Episode 698 | How to Launch a Million Dollar Business (With Noah Kagan)

Rob Walling:
Is your outsource development team dropping the ball? Maybe you’ve worked with a team that just couldn’t grasp your vision and needed constant oversight because they weren’t thinking strategically or maybe you ended up wasting hours micromanaging, often needing to jump on late night calls across massive time zone differences to get alignment. And in the end, they delivered a sluggish app with a frustrating UI that didn’t come close to the solution you had envisioned. If any of that sounds familiar, you need to reach out to our sponsor, DevSquad. 

DevSquad provides an entire development team packed with top talent from Latin America. Your elite squad will include between two to six full stack developers, a technical product manager plus specialists in product strategy, UI/UX design, DevOps and QA all working together to make your SaaS product a success. You can ramp up an entire product team fast in your time zone and it rates 75% cheaper than a comparable US based team. And with DevSquad, you pay month to month with no long-term contracts. 

Get the committed, responsive development team that your business deserves. Visit devsquad.com/startups and get 10% off for the first three months of your engagement. That’s devsquad.com/startups. 

You guessed it, you’re listening to Startups for the Rest of Us. I’m your host, Rob Walling, and in this episode I sit down with Noah Kagan. He has launched, I forget the number, I think he says it in the interview, but five, seven-figure companies, it might be six, it’s a lot. And he has written a book called The Million Dollar Weekend. The book is available now in all formats, head to milliondollarweekend.com if you want to learn more. 

Before we dive into that, tickets for MicroConf US in Atlanta next April 2024 are on sale. This event will sell out. If you’re thinking about coming to Atlanta April 21st through the 23rd to see me co-host this event with Lianna Patch and to see speakers like myself, Rand Fishkin and several others, head to microconf.com/us to grab your ticket before they sell out. We had an amazing event just a few months ago in Denver and I expect the event in Atlanta to be no different. So, microconf.com/us to grab your ticket today. 

And with that, let’s dive right into my conversation with Noah. We’re actually going to join it mid-conversation. He and I had been chatting for, I don’t know, four or five minutes and I realized it was good content so I just hit record and we rolled right into it.  

Noah Kagan:
Yeah, we can talk about that. I don’t think people give enough thought to good decisions over long periods of time.  

Rob Walling:
Yeah.  

Noah Kagan:
Consistent. You can make a good decision once but then, if you have to do that in competitive landscapes over 10-year periods or longer, that’s challenging, man, it’s tough.  

Rob Walling:
There’s this quote from Steve Martin where he used to go see comedians, he has a great book called Life Standing Up, Born Standing Up.  

Noah Kagan:
It’s so good.  

Rob Walling:
Yeah, love it. And my favorite quote from there is it’s easy to be great, it’s hard to be consistent. Because he would come and see a comedian just blow the doors off one night and then, next month, they would just bomb for the next month. And he was like, “The hard part was getting good enough that he could consistently be amazing.” And I think that’s what you’re talking about, right?  

Noah Kagan:
Well, that’s what we were doing with sumo.com even. That went from zero to six and a half million ARR in maybe two years or three years. Super quick.  

Rob Walling:
Was it just email capture?  

Noah Kagan:
Yeah.  

Rob Walling:
Was it the widget?  

Noah Kagan:
So, the original idea-  

Rob Walling:
What was the product?  

Noah Kagan:
The original premise was appsumo.com has no MRR, ARR stuff, we want to try to have something recurring, what have we built for ourselves that we can sell to others. And so, the original vision for my partner, Chad, his idea was we should build the WordPress plugin store for websites. So, you can put in one plugin and you can have all the marketing tools you’ll need and then the idea is can we launch tools within two to four weeks and we launched a highlighter tool. We basically tried to go to any of the largest businesses and I think this is a good way to do business today. It’s like, “What are you spending a lot of money on? Can you automate that or create software on it?” 

So, we went to New York Times and all these giant websites and they had these different features like a highlighter and then email collection and we’re like, “Huh, we’re doing a lot of email collection,” and then we launched the popup called the email capture and it just exploded. The demand was so easy at that time.  

Rob Walling:
I remember this. This was back when Drip was just email capture, right? Drip was the first, all it was was an email capture widget and auto responders. And then we … That was 2013 and it wasn’t until 2014 that we actually became a competitor to Mailchimp. And Sumo was around that time, wasn’t it?  

Noah Kagan:
Yeah, it was SumoMe and then we bought the domain after seven years for a million and a half and then we launched so many different things. We had a heat map and then we had scroll boxes and then we had, I don’t know, a lot of different analytics around the plugin and it’s interesting in business. I think what ends up happening in most businesses, they try all these new things and then, over time, they’re like, “Oh, I should just do the thing that people really wanted me for.” They do all these things and, really, at the end of the day, it was just capture emails for small businesses or solopreneurs and Mailmunch kicked our ass with that because they were 20 bucks and OptinMonster and they did WordPress. 

And then we got, as you were talking about your business, we got our asses kicked because we tried to then do mid-market and then we try to do e-commerce. I think it’s really hard to stay consistent and just do the thing well that’s working. And that’s something I’ve definitely learned over, I guess, now 15, 20 years of startups.  

Rob Walling:
Yeah, I have too. Tell me about sumo.com, I had no idea you sold it. Is that public info?  

Noah Kagan:
It’s not public yet.  

Rob Walling:
Okay.  

Noah Kagan:
We just closed … When did we close? Maybe two weeks ago. This podcast, by the time it comes out, I’m thinking it’ll be public. Man, I was really disappointed in myself and I was really sad just how badly I ruined it.  

Rob Walling:
What happened?  

Noah Kagan:
Well, first, when you get a product that works, you know. People are like, “How do you know if you have product market fit?” You know. You don’t have to ask people to buy.  

Rob Walling:
100%. You don’t need to send a survey out about would you be not wanting to, you see the graphs. I’ve been there, dude, you’re like, “This is a rocket ship.”  

Noah Kagan:
Yeah, people are excited to pay you for a problem that you can clearly demonstrate value. Now, we launched the product and then things just worked and I think one of the key things that helped it worked is that the first year we were just free so we just had this insane install base. So, then we said, “Hey, pay 20 bucks a month,” it just crushed.  

Rob Walling:
I remember that. You had your JavaScript snippet on hundreds of thousands-  

Noah Kagan:
Every site.  

Rob Walling:
… of sites, I thought it was crazy.  

Noah Kagan:
Yeah, it was about a billion users a year so far is what we ended up getting it across the websites. But the mistake, I think, the learnings for others which is fascinating was deviating from who our core customer is. That’s probably the number one mistake we made which was we got to the six point a half million and then you’re like, “Well, I got to get bigger,” and it’s like, “Why?” “Because that’s what you’re supposed to do.” So, then we raise the prices from 20 bucks a month to a hundred to 500 to thousands because then we went upmarket. And then we’re like, “Well, Shopify’s getting bigger, let’s go over there. We can go help these customers.” And really, appsumo.com and our core customer is the solopreneur, that’s probably more of a blogger, an agency, a marketer, we’re not e-commerce people, that’s not our customer base. And so, ultimately, if we just would’ve stayed on that price point and that customer, it could be a $20 million ARR, maybe more in that space. 

And so, I think that was one. And then, secondly, me and my partner just had disagreement in visions and my approach to that or my response to that was to run away a little B. I just ran away from it versus, hey, let’s agree on what we really want to do here. And so, I call it the seagull theory, I basically was like … He wanted to go mid-market and e-comm and I was like, “I just like affordable products. That’s why we have appsumo.com, I like good deals. $20 a month, good price.” And we just disagreed on it and we could not get to the same page so I ran away and built SendFox and some other tools but I did the seagull theory or seagull mentality where I just flew over their team and I (beep) on them and complained about things and then flew away. 

And we all do that and it’s more how do you get aligned with your visions and then how do you actually be … Are you here to help or complain? If you’re complaining, just sit the (beep) out. Ideally, if you’re going to go be a part of it, go and be a part of the solution. So, that’s definitely been something to … What’s the heart? There’s a quote I like which is what’s the thing unsaid and say that and then work through those things.  

Rob Walling:
And so, did the business decline? You sold it, was it like, “We got it, we’re just going to walk away.”? Did it decline?  

Noah Kagan:
Oh, dude. So, we peaked at six and a half million and we were getting offers, I think, around 30 million. I think we’ve had a $30 million offer and I was like, “That would’ve been real nice, I would love to fly private.” And my goal was, by 50, to only fly private if I can, God willing. And it just started declining and you just … I’m sure other people who have companies feel this way, we tried everything. You’re like, “Okay, try to optimize pricing more, call all these customers,” and, because we were competing against so many bases, so many different competitors, we were just losing against all of them because they were either better at WordPress, better at mid-market or better over at Shopify and e-commerce. 

So, what we ended up doing was skeleton crew that software and just let it cash out over the next, probably, five years because it was still doing, what was it doing, it was two or 3 million a year and declining over years. And so, only until recently, we saw that the revenue to the server cost was getting close enough that we’re like, “It’s becoming a liability and maybe someone can do something with this.” So, it was an interesting experience selling it because it makes you face your mistakes and I do think it’s interesting, what are people’s intentions. Because I didn’t build AppSumo to sell it, I didn’t build AppSumo to go public, I don’t need that ego, I don’t want that money, I want to have a cool job, that’s it. 

And with Sumo, I think it was more just disappointing, really. Yeah, you can tell. I’m like, “Ah, it’s so frustrating,” I know, all of us have felt that and so we went out to different brokers. The selling process is really interesting, there’s a lot of different types of buyers. There’s these vulture buyers who are just actually really savvy, frankly. They’re really savvy and they’re totally-  

Rob Walling:
Yeah, value buyers.  

Noah Kagan:
They’re value buyers and it takes a long time to sell. You see these articles or tweets, yeah, I sold my thing two minutes, da, da, da on acquire.com or through Quiet Light Brokerage, it doesn’t happen that way. So, you put out a prospectus, you have to get your finances actually really up to date, which we didn’t do because we haven’t really touched that business in probably five years which was nice to cash out, but I’d say the bigger takeaway was how do you actually find someone more strategic. So, we were able to find, I don’t know if they want to be public yet, but a Wix, wordpress.com business that’s doing really well and they wanted email marketing and marketing tools. 

And what was really impressive about these guys, and maybe by the time they want to be public with it, they’re very patient. They’re like, “Yeah, we’ve been doing our SaaS business for 20 years and we are okay if this takes another 20 years for it to get SumoMe,” it’s what it’s called, “Back up.” And then the strategic buy, yeah, they were willing to pay, I think it was around one X ARR for the business.  

Rob Walling:
Okay. And it was a declining, basically, flatlined business at the time.  

Noah Kagan:
It’s still declining. It’s declining, give or take, one to 3% a month. So, I think we’re … I don’t know, I don’t want to share their number, now it’s their numbers but, yeah, it was declining. So, it was a seven figure sale which, to me, it was just sad, it was just sad. The promise of what it was, what it could have been and, ideally, we learn from those mistakes but it still hurts.  

Rob Walling:
It does. It feels like almost snatching defeat from the jaws of victory in a way. Because, when you launched, I remember how many people had that JavaScript installed and I thought, because we were tangentially competitive with Drip because we were an email capture widget as well, but then we pivoted into becoming a full-blown email marketing provider. But I remember being like, “He’s going to do it, this is great. There’s no way he can’t be successful with this.” And in fact, you were successful with it because, six and a half million, $30 million offer, is amazing, it’s what everybody would dream about. 

But it’s harder than people think. Even with momentum, even with good people, even with a smart founder, it’s hard to run a tech company for 10 or 20 years and not just ride it over the top.  

Noah Kagan:
Yeah, I think it’s that and being patient with the plateaus. Everyone hits plateaus. At AppSumo, appsumo.com, another product market fit … And to be clear, I’ve done a lot of business that did not work. With AppSumo, we build, we call them the originals, and I was telling you, tidycal.com, our Calendly alternative is crushing, it’s five X growth this year. And that’s one of about 10 products that we’ve launched on the original team. ShortySMS, fail, EmailBadge, fail, MeetFam, fail, SumoMarket, fail, all these different things that did not work. And that’s part of the business is that you got to keep experimenting. 

But AppSumo, my point that I was saying, with sumo.com, we launched 300,000 first year, second year, 3 million, third year, 4 million and then it was basically three to 5 million for the next three years and then this year it’ll be around 80 million, 13 years later. And there’s numerous facets to that but I think the big takeaway for others, make sure people super want what you have, stick with your customer. So, whoever the customer is, just stick with them and understand them. And I would say, with sumo.com, for others, what was interesting how we grew so fast, one … You know we bought a lot of WordPress plugins?  

Rob Walling:
I did know that.  

Noah Kagan:
That was probably one of our biggest hacks because you could buy … So, the idea is buy WordPress plugin and then promote Sumo but the takeaway there is what’s something that others aren’t doing that’s cheap or unexploited that you can take advantage of to get distribution to your ideal customer base. That was probably the biggest one and then personally reaching out, what you did, what ConvertKit did. We’d go to Tim, we’d go to Pat Flynn and be like, “We’ll do everything for you, you don’t have to do anything,” which became … It’s a little bit of the norm now in some of the SaaS.  

Rob Walling:
Yeah, but it was novel 10 years ago. And I think … What was the other thing you did? With AppSumo specific, I remember you sponsoring email newsletters before there were really sponsors of email newsletters. Right?  

Noah Kagan:
Yeah.  

Rob Walling:
I remember you being in some random newsletter and someone’s like, “Oh yeah, Noah offered me 500 bucks to post this here,” and I’m like, “This guy knows what he’s doing, man.”  

Noah Kagan:
That strategy, to be clear, and that’s something everyone go … Well, don’t compete with us but copy it in your respective areas but we still do that day, it’s the prefluencer strategy. And so, we do it at AppSumo, we have a team of five now dedicated to video ambassadors. And so, the idea is we go out, we give them a flat fee and then a percent of their sales. And ideally, you don’t want to go to people … I have a million subs on YouTube and I have a relatively sizable audience, don’t go to me, go to the person whose audience is hyper engaged on a really tight subject. And even if you want to be even more creative, go to different languages. So, we have people crushing it in Spanish, crushing it in Portuguese. And when we want to do things now, we have a hundred and then, by next year, maybe a thousand people that can be doing this. 

We did the same thing with sumo.com, I did the same thing at mint.com, we did the same thing with appsumo.com. That strategy works because, when you’re going to Facebook or Google Ads, you’re paying market rate and you want to figure out how to not pay market rate. So, a lot of these smaller people have much more affordable pricing for very unique and great promotion to the right audience.  

Rob Walling:
So, I want to talk about AppSumo a little more, I want to talk about YouTube, I want to talk about your book. So, for folks who are listening or watching, Million Dollar Weekend, it’s mdwbook.com, that’ll take you to … That’s currently taking you to the Amazon page, is that what it’s going to do?  

Noah Kagan:
Yeah, we did buy so by the time this episode comes out. You can go to milliondollarweekend.com and take the 48-hour challenge to change your life. We’ll get into that, we’ll get into that.  

Rob Walling:
Yeah, yeah, we’ll do it. We’re talking about AppSumo. So, I want to find out, because from the outside, I remember when you started it, I remember you did your first bundle back when you were doing bundles and 20% of the deals came from micropreneur.com, a referral link in a forum and so you reached out to me, we did a phone call. I remember I was standing out by my swimming pool, 2010, ’09, ’10, had to have been around then and you were like, “Dude, what is Micropreneur?” It’s a precursor to what MicroComf is today. But I was like, “Who is this guy?” And you’re like, “I was employee number 30 at Facebook, I’m doing these deals,” and it was just this crazy serendipity to be able to meet each other like that. 

But then AppSumo took off, you went to … I know you went from bundles to individual daily deals and you have the whole thing going now. You grew it, you put a CEO in charge and you moved on to other things and then you came back as CEO. Are you CEO of it today?  

Noah Kagan:
Yeah, I’m CEO.  

Rob Walling:
Okay. Tell me about that. Maybe that interim or what’s the story there? You stepped away from it, were you bored, did you want to do other things and then why did you come back.  

Noah Kagan:
So, we all get bored of success … It’s not success. We get bored of what’s working because it’s not exciting. I remember telling my business partner, I said, “Chad, how is it that you like to do all the things that are boring and I like all the novel stuff? I like starting new businesses.” He’s like, “Everyone likes starting new things, Noah, it’s not just you.” And I do believe it’s a superpower for consistency. Now that I’m 41, if you can stay consistent and keep doing what’s working, you will be successful, period. And it’s so easy to get distracted, it’s just so easy. Even yesterday, on our YouTube team, there’s a guy, Dylan, who just started, he’s like, “Hey, we should try this new thing,” and I was like, “What’s our goal? Don’t get distracted.” We lost a thousand dollars on this thing and I was like, “It’s a thousand-dollar lesson, let’s stay focused.” 

And with appsumo.com, I got bored because I didn’t want to keep doing … I remember, at the time, I felt like a used car salesman. I’ve got a deal, it’s a car, you got a good price. But it was just more I was bored and that’s something to work on, how to find something that you don’t get bored with like your wives or husbands. And there’s something interesting in that about what areas are we not getting bored at and how do I replicate that in my business which is what I get to do today. And we brought on Amin and we said, “Amin” … And I’ll give a little context there. We said, “Amin, make $120,000 a month revenue and don’t (beep) up, that’s all you have to do here. Don’t do anything creative.” 

And a lot of people have asked us, “How did you find an Amin which is the CEO for your business?” This is the big point. One, we spent a year recruiting and then we spent 18 months training, that’s literally the main part. People are like, “Oh, you’re going to” … It’s how much time are you putting into it and the way that most businesses, whether you’re team of one or a team of 10, AppSumo is a team of hundred, how does your bench look? So, if you look at a professional sports team, they all have benches and they all have minor leagues or colleges and so what does that look like in your own business and is it being developed or not. 

And so, at AppSumo, I’m pretty regularly thinking who’s the CEO of these different department, who’s the CEO and who’s going to just take it, not give him permission, I can see who’s taking it. And so, Amin took over and then we started SumoMe which became sumo.com and, over the years, we grew it while, Amin, for the first two years, he just did the exact same thing. It was a few deals a month to make 120,000 and then, once sumo.com actually broke even, we’re like, “Amin, you could do whatever you want now, we don’t have to worry about that money,” and then he was able to do a few things that I can talk about that was really able to help get AppSumo to where we are today. 

During that time period though, my partner took over Sumo, Amin took AppSumo and I just was like, “Oh, I guess I’m going to” … I was making two to $3 million a year, I’m just going to do a podcast and then I’m going to build some little side projects like sendfox.com, kingsumo.com at a charity bike ride. But this is probably the most shocking part for others and it’s interesting, it was the most unsatisfying three years of my life. And I didn’t want to come back to work, I don’t know, it was just … I wasn’t challenged, it wasn’t hard, it was nice little projects. And there was a big takeaway that I’ll share in that moment but I just felt lost. And that’s not a boohoo, by the way. 

If someone’s getting rich complaining about it, tell them to shut the hell up. I’m like, “Okay, well, why don’t you” … It’s better to be rich and complain than be poor and complain and so at least everyone should get to that opportunity. That is literally what Million Dollar Weekend is about, it’s you can create that for yourself. Not the complaining part but the being rich part. But the most fascinating thing was Amin’s running the business, everything’s pretty good, I’m doing these little tiny dabbles, let’s call them, and sumo.com is floundering so we folded that team back into AppSumo and doubled down on what was working which was AppSumo. And Amin called me one day, I’m on a bike ride across America and he quit. And my reaction was like, “Hey, do you mind waiting until I get back from my bike ride to quit?” 

And I think this is a cheat code in all startups, who do you call, who’s your advisors. Can you call Rob Walling? Can you call Noah Kagan? Can you call … I have Andrew Chen, we have Moody Glasgow, I have this guy Roger [inaudible 00:20:41] he’s the CEO of Indeed. We have elite advisors that you could actually pay a thousand dollars an hour or a little more and get access to 10,000-hour people. That’s such a super cheat code that people don’t use enough. So, I called Andrew and I called my buddy Adam from mybodytutor.com and Adam was like, “Who’s paying for the bike trip you’re on?” I’m like, “Well, AppSumo,” and he’s like, “Well, you should probably take care of your business and not go on a bike trip then.” 

So, I sent the bike home and flew home the next day from my bike ride and then I tried to find another CEO and ultimately I was like, “Okay, I guess I’m” … And this is what we were chatting a little bit before the show, I’m really just afraid, I’m afraid of who I can become, I’m afraid that I can actually do it. And there’s a really powerful thing for all of us is what’s the hardest thing we’re avoiding today in our lives. And for me, I didn’t want to (beep) up the business, and I thought only Amin can do it and I thought I got fired early in my career and that’s been a big part of my story. It’s these guys are better than me, there’s no way I can do it either. And I just had so much fear around it. And then I was like, “Okay, well, at least you go do the hardest thing possible,” and it’s been number one best business decision I’ve ever done  

Rob Walling:
To come back as CEO?  

Noah Kagan:
Yeah.  

Rob Walling:
Huh.  

Noah Kagan:
Yeah. And it’s also been the hardest. There’s definitely a lot of days where I’m like, “I am quitting this thing,” but the hardest thing tends to be the things you’re most proud of and the most rewarding. And I think everyone can reflect on that. When you had that moment when you were like, “Oh, this is tough and I’m putting in a lot of work,” but you’re also the most proud of those experiences. And everything I was doing before that, those three years when I was retired of sorts, I just wasn’t committing, I was just like, “All right, let me just dabble,” and I think that’s just such a good thing. What’s the hard thing, go commit to it and it ends up turning out to be, almost all the time, a good thing, you don’t regret those moments of working hard. And it’s been three years and I’ve definitely made a lot of mistakes, a lot of mistakes in that time period.  

Rob Walling:
And the business is doing 80 million a year now which is incredible. Where was it at when you took it over?  

Noah Kagan:
It was doing more.  

Rob Walling:
Was it really? Oh, my gosh.  

Noah Kagan:
Yeah.  

Rob Walling:
Oh, dude.  

Noah Kagan:
I know. I know you wanted some hero story-  

Rob Walling:
I did. I wanted you to say [inaudible 00:22:41] … Yup.  

Noah Kagan:
… Noah Kagan came and saved the business.  

Rob Walling:
Yeah.  

Noah Kagan:
Let me caveat that. So, in terms of our, and this is something that … Whenever you’re hearing people, you really got to understand what the actual numbers are. So, there’s gross sales, which is what I’m sharing, and then there’s net revenue which is your refunds and credits or whatever have you then you have net revenue. And you got to be mindful, okay, net revenue, what is gross profit around these numbers then what is your net operating margin, net operating income around that net revenue. And so, what was interesting is we had such a COVID bump, we had such a fat COVID bump, it was great. People wanted to work online, people wanted to save money and so it really was an advantage to us that came back down. And then I made the mistake thinking that I’m super smart, I think I’m bright, but I made another mistake where I didn’t listen to the customers again. 

So, we strategically said let’s not just do deals, let’s have us a marketplace of products. So, I ran really fast in the wrong direction. I think we can all … You know how that goes. It’s like, “Oh, this is a great idea, I know it’s going to work,” and a lot of these problems can be solved coming back to basic principles of, one, AppSumo motto is test and invest, that is an App … We have an AppSumo playbook and that’s one of our core principles which is did you test it before you invested. And when we break that, I’m like, “Oh, this marketplace where we go from 600 products to 13,000 is definitely going to work,” it didn’t and then we went from 15% margin to around 2% margin of the business.  

Rob Walling:
Oh.  

Noah Kagan:
Yeah.  

Rob Walling:
What happened? Hiring?  

Noah Kagan:
Yeah, we spent a million to do promotion for the marketplace. Our teammate costs per month, we call them teammates, not employees, today it’s about 1.2 million a month, I think we got it up to two and a half, 3 million. So, it was definitely not following some of the principles of test and invest and then double down which is part of our AppSumo playbook. And this year though, we’ve definitely gotten back up to, I think, around 12% margin, reduced a lot of the distractions that I was doing and then just focused on the core of the business, what our customers want. And again, I talk to customers and partners every month and they were all saying, “Hey, we don’t want this marketplace. We just want you choose the best deals possible of the latest tools for us, for solopreneurs.” 

And I think that’s just such a core thing for all business, who’s your customer, what do they really want and how do you just keep serving that and really understanding what they want and you could test it. Can you test it this weekend, can you test it with a little bit of money, can you test it with not having to spend a bunch and that’s possible. So, definitely, it’s been a fascinating experience and hard experience over these three years.  

Rob Walling:
I bet. And is that where it stands today? Is the core driver of AppSumo revenue and profit is these weekly deals?  

Noah Kagan:
Yeah, yeah.  

Rob Walling:
Okay, yeah. Back to the roots.  

Noah Kagan:
It’s insane. I will say, one of the key things, the key takeaway for others out there, and I talk about it in Million Dollar Weekend, is just market selection. Are you in a million dollar market? Are you in a thousand dollar market? Are you in a billion dollar market? And it was lucky, I would say, that we chose software 13 years ago and the amount of software there that’s gotten created went from, my first year, there’s probably 20 projects to choose from, 20 businesses to, now, there’s 10,000 different software products. And so, market selection is almost one of the most important things, how many people are there and are they willing to spend. 

And so, we have other business units now, we have the originals which is basically affordable alternatives to popular software. So, Mailchimp, we have SendFox, Calendly, we have tidycal.com.  

Rob Walling:
So, you have your Kirkland. These are your Kirkland brands, right? Your house brands, yeah.  

Noah Kagan:
We call them [inaudible 00:26:07] originals, yeah. So, we think of it as … And it’s our number one way of getting new customers in the AppSumo ecosystem, number one is our originals team. So, that’s a real big takeaway for others out there. Do you have some way to get the ideal customer into your product through something free? Maybe it’s through templates, PDFs, courses, whatever, or a paid product and so ours is TidyCal which brings in, I think, it’s around almost 25% of all new buyers come through TidyCal into the AppSumo ecosystem.  

Rob Walling:
It’s crazy.  

Noah Kagan:
Which is amazing, yeah.  

Rob Walling:
Yeah.  

Noah Kagan:
And a lot of our business now, the amount of sophistication is really interesting. Pricing sophistication, business intelligence sophistication, timing of deals, the structure of how we negotiate maybe rev share so our partners get more as they do better. There’s a lot of things that have compounded that we just were ignorant and just learning and improving over the past three years.  

Rob Walling:
And so, you’re CEO of AppSumo for the past three years and you have this YouTube channel that you … I’ve watched it because MicroConf, similarly, has doubled down on our YouTube channel. And we’re not at a million but we-  

Noah Kagan:
A lot of people.  

Rob Walling:
Yeah. We started during COVID, we had … What’s trip is we announced in 2019 we were going to do a lot more digital stuff because, before that, we were really an in-person event. And so, we said we’re going to do online, we’re going to have a video vault and we wound up launching it right as COVID happened, not because of COVID, it was already on the schedule. And we grew, it took us about a year to get to 10,000 subscribers and then we unlocked some stuff, some secret sauce, if you will, and the next 18 months took us to about … We’re at 70,000 subscribers as of yesterday which is good-  

Noah Kagan:
Congrats, dude.  

Rob Walling:
Thank you. It feels-  

Noah Kagan:
It’s a lot of people.  

Rob Walling:
It is. And our space is not nearly as big as yours because we are SaaS, we’re Indie Hackers and SaaS and so this market itself is a lot smaller but it feels really good to have that reach. But I’ve watched you do something similar, although at a different scale, add a zero, basically, to the numbers I just said. And watched you experiment with different video types and some would get more views and then you went all in on where you follow people onto their jets and you go to the neighborhoods and ask them how they became billionaires and all this and you’re flying all over the place in a, I’ll say a Mr. Beast way in a way that it feels very tightly produced and very deliberate, very intelligently thought through on how to optimize it.  

Noah Kagan:
Yeah.  

Rob Walling:
But I guess I have two questions around this. Why did you decide to do that on YouTube as opposed to some other medium? There’s social media and there’s podcasts and all this stuff. And did that coincide with you coming back as CEO of AppSumo? Were those two decisions made in tandem or were they not coupled and it’s just coincidence that they both happened at the same time?  

Noah Kagan:
Yeah. One thing I want to take a step back on for everyone out there is all of AppSumo started with me and $50 in a weekend. And the YouTube channel started the same, it was me shirtless, which you can see the video, in my 800-square-foot house where it’s falling down literally, and I just started with my phone and I just uploaded the video. And the reason I’m saying that is, from Million Dollar Weekend, the number one thing that people take away is this mindset of now not how. Don’t worry about the lighting, don’t … I’m in a $20,000 studio in my house now but I started with my phone that everyone has, everyone has the same exact phone as me and they can just record it and you get going. 

And over time now, AppSumo has a hundred people and we have two people dedicated to business intelligence. We have different pricing stuff that’s going on all the time, we have an email team of, maybe it’s five people, that is testing so many different things in email but that just started 50 bucks in a weekend and got going and you keep going with it and you keep improving it. And that’s the part that you have to get started right now with YouTube or whatever it is to get to those points. I think people want to just figure out the ending and it’s like, “Yeah, that’s only going to get there if you get going. You can’t cook if you’re not in the kitchen.” And so, I think that’s just such an important thing for anyone out there whether it’s a SaaS business, which me and you have done a lot of, or whether it’s a content business or whatnot. 

So, I think the key thing around the YouTube content, similar to AppSumo, is what’s the thing that’s working and how are you doing more of it. And so, for AppSumo, we analyze what product categories and we have an algorithm around what products our customers are excited about and then the business development team goes and gets a lot more of those. And so, with the YouTube channel, I commit to … It’s called the law of 100 which is do a hundred of it and then quit or make the decision to quit because we quit too soon. I quit my podcast, I’ve restarted it and I’ve stuck with it, but I quit it too soon, I quit it around 30 to 50 episodes. If I just would’ve got to the 100, I would be at really high numbers. 

And so, whatever you’re doing, a hundred sales, a hundred days, a hundred videos, a hundred emails, whatever it is, just get it to a hundred of them and then you can make a more informed decision and you can keep improving along the way. You can improve your cameras, you can improve the lighting, you can improve your scripts, you can improve your thumbnails, you can improve these different parts of your business. Now, I tried growing all the different social channels. So, when it happened, I tried YouTube and then Instagram and I hate TikTok so I don’t really do any TikTok, LinkedIn, Twitter and blog and all these channels can work to be clear, a podcast as well. 

All of them can work but what I recognize is who’s the customer I actually like, what channel do I have maybe some advantage in and which one has the opportunity because I want to have an unfair advantage. I don’t want to compete fairly, it’s just not-  

Rob Walling:
Of course not.  

Noah Kagan:
Yeah, I want to win where not others are winning and it’s easier for me to win. And so, as I noticed, I can’t do all six and win, I can do one and win. So, I told the team we’re not doing anything but YouTube and the reason I did that is I was trying all of them and I saw, okay, we’re doing this much work and here’s the reward, meaning views or whatnot, and I enjoyed making content there. And so, that’s what I’d recommend for others, it could be podcasts. I tried podcasts, growing it for years, it was really hard, there’s just only … And now, with YouTube and Shorts, you can grow a podcast in a different way but it’s still challenging, there’s only so much podcast time. And then Twitter, the audience isn’t growing. And LinkedIn, it’s very competitive with all these different agency people. And Instagram, I don’t take photos and I don’t do TikTok. And blogging, I think that amount of search and traffic is declining. All right, it leaves a site that gets what a billion people a month and it is a little harder as you get to higher levels of video. 

We’re spending on, per video, I don’t know, maybe 30,000 if you look at salaries and editing and thumbnail designer and consultants and all this different travel stuff and I can talk about that. But in terms of that, it was just basically doing that analysis and, I will say, we did three videos a week for 50 weeks and almost none of them were really getting views. And so, the point for everyone, besides the law of 100, is find something you just, even if it’s not working great, you’re still satisfied. I was still having fun, I was like, “Even if this is not getting an insane result, I’m still having fun.” And then we were basically desperate, we’re like, “Hey, we’re not really growing, why don’t we just try something 180?” 

And so, we tried a video, we saw it on Instagram or somewhere where a guy went to someone’s door and we’re like, “What if we made a whole video” … Because we were always curious what rich people did in these houses so I was like, “I’ll just go knock on their doors and ask what they do for a living.” And that video, it’s crazy because it took two full days of filming to get 10 minutes of content. It’s so interesting because people are like, “Oh, you just go knock on the door and” … Dude, most people will reject, most people say, “What are you”-  

Rob Walling:
Yeah. What are you doing at home?  

Noah Kagan:
Yeah. They’re like, “Please get the hell out of my house,” I would. I’m paranoid about people coming to my house. That video, through some desperation, frankly, because the ways I operate AppSumo, the ways I operate my book, the ways I’m operating our YouTube channels, we have one goal. And so, we were at 170,000 subs and we wanted to get to 250 and we had about 40 days left and so we just had to do something more extreme to see if we could get it to work and that video got it to a million views. And then you’ll see that almost, double down, this is another AppSumo motto, I think these ones people know but no one does. No one actually does it the way we do, very few do. They do something that works and then they go do new things. And this is part of Amin’s, I would say, influence with me which was, this is working, double down and, not just once, but until it stops working. 

So, now, there’s a lot more people copying or going on the streets asking rich people or knocking on doors so we’re shifting and I can talk more about that. But you can see the channel, it was jets, yachts, first class passengers, streets of New York, streets of Monaco, streets of Switzerland, streets of Austin, [inaudible 00:34:29] but it was working and so it was doing a lot more of that and I think that’s a really core part of any business. And whenever I meet entrepreneurs that made their business and growing fast or they’re asking how to grow it, I’m like, “How did you get your last customer? How’d you get your first customers? How much of that are you doing?” They’re like, “Oh, yeah, I’m not really doing as much of it,” “Just do that.” 

So, that’s been really the growth strategy content wise. And so, we basically just found two types of content that works like these asking super rich people or interviewing older billionaires, frankly, and asking them their regrets. And so, lately, it’s really just doubling down on that content.  

Rob Walling:
Does the YouTube channel feed … What’s the end goal of that because it’s not … We have 70,000 subscribers and our most popular videos maybe has 150,000 views and I see-  

Noah Kagan:
nice, man.  

Rob Walling:
Yeah, no, thanks. Again, add a zero to those numbers if you’re listening and that’s what Noah has. But I see the payments from YouTube and we don’t even break even on our production costs so I know you’re not doing it for that. So, would it-  

Noah Kagan:
We’re not breaking even.  

Rob Walling:
There’s no chance but what is-  

Noah Kagan:
No, we’re not breaking even.  

Rob Walling:
But is the feedback into AppSumo? Is that the …  

Noah Kagan:
So, there are businesses, we’re fortunate, I think, a lot of YouTube, similar to you in that a lot of YouTubers that have to have a course and then they have to sell these other things but we have a business, AppSumo, that’s our sponsor, really, for the channel and we don’t do a good job integrating at the end of the day. I do think that most businesses should have some presence and I think most people connect with a person, not a brand. If you think about Nike, Nike’s not popular because of the swoosh or their shoes are really that great, you connect with it because it’s Tiger or LeBron or whoever the person is. 

And so, I do think we’ve surveyed and around 30% of people that buy AppSumo who know who I am. They’re like, “Oh, I think I’ve seen your videos or I’ve seen the stuff.” And what we started doing this year and what we’re going to get better at is I’m like an affiliate of AppSumo and so I have tracking on my content and so how do we do things that drive either new signups or awareness or direct sales into AppSumo. But yes, it’s not well integrated in our business.  

Rob Walling:
Not yet but you can get there.  

Noah Kagan:
Well, I think people-  

Rob Walling:
You can build the audience and then you can do it.  

Noah Kagan:
Yeah, people seeing AppSumo logo, seeing me wear the AppSumo clothing, I think our business … Not I think. Our business is very direct marketing ROI based so how much are we spending and then how much are we making back within six months or less and everything. And we spend about a half a million dollars a month around that and it’s all profitable. The problem with that is that it doesn’t expose our brand. So, moving 2024, one of our core strategies is brand awareness. So, how do we get people who are solopreneurs or curiepreneurs or wantrapreneurs and getting them like, “Yeah, I need some help with tools or maybe education around getting my business going, I’m going to go to Rob and then maybe I’ll check out AppSumo and see what tools they have available.”  

Rob Walling:
Well, I want to get to your book because we’re wrapping up on time. So, milliondollarweekend.com, the book is Million Dollar Weekend and you cover a ton of topics, getting better at rejection, it’s all about being an entrepreneur. It’s about starting a company, as you say, a million-dollar company in a weekend. Idea generation, growth playbook, lifestyle design, even have a section about managing your calendar to be more productive. Folks can obviously check that out if they want to dive into those topics. 

What I’m curious to hear about you is a little more of a meta question because I’ve written three books plus an ebook, and I’m working on a fourth, in essence, with my wife about selling companies. Why a book now? You’ve been an entrepreneur for so long, people have known your name, why do it? Because writing a book is a pain in the ass, I don’t know if people-  

Noah Kagan:
Dude, it’s so hard.  

Rob Walling:
Brutal, huh? And there’s no feedback loop. You do a YouTube video and it goes live in a few weeks. You write a book, it’s (beep) two years, man. It’s like, “What is happening?”.  

Noah Kagan:
It was three years, I know. And people buy books, people don’t read books. And selling a book, right now, I’m personally messaging Facebook people. So, a lot of … I’m posting. We built a launch team. And I do think one of the things I’ve done well with AppSumo and YouTube, I reply to people one-on-one and that’s something I talk about in the book and something I still do in all of my businesses which is most businesses are actually comprised of individuals, customers like Ruben, one of our mutual friends from Bidsketch, I don’t know what his new thing is called.  

Rob Walling:
SignWell.  

Noah Kagan:
SignWell, yeah. Ruben was one of the first AppSumo customers. Thirteen years later, I DM him how’s the fam and I think we disconnect some of that and that’s been a part of the book where … I posted, “Hey, I’m building a launch team, is anyone interested?” and then I DM every single person who said yes, asked them to buy the book and I have them join our launch team and it’s individual and that’s missed out on. 

Now, in terms of the book itself, it’s about 15 years ago I thought of writing a book on a bike ride. I was like, “There’s no book out there.” I’m frustrated, I’ve never seen a book that I can give to my cousin, I can give to a friend, I can give to a reader, I can give to a customer of AppSumo that, if you want to get a business going and change your life in 48 hours, which everyone has, everyone has a weekend, there’s nothing that can do it. If there is, let me know, I wouldn’t have written the book, it would’ve saved me a bunch of time. And I thought that was an interesting opportunity. And so, that was 15 years ago but I wanted to start more of my own businesses, I wanted to test it to see if it actually worked for others and then I wanted to be at a place where I felt like I could really share the message with the best collaborators possible. 

It’s easy to write a book, it’s hard to write a great book, it’s nearly impossible to get a book to change someone’s life is what I’m noticing. And so, I’m doing everything possible to stack the deck, is the way I think about it, in that this book will impact people to … Maybe they don’t need to be a millionaire, I think everyone should be a millionaire, it’s awesome but maybe they want to be a grocerynaire, maybe they want enough grocery money for the weekend, maybe they want to just turn their interest in woodworking into an actual business or they want to create a software product or SaaS business but they’re a little bit stuck. And what was crazy about entrepreneurship is there’s an unlimited amount of content out there but, if it’s so unlimited, how come others aren’t succeeding in starting a business? That’s the main thing that needs to get solved. 

And so, the book starts off with fun and really overcoming the two giant things that hold everyone back from success in entrepreneurship which is starting and asking and how to make those enjoyable so that people can overcome them in a fun way and then use that with strategy to then lead it to million-dollar opportunities and getting businesses going in a very short period of time.  

Rob Walling:
And that’s the USP of the book is that it is, not just your take on entrepreneurship, but it is that very constrained timeline and it’s your approach that I’ve heard you talk about over the years about getting used to rejection, about seeking problems before … People don’t want solutions, they want … What is it? They don’t want software, they want a solution to their problem or something like that, they don’t want another tool.  

Noah Kagan:
Yeah, no one cares about your idea.  

Rob Walling:
Yeah. No, yeah, idea.  

Noah Kagan:
Yeah, no one cares about your idea.  

Rob Walling:
Totally. So, I have this quote, when entrepreneurs come to me now, I say don’t tell me your idea, tell me what problem it solves and for whom. That’s my new thing, I say that to everybody and so it’s just right in line. What’s funny, dude, is, 15 years ago, I don’t know that we would’ve thought this but, as you progress, we all come up with these similar learnings. The rules of thumb are similar across SaaS, across entrepreneurship, across a jerky company that you talk about starting in a weekend as a challenge, right?  

Noah Kagan:
Well, your audience is a lot of SaaS people, I’ll just tell you openly. So, the frustration I have today, I hate QuickBooks, I hate DocuSign … Shout out, SignWell, Ruben, you can check out. But I also hate subscriptions and I hate Loom. Well, I think Loom is cool but it’s five videos and then you can’t use it anymore, you have to pay and I’m like, “Hmm.” So, what most people do now is that they’ll consume more content, they’ll wait on the sidelines, they’ll do more research and what you can actually do is find out, within 48 hours, everyone has a weekend, whether if you have a family and kids like you, whether you’re single, whether you’re old, whatever that is, it’s non-exclusive to actually see if you can get that business started. 

And so, for instance, let’s say you wanted to start a SignWell competitor which we’re evaluating … Shout out, Ruben. I love you, man. But I hate subscriptions and I’m frustrated with DocuSign and doing PDFs so can we create something like that at AppSumo within a very short period of time. And the idea for everyone, if you want to do that, you could literally message people and say, “Hey, I’m building a software today. It’s going to do this, here’s what to expect, can you prepay me for an early version of it?” And you could truly find out whether you can get customers for that or not. 

And then, if you get customers, great, go build it. And if you can’t, then you can try to understand in a conversation what problems they do have that they’d be excited to pay you for. That’s the fun, frankly, and the interesting challenge of entrepreneurship.  

Rob Walling:
Noah Kagan, thanks so much for joining me on the show, man. Folks who want to keep up with you, youtube.com/noahkagan, milliondollarweekend.com?  

Noah Kagan:
Yeah, I think it’s YouTube.com … Just go to milliondollarweekend.com, we have a 48-hour challenge in there, there’s a ton of resources, you can see my income streams which a lot of people like to see and there’s just a lot of things to get going. People have so much fear and you really can change your life in a short period of time without money and that’s the part that people are like, “Oh, (beep) maybe I can do these things.” Same as me being a CEO, I was like, “I don’t know if I can actually do this,” and the reality is we can, we just have to go get started.  

Rob Walling:
The dirty secret is, most of us, a good chunk of the time, feel like we’re in over our head and are scared.  

Noah Kagan:
Yeah, it doesn’t matter how successful or famous or rich you are. And I do believe and I see it all the time still that there’s a lot of ordinary people doing really well and the only difference between them and someone else is that they’re starting. And through that iteration of posting the video, of seeing if they can get someone to buy, of doing a service, of maybe even using a WordPress plugin as their software provider or using backend AI stuff, ChatGPT, whatever that is and then getting the customer, it’s like, “Huh, what else can I take this?”  

Rob Walling:
It’s an awesome note to leave it on, man. Thanks again for joining me. Thanks again to Noah for joining me on the show. It’s great to have you back this and every week. I’m really enjoying recording this podcast again, it’s so fun to be reinvigorated after taking time off over the holidays. And I’m approaching episode 700, hoping to cook up something special or maybe it’s just another episode and it happens to have two zeroes at the end of the number. This is Rob Walling signing off from episode 698.