Startups For the Rest of Us

Rob Walling:
So in my opinion, while I hate saying, “Well, you should just build it,” in the cases of a lot of these smaller products that you’re trying to get into the marketplaces, I think that building it first without doing a ton of validation is probably the way to go. It’s to act quickly, get something tested. Now, realize that it may fail and you may have wasted that time and that’s validation that it was a bad idea.
The problem with building without validating is usually building takes, what, six months, 12 months? Heaven forbid people spend 18 months sitting in a basement building and they’ve pissed away all that time when they could have done some validation and quickly gotten a signal of whether it’s going to work or not.
Welcome back to another episode of Startups For the Rest of Us. I’m your host Rob Walling, and in this episode, I’m going to answer listener questions. We have a great backlog of questions. I’m going to work through as many as I can today.
Before we dive into the first question, I wanted to let you know that my fourth book is complete. It’s called The SaaS Playbook: Build a Multimillion-Dollar Startup Without Venture Capital. It’s not solely focused on bootstrapping, you can raise a little bit of money, it’s just not going down the venture track. It’s all the things I talk about here on this show and at MicroConf and through TinySeed.
If you want to learn more about the book, see what I cover inside, read through the table of contents, download a couple sample chapters, head to SaaSPlaybook.com. I’ll be running at Kickstarter for the book in the next few months, and if you want to be notified, you can sign up for the email list at SaaSPlaybook.com, or better yet, head to StartupsFortheRestofUs.com. Enter your email there, and you’ll not only get the two secret episodes of Startups for the Rest of Us where I talk about things you should know and things you must know as you build and grow your company, we also have some guides that are attached to those, PDF guides, as well as a download of the 5 P.M. Framework.
But with that, let’s dive into our first listener question about challenging a nonprofit as a software startup.

Kevin:
Hey Rob, this is Kevin from Ohio. I’m curious your thoughts around attempting to challenge a nonprofit incumbent as a software startup, I’m looking at what I consider to be a pretty major opportunity in a niche of the higher education space where the current experience is both extremely expensive and inefficient for all parties involved. It’s not hard to find a lot of people complaining about the current situation on social media and some programs are openly exploring alternatives at the moment.
But I’m just wondering if you see any roadblocks in challenging a nonprofit that don’t exist when challenging another private company. Appreciate your thoughts, big fan of the show. Thanks very much.

Rob Walling:
Thanks for that question, Kevin, and of course, his question went to the top of the stack because it’s an audio or a video question. You can go to StartupsfortheRestofUs.com, click ask a question in the top nav and submit your question, and just in case you’re concerned that you might mess up while asking the question, we actually edit the questions to make everyone sound smart. So if you have a question, send it in.
To answer your question, Kevin, I can’t think of too many things that change when competing against a for-profit versus a nonprofit. I think the only thing that comes to mind is a lot of nonprofit software and a lot of nonprofits are essentially subsidized by donations. So if they are offering something cheaper than you are able to, that could obviously be an issue because they’re essentially subsidized by this external funding source.
Another thing to think about is if they’re a nonprofit, do they somehow have the moral high ground? Are they always able to say, “Well, we’re a nonprofit so you should support us and not this evil capitalistic for-profit company”? I don’t know. I don’t know if that’s the case. If everyone’s unhappy with them anyways, this probably won’t be an issue.
But aside from those two things, I honestly can’t think of anything that would stand in your way that wouldn’t be just a standard competition against an incumbent competitor.
My next question is more of a topic suggestion and it comes to me from Craig Hewitt. He actually posted in one of the Slack groups that I’m in, and he posted a link to Wistia Live, which is, as Wistia calls it, “The only tool marketers need to create, host, market and analyze webinars.” And Craig says, “I don’t know what to make of this from a bigger picture perspective, but it’s interesting to see everyone building tools that encroach on neighboring tools’ turf. It sure seems like the way most companies are choosing to grow these days. This might be an interesting topic for Startups For the Rest of Us.”
And it is an interesting topic for Startups For the Rest of Us. I think my thoughts are pretty straightforward on this. Most companies build a product and that product tops out at a certain point whether you have other competitors fighting against you, whether there’s just only so many SEO keywords you can rank for, you are going to plateau. And some products, like step one businesses, they plateau at two grand, five grand, ten grand a month, and others that can be multimillion-dollar products, they still plateau at some point. Maybe it’s one, maybe it’s $10 million, maybe it’s $50, but unless you’re a B2C play, you inevitably plateau with your first product.
And so there’s this great article called The Elephant in the Room: the Myth of Exponential Hyper-Growth. We’ll link it up. It’s by Jason Cohen, and in essence, he talks about this exact scenario and he called it the elephant curve or the S-curve, but you have this growth and then you plateau. And when you look at companies that continue to grow year after year after year, it’s almost never, especially in the B2B space, pretty much never a single product. I think Slack might be one exception I can think of. Salesforce, they have like a gajillion products. HubSpot, they have a bunch of products. Intercom, they have a bunch of products. These companies that get into the billions in B2B usually have a number of products.
And so in this article that Jason Cohen wrote, he talks about how in ’06 HubSpot was founded, they launched their Marketing Hub. In 2011, they acquired Performable, which was landing pages and I believe there was some split testing in it. And then in 2014 there were about $100 million and they launched CRM, and they launched their Sales Hub, and then they launched their Service Hub launch. I don’t even know what that is, but in 2017 they did, and they kept growing and you can see this graph of them launching product after product after product and it becomes inevitable. There are only so many big spaces in B2B SaaS that eventually you are likely to just stumble into the next adjacent space.
If you think about video hosting, webinars are a pretty obvious adjacent vertical, I’ll say. It’s not even a vertical, but just an adjacent market. Similar if you were an email service provider, there are some adjacent pieces to that. There are landing pages, there are driving ads to those landing pages and you saw Mail Chimp launch landing pages and then launch a Facebook ad builder, so they became more of a marketing suite, and I’m imagining that they will continue to pick off more and more pieces of that pie.
Similarly, if you launched a social media posting tool, first you’re going to go after Facebook or Twitter, and then you’re going to slowly add all of them. It’s an obvious thing. And then you start thinking, well, how else are people using this for? Oh, well, they’re using it for customer support. Let’s kind of build a support tool into it. And then you realize people are reviewing drafts of their content in there, so you build a whole content workflow, which is another adjacent product.
This naturally happens and it doesn’t happen in the first year. It happens in the fifth or the 10th or the 15th. When we see companies like Wistia and HubSpot and Intercom, whatever other B2B SaaS, MailChimp that I just mentioned, these are companies that have been around for a decade or two in some cases, and I view it almost as inevitable that companies that are around that long and are not acquired by another company and swallowed up and absorbed, that those companies will inevitably slowly just merge towards the big markets. And the big markets always have competition.
So thanks for that topic suggestion, Craig. Hope you found that insightful.
This next question’s a quick one. It’s text, but I am going to squeeze it in because I think it’s a fast answer and it comes from Andy. The subject is incorporating as a Delaware C Corp.
He asks, “Hey Rob, love the podcast. It’s been so helpful as I get my business off the ground. I’m starting to generate some revenue and have some high hopes for 2023. After some research, it seems like a Delaware C Corp will be my best route for my business. Is this something I should hire a lawyer or I can do myself? Thanks for all your help.”
So first off, I want to call out a prior episode of Startups for the Rest of Us that if you are deciding between LLCs, S Crops and C Corps, this is the US-based conversation obviously, but you should look at Episode 442 of this here very pod called, “Corporate Structures and How the Choice You Make Now Can Impact You years Down the Line.” Einar Vollset and myself sat here and talked for 35 minutes about the pros and cons of making that decision.
Once you’ve made that decision, I recommend Stripe Atlas. Stripe Atlas is amazing. So five years ago, the question of forming a C Corp, I would’ve hired a lawyer personally, pay someone $1,000 bucks, $2,000 bucks, and they file it for you and then you do have the extra tax burden of having a CPA file a C Corp return for you each year.
Now if I were doing it, C Corp LLC, I would go straight to Stripe Atlas. I believe the cost is $500, and we see TinySeed companies all the time using it. The docs are clean, the IP assignments are clean. I’m a big fan of Stripe Atlas and frankly, that is my recommendation. If for some reason Stripe Atlas doesn’t work for you or you can’t access it, then yes, I would hire a lawyer.
Can you do it yourself? Probably. You can go to a service like Lexgo, which is a TinySeed company, or you can go to Rocket Lawyer and do it yourself or just spend the hours and hours combing through government docs because I feel like it’s not that complicated, but you don’t really know what you’re doing and the odds of you doing something wrong are pretty high. So I would lean towards getting outside help.
Thanks for that question, Andy. Hope it was helpful. My next question is from Jeff in my very own Minneapolis.

Jeff Lynn:
Hey Rob, this is Jeff Lynn from Minneapolis, Minnesota. I started listening to your podcast about six months ago, so I’m relatively new to it. I’m catching up on some old episodes. Your most recent episode with Andrew Berkowitz on building happy, high-performing teams really resonated with me.
I run an 18-year-old software services company called Bust Out. We design and build custom mobile apps and websites. My question is around bootstrapping a spinoff startup from a dev agency. About a year ago, I also started a new company called Pennant. We’re a technology platform that enables performing artists to launch their own custom-branded streaming video platform on web, mobile and TV. We’re fully bootstrapped. We have some revenue, we have some customers, but my question is what are your thoughts on software services agencies spinning out product startups? We’re seeing some benefits and some challenges and just curious about whether or not you have any thoughts around that.
All right, thanks. Bye.

Rob Walling:
Thanks for the question, Jeff. This is a really good question and a common one. I know so many people who are either freelancing or they run an agency just like you do.
I actually ran a micro agency, I called it, where it was just me with several contractors and we would build websites and build, at the time it was asp.net, line of business applications, and that’s what I was doing as I transitioned into full-time product income.
And so my thoughts are yes, it’s both a luxury and an absolute pain in the ask because the luxury is you have dev resources and/or marketing resources and you have revenue, you have some type of money you can invest in this, which a lot of people doing it nights and weekends don’t. The hard part is every resource you throw towards your product is not a billable hour, and so it can feel like you are sinking costs into something that could be highly profitable for you if you were billing them out to a client.
In addition, I think the biggest killer or roadblock trying to have an agency launch products is they never get the focus that you need. You always get distracted running your agency because that’s what pays the bills. And so if it’s a decision of making another sale with the agency or trying a marketing approach that may not work for 4, 5, 6, 8 months, SEO content, pay per click, anything, anything we could talk about can take time to learn, usually you err on the side of keeping the cash cow business going, and that can be really challenging to be honest. That’s probably the biggest reason I see agencies not able to make the switch is the constant distraction.
So this can be easy if you’re big enough. Let’s say you have 30 developers and you’re hiring everyone out making X dollars per hour. If you take one or two of them and put them on a product and they don’t have to do any client work, well, at least they now have focus. Can you then spin off a designer or someone to almost be the founder, and they don’t have to own equity, but it’s “the founder” such that they can focus full-time on trying to grow or validate or do customer development on this product?
If you think about it, most products, especially SaaS, they don’t work, even those that are focused on full-time. You think of all the founders you’ve known that have quit their day job and worked on a product and had it not work out or have raised funding and quit their day job to work on a product and had that not work out. You are trying to do something that’s very hard and if you’re not putting people who can focus on it full-time, it’s yet another disadvantage. It’s taking bad odds and cutting those odds in half or in thirds. It’s making them even worse.
Now, not everyone has the luxury. If you’re an agency of eight people, it’s hard to carve off a full-time person to go work on that product. And so that is where, if I was running an agency, like I was… Mine was micro. It was a handful of people and I was the only founder. I did try to reserve nights and weekends, and if I had time during the day when I wasn’t doing my paid work, I would transition to working on my own product. But it was hard and it was like working a day job and having a side project. That is the way things go: very slow, and you often find yourself getting discouraged.
And so if, in any way, you’re able to carve out dedicated, focused resources who really want to grow this and make the product work, that’s going to put you in the best position to win. So thanks for that question, Jeff. I appreciate it.

Brian Geery:
Hey Rob, Brian Geery at SalesNV. I listen to your podcast all the time. Thank you so much. We have a SaaS product and we just signed on our first paying customer last month, so we’re early stage and we’re in product market fit.
The problem I’m running into is we solve a problem that’s more of a latent pain than a blatant pain. The software we sell enables everyone to demonstrate software like top performers, and we think our target audience is CEOs and VPs of Sales, is high-growth SaaS companies, but we also believe they’re not necessarily walking around thinking, “Of all the problems I need to solve today, I need to get everyone to give better demos.” So there’s an education process that hey, bad demos or mediocre demos really slow pipeline velocity, and if you fix that, you can significantly increase your revenue.
So the question I guess is any thoughts about how to go to market when I’m solving a latent pain, not blatant pain? Thanks so much.

Rob Walling:
Thanks for the question, Brian. It’s funny, I’ve never heard latent versus a blatant. I think of it like perhaps an aspirin and a vitamin where an aspirin is urgent and a vitamin is something that you can solve now, or maybe it’s not top of mind at the moment.
First off, it is kind of a bummer, right? If you’re solving a blatant pain or an aspirin-type of pain, you have a huge advantage because people are searching for it. And that’s where you do content marketing and people search for that in Google or on YouTube and you just get in front of them. Those are the best and fastest growing businesses that you can build. But it doesn’t mean you can’t build an interesting business with more of, as you said, a latent pain, or as I would say, maybe solving a vitamin problem that someone does have, but they don’t need, need to fix it today. It’s just stacking the odds against you just a bit.
So in your shoes, I would do two things. Number one, I would try to find out if there is a small subset of the world who does sales demos, where having them be better and having them be at the level that SalesNV provides really, really is important. And it may not be a huge market, but maybe it’s 5% of prospects. If you get a huge email list of all the people who do sales demos, maybe it’s just a small fraction, if you can figure out a way to identify those, maybe it’s all SaaS products or maybe it’s some other type of technology, I don’t know, but those would definitely be the folks I would start with if you can find that.
If not, and you are trying to find marketing channels that bring new prospects who are open to hearing from you and open to doing a demo with you, they’re not going to be searching for you, as you’ve said. And so you either need to go with outbound, like cold outreach through LinkedIn and email, or you need to do content marketing and education around adjacent topics so you go higher up in the funnel. So instead of talking directly about your product, you just educate everyone and you become the voice in sales demos, best practices, how long they should be, how you should handle them, how to handle objections, scripts for sales demos.
And you, essentially, you either partner with someone who’s already doing this if they don’t already have their own company or you become either yourself personally or someone on your team, becomes that voice that people listen to around demos that when everyone thinks of sales demos, we think, “Oh, that’s SalesNV.”
And you see Steli Efti has done this and he runs close.com. He’s become a master educator and a voice that people go to and listen to on this topic of all things sales. He’s written e-books on it, has tons of videos, podcasts, tons of written content all around that, and that just brings people into your orbit in a way that then when they think of sales demos, they think of you. And when they think of improving their sales demos, then they are there and they’re seeking SalesNV.
There are, of course, many other ways to go about it. There are a total of 20 B2B SaaS marketing approaches. I did a bunch of research and de-duped and gave it thought and I put them in my new book. It’s at SaaSPlaybook.com. It’s not available yet. I’m going to, as I said at the top, I’m going to kickstart it later in the year, but there are a total of 20 approaches that I would consider working for B2B SaaS, but not all will work for you because if they’re search-based, no one’s searching for it, that’s a problem. But there are plenty of others that are getting in front of people, whether it’s at in-person events or the other two I mentioned. There’s content marketing, idea content and SEO, building that personal brand, and of course cold outreach, which is what a lot of companies do.
So thanks for that question, Brian. I hope it was helpful.

Steven:
Hey Rob, big fan of the show and also of your MicroConf events. I got to see you in Atlanta and it was super cool to hear from you and Ben Chestnut.
So my question is, you talk a lot about the Stair Step Method and your suggestion is to build apps within app marketplaces because it helps with customer acquisition and helps with the marketing. It’s all built in. So the question is how do you validate ideas for those kinds of marketplaces? Because with a typical SaaS idea, you can kind of throw up a landing page and drive some traffic to it with Google Ads or Facebook Ads, what have you. But for these app marketplaces, the need tends to be somewhat more niche.
So I was just wondering if you had any ideas for how to validate ideas for those marketplaces. Thanks a lot. Really appreciate your show and what you do for us. Thanks.

Rob Walling:
Here’s a really good question. Thanks for that, Steven. And it’s cool that you made it to our MicroConf local event in Atlanta. We’re hosting some more events this year. If you’re listening to this and want to get together with between 50 and 60 amazing bootstrapped and mostly bootstrap founders, head to MicroConf.com/locals.
So Steven, to answer your question, it’s a really good one and it’s one that I get now and again, two thoughts come to mind. One is if I see something in, let’s say, a Shopify marketplace, and I don’t see it in a competing e-commerce marketplace, and I think you can tell by how many reviews there are. If there are five reviews, maybe it’s not very popular, but if this thing has 100, 200, 300 reviews, that to me is some validation that this could be useful in the other marketplaces. That’s just a research piece. The actual validation where you would normally have potential customer conversations, put up a landing page, all that stuff, you don’t really do that with these marketplace apps, these step one apps, because they should be pretty quick to get to market.
I think you could build a lot of these step one apps in a few weeks, maybe a month, and in that time, you could spend that trying to validate or you could just get the thing in the app store, get the thing in the Shopify, the Heroku, the Salesforce, the HubSpot Marketplace, and see how it goes and start tweaking around with the SEO to try to rank high and to get some people to use it in order to get reviews to try to rank high, whatever the algorithm is.
So in my opinion, while I hate saying, “Well, you should just build it,” in the cases of a lot of these smaller products that you’re trying to get into the marketplaces, I think that building it first without doing a ton of validation is probably the way to go. It’s to act quickly, get something, test it. Now, realize that it may fail and you may have wasted that time, and that’s validation that it was a bad idea.
The problem with building without validating is usually building takes what, six months, 12 months? Heaven forbid people spend 18 months sitting in a basement building and they’ve pissed away all that time when they could have done some validation and quickly gotten a signal of whether it’s going to work or not. But if you are literally spending a handful of weeks to get an MVP into an app marketplace, I think I would, as a developer, I would just go do that because the best validation you can get is people actually buying and using the product.
So thanks for that question, Steven. Hope that was helpful.
Last question of the day is from Rob Eids. He says, “This is Rob from Super, the digital platform for UK financial service providers. I’m a big fan and longtime listener. I was listening to a MicroConf on Air episode,” so this is the MicroConf podcast and we pull audio from our YouTube channel, and I have a YouTube video titled, “How to Get Your First 100 Customers for Your SaaS Product.” And we pulled that audio and put it in the MicroConf podcast feed. You can check that out on any pod player you like by searching for MicroConf.
Back to his email. You mentioned building a landing page with opt-in email and offering updates to subscribers. Could you give some more insight into one, how you would get relevant people to the landing page? And two, what do you recommend offering that works well in your experience?
So I’ll start with the second one first. The answer is, it depends. So when I was going to start an in-person event, MicroConf back in 2011 with my business partner, Mike Tabor, we put up a landing page and we just said, “Enter your email to hear about when this goes live.” And we had enough enticing language that you were signing up to hear about when tickets were available. Right now, I have a landing page for a book. I mentioned it twice already, SaaSPlaybook.com. If you had there, I’m giving away a sample chapter and the table of contents. I’m not trying to give people a Starbucks gift card to do it because then I don’t think that they would be that invested in the book. It’s something around the book. If they want this content, then they’ll enter their email.
When I had the landing page up for Drip, which eventually became an email service provider, I was really just promising the value of what the product would provide. It was a headline that said, “Make more money from your existing customers by capturing emails with an easy-to-use widget,” or something. It wasn’t that long. It was a much better H1 than that, but it was like the value proposition. If you weren’t interested in that value prop, I didn’t want your email because you weren’t going to convert to a customer long term.
So I don’t tend to give stuff away on these landing pages, maybe a sample chapter or something, but I tend to try to entice and intrigue with marketing copy of like, “This is going to be an interesting thing. If you are in this niche, you’re going to want to know about this.” That’s how the book and the conference, and frankly, TinySeed, same thing. We didn’t give anything away on the landing page when we first launched TinySeed, and I believe we got, I don’t know, about 3,000 emails in span of a week. It just said, “We’re launching TinySeed. It’s the first startup accelerator designed for SAS Bootstraps. This is how we’re doing things different, not venture track. We think this is going to be amazing. We hope you’re along for the journey. Sign up to hear about when we launch,” and we got tons and tons of interest.
So that’s what I would offer on a landing page to see if I can gauge interest or get people intrigued by it.
The question of how to get relevant people to landing pages, it’s just marketing, right? It’s buying the book Traction by Gabriel Weinberg. It’s honestly, The SaaS Playbook, which comes… I know you don’t have that now, so it doesn’t help you, but I go through how to choose marketing approaches. A landing page is the same as your product. Whatever you do once you launch a product, you’re going to have to try those things while you have a landing page. So when the Drip landing page was up, I was running Facebook ads to it. I was talking about it on podcasts. I was talking about it in my email newsletter. I was writing tweets and blog posts. It’s all B2B SaaS marketing approaches.
Now, cold email is an interesting one. If I were to cold email, I wouldn’t send him to a landing page. If I was doing cold outreach, I would just be wanting to have conversation like, “I’m building this thing. I’m not selling anything yet. I’m a founder. I’d love to find out if you have this pain.” That would be an interesting way to get leads as well. And if you have that conversation, if people say, “This is a desperate pain for me,” then you can quite easily… I probably wouldn’t put them on the email list. I’d put them in, at that point, it’s a Trello board or a Pipedrive because they’re kind of in an early sales process.
But just validating by sending people to a landing page is going to be something like, can I write a blog post that’s around this topic that makes it to the top of Hacker News? Can I answer questions on Quora? Can I do some SEO and content marketing? Do we start a podcast? Do we start a YouTube channel? Do we guest post? Do we guest on podcast or YouTube channels? Do we do cold outreach? Are there ads we can run? Again, it’s the list of 20 B2B SaaS marketing approaches, and you look at those and think, which one or two of these can we try first to see if we can drive interested parties? Because it depends on where they hang out and whether they’re searching for it or not. If someone’s searching for the solution that what you’re ultimately going to build solves, then people will be searching on Google for it. And even if the ad words clicks are expensive, it’s worth it to learn in these early days.
Capterra is another one. If you are within an existing category… Actually, you know what? I don’t know that you can be listed in Capterra if you’re still a landing page, so maybe scratch that one. But SEO and pay-per-click are pretty incredible if people are actively searching for it. If people are not actively searching for it, then you have to do what I talked about earlier, go up the funnel or go into adjacent spaces and start educating people and pulling them there. Now, you don’t want to go too high up the funnel because people, they won’t convert.
So the answer to how to get people to your landing page is it really depends. It depends on where people hang out and how they’re searching, if they’re searching. How will they find out about it once you’ve launched? Cool. So however they’re going to find out, then that’s what you do to try to get them to this landing page.
So thanks for the question, Rob. I hope that was helpful.
That’s our last question of the day. Thank you so much for joining me. I love these listener question episodes, and I hope you enjoy them too. This is Rob Walling signing off from Episode 648.

Rob Walling:
Welcome to this bonus episode of Startups For the Rest of Us. I’m Rob Walling, and today I’m chiming in to let you know that TinySeed applications for our next batch are open. They close in a couple weeks on February 19th. If you or someone you know might be interested in the right amount of funding for Bootstrap SaaS, amazing mentorship, world-class community, all the support you need to get there faster, you should head to TinySeed.com/apply. That’s it for the key takeaway of today’s bonus episode.
I also wanted to include the audio from a livestream I did yesterday with a couple other TinySeed folks, our program director and program manager, and we answered audience questions about TinySeed, about the program, anything that someone is wondering about, we talked it through. What’s amazing is even after doing a lot of these livestream Q&As, we still find that there are interesting and informative questions being asked, and each time we think, “Well, we’ll probably get through these in about half an hour and by the end, we’re just racing to answer all of them.
The session had a lot of energy and if you’re interested in learning more about TinySeed, even if you don’t plan to apply, it’ll be a fun listen. If not, delete it. I’ll be back with your regularly scheduled programming next Tuesday morning, US time. With that, let’s roll right in to our TinySeed Q&A. We are live. I love that TinySeed piece.
Alex McQuade:
I know. I love it so much.
Rob Walling:
I’m-
Alex McQuade:
It’s such a pump up song.
Rob Walling:
I’m very excited. It’s like Eye of the Tiger. I’m [inaudible 00:01:35] Rob Walling and I am here with Tracy Osborn…
Tracy Osborn:
Yep. Hey, happy to be here.
Rob Walling:
… Program…
Tracy Osborn:
Super happy.
Rob Walling:
… Program Director of TinySeed and Alex McQuade.
Alex McQuade:
Hello. Super excited to be here as well.
Rob Walling:
Program manager for our EMEA program. We have a lot of good questions. Looks like people are piling into the stream. Thank you so much for joining us today. This is our fourth or fifth time we’ve done this and every time we think A, there’s not going to be a lot of people that show up and we’re always wrong, and B…
Tracy Osborn:
We’ll just be [inaudible 00:02:03].
Rob Walling:
… there won’t be enough questions and we’re always wrong, right? This will be [inaudible 00:02:08].
Tracy Osborn:
It feels like we did did this last month. Time is…
Rob Walling:
I know.
Tracy Osborn:
… totally flies.
Alex McQuade:
[inaudible 00:02:11]? Yeah.
Tracy Osborn:
Mm-hmm.
Rob Walling:
I always leave here feeling energized and excited. Applications opened three days ago? Tracy, you want to talk a little bit about?
Tracy Osborn:
What day is it? It’s Monday?
Rob Walling:
It is.
Tracy Osborn:
Yeah.
Rob Walling:
It is Wednesday. Yeah.
Tracy Osborn:
Oh sorry.
Rob Walling:
No Thursday?
Tracy Osborn:
The applications opened on Monday. Today is Wednesday. Speaking of time flying. Yeah, our application round, applications are open. We’re taking applications for our spring 2023 batches, that’s Americas and EMEA open on Monday and they go through February 19th, which I think is a Sunday, Sunday at midnight eastern time.
We’ll be closing applications and then we’ll be starting the big review process. If anyone who is applying, just FYI, you have the ability to save your application so you can start your application anytime during this period. You just have to make sure it’s submitted by that February 19th date.
Rob Walling:
Save your application at any time. Brand new, super awesome functionality built by our very own…
Alex McQuade:
That’s a fancy feature.
Rob Walling:
… TracyMakes.
Tracy Osborn:
Yeah.
Rob Walling:
You want to talk about the new application we built?
Tracy Osborn:
Yeah, we might have… We’ve been talking about application systems for a while, I think, on our live streams and when we’re talking about startup ideas, we’ve always wanted an application system. We’ve really wanted to improve the user experience for the folks applying for the program. We have a new application system this round, testing it out, and it’s working really well. It’s a lot prettier, hopefully easier to use, has that save functionality. It’s a little goofier too, which is I think a fun, lots of little fun little touches we put into the system this round. Yeah, new application round, check it out.
Rob Walling:
Stoked.
Tracy Osborn:
A system rather.
Rob Walling:
Alex, before we dive into questions, anything you want to add about the EMEA batch? I know that the last time we added a sec… We are going to do one EMEA batch per year and then we got so many applicants, decided to [inaudible 00:04:01].
Tracy Osborn:
Yeah.
Alex McQuade:
I was going to say, that was our big announcement last round.
Rob Walling:
Yes.
Alex McQuade:
Two rounds. I would just say that I think it was the right decision. Our second batch was just as exciting as the first. The EMEA program is strong and growing. If you are in Europe, Middle East or Africa, come join us. Yeah, we’ve got a really strong group and I’m excited to keep it going.
Tracy Osborn:
Yes.
Rob Walling:
Awesome.
Tracy Osborn:
I see that little comment. New application system is five star. That makes me so happy.
Rob Walling:
Amazing. TracyMakes spent a lot of time on that. It’s great.
Tracy Osborn:
Yeah. You can see my former life was a designer. I was able to really fuss with it.
Rob Walling:
Dial it in.
Tracy Osborn:
Mm-hmm.
Rob Walling:
Cool. Well, let’s dive a little bit into questions. We have a lot of them coming in. I want to make sure we cover them all today. First question, what are some of the things, oh, what are some of the things that… Do we want to start with that, Tracy? Do we want to start with the other topics or should I dive into?
Tracy Osborn:
Hey, let’s talk about the application. Let’s just continue the little story about the application system.
Rob Walling:
Okay.
Tracy Osborn:
I think a little bit, I think, it’s really illuminating for us to go over some of the things that we value during applications, things that we’re looking for. If you don’t mind, I’m just going to lead off, we’ll do a brief overview here. We do also have a blog post, it’s… What is it called? What are the best fit startups for the TinySeed accelerator?
If you want to read it in full, we’ve listed out some of the top things we’re looking at in each application. Things like what’s your revenue, because TinySeed is a program focused on helping startups scale, not find necessarily product market fit or find their idea or really establish idea. We’re working for, looking for folks who are generally above 500 in MRR at the time of application and that can go actually way up. The minimum is 500 MRR.
If you’re at zero MRR, you’re just testing out your idea, probably isn’t the right time to apply for TinySeed. You still can and get on our radar and submit for applications once the company has grown to the level we can start scaling, but those are some of the things we’re looking at first is where you are in revenue levels so that the program works for you and helps you scale and you’re at the place where you can really take advantage of the things that we’ve built. That blog post has in full. What are some other things that you want to call out?
Rob Walling:
I want to piggyback on that and say that you don’t need product market fit to apply because if you’re at a thousand MRR, often you have very weak, if not any. We do help people strengthen product market fit and then scale up and we’ve accepted folks from, like you said, in that 500 to 1,000 MRR range all the way up to 100,000 MRR.
Tracy Osborn:
A hundred, Mm-hmm.
Rob Walling:
The biggest company that’s ever put part. That gives you an idea of the range [inaudible 00:06:52].
Tracy Osborn:
Range.
Rob Walling:
The other things, and we look at like, are you SaaS? Are you a software tool? Not 80% consulting, because we’ll have agencies apply and say, “We have all this revenue,” but it’s like…
Tracy Osborn:
Or physical product, which is like, yeah.
Rob Walling:
… it’s all [inaudible 00:07:05]. Right, physical product because we want to back companies we can help and we are really, we are world-class at this one little thing and it’s SaaS, B2B SaaS, right? We have evaluated like B2C is always on the edge and we kind of never do it because the churn’s too high and the price point’s too low. We like to see MRR. We like to see growth rate. We like to see is this probably in a niche that’s not going to be commoditized there.
We’re not scared of competition, but you can see certain trends in certain spaces where it’s like, “Ooh, there’s a lot of open source in that.” We may want to back away, but the TinySeed Q&A drinking game is I say Sunday, Sunday, Sunday so you can remember when applications in, and at this time it’s Sunday night.
Tracy Osborn:
Not this Sunday.
Rob Walling:
Not this Sunday…
Tracy Osborn:
Next Sunday. Yeah.
Rob Walling:
… but the next Sunday, Sunday, Sunday. If in doubt, fill it out. That’s the thing. If you’re in doubt, you can ask questions, like, “Should I apply?” My answer’s going to be, “Probably,” because it really, it takes about 10 to 15 minutes for you to apply. It takes us a minute or two to review. If you’re in doubt, you can certainly ask, but if in doubt, I would say fill it out.
With that, let’s dive into our first audience question. Ranma on YouTube says, “Hey, thanks for putting this together. How do we answer the ARPU, Average Revenue Per User, customer lifetime value? How many customers do you have? If we have a business that is transitioning to a SaaS model, but it has prior revenue?”
Tracy Osborn:
As you can tell, we like metrics.
Rob Walling:
Yes, we ask for a lot of metrics.
Tracy Osborn:
We are very metrics-focused. Yeah.
Rob Walling:
I’m going to say what I think and I’m curious if you two agree with me. I would say, put in your SaaS or software numbers and metrics and then we have a MRR clarification text field, and you can just put, in addition to this, we have consulting revenue, blah, blah, blah, blah. Just put it out. We are humans reading this. It’s not some AI. We will read through the application. I would tend to want the software metrics to be at the forefront as I skim down it and then something added. Alex, do you agree?
Alex McQuade:
Yeah, and I would say that’s how I would answer the question. I would also add, we sometimes get a similar question, what if my business is B2C, but I’m adding or I’ve started to add a B2B side of the business and obviously you said your focused on B2B SaaS businesses. Likewise, I would say share that with us. What are the metrics for the B2B side of the business? How much revenue have you started to generate there?
You can also share the B2C side. We’d like to hear that, but we’ll primarily be interested in hearing what traction you’ve gotten on the B2B side. Yeah, I think the MRR clarification field is the right place to just give us some context. We’d love to hear what you’re doing and some background.
Rob Walling:
All right. Next question from Plugged In on YouTube, “How many people apply and how many people get in?” We don’t publicly release detailed numbers. I will say, we’ve had, I forget if it’s like, it’s several thousand, 3,000 applicants, but that’s across all of the batches. We accept around 2% of applicants maybe.
Tracy Osborn:
I was going to say 3%.
Rob Walling:
Somewhere in that range.
Tracy Osborn:
Yeah. Mm-hmm.
Rob Walling:
It’s like 2 to 3% get in. More exclusive than Harvard University.
Tracy Osborn:
Yeah. Again, we’re looking for folks that can take advantage of the program, who can really benefit from the education and things that we put out there. It’s not like 100% of those folks are good fit and we’re really narrowing down to that tiny percentage. Look at that blog post. You can again see what we’re looking for in terms of applications and in terms of best fits. Obviously, the folks who are best fits for TinySeed. The acceptance rate is a lot higher.
Rob Walling:
Yep. That’s true. All right. Plugged In, nope, nope. All right. Chad on YouTube, “Do you fund companies that are direct competitors of a portfolio company?” We have funded 107 companies, give or take.
Tracy Osborn:
Mm-hmm. Yeah, yeah.
Rob Walling:
Right, 105, 107. In the next two years, we will be over 200. We will inevitably… Inevitably, we will have to back companies that are competitors. Now, there are some except, A, we’ve tried really hard not to back two competitors in the same batch. In fact, to date we have not.
The other thing is there are some spaces that are small and I think if, let’s say, you’re an email service provider or you’re ERP, these are massive, massive spaces. Could we back three, four competitors and all of them can win? Yes. But if you’re talking scheduling software for dry cleaners, there’s just some, that’s probably a pretty small niche and I would personally be resistant to doing that. The answer is yes, but it depends on the specifics.
Tracy Osborn:
Mm-hmm. Yeah, we get this and the previous question, we said like 3%, I should say that we were looking at about 30 companies across Americas and EMEA per round, I would say, for the spring 2023 round, approximately 30 companies in total, so that means like…
Rob Walling:
Twenty three.
Tracy Osborn:
… if we’re going to be doing that twice a year, 60 companies per year, then, of course we’re going to be looking at competitors, especially as the years go on. I think we have a lot of things in place to make sure that we, for anyone who might have small overlaps with other portfolio companies, to make sure that we can provide both of them the best support and the best advice and everything to help them both grow.
I should also say that during the application system, of course, we’re going to be seeing data from folks who are competitors within the application system. People are applying for competitors who current portfolio batches, and they just want to ask those questions. The application system itself is also completely confidential. We do not share any of the information that comes in through the applications. We don’t share that with anyone outside of the immediate program team, which is the three of us as well.
Rob Walling:
The three of us, yeah.
Alex McQuade:
Mm-hmm.
Tracy Osborn:
Yeah, the three of us and [inaudible 00:13:13] said, who is the other partner of TinySeed? Just want to reassure that if you’re a competitor to any of our portfolio companies that you’re applying that the information that’s on your application is completely confidential.
Rob Walling:
Question from Devin Perrick, “We’ve applied in the past, but feedback has been that our revenue traction wasn’t where it needed to be. That said, is there a sweet spot for current MRR and year-over-year growth?” What do you think Alex?
Tracy Osborn:
Kind of depends, right? Oh sorry, go ahead.
Rob Walling:
[inaudible 00:13:41].
Alex McQuade:
Actually, I don’t think I have a sweet spot number.
Rob Walling:
I know.
Alex McQuade:
It does depend [inaudible 00:13:48]. It depends on where you were. It depends on, I think, it also depends on what you’re working on. That’s another interesting part of the application. There’s a field about your customer acquisition funnel where you can share what you’re doing and that gives us more context on what direction you’re headed. I don’t know. I feel like I don’t want to opt out of this question, but I don’t have a specific number in mind.
Rob Walling:
Yeah, I think for me…
Tracy Osborn:
[inaudible 00:14:14].
Rob Walling:
… each of us, there’s four of us, well, there’s four of us who review and each of us has, I think, different criteria, which is good. There’s diversity of opinion there. I start to feel uncomfortable when like MRR is below 1,000 I’m not saying we have funded companies below 1,000, but it makes me, it’s like that’s really early, but we have funded-
Tracy Osborn:
There has to be other factors, right?
Rob Walling:
Yes.
Tracy Osborn:
It’s like what is the team done in the past and what are some of the things that they might have done that’s not relating to revenue but might be still contributing to growth that. There’s like factors that would make us more comfortable with a pre-1000, but in generally yeah.
Rob Walling:
It makes sense.
Tracy Osborn:
[inaudible 00:14:50].
Rob Walling:
I mean, I think once you hit 2 or 3000 MRR, I start to feel like, “All right, they’ve landed some stuff,” as long, but then it’s like, well, we’ve had companies apply with 3,000 MRR and they have one customer paying them 3,000. It’s like, “Okay, so now I’m less comfortable.” This is where the it depends happens.
For me, though, in between that two and three, up to about, I’d say most recently about 40k MRR, 40 or 50 is where we’ve been funding. I think if you’re above 40 or 50, we should probably talk about you using our syndicate to get funded unless you really want to be part of the accelerator.
Tracy Osborn:
Yes.
Rob Walling:
Then, in terms of growth, I got to be honest, we don’t really look at year over year. We look at month-over-month growth. We ask for your previous six months of MRR and-
Tracy Osborn:
Kind of filled out that. If you’ve applied before in previous rounds, this is one of the few new fields where we’re asking for each month for the last six months what your MRR is.
Rob Walling:
Yep.
Tracy Osborn:
Yep.
Rob Walling:
Ken on YouTube asks, “Have you funded companies that are still in the product development stage, pre-revenue?”
Alex McQuade:
[inaudible 00:15:48].
Tracy Osborn:
We have.
Rob Walling:
We have [inaudible 00:15:51].
Tracy Osborn:
We’re not doing it now.
Rob Walling:
The problem is, you think you’re going to get to growth next month or six months and it’s actually three years.
Tracy Osborn:
Which is fine.
Rob Walling:
We funded, yeah.
Tracy Osborn:
But, it might not be-
Rob Walling:
Don’t apply yet.
Tracy Osborn:
The-
Rob Walling:
The timing is not good.
Tracy Osborn:
Yeah. The calls, the mentors we bring in, we’re all going to be talking about things that are going to be [inaudible 00:16:11] to be listening to those calls and not be able to apply the things that we’re teaching immediately because you’re still working on that initial set of customers like the, yeah.
Alex McQuade:
Yeah. The nice thing is we have two batches per year. The wait time for the next batch isn’t that long. Six months from now, if you’re post revenue, you have traction, then, it’s a great time to apply.
Rob Walling:
Kimmy Med on YouTube, “As for pre-revenue companies, how should we address revenue churn and customer churn?”
Tracy Osborn:
I want to say that those are text fields. You can put it as zero and we’ll just…
Rob Walling:
[inaudible 00:16:48].
Tracy Osborn:
… interpolate from the fact that the, if your MRR is zero, then we’re not, we just not probably not even going looking at those fields. You can put in anywhere.
Rob Walling:
DJ Enzo or it might be DJenzo, I think it’s DJ Enzo 240 gamer, ooh, that’s a heck of a handle on YouTube, is B2B2C accepted? Alex McQuade, what do you think?
Alex McQuade:
B2B2C? Yes, I would context, but yes, I would think we’d want to see your application.
Tracy Osborn:
Definitely. Yeah.
Rob Walling:
Yep. Please apply.
Tracy Osborn:
Yeah.
Rob Walling:
Same username, I won’t say it again, “Is $220,000 the max funding?” If you go to TinySeed.com/program, you can look at our funding terms and we talk about it.
Tracy Osborn:
Yeah, slash FAQ jumps straight to the bottom of the page where it has more details about those funding terms.
Rob Walling:
Yeah, we invest between 120 and 220,000 per company for 10 to 12% equity. There have been some exceptions, like let’s say the company that applied at 100,000 MRR, we went slightly above 220. Yes. It’s as with all these things, we are humans and it depends a little bit depending on how much success you had. If you’re doing 1000 MRR and want to come in and raise 250k from us, that’s not going to be a fit, but obviously if you’re big or going very quickly, we do have some room to talk about it.
Tracy Osborn:
Yeah. We discuss these things with the founders. When we give the offer, we’ll have this discussion and we’ll give our best offer. The discussions can continue after the offer, too. So, we set what we think is fair. Discussions can continue. There is some legal room, but in general, if you’re looking for $500,000, you probably want to go to the TinySeed syndicate instead or other numbers.
Rob Walling:
And you need to have the progress to do to be there. And I would say that the vast majority of our offers, if you’re in that kind of sweet spot MRR range, it’s a standard offer. Again, we’ve funded 107 companies. We cannot negotiate individual term sheets. We can’t negotiate individual terms. Our terms are standard. We have docs that, again, a hundred-something founders have signed and they’ve been vetted and switching those would be very difficult to keep track of. Follow-
Tracy Osborn:
Let me jump in one more thing because sometimes people want to negotiate the percentage we take as well. And sometimes people say like, “Hey, this seems higher than a typical angel investment.” And it is because of the TinySeed program, because of that yearlong accelerator, because of everything you get through the program is one of the reasons why at first glance that percentage we take seems like it could be higher than a typical angel investment.
Rob Walling:
Right. That’s a good point. It’s the value. Our valuation is lower. We are not the cheapest money you will receive. No doubt. You can go to the dentist or the doctor down the street and absolutely raise money at maybe 2x the valuation we’re giving. Our value is not in the money we bring. That’s part of it. But our value is what Tracy’s talking about, which is world-class mentors, tinyseed.com/people. And look at the mentor list. It’s incredible. It’s the who’s who of B2B SaaS founders. You will have access to have to them. You’ll have access to me and Einar Vollset, Tracy and Alex. Like kickoff retreat, in-person, where we hang out for two and a half days. It will blow your mind, so [inaudible 00:20:07].
Tracy Osborn:
Yeah, the community, over 200 founders now within the TinySeed community. So, not including the team and the mentors and whatnot, we have this huge list of other star founders that are all going through the same thing together. And so, yeah, definitely the value is in the community, the mentorship, the advising, the resource that we can give. And then funding is great, but is definitely after those.
Rob Walling:
That’s right. Third or fourth on the list for most founders. So, they’re like, “Oh, yeah, the money’s great.” But the real long-lasting value is this year-long accelerator. No one else does a year-long accelerator program. And we do that.
Alex, I just mentioned the kickoff retreat that we do in-person. We do, what, two a year in Europe and two in America. Do you want to talk just briefly about what that entails?
Alex McQuade:
Where to start? The kickoff retreat personally is one of my favorite parts of the program. I mean, there’s a lot to compare it to, but it’s a really fun part of the program with a ton of value. So, approximately within a few weeks of when the program starts, we have a kickoff retreat. We bring together everyone who’s available to a location and we have dinners, we have masterminding, we have activities.
And the kickoff retreat, it has a few goals of mine. One, it is a good time, but two, it’s to start building relationships with the other founders in your batch. Part of the goal, one of the goals of TinySeed is for you to be building this relationship with other founders. These are founders who are going to be helping you over time, giving you feedback on your business, especially within your batch. These are people that you trust and that are just able to understand what you’re working on and be there alongside you. So, the kickoff retreat has that goal. And yeah, it’s an incredible value.
We mastermind half the day, so we spend time digging into your business, going over what your biggest challenges are. And on top of our team, you have a room full of founders who are just providing feedback based on their experiences, their advice. It’s a ton of value. And then we go out and we do these social activities. What have we done? We’ve done road trips.
Tracy Osborn:
It’s like half work, half play.
Alex McQuade:
Yeah. Half play.
Tracy Osborn:
Always know how to have a fun thing.
Alex McQuade:
Yeah, you can’t work all day.
Tracy Osborn:
I think the upcoming one, we’re working on the one that’s going to be happening for Americas. We’re going to have separate ones. Americas is going to be in April. Mia kickoff batch will be in May. And as the person who’s running the Americas’ one, I think we’re looking at indoor skydiving. Rage room where I guess you just go in the-
Rob Walling:
Yeah, the rage room. [inaudible 00:22:39] last time.
Tracy Osborn:
The rage room where you just go in and smash things. [inaudible 00:22:40] was last time. And then I’ve already volunteered very strongly for leading the zip lining crew.
Rob Walling:
Zip lining. Yeah. And we did hot air ballooning once. We do boat trips. We do, you know.
Tracy Osborn:
That was fun.
Rob Walling:
And it’s just a few hours in the afternoon where you keep talking about work, you keep talking about your business. So, it’s not like you’re screwing off in the afternoon. You’re just able to mix it up and have an activity and continue to talk about this.
Tracy Osborn:
Yeah, and have an experience together.
Alex McQuade:
Yeah, that’s true. We find the mastermind continues into the activity. People think later, “Oh, I remember you were discussing you had this issue. I just had an idea come to mind. Have you tried this?” So, it’s a great way to do that.
Rob Walling:
People, founders come away from it raving, just like, “I had no idea how valuable.” Already, someone told us last time like, “If I knew how valuable this would be, this makes the whole year for me.” Just these two and a half days just totally changed the way he was thinking about his business. Ron has posted that a couple of people are asking about…
Tracy Osborn:
Producer Ron.
Rob Walling:
… Producer Ron. Thanks. Asking about the next round of applications will be open after this one. So, if someone is pre-revenue now and they want to get to the point where they can apply, Tracy, do we have an idea? Because we run twice than the others.
Tracy Osborn:
We have a date. It still could be changed, but it would only change within the weeks. But right now, the fall 2023 applications are going to be starting in early September. So probably on, if you’re in the US or Canada, on Labor Day and going for two weeks just like this round. That could move back and forth like a week just depending on how things roll through the summer, but essentially it’s got to be early September.
Rob Walling:
Early September. Excellent.
Tracy Osborn:
And then that batch will be starting in November.
Rob Walling:
Paula on YouTube asks, “Our company operates fiscally in the US. We’re a Wyoming LLC. We work physically in Europe, in Italy, and we have applied for Tennessee Americas. Is that a problem?”
Alex McQuade:
Can I take this one?
Tracy Osborn:
Yep.
Alex McQuade:
I don’t want to steal it all away from Tracy, but I’m going to…
Tracy Osborn:
Yeah, I know, but you are.
Alex McQuade:
… tell her, “Come on over.”
Rob Walling:
You are. Yeah. I can see it.
Alex McQuade:
But I’ll answer. I do want to steal you, Paula, but my answer I think will both be useful for anyone else that’s in this situation. If you’re in this situation, if you’re based in Europe, I would highly suggest applying for the EMEA program. And the reason for that is because the EMEA program was made to be convenient for people who are in the EMEA region. Our calls are on European time zone, business hours.
Obviously, our retreat that we were just talking about, that’s going to be in London this year, so that’s going to be easier to get to. The other founders are in the region. It’s just more convenient overall here in that region. Of course, you can definitely apply for Americas, but I think it will be a better fit for you. So, Paula, if you want to reach out to me, let me know your company name, I can switch that over.
Tracy Osborn:
Let’s switch that for you. I will say whatever one you’re applying for, by the way, it can totally be changed. We’ll have these discussions with you during the application, or excuse me, during the interview stage, so we have a “don’t know” option in the forms. You can also choose that and then we definitely will reach out. And if you’re a good fit for TinySeed, we talk about which program works better for you. Essentially, they’re the same program. The time zone our calls are scheduled on are different. So, Alex’s calls are going to be, like you said, convenient for folks who are in the EMEA regions. The calls that I schedule are very convenient for Americas. Anyone in the world can apply.
Folks in the APAC region, we don’t have an accelerator just yet for the APAC region. So, folks in Australia, Japan, New Zealand, they have been joining TinySeed generally on the Americas side of things, and then the calls are at really inconvenient hours. We have people who are joining us at 5:00 AM if you want to join. Sunday, we’ll get there.
Rob Walling:
They’re watching the recordings.
Tracy Osborn:
But we have the recordings, yes. Everything is recorded and nothing is mandatory to join. So, even folks who are in the Americas batches that are super busy, they can not attend the calls live and just review the recordings afterwards. So, all of that works for us, but really, if you want to attend the live calls, which we recommend because they’re really fun, then that’s where the differences in the program really lies.
Alex McQuade:
Yeah, and I just remembered, too. I know you mentioned, Paula, that you’re incorporated in the US. I think just to mention, that’s fine as well. You can be part of the EMEA program and incorporated in the US.
Rob Walling:
For sure. Ryland on YouTube asks, “Do you expect successful applicants to focus all their professional resources on the company, on their startup? In other words, can candidates still have day jobs?” Alex? Tracy?
Alex McQuade:
Yes.
Tracy Osborn:
I was going to say yes. [inaudible 00:27:08] focused.
Alex McQuade:
Well, one of the things we ask is that if you’re accepted into TinySeed that at least one founder in the company is full-time in the business by the time the program starts. Hopefully, one of our hosts with the funding that that will help take care of any financial concerns you have. But really, we believe that the program will be able to better serve you if you’re able to focus solely in your business and really dedicate all of your energy to it. We’re going to be giving you a lot of information, a lot of resources, and you’ll be able to grow faster if you’re able to dedicate that energy.
Rob Walling:
With all the info we give you, if you work on nights and weekends, you’re going to be overwhelmed. You’re not going to be able to keep up. So, we do tend to fund, it’s not a direct formula based on the number of founders, but if you have one founder go full time and one not, you will get less money. You will get a lower valuation than if both go full time. And we have had all those situations happen where we’ve had one founder go full time and one not.
Adam on YouTube-
Tracy Osborn:
One last thing, just apply, even you’re not in a situation. If you’re not full-time, feel free to apply. And we’ll have that conversation with you. We’ll learn your plans and then we can talk about what the schedule should be for you and your company if we give you an offer. So, yeah, definitely apply. If you’re part-time, definitely apply. If you’re not working full-time, anything like that, definitely apply.
Rob Walling:
Adam on YouTube asks, “What is the process once you have shortlisted the most suitable applications?” Tracy, what do we do with the shortlist?
Tracy Osborn:
Let me do the full rundown of the process. So, all the applications come in and then the four of us, Alex, Tracy, Rob, Einar, we all go through and re-rate them, internally. And then that kind of helps us determine the folks who move on to the next stage, which is an initial interview with either Alex or myself. And so, of course, I take the ones that are going in the Americas direction and Alex takes the ones that are going into the EMEA direction. And we kind of split the folks who are aren’t sure.
After that initial application interview, that initial interview, then for folks who are still a good fit, then they move on to the call with Rob and Einar. And after that call, we are generally able to make a determination between the four of us of folks who are good fit for TinySeed and will receive an offer. Anything I missed?
Rob Walling:
There it is.
Tracy Osborn:
Okay.
Rob Walling:
I think you’re good. Let’s see. I don’t know, did we disclose this? Tracy Slav on YouTube asks, “How many AWS credits does the AWS partnership provide?”
Tracy Osborn:
We don’t disclose it. I don’t think we can due to our agreement with AWS. But I will say that if you look up if there’s public AWS credit programs, ours is higher and that’s why we can’t say it.
Alex McQuade:
So, people are usually pretty happy with the [inaudible 00:29:55].
Tracy Osborn:
Yeah. Exactly.
Rob Walling:
Amir on YouTube asks, “I’m doing AI automation for E-commerce operations. Are you still investing in the E-com space?” Alex McQuade, are we investing in the E-com space?
Alex McQuade:
As long as you’re a SaaS, yes.
Rob Walling:
There it is.
Alex McQuade:
There you go. I mean, straightforward.
Rob Walling:
Absolutely. David, on YouTube, “Do you back solo founders who are building part-time due to go full-time soon?”
Tracy Osborn:
Yes, yes.
Rob Walling:
That’s right.
Tracy Osborn:
We love solo founders.
Rob Walling:
Loves them.
Tracy Osborn:
Alex, we’ve mentioned that quickly. There are some other accelerator programs out there that are like, “You must have a co-founder.” We’re not that one. We love solo founders. We love multiple founder teams, of course, as well and that’s actually another part of that blog post I keep mentioning. The one that’s best fit startups for TinySeed. We talk about the number of founders. So, solo founders are awesome. If you’re at four founders and up, then we might have more questions for you.
Rob Walling:
Starts to be a lot. Yeah. But we-
Tracy Osborn:
Yeah. There’s some things there. But solo founder is great. If you’re going to go full time at some point, that’s great.
Rob Walling:
Yeah, and I think if I were to guess, I’d guess 60 or 70% of the companies we have funded are single founders. And I think-
Tracy Osborn:
I think this is the value of the program, because like I said, the number one value of the program is that community that’s within other founders. And as a solo founder having a community of fellow founders is hugely valuable. It’s a great benefit for the program because it’s really lonely being a solo founder.
Rob Walling:
Right, and it’s also-
Alex McQuade:
That’s what I was thinking, too, yeah.
Rob Walling:
It’s also the MicroConf community as a whole. We do the state of independent SaaS and it’s somewhere between 50 and 60% of MicroConf TinySeed type companies are single founders. And that’s very different than the venture capital landscape. Yeah.
Julius on YouTube asks, “If a business was built on using a current white label SaaS platform, would that be considered too much platform risk to apply?” What do you think, Alex?
Alex McQuade:
That’s a tough one. The business is built on our current. I might hand that to you, Rob.
Rob Walling:
I love putting Alex on the spot. It’s my favorite thing.
Alex McQuade:
Yeah. I think it’s a little… let me re-read that one.
Rob Walling:
It’s not too much. If in doubt, fill it out.
Alex McQuade:
Yeah, definitely apply.
Rob Walling:
We will-
Tracy Osborn:
I think it depends on the program, the platform, too.
Rob Walling:
Yeah, it does. We should just call that out in your application, please, so that we see it. Don’t try to hide it. Don’t make us dig it up. Just say, “This is built on this white label platform,” and then we’ll have a conversation about it. In my opinion, it is not too much platform risk to apply. We’ve had folks with as much more platform risk who have gotten into the program. And it’s just about managing that and understanding that risk is there and figuring out ways as you grow to mitigate it.
Jacob on YouTube, “What’s the difference between TinySeed and a traditional VC firm?” That is one of my favorite questions. You want to kick this off, Tracy?
Tracy Osborn:
All right. I’m grabbing it. I’m super excited.
Rob Walling:
All right. Do it.
Tracy Osborn:
The number one difference I think is the optionality that you get with TinySeed as compared to a traditional VC firm. Folks coming into TinySeed, if you want to continue bootstrapping after taking our investment, that’s totally great. A lot of VC firms, they want you to go in and raise money from them and then make plans for your seed, and make plans for your Series A, and then make plans for this. And then you’re like you’re on this constant accelerator-
Rob Walling:
Extra wheel.
Tracy Osborn:
Accelerated a process of always raising money. And I think, what is it, 60 to 70% of the companies that go through TinySeed go back to maybe semi-bootstrapping. Or still being like you say in indie state of mind while taking TinySeed money and then not raising for money. That does mean that there are some companies that go on and raise further investment. That’s awesome, too. Einar VoIlset is your partner in crime if you want to raise more money and he will walk you through that process and help you out. And we have resources within TinySeed to help people raise the next round of money if they want to do that.
We’re also totally happy if your plans is to go big and sell. That’s great. Let us know that. I want to emphasize the go big part. So, if you want to come into TinySeed and sell as fast as possible, there might be some issues. And Rob, do you have a better way of explaining that part?
Rob Walling:
Yeah. I mean, basically, venture capitalists-
Tracy Osborn:
You have to be ambitious, yeah. Go ahead.
Rob Walling:
Yeah, we have to be. You want to be an ambitious bootstrapper. I mean, if you want to build a half a million dollar ARR company and that’s amazing, you should go do that. But TinySeed can’t invest. We want you to shoot for at least $1 million, $2 million in ARR and frankly, to not sell too early. If you want to sell for $2 or $3 million, that doesn’t provide an adequate return for our investors.
We are a two-sided marketplace. We have LPs who invest and they’re taking a big risk by funding B2B SaaS companies in the early stage. And then we have founders who are giving the money, too. And so, basically, but here’s the difference. If you take venture money, they pretty much won’t invest if there’s not a potential for you to be a billion dollar outcome. Half a billion, a billion.
I like to think of our minimum as around a $10-million exit if you decide to sell, $10, $20s, that works. We’d love to see $50 million. But yeah, if you sold for 10 million, nah, all right, cool. That’s good for you and good for us. If you did that as if you raise venture money and do that, they’re going to be mad. That’s not the outcome they’re looking for.
Tracy Osborn:
Yeah. Exactly.
Rob Walling:
Right?
Tracy Osborn:
Mm-hmm.
Rob Walling:
So, the outcome is one. We also allow our companies to run profitably if you wanted to run profitably for a decade and pull out profits. That’s an option, right?
Tracy Osborn:
Mm-hmm.
Rob Walling:
Completely different. No venture fund would let you do that. We also run this year-long accelerator with all the support we’ve talked about. Venture funds do not do that. They write you a check and then they sit on your board and they’ll give you some advice. But the amount of involvement we have is 10 times what you’d get from a typical VC firm. In addition, venture funds in the US fund, Delaware C Corps. That’s it.
If you want to be any other entity, don’t bother. You have to convert. We fund C Corps, we fund LLCs, and we fund a select group of, I’ll say, non-US entities like London, or not London.
Alex McQuade:
UK.
Rob Walling:
But UK Limited. There’s a couple of countries that we have.
Alex McQuade:
Germany.
Rob Walling:
And that is not the case with venture. They will do Delaware C Corp. So, I think those are the main differences.
Tracy Osborn:
Yeah. I mean, in addition to everything else, like the program I think we talked about a lot. But if the plans you have as a company, I think, you have a lot higher, like larger range of options with TinySeed.
Rob Walling:
Good question coming up from Caloyan on YouTube. “What does the access to mentors look like? Do we do calls? Do we have direct communication? Can we send emails? How much are the mentors involved?”
Alex McQuade:
Mind if I steal this one?
Rob Walling:
Do it.
Alex McQuade:
Because I love to gush about our mentors. So, there’s two ways that mentors are involved. One, in our batches and two, one-to-one, so I’ll cover the group aspect first. After we finish the playbook part of the program in the first six weeks where every other week we’re covering a different topic that is essential as SaaS growth. Those are hosted by Rob and Einar.
Tracy Osborn:
We’ll say it’s more in six weeks because it’s every other week. I think it’s like three or five.
Alex McQuade:
I’m sorry. I say six sessions every other week, yeah.
Tracy Osborn:
There we go.
Alex McQuade:
We move on to mentor calls. And so, continuing, every other week, Tracy and I will be scheduling calls with one of our mentors who will come on and talk a little bit about their subject of expertise, but also, answer questions from the batch. So, this is a great time to come with a long list of questions. Maybe, it’s a marketing mentor and you can share issues you’re having with your marketing plan, hypothetical questions and kind of get some feedback.
Tracy Osborn:
Yeah. Like yesterday, I did a call with April Dunford, who’s the author of Obviously Awesome, and the premier positioning expert. So, she came on yesterday and was able to take positioning questions from all Tennessee founders and it was awesome.
Alex McQuade:
Yeah. And the groups are a great way because hearing other founders questions is super useful. Usually, things come up that you may not have thought of on top of your head, but is definitely useful in the future. But on top of that, you also have one-on-one connections with the mentors.
Usually, what we recommend doing is using this part of the program is when you’re facing a specific challenge, maybe a roadblock or you’re taking on a new initiative within the business. And you need some insight from a mentor that will help you boost ahead and save all the weeks, months of figuring it on your own, that’s a great time for it to reach out to Tracy or I and we’ll hook you up with a mentor. Often, they’re calls. Sometimes, they’re emails. It depends on the mentor and their availability. Of course, who are mentors are-
Tracy Osborn:
Yeah, so some folks on our Slack, they’ll do DDMs, yeah.
Alex McQuade:
Yep. Our mentors are all volunteers. They’re also running their own businesses, so we try to facilitate based on their availability. But they’re super generous of their time and they’ll jump on and provide advice, feedback. And the goal there is, like I said, to help you save time and not have to go through so much of what you normally would have to do on your own.
Tracy Osborn:
Yeah. Alex and I, one of our top role, both of our roles is really to make sure that founders get the information they need. And so, we’ve built a whole slew of systems to juggle these really amazing mentors. Making sure that that folks have really quick access to all the mentors when they need it. Ways to redirect requests if there’s a mentor who’s not available at that time because the folks can be busy because we have such really amazing mentors. The processes that we have built for this are quite extensive. And it’s also, we can make sure that the founders have the best experience possible.
Alex McQuade:
Yeah, and you don’t even need to know what mentor you need. You can just come to Tracy and I and say, “I’m struggling with this. What should I do? Who should I talk to?” And we’ll take it from there. We’ll connect you with the best, resource the person, who will help you move forward.
Rob Walling:
Right. And that’s one of the big benefits that I think people maybe don’t understand is how deep our mentor network is. And there has not been, I can’t think of a topic that we haven’t found someone for them to talk to.
Tracy Osborn:
And some niche ones.
Rob Walling:
Really niche.
Tracy Osborn:
We’ve all had, as a team, the four of us have had to put our brands together, and really work through it.
Rob Walling:
And sort. And that’s the thing is as a founder, don’t underestimate how many weeks or months the right advice at the right time can save you. My sales, I’m not closing as many sales demos.
Tracy Osborn:
Shortcuts.
Rob Walling:
Exactly. It’s this cheat code. It’s like, “Oh, well, send me a video of your demo, we’ll review it. Oh, well here’s like four things you’re doing wrong.” And it’s like boom, changes the trajectory of the business. It’s stuff like that. Copy. There’s design. Tracy, I know you did design teardowns. All kinds of stuff. Questions are coming in faster than we’re answering, so we’re going to lighting round it a little bit.
Tracy Osborn:
Right. Lighting, yeah.
Alex McQuade:
We always worry about this.
Rob Walling:
I know. So, Jacob on YouTube asks, “If we are accepted into the accelerator and are successful, are we eligible to come back and raise through the syndicate in the future?” Absolutely, yes. You’re eligible to raise through the syndicate now if you wanted, assuming you meet our requirements or if you’re a TinySeed company…
Tracy Osborn:
That’s a great path. We have all sorts of systems.
Rob Walling:
… that’s the point. That’s one of the points, one the reasons we started the syndicate was to be able to help you with following funding.
Shakat on YouTube asks, “Would you accept an application for a B2B SaaS where the business and the customers are outside of the US? It’s a health tech app and the US has laws and similar product already, hence, we are targeting APAC customers in the business outside of US.” I’m seeing nods of agreement.
Alex McQuade:
Yes.
Rob Walling:
Absolutely.
Alex McQuade:
The reason why it’s [inaudible 00:41:38].
Rob Walling:
We have done that.
Tracy Osborn:
Yeah. I mean the challenges you’re going through in building your own company in terms of finding customers and working on your pricing and learning the sales process and going enterprise sales, that’s all at universal for B2B SaaS.
Rob Walling:
The question from Rebo, and it’s a two part question. Well, they ask it as one part. They say, “Hi, we recently received a grant, but our MRR is less than $500. Could we apply to TinySeed and get through?” And I want to break that into two questions. If you have received a grant and you want to apply to TinySeed, yes, we have actually funded companies that have non-equity grants. Basically, from their government, from a competition or whatever, so yes.
If you’re less than 500, I’d say, and you want to apply, apply. The odds of you getting funding through us are a lot lower. We generally encourage people to be $500 and up, but you can certainly do it. We have some folks who apply for the experience of applying. You actually learn stuff about your business.
Tracy Osborn:
Yeah. One of the questions we asked is if you applied before, and what Alex and I do is go and find your previous application and link them, so we have that full set of history. So, if you applied before, very likely we’re going to get an email saying that, “Not right now.” But then you apply again, when you’re there, we have that history and arguably it can tell a really good story.
I’m not going to say it’s going to increase your chances of getting in, but we’ve had, was it Tony Chano of Cloud Forecast applied four times, I think before.
Rob Walling:
Three or four?
Tracy Osborn:
Three or four times before getting in. And because we can see that journey that he took and the progress. And then at that last time, it was like, “We can’t say no. This is great.”
Alex McQuade:
Yeah. I think some people worry that having applied again is a negative in our mind and it absolutely is not, it’s not.
Tracy Osborn:
A huge bonus. Yeah.
Alex McQuade:
Yeah. We love to see it. So, if you’ve applied before, do not hesitate.
Rob Walling:
Yep. We have funded many, many companies on their second or third or maybe even some fourth, I mean, so yeah, do it.
DJ Enzo asks, “Any chance of the APAC accelerator starting this year?” No chance of that, DJ. I’m sorry.
Tracy Osborn:
The economy didn’t go in the right direction for that.
Rob Walling:
It’s not. Yeah, there’s so much to be done there.
Tracy Osborn:
We want it, but not there yet.
Rob Walling:
Yep. Web Developer Ninja asks, “Any Azure credits as part of your perks?”
Alex McQuade:
I was just researching this. I don’t remember the number off the top of my head, but we have a link to that in our perks.
Rob Walling:
So, we do have perks, Azure perks?
Alex McQuade:
Yes.
Tracy Osborn:
I think Alex, you just set that up, right?
Alex McQuade:
Yeah. It’s a universal. I can share more information, but yes, you would qualify for Azure credits through, yeah.
Tracy Osborn:
If you go to tinyseed.com/perks-overview, it has logos for everyone we have in our perks page. It probably is missing some, but there’s a lot, which is why I was saying of like, “Do we have that one?” Because we have so many perks at this point, I’ve forgotten who we have.
Rob Walling:
I don’t remember. Yeah.
Tempest Media asks, “We are larger than your 50K MRR sweet spot. We are growing 50% a year. We are very interested in the accelerator portion of the value. Our company is greater than 40 or 50K still accepted?” Absolutely. We have accepted companies. Again, we accept an company accelerator at 100. We have it several in the 70 to 80,000 range. There is no cap.
Tracy Osborn:
I think our average is 18 and our median may be lower, but it’s all over the place, yeah.
Rob Walling:
It is. And so, yes, please apply. We’d love to chat with you.
DJ Enzo, “Do solo founders or founder startups with awards get an edge?” I don’t think either of those would give you an edge. We like solo founders, but if you were a one-person or a two-person team and you’re have the same numbers and the same business, to me, it’s all the same. And awards don’t care for me at all.
Tracy Osborn:
We don’t ask for that. I don’t think I’ve ever asked anyone about awards. I mean, it’s great. It tells a great story. It’s an award, especially if say it’s an industry award for something that you’re building and that could be proof of your company is growing at so and so. But then you have this award and it really shows that your industry is really into what you’re building. That could be a factor in our decision.
Rob Walling:
Paolo asks, “Our company is an infrastructure as a service provider. Since TinySeed is an Amazon partner, they are our biggest competitor. Are we still eligible?” That’s a funny question.
Tracy Osborn:
That’s a funny question. Well, Amazon has no insight whatsoever in what we’re doing, especially any big company. I only know they know we exist. Other than the fact that they have a perks program and they email me.
Rob Walling:
That’s it. Yes, you are eligible. Please apply. Chris. We might end early on this one. We’ve got a good lightning round going.
Tracy Osborn:
It’s too lightning.
Rob Walling:
Chris Bach on YouTube, “Do you take post revenue startups, so bootstrapped and have revenue that really need more connections and advice?”
Tracy Osborn:
Yes. That’s why we’re here.
Rob Walling:
That’s one of our big value props, yes. But what we’re not going to do is, we get this question now and again, “Can I go to the accelerator and not take any funding?” And it’s like no, because we’re not a nonprofit. We’re not a charity. You know what I mean? Part of this is that we need to have an upside.
Tracy Osborn:
We’re that two-sided marketplace.
Rob Walling:
Exactly.
Tracy Osborn:
Like you said.
Rob Walling:
Exactly. We need to have an upside. And so, we give you six figures in US D in order to have a bit of equity. But absolutely, connections and advice, mentorship, these are-
Tracy Osborn:
I will say shout out to MicroConf because we have MicroConf Connect, which the program’s take a read on the MicroConf side of things, the MicroConf conferences. So, if you want to have access to something that’s similar to TinySeed in terms of the advice and the focus, MicroConf is the way you can get that without having to go through the accelerator or get investment.
Rob Walling:
Goku Madon asks, “Do you have any companies that have applied to TinySeed in the past that are only enterprise sales? Or does TinySeed even make sense for a pure enterprise SaaS app?” Yes, indeed, we have.
Tracy Osborn:
We love enterprise.
Alex McQuade:
Yeah. Please, apply. You sound great.
Tracy Osborn:
A lot of-
Rob Walling:
High touch, low touch as long as we’re going to be-
Tracy Osborn:
Yeah. We’re not going to push people into what they don’t want to do. But I will say a lot of folks come into TinySeed and then they start their enterprise program, because there’s a lot of value in enterprise.
Alex McQuade:
Yeah, that’s a good point, yeah.
Rob Walling:
Yep. I would say it’s part of it. I was going to say it’s a big focus, but look, we also have low touch, no-touch funnels, that’s great, too. We service, we’re funneling [inaudible 00:47:55]-
Tracy Osborn:
But it’s like overwhelming, which is why there’s a lot of information there in terms of how to run enterprise things. So, there’s just so much to learn, so we have a part of the program that focuses on helping people. Launch those programs and know how to do it right because it can be a huge value add. In terms of once you move your contract values upwards, it makes a lot of things easier when you’re with your business.
Rob Walling:
Web Developer Ninja asks, “Do you fund teams that use offshore engineering talent?”
Alex McQuade:
Yep.
Rob Walling:
Alex?
Tracy Osborn:
Nod.
Alex McQuade:
Yeah. And also, a good clarification here, too, is a side question we sometimes get, you do not need to be a technical founder or have a technical founder. We’re fine with non-technical founders as well.
Tracy Osborn:
We do ask like one of the questions on the application is who’s the coder? We’re just curious about how it works in your team. A totally acceptable answer is offshore development team.
Alex McQuade:
Yep.
Rob Walling:
Now, I will say personally, see, again, we all have our own criteria, there’s four of us. I prefer if you have a technical founder, you have a slight edge in my rankings. But we have funded many folks without.
Tracy Osborn:
And it has to do with the speed at the which the business can execute. When you have a technical founder, it’s a lot faster to get things done than if you have to go through an offshore team. But we do have companies in TinySeed who go that path.
Rob Walling:
LJ asks, they ask, “How do UK residences register their SaaS company?” That one I would say go to Chat GPT or Google and type that in because I don’t know. I have never done it. Most people, companies who apply already have an entity, but there’s a chunk that don’t and they incorporate. We make an offer. They incorporate in their local region or in whatever, locally.
Tracy Osborn:
You don’t have to be incorporated before applying. You do have to be incorporated in order to accept the investment.
Rob Walling:
It’s nice.
Alex McQuade:
And if you haven’t have it, if you don’t have it set up and you don’t have contacts, we have gone through and researched like lawyers and things. We will have some things to help you out in terms of to make sure that deal gets done. It’s not like a part of the program as the incorporation aspect.
Rob Walling:
And LJ asks, “Can you help with an AI business?” If you’re B2B SaaS and you have some component of AI, I mean, yeah. B2B SaaS is B2B SaaS. It’s still solving a problem. Finding more customers who meet that problem and all the other stuff, all the blocking and tackling around that. So, AI or not, it doesn’t matter.
Tracy Osborn:
Yeah. Our spring ’22 batch had a lot of AI. And this is actually before the big AI really exploded, what, six months ago. So, we actually did this whole round of investing in a bunch of AI businesses before it went really big, which I think was good on us. We were already going in that direction. But yes, they are all at the core though B2B SaaS.
Alex McQuade:
We were into AI before AI was cool.
Tracy Osborn:
Yeah, exactly.
Rob Walling:
Kenneth from LinkedIn asks, “We’re incorporated in the US, but activities in Africa, in Nigeria.” So, I’m assuming that’s where their customers are. “Which will be the best program to apply to?” Alex, you go.
Alex McQuade:
Kenneth, I think it’s based on where you’re located.
Rob Walling:
Time.
Alex McQuade:
I was talking a little earlier about that, if you’re in the US, I would recommend applying for the Americas program. If you’re anywhere in the Europe, Middle East or Africa region, so in Nigeria, if you’re located in Nigeria, then please apply for EMEA.
Tracy Osborn:
Yeah, wherever you want to spend your time, time zone wise, I guess, with our education and our calls.
Rob Walling:
Code Shark asks, “Hey, guys. I hope you’re having a good morning. Do you fund applications in the marijuana space?” And I’m going to say we have not, but I believe we can. I don’t know. I would honestly have to talk to our legal and look at our own documents. We’re not opposed to doing it. It would only be if there was something in our charter that says we can’t fund.
Tracy Osborn:
We have heavily considered one in the past.
Rob Walling:
That’s right.
Tracy Osborn:
And I apologize to that company, if they’re watching this, that they know who they are, that we’ve got very close and then it didn’t work out. But it wasn’t due the fact that…
Rob Walling:
That’s true.
Tracy Osborn:
… it was a business in the cannabis industry. It was due to other factors.
Rob Walling:
Right, so I guess, that’s a yes then. All right. Ron Ma asks, “We collect revenue on behalf of our clients. They are other SaaS providers and we offer additional services like consultation and onboarding. We are evolving a traditional system. Could we be considered?” Not sure I fully understand that, but if it’s mostly-
Tracy Osborn:
Maybe they’re consulting now and then they’re starting to build their SaaS side.
Rob Walling:
A product?
Tracy Osborn:
Mm-hmm.
Rob Walling:
Okay. It depends, honestly. We are going to judge the SaaS part you have. So, if don’t have anything that’s software revenue that people are paying for a tool, then we’re not going to fund a consulting agency or a consulting firm or whatever. But if consulting is 70% of your business and SaaS is 30% and that 30% SaaS is up to $1000, $2000, $3000, that’s what we evaluate that piece of it. And it’s a nice bonus that you have, a consulting revenue because that is runway. So, that’s where it depends how far along the SaaS piece is. If in doubt, fill it out.
Craig, on YouTube, “I’m building a Euro travel tool to help people plan trips and I also want to have a tour guide marketplace. Does TinySeed work with travel-related startups?” So, there’s two questions here because yes, we will absolutely work with travel-related startups as long as you’re a B2B and you’re a B2B SaaS. If you’re two-sided marketplace and you charge a subscription to businesses, we would consider it. If most of your revenue or your focus is on B2C and it’s on consumers planning their trip, the odds are lower, much lower than we would consider.
Tracy Osborn:
And again, it’s because of the program. You’re not going to get as much high of the program because we don’t have any focus on the consumer side of things. So, it’s not like we don’t think your business can’t be wildly successful. It absolutely can. Absolutely, it can be wildly successful. Huge chance of that kind of business. It just doesn’t make sense for the program.
Rob Walling:
We have such a focus on that. But I would say, Craig, if you’re in doubt at apply and put this in a-
Tracy Osborn:
Lots of people are planning on building a B2B side of things, anyways.
Rob Walling:
We have funded a couple of B2C focus where they had started the B2B side and gotten enough traction that it was like, “Oh, that business is interesting to us.” And then the B2C revenue is a nice bonus because it’s runway. It’s much like having consulting and pivoting in. Thanks for that question, Craig.
Fahad on YouTube, “Is there a downside to incorporating in the US as an international founder and targeting a global market such as, for example, taxes?” I don’t know. You would honestly need to… it depends on what country you’re in and how they treat it. And I would say talk to a lawyer. I don’t know that I can give advice on this.
Tracy Osborn:
There are upsides. Upsides, in terms of incorporating the US as a C Corp. I’m not an expert on this. What is it? QSBS is a huge upside for, and I forget why. I just know that’s the word that people bring up when they say C Corps. I don’t why that’s a… yeah.
Rob Walling:
C Corps, you don’t pay taxes if you hold it for five years. There’s some stuff around there. If you want to-
Tracy Osborn:
Yeah, and then there’s also selling.
Rob Walling:
Yes. So, if you want to exit later, so many more buyers will consider a US entity. And raising any type of follow on funding, it’s much more difficult if you’re not a US entity, but those are the trade-offs you’d have to make.
All right. Kareem asks, “I wanted to ask, what do you think about cybersecurity in the SaaS business? Do you fund such platforms?” Yes. We funded several security-related. Again, if you’re full on consulting, a lot of security companies that apply are consulting companies that want to get into software. And if you have zero software revenue, then we’re not going to fund a consulting firm. But we have funded several that are a mix or that are fully blown security, cybersecurity SaaS.
Deliver Tech asks, “Do you fund startups that finance vehicle assets for logistics and transportation?” If you are B2B SaaS, we will. We have funded.
Tracy Osborn:
We have so many niches.
Rob Walling:
Yes. Go to tinyseed.com/portfolio and 105 companies, 170 companies. We have funded in so many niches. Yes, yes, and yes. If you’re a B2B SaaS, yes. It doesn’t matter.
Tracy Osborn:
Yeah. I was talking with April. With our call with April Dunford yesterday, and she specifically called out how she loved all the different CRMs that we have, like a CRM for this and a CRM for that, and a CRM for this. And it’s because there’s so much opportunity in each of these individual spaces. But we have such a range already in TinySeed and yes to B2B SaaS, you’re good.
Rob Walling:
That might be another way that we’re different than a traditional venture firm is a lot of venture firms focus on something, right?
Tracy Osborn:
Mm-hmm.
Alex McQuade:
Mm-hmm. That’s true.
Rob Walling:
They focus on network effects and they only fund network businesses or they focus on biotech or something. Our focus is B2B SaaS, which is very broad. And so, that does give us the opportunity to invest in these SaaS companies. Deliver Tech had another question, but it was basically, it was similar. “Do you fund startups that do X, Y, Z?” Brett asks, “If we are applying to TinySeed for a second time, is there a way to get a copy of our prior application?”
Tracy Osborn:
It’s a great question, actually. Yeah, send me an email or at hello@tinyseed.com or tracy@tinyseed.com. Send me an email and I can get that to you.
Rob Walling:
All right. I think at the sound of the bell, that was our last question.
Alex McQuade:
Twelve minutes.
Tracy Osborn:
I love how it was a wrap up right at the moment. Yeah. It’s cool.
Alex McQuade:
I didn’t think we were going to pull it off, but we did.
Rob Walling:
I know. It’s worth it. It was great.
Tracy Osborn:
Talk faster, guys.
Rob Walling:
We’ve been down this road before and we always make it. So, thanks everyone so much for joining us.
Tracy Osborn:
Yeah. Well, hopefully, you got a feel for us. One of the reasons why I like doing these things is that, I don’t know. I feel like the TinySeed brand is that we’re a serious professional people with a large, healthy, heaping amount of goofiness. We’re dorky weird people. And I think this is a great way to get to know us as a team. Not to mention get to know the program. I think the TinySeed team, itself, we are really wonderful friendly people and I hope you feel for us as well.
Alex McQuade:
Send us an email if you have any questions. We’d love getting emails.
Rob Walling:
Hello@tinyseed.com. It’s amazing.
Tracy Osborn:
And say hi to Alex because he takes care of the address.
Alex McQuade:
I’ll probably answer it. I love it.
Rob Walling:
Yes, indeed. So, thanks for joining us today. Looks like we had a great turnout. Lot of great questions. It was amazing. Obviously, feel free to ask follow-ups. Hopefully, you apply this time or maybe next time. But we look forward to checking out your application and getting to know you a bit more. From me, Alex, and Tracy, thanks y’all. See you next time.
Alex McQuade:
Ciao.
Tracy Osborn:
Bye.

Rob Walling:
Welcome back to another episode of Startups for the Rest of Us. I’m your host, Rob Walling, and in this episode I talk with Whitney Deterding about product marketing. Sounds really boring, but it’s really cool. It’s about equipping sales and support and the entire rest of your organization with critical product knowledge as you grow. And frankly, there’s a lot more to it as well. It’s learning not just how to drive new leads or new traffic to your website, which is marketing, but it’s learning how to communicate the aspects of your product, the individual features, the benefits, what you can do with it, use cases, case studies, learning how to communicate that to new people coming into your funnel, to your sales team, to your support team, to your success team. And when you’re one or two people, you’re doing all of this as a founder, but the moment you have three or four people on your team, you have to figure out a way to communicate how the product is changing, otherwise your prospects and sales and support won’t know that.
And so we spend 30 plus minutes talking through what type of resources to create. Is it a knowledge base? Is it a wiki, is it a Google doc? And then ways of thinking about communicating this to people. So this is definitely a conversation I wished I’d had many years ago. I remember after exiting Drip, I didn’t even know what product marketing meant. And learning that as we grew to 50 and then a hundred people was fine, but it would’ve been beneficial had I known about it earlier. Before we dive into that, TinySeed applications are open now through February 19th, tinyseed.com/apply if you’re interested in learning more. If you’re looking for the right amount of funding, amazing mentorship from world-class mentors, a strong tight-knit community in our Slack group, in-person gatherings, and frankly, the support you need to grow your business faster and stay sane while doing it, head to tinyseed.com/apply. And with that, let’s dive into my conversation with Whitney Deterding. Whitney, thanks so much for joining me on the show.

Whitney Deterding:
Yeah, thanks for having me.

Rob Walling:
It’s great to have you here. You’re the product marketing strategy lead at CoSchedule. People could find that at co-schedule.com. And I was doing a little digging before we chatted because I’d like to give listeners an idea of what your company is like in terms of stage because I bring some people on here who are solo founders making $10,000 a month, and it’s a great lifestyle business. And then other times I bring venture backed founders who are doing tens of millions, but CoSchedule, I found by digging through the internet through various sources, raised $5 million in funding. But this year or I guess it’s last year now, 2022, bought the founders, bought out their investors, which is a fascinating story on its own, three years on the Inc. 5,000, I think debuted at number 153 and north of 50 employees almost exclusively in the Midwest and in fact, mostly in North Dakota, is that right?

Whitney Deterding:
That’s right, yep. Bismark and Fargo. So Bismark is our headquarters, and then we’ve got a second location in Fargo, North Dakota.

Rob Walling:
And you did a talk at MicroConf Remote a few months back and you and I get to talking offline. That talk was about SEO and content marketing. But given that you’re in product marketing strategy, which it’s a mouthful, and the reason I want to have you on here was there are things that, especially a founder with two employees or five employees, in fact, when I was doing this, I didn’t even know what product marketing meant. I knew what product was because I have to decide what to build in what order and usually how it should look, how it should function. And I know what marketing is, and that’s getting more people into my funnel. But after we got acquired, we were this big team and suddenly people were like, “Yeah, you need a product marketing person.” And I had to Google it. So do you want to tell folks what is product marketing? What’s that role?

Whitney Deterding:
Yeah, it’s funny that you say that. So I actually got my start working at an agency and then transitioned through a whole bunch of other roles and then ended up as a product marketing specialist here at CoSchedule. And when I first started, I had very little knowledge of what a product marketer actually did. So I’ve been on the product marketing team for five years. And product marketing is really at its core, the team or the person or the role that sets the product positioning, understands the product market fit, understands the market that your product’s in and packages all of that stuff up so that your team can find and connect with your ideal customer.
So it’s one of those things where you look at… Let’s look at marketing software for example. So many tools, it’s absurd that exist out there, but product marketing is really at its core, how do you differentiate yourself from the market, and how are you valuable, beneficial, and why do people need to choose your product over X, Y, Z other products? So a lot of things go into that. Again, it’s messaging, it’s copy, it’s product category, it’s all these things. Do people understand what your product is, what it does, what value it brings? And product marketers are the people that put that together and then also equip the rest of the company to understand, which is-

Rob Walling:
That’s all the hard part.

Whitney Deterding:
It is challenging. Oh, I will tell you that. Yeah.

Rob Walling:
Yeah. I was telling you before we kicked off, I remember feeling overwhelmed. I was VP of product at Drip when we got acquired, and so I went from founder, CEO, to VP of product. And so I was running an engineering team and running the product team and at a certain point, 120 people in this company and I was in charge of, I was no longer just in charge of like, “Well, here’s what we’re going to build. Designers, help us figure out the UI. And then all right, now we’re going to build it and then we’re going to launch it.” The salespeople come and be like, “Dude, what are you launching next month?” And I’m like, “Stuff.” And they’re like, “Oh, well, I need to know what that does, how it works, how it applies, how to explain to people.” And then support would come and say, “What are you launching next month? Because I need to know how to answer questions about it. I need to know how it works. We need to train this person.”
And then customer success would come because they were dealing with the big clients. And, for me, I was like, “Ah.” And so we hired someone to basically have our back and have my back and be able to do that. That’s exactly the role that as an early stage founder, you just do it as a founder, your five people. So whoever’s running product is doing product marketing, but as you scale up, even at I would say 10, 15 people, if you’re still doing it, that’s fine. The role has to be filled, whether it’s a dedicated person, which usually is expensive, or whether it’s halftime job who is thinking about positioning and internal communication?

Whitney Deterding:
And that’s the thing too, is it’s internal communication and external communication. So it’s does your team know how to talk about this new product, this new feature? Does it impact customers? Does it impact people that are searching for your product? Because sometimes product teams, they’re launching incremental small features that aren’t going to change the way you inherently talk about or sell your product, but it might change how a customer uses that product.
And so it’s even delineating between which audiences are going to care about this and who needs to know what’s happening, who is this for? And product marketing really puts those things together. What is the solution? What is this feature product for? Who is it for? And how do we let them know that it’s here and how to use it? But all of that stems from equipping your team, your customer-facing teams to do that successfully. So that’s going to be your sales people, your customer success team, your customer service team, anyone fielding support tickets, live chat, all of those people need to be in the know and need to know how to talk about it in order to support those prospects and customers.

Rob Walling:
And that’s what I want to dive into first and spend the first part of the episode just digging into how you do that, what assets you create. I’m sure there are processes. There’s tons of knowledge in your head that I want to pull out. If there’s time today, I do want touch on at the end, positioning. Positioning is a big black box. It’s black magic, it’s like as much art as science. I don’t know, however I want to say it. It’s hard. It’s hard. And no matter how many books I read on it, April Dunford’s Obviously Awesome is a great book. I’ve read it and I’m still like, “I don’t really know how to position things.” It’s a challenging thing.
So if we have time, I’d love to throw in a few minutes at the end to hear how you think about it, how you find it, and it changes over time. It has to because the market changes. How do you know when it changes, blah, blah, blah. Now maybe that’s an episode all into itself, but we’ll see if we can get to it. So let’s start with this then. How do you implement cross team knowledge sharing? You have sales, you have success, you have support. What documentation do you need? I’m sure there’s knowledge base involved. You’re a 50 plus person company who sounds like you’re doing a really good job of it, so I’d love to hear your approach.

Whitney Deterding:
Yeah, so that’s a great question. I have been at CoSchedule for five years and let me tell you, this has seen many iterations over those five years. So when we first started, it was as simple as having a launch brief, which was simply put a Google document. It had basic information, who is this for any research that was done about the feature, about the product. And then product marketing, me, would go in and look through our customer support tickets, live chats, look at what competitors were doing, and pull together all of this research and information about this feature.
So let’s use as a really old school example from CoSchedule days when we launched our social media reports. This was a long time ago, but you go through and you look at all the other tools that have social media reports, and you look through your chats of what people want to see. You look at how even Facebook, Twitter, they talk about social reports and you pull all of that information together. And then what product marketing would do is create a series of talking points. Now, something like new social media reports is a feature that could potentially convince someone to purchase our product. That’s a hefty feature. It’s not something that only a customer would care about, someone deciding to choose a product would care about that.
So the way that we would prioritize how we communicate with our team is we would assign what we called a priority level to each launch. So something big like that, we would call a P1 or a priority one. And that just simply meant that our checklist of things that we needed to do in order to equip our team was longer, more robust. That’s something we’d want to add to the website. We’d probably want to do an announcement email about that. We would probably talk about that on social media, put it in a customer newsletter. And so there’s a million little things we’d want to do there externally.
Then we’d also have to talk about what do we need to do internally to make sure our team knows how to use this feature effectively, share the message about why our customers care about this so that when our support team’s on live chat, they can say, “Yeah, we have these brand-new social media reports and here’s why they’re awesome.” And they can deliver a talking point that’s been pre-structured for them. So depending on the priority level or the level of the launch or feature change, we would have these priority lists. And essentially it’s a big old checklist that we would go through, but at the start, it was those talking points because nothing else can move forward until we know how we’re going to talk about them.
So if it’s a feature that needed a name, like something brand new, you got to name the feature, what are you going to call it? How are we going to describe it? How do we talk about it? What are the benefits of this feature? Why should you care about it? And that’s one thing that product marketing, we joke about this all the time, we say WIIFM, what’s in it for me. If your talking points can’t answer what’s in it for me as the customer, they’re not good enough. And so making sure that our sales team and our customer success team, all those other people that need to be talking about the product are equipped with those talking points so they can answer those questions as things roll out. But yeah, it’s essentially that big checklist that we would roll from.

Rob Walling:
See, I like the simplicity of that. I’m not a process person. It’s what helps me move really quickly and be a good founder. A little bit to my detriment as I’ve scaled companies, to be honest, is by the time we were a 10 people, we weren’t even doing that. It was literally, “All right, Derek, what are we building next?” Okay, we’re doing this. So I’d write up an email, I’d send it to our support person and say, “Here’s a new feature. We’re just going to feature flag it for your test account.” He’d go in and play around with it. He’d be like, “Ah, this makes sense. I can support it.”
We only had one support person. We had two customer success. And I would go to Anna who was head of customer success and we’re in the same room, so I’m at a whiteboard and I’m like, “It’s going to do this and that.” And she’s like, “Ooh, this sounds great. I’m excited.” And then we’d talk to developers and they’d build it, and that’s what we did. We have no documentation. It was amazing in the early days. We were so fast and we didn’t need to do… But to be honest, since I was essentially running product and marketing, I kept dropping the ball on integrating. We would announce the new feature, we’d tweet about it, we’d email the list, and then that would be it. I’d forget to update the marketing website with new features. I’d forget to like, “Should this be integrated in onboarding or not?” Where else should this be surfaced? And to have even a single checklist like that doesn’t sound like too much process to me, and I wish it’s something that I had implemented back then.

Whitney Deterding:
No. And I actually pulled it up in preparation for this conversation, our old prioritization matrix that we called it. And it’s literally just a Google sheet and it’s got along the left-hand side talking points, branding, CSR training, email, blog post, announcement. I mean, it’s just got all these items to check, internal training, product education help, CSM resources. And you just go through the list. And if it’s on the list, we just put it on our own list, marketing’s list, and we start cranking those things out and it makes it feel less overwhelming and you don’t feel like you’ve missed something because that’s so easy to do. I mean, it’s so easy to do because there are a million things happening at once.
So something as simple as a checklist to start, we had a checklist and then a launch brief, and then the formal launch brief had the final talking points the day it was launching, who got it, what that communication plan was going to look like, and then we’d just share that in Slack with everyone, and then everyone had access to that information. And to be completely honest, that hasn’t changed significantly process wise, but the tools we use as we’ve scaled have changed to make that knowledge sharing a little smoother and a little more formalized.

Rob Walling:
There’s two things I want to say. One is if it were me and a co-founder and we were building a very small team and we had one support person, I probably wouldn’t do this yet. The moment that I hired a first salesperson or first success person, now I have a support and someone else to communicate to, that’s where spending 30 minutes, 20 minutes to write up a you called it a launch brief, I think. I Googled what is a launch brief product management just to see if there’s other examples. Some places are calling them product briefs, but you can get examples of these online of here’s eight, six things to include in it. For me, spending 20 minutes at that point by the time even at two people you’re trying to communicate to, I think would be something I’d be thinking about. And then the checklist thing, that’s a no-brainer.

Whitney Deterding:
Right. Well, and the thing is, too, that’s nice about having these briefs as well is you have something to look back on. When did that ship? You get in the cycle of you’re moving so fast, you’re moving so fast, and then you’re like, “Why did we decide not to do that?” But those notes then are documented somewhere.

Rob Walling:
Exactly. And then if I brought a new product person or a new developer or maybe a new successor salesperson on, I would say, “Go look through all of our product briefs in order because they’re going to be dated, so go in descending order back from today and look at the last few months of what we’ve launched, the last year of what we’ve launched to get an idea of the history.” Because without that, it’s all tribal knowledge, which means it’s in your head and it’s hard to learn from that. This is a paper trail of a lot of decisions you made.

Whitney Deterding:
I mean, we definitely use all of that for internal training.

Rob Walling:
Yeah, I can imagine. How else do you train new salesperson, new success, new support? I don’t know if there’s a shared training thing, but it’s like you have these product briefs someone can walk through. Is there also what internal knowledge base? Is there video? How do you handle it?

Whitney Deterding:
Yeah, so this is really actually a fun topic because we’re revamping a little bit of that right now. But we use a tool called Get Guru, which is a knowledge base, and we share cards. They’re basically little information cards that you can share, and that’s where we store all of our information. So if someone needs to look up how to talk about the product, we have product positioning talking points for Marketing Calendar, they can search that card in Guru, and they’ve got all the things they need to know. And the same goes for someone has a question about a specific feature, like our success team has even little cheat sheets and quick links to support docs. It helps us field things so much quicker, and it helps us onboard new team members so much faster. So we utilize those cards to store all of those processes, all of those helpful resources, links, it’s all in there.
So we have an entire series of cards that a new salesperson would have to read through during their onboarding, along with some certain milestones that they would need to make through their onboarding process, like setting up their demo environment to do demo calls, things like that. But even just having that stuff somewhat standardized makes that process a lot faster when we do have to skill up new team members. So a product like Marketing Suite is pretty robust, and so it’s pretty easy for a new salesperson to be a little overwhelmed. It’s like, “Where do I start? Because when I log into the calendar, it takes me to the homepage as an end user.” But when you’re demoing the aha moment of why this Marketing Suite and Marketing Calendar is so powerful, you want people to open up on the calendar.
So it’s just little small things that we build into our training resources, we do videos and then resources in those cards, but all of that information gets shared in that knowledge base. And then our teams can, I mean, they can retrain themselves even if they need to remind themselves of, “How do I talk about that? Or I’m demoing with a comms team instead of a marketing team, do I need to change my messaging a little bit or my examples that I might share?” So just having some of those things queued up and accessible with a knowledge tool like that makes it really nice. It’s very searchable. You can search by keywords and it pulls stuff up and it’s very quick. And it’s called Guru.

Rob Walling:
So it’s getguru.com?

Whitney Deterding:
Yep.

Rob Walling:
Okay. I haven’t heard of it, but folks can look at it. The interesting thing, too, I want to jump in here because as a founder, I’d imagine if they’re listening to this, they’re like, “Oh, I don’t have time to do all that, to create the knowledge base.” Now, here’s the tip. Here’s the pro tip that I learned is you don’t do it. When we would hire a new success person, usually there was a success or a support or even a sales who liked doing writing. And oftentimes when I first hired them, if it were three or four of us, they didn’t have full-time work yet. We hadn’t ramped things up. And so I’d say, “All right, part of your job for the first six months is going to be building out the knowledge base because you’re going to learn it. And as you learn it, you document it for the next person.”
This is not a fit for every hire. And at 50, you’re probably not going to do that. You already have it in scope. But when it’s 1, 2, 3 of you, you can start small. You don’t need to build the whole thing out. You build pieces out, much like refactoring code. And again, you bring your first success person in and as they learn it, you tell them, “Look, you’re the first person to document this. Let’s have this living, breathing document that others can learn from.”

Whitney Deterding:
The other piece of that is if you build a culture of your team being able to contribute to that freely, man, the stuff you get is so much better. So a perfect example of that is our revenue and sales team use that as well. And so we have a card, how do you handle objections to this? And if a certain salesperson has a really great way to handle that objection and it works, they put it in that objection handling card, and now the entire sales team, all three of them, have access to that instead of just one person holding onto that information because that’s what can happen. I think sometimes, like you said, it’s that tribal knowledge, you’ve been there since the start and you know it all, and then you’re like, “How do I unload all of this onto someone else? How do I share this efficiently, effectively?”
But if you just get in the habit of making that standard as you add new people like, “Hey, if something feels unclear or you try something and it works better, update the card, share it with everybody.” And then we have internally a really open sharing culture. So if I try something, it works great, I update the card and then I share it in Slack and say, “Hey, tag the people that matter, try this. It worked great. Check it out.” And it just builds, again, that culture of sharing that information. I mean, you’re working as a team. Everyone has the same goals. You want this product to be successful, you want this company to be successful. You’re all working together towards those same goals. So you got to share that information instead of keeping it tight-lipped. So I think it helps build that culture a little bit too.

Rob Walling:
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Let’s switch it up a little bit and talk about specifically equipping salespeople because they are on the front lines. If I’m in support, oftentimes a question comes in I don’t know the answer to, I can ask someone in Slack, I can search the knowledge, I can spend a few minutes and do an email. When I’m doing sales, there’s a lot of pressure on me to do stuff in real time. I need to be heavily equipped with a lot of knowledge. And again, this applies, whether you’re hiring your very first salesperson or whether you’re hiring your 10th or 15th, they need to have the knowledge to do it. So obviously you already mentioned standard talking points. You can dig more into that of how you think about talking points or move on to the other things that I’m sure that you prepare for them.

Whitney Deterding:
Yeah, I mean, I think the biggest thing, number one is they need to know what a qualified customer is, and they need to know which kind of signals to listen to like, “This maybe isn’t the right fit for you.” Because when they’re having those discovery calls, you want your discovery calls to be that, “Oh, does this qualify to move on to the more intensive demo process?” If you have that process from a sales team perspective. And so having the ability to know those markers is key. So there are a handful of things. If someone comes to us on a discovery call and all they talk about is I want to use this for social, we are not a great social only tool if you’re going to purchase the Marketing Suite. You want the Marketing Calendar, you want the workflow management, you need to want much more than just the social publishing for it to be a good product market fit.
So we have those sales people trained to say if they just only hear social, social, social, they need to know I’m going to be okay disqualifying this person and letting them know that too. So that’s one piece there. I think the other thing that can be really helpful is when you put together a sales deck and that flow of conversation, not only giving them the deck and maybe some speaking points for each slide, but also making sure that they know what questions to ask at which points in the conversation, to gather enough information about that prospect so that one, you can qualify or disqualify them. And two, if there’s an opportunity to personalize that conversation to fit them and their needs and their problems, as a salesperson, you have to hear them and being curious and asking them questions can help you create better responses for them.
So for us, we’re a marketing software for marketing teams. And so I think it goes back to positioning and talking points. So I was joking with Rob before we got online, every product helps you save time. Okay, great. And Marketing Suite helps you save time, but there’s no meat to that. Why does that matter? And so a good example of that is if you’re asking questions, how much time would you say you spend every week in meetings doing project kickoffs? Well, how often are you following up via email to get more information before you can start on a project? All of these little questions that you ask can help you start to formulate, oh, they’re going to save a lot of hours every week on marketing project management if they switch to Marketing Suite. So it can help you gather that information and make the demo stickier and more personalized to them, which is more way more effective than just giving everyone a cookie cutter spiel.

Rob Walling:
Right. So you have this documentation and these talking points, objections, whatever documented.

Whitney Deterding:
And these questions.

Rob Walling:
Yep. So then when you hire your second salesperson, or if someone else needs to jump in, let’s say I have a one sales and one success person, my salesperson’s off for a week, maybe I bring my success person, again, at 50 you don’t do this, but when it’s just three of you, you have to step in sometimes. That’s the other thing. What if I as the founder haven’t done a sales demo in six months because I handed it off, now I have to jump back in. I don’t remember how to do sales calls anymore, so I almost need this documentation.

Whitney Deterding:
Yeah, and that’s the one nice thing. You can add those speaking points to your deck, of course, so that if they’re really on the fly and need to jump in, they’ve got at least something to go off of. But something else that you can do that I know that we do here at CoSchedule is we build out an ideal demo environment, as well, of the product. What is the ideal use case, and how do you demo those aha moments that really hook people? Because yeah, okay, you can use a Google calendar for a Marketing Calendar if you want, but if you use Marketing Suite, what are all those wow moments in the demo that you can visualize on why it’s so much better? And so if you can identify those things and standardize those things a little bit, all those aha moments that really hit in a demo happen every single time because you’ve built that process and trained and equipped your sales team to make sure that they hit those things during that flow.
And I think it all starts with a strong narrative. What’s the story that you’re telling during that demo? Because they came to you for a reason. You know what struggles, challenges, problems that this person is having, and so you really want to sell the dream during that demo. You don’t want it to feel lackluster like you’re just hopping between features. So I think that’s the other piece is what is the story? And so one thing we do to train our team on how do you tell the story is I actually record a demo of the product, walking them through the story and all those key moments they have to hit, and we call it our standard demo. That’s the beginning of the demo. You have to do that. And then after that, we always say it’s choose your own adventure. Let the customer or the prospect steer you and you can an answer and field specific questions.
But this standard demo, the standard story is something that you want to hit in every single demo call. And that helps scale people up pretty quickly. And it’s maybe only 20 minutes of a 45-minute demo, but it’s making sure that they hit those main items every single time. One other thing, something we do during that training process is the salespeople that are training in do mock demo calls with different people on the team so that they can get comfortable and we can throw objections at them in real time before they actually get on a call. So depending on if you’re really new, you might not have time to do that and that’s okay too, but something you could consider as you’re training new salespeople.

Rob Walling:
Well, and I love the idea of hazing new employees. So I would set up the brand new totally green junior salesperson to do the demo. “Okay. Oh, and your partner is the CEO and founder of the company.” And you’re like, “Eh, I totally don’t want to do this.” Throw them under the bus from day one. No, I think a big takeaway that I hope that listeners are taking from this is that it doesn’t have to be complicated, and it doesn’t have to be a lot of process. It can be a Google sheet with six or eight different things about a product brief, six or eight different topics. And then you can have one checklist that you kind of build out over time.
Off the top of our head, I’m sure without your checklist, you and I could be like, “Well, every new feature, we should at least evaluate it. Do we need to talk to success sales and support? Do we need to do a blog post, a tweet? Is there any co-marketing that we could do if it’s an integration on and on, who gets emailed for what? Does this change our sales demo?” I mean, you and I in five minutes could come up, it would be like a V.8, it wouldn’t be perfect, but it’d be 20 check boxes that then next time you could be like, “Oh, we forgot about whatever extra email list we have. So we’ll put that checkbox now, or it should it be on the website.” So it doesn’t have to be perfect from the start. And it doesn’t have to be complex.

Whitney Deterding:
No, and that’s, I think, the beautiful part about it is it can be something as simple as a checklist. It can be something as simple as you sitting down and recording a demo and then sharing that video recording of your demo with your sales team, have them watch it, and then have them practice a couple times. It doesn’t have to be overly complicated, but making that information accessible is the important piece of that.

Rob Walling:
So with the last couple minutes we have, I just want to touch on positioning, as I said at the top, and I know that a couple minutes is not enough time to properly cover positioning, but I just want to hear how you think about it because day-to-day this is probably top of mind for you, I’m guessing. And you are probably thinking about it more than most people I have on this show, to be honest, because even founders can only think about positioning a tiny part of the time. Again, if you’re a five-person team, positioning is one of 14 different things I’m trying to work on versus you are actively, actively. So how do you think about this? What inputs and how do you make a decision about positioning? Because it’s big, it’s strategy level.

Whitney Deterding:
It’s very big, but I think the one thing to remember about positioning is even if you’re doing it by yourself, you’re not in it alone because I think great positioning always starts with research. It always is rooted in knowing what are customers saying in the market, people that are looking for solutions like yours in your product category. What makes your product better, different, faster? What are the differentiators of your product as opposed to everything else in the market? And so I think when you’re in product marketing or I mean anyone in working in selling a product, you innately are curious about those things because you want your product to stand out. How do I sell this differently? How do I find my target audience? And so I think it’s all about talking through how do we convey the value of our product through our product positioning, and how do we do it quickly?
Because you think about it, most people, that first touchpoint with your brand, probably going to be your homepage, probably going to be your website or maybe they read your blog and then they’re like, “Oh, I wonder what they do.” So you have to make sure that they understand what your product is and what it does quickly. And so I think on our homepage, it’s organized all of your marketing in one place. That’s our main tagline of our product. That’s the tagline. But it’s like, what is the product? Well, it’s a Marketing Calendar. So all of our products, it’s Marketing Calendar software, so you can see schedule and share all of your marketing in one place. And so it gives people the ability to just scan that and innately know what you do. And so that product positioning is key because that’s how people understand what you are, what you do, what value you add.
But then when you layer in that narrative, that’s the emotional hook of how do you hook them emotionally on why they need your product. And I think with product marketing, it’s really easy to do one and not the other, or one and not the other, but they do have to work together in order to be effective because you have to identify what is this product. But then you also have to say… There’s that old saying, it’s like, “It’s not a bandaid, it’s a painkiller.” You need to need it that bad, or a vitamin, not a painkiller. Excuse me. So it’s clear, concise copy. How do you do it as short and as concise as possible? Well, it’s very challenging.
And so something that we do a lot is, like I said, it starts with research and then it’s going down what I like to call the why rabbit hole, why does this matter? And you just keep asking yourself that question over and over and over. It’ll help you get deeper into the reality of the messaging that’s going to matter. It’s the difference between saying, “Marketing Calendar going to save you time versus Marketing Calendar is going to help you visualize all of your marketing in a single calendar you can share.” So there’s all sorts of ways you can go about doing that. But yeah, we could talk for hours about product positioning.

Rob Walling:
Yeah, there’s a lot there. And even the positioning has to change over time.

Whitney Deterding:
It does, yes.

Rob Walling:
And I believe you told me CoSchedule started as a social media calendar, then expanded into a Marketing Calendar, and then added, I believe at least two other products, one called Marketing Suite and one called Headline Studio. So now talk about positioning changes. There’s at least two or three in there. Was it obvious to you when these were happening? You’ve been there five years, I’m sure you’ve had some positioning changes. How have you navigated those? Has it been super obvious? This is our last question then we’ll wrap. But I’m just fascinated by this because I’ve also done it myself, and I always felt like, “I don’t know what the (beep) I’m doing.” And I was always like, “Hopefully this is right.” So how do you navigate that?

Whitney Deterding:
I know. I think the best way to go about doing it is thinking, so I’ll give you an example. And it was, gosh, I’d maybe been here about a year and a half when we launched the Marketing Suite. So initially we had had the Marketing Calendar and we were getting our roadmap really around more of these enterprise level features, things that small to mid-size enterprise marketing teams were wanting, needing, asking for. And so that was how our product team had prioritized the backlog. And so some of those things that people had been asking for was digital asset management, more robust social publishing features, more workflow automation features as they were building out marketing workflows. And so we were like, “This isn’t just one product category anymore. This isn’t just one Marketing Calendar software that publishes your blog posts.” And so it got to the point where we were like, “Okay, well this isn’t just a product, it’s a suite of products because we’re crossing into multiple product categories here.”
And so that was where that Marketing Suite was born because the growth of the product was bringing in a different segment of people. We were able to properly serve these mid-size enterprises and these larger teams with more complex workflows that were having some of the similar challenges of wanting to be able to visualize all their marketing in one place, but they also wanted to do this, this, this, this. And so by listening to the customer and collecting that feedback from our customers, that helped our product team build out that roadmap, as well as voice of the market, as well as voice of the customer, we were able to transition and launch that Marketing Suite product, which then of course significantly changed the product positioning and actually just created an entirely new product. So yeah, it’s a wild ride. And I think we’ve stepped away from wanting to be known as a social media only calendar because we do so much more than that now.
And social is a lot different than it was five, six years ago with influencer culture and TikTok and video. It’s very different than it was just publishing your blog and posting it on Facebook, Twitter, LinkedIn. So as the market changes, you just have to adapt. And I would say just keep a pulse on your customers, what they’re saying and the questions that are coming in, because that will reveal so much about where the market is going and if your positioning is still hooking people. If you’re getting more discovery calls and people are saying, “Do you do this?” And you’re like, “No, absolutely not.” Something’s off. And it’s time to readdress that positioning and clean things up a little bit, try some new stuff.

Rob Walling:
Yeah, I’ve been through several repositionings myself, both with my last SaaS product Drip went through. It was really two, three iterations of it evolving, and each time the positioning, not just the homepage, but everything had to adjust. And I felt like with MicroConf, we’ve done that too because MicroConf was an event, it was just an in-person event, and then it was two and that we did nine last year, and now it’s an online community and it’s an in-person community, and we do mastermind matching and it’s like no longer a conference, so positioning has evolved, so that you can check the headline and it’s always tricky, but if you do nothing, you will find that the market changes and that bad things will happen. Either you’ll get left behind and you’ll lose… Here’s what nobody talks about. You can lose product market fit, you can lose it, you can have it, and you can lose it because the market will drift if you don’t chase it either with features or with, when I say chase, constantly work on refining it, keeping it, you can lose it as fast as you found it. It’s really interesting.
So with that, Whitney, it’s amazing having you on the show. Thanks so much for showing up, dropping your knowledge. If folks want to see what you’re working on, coschedule.com. And any social media handles you’d like to share if folks want to keep up with you?

Whitney Deterding:
Yeah, if they want to follow on Twitter, I have the world’s longest last name, so it’s @whitdeterding instead of Whitney Deterding. And you can also connect with me on LinkedIn. If you’ve got questions, I’m happy to chat a little bit there too. Not too many Whitney Deterding’s online, so you can find me.

Rob Walling:
I know. You are lucky to have that. That’s great. Well, thanks again for coming on the show.

Whitney Deterding:
Yes, thank you for having me.

Rob Walling:
Thanks again to Whitney for joining me on this week’s episode. Hope you enjoyed it. This is Rob Walling signing off from episode 647.

Rob Walling:
Welcome to this special bonus episode of Startups For the Rest of Us. This is a Thursday drop. It’s a .5 episode, which we’ve used historically to have episodes that are maybe outside the timeline of the main feed, outside of the cannon, if you will, of startups For the Rest of Us. This episode came about because of a conversation I was having with Producer Xander and we were talking about the dramatic overhaul of MicroConf, the in-person event specifically that we’ve done over the past couple years. And we both realized that we’ve never come out and talked about kind of the refocusing of MicroConf US and MicroConf Europe on our expanded or extended hallway track, that we have dramatically shifted the event to focus on connection between founders. And since we started the event in 2011, and we’ve done 35 of them now I believe, the feedback we’ve always gotten is the hallway track is the best part of MicroConf and the speakers are an excuse to get us all in a room so that we can meet one another and build those relationships.

And after Covid hit, we decided to basically gamble, to take a chance, and to adjust our traditional format. So when MicroConf first started in 2011, we had 12 speakers over two days, and we quickly moved that down to nine speakers over two days. Still a lot of content, and you could meet folks in the morning for breakfast or at lunch and then there were some evening gatherings. But in 2022 in Minneapolis, we cut the number of speakers down to six, and then MicroConf Malta, which was just a few months ago, we cut it down to four. We got some feedback that four might be not enough. So I believe at this point we’re at five speakers, for MicroConf in Denver here in April. And the reason I wanted to say this on the podcast is I think if you’ve attended a MicroConf in the past and you feel like that’s no longer what you need or you don’t want to go somewhere and watch nine talks, MicroConf is literally two or three talks during the whole day, plus a couple attendee talks.
All the rest of the time is spent connecting with other founders. So we’ve started having offsite activities, adventures, that basically maybe push you outside your comfort zone a bit, but you do it with the other founders. So we’ve historically done things like kayak tours. We had an improv workshop in Minneapolis. Brewery tours. We had a trapeze class where people literally went offsite with other founders at MicroConf and they did trapeze class. They learned how to trapeze. And that’s just not something we’ve historically done, but we found that the attendees love these activities. In addition, we’ve introduced round tables, we’ve introduced workshops, and the nice part is we have what, four or five workshops and you’re able to pick one that applies to you, and these are smaller groups. And it’s not someone giving a talk, it’s you interacting with the other attendees. It’s you interacting with the person who is leading the workshop. And the feedback on those has been really high.

And finally, we introduce this thing that I think each of us secretly dreads, but is super valuable, and the feedback also been positive. It’s called Founder-by-Founder, and in essence, it’s speed networking. We basically set a seven-minute timer and we say, “Go talk to someone you don’t know and introduce yourself. Talk about what you’re working on. Talk about your biggest problem, biggest success, whatever you want to do.” And again, several founders have said, “When you said Founder-by-Founder, I was thinking, I don’t want to do this, but it was one of the most valuable parts of the conference” because you get to meet four or five people that you otherwise just wouldn’t go outside your comfort zone to meet, right? Because a lot of us come to MicroConf and we see familiar faces, and it’s amazing, but getting out of your own bubble and meeting other folks, whether it’s at the workshops, whether it’s at the offsite adventures, whether it’s at Founder-by-Founder, we’ve found has been an extremely valuable change and a shift to the way that the MicroConf in-person events happen.

And we’re not just doing this with our flagship events, the big two and a half day events, but we’re doing it with our local events. MicroConf, Locals started out as like a single day event with several talks. And now MicroConf Local is essentially a three-hour happy hour. We basically get together, do some Founder-by-Founder, usually I have a guest that I interview for about 30 minutes. I’ve interviewed Jason Cohen, Rand Fishkin, MailChimp co-founder Ben Chestnut. And then the rest of the time it’s hanging out. So there’s like 30 minutes of content, but it’s a three-hour gathering. And the feedback we’ve gotten has been overwhelmingly, that’s the right amount, that’s the right ratio. We don’t want three hours of talks, 30 minutes is just fine. So I’m saying this on this podcast because this is something that’s hard to communicate. If you go to the MicroConf website, we can say all day that this is an event focused on building community, and you’ll meet founders and we have the hallway track, but it can be hard to fully understand the dramatic shift that we’ve made over the past couple years.

And so if you haven’t been to a MicroConf in a while or you’re wondering what it actually is like, if you’ve never been, I’d encourage you to check one out. Our next MicroConf is in Denver this April, 16th through the 18th. And if you want to be in a room and meet a couple hundred other amazing bootstrapped, and mostly bootstrap, founders just like you. They are listeners of this podcast.

They’re members of MicroConf Connect. Head over to microconf.com/americas and you can grab your ticket. There’s still some left. It’d be great to see you there. I hope you can make it.

Rob Walling:
Welcome back to Startups For the Rest of Us. I’m your host, Rob Walling. This week I sit down with James Kennedy and we talk through this interesting approach he takes with his business, ProcurementExpress, where they have a recurring annual price increase every year. And they’re very upfront about this. They communicate this to the clients when they sign up. We run through the pros and cons of this strategy, as well as catch up with James Kennedy. He has spoken at several MicroConfs. You may have seen him if you’ve attended.
But before we dive into that, TinySeed applications for our next batch are open from February 6th to February 19th. If you’re a bootstrapped SaaS founder doing at least $500 in monthly recurring revenue up into the many tens of thousands in MRR, I’d love it if you would apply. Head to tinyseed.com/apply to find out more. You can drop your email there to get notified when applications open or just head to tinyseed.com/apply if you are interested in participating in a year-long accelerator program that is focused on bootstrap and mostly bootstrap SaaS founders like yourself. We offer mentorship, guidance, the batch itself, we have an amazing Slack channel, and we offer a community. And we match you with masterminds within your cohort of founders as well as the right amount of funding for a company like yours. Tinyseed.com if you’re interested. And with that, let’s dive into my conversation with James.
James Kennedy, welcome to the show.

James Kennedy:
Hi, Rob. How are you?

Rob Walling:
I’m doing good. People might recognize your name and voice from the many questions you’ve sent in, voicemail questions. You tried, we call it Video Ask, I guess, that’s at the top of the website.

James Kennedy:
I feel like I’m the biggest sponsor of that thing. I feel like, “This is an awesome idea. Why isn’t everyone doing this?” And then I’m the only one who does it.

Rob Walling:
Yeah, there’s some good audio, video questions that come through.
So yeah, want to welcome you on the show. You are the founder of ProcurementExpress at procurementexpress.com. Your H1 is take the hassle out of company purchasing finally. So as people can tell by your name, when we talk about doing enterprise sales and if you have to go through procurement, then you need to 10x your pricing, right? This is the thing. Well, your software helps companies handle their own procurement. Is that right? You want to describe it a little more?

James Kennedy:
Yeah, sure. We’re a little less enterprise, more like 50 to 500 employees. So the original use case was Richard, my business partner. He had an IT support business in Dublin. And he had two customers come to him in the same week looking for kind of the same thing. One was UNICEF and the other one was Clarins cosmetics. And they both wanted to… If you think about it, when you’re buying stuff and your own business is great, you take out your credit card, you do it, but then as soon as you get a bit bigger, if you need to spend money to do your job, it gets a bit more complicated.
In UNICEF’s case, they need to get approval. Obviously, it’s public money or donation money. They need to be very careful. There’s a lot of reputational risk if you don’t handle that money correctly. And in Clarins case, they actually had their old MD embezzle 150,000 euros worth of stock from them. So there were two very different reasons for wanting something. They didn’t know what to call it. We need controls. They didn’t want to be buy an ERP, but their accounting system wasn’t doing it for them.
So Rich Googled, not very well, couldn’t find anything because there are competitors. But he came to me, we hacked together the first version, and now we have about 300 customers all around the world, half in the States, half everywhere else. And we handle about $3 billion in spend for those customers each year. And that’s what we do. It’s normally like a CFO new in the business, he comes in, he’s like, “Oh, let me get control of the spend in this place. I’ll make it easier for people, an easy win.” And that’s what we do.

Rob Walling:
And how long have you been in business?

James Kennedy:
Incorporated in 2016. But the easy one is it’s the same age as my son, Max, nine. So we got pregnant with Max and I was like, Oh my God.” I had a crappy online business. It’s bad enough I’m ruining my own life with this marginal business. But now, suddenly I’m dragging my kids into it.
So that was a big motivation. And it was definitely the famous Jason Cohen speech from 2013 in MicroConf. That was the aha moment for me. And when Rich came with this opportunity, it almost matched up exactly. I’m sure the audience has already seen that. But if you haven’t, go Google MicroConf 2013, Jason Cohen. It’s the OG talk I would say. Maybe one of the best talks ever when it comes to bootstrapping a SaaS business.

Rob Walling:
That’s what I call it.

James Kennedy:
Yeah. We tried to ape some of that.

Rob Walling:
Yep. And how big is your team now? You’re bootstrapped fully, right?

James Kennedy:
Yeah. We did take an angel round, actually. So we have five angel investors in 2016, but we have about 25 people and we’re in around two million ARR in revenue mark. So it’s been very much the slow, what do you call that thing? The slow, steady for death. It’s not been an overnight success, but it’s great. It’s definitely all I ever would’ve hoped for and it’s a great team. I know people don’t think purchasing procurement is fun, but it’s a lot of fun to make something that delivers value and you couldn’t help for hope for more with our product.
We really save people a lot of hassle. And that’s what I get my kicks from is hearing the stories about, “Hey, I used to spend three hours a day doing this and now it’s gone Away. magically it’s gone away.” And despite the money, it’s the value. I think as engineers we like that idea of delivering value. So we’ve all maybe had jobs in the past where we’re horribly overpaid and you deliver no value and you feel empty and dead inside. And then of course we’ve gone the other way. We’ve built products that no one uses. Neither of those is good. So the crossover there is to build something that delivers value and is rewarding. So more or less, that’s what Procurement Express is.

Rob Walling:
And to build a pretty great business. It sounds at two million ARR, it’s just a SaaS company like this, the stability, and as you said it’s done everything you wanted it to do. And I love businesses like this. I often say boring businesses and I mean that as a compliment. It’s like you said, procurement doesn’t sound that amazing, but it’s like, no, that’s cool, ESP sending emails for people.
It’s like, “Ugh, this is boring.” But those can be fun businesses if you’re into them. It just depends on what brings you the joy. If you have to be working on a social network or the next hot thing, VR, that’s your personality, that’s cool. You’re playing a certain game. And that’s not the game that we tend to play in the MicroConf crowd. It’s more like I get my joy either from building businesses and providing value to people, like you said, in exchange for money or from the idea of wanting to be independent financially and whether that’s 10k a month MRR, whether that’s selling for 10 million, whatever. I think these things are all wrapped up in the ethos.

James Kennedy:
Yeah, and you say it’s boring, but it’s boring, if it’s not your job. If your job is to administer all the payments in a private school and you have a string of teachers waiting for you outside your office every Friday looking for their money and you’re terrified you’re going to make a mistake and then you make some sulfur to make that go away, to them, that’s not boring, you just give them another Friday afternoon back. So that’s third of stories I think of there are humans at the end of the day still. We’ll see what happens with AI now, but there’s still humans writing software for, so that’s the fun part for me.

Rob Walling:
And so we’re going to talk about your annual price changes for customers where every September you emailed me and said every September we increase our price by 8%. And it’s an incredible story frankly that I haven’t heard another SaaS company do. But before we do that, I want to ask about the name of your company, ProcurementExpress. Am I remembering correctly that when you started it was called Rubber Stamp? Rubberstamp.io?

James Kennedy:
Yeah, absolutely. There’s only two problems in computer science. One of them is naming things and I am terrible at naming things and my partner Rich came up with Rubber Stamp. I absolutely hated it, but I’m like, “Okay, whatever. Let’s just do this thing. We’re probably not going to be around in six months.” And who knew it took off. So I pushed to say this and we got to be grown up and be more professional now. And the Rubber Stamp idea was just get your expenses approved with a rubber stamp. But then we became paranoid because in the US some of our customers were saying, Well, rubber stamping isn’t necessarily a good thing. It means you’re just waving it through.” And then we got insecure about that and then we, let’s get a proper grownup name. Now there are great stories out there, like teamwork.com that went from some obscure domain to Teamwork and it exploded their business. It probably had the inverse effect for us. I think we may have been better off at Rubber Stamp, but that’s what happened. So c’est la vie, we can’t win them all.

Rob Walling:
Yeah, that’s the hard part, right? Naming’s hard. Rubber Stamp, I always liked it because it was so memorable. I remember hearing it be like, “Oh, I wonder what that does?” That’s an interesting clever name. And ProcurementExpress describes what it does, but it is less interesting I’d say. So naming’s hard as you said.

James Kennedy:
Yeah, I would say if I to do it again, I would not let myself be part of the naming. And attention is worth more than being super descriptive. And even a big problem with ProcurementExpress is that it’s very similar to our competitors, like from purify, pre choral, all these consensus kind of similar. Sometimes we get emails from people saying, “Oh fantastic, we’ve decided to work with you. This is great. We’re going to get started next month and we can’t wait to start working with whatever no friction or purify one of our competitors.” And I’m like, “No.” They can’t even tell us apart. So differentiating in hindsight, I think it probably was a mistake if I was to do it again, I would maybe have not been branded.

Rob Walling:
So let’s talk about this annual price increase. I want to preface this by saying that with companies that I advise that are selling into the enterprise that are actually doing annual contracts, it’s standard recommendation at this point to say if you’re signing an annual contract with a customer, build in an annual price increase, five to 10% is the rule of thumb that I think we throw around. But a lot of these companies are doing some annual, minority annual, let’s say 20% and then everything else is monthly and a lot of them aren’t custom contracts and they’re just signing up paying with a credit card a year in advance and they’re no custom TOS or whatever. So talk me through how you are handling this. I guess start with, are all your customers annual? And are they all more custom contracts you’re signing or is it terms of service? And then we’re going to dive into the 8% every September. I just want to know how that’s communicated and how that pans out.

James Kennedy:
So to answer your question, yes, for mostly month-to-month contract terms of service, we do have some contracts for some customers and in fact they often preclude us from price increases in those contracts or it’s certainly a point of negotiation, so for bigger customers. But let’s say for our mid-market customers, it’s three to a thousand dollars a month in MRR fees. That’s all just signing up on the website with a credit card. And we started doing this a few years ago because it’s been a mantra as long as I’ve been listening to this podcast about just increase your prices patio 11 I think. And definitely Patrick Campbell talks a lot about this, but I’ve never really, the reason I reached out to you because I never really talked about, well why don’t we just annualize this? And we annualized it just three years ago now and it’s been the best thing ever.
And I don’t want to say everyone should rush out and do this, but there’s definitely, I’ve identified five key benefits and there’s one reason not to do it in true content marketing style. So we started doing this three years ago and the first thing is that we actually did a price increase three years ago and it had to be bigger because we hadn’t done the price increase for three years or maybe three or four years. And then suddenly we were faced with new customers were paying $300 a month, whereas some customers were paying $50 a month from way back in the day. The longer it went on, the worse it became because if they were grandfathered then you just had this desperate group of payments and it also made the physically very difficult to manage all the payments. So your stripe becomes a mess.
Some people are on one type of plan and some people are on a different type of plan and it became very, very difficult to manage. So after having to go through the pay and also when you do a big increase, I think we did like 20% or so, we definitely hit churn on that. That’s not good news story for anyone. So we were like, okay, subsequent years we’re just going to warn our customers and in fact new customers that come on September, we do our price increase.
We normally say exactly that, it’s like between five and 10%. Last year it was 8%. And then the biggest benefit there, first one is it avoids this shock. So A, customers expect it. So it’s not so much because if you’re a hundred bucks a month, paying 110, it’s a rounding error. It really doesn’t matter to anyone except you as running a SaaS business because multiply that across all your customers, it’s actually a really significant bump to your MRR and it becomes a little early gift Christmas present, which you can plan for and you can decide, okay, you want to hire a new resource or whatever, you know it’s coming in September and it’s a two-way win.
You know you’re going to get the bump in ARR and your customers know it’s coming, you train them for it. So I’d say the first big reason is, or big benefit is it avoids a bigger shock every two or three years just forgetting to do it. You hear about lots of people who buy SaaS businesses and they haven’t done a price increase in 10 years or something nuts and then suddenly you’re faced with trying to bring them up to 2023 levels and it’s just too much and then you really annoy people. Yeah, so I’d say that’s the first benefit. It avoids larger bumps. The second thing is that I think really it’s a rule of thumb that no one really cares as long as less than 20% except for one group of people. And that’s the group of people that weren’t getting value from your product in the first place.
So it’s not universally great. So especially I think it’s maybe a little secret of SaaS is that there’s inactive users, it can be anything from five to 15% of your customer base may be paying you and are not getting value from the product. That’s a group of people that will consider things and you have to think about before you go ahead with your price increase, well how are you going to handle that?
Of course the best way to handle that is to identify them and try and get them active. But as we all know, no matter what you do, no matter how many cartwheels you do to try and get people activated, a hundred percent, I don’t know if it’s possible, I’ve never heard of it, but it’s just really hard to get people on board. So I think the fact that it’s 8% means that your risk of churn is very low. We do have a bump in churn after we do this, for sure it does exist, but it’s always the people who were just never onboarded in the first place. And personally I would prefer we could get them active, but I’d rather also be honest about my ARR and there’s an argument for just churning people who aren’t active anyway and just focusing on the people who are, because it keeps the business real and honest.

Rob Walling:
I’m curious how you communicate this to new customers. Obviously existing customers who’ve been with you through a September, they probably got an email and they know that it’s happening. But if I signed up, it’s December, if I signed up now, how would I find out that there’s going to be a price increase next September?

James Kennedy:
So it’s not part of our sales process, but if people ask, we always tell them. So we normally actually have a bit of a grace period. So if it’s September for anyone from July, they’ll get that year’s pricing for the following year. But anyone previous to that then will just be put onto the new pricing. And I know a lot of people go to a lot of effort with their emails, with fancy emails. My email is quite straightforward, the subject line is my favorite subject line is our smallest ever price increase and 10 new features we made for you this year. And then in there I’ll describe it as we’re going from $30 to $31 per user per month. And then I will go down through what we did for them that year, which I think is another benefit because I know this email is coming up in September and if you’ve got to explain your price increase, you know you got to do it.
It’s actually interesting. It’s a psychological thing. So how am I going to justify this price increase? And there’s a very good argument for inflation, yada yada, everything gets more expensive. Restaurant prices go up, food goes up, everything goes up. So why shouldn’t SaaS? There’s an argument to that which I’d like to talk a bit about which people think, “Well if it’s SaaS, you’ve made the product once and sure why should you ever have to put up the price because you just stamp out more software.” Which would be true if there wasn’t a thing called churn.
But there’s a roof, so there is actually a roof to what you can possibly get in terms of revenue. So it means that you do have to increase your prices. Yeah, so that’s how I describe it. I say this year for example was we went from 33 to $35 per user per month. The email goes out, we got one churn straight back on the email and then in the subsequent month we had a higher than normal churn. We have fairly low churn as the general rule, but it was really, I could see it was the people who hadn’t been onboarded and it was still a big win in terms of net MRR for us for sure.

Rob Walling:
And you mentioned to me that this also helps you close some deals. You’re in the middle of a procurement process yourself trying to bring someone on there in a decision process and you say if you get in by this date, you get the old pricing for a year in essence. And you actually mean it, it’s not just a sales tactic?

James Kennedy:
Sure, yeah. Well it is a hundred percent and I tell the sales team and they know it and they’re trying to get their people in, yeah, helps them with their quota, an extra thing to bring in for the end of the quarter, helps them bring in with their quota and everything. So it’s an overall good reason to move to take action. But there’s one definitely one big reason I think you should consider not doing this or you should be careful, and this is something actually I mentioned again Jason Cohen came up with on Twitter, I was talking about this and he was saying, “Well if you’re not careful you can inadvertently drift up market.”
So if you’re just increasing your prices and you’re not thinking about it at a certain point you change the nature of your customers. So you might go from proof prosumer to mid-market, you suddenly might go from mid-market to enterprise and then that changes how your product is positioned and so on. So normally at an 8% rate it’s not going to be about that. You just have to be aware of that as it’s going on. We definitely have some customers that only came on because we were 50 bucks a month. That’s long gone. We just are happy with that, not having those customers anymore. But yeah, still have to be cognizant of that, that you could damage your business if you just went too high without considering what your use case is.

Rob Walling:
Yeah, that’s what I was going to ask or I was going to ask an intentional question to that. If you raise every year five to 10%, do you find that you are now more expensive than any of your competitors and they’re not raising because a lot of people don’t and so not exactly up market, but to the point where you’re enough above a couple competitors that it’s causing you grief?

James Kennedy:
Yes, that is true and it means your product has to be better. And some people will say, “Well, if you built a business which is about undercurrent, undercutting a big incumbent like a Mail Chimp or a Constant Contact or something, then yeah, maybe you don’t want to do that.” But for our product we’re happy to go along with that because I personally believe because we sit on top of $3 billion worth of spend data every year, I see how people buy and I’m firmly convinced that the actual dollar value has very little to do with the buying decision, definitely in mid-market. So really the price is just someone has to justify to someone else why this product is worth something. You have to give them a good justification, but really what you’re doing in mid-market most of the time is saving people’s time and saving staff time, et cetera, so they can be let opened up to be more strategic, et cetera.
It’s saying you’ve got to be careful not to say the quiet bit out loud. So you got to be careful to say, “Listen, it’s all about price.” Especially our tool. We’re all about price and helping people get the right price. There’s trillions of dollars worth of mar tech solutions out there to help salespeople to sell, but there’s hardly any software help from us and our competitors to help people buy. So I am definitely aware of what the buying cycle is like for people. So you got to be aware of that. But having said that, I just believe that another thing is when people decide to buy, let’s say at a hundred dollars a month or whatever it is, they have not experienced the value in your product. They’ve heard a bunch of claims, they’ve maybe done a sales demo, they maybe got a testimonial, but they don’t actually know if it’s going to work. One year later after having experienced the product, if it’s working, then the money isn’t a problem.
If it’s not working, that’s a different situation. That’s why I’m not a big fan of discounting either, because it’s really a weak source argument for why someone should buy your product because you’re the cheapest. And where does that go? If you’re the cheapest, does that mean it’s okay to let yourself off and having the best performance or the best experience or whatever else you decided to compete on, and then where does that go? Well, someone else comes along who’s cheaper and they are even nastier or whatever. It lets you off the hook in terms of quality in your product. So maybe that’s the strategy here in Ireland. We have Ryanair, it’s like a low cost airline and they do very well doing that, but it’s not the strategy we cater for, especially in the face of increasing cost of acquisition across the board.
This has been an argument for decades, which is ad spend is going up, cost of acquiring customers going up and what’s going to happen there? To now, if I was to start our product today, there’s no way we would have enough money to compete with the other people like ourselves in the market because the ACVs have become high enough to support more expensive marketing channels. They’ve pushed up Capterra, pushed up AdWords, pushed up everything else. Even SEO becomes expensive when you’re competing against incumbents. So where does that go? If you’re not going up market, where’s your strategy? Because eventually someone else is going to come along with more. It could be a funded competitor who burns all their cash and goes into the ground or whatever, but then in the meantime they destroyed your business. So that doesn’t help you.
So that’s my view on increasing the prices also pushes your team say, “Hey listen, I’ve got to write this email next year a better price increase, so let’s think about that.” What’s going to be a no-brainer when I write the email about, hey, they’ve charging us extra two bucks a user and meanwhile they’ve added OCR and they’ve added whatever features we got planned for the year. And it focuses the mind a little bit like how Amazon did the press release before they do a product. You got to imagine, okay, well how are we going to justify our price increase this year, guys?

Rob Walling:
Yeah, I really like that aspect of it. There have been multiple times where I will sit down and write a landing page for something before I then go build it. So TinySeed started as a landing page, an AR and I actually maybe we had started building a deck, we had a part of a deck, but I remember being like, “I want to write down what this thing should be like. How do I explain it to people? How do I sell it to people?” And in essence, and I’ve done that with books and such before that, but that’s what you’re talking about is thinking about starting from the end and then using it as motivation to get things done. I want to circle back on one thing you said because I’m super curious. You said we’re sitting on $3 billion in procurement data and so I have a sense of how people buy. Any other insight that you want to share just off the cuff of a pattern or patterns you see that you feel like other SaaS folks could benefit from?

James Kennedy:
I will say that price has become more of an issue. I think we’ve all seen that anecdotally and also in terms of purchasing volumes has gone down and average dollar sale in the system has gone down. Now all on aggregated data is BS. So maybe I could, I don’t want to give you off the top answer there, but I can say in a very high level I could probably come back and give some segmented data there. But on a very high level for sure, price purchasing has changed in the last quarter and having a value prop, definitely it has tightened up. So it’s a lot more focus on getting the right value. So I’m not going to be as a more detailed answer. Maybe I should go and do some research and tell you about that.

Rob Walling:
And that’s fine because I asked you that off the cuff without any preparation.

James Kennedy:
Yeah.

Rob Walling:
I want to wrap up with this email subject line. When you emailed me, you said, “I’d like to throw in the best subject line I’ve ever written.” And of course that was a great teaser. I’d love to hear what it was.

James Kennedy:
Sure. When we do a price increase, it’s always some variation of this, which is what we’re going to do for you in 2023 and our lowest price increase ever. So I’m not hiding the fact that we’re doing a price increase. I personally love that line because it’s kind of humorous. I think you’re giving you a price increase, but at least it’s the smallest we’ve ever done. And the way we achieve that is on a percentage basis, we keep it within smaller than last year normally.

Rob Walling:
Awesome. Well, if folks haven’t seen your MicroConf talks, you have two of them. How we reduced churn by 25%, how you could do it too. That was MicroConf year of 2019, an attendee talk. And then you had a full talk about sales, how to stop giving demos and build a sales factory instead at MicroConf growth in 2017. And if folks want to keep up with you, procurementexpress.com to see what you’re working on. Are you still on Twitter these days?

James Kennedy:
Yeah, yeah. James Kennedy. I’m back. I think I’m the only one left on Twitter apparently.

Rob Walling:
Yeah, I was on it this weekend. I was like, “Hey, anybody out there?” It’s a trip. This’ll go live in a month. And so I am curious by the time that happens, is this where that all will have wound up?

James Kennedy:
We’ll all be on Mastodon. Yeah.

Rob Walling:
Apparently. Yeah.

James Kennedy:
Rob, it’s so, if it’s okay, I’m very keen to hear from other SaaS founders who are marketing to CFOs, hit me up on Twitter. I’d love to talk to you, looking for co-marketing opportunities. So it’s okay to say that I’d love to talk to anyone out there who’s selling to CFOs and mid-market, 50 to 500 employees, have a chat to see if we can do some brainstorming.

Rob Walling:
Absolutely. It would be amazing opportunity if folks are able to pull it together. So James, thanks for coming on the show.

James Kennedy:
Cool, thanks Rob.

Rob Walling:
Thanks for joining me this week. Hope you enjoyed a different episode where certainly it was an interview with James, but we weren’t telling his story per se, we were getting a tactic or a strategy from an experienced founder who’s built pretty incredible business. This is Rob Walling, signing off from episode 646.

Rob Walling:
I showed up to dinner and I think my belt buckle … I’d gotten out of a cab or an Uber or something. My belt buckle was literally two inches off to the side. And one guy said, “You got to straighten your belt. You run a conference now.” And I remember thinking to myself, “What in the (beep) are you talking about, man?” I’ve run five of these events, six of these events. This was my house. I remember feeling that. Like, “This is my house. You don’t come in here.” And it’s little levels of disrespect that just don’t need to be there.
And no one else does that. The only people that have come to MicroConf and said things like that happen to be these overconfident folks who had hopped in. And I’m not ragging on San Francisco per se, but we do know that there’s that “startup bro” feel that maybe just doesn’t jive with who I am, doesn’t jive with what MicroConf is, and it doesn’t jive with the community we’ve built.
Welcome back to Startups For the Rest of Us. As always, I’m your host, Rob Walling. And this is the show where we talk about building and growing bootstrapped, and mostly bootstrapped startups, through relentless execution and thinking in terms of years, not months. We know that this is a marathon, not a sprint. And maybe I can throw in another cliché metaphor right here. But no, it’s about thinking about things over the long-term and about shipping something every day, but not expecting that to move the needle immediately. Usually realizing it takes months, or in most cases, years to build something great.
Thanks for joining me again today. Today’s episode is a solo adventure where I talk through a few topics that are on my mind. I’m going to talk about whether bootstrapping, or maybe it’s MicroConf, is the “not-bro,” the “anti-bro” startup movement. Why today I think, in social media especially, it’s cool to be angry and that there’s more nuance to a lot of different situations. I’m going to bring up some examples of conversations I’ve had with my kids recently about that. And then talk about this headline where someone declined a $9 million acquisition at age 18 and then went on to build this company we’ve all heard of. And speaking of nuance and getting a little angry, the headline is sensational and I just want to point out what they got wrong, as well as dive into the difference between working with someone who’s good versus someone who’s great.
So to start off, I want to talk about this “anti-bro” startup movement thing. This occurred to me about four or five months ago, and I put it in this Trello board where I keep my solo topics. And the sentence is, “Is bootstrapping or is MicroConf the “anti-bro” startup movement?” And it felt to me a little weird to even say it. I often don’t want to come out and bring this negativity, this anti anyone mentality, into the world.
But then I was at MicroConf Local in Austin last month, and I want to thank Sarah for encouraging me to talk about this. Because she and I were talking, Sarah’s been to a few MicroConf. She said, “You know Rob, I want to commend you that the community here is so welcoming and it doesn’t in any way have that ‘bro’ vibe.” And she went on to say that she has gone to some startup events where it doesn’t feel great, and the energy in the room is such that it’s not welcoming to everyone. And I actually told her, I said, “I have this idea, and I was going to talk about it but I haven’t and I’m not sure I’m going to.” And she said, “You absolutely could,” and I can give you a bunch of examples. I didn’t want to take it to that point, but realistically, I did want to call this out because it’s something I think we stumbled into accidentally. But then once we got it, we have been very deliberate about guarding.
And it’s that idea of, A, everyone is welcome, and B, anyone can do this. It’s not like you have to be a particular type of person in any way, shape or form to bootstrap. I’ve talked about it as being the great equalizer and I believe that. I believe that almost anyone, now especially with no-code, but with code, with learning to code, with all the resources online today, that people can change their lives through bootstrapping. And not just through software bootstrapping. You can bootstrap product-as-services, you can become a freelancer, you can sell info products. There’s so many ways that bootstrapping changes lives.
And when we started talking about that on this podcast 12 years ago it was two bootstrappers who kind of knew what they were doing, who are not very “bro.” And when I think of “bro” I think of the overconfidence, the swagger, the negging, if you’ve heard of this, N-E-G. It’s like attacking or trying to be alpha, trying to out macho the next person. And it’s this energy that can feel overbearing. So the typical version of that might be, you’re in high school and there’s a bunch of jocks and they’re big and buffed and might makes right. And it just kind of sucks to be around them if you’re not one of them. And it’s a very inclusionary, exclusionary thing. That’s, anyways, how I think of bros.
But what really got me thinking about this originally, is there was a year at MicroConf where four or five people came from San Francisco, and it was crazy. They were the prototypical startup bros. Like they were doing paleo, they were talking about Soylent. They were everything I just said, the swagger, the negative, the, “I’m going to out whatever you … Whatever you do, I have a one-up.” Here I am, running this event, MCing the event, built this great community, and somehow the things they did were all better. And it just came … Really sour, really bad taste in my mouth.
And I remember thinking at the time, “If this is what MicroConf is becoming,” which it wasn’t and it isn’t, “but if this is what MicroConf is becoming, I don’t want to be part of this. I don’t like communities like this.” I’d been to [inaudible 00:05:19] where it’s this big competition to measure who was further along, who was better, who knew more people. It was the name-dropping. It’s all stuff that I just don’t have a desire to be involved in.
And I remember one example was, I was wearing a shirt from … It was called Structure at the time. And it was a pretty nice, fitted shirt, but I am tall and skinny and so my shirts never fit me quite right. And one of the guys was like, “Oh, I see your shirt. This is a tailored shirt tailored for me.” And I was like, “Oh, that’s cool.” “Yeah, you should really get one.” And I’m like, “Yeah, I will. Right now I’m investing in my startup. I don’t have the 150 bucks to drop on a shirt.” But it was this implication that somehow I was less, or my outfit was less, because of that. And again, it was someone’s first time meeting me, it was their first time at a MicroConf. It just feels like there’s a level of respect or a level of appreciation even, rather than starting to criticize or hint that somehow I’m better than you because I have this shirt.
The other comment someone made, it was for these four or five guys in this group, is I showed up to dinner and I think my belt buckle … I’d gotten out of a cab or an Uber or something. My belt buckle was literally two inches off to the side. And one guy said, “You got to straighten your belt. You run a conference now.” And I remember thinking to myself, “What in the (beep) are you talking about, man?” I’ve run five of these events, six of these events. I mean, at the time it was still early, but this was my house. I remember feeling that. Like, “This is my house. You don’t come in here.” And it’s little levels of disrespect that just don’t need to be there.
And no one else does that. That’s the thing. The only people that have come to MicroConf and said things like that happen to be these overconfident folks who had hopped in. And I’m not ragging on San Francisco per se, but we do know that there’s that “startup bro” feel that maybe just doesn’t jive with who I am, doesn’t jive with what MicroConf is, and it doesn’t jive with the community we’ve built.
And so I just want to call this out, because I’ve talked to folks who come to a MicroConf for the first time and they’re surprised that it is so welcoming and that it doesn’t have a bunch of bros in it. And if you’re a listener and you feel like, “I’m not going to fit in.” Like Anna Maste said, what, a year ago when she came on the show, and she said, “I just figured I was a woman with kids, growing a startup on the side. I’m not going to fit into any startup community.” And then she came into MicroConf and found out, “Oh, I fit into a startup community.” That’s what I want to express here. That’s what I want you to take away from this piece.
The second thing I want to talk about is something I’ve been talking to my kids about, but also it’s just constantly circling us on social media, and it’s this idea of, “I’m going to be angry about everything. I want to be outraged.” And I’m not saying that for me, I’m saying it seems like people on social media just want to be angry about everything. And the thing I’ve been telling my kids is, there’s always more nuance to this story, in almost every case. Of course, always is too strong a word. There are some cases where there’s very little nuance. Almost all cases there is nuance.
Elon Musk buying Twitter, cryptocurrency, NFTs, these things are way more polarizing than they probably should be. Now I will admit, Elon Musk buying Twitter is becoming more polarizing in a way that I think it should be, at least as of today. I’m recording this probably a month in advance, and so it’s almost hard to make comments about what will happen if things will completely go off the rails in the next month. But the idea that, say, a company could announce that they were going to issue an NFT and have people just losing their minds about it six months ago, a year ago, was just so surprising to me, because NFTs are just technology. This is being angry at someone for using an SSL certificate.
We can argue about energy usage. My kids were saying, “Well, NFTs use a bunch of energy.” And it’s like, they don’t … No, not necessarily In some cases they do, but there’s nuance. That’s what I’m trying to get to. There’s more to it than the headline take, the hot take that got you to click. The hot take that you read and then didn’t read the full piece. And the full piece, if it wasn’t written by an expert, probably didn’t have great info in it anyways. How many articles have you read in your field of expertise, when it’s written by a layman journalist, and you read it and you say, “That doesn’t make sense. That’s incorrect. They misuse that there.” No one else notices because you’re the expert.
So when the headline says, “NFTs are going to ruin the world. They sucked on all the energy and they’re a scam.” And then no one reads that article, because they just want to see the headline and, again, be angry about it, here’s what I do. I dig deeper or I don’t comment. I educate myself on this. I try to get facts, and I realize these days are facts in quotes now. I still believe there are facts and I try to find them. I try to find the sources that I think are going to deliver balanced information. And if I can’t find it or if I can’t form an informed opinion, then I don’t comment.
And that’s what I’ve been talking to my kids about. I was saying, “It’s cool for us to have a conversation here.” I’m not saying we shouldn’t talk about crypto, NFTs, Elon Musk, or any other polarizing topic. There of course should be discussion and discourse around it. But discussion and discourse on social media is not the same. Almost instantly it turns into name-calling and arguing. It’s completely counterproductive. And it’s just, it’s cool to be mad. And the madder you are, the hotter your take, the more thumbs up and retweets and likes you get, but there’s more nuance to it.
And that is one reason why I spend so little time on social media or when I’m on social media, I absolutely create filters. I mute and block people that I feel like have these takes that are uninformed yet very certain of themselves. The moment I see someone who is so certain of something, using all caps always, all caps never, it makes me very wary of listening to them. Even if I agree with them, it makes me wary that they’re not someone who looks at the nuance of situations, and who has probably formed an opinion based on one or two limited experiences.
The plural of anecdote is not data. I think Sherry heard that when she was getting her PhD in psychology and they did a bunch of research. They said, “Yeah, a bunch of stories does not mean data.” It doesn’t mean qualitative and quantitative or not both important, but this is similar to the startup founder who has one success and then comes out telling everyone, “This is how we should do it.” Or, “I’m an expert. I’ve grown startups and I have all this experience and I have all this knowledge and all these things,” when in fact, an n-of-1 is just that, an n-of-1. So I hope from that you’ll take away, there’s always more nuance, and dig deeper or don’t comment.
Speaking of digging deeper, I got an email for … It looks like it’s from DealMakers. I don’t even think I signed up for this list, but the subject line was, “Declining a $9 million acquisition at age 18 and then going on to build Vimeo.” And I read this. And I texted a friend of mine, Ruben Gamez, you’ve heard him on the show before, founder of SignWell, and I said, “He should have taken the money.” This is an anti-pattern of entrepreneurship. If you’re 18 and you’ve built a business to the point where someone offers you $9 million, you take that (beep) money. That changes your life. You will put yourself through college if you want to go, your kids through college if they want to go. You are set for most of your life with that. Don’t be dumb and believe that this is somehow a virtue to turn down a nine (beep) million dollar acquisition offer at 18.
I was mad. I was angry that they were abusing this headline, and that it was somehow being shown to be virtuous or the right decision. And then guess what? I started reading the piece and it turns out it was a terrible offer. From what I can tell, it was an all-stock offer of $9 million in stock in a private company, some venture-backed company. And then I was even angrier, but I digged deeper. That’s what I did, I digged deeper before I went up and spouted about it on this podcast. Or I never posted it to social media, but if I had, I would’ve then at least had both sides of it of, A, take the money. If you get a life-changing exit, do it, and then take another swing at [inaudible 00:13:12] with your next startup, as this founder did. Because the $9 million acquisition offer wasn’t Vimeo, it was something prior. He had many acts in his play. He had so many more things coming up in his life.
But then secondarily, this headline is clickbait. It’s like, yeah, a $9 million acquisition offer, let’s put that in quotes. It’s a crap offer. Let’s be honest, it’s all private stock. From what I can tell again, it’s like no cash or almost no cash. In that case I probably wouldn’t have taken it. And so therefore the headline that makes me think I should be shocked by it, it’s inauthentic, it’s manipulative.
All right. I feel like I’ve been a little more negative than usual, so I want to do a little positive segment here. I have always been fascinated with outlier performers. Meaning, people who in their field are so good that they transcend that field, some of the greatest of all time. I’ve never played hockey, not particularly a fan of hockey. It’s fine, but we all know who Wayne Gretzky is, and I’m fascinated by how good he was and how he got that way, how he thought about it.
I never played baseball in high school or college or any type of organized fashion. And yet, Facing Nolan is a documentary about Nolan Ryan, just came out on Netflix, it’s very good. And I watched it on the airplane. Not because I care much about baseball, because I’m so fascinated by this man who pitched in the majors for, I believe it was 22 years. He stopped pitching in the major leagues when he was 46 or 47-years-old. He has records people say will never be broken. He has something like 5,000 strikeouts. The number two behind him has 3,900. He is so far, so far ahead of everyone else that it fascinates me.
And I just want to understand, what was his work ethic? How did he think about things? How did he get there? Was it hard work? Absolutely. That is one thing that you hear through all these stories. None of these folks sat on their natural talent. They all worked incredibly hard. And their teammates will all say they were there, shooting baskets, or shooting goals, or throwing baseballs, long after their teammates left. But other names who are outliers. Michael Jordan, Bruce Lee, I love learning about Bruce Lee and how he thought about everything. Paul McCartney. And what’s crazy is, if you watch documentaries about this or you read books about them, is there are commonalities in the stories. And I find that pretty inspiring.
And so I’m going to pull in some audio from a YouTube video called I Learned 227 Beatles Baselines and Discovered This. And the reason I’m pulling it in is I really like the way this basis described Paul McCartney’s baselines and how they developed over time. And how, for the first several years, the baselines were very simple. They’re just root notes. And in fact, so I play a little bass and I play a lot of root notes, and just not that good. I mean, I can play. I’ve played in bands and I can play on stage, but I’m fine. I’m just a solid rhythm bassist.
When you listen to McCartney’s baselines as they progress through the years, the seven years when the Beatles were recording, he really starts upping his game around fifth or sixth album, like Rubber Soul and a couple of others. And he moves from being a root note kind of rhythm instrument to almost being another melody, or to being a harmony behind everyone. And the cool part about this audio I’m about to play is that this bassist shows the basic … He puts in all caps. If you go to watch the video, we’ll link it up in the show notes, but he says, “Not what Paul McCartney played.” And he’ll play it and it sounds perfectly serviceable. And you’re like, “Yeah, that’s cool.” And then when he plays what McCartney played you’re like, “Whoa, that is transcendent. That is so much better.” And I believe that Paul McCartney is one of the best songwriters of modern times, and I believe he’s one of the best bassist of all time.
And this example right here shows you the difference, that even if you don’t play bass, even if you don’t think about music in this way, this is the difference between being good at something and being amazing or being world-class or one of the best of all time. And so the song, Dear Prudence, on the White Album, let’s listen to what Paul didn’t play, the basic version of what a good bassist might play.

Speaker 2:
(singing).

Rob Walling:
And then this is what Paul actually played on the song.

Speaker 2:
(singing).

Rob Walling:
And then one other baseline is from the song You Won’t See Me, and here is What Paul didn’t play.

Speaker 2:
(singing).

Rob Walling:
And then here is the amazing baseline that Paul actually plays on that song.

Speaker 2:
(singing).

Rob Walling:
And here’s what’s funny, even though I never played hockey, didn’t play baseball, and I can kind of play the bass. I can’t read music, I can’t play any of the bass lines you just heard Paul play. I can’t play those bass lines. So it’s not because I happen to music that I am enamored with Gretzky, Nolan, Jordan, McCartney, Bruce Lee, it’s the ability to be so focused on something that you become one of the best at it.
And to link it back to entrepreneurship and startups and bootstrapping, I mean, I think there’s a couple of lessons to take. If you’re truly lifestyle bootstrapping, you want to do what you want to do and you don’t want to be the best at anything, that’s okay. To each their own. But I think I’ve always been a relatively competitive person, as competitive with other people, but also with myself. Competing to get better at things, and I enjoy that idea of mastery. I enjoy when I go back and watch a video that I recorded, listen to a talk, listen to a podcast, read a book or read a essay, and to say, “That’s really good. I’m proud of that.” I think I take a certain amount of pride in shipping something that lives up to my taste.
And I haven’t done that in a lot of areas of my life. I was in bands. We would record music. My vocals were never as good as I wanted them to be, I was always frustrated with it. When I ran track I was never as fast as I wanted to be, no matter how hard I worked. But I have found mastery in other areas where I feel like I’m pretty good at this. Pretty good at recording podcasts now. Pretty good at talking about startups and about thinking about all the stuff we talk about here on the podcast.
And so I think there’s a couple of aspects to this, is if you want to improve, think about how you can put that hard work into play and how you can focus on things. Because I do see people doing too many things if they want to be good at any of them. And launching 10 products instead of focusing on one, or trying to be good at 10 things instead of trying to be good at one, each of these is going to be a decision that impacts how good you can be at something.
And also, this lends itself to thinking about the people that you work with. I’m not saying that the team members you work with, whether co-founders, people you hire, that they need to be world-class, some of the best ever, because it’s just unrealistic. But there is the difference between someone who’s good and someone who’s great. And oftentimes it’s how much they care about it, how much ownership they take of it, and it’s putting in the focused time and working on the right things. I think that’s a big part of this, is you have to imagine the Gretzky and Nolan and McCartney and Bruce Lee, that they worked on the right things. Because if they worked on the wrong things they wouldn’t have gotten better at these tasks.
And I think, again, for you and your teammates or co-founders, what are you focused on? Are you putting in the hard work? Are you putting in the focus, or are you getting distracted by social media every 20 minutes? Are you working on things that last? Are you building a startup that will be around for a while? Are you shipping code that will be around for a while? Are you writing blog posts or essays that will be around for a while? Or are you focused on things like, “I’m going to send out a tweet because I get a dopamine hit,” but that tweet is gone to the wind in an hour. It’s ephemeral.
Each of us probably has a few things we should focus on, and each of us probably has a few things that are the right things for us to be working on. And as I wrap up this week’s episode, I want to challenge you with finding those things for yourself. Wow, so that got kind of deep. I hope that was inspiring for you, rather than a heavy listen. I enjoy doing these solo adventures and hope you enjoy listening to them. This is Rob Walling, signing off from episode 645.

Rob Walling:
Welcome back to Startups with the Rest of Us. I’m Rob Walling, and this week, I talk with Dan Martell about his new book, Buy Back Your Time. I read most of Dan’s book in preparation for this interview, and it’s really an interesting combination of productivity, of being effective rather than being efficient, and also a healthy dose of delegation. And if you’ve read books like The Four Hour Work Week, where Tim Ferris had the first part about being effective and delegating, and then the second part was about starting a business using AdWords and doing smoke tests and stuff. Buy Back Your Time is more of a fully fleshed out model with a bunch of frameworks. Really well done diagrams too, by the way, the book is gorgeous. Obviously, Dan hired a good designer to put this together, but I was impressed by the depth and the uniqueness of these frameworks that Dan uses in this book.
In fact, when I got done reading it, I actually told Sherry that she should read it because she’s right in the midst of hiring a chief of staff and getting a lot of things off her plate, and I felt like there’s a lot in this book that she could learn from, a lot in this book that I learned, and I think if you’re someone who has trouble delegating, has trouble feeling like you’re being effective, it’s obvious that Dan has spent a lot of time thinking about this. And this is from a founder’s perspective, so it’s highly applicable to folks like you and I. And if you’re looking for another book to read, just a couple weeks ago, I was able to get my book website live. It’s my fourth book. It’s called The SaaS Playbook; Build a Multimillion-Dollar Startup Without Venture Capital, and it’s at saasplaybook.com, if you want to see all the ringing testimonials and endorsements from folks like Jason Cohen, Dharmesh Shah, Noah Kagan, and so on. And read a little more about what’s in the book.
See the cover, see a few picks of the inside. The designer right now is working on all the diagrams, and this is why I noticed Dan Martell’s diagrams in Buy Back Your Time and how nice they are because I’ve been looking at my own for the past few weeks. But anyways, head to saasplaybook.com, enter your email if you’re interested in hearing about the Kickstarter, going to be doing that in a couple months. But with that, let’s dive into my conversation with Dan Martell.
Dan Martell, welcome to the show.

Dan Martell:
Rob. Thanks for having me, man. Obviously really excited, big fan. This is cool. This is exciting.

Rob Walling:
Yeah, it’s going to be fun. We’re going to talk about your experience and about your new book, Buy Back Your Time. If folks think shut up and take my money already, buybackyourtime.com. The book came out today, as this episode goes live. You told me offline, two and a half years to write this book. That’s a lot longer than a lot of people take. What was that process? Why did it take so long?

Dan Martell:
It took a while because… It’s funny, Buy Back Your Time is about the buyback principle. My philosophy in life is, before I say yes to something, I actually ask myself the who question, who do I want involved in this project? So it started with Ron, literally, he’s my book CEO. Ron Friedman, he’s multiple time bestselling author. He called me up, consumer of my YouTube channel and was like, “Dude, how do you not have a book yet?” And I was like, “Ah, it’s just not a priority. I’m kind of busy. I’ve run two companies.” And he was like, “Well, you need a book, would you collaborate with me on it?” And I was like, “I’m open to it. Tell me what you got.”
And it’s cool because I think, I don’t know about you, Rob, but the more you build and the more you stay in your lane and you just really try to focus on becoming tip of the spear, and Naval talks about this, the three levels of luck, where level one is you’re just lucky, you win the lottery. Level two is you work hard, you become lucky. Level three, if you’re great at what you do and you do one thing. I’ve only ever done, similar to you, is just software and B2B SaaS.
You eventually have other people come to you with their luck. So their level two luck comes to you. And that’s how I feel with Ron, he’s the one that came to me. He’d obviously had success in books and he was like, “Hey man, I’d love to help you do this.” So that’s why it took two and a half years is because we then worked on a book team, and I also know I’m going to write dozens of books in my career, and I wanted to lay down the foundation and process.
So I actually approached this as almost building the rhythm for writing a book every three to four years. So it wasn’t just, sit down and write, it was, okay, researcher, editor, agent, book team. Even on the marketing side, Daniel on my team who’s managing the launch, these are people I want to work with on all my books. So that’s really why it took so long. And then just the amount of editing, I probably earnestly edited it three big times, full edits. The first version was twice as long, and then it was like 70% or 30% less. And then we went away for five days with my copywriter, Chris, and we just attacked every paragraph in sentence and then did a final restructure, because I’m very framework focused and I remember the first version of my book, my editor Noah goes, “I need to explain…” He’s very kind.
I was like, “Dude, can you just skip to the end?” He was like, “I need to explain to you the difference between a university textbook and a bestselling book.” And I was like, okay, let’s… And he just explained, obviously. I’m just so… If you started reading the book, for me, it even feels like I wanted to grab some of these frameworks and put them in first paragraph. But he’s like, “Look, we need to get people invested in the story and invested in the concepts and then we can start unpacking it.” So I’m really, really, really happy with where it landed. I just finished reading the audio book not too long ago, added bonus stuff.
So literally at the end of each chapter, my audio engineer, Jessica, has never seen somebody do this, but because I do so much videos on YouTube, I literally would just riff. And I would just, at the end of the chapter, I’ve been doing a lot of keynotes on the topic. So I grabbed all the new stuff that obviously didn’t make the book and added it as audio bonuses. So yeah, it’s just been an incredibly fun and creative project, but that’s why it took so long.

Rob Walling:
Instead of just building a book, you kind of built a book factory, I’ll say. Like in programming, there’s factories that would make other objects. And I don’t mean that in terms of churning out the content, but you built a whole structure around producing a book every three to four years, which I think is super cool.

Dan Martell:
And I use an agile development process. I literally took the same philosophy of software development and just applied it to book writing, which drove a lot of my team members crazy because that’s not normal, the way we did each chapter and created a review and literally ran it a sprint process. It was kind of awesome for me because it kept me really close to the final product so that when I came back to edit, I didn’t feel like it was just such a departure. But yeah, it was neat to try to figure out what does the industry do, and then what do I need to have happen so that I feel good about it? And then try to merge both.

Rob Walling:
I just finished my fourth book and I think I’m going to be running a Kickstarter here in the spring, and they’ve all been self published. What I’ve never done before is hired a project manager, which I did this time, then she went out and hired an editor, a cover designer, whatever else, all that there. The interior layout, the interior designer for images, blah blah blah. And now, to your point, I’m already excited about writing my fifth, because I now have a team that as long as they’re around in a year or two, the next one will be coming as well. So I guess that’s what entrepreneurs do, is we build structure and we build repeatable things. If you’re used to building SaaS and software, you don’t want to do it once and throw it away, you want some type of SOP. And so I want to dive into what you call the buyback principle, which is, don’t hire to grow your business, hire to buy back your time. A little counterintuitive, talk me through what that means, flesh that out for listener.

Dan Martell:
Yeah, I call it calendar over capacity. So oftentimes, entrepreneurs, they just keep building. And people have never built companies, they don’t know any better, there’s nothing wrong with it. It’s like, you start a business, an agency, a software company, and then it’s like, I need a hire developer, I need to hire somebody to do copywriting or whatever, and you just keep hiring. The challenge with that approach is, as the CEO, at some point, you’ll hit what I call the pain line. And the pain line is this point where any more growth will create more pain in your life than you’re able to deal with. And what that means, usually it happens, it is different for different people to hit ceilings, but on average, it’s usually about 1.2 million in revenue and about a dozen employees. Where you wake up, you go to work, and you manage all these people.
Are there projects being done? Are they doing it right? You’re checking their work, and you have all these aspirations to get a ton of stuff done that day, and it’s literally three or four in the afternoon, you haven’t done anything except being in meetings. And you’re literally doing all the work that nobody else wants to do, right? You’re managing and project managing and coordinating and paying bills and dealing with fires and all this stuff. And what happens, and this is the biggest risk for business, is the pain line is, they usually, when entrepreneurs feel this, they do one to three things. I call them the three S’s. They either stall, they decide, “I don’t want to grow anymore, I want to just grow five, 10% a year, or last year was more profitable and I worked half the time, so I’m going to go back to that size.”
The challenge with stalling is, your customer’s not going to stop wanting more things or the market’s not going to stop desiring growth. GDP growth happens whether you like it or not. And the truth is, and this is a big one, Rob, as you know, your team wants more opportunity. So if you decide that you want to stall, you’re inadvertently slowly dying. Selling is the next one, which, we get the call, it’s like, “I don’t like this anymore. I thought it would be easier. I had this vision of freedom, my life does not look like that. Maybe I should go do something else.” And then third is sabotage. And that’s an interesting one because sabotage is dragging your feet responding to an email. Because you have a potential partnership in your inbox that could grow your business or you don’t make a key hire decision quick enough and the person takes another job.
All these things that are going to slow you down from winning and succeeding, but you have this psychological adversity and you can feel it on your chest. It’s like pressure and noise. I even talk about the five assassins because a lot of these are self-inflicted. I literally just got a message from an entrepreneur that admitted to me that he’s been drinking way too much this year because of that pressure and noise, and that’s the pain line. So the philosophy of the buyback principle is designed to avoid doing that or hitting that point, because if every time you deploy dollars for labor, right? Because that’s all hiring is, right? I have a resource and I deploy it, that you start first with your calendar and you look at the things that take energy from you and that are low cost to give to somebody else, so that you fill it back up with things that make you more money, that light you up.
Then as you grow through that process, it’s inevitable that you will actually build a repeatable, scalable model that doesn’t have a bottleneck. The reason why they call it a bottleneck is because the constraint is at the top of the bottle, which is the CEO. And when I’ve built all my companies this way, it’s felt way lighter and easier to scale. Whenever I violate this rule, and I go and I hire… I have clients that are like, “Yeah, I’m going to hire a COO.” And I’m like, “But you don’t even have an executive assistant.” They’re like, “What’s the difference?” I was like, “Huge difference.”
Start by just freeing up your calendar and do the work that a COO would do, and get the business to a place where it can actually absorb that type of talent and that cost structure, because that’s not a very efficient way to spend money. So in the book, I obviously break down a bunch of different frameworks like the buyback loop, how to do it, but that is the core reason. If you don’t do it this way, most businesses will end up hitting that pain line and just not succeeding. And I just want more entrepreneurs to build. The whole point is not a four-hour work week, it’s literally to buy back your time to create your empire, to create more art, to give back to the world.

Rob Walling:
So I find it really interesting, you’re talking about hiring a COO without an assistant. You have a whole chapter dedicated to hiring and delegating to assistants specifically. I guess talk a little more about that. You use an assistant extensively. In fact, when we scheduled this podcast, I basically scheduled it with her. And she used my link and then I emailed for the book and she’d said, “Hey, this is Dan’s assistant. I got to this email before Dan did and I wanted to do a quick response.” And so she sent me a copy of the book. So it does seem obvious as you say it, but I’m not sure that I’ve heard someone put it in those terms before of, COOs are expensive folks, director of operations are expensive. If you’re a bootstrap, maybe mostly bootstrap founder, you don’t have the money to hire that. But oftentimes, an assistant, especially if we were to go overseas, they’re not terribly expensive, even for a good one. So flesh that out a little more.

Dan Martell:
So in the book, I have a chapter dedicated to working with an executive assistant because it is literally the highest form of leverage. If I was starting from scratch, we always say, “Start from zero, what would you do?” I would literally hire an executive assistant. I would sell everything I own to keep that person in my life, because it’s literally a one-to-one, 40 extra hours a week of me being able to execute. So in the book, The Replacement Ladder, I literally sat down to explain to people there’s five levels. If you were trying to start from zero and work your way through what types of activities you would hire and what sequence, and it’s based on, again, my background’s in software, I look at it as a math problem. It’s like, I have dollars, and I need to buy back time. What’s the types of activities of the lowest cost that free up my time to go work on the level above it?
So level one is administrative work. And where I think a lot of people make the mistake is, the outcome goals you have to delegate is a hundred percent of your inbox on a hundred percent of your calendar. Why is this? Because I remember one time my brother, he called me up and he’s like, “Okay dude, what’s all the big deal with this executive assistant? I’m super busy,” and he was running a multiple eight figure real estate portfolio and company. Didn’t have an assistant, finally hit his capacity. And I say, “Well, here’s how it works,” And I gave him the structure. Six months later I see him and I’m like, “Hey man, how’s it going?” I was all excited to hear he hired somebody and they were helping them and he goes, “Ah, I don’t know what the big deal is.” And I go, “I know what the problem is. Did you give them a hundred percent of your inbox? As in, they triage your email first and only bring to you the things they don’t know how to deal with?”
He’s like, “No, I just CC them on stuff.” I go, “Exactly. Your inbox is nothing more than a public to-do list for stranger’s, goals and dreams on the internet.” That’s kind of crazy, but that’s how it works. So having somebody else triage that first, all my personal, professional emails go into one inbox, I’m involved in multiple companies. And then my executive assistant, and the reason why I call her an executive assistant, she’s earned that title. Now you can start with a virtual assistant part-time, but you still should delegate your inbox to that person and they triage, and they manage the calendar. Because for me, the way it works is, anything I need is in my calendar. It’s structured, the notes are next to it. When I get on a meeting, it’s all in there, they take care of that, and that way I can go back to back, back and be a hundred percent present.
That’s level one. If you have that dialed in, level two is delivery or fulfillment. It’s, whatever you do, once you sell a new client into your business, somebody else should start to help you with that. It could be onboarding, customer support, could be activating or setting up accounts, managing the customer communication. You might still be involved in the core thing that you do, if you’re a coach, in my world, I still do the coaching, but I do zero other part of that conversation. And that’s level two to just help you build more bandwidth in your calendar. Level three is marketing. You need to have somebody wake up every day and focus, in the two areas there is campaigns and traffic. Who’s monitoring the land?
Rob, how many times have you had something break out there and not know for weeks? It happens to me all the time. A funnel is like, a link’s broken in a funnel, and we’re running ads to this thing. And somehow, somebody saw a comment on a Facebook ad that’s like, “Hey, the thing doesn’t work.” I want somebody to wake up every day and literally monitor traffic, monitor campaigns, and generate new leads for the business. Level four is sales. Now, I actually think most founders should keep those conversations. If you’re buying companies, that should be you, if you’re selling, that should be you. Until it becomes 50% of your calendar. If you’re spending 50% of your calendar on sales or BizDev or whatever type activities, that’s when it makes sense to actually buy back your time and give it to somebody else that owns a hundred percent of the initial conversations in the follow-up.
The ROI of having somebody just pull forward deals in your calendar year that you would otherwise, three days here, four days later, vacation for two weeks, you just put things off. Pulling that forward pays for itself, no problem. And then level five is leadership. Level five is your executive leadership team. That’s when you start thinking about hiring people to lead departments, and you might do director levels or whatever. But to me, those are the five levels of the buyback time, the replacement ladder. If you wanted to argue with me, what’s the dollar I have to spend to buy back the type of activities out of my calendar in the most efficient way for me to fill it up with things that make the business more money and drive things forward?

Rob Walling:
And in order to get there and to evaluate, you have this thing called the loop.

Dan Martell:
Buy back loop.

Rob Walling:
Audit, transfer, fill, right?

Dan Martell:
Yeah.

Rob Walling:
Once you experience the pain, then you audit, you transfer and fill to find those three to help folks understand how to go about this process.

Dan Martell:
Yeah. So the way I think about it is, there’s this process that will never end. Unless you just decide I don’t want to grow anymore because I’m super happy and life is awesome. Most entrepreneurs do not sign up to that kind of mentality. But the buyback loop will always be part of your life. And essentially, once you feel like you’re at capacity, I probably do it every four months just because I’m adding, I’m adding, I’m adding, and I’m trying to buy back my time. Every four months, I do what’s called time and energy audit. So the time and energy audit at a high level is auditing your calendar for two weeks, highlighting things in red that suck your energy, highlighting in green things that light you up, and then using a one to four dollar sign annotation to tell yourself if it’s inexpensive to pay somebody else to do versus expensive.
Once I do that audit, then I put all the things that are red in one dollar sign in a bucket and I try to find somebody else to do it. If I don’t have any $1 signs, it’s only two dollar signs, then I take all the reds that are two dollar signs and find somebody else to do it. It usually correlates to the replacement ladder. But at the end of the day, once you have that list, then you have to figure out how to transfer it. And this is where I talk about the four Cs in the book. But one of my, I think, strategies that are unique, that most people work really hard on, is getting other people to be trained up and create systems and, what people call SOPs, I call them playbooks. But in my world, I use this thing called the camcorder method. I literally record myself doing the work while I’m doing the work so it takes me no extra time. I call it net time.
And then when I’m ready to hire somebody to do the work, I’ve got three to five videos of me doing it and talking about it, that I then give to them, and that becomes the first week of onboarding. So if I’m hiring somebody to manage my inbox, I literally have maybe five videos, 90 minutes each of me starting at three o’clock in the afternoon and going through my inbox and just talking out loud. People don’t realize simple things like, if you email me, Rob, I’m going to grab that email and I’m going to let the person know, “Hey search my inbox to see if we have context.” Okay, you’re going to see these emails, I’ve known Rob for a really long time, then move that conversation forward. You don’t need to ask me. If the person has a history with me, schedule the call.
So you start talking out loud, all these things. So then when you hire that person, they spend the first week training on those videos, they create the SOP. So that’s what’s very unique about me. I give them a template, it’s very simple structure, but then they create the process that they saw in the videos, and it creates a feedback loop for me as the hiring person, to know that they understood what I was asking them to do. And then if for whatever reason, in six weeks, two months, three months, it doesn’t work out with them, I now have training and now a playbook that the next person could follow. See, most people will hold on to somebody that’s an under performer, or not hire because they’re fearful of the amount of time it’s going to take to get them up to speed, and that they’re going to have to take out of their calendar.
It actually creates this compounding effect where it’s like, I don’t have the time to train them but I don’t have the time to do the work. So then you start cherry picking the most useful stuff, but at the end of the day, you just need to take the whole thing, get it off your plate. That’s transfer. And then the last one is fill, and this is where most people get it wrong. Let’s say I gave somebody an extra weekend or an extra day in their week, most people wouldn’t know what to do with it. It’s like, by wave of a magic wand, you now have Friday open, what are you doing on Friday? Well, they’d probably get caught up in stuff and sharpen the song, clean up some systems or whatever. But the truth is, you want to fill your time up with things that are going to propel your business forward.
And there’s only three buckets of those things. Number one is skills. I kind of consider a ladder, so on the left side of the ladder, the first part is skills. Every entrepreneur has to develop skills. And when I say skills, I also mean strategies or solving problems. So it might be like, how do I get more leads? How do I improve my sales process? How do I improve my product development process? How do I increase, decrease my churn? Those are skills that you have to acquire. On the right side of the ladder, the second area to invest time in, is in beliefs. For me, I know if I want to achieve a higher level of success, I ask myself, “Who do I need to become?” Who I am today is not the person because if it was, then I’d have that result in my life. It’s very simple.
So then the question is, how do I develop those beliefs? A lot of people don’t audit themselves. They don’t meditate, they don’t journal, they don’t have somebody they talk to, they don’t have a coach, they don’t have people in their lives that they can challenge their beliefs, and they just keep going through the same motion. At the end of the day, there’s no lack of knowing how to do something. It’s free on YouTube, it’s Google, everything’s there. What stops people is the belief, the confidence, the tenacity, the lens to look at the activity to actually drive that change forward. And then the center of the ladder, the steps, those are character values. That’s who you become. I’m always telling people, “You need to fill up your calendar once you free it up in the next level of area.” So if you don’t have a clear direction where you’re going, what that looks like, to then work backwards to say “Okay, I need to develop this skill, this belief set.”
Some people, it’s just learning to let go, control. A lot of the concepts in the book, and that’s why I put a ton of belief stuff in there. I know that it’s a personal challenge of letting go, right? Because they’re going to be like, “What if they mess up? What if they reply to somebody and they say the wrong thing?” It’s like, my rule, and I talk about this often, is 80% done by somebody else is a hundred percent freaking awesome. Any hour of activity that somebody else did on my behalf that I don’t have to do, even if they did at 80%, which means they will make mistakes, I am so okay with that. I am grateful for that, I am thankful that that happened, so that I didn’t have to do it. And it’s just so funny how people can be so critical about stuff that they don’t want to do.
It’s like, why are you so critical about it? Again, beliefs and activities in your character, who do you become? So that’s what the audit transfer fill process is, and it never stops, right? And it’s like skills, invest in seminars, training, reading, developing, just making it part of the process. Because every person out there that you admire as a entrepreneur, this is what they do. They may not have a framework for it, but I guarantee if you ask them, how have you grown into the CEO that runs this multi a hundred million dollar company? They’re going to tell you a story that sounds very similar to this process.

Rob Walling:
Yeah, the evolution, the smartest people, the most successful people that I know, the people that I admire, I’ll be honest, they’re constantly evolving. They’re so different than they were a decade ago. And myself included, not that I’m admiring myself, but I’m just very different. And I wasn’t ready to have success until I had a bunch of my, well you’re calling them beliefs, I always think of it as mindset shifts though. And it’s the ability to say, “I can do this.” For me, it was a self-confidence thing that I had to work through. I really like what you said about inability to let go. A belief that I’m the only one that can do it, right? The one that can do it best. You talk specifically about two objections, and why they are incorrect. And one is, no one does it right, and the other one is, I can’t afford it.
And the reason I bring these up is because I especially fell into the trap of the second one, when I was bootstrapping Drip. I was doing all the stuff you described it earlier, we were at 10 employees, I was doing all the crap that I didn’t want to bother anyone else with, I was doing the worst jobs, I didn’t like it, started to burn out. And my excuse at the time, my reason at the time was, well we’re bootstrapped, and if I make another 10 grand a month, I got to hire a developer because it’s super competitive. I can’t afford to do this. So talk us through why no one does it right, and I can’t afford it are essentially fallacies that we make up.

Dan Martell:
Yeah, the truth is… And Steve Jobs said this, he said “It’s easy to hire somebody and tell them what to do. It’s hard to hire somebody and have them tell you what to do.” If your experience today with hiring people is that they don’t do it right, then I know the problem, he’s staring at you in the mirror, and you have to confront that. The skillset, like I said, skills of being able to identify and hire great people that play at the things you work at is a skill. I consider myself world class at this skill. And I had to become that because there’s only a certain level of aspiration you can have in regards to the impact you want to I have on the world, that you can do by yourself. At a certain point, it’s like okay, if I want to do more, it requires higher talent, higher caliber people.
And that is a skillset. I actually talk about it in the book, in the talent pipeline framework as an example. If you’re not doing a test project with somebody that you hire to evaluate, Seth Gooden said this to me once. He says “I can’t work with you unless I work with you.” Again, that’s a strategy, that’s a skill that’s around hiring great people. But somebody that comes in that can not only play at the things you work at, it’s the most beautiful things. My bookkeeping team and finance team, they nerd out on spreadsheets, Rob. It would drain me if I had to sit there and pivot tables and analysis and all this stuff and reconciling bank accounts and all this is crazy. But it’s almost like, for them, it’s a game. They wake up in the morning to click all the accounts and they do their thing and they tag stuff and they’re happy.
That’s their happy place. So that’s one thing. And then on the afford side, that mindset, the truth is that, first off, if you don’t have an executive assistant, you actually do have one. It’s you, and you are an incredibly expensive one. That’s just a fact. At the end of the day, when people understand the value of their time, and that’s where I start the book at with this concept called the buyback rate, because you need to understand that you’ve built a business that creates an economic outcome, and you work, so that means essentially, you have a income per hour that you produce based on your current business, and then the only way to increase that capacity is for the business to grow, and you to work less so that… It’s not linear, right? Because you can only work 120 some hours a week until you burn yourself out.
I want you to get better so that a 30 hour, 40 hour week has a disproportionate output. But that’s only going to happen if you hire people to buy back the time to have the space to develop the skills that are more meaningful. Jim Rohn, this OG motivational guy back in the day, he’s like, “Your compensations based on the value the market decides.” The highest paid CEO in the world today makes a hundred million a year. His name is Tim Cook. The reason why the board and everybody in the world has no problem paying Tim Cook a hundred million dollars a year as a CEO is because he made a trillion dollars for the organization. There is levels to your ability to produce a higher level of income, which increases your buyback rate, which means you can hire more people. The problem is, I think what you experience, Rob, is the same thing. Is people hire expensive folks because they’re adding capacity, and they’re not buying back their time.
Now, the cool part is, if you follow the replacement ladder, you can get to a place where you’re adding capacity. And most of the time, when you’re buying back your time, you’re actually increasing the business capacity. You’re just doing higher caliber work. I want to free up myself from doing administrative work so I can go lead my teams, so I can work on product and work on customer success, not answer support tickets. I can pay somebody else to do that and train them up. I want to build the machine that builds the machine. I want to work on strategy and systems. Like you said, that’s repeatable, scalable. And the more I do that, then the more efficient the whole thing becomes, then the income goes up, which means my buyback rate goes up.
It’s a very simple mathematical equation. And that’s literally my scorecard. Every year, I’m like, did I become better? Because if I became better, then that means my income went up and the hours I worked to produce that income should have a higher rate. And if it didn’t, that means that maybe this year was a push. I can learn, adjust how I’m filling up my calendar for next year, and then work through the same buyback loop so that I’m more effective.

Rob Walling:
And as we wrap up, I want to ask you about one more thing. It caught my eye. Towards the end of the book, you have a chapter where you cover four hacks, and we won’t have time to cover them all today. But you have one called 1-3-1. It happens when someone comes to you, a team member comes to you with a problem, and I think the 1-3-1 helps define that and tighten it up. Talk us through that.

Dan Martell:
In the book, I realize, as I was writing it, I needed to add some leadership frameworks because if you just hire a bunch of people and you still show up as this chaotic, crazy CEO, which all CEOs are crazy, being an entrepreneur is a crazy concept, it’s not normal. I had to give them the antidote to their venom, a little bit. And one of them is, they have this desire to just tell people what to do. And I get it because it’s like, I see the problem, I know how to solve it, you’ve never solved it. I’ve done this a hundred times, go do this. Challenge is, we’re not developing our people. And the 1-3-1 rule is a core principle, and it’s part of our culture. In all my companies, I literally, it’s shorthand, we use it all the time. What’s your 1-3-1? And it’s essentially asking the person to come to you, and first off, describe one specific problem you’re talking about.
Because oftentimes, people come to you and they talk in circles. I usually politely ask somebody to stop and say, “What is the problem you’re trying to solve?” And then they define it. Then I ask them “What are the three options they evaluated?” At that point, usually a person says, “I don’t know.” And then it’s like, “Cool, do you need more time to go do some research to come to me with three viable options?” And they’re like, “Yeah, I’m probably going to need some time.” “Perfect. Want to meet tomorrow, same time?” “Yeah, tomorrow works perfect.” “Great, I’ll see you tomorrow.” And then they come back with those options. I had Adam, my head of recruiting, came to me a long time ago and he was like, “We got to hire 12 people this quarter.” And I was like, “Yeah.” He’s like, “Well how are we going to do that?”
And I was like, “I don’t know, but I think your title is head of HR and people so you’re going to tell me.” And he’s like, “But I’ve never done this before.” I go, “That’s okay. You want to see my to-do list? A bunch of stuff I’ve never done before.” But then I was just joking with him because he knew where I was going. But I wanted him to understand, I’m not here to do your job. And I think a lot of people might have a hard time with that, but that’s just the truth. It’s like, look, if I have to do everybody’s job, I’m going to be the bottleneck. I don’t want to be the bottleneck. So I just said, “Look, can you take some time, do some research and come back?” He didn’t even come back. He texted me and he’s like, “I got it.”
I’m like, “I knew you got it.” So the three viable options as the CEO is actually there because, most of the time, Rob, we just want to know the person thought through things the way we would, right? That’s it. We actually know that they have the answer, but even if they gave us the answer without telling us the three options, then we would ask them, “Well did you consider this and did you consider this?” It’s not that we don’t trust them, it’s just, because that’s how we do it. We literally running scenario planning in our head all the time. It’s like, well if this happens, this and this. I’m going to go with this option because of these reasons. And then the last one, so that’s one specific problem, three viable option. Then the one is their recommendation. 90% of the time, it’s like, yep, that sounds great. Do that.
And why this is so powerful is it pushes all the decision and problem-solving to the front line. And if you don’t teach this to your leaders, people that report to you, then you’re going to inadvertently teach them how to do… And I talk about this more in the book, transactional management. You’ll teach them how to do transactional management and then they’ll bottleneck. So it’s actually a learned strategy that’s negative that’ll stop you from growing because you taught your leaders that process. Whereas the 1-3-1 rule creates this uncapped opportunity because everybody’s coming to you. Here’s a problem I saw, here are my three options I looked at, and this is the one I’m recommending. And the person can go, “Oh, well consider this, tweak this. But I think you nailed it. Perfect.” And eventually, you essentially develop people to the point where they don’t even need to come to you unless it’s really big, and the business moves forward so much faster.

Rob Walling:
Buybackyourtime.com folks, want to check out the book. As I said, it was released today. And if folks want to keep up with you on Twitter, you are @danmartell. Thanks so much for joining me, man.

Dan Martell:
My pleasure, Rob, thanks so much.

Rob Walling:
Thanks again to Dan for coming on the show again, byebackyourtime.com if you are interested in learning more about the book and ordering a copy. Thanks again for joining me this week. I hope you enjoy the variety of episodes I’m trying to bring you. Today was an interview with a startup founder who is now an author. Last week was Listener Questions with Derek Reimer. Week before was about no code. The week before was solo listener questions. I’m trying to really mix it up, keep a lot of variety of material coming your way in different formats, because I know some people love certain episode formats, but I like to bring information, new information from outside our little bubble.
I could just have all MicroConf people come on this podcast and we would start to say and think the same things and it becomes a little too homogeneous for my taste. And so I’m trying to A, bring in outside perspectives, but also, looking at the same topics from different viewpoints, right? And different perspective in order to try to fully flesh out our understanding. And hopefully we all learn something along the way. Thanks for joining me this and every week, this is Rob Walling, signing off from episode 644.

Rob Walling:
Welcome to another episode of Startups for the Rest of Us. I’m your host, Rob Walling, and today with Derrick Reimer I’m answering listener questions. We cover topics ranging from how to implement feature flags in your SaaS app, combating imposter syndrome, whether to use the Stair Step Method and more amazing listener questions from listeners just like you.
But before we do that, I want to let you know about MicroConf US next April 2023. Lianna Patch and I will be MC’ing. We have amazing speakers, Claire Suellentrop, Dev Basu, Patrick Campbell. We have workshops. It’s going to be great. It starts April 16th and runs through the 18th in downtown Denver, Colorado. Head to microconf.com/americas if you want to find out more and buy a ticket. Tickets are on sale now. They are going fast. I’d love to see you there. And with that, let’s dive into listener questions.
Derrick Reimer. You’re back on the show.

Derrick Reimer:
Thanks for having me back.

Rob Walling:
By popular demand, and we’re answering listener questions today.

Derrick Reimer:
Whoo hoo. Let’s do it.

Rob Walling:
What led to this is there’s a lot of listener questions all of a sudden, and I’m not exactly sure. I think it’s the YouTube channel ticking up and just more people getting interest, but a lot more questions than in the past. And the interesting thing is I started going through them and I’m like, “Got to answer the video and audio first.” The first question we’re about to answer, I was like, “Oh, I have thoughts on this, but who know who would answer this really well is Derrick.” And then the second one, I was like, “Oh, Derrick would actually probably answer this better than I would.” So then once I had two I was like, “Yeah, I can build a whole show around this,” so I pulled off several questions and we’re diving into them today.

Derrick Reimer:
Very nice. Yeah, I always enjoy these episodes because I think you always invite me to the board where you’re working on organizing your listener questions and I can see the ones in the Derrick column and there’s just enough volume so all of these, on the one hand sort of easy to answer because they’re things that you know I would have thoughts on, so that’s always fun.

Rob Walling:
Yeah, right in your wheelhouse. So we’ll kick off with our first question from Alan and we’ll roll that here.

Alan:
Hi, Rob. It’s Alan from APIable here. I have a question regarding SaaS products. So we currently only have one plan in our SaaS product and this means when a customer logs in, they get access to all of the features that are there, whereas we look to add a second and third plan to our product. I’m wondering if there’s any software out there that can help us to toggle features on and off, for example, to record which customers on which plan to upsell the customer to a new plan. I can, of course, ask my developers just to program all this stuff, but it’s probably going to take two, three weeks, something like that, so maybe we could do this quicker.

Rob Walling:
So just to be clear, he’s talking about adding plans and these are often we call them pricing tiers, but yeah, pricing plans. And he’s saying how can we toggle features based on plans and record which customers are on which plan? What do you think, sir? You may have done this once or twice, Derrick.

Derrick Reimer:
I’ve done this a number of times, yeah, so I mean I think thinking about structuring your billing engine in a sense and how your billing engine marries up with your SaaS product, my thinking on this has evolved over the years, but certain parts have stayed the same. So years ago before Stripe had a nice sophisticated subscription billing engine where they could track all your plans and all that kind of stuff, we used to build all that stuff in the app and you would own the [inaudible 00:03:40] job that hit the payments API and charged the customer and all that kind of stuff.

Rob Walling:
Those were the days.

Derrick Reimer:
Those were the days. Thankfully we’re beyond those. There’s Stripe subscriptions, or Stripe Billing, I think they call it. There’s Chargebee and Recurly. There’s a bunch of different products that have different strengths and weaknesses that you could delegate that out to.
So these days what I do is use Stripe Billing, keep it simple, put my plans there, and then there’s always a certain amount of state that I want synchronized with my local database. And thankfully Stripe has… I mean their API has definitely gotten bigger and more complicated over time, so that’s one thing to watch out for, but fundamentally they have web hooks that you can set up listeners for and listen for when a subscription activates on a new plan or if you’re using Stripe’s billing portal thing, which I’ve been making use of that with SavvyCal and it’s pretty elegant so I don’t have to write the code, that allows the customer to go in and change their plan level.

Rob Walling:
That’s what I was going to ask. So if I’m in SavvyCal and I go to change my plan level, is there an I frame embedded in SavvyCal or do I actually go to a stripe.com domain and that’s how I change it?

Derrick Reimer:
Yeah, it’s a full redirect. I think people have just gotten used to that enough, you know? Even when you’re buying something on a Shopify website, it kind of redirects from the fully designed thing over to a checkout flow that looks more stripy, looks more stripped down. So, yeah, I think these days using the customer portal is… I don’t hear any customers complaining about it or feeling weird about getting redirected to Stripe. And that has the interface for updating credit card, changing plan, adding their tax ID number, all that kind of stuff so it’s nice not to have to own any of that code.
And then when those changes happen, we receive a web hook from Stripe saying a change happened and there’s products and prices in Stripe. The product would be the basic plan and then prices, you might have one for your annual tier and your monthly tier, say, so I keep a mapping of those. Like basic plan and SavvyCal maps to this price ID and this interval maps to this product or whatever, and then when those changes come in, I just update the record in the database that maps that subscription and then you can use that anywhere you need to. Anywhere where it makes sense to sort of gate a feature, you can just check that flag without having to call out to Stripe.
That’s why you want some of this state synchronizing your database. I always aim for minimal amount of state synchronization so I don’t have their list of invoices, for example in my database because if I need to show them that, I can either send them to Stripe UI or make an API request, and it doesn’t matter if it’s slow, but for things like choosing to show a certain feature, you’re going to want that to be fast.

Rob Walling:
And so when you go, actually in your code, to show a feature or not, do you use any type of… I think of Rails having a RubyGem and there’s a bunch of them for feature toggling, right? And I’m sure Laravel has them and every framework probably has them. Do you do that or are you more hard coding where it’s like if this plan then blah, if that plan then blah?

Derrick Reimer:
Yeah, I have a mix of this honestly. So I have kind of one place in the code base where I can ask the question, does this user have access to this certain feature? And so I have one place where a lot of that logic lives that’s kind of explicitly tied to a plan. Sometimes you have a feature where it’s like normally this is on the premium plan only, but I want the ability to enable it for a particular user without moving them fully to the premium plan. And so for me, it’s always a case-by-case basis. It’s a judgment call when you’re architecting it, but if it’s going to be something that you might want to enable, then I usually opt for the pattern of having a flag on the user record that you can set explicitly so you’re not purely relying on the plan level that they’re on, if that makes sense.

Rob Walling:
Absolutely, because I remember we used to have, let’s say, beta or early access individual features with complicated features, especially in Drip where it’s like this one, it might have a bug or it might be a little janky but it’s a whole new UI or it’s a whole new something, and we wanted to test it out in our own accounts and then we’d get… You know, it was Brennan Dunn or Ruben Gamez, just like a Drip-friendly, friend of Drip, and we would say, “Do you want to check this out?” “Yep.” So we’d feature flag, so that’s how you were doing it at the time.

Derrick Reimer:
Yeah, and so for that, for pre-releasing a feature, currently I make use of a library for doing this. There’s one for Elixir Phoenix called Fun with Flags that is just a little subsystem where, and they even give me a little administrative UI that I put behind special authentication so that just us admins can go access that, and just say for this user ID enable this feature, or you could even do things with it like for 50% of users, enable this feature if you want to-

Rob Walling:
That’s cool.

Derrick Reimer:
… gradually roll something out.

Rob Walling:
Yeah, that’s neat.

Derrick Reimer:
It makes sure that it loads the flags in memory so that you’re not doing a bunch of database calls every time you want to ask the question of who can see this feature. And yeah, I make heavy, heavy use of this. I mean, part of our methodology when we start working on features, we break them up into small chunks and we’ll often start shipping little pieces of functionality into production from day one and set up the feature flags.
So usually that’s the first step is figuring out what flag this is going to be under and then anytime we’re passing a user object around, we have a little object of flags on there so we can just check it wherever we need to and, yeah, that helps us really push forward quickly on things and get it into prod and de-risk things.

Rob Walling:
Right, and that’s the big advantage of that approach, right? Because someone who’s been writing software for 20 years hears that and thinks, “Oh, my gosh, pushing stuff into prod that much. The QA and this and that,” but it’s like, “No, it’s 20 lines of code that I wrote today and I’m going to push it in and we have massive unit test coverage and so the odds of having a regression are not huge.” I remember feeling so good about launching big features back in the day. I’m assuming you feel that way in SavvyCal because it’s like, “No, this code, 90% of this code’s been in the app for three weeks, so it’s like nothing bad has happened,” right?

Derrick Reimer:
Yeah, totally.

Rob Walling:
It’s a real nice way to do it. So Alan, there you go. Maybe even more than you asked for. You were talking about plans, but we also talked about… I mean the whole idea of the Fun with Flags thing where you could roll it out to 10%, 20% or individual users, that is invaluable. And if you’ve never built a SaaS app as a developer or product person, you just don’t think about that stuff, but if you have downloadable software, if you have developer component, if you have an app in an app store, none of that…
I guess maybe an app in an app store would, but the others, it wouldn’t make a difference and so in SaaS specifically, this is where having experience building multiple products is so helpful. So thanks for the question Alan, I hope that was helpful for you. Our next question is from Wyatt and it’s about how to communicate product needs to a technical co-founder.

Wyatt:
Hey, Rob. I’m a non-technical founder that has a technical co-founder that I just brought on board. I’m the one on the team currently that has the industry knowledge necessary to understand our customer needs the best and most deeply. We have early product market fit with our current iteration with several thousand in MRR and we’re starting to build more complicated features that are really going to start to separate us from competitors. And these features I think will be critical to our success, not only from a product side but also leveraging these in our marketing.
I guess my question is how do you build/design/mock up product features where I know the customer best and what they’re going to want, and describing the product interface to my technical co-founder and how it should be laid out the best, is this something where you would draw on the back of a napkin and send to them? Mock something up in, I guess, it would be one of the more famous mock-up tools? I guess, how do I go zero to one best with my technical co-founder on how to start initial designs that end up getting built by him in the end, and kind of communicate that properly with him on what to build, how to build it it in the best way that I know our end user would want.
I’m kind of currently just doing this via our Slack communication or Zoom meetings and I feel like this cannot be the best way to do it because I’m sure he’s interpreting things that I’m saying by just the words coming out of my mouth essentially. There’s got to be a better way I feel like to communicate some of the product needs of our customer better. Longtime listener, first time caller. Appreciate any feedback you might have.

Rob Walling:
Derrick, you are a technical co-founder and also someone who has had to communicate product needs, oftentimes to designers, to developers, to your dummy co-founder over here when we were building Drip, no. How do you think about this question?

Derrick Reimer:
Yeah, so I think I would say generally I’m a fan of the low fidelity mock ups. I think Jason Fried talks about using a sharpie instead of a ballpoint pen as kind of a way to picture this so that way you don’t accidentally get more specific than you intended to. It kind of forces you to keep it more high level. I think there’s digital tools to do this, tools like Balsamiq and I don’t know what other tools are out there these days for-

Rob Walling:
Balsamiq and Figma are the two that I think of.

Derrick Reimer:
Okay, and Figma, I think, oftentimes becomes more high fidelity because you can do pixel perfect designs in there, but I bet you can probably also just do boxes and arrows and stuff. And that being said, I wouldn’t get too bogged down with tool choices in this case. To be honest, mostly if I need to do this, I’m sketching it on paper and taking a picture of it and pasting that picture in the ticket.

Rob Walling:
Remember all the whiteboard pictures?

Derrick Reimer:
Yeah.

Rob Walling:
I still have 20, 30, 40 whiteboard pictures of UIs that we would sketch out and they were terrible. I can’t draw on a damn whiteboard and so none of the lines are… But that’s what you’re saying. It didn’t matter. We used to meet, we’re like, “Well, let’s put a text box here and a dropdown list and then we need something blah, blah, blah here,” right?

Derrick Reimer:
Totally, and there’s one other thing I want to mention because I’m getting a sense from the question that he may have been experiencing some miscommunications with his co-founder because it sounds like whatever they’re doing right now, it’s breaking at times, it’s not working super well. And to me this feels like a case where for some of these complicated features he’s talking about where there’s a lot of nuance and information to communicate and voice of customer to bring in and try to capture it all, I don’t know if they’re mainly trying to do this over Slack or other project management tools, but this feels like a case where a shared whiteboarding session would serve them really well.
We had so many of these building Drip and you get to combine the strengths that you both bring to the table. I’m not sure who’s more of the designer between the two of them because a technical co-founder isn’t necessarily the best UX person on the team so it just depends on who has a better sense for those things, but I would bet you that if you put your heads together and hashed out things and got on the same page in front of a whiteboard, you’d save a lot of time over trying to do that over writing.
The alternative is go asynchronous and just write, write a lot and provide a lot of context, which I know teams like Basecamp are a big fan of that approach, and you write these giant documents where you try to brain dump everything you’re thinking into one place, which is cool for other people to be able to go back and read it so there’s some nice archival benefits to that, but I would say if you’re trying to move quickly and not get too bogged down, a synchronous in-person or virtual whiteboarding or however you want to do it, could be really helpful.

Rob Walling:
I would wholeheartedly agree with that, and I think to take it a step further, once you do that whiteboard session, you take a picture of it or you have your screenshot of it and you slap that into… We used GitHub Issues, but hopefully you have some type of project management or issue management thing that you’re working in, whether it’s Jira or what’s the one you use that’s really good looking?

Derrick Reimer:
Linear, yeah.

Rob Walling:
Linear.

Derrick Reimer:
The new hotness.

Rob Walling:
So certainly… Yeah, the new hotness. Any features, bugs that you’re thinking about should be individually documented, but when you’re this early, I think you should be extremely agile and fast moving, lowercase A on that agile, and you can have a conversation. It’s like, “Oh, we realize that customers want this setting and it requires two check boxes and a dropdown list.” I would log in to GitHub Issues, open an issue and I would say, “We’re going to add two check boxes and a dropdown list.” I mean this is what I’m typing, right?
It was like four sentences tops, and then sometimes if you were going to build it, it was done because you knew the architecture. If you were handing it to a developer who maybe didn’t know, you’d be like, “These are going to pipe into this model and go into this.” I’m using the wrong words, but this aspect of the ORM in Rails, but no, yeah, right? But you’re like, “It’s this database table, blah, blah, blah,” if someone needed the architectural or the technical side. But we would build features that were two sentences, eight sentences. When it got complicated, it was a couple of paragraphs and then a lot of visual.
The ones that were more complicated were workflows where we did this huge visual thing and even that was several pieces of 8.5″ by 11″ paper taped together on the wall.

Derrick Reimer:
I remember that [inaudible 00:17:05].

Rob Walling:
You totally remember this, and I’ll see if I can find a picture of it. It would be great for the show notes. But it was that and then I think we just talked about what each of the nodes did and tried to define them in a sentence or two. That was it. And I’ve been at places where, because I worked at a credit card company, I worked for the City of Pasadena, the specs for those things would’ve been 50 pages or a hundred pages for documentation, for reasons, but not reasons that I ever want to experience again. I don’t work in those environments because you just don’t need that much when it’s two people, three people, four people trying to move fast, trying to ship fast.

Derrick Reimer:
Yeah. I find these days when Taylor and I are talking about a somewhat complicated feature, a lot of times I write a couple of sentences in the initial ticket and then maybe a note that, “Let’s discuss this. Let’s hash it out.” A lot of times it’s a little different than I originally envisioned, so I’m glad I didn’t invest a ton of time describing my grand vision for it, only for a quick back and forth to modify that slightly.
And then what’s nice is a lot of times we’ll talk it over, and since Taylor’s going to build that part, he will then write the tickets for it and kind of summarize what we talked about. I think that that’s just a helpful device for him to confirm that he understands what we both arrived at and write it up and I’ll skim over that and if there’s something off then I’ll just note it and correct it. But that’s a great way to just confirm that are we truly on the same page before we start investing developer cycles into it?

Rob Walling:
That’s a really nice way to do it and collaborate and have the double check, and realize when we are talking about these tickets or this feature description, that there’s kind of three components to it in my mind. There’s the user interface, how it looks. There’s obviously the technical details behind it, and then there’s how it acts and operates, the behavior of it. And sometimes you don’t even need to describe the user interface. Sometimes there is no user interface. It’s just a change in behavior of a scheduling blah, blah, blah, background, whatever. Sometimes user interface is literally, “We’re going to add a text box. It’s going to be called first name.”
You don’t need to say, “Use these styles.” We all know what the styles are in our app. So the UI can be complicated with workflows where you and I talked a lot or it can be non-existent. The technical side can sometimes be obvious, sometimes not. “Oh, you’re going to add a field to the customer table to do this,” or it’s just obvious what we’re using. The behavior, that third one, I think, is the one that I would spend the most time thinking about, how we got to get that right, and that’s usually not obvious, I think. It’s often the most, I think, challenging piece to communicate in a way that I know that it should work this way or maybe I don’t. Maybe I haven’t thought of the edge cases.
That would be the other thing is I’d throw a ticket in. You’d come back and you’d be like, “If we do this, we’re going to break everyone’s unsubscribed links or 10% of the unsubscribed links.” It’s like, “Oh, I hadn’t even thought about that,” so we change the behavior to not do that.

Derrick Reimer:
Yeah, I mean that’s ultimately the most important. I think that when you call that user experience where it’s like it’s not user interface design necessarily. That’s a part of it, but what’s the journey of the user? What problem are we trying to solve? And thinking about it a little more high level and then the details sort of take care of themselves. If it’s something that requires a lot of intricate UI design and the developer is not that great at interface design, then maybe that’s the point you loop in a designer to take care of the visual aspects of it. But all of that is sort of downstream from making sure you’re on the same page about the overall journey. What’s the problem we’re solving at a high level.

Rob Walling:
So thanks for the question, Wyatt. I hope that was helpful. Our next question comes from Bavesh and he’s discovered the Stair Step Method of bootstrapping and he’s asking, should I put my main SaaS on the back burner?
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Bhavesh:
Hi, Rob. Just got a question. I’ve seen your new video on YouTube titled, If I Had to Start Over Here’s the Three Steps I’d Take to One Million.” Now I’ve got a question or kind of a dilemma. I’ve been working on a SaaS project for a couple of months now. I’ve been doing interviews and customer research. I’ve been able to lock down the research and their pains through interviews, polls and everything. I’m now working on a [inaudible 00:22:31] for the solution that I’m going to present to them.
Following the video, I’m a bit slightly lost. Would you suggest I start with a smaller project, say a WordPress plugin or Shopify plugin, rather than continue with the main SaaS project to get my feet wet before I should plow through the main SaaS project? So let’s say the WordPress plugin, I’m estimating five to six months activity, whereas the main SaaS project would be another one to two years to go. What’s your thoughts of this, because I’m a bit lost as to taking your advice in the current situation that I am in with what I should be doing? Thanks, Rob.

Rob Walling:
Well, Mr. Reimer, this is a tough one, right? There’s no right answers on this one, but what’s your thinking? How would you go about thinking this through?

Derrick Reimer:
Yeah, so first off, it sounds like he’s doing the right things to set himself up for success as best possible. I hear he’s doing research, doing interviews, talking to people. Those are all great things. The one thing that’s not totally clear to me, because he’s mentioning maybe stepping back and working on a WordPress plugin or a Shopify plugin or something like that and I don’t know fully if he’s implying that these would be scaled back versions of the SaaS that he’s working on or if it’s just kind of a hypothetical alternative path he could take.
And I think the answer would kind of vary because in general I would say… Another thing that jumped out to me was he mentioned a one to two year timeline on building the SaaS, the main SaaS, and to me there’s a red flag because that’s a really, really long time. I think in this phase you want to be optimizing for learning and the trap that you could easily fall into as a builder is doing what you do best, building product, and not actually learning a bunch from the market or figuring out, “Am I on the right track? Is this going to work?”
This is kind of the age old problem that plagues us so often and I think that’s the biggest risk with working on a SaaS where if he feels pretty confident it’s going to take that long, then I would seriously think about either trying to cut scope to shorten that or just think a little bit differently about the process for developing the SaaS. Or potentially if these plugin ideas are speaking to the same market, the same idea generally that he has, but they’re a little bit more scaled back and easier to get to market quickly, then I think that would be something really interesting to think about doing to validate.

Rob Walling:
I’m not sure how much I have to add to your analysis, honestly. I feel the same way about it. These are hard decisions, really incomplete information, but when I saw one to two years I was like, “No, no, don’t do that. No matter if you’re talking to customers or not, it’s just too long.” By the time you’re a year in, it’s just a slog. You have to have some type of traction by that point, whether it’s customers using it, some money coming in. I’m not saying it needs to be 10K a month, but it just pains me to think of someone working probably nights and weekends, I might be guessing. Certainly you wouldn’t do one to two years full-time. That’s a lot of person hours before you get something into the wild.

Derrick Reimer:
That’s my assumption too is that this would be probably something on the side, and I do sometimes hear founders talk about being okay with it taking a long time because it’s just a side project. But I think something that’s really important to think about is your own motivation for the idea. There’s an element to trying to build some traction in the market even before you launch the thing. Hopefully you’re building an email list and these conversations that you had, you want to be able to follow up pretty quickly with something, at least some form of progress to keep the people that you’ve talked to interested in the idea.
And all of that’s going to wane a bit if you’re just slowly plotting along, making progress on the side, and I would bet that your own motivation for it would wane as well. And then what have you learned from that process? I mean, maybe you’ve learned some new technology or something if you’re experimenting with that while building, but have you gotten closer to making progress on the stair step and ultimately becoming independent, if that’s your goal? And so I think that’s an important thing to keep in mind.
It’s one thing if you just want to build something on the side and you’re just interested in doing that in its own right, then that’s cool, but you need to make sure. If you want to be making progress on building skills to bring products to market, then you’re probably going to want a tighter feedback loop.

Rob Walling:
To piggyback on what you just said, funded startups fail when they run out of money. Bootstrap startups fail when the founder runs out of motivation, and that’s what you’re saying is you grind for six to 12 and you start losing. Let’s say if you were to launch after 18 months, that’s the starting line. You’re in a hundred meter dash and that’s like you’re 10 meters in, so how do you then have the years it takes to grow that to replace your full-time income?
I think, in summary, if you were to just say, “Rob, if you were in Bavesh’s shoes today and you didn’t have any network, any audience, any funding, you couldn’t self fund and you haven’t had a success, you’ve never really launched anything, what would I do?” That’s how I like to think about these things. I would not spend two years on a SaaS app, and you said scale it back, which I think is interesting, or I would look at a more step one business. That is what I would do. Yeah, even though I’m a few months in, there’s a sunk cost fallacy there where you potentially are going to throw good time after bad.
But I want to be clear, Bavesh. I’m not telling you what you should do. I’m telling you what I would do in my shoes, knowing what I know, because these are hard decisions. The information’s obviously very incomplete and each of us has to make those for ourselves. So thanks for that question, Bavesh. I hope it was helpful. Our next question is from Matt about developer imposter syndrome.

Matt:
Hi, Rob. Matt here in the UK. I was just wondering if you’ve got any advice for any developers like me who are struggling to get past a mental barrier of not thinking that anything we develop is going to be worth other people paying for?

Rob Walling:
What do you think, Derrick? I’m curious if you ever felt this. Do you remember ever having this type… Because look, we’ve all had imposter syndrome. Let’s be clear. But this particular one where I think no one will pay for something that I’m building.

Derrick Reimer:
Yeah, I do think it’s curious the way he worded it. I was trying to think of the same thing, can I relate to this feeling? Because for me, I think, if there’s one area that I’m confident in as a developer, it’s my ability to build a product and take some pain point and solve it with software. And I think Matt should probably feel confident in that as well. This is our craft, this is what we do, this is what we’re good at, and I have zero doubts that he could build something that is worth paying for that solves a pain for a customer.
I think the bigger thing to be worried about, not to potentially add to the list of things you might be stressed about, but the bigger risk us builders have is skimping on the other side of it. It’s all the things outside of building the product. It’s figuring out how to talk to customers and how to reach them and how to position it in a way that people want to buy it. That’s where things get trickier.
And so I think certainly I experienced that, a ton of imposter syndrome around am I actually capable of being an entrepreneur in the full sense of taking something to market and selling it and putting a salesperson hat on when I need to and putting a marketer hat on when I need to? Those are all skills that are pretty far outside of the builder-developer skillset that, I think, a lot of us developers take pride in honing.
I guess if I had a word of encouragement, it’s try to foster that growth mindset. Recognize that these are all just skill sets, they’re learnable, there’s a lot out there, so there’s a lot of things to study, there’s podcasts to listen to, there’s books to read, but a lot of your best learning’s going to come from doing and so that’s the other thing. It’s like, well what’s the most effective way to get past feeling like I can’t do it is by proving to yourself that you can.
And I think that’s the power of the stair step approach is getting small wins to validate to yourself that like, “Oh, I actually can do these things,” and, yeah, it’s really difficult to build a SaaS app out of the gate and have all of those hundred variables that you have to get dialed in just right. Getting them all dialed in right out of the gate is incredibly difficult, and so that’s where there’s a lot of value in gradually building up your skillset and convincing yourself that, “No, I can do this,” and I’m confident that anyone who puts their mind to it can.

Rob Walling:
I am, as well. I mean at bootstrapping especially, it’s just such a great equalizer. It’s such a platform that does the tool solve a problem that’s worth paying for? Then people will pay for it and they usually don’t care who you are in most cases. They don’t care where you’re from and they don’t care about your background. They just care that this tool solves this problem, and so I love the advice you’ve given, Matt. I think the thing that I would add to it is it sounds like it is maybe a deeper…
I say this as someone with experience of this, of maybe a lack of self-confidence. And I remember feeling, especially in my twenties, feeling very, “I don’t know if I can do this stuff. I don’t know if I’m cut out for…” insert anything. Insert anything entrepreneurial because I didn’t know any entrepreneurs, none in my family. The only business owner I knew was the guy my dad worked for. There was just no history there of this is possible. Especially hadn’t seen it in software, especially hadn’t seen it in anything except Silicon Valley raising funding because I grew up in the East Bay Area.
And so it took me some, I’ll say, personal work working through that on my own. I went to therapy about a bunch of stuff, but that was one of the things. Was like, “Am I cut out to do this?” And you’ll find out you have a lot, all of us have limiting beliefs based on our upbringing. Upbringing or there’s a bunch of different reasons why these things happen, but they’re complete blindsides that you just don’t see, and this one feels like that to me.
And so whether it’s a therapist or whether it’s a mastermind group or a co-founder or just someone who’s in your corner and willing to think this through with you, I think that’s what worked for me. I’ll put it that way. And it wasn’t Sherry, it wasn’t my wife who helped me get through this. It was a third party, even though my wife is a psychologist. The irony runs deep, but that’s not what helped me. It was having some successes along the way as I stair stepped up. I think that’s our third shout out to it but, no, it was little things where I was like, “Oh, [inaudible 00:33:10] voice. Oh, now I’m making $900 a month on this little downloadable invoicing software.” That was what convinced me that I could build something people were willing to pay for because they paid me for it and then that proved it and I was like, “Oh, well if it could be $900, it could probably be 9,000, couldn’t it?”
And then the first dollar you make online is amazing, and then you figure out how do you make $2 and then how do you make$ 2,000? The other thing I would say, Matt, is if you’re not in a mastermind group, that was another game changer for me, both the mastermind with you, Derrick, and Phil back in Fresno, and then another mastermind with Ruben and another person that’s been remote for years and years. Those were less about building up my confidence because actually by time we were in masterminds, I was doing stuff and I was pretty confident I could do it, but you have ups and downs even then.
Whether it’s a lack of self confidence or latent belief that people aren’t going to buy it, it’s going to rear its head in different ways month to month, quarter to quarter, year to year. That’s going to come back. You’re never going to be through it. And so having folks around you who are in it for long term with you who can help identify that and as you talk through it, be like, “You know what, man? I’m going to call you. That’s bull (beep). That’s actually not true. That’s this other voice talking. That voice is not welcome here, because it’s just not helpful.”
And so I think having a person or a couple of people in your corner who can help sanity check… We all have thoughts and I’ve gotten better at it. I think everyone does, but you get better at identifying, “Huh, that thought today is because I’m really tired or I’m really depressed because there hasn’t been sunlight for five days and that thought about this not working or me not being good enough is really an external factor, so don’t believe it today. But if I feel this in a month, maybe that’s true.” And so I give myself time and space to have these negative thoughts and not dwell on them, and if they keep coming back, then I figure out other ways to handle them.

Derrick Reimer:
Yeah, the community piece is really important because we pour so much of ourselves into our endeavors, especially when you’re kind of staking your career on it, it feels like at times. So it takes a lot of emotional energy for sure, and when something doesn’t work, it’s so easy to come to the conclusion that, “I’m just not good enough or not capable,” when a lot of times the answer is maybe there are some things outside of your control that affected that, or maybe there was a tactical error or maybe there’s just something you haven’t thought about, some playbook that you could try running.
There’s usually other ways to problem solve and it’s basically never that I’m a fundamentally flawed person, incapable of getting past it. It’s just you need other people in your corner who can have a different perspective and help assure you that it’s just something to work through. It’s not that you’re incapable.

Rob Walling:
And if you never have these thoughts, then you’re a robot.

Derrick Reimer:
Right, yep.

Rob Walling:
Right? I mean, everyone I know who I like as a human being has these thoughts. There are probably people that are so confident in themselves, it’s called narcissism, where you never have these doubts and I don’t hang out with those kind of people. I’ve met them and they are hard to be around because they’re just so in their own world. Derrick Reimer, you are @DerrickReimer on Twitter. Are you still on Twitter?

Derrick Reimer:
I am still on Twitter these days, yeah. It’s getting to be an interesting place but, yeah.

Rob Walling:
That’s a question we have to ask, yeah. Thanks so much, man. Thanks for taking the time to come on the show. I’m sure the audience really appreciates your insights.

Derrick Reimer:
It was a blast, as always. Thanks for having me.

Rob Walling:
Thanks again to Derrick for joining me today and thank you for joining me this week and every week as we dive into topics for ambitious, bootstrapped and mostly bootstrapped SaaS founders about building, launching and growing startups. I hope the new year has been amazing for you so far. This is Rob Walling signing off from Episode 643.
Do you not use Chrome anymore?

Derrick Reimer:
I use Firefox. I’ve just used it as my [inaudible 00:38:00] couple of years.

Rob Walling:
Did you always use Firefox?

Derrick Reimer:
I think I started four years ago or something, yeah.

Rob Walling:
Okay, what made you switch?

Derrick Reimer:
Honestly, it was at one point there was an update, a Mac update that broke font rendering. It made the letter spacing all tight and I think it was a bug that got fixed. It took two months or something for it to get fixed, but it was messing with my… When I’m paying attention to pixels so closely, it really messes with my design stuff.

Rob Walling:
Yeah, that’s interesting. So if Apple wanted to totally screw Chrome’s market share, they could just do that every couple of months accidentally.

Derrick Reimer:
Yeah.

Rob Walling:
What a trip. Hadn’t even thought about it, but only for really picky UI people.

Derrick Reimer:
Right, right.

Rob Walling:
Because I didn’t notice.

Derrick Reimer:
Probably most people didn’t notice. Well, maybe it was early stages of SavvyCal. I can’t remember which app it was where I was really getting core patterns built out and paying a lot of attention to the spacing of tool bars, nav bars and it all looked extremely jacked up, so I was like…

Rob Walling:
Cracked it. Yeah, that makes it tough.

Derrick Reimer:
And then Firefox, it’s been actually nice. The UI used to be kind of ugly and it’s gotten much more chrome-like and they have syncing between phone and desktop. They’ve caught up on a lot of stuff, yeah.

Rob Walling:
That’s the big thing for me. Yeah, that’s cool. All the bookmarks I have, and I remember years ago when you have to transfer them manually to export and then import. I mean, I know they have all my (beep) data because I have to log in, but I don’t care. It’s so much better when I get on a new machine. I’m like brand new Mac, I install a few apps, I log into Dropbox, I log into Google Chrome and it’s not much [inaudible 00:39:44]. It’s like, “Oh, I got to get my ftp.” I have four or five SFTP things I got to move over, but compared to the old days when I’d spend eight or 10 hours, literally a full workday, just getting a machine set up.

Derrick Reimer:
I know, I know.

Rob Walling:
It’s so nice.

Derrick Reimer:
Yeah, now these days I’m relying almost exclusively on all the Apple migration stuff that’s built in. Like just do it for me, and it generally works out fine. The one thing I didn’t do, I just upgraded my phone finally and forgot that Google Authenticator doesn’t transfer over.

Rob Walling:
Yeah, that is rough. And you know what, dude? I actually switched away from Google Authenticator to LastPass Authenticator because of that, because it does, and I don’t know who… Some of them do and some don’t. I don’t care which you do, but pick one that does because that happened to me once.

Derrick Reimer:
1Password has more and more support for one time password stuff, and it’s magical when it automatically inserts the one-time password. So I have a few… Obviously some Google accounts and stuff were in there and I’m banking on being able to use the recovery codes when I need to.

Rob Walling:
When you need them. Ah, that’s such a bummer. That’s surprising that Google is doing that, A, and B, there are just still a few edge cases in this whole get a new phone, get a new laptop thing, and I don’t think you can get them back once you lose it.

Derrick Reimer:
No, I don’t think so. I mean, it must be baked in, intertwined with the fingerprint of the device or something. There’s something about it that just will not transfer, but Apple doesn’t warn you about that. They’re like, “Cool, you got a new phone? You want us to migrate all the stuff over?”” Yeah, let’s do it.” And then it finishes and it’s like, “We’re done. Should we wipe this?” And I’m like, “Yeah, wipe it, man.”

Rob Walling:
Of course.

Derrick Reimer:
“Do it.”

Rob Walling:
That’s terrible. Such a bummer.

Rob Walling:
Happy New Year. It’s another episode of Startups For the Rest of Us. This is the 13th calendar year in which an episode of this show has been published. It’s great to have you listening today.
In this episode, I talk with Tara Reed of Apps Without Code. We have a great conversation. We talk about her journey, getting into no-code, then starting Apps Without Code, growing it to a $5 million bootstrap company, actually pulling it back to between $3 and $4 million to make it more profitable. We talk about entrepreneurial mindset. She deals with a lot of early stage founders trying to get off the ground by building an MVP or an app in no-code, and she sees some patterns and some anti-patterns. And then we spend a good bit of time talking about the pros and cons of no-code, the amazing things it can do, and the handful of things that it struggles with.
Before we dive into that, if you want to get a headstart on your 2023 goals, join us for the MicroConf Accountability Challenge. The difference between crushing your goals and falling short often lies in the tiny habits and wins along the way. And sticking with those habits can be tough while you’re working solo so we’re running our second annual January accountability challenge inside MicroConf Connect. You can head to microconf.com/accountability-challenge, that’s microconf.com/accountability-challenge to sign up and get your 2023 off to an amazing start. And with that, let’s dive into our conversation.
Tara Reed, thanks for joining me on the show.
Tara Reed:
Yeah, thanks so much for having me.
Rob Walling:
It’s great to finally meet you. I’ve heard a lot about you. We have mutual friends. And I’ve been hearing about Apps Without Code for at least a couple years now. To get listeners on the same page, your H1 of Apps Without Code is, “Finally launch your app idea. Come up with a strong app idea, build it without writing code and make real money with your business.” You’ve been public about the revenue, $3 to $4 million this year. You help people build web and mobile apps. I think I got to kick it off with the question of what made you decide to start it?
Tara Reed:
I wasn’t really intentionally trying to start this business, it really sort of happened. What happened was I was building my first company, which is the previous business before this. I had launched this art startup. And I built this algorithm to match people to artwork based on their taste. And I was blogging at the time about how I had done that without writing any code. I essentially was like, “Let me see how far I can go just building something myself with off-the-shelf tools.” And I kept pushing that. Every time, I was like, “Okay, let me just see if I can do more.” I kept pushing that and was blogging about my journey of building without code. This was far before we called it no-code or this was really cool. This is maybe in 2016 I was doing this.
And I got invited to do a TEDx talk on building Apps Without Code. And I just had an influx of people emailing me saying, “Oh my gosh, I didn’t even know this was possible. Can you show me how to do this too? I’ve already spent $20,000, $30,000 on developers and don’t have what I want. I haven’t had the time to just stop what I’m doing and learn how to code, and it doesn’t quite make sense for me to stop what I’m doing and learn how to code because I’m going to ultimately be the business person, not the coding person.” I just kept hearing that. And for a while, my answer was, “No, I can’t help. I’m trying to run my business.”
And after getting more and more of those communications, I was like, okay, I’m going to help five people. I decided to help five people launch their app. They launched it out into the world. I then opened it up again, I think at that point maybe doubled or tripled the price because people have really had a lot of success with it. And there were 70 people, and I thought, oh wait, I think this is a thing. If you fast forward to now, we have open classes and more elaborate eight week training programs. We’ve trained 150,000 people in 14 different countries. And it’s been so fun.
Rob Walling:
That’s amazing. And you told me offline, I had seen I think somewhere on LinkedIn that you were doing $5 million a year ARR, and then you mentioned you deliberately pulled the business back to do between $3 and $4 million. Talk us through that decision.
Tara Reed:
Well I think a lot of the audience here thinks about bootstrapping, so we know that top line is not bottom line. Your top line revenue is not your profit margin. And so last year, we did a handful of things to get more profitable. One of the things that changed, and I think changed for a lot of people, was just efficiency of ads after iOS 14. And we had to do lots of reorganization around that. What it meant was that we changed some of our practices to operate more profitably but to spend less money on ads, and so top line went down a little bit but profitability actually went up.
Typically when I talk to people in the VC track business space, or why would you do that? Why would you ever intentionally pull back on revenue? But for me, it’s really important for me and my team to be operating a profit first business. And so sometimes you make reorganizations of things so that the team can have the life that they want, so that we can have the flexibility that we want, and so we made a strategic decision there.
Rob Walling:
Yeah. And that’s the beauty of having a bootstrapped or mostly bootstrap business. Oftentimes, we call them independent SaaS or independent businesses where you are not beholden to an investor. You could have an investor, but if they don’t own a majority of the company or don’t have all the provisions, you can make the decision that’s best for you, for your freedom. I know that you talk a lot about lifestyle design and travel and such, so that’s a nice luxury to have. How big is your team?
Tara Reed:
My team is 15 people, and we’re in five different countries.
Rob Walling:
Okay. That’s quite efficient. That’s a lot of revenue for only a team of 15.
Tara Reed:
Yeah. No, it’s really great. I think that we operate leanly but we also want to make sure that we get to design our lives and our days accordingly. I wouldn’t say that everybody’s just only work all the time, eight hours a week; that’s not really our culture. But we also operate lean at the same time.
Rob Walling:
You’ve taught all these people to code and you also… Your team builds apps for them. There’s two different pricing structures. You can pay around $1,700 and get instruction. I could pay this, right? And you would teach us how to build it.
Tara Reed:
Yep.
Rob Walling:
Or it’s like $4,800 and you’ll do that plus build the app for us, I guess. Do you have a success story or two of folks who have launched a business off you? I know you do.
Tara Reed:
Yeah.
Rob Walling:
Do you have a success story or 50 probably? But no, we only have time for one or two of someone who’s built a business that changed their life, in essence.
Tara Reed:
Yeah, there are a ton. I think my favorite success stories are scenarios where people take something that they know a lot about, they’re subject matter experts in. And typically they know a lot about it because it’s related to what they do for work. And there’s something related to what they do for work that is just hard or time consuming and not great.
An example of this, we have an alumni who’s gone through the program who’s in manufacturing. And I didn’t know this, but apparently in lots of manufacturing plants they’re still tracking things with pen, paper and a clipboard. Yep, is that done? Check with pen and paper. And yet everybody’s got a phone in their pocket. He built an app to streamline a lot of that process so that headquarters can really see what’s working, what’s not working, where is this process slowing down? And his first customer was Coca-Cola who white labeled this from him. That’s an example. I can give you more examples.
But the specific thing that gets me really excited about no-code and the opportunity there is that people get to take something that Silicon Valley’s not super excited about building a solution for, the non-sexy stuff is I think the coolest stuff where other people who are not in tech know something about it, they just don’t know how to code and come up with really cool ideas that I think are less likely for us to see in a Silicon Valley based startup or even a venture track, venture-based business.
Rob Walling:
Yeah, and that’s, in all honesty, the name of this podcast, Startups For the Rest of Us. It fits a lot of things. And a little bit cumbersome to say. Originally, it was around I had a family. I couldn’t apply to YC because I couldn’t move there, I couldn’t move to the Bay Area at the time so I was saying, “Well, what about the rest… What about how many millions of us don’t want to do that or aren’t able to?” And it seems to apply in that case as well of it’s for the rest of us who want to start a business that… I call them boring businesses, and I call it that with respect. Most of the businesses I’ve built have been boring. But helping manufacturing or helping-
Tara Reed:
Healthcare. Yeah.
Rob Walling:
Exactly. Yep. These are great niche businesses because you don’t have the massive players coming into them. Yeah, maybe one more example if you can think of.
Tara Reed:
Yeah, okay. I’ll give you maybe a few. There’s another alumni we’ve had go through the program; his name is Josh. When he met us, he has this afterschool program where he teaches students about music and music composition, playing music but also mixing music digitally. And schools would ask him to come do these afterschool pop-up programs all the time, but he can only do so many of them because he’s only one person. And so he built an app that allows students to compose and compile pieces of music and songs together and work in teams. The teachers can give assignments and grade and all of that. He built this custom platform for this and then licensed it to 23 schools in the state of Virginia, for example.
Rob Walling:
Wow, that’s incredible.
Tara Reed:
That’s another example of something you know something about that it’s hard or time consuming or manual and creating product around it.
Rob Walling:
Yeah, it’s interesting because when I talk to founders, and what I see across MicroConf and TinySeed is that about, I believe when we did our state of Independence SaaS survey, 90% of the bootstrapped and mostly bootstrapped SaaS founders, 90% of the teams have at least one technical founder, at least one developer; nine out of 10, in essence.
And some of the best combinations we see is a developer co-founder plus a subject matter expert. It’s the subject matter expert who can then do the sales and do the customer success and do all that. With no-code, low code, you can maybe get away without that developer because you don’t necessarily need that. Now, maybe you need it later on, maybe you need it to get big, maybe you need it to scale. And we’re going to talk about that in a minute because I love having you on here as an no-code expert to be able to talk about the pros and cons of it. I find it lining up with my experience of subject matter experts who have this deep domain knowledge and being able to build something that they know that they need.
Tara Reed:
Yeah. And I think the bridge specifically, to comment on what you were saying where you need the subject matter expert and the programmer, what no-code allows you to do is you’re still programming. And we can get into some of the limitations here. I do think you still need to have to learn the ability to think an engineer, to the if this, then that, but otherwise this, and really be able to immerse yourself in if this, then that logic. For some people, that’s really hard. It’s not really related to what they do in their day-to-day job so I do think you still need to think an engineer or at least learn to think in that logical, linear way because you’re still programming. You’re not coding, but you’re programming still, nonetheless, with no-code. You’re drag, drop, point, click, and then giving logic sentences of what to do. And I do think that’s one of the limitations, though. One of the limitations and downsides to no-code is that it’s not no effort. And it’s also you still need to be thinking logically and linearly about what you want this to do because the app still can’t read your mind.
Rob Walling:
Right. Just because it’s no-code or low code, however we want to describe it, as you said, it doesn’t mean no effort and it doesn’t mean it’s not complicated still, right?
Tara Reed:
Absolutely, absolutely.
Rob Walling:
Because you can tie together 10, 20, 30, 30 things. A simple example, Scratch, I’m sure you’ve heard of from MIT.
Tara Reed:
Yeah.
Rob Walling:
Both my kids started doing that when they were three or four. One of my sons built something that was big and I won’t say cumbersome, but I saw it as a… I was a software engineer myself, and I was like, “Oh my lord. No, we need refactor this whole piece.” It was no-code, but it got as spaghetti as code can get. There’s still those types of limitations, right?
Tara Reed:
I think that’s right. I think there’s a couple different waves of no-code that have come out. When I was starting in no-code in maybe 2016, 2015, it was like stringing together lots of different tools. You have your type form which talks to Zapper, which talks to this, which talks to that. That was the first iteration of this. And then we started to see platforms come out in a more cohesive way. The Bubbles, the Glides, the Adalos where you can do a little bit more in one stop shop. Even still, though, you can engineer your logic in a way that is really not that sustainable. There’s still the ability to do that.
I think depending on which tool you choose, they give you more or less space to have something that’s not sustainable. I think if you look at a tool Bubble, for example, which really gives you a blank canvas, I would say bubble probably has the highest functionality capability of the no-code tools out there. There’s also the highest learning curve. If you are not really skilled at thinking like an engineer, it’s really difficult. And also, because it gives you a blank canvas, there’s no training wheels, there’s lots of messiness that you can engineer. If you look at an example that’s more like Glide, there’s more training wheels. You can get moving faster. There’s a little bit less functionality and capability, but it’s harder to engineer something that’s really unsustainable in how you built it.
I’m going to add one additional layer to this, which is that the biggest, I think, capability limit that we see with no-code now is it’s not so much about how you engineered it and if that was sustainable because there’s a lot of tools that give you guardrails, I think it’s more about data limits, how much you can store and what your storage access is.
Rob Walling:
Is it storage or is it throughput? I’ve been calling it scale, issues with scale. And is it both?
Tara Reed:
It’s both, it’s both. If you look at some of the tools, they’ll articulate it different ways. Some of them will do it as rows of data that you have access to and how many actions you can run; and it’s some combination of those two things of your throughput and also of your storage. And those are the places where you run up into limits. And a lot of those limits are just what the platform set as the limit. But those are limits, those are limitations. I still think the trade-off of I got this up and running in a couple weeks, in a couple hours is still worth the limitations you might eventually run into. I think it’s still worth it to get revenue and get going and get customers first, but there are limitations.
Rob Walling:
Yeah, I would agree. We have built, with TinySeed and MicroConf have built, I believe it’s three, and it might be four, we used to call them line of business apps. They’re internal applications to run processes. 20 years ago, I was coding these from Scratch and Pearl, PHP, whatever. And now we needed something, we affectionately call them Pat and Vat. They are podcast Airtable and video Airtable, so obviously what platform they’re built on. But they’re just workflow things where I get a email that says, “A new video needs to be created for YouTube. Here’s the title.” Once you’ve created it, upload it to Dropbox, paste the link here, and click it as ready to edit. Change of status. This is all CRUD, it’s create, read, update, delete. It’s not super complicated.
But the bottom line is before this, it was Google Sheets and Google Docs. And then we moved to Notion with the Trello interface, KanBan interface, which was fine but it was not customized at all so it was clunky. And our producer, Ron, came on. And he’s not a developer, but he’s technical, but he doesn’t know how to write code. And he built both of these in, I think it was two or three weeks.
And look, does it scale to as far as my last SaaS app could? No, it doesn’t. It doesn’t need to because it’s internal. If I was building it externally, if I had to try to productize this and sell it to other people, I do think we’d run into some issues. And we could probably talk about those in a second because those are the cons that I do see around… Cons, limitations, whatever it is around no-code.
But I agree with you that the MVP, if I was not technical and trying to start a company, do I want to pay $20,000? Do I want to spend a year or two learning to code and build these? Or do I want to spend three weeks, get far enough to prove it out to make enough revenue that maybe I can then find a developer who can build it? Or maybe I can raise investment if that’s where I want to go. Are you seeing that type of stuff play out?
Tara Reed:
I’m not only seeing that type of stuff play out, but we do that internally. I’ll give you an example of this. Actually, this year is the first year that we started building tools for entrepreneurs and app planning, app thinking through here are all the questions you need to think through in your app and dynamically show them the questions they need to plan through for things. This is the first time of us doing that. One of the things that we’re doing is opening up our LMS because right now our learning platform is just for students that are in our eight week training program. And we’re opening that up to the public. This is an exact example of how we are even using no-code.
Rob Walling:
You’re going to sell it as a SaaS, the platform that you built internally?
Tara Reed:
Yeah. One of the interesting things that’s happening with the company is we’ve operated as a coaching and agency business and are really moving into SaaS now. And a lot of that is just because we’re able to use revenue from the other side of the business to build software. And it’s good timing because we already have a large audience.
But what I’m saying is even as we open that up and open up the lessons and videos and tutorials to the public, we are going to eventually, down the road, code this just because it’s going to link in with some things that really hit up into the limitations of no-code. But we’re first building it without code. We already have lots of audience and traffic, so we’re still building it with no-code. But the reason we’re doing that is so that we can get quick insights about what’s working and not working and be able to feed that back to the engineering team so that they’re not wasting any time; they know exactly what’s working and not working by the time they get to it. And so that’s an example of how we even use it, where we will build the first version, the first MVP, the first six months to a year of the product with no-code, and then even you transition it from there.
Rob Walling:
There used to be something called paper prototyping where you would draw out a screen on paper, and then someone would click the button and then you would put another piece of paper over it. Or mock-ups. Figma, I believe, has click through mock-ups; probably Balsamic as well where it’s a mock-up trying to simulate an app, and you’re trying to click through and get user feedback. And you’re taking that really just a half step further where you’re actually building it out, storing the data, moving it in and out.
Tara Reed:
Yeah, that’s exactly right, that’s exactly right.
Rob Walling:
And so before we get in, I want to dive a little more into pros and cons of no-code then talk about entrepreneurial mindset. Before we do that though, I wanted to ask your preferred platform. Is it Glide?
Tara Reed:
Glide is my preferred platform. It’s the main platform that we teach. We’ve taught other tools in the past. The reason we teach Glide is the combination of capability and learning curve. I think that they find that middle ground really well. And I think there are other tools that can do more things, but the learning curve drop off is not as balanced and so it’s better to get people something where they can get moving and going and launching and deploying. And so it’s my favorite tool for that reason.
Rob Walling:
Glide must love you. Are bringing them a ton of business? You have to be one of their biggest ambassadors.
Tara Reed:
I don’t know that we’re tracking it, but yeah.
Rob Walling:
Yeah, that’s cool. We’ve already touched on some pros and cons of no-code. And the reason that I bring it up this way is we do get this question at least once a quarter, maybe every couple months of, “I’m trying to build this in no-code. What should I watch out for? Should I try to do this in no-code?” Or even there’s questions that are like, “I’m about to pay someone $30,000 to build this for me.” And then I’ll pop in with this, “Sounds like something you could at least build an MVP in no-code.” Even if you can’t service 1,000 customers, you can get to a point.
I want to throw out to what I think are the three biggest positives around no-code. And I’m curious if you agree with them and then if there are others that you know of. But the first is that you don’t need to spend years learning to code. It’s a no or low developer requirement, which is amazing, so it’s a lot cheaper time wise and money wise if you had to hire it out. Second is speed. We’ve already touched on this. If I were to hire a developer to build or write it myself to build Pat and Vat like I just described, it would’ve been months of effort, no doubt. And we built it non-technical in a couple weeks. And the third one, maybe it’s a combination of the others, but I like to say that bootstrapping is a great equalizer, meaning almost anyone can bootstrap a business of some kind, and you don’t need permission to do it.
You actually have a phrase about building your own playbook. You just built your own playbook. I’m assuming the playbook’s available, they weren’t going to work for you. And then Bryce Roberts of Indie.vc has this phrase, permissionless entrepreneurship where you don’t need anyone’s permission to bootstrap a business. I see it as great equalizer. And I see if you can code, great. If you can’t, maybe no-code gives more non-technical people the ability to find that great equalizer.
Tara Reed:
I get to work with lots of people who do code and who love using no-code because they can move faster, they can validate do people want this? Will they pay for it? What are the main features that they need? And get that answer really quickly, and then they decide to go code it. I would even say it’s useful for people who do code too.
Rob Walling:
Okay. Those are my three. You have others that you’ve thought about?
Tara Reed:
I think your three are right. I think I would put an asterisk on the speed piece because I think that getting something out there quickly or your ability not to get something out there quickly, it’s probably the biggest killer of people’s entrepreneurial dreams that I see, just you’re in analysis paralysis, you never got it out. It went on the back burner, then you came back to it. Not using your momentum, that I think is people’s biggest downfalls in entrepreneurship, not knowing how to leverage that. And so getting something out there quickly is so important.
Rob Walling:
Yeah. I named three, but almost speed should be on there twice because it’s so important. That’s what you’re saying.
Tara Reed:
Underline it. Yeah.
Rob Walling:
Underline it. Yeah, no, I totally agree. Before we dive in, I want to talk about entrepreneurial mindset. But in terms of some of the drawbacks that I’ve seen, we already talked about scale in terms of some type of limit, whether it’s the number or the volume or whatever. My last company was an email service provider called Drip. And I don’t even remember the numbers, but I remember at one point we were sending 100 million emails a month. Is that right? Yeah. No, no, it was more than that. But anyways, I questioned if a no-code app could do that, could keep up with it. There’s a scale there. There are limitations on what you can build it. It’s within the limits of platforms because again, I don’t think today you could build… I know today you could not build Drip with no-code. It was a big, complex app. It required custom code, basically, to do it.
And then I think the last one that we’ve run into with Pat and Vat and our other stuff is the UX UI can be challenging. And I’m not that picky but I’m a product guy so I’m picky enough that I’m always like, “Ooh, can we change this? Because it’s pretty janky.” And Ron will be like, “That’s the only calendar widget they have. It just works that way.” I would have a tough time, I think, if I sent Pat and Vat out into the wild. I would almost feel a little bad of it’s great for internal, but for having other people use it, I’m like, “Ooh.” And maybe it’s the fact that we use Airtable. And I think the UI of Airtable is not great, Glide’s probably better.
Tara Reed:
Think that’s right, I think that’s right. I think there are tools that give you a lot more flexibility on the UX UI, all the way to tools that give you full blank canvas flexibility. Sometimes that’s good or bad. If you have no design sensibility… I am not a designer, you should not put me in charge of designing the UI because I’m going to put something wild and not great. If you are one of those people, you actually maybe don’t want one of those tools that gives you full blank canvas. But I do think now there’s a little bit more spectrum of options that you have. I would put Airtable on the least flexibility end of the spectrum there. I would put maybe Glide on the lower flexibility side of the spectrum, but not all the way there, and then Bubble on the far, you design the UI the way that you want to design the UI. I agree with all of those. I think maybe the last one, there’s a little bit more options in terms of UI.
And I think that on the second one that you mentioned about just features that you can and can’t do, there are some limitations there. I think some of this, though, is around mindset about how you’re approaching launching. My question that I usually use for myself is if there’s a feature that is hard to do or I can’t do in no-code, the question that I have for myself is will adding this make me money right now? Right now, not down the road. But will that change the revenue of the business or will that change the user signups of the business significantly? Usually the answer is no. If it is, I think it makes sense to look at other options. But I do think that you’re going to run into one feature set that you want to do that’s going to be tricky to build with no-code, and so I agree with that second one too.
Rob Walling:
Very nice. And do you have any others that you think maybe I missed?
Tara Reed:
Yeah, I would elaborate on the things that you can’t do. Here are some things that I still see are really tricky to do and hard to do with no-code. If you want to build virtual reality headset software, I still haven’t seen a good tool. I have seen good AR tools. And Facebook has one. There’s a couple for augmented reality, but virtual reality not great tools out there.
If you want to build… I don’t know, what are the things people are absolutely not… I do think HIPAA compliance gets tricky. Your list of resources just immediately shrinks. I think that will change long term, but there’s lots of people who are like, “We’re not going to touch that right now.” What else? Randomly, you know those emoji apps or the emoji keyboard comes in, you can’t alter your emojis?
Rob Walling:
Mm-hmm.
Tara Reed:
And let me think of what I’m trying to think of use cases where not at all.
Rob Walling:
That’s a deep cut.
Tara Reed:
Yeah. Not at all.
Rob Walling:
Yeah. Only someone who’s knee deep in it, like yourself, would know that. Yeah, wow.
Tara Reed:
Although maybe I have another list I can maybe share with you guys, we can put in the comments, the list of things that we typically get that are like, “We can’t do this at all.”
Rob Walling:
Yeah. Can’t do it. Yeah.
Tara Reed:
But I actually think you would be surprised at the limitation of the logic that you can implement here. And I just think it means that you have to choose a tool that has more flexibility.
Rob Walling:
Awesome. Well, let’s switch it up. Let’s talk about entrepreneurial mindset. The reason it’s so good to be able to talk to you about it is, A, you’re an entrepreneur yourself, B, you work with a ton of people who are trying to get businesses off the ground. And I think between you and I, thousands if not 10s of thousands of entrepreneurs that we’ve been exposed to.
And I think I want to kick it off, it’s like we can go down the design patterns and the anti-patterns. What are the commonalities that you see in folks who come to you? And oftentimes, as you’re saying, subject matter expert, someone who works in manufacturing or medical, no entrepreneurial experience, I’m guessing. Maybe even didn’t have an entrepreneur in their family. That is me, actually. Why do some of them succeed? What do you see in them?
Tara Reed:
Okay, so a couple things. First one is good fear management. If launching a business was not scary, everybody and their mama would have a million dollar business. And so it really is scary. Putting something that came from your brain out into the world for people to look at and see and judge, that in itself is scary. And so I think lots of people are looking for it to feel not scary first, and then they’ll do it. And it doesn’t actually work that way, it works in the reverse. You do the scary thing anyway, and then after you do it a couple times, it’s no longer scary to do, like hitting publish or asking people to sign up, sharing the link with people; those are the things that are just scary to do. That’s the first thing. People who do well have a good ability to manage their own fear around things.
Rob Walling:
And what’s interesting is episode 14 of this podcast, which was 12 years ago, is called Overcoming Fear. And of our first 100 episodes, it was one of the most popular. We’ve actually done replays of it. And even 650 episodes later I listen to it and it holds up because we all have that fear of launching. We have a fear of being criticized, we have a fear of looking dumb, we have a fear that no one will care, we have a fear that everyone will care, we have a fear of people’s eyes on us and saying, “This is great,” and a fear of success we have a fear of… Right?
Tara Reed:
Right.
Rob Walling:
Managing fear, that’s a really good one.
Tara Reed:
And the reality there is most people aren’t even paying that close attention to you. They’re worried about themselves. They’re not judging you that hard. They actually think in reality that what you’re putting out there and the fact that you’re putting something out there is really cool. They admire you. They think that’s awesome. That’s most scenarios.
Another one, and maybe this is a subset of fear, maybe it’s completely separate category, is managing a relationship with money, abundance, success I’ll put in the category. This is something I think for me that was really hard. And I think I’m just now eight years into entrepreneurship as a whole, really getting a grasp on. I think maybe some of that is I didn’t grow up in a wealthy family. The idea of investing in myself felt really scary to do. The idea of putting money into the business felt really scary. Those sorts of things made me really nervous.
I think the second thing of things I see that make a difference for people, success or not success, is really managing that relationship with money and abundance and not being in scarcity mindset of, “I can’t do this. I can’t go learn, I can’t go invest myself, I can’t pay for the software that I need because there’s not going to be enough, there’s not enough resources.” That’s another big one.
Just to put a quick note on this, I had to really invest in working on this for myself. I actually ended up doing a lot of hypnotherapy to help me with this, which sounds like super woo woo. Me several years ago would be like, “What are you talking about?” If I heard myself saying this. But there were lots of scenarios where just I didn’t have the relationship with money management to be able to run a company like I do now. It wasn’t there.
Rob Walling:
I share that, actually. I grew up without much money, and scarcity was my upbringing. We weren’t homeless, I don’t want to exaggerate it, but there were times when I was drinking powdered milk as a kid or my mom… It’s stuff. It doesn’t matter that much. Solidly working class is what I often say, which is fine. And every dollar counted, man. If I could get the socks for $2 cheaper at Costco and Target, I knew it and I would go to Costco. Or if the gas was 50 cents… Or not 50, 10 cents cheaper, then I would drive somewhere.
The problem was at a certain point, I made a bunch of money. I got rich in a way that is… And even me saying that sentence, I feel very uncomfortable saying it, to be honest. But why is that? Because I have this unhealthy relationship with it. And I’ve had to work on that.
And even to spend $100 on something that’s worth so much more to save time for me, to hire someone to come out and replace the [inaudible 00:31:37] on the garage door. I’ll spend six hours on a Saturday. I don’t anymore, but I used to because I grew up construction family, and to pay someone a couple hundred bucks to do something, my wife was like, “Dude, you’re nuts. You have so much. You could be with the kids, you could be doing some work, you could be… Whatever it is, relaxing. You need to chill out with that.” And so I realized at a certain point that I also had an unhealthy… It was an adaptive thing for me as a kid, and even as an adult, to be honest, because we came out of school making/// what did I make? $17 an hour at my first job. Hey, that’s great. Living in the Bay Area, can’t even afford a… We’re going to live in a trailer in a trailer park? We didn’t have the money.
And then suddenly, I had more and more. And I really liked this one because I don’t know that it’s talked about enough, probably not because it seems like whining on the yacht. You’ve heard this phrase of it seems like, oh real first world problem, so much money. But it’s like, even at the point where you… Let’s say you make, for the first time ever in your life you make $100,000. And that may be three times what your parents ever made, or something. That point, you should start adjusting. Now, you don’t go crazy and buy a Maserati, but are there ways that you can do that better? Are there ways that you can manage your money without just this tight fisted fear of every dollar?
Tara Reed:
Yeah. And I think it comes down to a trust in yourself and the ability to generate more. I do think that entrepreneurship really takes that, a trust in yourself that you’ll be able to flow money back to you. You’ll be able to create value for someone in some kind of way that you’ll be able to get resources. And if you don’t have that you, it’s really hard to take risks on an idea. And so that’s where I think it shows up for people. I like the example that you gave of even if you’re just making more money than your parents have made, it still shows up.
I think there’s two places where I see it show up for founders really specifically. The first show up of it is I don’t want to spend money on the software tool that I need because I’m trying to find a totally free way to do it. And while it’s really good to be tight on your expenses, there’s also a scenario that you run into where it’s like, yeah, but we need the tool to keep moving and to get going and to get the customers, so let’s just do that. Well, we’re going to be able to add value to people so we’ll get back.
I also see it show up a little bit later in the stage of but I don’t want to hire anyone to help me. I got to find a way to do everything myself. That’s the next stage place that it pops up. And it just requires a work on your relationship with abundance and not having scarcity mindset. That’s another thing.
Rob Walling:
Makes sense. You have any others you want to throw out? Other adaptive qualities. Or even go to the opposite, anti-patterns.
Tara Reed:
Yeah. The last anti-pattern is around the lack of scrappiness. There’s almost like a if you don’t have money for something, you need help from someone, you don’t have resources to do that, that’s fine. The inability to go, “Okay, how could I make this work? What if I bartered? What if I asked that person what they’re up to in life right now and what they need help with and found something that I could help with and then in exchange, they helped me with this thing that I need help with?” That, I think, is a big one.
And I think no-code is a really good tie in for that. It appeals to people who are scrappy, who are like, “Maybe it’s not going to be perfect.” Like in the scenario of bartering with someone. In an ideal scenario, you would have the payroll budget to hire them, but you don’t right now. In an ideal scenario, you would know how to code or have the technical co-founder, but you don’t right now. Or even if you are technical, you would have the product already out there and have feedback on it, but you don’t right now, so here’s the thing we can do, roll up our sleeves.
And I think what comes with that is a comfortability with not being perfect, it not being perfect when you put it out there. And I think when people are in full perfectionist mode, it’s really hard to launch something. Even if you had a full development team, the first thing you launch is still not going to be perfect. What’s that quote? Reid Hoffman says, “If you’re not embarrassed of the first version of your product, then you launched too late.” That willingness to put something out there and get feedback on and iterate over time. I think that the reliance on everything having to be perfect at first launch is it a anti-pattern.
Rob Walling:
Big time. Better done than perfect. That’s a phrase. I actually had that on a T-shirt, I think user list gave me. But I love the way the last two things you said tied in; lack of scrappiness. It’s like a lack of creativity, a lack of just getting it done, just the inability to just get done when it’s hard, when you don’t have the money, whatever. And maybe to jump in and do it yourself and to learn, I remember teaching myself X, Y, Z even though I only needed it once, but I needed it at that time. And I spent too many days learning it. Facebook ads was what it was, actually, where I spent an entire weekend reading all the books back in 2011. And I was being scrappy because I didn’t have the money to hire consultant and so I just did it. Each of these has, I think, a pattern and an anti-pattern.
The shadow side of that is you can’t then take that too far. You get down to the point where you don’t want to bring anyone in because, well, I can do everything because I’m the entrepreneur. And even if I have the money, I’m going to keep more money for myself and do it. And then of course that’s burnout. You move slower, you grow slower, you don’t whatever. Each of them, I think, has both sides.
Tara Reed:
That’s right, that’s right.
Rob Walling:
Well Terry Reed, it’s been amazing you on the show.
Tara Reed:
Yeah.
Rob Walling:
Thanks so much for coming on.
Tara Reed:
Thanks so much for having me. It’s been fun. Yeah.
Rob Walling:
Yeah. If folks want to keep up with you, you are on Instagram @tarareed_, and of course also on Instagram @appswithoutcode, and appswithoutcode.com. Thanks so much.
Tara Reed:
Thank you.
Rob Walling:
It’s great to be here on this third day of January 2023. Thanks for listening this week and every week. If you feel like you want to change someone’s year, maybe send them an episode of Startups For the Rest of Us or post a link to the show on Twitter. We’re @startupspod, I’m @robwalling. If you’re still on Twitter, that is, by the time this goes live. It’s great to be back in your ears again this week. This is Rob Walling signing off from episode 642.

Rob Walling:
Over the past probably five, 10 years, I’ve done a bunch of work to get better at that. So I worry about a lot fewer things, even though those are possible. So is it possible I’ll get struck by lightning? Is it possible I’ll get in a car accident? Is it possible I can go out of business next week or get sued, or have something terrible happen? Yes. All of those things are possible. Should I be worrying about those? That’s the real question, right? Welcome back to another episode of Startups for the Rest of Us. I’m your host, Rob Walling. And today, I’m going to be answering listener questions from bootstrapped and mostly-bootstrapped startup founders who are thinking through things like dealing with high churn when your tool is project-based, who to listen to in the early days to improve your product, and many more topics than that.
I did want to let you know that the website for my new book is live. Title of the book is The SaaS Playbook: Build a Multimillion-Dollar Startup Without Venture Capital. So it’s not solely focused on bootstrapping, but it’s bootstrapped and mostly bootstrapped SaaS companies, as you often hear me say on this show. So head to saasplaybook.com if you want to check it out. You can obviously sign up to the email list so I can notify you when the Kickstarter for the book begins. And of course, if you’re on other email lists of mine, you’ll hear from me as well. But I’m excited about this. It took me a lot longer to write the book than I would’ve liked. I had a bit of writer’s block in the midst of it. But in the end, I’m really excited about the end product. And I’ve had, I don’t know, a dozen people, maybe 15 people whom I trust who are SaaS founders … some really experienced, some still in the early days … read through it.
Gotten a lot of helpful feedback that allowed me to improve it, and then a lot of positive feedback telling me that I’m on the right track, right? Because this, like anything we do … I call products art. SaaS products are art. Music is art. A book like this, it’s art. It’s our product that we’re putting into the world. And anything like that in the early days, before you’ve had tens, hundreds, thousands of people consume it, it’s very fragile and it’s hard to tell if it’s good or not to be honest. And at a certain point, you get so close to your own art that it becomes difficult to tell if it’s valuable, if it’s going to be helpful for people, if it’s too obvious, if it’s not obvious enough, if it’s too deep, or not enough. So all that said, I’m super excited about the book. More excited than I’ve been about shipping a product like this in a long time. You can find out more about it at saasplaybook.com or, of course, I’ll be talking about it on this show in the coming months.
Before we dive into that, if you want to get a headstart on your 2023 goals, join us for the MicroConf Accountability Challenge. The difference between crushing your goals and falling short often lies in the tiny habits and wins along the way, and sticking with those habits can be tough while you’re working solo. So we’re running our second annual January Accountability Challenge inside MicroConf Connect. You can head to microconf.com/accountability-challenge. That’s microconf.com/accountability-challenge to sign up and get your 2023 off to an amazing start. And with that, let’s dive into our first listener question from Alex.

Alex:
Hey, Rob. My name is Alex. Love the podcast. You said recently that anything above 7% or 8% churn is “company on fire” level churn. And by this metric, our startup is very much on fire. The major conundrum is that a lot of our churn is due to people’s projects finishing. For example, we have grad students who use our tool for their dissertations, but they stop using it once they graduate. They love the tool, they use it for a couple of months, but then they just don’t need it anymore. Luckily, our top of funnel is large enough that we’ve built a company that is solidly profitable, which is nice. But the churn is causing our MRR to plateau.
We’ve settled on a strategy of capturing the lower end of the market and then trying to grow upmarket from there. We have some really old, hated incumbent competitors. So we believe there’s a market there for the taking, and we’re hoping that the upmarket users will have lower churn rate and a higher monthly spend. We were curious if you had any thoughts on this strategy or had any ideas of other things we should be thinking about. And also, if you have any advice or examples for how to grow upmarket, we would love to hear it. Thanks so much. And also, I’ll be at MicroConf Europe, so I will see you there.

Rob Walling:
Thanks for that question, Alex. This is definitely something that I’ve seen founders face before and it is challenging. And there’s a few ways to think about this. I can’t tell you one way that’s going to be right without you probably experimenting with it. But one way to think about it is maybe you’ve built a one-time use product. Not every product should be a subscription product. As much as we, as the business owners, love subscriptions, if the use case doesn’t match it may be time to think about just one price for a year. Instead of $30 a month, it’s $300 per year. And if a student only needs it for a project, they have to pay for a year and that’s it. There’s just no other option. And then those who do use it ongoing will pay annually. So that’s one way to think about it.
Another is to make it a one-time perpetual license. That feels a little odd to me. If it’s not just something they download and then can use on their own laptop without needing to phone home to a server, like if you’re running a web service, Any type of lifetime or perpetual deals are dicey. They’re dangerous to say the least. So that doesn’t make as much sense to me, unless you do make it that downloadable thing that people can run on their own without needing your servers. Another option is to essentially almost have a pay-as-you-go model. SparkToro tested this out. And in their early days, since they could also be a project-based tool, they actually had project-based pricing in essence. I think you got a week’s worth of access. And in the end, they stopped it. The idea was to reduce churn because the churn is troublesome when you’re a business owner. But in the end they decided, “Nope.” They were okay with the ins and outs and the complexities of that.
MailChimp has pay-as-you-go pricing. Loadster, which is at loadster.app … Similarly, it’s project-based. That’s a TinySeed batch one company. And you can imagine load testing your website. There are some people who need to do that once or twice a year, and there are some people or businesses who need to do that on an ongoing basis. Big companies, agencies who are rolling out a lot of websites. And so the founder, Andy, actually toyed with several different models. Tried it without pay-as-you-go, tried it with pay-as-you-go, tried it with pay-as-you-go plus pay-as-you-go subscriptions. There’s all different stuff he toyed around with, and he’s found his optimal model. And if you do wind up offering pay-as-you-go, it should be a lot more expensive. Like 3X, 4X the price of the monthly equivalent. So that’s an interesting one to think about. It adds complexity to your pricing, but it’s definitely a design pattern that I see people use.
And then the other way I thought about it is maybe if the people doing it project-based are all students, maybe there is just a student price. I’m making numbers up, but if your tool’s $30 a month right now and a lot of students use it for two or three months, maybe the student price is $99 for a year and everyone else is either monthly or annual. I don’t know if that’s the case, if there are non-students also using it on a project basis, but that would be another way to approach it. Lastly, you could just leave everything the same, but segment your churn based on folks who you think are using it on a project basis. If anybody cancels within two or three months, “All right, they were project-basis,” and that churn’s going to be outrageously high versus people who use it ongoing.
You figure out a way to segment the churn so that you can see what your, maybe, true monthly churn is versus your project-based churn. Thinking of them as two separate numbers. That last one’s a little dicey., Obviously it’s going to be imperfect. And if you ever go to raise funding or to sell the company, if your churn is 10%, 15% a month, you’re going to have a real headwind towards convincing any outside investor, or acquirer, that your business is not on fire. Those numbers just aren’t good. And so I, personally, would give some thought to how to make this better.
In addition, you asked about going upmarket. Honestly, it’s a huge topic and it just depends on who’s upmarket, do you already have competitors upmarket, or are you going above upmarket past them? Whether you have to add new features … Obviously, changing your pricing going upmarket means charging more. So are you going to be charging so much more that you’re going to be going from, say, teams of one or two up to teams of 10 or 20, and you’re going to go from low-touch sales where people self-onboard, to high-touch sales where you need to have a customer success person and a one-call or a three-call close? Are you going to have to go through procurement? There’s all these questions that without having those specifics, it’s just too much to cover.
So honestly, Alex, if you want to write back in or send another video question … The reason Alex’s question is getting a answered today, even though I have 30-something questions in the queue, is that he sent an audio question in. Audio and video always go to the top of the stack. And so Alex, if you want to head back to startupsfortherestofus.com, hit that ask a question link at the top of the page. I’d be happy to dig into that in a future episode. So thanks for the question, Alex. I hope that was helpful. My next question is a video question from Matt Lasker.

Matt:
Hey, Rob. Matt Lasker back again from PlayerBook. Quick reminder, we are gameifying the sports playbook. This is my third video call, so I appreciate all the feedback. You always have such great insight for me. You might just have to admit me to TinySeed with all the help you’re giving me, so I do appreciate it. This question is about the feedback loop. The prototype’s almost done, and I just want to really ask you a direct question about who I should be gaining my initial feedback from. I have built a community of about 1,500 to 2,000 through YouTube, and a website that I built off that YouTube channel. I built an audience of individual coaches that I would love to have demo it, work with their players on it, and get feedback from them directly. I think that’s a great place to start.
But there’s also this second grouping that I want to target with this initial MVP. Let’s just call them weekend camps, where 50 to 100 kids all kind of go to one place. It’s a kind of a quarterback training camp, and I want them to be a target as well. But I’m not sure whether I should let them see this very first version one and just stick with the feedback loop from my initial community members, where there will be a little bit less visibility … Or if I should just say, “Let’s just go for it,” get it to as many eyeballs as possible, get as much feedback as possible. It doesn’t matter if they’re maybe a higher level target down the line or not. Just get it out to as many people as possible. So I just really want to know if I should stick with less visibility initially to get the feedback started, or go bigger. Thanks!

Rob Walling:
Thanks for writing in again, Matt. I always appreciate your questions and the context as well. I definitely remember answering your past couple questions. So my thoughts on this are that in the early days, you don’t want as much feedback as you can get. Now, people often struggle to get feedback. I don’t think that’s going to be the case with your product. I think you’re going about it pretty deliberately. You have this audience built up. I think people are going to give you feedback. When I see some bootstrappers launch and no one is signing up … they don’t have product market fit and they’re churn as high … they often struggle to get to the bottom of why that is because no one will give them feedback. And in that case, yes you do want more feedback. You want more conversations. In your case, I would be really concerned about showing this.
What you’re calling an MVP … and I should take just a little side jag here … I want to make sure you’re not calling it a beta product. If it’s buggy, you can call it beta. If it’s not buggy, even if it’s just small, if it’s minimally viable, I would call it early access, right? This is early access. I believe Peldi from Balsamiq calls it that, and I loved that idea. We did early access with Drip and people paid for early access. They weren’t given lifetime, free use of the product. They weren’t even given a discount. They weren’t given a year free. We didn’t offer any of that. We wanted to build something that was so valuable to them that they were willing to try it out. And that that pain point, the need to solve that problem was such that they were willing to try it out.
Am I saying you should never give discounts? No. I’d be fine giving 20%, 50%, some number off the first year. It’s a nice courtesy. It’s the least you can do for people. You’re also going to probably be listening to them and building features they specifically asked for, so that’s also kind of a cool courtesy. And it’s a neat advantage they have as early access participants. All that said, one of the hardest things to do in the early days is if you get too much feedback and it’s from too many different groups. So I remember back in the early days of Drip, I was getting feedback from bloggers, from SaaS founders, from downloadable software people like the WordPress plugin folks, there were photographers that were using Drip, and some others. And the feedback across those four or five verticals was very different and that made it very hard for me.
And my big concern is if you have an audience of individual coaches who have these ongoing needs, where they have a team for an entire season, or an entire year or multiple years … I’m concerned that they are going to have different needs than someone who is a coach at a weekend quarterback camp. I played football. I was a wide receiver, and so I went to these week-long camps, actually, in the Bay Area. So I have context for this. And my relationship with my high school coach and my college track coach was very different than the coaches that were at my week-long or weekend camps, so I’m making an assumption here that their use cases are going to be different. I don’t know much about your product so I don’t know if that’s correct. But if you do think the use case is going to be different and the needs are going to be different, you probably don’t want all that feedback all at once.
I would personally think about, “I have this owned audience.” You have permission to contact the 1,500-2,000 folks that you have through YouTube and the community that you’ve built. I would most likely start with them and not go big yet and kind of iterate with that audience, and see how things go from there before I branched out into another audience. ]I don’t think you have full-time developers. If I recall, you’re working with an agency or freelancers. If you don’t have high feature velocity and you’re getting a lot of feedback, it can be overwhelming. I mean, you can get so much feedback that you have six months of building to do and you kind of can’t do much during that time because you’re like, “Wow, this MVP. It was not minimally viable. It was completely unusable.”
So then, you get to sit on your hands for months and months. And if you’ve gone out to this other audience that doesn’t know and trust you like your own audience does, it can be challenging. That’s my gut feel based on, I’ll say, the limited information I have so far. That’s how I would proceed. So thanks for that question, Matt. I hope it was helpful. Our next question is another video, and this is from Jonathan.

Jonathan:
Hey, Rob. What’s up? My name is Jonathan. Doing the fourth take already in a video question. Talking to you all the way from Israel. I am an aspiring bootstrapper. I was wondering … They say and you say, also, before you write a single line of code, you need to validate the target audience, the target market, to see that they need your solution and that they have the problem you are trying to solve. And only then, when you see that there are enough of those and validate your business plan, only then you should start writing code and promote your business. So I’m wondering when you do that process of sending out those copies and your idea to other people and asking people around, how do you manage the risk of being exposed, of your business idea being exposed?
Especially when you have nothing yet built, so you are taking a big risk because you don’t have something already that is enough progress to protect against certain competition. So I’m asking this: How do you deal with this risk? And I’m specifically trying to reach out to markets outside my country, so I’m doing paid ads in Facebook. I’m wondering whether I should avoid certain countries. Should I just not do that and go word-to-mouth?

Rob Walling:
Thanks for that question, Jonathan. I know that speaking into video can be difficult, so I appreciate you taking a couple cracks at it. This is a sentiment that I definitely hear among developers. I hear it less among non-developers because I think they aren’t folks who would go out and build something really easily, right? But as developers, we think everyone is able to do it. The interesting part is the actual subject line of Jonathan’s question. “Should I worry about people copying my business idea?” And if you look really close at that language, it’s, “Should I worry about it?” And I want to change that and say, “Is it possible that someone will copy your business idea?” Absolutely. Is it probable that they will copy your business idea? It depends. Some business ideas are really, really good. And once you hear them you’re like, “That’s amazing.” And if you have one of those? Yeah, someone’s probably going to copy it. If you don’t have one of those and you build it up to $40-$50K a month, odds are pretty good someone’s going to copy it. It’s inevitable. This happens, right?
So then the first part of your question was, “Should I worry about people copying my business idea?” And I know I’m taking it a bit literally here, but I want to think about this. Because I, personally, have naturally high anxiety and I worry about way too much in my life. I have worried about way too much throughout my life. And over the past probably five, 10 years, I’ve done a bunch of work to get better at that. So I worry about a lot fewer things even though those are possible. So is it possible I’ll get struck by lightning? Is it possible I’ll get in a car accident? Is it possible I can go out of business next week or get sued, or have something terrible happen? Yes. All of those things are possible. Should I be worrying about those? That’s the real question, right?
And I don’t think that as a person trying to execute in a high-pressure environment, whether you’re running a startup, running an accelerator, doing whatever it is that I do day-to-day … I don’t think worry is all that helpful. So perseverating or worrying about something happening, I have come to realize … Who said this? Someone else said this and I thought that was great. It was, “Worrying is like paying a debt you don’t owe, but with your emotions.” It’s really interesting, right? It’s the “would’ve, could’ve, should’ve” or what could possibly happen. And if you let your life get tied up and hung up on worry … Again, I did that for the first 30-something years of my life and I regret it. It made my life less enjoyable. And if you are tied up in those kind of cycles of everything is fear-based, it’s not super helpful and it can make you more risk-averse than perhaps you should be. It’s like asking, “What’s the worst that can happen?” and really answering that.
If you’re a developer working on something on the side, what’s the worst that can happen? Usually, it’s that you’d spend a bunch of time on a side project that doesn’t pan out. Okay, are you willing to risk that in order to potentially have a SaaS app that’s doing $10-$20K a month? That has to be up to you, or you’re going to leave your day job because you do have something making five or 10 grand a month? What’s the worst that could happen? Well, you could get put out of business and you then need to go back and get a day job, which is what you had last week. And even in this economy, if you’re a good developer, I think you’re going to work. These are each decisions you have to make for yourself. Now, that really wasn’t your question. Your question wasn’t, “Should I worry Existential Rob?” Hey, Philosopher Rob! Why don’t you weigh in on whether I should worry about things?” I know that’s not what you’re asking.
Your real question is are people going to steal your stuff? Are they going to steal your idea? And the answer is I don’t know. I don’t think so. It’s unusual for an idea to get stolen in the idea phase. Usually, it’s you launch something, it gets some traction, and then some people on Hacker News or Indie Hackers or Quora or whatever, Stack Overflow, wherever you’re talking about it … or even going on podcasts and talking a lot about your business. Especially if you say, “I had quick success and I built this in a week! And now, it’s doing $10K a month,” or whatever. That type of stuff attracts competition. It attracts copycats, right? It attracts people who want an easy win. So I would say that’s more often … It’s that phase. Or it is when you get to that half million, million-dollar point and you are a mini brand and you have traction, and people see it and hear about it and they want to copy it.
I have heard a lot less about someone who has an idea and they floated out there, and someone steals it and builds it and somehow, maybe, gets to market before them. In fact, I don’t know that I’ve heard of a single example of that. Not to say it never happens. I don’t know of every idea that’s ever launched, obviously. But kind of in the past 15, 17 years since I’ve been doing this … It’s not that ideas are worthless. Some ideas are better than others. But it’s usually that our ideas are so not fully-formed in these early days that they’re just not worth taking. If I think about the idea of Drip, it was not what Drip ultimately became. And in fact, the idea of Drip was not that great. It was just an email capture widget and an autoresponder. That’s it. It just wasn’t that great of a product idea, in terms of not being that novel.
It’s all the learning and the conversations that came from that, and then the product decisions that I made in the early days, that led us to building something amazing. But that wasn’t the idea from the start, and that’s often what happens. I’ll be honest. Most people have an idea, and by the time they get to product market fit and get to the point where they hit escape velocity and they’re growing, the idea has actually adapted and morphed quite a bit from that initial incarnation. And realistically, if someone can copy your idea, it depends. If they can get to market first, sometimes being first to market is an advantage, and other times it’s not. So that would be a bummer if someone got to market first. There’s already a bunch of competitors out there and you’re just another one. I just don’t know how much it matters.
And there are ways to even think about mitigating this, which is, as you said, to kind of go word-of-mouth only, right? One-on-one conversations, whether you’re doing cold email and having conversations. You’re not doing anything in public. You’re not running ads. You’re not doing the big landing page thing. That’s one approach to take. I’ve never done it that way. If you look back at my relaunching HitTail after I acquired it, at launching my first book, at launching MicroConf, at launching my first online membership community for bootstrapped founders, at launching Drip, launching TinySeed, all of those … There were a couple one-on-one conversations, but then it was a landing page that said pretty much what it was going to do. The book and the conference and the apps, the SaaS apps, and TinySeed … They said what they were going to be, and someone could have come out and copied me. And in fact, every one of those things has actually been copied.
Every one of the things I just mentioned was copied at different phases. Sometimes, it was just a competitor that copied features and copied some verbiage. And other times, it was almost a pixel-by-pixel recreation of what I had, which was a little annoying. And it’s super annoying when it happens, but that does happen eventually. And so I think, is it worth the risk? That’s a question you have to ask. It’s just a matter of risk tolerance and thinking, “What are the odds this is going to happen? And is my idea so incredible that everyone else is going to want to steal it? For me, the answer’s always been no. And I think for most founders, with most ideas, that’s also probably the right answer. So thanks for that question, Jonathan. I hope it was helpful.
My next question comes from Craig. He says, “Hey, Rob, I’m thinking about signing up for MicroConf Connect. I’m early in my startup and still working a day job. I’d like to sign up, but I’m unsure if I’m too early. I’m still validating the idea and getting a landing page in place. I am pre-step one of the stair step method. Are there any qualifications for joining Connect, and is there a cost to join .big fan of the pod and the content you provide.” Thanks for the email, Craig! I wanted to answer it on air. I actually replied directly to him. But just in case I haven’t been clear, MicroConf Connect is our community. It’s a Slack workspace where we have … I think it’s over 4,000 bootstrapped and mostly-bootstrapped founders now. It’s a pretty incredible place. Very positive, good amount of volume without being overwhelming. We moderate it heavily.
And so the answer to your question, Craig, is the only qualifications are that you are a founder and that you’re not a service provider. We don’t want a bunch of lawyers, investors, CPAs, anybody who’s trying to sell services to founders. We want it to be a community of founders, much like MicroConf has been from the start. And that’s just to keep the quality up, right? That’s to keep someone from pitching their stuff. And we obviously have some trouble, as any growing and vibrant community does, with people getting a little over-pitchy and having to moderate a bit. But it’s really, pretty minimal based on the size of the community, to be honest. The second part of your question is, “Is there a cost to join?” The answer is no there is not, nor are there any ongoing fees to be part of Connect. So we’d love to have you join. You can head to microconfconnect.com if you want to check it out.
My next question was from Twitter. I tweeted back in August. I said, “In your personal life, money can save you hours. In your startup, money can save you years,” and I got this great reply from Arvin Peter. He’s @RvnP on Twitter. He said, “Hiring project level thinkers versus task level workers! How do you go about identifying when you need that, and how do you go about finding such a person?” I liked this question! We can talk about these frameworks or theories of task level versus project level versus owner level as someone being maybe more able to manage more and more complex things. But to actually identify, “What person do I need in this role, and then how do I find that person? How do I interview for it? How do I craft a job description to do it?” I think is a really good thing to look at.
So first, let me talk about, “How do you identify which you need?” Obviously, it depends on the role. If you’re hiring a director of X, Y, Z, they at least need to be a project-level thinker. If you’re hiring a manager of engineering, a manager of blah, they have to be able to do something aside from being an individual contributor. Basically, individual contributors often are task level thinkers. Not always. You can get some ICs that are project-level thinkers, that are higher level thinkers. But if someone’s managing a group of people, or managers who manage groups of people, you have to be able to manage multiple projects. And so therefore, by definition, you have to be a project-level thinker or starting to edge.
Once you become a C-level, or even VPs, you’re kind of an owner-level thinker at that point, if you’re good. Because you have to be not just thinking about, “Oh, here’s these projects,” but thinking out a year. “Where is this headed? What happens when these plateau?” Consuming new information, reading books, going to events, listening to podcasts, and taking all of that and using it to make your role or your department better. That’s more owner-level thinking. It’s when you own a business and you’re constantly thinking about how to improve it, and not just how to drive projects forward. That’s a big piece of that owner-level thinker. And so identifying when you need what often, usually … especially with bootstrappers … it comes down to money. Usually, you just can’t afford owner-level thinkers. They’re just very expensive. They often become co-founders because you need to pay them an equity. And if someone’s that good and you don’t really have the tremendous budget to pay them, that’s often what happens.
If you have an individual contributor role where you just need an assistant, an executive assistant, a virtual assistant, you need someone to write blog articles, you need someone to run a pay-per-click ad campaign … Really, they can be task-level thinker, right? But the moment that they have to do, let’s say, marketing strategy, or they have to start deciding what features are built in your product … Usually, founders do that. But let’s just say it’s this one level up from doing the work and not just thinking, “I’m doing a task now, but what am I going to do next week and next month?” That’s when you start to need those project-level thinkers.
In a perfect world, you would hire a ton of project-level thinkers. Even individual developers … I’ve known several who are also project-level thinkers, even though they were coding. And it makes them really good because they’re thinking ahead. They’re super-senior. It’s that emotional intelligence that goes beyond just being a good coder, being a good developer. But actually, thinking ahead to what’s best for this product, what’s best for the team, what’s best for the company. Those are the folks that are amazing to find. They’re usually just very expensive. And as I said earlier, if you’re hiring someone, let’s say, to run marketing for you as a manager of marketing, a director of marketing, they have to be a project-level thinker. If they’re going to be managing several people who are working on projects, by definition, they have to be involved in those projects and have to be able to manage them.
And then the second part of Arvin’s question was, “How do you go about finding such a person?” I mean, really, it comes down to the title. And this is where job titles are actually important. I used to think they were (beep). After I left these big corporate jobs, where there was all this hierarchy, I started making up job titles. It turns out that’s not the best way to go, as I actually talked about that a bit in my MicroConf Europe talk just a couple months ago. But in essence, when you have a title like a director, a VP, a C-level, even a “manager of,” that’s going to imply a project-level thinker, and the bullets in that job description should reflect that, right? You don’t have a Director of Development where there’s no bullets in there about managing a lot of projects or about managing a bunch of developers, or about driving the whole team forward. That has to be part of it.
And if you’re looking for, let’s say, a mid-level or a senior software developer, probably won’t have those kind of bullets. I mean, you want them to be part of the team, but do they have to drive projects? Do they have to be a project-level thinker to be a mid-level software developer? I don’t think so. They can crank on their code and they can get the next task done, and they can do the next task until the end of the sprint and then go. If there’s someone above them in the hierarchy who is doing that project level thinking, then that all works.
So I hope that was helpful, Arvin, if you’re listening. Or if you’re not, to any of the other listeners out there. That’s the last question for the day. If you have a question, you can email it to questions@startupsfortherestofus.com, or just head straight to the website, click the “Ask a Question” button at the top. As a reminder, saasplaybook.com is now live and you can learn more about my new book that’ll be kick-starting here in a couple months. Thank you so much for joining me this week and every week on Startups for the Rest of Us. This is Rob Walling signing off from episode 641.