Episode 54 | How We Left Our Jobs Part 2

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[00:00] Mike: This is Startups for the Rest of Us: Episode 54.

[00:04] [music]

[00:11] Mike: Welcome to Startups for the Rest of Us, the podcast that helps developers be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it. I’m Mike.

[00:19] Rob: And I’m Rob.

[00:20] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. Anything new today, Rob?

[00:25] Rob: You were mentioning domain names before we recorded. What are our domain name announcements?

[00:29] Mike: The StartupsfortheRestofUs.com domain is going to be two years old, I believe, at the end of this month.

[00:35] Rob: Lah! Bring out a cake and some candles. Man, I was looking through my domains last week and I went through and dropped about 20 domains that I had registered last year. The humanity when my domains come up for renewal, man, it’s so painful. I think I have close to a hundred domains but most of them are active, like in one way or another. I just thought I would throw that out there because I get that question a lot. How many domain names do you own? It’s like well, there’s like 30 websites live and then WeddingToolbox has a bunch of custom domains that I buy for people so those are in there and then there are variations. Like we have Micropreneur.com and then we have Micropeneur.com that just redirects to it for misspelling. I have a couple of misspellings of HitTail because the tail can be spelled T-A-I-L or T-A-L-E. The proper spelling is A-I-L for the LongTail but I have A-L-E that redirects to it and such. Anyway how about you? Do you own a lot of domain names?

[01:28] Mike: I own, I think, around 31. It’s either 31 or 32. I forget which.

[01:33] Rob: Yes, I’m definitely not proud of owning a lot, I think. Obviously it’s a waste of money and stuff that I registered all those and I don’t encourage. You know what I don’t encourage people to do? Is to register – someone will say, “I’m going to start a company,” and then they’re into the dot com, dot net and dot org. I just don’t know that you need to do that. If you’re going to be huge and raise funding, then yes, go ahead and drop the money but if you’re going to have a lot of smaller businesses, I don’t know that I see a lot of value in doing that.

[01:56] Mike: I think it depends on whether it’s for a product or for [0:02:00] your company.

[02:01] Rob: Oh, totally. Yes, like with AuditShark – and since you plan – I mean you plan to make it a big product. I would get all three for that.

[02:08] Mike: Right. I forget whether I picked up dot org. I know I picked up the dot com and dot net and …

[02:13] Rob: Yes.

[02:13] Mike: … part of that is because I wanted my website to be on the dot com and then the backend network of everything is all going to be on dot net.

[02:21] Rob: Got it. Well, that’s kind of [Inaudible]. Yes.

[02:23] Mike: So it’s – I mean because I’m not going to be using AuditShark.net for any kind of SEO or anything like that and if somebody searches, they’re going to end up at the dot com anyway. It’s not a big deal. The dot net is just more or less going to be the login page so that way I can have, you know, that primary domain and, you know, use that for the company and for everything else. Then I’ve got this backend network and I’ve always thought it would be an interesting way to kind of segment your business so you’ve got – dot com is your website and that’s the commercial frontend for it and then dot net runs the actual application and everything else.

[02:54] Then you’ve got – and that way, you’ve got them separate and you don’t have to worry about having sub-domains or anything like that. Not that sub-domains are a big deal but you can think of – especially for AuditShark, I’ve got this thing that, you know, I’m kind of referring to different pieces of it as the AuditShark network because you’re basically piping data into this network of stuff and, you know, it’s just – it kind of fits with the dot net domain name.

[03:17] Rob: Yes. You know, one thing you need to be careful of is SSL certs.

[03:21] Mike: Yes.

[03:22] Rob: And if you try to do any type of JavaScript or cookie sharing between the two because JavaScript is really paranoid security-wise about domains and so are cookies. So as long as they never need to communicate with each other as in you don’t need a login page embedded in the dot com, but I’ve – because I’ve run into this with someone who split it up over two domain names and it was actually that you had some specific things they were trying to do; but it was actually really hard to make the two merge or even just communicate between one another on the frontend so …

[03:52] Mike: Right.

[03:52] Rob: … just be careful with that. You will definitely need SSL certs for both of them and will be able to do wildcard obviously.

[03:57] Mike: I don’t know if I need an SSL cert for both of them [0:04:00] though. I mean because if somebody is going to come in and buy the product, they’re going to do it over on the dot net domain anyway.

[04:06] Rob: Really? They’re going to buy it on dot net?

[04:08] Mike: Yes.

[04:09] Rob: Oh man, I would figure that they would buy it through the dot com, through your front-facing website.

[04:14] Mike: I could have them do it there, I guess. I mean the thing is, the dot com domain is hosted on a Linux machine and I would think that – you know, AuditShark is built on – is all based in Azure.

[04:24] Rob: Right. OK.

[04:24] Mike: So I can’t have them on the same physical machine regardless, you know. So I just …

[04:28] Rob: Right.

[04:28] Mike: … said, “Oh, I’ll just have this whole domain off to myself,” and I’ve actually thought about having a separate sub-domain for each customer anyway. I kind of canned that idea after a while but I was going to let them choose their own sub-domain and it was going to be messy so I just said, “The heck with it.”

[04:43] Rob: The other thing to think about with having them redirect over to dot net to buy is you’re really going to want to make sure Google and the other search engines don’t crawl dot net because it will confuse the engines. I mean you’re going to be splitting your page rank basically and you really don’t want dot net, your dot net domain appearing in the search engines as it sounds like. So you’re going to want to put a robots.txt and eliminate that stuff.

[05:06] Mike: But they’re not going to be able to because the entire application, you have to log in.

[05:09] Rob: No, but you said there would be the public-facing purchase pages on …

[05:13] Mike: Yes.

[05:13] Rob: … the dot net site. So there will be something that we will be – there will be a shopping cart. There will be a “buy now” button. I mean there will be a handful of public pages there. I would guess it would grow over time. I know that probably is not your initial vision but I’ve never seen anyone – well, I’ve just seen that one client do it so I think it’s an interesting idea. I would lean towards sub-domains but …

[05:31] Mike: Yes.

[05:31] Rob: … if you can make it work, you make it work.

[05:33] Mike: Yes, I could change it if I really need to, if there were any problems.

[05:35] Rob: Yes.

[05:36] Mike: It’s not that big a deal.

[05:37] [music]

[05:40] Rob: So today, we’re continuing with the cliffhanger from last episode. Last time, we talked about how we left our jobs, part one, and which Mike went through kind of the emotional process and the mindset process of leaving the fulltime salary grind; and today, we’re doing part two which is where I tell my story. You had asked me a question at the end of the last episode [0:06:00] and I left it for this one. Do you remember what that question was?

[06:03] Mike: The idea was that one of the things that I’m driving to at this point is time independence because I have location independence but not necessarily time independence. You had said that you were very risk-averse and, you know, you really valued that time independence and I was kind of wondering where did you kind of get that start from. I mean was there something that you started out doing and said, “Well, I don’t have time or location independence” that kind of drove you in that direction?

[06:27] Rob: Absolutely and it was called salaried employment.

[06:30] [Laughter]

[06:31] Rob: Seriously. So, you know, I got a salaried job right out of college and I was working for a construction company. I was a project manager and I realized right away that working 9:00 to 5:00 was for the birds. Man, I needed to figure out a way to get out of this and I knew that I wouldn’t – wasn’t going to do it until I retired and my goal the whole time, I had kept thinking, oh man, if I was just a consultant, if I was self-employed, you know, working for other people like – to write in code form or whatever and I wasn’t even writing code at this point but I was just imagining like being a consultant and being able to work out of coffee shops is the way to go. That’s the goal and I had that for several years until I achieved it and then I realized, “Oh, I totally deluded myself.”

[07:11] Like it was this fallacy that I thought I would have all this freedom and I did have location independence at that point but I realized a huge piece of my actual desire was to also have time independence and so that’s where the rest of the story – you know, that’s where I realized like I need to now go from consulting to how do I get time independence. That has been with software products so I think I want to circle back and there’s three things that – as I wrote this out, I realized three things that people will notice.  One is that I am pretty risk-averse. It doesn’t mean I don’t take any risks but I always tend to have a backup plan and realize if this fails, it won’t ruin me because I would stress out too much. Now I also have two kids and a mortgage and a wife and I just have a lot of responsibilities so I tend to take that pretty seriously.

[07:56] Mike: From my perspective, that has changed a lot for me. I used to be [0:08:00] a lot more open to risk and I’m much less open to risk at this point because of the exact same reasons.

[08:06] Rob: Yes. Once you have a family and you’re kind of taking care of the folks. Now, granted these days, my wife, we – getting her PhD during most of this story I’m going to tell today and it was just about two years ago that she started working and that she started making money; and that actually relieved a good chunk of burden off me because I didn’t feel like I was the sole breadwinner. And you are still, right? You’re …

[08:27] Mike: Yes.

[08:27] Rob: … the sole breadwinner. So it really – it has a big impact knowing that if you don’t bring in money, that the whole family is going to suffer for it. I think the other two things that people will notice is that I worked a lot of nights and weekends and I don’t think there’s any way around working your ass off to achieve any of this stuff. Like you can’t just read blogs in Hacker News and something is going to happen. It was hours and hours of nights and weekends and I know it was the same for you as well and then the last thing was learning by doing. I just kept diving into new things that were, you know, fairly scary or that I thought could be a big time-waster and I did waste a lot of time on some things that failed but the ones that turned out were enough to get me what I wanted, my end goal of location and time independence and enjoying what I want to do for a living.

[09:10] Anyway, back to the story. So I was working for a construction company and I was slated. You know, my dad had worked there for 30 something years and I was slated for management and they wanted me to rise the ranks and such but I hated it. Like I didn’t enjoy construction. It was not a fun gig and I started teaching myself Perl and HTML at night and I had graduated with a degree in computer engineering. But, you know, they don’t actually teach you much that’s applicable, right?

[09:34] I learned that – I wallowed kind of in sadness or in depression for like 18 months at that job because I didn’t want to leave. I didn’t want to disappoint my dad and all this people that I had known and finally, I realized no one is going to make me happy. Like no one is going to change this situation. I can either shut up and do this for 25, 30 years – and I would have made good money. I would have been, you know, the VP or the president or some high-up rank in this company and it was a [0:10:00] big company. It was several hundred million dollars and I knew that all the people – most of the people on the board. I knew all the presidents and CEOs. They had watched me grown up and they were waiting for me to graduate from college to come work for them.

[10:10] I mean I was set and I had a really hard decision to make and I realized that long term, I wouldn’t be happy even though I may have a crap load of money and I may have, you know, a bunch of power in this company that I had to make a break; and it was really hard. That was a lesson that I learned and I think that impacted me for years in learning, like you have to take control of the reins. No one is going to make that decision for you.

[10:32] So then I went and did maybe the funnest salary job I ever had in my life and I worked for a dot com. They were in Sacramento and I was just coding – I learned like – it was a consulting firm and we were working for all the dotcoms and so I learned like five programming languages in nine months because it was whatever they wanted you to code in, you code it in; and so I would start a project then buy a book on Perl or PHP or ColdFusion or Classic ASP. You know, the gamut, I learned all that stuff and it was so much fun and I realized, you know, learning is a big part of what makes me enjoy things.

[11:07] So I bought a house and within 60 days, the dotcom went out of business. That was brutal. That was our first house and I was 20 – I think 25 years old. I wasn’t that stressed about it but the CEO of the company was like hey, you know – we were about a 17 to 20-person company at that time and he said, “I have enough work for myself and three of you guys,” and he contacted me and said, you know, “I want you to be one of those guys.”

[11:32] He wanted us to contract for him and it was exactly what you said. Suddenly overnight, he was willing to pay us twice as much but we didn’t get – you know, it was hourly so we didn’t get paid if you didn’t work and you didn’t get benefits and you worked from home. There was no office and so he just basically cut out a lot of overhead and then shared some of that with us, kept some of it for himself and I turned him down. I was like no, I’m not a contractor. Like there’s too much risk. It was what was going on in my head.

[11:59] Mike: Really?

[12:00] Rob: [0:12:00] Yes. I was like I want a salary job. That’s what I’m going to do. I’m a salary guy. Isn’t this funny? Like to hear it now. This is 11 years ago. I just had a lot to learn from there. I tried to look for a job for months and I couldn’t find one. It was 2001 so I guess it was 10 years ago and there was no work. Over those months, he kept emailing and calling and he would finally – like well, you know, what if you just do this on the side while you’re looking for a job? And that’s what – I was like, “OK, I’ll do that.”

[12:29] So I did like 20 hours one week and then 30 hours the next and pretty soon, I was basically contracting for him fulltime and I was – yes, totally stuck around, you know, and convinced me to do it and then I realized like, “What was I thinking? This is pretty damn cool. I work from home.” Like you said, you know, you make a lot more money at least on paper upfront. You know, you would have to save for taxes and pay healthcare and all that stuff but it was quite an experience.

[12:55] Mike: But you have to pay for taxes anyway and you generally have to pay for your healthcare anyway. I mean a lot of times, the company will pick that up but they only pick up a percentage of it.

[13:03] Rob: Yes. No, but back then, my healthcare was fully covered by my employer and then I suddenly had to pay out of pocket. Now luckily, we were young and – you know, it was 10 years ago. Healthcare was literally like 25 percent of the cost it is today but yes. So that was my first taste where I was like this is the life and I loved it and it was again, working from home. I remember the first day that I didn’t have to go into an office where I got up and I had some coffee and I drove to Borders. I just didn’t – I didn’t know what to do with myself and I was so just having fun. That lasted for about a year which is typical with me. I got bored. I realized that you made good money as a consultant but you basically run on a hamster wheel.

[13:44] During that year, not only had I grown bored of building stuff for other people but I grew bored of – projects would end and then we would have no work for a few weeks. It was never a very long time but I would instantly start stressing about it and being like, “What if there’s no work for three months?” I [0:14:00] have savings but I’m just going to burn through it. Why am I doing – you know, I make more money but I’m going to piss it away.

[14:04] And so it was always this ongoing hamster wheel and so, I started thinking to myself like I’m 25, 26. Am I going to be doing this when I’m 50? And I realized that it’s – like you, I wanted to do something that I could leverage so I actually looked at all my options and I was – I day traded for a while. I like broke even, you know, over weeks and weeks of doing it and I realized that there was a whole lot to learn about that that I wasn’t willing to learn and then the other thing is I bought real estate.

[14:30] So I started buying real estate in LA. We moved to LA and I bought several properties down there and that was going to be my out for a while. I thought you had to just stack up a bunch of assets and either sell them for a bunch of money or just live off the residuals. It was a good plan until of course the real estate market popped.

[14:49] You know, that’s when I realized that as entrepreneurs, I feel like we’re a little more in control of our fates than when you’re buying into an investment that has such market forces that can send it up and down.

[15:00] Mike: So when was this? You said you dabbled in real estate.

[15:03] Rob: I started buying, you know, my second, third, fourth house in 2003. I think it’s when I bought the second and then bought basically three more over the next three years and some of them were with – I bought one with my dad and then we bought one with some folks – some friends we know so it was actually quite fun and I did it – that was my hobby. In the evenings and weekends when I was, you know, not doing other stuff, I would research the market and I was really into that, you know, as an idea to break free from salary employment; but that was a long road, man.

[15:37] It’s like it’s really hard with real estate because you have to get this massive amount of capital so you either take out a bunch of mortgages in which case you’re managing a ton of paperwork and you can only borrow so much and it’s pretty complex. You know, unless you’re going to really get into it – and I was into it pretty good. I actually started – I took a bunch of tests to prepare for my real estate exam. I was going to get a realtor license and do it myself to cut out the commissions.

[16:00] I’m an entrepreneur dude. Like I want to do this for myself and I want to go learn it as much as I wanted to do it for the three percent. This is LA in 2004, 2005. These houses were between 400 and 700 grand each so you look at three percent and you’re talking 12 to 20 grand per deal. [Indiscernible] I mean I was like totally, like I’ll take – the test costs, you know, a thousand bucks to take or something and I knew that – you know, I figured I could – I’m pretty good at standardized tests so I figured I would pass the first time and I was just like, “This is a no-brainer to do this.” Plus once I did that, then I got access to the MLS and it actually gave me an advantage when walking into a deal frankly.

[16:35] But I realized a couple of things. One, we moved out of California right towards the end of that and suddenly, I was going to get a California realtor’s license, you know, and it doesn’t apply anywhere else and two, the market started tanking. This was towards 2007 and – or started flattening out and then started going down. I watched that and realized like, wow, this is not – I mean this may work in 20 years. But what am I going to do for now to stay interested and to break free of this consulting work that I was now doing?

[17:05] That’s when I actually did go back to – I struggled with, “Should I be a consultant? Should I do salaried employment?” And every time I was done with a project, I would ask that same question again and so I went back to salaried employment for a couple of years during that time and while I was in salaried employment, that’s when I bought my first product.

[17:25] I was trying to build one and then I just saw this dot net forums offer for sale on eBay. I was like, well, of course, you know, just buy this because I don’t have the hundreds of hours to build it. I thought it would just be this – kind of a slam dunk to get started and a good learning experience and of course I found out I didn’t know crap about marketing software. I knew how to build it really well but the marketing was like this totally different thing, right?

[17:50] Mike: It’s like a black box. I mean you have absolutely no idea what’s in there or how it works or what to do with it once you got it in your hands.

[17:56] Rob: That’s right. That’s exactly right and I didn’t realize that. Like suddenly, I had this [0:18:00] software and I was like, “What do I do?” I had no idea what to do next, you know, and so that’s – we talked about this. That’s when I went and bought AdWords and dropped – I think it was 1500 bucks in a month and didn’t make any money. It was just trying different things and it sold reasonably well but if I recall, it was 200 to 300 bucks a month that it was selling and it wasn’t selling that much when I bought it so I actually improved it but pretty quickly, I realized I’m just not that excited about this.

[18:26] So I went on and I built a couple of other small apps. I launched them. One of them is called [Indiscernible]. It’s not super important what they do but it was just the idea that for each one, it was like four months of nights and weekends scrambling for an idea, trying to launch while I’m working a salaried job and they didn’t work out but I learned huge lessons from them about marketing. Each time, I learned like oh, so you need – you actually need to solve a problem people have and then it was like, oh, so you actually need to know how to reach people who have this problem.

[18:58] Honestly, those days of just churning away for a few years is what I think led to the ultimate – my first success which was DotNetInvoice and that was kind of my flagship product. I had thought about building a dot net invoicing software and I came upon some dudes on a forum who were having real trouble.

[19:15] They had already built – it was a nice app. It had a lot of Ajax in it and at the time, it looked really sexy and they were just like, “We don’t know how to market this thing. Who wants to partner with us?” And I was basically like if you will sell – like I don’t want to partner with someone, you know, especially someone I didn’t know. So I said, “If you will sell it to me, I’ll do it.” So I bought it and I overpaid and as soon as I got it, I realized there were a gazillion bugs they hadn’t talked about. There were a bunch of pissed off customers.

[19:40] Mike: It seems like a recurring theme with you.

[19:42] Rob: Yes. Although – it’s just that I’ve told the story so many times. That’s the difference these days is when I do an acquisition, I may have a bunch of stuff to clean up but there hasn’t been any surprises this time around because I’ve done so many now that it’s much – I’ll just say I’m in a much better situation these days in terms of being prepared for fixing things.

[20:00] Mike: [20:00] Well, I think you know the questions to ask to kind of alleviate some of the more obvious issues but – and I do this too. I think that most programmers in general do this. They tend to underestimate how long something is going to take to do and that’s just a – you know, it’s human nature. Oh, I can do this. I’m good enough that I can do this and, you know, 20 minutes or an hour or whatever and there are things that you don’t know and until you get into it, you didn’t know that those things were there or that they were a problem and they start introducing all these additional stuff that you have to do; and suddenly, something you thought was only going to take an hour suddenly took four.

[20:35] Rob: Yes, but I think the difference now is, is when that happens, I say, “Oh yes, cool.” This – the other shoe has dropped. I expected this. I’m totally not surprised when that happens whereas that first one DotNetInvoice, I was like panicked. Oh my gosh, I’m going to have to spend so much time. I didn’t count on this. Whereas now, I genuinely say whatever I think it’s going to take, pretty much triple it.

[20:56] I know that I’m going to run into a bunch of stuff and I need a bunch of contingencies to handle that. It’s purely experience and knowing that it’s – I don’t know, that it’s my whatever, 20th acquisition or something. You just – I don’t know about every surprise that’s going to come along but I just – I guess I’m not as surprised by them as I once was.

[21:13] Yes, DotNetInvoice was kind of an alpha. It had 26 showstopper bugs when I acquired it that I didn’t know about and so I fixed them in about three weeks. Sales started doing well and I kind of just let it go because I moved to New Haven for my wife’s schooling and I met a couple of MBA students from Yale. They were just going to graduate and we got together and we tried to launch three different funded ideas. We tried to get – they had to do a bunch of angels at Yale and we almost got funding for one of them and then we applied for Y Combinator. Have I ever told you that?

[21:44] Mike: I think I knew that. I don’t know if you really told me the story behind it.

[21:48] Rob: Yes, I mean basically we had – and I don’t even remember which of the ideas it was. There were some good ideas. Some of them came from the MBAs and they were – you know, they were sharp folks but yes, we applied for Y Combinators. I think it was three of us and [0:22:00] we got past the first round and we got into the phone interview round where they like have past YC founders interview people and so we talked to – it was like a travel startup that was in the – you know, the class from the previous year and it was one of the founders and he interviewed the three of us and then we didn’t make it any further but we were planning to – you know, we were talking about moving to Boston if we needed to.

[22:23] Frankly, after a year – I was consulting this whole time which was going well. I was making a lot of money, like the most money I had ever made in my life and New Haven, Connecticut was so cheap to live in that I just started – you know, I was banking a ton of money but everything else was a bust. All my nights and weekends had been spent going after these funded ideas and that was what I thought you had to do and this is around – this is 2007 and so at the end of this year, we’re moving now. We moved to Boston because my wife got a post-doc there and at the end of the year, I looked into this DotNetInvoice PayPal account and all I’ve been doing was answering support emails and I hadn’t done another release or anything and there was 25 grand in the PayPal account.

[23:00] Mike: Wow.

[23:00] Rob: And I realized, “What am I doing chasing after these things?” If I really want this time independence, if I really want products to get me out of consulting, go after this. Like grow DotNetInvoice or have three or four more DotNetInvoices and be done with it because I could totally – the amount of time I was spending on DotNetInvoice was not – I could totally have spent, you know, four times that much, five times that much. That’s when I realized that you don’t really need to go big. Going big is cool. Going big is fun. It’s hip. The way that it has a lot more certainty of it actually happening, at least in my opinion is to go small and to look for a market that has a need and test that need and then build an app for the market.

[23:37] Mike: So when you were looking at the money that was coming in from DotNetInvoice and you were looking around these other things that were either for sale on different websites – you know, I think you had mentioned in the past that you bought JustBeachTowels.com and CMSthemer.com. What sort of things were you looking at in terms of potential revenue for these things? I mean did you just kind of gather [0:24:00] that from the experience that you have with Flogs and FeedShot to figure out, “OK, well this is how much I could think I can turn this into in order to get to that goal”?

[24:09] Rob: That’s a good question actually. I think the first thing I’ll say is I kind of looked at my options at the time and I was making really good money consulting and I thought to myself, “I can build another app like DotNetInvoice but it’s going to take a lot of time.” Right? To build DotNetInvoice was probably 500 man hours previous guys have put in. I realized that I probably wasn’t going to stop consulting for a few months and build something and if you have that time, then building it is perfectly acceptable and, you know, it’s a good way but I realized I had more money than time. So I realized I wanted to do another acquisition and that’s when I went on – it was SitePoint at the time and I just started looking around and looking at what things were for sale that I thought could make enough money to get me to my goal of time independence.

[24:55] Like you said, I bought JustBeachTowels.com which is – at the time, it was nothing. It was just a site that ranked high in Google for beach towels and it wasn’t selling anything. It was like four, five flat HTML pages and so to me, it was an adventure. It was like I knew that – it was all about marketing. I saw that with DotNetInvoice, once I kind of hit upon some good marketing things, that it sold well on its own and so I realized that if I could do the same for Just Beach Towels and CMSthemer, that potentially I could travel a similar path.

[25:22] Now I’ve since sold both of those guys. They fit into my portfolio early on and they were, you know, high revenue but they were a higher kind of maintenance time that I needed to invest; but they were part of why I quit consulting ultimately and totally am glad that I bought them.

[25:40] Mike: So basically use them to kind of leapfrog you to a certain point, kind of advance what you were trying to do to get to that time independence.

[25:47] Rob: That’s exactly right. Yes, and I didn’t know that at the time. I was really buying them because they looked like sites that could make a good chunk of money and that I could learn from and it goes with the two things I was looking [0:26:00] for. I needed the money so that I could quit consulting and I needed to learn from them so that I could get better at the whole owning product thing. I really wanted to take – to learn more about marketing because I had realized pretty early that like that was the difference between all my other ideas and the one that had worked. It’s that I learned the market and I learned how to market.

[26:20] Mike: So when you acquired these different products though, especially early on, did you have an idea of how to assess the value of them, what your expectations were in terms of how much revenue you could bring in from them? So I mean if something was already bringing in $100, did you think you could turn it into $200 or $500 or $1000? What sort of things, you know, went into those decisions?

[26:41] Rob: So Just Beach Towels is bringing in zero dollars and I just saw that it was ranking number six in Google for a generic keyword. Anyway, it was on the first page and I saw – I was like the guy isn’t even selling anything. It’s a cheap site and I bought it with the intention of setting up an ecommerce site and that’s what I ultimately did. I had no idea how much I would sell, if it would be 1000 or 10,000 in beach towels. I had no idea how hard it would be to find [Indiscernible] beach towels. Just had no concept. It was purely a leap and so some people say, “Wow, that’s risky. You know, you’re taking a big risk,” but it’s like no, because if Just Beach Towels tanked, I was out the purchase price in some time.

[27:17] You know, it may have been adventurous to vote to spending months and months of nights and weekends learning the business and setting it up; but to me, the learning is fun and to me, the learning carries over to every app that I own now. Like that is why I’ve been able to quit consulting is because I put in all that time on that idea and so yes, with CMSthemer, same thing. It was making – I can’t remember what it was making. It was maybe two grand a month when I bought it but it was all manual. Like the dude was doing all the work himself and it was kind of a – PSD slicing is what it was and so I outsourced the work and made it a little more automated but I didn’t know how much I would be able to grow it. In fact, with that one, I think I maintained – I grew it a little bit but I pretty much [0:28:00] maintained it; but the fact that I automated it made it a much more valuable business because I – you didn’t have to do the work yourself.

[28:06] Actually, I mean buying those two which, you know, again I’ve since sold them – but I later bought WeddingToolbox.com. I bought ApprenticeLinemanJobs.com which I still own and that was the realization that I really wanted to build a portfolio and increase my recurring income and I watched that recurring income like a hawk. I kept it very separate from my consulting income because I was trying to figure out at what point I could quit this consulting work. I was really focused on that goal so every hour that I worked to like nights and weekends and such, it was focused on that goal of getting me to the day that I could stop consulting.

[28:40] So I actually looked at how much I was making from consulting and it was a lot more than I needed to live, right? My budget for living was – I don’t remember. It was like 50 percent or 60 percent of what I was making from consulting and so I realized that I didn’t actually have to earn as much as I was earning. I just needed to earn as much as I needed to live from these products. I kind of cut things to the bone. We had sold the car and I sold $5000 of stuff on eBay and Craigslist. I just kind of took it to the max and really decided to cut expenses and try to increase these product earnings.

[29:12] Frankly, when I hit 70 percent of what I needed to live – so it wasn’t 70 percent of my consulting earnings but it was 70 percent of, you know, what I thought I needed to live, I stopped consulting and I had a chunk of money in the bank. I remember the thoughts that went through my head that day. Like the last day I consulted, when I got up the next Monday and said, “Wow, I don’t have to do anything. No one is telling me what to do. I don’t have any clients anymore,” and it was a huge mental shift for me.

[29:37] All of a sudden, I had a lot of free time to spend on working on these products and I went from nights and weekends to suddenly I had way, way more time than I had spent ever working on products. It was a good feeling.

[29:49] Mike: You mentioned that when you got to 70 percent of what you needed to live, you stopped consulting and one of the things that I’ve noticed or at least I noticed a couple of years ago was that the more money that I had [0:30:00] coming in, the more likely I was to not necessarily pay attention to how much was coming in and maybe spend money on stuff that I didn’t necessarily need; and I think that’s probably a trap that people can easily fall into.

[30:14] So it’s sort of a lessons learned or a take-away from this is that that’s something that you have to be careful of because you can start wasting money on things that you just absolutely don’t need and then you get to a point where, you know, you want to do something else and you have to take a serious look at how much money you’re spending and where.

[30:34] Rob: I think that’s a really good point. I have a lot of friends who have either bought houses that they can afford now but if they want to stop working, you know, and work less or, you know, make a little less money, that they can’t. They’ve kind of trapped themselves into these high earning careers and the high earning career may not be something I want to do forever and you’re right. You can easily trap yourself into a job that you don’t want and if you’re able to get out from under those things or not buy them in the first place, you really do increase your chances of kind of getting to that point of freedom, time and location independence.

[31:08] Mike: Another one of the things that you’ve said was when you hit 70 percent of what you needed to live, you stopped consulting and you said you had money in the bank; but at the very beginning, you said you were also very risk-averse. I mean, how many months worth of that 30 percent – extra 30 percent that you needed that you have in the bank when you decided to just stop consulting?

[31:27] Rob: I have no idea. I genuinely don’t remember. I’m sure it was a lot. I imagine it was at least six months of 30 percent. What I remembered thinking was I need to do this. This was one of those times when I said, “What is the worst that will happen?” The worst that will happen if I don’t make this work is that I will go back to consulting and I know that I can find consulting work and that was it.

[31:51] So I am risk-averse but I was also realistic about I wasn’t going to lose the house. It wasn’t going to bankrupt us. I genuinely believe that [0:32:00] I could find work if I needed it so [Indiscernible] in three months, six months, I don’t know. I just knew that the time had come and I remember when I hit that 70 percent mark, I was really excited; and I think the next month, it actually dropped to like 63 percent or something and I was like, “Oh no, I’ve made the wrong decision.”

[32:17] Sure enough, that was a fluke and the more time I put into it, the more stuff I learned. I think I acquired another app and, you know, pretty soon I was – I hit 100 percent within probably six months and it was creeping up that whole time and then obviously way beyond that point now which has been really cool to have the freedom of this. You know, the time independence I was seeking and location independence; and early on, I admit when I had first quit consulting, I did stress about money. I did stress about hitting my number every month and I haven’t worried about that in a while because I’ve pretty consistently, you know, hit it now for probably – I don’t think I’ve  missed it in 18 months now.

[32:54] That’s in general my story. There’s obviously a lot since then because I think that leaves off in – what? 2008. But we’re not going to – we just want to talk about how we left our jobs, not our whole career path and such.

[33:04] Mike: So I think an important question that people are probably thinking to themselves right now though is, “When you decided that you were going to stop consulting because you had 70 percent of what you needed to live, what did you wife say?”

[33:16] Rob: She was OK with it because I had been communicating with her during the entire process and it wasn’t this big shock that I wanted to leave consulting. It was like years of me talking to her about it, talking about how to do it. She saw me buying the real estate. She saw me buying the apps. She saw the successes.

[33:32] I would show her the financials of what these apps were doing. She was on board. She had confidence that I could do it by that time because I had had so many failures. She knew about all the failures along the way too and she was kind of like, yes, we’re like seven years into this stuff by then. She was OK with it because now, if I had said that at the very first app I launched, you would have thought I was nuts; but by that time, she had confidence in what I could do.

[33:56] So if I hadn’t done that and it was all of a sudden some shocker, you know, I’m going to [0:34:00] quit consulting and this thing that has totally paid for us for years – and maybe that year she was a post-doc so she was not making – that was the first year she had made money and she wasn’t making very much so there was no way that she could have even come close to supporting us.

[34:12] Mike: Very cool.

[34:13] Rob: So I think I want to [Indiscernible] this with the fact that I just acquired HitTail, right? I acquired this app about a month ago and as I talked about on the last episode, it’s requiring me to ramp up again. I haven’t been working a lot which has been great because I have a young child, you know, who’s just one year old now. Some people might be thinking like, “Why the hell did you do that?” You know, why would you go out and force yourself to go back to the grind or go back to be encumbered to an app? And I don’t look at it that way at all.

[34:40] Like I really was feeling like I need a new chapter and like I need something new to learn and I’ve been asking myself for about a year what’s next and I had it written on a Post-it and I put it on my monitor. What’s next for me? What’s next? And so that’s why I’ve done HitTail is because I’m really excited about it and it may go beyond, you know, the Micropreneur stuff and the smaller ideas that I’ve had but geez, I’ve learned so much for doing those things. There’s no way I would have tackled HitTail without the knowledge that I learned from everything that has come before frankly.

[35:11] Mike: Yes, I think the guys from the TechZing podcast had asked us about both AuditShark and HitTail and they basically pointed out upfront and said, “Look, these aren’t really micropreneur endeavors. What are you guys thinking?”

[35:23] Rob: And we said that the micropreneur approach is perfectly valid and it is – in my opinion, it is the best way to start making money, if on a product, and it’s the most risk-averse way frankly. I think it’s the one that will succeed most of the time compared to doing something like AuditShark or HitTail or a little higher risk, the bigger ideas with more moving parts and more things that can break or fail both in marketing and – you know, and technology-wise. But we’ve both been doing this for what? Ten years at least, right? I think you launched your first thing in ’99 or 2000.

[35:54] I had one that I did in ’99 that I’ve never talked about but – so I’ve been doing it a long time too and it’s like hey, I think [0:36:00] you and I have years of experience doing this and we’re like ready to take on this challenge. I know perfectly well that what we’re doing has a little more risk than other stuff we’ve done in the past but I also think we’re enjoying it maybe more than doing another small idea.

[36:14] Mike: Oh, totally. I mean for AuditShark, I absolutely love getting in there and getting my hands dirty on this stuff that I’m actually doing and it’s not just the development side that’s fun. I mean it’s the marketing side as well. I mean sure I’m building it from scratch. It would be a lot cheaper to buy it if somebody had built something similar or something that I wanted to; but I enjoy getting in there and getting my hands dirty with all of it. I mean, you know, from beginning to end, from the development to the marketing, it’s just a lot of fun.

[36:41] Rob: Yes, and I think that’s more, for both of us, what we’re looking at these days. We’re just at a different place. We’re not that entrepreneur 10 years ago. You know, our first day so to speak on the job of entrepreneurship and so we’re just – we’re at a different place and ready to kind of take a – maybe take a bigger risk and learn more things. I mean there’s more likelihood we’re going to fail because these are bigger ideas but I’m super excited about the prospect of it.

[37:04] Mike: Well, the other thing is I think that these are probably also – both AuditShark and HitTail are probably higher price points than, you know, a lot of some of the other things that we’ve done.

[37:14] Rob: Sure.

[37:15] Mike: Both in terms of the recurring revenue aspects of them and, you know, just the actual dollar amount per customer anyway.

[37:21] Rob: Yes.

[37:22] Mike: Probably isn’t necessarily a bigger risk in that sense but certainly the opportunity for anything to go belly up.

[37:29] Rob: Right, and I also think both [Indiscernible] that we’re working on are – they’re much less automatable. They’re harder to automate. Like there’s going to be more high-touch sales, face to face interaction, phone call support, that kind of stuff. I don’t necessarily think that’s a bad thing. Like I’m prepared for it and I’m sure you are too. You’re willing to do it and maybe when I was working a fulltime job, I didn’t want to do that but we’re geared up and we have hopefully realistic expectations of what it’s going to take to make these things work.

[37:55] Mike: You know, until you mentioned that, I hadn’t really been on board with the whole idea of phone support so I don’t [0:38:00] know about that.

[38:01] Rob: All right. No, and that’s fine. I’m not – yes, I’m not trying to put words in your mouth. I guess …

[Crosstalk]

[38:05] Rob: … pretty actively that I will probably put a phone number up there and do it and see how it goes. If it really helps me get more customers and help support people, then I will – I won’t do it forever myself, right? I’ll do it for a month or two to learn the ropes and then I will find someone good who I can outsource it to; but that kind of thing that goes outside of our comfort zone, that’s what I was thinking.

[38:24] Mike: Well, I was thinking – the thought that came to me about – it was probably two or three weeks ago. I’ll run this idea past you. One thing I thought about was because AuditShark is, as you said, a much higher price point, probably higher touch sales and everything else, what I had thought about was OK, there are going to be people who probably want to talk to somebody on the phone or there are going to be situations where they have a particular problem and you really probably need to talk to them.

[38:47] What I had thought about doing was only doing support calls of any kind on like Tuesdays and Thursdays and that’s it; and maybe only in the afternoon. If you wanted to talk to somebody about a support issue, you had to wait until either Tuesday or Thursday afternoon.

[39:00] Rob: Right, so office hours. I think if you go enterprise, that that’s not going to work at all.

[39:06] Mike: Well, you would still get email support on other times but if you wanted phone support, then that’s the time.

[39:11] Rob:  I don’t know, man. As a customer, if someone has an issue on a Monday or a Saturday and their stuff is down or it’s not working and they have a consultant waiting on it, I guess you’re saying they could email you. To me, it depends on the market you’re selling into and the expectations you set upfront. I think that’s a big part of it. It sounds weird to me if you said there’s only phone support for, you know, four hours, twice a week. That – I’ve never heard anyone doing that and it sounds like a little small.

[39:36] Mike: It’s unorthodox.

[39:37] Rob: Yes, it is but it’s not to say you couldn’t give it a shot. If you’re doing …

[39:41] Mike: Yes.

[39:41] Rob: … in-person sales, you’re going to see their reaction pretty quickly and be able to change it and having no phone support, may be better than having two days a week, three hours a day. It might be. I’m just – I don’t know without – you know, without seeing the market you’re selling into or talking to customers. I think that’s going to be your [Indiscernible].

[39:57] Mike: Yes. I hadn’t actually decided that this was what I was [0:40:00] going to do. It came to mind one day. I don’t remember what I was doing. I said, “Huh, I wonder what would happen if you did this.”

[40:05] Rob: No, I think it’s a really interesting idea.

[40:08] Mike: Well, if any of you listeners out there just feel so inclined, feel free to come to the website and leave some comments and weigh in on that. It would be interesting to hear what other people think about that.

[40:17] [music]

[40:20] Rob: Or you can call it into our voicemail number at 1-888-801-9690 or you can email it to us in MP3 or text format to Questions@StartupsfortheRestofUs.com.

[40:32] Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. If you enjoyed this podcast, please consider writing a review in iTunes by searching for “startups”. You can subscribe to it in iTunes or via RSS.  A full transcript is available at our website, StartupsfortheRestofUs.com. Thank you for listening and we’ll see you next time.  [0:40:50]