Episode 681 | Why Launching a Second Product is Usually a Bad Idea

Rob Walling:
Welcome back. It’s another episode of The Startups For the Rest of Us. I’m Rob Walling, and in this episode, Ruben Gamez comes back on the show by popular demand and we talk about why launching a second product is usually, but not always, a bad idea. This episode idea comes to us from a listener who sent in a great suggestion about covering this topic. It’s one of those topics you could try to cover in six, seven minutes, like a typical listener question, but it deserves a lot of time. As you can see, this episode is longer than a lot of our standard episodes because there was a lot to fit in. But before we dive into that, tickets to MicroConf US in Atlanta are now on sale, Atlanta, Georgia, April 21st through the 23rd of 2024. Leanna Patch is returning to co-host with me. My hope is that she does not fall off the back of this stage, again. Rand Fishkin will be speaking and it’s generally going to be an awesome event. 

Hope you can join us in atlanta microconf.com/us, if you want to find the full speaker lineup and buy your ticket. This event will sell out all of our in-person events have been selling out. So if you think you want to come to Atlanta and hang out with me and a couple hundred of your other closest bootstrap founder friends, buy your ticket soon. With that, let’s dive into my conversation with Ruben. 

Ruben Gamez, welcome back to the show.  

Ruben Gamez:
Great to be here.  

Rob Walling:
Yeah, it’s always good to have you. By popular demand, you’re back on the show this time to talk about when we should and shouldn’t launch a second product. This topic was actually raised by a listener, Daniel Hoyman, sorry if I’m mispronouncing your last name. But Daniel has written in many times over the years with great suggestions for the show and was talking about a comment, an offhand comment I made a couple hundred episodes ago, to be honest. It was an episode with Jordan Gal, I think it was 499. I quickly said something like, “Oh, launching a second product, it’s usually a bad idea, but you, Jordan Gal, convinced me at the time that this was one of those cases where it’s a good idea.” Daniel was like, “Have you ever thought about recording an episode that actually walks through the pros and cons?” 

Daniel, is the CEO and founder of Intelligent Editing at intelligentediting.com. And, after being a single product company for 14 years, he is actually building a second product as well, has decided it’s the right time. So I wanted to bring someone on the show who, much like you and me and Jordan, have been faced with this decision themselves because I think every founder eventually is faced with it. The question is, what info do they have in their head to make this decision? Because I view it a little bit like a siren song of I’m in a white label, I’m going to translate my app to other languages, these things that are common mistakes in my head. So that’s why you’re on the show, man. Thanks for joining.  

Ruben Gamez:
Yeah, great topic. It comes up a lot. I see it with founders from time to time, so it’ll be good to go over.  

Rob Walling:
This is one of those where I have developed over the years, a default stance, it’s not an always. All caps always, all caps nevers, I don’t do those, but I have a, you really need to convince me why this isn’t the case or why this isn’t how you should proceed. I feel this way about launching a second product. Usually you probably shouldn’t. The odds are good it’s going to take away your focus and be a distraction. We all have shiny object syndrome as entrepreneurs and we want to chase that next thing and the grass is always greener, right? Similar with, I already mentioned, like white labeling. You launch, everyone’s going to approach about white labeling. Almost always a waste of time, not always, but most of the time. Translating your app into another language, I hear this all the time. Probably four or five times a year I’m talking to a TinySeed company and they go, “I want to translate it into Spanish or Portuguese.” 

I say things like, “Are you prepared to do support in Spanish, to market in Spanish, to have all your documentation translated into Spanish, to have the app itself and the error messages translated in this?” It’s just on and on and on. It’s really this Pandora’s box. But again, Jordan certainly convinced me. He was asking my opinion as an investor advisor at the time and I remember at the end of the call being like, “I think you should do this. You obviously feel very strongly and it seems like it could be the right call,” and in his case it was. You have been faced with the same decision. So I’m curious, do you also have a default stance when you come to this or is it purely case by case if founders approach you and ask if they should build a second product?  

Ruben Gamez:
Yeah, when somebody asks me, usually to me I’m leaning towards you probably shouldn’t do it. Most of the time it’s a bad idea. What I noticed, and I don’t know if this is what you’ve noticed too, it’s usually more of a reactive thing. They’re reacting to something. They’re reacting to slow growth or… In some cases it makes sense if there’s massive platform risk and you have to react, that’s sort of like a good time to react to that in that sort of way. But it’s often like they plateaued or they’re stuck and they can’t figure out how to grow past and they suspect that maybe they tapped out the market, that comes up a lot as well. Things like that.  

Rob Walling:
Yeah, that’s what usually bothers me, is it’s usually someone who doesn’t want to face the real problem head on and they’re trying to find another route around it rather than saying, “No, I just need to market more, sell more, change my pricing, find product market fit,” whatever it is that they’re looking for, this shortcut around it, in a grass is greener way.  

Ruben Gamez:
Yes, exactly. That’s the thing, it’s not a shortcut and it’s not easier than the problem that they’re facing, usually.  

Rob Walling:
Right. This is interesting to set the stage here, can we tell the story a bit of BidSketch and SignWell and how you bootstrapped BidSketch nights and weekends, you launched it I believe in 2009, so you’re like SaaS OG, bootstrap SaaS OG here, and you grew it to a point where it was a great income. You own a 100% of the business and then you had a big decision to make at a certain point involving… I mean it was like a rewrite, it was second… It eventually evolved. Can you talk through that piece of it? I don’t remember. Do you remember what year it was even? Was it like 2016, 17?  

Ruben Gamez:
Yeah, I don’t remember the exact year. Part of it was that BidSketch was around for a long time. When we started BidSketch, there was no category of proposal apps. There was for the enterprise, but it looks very, very different. It was like a lot of consulting and the software side of it was very different, to this day it’s still like that. There was nothing in… My initial thought was something like FreshBooks, a little bit more like that but for proposals. So we went into it and there was nothing. When you go fresh into a category like that, there are a lot of things that you need to figure out and do and some things you get right, some things you get wrong. Over time we had just going through several different teams and not paying down technical debt enough really. We ended up in a spot where we had an older code base and it was harder to release the types of features that we needed to and we needed to really rethink the product. 

We should have probably done that earlier because we had learned so much. Everyone in the category and most of the apps that, especially early in the category, they eventually just dropped out and failed and weren’t around. But there was so much that needed to be figured out. Nobody knew what it looked like. By the time we figured out, okay, this is what this base looks like, it was time to sort, all right, let’s approach it with everything that we’ve learned and have a product for this market. That’s when I started thinking about all of the… Because we did a lot of research at that point and we were thinking about how to approach the rewrite, how to approach the next version of BidSketch. Then it was about, well while we’re doing this, there’s also this need here and we integrate with e-sign services, but we get asked to just add that into BidSketch. 

In the category, it’s a very basic version of E-sign. The thinking was we can better support the full document signing process for our existing customers as a strategy and then open up the market as well and compete in the e-sign market. So be in a bigger market and use everything that we’ve learned to just build a better product. So we started off with that approach. My first thought was let’s build the e-sign features, specific features first and then add the document. There’s so much overlap between the products, add the document creation features next. But once we started building the e-sign features, the market started pulling us in a very different direction and there was a decision at that point to continue with the original vision or just go into the e-sign market by itself.  

Rob Walling:
This is something that was so impressive to me as you went through it because you and I have talked once a month for 13 years, 12 or 13 years. So I followed this journey along with you and I was so impressed with the fact… I remember you went back to basically refactor BidSketch and you had devs working on it for something like six months, rewriting code, adding unit tests, upgrading because you were on an old version of Rails or whatever. At a certain point you’re like, I’m going to change course. You didn’t get caught in the sunk cost fallacy. You had a bunch of sunk costs and you’d made the best decision but then you said this is not the right decision anymore. A big part of it was this market pull of I think we need to make it a standalone app and then we’ll build everything else in. Then you were pulled yet in another direction of it was pretty obvious that this market wanted something that maybe you hadn’t envisioned early on. 

Do you want to describe to someone listening what that feels like? There are some folks who don’t know what market pull feels like. What did that feel like? Was a lot of requests for something? Or how would you describe it?  

Ruben Gamez:
You’ll get a number of requests for certain types of features from certain types of customers. The thing is that it doesn’t always… So we have shifted product strategy twice. The first time I’d say it was really just a volume thing. It was just most of the requests that were coming in were taking us in a different direction and the types of customers that they were coming from looked a lot less than what I had envisioned and what we were serving with BidSketch. So that combination just made it clear this is a different thing. The next time it was less of a volume thing, it was less clear that everyone wants this because it’s not so much about that. In our case it was these really high value customers are requesting this and there’s this opportunity and we’re not getting a ton of this, we’re getting some of it, but there’s something there. It’s investigating that and seeing how big that opportunity is and what it really looks like and that sort of drove the next one.  

Rob Walling:
Yeah, that makes sense. So then you found yourself with BidSketch, which is a proposal software and it’s a SaaS, it’s still doing great and generating tens of thousands a month in revenue and SignWell, which is electronic signature. Now you have two products technically under one corporate umbrella, but really it’s almost like two companies really, not technically, but they’re two completely separate domains and all of that. I guess, through your experience, and we’re going to dig in a second to… We’re going to generalize this and go to the pitfalls and exceptions of when it does make sense or not to do a second product, as well as maybe some goals behind that. But for you now that you find yourself in this situation running two products, you have a single dev team, do you feel like it’s complicated? Do you feel good about where you are or do you wish that you could focus on just a single product at this point?  

Ruben Gamez:
I feel good where we are now because we are mostly focused on a single product, is how it is really. BidSketch is just a more mature product and if I was devoting equal energy towards growing both of them, then it would be a really tough thing. I don’t think that works that well. But all my energy when it comes to thinking about growth and getting business to the next level and all that is focused on SignWell. That’s why that works.  

Rob Walling:
Right, in a sense you have two products technically, but BidSketch really more is in… It’s a stable product that just keeps running. I am not going to say autopilot. That doesn’t exist. There is no autopilot. Eventually your marketing falls off. Everything decays, right? Your tech stack gets older. You can’t find developers for it. The security stuff’s introduced and security flaws and blah blah blah. So it’s not true autopilot, but it’s maybe as low maintenance as you can have it. Is that pretty accurate?  

Ruben Gamez:
Yeah, it’s much more low. As soon as you stop adding a bunch of features and all that, a lot of the risks goes out of the product. So you fix a bunch of bugs, it just gets very stable and then it’s really just about making sure that you support the newer customers that are coming in and upgrading.  

Rob Walling:
I want to point out here, there’s different ways to add a second product. Sometimes you add a second product and that product far outstrips the first one in terms of revenue growth, all this stuff, which is what has happened for you with SignWell. That happened with me with Drip. I had HitTail. HitTail was doing $25,000, $30,000 a month, great lifestyle business. I was like, I’m going to start another one of those because HitTail really was… It was like a feature. It didn’t have ongoing development basically, so it was as autopilot as probably about you could get aside from the marketing. So I was going to launch another one of those, it’ll be fun and then suddenly Drip takes off and now it’s like what do I do with this other thing? So for me, I held onto HitTail for a few years and then I wound up selling it in 2015. 

So usually one of them gets all your attention, but there are folks I know who will launch two and then hang on to both of them and have them be equal attention split, try to 50/50 their attention. I think that’s pretty dangerous and that actually maybe gets to our first pitfall here. What are the pitfalls of doing this? Why is our default stance that you probably shouldn’t do it? It’s focus, because as bootstrapped entrepreneurs or mostly bootstrap entrepreneurs, even if you had a team of five, ten, 20 people, if you put all those people on one product, it’s going to grow faster, it should grow faster. But if you split that focus between two, it’s so hard. 

Dude, I even remember… So Leadpages acquired Drip. They had 170 employees and I remember getting in there and they had Leadpages and they had Center, which was this product, they were trying to get off the ground. Some people there kept saying, this split focus is hurting us. Some people thought it was a great idea for diversification and for whatever other reasons and other people were like, “It’s really hurting us.” I was like, “Split focus? There’s 170 of you. You have $38 million in mentor funding.” But you know what, it was split focus, even at that scale.  

Ruben Gamez:
Right, I remember when Leadpages came out with Center. Around how many people did they put on that product?  

Rob Walling:
I don’t honestly know exact numbers, but I know they had an early access where they got a 100 or 200, and got them on and they tried it out and they didn’t have product market fit was an issue and that’s what they kept spinning on was trying to figure out where do we fit in the market? Because really it was Clay Collins, CEO, had a vision and it was trying to start a new category. It was supposed to be the Center, it was the marketing automation, but it didn’t send emails, so it was like the center of your stack. So it was like Segment, but I think it kept state, it’s hard to… So you hear me trying to explain it, which tells me there is no category. It wasn’t Zapier, it was like Zapier plus Segment for marketers. So it was this new category and as we know, that’s hard to do.  

Ruben Gamez:
Right, that’s super hard. Yeah, no, I was thinking more in terms of the internal team, like how many… It was split, right, how many?  

Rob Walling:
Yeah, engineering team was, I think, probably between six and ten engineers. Then they had a marketing squad of four or five people that I think were coming over from Leadpages. If I were to guess everyone who did some work on it, even though some were split, it was probably 20.  

Ruben Gamez:
Yeah, okay. Then because they care about this new thing, like the executive team leadership and all that, they’re thinking about it and they’re working on it. Yeah, definitely splits the focus right there.  

Rob Walling:
There’s two things going on with that example. There’s splitting focus, second product, and then there’s category creation, which we could probably record a whole other podcast about how hard that is. But let’s just take the example of a mostly bootstrap founder with a team of five, a team of ten, a team of 20 whatever. To split focus, especially when… If your first product is working and there’s still room to grow it, I’m always like, “Don’t do this because you’re just going to leave growth on the table.” But if your first one stalls and it isn’t growing anymore, what then? Should you focus on that first product and keep growing it or do you split focus?  

Ruben Gamez:
I think it depends on the core reason why the growth has stalled. Yeah, it’s really hard to generalize in this case, but a lot of times really when people’s growth stalls, they often don’t know. I think you need to investigate and you need to… As best as you can. Sometimes we just don’t know for sure, but as best as you can tell, just stop working on the symptoms or thinking about the symptoms like, oh, our churn is too high or we’re not getting enough signups or whatever. Well yeah, of course that’s a symptom. What’s the core reason? What’s going on here? It’s like, oh, I think we’ve tapped out on this market is a common one. It’s like really, have you?  

Rob Walling:
That’s usually not true, yes.  

Ruben Gamez:
That’s right.  

Rob Walling:
No, I see it where there’s a million potential customers in a market, someone has 500 customers and they plateaued or they have 50 customers or something and they’re like, “Oh, I’ve tapped out the market, need to check out the Spanish market.” It’s like, no, you don’t. Solve the problem. What’s the actual problem?  

Ruben Gamez:
It’s more likely that they’ve exhausted the marketing channels in the way that they’ve gone about marketing or sales or whatever, their current approach has been exhausted. Yes, okay, maybe if you’ve tapped that out, that’s something else, but are there other channels? Can you bring in somebody that can help you on the growth side, whether it’s somebody internally or somebody to help on the consulting or an agency or whoever? You have to start making bigger changes. It’s hard to get there just doing the same stuff or just slightly different versions of the same thing if you’re really plateaued. So yeah, I think there are a lot of things at play there and it all comes down to, for me, the reason why growth is stalled.  

Rob Walling:
I think that’s a good take on it. I guess the last thought I have on focus and splitting focus, because I want to get to our other topics, but splitting focus of the team is one thing. Most people don’t realize… I’ve had people say, “Oh, I have this code base and I built it for CRM for realtors and it would totally work for mortgage brokers. So what I’m going to do is I’m going to go, I’m going to register another domain and I’m going to start the prep, because the codes the same. So it’s not really that much work.” I’m always like, “You realize the code’s about 10% of the business.” Just even if you’re going to do SEO, you’re splitting your domain authority. All the links you’ve built, you’re starting from zero, start the Google timer over. All of your marketing, any cold outreach, any brand equity you have, any traffic you have, now split. 

Your support team now has to… You don’t need double the support people, but they have to now know two products. You’re making two decisions about what features to build into which products. You’re splitting your dev team. On and on and on, it is way more than you initially think about. It’s the iceberg problem, right?  

Ruben Gamez:
Yeah, and I did that in the early stages when I was doing BidSketch and SignWell. That’s what we were doing because we had to. It was too early in the SignWell days, but even then it was just clear this is not sustainable. It just wasn’t.  

Rob Walling:
Right. I can imagine someone hearing this and saying, well, I’m not going to register two domains. I’m going to have two products under one umbrella, right? I am going to keep the same domain. So you could have had BidSketch.com and you have two products, much like I think of Intercom almost having two. They have what four products, five?  

Ruben Gamez:
Yeah.  

Rob Walling:
It’s like they have the chat and they have the support, and they have the this and that. HubSpot is similar, where HubSpot is an umbrella and then they have all these different tools under it. So that wouldn’t split as much, but it still comes back to splitting focus and being a lot to bite off. You do have to market those individually. You have to position them individually. You are fighting battles on multiple fronts. I think of it as, I always say, like two-sided marketplaces, here’s my advice, don’t, that’s because you’re… It’s like they’re starting two SaaS apps at once. It’s just you’re fighting things on two fronts. I think two products will make it tough, but there are exceptions. There are exceptions to it. So you did it and I guess I would ask you, you made an exception, you have a two products. Was it the right choice for you?  

Ruben Gamez:
Yes, for us it was the right choice. I could have gone either way with it as far as I went in a completely different direction, but I could have just kept it with BidSketch and just truly made it version two and gone in the other direction with the original. I think it would’ve worked out. There isn’t a clear right or wrong choice sometimes. You can have multiple paths that can work or you can have paths that are just going to be a lot more risky and difficult and all. I think just being deliberate and knowing what you’re getting yourself into and why is a big part of it.  

Rob Walling:
Why was your choice the right one, in retrospect? If someone else is facing this same choice, what were the factors that made it make sense for you and that have led to it being the quote-unquote “right choice”?  

Ruben Gamez:
There was a significant amount of time and energy and work put into the decision and identifying the problem, or the problems, the things that we were trying to solve for. So it was clear after a while that there was opportunity, a lot of opportunity, and I iteratively tested things along the way. So even though I felt… It’s not like you do all this work up front and then you say, “Okay, this is what we’re doing,” and then heads down and just go in that direction and don’t look, right? I was constantly evaluating and thinking about, okay, is this right? Do I need to make adjustments? So it turned out to… It worked out. A lot of the reason why it worked out was because of the reason I was just deliberate. I was able to identify real opportunities and then verify that those opportunities were real and kept checking myself throughout the process and then just changed whenever I needed to change.  

Rob Walling:
That’s the thing, there are always exceptions to these. You are particularly a deep thinker and someone who challenges and is willing to challenge their own hypotheses. So when you come to me with a conclusion or close to a conclusion, I’m always like, I’ll ask you questions, but I’m pretty sure you’ve answered all the questions I’m going to ask you already in your own head. That’s your personality, right? There are folks on the other end who just wake up in the morning and there’s a dream where they’re like, I think I should launch a second product. Every question I ask them about, “I haven’t thought about any of them,” right? They haven’t validated. They haven’t really given a thought. So I think this part of it, a little bit of this, is knowing yourself, are you someone who just bounced, bounced? 

Are you the indie hacker who’s in the trap of launch, it didn’t take off immediately on Product Hunt, I’m just going to give up and go to the next thing because it’s not working? It’s a siren song of over and over because you get the launched dopamine, but you don’t actually put in the work to really grow the product. If that’s more of where you fall, then really listen to our advice to not do it. But if you don’t and you are more of a [inaudible 00:24:19] person, or even if there are some folks the other-  

Ruben Gamez:
Or you lean the other direction, right, like too strongly, right? The opposite, yeah. You should probably examine it and think about it, yeah.  

Rob Walling:
Right, because don’t we have friends who have started one product and tried to grow it for years and years and years and they’re at 2K MMR after six years. There it’s like, I don’t know if you need a second product or you just need to kill the first one. But some people stick with stuff too long, right? So maybe you could break it loose. I’ll give you another counter example. I have two more in my head, but one is Jordan, right? Jordan Gal who it was just-  

Ruben Gamez:
Yeah, I was wondering what did he tell you that convinced you?  

Rob Walling:
So to set the stage, he had built CartHook, which was cart abandonment emails. I believe it was just for Shopify. I don’t remember if it was just for Shopify or for all e-com, but whatever it was, someone abandoned their cart, then they would send them emails. He’d gotten it up to low tens of thousands MRR. Then he found out… They either found or somehow got wind that there was an unpublished Shopify API that allowed you to modify their checkout and modifying it… Because their checkout was garbage basically, and you couldn’t change it. Everybody knew it was garbage, right? It was built in 2007 and it had never been updated or whatever, so it didn’t have upsells. It didn’t have all the conversions. Anything you’d want on a checkout, it just didn’t have. So he saw this huge opportunity. It’s like we’re going to get in there, we’re going to write code against this unpublished API. 

Then we’re going to work to… Once it’s published, we’ll be one of the first ones and we’ll get approval to basically be an app and people are clamoring for this. So he was then in some maybe Facebook groups or whatever slack groups where these… A lot of them, it’s a lot of D2C physical products, right, they’re just selling through Shopify. They all wanted post-purchase upsells, or during purchase or post-purchase upsells and they could add this in using this. So he’s like, “The people I’m talking to are losing their minds if we could add this to Shopify.” I was like, “I don’t know man. The cart abandonment emails seem to be working. Why would you go do this?” We talked for probably 45 minutes and he just kept saying… And this is it, Jordan, his intuition is pretty good. You know what I mean? When I say pretty good, I mean really good. I’m understating. His intuition of where the gap is… There’s certain founders you know, whether it’s… I don’t know if they’ve had it their whole life or they learn it. 

I think you and I have good intuition, Jordan, there’s certain folks we know. That was a piece of it, he had this very strong gut feeling that it was a green open field. It wasn’t a grasses greener. It wasn’t a that that’ll be easier. It’s I want to get there first and I want to own it. That was really the conversation and I asked him all the questions that we’re talking about here. Is it just hard and not growing? How are you going to do it? Are you going to sunset the other one? How are you going to focus on two? It was all those questions and he was like, “Look, we’re going to put some engineering, we can build this.” This was another thing, how long does it take to test this? When will you know? Will you know in a year or will you know in two months? I believe he said it would be two months of engineering, maybe three. I was like, “That’s a lot of time at this early stage.” 

But he had runway. He had raised a fund strapped a very small round for me and some other folks’. This is pre-TinySeed. It was that line of thinking where I was like… Then I said, “What if this fails? What’s the flip side? What if this works? What if this fails? Is there asymmetric upside if this works?” The answer was, “Absolutely.” The entire company… I mean, the end of the story is eventually I think they just sold off or gave away their cart abandonment element of it and the post-purchase upsells just took… Just the cart, the checkout replacement took off like a Cinderella story basically.  

Ruben Gamez:
Right, yeah. I think maybe shut it down. It was so… It was making money.  

Rob Walling:
The cart abandonment?  

Ruben Gamez:
Right.  

Rob Walling:
Yeah.  

Ruben Gamez:
Maybe sold it or was seriously considering, yeah. But compared to the difference between how well the new product was doing versus the old, it wasn’t even worth putting that much time into figuring out what to do with it. I think you’re right. I think he might’ve partly sold it. No, that’s interesting to hear because I was talking to Jordan a lot during that time as well. We talked regularly. I remember when that happened. I remember thinking similar things like, oh, okay, you’re doing-  

Rob Walling:
Shiny object.  

Ruben Gamez:
Yeah, you’re doing pretty good. But you’re right, it’s funny because it was him, because he doesn’t have a history of just jumping to the next thing and just building out and his intuition is really good, I was like, okay, there’s probably something here, this could be really interesting. So I thought the same thing. But I think that brings up a really good point as far as I think a lot of people who have a problem with it and add products sooner than they should do feel like they have an opportunity that they see, but it’s more than that. It goes back to partly how good is your product intuition, and this is based off of your history? What have you seen and where do you lean? Do you lean towards just moving on and not finishing things and not pushing things through or the opposite? Depending on those answers, you really need to examine that more or push yourself more to do something new if it’s the other way.  

Rob Walling:
Right, and get outside feedback. Because what did Jordan do? He talked to you. He talked to me. I know he talked to other people and he got input. You did the same thing when you were launching SignWell. You talked to a bunch of people, including me, and you were trying to get outside, not confirmation, but outside information about what am I missing? Why is this good or bad? Two other things I just said about Jordan’s decision was in addition to his vision or his intuition is like, does it have asymmetric upside if it works? Is the downside if it fails, not catastrophic? And, how quickly can you test this or how quickly will you know? Because usually, yeah, another product is six months, nine months. That’s a really long time. You better be damn sure that it’s going to work.  

Ruben Gamez:
That’s why in decisions like that where it’ll be a while before you know, so you have to invest time, energy, money or whatever for a while, and the opportunity cost there is that you’re not growing your other thing or whatever. When the feedback cycle is slow like that, that’s when it pays off to put in more work upfront and that’s work in these conversations, doing little tests or doing whatever. If the feedback cycle is fast and you’ll know in a week, you don’t even have to talk to anybody, just try it and it’ll be a week before you know and then you move forward or whatever. It really depends on how long that feedback cycle is.  

Rob Walling:
On the point of feedback cycle… There’s one more example and then I want to get to our strategies or goals behind adding a product and then we’ll wrap. One more example. I know of several other examples, but you and Jordan, and then Stratosphere is the third example. Stratosphere is a TinySeed company. You can see them at stratosphere.io and their H1 is the all-in-one data visualization platform for investors research platform. It’s a rolling thing. When the AI stuff started getting popular… When the AI stuff. When ChatGPT and everything was buzzing six, eight months ago, they built finchat.io. My memory is they built and shipped it in six weeks. It was very fast and they got instant traction. It was one thing that, the downside if it didn’t work was not that much. I remember again, they brought it up and I was like, no, the second product, why are you doing that? 

All the stuff we’ve said here. They were like, it’s not going to take that long to test, the asymmetric upside if this really does catch, it would be the only thing doing this, and if it catches, it’s going to be astronomical. In addition, they already had… They’re not just a ChatGPT wrapper. What they did is with Stratosphere, they have all this proprietary data that they’ve cleaned that you can only get through their API or their interface and FinChat is a chat interface to that proprietary data. So even at that point, if it works, I suggest, it’s just another interface into what they’re already building. And, long-term… We talked early on. I said, “Well, what if this works? Can you merge this all back into the same product? Is this just a different price point, for instance, on your pricing page? Or is it…” Because right now it’s a separate domain name. But we talked through that possibility. It’s not like it’s some way far out of left field thing that really needs to be its own thing. 

It could feasibly come back and be part of the home base if it works and if it doesn’t, it was a fun experiment. So that was another one where at the end I said, “Assuming we live up to these things, I sign off.” Not that I needed to sign off, they were going to build it, whether or not it did. But it was another example of, I think, speed, being able to test it quickly.  

Ruben Gamez:
Yeah, which is a big deal in situations like this. One quick thought that I had, a question for you, was you talked about asking for feedback from others. We’ve seen this a lot where founders basically make up their mind and are talking to others and they’re asking for feedback, but all they’re really wanting to hear is people say, “Yeah, I think it’s a good idea.” The ones that don’t, they either… I’m not sure how it’s explained in their mind, they’re either not seeing the vision or whatever, and then any little confirmation, they take that and they run with it. What do you think? Do you have any thoughts about not falling into that trap or what being good at asking for feedback and taking that feedback looks like?  

Rob Walling:
Yeah, and why I have it is because some point in my history ten years ago, say 15, I was exactly the person you described where I would have a vision for something, I would ask for feedback, and then I would argue with all the feedback because I felt like, oh, you’re attacking my idea, I’m going to defend it because I know I’m right. Then at a certain point, I switched. That was seven, eight years ago, whatever. So I feel like I’m on both sides of that, A&R and my team may disagree with that statement that I’m better at it. No, I just feel like I’m better. What I’ve realized is it’s not… I used to think about it black and white of I have this idea, I’m going to ask for feedback, and if it doesn’t fit my idea, then either they’re wrong or I’m wrong. 

The idea is wrong or they’re wrong. That’s not actually what it is. Here’s what I do these days. I’ll come up with an idea. I present it to A&R, to producer Zander, to producer Ron. They’ll give feedback and I’m like, oh, with creativity, with growth mindset, that tweaks my idea. I’m going to change my idea. I’m not just going to scrap my idea, it’s a (beep) idea, it didn’t work because of their feedback. It actually will tweak it and make it better. So the format of a YouTube video, for example. I was like, this is how we should structure our YouTube videos. Then someone started… They were like, well, you need a story, you need a hook, you need a teaser at the end, you need this and that. I was like, oh, you’re improving. You’re improving it. It’s not, I should scrap my whole outline. It’s, I should just tweak it. That’s a trite example. 

But similarly, if I came to you with a business idea and I was like, I’m going to build an ESP for realtors or whatever, and you started having thoughts around it, it shouldn’t be, I should do it or not. It shouldn’t be this black and white thing. It should much more be around am I able to take your feedback and creatively incorporate it into my idea? Or if I’m really getting bad signals, I should just scrap it all together. Does that make sense?  

Ruben Gamez:
Yeah, I like that. I hadn’t thought about it in that way, but that’s a really good way to think about it.  

Rob Walling:
How about you? What’s your advice for someone who maybe tends to fall in that trap of I lock onto my ideas and I really don’t take outside feedback, even though I ask for it, I act like I’ve taken outside feedback, but I have my mind made up already? How do we get around that?  

Ruben Gamez:
That is tough because I can’t think of a time where I’m thinking in that sort of way. But, I can talk about how I think about it when I am getting feedback, and maybe that can be helpful.  

Rob Walling:
Yeah, because you’re really good at it. Ever since I’ve known you, and I think we’ve known each other for 15 years, maybe a little more, you’ve never been defensive about your ideas. You’ve always taken feedback in stride and you’re able to identify quickly usually, oh, that is actually a better idea than I had, or that makes my idea better. You’ve had that knack since I met you. So yeah, talk us through how you do that.  

Ruben Gamez:
So I don’t believe that my idea is finished or is perfect to begin with. So I think of it more as a starting point, that’s the first thing. I really like something that David Cancel, I heard him say a long time ago, which was the way that he thinks about it is that if he has an idea or anything for a feature, for a product or whatever, he figures that it’s wrong and he’s just trying to figure out how wrong it is. Is it 90% wrong? Is it 10% wrong? So I like that sort of mindset and it mirrors the way that I tend to think about it. The other thing is that it’s good to get multiple data points from multiple people, then consider their context, their experience, and then think about how it relates to mine. So I think about all those things when I’m taking in feedback because the context is really important. 

So as long as I feel pretty good about the people that I’m getting the information from and the feedback that I’m getting, then I can feel pretty good about integrating that or whatever, or at least considering it. Then the other thing is if something really bothers me, if somebody said something that I didn’t expect and it’s rubs me the wrong way or I have a bad feeling about it, that to me is a sign that I should examine that more. There’s something there that I’m like, I’m too married to this part of the idea. You know what I mean? I’m not willing to evaluate every part of it or something like this, to me, it’s a red flag, danger.  

Rob Walling:
Emotional, you have an having emotional reaction to it, which isn’t helpful.  

Ruben Gamez:
Exactly, right. That’s a good sign for me to take a look at what’s happening there and really try to consider it.  

Rob Walling:
It’s a very insightful, mature way of thinking about it rather than reacting, doing the self-examination. So as we move to our last segment here, obviously we’re running long on time and I’m intentionally just letting it do that. Let’s talk about if you decide that adding a second product is viable and it is the right way to go, let’s talk maybe about strategies doing that, behind doing that and goals, maybe the goal of adding a second product. I already talked a little bit about the indie hacker trap, I think, of launching, bouncing to the next, to the next, to the next. That doesn’t fit at all with a strategy, that usually is just a reaction to something. But you had a note in… We have a little outline we’re running from, and you have a, quote, “Portfolio of products” or quote, “Diversification” right, behind adding it. Talk me through that. Do you think that’s a good reason to do it? You think that’s a mistake?  

Ruben Gamez:
So this is something that I’ve seen go around a lot with in the indie hacker circles, which is they’re talking about a portfolio of products. You’re the OG of portfolio of products, like you did this way back in the day.  

Rob Walling:
In 2008, yeah.  

Ruben Gamez:
Yeah, that’s when I found out about you and what you were doing. I was like, oh, this is cool, and you were doing a lot of that. The other thing is diversification and the portfolio products seems to be the reason why that’s done is because of diversification. So it’s almost a fear-driven way to approach product and it misses… So that’s behind it, which is like a red flag. Then misses a really big component of SaaS, at least, which is momentum and building… If you split your effort and your energy, time, money, all that, amongst multiple products, it’s really, really, really hard to get any one of them to a scale and level that you probably want to get to because things get easier as you grow more, you add more revenue, it builds on itself. Momentum is a really, really, really big deal, and it’s hard to describe until you’ve felt it, but you’ll never get to the momentum that you need to get into build a million dollar SaaS business or whatever if you’re doing that.  

Rob Walling:
Yeah, and that’s the thing. I mean, you’re referring, I had somewhere… It depends on how you count exactly, but about nine or ten different revenue streams, different products. Almost all of them… Most of them were software. I had one content website. I had an e-commerce website. I had some eBooks, and then I had software. Some of it was one-time sales, some of it was SaaS, some of it was B2C. This is where I learned all the lessons, right, that we started talking about at the MicroConf, like don’t do B2C, raise your prices, et cetera, et cetera. I found exactly that. It was fun. I talk about the stair step method all the time, right? Step one is just cutting your teeth, doing something small, making a $1,000, $5,000 a month. Step two is having usually multiple of those step one businesses, doesn’t always have to be, but usually it’s multiple to get to that magic number, maybe $8,000 for some people a month, maybe $10,000 maybe $12,000, $15,000 whatever. 

So step two is building, I’d say a small portfolio of products. You get a little diversification. You get some more learnings, and you get to buy out your own time. You own all your time. Then you go after the big standalone. That’s the progression that I see and I think most people will follow. Now, there is this flip side, the indie hacker lifestyle dream that you’re talking about. Well, you get the portfolio and you’re perpetually traveling or you’re just working the four-hour workweek. That’s not a bad thing, but to your point, it hampers momentum. You will rarely, if ever, get to that seven figure goal, if that’s something you want to do. Honestly, there aren’t that many people. There are not thousands of people doing that. There are a handful of people that are truly doing that, I built a big Twitter following and now everything I launch people jump on. 

If you want to try to be the Tom Cruise of indie hackers where there’s like, oh, there’s one star that does this or there’s four we can name and everyone else it’s like… But how many hundreds, no, thousands of founders do you and I know who have done this other path of getting to that point of having that SaaS and focusing and building it? It’s just a more viable thing. We’ve talked probably more about indie hacking than we even should have with this, but I think that’s where a lot of the multiple product stuff comes in. That’s not where Daniel Hoyman with Intelligent Editing is not going. He has a 14-year product and truly is talking about adding a second product line to his company, which again, it is just a different conversation. 

But I mean, let’s say you add the second product. I guess we already talked a little bit about starting a whole new business where it’s a new domain, but let’s say you add the product to your lineup to where you can cross-sell the two of them. That’s a benefit someone could talk about. What’s the pros and cons of that and when does that make sense, I guess?  

Ruben Gamez:
Yeah, there are companies that do this successfully. It’s a proven way to go, but it’s not easy. It’s harder to sell even a new solution to the customers that you have. It’s almost like designing a new tier, a new plan, that people would upgrade into, but it’s a little bit more of a jump there than just upgrading to a different plan and adding new features. So if you think of Intercom, they’d famously do this, their pricing is a mess because of it. Zoho, I think does this pretty well.  

Rob Walling:
HubSpot.  

Ruben Gamez:
HubSpot, right. So there are these products that get there. I think moving in that direction too early is a mistake. That’s one of the more common mistakes, probably driven by a lot of the same reasons why people just do a separate product to begin with. Assuming that people will buy the product from you just because they’re already a customer is another mistake.  

Rob Walling:
Right, that you think you’re just going to sell a copy of the new one to every existing customer or some huge, huge percentage, right?  

Ruben Gamez:
Exactly, right.  

Rob Walling:
Yeah, there’s a really interesting article blog post by Jason Cohen, it’s called The Elephant in the room: The myth of exponential hypergrowth. He talks a lot about how exponential… He’s looking really at the word, and that part is fine, that he’s saying it’s not actually exponential. But there’s one slide later called the Elephant Curve that is very interesting. It’s basically about how every product eventually tops out, that maybe you top out at 500K ARR and maybe you top out at 5 million and maybe top out at 50 million, and it depends on your goals. But if you want to be HubSpot, which is we want to go public, and your HubSpot marketing, inbound marketing tool, basically tops out at 50 million or 100 million, that’s not enough. So remember they made not a pivot, but an additional… CRM was their big thing they went all in on seven, eight years ago. They really won a lot of the space from, well, from all the other players and from Salesforce. Though you’re saying, people do this too early though, is the problem.  

Ruben Gamez:
Right, all the companies that we mentioned that have done it successfully, they’re of a certain scale and trying to build a certain size company. The way that you described it was right, that it’s not… At some point, these really big companies that are often VC funded and they need to go towards going public or something like that, just where they’re playing is not enough to get them there, so they need more. So you often see that with these companies, but this is a very different position that a lot of startups are in when they start to think about this sometimes. It just goes back to all the same things too, you have to be spread thin and resources, time, focus, all that. It makes the rest more difficult.  

Rob Walling:
You had a note here that I’m curious, it’s under moving to a bigger market, breaking out of a niche, expanding the market. Obviously we’ve talked about a few successes here with HubSpot and these others, but you talk about some failures with Moz. Did they try to build a second product? I don’t remember this.  

Ruben Gamez:
Yeah, so this is the whole, like, this is future, this is the next thing, right? Yeah, Moz, their thing was like there were going to be a marketing suite. There weren’t going to be a suite for SEO. There were going to be marketing. Rand talks about this in his book to where he’s like, that was one of his biggest mistakes and he was believed so much in this vision that he just went off and spent a lot of time and money and all that focusing on just building this thing. Yeah, so that just didn’t work out that well for them because of that reason.  

Rob Walling:
Yeah, no, that makes a lot of sense, I think that-  

Ruben Gamez:
It is tricky to make work.  

Rob Walling:
Yeah, and I think he talked about they didn’t validate it enough. I think if I recall. I read his book, it’s probably five years, so I’m going from memory. This is Rand, so he’s very self-deprecating and has a lot of introspection. I remember him saying something like, “I was the founder. I had the vision and Moz worked and I thought I had the golden touch,” I’m paraphrasing, “So my next thing, I thought I had the golden touch, and was going to be right. And when we did it, it didn’t work out and it was because I had some hubris.” Oh look, all of us do this at one point or another, and I think that’s why we’re recording this episode is to let you know, hey, just because you got one, right, it doesn’t mean that you shouldn’t really think through trying to expand to a second product. But obviously it can work right, as it did with CartHook and Stratosphere and with SignWell and with others, so.  

Ruben Gamez:
Yeah, there was one really interesting one real quick with FreshBooks that I saw that they did, because they were invoicing and they went into… Now they’re cloud accounting. What they did was they created a product and called it something different, it wasn’t even FreshBooks. They put it out in the market and started testing it and getting signups. Once they started seeing growth going in the direction that they thought, okay, we have something here, then they were like, okay, rename this is FreshBooks, the new thing. So I thought that they took a very interesting approach to doing the new product.  

Rob Walling:
That’s a nice way to do it. Very elegant. Well, Ruben Gomez, thanks so much for joining me on the show. Not only joining me on the show, but going over time. I know we have a busy schedule and we’re already over our allotted time. Folks want to keep up with you, you are earthling works on Twitter and of course BidSketch.com and SignWell.com, if they want to see two of the best SaaS apps on the internet today.  

Ruben Gamez:
That’s right. Thanks. Yeah, I’m mostly on Twitter, but I post infrequently on there.  

Rob Walling:
Sounds good, man. Thanks again for coming on.  

Ruben Gamez:
All right, thanks for the invite.  

Rob Walling:
Thanks again to Ruben for coming on the show and to you for listening this and every week. As a reminder, I am on a drive to get 100 five star reviews for the SaaS Playbook in Amazon and/or Audible. If you’ve read the book and you feel like it deserves five stars, please head to your local Amazon or Audible site and give it that five star rating. I’d really appreciate it. This is Rob Walling signing off from episode 681. 

Ruben Gomez, thanks so much for coming back on the show.  

Ruben Gamez:
Oh, did we start? Sorry. Okay.  

Rob Walling:
Yes.  

Ruben Gamez:
That was such a smooth… Yeah, smooth transition.  

Rob Walling:
Cut, cut, take two. All right, so now it’s going to be me saying, “Let’s dive into the episode” and then I’m going to say, “Ruben Gomez, welcome back to Startups For the Rest of Us.”  

Ruben Gamez:
Did you do that? Sorry, I thought you were telling me what you’re going to do. I’m like, okay, cool, let me know.