Episode 753 | TinySeed Tales s4e3: Co-Founder Conflicts + Renaming a Business

Rob Walling:
Welcome back to episode three of Season four of TinySeed Tales. This is where we continue hearing Colleen SCH nestler’s startup journey. Before we dive into the episode, I want to tell you about the SaaS Institute. It’s at SaaS institute.com and it’s our private and premium coaching offering that is going to be launching here in the next month or two. The SaaS Institute is a private coaching community designed for B2B SaaS founders doing at least a million in a RR. We’re going to keep the initial cohort very small and invitations will be going out soon. Head to SaaS institute.com and enter your email address if you’re interested. And now let’s dive into this episode where we hear about co-founder conflicts and renaming a business.  

Colleen Schnettler:
We’re shutting it down. So MRR is at zero, so that’s super fun and we’re building something new.  

Rob Walling:
Welcome back to TinySeed Tales, a series where I follow a founder through the wild rollercoaster of building their startup. I’m your host, Rob Walling, a serial entrepreneur and co-founder of TinySeed, the first startup accelerator designed for Bootstrappers. Today in episode three, we’re back with Colleen Schneller, a developer, entrepreneur, and co-founder of Hammer Stone. It’s been about six weeks since Colleen and I last spoke, and in preparation for our conversation, I decided to listen to the most recent episode of Colleen’s podcast and in it Colleen and her co-founder Erin chat about building their software company. So I put on the most recent episode titled MicroComp Recap, and here’s what I heard.  

Aaron Francis:
So that was last Thursday, then Friday, boy, boy, Friday and Saturday some stuff happened. So we broke up with the client and then you turned around and broke up with me too.  

Colleen Schnettler:
I totally did that.  

Rob Walling:
The second I heard that, all I could think was what I expected, that things may have shifted or changed within the business since our last conversation as they tend to do with a startup, but breaking up with their co-founder, I was not expecting that. Needless to say, I was anxious to speak with Colleen and have her walk me through just what happened.  

Colleen Schnettler:
It’s interesting, Rob, because if you think of the number of people you have conflict with in your life, at least for me it’s not that many. And when you are trying to build a business with another person, especially something that you invest so much of yourself into, there’s bound to be conflict. And Aaron and I are in an odd position as co-founders because I am full-time and he is part-time, and that is just what works for us with our family situation and things like that. But I feel so much pressure to make this work, and to me it seems like, well, if it doesn’t work for him, then he just stays at his job and nothing changes where if it doesn’t work for me, it’s a huge deal. And so I think really what was happening there was I had just stopped consulting that Thursday and on Friday I just freaked out a little bit and I was like, this is it. 

I am no longer making money. I have no source of income anymore. This has to work. We have to make this work, and I am the kind of person where I am going to put all of myself into this to make this work. It felt terribly unfair in that moment that I was equal partners with someone where this was a part-time gig for him. And so it’s just an odd situation to be in. And so we had a really, really serious talk about it. It was very emotional. It spanned several days just about what did we both want. And it’s not even just what do you want with the business, but what do you want with your life? What are your goals? What are we doing here? And those things are really important to be on the same page. And it’s something I had kind of brought up with him before, but we really got into it. 

I mean, it was just all cards on the table, what are we doing? What’s our commitment level? What do you want? And that led us initially to maybe this isn’t going to work as a partnership, but fortunately we worked it out. Like I said, it was both of us thinking a lot about what we wanted. I mean, as I told Erin, I want to make all the decisions all the time, and I don’t get to make all the decisions all the time when I have an equal partner. And again, with my equal partner being part-time on the business, it’s weird, but we worked through it. I think we handled it really well as a pretty significant discussion, fight, whatever you want to call it. I think we handled it really well and we both took some time to think about what’s our level of commitment here? 

What do we really want? What are our life goals? What are we doing? And by that Saturday, so that was a Friday, and then we talked again Saturday morning, I told him, I was like, I’d rather do this with you than without you even given the constraints that we have. We are a great partnership. We have complimentary skill sets and it’s really nice. I mean, I really enjoy having a co-founder. And so the thing that’s a little bit funny is that Sunday we were flying out to MicroConf and my flight landed before his, so I wasn’t a hundred percent sure he was going to get off the airplane, but he did. He showed up, we were able to have it out in person and we kind of came full circle on that one.  

Rob Walling:
Wow, what a story. And this is obviously something that would in a perfect world, would be hashed out before you start a company together. But the second best is before you grow to a company that’s doing millions a year, right? It’s like I have seen multiple companies implode because of this exact dynamic. They get to half a million a year, for example, and one founder wants super profitable lifestyle business, and the other one’s like, I want to raise a series A and go to 50 million or whatever it is. And so the fact that you chose now, which is still very early in your company’s life in terms of where you’re headed, the fact that you chose now to tackle this, I think shows honestly quite a bit of maturity because it is easy to push this type of thing under the rug. It sounds like you were feeling scared, frustrated, anxious, all of the above. Because as you said, you stopped consulting, which the big enterprise client you had was paying, I dunno if we said on the show, but it was like $20,000 a month. It was a lot of money and that paid for you and a bunch of other stuff. And once that stopped, it sounds like that was a real moment of reckoning for you personally.  

Colleen Schnettler:
Yes, I think that’s a good way to describe it because I thought it was fine. I didn’t think I had that subconscious fear of not having money until I actually stopped making money and it brought all these issues that I think had been kind of simmering. It just brought all that anxiety to the surface. And when we were talking, he offered to walk away. He was like, if you don’t want to do this with me, I’ll just walk away. We don’t have to fight about it. We don’t have to get lawyers involved. But he said, we don’t have kids yet. Using the marriage analogy, which is a popular one in co-founder relationships, he’s like, I’ll walk away now. We don’t have kids AKA, we’re not at half a million dollars a year because when we are, that’s going to be a different conversation.  

Rob Walling:
Is there anything you wished you’d done differently around this conversation?  

Colleen Schnettler:
Yes, they say building a business brings out the best and worst in you. And I think many people who know me would tell you that I’m like a very stable person. If I have an issue, I’m really good about bringing that issue to a person. I don’t tend to gossip about people behind their backs. I don’t tend to be frustrated. And this issue with Aaron had been simmering for a long time and I was talking to everyone except for Aaron about it. I’m happy that we had it out, but we could have done that six months earlier.  

Rob Walling:
In my experience, communication is really the only way to establish a relationship built on trust, which is why having these tough conversations early and setting this precedent for communication is absolutely crucial for the long-term success and sustainability of any startup. Needless to say, I’m happy for Colleen that she and Erin were able to hash this out sooner than later, but I couldn’t help but wonder how this difficult conversation affected their relationship moving forward.  

Colleen Schnettler:
I think it has gotten so much better. I think when there was this undercurrent of me not being a hundred percent sure if I wanted to do this with him and I had to ask him some hard questions about his commitment level and him having this undercurrent of not being sure if I was going to turn around and be angry with him for a commitment, we had these very subtle undercurrents in our relationship before we had this conversation. And so I feel like it’s been amazing, so much better since we’ve kind of had it out. Everyone’s cards are on the table, this is where we stand, this is what we’re doing. We have been able to even be more open and honest and communicate even better. Now,  

Rob Walling:
Colleen and Aaron are proof that having those difficult and often uncomfortable conversations can ultimately lead to a more productive path forward. And it’s encouraging to hear that things worked out as well as they did. But as many of us know, there are no shortage of challenges in the early days of a startup. And for Colleen and Aaron, their potential breakup isn’t the only challenge they faced in recent weeks. They’ve also been working through a major pivot in their core business that I was eager to learn more about.  

Colleen Schnettler:
Last time you and I talked, we were talking about reporting, internal reporting for Rails, and Aaron was going to go and learn Ruby on Rails. He was going to be the primary developer. And before we did that, I thought to myself, okay, let’s not invest all this time until we know that this is the right thing to build. And so I talked to many, many, many people. I am fortunate, it’s my community. So I have access to a lot of rails developers that are very senior in positions of buying power. And I talked to them all and I realized after that round of customer interviews that although our pain point is correct, our positioning and our packaging for this product, it’s not there. It’s just not there. And so we’re not going to do that.  

Rob Walling:
And I’m going to quote you back to yourself. You sent me an email. This is easily going to be the best or worst decision we’ve made for the business. So what is the decision? What are you doing from here?  

Colleen Schnettler:
So starting over, we’re shutting down. Well, we actually sold the IP to our enterprise client, but we’re essentially shutting it down, right? We’re people who have purchased it, they have it, but as I’ve communicated to them, we’re not providing support, we’re refunding them. We’re literally refunding them. I mean it’s like, sorry, didn’t work out. They have the source code and now they didn’t spend any money on it. So it’s win-win hopefully for those people. So we’re shutting it down. So MRR is at zero, so that’s super fun and we’re building something new.  

Rob Walling:
Okay, so what indications did you have that the prior route wasn’t working?  

Colleen Schnettler:
So what we were doing I realized is we were building a productized consulting business because what was happening to us is people would come in and they buy refine. I think we were selling it for a thousand dollars a year. We could have charged more, but as part of that, they wanted us hands on the code in their app, making it match their UI perfectly. So I felt a couple things were happening. We were building a productized consulting business. We had to catch them early in their lifecycle. If they really, really needed it, they would’ve already built it. And if they didn’t really need it, then what are we doing? We don’t want to be a product that is kind of sort of nice to have. We want to be a product that this is amazing. We really need this. It was hard to integrate, which is why they wanted us as part of the package. 

And developers aren’t really used. It was almost like we were trying to build a market, which we are do not want to do that, right? There was this red flag that we didn’t have any competitors. And you know how at first you’re like, oh, great, we don’t have any competitors. Then you’re like, oh, there’s a reason. Because developers generally speaking, they aren’t in the mindset that they go and they license, they pay for a Ruby Gem and license that that’s not their workflow. Their workflow is they want an open source package and then maybe you can upcharge them for support. But that is again, not the kind of business we want to build. I am not a big believer in the open source to paid model for a small team. I mean, I think if we had raised a lot of money, it might be a great path, but what we’re trying to build that just isn’t a model that was really working.  

Rob Walling:
Folks listening might be wondering, Rob, you’re an investor. TinySeed invested in this company that whose MRR is now zero. Are you panicked? It’s a pivot. Oh my gosh, it’s resetting. And the answer is no, because this is a lot more common than people realize. And the number of successful companies that go through exactly what you’re doing, the number is high. And so we bet on founders, we bet on you and Aaron not on your idea. And specifically with Hammer Stone, when a r and I got off the interview call with you, we were really like them. Don’t love developer components. It’s not a MRR, it’s not a SaaS app, but we’ll make the bet on them. That was it. Even more so do we think they will figure it out than we invest? And the answer was yes. And so do we still think you’ll figure it out? We do. And so I mean I have the confidence that you are making the right decision. You and I have obviously talked a lot about this offline, but it might come across to people like, oh my gosh, everything’s failing. But I actually think you are closer to success today than perhaps you’ve ever been. Even though your MRR doesn’t indicate that it’s like a local minimum.  

Colleen Schnettler:
That’s amazing to hear. That’s good  

Rob Walling:
News. Perhaps even more exciting is a huge pivot that Colleen and Aaron made with the direction of their company, including a name change.  

Colleen Schnettler:
So we are now hello query com. We’re very proud of that domain name we love Hello Query. We wanted a.com. That was a priority query obviously because our initial value prop is SQL to CSV and I dunno, I like it. Hello Query. It’s friendly. Erin and I are friendly. It feels like it’s a good match for us as people and a good match with the kind of company we want to build. And what we are now building is it’s going to be hosted internal reporting for teams. And what we love about this idea is it’s a proper SaaS. To your point before we were doing licensing of software packages, which is just a tough business model for a small team. So it’s a proper SaaS, which is great. We host it as you would imagine, and it’s actually we’re in the same space. We’re solving a very similar problem to what we initially set out to solve. 

We’re just solving it in what we think is just a cleaner way. We’re so excited. So I just feel like there’s so many great things about this business. I think the first is we’re no longer married to just Rails developers. We can sell this to anyone with a database. So we are opening our aperture so wide in terms of the kinds of companies that can come in and use our product. We have a lot more options now in how we charge. So now we can charge per seat instead of, again, selling a licensed software once it’s out of our hands, it was out of our hands. They had the source code they are supposed to pay every year, but so we can charge per seat. We are hoping further down the road to do partnerships with database companies, these cloud hosted database companies. It feels like something they always say first time founders talk about products, second time founders talk about distribution. And so the opportunities I think for distribution with this, with add-ons, with Heroku, everyone’s on Postgres cloud. There’s just a lot of opportunity there to hook into something that people are already using.  

Rob Walling:
Colleen and Erin are searching for product-market fit and getting to product-market fit is hard. I was curious to find out after they realized that their initial approach missed the mark, how did they decide their next move?  

Colleen Schnettler:
So I have had many, many customer conversations been doing nothing but customer discovery since we decided to pivot again. And it feels really good right now. It feels like I have had inbound people who have spoken to me this exact problem. Like Sally in accounting needs X, y, Z reports and I have to build them for her or I have to set up Aron job to email them to her. But then she wants something slightly different in the report. She wants a different date range or she wants to filter on a different column. And so I’m getting this pain fed to me by people are inbound finding us. So that feels really, really good. To be fair, this is a crowded field. There are several competitors in the space, but what I’m hearing from people, even at the air quotes, easiest ones to use are not easy. They are too complicated. I had someone who works for a relatively large company, tell me just the other day he said, I tried to set up Mease for my finance team. It was too confusing. He was like, you’re supposed to be able to copy queries and put them elsewhere, but no one could quite figure it out. And there’s just still a lot of friction. I think I have a vision for what I want this product to be in the end, but we’re stair stepping to that vision.  

Rob Walling:
And I imagine during these decisions are never clear, they’re never as clear as they always sound in the podcast interviews or the TechCrunch articles. I knew the whole time that I was going to build Facebook. It’s like, no, you didn’t. Let’s be honest about this. And there have to be moments for you in the past month, six weeks where you’re like, it is kind of noisy. There’s some validation you’ve just said, but also is there enough? Do we bet that you’re kind of betting the farm again on a new conclusion? Has there been a moment or moments where you’re like, this is really scary and this might be a huge mistake?  

Colleen Schnettler:
Yes. I think one of the big ones for us is we, Aaron and I come up with this idea. We’re like, this is going to be amazing. This is what it’s going to look like. This is why it’s going to be better. We’re going to have this really cool feature that no one else has. And that’s our one differentiating factor. And then we start doing competitor research and we find this company that has built literally what we just described and they have raised $15 million and we’re like, oh no, how are we going to compete with these guys who have raised $15 million? So yeah, I’ve had those moments.  

Rob Walling:
Yeah, I can imagine. And so how are you going to compete with folks who’ve raised 15 million, or not even them, but it’s a competitive space and for you, is it exciting or is it intimidating? And how are you thinking about outcompeting these folks who have a lot more money and are ahead of you?  

Colleen Schnettler:
It’s exciting. Since I stopped consulting, which was only three weeks ago, I’m just having the best time. This is amazing, right? It feels like freedom and it’s just like, wow, all of these things I have always wanted to do. I can now do them. I’m excited. Honestly, I think early days it’s going to be very, very clear positioning and just so easy to use. In my ideal world, I guess we would pick one industry and start in that industry, so that would be ideal. I haven’t honed in on what industry that will be, but I would love to be the BI tool for everyone in the environmental space or the BI tool for whomever. But yeah, I think it’s fun. I think honestly, just in these early days, it’s just about the personal touch. I am doing cold outreach. I am to literally anyone who will talk to me, and I’m hoping the early people that come in are people who need this. They’re frustrated with a problem and also they like the level of customer support that we are able to provide.  

Rob Walling:
And you’re also trying not to make, I’d say the mistake that you made earlier, which is that curse of the audience where, hey, I have hundreds or thousands of people who know me online. They like me, so when I go to pre-sell something, my friends or people who like me pay me money for this. Right? And I think you’re trying to get around that with this cold outreach.  

Colleen Schnettler:
Yes. It’s interesting because just the other day, Aaron and I were talking about pre-selling and what happened to us the first time is we pre-sold what seemed to be like it was like $5,000 of refined rails. So that’s not terrible. And I was so excited. I had never pre-sold anything in my life and I was like, this is going to work. And so I think what I learned later is I didn’t ask those people a lot of questions. I just was so happy to have their money. And I think what I learned later, actually, just when I did this other round of customer interviews is it came out that people were using it on hobby projects and they thought it was cool and they wanted to support us. But the hobby projects is again, not the kind of business we’re trying to build. And so I think one of the things I’m trying to be very careful with on these customer interviews, and if we do pre-sell, will be what are you using this at work? Is this something you really need? Is this going to solve the problem you have at work?  

Rob Walling:
It sounds to me like Colleen and Aaron are asking the right questions and not only learning from the obstacles they’ve encountered thus far, but they’re also making meaningful pivots that can potentially result in a stronger, more valuable company in the longterm. I can’t wait to hear what Colleen is doing with all her newfound freedom post consulting and to find out how much progress they’ve made building Hello Query. We’ll find out in next week’s episode.