Startups For the Rest of Us

Rob Walling:
Welcome to this episode of Startups For the Rest Of Us. I’m your host, Rob Walling, and in this episode I sit down with fan favorite Ruben Gamez. He’s the founder of Sewell and an Oracle of SaaS bootstrapping, and he and I talk through a couple of myths or misunderstandings that we see infiltrating the Bootstrapper community. Do I use that clickbait word infiltrating? Realistically, these are things that we hear enough that we realize folks are buying into ideas that could be harmful to their business or their career. One of them the thought that I will never sell my company. I am happy to just run it forever. There is a conversation around being built differently because you don’t like to market, and so you’re just going to not market and expect your business to be successful, as well as some other topics that we dive into. 

It’s a great show. It’s conversational back and forth, and Ruben and I are speaking from our experiences growing our own software companies as well as the SaaS founders that we’ve been surrounded by for 15 to 20 years at this point. Before we dive into our conversation, if you are interested in indexing across hundreds of B2B SaaS companies and you’re an accredited investor, we are raising TinySeed Fund three. There’s only a bit more room in this fund, and so if you’ve been on the fence and you’re interested in investing in early stage B2B SaaS ambitious founders that go through our world class accelerator called TinySeed, you should head to TinySeed dot com slash invest. You can read it more about our thesis there. Our minimum for the remaining portion of this fund is lower than it has been in the past, and we are seeing great results from Fund one, which has been around for about six years. So our thesis is holding so far and we would love for you to be part of it, tiny c.com/invest. And with that, let’s dive into this amazing conversation with Ruben Gomez. Ruben Reuben, ga, welcome back to the show. Hey, good to be here for your 432nd appearance on startups For the Rest Of Us. Dude, I’ve lost count. I just don’t even know.  

Ruben Gamez:
Yeah, I don’t know. Five-ish or something. Somewhere around there.  

Rob Walling:
No, I think five within the last 18 months.  

Ruben Gamez:
No,  

Rob Walling:
Not either. I’m always trolling you with that stuff. Anyways, great to have you back on the show. You’re the founder of Sewell, as many people know, and you are also founder of Bid Sketch and you’ve been doing SaaS for 16 years, I think, man, I think since oh nine. You’re like one of the bootstrap SaaS OGs and you’re also where I steal all of my good ideas.  

Ruben Gamez:
Cool. 15. I always say 15 years, but yeah, I guess it’s 16 now, huh? I  

Rob Walling:
Think it is. It’s time  

Ruben Gamez:
To oh 9 0 8, something like that. Yeah, yeah,  

Rob Walling:
It might be oh eight. Yeah. And this episode I think has come about because you and I often text about things that we see online here on podcasts see on X Twitter, and sometimes it’s like, wow, this is a great idea, Jason Cohen’s tweet on X, Y, Z, so on point. And other times we see a tweet and we’re like, wow, this is catastrophically bad, misguided so bad that we need to rant about it. And then this episode came about because there were a couple of things that are not just I think bad advice or bad ideas, but we’ve seen them kind of spreading or we hear folks saying them a lot, right? 

And so at a certain point I said, this would make a great podcast episode and we just plunked things. So I don’t know if these are quite three myths or maybe just three sentiments that we’ve heard founders say that were like, question mark, this makes no sense. So we wanted to call it out. The first one is kind of a combination. I think there are think quite a few bootstrappers and whether they’re indie hackers or they’re more the ambitious bootstrappers who want to get to a million, 5 million, 10 million a RR. There are folks who believe they will never sell. And I know I always say everyone sells and people nod their head. I mean that when I say it, everyone sells. I mean, they really do. All the examples I always throw out of like, Hey, I never thought MailChimp would sell. I never thought, I didn’t think Baremetrics would sell. 

It was just, I dunno why I never thought that. I was like, Josh is just going to run it forever. I didn’t know I was going to sell Drip. Whatever everyone sells eventually except for Basecamp, that’s probably the one that may never sell. But I guess to throw it to you, what is the danger of a bootstrap founder starting a company and let’s say this is not a little indie hacker project. This is not something, ooh, it’s a step one, step two, business, 5K, 10 K, it’s going to plateau great. I’m never going to sell that. It’s like, fine, whatever. That doesn’t matter. But what if you’re growing when you’re at a half a million or a million or 2 million a RR and you’re growing well, 20 to a hundred percent a year and it’s going well, and you’re like, well, I’m just never going to sell. I like being bootstrapped. I don’t know what I would do next. All the objections. What’s the issue that you see with that?  

Ruben Gamez:
I think there comes a point where growth slows, it either slows so much that it basically is a plateau or it just is a legit plateau, and at that point, founders go for a very long time trying to change it. They don’t feel just that contrast between when they’re growing and that feels great, super easy when things are feeling really good, growth is going well to just be like, oh yeah, we’re just kicking back. I can see this going for, of course I can see it going forever when something is growing. Amazing. Yeah, yeah, life is good. Then it slows down and that feeling just sucks. They don’t like that feeling. They work on it and then we’ve seen this so many times, then they can’t change the growth, they can’t improve that. So then they want out, they start a new thing and they figure they’re going to sell and then they find out that they can’t sell the business for very much. A lot of founders don’t understand that growth multiples on exits have a huge impact. It’s everything. There’s such a big difference between selling when things are good and when you’re like, okay, I tried everything. It’s been flat for a couple of years, I just can’t, it just kind of sucks. I want out. It’s like, okay, well now you’re going to be very disappointed with what you’re going to get. So I think that’s one of the bigger dangers in my opinion.  

Rob Walling:
And to put some ranges to that, and I was throwing these out on Twitter the other day because someone said that they were trying to get a four to five X revenue multiple an A RR multiple on their SaaS, and they didn’t get that, so they weren’t going to sell. And I chimed in just saying, Hey, that is not a default. We throw out ranges. Well, on this show maybe we say four to seven or four to six, five to seven a or multiple, but that is if you are doing, let’s say 2 million bucks a year and you’re growing at 40, 50 or more percent per year, if you do not have that, let’s say you’re flat, let’s see at 2 million and you’ve grown less than 10% say in the last year, which is effectively as flat odds are, you’re going to get a one to two XARR multiple. 

If you get an a RR multiple, they might look, people might say, well, I’m buying on profit, and then we’re talking again that four to six, five to seven, but it’s profit and most of us don’t run our businesses. It depends, right? If you’re growing fast, you don’t run it to for profit. So that’s the difference is we’re talking, let’s just throw a couple numbers at, let’s say you’re doing 2 million and you get five x six x, you get 10 12,000,001 to two x is like 2 million bucks about the revenue you’ll do this year, and two x is obviously 4 million. That is, we get these numbers in our head when they’re growing and I don’t know, I remember being calculating my net worth in my head as the MRR would tick up. Ooh, that’s 5K of MRR this month that we went up. So that’s times 12 is 60 K of a RR. 

And let’s say we sold for five x, that’s $300,000 in net worth or in business enterprise value that we’ve created. But what that leaves out is that’s only if we keep growing five KA month every month or whatever percentages, and that’s we don’t want to be curmudgeons and people who are like, you should sell. Now, I guess that’s the next question is we want to be for people to be aware of the reality of it, but they might say, so then, so should I just sell the moment I hit a million or 2 million? Should I sell then? Is that what we’re saying?  

Ruben Gamez:
I think you just have to stay ahead of it and be mindful. So if you’re going to go for five more years, 10 more years, if that’s what you see, then just be aware that businesses don’t just grow forever in the way that they’re growing, especially at the earlier stages and that plateaus are always coming. And you can calculate that. It’s just math, right? Because the more you grow, even if your churn stays the same, which typically it does, like you have 2% churn, 3%, 5%, whatever it is, that means you have more customers, more revenue coming in and you’re churning basically you need more new fresh revenue and customers to make up for the additional churn as you grow. And that makes it harder and harder to stay at the same growth rate. We’re not even talking about increasing it, just staying growing 50% or that’s hard. The more you make the harder it is.  

Rob Walling:
Absolutely. Yeah. And I did a talk on plateaus that you reviewed for me and helped me improve it from the time I did it in Europe last year until I did it here in New Orleans a couple months ago. And we are going to be pulling that video and putting it on our YouTube channel. The folks want to see it right now. They can go to microcomp.com and you can buy the videos. But I think in two, three months we’re going to have just that video up on YouTube. And one of the things I talk about in that talk was the math for calculating your plateau, which is the new MRR in a given month divided by your churn rate. So if you’re adding $10,000 of MRR each month relatively consistently, look, I know it’s not to the penny, give or take on average over the past, whatever, it’s 10 K and you have a 2% churn rate, then you divide 10,000 by 0.02 and you will plateau at 500,000 of MRR. That’s not too bad. That’s 6 million bucks. Most people aren’t adding 10 K-M-R-R-A month, and most people don’t have a 2% churn rate. That’s the challenge In the talk I gave the example of adding 5K MRR and having a three or 4% turn rate, and in which case you’ll plateau much earlier than that.  

Ruben Gamez:
Yeah. I think part of it is staying ahead knowing when that happens. And what I mean by when I say staying ahead of it is that means that you have to do new things or more of what you’re doing. If there’s a lot to be done there to grow more, you have to stay ahead of it. Both of our friends, Robert Graham, who runs, he’s the CEO of a YC company doing many, many millions of dollars. I like how he put it pretty recently when we were talking about this, he said something like the prize that you get, and it can start to feel this way, the prize that you get for pulling a rabbit out of your hat, and that’s kind of finding new growth, is that you get to pull another rabbit out of the hat,  

Rob Walling:
Which is hard.  

Ruben Gamez:
Yes, it’s  

Rob Walling:
Not, which is hard. Yeah. That’s the thing. If you have an existing marketing approach or two that are working or five like we did with Drip, none of which were these big stellar things, but each one was 10, 15% of our new trials, we had all this integrations and whatever else was going on, each of those will plateau naturally. Some of them will kind of stop working at a certain point. And then you have to think about how big is my market? How much market share can I actually get? So adding new marketing approaches as we finding that first marketing approach is hard enough, adding new ones is just like that. Or like Robert said, rabbit out of a hat. So their headwinds there. And I think what you keep saying, and you’ve said this on the podcast in the past, is getting ahead of it. How do you get ahead of it? How do you think about, well, I’ve calculated that I’m going to, let’s say I’m at a million a RR right now, given what we’re doing right now, I’m going to plateau at about 1.5, 1.6, and that is six or eight months out, so I have some time to think about it. How do you Ruben think about this with your own businesses? Because I know you’ve gone through the process with Sowell.  

Ruben Gamez:
So for me, I am always trying to experiment a little bit of our time and budget on other stuff and maybe some of that hits and shows promise, but a lot of times it just doesn’t. So it really requires a ton of energy and time to find a new channel. Just like when you did it the first time, it requires a ton of activation engine. And in fact, sometimes it’s harder than finding that first channel because the first channel that you find is probably the easier thing, the more obvious thing. And now you have to do something new. So for me, it’s really just similar process of experimenting, thinking through where there is enough. And a lot of it is just kind of being systematic and using math, and it’s not like this complicated thing to where I’m using spreadsheets or anything like that. You’re really just thinking through, I’m doing a little bit of research of how does this market work? Every market works a certain way. Where are the opportunities still in this market? Competitors that are bigger, what’s working for them, what haven’t we done? And then prioritizing those based off of some rough estimates of what we think we can do there.  

Rob Walling:
And I think the key takeaway, if someone’s listening to this, it’s not to be scared all the time and be like, oh my God, I’m going to plateau. I should sell now. I should panic. And that’s not what we’re saying. We are saying be aware that you will naturally plateau if you do not bring more to the game. I don’t know that I can think of a single SaaS app in our ecosystem that is in between let’s say one and 20 million a RR that has just continued to grow and grow and grow and grow based on something they did in the early days. It always requires some type of additional, as you said, activation energy, some zero to one energy of bringing in a new marketing approach or a new expansion or a new product, or there’s something there. And so if you’re listening to this, I mean, I remember thinking about this with Trip and one of the reasons that we sold was I was like, how far can we take this before we plateau? 

I don’t know. I mean, I could do some math on it. And I saw that and then I was like, how are we going to get past that? Plateau is coming. It wasn’t months away, but it was definitely out there. And I didn’t have a strong sense of how to do that, and I didn’t know if I had the activation energy to continue doing that. I was a little burned out and I was getting a little tired of the email space with blacklists, there are certain things that just pull on you and you’re like, how? And I kept asking myself, if I’m going to get the activation energy to bus past that, cool, I’m invested in this for another two to three years, probably should raise some funding. Frankly, at the time we were cash strapped and that was hampering growth in hiring and stuff. Or I could consider taking these offers that are coming in. And for me and Derek, Eric, that was, I’ve never regretted it, so I’ll just say it was the right decision for us. It’s not that everyone has to do that, but I made a calculated decision to take money off the table instead of putting at risk or multiple, because we did get a nice a RR multiple, and if we ran it over the top, which I say more folks do than probably should, 

That would’ve been tough. It would’ve been tough.  

Ruben Gamez:
So this is something that I’ve seen when talking over this topic, people reply, which is I’ll just run it as a profitable business for X number of years. So why didn’t you do that? What was your thinking for exiting Drip instead of just running it for a few more years and just taking the cash out of it,  

Rob Walling:
Right? Get to two, 3 million, whatever. And yeah, no, that’s a great question. So there’s a couple of things. Number one is it is so demoralizing running a flat business or running a slow growing business, it gets so boring. I know several founders, I know a lot of founders that are running or have run flat businesses and it’s so boring. Super. Yeah, it’s rough. It is. As founders, we are naturally designed to see some number go up into the right. How do you get your energy? You don’t get your energy punching a clock and showing up to keep something flat. You have to see, usually it’s MRR. If you’re running a SaaS, that’s the number we could say, well, maybe it’s your YouTube channel followers for your SaaS or your email subscription. No, you don’t care. The scorecard is MRR. So that was a big one of I would just would get bored. And I don’t know that most founders think about that.  

Ruben Gamez:
No, I like the nine to five phrase that you used there because for some reason people have a really easy time thinking about how difficult it would be to just do a nine to five just zone out and just run through the motions day in, day out. But for some reason they have a tough time equating that to, that’s exactly what happens in a flat business.  

Rob Walling:
Yep. You’re responding to support tickets, you’re shipping features, you’re making product decisions, you’re still doing the marketing, you’re doing all the sales calls, you’re doing it all. And it’s kind of for, it’s to tread water. And again, if it’s two or three or four or 5 million, it doesn’t matter. It doesn’t matter. It’s boring. And this is one of the reasons Basecamp, I don’t know if they’re growing or flat or we don’t know. We know they’re super profitable, but there is a reason that they rewrite their entire code base every four or five years because they think DHH gets bored and then they launch other products because they get bored  

Ruben Gamez:
Email products.  

Rob Walling:
Totally. And look power to them. They can do whatever they want, but realize that their business, again, Jason Fried confirmed this on stage at MicroConf, Basecamp throws off tens of millions of dollars a year in net profit. And for all intents, it’s basically Jason Fried and DHH. Those dudes are raking an 8 million, I’m sorry, 8 million, eight figures a year of net profit. So on the outside we all say, well, they’re just living the dream. They’re living the dream. And it’s like, yeah, that is cool, but they are bored with the core product.  

Ruben Gamez:
Even them pulling in all that cash, they’re still looking for other stuff.  

Rob Walling:
So that was one big thing that I think founders should be aware of is flat businesses are not only boring, they’re demoralizing too. Both of those things. The other thing was I looked at the numbers and I thought, no matter how profitable I make this, let’s say I get to 3 million and I’m making, what do we think? I could make a million dollars a year, sure, make a million dollars a year, but if I can sell this thing now for 10 million and I get long-term cap gains on it instead of income tax and I draw 10 years and at 3 million a year, if I’m growing and I am not selling that thing for 10 million at 3 million a year, I’m going to get 15, 20, 20 5 million. Basically you’re going to get a lot of cash upfront in a way that accelerates all that earnings and then allows you to do your next thing or to do whatever you want frankly for the rest of your life rather than, because this is the other thing we hear right, is why would I sell it for two x or three x? Why would I sell it for such a low multiple? I should just run it and pull out the profit. We often hear that, why wouldn’t you do that?  

Ruben Gamez:
Even if it’s three x, which is a lower multiple for business, that means it’s not growing that fast usually, or there’s some risk or whatever. I think people are thinking that they’re going to run it for three years and they get that cash in three years. It’s not three years not even close because we’re talking about profit, whatever’s left over in the business that if you make it super profitable, that probably means you’re the one grinding doing most of the work during that time. So it’s a tougher amount of time, tougher number of years. And then besides that, whatever the profit, even if it’s really high, you’re taxed more on it usually. So it just takes longer. Plus as you go along, it’s harder and harder to keep up with the growth we just talked about. All these things come together into it being a longer period of time than people think and it being a harder sort of slog during that time and just they’re having significant risk versus getting the cash up front, freeing you up to work and do on whatever you want to do next.  

Rob Walling:
And I’ve known a few founders who have said, Hey, I’m going to get this business. It’s growing fast and I think I can get it to 3 million a RR in that range, let’s say two to four. But some specific folks have said, Hey, I want to get to 3 million and then I want to sell and I want to sell for this really good multiple and I want to be growing like crazy. And I remember being like, why not keep running it? Why don’t you keep running, running it? And he said, because at that point I have generational wealth and why would I keep pushing it? And he said, and I see some headwinds. And he had done the analysis and did he know for sure, of course not hard decisions, incomplete information, but he walked away with a really nice eight figure payday. And so if the business five Xs or 10 Xs in the next couple years, do you regret it? I don’t. Drip has more than 10 XD since we sold it. In fact it 10 XD within probably two years, maybe three. And there were a bunch of factors at play there. There’s a bunch of venture capitally invested in it. I mean, we grew the team from 10 to 125 by the time I left. There’s a lot of things, but did I ever think to myself, man, I really wish I hadn’t sold and I still owned it. Not once. Yeah, not once,  

Ruben Gamez:
Right.  

Rob Walling:
Alright, let’s move on to the second topic. It kind of ties in, but it’s crazy how often I’m seeing this quote or this sentiment that people are built differently, we’re wired differently. And it specifically applies to, it’s usually an excuse of you and I are like, do the hard things, do what it takes to succeed. And that usually means launching something, focusing on it, figuring out marketing approaches, whatever the approach that we talk about on this podcast. But there are other schools of thought that it’s like, well, that doesn’t fit with my personality. I don’t know how to do outbound sales or how to do X, Y, Z marketing or sales approach. I don’t know how to do that. Or it’s outside my comfort zone. I’ve seen all these phrases, so I’m not going to do that. I’m going to do what I know. I know content marketing, so I’m going to do that. And specifically with an example like that, it’s like shouldn’t the first question be where are my customers and what’s going to be the most successful rather than my comfort zone? So that’s a little thing there, but this idea that we’re built different and there are just certain people who I don’t know, they’re just wired to build 27 apps or you sent me a tweet the other day, someone’s going to build, said they build 60 apps, 60,  

Ruben Gamez:
60  

Rob Walling:
Apps that each going to make $500 a month. They want 30 K of above the recurring revenue. And I was like, oh my lord, good luck. The logistics of just managing the domains in the payment accounts alone. But if you and I chimed in on that, they’d probably say, well, I’m just bill different and I’m not going to put all my eggs in one basket or whatever. So tell me, am I summarizing it well, and what are your thoughts on this? What am I missing on this topic of being built different?  

Ruben Gamez:
Yeah. I usually just see it as an excuse for people to sort of do things that they’re comfortable with and not the uncomfortable stuff is really mostly what I see it come down to because where’s the growth in that? Right? This is a very static sort of self-identity type of thing. So even things that they say that they’re good at, how did you get good at those things? What if before you got good at those, you just stuck with what you knew and didn’t, right? And you’re like, oh, well, I’m just going to stick with the things that I know and I’m good at. You would never have gotten good at those other things, the things that you, you’re great at now. So we’re always learning new things, always having to figure stuff out and things get difficult and it’s not always easy, but that’s how you get good at stuff or that’s how you learn. That’s how you grow as a person. You find what things you enjoy, what things you’d rather have other people do for you or whatever. However you want to manage all that. It’s like without experimenting, it really is just this mindset that’s the opposite of a sort of experimentation sort of mindset. It’s tough to grow that way.  

Rob Walling:
Yeah, it is. The fixed versus growth mindset is a piece of it. Although that usually is I believe that I can change versus I’m willing to do things that are uncomfortable that make me change. But I’ve equated this to folks and I’ve stopped chiming in on this on X Twitter because I just get tired of saying the same thing over and over. But I’ve equated it to saying, because I would say, Hey, don’t launch 20 things and see what sticks. You’ve heard me rant about them on the podcast that I won’t say again why I believe that, but I’ll chime in with my reasoning of like, Hey, here’s why I think that’s a bad idea. And someone will say, well, I’m just built differently, but this fits my personality. And I chimed in one time and I said, it fits my personality not working out and eating right to lose weight. What fits my personality is eating ice cream. I love eating ice cream. It’s my favorite dessert actually. And so that fits my personality. The fallacy is like, but that doesn’t have anything to do. My personality or my desire doesn’t have anything to do with what gets results.  

Ruben Gamez:
Playing video games is really fun for me. And easy comes easy. It does come easy. It just comes easy to you. It does. I’m built for it, but that’s not going to help me get customers. It really comes down to where the people that I think are going make up our ideal customer, where can I find them and what type of marketing activities will best work to get distribution and get customers for a product? And I could say I like doing podcasts, I like talking, so I’m going to do podcasts to get customers, but that’s probably for most SaaS, that is not an effective channel. That’s usually not good. And I don’t want to say that it doesn’t matter at all what you’re good at because you can look at a market and a customer type and say, well, these two or three things seem to be effective in this market or seem like there would be good ways to reach these customers. And if one of those works best with the things I like, then of course I’m going to prioritize that. So use your strengths and connections and everything else. Doesn’t mean you don’t look at that, but first you work backwards from where do I get customers? And then if there’s some overlap with the things that you’re good at, then great use that.  

Rob Walling:
That’s where it is. And if I was really good at building a personal brand and building audiences and going on podcasts, I wouldn’t start a SaaS. I would start an info product and course business. That’s what you do. And guess what? That’s actually what I do. I don’t run a SaaS anymore because I enjoy what I do. Audience building and putting out podcasts, I like that better. And so I was under no illusion after building a few SaaS companies that I wanted to keep grinding on, that type of stuff. I just didn’t enjoy it as much as writing books and being in a personal brand influencer, whatever it is, someone wants to call me, I enjoy that more. It’s just more fun for me, maybe because I’m wired differently. But here’s the thing, but I was willing to grind and do whatever it took to grow the businesses back in the day. Right? I was willing to,  

Ruben Gamez:
Yeah, I remember, yes. Remember when we were doing Facebook ads? You were doing like hit tail, remember?  

Rob Walling:
Oh my God,  

Ruben Gamez:
The grind.  

Rob Walling:
Yes, I do. I remember.  

Ruben Gamez:
Yeah, man.  

Rob Walling:
Yes. It’s crazy. Multiple days a week in that ad thing, getting images generated.  

Ruben Gamez:
It’s not the most exciting or most fun thing, but no did the work  

Rob Walling:
Exactly. And I did it because I wanted to be a successful entrepreneur. I think that folks who are builders, product people, developers, makers, I don’t think you’re an entrepreneur until you take on the full role, a full scope of running a business. And look, if you have a cajillion dollars in funding, can you hire someone to do sales? I’m like, maybe. But if you don’t and you’re bootstrapping, you have to do it all. And I think if you have kind of a hobby project that maybe you get lucky and takes off if you’re not someone who’s willing to really look at what are the marketing and sales approaches that it takes to grow this thing, and someone asked you, I won’t say their name on X Twitter, but they said to you, they said, earthling works. I’m genuinely intrigued. Do you think you’re wired differently to have the desire or patience to? And they said for that, but basically they were saying, because you were suggesting some marketing approaches, you should do this, this, that, and this. Do what it takes, not what you want to do. So this person was saying, do you think you’re wired differently, Ruben, or that you’re just more disciplined? What do you say to that?  

Ruben Gamez:
I don’t know. I feel like for a lot of this stuff, I don’t think in those terms. I feel like people spend too much time thinking about whether something’s difficult, whether they can do it, whether I spend more time just trying to figure, it’s not really a thing, a way that I’m built or anything like this. It’s just where I put my focus and attention. If my focus and attention is on how difficult something is, how big of an obstacle I see, then yeah, it’s going to feel really hard and that doesn’t feel good. How am I going to bring out the energy in me and get started? If that’s the case, I’m just looking at, okay, what’s the first thing? What’s the first step? What’s the next thing that I need to do? And that’s where I put my time and attention focus on. So it’s almost like just not overthinking it, not spending a lot of time in my head about it.  

Rob Walling:
If I really simplify it, I think that you value success more than you value your constant carefree enjoyment of every minute growing your business. You value success more than wanting to have fun eight hours a day, five, six days a week, whatever it is that you’re working on. And I think some other people think, I mean maybe this is a controversial take, maybe they think, no, this should be fun all the time. I shouldn’t do anything I don’t want to do. Sorry, I laugh because how many things have you done in your professional career as an entrepreneur that you don’t want to do? I’ve done so many things and I believe that is one of the reasons why I’m successful. There’s just no chance that I would be who I am or have the success I’ve had without the willingness to do that.  

Ruben Gamez:
Yes, but there is a fun to a lot of these things, even the grindings to some of it, right? I don’t know. Can you go without finding some enjoyment to this? It’s kind of like, or framing it in a way. I think a lot of it really just comes down to framing and sure, I have some stuff that I have to do with the state of Delaware today. I’m doing that stuff yet I’m not thinking about like, oh, this is super fun, or Oh, this is terrible, whatever. I know it’s not something that I would choose to do or enjoy, but it doesn’t mean business is or that it sucks or that my day sucks. I still really enjoy what I’m doing and this is just part of what I need to do to move forward and make progress. That’s it.  

Rob Walling:
You have to enjoy some of it. You have to enjoy maybe the majority who knows what percentage it is, but you have to enjoy a significant amount or you’ll burn out. You will. So you have to find that balance. But I am under no illusion and I don’t know, do I know a single entrepreneur who didn’t do anything grindy that they didn’t want to do and got success and they got really, really lucky that one time. So if you want to bet your entrepreneurial success on getting lucky that way, you’re the one in a thousand. I mean, of course it happens. It’s just very, very, very rare. It’s way more rare than people, I guess it’s a little bit of the lottery ticket mentality of like, Hey, you can become a hundred million sent a millionaire without working if you get really, really lucky.  

Ruben Gamez:
Yeah, no, it’s a lot like that. I was literally thinking about this with a lot of that goes around with especially the 60 apps type mentality, right? It’s like going to the convenience store and getting a bunch of lottery tickets and scratching them off and hoping that one of them is a big winner  

Rob Walling:
And I like things that are repeatable and that I think give me a higher chance of success than a lottery ticket over many years. The last topic I kind of want to transition this to, but we’ve already started talking a little bit about it, is it’s kind of around getting really lucky. It’s all just luck. No one knows what they’re doing and it ties in with people having excuses of why their app didn’t work, why their business doesn’t work. And frankly, this got sparked into my mind. It’s something we see frequently people talking about, but the excuse to be specifically is I’ve now seen several founders start effectively the same business, the same SaaS serving the same market with same ideas, and one of them was incredibly successful and sold for tens of millions of dollars, completely bootstrapped and walked away with generational wealth and other folks plateau at 10 KA month and we’ve seen this multiple times. 

You and I, again, we’re not going to name names, but we see this in it’s multiple apps across different markets, across things that we see where it’s like someone’s doing two 3 million in a market and someone else is doing five KA month and that five KA month is like, yeah, this market’s just too hard. SaaS stuff doesn’t work anymore. SEO doesn’t work. AdWords don’t work all the market. It’s different in 2025. It’s a list of excuses frankly. And you and I were texting back and forth as we often do, and we were saying, isn’t it stark that these two products starting at relatively the same timeframe, had such different outcomes and people don’t look at that often because they want to blame things and to quote, you said people love excuses. What do you think? I mean aside from that just being very poignant and I was like, yeah, I just screenshotted that and put it in this outline. I was like, we have to talk about this. Expand on your thinking there.  

Ruben Gamez:
It actually happens often where you have the same apps being launched at the same time and even if it’s a completely new category, how often do we see that? All the time. And a lot of times you’ll see most of the people just have really just the amount of success that they have is just very small. They shut down the apps and they never really get anywhere. And there are people who make it work, not just that. But then we also see people who make one thing work after another. Like Jason Cohen, right? He did four, has done four startups in the millions of dollars. The latest won billions, and if it’s all luck, he must be super, the luckiest person ever, right?  

Rob Walling:
Really lucky. Yes. David Cancel has had five exits for cash heat, and Shaw has had, I don’t know, four successful SaaS companies. We could name a lot of people. It’s not luck.  

Ruben Gamez:
No,  

Rob Walling:
It’s not luck. There’s some luck involved in all of it, but it’s  

Ruben Gamez:
Right, not as much as, yeah, I think it makes people, some people feel better about when they don’t have success with what they’re doing because then if it’s luck, it’s not their fault. And I think this is their framing. It doesn’t necessarily mean that it is their fault unless they’re off playing video games or doing something else or avoiding the things that work, a lot of the stuff that we talked about to make progress. But it makes it so that they don’t have to assume responsibility for any of it, and they don’t have to feel bad.  

Rob Walling:
They don’t have to assume responsibility and they don’t have to do anything they don’t want to do because if it’s luck, I should just build it and throw it out there and I shouldn’t grind and I shouldn’t do. Referring back to the past 25 minutes of this show of like, no, you probably have to grind because luck is usually a very small component of the success.  

Ruben Gamez:
Sure, there’s always some element of luck, but even that you can increase, right? You can create more luck by creating more opportunities, more of the right type of opportunities. And it’s not just like any activity. It’s the right type of activity that will help create some additional luck. But if you are building a product and you never show it to anyone, you never talk to anybody in related industry, you’re just going to have less luck than someone who’s out there promoting the product, talking about it, showing it to the right people and doing a lot of work around customers and potential partners. And that person is going to have not just better results just straight up direct from the activities that they’re doing, but also they’re just going to have more luck that’s going to help them along.  

Rob Walling:
Yeah, there’s a quote, I think it’s attributed to Thomas Jefferson. I don’t know if he said it or not, but it’s like the harder I work, the luckier I get. Luck is when preparation meets opportunity. It’s always something there. And even I say on this podcast, doing things in public creates opportunity or creates luck to be honest. Doing things in public publishing, blog posts and launching SaaS, and as you’re saying, you can’t just do any random thing. This is maybe where that my sentence kind of breaks down is you can’t, because I guess someone could then say, well, I launched my SaaS and my doing things in public is posting to Twitter. And it’s like, well, that alright, maybe that doesn’t work. But if you want to see examples, if folks want to hear examples of people who stories of them kind of grinding and doing stuff. 

Number one, you do a lot of marketing that is not social media. In fact, you don’t do any social media marketing for Sewell, right? It’s all these other channels and we can probably dive into ’em someday, but I interviewed Kevin Wag, staff of Spector, I believe it was the home improvement or no, it was SaaS for home inspectors, I’m sorry. And how he and his brother bootstrapped and sold half the company for at a 90 million valuation. Listening to that episode, I was struck actually, it was such a good story and there was so much of the, we just did what it took. We didn’t care, and I don’t mean working 90 hour weeks. Some people will be like, oh, so you just got to grind. You just got to be a Silicon Valley bear. I say, no, no, no, no, no. That’s not what I mean. I mean working on things that are hard or maybe you don’t want to do. Or he did get up at 6:00 AM on a Sunday to do a demo to close a deal, and they did a bunch of Facebook group stuff, which is not the funnest thing,  

Ruben Gamez:
And consistently over a period of time I heard that it’s great if you listen to that and you hear about all of the stuff that he did for as long as he did. Then it’s like, oh, okay. I can see it sort of come together. And it also is probably offput to some people who think about the amount of work required to get to that point.  

Rob Walling:
It’s a lot. That was episode 776 if folks want to check it out, two episodes before that was a Noah Tucker who runs Social Snowball that io, the title of that episode was how a non-technical founder bootstrapped to millions in revenue. His story was very similar. He’s a single non-technical founder. He now runs a team of 24. It’s completely bootstrapped and is wildly successful. And everything you heard him talk about was doing what it took, not what he wanted to do, and he does enjoy it day to day. This is the thing I want to drive home. Again, it’s not that these guys hated their life the whole time. This is not it. This is not delayed gratification, grinding for years to get there, man. I know these guys now they could do it again. Either of ’em could do it again because they don’t rely on luck. 

Luck is just a small piece of the puzzle. Just like you had bid sketch, which you still run Sewell, and if you were like, I’m going to start another SaaS, right? Well, first I’d tell you, you know what? Maybe exit Sewell first so you’re not running three companies. That would be my first. That’s not going to happen, but, but if a few years from now, if you were to be like, I’m going to start another one, it’s like, well, that’s going to be great and it’s going to succeed or have a high likelihood of success because you’ve learned so much and haven’t relied on luck.  

Ruben Gamez:
Yeah, there are no guarantees of course, but there are some people that do the work and if they’re starting something new, it would not be a problem for me to put my money on them. And yeah, I wouldn’t expect guarantee that that’s going to work, but chances are pretty damn good.  

Rob Walling:
Rubin, thanks so much for joining me once again on Startups. For the Rest Of Us, if folks want to use the best electronic signature app on the internet, it’s at sewell.com and if they want to follow you on X Twitter, you are at Earthling Works. Thanks again for coming on.  

Ruben Gamez:
Thanks for the invite.  

Rob Walling:
Thanks again to Ruben for coming on the show. And after we hit stop on the record button, we came up with two or three more myths right at the end, and so I put it into a new outline and maybe I can convince Reuben to come back on the show here in a month or two, and we can keep this type of format going. If you enjoyed the conversation of this episode in particular, because it’s a little different than a lot of startups For the Rest Of Us, right? It’s a conversation between two grizzled, jaded SaaS founders talking through thoughts and ideas that we agree with and don’t agree with. And if you felt this was interesting, you can at mention us on X Twitter. I’m at Rob Walling and Ruben is at Earthling Works. Thank you for listening this week and every week. This is Rob Walling signing off from episode 780.

Rob Walling:
You’re listening to Startup. For the Rest Of Us, I’m Rob Walling and in this week’s episode I talk with Mark Thomas about 10 myths that most seven Figure SaaS founders believe, and this is based on a LinkedIn post he pushed live a couple of weeks ago. If you don’t know of Mark Thomas, he has spoken at MicroConf Europe and he’ll be speaking again this year in Istanbul, Turkey in just a few months. Mark served as head of Growth for both Powered by Search and Podia and he’s now doing growth consulting and he is one of our founding coaches of SaaS Institute, which is our premium coaching program. You can head to SaaS institute.com if you are interested in learning more about that. Before we dive in to this episode, I want to tell you a little more about MicroConf Europe in Istanbul in just a few months.
I’m really excited for it. It’s going to be in late September. You can head to MicroConf europe.com to buy a ticket. As of the time I’m recording this, which is about two weeks before this episode goes live, we are already 65% sold out. All the early bird tickets have sold out and we have sold out all of our events for the past few years. So if you want to come to this event, you really do want to get a ticket. Now we have speakers like Mark Thomas who you’re about to hear from. Michelle Hanson, founder of Geo Coio and author of Deploy Empathy, and James Mooring, founder of Talti who was on the show, I dunno, in the past six months. It’s a great crew that’s forming. We’re going to have another couple speakers as well and I’d love to see there September 28th through the 30th in Istanbul. You can head to MicroConf europe.com if you are interested. And with that, let’s dive into my conversation with Mark. Mark Thomas,

Marc Thomas :
Welcome to Startups For the Rest Of Us. Finally here. Finally here. It’s been a long time.

Rob Walling:
It feels like you’ve already been on the show and I’m kind of surprised you haven’t. So glad you took the time. Finally, after all my phone calls, my emails, my dms, it’s been

Marc Thomas :
Incredible

Rob Walling:
Into the abyss. I can’t even believe I finally had to go through Tracy, it’s SaaS Institute to get you on here.

Marc Thomas :
Yeah, the weight of correspondence has just been too much.

Rob Walling:
It’s a big deal.

Marc Thomas :
Yeah,

Rob Walling:
You have these, what I’m calling 10 myths, that seven figure SaaS founders believe these because I’ll also be 10 traps that pitfalls that seven and eight figure SaaS founders falling to and you did a really good post on LinkedIn about it and we’ll of course link that up in the show notes. Give us some background before we start walking through these of where you came up with ’em. Anything else you want to add before we dive in?

Marc Thomas :
Yeah, so I’ve done a lot of consultancy work but also worked in a number of different contexts in SaaS in general. I’ve been a founder. I actually was not great at marketing as a founder. We could talk about that in a bit. And then I learned marketing and now I do it my job and I’ve been in agency contacts working with big SaaS companies, but pretty much every time I work with a company I hear one of these things that we’re going to talk about and every time I think, I don’t know if that’s true, I disagree or I think there’s a different way and I’ve always try to gently guide people to the other path because ultimately I do this full time, but founders are thinking about a million different things. So yeah, I thought I put these down so that I got something to point people to next time they say one. So yeah,

Rob Walling:
I love lists like this too because listicles, they got a bad rap because of all the buzzfeeds and whatever, really diving into ’em 10, 15 years ago, I actually like listicles or just lists of things as long as they’re accurate and they deliver on the promise and they’re not bullshit, they’re not just made up fluffy really this could have been an email. It’s like this whole thing of no, these 10 I think are actually really interesting. Now, I don’t think you and I are in a hundred percent alignment on all of them, but that’s going to make for interesting radio and

Marc Thomas :
That’s what a rubbish world it would be if we were.

Rob Walling:
Yes, mark everything. I’m a Syco fan. Everything you’ve said in here is 100% my experience and that’s the other beauty is you and I coming onto the show, it’s like what is my experience? Also as a founder, I’m invested in 200 something startups and you’ve done probably more, certainly more in-depth marketing work with more startups than I have. I flit on the outskirts and I have high level conversations and I’m like, this is how I would approach it. And then I step away and for whatever my founders, they think I’m like sipping margaritas on a beach somewhere, but I’m actually recording fun podcasts like this. But you have been in the trenches certainly in knee deep in more startups than I have, so that’s where different perspectives come in.

Marc Thomas :
Yeah, hopefully.

Rob Walling:
Alright, so let’s dive in. So Mark Thomas on LinkedIn, if you are not following him, you should look in the show notes for that link and your post says, stuff I’ve heard from working with founders at SaaS companies between one and 10 million ARR and why they’re wrong. Number one is I’m not good at marketing.

Marc Thomas :
Ding, ding, ding. It’s the one that every founder says at one point I’m not good at marketing. I literally just said it, I wasn’t good at marketing. Right.
And the other version of this is that they say they’re not good at sales or that they find it icky or something like that and every time, I just think, hang on a minute, you have built a company that got to a million dollars at least in revenue, maybe higher. How did that happen? Did it just magic? It didn’t. Just magic. I’ve worked at dozens of teams at this stage and the founders, they’re the best marketers. They know the company, they know the client, they know the customer, they know how everything works, they know what messages land broadly. Maybe it’s not totally dialed in, but they’re incredible marketers who maybe don’t have the technical skillset of a marketer and I think it’s just such a limited belief and it makes founders often make poor choices about team structure and waste a lot of money.

Rob Walling:
I think it’s one thing to be honest with yourself, to assess yourself in certain areas of how good am I at operations versus product versus development, marketing, sales, whatever, and have a realistic, not overly narcissistic view of I’m a 10 10 on all those things, but this is one that I’ve heard probably more than I should specifically for companies that are doing seven figures, there are certainly we back founders that are doing 2,005,000 a month and some of them say, I’m not good at marketing, and we’re like, because you’ve never done it, you really just don’t know how you’ve scratch and clot and that’s legit. But if you’ve made it to seven figures, odds are something’s working. Something’s working.

Marc Thomas :
Yeah, for sure. You might not know how to run a paid ads account like newsflash. A lot of marketers don’t know how to do that either. I had a co-founder at my company who was a salesperson, he’d made his whole career in sales and recruitment and kind of selling that that’s a hard world to be in, and so I told myself, Hey, next to that guy, I’m like, I don’t know how to do sales. Same thing with marketing really. They’re pretty adjacent. And then I left the company and I went into agency world where suddenly months later I was selling effectively a hundred thousand dollars deals. It’s just a switch that you can flick and say, Hey, I’m maybe not technically gifted at this, but I could be really good at it and I’m going to do it because I’m a founder and I’m going to work it out. And that’s the founder mindset.

Rob Walling:
Yeah, that’s what I like about that is as a founder, even if you think, Hey, I’m not good at this, it’s usually, but I can be, but I’ll figure it

Marc Thomas :
Out. Yeah, that’s it. That’s

Rob Walling:
The thing. It’s like what do you need to figure out to grow this business? Sometimes it’s sales, sometimes it’s marketing, sometimes it’s hiring. There’s all these different things. You’ll figure it out even if it’s true that maybe today you aren’t technically as good at marketing as the person next to you probably doing just a fine job. I remember this after we sold Drip, we sold it to lead pages and they had a 40 person marketing team and there were marketers on that team, there were managers reporting to managers, big team, and they were really good because Clay, the CEO was a marketer by training and so he knew how to hire folks and I remember being intimidated and being like, I don’t know, and they’re like, bro, you grew this to, you bootstrapped this thing to millions in a RR. You know something about something. And I was always a little bit, intimidated is not the right word, but it was a little bit like I’m genuinely not as good as you guys, but it wasn’t that I wasn’t good, it’s just that wasn’t my sole focus. It was only something I did 20% of my time
With that. Let’s dive into number two quote. This is a founder saying this, we really need to get top of funnel working if we’re going to scale.

Marc Thomas :
Yeah. Oh my gosh, this really, really might be true sometimes, but here’s the thing, if you get to 1,000,010 million a r, there is a huge amount, I would say 90% of the time of waste in your lifecycle basically monetized usage. Let’s say you’ve got a thousand users and you get to 1 million a r, firstly, good for you. Secondly, you’ve probably got a small portion who are paying you the amount that they should be paying you and within the rest of that there is a captive audience who’ve already said somehow they have the problem that your product solves, but you haven’t yet found a way to get them to pay you. Now, they should be paying you for something if they’re using your product, if they are taking up expense basically on your company, you should find a way to make them profitable or at least pushing towards profitability.
And it’s a huge opportunity if you’ve got those thousand people and those 10% are paying you to actually make that real big amount of revenue. What would happen if instead of thinking about how much you’re going to have to spend to get three, four times that you simply said, I’m going to spend a third of what I might have spent to get to that four times number and I am going to work out how to extract as much value as I can without being an evil capitalist from these people as much as makes sense for your business and their business. It would be significant.

Rob Walling:
And this is one of the reasons why in the TinySeed accelerator we have playbooks, we have seven or eight different playbooks we walk through and our first one is funnels. And the reason we do that is we want to set some rules of thumb about what are the ranges of web visitor to trial or trial to paid or activation percentages, what are good decent churn numbers, what are good outbound conversion rates and calls to close and all this stuff? And it’s not that there is a one size fits all, but there are ranges if yes for credit card upfront versus not. It’s going to be different numbers and the way that I think this one of we really need to get top of funnel working if you’re going to scale is that’s true. That’s the lowest hanging fruit. If you’ve already optimized most of the rest of your funnel and most companies at 1 million have not, now by the time you get to 10 million, still a lot, but if you’ve brought in a knowledgeable marketer or you’ve learned marketing by that point, someone should have been working on your whole trial to paid or first touch to retention and expansion funnel, but it’s kind of boring grindy work and it’s more sexy and interesting to just drive more, you know what I mean?
It’s that vanity of like, but look, unique visitors to the website went up or whatever. But realistically, this is why I’m such a believer in kind of rules of thumb around a funnel. I can look at a SaaS funnel today and if you tell me credit card or not free trial or not freemium or not or it’s high touch or low touch, I’m sure you can do this too, where I just look at all the numbers and I’m, I point to one of them and I’m like, that’s your bottleneck, that’s your bottle. Well, how do I do that? It’s not magic that I’ve seen a bunch of these funnels and it’s just these rules of thumb in my head, right?

Marc Thomas :
Yeah, they’re all different, but I worked at a company once and basically they were at the upper end of this bracket up towards 10 million. I purely worked on lifecycle stuff with them, basically sequences like annual upgrade sequences, trial reactivation sequences, things like that. We added almost a million dollars of revenue in a year just through that right now. That’s wild and that’s possible for most businesses I think. I mean it’s basically what I work on these days is lifecycle stuff and just finding these opportunities.

Rob Walling:
It’s frequently low hanging fruit. The 80 20 of those is not, it’s not months and months of work. It’s like let’s get something in here, let’s get an email or two that does this and we can optimize it later depending on volume, but getting something in, let’s look at number three quote. What if we made our affiliate terms X percent for recurring revenue for the lifetime of a customer? So if I have an affiliate program and I’m a SaaS founder, the kind of myth or pitfall here is we’ve given away 10, 20, 30%, whatever it is for the lifetime of our customer. What’s the problem there?

Marc Thomas :
Well, I’ve got to say I was pretty new to affiliate marketing. It’s not something I’ve ever really thought about before, but I have now worked on a number of affiliate programs for SaaS companies in this stage, and when you download that CSV out of the affiliate platform and you look at the number of new sales that happen over time, what you tend to see, and this isn’t always true obviously, but what you tend to see is that the number of new sales actually drops over time, but the amount that you are paying out does not. In some cases it even grows the amount that you are paying out because if you’ve got expansion revenue working, you’re still paying for the same percentage for somebody who wrote a terrible little blog post in 2018, got you one customer and now they have been taking 30% of the lifetime of that customer even after you worked hard to expand them or grow the whole account.
Now firstly, that feels almost criminal to me, but secondly, stop doing it. It is crushing your profitability every month that you continue to pay out on that. Frankly, pipe dream of a promise to continue paying them forever is a month where you are making your business less profitable. Again, recently I worked on one of these and I found on day one of looking at the affiliate program, really $20,000 of revenue just sat there that was getting paid out, and it blew my mind in the sense that like, oh, this person, what would they do with 20,000 extra dollars right now if they had that today, would that make that runway for a month maybe? Yeah, maybe it might for some people or could they invest that in a channel that really works for them? Well, yeah, maybe and then they wouldn’t have to pay that. Plus it compounds for the life of the customer. It’s not just 20,000 a day, it’s maybe 20, $30,000 a year or whatever, and that’s a huge gain for some people, especially when you’re concerned with runway at the bottom end of this revenue bracket. More than the top probably.

Rob Walling:
Yeah, the least profitable bootstrap SaaS company that I know at scale is heavy, heavy affiliate stuff. And when I think of SaaS companies at scale, their net profit is usually between 30 and 50%. That’s what you can get to, and this company does 10% net profit because the affiliates are taking 30 or 40 or whatever the number is, lifetime. So this is one that I wholeheartedly agree. Now, I think if you are going to go heavily into an affiliate program and there is some keystone affiliate that you want to land, and usually these keystone affiliates have these big audiences and they want advisory shares as well. That’s kind of a dirty little secret. No one ever discloses, but yeah, no, this,

Marc Thomas :
I’ve never come across that.

Rob Walling:
Yeah, it’s big names. They don’t disclose. I don’t know if it’s an FTC violation or not, but whatever. Now maybe they’ll negotiate and you’re just like, I just have to do this. But once that affiliate falls, then you can get a bunch of others and the other ones you cap it 12 months, 18 months, 24 months, somewhere in there, usually 12 to 18 is what I recommend. I’ve had some TinySeed companies do affiliate programs and one of them was negotiating really hard and eventually said, well, we can give you two years. That’s a long time. Even two years is a long time. And the reason you talked about it how over time the number of new customers they send you goes down. That’s because it’s audience. Audience doesn’t grow at the pace. This is the whole reason why I often say don’t grow an audience. If you want to build a SaaS, grow an audience. If you want to do books and courses and sell events and do all the stuff I do, but if you’re going to do a SaaS, there’s so many better ways to spend your time, so many better marketing approaches than audience building.

Marc Thomas :
One thing finally, I’ll say on this one is that one worry that people have about cutting these things, if they’ve already done them, is that the affiliates will get really angry and try and sue them. Maybe I spoke to a person who runs an affiliate platform about this and they said, that’s never happened to anyone that I’ve ever heard of. The second thing is I actually did this. I cut one of these recurring commission things, just like I said, one month notice, that’s it After this, it’s just no more commission on anything older than 12 months. We actually saw an increase in referrals after that because people were like, flip, I haven’t been driving any business. I’m not getting any new commissions. I need that. I’m going to drive some commission. And we actually saw massive growth in the program after that. So it doesn’t have to be doomsday for your affiliate program to cut this stuff.

Rob Walling:
Yeah, I would agree. Number four, quote, we should build a marketing team so we can focus on product ops, finance, whatever. So what’s the issue with this?

Marc Thomas :
1 million feels like a lot of money because it’s a big mental kind of anchor for a lot of people, but even at 10 million, it’s not that big a business. It’s a nice business for sure. You should be proud of that, but the goal should be to grow out of that bracket as quickly as you can. In my experience, people, if they stall, it tends to be really between those numbers, one in 10 million revenue, try and get away from that stall by outpacing it. The reason that I think that you shouldn’t think too much about your marketing team at this point is because you’re going to make the wrong hires. You’re going to lose touch with your customer, you’re going to slow yourself down. You’re going to burn a lot of money. Let’s say you hire a VP of marketing at 1 million. Firstly, there’s no one to manage, so you don’t need a vp, but you need someone who’s senior enough to build a strategy and then junior enough to actually get it done to a high quality. Those people are hard to find and you’re probably hire the wrong person and they’re going to take a long time to ramp up. You’re going to pay ’em, they’re going to not work out, and then you’re going to have to let ’em go and start all over again. Anyway, so my advice, do the marketing yourself for as long as you can, hire consultants to fill in the gaps and help you scale channels that you already know are going to work and basically find the opportunities that maybe you haven’t have to hire them.

Rob Walling:
Alright, so this one I mostly agree with you on, and the thing that I see with TinySeed and beyond TinySeed founders is oftentimes it’s a couple developers and they want to hire marketing by the time they’re doing 20 KA month. And I’m like, no, no, no, we can’t do this. And I have this list of, we have dozens of TinySeed companies that are doing seven or eight figures in a RR and almost everyone, and I think maybe everyone, the founders did the marketing, sales and product into seven figures. That’s it.
And I believe it’s everyone, but maybe there’s one or two that didn’t, but whatever it is, it’s 90 something percent. And this can be challenging for a developer to hear of like, but I don’t want to do the mark. Can’t I just hire someone for that? Right. There’s a whole section of my book that says, can’t I just hire someone for that? It’s in the marketing channel. I hear this so much, but I do think that when you get to about a million or two, it depends on a bunch of stuff, the type of business and all this stuff, I think this is when a founder can think about handing off one of those three marketing, sales or product. Now it’s not delegating, abdicating, handing the complete thing, but it’s bringing someone in who is more senior and can do strategy rather than just piecemealing things out.
And I’m still the bottleneck. Yeah, I think it can, I’ve seen that work. I guess I’ll put it that way. I’ve seen that work enough that I’m like, this is a strategy. Now don’t hire a whole team. I’m not talking about hiring four or five people, but I’m talking about you now. If you’ve been doing marketing, sales or product for this long, you kind of know what’s happening, what’s working, what’s not, probably what you’re going to try next. Probably what’s in not autopilot, but is in maintenance mode of like, oh, we’re just doing more SEO every month. Bringing someone in who’s a little bit higher level and not just a task level thinker but can actually do project or owner level thinking is where I start to think about that between that one and 2 million ish mark.

Marc Thomas :
Totally.

Rob Walling:
I love it. Alright, number five, quote. We’ve done well with one customer type. We need to find a new market to grow into. Yeah, this is one, this one, let’s launch a second product. We talked a lot on this. I was like, Hey, we’re capping out. Yeah, let’s translate it into Spanish and German to expand our, yeah, so this is along those lines. I think the listeners of this podcast are familiar with that, but what do you talk about why this is an issue?

Marc Thomas :
Did you get my investor notes from my company?

Rob Walling:
No, no. I’ve just seen these pitfalls over and over.

Marc Thomas :
At one point we had a platform that basically allowed people to vote do live voting, and for some reason we thought, Hey, let’s really focus on societies where there’s a lot of democracy. And it turned out that if we look at a table of that, Iceland has one of the highest, most democratic societies, and we were like, well, it’s obvious. Let’s just translate the app into Icelandic.

Rob Walling:
It’s just going to be a, there’s no reason not to do this.

Marc Thomas :
Oh my gosh. Fortunately, better sense has prevailed because Iceland’s got, what, 3 million people? I think it’s 300,000 or 300,000.

Rob Walling:
I think the entire country is smaller than my town.

Marc Thomas :
Yeah,

Rob Walling:
It’s a small

Marc Thomas :
Place. There’s not that many users for that. So yeah, finding new markets just isn’t the biggest opportunity at this point. What I love about founders and working with founders is they have this mindset of the 80 20, what is the most impactful action? I’m here to tell you that it’s not finding a different market because you’ve, you’ve probably barely scratched the surface of everybody who could buy from you. And the other thing is, as we said at the top of the episode, there’s probably a lot of people who already tried to buy from you but couldn’t find a way or the timing wasn’t right. Going back to those people, it’s going to be infinitely easier than trying to develop a new market and find a new kind of go to market that works for them and get all of the features that that market needs maybe differently to your existing market. I think you’re going to need to do it at some point, but it’s probably not at this stage and maybe you’ll get out of the 10 million bracket without a second customer type or a second market. It’s entirely possible

Rob Walling:
In most cases, and this is again 95% plus of plateaus that I see or have nothing to do with market size or I’ve tapped out of market, it’s really a one in 50, one in a hundred where it’s like, oh no, we really have tapped out the market and you actually do need to look for an ICP. I did a talk at, well, last couple of micros about plateaus, and I think I sent you a video that I saw that saw that. Yeah, and one of ’em was, that was great. What next? I think one of them was, I’ve tapped out the market. It was the seven reasons that SaaS apps Plateau, and one of them was, I’ve tapped out of market and I pretty much say almost never just, this is here for completion, but don’t you use this as a crutch. I’m looking at you half the audience who’s like, oh, we expand it. It’s totally in line with number five here, number six, quote. If I send more email, people will unsubscribe. But Mark, this isn’t a myth. This is true. What do you want to say about this one? Rob, do you know

Marc Thomas :
Anything about

Rob Walling:
Email?

Marc Thomas :
Yeah, I come across this one so frequently because one of the things that I say most to founders and to marketing teams early stage is send more email. I think a lot of marketing science is basically voodoo, but this is true if you appear more frequently than your competitors to the person who you’re trying to sell to. And if you keep on doing that and you keep making offers, eventually someone will take notice. They might not buy from you, but they’ll certainly consider you if they have the problem that you’re solving. You think that you are appearing a lot right now. I promise you, you’re are not getting opens, you’re not getting noticed in the inbox, which gets a thousand emails a day. You’re not appearing frequently enough in people’s feeds and things like that. Email is one thing you absolutely can control. Just simply increase the number of emails that you send because a healthy email list is not the goal of building a SaaS company.
You don’t need a healthy email list in the sense that somebody who’s trying to sell an info product needs a healthy email list. You need to find new buyers in that list, or you need to sell more stuff to the people who are buying already. So just send more email. Just a specific case study here. I worked on a product once that had, who basically sending four emails a month kind of product announcements and things. I got the opportunity to basically look at that and go, here’s what I think we should do. And I just said, let’s send 12 emails a month instead of four. There was some friction there, people felt a bit sort of, should we do this? I tell you what, when we saw the data come in after doing this for a while and there was a 9% bump in conversions to paid plans after every email that we sent and then a trailing effect in the following days, suddenly people took notice. The goal is not to keep subscribers and build a subscriber base. The goal is to get more customers and send in more email and allows you to do that.

Rob Walling:
Number seven, I heard X, Y, Z company grew with programmatic SEO or insert any easy growth lever here. Why is this a trap? Because I have heard some people grow with programmatic SEO, I think Zapier did it back in the day, but what’s, yeah, talk to us about this.

Marc Thomas :
Hey, look, sometimes programmatic SEO is going to work for you, but I can’t tell you the number of times I’ve been talking to a company and they’ve gone, I think we should try programmatic SEO. And I’m like, okay, well, why have you tried creating content that speaks to your buyer’s pain? First of all, have you tried doing this other thing or this other thing? And the reason that a lot of the time people want to do stuff like programmatic SEO is because it is easy, relatively speaking, they’re basically building a feature for their marketing site. Google is not going to value that in the future in the same way that maybe they did in the past. All playbooks diminish in efficacy over time and effectiveness over time. And so if by the point that you’ve heard that somebody grew easily with whatever growth lever or growth hack or whatever, it probably is diminished in effectiveness already to a certain extent, and you should do what is more effective, which is trying to convert more people who are already in your life cycle. That’s my take.

Rob Walling:
What you said about it being easy really makes my founder myth or founder mistakes thing tingle because the founders who I see on the internet who kind of get in their own way over and over and never seem to succeed, but you’re always like, but you’re smart and you build good prop, but you never, it’s, they want to do the easy and they want to stay in their comfort zone. I see them thinking out loud on Twitter and instead of them saying, Hey, I built this product for this type of customer, what marketing purchase should I do? What would resonate with them? What are my customer? They’ll say, well, I’m good at or comfortable with, or in the past I’ve done, therefore I’m going to implement this for this SaaS app. And I’m always like, that has nothing to do with it. Nothing to your experience in comfort zone, to have nothing to do with whether this is going to be successful. You should start, you’re asking the wrong question. It’s not the easy, it’s not the comfortable. So that really just that piece of it really resonates with me.

Marc Thomas :
I think one thing I will say is I’m not trying to shame anyone here by saying this to her, and I know you’re not either, Rob.

Rob Walling:
No, I am. Yeah, no, I’m calling people out. I’m going to start throwing names. No, I’m not Just kidding. I’m just kidding. No, but not trying to shame anybody, but trying to educate and trying to be helpful.

Marc Thomas :
Yeah,

Rob Walling:
Right.

Marc Thomas :
I think it’s like, yeah, it is. Because the reality is people are scared of failing and scared of looking silly If they get the marketing or the sales wrong, look, you’re going to fail if you don’t get it right, so you may as well give it a good go on your way to the inevitable middle.

Rob Walling:
Yeah, that’s right. No, it’s never about making someone feel bad for what they’re doing, but it is saying, Hey, here’s a heads up and here’s how to do this better. I mean, that’s the whole point of this frigging podcast and the YouTube and all the books and all the reasons that I’m yapping yapping my face off for the last 20 years is hopefully we can help you make fewer mistakes. And I think the times when I get frustrated and when it sounds like I’m trying to shame people is when people keep making the same mistakes over and over, because I’ve been saying this for 10 years, stop doing B2C, stop doing two-sided marketplaces and stop staying in your comfort zone when it comes to marketing and sales. Your customers don’t care. Your customers don’t care what you’re comfortable with. They care with how they buy and how they want to be spoken to. So I like this. We got some good energy going here.

Marc Thomas :
Yeah, nice.

Rob Walling:
Alright, number eight, sales doesn’t work for us. We want self-serve only. What’s the issue with this?

Marc Thomas :
Sales works for everybody. You don’t like sales? There we go.

Rob Walling:
This is it

Marc Thomas :
You feel like you don’t want to be sold to, but again, it’s a limiting belief. At some point you validated this company that you’re building, unless you got incredibly lucky, and let me tell you, it’s not going to happen a second time. You had to validate this. It’s the same thing as sales. All you’re doing is validating in reverse. Now you’re basically saying, Hey, you’ve got this problem. I’ve got a product now that works and you’re going to the same people that you used to validate this thing, the same customer type, and you’re saying, look, do you want it? Because here’s the thing, self-serve is great, but if you’ve never done it before, and even if you have, it’s an absolute pain to get right. There are so many variables that could go in the wrong direction for you, and it takes time and energy and Headspace.
I’m not, again, self-serve models. In fact, most of the companies I work with are predominantly that. But you will learn a lot. You’ll go faster by adding a sales model and you’ll go faster by closing more deals and putting things that you learn back into the marketing, back into that self-serve motion. Definitely, even if you’re building an incredible self-serve motion, then still every now and again, get on a sales call with someone. Even if you don’t predominantly do that, just do it. Trust me, take the hint. You’re going to see some revenue from that. You’ll close bigger deals, you’ll learn that you’re underpriced, you’ll learn that people want you more. You’ll learn the features they actually care about the things they say about you. It’s like a shortcut to greatness by doing hard work.

Rob Walling:
With Drip, we were self-serve only in their early days, and at a certain point people wanted to start talking to us and what I had to do was qualify them upfront. I didn’t want to talk to everybody who wanted a $50 a month plan because it just wasn’t. And now in the early days I did, I was trying to learn, but at a certain point I was like, this isn’t worth it. So what we did was we learned to qualify with a little JavaScript pop-up questionnaire that’s like, Hey, how many subscribers do you have? Because we had just had one value metric and it was like, well, obviously you’re going to pay us two, 300 bucks a month. I’m willing to do a one call close with you. And we found that we had a two to three X improvement of conversion for those amazing instantly.
And then that’s when I hired, I had customer success. I didn’t even have a sales team. I just had one customer success rep who I then had do these warm, they weren’t even sales calls. It was more like answering questions like, I’m on Infusionsoft, how are you different? I’m on active campaign. How are you different? It was stuff like that and it really helped. And I think every business, almost every SaaS company, I know there are some very, very rare exceptions, but almost everyone can use some help with this. Not even help, but that it would help their business, as you said, along the learning and along conversion rates. And it gets you there faster. And it also can help you suss out. If you’re charging $30 a month for your SaaS and it’s all low touch, no touch, you start doing a few sales calls here and there. When someone’s like, well, I want 30 seats of this, or I want to buy 10 times more data than anyone, whatever your value metric is, you start to find those companies that do want to pay you $500 a month or a thousand dollars a month or $2,000 a month. You build that dual funnel of one low touch and one high touch, and that is where I see real kind of bootstrap or hockey stick stuff come out of.

Marc Thomas :
Yeah, totally.

Rob Walling:
Alright, I’ll tell you what we’re going to do. We are going to do number nine and then we’re going to leave it to the listeners to go to your LinkedIn post in order to discover what 10 is. How’s that for a teaser like that?

Marc Thomas :
Rob? Rob, you’re a marketer.

Rob Walling:
I’m not good at, I’m not good at marketing Mark. So alright. You just did it. That was it. That was ladies and gentlemen, that was mine. Alright, number nine. We don’t want to take cheap shots so we don’t do competitor content. So first you want to kind define quickly what competitor content is and then go into why this is probably not a healthy view.

Marc Thomas :
So competitor content would be something like literally an alternative page or a drip versus active campaign. I’ll take that one as an example. Yeah, that’s it. So people don’t want to do these because they think, oh, these never work on me, or I don’t believe it when people say things about their competitors, and that’s fine, but I tell you this, these pages are one of the best conversion points across all companies that’ve ever worked on. They’re almost always in the life cycle and the conversion path of a great customer. You can do competitor content that is genuinely helpful to your buyer without nagging your competitors, without saying like, Hey, these guys suck by our product. Instead, they’re going to choose someone in the market. So it makes sense for you to put across the genuine take rather than just saying, Hey, I’m going to take their most expensive plan and say I’m a thousand percent cheaper.
Right? Instead, just make the argument about who your product works best for and why. Because if you don’t do it, someone else, your competitor probably might put across the nagging view. They might do the potshot content and they’re going to be less generous, their stuff’s going to rank, people are going to read it. You should do it on the basis that you’re a helpful person trying to help your customers make a good choice. And by the way, if you create this content and say to people, Hey, if you are not the right fit for us, you are going to be in this group of people. These products are great for you because this is who buys these, but if you are the right fit for us, you should buy our product because of these reasons, you’re going to have better lifetime value because people are going to churn less frequently because you’ve actually sold people honestly on your product and you can deliver. That’s my big take on competitor content.

Rob Walling:
And we’ve talked about this on this show quite a bit, and we get listener questions about how do I do it? Should I do it? And I’ve talked about three gradients of going really all in and naming names and really being aggressive or naming names, but being a little more light handed with it or not naming it these different, I don’t know, even thresholds are just kind of areas of the spectrum. But in general, yeah, this is something I think probably every SaaS company should do to one degree or another. So Mark Thomas, thanks so much for joining me on the show, man. If folks want to keep up with you, of course they can search Mark Thomas on LinkedIn. It’s MARC

Marc Thomas :
And also on my website, which is positive human.co.

Rob Walling:
Positive human.co. Very nice. And again, as a reminder, if folks want to maybe chat a little more with you, SaaS institute.com and your info and Mark’s first group is coming together now. So thank you again for joining me, man.

Marc Thomas :
Thank you for having me. It’s been great.

Rob Walling:
Thanks again to Mark for coming on the show. And as a reminder, Mark’s going to be speaking at MicroConf Europe in Turkey in late September, MicroConf europe.com if you’d like to see us both there. Thanks for listening this week and every week. This is Rob Walling signing off from episode 779.
Well, hello listener. You have found the hidden track of this episode. Mark Thomas made the mistake of telling me one of his hobbies. I said, what’s your hobby? Please tell me. It’s Dungeons and Dragons. I know much of tribute. No, it’s not. It’s music. In fact, being a musician, it’s playing guitar and bass and composing and doing all types of stuff. You can actually see him singing to his own compositions on LinkedIn. But what I did is I went and asked chat GPT for 10 questions about playing guitar and bass that I could ask a podcast guest good if they’re funny in increasing order of difficulty. So I’m going to start with you. We’re only going to do three.

Speaker 3:
So

Rob Walling:
First one is easy. It’s number one, what’s the name of the four string instrument that lets you play root notes Look cool and take way fewer solos than your guitarist friend.

Marc Thomas :
Oh, that’s definitely the bass.

Rob Walling:
Alright, there we go. I’m going to jump to Medium easy. This is four out of 10, which guitar effect pedal is basically required. If you want your intro to sound like the edge from you two.

Marc Thomas :
Oh my gosh, I don’t own any pedals, but let me say this. My favorite name of a pedal, it’s the big muff.

Rob Walling:
Oh yeah, I used, I had a big muff back in the nineties I think.

Marc Thomas :
Yeah, it’s great. You know what? If you want a clip for YouTube, sure. It’s just you saying, I had a big muff in the nineties.

Rob Walling:
We can’t, Josh, do you need to bleep this? No, it is a distortion pedal, right? I’m pretty sure.

Marc Thomas :
Yeah. It’s a big, I had one big growly pedal. Yeah.

Rob Walling:
Back when I played in a grunge. I was kind of a nirvana’s cover band with the screamy grunge songs thrown. I can see

Marc Thomas :
Did you have long hair?

Rob Walling:
Yeah, kind of with an undercut. Yeah, it was pretty rough. And wore oversized sweaters. Like shoe guys. Yeah, kind of. Except we just weren’t that good. So alright. That was, oh, so you didn’t get it. So the edge from U2 uses it’s a delay pedal. Delay pedal, right.

Marc Thomas :
There you go. I thought we were asking a specific name though.

Rob Walling:
Nope, just the effect. Alright, let me see. Some of these are ridiculously hard. I’m even sure I would’ve gotten this. I’m a huge Beatles fan. Do you like the Beatles?

Marc Thomas :
I do like The Beatles. Yeah.

Rob Walling:
All right. I don’t think this one’s going to go well. This is hard. Number nine out of 10, which Beatles song features Paul McCartney’s slapping his Hoffner bass, like he invented funk, even though slap bass wouldn’t be popularized until decades later.

Marc Thomas :
Is it definitely a Beatles song? Because I was going to say Arrow, what’s it called? Arrow Right Through Me. What’s that song called McCartney

Rob Walling:
Song?

Marc Thomas :
It’s a wings one. I don’t know that

Rob Walling:
Song. That’s song. But is he just

Marc Thomas :
Couldn’t have done Worse Thing to me.

Rob Walling:
That’s a liver pu neck. This is amazing. Wow. So according to Chad g pt, it’s come together.

Marc Thomas :
Oh, okay. I can cha gt Cha G PT Hass. Never heard anyone slap a base.

Rob Walling:
That’s the thing. I was kind of like, wait a minute. Yeah, it’s one of this. Isn’t that Slap bit,

Marc Thomas :
That’s one of the coolest baselines I think ever. I think the only other baselines that I would consider cooler or a couple of top ones, anything by the jam, massive fan of that. In fact, that’s how, one of the ways that I got into playing electric bass, I actually play double bass. Oh

Rob Walling:
Boy.

Marc Thomas :
Wow. And yeah, that’s how I got into electric bass. And then the other one I’ll say is just listening to Peter Hook, kind of Blue Monday, joy Division, just generally like new order. Anything by those guys. The way he plays bass is just so incredible and different.

Rob Walling:
I love it. Yeah. I dove into McCartney’s baselines. Well, did I dive into it? What I did is I found a YouTube video as I go down these YouTube rabbit holes. And it was talking about how if you played root notes to several of these songs versus what McCartney played, and they’re like, here’s what a competent basis me. I am a competent rno basis just enough to sound good. And they were playing it do when I call you up. But then the McCartney bass says it’s like something out of a ska baseline. It’s like melodic, isn’t it? And it’s of course because he’s a songwriter and he writes melodies and all this stuff. So I love exploring outliers and I can play an instrument, but they can play an instrument. You know what I mean? It’s genius versus like, yes, I’ve been playing the bass for 20 years and I can do it competently. But it’s so different to write amazing songs and baselines.

Marc Thomas :
One more amazing baseline recommendation, if you haven’t heard it yet. There is an episode of the podcast, one song where they break down the roots, the stem, sorry, of all the different famous tracks. And there is an episode of that about London calling by the Clash, the baseline in that I had never noticed it before. It is incredible. And I’ve since listened to it and I’m like, I can’t hear anything except this bass now.

Rob Walling:
Yeah, now it’s,

Marc Thomas :
Go listen to that episode after this. Yeah, I’ll do that. Awesome. Alright man. Appreciate it man. It’s great to see you. Bye.

Rob Walling:
Being an entrepreneur is making calculated gambles. When I hear de-risk that feels like hedging. It feels like, well, I’m going to have a contingency. The contingency is to pivot. The contingency is if there’s not enough demand that you either figure out how to generate the demand, or if the niche isn’t big enough or the market isn’t big enough or the total reachable market isn’t big enough, then you expand later. You are listening to startups. For the Rest Of Us, this is the podcast that focuses on helping founders build incredible businesses that don’t make a dent in the universe, but might just change your little corner of it. And while you’re building that incredible business and maybe you bootstrap it, maybe you raise funding, it kind of doesn’t matter. You’re not sacrificing your freedom, your purpose, your relationships, your sanity, your mental health in order to grow it. 

It’s not growth at all costs, but it’s build incredible businesses that provide us with an incredible life and also improve the lives of those around you. I’ve been recording this podcast for more than 15 years. This is episode 778, and today I’m going to be answering listener questions, some great questions in the queue. And if you have a question you’d like me or me and a guest to answer in a future episode, you can go to startups For the Rest Of Us dot com and click ask a question. In the top nav audio and video questions tend to go to the top of the stack, although this time it looks like I have a question from X Twitter and also more advanced questions tend to go to the top of the stack rather than how do I get started? Early stage stuff today is going to be a mix. 

It’s going to be fun. We’re going to have a great time. Before I dive into my first question, I want to tell you about MicroConf Connect. It is the best paid community for bootstrapped and mostly bootstrapped SaaS founders in the world. You can add to MicroConf connect.com if you want to check it out because building a startup can be lonely and if you join Connect, you’re going to be surrounded by like-minded founders. This is our extension of our MicroComp Hallway track. In addition to the forums, the conversations, the dms, you get access to live events. So for example, on June 19th, which is next week, Matt Haman is a sales expert and he’s going to be doing a one hour session about using LinkedIn as a sales channel. And it will be a live virtual event, meaning you can join via, I dunno what a Zoom or whatever we use, but you’re there in real time and you can ask questions if you want to apply because we do not let everyone in. 

We are pretty quick on the draw to not let folks in who are trying to infiltrate and let’s say reduce the value of the community by them trying to sell stuff or being whatever. You get the idea. We try to keep the quality of the participants and the quality of the conversation very high. We have a full-time moderator who is making sure it’s the best community. It can be MicroConf connect.com if you want to check it out. And with that, let’s dive into our first question, which this one is actually a thank you and some feedback about TinySeed Tails.  

Speaker 2:
Hey Rob, long time listener. I just wanted to say thank you for the TinySeed Tails. I’ve been a long time listener for a couple of years now. I don’t have a startup of my own. I would love to have one, but I don’t. And the tiny details just showed me how much uncertainty there is behind a business. A business that has been backed by you guys, a business by a person that sounds like they have an idea of what they want to do and they still cannot find product-market fit, which is really, really helpful. I love all of your episodes, I love listening to them. I love listening to all of your guys’ experience and what you go through and suggestions, but tiny details showed me even for a person like that and for a company like that, how much unknown there is. I’m the type of person that’s interested in it. 

I work as a project manager and a product manager depending on the company, on the project, but I love coding. I’m very interested in that, but I still, I don’t have a startup because I have no idea what to do. I’m having trouble finding the problem to solve. And listening to these episodes with you, and I’m blanking on the name of the founder, I’m sorry, in the fourth season, it’s just eyeopening even for somebody that they thought they know what they wanted to do and what problem they wanted to solve, it’s still so much uncertainty. So just a huge thank you. And if you can do three founders per season, that’d be great. I absolutely love the TinySeed Tales. So yeah, a huge, huge, huge thank you for those episodes. Love hearing those, looking forward to new ones. And if you can find more founders to follow and update us on their progress, I would listen to it until I die. Thank  

Rob Walling:
You. I would listen to it until I die. That is deep praise indeed. Thank you for that. Antonio. I’ve received a lot of positive feedback about that season of the most recent season of Tiny Sea Tales. If you skipped it because for whatever reason you didn’t want to listen to it, it is a profoundly impactful experience to listen to Colleen have some early success and then lose a co-founder and then scrape and claw. And I believe we recorded, what is it, eight or nine episodes over almost two years. Yeah, two years almost to the day. So you get to hear this long journey and you get to hear how it pans out In the end, if you want to hear 90 minutes of a similarly recorded show, it’s kind of just a single audio documentary. Head to startup stories podcast.com, and that was recorded over, I don’t even remember, 15 months with Derek Reimer and I when we were first starting Drip. 

And it is agonizing for me to listen to before we had product-market fit. And then it kind of jumps to where we do at a certain point and that is a similar journey, but perhaps with a different end result, really appreciate the positive words, the kind sentiments around it. Antonio and I plan to keep doing it. I mean, tiny Sea Tales is, I’ll tell you what, per audio minute, it is way more work than anything else that we do just because of the heavy editing and the voiceover and the production value of it. It’s also for me, there’s no instant gratification. So I get to record these things over the course of a year. The original idea was to do it over 12 months. Colleen’s adventure lasted a lot longer than that, but to record things for a year and not put them out in public is really hard for me. 

Where I get the dopamine rush is when I launch a book, when I launch a podcast episode, when I ship a YouTube video, that’s when I’m like, yeah, the world is consuming this now. And then I get to hear feedback and thoughts from people about it. So it’s actually really hard for me to do that, to wait and to have the delayed gratification. But I have heard from multiple TinySeed founders and investors that the reason they wanted to be part of TinySeed was because of what they heard on TinySeed Tales and they heard the struggles or the earlier seasons and they heard the victories of the earlier seasons just generally heard the thought process and it made it more human. So I plan to keep producing them and I’m glad that you have enjoyed this last season. The next season is almost halfway done, and so every couple months I sit down with victim slash subject of season five and fingers crossed, I would love to launch that in September of this year, in fall of this year to coincide with TinySeed applications opening. But it all depends. These are things we can’t predict. I literally don’t know if the startup is going to succeed when the season starts. And I don’t know how long the season is going to be because we don’t know when the story kind of trails off. When do you ride off into the sunset? It’s certainly hard to tell at the start and we will do our best to keep shipping those episodes. So thanks again for your voicemail, Antonio. My next question is about pricing and pilot projects.  

Speaker 3:
Hey Rob, it’s John from what, what is a highly visual low code financial business simulator? We make it easy for decision makers to visually ask and answer their gnarliest. What if business questions in seconds all without formulas or spreadsheets? Users can build out dozens if not hundreds if not thousands of what if scenarios all in real time and then analyze those trends in the data and make better business decisions for solutions. Quite novel, the tech was not easy to build and we’re flirting precariously with some of those category creation type problems that you’ve mentioned in the past. My background is the visual effects industry and our go-to market is targeting large visual effects studios that have this complex relationship between revenue and capacity planning. Artist resources are a huge expense and our solution proposes a better way to forecast artist resources, reduce over time and mitigate unnecessary or poorly timed hires. 

So my question is about pilots and how to think and not overthink them. For example, we’re pitching a pilot for one of the top five visual effects studios in the world right now. They did $120 million worth of work in 2022. They’ve got a thousand employees and I think we can help them save between two and $3 million a year once our tech is fully implemented. So we’ve proposed a phase pilot, we’re focusing on one office, a subset of projects so they can get a sense of the tech and help us build out more functionality. I subscribe to the theory that pricing should be 10% of the value the customer receives, and here the obvious benefit is that we’re going to get brand recognition from a top tier company. And I also don’t want to give away too much value in the process though we’re still bootstrapped and I’m trying to recapture some of those sum costs. So how would you think about pilot pricing something so different? This is an interesting that’s been slammed by their rider strike and they are cash sensitive right now. Thanks for everything you do, Rob. Appreciate it. Bye.  

Rob Walling:
Thanks for that question, John. I like that you called out the charging 10% of the value theory. I think that’s a good rule of thumb. It’s not something that you have to adhere to, but it’s a great starting point. And if you’re going to save ’em two to 3 million a year and you charge 200,000 to 300,000 a year, it feels kind of fair and that’s a nice contract size. There are a couple schools of thought on pricing pilots. See, I’m a believer for sure that you should be charging for them because as opposed to just comping it, which is not anything that you indicated. Some founders are so desperate to get the business that they want to try to give it away. And there’s so many problems with that. Number one, you can waste a bunch of time. And number two, they don’t have any skin in the game and people don’t value what they don’t pay for generally. 

And so again, you didn’t say any of that, but I’m doing this for listeners who think, well why wouldn’t I just comp this pilot project pricing? I mean my default is to usually start with how you would price it if it wasn’t a pilot project, how much value do you think you’ll save them at just one office? And so if that number is a hundred thousand dollars or $200,000, then you charge 10 or $20,000 a year, right? I guess that’s talking annual probably how I think about it now then there’s are we doing a bunch of custom work for them? Because we may want to charge that separately. We may want to say, Hey, there truly is some integrations and some stuff we’re going to do that we don’t need for future customers or we don’t think we will. And so then you can do one-off stuff for that. 

We’re going to charge you a hundred bucks an hour or just a fixed price, $10,000 one time to do all this work for you in addition to the 10 or 20,000 a year. Now, if instead they’re giving you a bunch of guidance and you’re going to build a bunch of features that you think other companies are going to use, you can do one of two things. You can charge ’em a discounted rate for that. You can say, Hey, I’m going to charge you half. Or usually it’s about half, right? So if it’s like $10,000 worth of work, but I think I can reuse it, we’re going to charge you five grand to get it done and to be number one in the priority list to be number one on our roadmap. In essence, the thing I think about is who’s getting more value out of this? 

Or is it an even value exchange potentially that you get not only input to your roadmap, you get to have this customer zero that you really are building it for, but they also are going to get a lot of value and you’re both going to have to invest time into it. They have to invest time into the implementation, into working with you. And then you of course are investing the time to build out what needs to happen. And then the other thing I think about with the pilot project is the reason it’s called a pilot project and it’s not just a contract, is that the idea is it should lead somewhere. So that’s part of the conversation I’d be having. And it’s not that you need a written commitment, that’d be perfect, but it’s going to be really hard to get that. But it’s getting that verbal commitment of if this works, our expectation is we’re going to keep rolling it out. 

If this does everything you need it to do, we’re going to be rolling it out. And so that’s why it’s called a pilot is it is the tip of the spear, right? Or it’s the wedge that gets you into a company that then proves your value to this large company and proves to them that you are reliable and that you can in fact produce the results that you’ve promised. So that’s such a big thing of it. And the way I think about it is, let’s say you do the pilot and it works and they move forward to implementing you across the entire company or you do the pilot and it doesn’t work. In both cases, I want to feel okay about the pricing. If this is the only work I ever do for them, and they basically say, you know what? We don’t have the budget or it didn’t work, or leadership change or whatever else happens, they go out of business. 

I don’t particularly want to be in a position where I’m thinking to myself, oh man, we just did a bunch of work for free. We just ate a bunch of money. I underprice this because I thought that we were going to get all this work because that’s not a sure thing. So even if it’s not my most profitable pricing I ever implement, that’s fine. It doesn’t need be a huge cash cow, but I want to minimize the regret as I’m going to grind through this pilot. A lot of pilots can be kind of grinding and a lot more work than you think. I want to feel okay about the work that my team and I are putting into it. So that’s probably the high level overview of how I would think about pricing pilots. Thanks to that question, John. Hope it was helpful. My next question is from Twitter from Kenny Alami several months ago, well, geez, it was almost a year ago now. 

I said there’s a noticeable lack of intermediate and advanced questions on startups pod. Do you have any more advanced questions? And Kenny asks, how do you niche down to take advantage of industry knowledge and how do you de-risk the bet in case there is not enough demand? So first of all, I don’t think de-risk the bet. I think being an entrepreneur is making calculated gambles, and I think trying to, when I hear de-risk that feels like hedging. It feels like, well, I’m going to have a contingency. The contingency is to pivot. The contingency is if there’s not enough demand that you either figure out how to generate the demand, or if the niche isn’t big enough or the market isn’t big enough or the total reachable market isn’t big enough, then you expand later once you’ve tapped that out. What I don’t mean is once you’ve plateaued, because usually plateaus are not because you’ve tapped out your market, usually they’re because you have tapped out your present marketing expertise or you have only not really done very much marketing, which unfortunately is what a lot of the Indie Hecker folks on Twitter that I see saying, ah, I’m tapped out. 

And it’s like, oh, it’s because you thought building an audience on social media was going to be your marketing channel, and that is catastrophically misguided. So the bet is not something I’d particularly be doing in an early stage startup. There’s going to be a lot of risk in it. But the risk, here’s the thing, it’s not like you’re betting your house on it. The risk is that it doesn’t work and it’s some time and maybe some money. And the answer to that is as you get new information and you learn and you have more data, then again you pivot, you expand, you change it, you make these adjustments, these course corrections. This is something that experienced and successful founders do that inexperienced. And I’ll say the folks who I see, the founders who I see getting in their way over and over and over, are there ones that either don’t try stuff because they say, oh, it doesn’t work, or they try it and they don’t go all in and they don’t course correct. 

They try it and if it dosn’t work, they just quit. That doesn’t work. Ads words doesn’t work in 2025 SEO, it doesn’t work anymore. And in 2025, it just isn’t the thing. And it’s like, no, actually both of those things work. So does outbound sales. The playbook is not identical to what it was 10 years ago, but I’m invested in hundred and 24 B2B SaaS companies. Dozens of them are doing seven or eight figures, and there’s WP engine, which is what do we think the worth of them is? A billion. It’s a unicorn, right? And across all those companies, the successful ones are doing the stuff that I hear some people saying it doesn’t work in 2025. Well, if it doesn’t work, then how is it working for these companies that are growing? So all that said, de-risking course corrections, it’s what experienced founders do. 

Now, how do you niche down to take advantage of industry knowledge? Kind of hard to answer without specific. So I’m going to invent a contrived example. Let’s say that I have industry knowledge of electrical construction because let’s just say my dad worked in construction for 42 years and my older brother still works in it, and I worked in it for many, many, many years. I could think about any app, about an accounting app, about a booking link, like a scheduling link. I could think about a calendaring app, I could think about project management, I could think about anything. And then say for electrical contractors or more broadly for the trades, we think of the HVAC and electricians, your plumbers, your carpenters, your, your general contractors, any of these things could be narrowed down or niched down. And usually if I’m a bootstrap founder, I’m going to probably try to focus it on one of those, but I’m going to be open to others. 

I’m going to be open to where the interest is highest, right? I’m going to be looking for where the thing that I have in mind sparks that twinkle in their eye. I’m looking for when they have that moment of, wow, this could really help me in my business. And usually I’m not coming up with a solution. Usually I’m poking at a problem that they have, right? What problem does your idea solve? And for whom? Don’t tell me your idea. Tell me what problem it solves and for whom. That’s what I’m thinking about. And so the way I would niche down is probably to start pretty small and then kind of keep my ears open as to, oh, are there other verticals that are requesting this for me? There’s a TinySeed company right now that was serving one vertical of car dealerships and then rental car companies came about, and they have been looking at both of them now, and because they kept their head on a swivel and because they kept their ears open, and there’s a balance here, you can go too far and listen to everybody and be like, well, we’re going to have 20 ICPs. 

Or you can go too narrow and not listen and say, well, we’re only going to have one and keep our head down and not make any possibility that that’s going to happen. Not be open to it. Neither of those is probably correct. The hardest part, one of the hardest parts of being a founder is making hard decisions with incomplete information and all the information is incomplete, especially in the early days until you’re what at some number, 5 million, 10 million, a hundred million in annual recurring revenue. Everything’s incomplete. Even at those points, it’s still not super complete, but at least you have a more mature business. So in these early days, that’s how I’d be thinking about it is I niche down. My H one says I’m for this type of contractor, my sales conversations, my landing page, whatever I’m doing, is focused on a particular niche. 

If you think about the early days of Drip, I picked a couple of ICPs. One was SaaS founders. I had that reach and another quickly became information product and course creators. These days we call makers or the creator economy or whatever. That term didn’t exist back in 2012 when we started building it. But it quickly became apparent. I didn’t have a ton of reach into that second category, but really quickly realized it was a valuable market. Bloggers came along as well because bloggers in those course creators, there’s a lot of overlap. They’re not necessarily, it’s not a one for one Venn diagram, but there’s a lot of overlap. So I allowed, I guess, our number of ICPs to expand as I felt the demand. I felt the market pull from these different verticals. And while I didn’t have expertise really as a course creator, well, I had a little bit, right? 

I sold Micropreneur Academy, which was a membership site, and I’d sold books and stuff, but it isn’t how I identified for sure. And yet we could listen to them and listen to their feature requests and have solid conversations with them. Even though I knew SaaS so much more, it was still, I think, the right decision. I think it really helped accelerate our growth to be open to adding and expanding even early on our focus. So thanks for that question, Kenny. Hope it was helpful. My next question is from Mike about starting a business like Sidekick.  

Speaker 4:
Hi Rob. My name is Mike. I was listening to your interview with Mike Perham, the creator of Sidekick. I’ve been thinking of starting a similar business to Sidekick. I have a background in technology, been software doing software engineering for a long time, seen lots and lots of issues seeing a problem that I’d like to tackle. Let’s assume that I validated the problem with customer development conversations, Reddit, various tech communities, slack, discord, et cetera. I’m wondering, how would you approach starting a business like this? What would you focus on in the first six to 12 months? For example, I don’t have an audience similar to how Mike was present in the Ruby on rail space conferences, blog posts, et cetera, for quite a while before he launched Sidekick. Something I don’t have, and I know you preach against building an audience, this feels like it’s something that might require an audience, given that the core component is open source, but just wondering how would you go about starting this? What would you focus on and how would you think about charging money and when to start charging money? Thank  

Rob Walling:
You. So I want to start by saying trying to start a business like Sidekick is a little, it’s not exactly the same, but it’s a little like saying, I really want to go out and win the lottery today. There is a lot of luck involved, and it’s not to take anything away from Mike Perham, but on the episode, do you remember how many open source projects he launched that just didn’t get traction? The reason Sidekick works as a business is because he has this enormously successful, broadly adopted open source project. And if you had that today, you could turn it into a business. And so the question then is how do you get that? Now, I’ve never done that. I have talked to people and watched people who have done it, and usually there’s it. It’s unfortunate. Usually there’s a ton of luck involved. It’s shocking that I do think it’s a repetition. 

It’s like you got to get a bunch of shots on goal to do it. Now, with that said, what I’m not saying is build a hundred open source projects in a hundred days and launch. I do think there is some logic to this of research and thinking about where the other open source projects failing. This would be hard because there obviously are a ton already out there. And how do you find the gap in the market? I guess this is as hard as finding any idea, any type of business idea, but you said there’s a problem and you assume it’s validated. What were your first steps be? My first steps would be I want to launch an open source project that is going to get traction. And so I would look at every open source project that I know of that I’ve seen get traction, and I would study how they did it. 

So I’d listen to all the other interviews with Mike. I would listen to, I don’t know, early interviews with Matt Mullenweg, if he did them, just pick an open source project that is wildly successful. Adam Wains, tailwind, CSS. There’s a ton of ’em out there. How did they get traction in the early days? There was probably some belief in the developer. Did most of these developers have some kind of audience before they launched it? I’m guessing they did. So in that case, you probably want to go against my advice. So my advice is not that you shouldn’t build an audience. I get misquoted on this a lot. My advice is all things being equal dollar for dollar, hour for hour building an audience is not anywhere near the best marketing approach that you can use to build a SaaS. I have seen so many people with large audiences fail miserably at SaaS and plateau and build that no one wants. 

There’s a curse of an audience that goes with it. I’ve talked about this stuff a bunch, but the idea, I’m not saying an audience is worth nothing. I have an audience, it’s very valuable. But the amount of time that I have spent since 2005, 20 years, my first blog post was in late 2005, and I blog hard hundreds of hours a year for six years. Then I’ve written five books. That’s all audience. Then the YouTube channel, 515 YouTube videos, 7 78 episodes of this podcast, plus Zen Founder on and MicroComp, on and on and on. Great. So now I have an audience. I’m not saying it’s not valuable, but there are shorter routes to marketing your SaaS product. So that’s really what I’m saying is the amount of time invested, you’d be better off getting better at other things. But when I say that, I’m saying for SaaS. 

So if you were doing info products for courses, I’d say build a audience. Absolutely. That’s a reason that why am I building an audience? Why do I have an audience? Because we sell SaaS info products, event tickets where I’m an accelerator. Were not SaaS. Similarly open source projects. If in fact most of the folks who today have amazingly successful open source projects, if they had some type of audience or respect or they were book authors in their particular technology or whatever it is, if that’s what they did, then I would try to copy their approach. If that’s the one that works the most, I’m not an expert on it. And so that’s where I have a tough time giving advice. If you’re asking me how do you start a SaaS, I can tell you I consider myself quite knowledgeable on that front. But starting an open source project, I dunno, how do you do that? 

That I would then go and certainly research that from there. Let’s just say you had a wildly successful open source project. When do you start charging? Well, I mean, I would start charging as soon as I could, right? You have paid add-ons support. The moment that big companies come knocking at your door and they start saying, Hey, where’s the enterprise support plan? It’s been a while since I talked with Mike about sidekick, but frankly, he’s criminally underpriced. He’s leaving a lot of money on the table, and he knows that. I believe I pointed that out in the interview, that it could be a much more lucrative business. It could be a larger business, and he gets to make that choice of keeping it to a single developer with no employees and to keep his pricing simple. And that’s the choice he makes. I would make different choices, but that’s okay. 

We don’t have to agree on this stuff. He can run his business in the way that he wants. But I would say to Mike the question her, be careful. We all want to start a business like Sidekick. I want to run a, I forget what this revenue is, 3 million, four, 5 million, no employees or whatever, single founder. I want a business like that too, but I am under no illusion that I could just go do that. That’s not just going to happen. It’s going to be a tremendous amount, not just of work. It’s going to be a ton of hard work, which usually I’m fine to put in. Obviously you need some skills. I think there’s going to be quite a bit of luck involved with it, and unless you do have that audience, audience could offset that. If you have more audience, you need less luck. Yeah, that part I’m not sure about. So I would just caution you on thinking it’s cool to have that goal, but I think it’s going to be quite the uphill battle to try to build a business like Sidekick because there just aren’t that many. So thanks for that question, Mike. Hope it was helpful. And my last question of the day comes from anonymous.  

Speaker 5:
Hey, Rob, wanted to start by thanking you for all the amazing stuff you’ve been doing in the Bootstrap community. I’m new to this community, but this idea of a bookshelf startup really resonates with me, and I’ve been loving all the content that I’ve been reading and listening to on your podcast. So I read on your stereoscopic blog posts, but have also heard you say in some more recent podcast episodes that you can potentially skip steps depending on your life circumstances. So this question is about that. So a little bit more about me. I’ve been working at a fan equivalent for a few years now, so nowhere near financially independent, but I do have a decent safety net. In addition, I do really actually really like my job at the product I’m working on. So I’m not in a rush to escape anything, but I do have that itch, that desire, that sickness, as you sometimes jokingly referred to it of entrepreneurship and wanted to build something on my own. 

So I’m curious how you would think about skipping steps in the stair step model if you would do that. So I guess the first question is how would you skip some of those first steps? Would you go straight to building a SaaS on the side as you worked your full-time job? Would you start by acquiring something small and less established, maybe like 10, 15, $20,000 kind of range just to learn that sales and marketing side of things, or would you do something else? And then the second part of the question is, what would you think next steps would be? If you were acquiring something small, what kind of businesses would you be looking for? Things like that. Thanks so much. Look forward to hearing your  

Rob Walling:
Answer. Thanks for that anonymous. It’s interesting. Yeah, whenever I have a framework, there’s always that question of, well, when should I not do it? Because certainly these frameworks, they don’t apply to exactly 100% of everyone all the time. There are exceptions. But I do find that there are fewer exceptions than a lot of people think. And most of us, I see this a lot with TinySeed companies where I’ll come out with like, Hey, in general, you want to do this certain thing, or you should think about your pricing this way. And some founders perpetually think, well, I’m a snowflake. My business is so unique that I should skip this, or I should not do the years of grinding, or mine’s not going to take hard work. It’s just going to be luck skill or whatever. And folks have that. And I’m not saying that’s necessarily the case here, but I do want to caution you against that. 

There’s a reason that I say the things I do. It’s not just whimsical. It’s not just because I want to sound smart. It’s because I have seen patterns develop across thousands, tens of thousands of entrepreneurs. And so when I think about the stereotip approach, do I literally mean that you have to start something in a walled garden in an ecosystem and then build up and then buy out your time and then do a SaaS? Well, of course not. There are other paths to it, but the stereotip approach allows you to build your skills, to gain experience, to get confidence in your abilities, to buy your own time, to have some money coming in. It’s just everything. Everything just builds and snowballs versus you certainly don’t learn launching 20 things and seeing what sticks. You learn that luck is the way to go or something. I mean, I’ve railed on this for a long time. 

So that approach, I don’t like the one of just jumping directly to building a SaaS is not the worst. I could see some people doing that. But what I see over and over on social media are people writing into this podcast is, man, this is so complicated, man, this is really hard. Now I built it. Now what? There are way more moving parts than I thought. And it’s like, yeah, that’s why the stairs step exists. That’s why the real purpose of the stairs temp approach is to get you the confidence and experience skills, time and money to be able to do that. Next thing that’s a little harder. So you’re not trying to eat an entire watermelon at once. You’re trying to eat it in small pieces. You’re not trying to boil the ocean you are trying to look for yet. Another analogy about how doing things that are too big or too complicated right from the start can be challenging. 

Now, does it mean that you won’t succeed if you don’t do the stress simple? Of course not. It doesn’t. You can get lucky and some founders have more confidence, experience, skills, time and money than others. And so maybe you can skip some steps, but that’s how I think about it. It’s not just about, let’s say you had half a million dollars in the bank and you own all your own time, therefore you can just burn it down and you have a little bit of money. Should you still skip the early stages? I mean, do you have the confidence, the experience and the skills to build, launch market support, grow, manage engineers, do all these things to SaaS? If you’ve never done it, probably not. It’s really fucking complicated. I dunno how else to say how complicated and how hard it’s going to be if you’ve never done it. 

You just don’t know. And I’m not saying that to toot my own horn or the horn of SaaS founders around the world. It is just one of the more complicated businesses you can build on the internet because building a content website or an email newsletter, there’s hard work that goes into that, but you grind, you get better. You can just do it. E-commerce is not as complex now. E-commerce a pain in the ass with products and physical things and maybe manufacturing, yeah, there’s things, but ask anybody who has tried to start a SaaS, even when they have multiple successful businesses under their belt, if they haven’t done SaaS before, it completely knocks them on their ass. In general, that’s what happens. And most people underestimate how hard it is, and that is the point of the stair set method. So should you skip? I don’t know. 

Probably up to you. Do I think people should acquire more businesses than they build? I do. And in fact, several of my early successes were actually acquisitions. And for years, I preached this to anyone who would listen and no one wanted to listen. It became this thing of like, well, I don’t want to buy it. Well, what if the code quality is low? Well, how do I know what’s good? Well, how am I taking a gamble away? I just want to build my own thing I really want and fine. I heard that enough. I listened to the market. I pivoted my approach. I pivoted my message from these early days. But I love acquisitions. If you can find, I mean, think about it. I made a million dollars from hit tail. I spent $31,000 on that thing, and all the revenue plus the exit sale price was a million dollars. 

It completely changed our life. It had like a 90% net profit margin too. It was just me with a couple of contractors I bought that I couldn’t have gotten there that quickly. It would’ve taken me years longer to build it and find product-market fit and do it, but I was able to acquire it.net invoice. I acquired that, and that changed my life, not in the way of, oh, it made us wealthy, but it showed me that I could really do this. And then I had the skills and I learned a ton talk about stair stepping. It really, it wasn’t part of an ecosystem because there weren’t these app stores back then, but it kind of just had SEO and then as the marketing channel, and that’s what I talk about with Stepping is you pick that one thing and it’s kind of got one marketing channel. 

So you’re not trying to learn all marketing, you’re just trying to learn support and product and shipping and maybe sales if you need. You’re learning these other things along the way and you’re kind of scaffolded with it. So done Invoices was great because it made three, I guess at a peak, it made five grand one month, but it was onetime sales. It wasn’t subscription. So in a lot of months between two and $4,000, and that made our house payment. Plus we didn’t have car payments, but you get the idea. It was just a lot of extra money for us. I was working full time at the time. Sherry was still in grad school. And so I like acquisitions and I think if you could jump to that point of acquiring a full blown SaaS and you have the money to do it, cool. The challenge with what you said anonymous in the voicemail is buying something for 20 or 30 K most of the time that those things are so early stages, there’s not much there. 

And so the fact that I bought Hizo for 30 K, it was doing two or three doing two grand a month, maybe. I don’t even remember, somewhere in that range. It was pretty early these days. If you buy something for 30 grand, I just don’t know if there’s going to be enough there to teach you anything. Or if it’s still this super pre-product market fit thing that’s done. We did a lifetime deal with Sumo and now we’re selling it. It’s like, do you have anything there? That’s the big thing I’d be thinking about. Is there enough here that A, I can learn from it. But B, I have actually improved my chance of success because the acquisitions that I’ve done and that I’ve seen work are the ones where it does have you in that product-market Fit range. Because finding product-market fit, if I’m going to build SaaS from scratch these days, it’s like, what? 

12 months, 18 months, 24 months is a long time. And if I can jump ahead to that, well, I’ve saved myself a ton of heartache and headache. That’s really the way I probably the only way I’d be thinking about it. So thanks for that question anonymous. I hope that was helpful. And thank you for listening to this episode of Startups. For the Rest Of Us, if you keep listening, all keep recording and be sure to send any questions you have into questions at startup For the Rest Of Us dot com. Or you can go to the website, click ask a question in the top. Navigation. It’s been amazing having you here today, this week, and every week. This is Rob Walling signing off from episode 778. 

Rob Walling:
Welcome back to another episode of Startups For the Rest Of Us. I’m your host, Rob Walling, and in this episode I talk with Derek Coburn, the co-author of the book, let’s Retire Retirement, how to Enjoy Life to the Fullest, both now and Later. And we cover a bunch of topics, one of which is why retiring might be the worst goal for entrepreneurs. I really enjoyed my conversation today with Derek, and it relates to things that I often talk about on this show where we’re not just about building the biggest startup for all the money and sacrificing your life and your health and your relationships. We’re about building a startup that provides you freedom, purpose, and the ability to maintain healthy relationships. And that really is a big part of the focus of my conversation today with Derek. But before we dive in, I want to let you know late September of this year, I’m going to be in Istanbul, Turkey for MicroConf Europe.
We’re going to have a handful of amazing talks. We’re going to have amazing excursions, and of course, our world-class hallway track speakers so far include Michelle Hanson, the founder of Geo Coio, and the author of Deploy Empathy. Mark Thomas, the founder of Positive Human, James Mooring, the founder of talti, and of course, yours truly microcomp.com/europe if you want to buy your ticket. Tickets are as inexpensive as they will ever be. If you want to get a ticket and don’t want to miss the event because the event will sell out, we’ve sold out all the micro comps for the past couple years. You go to MicroConf dot com slash Europe and pick up your ticket for our event in Istanbul. And with that, let’s dive into my conversation with Derek about why retiring might be a bad goal for entrepreneurs. Derek Coburn, welcome to the show.

Derek Coburn:
What’s up Rob? Good to be

Rob Walling:
Here. It’s great to have you here, man. And we’re here to talk about your book, let’s Retire Retirement, how to Enjoy Life to the Fullest Now and Later. It’s a little bit off the beaten path of most of their super tactical, technical stuff I cover on this show, but I want to hear from you first. If someone’s listening to this episode and they only hear the first say three minutes, what do you want them to take away from this book you’ve written?

Derek Coburn:
Sure, thanks. Really excited to be here with you. I’ve been a financial advisor for about 27 years, and I had sold my practice in 2019. I realized that the best thing that I have done collectively for the majority of my clients was help them come to the realization that they were not going to be happy sitting around doing nothing for 30 years. And if you think about it, most of your listeners, I’m sure if they’ve met with a financial advisor or they’ve plugged numbers into a calculator online, they weren’t asked, do you want to retire? They were asked, what age do you want to retire? And we were all opted in whether we wanted to be or not. Most of us probably said we weren’t really sure, and someone suggested to us that we should pick 65 or 67 because that’s the age that everyone else is picking.
And we’re going along with this whole premise without really thinking much about it. And so what I want people to realize, we’re seeing this through the retirement movement right now where we have over 30% of 65 year olds are going back to work because they don’t enjoy just not doing anything, not contributing, not feeling useful, not connecting with other people. And the great thing about this is once people realize and they stop and think about it, that they’re not going to be doing nothing, that they’re going to have income coming in into their sixties, seventies, maybe even longer. What that means is they now have a lot more time and a lot more money that they get to spend right now on things that are important to them, essentially because they don’t have to save as much for retirement, the income coming in later is going to offset the need to invest as aggressively as maybe your financial advisor or your financial planning software is telling you.

Rob Walling:
Interesting. And so see that’s the thing is when you say folks over 65 are going back to work, I instantly think, oh, because they don’t have enough money. But you’re saying it’s because they’re so fucking bored. So my dad’s 80 and he was an electrician his whole life, and then a project manager worked construction. When he retired, he didn’t have side gig freelance. Probably most of the listeners here being developers or entrepreneurs can figure something out. It’s a different day and age now, so you can do stuff on the side. And so retirement is a thing. I hadn’t even heard of that concept.

Derek Coburn:
Yeah, it is a big thing, man. And look, I think part of it, it just feels natural. When retirement was first established, it was in 1889 by a German chancellor named Otto von Bismarck, and he picked the age of 70 when they were putting together the first government run social plan, he picked the age of 60 because that was the age that most Germans were dying. It wasn’t lowered until 65 until about 30 years later. FDR, when he was setting up Social security in 1935 thought that sounded like a good number at that time, life expectancy was about 71, 72. So it was never meant to be this thing where we just sat around and did nothing for 30 plus years. And I have a little bit, I cover in the book about the difference between pursuing happiness and pursuing meaning. And essentially when somebody is only focused on their own happiness, they’re only focused on being comfortable sitting on a beach somewhere, having a fruity drink, it’s producing a reaction in their body that is the same reaction that’s produced when someone’s dealing with chronic adversity, when someone’s dealing with the loss of a loved one, when someone’s dealing with the loss of a job versus the people that were in a separate group during this research initiative who were pursuing meaning something bigger than themselves, contribution to the world at large.
Those people were not producing that. Those people had lower inflammation, their immunity was better. So that’s why you hear a lot of stories. I’m sure everyone has a couple that they’ve heard of where you’re retired, somebody retired, they stopped working, they died, or they got a disease within two or three years because they just shut down and stopped having a bigger reason for doing this whole thing.

Rob Walling:
And that’s a big part of it. Almost probably anyone who’s listening to this podcast reads a ton of books often on Audible. Frankly, I have 914 books in my Audible account, which is either a badge of shame or a badge of honor. I don’t know, man, but we’re not going to stop working. I, I talked to Sherry about this within the last year of like, someone said, when are you going to stop doing the podcast, right? We’re 15 years in 777 episodes and it’s like, I don’t know, never. I’ve never thought about not doing it. Obviously there’s going to come a point where I don’t want to anymore or something like that, or I just get too old. But I do think there’s a whole mindset shift that has to happen around this. And in today’s show we’re going to talk about, you have a bunch of myths.
You have the fallacy of assumptions, you have something called $50,000 moments. I want to cover all those as we roll through. But I want to start by saying if folks are interested, if you’re already intrigued and you want to pick up the book, it’s on Amazon right now. It’s called Let’s Retire Retirement, and you have a Kindle, a paperback and an audible version, or they can go if they want to find out more bi directly from you, derek coburn.com. So let’s dig in this tale of two Tony’s I love. This is for my left brain folks in the audience. We’re going to talk some numbers here as a financial advisor, financial planner. That’s something I really appreciated about this book is you can read books about the high level philosophy of this kind of stuff, but you get down to the brass tacks because you’ve been doing this for decades. So let’s talk through the Tony’s.

Derek Coburn:
Alright, so I introduced a character named Tony in my book. He’s 45 years old. He makes $150,000 per year and he has $150,000 saved up in retirement accounts. Tony meets with his financial advisor and just like what I went through a second ago decides he’s going to retire at 65 without giving it a whole lot of thought. And his financial advisor tells him, in order for that to happen, he needs to save about $2,400 per month. You spread that over the course of a year, and that works out to be about 20% of what he’s making, which is a non-starter for most people. I mean, that means you’re basically living off of the same amount that you’re saving. So Tony, like a lot of individuals that gets this information, starts freaking out. He’s behind, how am I going to catch up? I’m going to work longer.
I’m going to not go to the gym. I’m not going to see my kids as much. I’m not going to take care of myself and just kind of gives himself over to playing this game and getting to a place where he’ll have enough to stop. And I have his wife remind him in the book that he likes his work. Are you sure you’re going to want to stop when you’re 65 years old? I can’t imagine you sitting around and doing nothing. So Tony reaches back out to his advisor and he says, Hey, can you change my plan and update it? Show me working until I’m 75 instead of 65, and the numbers are staggering. So I’m about to give a lot of your listeners immediate access to a ton of extra time and money that they previously did not think they had. The number goes from $2,400 a month down to $110 per month.
The amount that he needs to save in order to retire goes down by 96%. And even if Tony were to say, I’ll work until I’m 70 instead of 75, the number goes down to $600 per month, which is a 75% reduction. Look, I’m not saying that anyone needs to work as hard as they’re working now or do the same thing that they’re doing right now. What I am saying is that if we find work that we don’t hate, if we find work that we enjoy doing, we can do it on our terms the way we want to do it. I think we’re going to be able to do it for a longer time. And having that money coming in later allows the money that we do save to compound longer, to grow longer, to work longer. And it takes a lot of pressure off of us in the here and now in terms of what we need to do financially.

Rob Walling:
And something I talk about a lot on this podcast is about through entrepreneurship, wanting to find three things, freedom, purpose, and healthy relationships. So there was a time in my life, it was back when my second son was born and I found freedom. I was working a 10 hour work week, literally I had a bunch of products. It was the four hour work week, but I was working 10 hours. It was amazing. I was free. I hung out with the kid all the time. It was great. I was so bored after 10 months, I was so bored. I didn’t have the second thing. I had the freedom, but I didn’t have the purpose. And then relationships are a separate topic, but that’s what we’re saying here is if at 65 you just stop, you have freedom now, Hey, look at all this time I have. And you lose that purpose. So even keeping something going, as you said, you don’t have to necessarily work as hard, but the bit of purpose that brings you and the bit of income is shown in this to Tony’s example, right?

Derek Coburn:
Yep. Look, we’ve all seen all these articles about how we should have saved more when we were 22 years old and we feel like idiots for not doing it to take advantage of compounding interest. But no one really talks about how you can accomplish the same thing and have it be even more beneficial because it’s such a larger pool of money by just extending the time that you have it invested before you start taking it out. And that’s what trying to bring to people’s attention with this example.

Rob Walling:
And I think if we think back to maybe my dad is an electrician or someone who worked in a factory their whole life, they probably didn’t love their job. And so they’re counting the days until they cannot do that job. And there was not remote work, there was no work from home, there’s no freelancing that times have changed. And that’s really what this book is about. I want to bounce to this concept you have called $50,000 Moments and the Time Machine Effect. Do you want to talk us through as a concept you go through in the book?

Derek Coburn:
Yeah, so look, I have two boys. They’re 15 and 12 now, and when they were about 10 and seven, we had a nighttime routine, my wife and I, where we would take turns laying in bed with each of them for about 10 minutes while they fell asleep. And I noticed myself starting to not appreciate this time that I had with my oldest, especially because I knew he was getting close to the point where he probably wasn’t going to want to do this with his dad and his mom for too much longer. However, I was sitting there a lot of nights thinking to myself, gosh, hurry up and fall asleep, fall asleep so that I can go have a glass of wine and watch a show or finish some work or do whatever. And I knew I should be valuing these moments more and I tried to force myself to do it.
And that didn’t work necessarily all that well either. So what I did is I just had the stall one day. I said, what if there was a company that created a time machine? I’m 65 years old and they tell me I can go back in time for one night to have one of these nighttime routines with my kid. What would I pay for that? To be honest, I’d pay a lot of money, but I called it a $50,000 check. I know personally that I would write a $50,000 check to go back in time when my kid is 12 or 10 and have one more nighttime snuggle with him. And so I said, look, I got to start treating a lot of these moments, like the $50,000 moments that they are. And I think there’s a lot of parents especially that are taking these moments for granted and our kids are going to be with us for a short period of time.
They’re going to be gone and we’re going to miss ’em. We’re going to miss these experiences. And knowing that I’m going to be working a lot longer knowing that I’m going to be working a lot more once my youngest is out of the house in five and a half years is really like it sponsors me showing up more for them right now. It sponsors all of the time and attention that I’m able to give them because I don’t have plans to stop anytime soon and I’ll be happily will turn it up a notch or two once they leave.

Rob Walling:
Yeah. See, and that’s interesting to hear you talk about it in your own life. Did the concept for the book come out of your own thinking of you yourself want to do this? Are you planning to keep working to 65, 70, 75 and doing this stuff? You can tell folks you run Cadre, which is a community in DC in an event, what is this stuff that you could see yourself working on for the next 20 or 30 years?

Derek Coburn:
Look, I love contributing. I know that I have a lot of skills. I know that I have the ability to add value to people in a variety of ways. I want to keep learning. I want to keep leaning into all the different things that I’m doing. So I don’t know that I can sit here and say specifically, this is what I will be doing. Maybe I’ll have eight books by then. Maybe I’ll have no additional books. Maybe I’ll do coaching, maybe I’ll be speaking, maybe I’ll do something entirely different. I mean, if someone wants to create the Granddad Olympics at some point I will happily enter into that competition. But yeah, to your point, man, look, I started writing this book in 2017 and I was going to write it as a way to attract more clients for my practice and clients for my practice were minimum investible assets of a couple million bucks.
I sold the business, COVID happened, and I just got really immersed in the lives of my kids. I spent an extraordinary amount of time with my kids, my wife, my friends, having incredible experiences compared to most people. And the idea for the book just sat there because I was living what I’m preaching, I was living what I’m trying to get a lot of other people to do. And it wasn’t until a couple years ago I said, I want to finish the book. But since I sold the practice and I’m not really looking for new clients now I can write a book that will hopefully benefit a much larger group of people than maybe who the initial intended audience was going to be.

Rob Walling:
TinySeed is the world-class SaaS accelerator that I run with my co-founder, a r and our amazing team. And we are raising fund three to continue doing more of what’s working. We’ve recently invested in our 204th B2B SaaS company, and although we’ve only been doing this for a handful of years, the early signs are really good. We’re able to help these companies grow. These companies become extremely valuable because B2B SaaS doing seven or eight figures of a RR is extremely valuable and I am wildly optimistic about the future of TinySeed and we’d love to have you be part of it. If you are an accredited investor or the equivalent of that in your country, you can invest if you’re a US citizen or if you live in I think most countries in the world. And recently we’ve actually carved out a few spots for smaller investors that weren’t able to hit the minimum investment that we previously had. So if you’re interested in indexing across hundreds of ambitious early stage B2B SaaS companies, head to TinySeed dot com slash invest to see our full investment thesis. And if you fill out that form, Einar Vollset will reach out to you or obviously you can ping a r directly on X Twitter or via email, that’s tiny c.com/invest.
And in the book you get in towards the end of the book, you get into really specific three buckets, pretax tax-free cap gains, required minimum distributions, a lot of the nuts and bolts that you bring to this as a financial planner. And I don’t want to dive too deep into that today just because it gets technical. And folks, if they want to understand that part, I think they should get the book and read those chapters. The next thing I want to talk about is I love this concept of investing in you. If you are going to work longer, you don’t have to work so hard, you don’t have to save so much, you don’t have to push it off so far, you can have more fun, you can exercise more, sleep more, your relationships can be stronger. Talk me through that part whether you have examples of folks or even in your own life having seen the transformation.

Derek Coburn:
So I think that when it comes to things like sleep and health and working out that our society overemphasizes, the benefits that will occur 20 years from now and under emphasizes the benefits that will occur 20 hours from now. So for example, yeah, if you sleep well, you’re going to live longer. If you exercise, you’re going to live longer. But the main reason to sleep well in my opinion, is because tomorrow morning when you wake up and feel amazing, you’re going to make better choices at nine o’clock. And those better choices at nine o’clock are going to leave to better choices at 11 o’clock and it’ll be easier to work and it’ll be easier to make time for friends and connection and dating your wife more and all of these things. And so the investing in you chapter is essentially me saying, hopefully I’ve convinced you and shown you that you’re likely to work longer than what you previously thought.
And the immediate benefit or result of that is you now have more money and more time that you can spend on other things. And I think that as entrepreneurs, as business owners, a lot of us feel like we don’t have the time to spend on some of these things that are good for us while we’re building the business, while we’re growing the business. But I also feel like the best thing that we can do for our business, for the value of our business, for the value that we are bringing to the table for our clients and our customers, is to show up as the most optimized version of ourselves as possible. And so I think that the best place for any of us to turn to for advice is this best possible version of us, the well rested version, the clear-minded version, the energetic version.
And even though it feels like maybe we’re taking away from the business, I am betting on myself, I’m betting on most people I know to show up, working less hours in their business, but they’re well rested, they’re feeling good in their body, they’re feeling good in their mind, they’re calm in their central nervous system. I’m betting on the results. They are able to generate more than the results that somebody who is actually in the business for an extra hour or two but is stressed out as anxious, is worn down, is sluggish, is not feeling very good.

Rob Walling:
Yeah, that makes a lot of sense. There’s a term you use that it caught my eye. It’s called the concept of a fun recession. Well, you can define it for folks. And then I think I’m curious to hear why do you think that adults do have such a hard time prioritizing all the things we’re talking about, the fun and the rest?

Derek Coburn:
I say that I think we’re in a fun recession. I think that the majority of adults are not coming close at all to having the appropriate amount of fun that they should be having on a regular basis. I mean, when my kids wake up every day, they’re thinking about how much fun can I have today? Who can I have fun with? What can we do that’s going to be enjoyable? And I think I’ve done an informal survey for the past five, seven years with soccer parents and people that I know, and I ask, when was the last time you had a good time? Most people pause for 10 seconds, they have to think about it. And the most common response is something along the lines of A month and a half ago, we went out to dinner with this other couple and we had a bottle of wine and we talked about our kids.
And it’s like, look, would the version of us that we would look back to as the version that was having a lot of fun, that was having a good time, would they be impressed with the type of fund we’re having right now with the amount of fund that we’re having right now? And so I think, look, I just think if we’re here, we’re going to be working hard. We’re doing the work, we’re spending time at work, all these things good, but we shouldn’t be enjoying ourselves a little bit too. And there are a lot of data points that I talk about in the book about how it increases productivity, how it increases just how you feel in your body, how it reduces inflammation and keeps you healthier. But I think ultimately we should be looking for reasons to have a good time just for the sake of wanting to have a good time.

Rob Walling:
And in the book, you give options of what you can do. Let’s say you do hit 60 or 65 and you’re kind of like, look, I’ve been a software engineer my whole life. I don’t necessarily want to keep grind and doing a 40 hour work week working salaried. You have options like you can transition to a new career. Maybe it’s something that makes less money but you enjoy more, right? Since you don’t need to make as much money build a side business, which obviously a lot of folks listen to this podcast are doing, you can transition to consulting or coaching, which gives you a lot more flexibility, can slow down, you can pivot, you can take a mini mini retirement or a sabbatical. Do you have any examples of folks you’ve known who’ve taken one of these tax and has really I think been able to step away? I imagine if someone worked 20 years, 30 years as a W2 employee, they might think when I’m 65, I don’t want to do that anymore, but I’m too scared to kind of do something else. How can they get over maybe that resistance in their own mind of, well, what else will I do to fill the time and make money?

Derek Coburn:
I’ll share a quick story that I mentioned in the book that came from a book called Originals by Adam Grant, and he references a study that was done that looks at entrepreneurs that start companies while they either have an existing stream of income coming in, and that’s one group. The other group went all in and just started a company sort of with no backstop whatsoever, even though entrepreneurs sort of had the reputation of being great risk takers. The best entrepreneurs according to this study, and a lot of this research are shown to be the ones that are very good risk mitigators because it was the companies that were most likely to succeed were the ones that were run by individuals who had a steady stream of income coming in from someplace else. The story that he tells in the book, he was approached by the founders of Warby Parker to invest in their company, and he says, the worst financial decision I ever made was not doing this.
And the reason I didn’t do it is because these guys all had other jobs while they were building Warby Parker. And I’m like, I’m not going to give these guys money if they’re not going to be all in and all focused on it. So I bring this up to say that I think having two things going side by side at the same time offers some nice ancillary benefits. First and foremost, the ability to be really particular about who you work with. So if you have your job now and you’re working the 40 hours a week and you think there’s something else that might be of interest to you, start it. Maybe do a couple hours a week, try to find one or two clients. If it doesn’t work out, you can pivot, you can do something else. But if it does work out, I think that that income coming in from the other job will prevent you from selling your soul or prevent you from feeling like you need to work with people that you don’t want to work with in order to pay your bills.
And I think that there’s just a lot of ways that we can all explore. We can look into taking online courses, we can look into reading about other interests that we may have. You have a really smart and intelligent audience. And I would say even though now the norm is people to just kind of stick with what they do, we’re going to be up to 45% of the workers in this country are going to be freelancers by the year 2027. And I think that even a lot of people that are listening to this that are the type of person that you just described, they’re going to be in a position where if they’re good at what they do, companies will be happy to have them. If you say, look, I can only do 10 hours a week. I only want to work on Mondays, Tuesdays, and Wednesdays, I want to take summers off. If you’re good at what you do, you’re going to have the opportunity to call the shots and set things up in a way that’s really favorable for you.

Rob Walling:
And I like having that anyways. I mean, boy, when I was in my early to mid twenties, even when I had a day job, I was often doing freelancing on the side, both to make extra money. We were kick-starting a life, but also I was always a little mistrusting at the W2. Too many of my friends got laid off. And so having extra legs under the stool I think are super interesting. And that’s something I want listeners to take away is this podcast. And a lot of this stuff I do focuses on launching products, software, products, SaaS products companies. But I just recorded a YouTube video the other day where I talk about, look, the fastest way to make money is not with SaaS. That takes forever to build a long time to launch. It’s very complicated. It’s actually to do some freelance work, to do some consulting, to take your expertise and it’s dollars for hours. And so it’s not something I ever wanted to do for decades, but it really isn’t that hard as long as if you have some expertise, especially like I say, my audience who probably has marketing or design or some type of software development expertise. So if someone’s listening to this and in your head they’re like, I want to take one action, I want to do one thing after hearing our conversation today, what do you think they should do? I

Derek Coburn:
Think they should pause and they should think about how much thought they gave to setting up a retirement plan if they have one, because I do think that a lot of people just go along with this concept on autopilot because everyone else is doing it. And when you do a retirement plan, if you sit down with an advisor or you do it online, you have to make a lot of assumptions. You have to assume what inflation’s going to be for the next 20 years. You have to assume what rate of return you’re going to get in the stock market every single year for the next 20 years. What you’re going to earn after that. You have to assume what tax rates are going to be. Oh, by the way, you’re going to have to correctly guess what age you are going to die and your spouse if applicable, if your parents are going to have any issues where they’re going to need support financially or your children.
We’re picking all of these numbers like they’re easy to pick. And look, we’re all going to be really wrong about all of this. That’s the one thing I can safely bet on is that whatever we’re assuming we’re going to want in 20 years and what needs to happen in order to get there, it’s not going to be the way that we think it’s going to be. Yet so many people are living their lives based on the confidence that all of these things are going to happen. Look, you might save, and you might have this great plan that’s based on you being in a 30% tax bracket when you stop working at the age of 65. And if that’s the year that someone gets elected and decides to bump your tax rate up to 55%, then your entire financial plan is just going down the tubes at that point.
So really just be mindful of it. The reason why the retirement movement is as big as it is, is because people were promised to feel a certain way once they got to retirement, they were promised a certain outcome, the arrival fallacy, if you will, they were promised something. If they did things a certain way, they would feel a certain way and they’re not feeling that way. And I’m trying to get the attention of people in their thirties, forties, and fifties and help them realize that they’re probably not going to be happy with this idea of sitting around doing nothing for 30 years. And I want them to think about how they can live their lives differently knowing that that’s probably not going to be an outcome that they want.

Rob Walling:
Derek Coburn, thanks for joining me on the show, man. Your book is Let’s Retire Retirement, and It is Out today, as of this episode going live on Amazon, Kindle, paperback, and Audible. Thanks so much for joining me.

Derek Coburn:
Thanks so much, Rob. Appreciate you.

Rob Walling:
Thanks again to Derek for joining me on the show. Again, you can buy the book on Amazon or@derekcoburn.com. And thanks to you for listening this week and every week. This is Rob Walling signing off from episode 777.

Rob Walling:
Welcome back to Startups For the Rest Of Us. I’m your host, Rob Walling, and in this episode I talk with Kevin Wagstaff about how he and his brother co-founded a SaaS company and sold just under half of the company at a $90 million valuation. Yeah, bootstrapped it to a $90 million partial exit and then sold another swath of the company a year later. It’s a pretty incredible story. Kevin is a longtime listener of the podcast, a MicroConf attendee, and you’ll actually hear in the episode how he met the potential acquirer in the men’s room at in Denver 2023. It’s a pretty incredible story, and what’s interesting is this podcast and MicroConf have now been around so long that you are now hearing of folks who are the second or the third generation of founders, even like Reuben, probably the fourth generation of founders that have come up listening to this podcast and reading the books and going to MicroConf and being part of this community.
And few things bring me more satisfaction and happiness in life than hearing these stories and hearing these stories directly from the founders told straight from the heart like Kevin does in today’s episode. It really is an incredible story of how they bootstrapped and exited this company. And at the end, I ask for your questions to bring Kevin back on the show. So as you’re listening, if you have questions for Kevin about anything about how they grew the business, why they sold, how they sold, just anything that you hear, jot it down, send it to Questions at startup For the Rest Of Us dot com or at mention me at Rob Walling on X Twitter and I’ll bring Kevin back on. He said he’d be game to answer some listener questions before we get into this episode. If you haven’t checked out the SaaS launchpad, now is the time.
This is my nine and a half hour video course that takes you from no idea to your first paying SaaS customer. And you don’t have to take my word for it. Here’s what recent SaaS launchpad graduate Val Soapy had to say, and I’m quoting him here. I love the rapid paste nature, the hands-on interviews with industry leaders and the overall well-structured content. The course helped me discover my most recent B2B SaaS, which I just launched, and with which I’m already in the process of signing up my second client with over 80 employees after signing up my first client with over 300 employees, and I’ve recently added a new module to this course featuring arvid call the founder of POD scan fm arvid, and I go deep on what really matters before you bring AI into your SaaS, what to watch out for, what’s working and where founders are getting tripped up right now.
If you’re even thinking about ai, you’ll want to hear this. And if you buy and finish the course in the next 30 days, you’ll be entered to win a 30 minute one-on-one session with me. We can workshop your SaaS idea, tackle challenges or map out your next move together. If you want to kick the tires first, you can get a free sample lesson at SaaS launchpad.co. It’s a 28 minute video on the DNA of a great SaaS idea. And as a bonus, if you watch the video before June one, you’ll be entered to win a full copy of the course completely free. Since you’re listening to this podcast, enter the promo code launch at checkout. You’ll find all the details and the free sample at SaaS launchpad.co. And with that, let’s dive into how Kevin Wagstaff bootstrapped his SaaS to a $90 million exit.
Kevin Wagstaff, thanks for joining me on the show. It’s an honor to be here, man. I’ve heard your voice for a long time, other side of the AirPods, so to speak. So you and your brother built an absolutely incredible business called Spector, and your H one is all in one home inspection software, the trusted solution for home inspection, report writing and business management tools. You started it in looks like 2017 and you sold it. You can tell the listeners how much you sold it for. I’m just going to say for a cajillion dollars in, what was it, 2024.

Kevin Wagstaff:
2023 was the first sell, and we sold a minority stake to a great private equity partner, Radian Capital for valuation at 90 million. So we sold just under half the company at that time for 90, and then we sold a little bit more in 24 at a little higher valuation. One 10.

Rob Walling:
Yeah. So you and your brother still owned the majority of the company and each walked away with, if I’m doing loose math, was 20 20 million, 23 million, somewhere in that range. Unbelievable. So I guess my first question is I want to hear the story of it, why it worked as fast as it did. The acquisition process is a, that’s three podcast. That’s a whole miniseries. I could do a TinySeed tails miniseries just based on what you put there, but the real question I want to ask is do you remember that moment when the money came through finally, and I assume you went from being well off, you were running a successful SaaS company, so it wasn’t like you were scraping by, but suddenly it was like, oh, I never have to work again and my kids probably never have to work generational wealth. I’ll say that’s tremendous. What was that like for you?

Kevin Wagstaff:
I was sitting in this office and the process was a grind, and so it was definitely like a refresh. Refresh. Is this really real? And the bankers told us it’s never real until the digits are in the account and just refreshed and hugged. My wife felt like crying, but I think oddly I had to go to Costco or something later in that afternoon, and so anti climatically, I took out the trash and then went to Costco or something. That’s all I remember.

Rob Walling:
I love this because I tell the story of signing our final asset purchase agreement, our a PA with drip and the money coming through, and I was at a cello camp with my kid and the teacher was pissed. I was like, I had to go sign on my iPhone. And I’m like, step out and you’re supposed to, it’s Suzuki method, you’re supposed to be in there. And so I’m like, oh, I’m sorry, I got to go and I’m signing this thing. And it’s just like, it’s just normal life. You’re just rich. Now you do. You take out the trash and then the plumbing breaks and you call the plumber just like you did yesterday. You just don’t necessarily worry that it costs $300. That’s

Kevin Wagstaff:
Exactly in our heads though. We’re on a yacht popping a ball of champagne and there’s people everywhere and everyone’s putting you up on their shoulders, and in reality it’s just like, well, and here we

Rob Walling:
Go. Did you call your brother? I mean, you and your brother started this company. Did you call him and just say, bro, we did it.

Kevin Wagstaff:
Yeah, yeah. I think we maybe met up the next day and hugged and just let our shoulders down to say, part of the goal was to have generational wealth and money forever and a few money. And you’re right, we paid ourselves well because we had good margins along the way as a lot of bootstrappers can do. But it is a different level when it’s like, okay, true optionality and post economic or whatever you want to call it.

Rob Walling:
Yep. Yeah, that amount of cash in the bank is different than, oh, I made even half a million dollars last year or a million dollars last year. That is really cool. But there’s, I’m not throwing any shade at, but it is different than seeing a 23 million balance in your bank account. It is different. Remind me of what your revenue was forward looking a RR when you sold that first 49%.

Kevin Wagstaff:
Yeah, I think we were about, we’re going to be on a $12 million run rate around the diligence time. It was about midyear 2023. And so yeah, the multiples were kind of around that six, seven ish range.

Rob Walling:
And selling in 2023 was as it was recovering. If folks remember big boom in 2021, tons of deals going m and a deals especially. And then 22 was the bust, and then 23, it was like middling. I remember because a and r, you’ve talked to a R from TinySeed, he runs Discretion Capital, which is the sell side m and a advisory for SaaS. And 2023 was like touch and go, touch and go. So you sold in the middle of that and got a good multiple.

Kevin Wagstaff:
It felt chunky and lumpy in there though for sure, because running a process during the biggest interest rate hiking cycle in history maybe was not good for our blood pressure, our hair lines, but it was brutal.

Rob Walling:
Yeah, bet you did it. So we’re going to talk through this episode. I want to find out why you sold a minority share instead of just selling it all. The process itself is filled with so many ups and downs. I don’t know that we can cover ’em in a single episode. And one kind of twist to tease is you actually met someone, so Radian ultimately acquired the company and you met someone from there at MicroConf in Denver in the men’s room of all places.

Kevin Wagstaff:
This is why this is so special for me meeting you and talking to you is that our journey began with you with startups For the Rest Of Us. We were OGs, man a decade ago listening. We started from the beginning and then meeting someone at your conference. So you’re a special person in this journey,

Rob Walling:
Dude, that’s awesome. Well, I look forward to having an old fashioned with you at some point here soon.

Kevin Wagstaff:
Yeah, my treat.

Rob Walling:
So talk to me about then, let’s roll it back to 2017. You made some notes for me, which are really helpful to kind of give me your January, 2017, I had $9,000 in my bank account, $30,000 in wife student loans. There’s $10,000 loan from parents and a second mortgage to move into the new house. That gives you people an idea. It’s like you’re doing okay, you’re doing solidly there, but you’re kind of just living a life and you get this idea. How did it come about? I know that in 2017 there was already SaaS for home inspectors. So what was the thinking there of there needs to be another one and how are you different?

Kevin Wagstaff:
Great question. So about a year and a half prior, a good friend of my brother and I, his dad is a home inspector, and he came to us with an idea and said, Hey guys, the leader in this space I think is a little weak. There’s not an impressive SaaS player. And he said, I’d love for you two to come on board. This idea have to basically improve upon it. And so we liked the idea of niche. We didn’t like the idea of big fundraising, very capital intensive businesses. We kind of came from the school of lean startup and 37 signals type mentality. And so we took a look at some of the competition and we said, man, maybe SaaS forgot about this niche, this industry, because there wasn’t the sexy player. When you look at their homepage and you’re like, ah, next idea, someone already dominated this. There were still downloadable DVDs and mail it out to you players that were on the first page of Google, some very old looking ones. So we said, huh, okay, we think we’re going to compete here. So the idea found us, the other two founders dropped out a year later. So by launch it was just me and Mike with this kind of baby and idea. And 2016 was basically customer interviews, building MVP, helping customers basically with their marketing and SEO to kind of as a hook to get them interested in the software.

Rob Walling:
And did the other founders who left, did they have equity? Did you buy them out?

Kevin Wagstaff:
That was pre-launch and so they signed away any rights. So and this is such a good lesson, not on one side or the other, they had good paying jobs. They were probably making a hundred, 150 K at a tech company. I don’t think they wanted to go all in on something. They wanted to part-time it. And then once Mike and I really started putting in long hours and being on Slack all day, they were like, you guys are ready to do this at a level we’re not ready to commit to because we wanted to be all in. We knew customers would feel it if we were kind of moonlighting part-time, not around half the day. So we went all in on it.

Rob Walling:
And so it’s your brother Mike, and what are your backgrounds? Are the two of you developers?

Kevin Wagstaff:
He was a business major, but a computer science minor. And then I was a finance major, did real estate for five years and then kind of self-taught front end code, but then had more of an SEO marketing background. So little bit of a jack of all trades.

Rob Walling:
So your front end and was he the backend?

Kevin Wagstaff:
Yeah, he was everything. He was full stack. I was not at a level where I was writing production code. I was building websites for home inspectors. So more of on the marketing side.

Rob Walling:
Interesting. Ooh, so you have a marketing sales co-founder, you have your engineering. Yeah, that’s one of my favorite. And with TinySeed, that’s one of our favorite combos.
I think the only way it could get better is if one of you had been a home inspector. You know what I mean? If you have subject matter expertise. So this is interesting because I want to get to your growth in a second. The growth is stunning for this space. And I told you offline, if someone told me they were going to start a home inspection SaaS in 2017 or today or whatever, in no reality would I guess that it would grow this quickly. Actually, I’m going to go run through it right here. So end of 2018, you’re at $103,000 of MRR. So 1.2 million, forward looking end of 2019 doubled to 200,000, end of 2020 330,000, end of 2021, 600,000. In MRR you almost doubled again. And that’s 7.2 million. I mean, this is crazy. In 2022, you’re at 700,000 and of 2023, almost 800 KMRR.
Just to set that stage, I mean it is very fast for you to get there in this space. I guess what happened, how did you pull this up? Because if you were to tell me I’m going to start an ESP because I know the ESP space and you can go really fast. We saw it with, I mean I saw it with Drip, we saw it with ConvertKit, we saw it with beehive and substack. So there are spaces where if it’s a big market, you can get traction really quickly. Home inspection software is not one that I would expect to be that, but obviously you proved it. So what did you guys do? Right?

Kevin Wagstaff:
I think we came with a fresh angle at the time because if you know home inspectors, their typical process was they show up, they have a point and shoot camera like a cannon, and then they go home and build the report and send it to you. That was the way it was done for the most part up until about 2015. So we just believed in mobile first, which is so funny to say that in 2025 mobile first it was like, okay, they should be doing most of this on the app. So there was a little bit of innovation there of like, Hey, 90% of your inspection should be done on your phone and you might even be able to publish this in the driveway standing there with the buyer. We just, efficiency, that’s the way it should be. Home inspectors are about 10 years behind everything else, kind of like real estate, certain markets, technologically speaking, they’re behind.
So I think that was one big pillar was we innovated on the process and the workflow to say mobile first, the app is going to be way better than anything in this industry. Second, we knew these were not the most tech savvy customers, so we basically lived for customer service on Intercom. We lived on there. We would chat with ’em all day. We would have very unprofitable customers for the first year or two because the word of mouth was such a big deal in that industry. So I think the word of mouth you mix in our SEO presence was good in year one and two. And then the innovation on the app and the word of mouth really spread like wildfire because it is a herd mentality of like, Hey, have you seen this new software? It does X, Y, Z, low cost of acquisition when they’re just telling each other.

Rob Walling:
That’s the thing is typically this type of, I call it customer pain versus competitor pain competitors starting an email service provider, there’s 500 of them, so have fun, good luck. But customer pain is, well, there’s no good. It’s what you found, which is like there is no good competition here. We’re going to clean up with some good UX and customer service. But finding the customers is usually expensive and supporting them is usually expensive. It is realtors, construction, whatever. It’s less technical for auto mechanics and such like that. So it’s interesting for me to hear that your cost of acquisition was so low because you truly figured out word of mouth is what it sounds like. Is that right?

Kevin Wagstaff:
Nailed word of mouth really leaned into YouTube videos early on of just every single thing in the workflow that you could come across. I’m going to do a demo, I’m going to do little videos, we’re going to have playlists, we’re going to link it everywhere to try to help self-serve take off earlier. But the conferences and the reputation in the industry really floated us and carry, and the wave just kept going and going from that.

Rob Walling:
And here’s the thing, man. Most companies that I see, whether TinySeed, MicroConf, outside of that, most companies kind of in our mostly bootstrap B2B SaaS space, if they grow this quickly and get as big as you did, they’re high priced. They’re selling big ticket $25,000 a year, $50,000 a year end up and not all, but just as 80 20 maybe. And as I look at your pricing, which I’m sure has changed over the years, but just your pricing today is monthly. It’s 99 bucks a month, annual, it’s a thousand bucks a year. And then you have website plus SEO, which is like 1700. Your jumpstart package bundle is just over 2000. These are not high ticket, these are not high price points. And in fact, they actually restrict what you can afford to do. Trying to run Google ads I’d imagine is tough at a thousand. And so you do really need, you can do content, you can do SEO, you can do obviously word of mouth because it’s free and virality. There’s a handful, five, six, maybe seven marketing approaches that you can afford to do at that type of annual contract value. But it sounds like that wasn’t really as much of a damper as one might think.

Kevin Wagstaff:
Yeah, shockingly the high volume, high velocity kind of approach worked and compounded. It’s a high churn industry too, and that’s very scary. And I think that’s what scared some of the potential buyers was how do you handle this kind of churn if half your user base could go out of business in the next year, but a lot of inspectors sustain and do enough business to be part-time or seasonal. So we get a lot of boomerangs and And there’s about 30 to 40,000 home inspectors in the US and Canada. That’s kind of the estimate. So that was our TM we were dealing with. But then payments, that’s like the hidden multiplier. So they process the payments through our white labeled stripe

Rob Walling:
And you get a cut percent on that. Yeah, yeah. This is something I really want listeners if they haven’t heard this before. This was something I had heard of before TinySeed, I knew it existed. I saw it with Shopify and I saw it with other folks. And we have, let’s see, we back 204 companies through TinySeed, and I’m guessing there’s like maybe 20 or 30 that do this where they have, they take a cut of GMV in US essence, gross merchant volume, and sometimes that cut is 1% and sometimes it’s up to, I don’t know, six, 7% In certain instances, those numbers add up and they snowball the further you get in. And so it sounds like this is exactly what happened with you.

Kevin Wagstaff:
That was a big part of the snowball. First it was 1% of revenue, then five, then 10, then 15. The more you process, the better deals you get with payment providers. And then we work with our inspectors to have their ticket price go up by adding more services. So you start to think about your customers making more money, and then the snowball just gets bigger and bigger. So I didn’t understand the power of payments before, and then it’s like, wow, what businesses can you process payments for people?

Rob Walling:
And we had, well, Iran from Gym Desk, a TinySeed company, he came on the podcast, I dunno, in the last six months, and he exited, I forget what the published number is. I think it was 32.5 million for a majority stake. But he still, we all have a tiny seat, has a second bite at the Apple and so does he. And one part of Jim desk is payments. It is, and it’s Jim Jims that our subscription, and I forget what they take, but he happened to have a very low churn business that also had payments. So it was a similar thing and the multiple was really high. So we’ve talked about your growth and how you got this word of mouth in the early days it was customer service. How did you initially, let’s say the first six to 12, maybe 18 months, you have a cold start problem where it’s like one person in the industry. You’ve built some software mobile first. I get it, but how do you get that momentum? I mean, at the end of 2017, your first year really in business, you’re almost at 20 KMRR already people listening, there’s a lot of people here who would kill for that. Did you feel like getting there was like, oh, this was easier than we thought? Or was it like, oh my god, Mike and I were grinding nonstop to get there. What was that like?

Kevin Wagstaff:
The grind resonates, so it was constantly calling, emailing, asking any inspector that would even answer anything, any email or call to tell me what he hated about his software. So that was my role. We did connect with the biggest trade organization in our industry, so where everyone registers to get their continuing ed, it happens to be in Boulder and we’re in Denver. And so we drove up there, shook hands and said, we’ll mop your floors, we’ll do whatever. How can we be helpful to your home inspectors was the ask, where do you have gaps? What can we do to help? And then we went to their first little trade show up there and set up our little desk that looked dinky and the tablecloth was wrinkled and we were embarrassed and we were like, no one’s going to take us serious. We’re just two kids that don’t belong in this industry.
Posture syndrome like crazy. And it was tough because they were like, oh, you guys will be gone in a year. What’s different about you? Like, oh, new software, I’m good. I love what I got. You just hear that all the time. And they really don’t. That’s what I learned was they don’t want to be sold to. So at every conference we went to, they said, no, I’m good. Love my software. I was like, no, you can’t love all of it. Is there a part of it you don’t like? So trade shows getting buddied up with the biggest trade organization and then just every day anyone that even would do a trial, it was like, call, text, email, want to do a demo, want to do a third demo, six in the morning on Sunday. Cool. Our pride was answering the email within one minute. So when they would email and ask a question, Mike and I were racing to see who could answer it because we just wanted them to know that we’re going to help you figure this out. Wow. Talk about things that don’t scale. You know what I mean? That was our mantra that we live by. It was like, this doesn’t scale, but we’re going all in on this and we didn’t see our wives for a year or two, and that’s how there were sacrifices there of sitting in that office 12 hours a day.

Rob Walling:
And that’s got to be what I mean, there’s a lot of, you doubled several times as I was saying when I read it out, but getting to 18 KMRR almost 20 by the end of the first year is like, that’s crazy. The one that I think that surprises me the most is one year later you’re over a hundred thousand MRR you, five x in a year. Was it

Kevin Wagstaff:
The same story? There was two big occurrences that happened. So we also went and found all the Facebook groups where home inspectors hung out and mingled. There was these small Facebook groups and we were like, okay, how do we get in there to be helpful? So we would just try to add ourselves to them. We would ask an inspector that we knew to add us and let us in there just to listen and we wouldn’t even post because they hate vendors in these Facebook groups. And we tried to find the influential inspectors in there and really poke on that. And so one very influential inspector that everyone looked up to, killed myself to get a demo with him and he was like, I’ll meet with you, but it’s 6:00 AM on Sunday. That’s the only time I got. My kids are busy. My kids keep me busy.
I got inspections all week. And I was like, this is a test, man. I was like, let’s do it 6:00 AM Sunday. So I set my alarm, got up at 4:00 AM prepared. He ended up loving the software. He went and told his Facebook group of 200 inspectors that the next biggest thing is out there. You guys should check out Spec Tora. So that was one kind of push when we were like, wow, these guys listen to each other. Then the second we did a stupid grandfather pricing for life sale. I saw that. I saw that in

Rob Walling:
Your notes. I was like, it just goes to show you you can make mistakes and still survive. Was it a one-time thing then a one-time payment or just grandfather their pricing for life,

Kevin Wagstaff:
Grandfather pricing for life. If you do an annual deal, so you do an annual, you’ll never have a price increase for the rest of your existence. And turns out when we went to sell every private equity’s, like Why’d you do that?

Rob Walling:
Yeah,

Kevin Wagstaff:
It’s not great. You’re like, sorry, I was

Rob Walling:
Done. But it was only a hundred customers or something.

Kevin Wagstaff:
Yeah,

Rob Walling:
So it was a small number.

Kevin Wagstaff:
We knew we would have to raise prices over time as every good SaaS should, but those were kind of the two watershed moments where it was just big sale. And then we did another one on Black Friday and people do respond to these kind of FOMO sales, I think. Did you raise any funding or have any outside investors, or was it just you and Mike? Me and Mike, we started, we put in $2,500 each for the domain name and the AWS instance to stand that up and got calling from

Rob Walling:
That. That’s it. Yeah. Wow.

Kevin Wagstaff:
We did have about, yeah, like I said, I think we had maybe 10 or 20 grand in the bank each. So we had some runway and we told ourselves, Hey, first year we’re not going to pay ourselves.

Rob Walling:
And so the two of you then, it wasn’t nights and weekends, did you guys quit the day job right away?

Kevin Wagstaff:
We burned the boats to a degree because yeah, that’s a big deal. We both said we could go back to freelancing in 2018 if we go a year and we we’re just struggling and chugging along, we can pick up freelance stuff on the side. And I think we were still winding down some of the freelance stuff in those first couple months, but then once that first a hundred customers hit, we were like, we’re burning the boats.

Rob Walling:
That makes sense. As I hear more of your story, the little elements I got to know about the Facebook groups for example, or the 6:00 AM Sunday call ride is the first time I’m hearing it. As you talk about the Facebook group stuff, it makes me think, yeah, that’s totally, that’s how I used to think with Drip, right? Or that’s how I think too. And sometimes I’ll tell that to founders, they’ll ask me for advice whether on this podcast or whether privately, I’m like, well, are the Facebook groups for the thing? And there’s always a question of like, well, how does that work? How do I get in it? How do I not sell? How do I this or that? And it’s almost like a resistance to just doing it. And I remember again, back in my day of going on Reddit and responding to things and being a little salesy, a little tiny bit, but not so much.
And this works if you just do it. And I guess that’s what I kind of want a listener to hear is you thought about it, you kind of had a playbook in your mind it sounds like. And as the new thing came up, it’s like, oh, there’s Facebook groups. We have to be there and we’re going to put in the time and we’re going to put in the effort and we’re going to do this. Well, and it sounds like that was a piece of this puzzle. It was no one thing, but it was a lot of hard work. It was maybe a little luck, I guess, and a load of skill and willingness to just do a lot of things that resonate with you.

Kevin Wagstaff:
It does. And I could tell your approach was similar was like you just go in there and be helpful. And so what that required was thinking, where are home inspectors weak? What’s something they don’t do well? And it was like market their business. And so I going to make sure I learned everything I could about SEO and setting up a website and Google my business. And when someone had a question in those forums or Facebook groups, I would just chime in and answer and not say a thing about Spector. I almost anti sold. And I wanted them to be like, who’s this guy? He’s not an inspector. And then my signature, they would see a link to Spector. So I get clickthroughs from that.

Rob Walling:
That makes sense. And something I want to call out too is some founders, especially online or I have the SaaS launchpad course and folks will say, well, I can’t imagine building anything if I’m not customer number zero or number one, if I’m not building it for myself, it’s eating my own dog food. I couldn’t do this. Right. But you weren’t a home inspector and neither was your brother. It sounds like you had a friend, I forget if it was a relative or a friend.

Kevin Wagstaff:
Yeah, a friend’s dad was the home inspector. I was a realtor for five years. So I received home inspection reports and that maybe was a wedge, was my wedge. I said, Hey guys, I got these reports and I hated them. They were 90 page PDFs. Our new version of the report is it’s modular pictures blow up, there’s video. So that helped a little, but my magic line was like, Hey man, I’m not a home inspector. That’s why we’re going to listen to you tell us and we’ll listen. So our calling card was like, it’s an advantage that we’re not a home inspector. We don’t think we know better than you.

Rob Walling:
So I want to transition us into talking about the acquisition. Obviously a big piece of this story, I want to call it out though, if you’re listening to this, the acquisition is, it’s a capstone on a story, but there’s 5, 6, 7 years of you guys grinding and growing this. That’s the real story. I’ll say. There is no acquisition without all of that. And so it sounds like you had almost an acquihire offer in 2017 where Porch, I don’t even know who that is. Are they private equity? Are they a competitor?

Kevin Wagstaff:
No, they’re now an insurance company, but they were kind of like a home services marketplace. If you think of an Angie’s List or home advisor, they started off as that. Got it. They got public via spac. And so they just took the approach of buy up anything in the home services.

Rob Walling:
And so they offered you stock and a little bit of six of cash low six figures, and we call that an acquihire and TinySeed companies get this more often than I would care to admit. And usually it’s just a big fricking waste of time. They’re like, Hey, we want to acquire you. And you’re like, great, we’re really early. And they’re like, great, we’re going to give you some stock in our private company. I guess. I dunno if they were public at that point, but it’s like this really isn’t, probably isn’t worth it. Did you guys even entertain that or you like No,

Kevin Wagstaff:
We got a little scared because the CEO told us he’d basically make a free version of what we did. He’d spin it up and crush us. And so it was more like we’re going to get squashed the little cockroach we are at the time. We thought about it for a hot second, but then we just doubled down on what we believed and saw was like, no, people are liking this. People like what we’re doing. So we said, no, let’s compete. But we were scared for a second there, which is

Rob Walling:
Totally, yeah, it’s totally

Kevin Wagstaff:
Natural. Big money comes into every space, it’s going to scare.

Rob Walling:
Yeah. And so then in 2020, it sounds like front door made a $12 million offer. Was that mostly cash and was that serious enough that you guys considered taking that?

Kevin Wagstaff:
Yeah, that one we thought about because that was covid. So there’s opportunistic buyers coming out and we thought, okay, they do warranties, they’re adjacent to us, but we just saw our growth and we were like, no man, we’re still growing. If someone will pay this now, keep executing, keep our heads down. We’re in the zone working our asses off. It’ll get better. We’ll keep winning. So said no to that.

Rob Walling:
That’s big man, because if you two could have walked away with 6 million cash each, that is in most cities, this never have to work again, money, retirement money, it really is. You don’t need, a lot of people say 10 20. It’s like, nah, you can do it less than that. And so you must’ve really had the confidence that you could keep executing

Kevin Wagstaff:
And it felt opportunistic given the environment. They didn’t budge at all. We showed ’em our kind of amateur projections to say, Hey, we think two years from now, this is the a RR we’ll be at. And they may have not believed it, and maybe they didn’t have a reason to. I don’t know if we believed it, but we created a spreadsheet that we’re going to make. We’re going to grow and get there. And so we ended up not doing it. I’m

Rob Walling:
Glad we didn’t. And then in middle, it was June of 2022, you met with what a Bay area private equity company and they want to make an offer without running a process. I want to call this out because this is really common. Running a process is basically having an M and a advisor who goes and gets in touch with a hundred, 200 strategics and private equity and does kind of an auction where it’s like, Hey, this is for sale and you’ve got all sign lois, and you got to make offers and you got to make offers first. I guess they send in lois and most buyers, if they approach you, they want to try to get you to where you don’t do that because then they might get outbid. So then they try to, oh no, don’t run a, I mean NR deals with this all the time. So I want to call this out and I want you to explain, add on to what I’ve just said of why did they tell you not to run a process and then you decided to run one anyway. So talk me through that experience.

Kevin Wagstaff:
Yes. So we read forums, talked to other founders and found that we were kind of on that border of hire banker. Don’t hire a banker because smaller deals, it’s just probably not worth it. They may not even work with you if it’s in the low single digits, but every PE we talk to, they don’t like processes because it’s competition and it pushes the price up and then they have to compete and fall in line with everyone else. So they want to build these relationships with you early. Most of your listeners are probably getting these emails and calls because it’s an associate saying, Hey, want to get you to like us? So then when you’re ready to do a deal, it’s just, I’m not saying they all will chisel you down on price or try to give you poor multiples, but no competition usually brings a price down.
So we met with Hula and Loki, some bankers of New York. One works out of San Francisco, and we really liked what they had to say. They were very honest with us. They told us a competitive process will really show us the quality of buyers that are out there because there’s some private equities that are not interested in helping you run a great business for your customers. They’re just not. They want to roll up companies. They want to Frankenstein together something bigger to sell to the next private equity. So they helped us. It was like a master’s degree in private equity that they helped us through and we learned so much from the bankers. And so personally, I’m glad we did it, and I was happy to give the couple percent of the overall deal value to them because they showed us the game, they introduced us to people and they taught us what a business packaging it up nicely looks like with the right deck, the right selling points. What future vision are you selling to the buyer? It can’t just be, look what we did. It’s like what are they buying?

Rob Walling:
Yeah, where are you headed? No, that’s really good. I mean, Sherry and I, as you wrote a book Exit strategy and has published it in the last few months, and that is something I’m really bullish on hiring a good banker. And of course I’m with Einar Vollset who runs Discretion Capital and I refer a ton of people over there because some people don’t want to pay the, I don’t know, three, five, 6%, whatever the percentage of purchase prices is. And I’m always like, oh no, don’t DY your own legal, don’t DIY, your own tattoos. Don’t DIY, your own LASIK eye surgery and don’t DY your own acquisition. This is the biggest transaction of your entire life. Very likely,

Kevin Wagstaff:
Yes.

Rob Walling:
Why be cheap? You don’t want to pay someone half a million dollars. When I say half a million or six, even if it’s a million, it’s like, oh, that’s a lot of money. But if you’re paying them a million, you’re making so much more than that.

Kevin Wagstaff:
Yes, I respected it after going through it. I thought me and Mike thought the same way. We were like, oh, we could just represent ourselves and just do this. There’s so much inside baseball to this that you learn along the process, and I respect it so much more now of how to position a business for a buyer.

Rob Walling:
And you said you wanted to shout out a compliment to a private equity firm because there’s a lot of private equity that’s shifty, and there’s some that are good and there’s some that are great, but in particular, I think it was

Kevin Wagstaff:
Main sale, main sale partners. They just came across as so authentic and down to earth and not private equity in the sense of the sharp elbows talking a different language. We started talking to them in 2019. I started doing calls well before we were ready to even think we were a viable business to buy because I wanted to learn from them and ask. And that would be my advice to any entrepreneurs is when you’re talking to private equity, don’t be shy to ask them like, Hey, what would make this business worth six x seven X? What are you looking for? What’s appealing to you? And make them tell you. But anyway, main sell was very high integrity, very transparent. It never felt like they were trying to get a deal or get one over on us. I wanted them to be the highest bidder at the end of the process. They weren’t, but gladly worked with them and may work with them in the future. We’ll

Rob Walling:
See. And then the Bay Area private equity firm I mentioned earlier who tried to convince you not to run a process. Turns out they were one of the higher, highest bidders in the process, which is interesting. Right. I know you had a higher bid, but they dropped out to environment. I guess before I want to talk through how that went down. It sounds like it was tricky. You and your brother only sold 49% of the company with that first swing, and then you sold another, as you said, another small chunk of it, A year later. Yeah, a year later. Why? Why not just sell the whole thing all at once?

Kevin Wagstaff:
Yeah, we thought about it because obviously the dollars go up the more you sell, and we just thought there was still more to accomplish. We had projects, we had our go to market getting revamped. We had a few kind of new products we were rolling out, so we just thought there were things on the horizon that were going to increase the stock value in the next year. And so we said, no, we want to maintain control. And the second reason was we want to make sure to still be doing right by our customers because we have such an involved customer base. They know so much about our business and the product, and they’re so into it and so loyal that we wanted to make sure everything was above board and that customers were still being taken care of. And so that was a good kind of a glide path for working with the pe, I think was saying like, we’ll sell you a minority stake. Of course, we want all your resources and your help and your guidance because some of these firms, they’ve seen hundreds of businesses like Spector, as much as we think we’re all special. We were like, oh, wow, you have seen this story before. Help us. And so that was the initial rationale was we have more to accomplish. And then we’ll do the second bite later.

Rob Walling:
So this Bay Area private equity firm, you signed with them and it was at an 80 million enterprise value flashback, 30 minutes. We said you sold for 90 million. So this is not the one that goes through this wasn’t the winners. And so you sign an LOI in early December of 2022. So then due diligence over the holidays, which is a fucking nightmare. Regrets. These are life regrets when you do that stuff. I know you did not take a day off the entire Christmas New Year’s cycle.

Kevin Wagstaff:
Yeah, there’s never a good time to just get put through the ringer of just being told Your kids are ugly. Your mom’s ugly. Your dad’s ugly. You’re ugly. It’s abusive. It’s just abusive.

Rob Walling:
Yeah. Everyone I talk to who does any type of deal, whether it’s 80, 90 million or whether it’s like five or 10 million, they’re just like, due diligence is one of the worst experiences of my life. It

Kevin Wagstaff:
Points out everything you failed to document since the beginning.

Rob Walling:
Yeah, it’s terrible. And so they flew out and met you in Denver January 10th, and I like this. This is eloquently put, you said, we got appetizers and drinks. They said all the right things, excited to partner, love the business, et cetera, et cetera. Eight days later, the day before close and we’re going to receive a wire for $29 million. They send all caps, the retrade offer. Do you want to tell listeners what a retrade is?

Kevin Wagstaff:
Yes. A retrade is a company gives you basically an offer, offer sheet and says, Hey, pending due diligence, this is the price. These are the terms, this is the amount of money you’re going to get. You send wire instructions. And then they do their due diligence and afterwards they say, Hey, things we found are causing us to believe your business is worth less than it was when we made this offer. And when you put it that way, you’re like, okay, that’s not the most unreasonable thing to say that happens. Things can be worth less just like a home. You find something on the inspection. But there are private equity firms that will tell you, we pride ourselves on not re-trading. We do our work upfront with the price is the price. And this was one of those firms that said, we don’t retrade. We’re founder friendly. Those guys, they’re CHUs. The guys that Retrade are chumps. The reality is is they take your business and there’s a lead partner and they have an investment committee that they take it back to, which is all the other partners in the fund. They beat it up and say, this business ain’t worth that. We’re not doing that. So it has to go through and approvals. Once you learn that, you start to realize, okay, the guy we were working with believed in us and thought that was the right price. His partners at the firm vetoed it.

Rob Walling:
Wow. They added an earn out. They added terms that were just like, did they reduce the offer? Did they just add terms that were so onerous? You and Mike were like, no,

Kevin Wagstaff:
It effectively reduced the price, I think by about five, but it was by 10 million. So I think it ended up being an effective kind of 70 million valuation when you factor in the earnout and a call option, which is they wanted to reserve the right to buy more of the company at a fixed price, no matter how much, no matter how value we added. So they have a lot of tricks and a lot of deal mechanics that they can put in and it’s savvy. But when you don’t know about ’em, you read ’em. And that’s where a banker comes in and you’re like, Hey, decode this for me. What does this mean? So we did a lot of scenario planning on spreadsheets to say, Hey, if the business grows to here, how does this deal look bad for us? And we beat that up one night, almost all night with our banker on a Zoom. So they left us at the altar, gave us that deal, and we said, no, that’s ridiculous. And this was in the height of the poor news cycle after rates went up from zero to five and a half percent. So nobody knew what was going on.

Rob Walling:
And then you said No. And they came back, they said, we’ll do the original deal. Unbelievable. And then you’re like, wow, do I really want to be in? Because you’re kind of in business with these people because you and your brother are still going to own almost

Kevin Wagstaff:
50% of the company. They’re your board. They become your partners when they fly out, you’re eating together, you’re laughing, you’re getting to know each other’s families. It becomes very intimate. And they said, no, no, no, we’ll do the original deal. And we were like, you know what? We’re good.

Rob Walling:
Yeah.

Kevin Wagstaff:
So you walked away from, yeah, we don’t like how it felt. And our bankers handle it with grace. A good banker will say like, Hey, I’m working for you. And we know bankers get paid when the deal closes, but they said, you know what? It’s your decision. And if this doesn’t feel right, you’re going to be married to these people for a couple years.

Rob Walling:
You got to feel right about it. And so let’s flash forward three, four months. And this is the part that, so I want to tell listeners, I had no idea any of this had happened. You and I had never met, I didn’t know your name. I didn’t know the name of Spector. And I get from Arvid call has a, it’s Google alerts for podcasts. It’s called Pod scan. And I got a Google alert either from my name or from MicroConf that you had mentioned me or MicroConf in another show, and it was John Warlow built to sell. John and I are buddies. I just went down to his event a couple months ago and I’m like, wait, what? And I’m reading this. I’m like, oh, someone sold their company. And they’re mentioning, that’s kind of cool. And then I’m like, does that say 90 million? And I was like, I need to listen to this now to make sure the transcript is good. And then I’m like, how have I never met this guy? So I believe that’s when I reached out. I was like, dude, you need to tell me this story of what happened in the men’s room, Microcom, Denver, anybody who it was a couple of years ago is this freak fluke accident. It sounds like you met someone from Radian and Radian is a private equity firm who eventually bought your first swath for 90

Kevin Wagstaff:
Eventually. Yeah. Bought the company. So yeah, I’m in the men’s room and it’s just me and this other blonde-haired kid in there using the bathroom. And we just start chatting like, Hey, how’s conference going? And get to know each other. And then he’s like, oh yeah, Spector. We were in the process when you guys ran it last year. Love the business. We just didn’t think we could pay the price that you guys were looking for at the time. Would you be open to meeting with our partner Chris again? He’ll be in their trick is always like, oh, he’ll be in town. They’re always in town. They’re always in town. That’s a good hack. If you want to meet someone, it’s just be in town and buy him coffee. And he just seemed like he had done so much work on the industry and the business and the kid was Sharp Barack, he’s a great associate.
I think he might be higher now at Radian, but he really impressed me when he talked about the business. He was in it with me and I was like, wow, that’s cool. I’ll meet with this guy, but he has to come to the Starbucks next to my house near my house to make it. Because I told him, dude, we have P Ts D right now. I was like, we’re a little dated. Like, ah, totally. He were like, we’re not taking money. We’re like, we’re probably never taking money after a bad relationship. I’m never dating again. That kind of thing. So I honestly told him, we don’t want a deal. We don’t want to work with anyone. We’re pissed off and we’re just going to execute. We’re just going to take it out on the marketplace. Our competitors that I think worked in our favor, at the end of the day, if you don’t need them, they have capital that they need to deploy. Maybe that worked in our favor a little of saying like, no, we’re hungry for this deal.

Rob Walling:
And the interesting thing is, you didn’t run a process this time. It sounds like you did just have one buyer and yet you got this great deal. So April you meet Rock, and then by June was that two months you have the final term sheet and then two months later you closed

Kevin Wagstaff:
And you get the, it went fast, man. It was speed dating because Chris Livingston came out. He’s no longer at rating. He actually went to Vista, but he came out and was so down to earth, relatable, all the things just like meeting you. It’s just like it clicks and you’re like, man, I forgot you were a private equity guy there for a second. This is great. And he said, we could get close to your price. We wanted a hundred million valuation. We thought the growth prospects and the future vision and add-on products warranted it. Were we a little delusional, but you have to be right. You have to believe in where you’re going. We believed in it. What I loved about them was they were a newer, younger, private equity firm that wanted to prove themselves. And when they are that way, they’re going to show up and be invested in your business succeeding because their name and reputation relies on it.
The bigger the fun. Sometimes they just start playing the game of asset management and they don’t really care if you don’t make it. They just need a couple companies to make it. Loved what he said. My brother flew out to their CEO summit. I was on vacation, I was overseas. He went to New York to meet their partners and he had very vulnerable, intimate conversations with them and that helped sell him because we both working with real humans that have vulnerabilities and talk to you and listen and all the normal good things in life, not just spreadsheets and numbers. So that was a rare thing in the private equity world to say like, oh, you guys are humans that care about other humans and you’re good at your job, so we think we want to do this. And so we didn’t end up having to do a process at the end of the day and met Radian and then had a deal done. They moved fast, which I loved.

Rob Walling:
And it sounds like it worked out. Radiant’s doing a good job running the company. You hired a CEO. That’s that. We’ve smash cut to 2024 and you and your brother have since stepped away from the business. Well earned by the way. And radiant. The company’s still growing and everything. I mean, you still own a chunk of it, right?

Kevin Wagstaff:
Yeah. Collectively, I still own about 29, 30% between Mike and I, but they have been a great partner. Learning about board meetings and how they’re run at different sizes and stages has been very enlightening. And then you start to see what deep expertise in go to market product payments looks like when you meet some of these, because a lot of these funds have operators. They have an operating team that actually will get into the business with you and help. So we’ve had radiant folks fly out, work with our team in person to solve certain issues that you’re dealing with, and then you get access and insight into a couple dozen other companies, probably similar to TinySeed. It’s like the collective wisdom of a group of companies. Pretty powerful because we feel like we’re out in the wild alone all these years. And then you’re like, there’s other businesses like mine.

Rob Walling:
Yeah, yeah, exactly. Yeah, because man, running a SaaS company, even with a co-founder is just lonely. So lonely seems lonely. Yeah. It’s a big deal. Well, man, thanks so much for coming on the show. You’ve shared a ton of knowledge today. I know there’s still more of your story to tell, but you’re giving back to founders today by being on the show. You’re also now a TinySeed mentor, which is a big deal. I love it. This is the full circle thing I have to talk about with MicroConf and TinySeed in the podcast is it’s like if you get in the ecosystem and you do have success, try to give back to the other founders, and you’re doing a great job of that, so I really appreciate it.

Kevin Wagstaff:
Well, thank you. It’s just getting started. There was a decompression period that was needed. I asked you about that, about the couple months, three, six months of doing nothing or chasing interest, but then there comes a time where you want to see other people get their win and you’ve given so much to the community, so I was just trying to keep paying it forward.

Rob Walling:
For sure. If folks want to keep up with you, you are Kevin Wag staff and the number three on X Twitter where you tweet. I see you tweeting about SaaS and the NBA. I’m like, wow, I haven’t heard so much about the N because I don’t really watch basketball anymore. I’m like, oh man, this guy’s really into the NB. You’re like a R is with the San Francisco Giants.

Kevin Wagstaff:
You’re just in it. It’s funny. Yeah. Grew up playing, played in college, played a year professional overseas in the Philippines, and then stopped and went to work, and then I was suddenly finding this passion again for This is your jam.

Rob Walling:
Yeah. Well, I tell you what, if someone’s listening to this and they have questions for you about anything about growing, building acquisitions, if they either tweet me or you or they send ’em into questions at startups For the Rest Of Us, if we get enough, would you be willing to come back on the show and just do a q and a kind of Kevin Wagstaff q and a exclusive?

Kevin Wagstaff:
100%.

Rob Walling:
Yeah, that’d be super fun. I think there’s so

Kevin Wagstaff:
Much value in the nuance and details too. I think it spurs so much, and so happy to be an open book about it because it’s probably what you would’ve wanted. It’s what I would’ve wanted early on.

Rob Walling:
Awesome. So that’s a call to action. If you’re listening to this and you’re thinking, and again, anything about his journey, not just the acquisition, but working with the brother as a co-founder, all the growth upfront entering this industry, how the growth effect, just whatever. Anything that I didn’t ask that you’re thinking now, you can email questions at startups For the Rest Of Us dot com or at mention, either of us on Twitter, at Rob Walling, or at Kevin Wagstaff. Three. Thanks again, man for coming on the show.

Kevin Wagstaff:
Awesome, man. It’s an honor. Appreciate you and everything you’ve done for the community, so it’s awesome to be here. Thanks.

Rob Walling:
Thanks again to Kevin for taking time to appear on this podcast and to give back to the Bootstrapper community. As a reminder, if you have any questions for Kevin about his journey or his expertise, please send those into questions at startups For the Rest Of Us dot com and thank you for listening this week and every week. This is Rob Walling signing off from episode 776.

Rob Walling:
This podcast is brought to you by Mercury. I’ve been banking with Mercury for years and whenever I set up a new account, I’m reminded why traditional banking feels stuck in the past when our previous bank faced solvency issues, we needed to spin up new accounts quickly that could handle millions in funds across multiple businesses. Mercury had us up and running almost immediately. I manage half a dozen different Mercury accounts across a wide range of companies from my personal single member, LLC to MicroComp, our seven figure global events and education platform to TinySeed our venture fund and accelerator. Mercury easily handles them all. The interface is elegantly simple for daily banking, paying invoices, and sending and receiving international wires, yet powerful enough to handle the multi-step approval processes we needed to put in place. When funding founders with large transfers, anytime founders ask me who they should set up their accounts with, I send ’em to mercury.com. 

Check the show notes for more details. And note that Mercury is a financial technology company, not a bank. It’s another episode of Startups For the Rest Of Us, I’m your host, Rob Walling, and in this episode, Derek Reimer and I sit down and we answer listener questions. We answer a question about the impact of new AI coding tools, talk about user experience and how much time you should or shouldn’t invest in the early days. Talk about racking your own servers versus cloud hosting the trade-offs between those two things, email deliverability and reliability risks around that. And we handle another topic or two if you can possibly believe it. We packed it in to this amazing episode, and if you stick around until the hidden track at the end, you’ll get to hear Derek Reimer get ambushed by my trivia questions. Before we dive into the episode, I want to let you know about some exciting updates to the SaaS launchpad course. 

It’s my nine and a half hour video course that walks you through the process of going from no idea to your first paying customer. We’ve just added a new module that dives deep into what founders should think about before adding AI to their SaaS. It’s actually a private conversation I had with Arvid call. He’s been integrating AI into his own SaaS POD scan fm. We talked through the landmines and tricky spots that founders are hitting right now so you can avoid some costly mistakes. And here’s the thing I’m really excited about. If you buy and you complete the course material in the next 30 days, you’ll be entered for a chance to win a 30 minute one-on-one chat with me. We can talk through your SaaS idea, any roadblocks you’re running into or just brainstorm next steps together. If you want to test drive the content first, grab the free sample module at SaaS launchpad.co. It’s a 28 minute video all about the DNA of a great SaaS idea. As a bonus, our team is giving away a free copy of the full course to one person who watches that video by June 1st. And for loyal podcast listeners, use promo code launch at checkout to get $150 off this course. Get all the details and access the free sample at SaaS dot co. And with that, let’s dive into listener questions. 

Derek Rimer, welcome back to Startups For the Rest Of Us. Always a pleasure. It’s great to have you back. So we are going to dive into listener questions today. I have hand picked several that I think are well-designed for you to answer. Before we do that though, you’ve been working on some pretty awesome stuff with Savvy Cal, you want to tell folks, give ’em a hint, give ’em a teaser, and maybe a little call to action if they want to reach out to you.  

Derrick Reimer:
Yeah, I think this actually might be the first time I’m publicly talking about this, but yeah, we’ve been working on some interesting new product lines around appointment scheduling. So Savvy Cal has historically been sort of a Calendly competitor. That’s mostly for meeting scheduling. You need to take a sales call or just book something with a colleague or something like that. So meeting scheduling has its own dynamics and appointment scheduling. It’s something that has come up basically the entire time we’ve been in business people inquiring about using Savvy Cal for scheduling appointments for more service-based businesses. And we’re just now starting to work on kind of a second product line that repurposes a lot of the goodness that we’ve developed over time with Savvy Cal meetings, but for the appointment scheduling use case. So right now we’re kind of partnering with one agency who’s using this for a cool new project, but I’d love to have more conversations with folks who are sort of in the space of building sort of custom flows for service-based businesses, whether it’s telemedicine or whatever, and need kind of lower level scheduling infrastructure. Very interested in having those types of conversations.  

Rob Walling:
Awesome. So how can folks reach you?  

Derrick Reimer:
Yeah, you can hit me up at derek@savvycal.com over email and I’d love to hear from you.  

Rob Walling:
And that’s D-E-R-R-I-C k@savvycal.com. All right, let’s dive into listener questions. Our first one is from Zach, and his question is about the impact of new coding tools. He says, Hey Rob, I just finished your book and I’m feeling inspired to get started on my next startup Rocketship emoji, which I love. One thing I was curious on is your take on the new wave of AI coding platforms, cursor lovable, et cetera, and the impact of these specifically on the micro startup. Does your 300 hour rule still hold up if you can build an MVP in just a few hours? And so I believe he’s referring to and start small, stay small. I used to think, I thought I said four to 600 hours, but whatever. I wrote that book 15 years ago, so maybe I said 300. It’s approximately directionally correct, right, of like, Hey, I have the 2 2200 framework even these days, which is two hours to if you’re trying to validate an idea to do some research and to go to Google and to go to look at keyword volume and other HFS and other things. 

The 20 hours is, hey, maybe I’m going to put up a landing page, have customer conversations, and then if I make it past both of those points with an idea, maybe I do spend the 200 or 300 or whatever that number is to build that MVP and get it in the hands of folks. But AI coding tools do in fact change that timeline. I think it’s significantly shortened. Now, I don’t know if a few hours feels a little, I don’t know, it feels a little exaggerated. I dunno how maintainable that code will be and beyond that, but let’s kick it off. Are you using AI coding tools? Have you found them to live up to the promise that people are talking about of, Hey, I’m a non-technical and I can build everything in three minutes? What’s your experience and thoughts here?  

Derrick Reimer:
Yeah, so I have become a pretty deep user of AI coding assistance tools. I kind of came late to the game. There’s been GitHub copilot, which was launched, I don’t know, two or three years ago I think. And I just never really caught onto that mode back when it initially came out, I think because the models weren’t as good. And so the kind of autocorrect as you type was just a bunch of bad suggestions. And these days it has gotten considerably better, especially if you’re in certain languages that the LLMs really know well. Like JavaScript, Python, it knows Elixir decently well, and that’s what I mainly use. TypeScript. I regularly now use Windsurf, which is similar to Cursor. These are kind of the big two AI assisted code editors. And then I think you mentioned also V zero and lovable, and I think those are more specific products from companies that allow you to kind of type in, here’s the app I want you to build for me, and it just spikes out an MVP based on what you tell it. 

And yeah, I think it’s really interesting how these tools do considerably shortcut a V one. Now the question is how long are you expecting to use this V one is this purely for validating something? Think of it like a working mockup wireframe thing that actually persists things to a database and you can show flows off. It can get you to that place really quickly. I am skeptical about the maintainability of some of these code bases that were generated from scratch fully by ai. I haven’t found the code that it generates to be good enough for, I’m trying to imagine someone who doesn’t know code at all using this to try to maintain an application for the long haul. And I don’t think we’re there quite yet. We might get there. I mean, this might be a horribly outdated take even in six months, not sure, but at the present moment, it makes a lot of mistakes that if you’re not technical, you may not catch it and that would not serve you well in the long run. But for sure, for the purpose of proving something out and being able to demonstrate something, I think it has radically changed the game.  

Rob Walling:
I would agree. And is an, it depends to all of this, and the it depends is are you a developer and are you a senior developer or junior or not all? And I do think that AI coding tools, I think of it as almost like a Mex suit, right? You think of Alien or did they have many aliens do anyways, A Mex suit makes you super powerful if you know how to use it. But imagine getting in it for the first time and letting it run on autopilot question mark. It’s like, right. And the analogy breaks down because you don’t have to maintain a ME suit five years from now and have infrastructure and spaghetti code or weird bugs that nobody can really find because there’s been machine generated code for 40, 50 years, I mean for a very long time. And back in the day, I actually was a contractor at L-A-D-W-P, Los Angeles Department of Water and Power, and I was a developer working on T net stuff there, and they had a system, I think it was in cobol, and they had generated code in the seventies to do a bunch of stuff, and it was machine generated and no one wanted to, I didn’t know cobol, but they had COBOL contractors who are like, everyone’s scared to touch it. 

It is a complete disaster and people are scared. It was like a payroll system or maybe it ran the grid, the electrical grid in LA for all we know, 

And that’s just the state of affairs sometimes with government systems. But I remember being like, wow, they generated code and no one can touch it. That sucks. What’s the point then? I mean, it works until.dot. So I’m not saying AI code is that bad, but I think that’s the big concern is you and I were having a conversation a couple of weeks ago when you came over for DD and I believe he said, you given instructions and then you go through that code to really make sure that it is not screwing around and it makes mistakes, right?  

Derrick Reimer:
Yeah, I would say I’ve still found this to be true even in my few months of using it aggressively. Now that it is best at writing test code and test code is just, it’s usually kind of an afterthought when you’re trying to move quickly and especially earlier stage. You want to make sure stuff is kind of baseline sanity checked, and you have some support for preventing regressions and stuff, but we don’t love spending a ton of time writing tests if you’re just trying to deliver value quickly. And I have found it is very good at analyzing your code, figuring out all the different permutations that should be tested, and then writing that test code for you. And ideally it writes it in such a way where you can pretty quickly, easily read through it and see, all right, this is the setup, these are the assertions that looks correct, and then it’ll run it. And if it fails, then it’s pretty good at least helping you start to think about how to solve the bug. But it’s not always perfect at that. But even just having those test cases where it’s actually rigorous and does every single kind of important permutation, that has sped up my process a lot. It made me feel like I have a stronger foundation of tests  

Rob Walling:
Faster and better, more thorough than you would care to do yourself. 

And I think really getting back to Zach’s question, because we’ve talked about AI and how it generates code and the dangers of that, but really he’s asking, so what if it makes me twice as fast, 3, 4, 5 times as fast? Can I get it done in a day? What used to take me a week or two days? It used to take me a week and in the future, will it be even faster? How does that change all this methodology? It’s really interesting to think about because one of the reasons that I talk about that 2 2200 framework, the reason that framework exists is because I don’t want you to spend 200 or 300 or 400 hours building something that no one wants. So that’s why there are those steps before it. But he’s asking question I think, what if it doesn’t take me 200 hours? What if it takes me 40 hours to do what it used to take 200 hours? 

Should I just build more stuff more quickly without doing all the validation? Here’s the thing for me, as I said, the two is doing research online looking competitors and SEO traffic and interest in demand and blah, blah, blah. To me, I still want that. If I’m starting, I’m going to spend a few hours plugging away. If I have a list of 10 ideas that I’m thinking about, could I feasibly go and build all 10 of those ideas in a weekend? Probably not now, but let’s say you could and I could just, I don’t want to do that without knowing there’s some demand. I don’t want a product if there’s no search traffic or if there’s no, I can’t find anybody who wants this. It’s not solving a problem. So I still want to do the two part. And then the 20 part is either it’s a landing page or customer interviews conversations or both, frankly, which is usually what I recommend. 

I still want to do that too. Now maybe could I shortcut? Can I build mockups really fast with AI or can I build kind of a clunky click through paper prototype thing with AI that’s not maintainable and build an MVP in order to do the 20 maybe? I think the danger, I mean it could cut both ways. If sometimes the danger is you’re getting ahead of yourself on giving too much specificity to someone of here are 17 screens with text boxes and buttons to click through, and it’s like, is that what they need to know if it’s worth it? Or are you basically saying, Hey, I’m going to solve this problem. I’m going to build a system that manages your entire business and allows people to log in and log out and click and audit and this and that, and is that what they need to hear? Especially if they’re non-technical. And sometimes I think they maybe do need to see a few screens of like, ah, I get it. But other times I think presenting them with completed software could actually be a detriment.  

Derrick Reimer:
Yeah, I think that that’s a really good point that the process of building a product for a particular market segment entails that you are actually speaking to that customer set and figuring out what needs to go into that product because it’s hubris to assume that you have all those answers from the get-go. So building something based on a bunch of assumptions that you haven’t actually confirmed by working with customers means you’re probably going to miss the mark if you come with this fully built out product. I mean, we talk about this kind of new appointment scheduling stuff that I’m working on right now, and a big part of this is getting real-time feedback from the actual end user, the clinic who’s going to be using this product on a day-to-day basis and incorporating that in as we build stuff. I can just make a bunch of guesses and try to envision what they need. And that’s certainly a big part of it is just trying to get into their shoes and think about what they would need, but that’ll only get you so far. You need to actually talk to the real customer to figure out how do you really nail it for all of their workflows and use cases and that kind of stuff. AI can certainly help you workshop some of that, but I think ultimately you’re still selling to humans and you need to accommodate human needs. So getting the actual human data is pretty key there  

Rob Walling:
Still selling to humans for now, Derek, for now, until AI starts, this  

Derrick Reimer:
Also might be an outdated  

Rob Walling:
Take two years from now. People are like, guys, AI buys everything now. So anyways, yeah, I appreciate the question, Zach, and I hope Derek and my takes were helpful. Next question is an audio question from Arthur Ky.  

Arthur :
Hi, Rob Arthur here, an aspiring entrepreneur living in Denver, Colorado. I have an idea for an app that I’ve recently started developing after validating the concept with potential customers, it seems like a strong business opportunity to move forward on. As I work on building this, I’m realizing there are various ways to approach the app structure, pages and user interactions. My question for you is how do you approach the user experience when bringing an idea to life? A traditional UX designer might create user profiles, wire frames, prototypes, conduct user testing to uncover pain points and follow other structured steps. I have a college background in graphic design and now work as a software engineer. So part of me wants to go through this formal process, but another part of me feels I should focus on quickly building an MVP to prove the concept and refine the user experience later. When in the process do you believe it’s most essential to focus on user experience? How do you typically approach UX for a new idea? I think a great user experience can make or break an idea, so I’m very curious about your perspective on this. Appreciate what you do. Thanks so much.  

Rob Walling:
Alright, Derek, as one of the best UX folks that I know that exists on the internet today, what is your take on Arthur’s question?  

Derrick Reimer:
So obviously I come from a place of being biased towards wanting to solve problems from a UX first perspective, it’s something that I really value in the products that I buy and in the products that I build, consider myself a crafts person and this is what I really care about. However, my answer to this trying to be objective is, I think it really depends. Are you staking a big portion of your value proposition on better ux? When you compare yourself to the rest of the landscape, what does your buyer actually care about the most? I tried to think about some examples in my own stack. So I use linear for project management and they’ve been around for, I dunno, three, four or five years, something like that. And I think their main differentiator, I guess is that they’re trying to be Jira but with better UX experiences that people actually like to use. 

But it’s kind of solving the same underlying problem that Jira is, which and Jira kind of has a bad reputation for being a little bit of a nightmare to use. And so for them, in order to deliver on this promise, they have to be executing top-notch user experiences. Otherwise people will just use Jira because if it’s no better, no different than Jira on the UX front, then why bother savvy Cal? We’re promising to be a more delightful user experience for the scheduler and the person who’s configuring the links. So you should be able to go in and fine tune your availability faster, more efficiently than you can in the other tools. So I think for us, the customers we attract are the people who are looking for those better user experiences. So I would say in these cases it matters a lot for other products. I’m just trying to think of examples, like software for  

Rob Walling:
Construction firms,  

Derrick Reimer:
Yeah, where you, you’re logging in, you’re doing stuff, there’s screens with forms and you’re viewing reports and charts and things, but the level of UX attention that a lot of the products that a lot of us use, linear is just probably not as important. What you’re doing is you’re driving a different kind of value. I think of even more stark examples like hit tail back in the day product that we worked on was SEO keyword tool. So you could log in, you could get reports on these are the keywords you should be targeting in your content. And the setting screen in that app was not very important that it was top notch ux, like it’s form fields and buttons, and you have the basic essentials. It had to be obviously navigatable, but the core value prop there was the keywords it was giving you. So let’s say in an app like that, the quote user experience of the product mattered a whole lot less. The user experience was really like is it delivering the right keywords? And so I guess that is essentially a different kind of user experience than what we classically think of as the way that you lay out menus and form fields and things like that.  

Rob Walling:
I don’t know that I have much to add to that. That was pretty much my take was it depends, and it depends specifically on is this your advantage or one of your advantages or not? And there’s certain spaces that just don’t know the difference. And again, I think of construction firms or maybe someone, an owner of a gymnasium of a fitness gym, a fitness studio, are they going to know the difference between linear and Jira? They could tell the difference, but are they going to be like, Ooh, this is good ux. They don’t really even know what that is, right? So I think the big thing is you end user, do they care? And not only do they care, but do you want to invest the time to make this one of your advantages? I personally would, I would tend to enter spaces just like you where the users do care, but probably most software doesn’t matter. If I think of most B2B SaaS software, I shouldn’t say doesn’t matter at all. You can have catastrophic us and then UX and then everyone hates it, but it doesn’t matter nearly as much as I think  

Derrick Reimer:
I have often opined why is the most successful software out there, the crappiest software, how does this actually happen? But I think there are plenty of examples where it’s kind of that adage of it’s always safe to buy IBM kind of thing. Like Salesforce is known for being quite painful to use, but it’s Salesforce and they have staked this incredible position in the market of this is one of the two tools. Maybe HubSpot and Salesforce are the only big two that any serious business of a certain size will be on one of these platforms and the people buying them don’t care about the user experience. There’s a whole bunch of other things that cause them to make that buying decision. And so I think it would also, this is a trap that a lot of times people fall into where you look at a successful incumbent and you say Their UX is terrible, I can do better ux. 

And you ignore the fact that the actual person buying it, maybe the actual person buying it doesn’t even use the product, but they’re charged with buying it because a VP at some level and they’re the one who has to make that procurement decision and they buy it because their peers are buying it or because companies of our level of importance buy this software. And so there’s just different motivations, but I think that often causes kind of a mismatch and the entrepreneur who thinks I can build a better version of this thing when in reality the market doesn’t care.  

Rob Walling:
And I think that’s a good distinction you just made, which is the further your buyer is from the user of said software. I think the worse your UX can be because the buyer doesn’t care, the buyer’s usually going to buy based on market and brand and reputation rather than easy to use. So thanks for that question. Hope it was helpful. I wanted to jump in here for a second and invite you to Microcom Remote, which is happening live tomorrow, May 21st from 10:00 AM to 1:00 PM Eastern Time. The event consists of three presentations, talking about early stage SaaS sales. In addition, we have a founder by founder, which is like an online version of the hallway track at our in-person events talks will be recorded in case you’re listening to this event after to get access, head to MicroConf dot com slash remote. 

Next one comes from Louis Mertons and Louis asks a question about on-prem versus cloud hosting. He says, Hey Rob, I really enjoyed the book and I’ve listened to it twice now on Audible. I think SaaS Playbook, if I’m guessing. I also love Linus Tech Tips, and they recently built a server and said that these days it’s cheaper to run on-prem. And many people were moving back to on-prem rather than the cloud. I love proclamations that many people. It’s like, all right, yeah, there’s five of them. I wonder if you could talk through the pros and cons of cloud versus on-prem. I suppose it would avoid vendor. What do you think about this, Derek? I mean he’s basically saying getting a physical server in a cage somewhere and getting it in a, we used to do this 15, 20 years ago. We also used to charge one time for our software. Should we do that as well? No, I’m just kidding. You can tell my opinion on this, but what are your thoughts? Because you as an operator could totally, you could probably save monthly hosting cost if you spun up a physical database, go buy a Dell, buy a database server and then go buy your, I say this, I remember doing this 25 years ago with clients with big e-commerce clients and going and racking the servers in a place.  

Derrick Reimer:
I mean, I have seen a lot of talk off and on in our space about this, about exiting the cloud. And I think a lot of it’s driven by DHH. Maybe there are others that have done this, but I think he’s been the most vocal lately who’s been talking about doing this. And basically 37 signals looked at their cloud spend and they said, Hmm, we’re paying, I dunno, it was like 10 million a year for S3 or something. And then there had EC2 instances that were probably similar orders of magnitude. I think they were probably looking at their staffing and saying, well, we have all of these DevOps people on staff who were kind of bored and I think we could, this is the key. And so we have the talent on staff, we’re not necessarily shipping a bunch of new products, so we have extra capacity and we could probably stand to save some money and pull this stuff in-house. 

A very mature business, and they understand their traffic patterns really well. So they know Basecamp, I’m sure just kind of mostly chugs along at a very consistent rate. And if they get a bunch of new customers, it still doesn’t really move the needle so much. So they just have very strong understanding of this is how many servers we need and maybe in six months we’ll need to buy one more server, but we can anticipate that we can predict it. So yeah, I think for them, they’re at such a stage of maturity with so much in-house expertise that sure have at it do it, but I think, I guess I wouldn’t say a hundred percent of us, but for 99.9% of the rest of us, this is not a good decision. With platform as a service, you’re effectively getting all of those site reliability engineers and DevOps people at your platform of choice. 

You’re getting all of them as a functional extension of your team for metered cost. Usually it’s like an extra $10 for the next size up server. And so you’re getting this incredible amount of expertise for very, very low marginal cost. This is just close to a miracle for us people at a smaller stage being able to start out crack open a fresh application and you have close to $0 a month in cost, and then as you get more customers, you can just incrementally expand your resource usage at your platform as a service. This is just, I think, a no-brainer to stay in these systems. And yeah,  

Rob Walling:
You and I are on the same page with this. It’s the old thing where I say, don’t use Steve Jobs and Apple as an example, unless you are co-founding with a guy who invented the personal computer, Steve Wozniak, and when you’re 20 years old, you’re worth 1,000,021, you’re worth 10 million, 22, you’re worth a hundred million. It’s something approximately that I think that was Steve Jobs situation and you’ve started this incredible company, great. Then you can take Steve Jobs advice of not listening to your customers. They don’t know what they want until you give it to them. Or if you started a SaaS that is, as you said, 20 years mature has nine figures, hundreds of millions in revenue, we would guess tens of millions a year in profit, which is confirmed. Jason free confirmed at MicroConf, and you are so bored, I’ll say that you’ve rewritten the app multiple times. 

They have a Basecamp V two and a Basecamp V three. And when I say bored, I have a ton of respect for DHH and Jason Freed, and I think they’ve done a lot for SaaS and a lot for entrepreneurs. They are TinySeed investors, they’re TinySeed mentors, so they’re in our circles, but I think that they’ve been successful in spite of a lot of the advice they give when they to say, we don’t do marketing, we don’t track analytics, we don’t track opens, we don’t have any type of web analytics or conversion tracking on our website. They used to say that, I don’t know that they do anymore. And it’s like, yeah, and if you built a SaaS in 2005 and we’re one of the first ever, and you also don’t need that, but none of us are in that position. So just really take the stuff that they do with a grain of salt, these outliers. 

And that’s what we’re talking about here. In fact, if a TinySeed company, if I was interviewing a TinySeed applicant and things were going well, and they told me that they were racking their own servers, it would be a major red flag for me that I would dig into and I would say, why are you doing that? And they would better have a damn good reason. And I believe of all the TinySeed companies, 204 investments we’ve done, there was one founder who had physical servers, and the reason was is it was like three years ago and he was doing AI and needed physical GPUs. It was way too, he built his own model. It was before the chat. GPT became a thing right about two years ago. And he convinced me in a R because a R has a PhD in science and I know my way around a keyboard. And we dug into that with him. I Wait, what? And he was like, yeah, and he kind of showed us the cost and we’re like, ah, you actually, that is the right choice, but that’s it. He’s the one out of 204 that we’re like, okay, yeah, physical, alright, fine, cloud is more expensive, but it’s not as expensive as hiring your own SREs and DevOp folks.  

Derrick Reimer:
Yeah, and I think, I don’t know, even over the years, cloud’s kind of started out as a virtual private server, whatever, where it’s just like it’s an on-prem server that they will make sure to keep the power onto it, but everything else is managed by you. So you’re still doing a heavy amount of DevOps and some people choose to go that route. But even that, it would be so hard for me to justify just getting a digital ocean droplet and just trying to rotate my own server logs and doing all this stuff where you just don’t have to deal with that anymore. And you can get so much more reliability by going with a more modern platform as a service where you have a docker file that describes what your server should be and your host would ideally allow you to just say, deploy servers that follow this spec and they manage all other aspects of it. This is the way to go unless you’re planning on investing in having your own people on constant on-call rotation and doing a bunch of DevOps work. Some people are passionate about that, more power to you. But if you’re just starting out especially, you do not want to have to be responsible for that portion of your reliability.  

Rob Walling:
Your most valuable asset as a founder is your time. And anytime you spend not building value for customers, not selling, growing the business, even if you enjoy it, it is detrimental to the business. And your number two asset is money, but only because money buys you time. See number one, you know what I mean? And so let’s say you are truly bootstrapping. If you’re around with DevOps, that’s a catastrophic mistake. And let’s say you raise a million dollars and you hire a DevOps person to run your servers out of that million and you save the same amount of money or something, just you have another person on your team that really you probably don’t need, I just can’t justify it as you said, 99.9, so maybe one out of a thousand or one out of 500, there’s some number where this is probably appropriate, but otherwise don’t make this mistake. And it is a little bit of, yeah, it’s cargo cotting in a way. It’s kind of like it’s listening to advice from the wrong folks. It’s just also like don’t follow Silicon Valley founders and see how they grow their company and then as a bootstrapper think that’s how you’re going to do it because usually their advice doesn’t apply. So thanks for that question Lewis. Hope it was helpful. Our next question gives me some PTSD Derek, so I’m going to let you weigh in first. This is from Kyle.  

Kyle:
Hey Rob. Name is Kyle. I’ve listened to the show for a long time. I’ve actually had you answer one or two of my questions on the show, I think in the past just to kind of get straight to it. Basically, we are a client and project tracking tool for tattoo artists that also allows them to schedule appointments and send appointment reminders and whatnot. So my question really is about that last piece of the puzzle. Think of like a Vagaro acuity or Schedule Lista. There are lots of them out there. One of the issues that we’ve heard from artists that we’ve talked to so far that they have on those other platforms is emails getting sent to spam or not delivered or similar issues. And what I’m trying to figure out is just kind of steps or steps I could take or tools I could use to help limit that risk. The plan is to use SendGrid for all those automated and customized messages that come out of the platform to our artists’ clients. But yeah, any insight you might have on how we can help mitigate that risk just from day one would be greatly appreciated. Thanks in advance. Hopefully you get time to hit this question and keep doing the good work. You’ve been a great help to me so far, as well as countless other founders and hopeful founders. Thanks Rob. Take care.  

Rob Walling:
So Derek, having never managed email, sending infrastructure nor dealt with blacklists and deliverability, would you care to weigh in? Should we give folks background who don’t know that we started Drip, which was sending, I don’t know by the time we left. So we sold it in 2016, left in 2018, I believe, and it was sending 150 million emails a month maybe by the time we left. We started what with Mandrel and then we used Mail Gun and we used Send Grids, we used multiple sending providers. But to our point from the prior question, we never did spun up our own email sending servers. You know what I mean? That’s kind of equivalent. It would’ve been way cheaper. I mean, our SendGrid bill by the end, it was a lot of money and I don’t remember exactly, but certainly tens of thousands of dollars a year might even have been six figures. And so could you justify hiring someone in gives service? Maybe I would do it. All that said, this is about email deliverability. What are your thoughts  

Derrick Reimer:
Here? Yeah, so I mean taking the point that even running Drip, we never endeavored to do our own email sending. I mean, I think point number one is definitely use a mature provider in the space like SendGrid Postmark is another good one that’s been around a long time. I use them for Savvy Cals sending, I think Amazon has a service. So yeah, there are a handful of these out there that their sole purpose is to manage pools of IP addresses and sending reputation with all the major email service provider or ISPs. Postmark just recently had an incident where a bunch of their emails coming out of their system were getting flagged by Google, I think. And at a certain point, a status page post came out and they’re like, we are actively talking to Google to mitigate the issue. And within a few hours the issue was mitigated. 

And can you imagine if you were responsible for getting your stuff into people’s inboxes, not using a middleman that, are you going to call up Google? No. So I don’t think that’s what our asker here is asking. He obviously knows use an email sending provider, but I just wanted to underscore that point that you definitely want to use a SendGrid or something like that. Beyond that DRC has become a very important part of email authentication these days. I think all the major email providers look for a strong DMAC policy, so you can Google that or chat tot that to get more details about it. Look to your provider of choice for instructions on how to make sure you have that stuff dialed in for their system and of course your D Kim and all the DNS level authentication stuff to make sure that your own domain is in a good place. 

And then I think the other couple other big pieces here when you’re sending email, so it sounds like this is similar structure to what Savvy Cal does, where we send new appointment emails and reminders and things to people who schedule through our system. So we have a lot of emails going out to people scheduling into the system. And so you need to make sure that any place where an email address can get in, so that’s through the booking pages that you have good spam protection there because if you have people, malicious actors hitting those and putting junk email addresses through your system, that’s going to reflect back on your domain’s reputation. And that’s the biggest thing with email deliverability. Point number one is always like, well make sure you have high quality sending. And it’s like, well, easier said than done in a lot of cases, but the biggest thing you can do is make sure that you’re protecting all the places where emails can get in. 

I also these days, like to use an email validation service, I use emailable, and you can run email addresses through it and it’ll confirm to the best of its ability, whether it’s a valid email address and that keeps your bounce rate low. And just make sure that the less invalid email you attempt to send on your domain, the better for your reputation. And then also MX Toolbox, that’s kind of an oldie but goodie tool. We used it back in the day with Drip and it’s still around and you can use that to just kind of keep tabs on your email sending reputation and just make sure that you’re not ending up on blacklists.  

Rob Walling:
There it is. That’s a clinic. We should make that into a course. The five minutes of you talking there, I don’t have much to add, although I thought of a couple things. We used mandrel and their deliverability was phenomenal back in the day and they allowed marketing email at the time and then they kicked everyone off sending marketing email, and it’s only transactional. Now these days, if you were to ask me who I would use, it’d probably be mandrel. If it’s purely transactional, I would verify that and check with other people and this and that. But I remember, I mean MailChimp’s infrastructure is so good and they’ve had it for so long that Mandel is an extension of MailChimp, so definitely add that to the list of the postmarks and the sends grids. The other thing is there is a TinySeed company that kind of helps with all this. 

They’re called Sky Snag and they help with D Kim and they monitor all this stuff in monitor phishing and this and that. So if you’re listening to this and you’re like, man, I don’t really know what I’m doing, sky snag.com is probably a place to check out. And the last thought is, I agree with everything you said, and I think that’s great advice. The other thing is this is why a lot of folks, have you noticed how many are asking for phone numbers and doing SMS now for reminders, my haircut place only does SMS, and it’s because they know inboxes are full. And there’s the multiple inboxes. I don’t use these in Gmail, but where it’s the promotions tab, reminders get in there, and SMS is more direct. Now your RSMS inboxes, so to speak, are getting crowded, and so then we’re going to have to move to WhatsApp or something. 

But that’s the other thing to think about is in certain areas, especially appointment reminders and stuff, most of the ones I receive now are via text. And so that doesn’t remove the need to comply with stuff. There’s a bunch of regulations around this. We have, I mean, gosh, there’s got to be, there’s at least 10 probably TinySeed companies where SMS is their main focus and their main value prop. And then there’s probably another 20 if not more, that actually send SMS. And so there are some hurdles there, but if you use the equivalent, if you use a Twilio and you don’t need a dedicated number for each of your customers and you just have a few, I think it’s significantly less complicated than one might think. So thanks for that question, Kyle. I hope it was helpful. Our last question for today is for Mike.  

Mike :
Hi Rob. My name is Mike. I was listening to your A MA for the SaaS launchpad course, and you made a statement that for enterprise or other companies selling to the enterprise, you’d want the salesperson. And for somebody targeting lack of a better term, SMBs, you’d want the marketer on your team. Can you expand on your thinking between the differences and how does that affect what your choices are in terms of what kind of business you might want to start or how you give advice to people deciding what kind of business they want to start, and then how critical is it to have either skillset on the founding team or can for example, the sales side for the enterprise, could that be learned from something like founding sales book by Pete Kanji? Thank you for everything you do.  

Rob Walling:
I think the first question maybe is sales versus marketing. What’s the difference? Just very fundamentally, and the way I think about it is marketing is generating demand. So this is going out and getting in Google search results or running ads or doing any of the 20 B2B SaaS marketing approaches I have in the SaaS playbook doing integrations and having someone else talk about you to their audience, any of these things that gets you and your app and your value proposition in front of them, and that is inbound. And then people come to your website and they either book a demo or they sign up for a free trial or whatever. That’s marketing, it’s spreading. The word sales is a couple things, like sales is often outbound, right? It’s approaching on LinkedIn, it’s all the cold emails we get on a typical day. It’s the Twitter dms and all that stuff. 

And then it’s doing the demos face-to-face in essence, right over Zoom. It used to be in person obviously years ago, and it is trying to close a sale. So just marketing versus sales. Those are two things. They’re complimentary. Sometimes if you have a low touch, no touch funnel, you don’t have sales at all, you don’t do any outbound and you don’t do demos. And so it’s purely a marketing driven SaaS, and that is kind of the bootstrapper indie hacker dream. It’s pretty rare. And in fact, those tend to need lower price points, so then they have higher churn and they don’t grow into multimillion dollar businesses. It can happen, but it’s often bringing sales in, doing demos and closing the $2,000 a month deal versus the $200 a month deal or the $20 a month deal that really kicks that engine into growing into that seven or eight figure mark. So I want to kind of want to level set that with some definitions, but then beyond that, enterprise versus SMBs, what do you think?  

Derrick Reimer:
Yeah, there’s also kind of different levels inside of here. The definition of a small business. Some would say a small business is up to a hundred million a year in revenue or something. And it’s like that’s usually not what we mean by that. When we say small business, we’re usually talking much, much smaller, maybe a team of 10 people or something like that versus, and we often qualify enterprise as capable of buying at a higher price point. Basically, the grass is always greener on the other side. I will say this is kind of a choose your paying. If you go with the higher price point product and you’re able to do sales for it, then you typically have longer cycles. There’s more involved, more investment involved in order to make a sale. Cost to acquire a customer is often higher, but you can offset that with a higher price point. 

But I’ve talked to plenty of founders who get frustrated with this motion and needing to have all these conversations and make it through procurement and all of the kind of sucky things that come along with that piece. But on the flip side, when you’re going marketing driven, you generally have a lower price point. People are more price sensitive, churns higher, and it can be really difficult to move the needle on these lower price point businesses. Don’t ask me how I know that asking for a friend because each individual customer is only paying you a little bit of money and you have to be really good at getting a lot of distribution and showing people who care enough about the differences between you and maybe a bunch of other options on the market. Why should they pick you? And some of this just comes from being around for a while. 

It just takes a while to build up reputation where you’re showing up in conversations and making it onto the lists where people are comparing different products and making it into chat GPT so that it starts recommending you who the hell knows how to actually do that other than just be around. So there’s so many things involved with the marketing driven approach where, and obviously if you’re a master marketer, you will have better success at building up a business with this approach. But I guess all that to say, both of these approaches take a certain amount of expertise, and I think typically the more sales driven approach is something where you can kind of brute force it a little easier, I guess, than the marketing driven approach, which is like you just have to get really good at generating a ton of traffic in the right places. And that is a bit of a dark art for many of  

Rob Walling:
Us. And I like the way you put that. And it’s not just two, it’s not a dichotomy. There’s small and medium sized businesses, which I think of like, oh, is there one decision maker? Usually oftentimes is the decision maker also the user of the software. So maybe that’s even solopreneurs or prosumers. And they’re extremely price sensitive because they think of the money they’re spending as their money. So they think of it almost like consumers and then SMBs maybe a notch up. And then there’s, there’s enterprise and there’s this whole spectrum of it. But generally the tough part is if you get these big, big contracts, let’s say you’re selling $250,000 a year, which we have some TinySeed companies that’s their contract size, but they only close a deal every quarter or every six months, and it’s just brutal and agonizing and there’s no momentum and it’s super, it’s spiky in a way that’s just not that fun. 

And as you said, months in procurement, but they close these really big deals and they have this negative churn. Everybody’s expanding. That’s great, except for it’s kind of agonizing as the founder. On the flip side, you’re charging 15 bucks a month and your churn’s really high, and it’s hard to outrun that churn. You need a really massive funnel. I’ll say it’s impossible to outrun the churn of a $15 a month business if you want to become, let’s say a 10 million or 20 million business. And that’s why when we started Drip, it was $50 a month, a hundred of one 50. I think those are the price points, but we soon realized people were reaching out with really big email lists and they were like, oh, I would pay you $500 a month based on my list size or a thousand dollars a month, or I think when we left, there were people paying us two or three grand a month. 

And these are not enterprise in the enterprise sense, but for us, they’re enterprise. It’s anything over 25 KI kind of think of as a bootstrapper enterprise plan. And that was pretty interesting. And I call this a dual funnel. It’s where you have folks paying you no churn and paying you a lot of money on the top end, and you do have some folks doing sales demos and procurement maybe, but then you have this nice low touch funnel that usually has higher churn and more price sensitive customers on the bottom end. And this only works in really, I think, pretty big markets. It doesn’t work in these tight niches, but that’s a nice way to even it out to get a little bit of the best of both worlds if you can swing it. And we’ve seen like Ruben with Sewell has that type of fun and Riverside or squad cast has that type of funnel. And it’s not always possible, but it is a way to even out the agony of, oh, we close a deal every three months. This is fun. This is so great.  

Derrick Reimer:
And I can imagine just if it’s that extreme where it’s like hundreds of thousand dollars from individual customers, and I’m sure there’s a bit of cost involved with maintaining those, so it’s like you would want to make sure you have the people on staff to maintain that. But if one of those churns and it’s like, oh my gosh, we have to replace them or else crazy. Yeah. So yeah, having a bit of diversification is probably ideal where you don’t have too much customer concentration to the point where you’re like potentially have to lay someone off from your team if a customer cancels or whatever, but it’s business. Yeah,  

Rob Walling:
You got to do it. So thanks for that question, Mike. And Mike actually sent in another question, but we don’t have time to get to it today, so I will answer that in a future episode. Derek Rimer. Folks want to use the best scheduling link on the internet head savvy cal.com, and as a reminder, if you are an agency or a freelancer consultant and you are building solutions for folks who are booking appointments, this is like service businesses and other types of folks, you should reach out to Derek to find out what he’s building. I’d love to chat.  

Derrick Reimer:
Yeah,  

Rob Walling:
D-E-R-R-I-C k@savvycal.com. Thanks again for joining me.  

Derrick Reimer:
Thanks for having me.  

Rob Walling:
Thanks again to Derek for coming on the show and a reminder SaaS launchpad.co and use the code launch to get $150 off the course as well as MicroConf Remote is happening tomorrow. That’s MicroConf dot com slash remote. Thanks for listening this week and every week. This is Rob Walling signing off from episode 775. Derek, I have four fifth edition Dungeons and Dragons trivia questions for you. Order, oh boy. From easiest to hardest. The first is in Combat in fifth Edition, Dungeons and Dragons. What determines the order in which characters act  

Derrick Reimer:
You roll for  

Rob Walling:
Initiative? There it is. Alright, that’s one out of four. Alright, second question. If you attack a prone enemy with a melee attack, what do you gain  

Derrick Reimer:
Advantage.  

Rob Walling:
You do indeed gain advantage. Two out of four. All right.  

Derrick Reimer:
Capital A, advantage  

Rob Walling:
A. All right. This one, it’s getting harder.  

Derrick Reimer:
Oh boy.  

Rob Walling:
When attacking a creature you cannot see because they’re invisible, hidden, et cetera. What disadvantage do you suffer?  

Derrick Reimer:
Do they have surprise on you?  

Rob Walling:
Incorrect? What disadvantage do you suffer when you attack them? If they’re invisible?  

Derrick Reimer:
When I attack. Oh, okay. Okay. Well wait. You can make an attack on someone who’s invisible. They’re there but you can’t see them.  

Rob Walling:
Or hidden, like if thieves or rogues, I guess can hide in shadows.  

Derrick Reimer:
I see, I see. I dunno.  

Rob Walling:
You have disadvantage on your attack roll.  

Derrick Reimer:
No, it kind of makes  

Rob Walling:
Sense, right? I  

Derrick Reimer:
Should have just guessed that.  

Rob Walling:
Totally. Alright,  

Derrick Reimer:
What disadvantage do you have? Disadvantage.  

Rob Walling:
Yeah. It has it as lowercase D. It should be uppercase. And then the fourth and final. That one’s too easy. Oh my god, these are really easy. I asked cha GBT for 10, and I said, make them easy to hard, and I meant like eight, nine, and 10. And they’re just, they’re gimmies. Listen, if you roll a natural 20 on an attack row, what’s special effect occurs if you roll a NA 20 on an attack? Maybe it’s not as easy as I thought.  

Derrick Reimer:
See, this is rare. It’s only happened a few times. Yeah.  

Rob Walling:
Happens now and again. Yeah. So if you were to roll a Nat 20 on a bow attack or a sword attack, what do we do?  

Derrick Reimer:
Do you get an extra attack?  

Rob Walling:
It’s a critical hit is what it’s called. And you roll your damaged dice twice, but you only take the bonus. You know how there’s a damaged bonus? You only take that once, but you roll the damaged dice twice,  

Derrick Reimer:
Right?  

Rob Walling:
There are some dms that it’s all, A lot of this is house rule, but let’s say you’re doing a D eight plus three damage, right? Some dms will just say you do max damage automatically. Some will say you do two dice max damage. That feels like a lot to me. That would be 19 points of damage and others roll it twice. That’s what I do. Roll it twice at add three. All right. Bonus question, what condition occurs if your hit points become negative, equal to or greater than your maximum hit points from a single attack. So let’s say you had 20, your max hit points are 20 and you took 41 points of damage with a single attack, like a dragon breath. What would happen to you?  

Derrick Reimer:
Is that an instant kill?  

Rob Walling:
It’s,  

Derrick Reimer:
Yeah,  

Rob Walling:
You immediately die versus the fifth edition. Freaking death saving throws.  

Derrick Reimer:
I was going to say, you must be extremely dead in that case.  

Rob Walling:
Yeah, I actually played as 10 below. Is that what I did? See? I said if you went negative, I think I’ve been house rolling negative 10.  

Derrick Reimer:
Yeah, I think so. I  

Rob Walling:
Think that’s what I did. Which is interesting. It’s slightly more deadly, but if you have 50 hit points, let’s say, and you go to negative 10, that can happen. Meaning if your max is 50, but as you start to get down and get damaged, going to negative 10 is not unheard of. So I like there to be dead possible man.  

Derrick Reimer:
Yeah. And in our campaign, none of us have ever died yet with that house rule.  

Rob Walling:
No, no. But in the other, the early, the delver one where it was first and second level characters, I lost two. Lost two in one dragon breath. And I was like, oops.  

Derrick Reimer:
I bet you went kind of easy on us on the other campaign that we started years ago. You probably,  

Rob Walling:
I did. I didn’t really want anybody to die. I mean, I didn’t fudge dice rolls, but I always kind of made sure it’s really hard. DMing not really hard. It is difficult. DMing first and second level campaigns, so fragile.  

Derrick Reimer:
Yeah.  

Rob Walling:
Well, Derek Kremer, thanks for playing.  

Derrick Reimer:
Well, that was nerve wracking. Thanks for having,  

Rob Walling:
You did. Okay. You got four out of five, if I’m counting correctly.  

Derrick Reimer:
Yeah, let’s call it  

Rob Walling:
That. Yeah, let’s call it that. He says.  

Rob Walling:
You’re listening to startups with the rest of us. I’m your host, Rob Walling, and in this episode, I talk with Noah Tucker, the founder of Social Snowball, about how he, as a nontechnical founder, has bootstrapped Social Snowball to millions in ARR. And in the episode, he says they’re between five and 10 million in ARR and growing about 30k of MRR per month. It’s an incredible story about overcoming the challenges of not knowing how to hire good engineers and having a code base that’s falling apart and eventually finding very strong product market fit, moving up market, and now he’s in a spot where he has an incredible engineering org in place, but none of it fell into his lap. And it’s really a story of a lot of hard work, grinding to learn new skills, as well as some luck as there always is. Before we dive in to my conversation with Noah, I want to remind you that if you are doing seven or eight figures in ARR and you’re thinking that you might want to sell your SaaS business, let’s say between one and a half and $20 million of ARR discretion capital is the place that I recommend people go. You can reach out to my tiny seed co-founder, who is the founder and the principal of Discretion Capital. Head to discretion capital.com. Or email AR at Discretion Capital if you want to learn more about how they can help you as a bootstrap, or mostly bootstrapped, SaaS founder looking to sell their company. Also, I want to invite you to microconf remote on May 21, it’s all about early-stage SaaS sales, and it runs from 10 am to 1pm Eastern Time. It’s just three hours. We’re gonna have three presentations, amazing talks by Steven steers, Nick debto and Anastasia Kubro, as well as founder by founder, which is like an online version of our famous microconf hallway track. Again, that’s on May 21 and even if you can’t make it, if you get your ticket now, you’ll get all the recordings you can buy your ticket at microconf.com/remote. I’ll be emceeing it, and I hope to see you there. And with that, let’s dive into my conversation with Noah.
Noah Tucker, thanks for joining me on the show.

Noah Tucker:
Thank you for having me.

Rob Walling:
It’s great to have you here, man. You’re the founder of Social snowball@socialsnowball.io. Your H one is scale your affiliate revenue with creators and ambassadors, and then H two is build and grow all of your word of mouth marketing programs from one place. Now, what that doesn’t communicate is that you focus on E-com.

Noah Tucker:
Yes. Yep. Exclusively Shopify brands.

Rob Walling:
And so this is the amazing thing to me about the Shopify ecosystem is you are a SaaS app that is focused on affiliates with creators and ambassadors, and so that’s a niche and then your niche down only to Shopify, and yet that is still a big enough niche to build an incredible business. Do you want to give folks an idea of where you stand today?

Noah Tucker:
Yeah, I mean the Shopify ecosystem is pretty big, but we have about 2,700 customers a bit more. So those are Shopify brands using the platform. We’re a full-time team of 24 and we are between five and 10 million of a RR.

Rob Walling:
Good for you, man. And did you raise any funding?

Noah Tucker:
No, I mean technically it’s very, very small Angel round, which is just friends and family. It was nothing significant. We burnt it all on Upwork developers in three weeks,

Rob Walling:
So you’re pretty much bootstrapped and we’ll get into our in 2021 around social snowballing. We’ll get into that a little bit, but hell of a business man, five to 10 million. When you started it, so you started it between, it kind of evolved, it sounds between 2017 and 2019. As you graduated from high school, you got into e-commerce and you said that you had your own, you had a brand or two that you built yourself and you ran into this problem, right? What was it?

Noah Tucker:
Yeah, essentially, especially I was young, I wanted to grow these businesses, so these are just random products I was trying to sell on Shopify, it’s supplements, electronics, all this. So one of the growth channels I wanted to explore was influencers on Instagram. And the only thing I cared about at the time was driving revenue with those influencers. So I wanted those influencers to create content post on Instagram and I wanted to be able to incentivize them to do that and track their sales. And believe it or not, there was no tool that was perfectly focused on just that. There was affiliate platforms that were more built for publisher relationships, so not Instagram creators. And then there were influencer management tools, but those didn’t really have a lot of affiliate tracking, so there was nothing to really incentivize them to drive revenue. It was more just about incentivizing them to create a post but not track any of the actual performance of the posts. And for me, bootstrapped, I was 17, 18, 19, I was trying to drive revenue, I needed to drive revenue. There’s nothing else that really mattered. There was just nothing that existed that was an affiliate platform for creators and influencers. And that’s essentially how the idea started.

Rob Walling:
That’s interesting. So it sounds like a Venn diagram where one circle is affiliate management, and I’m familiar with a ton of those. I’ve had founders of ’em on the show. And then the side that I’m still familiar with, not as familiar with is the influencer relationship side. We’ve had several applied to TinySeed, so I’ve talked to ’em, but I haven’t been as intimately involved in those. So would you describe social snowball as kind of the intersection of those two?

Noah Tucker:
Yes, very much

Rob Walling:
So. Tell me this then. What was missing from the traditional affiliate management packages that social snowball does that they couldn’t,

Noah Tucker:
I mean there’s a lot of product specific things which I’m happy to share, but more big picture, just the entire user experience was not as simple as creators needed to be. Creators are like consumers. Think of consumer SaaS, everything has to be frictionless and easy and intuitive, and those are not our customers, so we don’t have to deal with that. We sell to the brands, but everything onboarding, it’s just signing up, generating link and code, receiving a payout. Everything was just very, very clunky, very outdated. But for a professional like PR or publisher affiliate, they’re used to that. That’s their job. They’re fine with dealing with those platforms and it was built for them. For a creator on Instagram that’s never used a platform that’s more confusing than Instagram, it was just unrealistic.

Rob Walling:
So a big piece of it was influencer ux.

Noah Tucker:
You’re

Rob Walling:
Saying these, your experience. Fascinating. So just to paint the picture, you’re like 19 or 20 years old, right? You don’t know how to code and you’ve run into this problem. What the hell made you think that you should go build this? That’s super ambitious.

Noah Tucker:
I think it was just my naiveness. I didn’t know what to expect, and I was maybe running off the high of thinking, oh, well, I built a few e-commerce stores, how different is a software business? And I really did think that. And looking back, I just laugh at myself, but I genuinely thought that, okay, I know how to run a business. You have a product and then you run ads. And I was like, okay, well, for software, I need to hire an engineer to build a product, and then I’ll just run ads and that’ll be the whole business. I’ll build it once it’ll exist. No one will ever have to log into GitHub again, and then I’ll run ads and be rich forever. And that

Rob Walling:
Was it.

Noah Tucker:
That’s what I thought. Yeah, obviously I learned that wasn’t the case pretty fast.

Rob Walling:
I think that should be so when you’re rich and famous or you kind of are becoming that already, maybe this is going to be your course that you sell on X, Twitter and LinkedIn of just profit, build it once, never log into GitHub again, man. So thinking back, are you just like, ooh, cringe knowing now what you didn’t know? Should you still have done it?

Noah Tucker:
Well, I’m glad I did, but if I knew what I knew now, I don’t even know. It would’ve just been a totally different approach because that is what I tried to do. That wasn’t just my idea. I hired an agency and even though we were going to build an MVP, which turned into a complete disaster, but I had an MVP and then I literally started running ads to it, and then I very quickly realized that this is just not how a software business works, but I really went ahead and executed that idea. I saw that through before I realized that this is not how a software business works.

Rob Walling:
And did you do, aside from you needing this product, did you do any type of validation or have any conversations with anybody to maybe be like, yeah, at least there’s five other people that need it?

Noah Tucker:
A little bit. Honestly, at this point, I had been in this e-commerce community for a few years, so I had just friends that were running similar businesses and I would ask them, Hey, have you tried any of the affiliate apps and the Shopify app store? And they were like, yeah, all of them suck. And they shared similar pain points that I shared. So I didn’t do proper market research validation, but I was really confident in it just from my own pain and just the few friends that I reached out to.

Rob Walling:
And so as you said, you hired an agency to build an MVP, which is, yeah, that’s tough. You can get lucky, obviously. And we see, I see MicroConf, TinySeed podcast listener, founders do this, and I don’t know what the number is. I could make something up. It’s probably 70 or 80% of the time. It’s a complete show.

Noah Tucker:
I would say like 95,

Rob Walling:
It might be. It’s a really high number. I didn’t want to overstate it, but you obviously fell in that bucket as well. So when you say it was a show, what do you mean? Can you give us some numbers, timelines, what exactly happened?

Noah Tucker:
Yeah, so I think they charged me something like 20 5K, and this is just, I didn’t have a lot of money saved. This is almost all the money I had saved up from my previous e-commerce ventures. So they quoted me like 20 5K, and they said it would take about three months for them to get the MVP that I wanted live and approved in the Shopify app store. And I kid you not that it took 15 months before I terminated the contract early with them because we still couldn’t get a working product. It was the textbook agency disaster textbook textbook. And at that point then I hired a freelancer on Upwork who was decent enough to get it approved into the app store, and I thought he would stay on full-time, but he didn’t want to join full-time. He had a lot of other commitments. And then I ended up kind of going back into the wild trying to find developers.

Rob Walling:
And I mean, you’ve heard me say on this podcast that this with single non-technical founders or founding teams that don’t have a technical founder. This is the biggest headwind consistently. And we see it with TinySeed founders as well. It’s like, I don’t want it to be the biggest headwind, but it is the product. SaaS products are complicated. They’re more complicated than I wish they were, to be honest. And so I guess, how did you dig yourself out of this? So you’re in the Shopify app store now, but the quote, quality can’t be good. So you probably have a bunch of bugs. It’s probably hard to add features, a bunch of cruft and legacy, this and that. Did you get, I guess to kind of piggyback on that, it’s like did you get customers early when you were in a Shopify app store? And then how did you deal with this basic technical debt from the start?

Noah Tucker:
So we did get customers. I think the one thing that was my strong suit and still is just marketing and growth. And so at first we just partnered with a bunch of influencers that post YouTube videos and Instagram and whatever about e-commerce. And we actually got to 10 KMRR in the first three months. So we had decent growth. And with that 10 KA month, I was like, okay, I can find some developers to work with. That being said, I still didn’t know how to find a good developer because as someone who looks at code and just sees gibberish, you can’t tell a good developer from a bad developer. So I went back to Upwork, which is another mistake again, and I hired more freelancers and I mean, I’m kind of fast forwarding a year at this point because it really was a year of just hiring and firing, hiring and firing these Upwork developers, everything breaking nonstop, customers getting pissed, hiring again, firing again, just like it was a treadmill of that until I found someone who was pretty good and he told me he wanted to be my CTO.
And to me, this was exactly what I needed because I didn’t have anyone that I really trusted as a leader in the engineering side, this guy proved to be probably the best engineer I’ve worked with so far, and he wants to be my CTO. He said he’d take a huge pay cut in exchange for some equity, and I was like, okay, this is actually exactly what I needed. This is the stars aligning. And so this dude was based in Romania, and I told him, look, I’m going to fly to Romania. I want to meet you in person. Let’s sign the papers in person and do a toast and then kick off this partnership. So that’s exactly what I did. I was already in Barcelona with my girlfriend for New Year, so we just hopped from Barcelona to Romania, met with him, spent time, great vibes, signed the papers, and then I flew back to the US and two weeks later, he doesn’t show up for work one day and I’m just like, Hey, are you okay?
What’s going on? And then he’s like, Hey, can we jump on a call? I got to tell you something. I was like, okay. And we get on a call and he tells me that he has been applying to become a priest and he just got accepted and that he’s going to move to a monastery now and he could only work a few hours a week. Is that okay? Was what he said. And I didn’t say this, but I was thinking, no, that’s actually probably the least okay thing you could have possibly came to me with. You just told me you wanted to be my CTO. I thought we’re going all in on this thing, grinding late night together, getting things done. And he’s like, yeah, this is going to be a side project for me now I’m going to become a priest. So at that moment, I started another search for engineers and I waited until the day before his equity vested to let him go, and I let him go. And then I just had no engineers, just zero developers. I couldn’t even log into GitHub on my own and we just had nothing, just me and one customer support person. And that was probably the hardest part of it all.

Rob Walling:
That was one of the low points it sounds like. Oh my gosh. So you’ve spent a year trying to find an engineer. You finally find someone who wants to be your CTO, and the dude basically pulls a, it’s not a full on ghosting, but it’s kind of just drop the mic and exit. What the fuck was he thinking?

Noah Tucker:
Do

Rob Walling:
Still? Who would do that? It’s just such a weird thing to do to someone.

Noah Tucker:
It’s just one of those things that you would never prepare for your CTO having to become a priest. You just never think of that

Rob Walling:
Or bailing on you at all saying, I’m going to be your CTO. We sign papers and then being like whatever the reason to suddenly only be like, I can work five hours a week, this just makes no sense. It’s like, then why did you waste my time? Oh my gosh,

Noah Tucker:
Dude. Okay,

Rob Walling:
So for a couple months then you have no engineers, you in support. The product has to be a rickshaw with good duct tape and bailing wire where you just bleeding customers. Is everyone pissed off?

Noah Tucker:
So believe it or not, we didn’t lose too many customers because myself and the customer support guy, we were just grinding nonstop to keep people happy and just making promises that it’ll get better soon. Honestly, this was one of the hardest periods of my life. I just remember thinking I was just gloomy. I was just down. I was spending all my time trying to deal with these fires at the same time, find another engineer, and at this point I’d already hired 20 engineers and only one of them was decent, so I didn’t even really know what to do. Everyone I would talk to, I’d be like, is this just going to be the same thing over again? So I just didn’t really know what to look for. And then some of our integration partners were reaching out saying, Hey, your API is sending us thousands of requests.
We’re going to turn off the integration if this doesn’t go off today. And I’m like, I don’t know how to turn that off. It was just bad. And so what I did at the time is I just reached out to one of our previous freelancers that was also pretty good at different one, but also couldn’t join full time. That happened a couple of times and I was like, dude, I will do anything. If you could just spend weekends or nights or whenever you have free time fixing these bugs, you don’t have to build anything else. The codebase you’ve worked with us before, just please fix these bugs. And he agreed to it. And so that kind of got us in a slightly more stable place. And then I was just basically begging him to join full time and he wouldn’t because he had a really high paying job that he was at and we couldn’t beat that. But he told me that his cousin was interested in a full-time job and that his cousin is also a great developer and I just took his word for it. And his cousin joined and his cousin is still with us today, and that was employee number one at social snowball.

Rob Walling:
Wow. First.

Noah Tucker:
Yeah.

Rob Walling:
And that was three plus years ago, right?

Noah Tucker:
Yeah. Yep.

Rob Walling:
Yeah. You know how I often say it’s hard work luck and skill. You kind of finally got lucky because you went through 20 devs and one of ’em was eventually good. Is that a little bit of what happened there? I mean, that’s crazy. The odds of that, of his cousin being around with you that long after churning through so many,
I want to step back a second because I think we glossed over something that some listeners will hear and be like, wait, what? You said, I partnered with some influencers, got to 10 KMRR in three months. Now no one does that. So here’s what I want to do is what do you mean partnered with influencers? Did you know already have a network of influencers? Could someone replicate this or was this only something you could do? And it was like 2019, right? It was like six years ago. I just want to dig in a little bit on that so someone might understand how you got, because even getting to 10 K in three months is something, and even with a crappy product, at least you have some money to pay someone to do something at that point versus if you are at one K after three months, maybe you’d have just punted on this whole thing after grinding for a year. So let’s double click on that.

Noah Tucker:
I would say, well, to answer your first question, it’s absolutely something you could replicate today. I talked to another founder just a couple days ago who is also selling a Shopify app and partnered with influencers and did really well with that, so I know it’s something you could replicate. I definitely had a bit of an unfair advantage because I did know some of the e-commerce influencers that would be super relevant to talk about social snowball, and that was the first few influencers. And then from there, I was just doing cold outreach, reaching out, getting people’s emails from YouTube and just reaching out. But yeah, I just asked, there’s plenty of people on YouTube that talk about e-commerce strategy and marketing, and I just asked the ones that I know and then a few others to make a video about social snowball and to try the app and make a case study with it. Just very simple things like that. And it was mostly YouTube videos. I think some people would post on Instagram eventually TikTok, I think this was before TikTok though. And so yeah, that first 10 KMRR just came strictly from those influencers.

Rob Walling:
Got it. And so tell us how, I mean, obviously I can go to your site and look at your pricing, but when you have 10 KMRR, that is brands that are paying you money, are they paying you a monthly fee plus affiliate commissions? I’ll put in quotes. Is that how your revenue works?

Noah Tucker:
Sort of. So I mean, our pricing has changed a lot. We’ve iterated it probably four or five times since. But yes, high level brands always pay us a monthly fee. And then we used to have more plans that do this. Now we only have one starter plan that does this where we, it’s not that we’re charging the affiliate commission up to the brand. I mean we have the software to do it, but the brand pays the affiliate commission directly through social snowball. We on the starter plan only take a percentage of affiliate revenue. 3%. Yeah.

Rob Walling:
Okay. And you’ve also mentioned to me that you’ve listened to this podcast for many years. Do you remember when you started?

Noah Tucker:
Yes. It was actually in the very, very beginning. Dude. Very, very beginning. One of the freelancers that I worked with that things didn’t work out with said, you should check out startups For the Rest Of Us. And I checked it out, and I kid you not from then until now. I maybe have missed one to three weeks ever. And I’ve listened to every week, and I’m not just saying this, I’ve told this to a lot of people, I say this behind your back, this podcast has helped me as a resource more than any other resource in the world, period. It really has. So yeah, so this is an exciting moment for me too.

Rob Walling:
Yeah, thanks, man. That’s a really big deal. It’s super meaningful to me because you know why I do this podcast now and I could just not, it’s to help people and if I can help you, and maybe someday you buy a book or you become a TinySeed founder or you invest in TinySeed or whatever, great. And you know what? If I had just able to help you, that’s cool too. And so, yeah, no, that’s super meaningful to hear, especially given the success you’ve had. So that’s awesome. Speaking of success in TinySeed, I can’t ignore this. So in 2021, you applied to TinySeed, we interviewed you. I remember talking to you.

Noah Tucker:
You did,

Rob Walling:
And we rejected

Noah Tucker:
You,

Rob Walling:
And this is one of, I’ve told you this in the past, but venture capitalists have what they call their anti-portfolio. So if you say no, if Google pitched you and you said no to them and Facebook Zuckerberg pitched you and you say, no, you said that’s my anti-portfolio, it’s the portfolio. I wish that I’d funded with TinySeed. We really don’t have an anti-portfolio. I think there’s a couple companies that have come along that have gotten quite large that I’ve been like, damn, we should have invested. But usually the signals at that point were not. They weren’t great. And it was like, I don’t regret saying no. Right? But you are definitely at the top, one of the top of the list here in the anti portfolio because doing five to 10 million and growing as fast as you are is just super, super impressive. But my memory was that your churn, I think you said you applied, you were around 20 KMRR, which is

Noah Tucker:
Something like that

Rob Walling:
Great sweet spot for us. That’s why we talked to you, and I’m sure you were growing, you were hustling, but I remember your churn being really high and we were trying to, there’s an influencer thing where it’s like, Ooh, is influencer space going to keep going? Is it really a thing? Again, this is four or five years ago, but also I think the churn was a big blocker. Do you have memories of all that going down?

Noah Tucker:
For sure. I remember talking to you and I was super starstruck, and then you told me to calculate my churn and I was like, oh, no, you asked me what my churn is. And I said, I have no idea where would I even look to find that? Especially because we don’t build through Stripe, we build through Shopify’s billing API, which at the time nothing integrated with. Now there’s a platform called Mantle, which is great, but at the time there was literally nothing. So I remember I spent, I think it was, I’m not even exaggerating, two or three hours going through every single transaction and all we had was this raw transaction history of everything that’s ever happened, and I was using a pen and paper and adding things up. I don’t even remember how I did it, but I figured out how to calculate churn literally by manually adding and subtracting or whatever, every single transaction. And then I got a number and it was something super high back then, like 10% or something. So it makes sense that you rejected me. Honestly, that is really high.

Rob Walling:
It’s a bummer. I do remember, I know when I ask in interviews about churn, and if someone doesn’t know their churn, that’s a weird signal to me as a SaaS founder, it is just like, wait. That is probably the number one number I look at. I looked at as a founder as my MRR, because I just want to see it up under the right, and probably my number two number was churn, and so I knew it by heart all the time, and then I think it was higher than 10. I bet I could go back. I think it was probably 15 or higher, and I remember really? Oh, really? Yeah, and I remember being like, uhoh, this could be an issue, but hey man, water under the bridge

Noah Tucker:
Would’ve probably said the same thing. That’s really high. That is really high.

Rob Walling:
It is. And here’s the thing, our signals, none of us are a hundred percent. You just can’t be got to be right. I talk about this all the time as a founder, do a bunch of shit and be right enough of the time that those ones win and that’s what it is. Just because we said no to you doesn’t mean TinySeed doesn’t work, and it also doesn’t mean we make bad decisions. It means sometimes we’re not correct. Sometimes we can’t see the future or sometimes the information presented doesn’t match the filter that we have. I’m curious now you built an incredible business. So you applied to TinySeed, you got rejected. Was that discouraging to you or were you just like, Hey, I’m going to do this anyways, whether they want to be on board or not?

Noah Tucker:
Yeah, I mean I definitely was a bit disappointed for sure, but I was just like, I mean, it is what it is. I can eat rejection all day. Rejection’s not going to slow me down. So I was just like, all right on where we go. So I mean it was definitely a bit disappointing. It was a big listener of the podcast, but it wasn’t going to stop me,

Rob Walling:
Didn’t change the trajectory. And that’s the best founders is when you’re not waiting for permission, you’re not waiting for someone to anoint you that like, oh, you’re going to succeed that me investing in you means you’re going to succeed and me not means you’re not going to. That’s just not true as evidenced by your story. So flashing forward, then finally have a developer full-time, first full-time employee and you start to pivot up market. Why?

Noah Tucker:
Honestly, it was just maybe partially from your podcast, just resources I was listening to in general just really made that sound like an appealing move. Also, the small segment of users that were a bit more upmarket for us were the best customers, obviously highest paying, lowest churn, easiest to deal with, just the basic stuff that you would expect. I’ve heard

Rob Walling:
That before.

Noah Tucker:
Yeah. So yeah, it was kind of a realization I had at some point and at the I was like, okay, there’s probably a lot of things I need to do to make this a reality. And it was really a pivot of the entire business that honestly took about a year from me realizing that and deciding this is where we’re going to go until I felt like, okay, we’re actually in a place where we can work with these bigger brands more consistently. So it’s a combination of product. The app had to have the features that these bigger brands expected, so that was just a slow building, a certain set of features. It was the pricing. We wanted to start pricing higher, but that was actually the last thing we did because we were like, let’s build all the pieces of this and then increase pricing. So product, customer success strategy, I hired someone to be full-time just onboarding.
I want someone hands-on talking to these brands, really building a relationship and helping answer their questions, not just reactive chat support, but proactive onboarding. And that was a big thing for us. Marketing as well. We were kind of relying on ads and influencers and the Shopify apps were before, and that’s how the smaller brands were shopping for software. We needed to find where the bigger brands were shopping for software, and now we’ve really cracked that code and we could get deeper into this, but it’s a combination of partnerships, events in person and online, content marketing, and then just brand and community stuff. What’s worked really well for us, and that was a big learning curve as well, and sales. I started taking more sales calls and actually talking to brands before they would install. So all of those pieces had to slowly be changed that none of these are overnight changes. Then once I felt like, okay, we’re in a good place, switch pricing, we made the starting plan at a hundred a month at the time, it’s higher now, but it was a hundred month at the time, and growth took off much faster at that point. That was a pivotal moment for social snowball.

Rob Walling:
Yeah, I want to call out something you said that I think some folks could miss is there’s a difference between raising your prices and going up market. Those are two different things. They can be the same, but a lot of times you are just underpriced for the market. You charge on 29, you can charge 49 to the exact same customer base, same positioning, same product. That’s not what you did. Going up market usually means a whole new customer set or subset that you have to, as you said, build features for build a customer success org for which in your case was one person, build a sales force and then raise prices. It’s complicated and it can take a long time. In season one of TinySeed Tails Gather did this, and it took them, I think it was like 12 months, it may have even been 18 to get there. It was somewhere between 12 and 18 months and they thought it was going to be six, which of course you do. And then they get to the 12 month mark and they’re like, we still don’t have all the features the big brands needed. How did you have the conviction to do that? Because to spend that much time and presumably that much money of your profit, you had to feel very convinced that was the right move.

Noah Tucker:
It was just from the data that we already had. We saw that these bigger brands were doing better. Also, affiliate marketing, sometimes smaller brands, they just don’t have the resources or to get it off the ground. It’s not something that you just turn on necessarily. It takes a bit of work, and the bigger brands had the resources, they had the influencers. It was easier for them to find influencers to work with or if they were running a customer ambassador program than they had more customers to bring into the ambassador program. So everything just worked better for the bigger brands, and that was pretty clear to me. So I think that’s kind of what gave me the conviction, and maybe this is a flaw, but something that I still hold onto today is that we can be the affiliate platform for all kinds of brands. So I never felt like I was letting go of the smaller brand segment.
I just felt like we were also allowing us to play in this bigger league. And so today we run what you would refer to as a dual funnel where we have a self-serve flow for the smaller brands. I mean it starts at 200 a month now, but that’s a smaller brand for us now. And then we have the sales led process for the bigger brands, and maybe if we were to shut off the self-serve, we would do better if we get focused, but I don’t know. I kind of like the idea that we can support any kind of brand.

Rob Walling:
So this next question is interesting. I’m trying to figure out exactly how to ask it, but really at the top level it’s like it sounds like you were right most of the time, aside from the tech developer hiring issues, a lot of other things have gone really well, like the early marketing you got there quick even deciding on the idea, the execution on the idea, the marketing, the sales, then the going up market. There’s a lot of things that went right. How did you do that? How did you learn to do all this? Right? You’re 26 now and you manage a team of 24 people. You’ve never worked a day job where you learned management skill, you know what I mean? Just a broader entrepreneur question, how did you execute on this as well as you did?

Noah Tucker:
I really think there’s no secret to it. I think I just was learning as I went and I was just trying to be a sponge and just absorb as much information as possible. So things like this podcast, other podcasts, I had a couple of advisors that just gave me advice, almost like mentors you could say. And then I would just fail all the time, just like the engineering stuff. We didn’t even talk about what our engineering team is now, which I think we have one of the best engineering teams literally possible. And to think about where we were when I had no engineers, I just got back from Romania, I was depressed. My app was completely falling apart to the fact that we have a nine person, Northern California based killer engineering team today. That is crazy. But that’s only just from aggressive trial error.
Just trying, failing, trying, failing, trying, failing. Okay. I learned a little thing there. Trying, failing, trying, failing. Okay, now we got a little bit closer and I think I just applied that and everything. And same with team building, you’re mentioning managing a team of 24, the first 10 iterations of our team, not just the engineering team, but all teams didn’t work. I hired the wrong people in every department. I had to fire people, people quit. Things didn’t work out. This happened across every part of the business. I think the only thing that I had a good knack for that was relatively smooth was the marketing and go-to-market stuff that was less bumpy, but everything else was failing, failing, failing, failing, and then finally figuring it out,

Rob Walling:
Doing a lot of things quickly and most of them worked out is what it sounds like eventually. Wow. So I do want to hear this story about, you said you have an incredible engineering org now, and I have a note here in 2024, which is last year, hired my dream, CTO is the quote, but how did this come about? It sounds like you’re all locked in Northern California engineering team. Does that fall on your lap or what?

Noah Tucker:
Okay, so I mentioned our first full-time employee, who’s that? Freelancers cousin. He’s still with us today. He’s awesome. But he basically helped us hire an engineering team. So we hired a couple other engineers. We ended up building a functioning engineering team. They weren’t the best engineers in the world, but they were good enough and we were moving along. We were slowly fixing debt. Some things were still breaking the app but still go down sometimes we were building new features, but it wasn’t like a complete disaster At a certain point, I guess last year, probably early last year, I realized this is not what’s going to take us to the next level. And it started to feel like engineering and product became an anchor to the ship again. And while marketing, sales, partnerships, customer success, brand, community, everything else was just sailing us forward. I could feel that anchor just pulling us back.
And so it wasn’t that the engineering team was a disaster, it’s just that it wasn’t the level that I needed to be at the scale and that we were in what my ambitions, what I wanted to accomplish. So I did what I usually do when I want to hire someone out of my league. I just literally went to LinkedIn, went to a lot of our competitors, some of our competitors, the big legacy competitors use our tech stack, and I reached out to a lot of the most senior engineering titles that were either currently or previously at those companies. And maybe I reached out to 20 people, got five that were interested. And then this one guy was literally the most qualified person possible. He was the VP of engineering. The only reason he wasn’t the CTO is because there was a technical founder there. So really the top engineering leader at literally our biggest legacy direct competitor that happens to also use our exec tech stack.
He was the third engineering hire there, and he exited during their series B when they had 200 or 300 engineers. He built the whole org. He knew his stuff, he knew the product, he knew the space, he knew how to build a team, he knew everything, and we got along super well, and he was super excited to join and he joined. And then when he joined, he brought on a lot of the top engineers that he worked with at this competitor as well. And he knew who was really good and they were all based in Sacramento because this company was based in Sacramento, in person. So we just have a bunch of really great engineers in Sacramento led by the CTO, and now I feel like we have a great product and engineering team. I think this is what I’ve been dreaming of for the past five years.

Rob Walling:
Yeah, it sounds like it. And it sounds like you kind of earned it, like you did all the hard knocks to get there. As I hear your story, man, it feels to me, I’m curious what you think about this assessment. I’m going to name two things that I think might be your superpower, is one of them that you just do not give up, and is the other one that you are not afraid of failure or rejection?

Noah Tucker:
I would say there’s are traits of mine. I would say my superpower though, with this stuff is getting people on board with my mission. I think I’m a great storyteller. I think I’m great at getting people excited and it’s not like I’m manipulating or being fake. I am genuinely excited about what we’re building and the path forward. And I think I just do a really good job at getting other people on board that mission. And I think that’s how I’ve been able to hire talent that’s definitely punching above our weight.

Rob Walling:
Yeah. How do you do that? Because I’m a storyteller too, whether they’re on this podcast or just to my team or whatever. How do you get someone like that on board with your mission? Is it just that, well, yeah, I’m curious. Do you tell ’em a story? Are you like, this is where we’re going, join us if you can make it, what is in your head when you’re doing that?

Noah Tucker:
There’s no concrete strategy. I literally just get on a call with them and I tell them, this is the problem we’re solving. This is what we’ve done so far, and this is what we can do. This is where we’re going, this is what we’ve achieved so far. And I think it’s just my excitement. I think I just have contagious excitement when I’m convincing someone to join the mission. And I think that’s really it. I don’t think there’s too much actual strategy to it. I think I just, I’m very, very clear on what we’re doing and where we’re going. To me, the vision is crystal, crystal clear. So if they have questions or if they want to just learn about what we’re doing, it’s not like I have to sit and think I know exactly what we’re doing, why we’re doing it, where we’re going, what the future looks like, in my mind at least. And I get really excited when I talk about it because it’s really exciting to me. And I think people just like that energy and they want to be able to build something cool, and this is their opportunity to.

Rob Walling:
And these days, I mean, your growth has accelerated dramatically. Obviously, if you’ve gone from give or take 20 KMRR four years ago and you’re, as you said, approaching between five and 10 million, what’s it like these days in terms of your growth trajectory?

Noah Tucker:
So I mean, recently it’s been really strong. January and Q1 is always a little bit slow for e-comm because there’s just all the sale periods and Black Friday’s over, so there’s always a bit of contraction and churn there. But we’re right back on track after that. And we’re adding something like 30 K-M-R-R-A month on average right now. Geez. Yeah, I think past 30 days it is right around exactly 30 k. And that’s new MRR expansion.

Rob Walling:
Amazing. Congrats man. Hell of a business. I wish TinySeed could have invested, but here we are. Here we are. Noah Tucker, thanks for joining me on the show.

Noah Tucker:
Thank you for having me. This is awesome.

Rob Walling:
If folks want to keep up with you, obviously they can go to social snowball.io to see what you’re working on. Is there a particular social channel that you hang out on? It does not look like you’re super active on X Twitter.

Noah Tucker:
I’m more of a consumer on X. Twitter. I used to post more, but I’m not super active. But yeah, extra Twitter, I do check my dms probably at least once a day, so that would be great. And also LinkedIn. I’m super active on both, so yeah, either would be fine.

Rob Walling:
Awesome, man. Thanks again.

Noah Tucker:
Thanks for having me.

Rob Walling:
Thanks again to Noah for joining me on the show. And I realized that Noah actually is active on X Twitter. He is N-O-A-T-U-C-K, Noah Tuck. I know Noah and Social Snowball have great things ahead, and I appreciate him joining me on the show to share what really is a pretty incredible story. Thanks to you for listening this week and every week. This is Rob Walling signing off from episode 774.

Rob Walling:
This podcast is brought to you by Mercury. I’ve been banking with Mercury for years and whenever I set up a new account, I’m reminded why traditional banking feels stuck in the past. When our previous bank faced solvency issues, we needed to spin up new accounts quickly that could handle millions in funds across multiple businesses. Mercury had us up and running almost immediately. I manage half a dozen different Mercury accounts across a wide range of companies from my personal single member, LLC to MicroComp, our seven figure global events and education platform to TinySeed our venture fund and accelerator. Mercury easily handles them all. The interface is elegantly simple for daily banking, paying invoices, and sending and receiving international wires, yet powerful enough to handle the multi-step approval processes we needed to put in place. When funding founders with large transfers, anytime founders ask me who they should set up their accounts with, I send ’em to mercury.com. 

Check the show notes for more details. And note that Mercury is a financial technology company, not a bank. Welcome back to another episode of Startups. For the Rest Of Us, I’m Rob Walling, and in this episode I talk with Maya Voer. She’s the author of Go to Market Strategist, everything You Need to Reach Product-Market Fit, and her book and her consulting and her writing is all focused on B2B SaaS. We have a great conversation today defining what go to market is, because that’s always a term that I’ve struggled with because it feels very MBA, like feels theoretical in a way that maybe isn’t helpful for Bootstrappers, but I’ve become more comfortable with it over the last several years and Maya has a nice way of communicating that Go-to-market or GTM is really just pricing and positioning and packaging and customer. It’s like an umbrella term for several things. 

So we dig into that. We dig into ECP, which is your early customer profile, which is different from your ICP as well as some early stage scrappy marketing approaches that don’t scale. Before we dive into the episode, I want to let you know about the MicroConf Growth Retreat, a new event we’re launching in London from May 14th to the 16th of 2025. This isn’t your average conference, we’re keeping it intimate with just 40 to 60 SaaS founders joining us for deep networking and invaluable insights. We’ll have focused morning work sessions where you’ll gain clarity on your business challenges, followed by unforgettable afternoon excursions, exploring the best of London, and then we’ll end each night with a reception. Tickets are limited, so head over to MicroConf dot com slash retreat to secure your spot. We will sell this event out. If you want to go to the MicroConf Growth Retreat in London, head to MicroConf dot com slash retreat. With that, let’s dive in to my conversation with Maya. Maya, thanks for joining me on the show,  

Maja Voje:
Rob, it’s such a pleasure. Let’s talk about everything. Go to market today.  

Rob Walling:
Everything go to market. Alright, so I want to ask you to first define for someone who has never heard the term go to market or they hear it and they think, isn’t that something that Proctor and Gamble does with a new brand of toothpaste? It’s very MBA speak. How do you break it down for a mostly bootstrapped founder who is just trying to build a product that people want? By people, I mean businesses of course, and trying to sell market that product. What does go to market mean for them?  

Maja Voje:
Well, that’s our best plan to reach. Early majority, the first customers are not that difficult. These are usually people who come from your phone book or some sort of social media, early adopters group, so that’s not that much of a rocket science. Then in the later stage, once you defend product-market fit, you are facing a big question. So how to build these predictable and scalable ways, how to get customers. These are called go-to market motions, and that in my science is the holy grail of the go-to market stage for startups, how to just stop worrying where our next customer is coming from, that we have some sort of predictable engines to do the work so we can maybe take vacation one day. That’s nice, but I have to emphasize here, and it’s such an important thing because oftentimes go to market is mistaken for marketing or sales or LinkedIn. 

So it’s a combination of different factors and if you are deep into the product, you will probably say, oh, go to market is that, but hear me out first we have to find a very good market market where we have a chance to win. Then we are dealing with just this selection of customers. So what are the customers that will indulge our product and help us grow this business? Later on, after we kind of figure that out, we can return to product and maybe we could be even playing around with different value propositions and different ways. How do we provide value? After we have a little bit of an initial traction going on, initial feedback, then we have to learn what to say, how to present our product. That’s positioning and messaging, and nevertheless, it’s nice that people pay us as well. So we are not doing everything for free. That’s pricing. And later on we bump into the last component, which is growth. So this is how to get customers. Ideally we would build go to market motions. Hope that was clear, but if you have any sort of sub-questions, this is my favorite topic and I cannot shut up about this.  

Rob Walling:
Your favorite topic so much that you wrote a book  

Maja Voje:
That’s right  

Rob Walling:
On it called Go to Market Strategist, everything you need to Reach Product-Market Fit. It is that there’s a hard copy there. You have paperback and Kindle, and of course it’s available on Amazon, and I believe this is how you came across our radar. Folks on X Twitter have been talking about you. And then go-to-Market strategist. The book came across our radar, and I think before I want to dive into this concept of ECP, right? It’s this early customer profile. But before I do that, I guess in summary, saying go to market is really this umbrella term for packaging up and bringing the product to market. And that’s the thing I think that confused me. Even five years ago, whenever I heard go to market, I thought, this is very academic, it’s very theoretical, it’s very big business, and it’s because every example that I read in a book always used Intuit and Best Buy and Target and these Fortune 500 companies, you know what I mean? 

And none of that ever applied, but if you package it up as no, it’s your early customers, it’s the market, it’s the pricing, it’s a plan, right? I think the summary, so I want to come back then to ECP, this concept that I just mentioned. So we talk a bit about on this podcast, about ICP, your ideal customer profile, and especially if you’re early stage, that can be impossible to know, difficult to find. Once a business is more mature, the SAP makes more sense. Maybe you have one, maybe you have two, whatever. What is this ECP concept? And talk me through how, again, maybe an early stage bootstrappers should be thinking about it, why it’s important to them.  

Maja Voje:
Awesome, and this is such an irrelevant question for our audience who’s mainly in B2B, right? Because in B2B, you know how it is. If you want to target big companies, you need to go through compliance, you need to have a couple of badges and everybody will ask you, can you show me 5K studies, seven use cases, and yada yada that you don’t have at the moment. So we have to build our way to the ideal customer profile. It’s very good to have a strong vision. Literally, I’m working with enterprise cloud AI softwares right now, and we are dealing and bumping into the same problem. So the technology is really good, but so far ideal customers have big, big, big considerations just like doing pilots and use cases because it’s not enterprise safe yet. So in order to bridge this gap between where we want to be and where we currently are with our product, our traction, we are using this proxy of early customers in order to strategically generate references and traction so that we can move up market later on. 

And why I like to call it early is literally a very personal reason as well because you need to do something right when you are launching. And of course you can have this big vision that might be true in three years, but where we are today, it’s a little bit different. So you need people who are thinking differently and acting differently. Early customers usually have much bigger risk tolerance, so they are those early adopters. There is a new tool I would like to play around a little bit. Sometimes they’re even inclined to break corporate rules. They are just using it from their personal emails or something like that. So I became obsessed with just this idea how to get early traction. So first in your beta it might be free, and these are not customers, these are users, and there will be huge discrepancy between people who are using it and saying it is awesome. This is why I wanted to differentiate this concept from just early adopters because the essence of customers is that they are paying for it. Meaning not only they are saying they are loving it, but we can actually reinvest in our business. So that’s a little bit of a why I’m so bullish on this early customer profile.  

Rob Walling:
So that’s an early customer. It sounds like ECPs are your early adopters, right? They’re willing to try your product  

Maja Voje:
That are  

Rob Walling:
Paying, that are paying that their customers, not users. This is something I often say on this show. Someone will say, I have 10,000 users, and I’m like, great, zero people paying you. It’s 10,000 customers. That matters. Okay? So ECPs are willing to try your product, provide feedback. Now, what’s the danger here? It seems like it could be pretty easy to make big mistakes. It’s like I’ve seen folks launch, you get 20, 30, 40 paying customers that maybe we could call ECPs in this context and they’re all over the place. Someone’s like, I want this to become this other competitor and I want this feature. And it’s just like 40 different people, 50 different feature requests. I can imagine this being overwhelming. So what are some big maybe mistakes that founders make as they’re trying to build out their ECP?  

Maja Voje:
Okay, best case scenario. You think about this before it happens. So when we are just deciding who is going to be ideal customer for our profiles, we can come up with a couple of hypothesis. And at this stage, I love to use prioritization framework. So I never, ever, ever want to say to people, just select one and let’s live with this for the next six months or something like that. No, your technology, your maybe AI agents could be helping a compliance B VCs, C banks, okay, we have three ideas of the segments. Do we really feel secure that we are just like saying maybe I like VCs, let’s go with VCs and just take it for granted for the next months of our go-to-market operations? No, we need to do validation first. So ideally you would not encounter this problem, but in reality you often do, and especially when you are launching and you are reverse engineering who either retained best or who converted best, which segment with your product, you can come into the very conflicting situation. 

So for example, freelancers love my AI content writer, but agencies would use it if they had this and this and that feature. And you’re like, okay, right now mission critical is to get 50 customers. At this point, I can no longer heavily invest in the product. And previously I have decided that my vision is to help small and medium businesses. So currently I don’t want to deal with this partnerships and with these agencies, by the way, I love to work with agencies. They are great accelerators, but point you have to be true to your vision, to your product vision. And if you have done the market research correctly, the segmentation, if you have done interviews, that could be a little bit easier because you will feel much more confident about your choices. But then another very common mistake with early customers is also how we are acquiring it because in literally the channels that we will choose for launch, terminate, who are we going to attract? 

So it’s mission critical to also do a very solid research on which channels our ICP is. And that’s not that difficult these days because JGPT, clo, what else could we be talking about? So yeah, definitely do your homework and especially if you are dealing in a very, very, very, very strict industries. For example, injection molding or some sort of transportation companies where people are not online, you can literally ask them where do they find relevant tools and information to advance in their career or businesses? So you can get this information from some of your people as well. Don’t just blindly follow this blueprint and I should post on LinkedIn and maybe Hacker News and product hunt launch if that’s not relevant for your audience, that’s a big mistake that we have to avoid.  

Rob Walling:
I like to dive into examples if we have them. Do you have any really good B2B SaaS case studies for ECP implementation?  

Maja Voje:
So I will not throw in the names of the companies right now. Some of the founders are public with this one, some are not. But yeah, let’s talk through a couple of ones. We have an AI content writer, a typical staff for repurposing a little bit better train that you could in your projects. And it was super, super, super interesting because we just launched, we thought that it is going to be a very broad product that everybody, every marketer and let’s say salesperson, business developer who needs to post on LinkedIn could be benefiting from this. That was our initial assumption. But once we saw the results from the traction, I mean users was always okay, but customers who were the first segments that were converting, rightly it was founders. So that was a big surprise. We anticipated that this is going to be very interesting for marketers, but we ended up serving founders and we literally had to pivot the communication of that one because just like for marketers, the value was not that convincing. 

We could not differentiate it much nicer than copy AI or what you can do in Jet GPT, but for founders it worked amazingly well. We have another example from an analytics tool and analytics tools. You know how they are, they’re a little bit heavier to sell, right? It’s a big investment like CRM, you have to learn it, you have to commit to using it for a longer period of time. So these types of launches are specifically interesting when they are done on the red ocean market. So when there is a lot of competition, and usually we go with vertical positioning, meaning that you narrow down to one specific audience, one specific persona and go all in to get early traction. Well, for this one, the situation was very similar. Again to what you’re saying the tool got, I kid you not 50,000 users from Reddit, an additional form and everybody was like, yay, this is so cool, yada yada. 

Product managers were playing around it. So far monetization was a pain in the arts. So what happened there was that initially they went with this idea to be serving in the developers and yada yada, but later on they figure it out that the real customer for them are just small and medium businesses, B2B businesses. So that was a huge one as well. I mean, I can be going on forever, forever, forever. It happened happen on to my launch because there is another fallacy that is kind of dangerous here. As a founder, you have this vision and usually the vision is to be helping everybody and to make your product super horizontal and useful in all different perspectives. And I was kind of the same. And there is another fallacy, so I literally envisioned that I want to serve growth people and marketers, people just like me, AKA eating your dog food. But in reality, just like after seeing the response from the market, these ideas of segments, who is actually my target customer refined probably 11 times since I am operating this GTM strategist venture. So end of story, even when you nail it, market changes, technology changes, go back to the drawing boards, make sure that you are always, always, always on point with that.  

Rob Walling:
Yeah, there’s a lot to that. You have done a tremendous amount of writing specifically and maybe you’ve also done speaking in podcasts, but I’ve seen your book and I’ve seen these articles that you’ve written@gtmstrategist.com, one of those that really caught my attention. The title is Go to Market Actions, do whatever it takes to get Customers 12 proven ways by Unicorn Companies and how to apply Them Now. And the thing that I find really interesting about this is again, if folks who are familiar with GTM or Go-to Market go-to Market Motions, that’s usually the term everyone hears and that is actually bringing the product to market. It’s doing, I think you said five things earlier, right? It’s like pricing, packaging customers, blah, blah blah. Yeah, but you’re talking about GTM actions go to market actions which happened before go to Market Motions, much like ECP is before I-C-P-G-T-M actions are before GTM motions as far as I’m reading into it because this is the first time I’m hearing of all this, but we’re going to link this article up in the show notes for sure because you have this great diagram that we won’t have time to go into in an audio podcast, but you have the 12 different GTM actions versus go-to-market motions. 

I want to talk about a few of these because they really remind me, frankly, they remind me of what a lot of our listeners do, which is our listeners. They are almost all of them start bootstrapped. Most of them probably start nights and weekends. Some of them have the luxury, they have a spouse or they’ve saved some money and they’re able to quit their day job and do this and some of ’em raise money, 10, 20%, probably 20% of our listeners wind up raising some type of money. So it’s not about bootstrapping versus not, but there’s a certain level of scrappiness, there’s a certain level of doing things that don’t scale and not saying if I want to be a $10 million company, I have to act like a $10 million company today. And if you act like a 10 million company today, you’re probably making a mistake, right? Much like a unicorn. If you want to become a billion dollar company, you don’t act like that today. You do these scrappy early stage things, which I think, am I summarizing it correctly? That’s kind of what you’re talking about GTM actions, they may not scale, but they get you your first 5, 10, 50 customers.  

Maja Voje:
I love it. No, seriously, your founders are heroes. You totally understand the sentiment of doing this. Why? I mean, when you are just like this founder and you have marketing growth, sales and fundraising and product and HR and accounting, this portion of energy that you can devote into this, it’s critical, but it’s not like your full day job. So I saw a lot of people just like being so burdened, so burned out by I should be posting on LinkedIn five times a week. I should be writing a weekly blog post. I should be doing this and this and this and this and that. Why? Because the big companies are doing this. But methods, actual techniques, how to get first customers doing things that don’t scale is a very nice comparison of it. I have literally talked to tele, tele is this loom like video recorder, but they have raised 2 million before and in the article it is mentioned that okay, they were with a Y Combinator and the first batch of customers were just like their peers from the incubator. 

So it was nothing fancy. Then they did outreach. And you don’t have to build full fetched marketing and sales machines. If your job to be done is to get 50 or 100 customers, you can do stuff which are much, much, much easier, often very inexpensive, even for free. But you have to go out there and this is the biggest obstacle, Rob right there. People are so afraid to just send out a couple of messages post on a couple of forums. I don’t know why. I’m sure that it is psychologically and I’m not an expert, but yeah, those actions are easier than you think.  

Rob Walling:
Got it. And I did want to touch on a couple of these. You have 12 examples again in this article. What I like too is that you kind of starred a lot of these are things that I’ve talked about on this podcast. These are super practical things.  

Maja Voje:
Awesome. Which one is your favorite though, Rob?  

Rob Walling:
Well, I mean, so your third one is warm outreach. So relationships or credibility. You also then have a cold outreach with a hook as two separate things. And I’ve talked a lot about this concept of concentric circle marketing, where at the center or people that know me, that’s the warm and then people I have relationships with and then it’s my audience is probably the next one and then it’s my network and then it’s my network’s audience. You got concentric circles and that’s what you’re talking about here.  

Maja Voje:
I love this concept. I would love to see a visual, but just going back to our previous discussion about ECP, you have to be intentional because even people from the second cycle who could potentially do this introduction to let’s say more distance cycles, you need to have good use cases. You need to have good case studies and just like traction. Because if you are pitching that, you have these accounting software for let’s say high schools, then if I work in construction, I’m not interested in this because I would be much more inclined towards seeing references, case studies from my vertical. So whenever you are starting out and doing this segmentation work, think really hard. Are these companies attractive for case studies? Will I be able to move up market if I do this business? If your discrepancy between early customers, the one you can close today and ideal customers, you should really, really, really be intentional about what type of businesses are you serving or white gloving.  

Rob Walling:
And another one that I like is fishing on forums and online communities.  

Maja Voje:
Are forums still a tin crop are still a thinkink? Which forums do you need?  

Rob Walling:
They are. I only go to forums when they mention something I have an alert set up for. But Reddit is going to be forms in Hacker News. It used to be Cora, but Cora. Cora kind of went bye bye. It’s still around but people aren’t using it as much. But I call these hangouts where people hang out online and oh, Facebook groups. I’m not on Facebook, but Slack, private Slack channels and everything. I call ’em Hangouts. Where if I’m going to target electrical contractors, people who are in construction industry, they’re going to be on Reddit, they’re going to be on Facebook, they may have a private Slack channel, probably not. There are some places my brother runs an electrical contracting business in California. And so I know there are places he hangs out online. It’s not a ton and it’s not like Hacker News where everybody’s on there all the time, but I would want to lurk and embed and start offering value. 

And look, it’s not a shortcut. And this is the thing, I was interviewed on a podcast a couple months ago and someone was asking me about these things. How do you get early customers? And I was listing all the things that I say, right? I have my standard big five approaches, there’s SEO and content and forums and warm outreach, cold outreach, blah, blah, blah. And they were almost treating it pretty transactionally. And here’s the thing, 5, 10, 15 years ago, you could go into online forums and you could be kind of transactional because not everyone was doing it, but marketers ruining everything. They’ve ruined everything, right? That’s what’s happened. That’s happened. A producer, 

Producer, Ron just sent me a screenshot of a completely random niche brick and mortar forum on Reddit. It’s a sub Reddit. And one of the things, it’s like posting rules, don’t be racist, blah, blah, blah. And one of ’em said, we don’t want to hear about your stupid startup idea. Don’t ask for it and give feedback. We will remove it and why they have that because a bunch of people have come and basically spammed kind of spammed it. And so you really have to walk this line of am I actually going to come in and contribute value? Am I actually going to become part of the community a bit or am I going to jump in and just try to weigh in and link to my stuff? And I don’t know if you have examples or experience with any of this.  

Maja Voje:
Tons. Tons. So a colleague, he was not a client, he was just like This dude that I hang out in afternoon hours because he’s built equal stuff all the time. He built AI for lawyers. He literally put one country’s registration and it was such a nice interface, you could literally ask a question, is it legal that my neighbor has this car partner? And it produced really good answers. So he got, I kid you not 8,000 users from posting in 12 different communities, like random communities here locally. And I was just so taken aback. Two days after he launched, one of the political parties called him if he would be interested in data exchange. He was all around the news. Why? Because his stone of communication was really, I build this, it does this, the that it’s not perfect. If you are sick and tired of paying for lawyers, just take it for a spin and tell me what’s wrong. 

I’m not saying that this is the formula, how should you be doing this? But it was just like this authenticity. It was just like this not promoting stuff or something like that, but it was just like, look, this is it. I think it’s very cool. If you think it’s cool as well, you can use it. Whatever. It’s for free. I’m not taking your data by now. So yeah, you can still get in. But as you said, the technique when you are just like there and developing a little bit of credibility and trust before you go full on and spam literally makes me think that less is better. So surgically choose the communities that your ICPs or ECPs are active in. And freedom as a tour Fremont project. I mean I was working with communities a lot when I was in my crypto times. Literally had to manage a telegram of 40 K people or something like that. 

It was ludicrous. And you can feel it as somebody who’s on the count that is there with a banner, with a hammer. As an admin, you can fill this stuff from a distance and if the community act, the member is active, you would support them. Literally you are developing a different type of sentiment towards them as an admin as well. But I wouldn’t place all my bets into that basket. I would definitely combine it with a little bit of outreach. And what I like to use these days a lot, especially with B2B softwares are influencers because people and LinkedIn, that’s just crazy. Five years ago and just like this B2C influencer game started to show up in ads and it became an official UGC, like small counter generation stuff. I think that we are approaching these days in B2B and I just love these type of tactics because the audience of micro creators usually has a lot of love and credibility towards that. So yeah, that’s the one that I sneak in as well as AKA community slash influencers.  

Rob Walling:
Very nice. And we’ve talked about three or four of the 12 examples that you give in this article. And if folks want to keep up with you, I mean you have a ton of resources@gtmstrategist.com, you have a book checklist masterclass, as well as obviously the article that we will link up in the show notes. Maya Voer, thanks so much for joining me on the show.  

Maja Voje:
Oh my God, it was such a pleasure. And guys, when you are launching and just like these GTM plays in 2025, everybody’s screaming like SEO doesn’t work tomorrow. I’m publishing how a company got 200 K users for just programmatic SEO. They’re saying that outbound is that they’re saying that inbound district or something like that, forget this stuff. Just first informed choice that you have to do is where your audience hangs out. That was a time that I took from Rob. The second thing is that you are there with a genuine message that you are contributing value, that you are not there pitch slapping them. And the third thing is just be consistent, right? Because oftentimes things don’t work the next day or the next week. Sometimes, especially with inbound, when you’re producing content, you have to go all in for two, three months, sometimes even like six months and just observe the progress. So that would be my best way how to say goodbye and thank you.  

Rob Walling:
Love it. Thanks again for joining me.  

Maja Voje:
Yeah, my pleasure.  

Rob Walling:
Thanks again, Maya, for joining me in this episode of the podcast. And thank you for listening this week and every week. This is Rob Walling signing off from episode 773.  

Rob Walling:
Thanks for joining me for this episode of Startups. For the Rest Of Us, I’m Rob Walling, and in this episode I’m joined by Anthony Pierri. He’s the co-founder of Fletch, which is an agency focused on B2B SaaS positioning and Fletch has helped over 400 startups discover their ideal product positioning. Anthony and his co-founder joined us in New Orleans just a couple of weeks ago at MicroConf, and he did a talk about positioning about their really detailed, I call it a framework, he calls it a methodology for defining and describing your positioning as a B2B SaaS founder. I love the conversation we had today because I got to start off by having Anthony define positioning in his words because if you know anything about positioning, it’s that everyone seems to define it just a little bit differently and then we dive into their methodology. It’s a great conversation. 

And before we dive into that, at TinySeed we are raising our third fund, TinySeed Fund three mentioned it on the show here before. If you want to index across hundreds of early stage B2B SaaS companies, in my opinion, TinySeed is the best place to do that. You can head to TinySeed dot com slash invest to find out more. And if you are an accredited investor or equivalent and you want to put a little money in a place that is not the public stock markets and it’s not invested in crypto, but it’s in an asset that we’ve seen do quite well over the past five to 10 to 15 years, you can add a TinySeed dot com slash invest. And with that, let’s dive into our conversation with Anthony. Anthony Pieri, welcome to Startups For the Rest Of Us. Thanks so much for having me. Super excited to be here. Great to see you again after your awesome talk. In New Orleans, one of the highest rated talks of the last several micro comps. How does that make you feel? Is this the moment where you’re like, I’ve done all these things in my life, I’m part of an amazing band on Spotify, you have a family, all the achievements, one of the highest rated talks at MicroConf, you cashing it in.  

Anthony Pierri:
I mean, this is a great moment for sure. It’s so funny too because we live in the LinkedIn sphere of things and it does feel like the Bootstrapper world is a different group of people who we don’t always run into, but philosophically, me and my co-founder align so much more with the MicroConf way of thinking and the books you’ve written are exactly what we tell people to do. And so it was very much like me and my co-founder, we’d meet these different founders who are incredibly niche and specific in what they do, solving real problems, and we’re like, we found our people. This is amazing. And so actually, it’s funny, I came in awareness of MicroConf way later than I would’ve liked. I would’ve loved to have known that this existed five, 10 years ago. And so I was blown away. This is amazing. This is what we always preach to everyone. There’s a whole community. They already exist. And so yeah, it was really cool though. Really great experience.  

Rob Walling:
You guys fit right in. I remember seeing you talk to founders and I was like, oh yeah, these are your people, man, I love you. Just kind of made it, not even an analogy, but a categorization of who’s on LinkedIn, which SaaS is on LinkedIn, and which SaaS is on Twitter, right before we hit record, and I’m not sure that I had thought of it this way, but you want to tell folks what you told me?  

Anthony Pierri:
Yeah, I mean I think that a lot of the companies that will work with us will be venture-backed. And so that’s one criteria that put you in LinkedIn land because you want to do that post and you want to show everyone else in your professional network, look, we just raised $30 million and Twitter people are doing fundraising announcements on Twitter too, but that’s one aspect. And then a lot of times it’s people selling to marketing teams or sales teams making technology, MarTech, sales tech, and it seems like to gravitate to LinkedIn because that’s where most of their buyers are. So we get the companies that have a lot of thought leadership cache and are talking about what they’re doing for that specific group. So I would say most of the companies we work with are in those two buckets. We rarely get design related companies like developer tools related companies, we’ll get some, but it feels like that group of people, they don’t really sell to people who are living on LinkedIn all day. So for them, a lot of them have grown their audiences or have sales pipeline coming from people on Twitter. And so it does feel like we work with potentially the less creative and kind of more boring side of the house over with LinkedIn. So I’m like, should we start an X account and start getting followers there? But you had just said maybe the platform’s dying. I don’t know.  

Rob Walling:
I don’t know mean this is the debate. We actually have a $1,000 bet between Tracy Osborne and Einar Vollset. You didn’t meet a R because he was sick this year, but you met Tracy and they bet on this podcast a thousand dollars that a R says Blue Sky will not be successful in three years from the date. And Tracy said it will. And we defined that I think it was at a hundred million act, a hundred million registered users because when we made the bet it was 25 or 30 million. And so that’s a push for Blue Sky. A R thinks it’s going to stay with X. From what I’m seeing, just the engagement is not, it’s just all over the place. And Blue Sky’s maybe threads, probably not. It feels like engagement bait. So it really is up in the air right now and my hope is that we go to a post social media world because I think social media has been a net negative in general. 

But all that said, let’s get to you. Let’s get to your baf fetus. So fletch pmm.com. If folks want to see the agency that you’ve run with your friend and co-founder Rob and your H one is let’s fix your confusing positioning. Fletch has helped over 400 startups discover their ideal product positioning and bring it to life on a newly crafted homepage. And listeners of this show know that it’s very, very rare if at all, that a consultant comes on this show because we get authors and consultants who want to come on because they want to sell the stuff. The reason you’re here is because you brought it at MicroConf producer, Sonya found you somehow, and then you and I did a call to say, Hey, you guys do positioning, a lot of people do positioning. Tell me what you have the MicroConf audience because I’m really particular about who gets on stage there, just like I’m really particular about who gets on the show. 

I said, tell me what you have. And you said, well, I have this framework or methodology I think as you refer to it, and it blew me away. I was blown away not only by the methodologies is the simplicity and the specificity. It’s like do this and frame it this way. And I was like, I love, this is such a good MicroConf talk, right? And then you showed up and blew it away and as I said, it was one of the best talks of the last few years. So with that intro, so positioning, what is it? Why is it important, how do you think about it? And then we’ll dive into your methodology as much as we can on an audio  

Anthony Pierri:
Podcast. Yeah, for sure. So I think one insight from the beginning when we got into this was we realized how unspecific a lot of these phrases are, and a lot of them are used interchangeably. And so I would say one of the first things that Robert, my co-founder and I would spend multiple hours per day for months on end, was trying to carve out the definitions of these different words so that they were mutually exclusive. And we started with product marketing messaging that you would see in a positioning mad lib where it would be like we help blank customer with blank problem and we do this by blank feature, which leads to blank benefit. And so even just those types of things, what really constitutes a customer segment? And a lot of people will fill that in with, oh, it has to be the industry, whether you’re talking about FinTech or you’re talking about logistics. 

But we very quickly realized that’s not always the case. There’s tons of products that are not industry focused. And so a lot of times when people work with positioning experts, they’re like, you have to niche down, you got to choose an industry. And it’s like, well, I can think of 50 companies that didn’t do that. And so the definitions of all these words were very loose, which left a lot of ambiguity in the way that we talk about these things. So our current definition when we say positioning, what we are actually talking about is product positioning for a specific market segment. What we’re not talking about is brand positioning where you would say, what does Apple stand for? What makes them different? Well, they stand for things like innovation, creativity, breaking boundaries, that’s like brand positioning stuff. And it’s sort of like no matter who you are in any type of buyer, you could all view Apple and have kind of the same understanding of their overall brand positioning. 

Product positioning is much more specific and is a lot of times aimed at a particular group of people. And so any company will have many, many, many different product positionings. And so what we don’t do is let’s map out every single positioning for every single segment for you that would take us years. What we do say is we say, let’s help you figure out your primary product positioning for the primary market segment that you’re going after. And then even one step further, we live mainly in B2B land. So a lot of the stuff I’m going to say is going to be business related software. This is not a framework for everyone for B2C and all that stuff, there’s some overlap. But in the business world, it’s not just for the primary positioning for the primary segment, but also for the primary we would call it like buying champion, which is usually someone in the role who’s not the end user, it’s also not the executive. 

If it’s a multi six figure deal or even if something’s more than 10 K, you’re going to have multiple stakeholders. So we’re not actually mapping out positioning for what is the executive, how do we position for executive, how we position for end user? We’re mainly figuring out what would we need to say to the buying champion. And we’ve seen this in the data that we know people who run qualitative studies and quantitative studies that basically most B2B software purchases are championed by one person and likely there are a manager or a director level. They’re not going to be a vp, they’re not going to be a C-level, and they’re not going to be like an intern or someone low. So what we’re really talking about when we say positioning is framing the value of our product against competitive alternatives related to the specific segment and specific person and getting that into a simple cohesive message. 

And then most positioning experts stop there, which is cool strategy work, really fun. And there’s people who’ve made a lot of money doing strategy work where you walk away with a multi six figure PowerPoint deck. We always found that companies, when they get those strategy decks, it’s easy to make a decision in a boardroom and very difficult to actually actualize that across the business. And so we said, is there a place we can document this strategy decision that will be a forcing function to get everyone to actually bring it to life? And what we have discovered is the homepage is a great place for this to live. So if you can answer these very, very trade-off related prioritization questions of who really is our most important buying champion in our most important segment and what would they compare us against and what would our value be to them? 

If you can get a group of people to agree on the answers to that question in a business and then rewrite the homepage, even just made the first hero section to reflect the answers to that question, the whole company will be so much more likely to be pulling in the same direction. And ideally, that customer segment is driving the most revenue for you is the most important to win over, tells most people about you and will see themselves in it. And what that means is kind of deprioritizing a bunch of these other different segments, maybe relegating them to lower parts on the homepage to different go-to-market plans, maybe not calling them out at all. So that’s kind of like at a high level hopefully sort of tactical, but that’s how we’re thinking about, it’s really answering those questions. Who is your product for? What really is it? And then what does it really replace?  

Rob Walling:
Got it. And I’m on your website now. As I said, it’s fletch pmm.com and you have, well, a content library they want to call out. I’ll probably mention it again later, but folks can pay $50 one time to, you haven’t written a book on this yet, and this is the closest thing you’re telling me too, a definitive thing. There’s notion templates, figma templates and other stuff if folks want to dig deeper. But I’m also looking at your before and after, which is you’ve done these 400 engagements and I just kind of picked one randomly. It’s called user evidence. And the prior H one is turn happy customers into your best sellers and generate verified competitive intelligence product stats and ROI data that credibly proves the value of your product. And the after is don’t beg for case studies, get customer proof at scale. So this is running a process. 

You have a methodology that took them from there to there. The reason I’m bringing this up is I want people to understand the specificity of your methodology and what it spit out after. When I say don’t beg for case studies, get customer proof at scale, I’ve pretty good idea what that is. And the prior one is Turn happy customers into your bestsellers. It’s like, I don’t know, I’m kind of confused by that if I’m being honest. Do you want to comment at all on what you did with user evidence or you can just dive into the methodology and kind of talk us through what it is, how you think about it, how you get there.  

Anthony Pierri:
Since it is an audio podcast, I’ll try to do it in the most audio friendly way because a lot of, if you see our stuff, if you look around in our content or whatever, it’s a lot of diagrams and colored boxes with arrows and stuff. So I would say the two biggest insights that we don’t see represented in other positioning work is two aspects of your target customer segment that don’t really get normally expressed when we think of who is your target customer. We usually think of firmographics demographics sort of things. You could build a list in LinkedIn ads or buy a list of it on the internet would be, well, we work with companies of excise that have X amount of revenue that are doing X amount of whatever your criteria of a perfect customer looks like. That’s usually as far as people go. 

And so they say that’s our ICP. We have realized that with software particularly, what is actually more important than any of those firmographic things is the actual use case or workflow or activity or business process that is being done, or it needs to be thinking about being done by the group of people you’re trying to sell to. And so there’s the phrase jobs to be done. We avoided that phrase from the beginning because there’s really a lot of schools of thought of what that means. People will say, I want to grow my business or increase my revenue is a job to be done. And in certain ways of defining it, that’s true, but we take much more of a functional workflow approach. So we would say if you’re selling cold email software, you might have a company that meets every single criteria of the software itself that you would want to sell to them. 

But if they are not doing cold outbound, if they don’t have the workflow that your product supports, they’re not on your ICP. And so to put it as even simpler, right? All software for B2B is workflow software. And so the most important way to segment a market is by segmenting it by actual workflows that are being done by real people in the business. And so you can think about a job description that when you think about an account executive and a sales team, there are bullet points of activities that they need to do. And so those types of ways of segmenting a market by those actual activities, that’s the most important thing that you can really land. Take something like the user evidence example that you pulled up. I’ve got it up here in front of me as well. Turn happy customers into your bestsellers. 

It is a message that is devoid of a workflow. And the way the litmus test is, if you imagine two people asking for recommendations on a software vendor, one example is they would say, do you know someone who can help us collect case studies? That’s a workflow that would be on someone’s job description. A customer marketer, that’s one of their job description is collect case studies. So you could say, Hey, we think we need to increase this or do that or whatever. And we think getting more case studies will help us. Do you know anyone who could help us collect case studies or do you know of software that automates the collection of case studies? That’s a workflow, that’s a real conversation that two people might have. It’s much less common for people to ping their network and say, do you know someone who can help me turn happy customers into your bestsellers? 

That’s an outcome laid in language, but it’s not how people shop. People shop. They refer at the level of workflows. Do you know the best way that we could collect customer’s case studies? And so really a big thing that we’re helping people do is narrow down to the very specific workflows that the software would help them do because people buy software to help them do their job. And so telling them, what part of my job are you going to help me with from 1:00 PM to 3:00 PM on Tuesday, here’s what I do, will you help me with that? And a lot of times, especially in business software, we’ve been trained to just speak in outcomes. We say, no one cares about the product, they just care about the outcome. Just tell ’em you’re going to increase their pipeline, but they actually want to know, if I’m going to buy this software, what part of my life will you help with? 

So the big thing that I would say the biggest insight for us with companies is helping them build these workflow based segments. And then on the flip side, the other aspect, which is never in there is what is the competitive alternative? There’s lots of flavors of this, but collecting case studies, let’s say that’s the workflow, a competitive alternative could be another software platform or it could be like a manual process. And when we went through this process with them, they realized that no one was really using software for this, so to say, we’re the best customer feedback collection tool on the market. We’re way better than all the other tools that would not resonate because their target market actually is just begging going around one by one and asking people for them. So it’s really figuring out which market do you want to play in. It’s loosely tied to that workflow. And then the competitive alternative way of accomplishing the workflow and building your positioning, your segmentation around those, and not just building it around firmographic based segments.  

Rob Walling:
I want to take a minute to let you know about the MicroConf Growth Retreat, a new event we’re launching in London from May 14th through the 16th of 2025. This isn’t your average conference, we’re keeping it intimate with just 40 to 60 SaaS founders joining us for deep networking and invaluable insights. We’ll have focused morning work sessions where you’ll gain clarity on your business challenges followed by unforgettable afternoon excursions, exploring the best of London, and then we’ll end each night with a reception. Tickets are limited, so head over to MicroConf dot com slash retreat to secure your spot. We will sell this event out. If you want to go to the MicroConf growth retreat in London, head to MicroConf dot com slash retreat. And remind me again since we are on audio mode and I’m trying to remember the questions in a diagram, this is really easy to see and obviously folks can go. I want to refer to your LinkedIn actually, Anthony Pierre, P-I-E-R-R-I. You’re putting out this stuff. If you ever write a book on this, it’s probably going to be a compilation of your and your co-founders LinkedIn post. I cleaned up because you put out books were the content on this, but remind me again, were there three questions that we’re asking?  

Anthony Pierri:
There were, yes. So that first question is who is your product for? And so answering that question, not just with it’s for sales teams, like a department, not just answering it with, it’s for people in mid-market B2B SaaS companies, some sort of firmographic. It’s saying who are doing this workflow, who are collecting customer case studies would be in that example, the segment, who is my software for? It’s for customer marketing teams and B2B software companies that are collecting case studies workflow. And then that last piece is competitive alternative. How are they doing it today? And it might be for them begging for customer case studies one by one. That right there is a marketable position segment that you could really go and write a crystal clear message for if you take out the workflow, if you take out the competitive alternative, you’re left with a very broad, make your life better and make your business more successful type of message. 

So getting it down to that level. And the other thing that’s tricky about this is workflows can be very big and broad or they can be very, very small. And so a very broad workflow could be doing sales or doing marketing. That’s a workflow that’s multifaceted, very, very broad. And so if you say, well, how do you do marketing today? What’s your competitive alternative, generic marketing agency or something like that, you’d be like, well, we do it ourselves. You’re dealing in this muddy. If you pick too broad of a workflow, your message is going to be so unclear and not sharpened and all that stuff. And so you have to abstract down levels of specificity to find the one that is like this is actually what our software does. It really helps you collect and present case studies in all sorts of interesting ways. And so that’s where the level of positioning actually makes sense is to segment that who is it for question, not just by the firmographics, but also by what do they have to be doing and what would they be considering in related to doing it that way? 

So that’s the first question. Who is it for? Then the other two questions are, what is it? Which is the product category that you play in? Do you call yourself a survey tool? Do you call yourself a customer feedback platform? It’s really that product category and there’s mature categories that you could just jump right into or there’s really sexy new ones that are emerging and might take and might not. There’s risks associated with whichever one you want to call yourself. And then that last question is what makes you better? And really it’s what makes you better than the competitive alternative? Why are you an improvement on them? And so that’s where you start to talk about your differentiation, what you bring to the table, how do you accomplish that workflow better than the way that they’ve been doing it in the past?  

Rob Walling:
Alright, so my last SaaS app that I sold in 2016, it was called Drip. You can still see it@drip.com, and it started as email marketing, then it became marketing automation. The headline now is totally different than what we had back then, but the headline, the H one at the time, which I would venture to see it was kind of our positioning was lightweight marketing automation. That doesn’t suck. That was H one. A couple of friends of my mastermind said, you should consider something like that. It was not contentious, but it was thought provoking. The word suck kind of drove some people away, but it brought people to us and we had a few different ICPs. It was like SaaS marketers slash founders if they were in my audience and it was info product and course sellers like what today we call the creator economy. That phrase didn’t exist in 2012 when we started building this and agencies, there were agencies and consultants that wanted to manage their email list and they wanted some workflows and they wanted to identify we had lead scoring and other things like that. In your opinion, is that an okay headline and position or do you feel like applying your methodology would’ve been an upgrade or I guess just to get your thoughts on that? It worked for us at the time, but then again, I didn’t try five different headlines. I didn’t try other positioning.  

Anthony Pierri:
And so just some inherent audience selection things that come from that headline that you can sort of reverse engineer. One, you’re choosing a segment of people who A, are trying to automate their marketing, B, are aware of the marketing automation software, category C, have some level of understanding that those platforms are pretty bad, and then D, that you could credibly make a case that drip would be a big improvement. So that is a segment of people doing this workflow with competitive alternative tools in the same category as you. And then you’re coming in and positioning against the category and saying, we actually are a better way of doing this specific set of tasks. That’s one segment and it’s always, for us, what we try to do, it’s less of a conversion rate optimization exercise because for that group you could phrase that 10 different ways, run ab tests and find which one would resonate the most, the types of positioning shifts that we would bring to the table. 

And really we bring them as options. We say, have you considered that you could go after these other groups? You might a see, and this is all dependent on maturity of the market. Are there marketers who don’t think that they’re using marketing automation platforms or are just not shopping for that? Maybe these first time creators, maybe they’re not using dedicated tools, maybe they’re manually stringing together a bunch of stuff. So that’s right there. That’s already a fork in the road segment. And for email marketing or marketing automation, it is a very mature space. But to give you a crazy example, if you think of something like a credit card, say you launch a new credit card and you want to say why you’re the best credit card, you could think, well, the only way I could do this would be to position myself against other credit cards, such a mature category. 

But again, it’s a segment based question. There are entire countries in Africa and places far away from the United States where they call it the unbanked, that there are people who have no bank account, no credit card, no debit card at all. And so for them, the workflow of storing money or borrowing money, the competitive alternative is very different. And you wouldn’t be like the credit card, that doesn’t suck. If I decided to go after the people in the unbanked countries and thought that’s where the money market’s going to be, it would just be a completely different message with a different competitive alternative, different framing, different differentiation. And so it really is a question of segment by saying email attribution or sorry, email marketing, that doesn’t suck. You are making a choice. You’re saying, I’m going after the people who already know what this is experiencing the space. 

And again, is that the best thing for your business? This is where it’s, we get into the bet language, it’s like where do I think my growth could come from? I think of a company like Slack. Slack now sort of assumes that everybody knows who they are. And so when you read their website, it’s a super vague, I think they have a slogan where work happens and they don’t really call themselves what they actually do, which is a messaging app, like an internal communication tool or something like that. They’ve really expanded it and things that, and so you’re basically saying, okay, well you’re making a decision to position for people who already kind of know what the space looks like and the options when you could make the argument that they have said explicitly that their tam, the total number of people who could work with them is a billion knowledge workers. 

And they have I think 40 million users. So they’ve got 4% market penetration. The biggest company in their space, Microsoft Teams has I think maybe 250 million or something like that. They’ve got 25% market penetration. What’s the rest of the people using? Are they using other direct competitors or are most of them using email? And the early Slack positioning was against email. It was a better way to do email, an email replacement, all that type of stuff. To me, I’m like, you might have more of a chance to grow the business by going after the 700 million people or whatever left who are probably still running their companies primarily on email than you would living in this very clearly. We all kind of know what we’re doing and we know what teams is and we know what Slack is and we don’t have to be specific anymore. So those are the types of things that you’re weighing when you’re making positioning shifts. You’re really saying, do I want to keep pointing the company at the same group? Do I want to expand it? Do I want to pivot it? And what would be the implications of any of those decisions?  

Rob Walling:
Yeah, I have this phrase that I say a lot on this podcast, which is being a founder is making hard decisions with incomplete information and people who think they can get all the data and a hundred percent data driven and even data can be twisted. Even at big companies where they have a lot of data, there’s always some gut feel, there’s always some intuition and especially early stage and early stage. I mean, geez, until you’re eight figures, there’s a lot of just like, Hey, I’m going to go with the founder gut feel. I can imagine someone listening to our conversation and hearing you spit out a headline based on your methodology and saying, well, how do I know that’s right? And you don’t know. That’s right. But you do need to read it and say, does this sound good? Do I think that’s reasonable to describe the product? 

Am I willing to test this out for a month or two or three? That’s the idea behind any of this is we’re taking our best guess based on some pattern matching based on some founder gut feel based on the methodology and just putting stuff in place and then gathering data and saying, Hey, is this working? Do we feel like this is better? And I can’t describe how often I will make a decision that I’m like, this just feels right and this other one doesn’t feel right. And it’s hard to teach someone how do you teach someone how to do it? And I’m not always right, but often enough you don’t have to be right all the time, just enough of the time.  

Anthony Pierri:
And the thing to even confound it more is that you can look and say, how is it going? Is it working? Is it not working? Lean startup had that great phrase in the early two thousands, which was the pivot or persevere, do I want to stick with the people that I’ve been going after or do I want to go after a new segment? And so you have these examples of companies like Zoom, where Zoom for many, many years was not doing very well. Zoom was positioned as this video chat solution for businesses, and up until 2019, they were not doing so hot, they’re getting beaten by all the other people. And so you could look at them and say like, man, maybe the positioning strategy is not working. We’re not going after the right people. We’re not using the right differentiation, whatever it might be. 

And then 2020, we have the pandemic hit and all of a sudden it is the right positioning and they’re skyrocket the most valuable company for a while. So that’s the other element is you can look at your existing customer base and say what’s working with them, but it’s so difficult to know. A former colleague of mine would talk about the local maxima or the global Maxima. Am I at the top of a small mountain and there’s a giant mountain right over there that I could be on, or if I really reach, I’m at the top of the mountain of all the mountains in the surrounding area. And so like you’re saying, you can look at Google, look at that list of the Google Cemetery of all the products they’ve sunset. There is probably no more data-driven company in the planet than Google who has more data on their customers, has been collecting it for 20 plus years, and they still will launch products that they would consider failures and are killing them and sunsetting them all the time.  

Rob Walling:
Yeah, none of this is easy, that’s for sure. So as we wrap up, I want to ask, do you have lessons learned, most common mistakes that you see, again, having done more than 400 of these exercises through this methodology, is there something that just crops up over and over that you’re either grown at or some learning you can share with folks?  

Anthony Pierri:
Yeah, I think the biggest learning will come as zero surprise to your audience. It’s that founders who try to do too much will fail and they spread themselves really thin and they try to go after all these different segments at the same time, and they don’t understand the implications that if you target 10 different workflows, the likelihood that in those conversations where someone says, do you know anyone who helps any software that does cold outreach or cold email software, if that’s one of their 10 and they have nine other ones and they have a small team, the likelihood that they could win in all 10 of those markets where when people are referring, they think of, oh, they do that, it’s just not going to happen. And so we work with primarily venture backed companies. For the most part. We still do work with bootstrap companies. 

The bootstrap companies are always more fun to work with because they already kind of believe the same things we believe. And we try to get the venture backed companies to act like bootstrapping companies. We’re like, listen, I know you want to be a million dollar company, right? The path there is not that different than anyone else. You can look at Amazon, they were just doing books for a while, which we all forgot, and then they owned books and then they expanded. Have you dominated a tiny niche yet? And if so, then fine. Now we can start expanding and getting bigger and broader. But most of the people we work with are early stage and have not dominated anything. And so for us, it’s really being very honed in on the positioning hyper-specific to get your initial traction because it’s just hard to be thought of for anything. 

The mental availability concept is extremely difficult. And so when I met a bunch of people at the conference, they were doing things like the one guy, he was doing software for laundromats, like self-service laundromats. And it was like, to me, that’s incredible. And he had built this really powerful business. They were doing great, their margins were unreal. And it’s like, okay, if that was a venture-backed founder, he could probably then start layering on new types of businesses to expand because he had already been dominating in the small one. It’s the same path. And so you don’t have to quell your vision. You could still want to be the unicorn, but for the vast, vast majority of founders, you would be so much better served by we would say, sequencing these segments, right? Don’t go after all of them at once. Pick one, go deep. If it’s the wrong one, you could either pivot or persevere. 

And then once you’ve dominated it, layer on the next one. And one last example, Spotify company, we all probably know they were doing just music for 10 years and then they became the number one market leader and they iPod and then they launched podcasts. And then they did podcasts until they became the number one market leader in podcasts and now they’ve launched audiobooks. That to me is like, and they’re venture scale and all that stuff. Win the small market first and then you can layer around the other ones. And then when you’re the market leader there, go bigger.  

Rob Walling:
Anthony, it’s been great having you on the show, man. So folks want to keep up with you and get this awesome free content you keep putting out Anthony p Ri, P-I-E-R-R-I on LinkedIn. If folks want to see your full MicroConf talk you give in New Orleans just a few weeks ago, they can head to MicroConf dot com slash us and the talks are available for sale there. I think it’s a hundred bucks and they get all the talks, but they can look at this with visuals, everything we’ve talked through today, but with visuals and more examples obviously as a structured talk would have. And then the last thing I want to point out is fletch pmm.com, which is your consulting agency. And not only do you have the content library, I mentioned earlier that folks can buy for 50 bucks, but you have an agency and your prices range from 70, you have 101 time up to 15,000 depending on the size of the company. If someone’s listening to this and they’re just like, look, can you just do this for me? Those are your options. So once again, man, thanks so much for joining me on the show.  

Anthony Pierri:
Yeah, it was a blast. Thanks for having me.  

Rob Walling:
Thanks so much to Anthony for joining me on the show. And thanks to you for joining me this week and every week. This is Rob Walling signing off from episode 772.  

Rob Walling:
This podcast is brought to you by Mercury. I’ve been banking with Mercury for years and whenever I set up a new account, I’m reminded why traditional banking feels stuck in the past. When our previous bank faced solvency issues, we needed to spin up new accounts quickly that could handle millions in funds across multiple businesses. Mercury had us up and running almost immediately. I manage half a dozen different Mercury accounts across a wide range of companies from my personal single member, LLC to MicroComp, our seven figure global events and education platform to TinySeed our venture fund and accelerator. Mercury easily handles them all. The interface is elegantly simple for daily banking, paying invoices, and sending and receiving international wires, yet powerful enough to handle the multi-step approval processes we needed to put in place. When funding founders with large transfers. Anytime founders ask me who they should set up their accounts with, I send ’em to mercury.com. 

Check the show notes for more details. And note that Mercury is a financial technology company, not a bank. It’s another episode of startup. For the Rest Of Us, I’m your host, Rob Walling, and in this episode I welcome Craig Hewitt back to the show and we answer listener questions on topics ranging from what changes as you grow into a multimillion dollar SaaS company, whether AI agents will be the death of SaaS, whether software patents are worth it, and more listener questions. Before we dive into the show, MicroConf remote is coming soon. It is focused on sales. The date is May 21st. It’s an online event. MicroConf remote.com speakers include Nick Desto, Steven Spears who spoke at MicroConf in Atlanta a couple years ago, and another speaker that will be announcing soon. We’ll also have our founder by Founder Sessions, which are like the digital hallway track for our virtual events. The date is May 21st for all the details. And to get your ticket head to MicroConf remote.com. We try to make these events accessible to everyone, so we keep the ticket prices low. I believe the early bird pricing for this event is $65. It takes place all online on May 21st from 10:00 AM to 1:00 PM Eastern time, MicroComp remote.com. And with that, let’s dive into listener questions. 

Craig Hewitt, welcome back to the show.  

Craig Hewitt:
Hey Rob, thanks for having me.  

Rob Walling:
It’s great to have you on the show, man. I’m excited to dive into some listener questions. Our first today comes from Amar and we’ll dive into that here.  

Speaker 3:
Hey, Rob, Amar here with Made longtime listener. First time caller. Heard a lot of advice from you over the years about startups and the early stages and sort of that David Vers Goliath battle. I had a quick question for you on how things change within the company and how you might approach marketing and sales and product differently when you begin to become a little bit more of the Goliath side of the equation versus David. So at ZenMaid, we’re making about two and a half million dollars a year right now, and we’re looking to take that to 5 million and 10 million and beyond. We still have much bigger competitors than ourselves, but we do already have the biggest brand in the industry thanks to our niche. And so I just wanted to quickly hear your thoughts on the mindset and what you would think about differently, what being a little bit bigger and going against folks that actually have less resources than us, what sort of advantages that might give us and how you would maybe keep the startup culture. So just any thoughts that you have on just once you get a little bit bigger and a little bit more successful and kind of how things change. So cool. I appreciate your podcast. Looking forward to this and many future episodes. Thanks for doing what you do.  

Rob Walling:
So Craig, before I kick it to you, I’ve realized that Ammar is kind of asking two questions and one is, how does it change for us as a company competing in our space, kind of the external marketing sales engine, the brand, what advantages do we have and should we capitalize on? And then a second question that he worked in towards the end is, and also our team’s getting bigger, how do we maintain a startup culture? So let’s split this into part A and part B for part A to me at two and a half million, even if you have bigger competitors, if you have the strongest brand, that’s probably the biggest thing I’d be leading into in any Reddit thread or any Facebook group or any conversation about your category. If you have a strong brand, you’re probably the top two that are mentioned, maybe top three, but probably top two, that’s a huge advantage. 

You should and could still go after SEO, generic terms, all that stuff. But you’re at the point now where if people know your name, that’s a huge advantage. And so one thing I’d be thinking about is do you have some type of community ambassador, brand ambassador, someone out there who is attending in-person events, who is frankly monitoring through arvid calls, POD scan FM or CEN monitoring, all the mentions on the Reddits and the, I say Hacker News, I don’t know if Send MA’s mentioned there, but you get the idea on all the socials that you can possibly monitor and being out there among the people because that’s something that when you’re doing five KA month and you’re scraping by it trying to build a full-time income, you kind of do that. I do that myself still for TinySeed MicroConf in my books, but you don’t really have the time to do that. 

If I’m honest, it’s maybe not the best user of time, but as you’re being mentioned by name now, if you go to an in-person event and if you have a booth or just wear the t-shirt, people will come up to you and be like, oh, we know and love you, or we’ve been hearing all about you we’re thinking. And it’s like having a presence and starting to have someone who is consistent and if it can be a founder or it can just be a human. Like Clay Collins at Leadpages, that’s a company that acquired Drip. He hired, and I forget the guy’s name, but he hired a guy to be the face of the webinars  

Craig Hewitt:
Tim Page.  

Rob Walling:
It was Tim Page, thank you. 

And Tim Page would then go to the in-person events and at first it started as Clay was the face, he was the founder, he got it to wherever he got it to, they raise venture money and then hired Tim Page who then became the face of it until he moved on three years later and then they promoted someone else. And it is fascinating in this world of AI and social media kind of starting to be not replaced by ai, but being flooded with ai, the depth human connection that people will resonate with and that you’ve talked a lot about this, right? About how you have moved forward yourself with, because obviously you’re the founder of casts and you’ve done a ton of SEO content marketing, all the blocking and tackling you’ve done over the years, but over the past 12 to 18 months, it seems like you’ve really doubled down on a little bit more of the personal brand side of you being a front facing person.  

Craig Hewitt:
Yeah, I heard it said really well the other day. They’re like, the goal of marketing is to be on the shortlist when somebody is evaluating a new product, there’s the top three, and if you’re there, that’s the goal of marketing. From there, it’s product and sales and pricing, all this. But brand I guess is what we’re talking about just gets you into the conversation. I was having this exact conversation letter founder today who in some circles they’re in that conversation and in some circles they’re not. And they’re like, that’s just the problem. And frankly, that’s a problem we run into In some circles, Casto is at the top of that list or in that top three and in some it’s not. And that’s where we fall short. So yeah, Amar, if you’re there because of kind of this niche that you’ve carved out, dude, that’s amazing. And I agree, lean in hardcore to that as much as you can that will take you a lot of places and give you unfair advantages that the other guys can’t. Pricing power and terms and missing features and things like that, right? It’s like no one ever got fired for buying IBM kind of thing.  

Rob Walling:
The other thing that I think about is if you’re doing north of 200,000 a month, MRR, because he said he’s north of two and a half million a year, you probably have some leeway to take, make some bets and to drop $20,000, $30,000 a quarter, take a flyer, take something that you think might have an asymmetric bet. And what I mean by this is marketing approaches, sponsorships, sales, just whatever. You have that luxury. Now, you didn’t have it when you were doing 10 KA month. You were just scraping by. So that’s the other thing that we did this with Drip the moment I had leeway, we started taking some pets. We’d certainly do it with MicroConf. You saw when we were dropping 15 grand a month on YouTube and it worked. It was a lot of money, but it works for us. And then now we’re spending a lot of time and money on LinkedIn. 

Why? Because we have that ability to take a flyer and if it doesn’t work the business, it’s money. It’s a bummer that I’m spending it, but the business will survive. And if it does work, and I can, like with YouTube, we went from let’s say 10 K subscribers to almost 90 K subscribers in two years. If it does work, if it does that, then it’s worth it. You don’t need every bet to pan out and it’s a luxury you have, you should have at that size. So now switching to the part B of his question, which is team has gotten bigger, and so let’s assume whatever it is, 15 to 30 people, maybe 50 would be a big team for that size, but let’s say it’s certainly not, probably not 10 people at two and a half million. So let’s say it’s some 15 to 30. You can lose your culture, you can lose the threat on it. And I know you’ve done a lot of thought, you’ve given a lot of thought to this, so I want to hear from you on it.  

Craig Hewitt:
Yeah, I think this is probably still that scrappy startup culture kind of phase. I think two and a half million, that’s nothing to sneeze at, right? Yeah, 12, 15 people probably, if you’re profitable and bootstrapped, you still need to own your small business roots. I think the bigger culture and the growing team, things like culture become more important as you’re scaling and hiring more because every time you hire, for me at least, it’s a chance for culture to get kind of eroded a little bit, have this one higher, that’s two degrees one way or the other. And it changes your culture if you’re not really intentional about keeping it culture, I’m going to mess up the quote, but culture is the personification of your values. It’s like what you do every day versus what you say you do as a company. I don’t know Omar, I know of Omar from Twitter and I know that you’re walking the walk and that’s really what culture is. You show up every day shipping stuff, providing value to customers and knowing that everyone else in your company is doing the same thing. I don’t think it needs to give you any more complicated than that and probably anything, but that is this premature optimization to say, Hey, we’re going to get big air quotes,  

Rob Walling:
And I’ll add to that. If you don’t define your culture and model it, your culture will evolve naturally based on the people you hire. And do you want to define it as the founder or CEO or do you want it to define itself? That’s a rhetorical question. The answer is the former. You absolutely want to personify that and it’s good to have that in writing. It’s good to have it in writing somewhere. I would say it’s not required and I’m the guy who, yeah, I know. It depends on the size. If you have 50 people, it has to be in writing, right? 

At MicroConf, TinySeed between us is nine or 10 people. The mission is to multiply the world’s population of independent self-sustaining startups. The culture is what we’ve built and what we communicate by leading. Now, it’s going to get dangerous if we had 15 people and we don’t have it in writing. I think there’s a point between 15 and 20 where if we are not communicating that, if the people at the top, let’s say a R and myself and Tracy and Alex on the accelerator side, if we are not directly doing the hiring and training and it’s people that we’ve hired that are doing the hiring and training, that’s when you need it. It’s that second layer because it’s a copy of a copy. So that is a controversial take. I know that some folks want more process. I’m really process light and I’m very mission driven, but I’m not a put everything in writing. I’m allergic to that until it’s necessary, but it’s just a different perspective. I’m not saying that’s right. That’s how I run companies and that fits within my skillset leader. I’m a way better leader and someone who paints the picture and motivates folks than I am a manager or I can operate, but I don’t like operating.  

Craig Hewitt:
I’ll just for what it’s worth, we didn’t have this until we did kind of a brand refresh codifying some of these things were part of that brand exercise that Francois from our team led us through. And that’s the only reason we have it. We didn’t have it before that we ideally would use those things to make decisions about product and hiring and all this kind of stuff. But yeah, I think there’s, the point of this is there’s a lot of different ways to slice it. And Omar, you probably have your own way and if that’s working for you, that’s great. I wouldn’t take what Rob or I say if what you’re doing works in the way that you’re exemplifying your culture to your team as a leader is working. That’s great.  

Rob Walling:
Omar, if you haven’t watched Omar Zen Homes talk at MicroConf in Dubrovnik, which was just, what was it like six months ago in October? So it was MicroConf 2024. He talked a lot about how as Webinar Ninja grew. So they exited Webinar Ninja, he had a great exit. He and his wife co-founded it, but he talked about how as it got bigger, he didn’t define the culture and they had to unwind that at a certain point and go in and say, look, this is the culture. And they put stuff in writing and one of ’em was being scrappy and being kind of frugal. They were bootstrapped from the start and they were always extremely frugal about expenses. And they got to a point where, and I don’t remember it was 20 employees or something where someone signed up for just a very expensive imagine. It’s like they signed up for Salesforce type thing and it’s like, no, no, no, we don’t use Salesforce here, dog. 

That’s like buying a Lamborghini when a Volvo be perfectly fine. And they had to go back and do that. And so there was a section of his talk that I would recommend. I think I believe those. You can go to micron.com and look around. I think we sell those talks for 50 bucks for the whole package of that, but also something to take a look at. So thanks for that question Ammar. Hope it was helpful. Question number two comes from Dan Delamar and he says, Hey Rob, hope you’re doing well, really enjoying your latest podcast episodes. Your show is one of the few must listens every week. I appreciate that, Dan. He says, one area I think would be interesting to explore is how SaaS can survive in a world of autonomous AI agents. We specialized software takes the backseat to more generic agents that can have a larger span of control and abilities, and then he links to, there’s a Google doc that was trending on Hacker News. 

So I want to start by saying I recorded a video that’s on YouTube now on the MicroComp channel, and you obviously will link it up in the show notes, but it’s called Will AI Agents Destroy SaaS. And so you can hear, what did I have? Nine minutes of thoughtful. I outlined it and kind of put a bunch of thought into how I am thinking about it. Realize these are predictions. There’s no one that’s right right now and there’s no one that knows where this is going. We’re all conjecturing based on past experience and our pattern matching and this and that. And so if you want to go watch nine minutes of that, it’s probably worthwhile, especially if you do it at two x. It’s only four and a half minutes. And I will also kind of summarize it here. But before I do that, Craig, I was going to pass it to you and ask, have you given much thought to this topic because AI agents are killing SaaS. Was kind of the refrain. I mean it was like two or three weeks ago everyone was saying that SaaS is dead, SaaS is dead, SaaS is dead. Where do you fall in this conversation?  

Craig Hewitt:
Yeah, so this has been the conversation on my podcast for the last 10 episodes, probably like my podcast is called Rogue Startups, and it’s all been interviews with SaaS business leaders talking about AI of late. And I think the answer is kind of to me, right? If you are a basic kind of CRUD app that you realistically could get replaced by just dropping a PDF into Claude, you’re toast. You probably were toast anyhow for a bunch of other reasons. If you’re a podcast hosting platform that integrates to Spotify and Apple and does petabytes of data a month and all this stuff, you probably are okay. And there’s an in-between to where yeah, will some of the pricing power and total customer base that’s looking for a solution like yours Change with ai. Yeah. Will it totally kill SaaS? No way. So I think it’s not, it’s going to kill SaaS. 

And it’s not that it doesn’t matter at all, it’s more nuanced than that. And it depends on then your application. How robust is it? How complex is it? It may even if you’re talking about someone’s going to vibe code this up in a weekend, good luck coding up cast us in a weekend. It is a beast. But I use this tool to frame screenshots. So I take a screenshot and it puts the Apple wallpaper behind it and downloads it. They’re probably be hurting. I saw this thing is Canva Toast. Now with the new image generation in chat, GPTI sure have created some images in the last week where I would’ve gone to Canva and I just did it in chat, GPT. So I think it’s chipping away at those edges. I do think we have years at the current trajectory probably,  

Rob Walling:
And I agree, and here’s the thing, someone might say, well, obviously Rob, you’re pro SaaS because SaaS is your whole life and your whole world and it’s what if SaaS starts going down or is negatively impacted. There’s going to be agent businesses that are subscription. It’s just another, it’s software by another name. So MicroConf on this podcast did not focus on SaaS until I got really deep in SaaS. Frankly, it was probably like 20 12, 13, 14. I had two SaaS apps before that. But we looked at mobile apps, we talked about, we had speakers talking about info products. We had downloadable software. We had downloadable web software that ran on the server on-prem stuff because that’s what the world was when this all started. And if I had started a fund and a TinySeed back then it would’ve invested in that. If SaaS goes away or it drops by 80% in terms of the value, something will replace that something. 

It will be software that does something. And so whether we call it SaaS or whether we call it agents, I’ll probably start investing in that and start telling people how to market that. So from my perspective, I’m not like, oh, if SaaS is dead, my whole ecosystem goes down. That’s not true. So take this with a grain of salt. There’s no way SaaS is dying. Just like no code didn’t kill SaaS, no code had an impact on SaaS, but it’s so easy to go to one of the streams and say, well, it’s not going to do anything or it’s going to totally kill it. It’s like, no, it’s going to do neither of those. Same way no-code did. Same way mobile apps. Remember people were saying, well, the web is dead, the open web is dead. There’s no more SaaS, there’s no more websites. Everything’s going to be mobile. 

And it was like, no, it’s not. It was obvious to me back then it wasn’t. And yet there were people saying that, right? That’s how I feel about AI agents and anything else that comes along is, as you said, it will replace I think the utilities, if you have a basic, you talked about basic utility. I’m thinking something that we feed our audio for this podcast in and it does some show notes and some timestamps. It’s a really cool tool. I think it’s called Pod Squeeze and we really, really like it. That will be an agent. But here’s the thing, will pod squeezes just build that agent? They already have the engine, so they just build it. So even if the SaaS dies, if they’re paying attention, can’t they build an agent on top of it? So I think that’s my take is it’s like any of these extreme views. 

It’s like if you’re smart and paying attention, I think you’re okay if you are a big incumbent and your advantage really is just that you got there first and you have a brand and you’re super lazy and you’re not innovating and you’re not paying attention and you are, let me say you were Infusionsoft in 2014 as we started eating their lunch. Or we could probably think of a couple companies today that are kind of resting on their lores and just milking it when the value PE buys them and is just melting the ice cube and trend. Yeah, those guys are going to tank pretty hard I think. But the SaaS ecosystem and really the startup ecosystem I think will, I’ll say be just fine, but there will be shifts, right? It is a transition point. That’s kind of how I think about it.  

Craig Hewitt:
Can I ask you a question? I think it’s related is how do you view these wrapper tools? So like Pod Squeeze, right? It’s just a wrapper, but you’d call it SaaS, you’d call it an AI tool. It’s not an agent, but how do you view them I guess from a TinySeed perspective? Are you investing in wrapper companies?  

Rob Walling:
We get a lot of AI applicants and some of them are developing their own models, like custom models that they’re training. And I’ll be honest, I don’t know how many of those we’ve invested in. It’s a small number, low single digits, let’s say. I think all of them have been decimated because they have their own model and we’re like, well, cool, that’s your competitive advantage. And then their competitive advantage went away with GPT-4  

Craig Hewitt:
0.0  

Rob Walling:
Or perplexity, whatever the, I’m not saying custom models never work, but in our space as bootstrappers, custom models are really, really tough. So then it’s like, okay, so you’re then going to build on a commodity in essence, I would say chat, GPT and perplexity and Llama and deep seek. I know they’re not all the same, but is there’s an infrastructure layer. It’s the same thing. AWS, it’s not the same as gcp, it’s not the same as Azure, but they’re close in terms of the function. The job to be done of those things is the same. And so these underlying LLMs are the same. So then you’re saying, all right, I’m wrapping this thing, would I invest in it? And the answer is, it depends on if I think they have some type of moat, and it depends on if they have something more than just the wrapper. 

Because if you are a genuine SaaS app on your own that you’re doing marketing and you’re getting customers and you’re closing deals, and a good chunk of your functionality is wrapping GPT, I don’t know how defensible is that. It might be, but the ones that scare me are when I see something that’s mostly a wrapper that is just taking off and in the six months of MRR we see it just goes from zero to 10 K 20 K, and the churn is 25 or 30% a month. That scares me. And there’s just no way. There’s no way, right? So I hate to say, oh, it depends, but it really does. It depends on the specifics we dig in of think how defensible do I think this is and how useful do I think it’s going to be? How many competitors are there? There’s some questions we ask around it. How are you thinking about it though?  

Craig Hewitt:
I guess from two different perspectives. One is we are building AI into our product. I won’t say what, but we’re a podcast hosting platform. So all the things you’re thinking makes sense both from a generative and analytical perspective. Like, hey, how can customers understand their own data better? That’s one of ’em, but we don’t view any of that as differentiable or emote. It’s just like we got to have it because you’re going to go use this other tool or you’re just going to expect us to have it. I think that’s the other part is the guys from Reforge just said the expectation of customers is so much higher with ai. They expect it to just do the thing, not to help them do the thing. So I think that’s the lens through which we as mostly conventional SaaS should look at it. But then, I mean to be honest, Rob, I see these wrappers as a quick hit. If you want to go make a hundred grand, that’s about the easiest way I can imagine is you go wrap Claude and you do a thing and you go make it big and you sell it on acquire.com at 15 grand a month doubling monthly. But I would not plan to run that for two years even.  

Rob Walling:
That’s the way I think about it. Yep. It’s opportunistic. It’s a short-term hit of I want to make quick money. It’s like a crypto and NFTA. There’s an opportunity there, but it’s not a five year business, certainly not a, I often think is it a 10 year business? But even this is not a five year business, as you’re saying, it’s not a two year business. So that’s how I think about it. And that’s the difference when people say this is a great business versus not. It’s like, well, it depends on what do you mean by great business? Do you mean it’s a billion dollar venture funded? Do you mean it’s more of a TinySeed funded? Do you mean it’s a awesome half a million dollar a year lifestyle business that I can run for 10 years or do you mean like you said, I can just pump a little bit of pumping up is the way I think about it, which  

Craig Hewitt:
Is  

Rob Walling:
Not wrong. You grow it,  

Craig Hewitt:
It’s not wrong, it’s just different.  

Rob Walling:
It’s not wrong. And it’s what I would’ve done years ago when I was first getting started to get some quick capital to actually build something more sustainable. It’s just not something I’m interested in anymore. So thanks for that question, Dan. I hope it was helpful. Our next question is from Stewart, and Stewart says, Hey Rob, hope you’re well. I know this has come up before on the podcast, although a long time ago, from what I can tell, I’m interested if your perspective on patents has changed evolved at all. I subscribe to Dave Kellogg’s newsletter and I like his writing and he links to an article that says, does your startup need a patent strategy? Why your startup needs a patent strategy? So we get the idea there. As a small self-funded business, I’ve always dismissed patents, but this did make me think particularly as we’re in the process of developing something relatively novel in our software. 

A couple of questions that would be interesting to hear answers to. Number one, in episode 542 of the podcast, Zach, co-founder of Squad Cast said he had two patents pending. Did they get granted? How much did they cost? Why did they go through the process? And then number two, have any of the TinySeed companies had patents or have patents pending? And number three, are patents something F International comes across much? And if so, do they add value to acquisition time? I’m going to give a quick summary of these. Basically I can’t answer for Zach and squad cast. I don’t know why they filed for the patents they are, or they were a tiny C company and they got acquired by script. I don’t know of any other tiny C company with patents. And we’ve invested 192 of them. It’s a very uncommon, they cost 20 to 30 grand each. 

That’s give or take, and I don’t know what is a year, 18 months. It’s a long time with Drip, after we got acquired, since we were acquired by a big venture backed company that had almost 40 million venture raise, I had a list of shit that Derek and I had invented that it was Unpatented in the software space that were novel and new in Drip, and I think I had six of them or seven of them, and I had just been jotting ’em down over the years that we would come up. I’d be like, wow, no one’s ever done that particular thing. And I showed it to the CEO and he said, Hey, we might patent those at some point. And you know what we never did because it just doesn’t matter. So you, Craig and I are not lawyers, so it was not legal advice, but this are two startup founders with opinions on the internet. What’s your take on, especially in our TinySeed, MicroConf kind of mostly bootstrap ecosystem about software patents?  

Craig Hewitt:
Yeah, so hey Stuart, I know Stuart Stewart’s been on my podcast. Yeah, this is not something I would spend energy on. That’s the simple answer. I think the only reason a patent is valuable is if it’s defensible. And I think in software especially, that becomes quite difficult, especially internationally steward’s in the uk. So just gets really tough really quick. I think it’s just not something, like you said, Rob, most of us who are building the dry cleaners of the internet, the little corner bodega, that’s going to provide a nice lifestyle business for us. This is just not where I would put my energy. As for TinySeed, I don’t think any of the TinySeed companies that I know of do this, and I can’t imagine it holds significant weight when you go to sell, unless that’s your moat. If that’s your moat, that’s really something  

Rob Walling:
That is really something. If that’s remote, I’ve never seen that be a mode other than in the big Facebook, Google spaces, then you’re going out and suing.  

Craig Hewitt:
But that would be something is I’ve never seen it. I’ve never even heard of it.  

Rob Walling:
Yeah, we’re on the same page and typically, and I didn’t read the full article that he linked to, but typically when you see an article like this of do you need a patent approach? I’ll just say every time I’ve ever seen an article like that, it’s written by a patent attorney every time. 

And we could probably click through and figure out if this guy has Esquire at the end of his name, but that’s usually what it is, and it’s trying to drum up business and they’re not saying anything that’s not true. They’ll be like, oh, with this, then there’s an asset you can sell at the end. And it’s like usually not in our space, but maybe in bigger spaces. You have heard of patent portfolios being acquired by the big companies, especially like cell phone patents and this and that. So yeah, I think you and I are pretty much in agreement the same thing. It’s like, no, I wouldn’t do it, never have never filed a patent for any software. And I built a lot of stuff that could have, I say a lot of stuff I built stuff that could have been patented and just never bothered with it, and I don’t regret it. It wouldn’t have made a difference.  

Craig Hewitt:
Hardware a hundred percent trademark a hundred percent.  

Rob Walling:
Our next question is an audio question from Javier.  

Speaker 4:
Hi Rob, it great to send you a question because I’ve been reading and listening to your content for quite some time now. I’ve learned so much from everything that you’ve taught on the internet, and I wanted to thank you for that. I’m sending you this from Spain. My name’s Javier, and I’m trying to build a B2B SaaS company. And my question is, how can a bootstrap company compete with a BC funded startup? I’ve found some resources that talk about this when the conversation is about an incumbent trying to beat an incumbent, and that makes sense to me, but a bootstrap company versus a startup, it’s a bit more difficult to imagine. Our strategy for now is trying to focus on other markets, Southern European markets that might be more price sensitive than the price our competitor is trying to push and to try to qualify a lower tier of our segment. But otherwise, we are very similar. So I don’t know. I would love to hear your insights about  

Rob Walling:
This. So Craig, in a way, this is a little bit of a different, it’s almost the opposite of the first question. The first question is not quite the opposite, but it’s similar to the opposite side of the fence where it’s like the first one’s like, Hey, I have two and a half million a RR. We’re a brand. How can we use that to our advantage? Javier is saying, how do I, you’ve talked about competing against incumbents, which I talk about all the time because we did it with Drip and I’ve seen a lot of TinySeed companies do it, but how do you compete against a venture funded company? Now, I want to say there’s some nuance here, and I know I try not to say it depends or when I say it depends, I then try to explore all the possibilities. It depends as a cop out, but realistically, it really depends. 

Venture funded is this huge world. You can be VC backed and raise a million dollars. You can be VC backed and raise 20, 30, $40 million. Those are two very different competitors given their capabilities. The other thing that I think about is someone can raise venture because maybe they got a little lucky, they knew the right person, they had the right idea at the right time, but they’re a very inexperienced founder and they just burned through their money very quickly. They just don’t know what they’re doing. And money doesn’t solve your problems in a startup. It can make them worse. If you don’t know what to do, you can overspend before product-market fit, you can do a lot of negative with it. So what if Mr or Ms, first time founder who doesn’t know what they’re doing raises $10 million versus someone like Jordan Gaal raising 10 million or Ruben Kamaz or you or me. 

So the founder and the founding team and their experience and their ability to execute, plus the amount raised, it changes things and one versus 2 million raised, maybe not, but have we seen TinySeed companies compete against companies that are mostly bootstrapped and then the next day they announce a $10 million funding ground? We have. It’s happened multiple times, and that’s where it’s like these guys can go freemium and they can cut their prices to a fifth of yours and they can survive forever. And so these are the types of things that I kind of want to throw at it in the front of. There is a lot of, it depends here, but with that said, what are your thoughts competing with VC back competitors?  

Craig Hewitt:
Yeah, I think just to add what you said to me, one of the biggest determinants of the potential for a company is I say it’s the boat you’re in. It’s the market and the opportunity and the customers you serve. And so as you are looking at yourself and this VC competitor or VC back competitor, if the market you’re in is that good, then VC makes more sense. If it’s not, then I think you actually as a bootstrapper have more of an advantage relative to the VC-backed company. So I just wanted to say that it’s the amount of money you raised, it’s the founding team and it’s the opportunity. Those three things quantify the opportunity of VC versus bootstrapping. And so Javier, you might be better off bootstrapped. And I think when it comes down to it as a bootstrap company, we have to be so much more focused and that’s our superpower. 

There’s a lot of the TinySeed companies I talked to in my advisor role where I’m like, yeah, you’re going up against the big huge competitor, whether they’re a VC funded or just the incumbent. You have to do something very different and you have to be better at it in some way, not across the board. You don’t have to have every feature, but you have to have this one feature that you do way better than everyone else, and you niche down and focus and position yourself on this thing to a T. And that’s how you can win because the VC backed company is going to try to do everything and have the billboards in San Francisco and be in the Super Bowl and all this crap, and you just can’t do it. And so just like how can you do the opposite of that is how I would think about competing against a mega funded competitor.  

Rob Walling:
I like that they’re going to zig how do you zag and how do you find, what is their Achilles heel where they’re kind of flailing all over the place. They need to grow very quickly. They don’t need to be profitable, but they need to grow very, very fast. So they’re going to be drawn towards the biggest, fastest growing segment of the market. Often with the highest ticket price. They’re probably going to wind up going upmarket, unless it’s a really, it depends on the space. But if it’s a really massive market and they can go freemium and get a huge funnel and start going with virality, that’s one thing that takes, that’s not as easy as it sounds. I’d take a hundred Silicon Valley founders, give ’em each 10 million bucks. There’s maybe five or 10 that’ll make that work. It’s not the majority. So I used to joke because with Drip, we would see new competitors come into the space because email service provider slash marketing automation is a net negative churn business if you do it well. 

So it’s a very, very lucrative business. It’s a very valuable business, a very large space that was growing fast kind of still is, but the heyday I think was 10 years ago or so with that second wave. The first wave was the MailChimps active campaign, even Infusionsoft. And then there was a second wave in the 20 teens that Drip was involved in. But I used to joke with Derek, my co-founder would drip where we’d see someone raise like 5 million bucks and I’d say, all right, let’s count down 18 months till they go out of business and then let’s acquire their assets. And I was right most of the time because that’s the typical path, that is the most common path for VC funded startups is if they go to zero, that’s the whole VC model is that what is it like six or seven out of 10 go to zero and two return two or three x and one returns a hundred x or something. That’s like the most typical model. So you expect 60 or 70% are going to go to zero. Now that’s not always the case. And I have seen mostly bootstrap companies operating and executing well and doing everything and still getting demolished or at least fighting a tremendous headwind against someone. Because 

Again, if someone raises 10 million bucks, if they’re smart, they’re really dangerous. And even if they’re not that smart or not that competent founder, they can live a long, long time. They can just last and they can just fuck it up for the rest of you that whole time as though it’s like, well, why are they a third of the price? Because they can afford to be, and you could say, but they’re not going to be around in a year or two. And people say, great, then I’ll switch back to you. They can really mess it up for you. So it muddies the water.  

Craig Hewitt:
If I could just add one thing about actual go to market is talking about that competitive advantage you could have as a bootstrap company is how you acquire customers. They’re going to go for things like paid and partnerships and paying affiliates 50%, and you’re going to go for things like community and brand and organic, and those are often better customers. So I might look at like you probably have a lifetime value of a customer advantage just as you’re formulating your go-to-market strategy.  

Rob Walling:
I like it. Greg Hewitt, thanks for joining me on the show. Folks want to keep up with you. You are the Craig Hewitt on X Twitter and you’re craig hewitt.com on Blue Sky, is that right?  

Craig Hewitt:
That’s right. Alright,  

Rob Walling:
Thanks for joining me, Amanda. Anything else you want to mention? The Rogue Startups, that’s your podcast you’ve been doing for a decade?  

Craig Hewitt:
Yeah, rogue Startups, the podcast. Yeah, that’s where I share most of what I’m thinking. Yeah.  

Rob Walling:
Yep. And if folks are on YouTube as well, they can search for your name and is it the CAOs channel or you  

Craig Hewitt:
Both? Yeah, Casto has channel. I have a channel where I talk about mostly sales.  

Rob Walling:
Awesome. Thanks again for joining me, man.  

Craig Hewitt:
Thanks, Rob.  

Rob Walling:
Thanks again to Craig for coming back on the show. Thank you for sending in your questions. These episodes only work. If we get folks like you submitting your thoughts, comments, and questions. You can email them directly to Questions at startups For the Rest Of Us dot com or head to startups For the Rest Of Us dot com. Click Ask Question in the top nav and you can submit an audio or video question. Thanks for listening this week and every week. This is Rob Walling signing off from episode 771.