Episode 540 | Bootstrapper News. Twitter Spaces, Indie.vc Closing, Shopify, and More

Rob: Welcome back to Startups for the Rest of Us. I’m Rob Walling, and we’re going to be hanging out today, talking about some bootstrapper news, news that is relevant to those of us who are bootstrapping, or mostly bootstrapping SaaS companies. Today, we’re going to Twitter Spaces, the closing of Indie.vc, some Shopify App Store drama, and a few other topics.

I have Tracy Osborn and Einar Vollset on the show again today. Those are my two teammates with TinySeed, they’ve been on many episodes in the past. As you know, Tracy was the founder of WeddingLovely and is now the program manager for TinySeed.

Einar Vollset is my co-founder with TinySeed. He has a ton of experience in SaaS, M&A as well as enterprise sales, cold email, along with his CS in Computer Science that I like to say I won’t hold against him.

Before we dive into that, I want to remind you that MicroConf Remote is coming up next Tuesday. If you have not purchased your ticket, microconfremote.com. I highly recommend it, it’s for earlier-stage folks, I’d say pre-5 or 10K MRR. But if you’re anywhere from idea up to about 10K, we’re going to be diving into four in-depth case studies of early-stage marketing approaches that folks have used to get traction and it will either be founders or subject-matter experts who can share numbers, thoughts, ideas, best practices, as well as some really cool opportunities to interact with fellow founders.

Producer Xander has really outdone himself on this one, and there is an entire video game aspect to it where you’re an avatar and you can walk around, you can walk into the venue itself, the auditorium. You see this visually in your browser, and then you’re seeing the livestream and it’s going to be me talking with these founders and going through keynote-type stuff.

And then you can leave and go explore a bunch of other rooms that are going to have content and other attendees, so replicating the hallway track where you can walk up to someone and just have a video chat with them between talks, as well as head to different rooms that emphasize different things whether it’s education or marketing tips.

It’s all kinds of stuff. It’s all kinds of fun and again, in true MicroConf fashion, we don’t want to run an event that’s just like everyone else. If you recall last year’s MicroConf Remote, we had segments like founders in cars getting coffee or not getting coffee in that case. I had a talk show host desk setup, we were between two large potted plants, just all these different sets. It’s because we want this to be entertaining.

We know that sitting at home is not what we’d rather be doing, we’d rather be in a room together chatting, so we’re putting our creativity into these types of events to make them more interesting, more compelling, and hopefully more useful to you, that the content sticks and resonates more as you’re about to both absorb it and talk to other folks who are doing this. Again, microconfremote.com, grab your ticket and I hope to see you there.

With that, let’s dive into our bootstrapper news roundtable. Tracy Osborn and Einer Vollset, thanks so much for joining me again on the show.

Tracy: Happy to be here.

Einar: Thanks for having me, Rob.

Rob: I gave the two of you a little introduction before I hit record here, so let’s just dive into our first story which is about Twitter Spaces. In essence, for those who have been under a rock, Twitter Spaces is a beta or an early-access, limited access feature in Twitter that is essentially—you guys correct me if I’m wrong—a ClubHouse, but it’s in Twitter instead.

Einar: Yeah, it’s a rip-off of ClubHouse.

Rob: Well, rip-off is one way of saying it. I mean, if they rolled it out last week, my guess is it was probably in development potentially even before ClubHouse came about. I don’t know how long ClubHouse has been around. It’s synchronous audio, so imagine taking all the benefit of a podcast and removing all the good things about it.

You need to sit there live, there’s no recording, and obviously there are some benefits. People come in the audience, you can just bring them in and have a chat and such. I don’t have access to it yet. Do either of you?

Einar: I don’t, no.

Tracy: I do not.

Rob: Have either of you attending a Twitter Space or a ClubHouse?

Einar: No.

Tracy: I find this frustrating. I understand why these companies are making these spaces. A certain group of people have access to something like verification or only a small amount of people can use ClubHouse, or only a certain amount of people can use Twitter Spaces, so it drives up this need here. You see other people using it, and all the other people like us are going, what’s going on over there? I don’t have access to this, I can’t host these things. There’s a marketing need for it, but it frustrates me.

Rob: Does it feel like fake FOMO?

Tracy: Yeah, I feel like I’m supposed to have FOMO about it, and I just get mad and then I don’t want to use it. But I don’t think I’m also the typical tech user, or maybe I am.

Einar: I don’t know. We actually made this mistake over a decade ago. We did reMail, which is an email startup. We just let everyone in. They were like, all right great come on in. We got mentioned on Tech Crunch and it just completely melted our servers and everything. It was a horrible experience for everybody, so I’m a little bit more sympathetic to the staged, let in some people, see how it goes, add a bit of FOMO, that sort of thing.

I actually think it’s been done reasonably well. I get what you mean, though. Sometimes it’s a bit much, but having been on the other side of it from an engineering perspective, I do have some sympathy.

Rob: But I feel like Twitter has the resources to not do that. I guess since they are so big, maybe if they let everyone in?

Tracy: Yeah. I see it as Twitter being the owner of this. I should have looked up how long ClubHouse has been around, so maybe that’s a scaling issue on their end, but Twitter has been around for what, 10 years now?

Rob: Longer, since 2007.

Tracy: I feel like they’re looking at ClubHouse locking it down, and being like, ooh we can lock it down too.

Rob: Yeah, I see that. My thing with ClubHouse is I think they want to avoid having to deal with so much spam right off the bat, and if we do it by referral only, that can help you in the early days but until you have the momentum to then go in the back-end, build all the bots and the AI needed to help solve that. Because if they just open it up to the world right now, even if their servers didn’t melt, it would be brutal. The spam and all that would be a major issue for them.

Tracy: Sorry for interrupting, but also I would actually say it’s not just for keeping out spam, but it’s more of a higher-tier of conversations by limiting it to only a certain amount of valuable voices. That can ensure that when people join they’re like, ooh look at all these great conversations going on rather than a lot of mediocre conversations with all the hoi polloi inside of it.

Rob: Right. I have not been in Twitter Spaces—there have been a few—but one started yesterday and it’s like, I have work to do. And that’s the thing. If they were an RSS feed of certain conversations, would I subscribe? Probably. Maybe I’d at least try it out, but I can’t stop in the middle of my work day. I’m not going to stop and sit there and go talk about bootstrapping or whatever.

Einar: If only there was some sort of technology where you could have a feed of things with audio, and then you could listen to it as you wanted.

Rob: XML would be a really good approach for that. That’s the joke I’ve been making with friends. Like really? Are we going backwards here? This is terrestrial radio, it’s just smaller, it’s just more niche. I guess I’m not a big fan of it.

However, I will say producer Xander and I have talked extensively once I have access doing some MicroConf stuff, and doing potentially a livestream audio event, whether it’s just like a MicroConf on air that we do audio only, because the chance for participation, I do see some of the benefits where I can call someone from the audience.

I’m sure there are other benefits that I don’t know about but that’s really the only one. We already do MicroConf on air as a livestream. It happens to be a video livestream because that’s just the norm for real-time content, because to do an audio livestream is unusual, I’ll say, so we do that every few weeks, we get people engaged, we get questions, and that’s cool.

Again, the only difference I see is the ability to see someone in the audience and say, they can contribute on this topic too, I recognize their name, and pull them in spontaneously, so to speak. Do either of you see any other benefits that I’m missing from either of these platforms?

Einar: Yeah, I think certainly just having a livestream and then it being like, yeah it’s on some website somewhere is one thing. Certainly with ClubHouse and definitely with Twitter, you have more the network effect, the fact that it’s inside these networks of things. In relation to ClubHouse, I keep seeing people on Twitter who I know have 5000 followers or something, and they come along and they’re like, look I’m on ClubHouse and now I have 150,000 followers.

They’re clearly very aggressively trying to build out by suggesting people and building that network, and I do think that’s a big part of the appeal. You could always do livestreams on the internet, that isn’t new. It’s just the more building the network and the social network and engagement around it, I think is the innovation.

Tracy: I feel like we’re pushed as consumers being that we’ve watched Twitter grow, and they’re watching all these other social networks like Instagram grow. A lot of people are realizing the power of being in early, building that initial network, and having that payout over time, if they can get in early enough. Now when social networks start, people are like, maybe this one will go big so I’m going to try to get in big early. And then they fizzle, which makes me sad.

As with Twitter alternatives, I think people have done that too. I’m not sure if that was really Mastodon, but I did know some people who were thinking that Mastodon would be the big competitor to Twitter, and therefore…Mastodon?

Einar: Masa-what? I’ve never heard of Mastodon. What is Mastodon?

Tracy: Yeah, exactly. It died, I think. It may be still alive. I do know of some people who looked at that and were like, this could be it. They spent a lot of time trying to build up that network just in case, and I feel like that could be happening a little bit with ClubHouse.

Rob: Yeah, the network effect will win. That’s the thing. With ClubHouse now a feature of Twitter, and Twitter already has the network, so my prediction is ClubHouse will be done. I know they have this amazing valuation right now—and I say amazing, what is it, billions of dollars—but for me it’s this typical silicon valley FOMO investor thing and everybody wants a piece of it now because it got popular.

Twitter has the network. If Facebook were to do this, they would have the network. ClubHouse is building it from scratch. I’m on Twitter, I have 21,000 followers. When I go to ClubHouse, I believe I have like 42. For me, I’m not going to invest my time on ClubHouse. I’m literally waiting to have access to Twitter Spaces. By the way, if you work at Twitter and you’re listening to this, I would love to have access to start doing a little Space now and again. Hit me up.

Tracy: Use the power you have.

Rob: It’d be great. I’d bring an audience with me, so I think it would be beneficial. I’m not some clown who’s going to show up and gather four people to do it.

Einar: Rob, are you verified on Twitter? Is that a thing?

Tracy: Oh my gosh.

Rob: It’s a thing. I’m not, no.

Einar: Okay. Tracy, did you used to be verified on Twitter?

Tracy: Yeah. Einar knows that I was just complaining before we jumped on the call and started recording this. I used to be verified but I changed my username from @limedarling to @tracymakes and lost verification. I’ve been in the, as I said earlier, the hoi polloi ever since.

Rob: That was like giving Tracy a papercut and pouring lemon juice in it. That’s what she just said.

Tracy: It’s like Einar’s favorite pastime.

Rob: Yeah, it’s the verified thing. So, prediction—Einar, is Clubhouse in business or swallowed up within 18 months?

Einar: Eighteen months, that’s a lifetime. I still think they’re around. They raised so much money. Didn’t they raise $100 million or something insane? I still think they’ll be around, I do. I used to think Snapchat was just a flash in the pan which it clearly wasn’t, so I’m a little bit more bullish (I guess) than you guys.

Rob: Tracy?

Tracy: I’m bearish because if I look at the social networks that made it big like Twitter, Instagram, Facebook—they outscale depending on the time. You can spend hours on each of these social networks, or you can just check in every five minutes, every now and then, and just catch up really quickly and close the app.

ClubHouse doesn’t really have that time scaling. I feel like it’s all or nothing. When the newness wears off, I feel like it’s more likely to not be as engaging anymore and that participation will drop off to a point where ClubHouse might have some issues.

Rob: I agree with you there. I think longer-term, Twitter Spaces will probably stick around. Maybe they’ll add video, and it becomes another avenue to do livestreams.

Tracy: Wait, do you think ClubHouse will bring in a Twitter-like alternative so they do have that time scaling?

Rob: No. What do you mean bring in a Twitter alternative?

Tracy: If we go with my analogy…

Rob: Ohh, I see what you mean. Add Twitter functionality?

Tracy: Yeah, exactly. So then you have the way of catching up really quickly but you don’t have that huge time effort. Do you think that ClubHouse will move into that direction?

Rob: With $100 million they can do whatever they want, but that seems like an odd place to go down at that point. I just think Twitter Spaces will stick around. I want less synchronous things in my life, period.

This is why we use Voxer. Voxer, for those who don’t know, is an asynchronous way to send audio communication. I push to talk, I can leave a five-minute Voxer, and then Tracy or Einar—it’s a private message—they get it, they can listen to it at their leisure and they can 2X or 3X me—3X is the speed—and then they can respond back.

We still do calls when we need to, but it cuts down the need to have a bunch of back and forth in Slack, or just go everything’s like let’s jump on a 30-minute call to discuss this. Oftentimes you can just go back and forth with little audio, and that’s how I want my life to be—more async.

Tracy: Voxer is essentially calls but without the call part, just like voicemail.

Rob: It really is. When I’m off a call or I’m just making dinner with my kids, before I sit down, brrt, you know? I’ll say, hey Tracy I was thinking about this one thing, what do you think? Blah-blah-blah.

In any case, let’s move on to our next story. Really interesting news this week—shocking news to be honest—that Indie.vc is shutting down. Bryce Roberts posted to Medium, a post titled The End of Indie. He doesn’t give a ton of background other than to say it looks like LPs weren’t as interested in this fund. For those who don’t know, Bryce runs two funds. One is the O’Reilly AlphaTech Ventures, oatv.com. In fact, when I emailed Bryce, that’s the domain name of his email address. That’s a very large fund, traditional venture capital, quite successful from what I understand. I don’t have inside information there.

Indie.vc is, again my understanding is it’s a much smaller fund and it was investing in alternative VC. Their terms are (let’s say) more bootstrapper-friendly and you can buy back equity and pay things back. Here’s a screenshot of an email from an LP-alluded partner, a potential investor in Indie.vc. The screenshot says, “Hey Bryce, we are out. The shift in strategy for the fund over time for your good intentional reasons has moved further away from the kinds of companies we are looking to have exposure to.”

And so he says, “Without the institutional support to scale the Indie economy we envision, it’s time to take our learnings and refocus to other strategies within the portfolio to deploy our capital. To our friends, founders, scouts, and supporters, thank you. It’s been an honor to write this chapter. Maybe we’ll get the band back together, take another run at the Indie opportunity down the road.”

This came completely out of nowhere, and I tweeted about it that I was surprised and also frankly saddened that the experiment didn’t work in a sense. They funded 40 companies, you can’t say nothing good came out of it, but the fact that it’s shutting down only six years after it started is a bummer.

Being lumped in—TinySeed has been lumped in with Indie.vc—as this bootstrapper-friendly funding and the mission I think is overlapping, but obviously TinySeed is very different in that we run the year-long accelerator, that our terms are quite different. They’re not custom terms, they were really just straightforward equity, and our focus is B2B SaaS. There are a lot of differences between the two, but I feel like I’ve talked a bit about this. Tracy, do you have other thoughts to add on Indie closing down?

Tracy: Yeah, I actually wasn’t thinking this before the call, but when you said the name of their blog post, The End of Indie, it’s interesting that it says that rather than End of Indie.vc. It’s a little bit saddening because Indie.vc and why TinySeed gets lumped in with them is that we are aiming for more of that independent bootstrapped type of world. Those types of entrepreneurs are looking for a path other than VC or just bootstrapping.

When the blogpost says End of Indie, and then talks about the LPs not wanting to invest in the space, what I’m hoping is that it doesn’t tell people that being an independent Indie entrepreneur—rather than say VC track entrepreneur I think is the way to look at it—they don’t think that that’s also the end of that, like people aren’t going to invest in this field, because we have investors.

We just raised our second fund and we’ve been really successful in getting people on board our mission and I just hope that blogpost doesn’t read as this mission of supporting independent entrepreneurs doesn’t work anymore.

Einar: I agree. Certainly, Bryce in Indie was a pioneer in this space. I certainly think we share the mission in terms of, I feel like in the last 10 years at least—I think this is what triggered Indie.vc to get formed—the name of the game in terms of funding has become chase after unicorns. It used to be, if you don’t think it’s going to become a billion-dollar business don’t invest.

A couple of years ago, it was forget about a billion dollars. If it can’t be $10 Billion then let’s just not invest. And then last I heard a week or two ago, people were talking about hectacorns or something crazy which is $100 billion.

Fundamentally, a key part of thesis for TinySeed is there is value creation and there is value in supporting founders who want to create businesses that are successful and ambitious but aren’t necessarily wanting to be $100 billion, super famous, the face of Fortune magazine, or whatever, where maybe a win is you sell for $20, $100, $5, or $10 million, that’s a win for everybody, including investors. I’m sad about it.

We at TinySeed took quite a different approach. We get lumped in with them and similar funds reasonably often, but in a way I actually think of Idie.vc and those kinds of funds more similar to revenue-based financing on debt funds, versus certainly what we think—or at least what I think—is given how early we invest—Indie usually invested later than us—you just need to be an equity investor and you need to basically not allow founders to buy back equity.

As you guys know, we sometimes get pushback on this. Why can’t I just buy back my equity? Why won’t you be happy with 5X or 10X your money back? For us, the reason is that the math just doesn’t work out that way. We think that the companies that we build, what we’re trying to do is to support a large number of founders and companies.

Some of them won’t do so well, and some will do well and sell for or just get to $5 or $10 million. Some will do really, really well. That whole mix of things needs to be in place in order for founders to be successful, but also in order for investors to be successful.

As you see with Indie, if you can’t convince investors or LPs to keep investing, then you’re dead in the water. The most founder-friendly terms in the world are just to give cash for no equity and no nothing to founders, but that doesn’t provide a suitable return for investors.

That’s been the challenge for us from day one. How do you find that balance between founder-friendliness and suitable investor returns, given that everybody has other options to what to do with their money? You can put it in crypto or S&P 500 Index funds, or you can YOLO into GME options.

There are a lot of things people can do with their money, and I think you need to find what that balance is. I think we’ve found it, and certainly I hope so at least, I guess time will tell, but I think that balance is hard to strike. For whatever reason, it doesn’t seem like Indie found it.

Rob: Yeah. You and I spent at least six months working on the TinySeed terms. We looked at Indie’s terms and came up with our own terms. I believe we had five, maybe six versions of different terms. There were straight equity—

Einar: Some were terrible.

Rob: Really bad, and some were way too founder-friendly in the sense of, hey investor give us $100,000 and we’ll give you $120,000 back in 10 years. That doesn’t work. We had some where the fund made out like a bandit and what founder or whatever in their right mind would accept that, right? That’s what we had to find, the balance where the Venn diagram intersects that founders will take it and it’s a good deal for them.

Einar: In some cases they were maybe a decent trade-off in some situations, but they ended up that they would preclude or stop the founder from doing certain things. We think a lot of the companies that we back will be successful without further funding after us, but we did want to come up with terms which meant that if they do decide, this is a bigger opportunity that I thought I want to go after the more traditional venture track, then they should be free to do that.

Some of the terms variations we thought of really snookered founders. In some cases they were complicated to the point where it wasn’t obvious. I’m not sure that most founders would have understood them until it was too late. Five years later they’re like, oh crap I can’t do this now. We see that just in general venture terms and stuff. You end up in a scenario where whatever terms that an early-stage investor put in is so weird that it ends up blowing up the cap table and ruining the company at least for further financing.

Rob: Yeah, and that was a big reason that we did land on equity, that it’s been around for centuries, it is understood, we invest the money, and we get a percentage. Really that’s the simplest way. All the other terms we had were a bunch of if-then-else statements in a contract in essence. If this happens, then this happens at this point, and it made us feel a little less comfortable. If you ever do decide to look into funding, whether it’s angel, whether it’s TinySeed bootstrapper-friendly, and whether it’s a venture, you really need to look into these edge cases.

To wrap up this topic, the sad news is that Indie has closed up shop and that’s a bummer. The good news is, before Indie, before TinySeed, we were bootstrapping. You can still build companies without any funding. You can. Is it probably a little harder? I think so. Will it take you longer? Probably.

This is what MicroConf, this podcast, my books, and everything I’ve been saying since 2005 is about. Don’t ask for permission to build your company. Build your company, not your slide deck. Go out and build it. Revenue is the best slide deck. That is another thing I’ve said at several talks. If you really do decide that you want to raise funding at some point, then the more traction you have the better off you do. So get in the trenches, get some revenue, get someone paying you—real customers, real product, real money—and that’s the way to do it, and it’s still totally possible.

If you need help along the way, it is good that there are funds like ours and other ones I’m sure will come along that can help folks who maybe don’t want to necessarily hop on the venture track, may want to, down the line.

Let’s move on to our next story. This was one I found on Hacker News, and we will link this up in the show notes. “Shopify says remove Stripe billing or get booted from their app store. We’re a SaaS business currently listed on the Shopify app store. Today, we got a stern email from Shopify’s partner governance team. TLDR: Don’t even have Stripe as an option for Shopify users or we’ll boot you. Also, back pay since January 2019.”

I’m not going to read this entire email—it’s several paragraphs long—but in essence, if you’re in the Shopify app store, even if you have a separate SaaS app, if you have any Shopify users coming through your SaaS app—imagine if you have your own domain, drip.com for example—and Shopify users are using it, then they’re saying that you have to go through Shopify’s billing.

I want to start by saying this is no surprise to me. While it sucks, that’s what Shopify is, a monopoly in essence. Back in the days as Drip pivoted into ecommerce, this was shortly before I left, we started talking to Shopify about getting in their app store and this was one of the big concerns I had. All of our billing engine and everything, refunds, annual prorating, just all the complexity, is a custom billing engine built on Stripe and it works really well. We have a credit system, overages, on and on and on. Some folks wanted to be in the Shopify app store, and that means suddenly you hand over all of that.

Our customer support people no longer have the ability to just provide someone with a refund. That was a pretty major yellow flag for me during integration so I’m not surprised by this. Yes it’s a bummer. What do you think about this Tracy?

Tracy: About the same. The hard part was because you shared the Hacker News page with me and of course I had to go through and read the comments…

Rob: Oh, don’t do that.

Tracy: Yeah, I shouldn’t do that. Now my thinking is warped by all these comments, but the top comment does make an interesting point which was, people have been talking about Apple taking a 30% cut of folks who are doing payments through their Apple apps, and the Shopify CEO was I think rightfully complaining about that—the loss of the open web—while also having this within Shopify. I just think that’s a little disappointing, I agree with that assessment.

I wish we could have an open environment both with Apple as basecamp and everyone has been talking about as well, but also with Shopify. But that said, I’m a pessimist when it comes to this kind of thing. It does not surprise me whatsoever that it’s this way.

Rob: These are big platforms, this is what they do eventually. This is why amazing step one businesses are these Shopify apps. It used to be mobile, but I’m not necessarily a fan of being at this point since everything’s sold for 99 cents it seems. There are the Shopify apps wherein the Salesforce app store and wherever else we can think of the online ecosystems and you can get in. Heroku is another one. It’s amazing to get to $5000, $10,000, $20,000 a month relatively quickly if you rank for terms that people want to search for if the ecosystem’s big enough.

Longer term, these are not great million-dollar, multimillion-dollar businesses if that’s your aspiration. This is your step one. Use that to then buy out your time and then either pivot this into hey, I’m going to build another business that’s very similar that isn’t in the Shopify App Store, or go and build that other app because platform risk is a big deal. Basically, you have to do what they say. They’re going in asking the original poster for 20% of revenue dating back to January 2019. That’s two years of revenue. That’s insane.

Tracy: Yeah, that’s wild.

Rob: Yeah. What do you think Einar?

Einar: I’m sort of the same. It’s not surprising that they’re doing this, but it’s hypocritical of them (Tobi) to be ragging on Apple when they’re doing the same thing if not worse. I think it was Tobi, who’s the CEO of Shopify, who said last quarter or the quarter before, we’re expecting to see a company IPO that’s built on the Shopify platform. I’m like, that’s tricky when you do things like this. I guess it’s happened on some platforms before, but not a lot.

There are some companies that maybe have done that on mobile, maybe some gaming things have done okay, but on a single platform? No. As an investor, we know this. We’re slightly wary of backing things if you’re only running on Shopify or a specific platform, because it is a risk. They can easily decide the next day, we’re doing exactly what you’re offering and it’s going to be free and now you’re screwed.

You can have a significant business that can be killed overnight by running on someone else’s platform and I think that’s a risk that everyone should take into consideration. Like I said, I somehow doubt that a Shopify plugin will become, well IPO, as a billion-dollar business.

Rob: One of the early questions we ask folks who apply for TinySeed if they are on a single platform is, what are you thinking to get around your platform risk, basically? Usually the approach is to look at the other platforms, to build out into a broader ecommerce thing. I have second-hand—through one of the investments that I have, an angel investment from long ago—have seen platform risk blow up and have seen a large platform just throw their weight around and be able to pretty much, extortion maybe is too strong a word, certainly dictate, that’s a good way to say it.

I know what can happen, and it doesn’t happen when you’re at $500,000 ARR. It happens when you’re at $5 million ARR. It happens when you get to that point that you get on their radar and they see, wow why is this company making all this money on our back? We want a big piece of that, and that’s usually what happens.

Einar, with your experience helping SaaS founders exit—SaaS founders that are doing basically anywhere north of $1 million, seven or eight-figure SaaS companies—have you seen acquirers be wary of platform risk in this sense? Even if, let’s say, someone did have a Shopify app that was doing $5 million or a collection of them, would a potential acquirer be willing to pay the same multiple as they would if there was no platform risk?

Einar: No. Certainly not. No.

Rob: That clear, huh?

Einar: Oh yeah, 100% because they’re aware of the risk; it’s obvious. There are ways to mitigate it. To give you an idea, in some cases there are things that you sort of know are platform risks but they’re not really the same sort. For example, for at least the last year or two, it’s been the case that a B2B SaaS business was usually selling for some sort of an ARR multiple gets discounted if it’s a business that serves WordPress clients exclusively.

That’s much less of a platform risk than Shopify or Apple because it’s an open-source thing and yeah, I guess WordPress can stop you or Dotcom can stop you from being in the plugin directory or whatever, but certainly the risk there is much lower. Those guys are taking a discount if they were not serving that market. There are just many, many buyers who are willing to punt on an asset or certainly pay a premium for an asset that’s running on the app store or whatever platform we’re talking about.

Rob: Our next story is another Twitter story, which is unusual. I don’t feel like Twitter ships many new features. In the past three years have they shipped two major features? But here we go. Space is at the top, Super Follow is a way for Twitter users to charge for their tweets. It’s like a subscription. I could say hey, I’m going to have my public Twitter feed but if you want the juicy details—I don’t know, more honesty, more transparency, whatever it is it’s the super secret sauce—then you can pay $5–$10 a month to get this separate private feed for Rob Walling.

Tracy, I’m curious if you would be willing to pay. Is the price set at $10? I should have read this, but can you set your own price or is it $10? They’re showing it as $4.99 so they haven’t clarified this, but would you pay to read anyone’s tweets? Is there anyone that comes to mind where you’re like, yes I would do this?

Tracy: People are making this Substack comparison. I also think it’s like Patreon, and I feel like there are people on Patreon—definitely not the majority—that are using it as a thought platform. Oh gosh, I always get bullish and bearish wrong. I would say I am bullish on this, actually. I don’t like it. I think I would pay for people’s tweets. It’s a smart move by Twitter.

With the trends between Patreon and Substack, and Twitter reaching the point where it has nearly everybody (it seems) has a Twitter account now, it feels that’s a natural evolution and a better way of monetizing the platform than just doing all the ridiculous advertising stuff that they were doing, all the weird Twitter ad stuff.

I wouldn’t want to pay for someone, I would probably say I’d prefer to read their tweets for free. I can see the business case for it, and I could see myself being won over by super amazing thought leaders, like if Barack Obama was doing a lot of thought leadership on Twitter and then decided…

Einar: He needed some money to charge $4.99?

Tracy: I don’t know, maybe the book sales aren’t going as well as he thought and he has to move over to Twitter. I could see myself being like fine, take my $5 a month so I can have access to what you’re saying.

Rob: Einar?

Einar: Before the thing I didn’t actually realize they had released it. I think it’s a good move for them. I certainly think it opens up some new use cases and I can see myself paying some stuff. I guess it’s been mostly used for porn, but isn’t this what superfans or onlyfans or whatever it’s called does? It’s sort of like that, so I think in general it’s fine. Why not? I’m just happy to see some sort of a product innovation from Twitter. It’s been a long time.

Rob: Me too. I’m waiting to see what some creative folks do with this. When I think about it in general, I think this isn’t that interesting. It’s like, okay you put up a pay wall in front of some tweets, but when Patreon first came out I felt the same way. But now I see how it’s used and I support probably 10 creators on Patreon. So would I support creators on Twitter where it’s almost a donation model? Yes, because I do that on Patreon where I pay people just to podcast.

Einar: Do you think I should set up a Super Follow just to do my YOLO GME bet tweets on there? Would you pay for that?

Rob: It could be there. I wouldn’t, but there are people out there who would. I agree with you. On a product front, this is a good move. People are comparing it to Substack, but Substack is email newsletters, so I don’t see how. This is a walled garden and Substack is email, unless I’m misunderstanding it.

Einar: I don’t think it’s the same. I have to be honest. I’m quite surprised at how successful Substack has been. I have to admit, that’s more surprising to me than anything else.

Rob: I know, that’s another one where I’m like, how? Why? You could just do this with MailChimp. Like, why? I know they have some other features and such. It’s really a tightly-niched product (almost) and I wonder what the reach of that can be if it can be venture scale. Obviously email marketing can be, but that’s a really different use case than just creators.

All right, our next story is actually comparing Google Cloud onboarding versus AWS onboarding, and it’s a blogpost on kevinslin.com. Obviously, we’ll link it up in the show notes. He says at the beginning, “Disclaimer: I used to work at AWS and have both conscious and unconscious biases towards my former employer.”

In essence, he received credits for AWS and Google Cloud, and he had to get onboarded essentially from scratch in order to redeem this offer and then get access to the stuff. In the end, his comparison is that the AWS process was completed in under a week, got all the credits and the perks right away, and access to first-party support from AWS. The Google Process was still ongoing after three weeks, he got credits in chunks, and he’s not sure what the terms are and when they renew. The first point of contact was a sales rep, not talking to a third-party partner.

To me, this is a bit of Amazon does tend to be… their customer service is not terrible. I tend to have decent interactions with customer service, and they do have human beings working in Amazon. With Google, anytime I’ve needed something, it’s pretty terrible in terms of going to forums and such. I would hope that Google Cloud would just be organized differently and again, he obviously has his own bias. I have not gone through this process, but Tracy I’m curious what your thoughts were after reading this post.

Tracy: Again, there was a Hacker News post for this and again, I looked at the comments.

Rob: Don’t do that.

Tracy: I am affected by the comments that are there, but some of them made a point that it’s actually more about instead of just Google Cloud versus AWS onboarding for people, it’s actually a comparison for YC companies. We kind of see this at TinySeed. When you set up a perk for an accelerator, some of the people that we get perks for will have a dedicated rep that you can just email immediately and they give you all the answers that you need.

And then there are other companies that say, we offer a perk but we’re not going to also offer the infrastructure to support all of that. Both of them are successful, it sounds like—as someone made a point—AWS has a better rep for this YC perk. I feel like a lot of it is just beating the horse about how Google support is terrible and AWS is great. I would argue that AWS’ rep for the YCombinator would be better than normal support for AWS.

Rob: What do you think, Einar?

Einar: I’m not sure what I think, actually, but I certainly think that’s right. One of the most frustrating things about this that we see with TinySeed, too, is that at least AWS has been around for a long time. That’s part of what’s shining through here, and they tend to be consistent with their stuff. They’re like, if we’re going to offer you 150,000 in credits then that’s what we’re going to do.

We had the experience with one of the perks that we offer with TinySeed where it was $100,000 and then I got busy, I got a bunch of emails all of a sudden, and then I read one of the emails from this. Like yeah, we’ve decided to change the program a bit. Usually those things are like, we changed our privacy policy. And he’s like, no we’re going to do now it’s $1500 per…

Tracy: $500.

Einar: $500? Even worse. I was like, you mean you reduced it from 100,000 to 500? That’s just an email in a change? That’s a bigger deal to me than how much pain it is. Although, with that being said, I like AWS a lot. I got the YC. AWS used to have a YC alumni credit, too, which is nice. I accidentally blew that. It was quite substantial, I think it was 100,000 or something. I accidentally blew that by having a cluster of huge instances, databases that I forgot to shut down.

I didn’t notice because it was just eating through my credits, and all of a sudden two or three months later I got an email that says, hey you owe us $13,000 in credits. I was like, you guys can clearly tell that I haven’t used this at all, this is a mistake, could you please set my bill to zero? And they did do that, AWS did which I’m not sure that everyone would have done the same, so I’m inclined to be pro-AWS just for that reason alone.

Rob: I’ve only used AWS, so I don’t know that I want to weigh in on the pros and cons. I’ve had people use Google Cloud and love it, too, so it’s an interesting datapoint.

As we wrap up, our last story is about the LinkedIn gig marketplace. In essence, they are developing a freelance work marketplace that could rival fast-growing gig sites like Fiverr and Upwork.

I hadn’t realized that LinkedIn acquired the assets of UpCounsel back in 2019. UpCounsel was the go-to two-sided marketplace I used to recommend people head to if they needed to find a lawyer, because it was actually pretty vetted—the lawyers—and I had found at least one, maybe two that I worked with back in the 2015–2016 timeframe.

I’m a little bummed that that isn’t around anymore, but I guess they acquired the assets. The founder, Matt Faustman, stuck around with LinkedIn and now they’re using him to essentially build this similar marketplace, although it’s not focused on legal, it’s more about gig workers.

Obviously, LinkedIn has both sides of this marketplace. They definitely have folks who are looking for work who may be interested in freelance work. They have company pages, but I’ve always thought of them as a little eye-rolley. It’s like you need to have one so people can say that they work for you. That’s the purpose, right? I don’t see a lot of companies on there beefing out their pages and in this case, maybe they would need to. I’m curious—this time I’ll start with you, Einar. What are your thoughts on the LinkedIn gig marketplace?

Einar: My main thought is what happened to LinkedIn and Twitter? For the first time in years and years, they’re doing something new. I was surprised to see this. I don’t really expect to get anything new from LinkedIn other than a crapton of email which seems impossible to unsubscribe from in every way, shape, or form. It depends on the kind of gig, I think. That’s my thing, I haven’t really looked at it. Are we talking Fiverr-type gigs here or are we talking more like lawyers?

Rob: I think it’s going to be more similar to Upwork because Fiverr is what? It’s $5 and it’s super small things, but Upwork is more like, I’m going to hire a freelancer maybe for this entire design project. Maybe I’ll hire someone for years to be an executive assistant, a VA, or whatever. If I were LinkedIn, that’s the direction I would certainly be going.

Einar: That makes sense because one of the issues with Upwork and whatever is if someone is terrible—they could be great for a little bit and then they could be terrible—if they’re really bad, you can burn their ratings, but they could just start up a new one and do the same thing over and over again, versus with LinkedIn, it’s harder to just disappear and then respawn as five different people.

I certainly think there’s a reputational thing that comes with the fact that LinkedIn has become this de facto online CV, resume-type service that I think is helpful in terms of reputation management. I could see them being reasonably successful.

Rob: I am happy to see a competitor to Upwork come about because there really isn’t another big player in the game. I do like what Dan and Ian are up to. They’re from the Tropical MBA and they’re working on dynamitejobs.com, which is Upwork with a twist. I love the way the boots are on the ground, we have a small community, we see a need, and they have both sides of the market in their podcast listenership and their Dynamite circle community. I think they can get traction.

It’ll take years and years to get big, but LinkedIn can start obviously very big because they’re at scale already and they already have tens of millions, hundreds of millions of profiles. I don’t even know what the numbers are, but it’s a lot of folks. What are your thoughts here Tracy?

Tracy: My biggest criticism of LinkedIn has been due to my experience of being a freelancer and a contractor for many years. Going onto LinkedIn and having it be so company-focused, and where did you work? I would always say I’m working for myself. I was trying to list out the projects I was working on and it was a terrible experience. I wish that LinkedIn would have a better emphasis on the projects you’ve worked on, whether that was at an employer or your own projects.

What I’m hoping with this news that they’re building a gig marketplace is that there is going to be some changes to the platform that allows for better emphasis on the things that people work on. And this is a big focus that they’re working on and better showcase the things that they’ve worked on. I’m optimistic. I like this news. I hate LinkedIn, honestly. I don’t use it very often regardless of the messaging.

I hope that this will help improve the LinkedIn platform because they’ve had, in my opinion, a lot of issues in terms of the way the work is displayed that’s leading to those other startups trying to fill that need. I feel like this is a good idea for LinkedIn to build into it because they’re definitely lacking in this area.

Rob: I hope they give that founder of UpCounsel a lot of say in how it’s built, because LinkedIn to me feels like an older, clunky product. I don’t want to throw stones, but it’s owned by Microsoft now and back in the day that’s how Microsoft felt compared to Apple.

If he has more say in how it gets built, because UpCounsel felt like a startup in a good way, it had good design, and at least my memory of it was that it was a well-functioning product. So if he’s tied into the legacy of LinkedIn, I think it’ll be a problem. But if he can make choices and build something truly from first principles or from scratch, he’ll be better off.

Tracy Osborn, thanks so much for joining me today. You are @tracymakes on Twitter.

Einar: Not verified.

Tracy: Yup, not verified. I almost got there before Einar, I knew he was going to do that.

Rob: And Einar Vollset, you are @einarvollset on Twitter. We have done a first close, as Tracy mentioned earlier. We did a first close on TinySeed’s second fund, but if you’re out there and you’re thinking, with all these crypto-winnings and the stock market going haywire, I would love to diversify—I’m a credit investor—into a broad swathe of early-stage, B2B, capital-efficient SaaS companies.

Head to tinyseed.com/thesis to find out more about our whole investment thesis and what’s unique about it, and the unique angles that we’ve taken. And, tinyseed.com/invest if you just want to hit up Einar directly. There’s a short form where you fill out a few things, but then you can get on his calendar and talk to him more about what we’re doing. Tracy and Einar, thanks so much for joining me.

Einar: Thank you.

Tracy: Yeah, this is super fun.

Rob: Thanks again to Tracy and Einar for joining me. If you have your own thoughts on these news stories, head to @startupspod on Twitter. Every week, we have a tweet or two, a whole thread that goes out, talks about the episode, shares a little audiogram, and you can feel free to weigh in there.

Respond, comment. I’m always monitoring that and can interact there as well. I would love to hear your thoughts. I’m glad you joined me again this week, I’ll be back in your earbuds again next Tuesday morning. Thanks so much again for joining me on the show.