane goes down? Now, granted the chances of that happening is pretty slim to none, but it could happen. What do I do? I went out and I got a hefty life insurance policy. If something does happen to me, at least I know that my family is going to be taken care of. It’s all about mitigating those risks so that you can take your mind off of those fears, put them together, and focus on what it is that you’re doing today.
Rob: Step five is that things don’t happen overnight and that you need to keep working on it. The bottom line is that fear goes away the more times you do something. If you have a fear of public speaking, the more times you do it, it’s going to get better. If you have a fear of publishing a blog post, if it takes you 10 hours and 20 edits to get a 500-word post out, you need to do it more. You’ll get a little better at it, but you’ll get over the fear that it has to be perfect.
The bottom line is it’s not very complex. you’re going to be scared the first time you do something and you need to do it over and over if it’s worth it to you to actually get good at something.
Mike: And the sixth step to dealing with fear is to get a sanity check from someone else. Whenever you’re working on something, whether it’s software, a blog post, a piece of marketing collateral, or a press release, anything along those lines, anything related to your business, or even in your personal life, just get a sanity check from someone else. That can be a close friend, that can be someone who barely knows you.
I had somebody contact me who said, “Hey, I’d like to get your input on something because I don’t talk to you very much and you don’t know anybody that I know. It would be great to hear from you about what you think of this.” That’s a perfect scenario where you can get that sanity check from someone else with virtually no fear of anyone else being informed about what your fears are.
One of the things that Rob and I actually used to do probably 5–6 years ago, something like that, when we were first getting our blogs started, we actually started sending some of our blog post back and forth just to get a sanity check on it, to say, “Hey, what do you think of this article? What do you think of the wording of this? Does this strike a chord or is it just too bland?” et cetera.
We did that for—what was it—six months or something like that and we just went our separate ways. By that time, we have gotten over our fears about doing any sort of blog post and publicly voicin what our thoughts and opinions were.
Rob: I think we did it for a closer to a year, actually. It was certainly helpful for me. It improved the work that both of us produced as well as—at least from my perspective—reduced the anxiety I had when I went to publish something because I knew that someone had already looked at it pretty critically. If I sent over a new… kind of said, “No, this is not very good,” or there’s a big flaw in this logic, then I would rewrite that piece and then when I posted it, I knew that it essentially had a sanity check done to it and it really reduce the fear that I was going to get slammed online.
To recap, the six steps when dealing with fear are: (1) take small steps, (2) get some concrete motivation in the right direction, (3) see failure and rejection in a new light, (4) don’t get caught up in the past of the future; work in the here and now, (5) keep working at it; things don’t happen overnight, and (6) get a sanity check from someone else.
Mike: Thanks to both Jonna and Trey. If you have a question or comment, please call it in to our voicemail number at 1-888-801-9690 or you can email an MP3 or text format to questions@startupsfortherestofus.com. If you enjoyed this podcast, please consider writing a review in iTunes by searching for startups. You can subscribe to this podcast in iTunes or via RSS at startupsfortherestofus.com. Our theme music is an excerpt of We’re Outta Control by MoOt used under Creative Commons. A full transcript to this podcast is available at our website at startupsfortherestofus.com. We’ll see you next time.
