Startups For the Rest of Us

Rob Walling:
And so that’s where it makes sense to invest time into something, and I just mean labor, human hours into something that can build that flywheel. That’s what SaaS is, right? It’s building a flywheel slowly over time, and if you have high churn, it’s hard to do that. If you have low churn, then it’s how do we throw everything we can afford at it in order to be able to onboard more people?
Welcome back to another episode of The Startups For the Rest of Us. I’m Rob Walling, and today I’m answering listener questions. We have a great funnel of listener questions coming into the show. Our first four questions are going to be audio or video, and then if we have time, I will dive into a text question or two to try to get through the backlog. Thanks as always for sending your questions. You can email them questions at startupsfortherestofus.com or head to startupsfortherestofus.com. Click ask a question in the top nav, and if you send an audio or video question, it goes to the top of the stack. My first question comes from Mike all the way from France.

Mike :
Hey Rob, Mike here, all the way from France. I love your podcast, so thanks a lot. I created a SaaS software company called typedesk, which is a template builder slash text expender for entrepreneurs and small teams. My main challenge right now is that we have a low churn, high stickiness once people actually spend time creating their templates and the feedback we get is usually, “Well, I can’t just live another day without typedesk.” Which is great to hear, but getting to that point is really challenging because I can provide new users with boilerplate templates. Each company’s unique. I mean, everyone has a different needs and also it’s quite a technical product, so right now working on making sure that we get to the value as quickly as possible and trying to demonstrate what the product does as quickly as possible in the onboarding, but I was wondering if you had any best practices or recommendations in my case. Thanks a lot.

Rob Walling:
That’s a good question and one that I have given a lot of thought, to be honest. I know of several companies like this where your churn is so low, but that barrier to getting folks to getting value is maybe a little further than an app that is easy to onboard. I think of SaaS apps like SavvyCal and SignWell, which are scheduling link and electronic signature, and those are pretty simple to get value from. You log in, you have a link five minutes later to allow people to schedule you, or if you’re in SignWell, you log in and you can send a doc within two, three minutes. There really isn’t much to getting onboarded. First is a tool like typedesk like you’re talking about, or think about an email service provider where you have the… There’s so much set up and importing subscribers and there’s just a lot to be done before you get to value.
The thing that I would be thinking about in your shoes is how can I handhold as many people as possible? And what I mean by that is manually getting on calls with folks doing weekly group webinars, and whether that’s you as the founder or whether it’s someone you hire, I don’t know where your revenue is yet. I would look at investing in person hours, non-scalable, you can add all the tool tips and the onboarding flow into the app that you want, that will improve it. But to truly get to the point where you are dramatically increasing the number of folks who get onboarded with a tool, that does take some time. This is why customer success exists, right? This is why that term, which what, 15 years ago, I never heard it. I don’t think it existed in 2008, 2010. The first time I started hearing about it was probably 2012, 13-ish.
And this role exists to get people onboarded and to get them getting value. And I see that your price points are low, but per seat, $5 per seat. So, if you have a hundred people at a company and you’re trying to get them on board and it’s $500 a month, is it worth having a customer success person get on a one-on-one call with folks? Yeah, it is not all 500, but a group call at that company is what I mean. Or is it worth holding a webinar twice a week to any and all of your customers to help them get onboarded? I do think so. So that’s what I’d be looking at. Now, you have to have the annual contract value or the average revenue per account or the lifetime value mean these things are, it’s all about price point. You have to have a price point that justifies that.
So, in your case, I wouldn’t offer concierge onboarding and setup to anyone that has less than make up a number, 10 seats, 20 seats. It’s $5,200 and you’re going to automate this, right? You’re going to automate it in code to basically say, if number of seats is at least 20 or if price point is at least a hundred, then in the app they can click a button to book immediately, use your SavvyCal link and they can get on your customer success person’s calendar. Or your email onboarding sequence is letting them know, “Hey, we can help you get set up.” “Hey, we can help you get set up and here’s a seminar, here’s a webinar.” And maybe what you do is for folks who are on the five, 10, $20 plans, they only have a few seats, maybe those folks who do push towards a group webinar that again, is once a week, twice a week, whatever makes sense based on your customer volume.
But the accounts where whether it’s 20 seats or 40 seats, I mean, there’s some number where it makes sense for you to invest the time, especially if your churn is super low. This is something we hardly encourage with TinySeed companies. It’s something we did at Drip. My first hire that was not a developer was a customer success manager, and she dramatically improved the number of people who not only converted to customers but who got onboarded and stuck around because the price points were worth it. We were charging hundreds of dollars a month, most months we had net negative churn. Talk about low churn. I’m guessing you might have the same thing with expansion revenue and all that. And so that’s where it makes sense to invest time into something and I just mean labor, human hours into something that can build that flywheel. That’s what SaaS is, right?
It’s building a flywheel slowly over time. And if you have high churn, it’s hard to do that. If you have low churn, then it’s how do we throw everything we can afford at it in order to be able to onboard more people? And this is such an interesting use case. Again, I don’t know where your business is at, but this is a point where if money is a limiting factor of like, “Well, I can’t do it,” or, “I can’t afford to hire a customer success person.” If you have an engine that’s working and over time you can put a dollar in and get two, three, $4 out over the next year or two, this is where funding is the ideal solution, that’s really what funding should be used for. I hate it when people raise VC on an idea. I hate it when they raise $5 million when they’re at 20K a month and they still don’t have product market fit and they’re just going to burn through the money.
Versus if you have a repeatable business model where you can insert a dollar and get three, four, $5 out over time, but you’re constrained on the front end with cash, then that is an interesting time to think about raising an angel round, raising through a syndicate like our TinySeed syndicate. Or if you have friends and family who can invest, that’s where you… Or even frankly, depending on where you are, you can take out revenue-based financing, you can take out a striped capital loan or go to one of the RBF providers and you take that cash out, allows you to scale the business faster and then you pay it out over time. So, thanks for that question, Mike. I hope that was helpful. My next question is from Kyle about branding and new business.

Kyle:
Hey Rob, my name is Kyle. I’m a software product owner on an agile team on a large company. Just want to say, first off, thank you for all the content. I’m a long-time listener, first time caller, as they say, I’m trying to break into the sass world, and I think I finally have an idea with some real potential. I’m creating a product for tattoo artists and tattoo shops that has a few features that pretty significantly differentiated, I think from the products that are already out there on the market, which are mostly just products for barbershops or hair salons that are re-skinned for the tattoo industry, validated the idea with a few artists. So, I think there’s really something there, building it on low-code and no-code solutions right now, and I’m trying to start thinking about branding and marketing to really get something out into the world, into the public to try to get some other feedback and potential signups.
So, what I’m wondering is, well, I’m doing, so I’m not really finding any standout search terms or search keywords that I can use to incorporate into my branding or my company name or URL. So, what I’m wondering is should I care about that, or should I just let my H1s landing pages and ad campaigns do that that work for me and focus right now on building a brand that stands out and is unique, easy to remember and might resonate with my target on the audience for another reason. So again, that’s basically my question. Love to hear what you think about that. Thanks again. I’ll be tuning into the next episode of course, and I look forward to hearing from you. Thanks a lot, Rob.

Rob Walling:
It’s a good question, Kyle. It’s interesting. Certain industries or verticals care a lot about aesthetic and care a lot about branding. And when you sell to designers, UX/UI professionals, tattoo artists, people who are into visual things, the aesthetic means a lot and brand is part of that. In a perfect world, you could have a cool name for the product with great design, logo, colors, fonts, and have some type of searchability. But the thing is, you don’t need keywords embedded in your company name or product name. Go to tinyseed.com/portfolio and assume that most of these companies are successful doing tens of thousands, if not hundreds of thousands of dollars a month. Obviously, ones that are more recent or a little earlier. But in general, a lot of the companies that are successful and look at the brand names, look at the company names, they are not keyword stuffed.
And yet there are still companies on that list. Many that are doing SEO and content are getting incredible amounts of search traffic. They’re not doing it on their product name, but they’re doing it on peripheral terms. So instead of trying to rank for it, I’m not emailserviceprovider.com, yeah you call it Drip. And then you have your blog, and you have your videos, and you have whatever that is covering topics and questions people are asking about. So, obviously in a perfect world you could have a mix of those two, but I really think those days, those days are more difficult now because there’s so many names and domain names are taken. But also, if you’re going into a space like tattoos, where again, it’s a real nod towards strong brands and aesthetics, for those who don’t know, my entire left arm is tattoo sleeve. It took me years to get it done. Many tattoos that weave together.
So, I’ve been in tattoo parlors, and you’ll just notice that everything they have from the needle to the thing that they wrap around your arm to… I don’t know, all these different things, a lot of them do have unique names or unique brands and brands is not just about colors and fonts in name, it’s more than that. But in this case, if you’re doing it from scratch, then you do have to start with the name does say something about it. So, all that to say, if I were in your shoes, I would go more towards a unique name that draws attention. You think of Monster Energy drink, Red Bull. These are things that where you hear and you’re like, “Wait, what? Why is it called that?” It was very different than saying hype it up, energy drink, although that’s actually not a bad name either, but it’s something that’s a generic version of that coolenergydrink.com or whatever.
It’s like, “Yeah, nobody cares. That’s not a great brand name, even though that may be an SEO keyword that people search for.” So, I would go with something that stands out, is easy to remember, and I think that will… It’s going to make it memorable and that’s going to be helpful in a space like this where word of mouth plays such a big part. The tattoo folks, they talk to one another in the same city, they all know each other, and that’s what I’d be looking to do here, right? It’s like while SEO can be a play and is something that I’ve used in pretty much every business I’ve ever done, that’s just going to be one kind of one leg of your stool in this. And I think being in the Facebook groups or wherever tattoo folks hang out online, I think is going to be a piece of that.
And just embedding yourself in that community. I call it hangouts, and this can be Quora or Reddit, /r/tattoo. And I’m sure there’s like tattoo parlor owners, it gets so defined versus people that are into tattoos versus people that actually own tattoo shops. Tattoo parlors are a business. So, that typical B2B SaaS marketing approaches can work. And these are things I would think about. I call them my big five. It’s content, SEO, cold outreach, integrations and partnerships. And that’s going to be with either other people making tattoo software or anybody that’s selling anything to a tattoo shop, how can you try to get some type of co-promotion going with them? And then of course, advertising. This is the instance where people say, “Should I advertise on Instagram, or should I start a TikTok channel or advertise on TikTok?” And for hardcore B2B, If I was an email service provider. I’m like, “Nah, usually not.”
Usually it’s Facebook, Google AdWords, LinkedIn, those are the three. And LinkedIn’s tough to get to work, but in this case, since all the tattoo people I know are on Instagram, I imagine there might be room here on Pinterest since it’s such a visual medium and you probably know this already. And then TikTok, which is so kind of a question mark to me, I’m not really on it, but I would imagine that that is another avenue. So anyways, you didn’t ask for my list of marketing approaches. I would try with this software, but that is where my head goes. And none of those really require, and aside from true Google SEO, which I think you should obviously target the terms you need to target. Aside from that, none of them require you to have keywords in your product name itself. And I think the memorability and the intrigue of your name is going to go much further than that.
If you haven’t read the book Fascinate by Sally Hogshead, I’d recommend it when thinking about naming because she goes through these, I think there’s seven different factors that you can have. It’s like trustworthiness or intrigue or kind of sensuality. I forget exactly what they’re called, but there are different facets that a brand can have, and I think you’ll want to figure out what it is and then base the name on that. So, it’s a great question. Thanks for asking and I hope that was helpful.

Speaker 5:
Hi Rob, love the show. Appreciate all that you do for the SaaS community. So, thank you so much. My question today is around cold outreach. I’m currently running through the 5:00 PM framework for a tool I’d like to build for speech language pathologist. This has already proven extremely helpful for me as I’m on my third iteration of the idea as my first idea was really providing a vitamin. And I think now I’m getting… I have an aspirin that I’d like to build. One of the challenges I have during cold outreach is A, either getting responses back from people. My question is how do I introduce myself to up the likelihood that someone is willing to engage with me? And then furthermore, if they do decide to engage with me, it seems that I can only hold on to them for about one or two exchanges. If you have any techniques on how I can better engage with those who are responding and how I can better get higher engagement with my cold outreach, I would love to hear those techniques. Thank you.

Rob Walling:
When I read this subject line to this question, it says cold outreach and engagement. And I thought it meant, “Hey, I have a product and I’m trying to sell things.” But this is actually kind of doing validation. And the cool part about doing validation in this way is you’re not just validating. Is there a need for what I want to build? You’re validating, “Can I find customers?” Because marketing risk is real. It’s way more of a risk than this software aspect to this. We know you can build what you need to build or pay someone to build it, but do we know that you can find enough people fast enough that you don’t lose interest and plateau at $200 a month after a year of working on it? No, we don’t. So that’s a big deal. I want to start off by saying if anyone listening is in this situation, they’re like, I just can’t get anyone to engage.
The question I always have is then how are you going to get them to engage? Once you have something to sell, it’s even harder. So, this is a good learning I think to have upfront. I like the cold outreach because you’re in control. The other things I’d be thinking about and things that I’ve done to validate ideas when in conjunction with cold outreach, I’m also, or warm outreach, to be honest. I am also putting up a landing page and then referring people to that page to try to get interested emails. I have run ads on Facebook and Google and I’m trying to think of what else. I mean these days I would consider Instagram if your folks are there and you send them to a page with a value proposition that says, “Are you trying to solve this problem? I’m building software to do it, please enter your email and I’ll be in touch.”
So, there you have outbound with your cold email and inbound through your pay-per-click. In addition, you can start doing SEO, you can… There’s a number of ways every marketing approach that you can do, once the product is live, you can do now, it’s just a matter of time. And we know that SEO’s going to take time to go. And the reason I say pay-per-click is nice is because it’s so fast to get going, and even if you’re spending money, you’re not trying to make money on this campaign. All you’re trying to do is get input and feedback at this point. So, if you have budget, those are usually the two things I do is the cold and warm outreach plus some type of paid acquisition in a sense, sending to a landing page. And I’m not just looking at how many people enter their email, but then I’m reaching out to those people like, “Hey, I saw you opted in, so you’re curious about this. I’d love to get your input on XYZ.”
Okay, so that kind of level sets how I would think about this. Next thing I would say is, if at all possible, try to get warm intros. Work your network. If you’re on whatever social media network, Facebook, Insta, TikTok, whatever you are on, just try to get warm intros because that’s going to make it so much easier. The next thing is when you do outreach, you say, “I’m a founder. I have nothing to sell you. I’m thinking about starting a company to solve this problem. Do you have it?” That’s what you do. I have nothing to sell you. I’m not a salesperson. That can help make it easier. The next thing to think about is how can you make it the most efficient for them? So, you can say, “I’d like some feedback. I have a few questions. Here are the questions. If it’s quickest for you to just respond, please do. Or you can click this link and fill out this survey with multiple choice options or I’d be happy to jump on a 10-minute call if that’s easier. Here’s my SavvyCal link to book that.”
So, you give them options. One, it can be a paradox of choice to be honest, but I think if I got an email like that, to be honest, I might just crank up a loom. I love recording just videos because it’s quick and you can do exit and I can just talk, and it’s done. I might go through your questions in a loom and then just send you a link to that. So, it’s like none of the options you offered, but it’s the way that I often like to communicate, especially when it’s more nuanced or when it’s more complex, a complex subject matter.
But I think what you’ll find is some people will click through into your survey and other people will just respond to the email. I think if people are dropping off after a couple, then that tells me they feel like it’s not a good use of their time or maybe they don’t believe that you’re going to build something that will help them. And that’s a problem is they’ll donate their “time” for one round, but to get them to go two, three, four and to really invest, it almost feels like you really need to be solving an aspirin problem for them. And if you find that you’re telling them the problem you’re going to solve and they lose interest, that’s not a great sign. It doesn’t mean it won’t work, but it’s definitely not a burning take my money problem if people stop responding to your emails. Last thing I’ll say is you might be asking for too much.
I haven’t seen your emails, but I’ve certainly received emails where someone will say, “Hey, can I ask you a quick question?” I say, “Sure.” And then I get a wall of text back and it’s like several questions and hundreds of words of context and I’m like, “Yeah, I just don’t have time for this.” And so, I’m sure you’re thinking about that already, but to be as succinct as possible and really only ask the critical things, I think is pretty important. Bottom line is getting someone on a call is going to be the highest fidelity and the most valuable. It’s just a big ask for busy people. And so, I have often done a lot of my warm slash cold outreach slash customer development purely via email where I send an email, people respond, and I go from there. But I usually haven’t had a lot of back and forth.
If you’re going to need to do a lot of back and forth because you’re still so early. Honestly, I think you might need to think about doing calls instead of focusing on email. I know that Jason Cohen, when he was vetting WP Engine, he would actually pay consultants or agencies, or he would offer to pay. He’s like, “I know your rate is a hundred dollars an hour and I’ll pay you for a half hour or for a full hour of your consulting rate. I just want to pick your brain.” Now, I obviously don’t know if you’re in the position to be able to do that. That takes budget, but it is another option. So, thanks for the question. Hope that was helpful. My next question is from Spencer on prioritizing product improvements versus funnel building. It’s the inevitable question. It’s features versus marketing. It’s product versus sales.

Spencer:
Hey Rob, my name’s Spencer Henry and I just acquired a micro-SaaS for art museums. Very small. We have 15 active customers. Some of them have been there for years though, and so it really solves a problem for those select few. One customer said, if I were to raise the prices, he can’t really do anything about it because they just can’t go back to not using the software. So, it was built by a non-technical, like a museum employee with an offshore dev team, and there’s a lot of product issues. There’s a lot of small wins and there’s a lot of larger things that I could fix. But I’ll just give one example. If you want to import data instead of entering it from scratch from a CSV, there is no example CSV for you to download or no way for you to know what the column should be titled. So, things like that where it would make the onboarding really rough.
I started working on fixing the landing page and setting up the drip email campaign. But when I ran into these issues as I was setting up guides and such, I’m not sure how to prioritize these product fixes versus marketing. My idea was to come in, get some new customers, and then start working on the product once I could show that I could get new customers. But I’m worried about really high churn with this rough onboarding experience. Thanks for any advice.

Rob Walling:
And Spencer comes through with a unique twist on this. It’s not just about marketing versus product, but he acquired a product, and it has issues in it. I actually had this exact situation when I bought HitTail in 2011. Product was a mess. It was actually crashing constantly. So, I spent think a month or two doing no marketing because I didn’t want anyone to come into that product while it was going down. Basically, every several months, it would have a day outage, two days outage. So, I stabilized it, moved it to new servers, and I fixed a bunch of bugs. There was just a bunch of craft in there. I did nothing visual, and I spent about two months fixing all of that before I then had a designer come back, redesigned stuff. I put a new coat of paint on it and shrink the signup form, which was like 10 or 12 fields down to two or three, and then started marketing it. Okay, so that’s what I did.
Now, was it the right choice? Yes, but it was only the right choice because I knew I would be able to find more customers. It was an SEO keyword tool. I knew the space well. A lot of people need it relatively easy to find traffic and send it and convert. It was low price point, et cetera, et cetera. So, I didn’t really have that fear that if I went out and marketed it that no one would show up. I knew that I could get some people to the website through all the methods, right? SEO and pay-per-click advertising and press and partnerships and integrations and all that stuff, and that is in essence what I did. And I did a nice talk about that at MicroConf a few years ago. Actually, I think it’s one of my better talks of my career because it was just a really nice story that also had a bunch of actionable takeaways.
But here’s the difference in your story. You don’t know if you can find new customers, that’s a challenge. For me, I would have a tough time bringing new customers in and setting them loose in a product that has bugs that I know about that are pretty clearing. So, there’s a couple options here. Number one, go try to find new customers through marketing, through sales, whatever, and manually onboard them, and that might be the best way to do it. It de-risks this idea of can I find new customers? But it also means that if you manually onboard them, then you don’t need to fix the CSV thing because you will know how it works and you can just help them do it. This is something that doesn’t scale and it’s not going to make sense to do long-term, but that doesn’t matter. All you’re doing now is trying to learn.
So that might be the way I would think about it is start marketing. Actually, you know what I would do? I would start marketing and start doing sales, and I’d probably make it demo only and concierge onboarding for free and all that, even if the economics don’t make sense for now. And if I had any downtime or any time when I was say burned out on marketing for this day, I would fix one or two of the higher priority things or one or two of the smaller things. Get a list of everything that’s broken, get an hour estimate for each of them, and then probably a severity level for each of them, and then kind of weigh that and start knocking off one of those a week, two of those a week, whatever it is your schedule allows. So, I would do kind of a mix of it, but with an emphasis on that sales and marketing.
Now, if you start getting so many people interested that it’s like, “Well, I can’t afford to spend the time to do the concierge onboarding anymore. You’re in a great position. That’s a great problem to have. Then it’s like, “All right, I’m working this weekend to fix all this stuff and then I’m going to open the floodgates.” I don’t think that’ll happen immediately, but that’s kind of how I would be thinking about is it’s not an either-or. It’s do both, but prioritize the marketing and sales and just do everything manually to work around the bugs that you currently have while in the back of your mind thinking, “I’m going to knock these out one by one.” Alternatively, you could do what I did with HitTail, and you could spend a month right now fixing all the bugs or two months or whatever, and there’s risk. The risk there is that you can’t find new customers and you’re wasted all your time.
And that’s where this does come down to risk tolerance. If you feel like as a founder, as a CEO of this company, you need for all that to be fixed. That’s okay, it’s your prerogative, right? You’re in control. You’re a mostly bootstrapped or bootstrap company I presume, and you can do that, but I think to de-risk it a bit, I would take the first approach that I mentioned. That was a fun question, Spencer, thanks for sending it in. I hope that was helpful. And those are all the questions we have time for today. Thanks again for joining me this week and every week. It’s amazing to be here with you. As always, this is Rob Walling signing off from episode 657.

Rob Walling:
But at a certain point, no matter your taste, no matter how high your taste is, you do have to balance that with shipping things into the world. And this is a really tough balance I think for a lot of people. What I think it comes down to is knowing yourself. If you are the type of person that sits and works on something for way, way, way too long, you need to ship way earlier than you think. And if you’re the type of person that ships stuff too early, then you need to wait longer and you need to perfect it and make it better. And if you’re shipping a lot of things and none are resonating, you probably need to ship fewer things, not more, but you need to spend more time on them and make them better.
Welcome back to Startups for the Rest of Us. I’m Rob Walling, and this week I’m walking through a couple Rob solo topics. I’m going to revisit that concept of having taste and what that means and how to balance that with shipping. I’m going to talk about being remembered for something or being the best, and I’m going to talk about getting clearer about what each of us is seeking. All of these, of course, with a bent on building software companies or really just being an entrepreneur and trying to change our lives in our little corner of the world. Before I dive into those topics, I have a special guest correspondent, my remote correspondent, Michele Hansen, who many of you may know from the Software Social Podcast. And she is campaigning to get awareness out about the change to the US laws around Section 174, which greatly impacts software companies. So with that, let’s hear from Michele.

Michele Hansen:
Hey everyone, it’s Michele Hansen. You may have heard Rob and Derek talk recently on this show about the changes to Section 174 of the US tax code, which make it so that software development and other research and experimental costs may no longer be expensed and instead have to be amortized, which is to say spread out over many years. Now, you may have heard about that and said, “Well, I don’t have any employees, so that probably doesn’t impact me, or I don’t file for the R&D tax credit, so this doesn’t impact me.” The more I talk to experts about this issue, the more it becomes clear to me that Section 174 as it stands right now is an existential threat to any business that builds and sells software. This is not only about new product development but also adding features to existing products. It’s not just about salaries, it’s also about the staging server that you use while you are building a new feature.
This stands to have catastrophic impact on the software community in general and especially our community because many of us cannot stomach a tax bill that is all of a sudden hundreds of times higher than we would’ve otherwise paid. The thing about this is that Congress never intended for this to take effect, and there is broad bipartisan support for fixing it, but they don’t feel any urgency about it. It’s been seen as a big business issue and people assume, you know what? A big business, they can manage an extra 10, 20 million in taxes for a year or two. While we sort this out. Small businesses can’t. Small businesses are seeing their tax bill go from $75,000 to $225,000. This is a massive impact on small businesses and we have to do something about it because as long as this stays a big business issue, it’s not going to have any urgency.
But this is impacting indie founders right now who are putting their taxes on their credit card, taking out lines of credit, scrambling, laying people off, freezing their hiring, doing everything they can just to pay this tax bill that Congress didn’t even intend for them to have in the first place. So what you can do about it is go to ssballiance.org and sign the letter that we are sending to Congress about this. These coalition letters are incredibly effective. A group of 500 small biotech companies sent one to Congress recently about Section 174, and a senator mentioned it in a hearing recently. This letter is going to get delivered directly to Congress people and will help them understand the impact that it is having and help our supporters in Congress bring more people on board and communicate that this is an urgent issue that small software businesses and other small businesses need a solution to. So if you are a US citizen with a US software business, go to ssballiance.org and sign the letter. Thank you so much everybody, and together we can fight this.

Rob Walling:
Thanks so much to Michele for chiming in on this critical issue. And again, that URL if you want to sign this letter if you’re a US citizen is ssballiance.org. I want to revisit this concept I talked about a couple episodes ago in my last solo episode where I talked about having taste and I talked about that quote from Ira Glass. Where he talks about each of us developing taste over time, and I talked about how to develop taste and why you may or may not want to do that. And then he talked about how when you first start creating things, it’s below your taste. And either someone asked me on Twitter or maybe I just thought of this randomly because I have it here in my trustee Startups for the Rest of Us solo topics Trello board. And it says, “I talked about taste, but how do you balance that with shipping?”
And I think that’s a really important thing to call out is that you can develop your taste to the point where you care so much about the details, you’re overly perfectionistic and it keeps you from ever shipping anything into the world. You endlessly tweak that one blog post and never hit publish. You endlessly tweak and edit this single podcast episode and never go live. You endlessly tweak and edit your book and never put it out into the world. That actually reminds me today when I’m recording this is the day that my Kickstarter went live and what an adventure. It’s been quite a journey already. I had a funding goal of $20,000, which made it worthwhile doing a print run of hardback books. And we blew past that in under three hours. We just passed 32, 33000 and I’m really excited about it. So if you haven’t backed that, it’s at SaaSplaybook.com and there’ll be a link to the Kickstarter.
I believe when this episode comes out, there’ll be a few more days to back it and it’s called the SaaS Playbook: Build a Multimillion-Dollar Startup without Venture Capital. And it’s pretty much everything that I could think of that you need to do that. So I hope you’ll check it out. Now, back to taste versus shipping, really the balance here is to not be overly perfectionistic. And I think of examples from artists and musicians who talk about how they put something into the world that everyone likes and then they point out that it has mistakes or that they no longer like it, that they screwed up x, y, z part. I’ve heard an interview with Kurt Cobain talking about how Smells like Teen Spirit, which is certainly one of the most popular songs of the nineties, and I would say change the course of music from hair bands to more of the grunge sound and is still a song that is played on the radio today.
Where he talks about not liking Smells like Teen Spirit, that the arrangement was off, that he’s written songs that are so much better than that, and yet that was the one that became popular. And you can imagine that if he didn’t love that song that he could have kept it to himself, not pushed it out in the world. I think of The Beatles, I believe it’s the last verse of She Loves You. Where the two of them, John and Paul, sing a lot in harmony and they say different phrases at a certain point, and they’re supposed to be one voice, right? They’re supposed to be saying the same words and they just kind of left it and they knew they didn’t want to do a retake. And George Martin, who was their producer, said, “You know, life’s too short. It’s good enough.” Or I think of the person who writes a book and ships it to the printer and gets it all ready to print, maybe me. And then they reread it and they realize, you know what? I want to add more to it already.
I really do. I’ve finished this book maybe three months ago, four months ago, and already I feel like, well, I have more to say about that. Or I would say that slightly differently, and this had been happening for the two years that I was writing this book. That when I would revisit a topic, I’d realize I could go deeper on that. I can add another example. I can add more thinking or different thinking to it. And every time I would do a YouTube video or another MicroConf talk, I would realize that that should really be pulled into the book and it would change that section of the book. But at a certain point, no matter your taste, no matter how high your taste is, you do have to balance that with shipping things into the world. And this is a really tough balance I think for a lot of people.
What I think it comes down to is knowing yourself. If you are the type of person that sits and works on something for way, way, way too long, then you need to ship way earlier than you think. And if you’re the type of person that ship stuff too early, then you need to wait longer and you need to perfect it and make it better. And if you’re shipping a lot of things and none are resonating, you probably need to ship fewer things, not more but you need to spend more time on them and make them better. People all the way from the greats like Beatles, I’m sure Picasso. I haven’t heard of him commenting on this, but you know that the story I told of being in the Picasso museum where he had 20 or 30 different takes of the same subject. So 20 or 30 different paintings that were basically all the same and just redo and redo and redo. So you know he didn’t think any of them were perfect. It was never done for him, and yet it was done eventually, right?
Eventually he stopped painting it and one of these paintings would sell for a jillion dollars and he’s known as one of the greatest artists of all time. But for him, given his taste in art, it was never done. And yet he would ship his paintings into the world even though to his taste, he knew they weren’t perfect. And that’s what I encourage you to do as well is you’ve probably developed pretty impeccable taste on certain elements of your craft and that’s great. And you have a name that you’re tying to, you’re tying your name to the product that you’re putting into the world. Whether that’s a podcast, whether that is a video on YouTube, whether it’s software, whether it’s marketing copy, whether it’s a support response, whether it’s a book. Whatever it is that you’re shipping into the world as your art, be proud of it, but don’t be such a perfectionist that you’re not shipping things into the world that frankly can help your business or can help other people.
You kind of owe it to the world to get them out there. My next topic comes from a quote or a sentence that was said on a podcast I’d listen to. The podcast is called Comic Lab, and it’s where two comic strip artists talk about their craft. These are not folks who write and draw for newspapers, but they are independent comic artists. So they sell on the web and they do Kickstarters and they have Patreon and they make their money being entrepreneurs. And one of the hosts, Dave Kellett was quoting someone and he said, “If you want to be remembered for something, you either have to be the first or the best.” And especially in, I’ll say, imagine being an artist or being an actor, you either have to be the first with that style. Think of it like James Dean or an Arnold Schwarzenegger, right?
They’re remembered because they were very unique when they came on the scene. I said, very unique. It’s funny, unique onto itself is as unique as it gets. You don’t need very, but you get the idea. They were unique individuals. No one had seen folks like them before, that archetype. Or we can think about folks who are the “best” actors that we might think of, folks like Dustin Hoffman or Robert De Niro, Kevin Costner, if you like his style. I mean, those folks maybe weren’t so unique that folks like them had existed before in Hollywood and have since, but they were so good that they’re memorable. And this instantly clicks something in my mind because I thought about the three unfair advantages for faster SaaS growth that I’ve brought up many times. One is being early, one is having an audience and one is having a network.
And so this kind of fits in at least the being first part fits in with being early, right? And in SaaS probably is with being an actor or an artist, there’s quite a bit of luck involved in being first or being early. I don’t think you need to honestly be the number one, but if you’re in the first few, that probably counts pretty well. But I was trying to think of the metaphor of like, well, what does it mean to be the best in SaaS, in software, in entrepreneurship? And I think a big part of that actually is not only execution, just getting there and building a great product and marketing well and doing all that. I think that’s a big part of it. I think that’s part of being the best, but I also think part of it is positioning. It’s this underrated thing that is so amorphous and hard to understand.
And even after April Dunford’s amazing book, which is Obviously Awesome, even after she’s defined it for us. I think a lot of people still miss this and don’t fully understand what positioning is and how it allows you to communicate that you are the best for people seeking X, but anyone who’s not seeking that, you’re not the best. That’s how I view positioning is you can enter a super crowded space of CRMs, ERPs, email service providers, whatever it is, but as long as you carve out a corner and you say, for anyone who wants the low-priced really easy to use version, that’s our position. Or if you are a realtor and you want this type of software, that’s our position and we are the best for that. And I think as bootstrapped and mostly bootstrap founders, we can’t compete head-to-head with these big behemoths that have raised a gazillion dollars.
And if you think about, let’s look at being first, let’s look at email service providers. MailChimp was super early, right? And they’re huge and they didn’t need to raise funding, and you could also say they’re one of the best. They executed very well. Now the product these days, yes, it’s a 23-year-old product or something. So is it the best product? No, no, it’s probably not. But realistically, they were first or very early and they executed well, and you could say that about Basecamp too, right? They were early and there’s a bit of luck in that. But also they did some things right. Now, if you come 10 years or 15 years after MailChimp and after Basecamp, you can’t just build what they’ve built and expect to succeed. This is where the idea of being first is gone and you have to think about, well, how can I be the best?
Well, can you be the best against MailChimp, against that brand, against the strength of what everyone knows about MailChimp? Can you compete with a decade’s worth of software development and tooling and all the stuff that they have built into their product as a bootstrap or mostly bootstrap founder? It’s unlikely. So that’s where we have to think, maybe head to head, I can’t beat MailChimp or Salesforce or HubSpot or Basecamp or insert name of a dominant player in a dominant space. We’re not going to be first. We can’t be the best head to head, so how can we be the best in our little corner of this market? And that’s positioning. That’s where we think, I’m going to be lightweight marketing automation that doesn’t suck because my corner is, we don’t need heavyweight marketing automation. Those exist out there, but we’re a lighter weight version of that.
And also we’re fun and easy to use and easy to interact with, and that’s the corner that we carved out with Drip, and I see the same thing in a lot of TinySeed companies that come on the scene into competitive spaces. Think of [inaudible 00:15:50] competing against all the other scheduling links that have come before them. Think of GymDesk competing against all the other gym and martial arts studio management software that has come before them, including some pretty large companies. These are folks that have carved out an angle. It’s a unique position. It’s every time Mike Taber comes on the show. What do I ask him about Bluetick? I say, are you marketing enough and how are you different? How are you different? And not only how are you different, how are you communicating that you’re different? That’s a huge part of positioning.
I don’t shy away from competition. I actually have a section in my book that says, how do I compete head-to-head with larger competitors? And I talk specifically about this, about using their weight and their motion against them and looking at their biggest weaknesses and saying, how can we be not that? How can we be the opposite of that? If you are the same as other large competitors and they have more money and more brand name recognition and a stronger brand, you will be a commodity. You will not grow. Just because it’s a huge market doesn’t mean that anyone will sign up with you. It means people won’t stick around. They’re going to go for the big player unless you carve out some type of unique position in the space that you are known for and that people say, you know what? This tool is the best for X within this broader ecosystem.
Last topic of the day is actually spurred on by another quote from Dave Kellett, who is one of the comic artists on Comic Lab. We should give him a shout-out on Twitter when this episode goes live. But he creates, writes and draws couple really good comic strips. One is called Sheldon, and we have all the books. I think there’s like 10 books. And I tell you, if you haven’t read these, they are hilarious. There’s one that is Sheldon’s take on pop culture, and it’s just all the pop culture strips and there’s a bunch of stuff about Microsoft and there’s stuff about Lord of the Rings and Star Wars and all this nerdy goodness, that one’s amazing. Then the other strip that Dave focuses on more now is called Drive, which is science fiction slash fantasy epic, but it’s amazingly well drawn and really funny and humorous as it goes along.
And so he has a successful career who is working for himself, making a full-time living, and it’s everything he’s always wanted. But on a recent episode of Comic Lab now it’s probably three, four months ago, but he said, “I have friends who’ve won a bunch of awards that I have not, but I would much prefer my career than theirs.” And he’s talking about a couple of things. One, he’s talking about his financial success, but he’s also talking about his creative freedom because he owns his characters and he owns his own destiny and doesn’t have to work for anyone else. And he also was talking about his closeness to his audience because I think, I don’t remember the context, but I think some of these friends are newspaper columnists and they’re kind of beholden to the syndicates and they aren’t close to their audience in the way that Dave Kellet is.
And this made me think about the lifestyle bootstrapper paradigm versus being a more ambitious bootstrapper versus wanting to change the world, so to speak, and become a billion-dollar startup. There’s all these different paths, and if you’re not clear on what you want from the start, it’s easy to copy the wrong person. That’s the thing is if you think, I want to build an amazing business that does half a million dollars a year and travel the world and just have incredible amounts of net profit going into my bank account, then don’t look to Silicon Valley, right? Don’t listen to inventor capitalists say, “Oh, it has to be a billion dollar market.” Or don’t listen to Y Combinator talking about how to start a company, how to build the company, how to find great ideas, because those ideas and those paradigms won’t apply to you because they’re talking about a completely different type of company.
Likewise, if you want to build a SaaS company and mostly bootstrap it to 5 million or 10 million a year, you probably don’t want to listen to the lifestyle business folks. I mean, truly the folks who are like, “Look, I just want 20 grand a month and I’m going to go travel Europe.” Usually those two business types are not the same. In fact, start small, stay small. My first book covers lifestyle businesses and it’s older now. It’s 13 years, he’s looking a little haggard. Don’t make fun of him. But frankly, it holds up and people still buy that book. And probably 75% of what’s in that book is still valid today for that true lifestyle business entrepreneur. And that’s where I was in 2009 when I wrote that book versus my new book, The SaaS Playbook, is about building that 5 million, 10 million, 20 million SaaS app, and it’s very different.
If you compare these two books and the focus and what’s in them, they’re not just different because they were written a little more than a decade apart. They’re very different because the approaches from the start have to be different. And if you don’t have an idea of where you want to go, and I’m not saying you need to know where you want to go with your whole life. I just mean with this single startup you’re working on. If you don’t, you may chase the wrong things. You may model yourself or listen to the wrong people. You might do the whole, you chase the audience when you really want money, or you might chase money when you really want the popularity or you might chase funding when what it really is you just want an amazing bootstrap business that provides you with freedom. I’ve talked about it on this show in the past, but my own rule for when I will listen to someone on social media and follow them and follow their advice is if they’ve done something that I want to do, and usually if they’ve done it twice.
So in terms of I want to start multimillion-dollar companies, have they done that a couple of times or am I pretty confident they didn’t get lucky with the first one? So if I want to build a $5 million company, do I want to listen to the person who’s spouting off about startups where the only thing that they ever did was build a company that quarter million dollars a year and sell it for whatever, 750,000 or a million or whatever the number is? No, I don’t because they don’t know what they’re talking about. They think they do, and they might sound like they do, but I’m not going to listen to that person. I’m going to listen to people who’ve been there and who’ve done it at least once, and who I see have a pretty methodical approach and who don’t rely on luck and who do things that are repeatable and are teachable.
So much of what some folks do when they have a success as they get lucky and then they try to teach what they did, but it turns out you can’t teach luck. But the other thing I want to add to that criteria of who to listen to is are they talking about the type of business that you want to build? Because again, the person who says, for example, something we hear a lot, which is build an audience and then sell something to that audience, that’s amazing for information products. If you want to write a book about building a SaaS company, if you want to start a YouTube channel and a podcast and then you want to sell courses or you want to sell whatever, and it’s information, build an audience by all means. But if you want start a SaaS company, look around at the people who have started successful SaaS companies and how many of them had an audience before they started.
So with TinySeed, for example, we have, I believe it’s about 107 companies that we funded, and I think we’re going to fund another 20-25 here in the next month or two. It’s a lot of companies, and less than 5% of them had an audience before they launched, less than five. And even of those handful of companies, the audiences were not huge. It was folks like Derek Reimer, he’s one that I counted as having an audience. And of course, did his audience help him in the early days in certain ways? Sure, it probably helped him get better feedback and get some guidance, but I’m going to tell you, Derek Reimer was going to be successful with or without that audience. It’s just something that I know in my bones, having worked with that guy for more than 10, 13 year, whatever the number is. I’ve known him since he was a wee lad. Derek would’ve been just fine on [inaudible 00:23:32], whether he had his podcast audience or the Twitter audience or whatever else he has.
But put that aside and realize that whatever it is, four or 5%, it’s a very small number of TinySeed companies had an audience. I’m not saying an audience is not an advantage, but it’s not worth the time to build if you’re going to build a SaaS company. There are so many other ways, so many better ways to spend your time than to sit down and write the blog posts and tweet. Look, if that’s in your wheelhouse and that’s what you want to do, that’s who I am. I had to start blogging. I didn’t blog and podcast because I wanted to. It’s because I had to. That’s just the person I am. So if that’s you, that’s cool, but what I don’t do is tell everyone that they need to be doing that because not everyone wants to do that. And in fact, I don’t think it’s the best use of time.
When I look at the thousands and thousands of hours that I’ve spent podcasting and blogging and tweeting and whatever, if I had invested all that into SEO in a hugely competitive space, I would be worth 10 times what I am now. No joke. There are so many better ways to use your time. So again, if that is in your wheelhouse, then by all means, feel free to do it. But if it’s not or if it’s not something you’ve already done, then I would not be following this, build an audience thing. I like to think that we pick companies that are successful or are going to be successful in TinySeed. And again, the super, super vast minority, less than 5% built an audience before they built a SaaS company. So that’s the kind of thing where try to get clear on what you’re seeking and figuring out who to listen to in order to get there. So that’s going to wrap us up for today. Thanks so much for joining me again this week and every week. I’m Rob Walling, signing off from episode 656.

Rob Walling:
I will admit that taught me a lot about how to interview, how to get jobs, how to present myself, and also how to work with a lot of different people and oh, this is a good one actually, a lot of different code bases. And this might be one of the reasons I was never scared to acquire companies or SaaS apps in essence, because I knew that no matter the code base, I could get in there and figure it out because so much of my career had been going into existing code bases and either refactoring or improving or adding on, and so I would’ve to learn the code base quickly. Sometimes I would’ve to learn the language, and so I knew that I could buy a SaaS app or a software product in a language that maybe I knew, maybe I didn’t, and that I could figure it out.
Welcome to another episode of Startups For the Rest of Us, I’m Rob Walling and I’m stoked to be here today. We got some great listener questions I’m going to comb through today covering pricing, idea validation, enterprise pricing, what you can learn as a consultant and more. This is the show where we dive into bootstrapping and mostly bootstrapping software companies, SaaS companies, but honestly, there’s a lot of listeners that are doing hardware info products. It really is just being an entrepreneur and trying to change your life and those around you through entrepreneurship. Whether you raise a bit of funding, whether you raise a lot of funding, it’s just about being motivated, not sacrificing your life or your mental health to get where you want to go. Before we dive into the first question, I have a new book. It’s my fourth book. It’s coming out in the next few months.
I’m actually doing a Kickstarter probably the week this comes out. It’s at SaaSPlaybook.com That will get you a link to the Kickstarter. If you’ve gotten value from me over the years, it’d be amazing if you could back one of the tiers. I have tiers starting at $30 for the book, plus either an audio or an electronic version of it, a PDF, all the way up to several thousand dollars for an in-person small group founder retreat with yours truly in Minneapolis this summer. I hope you’ll check that out and support me in the Kickstarter.
And with that, let’s dive into my first listener question from David.

David Canes:
Hi Rob. My name is David Canes and I have a SaaS business called WellPrept, which helps doctors send their patients homework. I’ll tell you about that in a second. But first, I wanted to thank you for Startups For the Rest of Us. I think I probably binged at least 600 episodes at 2.5x like a crazy person, but you’ve given me the language to understand SaaS in a way that has helped me communicate with my developers in an efficient way. You’ve helped me dream up a roadmap, you’ve changed my opinion on many different topics and really just wanted to thank you for doing this. I don’t know how I would’ve been able to become educated on these topics without your podcast. It would’ve been challenging. I know there’s a small violin playing for well-paid professionals who have struggles on the job, but one of the struggles that doctors deal with is that they have to explain basic concepts to their patients over and over, and WellPrept lets them set up customized education pages with their favorite resources they can easily share with patients.
My question has to do with individual plans versus team plans and how software can protect itself against the abuse of individual plans by teams. Sort of like how Netflix somewhat knowingly lets people share their passwords even though they lose money from it. Maybe there’s other examples of software where people use one seat but they somehow surreptitiously let many people use it. In my case, we allow individual doctors to set up really cool customized profiles, and while this is a selling point for most of them, we’ve had some groups say, “Yeah, we’ll forego the customization and we’ll just have a page for our whole practice and all our doctors can use it.” We want to set up team-based pricing, but to some degree, we don’t want this to completely be an honor system. What are the things that we need to be thinking about, either tech safeguards or otherwise, to help minimize the abuse of individual plans by teams? Thanks for everything that you do.

Rob Walling:
You binged 600 episodes? Well, that is a huge compliment and I’m sorry that I had to put you through all that pain, but hope you enjoyed the journey. It’s 13 years at this point, and that’s pretty incredible that you went back and listened to all those. I’m glad they were so helpful. To answer your question, I’m not sure I fully understand all the nuances of it. I think the basic piece of how to avoid login sharing is usually that if two people log in from the same company, they need to see something different in order to charge by seat. If you think about logging into a CRM like Salesforce or Close, or even like Trello, if I log in, I see my tasks, and if my co-founder logs in, they see their tasks, that makes it really easy to charge per seat. Versus let’s say you have an email service provider like MailChimp or Drip, if two people log in from the same company, they see the same thing.
There’s no customization. That’s like let’s say the standard rule for when to charge per seat. And it sounds like you have something like that. You have a public facing page that is customized per doctor, and so in that case, it should be pretty easy that if they have 10 pages and you charge 10 seats, but I hear you on the fact that it sounds like some do the entire practice. The only thing I can think of, I can think of two things. Number one, don’t let them do that and make them create a page for every doctor. That’s a little weird, but that’s one way to do it. Another way is to think about is there anything on the backend that’s not public facing that would allow you to charge per seat? Meaning they log in and they see something different, the leads go somewhere, whatever.
It doesn’t have to be a public facing aspect. It can be much like a CRM or whatever things are assigned to people. I don’t know if that’s happening. It’s hard to say. The third option is, I guess it is kind of honor system, right? If you do want to allow one page per practice, then yeah, you would ask them, “Well, how many doctors do you have? Because that’s how we charge.” Or you say if you want to do that, it’s this really expensive plan to discourage people from doing it. I’m not sure I can think of a brilliant way to achieve this without making it honor system or having this mechanism, the public or the private mechanism that means they can’t share logins. I mean, I guess the other way is that the way Netflix enforces it, right? Which is simultaneous logins or you’re like logging which IPS log in at different times, but if they’re all in the same office, how are you going to tell?
Then you start looking at IP and browser and you can fingerprint things. To me, that’s just a rabbit trail, man. I can’t imagine enjoying building that system. That sounds like a terrible waste of time, but that is a way to do it, right? There are technically ways that you can try to fingerprint individual computers based on browser settings and the computer, the laptop itself. And there are libraries that would try to allow you to look at how many people are either simultaneously logging on or logging on in a given week or a given month, and you could use that. I wouldn’t use that as a hard and fast. I personally probably wouldn’t bother with it. It sounds like a waste of time, but if you decide or if I’m misunderstanding and you do want to implement that, I would use that as more of a reporting to you, to your team of like, “Bing, they’re paying X amount, they said five seats and it looks like 20 computers are logging into this in a given week.”
Then you would have to reach out and say, “Hey, it looks like your usage varies.” I wouldn’t use it like I think Netflix literally blocks you or forces the other account to log out and you can do that. Again, it just feels heavy handed and a bit anti customer, and I think this entire path feels cumbersome to me. And I’m just wondering without trying to take a technical stand on it, because it just feels like a rabbit trail. You’re going to go down and waste a bunch of engineering time. I would try to think of more of a business solution to it, which I think is what you’re doing. It’s obviously a challenging problem and I appreciate your question and I hope that was helpful. My next question is from Karol from Slovakia on how to validate a business idea before committing to it.

Karol:
Hey, Rob. Karol from Slovakia here. First of all, thank you for your podcast and everything that you do. It’s been really inspiring and my question today is how do you validate business idea before committing to it? I know it may sound like a cliche question, but I’m really struggling here. How do you go about finding that niche specific problem that people want to be solved? If you haven’t experienced hands-on, some very specific problem, your or your friend’s work or personal life. I feel like it’s so hard to get a customer without at least some sort of basic MVP, but at the same time, it’s difficult to commit to an MVP if you don’t know for sure that people will be willing to pay for it. I’m starting to feel like it’s a vicious circle and I can’t get out of it. Any insights would be highly appreciated. Thank you very much. Take care.

Rob Walling:
Yeah, so this is a good question, Karol, and a common one. The thing to keep in mind is you’re never going to get to 100% validation. I say that all the time. When you come up with a brilliant idea, you’re probably at 10% out of a hundred that anyone else needs this. And then as you have conversations or as you drive traffic, collect emails, whatever smoke test you’re going to do, that slowly creeps up, oh, maybe 20%, 30%, 40%, and then you show an MVP and people start using it and that slowly climbs up. But until you launch and people are paying you money and not churning, you will never be at a hundred percent. In fact, I don’t think you can get much more than 50, 60%, whatever. It’s a arbitrary number that I’m throwing out. But that’s the idea is you will at some point have to make the decision to move forward because being an entrepreneur is making hard decisions with incomplete information.
And this is a great case in point. With that said, we actually released a YouTube video, which is just, it’s me talking to a camera for 12 and a half minutes. It’s called Validate Your SaaS Idea Fast, Step by Step SaaS Validation Process. And in it, I walk through the two methods that I typically see for people to validate. One is to put up a landing page. This is if you have a low-touch funnel, you’re going to have to drive a lot of traffic at a lower price point. For this, you put up a landing page, you start driving that traffic, you do SEO, you do pay per click, you do whatever it takes that you would be doing if the product was all done, and you’re basically asking people to opt in for interest. That’s like this landing paid smoke test.
Another approach, and I’ve used both of these by the way, is to have conversations, and these can be email, they can be Zoom, they can be in person, but this is where if you’re charging a hundred dollars, $500, a thousand dollars a month, maybe it’s not such a high traffic business, maybe it’s going to be one that relies on individual sales with demos. And for that, a lending page smoke test is a lot weaker, just doesn’t give you the right signal. That’s where you have to cold call, cold email, cold LinkedIn, or warm for that matter. If you have a network in the space, which it’s an unfair advantage if you do so, certainly take advantage of it.
But that’s where you have a bunch of conversations and you basically say, “I’m a founder, I’m a software developer, I’m not a salesperson, I don’t have anything to sell you, but I’m thinking about solving this problem.” I guess I’ll back up and say, do you even know what problem you’re solving? Are you going to go out and try to find a problem? Because that is hard on its own, but if you do already know the problem and you do know that say psychologists face this problem in their professional career, then you can approach them.
“Do you have this problem?” And if they say no, you move on. If they say yes, then you ask them the questions from the mom test, right? You say, “What are you doing today to solve that problem?” And you get on the list and then you get 5, 10, 40 people who are interested in your solution. Sometimes a solution is software, sometimes a solution is productized service. Sometimes a solution is that they should keep doing what they’re doing in their Google sheet or Excel spreadsheet. But if you realize that software could solve this problem, then you move to the next step.
With Drip, I got 11 yeses. With WP Engine, Jason Cohen got 40 yeses before he started coding. And when we did Drip, I did landing page validation and I did conversations, I did both. And here is a list of other things I validated using landing pages. Two books, MicroConf, TinySeed, Drip, and I believe my original online community was like a precursor to MicroConf. It was an online community and a bunch of content like information. I think that was also a landing page. These things are very versatile. Now, I did want to call out a couple pages in the 2022 State of Independent SaaS, and it’s page 15 and 16. We’ll link up to the State of Independent SaaS, which we do through MicroConf and we survey many hundreds of independent SaaS, non venture backed SaaS founders.
And we ask them a bunch of questions about MRR, and this and that. But we do have a couple questions about ideas, how they came up with them and about validation. Under how did you discover the idea for your business? 46% of respondents said it was a problem that they experienced. Another 24% said it was a problem they saw customers experiencing. 10% said it was a problem they saw at their day job. 7%, so pretty small, got it through research. 8% said it was a problem, friends and family experience, and then 3% acquired the business and 3% had other. You can see the vast majority is basically a problem they experienced, problem they saw customers experiencing. This was oftentimes like an agency that had clients who were experiencing something or they already had a product and they had customers experiencing this problem, so they built a different product, right? Between a problem they experienced, customers experience, day job or friends and family, that’s like 85% of the way people have discovered ideas, at least according to this survey.
And then in terms of validation, how did you validate the need for your solution? 33% built a prototype or an MVP. Almost 10% did pre-sales where they actually took money. Almost 10% had verbal commitments, which is the way I did with Drip. 8% said they did no validation, 20% said they asked their audience, and then 7% put up a landing page, like I said, and 7% copied a competitor. That gives you an idea of how folks are doing. It doesn’t necessarily comment on the effectiveness. In addition, what I’ll say is if you build a step one business and you can Google the Stair Step Method if you don’t know what that means, but if you’re building a step one business and you can just get something out there quick in under a month, that’s where personally I don’t know that I would be validating. If I’m going to build a Shopify app, a Heroku add-on, a Salesforce add-on a HubSpot add-on, and I can just code this thing nights and weekends, four weeks, six weeks, that’s validation unto itself, right?
Because validation alone is going to take you weeks to research and evaluate and then validate. And if you can just get an actual MVP into people’s hands, that’s also one way to do it. Lastly, I want to call out The 5 P.M. Idea Validation Framework, which I’ve mentioned on this show. That’s to take an idea and just run it through a filter. That’s not validation, it’s pre-validation. It’s just evaluating an idea from multiple perspectives to get an idea of do I want to tackle this? And then the next step after that of course would be validation. Thanks for the question, Karol. I hope that was helpful. My next question is from Gokul and it’s about enterprise pricing.

Gokul:
Hi Rob. My name is Gokul and I’m a longtime listener and a huge fan of the pod. My question today is related to pricing. A lot of your videos on the past have really great pricing frameworks for the low to medium touch funnel sort of businesses at a slightly lower price range. I was wondering if you had any frameworks or strategies to think about pricing for the higher monthly price enterprise customers, seat based pricing, feature gating, flat monthly price. How do you decide what’s the right pricing strategy for your product? To give you a little bit context on the product that I’m building, I work in deals analytics.
Typically when a company goes through a deal, so a divestiture, IPO, acquisition, they hire a lot of accounting consultants to help them prepare their financial statements, and I work with these accounting consultants a lot, and what I’ve found is on all of these projects, these accounting consultants spend a lot of time doing the same steps and processes multiple times, and it’s very manual and it’s done in Excel, so it’s very time consuming and it’s prone to error because it’s manual Excel formulas.
The tool that I’ve built basically automates a lot of these standard processes and reduces all the errors and improves efficiency by a lot. Now the problem is my customer is an accounting consulting firm, and so while it is a manual process for them, all of those hours that they spend are billable hours for revenue for the consulting firm. My tool basically greatly improves their efficiencies, but may reduce their billable hours, but at the same time, it could help improve their margins because they need less people to the same amount of work, and so they could increase their billable hours or billable rates. How would you think about pricing for something like this on the enterprise scale where you’re charging over two to $10,000 a month? Thank you.

Rob Walling:
Thanks for the question. This is a good one. My rule of thumb is charge a lot because enterprise customers are a pain to deal with in terms of procurement and all that. I think minimum 25K, 35K on the bottom end for these types of deals. In terms of seat based feature gating and all that, I laid out almost everything I know about it in The SaaS Playbook. I realize that doesn’t help you today, but hopefully that’s an entire section, it’s a sixth of the book is all about pricing. In addition, I did a talk at MicroConf Europe that is on YouTube and we’ll link it up in the show notes, but it’s called The Fundamentals of SaaS Pricing With Rob Walling, and if you watch that, that can also give you some ideas of how I think about it.
In terms of the specifics of your customer, that’s a very challenging question because this is selling to lawyers where if you make them more efficient then they bill fewer hours. Unless you’re dealing with fixed fee folks, and it doesn’t sound like you are, I don’t know that the value is there. When I did have an agency and I billed per hour … And that’s not true. I personally wanted to be more efficient just because I wanted to be, so I would buy frameworks and build them to help me be more efficient, and then I would usually just raise my hourly rate at that point. But I don’t know how you get around the you are going to make them pay you for the software and then that’s going to shrink their contracts. I mean, I think the only way would be to convince them like, :Well, this is a flat fee add-on to each project,” right?
Or if they bill on a fixed price basis, then obviously they become more efficient, they make more money. If truly they are making money per hour and you’re going to reduce that, that doesn’t sound like a great approach to me. Yeah, I don’t know an easy way around it. I think, again, if I were selling to these customers though, I mean, this sounds like 50 to $150,000 a year type price points because they are probably charging a lot and anytime you’re in the investment banking, the financial areas, there’s liability, there are long sales cycles and there’s things, there are things like that that make it a requirement that you charge that much in order to make the deals worthwhile. My next question is from Phil.

Phil Daniels:
Hi, Rob. This is Phil at PhilDaniels.io. I’ve heard you talk about your journey acquiring and building small products, about Drip, about starting TinySeed, but I don’t recall you talking about your early days as a consultant building your client base, quitting your 9:00 to 5:00. Being someone who loves startups and freelancing, I’d love to hear a little about that along with anything you might have learned along the way. Thanks.

Rob Walling:
Thanks for the question, Phil. Yeah, it’s not something I talk about so much because it was a less interesting part of my journey. I learned a little bit from it. I just didn’t enjoy building things for other people and also, I don’t know, man, the clients, you’d get these clients who didn’t know how to build software and they wanted to tell you how to build software. And you’d have this great UX designer you’re working with, and we’d wire it up and it’d look amazing, and they’d be like, “Well, can we move this around?” And it’s like, “No, this person knows way more than you do about how to build a user interface.” It got old. I’ll say I learned how to run a business. I will say yeah, I quit the 9:00 to 5:00 to kind of start this micro agency.
I was a consultant and then I would have other contractors helping me to fill in the gaps. It was a great living. I was making, I don’t know, two or 300 grand a year. I was working from my home, and that was just unheard of. This is early 2000s, right? But what I found was it quickly became a 9:00 to 5:00 because now I had to bill clients and do all the things you do as a consultant or a freelancer, and then I was also trying to write code and be in these remote meetings and phone calls. I learned to run a business. I learned to market. I mean, the way it was all content marketing, right? That’s one of the reasons I started the blog, although I started the blog because I really liked Paul Graham and Joel Spolsky, and they were writing essays, and I started learning enough as a contractor, a developer, a project manager, just a manager of people.
It was early still, but I was like five, six years into my career, and I was like, “I think I have some unique insights,” which that’s debatable. But at that point, then I started blogging about everything I was up to and theories I had on becoming a better manager, and I’d read a book and then I would kind of summarize that or I would incorporate it into my own thinking. I think I learned a lot more from perhaps books and other blogs than I did from the actual consulting. But some things I did learn are obviously content marketing and that blog, I transformed it into an entrepreneurial blog. As I started having products and having success with them, that’s what became Software by Rob, and then it’s now at RobWalling.com, all my essays from back in those days. That was one piece. Another thing, I did learn how to manage and outsource because I didn’t want to write all the code and I was billing a hundred, 125 an hour, and I could hire people for less.
That was an early learning curve. That was challenging for me, but that helped me once I had these small products that I did know how to basically hire people and not have to do everything myself. Now, the thing I learned is that I didn’t want to work for other people for the rest of my life. I was really constrained both by the demands of the hours where they would say, “Oh, we really need this out,” so then I just have to crank over a weekend, and I don’t mind working weekends if I’m making myself do it. But the moment someone else asked me to, it makes me mad. I think it’s that phrase unemployable, right? I learned during that time that I was kind of unemployable and that I should figure out a way to make my own path, because while I did a great job and I was usually one of the better team members, I didn’t enjoy it.
That’s where, for me, entrepreneurship was so much about freedom. It was not about changing the landscape of the Silicon Valley. It was not about becoming a gajillionaire. It was about being free enough that I could do what I wanted when I wanted. And I did learn that and those early years, because originally I thought being a salaried employee would be cool because I was coding and it was creative, and it was cool for about a year, year and a half. Then I got bored and I got frustrated. Then I said, “Well, I’m going to be a freelancer then I’ll control my own destiny. I can work from home.” And it was great for about 12 to 18 months until I got bored of it and got frustrated. And as I said before, clients were sometimes challenging, and so it was helpful to learn those things along the way and to learn the skills of dealing with a lot of different people.
That’s the other thing. I would have a job for a year, year and a half, then I’d get bored or be unhappy, so then I’d go freelance and then I’d go back to a job. I think I had two or three salaried jobs as a developer over the course of six or seven years, and then I’ve filled that in with this consulting work and essentially running the micro agency. That was probably pretty helpful for me. I was concerned early on that I would be viewed as a job hopper, and that just became irrelevant at a certain point. I don’t need anyone’s permission now to get a job, but I will admit that taught me a lot about how to interview, how to get jobs, how to present myself, and also how to work with a lot of different people and oh, this is a good one actually.
A lot of different code bases, and this might be one of the reasons I was never scared to acquire companies or SaaS apps in essence, because I knew that no matter the code base, I could get in there and figure it out because so much of my career had been going into existing code bases and either refactoring or improving or adding on. I would’ve to learn the code base quickly. Sometimes I would’ve to learn the language. When I first started, I knew Pearl, and then I had to learn on the job ASP. Then I learned PHP, and then I learned ColdFusion, and then I learned .NET. I mean, this was all within two years. And as a consultant, you basically work in the language that the client asks. Oh, Java as well, Java for the web. I knew that I could buy a SaaS app or a software product in a language that maybe I knew, maybe I didn’t and that I could figure it out.
And I don’t know that if you’ve worked at a job for five or 10 years in the same technology, same code base, I don’t know that you have that malleability. I think maybe that was an advantage that I had having worked in so many code bases. Thanks for that question, Phil. Honestly, it’s something I haven’t thought about in a really long time. I started working in construction in the late ’90s. I did that for about two, two and a half years, and I taught myself Pearl. I had a coding background, but I didn’t know modern languages.
I taught myself Pearl and HTML nights and weekends by checking out library books, and I got my first job professionally as a programmer in 2000, and then I became essentially a contractor within about two years of that. Then bounced back and forth a few times and then really had my first product success in like ’05-’06 with .NET Invoice. And then I quit the day job and by that I mean, consulting and salaried employment, working for anyone else. I believe it was late 2008, and that was the last time I worked for anyone. I appreciate that question. It’s just not something that I’ve thought about in a while. My next question is about finding a role fit in the SaaS world. It’s from Nick.

Nick:
Hey Rob, Nick here. I’m a co-founder of a hardware startup and we’re trying to sunset it/sell it off and just try to get some value for the hard work we’ve put in over the last three or four years. I’d like to consider moving into the SaaS world. I think it’s really interesting. I’ve been listening to your podcast for a long time. I’m a non-technical co-founder, but I do have some technical chops. I have some coding experience, but I’m certainly not a programmer. I would consider myself a non-technical co-founder, and I am looking at co-founder options in the SaaS world, but I think I might want to consider a smaller team with maybe a little bit of traction as well. I think my question to you is for someone who has a co-founding experience, and I’m sure as you know, when you’re a founder, co-founder, you’re kind of a jack of all trades.
I haven’t really developed a mastery of let’s say sales and BD or marketing or anything like that. And when you’re a co-founder, you have to do a little bit of everything, and that’s perfectly fine. But when you’re a small team, I feel like generally speaking, small teams look for specialized people to come in and take a particular role and really elevate it like a chief revenue officer or a chief marketing officer or something like that. My question to you is how would you view my experience in the context of a small team, and then how can I better position myself to small teams that might be looking for a third, fourth, fifthish member of their team? Thanks for everything you do. I’ve been listening for a while and I just got back from a run, and I often listen to your podcast before I run because it gets me excited, it gets me juiced up for the day, and it helps me run faster. Thanks for all the advice and thanks for helping me run faster occasionally too. All right, take care.

Rob Walling:
Yeah, this is a really interesting question, Nick. I think the way I about it is what do you like doing the most and what are you really good at? And you might be evenly good at a bunch of things. Then I would say, well, what do you like doing the most? Where do you think you could provide the most value? The nice part about knowing you want to get into the SaaS world is that there are only 10 departments in a SaaS company, right? And in a SaaS company of five people, not even departments, but it’s just roles. There’s product who decides what you build and how you build it, at least from an experience perspective. There’s design, there’s engineering, there’s marketing, sales, customer support, customer success, human resources, legal, finance, and I would just combine all those into ops, frankly.
I think for you, if you’re not an engineer, it’s like do you want to manage engineers? Are you good at making product decisions? Are you good at marketing? Everybody needs marketing. If you’re good at that, that’s one thing. Or are you better at sales, customer success or operations, right? I disagree with you that in a four-person company that people are hiring specialists. That usually doesn’t happen until … It depends. You’re hiring engineering specialists, they’re developers who write code, but in marketing, you’re not hiring specialists. And even I heard my first customer success person and they did customer success and sales. There’s a lot of these roles that are combined, and I actually call them out, not to do a callback to my book again, but it’s top of mind because I just wrote it. I talk about the most common combined roles at SaaS companies, and it depends on inbound or outbound leads, but customer success plus salesperson is a role that I hired for.
Customer success plus support is one that I see often. Product manager plus designer, engineer plus product manager, engineer plus designer, and then there’s some marketing combined roles and legal, finance and HR combined into operations. I think that’s what I would be asking myself if I’m going to join as employee number two through 10. I mean, the TinySeed companies, the MicroConf companies, and even when I was two through 10, always wanted people with multiple skill sets. They were like the unicorns that I looked for because I couldn’t afford to hire an individual for each role, and yet all the roles had to get done. I actually think it is an advantage for you. In your shoes, I would look at the two things that I’m most excited about and best at, or maybe three if you want to stretch it.
Like me personally, let’s just say hypothetically I had to go get a job at a startup today. I haven’t thought about this in forever, 15 years or something, but I could do operations. I would just hate it. It’s just not in my wheelhouse of fun. It is in my wheelhouse of capability because I’m Type A enough, but I just hate all the details and just having to take care of everything. I could absolutely run an engineering team. I could run product, I could do both. I could do a mix of product plus engineering. That’s essentially what I did at Drip after the acquisition, and we grew that team up to 20, right around 20 people, I think. I could also be involved with marketing and I could probably run a marketing team. I’m not, especially now, not the best marketer. I would need to get back at it because of the tactics change and these days getting into tactical SEO and tactical paper click advertising.
I just haven’t done that stuff in six or seven years, so I would have to get back to it. But I think the more valuable part anyways, this strategic thinking and the project management aspects, and I could definitely do both of those. Those would be the things I’d be thinking about. But obviously Nick, you’ll want to ask yourself the same questions. Hope that was helpful. My last question of the day is a text question. And man, this is from September, so it’s been a while. That’s the problem. The text questions are getting beat out by the audio and video questions. If you want to submit a question and get it answered soon, go to StartupsForTheRestOfUs.com. Hit the ask a question button at the top of the screen, and then you can record an audio or a video clip there in your browser, even on your mobile.
Or if you just want to record something and send an MP3 or an MP4, you can send in a Dropbox or a Google Drive link to questions@StartupsForTheRestOfUs.com. But Nick at BeeLine Reader asked several months ago, “I have two questions. The first is it possible to have a churn rate that is too low? I’ve heard you talk about what a good churn rate is and how a churn rate can be bad if it’s too high, but I’m wondering if it’s possible to have one that’s so low that it indicates you’re not charging enough. At BeeLine, we’ve never lost a B2B customer, and I wonder if this means we’re being too conservative in our pricing or annual increases.” Yes and no. I think when I first read the subject line of can you have a churn rate too low, I thought, “No, that’s impossible.”
But I do think a churn rate that low indicates that you’re probably not charging enough. Yes, Nick, I do think that’s something I would play around with. I’d probably start not by raising prices on existing customers. Usually when I think of pricing as an experiment, I change it on the pricing page first, make sure it doesn’t break the business, and then if I want to raise it more, then I do that again. Otherwise, I go back and decide am I going to grandfather people or not? There’s Rob’s rule of 15, which is if you’re not going to make at least 15% more MRR by raising prices on existing people, then it’s not worth a headache because people get mad and there’s a bunch of support, and it’s just a lot of effort. But if you’re going to make, honestly, it’s between about 10 and 15% more MRR just by raising prices on existing, then I start to think, “Ah, this is worth it.”
And really at any MRR level, that kind of holds true for me. That’s something I’d be thinking about. Nick’s second question is, “On a recent episode, you had a conversation about founders paying themselves versus plowing money back into the business. Given the disparate tax treatments of W2 wages, dividends, and capital gains,” this is in the US, “especially if it qualifies for qualified small business stock exemption, might be useful to have a conversation about how to weigh different factors related to compensation. I happen to be aware of some of these aspects since I was a tax lawyer in a former life, but I’d love to know what you or others who have gone through the process have found. I know there are also very fruitful ways to use SEP retirement accounts. Any chance you could have a guest on to discuss this topic, both for folks who plan to independently run their business for many years or those who are hoping to sell?”
This is a good question. Obviously, I’m not a tax attorney, can’t give tax advice. The way that most people do it in the US is you put your salary at a reasonable amount that you can defend to the IRS, nd then if you run an LLC, you can then take additional money out as owner’s distributions, withdrawals, dividends, whatever you want to call them. And on those, you save on the payroll taxes. Now, I know in the UK you can make your W2 equivalent wages very, very small. I think you can make them some ridiculous amount, like 10,000 pounds, and then everything above that you don’t pay any payroll tax on. And that just seems like a big loophole. But if it is and everybody’s doing it, then that’s what you do. In terms of plowing money back into the business, for me, I always knew the enterprise value was a multiplier.
It was so much more than any salary that I could take out. If I took a hundred thousand dollars out, my business is doing a million a year, and I could sell that business for $5 million, which is totally reasonable in the SaaS world, especially if you’re growing halfway decent. I knew that every 5,000 MRR was 60,000 in ARR, which times five is 300,000 in net worth. To me, you want a balance. You want to be able to live comfortably, but know that every dollar you pull out, if that negatively impacts growth, you are negatively impacting your outcome. So much more than that. If every thousand dollars you take out means you can’t put a thousand dollars of new MRR in place, that’s a 60 times multiplier. Now, that’s not super reasonable. I don’t know that you could put a thousand dollars into a business and get a thousand MRR, but just think about that 1000 times 12 times five gets you 60,000 in enterprise value.
Even if it’s half that, even if it’s a fifth of that, it’s still for every thousand I pull out in salary, maybe it’s 30,000 of net worth that I’m giving up, or it’s 20,000. It’s some number that’s larger than a thousand dollars. As long as you’re paying your bills and not trying to live on nothing, which I know some entrepreneurs do. I think that’s how I think about it. The other thing, yeah, SEP retirement accounts you mentioned, definitely talk to an attorney. My attorney has moved me from a simple retirement to a SEP retirement. And then at some point to individual 401ks, because those were most advantageous and those, I just don’t know all the details of those. And to your point, I could get someone on here to talk about it. I may do that. In all honesty, I think it would be an unfortunately very boring, I know it’s applicable, but these types of things are just so boring for so many people, and they’re not at that point where it’s like this matters.
I will give it some thought and see if I want to cover something like that. Oh, in addition, I want to tack onto this. Think about this. If you pull a hundred grand out of your company as a salary, you pay income tax on that, right? You’re in whatever, the 25%, the 35% bracket, you pay a lot of money. When you sell that company, as I said, let’s say it’s a million, you can sell it for five million. You pay long-term capital gains on it. Again, this is in the US, assuming you’ve owned it for at least five years, your tax bracket is, it’s 15% or 20%. If you sold it for five million, you pay 20% plus whatever state tax.
It’s way less. In addition, if your stock qualifies for QSBS, if it’s a C corp, you’ve held it more than five years, and there’s a couple other things, you pay no federal income tax on it. Just think about the difference between taking a wage out that, again, taking that thousand dollars out as a salary, and you pay a quarter of that to the government versus 20, 30, 40 times more in net worth, and you pay somewhere between zero and 20% tax to the ISR. It’s an incredible difference. The taxes are more advantageous if you sell the business, and the economics are more advantageous if you later sell the business rather than trying to pull it out as a revenue stream.
I’ve had businesses that are both, I’ve had amazing lifestyle businesses where I was pulling two, $300,000 a year out, actually more than that, and it was great. But the life-changing income that I’ve received has been from selling my own companies and from angel investing in companies like WP Engine and a few others that had these massive returns on my investment or on my time, and the tax advantages were there as well. Thanks for that question, Nick. That was a really good one. Hope it was helpful. Thanks for joining me this week and every week. It’s always great to be on the microphone. If you keep sending in questions, I will keep answering them. This is Rob Walling signing off from episode 655.

Rob Walling:
Welcome back to Startups For the Rest of Us. I’m Rob Walling. Today, you get to hear me have a conversation with Tom Merritt, the host of Daily Tech News Show, Cordkillers, Current Geek, It’s A Thing, Sword and Laser, Know A Little More. He has more podcasts than any five people I know, and this episode is a little different. Tom Merritt is not a SaaS founder. He has not written a book for SaaS founders, but I’m fascinated with people who are able to ship something every day for years, in fact, decades as you’ll hear us get into it. I asked him about his thought process and then the physical process of how he has shipped Daily Tech News Show five days a week for a decade. Talk about grind and discipline to get it out.
He’s a tech pundit, a journalist/pundit, but he’s very balanced and I’ve always admired his ability to summarize complex situations and then talk about both sides of them. He doesn’t get so far out in left field or out in right field like so many pundits do. They do it for the shock value and he doesn’t. So, if you know who Tom Merritt is and you’ve heard him on one of these shows, I’m sure this will be fun for you. If you haven’t and you came here today for some SaaS-focused tactics, this is not your episode and you can obviously feel free to skip this one. But I really enjoy the conversation and I do think that there is a lot to get out of someone like Tom Merritt who has been so successful and shipped so much amazing content into the world.
Before we dive into that, if you’re not subscribed to our YouTube channel, we’re putting out really incredible content every week, at least one video, sometimes two. Recently, Einar Vollse and I did a livestream about the SVB Bank collapse. Then every week, I’m recording something to deal with SaaS. It’s almost like 10 to 15 minute Rob solo adventures, but you get to see my smiling face on the camera, microconf.com/youtube if you want to check that out. With that, let’s dive into my conversation with Tom Merritt. Tom Merritt, it’s an absolute pleasure to have you on Startup For The Rest Of Us.

Tom Merritt:
Hey, Rob. Thanks for having me, man. This is super fun.

Rob Walling:
Yeah, I’m excited to dig into your experience and we are talking offline that you’re maybe not a typical guest for this show, but I think there’s a lot that you bring to the table in your experience that folks can learn from. First question I had for you is part of your career, your early career was at CNET hosting Buzz Out Loud with Molly Wood from like 2004 to 2010 and then you left and went to This Week In Tech, which is actually where I first discovered you on. There was a show that was Tech News Daily, and I actually forget the name of it now.

Tom Merritt:
It was Tech News Today.

Rob Walling:
Tech News Today. That’s right.

Tom Merritt:
Ever since Buzz Out Loud, I tried to name shows as boring as possible. It’s the Microsoft approach to naming.

Rob Walling:
Well, the SEO is great because then when I type into Apple Podcast today, because it’s a Daily Tech New Show is your show today, they showed you.

Tom Merritt:
Right, that’s the current one.

Rob Walling:
It is a daily tech new show, but in 2013 and this is on your Wikipedia page, so it’s not as if I’m exposing anything, but you had moved to LA because your wife started working for YouTube. So, suddenly, you’re remote. On your Wikipedia page, it says that you were let go because Leo, the head of the network, wanted people who were there local. I remember thinking to myself at this time, because I heard about it, “What’s he going to do?” There aren’t that many tech podcast networks in the world. At that point, you made a shift to basically go into business for yourself. You want to talk us through that?

Tom Merritt:
Yeah, I did that for a number of reasons that some were intentional and some were not. On the one hand, I still do a show called Cordkillers with Brian Brushwood, who was taking his own things independent and had been for years, who was encouraging me, gave me a lot of great advice, and helped me along that path. At the same time, I was also planning to start Daily Tech New Show with someone else who was going independent. So, I thought I was not going to be alone, and I did get severance from TWIT. So, I was able to have a little bit of runway. I sat down with my wife and I was like, “Well, I’ve got this much. Why don’t I just try all this stuff on my own and see how it goes?” But mostly, I just wanted to do things my way.
After having been at Tech TV, CNET, and This Week In Tech, I felt like I had gathered enough intelligence and the tools online had gotten good enough that I could make a go of it solo. So, I gave it a gamble. I decided to try it out. My motivation was I want to do my own show and I don’t want to have to mess with anything else. I just want to do my show. Things like Patreon and at the time, I was using Google Hangouts on Air made it easy to do that without having to put a bunch of capital outlay, to hire a bunch of producers or have a studio and all of that.

Rob Walling:
Well, and that’s the thing is 10 years later, you’re still doing it. So, it’s obviously worked out. You were the first person I believe I ever heard who mentioned Patreon. I had never heard of it. It was early. It feels like if you had perhaps left TWIT five years earlier that it would’ve been such a different road. I don’t know how you would’ve asked for donation. It just wouldn’t have worked, right?

Tom Merritt:
Yeah. I had been doing independent podcasts. One of the reasons I left CNET to go to This Week In Tech was because I wanted to do podcasts that were independent. Because CBS owned CNET, they would let you do it, but they made it hard. You had to go get them approved. There were certain ones, they were like, “Well, you can do it, but you can’t make money off of it.” But I was doing some and monetizing them with ads, but it wasn’t a lot. So, I thought, “Well, I could try to make a go of this by boosting the numbers and doing ads.” I was going to take ads on it, but like you say, Patreon had launched just about six, seven months before. It was Brian who said, “Let’s do our show,” which we had been doing on This Week In Tech as well.
He’s like, “Let’s do our own version of it independent. Let’s do it on Patreon.” I had messed around with Patreon and almost applied it to a different show because I do way too many shows. We almost use Patreon when it launched for a show I do called It’s A Thing, but we decided against it. So, when Brian was like, “Let’s try it with Cordkillers,” it worked like gangbusters immediately.
So, even though I launched Daily Tech News Show without a Patreon, with the idea of just building an audience and going advertising, Cordkillers was doing so well with it. By January 23rd, I was like, “Well, you know what? I should launch a Patreon for DTNS and see how well it can do with just Patreon.” Like you said, if I had launched it a year early before Patreon, I probably would’ve been doing an ad only model. You’re right.

Rob Walling:
A couple things on that. In SaaS, people try freemium and it usually doesn’t work. If you’re funded, you have buckets of money, you can do it, but freemium is like, “Well, you can use that up until a certain point.” Certainly, asking for donations wouldn’t work, costs and all this stuff to acquire customers, blah, blah, blah. So, I remember when you were talking about Patreon, it sounded to me like either a freemium model or a donate to help support the show. I remember my heartbreaking and thinking, “Oh, this isn’t going to work,” but how wrong I was, right? I mean, because is it public? If I went on to Patreon, does it show how much you make from DTNS?

Tom Merritt:
Not anymore. It was back then by default. They don’t show it anymore.

Rob Walling:
I remember 10 or 15K a month was the last I remembered. It was years ago. I’m not going to ask how much you make, but that’s the level. You have a very large audience and it’s obviously a broad audience because a lot of folks can listen to it. But you pretty quickly, it seemed like, were making a full-time income. Then you would hit a mark and then you’d bring on a co-host who I assume you were able to pay at that point.

Tom Merritt:
Yeah. In the earliest days of Patreon, they even don’t do this anymore, but they let you set goals to say, “Well, if we get to this amount of money or maybe this amount of patrons, we will do X.” So our first goal was we’ll stay ad free. We won’t go and get ads. Now, years later, I did create an ad supported free feed for people who weren’t patrons to say, “Look, if you don’t want to support Patreon, here’s your option. You can listen to the one with ads.” That exists now too, but in the beginning, it was like, “We’ll just go ad free for everybody.”
So, once we hit that mark, I was like, “Well, if you like this person that I have on, what if I had them on once a week? If we hit this mark, we’ll bring this person on once a week.” So we did that with Veronica Belmont, who I had worked on Buzz Out Loud with, Patrick Beja, a French tech podcaster, Darren Kitchen, if you know Hak5, you know Darren Kitchen, Scott Johnson, and Justin Robert Young. Eventually, within a year, I had set enough goals and met enough goals to bring on one person every day to help me out.

Rob Walling:
Was there ever a sense of doubt or fear? Because a lot of folks who make the leap are like, “Well, I used to get a paycheck and now I don’t.” You’ve mentioned your wife Eileen was very supportive and she has a full-time job, so that makes it little easier.

Tom Merritt:
Which was huge.

Rob Walling:
Yeah, but what was the emotional aspect for the first three, six months?

Tom Merritt:
Well, I think the fear that this was not going to work at any moment, it could all just fall apart, finally left me last year.

Rob Walling:
Really? Whoa.

Tom Merritt:
I’m saying that to be funny, but also it’s true. Those first five years particularly, I constantly hit marks where I’d be sitting at my table preparing for the show, just thinking, “I should probably just go get a job. This is too hard.” But it was so rewarding when I did it and the audience was so supportive that it always turned me around. Those moments became less and less, but I still kept thinking, “Well, I can’t go on forever.” At some point, it’s just going to fizzle out. It really is only in the past couple of years and we’re now in our 10th year where I’m pretty sure that even if it’s fading out now, it’s not fading out fast enough to ignore it and we can be serious about this. It’s a going concern, not just a thing that I’ll do as long as it lasts. It took a long time for me for that to sink in.

Rob Walling:
You mentioned that some days, you would get up and say, “This is just too hard, but you would do it anyways.” What was hard about it? Is it just putting the show together? Is it grind sometimes to find the stories and do it?

Tom Merritt:
Yeah, well, there’s that, right? I have a bigger staff now than I did in those first five years, but I had a producer, Jenny Josephson, for those first five years, who is very experienced in television, not as familiar with the tech world. So, I wasn’t relying on her for content. I was relying on her for production support. That was incredibly helpful, don’t get me wrong, but the vast amount of content preparation was on me. 95% of it was on me. My co-host, of course, brought in part of it, but I wasn’t making them spend all day with me when they were on. They were just coming on for the show.
So, writing and researching and deciding, “Okay, what are the things that are going to keep people interested? What are the things that are important to people?”, and then reading enough about them to make sure I don’t get it wrong. Then running into people who were critical, who were dismissive, who were saying, “Oh, well, you didn’t do this well enough. You screwed this fact up.” A lot of times, those were people where I’m like, “No, you’re misunderstanding,” or “You didn’t hear what I said,” which would frustrate me. Sometimes they were right. I’m like, “Oh, no, I screwed that up. I got that wrong.” So that wears at you because people say something nice to you like, “Your show is great. You’re the best.” People do say that to me. You remember it for 10, 15 minutes. People say, “You screwed this up.”
For me, I remember that all week and it just haunts me. So, it was that pressure that was just grinding on me, the expectation that oh, Tom went and did this crazy thing and it’s going to fail. Whether people were really saying that or not, that was in my head as well. Then there was also one person who hopefully got help that was threatening me and I had to report them to the police. So, I didn’t think that was normal, but that just was another thing that weighed on me. So, yeah, it was just all of that pressure combined and just trying to figure out each day, because it was a daily show, how to make sure we delivered on what I knew the audience liked.

Rob Walling:
That’s a really good point. It wasn’t even something that I thought about coming into this conversation, but your audience must be 10 times mine or 20 times, a lot larger, which means I know that I deal with a lot of compliments and it feels great. To your point, I also deal with people who say, I said the wrong thing. I’m dumb. I’m dumb. I’m an (beep). Whatever it is they say, you could call them haters, but frankly, to your point, there’s a lot of people that aren’t haters and their opinion is actually valid. I’m like, “Huh, I really did drop the ball there,” or “Wow, I misspoke there,” but you have whatever, 10, 20 times that volume might imagine. You talked a little bit about it, but how do you deal with that?
It is relevant to software entrepreneurs because so much of my audience is software developers. The first time they write a blog post, the first time they ship some code, it’s terrifying. Someone’s going to criticize me. I’m at the top of Hacker News and everyone’s ragging on me, or I’m on Product Hunt. Person said it was a crappy product. It’s this fear of criticism or this fear of public failure or whatever it is. You deal with that probably more than most. How have you learned to live with it without getting… Because you don’t strike me as someone who has a shell that’s so hard that it’s just like F everyone, right?

Tom Merritt:
Yeah, no, definitely not.

Rob Walling:
I feel like that’s what some politicians do or CEOs of big companies. Everyone else is wrong. That’s not balanced either, right? So how have you held those two things in tension?

Tom Merritt:
Yeah, it’s tough. I do a lot of things. For the stuff that you know is irrelevant, it’s just like, “You know what? You can get away with not reading the comments in some situations.” I have built a show that’s based on reading everyone’s emails and everyone’s comments. So, I can’t do that as much as maybe somebody who does a movie who’s like, “Yeah, I’m just not going to read my reviews.” There’s a little bit of that. There’s a little bit of just taking solace in the audience that you do have and saying, “Hey, do you also agree that this is there?” That resets expectations. If they do agree, they’ll say it nicer. But the majority of the time, what I’ve done is I engage. Now, there are a few situations where you can’t engage.
In fact, somebody dinged us in an Apple Podcast review this week for covering AI too much and gave us three out of five stars. I have no way to respond to it. So, it’s just sitting there in my brain eating away at me, but I’ll tell you in a second what I’ve done to deal with that. But for the people who email, I often just email back and I give myself time. Sometimes I’ll even write the response and then delete it so that I’m not responding emotionally. I try to recast what they’ve said in the nicest possible terms and then respond as if they said it that way. A lot of the times, I would say three quarters of the time, the person comes back with, “Oh, my gosh. I came off so harsh. What I meant was X,” or “Oh, that’s really helpful to hear. Thank you.” It turns it all around. That helps a lot.
Sometimes they don’t respond at all. Sometimes they still respond angrily. Honestly, that helps me because if I’ve made the effort to be nice and then you still respond angrily, I’m like, “Oh, okay. I can ignore you now. You are unreasonable.” I don’t have to think that what you said at the beginning was reasonable, but I can still learn something from it. I think the final thing I usually do is I try to honestly say, “Is there a way to do something better that will cause someone not to think this?” Because usually, what they’re saying is not what they’re mad at. When they’re saying, “I hated that you called Apple great,” they’re not saying, “I hated that you called Apple great.” They’re saying you don’t cover Android enough.
So, I try to look at okay, but what’s really behind the comment there and try to adjust that. I also do a lot of preventative measures, like going out and doing surveys and asking people, “Well, yo, what do you hate about the show? Get it out now. Just let us know.” That seems to help a little bit. Then in those cases, that Apple Podcast Review, I just said on the show today, I was like, “Hey, I know some people are tired of us covering AI, but it seems to be one of the most important stories right now, so that’s why we’re covering it.”
Maybe that person heard it and now I’ve answered this is why we’re covering it that way, but I usually try to just let myself calm down, maybe even write the angry email to get out of my head, and then say, “Okay, but what can I learn from this?” That helps some. There’s still times when it just gets to you and you just got to let it go.

Rob Walling:
Yeah, that’s a good system you have. It’s just a very mature way of thinking about it, because it’s so easy to say everybody’s wrong and it’s easy to also take offense to it and be too offensive.

Tom Merritt:
Well, yeah. If you just say everybody’s wrong, you don’t learn anything and you just keep getting the same criticism over and over again. But if you learn from it and then they still say the same thing, then at least for me, I’m like, “Oh, but you’re not right anymore because I addressed that already.” Yeah.

Rob Walling:
That’s great. I want to mix up a little bit and ask you about you’re very prolific. You have many podcasts. I listen to most of them, Daily Tech News Show, Cordkillers with Brian Brushwood. You were doing Current Geek with Scott Johnson. I think it’s on hiatus or maybe you won’t come back to it. I know there was a season. It’s A Thing with Molly and Sword and Laser as well, which I just never listened to. I don’t read a lot of fiction. Know A Little More and Let’s Talk About Star Wars. I could keep going. That’s a lot of podcasts, man. I have three podcasts. I have this one that’s shipped every week since 2010. I have one that goes in seasons, and I interview a startup founder over the course of a year every month, and then we make one season. So, it’s like a longitudinal things, but that’s one conversation.
Then there’s a producer and a voiceover and blah, blah, blah. It’s highly produced, but that’s a thing that happens once a year. Then I have one that I just do intros for, where we’re pulling content off our YouTube channel, audio content, but even that and I put a YouTube video at it every week on our channel, that’s a lot. Now I have a day job. These are all part of my day job, but I do run two companies as I’m doing that. But man, it feels like a ton of content. You, sir, put out way more than I just described. I think there are a lot of folks in the audience who want to be able to produce more content or to produce it quickly at a high quality. How do you this?

Tom Merritt:
Well, dude, you just said you run two companies. You threw that away that’s like, “I also just run two companies.” Well, I guess I run the company that’s making my podcast, but that’s all tight. That’s all it does. The key is that I do not have the day job. That helps a lot.

Rob Walling:
So is DTNS… Daily Tech News Show for those who aren’t getting the acronym there. Is DTNS most of your morning? Are you busy from 8:00 or 9:00 in the morning until 2:00 or 2:30 with it and then anything else has to happen after that?

Tom Merritt:
Pretty much. The short version of how Daily Tech News Show gets produced on a day where I’m on the show, I may or may not be in charge of what we call the rundown, which is what’s going to be in the show that day, but it’s basically the same whether I am or not. In the morning, I’m looking through my RSS Reader, I’m looking through Feedly. I’m marking stories that I think will be interesting. We have a shared Feedly account so we can all mark stories for each other. Then I go walk the dog, have my breakfast, that stuff, come back. We’re on a pretty routine schedule that from 9:00 to 10:00 Pacific, we are filling in the rundown.
So, if you’re in charge, you’re the one putting stuff in there saying, “This is going to be the quick hits. These are going to be the discussion stories.” If you’re not in charge, you’re contributing. You’re like, “Oh, I really like this story. Don’t miss this one.” You’ve got a little more latitude there. If I’m not doing the rundown, sometimes I’ll get a jump on a story I know is going to make it and start writing it. Then from 10:00 to 11:00, we’re writing up the intros and the notes and things we want to make sure we cover about those stories.
That gets distributed amongst the people working on the show. 11:00 to 12:00 is just cleaning up, making sure there’s as few typos as necessary as possible, looking if there’s any gaps, checking to see if there’s any late breaking news, whether a bank has had a problem that day that we suddenly have to jump on. Then at 12:00, we have a Discord voice meeting to go over that rundown and be like, “Okay, how much time are we given to this? Is this right? Any last minute adjustments we need to make?”
Then we get a break for lunch, 12:45, we jump on StreamYard, do all the tech checks, make sure everything’s working, and then we go live 1:00. 1:00 to 2:00 is the show. 2:00 to 2:30 is any production notes, any post stuff, things we need to talk about before we’re out of there. That can sometimes end early. Then I’m off to do other stuff. In there, depending on the day and what the load is like, and whether we have a guest who’s producing their own segment, I might have a little time to do some other stuff. I usually have time to do a few things. But yes, Daily Tech New Show is pretty predominant through that part.

Rob Walling:
The interesting thing is obviously, the software entrepreneurs in the audience are like, “Well, I don’t have every day until 2:00 PM to produce a show or a podcast.” But that’s not the takeaway here. The takeaway is, I think, A, you’re very disciplined as you’re talking in 15-minute increments almost, but also, I don’t think you rely on your own discipline. My guess is you have to show up because other people rely on you. If you don’t show up, it’s like having a gym buddy. I don’t want to go to the gym, but if I told I committed to being there every day at 9:00, then I’m going to be there. That’s what I think a lot of folks who do want to put out, let’s say, a podcast for their company or something on the YouTube channel.
The only reason that I ship the show every week still 13 years in, 650 something episodes, not the only reason, but a main reason that I don’t miss a week is because I haven’t missed a week. I haven’t missed a week. I mean, I got super sick one time and I recorded an episode. You hear Ira Glass sometimes with This American life where it’s like, “Ooh, this is rough,” but the show must go on, right? It’s like you have this rhythm. It’s the Jerry Seinfeld exes, right? I write a joke every day. I don’t want to break the chain.

Tom Merritt:
Yeah.

Rob Walling:
Is there a sense of that for you that it’s like, “Well, this is just what I do. I don’t care if I don’t feel like it”?

Tom Merritt:
There’s a group of people that are going to show up live. We stream the show on Twitch. We stream the audio on our Discord. Even though they are not the majority audience, the majority audience listens to it on demand later. They’re there. They’re waiting for us. They’re going to say, “Hey, where did you go?” if you’re not there. So, yeah, in the past, I have done the show from an airport just sitting out at the gate using airport Wi-Fi to stream. I’ve done a show from my car when I was moving and I couldn’t use my studio because everything was being packed up and put in a truck.
So, I just sat in my car in the garage and did the show from there. Thankfully, we’ve gotten to a point where if I need the day off, I can take the day off to the show and people will cover, but we still have a show. That has been one of my greatest stresses is making sure that we deliver because like you say, there’s that expectation of, “Hey, where’s the thing? I’m expecting the thing.” It is a habit.

Rob Walling:
Have you missed a day of Daily Tech News Show? Not you personally. Has there been a day where there was no show since 2013 or 2014, I guess?

Tom Merritt:
I don’t think there’s been a day without a show that wasn’t planned. We take all federal holidays off. That’s my way of not having to have to think too hard about what days are off. So, we’re like, “Yeah, if it’s on the federal holiday list, we take it off.” Then we take Saturdays and Sundays off, but I don’t think we’ve ever had a day we’re like, “Oh, sorry. There was no show.” Shows have been moved a couple of times. The very first show was late because I had to go do my… Not TSA pre, but the what’s the customs one?

Rob Walling:
Oh, the World Card.

Tom Merritt:
Yeah, whatever that one is, the customs thing. I had to go do the interview that day and it had been planned months before. Yeah, so there’s been a couple that have been rescheduled, but we’ve never missed one. We’ve never missed one that we intended to do, put it that way.

Rob Walling:
Yeah, it’s incredible. I want to ask you about this, ability that you have that I think is lost in society today. It’s to see both sides of a story or of a conversation or an argument, and it’s to be moderate. I say that complimentary.

Tom Merritt:
I know it’s a dirty word these days.

Rob Walling:
I’m insulting you, but no, this is the reason that I have listened to you, because I listened to you since the TWIT days. So, what are we talking, 12 years or something in there. It’s because when I hear a story from you, I don’t expect a spin. Even if there are others around it who are really wound up about it and are saying things, my words, not yours. Brian Brushwood is hilarious on Cordkillers, but he just gets spun up about things and he’ll just go off and you bring them down to earth. You’re like, “Well, maybe, but also, here’s the other side of that. Netflix is already paying the providers in France, the internet.” You show the other side of it.
Again, I just don’t hear it from many people and it’s a very informed opinion and calculates not the right word, but it’s very well considered. It’s as if you are like, no, this is the whole story and I’m going to present it. You have opinions of I think they’re screwing this up and long term, it won’t work, but also you’re not this extreme whatever Joe Rogan type thing. It’s not my style. So, how do you do that? Is it natural? Did you have to work on that?

Tom Merritt:
As with most things, a little of both. I think I’ve always been naturally tending to be empathetic. I try not to make that sound like a self-compliment, but always being able to see another person’s point of view and understand, “Oh, this is what they mean by that.” I think that that’s just one of those things I’ve been able to do. I’m also a contrarian. I have definitely been told that by my family that if there’s an opposite side to be taken, I will take it. So, that is part of it too is like, “Oh, if everybody’s thinking this, I’m going to tend to want to be like, ‘Yeah, but what’s the other side?'”
And then you combine that with not wanting someone to be able to write in and say, “You got this wrong” makes me try very hard to really understand because the corrections that I like getting but also try to avoid are I understand why you covered the 5G interference with airlines this way. I’m a pilot though, and let me tell you this is something that most people don’t know that we run into. I love getting those. I value those amazingly, but I do try to be like, “Okay, what is the pilot going to say about this? Can I find that answer before I have to rely on that person?”
You can’t always do that because no one can have all the experiences, but I do have that motivation to try to look a little farther behind what people think are the knee-jerk motivations. Well, they’re doing that because they’re greedy or they’re doing that because that. Human motivations are usually much more complex than that. I’ve been on the inside at CNET where people were accusing us of things and I was like, “No, I’m here. I know we’re not doing those things.” So I also try to go like, “Okay, but what are the people inside of Facebook thinking when they make this decision?” It looks different from the inside than it does from the outside. So, all of those things, I guess if I had to come up with a reason contribute.

Rob Walling:
AI, you’re covering it a lot, which I think is great and not too much for me, by the way.

Tom Merritt:
Three out of five stars.

Rob Walling:
Three out of five stars for you.

Tom Merritt:
There’s too much, too much.

Rob Walling:
I’m so opinionated about your coverage of AI, but the question for me is, are you using it? I record a YouTube video every week about building and growing SaaS companies, and I’m given a title. My team comes up with a title and says, “Can you record a video about this?” I say, yes. Then I think, “How am I going to outline this?” So I go to ChatGPT sometimes, and I’ll just type in outline a YouTube video just to see. I rarely use more than 20, 30% of it because a lot of it is generic internet advice. But I’m curious if in your workflow, anything you’re doing, are you using AI to help generate content research, any of that?

Tom Merritt:
Yeah, I’ve been trying it and I’ve used it for a few things here and there. It’s not good for a lot of the things I do because I am so focused on what we just talked about, trying to make sure that I’ve got all the nuances and bringing in the parts of the story that maybe people aren’t considering. ChatGPT is not good at that because it’s trained on the people who aren’t doing that. On the other hand, we use it on Sword and Laser, science fiction and fantasy book club podcast to create the artwork that goes in the thumbnail. My co-host, Veronica Belmont, uses Midjourney for that. That has been fantastic. It doesn’t always work perfectly. Sometimes it works hilariously, but we usually get something pretty interesting out of it.
I’ve been using it every so often to aid in writing a paragraph or two of something where I’m like, “Man, I just really need this summarized well.” I’ll put what I put in and say, “Shorten this up.” It’s pretty good at that. I still have to tweak it. It’s not ready-made when it comes out, but it helps. It saves a little time. My favorite use of it has been, I have an episode of Know A Little More coming out that is about OpenAI stuff and about transformers. So, I put in the two paragraphs leading up to it, describing how it works. I think it’s particularly about ChatGPT, this segment. Then I had ChatGPT write the next paragraph. It was really good. It nailed that one. It knows itself at least.

Rob Walling:
Any chance you’ve checked out ElevenLabs? It’s audio generative AI.

Tom Merritt:
Yeah, I have.

Rob Walling:
About a month ago, you can train it with your own voice, snippets of your own voice. So, I uploaded snippets of mine and trained it to sound like me. Then I typed out a piece of the intro of this podcast and I cut it in just to see if anybody would notice. I called it out in the episode. The Rob bot itself called out that I am not. Do I sound funny? Because I am Rob bot. Some people noticed, but most people said it sounded like you had a cold or you were using a different microphone. It was different, but it was really close, so you should do it. It’s weird. It’s weird to hear your own voice.

Tom Merritt:
This is where I reveal I’ve been using it this entire time.

Rob Walling:
The whole time. I’ve been using it for a decade, bro.

Tom Merritt:
No. Scott Johnson, one of my fellow podcasters, sent me a clip of myself saying something ridiculous about eating spiders or something in my own voice that he had trained it on. It was my first experience with it. Then I had a friend of mine, Alison Sheridan, did a bunch of the intros and outros of an episode of her podcast using it because she had lost her voice. So, it was super helpful for her. Then like you did, she called it out. Another friend of mine, Andrew Heaton, did an entire episode of his Political Orphanage Podcast written by ChatGPT and read by either ElevenLabs or one of the similar ones. I can’t remember if he used ElevenLabs or not.

Rob Walling:
I cannot imagine doing something long form like that. ChatGPT stuff that’s short or the ElevenLabs clip that was short, I can work with that. The longer it gets, it’s like a copy of a copy type thing where it starts getting off the rails. So, that must have been super interesting to hear. Well, Tom Merritt, it’s been great having you. Folks want to keep up with what you’re up to, Daily Tech News Show, wherever greater podcasts are served, on Patreon as well obviously, and Know A Little More. You have five, six other podcasts, but people can find you. On Twitter, you’re @acedetect.

Tom Merritt:
If you just search Tom Merritt-

Rob Walling:
There you go.

Tom Merritt:
… that crazy username shows up. Yeah.

Rob Walling:
Two R and two T’s. Yup. Thanks again so much for taking the time, Tom.

Tom Merritt:
Yeah, thanks, Rob. Appreciate it.

Rob Walling:
I really appreciate Tom taking time out of his business schedule to come on the show. I’ll admit he’s one of those people that I really admire and I’ve learned a ton from him over the years and it was great to be able to sit down and get some insights from him. If you like this show and are interested in tech news or cutting the chord streaming TV or just learning more about technical topics, his podcast are some of the best out there. Thanks for joining me again this week. This is Rob Walling signing off from episode 654.
Welcome. You’ve made it to the Hidden Track. When I told my 16-year-old that I was going to be interviewing Tom Merritt, he said, “I have to talk to him.” My son and I bond over a lot of Tom’s shows as we’re driving or doing whatever, especially their show, It’s Spoiler in Time, which is where they essentially talk about shows that are on the air. So, they are doing Last of Us and they do the Star Wars shows that come out, Mandalorian. It’s great fun and we’re able to hear other people’s other smart people’s opinions and compare them to our own. So, I let my son come on for a few minutes and just talk to Tom about a few nerdy things, and we’re going to roll that right here. Hope you enjoy it.

Fin:
Mr. Merritt, how do you feel about the obvious joke?

Tom Merritt:
Oh, the obvious joke. You have to push the obvious joke to make the obvious joke work.

Fin:
So in order to give the obvious joke merit, you have to be real stretchy with it.

Tom Merritt:
Like that, good example. Yeah. Yeah. I don’t like the obvious joke if it’s just laid out there flat, but yeah, you can use it to good effect or you can turn it on its head. One of my favorite things is when it sounds like someone’s doing the obvious joke and then at the end, it makes a hard left turn and you’re like, “Oh, that was not where I was expecting it to go.”

Fin:
All your podcasts have a certain quality to them that makes them really cool and fun to listen to.

Tom Merritt:
Oh, thanks. What is that? So I can keep doing it.

Fin:
Panache.

Tom Merritt:
Okay. All right.

Fin:
Maybe not the adjective good that I would’ve gone for. I mean, there is panache, but I think what makes it amazing is all that the work you put in. I mean, considering your success, it’s probably proof that the podcast, there’s no big podcast network, but the idea of podcasts are a meritocracy.

Rob Walling:
Uh-oh, here we go. You’re not going to do this. You’re not going to this the whole time, right? Yeah.

Fin:
No.

Rob Walling:
You’re killing me.

Fin:
Now I want to talk about nerd stuff.

Tom Merritt:
Okay, cool.

Fin:
Okay, so Star Wars.

Tom Merritt:
Yes.

Fin:
What’s your favorite Star Wars thing to come out in the last five years, let’s say?

Tom Merritt:
Last five years.

Fin:
Yeah. So, Clone War season seven was in there. There’s some good stuff.

Tom Merritt:
Bad Batch, Mando, all of that.

Fin:
Andor.

Tom Merritt:
Yeah, see, I think Andor is great, but Brian Brushwood thinks it’s the best. He would immediately just say Andor. I almost want to admit that he’s right, but then I resist that because I don’t want to admit that he is right. But I didn’t have the over the top reaction that he did, but I still really liked it. That first season of Mandalorian was really good too because again, it’s subverted expectations and it gave me that feel of Star Wars and the lived universe. I don’t know if you get Andor without the Mandalorian, so I probably will say season one of Mandalorian, which Andor is indebted to.

Fin:
Yeah, yeah. That makes sense. I’m glad that you mentioned Brian because one of the things we talk about a lot is the interesting dynamic on the podcast. We mostly listen to your Star Wars and Marvel stuff, and Brian is usually like, “I don’t like this.”

Rob Walling:
This is on Spoiler in Time, which is-

Fin:
Yeah, Spoiler in Time.

Rob Walling:
… part of Cordkillers.

Fin:
I need to specify because you have so many.

Rob Walling:
Yeah. There’s other listeners.

Fin:
Yeah, and Bryce tends to like him and you are the cooler head that prevails in those two. It’s an interesting dynamic and I’m wondering how much of that is conscious and how much of that is you guys overplaying. Is it natural or exaggerated, I guess, is my question.

Tom Merritt:
All of it is natural. All of it is real.

Fin:
I wasn’t trying to imply that it was…

Tom Merritt:
Well, this is just the first half of the answer, which is like we don’t sit down beforehand and say, “Okay, you be the negative person.” But we do exaggerate. Brian for sure likes to exaggerate. That’s who he is.

Rob Walling:
He’s a performer.

Tom Merritt:
That’s his personality, and it makes it more interesting to exaggerate as a conversation. But I probably exaggerate the least of them. I used to exaggerate more. I used to pick fights with Brian and get him going, but then people started to wonder if we were getting along and I was like, “Okay, that’s probably a push we get too far. We don’t want people to think we’re mad at each other.” But yeah, I think even in the last year or so, it’s gotten closer to Brian moderating and saying, “Yeah, there’s no bad episode of this series, but there has to be one worst episode,” as a way to say, “Look, I’m not trying to hate on it, but let me explain what I don’t like about it.” So yeah, I’d say there’s like 18% exaggeration in there.

Rob Walling:
That’s a good number.

Fin:
That’s what we were talking about, where it feels very real and natural, but there is also the sense that maybe Brian is a little bombastic.

Tom Merritt:
Yeah, he likes to push buttons and stuff, which is good. It’s fun.

Fin:
Okay. Fact, check me on this, Rob, but you used to run to do Walking Dead on either the film or podcast.

Rob Walling:
They did spoiler years ago. It was on frame rate, I think.

Tom Merritt:
Yeah, back at the frame rate days even. Yeah.

Fin:
Yeah. I don’t know if you’ve discussed this on a podcast, so I’m really sorry if this is redundant information, but as someone who has enjoyed both a lot of Walking Dead and the Last Of Us, how do you think those two compare?

Tom Merritt:
They almost feel and I guess literally they are as if they’re from different decades, different time periods, right? Again, not to repeat the Mando thing, but I think Last Of Us’s appeal owes a lot to Walking Dead. In fact, I wouldn’t be surprised, although I don’t know this if Last of Us the game didn’t owe something to the graphic novels of Walking Dead, because I think Walking Dead was one of the first to say, “Okay, but what if we focus on the problem being the people more now?” The movies did that a little bit.
The Romero movies certainly did that, but Walking Dead very quickly, we said, the zombies are not really a character with agency in our story. It’s going to all be about the people involved. I think The Last of Us ran with that and said, “Well, what if we focus even more on a couple of characters?” I don’t know. I guess The Last of Us is better to me, but only because it learned from our reactions to Walking Dead.

Fin:
It does feel not realistic, but everyone feels almost more grounded. In The Walking Dead, everyone goes off the deep end, and from there, it’s just like, “Wow, all these people suck.” But since The Last of Us is about this connection between Joel and Ellie, it almost feels more personable. I feel like even that applies to the villains because the lady who took over the Fedra place and made it almost worse, Caitlin, Catherine?

Tom Merritt:
Yeah. Yeah. Caitlin I think is right.

Fin:
I feel like she is more sympathetic than the governor, for example.

Tom Merritt:
Oh, for sure. Right.

Fin:
Yeah. But we haven’t seen the finale yet, so please no spoilers. But the evil, the priest teacher, creepy guy in episode eight felt very Walking Dead, because he was unhinged and unsympathetic. That sparked a conversation of what feels different and similar about these two shows. Yeah, I think the human connection is really what makes it interesting.

Tom Merritt:
I think that’s a normal process with new kinds of stories that are in the same vein where the first one to tell it like Night of the Living Dead doesn’t have to be complex because people are like, “Oh, my gosh, I’ve never seen zombies before.” The zombies are new. When we go back and watch it, it looks cookie cutter in some ways because we’re like, “Well, yeah, you don’t have to explain zombies. Zombies aren’t impressive. We’ve seen a million zombies.” That happens in smaller ways too. Whereas The Walking Dead, they had more space. They didn’t have to explain what zombies were anymore, but they had to leave space for you to realize, “Oh, this is about the interactions of the people.”
Last of Us benefits from like, “Oh, yeah, we’re used to that. Of course, it’s always about the people.” So now they have more space to be like, “Okay, we don’t have to explain this is about the people. We don’t have to leave space for that. We can focus in a little more.” But then there’s some characters like creepy guy that it’s like, “Yeah, it’s still a good character type. Maybe we’ll drag that one out anyway.” Yeah, it’s an interesting choice.

Fin:
Yeah. Oh, I’m glad you mentioned The Night of The Living Dead. I do feel like that one does have the barest hints of a more complex thing, because the zombies are definitely the start of the show, but spoilers for a 60-year-old movie, by the way. But at the end, the guy gets shot because they just think he’s a zombie. I think it was a real gut punch moment for me the first time I saw it. I think it was an accident and it’s not due to humans going crazy when civilization falls, but it does have that hint of this guy survived all this just to get shot by the people who should be helping him.

Tom Merritt:
Yeah, those are timeless elements of a story, right?

Fin:
Being really frigging sad.

Tom Merritt:
Yeah, or Old Yeller, no spoilers.

Fin:
Bridge to Terabithia.

Tom Merritt:
Yeah, Romeo and Juliet. I won’t tell you how that one ends.

Fin:
Ooh. I’m sure you’ve answered this somewhere else, but I don’t remember. So, thoughts on The Last Jedi?

Tom Merritt:
The Ryan Johnson one?

Fin:
Yeah, that was The Last Jedi, Ryan Johnson. Yes.

Tom Merritt:
So episode eight.

Rob Walling:
Episode nine. Wait, no, that’s Skywalker. Wait, is that Skywalker?

Tom Merritt:
Well, that’s why I asked. I was like, “Okay, it’s not the last movie. It’s The Last Jedi.”

Fin:
Yes, The Last Jedi.

Tom Merritt:
I like The Last Jedi.

Fin:
Good, thank you. Me too. I only dislike that they didn’t have Abrams and Johnson cooperate more because it did feel a little bit like a tug of war of “Oh, you were taking the story this way. Well, I’m going to take the story this way.” But outside of that, I thought it was a really good story. There are a couple parts here and there, like in any movie, where I’m like, “Eh, that didn’t work for me as much.” But overall, the way they handled the force timing between them, where they’re talking through the force I thought was really cool and really interesting.

Rob Walling:
Well, If you think about four, five, and six, their original trilogy, Luke or Vader and Obiwan could only communicate when they were together. It’s like you can’t just have them together that much, but the story might be better if they were talking and they were able to do that with this Force Time of you have these two arch enemies. So, that when they do finally get together, they can just fight and not have to have this long diatribe of when I met you, I was about [inaudible 00:45:43]. It’s like, “Okay, get on with the fight.” So I feel like Forced Time was a really nice narrative device.

Tom Merritt:
Yeah. Yeah.

Fin:
Okay. Also, just for the record, both of you probably know this, but it is called a dyad. I appreciate Force Time, but I want to make sure we’re all on the same page here as a Star Wars nerd. Oh, a dyad in the fourth.

Rob Walling:
That’s like the technical term for it.

Fin:
D-Y-A-D.

Tom Merritt:
Got it.

Fin:
Yes, definitely, Force Time. Great. I’m glad to hear you say that because my most unpopular movie opinion is that The Last Jedi is really good actually. I wrote a whole essay on it.

Tom Merritt:
I don’t know why people hate on that movie.

Fin:
That’s my litmus test.

Tom Merritt:
There are certainly little things about it you can pick on, but I don’t know why people hate it.

Fin:
Yeah, yeah, yeah, definitely. I feel like it almost gets dragged down by Rise of Skywalker because it sets up so much and the ninth movie.

Tom Merritt:
I knew a lot of people who are already against it even before Rise of Skywalker, who were then undermined, because they’re like, “You’ll see Rise of Skywalker’s going to be better.”

Fin:
Yeah, I hear people nowadays go like, “Oh, they set this up and never paid it off.” I’m like, “That’s not Johnson’s fault. Eight taken in a vacuum is a great movie.”

Tom Merritt:
Yeah, I agree.

Fin:
Cool. I’m glad we agree on that. This is a really fun if brief nerd diatribe.

Tom Merritt:
Yeah, man. Thanks for saying hi. It was good to meet you.

Rob Walling:
The Armageddon beer is there for when things get so bad that there is no hope, it’s when it’s absolute Armageddon. And when that happens, you and I are going to come into this trailer alone, we’re going to open that beer, each going to drink half, then we’re going to drive to the shop, the corporate headquarters, we’re going to turn in our keys and we’re going to walk. If it’s that bad, we’re going to drink the beer. And if it’s not, then we’re going to finish this job.
Welcome back to another episode of Startups With the Rest of Us. I’m Rob Walling, and this week we have a Rob solo adventure, where I’m going to talk through a few topics including a story about an Armageddon beer, how I would think about attacking a competitive market, asking yourself, “What will I do if I succeed?” And maybe more if time allows.
Before we dive into that, I want to let you know that MicroConf U.S. tickets are now sold out. So if you want to come to MicroConf U.S. here in Denver in a few weeks, get on the wait list at microconf.com/americas. I would expect a few additional tickets to become available. Sorry you missed out on tickets, but I hope to see you there.
And also, MicroConf Remote 6.0 starts today. It is solely focused on sales, leveling up your sales game as a SaaS founder. For tickets, head to microconf.com/remote. Even if you missed today’s session, which is about a 90-minute session, recordings will be available for those with tickets. So, microconf.com/remote.
I’m going to tell a story that I’ve told once on another podcast, but I’ve never done it here and I’ve always felt like it should be solidified in this archive.
Good friend of mine, whom I’ve known for decades, is a project manager at a big construction firm. And at the point in time that this story takes place, he was one of the best, if not the best project managers at this massive company.
And so, he was put on what was considered the most difficult job the company ever did. And almost like a movie setup, he was working with a general foreman that he had worked with many times, and this general foreman was retiring after this job. It was his last job. And this job was an absolute bear. I’m not sure I’m going to be able to communicate how difficult it actually was, but essentially it was a three-year job compacted into 12 months, maybe nine months.
So if you think about writing software, and if I told you, “We have a year long software project and we’re going to do it in three months or four months,” you can imagine how hard that would be and how many things would break along the way, across all the axes of things that could break.
So my friend and the general foreman are running this job. They’re planning how they’re not going to lose their minds running it. And the general form says, “Look, this is the hardest job either of us will ever run. It’s probably the hardest job ever run in this state, maybe in the country. But in this state, I’ve never heard of a job that is going to be more of a meat grinder and have more risk and more exposure than this job. It’s going to be so stressful.”
And as they’re talking about this, my friend opens the mini fridge in the trailer and he sees the usual water and soda, and then he sees a bottled beer in the back. And he says, “What are we doing, man? You can’t have alcohol on a job site.” And the general foreman says, “Don’t worry. If anyone drinks that beer, it’s going to be the least of our worries.” And my friend looks at him puzzled and the general foreman says, “Look at the label.” And he looks, and in Sharpie it’s written, “Armageddon beer. Do not drink.”
And the general foreman continues, he says, “The Armageddon beer is there for when things get so bad that there is no hope. It’s when it’s absolute Armageddon. And when that happens, you and I are going to come into this trailer alone, we’re going to open that beer, each going to drink half, then we’re going to drive to the shop, the corporate headquarters, we’re going to turn in our keys and we’re going to walk. If it’s that bad, we’re going to drink the beer. And if it’s not, then we’re going to finish this job.”
So my friend kind of shrugged it off or laughed. It just seems like a preposterous idea, right? Flash forward a few months, they’re in the middle of the job and it’s worse than they thought it would be. Everything’s falling apart. Everything’s hard, working 12 hour, 15 hour days, seven days a week. Just incredible pressure on the crew, hundreds of construction workers, and certainly on the people running, running the job, the project manager and general foreman.
And at a certain point, the project manager’s working on something, the general foreman says, “We have a problem.” Lays out some drawings and said, “All of this cable was mismeasured.” And you might think of cable as something in your house, right? A little wire that runs power to an electrical outlet or a light switch. So if you mismeasure that, you spend 10 bucks, 50 bucks, and you get another piece of wire and you cut it. These are pre-measured cables that are inches thick, two inches, three inches, sometimes four or five inches thick with their insulation. Very difficult to bend. They’re copper. They are just incredibly heavy. You need cranes or forklifts to move a spool of them around. And they’re incredibly expensive.
So he throws this drawing down and my friend looks at it and the color just leaves his face, and the hair stands up on the back of his neck and he says, “This is it. We’re done. This is hundreds and hundreds of thousands of dollars of a mistake that we have to replace.”
And if you don’t know construction, it’s a razor-thin business. So you often bid jobs at 10%, 15% gross margin. Those are bigger jobs. If you get smaller, you can work more margin in. But then, you try to make it up in efficiency or frankly in volume. You’re keeping your crews busy. And if you can even make a 5% net margin on a $6 million job, you’re making $300,000, that’s something. And then, you’re also making a gross margin, which is a big part of a overhead in construction. I won’t go down that rabbit hole. But hundreds of thousands of dollars on even a large job is a tremendous hit, and it can flip you upside down. It can make the job turn into a massive loss.
So my friend, whose face is now white, is just staring slack-jawed at the drawing, trying to figure out what happened, panicking. And the general foreman said, “Should I get the beer?” And it was an instant level set. It was a moment where my friend thought, “This is bad, but it’s not that bad. We don’t need to drink the beer, drive to the corporate headquarters and quit our jobs. We can figure this out.” And I love that. I love that It was a mental reset to go from panic, “The sky is falling, it’s Armageddon,” to, “We can figure this out.”
And so, what they did was they realized, as they actually tried to troubleshoot it without the panic, without the adrenaline going through their veins, that they were mismeasured, but there were some that were supposed to be longer than others. And so, the longest ones, although they were short, they were long enough to be for some of the other runs. And so, what initially appeared to be… I don’t remember the numbers, but let’s say it was $400,000, $500,000 mistake, turned out to be a $200,000 mistake. Still a big deal, but they figured it out.
And throughout that job, I believe there were one or two more times where the general foreman said, “Should I get the beer?” And they finished that job and they actually made buckets of money on it. I don’t actually know how. I don’t know all the details of how they possibly turned it all around based on the stories I’ve heard, but it’s one of those movie-like moments, where the odds are stacked against you and somehow they pulled it out. And then, the general foreman retired.
The reason I’m telling you this story is I imagine in your entrepreneurial journey, as you are building your company or companies, that events happen, things come along that make you feel like, “Well, that’s it. Guess we had a good run.” And I think someone asking if you need the Armageddon beer, whether it’s literally someone asking that, or if you have an object or a human that can level set and reset your mental model to, “Is this actually business ending?” I think that’s a tremendous superpower to have.
I’ve talked on this podcast and elsewhere about how my biggest regrets around building and selling drip was never what I did, but it’s how I felt while I was doing it. Between Russian spammers, sending phishing emails, between most of our IPs, getting blacklisted at different times, between angry customers, entitled customers who had made a mistake flaming us and then me personally on Twitter, to competitors who ripped us off, and on and on, there were all these moments that felt business ending.
And I’ll admit, the reaction I had often was they almost felt life ending in a way. But every time, after the adrenaline finished coursing through my veins, I would circle up the team and say, “How are we going to fix this?” And we did every time.
Obviously, I’m not saying there are never business ending events and nothing can be so bad. But if you’re like me, I felt a lot of speed bumps that I turned into roadblocks in my mind and I beared a mental burden that was detrimental to my mental health. And honestly, I don’t think it was anyone’s fault on my own.
And actually, after selling Drip, I vowed to never return to that mental state again, no matter how hard it got. And in fact, I haven’t. Even though today with MicroConf and TinySeed, I deal with larger sums of money, I deal with, I say it’s vicarious, but more intense situations through the founders that I’m invested in, and frankly, there are things that are happening and have happened that should be much more stressful than they were back in the day, I’m a different person now because I asked myself, “Is it time to get the beer?”
So I think if you’re a person who feels these things deeply and maybe feels like you’re constantly stressed about little or big things, having a symbolic Armageddon beer, whether it’s an object that you realize, “If it ever hits the fan, I’m cracking that open and I am consuming this sparkly water, this beer, this can of soda.” Or if it’s a human who asks you, “Should I get the beer?” Some other phrase that level sets what you’re actually going through and compares it to a business ending event, because usually those two will not be the same.
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My second topic I want to talk about is about developing taste. I was thinking about this the other day and about how when you first start consuming media, let’s say films or songs or music of any kind, really, it’s almost like you don’t have anything to compare it to.
I remember when my oldest son, who’s now 16, he was eight or nine, and we started watching movies together, a lot of movies, like the early Star Wars films, Back to the Future, Goonies, E.T., even Blade Runner as he got older. And then, of course, The Thing, 1982, as he got older. Just all the classic ’80s films that you should kind of have in your repertoire. And when I first showed him these films, he didn’t have anything to compare it to. He didn’t know how good Star Wars was compared to other science fantasy. I remember he read Lord of the Rings when he was little, and he said, “I want more books like that.” And I said, “Well, that’s one of the best. It may not be the best, but it’s certainly going to be hard to find another book that good.”
And it’s a trip when you’ve only read one thing or you’ve only seen one movie, you don’t have taste. I’m not trying to be snooty about taste, of like, “Oh, I have refined taste.” I just mean a reference for comparison to know what’s good and even to have a strong opinion about things for yourself. That’s what I mean by taste.
And to carry this into what we deal with every day, I remember as a developer writing software early on, and I had no taste as to what good code was. I didn’t know the difference between hacky spaghetti code that I had written since I was eight years old when I learned to code and really well-structured, these days, well-tested, unit-tested, amazingly easy to read and easy to edit without regression code. I didn’t know the difference. And over the years of coding, you start to learn those lessons.
Same thing with design. I was a software developer for several years and did not develop a design taste because I didn’t read books about design. I didn’t expose myself to a lot of design. And I would run into people who would say, “Oh, that font…” Derek Reimer’s this guy, “The font kerning is off.” I’m like, “What are you talking… I don’t even know what font that is.” I can’t name a font by seeing it. I don’t have that taste. I still don’t. And folks like Derek, folks like Tracy Osborne, who we’ve heard on this show, many others who have just impeccable design taste, and it’s because they’ve exposed themselves to a lot of things, they pay attention to the details.
And look, do I have taste in other areas? Absolutely. And by taste, again, I mean opinions. I care strongly about how audio sounds in a podcast. There’s a reason when I record these, even though they’re on video, I have this mic two inches from my face, because when I move it down six inches, I hear the difference and it bugs the (censored) out of me. And that is having taste.
There’s a famous clip of Ira Glass, who has run This American Life, which is usually the number one radio show and number one podcast in the country, and has been for decades.
Ira Glass:
“Nobody tells people who are beginners. And I really wish somebody had told this to me, is that all of us who do creative work, we get into it, and we get into it because we have good taste. But it’s like there’s a gap. That for the first couple years that you’re making stuff, what you’re making isn’t so good. It’s not that great. It’s trying to be good. It has ambition to be good, but it’s not quite that good. But your taste, the thing that got you into the game, your taste is still killer and your taste is good enough that you can tell that what you’re making is kind of a disappointment to you. You know what I mean?
A lot of people never get past that phase. A lot of people, at that point, they quit. And the thing I would just say to you with all my heart is that most, everybody I know who does interesting, creative work, they went through a phase of years where they had really good taste, they could tell what they were making wasn’t as good as they wanted it to be, they knew it fell short, it didn’t have this special thing that we wanted it to have. And the thing I would say to you is everybody goes through that. And for you to go through it, if you’re going through it right now, if you’re just getting out of that phase, you got to know it’s totally normal.
And the most important possible thing you could do is do a lot of work, do a huge volume of work, put yourself on a deadline, so that every week or every month you know you’re going to finish one story. Because it’s only by actually going through a volume of work that you’re actually going to catch up and close that gap, and the work you’re making will be as good as your ambitions.
In my case, I took longer to figure out how to do this than anybody I’ve ever met. It takes a while. It’s going to take you a while. It’s normal to take a while, and you just have to (censored) fight your way through that.
Rob Walling:
He’s basically talking about when you start creating anything, and in this case, let’s stick to audio content, but visual, being a musician, singing, all of these things, when you start creating anything, usually, you’ve listened or looked and developed a taste and an opinion of what you like and don’t like. And the quality of things that you make at that early stage do not compare to your taste.
I used to be so frustrated when I was in bands. I was in a couple different bands. We would write songs. The songs were good, they were catchy. We’d go to record them, and no matter how hard I tried, my vocals were never up to my taste. They were never up to the standard that I wanted them to sound like. And even now, listening back, I did vocal lessons, I practiced, I did all the things that you would need to get better, and yet they were never at the level that I wanted them to be.
And then, there are other things, like building companies or writing, the written word, writing blog posts, writing books, recording audio, all of those things, I remember when I started doing each of them. And I remember I didn’t know how to build a great business, I didn’t know how to write a great blog post, I didn’t know how to write a good book, and I wasn’t capable of creating good audio content. If you go back to the first 10, 20, 30 episodes of this show, it’s terrible, and that’s okay, because our audience was small and we were learning how to do it. And then, over the years, my abilities have caught up with my taste, both in my writing, although that still takes me longer than I would like, and in building and growing companies.
And so, almost like a fractal, whether you’re looking at a very tiny thing, like writing this function or this method in code, or whether designing this single image, or whether designing this webpage, or whether designing this company or this movement, in any of these things, if you want to develop taste, you need to expose yourself to a lot of that thing.
And I’ll go back again and say I have some design sense, but I would not consider my taste super refined in terms of visual design. I can have opinions on it, but they’re not at the level that someone like Tracy Osborne or Derek Reimer are. So you don’t have to do this with everything, but choose what you want to get better at. Choose what you want to have more opinions about, and expose yourself to that. And then, you have to go do it if you want to get better at it. So choosing what you want taste in and then choosing what you want to get better at is a matter of exposure and repetition.
And it’s also a matter of listening to those who maybe have gone before you, right? Because unlike developing a taste for coffee or wine, you don’t need to do it all yourself. You can be exposed vicariously to growing companies through a podcast like this, or a community like MicroConf or Indie Hackers or the Dynamite Circle. It’s not exactly the same, but it is an interesting proxy. And given that you may only start a few companies in your entire lifetime, being able to read books, listen to podcasts, and hear from other founders who are doing it can help you develop that taste and maybe even get a little better at it too.
For my last topic of the day, I want to talk about this question. The question is, “What if I succeed?” It’s a question I think all of us should be asking ourselves. Whether you are just starting out, you’re working a day job and you want to launch a side hustle, or you want to launch a business that can get to 10K MRR and support you.
I think we can sit and dream about things without thinking about the realities of them. Sitting down and asking yourself, “What if I succeed?” And then thinking or writing can be a way to prepare yourself for how things might actually be, instead of having this arrival fallacy, right? The arrival fallacy is where you say, “Once I get to that point with a side income of 2K a month, then I will have arrived and I’ll be happy.” “Once I can quit my day job and work for myself, then I’ll be happy.”
Or for those of you who have six figure, seven figure, multimillion dollar businesses, what is your end game? Is it growing the business and taking off huge amounts of profit? Well, what if you succeed? Is it selling for $20 million? $30 million? What if you succeed? What are you going to do then?
I have asked myself this very question about things that I’m working on. “What if I succeed with what I’m trying to do with this podcast, the YouTube channel, MicroConf, TinySeed? What does that look like and what does it mean for me? And what then?”
I think so many of us get caught up in the day-to-day, and we can get caught up in the anxiety of things that are exploding. We can get caught up in the grind and really lose focus on long-term goals and also be unhappy. And if you’re unhappy today, while you’re growing your company, odds are decent, you’re going to sell that company and you’re going to be unhappy then too. It’s easy to blame unhappiness on external factors. Usually, unhappiness, I won’t say comes from within, but it often has to do with your state of mind and how you are thinking about things, rather than being solely blamable on external factors.
So this exercise of, “What if I succeed?” I think helps you avoid this arrival fallacy, because I’ve known many people who get there, who get to 10K a month, who get to 100K a month, who get to a $10, $20 million exit and don’t know what to do next, and are shocked that they’re not happy forever. Don’t be shocked. We all go through it.
Asking yourself, “What if I succeed? It’s not just what are my goals, but how will I feel? What’s the next step after that?” Because as entrepreneurs, we are always pushing and looking to that next step. So don’t kid yourself, that you’re going to get somewhere and retire, stop working forever.
I’ve had three times in my professional career where I have effectively taken six to 12 months mostly off. And one time I was working 20 hours a week, it was right after I switched to full-time product work, and this is almost 15 years ago now, and I took about six or eight months and I worked 15, 20 hours a week. Before that, I was working 40 hours a week consulting, and then 15, 20 hours a week on my side hustle. So I went from 55, 60 hour weeks down to 15, 20. It felt like I wasn’t working at all, and it was amazing. And then, I got bored.
Second time I did it was when our second son, who is now 12, almost 13, was born. I took about eight or 10 months off. And that time I worked like eight hours a week, very minimal work. I was truly trying to achieve the four-hour work week because I thought that was what I wanted. I thought that would make me happy forever, and I got so bored.
And then, the last time I didn’t kid myself at all, that I was somehow going to be happy not doing anything. That was after selling and then leaving Drip in 2018, and I vowed to take about six months off. It was super rejuvenating and regenerating for me, because I didn’t kid myself into thinking that I was going to retire, because I’d been through it twice before and I knew that I would do something next, but I knew that that next thing that I did would be exactly what I wanted to do, nothing more, nothing less. Because I no longer had anything to prove to myself and I no longer wanted to work on things that didn’t make me happy almost every day.
So if you’ve never sat down and asked yourself, “What if I succeed with this?” I think it’s a good exercise to have, to take some notes, think about how you’re going to get there, to think about what it will look like when you get there, think about what you’ll do after, and to think about if along the way you might need that Armageddon beer.
Thanks so much for joining me this week and every week. This is Rob Walling signing off from episode 653.

Rob Walling:

Welcome back to another episode of Startups For the Rest of Us, I’m Rob Walling, and this is the podcast where we talk about topics related to building, launching, and growing successful software products with an emphasis on SaaS and an emphasis on bootstrapping or mostly bootstrapping your company. Talk about doing it in a capital efficient way that allows you to have a sane life as you change your life and those around you. Today I answer listener questions with Derrick Reimer. He is a fan favorite. We answer questions like, should I mix no code with code? If I’m a developer and I need to develop one superpower to be a successful SaaS founder, what should I develop and should I take a $5,000 angel check? Plus we have two or three other listener questions. It’s a great episode today. I hope you enjoy it.

But before we dive into that, MicroConf in Denver in just about a month is now sold out. I had mentioned a few times on the show that we had, I don’t know, 25, 30 tickets left and they’ve been selling really strong. So MicroConf is sold out. But if you would like to attend, go to microconf.com/americas and get on the wait list.

I would expect a few tickets to become available in the coming weeks. In addition, MicroConf Remote is next week. That’s where we teach founders how to up their sales game, diving into cold email and doing demos, and just getting better in general as a founder at sales. That’s at microconf.com/remote. And with that, let’s dive into my conversation with Derek.

Derrick Reimer back for more punishment, huh?

Derrick Reimer:

Back for more. I’m ready.

Rob Walling:

We have some good listener questions that are in your wheelhouse today. I’m excited to have you back on the show. First question is from Paul Maxwell and the subject line is most important superpower for developers to learn? Paul asks, “What is the most important superpower for developers to cultivate when making the transition to SaaS entrepreneur?” I’ll let you answer first.

Derrick Reimer:

I like this question. It’s a tough one because there are quite a few superpowers that are nice to have as you’re building. I would say one could be developing design shops so that you can take something from both backend implementation to a nicely polished UI using something like the Refactoring UI book from the Tailwind team is a really great resource for that.

But I think my favorite superpower that I landed on is building up your shipping muscle. So I think what that means is developing a keen sense for when it’s okay to cut corners on something and the areas where you shouldn’t cut corners and where you should really go the extra mile and just really figuring out how to be okay with relentlessly cutting scope in the name of shipping things fast.

I think a lot of us founder developers, we tend to be perfectionists at our craft and we enjoy making really high quality software and that’s a great, but when you’re trying to get something off the ground fast, you have to be willing to compromise on some of your perfectionism. And for me, that has been a career long journey, I think, that I’ve been trying to hone over time. I wrote a blog post kind of about this recently called Ship Small, Ship Fast about how the SavvyCal team tries to embody this by shipping small pieces to production as we go and really aggressively trying to get things in place so that when we get a sense for this might be actually ready to ship to customers, we can sort of stop there and not keep going on what we maybe originally thought we had to do.

Rob Walling:

And I remember back in the Drip days when we were building automations into what was basically a ESP lite. Just a very light ESP that could send some emails and do some stuff, but we didn’t have any of the marketing automations. We didn’t spend five months and then drop 10,000 lines of code into production. We called it the rules engine, but it was an automation engine. I believe that you wrote the background and it was like whether it was a state machine or it was a bunch of classes, no UI, and you pushed all that to production one week.

And it didn’t do anything. You couldn’t do it. And then the next week it was a screen where you could make a rule and there was one trigger and there were four actions and I think the trigger was, you may remember, but I thought it was like click a link. It might have been the first one we implemented and then our actions were like add a tag and send someone an email and subscribe them or unsub, like there were five different actions. That was it. And then the next week there were more triggers and there were more actions.

And over those months and we actually saw the graphs changing. The retention graphs were going up, the trials paid was going up during that time. I feel like that’s another great example of ship often, ship fast.

As I was coming up, I started writing software professionally 22 years ago now. It was all waterfall development, man. And we would spec things out. I was a consultant and contractor and we’d spec it out and you would ship 20,000 lines of code to production and it was a mess. It was terrible. And that’s still done today. I want to be clear, there are a lot, if you work at a bank today, if you work at a credit card company, if you work at an insurance company, if you work at a Fortune 1000, you probably drop big quantities of code months and months and then you drop it into production.

And if you’re going to be a solo SaaS founder or whether you’re solo or not, early stage SaaS founder, you have to ship way, way faster than that. And not even full features, but fully tested code that cuts your risk down in essence of an introducing bugs and also feature velocity. That’s one of our biggest advantages as early stage bootstrappers is that we are faster, we’re more nimble, and we’re faster than larger incumbents. And so if you’re not going to weigh into that big advantage, I think you’re making a mistake.

Derrick Reimer:

Yeah, I mean workflow automations is a good example of this where or our initial rules engine where we know that people want to accomplish tasks in response to certain events happening. So we know that that’s an area of interest and we can start to make first steps into that. And by shipping the first useful parts as early as possible, the concern might be that people are going to think this is an incomplete feature and doesn’t do all that they want it to do. But that’s actually a good thing if people are emailing you saying, “I can’t believe your first version doesn’t do this, this, and this,” then there’s visceral pain around that next thing and you can incorporate that into your planning and maybe that kicks it up in priority if enough people are screaming about it not being able to do something. The worst is when you’re sitting in the dark building and you’re not hearing that feedback loop from customers or you spend eight months building something and you ship it and it’s crickets, that’s major risk too.

Rob Walling:

I fully agree with your take and I also have something that I noodled on. I have four superpowers you should develop, but he really did ask for a singular superpower and so I want to lean in. For me it is learning how to market. Well, it’s market or sell, it depends. So if you’re going to be lower price point, more self-service, then learn how to market and I’ll go into just some basics of that in a second. If you’re going to sell to banks, insurance companies, $500, 10,000 a month, you need to learn how to sell. And if you don’t know how to sell, then don’t go into that space unless you have a co-founder who could do it or unless you want to learn how to do it.

The reason I say marketing is that’s kind of more my expertise, right, than selling, and I don’t just mean learn how to run ads and do SEO and tactical stuff. That’s cool. These are good skills to learn. I mean, learn how to write marketing copy. Because I don’t think, if I were to say as a founder, what are your skillsets? What are your superpowers? My guess is you would say design, shipping code, building features, UX, you have all these things. I don’t think you’d put marketing as like, and maybe even in a top four or five, and yet you write really good copy and yet you design really good marketing websites and yet how to relate to customers, you know your ICP, your ideal customer profile. You know a lot more about marketing than I think most people realize. You build great products but they don’t sell themselves. You either hire the help to help you market them or you’ve marketed them yourself.

And so I think learning how to write copy, how to think about marketing and what it is, because I remember as just as a straight developer 15, 20 years ago, you just don’t know anything. You forget how much we actually do know these days because we’ve been there and done it. And I think again, learning copywriting, learning even what the marketing tactics are, learning kind of what are the top five B2B SaaS marketing approaches. I say them on this podcast all the time and what are the next five or ten that most people use?

You don’t have to implement all these, but even if you build a step, step one business, let’s say you build a Heroku add-on or Shopify add-on, do you need to drive a bunch of traffic to that? No, because you’re in the app store. Your channel is basically you need to learn how to SEO, how to do search engine optimization for the Shopify or Heroku app store so that you rank, but you do need to learn how to write copy. You need to learn how to present features and benefits in the way that makes it attractive.

There’s so much more to marketing than just driving traffic somewhere. I think that’s such a big message of all my books frankly, but my first book especially, Start Small, Stay Small, really was trying to drive home, look, I know you’re developer, I know you can write code. You need to start thinking about this a little bit differently. There’s a mindset shift that has to happen.

Derrick Reimer:

Yeah, I would totally agree with that. I mean, I think classically the most challenging thing for developers is breaking out of the assumption that the hardest part is writing the code. That truly the easiest part is writing the code if you’re a code craftsperson. That’s the fun stuff, you know how to do that. But yeah, like you said, learning enough to be dangerous in those other areas until you get to the point where you can start delegating that stuff. But even then it’s important that you have some level of expertise coming from the top as the founder.

Rob Walling:

That’s right. And enough to be dangerous is a really good way to put it. Because I remember Patrick Mackenzie one time tweeting, “A developer who knows how to market is just an incredible combination because there are so few of them.” And frankly, I know about marketing, I’m not the best marketer, I’m good, I’m not great. I would say you’re a good marketer. You’re not at the level of some of the other people we’ve worked with and Patrick Mackenzie similarly I’m sure would self-admittedly say, “Yeah, I know marketing, but I’m not the best one out there.”

I remember after we got acquired and we were working with Leadpages’ team, I remember, I don’t know if I told you or just my inner monologue, I was like, “Whoa, these folks know what they’re doing. I always thought I knew what that was doing. They actually know what they’re doing.” They were better copywriters, they were better strap marketing strategists. They had a bigger team and could do all the stuff, but their design was better than, I mean just their taste, just everything about what they did. I realized that I am an amateur, which is fine because we got where needed to go with it. That’s the thing, you don’t have to be great at it if you’re a developer.

Derrick Reimer:

You can hope to get to the place where you fire yourself from that role, but you have to get there first. You have to get, assuming you’re bootstrapping, you need to get enough revenue in the door to where you can hire that person to really be better than you at it. And that’s what you need to focus on first is getting to that first level where you can start peeling these things off and hiring the experts.

Rob Walling:

So thanks for the question Paul. I hope that was helpful. Our next question is a voicemail from Raphael.

Raphael:

Hi Rob. This is Raphael from Germany. I run a wedding website that’s pretty similar to what Tracy had with WeddingLovely. Our company’s called Hot [inaudible 00:11:50] and I know your thoughts about Boots driving a marketplace and I couldn’t agree more, but I’ve been doing it for such a long time. We are pretty far along, so I’m sure that we can make it work.

Our problem is that we are profitable but not yet so profitable that we can hire a lot of full-time developers. We have full-time junior developer and then a senior developer who’s freelancing for us and we have so many things that we want to build, but we don’t have the money for it. So my question is, does it make sense if you already have an existing code base? We are written in mostly in Node.js and Angular. Does it make sense to combine this with no code or low code for new products or new features, especially if it’s not a standalone product, but it’s actually it needs to be somewhat integrated in the existing system. Would this make sense or would this just increase complexity and just be something that’s extra that would have to be rewritten at a later point anyways? So yeah, would love to hear your thoughts on this and thank you so much for your podcast. It’s been a pleasure to listen to it for the last couple of years.

Rob Walling:

I really like this question because it’s one I’ve never thought of. I’ve done a lot of talking about no code lately on the podcast, on the MicroConf YouTube channel, but this is such a cool question to think about. There’s pros and cons to it, but I think it’s something that will become more and more common. I think more people will think about this avenue of this hybrid mix. What are your thoughts?

Derrick Reimer:

Yeah, I mean think ultimately the beauty of this is that your customers don’t care what tools your product is built in, which has always been true but continues to be true as you think about incorporating more platforms that take care of larger parts of your application. As I think about what no code tools I’ve historically used, I mean they wouldn’t call themselves no code tools, but as an example, we never send our own emails. We use Postmark. I don’t write my own content management system, I use Ghost for people to publish articles onto our blog and I use Help Scout knowledge bases, that’s a separate website. And so for a long time I think a lot of us have been using third parties as part of our product experience, but we’ve been saying that’s either not core to it or not something that we want to build bespoke, so we’re going to pull something off the shelf.

And so I think as we ponder using more and more platforms like that as part of our actual core product, I don’t think I have a particular bias against that. I think it’s a smart move if it kind of rationally makes sense. I’m a little more cautious about taking core parts of my application and shelling them out to a no code platform. I think because there’s always going to be platform risk and I’m okay accepting platform risk with my customer support system. If something were to go wrong and Help Scout were to shut down, it’d be a bummer, but we would just switch and SavvyCal customers wouldn’t be affected. But if I had subbed out all of my calendar communications stuff to a different company and then they got acquired and shut down, then that’s existential risk to my product. So I think the big thing to consider is platform risk.

Is it a stable company that you trust? Do you have reason to believe that they’re going to be around for a while? And there’s always going to be risk with anything, so you’re not going to have zero risk, but I think you want to do your diligence to feel really confident in that.

The other big factor is the implementation cost. I’ve explored a couple tools lately. I’ve been reworking some of our onboarding flows in the app and I’ve had some contact with companies that provide sort of a no code implementation for in-app onboarding flows. And I did some close vetting of those because on the one hand it might save me a lot of work, but I determined in that case it was going to be just as much work to wire it up and then I was sacrificing flexibility and so I kind of looked at implementation cost versus what I’m giving up and it just didn’t work out. So I think that’s another key thing to look at.

Rob Walling:

And what’s interesting is when it’s no code like that, like AppCues is an example of a onboarding, no code tool I guess we could call it. When they get niche like that, they get really expensive. And it’s almost like the cheaper no code stuff is the Bubbles, the Airtables, the Softers, we use those at MicroConf and at TinySeed and they’re generalist platforms and they’re massive in terms of their reach and so they can price themselves cheap. Maybe it’s because they’ve raised a bunch of venture or maybe they are actually breaking even making money, whatever with that. But the further you further niche you get there, some of these AppCues and those other ones, the prices are crazy. So it wouldn’t just be your implementation hours of doing it, the effort, but it would also be expensive. So that’s an interesting one.

Something I want to double down on that you said was for core pieces of my application, and I would agree with that. If it is a core piece of a SaaS application or a core piece of software, I would have a real tough time with that. But there’s so much that’s not core, so much auxiliary stuff and so much that’s experimental.

Imagine Raphael has a wedding website he needs to put up, who wants to try a new directory of vendors and do you code all that up or do you just build, I mean you could build that so fast, right? It’s like the prototypical example of no code on Airtable is building a directory. And so in that instance, would I consider building it in no code or having someone? Absolutely, because if it works, either you leave it or later you’re at it, write it out in code, you pay someone to build it. I mean, we’re doing some stuff with MicroConf now that is going to be customer facing so to speak, is MicroConf attendee and community facing that you can’t tell is no code. And as long as it scales and we don’t have massive scale, it’s not like we need 10,000 simultaneous users. As long as it scales. I don’t think we’ll ever rewrite it, but we’re not a SaaS application and you are coming from that.

Another good example, dude, remember when we had a list of applications that integrated with us, like an applications directory, but it was just a flat page and then post-acquisition, we had time and we had a resource who basically turned that into a searchable directory with all types of information. It wasn’t a core piece of the product, but it was a nice marketing asset. So when we approached people to integrate, we said, we can send an email, we do a blog post, we do a tweet, and you go into our application directory. That’s such a cool use of no code, probably never need to rewrite that.

I have a tough time imagining a feature of a SaaS application that I would build in no code. Maybe someone can think of an example, but if boy, if I have a code base I would have a tough time. Maybe in embed, yeah, I imagine in embed, you can go to SignWell, electronic signature and they have an API and they have embeds that you could embed in your app so that people could sign stuff in your app and it’s white labeled. You could say that’s a no code integration and I would be fine with that type of thing, but I think an actual, as you said, more of a core feature that a lot of people are going to use, I’d have a much tougher time with it.

Derrick Reimer:

Yeah, so much depends on what the nature is of the service you’re providing. I’ll use my own product. If scheduling is a piece of your experience, you probably don’t want to build your own scheduling infrastructure. Unless you are building a scheduling tool where that is, that’s the part that differentiates you. I guess. The definition of what’s core and what’s not is kind of difficult I guess.

Rob Walling:

Little bit of founder gut there where it’s like I’m not sure. I think overall though, my answer to his question is in general I’m pretty bullish on no code. It does a lot today and it’s doing more it seems like every month and the amount of stuff we’ve now built internal to TinySeed and MicroConf is pretty surprising. And aside from some of the pros and cons, which I talked through these what, six episodes ago with Tara Reed of Apps Without Code and we talked through the pros and cons. And so if the cons that we mentioned there are not huge deal breakers, then I think it’s certainly something you could toy with. So thanks for the question, Raphael. I hope that was helpful. Our next question is a video voicemail from Drew Clements.

Drew Clements:

Hey Rob. Drew here. I’m new to the Startups Podcast and to the community as a whole. It’s been incredibly informational and incredibly helpful. For someone like me, I’m a developer with a small startup. I have a handful of alpha testers. The feedback has been really good so far. I think we have a lot of good stuff on the roadmap for features and for growth in the future.

My question is, I have someone interested in angel seeding $5,000 into the project, but I’m not sure if now is the right time to take that. I think I could definitely find ways to spend it on marketing and ads and stuff like that. My hesitation though is that I know the market that I’m after doesn’t necessarily respond well to traditional marketing tactics. So I feel like Google ads and stuff like that may just be spending money for the sake of spending money. But at the same time, it’s significant enough that I don’t want to just say no if there’s other ways it could be used. So I’m the sole developer on the project. I wouldn’t really want to outsource or bring on any contractors this early, especially if that’s the only amount that’s being seeded. So yeah, I’m just looking for feedback. Small project, handful of alpha testers, great feedback. I think there’s a lot of room for growth. Yeah, I’m just not sure if that’s the right step just yet. Thanks for answering.

Rob Walling:

5K angel investment. It’s unusual. What do you think about this?

Derrick Reimer:

Yeah, I mean I think my answer depends ultimately on the nature of the investment, what are the terms and what comes with the money? My gut is saying if it’s just purely monetary, if it’s a friend who’s trying to be helpful and wants to give you 5K to help you get your thing off the ground but is not necessarily coming with mentorship or connections or people in the other people in the industry or the other things that come with smart money, then I would say 5K, it’s not nothing but it’s not going to go super far and I don’t know if giving up a piece of equity in your company at this early of a stage for that small amount of money is really worth it.

My recommendation would be to be scrappy. This is the time to be scrappy and hustle and use your time and your effort more than money to try to get some initial traction and then seek some smart money if that’s something you want. That’s what TinySeed is, right, it’s when you have a little bit of traction, you apply to the accelerator, you get some money, but the bigger benefit is the connections and the mentorship and the network and that’s really what makes it attractive to bootstrappers who are trying to be ambitious but don’t want to go on the venture capital track. So that didn’t mean for this to be a TinySeed ad, I am a member of TinySeed and that’s the reason why I joined. So I think yeah, that’s probably how I would think about taking investment.

Rob Walling:

I think I agree with you. I think that if you don’t need the money, because Drew said, “I kind of don’t know where I would spend it,” and if you’re in that position where 5K doesn’t make a huge difference because for some people it would. If I was starting a company when I was 20 years old or just out of college, 5K, actually it was a big deal. I just didn’t have any money. And so if you’re in that position, the 5K really will help you and the terms are not terrible then yeah, take it. But it doesn’t sound like Drew’s in that position and I think I echo what you’re saying where I probably wouldn’t take it at this point. It’s almost not enough money. Because think about this, you have to have a lawyer look at a safe or a convertible note or whatever you take it and so by the time you find a lawyer and pay them, I mean what is that a thousand dollars, 1500?

It’s just when TinySeed founders come and talk about, “Hey, I want to raise some follow on funding.” We say, “Cool, here’s our advice.” And pretty much the blanket advice I give is it’s almost not worth doing if you’re not going to raise I’d say a hundred grand maybe for 75, you know what I mean? Because it’s time consuming, it’s distraction. It is legal fees. Depending on how you structure it can be more or less expensive. Certainly I would only do a safer convertible note at a round that’s that small. So I think we’re on the same page. Unless there’s extenuating circumstances, I would probably hold off and Drew, if you find yourself in a spot where, oh, you are growing and you do want to raise, then maybe have that 5K as your anchor, anchor angel, and then go out and look for others to make it a round that’s enough money that it’s worth your while.

Derrick Reimer:

If the question had been I am working on a product and it has some traction, but I need to license this thing for X amount of money and someone’s offering to invest to get me that money now so I don’t have to wait nine months of investing my own income into the thing, that would be different. If there was a use for the money and there was a more direct tie to an immediate impact it would have on the business, I would probably feel differently about it. But in this case, context wise, it just kind of feels like, I don’t know if it’s worth it.

Rob Walling:

Thanks for the question Drew. I hope that was helpful. Next question is from Hayden.

Hayden:

Hey Rob, my name is Hayden. I really enjoy the podcast. Thanks for answering questions and for taking my question. I am an aspiring SaaS Hindi founder kind of in the idea of formation stage. I’ve been reading the Mom Test and it’s a great book, but I really want to validate an idea. My idea involves feedback for the banking industry and one of the hard things would be reaching out to bank either managers or executives and interviewing them without really having much to offer them. And so I guess I’m curious what you recommend, how to reach out and even what to offer. Obviously I want to interview them and solve their problems, but especially something a little more corporate like that, I want to target credit unions, but I find it challenging to get their time of day to do something like this. So curious what you think about that, how you would go about that, and how I could really have a value proposition that is worth something to them. Thanks again.

Rob Walling:

Derrick, what do you think about this one?

Derrick Reimer:

Yeah, so I think the good news is when you’re doing the Mom Test, you don’t actually want to come in with a value proposition for the person that you’re talking to. The idea is to come in more with a learning mentality. You want to learn what your potential target customer struggles with and get a sense for whether the hypothesis you have is actually valid, whether it aligns with the problem that they’ve expressed. So you’re looking to have conversations to find evidence of demand and willingness to pay. And so really what you’re looking to do is learn, and you’re looking for them to do you a favor.

So a couple ideas off the top of my head, I don’t know how much connection you have to that industry already. I mean banking industry sounds pretty specific, so maybe you have a brother-in-law in banking or something like that. But I would say if you anyone in the industry and you have a warm connection already, could you ask him to coffee under the premise that like, “Hey, I’m a developer looking to solve problems in your space and I’m interested in learning about what challenges you have day to day.” And if they agree to do that, great. And then you ask, “Do you have any colleagues that you’d be willing to introduce me to?” So you try to keep that chain of warm connections going to talk to folks in the industry.

You could get really scrappy. You could make a list of local branches in your area and you could buy a box of donuts and go in and say, “Hey, I bought these for the office. Can I have a few minutes with your branch manager?” If you’re an introvert, that probably makes you extremely uncomfortable, but it might take some bold moves to charm people into being willing to talk to you. And so just try to be as friendly and open as you can as you try to have these conversations with people who maybe otherwise wouldn’t want to give you a slice of their day.

Rob Walling:

Yeah, I think that’s really well said. The only thing that I would add is if you don’t already have connections in the banking industry, I personally would stay away from it in terms of building software for it because they are going to take months or years to adopt new things and it’s going to be very, very hard to crack in as essentially a bootstrapped founder. It’s just one of the worst industries that you can pick as someone without huge buckets of money and a sales force and all that. But if you do have context, you do have ins I think your advice is dead on. So thanks for the question, Hayden. I hope that was helpful.

Our next question is passed along from Scott Underwood. He’s a longtime listener of the show and he linked us up to a hacker news thread that is titled, How Are You Handling Section 174 Changes for Bootstrapped Companies? Under these new rules, the US, it’s a US law, so if you’re not here, maybe skip the next couple minutes, but the US says that if you spend $90,000 in developer salaries to make your software, you used to be able to write that off in one year as an expense, which makes sense because when you have a company and you pay salaries, those are an expense this year. But now the 174 changes are saying it has to be spread over five years and you can only take 10% of it in the first year. I’m not sure I fully understand that part. But so suddenly I’ve gone from a profit of let’s say 10 K to a profit of $91,000 for tax purposes.

You’ll obviously eventually get this back over the next five years, but from what I’ve read, bipartisan, nobody likes this change, but it slipped through or it expired or something. So it really is a problem. Separately, there’s this R and D tax credit that you get, and that’s what I thought this was impacting, but now I realize how bad this actually is. So there’s been discussions of it in MicroConf Connect. There’s been discussions of it in the TinySeed Slack. What’s your take on this, sir?

Derrick Reimer:

Yeah, I mean this is an absolute cluster, right? Because it seems to have caught founders, accountants, even the government flatfooted. Like the IRS has said, we will release guidance on this later in the year, but it applies to the 2022 tax year.

Rob Walling:

And my taxes are doing two weeks for my corp, right? If you have an LLC.

Derrick Reimer:

And by the way, if you’re me, Johnny on the spot this year and I already filed my taxes, that means potentially an amendment. What a lot of people are doing that I’m hearing, and again, take everything I say with a grain of salt, not an accountant, not accounting advice, but what I’m hearing a lot of people say is that their accountants are telling them to basically file an extension and wait and see if this gets rolled back.

Rob Walling:

Repealed, which I think it will. If they’re smart, they’ll do it. Because this is not good. Otherwise, how many companies do we know that their software developers are suddenly going to maybe have a different job title or it says developer, but they only spend half their time building the product. The rest of it is helping with marketing. This is no good.

Derrick Reimer:

And the challenge for me, so just to give you a little perspective as a founder, I actually haven’t bothered myself with the R and D tax credit because I understand that the IRS does love to audit companies that take the R and D tax credit, and I don’t want to be audited. I don’t want to increase my odds of being audited that just sounds like a massive distraction as an early stage company. So personally, that’s been my choice. I haven’t bothered with it.

Now it becomes pretty irrational not to try to get the tax credit if you’re going to be subject to this new amortization policy, but it’s weird because it would appear the compliance requirements for actually carving out and saying, “This much of this person’s salary was R and D versus this much was not.” You have to be rigorous about that if you’re getting the tax credit. Especially if they’re giving you a benefit, then the IRS is going to want to know, in the case of an audit, they’re going to want to know, well, how did you justify saying this much was R and D?

So even if you wanted to take a broad stroke and just say, “Okay, fine, this full developer’s salary is R and D, I’ll amortize it, but I also want to claim a tax credit for that full salary.” Well, now you have to have done all of your diligence to justify it.

So it’s nasty. Talking to other founder friends seems like most people’s accountants, even those who are more tech-oriented are not super aware of this change. So I think you may have to do a little more digging or prod your own accountant with some articles on like, “Hey, this is specifically what I’m hearing. Can I get your advice on this?” Because I think a lot of accountants just aren’t even aware this is such an outlandish change. Everyone’s kind of surprised by it.

Rob Walling:

Yep, it’s a mess. Call your Congress people, let’s get this repealed. My hope is that it will get fixed because that’s the best solution here.

Derrick Reimer:

Yeah, I do know that Michelle Hansen, she’s one of the TinySeed mentor and founder of Geocodio. I think she’s organizing some efforts to write letters to your Congress people, so check out what she’s up to. I think that could hopefully help move the needle on getting this changed.

Rob Walling:

Yeah, so thanks for passing that along, Scott. Our last question of the day is from Dan the BA, BA stands for business analyst, on Twitter. He says, “Hey Rob, I love your podcast and especially the question and answer rounds. I was hoping you’d be able to advise. I work as a business analyst and I have okay technical knowledge, but I want to be more of a doer, more database querying integrations, file translations, automation. Currently messing around on Code Academy doing a SQL course, but I was wondering what learning resources or possible mentorships you could recommend. I personally think having a proper test environment and or mentor to actually go through scenarios would be ideal.” What do you think, sir?

Derrick Reimer:

That’s a good question actually. I’m curious to hear what your thoughts are on this. I know you’ve thought about this a bit. I feel like my knowledge is slightly outdated on a DIY learning how to code yourself because I’ve so far removed from that, so I’m not sure I can name specifics. I know Code Academy was like, that was big back in 2012 when we were hiring junior developers and I was teaching a course on it and stuff, but I’m not really sure what the newest, hottest things are out there. So I guess I’m curious to let you take this one first.

Rob Walling:

I got to be honest, I think if I were trying to get into kind of technical stuff when I was non-technical, I would think about no code. This is becoming an advertisement for no code, but I would start digging into Airtable to learn the paradigms and it doesn’t do everything, it doesn’t do a lot of what Dan is asking about here, but you can build full-blown SaaS apps in the thing with limitations.

If you really, really want to get into transforming data and querying the database, doing integrations, it’s shocking how much of that you can get through tools, through just external tools. But if you do want to get into code learning SQL I think is a great way to do it. I have a tough time advising on how to do it because for me, I always learned really well from books and I don’t think most people do. But I would literally buy when I try to learn SQL, which is structured query language for those, if you’re not technical, but it’s just how you query a relational database. I would just read through and be like, oh, yeah, that makes sense. But it’s like a lot of people really want an in-person course or they want a video course or they want a whatever.

I think Code Academy and the like, I still think they’re pretty good. How much has changed with learning SQL in the past 20 years? I mean obviously there’s a little bit, Postgres adds a feature where you can group by and this and that. You don’t need to know that today. You need to know what a select star from blah is and then what some basic operators do. And so I think almost any online course that you can find is probably going to be pretty good.

I know that Khan Academy has programming courses. What I don’t know is if they have SQL specifically, but yeah, I don’t have anything more up to date than you do. I just know there’s a ton out there and I think a lot of it is quite good. Egghead.io, that’s Joel Hooks who comes to MicroConf, that’s certainly going to have top quality stuff. Frontend Mentor, which is a TinySeed backed company, but been part of the MicroConf community for years. Now, they’re going to be front end stuff, not SQL like Dan the BA’s asking about, but I do think it’s honestly easier than it ever has been.

I remember in let’s say around 2000, 2001, a friend of mine wanted to learn to code and I was like, “I learned from books. Here you go.” And she was like, “I don’t learn from books.” So she signed up for an in-person course, was in Sacramento, California, and she would drive there two days a week and it wasn’t like a junior college course, it was a technical training, kind of a occupational training thing, and she learned it and she went twice a week for several months and then got a certificate in whatever it was she was learning. It was like HTML and PEARL or PHP or JavaScript, just some basic web stuff, webmaster type stuff. You don’t have to do that anymore. I don’t think that’s necessary unless you really do need the in-person aspect of it. I think you if you have discipline and you can carve out an hour or two every few days, I think you can learn a lot of this stuff.

Derrick Reimer:

Yeah, there are a ton. It’s I guess why I have trouble naming one specifically because there’s just so many. There’s so many different courses out there and individuals trying to produce courses and larger companies producing courses. Pluralsight I think is one of the big sites that has video courses. Some are more like watch a YouTube video and learn as you go. Some are more step by step, each screen you type code into a thing and it tells you whether you did it right or not. There’s just so many different ways depending on how you learn best I think.

I would also say depending on what your kind of environment, the tooling that you’re working with, yeah, thinking about it as the no code being the bridge into it. I see a lot of less technical co-founders doing this where maybe they’re technical co-founders writing a lot of code and they’re trying to be useful on some parts of analyzing user patterns or something, and they have some raw data, and so then they start using a no-code tool and it introduces coding concepts. You start to learn about conditionals and filter criteria and just these things that you need to know when you’re writing SQL query, but you can learn it in a more beginner-friendly way and kind of graduate into the really low level stuff. I think that can be a good bridge.

And then seeing what environments are available with the tooling you’re using. I think about even my own dad, he’s a mechanical engineer and he taught me how to code when I was a kid, and he taught himself by writing macros in their CAD software. So there was visual basic for applications, which was a very particular environment, and he just kind of learned VBA. He learned how to code through that, and then that knowledge became more generalized, but it came by way of solving a problem inside of the tooling that he was using for his job. And it sounds like you probably have some tooling as a BA that you’re using already, so is there an opportunity to write something custom into that that might give you a hint on what to look for a course on or something to learn?

Rob Walling:

And the good news is if you’re learning SQL or Python or Ruby, there is so much information out there and don’t let the paradox of choice be like, “Well, there’s so much. I just don’t know what to pick.” Just pick one. Just like Pluralsight, Udemy, Udacity, Teachable. Go to any of those or Egghead, Frontend Mentor that I mentioned. Just pick one. They’re going to be fine. There are so many good Rails courses or Ruby courses and Python and sequel courses out. If it looks interesting, keeps you entertained and you’re learning, just do it and don’t worry about it. You’re not min-maxing, you’re not optimizing. Oh my God, I has to be the best course, just take a course.

I also have different advice. If Dan is thinking about maybe I want to become a developer, I want to transition from a BA to become a developer long term, then I would say, okay, then dig into it, really learn it, X, Y, Z. I don’t know that I would do the no code. That would be a real quick entry point, but if you think you might want to be, I would dive headfirst. I don’t think most people want to be developers, and I don’t think most people need to be developers.

So if you still want to be a BA or you want to just be a more technical person in whatever realm you’re going to be in, you’re still going to be more of on the business side, then I would do what we’ve said, and I wouldn’t dive in with both feet and I would just learn at an even pace and kind of augment, you’re augmenting your zone of genius rather than trying to switch it to something else. Because I’m imagining, let’s say I wanted to write code again, I still hack. I learned Python a few weeks ago. I learned 10 commands and syntax and some basic stuff, and I can still hack PHP and it’s fun, but I can’t write production code anymore. It would be terrible. I’m out of it, and so I’m thinking-

Derrick Reimer:

We locked you out of the codebase a long time ago, right?

Rob Walling:

It was years ago. “Hey, how come my credentials say read only all of a sudden?” Yep. That’s pretty much by design. The commando cowboy coding I was doing. But if I wanted to get back to writing production code, it would take a long time, even though I know how to code, it would take me months, 40 hours a week, to really get back to where I’d want to ship code that would go into SavvyCal, for example, at that level, and that’s me with my background. It’s like, well, if you’ve never done it’s going to take you a really long time, and so really ask yourself.

Most people don’t need to be at that level. Hacking scripts to transform data or analyze and do basic things that are not production code running in a SaaS app, you can be kind of a hack, which I am fully embracing as me, I’m a hack, but I can still write code to do stuff. So it’s like figuring out where you think you’re going to wind up or want to be along that continuum can help dictate how far you lean in to learning.

So thanks for the question, Dan. I hope that was helpful. Mr. Reimer, folks want to find you online. You are derrickreimer.com, as well as Derek Reimer on Twitter.

Derrick Reimer:

That I am.

Rob Walling:

And SavvyCal if folks want to use the best scheduling link on the internet.

Derrick Reimer:

Well, thank you. You’re too kind.

Rob Walling:

Thanks for joining me, man.

Derrick Reimer:

Thanks for having me back.

Rob Walling:

Thanks again to Derrick for coming on the show and a reminder that MicroConf Remote is focused on leveling up your SaaS sales head to MicroConf.com/remote if you are interested. Thanks for joining me this week and every week. This is Rob Walling signing off from episode 652.

Rob Walling:
It’s Startups For the Rest of Us. I’m your host, Rob Walling. This week, I talk with Mike Taber, how he has gone from Bluetick being a side hustle for years to finally being a full-time gig for him, a profitable app that supports him full-time. I’m really happy for Mike. We have a fun conversation.
For those that don’t know, for the first 448 episodes of this podcast, Mike and I co-hosted Startups For the Rest of Us, and then Mike stepped back to focus on Bluetick so that he could grow it into a full-time income. And in this episode 651, he comes on the show to help share what that journey has looked like over the past year or two.
But before we dive into that, MicroConf in Denver is just a couple of months from now, April 14th through the 16th. Tickets are selling out. We are going to sell out in the next week or two. So if you’re interested in joining me, Leanna Patch, Deb Basu, Patrick Campbell, and 200 of your closest bootstrapped and mostly bootstrap founder friends, head to microconf.com/americas to grab your ticket before they sell out.
And with that, let’s dive into my conversation with Mike Taber on moving from side hustle to full-time and profitable.
Mike Taber, welcome back to Startups For the Rest of Us. How you doing, man?

Mike Taber:
Hey, how’s it going?

Rob Walling:
It’s going pretty good. Yeah, it’s nice to chat with you. It’s been a while.

Mike Taber:
Yeah.

Rob Walling:
I think last time you were on the show was over a year ago. It’s like 14, 15 months.

Mike Taber:
Yep. Something like that.

Rob Walling:
And so there’s going to be some folks listening who are deeply familiar with your story through the AuditShark years, the Bluetick years, and then other folks, we should probably provide some background. You and I co-hosted the show till episode 448, which I believe was sometime in 2018. And since then, you’ve come on periodically to update us on your startup. You run a SaaS app called Bluetick @bluetick.io. And your H1 is personal outreach at scale for all your follow-up emails. Imagine there were 1000 of you to follow up one-on-one with your prospects. So you send a lot of email, lot of follow up email. And last time we were on what, November of 2021, I believe, you had a a potential partnership that didn’t come through and Bluetick was not supporting you and you’d been working on it for several years. And at the time you were kind of like 90-day plan. That’s how that episode ended. I have a 90-day plan to double down, triple down on Bluetick. And if that doesn’t work, I’m going to start thinking about other options. So talk to us about what’s happened in the ensuing 15 months.

Mike Taber:
Sure. So I guess I’ll give context there for the listeners who are not necessarily familiar with the story. Bluetick is a struggle for a long time trying to find out what market addresses. I generally have conversations with people who, if they’re in a troubled situation where they’ve got lots of outreach to do, but they’re not really sure where to start, one of the things that generally continues to come up with those conversations is that Bluetick can do a lot of things. Where do I start with it? And that’s actually a challenge that kind of rolls over into the marketing side of things too, because Bluetick can be used for so many different situations or use cases. So how do I market it? How do I present it?
As part of that 90-day plan, I decided to double down on Bluetick and just kind of figure out what is it am I actually going to do with it, and what are my own internal mental metrics for whether or not I continue with it or not.
And so I went from, things have been successful, I would say over the past 12, 15 months and have gone really, really well. And most of that has been sort of a pivot towards agencies. And that I think has been the big change where before I was going after individual customers who were maybe paying $50 a month or a hundred dollars a month for one or two mailboxes, and switching over to agencies. And agencies manage lots of mailboxes. So they’re much higher value customers, they’re harder to land, and they have more in depth needs and more technical requirements, but they’re also far more profitable, and it’s a lot easier to do support for them. Because even if they have 200, 300 mailboxes, I still only have a single point of contact. Whereas if I had a hundred customers each with their own individual mailbox, the support costs can easily go through the roof. And as one person, it’s just a lot harder to keep on top of all those things. So the agency route has really been helpful for me and has really kind of changed things quite a bit.

Rob Walling:
That’s cool. And so are these agencies using Bluetick for cold outreach to get new business, or is it for follow up with existing clients?

Mike Taber:
So originally Bluetick was all intended for that warm email outreach. But because warm email is kind of a subset of cold email outreach, it just has, I’ll say, more requirements and it’s a little bit more difficult because if you have somebody in multiple email sequences, for example, you need to be able to recognize exactly which sequence that they’re replying to and then pull them out of that one but not touch the other ones. And so a lot of my competitors have that issue where if somebody replies to any email, they’re immediately out of every sequence and they’re just essentially marked as done. Whereas I don’t do that inside of Bluetick. You can have somebody inside of 1, 3, 10, 20 different sequences all at the same time on different schedules, and Bluetick will still be able to properly identify which sequence they reply to and not mark them as done in the other ones and continue doing the outreach for whatever it is.
I have customers who use Blue Tick for onboarding new customers. They have a complicated onboarding process. They need lots of information from their customers, and they’ve tried using a spreadsheet or a checklist or something like that, and it’s just too much. Their customers look at it, their eyes glaze over, and then they end up losing those customers because the customer doesn’t want to go through the effort of hunting down 10 or 20 different things and then sending them over. So they broke it up quite a bit and started going through individual things and asking for things on a much smaller scale through those follow-ups. And then when they get them, they turn around and add them into a different sequence and essentially just cycle through them until they’re completely onboarded.
So anyway, that’s a kind of long way of saying that, I’ve also switched over to saying, you know what, I’m not necessarily opposed to cold email either. And that’s where those agencies come in, because they do do a lot of cold email outreach.

Rob Walling:
Got it. And when we talk about startups, anytime I interview someone here, I ask, give us an idea where the business is, and sometimes they give MRR and sometimes they give employee headcount and say, it’s four of us and we’re profitable, or whatever. If you say, I’m 37 people versus I’m solo and it’s not paying my bills, it just gives us an idea of where the business is. So talk to us about that.

Mike Taber:
Yeah, so when we talked last time, I was not even at a point where the business was supporting me. I was still spending several thousand dollars a month out of savings out of my own pocket every month. At this point, the business is fairly profitable. I see avenues for essentially tripling revenue. It is past five figures at the moment, certainly not near six, but I could definitely see some things on the horizon where it could get close to six figures by the end of this coming year. And that’s MRR. So I am paying myself a salary and things are going well. I’m already looking to hire at least one, probably two engineers in the next couple of weeks or so, maybe a month at the latest, because I’ve got all these low-hanging features that I want to have implemented that I just don’t have time to get to because they just don’t bubble up to the top of the priority list. But they still need to get done. So I’m looking at hiring a couple of people to help bang out those low-hanging features, that… Simple things like, oh, I want to be able to see my invoices inside the app. It’s like, all right, well, you get them emailed to you, but you can’t go back and see anything if… And you’re an agency, that’s kind of a big deal.

Rob Walling:
That’s cool, man. It’s really good to hear. I think after these years of toil on both AuditShark and Bluetick, it’s certainly awesome to hear that you’re making that progress. How does that feel?

Mike Taber:
It’s mixed feelings, and of course they’re mixed in other ways, too. I don’t think that I mentioned this to you before, but somebody approached me late last year, and I ended up selling the auditshark.com domain, and I did get five figures for it, so…

Rob Walling:
Whoa.

Mike Taber:
I can’t complain.

Rob Walling:
That’s funny.

Mike Taber:
So yeah, I made decent money off of that, I guess. But no, it’s one of those things where I wish things had turned in this direction a lot sooner, but I’ll say there was personal struggles. There was a lot of health issues for a while, still have some of them I’m going through, but I also went off all but one of my medications this past year, and that was just kind of a hard stop. I was having literal heart problems. So basically got rid of all that stuff and I’m only on one now and things are tolerable or manageable, I guess, however you want to put it.

Rob Walling:
That’s good to hear, man. I’m curious about the agency focus. Did that come about accidentally? Did you start getting agency interest or you had one or two that it really worked for and then you decided to focus on them? Or was it a deliberate thing that you decided I’m going to go out and target these folks?

Mike Taber:
It was first, I had a couple of agencies and I made the decision to focus on those. So it was a little, I don’t know how to answer that, it’s a little both really. One kind of led to the other, but it was kind of intentional to start focusing on those agencies more, because I could see that that was where my support costs would be lower because they’re going to have essentially a standardized process internally for managing their own customers and then being able to translate that across 5, 10, 50 different customers or whatever inside of Bluetick, and then just use the exact same process inside of each of their accounts. And I did do some things inside of Bluetick to cater to them specifically. So I’m sure you remember in Drip you could have all these different accounts for different brands or whatever.
I implemented something similar in Bluetick where you can literally just use a dropdown menu and switch between different accounts, because I noticed that some of my customers were managing multiple accounts for their customers, and they had a different user account for each of them. So they had a different email address, different password, and for all I know, maybe they were using the same password, I don’t know. But the underlying problem was that they’d have to log in, view everything, and then they’d log out, and then to log into a different account, and it just kind of made things messy. So I kind of streamlined that a little bit so they can just toggle back and forth between the different accounts very quickly. Obviously it helped them, but it also helps me scale, because then they don’t have to create new user accounts every single time that they want to spin up a new customer. It’s just they go in and click add account, and then they just start adding stuff.

Rob Walling:
Exciting. You’re obviously adding features specifically for agencies. Once you have a customer segment that is profitable and allows you to grow your MRR, it makes total sense to do that.
One thing you mentioned to me offline is that you have some customer concentration in terms of, for folks who haven’t heard that term before, it means, let’s say, I have example. This is not your numbers, but let’s say I have a thousand customers, but five customers make a 60% of my MRR, or 70, or some huge number. There’s risk that if I lose just those handful of customers that the business isn’t in a great shape. And in fact, if you go to raise investment, folks will ask about it. It won’t necessarily be a deal breaker, but in an acquisition, if you go to sell the company, it can and will impact the purchase price because there’s obviously risk there of losing one customer or 10 customers, whatever that number is. So you have this. So how are you thinking about that as you grow this business? Does it bother you? Is it a daily thing of if I lose a few customers, I’m not in a great shape. Or other, are you okay with it and you’re just pushing ahead?

Mike Taber:
It’s a good question. It doesn’t bother me until things start to go wrong. I don’t really think about it and then a service fails and I don’t notice it right away, or something doesn’t restart correctly, or go to do deployment and something gets locked up and the logs start flooding with all these different problems. Because my infrastructure has, I’ll say, grown dramatically over the past 12 months. I’ve gone from sending on a good day, I was sending maybe a thousand emails a day to anywhere from five to 600,000 emails a day. So 500 X growth in 12 months, just keeping things running has been something of a struggle at times. And I would say the past month or two, things have really calmed down, and I’ve been able to focus more on new things that the customers need as opposed to just trying to hold things together with bailing twine and duct tape, because that’s really what I was doing for most of this past year is just trying to keep everything going. Part of that was because of the massive growth. I would say my MRR doubled in the past three months. There’s that hockey stick looking growth curve that I’ve had recently, which that’s something that everyone wants to see, but when you’re in the weeds trying to make sure everything is still going to work, it’s hard to see that that’s a good thing.

Rob Walling:
It’s a good problem to have, but it’s still a problem and it is something, I lost a lot of sleep over when we were scaling Drip. And I was telling you, I still have get triggered when people show me queues that are all backed up because it was just, I thought about it so much, and it can make your life kind of crappy as an entrepreneur. Do you feel like if you were to double again in three months, are you set up better to scale, or would you still run into the same struggles?

Mike Taber:
I’m better set up now than I was four to six months ago when I first started onboarding some of these customers. I had to make a lot of changes and some really fundamental changes in order to be able to grow. I had thought that there were certain places where I had kind of modularized a lot of the code and said, oh, well, I’ll create a microservice over here, or I’ll use queues over in this other place. And at the time, I felt like I was going to be able to scale to as far as I would need to. And the reality is that when you go from the scale that I was at and you multiply by 500 X, it is not the same ballpark of problems that you run into. And so I would say early on in this past year in 2022, I probably lost a lot of sleep.
The tail end of it, not so much. Things have gone, I would say, pretty well. And even being able to send, I forget who I was talking to, they were commenting on, I think it was SendGrid. They’re like, yeah, I can only get one email per second out of SendGrid. And I’m like, I’m sending 30 a second through Bluetick. And it’s insane. I just look at the numbers of how things are going, and I know that they’re going up. Every single week they go up. It’s just insane. It’s just between the profit margin and the numbers of the metrics, I’m kind of blown away, to be honest. But it is a good problem to have. So it’s hard to complain, too.

Rob Walling:
Especially now that you’re past it.

Mike Taber:
Yeah.

Rob Walling:
It’s being able to scale it up and not lose your key customers and also, I guess, not have it take forever. To scale it over the course of weeks or a month or two is one thing, if you have to rewrite an entire code base and or plug into a different data store, suddenly, that could be a six-month project, and that’s when it’s not good. With this focus on agencies. We’ve talked a lot about engineering and scaling and product. Have you been doing much marketing?

Mike Taber:
No. Most of what I’ve been doing is just trying to keep everything running. The vast majority of the growth has come from the customers themselves growing.

Rob Walling:
Expansion revenue.

Mike Taber:
And going back to your, and I’ll touch on a couple of different things here. One, your question about the growth and the being able to keep everything up and running. There’s times where I’ll log in on a Monday or Tuesday or something like that… Or actually I get a daily report every single day that just gives me all this statistics from the app, how many accounts there are, how many emails have been sent on a daily basis, how many mailboxes each customer has. And there’s some of them that I kind of monitor more than others just because of their size. And there’ll be times where it’s like, oh, this customer added a hundred mailboxes between yesterday and today, and it’s just like the rest of the infrastructure just didn’t even notice. And that’s a great position to be in. So that’s where those questions about being able to sleep or having problems with stress start to go away, because those things on day one, 365 days ago, that would’ve been a major, major problem.
And today it’s not. Because my infrastructure’s gotten large enough and the system is scalable, and it kind of rearranges things a little bit to some extent to kind of take care of itself. So that stuff is helpful. And then the other side of it is that you asked about is it stressful having majority of my revenue kind of locked up in a few of these key customers. And I would say that when things go wrong, yes it is. But at the same time, I also have implemented a number of features that have helped them either move away from other services that they’re using. One thing I implemented was some basic automations that allowed people to stop using some other tools that were out in the market that allowed them to glue different tools together. And I cut their bill by five or $6,000 a month.
So it’s incentive for them to stick with me. Because even if they move off, if they decide that they’re not happy with Bluetick, and I’m not responsive, which I am. I try to be really responsive to those types of customers, but if something goes wrong, they know that I’m there and I’m going to fix it for them. But the fact that they’re also saving five, six, $7,000 a month from not having to pay for these other tools because now that functionality that they needed is native in Bluetick, it’s another reason for them to not leave.

Rob Walling:
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And so talk me through, in the last 15 months, I like to ask this high low question of have you had a high point where you were celebrating, we’re going to break out the champagne, wife and I are going to get some ice cream or bourbon or whatever it is. I don’t know. I guess I haven’t celebrated in a while, because it’s like I don’t know what to do. But has there been a moment where you’re just like, hell yes, this is amazing and I’m super happy that I’m doing this?

Mike Taber:
I would say there’s a couple of them. The first one was when I crossed 10K MRR, and then after that I would say that kind of looking at my bank account and seeing that the money is going up as opposed to down, and then getting to the end of the year. This is January now, but last month I made sure to do the vast majority of my bookkeeping and taxes before the end of the year. And then I looked at my bank account and I’m like, crap, I’m going to have to spend money in order to reduce my tax burden. And so I ended up spending like $20,000 in December solely for that reason alone. It was like, I don’t want to have to pay extra taxes, but I’m still going to have to pay money on the rest of the profit, but it’s going to be somewhat reduced. But even then, I still could have spent a heck of a lot more, and I just chose not to. Those, I would say, are high points.

Rob Walling:
Your high points around money. All right. When you’re a founder that number one metric is MRR. The number two metric is MRR growth, right? These are the ways I think about it. I have another, I want to do the low point, but first I have to ask you, Mike, when did you know, you had product market fit?

Mike Taber:
Oh, good question. I wouldn’t say this was product market fit in my mind yet, but I knew that I was on the path to it. And I would say it was when I had a customer who came on. They said, we’d like to trial for eight weeks, and we’re going to put a hundred mailboxes on your system and see how things go. And it was just going to be a trial, and it was limited. I gave them a proposal. The trial started three weeks late, which was obviously a little concerning. And then I think it was three or four weeks into it, they said, you know what? Everything looks great. We’re going to start dumping more on. And instead of adding another 300, 350 mailboxes, like they said that they were going to, they ended up adding 450, something like that. So I would say that was about the time where I recognized it as an obvious turning point. I just didn’t know all the implications of what that was going to entail.
And then of course, that was very stressful because lots of things broke at the time because my infrastructure was just really not set up to handle that kind of influx. Since then, if I had a customer who added four or 500 mailboxes tomorrow, it really wouldn’t be an issue. It might take an extra hour or two of work to spin up a couple more servers. But I self-manage everything. It’s not like I’m using AWS or Azure’s serverless cloud computing stuff to do things. I manage the servers myself, which helps me to reduce costs. And then I pass those savings onto the customers so they get a great deal. And I get customers who don’t want to leave, because I’m giving them such a good deal and the software just works and does what it’s supposed to do.

Rob Walling:
Giving them a great deal. Do you feel like you are leaving money on the table? Do you feel like you should be charging them more?

Mike Taber:
Yes and no. I go back and forth on that a little bit. I feel like with any SaaS, when you’re first starting off, you’re willing to cut deals with people just to make sure that you get things off the ground, figure out what problems they’re actually having. And for the customers that I have now, they are getting, I would say, reasonably good deals. In the future that will probably turn out to be less of great deals, still good deal, but not nearly as good as the early ones. And I feel like that’s appropriate too, because you’ve got those people who are the early adopters, they’re taking chances on you. And I think that giving them a reward in the form of lower prices is appropriate because you’re also learning from them too, and that’s helpful for you. And on their side, they’re taking a chance on you. They’re risking parts of their business.
And I do have customers who 95% of their business success relies directly on Bluetick functioning properly, because if it doesn’t, that’s their entire business. Yeah, am I leaving money on the table? Yeah, absolutely. But there are also features that I’m cutting discounts for certain features that I don’t have that they have to pay other vendors for. And I’m looking specifically at those features as ways to essentially triple revenue in the next six to eight months because of implementing those features and then rolling them out to my customers that I have now, and then they don’t have to pay these other vendors. They can pay me instead. And I’ve already had those conversations so that money should come through. I just need to implement the features.

Rob Walling:
Are you implementing features that other companies will use? Because almost when you say it like that, it’s almost like, oh, are you more doing consulting ware? Are you kind of building custom software that you of course own the rights and IP to, but does that apply to other agencies or companies who would sign up?

Mike Taber:
It does, yeah.

Rob Walling:
Okay.

Mike Taber:
At a certain scale, you’re going to want those features. And so those features are directly applicable to agencies. And that’s where, if it was one customer, and I’m thinking of a feature right now, that it would probably take four months of hard work in order to implement that one feature, but it’s worth an extra 60% to my bottom line. And I could also kind of spin that off and not just integrate it directly into Bluetick, but I could also spin it as a completely separate product if I wanted to. Will I? I don’t know. That seems like a lot of extra work and a lot of extra marketing stuff that I’d need to do, which I probably will not. But at the same time, there might be a way to modularize it so that in the future if I wanted to do that, I probably could.

Rob Walling:
And I want to finish up the high point low point thing I asked you about high point, talked about money. Are your low points with money, too? No. What is one or two really hard times that you’ve had with the business over the past 15 months?

Mike Taber:
I would say most of them boil down to times where scalability was an issue. There were a couple of times where not to trigger you or anything, but there were times where queues would-

Rob Walling:
You can talk about it.

Mike Taber:
One of my queues, we had over a million messages in it. I knew that it was going to take hours and hours for it to clear. Most of my code runs through these services that are running in the background on the servers, and I have the ability to toggle some of those services on and off, and I turned all of them off except for the ones that process the queues for about four hours and just let it catch up. But at the same time, it kind of leads me to that thought of, well, what if I anger some of these customers? Or what if they notice? Or what if it becomes a problem for them and it’s really affecting their business? And it didn’t, but those thoughts still go through your mind.

Rob Walling:
Concentration risk is platform risk, but different. But it is. It’s relying on a one or a handful of customers and it makes you nervous. It’s something to keep. It literally keeps you up at night. It’s also sometimes how you have to build your business. And the goal moving forward should obviously be to add more customers to the point where no one customer is more than X percent of your revenue, but hey, it’s better than not having them. It is, right? It’s better to have that revenue.
I’m curious, something changed pretty dramatically. You had been working on Bluetick for, I don’t know, three, four years, not much progress. And then in the last year or so, obviously revenue has gone up dramatically, five or 10 X. I don’t even remember the number. You said doubled in the past three months, but even before that, what changed? Did you start marketing? Did you change the positioning? No, you said you started getting agencies before you changed positioning. Was it a little bit of luck? What do you attribute it to? Why are you having this success at this point?

Mike Taber:
I would definitely say part of it was luck. One of the agencies that I brought on, they were using a competitor, and I suspect I don’t have the whole story. I’ve never really asked. It might be. I don’t know how well it would go over if I were to ask, but I don’t think that they were happy with this competitor. And so they were looking around. This is essentially kind of the what kicked things off for me with kind of the new focus for Bluetick. And I’ll say a lot of the growth, this one customer that I have now, they were with a competitor, weren’t happy, wanted to do a trial with me, and it went so well that they’re like, yeah, we’re done with them. And so they brought over a lot of stuff, a lot of mailboxes. And then I saw that the competitor had raised their prices, and maybe it was across the board, maybe that had something to do with it, but they’ve grown quite a bit with me.
So I think that that has a lot to do with it. The other thing is, I don’t know if you remember, it was at MicroConf in Croatia where it was the last day of the conference. We were sitting there and I don’t remember who was on stage talking, but you and I were sitting at the same table and I’m like, I’ve got to go. I don’t feel good. And my heart was just racing. And so I went and I laid down for an hour or two, and that helped. But getting off of all those medications that I had accumulated over five or six years really helped out a lot, because then I was able to actually sleep at night. I was able to focus during the day. I can’t even begin to go into the details on how awful that experience was. But getting off of those things helped.
And then I would say that there is a certain amount of a snowball effect when you have some success and things start going well. And it gives you this motivation that if you’re struggling, and struggling, and struggling, beating your head against the wall, it’s hard to be motivated to do anything else because you look at it, and you’re like, this hasn’t worked, that hasn’t worked. This other thing hasn’t worked. Why am I continuing to beat my head against the wall when nothing I do seems to make any difference at all? And then when you start to get some sort of traction and some level of success, that builds and it becomes a snowball in the other direction. I don’t know if there’s a great way to combat that other than buckle down and do it. Maybe there’s something to be said for that sometimes. But with all these different factors that are in play for any given person, it’s hard to generalize and say, this is what you should do.

Rob Walling:
Well, yeah and that’s one reason, it’s small wins along the way. It creates a virtuous cycle. And that’s one of the reasons that I’m so pro on the stair step approach is that if you get these small wins and you build a product doing a thousand or 5,000, you then have the confidence, the revenue, some skills that you’ve built to then do it again and to do it bigger even. So to summarize, it sounds like I asked what made the difference, but it sounds like you got a little lucky, but you executed really well. You worked hard and you delivered, and you were at the right place at the right time. There’s the luck surface area from Jason Roberts where your luck surface area is big because you were doing things in public. Doing things in public creates opportunity. You had this app out there, and if you didn’t have that, none of this would’ve happened. So a little bit of luck, but execution as well. You’ve scaled it up in a way that maybe a lesser engineer wouldn’t have been able to do. You’ve done things for your customers. You’ve made decisions that have allowed you to grow the business.

Mike Taber:
And I mean, to speak to the luck point a little bit, I’ll definitely acknowledge that there was a little bit of luck involved. And the first customer that came into me in that 90-day window that we had kind of talked about in the last episode we recorded, it was in December, I think, when I talked to them. And so they had reached out to a dozen different vendors, tried to get on the phone with them and talked to them because they had what they felt was a fairly large infrastructure that they needed to be able to have supported with an email service provider. And I made the shortlist. They talked to about 12 of them, and they reached out to 12, cut it down to half very quickly. I gave them a proposal, and then I was the only one that they had a second call with.
And they told me that. They’re like, you’re the only one we’re talking to for a second time. I feel like in part, that’s because I was the founder of the company and they were talking directly to me. And I told them, I was like, look, if there’s something specific you need, I can get it done. I may not be on the exact timeline that you’re looking for, but I can guarantee that whatever it is that you need, if it’s important, I can get it done for you. And knowing that I’m also the person who’s writing the code, answering the support tickets, all that stuff, it factored into it and they’re like, yeah, this guy can help us. And they acknowledged, we’re taking a risk with you, but we’re going to try this out as a pilot program first. And that was where things really started to kick off and really turn around for the product. And it just kind of gives that confidence, yeah I’m on the right track. These are the right things to do, and things just kind of snowballed in the right direction from there.

Rob Walling:
And that’s the power of, I’d say bootstrapping, but it’s the power of being a small agile team, in this case a one person team, is that you can make decisions like that if you had raised funding or if you were a 10, 20 person team. It just doesn’t make sense to do these things. And you had this agility and this superpower of being small and being able to move really quickly.

Mike Taber:
I was going to say, it’s being in the right place at the right time was helpful in December, but I also think that there was something about having been around for several years before that, where I had done a lot of the work and cleaned out a lot of the rough edges of the products. Don’t get me wrong, they’re still rough edges all over the place, but it was good enough and functional for what they needed, and it’s gotten better since then. But it was enough to kind of get over those initial hurdles. And now they like the product. They use it all the time, and it’s gone well for them. And then it’s helped me land other customers as well, which has been the turning points, because that first customer is really where things started to turn around. And since then, things have gotten better and better.

Rob Walling:
Are you going to update your marketing to position it to agencies? I’m just curious, because it sounds like agencies are really working, but when I read your H1, it doesn’t mention that. Does it make sense to do that?

Mike Taber:
It does. And that’s something that, you and I talked about startups for a long time, and it’s one of those things where if you’re growing quickly enough, the marketing almost doesn’t matter, especially if you’ve got that expansion revenue. Don’t get me wrong, I would love to have more customers and more new customers any given day of the week. But when updating those things on your website is such a low priority as opposed to, let me implement this feature over here that I know that I can charge a bunch of my customers more money for. And I can justify it because on the invoices, and then somebody, I forget who it was, they gave me this advice about, oh, any discounts that I give my customers, I put it on the invoice and say, this is how much this discount is for, and this is how much of a discount you’re getting.
And when you go back to essentially negotiate a different price for them, whether it’s new features or this or that, it gives you, they said, ammunition. And I wish I could remember who it was that told me that, but they advise me to do that. And so it shows up on the invoices every month. This is the discount that you’re getting, this is how much it is, and this is per mailbox, et cetera, and it’s pretty substantial. So when I implement some of these new features, I’m going to be able to go to them very easily and say like, hey, you’re not going to get this discount anymore, but you won’t have to use this other product over here that I haven’t been able to provide for you, even though we discussed it before. And so it’ll just add to my profit margin at that point. Chances are good I’ll have to pay in advance to hire some people to help out with some of those things. I don’t think I have a choice, but at the same time, the business is profitable enough that I don’t care. And the ROI on those is probably going to be a couple of months at most, which is great.

Rob Walling:
Yeah, I’m really happy for you, man. Congratulations on getting to this point.

Mike Taber:
Thanks.

Rob Walling:
Yeah, it’s great to hear it. You’re in good spirits. Just your tone and the way you’re talking is just the most positive that I’ve heard you in a very long time. So awesome to have you back on the show. Folks want to see what you’re up to. Bluetick.io and of course, singlefounder on Twitter. You’re never on Twitter, are you?

Mike Taber:
I’m rarely on Twitter.

Rob Walling:
Even before the Elon Musk stuff, you were like never on Twitter.

Mike Taber:
Yeah, we won’t discuss that. If you want to do another episode where we could just rag on Twitter, then sure. But…

Rob Walling:
Riff on it. Yeah. Frankly, I was telling you offline, I deleted Twitter off my phone when I went on vacation a couple of weeks ago, Twitter and Slack. And I really don’t miss it. And I don’t know that I will stay off it, but it’s does not feel like a big hole in my life. I’ll put it that way. So anyways.

Mike Taber:
Yeah.

Rob Walling:
Thanks again, man. Thanks for coming on the show.

Mike Taber:
All right. Thanks for having me.

Rob Walling:
Thanks to Mike for coming on the show. I always enjoy our conversations. He and I have known each other for 16 years, I believe. It’s always good to chat with him. Thank you for sticking around this week and every week. This is Rob Walling signing off from episode 651.

Rob Walling:
Buying lets you skip the line, so to speak. It lets you skip 12, 18, 24 months of building, launching, finding product-market fit. And while there are obvious pros and cons to buying versus building, I am a huge proponent of it if you have the resources. In fact, if you go back to a lot of the speaking and the teaching I was doing from about 2008 until maybe 2011, a lot of that emphasized buying equally with building from scratch.
It’s that time of the week for another episode of Startups For the Rest of Us. I’m Rob Walling, and this week I am answering listener questions. Got some really good questions that have come in, people asking for thoughts on acquiring a SaaS app, how to get more customers while working full-time, and advice for talking to users when there’s a language barrier. But before we dive into that, our next MicroConf Remote is coming up in just a few weeks, March 21st and 22nd. Level Up Your SaaS Sales, that’s the title. It’s totally focused on SaaS sales. It’s a fully virtual event, happens over two days, one and a half hours per day. It’s $30 price tag. I’m going to be hosting it with some baller speakers, Jen Abel from JJELLYFISH, John Ndege from Rapid Reply, Pete Kazanjy, who you heard on this podcast just a few weeks back, author of Founding Sales, and Valentin Wallyn, the founder of Findymail. So if you want to learn sales as a SaaS founder or level up your game, you’re not going to want to miss this.
And of course, if you buy a ticket, we do record the sessions and you’ll get the recordings after microconf.com/remote if you want to check it out. I hope to see you there. So with that, let’s dive into our first question of the day from Tim Young.

Tim Young:
Hey Rob, Tim here, longtime listener, first time submitting a question. Really love the pod and appreciate everything you do. I’ve got a question about acquisition entrepreneurship. I’m thinking of making a small acquisition as a way to get myself into the SaaS game. I’ve heard you tell the story of HitTail and how that worked out for you, and I’m thinking of following a similar path. So I’ve got about $25,000 at my disposal that I can put into this thing that I’m totally comfortable if that goes to zero, that’s fine with me, I’m just ready to take a risk with it. So I’m thinking of trying to find a SaaS app that’s got a few hundred dollars in MRR that I can acquire for around $10,000, and then have the rest of my cash to help operate it and scale it up as I learn the ropes here. So the downside of that is it’s going to be a pretty unstable product and business at that point being so low in revenue, really wouldn’t have much product-market fit at all. So the actual product side is riskier.
Another option would be to take my money and combine it with some financing or otherwise structure a deal that’s low six figures, but still a larger acquisition and something that might have a little more traction. So specifically want to get your thoughts on that choice of making a really small $10,000 acquisition versus a larger acquisition that’s in the low six figures. And then more generally, your thoughts on acquisition entrepreneurship. I don’t hear you talk a lot about that, so would be curious to hear how you think through that, what your mental framework would be, and then any other thoughts, tips, and tricks, considerations that you would recommend for somebody in my shoes. Thanks a lot, Rob. Appreciate everything you do.

Rob Walling:
This is an easy answer for me, Tim. I love the idea of buying things instead of building them. In fact, as I was getting started on my entrepreneurial journey and starting to have success, I had a mix of building and buying. And buying was always faster. Buying lets you skip the line, so to speak. It lets you skip 12, 18, 24 months of building, launching, finding product-market fit. And while there are obvious pros and cons to buying versus building, I am a huge proponent of it if you have the resources. In fact, if you go back to a lot of the speaking and the teaching I was doing from about 2008 until maybe 2011, a lot of that emphasized buying equally with building from scratch. The reason that I stopped doing that is almost no one wants to do that. I found that the entrepreneurs would come through and I’d say, “You should go buy things.”
And then they would look around and say, “I don’t see anything I like and I’m scared of technical debt and this feels complicated. I’m just going to go do what I’m comfortable with, which is building,” and that’s fine. But the vast, vast, vast majority of even this audience today I bet does not want to acquire things, which is good. If everyone wanted to acquire things, they’d get very expensive. So yes, I love the idea of buying a handful of my early successes were apps that I acquired, sometimes for pennies on the dollar. This is before the Quiet Lights, the FE Internationals, the Acquire.coms, where multiples are higher now, which is good for us as entrepreneurs, but when you’re looking to acquire and you can buy something for 12 to 18 months of net profit, that’s a pretty easy business to turn around. There’s not a ton of risk there.
So yes, I have acquired many, I mean dozens if you include both websites like content sites, e-comm, info products, software and SaaS, all those things. Literally dozens that I acquired for sometimes couple of thousand dollars, sometimes tens of thousands of dollars as I did with HitTail. But one thing that you mentioned was spending $10,000 to acquire something. And these days, unless you get a really good deal that doesn’t get you much. It might get you a codebase, and look, codebase is fine, but what I would really be looking for if I were in your shoes is some type of momentum, some type of SEO traffic, some type of customer base, some type of product-market fit ’cause until you have that, you don’t have much. And so I do know of a company where they raised funding, a small amount of funding from angel investors like myself ’cause I invested to acquire an app that I believe was doing about eight grand a month at the time, and I don’t remember the purchase price, it was probably between a $100,000 and $200,000 if I were to guess.
And they basically raised that money to acquire it, and they have since grown the business and done really well with it. And it obviously saved them a lot of time in terms of having to launch and having to find customers and find product-market fit and build the product from scratch and all that. So if I were in your shoes, that is probably the avenue that I would be looking to go down. Not saying that buying something for $10,000 can’t work, I do think if you spend that 10 grand, you don’t just want to buy a codebase. And so whether you go raise outside funding, whether you take on debt financing, whether you find a single partner who can partner with you and write a check and own some of the equity, there’s a lot of different options to be had.
One thing to keep in mind, that may sound a little counterintuitive, but if you are going to buy, let’s say, you’re going to buy something for $200,000, you don’t want to raise money at a $200,000 valuation. Because if you raise 200 grand, then the person giving you the money owns the entire company. I would think of it more as it being an accelerator valuation or an angel valuation, where you are taking a product, imagine that this product was going to raise an angel round, or that this product was going to join TinySeed. What type of terms would they get? And then maybe angel round may be a little ambitious, I’m going to be honest, especially if the thing isn’t growing. But my point is, if you’re raising, again hypothetically $200,000, I’d be thinking I want a valuation in the million, $2 million range such that I sell a certain percentage of it.
But if you’re going all in and you’re basically putting a lot of opportunity cost on the table, you could be doing a lot of things. You could be working a day job, making a good chunk of money, or you could be starting another company and that opportunity cost has to be rewarded because you’re taking on a huge chunk of risk. I understand someone writing you a check is taking on risk, but time is more valuable than money. So thanks for the question, Tim. I hope that was helpful. My next question’s about how to get more customers while working full-time, from Troy Munson.

Troy Munson:
Hey Rob, how are you? My name is Troy Munson. Currently, I’m a full-time employee at a company doing sales. I also have a five-month-old son and a wife, and she’s taken some time off until he’s about a year old. But on the side, I have a customer referral platform. Right now, we have about five customers. And it’s all from me doing hardcore prospecting on the side, I’ll take about one or two hours out of my day. But we launched this January, we have five customers and I was curious, what is the first step you would take to acquire more customers to where I’m not solely just prospecting? I heard some good things about Capterra, some people say paid search, really what I’m looking to do is get people to want to see our platform and raise their hand and things of that nature. I currently can’t quit my full-time job but I do plan to do so by the end of the year to take this full time. But yeah, I was just curious how to get more traffic to make sure that we can get more customers. Thanks.

Rob Walling:
This is a good question, Troy. Thanks for sending it in. This is tough ’cause this is the building on the side, it’s the side hustle nights and weekends, and it’s the same problem that everyone has. I had it too when I was doing this, I did this for many years, where I was trying to write code and market on the side as I was working a day job, sometimes as a full-time salaried employee, sometimes as a consultant, but we all run into that same constraint of time. And realistically, I know that prospecting is time-consuming, but so is SEO, so is cranking out articles that you then have to promote and link build that you did keyword research for, and those have a longer half-life, meaning those have the potential to draw in a lot more customers in the next 6, 12, 18 months if they catch and if you have organic rankings. But do you need customers now or do you need them in 12 months? All right? And it’s a balance. If you could do both, you would do both.
In The SaaS Playbook, I talk quite a bit about finding ideal marketing approaches for your business, saasplaybook.com, it’s my book that I’m going to do a Kickstarter in a couple of months. But I gave a lot of thought to this because I’m obviously advising a lot of companies on how to think about this. And I talk about how marketing approaches have a speed and it’s a speed in which they drive customers to you. So cold prospecting, the speed is very fast. Meaning you can send an email today and you could close a customer this week. SEO is slow but it’s more scalable or it’s you have better leverage, is probably a better way to say it, on your time. And if you had infinite time, you would do both of them. Or if you had even a few more hours, you would do both. You want to usually be doing one slow and one fast at any given time. The slow is investing in your future growth and the fast is basically handling today’s growth.
I do like that you mentioned Capterra and paid search because these are fast and they don’t require a ton of time, not nearly as much time as SEO. So if you have a bit of budget, I would consider trying one or both of those. If you want to see what I think is the best resource on attacking Capterra from a B2B, mostly bootstrap, SaaS founder who has made it work, head to microconfremote.com, scroll down to the bottom and there’s a link for early stage SaaS marketing strategies. It’s a MicroConf Remote and we ran six months ago maybe, and Eran Galperin from Gymdesk talked all about how he made that work. He and I sit down for about 30 minutes, and he basically walks through the tactics. I’m almost interviewing him with slides to find out how does this work, how did you make it work, how would I think about it as a founder? So you can buy the videos there if you want, or you can obviously just go research it and look for other resources.
But I would certainly arm myself with the information that you need and become smart about it before I started placing bids, AdWords, Facebook, Instagram are, depending on your niche, something to consider as well. But I do think there are a couple of options here. For the prospecting specifically, you could try to automate it more. I don’t know how manually you’re doing it, but there are tons of tools out there that help you automate the prospecting. Or you could delegate it if you have budget. Can you hire a service, someone on Upwork, a productized version of this? There are plenty of them out there. If you have a system that’s working, can they take what you already have and have someone that you’re paying $10, $20 an hour to just crank on the system you have, again, if it’s working, and then you shift focus to one of these other things? And if you don’t have the budget for both, then, yes, I am intrigued by the idea of you trying some type of paid acquisition, at least dabbling in it.
If you have five customers, that means you have very, very weak product-market fit. And that’s not an insult, I just want to call it like it is. It’s not enough history or traction to be able to say, “Obviously I’m serving this broad audience and have built something people want.” But you have built something that these five people want. And so the idea of being able to make ads work is just a little bit better than if you hadn’t had any of these customer conversations. At least now you know how your customers are probably talking about your tool, you probably did a sales conversation, a demo with each of them, and you can take that knowledge and use it to help you craft your Capterra page or your ad copy.
But nice work hustling on the outbound prospecting. It’s something that I see some founders shy away from because it’s hard, it’s hard work, and there’s a lot of rejection, but I think especially in the early days of starting a product, it can be easy to fall back on the easy or the sexier marketing approaches that just take a long time to kick in. So I think you’re on the right track. Thanks again for that question, Troy, I hope it was helpful. My next question is from Jeremy Keating.

Jeremy Keating:
Hi, Rob. I listen each week, and I’ve done for a couple of years. It’s great content, so thank you. I’m looking to buy an established SaaS business as a private buyer, where it’s through my company, but that’s mostly me. I’ve signed up to the marketplace and so on, but I wondered if there’s any people or companies that can actively find a SaaS business for me to buy. So that’s companies that are not already on the market but the current owner would consider selling if approached. I’ve heard you say all businesses should be for sale for the right price.
I’ve spoken to an existing old-school service who do this way, a couple, but I found they just stay on Stan SaaS and they haven’t really had the experience. I had one tell me that a software business isn’t worth anything ’cause there’s no physical assets. So I held back from saying the most valuable businesses in the world are based on software, but I need someone to understands the industry. Yeah, so someone who can actively find a potential SaaS business for me to buy. If anyone, it’d be really helpful. Thanks again, Rob. Cheers. Bye-bye.

Rob Walling:
So Jeremy, if you’re thinking of buying a SaaS application for $100,000, $500,000, I don’t know of anyone that will do what you’re talking about, but I do have some thoughts. Number one, there is a financial device mechanism called a search fund, and it’s where an entrepreneur raises funds from investors in order to acquire a company in which that entrepreneur wishes to take an active day-to-day leadership role. And so you could go out and raise funds from angels, or there are search funds out there. Keep in mind, they’re going to have their own agendas, so you’re not going to be in as much control as if you do this on your own. And they’re probably going to want larger outcomes than, I’m not making assumptions about where you want to go, but if you’re bootstrapped, mostly bootstrapped, and wanting to grow a company on your own, that may not be in line with the search funds that are out there.
If I were in your shoes, I would of course be signed up on Quiet Light’s email list, FE International, Empire Flippers, Acquire.com, that used to be MicroAcquire, and those are I think the big four in our space. And then you can do what I did, which is to cold email a bunch of apps that you think people have neglected, or that are out of date, or that have not been updated in a while, and ask if they might be interested in selling. And that is how I acquired hittail.com back in 2011. Or if you don’t have the time to do that, you could obviously hire someone to do that for you. You go on Upwork and you basically come up with a cold email, and they have to prospect and find companies that match the description saying, whatever have the criteria that you are looking for. And then they would have to hand them off to you, of course, for closing the deal, for negotiating and closing a deal. Certainly an interesting question, and I hope my thoughts were helpful. My next question is from Josh Ledgard.

Josh Ledgard:
Hey Rob, it’s Josh from KickoffLabs here. Just wanted to say it was MLK weekend today and that got me thinking, when I looked at my podcast feed, that I don’t have a very diverse set of podcasts or people that I follow. My feed, when it comes to entrepreneurship is filled with a lot of, I’ll just say it, middle-aged white men like myself. And not that I don’t love us, but I was wondering if you had suggestions for a more diverse feed that would include more people of color, diversity or women in the feed talking about new businesses. So hopefully, yeah, maybe that question would be interesting for anybody else listening that wants to diversify their feed, and have a great weekend.

Rob Walling:
It’s a good question, Josh. And obviously with the broader bootstrapped world being, I don’t know what, I don’t remember exactly what the numbers are, but it’s even 90%, 85% white males, that is an unfortunate reality of it, is that, by proxy, are 85% or 90% of the podcast out there in the space by white men? Probably. But there are definitely some podcasts that I think you could branch out into, and I’d love to hear from listeners if you know of other podcasts that I miss in this list. But these are podcasts either that I currently listen to or have listened to in the past that are related to entrepreneurship, that have more diverse hosts and are related to entrepreneurship. First one is ZenFounder hosted by my wife. She is on episode 300 something at this point, and it’s all about staying sane while starting up and being a high performer. Honorable mention to Software Social, that was a great podcast hosted by two women entrepreneurs. But as of a month ago, I believe they have stopped producing episodes.
There’s the Indie Hackers podcast hosted by Courtland Allen and his brother, Channing. Imagine there’s quite a bit of overlap between this podcast and theirs. In Demand by Asia Orangio, that’s a great one because it’s mostly evergreen content. So if you go to the In Demand feed now, you can go back and listen to all the prior episodes and then subscribe, because Asia has talked publicly and she and I have chatted about her next season of the podcast that she’s trying to get out I imagine this year. Then we have They Got Acquired, which is stories of reasonable acquisitions. It’s a bit like Built to Sell where it’s not talking about the Instagrams and the YouTubes, but it’s realistic business exits, and that’s hosted by Alexis Grant.
And the last one I’ll throw out there isn’t solely entrepreneurship, but it’s more about personal finance and there’s a bit of real estate in it, it’s called Afford Anything, and it’s hosted by Paula Pant. And it’s one of the more popular personal finance podcast that I can actually listen to because so many of them say the same thing over and over, or they’re hosted by someone that I guess gets on my nerves and I’ve just never felt that about Paula. So there are five or six options for you, Josh, and if you are listening to this and you feel like there’s additional podcasts that Josh should consider, feel free to hit both he and I up on Twitter. He is @joshaledgard, L-E-D-G-A-R-D, and of course I’m @robwalling. And if you’re not on Twitter, feel free to post them as a comment on this episode. This is episode 650 and it will appear on startupsfortherestofus.com. And our last question of the day is from Devin asking about advice for talking to users with a language barrier.

Devin:
Hi Rob, this is Devin. I have a rather specific question actually. My company focuses on helping English language learners feel more comfortable with their English skills, which means, by default, my users are people who are not comfortable speaking English. It has caused some issues in the whole major piece of advice of top two users because people are not very comfortable speaking with me, or even if they don’t mind speaking with me, they have difficulty expressing any issues they’re really having, in a way that really reflects how they really feel and comes out clearly to me. So I am curious if you happen to have any thoughts or advice on maybe how to approach this situation. I know that people almost always say that the founder needs to do the speaking and they should not be hiring salespeople, but I wonder if in this case something like a translator would be the same, or if it would be still preferable to not have any middle man or secondary person. Anyway, thank you so much.

Rob Walling:
I like this question because it’s one that I’ve never heard asked before. Feels to me like there’s a couple of options here. The first one that you threw out of having an intermediary, like a translator or an interpreter, I think is perfectly acceptable. When people say the founder should be having these conversations, I usually hear that more in the context of doing sales, like initial sales calls for the first 10, 100, 500 customers, whatever, ’cause you’re learning so much from those. But Jobs-to-be-Done interviews, we have outsourced those and I know founders who even in the early days outsourced them to a super competent intermediary, someone like Claire Suellentrop, Asia Orangio. There are plenty of qualified people who may even be better at the Jobs-to-be-Done interviews than you are. The trick, of course, will be finding that Venn diagram intersection of someone who is good at a Jobs-to-be-Done interview and also speaks the language of your customer base.
So while I do think, in a perfect world, the founder would have these conversations, sometimes that is just not possible. And in this case, it sounds like that’s a problem. So would I “outsource” this to a consultant who’s competent in Jobs-to-be-Done and speaks the language? I would, and I wouldn’t feel bad about it, especially if the consultant takes notes, obviously in English so you can read them, summarizes their findings, I think it’s a pretty good solution to this issue. The other thing that would be interesting is, as you said, hiring an interpreter. So you find someone who speaks English plus this other language. And in that case, you are able to ask the question in English, and then they translate it and then translate the answers back to you. Now, do I think that some things will get lost in translation, if you’ll forgive the, it’s not really a pun, but this is literally the use case for that phrase, I do think you’ll lose something, but I don’t think you’ll lose 50%, maybe you’ll lose 10 or 15.
And is that better than making your customers feel uncomfortable because they’re speaking a non-native language that they’re not comfortable speaking? I think it’s way better than that. The third option, and I don’t know that you’re there yet, it would be if you had someone on your team who’s working for you full-time and is bought in on the mission, and you could teach them Jobs-to-be-Done and they spoke both languages. I’m guessing if you already had that, you wouldn’t be writing into the podcast. But that may be, if you think you’re going to be needing to do a lot of these, something interesting to consider in terms of building out your team over time. And of course, the two books I always recommend for learning Jobs-to-be-Done are, number one, The Jobs-to-be-Done Playbook or Handbook, it’s by Jim Kalbach, I interviewed him on this podcast maybe 50 episodes ago, and Deploy Empathy by Michele Hansen.
Both of them are exceptional, and they dive deep into the tactics with actual questions, not high-level theory. And it’s designed for companies like ours, bootstrapped, mostly bootstrapped, and doesn’t necessarily focus solely on software or SaaS. So I think those could be two good resources for you, Devin, if you haven’t already read them. Thanks for sending in that question, hope it was helpful. As a reminder, the reason all of these questions got answered today, ahead of a slew of text questions that have been sent in, is that these were all audio or video questions. And so you can record yourself, again, audio or video goes to the top. You can send me a Dropbox link or you can go to startupsfortherestofus.com. There’s an Ask a Question button at the top of the page. You can do it on an iPhone, you can do it on a laptop, a tablet, and keep those questions coming ’cause these are topics that I covered today that I wouldn’t have thought to cover on my own.
And that’s one of the beauties of having a format like this, is that this show is then able to be structured around things that you want to hear about, rather than just the topics that are coming from me and my team. We continue to get positive feedback about these listener question episodes, and I certainly enjoy doing them, whether it’s with a guest or on my own. That’s going to do it for the show today. Thanks so much for joining me this and every week. This is Rob Walling signing off from episode 650.

Rob Walling:
Welcome back to another episode of Startups for the Rest of Us. I am your host, Rob Walling. This week I talk with Pete Kazanjy about his book, Founding Sales. His book is one of the best books for a founder to learn to sell, and it’s specifically focused on SaaS.
I was very impressed with both the breadth and the depth of topics Pete covered in this book. But before we dive into that, do you notice anything weird about my voice? This is not the real Rob, this is an AI generated voice made to sound like Rob, a Rob bot, you might say. And now won’t the real Rob Walling please stand up? I’m curious if before I called it out, if you were thinking to yourself, “Boy, Rob’s voice really sounds odd today.” Thanks to Justin Vincent of the TechZing Podcast for the heads-up about the ElevenLabs Voice API. I spent a little time messing around with it over the weekend and it was just too fun of an opportunity to pass up.
But just because the AI said it doesn’t mean it isn’t true. Pete Kazanjy and I have an amazing conversation today about his book, Founding Sales, which is absolutely one of the best books I’ve ever read about learning how to do sales and how to hire for sales and how to scale sales, as a founder. It’s a really interesting interview to hear Pete’s story, and I recommend checking out his book, Founding Sales.
But before we dive into that, I’ve talked before about MicroConf U.S. here in Denver in just a couple of months, mid-April, but I wanted to talk in a little more detail. Patrick Campbell, the former founder and CEO of ProfitWell, now the Chief Strategy Officer for Paddle, is going to be telling his story, the story of bootstrapping ProfitWell and growing it to exit that’s north of $200 million. Incredible story. We’ve heard bits and pieces of it, but if you haven’t seen Patrick speak before, he’s an incredible storyteller and has a very strong presence on stage. This isn’t something you want to miss. You can head to microconf.com/us if you’re interested in finding out more details and buying tickets before they sell out.
And now I’ll hand it back to Rob Bot. And with that, let’s dive into my conversation with Pete Kazanjy.
Pete Kazanjy, thanks for joining me on the show.

Pete Kazanjy:
What’s up, Rob? How you doing?

Rob Walling:
I’m good. So you’re from California, but you’re talking like someone from Jersey, is that right?

Pete Kazanjy:
No, I’m from Southern California, so there will probably be a healthy helping of dudes, maybe even a bitching might show up. You never know. But a lot of likes. Right? So-

Rob Walling:
That’s [inaudible 00:02:40].

Pete Kazanjy:
… the Southern California in me.

Rob Walling:
Oh, yeah.

Pete Kazanjy:
It always pops out.

Rob Walling:
Yep. I lived in SoCal for five, six years, so I’m well acquainted with it. So you’re the author of a book called, Founding Sales. Folks can get more info at foundingsales.com. It’s available on Amazon, physical format, Kindle, and all that. What I’m surprised-

Pete Kazanjy:
All the things.

Rob Walling:
All the things, except for audio actually, because I was going to buy… I’m an audio guy.

Pete Kazanjy:
I know. I get so much crap from folks.

Rob Walling:
I bet you do.

Pete Kazanjy:
Well, maybe now with all the weird like GPT-3 generative voice things, maybe I can give some service a five-second sample of my voice and it’ll just bust out an audiobook of Founding Sales. That’d be pretty sick.

Rob Walling:
So Apple Books, this is a little side jag here, we’ll leave it in, but Apple iBooks, whatever the heck they call it, just this week they rolled out four different voices.

Pete Kazanjy:
I saw that.

Rob Walling:
And it’s like two for non-fiction and two for… I don’t know why the voice has to be different for different types, but they have a male and female voice for nonfiction. And that’s coming for everybody. I personally still… I like reading my own books, but… So okay, my books, I just finished my fourth one and they are like 200 to 225 pages. That’s how big the books are that I write. When I downloaded your book, I was like, “Okay, just kind of chill.” I’m like, “480 pages! What in the world is this?” And here’s the thing, it’s usually a yellow flag for me because usually books that long are padded with bull (beep) stories. “Oh, I get to hear about how Intuit and IBM implemented something that has nothing to do with me that a ghost writer went and pulled some story from the internet.” Your book is not that. I want to be clear.
I was actually texting a friend being like, “uh oh, this is a big book. I hope it’s not padded.” Turns out 12, 13 chapters and you cover so many topics. It’s not just about sales, it’s about sales materials, it’s about early prospecting, outreach and demos-

Pete Kazanjy:
Success.

Rob Walling:
… inbound leads, customer success. Then it’s negotiating and closing. It is early sales management, it’s hiring, it’s scaling on a… And as I saw that, I was like, “Oh, he just wrote two books.” And you wrote two books worth of material.

Pete Kazanjy:
Yeah, I mean, the thing there is where Founding Sales came from, we call it the early stage go-to-market handbook, it’s not really designed to be a page turner, per se. I don’t want to say it’s a textbook, but it’s like not, not a textbook. And what I mean by that is, it’s trying to be the thing that as a founder, it’s the book that I wish I had when I was a early stage founder who didn’t know (beep) about sales. And I’m a pretty bookish guy, so I’m like, “Hey, yeah. I’ll just go read the documentation on this, right? Come on. I’m sure someone’s written it up.” And I’m like, “Wait a minute, no one has.” And so ended up making it up with the help of a lot of the network of the First Round Capital portfolio and what have you that my last software company, TalentBin, was where kind of went from being a business generalist founder to being an early stage sales leader.
But really, it was just like all the… Founding Sales was the amalgamation of all the stuff that I learned during that four year process and after we got acquired by Monster Worldwide. And so it’s funny, you were throwing a little bit of shade to some of the other business books or success porn that’s out there, which is really just aggregations of a bunch of anecdotes. [inaudible 00:05:55] like this is a very easy way to write a book, but ultimately it’s not very synthesized. And so the idea behind Founding Sales is like, “No, here’s your recipe book for…” Because if you think about where most founders come from, they come from a product management background or product marketing background, or maybe engineering background, maybe a consulting background, maybe a finance background. Fill in the blank. But generally speaking, not a lot of sales experience. And so it can be pretty impenetrable, especially considering the fact that sales is typically learned via apprenticeship, if you will.
And so the whole idea behind Founding Sales was like, “Screw that, having to figure it out as we go. Let’s just create a full synthesis of what the founder would need in order to get from zero to that first one, two, 3 million of ARR before you want to professionalize the sales organization with dedicated sales management and sales leadership and what have you.” And that’s why it’s not like Success Point. Maybe it’s not as much fun to read as like, The Hard Thing About Hard Things, or what have you. Or it’s like, “Oh yeah.” It’s kind of like war stories over whiskey or whatever. But this is more just the thing that you want to come back to on a recurrent basis.
Or alternatively you’re like, “Okay, cool, I’m going to read the first five chapters because I have no customers right now. And then once I start acquiring some customers, now maybe I turn my attention to customer success. I’m going to read that chapter now.” Right?

Rob Walling:
Yeah. I like the way you’re describing it, more of a manual.

Pete Kazanjy:
Yeah, manual. Perfect encapsulation. So, it’s very much a handbook that we want people to come back to. This is why it’s available online in hypertext format as well, so it can be searchable and people can come back to it. But yeah, that’s kind of like the whole purpose of it.

Rob Walling:
And I love the focus of it. I mean, the Amazon blurb says, “This book is specifically targeted for founders who find themselves at the point where they need to transition into a selling role, specifically founders who are leading organizations that have a B2B direct sales model. And this book will be targeted specifically to the realm of B2B SaaS.” And as I’m reading this, I’m just like, “Yes, please. Yeah, this is exactly my world. How have I not…” I was kind of like, “How have I not heard of this before now?” So I’m glad that’s some of the [inaudible 00:07:55].
I mean, no joke, I haven’t read the whole thing obviously because it’s 477 pages, but I read a good chunk of it last night. And it is the best encapsulation, the best book or other material that I have read of being a founder who doesn’t have much, if any sales experience. That was the situation you were in with TalentBin. I think you had to learn sales in order to find product market fit. And then you grew it to 6 million ARR before selling to Monster, is that right?

Pete Kazanjy:
Yeah. So very much TalentBin was the situation where we had an initial hypothesis that you could use. So TalentBin was essentially open web talent search engine. Essentially what we did is we crawled GitHub, Stack Overflow, Twitter Meetup, et cetera, et cetera. This is 10 years ago, before LinkedIn had really solved their problem of information density on the profile pages. And so as a result, if you could crawl all those different websites and then kind of create a composite profile and put that in a database, technical recruiters would really like that. And so, that’s what talented was.
And it turned out that that hypothesis was correct, but it was not something that people would just buy on their own. And so we had to transition from, “All right, people will just buy this on their own.”, which is not the case. Never is the case, unless you’re talking about a very, very thin kind of PLG use case. And so someone had to go from being… Someone had to go sell it. And that was kind of my responsibility.
And so I went from being our first seller to being our first sales manager and then our first sales leader. And when we were acquired by a Monster, I think we had 10 sellers, eight sellers, or what have… Eight sellers, five SDRs, similar number of CSMs, and what have you. And so the way that I learned sales in that scenario was very much piecing it together. So I obviously read Predictable Revenue by Aaron Ross, but that’s actually later stage, if you think about it. You already have a sales motion that’s been de-risked, and really it’s just about driving scale at top of funnel.
And then of course you have Eric Ries, the Lean Startup, and Steve Blanks, Four Steps to the Epiphany, I guess it’s called The Startup Owner’s Manual now. And there’s kind of like this thing that’s missing in the middle where’s just like, “Okay, cool, I validated the hypothesis here. And maybe I have a product that has early indications that it solves the relevant problem. But now I have to repeatedly…” Or sorry. “Now first I have to get non-zero customers and then I have to repeatedly sell it. And then once I repeatedly sell it, ideally get other people to repeatedly sell it.” And so that was kind of missing in the middle there, and that’s what the book was written for.

Rob Walling:
And you grew an exited, and now you’re working on your next startup called, Atrium. It’s atriumhq.com. Your H1 is tough times, call for amazing sales management. Atrium helps sales managers use metrics to increase rep efficiency and survive and thrive in a downturn.
You’ve raised quite a bit of money just talking offline. I said, Crunchbase says 33 and a half million. And you’re like, “Well, I guess that’s a lot of money. I guess that’s right.” It starts acting up, you just lose track at a certain point, right?

Pete Kazanjy:
Yeah, yeah. So, exactly. So Atrium makes, what we call, data-driven sales management software. It’s software that helps sales organizations, so managers, leaders, and reps use metrics to improve performance. I mean, the way to kind of think about it in short is Moneyball for sales teams. And really, it’s kind of the software encapsulation of a lot of the work that I did at TalentBin around instrumenting the quantity and quality of selling behavior that was happening on our team. Except the way that we did it back then, back then in the olden days, was lots of Google Sheets, lots of Salesforce reporting, and dashboards, and what have you, [inaudible 00:11:28] together with meeting invites and what have you to make sure that your people are coming back, and looking at that stuff.
And what we realized was that most organizations really suck at measuring and managing biometric. I was pretty okay at it because I’m kind of a sales nerd, but most organizations are pretty poor at that. And most sales managers and sales leaders, as we kind of like to joke, don’t necessarily come from the math department or the finance department. They come from the storytelling department, which is fine. And so helping them manage biometric, is a really powerful thing that you can do.
And yeah, we’ve been working on Atrium for, I guess, six years now or what have you, few hundred customers. Yeah, definitely a little bit of a different track than a lot of the… Definitely not a bootstrap track, but lots of fun. We get to work with hundreds and hundreds and hundreds of modern sales organizations. I also started and run the nation’s largest sales operations in leadership community called, Modern Sales Pros. But yeah, it’s just like it’s all sales all the time over here.

Rob Walling:
I know how that feels. Not that I’m in sales, it’s that I’m in all bootstrapped and mostly bootstrapped B2B SaaS. It’s just what I think about day and night.
I want to dive into the book a bit. So in a lot of interviews when I interview authors, I feel like, “I think we can cover a quarter of this book or a third of this book [inaudible 00:12:44].” There’s no chance. We’re going to be five to 10%. So obviously as a listener, if you’re listening to this, head to foundingsales.com, check it out.
But I want to bounce around a bit. So chapter one is, mindset changes in first time sales professionals. And there’s two things I’d love to hear you expound on. One is, one, mindset changes, embrace plenty not scarcity. And the second one is expect to win, but be unfazed by rejection.

Pete Kazanjy:
Well, I think that… And yeah, thanks for calling that. One thing just had got a note for your audience, the book is available online at foundingsales.com. It’s available, you just log in. And I really wanted it to be available via hypertext so people could search across it and come back to it because again, it is very much of a manual. You can set it down and come back to it, et cetera.
So yeah, I mean the concept of embracing plenty is a very confusing concept to most humans. And in general, I think the sales mindset change chapter is about validating that that uncomfortable feeling that you’re feeling as you’re starting to do sales, is totally okay. Because a lot of the things that you do as a seller is very, very, very different than what you would do as a product manager or a software engineer or consultants, or what have you. Or even just a human in general, which sounds kind of weird.
A good example of that would be, most of the time we think about things like, “Hey, we should conserve resources.” Like, “Hey, you know what? That carton of milk’s not done.” “Hey, let’s not throw out that extra pizza.”, et. cetera. Whereas the thing that’s a big kind of mind shift in sales is that the thing that you have scarcity of is your time, you don’t have scarcity of prospects. And so oftentimes what ends up happening is, people get really wrapped around the axle like chasing opportunities, essentially deals, potential deals or prospects or what have you, that end up not having the need of the problem that you solve. Or alternatively, maybe they do, but they’re just not getting it. Right? And you’re like, “No, no, no, I’m going to get them there. I’m going to get them there, I’m going to convince them.”
And really at a certain point, you just have to be like, “No, no, no, I’m going to set this down. I’m going to close loss this, and I’m going to move on.” Because especially, especially early on, in either new category creation or early stage SaaS, there’s going to be tens of thousands if not hundreds and hundreds and hundreds of thousands of prospects that could use your solution. So, that’s what we mean around embracing a mindset of plenty versus a mindset of scarcity. So, stop throwing good time after bad with respect to those prospects. And then as soon as you start embracing that concept of abundance as opposed to scarcity, you start thinking about things like, “Oh, okay, cool. How can I get in touch with everybody? How can I scalably get in touch with tens and tens of thousands of people? Or how can I paralyze my meetings or what have you?” So, that’s the first thing.
And the second thing that you kind of talked about expecting to win, but being unfazed when you lose, is that in general, the big kind of mindset shift with sales that’s kind of hard for people to take is that you’re going to be losing most of the time. If you have a 25% win rate, which is really good. If you win a quarter of the deals, first meetings that you take, that’s a really good win rate. Most early stage, especially new categories, it’s going to be a lot lower than that because people are like, “Yeah, I’m not necessarily sure I have this need.” Anywhere in the 10 to 15% range. So, you’re going to be losing 75, 80, 85% of the time. And so most normal human beings, that would be really demoralizing. You might be like, “I don’t know if I like this.” Right? And so that’s why what you have to do is, you really have to just rebase yourself and recalibrate and say, “Hey, you know what, I’m going to be unphased if I lose.”
But the other thing with sales too is that we are in the business of, I forget who says this, but it’s like sales is the transfer of enthusiasm. And so, we are able to impact our audience and our prospect in a meaningful way. We’re trying to reveal to them the unmet needs that they might have. We’re trying to reveal to them the fact that there’s a new way, a better way of doing what it is that they’re doing right now. We have to get them stoked up on that and pumped. And it’s kind of hard to do that if you’re like, “Oh man, I’m probably just going to lose this deal anyway.”
Actually, there’s a gentleman who is an early sales sales rep here at Atrium, gentleman named, Carson Kaufman. Super bright guy. And he always says that sales is a Broadway play put on by psychologists, because essentially you’re performing, like, “Hey, all right. Let’s get excited.”, while thinking about what the other person’s thinking about and how I can talk to them and change their perceptions in a way that is going to lead them along to the path that I want them to follow. And so if you do that with an Eeyore mindset or like, “Oh, [inaudible 00:17:40].”, you’re actually going to negatively impact your ability to achieve your goal.
And so, that’s why when you walk into a sales call, you have to get pumped and say, “Hey, you know what? I’m going to expect to win this, and I’m going to will that into existence. And moreover, if I end up losing it, which I probably will, I’m not going to be phased by it, because I probably have another meeting immediately afterwards.”

Rob Walling:
Right. Another crack at the plate, right?

Pete Kazanjy:
Yeah.

Rob Walling:
Yeah, it’s an interesting way to think about it.
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You also, skipping ahead to chapter three, sales materials basics, you go through… One of my favorite things was you were talking about speed versus production value, and the ability to iterate quickly on sales material. And first of all, you were like, “Founder, you need to do sales. You can’t outsource this until you hit a point where you’re… And outsource, I mean, hire someone to do it. “Until you hit a point where you have repeatable sales.” I think hopefully most people listening already know that. I’ve said it a few times here. But when you said speed versus production value and-

Pete Kazanjy:
Bless, Rob. Bless. Good job.

Rob Walling:
I know. I’m trying to preach the good gospel here. I had to chuckle as I was reading because your sales presentations, you give tons of examples like, “Here are the basics, six things or whatever that should be in it.” And then you gave examples, I’m assuming from TalentBin, of actual slides that you would use. They did not look good, sir. They were really crappy. And I was laughing because I’m like, “He’s eating his own dog food here. He’s walking the walk.” Because your point was, “Stop hiring a designer and waiting for weeks to turn (beep) around because you learn something this call, you change the slide for next call.” Right? Talk us through that a little more about speed of iteration, production value, all that.

Pete Kazanjy:
Yeah, for sure. I mean, I think the thing that might be helpful for your audience is the way to think about your sales motion, think of it as a product or a as software itself. And so what you want to be able to do there is have speed of iteration. So think of it as like MVP, right? Minimum viable, minimum valuable, et cetera. And so you want to be able to have speed of iteration, not just iteration, but speed of addition as well.
And so a good example of that would be, let’s say that an objection comes up. “Hey Rob, I’m not sure if the TinySeed route is for me. I think I might want to go with a more traditional, I want to go big. I want to go big. I’m going to go out to the valley and I’m going to raise me a seed round.” And Rob can talk that through and just be like, “Well, let me explain to you why it might make a lot more sense for you to do a smaller kind of like TinySeed, work with us here at TinySeed.” Rob can explain that, but wouldn’t it be better if he had a slide that would then demonstrate that?
And so maybe when Rob… And I’m sure you probably have encountered maybe that objection two years ago, three years ago, whatever it was. And then every time you hear an objection twice, this is the rule of thumb that I like to say is, anytime you hear the same objection twice, create a slide. And what it does is it creates a swim lane, kind of like guardrails for you, where you have visuals because humans are visual. It allows them to see something while you’re talking at them. And it gives you guardrails and a map for reading, not reading, reading, but essentially a path to talk them through.
And so if you take a long time to do that incremental objection handle slide, or as you were kind of noting earlier, iterating a slide for a part of your presentation that isn’t necessarily landing, well, that’s a problem. It’s like having a bug on production that you can’t solve, that you’re not going to fix for a whole month or whatever. All of your users are running into that bug on a recurrent basis. So it’s way better to trade off speed, at least in the early stage, it’s way better to trade off speed for the ability to iterate, versus making it picture, picture perfect.

Rob Walling:
This ties into the next thing I was going to ask you about, which is in chapter seven, about pitching. You talk a lot about objection handling. And there’s a quote from the book. So periodically, Pete, I get quoted on Twitter. People will quote me back to myself, and I’m like, “I said that?” Could you point to a source? So, I love quoting authors back to themselves because-

Pete Kazanjy:
Oh, man, making me scared right now.

Rob Walling:
477 pages, and I’m going to quote you. No, your quote was, “Objection handling is where some of the most important work in sales is done.” And that sentence struck me, when I read it. Can you expound on that?

Pete Kazanjy:
Yeah, for sure. So the way to think about what we’re doing when we’re selling is, we’re trying to reveal need to someone. Right? Like, “Oh man, I didn’t realize the downside associated with a traditional seed round. That’s interesting. You’ve rebased how I think about things.” So, it’s revealing to them a need, an unmet need and the magnitude associated there with, presenting to them a mechanism by which to surmount that unmet need. Like, “Oh. Well the good news is, there’s this thing called TinySeed that never existed before.” “Oh, okay, cool.” And the value associated with that.
And then the last part is handling objections for someone who’s like, “Yeah, but I’m not so sure about this. Wait a minute, what about this? Wait a minute, [inaudible 00:24:03].” And so the good news is, is that when people are objecting, that means they’re engaged. Right? It’s kind of like, what is it? The opposite of love is not hate. The opposite of love is indifference. So in this case, someone’s actually objecting to things that you’re saying, at least they’re paying attention and they’re engaged. And so what’ll end up happening is, you’ll start identifying these common scenarios wherein somebody is objecting to the value proposition you’re presenting.
So, let’s use Atrium as an example. So Atrium makes this… we make data-driven sales management software. One of the things that’s super cool about it, it takes two minutes to set up. You just sign into your Salesforce account and poof, it creates a world-class metrics harness that then of course, is continuously monitored statistically to tell you when there are problems with metrics for this rep or that rep or whatever. Again, it’s automated Moneyball for sales teams.
All right, cool. Well you can imagine some sales manager or some sales interview, like, “But we have a very specific sales motion, so I don’t know if you’re out-of-the-box metrics are really going to handle it.” “You know what, Rob, I hear what you’re saying there, but it turns out that the revenue formula is the same, regardless of the organization. So bookings, wins, win rate, average selling price, the number of opportunities that are in your pipeline, the number of new opportunities that are coming in your pipe, customer facing meetings, those are all things that matter for organizations, regardless of which organization it is. I imagine that’s the case for you guys as well. Am I thinking about that right?” “God, you’re right. I guess I hadn’t thought about that.” “Yeah, moreover, you probably don’t have all these metrics right now. Moreover, you’re probably not recurringly analyzing them.” “That’s a good point, Pete.” “Wonderful. Yeah. So, were there other questions?”
And so what’ll end up happening is, you’ll start seeing these… you’ll start getting this map of questions that will currently come up. And then so one, you can have those objection handles ready. Two, you can have a slide for it, like, “Oh, I hear what you’re saying here, Rob. Let’s go ahead and look at this.” And then three, what you can do is you can start pulling that forward and you can start prehandling those. So essentially bringing it forward in the pitch in order to rehandle those, like essentially incept the person ahead of time so it never even shows up for them. Because like, “I know what you’re thinking.” If you’re some of the folks we talk with, you’re thinking this, right? You can deal with that, because literally all we’re trying to do is smooth the pathway to a purchase, smooth the pathway.
It’s kind of like a checkout flow. But in this case, because it’s a 10,000, 20,000, $30,000 contract, there’s not really going to be a swipe checkout flow. So what we’re trying to do is we’re trying to smooth that checkout flow as much as possible using words and pictures. And so having good objection handles is a great way of doing them.

Rob Walling:
In that chapter, you also touched on asking for the sale, which is a mistake. I see.

Pete Kazanjy:
Oh, yeah.

Rob Walling:
This audience of this podcast is, let’s say, 75% technical, maybe even 80% developers. And we, as a developer, former developer, myself, I just was always felt awkward to… ‘Cause it’s an awkward question, and guess what? It leads to rejection because people say no. But talk me through. How do you get over that and why is it such a critical thing to learn?

Pete Kazanjy:
I think at the end of the day, the thing that… This is something that hopefully I won’t get on a rant here. I can’t promise though. I can’t promise, I can’t promise. One of the things that drives me nuts is how people will tell folks like, “Oh yeah, there’s born sellers.” And I think that’s BS, right? I think it’s just practice. And so, good example because these things… As I noted earlier regarding sales mindset changes, these are just not supernatural behaviors, super common behaviors. But that doesn’t mean that they’re impossible. They just require repetition and kind of grooving those behaviors. And once you’ve done it a few dozen times or more than that, you’ve got the muscle memory going, you’re callous, and you’re on your merry way.
And this is why in that sales mindset changes chapter, I kind of talk about how you actually feel this weird psychological, neurological changes in yourself. And so asking for the sale is a great example of that. And then the good news is, there’s lots of ways that you can practice these things ahead of time. Because I think oftentimes, people equate sales to different athletic endeavors for good reason. Because what it is, is its these micro behaviors that are kind of motions you might engage in a baseball swing or a golf swing or a basketball player, what have you. And they’re not easy and they’re not necessarily natural. So you practice them. And then once you practice them, you get good at them, and they don’t feel unnatural anymore. You just do them like you’re falling out of bed.
And so asking for the sale is a great example of that, being comfortable to say, “So based on what you’re saying here, Rob, it sounds like you got about 15 sales reps and no sales operations function over there. And so I think you had mentioned earlier that you had a couple reps that like man, you really wish you had caught their underperformance earlier before you had to fire them a lot later than you had anticipated. We’ve shown you that how Atrium could have solved that. Based on what I’m seeing here, this really seems like something that would solve your problems. Am I thinking about that wrong or what are your thoughts?” And just shut up. Right?
And so, just doing that lots and lots and lots and lots and lots and lots and lots and lots of times is just going to make you way more comfortable. And so the way to kind of surmount that is to not avoid it. This is the worst way. But just to look for opportunities to test yourself on a recurrent basis. And so, there’s kind of micro behaviors that I like to say that people can engage in. As an example, you want to get better at just talking with folks and creating rapport? Just make awkward eye contact with people while you’re walking down the street. Just force yourself to. It’s just a small bit of practice, like, “All right, I’m just going to make eye contact with every person that I walk by and I’m going to smile at them. And that’s going to be a micro behavior that I’m going to do in order to force myself to become callous to that behavior.”
Maybe a more advanced version of that is, “I’m going to strike up conversations with people. I’m going to force myself to find something that I need to be able to hook onto.” When we started this call like, “Whoa, Millennium Falcon! Look out. It’s a trap.” Force yourself to do that. And low and behold, two months in, your behavior will be totally changed. And it’s a more advanced version of that is, “Right. So what the pricing would be for something like… You guys will probably be around 25 or $30,000. How does that feel?”

Rob Walling:
And then you shut up?

Pete Kazanjy:
Right. And that’s very difficult. But you can work your way up to it and then just do it again and again and again and again. So don’t avoid it, just embrace it. And just recognize that after you do it 50 or a hundred times, it’s going to just be a callous. And everyone can do it.

Rob Walling:
Yeah, that’s great. I love that, I mean, one of my personal mottoes, I’ve said it many times on the show, is, relentless execution. I didn’t become a success in two years. It took me, depending on how you define it, five years or 11 years or whatever. And it was showing up every day and doing repeated behaviors that I had to get better at. 15 years ago, I was not the entrepreneur I am today. And that didn’t happen by magic, it happened by wrote the execution and just doing (beep) that was hard and getting better at it. And so, I really like that idea.

Pete Kazanjy:
Put in the calories. You definitely have to put the calories in.

Rob Walling:
So as we wrap up, I want to ask you a question. Oh, so another fun side jack. So I went to ChatGPT before this just to see. I’ve never done this. And I said, “I’m interviewing Pete Kazanjy, author of Founding Sales, for my podcast.” I did the whole thing, did a prompt. And I said-

Pete Kazanjy:
You’re frightening me.

Rob Walling:
… “What interview questions should I ask him?” And it gave me eight interview questions that basically were… Six, were garbage. They are these high level, complete, (beep) general. It’s things you hear on a podcast where they’re just going through the motions, and that’s not what we do here. You can tell I dig into the material I want to hear.

Pete Kazanjy:
Yeah, yeah.

Rob Walling:
But two of them were actually pretty good. I think we’ll have time for one of them, and I’m going to tweak it a little bit. The question that they had was, “In your experience, what sets successful sales teams apart from those that struggle?” But I want to change it up because for this audience, there aren’t a lot of sales teams, there’s a lot of founders. So I was really thinking, let’s say that you had a situation where you have decent product market fit with your product, and you have two sales reps. They’re dealing with the same leads. One is closing one in 10 and one is closing three in 10. So, huge difference in performance. What are the one or two or three most common differences between those two individuals that you see?

Pete Kazanjy:
So I think what what’s funny is, you prune down the decision tree of what might be the problem there already, kind of like when setting up your hypothetical there. So the first thing, sales success is driven by a high quantity of high quality selling behavior. That’s why it again, is kind of analogous to a lot of athletic endeavor, because it’s very difficult to have non-linear scale with respect to B2B sales, because it’s essentially bounded by the constraint of a human and another human. So, there’s only 40 or 50 hours in the week or what have you.
So in your case, you said, “Hey look, this person’s got a win rate problem. They’re winning one out of 10. This person over here is winning three out of 10.” So, that indicates that it’s actually not an activity issue. It’s not that they don’t have an insufficient… they’re not doing an insufficient quantity of selling behavior, presumably. Let’s say they’re both having, I don’t know, five first meetings a week or seven first meetings a week or what have you.
So then the question there is, “Wonderful. So, what’s the issue with the person who’s only closing one out of 10?” So there could be a variety of things. Now we have to go upstream in the decision tree and say, “Okay, start looking at their opportunity conversion rates.” You can do this in your CRM and looking at opportunity conversion rates. We can do it in a more kind of minimum viable way here. It’s like, “Look, in the first meeting, are we revealing pain, or are we talking to people who literally don’t have the problem that we have?”
Because if we’re talking to people who don’t have the problem that we have, use Atrium as an example. If you have a rep who’s engaging with organizations with two sales reps, Atrium makes sense when you start have your SDRs plus AEs is greater than or equal to 10 all the way up to 500. So if you have a rep and they’re talking to organizations that are not ideal customer profile, like, “Oh yeah. Hey, how’s it going there, Rob? So, how many AEs you got over there?” “Oh, I got one.” “Okay, awesome. Let me tell you a little bit more about Atrium.” Right?

Rob Walling:
Right. Right.

Pete Kazanjy:
It’s like, “Get out, man. What are you doing?” Right? That’s not ICP. So that be the first thing is, need there. Right? Is need there? First. Second, are they revealing eliciting need to that person? Might not be doing a good job of that. “Hey Rob, how many accounting… I was looking at LinkedIn earlier, and it seems like you got about 15 AEs over there at Drip. Am I thinking about that, right?” “Yeah, you are. Yeah.” “Hey, good job. Good LinkedIn sort of thing.” “Yeah, thanks.” “Well here, let me just tell you a little bit about Atrium [inaudible 00:35:10].” And show up and throw up versus, “Yeah. So Rob, how do you go about measuring their performance? I noticed you don’t have any sales ops over there. Are you in charge of the reporting in all your free time? Wink, wink.” “Oh, man. Let me tell you about how hard it is [inaudible 00:35:29].” And that’s good discovery.
And so then the next thing would be based on that discovery, then fitting the value proposition to the discovered pain points, or discovered slash revealed pain points. And so you can break that down and see where is the hitch in that rep’s giddy up. And it could be any of the above. Maybe it’s none of the above right there, but the person is just a spazz and they don’t manage their pipeline effectively. Well, that would show up in other indicators as well. Like, “Man, when I listen to your calls, you do a really good job of these things right here. You just forget to send follow-up emails and set next meetings.” “Oh, okay, cool.” That would also lead to a low win rate.
So essentially, and this is where data-driven management comes in, is what you want to be able to do, is use metrics and data in order to interrogate. Again, I think your audience is largely developers. When you’re doing a stack trace or you’re trying to understand what’s wrong with your app, that’s what observability software is for, is to help you understand where is the hitch and the giddy up? Is it in the front end? Is the page not loading because there’s a problem in the front end, or is the page not loading because there’s a problem with the network? Or the page not loading because there’s a problem with the query? Where’s the problem at? And so, that’s how you can interrogate that on a per human basis and understand where the issue is.

Rob Walling:
It’s like debugging. Debugging. No, but-

Pete Kazanjy:
Super-

Rob Walling:
… debugging anything is hard.

Pete Kazanjy:
It’s debugging. It is debugging.

Rob Walling:
I like the analogy you use there. Yeah, that’s super cool.

Pete Kazanjy:
Except in this case, they’re humans, so they’re squishy and messy. And they’re not deterministic and they don’t execute the same way every time. So we talk about this with people all the time, because we’ll talk with sales operations folks or whatever. And they’ll be like, “Oh, but I don’t know how precise the metrics is.” It’s like, “My brother, we are measuring humans here. So our statistical significance, or our significant digits cannot be more than the nature of the problem that we’re measuring, which are humans right now.”

Rob Walling:
Yeah, that’s great. And that’s something that is… Sales feels… Sales and marketing. If you’re a developer, sales and marketing feel complex and scary and like a black box. And they’re squishy, and it’s all due to that. You can’t run a stack trace on your sales team. You have to pull in a bunch of metrics and look at it.

Pete Kazanjy:
The thing that people mistake is, people look at it and they say, “No, no, no, it’s only art.” They’re wrong. And then there’s other people are like, “No, no, no, it’s only science.” They’re also wrong. It is a science that is around people. Again, kind of athletic analytics and kind of things like that. To say that you can’t use metrics and numbers to instrument and improve the human behavior is of course, silly pants. Right? Because I’m sure a lot of the audience listening at home, they probably have Apple watches or WHOOPs, or maybe Oura Rings or Eight Sleep or whatever. And numbers are our friends. That’s why the Babylonians came up with them, right?

Rob Walling:
Right. And even if you can’t to a hundred percent, it’s like website attribution or click through attribution. It’s not a hundred percent. And I hear people online, it’s especially people who don’t want to market, are like, “Well, attribution just doesn’t work.” And it’s like, “No, it does work. It’s just not a hundred percent, but some attribution is better than nothing.” And that’s-

Pete Kazanjy:
Exactly. The appropriate level of specificity.

Rob Walling:
Yep. Well, Pete, thanks so much for joining me today. Folks want to check out your book, Founding Sales.com, and of course, your Pete Kazanjy, K-A-Z -A-N-J-Y, on Twitter. Thanks again, man.

Pete Kazanjy:
Yeah, you bet. Thanks for having me, Rob.

Rob Walling:
Thanks again to Pete for joining me this week, and thank you for showing up every week. If you keep listening, I’ll keep recording. This is Rob Walling, signing off from episode 649.